UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
x 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
CITIZENS &
NORTHERN CORPORATION
(Name of Registrant as Specified
In Its Charter)
(Name of Person(s) Filing
Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required
¨ Fee paid previously with preliminary materials.
¨ Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11
PRELIMINARY COPY
90-92 Main Street
Wellsboro, Pennsylvania 16901
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, APRIL 21, 2022
TO OUR SHAREHOLDERS:
Notice
is hereby given that the Annual Meeting of Shareholders of Citizens & Northern Corporation (the “Corporation”)
will be held in a virtual meeting format only with no physical location on Thursday, April 21, 2022 at 2:00 P.M., local time, for
the following purposes:
| 1. | To elect four Class II directors to serve for a term of 3 years; |
| | |
| 2. | To consider and approve the following advisory (non-binding) resolution: |
| | |
|
| “Resolved, that the shareholders approve the compensation
paid to the Named Executive Officers of the Corporation pursuant to the policies and procedures employed by the Corporation, as described
in the Compensation Discussion and Analysis and tabular disclosure regarding Named Executive Officer compensation (together with the
accompanying narrative disclosure) in this Proxy Statement”; |
|
| |
| 3. | To amend the Corporation's Articles of Incorporation to increase the aggregate number of shares of common
stock that the Corporation may issue from 20 million shares to 30 million shares; |
| | |
| 4. | To ratify the appointment of Baker Tilly US, LLP as the Corporation’s independent registered public
accounting firm for the year ending December 31, 2022; and |
| | |
| 5. | To transact such other business as may properly be brought before the meeting or any adjournments or postponements
thereof. |
The Board of Directors
recommends that you vote “FOR” the election of each of the nominees for director listed in the enclosed proxy statement, and
“FOR” the approval of an advisory vote on the compensation of the Corporation’s Named Executive Officers, and “FOR”
the amendment to the Corporation’s Articles of Incorporation to increase the aggregate number of shares of common stock that the
Corporation may issue from 20 million shares to 30 million shares, and “FOR” the ratification of the appointment of Baker
Tilly US, LLP as the Corporation’s independent registered public accounting firm for the year ending December 31, 2022.
We have elected to provide
access to our proxy materials over the Internet using the Securities and Exchange Commission’s “notice and access” rules.
Details regarding the business to be conducted are described in the Notice of Internet Availability of Proxy Materials (“Notice”)
you received in the mail and in this proxy statement. We have also made available a copy of our 2021 Annual Report on Form 10-K with
this proxy statement. We encourage you to read our Annual Report. It includes our audited financial statements and provides information
about our business.
The Annual Meeting will be
hosted in a virtual format only online via live webcast. You will not be able to attend the Annual Meeting in person. You will be able
to attend and participate in the Annual Meeting online, vote your shares electronically and submit your questions prior to and during
the meeting by visiting https://web.lumiagm.com/244346915, click on “I have a control number,” enter the control number found
on your proxy card, voting instruction form or notice that you received previously, and enter the password: citizens2022 (the password
is case sensitive).
If
your shares are held in “street name” through a broker, bank or other nominee, in order to participate in the virtual annual
meeting you must first obtain a legal proxy from your broker, bank or other nominee reflecting the number of shares of Citizens &
Northern Corporation common stock you held as of the record date, your name and email address. You then must submit a request for
registration to American Stock Transfer & Trust Company, LLC: (1) by email to proxy@astfinancial.com; (2) by
fax to 718-765-8730 or (3) by mail to American Stock Transfer & Trust Company, LLC, Attn: Proxy Tabulation Department, 6201
15th Avenue, Brooklyn, NY 11219. Requests for registration must be labeled as “Legal Proxy” and be received by American Stock
Transfer & Trust Company, LLC no later than 5:00 p.m. Eastern time on April 11, 2022.
Your vote is important regardless
of the number of shares you own. You may vote during the Annual Meeting by following the instructions on the meeting website during the
meeting. Whether or not you plan to attend the Annual Meeting, the Board of Directors encourages you to vote your shares. You may vote
over the Internet, as well as by telephone, or, if you requested to receive printed proxy materials, by mailing a proxy or voting instruction
card. Please review the instructions described in this proxy statement, as well as in the Notice you received in the mail. This will not
prevent you from voting at the meeting but will assure that your vote is counted if you are unable to participate.
Only shareholders of record
at the close of business on February 1, 2022, the record date for the Annual Meeting, are entitled to notice of, and to vote at,
the Annual Meeting.
|
By Order of the Board of Directors, |
|
|
|
|
|
|
Wellsboro, Pennsylvania |
J. Bradley Scovill |
March 11, 2022 |
President and Chief Executive Officer |
TABLE OF CONTENTS
90-92 Main Street
Wellsboro, Pennsylvania 16901
PROXY STATEMENT
Annual Meeting of Shareholders – April 21,
2022
Annual Meeting Information
This proxy statement is furnished
in connection with the solicitation of proxies by the Board of Directors of Citizens & Northern Corporation (the “Corporation”)
to be used at the Annual Meeting of Shareholders of the Corporation to be held on Thursday, April 21, 2022, at 2:00 P.M., in a virtual
meeting format only with no physical location, and at any adjournments or postponements thereof. This proxy statement was first made available
to shareholders on March 11, 2022.
Who is entitled to vote?
Shareholders owning Corporation
common stock on February 1, 2022 are entitled to vote at the Annual Meeting or any adjournment or postponement of the meeting. Each
shareholder has one vote per share on all matters to be voted on. On February 1, 2022, there were 15,832,144 shares of Corporation
common stock outstanding.
On what am I voting?
You will be asked to elect
four (4) Class II directors for three-year terms expiring in 2025; to approve the advisory (non-binding) resolution on the compensation
paid to the Named Executive Officers of the Corporation; to amend the Corporation’s Articles of Incorporation to increase the aggregate
number of shares of the Corporation’s common stock which the Corporation may issue from 20 million shares to 30 million shares;
and to ratify the appointment of Baker Tilly US, LLP as the Corporation’s independent registered public accounting firm for the
year ending December 31, 2022. The Board of Directors is not aware of any other matters to be presented for action at the Annual
Meeting. If any other matter requiring a vote of the shareholders would be presented at the meeting, the proxies will vote according to
the directions of the Corporation’s management.
How does the Board of
Directors recommend I vote on the proposals?
The Board of Directors recommends
that you vote “FOR” the election of each of the nominees for director listed in this proxy statement, “FOR” approval
of the compensation paid to the Named Executive Officers of the Corporation, “FOR” the amendment to the Corporation’s
Articles of Incorporation to increase the number of shares of common stock that the Corporation may issue from 20 million shares to 30
million shares; and “FOR” the ratification of the appointment of Baker Tilly US, LLP as the Corporation’s independent
registered public accounting firm for the year ending December 31, 2022.
How are proxy materials
being disseminated?
In accordance with rules adopted
by the Securities and Exchange Commission (“SEC”), we have elected to furnish proxy materials, including this proxy statement
and our 2021 Annual Report on Form 10-K, to our shareholders by providing access to such documents on the Internet instead of mailing
printed copies. Most shareholders will not receive printed copies of the proxy materials unless they request them. Instead, the Notice,
which was mailed to most of our shareholders, provides instructions as to how you may access and review all of the proxy materials on
the Internet. The Notice also instructs you as to how you may submit your proxy via the Internet. If you would like to receive a paper
or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice.
If you received more than
one Notice, it means that your shares are registered differently and are held in more than one account. To ensure that all shares are
voted, please either vote each account over the Internet or by telephone, or sign and return by mail all proxy cards or voting instruction
forms requested in paper format.
How do I vote?
As described in the Notice,
you may vote by any of the following methods:
Internet.
Go to www.voteproxy.com 24 hours a day, seven days a week, and follow the instructions. You will need the control number that is included
in the Notice, proxy card or voting instructions form that is sent to you. The Internet voting system allows you to confirm that the system
has properly recorded your votes. This method of voting will be available until 11:59 p.m., Eastern Time, on April 20, 2022.
Telephone.
Call toll-free 1-800-PROXIES 24 hours a day, seven days a week, and follow the instructions. You will need the control number that is
included in the Notice, proxy card or voting instructions form that is sent to you. As with Internet voting, you will be able to confirm
that the system has properly recorded your votes. This method of voting will be available until 11:59 p.m., Eastern Time, on April 20,
2022.
Mail.
If you are a shareholder of record and you elect to receive your proxy materials by mail, you can vote by marking, dating and signing
your proxy card exactly as your name appears on the card and returning it by mail in the postage-paid envelope that will be provided to
you. If you hold your shares in street name and you elect to receive your proxy materials by mail, you can vote by completing and mailing
the voting instructions form that will be provided by your bank, broker or other holder of record. You should mail the proxy card or voting
instruction form in plenty of time to allow delivery prior to the meeting. Do not mail the proxy card or voting instruction form if you
are voting over the Internet or by telephone.
At
the Virtual Annual Meeting. Unless your shares are held in “street name,” you may vote your shares at the virtual
Annual Meeting. We encourage you to vote via the Internet or by telephone prior to the meeting. It is fast and convenient, your vote
is recorded immediately, and there is no risk that postal delays will cause your vote to arrive late and therefore not be counted. If
your shares are held in “street name” through a broker, bank or other nominee, in order to participate in the virtual annual
meeting you must first obtain a legal proxy from your broker, bank or other nominee reflecting the number of shares of Citizens &
Northern Corporation, common stock you held as of the record date, your name and email address. You then must submit a request for
registration to American Stock Transfer & Trust Company, LLC: (1) by email to proxy@astfinancial.com; (2) by
fax to 718-765-8730 or (3) by mail to American Stock Transfer & Trust Company, LLC, Attn: Proxy Tabulation Department,
6201 15th Avenue, Brooklyn, NY 11219. Requests for registration must be labeled as “Legal Proxy” and be received by American
Stock Transfer & Trust Company, LLC no later than 5:00 p.m. Eastern time on April 11, 2022.
How do I change my vote?
If you give the vote we are
soliciting, you may revoke it at any time before it is exercised:
| • | by signing and returning a later-dated proxy; or |
| • | by giving written notice to Citizens & Northern Corporation, 90-92 Main Street, Wellsboro, PA
16901, Attention: Corporate Secretary; or |
| • | by voting virtually at the Annual Meeting. |
A shareholder whose shares
are held in street name should follow the instructions of his or her broker regarding revocation of proxies. You should note that your
presence at the meeting without voting virtually will not revoke an otherwise valid proxy.
What is a quorum?
A “quorum” is
the presence at the meeting, virtually or by proxy, of the holders of a majority of the outstanding shares. There must be a quorum for
the meeting to be held. Abstentions are counted for purposes of determining the presence or absence of a quorum but are not considered
as a vote cast under Pennsylvania law. Brokers holding shares in “street name” for their customers generally are not entitled
to vote on certain matters unless they receive voting instructions from their customers. Such shares for which brokers have not received
voting instructions from their customers are called “broker non-votes.” Under Pennsylvania law, broker non-votes will be counted
to determine if a quorum is present with respect to any matter to be voted upon by shareholders at the meeting only if such shares have
been voted at the meeting on a matter other than a procedural motion.
What vote is required
to approve the proposals?
The
Board of Directors of the Corporation recently adopted an amendment to the By-Laws of the Corporation which provides that the election
of directors is subject to a majority vote requirement under which any director who does not receive a majority of the votes cast in an
uncontested election must tender his or her resignation to the Board. The four (4) nominees for election to the Board of Directors
are subject to the majority voting requirement. “Withhold” votes will have the effect of a vote against a nominee. Abstentions
and broker non-votes will have no effect on the election of directors.
Approval of the advisory (non-binding)
resolution on the compensation paid to Named Executive Officers, approval of the amendment to the Articles of Incorporation and ratification
of the appointment of Baker Tilly as the Corporation’s independent registered public accounting firm for the year ending December 31,
2022 require the affirmative vote of a majority of the votes cast at the meeting, virtually or by proxy. Abstentions and broker non-votes
will have no effect in calculating the votes on these matters.
Who will count the vote?
The Judges of Election appointed
by the Board of Directors will count the votes cast virtually or by proxy at the meeting.
How are proxies being
solicited?
The Corporation will bear
its own cost of solicitation of proxies for the meeting. In addition to solicitation by mail, the company’s directors, officers
and employees may solicit proxies personally or by telephone, facsimile transmission or otherwise. These directors, officers and employees
will not be additionally compensated for their solicitation efforts but may be reimbursed for out-of-pocket expenses incurred in connection
with these efforts. The Corporation will reimburse brokerage firms, fiduciaries, nominees and others for their out-of-pocket expenses
incurred in forwarding proxy materials to beneficial owners of shares of common stock held in their names.
What is the deadline
for shareholder proposals for next year’s Annual Meeting?
Any shareholder who, in accordance
with and subject to the provisions of the proxy rules of the SEC, wishes to submit a proposal for inclusion in the Corporation’s
proxy statement for its 2023 Annual Meeting of Shareholders must deliver the proposal in writing to the Secretary of Citizens &
Northern Corporation at the Corporation’s principal executive offices at 90-92 Main Street, Wellsboro, Pennsylvania, no later than
November 4, 2022.
For
any proposal that is not submitted for inclusion in next year’s proxy statement (as described in the preceding paragraph), but is
instead sought to be presented directly at the next Annual Meeting, the Corporation’s Articles of Incorporation require shareholders
to give advance notice of such proposals. The required notice, which must include the information and documents set forth in the Articles
of Incorporation, must be given no more than 50 days and no less than 14 days prior to the Annual Meeting. If notice is not received
by the Corporation within this time frame, the Corporation will consider such notice untimely.
Under Rule 14a-4(c)(1) of
the Securities Exchange Act of 1934, as amended, if any shareholder proposal intended to be presented at the Annual Meeting without inclusion
in our proxy statement is received within the required time frame and is properly presented, then a proxy will have the ability to confer
discretionary authority to vote on the proposal.
Internet Availability of Proxy Materials
Important
Notice About the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on April 21, 2022: This proxy
statement, proxy card and the Corporation’s annual report to shareholders are available at: http://www.astproxyportal.com/ast/11697/.
Cautionary Statement Regarding Forward-Looking
Statements
This proxy statement and the
documents that have been incorporated herein by reference may contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, these
statements can be identified by the use of words such as “anticipate,” “believe,” “can,” “could,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,”
“should,” “target,” “will,” “would” and similar expressions. Actual results and trends
could differ materially from those set forth in such statements due to various risks, uncertainties and other factors. Such risks, uncertainties
and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following:
• |
changes in monetary and fiscal policies of the Federal Reserve Board and the U.S. Government, particularly related to changes in interest rates |
• |
changes in general economic conditions |
• |
the Corporation’s credit standards and its on-going credit assessment processes might not protect it from significant credit losses |
• |
the effect of the novel coronavirus (COVID-19) and related events |
• |
legislative or regulatory changes |
• |
downturn in demand for loan, deposit and other financial services in the Corporation’s market area |
• |
increased competition from other banks and non-bank providers of financial services |
• |
technological changes and increased technology-related costs |
• |
information security breach or other technology difficulties or failures |
• |
changes in accounting principles, or the application of generally accepted accounting principles |
• |
failure to achieve merger-related synergies and difficulties in integrating the business and operations of acquired institutions |
Although forward-looking statements
help provide additional information about us, investors should keep in mind that forward-looking statements are only predictions, at a
point in time, and are inherently less reliable than historical information. You are urged not to place undue reliance on these forward-looking
statements, which speak only as of the date of this proxy statement. We assume no obligation to update any forward-looking statement in
order to reflect any event or circumstance that may arise after the date of this proxy statement, other than as may be required by applicable
law or regulation.
PROPOSAL 1 -- ELECTION OF DIRECTORS
Board of Directors
Our Articles of Incorporation
provide that the Board of Directors shall consist of not less than five (5) nor more than twenty-five (25) directors and that within
these limits the number of directors shall be as established by the Board of Directors. The Articles further provide that the Board shall
be classified into three classes, as nearly equal in number as possible. One class of directors is elected annually, and the term for
each class is three (3) years. Any vacancy occurring on the Board of Directors, for any reason, may be filled by a majority of directors
then in office to serve until the expiration of the term of the vacancy. There are currently thirteen (13) members of the Corporation’s
Board of Directors. However, Clark S. Frame, a Class II director, has advised the Board of Directors that he intends to retire as
a director, effective as of the Board of Directors meeting to be held on March 17, 2022. Upon Mr. Frame's retirement, there
will be twelve (12) members of the Corporation's Board of Directors.
At the 2022 Annual Meeting,
four (4) Class II directors are to be elected to serve for a three-year term.
Nominees for Election
The Board of Directors proposes
the following four (4) nominees be elected as Class II directors for terms expiring at the 2025 Annual Meeting of Shareholders:
Susan E. Hartley, Leo F. Lambert, Helen S. Santiago, and Katherine W. Shattuck. Each of the nominees currently serves as a director of
the Corporation.
As previously indicated under
the Annual Meeting Information section, the Board of Directors of the Corporation recently adopted an amendment to the By-Laws of the
Corporation which provides that the election of directors is subject to a majority vote requirement under which any director who does
not receive a majority of the votes cast in an uncontested election must tender his or her resignation to the Board. The four (4) nominees
for director in this uncontested election are subject to the majority vote standard. Unless otherwise instructed, proxies received from
shareholders will be voted for the nominees named in this proxy statement. If a nominee should become unavailable for any reason, proxies
will be voted for a substitute nominee determined by the Board of Directors. The Board of Directors has no reason to believe that the
nominees will be unable to serve if elected.
Cumulative voting does not
exist in the election of directors. Each share of Corporation common stock is entitled to cast one vote for each nominee. For example,
if a shareholder owns ten shares of common stock, he or she may cast up to ten votes for each of the four nominees to be elected.
The Board of Directors
recommends a vote “FOR” the election of the nominees identified above, each of whom has consented to be named as a nominee
and to serve if elected.
Director Qualifications
We provide below information
as of the date of this proxy statement about each nominee and director of the Corporation. The information includes information each director
has given us about his/her age, all positions held, principal occupation and business experience for the past five years, and the names
of other publicly-held companies of which he or she currently serves as a director or has served as a director during the past five years.
In addition to the information presented below regarding each nominee’s specific experience, qualifications, attributes and skills
that led the Board of Directors to conclude that he or she should serve as a director, we also believe that all of our directors and nominees
have demonstrated good judgment, strength of character, and an independent mind, as well as a reputation for integrity and the highest
personal and professional ethics.
The age shown below for each
director is as of April 21, 2022, which is the date of the annual shareholders meeting.
Nominees as
Class II Directors for a term expiring at the 2025 Annual Meeting
Susan E. Hartley
Director since:
1998
Age: 64
Ms. Hartley has been an attorney since 1984.
She received her Bachelor of Arts degree from Elmira College, Master of Arts degree from State University of New York at Buffalo, and
Doctorate of Jurisprudence from State University of New York at Buffalo School of Law. We believe Ms. Hartley’s qualifications
to serve as a director of the Corporation include her experience as an attorney and her over 20 years of experience as a director of the
Corporation.
Leo F. Lambert
Director since:
2001
Age: 68
Mr. Lambert has been the President and General
Manager of Fitzpatrick & Lambert, Inc., in Dushore, PA since 1978. Mr. Lambert received his Bachelor of Science degree
from St. Francis College Loretto. Mr. Lambert has served and continues to serve on many nonprofit boards within his community. We
believe Mr. Lambert’s qualifications to serve as a director of the Corporation include his over 40 years of experience as a
local business owner, entrepreneur and community leader, as well as 20 years of experience as a director of the Corporation.
Helen S.
Santiago
Director since:
2021
Age: 42
Ms. Santiago has served as a CPA for LaBarr &
LaBarr, LLC in Sayre, PA since 2009 where her focus is income tax preparation, tax planning and financial statements. Prior to returning
to Bradford County, she worked for KPMG in Philadelphia for seven years, earned her CPA license and served as an auditor before being
promoted to Manager. Ms. Santiago earned her Bachelor of Science degree in Accounting from Susquehanna University. Santiago is involved
in the community as Secretary of the Bradford/Sullivan Counties’ Outstanding Young Woman Program. She’s also active in the
Parent/Teacher Guild (PTG) of St. Agnes School in Towanda, PA.
Katherine
W. Shattuck
Director since:
2021
Age: 47
Ms. Shattuck is a Senior Client Partner at
Korn Ferry, the global leader in talent management and executive search, where she serves as a specialist in the Financial Markets sector
and also co-founded and co-leads the firm’s work in Impact and ESG Investing. Kate holds a Master’s degree in Business Administration
from Harvard Business School and a Master’s degree in Public Administration from Harvard University’s Kennedy School of Government.
She earned a Bachelor of Science degree from The United States Military Academy at West Point. Currently, Kate serves as a board member
of the West Point Association of Graduates Board of Directors and the Women’s Advisory Council for the Girl Scouts of the National
Capital Region. She also volunteers for the Forte Foundation, an organization working to launch women into fulfilling, significant careers
through access to business education.
Continuing
as Class III Directors for a term expiring at the 2023 Annual Meeting
Stephen M.
Dorwart
Director since:
2020
Age: 52
Mr. Dorwart served on the Covenant Bank Board
of Directors from 2007 until July 2020. He served as Chair for both the Audit and Compensation Committees and was the Lead Outside
Director for 5 years. He received his Bachelor of Science degree in Business Administration from Bucknell University in 1991. Mr. Dorwart
is the managing partner of the public accounting firm Fischer Dorwart, PC with offices in Audubon, NJ and Harrisburg, PA. He is a CPA
licensed in Pennsylvania, New Jersey and Delaware. We believe Mr. Dorwart is qualified to serve as a director of the Corporation
because of his extensive experience in public accounting and as a director of Covenant Bank.
Timothy E.
Schoener
Director since:
2019
Age: 59
Mr. Schoener is the Vice President &
Chief Information Officer of UPMC Pinnacle, Harrisburg PA. He previously served as the Vice President & Chief Information Officer
of UPMC Susquehanna, Williamsport, PA. Mr. Schoener has been employed in various positions with UPMC Susquehanna and predecessor
organizations since 1992. Mr. Schoener has a B.S. degree in Industrial Engineering from Penn State University and an M.B.A from Liberty
University. Mr. Schoener serves with The College of Healthcare Information Management Executives (CHIME) and is also a member of
the Healthcare Information Management Systems Society (HIMSS). He’s held his CHIME certification as CHCIO (Certified Healthcare
Chief Information Officer) since 2015 and was issued his Certified Professional in Healthcare Information and Management Systems credentials
by HIMSS in 2002. We believe Mr. Schoener is qualified to serve as a director of the Corporation because of his extensive background
in information technology as well as his executive leadership experiences.
J. Bradley
Scovill
Director since:
2015
Age: 62
Mr. Scovill became employed as President
and Chief Executive Officer of the Corporation and Citizens & Northern Bank (the “Bank”) and was appointed to the
Board of Directors of the Corporation and the Bank, effective March 2, 2015. Prior to joining the Corporation and Bank, Mr. Scovill
most recently served as President and Chief Operating Officer of Kish Bancorp, Inc. and Kish Bank headquartered in Belleville, Pennsylvania,
where he was an executive for more than five (5) years. Prior to Kish, Mr. Scovill held various executive management positions
with both PNC Bank and Sterling Financial Corporation, headquartered in Lancaster, Pennsylvania. Mr. Scovill received a Bachelor
of Science degree in Finance from The Pennsylvania State University. We believe Mr. Scovill is qualified to serve as a director of
the Corporation because of his extensive experience working in financial and executive roles in the banking industry.
Aaron K. Singer
Director since:
2017
Age: 50
Mr. Singer has been the President &
Chief Executive Officer of MetalKraft Industries Inc., in Wellsboro, PA, since 2000. He received his Bachelor of Science degree from Shippensburg
University. Mr. Singer serves on the boards of various organizations within his local community. We believe Mr. Singer’s
qualifications to serve as a director of the Corporation include his business experience as well as his executive leadership experiences
at MetalKraft.
Continuing as Class I Directors for a
term expiring at the 2024 Annual Meeting
Bobbi J. Kilmer
Director since:
2018
Age: 58
Ms. Kilmer served as the President &
Chief Executive Officer of Claverack Rural Electric Cooperative from 2006 until retiring in January 2021. She also served as the
Co-President & CEO of C&T Enterprises, Inc., which is the owner of Valley Energy in Sayre, PA, Wellsboro Electric Company
and Citizens Electric Company in Lewisburg. She previously served as the Executive Vice President & Chief Operating Officer of
Claverack. Ms. Kilmer serves on the boards of various organizations within her local and surrounding communities. She received her
Bachelor of Science degree from Mansfield University. We believe Ms. Kilmer’s qualifications to serve as a director of the
Corporation include her business experience, as well as her executive leadership roles at Claverack Rural Electric Cooperative and C&T
Enterprises, Inc.
Terry L. Lehman,
CPA, Chairman
Director since: 2016
Age: 64
Mr. Lehman is a retired certified public
accountant with over 35 years of experience in public accounting and private industry, including serving the roles of an Assurance Director
at BDO, LLP in Harrisburg, an Audit Partner at ParenteBeard, LLC, and Beard Miller Company, LLP both located in Harrisburg, Senior Manager
at Ernst & Young, and an Internal Auditor at Peoples National Bank of Lebanon. Mr. Lehman was a Board Member for both MidCoast
Community Bancorp, Inc. and MidCoast Community Bank from October 2015 until 2020. He also is active with various organizations
in his local communities and is a CPA licensed in Pennsylvania. He received his B.S.B.A. degree in Accounting from Shippensburg University.
We believe Mr. Lehman’s extensive experience in public accounting and private industry, much of which has been concentrated
in work for and on behalf of financial institutions and public companies, make him qualified to serve as a director of the Corporation.
Robert G.
Loughery
Director since:
2020
Age: 52
Mr. Loughery served on the Covenant Bank
Board of Directors for 5 years. As a real estate investor and developer, Mr. Loughery currently serves as the President of Nehemiah
Development Company, Inc. Mr. Loughery served as a County Commissioner in the County of Bucks from February 2011 until
January 2020. Mr. Loughery serves on numerous private boards and public authorities. Mr. Loughery has a B.A. degree in
Policy and Management Studies from Dickinson College in 1991. Following graduation, he was commissioned an officer in the US. Army Reserves.
We believe Mr. Loughery is qualified to serve as a director of the Corporation because of his over 20 years’ experience in
real estate development and finance and his leadership abilities.
Frank G. Pellegrino
Director since:
2016
Age: 58
Mr. Pellegrino is Owner/Developer with Carlton
Associates, LLC, in Lycoming County PA. He is the former Executive Vice President of Sales and Marketing of Primus Technologies Corp,
Williamsport, and serves in executive leadership roles in several businesses in Lycoming, Montour, Centre, and Union counties. We believe
Mr. Pellegrino’s qualifications to serve as a director of the Corporation include his more than 20 years in an executive leadership
role with Primus Technologies Corp and his leadership role with several other businesses.
EXECUTIVE OFFICERS
The following table provides
information regarding each of the executive officers of the Corporation and the Bank. The age shown below for each executive officer is
as of April 21, 2022, which is the date of the annual shareholders meeting.
J. Bradley Scovill
Age: 62
Mr. Scovill has served as President and Chief
Executive Officer of the Corporation and Citizens & Northern Bank (the “Bank”) since March 2, 2015. Prior to
joining the Corporation and Bank, Mr. Scovill most recently served as President and Chief Operating Officer of Kish Bancorp, Inc.
and Kish Bank headquartered in Belleville, Pennsylvania, where he was an executive for more than five (5) years. Prior to Kish, Mr. Scovill
held various executive management positions with both PNC Bank and Sterling Financial Corporation, headquartered in Lancaster, Pennsylvania.
Mr. Scovill received a Bachelor of Science degree in Finance from The Pennsylvania State University.
Alexander Balagour
Age: 45
Mr. Balagour has served as Executive Vice
President and Chief Information Officer of the Bank since May 2021. Prior to joining the Bank, Mr. Balagour most recently
served as the Chief Information Officer at Customers Bank in Reading, PA, where he led the organization through the transformation of
their sales and lending technology, data analytics and customer experience. Mr. Balagour received a Bachelor of Science degree in
Computer Science from Arcadia University, where he earned the Sigma Zeta Award in Computer Science, given to the top-graduating student
for academic excellence. He went on to receive his Executive Masters in Technology Management from Wharton School and School of Engineering
from the University of Pennsylvania.
Matthew L. Bower
Age: 54
Mr. Bower has served as Executive Vice President
and Chief Wealth Management Officer of the Bank since February 2022. Prior to joining the Bank, Mr. Bower served as a Managing
Director at PNC’s Wealth Management Group in Atlanta, GA, where he led the team in delivering industry-leading results in client
end employee satisfaction for 13 years. Mr. Bower received a Masters of Jurisprudence from Texas A&M University, School of Law
in Fort Worth, TX, completed the Stanford Graduate School of Business’s Executive Leadership Program and received a Bachelor of
Science degree in Political Science from Florida State University. Mr. Bower has several FINRA Licensures and has earned designations
as a Certified Trust and Financial Advisor (CTFA), Certified Securities Operations Professional (CSOP) and a Chartered Wealth Manager
(CWM).
Stan R. Dunsmore
Age: 59
Mr. Dunsmore has served as Executive Vice
President and Chief Credit Officer of the Bank since January 2015. Previously, Mr. Dunsmore served as Vice President and
Commercial Loan Sales Officer of the Bank since May 2007. Prior to the May 2007 acquisition of Citizens Trust Company
by Citizens & Northern Bank, Mr. Dunsmore served as Vice President and Chief Lending Officer of Citizens Trust Company since
1995. Mr. Dunsmore received a Bachelor of Science degree in Management Science from Lock Haven University of Pennsylvania.
Shelley L. D’Haene
Age: 61
Executive Vice President, Chief Digital Channels
and Payments Officer of the Bank since February 2021; formerly Executive Vice President, Senior Operations Officer since January 2015;
and Executive Vice President and Director of Alternative Delivery Channels of the Bank since January 2013 and Vice President and
Cash Management Coordinator of the Bank since February 2006 after joining the Bank in 1999. Shelley is a graduate of PBA School
of Banking and PBA Advanced School of Banking.
Harold F. Hoose, III
Age: 55
Executive Vice President and Chief Revenue Officer
of the Bank since February 2021; formerly Executive Vice President and Director of Lending of the Bank since March of 2005.
Prior to becoming the Director of Lending, Mr. Hoose was a regional commercial relationship manager for C&N since August of
1997. Prior to that, Mr. Hoose began his banking career in 1990 as a management trainee with Commonwealth Bank (Williamsport PA)
and moved to the credit/lending area of the bank in April 1993. Mr. Hoose received his Bachelor of Science degree from
Mansfield University and completed the Graduate School of Banking at the University of Colorado.
Mark A. Hughes
Age: 61
Mr. Hughes serves as Treasurer of the Corporation
and Executive Vice President and Chief Financial Officer of the Bank. Mr. Hughes served as Interim President and Chief Executive
Officer of the Corporation and Bank from August 12, 2014 through March 1, 2015. Effective March 2, 2015, Mr. Hughes
resigned from the positions of Interim President and Chief Executive Officer of the Corporation and Bank and was appointed to the positions
he had formerly held as Treasurer of the Corporation since November 2000 and Executive Vice President and Chief Financial Officer
of the Bank since August 2000. Mr. Hughes is a CPA licensed in Pennsylvania. Mr. Hughes received a Bachelor of Arts degree
in Accounting from Lycoming College.
John M. Reber
Age: 55
Executive Vice President and Chief Risk Management
Officer of the Bank since February 2021; formerly Executive Vice President and Director of Risk Management of the Bank since January 2011;
formerly Vice President and Director of Risk Management of the Bank since June 2004. Prior to joining C&N, Mr. Reber held
various staff and management positions in credit, lending and risk management with SunBank, headquartered in Lewisburg, Pennsylvania.
Mr. Reber received a Bachelor of Science degree in Finance from Bloomsburg University of Pennsylvania.
Thomas L. Rudy, Jr.
Age: 58
Executive Vice President, Chief Delivery Officer
and Region President of the Bank since February 2021; formerly Executive Vice President and Director of Branch Delivery of the Bank
since February 2004; President of C&N Financial Services Corporation since January 2000; President of Bucktail Life Insurance
Company since May 2018. Mr. Rudy received a Bachelor of Science degree in Finance from The Pennsylvania State University and
is a graduate of the ABA Graduate School of Banking at the Wharton School, University of Pennsylvania.
Blair T. Rush
Age: 60
Executive Vice President and Southeast Region
President of the Bank since February 2021; formerly Southeast Region President of the Bank since July 2020 with the acquisition
of Covenant Bank. Prior to his employment with C&N, Mr. Rush most recently served as President & Chief Operating Officer
of Covenant Bank since April 2016. Prior to this time, he was the Eastern Region President with National Penn Bank. He joined National
Penn through their acquisition of FirstService Bank in February 2003, where he was an Executive Vice President and was one of four
original officers of the de novo FirstService Bank. Prior to FirstService Bank, Blair was a Vice President with CoreStates and Bucks County
Bank where he started his forty-year banking career. Blair is a graduate of Delaware Valley College with a Bachelor of Science degree
in Business Administration and the Pennsylvania Bankers Association’s Central Atlantic Advanced School of Banking.
Tracy E. Watkins
Age: 57
Ms. Watkins has served as Executive Vice
President and Chief Human Resources Officer of the Bank since February 2021. Executive Vice President and Director of Human Resources
of the Bank since January 2018; formerly Vice President and Director of Human Resources of the Bank since 2010, and HRIS (Human Resources
Information System) & Employee Relations Manager since 2005 after joining Citizens & Northern Bank in 2003. Ms. Watkins
holds a B.S. in English/Secondary Education from Juniata College, a Certificate from The Institute for Paralegal Training in Philadelphia,
PA and is a Graduate of the PBA Advanced School of Banking and The Graduate School of Banking Human Resource Management School as well
as being a Certified Employee Benefit Specialist (CEBS – RPA, GBA) and Senior Professional in Human Resources (SPHR).
HUMAN CAPITAL MANAGEMENT
Human Capital
The Corporation’s Board of Directors and
executive leadership team have established the following mission, vision and values:
Mission:
Creating value through lifelong relationships with our customers, teammates, shareholders and communities.
Vision:
Every customer says “C&N is the ONLY bank I need.”
Values:
Teamwork, Respect, Responsibility and Accountability, Excellence, Integrity, Client Focus, Have Fun.
We recognize that our ability to create value
on a consistent basis is highly dependent upon the effectiveness of our team.
The Corporation’s key
human capital management objectives are to attract and retain diverse talent that fits our values and culture. Our talent strategy focuses
on acquiring new employees through branding and outreach programs, developing employees though a robust onboarding program, ongoing training,
and performance management, and retaining employees through recognition, engagement, and a competitive total rewards package.
Diversity and Inclusion
At C&N Bank, we are committed
to creating value through relationships. At the heart of this mission is a promise of excellence in service to all people, as demonstrated
by our commitment to equity of opportunity, inclusion and our fostering of a spirit of belonging. We live our values of respect, integrity
and excellence by creating access and providing support to help our diverse constituents of customers, teammates, shareholders and communities
in achieving their financial goals. We embrace inclusion of all of our stakeholders as an important component of our vision to be the
ONLY bank our customers need.
Compensation and Benefits
The Corporation offers competitive
compensation to attract and retain talent. Our generous total rewards package includes market-competitive salary, bonuses or sales commissions,
short-term and long-term equity incentives, healthcare and retirement benefits, and paid time off. Employees have regular performance
reviews and merit salary adjustments commensurate with performance. Employees have access to a holistic suite of items within our employee
assistance program that caters to physical, emotional, and mental wellbeing for the employee and their family.
Training and Development
The Corporation provides a
robust training and development program that supports our culture, prepares employees for their immediate role, develops them for long
term success at the Bank and supports personal enrichment. We offer functional training, culture building exercises, personal development,
C&N Bank history, C&N Bank integration and ongoing technical training throughout each year. Employees also have access to additional
educational and development opportunities including tuition reimbursement and certification programs.
Communication and Engagement
At C&N, we believe in
the importance of employee communication and engagement. We utilize several methods to foster engagement, including activities such as
Employee Recognition programs, Service Anniversary Awards, Bank wide monthly calls, semi-annual Bank wide events, annual employee surveys,
focus groups, daily huddles, and the Giving Back, Giving Together community service program. We believe keeping our team well informed,
connected, and appreciated adds to the success of our organization.
Board Diversity
The following table summarizes
voluntary disclosure of diversity characteristics of the Corporation’s Board of Directors.
Board Diversity Matrix as of February 1, 2022 |
Board Size: |
Total Number of Directors |
13 |
Gender: |
Male |
Female |
Non-Binary |
Gender Undisclosed |
Number of directors based on gender identity |
7 |
4 |
0 |
2 |
Number of directors who identify in any of the categories below: |
African American or Black |
0 |
0 |
0 |
0 |
Alaskan Native or American Indian |
0 |
0 |
0 |
0 |
Asian |
0 |
0 |
0 |
0 |
Hispanic or Latinx |
0 |
0 |
0 |
0 |
Native Hawaiian or Pacific Islander |
0 |
0 |
0 |
0 |
White |
7 |
4 |
0 |
0 |
Two or More Races or Ethnicities |
0 |
0 |
0 |
0 |
LGBTQ |
0 |
Undisclosed |
2 |
CORPORATE GOVERNANCE
Members of the Corporation’s
Board of Directors are elected by the shareholders. In selecting nominees for the shareholders’ consideration, the Board attempts
to identify individuals with appropriate business, financial, legal and other skills and knowledge that are essential to providing oversight
of the Corporation’s affairs, and who demonstrate a passion for promoting and enhancing the Corporation’s financial performance
and its service to the communities within our marketplace. In evaluating candidates, the Board considers diversity of gender, race, knowledge
and educational and business background and experiences, taking into account the experience “mix” of current directors, as
well as that of the candidates. The nominating process is described in more detail in the section titled “Governance and Nominating
Committee” below.
Director Independence
During 2021 and through the
date of this proxy statement, all directors and nominees are and were independent, except for J. Bradley Scovill, as determined in accordance
with the independence standards of the NASDAQ Stock Market. In determining the directors’ independence, in addition to matters disclosed
under “Related Person Transactions and Policies” on pages 17-18 of this proxy statement, the Board of Directors considered
each director’s beneficial ownership of Corporation common stock and loan transactions between the Bank and the directors, their
family members and businesses with whom they are associated, as well as any contributions made by the Bank to non-profit organizations
with whom such persons are associated. In each case, the Board determined that none of the transactions above impaired the independence
of the director.
The Bank makes loans to Directors
and Executive Officers in the ordinary course of business on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons and do not involve more than normal risks of collectability.
Additional information concerning
loans and deposits with Directors and Executive Officers is incorporated herein by reference to disclosure provided in Note 15 to the
Consolidated Financial Statements, which is included in Part II, Item 8 of the Corporation’s Annual Report on Form 10-K
for the year ended December 31, 2021.
Leadership Structure of the Board
Terry L. Lehman serves as
Chairman of the Board of the Corporation and the Bank. The Board’s establishment of an independent chair reflects its desire to
maintain separation between the Board’s role of providing oversight of corporate activities and protecting shareholder interests
and the Chief Executive Officer’s role of managing the Corporation and Bank.
The Board attempts to ensure
that thorough, open and honest discussions take place at all Board and committee meetings, and that all of the directors are sufficiently
informed about each matter that arises so as to make informed decisions. Mr. Lehman presides over meetings of the Board and the Executive
Committee, as well as executive sessions and meetings of the independent directors. Further, the Chairman is responsible for communicating
the thoughts or concerns of the independent directors to the Chief Executive Officer.
Majority Vote Standard
In February 2022, the
Governance and Nominating Committee recommended, and the Board of Directors adopted, a majority vote standard for uncontested director
elections by amending the Corporation's By-Laws by the addition of a new Section 1.6 "Election of Directors; Majority Vote Standard."
Under Section 1.6, any director who does not receive a majority of the votes cast in an uncontested election must tender his or her
resignation as a director of the Corporation via the Chairperson of the Corporate Governance and Nominating Committee. A director whose
resignation is under consideration shall abstain from participating in any recommendation or decision regarding that resignation. The
Corporate Governance and Nominating Committee shall make a recommendation to the Board whether to accept, reject or otherwise act with
respect to the tendered resignation in accordance with Section 1.6 of the By-Laws. Notwithstanding the foregoing, in the event of
a contested election of directors, directors shall be elected by the vote of a plurality of the votes cast at any meeting for the election
of directors at which a quorum is present. Our Board believes the majority vote standard will provide the shareholders with an enhanced
role in the director election process, while preserving flexibility for the Board to consider the reasons behind the vote in the course
of discharging its fiduciary obligations to the shareholders.
Meetings and Committees of the Board of Directors
Board
of Directors. During 2021, the Board of Directors of the Corporation met thirteen
(13) times, the Board of Directors of the Bank met thirteen (13) times, and the independent directors met in executive session eight (8) times
and held meetings of the independent directors two (2) times. All of the incumbent directors attended at least 75% or more of the
meetings of the Board of Directors of the Corporation and of the Board committees on which he or she served.
Although the Corporation does
not have a formal policy with respect to director attendance at the Annual Meeting of Shareholders, each director is encouraged to attend
the Annual Meeting.
Executive
Committee of the Corporation. The Executive Committee has been inactive since 2019. If there should be a need to
activate the Committee, it shall consist of the other Committee chairs, the Chief Executive Officer, and the Chairman of the Board. The
Committee would act on behalf of and with full authority of the Board of Directors in matters that may arise between regular monthly meetings
of the Board, which would require immediate Board level action and would provide advice and counsel to the Chief Executive Officer on
various matters not necessarily requiring Board consideration.
Audit
Committee. The primary function of the Audit Committee is to review the internal audit program as performed by the
internal auditors; recommend to the Board of Directors the engagement of the independent registered public accounting firm for the year;
review the examinations and reports from those persons; and review the annual financial statements of the Corporation. In 2021, the members
of the Audit Committee of the Corporation included: Stephen M. Dorwart, Clark S. Frame, Susan E. Hartley, Leo F. Lambert, Terry L. Lehman,
Helen S. Santiago, and Aaron K. Singer. Director Santiago has served on the Committee since April 2021. During 2021, Stephen M. Dorwart
and Terry L. Lehman served as Co-Chairs of the Committee. Stephen M. Dorwart now serves as Chair of the Committee. The Audit Committee
held seven (7) meetings in 2021. All the members of the Audit Committee are and were independent under the independence standards
of the NASDAQ Stock Market.
Director Lehman meets the
definition of “audit committee financial expert” as defined in the rules adopted by the SEC. The Board of Directors has
determined that each of the members of the Audit Committee has sufficient knowledge and experience in financial matters to effectively
perform his or her duties as a member of the Audit Committee.
The Board of Directors of
the Corporation has adopted a written charter for the Audit Committee, a copy of which is available on our website at www.cnbankpa.com
by hovering on “ABOUT,” then clicking on “Corporate Governance Policies” under the Investor Relations heading,
then “Audit Committee Charter of C&N Corp.” The policies and procedures for pre-approval of engagements for non-audit
services are included in the Charter.
Compensation
Committee of the Corporation. The purpose of the Compensation Committee is to discharge the responsibilities of
the Board of Directors relating to compensation of the executive officers, provide oversight of the Bank’s compensation, benefit,
perquisite and employee equity incentive programs, and monitor and oversee the management succession plan and leadership development processes.
The Committee is also responsible for establishing and maintaining the CEO Succession Plan. In 2021, the members of the Compensation Committee
included: Bobbi J. Kilmer, Stephen M. Dorwart, Leo F. Lambert, Terry L. Lehman, Frank G. Pellegrino, Katherine W. Shattuck, and Leonard
Simpson. Director Simpson served on the Committee from January until his retirement in April 2021. Director Dorwart has served
on the Committee since April 2021. Director Shattuck has served on the Committee since June 2021. Bobbi J. Kilmer currently
serves as Chair of the Committee. The Compensation Committee held eight (8) meetings in 2021. All of the members of the Compensation
Committee are and were independent under the independence standards of the NASDAQ Stock Market.
The Board of Directors of
the Corporation has adopted a written charter for the Compensation Committee, which is available on our website at www.cnbankpa.com
by hovering on “ABOUT,” then clicking on “Corporate Governance Policies” under the Investor Relations heading,
then “Compensation Committee Charter of C&N Corp.”
Governance
and Nominating Committee. The main purpose of the Governance and Nominating Committee is to establish criteria for Board
member selection and retention; identify individuals qualified to become Board members; and recommend to the Board the individuals to
be nominated and re-nominated for election as directors. Further, the Committee recommends members and chairs of various committees of
the Corporation and the Bank to the Board of Directors. The Committee is also responsible for establishing and maintaining succession
plans for the positions of Board Chair and Committee Chairs and reviewing and reporting to the Board periodically on matters of corporate
governance. In 2021, the members of the Governance and Nominating Committee included: Susan E. Hartley, Bobbi J. Kilmer, Robert G. Loughery,
Katherine W. Shattuck, Leonard Simpson, and Aaron K. Singer. Director Simpson served on the Committee from January until his retirement
in April 2021. Director Loughery has served on the Committee since April 2021. Director Shattuck has served on the Committee
since June 2021. Susan E. Hartley currently serves as Chair of the Committee. During 2020, the Governance and Nominating Committee
held seven (7) meetings. All members of the Governance and Nominating Committee are and were independent under the independence standards
of the NASDAQ Stock Market.
The Board of Directors of
the Corporation has adopted a written charter for the Governance and Nominating Committee, which is available on our website at www.cnbankpa.com
by hovering on “ABOUT,” then clicking on “Corporate Governance Policies” under the Investor Relations heading,
then “Governance and Nominating Charter”.
Qualifications considered
by the Governance and Nominating Committee in assessing director candidates include, but are not limited to, the following:
| • | An understanding of the business and financial affairs and the complexities of a business organization.
A career in business is not essential, but the candidate should have a proven record of competence and accomplishments and should be willing
to commit the time and energy necessary to fulfill the role as an effective director; |
| • | A genuine interest in representing all of the Corporation’s stakeholders, including the long-term
interests of the shareholders; |
| • | A willingness to support the values, mission and vision of the Corporation; |
| • | An open-mindedness and resolve to independently analyze issues presented for consideration; |
| • | A reputation for honesty and integrity; |
| • | A candidate’s diversity of experience, gender, race, knowledge and perspective; |
| • | A high level of financial literacy (i.e., the ability to read financial statements and financial ratios,
and a working knowledge and familiarity with basic finance and accounting practices); |
| • | A mature confidence and ability to approach others with self-assurance, responsibly and supportively.
Candidates should value Board and team performance over individual performance and should be able to raise tough questions in a manner
that encourages open discussions. Additionally, a candidate should be inquisitive and curious and feel a duty to ask questions of management; |
| • | The ability, capacity, and willingness to serve as a conduit of business referrals to the organization; |
| • | Independence in accordance with the independence standards of the NASDAQ Stock Market; and |
| • | Experience with a business of size similar or larger than the Corporation. |
Other than the foregoing,
there are no stated minimum criteria for director nominees, although the Governance and Nominating Committee may also consider such other
factors as it may deem are in the best interests of the Corporation and its shareholders, and such factors may change from time to time.
The Governance and Nominating Committee does, however, require that a majority of the directors be independent under the independence
standards of the NASDAQ Stock Market and expects directors to meet the minimum stock ownership expectations described in the “Stock
Ownership Guidelines” section.
The Committee identifies nominees
by first evaluating the current directors who are willing to continue in service. If any member of the Board does not wish to continue
service or the Board determines not to re-nominate a current director for re-election, the Governance and Nominating Committee identifies
the desired skills and experience of a new nominee in light of the criteria above. The Committee evaluates each individual candidate in
the context of the Board as a whole, with the objective of recommending a group containing a broad array of diverse experience.
The Board does not have a
formal written policy for considering director candidates recommended by shareholders due to the infrequency of nominations, but its long-standing
informal policy is to give due consideration to any and all candidates. The evaluation procedure for candidates recommended by the shareholders
would be the same as is done for those recommended by the Board of Directors and management. The Committee recommends a director nominee
to the Board, and the Board makes the final determination as to the nominees who will stand for election.
Current members of the Board
of Directors are polled for suggestions as to prospective director candidates meeting the Governance and Nominating Committee’s
criteria. The Committee has the prerogative to employ and pay third party search firms, but to date has not done so.
Article Tenth of the
Corporation's Articles of Incorporation requires that shareholders give advance notice of any nominations for election to the Board of
Directors. The required notice, which must include the information set forth in the Articles of Incorporation, must be made in writing
and must be delivered or mailed to the President of the Corporation not less than 14 days nor more than 50 days prior to the Annual Meeting.
If notice is not received by the Corporation within this timeframe, the Corporation will consider such notice untimely.
Asset
Liability Committee of the Corporation. The purpose of the Asset Liability Committee is to stabilize and improve
profitability by balancing the relationship between risk and return over an extended period of time, as well as to function as an investment
committee. In 2021, the members of the Asset Liability Committee included: Clark S. Frame, Susan E. Hartley, Terry L. Lehman, Timothy
E. Schoener, J. Bradley Scovill, and Aaron K. Singer. J. Bradley Scovill currently serves as Chair of the Committee. The Asset Liability
Committee met four (4) times during 2021.
Merger &
Acquisition (M&A) Committee of the Corporation. The purpose of the M&A Committee is to assist in the review
of merger and acquisition opportunities. In 2021, the members of the Merger & Acquisition Committee included: Clark S. Frame,
Leo F. Lambert, Terry L. Lehman, Frank G. Pellegrino, J. Bradley Scovill, and Leonard Simpson. Director Frame has served on the Committee
since April 2021. Director Simpson served on the Committee from January until his retirement in April 2021. Terry L. Lehman
currently serves as Chair of the Committee. The M&A Committee met four (4) times during 2021.
Executive
Committee of the Bank. The Executive Committee has been inactive since 2019. If there should be a need to activate
the Committee, it shall consist of the other Committee chairs, the Chief Executive Officer, and the Chairman of the Board. The Committee
may act on behalf of and with full authority of the Board of Directors in matters that arise between regular monthly meetings of the Board,
which would require immediate Board level action and would provide advice and counsel to the Chief Executive Officer on various matters
not necessarily requiring Board consideration.
Information
Technology Committee of the Bank. The purposes of the Information Technology (“IT”) Committee are to
oversee significant strategies, innovation, projects and technology architecture decisions; monitor IT programs to ensure they support
business objectives and strategies; confer with the Bank’s senior IT and Risk Management teams; and inform the Board of Directors
on IT Risk Management-related matters. Among its duties, the Information Technology Committee reviews, not less than annually, the Bank’s
business continuity plan, cyber security assessment tool and other technology reports and assesses their adequacy. In 2021, members of
the Information Technology Committee were: Terry L. Lehman, Robert G. Loughery, Frank G. Pellegrino, Timothy E. Schoener, and Aaron K.
Singer. Aaron K. Singer currently serves as Chair of the Committee. During 2021, the Information Technology Committee held four (4) meetings.
Trust
Investment Committee of the Bank. The Trust Investment Committee of the Bank determines the policy and investments
of the Trust Department and the acceptance and relinquishment of all fiduciary relationships. In 2021, members of the Trust Investment
Committee included: Stephen M. Dorwart, Clark S. Frame, Bobbi J. Kilmer, Frank G. Pellegrino, and Helen S. Santiago. Director Simpson
served on the Committee from January until his retirement in April 2021. Director Santiago has served on the Committee since
April 2021. Frank G. Pellegrino currently serves as Chair of the Committee. During 2021, the Trust Investment Committee held four
(4) meetings.
Finance
and Loan Committee of the Bank. The primary purpose of the Finance and Loan Committee is to review larger watch list loans,
review loan portfolio statistics and trends, and review proposed changes to the loan policy and make recommendations to the Board of Directors,
and evaluate and act on loan requests that exceed management’s lending authority. In 2021, members of the Finance and Loan Committee
included: Clark S. Frame, Leo F. Lambert, Robert G. Loughery, Frank G. Pellegrino, Timothy E. Schoener, and J. Bradley Scovill. Director
Simpson served on the Committee from January until his retirement in April 2021. J. Bradley Scovill currently serves as Chair
of the Committee. During 2021, the Finance and Loan Committee held six (6) meetings.
Shareholder Communications
If you wish to communicate
with the Board, you may send correspondence to Corporate Secretary, Citizens & Northern Corporation, 90-92 Main Street, Wellsboro,
PA 16901. The Corporate Secretary will submit your correspondence to the Board or the appropriate committee, as applicable. You may also
communicate directly with the Chairman by writing to the Chairman, Citizens & Northern Corporation, 90-92 Main Street, Wellsboro,
PA 16901.
Related Person Transactions and Policies
Certain directors and officers
of the Corporation and Bank and their affiliates (including corporations of which such persons are officers or greater than 10% beneficial
owners) were customers of, and had transactions with, the Corporation and Bank in the ordinary course of business during the year ended
December 31, 2021. Similar transactions may be expected to take place in the future. Such transactions included the purchase of certificates
of deposit and extensions of credit in the ordinary course of business on substantially the same terms, including interest rates and collateral
requirements, as those prevailing at the time for comparable transactions with third parties and did not involve more than the normal
risks of collectability or present other unfavorable features. The Corporation expects that any other transactions with directors and
officers and their affiliates in the future will be conducted on the same basis.
The Corporation and the Bank
are subject to Federal Reserve Regulation O, which governs loans to certain insiders, including executive officers, directors or 10% controlling
shareholders of a bank or holding company, or an entity controlled by an executive officer, director or controlling shareholder (an “Insider”).
As required by Regulation O, the Bank’s Loan Policy prohibits loans to an Insider unless the loan (i) is made 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 Insider; and (ii) does not involve more than the normal risk of repayment or present other unfavorable features.
The Corporation is required
to disclose transactions with certain “Related Persons” (as defined by SEC regulations) where the annual amount involved exceeds
the lesser of $120,000 or 1% of the Corporation’s total assets at year-end for the last two years. In 2021, the Corporation did
not have any related person transactions requiring disclosure.
Stock Ownership Requirements
In
February 2022, the Board of Directors amended its requirements for the minimum amount of Corporation common stock that all independent
directors are expected to own. Pursuant to these requirements, each independent director shall be the beneficial owner of Corporation
common stock having a minimum aggregate fair market value of six times the annual cash retainer paid to independent directors, which annual
retainer currently is $20,000. Each independent director shall have five (5) years from the date of initial election or appointment
to establish the minimum stock ownership and shall thereafter maintain such minimum stock ownership throughout his or her term as a director.
It is intended that directors will not sell shares of Corporation common stock received from the Independent Directors Stock Incentive
Plan prior to reaching the minimum level of ownership required under this policy.
In February 2022, the
Board of Directors also amended its requirements for the minimum amount of Corporation common stock that the Chief Executive Officer (CEO)
and each Executive Vice President (EVP) is required to own. The CEO shall be the beneficial owner of Corporation common stock having a
minimum value equal to three (3) times the previous year’s annual base salary, and each EVP is required to own Corporation
common stock having a minimum value equal to one (1) times the previous year’s annual base salary. The CEO
and each EVP shall have five (5) years from initial election or appointment by the Board of Directors to comply with the minimum
ownership requirement.
For
purposes of determining compliance with these minimum stock ownership requirements, the aggregate fair market value of common stock shall
be measured annually by reference to the average of the high and low sales price of the stock on June 30 of each year. Notwithstanding
the foregoing stock ownership requirements, the Board of Directors, in the exercise of its reasonable discretion, may approve exceptions
to the stock ownership requirements, on a case by case basis, to account for unusual volatility in the trading price of the common stock
on or about the annual valuation date of the stock on June 30 of each year.
Presently, all directors and
named executive officers meet the minimum stock ownership requirements or have been in their current positions for less than five years.
Anti-Hedging Policy
The Board of Directors has
adopted an anti-hedging policy that prohibits directors and officers of the Corporation and any subsidiary of the Corporation from purchasing
any financial instruments or engaging in any transactions that are designed to hedge or offset any decrease in the market value of equity
securities of the Corporation, including, without limitation, puts, calls, prepaid variable forward contracts, equity swaps, collars,
exchange funds and other derivative securities or transactions with economic consequences comparable to the foregoing financial instruments.
INFORMATION CONCERNING SECURITY OWNERSHIP
Beneficial ownership of shares
of the Corporation’s common stock is determined in accordance with SEC Rule 13d-3, which provides that a person should be credited
with the ownership of any stock held, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise,
in which the person has or shares:
| • | Voting power, which includes power to vote or to direct the voting of the stock; |
| • | Investment power, which includes the power to dispose or direct the disposition of the stock; or |
| • | The right to acquire beneficial ownership within 60 days after February 1, 2022. |
Beneficial Ownership of Principal Holders
The following table shows,
to the best of the Corporation’s knowledge, those persons or entities, who owned of record or beneficially, on December 31,
2021, more than 5% of the Corporation’s outstanding common stock.
Name & Address | |
Amount & Nature of | | |
| |
of Beneficial Owner | |
Beneficial Ownership | | |
Percent of Class | |
BlackRock, Inc. | |
| 1,089,905 | (1) | |
| 6.9 | % |
55 East 52nd Street | |
| | | |
| | |
New York, NY 10055 | |
| | | |
| | |
(1)
Based on an Amendment No. 11 to Schedule 13G filed with the Securities and Exchange Commission on February 1, 2022, which reported
beneficial ownership as of December 31, 2021 by BlackRock, Inc.
Beneficial Ownership of Executive Officers
and Directors
The following table sets forth,
as of February 1, 2022, and from information supplied by the respective persons, the amount and the percentage, if over 1%, of the
common stock of the Corporation beneficially owned by each director, each nominee for director, each of the named executive officers and
all executive officers and directors of the Corporation as a group.
Name of Individual or Identity of Group | |
Amount and Nature of
Beneficial Ownership (1) | | |
Percent of Class | |
Stephen M. Dorwart | |
15,557 | (2) | |
* | |
Clark S. Frame | |
110,237 | (3) | |
* | |
Susan E. Hartley | |
21,143 | (2) | |
* | |
Bobbi J. Kilmer | |
9,860 | (2) | |
* | |
Leo F. Lambert | |
37,187 | (2) | |
* | |
Terry L. Lehman | |
20,704 | (2) | |
* | |
Robert G. Loughery | |
4,701 | (2) | |
* | |
Frank G. Pellegrino | |
25,887 | (2) | |
* | |
Helen S. Santiago | |
5,313 | (2) | |
* | |
Timothy E. Schoener | |
4,062 | (2) | |
* | |
Katherine W. Shattuck | |
1,173 | (2) | |
* | |
Aaron K. Singer | |
9,463 | (2) | |
* | |
J. Bradley Scovill | |
88,661 | (4) | |
* | |
Mark A. Hughes | |
78, 517 | (5) | |
* | |
Harold F. Hoose, III | |
54, 657 | (6) | |
* | |
Directors and Executive Officers as a Group (22 Persons) | |
652,759 | | |
4.12 | % |
| * | Indicates beneficial ownership of less than 1%. |
| (1) | Pursuant to the regulations of the SEC, the number of shares of common stock deemed outstanding includes
shares issuable pursuant to options held by the respective person or group that are currently exercisable or may be exercised within 60
days of February 1, 2022 with an exercise price of less than $25.03, which is the closing price on February 1, 2022 (“presently
exercisable stock options”). Unless otherwise indicated, each individual holds sole voting and investment authority with respect
to the shares listed. |
| (2) | Includes 799 shares of restricted stock. |
| (3) | Includes 799 shares of restricted stock, and 24,794 shares of common stock for which Mr. Frame, as
a co-trustee, has voting and investment power over securities in the trusts. |
| (4) | Includes 20,749 shares of restricted stock. |
| (5) | Includes 8,663 shares of restricted stock. |
| (6) | Includes 9,143 shares issuable pursuant to presently exercisable stock options and 9,076 shares of restricted
stock. |
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), requires the Corporation’s directors, executive officers and
persons who beneficially own more than ten percent of the Corporation’s issued and outstanding common stock to file initial reports
of ownership and reports of changes in beneficial ownership with the SEC. Such persons are also required to furnish the Corporation with
copies of all such reports they file.
Based solely upon a review
of the reports filed pursuant to Section 16 of the Exchange Act, the Corporation believes that its directors and executive officers
timely filed all reports required under Section 16, with the exception of Directors Dorwart and Lambert who each made one late filing
related to a purchase and Director Shattuck who made a late filing of initial statement of beneficial ownership. Each of these late filings
was due to administrative oversight.
COMPENSATION DISCUSSION & ANALYSIS
The Compensation Discussion
and Analysis (CD&A) section of our Proxy Statement provides our shareholders with an explanation of our Named Executive Officer (NEO)
compensation philosophy, programs, policies and decisions, all within the context of our business environment and performance. Our goal
is to present a clear and concise overview of our executive compensation practices and describe key changes from last year.
The Corporation’s executive
compensation program is designed to provide participating executives with an industry-competitive level of total compensation when their
collective and individual performances meet or exceed the goals approved by the Board of Directors. We believe that the compensation program
for executives should directly support the achievement of specific annual, long-term and strategic goals of the business, and, thereby,
align the interests of executives with the interests of our shareholders. Accordingly, the program includes short and long-term incentive
opportunities, but only when performance targets are met on a consistent basis and subject to appropriate controls to ensure management
is not incented to take excessive risk.
2021 Performance Highlights
Highlights for 2021 included
the following:
| • | Net income per diluted share was $1.92 for the year ended December 31, 2021, up from $1.30 in 2020.
Excluding the impact of merger-related expenses and loss on prepayment of borrowings, adjusted (non-U.S. GAAP) earnings for 2020 would
be $26,648,000 or $1.80 per share. Effective July 1, 2020, C&N acquired Covenant Financial, Inc. (“Covenant”).
C&N incurred pre-tax merger-related expenses related to the Covenant transaction of $7.7 million for the year ended December 31,
2020. In the fourth quarter 2020, C&N incurred a pre-tax loss of $1.6 million on prepayment of long-term borrowings (Federal Home
Loan Bank of Pittsburgh advances) with outstanding balances totaling $48.0 million. The borrowings included several advances maturing
in 2022 through 2024 with a weighted-average interest rate of 1.77% and a weighted-average duration of 2.3 years. |
| • | The return on average assets (ROAA) for the twelve months ended September 30, 2021 was 1.30%, and
the return on average equity (ROAE) was 9.99%. Excluding from earnings the after-tax impact of merger-related expenses, loss on prepayment
of borrowings, amortization of core deposit intangibles, net gains on securities and net loss on marketable equity security, the adjusted
annual ROAA for the twelve months ended September 30, 2021 was 1.38% and the similarly adjusted ROAE was 10.59%. As described in
more detail below, ROAE is a significant variable considered in determining cash awards to NEOs under the Annual Incentive Award Plan.
The corporate performance-based portion of each Executive’s award was calculated based upon achievement of annual ROAE in comparison
to a defined comparator group’s performance. For 2021, the Corporation’s ROAE, as adjusted to exclude merger-related expenses,
loss on prepayment of borrowings and other items, was compared to the ROAE of a comparator group for the twelve months ended September 30,
2021. The 2021 corporate performance-based payout was 65% of target for each Executive, down from 134% of target for 2020. |
| • | The Bank is subject to various regulatory capital requirements. At December 31, 2021, the Bank maintains
regulatory capital ratios that exceed all capital adequacy requirements. We expect the Bank to remain well-capitalized for the foreseeable
future. |
The following table provides a reconciliation of
the Corporation’s 2021 and 2020 earnings results under U.S. generally accepted accounting principles (U.S. GAAP) to comparative
non-U.S. GAAP results excluding merger-related expenses and loss on prepayment of borrowings. We believe disclosure of 2021 and 2020 earnings
results, adjusted to exclude the impact of these items, provides useful information to investors for comparative purposes.
RECONCILIATION OF NET INCOME AND |
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE TO |
|
|
|
|
|
|
|
|
|
NON-U.S. GAAP MEASURE |
|
|
|
|
|
|
|
|
|
(Dollars In Thousands, Except Per Share Data) |
|
|
|
|
|
|
|
|
|
| |
Year Ended December 31, 2021 | | |
Year Ended December 31, 2020 | |
| |
Income | | |
| | |
| | |
Diluted | | |
Income | | |
| | |
| | |
Diluted | |
| |
Before | | |
| | |
| | |
Earnings | | |
Before | | |
| | |
| | |
Earnings | |
| |
Income | | |
Income | | |
| | |
per | | |
Income | | |
Income | | |
| | |
per | |
| |
Tax | | |
Tax | | |
Net | | |
Common | | |
Tax | | |
Tax | | |
Net | | |
Common | |
| |
Provision | | |
Provision | | |
Income | | |
Share | | |
Provision | | |
Provision | | |
Income | | |
Share | |
Earnings Under U.S. GAAP | |
$ | 37,687 | | |
$ | 7,133 | | |
$ | 30,554 | | |
$ | 1.92 | | |
$ | 23,212 | | |
$ | 3,990 | | |
$ | 19,222 | | |
$ | 1.30 | |
Add: Merger-Related Expenses (1) | |
| 0 | | |
| 0 | | |
| 0 | | |
| | | |
| 7,708 | | |
| 1,574 | | |
| 6,134 | | |
| | |
Add: Loss on Prepayment of Borrowings (1) | |
| 0 | | |
| 0 | | |
| 0 | | |
| | | |
| 1,636 | | |
| 344 | | |
| 1,292 | | |
| | |
Adjusted Earnings (Non-U.S. GAAP) | |
$ | 37,687 | | |
$ | 7,133 | | |
$ | 30,554 | | |
$ | 1.92 | | |
$ | 32,556 | | |
$ | 5,908 | | |
$ | 26,648 | | |
$ | 1.80 | |
| (1) | Income tax has been allocated based on a marginal income tax rate of 21%. The effect on the income tax provision is adjusted for the
estimated nondeductible portion of the expenses. Merger-related expenses are for the Covenant acquisition completed on July 1, 2020. |
2021 Key Compensation Decisions and Actions
The following is a summary
of key actions taken by the Compensation Committee on executive compensation for 2021:
| • | Base Salaries: The 2021 base salary for each NEO increased between 3.4% and 9.3% over the 2020
amount. |
| • | 2021 Short-Term Incentive Awards: Payouts to NEOs for 2021 performance ranged from 31% to 37% of
base salary, above target levels ranging from 30% to 35% of base salary. These awards reflected measurements of achievement including:
(1) corporate awards equal to 65% of target based on ROAE in comparison to the comparator group’s median 12 months ended September 30,
2021 ROAE, (2) Awards based on key performance indicators aggregating to 148% of target and (3) individual goals ranging from
125% to 150% of target. |
| • | 2021 Long-Term Incentive Awards: Equity awards to NEOs in 2021 had grant date fair values of 45%,
30% and 38% of base salary for Messrs. Scovill, Hughes and Hoose, respectively. The awards included a mix based on 50% time-based
restricted stock awards (“RSA”) and 50% performance-based restricted stock awards (“PRSA”). The time-based RSAs
and PRSAs vest over three years, with one-third vesting on each anniversary date of the award. For PRSAs, awards only vest to the extent
performance has been met for the prior year. |
| • | 2021 Performance Outcome: Based on 2021 performance compared to performance of the approved comparator
group for the 12 months ended September 30, 2021, 100% of the potential shares were vested for PRSA awards granted in 2019 and 2020
and 50% of the potential shares were vested for PSRAs granted in 2018. |
Overview of the Executive Compensation Program
The Corporation’s executive
compensation program includes fixed and variable compensation and benefit components, typical of programs among comparable community banking
and financial services companies in our local and regional marketplace. The program is designed to provide participating executives with
an industry-competitive level of total compensation when their collective and individual performances meet or exceed the goals approved
by the Board of Directors.
Compensation Philosophy and Program Objectives
We believe that the compensation
program for executives should directly support the achievement of specific annual, long-term and strategic goals of the business, and,
thereby, align the interests of executives with the interests of our shareholders.
We believe the current program
provides sufficient levels of fixed pay elements, in the forms of base salary and health and welfare benefits, to attract high caliber
executive talent to the organization. It also provides annual and long-term incentive opportunities to encourage specific performance
and to reward the successful efforts of executives. The incentive opportunities are structured to produce a performance-leveraged program
format in which executives may derive a significant portion of their total compensation, depending on their role in the organization,
from short and long-term incentive opportunities, but only when performance targets are met on a consistent basis and subject to appropriate
controls to ensure management is not incented to take excessive risk.
We believe that the features
and composition of the current program provide a total compensation package for executive officers that is competitive in our marketplace
but weighted toward variable pay based on corporate and individual performance, and which contributes to the creation of shareholder value.
2021 Program Components
The following is a discussion of the primary purpose
of each element within our executive compensation program.
| 1. | Base Salary.
Base salaries are set to recognize the executive’s experience, responsibilities associated with the position and expectations with
respect to the individual’s contributions to the Corporation. In setting or adjusting base salary levels for our NEOs, the Corporation
considers the following factors: the executive’s position, individual performance, contribution to the Corporation, market salaries
for similar positions, experience in the position, industry merit increase budgets, and the Corporation’s overall financial performance.
Base salaries for the NEOs are reviewed and approved annually by the Compensation Committee no later than the first quarter of the fiscal
year so the Compensation Committee can take into account results from the prior fiscal year-end performance. |
| 2. | Short-Term (Annual) Incentives.
The Corporation’s Annual Incentive Award Plan provides participating executives with opportunities to earn additional
cash compensation in a given year when corporate and business unit operating results and individual performance contributions meet or
exceed established thresholds of acceptable achievement. For 2021, corporate performance was measured based on the Corporation’s
ROAE, adjusted to exclude extraordinary occurrences (including significant amounts of merger-related expenses, loss on prepayment of borrowings,
securities gains and losses and other items) as compared to ROAE goals based on the comparator group’s ROAE for the 12 months ended
September 30, 2021. Key performance indicators include such items as core deposit growth, total revenue growth, efficiency ratio,
and growth in wealth management revenue. Each participant’s individual performance contribution is evaluated by his or her supervisor,
with the Chief Executive Officer’s individual performance contribution evaluated by the Board of Directors. The Committee, in its
discretion, may adjust or eliminate award payments under the Incentive Award Plan. All awards under the Incentive Award Plan are paid
in cash as soon as it is practical after the end of a plan year. |
| 3. | Long-term Incentives (“LTI”). The Corporation’s 1995 Stock Incentive Plan
provides participating executives with the ability to receive equity awards (as determined by the Committee, as administrator of the plan),
and is intended to focus the recipient’s efforts on the strategic direction and goals of the business, incent ownership in the Corporation
and promote a vested interest in the Corporation’s long-term success. Awards may take the form of incentive stock options, nonqualified
options, stock appreciation rights or restricted stock. The Committee reviews and recommends approval of awards to executives based upon
its assessment of individual performance, a review of the executive’s existing long-term incentives, and retention considerations.
To date, all awards granted under the plan have been incentive stock options or restricted stock. A total of 850,000 shares of common
stock may be issued under the plan. As of December 31, 2021, a balance of 110,800 shares remain available for issuance. |
In 2021, the Corporation made LTI grants
to its NEOs in the form of 50% RSAs and 50% PRSAs. RSAs granted to the Corporation’s and the Bank’s executive officers in
2021 vest equally over a three-year period. On each anniversary date of the 2021 RSAs, one-third of the total shares will be distributed
based on the recipient’s satisfactory performance of his or her job.
The Corporation’s PRSAs are structured
in a way where performance is assessed at the end of each year within the three-year performance period. On each anniversary date, up
to one-third of the total PRSA shares will be distributed based on the recipient’s satisfactory performance of his or her job and
the Corporation’s attainment of an earnings-based performance standard. For the 2021 LTI awards, 50% of the PRSAs are evaluated
based on ROAE performance while 50% are evaluated based on ROAA performance. Like the Annual Incentive Plan, 2021 ROAE and ROAA performance
is assessed by comparison of the Corporation’s level of performance to goals based on the comparator group’s performance for
the 12 months ended September 30, 2021. The threshold requirement for ROAE is based on the 35th percentile rank, while
the target for ROAA is based on the 65th percentile rank as compared to the comparator group’s 12 months ended September 30,
2021 results. All restricted shares not distributed due to the recipient’s unsatisfactory performance of his or her job or due to
the Corporation failing to achieve the minimum ROAE or ROAA threshold shall be forfeited by the executive and revert back to the Corporation
as of the anniversary date on which such determinations are made.
Stock options were not granted to executives
in 2021.
| 4. | Ownership Guidelines.
In order to better align the interests of the NEOs with those of our shareholders, the Corporation requires that they own a number of
shares of the Corporation’s common stock with fair market value equal to a percentage of his/her salary. At this time, the CEO is
required to own a minimum amount of stock equal to three (3) times the previous year’s base salary and all other Executive
Vice Presidents are required to own one (1) times the previous year’s base salary. Each executive officer has five (5) years
from initial election or appointment by the Board of Directors to comply with the minimum ownership requirements. Currently, all NEOs
meet the minimum requirements. |
| 5. | Health and Welfare Benefits.
Executives participate in the Corporation’s qualified health and welfare benefits programs on the same terms and conditions as other
employees of the Corporation. |
| 6. | Nonqualified Benefits and Perquisites. Nonqualified benefits and perquisites that may be
offered by the Corporation include participation in a supplemental retirement income plan (“SERP”), as well as, in many instances,
use of a company-provided automobile. In a few instances, the Corporation pays a portion of an executive’s membership dues for a
golf or social club, when such membership can facilitate the conduct of business with clients. |
SERP
- The SERP is intended to replace some of the benefits lost by executives under federally mandated restrictions on retirement
income benefits to highly compensated employees under qualified retirement income plans like pensions and 401(k) plans. The Corporation’s
SERP provides a retirement benefit to participants who retire after attaining age 55, with 5 years of Participation in the Plan. Participants
vest earlier than age 55 in the event of disability, death or in the event of a change in control of the Corporation. Annual contributions
to the SERP are at the discretion of the Board of Directors, and the Board may terminate the SERP at any time.
Historically, the Corporation’s
annual contribution has been based on a formula designed to provide an annual benefit equal to 20% of the individual’s highest five-year
average compensation and assumes retirement at age 65. In determining the annual contribution amounts, the Corporation assumes interest
rates of 8% for preretirement and 6% for postretirement and utilizes a standard mortality table.
The annual contribution is deposited
into each participant’s account held in a trust account at the Bank. While the Bank’s Trust and Financial Management Group
manages the trust assets, each participant may direct the investment of the funds credited to their account. All assets in the trust are
subject to the claims of the Bank’s creditors in the event of insolvency. The actual amount available to be distributed to a participant
at separation of service depends upon the return on the investment of the funds held in the account over time. The actual investment returns
do not impact the Corporation’s determination of the annual contribution. Investment returns are allocated to participant
accounts daily based on units held of each investment. Upon vesting, amounts credited to a participant’s account are payable, at
the election of the participant, in monthly or annual installments.
Deferred
Compensation Plan - The Corporation has a nonqualified Deferred Compensation Plan that allows selected officers the option
to defer receipt of up to 100% of base salary plus any non-equity incentive plan compensation. The Compensation Committee of the Board
of Directors determines employees eligible to participate (“Participants”). The Deferred Compensation Plan does not provide
for Corporation contributions.
Participants are given an annual opportunity
to elect, by entering into a Participation Agreement with the Corporation, to defer the receipt of eligible compensation by a dollar amount
or percentage specified in the Participation Agreement. Participant contributions are deposited into each Participant’s account
held in a trust account at the Bank. While the Bank’s Trust and Financial Management Group manages the trust assets, each Participant
may direct the investment of the funds credited to their account. All assets in the trust are subject to the claims of the Bank’s
creditors in the event of insolvency. The Board of Directors may amend or terminate the Plan at any time; provided, however, that no such
amendment or termination shall reduce the balance in any Participant’s account nor affect the terms of the Plan relating to the
payment of any account.
Participants are fully vested in their
accounts at all times. Upon separation from service, amounts credited to a participant’s account are payable, at the election of
the participant, in monthly or annual installments.
| 7. | Employment, Change in Control and Severance Agreements. The Corporation has entered into
Employment Agreements with Mr. Scovill, Mr. Hughes and Mr. Hoose. The Employment Agreements are described in more detail
on pages 31-32. |
None of the named executive officers
has a commitment from the Corporation for a tax gross-up payment in the event that their severance benefits exceed the deduction limitations
under Internal Revenue Code Section 4999.
How We Make Decisions Regarding Named Executive
Officer Compensation
The Compensation Committee,
with the support of its independent compensation consultant and management, determines executive compensation programs, practices, and
levels for full Board consideration and approval. Specific responsibilities are assigned in accordance with governance best practices.
In making its determinations, the Compensation Committee and its partners consider data and analyses regarding a peer group and other
internal studies. Below is an explanation of the key roles and responsibilities of each group, as well as how market data is integrated
into the process.
Role
of the Compensation Committee. The Compensation Committee (“the Committee”) of the Board of Directors
has primary responsibility for the design and administration of the executive compensation program. It reviews the make-up and administration
of the executive compensation program throughout the year in light of changing organization needs and operating conditions and changing
trends in industry practice. The Compensation Committee determines and approves the salaries, cash and equity incentive bonuses, equity
awards, benefits and employment policies as they relate to the named executive officers, subject to full Board consideration and approval.
In making determinations regarding
executive compensation, the Compensation Committee weighs an individual’s personal performance, the performance of his or her area
of responsibility, and the overall performance of the Corporation. The performance of the Chief Executive Officer in each of these regards
is evaluated by the Compensation Committee. The performance of each of the named executive officers (other than the Chief Executive Officer)
is evaluated by the Chief Executive Officer. The Compensation Committee reviews performance of the named executive officers on an annual
basis and examines each named executive officer’s base salary, cash and equity incentive bonus, and restricted stock award at such
time.
The Compensation Committee
has the authority to retain or obtain the services of compensation consultants or other advisors to provide compensation and benefit consulting
services to the Committee. The independence of any such advisor is determined by the Compensation Committee prior to selecting or receiving
advice from the advisor.
Role
of Executive Management. Key members of the Corporation’s executive management attend Compensation Committee meetings
at the Compensation Committee’s request to provide information and their perspective about executive compensation policies and programs.
Management’s participation plays an important part in the development and continuation of benefit plans, and in determining appropriate
levels of compensation. The Compensation Committee holds discussions with management in attendance to ensure that the Compensation Committee
makes fully informed recommendations with respect to compensation matters that affect the Corporation’s operations and shareholder
returns. Finally, the Corporation’s Chief Executive Officer participates in deliberations of the Compensation Committee on an ex-officio,
non-voting basis, but does not participate during, or attend, deliberations concerning his own compensation. No member of management was
present during the portion of any Compensation Committee meeting at which the Compensation Committee made determinations regarding such
named executive officer’s compensation.
Role
of the Compensation Consultant. The Compensation Committee utilizes the support of outside compensation experts in establishing
the policies, programs, and levels of executive compensation. In 2021, the Compensation Committee engaged Pearl Meyer & Partners,
LLC (Pearl Meyer) to:
| • | Review and provide feedback on Proxy Statement disclosures; |
| • | Review and update the compensation peer group, as appropriate, and provide updates on comparator group
earnings performance; |
| • | Assess executives’ total compensation |
In their role as the Corporation’s
outside advisor, Pearl Meyer also responds to questions from the Compensation Committee and attends meetings as requested. Pearl Meyer
reports directly to the Compensation Committee and, as directed by the Compensation Committee, works with management in support of the
Committee. Pearl Meyer performed no services outside of those related to executive and director compensation for the Corporation in 2021.
The Compensation Committee assessed the independence of Pearl Meyer and believes they are an independent advisor pursuant to the rules and
standards promulgated by the SEC and NASDAQ.
Role
of Market Data/External Comparison. Annually, the Committee asks its independent compensation consultant to review proxy
disclosures and survey sources on national and regional compensation practices within the Corporation’s industry group, focusing
on pay levels and practices among community banking institutions based in the Mid-Atlantic Region. For the 2021 program planning review
conducted in 2020, the independent compensation consultant applied the following filters in developing a recommended group of institutions
to serve as the Corporation’s peer group (the “2021 Peer Group”):
| • | included publicly traded commercial banks, and excluded thrifts, mutual holding companies and private
banks; all institutions selected are traded on NASDAQ, NYSE or NYSE American except for a few local competitors who are traded on the
OTC Marketplace; |
| • | included banking institutions with asset size ranging from approximately 1/2 to 2.5 times the Corporation’s
asset size that were headquartered in Pennsylvania, New Jersey, New York, Maryland, West Virginia, and Ohio; and |
| • | excluded banking institutions with no Trust Assets Under Management, except for a few companies who had
been included in the prior year’s peer group. |
Based on these criteria, the following 20 institutions
were selected for inclusion in the 2021 Peer Group:
ACNB Corporation |
Citizens Financial Services, Inc. |
Franklin Financial Services Corporation |
Penns Wood Bancorp, Inc. |
AmeriServ Financial, Inc. |
Civista Bancshares, Inc. |
LCNB Corp. |
Peoples Bancorp Inc. |
Arrow Financial Corporation |
CNB Financial Corporation |
Mid Penn Bancorp, Inc. |
Peoples Financial Services Corp. |
Bryn Mawr Bank Corporation |
Codorus Valley Bancorp, Inc. |
Norwood Financial Corp. |
Shore Bancshares, Inc. |
Chemung Financial Corporation |
First United Corporation |
Orrstown Financial Services, Inc. |
Summit Financial Group, Inc. |
In addition to the custom
peer group data, market data from various banking industry surveys is also utilized and reflects banks of similar asset size and region
to that of the Corporation.
Program
Review and Pay Decision Process. During the fourth quarter each year, the Committee (1) receives base salaries and
annual and long-term incentive information on current executive compensation levels in the industry and industry program practices provided
by its independent compensation consultant; (2) conducts a comprehensive review of the Corporation’s compensation program structure
and provisions; and (3) considers salary and benefit adjustments and incentive awards for executives. After examining the information
provided by its independent compensation consultant, the Committee determines whether (1) the content and structure of the Corporation’s
compensation program is still competitive; (2) the current provisions remain consistent with the Corporation’s overall pay
philosophy; and (3) the compensation program continues to support achievement of the Corporation’s business objectives.
After deciding on the program
structure for the coming calendar year, the Committee examines the current compensation and benefit levels of incumbent executives in
light of their continuing or changing roles in the business, the assessments of their individual performances by the Chief Executive Officer,
and industry trends. The performance of the Chief Executive Officer is reviewed and appraised by the Committee, with input from all members
of the board of directors. Based on the information gathered about each executive, the Committee formulates recommendations on possible
salary adjustments for executives during the coming year. It also determines annual incentive awards for executives based on results achieved
against goals and objectives defined at the beginning of the year and determines appropriate long-term incentive awards in the form of
stock-based compensation. These recommendations are then presented to the full Board of Directors for consideration and approval.
As incentive awards for the
current year are determined, the Committee also works with the Chief Executive Officer to construct executive performance plans for the
coming year. The Committee formulates their recommendations on performance goals and award opportunities for Board consideration and approval.
The Committee may also be
called upon to consider pay related decisions from time to time throughout the calendar year as executives are reassigned or new executives
join the organization. In these instances, the Committee will review all aspects of the executive’s compensation, including base
salary level, annual incentive opportunities, long-term incentive awards, participation in special benefit plans, and employment contract
provisions, if applicable.
2021 Executive Compensation Decisions
Base
Salaries. For 2021, the Compensation Committee approved annual increases in base salary ranging between 3.4% and 9.3% for
each of the Named Executive Officers in recognition of each executive’s contribution and performance.
Annual
Incentive Awards. The table below presents the performance criteria and the weighting of each criterion used in determining
the annual incentive awards earned based upon 2021 performance for the named executive officers:
| |
Performance Criteria | |
Target
Performance
Result | | |
Actual
Performance
Result | | |
Criterion
Weighting | | |
Target
% of
Base
Salary | | |
Maximum
% of Base
Salary | | |
Award
% of
Base
Salary |
J. Bradley Scovill | |
Corporate Earnings Performance: | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
| |
Award Matrix Result (1) | |
| 100.00 | % | |
| 65.16 | % | |
| 50 | % | |
| 17.5 | % | |
| 26.3 | % | |
11.4 |
% |
| |
Key Performance Indicators (2) Based on: | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
| |
Growth in Annual Average Core Deposits (3) | |
| 4.00 | % | |
| 10.59 | % | |
| 7.5 | % | |
| 2.6 | % | |
| 3.9 | % | |
3.9 |
% |
| |
Total Revenue (4) | |
$ | 100.6
Million | | |
$ | 104.9
Million | | |
| 7.5 | % | |
| 2.6 | % | |
| 3.9 | % | |
3.8 |
% |
| |
Efficiency Ratio (5) | |
| 61.92 | % | |
| 59.54 | % | |
| 7.5 | % | |
| 2.6 | % | |
| 3.9 | % | |
3.9 |
% |
| |
Total Wealth Management Revenue (6) | |
$ | 8.3 Million | | |
$ | 9.1 Million | | |
| 7.5 | % | |
| 2.6 | % | |
| 3.9 | % | |
3.9 |
% |
| |
Individual Performance (7) | |
| | | |
| | | |
| 20 | % | |
| 7.0 | % | |
| 10.5 | % | |
10.5 |
% |
| |
Totals | |
| | | |
| | | |
| | | |
| 35.0 | % | |
| 52.5 | % | |
37.5 |
% |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Mark A. Hughes | |
Corporate Earnings Performance: | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
| |
Award Matrix Result (1) | |
| 100.00 | % | |
| 65.16 | % | |
| 50 | % | |
| 15.0 | % | |
| 22.5 | % | |
9.8 |
% |
| |
Key Performance Indicators (2) Based on: | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
| |
Growth in Annual Average Core Deposits (3) | |
| 4.00 | % | |
| 10.59 | % | |
| 7.5 | % | |
| 2.3 | % | |
| 3.4 | % | |
3.4 |
% |
| |
Total Revenue (4) | |
$ | 100.6
Million | | |
$ | 104.9
Million | | |
| 7.5 | % | |
| 2.3 | % | |
| 3.4 | % | |
3.2 |
% |
| |
Efficiency Ratio (5) | |
| 61.92 | % | |
| 59.54 | % | |
| 7.5 | % | |
| 2.3 | % | |
| 3.4 | % | |
3.4 |
% |
| |
Total Wealth Management Revenue (6) | |
$ | 8.3 Million | | |
$ | 9.1 Million | | |
| 7.5 | % | |
| 2.3 | % | |
| 3.4 | % | |
3.4 |
% |
| |
Individual Performance (7) | |
| | | |
| | | |
| 20 | % | |
| 6.0 | % | |
| 9.0 | % | |
7.5 |
% |
| |
Totals | |
| | | |
| | | |
| | | |
| 30.0 | % | |
| 45.0 | % | |
30.6 |
% |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Harold F. Hoose, III | |
Corporate Earnings Performance: | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
| |
Award Matrix Result (1) | |
| 100.00 | % | |
| 65.16 | % | |
| 45 | % | |
| 13.5 | % | |
| 20.3 | % | |
8.8 |
% |
| |
Key Performance Indicators (2) Based on: | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
| |
Growth in Annual Average Core Deposits (3) | |
| 4.00 | % | |
| 10.59 | % | |
| 10 | % | |
| 3.0 | % | |
| 4.5 | % | |
4.5 |
% |
| |
Total Revenue (4) | |
$ | 100.6
Million | | |
$ | 104.9
Million | | |
| 15 | % | |
| 4.5 | % | |
| 6.8 | % | |
6.5 |
% |
| |
Efficiency Ratio (5) | |
| 61.92 | % | |
| 59.54 | % | |
| 10 | % | |
| 3.0 | % | |
| 4.5 | % | |
4.5 |
% |
| |
Total Wealth Management Revenue (6) | |
$ | 8.3
Million | | |
$ | 9.1 Million | | |
| 10 | % | |
| 3.0 | % | |
| 4.5 | % | |
4.5 |
% |
| |
Individual Performance (7) | |
| | | |
| | | |
| 10 | % | |
| 3.0 | % | |
| 4.5 | % | |
4.5 |
% |
| |
Totals | |
| | | |
| | | |
| | | |
| 30.0 | % | |
| 45.0 | % | |
33.3 |
% |
| (1) | The Corporate Earnings Performance award was calculated based upon achievement of annual return on average
equity (ROAE) as a percent ranking compared to Comparator Group Performance. The Comparator Group included all publicly traded commercial
banks and thrifts within MD, NJ, NY, OH, PA and WV with total assets between 0.5 and 2.0 times CZNC as of September 30, 2021. The
chart below was used to determine the incentive opportunity percentage of base salary from which a participant’s cash incentive
award would be paid: |
|
Threshold |
Target |
Maximum |
Actual |
Relative ROAE Rank vs. Peers |
25th percentile |
50th percentile |
75th percentile |
37th percentile |
|
|
|
|
CZNC Adjusted 2021 ROAE: 10.59% |
|
|
|
|
Comparator Group |
|
|
|
|
Average: 11.85% |
|
|
|
|
Median: 11.83% |
Corporate Payout |
33% |
100% |
150% |
65.16% |
The decision to use an ROAE rank against
Comparator Group of 25th percentile to establish the minimum performance standard for a payout, and an ROAE rank against Comparator
Group of 50th percentile to establish a payout at 100% of Target, recognized that the Corporation’s equity capital, as
a percentage of assets, is significantly higher than the peer average. An indicator of the Corporation’s higher-than-Peer average
equity capital is that although the Corporation’s adjusted twelve months ended September 30, 2021 ROAE rank was the 37th
percentile compared to the twelve months ended September 30, 2021 Comparator Group results, the Corporation’s adjusted return
on average assets of 1.38% at the 78th percentile ranking compared to Comparator Group results.
For purposes of comparing the Corporation’s
ROAE and ROAA to comparator group results, the Corporation’s earnings as determined under U.S. Generally Accepted Accounting Principles
(U.S. GAAP) were adjusted to eliminate amounts the Committee determined to be based on “extraordinary occurrences,” as described
in the 2021 Annual Incentive Award Plan document. Reconciliation of the Corporation’s earnings for the twelve months ended September 30,
2021 under U.S. GAAP to the non-GAAP earnings amount used in the incentive award calculation is as follows:
(Dollars In Thousands)
| |
| | |
| | |
Annualized | | |
| | |
Annualized | |
| |
| | |
| | |
Return on | | |
| | |
Return on | |
| |
Net | | |
Average | | |
Average | | |
Average | | |
Average | |
| |
Income | | |
Equity | | |
Equity | | |
Assets | | |
Assets | |
Totals - Consolidated US GAAP | |
$ | 30,016 | | |
$ | 300,456 | | |
| 9.99 | % | |
$ | 2,309,797 | | |
| 1.30 | % |
Add: Merger-Related Expenses (a) | |
| 144 | | |
| | | |
| | | |
| | | |
| | |
Add: Loss on Prepayment of Borrowings (b) | |
| 1,292 | | |
| | | |
| | | |
| | | |
| | |
Add: Amortization of Core Deposit Intangibles (c) | |
| 482 | | |
| | | |
| | | |
| | | |
| | |
Net Gains on Available-for-sale Debt Securities (d) | |
| (133 | ) | |
| | | |
| | | |
| | | |
| | |
Net Loss on Marketable Equity Security (e) | |
| 17 | | |
| | | |
| | | |
| | | |
| | |
Totals Used for Performance Evaluation | |
$ | 31,818 | | |
$ | 300,456 | | |
| 10.59 | % | |
$ | 2,309,797 | | |
| 1.38 | % |
| (a) | Pre-tax expenses related to the Covenant acquisition totaled $182,000 in the fourth quarter 2020. Income
tax has been allocated at the Corporation’s marginal tax rate of 21% on the estimated deductible portion of these expenses. |
| (b) | Pre-tax expenses related to loss on prepayment of borrowings totaled $1.6 million. Income tax has been
allocated at the Corporation’s marginal tax rate of 21%. |
| (c) | Pre-tax amortization of core deposit intangibles totaled $610,000. Income tax has been allocated at the
Corporation’s marginal tax rate of 21%. |
| (d) | Pre-tax realized gains on securities totaled $168,000. Income tax has been allocated to the net gains
at the Corporation’s marginal tax rate of 21%. |
| (e) | The pre-tax loss on marketable equity security totaled $22,000. Income tax has been allocated to the net
gain at the Corporation’s marginal tax rate of 21%. |
| (2) | Certain performance measurements were identified by the Corporation as 2021 Key Performance Indicators
(“KPIs”). In order for the NEOs to have the opportunity to earn the incentive award amounts indicated in the table for each
KPI, the Corporation had to first meet certain risk management requirements as measured by specific Key Risk Indicators (“KRIs”).
The KRIs functioned as a pass/fail mechanism. As of September 30, 2021, if the Corporation’s Total Summary KRI Value were to
fall outside of the middle range of possible values, or if the risk rating for any individual category were at an elevated level, the
NEOs would have been ineligible for an incentive award based on the KPIs. As of September 30, 2021, the Total KRI Summary Value and
values for each risk category were at acceptable levels. Accordingly, the NEOs were eligible for incentive awards based on the KPIs. |
| (3) | Core deposits were defined as the Corporation’s total deposits excluding time deposits. The target
award criterion growth in annual average core deposits was a 4.00% growth rate over the 4th quarter 2020 average core deposits
amount of $1.399 billion. Total average core deposits in 2021 was $1.547 billion, or 10.59% growth over the 4th quarter 2020
average. |
| (4) | Total revenue was calculated based on the Corporation’s consolidated financial results for 2021,
including the sum of: (a) total net interest income (including income from tax-exempt securities and loans on a fully-taxable equivalent
basis) and (b) noninterest income excluding securities gains and losses. The target award criterion of $100.6 million was 8.3% higher
than the corresponding total revenue for 2020 and was based on the Corporation’s 2021 budgeted total. Actual revenue for 2021 totaled
$104.9 million, or 104.34% of the target amount. |
| (5) | The Efficiency Ratio was calculated based on the Corporation’s consolidated financial results for
2021, by dividing: (a) total noninterest expense by (b) the sum of net interest income (including income from tax-exempt securities
and loans on a fully-taxable equivalent basis) and noninterest income excluding securities gains and losses. |
| (6) | Wealth Management Group revenue was based on comparison of total revenue from trust and brokerage services
and from insurance commissions received as a result of efforts by employees within that group. The target award criterion amount was 6.31%
higher than the corresponding total revenue for 2020 and was based on the Corporation’s 2021 budgeted total. The threshold award
criterion amount was established based on achieving at least 95% of the target amount. Actual revenue for 2021 totaled 109.57% of the
target amount. |
| (7) | The Individual Performance awards were based on each individual’s overall performance evaluation. |
For Mr. Hughes and Mr. Hoose,
the individual performance evaluations reflected a scale of overall ratings comparing performance to Expectations, including: Does Not
Meet, Meets, and Exceeds. In determining these ratings, results were evaluated in comparison to specific goals, including the KPIs. Also,
significant weight was given to inherently subjective evaluations of each person’s performance with regard to identified core competencies
including: strategic leadership, decision making, adaptability, customer focus, teamwork/partnering, accountability and drive for results/resource
management.
Mr. Scovill’s Individual
Performance award was determined by the Board of Directors, based on recommendation of the Compensation Committee, and based on assessment
of Mr. Scovill’s contributions to overall corporate performance.
Long-term
Performance Incentives. As a part of our annual compensation review process, we worked with our outside Compensation Consultant
in 2020 to review pay opportunities relative to market and used those results to make changes/pay decisions for 2021. As a result of this
review, the Committee elected to grant equity awards, including time-based and performance-based awards in January 2021. The awards
are as follows:
Name | |
Title | |
2020 Base
Salary | | |
LTI Award
as % of
Base Salary | | |
Grant Date Fair
Value of LTI Awards | |
Grant Date | |
Grant
Date
Share
Price | | |
# of Shares
Granted at
Target (1) | |
J. Bradley Scovill | |
Chief Executive Officer | |
$ | 475,000 | | |
| 45.0 | % | |
$ |
213,754 | |
1/29/2021 | |
$ | 20.02 | | |
10,677 | |
Mark A. Hughes | |
EVP and Chief Financial Officer | |
$ | 290,000 | | |
| 30.0 | % | |
$ |
87,007 | |
1/29/2021 | |
$ | 20.02 | | |
4,346 | |
Harold F. Hoose, III | |
EVP and Chief Revenue Officer | |
$ | 245,000 | | |
| 37.5 | % | |
$ |
91,872 | |
1/29/2021 | |
$ | 20.02 | | |
4,589 | |
(1) As described above, all of the awards granted to NEOs in 2021 consisted of 50% RSAs and 50% PRSAs, vesting over a three-year period.
Consideration of Say-On-Pay Advisory Vote
At our 2021 annual meeting
of shareholders, approximately 94% of our shareholders who voted on the “say-on-pay” proposal (excluding broker non-votes
and abstentions) approved the compensation we pay to our named executive officers. The Compensation Committee believes that the shareholder
vote reflects fundamental support for our compensation philosophy. Accordingly, we have not modified our practices or philosophy as a
result of the 2021 advisory vote.
The Corporation’s current
practice is to conduct a say-on-pay advisory vote each year. The Compensation Committee values the opinions of shareholders and carefully
evaluates the say-on-pay advisory vote results when determining future compensation.
Risk Management
We do not believe that the
Corporation’s compensation programs and practices present any risks that are reasonably likely to have a material adverse effect
on the Corporation.
The Committee believes that
the direct compensation components of the executive compensation program—salary, annual incentive opportunities, equity grants—are
reasonable, competitive and approximate the median of prevailing industry practices. The Committee intends to maintain the current leveraged
approach to total compensation, directly tying a significant portion of an executive’s total earnings to achievements against goals
and objectives approved by the Board of Directors, while balancing the approach with appropriate controls to ensure that management is
not incented to take excessive risks.
Recoupment Policy
The Corporation has an executive
compensation recoupment policy pursuant to which annual cash bonuses, stock-based awards, performance-based compensation and other forms
of cash or equity compensation other than salary paid to executive officers are subject to a "clawback" pursuant to the recoupment
policy in the event the Corporation is required to restate its audited financial statements due to material non-compliance with financial
reporting requirements under the securities laws.
Executive Compensation Tables
The following tables set forth
for the fiscal years ended December 31, 2021 and 2020, the compensation which the Corporation and its subsidiaries paid to its named
executive officers.
Summary Compensation Table
The following table contains
information with respect to annual compensation for services in all capacities to the Corporation and the Bank for the fiscal year ended
December 31, 2021, with comparative information for 2020, of those persons who were, (i) the Chief Executive Officer, (ii) the
Chief Financial Officer and (iii) the other most highly compensated executive (collectively, the “named executive officers”)
to the extent such person’s total compensation exceeded $100,000:
| |
| | |
| | |
| | |
| | |
| | |
| | |
Change in | | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
Pension Value | | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
and | | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| | |
Non-Equity | | |
Nonqualified | | |
All | | |
| |
| |
| | |
| | |
| | |
Stock | | |
Option | | |
Incentive Plan | | |
Deferred Plan | | |
Other | | |
| |
Name and | |
| | |
Salary | | |
Bonus(1) | | |
Awards(2) | | |
Awards(3) | | |
Compensation(4) | | |
Compensation | | |
Compensation(5) | | |
Total | |
Principal
Position | |
Year | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
J.
BRADLEY SCOVILL | |
| 2021 | | |
| 498,750 | | |
| - | | |
| 213,754 | | |
| - | | |
| 186,929 | | |
| - | | |
| 209,760 | | |
| 1,109,193 | |
President
and | |
| 2020 | | |
| 475,000 | | |
| - | | |
| 196,638 | | |
| - | | |
| 208,727 | | |
| - | | |
| 165,546 | | |
| 1,045,911 | |
Chief Executive
Officer | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
MARK A.
HUGHES | |
| 2021 | | |
| 300,000 | | |
| 500 | | |
| 87,007 | | |
| - | | |
| 91,877 | | |
| - | | |
| 68,691 | | |
| 548,075 | |
Executive
Vice President | |
| 2020 | | |
| 290,000 | | |
| 500 | | |
| 82,633 | | |
| - | | |
| 109,230 | | |
| - | | |
| 64,688 | | |
| 547,051 | |
and Chief
Financial Officer | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
HAROLD
F. HOOSE, III | |
| 2021 | | |
| 267,750 | | |
| 500 | | |
| 91,872 | | |
| - | | |
| 89,027 | | |
| - | | |
| 59,829 | | |
| 508,978 | |
Executive
Vice President | |
| 2020 | | |
| 245,000 | | |
| 500 | | |
| 84,541 | | |
| - | | |
| 83,326 | | |
| - | | |
| 53,479 | | |
| 466,845 | |
and Chief
Revenue Officer | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
(1)
The bonus amounts paid to Mr. Hughes and Mr. Hoose were paid pursuant to discretionary “holiday awards”
that were paid in December of each year to essentially all employees except the Chief Executive Officer.
(2)
The grant date fair market value of stock awards is computed in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (the “ASC”) topic 718, “Compensation—Stock Compensation,”
excluding the effect of estimated forfeitures. The value used for restricted stock awards is based on the market value of the stock
at the grant date. The amounts shown in the “Stock Awards” column equal the values of restricted stock awards determined based
on the average of the high and low stock price at each grant date. For 2021, the value as of the grant date for the January 29, 2021
time-based awards was $20.02 per share. The value of time-based awards granted January 31, 2020 was $26.37 per share, and the value
of performance based awards granted March 16, 2020 was $19.17 per share.
Restricted stock awards to NEOs under the Stock
Incentive Plan in 2021 and 2020 provided for vesting over a three-year term, with vesting for half of the shares dependent on satisfactory
performance (time vesting) and vesting for half of the shares based on time vesting and upon the Corporation meeting an ROAE (one-sixth
of the total shares awarded) and ROAA (one-sixth of the total shares awarded) performance ratio, as defined. In 2021, the Corporation
met the performance condition based on ROAA but did not meet the performance condition based on ROAE. Accordingly, in the first quarter
2022, the following forfeitures of restricted stock awarded in 2019 occurred: Mr. Scovill – 1,293 shares; Mr. Hughes -
559 shares; and Mr. Hoose – 564 shares. In 2020, the Corporation met the performance condition defined in the awards.
(3)
There were no options awarded in 2021 or 2020.
(4)
The amounts shown in the “Non-Equity Incentive Plan Compensation” column were paid pursuant to the Incentive
Award Plan, which is described in the “Program Components” section of Compensation Discussion and Analysis.
(5)
Amounts shown as “All Other Compensation” include the following:
ALL OTHER COMPENSATION
TABLE |
| |
| | |
Employer | | |
| | |
| | |
| | |
| | |
| | |
| |
| |
| | |
Contributions | | |
Employer | | |
Employer | | |
| | |
| | |
| | |
| |
| |
| | |
to the | | |
Contributions | | |
Contributions to | | |
Dollar Value of | | |
| | |
| | |
| |
| |
| | |
Employee | | |
to the 401 (k) | | |
the Supplemental | | |
Insurance Premium | | |
Dividends | | |
Perquisites | | |
| |
| |
| | |
Stock | | |
Employee | | |
Executive | | |
paid for Group- | | |
Paid on | | |
and Other | | |
| |
| |
| | |
Ownership | | |
Savings | | |
Retirement | | |
Term Life and Long- | | |
Restricted | | |
Personal | | |
| |
| |
| | |
Plan | | |
Plan | | |
Plan (SERP) | | |
Term Disability | | |
Stock | | |
Benefits(1) | | |
Total | |
Name | |
Year | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
J. Bradley Scovill | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 2021 | | |
| 11,600 | | |
| 14,500 | | |
| 135,143 | | |
| 2,388 | | |
| 21,737 | | |
| 24,392 | | |
| 209,760 | |
| |
| 2020 | | |
| 11,400 | | |
| 14,250 | | |
| 112,706 | | |
| 2,388 | | |
| 14,581 | | |
| 10,221 | | |
| 165,546 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Mark A. Hughes | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 2021 | | |
| 11,600 | | |
| 14,500 | | |
| 30,591 | | |
| 2,388 | | |
| 9,012 | | |
| 600 | | |
| 68,691 | |
| |
| 2020 | | |
| 11,400 | | |
| 14,250 | | |
| 30,469 | | |
| 1,751 | | |
| 6,218 | | |
| 600 | | |
| 64,688 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Harold F. Hoose, III | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 2021 | | |
| 11,600 | | |
| 14,500 | | |
| 16,499 | | |
| 1,197 | | |
| 9,362 | | |
| 6,672 | | |
| 59,830 | |
| |
| 2020 | | |
| 11,400 | | |
| 14,250 | | |
| 14,708 | | |
| 1,197 | | |
| 6,297 | | |
| 5,627 | | |
| 53,479 | |
| (1) | Perquisites and other personal benefits include the estimated personal use portion of the cost of a company-supplied
automobile and personal reimbursement for cell phones and club memberships, which were used primarily, but not exclusively, for business
purposes. |
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth
information with respect to outstanding stock options and non-vested stock awards as of December 31, 2021 for the named executive
officers.
| |
Option
Awards | | |
| | |
| | |
Stock Awards | |
| |
| | |
| | |
| | |
| | |
Market | |
| |
Number of | | |
| | |
| | |
Number of | | |
Value of | |
| |
Securities | | |
| | |
| | |
Shares or | | |
Shares or | |
| |
Underlying | | |
| | |
| | |
Units of | | |
Units of | |
| |
Unexercised | | |
Option | | |
| | |
Stock | | |
Stock | |
| |
Options | | |
Exercise | | |
Option | | |
That Have | | |
That Have | |
| |
(#) | | |
Price | | |
Expiration | | |
Not Vested | | |
Not Vested | |
Name | |
Exercisable | | |
($) | | |
Date | | |
(#) | | |
($) | |
J. Bradley Scovill | |
| - | | |
| - | | |
| - | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| 19,167 | | |
$ | 500,642 | |
Total: | |
| 0 | | |
| | | |
| Total: | | |
| 19,167 | | |
$ | 500,642 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Mark A. Hughes | |
| 2,000 | | |
| 19.210 | | |
| 1/3/2023 | | |
| | | |
| | |
| |
| 5,024 | | |
| 20.450 | | |
| 1/3/2024 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| 7,944 | | |
$ | 207,497 | |
Total: | |
| 7,024 | | |
| | | |
| Total: | | |
| 7,944 | | |
$ | 207,497 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Harold F. Hoose, III | |
| 5,622 | | |
| 19.210 | | |
| 1/3/2023 | | |
| | | |
| | |
| |
| 3,521 | | |
| 20.450 | | |
| 1/3/2024 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| 8,255 | | |
$ | 215,621 | |
Total: | |
| 9,143 | | |
| | | |
| Total: | | |
| 8,255 | | |
$ | 215,621 | |
Employment Agreements
The Corporation and the Bank
have entered into employment agreements with each of the named executive officers (collectively, the “Employment Agreements”).
The employment agreement with Mr. Scovill has an effective date of March 2, 2015, and the employment agreements with Mr. Hughes
and Mr. Hoose were effective September 19, 2013. The following summarizes the material terms of the Employment Agreements.
The employment agreement with
Mr. Scovill provided for an initial three (3) year term at an initial annual base salary of $380,000. In June 2017, the
Corporation and Bank, and Mr. Scovill, entered into an amendment to the employment agreement which extended the end date of the initial
term by one (1) year to March 1, 2019 and provided for automatic renewal for successive twelve (12) month terms, unless either
the Corporation or Mr. Scovill would give written notice of non-renewal at least ninety (90) days prior to the next renewal date.
The Corporation and Bank and Mr. Scovill entered into a second amendment to the employment agreement on August 24, 2018 which
modifies and extends the employment period to provide for automatic renewals for successive three (3) year terms unless either the
Corporation or Mr. Scovill gives written notice of non-renewal at least 90 days prior to the next renewal date. The second
amendment also amended the formula for determining the amount of cash payments to Mr. Scovill in the event of a termination of employment
by the Corporation without “cause” or by Mr. Scovill for “good reason,” as described below, to include the
value of stock-based incentives awarded to Mr. Scovill. Other features of the employment agreement with Mr. Scovill are included
in the summary of descriptions of the Employment Agreements that follow.
The initial term of the Employment
Agreement with Mr. Hughes expired September 19, 2016 and provides that the term of the agreement shall be automatically renewed
on each September 19th for successive three (3) year terms, unless either the Corporation or the executive gives written notice
of nonrenewal at least 90 days prior to the next renewal date in which case this Agreement will continue in effect for a term ending two
(2) years from the Annual Renewal Date immediately following such notice. The Employment Agreement with Mr. Hoose had an initial
expiration date of September 30, 2015 and has been extended through September 30, 2022. The Employment Agreement with Mr. Hoose
provides that the term of the agreement shall be automatically extended an additional twelve (12) months, unless written notice of nonrenewal
is provided no later than July 19th of each successive calendar year.
Under the Employment Agreements,
each executive is eligible to receive annual incentive payments and stock based incentives as determined by the Compensation Committee,
which may, but need not be, issued under any incentive plan maintained by the Company, and is eligible to participate in any retirement
plan, deferred compensation plan, welfare benefit plan or other benefit program in which full-time employees of the Bank are eligible
to participate.
The Employment Agreements
also provide each executive with reimbursement of business expenses and paid vacation in accordance with Corporation or Bank policies
and procedures and, with respect to Mr. Scovill and Mr. Hoose, use of a Bank owned automobile and a country club membership.
Each Employment Agreement
contains customary nondisclosure and mutual non-disparagement provisions and, in the case of Mr. Scovill and Mr. Hughes, a twenty-four
(24) month non-competition and non-solicitation covenant and, in the case of Mr. Hoose, an eighteen (18) month non-competition and
non-solicitation covenant, in each case applicable within thirty-five (35) miles of any office of the Corporation or the Bank after voluntary
or involuntary termination of the executive’s employment with the Corporation and the Bank.
Each Employment Agreement
also provides that the executive may terminate his employment for “good reason” (as defined in the agreement) after notice
to the Corporation or the Bank within thirty (30) days after the initial existence of the condition giving rise to the right to terminate
and the failure of the Corporation or Bank to cure the situation within thirty (30) days after receipt of such notice.
Additionally, each Employment
Agreement provides for a lump sum payment to the executive in the event of a termination of employment by the Corporation without “cause”
(as defined in the agreement) or by the executive for “good reason” (as defined in the agreement) following a “change
in control” (as defined in the agreement) or absent a change in control, such payment to be equal to the sum of the highest annual
base salary earned by the executive during the immediately preceding three (3) years, plus the highest cash bonus and other incentive
compensation earned with respect to one of the three preceding years, plus the highest value of stock options and other stock incentives
awarded to the executive in one of the immediately preceding three years, multiplied by a predetermined factor depending on the executive
and whether the executive was terminated following a change in control. Additionally, each of the Employment Agreements provides for the
continuation of the executive’s participation in the Bank’s life, disability, medical/health insurance and other welfare benefits
in effect during the one (1) year period preceding the termination of employment (or a cash payment representing the value of such
benefits). The factor applicable to each of the executives for purposes of determining the lump sum payment and the time period for which
benefits are to be continued are set forth in the following table.
The employment agreements
in effect on December 31, 2021 do not provide for an excise tax gross-up pursuant to Section 280G of the Internal Revenue Code.
In the event any payments to our named executive officers would otherwise constitute a parachute payment under Section 280G of the
Internal Revenue Code, the payments will be limited to the greater of (i) the dollar amount which can be paid to such named executive
officer without triggering an excise tax under Section 4999 of the Internal Revenue Code or (ii) the greatest after-tax dollar
amount after taking into account any excise tax incurred under Section 4999 of the Internal Revenue Code with respect to such parachute
payments.
| |
Multiplier Factor | | |
Benefits Continuation Period |
Executive | |
Change
in Control | | |
Absent a Change in
Control | | |
Change
in Control | |
Absent a Change in
Control |
J. Bradley Scovill | |
| 2.99 | X | |
| 1.0 | X | |
3 Years | |
1 Year |
Mark A. Hughes | |
| 2.99 | X | |
| 1.0 | X | |
3 Years | |
1 Year |
Harold F. Hoose, III | |
| 1.5 | X | |
| 0.5 | X | |
18 Months | |
6 Months |
Potential Payments upon Termination or Change in Control
The table that follows provides
quantitative information regarding contracts, agreements, plans or arrangements that provide for payments to a named executive officer
upon termination of employment. The table does not include information with respect to contracts, agreements, plans or arrangements to
the extent they do not discriminate in scope, terms, or operation, in favor of executive officers or the Corporation and that are available
generally to all salaried employees.
As of December 31, 2021: | |
| | |
Supplemental | | |
| | |
Value of | |
| |
| | |
Executive | | |
Health | | |
Restricted | |
| |
| | |
Retirement | | |
And | | |
Stock | |
| |
| | |
Plan | | |
Welfare | | |
Subject to | |
| |
Cash | | |
Benefit | | |
Benefits | | |
Acceleration | |
Name | |
($) | | |
($) | | |
($) | | |
($) | |
Termination Due to Retirement | |
| | | |
| | | |
| | | |
| | |
J. Bradley Scovill | |
| - | | |
| 774,100 | | |
| - | | |
| - | |
Mark A. Hughes | |
| - | | |
| 481,571 | | |
| - | | |
| - | |
Harold F. Hoose, III | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Termination Due to Disability | |
| | | |
| | | |
| | | |
| | |
J. Bradley Scovill | |
| - | | |
| 774,100 | | |
| - | | |
| - | |
Mark A. Hughes | |
| - | | |
| 481,571 | | |
| - | | |
| - | |
Harold F. Hoose, III | |
| - | | |
| 198,341 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Termination Without Cause or for Good Reason - Before a Change in Control | |
| | |
J. Bradley Scovill | |
| 921,231 | | |
| 774,100 | | |
| 12,067 | | |
| - | |
Mark A. Hughes | |
| 496,737 | | |
| 481,571 | | |
| 12,316 | | |
| - | |
Harold F. Hoose, III | |
| 224,575 | | |
| - | | |
| 8,003 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Termination Due to Death | |
| | | |
| | | |
| | | |
| | |
J. Bradley Scovill | |
| - | | |
| 774,100 | | |
| - | | |
| - | |
Mark A. Hughes | |
| - | | |
| 481,571 | | |
| - | | |
| - | |
Harold F. Hoose, III | |
| - | | |
| 198,341 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Termination Without Cause or for Good Reason - Upon or After a Change in Control |
J. Bradley Scovill | |
| 2,754,481 | | |
| 774,100 | | |
| 36,201 | | |
| 500,642 | |
Mark A. Hughes | |
| 1,485,244 | | |
| 481,571 | | |
| 36,948 | | |
| 207,497 | |
Harold F. Hoose, III | |
| 673,724 | | |
| 198,341 | | |
| 24,008 | | |
| 215,621 | |
Indemnification Agreements
On April 20, 2004, the
shareholders of the Corporation authorized the Corporation to enter into indemnification agreements (the “Indemnification Agreements”)
with the directors of the Corporation and the Bank and certain officers of the Bank, as designated by the Board of Directors. The primary
purpose of the Indemnification Agreements is to ensure the ability of the Corporation and Bank to continue to attract and retain responsible,
competent and otherwise qualified directors and officers. Indemnification Agreements have been entered into with all Directors of the
Bank and the Corporation, as well as the Corporation’s and Bank’s Executive Officers as named on pages 9-13.
The Indemnification Agreements
provide to covered directors and officers the most advantageous of any combination of benefits under (i) the benefits provided by
the Bylaws of the Corporation in effect as of the date the agreements were entered into; (ii) the benefits provided by the Bylaws,
the Articles of Incorporation or their equivalent of the Corporation in effect at the time indemnification expenses are incurred by an
indemnitee; (iii) the benefits allowable under Pennsylvania law in effect on the date of the agreements; (iv) the benefits allowable
under the law of the jurisdiction under which the Corporation exists at the time indemnifiable expenses are incurred by an indemnitee;
(v) the benefits available under a liability insurance policy obtained by the Corporation and its subsidiaries in effect on the date
of the agreements; (vi) the benefits available under a liability insurance policy obtained by the Corporation and its subsidiaries,
in effect at the time the indemnifiable expenses are incurred by an indemnitee; and (vii) such other benefits as are or may otherwise
be available to the indemnitee.
The Corporation is not obligated
to, nor has it agreed to provide funding for its obligations under the agreements. The Corporation is obligated, however, to pay its obligations
under the agreements from general assets or insurance. The agreements do require the Corporation to continue to purchase D&O Coverage
for so long as it is available on a commercially reasonable basis.
The indemnification available
pursuant to the agreements is subject to a number of exclusions. No indemnification is required under the agreements with respect to any
claim as to which it is finally proven by clear and convincing evidence in a court of competent jurisdiction that the covered person acted
or failed to act with deliberate intent to cause injury to the Corporation or a subsidiary thereof or with reckless disregard for the
Corporation’s best interest. The Corporation is also not required to make any payment finally determined by a court to be unlawful
or any payment required under Section 16(b) of the Securities and Exchange Act of 1934, as amended. In addition, any claim (or
part thereof) against an indemnitee which falls within the prohibitions of 12 C.F.R. §7.5217 (i.e., a prohibition on indemnification
or insurance coverage for expenses, penalties or other payments incurred in connection with an action by a banking regulatory agency which
results in a final order assessing monetary penalties or requiring affirmative action in the form of payment to the bank) is excluded
from indemnification under the agreements.
Compensation of Directors
The following table summarizes
the compensation paid by the Corporation and Bank to directors for the fiscal year ended December 31, 2021, other than J. Bradley
Scovill who did not receive compensation as a director.
DIRECTOR COMPENSATION (1)(2)(3)
| |
Fees | | |
| | |
| |
| |
Earned or | | |
| | |
| |
| |
Paid in | | |
Stock | | |
| |
| |
Cash (4) | | |
Awards (5) | | |
Total | |
Name | |
($) | | |
($) | | |
($) | |
Stephen M. Dorwart | |
| 44,575 | | |
| 20,000 | | |
| 64,575 | |
Clark S. Frame | |
| 47,600 | | |
| 20,000 | | |
| 67,600 | |
Susan E. Hartley | |
| 49,200 | | |
| 20,000 | | |
| 69,200 | |
Bobbi J. Kilmer | |
| 51,000 | | |
| 20,000 | | |
| 71,000 | |
Leo F. Lambert | |
| 63,483 | | |
| 20,000 | | |
| 83,483 | |
Terry L. Lehman | |
| 66,617 | | |
| 20,000 | | |
| 86,617 | |
Robert G. Loughery | |
| 40,600 | | |
| 20,000 | | |
| 60,600 | |
Frank G. Pellegrino | |
| 52,600 | | |
| 20,000 | | |
| 72,600 | |
Helen S. Santiago | |
| 21,900 | | |
| 0 | | |
| 21,900 | |
Timothy E. Schoener | |
| 42,700 | | |
| 20,000 | | |
| 62,700 | |
Katherine W. Shattuck | |
| 12,600 | | |
| 0 | | |
| 12,600 | |
Aaron K. Singer | |
| 51,000 | | |
| 20,000 | | |
| 71,000 | |
(1) The
columns disclosing option awards, non-equity incentive plan compensation, changes in pension value and nonqualified deferred compensation
earnings, and other forms of compensation have been omitted from the table because no director earned any compensation during 2021 of
a type required to be disclosed in those columns.
(2) As
of December 31, 2021, non-employee directors except Directors Santiago and Shattuck each owned 999 shares of common stock awarded
pursuant to the Independent Directors Stock Incentive Plan (described below) for which transfer restrictions had not yet lapsed. For the
Directors, those shares had a value of $26,094 based on the closing price of the Corporation’s common stock on December 31,
2021 (the last business day of the year). Directors Santiago and Shattuck were not Directors when the 2021 restricted stock was awarded.
(3) Effective
January 31, 2022, the Corporation awarded 799 shares of restricted stock under the Independent Director Stock Incentive Plan to each
director. The value of the restricted stock was $25.02 per share, based on the market price of the Corporation’s stock on January 28,
2022, and vest over (1) one year. The awards made in January 2022 are not included in the table.
(4) Includes
annual cash retainer, Chairman or Committee chair retainer (if any) and attendance fees.
(5) The
amount shown in the “Stock Awards” column equals the value of restricted stock awards of 999 shares, determined based on the
grant date fair market value of $20.02 per share.
Director
Fees. Compensation of the Board of Directors is established by the Board upon recommendation of the Compensation Committee.
In developing its recommendations for 2021, the Compensation Committee considered information provided by Pearl Meyer.
Non-employee directors receive
cash compensation for their service as directors in accordance with the following fee schedule. Employee directors are not entitled to
additional compensation for board or committee service.
Annual Fees: | |
| | |
Cash Retainer (all Directors, including Chairman) | |
$ | 20,000 | |
Chairman of the Board | |
$ | 25,000 | |
| |
| | |
Committee Chairman: | |
| | |
Audit Committee | |
$ | 7,500 | |
Compensation Committee | |
$ | 5,000 | |
All Other Committees | |
$ | 4,000 | |
| |
| | |
Per-Meeting Attendance Fees: | |
| | |
Board meetings (all Directors) | |
$ | 1,000 | |
| |
| | |
Committee meetings | |
| | |
Audit Committee | |
$ | 700 | |
Compensation Committee | |
$ | 700 | |
All Other Committees | |
$ | 600 | |
A director who, by invitation,
attends a meeting of a committee of which he or she is not a regular member will be paid the same attendance fee as is payable to members
of that committee. Attendance fees are not doubled in the event of joint meetings of the Corporation and Bank Boards.
Independent
Directors Stock Incentive Plan. In addition to cash fees, non-employee directors may also receive compensation in the form
of Corporation common stock or stock options under the Independent Directors Stock Incentive Plan. This plan permits awards of nonqualified
stock options and/or restricted stock to non-employee directors. A total of 235,000 shares of common stock may be issued under the Independent
Directors Stock Incentive Plan. The recipient’s right to exercise stock options under this plan vests immediately and expires 10
years from the date of grant. The exercise prices of all stock options awarded under the Independent Directors Stock Incentive Plan are
equal to the fair market value on the grant date. Restricted stock awards issued under the plan through December 31, 2021 vest ratably
over one (1) year. As of December 31, 2021, a balance of 96,309 shares remains available for issuance under the Independent
Directors Stock Incentive Plan.
PROPOSAL 2 -- ADVISORY NON-BINDING VOTE ON EXECUTIVE
COMPENSATION
The Corporation is required
to provide its shareholders with a separate, non-binding advisory vote on the compensation paid to the Corporation’s named executive
officers pursuant to the policies and procedures employed by the Corporation, as described in the Compensation Discussion and Analysis
(CD&A) and tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure)
in this Proxy Statement.
For the reasons set forth
in this Proxy Statement, we believe that our compensation policies and procedures are centered on a pay-for-performance culture, are competitive
in our marketplace, are strongly aligned with the long-term interests of our shareholders, and that the compensation paid to our executives
is consistent with such policies and procedures.
This proposal, commonly known
as a “Say-on-Pay” proposal, gives you as a shareholder the opportunity to endorse or not endorse our executive pay program
and policies through the following resolution:
“Resolved, that the
shareholders approve the compensation paid to the Named Executive Officers of the Corporation pursuant to the policies and procedures
employed by the Corporation, as described in the Compensation Discussion and Analysis and tabular disclosure regarding Named Executive
Officer compensation (together with the accompanying narrative disclosure) in this Proxy Statement.”
Because your vote is advisory,
it will not be binding upon the Board. However, the Compensation Committee will consider the outcome of the vote when considering future
executive compensation arrangements.
The Board of Directors recommends a vote “FOR”
approval of the compensation paid to the Named Executive Officers of the Corporation pursuant to the policies and procedures employed
by the Corporation, as described in the Compensation Discussion and Analysis and tabular disclosure regarding the Named Executive Officer
compensation (together with the accompanying narrative disclosure) in this Proxy Statement.
PROPOSAL 3 – AMENDMENT TO THE CORPORATION'S
ARTICLES OF INCORPORATION
Vote Required for Approval
The Board of Directors of
the Corporation, at a meeting held on February 17, 2022, unanimously adopted a resolution approving and recommending to the shareholders
for their adoption an amendment to the Articles of Incorporation of the Corporation in order to increase the number of authorized shares
of common stock from 20 million to 30 million.
The Corporation's Articles
of Incorporation currently provide for 20 million authorized shares of common stock, par value $1.00 per share, and 30,000 shares of
preferred stock, par value $1,000.00 per share. As of February 1, 2022, there were 15,980,821 shares of common stock outstanding.
In addition, the Corporation has reserved shares of common stock for issuance pursuant to its dividend reinvestment and stock purchase
plans and its equity compensation programs. Currently no preferred shares are issued or outstanding.
Proposed Amendment
The proposed amendment would
increase the number of authorized shares of common stock from 20 million shares to 30 million shares. The full text of the amendment
is as follows:
The first paragraph of Article FIFTH
of the Articles of Incorporation is hereby amended to read in its entirety as follows:
"FIFTH. The
total number of shares of all classes of the capital stock that the Corporation has the authority to issue is 30,030,000, of which 30,000,000
shall be common stock, $1.00 par value per share, and 30,000 shall be preferred stock, $1,000.00 par value per share. The shares may
be issued by the Corporation from time to time as authorized by the Board of Directors without the approval of the stockholders except
as otherwise provided in this Article FIFTH or to the extent that such approval is required by governing law, rule or regulation.
The consideration for the issuance of the shares shall be paid in full before their issuance and shall not be less than the par value
per share. Neither promissory notes nor further services shall constitute payment or part payment for the issuance of shares of the Corporation.
The consideration for the shares shall be cash, tangible or intangible property (to the extent direct investment in such property would
be permitted), labor or services actually performed for the Corporation or any combination of the foregoing. In the absence of actual
fraud in the transaction, the value of such property, labor, or services, as determined by the Board of Directors of the Corporation,
shall be conclusive. Upon payment of such consideration, such shares shall be deemed to be fully paid and non-assessable. In the case
of a stock dividend, the part of the surplus of the Corporation that is transferred to stated capital upon the issuance of shares as
a share dividend shall be deemed to be the consideration for their issuance."
All other provisions of the
Articles of Incorporation, including the other paragraphs of Article FIFTH, will remain unaffected and in full force and effect.
No change is being proposed with respect to the preferred shares.
All shares of common stock,
including those currently authorized and those which would be authorized by the proposed amendment, are equal in rank and have the same
voting, dividend and liquidation rights. There are no preemptive rights associated with the Corporation's common stock.
Reasons for the Proposed
Increase in Common Stock
The Board of Directors believes
that the proposed increase in the number of authorized shares of common stock is desirable so that a sufficient number of shares of common
stock will be available for issuance from time to time without further action or authorization by the shareholders. The additional authorized
shares of common stock may be used as consideration in acquisitions, in connection with equity financing, stock splits, dividends, employee
and non-employee director benefit plans, dividend reinvestment and stock purchase plans and other corporate purposes determined by the
Board of Directors to be in the best interests of the Corporation.
The Board of Directors has
no specific present plans, arrangements, or undertakings for the issuance of the additional shares of common stock.
The authorization of the
additional shares will not, by itself, have any effect on the rights of the Corporation's shareholders. The issuance of additional shares
for corporate purposes other than a stock dividend or stock split could have, among other things, a dilutive effect on earnings per share
and on the equity percentage and voting power of shareholders at the time of issuance.
Effective Date
If the proposed amendment
is approved by the shareholders, it will become effective on the date upon which the necessary filings are made with the Pennsylvania
Secretary of State. Such filings will be made as soon as practicable following shareholder approval.
Vote Required for Approval
The affirmative vote of a
majority of the votes cast is required to approve the proposed amendment.
Recommendation of the
Board of Directors
The Board of Directors recommends
a vote FOR approval of the amendment to the Articles of Incorporation to increase the number of authorized shares of common stock
from 20 million to 30 million.
PROPOSAL 4 -- RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Baker Tilly was selected
by the Board as the independent registered public accounting firm for the Corporation for the fiscal year ending December 31, 2022.
Baker Tilly, including predecessor firms, has been the independent registered public accounting firm for the Corporation since 1979.
No member of the firm or any of its associates has a material financial interest in the Corporation. A representative of Baker Tilly
is expected to be present at the Annual Meeting to answer appropriate questions from shareholders and will be afforded an opportunity
to make any statement that the firm desires.
At its meeting on February 17,
2022, the Audit Committee selected Baker Tilly to be the Corporation’s independent registered public accounting firm for the year
ending December 31, 2022.
The affirmative vote of a
majority of the votes cast at the meeting, in person or by proxy, is required to ratify the appointment of Baker Tilly as the Corporation’s
independent registered public accounting firm. Abstentions and broker non-votes will have no effect in calculating the votes on this
matter.
The Board of Directors
recommends a vote “FOR” ratification of the appointment of Baker Tilly US, LLP as the Corporation’s independent registered
public accounting firm for the fiscal year ending December 31, 2022.
Fees of Independent Registered Public Accounting
Firm
The following table sets
forth information concerning fees paid to independent public accountants for the years ended December 31, 2021 and 2020. All services
provided by Baker Tilly in 2021 and 2020 were pre-approved by the Audit Committee, consistent with the limits provided for in the Audit
Committee Charter.
| |
Fiscal Years Ended | |
| |
December 31, | |
| |
2021 | | |
2020 | |
Audit Fees | |
| | | |
| | |
Audit of Annual consolidated financial statements and | |
| | | |
| | |
audit of internal control over financial reporting | |
| | | |
| | |
and reviews of Quarterly financial statements | |
$ | 281,280 | | |
$ | 289,800 | |
| |
| | | |
| | |
Audit-Related Fees | |
| | | |
| | |
Services rendered in connection with business combinations | |
| 0 | | |
| 92,550 | |
Audits of employee benefit plans | |
| 20,881 | | |
| 21,212 | |
| |
| | | |
| | |
Tax Fees | |
| | | |
| | |
Preparation of Corporation tax returns | |
| 30,205 | | |
| 26,080 | |
| |
| | | |
| | |
Aggregate of all fees billed to the Corporation | |
$ | 332,366 | | |
$ | 429,642 | |
Audit Committee Report
On February 17, 2022,
the Audit Committee of the Board of Directors reviewed and discussed with management the audited financial statements dated December 31,
2021. The Audit Committee also discussed with Baker Tilly, the independent registered public accounting firm of the Corporation, the
matters required to be discussed with those charged with governance pursuant to the Public Company Accounting Oversight Board Auditing
Standard AS 1301(Communications with Audit Committees).
The Audit Committee has received
from Baker Tilly, the written disclosure and the letter required by PCAOB Rule 3526 (Communication with Audit Committees Concerning
Independence) and has discussed Baker Tilly’s independence with its representatives. These items relate to that firm’s independence
from the Corporation.
Based on its review and discussions
referred to above, the Committee has recommended to the Board of Directors that the audited financial statements be included in the Corporation’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for filing with the Securities and Exchange Commission.
Audit Committee
Stephen M. Dorwart, Chairman |
Leo
F. Lambert |
Susan E. Hartley |
Helen
S. Santiago |
Clark S. Frame |
Terry
L. Lehman |
Aaron K. Singer |
|
ANNUAL REPORT ON FORM 10-K
A copy of the Corporation’s
Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC, was made available to shareholders
with this proxy statement. The Annual Report on Form 10-K is also available at www.cnbankpa.com.
A paper copy of the Annual
Report on Form 10-K will be furnished to shareholders free of charge upon written request. Such requests should be directed to the
Treasurer of Citizens & Northern Corporation at 90-92 Main Street, Wellsboro, PA, 16901, or by phone at 570-724-3411.
OTHER MATTERS
The management of the Corporation
does not intend to bring any other matters before the Annual Meeting and is not presently informed of any other business which others
may bring before such meeting. However, if any other matters should properly come before such meeting or any adjournment thereof, it
is the intention of the persons named in the accompanying proxy to vote on such matters as they, in their discretion, determine.
| 1.ELECTION OF CLASS II DIRECTORS.
Susan E. Hartley
Leo F. Lambert
Helen S. Santiago
Katherine W. Shattuck
2. TO APPROVE, IN AN ADVISORY (NON-BINDING) VOTE, THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THE PROXY
STATEMENT.
3. TO AMEND THE CORPORATION'S ARTICLES OF INCORPORATION TO INCREASE
THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK THAT THE
CORPORATION MAY ISSUE FROM 20 MILLION SHARES TO 30 MILLION SHARES.
4. RATIFICATION OF THE APPOINTMENT OF THE FIRM OF BAKER TILLY US, LLP AS
THE CORPORATION'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE YEAR ENDING DECEMBER 31, 2022.
5. OTHER MATTERS. In their discretion, to vote with respect to any other matters that may
properly come before the Meeting or any adjournments thereof.
nomineeS:
important notice of availability of Proxy materials for the Shareholder meeting of
CitiZenS & northern CorPoration to Be held on:
april 21, 2022 at 2:00 p.m. Local time
virtually at https://web.lumiagm.com/244346915 Password: citizens2022 (case sensitive)
this communication presents only an overview of the more complete proxy materials that are available to you on the internet. we
encourage you to access and review all of the important information contained in the proxy materials before voting.
if you want to receive a paper or e-mail copy of the proxy materials you must request one. there is no charge to you for requesting a
copy. to facilitate timely delivery please make the request as instructed below before 4/11/2022.
Please visit http://www.astproxyportal.com/ast/11697/, where the following materials are available for view:
• Annual Highlights
• Notice of Annual Meeting of Stockholders
• Proxy Statement
• Form of Electronic Proxy Card
• Annual Report on Form 10-K
to reqUeSt materiaL: teLePhone: 888-Proxy-na (888-776-9962) and 718-921-8562 (for international callers)
e-maiL: info@astfinancial.com
weBSite: https://us.astfinancial.com/onlineProxyVoting/ProxyVoting/requestmaterials
to Vote: onLine: To access your online proxy card, please visit www.voteproxy.com and follow the on-screen
instructions or scan the QR code with your smartphone . You may enter your voting instructions at
www.voteproxy.com up until 11:59 PM Eastern Time on April 20, 2022.
VirtUaLLY at the meetinG: The company will be hosting the meeting virtually this year. To attend the
meeting virtually, please visit https://web.lumiagm.com/244346915 Password: citizens2022
(case sensitive) and be sure to have your control number available.
teLePhone: To vote by telephone, please visit www.voteproxy.com to view the materials and to obtain
the toll free number to call.
maiL: You may request a card by following the instructions above.
ComPanY nUmBer
aCCoUnt nUmBer
ControL nUmBer
John Smith
1234 main Street
aPt. 203
new York, nY 10038
Please note that you cannot use this notice to vote by mail. |
| Signature of Stockholder Date: Signature of Stockholder Date:
Note:Please sign exactly as your name or names appear 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.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
1.ELECTION OF CLASS II DIRECTORS.
O Susan E. Hartley
O Leo F. Lambert
O Helen S. Santiago
O Katherine W. Shattuck
FOR ALL NOMINEES
WITHH OLDAUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
INSTRUCTIONS:To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT”
and fill in the circle next to each nominee you wish to withhold, as shown here:
JOHN SMITH
1234 MAIN STREET
APT. 203
NEW YORK, NY 10038
NOMINEES:
ANNUAL MEETING OF STOCKHOLDERS OF
CITIZENS & NORTHERN CORPORATION
April 21, 2022
PROXY VOTING INSTRUCTIONS
Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
------------------ ----------------
20430303000000000000 6 042122
COMPANY NUMBER
ACCOUNT NUMBER
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, proxy statement and proxy card
are available at http://www.astproxyportal.com/ast/11697/
INTERNET- Access “ www.voteproxy.com ” and follow the on-screen
instructions or scan the QR code with your smartphone. Have your proxy
card available when you access the web page.
TELEPHONE- Call toll-free 1-800-PROXIES (1-800-776-9437) in the
United States or 1-718-921-8500 from foreign countries and follow the
instructions. Have your proxy card available when you call.
Vote online/phone until 11:59 PM EST on April 20, 2022.
MAIL- Sign, date and mail your proxy card in the envelope provided as
soon as possible.
VIRTUALLY AT THE MEETING- The company will be hosting the meeting
virtually this year. To attend the meeting virtually, please visit
https://web.lumiagm.com/244346915 Password: citizens2022 (case
sensitive) and be sure to have your control number available.
GO GREEN- e-Consent makes it easy to go paperless. With e-Consent,
you can quickly access your proxy materials, statements and other eligible
documents online, while reducing costs, clutter and paper waste. Enroll
today via www.astfinancial.com to enjoy online access.
2. TO APPROVE, IN AN ADVISORY (NON-BINDING) VOTE, THE
COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE
OFFICERS AS DISCLOSED IN THE PROXY STATEMENT.
3. TO AMEND THE CORPORATION'S ARTICLES OF INCORPORA-
TION TO INCREASE THE AGGREGATE NUMBER OF SHARES OF
COMMON STOCK THAT THE CORPORATION MAY ISSUE FROM
20 MILLION SHARES TO 30 MILLION SHARES.
4. RATIFICATION OF THE APPOINTMENT OF THE FIRM OF BAKER
TILLY US, LLP AS THE CORPORATION'S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR
ENDING DECEMBER 31, 2022.
5. OTHER MATTERS. In their discretion, to vote with respect to any other matters that may
properly come before the Meeting or any adjournments thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY
THE STOCKHOLDER. UNLESS OTHERWISE INDICATED, THIS PROXY WILL BE VOTED
FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED IN PROPOSAL 1 AND FOR
PROPOSALS 2, 3 AND 4.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE-PAID ENVELOPE.
FORAGAINSTABSTAIN
FORAGAINSTABSTAIN
FORAGAINSTABSTAIN |
| ANNUAL MEETING OF STOCKHOLDERS OF
CITIZENS & NORTHERN CORPORATION
April 21, 2022
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, proxy statement and proxy card
are available at http://www.astproxyportal.com/ast/11697/
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
Signature of Stockholder Date: Signature of Stockholder Date:
Note:Please sign exactly as your name or names appear 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.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
1.ELECTION OF CLASS II DIRECTORS.
O Susan E. Hartley
O Leo F. Lambert
O Helen S. Santiago
O Katherine W. Shattuck
2. TO APPROVE, IN AN ADVISORY (NON-BINDING) VOTE, THE
COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE
OFFICERS AS DISCLOSED IN THE PROXY STATEMENT.
3. TO AMEND THE CORPORATION'S ARTICLES OF INCORPORA-
TION TO INCREASE THE AGGREGATE NUMBER OF SHARES OF
COMMON STOCK THAT THE CORPORATION MAY ISSUE FROM
20 MILLION SHARES TO 30 MILLION SHARES.
4. RATIFICATION OF THE APPOINTMENT OF THE FIRM OF BAKER
TILLY US, LLP AS THE CORPORATION'S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR
ENDING DECEMBER 31, 2022.
5. OTHER MATTERS. In their discretion, to vote with respect to any other matters that may
properly come before the Meeting or any adjournments thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY
THE STOCKHOLDER. UNLESS OTHERWISE INDICATED, THIS PROXY WILL BE VOTED
FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED IN PROPOSAL 1 AND FOR
PROPOSALS 2, 3 AND 4.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE-PAID ENVELOPE.
FOR ALL NOMINEES
WITHH OLDAUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
INSTRUCTIONS:To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT”
and fill in the circle next to each nominee you wish to withhold, as shown here:
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
Please detach along perforated line and mail in the envelope provided.------------------ ----------------
20430303000000000000 6 042122
FORAGAINSTABSTAIN
GO GREEN
e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy
material, statements and other eligible documents online, while reducing costs, clutter and
paper waste. Enroll today via www.astfinancial.com to enjoy online access.
NOMINEES:
FORAGAINSTABSTAIN
FORAGAINSTABSTAIN |
| 0
------------------ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .----------------
14475
CITIZENS & NORTHERN CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 21, 2022
The undersigned hereby appoints Aaron K. Singer and Bobbi J. Kilmer, and each
or either of them, as the attorneys and proxies of the undersigned, with full power of
substitution in each, to vote all shares of the common stock of Citizens & Northern
Corporation which the undersigned would be entitled to vote at the Annual Meeting of
Stockholders to be held on Thursday, April 21, 2022, at 2:00 P.M. (local time), in a virtual
meeting format only with no physical location, at https://web.lumiagm.com/244346915
password: citizens2022 (case sensitive), and at any adjournments thereof, and to vote as
follows:
(Continued and to be signed on the reverse side)
1.1 |
Grafico Azioni Citizens and Northern (NASDAQ:CZNC)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Citizens and Northern (NASDAQ:CZNC)
Storico
Da Giu 2023 a Giu 2024