CHEMUNG FINANCIAL CORP
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. ____)
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
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Preliminary Proxy Statement | |||||||
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||||||
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Definitive Proxy Statement | |||||||
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Definitive Additional Materials | |||||||
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Soliciting Material under §240.14a-12 | |||||||
| CHEMUNG FINANCIAL CORPORATION | ||||||||
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(Name of Registrant as Specified In Its Charter)
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| Payment of Filing Fee (Check all boxes that apply): | ||||||||
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No fee required. | |||||||
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Fee paid previously with preliminary materials. | |||||||
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11. | |||||||
One Chemung Canal Plaza
Elmira, New York 14901
April 23, 2025
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Chemung Financial Corporation on Tuesday, June 3, 2025, at 2:00 p.m., Eastern Time. The Annual Meeting will be held in a virtual format accessible at https://web.lumiconnect.com/244778332 (password: chemung2025).
The Annual Meeting will be held to review the matters to be voted upon by the shareholders as described in the accompanying Notice of Annual Meeting of Shareholders and related Proxy Statement.
Your vote is important. We want to be sure that your shares are represented and that your vote is properly accounted for and, whether or not you plan to attend the Annual Meeting, we request that you vote your shares. You may vote your shares by telephone, by the Internet or by returning a requested proxy card, as further explained in the Proxy Statement. Please see the attached Notice of Annual Meeting of Shareholders and accompanying Proxy Statement for additional information regarding how to vote your shares.
We encourage you to review the following Proxy Statement for a better understanding of the Corporation, its compensation practices and corporate governance structure, as well as a summary of the matters that will be voted on this year. We have attempted to present the information contained in the Proxy Statement in a straightforward and easily understood manner. However, much of the information presented is required by law to be included in a certain format. We appreciate your taking the time to read our Proxy Statement and hope that we have addressed the issues that interest you, our shareholders. Thank you for your support and investment in Chemung Financial Corporation.
Sincerely,
Anders M. Tomson
President Chief Executive Officer
Notice of Annual Meeting of Shareholders
Date
June 3, 2025
Time
2:00 PM
Location
https://web.lumiconnect.com/244778332 (password: chemung2025)
,
and enter the control number and
password included in your Notice of Internet Availability of Proxy Materials, voting instruction form or
proxy card. Online access to the Annual Meeting will be open approximately 15 minutes prior to the start
of the Annual Meeting.
Record Dat
e April 7, 2025
| Items of Business | 1. | To elect four (4) directors for a term of three years expiring in 2028 [Proposal 1]; | |||||||||
| 2. | To conduct an advisory vote to approve, on a non-binding basis, compensation paid to the Corporation's named executive officers ("Say-On-Pay") [Proposal 2]; | ||||||||||
| 3. | Approval of the Chemung Financial Corporation 2025 Equity Incentive Plan [Proposal 3]; | ||||||||||
| 4. | To ratify the appointment of Crowe LLP as the Corporation's independent registered public accounting firm for the fiscal year ending December 31, 2025 [Proposal 4]; and | ||||||||||
| 5. | To act upon such other business as may properly come before the meeting or any adjournment thereof. At the present time, the Board of Directors knows of no other business to come before the Annual Meeting. | ||||||||||
We have elected to take advantage of Securities and Exchange Commission (“SEC”) rules that allow us to furnish proxy materials to certain shareholders over the Internet. We believe furnishing proxy materials to our shareholders over the Internet allows us to provide shareholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting. If you have received the Notice of Internet Availability, you will not receive a printed copy of the proxy materials unless you request it by following the instructions for requesting such proxy materials contained in the Notice of Internet Availability and summarized in the proxy statement.
If you were a shareholder of record as of the close of business on April 7, 2025 i.e., you held your shares in your own name as reflected in the records of our transfer agent, Equiniti Trust Company, LLC ("ETC"), formally known as American Stock Transfer Trust Company, you can attend the annual meeting by accessing https://web.lumiconnect.com/244778332 and selecting the button “I have a Control Number.” You will then be directed to a screen where you will enter: (1) the 11-digit control number on the proxy card; and (2) the meeting password chemung2025. Please note, the meeting password is case sensitive. Once you have completed these steps, select the “login” button, which will take you to the annual meeting page (the “Meeting Page”) where you can vote, submit written questions and listen to the meeting. If you are a shareholder of record and misplaced your 11-digit control number, please call ETC at (800) 937-5449. If you were a beneficial owner as of the close of business on April 7, 2025 (i.e., you held your shares in “street name” through an intermediary, such as a bank, broker or other nominee), you must register in advance to attend the Annual Meeting. To register, please obtain a legal proxy from the bank, broker or other nominee that is the record holder of your shares and then submit the legal proxy, along with your name and email address, to ETC to receive an 11-digit control number that may be used to access the Annual Meeting site provided above. Any control number that was provided with your proxy materials, likely a 16-digit number, will not provide access to the Annual Meeting site. Requests for registration and submission of legal proxies should be labeled as “Legal Proxy” and must be received by ETC no later than 5 p.m., EST, on May 28, 2025. All such requests should be submitted (1) by email to proxy@equiniti.com, (2) by facsimile to (718) 765-8730, or (3) by mail to Equiniti Trust Company, LLC, Attn: Proxy Tabulation Department, 55 Challenger Rd Suite 200B, 2nd floor, Ridgefield Park, NJ 07660. Obtaining a legal proxy may take several days and shareholders are advised to register as far in advance as possible. Once you have obtained your 11-digit control number from ETC, please follow the steps set forth above for “Record Holders” to attend the Annual Meeting.
Whether or not you plan to attend the Annual Meeting virtually, you are encouraged to vote in advance of the Annual Meeting. Registered shareholders can vote shares online, by telephone or by regular mail in advance of the Annual Meeting. To access your proxy materials and vote online, please visit www.voteproxy.com and follow the instructions. If you wish to vote by telephone, please call 1-800-PROXIES (1-800-776-9437) in the United States or 1-201-299-4446 from foreign countries using a touch-tone phone and follow the prompted instructions. You may also vote by mail by requesting a paper proxy card. Shareholders who hold their shares through an intermediary, such as a bank or broker, should follow voting instructions provided by the intermediary.
Please ensure that your shares are represented at the 2025 Annual Meeting, as your vote is very important.
| By Order of the Board of Directors | ||||||||
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Kathleen S. McKillip
Corporate Secretary
Elmira, New York
April 23, 2025
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Important Notice Regarding the Availability of Proxy Materials for the
2025 Annual Meeting of Shareholders to be Held on June 3, 2025:
The Corporation's Proxy Statement and 2024 Annual Report on Form 10-K, which includes an abbreviated report for the twelve-month period, are available at
http://astproxyportal.com/ast/01079
| PROXY STATEMENT TABLE OF CONTENTS | |||||
Proxy Summary
ANNUAL MEETING OF SHAREHOLDERS
| Date Time | Location | Record Date | ||||||||||||
| 6/3/2025 | Virtual Meeting | 4/7/2025 | ||||||||||||
| at 2:00 p.m. EST | https://web.lumiconnect.com/244778332 | |||||||||||||
Matters to be Voted Upon
| Item |
Board
Recommendation |
Page | ||||||||||||
| 1 | To elect four (4) directors for a term of three years expiring in 2028. |
FOR
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7 | |||||||||||
| 2 | To approve, on a non-binding advisory basis, the compensation of the Named Executive Officers of the Corporation ("Say-On-Pay") |
FOR
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14 | |||||||||||
| 3 | To approve the Corporation's 2025 Equity Incentive Plan. |
FOR
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15 | |||||||||||
| 4 | To ratify the appointment of Crowe LLP as the Corporation's Independent registered public accounting firm for the fiscal year ending December 31, 2025. |
FOR
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22 | |||||||||||
How to Vote as a Registered Shareholder
Mail
request, complete and return a paper proxy card
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Phone
toll-free 1-800-PROXIES (1-800-776-9437)
within the United States or 1-201-299-4446 from foreign countries
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Internet
www.voteproxy.com
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At the Virtual Meeting
by electronic vote at the
virtual meeting
https://web.lumiconnect.com/244778332
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Proxy Statement
Dated April 23, 2025
For the Annual Meeting of Shareholders to be held June 3, 2025
General Voting Information
We are providing this proxy statement (the “Proxy Statement”) in connection with the solicitation of proxies on behalf of the Board of Directors (the "Board") of Chemung Financial Corporation (the "Corporation" or "Chemung Financial") for use at the Annual Meeting of Shareholders (the “Annual Meeting”), to be held virtually at https://web.lumiconnect.com/244778332 on
Tuesday, June 3, 2025 at 2:00 p.m. ET
and any adjournment thereof. In the Proxy Statement, the "Bank" refers to Chemung Canal Trust Company, a New York-chartered trust company and wholly-owned subsidiary bank of Chemung Financial.
The release of the Notice Regarding the Availability of Proxy Materials, the Notice of the 2025 Annual Meeting of Shareholders, the Proxy Statement, and the Corporation's Annual Report on Form 10-K for year ended December 31, 2024, which includes an abbreviated report for the twelve-month period (collectively, the "Proxy Materials") is scheduled to begin on April 23, 2025, to shareholders of record as of the close of business on April 7, 2025. As of the record, there were 4,789,963 shares of Corporation common stock outstanding, and each share is entitled to one vote at the Annual Meeting.
The enclosed proxy is being solicited by the Board of Directors of the Corporation. The total cost of solicitation of proxies in connection with the Annual Meeting will be borne by the Corporation.
Vote Required
| Proposal | Item | Votes Required for Approval | Board of Directors Recommendation | Effect of Abstentions | Effect of Uninstructed Shares Held by Broker, Bank or Other Agent | ||||||||||||
| Voting Proposal 1 | Election of Directors | A plurality of votes cast by holders of shares of common stock of the Corporation entitled to vote | “FOR” each of the Corporation’s four nominees | Not Voted | Not Voted | ||||||||||||
| Voting Proposal 2 | Approval, on an advisory basis, of the Corporation’s 2024 Named Executive Officer Compensation (Say-On-Pay) | An affirmative vote of a majority of all votes cast by the holders of common stock of the Corporation entitled to vote | “FOR,” on an advisory basis, the Corporation’s Named Executive Officer compensation (Say-On-Pay) | Not Voted | Not Voted | ||||||||||||
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Voting Proposal 3
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Approval of the Corporation's 2025 Equity Incentive Plan | An affirmative vote of a majority of all votes cast by the holders of common stock of the Corporation entitled to vote | "FOR" the approval of the Corporation's 2025 Equity Incentive Plan |
Not Voted
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Not Voted
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Voting Proposal 4
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Ratification of the Selection of Crowe LLP as the Corporation’s Independent Registered Public Accounting Firm for 2025 | An affirmative vote of a majority of all votes cast by the holders of common stock of the Corporation entitled to vote | “FOR” the ratification of the appointment of the independent registered public accounting firm, Crowe LLP, as the independent registered public accounting firm of the Corporation for the year ending December 31, 2025 | Not Voted | Discretionary Vote | ||||||||||||
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Internet Availability of Proxy Material
In accordance with rules adopted by the SEC, instead of mailing a printed copy of our materials to each shareholder of record, we furnished our proxy materials, including the Notice of Annual Meeting of Shareholders, this Proxy Statement, and the Annual Report to Shareholders on Form 10-K for the year ended December 31, 2024, which includes an abbreviated report for the twelve-month period, by sending a notice of internet availability of proxy materials (the “Notice of Internet Availability”) and providing access to such documents over the Internet. Generally, shareholders will not receive printed copies of the proxy materials unless they request them. Shareholders of record who prefer to receive a paper or e-mail copy of our proxy materials must follow the instructions below or as provided in the Notice of Internet Availability for requesting such materials. The Notice of Internet Availability only identifies the items to be voted on at the Annual Meeting. You cannot vote by marking the Notice of Internet Availability and returning it.
To view or request material ONLINE:
Visit http://astproxyportal.com/ast/01079 to view material 24 hours a day, seven days a week, through the conclusion of the Annual Meeting. You will need your Notice of Internet Availability with your control number in order to log in and view the proxy material. You may request a paper copy by visiting the following https://us.astfinancial.com/OnlineProxyVoting/ProxyVoting/Request Materials and click "sign-up for E-Delivery."
To receive a PAPER or E-MAIL copy:
You
MUST REQUEST
a paper or e-mail copy of the proxy materials by sending an email to help@equiniti.com and include your control number (available on your Notice of Internet Availability) in the subject line, your preference to receive printed or via e-mail, and note if you would like this election to apply to the delivery of materials for all future shareholder meetings. There is NO charge to receive a paper or e-mail copy of the materials. Please choose one of the following methods for your request prior to May 21, 2025.
To request material by
TELEPHONE
: 1-888-Proxy-NA (1-888-776-9962) in the United States or 1-201-299-6210 from foreign countries from any touch-tone telephone.
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Additional Voting Information
Frequently Asked Questions:
Who is entitled to vote?
The Corporation has one class of stock outstanding, common stock, $0.01 par value per share. At the close of business on the record date of April 7, 2025, there were
4,789,963 shares outstanding. The holders of these shares are considered shareholders of record and will be entitled to vote at the Annual Meeting or any adjournment thereof. Each of these shareholders will receive a Notice of the Annual Meeting and instructions on how to vote their shares. Each share outstanding on the record date is entitled to vote. Shares held in treasury by the Corporation are not eligible to vote and do not count toward a quorum.
Who can attend the Annual Meeting Virtually?
If you were a
shareholder of record
as of the close of business on April 7, 2025 (i.e., you held your shares in your own name as reflected in the records of our transfer agent, Equiniti Trust Company, LLC ("ETC"), formally known as American Stock Transfer Trust Company, you can attend the annual meeting by accessing https://web.lumiconnect.com/244778332 and selecting the button “I have a Control Number.” You will then be directed to a screen where you will enter: (1) the 11-digit control number on the proxy card; and (2) the meeting password chemung2025. Please note, the meeting password is case sensitive. Once you have completed these steps, select the “login” button, which will take you to the annual meeting page (the “Meeting Page”) where you can vote, submit written questions and listen to the meeting. If you are a shareholder of record and misplaced your 11-digit control number, please call ETC at (800) 937-5449.
The Annual Meeting will begin promptly at 2:00 p.m. Eastern Time on June 3, 2025. We encourage you to access the virtual Annual Meeting prior to the start time leaving ample time for check in.
If you were a
beneficial owner
as of the close of business on April 7, 2025 (i.e., you held your shares in “street name” through an intermediary, such as a bank, broker or other nominee), you must register in advance to attend the annual meeting. To register, please obtain a legal proxy from the bank, broker or other nominee that is the record holder of your shares and then submit the legal proxy, along with your name and email address, to ETC to receive an 11-digit control number that may be used to access the annual meeting site provided above. Any control number that was provided with your proxy materials, likely a 16-digit number, will not provide access to the annual meeting site. Requests for registration and submission of legal proxies should be labeled as “Legal Proxy” and must be received by ETC no later than 5 p.m., ET, on May 28, 2025. All such requests should be submitted (1) by email to proxy@equiniti.com, (2) by facsimile to (718) 765-8730, or (3) by mail to Equiniti Trust Company, LLC, Attn: Proxy Tabulation Department, 55 Challenger Rd Suite 200B, 2nd floor, Ridgefield Park, NJ 07660. Obtaining a legal proxy may take several days and shareholders are advised to register as far in advance as possible. Once you have obtained your 11-digit control number from ETC, please follow the steps set forth above for “Record Holders” to attend the Annual Meeting
.
If you would like to join the meeting as a guest in listen-only mode, go to https://web.lumiconnect.com/244778332 and select the button “I am a guest.” Please note you will not have the ability to ask questions or vote during the meeting if you participate as a guest.
What are “broker non-votes” and how are they voted at the Annual Meeting?
Shares of the Corporation common stock can be held in (i) certificate form; (ii) by “book entry” at the Corporation’s transfer agent, Equiniti Trust Company, LLC; or (iii) in “street name” at a broker. When shares owned by you are held in street name, the broker will solicit your vote and provide the Corporation with the results of the vote for all of the Corporation shares it holds in your account. On “routine” matters, if you as the beneficial owner of the shares do not provide the broker with voting instructions, the broker has the right to vote these shares in its own discretion. However, a broker is not allowed to exercise its discretion on voting shares held in street name on any “non-routine” matter. On such matters, these shares may only be voted by the broker in accordance with express voting instructions received by the broker from you, the beneficial owner of the shares. The votes attached to such shares, that is, shares that may or may not be voted by a broker except in accordance with the owner’s voting instructions, are referred to as “broker non-votes.”
3
This year, the only matter that will be considered a “routine” matter is Proposal 4, the ratification of the Corporation’s independent registered public accounting firm. Proposal 1, the election of directors, Proposal 2, Say-On-Pay, and Proposal 3, approval of the Chemung Financial Corporation 2025 Equity Incentive Plan, are non-routine matters; therefore, shares held by a broker in street name cannot be voted on by the broker at his or her discretion for those proposals.
If your shares are held at a broker, the Corporation urges you to provide voting instructions to your broker so that your vote may be counted
.
How are Dividend Reinvestment Plan shares voted?
Shares owned by you in the Chemung Financial Corporation Dividend Reinvestment Plan (“DRIP”) on the record date will be combined with all other shares owned by you directly on that date and presented to you with voting instructions.
How are shares held in the 401K Profit Sharing, Savings and Investment Plan voted?
Shares held by the Corporation employees in the 401K Profit Sharing, Savings and Investment Plan (the “401K Plan”) on the record date will be voted by the employees. Participants will receive a separate voting form from the transfer agent, Equiniti Trust Company, LLC, via email for this purpose. If a participant does not vote for his or her Corporation shares held in the 401K Plan, the participant’s shares will be voted for in accordance with the “mirror voting” provisions of the 401K Plan. Under the “mirror voting” provisions, such shares will be voted in a pro rata manner calculated to reflect most accurately the instructions received from those account holders who did vote.
What constitutes a quorum?
A quorum of shareholders is necessary to hold a valid meeting. A quorum will be present if shareholders holding at least a majority of the outstanding shares are present at the Annual Meeting in person or represented by proxy. Holders of 2,394,982 shares must be present in person or represented by proxy in order to have a quorum. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted by your broker, bank or other nominee) or if you vote in person at the meeting. Abstentions and broker non-votes will be counted for purposes of whether a quorum is present. If there is no quorum, the holders of the majority of shares present at the Annual Meeting in person or represented by proxy may adjourn the Annual Meeting to another date.
How many votes are required for approval of Proposal 1?
The first item on the agenda is the election of
four
directors. The affirmative vote of the holders of a plurality of the shares of common stock present in person or represented by proxy at the Annual Meeting and eligible to vote on such matter is required for the election of each director. A “plurality” means receiving a higher number of votes for such position than any other candidate, up to the maximum number of directors to be chosen at the Annual Meeting. Because there are only as many nominees
(four)
as there are directors to be elected
(four)
at this year’s meeting, a director nominee is assured of being elected if he or she receives any “For” votes, regardless of how many negative votes (“Withhold Authority”) are cast for that director.
How many votes are required for approval of Proposal 2?
The second item on the agenda is the advisory approval of the Named Executive Officer compensation, Say-On-Pay for NEOs. The affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and voting on this proposal is required to approve, by advisory vote, the compensation paid to the NEOs. Abstentions and broker “non-votes” will not be counted in determining the number of votes cast and; therefore, will have no effect on the outcome of this vote. A proxy or ballot marked “Abstain” on Proposal 2 will not have the same effect as a vote “Against” such proposal. A proxy or ballot marked “Against” on Proposal 2 is an actual vote (and counts in the total number of votes cast on the proposal). Therefore, a vote “Against” Proposal 2 makes it more difficult to achieve shareholder advisory approval of Say-On-Pay than a vote to “Abstain.”
4
How Many votes are required for approval of Proposal 3?
The third item on the agenda is approval of the Chemung Financial Corporation 2025 Equity Incentive Plan. The affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and voting on the proposal is required to approve the Chemung Financial Corporation 2025 Equity Incentive Plan. Abstentions and broker “non-votes” will not be counted in determining the number of votes cast and, therefore, will have no effect on the outcome of this vote. A proxy or ballot marked “Abstain” on Proposal 3 will not have the same effect as a vote “Against” such proposal. A proxy or ballot marked “Against” on Proposal 3 is an actual vote (and counts in the total number of votes cast on the proposal). Therefore, a vote “Against” Proposal 3 makes it more difficult to approve the Chemung Financial Corporation 2025 Equity Incentive Plan than a vote to “Abstain.”
How many votes are required for approval of Proposal 4?
The fourth item on the agenda is ratification of the independent registered public accounting firm, Crowe LLP. The affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and voting on this proposal is required for ratification. Brokers will be eligible to vote on Proposal 4. A proxy or ballot marked “Abstain” on Proposal 4 will not have the same effect as a vote “Against” such proposal. A proxy or ballot marked “Against” on Proposal 4 is an actual vote (and counts in the total number of votes cast on the proposal). Therefore, a vote “Against” Proposal 4 makes it more difficult to achieve shareholder ratification than a vote to “Abstain.”
How do I vote?
If you are a shareholder of record as of the close of business on April 7, 2025, you will be entitled to vote at the Annual Meeting, or any adjournment or postponement thereof. You can ensure that your shares are voted properly by submitting your proxy by calling toll free 1-800-PROXIES (1-800-776-9437) (United States Canada) or 1-201-299-4446 (Internationally), visiting www.voteproxy.com or by completing, signing and dating the proxy card that will be provided to you upon request. Shareholders of record should receive a notice with voting instructions and the ability to request Proxy Materials. In order for your vote to count by proxy, it has to be received by 11:59 p.m., Eastern Time, on June 2, 2025. If your shares are held by a broker, bank or other agent, you must follow the voting instructions on the form you receive from your broker, bank or other agent. If you hold shares through a broker or bank or other agent and wish to vote in person at the Annual Meeting, you must obtain a “legal” proxy from your broker, bank or other agent.
May I revoke my proxy?
A shareholder may revoke a proxy at any time before it is voted by: (1) delivering written notice of revocation bearing a later date than the proxy to the Secretary of the Corporation at One Chemung Canal Plaza, Elmira, New York 14901; (2) submitting a later-dated proxy by mail, telephone or via the internet; or (3) by voting in person at the Annual Meeting. Attendance at the Annual Meeting will not by itself constitute a revocation of a proxy. To revoke your proxy, you must vote at the virtual Annual Meeting or submit a later-dated proxy. If your shares are registered in the name of your broker, bank or other agent, you should follow your broker’s, bank’s or other agent’s instructions regarding the revocation of proxies.
How are proxies being solicited?
Proxies are being solicited electronically, by telephone and by mail. Proxies may also be solicited without additional compensation by directors, officers and other employees personally, by telephone or other means.
The Corporation will bear all costs of proxy solicitation.
The Corporation has retained Laurel Hill Advisory Group, LLC to assist in soliciting proxies, and has agreed to pay Laurel Hill Advisory Group, LLC a fee of $6,500 plus reasonable expenses for these services. The Corporation may also request nominees, brokerage houses, custodians and fiduciaries to forward soliciting material to beneficial owners of the Corporation’s common stock and will reimburse such intermediaries for their reasonable expenses in forwarding proxy materials.
5
Additional Matters for Consideration at the 2025 Annual Meeting
Please note the deadline for submission of proposals by shareholders for consideration at the 2025 Annual Meeting has passed. This applies to proposals that shareholders might wish to include in the Corporation’s Proxy Statement for the Annual Meeting (this Proxy Statement), proposals that shareholders might wish to include in their own proxy materials, which they would prepare, file with the SEC and disseminate to shareholders, or proposals that shareholders might wish to submit directly to a shareholder vote, in person, at the Annual Meeting. Therefore, no additional matters may be proposed by any shareholder for submission, or submitted, to a vote of the shareholders generally at the Annual Meeting, other than procedural issues such as adjournment, postponement or continuation. On such procedural issues, all shares represented at the Annual Meeting by proxy may be voted at the discretion of the attorneys-in-fact named in the proxies, to the extent permitted by law.
Proxy Cards Returned Without Specific Voting Instructions
Shares represented by properly executed proxies will be voted as directed. If you return a signed proxy card without specific voting instructions for any or all proposals, your shares will be voted “FOR” each of the Board’s four
Di
rector nominees on Proposal 1; “FOR” Say-On-Pay on Proposal 2; "FOR" the Corporation's 2025 Equity Incentive Plan on Proposal 3; “FOR” ratification of the appointment of Crowe LLP on Proposal 4; and, “FOR” any other procedural matter properly submitted for shareholder consideration, in such manner as the shareholders’ attorneys-in-fact may determine, in their discretion, to be appropriate and in the best interests of shareholders generally.
6
Voting Proposal 1 - Election of Directors
The Board is divided into three classes of directors, as equal in number as possible, with one class to be elected each year for a term of three years.
Shareholders will be entitled to elect four directors for a three-year term expiring at the 2028 Annual Meeting of Shareholders, or until their respective successor has been duly elected and qualified. Should any nominee become unable to serve as a director, the persons named as proxies will vote for any alternative nominee who may be nominated by the Board. The Board has nominated for election Ronald M. Bentley, David M. Buicko, Robert H. Dalrymple and Jeffrey B. Streeter
to terms listed below.
All
four
nominees were unanimously recommended by the Nominating and Governance Committee to the Board, have been determined to be qualified, and have consented to serve if elected.
There are no arrangements or understandings between any director or director nominee and any other persons pursuant to which he or she was selected as a director or nominee. None of the directors are party to any agreement or arrangement that would require disclosure pursuant to Listing Rule 5250(b)(3) of NASDAQ®, where the Corporation’s common stock is listed. This rule requires disclosure of agreements or arrangements between a director and a third party related to the director’s service on the Board.
The Board is not aware that any nominee named in this Proxy Statement will be unable or unwilling to serve as a director. Under applicable law and the Corporation’s Bylaws, directors are elected by a plurality of the shares voted at the Annual Meeting, meaning the nominees receiving the most “For” votes will be elected.
•
Vote Recommendation:
Your Board recommends you vote
“For”
each of the Corporation’s
four
nominees: Ronald M. Bentley, David M. Buicko, Robert H. Dalrymple and Jeffrey B. Streeter
Director Nomination Process
The Nominating and Governance Committee is responsible for identifying and recommending to the full Board suitable nominees to serve as directors. Director nominees are selected based upon the following criteria:
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•
Individual Strengths:
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The candidate’s knowledge, skill, experience and business expertise.
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Board Composition:
|
The objective of achieving certain characteristics for the Board as a group, such as diversity of experience, skills, gender, race, ethnicity and age are factors, among others, considered in this process. | ||||
The Nominating and Governance Committee reviews annually with the Board the composition of the Board as a whole and considers whether the Board reflects an appropriate balance of knowledge, experience, skills and expertise of diversity. Among other factors, the Committee looks for director nominees who know the communities and industries that the Corporation serves. The Committee utilizes the following process when identifying and evaluating the individuals that it recommends to the Board as director nominees:
•
The Committee reviews the qualifications of each candidate who has been properly recommended or nominated by the shareholders, as well as those candidates who have been identified by management, individual members of the Board or, if the Committee determines, a search firm.
•
The Committee evaluates the performance and qualifications of individual members of the Board eligible for reelection at the annual meeting of shareholders.
•
The Committee considers the suitability of each candidate, including the current members of the Board, in light of the current needs of the Board. In evaluating the suitability of the candidates, the Committee considers many factors including character, judgment, independence, business expertise, experience, other commitments, and such other factors as the Committee determines are pertinent.
•
After such review and consideration, the Nominating and Governance Committee recommends that the Board select the slate of director nominees.
7
The Board will give substantial weight to the recommendations of the Nominating and Governance Committee in selecting director nominees. For information on how shareholders may participate in the director nomination process see the Shareholder
"Submissions of Director Nominees for the 2026 Annual Meeting"
section.
Board Refreshment
The Board believes that director refreshment is an important component of good corporate governance. In total, three (3) new directors were elected to the Board by shareholders at the 2020, 2021 and 2022 Annual Meeting of Shareholders bringing a wealth of experience, diverse perspectives and backgrounds, and effective skills and qualifications. More than half of the Board's thirteen (13) directors joined since 2016.
With the level of deep experience, significant contributions being made by the directors, and the level of director refreshment that has occurred since 2016, the Nominating and Governance Committee members are satisfied with the current strength and structure of the Board.
Annual Meeting Shareholder Proposal Process
Shareholder Submissions of Director Nominees for the 2026 Annual Meeting
Any shareholder submission of a candidate for the Board to consider as one of its nominees for director at the 2026 Annual Meeting of Shareholders must be directed in writing not later than 120 days prior to the anniversary date on which the Corporation’s proxy statement was made available to shareholders in connection with the previous year’s annual meeting, or if such nomination is to be made at a meeting of shareholders other than an annual meeting, a reasonable time before the mailing of the Corporation’s proxy materials to the Corporate Secretary, One Chemung Canal Plaza, Elmira, New York 14901, and must include: (i) the name and address of the shareholder proposing a nominee for consideration; (ii) the number of shares owned by the notifying shareholder and the date the shares were acquired; (iii) any material interest of the notifying shareholder in the nomination and a statement in support of the nominee with references; (iv) the name, age, address and contact information for each proposed nominee; (v) the principal occupation or employment of each proposed nominee; (vi) the number of shares of the Corporation’s common stock that are owned by the nominee as of the record date; (vii) detailed information of any relationship or understanding between the proposing shareholder and the nominee; (viii) detailed information of any relationship between the nominee and the Corporation within the last three years; and, (ix) other information regarding the nominee as would be required to be included in the Proxy Statement pursuant to Regulation 14A of the Exchange Act.
A shareholder may act directly to nominate his or her own director candidates at our 2026 Annual Meeting of Shareholders by following the procedures set forth in the subsection titled “
Shareholder Proposals for Inclusion in the 2026 Proxy Statement
.” Such direct nominations by shareholders not involving the Board’s nomination are subject to the deadlines and procedures described and set forth in our Bylaws and applicable rules of the SEC, including minimum advance notice to the Board.
8
Nominee and Continuing Director Biographies
The biography of each of the nominees and continuing directors listed on the following pages contain information regarding the individuals’ service as a director, business experience, and other positions, if any, held currently or at any time during the last five years, and individual experience, qualifications, and skills that contribute to the Board’s effectiveness as a whole. Age is as of January 1, 2025.
Nominees for Election (term expiring in 2028, if elected)
|
Ronald M. Bentley
,
age 72, has served as a director since 2007. From January 1, 2018 through December 31, 2018, he served as a consultant of the Corporation and Bank. He formerly served, from April 2007 to July 2015, as President CEO of the Corporation and the Bank. Prior to that, from July 2006 through April 2007, he served as President COO of the Corporation and Bank. Qualifications to serve on the Board include 35 years of experience in the banking industry, and leadership, management, strategic planning and organizational skills.
|
||||
|
David M. Buicko
, age 71, has served as a director since 2018. Since 2016, he has served as President CEO of Galesi Group, a diverse real estate company with a commitment to investing in the Capital Region, its infrastructure, and its people. From 1986 to 2016, Mr. Buicko was Chief Operating Officer of Galesi Group. Qualifications to serve on the Board include strategic planning, corporate finance and accounting, mergers and acquisitions, community development, and real estate development and financing for over 35 years.
|
||||
|
Robert H. Dalrymple
, age 74, has served as a director since 1995. Since 1994, he has served as Secretary and Vice President of Dalrymple Holding Corporation, the parent company for several construction materials and highway construction companies. He also serves as President of Seneca Stone Corporation and Vice President of Chemung Contracting Corporation, both subsidiaries of Dalrymple Holding Corporation. He is the brother of David J. Dalrymple, also a director of the Corporation and Bank. Qualifications to serve on the Board include experience in all aspects of business ownership, strategic planning skills and financial management experience.
|
||||
|
Jeffrey B. Streeter
, age 57, has served as a director since 2018. Since 2002, he has served as owner and President of Streeter Associates, a commercial general construction firm based in Elmira, New York. Mr. Streeter currently owns multiple commercial real estate properties. Qualifications to serve on the Board include experience in all aspects of business ownership and operation, strategic and financial planning, people management, organizational skills and service on several boards in the Elmira area in the not for profit arena.
|
||||
9
Continuing Directors (term expiring in 2026)
|
Richard E. Forrestel Jr.
, age 67, has served as a director since October 2020. Since 1987, he has served as Treasurer of Cold Spring Construction Company, a highway construction firm. He is a CPA. Qualifications to serve on the Board include experience in accounting, auditing, strategic planning and his former experience serving on the board of directors of a community bank for 22 years where he gained experience and knowledge in all aspects of banking.
|
|||||||
|
Stephen M. Lounsberry III
, age 71, has served as a director since 1995. Since 1981, he has served as President of Applied Technology Manufacturing Corp., a manufacturer of machined industrial and railroad component parts. He was formerly a commercial bank internal auditor and vice president of a community bank. Qualifications to serve on the Board include experience in management, marketing, sales, operation, strategic planning and his knowledge of all aspects of banking.
|
|||||||
|
Anders M. Tomson
, age 57, has served as a director since 2016. Since December 2016, he has served as President Chief Executive Officer (“CEO”) of the Corporation and the Bank. From 2015 through 2016, he served as President and Chief Operating Officer (“COO”) of the Bank and was responsible for Retail Client Services during that time. Formerly, from 2011 through 2015, he served as President, Capital Bank, a Division of Chemung Canal Trust Company. Qualifications to serve on the Board include over 15 years of experience in the banking industry, and leadership, management, strategic planning and organizational skills.
|
|||||||
|
G. Thomas Tranter Jr.
, age 70, has served as a director since 2014. He retired on June 30, 2020, after serving 20 years, as President of Corning Enterprises and Director of Government Affairs for Corning Incorporated, a diversified manufacturing company. He formerly served 26 years in public administration and management, including being elected Chemung County Executive for three four-year terms. Mr. Tranter is the father-in-law of Joseph F. Meade IV, also a director of the Corporation and Bank. Qualifications to serve on the Board include leadership, business development and managerial skills together with extensive experience in government relations and community development.
|
|||||||
10
Continuing Directors (term expiring in 2027)
|
Raimundo C. Archibold Jr.
, age 66, has served as a director since February 2021. Since 2010, he has been a Managing Director of Schwartz Heslin Group, a business advisory and investment banking firm servicing family and entrepreneur-owned businesses. Prior to 2010, he worked for various investment banking firms servicing technology companies as well as financial institutions. Qualifications to serve on the Board include strategic planning, corporate finance and accounting, mergers and acquisitions, community development, and financing for over 30 years.
|
||||
|
David J. Dalrymple
, age 71, has served as a director since 1993, and is currently Chairman of the respective Boards of the Corporation and the Bank. Since 2014, he has served as President of Dalrymple Gravel and Contracting, a company specializing in producing construction materials for highway construction. He previously held the position of President of Dalrymple Holding Corporation from 1993 until 2014. He is the brother of Robert H. Dalrymple, also a director of the Corporation and Bank. Qualifications to serve on the Board include over 30 years of experience in business ownership, financial planning experience and strong managerial and organizational skills.
|
||||
|
Denise V. Gonick
, age 58, has served as a director since 2018. She is the founder of Cross Sound Concepts, a strategic advisory firm. From 2012 through 2019, she served as President CEO of MVP Health Care, a family of companies offering a range of health benefit plans and options combined with leading-edge wellness programs that help reduce health risks and control health care costs. Prior to that she was the Chief Legal Officer and Corporate Secretary of MVP Health Care. Qualifications to serve on the Board include seven years as CEO of a health insurer, 17 years corporate legal experience, leadership, transactions, strategic planning, executive management, financial management, compliance and government relations.
|
||||
|
Joseph F. Meade IV
, age 44, has served as a director since 2022. Since 2018, he has served as President CEO of Mercury Aircraft Inc., the parent company for several manufacturing companies including Mercury Minnesota, Inc. and Mercury Aircraft de Mexico. Mr. Meade is the son-in-law of G. Thomas Tranter Jr., also a director of the Corporation and Bank. Qualifications to serve on the Board include 20 years of experience in manufacturing, administration, international management and ownership, including financial and strategic planning.
|
||||
|
Thomas R. Tyrrell
, age 74, has served as a director since 2014. Since 2014, he has served as Vice President of NFP, an Aon Company (formerly NFP Corp.), a general insurance agency in the North East. He was formerly Albany Area Chairman of Arthur J. Gallagher Co., a company specializing in providing contract surety and property and casualty insurance and risk management products and services to the construction industry with particular emphasis on the heavy highway, bridge, and general building construction disciplines. Qualifications to serve on the Board include business management skills, sales experience, business ownership experience and service on several boards in the Albany area in the non-profit arena.
|
||||
11
Director Compensation
The Compensation Committee periodically reviews and is responsible for the design, implementation and administration of the Corporation’s compensation program for members of the Board of Directors and makes recommendations to the Board with respect to the type and amounts of compensation payable to the directors for service on the Boards of the Corporation, Bank and respective board committees.
Each non-employee director of the Corporation and Bank receives a flat annual retainer fee of $11,500; plus, a supplemental retainer fee for the Chair of the Corporation's and Bank's Board and Chair of the Corporation's and Bank's Committees. This fee is paid quarterly and trued-up in January of the following year based upon the number of meetings held during the prior year. Each non-employee director serving as Chair of the Corporation’s and Bank’s Board, or Audit Committee, receives an additional supplemental annual retainer commensurate with the increased responsibility accompanying such position. All non-employee directors receive a flat fee for attending meetings of the Corporation’s and Bank’s Board and committees. Mr. Tomson received no compensation for his service as a director in 2024.
The following table presents the various cash fees paid to non-employee directors in 2024 for their service on the Corporation’s and Bank’s Boards and committees.
|
BASIC ANNUAL RETAINER FEES
(1)
|
|||||
| ($) | |||||
| Basic Annual Retainer | 11,500 | ||||
| Chair of the Board Supplemental Retainer | 7,750 | ||||
| Chair of the Board Fees | 3,500 | ||||
| Chair of Audit Committee Supplemental Retainer | 2,875 | ||||
| Chair of Audit Committee Chair Fees | 1,250 | ||||
| Chair of Executive Committee Chair Fees | 250 | ||||
| Chair of Enterprise Risk Committee Chair Fees | 1,000 | ||||
| Chair of Loan Committee Chair Fees | 3,000 | ||||
| Chair of Trust Committee Chair Fees | 1,500 | ||||
| Chair of Compensation Committee Chair Fees | 750 | ||||
| Chair of Nominating and Governance Committee Chair Fees | 250 | ||||
| Chair of Asset Liability Committee Chair Fees | 1,000 | ||||
|
MEETING FEES
(2)
|
|||||
| ($) | |||||
| Board of Directors | 500 | ||||
| Chair of the Board | 500 | ||||
| Committees of the Board | 500 | ||||
| Chair of Committees | 500 | ||||
|
(1)
Annual Retainer fees are paid on a quarterly basis, based on the position held on the Corporation's and Bank's Board and Committee and trued-up in January of the following year.
|
|||||
|
(2)
Based on per meeting attendance.
|
|||||
12
The Directors’ Deferred Fee Plan allows non-employee directors of the Corporation or the Bank to elect to defer receipt of fees payable to the director for service as a member of the Board of Directors of the Corporation or the Bank. At the election of a director, the deferred fees are converted into units and allocated to a unit value account, which appreciates or depreciates as would an actual share of common stock of the Corporation. A director’s unit value account is credited with declared dividends pursuant to a formula described in the Plan. The units are paid to the director in the form of common stock of the Corporation. The common stock of the Corporation payable under the Directors’ Deferred Fee Plan is paid to the director either at a specified age or time elected by the director, at termination of the director’s service with the Corporation and/or Bank, or upon the occurrence of a change in control as defined in the Directors’ Deferred Fee Plan. The number of shares of common stock of the Corporation payable to a director with a unit value account under the Plan represents, at all times, a general unfunded obligation of the Bank, and each director participating in the Directors’ Deferred Fee Plan will be a general creditor of the Bank with respect to the value of his or her unit value accounts. Currently, there is one non-active participant in the Directors’ Deferred Fee Plan.
2024 Director Compensation Table
The following Director Compensation Table summarizes all compensation paid by the Corporation and Bank to the non-employee directors of the Corporation and Bank for the fiscal year ended December 31, 2024.
|
Directors
|
Fees Earned or Paid in Cash |
Number of Shares Outstanding
(1)
|
Stock Awards
(2)
|
All Other Compensation
|
2024 Total Compensation
|
|||||||||||||||
| ($) | (#) | ($) | ($) | ($) | ||||||||||||||||
| Raimundo C. Archibold Jr. | 25,500 | 582 | 28,000 | 1,731 |
(4)(5)
|
55,231 | ||||||||||||||
| Ronald M. Bentley | 31,750 | 603 | 29,010 | 3,458 |
(3)(4)(5)
|
64,218 | ||||||||||||||
| David M. Buicko | 34,625 | 668 | 32,137 | 839 |
(4)(5)
|
67,601 | ||||||||||||||
| David J. Dalrymple | 48,250 | 848 | 40,797 | 1,064 |
(5)
|
90,111 | ||||||||||||||
| Robert H. Dalrymple | 30,000 | 666 | 32,041 | 836 |
(5)
|
62,877 | ||||||||||||||
| Richard E. Forrestel Jr. | 28,500 | 582 | 28,000 | 731 |
(5)
|
57,231 | ||||||||||||||
| Denise V. Gonick | 27,500 | 582 | 28,000 | 992 |
(3)(5)
|
56,492 | ||||||||||||||
| Stephen M. Lounsberry III | 32,000 | 603 | 29,010 | 757 |
(5)
|
61,767 | ||||||||||||||
|
Joseph F. Meade IV
|
28,000 | 582 | 28,000 | 731 |
(5)
|
56,731 | ||||||||||||||
| Jeffrey B. Streeter | 28,000 | 582 | 28,000 | 731 |
(5)
|
56,731 | ||||||||||||||
| G. Thomas Tranter Jr. | 32,000 | 614 | 29,540 | 770 |
(5)
|
62,310 | ||||||||||||||
| Thomas R. Tyrrell | 31,250 | 603 | 29,010 | 2,257 |
(4)(5)
|
62,517 | ||||||||||||||
|
(1)
Represents the number of shares of the Corporation's unvested restricted common stock awards for each Director outstanding as of the fiscal year ended December 31, 2024, which will fully vest on the first anniversary of the grant date.
|
||||||||||||||||||||
|
(2)
Represents the grant date fair value of awards granted on January 17, 2024. The assumptions used to determine the value of the stock awards are described in Note 14 of the Corporation's audited consolidated financial statements contained in the Corporation's 2024 Annual Report on Form 10-K.
|
||||||||||||||||||||
|
(3)
Represents mileage paid to certain directors to attend Board and committee meetings during 2024.
|
||||||||||||||||||||
|
(4)
Represents Advisory Board fees earned during 2024.
|
||||||||||||||||||||
|
(5)
Includes dividends paid on restricted stock in 2024.
|
||||||||||||||||||||
13
Voting Proposal 2 - Advisory Approval of the Corporation's 2024 Named Executive Officer Compensation ("Say-On-Pay")
Summary and Board Recommendation
Proposal 2 is a proposal to approve, on an advisory basis, the Corporation’s 2024 Named Executive Officer compensation (“Say-On-Pay”), as described in the “
Compensation Discussion and Analysis
” section. This vote is not intended to address a specific item of compensation, but rather the overall compensation of the Named Executive Officers (“NEOs”) and the philosophies, policies and practices as described in this Proxy Statement. Say-On-Pay is an advisory proposal, which means that the vote on NEO compensation is not binding on the Corporation, Board of Directors or the Compensation Committee of the Board.
At the 2024 Annual Meeting, shareholders voted to approve the compensation program of the Corporation’s NEOs for the fiscal year ended December 31, 2023. After a comprehensive market review and in light of strong shareholder support, the Compensation and Personnel Committee concluded that no substantial changes to the executive compensation program were required. Approval of Say-On-Pay will require the affirmative vote of the holders of a majority of the shares of common stock present or represented by proxy at the Annual Meeting and voting on the below resolution.
RESOLVED, that the compensation paid to the Corporation's NEOs, as disclosed pursuant to Item 402 of Regulation S-K, including the
Compensation Discussion and Analysis
, compensation tables and narrative discussion, is hereby APPROVED.
•
Vote Recommendation:
Your Board recommends you vote
“For,”
on an advisory basis, the Corporation’s Named Executive Officer compensation (Say-On-Pay).
Say-On-Pay Details
The Compensation of the Corporation’s NEOs is disclosed in the “
Compensation Discussion and Analysis
,” the summary compensation table, and the other related tables and narrative disclosures contained elsewhere in this Proxy Statement. As discussed in those disclosures, the Board believes that our executive compensation philosophy, policies, and practices provide a strong link between each NEO’s compensation and our short- and long-term performance. The objective of our executive compensation program is to provide compensation which is competitive with our peers of comparable size and business model based on our performance, and aligned with the long-term interest of our shareholders.
•
Change in Control Agreements:
Consistent with shareholder advisory guidance, the Corporation’s executive change in control agreements provide for “double trigger” severance benefits upon the NEO’s qualifying termination event in connection with a change in control.
•
Balanced:
The Corporation’s bonus program is a balanced program based on predefined goals of both the Corporation and the individual executive’s performance.
•
Annual Review:
The annual bonus is based on predefined goals that are reviewed and updated yearly and are set to encourage long-term profitability within accepted conservative risk parameters.
•
Shareholder Aligned:
Long-term equity-based incentives, such as restricted stock awards, recognize and encourage an alignment of executives’ goals over the long term with those of the shareholders. Awards under the Equity Incentive Plan provide for vesting over a five-year period (except for Mr. Tomson who has a one-year vesting period).
14
Voting Proposal 3 - Approval of the Chemung Financial Corporation 2025 Equity Incentive Plan
Summary and Board Recommendation:
The Board of Directors has approved the submission of the Chemung Financial Corporation 2025 Equity Incentive Plan (the “2025 Equity Incentive Plan”) for approval by our shareholders.
The 2025 Equity Incentive Plan will provide officers, employees and directors of the Corporation and the Bank with additional incentives to promote the growth and performance of the Corporation.
By approving the 2025 Equity Incentive Plan, our shareholders will give us the flexibility we need to continue to attract and retain highly qualified officers and directors by offering a competitive compensation program that is linked to the performance of our common stock.
In addition, the 2025 Equity Incentive Plan is intended to further align the interests of our directors and management with the interests of our shareholders by potentially increasing the ownership interest of directors and officers in the common stock of the Corporation.
If the 2025 Equity Incentive Plan is approved by shareholders, no more awards will be granted under the Chemung Financial Corporation 2021 Equity Incentive Plan (the “2021 Plan”).
The Corporation does not intend or expect to grant any further awards under the 2021 Plan prior to the approval of the 2025 Equity Incentive Plan.
The following is a summary of the material features of the 2025 Equity Incentive Plan, which is qualified in its entirety by reference to the provisions of the 2025 Equity Incentive Plan, attached hereto as Appendix A.
In the event of conflict between the terms of this disclosure and the terms of the 2025 Equity Incentive Plan, the terms of the 2025 Equity Incentive Plan will control.
General
Subject to permitted adjustments for certain corporate transaction, the maximum number of shares of Corporation common stock that may be delivered to participants under the 2025 Equity Incentive Plan is equal to 160,000 shares of Corporation common stock (the “Share Limit”).
Shares of Corporation common stock subject to the Share Limit may be issued pursuant to grants of stock options, restricted stock awards or restricted stock units, provided, however that no more than the number of shares of Corporation common stock equal to the Share Limit may be delivered pursuant to the exercise of stock options that are granted as incentive stock options.
The Share Limit is reduced, on a one-for-one basis, for each share of common stock subject to a stock option, restricted stock award or restricted stock unit.
If any award granted under the 2025 Equity Incentive Plan expires, terminates, is canceled or is forfeited without being settled or exercised or is settled without the issuance of shares of common stock, shares of the Corporation common stock subject to such award will be made available for future grant under the 2025 Equity Incentive Plan.
If any shares are surrendered or tendered to pay the exercise price of a stock option, such shares will not again be available for grant under the 2025 Equity Incentive Plan.
In addition, shares of Corporation common stock withheld in payment for purposes of satisfying tax withholding obligations with respect to an award do not become available for re-issuance under the 2025 Equity Incentive Plan.
The 2025 Equity Incentive Plan will be administered by the members of the Corporation’s Compensation Committee (the “Committee”) who are “Disinterested Board Members,” as defined in the 2025 Equity Incentive Plan.
The Committee has full and exclusive power within the limitations set forth in the 2025 Equity Incentive Plan to make all decisions and determinations regarding: (i) the selection of participants and the granting of awards; (ii) establishing the terms and conditions relating to each award; (iii) adopting rules, regulations and guidelines for carrying out the 2025 Equity Incentive Plan’s purpose; and (iv) interpreting the provisions of the 2025 Equity Incentive Plan and any award agreement.
The 2025 Equity Incentive Plan also permits the Committee to delegate all or part of its responsibilities and powers to any person or persons selected by it.
The closing sale price of the Corporation’s common stock as reported on the NASDAQ® Global Select Market on April 7, 2025, the record date, was $
42.98
.
Set forth below is information as of December 31, 2024 regarding equity compensation plans categorized by those plans that have been approved by shareholders and those plans that have not been approved by shareholders.
•
Vote Recommendation:
Your Board recommends you vote
“FOR”
the 2025 Chemung Financial Corporation Equity Plan.
15
Set forth below is information as of December 31, 2024 regarding equity compensation plans categorized by those plans that have been approved by shareholders and those plans that have not been approved by shareholders.
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights | Weighted Average Exercise Price |
Number of Securities Remaining Available for Issuance Under Plan
(1)
|
||||||||
| (#) | ($) | (#) | |||||||||
|
Equity compensation plans approved by shareholders
(2)(3)
|
-- | -- |
67,286
|
||||||||
| Equity compensation plans not approved by shareholders | -- | -- | -- | ||||||||
| Total | -- | -- |
67,286
|
||||||||
|
(1)
Represents the number of shares that may be granted as stock awards under the Corporation’s 2021 Equity Incentive Plan. As of April 7, 2025, there were 33,872 shares remaining available for issuance under the 2021 Equity Incentive Plan.
|
|||||||||||
|
(2)
The outstanding full value awards as of December 31, 2024 was 49,703, and the outstanding full value awards as of April 7, 2025 was 71,436. We do not have outstanding stock options as of April 7, 2025.
|
|||||||||||
|
(3)
Although the Corporation does not intend to grant any awards under the 2021 Plan following the record date and prior to the approval of the 2025 Equity Incentive Plan, to the extent any awards are granted under the 2021 Plan during such period, the awards will be counted against the number of shares reserved for grant under the 2025 Equity Incentive Plan.
|
|||||||||||
Eligibility
Employees and directors of the Corporation or its subsidiaries are eligible to receive awards under the 2025 Equity Incentive Plan, except that non-employees may not be granted incentive stock options. As of April 7, 2025, there were twelve non-employee directors and fifty employees eligible to participate and receive awards under the Plan.
Types of Awards
The Committee may determine type and terms and conditions of awards under the 2025 Equity Incentive Plan, which shall be set forth in an award agreement delivered to each participant. Awards may be granted as incentive and non-statutory stock options, restricted stock awards, restricted stock units or any combination thereof, as follows:
Stock Options.
A stock option gives the recipient or “optionee” the right to purchase shares of common stock at a specified price for a specified period of time. The exercise price may not be less than the fair market value on the date the stock option is granted. Fair market value for purposes of the 2025 Equity Incentive Plan means the final sales price of the Corporation’s common stock as reported on NASDAQ® on the date the option is granted, or if the Corporation’s common stock was not traded on such date, then the day prior to such date or on the next preceding day on which the Corporation’s common stock was traded, and without regard to after-hours trading activity. The Committee will determine the fair market value, in accordance with Section 422 of the Internal Revenue Code and applicable requirements of Section 409A of the Internal Revenue Code. If it cannot be determined in the manner described herein. Further, the Committee may not grant a stock option with a term that is longer than 10 years.
Stock options are either “incentive” stock options or “non-qualified” stock options. Incentive stock options have certain tax advantages and must comply with the requirements of Section 422 of the internal Revenue Code. Only employees are eligible to receive incentive stock options. Shares of common stock purchased upon the exercise of a stock option must be paid for in full at the time of exercise by either: (i) by tendering, either actually or constructively by attestation, shares of stock valued at fair market value as of the day of exercise; (ii) by irrevocably authorizing a third party, acceptable to the Committee, to sell shares of stock (or a sufficient portion of the shares) acquired upon exercise of the stock option and to remit to the Corporation a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise; (iii) by a net settlement of the stock option, using a portion of the shares obtained on exercise in payment of the exercise price of the stock option (and if applicable, any minimum required tax withholding); (iv) by personal, certified or cashier’s check; (v) by other property deemed acceptable by the Committee; or (vi) by any combination thereof.
16
Under no circumstances will the Corporation buy back underwater stock options without shareholder approval.
Restricted Stock.
A restricted stock award is a grant of common stock, subject to vesting requirements, to a participant for no consideration or minimum consideration as may be required by applicable law. Restricted stock awards under the 2025 Equity Incentive Plan will be granted only in whole shares of common stock and are subject to vesting conditions and other restrictions established by the Committee as set forth in the 2025 Equity Incentive Plan or the award agreement. Awards will be evidenced by award agreements approved by the Committee, which set for the terms and conditions of each award. Prior to their vesting, unless otherwise determined by the Committee, the recipient of a restricted stock award may exercise any voting rights with respect to common stock subject to an award and receive any dividends and distributions with respect to the common stock. Unless otherwise determined by the Committee, dividends on unvested restricted stock awards on a time-based vesting schedule will be distributed immediately. However, no dividends on unvested restricted stock awards subject to performance-based vesting conditions will be distributed unless and until the participant vests in the restricted stock award.
Restricted Stock Units:
Restricted stock units are similar to restricted stock awards except that no shares of common stock are actually issued to the award recipient at the time of grant. Restricted stock units are denominated in shares of common stock. Restricted stock units granted under the 2025 Equity Incentive Plan will be settled in shares of our common stock or, in the sole discretion of the Committee determined at the time of settlement, in cash or a combination thereof, and are subject to vesting conditions and other restrictions set forth in the 2025 Equity Incentive Plan or the recipient’s award agreement. Participants have no voting rights with respect to any restricted stock units granted under the 2025 Equity Incentive Plan. No dividends will be paid on restricted stock units. In the sole discretion of the Committee, exercised at the time of grant, dividend equivalent rights may be paid on restricted stock units. Dividend equivalent rights will be paid when the restricted stock unit is settled or at the same time as the shares subject to such restricted stock unit are distributed to the participant.
Performance Awards.
A performance award is a restricted stock award or restricted stock unit, the vesting of which is subject to the achievement of one or more performance conditions specified by the Committee and set forth in the 2025 Equity Incentive Plan.
Prohibition Against Repricing and Underwater Buyouts of Options.
The 2025 Equity Incentive Plan provides that neither the Committee nor the Board of Directors is authorized to make any adjustment or amendment that reduces or would have the effect of reducing the exercise price of a stock option previously granted, including (i) cancellation of outstanding options in exchange for the grant of new options is a lower exercise price, (ii) cancellation of underwater options in exchange for stock awards, and (iii) cash buyouts of underwater options, except for adjustments pursuant to certain corporate transactions.
Limitation on Awards under the 2025 Equity Incentive Plan
The 2025 Equity Incentive Plan includes the limitation that no more than the Share Limit may be issued in the aggregate as incentive stock options under the 2025 Equity Incentive Plan.
In the event of a corporate transaction involving the stock of the Corporation, such as a recapitalization, stock dividend, extraordinary cash dividend or a stock split, the number of shares covered by awards then outstanding under the 2025 Equity Incentive Plan, the limitation on awards under the 2025 Equity Incentive Plan and/or the exercise price of the outstanding stock options and other equitable substitutions or adjustments will be made proportionally and uniformly to reflect such corporate transaction, as applicable.
17
Performance Features
The performance measures that may be used for such awards will be based on any one or more of the following performance measures, as selected by the Committee: book value or tangible book value per share; basic earnings per share; basic cash earnings per share; diluted earnings per share; diluted cash earnings per share; return on equity; net income or net income before taxes; cash earnings; net interest income; non-interest income; non-interest expense to average assets ratio; cash general and administrative expense to average assets ratio; efficiency ratio; cash efficiency ratio; return on average assets; cash return on average assets; return on average shareholders’ equity; cash return on average shareholders’ equity; return on average tangible shareholders’ equity; cash return on average tangible shareholders’ equity; core earnings; operating income; operating efficiency ratio; net interest rate margin or net interest rate spread growth in assets; loans; or deposits; loan production volume; non-performing loans; cash flow; strategic business objectives consisting of one or more objectives based upon meeting specified cost targets; business expansion goals; and goals relating to acquisitions or divestitures, or goals relating to capital raising and capital management; or any combination of the foregoing.
Vesting of Awards
The Committee shall specify the vesting schedule or conditions of each award.
Awards made under the 2025 Equity Incentive Plan are subject to a minimum vesting period of one year from the date of grant, provided, however, that the following awards would not be subject to the one year minimum vesting requirement: (1) substitute awards granted in connection with awards that are assumed, converted or substituted pursuant to a merger, acquisition or similar transaction; (2) awards to non-employee directors that vest on the earlier of the one-year anniversary of the date of grant or the next annual meeting of shareholders that is at least 50 weeks after the immediately preceding year’s annual meeting; and (3) up to 5% of the available share reserve authorized for issuance under the 2025 Equity Incentive Plan.
Notwithstanding the foregoing, vesting (including the reduction or elimination of any restrictions) may be accelerated in the event of death, disability, or upon involuntary termination of employment or service following a change in control.
Change in Control
The 2025 Equity Incentive Plan uses a double trigger change in control feature, providing for an acceleration of vesting only upon an involuntary termination of employment or service simultaneous with or following a Change in Control. Also, if an acquiring corporation fails to assume awards granted under the 2025 Equity Incentive Plan (other than performance-based awards, addressed below), such awards will vest immediately upon the effective time of the Change in Control.
•
Unless otherwise stated in an award agreement, at the time of an involuntary termination following a Change in Control, all stock options then held by the participant shall become fully earned and exercisable (subject to the expiration provisions otherwise applicable to the stock option). All stock options may be exercised for a period of one year following the participant’s involuntary termination provided, however, that no stock option shall be eligible for treatment as an incentive stock option in the event such stock option is exercised more than three months following involuntary termination.
•
At the time of an involuntary termination following a Change in Control, all awards of restricted stock restricted stock units, and performance shares shall become earned and fully vested immediately.
•
In the event of a change in control, any performance measure attached to a performance award under the 2025 Equity Incentive Plan shall be deemed satisfied at the greater of (i) the target level of performance on a pro-rata basis for time elapsed in the performance period and (ii) the actual level of performance.
18
Amendment and Termination
The Board of Directors may, as permitted by law, at any time, amend or terminate the 2025 Equity Incentive Plan or any award granted under the 2025 Equity Incentive Plan. However, except as provided in the 2025 Equity Incentive Plan, no amendment or termination may adversely impair the rights of an outstanding award without the participant’s (or affected beneficiary’s) written consent. The Board of Directors may not amend the provision of the 2025 Equity Incentive Plan related to repricing, materially increase the aggregate number of securities that may be issued under the 2025 Equity Incentive Plan (other than as provided in the 2025 Equity Incentive Plan), materially increase the benefits accruing to a participant, or materially modify the requirements for participation in the 2025 Equity Incentive Plan, without approval of shareholders. Notwithstanding the foregoing, the Board may, without shareholder approval, amend the 2025 Equity Incentive Plan at any time, retroactively or otherwise, to ensure that the 2025 Equity Incentive Plan complies with current or future law and the Board of Directors may unilaterally amend the 2025 Equity Incentive Plan and any outstanding award, without participant consent, in order to maintain an exemption from, or to comply with, Section 409A of the Internal Revenue Code and its applicable regulations and guidance.
Duration of Plan
The 2025 Equity Incentive Plan will become effective upon approval by the shareholders at this meeting. The 2025 Equity Incentive Plan will remain in effect as long as any awards under it are outstanding; however, no awards may be granted under the 2025 Equity Incentive Plan on or after the day immediately prior to the 10-year anniversary of the effective date of the 2025 Equity Incentive plan. At any time, the Board of Directors may terminate the 2025 Equity Incentive Plan. However, any termination of the 2025 Equity Incentive Plan will not affect outstanding awards.
Federal Income Tax Considerations
The following is a summary of the federal income tax consequences that may arise in conjunction with the participation in the 2025 Equity Incentive Plan.
Non-Qualified Stock Options.
The grant of a non-qualified stock option will not result in taxable income to the participant. Except as described below, the participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares acquired over the exercise price for those shares, and we will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of exercise.
Incentive Stock Options.
The grant of an incentive stock option will not result in taxable income to the participant. The exercise of an incentive stock option will not result in taxable income to the participant provided the participant was, without a break in service, an employee of the Corporation or a subsidiary during the period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant is disabled, as that term is defined in the Internal Revenue Code). We will not be entitled to a tax deduction upon the exercise of an incentive stock option.
The excess of the fair market value of the shares at the time of the exercise of an incentive stock option over the exercise price is an adjustment that is included in the calculation of the participant’s alternative minimum taxable income for the tax year in which the incentive stock option is exercised. For purposes of determining the participant’s alternative minimum tax liability for the year of disposition of the shares acquired pursuant to the incentive stock option exercise, the participant will have a basis in those shares equal to the fair market value of the shares at the time of exercise.
Provided a participant does not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option or within one year after the exercise of such stock option, then, upon disposition of such shares, any amount realized in excess of the exercise price will be taxed as a capital gain. A capital loss will be recognized to the extent that the amount realized is less than the exercise price.
19
If the foregoing holding period requirements are not met, a participant will generally recognize ordinary income at the time of the disposition of the shares in an amount equal to the lesser of (i) the excess of the fair market value of the shares on the date of exercise over the exercise price; or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price, and the Corporation will be entitled to a corresponding deduction. If the amount realized exceeds the value of the shares on the date of exercise, any additional amount will be a capital gain. If the amount realized at the time of disposition is less than the exercise price, the participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares.
Restricted Stock.
A participant who has been granted a restricted stock award will not realize taxable income at the time of grant, provided that the stock subject to the award is not delivered at the time of grant or if the stock is delivered, it is subject to restrictions that constitute a “substantial risk of forfeiture” for federal income tax purposes. Upon the later of delivery or vesting of shares subject to an award, the holder will realize ordinary income in an amount equal to the then fair market value of those shares and the Corporation will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of delivery or vesting. Any dividends paid to the holder during the restriction period will also be compensation income to the participant, and the Corporation will be entitled to a corresponding deduction for tax purposes. A participant who makes an election under Section 83(b) of the Internal Revenue Code will include the full fair market value of the restricted stock award subject to such election in taxable income in the year of the grant at the grant date fair market value.
Restricted Stock Units.
A participant who has been granted a restricted stock unit will not realize taxable income at the time of grant and will not be entitled to make an election under Section 83(b) of the Internal Revenue Code since no stock is actually transferred to the recipient on the date of grant. At the time a restricted stock unit vests, assuming the award of common stock or cash is distributed at that time, the recipient will recognize ordinary income in an amount equal to the fair market value of the common stock or the amount of cash received. If the restricted stock unit is not distributed at the time it vests, no income will be recognized at the time and taxation will be deferred until the common stock or cash associated with the restricted stock unit is distributed. At the time the recipient recognizes taxable income on a restricted stock unit, the Corporation will be entitled to a corresponding tax deduction in the same amount recognized by the award recipient.
Withholding of Taxes.
We may withhold amounts from participants to satisfy withholding tax requirements. Except as otherwise provided by the Committee, participants may have shares withheld from awards to satisfy the minimum tax withholding requirements.
Change in Control.
Any acceleration of the vesting or payment of the awards under the 2025 Equity Incentive Plan in the event of a change in control or termination of service following a change in control may cause part or all of the consideration involved to be treated as an “excess parachute payment” under Section 280G of the Internal Revenue Code, which may subject the participant to a 20% excise tax and preclude deduction by the Corporation related to awards.
Deduction Limits.
Section 162(m) of the internal Revenue Code generally limits the Corporation’s ability to deduct for tax purposes compensation in excess of $1.0 million per year for our Chief Executive Officer, Chief Financial Officer and three other most highly compensated officers (each, a “covered employee”), as well as any employee who has been designated as a covered employee for any fiscal year beginning after December 31, 2016. Compensation resulting from awards under the 2025 Equity Incentive Plan will be counted toward the $1.0 million limit.
Tax Advice.
The preceding discussion is based on federal tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the federal income tax aspects of the 2025 Equity Incentive Plan. A participant may also be subject to state and local taxes in connection with the grant of awards under the 2025 Equity Incentive Plan.
20
Accounting Treatment
Under U.S. generally accepted accounting principles, we are required to recognize compensation expense in our financial statements over the requisite service period or performance period based on the grant date fair value of stock options and other equity-based compensation (such as restricted stock awards, and restricted stock units).
Awards to be Granted
The Board of Directors approved the submission of the 2025 Equity Incentive Plan for approval by shareholders, and the Committee intends to meet after shareholder approval to determine the specific terms of the awards, including the allocation of awards to officers, employees and non-employee directors.
Awards Subject to Clawback Policy
Awards granted under the Plan are subject to clawback if the Corporation is required to prepare an accounting restatement due to material noncompliance of the Corporation, as a result of misconduct with any financial reporting requirement under the federal securities laws and the forfeiture provisions of the Sarbanes-Oxley Act of 2002 apply. Awards may also be subject to clawback under any other clawback policy adopted by the Corporation from time to time, whether pursuant to the Dodd-Frank Act or otherwise.
Required Vote and Recommendation of the Board
In order to approve the Chemung Financial Corporation 2025 Equity Incentive Plan, the proposal must receive the affirmative vote of a majority of the votes cast at the meeting.
•
Vote Recommendation:
Your Board recommends you vote
“For”
the Chemung Financial Corporation 2025 Equity Incentive Plan.
21
Voting Proposal 4 - Ratification of the Selection of Crowe LLP as the Corporation's Independent Registered Public Accounting Firm for 2025
Summary and Board Recommendation
The Audit Committee of the Corporation has selected the independent registered public accounting firm, Crowe LLP (“Crowe”), as the Corporation’s independent registered public accounting firm for the year ending December 31, 2025. The selection process included a thorough review of Crowe’s performance in prior years, the quality and expertise of the Crowe management team, its understanding and expertise in the industries in which the Corporation operates, the appropriateness of the fees charged, and its familiarity with the Corporation’s internal controls and accounting policies and practices.
Although shareholder approval of the appointment of Crowe is not required, the Board believes that it is important to give shareholders an opportunity to ratify the decision of the Audit Committee. If the selection is not ratified, the Audit Committee will consider the shareholders’ views in future retention of the Corporation’s independent registered public accounting firm.
A representative of Crowe is expected to be present at the Annual Meeting and will have the opportunity to make a statement if desired and may be available to respond to appropriate questions.
Ratification of the selection of Crowe will require the affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and voting on this proposal.
•
Vote Recommendation:
Your Board recommends you vote
“For”
the ratification of the independent registered public accounting firm, Crowe LLP, as the independent registered public accounting firm of the Corporation for the year ending December 31, 2025.
22
Audit Committee Report
In accordance with its written charter adopted by the Board of Directors, the Corporation’s Audit Committee assists the Board in fulfilling its oversight responsibilities for the integrity of the Corporation’s financial statements, systems of internal accounting and financial controls, compliance with legal regulatory requirements, and the independent auditor’s qualifications, independence and performance as well as the performance of its internal audit function.
The members of the Audit Committee meet the independence requirements of applicable laws and rules as determined by the Board.
Five meetings of the Audit Committee were held during 2024.
The charter was re-approved in February 2025 and can be viewed on the Bank’s website at:
https://s25.q4cdn.com/655202364/files/doc_downloads/governance/2025/02/2025-Audit-Committee- Charter.pdf
On March 13, 2025, the Audit Committee appointed the independent registered public accounting firm, Crowe LLP, as the Corporation’s independent auditors for the year ending December 31, 2025.
The Audit Committee has reviewed and discussed with management and with Crowe LLP, the Corporation’s audited consolidated financial statements for the year ended December 31, 2024.
The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; and, received the written disclosures and the letter from the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and have discussed with the independent registered public accounting firm their independence from the Corporation.
The Audit Committee also discussed the quality and adequacy of the Corporation’s internal controls with management and the independent auditors.
In addition, the Audit Committee reviewed with Crowe LLP their audit plans, audit scope and identification of audit risks.
Based upon the above-mentioned reviews and discussions with management and Crowe, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024 to be filed with the Securities and Exchange Commission.
| The Audit Committee: | |||||||||||
| David M. Buicko, Chairman | Raimundo C. Archibold Jr. | David J. Dalrymple | Richard E. Forrestel Jr. | ||||||||
| Jeffrey B. Streeter | G. Thomas Tranter Jr. | Thomas R. Tyrrell | |||||||||
This foregoing Audit Committee Report is not “soliciting material,” is not deemed “filed” with the SEC, and shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing of ours under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this report by reference.
23
Fees Paid to Independent Registered Public Accounting Firm
Fees billed by Crowe LLP relating to the years ended December 2024 and 2023 are provided in the following table. All services provided by Crowe LLP in 2024 and 2023 were pre-approved by the Audit Committee.
| Type of Service |
Fiscal Years Ended
December 31,
|
||||||||||
| 2024 | 2023 | ||||||||||
| ($) | ($) | ||||||||||
| Audit Fees | 425,700 | 387,000 | |||||||||
| Audit-Related Fees | — | 85,000 | |||||||||
| Tax Fees | — | — | |||||||||
| Captive Insurance Subsidiary Fees | — | 25,000 | |||||||||
| All Other Fees | — | — | |||||||||
| Total Fees | 425,700 | 497,000 | |||||||||
The Audit Fees were for professional services rendered for the audit of the Corporation’s annual financial statements, the independent auditor’s report on internal control over financial reporting, review of financial statements included in the Corporation’s Quarterly Reports filed on Form 10-Q, and services that are normally provided by Crowe LLP, in connection with statutory and regulatory filings or engagements.
The Audit-Related Fees for 2023 consisted of consulting and auditing services related to the implementation of ASC 326 (CECL) and for an attestation of the Corporation's financial statements as of December 31, 2023 related to the S-3 filing on July 11, 2023 for the Corporation's Shelf Registration. The Captive Insurance Subsidiary Fees for 2023 were for audit and tax services.
Audit Committee Pre-Approved Policies and Procedures
The Audit Committee pre-approves the audit and permissible non-audit services provided by the independent auditors.
These services may include audit services, non-audit services, audit-related services, tax services and other services.
Crowe LLP and management periodically report to the Audit Committee regarding the extent of services provided by the independent auditor in accordance with this pre-approval, and the fees for the services performed to date.
The Audit Committee may also pre-approve additional services on a case-by-case basis.
In the period between meetings of the Audit Committee, the Audit Committee Chair or a delegated sub-committee is authorized to pre-approve such services provided that such pre-approval is ratified by the Audit Committee at its next regularly-scheduled meeting.
24
Corporate Governance
The business of the Corporation is managed under the direction of its Board of Directors in accordance with the laws of New York State. The Board serves as the ultimate decision-making body of the Corporation, except for those matters reserved to or shared with the shareholders.
The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Corporation.
The directors are responsible to exercise their business judgment as they reasonably believe will further the long-range best interests of the Corporation, its shareholders and other stakeholders. The Board believes that the success of the Corporation depends on its financially sound performance to further its strategic objectives and its adherence to high standards of business ethics focusing on the letter and spirit of regulatory and legal mandates. At least once a year, the Board will take an active role in reviewing strategic planning of the Corporation and will exercise oversight over the implementation of strategic planning.
The Nominating and Governance Committee of the Board is responsible for ensuring that the Board is properly constituted to meet its fiduciary obligations to shareholders and the Corporation has and follows appropriate governance standards. This assessment includes whether individual directors or nominees qualify as independent under applicable laws and guidelines, as well as consideration of diversity, age, skills and experience of the directors as a group in the context of the needs of the Board. A majority of the directors must meet the criteria for general Board independence as required and defined by NASDAQ®.
The Board’s membership is divided into three classes, as equal in number as possible, with one class generally to be elected each year by the Corporation’s shareholders for a term of three years. The Nominating Governance Committee identifies and recommends to the full Board suitable candidates for nomination for Director, including, when appropriate, incumbent directors. In making its recommendations, the Nominating and Governance Committee will consider any proposals it properly receives from shareholders for director nominees. Shareholders may propose a director candidate for consideration by the Nominating and Governance Committee by following the rules described under the heading
“Shareholder Submissions of Director Nominees for the 2026 Annual Meeting”
in the Additional Shareholder Information section. The Nominating and Governance Committee’s recommendations of candidates for nomination will be based on its determination as to the suitability of the particular individuals, and the slate as a whole, to serve as directors of the Corporation and Bank, taking into account the criteria described in the “
Director Nomination Process
” in the “
Voting Proposal 1 – Election of Directors
” section.
The Board does not believe that directors should be subject to term limits. While term limits may in some cases enhance the flow of fresh ideas and viewpoints in the boardroom, they may also result in the loss of knowledgeable and experienced directors, whose insights into the Corporation and its operations typically expand and deepen over time. When evaluating whether incumbent directors should be re-nominated, the Nominating and Governance Committee will consider, in addition to the incumbent’s prior performance on the Board, each such director’s attendance record for meetings of the Corporation’s Board, its subsidiary bank’s Board and committees on which the director serves, as applicable, and the same general qualities and attributes, such as suitability, personal character, integrity, general experience and background that it applies to new candidates for director. Additionally, the Corporation’s Bylaws provide that directors will retire from the Board at the first Annual Meeting of Shareholders held on or after they attain the age of 75. The Board may waive the limitation in its discretion or establish a greater age in the future.
25
Board Leadership Structure
Chemung Financial is managed under the direction of its Board. All members of the Corporation’s Board also serve on the Board of the Bank. The Board establishes policies and strategies and regularly monitors the effectiveness of management in carrying out these policies and strategies. Members of the Board are kept informed of the Corporation’s business activities through discussions with key members of the management team, by reviewing materials provided to the Board and by participating in meetings of the Board and its committees. The Board currently consists of thirteen members. The Corporation separates the roles of CEO and Chairman of the Board, which provides the appropriate balance between strategy development and independent oversight of management and a higher degree of independence and transparency between the Board and management. The CEO is conversant with the Corporation’s business and industry and is responsible for identifying strategic priorities and leading the discussion and execution of strategy. The Chairman of the Board presides at all executive sessions of the Board, facilitating teamwork and communication between management and the Board, while providing guidance to the CEO. Mr. David J. Dalrymple served as Chairman of the Board in 2024. The Corporation believes that oversight by the Chairman of the Board, combined with the Corporation’s overall corporate governance structure, policies and practices as outlined earlier, maximizes the effectiveness of Board leadership. The Nominating and Governance Committee and the independent directors will continue to evaluate the Board’s leadership structure as part of its regular reviews of corporate governance and succession planning to ensure that it remains best suited for the Corporation and shareholders.
Insider Trading Policy
The Corporation’s
Insider Trading Policy
governs the purchase, sale, and other dispositions of the registrant's securities by directors, senior management, and employees that the Board believes is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the NASDAQ® exchange listing standards. A copy of the Corporation’s Insider Trading Policy is filed as Exhibit 19 to the Annual Report on Form 10-K for the year ended December 31, 2024.
Anti-Hedging and Pledging Policy
The Corporation’s anti-hedging and anti-pledging provisions are covered in the Corporation’s Insider Trading Policy. Under the policy, directors and executive officers are prohibited from engaging in short sales of Corporation stock and from engaging in transactions in publicly-traded options, such as puts, calls and other derivative securities based on Corporation stock including any hedging, monetization or similar transactions designed to decrease the risks associated with holding Corporation stock. In addition, directors and executive officers are prohibited from pledging Corporation stock as collateral for any loan or holding Corporation stock in a margin account.
Stock Option Award Policy
The Corporation has not historically granted stock options or similar awards as part of its equity compensation programs and did not grant any stock options during the year ended December 31, 2024.
While the Corporation
does not
have a formal policy or obligation that requires it to grant or award equity-based compensation on a specific date, if stock options or similar awards are granted in the future, our Insider Trading Policy provides that the Corporation will not grant stock options or similar awards in anticipation of the release of material nonpublic information that is likely to result in changes to the price of the Corporation’s common stock, such as a significant positive or negative earnings announcement, and it will
not time
the public release of such information based on stock option grant dates.
Consequently, the Corporation has not granted and does not expect to grant stock options or similar awards during periods in which there is material nonpublic information about the Corporation, including during “blackout” periods or at any time during the four business days prior to or the one business day following the filing with the SEC of any report on Forms 10-K, 10-Q, or 8-K that discloses material nonpublic information. The Compensation and Personnel Committee and the Board do not take material non-public information into account when determining the timing of equity awards and do not time the disclosure of material non-public information in order to impact the value of executive compensation.
These restrictions do not apply to restricted stock awards or other types of equity awards that do not include an exercise price related to the market price of the Corporation’s common stock on the date of grant.
26
Board Committees
The Board has three standing committees whose membership and responsibilities must meet certain NASDAQ® and SEC requirements. These standing committees are the Audit, Nominating and Governance and Compensation and Personnel Committees (collectively, the “Committees”). The Board may from time to time establish or maintain additional committees, as it deems necessary or appropriate, the membership of which may include one or more directors, as well as non-directors.
Committee Membership
The Nominating and Governance Committee regularly reviews committee membership and makes recommendations for changes on an annual basis, with consideration given to the qualifications and preferences of individual directors and the specific requirements, if any, of NASDAQ® and the SEC for service on such Committees. The Board gives consideration to rotating committee members periodically, to the extent feasible under applicable laws and regulations governing the membership requirements of the Committees, but the Board does not believe rotation should be mandated as policy, nor that service by a director on a committee should be subject to term limits. All members of the three standing Committees are independent directors, as defined (and generally required) under applicable law, rules, listing standards and regulations (see “
Director Independence
” later in this section for more detail). A table showing the current members of each of the standing Committees follows:
| Director |
Audit
Committee
|
Nominating
Governance Committee
|
Compensation
Personnel Committee
|
||||||||
| Raimundo C. Archibold Jr. | ü | ||||||||||
| Ronald M. Bentley | ü | ||||||||||
| David M. Buicko | Chair | ||||||||||
| David J. Dalrymple | ü | ü | ü | ||||||||
| Robert H. Dalrymple | ü | ü | |||||||||
| Richard E. Forrestel Jr. | ü | ||||||||||
| Denise V. Gonick | ü | ü | |||||||||
| Stephen M. Lounsberry III | ü | Chair | |||||||||
| Joseph F. Meade IV | ü | ü | |||||||||
| Jeffrey B. Streeter | ü | ||||||||||
| G. Thomas Tranter Jr. | ü | ü | ü | ||||||||
| Thomas R. Tyrrell | ü | Chair | ü | ||||||||
Each of the three standing Committees has its own charter that sets forth the purposes, goals and responsibilities of the committee, as well as the qualifications for membership, procedures for appointing members, structure and operations, and policies for Board oversight of the committee. Each has the power to hire, at the Corporation’s expense, independent accounting, compensation, financial, legal or other consultants, as the members may deem necessary and appropriate, consistent with the overall authority to retain such advisors as set forth in the committee’s charter, including budgeting or professional conditions and limitations. Management approval will not be required for engagement of consultants, although management normally will be advised and consulted prior to any such engagement to avoid, among other things, conflicts of interest. The charters of each committee can be viewed on the Bank’s website at: https://chemungfinancial.q4ir.com/corporate-information/documents/default.aspx
27
Committee Descriptions
A description of each of the three standing Committees follows:
•
Audit Committee:
Mr. Buicko is the Chair of the Audit Committee; he has served in this role since 2019. The primary responsibilities of the Audit Committee include the appointment of independent auditors, the pre-approval of all audit and non-audit services performed by the Corporation’s independent auditors, the review of the adequacy of internal accounting and disclosure controls of the Corporation, reviewing the financial statements and audit report with management and the Corporation’s independent auditors and reviewing the quarterly and annual reports filed with the SEC. In accordance with applicable rules, the Audit Committee must specifically approve, in advance, all services performed by the independent auditor. The Audit Committee met five times in 2024. For additional information, see the “
Audit Committee Report
” section.
•
Nominating and Governance Committee:
Mr. Tyrrell is the Chair of the Nominating and Governance Committee; he has served in this role since 2019. The Nominating and Governance Committee’s primary responsibilities include oversight of the Corporation’s corporate governance matters on behalf of the Board of Directors, identifying, evaluating and recommending qualified director nominees, considering shareholder nominees for election to the Board, reviewing annually and reporting to the Board regarding the independence of the directors, reviewing committee structure and making recommendations to the full Board for committee membership, recommending Corporate Governance Guidelines to the Board, and overseeing the Board and committee self-evaluation process. The Nominating and Governance Committee met two times in 2024.
•
Compensation and Personnel Committee:
Mr. Lounsberry is the Chair of the Compensation and Personnel Committee (the “Compensation Committee”); he has served in this role since 2012. The Compensation Committee’s primary responsibilities include to exercise authority, in its sole discretion, to retain and terminate, or obtain the advice of any adviser to be used to assist in the performance of its duties, but only after taking into consideration factors relevant in the adviser’s independence from management as specified in NASDAQ® Listing Rule 5605(d)(3), or any successor provision thereto, exercise authority or submit to the Disinterested Board Members for ratification (depending on the terms of the compensation plan) relating to the compensation of the executive officers, including to review and
determine the compensation of the CEO and the other Named Executive Officers,
review the Corporation’s compensation plans and programs affecting other employees, review management’s proposals for the election and promotion of officers, monitor compensation trends; and, select a peer group of companies against which to compare the Corporation’s compensation for the CEO, and executive officers. The Compensation Committee’s oversight of the Bank’s incentive compensation plans, including setting corporate measures and goals consistent with principles of safety and soundness, make recommendations to the Board relating to awards and approve long-term equity awards. Director compensation is established by the Corporation’s Board of Directors upon the recommendation of the Compensation Committee. The Compensation Committee met six times in 2024. For additional information, see the “
Director Compensation
” section.
28
Executive Session with Independent Directors
In addition to regular Board and committee meetings, directors meeting the general independence test under NASDAQ® meet, at least, two times a year in Executive Session to discuss any matters deemed relevant to the Corporation’s operation and condition. No current members of management are in attendance during these sessions, which are chaired by the Chairman of the Board. Due to the informality and expectation of confidentiality that characterize Executive Sessions, typically no binding corporate decisions or actions are taken nor official records maintained for them. The independent directors held two Executive Sessions in 2024.
Attendance
In 2024, the Corporation’s Board held twelve regularly-scheduled meetings and the Board of the Bank also held twelve regularly-scheduled meetings. Each then-current director attended at least 75% of the Board meetings and committee meetings to which he or she were assigned. The Corporation does not have a formal policy regarding attendance by a member of the Board at the Corporation’s Annual Meeting of Shareholders. In 2024, ten of thirteen then-current directors attended the Annual Meeting of Shareholders.
Code of Ethics
The Board of Directors has adopted a Code of Ethics for senior financial officers, which applies to the Bank’s CEO, CFO, and other senior officers performing accounting, auditing, financial management or similar functions. This Code of Ethics supplements a Code of Business Conduct and Ethics, which governs all employees, officers and directors. Both codes can be viewed on the Bank’s website at the following link:
https://s25.q4cdn.com/655202364/files/doc_downloads/governance/2024/03/2024-Code-of-Conduct-Revised.pdf
Director Independence
Under applicable law and regulation, it is the responsibility of the Board, through recommendation of the Nominating and Governance Committee, to review and make a determination regarding the independence and qualifications of each member, as well as additional review and determination for members of certain committees.
The Corporation’s Governance Guidelines require that the Board consist of a majority of independent directors. Based upon a review of the annual Directors’ Questionnaires and the responses of the directors to questions regarding affiliation, compensation history, employment, and relationships with family members and others, the Board determined that all directors except for Mr. Tomson meet the independence requirements of the applicable laws and rules and NASDAQ® listing standards. In connection with its evaluation of director independence during 2024,
there were no transactions considered other than those described under the section titled “
Related Party Transactions
.”
There were no “Compensation Committee Interlocks,” as defined under the SEC rules, in existence during the fiscal year 2024.
No member of the Compensation Committee is a current or former employee of the Corporation or Bank, except for Ronald M. Bentley, who served as President and CEO of the Bank and Corporation and became independent, per NASDAQ® standards, as of January 1, 2021.
No member of the Compensation Committee is party to any related party transaction with the Corporation requiring disclosure by the Corporation or Bank.
In addition to meeting NASDAQ® general independence standards applicable to directors, the directors who serve on the Audit and/or Compensation Committees must meet certain additional independence or regulatory requirements some of which may be more rigorous than the general standards. The Board has determined that Directors Archibold Jr., Buicko, D. Dalrymple, Forrestel Jr., Streeter, Tranter Jr. and Tyrrell, who constitute the Audit Committee, all meet the SEC’s more stringent independence requirements for Audit Committee members.
The Board has also determined that Director Buicko qualifies as an “Audit Committee Financial Expert,” as defined by the SEC rules (not all Audit Committee members are required to be financial experts).
Further, the Board has determined that Directors Lounsberry III, Bentley, D. Dalrymple, R. Dalrymple, Gonick, Meade IV, Tranter Jr. and Tyrrell, who constitute the Compensation Committee, all meet the independence requirements of NASDAQ® and the SEC for Compensation Committee members.
29
Related Party Transactions
•
Loans and Extensions of Credit:
The Sarbanes-Oxley Act generally prohibits publicly-traded companies from making loans to their executive officers and directors; however, it contains a specific exemption from such prohibition for loans made by federally insured financial institutions, such as the Bank, to their executive officers and directors in compliance with federal banking regulations.
The Bank is engaged, and expects to engage in the future, in banking transactions in the ordinary course of business with executive officers, directors and their related parties, on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with persons not related to the Bank and that do not involve more than the normal risk of collectability or present other unfavorable features. Additionally, any transactions that would be required to be reported must be reviewed by the Audit Committee or another independent body of the Board of Directors. Any transaction with a director is reviewed by and subject to approval of the members of the Board of Directors who are not directly involved in the proposed transaction to confirm that the transaction is on terms that are no more favorable than those that would be available to them from an unrelated third party through an arms-length transaction.
The aggregate outstanding amount of our loans to the executive officers, directors and their related parties was $25.4 million as of December 31, 2024. At December 31, 2024, all loans to directors, executive officers and their related parties were made in the ordinary course of business, were 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 Bank, and did not involve more than the normal risk of collectability or present other unfavorable features. These loans were performing according to their original terms at December 31, 2024, and were made in compliance with federal banking regulation.
•
Other Transactions:
Mr. Buicko is President and CEO of Galesi Group and a member of Westcott Road Development LLC from which the Bank has leased, since 2018, its branch located at 2 Rush Street, Schenectady, New York, under a lease agreement through February 2033 with a monthly rent and common area maintenance ("CAM") payment of $9,000. The total estimated lease payments beginning in January 2025 through the end of the term of the lease are expected to be $692,290.
Board Risk Oversight
The Board is responsible for establishing the level of risk that the Corporation will take. The Board approves the Corporation’s overall business strategies and significant policies, including those related to managing risks. The Board has approved significant policies to establish tolerances for the institution’s activities and periodically reviews risk exposure limits to align with the changes in the institution’s strategies, address new activities and products, and react to changes in the industry and market conditions. The Board has charged the Enterprise Risk Committee with the oversight of risk management, including cybersecurity, as referenced in Item 1C of the Corporation's 2024 Annual Report on Form 10-K . The Chief Risk Officer (the “CRO”) reports to the CEO. The CRO is responsible for developing and maintaining a comprehensive process for identifying, assessing, monitoring, and reporting key risks to the organization. The CRO ensures that the risk triggers are appropriate for the nature and complexity of the Corporation’s and Bank’s business activities and are consistent with the risk parameters established by the Board. The CRO makes regular reports to the Board and Enterprise Risk Committee regarding the status of risk management.
As it relates to the risks inherent in the Corporation’s incentive compensation plans, the CRO prepares and presents an annual report to the Compensation Committee verifying the plans do not encourage excessive risk-taking. This report includes an evaluation of the design of the Bank’s incentive plans to ensure they satisfy bank regulatory requirements and do not encourage excessive or imprudent risk-taking, the Board’s oversight of our incentive compensation program to ensure that there is effective governance over the program and the internal controls over determining incentive payments. At the present time, the Compensation Committee and the Board do not believe these plans create risks that are reasonably likely to have a material adverse effect on the Corporation due to the existence of internal controls and the fact that the incentive payments comprise a moderate portion of the employees’ total compensation. For more information, see the “
Compensation Discussion and Analysis
” section.
30
Corporate Responsibility
The Enterprise Risk Committee has primary oversight of our efforts to be responsible stewards of the environment, to be a good corporate citizen in our communities, and to maintain strong governance practices. The oversight assists the Corporation and Bank to focus better on how we impact our key stakeholders and communities, while also strengthening our business performance.
As presented on the Bank’s website,
“Chemung Financial embraces its corporate responsibility and commits to fully supporting every community within our footprint. This responsibility requires volunteerism, financial support, thoughtful partnerships, and the responsible management of our environmental impact. The value we provide to these communities is an integral part of who we are. Our employees’ leadership and service in charitable and civic organizations is foundational to our corporate citizenship. We serve diverse communities and value a representative workforce and Board of Directors. Our community-banking mission focuses equally on all of our stakeholders and promotes the long-term sustainability of our communities.”
For more information, visit the Bank’s website at www.chemungcanal.com.
Shareholder Communication with the Board
Shareholders may communicate to the Board, to an individual director or directors, or to a particular committee of the Board by directing such communication either by email to kmckillip@chemungcanal.com or in writing to: Board of Directors – Shareholder Communications, c/o Corporate Secretary, Chemung Financial Corporation, One Chemung Canal Plaza, Elmira, New York 14901. If a shareholder intends such communication to be delivered to an individual director, specific directors, or particular committee of the Board, we request that this information be prominently displayed at the beginning of the communication.
Named Executive Officers
The Corporation’s Named Executive Officers for 2024 were Anders M. Tomson - President and CEO; Dale M. McKim III - Executive Vice President, Chief Financial Officer and Treasurer; Loren D. Cole - Executive Vice President and Chief Information Officer (“CIO”); Peter K. Cosgrove - Executive Vice President, Chief Credit Officer (“CCO”) and Chief Risk Officer ("CRO"); and, Daniel D. Fariello - President, Capital Bank Division.
31
Stock Ownership Information
The following table sets forth the beneficial ownership of the Corporation’s common stock, as defined under SEC rules, as of April 7, 2025, the record date for the 2025 Annual Meeting, for each director, director nominee and NEO of the Corporation, as well as for all directors and executive officers as a group. Unless otherwise indicated, each of the beneficial owners named below has sole voting and investment authority with respect to the shares listed. Under Rule 13d-3 of the Exchange Act, a person is considered a beneficial owner of a security if they have or share voting power or investment power over the security or has the right to acquire beneficial ownership of the security within 60 days from the date of this filing. “Voting Power” is the power to vote or direct the voting of shares. “Investment Power” is the power to dispose or direct the disposition of shares.
| Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | |||||||||
| Directors, Nominees and NEOs: | (#) | (%) | |||||||||
| Raimundo C. Archibold Jr. | 1,975 |
(1)
|
* | ||||||||
| Ronald M. Bentley | 46,601 |
(1)
|
* | ||||||||
| David M. Buicko | 8,225 |
(1) (2)
|
* | ||||||||
| David J. Dalrymple | 46,649 |
(1)(3)
|
* | ||||||||
| Robert H. Dalrymple | 248,951 |
(1)(4)
|
5.20% | ||||||||
| Richard E. Forrestel Jr. | 14,639 |
(1)
|
* | ||||||||
| Denise V. Gonick | 6,156 |
(1)(5)
|
* | ||||||||
| Stephen M. Lounsberry III | 22,457 |
(1)(6)
|
* | ||||||||
| Joseph F. Meade IV | 3,743 |
(1)(7)
|
|||||||||
| Jeffrey B. Streeter | 14,179 |
(1)(8)
|
* | ||||||||
| Anders M. Tomson | 60,315 |
(9)(11)
|
1.26% | ||||||||
| G. Thomas Tranter Jr. | 27,698 |
(1)
|
* | ||||||||
| Thomas R. Tyrrell | 8,533 |
(1)
|
* | ||||||||
| Loren D. Cole | 12,049 |
(9)(11)
|
* | ||||||||
| Peter K. Cosgrove | 6,466 |
(11)
|
* | ||||||||
| Daniel D. Fariello | 10,300 |
(9)(11)
|
* | ||||||||
| Dale M. McKim III | 5,589 |
(11)
|
|||||||||
|
Directors and executive officers as a group (22 people)
|
594,710 |
(10)
|
12.41% | ||||||||
|
*Less than 1% based upon 4,789,963 outstanding shares as of April 7, 2025.
|
|||||||||||
|
(1)
Includes all unvested shares of the Corporation’s common stock held in a restricted stock account at Equiniti Trust Company, LLC on behalf of the directors for their annual stock compensation. Directors Archibold Jr., Bentley, Buicko, D. Dalrymple, R. Dalrymple, Forrestel Jr., Gonick, Lounsberry III, Meade IV, Streeter, Tranter Jr. and Tyrrell own 592, 613, 679, 867, 655, 592, 592, 624, 592, 592, 624 and 603 shares, respectively.
|
|||||||||||
|
(2)
Includes 4,725 shares held solely by David M. Buicko and 3,500 shares held jointly with his spouse.
|
|||||||||||
|
(3)
Includes 25,065 shares held solely by David J. Dalrymple and 21,584 shares held in trust over which Mr. Dalrymple has voting and dispositive powers.
|
|||||||||||
|
(4)
Includes 3,488 shares held solely by Robert H. Dalrymple. Includes 234,486 shares held by RD Wood, LLC, which Robert H. Dalrymple and Elizabeth T. Dalrymple manage and have shared voting and dispositive power over. Includes 10,977 shares held by Mr. Dalrymple’s spouse as to which he disclaims beneficial ownership.
|
|||||||||||
|
(5)
Includes 3,956 shares held solely by Denise V. Gonick and 2,200 shares held jointly with her spouse.
|
|||||||||||
|
(6)
Excludes 17,500 shares that Stephen M. Lounsberry III has credited to his account in memorandum unit form under the Corporation’s Directors’ Deferred Fee Plan. The deferred fees held in memorandum unit form will be paid solely in shares of the Corporation’s common stock pursuant to the terms of the Plan and the election of the plan participants. Shares held in memorandum unit form under the Plan have no voting rights.
|
|||||||||||
|
(7)
Includes 2,658 shares held solely by Joseph F. Meade IV and 1,085 shares held jointly with his spouse.
|
|||||||||||
|
(8)
Includes 4,179 shares held solely by Jeffrey B. Streeter and 10,000 shares held in a revocable trust.
|
|||||||||||
|
(9)
Includes all shares of common stock of the Corporation held for the benefit of certain executive officers by the Bank as trustee of the Bank’s Profit Sharing, Savings and Investment Plan. Messrs. Tomson, Cole, and Fariello own 17,298, 6,202 and 1,795 shares, respectively.
|
|||||||||||
|
(10)
Includes 11,082 shares owned by spouses of certain officers and directors of which such officers and directors disclaim beneficial ownership.
|
|||||||||||
|
(11)
Includes all unvested shares of the Corporation’s common stock held in a restricted stock account at American Stock Transfer and Trust Company, LLC on behalf of certain executive officers. Messrs. Tomson, Cole, Cosgrove, Fariello and McKim III own 4,447, 4,437, 4,491, 4,354 and 5,083 shares, respectively.
|
|||||||||||
32
5% Shareholders
The following table sets forth the beneficial ownership of the Corporation’s common stock as of April 7, 2025, the record date for the 2025 Annual Meeting, by four holders known by us to be the beneficial owner of more than 5% of the outstanding shares of the Corporation’s common stock on such date. Beneficial ownership includes all shares of common stock for which the person or entity has sole or shared voting power or investment power.
| Name | Number of Shares Owned | Percentage of Shares Owned | |||||||||
| More than 5% Owner (other than directors): | (#) | (%) | |||||||||
| Chemung Canal Trust Company | 336,503 |
(1)
|
7.08% | ||||||||
| One Chemung Canal Plaza, P.O. Box 1522 | |||||||||||
| Elmira, New York 14902-1522 | |||||||||||
| Dalrymple Family Limited Partnership |
339,242
|
(2)
|
7.08% | ||||||||
| Henry M. Dalrymple | |||||||||||
| Matthew D. Dalrymple | |||||||||||
| 2105 S. Broadway | |||||||||||
| Pine City, New York 14871 | |||||||||||
| RD Wood LLC | 248,951 |
(3)
|
5.20% | ||||||||
| Robert H. Dalrymple | |||||||||||
| Elizabeth T. Dalrymple | |||||||||||
| 5 Woodland Way | |||||||||||
| Ithaca, New York 14850-9802 | |||||||||||
| BlackRock, Inc. | 249,643 |
(4)
|
5.20% | ||||||||
| 50 Hudson Yards | |||||||||||
| New York, NY 10001 | |||||||||||
|
(1)
Shares held by the Bank in various fiduciary capacities, either alone or with others. Includes 334,503 shares held with shared voting power and 2,000 shares held with sole voting power. There are 279,175 shares held with shared dispositive powers. Shares held in a co-fiduciary capacity by the Bank are voted by the co-fiduciary in the same manner as if the co-fiduciary were the sole fiduciary. Shares held by the Bank as sole trustee will be voted by the Bank only if the trust instrument provides for voting of the shares at the direction of the grantor or beneficiary and the Bank actually receives voting instructions.
|
|||||||||||
|
(2)
Mr. David J. Dalrymple no longer has shared powers or voting rights of Dalrymple Family Limited Partnership. Mr. Dalrymple’s sons, Henry M. and Matthew D. Dalrymple, are general partners of Dalrymple Family Limited Partnership of which each hold 50% ownership.
|
|||||||||||
|
(3)
Robert H. Dalrymple and Elizabeth T. Dalrymple are the managers of RD Wood, LLC. RD Wood, LLC is owned by a family trust and by Elizabeth T. Dalrymple. The above amount includes 3,488 shares held solely by Mr. Robert H. Dalrymple, 10,977 shares held by Mr. Dalrymple’s spouse as to which he disclaims beneficial ownership.
|
|||||||||||
|
(4)
Based on information reported in a Schedule 13G filed with the SEC on November 8, 2024, BlackRock, inc. has sole voting and dispositive power over all 249,643 shares.
|
|||||||||||
33
Compensation Discussion and Analysis
The Compensation Discussion and Analysis section of this Proxy Statement provides our shareholders with an explanation of the Corporation’s compensation philosophies, objectives, processes, practices and other relevant factors in setting NEO compensation.
For more information on the Corporation’s NEOs see the “
Named Executive Officers
” section.
Compensation Philosophy and Objectives
As discussed in the “
Committee Descriptions
” section, the Compensation Committee reviews and administers the Corporation’s compensation policies and practices for NEOs.
The Corporation’s compensation philosophy is designed to attract, motivate and retain highly qualified financial services professionals capable of maximizing business performance for the benefit of shareholders.
The Compensation Committee believes in a simple, straight-forward approach to executive compensation and, therefore, has limited the number and types of plans used to compensate NEOs.
For more information on the plans, see the “
Elements of Compensation
” section.
The Corporation’s and Bank’s compensation plans and practices are designed to reward NEOs for satisfying both corporate and individual performance goals. In 2024, NEO compensation consisted of the following components: base salary, short- and long-term performance-based incentives, and retirement and other benefits. The Compensation Committee reviews both quantitative and qualitative measures, including subjective measures, before applying its judgment to determine appropriate compensation for its NEOs.
As a result, incentive plan pay is not tied directly to any specific set of metrics, and the Compensation Committee does not restrict its decisions to rigid formulas for the allocation between cash and non-cash components, the allocation of short- and long-term equity incentive compensation, or the percentage by which other NEOs’ compensation opportunity should be in relation to the CEO’s compensation.
The Compensation Committee uses peer group data to provide a competitive level of total compensation targeted at the average level of comparably-sized financial institutions.
As described below, the Compensation Committee also utilizes an independent compensation consultant to periodically evaluate NEO compensation levels and mix of cash and stock compensation.
In 2024, the Compensation Committee believes that the relationship between the NEOs’ total compensation (base salary plus cash and stock-based incentive compensation) and the Corporation’s financial results demonstrates the alignment that the Corporation has established between pay and business performance.
In March 2024, the Compensation Committee changed the Corporation’s incentive compensation payout structure so that incentive compensation would be payable in February following the end of the fiscal year (rather than in December of the applicable year).
This change allows the Compensation Committee to consider the financial results of the Corporation for the fiscal year which are generally not available until after the fiscal year end.
Accordingly, incentive compensation for fiscal year 2024 was paid in February 2025.
Setting Executive Compensation
The Compensation Committee is responsible for the design, implementation and administration of our compensation plans and practices for the NEOs.
The Compensation Committee periodically engages an independent outside consulting firm to conduct a comprehensive review of the Corporation’s executive compensation program.
In 2024, the Compensation Committee engaged Aon to conduct a peer group analysis and to review executive compensation.
The Corporation's peer group was developed by Aon with input from the Compensation Committee, using objective parameters to identify bank holding companies of similar asset size and business model located in the Corporation's general geographic region.
34
The peer group, which is listed below, consists of twenty-three (23) bank holding companies in Connecticut, Maine, Massachusetts, New York, Ohio and Pennsylvania that range from $1.3 billion to $6.1 billion in assets:
| ACNB Corp. | ENB Financial Corp. | The First Bancorp, Inc. | Orrstown Financial Services, Inc. | ||||||||
| Arrow Financial Corp. | Enterprise Bancorp, Inc. | Franklin Financial Services Corp. | Peoples Financial Services, Inc. | ||||||||
| Bar Harbor Bankshares, Inc. | Evans Bancorp, Inc. | Greene County Bancorp, Inc. | Pioneer Bancorp, Inc. | ||||||||
| Citizens Financial Services | Farmers National Banc Corp. | LCNB Corp. | Rhinebeck Bancorp, Inc. | ||||||||
| Citizens Northern Corp. | Fidelity D D Bancorp, Inc. | Mid Penn Bancorp, Inc. | SB Financial Group, Inc. | ||||||||
| Civista Bancshares, Inc. | Financial Institutions, Inc. | Orange County Bancorp, Inc. | |||||||||
The Compensation Committee evaluates the peer group annually for suitability and may modify the peer group from time-to-time based on mergers and acquisitions within the industry or other relevant factors.
The Corporation uses the peer bank data to inform it of the pay levels and practices of the Corporation’s peers as they most closely represent the labor market in which the Bank competes for key talent.
Informed by this data, the Compensation Committee endeavors to provide a competitive level of total compensation targeted at the average level of comparably-sized financial institutions, although actual compensation paid to an NEO may vary based on other factors such as the individual’s performance, experience, responsibilities and competitive conditions.
Role of Management
Although the Compensation Committee is ultimately responsible for designing our executive compensation program, input from the CEO is critical in ensuring that the Compensation Committee has the appropriate information needed to make informed decisions.
The CEO participates in compensation-related actions associated with the other NEOs purely in an informational and advisory capacity, and he presents the other NEOs’ performance summaries and recommendations relating to their compensation to the Compensation Committee for its review and submission to the Disinterested Board Members for ratification.
The CEO neither recommends nor participates in Compensation Committee deliberations regarding his own compensation.
Previous Say-On-Pay Vote Results
Following our Annual Meeting of Shareholders on June 4, 2024, the Compensation Committee reviewed the results of the shareholder advisory vote on executive compensation with respect to 2023 compensation actions and decisions for our NEOs, which resulted in approximately 96.6% of the votes cast in favor of the proposal.
After a comprehensive market review and considering strong shareholder support, we concluded that no substantial changes to our executive compensation program were required.
Elements of Compensation
For 2024, as discussed above, incentive compensation (which is comprised of both cash compensation and restricted stock) received by the NEOs, other than the CEO, represented approximately 55% of their base salary.
The CEO’s incentive compensation for 2024 was comprised of cash and restricted stock and represented approximately 65% of his base salary.
Awards under the incentive plans are based on the Compensation Committee’s independent business judgement after evaluating the performance of each of the NEOs against pre-established Bank goals and individual goals.
The Compensation Committee regularly reviews these elements of compensation in order to ensure that, as a whole, they conform to the Bank’s philosophy and objectives.
•
Base Salary:
Base salary paid to executives is reviewed against market on an annual basis.
Base salary levels reflect the Compensation Committee’s perceived value of the position, both in the context of the market data of the Bank’s peer group for similar positions, as well as the individual fulfilling the duties of the position.
The CEO reviews the base salaries of the other NEOs with the Compensation Committee and a recommendation for approval is submitted to the full Board.
The recommendations are based upon an evaluation process which includes professional and leadership performance and the attainment of goals set forth in the Corporation’s annual business plan and base salary levels of each NEO relative to peers.
35
In December 2023, the Compensation Committee reviewed the NEOs’ base salaries utilizing the same methodology (relevant market data of our peer group and individual performance) and increased the base salaries effective for the 2024 fiscal year as follows:
| Named Executive Officer |
2023 Salary
|
2024 Raise
|
2024 Salary
|
Nature of Increase | |||||||||||||
| % of Base Salary | Amount of Increase | ||||||||||||||||
| ($) | (%) | ($) | ($) | ||||||||||||||
| Anders M. Tomson |
660,000
|
4.0
|
26,000
|
686,000
|
Merit and Market-Based | ||||||||||||
| Loren D. Cole |
254,188
|
5.0
|
12,709
|
266,897
|
Merit and Market-Based | ||||||||||||
| Peter K. Cosgrove |
260,442
|
4.0
|
10,418
|
270,860
|
Merit and Market-Based | ||||||||||||
| Daniel D. Fariello |
257,319
|
5.0
|
12,866
|
270,185
|
Merit and Market-Based | ||||||||||||
|
Dale M. McKim III
|
315,000
|
4.0
|
12,600
|
327,600
|
Merit and Market-Based | ||||||||||||
Based on a similar assessment of the NEOs’ performance in 2022, the Compensation Committee increased each NEO’s base salary as follows:
| Named Executive Officer |
2022 Salary
|
2023 Raise
|
2023 Salary
|
Nature of Increase | |||||||||||||
| % of Base Salary | Amount of Increase | ||||||||||||||||
| ($) | (%) | ($) | ($) | ||||||||||||||
| Anders M. Tomson |
600,000
|
10.0
|
60,000
|
660,000
|
Merit and Market-Based | ||||||||||||
| Loren D. Cole |
236,454
|
7.5
|
17,734
|
254,188
|
Merit and Market-Based | ||||||||||||
| Peter K. Cosgrove |
248,040
|
5.0
|
12,402
|
260,442
|
Merit and Market-Based | ||||||||||||
| Daniel D. Fariello |
245,066
|
5.0
|
12,253
|
257,319
|
Merit and Market-Based | ||||||||||||
|
Dale M. McKim III
|
NA
|
NA
|
NA
|
315,000
|
Mr. McKim joined the Bank on 7/3/2023
|
||||||||||||
•
Short- and Long-Term Performance-Based Incentive Compensation:
The Corporation has adopted incentive compensation plans to motivate and reward senior officers (including the NEOs) for achieving predefined goals.
The Compensation Committee and the Board do not subscribe to formula-driven incentive plans but believe in maintaining discretion over the payment of incentive compensation.
This discretion permits the Compensation Committee to make compensation decisions in the best interests of the Corporation and shareholders when events beyond the control of management positively or negatively influence financial results.
In addition, it allows the Compensation Committee to consider subjective criteria, such as leadership, morale building, and effect on culture, which are not easily measured by numeric performance metrics.
In certain circumstances, the Compensation Committee may reduce or increase incentive payments.
Each senior officer’s incentive award opportunity is not limited to a specified percentage of the incentive pool.
The Compensation Committee conducts an annual performance review of the CEO.
The CEO’s performance objectives are defined consistent with, and in support of, the Corporation’s annual business plan.
Performance is also measured against progress towards the attainment of the Corporation’s long-term strategic plan.
These goals include, but are not limited to, metrics related to net income, return on equity, efficiency, asset quality, bank performance against its peer group and progress in achieving long-term strategic objectives.
For purposes of comparing the relevant financial metrics, the same peer group is used to assess total compensation.
For more information on the peer group, see the “Setting Executive Compensation” section.
36
Additionally, in the context of structuring of our incentive compensation plans, the Compensation Committee assesses the individual contributions made by the NEOs, including assessing their accountability for specific financial, organization, operational and risk management objectives that are otherwise measurable performance objectives, the attainment of which contributes significantly to the growth and profitability of the Bank’s business operations.
As a result, the Compensation Committee believes the Bank’s incentive compensation plans incentivize the NEOs to effectively plan, organize, supervise, monitor and evaluate the key functional area and department for which they are responsible and through which the Corporation’s most important corporate objectives are achieved.
The Compensation Committee employs cash and restricted stock awards to recognize significant efforts or individual contributions of senior officers, including the NEOs.
In determining these awards, many factors are considered including, but not limited to, the Bank’s net earnings, the financial results delivered by the senior officer’s division against goal, service quality results, individual success in implementing business plan initiatives, and other contributions made by the senior officer to the Bank’s success.
The senior officers eligible for an award, the criteria used to determine individual awards, and actual awards are reviewed with the Compensation Committee.
There is no expectation that these awards will be paid each year.
The Compensation Committee approved a cash bonus opportunity representing 30% of the aggregate base salaries of NEOs and 20% of the aggregate base salaries of other senior officers.
In 2024, the NEO’s cash awards totaled $322,500.
Due to the restricted stock awards being paid in 2025, these amounts will be presented in the Corporation's 2026 Proxy Statement. In 2024, the CEO’s cash bonus award totaled $230,000, and the value of the restricted stock award totaled $220,007 (based on the grant date fair value on January 17, 2024) for a total of $450,007.
The following paragraphs provide further description of the Corporation’s compensation and benefit plans in which the NEOs participate:
•
2021 Equity Incentive Plan:
The Corporation adopted the Chemung Financial Corporation 2021 Equity Incentive Plan, which was approved by shareholders in June 2021, to promote the long-term financial success of the Corporation, and its Subsidiaries, including the Bank by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Corporation’s shareholders through the ownership of Corporation common stock.
The 2021 Equity Incentive Plan will remain in effect as long as any awards under it are outstanding provided, however, that no awards may be granted under the 2021 Equity Incentive Plan after the day immediately prior to the ten-year anniversary of the Effective Date.
Mr. Tomson recommends to the Compensation Committee (other than his own compensation) the number of shares to be awarded to senior officers including NEOs.
The Compensation Committee granted restricted stock awards to twenty-three senior officers including Messrs. Tomson, Cole, Cosgrove, Fariello and McKim III for their service in 2024.
These shares of restricted stock generally vest over a five-year period (except that the award Mr. Tomson received vests after one year), subject to accelerated vesting in the cases of death, disability or an involuntary termination following a change in in control.
For an entire description of the plan, see the “2021 Equity Incentive Plan” section.
For additional information, see the
“Summary Compensation Table”
section.
Upon approval of the 2025 Equity Incentive Plan by shareholders, no further awards will be granted under the 2021 Equity Incentive Plan as future awards will be granted under the 2025 Equity Incentive Plan with substantially similar terms as the 2021 Equity Incentive Plan.
•
Retirement and Other Benefits
.
The NEOs also are eligible for the same benefits available to all other employees of the Bank including participation in tax-qualified retirement plans, life and health insurance coverage, vacation, holidays, and personal sick leave.
37
•
Chemung Canal Trust Company 401(k) Defined Contribution Profit Sharing, Savings and Investment Plan (the "401(k) Plan"):
The Bank sponsors the 401(k) Plan, which covers all employees.
The Bank makes a non-discretionary profit-sharing contribution equal to 3% of gross annual wages for each eligible participant, regardless of the participant’s deferral.
In addition, the Bank makes a matching contribution of 50% of a participant’s deferrals up to 6% of gross annual wages.
All contributions vest immediately.
•
Chemung Canal Trust Company Pension Plan
:
The Bank maintains a defined benefit pension plan, which was frozen effective as of January 1, 2017.
None of the NEOs are participants in the frozen pension plan.
•
Defined Contribution Supplemental Executive Retirement Plan (the “Defined Contribution SERP”):
The Bank maintains the Defined Contribution SERP to attract and retain highly qualified executives.
Messrs. To
mson, Cole, Cosgrove, Fariello, and McKim III are participants in the Defined Contribution SERP.
Each year, the participants' accounts are credited with an annual contribution from the Bank in an amount equal to 20% of their base salary.
The annual contribution will cease upon the earlier of their (1) termination of employment for any reason or (2) the discontinuation of their participation in the Defined Contribution SERP.
The participants become 50% vested in their account balance after five (5) years of participation in the Defined Contribution SERP and vest in an additional 10% for each year of participation thereafter until they are 100% vested with ten (10) years of participation.
Vesting accelerates upon the participants attainment of normal retirement age, death, disability, and in the event of a change in control (as defined in the Defined Contribution SERP).
The Bank may discontinue future contributions to any participant at any time.
Benefits are payable upon the earlier of retirement, disability, death or a change in control.
The annual Bank contribution is credited as of the last day of the applicable plan year provided that the participant is actively employed on that date.
As of the first day of each calendar quarter (each a “valuation date”), the cumulative value of each participant’s account shall be credited with simple interest at a rate of return equal to the average yield on 5-year U.S. treasury notes for the calendar quarter ending immediately prior to the valuation date.
•
Chemung Canal Trust Company Deferred Compensation Plan (the “Deferred Compensation Plan”):
The Bank maintains the Deferred Compensation Plan that allows the NEOs (and other senior officers that the Compensation Committee may approve annually) to defer all or a portion of their annual base salary and cash bonus to be paid at a future date as elected by the officer.
Although all of the NEOs are eligible to participate, Mr. Tomson was the only NEO who participated in the Deferred Compensation Plan in 2024.
For more information on the Deferred Compensation Plan, see the “
Deferred Compensation Plan
” section.
•
Perquisites:
The NEOs are granted perquisites that the Compensation Committee believes are modest, reasonable and similar to those provided to executive officers at peer financial institutions and are designed to assist the executives in carrying out their duties.
Club memberships are provided to the NEOs to enable them to interact and foster relationships with clients and local business leaders.
Mr. Tomson has the use of a Bank-owned vehicle for business purposes and periodically uses a car service in order to continue facilitating meetings and conducting business, as necessary, during his travel time.
38
•
Change in Control Agreements:
Th
e Bank has entered into individual change in control agreements with Messrs. Tomson, Cole, Cosgrove, Fariello, and McKim III.
The purpose of the change in control agreements is to retain and secure key executives and encourage their attention and dedication to their assigned duties in the event of a change in control of the Bank.
The agreements provide that in the event of the executive’s termination by the Bank without cause or voluntary resignation for good reason within twelve (12) months following the effective date of a change in control of the Corporation or the Bank, the executive would be entitled to receive a severance benefit equal to 2.0 times (2.99 times for Mr. Tomson) his highest annual rate of base salary and highest annual incentive award (paid in the form of cash and/or stock, as applicable) paid by the Bank to, or earned by, the executive during the calendar year of the change in control or either of the two (2) calendar years immediately preceding the change in control.
The severance benefit would be payable to each executive in equal monthly installments, subject to required tax withholding, for twenty-four (24) months (thirty-six (36) months for Mr. Tomson).
Compensation Committee Report
The Compensation Committee of the Board has reviewed and discussed with management the Compensation Discussion and Analysis section, as required by item 402(b) of the SEC’s Regulation S-K. Based on its review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in the Proxy Statement.
| The Compensation Committee: | ||||||||||||||
| Stephen M. Lounsberry III, Chairman | Denise V. Gonick | |||||||||||||
| Ronald M. Bentley |
Joseph F. Meade IV
|
|||||||||||||
| David J. Dalrymple | G. Thomas Tranter Jr. | |||||||||||||
| Robert H. Dalrymple | Thomas R. Tyrrell | |||||||||||||
This foregoing Compensation Committee Report is not "soliciting material," is not deemed "filed" with the SEC, and shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing of ours under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this report by reference.
39
Executive Officers
The following table sets forth certain information regarding the executive officers of the Corporation and Bank as of January 1, 2025:
| Name | Age | Position | |||||||||
|
Anders M. Tomson | 57 | CEO of the Corporation and the Bank (2016); President and COO of the Bank (2015); President of Capital Bank, a division of Chemung Canal Trust Company (2011). Mr. Tomson has been with the Bank since 2011. | ||||||||
|
Loren D. Cole | 52 | Executive Vice President and Chief Information Officer of the Bank (2018); Senior Vice President and Chief Information Officer of the Bank (2017); Senior Vice President of Bank of Oklahoma (2017); Executive Vice President of SpiritBank Corp. (2011). Mr. Cole has been with the Bank since 2017. | ||||||||
|
Peter K. Cosgrove | 64 | Executive Vice President and Chief Credit Officer (2025); Executive Vice President, Chief Credit Officer and Chief Risk Officer (2020); Executive Vice President and Chief Credit Officer (2019); Regional Sales Executive, East Region, at KeyBank (2016); and member of the Merger Integration Leadership Team at KeyBank (2015-2017). Mr. Cosgrove has been with the Bank since 2019. | ||||||||
|
Vincent M. Cutrona | 49 | Executive Vice President of the Bank and President of Canal Bank, a division of Chemung Canal Trust Company (2025); Senior Vice President of the Bank and President of Canal Bank, a division of Chemung Canal Trust Company (2024); Director of Capital Markets of Uniland Development (2022); and, Senior Vice President/Commercial Banking Director of Evans Bank (2006). Mr. Cutrona has been with the Bank since 2024. Mr. Cutrona is not an NEO. | ||||||||
|
Daniel D. Fariello | 48 | Executive Vice President of the Bank and President of Capital Bank, a division of Chemung Canal Trust Company (2024); President of Capital Bank, a division of Chemung Canal Trust Company (2018); Senior Vice President of Capital Bank (2013); Relationship Manager (Commercial Loan Officer) of First Niagara Bank N.A. (2005). Mr. Fariello has been with the Bank since 2013. | ||||||||
|
Kimberly A. Hazelton | 57 | Executive Vice President of the Bank (2016) responsible for Retail Client Services, Marketing and Business Services; Chief Operation Officer (2014) at Alternatives Federal Credit Union; Market President, Retail (2007-2013) at TD Bank. Mrs. Hazelton has been with the Bank since 2016. Mrs. Hazelton is not an NEO. | ||||||||
|
Jeffrey P. Kenefick | 58 | Executive Vice President of the Bank and Regional President of the Bank (2024); Regional President of the Bank (2021); Senior Vice President (2019-2021); Executive Vice President, Commercial Strategic Development and Regional President, Five Star Bank (2016); Executive Vice President, Commercial Banking and Regional President (2013-2016). Mr. Kenefick has been with the Bank since 2019. Mr. Kenefick is not an NEO. | ||||||||
|
Dale M. McKim III
|
50 | Chief Financial Officer and Treasurer of the Corporation and Executive Vice President, Chief Financial Officer and Treasurer of the Bank (July 2023); Executive Vice President and Chief Risk Officer of Evans Bancorp (2017); Partner at KPMG LLP (2007). Mr. McKim has been with the Bank since 2023. | ||||||||
|
Mary E. Meisner | 43 | Executive Vice President and Chief Risk Officer (2025); and, Senior Vice President and Senior Risk Officer (2019). Mrs. Meisner has been with the Bank since 2017. Mrs. Meisner is not an NEO. | ||||||||
|
Thomas W. Wirth | 59 | Executive Vice President of the Bank (2015) responsible for the Wealth Management Group; Senior Vice President of the Bank (2004) responsible for Investment Services. Mr. Wirth has been with the Bank since 1987. Mr. Wirth is not an NEO. | ||||||||
40
Executive Compensation
This Executive Compensation section includes several tables with details of the compensation paid and/or awarded to certain NEOs of the Corporation for each of the last three fiscal years, where applicable. Tables included in this section are as follows:
•
Summary Compensation Table
•
All Other Compensation Table for 2024
•
Grants of Plan-Based Awards Table
•
Outstanding Equity Awards at December 31, 2024 Table
•
Restricted Stock Vested During the Fiscal Year Ended December 31, 2024 Table
•
Deferred Compensation Table
•
Defined Contribution SERP Table
•
Pay Versus Performance Table
•
Potential Payments Table
Summary Compensation Table
| Name and Principal Position | Year |
Salary
(1)
|
Cash Bonus
(1)
|
Stock Awards |
All Other Compensation
(4)
|
Total | |||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||
| Anders M. Tomson | 2024 | 710,384 | 230,000 | 220,007 |
(2)
|
203,679 | 1,364,070 | ||||||||||||||||
| President and CEO |
2023
|
655,385
|
220,000 | 210,038 |
(2)
|
197,675
|
1,283,098 | ||||||||||||||||
| 2022 | 600,000 | 210,000 | 181,517 |
(2)
|
185,382 | 1,176,899 | |||||||||||||||||
|
Dale M. McKim III
|
2024 | 340,200 | 100,000 | — |
(3)
|
113,266 | 553,466 | ||||||||||||||||
| Executive Vice President, |
2023
|
136,904
|
65,000
|
165,060 |
(3)
|
53,364 | 420,328 | ||||||||||||||||
|
CFO and Treasurer
|
— | — | — | — | — | — | |||||||||||||||||
| Loren D. Cole | 2024 | 277,162 | 75,000 | — |
(3)
|
86,692 | 438,854 | ||||||||||||||||
| Executive Vice President |
2023
|
254,188
|
75,000
|
75,047 |
(3)
|
81,551 | 485,786 | ||||||||||||||||
| and CIO | 2022 | 236,454 | 70,000 | 70,041 |
(3)
|
77,358 | 453,853 | ||||||||||||||||
| Peter K. Cosgrove | 2024 | 281,278 | 75,000 | — |
(3)
|
96,564 | 452,842 | ||||||||||||||||
| Executive Vice President |
2023
|
260,442
|
72,500
|
72,545 |
(3)
|
91,736 | 497,223 | ||||||||||||||||
| and CCO | 2022 | 248,040 | 75,000 | 75,024 |
(3)
|
86,172 | 484,236 | ||||||||||||||||
| Daniel D. Fariello | 2024 | 280,577 | 72,500 | — |
(3)
|
87,598 | 440,675 | ||||||||||||||||
| President, |
2023
|
257,319 |
70,000
|
70,043 |
(3)
|
80,035 | 477,397 | ||||||||||||||||
| Capital Bank Division | 2022 | 245,066 | 72,500 | 72,532 |
(3)
|
71,568 | 461,666 | ||||||||||||||||
|
(1)
The amounts shown for salary represent the annual rate of base salary and the amounts shown for bonus represent amounts earned in 2024, 2023 and 2022, respectively.
|
|||||||||||||||||||||||
|
(2)
The amounts shown for Mr. Tomson were made under the terms of the 2021 Equity Incentive Plan and reflect the grant date fair value as reported in Note 14 of the Corporation's audited consolidated financial statements contained in the Corporation's 2024 Annual Report on Form 10-K. The awards granted during 2024 are restricted and fully vest on the first anniversary of the grant date.
|
|||||||||||||||||||||||
|
(3)
In March 2024, the Compensation Committee changed the Corporation’s incentive compensation payout structure with respect to the NEOs (other than Mr. Tomson) so that incentive compensation would be payable in February following the end of the fiscal year (rather than in December of the applicable year). This change allows the Compensation Committee to consider the financial results of the Corporation for the fiscal year which are generally not available until after the fiscal year end. Accordingly, incentive compensation for fiscal year 2024 was paid in February 2025 and as a result, the NEOs (other than Mr. Tomson) did not receive a stock award grant during 2024.
|
|||||||||||||||||||||||
|
(4)
The amounts shown include non-discretionary and matching contributions made by the Bank to the 401(k) Plan, dividends paid on unvested restricted stock, Defined Contribution SERP contributions and perquisites such as car allowance, personal portion of Bank-owned vehicles and club memberships.
|
|||||||||||||||||||||||
41
All Other Compensation Table for 2024
| Name | Employer Contributions to 401(k) | Dividends on Restricted Stock Awards | Automobile Allowance/ Usage | Club Memberships | Defined Contribution SERP Contribution | Total | ||||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
| Anders M. Tomson | 20,700 | 5,672 | 7,781 | 27,449 | 142,077 | 203,679 | ||||||||||||||||||||
| Dale M. McKim III | 20,412 | 4,712 |
—
|
20,102 | 68,040 | 113,266 | ||||||||||||||||||||
| Loren D. Cole | 16,630 | 5,463 |
—
|
9,167 | 55,432 | 86,692 | ||||||||||||||||||||
| Peter K. Cosgrove | 16,188 | 5,393 |
—
|
18,727 | 56,256 | 96,564 | ||||||||||||||||||||
| Daniel D. Fariello | 16,835 | 5,375 |
—
|
9,273 | 56,115 | 87,598 | ||||||||||||||||||||
Grants of Plan-Based Awards Table
| Name | Grant Date | All Other Stock Awards: Number of Shares of Stock |
Grant Date Fair
Value of Stock Awards
(2)
|
|||||||||||
| (#) | ($) | |||||||||||||
| Anders M. Tomson | 1/17/2024 | 4,573 |
(1)
|
220,007 | ||||||||||
|
(1)
This grant was awarded to Mr. Tomson as part of a year-end bonus for 2023. The award was granted pursuant to the 2021 Equity Incentive Plan on January 17, 2024 and fully vested on the first anniversary of the grant date.
|
||||||||||||||
|
(2)
This amount represents the grant date fair value as reported in Note 14 of the Corporation's audited consolidated financial statements contained in the Corporation's 2024 Annual Report on Form 10-K for the year ended December 31, 2024. The stock was awarded under the 2021 Equity Incentive Plan.
|
||||||||||||||
Outstanding Equity Awards at December 31, 2024 Table
The following table shows all outstanding restricted stock awards held by each NEO under the 2021 Equity Incentive Plan and the Restricted Stock Plan as of December 31, 2024.
| Name | Grant Date |
Number of Shares
or Units of Stock That Have Not Yet Vested
|
Market Value of Shares or
Units of Stock That Have
Not Vested
(3)
|
|||||||||||
| (#) | ($) | |||||||||||||
| Anders M. Tomson | 01/17/2024 | 4,573 |
(1)
|
223,208 | ||||||||||
|
Dale M. McKim III
|
12/19/2023
|
1,061 |
(2)
|
51,787 | ||||||||||
| 07/03/2023 | 2,084 |
(2)
|
101,720 | |||||||||||
| Loren D. Cole |
12/19/2023
|
1,224 |
(2)
|
59,743 | ||||||||||
|
12/20/2022
|
912 |
(2)
|
44,515 | |||||||||||
| 12/15/2021 | 642 |
(2)
|
31,336 | |||||||||||
| 12/16/2020 | 205 |
(2)
|
10,006 | |||||||||||
| Peter K. Cosgrove |
12/19/2023
|
1,184 |
(2)
|
57,791 | ||||||||||
| 12/20/2022 | 976 |
(2)
|
47,639 | |||||||||||
| 12/15/2021 | 689 |
(2)
|
33,630 | |||||||||||
| 12/16/2020 | 188 |
(2)
|
9,176 | |||||||||||
| Daniel D. Fariello |
12/19/2023
|
1,143 |
(2)
|
55,790 | ||||||||||
| 12/20/2022 | 944 |
(2)
|
46,077 | |||||||||||
| 12/15/2021 | 665 |
(2)
|
32,459 | |||||||||||
| 12/16/2020 | 197 |
(2)
|
9,616 | |||||||||||
|
(1)
Restricted stock awards vest on the anniversary of the grant date.
|
||||||||||||||
|
(2)
Restricted stock awards vest in five equal annual installments commencing one year following the grant date.
|
||||||||||||||
|
(3)
These amounts are based on $48.81, the closing price for the Corporation's common stock on December 31, 2024.
|
||||||||||||||
42
Restricted Stock Vested During the Fiscal Year Ended December 31, 2024 Table
The following table shows all restricted stock awards held by each NEO under the Restricted Stock Plan or the 2021 Equity Incentive Plan that vested during the year-ended December 31, 2024.
| Name | Vested Date | Number of Shares of Stock Awards Acquired on Vesting | Value Realized on Vesting | |||||||||||
| (#) | ($) | |||||||||||||
|
Anders M. Tomson
|
01/18/2024 | 4,577 | 220,245 |
(1)
|
||||||||||
| Dale M. McKim III | 07/03/2024 | 520 | 23,764 |
(7)
|
||||||||||
| 12/19/2024 | 265 | 13,171 |
(5)
|
|||||||||||
| Loren D. Cole | 12/13/2024 |
320
|
17,331 |
(2)
|
||||||||||
| 12/16/2024 |
205
|
11,088 |
(3)
|
|||||||||||
| 12/18/2024 |
213
|
10,884 |
(4)
|
|||||||||||
| 12/19/2024 | 306 | 15,208 |
(5)
|
|||||||||||
| 12/20/2024 |
303
|
15,165 |
(6)
|
|||||||||||
| Peter K. Cosgrove | 12/13/2024 |
344
|
18,631 |
(2)
|
||||||||||
| 12/16/2024 |
188
|
10,169 |
(3)
|
|||||||||||
| 12/18/2024 |
79
|
4,037 |
(4)
|
|||||||||||
| 12/19/2024 | 295 | 14,662 |
(5)
|
|||||||||||
| 12/20/2024 | 325 | 16,266 |
(6)
|
|||||||||||
| Daniel D. Fariello | 12/13/2024 |
332
|
17,981 |
(2)
|
||||||||||
| 12/16/2024 | 197 | 10,656 |
(3)
|
|||||||||||
| 12/18/2024 |
179
|
9,147 |
(4)
|
|||||||||||
| 12/19/2024 | 285 | 14,165 |
(5)
|
|||||||||||
| 12/20/2024 |
314
|
15,716 |
(6)
|
|||||||||||
|
(1)
These amounts are based on $48.12, the closing price of Chemung Financial Corporation’s common stock on the 01/18/2024 vesting date.
|
||||||||||||||
|
(2)
These amounts are based on $54.16, the closing price of Chemung Financial Corporation’s common stock on the 12/13/2024 vesting date.
|
||||||||||||||
|
(3)
These amounts are based on $54.09, the closing price of Chemung Financial Corporation’s common stock on the 12/16/2024 vesting date.
|
||||||||||||||
|
(4)
These amounts are based on $51.10, the closing price of Chemung Financial Corporation’s common stock on the 12/18/2024 vesting date.
|
||||||||||||||
|
(5)
These amounts are based on $49.70, the closing price of Chemung Financial Corporation’s common stock on the 12/19/2024 vesting date.
|
||||||||||||||
|
(6)
These amounts are based on $50.05, the closing price of Chemung Financial Corporation’s common stock on the 12/20/2024 vesting date.
|
||||||||||||||
|
(7)
These amounts are based on $45.70, the closing price of Chemung Financial Corporation’s common stock on the 07/03/2024 vesting date.
|
||||||||||||||
Chemung Financial Corporation Amended and Restated Restricted Stock Plan (the "Restricted Stock Plan")
Prior to the approval of the 2021 Equity Incentive Plan, the Corporation granted awards to executive officers, excluding the CEO, under the Restricted Stock Plan, a component plan of the 2014 Omnibus Plan. Awards granted under the Restricted Stock Plan vest over a five-year period, lapse with termination of employment, unless otherwise waived by the Compensation Committee, and vest immediately in case of death, disability or a change in control. In connection with the implementation of the 2021 Equity Incentive Plan, no more awards are permitted to be granted under the Restricted Stock Plan and the plan will remain in existence solely for the purpose of administering outstanding grants thereunder. For additional information, see the
"Summary Compensation Table"
section.
Deferred Compensation Plan
The Deferred Compensation Plan allows a select group of management and highly compensated employees to defer all or a portion of their annual compensation to a future date. From time to time, the Compensation Committee designates employees who are eligible to participate in the Deferred Compensation Plan. Mr. Tomson was the only NEOs who participated in the Deferred Compensation Plan in 2024. Investments in the plan are recorded as trading assets and deferred amounts are an unfunded liability of the Corporation. The Deferred Compensation Plan requires deferral elections be made before the beginning of the calendar year during which the participant will perform the services to which the compensation relates. Participants in the Deferred Compensation Plan are required to elect a form of distribution, either lump sum payment or annual installments not to exceed ten years, and a time of distribution, either a specified age or a specified date. The terms and conditions for the deferral of compensation are subject to the provisions of Section 409A of the IRS
43
Code. The income from investments and cost of the plan are recorded as dividend, non-interest income, and non-interest expenses, respectively, in the consolidated statements of income.
Deferred Compensation Table
As previously discussed in the “
Deferred Compensation Plan
” section, the Bank maintains a Deferred Compensation Plan. The following table sets forth the contributions made by the NEO(s) for 2024.
| Name | Year | Executive Contributions in Fiscal Year 2024 | Registrant Contributions in Fiscal Year 2024 |
Aggregate Earnings in Fiscal Year 2024
(1)
|
Aggregate Balance as of December 31, 2024 | ||||||||||||
| ($) | ($) | ($) | ($) | ||||||||||||||
| Anders M. Tomson | 2024 | 35,519 | — | 7,358 | 222,545 | ||||||||||||
|
(1)
These amounts are not reported in the
"Summary Compensation Table"
section.
|
|||||||||||||||||
•
Defined Contribution Supplemental Executive Retirement Plan (the “Defined Contribution SERP”):
The Defined Contribution SERP is provided to certain executives, including the NEOs, to motivate and retain key management by providing a non-qualified retirement benefit that is payable at retirement, disability, death and certain other events. Under the Defined Contribution SERP, the Bank will make an annual contribution to each participant's account equal to 20% of the participant's base salary until the earlier of (i) the participant's termination of employment for any reason or (ii) the discontinuation of the participant's participation in the plan. The annual contribution is credited on the last day of the plan year, provided that the participant is employed on that date. On the first day of each calendar quarter, participants' accounts are credited with simple interest at a rate of return equal to the average yield on 5-year U.S. treasury notes for the immediately preceding calendar quarter. Participants are zero percent vested in their account until they have participated in the Defined Contribution SERP for five years. Participants become 50% vested in their account after five years of participation in the plan and an additional 10% for each year of participation thereafter. Participants become fully vested in their account in the event of attaining normal retirement age, a change in control, death or disability.
The Defined Contribution SERP is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly compensated employees under Section 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974. The Defined Contribution SERP’s expense is the Corporation’s annual contribution plus interest credits.
Defined Contribution SERP Table
| Name |
Registrant Contribution in Fiscal Year 2024
(1)
|
Aggregate Earnings in Fiscal Year 2024
(1)
|
Aggregate Balance as of December 31, 2024
|
||||||||
| ($) | ($) | ($) | |||||||||
| Anders M. Tomson | 142,077 | 44,121 | 1,239,645 | ||||||||
|
Dale M. McKim III
|
68,040 | 1,147 | 96,573 | ||||||||
| Loren D. Cole | 55,432 | 9,990 | 303,938 | ||||||||
| Peter K. Cosgrove | 56,256 | 9,307 | 287,778 | ||||||||
| Daniel D. Fariello | 56,115 | 11,991 | 354,410 | ||||||||
|
(1)
Contributions are reflected in the “
Summary Compensation Table
” section for the fiscal year ended December 31, 2024. No aggregate earnings were reported in the “Summary Compensation Table” section.
|
|||||||||||
44
Pay Ratio Disclosure
The Bank’s compensation program is designed to motivate all employees to carry out the Corporation’s mission of value for our shareholders, value for our clients, value for our employees and value for our communities. The Corporation aims to pay appropriate compensation at all levels within the Bank.
The following is a reasonable estimate calculation, prepared in accordance with SEC rules, of the ratio of the total annual compensation paid to Mr. Tomson, our President CEO, to the median of the total annual compensation of all of the Bank’s employees except Mr. Tomson, for 2024.
Our median employee for this calculation was determined using wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for all of our active employees, excluding Mr. Tomson, as of December 31, 2024. We included all employees, whether employed on a full-time, part-time or seasonal basis. We annualized the data used in the calculation only for our full-time employees who were hired during 2024.
After identifying the median employees as described above, we determined that the median employee had a total annual compensation
of
$46,532
for 2024. The total annual compensation for Mr. Tomson for the same period was $1,364,070. The ratio of Mr. Tomson
’s annual compensation for 2024 to the median total annual compensation of all other employees for 2024 was estimated to b
e
29:1.
45
Pay Versus Performance Table
We are required by SEC rules to disclose the following information regarding compensation paid to our Named Executive Officers (“NEOs”). The amounts set forth below under the headings “Compensation Actually Paid to PEO” and “average Compensation Actually Paid to non-PEO NEOs” have been calculated in a manner consistent with Item 402(v) of Regulation S-K. Footnote (2) below sets forth the adjustments from the Total Compensation as reported in the Summary Compensation Table above.
The following table sets forth additional compensation information of our Chief Executive Officer ("PEO") and our non-PEO NEOs along with total shareholder return ("TSR") and net income for fiscal years 2024, 2023 and 2022:
| Value of Initial Fixed $100 Investment based on: | ||||||||||||||||||||
|
Year
|
Summary Compensation Table (SCT) Total
for PEO
(1)
|
Compensation Actually Paid to PEO
(1)
|
Average SCT Total for non-PEO
NEOs
(1)
|
Average Compensation Actually Paid to non-PEO
NEOs
(1)
|
TSR
(4)
|
Net
Income (in thousands)
(5)
|
||||||||||||||
| 2024 |
$
|
$
|
$
|
$
|
$
|
$
|
||||||||||||||
|
2023
|
$
|
$
|
$
|
$
|
$
|
$
|
||||||||||||||
| 2022 |
$
|
$
|
$
|
$
|
$
|
$
|
||||||||||||||
(2)
To calculate Compensation Actually Paid for the PEO, the following adjustments were made to Summary Compensation Table total compensation, calculated in accordance with the SEC methodology for determining Compensation Actually Paid for each year shown:
| Adjustments to PEO Compensation | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Summary Compensation Table Total |
$
|
$
|
$
|
||||||||||||||
|
Minus
Restricted Stock Awards from Summary Compensation Table
|
(
|
(
|
(
|
||||||||||||||
|
Plus
Year-End Equity Value of Unvested Awards Granted During the Year
|
|
|
|
||||||||||||||
|
Plus
Change in Value of Unvested Awards Granted in Prior Years
|
(
|
|
(
|
||||||||||||||
|
Plus
Value of Awards Granted and Vested During Year
|
|
|
|
||||||||||||||
|
Plus
Change in Value of Prior Years' Awards Vested During Year
|
|
|
|
||||||||||||||
|
Minus
Value of Performance-Based Awards Forfeited During Year
|
|
|
|
||||||||||||||
|
Plus
Dividends and Earning Paid on Awards in the Covered Fiscal Year Prior to Vest
|
|
|
|
||||||||||||||
| Compensation Actually Paid |
$
|
$
|
$
|
||||||||||||||
(3)
To calculate average Compensation Actually Paid for the non-PEO NEOs, the following adjustments were made to Summary Compensation Table total compensation, calculated in accordance with the SEC methodology for determining Compensation Actually Paid for each year shown:
| Adjustments to non-PEO Compensation | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Summary Compensation Table Total |
$
|
$
|
$
|
||||||||||||||
|
Minus
Restricted Stock Awards from Summary Compensation Table
|
|
(
|
(
|
||||||||||||||
|
Plus
Year-End Equity Value of Unvested Awards Granted During the Year
|
|
|
|
||||||||||||||
|
Plus
Change in Value of Unvested Awards Granted in Prior Years
|
(
|
|
(
|
||||||||||||||
|
Plus
Value of Awards Granted and Vested During Year
|
|
|
|
||||||||||||||
|
Plus
Change in Value of Prior Years' Awards Vested During Year
|
|
|
(
|
||||||||||||||
|
Minus
Value of Performance-Based Awards Forfeited During Year
|
|
|
|
||||||||||||||
|
Plus
Dividends and Earning Paid on Awards in the Covered Fiscal Year Prior to Vest
|
|
|
|
||||||||||||||
| Compensation Actually Paid |
$
|
$
|
$
|
||||||||||||||
(4)
Cumulative TSR is calculated using the Corporation's common share price at the end and the beginning of the applicable measurement period assuming reinvestment is executed on the ex. dividend date.
(5)
Net income as
reported on the Corporation's consolidated financial statements.
46
The following charts illustrate the relationship between compensation actually paid to the NEOs for 2022, 2023 and 2024, and each of the financial metrics stated therein.
47
Agreements with Named Executive Officers
The following paragraph summarizes the estimated amounts payable to each of the NEOs under their change in control agreements assuming employment was terminated on December 31, 2024.
The Bank has entered into a Change in Control Agreement with Mr. Tomson, President and CEO. If within 12 months following a change in control, Mr. Tomson’s employment is terminated without cause or Mr. Tomson resigns for good reason, the agreement provides for a cash severance payment equal to 2.99 times the highest annual rate of base salary and highest annual incentive award paid to, or earned by, Mr. Tomson for any of the two calendar years ending with the year in which Mr. Tomson’s employment ended. Payments would be made in equal monthly installments for thirty-six (36) months following the effective date of the termination. The executive's shares of restricted stock shall immediately vest and all restrictions thereon shall lapse. See “
Potential Payments Table
” below for more information.
The Bank has entered into Change in Control Agreements with executive officers Cole, Cosgrove, Fariello and McKim III. If, within 12 months following a change in control, the executive’s employment is terminated without cause or the executive resigns for good reason, the agreements provide for payments of 2.0 times the executive’s highest annual rate of base salary and highest annual incentive award paid to, or earned by, the executive for any of the two calendar years ending with the year in which the executive’s employment ended. Payments would be made in equal monthly installments for twenty-four (24) months following the effective date of the termination. The executive’s shares of restricted stock shall immediately vest and all restrictions thereon shall lapse. See “
Potential Payments Table
” below for more information.
48
Potential Payments Table:
| Name and Principal Position | Type of Payment |
Involuntary Termination Without Cause or Voluntary Termination For Good Reason Within One Year of Change in Control
(1)(2)(3)
|
Voluntary Resignation | Retirement | Disability | Death |
Involuntary Termination With Cause
(1)
|
Involuntary Termination Without Cause or Voluntary Termination for Good Reason
(1)(3)
|
||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||
| Severance | 3,439,648 | — | — | — | — | — | — | |||||||||||||||||||
| Anders M. Tomson |
Restricted Stock
(4)
|
223,208 | — | — | — | 223,208 | — | — | ||||||||||||||||||
| President and CEO |
Non-Qualified SERP
(5)
|
1,239,645 | 1,239,645 | 1,239,645 | 1,239,645 | 1,239,645 | — | 1,239,645 | ||||||||||||||||||
| Disability | — | — | — | 194,487 | — | — | — | |||||||||||||||||||
| Total | 4,902,501 | 1,239,645 | 1,239,645 | 1,434,132 | 1,462,853 | — | 1,239,645 | |||||||||||||||||||
| Severance | 940,400 | — | — | — | — | — | — | |||||||||||||||||||
|
Dale M. McKim III
|
Restricted Stock
(4)
|
153,507 | — | — | — | 153,507 | — | — | ||||||||||||||||||
| Executive Vice President, |
Non-Qualified SERP
(5)
|
96,573 | — | — | 96,573 | 96,573 | — | — | ||||||||||||||||||
| CFO and Treasurer | Disability | — | — | — | 302,678 | — | — | — | ||||||||||||||||||
| Total | 1,190,480 | — | — | 399,251 | 250,080 | — | — | |||||||||||||||||||
| Severance | 854,324 | — | — | — | — | — | — | |||||||||||||||||||
| Loren D. Cole |
Restricted Stock
(4)
|
145,600 | — | — | — | 145,600 | — | — | ||||||||||||||||||
| Executive Vice President, |
Non-Qualified SERP
(5)
|
303,938 | 151,969 | 151,969 | 303,938 | 303,938 | — | 151,969 | ||||||||||||||||||
| and CIO | Disability | — | — | — | 277,561 | — | — | — | ||||||||||||||||||
| Total | 1,303,862 | 151,969 | 151,969 | 581,499 | 449,538 | — | 151,969 | |||||||||||||||||||
| Severance | 852,556 | — | — | — | — | — | — | |||||||||||||||||||
| Peter K. Cosgrove |
Restricted Stock
(4)
|
148,236 | — | — | — | 148,236 | — | — | ||||||||||||||||||
| Executive Vice President, |
Non-Qualified SERP
(5)
|
287,778 | 143,889 | 143,889 | 287,778 | 287,778 | — | 143,889 | ||||||||||||||||||
| CCO and CRO | Disability | — | — | — | 59,174 | — | — | — | ||||||||||||||||||
| Total | 1,288,570 | 143,889 | 143,889 | 346,952 | 436,014 | — | 143,889 | |||||||||||||||||||
| Severance | 841,154 | — | — | — | — | — | — | |||||||||||||||||||
|
Restricted Stock
(4)
|
143,941 | — | — | 143,941 | — | — | ||||||||||||||||||||
| Daniel D. Fariello |
Non-Qualified SERP
(5)
|
354,410 | 212,646 | 212,646 | 354,410 | 354,410 | — | 212,646 | ||||||||||||||||||
| President, Capital Bank Division | Disability | — | — | — | 321,701 | — | — | — | ||||||||||||||||||
| Total | 1,339,505 | 212,646 | 212,646 | 676,111 | 498,351 | — | 212,646 | |||||||||||||||||||
|
(1)
The term "cause" generally means personal dishonesty, willful misconduct, breach of fiduciary duty, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses), gross insubordination, or gross negligence. For the purposes of this paragraph, no act or failure to act shall be considered "willful" unless done or omitted to be done, by the executive officer not in good faith and without a reasonable belief that the executive officer's action or omission is in the best interests of the Bank. In no event shall the executive officer be deemed to have been terminated by Cause unless and until there shall have been delivered to the executive officer a copy of a certification by a majority of the non-officer members of the Board of Directors finding that the executive was guilty of conduct deemed to be Cause.
|
||||||||||||||||||||||||||
|
(2)
The term "change in control" generally means (i) any merger, consolidation or other corporate reorganization in which the Corporation or the Bank is not the surviving corporation, (ii) the event that any "person" (as that term is used in Section 13(d) and 14(d)(2) of the Exchange Act) becomes the beneficial owner, directly or indirectly, of securities of the Corporation or the Bank representing thirty percent (30%) or more of the combined voting power of the Bank's then outstanding securities, provided that the acquisition of additional securities or voting power by a person who, as of the date of this Agreement, already is the direct or indirect beneficial owner of twenty percent (20%) of such combined voting power, shall not constitute a change of control, or (iii) the event in which a majority of the members of the Corporation's or the Bank's Board of Directors is replaced during any twenty-four (24) month period or who was appointed to the Corporation's or the Bank's Board of Directors during such twenty-four (24) month period as a result of a directive, supervisory agreement or order issued by the primary federal regulator of the Corporation or the Bank prior to the date of appointment or election.
|
||||||||||||||||||||||||||
|
(3)
The term "good reason" generally means (i) a material reduction in the executive officer's base salary or benefits in effect as of the effective date of the change in control; (ii) a material reduction in the executive officer's authority, duties or responsibilities from the position and attributes associated with the executive officer's position (or any successor executive position in effect as of the effective date of the change in control); (iii) a relocation of the executive officer's principal place of employment in effect immediately prior to the effective date of the change in control, resulting in an increase of the executive officer's commute of thirty (30) miles or more; or (iv) a material breach of the executive officer's change in control agreement by the Bank.
|
||||||||||||||||||||||||||
|
(4)
Our 2021 Equity Incentive Plan and the Restricted Stock Plan provide that, if the executive officer's employment is terminated without cause or if the executive officer resigns for good reason, after the effective date of the change in control (i.e., "double-trigger"), then the executive officer's unvested restricted stock awards become fully vested. The value of equity amounts represents the fair value of $48.81 per share, the closing price for the Corporation's common stock on December 31, 2024.
|
||||||||||||||||||||||||||
|
(5)
In the event of change in control, the executive officer's Defined Contribution SERP account will become fully vested and paid in a lump sum cash payment (i.e., "single trigger").
|
||||||||||||||||||||||||||
49
Delinquent Section 16(a) Reports
The Corporation’s executive officers and directors, as well as any 10% shareholders of the Corporation, are required by Section 16(a) of the Securities Exchange Act of 1934 to file reports with the SEC regarding their ownership of Corporation common stock, including changes in their stock ownership. The Corporation has reviewed these reports filed by the Corporation’s executive officers and directors during 2024, along with written statements received from the directors and executive officers. Based solely upon review of these reports furnished to the Corporation and its representatives and certain representations that no other reports were required, subject to the SEC reporting requirements, all directors and executive officers filed the required reports on a timely basis.
Shareholder Proposals for Inclusion in the 2026 Proxy Statement
The Corporation’s Board will establish a date for the 2026 Annual Meeting of Shareholders. The shareholder’s proposal must be received by the Corporate Secretary of Chemung Financial Corporation at its principal executive offices, One Chemung Canal Plaza, Elmira, New York 14901, no later than December 24, 2025, which is 120 days prior to the anniversary date the proxy statement for the 2025 Annual Meeting was first made available. The shareholder must also satisfy the other requirements of SEC Rule 14a-8. Under SEC Rule 14a-19, a shareholder intending to engage in a director election contest with respect to the Corporation's annual meeting of shareholders to be held in 2026 must give the Corporation notice of its intent to solicit proxies by providing the names of its nominees and certain other information at least 60 calendar days before the anniversary of the previous year's annual meeting. This deadline is April 6, 2026. Additionally, our Corporation Bylaws require the name and address of record of the proposing shareholder, appropriate information regarding the matter sought to be presented or person to be nominated, as well as the number of shares of our common stock that are owned by the proposing shareholder. Note that this requirement is separate from the notice requirements described in this Proxy Statement regarding the advance notice that is required before a shareholder is permitted to present a proposal for a vote at any annual meeting pursuant to the Corporation’s Bylaws.
The Corporation’s Bylaws establish an advance notice procedure with regard to certain matters, including shareholder proposals and director nominations, which are properly brought before an annual meeting of shareholders. To be timely, a shareholder’s notice must be delivered to or mailed and received at the Corporation’s principal executive offices not less than 120 calendar days prior to the anniversary date the Proxy Statement was first made available to shareholders in connection with the previous year’s annual meeting of shareholders. In the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 days from the date contemplated at the time of the previous year’s Proxy Statement, notice by the shareholder to be timely must be so received a reasonable time before the solicitation is made.
50
APPENDIX A
Chemung Financial Corporation
2025 Equity Incentive Plan
ARTICLE 1 - GENERAL
Section 1.1
Purpose, Effective Date and Term
. The purpose of this Chemung Financial Corporation 2025 Equity Incentive Plan (as amended from time to time, the “
Plan
”) is to promote the long-term financial success of Chemung Financial Corporation (the “
Company
”), and its Subsidiaries, including Chemung Canal Trust Company (the “
Bank
”) by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s stockholders through the ownership of Company common stock. The “
Effective Date
” of the Plan is date the Plan is approved by the Company’s stockholders. The Plan shall remain in effect as long as any awards under it are outstanding;
provided, however,
that no Awards may be granted under the Plan after the day immediately prior to the ten-year anniversary of the Effective Date. Upon stockholder approval of this Plan, no further awards shall be granted under the Prior Plan, and the Prior Plan shall remain in existence solely for the purpose of administering outstanding grants thereunder.
Section 1.2
Administration
. The Plan shall be administered by the Compensation Committee of the Company’s Board of Directors (the “
Committee
”), in accordance with
Section 5.1
.
Section 1.3
Participation
. Each Employee or Director of, or service provider to, the Company or any Subsidiary of the Company who is granted an Award in accordance with the terms of the Plan shall be a “
Participant
” in the Plan. The grant of Awards under the Plan shall be limited to Employees and Directors of, and service providers to, the Company or any Subsidiary.
Section 1.4
Definitions
. Capitalized terms used in the Plan are defined in
Article 8
and elsewhere in the Plan.
ARTICLE 2 - AWARDS
Section 2.1
General
. Any Award under the Plan may be granted singularly, or in combination with another Award (or Awards). Each Award under the Plan shall be subject to the terms and conditions of the Plan and such additional terms, conditions, limitations and restrictions as the Committee shall provide with respect to such Award and as evidenced in the Award Agreement. Every Award under the Plan shall require a written Award Agreement. Subject to the provisions of
Section 2.6
, an Award may be granted as an alternative to or replacement (subject to
Section 2.7
) of an existing award under the Plan or any other plan of the Company or any Subsidiary (provided, however, that no reload Awards shall be granted hereunder) or as the form of payment for grants or rights earned or due under any other compensation plan or arrangement of the Company or its Subsidiaries, including without limitation the plan of any entity acquired by the Company or any Subsidiary. The types of Awards that may be granted under the Plan include:
(a)
Stock Options
. A Stock Option means a grant under
Section 2.2
that represents the right to purchase shares of Stock at an Exercise Price established by the Committee. Any Stock Option may be either an Incentive Stock Option (an “
ISO
”) that is intended to satisfy the requirements applicable to an “incentive stock option” described in Code Section 422(b), or a Non-Qualified Stock Option (a “
Non-Qualified Option
”) that is not intended to be an ISO,
provided, however
, that no ISOs may be granted: (i) after the ten-year anniversary of the Effective Date or the date the Plan is approved by the Board, whichever is earlier; or (ii) to a non-employee. Unless otherwise specifically provided by its terms, any Stock Option granted under the Plan shall be a Non-Qualified Option. Any ISO granted under this Plan that does not qualify as an ISO for any reason (whether at the time of grant or as the result of a subsequent event) shall be deemed to be a Non-Qualified Option. In addition, any ISO granted under this Plan may be unilaterally modified by the Committee to disqualify such Stock Option from ISO treatment such that it shall become a Non-Qualified Option; provided however, that any such modification shall be ineffective if it causes the Award to be subject to Code Section 409A (unless, as modified, the Award complies with Code Section 409A).
(b)
Restricted
Stock Awards.
A Restricted Stock Award means a grant of shares of Stock under
Section 2.3
for no consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan, subject to a time-based vesting schedule or the satisfaction of market conditions or performance conditions.
(c)
Restricted Stock Units
. A Restricted Stock Unit means a grant under
Section 2.4
denominated in shares of Stock that is similar to a Restricted Stock Award except no shares of Stock are actually awarded on the date of grant of a
A-1
Restricted Stock Unit. A Restricted Stock Unit is subject to a time-based vesting schedule or the satisfaction of market conditions or performance conditions and shall be settled in shares of Stock; provided, however, that in the sole discretion of the Committee, determined at the time of settlement, a Restricted Stock Unit may be settled in cash based on the Fair Market Value of a share of the Company’s Stock multiplied by the number of Restricted Stock Units being settled.
(d)
Performance Awards
. A Performance Award means an Award under
Sections 2.2, 2.3
or
2.4
that vests upon the achievement of one or more specified performance measures, as further set forth in Article 8.
Section 2.2
Stock Options
.
(a)
Grant of Stock Options
. Each Stock Option shall be evidenced by an Award Agreement that shall: (i) specify the number of Stock Options covered by the Award; (ii) specify the date of grant of the Stock Option; (iii) specify the vesting period or conditions to vesting; and (iv) contain such other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Service with the Company as the Committee may, in its discretion, prescribe. Stock Options may be granted as a Performance Award.
(b)
Terms and Conditions
. A Stock Option shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee. In no event, however, shall a Stock Option expire later than ten (10) years after the date of its grant (or five (5) years with respect to an ISO granted to an Employee who is a 10% Stockholder). The “
Exercise Price
” of each Stock Option shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant (or, if greater, the par value of a share of Stock);
provided, however,
that the Exercise Price of an ISO shall not be less than 110% of Fair Market Value of a share of Stock on the date of grant if granted to a 10% Stockholder;
further, provided,
that the Exercise Price may be higher or lower in the case of Stock Options granted or exchanged in replacement of existing Awards held by an Employee or Director of or service provider to an acquired entity. The payment of the Exercise Price of a Stock Option shall be by cash or, subject to limitations imposed by applicable law, by such other means as the Committee may from time to time permit, including: (i) by tendering, either actually or constructively by attestation, shares of Stock valued at Fair Market Value as of the date of exercise; (ii) by irrevocably authorizing a third party, acceptable to the Committee, to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and to remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise; (iii) by net settlement of the Stock Option, using a portion of the shares obtained on exercise in payment of the Exercise Price of the Stock Option (and if applicable, tax withholding); (iv) by personal, certified or cashier’s check; (v) by other property deemed acceptable by the Committee; or (vi) by any combination thereof. The total number of shares that may be acquired upon the exercise of a Stock Option shall be rounded down to the nearest whole share, with cash-in-lieu paid by the Company, at its discretion, for the value of any fractional share.
(c)
Dividends
. No dividends or Dividend Equivalent Rights shall be paid with respect to any Stock Options.
Section 2.3.
Restricted Stock Awards
.
(a)
Grant of Restricted Stock.
Each Restricted Stock Award shall be evidenced by an Award Agreement, that shall: (i) specify the number of shares of Stock covered by the Restricted Stock Award; (ii) specify the date of grant of the Restricted Stock Award; (iii) specify the vesting period; and (iv) contain such other terms and conditions not inconsistent with the Plan, including the effect of termination of Participant’s employment or Service with the Company as the Committee may, in its discretion, prescribe. Restricted Stock Awards may be granted as Performance Awards. All Restricted Stock Awards shall be in the form of issued and outstanding shares of Stock that, at the discretion of the Committee, shall be either: (x) registered in the name of the Participant and held or on behalf of the Company, together with a stock power executed by the Participant in favor of the Company, pending the vesting or forfeiture of the Restricted Stock; or (y) registered in the name of, and delivered to, the Participant. In any event, the certificates evidencing the Restricted Stock Award shall at all times prior to the applicable vesting date bear the following legend:
The Stock evidenced hereby is subject to the terms of an Award Agreement between Chemung Financial
Corporation and [Name of Participant] dated [Date], made pursuant to the terms of the Chemung Financial
Corporation 2025 Equity Incentive Plan, as amended from time to time, copies of which are on file at the
executive offices of Chemung Financial Corporation, and may not be sold, encumbered, hypothecated or
otherwise transferred except in accordance with the terms of such Plan and Award Agreement.
or such other restrictive legend as the Committee, in its discretion, may specify. Notwithstanding the foregoing, the Company may in its sole discretion issue Restricted Stock in any other approved format (e.g., electronically) in order to facilitate the paperless transfer of such Awards. In the event Restricted Stock that is not issued in certificate form, the
A-2
Company and the transfer agent shall maintain appropriate bookkeeping entries that evidence Participants’ ownership of such Awards. Restricted Stock that is not issued in certificate form shall be subject to the same terms and conditions of the Plan as certificated shares, including the restrictions on transferability and the provision of a stock power executed by the Participant in favor of the Company, until the satisfaction of the conditions to which the Restricted Stock Award is subject.
(
b
)
Terms and Conditions.
Each Restricted Stock Award shall be subject to the following terms and conditions:
(i)
Dividends.
Unless the Committee determines otherwise with respect to any Restricted Stock Award and specifies such determination in the relevant Award Agreement, any dividends or distributions declared and paid with respect to shares of Stock subject to the Restricted Stock Award shall be immediately distributed to the Participant. If the Committee determines to delay the distribution of dividends to a Participant until the vesting of an Award of Restricted Stock, the Committee shall cause the dividend (and any earnings thereon) to be distributed to the Participant no later than two and one-half months following the date on which the Restricted Stock vests.
(ii)
Voting Rights.
Unless the Committee determines otherwise with respect to any Restricted Stock Award and specifies such determination in the relevant Award Agreement, a Participant shall have voting rights related to the unvested, non-forfeited Restricted Stock Award and such voting rights shall be exercised by the Participant in his or her discretion.
(iii)
Tender Offers and Merger Elections.
Each Participant to whom a Restricted Stock Award is granted shall have the right to respond, or to direct the response, with respect to the related shares of Restricted Stock, to any tender offer, exchange offer, cash/stock merger consideration election or other offer made to, or elections made by, the holders of shares of Stock. Such a direction for any such shares of Restricted Stock shall be given by proxy or ballot (if the Participant is the beneficial owner of the shares of Restricted Stock for voting purposes) or by completing and filing, with the inspector of elections, the trustee or such other person who shall be independent of the Company as the Committee shall designate in the direction (if the Participant is not such a beneficial owner), a written direction in the form and manner prescribed by the Committee. If no such direction is given, then the shares of Restricted Stock shall not be tendered.
Section 2.4
Restricted Stock Units
.
(a)
Grant of Restricted Stock Unit Awards
. Each Restricted Stock Unit shall be evidenced by an Award Agreement which shall: (i) specify the number of Restricted Stock Units covered by the Award; (ii) specify the date of grant of the Restricted Stock Units; (iii) specify the vesting period or market conditions or performance conditions that must be satisfied in order to vest in the Award; and (iv) contain such other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Services with the Company as the Committee may, in its discretion, prescribe. Restricted Stock Unit Awards shall be paid in shares of Stock, or in the sole discretion of the Committee determined at the time of settlement, in cash or a combination of cash and shares of Stock.
(b)
Terms and Conditions
. Each Restricted Stock Unit Award shall be subject to the following terms and conditions:
(i)
Type of Award.
A Restricted Stock Unit Award shall be similar to a Restricted Stock Award except that no shares of Stock are actually awarded to the recipient on the date of grant. Each Restricted Stock Unit shall be evidenced by an Award Agreement that shall specify the Restriction Period (defined below), the number of Restricted Stock Units granted, and such other provisions, including the effect of termination of a Participant’s employment or Service with the Company, as the Committee shall determine. The Committee shall impose such other conditions and/or restrictions on any Restricted Stock Unit Award granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Restricted Stock Unit, time-based restrictions and vesting following the attainment of performance measures, restrictions under applicable laws or under the requirements of any Exchange or market upon which such shares may be listed, or holding requirements or sale restrictions placed by the Company upon vesting of such Restricted Stock Units.
Restricted Stock Units may be granted as Performance Awards.
(ii)
Non-Transferable.
Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing with the date of such Restricted Stock Unit for which such Participant’s continued Service is required (the “
Restriction Period
”), and until the later of (A) the expiration of the Restriction Period and (B) the date the applicable performance measures (if any) are satisfied, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Restricted Stock Units.
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(iii)
Voting Rights.
A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.
(iv)
Dividends
. No dividends shall be paid on Restricted Stock Units. In the sole discretion of the Committee, exercised at the time of grant, Dividend Equivalent Rights may be paid on Restricted Stock Units either at the time the Restricted Stock Unit vests or, if later, when the Restricted Stock Unit is settled, as set forth in the Award Agreement. If a Restricted Stock Unit is intended to be performance-based, payment of Dividend Equivalent Rights to the Award recipient will be conditioned on the satisfaction of the performance criteria or any other vesting conditions. In such case, the Dividend Equivalent Right shall be paid when the Restricted Stock Unit is settled or at the same time as the shares subject to such Restricted Stock Unit are distributed to the Participant.
Section 2.5
Vesting of Awards
. The Committee shall specify the vesting schedule or conditions of each Award.
Notwithstanding any other provision of the Plan to the contrary, Awards granted under the Plan shall vest no earlier than the first anniversary of the date on which the Award is granted;
provided
, that the following Awards shall not be subject to the foregoing minimum vesting requirement: any (i)
substitute Awards granted
in connection with awards that are assumed, converted or substituted pursuant to a merger, acquisition or similar transaction entered into by the Company or any of its Subsidiaries, (ii) Awards to Non-Employee Directors that vest on the earlier of the one-year anniversary of the date of grant or the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting, and (iii) any additional Awards the Committee may grant, up to a maximum of five percent (5%) of the available share reserve authorized for issuance under the Plan pursuant to Section 3.2 (subject to adjustment under Section 3.3); and,
provided
,
further
, that the foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award or acceleration in the event of death, Disability or a Change in Control in the terms of the Award Agreement or otherwise.
Section 2.6
Deferred Compensation
. If any Award would be considered “deferred compensation” as defined under Code Section 409A (“
Deferred Compensation
”), the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the Award Agreement, without the consent of the Participant, to maintain exemption from, or to comply with, Code Section 409A. Any amendment by the Committee to the Plan or an Award Agreement pursuant to this Section
shall maintain, to the extent practicable, the original intent of the applicable provision without violating Code Section 409A. A Participant’s acceptance of any Award under the Plan constitutes acknowledgement and consent to such rights of the Committee, without further consideration or action. Any discretionary authority retained by the Committee pursuant to the terms of this Plan or pursuant to an Award Agreement shall not be applicable to an Award which is determined to constitute Deferred Compensation, if such discretionary authority would contravene Code Section 409A. Unless otherwise provided in a valid election form intended to comply with Code Section 409A, all Awards that are considered Deferred Compensation hereunder shall settle and be paid in no event later than 2 ½ months following the end of the calendar year with respect to which the Award’s substantial risk of forfeiture lapsed.
Section 2.7
Prohibition Against Option Repricing
. Except for adjustments pursuant to
Section 3.3
or in connection with a Change in Control, and reductions of the Exercise Price approved by the Company’s stockholders, neither the Committee nor the Board shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the Exercise Price of a Stock Option previously granted under the Plan, whether through amendment, cancellation (including cancellation in exchange for a cash payment in excess of the Stock Option’s in-the-money value or in exchange for Stock Options or other Awards) or replacement grants, or other means.
Section 2.8.
Effect of Termination of Service on Awards.
The Committee shall establish the effect of a Termination of Service on the continuation of rights and benefits available under an Award and, in so doing, may make distinctions based upon, among other things, the cause of Termination of Service and type of Award. Unless otherwise specified by the Committee and set forth in an Award Agreement, the following provisions shall apply to each Award granted under this Plan:
(a) Upon the Participant’s Termination of Service for any reason other than due to Disability, death or Termination for Cause, Stock Options shall be exercisable only as to those shares that were immediately exercisable by such Participant at the date of termination and may be exercised only for a period of three (3) months following termination, and any Restricted Stock or Restricted Stock Units that have not vested as of the date of Termination of Service shall expire and be forfeited.
(b) In the event of a Termination of Service for Cause, all Stock Options granted to a Participant that have not been exercised and all Restricted Stock Awards, and Restricted Stock Units granted to a Participant that have not vested shall expire and be forfeited.
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(c) Upon Termination of Service for reason of Disability or death, all Stock Options shall be exercisable as to all shares subject to an outstanding Award whether or not then exercisable, and all Restricted Stock Awards and Restricted Stock Units shall vest as to all shares subject to an outstanding Award, whether or not otherwise immediately vested, at the date of Termination of Service. Stock Options may be exercised for a period of one year following Termination of Service due to death or Disability, or the remaining unexpired term of the Stock Option, if less, provided, however, in order to obtain ISO treatment for Stock Options exercised by heirs or devisees of an optionee, the optionee’s death must have occurred while employed or within three (3) months after Termination of Service. In the event of Termination of Service due to Retirement, a Participant’s vested Stock Options shall be exercisable for one year following Termination of Service, provided that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three months following Termination of Service due to Retirement and any Stock Option, Restricted Stock Award or Restricted Stock Unit that has not vested as of the date of Termination of Service shall expire and be forfeited.
(d) Notwithstanding anything herein to the contrary, no Stock Option shall be exercisable beyond the last day of the original term of such Stock Option.
(e) Notwithstanding the provisions of this
Section 2.8
, the effect of a Change in Control on the vesting/exercisability of Stock Options, Restricted Stock Awards, Restricted Stock Units and Performance Awards is as set forth in
Article 4
.
ARTICLE 3 - Shares Subject to Plan
Section 3.1
Available Shares
. The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently authorized but unissued, currently held or, to the extent permitted by applicable law, subsequently acquired by the Company, including shares purchased in the open market or in private transactions.
Section 3.2
Share Limitations
.
(a)
Share Reserve
. Subject to the following provisions of this
Section 3.2
, the maximum number of shares of Stock that may be issued to Participants and their beneficiaries under the Plan shall be equal to 160,000 shares of Stock (the “
Share Limit
”). Subject to
Section 3.2(b)
, shares of Stock may be issued under the Plan up to such Share Limit; provided, however, that no more than a number of shares of Stock equal to the Share Limit may be delivered pursuant to the exercise of Stock Options that are granted as ISOs. The aggregate number of shares available for grant under this Plan and the number of shares of Stock subject to outstanding awards shall be subject to adjustment as provided in
Section 3.3
.
(b)
Computation of Shares Available.
For purposes of this
Section 3.2
the number of shares of Stock available for the grant of Awards shall be reduced by the number of shares of Stock previously granted under the Plan, subject to the following:
(i) shares of Stock issued pursuant to Restricted Stock Awards or Restricted Stock Units shall count against the Share Limit as one (1) share of Stock for each one (1) share of Stock issued in connection with the Award;
(ii) shares of Stock issued pursuant to the exercise of Stock Options shall count against the Share Limit as one share of Stock for every one (1) share of Stock to which such exercise relates;
(iii) to the extent any shares of Stock covered by an Award (including Restricted Stock Awards and Restricted Stock Units) under the Plan are not delivered to a Participant or beneficiary for any reason, including because the Award is forfeited or canceled or because a Stock Option is not exercised, then such shares shall not be deemed to have been delivered for purposes of determining the remaining Share Limit; and
(iv) to the extent (A) a Stock Option is exercised by using an actual or constructive exchange of shares of Stock to pay the Exercise Price; (B) shares of Stock are withheld to satisfy withholding taxes upon exercise or vesting of an Award granted hereunder; or (C) shares are withheld to satisfy the exercise price of Stock Options in a net settlement of Stock Options, then the number of shares of Stock available shall be reduced by the gross number of shares of Stock issued rather than by the net number of shares of Stock issued.
Section 3.3
Corporate Transactions
.
(a)
General.
If the shares of Stock are changed into or exchanged for a different number of kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, spinoff,
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combination of shares, exchange of shares, extraordinary cash dividend, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kind of shares subject to the Share Limit and the number, kind and purchase price per share (if applicable) of shares subject to outstanding Awards shall be adjusted proportionately and accordingly by the Committee, so that the proportionate interest of the grantee immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Stock Options shall not change the aggregate purchase price payable with respect to shares that are subject to the unexercised portion of the Stock Option outstanding but shall include a corresponding proportionate adjustment in the purchase price per share. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, outstanding Awards (including, without limitation, cancellation of Awards in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution or exchange of Awards using stock of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any parent or Subsidiary or the financial statements of the Company or any parent or Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles.
(b)
Merger in which Company is Not Surviving Entity.
In the event of any merger, consolidation, or other business reorganization (including, but not limited to, a Change in Control) in which the Company is not the surviving entity, unless otherwise set forth in the agreement relating to the consummation of such merger, consolidation or other business reorganization, any Stock Options granted under the Plan which are outstanding immediately prior to such merger, consolidation or other business combination shall be converted into Stock Options to purchase voting common equity securities of the business entity which survives such merger, consolidation or other business reorganization having substantially the same terms and conditions as the outstanding Stock Options under this Plan and reflecting the same economic benefit (as measured by the difference between the aggregate Exercise Price and the value exchanged for outstanding shares of Stock in such merger, consolidation or other business reorganization), all as determined by the Committee prior to the consummation of such merger. The Committee may, at any time prior to the consummation of such merger, consolidation or other business reorganization, direct that all, but not less than all, outstanding Stock Options be canceled as of the effective date of such merger, consolidation or other business reorganization in exchange for a cash (or acquirer stock) payment per share of Stock equal to the excess (if any) of the value exchanged for an outstanding share of Stock in such merger, consolidation or other business reorganization over the Exercise Price of the Stock Option being canceled; provided, further, that in the event the Exercise Price of outstanding Stock Options exceed the value to be exchanged for an outstanding share of Stock (an “
Underwater Stock Option
”) in such merger, consolidation or other business reorganization, the Committee may, in its discretion, cancel and terminate such Underwater Stock Options without the consent of the holder of the Stock Option and without any payment to such holder.
Section 3.4
Delivery of Shares
. Delivery of shares of Stock or other amounts under the Plan shall be subject to the following:
(a)
Compliance with Applicable Laws.
Notwithstanding any other provision of the Plan, the Company shall have no obligation to deliver any shares of Stock or make any other distribution of benefits under the Plan unless such delivery or distribution complies with all applicable laws (including, the requirements of the Securities Act), and the applicable requirements of any Exchange or similar entity.
(b)
Certificates.
To the extent that the Plan provides for the issuance of shares of Stock, the issuance may be made on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any Exchange.
ARTICLE 4 - CHANGE IN CONTROL
Section 4.1
Consequence of a Change in Control
. Subject to the provisions of
Section 3.3
(relating to the adjustment of shares and cancellation of Stock Options in exchange for a cash or stock payment of the in-the-money value) and except as otherwise provided in the applicable Award Agreement:
(a) At the time of an Involuntary Termination at or following a Change in Control, all Stock Options then held by the Participant shall become fully earned and exercisable (subject to the expiration provisions otherwise applicable to the Stock Option). All Stock Options may be exercised for a period of one year following the Participant’s Involuntary Termination, provided, however, that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three (3) months following Involuntary Termination following a Change in Control.
(b) Upon an Involuntary Termination following a Change in Control, all Awards of Restricted Stock Awards and Restricted Stock Units that are not Performance Awards shall be fully earned and vested immediately.
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(c)
Upon an Involuntary Termination following a Change in Control, all Performance Awards shall vest at the higher of the actual level of the performance measures that have been achieved, or pro-rata assuming the performance measures have been achieved at “target.”
(d)
Notwithstanding anything in the Plan to the contrary, in the event of a Change in Control in which the Company is not the surviving entity, any Awards granted under the Plan which are outstanding immediately prior to such Change in Control shall become fully vested in the event the successor entity does not assume the Awards granted under the Plan and Performance Awards shall vest at the rate specified in Section 4.1(c) of the Plan.
Section 4.2
Definition of Change in Control
. For purposes of the Plan, unless otherwise provided in an Award Agreement, a “
Change in Control
” shall be deemed to have occurred upon the earliest to occur of the following:
(a)
Merger
: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Company or the Bank, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;
(b)
the acquisition of all or substantially all of the assets of the Company or beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the outstanding securities of the Company entitled to vote generally in the election of directors by any person or by any persons acting in concert, or approval by the stockholders of the Company of any transaction which would result in such an acquisition;
(b)
Acquisition of Significant Share Ownership
: A person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s Voting Securities; provided, however, this clause (b) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding Voting Securities;
a complete liquidation or dissolution of the Company or the Bank, or approval by the stockholders of the Company of a plan for such liquidation or dissolution;
(c)
Change in Board Composition
: During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (c), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period or who is appointed as a director as a result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation shall be deemed to have also been a director at the beginning of such period; or
(d)
Sale of Assets
: The Company and the Bank sells to a third party all or substantially all of its assets.
Notwithstanding the foregoing, in the event that an Award constitutes Deferred Compensation, and the settlement of, or distribution of benefits under, such Award is to be triggered solely by a Change in Control, then with respect to such Award, a Change in Control shall be defined as required under Code Section 409A, as in effect at the time of such transaction.
ARTICLE 5 - COMMITTEE
Section 5.1
Administration
. The Plan shall be administered by the members of the Compensation Committee of the Company who are Disinterested Board Members. If the Committee consists of fewer than two Disinterested Board Members, then the Board shall appoint to the Committee such additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least two Disinterested Board Members. Any members of the Committee who do not qualify as Disinterested Board Members shall abstain from participating in any discussion or decision to make or administer Awards that are made to Participants who at the time of consideration for such Award are persons subject to the short-swing profit rules of Section 16 of the Exchange Act. The Board (or if necessary to maintain compliance with the applicable listing standards, those members of the Board who are “independent directors” under the corporate governance statutes or rules of any national Exchange on which the Company lists, or has listed or seeks to list its securities, may, in its discretion, take any action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force and effect under the Plan as if done or exercised by the Committee.
Section 5.2
Powers of Committee
. The Committee’s administration of the Plan shall be subject to the following:
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(a) The Committee will have the authority and discretion to select from among the Company’s and its Subsidiaries’ Employees, Directors and service providers those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, features, (including automatic exercise in accordance with
Section 7.18
) performance criteria, restrictions (including without limitation, provisions relating to non-competition, non-solicitation and confidentiality), and other provisions of such Awards, to cancel or suspend Awards (subject to the restrictions imposed by
Article 6
) and to reduce, eliminate or accelerate any restrictions applicable to an Award at any time after the grant of the Award, or to extend the time period to exercise a Stock Option, provided that such extension is consistent with Code Section 409A. Notwithstanding the foregoing, the Committee will not have the authority or discretion to accelerate the vesting requirements applicable to an Award to avoid the one-year minimum vesting requirement pursuant to
Section 2.5
except in the event of a Change in Control as provided under Section 4.1 of the Plan and in the event of termination due to death or Disability.
(b) The Committee will have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.
(c) The Committee will have the authority to define terms not otherwise defined herein.
(d) Any interpretation of the Plan by the Committee and any decision made by it under the Plan are final and binding on all persons.
(e) In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the certificate of incorporation and bylaws of the Company and applicable state corporate law.
(f)
The Committee will have the authority to (i) suspend a Participant’s right to exercise a stock option during a blackout period (or similar restricted period) that is necessary or in the best interests of the Company in order to comply with the securities laws and regulations issued by the SEC (the “Blackout Period”), and (ii) to extend the period to exercise a Stock Option by a period of time equal to the Blackout Period, provided that such extension does not violate Section 409A of the Code, the incentive stock option requirements or applicable laws and regulations.
Section 5.3
Delegation by Committee
. Except to the extent prohibited by applicable law, the applicable rules of an Exchange upon which the Company lists its shares or the Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3 promulgated under the Exchange Act, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including (a) delegating to a committee of one or more members of the Board who are not “Disinterested Board Members,” the authority to grant Awards under the Plan to eligible persons who are not then subject to Section 16 of the Exchange Act; or (b) delegating to a committee of one or more members of the Board who would be eligible to serve on the Compensation Committee of the Company pursuant to the listing requirements imposed by any national securities Exchange on which the Company lists, has listed or seeks to list its securities, the authority to grant awards under the Plan. The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any awards so granted. Any such allocation or delegation may be revoked by the Committee at any time.
Section 5.4
Information to be Furnished to Committee
. As may be permitted by applicable law, the Company and its Subsidiaries shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties. The records of the Company and its Subsidiaries as to a Participant’s employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.
Section 5.5
Committee Action
.
The Committee shall hold such meetings, and may make such administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. Subject to
Section 5.1
, all actions of the Committee shall be final and conclusive and shall be binding upon the Company, Participants and all other interested parties. Any person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other
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communication signed by a member of the Committee or by a representative of the Committee authorized to sign the same in its behalf.
ARTICLE 6 - AMENDMENT AND TERMINATION
Section 6.1
General
. The Board may, as permitted by law, at any time, amend or terminate the Plan, and may, at any time, amend any Award Agreement, provided that no amendment or termination (except as provided in
Section 2.6
,
Section 3.3
and
Section 6.2
) may cause the Award to violate Code Section 409A, may cause the repricing of a Stock Option, or, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely impair the rights of any Participant or beneficiary under any Award granted under the Plan prior to the date such amendment is adopted by the Board;
provided, however
, that, no amendment may (a) materially increase the benefits accruing to Participants under the Plan; (b) materially increase the aggregate number of securities that may be issued under the Plan, other than pursuant to
Section 3.3
, or (c) materially modify the requirements for participation in the Plan, unless the amendment under (a), (b) or (c) above is approved by the Company’s stockholders.
Section 6.2
Amendment to Conform to Law and Accounting Changes
. Notwithstanding any provision in this Plan or any Award Agreement to the contrary, the Committee may amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of (i) conforming the Plan or the Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), or (ii) avoiding an accounting treatment resulting from an accounting pronouncement or interpretation thereof issued by the SEC or Financial Accounting Standards Board subsequent to the adoption of the Plan or the making of the Award affected thereby, which in the sole discretion of the Committee, may materially and adversely affect the financial condition or results of operations of the Company. By accepting an Award under this Plan, each Participant agrees and consents to any amendment made pursuant to this
Section 6.2
or
Section 2.6
to any Award granted under the Plan without further consideration or action.
ARTICLE 7 - GENERAL TERMS
Section 7.1
No Implied Rights
.
(a)
No Rights to Specific Assets.
Neither a Participant nor any other person shall by reason of participation in the Plan acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the shares of Stock or amounts, if any, payable or distributable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.
(b)
No Contractual Right to Employment or Future Awards.
The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating Employee the right to be retained in the employ of the Company or any Subsidiary or any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. No individual shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to receive a future Award under the Plan. There is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards.
The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether or not such Participants are similarly situated.
(c)
No Rights as a Stockholder
. Except as otherwise provided in the Plan or in an Award Agreement, no Award under the Plan shall confer upon the holder thereof any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.
Section 7.2
Transferability
. Except as otherwise so provided by the Committee, ISOs under the Plan are not transferable except (i) as designated by the Participant by will or by the laws of descent and distribution; (ii) to a trust established by the Participant, if under Code Section 671 and applicable state law, the Participant is considered the sole beneficial owner of the Stock Option while held in trust, or (iii) between spouses incident to a divorce or pursuant to a domestic relations order, provided, however, in the case of a transfer within the meaning of this
Section 7.2(iii)
, the Stock Option shall not qualify as an ISO as of the day of such transfer. The Committee shall have the discretion to permit the transfer of vested Stock Options (other than ISOs) under the Plan;
provided, however,
that such transfers shall be limited to Immediate Family Members of Participants, trusts and partnerships established for the primary benefit of such family
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members or to charitable organizations, and;
provided, further,
that such transfers are not made for consideration to the Participant.
Restricted Stock Awards shall not be transferable prior to the time that such Awards vest in the Participant. A Restricted Stock Unit Award is not transferable, except in the event of death, prior to the time that the Restricted Stock Unit Award vests and is earned and the property in which the Restricted Stock Unit is denominated is distributed to the Participant or the Participant’s beneficiary.
Section 7.3
Designation of Beneficiaries
. A Participant hereunder may file with the Company a written designation of a beneficiary or beneficiaries under this Plan and may from time to time revoke or amend any such designation (“
Beneficiary Designation
”). Any designation of beneficiary under this Plan shall be controlling over any other disposition, testamentary or otherwise (unless such disposition is pursuant to a domestic relations order);
provided, however,
that if the Committee is in doubt as to the entitlement of any such beneficiary to any Award, the Committee may determine to recognize only the legal representative of the Participant in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone.
Section 7.4
Non-Exclusivity
. Neither the adoption of this Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including, without limitation, the granting of Restricted Stock Awards, Restricted Stock Units or Stock Options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
Section 7.5
Award Agreement
. Each Award granted under the Plan shall be evidenced by an Award Agreement. A copy of the Award Agreement, in any medium chosen by the Committee, shall be provided (or made available electronically) to the Participant, and the Committee may, but need not require, that the Participant sign a copy of the Award Agreement. In the absence of a specific provision in the Award Agreement, the terms of the Plan shall control.
Section 7.6
Form and Time of Elections; Notification Under Code Section 83(b)
. Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof, shall be filed with the Company at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require. Notwithstanding anything herein to the contrary, the Committee may, on the date of grant or at a later date, as applicable, prohibit an individual from making an election under Code Section 83(b). If the Committee has not prohibited an individual from making this election, an individual who makes this election shall notify the Committee of the election within ten (10) days of filing notice of the election with the Internal Revenue Service. This requirement is in addition to any filing and notification required under the regulations issued under the authority of Code Section 83(b).
Section 7.7
Evidence
. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information upon which the person is acting considers pertinent and reliable, and signed, made or presented by the proper party or parties.
Section 7.8
Tax Withholding
. Where a Participant is entitled to receive shares of Stock upon the vesting or exercise of an Award, the Company shall have the right to require such Participant to pay to the Company the amount of any tax that the Company is required to withhold with respect to such vesting or exercise, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of shares of Stock to cover the minimum amount required to be withheld. To the extent determined by the Committee or specified in an Award Agreement and no adverse accounting consequences are triggered under FASB ASC Topic 718 or its successor and is permitted under applicable withholding rules promulgated by the Internal Revenue Service or another applicable governmental entity, a Participant shall have the ability to direct the Company to satisfy up to his or her highest marginal tax rate of required federal, state and local tax withholding by, (i) with respect to a Stock Option, reducing the number of shares of Stock subject to the Stock Option (without issuance of such shares of Stock to the Stock Option holder) by a number equal to the quotient of (a) the total maximum amount of tax withholding divided by (b) the excess of the Fair Market Value of a share of Stock on the exercise date over the Exercise Price per share of Stock; and (ii) with respect to Restricted Stock Awards and Restricted Stock Units, withholding a number of shares (based on the Fair Market Value on the vesting date) otherwise vesting that would satisfy the maximum amount of tax withholding. Provided there are no adverse accounting consequences to the Company (a requirement to have liability classification of an award under FASB ASC Topic 718 is an adverse consequence), a Participant who is not required to have taxes withheld may require the Company to withhold in accordance with the preceding sentence as if the Award up to the Participant’s highest marginal tax rate.
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Section 7.9
Action by Company or Subsidiary
. Any action required or permitted to be taken by the Company or any Subsidiary shall be by resolution of its Board of Directors, or by action of one or more members of the Board (including a committee of the Board) who are duly authorized to act for the Board, or (except to the extent prohibited by applicable law or applicable rules of the Exchange on which the Company lists its securities) by a duly authorized officer of the Company or such Subsidiary.
Section 7.10
Successors
. All obligations of the Company under this Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business, stock, and/or assets of the Company.
Section 7.11
Indemnification
. To the fullest extent permitted by law and the Company’s governing documents, each person who is or shall have been a member of the Committee, or of the Board, or an officer of the Company to whom authority was delegated in accordance with
Section 5.3
, or an Employee of the Company shall be indemnified and held harmless by the Company (i) against and from any loss (including amounts paid in settlement), cost, liability or expense (including reasonable attorneys’ fees) that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan; and (ii) against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute or regulation. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s certificate of incorporation or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. The foregoing right to indemnification shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition, provided, however, that, if required by applicable law, an advancement of expenses shall be made only upon delivery to the Company of an undertaking by or on behalf of such persons to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such person is not entitled to be indemnified for such expenses.
Section 7.12
No Fractional Shares
. Unless otherwise permitted by the Committee, no fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated by rounding down.
Section 7.13
Governing Law
. The Plan, all Awards granted hereunder, and all actions taken in connection herewith shall be governed by and construed in accordance with the laws of the State of New York without reference to principles of conflict of laws, except as superseded by applicable federal law. The federal and state courts located in the State of New York, shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any award under this Plan, each Participant and any other person claiming any rights under the Plan agrees to submit himself or herself and any legal action that the Participant brings under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.
Section 7.14
Benefits Under Other Plans
. Except as otherwise provided by the Committee or as set forth in a Qualified Retirement Plan, Awards to a Participant (including the grant and the receipt of benefits) under the Plan shall be disregarded for purposes of determining the Participant’s benefits under, or contributions to, any Qualified Retirement Plan, non-qualified plan and any other benefit plans maintained by the Participant’s employer. The term “
Qualified Retirement Plan
” means any plan of the Company or a Subsidiary that is intended to be qualified under Code Section 401(a).
Section 7.15
Validity
. If any provision of this Plan is determined to be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision has never been included herein.
Section 7.16
Notice
. Unless otherwise provided in an Award Agreement, all written notices and all other written communications to the Company provided for in the Plan, or in any Award Agreement, shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid
(provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile, email or prepaid overnight courier to the Company at its principal executive office. Such notices, demands, claims and other communications shall be deemed given:
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(a) in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five (5) days after deposit in the U.S. mail; or
(c) in the case of facsimile or email, the date upon which the transmitting party received confirmation of receipt;
provided, however,
that in no event shall any such communications be deemed to be given later than the date they are actually received, provided they are actually received. In the event a communication is not received, it shall only be deemed received upon the showing of an original of the applicable receipt, registration or confirmation from the applicable delivery service. Communications that are to be delivered by the U.S. mail or by overnight service to the Company shall be directed to the attention of the Company’s Chief Executive Officer and to the Corporate Secretary, unless otherwise provided in the Participant’s Award Agreement.
Section 7.17
Forfeiture Events
. The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events include, but are not limited to, termination of employment for Cause, termination of the Participant’s provision of Services to the Company or any Subsidiary, violation of material Company or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct of the Participant that is detrimental to the business or reputation of the Company or any Subsidiary.
Section 7.18
Automatic Exercise
. In the sole discretion of the Committee exercised in accordance with
Section 5.2(a)
above, any Stock Options that are exercisable but unexercised as of the day immediately before the tenth anniversary of the date of grant may be automatically exercised, in accordance with procedures established for this purpose by the Committee, but only if the exercise price is less than the Fair Market Value of a share of Stock on such date and the automatic exercise will result in the issuance of at least one (1) whole share of Stock to the Participant after payment of the exercise price and any applicable minimum tax withholding requirements. Payment of the exercise price and any applicable tax withholding requirements shall be made by a net settlement of the Stock Option whereby the number of shares of Stock to be issued upon exercise are reduced by a number of shares having a Fair Market Value on the date of exercise equal to the exercise price and any applicable minimum tax withholding.
Section 7.19
Regulatory Requirements
. The grant and settlement of Awards under this Plan shall be conditioned upon and subject to compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(k), and the rules and regulations promulgated thereunder.
Section 7.20.
Awards Subject to Clawback
.
(a) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the federal securities laws, and the automatic forfeiture provisions under Section 304 of the Sarbanes-Oxley Act of 2002 apply as a result, any Participant who was an executive officer of the Company at the time of grant or at the time of restatement shall be subject to “clawback” as if such person was subject to Section 304 of the Sarbanes-Oxley Act of 2002.
(b)
Awards granted hereunder are subject to any Clawback Policy that may be adopted by the Company from time to time, whether pursuant to the provisions of Section 954 of the Dodd-Frank Act, implementing regulations thereunder, or otherwise.
ARTICLE 8 - DEFINED TERMS; CONSTRUCTION
Section 8.1
In addition to the other definitions contained herein, unless otherwise specifically provided in an Award Agreement, the following definitions shall apply:
(a) “
10% Stockholder
” means an individual who, at the time of grant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company.
(b)
“Award”
means any Stock Option, Restricted Stock, Restricted Stock Unit, or any or all of them, or any other right or interest relating to stock or cash, granted to a Participant under the Plan.
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(c) “
Award Agreement
” means the document (in whatever medium prescribed by the Committee) which evidences the terms and conditions of an award under the Plan. Such document is referred to as an agreement regardless of whether Participant signature is required.
(d)
“
Board
” means the Board of Directors of the Company.
(e)
If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of termination for “cause,” then, for purposes of this Plan, the term “
Cause
” shall have meaning set forth in such agreement. In the absence of such a definition, “
Cause
” means (i) the conviction of the Participant of a felony or of any lesser criminal offense involving moral turpitude; (ii) the willful commission by the Participant of a criminal or other act that, in the judgment of the Board will likely cause substantial economic damage to the Company or any Subsidiary or substantial injury to the business reputation of the Company or any Subsidiary; (iii) the commission by the Participant of an act of fraud in the performance of his duties on behalf of the Company or any Subsidiary; (iv) the continuing willful failure of the Participant to perform his duties to the Company or any Subsidiary (other than any such failure resulting from the Participant’s incapacity due to physical or mental illness) after written notice thereof; or (v) an order of a federal or state regulatory agency or a court of competent jurisdiction requiring the termination of the Participant’s Service with the Company.
(f) “
Change in Control
” has the meaning ascribed to it in
Section 4.2
.
(g) “
Code
” means the Internal Revenue Code of 1986, as amended, and any rules, regulations and guidance promulgated thereunder, as modified from time to time.
(h) “
Code Section 409A
” means the provisions of Section 409A of the Code and any rules, regulations and guidance promulgated thereunder, as modified from time to time.
(i)
“
Committee
” means the Committee acting under
Article 5
.
(j) [Intentionally blank]
(k) “
Director
” means a member of the Board of Directors of the Company or a Subsidiary.
(l) “
Disability.
” If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of “Disability” or “Disabled,” then, for purposes of this Plan, the terms “Disability” or “Disabled” shall have meaning set forth in such agreement. In the absence of such a definition, “Disability” shall be defined in accordance with the Bank’s long-term disability plan. To the extent that an Award hereunder is subject to Code Section 409A, “Disability” or “Disabled” shall mean that a Participant: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Employees. Except to the extent prohibited under Code Section 409A, if applicable, the Committee shall have discretion to determine if a termination due to Disability has occurred.
(m) “
Disinterested Board Member
” means a member of the Board who: (a) is not a current Employee of the Company or a Subsidiary, (b) does not receive remuneration from the Company or a Subsidiary, either directly or indirectly, for services rendered as a consultant or in any capacity other than as a Director, except in an amount for which disclosure would not be required pursuant to Item 404 of SEC Regulation S-K in accordance with the proxy solicitation rules of the SEC, as amended or any successor provision thereto, (c) does not possess an interest in any other transaction, and is not engaged in a business relationship, for which disclosure would be required pursuant to Item 404(a) of SEC Regulation S-K under the proxy solicitation rules of the SEC, as amended or any successor provision thereto; and (d) is an “independent director” under the rules under Nasdaq or other securities exchange or inter-dealer quotation system on which the Stock is listed or quoted. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to conform to the requirements of a “Non-Employee Directors” under Rule 16b-3 promulgated under the Exchange Act and the corporate governance standards imposed on compensation committees under the listing requirements imposed by any national securities exchange on which the Company lists or seeks to list its securities.
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(n) “
Dividend Equivalent Rights
” means the right, associated with a Restricted Stock Unit, to receive a payment, in cash or stock, as applicable, equal to the amount of dividends paid on a share of the Company’s Stock, as specified in the Award Agreement.
(o) “
Employee
” means any person employed by the Company or any Subsidiary. Directors who are also employed by the Company or a Subsidiary shall be considered Employees under the Plan.
(p)
“Exchange”
means any national securities exchange on which the Stock may from time to time be listed or traded.
(q) “
Exchange Act
” means the Securities Exchange Act of 1934, as amended from time to time.
(r)
“
Exercise Price
” means the price established with respect to an option pursuant to
Section 2.2
.
(s) “
Fair Market Value
” on any date, unless otherwise determined by the Committee, means (i) if the Stock is listed on an Exchange, the closing sales price on such Exchange or over such system on such date or, in the absence of reported sales on such date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) if the Stock is not listed on a securities exchange, “Fair Market Value” shall mean a price determined by the Committee in good faith on the basis of objective criteria consistent with the requirements of Code Section 422 and applicable provisions of Section 409A.
(t)
A termination of employment by an Employee Participant shall be deemed a termination of
employment for “
Good Reason
”
as a result of the Participant’s resignation from the employ of the Company or any Subsidiary upon the occurrence of any of the following events:
(i) a material diminution in Participant’s base salary or base compensation;
(ii) a material diminution in Participant’s authority, duties or responsibilities;
(iii) a change in the geographic location at which Participant must perform his or her duties that is more than twenty-five (25) miles from the location of Participant’s principal workplace on the date of the Change in Control and such relocation results in a material increase in Participant’s normal commuting time; or
(iv) in the event a Participant is a party to an employment or change in control agreement that provides a definition for “Good Reason” or a substantially similar term, then the occurrence of any event set forth in such definition.
(u) “
Immediate Family Member
” means with respect to any Participant: (a) any of the Participant’s children, stepchildren, grandchildren, parents, stepparents, grandparents, spouses, former spouses, siblings, nieces, nephews, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law, brothers-in-law or sisters-in-law, including relationships created by adoption; (b) any natural person sharing the Participant’s household (other than as a tenant or employee, directly or indirectly, of the Participant); (c) a trust in which any combination of the Participant and persons described in section (a) and (b) above own more than fifty percent (50%) of the beneficial interests; (d) a foundation in which any combination of the Participant and persons described in sections (a) and (b) above control management of the assets; or (e) any other corporation, partnership, limited liability company or other entity in which any combination of the Participant and persons described in sections (a) and (b) above control more than fifty percent (50%) of the voting interests.
(v)
“
Involuntary Termination
”
means the Termination of Service by the Company or Subsidiary other than a termination for Cause, or termination of employment by an Employee Participant for Good Reason.
(w) “
ISO
” has the meaning ascribed to it in
Section 2.1(a)
.
(x) “
Non-Qualified Option
” means the right to purchase shares of Stock that is either (i) granted to a Participant who is not an Employee, or (ii) granted to an Employee and either is not designated by the Committee to be an ISO or does not satisfy the requirements of Section 422 of the Code.
(y) “
Participant
” means any individual who has received, and currently holds, an outstanding award under the Plan.
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(z) “
Performance Award
” means an Award that vests in whole or in part upon the achievement of one or more specified performance measures, as determined by the Committee. Regardless of whether an Award is subject to the attainment of one or more performance measures, the Committee may also condition the vesting thereof upon the continued Service of the Participant. The conditions for grant or vesting and the other provisions of a Performance Award (including without limitation any applicable performance measures) need not be the same with respect to each recipient. A Performance Award shall vest, or as to Restricted Stock Units be settled, after the Committee has determined that the performance goals have been satisfied.
Performance measures can include, but are not limited to: book value or tangible book value per share; basic earnings per share (
e.g.,
earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization; or earnings per share); basic cash earnings per share; diluted earnings per share; return on equity; return on average tangible equity; net income or net income before taxes; net interest income; non-interest income; non-interest expense to average assets ratio; cash general and administrative expense to average assets ratio; efficiency ratio; cash efficiency ratio; financial return ratios; core earnings, capital ratios; increase in revenue; total stockholder return; net operating income, operating income; net interest margin or net interest rate spread; stock price; assets, growth in assets, loans or deposits, asset quality level, charge offs, loan reserves, non-performing assets, loans, deposits, growth of loans, loan production volume, non-performing loans, deposits or assets; regulatory compliance or safety and soundness; achievement of balance sheet or income statement objectives and strategic business objectives, or any combination of these or other measures.
Performance measures may be based on the performance of the Company as a whole or on any one or more Subsidiaries or business units of the Company or a Subsidiary and may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures. The terms of an Award may provide that partial achievement of performance measures may result in partial payment or vesting of the award or that the achievement of the performance measures may be measured over more than one period or fiscal year. In establishing any performance measures, the Committee may provide for the exclusion of the effects of one or more items, including but not limited to: (i) extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) dividends declared on the Company’s stock; (iv) changes in tax or accounting principles, regulations or laws; or (v) expenses incurred in connection with a merger, branch acquisition or similar transaction. Subject to the preceding sentence, if the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company or the manner in which the Company or its Subsidiaries conducts its business or other events or circumstances render current performance measures to be unsuitable, the Committee may modify such performance measures, in whole or in part, as the Committee deems appropriate. Notwithstanding anything to the contrary herein, performance measures relating to any Award hereunder will be modified, to the extent applicable, to reflect a change in the outstanding shares of Stock of the Company by reason of any stock dividend or stock split, or a corporate transaction, such as a merger of the Company into another corporation, any separation of a corporation or any partial or complete liquidation by the Company or a Subsidiary. If a Participant is promoted, demoted or transferred to a different business unit during a performance period, the Committee may determine that the selected performance measures or applicable performance period are no longer appropriate, in which case, the Committee, in its sole discretion, may: (i) adjust, change or eliminate the performance measures or change the applicable performance period; or (ii) cause to be made a cash payment to the Participant in an amount determined by the Committee.
(aa) “
Prior Plan
” means the Chemung Financial Corporation 2021 Equity Incentive Plan, as amended from time to time, including the component plans thereunder.
(bb) “
Restricted Stock
”
or
“
Restricted Stock Award
” has the meaning ascribed to it in
Sections 2.1(b)
and
2.3
.
(cc) “
Restricted Stock Unit
” has the meaning ascribed to it in
Sections 2.1(c)
and
2.4.
(dd) “
Restriction Period
” has the meaning set forth in
Section 2.4(b)(ii)
.
(ee)
“
Retirement
” means, unless otherwise specified in an Award Agreement, retirement from employment as an Employee on or after the attainment of age 65, or Termination of Service as a Director on or after the attainment of the latest age at which a Director is eligible for election or appointment as a voting member of the Employer’s Board of Directors under the Employer’s charter, or if there are no age limitations for serving as a Director, then age 70,
provided, however
, that unless otherwise specified in an Award Agreement, an Employee who is also a Director shall not be deemed to have terminated due to Retirement for purposes of vesting of Awards and exercise of Stock Options until both Service as an Employee and Service as a Director has ceased. A non-Employee Director will be deemed to have terminated due to Retirement under the provisions of this Plan only if the non-Employee Director has terminated Service on the Board(s) of Directors of the Company and any Subsidiary or affiliate in accordance with applicable Company policy,
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following the provision of written notice to such Board(s) of Directors of the non-Employee Director’s intention to retire. A non-employee Director who continues in Service as a director emeritus or advisory director shall be deemed to be in Service of the Employer for purposes of vesting of Awards and exercise of Stock Options.
(ff) “
SEC
”
means the United States Securities and Exchange Commission.
(gg) “
Securities Act
” means the Securities Act of 1933, as amended from time to time.
(hh) “
Service
” means service as an Employee, consultant or non-employee Director of the Company or a Subsidiary, as the case may be, and shall include service as a director emeritus or advisory director. Service shall not be deemed interrupted in the case of sick leave, military leave or any other absence approved by the Company or a Subsidiary, in the case of transferees between payroll locations or between the Company, a Subsidiary or a successor.
(ii) “
Stock
” means the common stock of the Company, $0.01 par value per share.
(jj) “
Stock Option
” has the meaning ascribed to it in
Sections 2.1(a)
and
2.2
.
(kk) “
Subsidiary
” means any corporation, affiliate, bank or other entity which would be a subsidiary corporation with respect to the Company as defined in Code Section 424(f) and, other than with respect to an ISO, shall also mean any partnership or joint venture in which the Company and/or other Subsidiary owns more than fifty percent (50%) of the capital or profits interests.
(ll) “
Termination of Service
” means the first day occurring on or after a grant date on which the Participant ceases to be an Employee or Director of, or service provider to, the Company or any Subsidiary, regardless of the reason for such cessation, subject to the following:
(1) The Participant’s cessation as an Employee or service provider shall not be deemed to occur by reason of the transfer of the Participant between the Company and a Subsidiary or between two Subsidiaries.
(2) The Participant’s cessation as an Employee or service provider shall not be deemed to occur by reason of the Participant’s being on a leave of absence from the Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the Participant’s Services provided such leave of absence does not exceed six months, or if longer, so long as the Employee retains a right to reemployment with the Company or Subsidiary under an applicable statute or by contract. For these purposes, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Employee will return to perform Services for the Company or Subsidiary. If the period of leave exceeds six months and the Employee does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following such six-month period. For purposes of this sub-section, to the extent applicable, an Employee’s leave of absence shall be interpreted by the Committee in a manner consistent with Treasury Regulation Section 1.409A-1(h)(1).
(3) If, as a result of a sale or other transaction, the Subsidiary for whom Participant is employed (or to whom the Participant is providing services) ceases to be a Subsidiary, and the Participant is not, following the transaction, an Employee of or service provider to the Company or an entity that is then a Subsidiary, then the occurrence of such transaction shall be treated as the Participant’s Termination of Service caused by the Participant being discharged by the entity for whom the Participant is employed or to whom the Participant is providing Services.
(4) Except to the extent Section 409A of the Code may be applicable to an Award, and subject to the foregoing paragraphs of this sub-section, the Committee shall have discretion to determine if a Termination of Service has occurred and the date on which it occurred. In the event that any Award under the Plan constitutes Deferred Compensation (as defined in
Section 2.6
), the term Termination of Service shall be interpreted by the Committee in a manner consistent with the definition of “Separation from Service” as defined under Code Section 409A and under Treasury Regulation Section 1.409A-1(h)(ii). For purposes of this Plan, a “Separation from Service” shall have occurred if the Bank and Participant reasonably anticipate that no further Services will be performed by the Participant after the date of the Termination of Service (whether as an employee or as an independent contractor) or the level of further Services performed will be less than 50% of the average level of bona fide Services in the 36 months immediately preceding the Termination of Service. If a Participant is a “Specified Employee,” as defined in Code Section 409A and any payment to be made hereunder shall be determined to be subject to Code Section 409A, then if required by Code Section 409A, such payment or a portion of such payment (to the minimum extent possible) shall be delayed and shall be paid on the first day of the seventh month following Participant’s Separation from Service.
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(5) With respect to a Participant who is a director, a Termination of Service as a Director will not be deemed to have occurred if the Participant continues as a director emeritus or advisory director. With respect to a Participant who is both an Employee and a Director, termination of employment as an Employee shall not constitute a Termination of Service for purposes of the Plan so long as the Participant continues to provide Service as a Director or director emeritus or advisory director.
(mm) “
Immediate Family Member
”
means with respect to any Participant: (a) any of the Participant’s children, stepchildren, grandchildren, parents, stepparents, grandparents, spouses, former spouses, siblings, nieces, nephews, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law, brothers-in-law or sisters-in-law, including relationships created by adoption; (b) any natural person sharing the Participant’s household (other than as a tenant or employee, directly or indirectly, of the Participant); (c) a trust in which any combination of the Participant and persons described in section (a) and (b) above own more than fifty percent (50%) of the beneficial interests; (d) a foundation in which any combination of the Participant and persons described in sections (a) and (b) above control management of the assets; or (e) any other corporation, partnership, limited liability company or other entity in which any combination of the Participant and persons described in sections (a) and (b) above control more than fifty percent (50%) of the voting interests.
Section 8.2
In this Plan, unless otherwise stated or the context otherwise requires, the following uses apply:
(a) Actions permitted under this Plan may be taken at any time and from time to time in the actor’s reasonable discretion;
(b) References to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing the statute or its successor, as in effect at the relevant time;
(c) In computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until” and “ending on” (and the like) mean “to, but excluding”;
(d) References to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality;
(e) Indications of time of day mean Eastern time;
(f) The word “including” means “including, but not limited to”;
(g) All references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Plan unless otherwise specified;
(h) All words used in this Plan will be construed to be of such gender or number as the circumstances and context require;
(i) The captions and headings of articles, sections, schedules and exhibits appearing in or attached to this Plan have been inserted solely for convenience of reference and shall not be considered a part of this Plan nor shall any of them affect the meaning or interpretation of this Plan or any of its provisions;
(j) Any reference to a document or set of documents in this Plan, and the rights and obligations of the parties under any such documents, shall mean such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof; and
(k) Unless otherwise determined by the Committee, all accounting terms not specifically defined herein shall be construed in accordance with GAAP.
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TABLE OF CONTENTS
Proxy Summary iGeneral Voting InformationAdditional Voting InformationAdditional Shareholder InformationVoting Proposal 1 Election of DirectorsVoting Proposal 2 Advisory Approval of the Corporations 2023 Executive Compensation (Say-on-Pay)Voting Proposal 3 - Approval of the Corporation's 2025 Equity Incentive PlanVoting Proposal 4 - Ratification of the Selection of Crowe LLP as the Corporation's Independent Registered Public Accounting Firm for 2024Audit Committee ReportCorporate GovernanceNamed Executive OfficersStock Ownership InformationCompensation Discussion and AnalysisExecutive OfficersExecutive CompensationPay Versus PerformanceAgreements with Named Executive OfficersPotential Payments TableDelinquent Section 16(a) ReportsShareholder Proposals for Inclusion in the 2025 Proxy Statement