The Board is divided into three classes of directors, as equal in number as possible, with generally, one class to be elected each year for a term of three years. Following this year's one-year term elections, it is the Board's intent to re-balance the classes in 2019. The Board is not aware that any nominee named in this Proxy Statement will be unable or unwilling to serve as a director.
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 andof 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:
•After such review and consideration, the Nominating and Governance Committee recommends that the Board select the slate of director nominees.
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 below.
Annual Meeting Shareholder Proposal Process:
Shareholder recommendationsSubmissions of Director Nominees for nominees tothe 2023 Annual Meeting:
Any shareholder submission of a candidate for the Board to consider as one of its nominees for director at the 2023 Annual Meeting of Shareholders must be directed in writing not later than 120 days prior to the anniversary date on which the Corporation'sCorporation’s proxy statement was mailed to shareholders in connection with the previous year'syear’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'sCorporation’s proxy material 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 athe record date; (vii) detailed information aboutof 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.
Chemung Financial’sA shareholder may act directly to nominate his or her own director candidates at our 2023 Annual Meeting of Shareholders by following the procedures set forth in the subsection titled “Shareholder Proposals for Inclusion in the 2023 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 establish anand applicable rules of the SEC, including minimum 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 date Proxy Statements were mailed to shareholders in connection with the previous year’s annual meetingBoard.
Nominee and Continuing Director Biographies:
The biography of shareholders. In the event that no annual meeting was held in the previous year or the dateeach of the annual meeting has been changed by more than thirty (30) days fromnominees and continuing directors listed on the date contemplatedfollowing page contain information regarding the individuals’ service as a director, business experience, and other positions, if any, held currently or at any time during the timelast five years, and individual experience, qualifications, and skills that contribute to the Board’s effectiveness as a whole. Age as of January 1, 2022.
Nominees for Election (term expiring in 2025, if elected)
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| Ronald M. Bentley,age 69, 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. |
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| David M. Buicko, age 68, has served as 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. |
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| Robert H. Dalrymple, age 71, 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. |
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| Jeffrey B. Streeter, age 54, has served as a director since 2018. Since 2002, he has served as President of Streeter Associates, a general construction firm based in Elmira, New York. Qualifications to serve on the Board include experience in all aspects of business ownership, strategic and financial planning, people management and organizational skills. |
Continuing Directors (term expiring in 2023)
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| Richard E. Forrestel Jr., age 64, 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. |
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| Stephen M. Lounsberry III, age 68, 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. |
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| Anders M. Tomson, age 54, 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. |
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| G. Thomas Tranter Jr., age 67, 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. Qualifications to serve on the Board include leadership, business development and managerial skills together with extensive experience in government relations and community development. |
Continuing Directors (term expiring in 2024)
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| Raimundo C. Archibold Jr., age 63, 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. |
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| David J. Dalrymple, age 68, 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. |
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| Denise V. Gonick, age 55, has served as 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. |
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| Thomas R. Tyrrell, age 71, has served as a director since 2014. Since 2014, he has served as Vice President of NFP Corp. (formerly Rose & Kiernan, Inc.), 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. |
Director Retiring as 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. A copy of the Nominating and Governance Committee Charter can be viewed on the Bank’s website at:2022 Annual Meeting
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| Larry H. Becker, age 82, has served as a director since 2011. Since 1983, he has served as COO of Windsor Development, Inc., a regional full service real estate development company that specializes in the development, acquisition and management of supermarket-anchored properties. Prior to founding Windsor Development, Mr. Becker was a founding member of Teal, Becker & Chiaramonte CPAs, an accounting firm in the New York State Capital Region. Qualifications to serve on the Board include more than 40 years of experience owning and managing various business entities in the Capital Region of New York State, experience in corporate finance and accounting and his experience serving on the Board of Directors of Capital Bank & Trust Company. Mr. Becker will retire from the Corporation's and Bank's Boards as of June 7, 2022. |
http://www.snl.com/IRW/govdocs/100690
Compensation of Directors
Director Compensation:
The Compensation Committee periodically reviews and is responsible for the compensationdesign, implementation and administration of the Corporation’s compensation program for members of the Board of Directors and makes recommendations to the full 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. In 2020, McLagan conducted an independent and objective analysis of all elements of compensation, individually and in aggregate, relative to market and peer group practices. A primary data source used in the McLagan Report for determining the competitive market for Director compensation was the information publicly disclosed by a peer group of other publicly traded banks. This peer group was developed by McLagan, with input from the Compensation Committee, using objective parameters that reflect bank holding companies of similar asset size and business model located in our general geographic region. With this information, the Board determined that the Director compensation fee structure would change following the approval of the 2021 Chemung Financial Corporation Equity Incentive Plan, which was approved by shareholders at the Annual Meeting held on June 8, 2021 and the Bank and the respective Board committees.would be retroactive to January 2021.
Each non-employee director of the Corporation and Bank receives ana flat annual retainer fee of $5,500.$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 and is based upon the number of meetings held during the year. 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 receives a fee of $500 for each meetingserving as Chair of the Corporation’s and Bank’s Board, and its committees attended and the chair of each committee receives $600 for each committee meeting attended. The Chairman of the Boardor 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 $7,750. One fee is paid for attendance at meetings that serve both the CorporationCorporation’s and the Bank.Bank’s Board and committees. Mr. Tomson received no cash compensation for his service as a director in 2017.2021.
The following table presents the various cash fees paid to non-employee directors in 2021 for their service on the Corporation’s and Bank’s Boards and committees.
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BASIC ANNUAL RETAINER FEES(1) |
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| 2021 | ($) |
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| Basic Annual Retainer | 11,500 |
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| Chair of the Board Supplemental Retainer | 7,750 |
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| Chair of the Board Fees | 5,000 |
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| Chair of Audit Committee Supplemental Retainer | 2,875 |
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| Chair of Audit Committee Chair Fees | 1,250 |
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| Chair of Loan Committee Chair Fees | 3,500 |
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| Chair of Trust Committee Chair Fees | 1,500 |
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| Chair of Compensation Committee Chair Fees | 750 |
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| Chair of Nominating and Governance Committee Chair Fees | 750 |
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| Chair of Asset Liability Committee Chair Fees | 1,000 |
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MEETING FEES(2) |
| ($) |
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| Board of Directors | 500 |
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| Chair of the Board | 500 |
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| Committees of the Board | 500 |
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| Chair of Committees | 500 |
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(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. |
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(2) Based on per meeting attendance. |
The Directors’ Deferred Fee Plan allows non-employee directors of each of Chemung Financial andthe 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 each Chemung Financial andthe 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 the termination of the director’s service with Chemung Financialthe Corporation and/or the 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 account.accounts. Currently, there is one non-active participant in the Directors’ Deferred Fee Plan.
Pursuant
2021 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, 2021.
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Directors | Fees Earned or Paid in Cash | Number of Shares Awarded (1) | Stock Awards Market Value(2) |
All Other Compensation | |
2021 Total Compensation |
| ($) | ($) | ($) | ($) | | ($) |
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| Raimundo C. Archibold Jr. | 12,500 | 615 | 28,000 | — | | 40,500 |
| Larry H. Becker | 28,000 | 615 | 28,000 | — | | 56,000 |
| Ronald M. Bentley | 30,500 | 637 | 29,000 | 4,660 | (3)(4) | 64,160 |
| David M. Buicko | 34,625 | 706 | 32,125 | — | | 66,750 |
| David J. Dalrymple | 48,000 | 895 | 40,750 | — | | 88,750 |
| Robert H. Dalrymple | 32,500 | 703 | 32,000 | — | | 64,500 |
| Richard E. Forrestel Jr. | 30,000 | 615 | 28,000 | — | | 58,000 |
| Denise V. Gonick | 26,500 | 615 | 28,000 | 529 | (3) | 55,029 |
| Stephen M. Lounsberry III | 29,750 | 637 | 29,000 | — | | 58,750 |
| Jeffrey B. Streeter | 28,000 | 615 | 28,000 | — | | 56,000 |
Richard W. Swan(5) | 30,000 | 637 | 29,000 | — | | 59,000 |
| G. Thomas Tranter Jr. | 31,000 | 648 | 29,500 | — | | 60,500 |
| Thomas R. Tyrrell | 32,250 | 637 | 29,000 | — | | 61,250 |
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(1) Represents the number of shares of the Corporation's unvested common stock awarded to each Director which will fully vest on the first anniversary of the grant date. Any fractional shares are rounded up to the next whole share. |
(2) Represents the grant date fair value for awards earned in 2021. The assumptions used to determine the value of stock awards are described in Note 14 of the Corporation's audited consolidated financial statements contained in the Corporation's Form 10-K. |
(3) Represents mileage paid to certain directors to attend Board and committee meetings during 2021. |
(4) Represents $1,500 in Advisory Board fees earned by Mr. Bentley during 2021. |
(5) Mr. Swan retired from the Board on June 8, 2021. |
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| Voting Proposal 2 - Advisory Approval of the Corporation's 2021 Executive Compensation ("Say-On-Pay") |
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Summary and Board Recommendation:
Proposal 2 is a proposal to approve, on an advisory basis, the Corporation’s 2021 executive 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 executive compensation is not binding on the Corporation, Board or the Compensation Committee of the Board.
At the 2021 Annual Meeting, shareholders voted to approve the compensation program of the Corporation’s NEOs for the fiscal year ended December 31, 2020. After a comprehensive market review and in light of strong stockholder support, we concluded that no substantial changes to our 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 this proposal.
•Vote Recommendation: Your Board recommends you vote “For,” on an advisory basis, the Corporation’s executive 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 Restricted Stock Plan provide for vesting over a five year period.
2021 Equity Incentive Plan:
Our shareholders approved the Chemung Financial Corporation 2021 Equity Incentive Plan (the "2021 Equity Incentive Plan") on June 8, 2021. The purpose of the 2021 Equity Incentive Plan is 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 stockholders 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. No further awards will be granted under the Chemung Financial Corporation 2014 Omnibus Plan, including its component plans (the "2014 Omnibus Plan"), and such plan will remain in existence solely for the purpose of administering outstanding grants thereunder. Employees and directors of the Corporation or its subsidiaries are eligible to receive awards under the 2021 Equity Incentive Plan, except that non-employees may not be granted incentive stock options.
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 2021 Equity Incentive Plan is equal to 170,000 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. 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 2021 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 2021 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 2021 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 2021 Equity Incentive Plan.
The 2021 Equity Incentive Plan is administered by the members of the Corporation’s Compensation Committee who are “Disinterested Board Members,” as defined in the 2021 Equity Incentive Plan. The Compensation Committee has full and exclusive power within the limitations set forth in the 2021 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 2021 Equity Incentive Plan’s purpose; and (iv) interpreting the provisions of the Chemung Financial2021 Equity Incentive Plan and any award agreement. The 2021 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.
Set forth below is information as of December 31, 2021 regarding equity compensation plans categorized by those plans that have been approved by shareholders and those plans that have not been approved by shareholders.
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| 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) |
| (#) | ($) | (#) |
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| Equity compensation plans approved by shareholders | -- | -- | 149,237 | |
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| Equity compensation plans not approved by shareholders | -- | -- | -- |
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| Total | -- | -- | 149,237 | |
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(1) Represents the number of shares that may be granted as stock awards under the Corporation’s 2021 Equity Incentive Plan. |
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| Voting Proposal 3 – Ratification of the Selection of Crowe LLP as the Corporation’s Independent Registered Public Accounting Firm for 2022 |
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Summary and Board Recommendation:
The Audit Committee of the Corporation Directors’ Compensation Plan, additional compensationhas 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, 2022. 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 paidnot required, the Board believes that it is important to each non-employee directorgive 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 sharesfuture 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 an amount equalperson 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, 2022.
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 2021. The charter was approved in February 2022 and can be viewed on the Bank’s website at: https://s25.q4cdn.com/655202364/files/doc_downloads/governance/Audit-Committee-Charter.pdf
On March 21, 2022, the Audit Committee appointed the independent registered public accounting firm, Crowe LLP, as the Corporation’s independent auditors for the year ending December 31, 2022.
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, 2021. 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 total amountBoard of cash fees earned by each director duringDirectors that the audited consolidated financial statements be included in the Corporation’s Annual Report on Form 10-K for the year determinedended December 31, 2021 to be filed with the Securities and Exchange Commission.
The Audit Committee:
David M. Buicko, Chairman Jeffrey B. Streeter
Larry H. Becker G. Thomas Tranter Jr.
David J. Dalrymple Thomas R. Tyrrell
Richard E. Forrestel Jr.
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.
Fees Paid to Independent Registered Public Accounting Firm
Fees billed by Crowe LLP relating to the years ended December 2021 and 2020 are provided in the following table. All services provided by Crowe in 2021 and 2020 were pre-approved by the Audit Committee.
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| Type of Service | Fiscal Years Ended
December 31, |
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| 2021 | | 2020 |
| ($) | | ($) |
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| Audit Fees | 335,000 | | | 371,800 | |
| Audit-Related Fees | 30,000 | | | 8,000 | |
| Tax Fees | — | | — |
| Captive Insurance Subsidiary Fees | 23,050 | | | 22,750 | |
| All Other Fees | — | | — |
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| Total Fees | 388,050 | | | 402,550 | |
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, additional audit procedures required to be performed in response to the COVID-19 pandemic, and services that are normally provided by Crowe LLP in connection with statutory and regulatory filings or engagements.
The $30,000 in Audit-Related Fees for 2021 consisted of $20,000 for additional review of new accounting software and $10,000 for services related to the consent issued with the filing of the Form S-8 dated June 21, 2021 with the SEC. The $8,000 in Audit-Related Fees for 2020 consisted of an attestation of the Corporation’s financial statements as of December 31, 2019 and December 31, 2018 related to the S-3 filing on April 27, 2020 for the Corporation’s Shelf Registration Statement.
The Captive Insurance Subsidiary Fees for 2021 and 2020 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.
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 averageultimate decision-making body of the closing pricesCorporation, except for those matters reserved to or shared with the shareholders. The Board selects and oversees the members of a sharesenior management, who are charged by the Board with conducting the business of the Corporation's common stockCorporation. The directors are responsible to exercise their business judgment as quotedthey 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 NASDAQ Stock Market for eachletter and spirit of regulatory and legal mandates. At least once a year, the prior thirty trading days ending on December 31, 2017, and paidBoard will take an active role in January of the following year. For his service as a director on the respective Boardsreviewing strategic planning of the Corporation and will exercise oversight over the Bank, Mr. Tomsonimplementation of strategic planning.
The Nominating and Governance Committee of the Board is paidresponsible 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 director’s feegroup in sharesthe context of common stockthe 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 Proposals for Inclusion in the 2023 Proxy Statement” 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 an amount equalthe “Director Nomination Process” in valuethe “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 average cash compensation awardedincumbent’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 non-officernew candidates for director. Additionally, the Corporation’s Bylaws provide that directors whowill 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.
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 familiar 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 2021. 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.
Board Diversity Matrix (as of December 31, 2021):
The Company believes in the benefits that diversity brings to the Board of Directors. Based upon voluntary self-identification by each member of the Company's Board of Directors, the diversity composition of the Board of Directors for the current year is disclosed as follows:
| | | | | | | | | | | | | | |
| Total Number of Directors: 13 |
| Female | Male | Non-Binary | Did Not Disclose |
| Part I: Gender Identity: |
| Directors | 1 | 8 | — | 4 |
| Part II: Demographic Background |
| African American or Black | — | — | — | — |
| Alaskan Native or Native American | — | — | — | — |
| Asian | — | — | — | — |
| Hispanic or Latinx | — | 1 | — | — |
| Native Hawaiian or Pacific Islander | — | — | — | — |
| White | 1 | 7 | — | — |
| Two or More Races or Ethnicities | — | — | — | — |
| LGBTQ+ | — | — | — | — |
| Did Not Disclose Demographic Background | 4 |
Anti-Hedging 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.
Board Committees:
The Board has four standing committees whose membership and responsibilities must meet certain NASDAQ® and SEC requirements. These standing committees are the Audit, Enterprise Risk, 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. One such additional committee that the Board has established is the Executive Committee, which is described later in this section.
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 four standing Committees are independent directors, as defined (and generally required) under applicable law, rules 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 | Enterprise
Risk
Committee | Compensation
& Personnel Committee | Nominating & Governance Committee |
| Raimundo C. Archibold Jr. | | ✔ | | |
| Larry H. Becker | ✔ | | | |
| Ronald M. Bentley | | | ✔ | |
| David M. Buicko | Chair | | | |
| David J. Dalrymple | ✔ | Chair | ✔ | ✔ |
| Robert H. Dalrymple | | | ✔ | ✔ |
| Richard E. Forrestel Jr. | ✔ | ✔ | | |
| Denise V. Gonick | | ✔ | ✔ | ✔ |
| Stephen M. Lounsberry III | | ✔ | Chair | ✔ |
| Jeffrey B. Streeter | ✔ | ✔ | | |
| G. Thomas Tranter Jr. | ✔ | ✔ | ✔ | ✔ |
| Thomas R. Tyrrell | ✔ | | ✔ | Chair |
Each of the four 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://s25.q4cdn.com/655202364/files/doc_downloads/governance/
Committee Descriptions
A description of each of the four standing Committees, as well as the Executive Committee, 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 earnings and financial releases and 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 2021. For additional information, see the “Audit Committee Report” section.
•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 make recommendations to the Board (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, executive officers and chief auditor. 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 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 four times in 2021. For additional information, see the “Director Compensation” 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 four times in 2021.
•Enterprise Risk Committee: Mr. David J. Dalrymple is the Chair of the Enterprise Risk Committee; he has served in this role since the establishment of the committee in 2016. The responsibilities of the Enterprise Risk Committee include monitoring the Corporation’s compliance with legal and regulatory requirements, key risk areas to assess the effectiveness of risk management policies and procedures, reviewing management’s assessment of the enterprise risk profile of the Corporation including applicable ratios, trends and key risk indicators for credit, market, liquidity, operational, compliance and legal reputation and strategic risk, environmental, social and corporate governance risk, and the aggregation and correlation of individual risk exposures. At least annually, the committee will review a vendor report which provides a third party risk management program overview, including any vendor
issues along with status of critical, high risk, and new vendor due diligence. The committee will review a physical safety and security annual report which provides a timeline of all incidents related to workplace safety and health as well as physical security for the previous twelve (12) monthsmonths. The committee reviews the information security report on a quarterly basis outlining strategic objectives, program changes, phishing tests and vulnerability management and trends. The committee is provided with an annual incentive compensation evaluation which reviews all incentive compensation plans and assigns a risk rating to each plan. The committee will be apprised of environmental, social and governance initiatives from our management-level committee through the Enterprise Risk Management Dashboard, which is presented to the committee on a quarterly basis. Major fraud losses are reported to the committee on an annual basis citing any trends, concerns, and recommendations for improvement. At the beginning of the year, a training plan for the employees and directors is presented to the committee for review; this outlines all regulatory required training for the Corporation. The Enterprise Risk Committee met four times in 2021.
•Executive Committee: The main purpose of the Executive Committee is to act on matters that may require immediate attention at a time when it is impractical or inconvenient to convene the entire Board and serves in a dual capacity for the Corporation and the Bank. The Executive Committee has the full authority of the Board, except those powers that are expressly reserved to the Board under law or the Corporation’s Bylaws. For example, the committee is not authorized pursuant to the Bylaws to make submissions to shareholders of any action that requires shareholders’ approval, fill vacancies on the Board of Directors or in any committee, fix compensation of the Board or any committee, amend or repeal the Bylaws or the adoption of new Bylaws or amend or repeal any resolution of the Board. Because the Board believes proper governance involves the entire Board in the previous year.Corporation’s decision-making process, the Board strives to keep meetings of the Executive Committee to a minimum. The Executive Committee is currently comprised of the Board Chair, Mr. D. Dalrymple and Messrs. Bentley, Buicko, R. Dalrymple, Lounsberry, Tomson, Tranter and Tyrrell. In 2021, the Executive Committee met two times.
11Executive Session with Independent Directors
In connection with Mr. Bentley’s continued services asaddition to regular Board and committee meetings, directors meeting the general independence test under NASDAQ® meet, at least, two times a part-time employeeyear 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 2021.
Attendance
In 2021, the Corporation’s Board held twelve regularly-scheduled meetings and the Board of the Bank as an advisor in 2017, Mr. Bentley received a salary of $50,000, a company-owned vehicle and reimbursement for other business expenses. Mr. Bentley was not eligible to participate in any benefit plansalso held twelve regularly-scheduled meetings. Each then-current director attended at least 75% of the Bank, except for certain health plans. For 2018Board meetings and beyond, Mr. Bentley has agreedcommittee meetings to serve as a consultant to the Bank and Corporation pursuant to a Post-Employment Consulting Agreement. Mr. Bentley will receive an annual consulting fee of $50,000, and reimbursed for other reasonable business expenses. With the exception of benefit plans available to our non-employee directors, Mr. Bentley will not be eligible to participate in any employee benefit plans of the Bankwhich he or Corporation.
In 2017, no director or director nominee received any compensation or payment from a third party in connection with his or her candidacy or board service.
Non-Officer Director Compensation Table
|
| | | | | | | | | | | | | | | | | |
| Directors | | Fees Earned or Paid in Cash | | Number of Shares Awarded (1) | | Market Value of Shares (2) | All Other Compensation(4) | | Total |
| Larry Becker | |
| $20,300 |
| | 406 | |
| $19,529 |
|
| $0 |
| |
| $39,829 |
|
| Ronald M. Bentley | |
| $23,000 |
| | 460 | |
| $22,126 |
|
| $50,000 |
| |
| $95,126 |
|
| Bruce W. Boyea | |
| $17,000 |
| | 340 | |
| $16,354 |
|
| $0 |
| |
| $33,354 |
|
David M. Buicko(3) | |
| $0 |
| | 0 | |
| $0 |
|
| $0 |
| |
| $0 |
|
| David J. Dalrymple | |
| $39,850 |
| | 796 | |
| $38,288 |
|
| $0 |
| |
| $78,138 |
|
| Robert H. Dalrymple | |
| $20,000 |
| | 400 | |
| $19,240 |
|
| $0 |
| |
| $39,240 |
|
| Clover M. Drinkwater | |
| $20,900 |
| | 418 | |
| $20,106 |
|
| $0 |
| |
| $41,006 |
|
Denise V. Gonick(3) | |
| $0 |
| | 0 | |
| $0 |
|
| $0 |
| |
| $0 |
|
| Stephen M. Lounsberry III | |
| $25,100 |
| | 501 | |
| $24,098 |
|
| $0 |
| |
| $49,198 |
|
| John F. Potter | |
| $22,200 |
| | 444 | |
| $21,356 |
|
| $0 |
| |
| $43,556 |
|
Jeffrey B. Streeter(3) | |
| $0 |
| | 0 | |
| $0 |
|
| $0 |
| |
| $0 |
|
| Richard W. Swan | |
| $21,300 |
| | 426 | |
| $20,491 |
|
| $0 |
| |
| $41,791 |
|
| G. Thomas Tranter Jr. | |
| $21,500 |
| | 430 | |
| $20,683 |
|
| $0 |
| |
| $42,183 |
|
| Kevin B. Tully | |
| $24,600 |
| | 492 | |
| $23,665 |
|
| $0 |
| |
| $48,265 |
|
| Thomas R. Tyrrell | |
| $22,000 |
| | 440 | |
| $21,164 |
|
| $0 |
| |
| $43,164 |
|
(1) The total number of shares awarded are determined by dividing the total amount of the annual retainer and fees by the grant price of the shares. Any fractional shares are rounded up to the next whole share. |
(2) These amounts are based on the grant date fair market value of the shares as reported in Note 13 of the Corporation's audited financial statements contained in the Corporation's Form 10-K for the year ended December 2017. . Pursuant to this formula, the rounded, per share market value, at December 31, 2017 was $48.10. |
(3) Messrs. Buicko and Streeter and Ms. Gonick joined the Board in March 2018 and were not yet eligible for participation in the Plan. |
(4) Represents $50,000 in salary in connection with Mr. Bentley's continued employment with the Bank. |
Communicating with the Board
Shareholders may communicate in writing with the Board or with individual directors by contacting the Corporation’s Corporate Secretary at Chemung Financial Corporation, One Chemung Canal Plaza, Elmira, New York 14901. The Corporate Secretary will relay the question or message to the specific director identified by the shareholder or, if no specific director is requested, to the CEO.
Directors Attendance at Annual Meetings
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. The Corporation will continue to encourage such attendance.Annual Meeting of Shareholders. In 2017, nine2021, eleven of thirteen then-current directors attended the Annual Meeting of Shareholders.
Code of Ethics
The Board’s Role in Risk Oversight
The Board of Directors has adopted a Code of Ethics for senior financial officers, which applies to the Bank’s CEO, CFO, Chief Auditor 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://chemungfinancial.q4ir.com/corporate-information/documents/default.aspx
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 2021, 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 2021. No member of the Compensation Committee is a current or former employee of the Corporation or Bank. 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 Buicko, Becker, D. Dalrymple, Forrestel, Streeter, Tranter 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, Bentley, D. Dalrymple, R. Dalrymple, Gonick, Tranter and Tyrrell, who constitute the Compensation Committee, all meet the independence requirements of NASDAQ® and the SEC for Compensation Committee members.
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 us 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 $51.2 million as of December 31, 2021. At December 31, 2021, 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, 2021, 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 payment of $8,000. The total estimated lease payments beginning in January 2021 through the end of the term of the lease are expected to be $937,677. Mr. Becker is COO of Windsor Development Group, Inc. and the Bank leases its branch located at 1365 New Scotland Road, Slingerlands, New York, under a lease agreement through July 2027 with a monthly rent payment of $4,000. The total estimated lease payments beginning January 2021 through the end of the term of the lease are expected to be $289,039.
Board Risk Oversight:
The Board is responsible for establishing the level of risk that the Corporation will take. The Board approves the Corporation'sCorporation’s overall business strategies and significant policies, including those related to managing risk.risks. The Board of Directors has approved significant policies to establish risk tolerances for the institution'sinstitution’s activities and periodically reviews risk exposure limits to align with the changes in the institution'sinstitution’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. The Chief Risk Officer (the “CRO”) reports to the CEO and the Enterprise Risk Committee. 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 Bank’sCorporation’s and Corporation'sBank’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, Internal Auditthe CRO prepares and presents an annual report to the Compensation Committee and the Enterprise Risk Committee verifying the plans do not encourage excessive risk-taking. This risk assessment includes an evaluation of: (1)of the design of ourthe Bank’s incentive plans to ensure they satisfy bank regulatory requirements and do not encourage excessexcessive or imprudent risk taking; (2)risk-taking, the Board of Director’sBoard’s oversight of our incentive compensation program to ensure that there is effective governance over the program;program and (3) the internal controls over determining incentive payments and a review of the accuracy of the incentive payments and any related accruals. At the present time, the Compensation Committee, Enterprise Risk 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 of a moderate portion of the employees’ total compensation. See the “Compensation Discussion and Analysis” section on page 15 forFor more information, aboutsee the Corporation’s incentive compensation plans.
PROPOSAL 2:
APPROVAL ON A NON-BINDING, ADVISORY BASIS, OF THE COMPENSATION
OF THE NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) added Section 14A to the Exchange Act, which requires the Corporation to provide our shareholders an opportunity to vote to approve, on a non-binding advisory basis, the compensation of our NEOs Say-On-Pay, as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission (“SEC”). As described in greater detail under the heading “Compensation Discussion and Analysis”, section.
Environmental, Social and Governance:
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 seeksand Bank to alignfocus better on how we impact our key stakeholders and communities, while also strengthening our business performance.
As presented on the interestsBank’s website, “Chemung Financial embraces its corporate responsibility and commits to fully supporting every community within our footprint. This responsibility requires inclusion, volunteerism, financial support, thoughtful partnerships and the responsible management of our NEOsenvironmental 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 interestsBoard:
Shareholders may communicate to the Board, to an individual director or directors, or to a particular committee of the shareholders.
This vote is advisory, which means that the vote on executive compensation is not binding on theBoard 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, our BoardOne Chemung Canal Plaza, Elmira, New York 14901. If a shareholder intends such communication to be delivered to an individual director, specific directors, or the Compensation Committeeparticular committee of the Board. Board, we request that this information be prominently displayed at the beginning of the communication.
The vote onCorporation’s Named Executive Officers for 2021 were Anders M. Tomson, President and CEO; Karl F. Krebs, Executive Vice President, Chief Financial Officer (“CFO”) 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.
| | | | | | | | | | | | | | |
| Stock Ownership Information |
|
The following table sets forth the resolution is not intended to address any specific element of compensation, but rather relates to the overall compensationbeneficial ownership of the Corporation’s NEOs,common stock, as described in this Proxy Statement in accordance withdefined under SEC rules, as of April 8, 2022, the compensation disclosure rulesrecord date for the 2022 Annual Meeting, for each director, director nominee and NEO of the SEC. AtCorporation, as well as for all directors and executive officers as a group. Unless otherwise indicated, each of the 2017 Annual Meeting, shareholders votedbeneficial owners named below has sole voting and investment authority with respect to approve the compensation programshares 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. | 615 | (1) | * |
| Larry H. Becker | 37,033 | (1) | * |
| Ronald M. Bentley | 51,753 | (1) | 1.11 | % |
| David M. Buicko | 5,951 | (1) | * |
| David J. Dalrymple | 40,816 | (1)(2) | * |
| Robert H. Dalrymple | 246,932 | (1)(3) | 5.28 | % |
| Richard E. Forrestel Jr. | 12,775 | (1) | * |
| Denise V. Gonick | 3,187 | (1)(4) | * |
| Stephen M. Lounsberry III | 19,302 | (1)(5) | * |
| Jeffrey B. Streeter | 12,192 | (1)(6) | * |
| Anders M. Tomson | 46,474 | (7)(9) | * |
| G. Thomas Tranter Jr. | 25,736 | (1) | * |
| Thomas R. Tyrrell | 7,308 | (1) | * |
| Loren D. Cole | 8,396 | (7)(8)(9) | * |
| Peter K. Cosgrove | 2,930 | (9) | * |
| Daniel D. Fariello | 6,903 | (7)(9) | * |
| Karl F. Krebs | 11,516 | (7) | * |
Directors and executive officers as a group (20 people) | 572,435 | | 12.25 | % |
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| *Less than 1% based upon 4,674,026 outstanding shares as of April 8, 2022. |
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(1) 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 the directors for their annual stock compensation. Directors Archibold, Becker, Bentley, Buicko, D. Dalrymple, R. Dalrymple, Forrestel, Gonick, Lounsberry, Streeter, Tranter and Tyrrell own 615, 615, 637, 706, 895, 703, 615, 615, 637, 615, 648 and 637, respectively. |
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(2) Includes 20,646 shares held solely by David J. Dalrymple and 20,170 shares held in trust over which Mr. Dalrymple has voting and dispositive powers. |
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(3) Includes 1,469 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. |
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(4) Includes 1,987 shares held solely by Denise V. Gonick and 1,200 shares held jointly with her spouse. |
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(5) Excludes 16,091 shares that Stephen M. Lounsberry 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. |
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(6) Includes 2,192 shares held solely by Jeffrey B. Streeter and 10,000 shares held in a revocable trust. |
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(7) 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, Fariello and Krebs own 12,747, 3,621, 1,387 and 5,729 shares, respectively. |
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(8) Includes 11,082 shares owned by spouses of certain officers and directors of which such officers and directors disclaim beneficial ownership. |
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(9) 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 and Fariello own 3,985, 3,509, 2,709 and 3,503, respectively. Mr. Krebs’ restricted stock vested in February, 2021, when he turned 65. |
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5% Shareholders:
The following table sets forth the beneficial ownership of the Corporation’s NEOscommon stock as of April 8, 2022, the record date for the fiscal year ended December 31, 2016, including 2016 bonuses that were paid in 2017. The Corporation asks that shareholders again vote2022 Annual Meeting, by four holders known by us to approvebe the Corporation’s compensation program for its NEOs as described in this Proxy Statement.
The compensationbeneficial owner of more than 5% of the outstanding shares of the Corporation’s NEOs is disclosed incommon 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.
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| Name | Number of Shares Owned | | Percentage of Shares Owned |
| More than 5% Owner (other than directors): | (#) | | (%) |
|
| Chemung Canal Trust Company | 277,877 | (1) | 5.90 | % |
| One Chemung Canal Plaza, P.O. Box 1522 | | | |
| Elmira, New York 14902-1522 | | | |
| | | |
| Dalrymple Family Limited Partnership | 339,242 | (2) | 7.30 | % |
| Henry M. Dalrymple | | | |
| Matthew D. Dalrymple | | | |
| 2105 S. Broadway | | | |
| Pine City, New York 14871 | | | |
| | | |
| RD Wood LLC | 281,095 | (3) | 5.00 | % |
| Robert H. Dalrymple | | | |
| Elizabeth T. Dalrymple | | | |
| 5 Woodland Way | | | |
| Ithaca, New York 14850-9802 | | | |
| | | |
| FJ Capital Management | 352,922 | (4) | 7.57 | % |
| 7901 Jones Branch Drive, Suite 210 | | | |
| McLean, VA 22102 | | | |
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(1) Shares held by the Bank in various fiduciary capacities, either alone or with others. Includes 279,877 shares held with shared voting power. There are 198,811 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. |
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(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. Based on information reported in a Schedule 13G/A filed with the SEC on February 11, 2022, the Dalrymple Family Limited Partnership and Henry M. Dalrymple and Matthew D. Dalrymple have shared voting and dispositive power over all the shares. |
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(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 1,469 shares held solely by Mr. Robert H. Dalrymple, 10,977 shares held by Mr. Dalrymple’s spouse as to which he disclaims beneficial ownership. Based on the information reported in a Schedule 13G/A filed with the SEC on February 11, 2022, RD Wood, LLC has shared voting and dispositive power over 234,486 shares; Robert H. Dalrymple has shared voting and dispositive power over 234,486 shares; and, Elizabeth T. Dalrymple has shared voting and dispositive power over 234,486 shares. |
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(4) Based on information reported in a Schedule 13G/A filed with the SEC on February 10, 2022 the holdings consist of 307,556 shares of common stock of the Corporation held by Financial Opportunity Fund LLC and 10,904 shares of common stock of the Corporation held by Financial Opportunity Long/Short Fund LLC, of which FJ Capital Management LLC is the managing member, and 34,462 shares of common stock of the Corporation held by managed accounts that FJ Capital Management manages; as such, the Reporting Person may be deemed to be a beneficial owner of reported shares but as to which the Reporting Person disclaims beneficial ownership. |
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| Compensation Discussion and Analysis |
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The Compensation Discussion and Analysis the summary compensation table and the other related tables and narrative disclosures contained elsewhere insection of this Proxy Statement. As discussed in those disclosures, the Board believes thatStatement provides our executive compensation philosophy, policies, and procedures provide a strong link between each NEOs’ compensation and our short and long-term performance. The objective of our executive compensation program is to provide compensation which is competitive based on our performance and alignedshareholders with the long-term interest of our shareholders.
The Corporation asks shareholders to indicate their support of our NEOs’ compensation as described in this Proxy Statement. This proposal will be presented at the Annual Meeting as a resolution in substantially the following form:
“RESOLVED, that the Corporation's shareholders approve, on a non-binding advisory basis, the compensationan explanation of the Corporation’s NEOs, as disclosed in the Corporation’s Proxy Statement for the 2018 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and narrative discussion,philosophies, objectives, processes, practices and other related tables and disclosure.”
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE, ON A NON-BINDING, ADVISORY BASIS, “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NEOS, AS DISCLOSED IN THIS PROXY STATEMENT
PROPOSAL 3:
Non-Binding, Advisory Vote Regarding the Frequency of Say-On-Pay
The Dodd-Frank Act also requires that the Corporation provide shareholders with the opportunity to vote, on a non-binding, advisory basis, on their preference as to how frequently to vote on future advisory votes on the compensation of our NEOs, as disclosedrelevant factors in accordance with the compensation disclosure rules of the SEC. In particular, you may vote whether the advisory vote should occur every three years, every two years or every year. Shareholders may also abstain from casting a vote on this proposal.
The Board has determined that an annual advisory vote on executive compensation is the most appropriate alternative for the Corporation and, therefore, the Board recommends that you vote for an annual advisory vote on executivesetting NEO compensation. In determining to recommend that shareholders vote annually on executive compensation, the Board considered how an advisory vote at this frequency will provide our shareholders with direct inputFor more information on the Corporation’s executive compensation philosophy, policies and practices as disclosed inNamed Executive Officers see the Proxy Statement each year, which is consistent with our efforts to engage in an ongoing dialogue with our shareholders on executive compensation and corporate governance matters.
This vote is advisory, which means that the vote on executive compensation is not binding on the Corporation, our Board or the Compensation Committee of the Board. The Corporation recognizes that the shareholders may have different views as to the best approach for the Corporation and, therefore, the Corporation looks forward to hearing from our shareholders as to their preferences on the frequency of an advisory vote on executive compensation. The Board and the Compensation Committee will take into account the outcome of the vote on frequency of the advisory vote on executive compensation; however, when considering the frequency of future advisory votes on executive compensation, the Board may decide that it is in the best interests of our shareholders and the Corporation to hold an advisory vote on executive compensation more or less frequently than the frequency receiving the most votes cast by our shareholders.
Shareholders may cast a vote on the preferred voting frequency by selecting the option of every year, two years, three years, or abstaining, when voting in response to the resolution that will be presented at the Annual Meeting in substantially the following form:
“RESOLVED, that shareholders determine, on a non-binding, advisory basis, whether the preferred frequency of an advisory vote on the executive compensation of the Corporation’s NEOs as set forth in the Corporation’s Proxy Statement should be every year, every two years or every three years.Named Executive Officers”
section.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
THE OPTION OF “EVERY YEAR” AS THE PREFERRED FREQUENCY FOR THE NON-BINDING, ADVISORY VOTE ON SAY-ON-PAY
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Committee
The Compensation Committee, currently consisting of Messrs. Lounsberry (Chair), D. Dalrymple, R. Dalrymple, Swan and Tranter, met four times in 2017. The members of the Committee meet the independence requirements of applicable laws and rules as determined by the Board.
Compensation Philosophy and ObjectivesObjectives:
As discussed previously,in the “Committee Description” section, the Compensation Committee reviews and administers the Corporation’s compensation policies and practices for the NEOs. The NEOs named in the Summary Compensation Table are: Anders M. Tomson, CEO and Karl F. Krebs, Executive Vice President, Chief Financial Officer and Treasurer. The other NEOs are: Bank executive officers Louis C. DiFabio, Karen R. Makowski and Thomas W. Wirth. Any references to NEOs in this Proxy Statement are to the individuals listed in the preceding sentence.
The Corporation’s compensation philosophy is designed to attract, motivate and retain highly qualified financial services’services professionals capable of maximizing business performance for the benefit of shareholders. The Compensation Committee believes in a simple, straightforwardstraight-forward approach to executive compensation and, therefore, has limited the number and types of plans used to compensate NEOs, as discussedNEOs. For more information on page 16 in 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 Bankcorporate and individual performance goals. In 2017,2021, compensation components of NEO compensation consisted of: 1)of base salary; 2)salary, short and long term performance-based incentives;incentives, and 3) retirement and other benefits. The Compensation Committee reviews quantitative and qualitative/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. As such, the Compensation Committee has not established rigid formulas for the allocation between cash and non-cash components, the allocation of short-term 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 2017,2021, 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 the Corporation has established between pay and business performance.
Setting Executive CompensationCompensation:
The Compensation Committee is responsible for the design, implementation and administration of our compensation programplans and practices for ourthe NEOs. The Compensation Committee engaged McLaganperiodically engages an independent outside consulting firm to conduct an Executive Compensation Review in 2015. After receiving the Reporta comprehensive review of Findings from McLagan, the Corporation’s executive compensation program. This peer group for compensationwas developed by McLagan, with input from the Compensation Committee, using objective parameters that reflect bank holding companies of the executive officerssimilar asset size and thebusiness model located in our general geographic region.
The peer group, for financial benchmarking are now one in the same as reflected below.
The Compensation Committee analyzes and uses compensation data provided by a peer group comprisedwhich is listed below, consists of twenty-two (22) bank holding companies in the Northeast,Connecticut, Maine, Massachusetts, New York, Ohio and Pennsylvania with assets between $1.1 - $4.3that range from $1 billion (plus Tompkins Financial Corporation due to location). The following is the peer group used$5 billion in 2017: ACNB Corp., AmeriServ Financial Inc., Arrow Financial Corp., Bar Harbor Bankshares, Bridge Bancorp Inc., Bryn Mawr Bank Corp., Camden National Corp., Citizens & Northern Corp., Civista Bancshares Inc., CNB Financial Corp., assets:
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| ACNB Corp. | CNB Financial Corp. | Financial Institutions Inc. | Orrstown Financial Services |
| Arrow Financial Corp. | ENB Financial Corp. | First Bancorp Inc. | Peoples Financial Services |
| Bar Harbor Bank Shares | Enterprise Bancorp Inc. | Franklin Financial Services | Rhinebeck Bancorp Inc. |
| Citizens & Northern Corp. | Evans Bancorp Inc. | Greene County Bancorp Inc. | Salisbury Bancorp Inc. |
| Civista Bancshares Inc. | Farmers National Banc Corp. | LCNB Corp. | SB Financial Group Inc. |
Codorus Valley Bancorp Inc., Enterprise Bancorp Inc., Farmers National Banc Corp., Financial Institutions Inc., First Bancorp Inc., First of Long Island Corp., Franklin Financial Services, Orrstown Financial Services, Peoples Bancorp Inc., Tompkins Financial Corp., Univest Corporation of Pennsylvania, and Washington Trust Bancorp. Inc. | Fidelity D & D Bancorp. Inc. | | |
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The Compensation Committee evaluates the peer groupsgroup annually for suitability and may modify the peer groupsgroup from time-to-time based on mergers and acquisitions within the industry or other relevant factors.The Corporation does not target any specific element of compensation to compare to amounts paid by the peer group with respect to that element. Rather, the Corporation uses the peer bank data to inform it of the pay levels and practices of the Corporation'sCorporation’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’s goal is to provide a competitive level of total compensation targeted at the average level of comparably-sized financial institutions. In 2017,institutions, although actual compensation paid to an NEO may vary based on other factors such as the total annual compensation for each NEO, except the CRO, was below the average total annual compensation of the peer group.individual’s performance, experience, responsibilities and competitive conditions.
Role of ManagementManagement:
Although the Compensation Committee is ultimately responsible for designing our Executive Compensation Program, input from ourthe 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 recommendation to the full Board for approval.The CEO neither recommends nor participates in Compensation Committee deliberations regarding his own compensation.
Say on PayPrevious Say-On-Pay Vote Results:
Following our Annual Meeting of StockholdersShareholders on May 11, 2017, weJune 8, 2021, the Compensation Committee reviewed the results of the stockholdershareholder advisory vote on executive compensation with respect to 20162020 compensation actions and decisions for our NEOs. Approximately 85 percentNEOs, which resulted in approximately 95% of the votes cast on the proposal were voted in supportfavor of the compensation outlined in last year's Proxy Statement. proposal.After a comprehensive market review and in light of strong stockholdershareholder support, we concluded that no substantial changes to our Executive Compensation Program were required.
Elements of CompensationCompensation:
In 2017,2021, the Bank's mix of base salary and incentive compensation (which is incentive cash compensation and equity awards) places the average variable pay received by NEO,NEOs, other than the CEO, at approximately 55%66% of the NEO'stheir base salary.The CEO'sCEO’s incentive pay comprised of cash and unrestrictedrestricted stock, represented approximately 56%70% of his base pay.Awards under the incentive plans are based on the Compensation Committee’s independent business judgmentjudgement after evaluating the performance of each executive officer against pre-established Bank 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 ourthe Bank’s peer group for similar positions, as well as the individual fulfilling the duties of the position.The CEOreviews 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 as well asand the attainment of goals set forth in the Corporation’s annual business plan.plan and base salary levels of each NEO relative to peers.
The actual base salaries for 2017 are reported in the Summary Compensation Table on page 21. Similarly inIn December 2017,2020, 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 as follows: Mr. DiFabio $13,519 or 7.5%; Mr. Krebs $6,556 or 3%; Mrs. Makowski $6,027 or 3% and Mr. Wirth $5,253 or 3%.
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| Named Executive Officer | 2020 Salary | 2021 Raise | 2021 Salary | Nature of Increase |
| % of Base Salary | Amount of Increase |
| ($) | (%) | ($) | ($) | |
| | | | | |
| Anders M. Tomson | 480,000 | 7.9 | 38,000 | 518,000 | Merit and Market-Based |
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| Loren D.Cole | 216,110 | 5.2 | 11,250 | 227,360 | Merit and Market-Based |
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| Peter K. Cosgrove | 231,750 | 2.9 | 6,750 | 238,500 | Merit and Market-Based |
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| Daniel D. Fariello | 219,200 | 7.5 | 16,440 | 235,640 | Merit and Market-Based |
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| Karl F. Krebs | 255,694 | 5.0 | 12,785 | 268,479 | Merit and Market-Based |
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Based on a similar assessment of the NEO'sNEOs’ performance in 2016,2019, the Compensation Committee increased each NEO'sNEO’s base salary as follows in 2017: Mr. DiFabio $5,250; Mr. Krebs $6,365; Mrs. Makowski $5,852 and Mr. Wirth $5,100. The total base salary earned by the NEOs in 2017 is reported in the Summary Compensation Table on page 21.follows:
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| Named Executive Officer | 2019 Salary | 2020 Raise | 2020 Salary | Nature of Increase |
| % of Base Salary | Amount of Increase |
| ($) | (%) | ($) | ($) | |
| | | | | |
| Anders M. Tomson | 460,000 | 4.3 | 20,000 | 480,000 | Merit and Market-Based |
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| Loren D.Cole | 192,610 | 12.2 | 23,500 | 227,360 | Merit and Market-Based |
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| Peter K. Cosgrove | 225,000 | 3.0 | 6,750 | 231,750 | Merit and Market-Based |
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| Daniel D. Fariello | 195,700 | 12.0 | 23,500 | 219,200 | Merit and Market-Based |
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| Karl F. Krebs | 231,854 | 10.3 | 23,840 | 255,694 | Merit and Market-Based |
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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 aits 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. SeeFor more information on the peer group, shown on page 15.see the “Setting Executive Compensation” section.
In December 2017, the Compensation Committee determined that Mr. Tomson achieved his 2017 goals and he received a base salary increase of $42,000 for 2018 in order to align his salary more closely with the market with respect to chief executive officers of financial institutions in our peer group. Due to a position and responsibility change that occurred on June 31, 2016, the Compensation Committee increased Mr. Tomson's base salary by $48,077 for 2017. The total base salary earned by Mr. Tomson in 2017 is reported in the Summary Compensation Table on page 21. In 2017, the total annual compensation for Mr. Tomson was below the average total annual compensation payable to chief executive officers of financial institutions in our peer group.
Additionally, in the context of structuring of our incentive compensation plans, the Compensation Committee assesses the individual contributions made by the NEOs, which includes assessing their accountability for specific financial, organization, operational and risk management objectives that are otherwise measurable performance objectives, the attainment of which contributecontributes significantly to the growth and profitability of the Bank'sBank’s business operations.As a result, we believe ourthe Compensation Committee believes the Bank’s incentive compensation plans incentivize ourthe NEOs to effectively plan, organize, supervise, monitor and evaluate the key functional areasarea and departmentsdepartment for which they are responsible and through which ourthe Corporation’s most important corporate objectives are achieved.
The NEOs are eligible for the same benefits available to all other employees of the Bank including life and health insurance, vacation, holidays, and personal and sick leave.
•Short and Long-Term Performance-Based Incentive Compensation:The Corporation has createdadopted 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
certain circumstances, the Compensation Committee may reduce or increase incentive payments, but in no event may the payments be greater than the levels described below. payments.Each senior officer’s incentive award opportunity is not limited to a specified percentage of the incentive pool.
The Compensation Committee and the Board do not believe these incentive plans are reasonably likely to have a material adverse effect on the Corporation. These plans are believed to be of low risk as they provide for payments that comprise a moderate percentage of total compensation and, therefore, do not encourage excessive risk taking. Furthermore, the Corporation has decided to limit equity incentive awards to restricted stock grants, thereby reducing any motivation to take unnecessary or excessive risk to increase the Corporation’s stock price, as may be the case with stock options. Additionally, restricted stock awards are not tied to formulas that could focus NEOs on only short-term results. Finally, we believe these programs generally conform to sound incentive compensation policies as prescribed by the federal banking regulators.
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 vs. original plan, the financial results delivered by the senior officer’s division against goal, service quality results vs. goal, 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 pool representing 30% of the aggregate base salaries of NEOs and 20% of the aggregate base salaries of senior officers.In November 2017, the Compensation Committee revised the restricted stock pool to represent 30% of the aggregate base salaries of NEO's and 20% of the aggregate base salaries of senior officers to get the Bank in line with peers and aid in recruitment and retention efforts. In 2017,2021, the cash awards totaled $370,500$647,500 and the value of the restricted stock awards totaled $507,500,$807,500 for a total of $878,000$1,455,000 representing approximately 34%40% of the aggregate base salaries of plan participants.In 2021, the Compensation Committee approved an additional bonus pool for senior officers who are members of the Executive Management Team, in recognition of the record earnings of the Corporation in 2021, representing 10% of the cash and stock awards presented.The additional cash awards totaled $59,500 and the additional restricted stock awards totaled $59,500 for a total of $119,000 or 10% of their awards received in the original awards granted.As mentioned previously, stated, these two components of incentive compensation for NEOs (other than the CEO) represent approximately 55%60% of the NEO’sNEOs’ base salary. The Compensation Committee approved both a cash and stock bonus representing 56% ofsalaries.In 2021, the CEO's base salary. In 2017, the CEO'sCEO’s cash award totaled $100,721$181,500 and the value of the unrestrictedrestricted stock award totaled $108,735 (which includes $22,222 for the Directors' Stock Compensation Plan which Mr. Tomson is a participant),$181,500 for a total of $209,456.$363,000.
The following paragraphs provide a further description of these plans.
plans:
Omnibus Plan: In 2014, the Board approved an Omnibus Plan to aggregate into one document all current compensation plans, programs and arrangements that provide restricted stock, unrestricted stock, and cash awards to eligible employees and to members of the Board of Directors of the Corporation and the Bank and its affiliates. The Omnibus Plan incorporates all of the provisions of the Corporation's Restricted Stock Plan, Incentive Compensation Plan, Directors' Compensation Plan and the Corporation's and the Bank's Directors' Deferred Fee Plan. The Component Plans are generally intended to enhance the Corporation and Bank's ability to attract and retain highly qualified officers, directors, key employees, and other persons, and to motivate such persons and to expend maximum efforts to improve the business results and earnings of the Corporation and the Bank by providing to such persons and opportunity to acquire or increase a direct proprietary interest in its operations and future success.
•2021 Equity Incentive Plan: The Corporation adopted the Chemung Financial CorporationAmended and Restated Restricted Stock 2021 Equity Incentive Plan, (the “Restricted Stock Plan”): In 2010, which was approved by stockholders in June 2021, to promote the Board approved a Restricted Stock Plan for officers of the Bank, excluding the CEO. The Compensation Committee may make discretionary grants of restricted shares of the Corporation’s common stock to officers selected to participate in the Plan. The Compensation Committee believes that these awards: 1) align the interests of the Bank’s executives and senior managers with the interestslong-term financial success of the Corporation, and its shareholders; 2) ensure thatSubsidiaries, including the Corporation’s compensation practices are competitiveBank by providing a means to attract, retain and comparablereward individuals who contribute to such success and to further align their interests with its peers; and 3) promote retention of select management level employees. The awards are based on the performance, responsibility and contributionsthose of the NEOs and other senior officers.Corporation's stockholders 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 the NEOs, which is subject to the approval of the Compensation Committee. The awards may not exceed 15,000 shares per year in the aggregate. 19NEOs. Twenty senior officers including Messrs. DiFabio,Tomson, Cole, Cosgrove, Fariello and Krebs Wirth and Mrs. Makowski were awarded restricted stock for their service in 2017.2021. These shares vest over a five-year period lapse with termination of employment, with or without cause, and vest(except that the award Mr. Tomson received vests after one year). Vesting accelerates immediately in case of death, disability or an involuntary termination following a change ofin control. For
Chemung Financial Corporation Incentive Compensation Plan (the “Incentive Compensation Plan”): The Incentive Compensation Plan provides for the grant of unrestricted stock and/or cash awards to select officers and key employees designated annually in the sole discretion of the Board as a reward for attainment of annual and long-term performance goals. The maximum number of shares that can be awarded as unrestricted stock is ten thousand (10,000) per calendar year. The maximum cash bonus is $300,000 per calendar year. In 2017, the Compensation Committee approved granting an Incentive Plan award of $167,763 to the CEO. The awards were based on Mr. Tomson’s performance measured against his pre-determined individual and Bank goals to include, but not limited to, metrics related to net income, return on equity, efficiency, asset quality, bank performance against peers, progress in achieving long-term strategic objectives, and other qualitative information considered by the Compensation Committee. The award was paid in
an entire description of the plan, see the "2021 Equity Incentive Plan" section. For additional information, see the "Summary Compensation Table" section.
January 2017: Mr. Tomson received $81,250 in cash and $86,513 in the Corporation’s common stock, which amounted to 2,380 shares. Mr. Tomson was the only executive approved by the Compensation Committee to participate in the Plan in 2017.
•Retirement and Other Benefits:The Corporation sponsors the Chemung Canal Trust Company 401(k) Defined Contribution Profit Sharing, Savings and Investment Plan (the "401(k) Plan"“401(k) Plan”) which covers all eligible employees.The Corporation contributes a non-discretionary 3% of gross annual wages for each participant, regardless of the participant’s deferral, in addition to a 50% match up to 6% of gross annual wages.All contributions made on or after January 1, 2017 will vest immediately, while all previous contributions continue vesting on a five-year vesting schedule.The plan's401(k) Plan’s assets consist of Chemung Financial Corporation common stock, as well as other common and preferred stocks, U.S. Government securities and corporate bonds and notes, and mutual funds. notes.The Bank instituted a total "freeze"“freeze” of any future benefit accruals under the Chemung Canal Trust Company Pension Plan (the "Pension Plan"“Pension Plan”) effective January 1, 2017.Messrs. DiFabio,Tomson, Cole, Cosgrove, Fariello and Krebs Tomson, Wirth and Mrs. Makowski receivereceived a 3% non-discretionary contribution to the 401(k) Plan subject to limitations imposed by the Internal Revenue Code of 1986, as amended (the “Code”), and applicable regulations.Effective January 1, 2017, as a result of the total "freeze"“freeze” of the Pension Plan, all eligible employees will participate in the 401(k) Plan subject to limitations imposed by the Code and applicable regulations.
In June 2012, the Compensation Committee adopted a •Defined Contribution Supplemental Executive Retirement Plan (the “Defined Contribution SERP”): In June 2012, the Compensation Committee adopted the Defined Contribution SERP to attract and retain high-quality talent.Messrs. DiFabio,Tomson, Cole, Cosgrove, Fariello and Krebs Tomson, Wirth and Mrs. Makowski are credited with an annual contribution from the Bank contribution in an amount equal to 20% of their base salary, untilwhich such annual contribution will cease upon the earlier of: (i)of their (1) termination of employment for any reason;reason or (ii)(2) the discontinuation of their participation 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.
The NEOs are eligibleAs of each 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 same benefits availablecalendar quarter ending immediately prior to all other employees of the Bank including life and health insurance, vacations, holidays, and personal and sick leave.valuation date.
The Bank maintains the •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 amounts up to all of their compensation to be paid at a future date as elected by the officer. Although all of the NEOs are eligible to participate, Mrs. Makowski and Messrs. DiFabioTomson, Cosgrove and Krebs arewere the only NEOs who participateparticipated in this plan. Thethe plan in 2021. For more information on the Deferred Compensation Plan, is described more fully on page 23.see the “Deferred Compensation Plan” section.
•Perquisites:The NEOs are granted perquisites which 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 people. Mr. Tomson has the use of a Bank-owned vehicle for business purposes. Mrs. Makowskipurposes and periodically uses a car service in order to continue facilitating meetings and conducting business, as necessary, during his travel time. Messrs. DiFabio,Cosgrove, Fariello and Krebs and Wirth each received a car allowance during 2017.mileage reimbursements in 2021.
•Change in Control Agreements: The Bank has entered into individual change in control agreements with Messrs. Tomson, Cole, Cosgrove, Fariello and Krebs, which (except for Mr. Tomson, Mr. DiFabio, Mr. Krebs, Mr. WirthTomson's) were amended and Mrs. Makowski.restated in December 2019. The purpose of the change in control agreements is to retain and secure key employeesexecutives and encourage their attention and dedication to their assigned duties in the event of a change in control of the Bank. Under theThe agreements, as amended, have a double trigger change in control provision such that in the event of the executive’s involuntaryvoluntary termination without cause or voluntary termination for anygood reason within 12twelve (12) months following the effective date of a change in control of the Corporation or the Bank, each executive would be entitled to receive a severance benefit equal to 2.0 times (oror 2.99 times for(for Mr. Tomson) his or her highest annual compensation, includingrate of base salary and bonuses,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 for anyduring the calendar year of the change in control or either of the two (2) calendar years ending withimmediately preceding the yearchange in whichcontrol. Severance pay will be reduced by all amounts that are required to be withheld or deducted under the executive’s date of termination occurs.federal, state or municipal law. Such benefit would be payable to each executive in equal monthly installments for 24twenty-four (24) months (or 36or thirty-six (36) months for(for Mr. Tomson), provided, however, that the benefits would be reduced to avoid an excess parachute payment under Section 280G of the Code..
Compensation Committee Report:
COMPENSATION AND PERSONNEL COMMITTEE REPORT
The Compensation Committee of the Board has reviewed and discussed with management the foregoing Compensation Discussion and Analysis with management and, basedsection, 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 thisthe Proxy Statement.
Stephen M. Lounsberry III, Chairman Denise V. Gonick
Ronald M. Bentley G. Thomas Tranter Jr.
David J. Dalrymple Thomas R. Tyrrell
Robert H. Dalrymple
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.
|
| | | | | | | | | | | | | |
The Compensation and Personnel Committee: | Executive Officers |
| |
Stephen M. Lounsberry III, Chairman | Richard W. Swan |
David J. Dalrymple | G. Thomas Tranter Jr. |
Robert H. Dalrymple | |
TAX AND ACCOUNTING MATTERS
Section 162(m). Under Section 162(m) of the Code, companies are subject to limits on the deductibility of executive compensation. Deductible compensation is limited to $1 million per year for each executive officer listed in the summary compensation table, with the exception of the executive listed as a result of serving as the principal financial officer. Compensation that is “qualified performance-based compensation” under the Code’s definition is exempt from this limit.
The Tax Cuts and Jobs Act (the “Tax Act”) enacted on December 22, 2017, significantly modified Section 162(m) of the Code. The Act eliminated the “qualified performance-based compensation” exception to the deductibility limitation under Section 162(m) for tax years commencing after December 31, 2017. The Tax Act provides “grandfathered” treatment for qualified performance-based compensation in excess of $1 million that meets the requirements of Section 162(m), is payable pursuant a written binding contract in effect as of November 2, 2017, and is not modified in any material respect. In addition, the Act expands the definition of “covered employee” to include the principal financial officer as well as any employee who has been designated a covered employee for any fiscal year beginning after December 31, 2016.
The Compensation Committee has historically attempted to structure its compensation arrangements to achieve deductibility under Section 162(m) of the Code, unless the benefit of such deductibility is considered by the Compensation Committee to be outweighed by the need for flexibility or the attainment of other objectives. As was the case prior to the enactment of the Tax Act, the Compensation Committee will continue to monitor issues concerning the deductibility of executive compensation. Since corporate objectives may not always be consistent with the requirements for tax deductibility, the Compensation Committee is prepared, when it deems appropriate, to enter into compensation arrangements under which payments will not be deductible under Section 162(m) of the Code. Thus, deductibility will be one of many factors considered by the Compensation Committee in ascertaining appropriate levels or modes of compensation.
Sections 4999 and 280G. Section 4999 of the Code imposes a 20% excise tax on certain “excess parachute payments” made to “disqualified individuals.” Under Section 280G of the Code, such excess parachute payments are also nondeductible to the Corporation. If payments that are contingent on a change of control to a disqualified individual (which terms include the NEOs) exceed 2.99 times the individual’s “base amount,” they constitute “excess parachute payments” to the extent they exceed one times the individual’s base amount.
Accounting Considerations. The Audit Committee is informed of the financial statement implications of the components of the compensation program for NEOs.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee was an officer or an employee of the Corporation or any of its subsidiaries during 2017 or any prior period. None of the Bank’s executive officers has served as a member of a compensation committee or board of directors of any entity that has an executive officer serving as a member of the Corporation’s Board or Compensation Committee.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the NEOs and other executive officers of the Corporation and Bank.Bank as of January 1, 2022:
|
| | | | | | | | | | |
| Name | | Age | | Position |
|
| Anders M. Tomson | | 51 | 54 | CEO of the Corporation and the Bank (Effective December 22, 2016)(2016); President and COO of the Bank (2015) also; President of Capital Bank, a division of Chemung Canal Trust Company (2011). Mr. Tomson has been with the Bank since 2011. |
|
| Loren D. Cole | 49 | 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 | 61 | 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. |
|
| Daniel D. Fariello | 45 | 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 | 54 | Executive Vice President of the Bank (2016) responsible for Retail Client 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 | 55 | Regional President of the Bank (January 4, 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. |
| | | |
| Karl F. Krebs | | 61 | 65 | Chief Financial Officer and Treasurer of the Corporation and Executive Vice President, Chief Financial Officer and Treasurer of the Bank (commencing October 16, 2013)(2013); Executive Vice President and Chief Financial Officer of Financial Institutions (2009). Mr. Krebs has been with the Bank since 2013. |
Louis C. DiFabio | | 54 | | Vice President of the Corporation (2015) and Executive Vice President of the Bank responsible for Business Client Services (2015); Executive Vice President of the Bank (2011) responsible for Retail Client Services. Mr. DiFabio has been with the Bank since 1987. |
Kimberly A. Hazelton | | 50 | | Executive Vice President of the Bank (2016) responsible for the Retail Client Services Group; Chief Operations Officer (2014) at Alternatives Federal Credit Union; and, Market President, Retail (2007 to 2013) at TD Bank. Mrs. Hazelton has been with the Bank since August 2016. Mrs. Hazelton is not an NEO. |
Karen R. Makowski | | 61 | | Executive Vice President and Chief Risk Officer of the Bank (2011); Consultant in regulatory compliance and strategic planning (2009). Mrs. Makowski has been with the Bank since 2011. |
| Thomas W. Wirth | | 52 | 56 | 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. |
EXECUTIVE COMPENSATION
The followingThis Executive Compensation section includes several tables summarizewith details of the compensation informationactually paid and/or earned byawarded to certain NEOs of the Corporation andfor each of the Bank for thelast three fiscal year ended December 31, 2017, with comparative information for 2016 and 2015 relating to the summary compensation table.years, where applicable. Tables included in this section are as follows:
•Summary Compensation Table |
| | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal
Position | | Year | | Salary
| | Bonus
| | | Stock
Awards | | | | Change in
Pension Value
(7) | | All Other
Compensation
(8) | | Total |
| | | | | ($) | | ($) | | | ($) | | | | ($) | | ($) | | ($) |
Anders M.Tomson
President & Chief Executive Officer(2) | | 2017 | | 375,000 |
| | 100,721 |
| (1)(6) | | 108,735 |
| (4) | | | — |
| | 153,692 |
| | 738,148 |
|
| | 2016 | | 326,923 |
| | 60,000 |
| (1) | | 60,088 |
| (4) | | | — |
| | 114,335 |
| | 561,346 |
|
| | 2015 | | 276,033 |
| | — |
| (3) | | — |
| (3) | | | — |
| | 93,890 |
| | 369,923 |
|
Karl F. Krebs
Executive Vice President, Chief Financial Officer,
and Treasurer | | 2017 | | 218,797 |
| | 65,340 |
| (2) | | 70,709 |
| (5) | | | — |
| | 91,578 |
| | 446,424 |
|
| | 2016 | | 212,425 |
| | 55,000 |
| (2) | | 49,739 |
| (5) | | | — |
| | 73,679 |
| | 390,843 |
|
| | 2015 | | 206,238 |
| | 45,000 |
| (2) | | 34,698 |
| (5) | | | — |
| | 69,124 |
| | 355,060 |
|
Louis C. DiFabio
Executive Vice President | | 2017 | | 180,770 |
| | 52,748 |
| (2) | | 51,666 |
| (5) | | | — |
| | 77,140 |
| | 362,324 |
|
| | 2016 | | 175,202 |
| | 50,000 |
| (2) | | 38,698 |
| (3) | | | 86,936 |
| | 25,862 |
| | 376,698 |
|
Karen R. Makowski
Executive Vice President & Chief Risk Officer | | 2017 | | 201,136 |
| | 52,775 |
| (2) | | 57,130 |
| (5) | | | — |
| | 79,200 |
| | 390,241 |
|
| | 2016 | | 195,277 |
| | 45,000 |
| (2) | | 38,698 |
| (5) | | | — |
| | 65,988 |
| | 344,963 |
|
| | 2015 | | 189,590 |
| | 45,000 |
| (2) | | 40,950 |
| (5) | | | — |
| | 62,086 |
| | 337,626 |
|
Thomas W. Wirth
Executive Vice President | | 2017 | | 175,302 |
| | 45,235 |
| (2) | | 48,961 |
| (5) | | | — |
| | 72,412 |
| | 341,910 |
|
| | 2016 | | 170,196 |
| | 28,638 |
| (2) | | 16,580 |
| (3) | | | 77,569 |
| | 23,170 |
| | 316,153 |
|
(1) The amounts shown for bonus represents amounts paid in 2017 and 2016. |
(2) The amounts shown for salary and bonus represent amounts earned in 2017, 2016, and 2015. |
(3) In 2015, Mr. Tomson participated in the Incentive Compensation Plan, which paid in January of the following year rather than December. |
(4) The awards to Mr. Tomson were made under the terms of the Incentive Compensation Plan. The awards are fully vested upon grant and reflect the grant date fair value of the stock on December 31 of the year earned. The stock award granted to Mr. Tomson in 2017 includes director fees in the amount of $22,222. |
(5) The amounts shown for Messrs. Krebs, DiFabio, Wirth and Mrs. Makowski represent shares granted under the Restricted Stock Plan and reflect the grant date fair market value as reported in Note 13 of the Corporation’s audited consolidated financial statements contained in the Corporation’s Form 10-K for the year ended December 31, 2017. Twenty percent of the restricted stock awarded vests each year commencing with the first anniversary date of the award and is 100 percent vested on the fifth anniversary date. See table on page 22 captioned “Grants of Plan-Based Awards.” The amount of the awards are determined in the discretion of the Compensation Committee as discussed on page 17. |
(6) $19,471 of Mr. Tomson's bonus is an additional cash bonus awarded to Mr. Tomson pursuant to a Bank-wide 5% cash bonus plan in which all non-sales employees participate. Other NEOs are not eligible to participate in this 5% cash bonus pool. |
(7) The amounts shown represent the aggregate change, during the respective year, in the present value of the named executive officers’ accumulated pension benefit from the Pension Plan. The Board approved a total "freeze" of the Pension Plan effective January 1, 2017. |
(8) The amounts shown include non-discretionary and matching contributions made by the Bank to the 401(k) Plan, dividends paid on unvested restricted stock, Defined Contribution SERP contributions, and perquisites, such as car allowance or personal portion of Bank-owned vehicles and club memberships. The NEOs participate in certain group health, life, disability and medical reimbursement plans, not disclosed in the Summary Compensation Table, that are generally available to salaried employees and do not discriminate in scope, terms and operation. See table below captioned “All Other Compensation Table.” |
|
| | | | | | | | | | | | | | | | | | |
| Name | | Employer Contribution to 401(k) | | Dividends on
Restricted Stock | | Automobile Allowance/Usage | | Club Memberships | | Defined
Contribution
SERP | | Total |
| | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| Anders M. Tomson | | 37,391 |
| | 1,334 |
| | 17,964 |
| | 22,003 |
| | 75,000 |
| | 153,692 |
|
| Karl F. Krebs | | 25,913 |
| | 3,151 |
| | 8,209 |
| | 10,545 |
| | 43,760 |
| | 91,578 |
|
| Louis C. DiFabio | | 21,007 |
| | 3,271 |
| | 7,303 |
| | 9,405 |
| | 36,154 |
| | 77,140 |
|
| Karen R. Makowski | | 23,659 |
| | 3,335 |
| | 6,718 |
| | 5,261 |
| | 40,227 |
| | 79,200 |
|
| Thomas W. Wirth | | 19,745 |
| | 1,610 |
| | 7,176 |
| | 8,821 |
| | 35,060 |
| | 72,412 |
|
•Grants of Plan-Based Awards
|
| | | | | | | | | |
| Name | | Grant Date | | All Other Stock Awards: Number of Shares of Stock | | Grant Date Fair Value of
Stock Awards | |
| | | | | (#) | | ($) | |
| Anders M. Tomson | | 01/03/2018 | | 462 |
| | 22,222 |
| (1) |
| | | 01/05/2017 | | 2,380 |
| | 86,513 |
| (2) |
| Karl F. Krebs | | 12/20/2017 | | 1,307 |
| | 70,709 |
| (3) |
| Louis C. DiFabio | | 12/20/2017 | | 955 |
| | 51,666 |
| (3) |
| Karen R. Makowski | | 12/20/2017 | | 1,056 |
| | 57,130 |
| (3) |
| Thomas W. Wirth | | 12/20/2017 | | 905 |
| | 48,961 |
| (3) |
(1) This grant was awarded to Mr. Tomson as part of Directors' Compensation Plan and reflects the grant date fair market value as reported in Note 13 of the Corporation’s audited consolidated financial statements contained in the Corporation’s Form 10-K for the year ended December 31, 2017. |
(1) This grant was awarded to Mr. Tomson as part of a year-end bonus pursuant to the Incentive Compensation Plan and reflects the grant date fair market value as reported in Note 13 of the Corporation’s audited consolidated financial statements contained in the Corporation’s Form 10-K for the year ended December 31, 2016. |
(2) These amounts represent the grant date fair market value of as reported in Note 13 of the Corporation’s audited consolidated financial statements contained in the Corporation’s Form 10-K for the year ended December 31, 2017. The stock was awarded under the Restricted Stock Plan. |
•Vested Equity Awards at December 31, 2021
•Deferred Compensation
•Defined Contribution SERP
•Potential Payments Under Change in Control
Summary Compensation Table:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| Name and Principal Position | Year | Salary (1) | Cash Bonus (1) | Stock Awards | | Change in Pension Value | All Other Compensation (4) | Total |
|
| | ($) | ($) | ($) | | ($) | ($) | ($) |
|
| Anders M. Tomson | 2021 | 518,000 | | 181,500 | | 181,915 | | (2) | — | 159,127 | 1,040,542 |
| President & CEO | 2020 | 480,000 | | 157,500 | | 161,242 | | (2) | — | 151,223 | 949,965 |
| 2019 | 460,000 | | 125,000 | | 115,637 | | (2) | — | 162,833 | 863,470 |
|
| Karl F. Krebs | 2021 | 268,789 | | 88,000 | | 84,790 | | (3) | — | 82,386 | 523,965 |
| Executive Vice President, | 2020 | 256,186 | | 108,500 | | 46,525 | | (3) | — | 83,276 | 494,487 |
| CFO and Treasurer | 2019 | 235,540 | | 62,500 | | 67,500 | | (3) | — | 89,436 | 454,976 |
|
| Loren D. Cole | 2021 | 227,710 | | 74,250 | | 71,529 | | (3) | — | 71,015 | 444,504 |
| Executive Vice President | 2020 | 216,542 | | 84,000 | | 36,019 | | (3) | — | 69,193 | 405,754 |
| and CIO | 2019 | 196,283 | | 42,500 | | 47,500 | | (3) | — | 60,066 | 346,349 |
|
| Peter K. Cosgrove | 2021 | 238,867 | | 79,750 | | 76,843 | | (3) | — | 81,728 | 477,188 |
| Executive Vice President, | 2020 | 232,010 | | 77,000 | | 33,032 | | (3) | — | 76,868 | 418,910 |
| CCO and CRO | 2019 | 78,144 | | 15,000 | | 17,500 | | (3) | — | 18,821 | 129,465 |
|
| Daniel D. Fariello | 2021 | 236,003 | | 77,000 | | 74,164 | | (3) | — | 70,548 | 457,715 |
| President, Capital Bank Division | 2020 | 219,200 | | 80,500 | | 34,500 | | (3) | — | 66,244 | 400,444 |
| 2019 | 195,700 | | 35,000 | | 40,000 | | (3) | — | 71,121 | 341,821 |
|
(1) The amounts shown for salary represent the annual rate of base salary and the amounts shown for bonus represent amounts earned in 2021, 2020 and 2019, 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 Form 10-K. The awards for 2021 are restricted and fully vest on the first anniversary of the grant date. Awards for 2020 and 2019 were fully vested upon grant. The stock awards granted to Mr. Tomson for 2020 and 2019 includes director fees in the amounts of $26,258 and $22,653, respectively. |
|
(3) The amounts shown for Messrs. Krebs, Cole, Cosgrove and Fariello represent shares granted under the 2021 Equity Incentive Plan and reflect the grant date fair value as reported in Note 14 of the Corporation’s audited consolidated financial statements contained in the Corporation’s Form 10-K. Twenty percent of the restricted stock awarded vests each year commencing with the first anniversary date of the award and is 100 percent vested on the fifth anniversary date. For more information on the restricted stock granted, see the “Grants of Plan-Based Awards Table” section. The amount of the awards are determined in the discretion of the Compensation Committee as discussed in the “Elements of Compensation” section. |
|
(4) The amounts shown include non-discretionary and matching contributions made by the Bank to the 401(k) Plan, dividends paid on unvested restricted stock, Defined Contribution SERP contributions and perquisites such as car allowance, personal portion of Bank-owned vehicles, gas reimbursement, mileage reimbursement (“Automobile Allowance/Usage”) and club memberships. |
|
|
All Other Compensation Table:
| | | | | | | | | | | | | | | | | | | | |
|
| Name | Employer Contributions to 401(k) | Dividends on Restricted Stock Awards | Automobile Allowance/ Usage | Club Memberships | Defined Contribution SERP | Total |
| ($) | ($) | ($) | ($) | ($) | ($) |
|
| Anders M. Tomson | 17,400 | — | 14,075 | 24,052 | 103,600 | 159,127 |
|
| Karl F. Krebs | 17,400 | 1,103 | 1,249 | 8,876 | 53,758 | 82,386 |
|
| Loren D. Cole | 14,602 | 2,946 | 0 | 7,925 | 45,542 | 71,015 |
|
| Peter K. Cosgrove | 15,029 | 1,430 | 725 | 16,772 | 47,773 | 81,729 |
|
| Daniel D. Fariello | 10,356 | 2,997 | 6,074 | 3,920 | 47,201 | 70,548 |
|
Grants of Plan-Based Awards Table:
| | | | | | | | | | | | | | |
|
| Name | Grant Date | All Other Stock Awards: Number of Shares of Stock | | Grant Date Fair Value of Stock Awards(3) |
| | (#) | | ($) |
|
| Anders M. Tomson | 01/12/2022 | 3,985 | (1) | 181,915 |
|
| Karl F. Krebs | 12/15/2021 | 1,899 | (2) | 84,790 |
|
| Loren D. Cole | 12/15/2021 | 1,602 | (2) | 71,529 |
|
| Peter K. Cosgrove | 12/15/2021 | 1,721 | (2) | 76,843 |
| | | | |
| Daniel D. Fariello | 12/15/2021 | 1,661 | (2) | 74,164 |
|
(1) This grant was awarded to Mr. Tomson as part of a year-end bonus for 2021. The awards were granted pursuant to the 2021 Equity Incentive Plan on January 12, 2022 and fully vest on the first anniversary of the grant date. |
|
(2) These grants were awarded on December 15, 2021 and vest in five equal annual installments commencing on the first anniversary of the grant date. |
(3) These amounts represent the grant date fair value as reported in Note 14 of the Corporation's audited consolidated financial statements contained in the Corporation's Form 10-K for the year ended December 31, 2021. The stock was awarded under the 2021 Equity Incentive Plan. |
|
Outstanding Equity Awards at December 31, 20172021 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, 2021.
| | | | | | | | | | | | | | |
|
| Name | Grant Date | Number of Shares or Units of Stock That Have Not Yet Vested(1) | | Fair Value of Shares or Units of Stock That Have Not Vested(2) |
| | (#) | | ($) |
|
| | | | |
| Loren D. Cole | 12/15/2021 | 1,602 | | 74,413 | |
| 12/16/2020 | 820 | | 38,089 | |
| 12/18/2019 | 639 | | 29,682 | |
| 12/19/2018 | 375 | | 17,419 | |
| 12/20/2017 | 73 | | 3,391 | |
|
| Peter K. Cosgrove | 12/15/2021 | 1,721 | | 79,940 | |
| 12/16/2020 | 752 | | 34,930 | |
| 12/18/2019 | 236 | | 10,962 | |
| | | | |
| Daniel D. Fariello | 12/15/2021 | 1,661 | | 77,153 | |
| 12/16/2020 | 786 | | 36,510 | |
| 12/18/2019 | 537 | | 24,944 | |
| 12/19/2018 | 398 | | 18,487 | |
| 12/20/2017 | 121 | | 5,620 | |
|
| | | | |
(1) Restricted stock awards vest in five equal annual installments commencing on the grant date. |
|
(2) These amounts represent the fair value of $46.45, the closing price for the Corporation's common stock on December 31, 2021. |
|
|
| | | | | | | | |
| Restricted Stock Awards Under the Restricted Stock Plan |
| Name | | Grant Date | | Number of Shares or Units of Stock That Have Not Vested (1) | | Market Value of Shares or Units of Stock That Have Not Vested (2) |
| | | | | (#) | | ($) |
| Karl F. Krebs | | 12/20/2017 | | 1,307 |
| | 62,867 |
|
| | 12/20/2016 | | 1,100 |
| | 52,910 |
|
| | 12/16/2015 | | 763 |
| | 36,700 |
|
| | 12/17/2014 | | 426 |
| | 20,491 |
|
| Louis C. DiFabio | | 12/20/2017 | | 955 |
| | 45,936 |
|
| | 12/20/2016 | | 856 |
| | 41,174 |
|
| | 12/16/2015 | | 654 |
| | 31,457 |
|
| | 12/17/2014 | | 426 |
| | 20,491 |
|
| | 12/20/2013 | | 187 |
| | 8,995 |
|
| Karen R. Makowski | | 12/20/2017 | | 1,056 |
| | 50,794 |
|
| | 12/20/2016 | | 856 |
| | 41,174 |
|
| | 12/16/2015 | | 654 |
| | 31,457 |
|
| | 12/17/2014 | | 426 |
| | 20,491 |
|
| | 12/20/2013 | | 187 |
| | 8,995 |
|
| Anders M. Tomson | | 12/17/2014 | | 426 |
| | 20,491 |
|
| | 12/20/2013 | | 187 |
| | 8,995 |
|
| Thomas W. Wirth | | 12/20/2017 | | 905 |
| | 43,531 |
|
| | 12/20/2016 | | 367 |
| | 17,653 |
|
| | 12/16/2015 | | 327 |
| | 15,729 |
|
| | 12/17/2014 | | 142 |
| | 6,830 |
|
| | 12/20/2013 | | 125 |
| | 6,013 |
|
(1) Restricted stock awards vest over a five year period after the date of the grant. |
(2) These amounts represent the market value of $48.10, the closing price for the Corporation's common stock on December 29, 2017. |
Restricted Stock Vested During the Year Ended December 31, 20172021 Table:
The following table shows all restricted stock awards held by each NEO under the Restricted Stock Plan that vested during the year-ended December 31, 2021.
| | | | | | | | | | | | | | |
| Name | Vested Date | All Other Stock Awards: Number of Shares of Stock | Vested Date Fair Value of Stock Awards | |
| | (#) | ($) | |
|
|
| Karl F. Krebs | 2/17/2021 | 275 | 9,721 | (1) |
| 2/17/2021 | 524 | 18,523 | (1) |
| 2/17/2021 | 912 | 32,239 | (1) |
| 2/17/2021 | 1,208 | 42,703 | (1) |
| 2/17/2021 | 1,324 | 46,803 | (1) |
| 12/15/2021 | 1,899 | 84,790 | (2) |
|
| Loren D. Cole | 12/16/2021 | 205 | 9,338 | (3) |
| 12/17/2021 | 187 | 8,282 | (4) |
| 12/17/2021 | 212 | 9,389 | (4) |
| 12/20/2021 | 73 | 3,263 | (5) |
|
| Peter K. Cosgrove | 12/16/2021 | 188 | 8,563 | (3) |
| 12/17/2021 | 78 | 3,455 | (4) |
| | | | |
| Daniel D. Fariello | 12/16/2021 | 196 | 8,928 | (3) |
| 12/17/2021 | 179 | 7,928 | (4) |
| 12/17/2021 | 199 | 8,814 | (4) |
| 12/20/2021 | 121 | 5,409 | (5) |
| 12/20/2021 | 92 | 4,112 | (5) |
|
(1) These amounts represent the fair value of $35.35, the closing price of Chemung Financial Corporation’s common stock on the 2/17/2021 vesting date. |
| | | | |
(2) These amounts represent the fair value of $44.65, the closing price of Chemung Financial Corporation’s common stock on the 12/15/2021 vesting date. |
| | | | |
(3) These amounts represent the fair value of $45.55, the closing price of Chemung Financial Corporation’s common stock on the 12/16/2021 vesting date. |
|
(4) These amounts represent the fair value of $44.29, the closing price of Chemung Financial Corporation’s common stock on the 12/17/2021 vesting date. |
|
(5) These amounts represent the fair value of $44.70, the closing price of Chemung Financial Corporation’s common stock on the 12/20/2021 vesting date. |
Chemung Financial Corporation Amended and Restated Restricted Stock Plan (the "Restricted Stock Plan"):
Prior to the approval of the 2021 Equity Incentive Plan, the Corporation granted awards to executive officers, excluding the CEO, under the Restricted Stock Plan, a component plan of the 2014 Omnibus Plan. Awards granted under the Restricted Stock Plan vest over a five-year period, lapse with termination of employment, unless otherwise waived by the Compensation Committee, and vest immediately in case of death, disability or a change in control. In connection with the implantation of the 2021 Equity Incentive Plan, no more awards are permitted to be granted under the Restricted Stock Plan and the plan will remain in existence solely for the purpose of administering outstanding grants thereunder. For additional information, see the "Summary Compensation Table" section.
|
| | | | | | | | | |
| Name | | Vested Date | | All Other Stock Awards: Number of Shares of Stock | | Vested Date Fair Value of Stock Awards | |
| | | | | (#) | | ($) | |
| Karl F. Krebs | | 12/20/2017 | | 274 |
| | 14,823 |
| (1) |
| | 12/15/2017 | | 213 |
| | 11,134 |
| (2) |
| | 12/15/2017 | | 254 |
| | 13,277 |
| (2) |
| Louis C. DiFabio | | 12/20/2017 | | 187 |
| | 10,117 |
| (1) |
| | 12/20/2017 | | 213 |
| | 11,523 |
| (1) |
| | 12/19/2017 | | 158 |
| | 8,549 |
| (3) |
| | 12/15/2017 | | 218 |
| | 11,395 |
| (2) |
| | 12/15/2017 | | 213 |
| | 11,134 |
| (2) |
| Karen R. Makowski | | 12/20/2017 | | 213 |
| | 11,523 |
| (1) |
| | 12/20/2017 | | 187 |
| | 10,117 |
| (1) |
| | 12/19/2017 | | 198 |
| | 10,714 |
| (3) |
| | 12/15/2017 | | 218 |
| | 11,395 |
| (2) |
| | 12/15/2017 | | 213 |
| | 11,134 |
| (2) |
| | 02/06/2017 | | 217 |
| | 7,708 |
| (4) |
| Anders M. Tomson | | 12/20/2017 | | 187 |
| | 10,117 |
| (1) |
| | 12/19/2017 | | 237 |
| | 12,824 |
| (3) |
| | 12/15/2017 | | 213 |
| | 11,134 |
| (2) |
| Thomas W. Wirth | | 12/20/2017 | | 125 |
| | 6,763 |
| (1) |
| | 12/20/2017 | | 91 |
| | 4,924 |
| (1) |
| | 12/19/2017 | | 158 |
| | 8,549 |
| (3) |
| | 12/15/2017 | | 109 |
| | 5,697 |
| (2) |
| | 12/15/2017 | | 71 |
| | 3,711 |
| (2) |
(1) These amounts represent the market value of $54.10, the closing price for the Corporation’s common stock on the 12/20/2017 vesting date. |
(2) These amounts represent the market value of $52.27, the closing price for the Corporation’s common stock on the 12/15/2017 vesting date. |
(3) These amounts represent the market value of $54.11, the closing price for the Corporation’s common stock on the 12/19/2017 vesting date. |
(4) This amount represents the market value of $35.52, the closing price of the Corporation's common stock on the 2/6/2017 vesting date. |
Deferred Compensation PlanPlan:
The Deferred Compensation Plan allows a select group of management and employees to defer all or a portion of their annual compensation to a future date. Eligible employees areand generally highly compensatedhighly-compensated employees and are designated by the Board of Directors from time to time. Messrs. Tomson, Cosgrove and Krebs were the only NEOs who participated in the Deferred Compensation Plan in 2021. Investments in the plan are recorded as trading assets and deferred amounts are an unfunded liability of the Corporation. The Deferred Compensation Plan requires deferral elections be made before the beginning of the calendar year during which the participant will perform the services to which the compensation relates. Participants in the Deferred Compensation Plan are required to elect a form of distribution, either lump sum payment or annual installments not to exceed ten years, and a time of distribution, either a specified age or a specified date. The terms and conditions for the deferral of compensation are subject to the provisions of Section 409A of the IRS Code. The income from investments and cost of the plan are recorded as dividend, non-interest income, and non-interest expenses, respectively, in the consolidated statements of income.
Deferred Compensation Table:
As previously discussed in the “Deferred Compensation Plan” section, the Bank maintains a Deferred Compensation Plan. The following table sets forth the contributions made by the NEOs for 2021.
| | | | | | | | | | | | | | | | | |
|
| Name | Year | Employee Contribution | Registrant Contribution | Aggregate Earnings(1) | Aggregate Balance |
| | ($) | ($) | ($) | ($) |
|
| Anders M. Tomson | 2021 | 33,775 | — | 1,964 | 74,972 |
| | | | | |
| Peter K. Cosgrove | 2021 | 272,495 | — | 16,616 | 705,574 |
| | | | | |
| Karl F. Krebs | 2021 | 40,318 | — | 8,622 | 306,202 |
|
(1) These amounts are not reported in the "Summary Compensation Table" section. |
|
(2) Amounts reflected in the “Summary Compensation Table” section for the previous year for Messrs. Tomson, Cosgrove and Krebs include $30,250, $265,644 and $25,635, respectively. Mr. Fariello was not considered an NEOs in 2020. |
|
Pension BenefitsBenefits:
•Tax Qualified Pension Plan: Messrs. DiFabio and Wirth are participants inThe Bank adopted the Pension Plan, which is a non-contributory defined benefit pension plan. The Pension Plan isplan and a “qualified plan” under the Code and therefore must be funded. Contributions are deposited to the Planplan and held in trust. The Pension Plan assets may only be used to pay retirement benefits and eligible plan expenses. The Bank instituted a total “freeze” of any future benefit accruals under the Chemung Canal Trust Company Pension Plan (the “Pension Plan”) effective January 1, 2017. None of the NEOs are participants in the Pension Plan.
Under the Pension Plan, pension benefits are based upon final average annual compensation where the annual compensation is total base earnings paid plus salary deferrals. Bonuses, overtime, commissions and dividends are excluded. The normal retirement benefit equals 1.2% of final average compensation (highest consecutive five years of annual compensation in the prior ten years) times years of service (up to a maximum of 25 years), plus 1% of average monthly compensation for each additional year of service (up to a maximum of 35 years), plus 0.65% of average monthly compensation in excess of covered compensation for each year of credited service up to 35 years. Covered compensation is the average of the social security taxable wage bases in effect for the 35 year35-year period prior to normal social security retirement age. Compensation for purposes of determining benefits under the Pension Plan is reviewed annually. On September 21, 2016, the Board amended the Pension Plan to cease future benefit accruals effective January 1, 2017.
During the fourth quarter of 2018, the Corporation offered terminated, vested employees, the option to receive lump sum settlement
payments. The effects of these changes are reflected in Note 14 of the 10-K under pension plan disclosures as of December 31, 2018.
Normal retirement age under the Pension Plan is age 65. Participants may commence their retirement benefit prior to the age of 65 if they have at least five years of credited service and have attained age 55. The retirement benefit payable before age 65 is reduced to recognize the greater number of years during which the participant will receive the retirement benefit. The reduction is 6 2/3%6.67% for each year between age 60 and 65 that the benefit commences prior to the age of 65. The reduction prior to age 60, if the benefit commences between age 55 and 60, is 5.33% per year.
•Defined Contribution Supplemental Executive Retirement Plan (the "Defined(the “Defined Contribution SERP"SERP”): The Defined Contribution SERP is provided to certain executives to motivate and retain key management employees by providing a non-qualified retirement benefit that is payable at retirement, disability, death and certain other events. In 2017,The NEOs who participated in the plan in 2021 are as follows: Messrs. DiFabio, Krebs, Tomson, WirthCole, Cosgrove, Fariello and Mrs. Makowski wereKrebs. Under the only active participants.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 plan 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 compensatedhighly-compensated employees under SectionsSection 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974. The Defined Contribution SERP'sSERP’s expense is the Corporation’s annual contribution plus interest credits.
Pension Benefits TableDefined Contribution SERP Table:
| | | | | | | | | | | |
|
| Name | Registrant Contribution(1) | Aggregate Earnings(1) | Aggregate Balance(2) |
| ($) | ($) | ($) |
|
| Anders M. Tomson | 103,600 | 5,480 | 743,243 |
|
| Karl F. Krebs | 53,758 | 2,886 | 390,641 |
|
| Loren D. Cole | 45,542 | 715 | 129,032 |
|
| Peter K. Cosgrove | 47,773 | 537 | 110,424 |
|
| Daniel D. Fariello | 47,201 | 1,063 | 171,317 |
|
(1) Contributions are reflected in the “Summary Compensation Table” section for 2021. No aggregate earnings were reported in the “Summary Compensation Table” section. |
|
(2) Amounts reflected in the “Summary Compensation Table” section for the previous year for Messrs. Tomson, Krebs, Cole and Cosgrove include $96,000, $51,237, $43,309 and $46,402, respectively. Mr. Fariello was not considered an NEO in 2020. |
|
Pay Ratio Disclosure:
The table below sets forthBank’s compensation program is designed to motivate all employees to carry out the accumulated benefitsCorporation’s Mission of value for our shareholders, value for our clients, value for our employees and value for our communities. The Corporation aims to whichpay appropriate compensation at all levels within the executives would be entitled had they terminated employment December 31, 2017 and elected to commence their benefit at the earliest age at which they would receive an unreduced benefit, payable asBank.
The following is a monthly benefit for as long as the executive lived. The expected benefit payments are discounted using interest and mortality assumptions to produce the present valuereasonable estimate calculation, prepared in accordance with SEC rules, of the accumulated benefitratio 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 2021.
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, 2017. The assumed interest rate is 3.74% and the mortality assumption is based upon the IRS Static 2018 Mortality Table as specified in IRS Regulation 1.430(h)(3)-1, applied2021. We included all employees, whether employed on a static basis,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 2021.
After identifying the median employees as described above, we determined that the median employee had a total annual compensation of $41,512 for 2021. The total annual compensation for Mr. Tomson for the same period was $841,469. The ratio of Mr. Tomson’s annual compensation for 2021 to the expected yearmedian total annual compensation of benefit commencement.all other employees for 2021 was estimated to be 1-to-20.
|
| | | | | | | |
| Name | | Plan Name | | Number of Years Credited Service | | Present Value of Accumulated Benefit |
| | | | | | | ($) |
| Louis C. DiFabio | | Chemung Canal Trust Company Pension Plan | | 27 | | 525,680 |
|
| Thomas W. Wirth | | Chemung Canal Trust Company Pension Plan | | 30 | | 529,932 |
|
The increase in the actuarial present value of accumulated benefits is the difference between the actuarial present value of accumulated benefits as of December 31, 2016 and December 31, 2017, taking into account the changes in the discount rate assumption, the mortality assumption, and the fact that each participant is one year closer to expected retirement. Since benefits under both pension plans were frozen at December 31, 2016, there were no increases in the accrual benefits during 2017.
|
| | | | | | | | | | | | | |
Name | | Plan Name | | Increase in the Actuarial Present Value of the Pension Benefit as of December 31, 2017Agreements with Named Executive Officers |
| | | | ($) |
Louis C. DiFabio | | Chemung Canal Trust Company Pension Plan | | 47,772 |
|
Thomas W. Wirth | | Chemung Canal Trust Company Pension Plan | | 49,551 |
|
Defined Contribution SERP Table
As previously discussed above, the Bank maintains a Defined Contribution SERP to provide additional retirement income to select, key employees. The Plan was first adopted in June 2012. The following Table sets forth the Bank contributions for 2017 on behalf of the NEOs.
|
| | | | | | | | | |
| Name | | Registrant Contribution | | Aggregate Earnings(1) | | Aggregate Balance(2) |
| | | ($) | | ($) | | ($) |
| Anders M. Tomson | | 75,000 |
| | 5,036 |
| | 341,858 |
|
| Karl F. Krebs | | 43,760 |
| | 2,562 |
| | 179,542 |
|
| Louis C. DiFabio | | 36,154 |
| | - |
| | 36,154 |
|
| Karen R. Makowski | | 40,227 |
| | 3,678 |
| | 235,135 |
|
| Thomas W. Wirth | | 35,060 |
| | - |
| | 35,060 |
|
(1) No amounts reported in the Executive Compensation Table on page 21. |
(2) Amounts reflected in the Executive Compensation Table for previous years: Mr. Tomson $122,694; Mr. Krebs $84,465; Mr. DiFabio $0; Mr. Wirth $0; and, Mrs. Makowski $78,675. |
Deferred Compensation Table
As previously discussed on page 23, the Bank maintains a Deferred Compensation Plan that allows a select group of management and employees to defer all or a portion of their annual compensation to a future date. Eligible employees are generally highly compensated employees and are designated by the Board of Directors from time to time. The following Table sets forth the contributions made by the NEOs for 2017.
|
| | | | | | | | | | | | | |
| Name | | Year | | Employee Contribution | | Registrant Contribution | | Aggregate Earnings(1) | | Aggregate Balance(2) |
| | | | | ($) | | ($) | | ($) | | ($) |
| Karl F. Krebs | | 2017 | | 21,880 |
| | - | | 5,388 |
| | 116,208 |
|
| Louis C. DiFabio | | 2017 | | 15,996 |
| | - | | 5,163 |
| | 157,519 |
|
| Karen R. Makowski | | 2017 | | 9,300 |
| | - | | 3,891 |
| | 57,606 |
|
(1) No amounts reported in the Executive Compensation Table on page 21. |
(2) Amounts reflected in the Executive Compensation Table for previous years: Mr. Krebs $43,123; Mr. DiFabio $27,256; and, Mrs. Makowski $15,753. |
Potential Payments upon Termination of Employment or Change in Control
The following paragraph summarizes the estimated amounts payable to each of the NEOs under an employment agreement or change in control agreement assuming employment was terminated December 31, 2017.2021.
The Bank has entered into a Change ofin Control Agreement with Mr. Tomson, President &and CEO. FollowingIf within 12 months following a change in control, if Mr. Tomson’s employment is terminated within twelve monthswithout cause or if heMr. Tomson resigns for anygood reason, the agreement provides for a cash severance payment equal to 2.99 times the highest annual compensation (including onlyrate of base salary and bonus)highest annual incentive award paid to, or earned by, the Bank to the executiveMr. 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 histhe effective date of the termination. The amountexecutive's shares of severance pay that Mr. Tomson would be entitled to, pursuant to the Change in Control Agreement, if termination had occurred on December 31, 2017 would be $1,770,749.restricted stock shall immediately vest and all restrictions thereon shall lapse. See “Potential Payments Table” below for more information.
The Bank has entered into Change ofin Control Agreements with executive officers DiFabio, Krebs, MakowskiCole, Cosgrove and Wirth. FollowingFariello. If within 12 months following a change in control, if the executive’s employment is terminated within twelve monthswithout cause or if the executive resigns for anygood reason, the agreements provide for payments of 2.0 times the executive’s highest annual compensation (including onlyrate of base salary and bonus)highest annual incentive award paid to, or earned by, the Bank to the executive for any of the two calendar years ending with the year in which the executive’s employment ended. Payments would be made in equal monthly installments for twenty-four (24) months following the effective date of the termination. The amountexecutive’s shares of severance pay that eachrestricted stock shall immediately vest and all restrictions thereon shall lapse. See “Potential Payments Table” below for more information.
Potential Payments Table: | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| Name and Principal Position | Type of Payment | Involuntary Termination Without Cause or Voluntary Termination For Good Reason Within One Year of Change in Control(1)(2)(3) | Voluntary Resignation | Retirement | Disability | Death | Involuntary Termination With Cause(1) | Involuntary Termination Without Cause or Voluntary Termination for Good Reason(1)(3) |
| | ($) | ($) | ($) | ($) | ($) | ($) | ($) |
|
| Severance | 2,634,190 | — | — | — | — | — | — |
| Anders M. Tomson | Restricted Stock(4) | — | — | — | — | — | — | — |
| President and CEO | Non-Qualified SERP(5) | 743,243 | 668,919 | 668,919 | 743,243 | 743,243 | — | 668,919 |
| Disability | — | — | — | 284,588 | — | — | — |
| Total | 3,377,434 | 668,919 | 668,919 | 1,027,831 | 743,243 | — | 668,919 |
|
| Severance | 889,578 | — | — | — | — | — | — |
| Karl F. Krebs | Restricted Stock(4) | — | — | — | — | — | — | — |
| Executive Vice President, | Non-Qualified SERP(5) | 390,641 | 390,641 | 390,641 | 390,641 | 390,641 | — | 390,641 |
| CFO and Treasurer | Disability | — | — | — | 17,073 | — | — | — |
| Total | 1,280,218 | 390,641 | 390,641 | 407,714 | 390,641 | — | 390,641 |
|
| Severance | 752,420 | — | — | — | — | — | — |
| Loren D. Cole | Restricted Stock(4) | 162,993 | — | — | 162,993 | 162,993 | — | — |
| Executive Vice President, | Non-Qualified SERP(5) | 129,032 | — | — | 129,032 | 129,032 | — | — |
| and CIO | Disability | — | — | — | 390,324 | — | — | — |
| Total | 1,044,445 | — | — | 682,349 | 292,025 | — | — |
|
| Severance | 796,734 | — | — | — | — | — | — |
| Peter K. Cosgrove | Restricted Stock(4) | 125,833 | — | — | 125,833 | 125,833 | — | — |
| Executive Vice President, | Non-Qualified SERP(5) | 110,424 | — | — | 110,424 | 110,424 | — | — |
| CCO and CRO | Disability | — | — | — | 140,007 | — | — | — |
| Total | 1,032,992 | — | — | 376,265 | 236,258 | | |
|
| Severance | 780,005 | — | — | — | — | — | — |
| Restricted Stock(4) | 162,714 | — | — | 162,714 | 162,714 | — | — |
| Daniel D. Fariello | Non-Qualified SERP(5) | 171,317 | — | — | 171,317 | 171,317 | — | — |
| President, Capital Bank Division | Disability | — | — | — | 454,867 | — | — | — |
| Total | 1,114,037 | — | — | 788,899 | 334,032 | — | — |
|
(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 $46.45 per share, the closing price for the Corporation's common stock on December 31, 2021. |
(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"); provided, however, that in the event the executive officer receives any payments or other compensation that would constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code (the "Code"), and, would otherwise be subject to the excise tax imposed by Section 4999 of the Code, then the benefit shall be reduced to the minimum degree necessary to avoid application of the excise tax. |
| | | | | | | | | | | | | | |
| Delinquent Section 16(a) Reports |
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The Corporation’s executive officers and directors, as well as any 10% shareholders of the executive officers would be entitled to, pursuant to the Change in Control Agreements, if termination had occurred on December 31, 2017 is as follows: Mr. Krebs $920,784; Mr. DiFabio $1,176,922; Mr. Wirth $1,095,821; and, Mrs. Makowski $895,867.
The amounts above do not take into account any reductions that may be required to avoid penalties under Section 280G of the Code.
Pay Ratio Disclosure
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 and CEO, to the median of the total annual compensation of all of our employees, except Mr. Tomson for 2017.
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, 2017. 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 2017.
After identifying the median employee as described above, we determined that the median employee had a total annual compensation of $41,402 for 2017, which was determined using the same methodology asCorporation, are required by the SEC for named executive officers as set forth in the summary compensation table on page 21. The total annual compensation for Mr. Tomson for the same period shown in the summary compensation table was $738,148. The ratio of Mr. Tomson’s total annual compensation for 2017 to the median total annual compensation of all other employees for 2017 was 18:1.
RELATED MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires directors and certain officers of the Bank and persons who beneficially own more than ten percent of the outstanding shares of the Corporation’s common stock to file reports of beneficial ownership and changes of beneficialwith the SEC regarding their ownership of shares ofCorporation common stock, ofincluding changes in their stock ownership. The Corporation has reviewed these reports filed by the CorporationCorporation’s executive officers and directors during 2021, along with written statements received from the SEC. SEC regulations require such persons to furnish the Corporation with copies of all Section 16(a) reports they file.directors and executive officers. Based solely upon review of the copies of suchthese reports furnished to the Corporation and its representatives and certain representations that no other reports were required, subject to the SEC reporting requirements, all persons except Mr. Swandirectors and Mrs. Hazelton who each had one late report with one transaction,executive officers filed the required reports on a timely basis.
Transactions With Certain Related Persons
Loans and Extensions of Credit.
The Sarbanes-Oxley Act generally prohibits publicly traded companies from making loans to their executive officers and directors, but 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 aggregate outstanding amount of our loans to our executive officers, directors and their related parties was $39.2 million at December 31, 2017. At December 31, 2017, all of our 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, 2017, and were made in compliance with federal banking regulations.
Additionally, any transactions that would be required to be reported must be reviewed by our 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 us from an unrelated third party through an arms-length transaction.
Director Becker is a managing member of Two Slingerlands Associates LLC (“Slingerlands”) from which the Bank leases its branch located at 1365 New Scotland Road, Slingerlands, New York, under a lease agreement through August 2019 with monthly rent expense totaling $4,000 per month. Annual rent paid to Slingerlands totaled $51,000 for the year ended December 31, 2017. The rent owed to Slingerlands over the remaining term of the lease is $80,000.
Code of Ethics
The Board of Directors has adopted a Code of Ethics for senior financial officers, which applies to the Bank's Chief Executive Officer, the Chief Auditor 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:
http://www.snl.com/IRW/govdocs/100690
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 and 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 2017. The charter was approved in February 2018 and can be viewed on the Bank’s website at http://www.snl.com/irweblinkx/govdocs.aspx?iid=100690.
On March 7, 2018, the Audit Committee appointed the independent registered public accounting firm, Crowe Horwath LLP, as the Corporation’s independent auditors for the fiscal year ending December 31, 2018.
The Audit Committee has reviewed and discussed with management and with Crowe Horwath LLP, the Corporation’s audited consolidated financial statements for the year ended December 31, 2017. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board; and, received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's communications with the Audit Committee concerning independence, and have discussed with the independent registered public accounting firm their independence from us. 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 also reviewed with Crowe Horwath LLP their audit plans, audit scope and identification of audit risks.
The Audit Committee discussed and reviewed with Crowe Horwath LLP all communications required by Statement on Auditing Standards No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board, and has discussed and reviewed the results of their examination of the financial statements.
Based upon the above-mentioned reviews and discussions with management and Crowe Horwath, 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, 2017 to be filed with the Securities and Exchange Commission.
The Audit Committee:
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| Kevin B. Tully, Chairman | G. Thomas Tranter Jr | Shareholder Proposals for Inclusion in the 2023 Proxy Statement |
| David J. Dalrymple | Larry H. Becker | |
| John F. Potter | Thomas R. Tyrrell | |
Fees Paid to Independent Registered Public Accounting Firm
Fees billed by Crowe Horwath LLP relating to the years ending in 2016 and 2017 are provided in the following table. All services provided by Crowe Horwath in 2016 and 2017 were pre-approved by the Audit Committee.
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| Type of Service | Fiscal Years Ended December 31, |
| | 2017 | | 2016 |
| Audit Fees | $275,000 |
| | $256,000 |
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| Audit-Related Fees | 7,500 |
| | 40,000 |
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| Captive Insurance Subsidiary Fees | 18,000 |
| | 130,000 |
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| All Other Fees | — |
| | — |
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| Total Fees | $300,500 |
| | $426,000 |
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The audit fees were for professional services rendered for the audit of the Corporation’s annual financial statements, management’s report on internal control over financial reporting and review of financial statements included in the Corporation’s Quarterly Reports on Form 10-Q,and services that are normally provided by Crowe Horwath LLP in connection with statutory and regulatory filings or engagements.
The $7,500 in Audit-Related Fees for 2017 consisted of an additional billing for the integrated audit of the consolidated 2016 financial statements. The $40,000 in Audit Related Fees for 2016 consisted of an additional billing of $30,000 for the integrated audit of the consolidated 2015 financial statements and internal controls over financial reporting, and $10,000 for procedures related to the June 30, 2016 10-Q filing.
The Captive Insurance Subsidiary Fees for 2017 were for audit and tax services. The Captive Insurance Subsidiary Fees for 2016 were for the costs related to the preparation of a feasibility analysis and the implementation of Chemung Risk Management, Inc.
Audit Committee Pre-Approval 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 Horwath 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.
Proposal 3:
Ratification of Appointment of Independent Registered Public Accounting Firm
The Audit Committee has appointed Crowe Horwath LLP as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2018. Although shareholder approval of the appointment of Crowe Horwath LLP is not required, the Board believes that it is important to give shareholders an opportunity to ratify this selection. If it is not ratified, the Audit Committee will consider the shareholders’ views in future selections of the Corporation’s independent auditors.
A representative of Crowe Horwath LLP is expected to be present at the Annual Meeting and available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF CROWE HORWATH LLP AS THE CORPORATION'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.
SHAREHOLDER PROPOSALS AT THE ANNUAL MEETING IN THE YEAR 2019
The Corporation’s Board will establish thea date for the 20192023 Annual Meeting of Shareholders. Under SEC regulations, in order for a shareholder to be entitled to have a shareholder proposal included in the Corporation’s proxy statement for the 2019 meeting, the shareholder must be a record or beneficial owner of a least 1% or $2,000 in market value of shares entitled to be voted at the meeting, and shall have held such shares for at least one year and shall continue to own such shares through the date on which the meeting is held. The shareholder'sshareholder’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 NovemberDecember 30, 2018,2022, which is 120 days prior to the date the proxy statement for the 20192023 Annual Meeting will be first mailed. The shareholder must also satisfy the other requirements of SEC Rule 14a-8. Under new 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 2023 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 8, 2023. 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.
GENERAL
The Corporation’s 2017 Annual ReportBylaws establish an advance notice procedure with regard to Shareholders on Form 10-K, together withcertain matters, including shareholder proposals and director nominations, which are properly brought before an abbreviated report forannual meeting of shareholders. To be timely, a shareholder’s notice must be delivered to or mailed and received at the twelve-month period accompanies thisCorporation’s principal executive offices not less than 120 calendar days prior to the anniversary date the Proxy Statement which was mailed to shareholders onin connection with the previous year’s annual meeting of shareholders. In the event that no annual meeting was held in the previous year or about March 30, 2018. The annual report is not partthe date of the proxy solicitation materials. The Annual Report on Form 10-K is also available onannual meeting has been changed by more than 30 days from the Bank’s website, http://www.snl.com/IRW/Docs/100690 and will be furnished to anydate contemplated at the time of the previous year’s Proxy Statement, notice by the shareholder upon written request to the Corporate Secretary, One Chemung Canal Plaza, Elmira, New York 14901.
OTHER MATTERS
The Board is not aware of any other matters to be broughttimely must be so received a reasonable time before the Annual Meeting other than as specified above. If, however, any other matters should come before the 2018 Annual Meeting, itsolicitation is intended that the persons named in the enclosed proxy, or their substitutes, will vote such proxy in accordance with their best judgment on such matters.
By Order of the Board of Directors
Kathleen S. McKillip
Secretary
made.
Date: March 30, 2018
One Chemung Canal Plaza
Elmira, New York 14901
CHEMUNG FINANCIAL CORPORATION
Annual Meeting of Shareholders – May 10, 2018
This proxy is solicited on behalf of the Board of Directors
The undersigned shareholder(s) hereby appoint(s) Karl F. Krebs and Thomas J. Whitaker as proxies, with power to act without the other and with the power to appoint his substitute, and hereby authorizes them to represent and vote as designated on the items on the reverse side, and at the discretion of said proxies on such other matters as may properly come before the meeting, all the shares of stock of Chemung Financial Corporation held on record by the undersigned on March 12, 2018, standing in the name of the undersigned with all powers which the undersigned would possess if present at the Annual Meeting of Shareholders of the Corporation to be held May 10, 2018 or any adjournment thereof.
(Continued and to be marked, signed and dated on reverse side)
ANNUAL MEETING OF SHAREHOLDERS OF
CHEMUNG FINANCIAL CORPORATION
MAY 10, 2018
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PROXY VOTING INSTRUCTIONS |
INTERNET – Access www.voteproxy.com and follow the on-screen instructions or scan the QR code with your smartphone. Have your Proxy Card available when you access the web page.
TELEPHONE – Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your Proxy Card available when you call.
Vote online/phone until 11:59 PM EST the day before the meeting.
MAIL – Sign, date and mail your Proxy Card in the envelope provided as soon as possible.
IN PERSON - You may vote your shares in person by attending the Annual Meeting.
GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access.
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NOTICE OFINTERNET AVAILABILITY OF PROXY MATERIALS: The Notice of Meeting, Proxy Statement and Proxy Card are available at http://www.astproxyportal.com/ast/01079
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Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS, "FOR" PROPOSALS 2 AND 4, AND FOR THE OPTION OF AN ANNUAL VOTE AS THE PREFERRED FREQUENCY FOR ADVISORY VOTES ON EXECUTIVE COMPENSATION IN PROPOSAL 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
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1. Election of Directors:
o For all Nominees
o Withhold Authority
For All Nominees
o For All Except
(see instructions below)
| NOMINEES:
Three-Year Term:
mDavid J. Dalrymple
m Denise V. Gonick
m Kevin B. Tully
m Thomas R. Tyrrell
One-Year Term:
m Larry H. Becker
mDavid M. Buicko
m Jeffrey B. Streeter
| 2. To approve, on a non-binding, advisory basis,
the compensation of the Named Executive
Officers of the Company (“Say-on-Pay”).
3. To vote on a non-binding, advisory basis, on the frequency of the Say-when-on-Pay vote.
4. To ratify the appointment of Crowe Horwath
LLP as the Company’s independent registered
public accounting firm for the fiscal year ending
December 31, 2018.
| FOR AGAINST ABSTAIN
ooo
Every Every
Every Two Three
Year Year Years ABSTAIN
oooo
FOR AGAINST ABSTAIN
ooo
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INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: l
| This proxy will, when properly executed, be voted as directed by the shareholder.
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof.
If no direction is given, this proxy will be voted "FOR" the election of the nominees in Proposal 1, "FOR" Proposals 2 and 4, and "EVERY YEAR" for Proposal 3.
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To change the address on your account, please check the box and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. |
Signature of Shareholder | Date | Signature of Shareholder | Date |
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
