(1) This column excludes shares reflected under the column “Number of Securities to be issued upon exercise of outstanding options.”



SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE



Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the Company's officers and directors, and persons who beneficially own more than 10% of the Company's common stock, to file initial reports of ownership and reports of changes in ownership with the SEC.  Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.



Based solely on a review of the copies of such forms furnished to the Company and written representations from the Company's officers and directors, the Company believes that during fiscal 2013,year 2016, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with by such persons, except that Nora B. Sullivan filed a late report on Form 4 to report a purchase of 200 shares of common stock of the Company.persons.





The Company's bylaws provide for a classified board of directors, with three classes of directors, each nearly as equal in number as possible.  Each class serves for a three-year term, and one class is elected each year.  The Board of Directors is authorized by the Company's bylaws to fix from time to time, the number of directors that constitute the whole Board of Directors.  The Board size is set at thirteen members.  The nominees for director at the 20142017 Annual Meeting are: Michael A. Battle, James E. Biddle, Jr., Marsha S. Henderson, Kenneth C. Kirst,Jody L. Lomeo,  Oliver Sommer, and Nora B. Sullivan for terms to expire at the 2017 Annual Meetingfollowing terms and until their successors are duly elected and qualified.qualified:



The Board of Directors has no reason to believe that any nominee would be unable or unwilling to serve, if elected. In the event that any nominee for director becomes unavailable and a vacancy exists, it is intended that the Nominating Committee of the Board of Directors will recommend a substitute nominee for approval by the Board of Directors.



ItRequired Vote

Under New York law and the Company’s bylaws, directors are elected by the affirmative vote, in person or by proxy, of a plurality of the votes cast at a meeting at which a quorum is intended that proxies solicited bypresent.  Only votes actually cast will be counted for the purpose of determining whether a particular nominee received more votes than the persons, if any, nominated for the same seat on the Board of DirectorsDirectors.  This means that, for Proposal I, the five director nominees identified in this Proxy Statement will unlessbe elected if they receive more affirmative votes than any other nominees.  Votes to withhold in an uncontested election and broker non-votes will have no effect on the outcome of this vote.

Unless otherwise directed, be votedthe persons named in the proxy card intend to vote shares as to which proxies are received “FOR” the director nominees: Michael A. Battle, James E. Biddle, Jr., Marsha S. Henderson, Kenneth C. Kirst,Jody L. Lomeo, Oliver Sommer, and Nora B. Sullivan.



THE COMPANY’S BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES OFFOR ELECTION TO THE BOARD OF DIRECTORS.



INFORMATION REGARDING DIRECTORS, DIRECTOR NOMINEES

AND EXECUTIVE OFFICERS



The following tables set forth the names, ages, and positions of the director nominees, the directors continuing in office, and the executive officers of the Company:



Nominees for Director:

* Independence has been determined by the Company’s Board of Directors as defined in the listing rules of NYSE MKT.



Directors Continuing in Office and Executive Officers:



† Executive Officer

*  Independence has been determined by the Company’s Board of Directors as defined in the listing rules of NYSE MKT

** As previously reported on a Form 8-K filed on November 25, 2013, Mr. Brothman has announced his intention to resign from the Board of Directors effective April 30, 2014.





Directors, Director Nominees and Executive Officer Information.



Set forth below are the biographies of (1) each of the nominees and continuing directors containing information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Board to determine that the person should serve as a director for the Company beginning in 2014,2017, and (2) the executive officers of the Company.



Nominees for Director



Mr. Battlehas been a director of the Company since August 2016.  He has been a partner of the Washington, DC office of Barnes & Thornburg LLP, specializing in White Collar Criminal Defense, and is a member of the Litigation Department since April 1, 2016.  Mr. Battle’s practice focuses on commercial and civil litigation, white collar criminal matters, and appeals.  Prior to his role with Barnes & Thornburg, Mr. Battle was a senior partner of Schlam, Stone & Dolan LLP from 2010 – April 2016 and was a partner of Fulbright & Jaworski LLP from 2007 – 2010.  He was Director of the Executive Office for United States Attorneys from 2005 – 2007, providing administrative oversight of all 93 United States Attorneys and serving as a liaison between the United States Attorneys and the Justice Department and other federal agencies.  Mr. Battle served as United States Attorney with the United States Attorney’s Office, Western District of New York, from 2002 – 2005.  From 1996 – 2002, he was appointed by Governor George Pataki (and subsequently elected) to serve as Judge for Erie County Family Court, providing rulings in thousands of family-law and matrimonial cases.  Mr. Battle served as Attorney in Charge with the New York State Attorney’s Office, Buffalo Regional Office, from 1995 – 1996.  He was the Assistant Federal Defender with the Federal Defender’s Office, Western New York, from 1992 – 1995 and Assistant United States Attorney with the United States Attorney’s Office, Western District of New York, from 1985 – 1992.  Mr. Battle began his career as an Attorney with the Legal Aid Society of New York, Civil Division, from 1981 – 1985.  We believe that Mr. Battle’s wide-ranging and extensive legal and governance experience make him a valuable member of our Board and its Corporate Governance and Nominating Committee.

Mr. Biddle has been a director of the Company since 2001.  He serveshas served as the Chairman and Treasurer of Mader Construction Co., Inc., and has held that position since 2001.  Mr. Biddle servesalso has served as the Chief Financial Officer of Bullis Investors, LLC, and has held that position since 2007.  In addition, Mr. Biddle serveshas served as the Vice President and Treasurer of Arric Corp., an environmental remediation company.  Mr. Biddle has extensive experience in the construction sector, an attribute that enables him to assist the Board in understanding the opportunities and risks of a large component of our loan portfolio.  In addition, his experience as a treasurer provides the Board with skills in assessing risk and exercising diligence, which are functions relevant to his service on the Audit Committee, as well as the Governance and Nominating Committees.  We believe that Mr. Biddle’s work in the construction industry, his continuing executive experience, and his proven financial acumen make him a very valuable member of our Board and its Audit, GovernanceHuman Resources and Nominating Committees.

Ms. Hendersonhas been a director of the Company since 2011.  She is the Consultant to the President at the University at Buffalo, a university in the State University of New York system, and has held that position since 2011.  From 2005 to 2011, Ms. Henderson served as the Vice President for External Affairs at the University at Buffalo.  Ms. Henderson was the President of the Western New York District of KeyBank, N.A. from 1998 to 2005.  From 1990 to 1998, Ms. Henderson held the position of Senior Vice President and Market Manager, Private Clients Group, of Fleet Boston.  Ms. Henderson worked at M&T Bank from 1971 to 1990, with much of her time spent in commercial lending and operations, including as Vice President of the WNY Commercial Group from 1985 to 1990.  Ms. Henderson’s experience working in a leadership position in the Western New York banking industry and her highly visible role in one of Western New York’s leading institutions in the University at Buffalo provide the Board with valuable banking and strategic expertise and community leadership, and qualify her for service as chair of the Board’s Governance Committee and a member of the Board’s NominatingCompensation Committee.



Mr.  KirstLomeo has been the President and Chief Executive Officer of Kaleida Health, a directorhealthcare provider in Western New York, since April of 2014 and served as interim CEO from January 2014 - February 2014.  In addition to Kaleida Health, since 2014 he has served as the President and Chief Executive Officer of the Company since 2005.  He isGreat Lakes Health System of Western New York, the Executive Vice Presidentparent organization responsible for integrating the clinical activities of Kirst Construction, Inc.Kaleida Health, Erie County Medical Center Corporation (ECMC), a construction company,University at Buffalo and has held that position since 2004.  From 1976 until 2004, he was the Vice PresidentCenter for Hospice & Palliative Care.  Mr. Lomeo served as CEO of Kirst Construction, Inc.ECMC from 2009 - 2014.  We believe Mr. Kirst’sLomeo’s significant executive experience and community leadership qualify him to serve as an executive in a construction company provides the Board with in-depth knowledge of the real estate marketplace.  We believe that his high-level executive experience qualifies him for service as aintegral member of our Board of DirectorsDirectors.

Mr. Sommerhas been a partner with The River Group, a management consulting firm assisting CEOs and its Human Resourcesenior executive transform their organizations and Compensation Committee.leaders in order to achieve strategic intent, since July 2013.  His role includes leading the marketing, business development, practice development, client engagement management, infrastructure establishment, and recruiting efforts.  Prior to his role with The River Group, Mr. Sommer was Executive Vice President, Corporate Development, with First Niagara

Financial Group, Inc. (now part of KeyCorp.) from 2010 – 2013, providing financial services to individuals, families and businesses across Upstate New York, Pennsylvania, Connecticut and Massachusetts.  Mr. Sommer was the President of Aston Associates / Aston Strategic Capital, a boutique advisory firm for financial institutions and their investors, from 2004 – 2010, and Managing Director from 1996 – 2003.  We believe Mr. Sommer’s extensive experience in the financial services industry in a variety of roles, but in particular in corporate strategy and development, make him well-qualified to serve on our Board of Directors. 



Ms. Sullivan has been a director since September 2013.  She is President of Sullivan Capital Partners, LLC, a financial services company providing investment banking and consulting services to closely-held private businesses.  Ms. Sullivan focuses on strategic planning, mergers and acquisitions, and governance matters.  Prior to founding Sullivan Capital Partners in 2004, Ms. Sullivan worked for Citigroup Private Bank from 2000 to 2004, providing wealth management and private equity services to high net worth clients.  From 1995 to 1999, Ms. Sullivan was Executive Vice President of Rand Capital Corporation, (NASDAQ: RAND), a publicly traded closed-end investment management company providing capital and managerial expertise to small and mid-size businesses.  Ms. Sullivan began her career in the legal profession where she held various positions with significant legal responsibility and acquired a solid foundation in corporate related matters and business transactions. In 2015, Ms. Sullivan joined the board of directors of 22nd Century Group, Inc. a publicly traded company that is in the plant biotechnology industry and is a leader in tobacco harm reduction. She is currently and has been a member of the board of directors of several privately held businesses, working closely with fellow board members, management and ownership on strategic planning initiatives, developing exit strategies and implementing sound governance practices.  We believe Ms. Sullivan’s unique combination of legal experience and financial services expertise qualifies her to serve on our Board of Directors, and as a

member of the Board’s Human Resource and Compensation and Governance Committees.   Audit Committee.



Directors Continuing in Office and Executive Officers

Mr. Brothman has been a director of the Company since 1976.  He was a partner in the law firm of Hurst Brothman & Yusick from January 1969 until February 2004 when Hurst Brothman & Yusick merged with Harris Beach PLLC.  Mr. Brothman was a member of the law firm of Harris Beach PLLC from February 2004 until January 2010 when he became Senior Counsel to the Firm, and later retired as counsel to Harris Beach, PLLC on December 31, 2013.  He served as Chairman of the Board of Directors of the Company and Chairman of the Board of Directors of Evans Bank, N.A. (the “Bank”) from January 2001 through April 2012.  Mr. Brothman has announced his intention to resign from our Board of Directors effective April 30, 2014.  Mr. Brothman’s board experience, from his eleven years as Chairman of the Company’s Board and his three decades of experience as a member of the Company’s Board of Directors, have provided him with key skills in working with directors and understanding board processes and functions.  These same skills have made him well suited to serve on our Audit Committee and Human Resource and Compensation Committee.  Further, we believe Mr. Brothman’s professional interaction with multiple sectors of industry, including local municipalities and school districts, small and mid-sized businesses, and high net-worth individuals, have provided our Board with insights into the local business climate. 



Mr. Miller has been a director of the Company since 2001 and has served as the Secretary of the Company since April 2010.  He has served as the President of The Evans Agency, LLC (“TEA”), an indirect wholly-owned subsidiary of the Company, since 2000 and as Executive Vice President of the Bank since December 2009.  He also has served as the President of Evans National Financial Services, LLC, a wholly-owned subsidiary of the Bank, since May 2002.  Mr. Miller serves as President of TEA pursuant to an employment agreement with the Company and TEA.  Mr. Miller’s substantial experience in the financial services industry gives him a solid foundation from which to advise the Board with respect to financial service acquisition opportunities, and his experience overseeing a financial sales force provides him with a practical background on matters such as developing strategies to succeed in a highly competitive marketplace.



Mr. Nasca has been a director of the Company since 2006.  Mr. Nasca also serves as the President and Chief Executive Officer of the Company and as President and Chief Executive Officer of the Bank.Evans Bank, N.A. (the “Bank”).  He has held the position of President of the Company and the Bank since 2006, and Chief Executive Officer of the Company and the Bank since 2007.  Mr. Nasca served as Chief Operating Officer of LifeStage, LLC, a health care services startup company, from October 2005 to August 2006.  From June 2004 to July 2005, Mr. Nasca served as Executive Vice President of Strategic Initiatives of First Niagara Financial Group.  Mr. Nasca held the position of Executive Vice President, Consumer Banking Group, Central New York Regional Executive of First Niagara Financial Group from June 2002 through June 2004.  From October 2000 to June 2002, Mr. Nasca served as President and CEO of Iroquois Financial, Inc. and Cayuga Bank which were wholly owned by First Niagara Financial Group.  Mr. Nasca serves as President and CEO of the Company and the Bank pursuant to an employment agreement with the Company and the Bank.  As President and CEO, Mr. Nasca provides our Board with information gained from hands-on management of our operations, identifying our near-term and long-term challenges and opportunities.  The Board has determined that Mr. Nasca’s significant experience in the banking industry over the past 30 years, including operational, financial, and executive roles, as well as his unique perspective as leader of our management team, qualifies him for service as a member of our Board of Directors.



Mr. O’Brien has been a director of the Company since 2003 and has served as Chairman of the Board since April 2012.  He previously served as Vice Chairman of the Board from 2008-2012.  Prior to his retirement in June 2004, Mr. O’Brien served as the Executive Director of Financial Administration for the Roman Catholic Diocese of Buffalo, New York.  Prior to his role with the Diocese of Buffalo, Mr. O’Brien was an audit partner at KPMG LLP, a national accounting and consulting firm.  We believe his extensive high-level executive experience monitoring regulatory financial compliance and interacting with inside and outside public accountants and auditors routinely exposed him to financial analysis and

oversight, preparing him for service a member of the Audit Committee.  These same skills and executive experience of over 40 years make him well suited as a member of our Corporate Governance and Nominating Committee and its Human Resource and Compensation Committee.

Mr. Pfalzgrafhas been a director of the Company since 2014.  He has been a Managing Partner of Rupp, Baase, Pfalzgraf, Cunningham LLC, a law firm specializing in private business enterprises ranging from closely-held family businesses to multi-national corporations, since April 2000.  Mr. Pfalzgraf leads the firm’s corporate practice group, working primarily with private business enterprises ranging from closely-held family businesses to multi-national corporations.  He assists clients with all corporate needs including business formations, restructurings, mergers and acquisitions, financing and investment, development, labor and employment issues, and commercial transactions.  Mr. Pfalzgraf’s extensive legal and business experience makes him a valuable member of our Board of Directors as well as our Corporate Governance and Nominating Committee and Human Resource and Compensation Committees.Committee.



Mr. Rogers has been a director of the Company since 2011.  He is a certified public accountant in New York State and the managing member of a real estate development company, Oakgrove Development, LLC, a position he has held since 2009.  Mr. Rogers was the Executive Vice President and Chief Financial Officer of Great Lakes Bancorp, Inc., the parent company of Greater Buffalo Savings Bank, from 2006 to 2008.  From 2004 to 2006, Mr. Rogers worked as an independent consultant, principally on Sarbanes-Oxley initiatives and business rationalization reviews.  Mr. Rogers worked at KPMG LLP, a leading accounting firm, from 1984 to 2004, serving as an audit partner from 1995 to 2004.  In his role as an auditor at KPMG LLP, Mr. Rogers worked on several engagements for financial institutions, particularly banks.  His many years of experience have provided Mr. Rogers with a very strong knowledge base on the banking industry.  His previous roles as an audit partner, SEC reviewing partner, and CFO also demonstrate his high level of competence in the areas of finance and accounting in general, and SEC reporting in particular, qualify him to be our Audit Committee Chairman and provide the Board an additional expert on these matters in an increasingly complex regulatory environment.



Mr. Waring has been a director of the Company since 1998.  He has owned and managed Waring Financial Group, a financial planning, insurance and financial services and sales firm since 1996.  Waring Financial Group was changed to GCW Risk and Benefit Solutions LLC in 2016.  Mr. Waring is the majority member of GCW Capital Group, LLC. Additionally, Mr. Waring is the majority member of GCW Capital, LLC, a fee only independent registered investment advisory entity formed in August 2014 and registered with the SEC.  GCW Capital, LLC and GCW Risk and Benefit Solutions, LLC market themselves to the public under the brand GCW Capital Group, LLC.  He has also been the managing member of Family & Business Directions, LLC, a fee-based consulting business serving family-held and closely-held business owners, their families, and key executives, since 2010.  In 2015, Mr. Waring became a member of Mallard Advisory Group, LLC.  The firm consists of principals with diverse backgrounds and expertise in serving businesses facing ownership and other major transitions. Mr. Waring’s financial services experience provides the Board with a deeper understanding of the products and services which the Company needs to provide in the marketplace to remain competitive, as well as the delivery of those products and services. He has also been the managing member of Family & Business Directions, LLC, a fee-based consulting business serving family-held and closely-held business owners, their families, and key executives, since 2010.  Mr. Waring frequently advises high net worth individuals, family business owners and closely-held business owners.  He is experienced in providing strategic planning and development advice, including designing and implementing executive and key employee benefits.  We believe that Mr. Waring’s qualifications to serve on our Board of Directors and as Chairman of our Human Resource and Compensation Committee include his extensive sales and marketing

experience with a financial services company, as well as his executive leadership and management experience.



Mr. Wortham has been a director of the Company since 2011 and has served as Vice Chairman since April 2012.  He has been a Partner in Barrantys LLC, a consultant and service provider to wealthy families and family offices, since 2007.  Prior to his role with Barrantys, Mr. Wortham was an Executive Vice President of First Niagara Financial Group from 2005 to 2007, where his responsibilities included wealth management, risk management, and corporate marketing.  From 1999 to 2005, Mr. Wortham was the Executive Vice President of Global Private Client Services, Product Development, and Central Operations for The Bank of New York.  Mr. Wortham held several positions at Chase Manhattan Bank and Chemical Bank (currently JP Morgan Chase & Co.) from 1985 to 1999, including leading the Global Private Bank’s activities in Europe, the Middle East, and Africa while based in London, England.  He started his career at M&T Bank in retail banking from 1980 to 1985.  Mr. Wortham’s extensive experience in the financial services industry makes him a valuable member of our Board, and its Audit and Human Resource and Compensation Governance, and Nominating Committees.  His expertise has been valuable in helping the Board evaluate the Company’s strategies to diversify its product offerings and revenue stream as a growing and competitive financial institution.



Mr. KajtochConnerton has served aswas appointed Treasurer of the Company and Chief Financial Officer of the Bank since 2007.on November 30, 2015.  Prior to his appointment as Treasurer of the Company he had served as Principal Accounting Officer of the Company between 2002 and 2010 and again between 2013 and 2015. He has also served as ExecutiveSenior Vice President and Treasurer of the Bank since 2009.  Mr. Kajtoch served as Senior Vice President of the Bank from 2007 to 2009.2010.  Prior to joining the Company, Mr. Kajtoch served asConnerton was a Vice PresidentSenior Auditor specializing in the Finance Division of M&T Bank.  His responsibilitiesauditing and consulting for banking, healthcare and manufacturing clients at M&T Bank included serving as manager of Management Accounting from 2005 to 2007.  Mr. Kajtoch serves as Treasurer of the Company and Chief Financial Officer and Executive Vice President of the Bank pursuant to an employment agreement with the Company and the Bank.Deloitte & Touche LLP.



CORPORATE GOVERNANCE

Independence of Directors



A majority of the Board of Directors, and each member of the Audit, Human Resource and Compensation, and Corporate Governance and Nominating Committees, are independent, as affirmatively determined by the Board, consistent with the criteria established by NYSE MKT and as required by our bylaws.



The Board has conducted an annual review of director independence for all current nominees for election as directors and all continuing directors.  During this review, the Board considered transactions and relationships during the prior year between each director or any member of his or her immediate family and the Company and its subsidiaries, affiliates and principal shareholders, including those reportedof the type described below under “Transactions with Related Persons.”  The Board also examined transactions and relationships between directors or their affiliates and members of senior management or their affiliates.  The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent.



As a result of this review, the Board affirmatively determined that of the nominees Michael A. Battle, James E. Biddle, Jr., Marsha S. Henderson,Jody L. Lomeo,  Oliver Sommer and Nora B. Sullivan meet the Company’s standard of independence, as do the following continuing directors: Phillip Brothman, John R. O’Brien, David R. Pfalzgraf, Jr., Michael J. Rogers, Thomas H. Waring, Jr., and Lee C. Worthman.  David J. Nasca and Robert G. Miller, Jr. were determined not to be independent because they are currently executive officers of the Company. Kenneth C. Kirst was determined not to be independent because transactions between the Bank and a company owned by Mr. Kirst’s son-in-law exceeded $120,000 during 2013.



Leadership Structure.  John R. O’Brien has served as Chairman of the Company’s Board of Directors since April 2012.  In his capacity as Chairman, Mr. O’Brien chairs meetings of the Board and executive sessions of the Board, coordinates the activities of the other independent directors, and performs such other duties and responsibilities as the Board of Directors may determine.  These duties also include chairing meetings of the Company’s shareholders, overseeing the preparation of agendas for meetings of the Board, keeping directors informed through the timely distribution of information and reports, maintaining contact with the Company’s CEO and outside counsel between meetings to stay current on developments and to determine when it may be appropriate to alert the Board to significant pending developments, serving as a liaison between independent directors and the CEO with respect to sensitive issues, and other matters.



We separated the positions of Chairman and CEO in 2001.  While the separation of these positions is not required by our bylaws, we believe that it is the most appropriate leadership structure for us at this time.  We believe that it is advantageous to separate the two positions in order to provide for independent director control over Board agenda and information flow, encourage open and lively communication between the independent directors and management, and to help balance the leadership of the Board.



Board of Directors Stock Ownership. Upon his or her first election or appointment to the Board of Directors, a new director must hold, or must obtain within 60 calendar days after such election or appointment, not less than $10,000 aggregate market value of the Company's common stock, based on the trailing 365-day average price.  A new director has a period of 5 years from the beginning of such director’s term of office to obtain the required $50,000 aggregate market value of the Company’s common stock, discussed below under “Board of Director Committees – Corporate Governance and Nominating Committee”.  The value of a new director’s qualifying shares at the beginning of his or her term in office will be determined as of the date purchased or the date on which the individual becomes a director, whichever value is greater.  As of the date of this Proxy Statement, all directors are in compliance with the Board of Directors stock ownership requirements.

Oversight of Risk Management. The Corporate Governance and Nominating Committee will review and discuss with management, at least annually, the Company’s risk governance structure and the Company’s risk management and risk assessment guidelines and policies regarding market, credit, operations, liquidity, funding, reputation and franchise risk, and the Company’s risk tolerance. The

Committee will review at least quarterly the major risk exposures of the Company and its business units against established risk management methodologies and targets. The Board’s role in the Company’s risk oversight process includes receiving regular reports, at least quarterly, from members of senior management on areas of material risk to the Company, including operational, financial, credit, liquidity, legal and regulatory, and strategic and reputational risks.  The full Board (or the appropriate committee in the case of risks that are under the purview of a particular committee) receives these reports from the appropriate “risk owner” within the organization to enable it to understand our risk identification, risk management and risk mitigation strategies.  When a committee receives the report, the chairman of the relevant committee reports on the discussion to the full Board during the committee reports portion of the next Board meeting.  This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.  The Board’s role in the Company’s risk oversight process has not directly impacted its leadership structure.



Compensation Risk.The Human Resource and Compensation Committee considers risk and its influence on the Company's compensation programs. This Committee reviews each compensation element individually and in the aggregate to ensure that the overall compensation program provides a balanced perspective that ultimately aligns pay with performance while also ensuring bonus / incentive programs do not motivate inappropriate risk-taking.  Equity award levels and practices are set to foster shared interests between management and shareholders, but are not considered by the Committee to be at levels that would drive inappropriate behavior. In the Committee's judgment, the compensation policies and practices of the Company do not give rise to material risks.

In addition, we arethe Company is subject to guidance issued by the FDIC, the FRB and the OCC designed to ensure that incentive compensation arrangements at banking organizations appropriately tie rewards to longer-term performance and do not undermine the safety and soundness of the firm or create undue risks to the financial system.  This guidance embodies three core principles, which are: (1) incentive compensation arrangements at a banking organization should provide employees incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risks; (2) these arrangements should be compatible with effective controls and risk management, and (3) these arrangements should be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.  We believe that our incentive compensation programs are in compliance with this guidance.



Policy for Director Attendance at Annual Meeting.  It is the policy of the Company that all directors be present at the Annual Meeting, barring unforeseen or extenuating circumstances.  All directors who were then serving were present at the Company’s 20132016 Annual Meeting, other than Ms. Sullivan, who was not yet a member of the Board of Directors.Meeting.    



Shareholder Communications with the Board of Directors.Shareholders and other parties interested in communicating directly with the Company’s Board of Directors may do so by writing to the Evans Bancorp, Inc. Board of Directors, One Grimsby Drive, Hamburg, NY 14075.  All correspondence received under this process is compiled and summarized by the Executive Assistant to the President and Chief Executive Officer of the Company and presented to the Board of Directors, in accordance with our Policy for Communication to the Board of Directors.  Concerns relating to accounting, internal controls or auditing matters are handled in accordance with procedures established by the Audit Committee, as set forth in our Employee Complaint Procedure for Accounting and Auditing Matters.  Each of these policies is available in the Governance Documents section of the Company’s website (www.evansbancorp.com)., which can be found under the “Corporate Overview” tab.



Code of Ethics for Chief Executive Officer and Principal Financial Officers.  The Company has a "Chief Executive Officer/Treasurer/Controller Code of Ethics," which is applicable to the Company’s principal executive officer, principal financial officer, and principal accounting officer.  The "Chief Executive Officer/Treasurer/Controller Code of Ethics" is available in the Governance Documents section of the Company’s website (www.evansbancorp.com)www.evansbancorp.com.),  which can be found under the “Corporate Overview” tab.  The Company intends to post amendments to or waivers from its code of ethics at this location on its website.

Board Meetings and Attendance at Board of Director and Committee Meetings.  The Company’s Board of Directors met thirteen times during fiscal 2016, including one strategic planning meeting.  Each incumbent director attended at least 75% of the aggregate of: (1) all meetings of the Company’s Board of Directors (held during the period for which he or she served as a director) and (2) all meetings held by the committees of the Company’s Board of Directors on which he or she served (during the periods that he or she served).

Availability of Committee Charters and Other Corporate Governance Documents.  Current copies of the written charters for the Audit Committee, the Human Resource and Compensation Committee, and the Corporate Governance and Nominating Committee, copies of the Company's "Chief Executive Officer/Treasurer/Controller Code of Ethics" and the "Code of Conduct," the "Policy for Communication to the Board of Directors," and the “Employee Complaint Procedure for Accounting and Auditing Matters” are available in the Governance Documents section of the Company's website (www.evansbancorp.com), which can be found under the “Corporate Overview” tab.





BOARD OF DIRECTOR COMMITTEES



The Company’s Board of Directors has four standingthree outstanding committees: the Audit Committee, the Corporate Governance and Nominating Committee, and the Human Resource and Compensation Committee and the Nominating Committee.  The members of each committee have been nominated by the Chairman of the Board of Directors and approved by the full Board.  The names of the members of each committee, together with a brief description of each committee’s function, are set forth below.



Audit Committee:







The Audit Committee met five times during fiscal 2013.2016.  The Audit Committee is responsible for reviewing the financial information of the Company that will be provided to shareholders and others, overseeing the systems of internal controls which management and the Board of Directors have established, selecting and monitoring the performance of the Company’s independent auditors, and overseeing the Company’s audit and financial reporting processes.  The Board of Directors has determined that John R. O’Brien, James E. Biddle, Jr., Michael J. Rogers, Nora B. Sullivan and Lee C. Wortham each qualify as an “audit committee financial expert” as defined in Item 407(d) of Regulation S-K, and that each member of the Audit Committee is an "independent director" in accordance with applicable NYSE MKT listing requirements, including the heightened independence requirements applicable to Audit Committee members, and Rule 10A-3(b)(1) under the Exchange Act.  The Board of Directors has adopted an Audit Committee Charter, which is available in the Governance Documents section of the Company's website at www.evansbancorp.com., which can be found under the “Corporate Overview” tab.



Human Resource and Compensation Committee: 





The Human Resource and Compensation Committee met fivefour times during fiscal 2013.2016.  The Human Resource and Compensation Committee is responsible for administering the Company’s equity incentive plans and awarding new grants thereunder, for administering the Evans Excels Performance Incentive

Plan, the Employee Stock Purchase Plan, the Executive Severance Plan, the SERP Plans (defined below), the Deferred Compensation Plan, and the Executive SeveranceIncentive Retirement Plan for making such determinations and recommendations as the Human Resource and Compensation Committee deems necessary or appropriate regarding the remuneration and benefits of employees of the Company and its subsidiaries and, in addition, for reviewing with management the Compensation Discussion and Analysis and providing a report recommending to the Board of Directors whether the Compensation Discussion and Analysis should be included in the Proxy Statement.



The Human Resource and Compensation Committee has the authority to act on behalf of the Board of Directors in setting compensation policy, administering Board or shareholder approved compensation plans, approving benefit programs and making decisions for the Board with respect to compensation of senior management.  TheExcept as otherwise required by the applicable rules of the SEC or the NYSE MKT, the Human Resource and Compensation Committee may delegate any of its responsibilities to a subcommittee comprised of one or more members of the Human Resource and Compensation Committee, the Board or members of management.  As discussed in more detail below under “Compensation Discussion and Analysis,” the Company’s executive officers may attend Human Resource and Compensation Committee meetings to present data and analysis and to make recommendations regarding executive (excluding the President and CEO) and employee compensation, benefit plans and promotions.promotions for executive officers other than the President and CEO.  The Human Resource and Compensation Committee, on an annual basis, reviews and approves corporate goals and objectives relevant to CEO and other officer compensation, evaluates the performance of the CEO and the other executive officers in light of those goals and objectives, and determines and recommends compensation levels for the CEO and the other executive officers to the full Board of Directors based on this evaluation.



The Human Resource and Compensation Committee also has the authority to review and recommend to the full Board for approval director compensation, including board fees, committee fees and additional compensation, including awards of restricted stock and stock options.



In carrying out its duties, the Human Resource and Compensation Committee has the authority to retain, at the Company’s expense, to oversee the work of, and to terminate, a compensation consultant.  The Human Resource and Compensation Committee also has the authority to retain independent counsel and other advisors at the Company’s expense.  TheDuring 2016, the Human Resource and Compensation Committee engaged Arthur WarrenPearl Meyer & Associates, Esq.,Partners, an executive compensation consultant specializing in community bank compensation plans, to provide advisory services regarding executive and director compensation and preparation for the Company’s first “Say On Pay” vote, conducted at the 2013 Annual Meeting of Shareholders.  The Committee also engaged McLagan, an Aon Hewitt company providing Performance/Reward consulting and benchmarking services for the financial services industry, to provide the Committee with an update and reporting on recent compensation trends within the industry, described in greater detail under “Executive Compensation – Compensation Discussion and Analysis – Compensation Recovery Policy” and “Executive Compensation – Compensation Discussion and Analysis – Executive Total Compensation”, respectively, below. compensation.



The Board of Directors has determined that each of the members of the Human Resource and Compensation Committee is an “independent director,” in accordance with applicable NYSE MKT listing requirements, including the heightened independence requirements applicable to compensation committee members.  The Board of Directors has adopted a Human Resource and Compensation Committee Charter, which is available in the Governance Documents section of the Company’s website at www.evansbancorp.com.,  which can be found under the “Corporate Overview” tab





Corporate Governance and Nominating Committee:





The Corporate Governance and Nominating Committee met twicefive times during fiscal 2013.2016.  Its purpose is to assist the Board in developing and implementing corporate governance guidelines for the Company, and to provide oversight of the corporate governance affairs of the Company, including strategic planning.  The Board of Directors has adopted a Governance Committee Charter, whichIt is available in the Governance Documents section of the Company’s website at www.evansbancorp.com.

Nominating Committee:

The Nominating Committee met once during fiscal 2013.  It isalso charged with the responsibility of identifying and recommending to the Board

candidates for director nominees to be presented to the shareholders for their consideration at the annual meetingsAnnual Meetings of shareholders,Shareholders, and to fill vacancies on the Board of Directors.  The director nominees for the Annual Meeting were selected by a majority of the independent directors of the full Board.  The Board of Directors has determined that each of the members of the Corporate Governance and Nominating Committee is an "independent director," in accordance with applicable NYSE MKT listing requirements. The Board of Directors has adopted a Corporate Governance and Nominating Committee Charter, which is available in the Governance Documents section of the Company'sCompany’s website at www.evansbancorp.com.  , which can be found under the “Corporate Overview” tab.



The Company's bylaws set out the procedure to be followed by shareholders desiring to nominate directors for consideration at an annual meeting of shareholders.  Under the Company's bylaws, shareholder director nominations must be submitted to the Secretary of the Company in writing not less than 14 days nor more than 50 days immediately preceding the date of the annual meeting.  If less than 21 days notice of the annual meeting is given to shareholders, nominations must be mailed or delivered to the Secretary of the Company not later than the close of business on the seventh day following the day on which the notice of meeting was mailed.  Such notification must contain the following information to the extent known by the notifying shareholder: (a) name and address of each proposed nominee; (b) the

principal occupation of each proposed nominee; (c) the total number of shares of common stock of the Company that will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of common stock of the Company owned by the notifying shareholder.  Candidates for nomination to the Board of Directors must meet criteria established from time to time by the Board of Directors or a duly authorized committee of the Board.  Additionally, the Company's bylaws require that, in order to serve as a director of the Company, an individual must be less than 70 years of age and must own at least $50,000 aggregate market value of the Company's common stock, based on the trailing 365-day average price,price.  During 2016, Section 204 of the Company’s bylaws were updated and must be less than 70revised to provide that a Director who obtains the age of seventy (70) years of age.  Uponold during his or her first election or appointment toterm as a Director may remain in office through the Board of Directors, a new director must hold, or must obtain within 60 calendar days after such election or appointment, not less than $10,000 aggregate market value of the Company's common stock, based on the trailing 365-day average price.  A new director has a period of 5 years from the beginning of such director’s term of office to obtain the required $50,000 aggregate market value of the Company’s common stock.  The value of a new director’s qualifying shares at the beginningexpiration of his or her term in office will be determined as of the date purchased or the date on which the individual becomes a director, whichever value is greater.term.  Nominations not made in accordance with the bylaws of the Company may be disregarded by the presiding officer of the meeting, in his or her discretion, and upon his or her instruction, the inspectors of election may disregard all votes cast for each such nominee.  However, in the event that any such nominee is nominated by more than one shareholder, the nomination shall be honored, and all votes cast in favor of such nominee shall be counted if at least one nomination for that person complies with the provisions of the bylaws of the Company.



The process whereby the Corporate Governance and Nominating Committee identifies director candidates may include identification of individuals well-known in the community in which the Company operates and individuals recommended to the Corporate Governance and Nominating Committee by current directors or officers who know those individuals through business or other professional relationships, as well as recommendations of individuals to the Corporate Governance and Nominating Committee by shareholders and customers.The Company has not historically received director candidate recommendations from its shareholders and does not have a formal policy regarding consideration of such recommendations.  However, the Corporate Governance and Nominating Committee will consider qualified nominees recommended by shareholders, and there is no difference in the manner in which the Corporate Governance and Nominating Committee will evaluate director candidates recommended by shareholders, as opposed to director candidates presented for consideration to the Corporate Governance and Nominating Committee by directors, officers or otherwise.  The Corporate Governance and Nominating Committee, in conjunction with the CEO, maintain a list of potential director candidates based upon community reputation and contacts, record of accomplishment, and skill set.  Additionally, the Corporate Governance and Nominating Committee reviews committee and Board assessments for competencies and needs and seeks to identify candidates that will assist in the continued development and enhancement of the Board of Directors.  In its evaluation of prospective director candidates, the Corporate Governance and Nominating Committee considers an individual's independence (as defined in the listing rules of NYSE MKT), as well as his or her skills and experience relative to the needs of the Company.  Director candidates meet personally with the members of the Corporate Governance and Nominating Committee and are interviewed to determine their satisfaction of the criteria referred to above.  Although

the Company has no policy regarding diversity, the charter of the Corporate Governance and Nominating Committee provides that diversity is one of the criteria the Nominating Committee may consider when selecting individuals to recommend for Board membership, together with independence, sound judgment, skill, integrity, willingness to make the required time commitment, understanding of financial statements and knowledge of and experience in the Company’s and its subsidiaries’ businesses, and the interplay of a candidate’s experience with the experience of other members of the Board of Directors.  There is no difference in the manner in which the Nominating Committee will evaluate director candidates recommended by shareholders, as opposed to director candidates presented for consideration to the Nominating Committee by directors, officers or otherwise.

Board Meetings and Attendance at Board of Director and Committee Meetings.The Company’s Board of Directors met twelve times during fiscal 2013.  Each incumbent director attended at least 75% of the aggregate of: (1) all meetings of the Company’s Board of Directors (held during the period for which he or she served as a director) and (2) all meetings held by the committees of the Company’s Board of Directors on which he or she served (during the periods that he or she served).

Availability of Committee Charters and Other Corporate Governance Documents.  Current copies of the written charters for the Audit Committee, Governance Committee,    Human Resource and Compensation Committee, and Nominating Committee copies ofworked with the Company's "Chief Executive Officer/Treasurer/Controller Code of Ethics"CEO to meet with and the "Code of Conduct," the "Policyinterview Mr. Lomeo and Mr. Sommer and subsequently recommended them for Communicationnomination to the Board of Directors," and the “Employee Complaint Procedure for Accounting and Auditing Matters” are available in the Governance Documents section of the Company's website at www.evansbancorp.com.Board.



DIRECTOR COMPENSATION

Director Compensation Philosophy.    The Company’s Director Compensation Program is designed to provide a compensation amount and structure that will attract and retain highly competent, skilled and engaged individuals for Board service.  Compensation is delivered in both cash and equity.  This split in compensation aligns director compensation with long term shareholder value and provides directors with an appropriate compensation for service.



Director Fees.  Each director of the Company also serves as a member of the Board of Directors of the Bank. Non-employee directors do not receive compensation for attending meetings of the Bank’s Board, but do receive committee meeting fees.  Further, itIt is the policy of the Board that employee directors are not paid for their service on the Company's or the Bank's Board of Directors in addition to their regular employee compensation.



During fiscal 2013:2016:

Non-employee directors were paid a retainer at the rate of $1,000 in cash, payable on a monthly basis, and $1,000 per month in shares of restricted stock payable as a lump sum grant equal to $12,000 at the February board meeting.  The number of shares of restricted stock awarded is calculated by dividing $12,000 by the closing price for a share of the Company’s common stock on the NYSE MKT on the date of grant.  In February 2016, each non-employee director, except for Mr. Battle, received a grant of 493 shares of restricted stock, at a grant date fair value of $24.35 per share, for service during 2016.   Mr. Battle received a grant of 194 shares of restricted stock, at a grant date fair value of $25.78 per share equal to $5,000 for his services beginning in August 2016 through December 2016. Each restricted stock grant vests on a one-year basis, with 100% of the award vesting on the first anniversary of the grant date, subject to full acceleration of vesting upon an individual’s death, disability, retirement or involuntary termination in connection with a change in control of the Company.  Vesting of restricted stock grants is accelerated on a pro-rated basis upon the individual’s resignation. 

Non-employee directors were compensated per committee meeting of the Board of Directors of the Company and of the Bank as follows:







In addition to the annual service fee described above and Board meeting fees, the individual serving as Chairman of the Company’s Board of Directors and the Bank’s Board of Directors is entitled to receive an annual fee of $43,000.  He or she does not receive committee meeting fees while serving as Chairman.

In addition to the annual service fee described above and Board and committee meeting fees, the



Director Compensation.  The following table provides information with regard to the compensation paid to the Company's non-employee directors for their service during the fiscal year ended December 31, 2013.2016.



(1)Includes the aggregate amount of the cash retainer, plus all committee (including Executive Loan Committee) and/or chairmanship fees and meeting fees paid to each director for service in 2016.

(2)Reflects the fair value of the awards at grant date, in accordance with FASB ASC Topic 718 for financial statement reporting purposes.  For additional information as to the assumptions made in valuation, see Note 12 to the financial statements filed with the SEC in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.  Amounts shown in the table are based on the Company’s accounting expense for these awards, and do not necessarily correspond to the actual value that may be recognized by the directors.

(3)    The following reflects all equity awards granted to each director that were outstanding as of December 31, 2016:



(3)Mr. Battle’s equity award, which was granted in August 2016 upon commencement of his service as a director, had a grant date fair value of $25.78.  All other equity awards granted to each director had a grant date fair value of $24.35.

(4) The Company maintains a non-qualified deferred compensation plan whereby the directors may elect to defer 1% to 100% of their fees until retirement or termination of service.  The Company credits such deferrals at a rate determined at the beginning of each plan year equal to 1% over the prime rate as of each January 1st.  This column reflects amounts credited under the deferred compensation plan during 20132016 at interest rates greater than 120% of the applicable federal long-term rate then in effect.  Only the above-market portion of interest credited to the participating directors’ accounts has been reported.



(4)(5) Ms. Ware resigned fromHenderson announced her positionresignation as a director of the Company in June 2013.  When she retired, a pro-rata amount of the original $8,400 grant vested, equal to 238 shares.  Ms. Sullivan was appointed to fill a vacancy in September 2013 and received a pro-rata amount of the original $8,400 grant, equal to 147 shares.   effective March 31, 2017.





HUMAN RESOURCE AND COMPENSATION COMMITTEE INTERLOCKS

AND INSIDER PARTICIPATION



The members of the Human Resource and Compensation Committee during 20132016 were:  Phillip Brothman, Marsha S. Henderson (until October 2013)James E. Biddle, Jr., John R. O’Brien, David R. Pfalzgraf, Jr., Nora B. Sullivan, (beginning October 2013), Thomas H. Waring, Jr., and Lee C. Wortham.  None of the members of the Human Resource and Compensation Committee was, during fiscal 2013 is2016 or has beenpreviously, an officer or employee of the Company or any of its subsidiaries, and no member had a relationship during 20132016 requiring disclosure under “Transactions With Related Persons,” below.



During fiscal 2013,2016, none of the Company's executive officers served on the compensation committee (or equivalent) or on the board of directors of another entity with “interlocking” relationships requiring disclosure under applicable SEC rules.



HUMAN RESOURCE AND COMPENSATION COMMITTEE REPORT



The information contained in this Human Resource and Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act of 1933 or the Exchange Act.



The Human Resource and Compensation Committee of the Board of Directors has reviewed and discussed the section of this Proxy Statement entitled "Compensation Discussion and Analysis" with management.  Based on this review and discussion, the  Human Resource and Compensation Committee recommended to the Board of Directors that the section entitled "Compensation Discussion and Analysis" be included in this Proxy Statement and incorporated by reference into the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013.2016.



Human Resource and Compensation Committee



EXECUTIVE COMPENSATION



Compensation Discussion and Analysis.



Executive Summary.



Financial Performance.  Despite an economic environment that continued to be challenging during 2013, theThe Company delivered strong financial performance and growth. growth in 2016, including the following highlights:





Return on average equity was 9.70% in 2016 compared with 8.78% for the 2016 Proxy Peer Group (defined below).

Loans grew 22%, or $169 million, to $943 million as of December 31, 2016 compared with 13% growth for the 2016 Proxy Peer Group.

The Company experienced strong year-over-year deposit growth across all product categories.  Total deposits increased 17% to $940 million compared with 12% growth for 2016 Proxy Peer Group.

Executive Compensation Philosophy.



The Company seeks to align the interests of its executive officers, including the executive officers named in the Summary Compensation Table below (the “NEOs”) with the interests of its shareholders.  The Company’s executive compensation program is designed to complement the Company’s strategic plan objectives and to reward executives for performance as measured against short-term goals, long-term sustained results to the Company’s shareholders, and the Company’s core values.  The Company continues to design and monitor its compensation programs to further ensure that those programs are aligned with these objectives and to reflect emerging best practices. 

As part of this process, during 20132016 the Human Resource and Compensation Committee of the Company’s Board of Directors (the “Committee”) reviewed and approved all of the Company’s executive and employee incentive plans to monitor the levels of risk involved in each program.  The Committee also conducted its annual performance evaluation to confirm satisfactory completion of its responsibilities under the Human Resource and Compensation Committee Charter, and reviewed and approved there-approved its committee charter and the Company’s compensation philosophy, which is described in greater detail below.  Finally, as part of its annual self-assessment to confirm the Committee’s satisfactory completion of its responsibilities under its committee charter, in 2016 the Committee adopted an enhanced self-assessment model, involving a more detailed review of the Committee’s activities and performance.



In addition, the Company continues to focus on rewarding NEOs for achievement of short-term and long-term strategic and operational goals and increased shareholder return, while at the same time avoiding the encouragement of excessive or unnecessary risk taking. Toward that end, the Company continued to emphasize the following prudent compensation practices during 2013:2016:



Short-term and long-term incentive compensation is tied to both financial and non-financial performance measures in order to further align the interests of NEOs with those of the Company’s shareholders.

Compensation criteria are structured so that achievement of corporate and individual goals do not encourage excessive risk-taking through the use of guardrails, which provide a top and bottom metric to monitor performance, and a mix of performance metrics, which reduce the risk associated with any single performance metric.

Performance-based compensation paid to our executive officers is subject to a “clawback” policy, providing for the return of incentive compensation in the event of a restatement of our financial statements involving fraud or illegal conduct.

No tax “gross-ups” are included in any employment-related agreements.

Perquisites and personal benefits are limited to those that support a demonstrated business purpose.

Change in control provisions in the Company’s employment and other agreements with its NEOs provide for payment of severance benefits, including accelerated vesting of stock options and restricted stock, only upon termination of employment or job diminishment in connection with a change in control (a so-called “double trigger” event).



Compensation Program Objectives and Overview.  The objective of the Company’s executive compensation programs is to attract, develop and retain executive officers capable of effectively leading the Company and maximizing performance for the benefit of the Company’s shareholders.  The Committee has reviewed the various elements of executive compensation provided by the Company during 20132016 to ensure that the elements of compensation will align executives’ interests with those of the shareholders and the long-term interests of the Company.  The Committee determines the allocation of compensation among base salary, and short term and long term incentives by reviewing data from the Company’s Proxy Peer Group (described below) as well as through the use of salary surveys and review of industry trends.  The Committee reviews each element of compensation to ensure the compensation packages offered will allow the Company to attract and retain superior executive talent and reward performance while not encouraging excessive risk-taking.  The Company’s executive compensation program during 2013,2016, discussed in greater detail below, included:

Cash base salary and,  where the Committee deemed it appropriate, employment contracts that are competitive within the industry and designed to enable the Company to recruit and retain highly-qualified individuals;

Cash bonus incentive plans, directly linking pay to both Company and individual performance and designed to motivate executives to deliver superior results without encouraging excessive risk-taking;

Long-term equity incentives, designed to align executives’ interests with those of the Company’s shareholders in achieving long-term performance;



The decisions made on senior executive compensation, including NEO compensation, are based primarily upon the Committee’s assessment of each executive’s leadership and operational performance, and his or her potential to contribute to the long-term success and soundness of the Company and to enhance long-term shareholder value.  While the Committee does establish objective performance measures, such as those under the cash bonus incentive plan, the Committee primarily considers its subjective assessment of each individual’s performance rather than  rigid formulas or short-term changes in business performance in determining the amount and mix of compensation elements and whether each particular payment or award provides an appropriate incentive and reward for performance that sustains and enhances long-term shareholder value.  Key factors affecting the Committee’s judgment include the executive’s performance compared to the financial, operational, and strategic goals established by the Board of Directors at the beginning of each fiscal year; contribution to the Company’s financial results, particularly with respect to key metrics such as asset growth, credit quality and earnings on capital; and effectiveness in leading our initiatives to increase shareholder value.  Additionally, the Committee assesses each executive’s presence in and commitment to the community.

Role of the Human Resource and Compensation Committee and CEO.Committee.  The Committee is composed solely of independent directors of the Company.  It is responsible for all policies and practices related to director, executive and employee compensation.  As part of this responsibility, the Committee, on an annual basis, reviews and approves corporate goals and objectives relevant to executive compensation, and reviews and evaluates the performance of each of the senior executive officers, including the NEOs, in light of those goals and objectives.   Compensation for the NEOs is reviewed and approved by the Committee during the first quarter of each year based on performance during the prior year.  Base salary is then reviewed a second time, typically during the third fiscal quarter, to determine whether an individual’s performance merits a further increase, or to address other changes that occur later in the fiscal year.



The Committee meets at least quarterly.  Members of Company management may attend Committee meetings to provide the Committee with information relating to the Company’s compensation and benefit plans and programs, recommended changes to those plans and programs, and educational material.  In particular, the Bank’s President and CEO and its Chief FinancialAdministrative Officer and Executive Vice President of Organizational Development & Employee Experience(CAO) attend Committee meetings to present data and analysis and to formulate recommendations regarding compensation, for executive (excludingofficers other than the President and CEO) and employee compensation,CEO, benefit plans and promotions.  The Executive Vice President of Organizational Development & Employee ExperienceCAO provides the Committee with data for its consideration in setting the base salary for the President and CEO.  In addition, certain members of the executive management team may attend Committee meetings to provide guidance on SEC reporting requirements as well as on other matters related to executive compensation, such as employee benefits and related insurance matters.  

The Committee believes that this input from management is critical to ensuring that the Committee and its advisors have the data needed to make informed decisions with respect to the Company’s compensation programs and each NEO’s individual compensation.  In determining the base salary, annual incentive and long-term incentive components of CEO compensation, the Committee will consider multiple factors including the Company’s performance and relative shareholder return, the value of similar compensation elements paid to CEOs at comparable companies, and the awards given to the Company’s CEO in past years.  The Committee also spends a portion of each meeting convening in executive session, without the presence of any members of management or other attendees.



Role of Compensation Consultants.  During 2013,2016, the Committee engaged Arthur WarrenPearl Meyer & Associates, Esq., anPartners (“Pearl Meyer”) a national executive compensation consultant specializing in community bankaligning executive compensation plans, to provide advisory services regardingwith business and leadership strategy. Pearl Meyer advised the Committee on the selection of the Company’s Proxy Peer Group for 2017 compensation, and reviewed and analyzed the Company’s director compensation program and preparationmade recommendations for 2017 director compensation. A discussion of the Committee’s response to the advice and recommendations of Pearl Meyer will be included in the Company’s Compensation Discussion and Analysis for the Company’s first “Say On Pay” vote, conducted atfiscal year ending December 31, 2017. 

Pearl Meyer provided no services to the 2013 Annual Meeting of Shareholders.  The Committee also engaged McLagan, an Aon Hewitt company providing Performance/RewardCompany during 2016 other than the compensation consulting and benchmarking services for the financial services industry,rendered to provide the Committee with an update and reporting on recent compensation trends within the industry.as described above.



Benchmark Analysis.  The base salary compensation of the NEOs and certain other members of the executive management team are compared to a “benchmark” established using relevant industry compensation surveys and compensation information derived from proxy statements filed by other publicly-held companies in the financial services industry.  The Committee considers the compensation data and financial performance of the financial institutions included in those surveys and filings.  For this analysis, the established Proxy Peer Group,Committee also considers data from the proxy peer group, created by the Committee with input from management input, reflectsand compensation consultants for purposes of reviewing and setting  compensation and to gauge the Company’s performance (the “Proxy Peer Group”).  The Proxy Peer Group used for 2016 compensation (the “2016 Proxy Peer Group”) included financial institutions of similarwith assets ranging from approximately one-half to slightly more than double the Company’s asset size, and that operate in geographic regions with a median household income level similar to the Bank’s primary market area, and whosereturn on assets, return on average equity and earnings per share are similar to or better than the Company’s.  Based on these criteria, one new institution was named toupon the Committee’s review and discussion, the 2016 Proxy Peer Group included 21 of the 23 companies included in the Proxy Peer Group in 2013 with fourteen remainingused for 2015 compensation (the “2015 Proxy Peer Group”). Two institutions from 2012.   

In prior years, the Committee had also reviewed compensation data from a group of local banks and a group composed of banks that may be of larger size or that operate in more affluent geographic regions than the Company’s primary market area.  However, because the2015 Proxy Peer Group data and the additional survey data described below provided significant comparative information and there was some duplication among thewere removed because of M&A activity.

The 2016 Proxy Peer Group and the other comparison groups, in 2013 the Committee determined that it was no longer necessary to utilize data from the other comparison groups. 

The Proxy Peer Group utilized in setting equity compensation levels for 2013 included ACNB Corporation, American National Bankshares, Inc.,CNB Financial Corporation, Chemung Financial Corporation, Citizens Financial Services, Inc., Codorus Valley Bancorp, Inc., Community Bank Shares of Indiana, Inc., ENB Financial Corp., Farmers & MerchantsElmira Savings Bank, Enterprise Bancorp, Inc., Farmers National Banc Corp., First Citizens BancShares,German American Bancorp, Inc., Greene County Bancorp, Inc., Hingham Institution for Savings, LCNB Corp., Lake Shore Bancorp, Inc., Mid Penn Bancorp, Inc., MonarchNorwood Financial Holdings,Corp., Ohio Valley Banc Corp., Orrstown Financial Services, Inc., NB&T Financial Group,Parke Bancorp, Inc., Penns Woods Bancorp, Inc., Teche Holding Company and Valley Financial Corporation.    Your Community Bankshares, Inc.

In addition, the Committee reviewed survey data published by Pearl Meyer & Partners as well as by the American Bankers Association, by both asset size as well as region, and regional data provided by the Buffalo Niagara Partnership, a local business advocacy organization.region.  While the Proxy Peer Group reflects financial institutions that are the most similarly situated to the Company, the Committee believes that it is useful to examine the “best practices” of a broader group of companies, and that multiple sources of compensation data assist the Company in designing pay programs that are both contemporary and relevant.  The Pearl Meyer compensation survey report for 2016 was used to analyze compensation from two groups of companies within the Northeastern U.S.  The first group consisted of approximately 30 financial institutions with asset sizes of $500 million to $800 million and the second included approximately 30 institutions with asset sizes of $800 million to $1.5 billion.  The American Bankers Association survey is a report consisting of financial institutions across the U.S. segregated by asset size.  The Committee analyzed compensation data from three groups of approximately 40 companies each, identified by asset size.  The groups consisted of companies with assets of $500M to $699 million, $700 million - $999 million and $1 billion - $2.9 billion.



The Committee utilizes the salary surveys and the Proxy Peer Group data as a sourcesources of information in determining base salary for Messrs. Nasca and Kajtoch, and hasConnerton.  The Committee generally targetedtargets the 50th to the 75th percentile for the base salary.salary of Messrs. Nasca and Connerton.    The base salary of Mr. Miller is not compared to benchmark data, due to a lack of comparable data for his position.  Instead, Mr. Miller’s compensation is determined based upon his individual performance as compared to annual goals, including the achievement of corporate strategic and operational objectives.  TheFor Messrs. Nasca and Connerton, the Committee uses the survey data as a point of reference and comparison only, and not for purposes of establishing or setting a specific level of compensation to be achieved.  The survey data include companies that may not have the complexity of our organization, such as an insurance

component, and we believe it is important to pay for the expertise required to manage all facets of our business.  Because the roles and responsibilities of executive officers can vary from one institution to another, the Committee also considers each NEO’s experience, length of service in his or her position, and individual performance.  The Committee has made the decision to pay above the 50th percentile for NEO salary where the Committee believes it is necessary to attract and retain superior executive talent and/or experience in order to support planned growth of the Company.  The Committee believes that this is appropriate in light of the expected future roles of the executives in supporting a larger organization as the Company pursuescontinues to pursue a growth strategy.  During 2013,2016, the Company paid Mr. Nasca 101% and Mr. Kajtoch 102%116% of the weighted survey average base salary at the 50th percentile, as reported in the 20122015 salary surveys and Proxy Peer Group data utilized by the Committee as described above.  Mr. Connerton’s salary was 91% of the weighted survey average at the 50th percentile, which the Committee determined was appropriate due to his more limited experience as CFO.  See “Executive Total Compensation – Base Salary” below for a discussion of actions taken with respect to the NEOs’ base salarysalaries in 2013.2016.



Compensation Recovery Policy.  The Company’s Incentive Plan Clawback Policy provides for the recovery of performance-based compensation paid to certain senior executives of the Company, including the NEOs, in the event of a restatement of the Company’s consolidated financial statements.  The policy applies to performance-based compensation paid during the three-year period prior to the correction of the accounting error, where the amount of such compensation paid to the executive was increased based on the erroneous financial statements, and the executive engaged in fraud or illegal conduct which materially contributed to the need for the restatement.  The policy generally covers compensation paid or awarded to executives under the Company’s short-term and long-term incentive plans. 



Executive Total Compensation.  The following discussion describes the key elements of the Company’s NEO compensation program and the actions taken with respect to each element for 2013.2016. 



The Company maintains a common anniversary date for the merit review process and related salary adjustments, which generally occur in the middle of the first quarter each year.  Salaries are then reviewed a second time, usually during the third quarter of each year.  After consideration of compensation data, Company performance and individual performance, the Committee makes a subjective assessment of each individual’s performance as described in the preceding paragraph, and above under “Compensation Discussion and Analysis – Compensation Program Objectives and Overview.”  While it is uncommon for an individual to receive an increase at both review cycles (winter and summer), this may occur when an individual expands his or her skill set or experience, or demonstrates outstanding performance or increased responsibility.  Because Mr. Connerton’s base salary had been increased in the fourth quarter of 2015 in connection with his appointment as CFO, the Committee made no changes to his base salary on the first review date in 2016, but determined that an increase was warranted on the second review date in the third quarter of 2016.  For 2013,2016, the Committee approved discretionary increases to the base salary of each of our NEOs,Messrs. Nasca and Miller, effective January 30, 2013,February 3, 2016, as follows: Mr. Nasca’s annual base salary was increased from $300,000$405,000 to $315,000, Mr. Kajtoch’s annual base salary was increased from $175,224 to $185,002,$425,006, or 5%; and Mr. Miller’s annual base salary was increased from $238,415$258,754 to $245,090. $265,223 or 2.5%.  Mr. Connerton’s annual base salary was increased from $180,000 to $182,700 or 1.5% on August 3, 2016.





For 2013,2016, the Committee utilized Company annual adjusted net income growth as the measure for determining whether awards would be paid under the Evans Excels Plan.  The Committee determined the levels of growth in adjusted net income (after tax but before short term incentive payment) which it believes provide a reasonable

balance between shareholder value and appropriate employee motivation and reward.  A “target” was set at $6,460,884 inAdjusted net income which would pay out 100% of the potential incentive. By comparison, 2012is a non-GAAP financial measure, and is defined as net income was $8,132,377.  A “stretch” goal was set at $6,671,435, which would provide potential(GAAP) as reported in the Company’s financial statements excluding the short-term incentive payout at 150%.  Typically, the Committee establishes a separate “threshold” levelpayment, which is a lower level than “target” performancecalculated net of any tax impact associated with the short-term incentive payment.  The goals set for 2016 and provides for payout of 50% of the potential incentive.  However, for 2013, the Committee determined that due to the lower projectedactual results, as derived from GAAP net income, level for 2013 compared to 2012, no separate “threshold” would be set, and instead the “target” level would operatewere as the threshold for payout under the plan. If actual net income growth were below the target level for 2013, no incentive would be paid. follows:



In 2013,2016, the “stretch” goal was met, reflecting actualadjusted net income of $7,856,559,$9,324,448, a 3.4% decrease over 2012.  As discussed further10% increase from 2015.  The Committee sets both Company and individual NEO goals each year in reviewing the Board-approved four-year Strategic Plan and aligning Board-approved business targets and associated desired metric results with the calendar year.  Company performance goals for each performance year are set in the Company’s Annual Report on Form 10-K forfourth quarter of the fiscalprior year, ended December 31, 2013, the Company’s 2013 net income reflected a $1.6 million increaseand individual performance goals are set in the Company’s provision for loanfirst quarter of the relevant performance year.  Goals are then cascaded from the Strategic Plan to the CEO and lease losses, compared with a $2.6 million decreasethen to each NEO.  The 2016 individual NEO goals are presented in the provision for loan and lease losses in 2012.  The Committee establishes net income targets in January of each year based on the Company’s budget for that year, taking into consideration metrics that require board approval related to asset growth, efficiency ratio, return on equity, return on assets, net charge offs to average loans and non-performing loans to total loans.  table below.

All awards are to be paid out as a percentage of a participant’s baseannual salary earnedon the last calendar day during the relevant performance period, which runs from January 1st to December 31st.

In addition to the Company performance measure discussed above, the Committee considers individual performance and attainment of assigned goals. Even if the threshold (or higher) Company performance measure is met, an employee must meet a certain level of individual performance to receive payment under the plan.    Historically, the Committee has considered a broad variety of individual performance goals to establish specific individual performance measures.  The Committee reviews these specific performance measures and exercises some degree of discretion in determining each employee’s payout amount.  The Committee believes that establishing specific performance measures for each participant will enhance the ability of the plan to encourage individual performance in those targeted areas.



The individual performance measures established by the Committee are a combination of financial goals, “key result areas” or “KRAs” derived from the Company’s strategic plan, and discretionary assessment.  Each performance measure receives a weighting, which represents its relative importance to overall individual performance under the plan.  For each individual performance measure, the Committee establishes a “target”, “threshold” and “stretch” standard.

The table below shows the performance measures at target level, and relative weightings of the various performance measures utilized for the NEOs for 2013.  The threshold performance levels for each performance measure would provide for a lower achievement level than that shown in the table, while the stretch performance level would provide for a higher achievement level.  For example, a2016.  A performance measure requiring an NEO to deliver on a specified strategic plan KRA will be broken down into several specific goals/action items, and whether the NEO achieves that KRA at threshold, target or stretch level (or not at all) will be determined based on the extent to which he achieved meaningful results toward those specific goals/action items.  

Under the terms of the plan, an individual must be employed by the Company on the payment date in order to receive payment under the plan.  The following performance measures were utilized for the NEOs for 2013:2016:





The payouts are determined pursuant to the sum of the weightings for each individual’s total goal set for 2013.  If all individual goals were met at “target” performance, Mr. Nasca would be awarded a cash incentive payment equal to 25% of his 2013 base salary, and each of Messrs. Miller and Kajtoch would be awarded a cash incentive payment equal to 19% of his 2013 base salary.  If all individual goals were met at “stretch” performance, Mr. Nasca would be awarded a cash incentive payment equal to 37.5% of his 2013 base salary, and each of Messrs. Miller and Kajtoch would be awarded a cash incentive payment equal to 28.5% of his 2013 base salary.  If all individual goals were met at “threshold” performance, Mr. Nasca would be awarded a cash incentive payment equal to 12.5% of his 2013 base salary, each of Messrs. Miller and Kajtoch would be awarded a cash incentive payment equal to 9.4% of his 2013 base salary.2016.  Notwithstanding the individuals’ achievement of their specific performance measures, the established levels of Company performance, described above, are required to “open” the plan to allow payout of incentives.   If the minimum net income growth (threshold) level is not met, no awards would be payable pursuant to the plan, except that the Board of Directors may, at its discretion, grant awards notwithstanding Company performance below threshold.  To date, the Board of Directors has not exercised this discretionary authority.  The amounts paid under the plan to each NEO for 20132016 are set forth in the Summary Compensation Table, below.



The following table illustrates the cash incentive payment, as a percentage of 2016 base wages, that would be payable to each of our NEOs if all individual goals were met at the specified level of performance (and assuming Company achievement of at least the “threshold” performance level).



Under the equity incentive plan, the Committee typically grants awards of restricted stock, which provides immediate value to the NEO (subject to vesting) but loses value in the event that shareholder value decreases, and stock options, under which executives recognizethe NEO recognizes value commensurate with increases in long-term shareholder value.  In 2016, after considering various alternatives under the equity incentive plan, the Committee determined to continue with its past practice of granting stock options and restricted stock.  Both restricted stock and stock options link an NEO’s compensation to long-term Company performance.  The Committee believes that restricted stock is a particularly effective incentive tool because the value of the award can be further enhanced if the value of the Company’s common stock increases after the date the restrictions lapse.  The Committee further believes that stock options are an effective long-term incentive because the holder can only profit if the value of the Company’s common stock increases.  Both types of equity awards also have a retentive effect because they vest over a period of time, typically four years.  Vesting may be accelerated under certain circumstances, such as the executive’s death, disability or retirement, or if an executive’s employment is terminated in connection with a change in control of our Company.  TheHolders of restricted stock will receive dividends if and when dividends are paid on the Company’s common stock during the restrictive period, and have voting rights during the restriction period.  Holders of stock options, on the other hand, have no rights as a shareholder until the options are exercised.   Beginning in 2013, awardsAwards granted under the equity incentive plan consist of 75% shares of restricted stock and 25% stock options, which the Committee believes is an appropriate formula to drive increased equity ownership by the Company’s executive officers.  The Committee may also grant awards of stock appreciation rights and restricted stock units under the equity incentive plan.plan, but it has not historically done so. 



The Committee believes that the Evans Excels short-term incentive plan and the equity-based long-term incentive plan together create a balance between short-term and long-term performance goals and encourage appropriate risk-taking.



The Committee exercises its discretion in determining when to grant equity incentive awards, as well as the size and nature of the awards.  Equity awards are typically granted on an annual basis, during the first quarter, based on prior year performance, but may under certain circumstances be granted at other times

during the year, for example, in connection with a new hire or a change in position within the Company.  As a general matter, the Committee’s process is independent of any consideration of the timing of the release of material non-public information, including with respect to the determination of grant dates or stock option exercise prices.  Similarly, we haveThe Committee has never timed the release of material non-public information to affect the value of executive compensation.  In general, the release of such information reflects long-established timetables for the disclosure of material non-public information such as earnings reports or, with respect to other events reportable under federal securities laws, the applicable requirements of such laws with respect to timing of

disclosure.  In determining the amount of each award, the Committee looks at Company performance generally(in 2016, net income growth,growth), the number of shares remaining available for issuance under the plan, the market price for the Company’s common stock, and the Committee’s subjective assessment of each individual’s performance (generally based on the same factors as those described above with respect to individual performance under the Evans Excels short-term cash incentive plan).  The Committee does not rely on specified pre-determined target award values.



During 2013,2016, the Committee approved the following equity awards (for more detail on the awards granted to the Company’s NEOs, see the “Summary Compensation Table” and “Grants of Plan-Based Awards” table below):









Employment Agreements.  The Company believes the use of clear and concise employment contracts iscan be an effective tool to attract and retain senior executives, as well as to protect proprietary information and customer relationships.  Messrs.However, in recent years and consistent with trends in corporate governance, the Committee has been limiting its use of executive employment contracts.  The Company has historically been a party to employment contracts with several of its NEOs.  Currently, only Mr. Nasca Kajtoch and Miller are eachis covered by a three year terman employment contract, which is described below under “Employment Agreements with a daily renewal.  On May 21, 2012, Evans Bancorp, Inc. and The Evans Agency, Inc. together delivered a notice of non-renewal to Mr. Miller. Mr. Miller’s contract will terminate upon expiration of the current three year term, on May 21, 2015.Our NEOs”.  



Post-Termination Compensation.  As mentioned above, the Company has entered intohistorically been a party to employment contracts with its NEOs which provide for certain severance payments, described below under “Potential Payments Upon Termination or Change in Control,” if the executive’s employment terminates under circumstances described in theirthe employment contracts.contract.  In addition, if there is a change in control of the Company, the NEOsexecutive may be entitled to full acceleration of theirhis equity-based compensation, as described above under “Executive Total Compensation – Equity Incentives.”  The Committee believes that these arrangements are important as a recruitment and retention device, as most of the companies with which we compete for executive talent have similar arrangements in place for their executives.  These arrangements may help incentivize NEOsthe executive to remain with the Company and to assist in any potential change in control transaction, which provides security for the NEOsexecutive and stability for the Company.  The Committee attempts to balance protection of its executives upon a change in control with protection of the Company’s interests by making accelerated vesting available upon a change in control only if the NEOs areexecutive is involuntarily terminated or experience a job diminishment in connection with the change in control (a so-called “double-trigger”).  Additionally, the Committee links severance payments to agreements by the NEOsexecutive not to compete with the Company, solicit the Company’s employees or customers, or disclose confidential information.

Currently, only Mr. Nasca is a party to an employment contract providing for such change-in-control payments.  However, each of Mr. Miller and Mr. Connerton is a party to a rolling two-year change in control agreement with the Company.  The change in control agreement, like the employment contracts described above, provides a double-trigger benefit.

For further information on the potential payouts under these arrangements, see “Potential Payments Upon Termination or Change in Control”, below.



Executive Severance Plan.  The Company’s Executive Severance Plan provides post-termination coverage to executive officers who are not covered under an employment contract or change in control agreement that provides for severance or similar post-employment compensation.  Acompensation, or whose benefits are triggered only under a change in control agreement.  Under the Executive Severance Plan, a participant (1) whose employment is involuntarily terminated by the Company for reasons other than for cause, as defined in the plan, (2) who is required to move employment more than 35 miles from his or her current place of employment, and who rejects the relocation and terminates employment, or (3) whose aggregate compensation is materially reduced, and who terminates employment, will be eligible for severance payments under the Executive Severance Plan.  Under the plan, a participant eligible for benefits would receive 1812 months of salary continuance plus the participant’s short term incentive amount at the target level, pro-rated for the time during the year in which the participant was actively employed by the Company.  The severance payments will be made over the 18-month12-month period following termination in accordance with the Company’s regular payroll cycle.  In addition, the Company will reimburse eligible participants for up to $5,000

$5,000 in outplacement services during the 12-month period following termination (payable in a lump sum, in cash).  Payments and benefits under the Executive Severance Plan are subject to the participant’s compliance with one-year non-competition and non-solicitation covenants.  Because each ofcovenants, and an employee will cease to be a participant in this plan if benefits are severance benefits are triggered under an employment contract or change in control agreement.  Messrs. Miller and Connerton are participants in the NEOs currentlyExecutive Severance Plan.  Mr. Nasca, who has an employment agreementcontract providing for severance benefits, none of the NEOs is covered by the Executive Severance Plan as of the date of this proxy statement.  Any NEOdoes not covered by such an agreement would, however, be eligible to participate in this plan. 



Tax and Accounting Considerations.  Section 162(m) of the Internal Revenue Code generally denies publicly-held corporations a federal income tax deduction for compensation exceeding $1,000,000 paid to the chief executive officer or, for smaller reporting companies, any of the threetwo other highest paid executive officers, (other than the chief financial officer), excluding performance-based compensation.  Through December 31, 2013,2016, this provision has not limited the Company’s ability to deduct executive compensation.  The Committee will continue to monitor the potential impact of Section 162(m) on the Company’s ability to deduct executive compensation, and in particular, will review the effect of recent Internal Revenue Service rulings related to performance-based compensation in change-in-control situations. The 2009 Long-Term Equity Incentive Plan has been designed, and is intended to be administered, in a manner that will enable the Company to deduct compensation attributable to options and certain other awards thereunder, without regard to the deduction limitation established by Section 162(m).



Section 409A of the Internal Revenue Code generally changes the tax rules that affect most forms of deferred compensation that were not earned and vested prior to 2005, and imposes an additional tax on certain forms of deferred compensation.  The Committee takes Section 409A into account in determining the form and timing of compensation paid to the Company’s executives.  While Section 409A is generally not applicable to the compensation provided by the Company, it does affect the timing of certain severance payments. 



The Company values stock option and restricted stock grants under FASB ASC Topic 718.  More information regarding the application of ASC Topic 718 by the Company may be found in Note 12 to the Company’s audited financial statements filed with the SEC in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.2016.



Say On Pay.  Proposal II provides the Company’s shareholders with the opportunity to cast a non-binding advisory vote on executive compensation.  Shareholders are being asked to approve the compensation paid to the Company’s NEOs, as described in this proxy statement, including this “Compensation Discussion and Analysis” and the compensation tables and narrative discussions contained in this proxy statement under the caption “Executive Compensation”. 



We attempt to maintain a regular dialogue with our major shareholders to discuss various corporate governance topics, including executive compensation that may be of interest to them.  These discussions have provided useful guidance for our Committee as it reviews and adopts the various compensation policies and practices affecting our employees, including our NEOs.  At our 20132016 Annual Meeting of Stockholders,Shareholders, a substantial majority of our stockholdersshareholders voted to approve the compensation paid to our NEOs in 2012,2015, with less than 16%93% of the votes cast not supporting the measure. The Committee noted that our largest shareholders supported the 2013 say-on-pay proposal, and in their discussions with the Committee, these shareholders did not express significant concerns regarding our executive compensation program.



In reviewing the Company’s compensation programs and making decisions related to 20132016 executive compensation, the Committee evaluated the results concerning the vote on the advisory resolution on executive compensation at that meeting. Going forward, the Committee will continue to consider shareholder feedback when determining executive compensation.



Summary Compensation Table.  The following table sets forth the compensation of the Company’s NEOs for the fiscal years ended December 31, 2013, 20122016, 2015 and 2011.2014.  The NEOs identified in the table below are the Company's Principal Executive Officer, Principal Financial Officer, and one other individual identified below who was serving as an executive officer as of  December 31, 20132016 and met the applicable SEC reporting threshold.



(1)  Amounts reported under “salary” for Mr. Miller include the “employee portion” of residual commissions earned on certain products sold through M&W Group, Inc. prior to September 1, 2000.













Grants of Plan-Based Awards.  The following table reflects the terms of the compensation plan-based awards granted to Named Executive Officers in 2013.2016.