FIDELITY D & D BANCORP, INC.



Blakely and Drinker Streets

Dunmore, Pennsylvania 18512

(570) 342-8281













PROXY STATEMENT

FOR THE ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 1, 20183,  2022

































The Board of Directors is distributing this proxy statement to shareholders

on or about March 21, 201823, 2022



Nasdaq Market trading symbol: FDBC



www.bankatfidelity.com











[THIS PAGE INTENTIONALLY LEFT BLANK]

*Committee jointly serves both the Company and Bank.



The Board of Directors of the Company met 2414 times during 2017.2021.  There werewas a total of 5149 meetings of the various committees of the Board of Directors in 2017.2021.  All directors attended at least 75% 90%

or more of the meetings of the Board of Directors and of the various committees on which they served. The Board of Directors has no policy regarding annual meeting attendance.  All directors attended the 20172021 Annual Meeting of Shareholders.  All directors anticipate attending the 20182022 meeting.

Shareholder Communications

The Board of Directors has not adopted a formal process for shareholders to send communications to the Board of Directors.  Due to the infrequency of shareholder communications, the Board of Directors does not believe that a formal process is necessary.  Written communications received by the Company from shareholders are shared with the full Board of Directors no later than the next regularly scheduled Board of Directors meeting.

Nomination of Directors

In considering whether to recommend any candidate for inclusion as a nomination for director, including candidates recommended by shareholders, the Board of Directors has determined that the Board of Directors must have the right diversity.  This includes the candidate's integrity, business acumen, age, experience, education, commitment, diligence, conflicts of interest and the ability to act in the best interests of all shareholders.  The Board of Directors seeks nominees with a broad diversity of experience, professions, skills, geographic representation, and backgrounds.  Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.

Under the Company’s by-laws, nominations for a director may be made by the Board of Directors or by a shareholder of record entitled to vote. In order for a shareholder to make a nomination, the shareholder must provide a notice along with the additional information and materials required by the by-laws to the Company’s Secretary not less than 60 days prior to the date of any meeting of shareholders called for the election of directors. For our annual meeting in the year 2019,2023 we must receive this notice on or before March 8, 2019.4, 2023. You can obtain a copy of the full text of the by-law provision by writing to John T. Cognetti, Secretary, Blakely and Drinker Streets, Dunmore, PA.PA 18512. A copy of our by-laws has been

filed with the Securities and Exchange Commission as an exhibit to the Company’s current report on Form 8-K, filed with the SEC on November 21, 2007.April 16, 2020.

Submission of Shareholder Proposals

Any shareholder who, in accordance with the proxy rules of the SEC, wishes to submit a proposal for inclusion in the Company’s proxy statement for its 20192023 Annual Meeting of Shareholders must deliver such proposal in writing to the Secretary of Fidelity D & D Bancorp, Inc. at its principal executive office, Blakely and Drinker Streets, Dunmore, PennsylvaniaPA 18512, not later than November 21, 2018.23, 2022.

A shareholder may have other business brought before the 20192023 Annual Meeting by submitting the proposal to the Company’s Secretary, in accordance with our by-laws. The proposal must be delivered to our executive offices at Blakely and Drinker Streets, Dunmore, PA 18512, to the attention of the Company’s Secretary. We are not required to include any proposal received after November 21, 201823, 2022 in our proxy materials for the 20192023 annual meeting.

In addition to satisfying the foregoing requirements under the Company’s by-laws, to comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other than the Company's nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 4, 2023.

Anti-Hedging/Pledging Policy

Our Board of Directors has not adopted a hedging policy with respect to transactions by our directors, officers and employees that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our equity securities.

Employee Code of Ethics

Since 1993, the Bank has had a Code of Ethics.  As required by law and regulation, the Board of Directors amended the Code of Ethics as of May 16, 2017, so that our Code of Ethics is applicable to all of the Company’s and the Bank’s directors, officers and employees, including the Chief Executive Officer and senior financial officers.Chief Financial Officer.

The Code of Ethics encourages individuals to report any conduct that they believe in good faith to be an actual or apparent violation of the code of ethics. The Board of Directors periodically receives reports on our compliance program.  The Code of Ethics is posted on our website at www.bankatfidelity.com, under Investor Relations - Other Information - Governance Documents. We have also filed a copy of the Code of Ethics with the SEC as Exhibit 14 to our May 22, 2017 current report on Form 8-K.

ELECTION OF DIRECTORS

(PROPOSAL NO. 1)



Qualification and Nomination of Directors

The Company’s by-laws provide that the Board of Directors consist of at least three directors and be classified into three classes.  Each class is elected for a term of three years.  Accordingly, the terms of the classes expire at successive annual meetings.  The Board of Directors may fix the number of directors and their respective classifications within the foregoing limits.  A majority of the Board of Directors may also fill vacancies on the Board, and the person appointed to fill the vacancy serves, until the expiration of the term of office of the class of directors to which he or she was appointed.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL TO ELECT THE THREEFOUR NOMINEES LISTED BELOW AS CLASS AC DIRECTORS OF THE COMPANY.

Currently, Class A consists of threefour directors, Class B consists of three directors, and Class C consists of threefour directors.  Shareholders will elect threefour Class AC directors at the annual meeting to serve for a three-year term that expires at the Company’s annual meeting in the year 2021.2025.

The proxy holders will vote the proxies for the election of each of the nominees named below, unless you indicate that your vote should be withheld from any or all of them.  Each nominee elected as a director will continue in office until his or her successor has been duly elected and qualified, or until his or her death, resignation, or retirement.

The Board of Directors nominated John T. Cognetti,  Brian J. Cali, Richard M. Hotchkiss, Daniel J. LettieriSantaniello, and Paul C. Woelkers Michael J. McDonald, Esquireto serve as Class AC directors until the 20212025 annual meeting of shareholders. Messrs. Cognetti, LettieriCali, Hotchkiss, Santaniello and McDonaldWoelkers are presently members of the Board of Directors and have consented to serve another term, if elected.  If any of the nominees is unable to serve for any reason, a majority of the

Board of Directors then in office may fill the vacancy until the expiration of the term of the class of directors to which he or she was appointed.

The Board of Directors is proposing the following nominees for election as Class AC Directors at the annual meeting:





The Board of Directors recommends a vote FOR the election of the above namedabove-named nominees for directors.

BOARD OF DIRECTORS AND MANAGEMENT

Information as to Directors and Nominees

The following biographies contain selected information with respect to the directors of the Company.  The information includes each person’s age as of March 7, 2018,9, 2022, and principal occupation for at least the past five years.

Current Class A Directors (to serve until 2018) and Nominees (to serve until 2021, if re-elected)2024)

John T. Cognetti

Mr. Cognetti, age 68,72, has been a Director of the Company since 1999. He has served as a member of the Bank’s Board of Directors since 1988.   Mr. Cognetti is the former President of Hinerfeld Commercial Real Estate, based in Scranton, Pennsylvania. With his background, education and fortyforty-five years’ experience in real estate brokerage, he provides insight on issues, trends and values of the market value of regional and national commercial real estate providingmarkets.  He also provides guidance to the Board. Also havingBoard on Bank owned real estate issues. Having hired and managed sales professionals in his business, Mr. Cognetti shares his insight on personnel, marketing, sales and management issues.

Richard J. Lettieri

Mr. Lettieri, age 70,74, has been a Director of the Company and a member of the Bank’s Board of Directors since 2012.  In 1986, Mr. Lettieri founded Dock Square Consultants in Boston, MA, and managed the firm until his retirement in 2005.  His consulting practice focused on business strategy and market development. Mr. Lettieri’s expertise in strategic consulting, centering on helping to solve complex problems and plot future directions in a wide variety of business environments, provides valuable insight for the Company and Bank.

Michael J. McDonald, Esquire

Mr. McDonald, age 63,67, has been a Director of the Company since 1999. Mr. McDonald has served as a member of the Bank’s Board of Directors since 1994. He is a partner with the law firm of McDonald and MacGregor, LLC in Scranton, Pennsylvania. Mr. McDonald’s education and legal experience provides valuable insight for the Company and Bank.

Current Class B Directors (to serve until 2020)HelenBeth G. Vilcek

Mary E. McDonald

Mrs. McDonald,Ms. Vilcek, age 85,64, has been a Director of the Company and member of the Bank’s Board of Directors since 2000.  Mrs. McDonald2020.  Ms. Vilcek is the owner of Garofalo Real Estate, a property management company located in Easton, Pennsylvania.  Ms. Vilcek serves on the board and chairs the audit committee at the Bank of Bird-in-Hand in Bird-in-Hand, Pennsylvania.  She was an original investor with the former Premier Bank, Doylestown, Pennsylvania.  Ms. Vilcek is active in the community and is a retired educator. Mrs. McDonald’s many yearsPast Grand Matron of the Order of Eastern Star for the state of Pennsylvania. Ms. Vilcek’s experience and community involvement provides valuable insight for the Company and Bank.

Current Class B Directors (to serve until 2023)

William J. Joyce, Sr.

Mr. Joyce, age 63, has been a Director of the Company and member of the Bank’s Board of Directors since 2020.  Mr. Joyce is the former Principal of Joyce Insurance Group located in Pittston, Pennsylvania.  Mr. Joyce has expertise in risk assessment and management, financial statement preparation, review, and analysis.  Mr. Joyce holds an associate degree of Hotel and Restaurant Management from the Culinary Institute of America and has a Property & Casualty Insurance License in

the Commonwealth of Pennsylvania.  Mr. Joyce’s education, experience and community involvement provides valuable insight for the Company and Bank.

Kristin D. O’Donnell

Mrs. O’Donnell, age 48,52, has been a Director of the Company and a member of the Bank’s Board of Directors since 2012.  Mrs. O’Donnell’s experience includes over fourteenseventeen years as a vice president of sales and marketing for Dempsey Uniform & Linen Supply, Inc., in Jessup, Pennsylvania, driving the responsible and successful growth of the company.  As an owner and member of the Company’scompany’s Board of Directors, she has also participated in risk assessment, financial statement preparation, review and

analysis, and acquisitions.  Mrs. O’Donnell has an undergraduate degree in Engineering and an M.B.A.  Mrs. O’Donnell’s education and experience provides valuable insight for the Company and Bank.

David L. Tressler, Sr.Alan Silverman

Mr. Tressler,Silverman, age 81, has been a64, Director of the Company since 1999.  Mr. Tressler has been aand member of the Bank’s Board of Directors since 1998.2020.  Mr. Silverman, is a Certified Public Accountant for over thirty years, operates his own firm specializing in meeting the needs of the healthcare industry. He is currently a consultant for The Quandel Group, Inc., in Scranton, Pennsylvania.  Mr. Tressler has a broad knowledge from his many yearsone of banking experience which included 16 years as Chairmanthe founders and CEO of PrimeMed P.C.   Mr. Silverman has acted as President of not-for-profit nursing home corporations, serving the Medicaid community, and is a regional bank.past President of Glen Oak Country Club.  Mr. Silverman’s background provides valuable financial knowledge for the Company and Bank.

Current Class C Directors (to serve until 2019)2022) and Nominees (to serve until 2025, if re-elected)

Brian J. Cali, Esquire

Mr. Cali, age 65,69, has been a Director of the Company and a member of the Bank’sBank's Board of Directors since February of 2001. He is the managing owner of Brian J. Cali and Associates a Pennsylvania law firm located in Dunmore, Pennsylvania. He has been a practicing attorney for over 40 years. Mr. Cali is also the owner of and has been affiliated with several businesses located in Northeastern Pennsylvania.

Attorney Cali’sCali's law practice and the experience he has in the operation and management and affiliation withof several businesses provides a wealth of knowledge as a member of the Board of DirectorsDirector and its Executive Committee.as Chairman.

Richard M. Hotchkiss

Patrick J. Dempsey

Mr. Dempsey,Hotchkiss, age 84,78, has been a Director of the Company since 1999. Mr. Dempsey has also served asand a member of the Bank’s Board of Directors since 1985.  He is2020.  Mr. Hotchkiss, a veteran, has been the founderowner of several businesses including a family lumber business, convenience store, gas station and freight hauling company.  Upon retiring he became a PA Certified UCC building inspector.  Mr. Hotchkiss served at the former MNB Corporation as the Chairman of the Building Committee and Chairman of the Board of Dempsey Uniform & Linen Supply, Inc.,Directors. Mr. Hotchkiss’s leadership experience in Jessup, Pennsylvania.  In addition to his advanced formal education, Mr. Dempsey has gained extensivebusiness operations provides valuable knowledge in Human Resources, Finance, Marketing/Salesfor the Company and Operations.Bank. 

Daniel J. Santaniello

Mr. Santaniello, age 52,56, has been a Director of the Company and a member of the Bank’s Board of Directors since March 2011. Mr. Santaniello was namedhas served as President and Chief Executive Officer onof the Corporation and Bank since December 2, 2010. Mr. Santaniello had previously served as Vice President and Chief Operating Officer of the Company since May 2004. Mr. Santaniello has a broad knowledge of banking from his many years in the industry.

Family RelationshipsPaul C. Woelkers

Mr. Woelkers, age 62, has been a Director Mary E. McDonaldof the Company and a member of the Bank’s Board of Directors since July 2021. Mr. Woelkers founded Lackawanna Mobile X-Ray spending his career growing the company throughout seven states in the Mid-Atlantic region and beyond. In 2010, he sold the company and is now President of Lackawanna Mobile X-Ray, acquiring 170 former clients back into his service fold.  Mr. Woelkers served as a member of the auntBoard of Director Michael J. McDonald, Esquire.Directors of the former Landmark

Bancorp Inc. Mr. Woelkers’ leadership experience in business provides valuable knowledge for the Company and Bank.

Listed below is a board diversity matrix chart pursuant to the daughter of Director Patrick J. Dempsey.NASDAQ Board Diversity Rules.

Executive Officers of the Company and Bank

Daniel J. Santaniello, age 52, was named56, has served as President and Chief Executive Officer onof the Company and Bank since December 2, 2010.  Mr. Santaniello had previously served as Vice President and Chief Operating Officer of the Company since May 2004.  Mr. Santaniello has been employed by the Bank since July 2001.

Salvatore R. DeFrancesco, Jr., CPA, CGMA, age 48,52, has served as Treasurer and Chief Financial Officer of the Company since January 2003.  Mr. DeFrancesco has been employed by the Bank since January 2003 and serves as Executive Vice President and Chief Financial Officer.

Timothy P. O’Brien, age 66, has been employed by the Bank since January 2008 and serves as Senior Executive Vice President and Chief Lending Officer.

Eugene J. Walsh, age 53,57, re-joined the Bank on March 17, 2014, as Executive Vice President and Chief Risk and Credit Officer.  In May 2016, Mr. Walsh was named Vice President &and Chief Operating

Officer of the Company and Executive Vice President &and Chief Operating Officer of the Bank.  Mr. Walsh was previously Executive Vice President and Senior Loan Officer of the Bank from 2001 to 2005. During the interim period, Mr. Walsh served as Vice President, Government Banking & Corporate Lending at M&T Bank in Wilkes-Barre, Pennsylvania, and Chief Financial Officer of Intific, Inc. in Peckville, Pennsylvania.

Michael J. Pacyna, age 52,56, joined the Bank on April 14, 2015, as Executive Vice President and Chief Business Development Officer.  In 2021, Mr. Pacyna was named Chief Lending Officer.  Mr. Pacyna was previously employed by PNC Bank for 26 ½ years as SVP Commercial and Corporate Manager based in Scranton, PA.



REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors is comprised of directors who meet the Nasdaq standards for independence.  The Audit Committee operates under a written charter adopted in 2004 by the Board of Directors, which was reviewed and revised in February 2008, and is available through our website, www.bankatfidelity.com, under Investor Relations - Other Information - Governance Documents.

The Audit Committee met with Management periodically during the year to consider the adequacy of the Company’s internal controls and the objectivity of its financial reporting. The Audit Committee discussed these matters with the Company’s independent registered public accountants and with appropriate Company financial personnel and internal auditors. The Audit Committee also discussed with the Company’s Management and independent registered public accountants the process used for certifications by the Company’s Chief Executive Officer and Chief Financial Officer which are required for certain of the Company’s filings with the Securities and Exchange Commission.

The Audit Committee met privately at its regular meeting with both the independent registered public accountants and the internal auditors, as well as with the Chief Financial Officer and the Chief Executive Officer on a number of occasions, each of whom has unrestricted access to the Audit Committee.

The Audit Committee outsourced the internal audit function to the independent registered public accounting firm of McGrail Merkel Quinn & Associates P.C. (MMQ), with the exception of the Trust and Compliance Management System audits.  In November 2017, MMQ notified the audit committee of its intent to resign its engagement following completion of its current contract, citing difficulties with retaining experienced staffing needed to perform its function.  Management is conducting an active search to replace the functions of MMQ.

The Trust and Compliance Management SystemOperational audits have been outsourced to independent auditors, S.R. Snodgrass, P.C. (“Snodgrass”).  The main responsibility of these firmsthe firm was to complete the internal audits necessary to meet the monitoring component of the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Other responsibilities included identifying, re-testing and reporting all significant findings to the Audit Committee.

The Audit Committee outsourced the regulatory compliance audit function to the independent firm Capco, formerly Fidelity Information Services, LLC (Capco).  CapcoSnodgrass.  Snodgrass specializes in providing regulatory compliance services to the financial services industry.  The main responsibility of the firm is to provide comprehensive regulatory compliance audits to identify compliance exceptions and report all significant exceptions to the Audit Committee.

Finally, the Audit Committee outsourced the Information Technology audit, including an audit of the FFIEC Maturity level and Cybersecurity, to NETBank Audit of Alexandria, Va., which specializes in providing information technology services to the financial services industry.

The commitment of the Audit Committee, internal audit and management, resulted in the completion of the scheduled internal audits. Management, in response to findings, has taken corrective action and internal audit re-testing was performed as required.  The combined efforts were successful in meeting the internal control components of risk assessment and monitoring required by year end. The

internal audit outsource arrangement, audit schedule and the commitment to maintain an effective system of internal controls, required under regulation, caused the Audit Committee to meet five (5)six (6) times in 2017.2021.

The Audit Committee selected RSM US LLP as the independent registered public accounting firm for the Company in 2016 after reviewing the firm’s performance and independence from Management.

Management has primary responsibility for the Company’s consolidated financial statements and the overall reporting process, including the Company’s system of internal controls.

RSM US LLP audited the annual consolidated financial statements prepared by Management, expressed an opinion as to whether those consolidated financial statements fairly present the consolidated financial position, results of operations and cash flows of the Company in conformity with accounting principles generally accepted in the United States of America and discussed with the Audit Committee any issues they believed should have been raised with the Audit Committee.

The Audit Committee reviewed with Management and RSM US LLP,  the Company’s audited consolidated financial statements and met separately with both Management and RSM US LLP,  to discuss and review those consolidated financial statements and reports prior to issuance. Management has represented, and RSM US LLP has confirmed, to the Audit Committee that the consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The Audit Committee also has discussed with RSM US LLP the matters required to be discussed by Statement of Auditing Standards No. 1301, Communications with Audit Committees, as currently in effect.

The Audit Committee received from RSM US LLP,  the written disclosure and the letter required by Public Company Accounting Oversight Board (PCAOB) Rule 3526, Communication with Audit Committees Concerning Independence.  The Audit Committee first discussed with RSM US LLP,  the items related to the firm’s independence from the Company. The Audit Committee also discussed with RSM US LLP,  matters required to be discussed by PCAOB Auditing Standards No. 16, Communication with Audit Committee. As such, the Audit Committee implemented a procedure to monitor auditor independence, reviewed audit and non-audit services performed by RSM US LLP,  and discussed with the auditors their independence.

In reliance on these reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017,2021, for filing with the Securities and Exchange Commission.  The Committee and the Board of Directors have also recommended, subject to shareholder ratification, the selection of RSM US LLP, as the Company’s independent registered public accounting firm for the year ending December 31, 2018.2022.

Members of the Audit Committee

Michael J. McDonald, Chairman

David L. Tressler, Sr.

Mary E. McDonald

Richard J. Lettieri

Alan Silverman
HelenBeth G. Vilcek

BENEFICIAL OWNERSHIP OF THE COMPANY’S COMMON STOCK BY PRINCIPAL SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS

The following table shows, to the best of our knowledge, the names and address of each person or entity who owned more than 5% of the Company’s outstanding common stock, either on the Company’s records or indirectly as a “beneficial” owner, as of February 28, 2018:2022:



See footnote references (1) & (2) listed at table below.

The following table provides information, as of February 28, 2018,2022, with respect to the following beneficial owners of the Company’s common stock:

We determined beneficial ownership by applying the General Rules and Regulations of the SEC, which state that a person may be credited with the ownership of common stock:

Also, a person who has the right to acquire shares within 60 days after February 28, 2018,2022, will be considered to own the shares.  As of February 28, 2018,2022, the number of shares of common stock outstanding was approximately 3,781,965.5,728,094.  The calculation of percentages is based upon this number, plus the exercisable number of stock-settled stock appreciation rights (SSARs) for that individual or for the group which has a total of 12,28722,762 shares of common stock subject to exercisable SSARs for a total of 3,794,2525,750,856 shares.

*     Represents beneficial ownership of less than 1% of the Company’s common stock.



SECTION 16(A)16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors, and persons who own more than 10% of the registered class of the Company’s equity securities to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission.  Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all filed Section 16(a) forms.  The Board of Directors knows of no persons who own greater than 10% of the Company’s outstanding common stock.

DELINQUENT SECTION 16(a) REPORTS

Based solely on itsa review of the copies of such forms received by it, orreports filed for fiscal year 2021 and related written representations, from certain reporting persons,we believe all Section 16(a) reports were filed on a timely basis, except for two late reports for two purchases of common stock by HelenBeth G. Vilcek, and four late reports for four dividend reinvestment purchases made through brokerage accounts for William J. Joyce, Sr.  These transactions were reported on Form 5 in February 2022.  Other than those filings, we are not aware of any of our directors or executive officers failing to comply with the Company believes that during the period from January 1, 2017, through December 31, 2017, all officers and directors were in compliance with all filing requirements applicable to themof Section 16(a) during 2021.

CERTAIN BUSINESS RELATIONSHIPS AND TRANSACTIONS WITH MANAGEMENT

Except as described below, the Company has not entered into and does not intend to enter into any material transactions with any director or executive officer of the Company and/or the Bank or their immediate family members or associated companies.

Some of our directors, officers, their immediate family members and the companies with which they are associated had banking transactions with the Bank in the ordinary course of business during 2017,2021, and the Bank expects to continue such banking transactions in the future.

Total loans outstanding from the Bank at December 31, 2017,2021, to the Company’s/Bank’s officers and directors as a group, members of their immediate families and companies in which they had an ownership interest of 5% or more, amounted to $6,496,754,$11,505,593, or approximately 7%5% of the total Shareholders’ equity of the Bank.  The Bank made these loans in the ordinary course of business on

substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, not associated with the Bank, and they did not involve more than the normal risk of collection or present other unfavorable features.

The largest total amount of indebtedness outstanding during 20172021 to the above described group was approximately $8,370,277.$17,402,951.  The aggregate amount of indebtedness outstanding as of the latest practicable date, February 28, 2018,2022, to the above group was approximately $6,345,935.$13,239,733.

Written policies and procedures for approving loans to related parties are comparable to those applied to non-related parties. In deciding whether to approve other types of related person transactions the following factors may be considered:

To receive approval, the related person transaction must be on terms that are fair and reasonable to the Company, and that are as favorable to the Company as would be available from non-related entities in comparable transactions.

Other than loans, there have been no material transactions between the Company or the Bank, or any material transactions proposed, with any director or executive officer of the Company or the Bank, or any associate of these persons.  The Bank does, from time-to-time, enter into non-material transactions with related parties.

During 2017,2021, the Bank paid, in its ordinary course of business, ETA Inc., for legalloan closing representation services, performed byof which Brian J. Cali Esquire and by Tressler Law LLC, of which James M. Tressler, Esquire is an owner and the son of David L. Tressler, Sr.  During 2017, theowner.  The Bank also paid approximately $153,000 in fees for architectural services performed by DX Dempsey, of which Michele Dempsey, daughter of Patrick J. Dempsey and sister of Kristin D. O’Donnell, is owner.  Further, in 2017,2021 the Bank paid Dempsey Uniform & Linen Supply, Inc., of which Patrick J. Dempsey is Chairman of the Board, and of which Kristin D. O’Donnell is a vice president, for laundry and uniform services; Guy Cali and Associates, Inc.,ERA One Source Realty, of which Guy Cali, brotherAntoinette Walsh, wife of BrianEugene Walsh, is a real estate agent, for the commissions on the sale of real estate; Richard M. Hotchkiss for real estate inspection services, Kennedy Water JJWR Inc, of which William J. Cali,Joyce, Sr. is a part owner, along with his brothers Joseph and John Joyce for photography servicesa property the Bank leases, and creative projects.to Joseph J. Joyce Associate, of which William J. Joyce, Sr. was part owner along with his brothers Joseph and John Joyce for payment of insurance premiums. All of these products and services were sold or provided according to the customary price or fee schedule of the seller or service provider.

EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation Discussion and Analysis discusses the compensation awarded to named executive officers.  Named executive officers include the principal executive officer, the principal financial officer and the Corporation’s threeCompany’s two most highly compensated executive officers (earning over $100,000) other than the principal executive officer and the principal financial officer who were serving as executive officers at the end of the last completed fiscal year. The named executive officers for the year 20172021 are Daniel J. Santaniello, President and Chief Executive Officer; Salvatore R. DeFrancesco, Jr., Treasurer and Chief Financial Officer; Eugene J. Walsh, Vice President and Chief Operating Officer; Timothy P. O’Brien, Seniorand Michael J. Pacyna, Executive Vice President and Chief Lending Officer of the Bank; and Michael J. Pacyna, Executive Vice President and Chief Business Development Officer of the Bank.

Objectives of Compensation Programs

The Company’s compensation philosophy is to reward management for exceptional performance.  The program is designedperformance with compensation-based tools, allowing for recruitment and retention of executives and encouragement for executives to work toward enhancing shareholder value in an easily understood and calculable manner.  The Compensation Committee’s intention is to provide a comprehensive plan to reward for consistent performance while avoiding outcomes that yield short term results that are risky, unsustainable, and beyond the sight of anticipated long termlong-term goals.  The philosophy fosters accountability by coupling base compensation with other forms of compensation, including specific goal-oriented plans.

The Committee had determined that executive compensation should consist of:

Base Pay

Base pay is a fixed amount of money paid to the executive and is the core of the Company’s executive compensation, and allows the executive to haveallowing a predictable level of income.  It represents a “fixed” amount of money the executive receivesis paid in exchange for sustained performance of duties and responsibilities.  Itresponsibilities and is largelymainly determined by the position held, experience within the position, performance, longevity and longevity.    Similar positions within the marketplace provide additional guidance.benchmarking resources.  There is no specific formula or weight used in determining the base pay, but each factor is reviewed separately in developing the base pay.amount. Gaining guidance from similar positions within the marketplace, input from compensation consultants, and reviews of peer banks of comparable asset size within the state assist in the determination.  The Committee uses its business judgment and input from the Chief Executive Officer in determining the amount of increase in base pay to award the other named executive officers.

Incentive Plan

In 2014, theThe Committee approvedannually approves incentive plans for various areas of the Company, including an Annual Incentive Plan (AIP) covering the named executive officers.  The plan’sincentive plans, as a part of overall compensation plans, provide an opportunity for reward for meeting and exceeding established performance goals as well as recognition of individual achievements.  Its purpose is to motivate, reward and reinforce performance and achievement of the executive’s team and individual goals in support of strategic objectives for growth and profitability.   TheLinked to bank and individual performance factors, the plan provides a form of variable cash compensationcompensation. Factors and weighting, which is directly linked to individual and bank performance factors.  Factors are reviewed annually and may be updated from year to year.   The factors and weightingyear, are determined at the beginning of each plan year and are developed with threshold, target and maximum goals.year.  Actual performance is compared to the goals set and awards are determined based on meeting and exceeding the annual performance objectives. The plan focuses on achievement of the goals in support of the strategic objectives of the Company and the best interest of the shareholders. For the year 2017,2021, the plan focused upon net incomeon goals of earnings per share, asset growth, average Key Performance Indicator score and return on assets as follows:a board discretion component calculated against threshold, target and maximum performance measures.



Clawback:

The plan contains a clawback provision wherein awards will be recalculated if the relevant performance factor upon which they are based is restated or otherwise adjusted within the thirty-six (36) month period following the public release of the financial information. Any material overpayments or adjustments required by law will be owed back to the Company.

Broad Based Benefits

The Company offers competitive and comprehensive benefit plans to all qualifying employees, including the named executives.  The benefit plans offer additional incentive to recruit and retain employees.  The plans, including health insurance,insurances, short and long-term disability programs and term life insurance, help to protect the Company’s employees from the financial consequences of being uninsured.  Each executive is eligible to participate in these plans to the same extent as all other employees of the Company.

In 2017, the Company purchased new Bank Owned Life Insurance consistent with the Company’s overall business strategy.  This purchase retains the same benefit formula at three times salary for named executives but removes the maximum benefit of $450,000 and replaces it with the lesser of the executive’s projected final benefit or the net amount insurance of total death benefit minus the cash surrender value.   In addition, Messrs. Santaniello, DeFrancesco and Walsh will retain a reduced benefit after separation from service if vested.

Retirement Plan

Consistent with the Company’s Compensation Philosophy, the Company provides a 401(k) plan for all of its full-time employees and for part-time employees working over a certain threshold of hours, subject to certain eligibility requirements regarding age and length of employment. The Company provides up to a 6% match of employee contributions which incents employees to save for retirement. Contributions by the executives and subsequent bank matchmatches are subject to the normal discrimination testing for 401(k) plans and are limited by those rules.

Profit Sharing Contribution

An additional component ofThe 401(k) plan maintains a discretionary profit-sharing option with eligibility rules mirroring the 401(k) plan is a profit sharing option.  Eligibility rules mirror the 401(k) plan plus the requirement of being an active employee as of the plan’s year end.  Participation is inclusive of executives under the same terms.  The profit sharing option isCompany may make a discretionary and allows the Company to make an annual award to all eligible employees based on the Company’s profitability.  Participation is inclusive of executives under the same terms.  The Company believes that this plan encourages longevity with the Company and encourages the employees to assist in keeping the Company profitable.  No profit sharingprofit-sharing contributions were made to employees in 2017.2021.

Equity Based Compensation

Equity based compensation provides an incentive to attract, retain and reward persons performing services for the Company through providing the means by which eligible executives may be given the opportunity to benefit from increases in value of the common stock through the granting of awards.  In accordance with the Compensation Philosophy of the Bank, the Compensation Committee believes that incenting through equity-based compensation plans will advance the interests of the Company and its shareholders by motivating executives to contribute to the growth and profitability of the Company.

In 2012, the Company approved the Omnibus Stock Incentive Plan that is designed to provide stock-based compensation including qualified and non-qualified stock options, restricted stock orand stock-settled stock appreciation rights. In 2013, named executive officers then employed were awarded with restricted stock, with grants subsequently made in 2014 and 2015.  The grants from 2013 through 2015 were awarded with a four year vesting period designed to encourageencourages management continuity as well as to alignand aligns the interests of the participants with those of the shareholders. The Committee used its discretion and business judgment in determining to whom and the amount of equity awarded as there was no formula that governed the amount and timing of the stock grants.

In 2015, the Committee approved the implementation of a Long TermLong-Term Incentive Plan (LTIP) governedwas implemented by the 2012 Omnibus Plan, for the executives, effective December 15, 2015 through December 31, 2017.  In accordance with the Compensation Philosophy of the Bank, the Compensation Committee believes that incenting through this plan will advanceand in 2021, the interests of the Company and its shareholders by providing an incentive to attract, retain and reward persons performing servicesLTIP set parameters for the Company, to provide a means by which the eligible executives may be given an opportunity to benefit from increases in value of the common stock through the granting of awards, and by motivating the executives to contribute to the growth and profitability of the Company. 

one-year period.  The awards of restricted stock and stock appreciation rights in the LTIP are calculated following the end of each of the Company’s 2021 fiscal years beginning in 2015 and ending in 2017year and are based on thepeer metrics of return on equity (ROE) performance, EPS net income, asset growth, Key Performance Indicator score and core earnings per share growth (EPS). The goals set for thea board discretion component. Restricted Stock awards are both annual milestones and results overwith a full three-year cumulative period.  Three-year aggregate goals are based on average return on equity (AROE) and core earnings per share growth (EPS). Awardsvesting period were granted to named executives in February 20162022 for the year 2015, in February 2017 for the year 2016, and in February 2018 for the year 2017 with a three year vesting period. The February 2018 awards were based on both the annual and three-year aggregate goals for 2017.2021.

For the 2017 annual award, and for the three-year cumulative period award for 2017, ROE/AROE and EPS metrics are depicted in the following charts.  A plan for 2018 has not been adopted although the Compensation Committee is currently reviewing plan designs for future years.Clawback

* Earnings per share goals were adjusted to reflect the 2017 stock split.

Clawback:

The plan does contain a clawback provision wherein awards will be recalculated if the relevant performance factor upon which they are based is restated or otherwise adjusted within the thirty-six (36) month period following the public release of the financial information. Any material overpayments or adjustments required by law will be owed back to the Company.  In the event the Corporation or Bank is required to prepare an account restatement because of the awardee’s misconduct or fraudulent activity, then the awardee shall return and refund to the Bank the entire award that was received based upon the erroneous data.

Employee Stock Purchase Plan

An Employee Stock Purchase Plan is offered to all employees, including executives.  The plan’s purpose is to provide eligible employees the opportunity to acquire or increase their ownership interest in the company through the purchase of a limited number of shares of Company stock at a discounted price.  This program assists in aligning the interests of the employees with those of the shareholders and it provides further incentive to employees to enhance the financial results of the Company.  The Employee Stock Purchase Plan is an optional program with entry available at the beginning of each year.

Supplemental Executive Retirement Plan

In March 2017, theThe Bank has entered into a supplemental executive retirement plan (“SERP”) with Messrs. Santaniello, DeFrancesco, Walsh and O’Brien.Pacyna.  The intent of entering into the SERPs was to recognize the valuable services each executive has performed for the Bank, to encourage the executive’s continued employment, and to provide the executive with additional incentive to achieve corporate objectives by providing additional retirement benefits.   The triggering events are normal retirement age, disability, change in control and early termination as long as the early termination occurs after the first day of the fourth plan year.   The triggering events are designed to further the SERPs’plan’s intent to encourage continued employment.  The SERPs are considered a defined contribution plan, whereby the Bank contributes a specific sum to the executive’s SERP unless the Board of Directors believes that an increase or decrease in the amount to be contributed is necessary.  The Committee thoughtdetermined it was in the best interest of the Bank to structure the SERPs as defined contribution plans and not to provide for specific guaranteed amounts upon retirement to shift a portion of the risks associated with SERPs to the executive.  The SERPs also contain a forfeiture provision should the executive violate certain noncompetition agreements to which the executive is a party.



Split Dollar Life Insurance

In March 2017, theThe Bank has entered into split dollar life insurance agreements (“Split Dollar Agreement”) with Messrs. Santaniello, DeFrancesco, Walsh O’Brien, and Pacyna.  The intent of entering into the Split Dollar Agreement was to recognize the valuable services each executive has performed for the Bank, to encourage the executive’s continued employment, and to provide the executive with additional incentive to achieve corporate objectives by providing additional life insurance benefits.   The Split Dollar Agreement will vest upon the earlier of disability, change in control, normal retirement age or a date chosen by the Board.  Upon death while still employed by the Bank, the executive’s beneficiary will receive the lesser of three (3) times the executive’s base salary or the net death proceeds as defined in the policy.  If Messrs. O’Brien or Pacyna die after a separation of service, the Bank will receive all of the death proceeds.   Upon the death of Messrs. Santaniello, DeFrancesco, Walsh or Walsh, after their respectivePacyna, following vesting and termination of employment, after a vesting event, the executive will be entitled to the lesser of two (2) times his highest base salary or the net death proceeds.  Upon hisIf death after his termination of employmentoccurs prior to a vesting, event, the Bank will receive all death proceeds.

Perquisites

Consistent with the Company’s Compensation Philosophy, select executives may receive perquisites for purposes of providing opportunities to cultivate business.  Perquisites are considered an important part of the executive compensation mix and include business use of automobiles and/or memberships to country clubs and social clubs.  Use of a Company automobile is essential to conduct bank business in locations away from the office.  Developingoffice and developing relationships through outside activities via use of club memberships provides opportunity to market new and current clients. Any expense that is personal in nature is expected to be reimbursed to the Company by the executives.

Role of Executive Officers in Compensation Decisions

The Compensation Committee makes all compensation decisions with respect to executive officers.  The Chief Executive Officer provides input to the Compensation Committee based on daily oversight of the other named executives and presents compensation recommendations. Recommendations areThe Compensation Committee evaluates the recommendations derived from executive performance and other factors.  The Committee evaluates the recommendationsfactors and incorporates its interactions with executive officers in their respective positions in determining the level of compensation appropriate for the named executives.  The Chief Executive Officer is excluded from

discussion when his performance and compensation are discussed, and no other executive officer is present when discussions regarding compensation occur.

Role of Executive Compensation Philosophy in Determining Executive Compensation

In 2015, theThe Company has adopted a Compensation Philosophy designed to assist in attracting, retaining and motivating key talent.  It was developed to maintain a competitive and pay-for-performance-focused executive compensation plan.  The plan does not provide specific compensation recommendations for the named officerofficers but provides the guidance in developing and implementing compensation strategies for the executives.

Role of Shareholder Vote – “Say-on-Pay”

During the 2016 Annual Meeting of Shareholders, a “say-on-pay” proposal, giving shareholders the opportunity to express their views on named executive officers’ compensation, was presented as an advisory vote and approved by shareholders.  It was not intended to address any specific item of compensation of named executive officers, but rather the overall compensation of named executive officers and the associated philosophy, policies and practices. The Compensation Committee considers the results of the “Say-on-Pay” proposal and any other shareholder feedback on compensation in setting the compensation for the named executive officers.  Shareholder advisory votes on the Company’s executive compensation for named executive officers occur every three years and will take place again at the 2019 Annual Meeting of Shareholders.

Benchmarking

In determining the appropriate levels of executive compensation, the Compensation Committee reviews levels of compensation from a variety of standard sources:

The Committee uses the above resources as a method to educateeducates itself on the current trends in compensation.  Resources include Blanchard Consulting Group’s study of executive compensation, although noreviews of public information containing compensation levels of similar peer banks, general compensation surveys and comparisons of executive compensation levels within the marketplace and regionally.   No specific weight is given to any of the resources.  With banking being a highly regulated industry, adherence with regulatory guidelines is given the utmost consideration.

With the adoption of the Compensation Philosophy, the Committee may consider compensation survey data, peer group comparisons, and associated recommendations contained within the study as a part of its process.

Changes in 20172021 Executive Officer Compensation

The Summary Compensation Table outlines actual compensation of the executive officers.  The changes in base pay for named executive officers were based upon their performance and achievement of goals, their longevity with the Bank, their respective positions and data obtained from recent surveys.surveys as reviewed by the Compensation Committee.  The Company also provides employment agreements to the Chief Executive Officer, the Chief Lending Officer, the Chief Financial Officer, and the Chief Operating Officer and a change in control agreement to the Chief Business DevelopmentLending Officer.

The Compensation Committee believes that it is appropriate to provide employment agreements to the Chief Executive Officer, the Chief Lending Officer, the Chief Financial Officer and the Chief Operating Officerthese executive officers in order to protect the Company through the non-competition provisions contained in the agreements. The Committee also believes that it is appropriate to provide a change in control agreement to the Chief Business Development Officer based upon his individual role with the Company.

The Compensation Committee also recommended and the Bank approved the provision of SERPs and Split Dollar Agreements to certain executives as discussed in Supplemental Executive Retirement Plan and Split Dollar Life Insurance above.

Impact of Accounting and Tax

There were no compensation decisions made as a result of accounting and/or tax treatments except the inclusion of gross-up or gross-down provisions contained in the respective agreements as discussed below.

Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the company’s Chief Executive Officer, the Chief Financial Officer or any of the Company’s three other most highly compensated executive officers who are employed as of the end of the year.  The amount of the executive’s compensation does not trigger Section 162(m) limitation.

The employee stock purchase plan, the 401(k) plan, stock incentive plan, the employment agreements, and change in control agreements are designed to be compliant with the applicable Internal Revenue Code sections.

Triggering Events in Contracts

The Company is currently a party to employment agreements with Messrs. Santaniello, O’Brien, DeFrancesco, Walsh and Walsh.Pacyna.   Employment agreements are standard in the financial services industry and are used to protect the Company’s client base through non-competition provisions. The agreements are also used to balance the financial goals of the executive with the needs of the Bank.  The triggering events that provide payment which are prevalent in the financial services industry include:

The triggering events for payment incent executives to maintain expected performance levels for continued employment.  Upon the employee’s death, a termination by the employee without good reason, the employee’s disability or a termination for cause, the employment agreement is terminated and the employee will not receive any payments under the agreement. The Board did not determine it to be

necessary to provide payment upon a disability or death because life insurance is provided to all employees and the employee may receive payments under the Company’s disability insurance plan.  The employee only receives a payment under the agreement if the employee’s employment is terminated after a change in control, without cause, or by the employee for good reason.  The contracts give the executive the security of knowing that if he is terminated in one of those scenarios, the executive will receive some form of compensation during his transition phase. The contracts contain change of control provisions whereby the executive is compensated upon a termination after a change of control in order to ensure that decisions regarding potential change of controls are made in the best interests of the shareholders and that personal concerns regarding subsequent employment are minimized. In addition, the contracts contain a non-competition provision, whereby the executive is not allowed to compete with the Company or solicit customers of the Company for a specific period of time, typically the time period during which he is being compensated.

Additionally, the Company is a party to a change in control agreement with Mr. Pacyna. The Compensation Committee believed that it was appropriate to offer this executive a change in control agreement as it gave the executive the security of knowing that if he was terminated as a result of a change in control he would receive some form of compensation during his transition phase.

The Company is also a party to SERP agreements with Messrs. Santaniello, DeFrancesco, Walsh and O’Brien.Pacyna.  The triggering events for the SERPs are normal retirement, disability, change in control, death, and early termination.  The SERPs are intended to encourage the executives to continue in the employment of the Bank and therefore benefit amounts for a termination prior to normal retirement will be less than benefit amounts for a termination after normal retirement. 

Hedging and Pledging

Employees who own shares outright are permitted to hedge or pledge shares, subject to the Company’s Insider Trading Policy Statement that restricts certain transactions prior to the release of certain nonpublic information.

Ownership Guidelines

At this time,Effective with the LTIP award granted in February 2021 and continuing in 2022, the Company does not requireinstituted a holding requirement for its named executive officers to own a certain number of shares of Company stock; however,stock based on a percentage of annual salary; it encouragescontinues to encourage ownership of Company stock through its Employee Stock Purchase Plan and awards restricted stock and stock appreciation rights through the LTIP when plan goals are met.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and the Company’s Form 10-K.

Compensation Committee

Patrick J. Dempsey, Chairman

Michael J. McDonald

Brian J. Cali

Summary Compensation Table

The following table provides the annual and equity basedequity-based compensation for services rendered in all capacities to the Company and the Bank for the fiscal year ended December 31, 2017,2021, for those persons who were:

The current President and Chief Executive Officer, the Chief Financial Officer, and the other threetwo most highly compensated executive officers of the Company or Bank to the extent such person’s total exceeded $100,000.





Employment Agreements

Each named executive entered into a three-year term employment agreement with annual extensions.  Agreement entry dates for each are:

Employment Agreement with Daniel J. Santaniello

On March 23, 2011, the Company and the Bank entered into a three year term employment agreement with annual extensions with Mr. Santaniello. Under the terms of the employment agreement,agreements, in the event Mr. Santaniellothe named executive is terminated without cause, after a change in control, or by Mr. Santaniellothe named executive for good reason, he will receive two (2) times his annual base salary plus benefits for two years. He is also bound by non-competition and non-solicitation provisions.

Employment Agreement with Salvatore R. DeFrancesco, Jr.  

On March 17, 2016, the Company and the Bank entered into a three year term employment agreement with annual extensions with Mr. DeFrancesco. Under the terms of the employment agreement, in the event Mr. DeFrancesco is terminated without cause, after a change in control, or by Mr. DeFrancesco for good reason, he will receive two (2) times his annual base salary plus benefits for two years. He is also bound by non-competition and non-solicitation provisions. This agreement replaced the previously executed change in control agreement and severance agreement dated December 31, 2008. 

Employment Agreement with Timothy P. O’Brien

On March 23, 2011, the Company and the Bank entered into a three year term employment agreement with annual extensions with Mr. O’Brien. Under the terms of the employment agreement, in the event Mr. O’Brien is terminated without cause, after a change in control, or by Mr. O’Brien for good reason, he will receive two (2) times his annual base salary plus benefits for two years. He is also bound by non-competition and non-solicitation provisions.

Employment Agreement with Eugene J. Walsh

On March 29, 2017, the Company and the Bank entered into a three year term employment agreement with annual extensions with Mr. Walsh. Under the terms of the employment agreement, in the event Mr. Walsh is terminated without cause, after a change in control, or by Mr. Walsh for good reason, he will receive two (2) times his annual base salary plus benefits for two years. He is also bound by non-competition and non-solicitation provisions. This agreement replaced the previously executed change in control agreement and severance agreement dated June 26, 2015. 

Change in Control and Severance Agreement with Michael J. Pacyna, Jr.

Mr. Pacyna has a change in control agreement and severance agreement dated March 29, 2017 which provides for payments to the executive in the event of termination without cause, as defined in the agreement, or in the event of a change in control, as defined in the agreement. In the event that Mr. Pacyna is terminated or terminates his employment because he has experienced an adverse employment condition as delineated in the agreement after a change in control, he shall receive one (1) times his annual base salary.  In the event that he is terminated without cause, he shall receive six (6) months of his annual base salary.  Mr. Pacyna is also bound by a non-solicitation provision commensurate with the payments.

EQUITY COMPENSATION PLAN INFORMATION

On August 15, 2017 the Company declared a three-for-two stock split effected in the form of a 50% stock dividend.  All share and per share information in this proxy for prior years has been retroactively adjusted to reflect this stock split.

2012 Omnibus Stock Incentive Plan

The Company maintains an omnibus stock incentive plan (the 2012 Omnibus Plan) that was approved by the shareholders at the 2012 Annual Meeting.  The 2012 Omnibus Plan replaced the 2000 Stock Incentive Plan and will expire on, and no stock-based awards will be granted after the year 2022.  The purpose of this plan is to advance the development, growth and financial condition of the Company by providing incentives through participation in the appreciation in the value of the Company’s common stock.  In return, the Company hopes to secure, retain and motivate employees who are responsible for the operation and the management of the affairs of the Company by aligning the interest of its employees and directors with the interest of its shareholders.  In the 2012 Omnibus Plan, the Company reserved 750,000 shares of its no-par common stock for issuance under the plan.  In the 2012 Omnibus Plan, employees are eligible to be awarded stock-based compensation grants which can consist of stock options (qualified and non-qualified), SARsSSARs or restricted stock. 

The 2022 Stock Incentive Plan (the 2022 Omnibus Plan) was approved by the Board of Directors to replace the expiring 2012 Omnibus Plan.  The 2022 Omnibus Plan shall be presented for approval at the next meeting of the Corporation’s shareholders. The 2022 Omnibus Plan will expire on, and no stock-based awards will be granted after the year 2032.  The purpose of the plan is to advance the development, growth and financial condition of the company by providing incentives through participation in the appreciation of the common stock of the Company to attract, secure, retain and motivate directors and employees who may be responsible for the supervision, operation and for the management of the affairs of the Company and any subsidiary now or hereafter existing.  In the 2022 Omnibus Plan, the Company reserves 500,000 shares of its no-par common stock for issuance under the plan. In the 2022 Omnibus Plan, directors and employees are eligible to be awarded stock-based compensation grants which can consist of stock options (qualified and non-qualified), SSARs, stock awards and restricted stock, stock units and restricted stock units, performance awards and directors’ fees. 

During 2015, the Company created a Long-Term Incentive Plan (LTIP) that awards restricted stock and stock-settled stock appreciation rights (SSARs)SSARs to senior officers based on the attainment of performance goals.  The service requirement is the participant’s continued employment throughout the LTIP with a three-year vesting period.  TheIn 2018 and 2019, the restricted stock hashad a two-year post vesting holding period requirement.  The post vesting hold period requirement was eliminated for awards made in 2020 based on 2019 performance, for awards made in 2021 based on 2020 performance and for awards made in 2022 based on 2021 performance. The SSAR awards have a ten yearten-year term from the date of each grant.  The Company granted restricted stock and SSARs in February 20162021 based on 20152020 performance and in February 20172022 based on 20162021 performance.  SSARs were not granted in 2021 or 2022.

The following table is a summary of the activity and the status of the 2012 Omnibus Plan for restricted stock grants awarded to the named executives during 2017:

Grants of Plan-Based Awards

In February 2018,2022, the Company granted a total of 10,80016,520 restricted shares and 38,941 stock appreciation rights to its senior officers including named executive officers.officers and other key employees.  On the date of grant, the value of the Company’s common stock was $49.50$49.85 per share.  The restricted stock grants, valued at an aggregate grant date fair value computed in accordance with FASB ASC Topic 718, will vest over a100% in three year period,years, during which time the Company expects to recognize compensation expense of $494,921.  The stock appreciation rights, valued at $13.73 per share in accordance with FASB ASC Topic 718, will vest over a three year period and expire ten years less one day from the date of the grant, with compensation expense of $534,582 expected to be recognized by the Company during that time.$823,522.

The numbers represented in the chart below represent awards from the 2012 Omnibus Stock Incentive Plan and the 2000 Stock Incentive Plan as detailed above.  The following table summarizes each outstanding equity award as of December 31, 2017.2021.

Outstanding Equity Awards at Fiscal Year-End

Option Exercises and Stock Vested

2002 Employee Stock Purchase Plan

The Company maintains an employee stock purchase plan that was approved by the shareholders at the 2002 Annual Meeting.  The purpose of this plan is to provide employees the opportunity to acquire ownership interests in the Company and to motivate the employees to improve job performance and enhance the financial results of the Company.  Under the plan, each eligible employee may purchase a limited number of shares of the Company’s common stock on each January 1st at a purchase price per share equal to 90% of the lower of the ten trading day average fair market value of the Company’s common stock measured as of December 31st or January 1st of the previous year.  The subsequent sale or transfer of the purchased shares under the plan is restricted for one year from the purchase date.

NONQUALIFIED DEFERRED COMPENSATION

The following table includes information about activity in, amounts earned, and balances of each executive’s supplemental executive retirement agreement:

(1) The Company contributions are included in All Other Compensation in the Summary Compensation table.

On March 29, 2017, the Company entered into separate supplemental executive retirement (SERP) agreements with the above named executives;Messrs. Santaniello, DeFrancesco and Walsh pursuant to which the Company will credit an amount to a SERP account established for each participant’s behalf while they are actively employed by the Company for each calendar month from March 1, 2017 until the normal retirement age. The SERP account will be credited with interest at an annual rate equal to 4.00%, compounded monthly. This rate is fixed from plan inception until all payments are distributed. The SERP account is payable in 180 monthly installments commencing upon separation of service after attaining normal retirement age. If separation from service occurs following the first day of the fourth plan year for a reason other than death, disability or following a change in control, the participant will receive the SERP account balance at that date, payable in 60 monthly installments beginning at normal retirement age. If the executive terminates prior to the first day of the fourth plan year, the executive will forfeit all rights under the SERP.  On January 1, 2020, Messrs. Santaniello, DeFrancesco and Walsh met the service requirements to vest into accrued SERP benefits.

On March 20, 2019, the Bank entered into a SERP with Mr. Pacyna under the same considerations as afforded to Messrs. Santaniello, DeFrancesco and Walsh.  

POTENTIAL PAYMENTS UPON TERMINATION

Payments under each executive's contracts as detailed below would be triggered by termination of executive's employment for cause, good reason, disability, death, voluntary separation absent good reason, involuntary termination absent cause, and in the event of a change in control. The value of equity awards was calculated using $41.30$59.00 per share, the closing market price of the Company’s common stock on December 31, 2017.

Daniel J. Santaniello2021.

The tabletables below showsshow the payments upon termination of Mr.Messrs. Santaniello, DeFrancesco, Walsh and Pacyna as of December 31, 2017:2021: