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CNB Financial Corporation
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Table of Contents
1 South Second Street
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CNB FINANCIAL CORPORATION will be held virtually only via a live webcast exclusively at Lock Haven University – Clearfield Campus, 201 University Drive, Clearfield, PA 16830, 2nd Floor – Upper Loungehttp://www.viewproxy.com/CNBFinancial/2023/vm. Please register in advance of the virtual meeting by visiting www.viewproxy.com/CNBFinancial/2023. For procedures on attending the virtual meeting, please refer to the section titled “About the Meeting” beginning on page 1. The virtual meeting will be held on Tuesday, April 21, 2020,18, 2023, beginning at 2:00 P.M.p.m. (EDT) for the following purposes: | 1. | ELECTION OF DIRECTORS: To elect four Class 1 directors to serve until the Annual Meeting in the year 2023 or until their respective successors are elected and qualified and one Class 2 director to serve until the Annual Meeting in the year 2022 or until her successor is elected and qualified.
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| 2. | SAY-ON-PAY VOTE: To vote on anon-binding advisory resolution on the compensation program for CNB Financial Corporation’s named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related narrative executive compensation disclosures contained in the Proxy Statement (a“say-on-pay” vote).
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| 3. | SAY-ON-FREQUENCY VOTE: To vote on anon-binding advisory basis on how frequently shareholders will be provided a“say-on-pay” vote. Shareholders have the opportunity to request a“say-on-pay” vote every year, every two years, or every three years, or abstain from voting on the matter completely.
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| 4. | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM: To ratify the appointment of Crowe LLP as our independent registered public accounting firm for the year ending December 31, 2020.
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| 5. | TRANSACTION OF OTHER BUSINESS: To transact such other business as may properly come before the meeting or any adjournment thereof.
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1.ELECTION OF DIRECTORS: To elect the four Class 1 directors to serve until the Annual Meeting in the year 2026 or until their respective successors are elected and qualified and one Class 3 director to serve until the Annual Meeting in 2024 or until his successor is elected and qualified.
2.SAY-ON-PAY VOTE: To vote on a non-binding advisory resolution on the compensation program for CNB Financial Corporation’s Named Executive Officers, as disclosed in the Compensation Discussion and Analysis, and compensation tables, and related narrative executive compensation disclosures contained in the Proxy Statement (a “say-on-pay” vote).
3.RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM: To ratify the appointment of FORVIS, LLP as our independent registered public accounting firm for the year ending December 31, 2023.
4.TRANSACTION OF OTHER BUSINESS: To transact such other business as may properly come before the meeting or any adjournment thereof.
The Board of Directors of CNB Financial Corporation fixed February
24, 2020,21, 2023, as the record date for the determination of shareholders entitled to notice of and to vote at the meeting. Only shareholders of record at the close of business on that date will be entitled to notice of and to vote at the Annual Meeting or any adjournments thereof.
The Annual Report on Form 10-K for the year ended December 31,
2019,2022, the
2022 Annual Report,
Highlights, and the Proxy Statement and form of proxy for the meeting are enclosed.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. YOU ARE URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WHETHER OR NOT YOU PLAN TO
VIRTUALLY ATTEND THE
MEETING IN PERSON.MEETING. PLEASE RETURN THE PROXY CARD AS PROMPTLY AS POSSIBLE. THE BOARD RECOMMENDS A VOTE “FOR” EACH OF PROPOSALS ONE, TWO AND
FOUR DESCRIBED ABOVE AND “ONE YEAR” WITH RESPECT TO PROPOSAL THREE DESCRIBED ABOVE. YOU MAY WITHDRAW
OR CHANGE YOUR PROXY AT ANY TIME BEFORE IT IS
OFFICIALLY REGISTERED AS VOTED BY SO NOTIFYING THE SECRETARY AND
VOTEVOTING YOUR SHARES
IN PERSON.WHILE THE POLLS ARE OPEN DURING THE VIRTUAL ANNUAL MEETING.
By Order of the Board,
Richard L. Greslick, Jr., Secretary
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held virtually only on April 21, 2020.18, 2023. This Proxy Statement, along with our Annual Report on Form 10-K for the fiscal year ended December 31, 20192022, and our 2019separate 2022 Annual Report document which includes, among other information, listings of the Directors and Officers of CNB Financial Corporation and its subsidiaries, are available free of charge on the Investor Relations section of our website (www.cnbbank.bank)(www.cnbbank.bank).
CNB FINANCIAL CORPORATION
CLEARFIELD, PA 16830-0042
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
VIRTUALLY
TUESDAY, APRIL
21, 2020,18, 2023, 2:00 p.m.
(EDT)
This Proxy Statement is furnished to shareholders of CNB Financial Corporation (the “Corporation”
or the “Holding Company”) in connection with the solicitation of proxies on behalf of the Board of Directors of the Corporation (the “Board”) for use at the Annual Meeting of Shareholders
(the “Annual Meeting”) to be held on Tuesday, April
21, 202018, 2023 at 2:00 p.m.
(EDT).
The Corporation is a Pennsylvania business corporation and a financial holding company registered with the Federal Reserve Board and has its principal offices at CNB Bank,
1 South Second Street, Clearfield, Pennsylvania 16830. The subsidiaries of the Corporation are CNB Bank (“CNB Bank” or the “Bank”), CNB Securities Corporation, CNB Risk Management, Inc., Holiday Financial Services Corporation and CNB Insurance Agency.
Unless otherwise directed, proxies solicited hereby will be voted FOR the election as directors of the nominees named under the caption: “Proposal 1. Election of
Directors,Directors;” FOR approval of the
non-binding advisory resolution on the compensation program for our NEOs (as defined below)
, “ONE YEAR” with respect to under the
non-binding advisory vote caption: “Proposal 2. Advisory Vote on
the frequency of shareholder votes on executive compensationExecutive Compensation;” and FOR ratification of the appointment of our independent registered public accounting firm for the year
2020.2023 under the caption: “Proposal 3. Ratification of Appointment of Independent Registered Public Accounting Firm.” The Board is not aware of any other matters which will be presented for action at the meeting, but the persons named in the proxies intend to vote or act according to their discretion with respect to any other proposal which may be presented for shareholder
action.action at the Annual Meeting.
The enclosed proxy is being solicited by the Board. The cost of preparing, assembling and mailing the notice of annual meeting, proxy statement and form of proxy is to be borne by the Corporation. In addition to the solicitation of proxies by use of mail, directors, officers or other employees of the Corporation may solicit proxies personally or by telephone and the Corporation may request certain persons holding stock in their names or in the names of their nominees to obtain proxies from and send proxy
materialsmaterial to the principals and will reimburse such persons for their expenses in so doing. Directors, officers, or other employees so utilized will not receive special compensation for such efforts. The date on which this Proxy Statement and the accompanying form of proxy was first mailed to shareholders was
on or around March
11, 2020.9, 2023.
A quorum for the transaction of business at the
annual meetingAnnual Meeting will require the presence,
in personthrough virtual confirmed attendance, or by proxy, of shareholders entitled to cast at least a majority of the votes that all shareholders are entitled to cast on a particular matter to be acted upon at the meeting. Abstentions are counted as shares present for determination of a quorum but are not counted as affirmative or negative votes and are not counted in determining the number of votes cast on any matter. The affirmative vote of a majority of the votes cast by all shareholders entitled to vote on the matter is required for the approval of all matters under consideration at the
annual meeting.Annual Meeting. Shareholders have one vote for each share held.
The enclosed proxy is revocable at any time prior to the actual voting of such proxy by the filing of a written notice revoking it, or a duly executed proxy bearing a later date, with Richard L. Greslick, Jr., the Secretary of the Corporation. In the event your proxy is mailed and you
virtually attend the meeting, you have the right to revoke your proxy and cast your vote
personally.personally using the instructions included under the section titled “Attending the Virtual Annual Meeting” which begins on page 2 of this Proxy Statement. All properly executed proxies delivered to us pursuant to this solicitation will be voted at the meeting in accordance with your instructions, if any.
Eligibility to Vote; Record Date
The securities that can be voted at the
annual meetingAnnual Meeting consist of shares of common stock of the Corporation with each share entitling its owner to one vote on all matters properly presented at the meeting. There is no cumulative voting of shares. The Board has fixed the close of business on February
24, 202021, 2023, as the record date for the determination of shareholders entitled to notice of, and to vote at, the
annual meeting.Annual Meeting. On the record date, there were
15,369,06421,217,777 shares of common stock then outstanding and eligible to be voted at the
annual meeting.Annual Meeting. As of that date, all executive officers and directors of the Corporation as a group
(19(22 persons) beneficially owned
456,941599,690 shares, or
2.97%2.83%, of the total number of outstanding shares.
Whether you hold shares directly as a registered shareholder of record or beneficially in street name, you may vote without
virtually attending the
meeting.Annual Meeting. You may vote by granting a proxy or, for shares held beneficially in street name, by submitting voting instructions to your broker, bank or other trustee or nominee. In most cases, you will be able to do this by using the internet, by telephone or by mail.
| • | | Voting by internet or telephone—
•Voting by internet or telephone - You may submit your proxy over the internet or by telephone by following the instructions for internet or telephone voting provided with your proxy materials and on your proxy card or voter instruction form. |
| • | | Voting by mail—You may submit your proxy by mail by completing, signing, dating and returning your proxy card or, for shares held beneficially in street name, by following the voting instructions included by your broker or other intermediary. If you provide specific voting instructions, your shares will be voted as you have instructed.
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Under current New York Stock Exchange (“NYSE”) rules, which govern NYSE brokerage members, the internet or by telephone by following the instructions for internet or telephone voting provided with your proxy materials and on your proxy card or voter instruction form.
•Voting by mail - You may submit your proxy by mail by completing, signing, dating and returning your proxy card or, for shares held beneficially in street name, by following the voting instructions included by your broker or other intermediary. If you provide specific voting instructions, your shares will be voted as you have instructed.
The proposal to ratify the appointment of independent auditors (Proposal
4)3) is considered a “discretionary” item. This means that brokerage firms may vote in their discretion on this matter on behalf of clients who have not furnished voting
instructions in accordance with NYSE rules.instructions. In contrast, the proposals with respect to the election of directors (Proposal 1)
,“say-on-pay” and “say-on-pay” (Proposal 2)
and“say-on-frequency” (Proposal 3) are
“non-discretionary” “non-discretionary” items. This means brokerage firms that have not received voting instructions from their clients on these matters may not vote on these proposals. These
so-called “broker
non-votes” will not be considered in determining the number of votes necessary for approval and, therefore, will have no effect on the outcome of the vote for these proposals.
Attending the Virtual Annual Meeting
Shareholders at the virtual Annual Meeting will have the same rights as at an in-person meeting, including the rights to vote and ask questions at the virtual meeting. Both shareholders of record and street name shareholders who wish to virtually attend the Annual Meeting will need to register to be able to attend the Annual Meeting via live webcast, submit their questions during the meeting and vote their shares electronically at the Annual Meeting by following the instructions below.
If you are a shareholder of record, you must:
•Follow the instructions provided on your Notice or proxy card to first register at www.viewproxy.com/CNBFinancial/2023 by 11:59 p.m. (EDT) on April 17, 2023. You will need to enter your name, phone number, virtual control number (included on your Notice or proxy card) and email address as part of the registration, following which, you will receive an email confirmation of your registration, as well as a password to virtually attend the Annual Meeting.
•On the day of the Annual Meeting, if you have properly registered, you may enter the Annual Meeting by logging in using the password you received via email registration confirmation at http://www.viewproxy.com/CNBFinancial/2023/VM (you will need the password provided to you after you have registered to attend).
•If you wish to vote your shares electronically during the virtual Annual Meeting, you will need to visit http://www.AALvote.com/CCNE during the Annual Meeting while the polls are open (you will need the 16 digit virtual control number included on your Notice or proxy card).
If you are a street name shareholder, you must:
•Obtain a legal proxy from your broker, bank or other nominee.
•Register at www.viewproxy.com/CNBFinancial/2023 by 11:59 p.m. (EDT) on April 17, 2023. You will need to enter your name, phone number and email address, and provide a copy of the legal proxy (which may be uploaded to the registration website or sent via email to VirtualMeeting@viewproxy.com)as part of the registration, following which, you will receive an email confirming your registration, your virtual control number, as well as the password to virtually attend the Annual Meeting. Please note, if you do not provide a copy of the legal proxy, you may still attend the Annual Meeting but you will be unable to vote your shares electronically at the Annual Meeting.
•On the day of the Annual Meeting, if you have properly registered, you may enter the Annual Meeting by logging in using the password you received via email in your registration confirmation at http://www.viewproxy.com/CNBFinancial/2023/VM(you will need the virtual control number assigned to you in your registration confirmation email).
•If you wish to vote your shares electronically at the virtual Annual Meeting, you will need to visit http://www.AALvote.com/CCNEduring the Annual Meeting while the polls are open (you will need the virtual control number assigned to you in your registration confirmation email). Further instructions on how to attend the Annual Meeting via live audio webcast, including how to vote your shares electronically at the Annual Meeting are posted on www.viewproxy.com/CNBFinancial/2023under Frequently Asked Questions (FAQ). The Annual Meeting live webcast will begin promptly at 2:00 p.m. (EDT) on April 18, 2023. We encourage you to access the meeting prior to the start time. Online check-in will begin at 1:30 p.m. (EDT), and you should allow ample time for the check-in procedures.
Live Q&A
You may ask questions during the virtual meeting by following the instructions that will be available on the virtual meeting website during the meeting. We will answer questions as they come in and address those asked in advance, to the extent relevant to the business of the Annual Meeting, as time permits. Off-topic, personal or other inappropriate questions will not be answered.
Technical Assistance
We will have technicians ready to assist you with any technical difficulties you may have accessing the Annual Meeting live webcast. Please be sure to check in by 1:30 p.m. (EDT) on April 18, 2023, the day of the Annual Meeting, so we may address any technical difficulties before the Annual Meeting live audio webcast begins. If you encounter any difficulties accessing the Annual Meeting live webcast during the check-in or meeting time, please email VirtualMeeting@viewproxy.com or call 1-866-612-8937.
The platform we are using for the Annual Meeting live webcast will require you to install a software or have the ability to run a temporary application in order for you to join the Annual Meeting live webcast. If you have not registered to attend the meeting, but would like to listen in only on the day of the meeting at 2:00 p.m. the toll-free number and access code will be displayed on the site www.viewproxy.com/CNBFinancial/2023.
Obtaining an Annual Report on Form
10-KThe Corporation is required to file an Annual Report on Form10-K (the “Form10-K”) for the 20192022 fiscal year with the U.S. Securities and Exchange Commission (“SEC”). Shareholders may obtain, free of charge, a copy of the Form10-K by writing to Richard L. Greslick, Jr., Secretary, CNB Financial Corporation, P.O. Box 42, Clearfield, Pennsylvania 16830. Our annual report2022 Annual Report is also available free of charge on the Investor Relations section of our website (www.cnbbank.bank).2
PROPOSAL 1. ELECTION OF DIRECTORS
The Bylaws of the Corporation
(the “Bylaws”) provide that the Board shall consist of not less than nine nor more than twenty-four persons. The Board has acted to fix the number of directors for the ensuing year at
twelve.twelve, including ten independent directors and two directors who are also members of the Corporation’s management team.
The Bylaws further provide that the Board shall be classified into three classes with each class consisting of not less than three nor more than eight directors. The Board has elected to fix the number of each class of directors at four. One class of directors is to be elected annually for a three-year
term.term and until their successors are elected and qualified, or until their earlier death, resignation, removal or achievement of the mandatory retirement age of 70. The four Class 1 nominees named below are nominated to serve as Class 1 directors to hold office for a three-year term expiring at the third succeeding annual meeting (in the year
2023)2026). The one Class
23 nominee named below is nominated to serve as a Class
23 director to hold office for a
two-year one-year term expiring at the
second succeedingnext annual meeting (in the year
2022)2024).
The Class 3 nominee replaces a previously elected Class 3 director who retired from the Board as of December 31, 2022. Each nominee has consented to be named as a nominee and has agreed to serve if elected. If, for any reason, any of the nominees named below should become unavailable to serve, the enclosed proxy will be voted for the remaining nominees and such other person or persons as the Board may select among those recommended by the Corporate Governance/Nominating Committee.
Information as to Nominees and Other Directors
The following tables set forth the names of the nominees for election as directors and the current directors of the Corporation. Also set forth in the tables is certain other information with respect to each such person’s age at December 31,
2019,2022, the periods during which such person has served as a director of the Corporation and positions currently held with the Corporation.
Following the tables are biographies of each of the nominees and continuing directors which contain information regarding each such person’s business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Corporate Governance/Nominating Committee and the Board to determine that such person should serve as a director as of the time of filing of this Proxy Statement.
EachThe Corporate Governance/Nominating Committee believes that each director brings a strong and unique background and set of skills to the Board, giving the Board as a whole competence and experience in a wide variety of areas, including corporate governance, board service, executive management, business, finance and marketing. “Independent” directors are those who, in the Board’s judgment, meet the standards for independence as required by NASDAQ.
The following Class 1 directors for a
three yearthree-year term expiring at the time of the annual meeting in
2023.2026. | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Age at
December 31,
2019
2022 | | (Past Five Years) | | Positions Held at CNB | | Director
Since |
Peter F. Smith Independent Director | | 6568 | | Chairperson of the Board
Attorney at Law
| | — | | 9/12/1989 |
Jeffrey S. Powell
Independent Director
| | 5558 | | President, J.J. Powell, Inc. (Petroleum Distributor) | | — | | 12/27/1994 |
Francis X. Straub, III
Independent Director
| | 5962 | | Owner/Pharmacist/CFO/Director, St. Mary’s Pharmacy
President/CEO of U.S. Complete Care Inc. | | — | | 4/19/2015 |
Peter C. Varischetti
Independent Director
| | 5053 | | President, Varischetti Holdings, LP | | — | | 7/1/8/11/2015 |
.
The following Class
23 director for a
two yearone-year term expiring at the time of the annual meeting in
2022.2024. | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Age at
December 31,
2019
2022 | | (Past Five Years) | | Positions Held at CNB | | Director
Since |
Julie M. Young(1)
Independent Director
Michael D. Peduzzi | | 4657 | | Attorney, JMY Law, LLC, Worley Law, LLC
President and Chief Executive Officer, CNB Financial Corp. and CNB Bank President & Chief Operating Officer, CNB Bank Senior Vice President and Chief Financial Officer, Mid Penn Bancorp, Inc | | —President and Chief Executive Officer, CNB Financial Corp. and CNB Bank President & Chief Operating Officer, CNB Bank | | 5/14/20191/1/2023 |
(1) | Pursuant to the Corporation’s Bylaws, as Ms. Young was appointed after the 2019 Annual Meeting of Shareholders, she must stand for election to serve out the term to which she was appointed. Ms. Young was appointed by the Board as a Class 2 director and, therefore, she has been nominated by the Board to hold office for a term expiring at the Corporation’s 2022 annual meeting.
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3
Peter F. Smith obtained his Bachelor of Arts from Williams College in 1976 and later graduated from the Dickinson School of Law in 1981. He joined his late father, William U. Smith, in the general practice of law in Clearfield after graduation. Mr. Smith has continued in the practice, representing a diverse group of businesses and their owners. He concentrates his practice on commercial transactions, real estate, mineral law, estate planning and related litigation. Mr. Smith has served on the Ethics Committee of the Pennsylvania Bar Association since 1994 and has authored numerous written opinions to assist other lawyers with ethical issues, and has been invited to speak as a panelist by the Pennsylvania Bar Institute. Mr. Smith has served and continues to serve numerous charitable and public services organizations. Mr. Smith’s legal experience provides the Corporation’s Board with valuable insight into legal matters affecting it and its markets. Mr. Smith also bringshas strong corporate governance, lending and financial experience resulting from serving on the Board for over thirty years.
Michael D. Peduzzi joined CNB Financial Corporation as the President and Chief Operating Officer of CNB Bank in August 2021. He became CEO of CNB Bank on July 1, 2022, and became President and CEO of CNB Financial Corporation on December 31, 2022. Mr. Peduzzi has over 30 years of experience working for companies in the banking and financial services industry while maintaining his Certified Public Accounting license continuously throughout that same period. Prior to joining the Board.Bank, Mr. Peduzzi served as an executive at other publicly-held financial institutions, including as the Senior Vice President and Chief Financial Officer of Mid Penn Bancorp, Inc. from 2016 through August 2021. He has also held Executive and Chief Financial Officer roles at Codorus Valley Bancorp and Union National Financial Corp, and was the Corporate Audit Executive for Keystone Financial Inc. Mr. Peduzzi graduated from The Pennsylvania State University with a Bachelor of Science degree in Accounting. He is a Pennsylvania-licensed Certified Public Accountant and a member of both the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants.
Jeffrey S. Powell serves as Audit Committee Chairperson. He is a graduate of The Pennsylvania State University where he earned a degree in Business Administration. He is currently the President of J.J. Powell Inc., a petroleum marketer, as well as Snappy’s Convenience Stores. Mr. Powell’s extensive executive experience in the petroleum marketing and retail convenience industry provide strong knowledge regarding finance, operations compliance and planning to the Board.
Francis X. Straub, III managing executive officer and director is President/CEO of St. Marys Pharmacy,U.S. Complete Care Inc. and Bennetts Valley Pharmacy, Inc., was appointed to the board of CNB Bank in November 2015. Mr. Straub brings a diverse background in healthcare and entrepreneurial culture, which began in his family’s pharmacy over 40 years ago. Mr. Straub holds a Bachelor of Science degree in the field of pharmacy from Duquesne University and has beenis a practicing, licensed pharmacist at St. Marys Pharmacy for over 30 years.pharmacist. He has served on numerous charitable and public service boards and currently serves as a memberChairman of the Board of Directors/TreasurerDirectors at Value Drug Company, Executive Team Board Member/Vice Chairperson atboard member on the Penn Highlands ElkNorthern Regional board and Chairpersonboard member of the Board of PCC Management HoldingsStraub Brewery Inc. Additionally, Mr. Straub is involved with industrial manufacturing, oil and gas production, medical services and commercial real estate development.
Peter C. Varischetti, is the President of Varischetti Holdings, LP, was appointeda privately held holding company that includes businesses in the manufacturing industry, gas field services, fabrication, electrical contracting, automation & control systems, and real estate. Mr. Varischetti is also a director and officer of Guardian Healthcare Holdings, Inc., a healthcare services company providing skilled nursing, rehabilitation, pharmacy, and healthcare staffing services to communities in Pennsylvania and West Virginia. Additionally, Mr. Varischetti is the boardPresident of CNB BankVarischetti Sports, LLC, which owns a minority interest in the Pittsburgh Steelers. A member of the Board of Trustees for the University of Pittsburgh, Mr. Varischetti is chairman of the Property and CNB Financial Corporation in July 2015. HeFacilities Committee and the School of Health and Rehabilitation Sciences Board of Visitors, and also serves on their Governance and Nominating Committee. Mr. Varischetti has served on numerous charitable and public service boards and currently serves as director and officerchairman of Guardian Elder Care Holdings, Inc., and chairperson of both the Brockway Schools and Community Education Foundation, and the Brockway Center for Arts &and Technology. Mr. Varischetti is a board member of DuBois Central Catholic andAdditionally, he serves on the Erie Diocesan Finance Council, and the Parish Finance Council of St. Tobias Church.Church, and the Finance Committee of DuBois Central Catholic. Mr. Varischetti also serves on the boardBoard of directorsDirectors for the Frank Varischetti Foundation, is a member of the Board of Trustees for the University of Pittsburgh and is chairperson of the School of Health and Rehabilitation Sciences Board of Visitors. Mr. Varischetti earnedFoundation. He holds a Bachelor of Science degree in Business Administration and Psychology from the University of Pittsburgh.Julie M. Young is an attorney specializing in employment law
There are no arrangements or understandings between any director and
human resources at JMY Law, LLC. Ms. Young has served in this role since 2016. With over 19 years of experience navigating federal and state employment laws, Ms. Young works closely with small andmid-sized businessesany other person pursuant to
provide comprehensive employment law services. Prior to her current position, Ms. Young practiced employment law at Worley Law, LLC. Ms. Young is a frequent speaker on employment law and human resource topics, from structuring employment agreements, to federal and state compliance considerations and advising on anti-harassment and anti-discrimination policies and practices. Ms. Young is active in her community and previously servedwhich he or she was selected as a
member of the board of advisors of FCBank, a division of CNB Bank headquartered in Worthington, Ohio, since December 2017. Ms. Young received her B.A. from Miami University of Ohio and J.D. from The Ohio State University Mortiz College of Law. The Board believes that Ms. Young’s qualifications include her broad human resources and employment law experience, which will provide critical support to the Corporation’s business and strategic goals.director.
Under our Bylaws, to be elected in an uncontested election, director nominees must receive the affirmative vote of a majority of the votes cast (the number of shares voted FOR a director nominee must exceed the number of votes cast AGAINST that director nominee). For purposes of the election of directors, abstentions and other shares not voted (whether by broker
non-vote or otherwise) will not be counted as votes cast for or against a nominee’s election and will have no effect on the result of the vote. There is no cumulative voting with respect to the election of directors.
If an incumbent director fails to be reelected by a majority of votes cast, that director is required under our Bylaws to promptly deliver to the Board his or her irrevocable offer to resign from the Board. The Board will consider such director’s offer to resign, taking into consideration any such factors that the Board deems relevant in deciding whether to accept such director’s resignation, including any recommendation of the Corporate Governance/Nominating Committee. The Board is required to act on such director’s resignation within 90 days after the election results are certified.
The Board unanimously recommends that shareholders vote FOR each of the foregoing
nominees.4
nominees
The following Class 3 directors’ terms expire at the time of the annual meeting in 2024.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Age at
December 31,
2022 | | Business Experience (Past Five Years) | | Positions Held at CNB | | Director
Since |
Joel E. Peterson
Independent Director | | 64 | | President, Clearfield Wholesale Paper (Wholesaler) | | — | | 9/13/2011 |
Richard B. Seager
Independent Director | | 65 | | Owner, Ritri Holdings, LLC
President and CEO, Journey Health System (Mental Health) | | — | | 12/14/2010 |
Michael Obi
Independent Director | | 55 | | President, UBIZ Venture Capital;
Chief Executive Officer, Spectrum Global Solutions | | — | | 9/14/2021 |
Joel E. Peterson is a graduate of The Pennsylvania State University with a major in Accounting and Marketing. He is the Chairman/CEO of Clearfield Wholesale Paper Company, a fourth-generation 100 year old business that serves suppliers in several states. His previous employment was in banking for several years as a credit and loan origination analyst. Currently, he serves on the DuBois Educational Foundation as the Development Committee Chair and previously served as the Chairman of the Clearfield Jefferson Regional Airport Authority with duties that included working with state and federal agencies. He has also served as President of the Bucktail Council of the Boy Scouts of America and President of the Clearfield YMCA. Mr. Peterson, by virtue of his executive service and business and community involvement in our CNB market, brings meaningful corporate governance experience to the Board.
Richard B. Seager has over 30 years of experience in health care administration, consulting, and finance. Mr. Seager is actively involved in small business and community development activities throughout northwestern Pennsylvania, including service on various non-profit boards. He obtained his Bachelor of Science degree from Gannon University. Mr. Seager provides the Board with knowledge of the market area and strong governance experience as a result of his executive experience as President and Chief Executive Officer of multiple companies.
Michael Obi is President of UBIZ Venture Capital and Chief Executive Officer of Spectrum Global Holdings, LLC, in Cleveland, Ohio. He has seventeen years of experience working in banking and financial services including executive leadership positions at KeyBank, Bank of America, Wells Fargo and SunTrust. Prior to launching Spectrum Global Holdings, LLC, he served as Senior Vice President for KeyBank’s Retail and Business Banking Segments. Mr. Obi obtained both his Bachelor of Science degree in Accounting and Master of Business Administration from the Coggins School of Business at the University of North Florida in Jacksonville, Florida. Mr. Obi has served and continues to serve on various boards within the Cleveland community. He is also an economic development advisor for the Urban League of Greater Cleveland. The Board
believes that Mr. Obi, through his extensive experience in all areas of banking, including retail, commercial, operations and finance, provides a significant depth of knowledge of the industry to the Board.
The following Class 2 directors’ terms expire at the time of the annual meeting in
2022.2025. | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Age at
December 31,
2019
2022 | | (Past Five Years) | | Positions Held at CNB | | Director
Since |
Richard L. Greslick, Jr. | | 4346 | | Senior Executive Vice President,
Chief Operational Officer and
Secretary, CNB Financial Corp.
and CNB Bank | | Senior Executive Vice President, Chief SupportOperational Officer and Secretary, CNB Financial Corp. and CNB Bank | | Senior Executive Vice President, Chief Support Officer and Secretary, CNB Financial Corp. and CNB Bank
| | 1/1/2012 |
Deborah Dick Pontzer
Independent Director
| | 5962 | | President of Grow Rural PA Economic Development and& Workforce Specialist for Congressman Glenn Thompson | | — | | 6/10/2003 |
Nicholas N. Scott
Independent Director
| | 4750 | | Vice President/Owner Scott
Enterprises (Hospitality Industry) | | — | | 5/14/2013 |
Julie M. Young
Independent Director | | 49 | | Employment Attorney, JMY Law, LLC | | — | | 5/14/2019 |
Richard L. Greslick, Jr., has been with the Corporation since 1998 and previouslyserves as the Senior Executive Vice President & Chief Operating Officer of CNB Bank. Mr. Greslick has served as Controllera director and Secretary of CNB Financial Corporation and director and Senior Executive Vice President of Operations of CNB Bank. In 2009, Mr. Greslick was named Vice President of Administration of CNB Bank and Secretary ofsince January 2012. He previously held roles as the Corporation. In July 2010, Mr. Greslick was namedChief Support Officer and Senior Vice President of Administration of CNB Bank. In December 2012, Mr. Greslick was named Senior Executive Vice President and Chief Support Officer (“CSO”) of CNB Bank.Administration. Mr. Greslick holds a Bachelor of Science in Accounting from Indiana University of Pennsylvania and is a 2009 graduate of the American Bankers Association’s Stonier National Graduate School of Banking in Philadelphia, PA.Pennsylvania. Mr. Greslick has served and continues to serve on various boards within the community.community and on the board of the Pennsylvania Banking Industry. Mr. Greslick’s experience as an executive of the Corporation provides him with a thorough knowledge of the Corporation’s opportunities, challenges, and operations.
Deborah Dick Pontzer is an Economic Developmentthe President of Grow Rural PA, specializing in economic and Workforce Specialist for Congressman Glenn Thompson.community development. In thather current capacity, she works with business, industry, and communities to identifydoing strategic planning, identifying and obtainobtaining the resources necessary for continuedimpactful, equitable economic growth through infrastructure development, capacity building, job creation, retention and recruitment. Her prior experience includes serving as an economic development and growth. Her prior experience is in higher educationworkforce specialist for U.S. Congressmen, John E. Peterson and public accounting, including workingGlenn Thompson, and as a senior associate for Coopers & Lybrand in the Business Investigation Services Group for a Big 4 international firm. Ms. Pontzer also served as executive director for the Community Education Council of Elk and Cameron Counties, and her duties included preparation of budgetary, financial, and statistical data, as well as income and payroll tax reporting. Mr. Pontzer served as director of Outreach and Business Services for the University of Pittsburgh at Bradford. In that position, she supervised staff who prepared prospective financial statements for small businesses and entrepreneurs, managed grant funds, and oversaw the operation of the adult continuing education division.unit. She is active in her community, and currently serves as a Trustee for The Stackpole-Hall Foundation, including servicesserving on the foundation’s Audit and Investment Committees.various boards. Ms. Pontzer earned a B.A.Bachelor of Arts degree from Mount Holyoke College and an M.B.A.a Masters of Business Administration from the American Graduate School of International Management.Management, a division of Arizona State University. Ms. Pontzer’s experience as Economic Development and Workforce Specialist for Congressman Glenn Thompsondelivering meaningful economic outcomes enables her to provide a valuable perspective to the Board.
Nicholas N. Scott is Vice President/Owner of Scott Enterprises, ofa family owned-hospitality enterprise based in Erie, PA.Pennsylvania, focused on restaurants and hotels, including two resorts. Mr. Scott has served in this role since 1995. Mr. Scott serves on the UPMC Hamot Health Foundation Board of Trustees, Penn State Behrend Council of Fellows Executive Board, Visit Erie Board of Directors, Erie Regional Chamber and Growth Partnership Board of Directors, and the Pennsylvania Free Enterprise Week Board of Directors. He also lends his expertise to the United Way’s Success by 6 Committee, and the Pennsylvania Early Learning Investment Commission. As a business leader responsible for operations and development of the third-generation family owned hospitality business, Mr. Scott applies his expertise in strategic planning and provides leadership and guidance to the Board.5
Mr. Scott also has a degree in Hotel, Restaurant, and Institutional Management from The following Class 3 directors’ terms expirePennsylvania State University. Mr. Scott also serves on numerous boards in his community.
Julie M. Young is an attorney specializing in employment law and human resources at the timeJMY Law, LLC. Ms. Young has served in this role since 2016. With over two decades of experience navigating federal and state employment laws, Ms. Young works closely with small and mid-sized businesses to provide comprehensive employment law services. Prior to her current position, Ms. Young practiced employment law at Worley Law, LLC. Ms. Young is a frequent speaker on employment law and human resource topics, from structuring employment agreements, to federal and state compliance considerations and advising on anti-harassment and anti-discrimination policies and practices. Ms. Young is active in her community and also serves as a member of the annual meeting in 2021. | | | | | | | | |
Name
| | Age at December 31,
2019 | | Business Experience
(Past Five Years)
| | Positions Held at CNB
| | Director Since |
Joseph B. Bower, Jr.
| | 56 | | President and Chief Executive Officer, CNB Financial Corp. and CNB Bank
| | President and Chief Executive Officer, CNB Financial Corp. and CNB Bank | | 4/19/2005 |
Robert W. Montler
Independent Director
| | 68 | | Chairperson and CEO, Lee Industries (Manufacturer)
| | — | | 6/28/2005 |
Joel E. Peterson
Independent Director
| | 61 | | President, Clearfield Wholesale Paper (Wholesaler)
| | — | | 9/13/2011 |
Richard B. Seager
Independent Director
| | 62 | | President and CEO, Journey Health System (Mental Health)
| | — | | 12/14/2010 |
Joseph B. Bower, Jr., has been with the Corporation since 1997 and previously served as Chief Financial Officer and Chief Operating Officerboard of advisors of FCBank, a division of CNB Bank, as well as Secretary and Treasurer of CNB Financial Corporation. In January 2010, he was named President and Chief Executive Officer of CNB Bank and CNB Financial Corporation. Mr. Bower previously worked as a certified public accountant and holdsheadquartered in Worthington, Ohio. Ms. Young received a Bachelor of Arts in Accountingdegree from Lycoming College in Williamsport, Pennsylvania. In 1984, Mr. Bower enlisted in the United States Army, where after twoMiami University of Ohio and a half years the Army awarded him with a full ROTC scholarship. Upon graduatingJuris Doctorate from LycomingThe Ohio State University Mortiz College Mr. Bower graduated from the U.S. Army Ordinance School Officer Basic Course. Mr. Bower has servedof Law. The Board believes that Ms. Young’s qualifications, including her broad human resources and continuesemployment law experience, will provide critical support to serve on various boards within the community. Mr. Bower’s position as President and Chief Executive Officer of the Corporation and his day to day leadership of the Corporation provides him with thorough knowledge of the Corporation’s opportunities, challenges and operations.
Robert W. Montler is Chairperson and CEO of Lee Industries. Mr. Montler is also President and CEO of Keystone Process Equipment, which purchases and refurbishes used process equipment for the pharmaceutical, cosmetic, food and chemical markets. In 1997, he started Keystone Process Equipment and also began a real estate development company known as Tipton Realty. Mr. Montler’s previous experience includes service in either a board or advisory board capacity for three other financial institutions, including services on audit committees for two of the institutions. In addition, Mr. Montler has an extensive background in executive level financial management, internal control over financial reporting, and the application of generally accepted accounting principles in the United States. He held a senior level audit position with a regional public accounting firm and has also worked as both controller and Executive VP/Chief Financial Officer for Lee Industries. As a result, the Board has determined that Mr. Montler qualifies as an “audit committee financial expert” as defined in applicable SEC rules, and has designated Mr. Montler as such on the Corporation’s Audit Committee. Mr. Montler has served and continues to serve on various boards within the community. Mr. Montler’s experience as Chairperson and CEO of Lee Industries and President and CEO of Keystone Process Equipment provides him with extensive experience concerning conducting business in the Corporation’s markets.
Joel E. Peterson is a graduate of Pennsylvania State University with a major in Accounting and Marketing. He is the owner and President of Clearfield Wholesale Paper and participates in the governance of many community organizations. Mr. Peterson, by virtue of his executive service, brings meaningful corporate governance experience to the Board.
Richard B. Seager has over 25 years of experience in health care administration, consulting, and finance. Mr. Seager is actively involved in small business and community development activities throughout northwestern Pennsylvania, including service on variousnon-profit boards. Mr. Seager provides the Board with knowledgestrategic goals.
Table of
the market area and strong governance experience as a result of his executive experience as President and CEO of Journal Health System.There are no arrangements or understandings between any director and any other person pursuant to which he or she was selected as a director.
6
Contents
PROPOSAL 2. ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) added Section 14A to the Securities Exchange Act of 1934 (the “Exchange Act”), which requires that
wethe Corporation provide
ourits shareholders with the opportunity to approve, on a
non-binding advisory basis, the compensation of
ourits named executive officers (the “NEOs”) as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC.
As described in greater detail under the heading “Compensation Discussion and Analysis,” we seek to align the interests of our NEOs with the interests of our shareholders. Our compensation programs are designed to reward our NEOs for the achievement of short-term results and long-term growth
that are consistent with enhancing shareholder value, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking.
The Corporation is presenting the following proposal, which gives you as a shareholder the opportunity to endorse or not endorse our compensation program for NEOs by voting for or against the following resolution (a
“say-on-pay” “say-on-pay” vote). While the vote on the resolution is advisory in nature and therefore will not bind us to take any particular action, our Board intends to carefully consider the shareholder vote resulting from the proposal in making future decisions regarding our compensation program.
“RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the Corporation’s NEOs, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related narrative executive compensation disclosures contained in this Proxy Statement.”
The affirmative vote of a majority of the votes cast by all shareholders entitled to vote on this proposal is required to approve (on a
non-binding advisory basis) the compensation of the Corporation’s named executive officers. For purposes of the vote on this proposal, abstentions and other shares not voted (whether by broker
non-vote or otherwise) will not be counted as votes cast and will have no effect on the result of the vote.
The Board unanimously recommends that shareholders vote FOR the resolution approving on a
non-binding advisory basis the compensation of the Corporation’s named executive officers.
7
PROPOSAL 3.
ADVISORY VOTE ON THE FREQUENCY OF THE VOTE ON EXECUTIVE COMPENSATIONIn accordance with Section 14A of the Exchange Act, which was added by Dodd-Frank, and the related SEC rules, we are including in these proxy materials a separate resolution subject to shareholder vote to recommend, in anon-binding advisory vote, whether anon-binding shareholder vote to approve the compensation paid to our named executive officers (that is, votes similar to thenon-binding vote in Proposal 2 on page 8 should occur every one, two or three years. While the results of the vote arenon-binding and advisory in nature, the Board intends to carefully consider the results of the vote.
In considering their vote, shareholders may wish to review with care the information presented in connection with Proposal 2, the information under the heading “Compensation Discussion and Analysis” beginning on page 20, as well as the discussion regarding the Compensation Committee beginning on page 13.
The Board values constructive dialogue on executive compensation and other important governance topics with our shareholders. The Board believes that an advisory vote every year will provide an effective way to obtain information on shareholder sentiment about our executive compensation program.
While the vote is advisory in nature and therefore will not bind us to take any particular action, our Board intends to carefully consider the shareholder vote resulting from the proposal in making future decisions regarding the frequency of holding a“say-on-pay” vote.
Vote Required
The affirmative vote of a majority of the votes cast by all shareholders entitled to vote on this proposal is required to approve (on anon-binding advisory basis) the frequency of the shareholder vote to approve the compensation of our named executive officers. For purposes of the vote on this proposal, abstentions and other shares not voted (whether by brokernon-vote or otherwise) will not be counted as votes cast and will have no effect on the result of the vote.
Our Recommendation
The Board unanimously recommends that shareholders vote “ONE YEAR” with respect to thenon-binding advisory vote on the frequency of shareholder votes to approve the compensation paid to the Corporation’s named executive officers.
8
PROPOSAL 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board is responsible for selecting the Corporation’s independent registered public accounting firm. At its meeting held on March
4, 2020,1, 2023, the Audit Committee appointed
CroweFORVIS, LLP as the independent registered public accounting firm for the fiscal year ending December 31,
2020.2023. Although shareholder approval for this appointment is not required, the Board is submitting the selection of
CroweFORVIS, LLP for ratification to obtain the views of shareholders. If the appointment is not ratified, the Audit Committee will reconsider its selection.
Crowe LLP was previously the principal accountants for the Corporation. Following a competitive process commenced at the direction of the Audit Committee, on March 4, 2022, the Corporation engaged FORVIS, LLP (formerly BKD, LLP) as the Corporation’s principal accountants for the year ending December 31, 2022. As a result of the engagement of FORVIS, LLP, on March 4, 2022, the Corporation dismissed Crowe LLP as the Corporation’s principal accountants. The decision to change accountants was approved by the Audit Committee on March 4, 2022.
During the two fiscal years ended December 31, 2021, and the subsequent interim period through March 3, 2022, there were no: (1) disagreements (as that term is used in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) with Crowe LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have cause them to make reference to the subject matter of the disagreements in connection with their reports, or (2) reportable events (as described in Item 304(a)(1)(v) of Regulation S-K).
The audit reports of Crowe LLP on the consolidated financial statements of the Corporation and its subsidiaries as of and for the years ended December 31, 2021 and 2020 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. During the years ended December 31, 2021 and 2020, and through March 3, 2022, the Corporation did not consult with FORVIS, LLP with respect to (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might have been rendered on the Corporation’s consolidated financial statements, or (2) any matters that were either the subject of a disagreement (as that term is used in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
In making the appointment of
CroweFORVIS, LLP as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31,
2020,2023, the Audit Committee considered whether
CroweFORVIS, LLP’s provision of services other than audit services is compatible with maintaining independence as our independent auditors and decided that the provision of such services is compatible with maintaining independence.
The affirmative vote of a majority of the votes cast by all shareholders entitled to vote on this proposal is required to approve the ratification of the appointment of
CroweFORVIS, LLP as the Corporation’s independent registered public accounting firm. For purposes of approving Proposal
4,3, abstentions and other shares not voted will not be counted as votes cast and will have no effect on the result of the vote. Even if the appointment of
CroweFORVIS, LLP as the Corporation’s independent registered public accounting firm is ratified, the Audit Committee may, in its discretion, change that appointment at any time during the year should it determine such a change would be in our and our shareholders’ best interests.
The Board unanimously recommends that shareholders vote FOR ratification of the appointment of independent auditors.
CONCERNING THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Corporation’s independent registered public accounting firm for the fiscal year ended December 31,
20192022 was
CroweFORVIS, LLP. The Audit Committee
hashad selected
CroweFORVIS, LLP to be the independent registered public accounting firm for the fiscal year ending December 31,
2019.2022. Representatives of
CroweFORVIS, LLP are expected to be present at the
annual meetingAnnual Meeting to respond to appropriate questions and to make such statements as they may desire, including comments on the financial statements of the Corporation.
Audit Fees.
The following table sets forthshows the aggregate fees billed topaid or accrued by the Corporation for professional services provided by FORVIS, LLP during the fiscal yearsyear ended December 31, 20192022 and 2018 by Crowe LLP during the fiscal year ended December 31, 2021:
| | | | | | | | | | | |
| | December 31, |
| | 2022 | | 2021 |
| Audit Fees | $ | 415,000 | | | $ | 365,000 | |
| Audit-Related Fees | — | | | 15,200 | |
| Tax Fees | 28,000 | | | 7,500 | |
| All Other Fees | 75,000 | | | 7,500 | |
| $ | 518,000 | | | $ | 395,200 | |
Audit fees represent fees for professional services rendered by FORVIS, LLP in connection with the audit of the Corporation’s
independent registered public accounting firm Crowe LLP. | | | | | | | | |
| | | December 31, | |
| | | 2019 | | | 2018 | |
Audit Fees | | $ | 312,025 | | | $ | 310,403 | |
Audit-Related Fees | | | 15,000 | | | | 7,500 | |
Tax Fees | | | 7,500 | | | | 110,000 | |
All Other Fees | | | 96,000 | | | | — | |
| | | | | | | | |
| | $ | 428,025 | | | $ | 427,903 | |
| | | | | | | | |
consolidated financial statements and internal control over financial reporting and reviews of the consolidated financial statements included in the Corporation’s quarterly reports on Form 10-Q. Tax fees relate to the Corporation’s Federal and State income tax compliance. All other fees for 2022 represent fees related to the Corporation’s common equity capital raise in 2022.
Audit fees represent fees for professional services rendered by Crowe LLP in connection with the audit of the Corporation’s consolidated financial statements and internal control over financial reporting and reviews of the consolidated financial statements included in the Corporation’s quarterly reports on Form
10-Q. Audit-related fees
for 2021 represent audit fees for the captive insurance
company in the amount of $15,000.company. Tax fees in
20192021 reflect tax compliance services for the captive insurance
company, while 2018 tax fees include the preparation oftax-related items associated with the Corporation’s formation of a captive insurance company. All other fees in
2019 include $90,000 for the drafting of the comfort letter for our “at the market” offering and $6,000 for delivery of Crowe LLP’s consent in connection with the filing of a FormS-8. All other2021 represent fees
in 2018 relaterelated to
fees incurred in connection with the formation of the Corporation’s
captive insurance company.issuance of subordinated debt in a private placement to certain qualified institutional buyers and accredited investors.
In 2021, the Corporation paid FORVIS, LLP fees totaling $68,293 related to services regarding the Corporation’s allowance for credit losses model valuation and certain tax services.
Auditor Independence.Independence
The Audit Committee of the Board believes that the
non-audit services provided by
CroweFORVIS, LLP
arewere compatible with maintaining the auditor’s independence. None of the time devoted by
CroweFORVIS, LLP on its engagement to audit the financial statements for the year ended December 31,
20192022 is attributable to work performed by persons other than full-time, permanent employees of
CroweFORVIS, LLP. The Audit Committee is responsible for approving any service provided by
the Corporation’s independent registered public accounting firm. The Audit Committee pre-approved all services performed by FORVIS, LLP during 2022 and by Crowe
LLP.LLP during 2021, including those listed in the table above
The business and affairs of the Corporation are managed under the direction of the Board. Members of the Board are kept informed of the Corporation’s business through discussions with the Chairperson of the Board and the Corporation’s executive officers, by reviewing materials provided to them and by participating in meetings and strategic planning sessions of the Board and its various committees. The Board is also kept apprised by the Chairperson of the Board and management of continuing educational programs on corporate governance and fiduciary duties and responsibilities.
The Corporation believes in the importance of sound and effective corporate governance and has adopted policies and promoted practices which it believes enhance corporate governance of the Corporation.
Board Leadership Structure
The Corporation has elected to have two separate individuals as Chief Executive Officer (“CEO”) and Chairperson. The
CorporationBoard believes that this separation facilitates the independence of the Board and is appropriate for the size and structure of the Corporation.
In addition, this structure allows us to draw upon the skills and experiences of both our Chairperson and our CEO, while allowing our CEO to focus on overseeing the Corporation’s day-to-day operations and long-term strategic planning. If in the future the Board, after considering facts and circumstances at that time, appoints the CEO as Chairperson of the Board, we will promptly publicly disclose the appointment.
The Chairperson’s duties and responsibilities include: (1) developing and establishing Board meeting agendas and the appropriate schedule of Board meetings, in consultation with the CEO and the other directors; (2) along with other Board members, engaging in communications with shareholders and other stakeholders, including at our annual meetings; (3) engaging with the CEO, chairs of Board committees, and other members of the Board regarding Board structure; and (4) encouraging professional development of the Board members and executive officers.
Risk identification and management are essential elements for the successful management of the Corporation. In the normal course of business, the Corporation is subject to various types of risk. These risks are controlled through policies and procedures established throughout the Corporation, which are monitored and reviewed by the
Board. Our Board
in accordanceis responsible for overseeing our company-wide approach to the identification, assessment, and management of short-term, intermediate-term, and long-term risks facing the Corporation. The Board recognizes its responsibility for overseeing the assessment and management of risks that may threaten successful execution of our long-term strategies, and the Board consults with
established Corporation policies.outside advisors and experts when necessary
The Corporation’s Enterprise Risk Management (“ERM”) program includes measurement and monitoring of the following risks: credit, market, liquidity, operational, compliance, strategic and reputation. An ERM Risk Assessment Team evaluates, analyzes, and reports annual risk assessment(s) and provides quarterly updates to the ERM Risk Steering Committee, comprised of the Executive Management Team. The
Corporation’s ERM Board
Committee members meet quarterly to review the overall risk profile of
the Corporation. The ERM Board Committee met four times during 2019. The ERM Board Committee followsDirectors has established an ERM Policy, Risk Philosophy Statements and Risk Appetite Statements that summarize the risk appetite of the Corporation as well as the expected reward for the risks.
In addition to the ERM program, the following risks are specifically addressed as outlined below: market, credit, and liquidity risk.
Market risk is the sensitivity of net interest income and the market value of financial instruments to the direction and frequency of changes in interest rates. Market risk results from various repricing frequencies and the maturity structure of the financial instruments owned by the Corporation. The Corporation uses its asset/liability management policy and systems to control, monitor, and manage market risk. Such policies and systems are monitored by the Management Asset/Liability Committee,
which generally meets monthly, and by the Asset/Liability Committee of the Board, which meets four times per year.
Credit risk represents the possibility that a customer may not perform in accordance with contractual terms. Credit risk results from loans with customers and the purchase of investment securities. The Corporation manages credit risk by following an established credit policy and through a disciplined evaluation of the adequacy of the allowance for loan losses. Also, the investment policy limits the amount of credit risk that may be taken in the securities portfolio. Such policies and systems are monitored by both the Asset/Liability Committee of the Board and the Loan Committee of the Board, both of which meet four times per year.
Liquidity risk represents the inability to generate or otherwise obtain funds at reasonable rates to satisfy commitments to borrowers and obligations to depositors. The Corporation has established guidelines within its asset liability management policy
to manage liquidity risk. These guidelines include contingent funding alternatives. Such guidelines are monitored
at least monthly by the Management Asset/Liability Committee,
which generally meets monthly, and by the Asset/Liability Committee of the
Board.Board, which meets four times per year.
Meetings and Committees of the Board
The Board held
eighteleven meetings during
2019. Eleven directors attended the 2019 annual meeting of shareholders.2022. Each incumbent director attended at least 75% of the aggregate of (i) the total number of meetings held by the Board during the period that the individual served and (ii) the total number of meetings held by all committees of the Board on which the individual served during the period that the individual served.
11
All directors attended the 2022 Annual Meeting of Shareholders.
The Board of the Corporation and the Board of the Bank have a number ofthree standing joint committees that serve both the Corporation and the Bank, including standingthe Audit, Executive Compensation and Corporate Governance/Nominating Committees. Directors Peter F. Smith, Joseph B. Bower, Jr.Michael D. Peduzzi, and Richard L. Greslick, Jr. areex-officio members of all committees if not otherwise named, except for the Audit, Corporate Governance/Nominating and Executive Compensation Committees as to Mr. BowerPeduzzi and Mr. Greslick.
Audit Committee.Committee
The Audit Committee met fivefour times in 2019.2022. The Audit Committee appoints the Corporation’s independent registered public accounting firm, reviews and approves the audit plan and fee estimate of the independent registered public accounting firm, appraises the effectiveness of the internal and external audit efforts, evaluates the adequacy and effectiveness of accounting policies and financial and accounting management, approves and evaluates the internal audit function,pre-approves all audit and anynon-audit services, and reviews and approves the annual and quarterly financial statements. The Audit Committee also is responsible for reviewing and overseeing the Corporation’s privacy, information technology security and cybersecurity risk exposures. The Audit Committee has the authority to engage legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities, at the Corporation’s expense. The members of the Audit Committee are Jeffrey S. Powell, Chairperson, Peter F. Smith, Robert W. Montler,Michael Obi, Joel E. Peterson, Deborah Dick Pontzer, Richard B. Seagerand Peter C. Varischetti. The Corporation’s Board adoptedhas a written charter for the Audit Committee, on May 3, 2001. The charterwhich is reviewed annually by the Audit Committee and no changes were made in 2019.Committee. The charter is available on the Corporation’s website atwww.cnbbank.bank. In the opinion of the Corporation’s Board, the members of the Audit Committee do not have a relationship with the Corporation or any of its affiliates that would interfere with the exercise of independent judgment in carrying out their responsibilities as directors. None of them is or has for the past three years been an employee of the Corporation or any of its affiliates; no immediate family members of any of them is or has for the past three years been an executive officer of the Corporation or any of its affiliates; and they otherwise meet the standards for independence required by NASDAQ.
The Board has also determined that Mr.
MontlerObi qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of Regulation
S-K. Mr.
MontlerObi is also an independent director.
The Audit Committee must
pre-approve all permitted
non-audit services performed by the Corporation’s external audit firm. The Audit Committee may delegate such authority to a subcommittee, provided that any decisions of the subcommittee are presented to the full Audit Committee at its next scheduled meeting.
The Audit Committee has submitted the following report (the “Audit Committee Report”) for inclusion in this Proxy Statement:
The Audit Committee has reviewed the audited financial statements for the year ended December 31,
20192022 and has discussed them with management. The Audit Committee has also discussed with
CroweFORVIS, LLP the matters required to be discussed by the Public Company Accounting Oversight Board’s Auditing Standard No. 16 and by SEC rules. The Audit Committee has received the written disclosures and the letter from
CroweFORVIS, LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding
CroweFORVIS, LLP’s communications with the Audit Committee, and has discussed with
CroweFORVIS, LLP their independence. Based on this, the Audit Committee recommended to the Board that the audited financial statements be included in CNB Financial Corporation’s Annual Report on Form
10-K for the fiscal year ended December 31,
20192022 for filing with the SEC.
Submitted by the Audit Committee:
| | | | | | | | |
Jeffrey S. Powell, Chairperson | | Peter F. Smith | | Robert W. Montler
| | Michael Obi |
| Joel E. Peterson | Deborah Dick Pontzer | Richard B. Seager |
| Peter C. Varischetti | | |
Joel E. Peterson
| | Deborah Dick Pontzer
| | Peter C. Varischetti
| | |
This report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Exchange Act and shall not be deemed filed under
thatthe Exchange Act.
Executive Compensation Committee.Committee
The Executive Compensation Committee (the “ECC”) consists of the following independent directors as defined by NASDAQ rules:
Richard B. Seager,Michael Obi, Chairperson, Peter F. Smith,
Robert W. Montler, Deborah Dick Pontzer, Jeffrey S. Powell,
Julie Young and Nicholas N. Scott. The
CommitteeECC met six times during
2019.2022. See “Compensation Determination Process” for more information about the ECC.
12
Corporate Governance/Nominating Committee.Committee
The Corporate Governance/Nominating Committee
(the “CGN Committee”) met
fourtwo times during
2019.2022. The
CGN Committee consists of the following independent directors as defined by NASDAQ rules: Peter F. Smith, Chairperson,
Robert W. Montler,Michael Obi, Joel E. Peterson, Deborah Dick Pontzer, and Jeffrey S. Powell. The
CGN Committee was established by resolution of the Board and recommends to the Board candidates for nomination for election to the Board. Any shareholder who wishes to have the
CGN Committee consider a candidate should submit the name of the candidate, along with any biographical or other relevant information that the shareholder wishes the
CGN Committee to consider and the consent of such candidate evidencing his or her willingness to serve as a director, to the President of the Corporation at the address appearing on the Notice of Annual Meeting no later than November
11, 2020.10, 2023 if the shareholder proposes that such candidate be included in the Corporation’s proxy statement. All recommendations are subject to the process described below.
We believe that the quality, focus and diversity of skills, experience, and perspective of the Board have been a key driver of the Corporation’s success and that the strength of the Board is a competitive advantage. The
CGN Committee has the responsibility of reviewing and evaluating candidates for election or appointment to the Board,
strategically thinking about board refreshment and
comparessuccession planning, rather than simply reacting to isolated retirements. The CGN Committee evaluates, among other things, the current Board’s range of skills, education and experience to assess any needs, including increasing the racial, ethnic and gender diversity of the Board and anticipating Board vacancies. In identifying candidates to
the current Board to ensure thatjoin the Board,
hasthe CGN Committee solicits input from a
groupvariety of
individuals that are represented by diverse professions, experience, education or skill. The process utilized by the Committee to recommend a candidate consists of first reviewingsources, including existing directors, senior management and formal expressions of interest by
interested individuals
whichthat have been communicated to the
CGN Committee.
In addition, the Committee obtains input from shareholders, directors and management regarding other potential candidates who have not indicated an interest in a Board position. Utilizing the selection criteria set forth below, the
CGN Committee selects a
prospective candidate and then conducts an interview in order to further evaluate the individual. Subsequent to the interview the
CGN Committee meets to determine whether to recommend the candidate to the Board for election or appointment. The Board,
exclusive ofexcluding all non-independent directors, either accepts or rejects the
CGN Committee’s recommendation.
The
CGN Committee utilizes various selection criteria to evaluate a candidate for election or appointment to the Board including, among others, the following minimum criteria:
| 1. | Residency within the market area of CNB Bank.
|
| 2. | Ability and willingness to commit time necessary to fulfill Board and committee duties.
|
| 3. | Strong interest in or familiarity with the financial services industry.
|
| 4. | Successful career in a business or profession suitable to our business plan within the Bank’s market area.
|
| 5. | Character and reputation.
|
| 6. | Whether the candidate is “independent” under SEC and NASDAQ rules.
|
1.Residency within the market area of CNB Bank.
2.Ability and willingness to commit time necessary to fulfill Board and committee duties.
3.Strong interest in or familiarity with the financial services industry.
4.Successful career in a business or profession, or valuable community knowledge and perspective, suitable to our business and community service plans within the Bank’s market area.
5.Character and reputation.
6.Whether the candidate is “independent” under SEC and NASDAQ rules.
7.Provide expertise in an area needed for the Board.
No incumbent director may be nominated without approval of at least 25% of the existing directors and no person not then a director may be proposed for nomination without approval of at least
two-thirds of the directors. The Bylaws provide that any director, upon first being appointed or elected to serve as a director, must own the lesser of 1,000 unencumbered shares of common stock of the Corporation or the number of shares equivalent to $15,000 of market value as of the date of the appointment or election. Further, on or before the third anniversary of the director’s first election to the Board, the director must own at least the lesser of 2,500 unencumbered shares of common stock of the Corporation or the number of shares equal to $25,000 of market value.
The Corporate Governance/Nominating Committee has a charter, a copy of which is available on the Corporation’s website atwww.cnbbank.bank.
Communications with Directors
Any shareholder who wishes to communicate with the directors (or with any individual director) should send a letter to the directors as follows: ATTN: Corporate Secretary - Communication to Directors, CNB Financial Corp.,
POP.O. Box 42, Clearfield, PA
16830-0042.16830. The Corporate Secretary will regularly forward all such correspondence to the directors.
Director Attendance at Annual Meetings
The Corporation typically schedules a meeting of the Board in conjunction with the annual meeting and expects that the members of the Board will attend the annual meeting, absent a valid reason, such as a previously scheduled conflict.
ElevenAll of the individuals then serving as directors attended the
annual meeting2022 Annual Meeting of Shareholders in April
2019.13
2022.
The Corporation and the Board believe that continuing director education is essential to the Board’s performance and continued oversight of the Corporation and its business. On May
14, 2019,17, 2022, the Board attended a formal training session related to the Bank Secrecy Act of 1970,
Office of Foreign Assets Control requirements and anti-money laundering.
On October 25, 2022, the Board attended a formal training session related to the roles and responsibilities of the Board. In addition, periodic training sessions for the Board occur during regularly scheduled
boardBoard and committee meetings. Topics covered during these trainings in
20192022 included information technology, information security,
cyber securitycybersecurity, bank owned life insurance policies and asset-liability management.
The Board also attended a formal training session on October 22, 2019 regarding the following topic(s): recent labor and employment law changes, competing withnon-traditional banks and economics. Finally, individual Board members,
at times, attend specialized industry conferences based on their committee assignments and training
needs that are identified through the Board’s self-assessment process.needs.
Our Board brings diverse experience and perspectives to areas critical to our business. Their collective knowledge ensures appropriate management and risk oversight and supports our strategy of long-term sustainable shareholder value.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | INDEPENDENT DIRECTORS | | | INSIDERS | |
| | | Smith | | | Montler | | | Peterson | | | Pontzer | | | Powell | | | Scott | | | Seager | | | Straub | | | Varischetti | | | Young | | | Bower | | | Greslick | |
Financial industry experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | X | | | | X | |
CEO/business head | | | | | | | X | | | | X | | | | | | | | X | | | | | | | | X | | | | X | | | | X | | | | | | | | X | | | | | |
Business ethics | | | X | | | | | | | | | | | | X | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Technology | | | | | | | | | | | | | | | | | | | | | | | | | | | X | | | | X | | | | | | | | | | | | X | | | | X | |
Human capital management/compensation | | | | | | | X | | | | | | | | | | | | X | | | | | | | | X | | | | | | | | | | | | X | | | | X | | | | X | |
Audit Committee financial expert | | | | | | | X | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mergers and acquisitions | | | X | | | | | | | | | | | | | | | | | | | | X | | | | X | | | | X | | | | X | | | | | | | | X | | | | X | |
Public company governance | | | | | | | | | | | | | | | X | | | | | | | | | | | | | | | | | | | | | | | | | | | | X | | | | X | |
Sales and marketing | | | | | | | | | | | X | | | | | | | | X | | | | X | | | | | | | | | | | | | | | | | | | | | | | | | |
Legal, legislative or regulatory | | | X | | | | | | | | | | | | X | | | | | | | | | | | | | | | | | | | | X | | | | X | | | | X | | | | X | |
Demographic background | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ethnic, gender, nationality or other diversity | | | | | | | | | | | | | | | X | | | | | | | | | | | | | | | | | | | | | | | | X | | | | | | | | | |
Years on Board | | | 32 | | | | 15 | | | | 8 | | | | 17 | | | | 24 | | | | 7 | | | | 9 | | | | 5 | | | | 5 | | | | 1 | | | | 15 | | | | 8 | |
Age | | | 65 | | | | 68 | | | | 61 | | | | 59 | | | | 55 | | | | 47 | | | | 62 | | | | 59 | | | | 50 | | | | 46 | | | | 56 | | | | 43 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| INDEPENDENT DIRECTORS | | INSIDERS |
| Smith | | Obi | | Peterson | | Pontzer | | Powell | | Scott | | Seager | | Straub | | Varischetti | | Young | | Peduzzi | | Greslick |
| Financial industry experience | X | | X | | | | | | | | | | | | | | | | | | X | | X |
| CEO/business head | | | X | | X | | | | X | | | | X | | X | | X | | | | X | | |
| Business ethics | X | | X | | | | X | | | | | | | | | | | | | | X | | |
| Technology/cybersecurity | | | | | | | | | | | | | X | | X | | | | | | X | | X |
| Human capital management/compensation | | | X | | | | | | X | | | | X | | | | | | X | | X | | X |
| Audit Committee financial expert | | | X | | | | | | | | | | | | | | | | | | | | |
| Mergers and acquisitions | X | | | | X | | | | | | X | | X | | X | | X | | | | X | | X |
| Public company governance | | | | | | | X | | | | | | | | | | | | | | X | | X |
| Sales and marketing | | | | | X | | | | X | | X | | | | | | | | | | X | | |
| Legal, legislative or regulatory | X | | | | | | X | | | | | | | | | | X | | X | | X | | X |
Board Diversity Matrix
Our Board views its diversity as an important strength, as our commitment to diversity of experience, gender, and ethnicity is a key driver of the Corporation’s success. The following matrix illustrates the diversity of the Board as of the date of the Annual Meeting of Shareholders.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Number of Directors | 12 | | | | | | | |
| | | | | | | | |
| | | Female | | Male | | Non-Binary | | Did Not Disclose
Gender |
| Part I: Gender Identity | | | | | | | | |
| Directors | | 2 | | 10 | | — | | — |
| Part II: Demographic Background | | | | | | | | |
| African American or Black | | — | | 1 | | — | | — |
| Alaskan or Native American | | — | | — | | — | | — |
| Asian | | — | | — | | — | | — |
| Hispanic or Latinx | | — | | — | | — | | — |
| Native Hawaiian or Pacific Islander | | — | | — | | — | | — |
| White | | 2 | | 9 | | — | | — |
| Two or More Races or Ethnicities | | — | | — | | — | | — |
| LGBTQ+ | | — | | — | | — | | — |
| Did Not Disclose Demographic Background | | — | | — | | — | | — |
In addition to the valuable perspectives resulting from the diversity of gender and ethnicity on the Board, the CGN Committee seeks to ensure that there is diversity of thought among directors, resulting in more thorough analysis of each issue and better decisions, which in the long-term results in greater shareholder value. The Board and CGN Committee believes that diversity of thought stems from many factors including professional experience, life experience, socio-economic background, gender, race, religion, skill set, and geographic representation. The Corporation believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge, abilities, and shareholder and community representation that will allow the Board to fulfill its responsibilities.
The Board recognizes and values the importance of diversity and the beneficial impact it has on the long-term success of the Corporation. As such, the Board has commenced a search for qualified, independent directors that identify themselves as a gender other than male (“Qualified Directors”). The Board’s goal is to add such Qualified Directors during the 2023 calendar year so that the mix of Qualified Directors meets or exceeds 30% of the total number of directors, by the end of 2023.
Environmental, Social and Governance (ESG) Principles and Activities of the Corporation
The Corporation respects, values and promotes the realization of an increasing diversity and inclusivity profile in our team of Board members and employees, and our customers, reflective of the communities we serve. In addition to the above-described Board attributes, the Corporation emphasizes relevant governance and diversity and inclusion principles in strategic planning, human capital management and leadership development (which includes recruiting and retaining employees), and vendor management, as relationships with third parties represent critical connections to and extensions of the values and operating principles of the Corporation and Board.
Strategic Planning and Related Training
The Corporation has established a formal Strategic Plan, and the framework of the Strategic Plan establishes that principles of inclusion and diversity encompass and integrate with the other objectives of the Strategic Plan, including exceptional experiences, demonstrated leadership, adaptable technology, and long-term growth. In establishing these principles as the foundation upon which all other strategic objectives are anchored, the Corporation seeks to further develop and sustain a diverse, equitable, and inclusive culture, with sensitivity to the entirety of the Corporation’s footprint and environment in which it operates. The differences among the Board and employees, and its customers and community members, are respected and embraced to drive innovative products, services, and solutions that effectively meet the variety of needs among the Corporation’s diverse group of stakeholders.
To ensure that the Environmental, Social, and Governance principles are understood, implemented, and demonstrated by the Corporation’s employee team on a sustained basis, the Corporation developed a comprehensive diversity, equity, and inclusion (“DE&I”) communication processes and a training curriculum which was rolled out to all employees, including internal sessions delivered by a certified diversity and inclusion trainer, supplemented by relevant external training sources. Employee experience committees were also formed in 2022 to explore and evaluate how various DE&I topics impact our employees and how we can better address them. To monitor progress and solicit feedback, the Corporation conducted a company wide survey on DE&I. The results of this survey will be utilized for developing areas of focus for 2023. In 2023, the Corporation also plans to continue offering training to employees, including a module within the Corporation’s training program for new managers, monthly lunch and learn events, and develop employee resource groups, which are employee-led groups whose aim is to foster a diverse, inclusive workplace aligned within the organization.
Inclusion and Diversity Committee
In support of its strategic diversity and inclusion efforts, and to ensure that the diverse perspectives of the entire Corporation’s employee team is considered when developing and implementing its service and operating profile, the Corporation established a Diversity, Equity and Inclusion Committee (the “Diversity Committee”) in 2018. The Diversity Committee, which meets monthly, is comprised of over 10 employee members including underrepresented minorities, females, and those who identify as LGBTQ+, as well as two senior executive level members, with the following committee responsibilities and goals:
•Encourage an inclusive and engaged workforce culture through communications and training
•Demonstrate sustainability, commitment and accountability by tracking inclusion and diversity efforts bank wide
•Bring awareness to the importance of inclusion and diversity internally and externally
The Diversity Committee’s meeting minutes, activities and recommendations are provided regularly to the Corporation’s executive management team for consideration to promote the effective integration of diversity and inclusion principles into the respective facets of our business evaluated and addressed by the Diversity Committee.
Human Capital Management and Leadership Development
We seek to recognize the unique contribution each employee brings to the Corporation, and we are fully committed to supporting a workplace that understands, accepts and values the similarities and differences between individuals. The Corporation’s key human capital management objectives are to recruit, hire, develop and promote a deeply experienced and diverse employee team, supplemented by similarly inclusive and diversity-focused third-party vendors, that collectively translate into a strong workforce committed to fostering, promoting, and preserving the entire spectrum of our communities and culture, while successfully executing our business strategies and demonstrating our corporate values. To support these objectives, the Corporation’s Employee Experience processes and programs are designed and operated to:
•Attract and develop talented employees across the spectrum of professional experience, life experience, socio-economic background, gender, race, religion, skill set, and geographic representation;
•Prepare all members of our team for critical roles and leadership positions both now and the future, in serving as employees and valuable community members;
•Reward and support employees fairly and without discrimination based upon successful performance and through competitive pay and benefit programs;
•Enhance the Corporation’s culture through efforts to better understand, foster, promote, and preserve a culture of diversity and inclusion; and
•Evolve and invest in technology, tools, and resources to better support employees of varying skills and backgrounds at work.
Among the means we use to monitor our performance in employee diversity and inclusion management, we take recurring management and employee demographic measurements and engagement surveys, and utilize the results to identify progress made, as well as areas in need of more attention, in improving the diversity, equity, and inclusion of our leadership and workforce profile, and personnel management practices.
A critical measure is realizing increasing diversity in our senior leadership positions, as those members of the Corporation’s management have greater ability to effectuate sustained change in the composition of our team and the expanded, relevant involvement of all groups within the spectrum of our workforce and communities. We are proud of the diversity we have achieved within the Corporation’s senior leadership team, which is comprised of 16 individuals, of which 50% are female or members of underrepresented minority groups.
Overall, the Corporation’s workforce is 67% female and 33% male, as reported by those who self-identified. In addition, 11% of the Corporation’s workforce self-identified as a member of an underrepresented minority group. The underrepresented minority groups include individuals who self-identify as an ethnicity other than white, LGBTQ+ or military veteran.
As a result of broadening our recruitment efforts to increase the diversity of our teams, for the year ended December 31, 2022, 45 people out of 196 total hires for the Corporation identified as an underrepresented group. The Corporation increased the percentage of underrepresented hires from 19.5% of total new hires in 2021 to 22.7% in 2022, allowing us to continue to improve our overall diversity workforce profile, as our regional banks’ workforce profiles are moving towards better alignment with the overall demographics of their respective communities.
Vendor Management
In 2021, the Corporation enhanced its new vendor selection process to include an evaluation of the potential vendor’s commitment to sustainability and diversity and inclusion. Our goal is to work with vendors that share our core values and commitment to be a responsible corporate citizen, with a dedication to strengthening the diversity of our team members. We are making the necessary changes to ensure that our procurement practices are designed to identify diverse-owned businesses committed to delivering the service, quality, and value that defines our brand, and to request vendors to definitively respond regarding their diversity and inclusiveness practices and measures. It is our goal to promote the economic growth of the local business communities we serve, in a manner reflective of our size, growth, and geographical location of individuals, departments and services. We understand the competitive advantage of having a broad selection of available suppliers to choose from with respect to factors such as price, quality, attention to detail, and future relationship building, and we now add their respective embracing of diversity and inclusion to the list of significant determining factors.
Community Involvement and Social Impacts
The Corporation serves as a cornerstone institution of both financial support and community service in the markets in which we serve. We are committed to strengthening these communities through the active volunteering of our employees.
The Corporation’s employees actively participate in their local communities through volunteer activities in education, economic development, human and health services, and community reinvestment. During 2022, employees donated 15,316 hours in support of more than 658 organizations, with 60% of employees actively participating. Additionally, there were approximately $987,000 in donations to community organizations and events within the communities we serve. Notably, the Corporation’s Martin Luther King, Jr. “Take the Day On” efforts resulted in the support of 30 community organizations and 249 volunteer hours recorded. Employees collected donations and delivered them to local organizations in need during this national day of service, which typically serves as a bank holiday.
The Corporation expanded its efforts surrounding its financial literacy outreach in 2022, conducting five Financial Reality Fairs in various regions throughout the footprint we serve. The fairs teach real-life budgeting skills to high school students, many of whom are in low-to-moderate income households. The fairs included seven high schools and almost 1,000 students. Eighty employees donated over 875 hours of volunteer time and leveraged partnerships with thirty community organizations. Our employees and community volunteers not only shared their real-life knowledge of budgeting, but also provided additional financial education after the events. In addition to the fairs, employees participated in 120 other financial literacy events ranging from basic community banking sessions to school presentations. A total of 1,219 volunteer hours can be attributed to the Corporation’s financial literacy program. Further, the Corporation sponsored elementary and secondary banking curriculum materials donating $30,155 to provide 8,666 workbooks for students, along with teacher guides and complimentary digital programs. Additionally, the Corporation provided $300,000 in Educational Improvement Tax Credit Program scholarships, and $24,500 in academic scholarships in service to the communities in which we operate.
In 2022, the Corporation focused on increasing its outreach to those who are “unbanked” or “underbanked”. Two examples of how the Corporation worked to address this social issue include the launch of the Stress Less account, the Bank’s first Bank On Certified account and opening a new fully mobile “BankOnWheels” to operate in the Buffalo metro area. The national Bank On movement seeks to provide consumers safe and affordable access to the mainstream financial system and help connect unbanked and underbanked people to these products. The Bank is committed to expanding banking access to its communities with this Bank On Certified account. Features of this account include a low minimum to open, checkless checking, a low monthly service charge, free access to eBanking, debit card access, and no fees for overdraft or dormancy. BankOnWheels, which opened in the fourth quarter of 2022, is an innovative new banking experience, making full-service banking accessible to more consumers and small businesses, particularly those in underserved communities. The first of its kind operated by any financial institution in Western New York, BankOnWheels is a full-service, yet fully mobile bank branch, which will enable the Bank to deliver essential banking services to communities with little or no access to such services today. The BankOnWheels will rotate between three locations in the cities of Buffalo and Niagara Falls, which are located in communities underserved by banks, with plans to serve additional areas in the future.
Throughout its history, the Corporation has focused on strengthening the communities it serves. We accomplish this by promoting economic development through investments in community-strengthening initiatives, such as affordable housing and revitalization efforts. As of December 31, 2022, the Corporation’s investment in affordable housing totaled approximately $8.0 million, with an additional investment commitment of $1.0 million and $2.5 million invested in the Erie Downtown Development Corporation, which is focused on revitalization efforts in downtown Erie, Pennsylvania.
The Corporation is also committed to supporting women owned businesses. The Bank intends to launch Impressia Bank, a division of the Bank, in the first quarter of 2023. Designed for women by women, Impressia Bank will be a full-service banking division of the Bank dedicated to the professional and financial development and advancement of women business owners and women leaders. Impressia Bank clients will have access to resources related to accelerating their business, developing appropriate business strategies, and establishing a community of women who support one another.
Environmental
The Corporation continues to evaluate opportunities to mitigate our environmental impact through new initiatives as well as altering existing business practices. The Corporation has identified increasing customer enrollment in paperless “eStatements” as an area of continued focus for 2023. As of December 31, 2022, customer enrollment in eStatements was 43%, compared to 36% at the end of 2021. The Corporation has set a goal of increasing overall customer enrollment to 50% by the end of 2023. To achieve this goal, our customers will be prompted to consider enrolling in eStatements each time they log in unless they specifically request not to be enrolled. This initiative will not only reduce paper usage but also the carbon footprint impact of delivering paper statements to our customers. We also rolled out new functionality on our website and mobile app to allow businesses to open new accounts without having to visit a branch, reducing travel for our customers. The Corporation’s “Small Business Xpress” lending platform provides our customer with a totally digital experience from start to finish. The customer completes an online application, uploads digital loan support documents, and receives paperless loan funding. Lastly, the Corporation has continued its efforts to replace paper documents by utilizing electronic filing of mortgage documents and the widespread adoption of DocuSign. The use of DocuSign resulted in an estimated reduction of approximately 374,000 pages of paper in 2022 alone.
We also continue to look for opportunities to recycle our waste and to replace items we currently use with recycled products and choosing biodegradable solutions where waste cannot be eliminated. An example of this in practice would be our printers switched to default print double sided in conjunction with using recycled copy paper, ensuring recycling bins are conveniently located, and that sensitive documents placed in secured shred bins are disposed of in a manner that allows for recycling as well. Products made locally are utilized where possible not only to support local businesses, but also to reduce the carbon footprint created through the necessary transportation of those products to our facilities. Finally, we are reducing energy usage through the implementation of higher efficiency equipment in our buildings and sourcing technology solutions that monitor and control usage flow to help reduce the carbon footprint of our facilities.
Cybersecurity
The Corporation is committed to cybersecurity and vigilantly protecting all clients, resources and information from unauthorized access. The Corporation has implemented a strategic approach to cybersecurity and performs semi-annual cybersecurity penetration tests and formal cybersecurity maturity assessments via a third party to ensure that we are consistent with security best practices. The Corporation’s cybersecurity approach incorporates a layered portfolio of technology products and tools, documented policies, end-user training and dedicated resources to manage and monitor the evolving threat landscape. We employ dedicated cybersecurity personnel to focus on preventing, identifying, and detecting cybersecurity risks. We use advanced next generation protection technologies to rapidly detect and investigate any evidence of malicious activity, which allows us to quickly isolate systems to contain and prevent damage and restore systems. Incidents are required to be internally reported, including to the Board, if material or appropriate. The Board exercises its responsibility for overseeing cybersecurity risks by directly evaluating, in conjunction with management, information security technologies that not only support the Corporation’s business initiatives but also strengthen its cybersecurity related defenses. Additionally, the Board leverages the Corporation’s internal audit function to continuously assess its degree of protection against potential cyber security threats. Finally, management provides the Board with updates on current cybersecurity projects and industry trends on at least a quarterly basis. Our cybersecurity personnel regularly evaluate risks and opportunities to improve our cybersecurity program. In addition, controls related to the Corporation’s information technology environment are tested as part of our Sarbanes-Oxley audit.
COMPENSATION OF DIRECTORS
Director fees
for non-employee directors are reviewed annually by the ECC for recommendation to
the Board. Directors who are also employees of the Corporation do not receive compensation for their service on the Board. The ECC reviews relevant peer group data similar to that used in the executive compensation review. The ECC believes that appropriate compensation is critical to attracting, retaining and motivating directors who have the qualities necessary to
direct thisserve the Corporation
as a director and who meet the guidelines
referred to under Corporate Governance/Nominatingset forth by our CGN Committee. In addition, the ECC annually recommends an equity award of the Corporation’s common stock for directors who have served at least one year on the Board. The equity awards vest immediately.
The Board has adopted
certain stock ownership guidelines (the “Director Stock Ownership Guidelines”) for directors of the Corporation and CNB Bank because it believes that it is important for the Corporation’s future success that directors own and hold a minimum number of shares of common stock of the Corporation in order to further align their interests and actions with the interests of the Corporation’s shareholders. The
Corporation’s Bylaws provide that any director, upon first being appointed or elected to serve as a director, must own the lesser of 1,000 unencumbered shares of common stock of the Corporation or the number of shares equivalent to $15,000 of market value as of the date of the appointment or election. Further, on or before the third anniversary of the director’s first election to the Board, the director must own at least the lesser of 2,500 unencumbered shares of common stock of the Corporation or the number of shares equal to $25,000 of market value. Beyond this initial three-year period and prior to the five-year anniversary of a director joining the Board, the Director Stock Ownership Guidelines require directors of the Corporation and CNB Bank to own
at all timesand sustain during the period of their directorship a number of shares of the Corporation’s common stock with a market value equal to 500% or more of the director’s annual retainer for serving on both the CNB Bank and Corporation boards of directors.
This ownership threshold must be met within five years of a director joining the board. Compliance with the Director Stock Ownership Guidelines is monitored and reported to the Board by the Corporation’s CEO.
2019 Director Fee Schedule
| | | | | | |
Meeting/Committee Description
| | Fee ($) | | | Frequency |
Board Meeting – CNB Bank
| | | 600 | | | Monthly |
Board Meeting – CNB Financial Corp.
| | | 600 | | | Quarterly |
Retainer – CNB Bank
| | | 800 | | | Monthly |
Retainer – CNB Financial Corp.
| | | 800 | | | Monthly |
Committee Meeting
| | | 500 | | | Depends on committee |
Committee Chairs
| | | 600 | | | Depends on committee |
Retainer – Audit Committee Chair
| | | 2,125 | | | Quarterly |
Retainer – Executive Compensation Committee Chair
| | | 1,250 | | | Quarterly |
Retainer – Corporate Governance/Nominating Committee Chair
| | | 1,250 | | | Quarterly |
Annual Meeting
| | | 600 | | | Annual |
Director Training
| | | 500 | | | Varies |
Non-routine Director Work
| | | 1,000 | | | Per full day |
2019Non-Employee Director
Deferred Compensation
Table | | | | | | | | | | | | | | | | |
Name | | Fees Earned
or Paid in
Cash ($) | | | Stock Awards
($) (1) | | | All Other
Compensation ($) | | | Total
($) | |
Peter F. Smith | | | 106,900 | | | | 35,000 | | | | — | | | | 141,900 | |
Julie Young | | | 23,200 | | | | — | | | | — | | | | 23,200 | |
Robert W. Montler | | | 45,800 | | | | 35,000 | | | | — | | | | 80,800 | |
Joel E. Peterson | | | 43,400 | | | | 35,000 | | | | — | | | | 78,400 | |
Deborah Dick Pontzer | | | 49,800 | | | | 35,000 | | | | — | | | | 84,800 | |
Jeffrey S. Powell | | | 60,475 | | | | 35,000 | | | | — | | | | 95,475 | |
Nicholas N. Scott | | | 47,400 | | | | 35,000 | | | | — | | | | 82,400 | |
Richard B. Seager | | | — | | | | 35,000 | | | | 48,950 | | | | 83,950 | |
Francis X. Straub, III | | | — | | | | 35,000 | | | | 43,800 | | | | 78,800 | |
Peter C. Varischetti | | | 32,175 | | | | 35,000 | | | | 10,725 | | | | 77,900 | |
Plan for Non-Employee Directors
The Corporation has established a deferred compensation plan for its
non-employee directors
which provides for the deferralthat allows each director to elect to defer receipt of up to 100% of
his or her director compensation.
AllAmounts deferred
compensation isare credited to a
general liabilitybookkeeping account established in the name of the
Corporationdirector and
may be notionally invested by the
Bank.director among a portfolio of investment funds. Any appreciation or depreciation in
each participant’sa director’s bookkeeping account value will reflect the performance of the underlying investments. No above-market earnings accrue under this plan.
All amounts deferred under the deferred compensation plan are unfunded and represent a general liability of the Corporation and the Bank. Deferred compensation will serve as a funding source for a Rabbi trust.
15
Investments are expected Amounts credited to closely matcha non-employee director’s deferred compensation account will be distributed upon the appreciatednon-employee director’s normal retirement, death, or depreciated liability. Distributions are receiveddisability in the form of a lump sum or annuity, upon normal retirement, death, or disability. Any variance will be adjustedas elected by an expense or gainthe director. Amounts deferred and any earnings thereon are not subject to federal individual income tax until distributed to the Corporation or Bank. The plan provides tax advantages to the participants and participation in the plan further aligns the interests of participants with those of our shareholders.non-employee director. Accounting treatment for this plan is subject to the ASC Topic 718.
2022 Director Fee Schedule
| | | | | | | | | | | | | | | | | |
| Meeting/Committee Description | | Fee
($) | | Frequency |
| Board Meeting – CNB Bank | | 600 | | Per Meeting |
| Board Meeting – CNB Financial Corp. | | 600 | | Quarterly |
| Retainer – CNB Bank | | 1,042 | | Monthly |
| Retainer – CNB Financial Corp. | | 1,042 | | Monthly |
| Committee Meeting | | 500 | | Committee dependent |
| Committee Chairs | | 600 | | Committee dependent |
| Retainer – Chairperson of the Board - CNB Bank | | 2,550 | | Monthly |
| Retainer – Chairperson of the Board - CNB Financial Corp. | | 2,550 | | Monthly |
| Retainer – Audit Committee Chair | | 2,125 | | Quarterly |
| Retainer – Executive Compensation Committee Chair | | 1,250 | | Quarterly |
| Retainer – Corporate Governance/Nominating Committee Chair | | 1,250 | | Quarterly |
| Annual Meeting | | 600 | | Annual |
| Director Training | | 500 | | Varies |
| Non-routine Director Work | | 1,000 | | Per full day |
2022 Non-Employee Director Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash
($) | | Stock Awards(1) ($) | | All Other Compensation(2) ($) | | Total
($) |
| Peter F. Smith | | 124,000 | | 34,990 | | — | | 158,990 |
| Michael Obi | | 34,125 | | — | | 11,375 | | 45,500 |
| Joel E. Peterson | | 22,500 | | 34,990 | | 22,500 | | 79,990 |
| Deborah Dick Pontzer | | 47,100 | | 34,990 | | — | | 82,090 |
| Jeffrey S. Powell | | 56,550 | | 34,990 | | — | | 91,540 |
| Nicholas N. Scott | | 46,000 | | 34,990 | | — | | 80,990 |
| Richard B. Seager | | 51,000 | | 34,990 | | — | | 85,990 |
| Francis X. Straub, III | | — | | 34,990 | | 44,700 | | 79,690 |
| Peter C. Varischetti | | 34,500 | | 34,990 | | 11,500 | | 80,990 |
| Julie Young | | 47,500 | | 34,990 | | — | | 82,490 |
(1) Total stock award value computed using the closing price on the date of the award multiplied by the number of shares awarded.
(2) Deferred compensation under the non-employee directors’ plan.
The Corporation has also established a Survivor Benefit Plan for the benefit of
non-employee directors.
The purpose ofUnder the
plan isSurvivor Benefit Plan, each non-employee director may designate a beneficiary (or beneficiaries) who will be entitled to
providereceive a
$100,000 to $150,000
(amount varies by participant) life insurancedeath benefit
to designated beneficiaries if a participant dieseither (i) upon the non-employee director’s death while serving as a director of the Corporation or,
(ii) in the case of a
non-employee directors director who has served as a director of the Corporation for ten or more years (or attain age 70 while serving as a director),
followingupon such
non-employee director’s
death after his termination of
board service. The
planSurvivor Benefit Plan is
considered an unfunded plan for tax and ERISA purposes and all obligations arising under the plan are payable from the general assets of the Corporation.
Messrs. Bower and Greslick are ineligible to participate in the plan.16
The following table sets forth information regarding our executive officers:
CNB Financial Corporation:
| | | | | | | | | | | | | | |
Name | | Age as of
December 31, 2019
March 9, 2023 | | Title |
Joseph B. Bower, Jr.
Michael D. Peduzzi | | 5657 | | President and Chief Executive Officer |
Richard L. Greslick, Jr. | | 46 | | Senior Executive V.P., Chief Operational Officer and Secretary |
| Tito L. Lima | | 5458 | | Senior Executive V.P., Chief Financial Officer and Treasurer |
Richard L. Greslick, Jr.
Leanne D. Kassab | | 4354 | | Senior Executive V.P., Chief SupportExperience Officer and Assistant Secretary |
CNB Bank:
| | | | | | | | | | | | | | |
Mary Ann Conaway
Name | | 57Age as of
March 9, 2023 | | Title |
| Michael D. Peduzzi | | 57 | | President and Chief Executive Officer |
| Richard L. Greslick, Jr. | | 46 | | Senior Executive V.P., Employee ExperienceChief Operational Officer |
Joseph E. Dell Jr.
Tito L. Lima | | 6358 | | Senior Executive V.P., Chief Financial Officer |
| Martin T. Griffith | | 60 | | Senior Executive V.P., Chief Banking Officer |
| Leanne D. Kassab | | 55 | | Senior Executive V.P, Chief Experience Officer |
| Gregory M. Dixon | | 45 | | Executive V.P., Chief Risk Officer |
| Darryl P. Koch | | 38 | | Senior V.P. and, Chief Information Technology & Security Officer |
| Heather J. Koptchak | | 38 | | Senior V.P., Chief Employee Resources Officer |
| Robin W. Mink | | 60 | | Senior V.P., Chief Treasury Management Officer |
| Steven R. Shilling | | 52 | | Executive V.P., Chief Wealth Management Officer |
| Angela D. Wilcoxson | | 52 | | Executive V.P., Chief Commercial Banking Officer |
Gregory M. Dixon
| | 42 | | Executive V.P. and Chief Risk Officer
|
Martin T. Griffith
| | 57 | | Executive V.P. and BankOnBuffalo Market President
|
Leanne D. Kassab
| | 52 | | Executive V.P., Customer Experience
|
Steven R. Shilling
| | 49 | | Executive V.P., Private Client Solutions
|
Provided below is biographical information for each of our executive officers, other than Messrs.
BowerPeduzzi and
Greslick.Greslick, who also serve as directors of the Corporation. For information regarding Messrs.
BowerPeduzzi and Greslick, see “Election of Directors.”
Tito L. Limahas over 30 years of experience in various areas of banking. Prior to joining the Corporation in July 2019, he served as Executive Vice President and Chief Financial Officer at NexTier Bank, N.A. from 2015 through June 2019. Prior to joining NexTier Bank, N.A. Mr. Lima served as Executive Vice President of Finance for National Penn Bancshares from 2013 to 2015. Mr. Lima graduated from the Robert Morris University with a Bachelor of Science degree in Finance.Mary Ann Conaway has been with the Corporation since 1982 and has served as the Executive Vice President/Employee Experience since 2014. Ms. Conaway first took a lead role in her field with the promotion in 1992 to Human Resource Officer. In 2011, Ms. Conaway graduated from the Human Resource Management School of the Graduate School of Banking presented by the Central States Conference of Banking Associations and University of Wisconsin-Madison. She has also served as a past member of the Pennsylvania Bankers Association/Professional Development Network State Educational Advisory Committee. Ms. Conaway has served and continues to serve on various boards within the community.
Joseph E. Dell, Jr. has been with the Corporation since 2013 and has served as the Chief Commercial Banking Officer since 2014. Mr. Dell holds a Bachelor’s of Science in Business Administration from Clarion University and a Master’s in Business Administration from Waynesburg University. He is a graduate of the American Bankers Association Stonier Graduate School of Banking. Mr. DellFinance.
Martin T. Griffith has over 30 years of experience in commercial banking and credit administration and has previously served in executive and senior leadership roles with FSG Bank, a division of Atlantic Capital, First Commonwealth Bank, and National Bank of the Commonwealth. Mr. Dell has served and continues to serve on various boards within the community.Gregory M. Dixonhas been with the Corporation since 2003 and has served in various capacities, with the most recent being Senior Credit Officer. Mr. Dixon holds a Bachelor’s of Science in Accounting from Indiana University of Pennsylvania. He is a graduate of the American Bankers Association Stonier Graduate School of Banking and a graduate of the Pennsylvania Bankers Association School of Commercial Lending. Mr. Dixon has served and continues to serve on various boards within the community.
Martin T. Griffith has over 29 years of experience in various areas of banking. Prior to joining the Corporation in 2016, he was employed for the prior 16 years with Five Star Bank, serving in roles of SVP/Retail Banking Executive, SVP/Commercial Banking and Regional President. Mr. Griffith graduated from Ithaca College with a B.S.Bachelor of Science degree in Business Administration and has a degree from the Graduate School of Banking at the University of Wisconsin.
Leanne D. Kassab joined CNB Bankthe marketing team at the Corporation in 1996 as a Marketing Assistant and served inhas held various roles including Senior Vice PresidentEVP of Marketing,Client Experience, before transitioning to her current role as Executive Vice President of Customer Experience in 2014. She served as Senior Risk Officer for CNB Financial Corporation’s Enterprise Risk Management (ERM) program from 2013 to 2015.2021. Ms. Kassab graduated from Indiana University of Pennsylvania with a Bachelor of Science in Marketing. She graduated with honors from the American Bankers Association (ABA) School of Bank Marketing and Management and fromSchool, the Pennsylvania Bankers Association Advanced School of Banking.Banking and the Pennsylvania Bankers Commercial Lending School. She was awarded the Certified Financial Marketing Professional (CFMP) designation from the Institute of Certified Bankers (CIB)(ICB) and serves as an ABA Bank Marketing Conference Advisory Board member and Vice President of the board of directors for Clearfield Arts Studio Theater, Inc. (CAST).17
Gregory M. Dixon has been with the Corporation since 2003 and has served in various capacities, with the most recent being Senior Credit Officer. Mr. Dixon holds a Bachelor of Science degree in Accounting from Indiana University of Pennsylvania. He is a graduate of the American Bankers Association Stonier Graduate School of Banking and a graduate of the Pennsylvania Bankers Association School of Commercial Lending. Mr. Dixon has served and continues to serve on various boards within the community.
Darryl P. Koch has twenty years of experience in the field of information technology and security. Prior joining the Corporation in 2019, Mr. Koch operated an information technology consulting business, which provides him with a depth and breadth of experience in the field. Mr. Koch holds a Bachelor of Science in Information Technology & Security and Master of Science in Information Security & Assurance from Western Governors University. In addition, he has obtained numerous relevant certifications, including; Certified Ethical Hacker, Computer Hacking Forensic Investigator, Cisco CCNP, and Microsoft MCSA.
Heather J. Koptchak has been with the Corporation since 2004, rising through the organization from Universal Associate to her current role as Chief Employee Resources Officer for the Bank. She holds an Associate of Science in Business Administration from Pennsylvania State University and is a certified Society of Human Resource Management (SHRM-CP) professional. Mrs. Koptchak also graduated from the Graduate School of Banking, Human Resources Management School, PA Bankers, and Advanced School of Banking. She serves on various nonprofit boards and volunteers within the community.
Robin W. Mink joined CNB Bank in 2017 to develop and oversee the treasury management product and sales strategy for the Corporation. She has over 30 years of experience in treasury management as both a banker and corporate finance practitioner having served as Corporate Cash Manager at both Cardinal Health and Safelite Autoglass prior to her role as Senior Vice President, Treasury Management Market Executive for PNC Bank. Robin is a graduate of Otterbein University and holds the Certified Treasury Professional credential (CTP).
Steven R. Shilling has over 2527 years of experience in wealth management and private banking. Prior to joining the Corporation in 2015, he served as a Senior Vice President in leadership roles with Huntington Wealth Advisors, National City Private Client Services and the Bank of America Private Bank. He graduated summa cum laude with a BABachelor of Arts degree in Economics from Grove City College and received an MBAa Master of Business Administration degree from the Fuqua School of Business at Duke University.18
Angela D. Wilcoxson has been with the Corporation since 2020 and has served as the Chief Commercial Banking Officer since January 1, 2022. Ms. Wilcoxson holds a Bachelor of Business Administration degree in Finance from Kent State University and a Master of Arts in Applied Biblical Studies from Moody Bible Institute. Ms. Wilcoxson has over 29 years of experience in various areas of commercial banking and credit underwriting and has previously served in a senior leadership role with KeyBank. Ms. Wilcoxson has served and continues to serve on various boards within the community.
COMPENSATION DISCUSSION AND ANALYSIS
This discussion and analysis is focused on the Corporation’s NEOs and summarizes the philosophy, strategy and major details of the Corporation’s approach to compensating our NEOs. Our NEOs for the year ending December 31,
20192022 are as follows:
Joseph B. Bower, Jr.•Michael D. Peduzzi – President and Chief Executive Officer
(1)•Joseph B. Bower, Jr. – Former President and Chief Executive Officer (1)
•Tito L. Lima – Senior Executive Vice President, Chief Financial Officer and Treasurer (commencing July 1, 2019)
•Richard L. Greslick, Jr. – Senior Executive Vice President, Chief SupportOperational Officer and Secretary
Joseph E. Dell, Jr.•Martin T. Griffith – Senior Executive Vice President and Chief Commercial Banking Officer
Brian W. Wingard•Leanne D. Kassab – FormerSenior Executive Vice President, Chief FinancialExperience Officer and Treasurer (through June 30, 2019)
Assistant SecretaryMark D. Breakey – Former Senior Executive Vice(1) Mr. Bower retired from his capacity as President and Chief CreditExecutive Officer, (througheffective December 31, 2019)
2022 and Mr. Peduzzi became President and Chief Executive Officer, effective December 31, 2022.
Financial Highlights
During 2019,
Despite a continued level of uncertainty and volatility in the market-place, for the year ended December 31, 2022, the Corporation continued to execute on its strategies
and achieved the following key results:while focusing on its long-term objectives: 2019 net•Net income available to common stock shareholders of $40.1$58.9 million or $2.63$3.26 per diluted share, for the twelve months ended December 31, 2022, compared to $53.4 million or $3.16 per diluted share, for the twelve months ended December 31, 2021, reflecting increases of $5.5 million, or 10.3%, and $0.10, or 3.2%, per diluted common share, respectively. As discussed in more detail below, the 2022 diluted earnings per share reflectedwas impacted by the effect of the Corporation’s common stock offering, completed in September 2022;
•In September 2022, the Corporation completed a common stock offering, resulting in the issuance of 4,257,446 shares of its common stock at $23.50 per share. Net proceeds from this offering were $94.1 million, after deducting the underwriting discount and customary offering expenses;
•As part of its overall capital management strategy, the Corporation increased the dividend per common share to $0.70 for the full-year 2022, from to $0.685 for the full year-2021;
•Book value per common share was $22.39, at December 31, 2022, compared to $22.85 at December 31, 2021. The Corporation’s book value per common share was impacted by an increase in accumulated other comprehensive loss, from $394 thousand at December 31, 2021 to $52.5 million at December 31, 2022. The Corporation’s accumulated other comprehensive loss is comprised primarily of unrealized losses on its investment portfolio;
•At December 31, 2022, the Corporation’s loan portfolio totaled $4.3 billion, representing an increase of $6.4$640.4 million, or 18.9%,17.6% from December 31, 2021;
•The Corporation increased its profitability as reflected in Return on Average Assets and $0.42 per diluted share, or 19.0%Return on Average Equity (“ROE”) of 1.20% and 13.86%, respectively,
Increased total loans outstanding $329.5 million, or 13.3%, to end 2019 at $2.804 billion
Increased total deposits $491.5 million, or 18.8%, to end 2019 at $3.102 billion
Increased return on average tangible equity to 14.05% in 2019, for the twelve months ended December 31, 2022, compared to 13.46%1.14% and 13.39%, respectively, for the twelve months ended December 31, 2021;
•In December, 2022, the Corporation announced its plans to launch a new bank division, Impressia Bank. This division is designed for women by women and will be a full-service banking division of CNB Bank, dedicated to the professional and financial development and advancement of women business owners and women leaders;
•The Corporation continued to invest in 2018customer-facing technology aimed at enhancing speed and quality of customer interactions and;
Increased return•The Corporation continued to focus on average assets to 1.17% in 2019, compared to 1.12% in 2018
Inits diversity and inclusion responsibility throughout the fourth quarterorganization. We are proud of 2019 announced a definitive agreement to acquire Bankthe diversity we have achieved within the Corporation’s senior leadership team, which is comprised of Akron, headquartered in Akron, NY,16 individuals, of which will nearly double BankOnBuffalo’s total assets to over $1 billion
Delivered organic growth50% are female or members of 4,972, or 7.8%, in households serviced
underrepresented minority groups.Launched an “at the market” offering, pursuant to which the Company may issue and sell up to $40 million, thereby continuing to support its long-term growth strategy
Say-on-Pay Results and Shareholder Outreach
At the 2019 annual meeting2022 Annual Meeting of shareholders, 9,241,483Shareholders, 9,187,235 shares, or 97%94.4% of shares voted (excluding brokernon-votes and abstentions),votes cast, approved, on an advisory basis, the compensation paid to the Corporation’s NEOs as disclosed in the Corporation’s proxy statement for that annual meeting. The ECC considered this feedback during 20192022 when designing our executive pay program and policies. The Corporation currently hascontinues to have an annualsay-on-pay vote on an advisory basis.
After the 2022 shareholder meeting, as
approveddirected by
the Board, the Corporation conducted an institutional shareholder outreach program to the largest shareholders. We directly contacted shareholders
in 2014. The Boardrepresenting approximately 43% of all outstanding shares and 82% of shares that were institutionally held. Five institutional shareholders responded to the Corporation’s request for a discussion to discuss Environmental, Social, and Governance related topics with six other investors responding that a call is
recommending that shareholders again approve an annualsay-on-pay vote, as described in “Proposal 2” above.not needed at this time. Participants on the calls were Mr. Peduzzi and Mr. Lima, both of whom found the calls helpful to better understand the concerns of our shareholders.
The ECC defines and oversees our executive compensation philosophy, programs, and pay decisions for our executive officers.
The ECC’s expectation is that our
seniorexecutive management team should drive performance and produce appropriate returns
and enhance value for shareholders. To achieve that goal, our executive compensation is benchmarked, both as to pay and as to performance, and designed with a focus on performance-based pay. We target our executive compensation program to be
consistent withwithin a reasonable range of the median pay of financial institutions of similar size, region, and complexity. Our program is designed to provide variable
rewardsincentives that will reward for performance.
The primary objectives of the executive compensation program are to:
•Attract, retain, and motivate key executives to produce above averageabove-average operating results and shareholder resultsreturns for the Corporation;
•Align the financial interestinterests of the NEOs andwith those of our shareholders through incentive-based compensation; and
•Provide a total compensation program that recognizes individual contributions as well as overall business results.
19
The following table illustrates how we designed our executive compensation program to reflect these compensation objectives:
| | | | | | | | |
Key Objectives | | How our Compensation Program Supports this Objective |
Attract, retain, and motivate key executives to drive shareholder resultsreturns for the Corporation | | • ProvideProvides competitive total compensation opportunities that target pay atwithin a reasonable range of the peer group median (for meeting performance targets) with the ability to pay above market for driving above averagesuperior results (or below market forsub-par performance) • Long-termEncourages retention of our NEOs through long-term incentive awards align executives with shareholder interests and provide retention throughthat include multi-year vesting conditions |
| |
Align the financial interestinterests of the NEOs andwith those of our shareholders through incentive-based compensation | | • ProvideProvides incentives that are tied to our business plansplan and motivatemotivates performance that drives shareholder value • Require allRequires NEOs to have minimummeet stock ownership requirementsguidelines • Implemented a new performance-based componentMotivates our NEOs to the long-term incentive program all NEOs in 2018 that is based on a 3 year measurement ofachieve predetermined multi-year performance goals related to our 3-year earnings per share (EPS)(“EPS”) growth and return on average equity (ROE)ROE in relation to the SNL US Bank $1 - $5S&P U.S. Small Cap Banks Index Constituents excluding Thrifts with assets between $2.5 billion indexand $10 billion as of the first trading day of the performance period (relative performance) |
| |
Provide a total compensation program that recognizes individual contributions as well as overall business results | | • Each NEO annualCorrelates incentive plan correlatesopportunity to elements of growth, profitability, and asset quality that each NEO can control throughday-to-day business decision and execution of strategic plans • AllEncourages team focus by measuring NEO performance against an annual NEO incentive plans include common components for:plan scorecard which covers (1) Return on average equity;fully-diluted EPS; (2) Deposit growth;Commercial loan revenue; (3) Mortgage, home equity, and (3) Growth in households served in relation to the Corporation’s budgeted household growth (absolute performance).• All annual NEO incentive plans also include a formulaconsumer loans; (4) Efficiency ratio; and (5) Wealth & Asset management fees, for the reduction of2022 non-equity incentive plan compensation
•Mitigates undue risk taking through a risk adjustment modifier, which can reduce the incentive paid ifpayouts when CNB Bank only net loan chargeoffs as a percentage of average loans exceedBank’s Net Charge-Offs ratio exceeds 20 basis points.points |
20
Our executive compensation program is designed to be simple, straightforward, and fair, and consists of the following elements:
•Long-term incentives (stock)(equity); and
Target Pay and Mix for Compensation Elements
The ECC reviews both total compensation and each element of compensation when making pay decisions and recommendations to our Board. We target compensation to be within a reasonable range of the median, with actual compensation varying above or below targets based on individual and Corporation performance.
In allocating compensation among these elements, our program is designed to provide a balance of:
•Fixed and variable / performance-based/(performance-based) compensation;
•Cash and equity compensation;
Short-term•Recognition of both short-term (annual) and long-term (multi-year) performance;
•Performance ofrelative to corporate strategic goals, shareholder value, and individual contributions; and
•Absolute performance (our own goals) and relative performance (compared to industry)
industry/peers)This balanced approach helps to mitigate the influence of any one element of compensation which might be considered to drive excessive risk taking.
Summarized below are highlights with respect to our executive compensation program in
2019:2022:•Measured absolute performance in our annual bonuses using a team-based approach with onefive common performance goals included in the formula for all NEOs;
•Continued to provide a significant portion of executive compensation in incentive-based pay (ensuring apay-for-performance alignment);
Made•Granted stock-based grantsawards to motivate long-term performance and align the executives with shareholderand shareholders’ interests;
•Continued to expanda performance-based long-term incentive program for allexecutive officers;
•With the assistance of an independent consultant, examined the competitiveness of our executive compensation program to confirm that it meets our objectives of attracting, retaining and motivating executives;
•Continued to usemaintain a clawback policy;
•Continued to require executives to meet stock ownership guidelines; and
Ensure incentive programs retain•Retained a risk mitigation feature, for net loan chargeoffs.
such as risk modifier (i.e. Net Charge-offs ratio), in the incentive program.
Compensation Determination Process
The ECC is composed of six
non-employee, independent directors (as defined by the NASDAQ independence standards) selected from the Board of the Corporation.
The ECC has overall responsibility for reviewing, establishing, and administering the policies that govern our executive compensation program. It determines the compensation of the NEOs and
makes a recommendationsuch determinations are submitted to the
entire Board.full Board for ratification. In discharging these responsibilities, the ECC seeks to maintain a position of
“equity”both “independence and equity” with respect to balancing the interests of our shareholders with those of our NEOs.
The ECC has not delegated any of its responsibilities to individual members of the ECC or to a subcommittee of the ECC, although it has the discretion to do so.
The ECC has a charter, a copy of which is available on the Corporation’s website atwww.cnbbank.bank. The ECC meets regularly regarding compensation issues, regularly participates in an executive session (without management), and receives input from its independent compensation consultant.21
The Role of the Compensation Consultant
The ECC has the sole authority to retain and terminate a compensation consultant and to approve the consultant’s fees and all other terms of the engagement. The ECC has direct access to outside advisors and consultants throughout the year.
During
2019,2022, the ECC engaged Meridian Compensation Partners, LLC (“Meridian”), an independent compensation consulting firm that specializes in executive and board compensation
matters.matters and related governance issues. Meridian worked with the ECC to conduct executive and board compensation benchmarking, review market trends and best practices and expand the performance-based long-term incentive plan to all executives. Meridian reported directly to the ECC and carried out its responsibilities as assigned by the ECC. After careful review, the ECC determined that Meridian satisfies the NASDAQ independence standards and identified no conflicts of interest.
At the request of the ECC, NEOs may be present at ECC meetings for discussion purposes. None of the NEOs, however, may be present during any deliberations or votes concerning their respective compensation. The NEOs
have no involvementare not involved in the decisions made by the ECC, nor do they have a vote on any matters brought before the ECC.
The ECC solicits the recommendations of the
Chief Executive Officer (“CEO”)Corporation’s CEO regarding the performance and compensation of the other NEOs. Ultimately, however, the ECC determines each NEO’s compensation. To determine the remuneration of the CEO, the ECC considers feedback from the
CEO, as well as input from Meridian,
on anas-requested basis.as outlined in the previous section.
On an annual basis, the ECC reviews competitive market data and conducts a comprehensive compensation assessment. To assist in making compensation decisions, the ECC engaged Meridian
beginning in
the fall of 20182021 to conduct a comprehensive competitive analysis
to assess the competitiveness of
the totalour executive compensation program as a reference
for setting its 2019from which to set 2022 executive compensation
program,levels, to develop the NEO long-term incentive program and to assess the historical pay for performance relationship.
The purpose ofIn addition, this analysis provided the
review was to provideECC with an independent and objective
analysisassessment of
all elementseach element of compensation
(individually and
in the aggregate)total target compensation relative to market and peer group
practices. An assessmentpractices and of the pay mix and the pay for performance
relationship were also presented to the ECC.relationship.
In developing a market composite for its compensation review, Meridian used data from the (1) public company proxy peer group and (2) published compensation surveys. Meridian developed
thea proposed peer group using objective parameters that reflect financial corporations of similar size
(assets between $2B and $10B; approximately half to two times the Corporation’s asset size when the peer group was developed), geographic region and business model (factors that influence NEO compensation in the banking industry).
Meridian excluded financial corporations in large metropolitan areas as they are not similar to the Corporation. The ECC
reviewed and approved the peer
group.group as developed and recommended by Meridian. The peer group is reviewed and updated as appropriate, since the comparable financial corporations may change depending on acquisitions and the business focus of the Corporation or our peer institutions. Overall, the goal is to have 15 to 25 comparative financial corporations that approximate
ourthe Corporation’s asset size and region and provide a market perspective for NEO total compensation.
The following
seventeentwenty financial corporations
comprisecomprised the
2022 peer group:
| | | | | |
Access National Corporation
Peer Group Company | | Howard Bancorp, Inc.
| | Southern National Bancorp of Virginia
Ticker Symbol |
Park National | PRK |
| First Commonwealth | FCF |
| S&T Bancorp | STBA |
| Tompkins Financial | TMP |
| Premier Financial | PFC |
| Univest Financial | UVSP |
| City Holding Company | CHCO |
| Republic First Bancorp | FRBK |
| Financial Institutions | FISI |
| Peoples Bancorp | PEBO |
| Carter Bankshares | CARE |
Arrow Financial Corporation | AROW |
| Mid Penn Bancorp | Lakeland Bancorp
MPB |
| Primis Financial | FRST |
| Farmers National | FMNB |
Summit Financial Group Inc. | SMMF |
City Holding Company
First Community | | Old Line Bancshares, Inc.
| | Tompkins Financial Corporation
FCBC |
FarmersAmerican National Banc Corp
| | Peoples Bancorp, Inc.
| | United Community Financial Corp.
AMNB |
Financial Institutions, Inc.
Civista Bancshares | | Peoples Financial Services Corp.
| | Univest Corporation of Pennsylvania
CIVB |
First Community Bancshares, Inc.
Peoples Financial | | Republic First Bancorp, Inc.
| | PFIS |
2019
2022 Compensation Program and Pay Decisions
The Corporation’s compensation program consists of four elements: base salary, annual incentives,
long-term/stock-based compensation,long-term incentives (equity), and benefits. The following section summarizes the role of each element, how decisions are made and the resulting
20192022 decision process as it relates to our NEOs.
The Corporation believes that a competitive base salary is essential to hire and retain our NEOs. To that end, the Corporation aims to provide competitive fixed pay related to the role and contribution of the NEO.
The ECC uses the benchmark data provided by Meridian as a reference when setting the base salary of each NEO. The ECC targets
marketa range around the peer group median but considers each NEO’s specific role, experience, contribution and performance in determining base salaries.
22
In December of each year, the ECC reviews and sets each NEO’s base salary for the following calendar year to reflect competitive market conditions, individual experience, expertise and performance. The ECC considers input from the Corporation’s CEO when setting the base salaries of the other NEOs, but is solely responsible for determining the CEO’s base salary.
In December 2018,2021, the ECC reviewed the NEOs’ base salaries against the market range for each position and the relative salaries of the executive team, as well as competitive market data, individual performance and contributions. Salary adjustments for 20192022 were made for the NEOs in December 2018,2021, to ensure compensation for the NEOs continues to be in line with market practice and recognize executive performance and contribution.
The
20192022 salary adjustments were as follows:
| | | | | | | | | | | | |
NEO | | Title | | 2018 Salary | | % Increase | | | 2019 Salary | |
Joseph B. Bower, Jr. | | President & Chief Executive Officer | | $572,000 | | | 3% | | | $ | 590,000 | |
Tito L. Lima | | Executive V.P. & Chief Financial Officer | | N/A | | | — | | | $ | 250,000 | |
Richard L. Greslick, Jr. | | Senior Executive V.P. & Chief Support Officer | | $283,000 | | | 8% | | | $ | 305,000 | |
Mark D. Breakey | | Former Senior Executive V.P. & Chief Credit Officer | | $250,000 | | | 6% | | | $ | 264,000 | |
Joseph E. Dell, Jr. | | Senior Executive V.P. & Chief Commercial Banking Officer | | $270,000 | | | 7% | | | $ | 288,000 | |
Brian W. Wingard | | Former Executive V.P. & Chief Financial Officer | | $252,000 | | | 3% | | | $ | 260,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| NEO | | Title | | 2021 Salary
($) | | %
Increase | | 2022 Salary
($) |
| Michael D. Peduzzi | | President & Chief Executive Officer (1) | | 475,000 | | 5% | | 500,000 |
| Joseph B. Bower, Jr. | | Former President & Chief Executive Officer (1) | | 644,000 | | 5% | | 678,000 |
| Tito L. Lima | | Senior Executive V.P. & Chief Financial Officer and Treasurer | | 275,000 | | 9% | | 300,000 |
| Richard L. Greslick, Jr. | | Senior Executive V.P. & Chief Operational Officer and Secretary | | 330,000 | | 8% | | 356,500 |
| Martin T. Griffith (2) | | Senior Executive V.P. & Chief Banking Officer | | 283,667 | | 15% | | 325,000 |
| Leanne D. Kassab | | Senior Executive V.P. & Chief Experience Officer and Assistant Secretary | | 230,000 | | 12% | | 257,500 |
(1) Mr. Bower retired from his capacity as President and Chief Executive Officer, effective December 31, 2022 and Mr. Peduzzi became President and Chief Executive Officer, effective December 31, 2022.
(2) Mr. Griffith was promoted to a new corporate level position in September 2021, which was the primary driver of the salary increase in 2022.
The primary objective of our annual incentive program is to motivate and reward key members of management for achieving specific corporate, department, and individual goals that support our strategic plan. Through our
20192022 NEO Incentive Plan, we offer a select group of key executives, including the NEOs, whose efforts largely determine the achievement of corporate goals and objectives, an annual cash incentive opportunity. For each NEO, there are also team-based objectives that are measured using absolute metrics.
Each NEO has a target opportunity based on his
or her position at the Corporation and competitive market data provided by Meridian.
Actual payouts can range from zero if performance does not result in any goals being achieved to 150% if stretch goals are achieved for all metrics. AAn NEO receives
a 50%
payoutof his or her incentive target opportunity for achieving
thresholdminimum performance
and agoals, 100%
payoutof target opportunity for achieving target
performance goals
and 150% of target opportunity for achieving stretch performance goals. If performance falls between minimum performance and target performance levels, there is no interpolation of payout percentages. If target performance levels have been exceeded, then the payout percentage of target opportunity is interpolated between target and stretch performance levels. If the minimum performance goal has not been achieved with
interpolation among therespect to a performance
categories once the threshold has been met. | | | | | | | | | | |
NEO | | Title | | Incentive Target
(% of Base Salary) | | | Incentive Target
($) | |
Joseph B. Bower, Jr. | | President & Chief Executive Officer | | | 40% | | | $ | 236,000 | |
Tito L. Lima | | Executive V.P. & Chief Financial Officer | | | 35% | | | $ | 88,000 | |
Richard L. Greslick, Jr. | | Senior Executive V.P. & Chief Support Officer | | | 35% | | | $ | 107,000 | |
Mark D. Breakey | | Former Senior Executive V.P. & Chief Credit Officer | | | 35% | | | $ | 93,000 | |
Joseph E. Dell, Jr. | | Senior Executive V.P. & Chief Commercial Banking Officer | | | 35% | | | $ | 101,000 | |
Brian W. Wingard | | Former Executive V.P. & Chief Financial Officer | | | 35% | | | $ | 91,000 | |
23
goal, then no payout would be earned with respect to that performance goal.
| | | | | | | | | | | | | | | | | | | | |
| NEO | | Title | | 2022 Incentive Target Opportunity
(% of Base Salary) | | 2022 Incentive Target Opportunity
($) |
| Michael D. Peduzzi | | President & Chief Executive Officer (1) | | 35% | | 175,000 |
| Joseph B. Bower, Jr. | | Former President & Chief Executive Officer (1) | | 40% | | 271,200 |
| Tito L. Lima | | Senior Executive V.P. & Chief Financial Officer and Treasurer | | 35% | | 105,000 |
| Richard L. Greslick, Jr. | | Senior Executive V.P. & Chief Operational Officer and Secretary | | 35% | | 124,775 |
| Martin T. Griffith | | Senior Executive V.P. & Chief Banking Officer | | 35% | | 113,750 |
| Leanne D. Kassab | | Senior Executive V.P. & Chief Experience Officer and Assistant Secretary | | 35% | | 90,125 |
(1) Mr. Bower retired from his capacity as President and Chief Executive Officer, effective December 31, 2022 and Mr. Peduzzi became President and Chief Executive Officer, effective December 31, 2022.
The performance measures and goals are selected and approved by the ECC at the beginning of each year. For 2019,2022, the ECC selected Return on Equity (“ROE”), deposit growth(1) fully-diluted EPS; (2) Commercial loan revenue; and growth in households as key indicators of our performance(3) Mortgage, home equity, and execution of our strategic plan.consumer loan growth; (4) Efficiency Ratio; and (5) Wealth & Asset Management fees. Actual performance iswas assessed and the resulting incentive payouts were determined in February 2020.2023. The tableperformance measures selected by the ECC were based on providing management and the Corporation’s staff at large with incentives that are closely aligned with the interests of our shareholders. The ECC believes the execution on these metrics leads to increased shareholder value. Efficiency Ratio is calculated from non-interest expense, less core deposits intangible amortization, divided by the sum of non-interest income and net interest income, adjusted to include the tax equivalent income on tax exempt income from investments and loans.
The tables below summarizes the performance measures, goals and actual performance achieved. As a resultand the percentage of its strong performance in 2019,target opportunity achieved for (i) Mr. Bower and (ii) for each other NEO.
Joseph B. Bower, Jr. – Former President & Chief Executive Officer:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performance Measure | Performance Goal | | 2022 Actual Performance |
| Weight | | Minimum | | Target | | Stretch | | Incentive
Target
Opportunity % | | Performance | | Actual
Incentive % |
| Fully-Diluted EPS | 30 | % | | $ | 3.10 | | | $ | 3.18 | | | $ | 3.34 | | | 12.00% | | $ | 3.26 | | | 15.03% |
Commercial Loan Revenues (1) | 30 | % | | $ | 117,367 | | | $ | 120,377 | | | $ | 126,395 | | | 12.00% | | $ | 139,257 | | | 18.00% |
Mortgage, Home Equity, and Consumer Loans (1) | 10 | % | | $ | 1,158,202 | | | $ | 1,187,899 | | | $ | 1,247,294 | | | 4.00% | | $ | 1,305,288 | | | 6.00% |
| Efficiency Ratio | 20 | % | | 62.53 | % | | 61.31 | % | | 59.47 | % | | 8.00% | | 60.87 | % | | 8.94% |
| Wealth & Asset Management Fees | 10 | % | | $ | 7,414 | | | $ | 7,900 | | | $ | 8,295 | | | 4.00% | | $ | 7,172 | | | 0.00% |
| TOTAL | 100 | % | | | | | | | | 40.00% | | | | 47.97% |
(1) In thousands
Remaining NEOs:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performance Measure | Performance Goal | | 2022 Actual Performance |
| Weight | | Minimum | | Target | | Stretch | | Incentive
Target
Opportunity % | | Performance | | Actual
Incentive % |
| Fully-Diluted EPS | 30 | % | | $ | 3.10 | | | $ | 3.18 | | | $ | 3.34 | | | 10.50% | | $ | 3.26 | | | 13.17% |
Commercial Loan Revenues (1) | 30 | % | | $ | 117,367 | | | $ | 120,377 | | | $ | 126,395 | | | 10.50% | | $ | 139,257 | | | 15.75% |
Mortgage, Home Equity, and Consumer Loans (1) | 10 | % | | $ | 1,158,202 | | | $ | 1,187,899 | | | $ | 1,247,294 | | | 3.50% | | $ | 1,305,288 | | | 5.25% |
| Efficiency Ratio | 20 | % | | 62.53 | % | | 61.31 | % | | 59.47 | % | | 7.00% | | 60.87 | % | | 7.82% |
| Wealth & Asset Management Fees | 10 | % | | $ | 7,414 | | | $ | 7,900 | | | $ | 8,295 | | | 3.50% | | $ | 7,172 | | | 0.00% |
| TOTAL | 100 | % | | | | | | | | 35.00% | | | | 41.99% |
(1) In thousands
Based on the
Corporation’s overall payout was 113%ratio of
target. | | | | | | | | | | | | | | | | | | | | | | | | |
Performance Measure | | | | | Performance Goal | | | 2019 Actual Performance | |
| | Weight | | | Threshold | | | Target | | | Stretch | | | Performance | | | Performance Factor | |
ROE to budget | | | 40% | | | | 13.46% | | | | 13.95% | | | | 14.50% | | | | 14.09% | | | | 113% | |
Deposit growth | | | 30% | | | $ | 157 million | | | $ | 261 million | | | $ | 392 million | | | $ | 492 million | | | | 150% | |
Efficiency Ratio | | | 30% | | | | 61.15% | | | | 60.00% | | | | 59.00% | | | | 60.07% | | | | 75% | |
TOTAL | | | 100% | | | | | | | | | | | | | | | | | | | | 113% | |
The ECC considers asset quality as a potential negative adjustmentnet charge-offs to theaverage loans, incentive awards. Payouts werepayouts are subject to a reduction in incentives earned if the Corporation’s ratio of net chargeoffs to average loans (excluding the Corporation’s Holiday Financial Subsidiary) exceedsaccordance with the following thresholds:
| | | | |
CNB Bank net chargeoffs / Average CNB Bank loans | | Incentive percentage forfeited | |
0.20% | | | 25% | |
0.25% | | | 50% | |
0.30% | | | 75% | |
0.34% | | | 100% | |
Duringtable:
| | | | | | | | |
| CNB Bank net charge-offs / Average CNB Bank loans | | Percentage of Incentive Award Forfeited |
| 0.20% | | 10% |
| 0.25% | | 20% |
| 0.30% | | 30% |
| 0.34% | | 50% |
Loan charge-offs significantly in excess of 34 basis points could affect the payout of the total incentive based on the facts and circumstances surrounding the loss, subject to the recommendation of the President and CEO, and review by the ECC and full Board.
For the year ended December 31,
2019,2022, the
Corporation’sCNB Bank’s ratio of net
chargeoffscharge-offs to average loans was
(excluding the Corporation’s Holiday Financial subsidiary) 0.18%0.02%. As a result, no incentive reductions for the NEOs were required under the
20192022 NEO Incentive Plan.
The following table summarizes the
payouts awardedactual incentive award earned by each NEO for 2022 (with such incentives paid to the
NEOs for 2019: | | | | | | | | | | | | | | |
NEO | | Title | | Incentive
Payout ($) | | | Incentive Payout
as % of Target | | | Incentive Payout as
% of Base Salary | |
Joseph B. Bower, Jr. | | President & Chief Executive Officer | | $ | 265,715 | | | | 113% | | | | 45% | |
Tito L. Lima | | Executive V.P. & Chief Financial Officer | | $ | 49,540 | (1) | | | 113% | | | | 40% | |
Richard L. Greslick, Jr. | | Senior Executive V.P. & Chief Support Officer | | $ | 120,472 | | | | 113% | | | | 39% | |
Mark D. Breakey | | Former Senior Executive V.P. & Chief Credit Officer | | $ | 104,710 | | | | 113% | | | | 40% | |
Joseph E. Dell, Jr. | | Senior Executive V.P. & Chief Commercial Banking Officer | | $ | 113,717 | | | | 113% | | | | 39% | |
Brian W. Wingard | | Former Executive V.P. & Chief Financial Officer | | $ | — | (2) | | | N/A | | | | N/A | |
(1) | The incentive payout and base salary for Mr. Lima were prorated for 2019, based on his hire date with the Corporation.
|
(2) | Mr. Wingard retired from the Corporation, effective June 30, 2019. As a result, he did not receive an incentive payout for 2019.
|
Tito L. Lima
respective executives in February 2023):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| NEO | | Title | | 2022 Incentive
Payout
($) | | 2022 Incentive Payout
as % of Target | | 2022 Incentive Payout as % of Base Salary |
| Michael D. Peduzzi | | President & Chief Executive Officer (1) | | 209,950 | | 120.0% | | 41.99% |
| Joseph B. Bower, Jr. | | Former President & Chief Executive Officer (1) | | 325,237 | | 120.0% | | 47.97% |
| Tito L. Lima | | Senior Executive V.P. & Chief Financial Officer and Treasurer | | 125,970 | | 120.0% | | 41.99% |
| Richard L. Greslick, Jr. | | Senior Executive V.P. & Chief Operational Officer and Secretary | | 149,694 | | 120.0% | | 41.99% |
| Martin T. Griffith | | Senior Executive V.P. & Chief Banking Officer | | 136,468 | | 120.0% | | 41.99% |
| Leanne D. Kassab | | Senior Executive V.P. & Chief Experience Officer and Assistant Secretary | | 108,124 | | 120.0% | | 41.99% |
(1)Mr. Lima joined the Corporation on July 1, 2019, with his compensationpro-rated for his time served as the Executive Vice President, Chief Financial Officer and Treasurer of the Corporation. Compensation decisions for Mr. Lima include:Base Salary set at $250,000;
Non-equity incentive plan as discussed above;
Annual equity awards set at levels commensurate with his role as CFO to be allocated at 50% performance equity awards and 50% time-based equity awards.During 2019, Mr. Lima did not receive any incentive equity awards based on the timing of his joining the Corporation;
Mr. Lima received an upfront equity award with an approximate value of $26,450, granted in the form of 1,000 time-based shares that will vest 25% each year, on the first four anniversaries of the grant date. Mr. Lima’ssign-on equity award is excluded from the Long-Term Incentive chart above.
24
Brian W. Wingard
Mr. WingardBower retired from the Corporation,his capacity as President and Chief Executive Officer, effective June 30, 2019. As a result, his base salaryDecember 31, 2022 and incentive equity award were prorated for the duration of his service with the Corporation.
Mr. Peduzzi became President and Chief Executive Officer, effective December 31, 2022.
We believe that our NEOs should be invested in the Corporation and share
in the
same risks and rewards
of allas our shareholders. The purpose of the
Corporation’s stock-based component of the executive compensationlong-term incentive program is to align
the interests of the NEOs with the long-term interests of the Corporation and
our shareholders, encourage stock ownership and enhance our ability to retain top performers.
The
20192022 Long-Term Incentive Program (“LTIP”) consists of a combination of performance
unitsshares and time-based restricted stock. We believe it is important for
aour LTIP to include
aboth time-based
as well asand performance-based
component,components, to balance performance orientation of the performance shares with the retention orientation of time-based
shares, while providing the entire long-term incentive mix inshares. Also, our LTIP is comprised entirely of equity
and ensuringcompensation to ensure alignment with shareholders. Each NEO has a target long-term incentive opportunity that is defined as a percentage of base salary and that is positioned to be
conservatively competitive with the market median of the
our compensation peer group.
The CEOMr. Bower received
60% performance shares and 40%100% time-based restricted stock
due to his planned retirement on December 31, 2022, while all other NEOs received their respective shares as a 50% / 50%
mix.mix between performance shares and time-based restricted stock.
Time-based
awards vestrestricted stock vests incrementally over three years (e.g.
1/3, one third per
year)year beginning on the first anniversary of grant) while performance
unitsshares cliff vest at the end of the three-year performance period based on the Corporation’s performance of EPS Growth and Return on Average Equity as compared to the
SNL US Bank $1 billion—$5S&P U.S. Small Cap Banks Index Constituents excluding Thrifts with assets between $2.5 billion
Index.and $10 billion as of the first trading day of the performance period. The metrics were selected to reflect performance goals that are aligned with
the enhancement of long-term shareholder value. The metrics are weighted equally with payouts ranging from 0% to 150% of target
dependentdepending on the Corporation’s ranking at the end of the three-year period (see below table for payout range).
PerformanceActual performance between threshold, target and stretch will be interpolated. The
payoutperformance shares will vest
three years followingafter the
date of issuance after an assessment ofperformance period and when relative performance,
is determined. | | | | | | | | |
Measure | | Weight | | Threshold | | Target | | Stretch |
Relative EPS Growth | | 50% | | 35th percentile | | 50th percentile | | 75th percentile or
greater |
Relative Return on Average Equity | | 50% | | 35th percentile | | 50th percentile | | 75th percentile or
greater |
Payout Range (% of Target) | | 100% | | 50% | | 100% | | 150% |
as compared to the Corporation’s proxy peer group results, are reviewed and approved by the ECC.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Measure | | Weight | | Threshold | | Target | | Stretch |
| Relative EPS Growth | | 50% | | 35th percentile | | 50th percentile | | 75th percentile or greater |
| Relative Return on Average Equity | | 50% | | 35th percentile | | 50th percentile | | 75th percentile or greater |
| Payout Range (% of Target) | | 100% | | 50% | | 100% | | 150% |
Decisions regarding the size of
stock-basedlong-term incentive awards are made by the ECC after careful consideration of corporate and individual performance, market data, retention considerations, impact on dilution, and existing equity holdings of each NEO. We
willdo not time or select the grant dates of any
stock-basedlong-term incentive awards in coordination with our release of material
non-public information, nor
willdo we have any program, plan or practice to do so. We believe that the strategy described above both aligns the interests of the NEOs and our shareholders and facilitates the retention of our NEOs.
The long-term incentive grants awarded to NEOs in February 2019 are summarized below.
| | | | | | | | | | | | | | | | |
NEO | | Restricted Stock Award –
Time Based
# of Shares | | | Restricted Stock Award –
Performance Based
# of Shares (1) | | | Total LTI Grant Value
Total Value (2) | | | % of Base
Salary | |
Joseph B. Bower, Jr. | | | 3,720 | | | | 5,580 | | | $ | 235,011 | | | | 40% | |
Tito L. Lima | | | — | | | | — | | | | — | | | | — | |
Richard L. Greslick, Jr. | | | 1,583 | | | | 1,583 | | | $ | 80,005 | | | | 26% | |
Mark D. Breakey | | | 989 | | | | 989 | | | $ | 50,009 | | | | 19% | |
Joseph E. Dell, Jr. | | | 1,088 | | | | 1,088 | | | $ | 54,988 | | | | 19% | |
Brian W. Wingard | | | 1,029 | | | | 1,092 | | | $ | 52,006 | | | | 20% | |
(1) | Number of shares at the Target measurement, which assumes a 100% payout range.
|
(2) | Total award value computed using the closing price on the date of the award multiplied by the number of shares awarded at the target measurement.
|
Long-term incentive grant values are determined based on a market range that is provided by Meridian, with adjustments made based on the Corporation’s performance and the individual NEO’s
performance.25
performance, role, contributions, and long-term potential with the Corporation.
Benefits
Table of Contents
The Corporationlong-term incentive grants made to NEOs in February 2022 are summarized below.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| NEO | | % of Base Salary | | Total LTI Grant Value
($) | | Restricted Stock Award – Time-Based # of Shares(1) | | Restricted Stock Award – Performance Based Target # of Shares(1) |
| Michael D. Peduzzi | | 10% | | 50,001 | | 936 | | 936 |
| Joseph B. Bower, Jr. | | 38% | | 261,010 | | 9,772 | | — |
| Tito L. Lima | | 20% | | 59,991 | | 1,123 | | 1,123 |
| Richard L. Greslick, Jr. | | 32% | | 115,013 | | 2,153 | | 2,153 |
| Martin T. Griffith | | 23% | | 75,002 | | 1,404 | | 1,404 |
| Leanne D. Kassab | | 21% | | 55,023 | | 1,030 | | 1,030 |
(1) The number of shares granted is determined by the grant value divided by the grant date closing price.
Benefits
CNB Bank maintains a 401(k) Savings Plan to
helpattract and retain employees and
provide forhelp them meet their
retirement.retirement goals. Further information is provided under “Retirement Plan.”
The Corporation and/or CNB Bank also maintains several non-qualified retirement plans. We believe that the Corporation’sthese non-qualified deferred compensation retirement plans are an important element in retaining NEOs, as well as helping them meet their retirement goals. We provide:
•Supplemental Executive Retirement Plan (“SERP”) – Each of Messrs. Peduzzi, Bower and Greslick participate in a defined benefit SERP, which is designed to provideattract and retain qualified and experienced executive officers. Each SERP is embodied in an agreement between CNB Bank and the respective NEO. The narrative that follows the “Pension Benefits” table below contains a detailed description of each SERP.
•Defined Contribution Plan – Effective as of January 2, 2022, Mr. Lima and Ms. Kassab participate in a defined contribution plan pursuant to which the Corporation will contribute an amount to the plan each year, on January 1st, until the respective NEO’s service with the Corporation terminates, equal to 20% of Mr. Lima’s and 35% of Ms. Kassab’s annual base salary. The plan is embodied in an agreement between the Corporation and the respective NEO. The narrative that follows the “Nonqualified Deferred Compensation” table below contains a detailed description of each defined contribution plan.
•Executive Deferred Compensation Plan – Each NEO can participate in this plan, which allows them to defer up to 75% of base compensation and 100% of annual incentive compensation until a date in the future. If 100% of incentive compensation is deferred, the executive is responsible for retirement. For that reason, we provide: | • | | The Supplemental Executive Retirement Plan (“SERP”) – Certain NEOs participate in a SERP, which is designed to attract and retain qualified and experienced executive officers. Each SERP is embodied in an agreement between the Bank and the respective NEO. The narrative that follows the “Pension Benefits” table below contains a detailed description of the SERP.
|
| • | | The Executive Deferred Compensation Plan – NEOs can participate in this plan, which allows them to defer up to 75% of base compensation and 100% of annual incentive compensation until a date in the future, typically upon termination of employment. If 100% of incentive compensation is deferred, the executive is responsible for payment of applicable payroll taxes. At the election of the plan participant, all or a portion of the deferrals can be “deemed” to be invested in Corporation common stock, and the proportionate value of a participant’s account generally tracks the performance of the Corporation’s common stock. The Corporation provides no inducement (match or discretionary contribution) for NEOs who participate but believes that having this “phantom stock” option available helps align the interest of participants with that of shareholders by focusing on the Corporation’s long-term performance.
|
payment of applicable payroll taxes. The Corporation provides no inducement (match or discretionary contribution) for NEOs to participate.
The Corporation provides certain NEOs with perquisites that the ECC believes are reasonable and consistent with its overall compensation philosophy and consistent with standards that are customary in the financial services industry. Specifically, the Corporation provides each of Messrs.
DellPeduzzi, Bower, Lima, Greslick, and
GreslickGriffith and Ms. Kassab the option to the use of a vehicle as well as payment of club dues, both of which are included in
taxable income. Prior to their respective retirements, the Corporation also provided payment of club dues for each of Messrs. Breakey and Wingard, which were included in in their taxable income. The ECC believes that these perquisites assist the NEOs in the performance of their respective job duties by providing greater opportunities to develop and expand business contacts.
The ECC believes that the Corporation’s continued success depends, to a significant degree, on the skills and competence of certain members of our executive management team. The Corporation and the Bank have entered into executive employment contracts with Messrs.
Peduzzi, Bower,
andLima, Greslick, and
prior to his retirement, Mr. Wingard,Griffith and
the Bank has entered into executive employment contracts with Mr. Dell and, prior to his retirement, Mr. BreakeyMs. Kassab (collectively, the “Employment Contracts”). These Employment Contracts are intended to ensure that the Corporation and the Bank will continue to maintain and retain experienced executive management.
The Corporation, the Bank and Mr. Bower entered into a new Employment Contract on October 24, 2019, with
thean initial term expiring on December 31, 2022. Thereafter, Mr. Bower’s Employment Contract
would have renewed automatically for successive 12-month periods unless terminated by either party upon 120 days’ written notice. On February 9, 2022, the Corporation announced Mr. Bower's retirement, effective December 31, 2022, from his position as President and Chief Executive Officer of the Corporation and retirement, effective July 1, 2022, from his position as Chief Executive Officer of CNB Bank. The Corporation, the Bank and Mr. Peduzzi entered into an Employment Contract on October 22, 2021, with the initial term expiring on December 31, 2024. Thereafter, Mr. Peduzzi’s Employment Contract renews automatically for successive
12-month periods unless terminated by either party upon 120 days’ written notice. The Employment Contracts for Messrs.
Lima, Greslick, and
DellGriffith and
prior to their respective retirements, Messrs. Breakey and Wingard, provide that the respective contractsMs. Kassab shall automatically renew for successive terms of one year unless either party gives the other party ninety days written notice of intent not to renew the contract prior to the end of the then-current term.
The current terms of the Employment Contracts for Messrs. Greslick and Dell expire on December 31, 2019. Messrs. Wingard and Breakey retired from the Corporation in 2019, effective June 30, 2019 and December 31, 2019, respectively.The Employment Contracts provide for a base salary to be established annually by the Board and for annual increases, stock, stock options/rights and bonuses as may from time to time be awarded by the Board.
The Employment Contracts also provide certain fringe benefits, including a family country club membership for each of Messrs. Breakey (prior to his retirement), Greslick, Wingard (prior to his retirement) and Dell, as well as an automobile for each of Messrs. Greslick and Dell. Each Employment Contract contains a covenant not to compete against the Corporation and the Bank, their parent, affiliates or subsidiaries during the term of employment and thereafter until the earlier of (i) the third anniversary of the executive’s termination of employment or (ii) the date of a change in control of the Corporation or the Bank. In addition, each Employment Contract contains a covenant to protect the Corporation’s and the Bank’s confidential information.
The Employment Contracts also provide for severance payments in the event
aan NEO is terminated without
cause,“cause” (as such term is defined in the Employment Contracts) regardless of whether such termination is in connection with a change
ofin control, or voluntarily terminates employment under certain specific
“good reason” circumstances following a change
ofin control. Such
“good reason” circumstances include a reduction in title or responsibilities, assignment of duties or responsibilities inconsistent with current responsibilities, a reduction in salary or other benefits, and reassignment to a location greater than 25 miles from the current location. Following such a termination of employment,
(a) Messrs.
Greslick and Bower
and Greslick26
will each be entitled to receive a lump sum cash payment equal to 2.99 times the sum of (i) his base salary forplus (ii) the year in which his employment endsaverage incentive bonus paid over the preceding three-year period, (b) Messrs. Peduzzi, Lima, and Mr. DellGriffith will be entitled to receive a lump sum cash payment equal to 2.50 times the sum of (i) his base salary, forplus (ii) the year in which his employment ends. As discussed above, Messrs. Breakeyaverage incentive bonus paid over the preceding three-year period, and Wingard retired from the Corporation, effective December 31, 2019 and June 30, 2019, respectively. Prior(c) Ms. Kassab will be entitled to their respective retirements, Messrs. Breakey and Wingard would each have receivedreceive a lump sum cash payment equal to 2.50 times their respective salaries. Messrs. Bower and Greslick will be entitled to receive a payment in the amountsum of 2.99 times(i) her average base salary over the preceding five-year period, plus (ii) the average incentive bonus paid over the preceding three-yearfive-year period. Mr. DellAdditionally, accelerated vesting of outstanding time-based unvested restricted stock awards will be entitledoccur and restrictions will lapse. Outstanding performance-based awards will vest and restrictions will lapse, prorated by the number of full months from award date to receive a paymentthe change in control or termination without cause date, and the amountdenominator of 2.50 times the average incentive bonus paid over the preceding three-year period. Messrs. Breakey and Wingard would each have been entitled to receive a payment in the amount of 2.50 times the average incentive bonus paid over the preceding three-year period. The potential payments that would have occurred assuming a change of control event at December 31, 2019 were $2,438,227 for Mr. Bower, $0 for Mr. Lima, $1,251,508 for Mr. Greslick, $950,194 for Mr. Dell and $890,981 for Mr. Breakey (given his employment was effective until December 31, 2019). With respect to Mr. Wingard, prior to his retirement, he would have received $780,074 under such circumstances. Upon their retirements, Mr. Breakey and Mr. Wingard each received a payment of $30,462 and $10,000, respectively, in accordancewhich equals 36, with the Corporation’s Personnel Policy.
performance goals measured as of the most recently completed fiscal quarter.
Cash and benefits paid to a NEO under the Employment Contracts together with payments under other benefit plans following a change
ofin control may constitute an “excess parachute” payment under Section 280G of the Code, resulting in the imposition of a 20% excise tax on the recipient and the denial of the deduction for such excess amounts to the Corporation or the Bank. If amounts payable to the NEO would be excess parachute payments, then the NEO’s severance benefits will be reduced to that amount that would result in no portion being an excess parachute payment unless payment of the full severance amount would result in the executive receiving an amount equal to or greater than 110% of the reduced amount on an
after-tax basis. The Employment Contracts do not provide for tax indemnity for any such potential excise taxes that may be due by the NEOs.
Impact of Accounting and Tax
The ECC and our executive management team consider the accounting and tax (individual and corporate) consequences of the compensation plans prior to making changes to the plans.
Section 162(m) of the Internal Revenue Code prohibits publicly held companies from deducting annual compensation in excess of $1,000,000, for U.S. federal income tax purposes, paid to the CEO and all other NEOs
(and certain former NEOs) in any one fiscal year. While the ECC recognizes the importance of tax deductibility and endeavors to formulate its compensation program in a
tax-effective manner, it also believes it is critical to balance tax deductibility with ensuring that the Corporation’s programs are designed appropriately to recognize and reward executive performance, such that at times current tax deductibility limits may be exceeded.
The ECC has considered the impact of the Financial Accounting Standards Board ASC Topic 718
(formerly known as FASB Statement 123R) on the Corporation’s equity incentives as a key retention tool.
In 2014, the Board adopted
certain stock ownership guidelines (the “Executive Stock Ownership Guidelines”) for executive officers of the Corporation and CNB Bank and our regional bank
presidents because thepresidents. The Board believes that
it is important for the Corporation’s future success thata certain level of stock ownership of senior management
own and hold a minimum number of shares of common stock of the Corporation in order to further
alignaligns their interests and actions with the interests of the Corporation’s shareholders. The Executive Stock Ownership Guidelines require
Mr. Peduzzi, and prior to his retirement, Mr. Bower, in his capacity as CEO, to own at all times during the period of his employment a number of shares of the Corporation’s common stock with a market value equal to 300% or more of his then-base salary. All other executive officers of the Corporation and CNB Bank and our regional bank presidents are required to own at all times during the period of their employment a number of shares of the Corporation’s common stock with a market value equal to 150% or more of the executive’s then-base salary. The Executive Stock Ownership Guidelines provide that until a person subject to the Executive Stock Ownership Guidelines achieves full compliance with such guidelines, the person may not dispose of any shares
of restricted common stock that vest,received from the equity compensation, other than for tax purposes. The Executive Stock Ownership Guidelines are administered and enforced by the ECC, and compliance is monitored and reported to the ECC by the Corporation’s CEO.
Hedging
and Pledging Policy
All directors and employees of the Corporation are prohibited from engaging in any speculative transaction designed to hedge or offset any decrease in the market value of the Corporation’s securities, including hedging
and/or pledging of the Corporation’s common stock. Effective August 11, 2015, the Corporation also prohibited any pledging of the Corporation’s securities in a margin account and restricted all other pledging of the Corporation’s securities by requiring directors and employees to obtain prior approval of the CSO before entering into any such agreement. Corporation securities that were pledged as of August 11, 2015 as collateral for a loan are grandfathered and may continue to be pledged until released pursuant to the terms of relevant agreements.
27
Clawback/Recoupment Policy
The Board adopted a clawback policy
on the recoupment offor incentive compensation. The policy provides that the ECC may, in its sole discretion, subject to the terms of the policy and to the extent legally permitted, require the return, repayment, or forfeiture of any annual or long-term incentive compensation payment or award made or granted to any current or former executive officer during the three-year period preceding a triggering event. A triggering event is defined as restatement of previously reported financial statements due to the material noncompliance with any financial reporting requirement under the securities laws or misconduct by an executive officer.
The Corporation is analyzing the new clawback rules proposed by NASDAQ and will make any necessary amendments to the clawback policy in advance of the compliance deadline.
Reducing the Possibility of Excess Risk-Taking
The ECC has determined that the risks arising from the compensation policies and practices for
employeesexecutives of the Corporation are not reasonably likely to have a material adverse effect on the Corporation as a whole.
Several features of the Corporation’s cash and stock-based incentive program reduce the likelihood of excessive risk-taking:
•The program design provides a balanced mix of cash and equity, annual and long-term incentives.
•We set performance goals that we believe are reasonable in light of past performance and market conditions.
•We include both absolute performance goals and relative performance goals in our annual bonus program in order to appropriately balance risk/reward when developing strategic goals.
•Our annual bonus program limits individual payout amounts to 150% of the target payout amounts.
•Equity grants typically vest over a three-year period to encourage our NEOs to maintain a long-term perspective.
The program includes•We have a clawback feature for the recoupment ofpolicy which allows us to recoup any cash and/or equity annual or long-term incentive compensation payment.
payouts for a triggering event.•Our NEOs are subject to certain stock ownership guidelines, as discussed above, which we believe align our NEOs’ interests with the interests of our shareholders.
•We use restricted stock because restricted stock retains value even in a depressed market and NEOs will be less likely to take unreasonable risks to get, or keep, options“in-the-money. “in-the-money.”
•The ECC has downward discretion over the annual incentive program and long-term incentive payouts.
•For compensation benchmarking purposes, we employ an appropriate peer group derived from a standardized process.
28
•We retain an independent compensation consultant who keeps the ECC aware of market trends and best practices.
COMPENSATION COMMITTEE REPORT
The ECC met with management to review and discuss the Compensation Discussion and Analysis disclosures in this Proxy Statement. Based on such review and discussion, the ECC recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Corporation’s Annual Report on Form
10-K for the fiscal year ending December 31,
2019,2022, and the Corporation’s Board has approved that recommendation.
Submitted by the Executive Compensation Committee:
Richard B. Seager, Chairperson Peter F. Smith Robert W. Montler Deborah Dick Pontzer Jeffrey S. Powell Nicholas N. Scott
29
| | | | | | | | |
| Michael Obi, Chairperson | Peter F. Smith | Jeffrey S. Powell |
| Deborah Dick Pontzer | Julie Young | Nicholas N. Scott |
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table shows,presents, for the three years 2019, 2018,ended December 31, 2022, 2021, and 2017,2020, the cash compensation paid by the Corporation and its subsidiaries, as well as certain other compensation paid or accrued for those years, to each of the principalCorporation’s named executive officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | Year | | Salary
($) | | Restricted Stock Awards(1) ($) | | Non-Equity Incentive Plan Compensation(2) ($) | | Change in Pension Value & Nonqualified Deferred Compensation Earnings(3) ($) | | All Other Compensation(8) ($) | | Total
($) |
Michael D. Peduzzi , (5) | 2022 | | 500,000 | | 50,001 | (7) | 209,950 | | 278,205 | | 72,333 | | 1,110,489 |
President and Chief Executive Officer of the Corporation;
Chief Executive Officer of CNB Bank
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
Joseph B. Bower, Jr., (5) | 2022 | | 678,000 | | 261,010 | (7) | 325,237 | | 902,701 | (4) | 265,623 | | 2,432,571 |
Former President and Chief Executive Officer of the Corporation;
Former Chief Executive Officer of CNB Bank
| 2021 | | 644,000 | | 272,400 | | 296,760 | | 1,760,834 | (4) | 54,555 | | 3,028,549 |
| 2020 | | 623,000 | | 347,079 | | 120,625 | | 467,045 | | 50,671 | | 1,608,420 |
| Tito L. Lima | 2022 | | 300,000 | | 59,991 | (7) | 125,970 | | 1,086 | | 128,841 | | 615,888 |
Principal Financial Officer and
Treasurer of the Corporation; Senior Executive Vice President and Chief Financial Officer of CNB Bank
| 2021 | | 275,000 | | 56,250 | | 97,175 | | — | | 53,493 | | 481,918 |
| 2020 | | 262,000 | | 37,504 | | 44,390 | | — | | 53,840 | | 397,734 |
| Richard L. Greslick, Jr. | 2022 | | 356,500 | | 115,013 | (7) | 149,694 | | 79,948 | | 52,767 | | 753,922 |
Secretary of the Corporation;
Senior Executive Vice President and Chief Operational Officer of CNB Bank
| 2021 | | 330,000 | | 106,250 | | 116,323 | | 92,790 | | 51,547 | | 696,910 |
| 2020 | | 320,000 | | 125,002 | | 54,040 | | 69,204 | | 49,808 | | 618,054 |
| Martin T. Griffith | 2022 | | 325,000 | | 75,002 | (7) | 136,468 | | — | | 56,509 | | 592,979 |
Senior Executive Vice President and
Chief Banking Officer of CNB Bank
| 2021 | | 283,667 | | 56,250 | | 112,697 | | — | | 52,154 | | 504,768 |
| 2020 | | 257,500 | | 62,482 | | 35,261 | | — | | 51,226 | | 406,469 |
Leanne D. Kassab (6) | 2022 | | 257,500 | | 55,023 | (7) | 108,124 | | 1,631 | | 127,984 | | 550,262 |
Assistant Secretary of the Corporation
Senior Executive Vice President and Chief Experience Officer of CNB Bank | | | | | | | | | | | | | |
(1) This column reflects shares of restricted stock awarded under the Corporation’s 2019 Stock Incentive Plan valued at the dollar amount recognized for financial reporting purposes in accordance with ASC Topic 718. The shares of restricted stock that remain subject to forfeiture entitle the NEO to all of the rights of a shareholder generally, including the right to vote the shares and receive any dividends that may be paid thereon. The shares of time based restricted stock awards vest in equal annual installments a three, four or five-year period. The shares of performance-based restricted stock performance awards cliff vest at the end of the three-year period. The shares continue to be subject to risk of forfeiture, which will lapse upon vesting.
(2) Amount represents annual cash incentive payments made under the Corporation’s Non-Equity Incentive Plan.
(3) Amount reflects the change in value of the Corporation’s non-qualified supplemental executive retirement plans with each of Messrs. Peduzzi, Bower, and Greslick. For Mr. Lima and Ms. Kassab, amounts represent above-market interest or earnings credited on deferred compensation under our Corporation’s nonqualified deferred compensation plans, as calculated pursuant to Item 402(c)(2)(viii)(B) of SEC Regulation S-K. For this purpose, interest or earnings on deferred compensation is above-market if the rate of interest exceeds 120% of the applicable federal long-term rate, with compounding at a rate that corresponds most closely to the rate under the applicable plan at the time the interest rate or formula is set. A discussion of the Corporation’s nonqualified deferred compensation plans is provided below in the subsection entitled Executive Defined Contribution Plan.
(4) The increase in pension value for 2021 and 2022 was the result of updates to actuarial assumptions used to calculate the value of pension benefits, specifically the change in expected date of retirement due to the announcement by Mr. Bower to retire in 2022.
(5) Mr. Peduzzi became CEO of CNB Bank on July 1, 2022 and President and CEO of the Corporation on December 31, 2022. Mr. Bower retired from his capacity as President and Chief Executive Officer of the Corporation, effective December 31, 2022.
(6) Ms. Kassab became an NEO for the first time for the 2022 calendar year.
(7) In 2022, all NEOs received performance-based restricted stock awards. The amount reported for the value of the awards is based on the aggregate compensation cost to be recognized over the three-year service period based on the most probable outcome, in accordance with ASC Topic 718. The amount reported above represents the value of the award at the grant date assuming that the target level of performance conditions would be achieved. Performance restricted stock awards granted in 2022 may pay out up to 150% of the target award, which would have amounted to the grant date fair values listed as the maximum total grant date fair value for each named executive officer as follows: Mr. Peduzzi, $62,501; Mr. Bower, $261,010; Mr. Lima, $74,988; Mr. Greslick, $143,767; Mr. Griffith $93,752 and Ms. Kassab, $68,778. We include the principalassumptions used in the calculation of these amounts in the footnotes to our audited financial officerstatements included in our respective Annual Report on Form 10-K for the fiscal years ended December 31, 2020, 2021 and 2022.
(8) Amounts stated in this column for 2022 include:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Profit Sharing
Contribution
($) | 401(k) Match
Contribution
($) | Company Contributions to Nonqualified Defined Contribution Plan (9) ($) | Life Insurance
Premiums
($) | Auto
Benefits
($) | Club Dues (10) ($) | Other Incentive (11) ($) | Moving Allowance (12) ($) | Retirement Benefit (13) ($) | Total
($) |
| Michael D. Peduzzi | 27,306 | 12,200 | — | 743 | 13,000 | — | — | 19,084 | — | 72,333 |
| Joseph B. Bower, Jr., | 27,306 | 12,200 | — | 2,153 | 11,598 | 8,539 | — | — | 203,827 | 265,623 |
| Tito L. Lima | 27,306 | 12,200 | 60,000 | 893 | 12,647 | 5,795 | 10,000 | — | — | 128,841 |
| Richard L. Greslick, Jr. | 27,306 | 12,200 | — | 470 | 7,831 | 4,960 | — | — | — | 52,767 |
| Martin T. Griffith | 27,306 | 12,200 | — | 1,156 | 1,548 | 14,299 | — | — | — | 56,509 |
| Leanne D. Kassab | 23,153 | 12,200 | 90,125 | 657 | — | 1,849 | — | — | — | 127,984 |
(9) Contributions by the next three highest paidCorporation to the Nonqualified Defined Contribution Plan as outlined in the benefits section for Mr. Lima and Ms. Kassab.
(10) It is the policy of the Corporation to pay dues to certain service and social organizations for the executive officers. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | | Salary
($) | | | Restricted
Stock Awards
($) (1) | | | Non-Equity
Incentive Plan
Compensation
($) (2) | | | Change in
Pension Value
& Nonqualified Deferred
Compensation Earnings
($) (3) | | | All Other
Compensation
($) (4) (5) | | | Total
($) | |
Joseph B. Bower, Jr., President and Chief Executive Officer of CNB Financial Corp. and CNB Bank | |
| 2019
2018 2017 |
| |
| 590,000
572,000 520,000 |
| |
| 352,517
269,200 259,200 | (6)
| |
| 265,715
285,867 124,800 |
| |
| 408,830
428,235 339,880 |
| |
| 47,583
47,211 46,740 |
| |
| 1,664,645
1,602,513 1,290,620 |
|
Tito L. Lima Principal Financial Officer and Treasurer of CNB Financial Corp.; Executive Vice President and Chief Financial Officer of CNB Bank | | | 2019 | | | | 125,000 | (7) | | | — | | | | 49,540 | | | | | | | | 368 | | | | 174,908 | |
Richard L. Greslick, Jr. Secretary of CNB Financial Corp.; Senior Executive Vice President and Chief Support Officer of CNB Bank | |
| 2019
2018 2017 |
| |
| 305,000
283,000 260,000 |
| |
| 99,993
81,245 50,000 | (6)
| |
| 120,472
142,222 78,000 |
| |
| 61,932
58,253 44,430 |
| |
| 48,227
48,246 44,951 |
| |
| 635,624
612,966 477,381 |
|
Mark D. Breakey Senior Executive Vice President and Chief Credit Officer of CNB Bank | |
| 2019
2018 2017 |
| |
| 264,000
250,000 235,000 |
| |
| 62,480
58,739 46,008 | (6)
| |
| 104,710
106,667 65,800 |
| |
| 223,554
163,404 134,676 |
| |
| 41,403
40,487 39,280 |
| |
| 696,147
619,297 520,764 |
|
Joseph E. Dell, Jr. Senior Executive Vice President and Chief Commercial Banking Officer of CNB Bank | |
| 2019
2018 2017 |
| |
| 288,000
270,000 253,000 |
| |
| 68,734
63,262 46,500 | (6)
| |
| 113,717
115,200 68,310 |
| |
| —
— — |
| |
| 45,392
44,168 44,135 |
| |
| 515,843
492,630 411,945 |
|
Brian W. Wingard Former Treasurer of CNB Financial Corp.; Executive Vice President and Chief Financial Officer of CNB Bank | |
| 2019
2018 2017 |
| |
| 135,000
252,000 240,000 | (8)
| |
| 64,994
60,005 46,008 | (6)
| |
| —
108,089 48,000 |
| |
| —
— — |
| |
| 33,049
36,888 36,136 |
| |
| 233,043
456,982 370,144 |
|
(11) The Board of Directors approved a discretionary incentive award of $10,000 to Mr. Lima, in recognition of his promotion to Senior Executive Vice President.
(12) Mr. Peduzzi received a moving allowance to assist with his relocation to the Central Pennsylvania area as part of his employment contract in the amount of $19,084, which was paid to him in 2022.
(13) Mr. Bower received $78,231 in severance at time of retirement. The Corporation has a policy which entitles employees and officers to receive six weeks of pay at time of retirement if he or she has more than twenty but less than thirty years of service. In addition, Mr. Bower's employment contract provides a post-retirement health insurance benefit for himself and his family for up to ten years after retirement. The present value of this future benefit was estimated to be $125,596 at time of retirement.
Pay Versus Performance
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | Summary Comp. Table Total for CEO - Michael D. Peduzzi (1) ($) | Summary Comp. Table Total for CEO - Joseph B. Bower, Jr. (2) ($) | Comp. Actually Paid to CEO - Michael D. Peduzzi (1) ($) | Comp. Actually Paid to CEO - Joseph B. Bower, Jr. (2) ($) | Average Summary Comp. Table Total for Non-CEO NEOs (3) ($) | Average Comp. Actually Paid to Non-CEO NEOs (3) ($) | Value of Initial Fixed $100 Investment Based On: | Net Income(5) ($) | Fully-Diluted Earnings Per Share
($) |
| TSR | Peer Group TSR (4) |
| | | | | | | | | | |
| 2022 | 1,110,489 | 2,432,571 | 1,117,076 | 1,612,982 | 628,263 | 625,017 | 79 | 100 | 63,188 | 3.26 |
| 2021 | | 3,028,549 | | 1,734,559 | 557,132 | 570,275 | 86 | 106 | 57,707 | 3.16 |
| 2020 | | 1,608,420 | | 1,107,862 | 470,922 | 402,368 | 67 | 77 | 32,743 | 1.97 |
(1) Mr. Peduzzi was appointed President and Chief Executive Officer, effective December 31, 2022.
(2) Mr. Bower retired from his position as President and Chief Executive Officer, effective December 31, 2022.
(3) For fiscal year 2022, the Corporation’s non-CEO NEOs were Tito L. Lima, Richard L. Greslick, Jr, Martin T. Griffith and Leanne D. Kassab. For fiscal years 2021 and 2020 the Corporation’s non-CEO NEOs were Tito L. Lima, Richard L. Greslick, Jr, Martin T. Griffith and Joseph E. Dell, Jr.
(4) The TSR peer group utilized is the same peer group disclosed in the Competitive Benchmarking section above.
(5) Presented in thousands
(6) Compensation actually paid (“CAP”) is defined by the SEC and is computed by starting with the “Total” column of the Summary Compensation Table (“SCT”) for each year and then:
•subtracting the amount in the “Restricted Stock Awards” column of the SCT for such year,
•adding, for all unvested equity awards granted during the reporting year and outstanding on the last day of the reporting year, the fair value as of the last day of the reporting year, utilizing the same assumptions as the Outstanding Equity Awards at 2022 Fiscal Year-End table below.
•adding, for all unvested equity awards granted prior to the reporting year and outstanding on the last day of the reporting year, the change in fair value from the last day of the preceding year to the last day of the reporting year, utilizing the same assumptions as the Outstanding Equity Awards at 2022 Fiscal Year-End table below.
•adding, for equity awards vesting during the reporting year, the change in fair value from the last day of the preceding year to the vesting date,
•adding the value of any dividends or other earnings paid in the reporting year on unvested equity awards that are not otherwise included in the total compensation for the reporting year,
•subtracting the amount in the “Change in Pension Value & Nonqualified Deferred Compensation Earnings” column of the SCT for such year, and
•adding, for all defined benefit and actuarial pension plans, (A) the service cost, calculated as the actuarial present value attributable to services rendered during the reporting year, plus (B) the prior service cost, calculated as the entire cost of benefits granted in a plan amendment during the reporting year that are attributed by the benefit formula to services rendered in periods prior to the amendment.
For this purpose, the fair value of equity awards is computed in a manner consistent with the fair value methodology used to report Outstanding Equity Awards at Fiscal Year-End. This may result in a difference in the share value input used for the fair value calculation at year-end when compared to the share value used for performance-based share awards at time of award. The following tables reflect the adjustments made to SCT total compensation to compute CAP for the position of CEO and average CAP for our other NEOs:
(1) | Reflects shares
| | | | |
| CEO SCT Total to CAP Reconciliation – Michael D. Peduzzi | 2022 |
| SCT Total Compensation | $ | 1,110,489 | |
| SCT Restricted Stock Awards | (50,001) | |
Fair Value of restricted stock awarded under the 2009 Stock Incentive Plan valued at the dollar amount recognized for financial reporting purposesNew Unvested Equity Awards | 55,669 | |
Change in accordance with ASC Topic 718. The sharesFair Value of restricted stock that remain subject to forfeiture entitle the NEO to allExisting Unvested Equity Awards | (6,306) | |
Change in Fair Value of the rights of a shareholder generally, including the right to vote the shares and receive any dividends that may be paid thereon. The shares of restricted stock awarded vest equally over a four-year period. The shares continue to be subject to risk of forfeiture, which will lapse upon vesting. Accelerated vesting will occur and restrictions will lapse in the event that certain change in control events or normal retirements occur.Vesting Equity Awards | (105) | |
(2)Dividends on Unvested Equity Awards | Amount represents cash payments made under the Corporation’sNon-Equity Incentive Plan.
2,488 | |
(3) | TheSCT Change in Pension Value reflects the change in value of the Corporation’snon-qualified supplemental executive retirement plan.
& Nonqualified Deferred Compensation Earnings | (278,205) | |
| Service Cost & Prior Service Cost | 283,047 | |
| CAP | $ | 1,117,076 | |
(4) | Amounts stated in this column for 2019 include:
|
30
| | | | | | | | | | | | | | | | | | | | |
| CEO SCT Total to CAP Reconciliation – Joseph B. Bower, Jr. | | 2022 | | 2021 | | 2020 |
| SCT Total Compensation | | $ | 2,432,571 | | | $ 3,028,549 | | $ 1,608,420 |
| SCT Restricted Stock Awards | | (261,010) | | | (272,400) | | (347,079) |
| Fair Value of New Unvested Equity Awards | | — | | | 286,041 | | 192,291 |
| Change in Fair Value of Existing Unvested Equity Awards | | — | | | 76,316 | | (156,339) |
| Change in Fair Value of Vesting Equity Awards | | 3,631 | | | 19,005 | | 45,515 |
| Fair Value of New Vested Equity Awards | | 232,476 | | | — | | | — | |
| Fair Value as of Prior Year-end of Equity Awards Forfeited | | (258,031) | | | — | | — |
| Dividends on Unvested Equity Awards | | 10,706 | | | 6,933 | | 4,842 |
| SCT Change in Pension Value & Nonqualified Deferred Compensation Earnings | | (902,701) | | | (1,760,834) | | (467,045) |
| Service Cost & Prior Service Cost | | 355,340 | | | 350,949 | | 227,257 |
| CAP | | $ | 1,612,982 | | | $ | 1,734,559 | | | $ | 1,107,862 | |
| | | | | | | | | | | | | | | | | | | | |
| Average Non-CEO NEOs SCT Total to CAP Reconciliation | | 2022 | | 2021 | | 2020 |
| SCT Total Compensation | | $ | 628,263 | | | $ | 557,132 | | | $ | 470,922 | |
| SCT Restricted Stock Awards | | (76,257) | | | (66,438) | | | (73,438) | |
| Fair Value of New Unvested Equity Awards | | 84,907 | | | 69,940 | | | 42,335 | |
| Change in Fair Value of Existing Unvested Equity Awards | | (11,407) | | | 15,104 | | | (31,109) | |
| Change in Fair Value of Vesting Equity Awards | | 2,085 | | | (969) | | | (3,771) | |
| Dividends on Unvested Equity Awards | | 1,971 | | | 2,000 | | | 1,766 | |
| SCT Change in Pension Value & Nonqualified Deferred Compensation Earnings | | (19,987) | | | (23,198) | | | (17,301) | |
| Service Cost & Prior Service Cost | | 15,442 | | | 16,704 | | | 12,964 | |
| CAP | | $ | 625,017 | | | $ | 570,275 | | | $ | 402,368 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Profit Sharing
Contribution ($) | | | 401(k) Match
Contribution ($) | | | Life Insurance
Premiums ($) | | | Auto Benefits
($) | | | Club Dues ($) | | | Total
($) | |
Joseph B. Bower, Jr., | | | 25,185 | | | | 11,200 | | | | 1,617 | | | | 5,329 | | | | 4,252 | | | | 47,583 | |
Tito L. Lima | | | — | | | | — | | | | 368 | | | | — | | | | — | | | | 368 | |
Richard L. Greslick, Jr. | | | 25,185 | | | | 11,200 | | | | 337 | | | | 7,831 | | | | 3,674 | | | | 48,227 | |
Mark D. Breakey | | | 25,185 | | | | 11,200 | | | | 1,039 | | | | — | | | | 3,979 | | | | 41,403 | |
Joseph E. Dell, Jr. | | | 25,185 | | | | 11,200 | | | | 1,172 | | | | 7,835 | | | | — | | | | 45,392 | |
Brian W. Wingard | | | 22,036 | | | | 10,124 | | | | 146 | | | | — | | | | 743 | | | | 33,049 | |
(5) | It is the policy of the Corporation to pay dues to certain service and social organizations for the executive officers. The incremental cost of these dues were minimal and the aggregate amount of such compensation did not exceed $10,000 for any named executive officer for any of the years shown.
|
(6) | In 2019, all NEOs received performance-based restricted stock awards, with the exception of Mr. Lima, based on his hire date with the Corporation. The amount reported for the value of the awards is based on the aggregate compensation cost to be recognized over the three-year service period based on the most probable outcome. Using performance data available as of December 31, 2019, the amount reported above represents the value of the award at the grant date assuming that the highest level of performance conditions would be achieved.
|
(7) | The base salary for Mr. Lima was prorated for 2019, based on his hire date with the Corporation.
|
(8) | The base salary for Mr. Wingard was prorated for 2019, based on his retirement date from the Corporation.
|
Table of Contents
Pay Versus Performance Descriptive Disclosure
The following financial measures are the most important measures used to link our NEOs’ (including our President and Chief Executive Officer) CAP to our performance during the most recently completed fiscal year.
•Fully-diluted EPS
•Commercial Loan Revenues
•Efficiency Ratio
•Mortgage, Home Equity, and Consumer Loan Growth
•Wealth & Asset Management revenue
•Return on Equity
Comparison of Corporation TSR versus Peer Group TSR
As shown in the chart below, the Corporation’s TSR is less than Corporation’s peer group TSR.
Comparison of Compensation Actually Paid versus Corporation TSR
As shown in the chart below, the CAP to our President and Chief Executive Officer and the average CAP to our other NEOs are aligned with our TSR. This is due primarily to performance-based incentive compensation which links payouts to metrics that increase shareholder value, such as fully-diluted EPS and return on equity.
Comparison of Compensation Actually Paid versus Net Income
The chart below compares the CAP to our President and Chief Executive Officer and the average of the CAP to our other NEOs to net income. As shown in the chart, the CAP to our President and Chief Executive Officer and average of the CAP to our other NEOs has increased in line with increases in our net income. This is because net income is a direct input in the calculation of fully-diluted EPS, one of the most important measures used to link our NEOs’ (including our President and Chief Executive Officer) CAP to our performance.
Comparison of Compensation Actually Paid versus Company-Selected Measure (“CSM”)
The chart below compares the CAP to our President and Chief Executive Officer’s and average of the CAP to other NEOs and our CSM, fully-diluted EPS, which shows a very strong relationship between fully-diluted EPS and CAP.
The CNB Financial Corporation 2019 Omnibus Incentive Plan (the “2019 Incentive Plan”) was initially adopted by the Corporation’s Board and subsequently approved by the Corporation’s shareholders at its annual meeting held in 2019. Certain full or part-time employees of the Corporation, any parent, subsidiary or affiliate thereof, or persons who serve the Corporation or an affiliate as a director, are eligible to receive awards under the 2019 Incentive Plan. Awards may be granted in the form of options,
SARs,stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, other equity-based awards and cash bonus awards. The 2019 Incentive Plan provides that the exercise price of each option will be determined by the ECC, provided that the per share exercise price will be equal to or greater than 100% of the fair market value of a share of our common stock on the grant date. Generally, the term of an option will not exceed ten years from the grant date. For this purpose, fair market value is determined by reference to the closing price of the common stock on the date of grant or, if the grant date is not a trading day, the trading day immediately preceding the grant date.
31
Equity Compensation Plan Information
The following table provides information about our common stock that may be issued under the 2019 Incentive Plan as of December 31,
2019.2022. | | | | | | | | | | | | | | | | | | | | |
Plan Category | | Number of Securities to be
Issued Upon Exercise of
Outstanding Options, Warrants
and Rights | | | Weighted-Average Exercise
Price of Outstanding Options,
Warrants and Rights | | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights | | Number of Securities
Remaining Available for Future
Issuance Under Equity
Compensation Plans (Excluding
Securities Reflected in First
Column) | |
Equity compensation plans approved by shareholders | | — | — | — | | | — | | | | 506,483 | 320,372 |
Equity compensation plans not approved by shareholders | | — | — | — | | | — | | | | — | |
| Total | | | | | | | | | | | | |
Total
| | | — | | | | — | | | | 506,483 | |
| — | | — | | | | | | | | | 320,372 |
Grants of Plan-Based Awards in
2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Estimated Future Payouts under
Non-Equity Incentive Plan Awards | | | Estimated Future Payouts under Equity
Incentive Plan Awards | | | All Other
Share
Awards:
Number
of Shares
or Share
Units(1) | | | Grant
Date
Fair
Value of
Shares | |
Name | | Grant
Date | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | (#) | | | ($)(2) | |
Joseph B. Bower, Jr. | | | 1/31/19 | | | | 118,000 | | | | 236,000 | | | | 354,000 | | | | 2,790 | | | | 5,580 | | | | 8,370 | | | | 3,720 | | | | 235,011 | |
Tito L. Lima | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Richard L. Greslick, Jr. | | | 1/31/19 | | | | 53,500 | | | | 107,000 | | | | 160,500 | | | | 792 | | | | 1,583 | | | | 2,374 | | | | 1,583 | | | | 80,005 | |
Mark D. Breakey | | | 1/31/19 | | | | 46,500 | | | | 93,000 | | | | 139,500 | | | | 495 | | | | 989 | | | | 1,484 | | | | 989 | | | | 50,009 | |
Joseph E. Dell, Jr. | | | 1/31/19 | | | | 50,500 | | | | 101,000 | | | | 151,500 | | | | 544 | | | | 1,088 | | | | 1,632 | | | | 1,088 | | | | 54,988 | |
Brian W. Wingard | | | 1/31/19 | | | | 45,500 | | | | 91,000 | | | | 136,500 | | | | 515 | | | | 1,029 | | | | 1,543 | | | | 1,029 | | | | 52,006 | |
(1) | Time-based awards vest ratably over a three-year period.
|
(2) | Fair value of stock award computed in accordance with ASC Topic 718.
|
32
2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Estimated Future
Payouts under Non-Equity
Incentive Plan Awards | | Estimated Future
Payouts under Equity
Incentive Plan Awards | | All Other Share Awards: Number of Shares or Share Units(1) | Grant Date Fair Value of Shares(2) |
| Name | Grant
Date | | Threshold ($) | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) | | (#) | ($) |
Michael D. Peduzzi (3) | 1/31/22 | | 87,500 | 175,000 | 262,500 | | 468 | 936 | 1,404 | | 936 | 50,001 |
Joseph B. Bower, Jr. (3) | 1/31/22 | | 135,600 | 271,200 | 406,800 | | — | — | — | | 9,772 | 261,010 |
| Tito L. Lima | 1/31/22 | | 52,500 | 105,000 | 157,500 | | 562 | 1,123 | 1,685 | | 1,123 | 59,991 |
| Richard L. Greslick, Jr. | 1/31/22 | | 62,388 | 124,775 | 187,163 | | 1,077 | 2,153 | 3,230 | | 2,153 | 115,013 |
| Martin T. Griffith | 1/31/22 | | 56,875 | 113,750 | 170,625 | | 702 | 1,404 | 2,106 | | 1,404 | 75,002 |
| Leanne D. Kassab | 1/31/22 | | 45,063 | 90,125 | 135,188 | | 515 | 1,030 | 1,545 | | 1,030 | 55,023 |
(1) Time-based awards vest ratably over a three-year period.
(2) Fair value of stock award computed in accordance with ASC Topic 718.
(3) Mr. Bower retired from his capacity as President and Chief Executive Officer, effective December 31, 2022. Michael D. Peduzzi was appointed President and CEO of CNB Financial Corporation on December 31, 2022 following Mr. Bower’s retirement.
Outstanding Equity Awards at
20192022 Fiscal
Year-End | | | | | | | | | | | | | | | | |
Name | | Number of Time-Based Shares
That Have Not Vested | | | Market Value
of Shares That
Have Not
Vested ($) (1) | | | Equity Incentive Plan
Awards; Number of
Unearned Shares, Units,
or Other Rights that
have not vested (#) | | | Equity Incentive Awards;
Market or Payout Value of
Unearned Shares, Units or
Other Rights that have not
vested ($) (1) | |
Joseph B. Bower, Jr. | | | 1,063 | (2) | | | 34,723 | | | | 5,306 | (7) | | | 173,400 | |
| | | 964 | (3) | | | 31,493 | | | | 4,636 | (8) | | | 151,504 | |
| | | 2,060 | (4) | | | 67,321 | | | | 5,580 | (10) | | | 182,354 | |
| | | 3,720 | (5) | | | 121,570 | | | | | | | | | |
Tito L. Lima | | | 1,000 | (6) | | | 32,680 | | | | — | | | | — | |
Richard L. Greslick, Jr. | | | 650 | (2) | | | 21,242 | | | | 1,207 | (8) | | | 39,445 | |
| | | 964 | (3) | | | 31,504 | | | | 1,583 | (10) | | | 51,732 | |
| | | 850 | (9) | | | 26,307 | | | | | | | | | |
| | | 1,583 | (5) | | | 51,732 | | | | | | | | | |
Mark D. Breakey (11) | | | — | | | | — | | | | 873 | (8) | | | 28,530 | |
| | | | | | | | | | | 989 | (10) | | | 32,321 | |
Joseph E. Dell, Jr. | | | 675 | (2) | | | 22,059 | | | | 940 | (8) | | | 30,719 | |
| | | 898 | (3) | | | 29,347 | | | | 1,088 | (10) | | | 35,556 | |
| | | 625 | (9) | | | 20,425 | | | | | | | | | |
| | | 1,088 | (5) | | | 35,556 | | | | | | | | | |
Brian W. Wingard (12) | | | — | | | | — | | | | — | | | | — | |
(1) | The amount shown represents the number of awards that have not vested multiplied by the closing price of the Corporation’s common stock on December 31, 2019, which was $32.68.
|
(2) | Stock awards vest 25% on each anniversary of the grant date, which was February 19, 2016.
|
(3) | Stock awards vest 33% on each anniversary of the grant date, which was February 14, 2017.
|
(4) | Stock awards vest 33% annually on January 31 following the grant date, which was February 13, 2018.
|
(5) | Stock awards vest 33% annually on January 31 following the grant date, which was January 31, 2019.
|
(6) | Stock awards vest 25% annually on the first four anniversaries of the grant date, which was October 1, 2019.
|
(7) | The number of shares reported represents the target number of performance shares awarded on February 14, 2017.
|
(8) | The number of shares reported represents the target number of performance shares awarded on February 14, 2018, as disclosed in “Grants of Plan-Based Awards in 2019” table.
|
(9) | Stock awards vest 25% annually on January 31 following the grant date, which was February 13, 2018
|
(10) | The number of shares reported represents the target number of performance shared awarded on January 31, 2019
|
(11) | Prior to his retirement, Mr. Breakey would have had 5,118 time-based shares, valued at $153,420, which had not vested.
|
(12) | Prior to his retirement, Mr. Wingard would have had 5,177 time-based shares, valued at $141,269, which had not vested. In addition, Mr. Wingard would have had 1,926 performance-based shares, valued at $62,779, which had not vested.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name (10) | | Award Year | | Number of
Time-Based
Shares
That Have
Not Vested | | Market Value of Shares That Have Not Vested(1) ($) | | Equity Incentive Plan
Awards; Number of
Unearned Shares, Units, or
Other Rights that have not
vested
(#) | | Equity Incentive Awards; Market or Payout Value of Unearned Shares, Units or Other Rights that have not vested(1) ($) |
| Michael D. Peduzzi | | 2021 | | 2,327 | (9) | 55,359 | | | — | | | — | |
| | 2022 | | 936 | (2) | 22,267 | | | 1,404 | (5) | 33,401 | |
| | Total | | 3,263 | | 77,626 | | 1,404 | | 33,401 |
| Tito L. Lima | | 2019 | | 250 | (8) | 5,948 | | | — | | | — | |
| | 2020 | | 169 | (3) | 4,021 | | | 508 | (6) | 12,085 | |
| | 2021 | | 713 | (4) | 16,962 | | | 1,605 | (7) | 38,183 | |
| | 2022 | | 1,123 | (2) | 26,716 | | | 1,685 | (5) | 40,086 | |
| | Total | | 2,255 | | 53,647 | | 3,798 | | 90,354 |
| Richard L. Greslick, Jr. | | 2020 | | 563 | (3) | 13,394 | | | 1,691 | (6) | 40,229 | |
| | 2021 | | 1,347 | (4) | 32,045 | | | 3,032 | (7) | 72,131 | |
| | 2022 | | 2,153 | (2) | 51,220 | | | 3,230 | (5) | 76,842 | |
| | Total | | 4,063 | | 96,659 | | 7,953 | | 189,202 |
| Martin T. Griffith | | 2020 | | 282 | (3) | 6,709 | | | 846 | (6) | 20,126 | |
| | 2021 | | 713 | (4) | 16,962 | | | 1,605 | (7) | 38,183 | |
| | 2022 | | 1,404 | (2) | 33,401 | | | 2,106 | (5) | 50,102 | |
| | Total | | 2,399 | | 57,072 | | 4,557 | | 108,411 |
| Leanne D. Kassab | | 2020 | | 299 | (3) | 7,113 | | | 896 | (6) | 21,316 | |
| | 2021 | | 713 | (4) | 16,962 | | | 1,605 | (7) | 38,183 | |
| | 2022 | | 1,030 | (2) | 24,504 | | | 1,545 | (5) | 36,756 | |
| | Total | | 2,042 | | 48,579 | | 4,046 | | 96,255 |
(1) Amount shown represents the number of awards that have not vested as of December 31, 2022, multiplied by the closing price of the Corporation’s common stock on December 31, 2022, which was $23.79.
(2) Stock awards vest 33% annually on January 31 following the grant date, which was January 31, 2022.
(3) Stock awards vest 33% annually on January 31 following the grant date, which was January 31, 2020.
(4) Stock awards vest 33% annually on January 31 following the grant date, which was January 31, 2021.
(5) The number of shares reported represents the max number of performance shares awarded on January 31, 2022.
(6) The number of shares reported represents the target number of performance shares awarded on January 31, 2020.
(7) The number of shares reported represents the max number of performance shares awarded on January 31, 2021.
(8) Stock awards vest 25% annually on October 1st, following the grant date, which was October 1, 2019.
(9) Stock awards vest 20% annually on August 31st, following the grant date which was November, 1, 2021.
(10) Mr. Bower retired from his capacity as President and Chief Executive Officer, effective December 31, 2022. His retirement resulted in the accelerated vesting of all outstanding time-based restricted stock awards and the forfeiture of all outstanding performance-based restricted stock awards. After his retirement, Mr. Bower has no remaining outstanding equity awards. Each of his awards that vested in connection with his retirement is reflected below in the “Option Exercises and Stock Vested” table.
Option Exercises and Stock Vested
The following table sets forth information concerning the vesting in
20192022 of time-based
and performance-based restricted stock awards granted to the NEOs.
| | | | | | | | |
Name | | Number of
Shares
Acquired on
Vesting
(#) | | | Value
Realized on
Vesting
($) (1) | |
Joseph B. Bower, Jr. | | | 4,057 | | | | 104,233 | |
Tito L. Lima | | | — | | | | — | |
Richard L. Greslick, Jr. | | | 2,159 | | | | 55,616 | |
Mark D. Breakey | | | 2,010 | | | | 51,851 | |
Joseph E. Dell, Jr. | | | 2,062 | | | | 53,186 | |
Brian W. Wingard | | | 2,016 | | | | 52,003 | |
(1) | Value realized calculated by multiplying the number of shares vesting by the closing price of the Corporation’s common stock on the applicable vesting dates.
|
33
We do not have any outstanding options.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Time-Based | | Performance-Based | | Total |
| Name | Number of
Shares
Acquired on
Vesting (#) | | Value Realized on Vesting(1) ($) | | Number of
Shares
Acquired on
Vesting (#) | | Value Realized on Vesting(1) ($) | | Number of
Shares
Acquired on
Vesting (#) | | Value Realized on Vesting(1) ($) |
| Michael D. Peduzzi | 582 | | 15,318 | | — | | — | | 582 | | 15,318 |
Joseph B. Bower, Jr. (2) | 19,893 | | 486,684 | | 6,324 | | 165,499 | | 26,217 | | 652,183 |
| Tito L. Lima | 776 | | 19,942 | | — | | — | | 776 | | 19,942 |
| Richard L. Greslick, Jr. | 1,765 | | 47,143 | | 1,794 | | 46,949 | | 3,559 | | 94,092 |
| Martin T, Griffith | 1,233 | | 32,933 | | — | | — | | 1,233 | | 32,933 |
| Leanne D. Kassab | 983 | | 26,256 | | 1,121 | | 29,337 | | 2,104 | | 55,593 |
(1) Value realized calculated by multiplying the number of shares vesting by the closing price of the Corporation’s common stock on the applicable vesting dates.
(2) Mr. Bower retired from his capacity as President and Chief Executive Officer, effective December 31, 2022. His retirement resulted in the accelerated vesting of all outstanding time-based restricted stock awards and the forfeiture of all outstanding performance-based restricted stock awards.
Pension Benefits
| | | | | | | | | | | | |
Name | | Plan Name | | | Number of
Years Credited
Service | | | Present Value of Accumulated Benefit ($) | |
Joseph B. Bower, Jr. | | | SERP | (1) | | | 22 | | | | 3,224,692 | |
Tito L. Lima | | | | | | | N/A | | | | — | |
Richard L. Greslick, Jr. | | | SERP | (1) | | | 21 | | | | 322,979 | |
Mark D. Breakey | | | SERP | (1) | | | 28 | | | | 1,269,719 | |
Joseph E. Dell, Jr. | | | | | | | N/A | | | | — | |
Brian W. Wingard | | | | | | | N/A | | | | — | |
(1) | The SERP is described below. This plan is offset bytax-free earnings from Bank-owned life insurance.
|
Supplemental Executive Retirement - Defined Benefit
| | | | | | | | | | | | | | | | | | | | |
| Name | | Plan Name | | Number of
Years Credited
Service | | Present Value of
Accumulated Benefit
($) |
| Michael D. Peduzzi | | SERP | (1) | 1 | | 233,737 |
Joseph B. Bower, Jr. (2) | | SERP | (1) | 25 | | 5,670,541 |
| Tito L. Lima | | — | | — | | — |
| Richard L. Greslick, Jr. | | SERP | (1) | 24 | | 1,292,883 |
| Martin T. Griffith | | — | | — | | — |
| Leanne D. Kassab | | — | | — | | — |
(1) The SERP is described below. This plan is offset by tax-free earnings from Bank-owned life insurance.
(2) Mr. Bower retired from his capacity as President and Chief Executive Officer, effective December 31, 2022. Michael D. Peduzzi was appointed President and CEO of CNB Financial Corporation on December 31, 2022 following Mr. Bower’s retirement.
The Corporation maintains the CNB Bank Employee’s Savings and Profit Sharing Plan and Trust (the “Plan”). The Plan permits eligible employees to make
pre-tax and Roth contributions up to 70% of salary. Employees 21 years of age or over with a minimum of
one-year full-time with 1,000 hour service are eligible for matching contributions by the Corporation at 100% of elective contributions not to exceed 3% of plan salary plus 50% of elective contributions that exceed 3% of plan salary but do not exceed 5% of plan salary. A profit sharing
discretionary non-contributory pension plan component is in place for employees 21 years of age or over with a minimum of
one-year full-time with 1,000 hours service and allows employer contributions
in an amount equal to a percentage of
6% based on current year’seligible compensation plus 5.7% of the compensation for all employees in excess of
$132,900,$147,000, subject to a
$280,000$305,000 salary limit. The Corporation’s total contributions to the Plan for all employees were approximately
$1,028,000$1.6 million for the 401(k) savings plan component and
$1,872,000$2.9 million for the profit sharing
non-contributory pension plan component.
Supplemental Executive Retirement Plan
The Internal Revenue Code places certain limitations on pension benefits that may be paid from the trusts of
tax-qualified plans. Because of these limitations and in order to provide certain executives with adequate retirement income, the Bank has entered into SERP agreements that provide retirement benefits to certain executives in the manner discussed below.
The Bank has entered into agreements with Messrs. Bower
Greslick and
BreakeyGreslick to provide each executive with an annual supplemental retirement benefit at age 65 equal to a percentage of the executive’s final average compensation (i.e., average annual base salary for prior three years plus average annual bonus for prior five years) paid for twenty years reduced, as applicable, by amounts attributable to Social Security, the annual benefit that could be provided by contributions by the Corporation and the Bank (other than the executive’s elective deferrals) to the Plan and the earnings on those amounts, calculated on an actuarial equivalent basis. The annual supplemental retirement benefit percentage at age 65 is 75% for Messrs. Bower and
Greslick and 65% for Mr. Breakey.Greslick.
Reduced amounts will be payable under each SERP in the event the executive takes early retirement after age 55. Reduced amounts will also be paid in twenty equal annual installments to a designated beneficiary if the executive dies or becomes disabled prior to the commencement of benefits and any unpaid installments will be paid to such beneficiary if the executive dies after the commencement of benefits.
The SERP isalso provides for termination and change in control benefits with such benefits payable over a twenty-year period. the potential payments that would have occurred assuming a change in control or termination event at December 31, 2022 are outlined in the section Termination and Change in Control Benefits below.
The Bank has entered into an agreement with Mr. Peduzzi to provide him with an annual supplemental retirement benefit at age 62 equal in the amount of $120,000 paid for twenty years. Mr. Peduzzi shall be 0% vested until the later of the date he attains the age fifty-five or five years has passed since the effective date of the agreement. Reduced amounts will be payable under the SERP in the event the executive takes early retirement before 62. If the executive dies prior to payment, the Bank shall pay the beneficiary the present value of the accrued benefit or normal retirement benefit. Reduced amounts will also be paid in twenty equal annual installments to a designated beneficiary if the executive dies or becomes disabled prior to the commencement of benefits and any unpaid installments will be paid to such beneficiary if the executive dies after the commencement of benefits. The SERP also provides for termination and change in control benefits with such benefits payable over a twenty-year period. the potential payments that would have occurred assuming a change in control or termination event at December 31, 2021 are outlined in the section Termination and Change in Control Benefits below.
The SERPs are considered an unfunded plan for tax purposes and a “top hat” plan for purposes of ERISA. All obligations arising under the SERP are payable from the general assets of the Bank.
34
Nonqualified Deferred Compensation Plan and Executive Defined Contribution Plan
The
SERP also provides for terminationfollowing table includes information about the activity in, amounts earned, and
changebalances of
control benefits with such benefits payable over a twenty-year period. If a termination or change of control would have occurred at December 31, 2019,each NEO’s account under the
following aggregate amounts would have been paid: Mr. Bower – $5,792,436 (change in control), $4,728,575 (termination); Mr. Greslick $2,321,809 (change in control), $0 (termination); and Mr. Breakey – $1,401,642 (change in control), $1,377,472 (termination).CNB Financial Corporation Executive Deferred Compensation Plan
and Executive Defined Contribution Plan.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Plan | | Executive Contributions in 2022(1) ($) | | Corporation Contributions in 2022(2) ($) | | Aggregate Earnings in 2022(3) ($) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate
Balance at
December 31,
2022
($) |
| Michael D. Peduzzi (4) | | Executive Deferred Compensation | | 50,000 | | — | | (2,639) | | — | | 47,361 |
| Joseph B. Bower, Jr. (4) | | Executive Deferred Compensation | | — | | — | | (109,408) | | — | | 637,136 |
| Tito L. Lima | | Executive Defined Contribution | | — | | 60,000 | | 2,387 | | — | | 62,387 |
| Richard L. Greslick, Jr. | | Executive Deferred Compensation | | 81,619 | | — | | (49,156) | | — | | 383,254 |
| Martin T. Griffith | | Executive Deferred Compensation | | — | | — | | — | | — | | — |
| Leanne D. Kassab (5) | | Executive Deferred Compensation | | 25,750 | | — | | (1,363) | | — | | 24,387 |
| Leanne D. Kassab (5) | | Executive Defined Contribution | | — | | 90,125 | | 3,585 | | — | | 93,710 |
(1) Executive contributions are included in the applicable amounts within the salary column of the Summary Compensation Table.
(2) Corporation contributions are included in the applicable amounts within the other compensation column of the Summary Compensation Table.
(3) Amounts in this column represent all interest and earnings on Executive Deferred Compensation Plan and Executive Defined Contribution Plan account balances during fiscal 2022. The “above-market” portion of this interest and earnings is included in the fiscal 2022 amounts in the Summary Compensation table under “Change in Pension Value and Nonqualified Deferred Compensation Earnings” for those participating in an Executive Defined Contribution Plan.
(4) Mr. Bower retired from his capacity as President and Chief Executive Officer, effective December 31, 2022. Michael D. Peduzzi was appointed President and CEO of CNB Financial Corporation on December 31, 2022 following Mr. Bower’s retirement.
(5) Ms. Kassab is party to both the Executive Deferred Compensation Plan and the Executive Defined Contribution Plan.
Executive Deferred Compensation
We have established a deferred compensation plan for executive officers. Annually, executive officers can defer up to 75% of their base compensation and 100% of all bonuses. If 100% of incentive compensation is deferred, the executive is responsible for payment of applicable payroll taxes. All deferred compensation is a general liability of the Bank. Any appreciation or depreciation in each participant’s account value will reflect the performance of the underlying investments. Deferred compensation will serve as a funding source for a Rabbi trust. Investments are expected to closely match the appreciated or depreciated liability. Distributions are received in lump sum or annuity upon normal retirement, death, or disability. Any variance will be adjusted by an expense or gain to the Bank.
The plan providesAmounts deferred and any earnings thereon are not subject to federal individual income tax
advantagesuntil distributed to the
participants and participation in the plan further aligns the interests of participants with those of our shareholders.non-employee director. Accounting treatment for this plan is subject to the ASC Topic 718.
Nonqualified Deferred Compensation
Executive Defined Contribution Plan
The
Corporation has adopted a defined contribution plan for certain executive officers, including Mr. Lima and Ms. Kassab, pursuant to which the Corporation will contribute an amount to the defined contribution plan each January 1, commencing (for 2022 only) on January 2, 2022, until their service with the Corporation terminates, equal to 20% of Mr. Lima’s annual base salary and 35% of Ms. Kassab’s annual base salary. They will be 0% vested in the contributions made by the Corporation to the defined contribution plan until the earliest to occur of one of the following
table includes information aboutevents, at which time they will be 100% vested in such contributions: (i) attainment of five years of service with the
activityCorporation; (ii) death or “disability” (as defined in
amounts earned, and balancesthe defined contribution plan); or (iii) a “change in control” (as defined in the defined contribution plan) of
each NEO’s accountthe Corporation. They may elect to receive payment of their vested amounts under the
CNB Financialdefined contribution plan in either a lump sum or in annual installments for a period of ten years, provided that if their service with the Corporation
Executive Deferred Compensation Plan. | | | | | | | | | | | | | | | | | | | | |
Name | | Executive
Contributions
in 2019 ($)(1) | | | Corporation
Contributions
in 2019 ($) | | | Aggregate
Earnings
in 2019 ($) | | | Aggregate
Withdrawals/
Distributions ($) | | | Aggregate
Balance at
December 31, 2019 ($) | |
Joseph B. Bower, Jr. | | | 70,800 | | | | — | | | | 63,746 | | | | — | | | | 397,318 | |
Tito L. Lima | | | — | | | | — | | | | — | | | | — | | | | — | |
Richard L. Greslick, Jr. | | | 57,933 | | | | — | | | | 39,254 | | | | — | | | | 184,215 | |
Mark D. Breakey | | | — | | | | — | | | | 12,107 | | | | — | | | | 116,822 | |
Joseph E. Dell, Jr. | | | 14,400 | | | | — | | | | 2,700 | | | | — | | | | 17,100 | |
Brian W. Wingard | | | — | | | | — | | | | — | | | | — | | | | — | |
(1) | Executive contributions are included in the applicable amounts within the salary column of the Summary Compensation Table.
|
35
terminates prior to the attainment of age 65, other than by retirement, then their vested amounts under the defined contribution plan will be paid in a lump sum. Payments of vested amounts under the defined contribution plan will be made or commence within 90 days following the later of termination date of service from the Corporation or attainment of age 65, provided that if Mr. Lima or Ms. Kassab becomes disabled, then payments will be made or commence within 90 days following the disability event. Notwithstanding the previous sentence, if Mr. Lima or Ms. Kassab dies prior to payments commencing under the defined contribution plan, then they will receive payment of their vested amounts in a lump sum within 90 days following death, and if their service with the Corporation terminates within one year following a change in control of the Corporation, then they will receive payment of the vested amounts in a lump sum within 90 days following the termination date of service. Amounts contributed to the defined contribution plan by the Corporation will be credited with earnings each December 31 at a fixed rate of 4%.
The Board may, in its sole discretion and at any time, amend or terminate the defined contribution plan, provided that no such amendment or termination may adversely affect the rights or benefits of Mr. Lima or Ms. Kassab under the plan without their prior written consent. The defined contribution plan is considered an unfunded plan for tax purposes and a “top hat” plan for purposes of ERISA. All obligations arising under the plan are payable from the general assets of the Corporation.
Termination and Change in Control Benefits
As discussed under “Employment Contracts”“2022 Compensation Program and Pay Decisions” and “Supplemental Executive Retirement Plan” above, the Corporation provides additional benefits to the NEOs in the event of retirement or termination of employment in certain circumstances and in the event of a change in control. We have summarized and quantified the estimated payments under the agreements, assuming a termination event would have occurred on December 31, 2022, below.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| No Change In Control Event | Change In Control Event | Life Events |
| NEO | Termination Without Cause (10) | Termination Following Detrimental Event to Executive (Good Reason) | Termination Without Cause or Detrimental Event to Executive (Good Reason) | No Termination | Other Termination | Retirement | Disability (11) | Death |
| Michael D. Peduzzi | | | | | | | | |
Cash Severance (1) | $ | 1,568,683 | | $ | 1,568,683 | | $ | 1,568,683 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Benefit Continuation (2) | 9,305 | | 9,305 | | 9,305 | | — | | — | | — | | — | | — | |
Accelerated Vesting of Equity Awards (3) | 88,475 | | 88,475 | | 88,475 | | 88,475 | | — | | — | | 88,475 | | 88,475 | |
Defined Benefit SERP (4) | 233,737 | | 233,737 | | 2,400,000 | | — | | 2,400,000 | | 233,737 | | 2,400,000 | | 1,362,686 | |
| Total | $ | 1,900,200 | | $ | 1,900,200 | | $ | 4,066,463 | | $ | 88,475 | | $ | 2,400,000 | | $ | 233,737 | | $ | 2,488,475 | | $ | 1,451,161 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| No Change In Control Event | Change In Control Event | Life Events |
| NEO | Termination Without Cause (10) | Termination Following Detrimental Event to Executive (Good Reason) | Termination Without Cause or Detrimental Event to Executive (Good Reason) | No Termination | Other Termination Within Two Years of Change In Control | Retirement | Disability (11) | Death |
| Joseph B. Bower, Jr. | | | | | | | | |
Cash Severance (1) | $ | 2,767,366 | | $ | — | | $ | 2,767,366 | | $ | — | | $ | — | | $ | 78,231 | | $ | — | | $ | — | |
Benefit Continuation (2) | — | | — | | — | | — | | — | | 125,596 | | — | | — | |
Accelerated Vesting of Equity Awards (3) | 539,226 | | 539,226 | | 539,226 | | 539,226 | | — | | 363,844 | | 539,226 | | 539,226 | |
Defined Benefit SERP (5) | 5,670,541 | | 5,670,541 | | 7,249,541 | | — | | 7,249,541 | | 5,670,541 | | 5,662,573 | | 3,375,201 | |
| Total | $ | 8,977,133 | | $ | 6,209,767 | | $ | 10,556,133 | | $ | 539,226 | | $ | 7,249,541 | | $ | 6,238,212 | | $ | 6,201,799 | | $ | 3,914,427 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| No Change In Control Event | Change In Control Event | Life Events |
| NEO | Termination Without Cause (10) | Termination Following Detrimental Event to Executive (Good Reason) | Termination Without Cause or Detrimental Event to Executive (Good Reason) | No Termination | Other Termination Within One Year of Change In Control | Retirement | Disability (11) | Death |
| Tito L. Lima | | | | | | | | |
Cash Severance (1) | $ | 972,946 | | $ | — | | $ | 972,946 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Accelerated Vesting of Equity Awards (3) | 90,640 | | 90,640 | | 90,640 | | 90,640 | | — | | — | | 90,640 | | 90,640 | |
Defined Contribution SERP (7) | — | | — | | 62,387 | | — | | 62,387 | | — | | 62,387 | | 62,387 | |
| Total | $ | 1,063,586 | | $ | 90,640 | | $ | 1,125,973 | | $ | 90,640 | | $ | 62,387 | | $ | — | | $ | 153,027 | | $ | 153,027 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| No Change In Control Event | Change In Control Event | | | Life Events |
| NEO | Termination Without Cause (10) | Termination Following Detrimental Event to Executive (Good Reason) | Termination Without Cause or Detrimental Event to Executive (Good Reason) | No Termination | Other Termination Within Two Years of Change In Control | Retirement | Disability (11) | Death |
| Richard L. Greslick, Jr. | | | | | | | | |
Cash Severance (1) (8) | $ | 1,384,925 | | $ | — | | $ | 1,384,925 | | $ | — | | $ | — | | $ | 41,135 | | $ | — | | $ | — | |
Accelerated Vesting of Equity Awards (3) | 189,987 | | 189,987 | | 189,987 | | 189,987 | | — | | — | | 189,987 | | 189,987 | |
Defined Benefit SERP (6) | — | | — | | 2,777,906 | | — | | 2,777,906 | | — | | 1,275,808 | | — | |
| Total | $ | 1,574,912 | | $ | 189,987 | | $ | 4,352,818 | | $ | 189,987 | | $ | 2,777,906 | | $ | 41,135 | | $ | 1,465,795 | | $ | 189,987 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| No Change In Control Event | Change In Control Event | Life Events |
| NEO | Termination Without Cause (10) | Termination Following Detrimental Event to Executive (Good Reason) | Termination Without Cause or Detrimental Event to Executive (Good Reason) | No Termination | Other Termination Within One Year of Change In Control | Retirement | Disability (11) | Death |
| Marin T. Griffith | | | | | | | | |
Cash Severance (1) (8) | $ | 1,049,521 | | $ | — | | $ | 1,049,521 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Accelerated Vesting of Equity Awards (3) | 108,720 | | 108,720 | | 108,720 | | 108,720 | | — | | — | | 108,720 | | 108,720 | |
| Total | $ | 1,158,241 | | $ | 108,720 | | $ | 1,158,241 | | $ | 108,720 | | $ | — | | $ | — | | $ | 108,720 | | $ | 108,720 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| No Change In Control Event | Change In Control Event | Life Events |
| NEO | Termination Without Cause (10) | Termination Following Detrimental Event to Executive (Good Reason) | Termination Without Cause or Detrimental Event to Executive (Good Reason) | No Termination | Other Termination Within One Year of Change In Control | Retirement | Disability (11) | Death |
| Leanne D. Kassab | | | | | | | | |
Cash Severance (1) (8) | $ | 755,780 | | $ | — | | $ | 755,780 | | $ | — | | $ | — | | $ | 29,712 | | $ | — | | $ | — | |
Accelerated Vesting of Equity Awards (3) | 96,730 | | 96,730 | | 96,730 | | 96,730 | | — | | — | | 96,730 | | 96,730 | |
Defined Contribution SERP (7) | — | | — | | 93,710 | | — | | 93,710 | | — | | 93,710 | | 93,710 | |
| Total | $ | 852,510 | | $ | 96,730 | | $ | 946,220 | | $ | 96,730 | | $ | 93,710 | | $ | 29,712 | | $ | 190,440 | | $ | 190,440 | |
(1) The Employment Contracts provide for lump sum cash severance payments in the event a NEO is terminated without “cause” (as such term is defined in the Employment Contracts), regardless of whether such termination is in connection with a change in control, or voluntarily terminates employment under certain specific “good reason” circumstances following a change in control, subject to the NEO’s execution and non-revocation of a release. Such “good reason” circumstances include a reduction in title or responsibilities, assignment of duties or responsibilities inconsistent with current responsibilities, a reduction in salary or other benefits, and reassignment to a location greater than 25 miles from the current location. Following such a termination of employment, (a) Messrs. Greslick and Bower will each be entitled to receive a lump sum cash payment equal to 2.99 times the sum of (i) his base salary plus (ii) the average incentive bonus paid over the preceding three-year period, (b) Messrs. Peduzzi, Lima, and Griffith will be entitled to receive a lump sum cash payment equal to 2.50 times the sum of (i) his base salary, plus (ii) the average incentive bonus paid over the preceding three-year period, and (c) Ms. Kassab will be entitled to receive a lump sum cash payment equal to 2.50 times the sum of (i) her average base salary over the preceding five-year period, plus (ii) the average incentive bonus paid over the preceding five-year period. The Employment Contract for Mr. Peduzzi includes a “good reason” trigger not in connection with a change in control if the Corporation’s Board fails to appoint Mr. Peduzzi as President and Chief Executive Officer of the Corporation and the Bank effective as of January 1, 2023.
(2) Messrs. Peduzzi and Bower are each party to an Employment Contract that provides for certain health and welfare benefit continuations under certain circumstances. Mr. Peduzzi’s Employment Contract provides that, upon the termination of employment without “cause” or for “good reason,” then subject to his execution and non-revocation of a release, he will be entitled to, for a period of six months following such termination, medical, dental and vision coverage for Mr. Peduzzi and members of his family, which is not less favorable than the group medical, dental and vision coverage provided to Mr. Peduzzi and family immediately prior to the date of termination. The benefit continuation will terminate if Mr. Peduzzi obtains comparable medical, dental, or vision coverage from any other employer during such period. In addition, Mr. Peduzzi will be obligated to pay an amount equal to the active employee contribution, if applicable. Under Mr. Bower’s Employment Contract, if Mr. Bower retires on December 31, 2022, then the Bank will provide healthcare insurance (i) to Mr. Bower until his 65th birthday (or until Mr. Bower is eligible for other public or private healthcare coverage), plus (ii) healthcare insurance to Mr. Bower’s spouse, until December 31, 2032, as well as his child for the period of time required per the Affordable Care Act. The present value of this future benefit was estimated to be $125,596 at time of retirement and is included in the Summary Compensation Table, column All Other Compensation.
(3) The values in this row represent the amounts of the performance-based restricted stock and time-based restricted stock subject to accelerated vesting upon the termination of employment for any of the following reasons: (i) death, (ii) disability, (iii) retirement, (iv) without cause, (v) for good reason, or, (vi) in the event a change in control occurs during a performance period, subject to the executive’s continued service through the effective time of such Change in Control. For performance-based restricted stock, the NEO will vest as of the date of such termination in a pro-rata portion of the number of shares that would have vested based on actual performance measured as of the most recently completed fiscal quarter, with such pro-rata portion calculated by multiplying such number of shares by a fraction, the numerator of which equals the number of full months that the NEO was employed during the performance period, and the denominator of which equals 36. If the compensation committee of the Corporation cannot determine the extent to which the performance goals have been achieved as of the most recently completed fiscal quarter, then the NEO will vest in a pro-rata portion of the target number of shares of stock identified in his or her agreement, with such pro rata portion calculated as described above. For purposes of this column, the terms “Good Reason,” “Disability,” “Retirement,” “Cause,” and “Change in Control” have the meanings ascribed to them in the 2019 below. | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Joseph B.
Bower, Jr. | | | Tito L.
Lima | | | Richard L.
Greslick, | | | Mark D.
Breakey | | | Joseph E.
Dell, | | | Brian W.
Wingard (1) | |
Death, Retirement or Disability` | |
Restricted Stock Vesting | | | 483,878 | | | | — | | | | 154,491 | | | | 95,235 | | | | 123,683 | | | | — | |
Discharge Without Cause – No Change in Control | |
Lump Sum Cash Payment SERP Payment Increased SERP Benefit | |
| 2,438,227
4,728,575 1,934,359 |
| |
| —
— — |
| |
| 1,251,508
— — |
| |
| 890,981
1,377,472 208,958 |
| |
| 950,194
— — |
| |
| —
— — |
|
Discharge Without Cause – Change in Control-Related | |
Lump Sum Cash Payment SERP Payment Increased SERP Benefit | |
| 2,438,227
5,792,436 2,998,220 |
| |
| —
— — |
| |
| 1,251,508
2,321,809 2,065,042 |
| |
| 890,981
1,401,642 233,128 |
| |
| 950,194
— — |
| |
| —
— — |
|
(1) | Prior to his retirement, Mr. Wingard would have been entitled to vesting of restricted stock in the amount of $96,260 due to death, retirement or disability. Mr. Wingard would also have been entitled to a lump sum cash payment of $780,074 due to discharge without cause (no change in control) or $780,074 due to discharge without cause (change in control).
|
Incentive Plan or applicable award agreement. Mr. Bower did not reach normal retirement age prior to his retirement on December 31, 2022 to qualify for accelerated vesting upon retirement. However, the Board approved the accelerated vesting of his outstanding time-based restricted stock upon his retirement which is included in the table above for the Retirement column. All outstanding performance-based restricted stock was forfeited upon his retirement.
(4) Under the SERP agreement between the Corporation and Mr. Peduzzi (the “Peduzzi SERP Agreement”), if Mr. Peduzzi’s employment is terminated for any reason prior to his 62nd birthday, then Mr. Peduzzi is entitled to an annual amount, for twenty years, equal to $120,000 multiplied by a fraction, the numerator of which is the number of years Mr. Peduzzi participated in the Peduzzi SERP Agreement through the termination date, and the denominator of which is the number of consecutive 12-month periods starting from January 1, 2022 until Mr. Peduzzi’s 62nd birthday. If Mr. Peduzzi’s employment is terminated without cause, for good reason, or retirement before normal retirement age, then such amounts will become payable upon Mr. Peduzzi’s 62nd birthday. The amounts presented above estimate the present value of the future benefits that would be received starting at age 62. If Mr. Peduzzi’s employment is terminated by reason of disability, or for any reason within one year following a change in control, then Mr. Peduzzi will receive the Normal Retirement Benefit in a lump sum payment, regardless of whether Mr. Peduzzi has attained age 62. If Mr. Peduzzi’s employment is terminated by reason of death, then Mr. Peduzzi's beneficiary will receive the present value of the Normal Retirement Benefit in a lump sum within 90 days following death. If Mr. Peduzzi’s employment is terminated for any reason after one year following a change in control, he will receive his full Normal Retirement Benefit, with twenty annual payments.
(5) Under the SERP agreement between the Bank and Mr. Bower (the “Bower SERP Agreement”), if Mr. Bower’s employment is terminated for any reason other than death, then he will be entitled to the “actuarial equivalent” (as defined below) of 75% of (i) the average of Mr. Bower’s base salary for the previous three years, plus (ii) the average of his annual bonus paid for the previous five years, reduced by (iii) (A) amounts attributable to Social Security, as applicable, (B) the actuarial equivalent of his balance in the Bank’s money purchase plan at termination and (C) the actuarial equivalent of his balance in the Bank’s contributions to the 401(k) plan payable at termination (collectively, (i), (ii) and (ii), the “Bower SERP Benefit”). The Bower SERP Benefit will be paid in quarterly installments for a period of 20 years. “Actuarial equivalent” means the actuarial adjustment needed to convert such amounts such that the amount remains equal based on the long-term applicable federal rate (AFR) in place. If Mr. Bower’s employment was terminated by reason of death, then his beneficiary is entitled to 60% of the Bower SERP Benefit, payable in quarterly installments for a period of 20 years. If Mr. Bower’s employment is terminated within two years following a “change in control” (as such term is defined in the Bower SERP Agreement), then he is entitled to 75% of the Bower SERP Benefit, payable in quarterly installments for a period of 20 years and paid to the fully funded rabbi trust established by the Bank for his benefit.
(6) Under the SERP agreement between the Bank and Mr. Greslick (the “Greslick SERP Agreement”), if Mr. Greslick’s employment is terminated for any reason other than death, disability, or pursuant to a change in control as of December 31, 2022, then he will not have any entitlements under the Greslick SERP Agreement because he will not have attained age 55. If Mr. Greslick’s employment is terminated by reason of death, then his beneficiary is entitled to 30% of (i) the average of his base salary for the previous three years, plus (ii) the average of his annual bonus paid for the previous five years, reduced by (iii) (A) amounts attributable to Social Security, as applicable, (B) the “actuarial equivalent” (as defined below) of his balance in the Bank’s money purchase plan at termination and (C) the actuarial equivalent of his balance in the Bank’s contributions to the 401(k) plan payable at termination (collectively, (i), (ii) and (ii), the “Greslick SERP Benefit”). The death benefit under the Greslick SERP Agreement will be paid in quarterly installments for a period of 20 years. “Actuarial equivalent” means the actuarial adjustment needed to convert such amounts such that the amount remains equal based on the long-term applicable federal rate (AFR) in place (the long-term AFR for December 2022 was 4.34%). If Mr. Greslick’s employment is terminated by reason of “disability” (as such term is defined in the Greslick SERP Agreement), then he is entitled to the actuarial equivalent of 65% of the Greslick SERP Benefit, payable in quarterly installments for a period of 20 years. If Mr. Greslick’s employment is terminated within two years following a “change in control” (as such term is defined in the Greslick SERP Agreement), then he is entitled to 65% of the Greslick SERP Benefit, payable in quarterly installments for a period of 20 years and paid to the fully funded rabbi trust established by the Bank for his benefit.
(7) Represents the following amounts under the Defined Contribution Plan agreements between the Corporation and each of Mr. Lima (the “Lima Defined Contribution Plan”) and Ms. Kassab (the “Kassab Defined Contribution Plan”):
a.Under the Lima Defined Contribution Plan, if Mr. Lima’s employment is terminated for any reason other than death, disability, or pursuant to a change in control as of December 31, 2022, then he will not have any entitlements because he will remain unvested until reaching five years of service with the Bank. In the event of death, disability or a change in control event, Mr. Lima will become vested and receive a lump sum payment of the balance of his account.
b. Under the Kassab Defined Contribution Plan, if Ms. Kassab’s employment is terminated for any reason other than death, disability, or pursuant to a change in control as of December 31, 2022, then she will not have any entitlements because she will remain unvested until reaching the age of 55. In the event of death, disability or a change in control event, Mr. Lima will become vested and receive a lump sum payment of the balance of his account.
(8) Amount includes cash severance amount equal to six weeks of base salary under the Bank’s severance policy, which is based on the number of years of service.
(9) Mr. Bower retired, effective December 31, 2022. Due to the technical application of the rules, disclosure has been provided with respect to potential payments due in each of the termination or change in control scenarios reflected in this table, but the amounts reflected in the “Retirement” column reflect amounts actually paid.
(10) The meaning of the term “cause” will be specific to the applicable Employment Contract, SERP agreement, Defined Contribution Plan, 2019 Incentive Plan, or the applicable award agreement thereunder.
(11) The meaning of the term “disability” will be specific to the applicable Employment Contract, SERP agreement, Defined Contribution Plan, 2019 Incentive Plan, or the applicable award agreement thereunder.
Executive Compensation Committee Interlocks and Insider Participation
The members of the ECC are Messrs.
SeagerObi (Chairperson),
Montler, Pontzer, Powell, Scott,
Smith and
Smith.Mses. Pontzer and Young. No person who served as a member of the ECC during
20192022 was a current or former officer or employee of the Corporation or any of its subsidiaries or, except as disclosed below, engaged in certain transactions with the Corporation required to be disclosed by regulations of the SEC. Additionally, there were no compensation committee “interlocks” during
2019,2022, which generally means that no executive officer of the Corporation served as a director or member of the compensation committee of another entity, one of whose executive officers served as a director or member of the ECC of the Corporation.
36
Directors and officers of the Corporation and certain business organizations and individuals associated with them have been customers of and have had normal banking transactions with CNB Bank. All such transactions have been in the ordinary course of business, on terms substantially equivalent, including interest rates and collateral, to those which prevailed at the time in comparable transactions with persons not related to the Corporation or the Bank and do not involve more than the normal risk of collectability or present other unfavorable features.
The Board has approved a Code of Ethics for Officers and Directors. The Code of Ethics can be found at the Bank’s website, www.cnbbank.bank.
Policies and Procedures Regarding Transactions with Related Persons
Pursuant to the Corporation’s Code of Conduct, directors, officers, agents, attorneys and immediate family members of such persons and business entities in which such persons have, directly or indirectly, a majority or controlling interest should at all times be free of any conflicting interests when acting on behalf of the Corporation or any of its affiliates.
The Code of Conduct specifies that loan transactions involving such persons will be governed by regulatory rules and regulations restricting rates and terms, the Corporation’s general lending policies and the Corporation’s insider loans policy and such loans must be approved by an authorized lending officer other than the person in question.
The Code of Conduct further requires that all potential conflict of interest situations be reported. Any person who wishes to obtain approval of a particular action, or waiver of any requirements of the Code of Conduct in any particular situation, must apply for approval or waiver by disclosing all relevant facts and circumstances to the approving authority. For directors, the Corporation’s Board may grant approval or waivers. For officers, the executive officer responsible for the department to which the officer is assigned may grant approval or waivers and for all others, the Corporation’s Chairperson or President may grant such approval or waivers. Persons subject to the Code of Conduct and wishing to engage in a purchase, lease or sale of any assets or services from or to the Corporation or any of its affiliates, other than in the ordinary course of business, must disclose the facts to the Corporation’s Board, which shall then determine whether to approve such transaction.
37
Stock Owned by Management and Directors
The following table presents information known to us regarding the beneficial ownership of our common stock as of the record date of February
24, 202021, 2023 by each of our directors and NEOs and by all of our directors, NEOs and other executive officers as a group. All information as to beneficial ownership has been provided to us by the directors, NEOs and other executive officers, and unless otherwise indicated, each of the directors, NEOs and other executive officers has sole voting and investment power over all of the shares they beneficially own.
| | | | | | | | |
Name | | Shares Beneficially
Owned(1) | | | Percentage of Shares
Outstanding(5) | |
Directors: | | | | | | | | |
Peter F. Smith | | | 83,359 | (2) | | | * | |
Joseph B. Bower, Jr. | | | 46,029 | (2)(3) | | | * | |
| | | 277,097 | (4) | | | 1.80% | |
Richard L. Greslick, Jr. | | | 18,410 | | | | * | |
Robert W. Montler | | | 55,683 | | | | * | |
Joel E. Peterson | | | 10,417 | | | | * | |
Deborah Dick Pontzer | | | 27,037 | | | | * | |
Jeffrey S. Powell | | | 124,775 | (2) | | | * | |
Nicholas N. Scott | | | 12,294 | | | | * | |
Richard B. Seager | | | 13,901 | | | | * | |
Francis X. Straub, III | | | 16,659 | | | | * | |
Peter C. Varischetti | | | 6,223 | | | | * | |
Julie Young | | | 352 | | | | * | |
Executive Officers: | | | | | | | | |
Joseph E. Dell, Jr. | | | 10,246 | | | | * | |
Tito L. Lima | | | 1,507 | | | | * | |
Mark D. Breakey | | | — | | | | N/A | |
Brian W. Wingard | | | — | | | | N/A | |
Directors and Executive Officers as Group (19 persons) (6) | | | 456,941 | | | | 2.97% | |
(1) | Information furnished by directors, NEOs and other executive officers.
|
(2) | Includes joint ownership with relatives as to which the director or officer has joint voting or investment powers.
|
(3) | Includes shares through a trust or pension plan agreement.
|
(4) | Includes shared voting rights for shares indirectly held in trust for the Plan.
|
(5) | * represents less than 1%.
|
(6) | Excludes shares indirectly held in trust for the Plan.
|
38
| | | | | | | | | | | | | | | | | |
| Name | | Shares Beneficially Owned (1) | | Percentage of Shares Outstanding (3) | |
| Directors: | | | | | |
| Peter F. Smith | | 96,993 | | | * |
| Michael D. Peduzzi | | 17,565 | | | * |
| Richard L. Greslick, Jr. | | 37,901 | | | * |
| Michael Obi | | 3,206 | | | * |
| Joel E. Peterson | | 22,984 | | | * |
| Deborah Dick Pontzer | | 38,714 | (2) | | * |
| Jeffrey S. Powell | | 133,552 | (2) | | * |
| Nicholas N. Scott | | 28,464 | | | * |
| Richard B. Seager | | 18,589 | | | * |
| Francis X. Straub, III | | 34,954 | | | * |
| Peter C. Varischetti | | 16,908 | | | * |
| Julie M. Young | | 5,567 | | | * |
| Executive Officers: | | | | | |
| Joseph B. Bower, Jr. | | 71,297 | (2) | | * |
| Martin T. Griffith | | 10,102 | | | * |
| Leanne D. Kassab | | 11,612 | (2) | | * |
| Tito L. Lima | | 15,429 | (2) | | * |
| Directors and Executive Officers as Group (22 persons) | | 599,690 | | 2.83 | % |
* Less than 1%.
(1) Information furnished by directors, NEOs and other executive officers.
(2) Includes joint ownership with relatives as to which the director or officer has joint voting or investment powers.
(3) Based on 21,217,777 shares of our common stock outstanding as of February 21, 2023.
Stock Owned by 5% Shareholders
| | | | | | | | |
Name | | Shares Beneficially
Owned | | | Percentage of Shares
Outstanding | |
BlackRock, Inc. | | | 821,557 | (1) | | | 5.4% | |
(1) | Based solely on a Schedule 13G filed with the SEC on February 7, 2020. BlackRock, Inc. has sole voting power with respect to 794,344 shares and sole dispositive power with respect to 821,557 shares. BlackRock, Inc. has indicated that it filed the Schedule 13G on behalf of the following subsidiaries: BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Fund Advisors, BlackRock Asset Management Ireland Limited, BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Schweiz AG and BlackRock Investment Management, LLC. The address of BlackRock, Inc. is 555 East 52nd Street, New York, NY 10055.
|
39
The following table presents common stock ownership information for persons known to us to beneficially own more than 5% of the Corporation’s stock as of the record date of February 21, 2023.
| | | | | | | | | | | | | | |
| Name | | Shares Beneficially
Owned | | Percentage of Shares Outstanding(1) |
| Wellington Management Group LLP | | 1,425,149 | (2) | 6.7% |
| BlackRock, Inc. | | 1,401,528 | (3) | 6.6% |
(1) Based on 21,217,777 shares of our common stock outstanding as of February 21, 2023.
(2) Based on a Schedule 13G filed on February 6, 2023 by Wellington Management Group LLP. (“Wellington”), which listed its address as c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210, Wellington possesses shared voting power with respect to 1,390,828 shares of common stock and shared dispositive power with respect to 1,425,149 shares of common stock. Wellington has indicated that it filed the Schedule 13G on behalf of the following subsidiaries: Wellington Group Holdings LLP; Wellington Investment Advisors Holdings LLP; Wellington Management Global Holdings, Ltd and Wellington Investment Advisors.
(3) Based on a Schedule 13G/A filed on February 1, 2023 by BlackRock, Inc. (“BlackRock”), which listed its address as 55 East 52nd Street, New York, NY 10055, BlackRock possesses sole voting power with respect to 1,378,858 shares of common stock and sole dispositive power with respect to 1,401,528 shares of common stock. BlackRock has indicated that it filed the Schedule 13G/A on behalf of the following subsidiaries: Aperio Group, LLC; BlackRock Advisors, LLC; BlackRock Asset Management Canada Limited; BlackRock Fund Advisors; BlackRock Institutional Trust Company, National Association; BlackRock Financial Management, Inc.; and BlackRock Investment Management, LLC.
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation
S-K, we are providing the following information about the relationship
of the median of the annual total compensation of our employees and the annual total compensation of Mr.
Joseph B. Bower, Jr.,Michael D. Peduzzi, our
CEO. For 2019,CEO, as of December 31, 2022. As of December 31, 2022, our most recently completed fiscal year, the
median of the annual total compensation of
all of the Corporation’s employeesour median employee was
$36,768,$64,192 and the annual total compensation of our CEO, as reported in the “Summary Compensation Table” included in this Proxy Statement and adjusted for the value of
non-discriminatory health insurance benefits, was
$1,678,443.$1,131,245. As a result,
our CEO’sthe annual total compensation
of our CEO was
4618 times that of the median
of the annual total compensation of all employees.employee.
To identify
theour median
of the annual total compensation for all of the Corporation’s employees,employee, as well as to determine the annual total compensation of our median employee and CEO, we took the following steps:
| 1. | We determined that, as of December 31, 2019, our employee population consisted of 594 individuals with all of these individuals located in the United States (as reported in Item 1, Business, in our Annual Report on Form10-K filed with the SEC on March 5, 2020 (the “Annual Report”)). This population consisted of our full-time, part-time, and temporary employees.
|
| a. | In this Proxy Statement, we selected December 31, 2019, which is within the last three months of 2019, as the date upon which we would identify the “median employee” because it enabled us to make such identification in a reasonably efficient and economical manner.
|
| 2. | To identify the “median employee” from our employee population, we compared the salary amount of our employees as reflected in our payroll records as reported to the Internal Revenue Service on FormW-2 for 2019.
|
| 3. | We identified our median employee using this compensation measure, which was consistently applied to all of our employees included in the calculation. Since all of our employees are located in the United States, as is our CEO, we did not make anycost-of-living adjustments in identifying the median employee.
|
| 4. | Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2019 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K, resulting in annual total compensation of $36,768. As the median employee has opted out of our health care benefits, the estimated value of such employee’s benefits is $0.
|
| 5. | With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2019 Summary Compensation Table included in this Proxy Statement and incorporated by reference under Item 11 of Part III of our Annual Report, then added the value ofnon-discriminatory health insurance benefits.
|
40
1.We determined that, as of December 31, 2022, our employee population consisted of 758 individuals with all of these individuals located in the United States. This population consisted of our full-time, part-time, and temporary employees.
a.In this Proxy Statement, we selected December 31, 2022, which is within the last three months of 2022, as the date upon which we would identify the “median employee” because it enabled us to make such identification in a reasonably efficient and economical manner.
2.To identify the “median employee” from our employee population, we compared the salary amount of our employees as reflected in our payroll records as reported to the Internal Revenue Service on Form W-2 for 2022.
3.We identified our median employee using this compensation measure, which was consistently applied to all of our employees included in the calculation. Since all of our employees are located in the United States, as is our CEO, we did not make any cost-of-living adjustments in identifying the median employee.
4.Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2022 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $64,192.
5.With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2022 Summary Compensation Table included in this Proxy Statement and incorporated by reference under Item 11 of Part III of our Annual Report, then added the value of non-discriminatory health insurance benefits.
Delinquent Section 16(a)
Beneficial Ownership Reporting ComplianceReports
Under SEC rules, the Corporation’s directors, executive officers and beneficial owners of more than 10% of the Corporation’s equity securities are required to file periodic reports of their ownership, and changes in that ownership, with the SEC.
Based solely on
itsa review of
copiesreports we filed on behalf of
our directors and executive officers, and written representations from these
individuals that no other reports
were required, all reports on behalf of our directors and
representationsexecutive officers were filed on a timely basis under Section 16(a) other than, as a result of
such reporting persons,an administrative error, the Corporation
believes that during fiscal 2019, such SEChad a late filing
requirements were satisfied.of a report in March 2022 related to a stock purchase made by Joel E. Peterson.
Other Matters to Come Before the
20202023 Annual Meeting
The Board does not intend to bring any other matters before the annual meetingAnnual Meeting and does not know of any matter which anyone proposes to present for action at the meeting. However, if any other matters properly come before the meeting, the persons named in the accompanying proxy, or their duly constituted substitutes acting at the meeting, will be authorized to vote or otherwise act thereon in accordance with their judgment.
Shareholder Proposals for the
20212024 Annual Meeting
Any shareholder proposal pursuant to Rule14a-8 of the rules promulgated under the Exchange Act, to be considered for inclusion in our proxy materials for the 2021 annual meeting2024 Annual Meeting of shareholders,Shareholders must be addressed to Michael D. Peduzzi., President, CNB Financial Corporation, P.O. Box 42, Clearfield, PA 16830 and anyreceived no later than November 10, 2023. Any shareholder proposal for a nominee to the Board or proposal for any other matter to be acted upon at the 2021 annual meeting2024 Annual Meeting of shareholdersShareholders (and not for inclusion in our proxy statement) must be addressedreceived no later than January 24, 2024.
In addition to Joseph B. Bower,satisfying the foregoing requirements under our bylaws, to comply with the universal proxy rules under the Exchange Act, shareholders who intend to solicit proxies in support of director nominees other than the Corporation’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than February 17, 2024.
Householding
If you share an address with one or more other shareholders, you may have received notification that you will receive only a single copy of the 2022 Annual Report, Notice of Internet Availability of Proxy Materials and Proxy Statement for your entire household unless you have notified us that you wish to continue receiving individual copies. This practice, known as “householding,” is designed to reduce printing and mailing costs. If you would like to revoke your consent to “householding,” or if you are receiving multiple copies at your address and would like to enroll in “householding,” please submit your request to Richard L. Greslick, Jr., President,Secretary, CNB Financial Corporation, P.O. Box 42, Clearfield, PAPennsylvania 16830 and received no later than November 11, 2020.By Order of the Board of Directors,
Richard L. Greslick, Jr., Secretary
Clearfield, Pennsylvania
March 11, 2020
41
PROXY
CNB Financial Corporation
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 21, 2020
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Ms. Kylie Graham and Ms. Alyssa Lumadue, and each of them, as proxies with full power of substitution,or call us at (814) 765-9621. If you own your shares in “street name,” please contact your broker, bank or other nominee to represent and vote all of the shares which the undersigned is entitled to vote at the Annual Meeting of Shareholders (the “Annual Meeting”) of CNB Financial Corporation (the “Corporation”) in such manner as they, or any of them, may determine on any matters which may properly come before the Annual Meeting or any adjournments thereof and to vote on the matters set forth on the reverse side as directed by the undersigned. The Annual Meeting will be held at Lock Haven University - Clearfield Campus, 201 University Drive, Clearfield, PA 16830, 2nd Floor - Upper Lounge on Tuesday April 21st, 2020, 2:00 p.m. Eastern Time, and at any and all adjournments thereof. The undersigned hereby revokes any proxies previously given.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, FOR ANY NOMINEE IT WILL BE VOTED “FOR” ALL NOMINEES UNDER PROPOSAL 1 AND WILL BE VOTED “FOR” PROPOSALS 2 AND 4, AND “ONE YEAR” FOR PROPOSAL 3. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER BUSINESS NOT KNOWN AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
(Continued, and to be marked, dated and signed, on the other side)
p FOLD AND DETACH HERE AND READ THE REVERSE SIDEp
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to be held April 21, 2020.
The Proxy Statement and our 2019 Annual Report to Shareholders
are available at:http://www.viewproxy.com/CNBFinancial/2020
| | | | |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1, 2, AND 4, AND “ONE YEAR” FOR PROPOSAL 3. | | Please mark your votes
like this | | ☒ |
make your request.Proposal 1. Election of Class 1 Directors for 3 year terms expiring in 2023.
| | | | | | |
| | FOR | | AGAINST | | ABSTAIN |
01 Peter F. Smith | | ☐ | | ☐ | | ☐ |
02 Jeffrey S. Powell | | ☐ | | ☐ | | ☐ |
03 Francis X. Straub, III | | ☐ | | ☐ | | ☐ |
04 Peter C. Varischetti | | ☐ | | ☐ | | ☐ |
Election of Class 2 Director for a 2 year term expiring in 2022.
| | | | | | |
| | FOR | | AGAINST | | ABSTAIN |
01 Julie M. Young | | ☐ | | ☐ | | ☐ |
|
DO NOT PRINT IN THIS AREA
(Shareholder Name & Address Data)
|
| | | | |
| | CONTROL NUMBER
| | |
 | | | | |
| | |
Proposal 2. | | SAY-ON-PAY VOTE: To vote on a non-binding advisory resolution on By Order of the compensation program for CNB Financial Corporation’s named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related narrative executive compensation disclosures contained in the Proxy Statement (a “say-on-pay” vote).
Board of Directors, |
|
| Richard L. Greslick, Jr., Secretary | | | | | | |
|
| | ☐FOR | | ☐AGAINST | | ☐ABSTAIN | | |
| | Clearfield, Pennsylvania |
Proposal 3. | | SAY-ON-FREQUENCY VOTE: To vote on a non-binding advisory basis on how frequently shareholders will be provided a “say-on-pay” vote. Shareholders have the opportunity to request a “say-on-pay” vote every year, every two years, or every three years, or abstain from voting on the matter completely.
March 9, 2023 |
| | | | | | | | |
| | ☐ONE YEAR | | ☐TWO YEARS | | ☐THREE YEARS | | ☐ABSTAIN |
| | |
Proposal 4. | | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM: To ratify the appointment of Crowe LLP as our independent registered public accounting firm for the year ending December 31, 2020.
|
| | |
| | WILL ATTEND THE MEETING ☐ |
Note: Please sign exactly as your name or names appear on this card. Joint owners should each sign personally. If signing as a fiduciary or attorney, please give your exact title.
54
p FOLD AND DETACH HERE AND READ THE REVERSE SIDEp
As a shareholder
Table of CNB Financial Corporation you have the optionContents
Table of
voting your shares electronically through the Internet or by telephone, eliminating the need to return the proxy card. Your electronic vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed, dated and returned the proxy card. Votes submitted electronically over the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on April 20, 2020.
PROXY VOTING INSTRUCTIONS
Please have your 11 digit control number ready when voting by Internet or Telephone
| | | | | | | | |
 | | | |  | | | | 
|
| | | | |
INTERNET
Vote Your Proxy on the Internet:
Go towww.AALvote.com/CCNE
| | | | TELEPHONE
Vote Your Proxy by Phone:
Call 1 (866) 804-9616
| | | | MAIL
Vote Your Proxy by Mail:
|
| | | | |
Have your proxy card available when you access the above website. Follow the prompts to vote your shares. | | | | Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares.
| | | | Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. |
PLEASE DO NOT RETURN THE PROXY CARD IF YOU ARE VOTING ELECTRONICALLY
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