UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

(Rule 14a-101)

 

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.)

 

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Preliminary Proxy Statement

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to 240.14a-12

 

First National CommunityFNCB Bancorp, Inc.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

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FIRST NATIONAL COMMUNITYFNCB BANCORP, INC.

102 East Drinker Street

Dunmore, Pennsylvania 18512

 

NOTICE OF 20162017 ANNUAL MEETING OF SHAREHOLDERS

To our Shareholders:

 

TO OUR SHAREHOLDERS:

NOTICE IS HEREBY GIVEN that theFNCB Bancorp, Inc., a Pennsylvania corporation (“FNCB”) will hold an Annual Meeting of Shareholders of First National Community Bancorp, Inc. (the “Company”) will be held at First National CommunityFNCB Bank’s (the “Bank”) Exeter Branch Office located at 1625 Wyoming Avenue, Exeter, Pennsylvania 18643, on May 18, 201617, 2017 at 9:00 A.M. Eastern Time, for the following purposes:

 

 

1.

To elect three (3) directors to the Board of Directors for terms expiring in 20192020 and until their successors are elected;

 

 

2.

To approvehold an advisory vote on the compensation of the Company’sFNCB’s named executive officers (referred to as the Company’s 2016 say-on-pay proposal);officers;

 

 

3.

To ratify the appointment of Baker Tilly Virchow Krause, LLP as the Company’sFNCB’s independent registered public accounting firm for the year endedending December 31, 2016;2017; and

 

4.

To transact any other business properly presented at the annual meeting and any adjournment or postponement of the meeting.

 

The Board of Directors unanimously recommends that you vote “FOR” each of the proposals named above.

 

The Board of Directors fixed April 8, 2016, as the record date (the “Record Date”) for determining shareholders entitled to notice of, and to vote at, the meeting. Only shareholders of record of the Company’s common stock at the close of business on that dateApril 7, 2017 (the “Record Date”) are entitled to notice of, and to vote at, the meeting.annual meeting or any adjournment of postponement thereof.

 

Please refer to the attached proxy statement and the 20152016 Annual Report to Shareholders. You may obtain a copy of this Proxy Statement and the Annual Report to Shareholders on Form 10-K including the financial statements and exhibits for the 20152016 fiscal year at no cost on our website atwww.fncb.com/investorrelations.

 

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED SELF-ADDRESSED, STAMPED ENVELOPE OR VOTE VIA THE TOLL-FREE NUMBER OR VIA THE INTERNET. YOU MAY REVOKE ANY PROXY GIVEN IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE VOTE AT THE ANNUAL MEETING.
By Order of the Board of Directors,
/s/ Dominick L. DeNaples

Dominick L. DeNaples, Chairman

Dunmore, Pennsylvania

April 17, 2017

 

By Order of the Board of Directors,

IMPORTANT NOTICE

Please vote your shares by one of the following methods as soon as possible, whether or not you plan to attend the Annual Meeting: (1) a toll-free telephone call, (2) the Internet, or (3) the enclosed proxy in the postage paid envelope provided. If you hold shares through a broker, trust, bank or othernominee holder, please complete the voting instructions of that broker or custodian. Brokers may not vote your shares on the election of directorsand the advisory vote on the compensation of FNCB’s named executive officers unless you provide your nominee with specific instructions as to how to vote your shares. Please vote your shares so your vote can be counted.

 

/s/ Dominick L. DeNaples

Dominick L. DeNaples, Chairman

Dunmore, Pennsylvania

April 18, 2016

 

 
 
 

 

PROXY STATEMENT

TABLE OF CONTENTS

 

 

PAGE

Frequently Asked Questions and Answers

3

General Information

5

Date, Time and Place of Annual Meeting

5

Internet Availability of Proxy Materials

5

Purpose of the Annual Meeting

5

Record Date, Quorum and Voting Rights

6

Solicitation of Proxies and Voting

6

Revocation of Proxies

7

Principal Beneficial Owners of the Company’sFNCB’s Common Stock

78

Principal Owners

78

Beneficial Ownership by Directors, Executive Officers and Nominees

89

PROPOSAL 1 Election of Directors

10

Information as to Nominees

11

Information as to Directors Who Will Continue in Office

12

Information as to Executive Officers and Significant Employees

14

Corporate Governance

16

Code of Ethics

17

Shareholder Communications

17

Submission of Shareholder Proposals for 20172018 Annual Meeting

1817

The Board of Directors

18

Committees of the Board of Directors

2019

Director Compensation Committee

20

Compensation Committee20

Risk Management Committee

2021

Corporate Governance Committee

21

Director Nominations

21

Audit Committee

22

Report of the Audit Committee

22

Executive Compensation

23

Compensation Discussion and Analysis

23

Compensation Committee Report

32

Summary Compensation Table

32

33

Grants of Plan-Based Awards

34

Potential Payments Upon Termination or Change in Control

37

   Director Compensation

39

Compensation Committee Interlocks and Insider Participation

40

   Compensation Committee Report

4139

Stock Performance Graph and Table

4240

PROPOSAL 2Advisory Vote on Compensation of the Company’sFNCB’s Named Executive Officers

4341

Certain Relationships and Related Transactions

4341

PROPOSAL 3Ratification of the Appointment ofIndependent Registered Public Accounting Firm

4543

Fees Paid to Independent Registered Public Accounting Firm

4643

Section 16(a) Beneficial Ownership Reporting Compliance

4644

Other Matters

4744

Additional Information

4744

 

 

   

FREQUENTLY ASKED QUESTIONS AND ANSWERS

 

Who is entitled to vote?

 

Only those shareholders who held their shares of record as of the close of business on April 8, 2016,7, 2017, the Record Date, are entitled to vote. As of April 8, 2016,7, 2017, there were 16,530,43216,692,314 shares of the Company’sFNCB’s common stock outstanding and entitled to vote. Each of the Company’sFNCB’s shareholders on the Record Date is entitled to one vote per share.

 

How do I vote?

 

If you are a shareholder of record as of April 8, 2016,7, 2017, you may vote your shares by using one of four methods: mail, via the internet, telephone or in person. (See instructions on the proxy card).

 

How does discretionary authority apply?

 

If you are a shareholder of record and vote by proxy but make no specification how to vote your shares on your proxy card that you have otherwise properly executed, the named agent(s) mayproxy holders will vote the shares represented by your proxy by votingFOReach of the proposals listed on the proxy card.

 

Is my vote confidential?

 

Yes. Only the Judge of Election, the proxy holders and the transfer agent will have access to your proxy. All comments will remain confidential unless you ask that your name be disclosed.

 

Who will count the votes?

 

A representative of FNCB’s transfer agent, American Stock Transfer and Trust Company, LLC, the Company’s transfer agent, will tabulate the votes and act as Judge of Election.

 

What does it mean if I receive more than one proxy?

 

Your shares are probably registered differentlyin more than one name or are held in more than one account. Vote all proxies to ensure that all your shares are voted.

 

What constitutes a quorum?

 

As of April 8, 2016, 16,530,4327, 2017, 16,692,314 shares of common stock were outstanding and entitled to vote. The presence, in person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast, constitutes a quorum for the transaction of business at the annual meeting. If you vote by proxy or in person, you will be considered part of the quorum.

 

What percentage of stock do the directors and officers own?

 

Approximately 13.49%14.17% of the Company’sFNCB’s common stock as of March 31, 2016April 7, 2017 is owned by theour directors and executive officers combined.as a group. (See page 9 of the proxy statement for more details).

 

 

What are the solicitation expenses?

 

The CompanyFNCB has retained American Stock Transfer and Trust Company, LLC of Brooklyn, New York as its transfer agent. In its capacity as transfer agent, American Stock Transfer and Trust Company, LLC will assist in the distribution of proxy materials and solicitation of votes, and will act as the Judge of Election. The estimated fee to provide these services is $11,300$13,200 plus out-of-pocket expenses.

 

Who is the largest principal shareholder?

 

The largest principal shareholder of FNCB as of April 8, 20167, 2017 is Louis A. DeNaples (see page 9 of the proxy statement for more details).

 

How many votes are needed to approve each proposal and what are the effects of abstentions or broker non-votes on the voting results?

 

Proposal

Number

Item

Vote Required

for Approval of

Each Item

Abstentions*

Uninstructed

Shares/Effect of

Broker Non-votes

Signedbut

Unmarked

Proxy

Cards

1

Election of Directors

Plurality

No effect

Not voted/No effect

Voted “for”

2

Advisory Vote for Say-on-Payon the compensation of FNCB’s named executive officers

Majority of votes cast

No effect

Not voted/No effect

Voted “for”

3

Ratification of Baker Tilly Virchow Krause, LLP as FNCB’s independent registered public accounting firm for the year ending December 31, 2017

Majority of votes cast

No effect

Discretionary vote by Broker

Voted “for”

* Abstentions are included in determining whether a quorum is present.

 

 

First National CommunityFNCB Bancorp, Inc.

102 E. Drinker Street

Dunmore, PA 18512

 

PROXY STATEMENT

FOR THE2017ANNUAL MEETING OF SHAREHOLDERS,to be held onMay 18, 201617, 2017

 

 

Date, Time and Place of Annual Meeting

 

This proxy statement is being furnished foras part of the solicitation of proxies by the Board of Directors (the “Board of Directors” or “Board”) of First National CommunityFNCB Bancorp, Inc. (the “Company”(“FNCB”), a Pennsylvania business corporation and registered bank holding company, of proxies to be voted at the Company’s 2016FNCB’s 2017 annual meeting of shareholders.shareholders (“annual meeting”). The annual meeting will be held at First National CommunityFNCB Bank’s (the “Bank”) Exeter Branch Office, 1625 Wyoming Avenue, Exeter, Pennsylvania 18643 on Wednesday, May 18, 201617, 2017 at 9:00 a.m., prevailing time. All inquiries regarding the annual meeting should be directed to Joseph Coccia, Secretary of the Company.FNCB. This proxy statement and the enclosed form of proxy are first being sent to shareholders of the CompanyFNCB on or about April 18, 2016.17, 2017.

 

Internet Availability of Proxy Materials

 

The proxy materials relating to the 20162017 annual meeting of shareholders and the 20152016 Annual Report on Form 10-K are available free of charge on the Internet. Please go towww.fncb.com/investorrelations to view and obtain the materials online.

 

Purpose of the Annual Meeting

 

At the annual meeting, shareholders will be requested:

 

 

●

to elect three (3) directors to the Board of Directors for terms expiring in 20192020 and until their successors are duly elected and qualified;

 

 

●

to approvehold an advisory vote on the compensation of the Company’sFNCB’s named executive officers (referred to as the Company’s 2016 “say-on-pay” proposal);officers;

 

 

●

to ratify the appointment of Baker Tilly Virchow Krause, LLP as the Company’sFNCB’s independent registered public accounting firm for the year endedending December 31, 20162017; and

 

●

●     to transact any other business properly presented at the annual meeting and any adjournment or postponement of the meeting.     

 

We have not authorized anyone to provide you with information about the Company;FNCB; therefore, you should rely only on the information contained in this document or on documents to which we refer you. Although we believe we have provided you with all the information helpful to you in your decision to vote, events may occur at the Company subsequent toFNCB after printing this proxy statement that might affect your decision or the value of your stock.

 

 

  

Record Date, Quorum and Voting Rights

 

The Company’sFNCB’s Board of Directorshas fixed April 8, 20167, 2017 as the Record Date for the determination of shareholders entitled to notice of, and to vote at, the annual meeting. On the Record Date, the CompanyFNCB had 16,530,43216,692,314 shares of common stock, par value $1.25 per share (the “common stock”), outstanding and entitled to vote, held by approximately 1,8231,921 shareholders. The Company’sFNCB’s common stock is the only authorized class of stock entitled to vote.

 

Under Pennsylvania law and the Company’sFNCB’s bylaws, the presence of a quorum, in person or by proxy, is required for each matter to be acted upon at the annual meeting. The presence, in person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders areshares of common stock entitled to cast,vote at the annual meeting, constitutes a quorum for the transaction of business at the annual meeting. Votes withheld and abstentions will be counted in determining the presence of a quorum. A “broker non-vote” results on a matter when your broker or nominee returns a proxy but does not vote on a particular proposal because it does not have discretionary authority to vote on that proposal and has not received voting instructions from you. We believe that your broker or nominee only has discretionary voting power with respect to the proposal regarding the ratification of the appointment of the independent registered public accounting firm.firm for 2017.

 

Each holder of common stock is entitled to one vote, in person or by proxy, for each share of common stock held in his or her name in the Company’sFNCB’s books as of the Record Date. If your shares are held in an account at a bank, brokerage firm, broker-dealer or other similar organization, then you are a beneficial owner of shares held in street“street name.” In that case, you will have received these proxy materials from that organization holding your account and, as a beneficial owner, you have the right to instruct your broker, bank, trustee, or nominee how to vote the shares held in your account. If no voting instructions are given, your broker or nominee has discretionary authority to vote your shares on your behalf on routine matters. If you hold your shares in “street name” through a broker, trust, bank or other nominee, your nominee holder may not be able to vote your shares on the proposal to elect directors and the advisory vote on the compensation of FNCB’s named executive officers unless you provide specific instructions how to vote on those proposals.

 

Assuming the presence of a quorum, the three (3) nominees for director receiving the highest number of votes will be elected at the annual meeting. The advisory vote on the compensation of the Company’sFNCB’s named executive officers, the ratification of Baker Tilly Virchow Krause, LLP as FNCB’s independent registered public accounting firm for 2017, and any other matters that may come before the annual meeting, will require the affirmative vote of a majority of the votes cast on the proposal. In all matters, anyproposal to be approved. Any abstention or broker non-votes will not be counted as a vote cast.cast on a proposal but will be counted in determining whether a quorum is present at the annual meeting.

 

Solicitation of Proxies and Voting

 

The cost of preparing, assembling, printing, mailing and soliciting proxies, and any additional material regarding the annual meeting that the CompanyFNCB sends to its shareholders in connection with the annual meeting, will be paid by the Company.FNCB. In addition to solicitation by American Stock Transfer and Trust Company, LLC, the directors, officers and employees of the CompanyFNCB and the Bank may solicit proxies from shareholders personally or by telephone, facsimile or other electronic means without additional compensation. Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries to forward proxy solicitation materials to the beneficial owners of the common stock held of record by these persons, and upon their request, the CompanyFNCB will reimburse them for their reasonable forwarding expenses.

 

Shareholders of record can vote their shares byby: (1) completing and returning athe enclosed written proxy card or viacard; (2) by telephone using the toll-free number, 1-800-776-9437; and (3) the Internet. To do so,vote via the Internet, go towww.voteproxy.com and follow the on screenonscreen instructions. HavePlease have your control number from your proxy card available when you access the web page. Telephone voting is also available, toll free, for shareholders of record by calling 1-800-776-9437 from a touch tone phone.


 

Shareholders of record can also vote in person at the meeting. Submitting your voting instructions by returning a proxy card or by voting over the telephone or over the Internet will not affect your right to attend the meeting and vote. The method by which you vote will in no way limit your right to vote in person at the annual meeting, after giving written notice to Joseph Coccia, Secretary of the Company.FNCB.


 

Please note that you may not vote shares held in street name in person at the annual meeting unless you obtain a legal proxy from that organization holding your account. If your shares are held in an account at aanother bank, brokerage firm, broker-dealer or other similar organization, these proxy materials are being forwarded to you by your broker or nominee which is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker how to vote and are also invited to attend the meeting. If you plan to attend the annual meeting, you will be required to provide a “Broker Letter” as proof of ownershipof FNCB’s common stockto be allowed to attend the annual meeting. Your broker or nominee has enclosed a voting instruction card for you to use in directing the broker or nominee how to vote your shares.

 

Revocation of Proxies

 

A shareholder of record who returns a proxy may revoke the proxy prior to the time it is voted at the annual meeting in any one of the following ways:

 

 

●

by giving written notice of revocation to Joseph Coccia, Secretary of First National CommunityFNCB Bancorp, Inc., 102 East Drinker Street, Dunmore, Pennsylvania 18512; or

 

 

●

by executing a later-dated proxy and giving written notice to the Secretary of the Company;FNCB; or

 

 

●

by voting in person after giving written notice to the Secretary of the Company.FNCB.

 

Attendance by a shareholder at the annual meeting will not in and of itself constitute a revocation of the proxy.

 


PRINCIPAL BENEFICIAL OWNERS OF THE COMPANY’SFNCB’S COMMON STOCK

 

Principal Owners

 

The following table sets forth, information as of April 8, 2016 with respect to7, 2017, information about the beneficial ownershipnumber of common stockshares held by any person or group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”) who is known by the Board of Directorspersons FNCB knows to be the beneficial ownerowners of more than five percent (5.0%)5.0% of the Company’sFNCB’s outstanding common stock. As of April 8, 2016, the Company7, 2017, FNCB had 16,530,43216,692,314 shares of common stock outstanding and entitled to vote.

 

Name and Address

Shares Beneficially Owned(1)

Percent of

Outstanding

Common Stock

Beneficially Owned

 

Shares

Beneficially

Owned(1)

  

Percent of

Outstanding

Common Stock

Beneficially Owned

 
          

Louis A. DeNaples

400 Mill Street

Dunmore, PA 18512

1,630,449

9.83%

Louis A. DeNaples

  1,730,813   10.37% 

400 Mill Street

Dunmore, PA 18512

        

(1)

All shares are owned individually or jointly with a spouse unless otherwise indicated. For additional details on the shares beneficially owned, see “Beneficial Ownership by Directors, Executive Officers and Nominees” on page 9.

 

Beneficial Ownership by Directors, Executive Officers and Nominees

 

The following table sets forth certain information concerning the number and percentage of whole shares of the Company’sFNCB’s common stock beneficially owned by each of its directors and director nominees, its executive officers whose compensation is disclosed in this Proxy Statement, its principal shareholders who own more than 5.0% of FNCB’s common stock, and by its current directors and all executive officers as a group, as of April 8, 2016.7, 2017. The address of each of the beneficial owners identified is 102 E. Drinker Street, Dunmore, PA 18512. Except as otherwise indicated, each person included in this table owns theirhis or her shares directly and possesses sole voting and sole investment power with respect to all such shares; none of such shareswhich are pledged as security. Except as set forth below, the CompanyFNCB knows of no other person or persons who beneficially own in excess ofowns more than five percent (5.0%) of the Company’sFNCB’s common stock. Further, the CompanyFNCB is not aware of any arrangement which at a subsequent date may result in a change of control of the Company.FNCB.

   


    

Number

     

Name

 

Position

 

of Shares

  

Percentage (15)

 

William G. Bracey (1)

 

Director of FNCB and the Bank

  106,796    * 
           

Joseph Coccia (2)

 

Director of FNCB and the Bank; Secretary of the Board of Directors

  181,820   1.09% 
           

Dominick L. DeNaples (3)

 

Director, Chairman of the Boards of FNCB and Bank

  65,304    * 
           

Louis A. DeNaples (4)

 

Director of FNCB and the Bank; Former Chairman of the Boards of FNCB and the Bank

  1,730,813   10.37% 
           

Louis A. DeNaples, Jr. (5)

 

Director, Vice Chairman of FNCB and the Bank

  103,470    * 
           

Keith W. Eckel (6)

 

Director of FNCB and the Bank

  4,843    * 
           

Thomas J. Melone (7)

 

Director of FNCB and the Bank

  800    * 
           

John P. Moses (8)

 

Director of FNCB and the Bank

  84,877    * 
           

Gerard A. Champi (9)

 

Director, President and Chief Executive Officer of FNCB and the Bank; Former Chief Operating Officer of the Bank; and Former Interim President and Chief Executive Officer of FNCB and the Bank

  26,322    * 
           

James M. Bone, Jr. (10)

 

Executive Vice President and Chief Financial Officer/Treasurer of FNCB and the Bank and Former Chief Information Officer of the Bank

  22,517    * 
           

Brian C. Mahlstedt (11)

 

Executive Vice President and Chief Lending Officer of the Bank

  8,922    * 
           

Mary Griffin Cummings (12)

 

Senior Vice President and General Counsel of the Bank

  4,549    * 
           

Lisa L. Kinney (13)

 

Senior Vice President and Retail Lending Officer of the Bank

  6,948    * 
           
  

All current directors and executive officers as a group (20 persons)(14) +

  2,364,477   14.17% 

BENEFICIAL OWNERSHIP BY DIRECTORS, EXECUTIVE OFFICERS AND NOMINEES

Name

 

Position

 

Number

of Shares

 

Percentage (14)

William G. Bracey (1)

 

Director of the Company and Bank

 

                     104,973

 

*

       

Joseph Coccia (2)

 

Director of the Company and Bank; Secretary of the Board of Directors

 

                     181,820

 

1.10%

       

Dominick L. DeNaples (3)

 

Director, Chairman of the Boards of the Company and Bank

 

                       49,755

 

*

       

Louis A. DeNaples (4)

 

Director of the Company and Bank; Former Chairman of the Boards of the Company and the Bank

 

                  1,630,449

 

9.83%

       

Louis A. DeNaples, Jr. (5)

 

Director of the Company and Bank

 

                     101,736

 

*

       

Keith W. Eckel (6)

 

Director of the Company and Bank

 

                         4,400

 

*

       

Thomas J. Melone (7)

 

Director of the Company and Bank

 

                            800

 

*

       

John P. Moses (8)

 

Director of the Company and Bank

 

                       84,877

 

*

       

Steven R. Tokach (9)

 

Director of Company and Bank; President and Chief Executive Officer of the Company and Bank

 

                         8,600

 

*

       

James M. Bone, Jr. (10)

 

Executive Vice President and Chief Financial Officer/Treasurer of the Company and Bank and former Chief Information Officer of the Bank

 

                       18,745

 

*

       

Gerard A. Champi (11)

 

Chief Operating Officer of the Bank; Former Interim President and Chief Executive Officer of the Company and Bank

 

                       22,124

 

*

       

Brian C. Mahlstedt (12)

 

Executive Vice President and Chief Lending Officer of the Bank

 

                         3,889

 

*

      

 

Mary Griffin Cummings (13)

 

Senior Vice President and General Counsel of the Bank

 

                         2,000

 

*

       
  

All current directors and executive officers as agroup (21 persons)(14) +

 

                  2,237,594

 

13.49%

*Indicates ownership of less than 1%.

 

+Includes all options held by all current directors and executive officers that are exercisable within 60 days.

 

(1) Comprises 3,897Comprised of 3,965 shares held individually by Mr. Bracey and 101,076102,831 shares held by a business which is 100.00% owned by Mr. Bracey.

 


(2) ComprisesComprised of 9,075 shares held jointly with Mr. Coccia’s spouse and 172,745 shares held by a family limited partnership.

  


(3) Comprises 47,316Comprised of 5,272 shares held individually by Mr. DeNaples, 57,593 shares held jointly with Mr. DeNaples’ spouse and 2,439 shares held by a business in which he is a 33.33% owner with his brother, Louis A. DeNaples.

 

(4) Comprises 1,609,063Comprised of 1,708,259 shares held individually by Mr. DeNaples, 14,01615,099 shares owned individually by his spouse, 4,9315,016 shares owned jointly with Mr. DeNaples’ spouse and 2,439 shares held by a business in which he is a 33.33% owner with his brother, Dominick L. DeNaples.

 

(5) Comprises 73,244Comprised of 74,515 shares held individually by Louis A.Dr. DeNaples, Jr., 27,21727,658 co-owned with Louis A.Dr. DeNaples, Jr.’s children and 1,2751,297 shares held for the benefit of a minor nephew.

 

(6) Comprises 4,400Comprised of 4,843 shares held individually by Mr. Eckel.

 

(7) ComprisesComprised of 800 shares held individually by Mr. Melone.

 

(8) ComprisesComprised of 2,673 shares held individually by Mr. Moses and 82,204 shares held jointly with Mr. Moses’ spouse.

 

(9) Comprises 8,600Comprised of 12,550 shares held individually by Mr. Tokach.Champi, 2,907 shares held jointly with Mr. Champi’s spouse, 1,765 shares held as custodian for the benefit of a minor, and exercisable options to purchase 9,100 shares.

 

(10) Comprises 2,142Comprised of 2,233 shares held jointly with Mr. Bone’s spouse, 3,7348,998 shares held individually, 4,6574,722 shares co-owned with Mr. Bone’s father and three of his siblings, 6264 shares held by Mr. Bone’s adult child who is considered his dependent, and exercisable options to purchase 8,1506,500 shares.

 

(11) Comprises 6,0958,922 shares held individually by Mr. Champi, 2,857 shares held jointly with Mr. Champi’s spouse, 1,735 shares held as custodian for the benefit of a minor, and exercisable options to purchase 11,437 shares.Mahlstedt.

 

(12) Comprises 3,889 shares held individually by Mr.Mahlstedt.

(13) Comprises 2,0004,549 shares held individually by Ms. Cummings.

 

(13) Comprises 4,178 shares held individually by Ms. Kinney, 170 shares held by Ms. Kinney’s adult child who is considered her dependent, and exercisable options to purchase 2,600 shares.

(14)(15) Percentages are calculated in accordance with Rule 13d-3 under the Exchange Act. Accordingly, representsAct, and represent percentage of 16,581,17816,692,314 shares issued, outstanding and entitled to vote as of March 31, 2016,April 7, 2017,except with respect to individuals holding options exercisable within 60 days of that date, in which event, represents percentage of shares issued, outstanding and entitled to vote plus the number of shares for which that person holds options exercisable within 60 days of March 31, 2016April 7, 2017 and except with respect to all directors and executive officers of the CompanyFNCB as a group, in which case represents percentage of shares issued, outstanding and entitled to vote plus the number of shares for which those persons hold such options.options exercisable within 60 days of April 7, 2017. The above table excludes unvested shares of restricted stock because, though those shares are outstanding, the holder does not have the power to vote or transfer the shares. Certain shares beneficially owned by the Company’sFNCB’s directors and executive officers may be held in accounts with third-party firms, where such shares may from time to time be subject to a security interest for margin credit provided in accordance with such firm’s policies.

 

PROPOSAL 1

ELECTION OF DIRECTORS

 

In accordance with Section 2.02 of the Company’sFNCB’s bylaws, the CompanyFNCB has a classified Board of Directors with staggered three-year terms of office. The Board is divided into three classes, with each class to be as nearly equal in number as possible. In April 2016, Director Steven R. Tokach resigned as a Class B director and was reappointed as a Class A director in order to maintain the number of directors in each class as nearly equal as possible following the resignation of Michael J. Cestone, Jr. in December 2015.TheThe terms of the separate classes expire in successive years. Thus, at each annual meeting of shareholders, successors to the class of directors whose term then expires are elected to hold office for a term of three years. Therefore, the term of office of one class of directors expires in each year. The Board of Directors is authorized to increase the number of directors that constitutes the whole Board of Directors provided that the total number of directors in each class remains relatively proportionate to the others.

 


Unless otherwise instructed, the proxy holderholders will vote the proxies received for the election of the three (3) nominees for Class CA Director named below. If any nominee should become unavailable to serve for any reason, proxies will be voted in favor of a substitute nominee as designated by the Board of Directors. The Board of Directors currently believes that the nominees named will be able to serve if elected. Any vacancy on the Board of Directors, including vacancies resulting from an increase in the number of directors, will be filled by a majority of the remaining members of the Board of Directors and each person so appointed will be a director until the expiration of the term of office of the class to which he or she was appointed. Assuming the presence of a quorum, the three (3) nominees for director receiving the highest number of votes will be elected at the annual meeting.

 


Cumulative voting rights do not exist with respect to the election of directors. Except as may otherwise be provided by statute or by the articles of incorporation, at every shareholdersshareholders’ meeting, each shareholder entitled to vote has the right to one vote for each share of common sharestock owned on the Record Date fixed for the meeting. For example, if a shareholder owns 100 shares of common stock, he or she may cast up to 100 votes for each of the nominees for director in the class to be elected.

  

InformationInformationastasto Nominees

 

The following section contains, as of April 8, 2016,7, 2017, certain information with respect to the nominees for directors for terms to expire in 2019.2020. You will find information about their share ownership on page 10.

 

NOMINEES FOR CLASS C DIRECTORSA DIRECTOR WHOSE TERMS WILL EXPIRE IN 20192020

 

Joseph CocciaGerard A. Champi (Director of the CompanyFNCB since 1998)2016)

 

Mr. Joseph Coccia, 61, is a DirectorGerard A. Champi, 56, was appointed to President and Chief Executive Officer and Board Member of the CompanyFNCB and the Bank since 1998.on July 1, 2016. Prior to holding this position, Mr. CocciaChampi was appointed as SecretaryChief Operating Officer of the Board of Directors in May 2015.Bank from March 2011 to June 2016. Mr. Coccia is President of Coccia Ford, Inc. (doing business as Coccia Ford Lincoln), a car dealership in Wilkes-Barre, Pennsylvania, and President of Eastern Auto Exchange, Inc. Mr. CocciaChampi also served onas Interim President and Chief Executive Officer of FNCB and the Lincoln Mercury Dealer Association Board. Mr. Coccia’s strong business backgroundBank and knowledge of owning and operating a large local business, his broad community involvement, and his service as a director of the CompanyBank from March 2010 until February 2011. Mr. Champi has been with the Bank since 1991 and has served in various leadership roles in the Retail, Commercial Sales and Executive Divisions. Mr. Champi currently serves as the President of the Northeastern Pennsylvania Council Boy Scouts of America. He also serves as Board member of the St. Joseph’s Center and the Lackawanna Blind Association, Advisory Board member of Penn State Worthington Scranton, a campus of the Pennsylvania State University and Past President of the Boards of Directors of the Greater Pittston Chamber of Commerce and the Luzerne County Community College Foundation. Mr. Champi’s extensive knowledge of FNCB and the Bank, for over 14 yearshis time as Interim President and Chief Executive Officer and other various leadership positions with the Bank and extensive community and charitable involvement qualify him to serve as a director of the Company.FNCB.

 

Dominick L. DeNaples (Director of the Company since 1998)

Mr. Dominick L. DeNaples, 78, is an independent Director of the Company since 1998 and of the Bank since 1987. Mr. DeNaples has served as the Chairman of the Board of Directors of the Company and Bank since 2010. Previously, he served as Vice Chairman of the Boards of Directors of the Company and Bank from December 2009 until he was elected Chairman in May 2010. He is President of Rail Realty Corporation, Vice President of DeNaples Auto Parts Inc., and Vice President of Keystone Landfill, Inc., each of which he is also co-owner with his brother Louis A. DeNaples. Mr. DeNaples currently serves as Chairman of the Board and Finance of Lackawanna College’s Board of Trustees, St. Joseph’s Center and St. Joseph’s Foundation. Mr. DeNaples serves on the Board of Geisinger Health Services, Hospice of the Sacred Heart and also on the Advisory Board of Penn State University – Worthington campus. He formerly served as President of the Council and Chairman of Finance of the Northeastern Pennsylvania Council of Boy Scouts of America, and currently serves as a board member. Mr. DeNaples’ extensive business background, years of community and charitable involvement and service as a Director of the Company and the Bank for many years qualify him to serve as Director of the Company. Mr. DeNaples is the brother of director, Louis A. DeNaples and the uncle of director Louis A. DeNaples, Jr.


John P. Moses, Esquire (Director of the Company since 1999)

Mr. John P. Moses, Esquire, 69, is an independent Director of the Company and the Bank since 1999. Attorney Moses serves on Highmark, Inc.’s Board of Directors and the NEPA Advisory Board to Highmark, Inc. since June 2015. Previously, Attorney Moses served as the Chairman of Blue Cross of Northeastern Pennsylvania from 1997 to June 1, 2015 when Blue Cross of Northeastern Pennsylvania merged into Highmark, Inc. Attorney Moses is also engaged in private practice of law since 1971, including Of Counsel at the law firm of Cozen & O’Connor since 2009. During his career, he also has served as Chairman of the Northeast Pennsylvania Heart Association and as Chairman and President of the Board of Governors of St. Jude Children’s Research Hospital (“St. Jude”), and as Chief Executive Officer for ALSAC, the fundraising arm of St. Jude. Attorney Moses also has had a distinguished career in public service, having served as a member of various state commissions and as counsel to various state and local judicial, executive, legislative and administrative offices and non-profit organizations. Attorney Mosses has received numerous awards for his contributions in public service, business, the law and charitable causes, including the Ellis Island Medal of Honor. Attorney Moses also serves on the boards of Villanova University School of Law, The Commonwealth Medical College, First Priority Health and First Priority Life Insurance Company. In addition, Attorney Moses serves as Chairman and Board member of the Boards of AllOne Foundation, AllOne Charities and AllOne Health Resources. Admitted to practice law in Pennsylvania and before the U.S. Supreme Court, he is a graduate of the Villanova University School of Law. Attorney Moses’ extensive business and legal background, community and charitable involvement and service as a director of the Company and Bank for over 13 years qualify him to serve as a director of the Company.

Board Recommendation

The Company’s Board of Directors recommends that shareholders voteFOR the election for each of the nominees for director listed above.

Informationas to Directors Who Will Continuein Office

The following section contains, as of April 8, 2016, certain information with respect to Class A and Class B directors who are continuing directors and are not standing for election at the annual meeting:

CLASS A DIRECTORS WHOSE TERMS WILL EXPIRE IN 2017

Louis A. DeNaples (Director of the CompanyFNCB from 1998 to 20122008 and 2013 to Present)

 

Mr. Louis A. DeNaples, 75,76, is an independent director of the CompanyFNCB and the Bank. He has been a director of the Bank since 1972 and served as Chairman of the Board of Directors of the CompanyFNCB from 1998 until he took a leave of absence from involvement with the CompanyFNCB and the Bank in February 2008. In 2013, Mr. DeNaples returned from a leave of absence and rejoined the CompanyBank’s Board on December 23, 2013. He was re-elected to FNCB’s Board of Directors on May 21, 2014. Mr. DeNaples is President of DeNaples Auto Parts, Inc., President of Keystone Landfill Inc. and Vice President of Rail Realty CorpCorp., each of which he co-owns with his brother, Dominick L. DeNaples. Mr. DeNaples hasserves on the boards of AllOne Foundation, AllOne Charities, AllOne Health Resources, Allied Services Foundation, and Scranton Preparatory School. Mr. DeNaples also serves as a citizen member of the Community Advisory Board for Geisinger Commonwealth School of Medicine and was past Chairman of the University of Scranton Board of Trustees. Mr. DeNaples’ extensive business knowledge, community and charitable involvement and association with the Bank for many years, which qualify him to serve as a director of the Company.FNCB. Mr. DeNaples is the brother of director and nominee for director, Dominick L. DeNaples, and the father of director, Louis A. DeNaples, Jr.

 

Keith W. Eckel (Director of the CompanyFNCB since 2014)

 

Mr. Keith W. Eckel, 69,70, was appointed an independent Director of the CompanyFNCB and the Bank on September 24, 2014. Mr. Eckel is the sole owner and Chief Executive Officer of Fred W. Eckel and Sons and President of Eckel Farms, Inc. Mr. Eckel serves as a Trustee of PennPennsylvania State University. Mr. Eckel formerly served as Board member and Chairman of Nationwide Mutual Insurance Company, a Fortune 100 insurance provider, and Allied Group, Inc., a subsidiary of Nationwide Mutual Insurance Company. Mr. Eckel also previously served as Board member of International Food and Agricultural Development, an organization that advises the United States Agency for International Development on agricultural matters,priorities and was theissues, and is a former President of the Pennsylvania Farm Bureau. Mr. Eckel’s strong business background, extensive knowledge in the insurance industry and agribusiness and community and charitable involvement qualifies him to serve as a director of the Company.FNCB.

 

 

 

Steven R. Tokach (Director of the Company since 2011)Board Recommendation

 

Mr. Steven R. Tokach, 69, was appointed as DirectorFNCB’s Board of Directors recommends that shareholders voteFOR the election for each of the Companynominees for director listed above.

Informationas to Directors Who Will Continuein Office

The following section contains, as of April 7, 2017, certain information with respect to Class B and Class C directors who are continuing directors and are not standing for election at the Bank on November 21, 2011 and serves as President and Chief Executive Officer of the Company and the Bank. Previously, Mr. Tokach was retired from banking from 2006 to his appointment. Prior to that, he was Senior Vice President and Chief Credit Administrator for Community Bank, N.A., a multi-billion dollar bank with locations in upstate New York and Northeastern Pennsylvania, from 2004 to 2006. Mr. Tokach served as Regional President of First Liberty Bank & Trust, N.A., the Pennsylvania bank division of Community Bank, N.A, from 2001 to 2004. He served as President of First Liberty Bank in Jermyn, Pennsylvania from 1996 to 2001 and as Executive Vice President and Chief Operating Officer from 1991 to 1996. Prior to that, Mr. Tokach worked for three other banks located in Pennsylvania, serving as Vice President of First Eastern Bank from 1989 to 1991, as Vice President of Guaranty Bank, N.A. from 1986 to 1989 and as Vice President of The First National Bank of Jermyn from 1982 to 1986. Prior to his banking career, Mr. Tokach was a Bank Examiner with the OCC from 1968 to 1982, supervising or assisting in the examination of national banks. Mr. Tokach is a graduate of King’s College in Wilkes-Barre, Pennsylvania, where he earned his bachelor’s degree in accounting. He is a former member of the boards of directors of the Scranton Chamber of Commerce and the United One Credit Bureau and the Scranton Chapter of the American Red Cross. Mr. Tokach’s extensive banking experience, knowledge of bank regulatory matters from his time with the OCC and accounting and financial background qualify him to serve as a director of the Company.annual meeting:

 

CLASS B DIRECTORS WHOSE TERMS WILL EXPIRE IN 2018

 

William G. Bracey (Director of the CompanyFNCB since 2014)

 

Mr. William G. Bracey, 61,62, was appointed as an independent Director of the CompanyFNCB and the Bank on May 12, 2014. Mr. Bracey is the owner ofowns two Shoprite Supermarkets, as well as several retail businesses including an Ace Hardware Store, two NAPA Auto Parts Stores, two Hallmark Gold Crown Stores and Plociniak Fuel Services. Mr. Bracey currently serves on the Board of the Pennsylvania Food Merchants and Johnson College. He formerly served as Board member and Chairman of Affiliated Foods, Board member and Co-chairman of Associated Wholesale and Board member of Scranton Preparatory School. Mr. Bracey’s 40 years of entrepreneurial and corporate management experience, strong network of community relationships and partnerships, and significant knowledge of the retail business climate in the region qualifies him to serve as director of the Company.FNCB.

 

Louis A. DeNaples, Jr. (Director of the CompanyFNCB since 2008)

 

Dr. Louis A. DeNaples, Jr., 48, is49, has been an independent Director of the CompanyFNCB and the Bank since 2008. He was elected Vice-Chairman of the CompanyFNCB and the Bank in December 2013. Dr. DeNaples is a licensed physician and practices emergency medicine at Geisinger-Community Medical Center Emergency Department in Scranton, Pennsylvania. Dr. DeNaples served as Director and Vice Chairman for The Community’s Bank of Bridgeport Connecticut from 2001 through September 2013. Dr. DeNaples’sDeNaples’ understanding of the banking and medical industries, considerable community and charitable involvement and service as director of the CompanyFNCB and the Bank since 2008 qualify him to serve as a director of the Company.FNCB. Dr. DeNaples is the son of director and nominee for director, Louis A. DeNaples, and the nephew of director, and nominee for director, Dominick L. DeNaples.

 


Thomas J. Melone, CPA (Director of the CompanyFNCB since 2011)

 

Mr. Thomas J. Melone, CPA, 57,58, was appointed as an independent Director of the CompanyFNCB and the Bank on May 25, 2011. Mr. Melone is a Partner with the Albert B. Melone Company Certified Public Accountants, a leading provider of accounting, tax and consulting services throughout the Northeastern Pennsylvania region. Mr. Melone, who has been with this firm since 1984, leads the firm’s Tax Preparation and Advisory Services line as well as its Small Business Advisory and Consulting Services line. Additionally, he has extensive experience in the financial management of public school districts operating in the Commonwealth of Pennsylvania. Mr. Melone is also an owner of Pro-Data Processing, Inc. Mr. Melone is an active member of several professional, business and community organizations including the American Institute of Certified Public Accountants, Pennsylvania Institute of Certified Public Accountants and the Allied Services Board, specifically serving as Chairman of the Allied Institute of Rehabilitation Medicine and the John Heinz Institute of Rehabilitation Medicine. Mr. Melone is a graduate of King’s College in Wilkes-Barre, Pennsylvania. Mr. Melone’s community involvement, extensive business and accounting experience and service as a director of the CompanyFNCB and the Bank qualify him to serve as a director of the Company.FNCB.


CLASSC DIRECTORS WHOSE TERMS WILL EXPIRE IN 2019

 

Joseph Coccia (Director ofFNCB since 1998)

Mr. Joseph Coccia, 62, has been a Director of FNCB and the Bank since 1998. Mr. Coccia was appointed as Secretary of the Board of Directors in May 2015. Mr. Coccia is President of Coccia Ford, Inc. (doing business as Coccia Ford Lincoln), a car dealership in Wilkes-Barre, Pennsylvania, and President of Eastern Auto Exchange, Inc. Mr. Coccia is a member of the Boards of Directors of AllOne Charities and NEPA Highmark. Mr. Coccia also served on the Lincoln Mercury Dealer Association Board. Mr. Coccia’s strong business background and knowledge of owning and operating a large local business, his broad community involvement, and his service as a director of FNCB and Bank since 1998 qualify him to serve as a director of FNCB.

Dominick L. DeNaples (Director ofFNCB since 1998)

Mr. Dominick L. DeNaples, 79, has been an independent Director of FNCB since 1998 and of the Bank since 1987. Mr. DeNaples has served as the Chairman of the Board of Directors of FNCB and Bank since 2010. Previously, he served as Vice Chairman of the Boards of Directors of FNCB and Bank from December 2009 until he was elected Chairman in May 2010. He is President of Rail Realty Corporation, Vice President of DeNaples Auto Parts Inc., and Vice President of Keystone Landfill, Inc., each of which he is also co-owner with his brother Louis A. DeNaples. Mr. DeNaples currently serves as Chairman of the Finance Committee of Lackawanna College’s Board of Trustees, and Chairman of the Board and the Finance Committees of St. Joseph’s Center and St. Joseph’s Foundation. Mr. DeNaples serves on the Board of Geisinger Health Services, Hospice of the Sacred Heart and on the Advisory Board of Penn State University – Worthington campus. He formerly served as Chairman of the Board of Lackawanna College, President of the Council and Chairman of Finance of the Northeastern Pennsylvania Council of Boy Scouts of America, and currently serves as a Board member. He also served as former Vice Chairman of the Board and Finance Committee of Scranton Preparatory School. Mr. DeNaples’ extensive business background, years of community and charitable involvement and service as a Director of FNCB and the Bank for many years qualify him to serve as Director of FNCB. Mr. DeNaples is the brother of director and nominee for director, Louis A. DeNaples, and the uncle of director, Louis A. DeNaples, Jr.

John P. Moses (Director ofFNCB since 1999)

Mr. John P. Moses, Esquire, 70, has been an independent Director of FNCB and the Bank since 1999. Atty. Moses is engaged in private practice since 1971, including as Of Counsel at the law firm of Cozen O’Connor since 2009. Mr. Moses has served as the Chairman of BlueCross of Northeastern Pennsylvania from 1997 to 2015. During his career, he also has served as chair of the Northeast Pennsylvania Heart Association and as Chairman and President of the Board of Governors of St. Jude Children’s Research Hospital (“St. Jude”), and as Chief Executive Officer for ALSAC, the fundraising arm of St. Jude. Mr. Moses also has had a distinguished career in public service, having served as a member of state commissions and as counsel to various state and local judicial, executive, legislative and administrative offices and non-profits. Mr. Moses has received numerous awards for his contributions in public service, business, the law and charitable causes, including the Ellis Island Medal of Honor. Mr. Moses serves on the Boards of Villanova University School of Law and Highmark, Inc. Mr. Moses also serves as Chairman of Board of AllOne Foundation, AllOne Charities and AllOne Health Resources. Mr. Moses previously served on the Board of The Commonwealth Medical College. Admitted to practice law in Pennsylvania and before the U.S. Supreme Court, Mr. Moses is a graduate of the Villanova University School of Law. Mr. Moses’ extensive business and legal background, community and charitable involvement and service as a director of FNCB and the Bank since 1999 qualify him to serve as a director of FNCB.


Information as to Executive Officers and Significant Employees

 

Executive Officers Who Are Not Directors

 

Information as of April 8, 20167, 2017, regarding persons who are executive officers of the CompanyFNCB or the Bank and who are not directors of the CompanyFNCB is set forth below. Except as otherwise indicated, the occupation listed has been such person’s principal occupation for at least the last five years.

 

James M. Bone, Jr., CPA

 

Mr. James M. Bone, Jr., 54,55, is Executive Vice President and Chief Financial Officer/Treasurer of the CompanyFNCB and the Bank, a position he has held since September 2012. Previously, Mr. Bone has been an employee of the Bank since 1986, serving aswas Executive Vice President and Chief Information Officer from May 2010 to August 2012;2012 and First Senior Vice President and Administrative Services Division Manager from July 2000 to April 2010; Senior Vice President2010. Mr. Bone has been with the Bank since 1986 and Branch Administrator from January 1995 to June 2000; Vice Presidenthas served in various leadership roles in Retail, Commercial Sales, Compliance, Operations and Community Office Manager/Commercial Loan Officer from May 1992 to December 1994; Vice President and Loan Administration/Compliance Division Manager from January 1989 to May 1992;Technology and Internal Auditor from July 1986 to December 1988.Audit. Mr. Bone is a licensed Certified Public Accountant. In addition, Mr. Bone owns a limited liability company through which he provides tax and consulting services to various individual clients and small businesses.

Gerard A. Champi

Mr. Gerard A. Champi, 55,Bone is Chief Operating Officera member of the Bank since March 2011. Prior to holding this position, he served as Interim President and Chief Executive OfficerIssuer Advisory Council of the CompanyOTCQX and an Advisory Board Member for the Federal Home Loan Bank and as a director of the Bank from March 2010 until February 2011.Pittsburgh. Mr. Champi has been with the Bank since 1991 and has served in various leadership rolesBone is also active in the Retail, Commercial Salescommunity with King’s College and Executive Divisions. He currently serves as theVice President of the Greater Pittston ChamberFinance, Chair of Commerce and Executive Vice PresidentCouncil Friends of Scouting and Board Member of the Northeastern Pennsylvania Council Boy Scouts of America. He also serves as Board Member of the Pennsylvania Bankers Association, St. Joseph’s Center and the Lackawanna Blind Association, an Advisory Board Member of Penn State Worthington Scranton, a campus of the Pennsylvania State University and Past President of the Luzerne County Community College Foundation Board of Directors.

 

Cathy Conrad

 

Ms. Cathy J. Conrad, 42,43, is Senior Vice President and Credit Administration Officer of the Bank, a position she has held since September 2013. Ms. Conrad has been with the Bank since 1995. Her previous roles include Senior Vice President and Credit Administration Manager from 2010 until September 2013 and Vice President, Credit Department Manager from 2004 to 2009.

 


Mary Griffin Cummings, Esquire

 

Attorney Mary Griffin Cummings, 53,54, is Senior Vice President and General Counsel of the Bank, a position she has held since October 1, 2012. Prior to joining the Bank, she was Associate General Counsel, Resident Counsel and General Counsel for Wyoming Valley Health Care System, Inc. (“WVHCS”), a large health care system previously located in Wilkes-Barre, Pennsylvania, from May 2000 to May 2009. From May 2009 through October 2012, Ms. Cummings practiced law both in her own private practice and for Wyoming Valley Health and Education Foundation and WVHCS Retention Company. Ms. Cummings is a licensed attorney and admitted to practice law in the Courts of the Commonwealth of Pennsylvania and the United States District Court for the Middle District of Pennsylvania. She is a member of the Wilkes-Barre Law and Library Association and the Pennsylvania Bar Association. Ms. Cummings serves as Chair and Board member of the Catherine McAuley Center, Scranton, PA and a Board member of the American Red Cross/Wyoming Valley Chapter and the McGlynn Learning Center, Wilkes-Barre, PA. Ms. Cummings also serves on the Leadership Council for the American Red Cross/Wyoming Valley.

 

Richard D. Drust

 

Mr. Richard D. Drust, 55, is Senior Vice President and Retail Banking Officer of the Bank, a position he has held since February 2014. Prior to joining the Bank, he was Vice President of Retail Banking, Business Banking and Deposit Operations at Franklin Security Bank from 2007 to February 2014. Mr. Drust currently serves as Treasurer of The Arc of Luzerne County and has served as a member of its board since 2005.

 

Joseph J. Earyes, CPA

Mr. Joseph J. Earyes, 59, is First Senior Vice President and Operations and Technology Services Officer of the Bank, a position he has held since June 2015. Prior to holding this position, he served as First Senior Vice President and Chief Retail Banking and Operations Officer of the Bank from March 2013 to June 2015, First Senior Vice President and Retail Banking Officer of the Bank from February 2011 to February 2013 and Senior Vice President and Retail Banking Officer of the Bank since December 2008. Mr. Earyes, who has FINRA Series 7 and 63 licenses, also is a financial services representative of Invest Financial Corporation through that entity’s third party brokerage arrangement with the Bank. Prior to joining the Bank, Mr. Earyes was Chief Financial Officer of State Petroleum Distributors LLC, a wholesale fuel distributor, from February 2006 to August 2008. Mr. Earyes has previous banking experience from his time as Executive Vice President and Chief Executive Officer of Fidelity Deposit and Discount Bancorp, Inc. of Dunmore, Pennsylvania, the holding company for The Fidelity Deposit and Discount Bank, from April 2001 to April 2004. Mr. Earyes is a licensed Certified Public Accountant and worked as a partner in the Earyes/Alu LLP CPA firm that he co-owned from July 2004 to January 2006.


 

Mary Ann Gardner, CRCM

 

Ms. Gardner, 58, is Senior Vice President and Compliance Officer of the Bank, a position she has held since April 2013. Ms. Gardner is a Certified Regulatory Compliance Manager and has been an employee of the Bank since 1976. She previously served as Regulatory Compliance Manager from 2010 to 2011 and Compliance and Community Reinvestment Act Officer from 2011 to 2013.

 

Dawn D. Gronski

Ms. Dawn D. Gronski, 46, is Vice President and Human Resources Officer, a position she has held since March 2017. Ms. Gronski has been an employee of the Bank since 1998 with her previous roles including Vice President and Compensation and Benefits Officer from April 2013 to March 2017; and Assistant Vice President and Payroll/HRIS Administrator from June 2010 to March 2013. Ms. Gronski serves as the treasurer of the Scranton Civic Ballet Company and has served as member of its board since 2009.

Ronald S. Honick, Jr. CPA, CIA

 

Mr. Ronald S. Honick, Jr., CPA, CIA, 38,39, is Senior Vice President and Operations and Technology Services Officer, a position he has held since June 2017. Previously, Mr. Honick was Senior Vice President and Audit Manager of the Bank a position he has held sincefrom January 2011.2011 to May 2016. Prior to joining the Bank, Mr. Honick was a Financial Analyst in the technical accounting department of a global manufacturing company from 2008 to December 2010. Mr. Honick is a licensed Certified Public Accountant and a licensed Certified Internal Auditor.


 

Lisa L. Kinney

 

Ms. Lisa L. Kinney, 46,47, is Senior Vice President and Retail Lending Officer and Consumer Lending Manager of the Bank, a position she has held since September 2008. Ms. Kinney has been an employee of the Bank since 1994, with her previous roles including Vice President and Indirect Lending Manager from January 2007 to September 2008; Vice President and Indirect Lending Officer from December 2005 to December 2006; and Assistant Cashier and Indirect Lending Officer from May 1998 to November 2005. Ms. Kinney is currently a Board Member of the Dunmore Lions Club and has served as Past-President.

 

Brian C. Mahlstedt

 

Mr. Brian C. Mahlstedt, 56,57, is Executive Vice President and Chief Lending Officer of the Bank since September 2013. Mr. Mahlstedt first joined the Bank in 1999 and served as Senior Vice President and Commercial Loan Officer until 2009. From 2011 to September 2013, when he rejoined the Bank, Mr. Mahlstedt was a Senior Vice President, Senior Commercial Loan Officer at Wayne Bank. Mr. Mahlstedt also served as Vice President, Senior Loan Officer at Pennstar Bank from 2009 to 2011.

 

Donald H. RyanWilliam A. McGuigan, CPA

 

Mr. Donald H. Ryan, 63,William A. McGuigan, CPA, 67, is the Human Resources Officer and Seniora Vice President and Audit Officer of the Bank, a position he has held since November 2011. BeforeJune 2016. Previously, Mr. McGuigan was Audit Manager of the Bank from March 2012 to June 2016. Prior to joining the Company,Bank, Mr. RyanMcGuigan was a partner in a local public accounting firm serving the Operations Director at Johnson College from June 2009 until September 2011 with responsibility for human resources, information technologyBanking and facilities. From 1997 to 2009, he was PresidentSmall Business sectors. He also spent 10 years leading corporate audit and principal of The Ryan Group,accounting departments. Mr. McGuigan is a Northeastern Pennsylvania based human resources consulting firm. Prior thereto, Mr. Ryan held senior human resources positions at National Westminster Bancorp, U.S. Trust Company of New York and The Federal Reserve Bank of New York.licensed Certified Public Accountant.


  

Stephanie A. Westington, CPA

 

Ms. Stephanie A. Westington, CPA, 50,51, is Senior Vice President and Controller of the Bank, a position she has held since July 2012. Prior to joining the Bank, Ms. Westington was Director of Finance for Physicians Health Alliance, a physicians group that is a member of the Moses Taylor Health Care System, from March 2011 to July 2012. Ms. Westington is a licensed Certified Public Accountant and has previous banking experience from her time as Vice President of Finance at the former Community Bank and Trust Company from January 1998 to March 2011.2011 and Assistant Vice President and Controller at the former LA Bank, N.A. from September 1990 to December 1997. Ms. Westington currently serves as Board Member of the Howard Gardner Multiple Intelligence Charter School and is a member of the Rotary Club of the Abingtons.

 

CORPORATE GOVERNANCE

 

Our Board of Directors believes that the purpose of corporate governance is to promote shareholder value in a manner consistent with legal requirements and the highest standards of integrity. The Board has adopted and adheres to corporate governance practices that it and senior management believe promote this purpose, are sound and represent best practices. The Board continually reviews these governance practices, Pennsylvania law (the Company’s(FNCB’s state of incorporation), the rules and listing standards of NASDAQ, and Securities and Exchange Commission (“SEC”) regulations, as well as best practices suggested by recognized governance authorities to maintain the highest governance standards.


 

The Board of Directors has four standing committees: Audit Committee, Risk Management Committee, Compensation Committee and Corporate Governance Committee, which is the committee that makes director nominating recommendations to the Board of Directors. The charters of these committees have been approved by the Board and are available on our corporate website atwww.fncb.com/investorrelations.     

 

Currently, the Board of Directors has nine members. The CompanyFNCB evaluates the independence of directors under the SEC and NASDAQ stock market’s standards for independence. The NASDAQ standards require the Board of Directors to be comprised of a majority of independent directors. The NASDAQ standards also require that, except for exceptional and limited circumstances, the Board of Directors maintain an audit committee comprised only of independent directors and that compensation and nomination decisionsdirector nominees must be made onlyselected either by independent directors comprising a majority of the Board’s independent directors in a vote in which only independent directors participate, or by a nominations committee comprised solely of independent directors. The Corporate Governance Committee of FNCB’s Board has responsibility for selecting director nominees and is comprised solely of independent directors. NASDAQ corporate governance standards also require that the Board maintain a compensation committee comprised of at least two members, each of whom is an independent director. The Board of Directors of FNCB has appointed a Compensation Committee, currently comprised of four directors, each of whom the Board has determined is “independent.”

 

Independence is reviewed at least annually to determine whether all existing and potential committee members are independent. The Board of Directors has determined that William G. Bracey, Louis A. DeNaples, Louis A. DeNaples, Jr., Keith W. Eckel, John P. Moses, Dominick L. DeNaples and Thomas J. Melone met the standards for independence.

 

In making its independence determinations, the Board considers all relevant facts and circumstances, and not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation. The Board considered that in the ordinary course of business the CompanyFNCB and the Bank may provide commercial banking and other services to some of the independent directors and to business organizations and to individuals associated with them. The Board also considered that in the ordinary course of business some business organizations with which an independent director is associated may provide products and services to the CompanyFNCB and the Bank. The Board has determined that, based on the information available to the Board, none of these relationships were material.

 


Mr. Moses, a director, is Of Counsel at the law firm of Cozen & O’Connor (“Cozen”), which has provided legal services to the CompanyFNCB during 2015.2016. Mr. Moses does not have any ownership or profit sharing interest in Cozen. The Board has considered this relationship and determined that it did not impair Mr. Moses’ independence. Please see the relationships discussed under the section of this Proxy Statement entitled “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS” for a description of the other relationships considered by the Company’s boardFNCB’s Board of directors.Directors.

 

Code of Ethics

 

The CompanyFNCB has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to the Company’sFNCB’s directors and employees, including the President and Principal Executive Officer (“PEO”), Principal Financial Officer (“PFO”) and Principal Accounting Officer (“PAO”). The Code includes guidelines relating to compliance with laws, the ethical handling of actual or potential conflicts of interest, the use of corporate opportunities, protection and use of the Company’sFNCB’s confidential information, accepting gifts and business courtesies, accurate financial and regulatory reporting, and procedures for promoting compliance with, and reporting violations of, the Code. The Code is available in the Investor Relations section on the Company’sFNCB’s website atwww.fncb.com/investorrelationsby clicking on Corporate Information and then Governance Documents. The CompanyFNCB intends to post any amendments to the Code on its website and also to disclose any waivers (to the extent applicable to the Company’sFNCB’s President and PEO, PFO or PAO) on a Form 8-K within the prescribed time period.

 

Shareholder Communications

 

Any shareholder who wishes to communicate with the Board of Directors may send correspondence to Joseph Coccia, Secretary, at 102 East Drinker St., Dunmore, PA 18512, or by sending an electronic message tocorporatesecretary@fncb.com. Mr. Coccia will submit your correspondence to the Board of Directors or the appropriate committee as applicable.


Submission of Shareholder Proposals for 20187 Annual Meeting

 

Shareholder proposals for the 20172018 annual meeting of shareholders must comply with applicable SEC rules and regulations and must be received by the Secretary of the CompanyFNCB prior to December 15, 201618, 2017 to be considered for inclusion in the Company’sFNCB’s Proxy Statement for that meeting. If the December 15, 201618, 2017 deadline is missed, a shareholder proposal may still be submitted for consideration at the 20172018 annual meeting of shareholders, although it will not be included in the Company’sFNCB’s Proxy Statement, if it is received earlier than February 17, 20172018 and later than March 10, 2017.9, 2018. If notification of a shareholder proposal is not received by December 15, 2016, the Company2017, FNCB may vote, in its discretion, any, and all, of the proxies received in its solicitation against such proposal. See “Director Nominations” on page 2111 for more information on director nominations.

 

In addition, any shareholder who intends to nominate a candidate for election to the Board of Directors (other than a candidate proposed by the Company’sFNCB’s then existing Board of Directors) or submit a proposal for consideration at the 20172018 annual meeting must comply with the advance notice provisions of the Company’sFNCB’s bylaws. The advance notice provisions in the Company’sFNCB’s bylaws require that the following additional information must be provided to the CompanyFNCB by a shareholder submitting a shareholder proposal:

 

 

a)

the name and address of the shareholder who intends to make the nomination or propose the business, and, as the case may be, of the person or persons to be nominated;


 

b)

a representation that the shareholder is a holder of record of shares of the CompanyFNCB and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice or to make the proposal;

 

c)

the number of and class of shares owned by the shareholder and any Shareholder Associated Person (as defined in the bylaws), which information must be supplemented as of the record date;

 

d)

a description of any agreement, arrangement or understandings between the shareholder or any other person or persons, pursuant to which the nominations or nominations are to be made by the shareholder, or the business is to be proposed, which information must be supplemented as of the record date;

 

e)

information regarding the shareholder’s, Shareholder Associated Person’s or certain affiliated partnership’s ownership of derivative instruments (such as options, warrants, convertible security, etc.) or any other opportunity of the shareholder or Shareholder Associated Person to profit from a change in the value of shares of the CompanyFNCB and the existence of any hedging transactions, which information must be supplemented as of the record date;

 

f)

if applicable, the consent of each nominee to serve as a director of the CompanyFNCB if so elected; and

 

g)

any other information regarding the nominee or each matter of business to be proposed by such shareholder that would be required under the SEC’s proxy rules and regulations had the nominee been nominated, or the matter been proposed, by the Board of Directors.

 

Copies of the full text of the bylaw provision relating to advance notice can be obtained by writing to Joseph Coccia, Secretary, at 102 East Drinker St., Dunmore, PA 18512. A copy of the Company’sFNCB’s bylaws was filed with the SEC as Exhibit 3.2 to the Company’s QuarterlyFNCB’s Current Report on Form 10-Q for the period ended September 30, 2013, filed November 12, 2013.8-K on October 4, 2016.

 

The Board of Directors

 

The Company’sFNCB’s business is managed under the direction of our Board of Directors, in accordance with the Pennsylvania Business Corporation Law, FNCB’s Articles of Incorporation and our bylaws. The positions of Chairman of the Board and Chief Executive Officer are separated, as the Board believes separation of these positions enhances the independent oversight of the CompanyFNCB and the monitoring and objective evaluation of the Chief Executive Officer’s performance. Mr. Dominick L. DeNaples serves as non-executive Chairman of the Board of Directors and is independent of management.

 


Management is responsible for the day-to-day management of the risks faced by the Company,FNCB, while the Board of Directors, as a whole, is responsible for the general oversight of risk management. For 2015,2016, this oversight was primarily conducted through the Risk Management and Audit Committees. On February 26, 2014, the Board established aThe Risk Management Committee which has the primary role in risk management of the Company.FNCB. The Risk Management Committee oversees the Company’sFNCB’s enterprise-wide risk management program and provides oversight and guidance to management on the Company’sFNCB’s risk appetite. The Audit Committee, pursuant to its charter, considers and reviews with the Company’sFNCB’s internal audit department, independent registered public accounting firm, and management, the adequacy of the Company’sFNCB’s internal controls, including the processes for identifying significant risks or exposures, and elicits recommendations for the improvements of such procedures where desirable. In addition to the Audit and Risk Management Committees’Committees roles, the full Board of Directors is involved in oversight and administration of risk and risk management practices by overseeing members of senior management in their risk management capacities, regularly reviewing and analyzing the Company’sFNCB’s investment and loan portfolios and accompanying risk levels, and considering the potential impact on the Company’sFNCB’s objectives. Members of the Company’sFNCB’s senior management have day-to-day responsibility for risk management and establishing risk management practices, and members of management are expected to report matters relating specifically to the Risk Management Committee and Audit Committee directly thereto, and to report all other matters directly to the Board of Directors as a whole. Members of the Company’sFNCB’s senior management have an open line of communication to the Board of Directors and have the discretion to raise issues from time-to-time in any manner they deem appropriate, and management’s reporting on issues relating to risk management typically occurs through direct communication with directors or committee members as matters requiring attention typically arise.

 


The Bank Board maintains a Directors Loan Committee and had maintained a Compliance Committee. The Bank Board’s Compliance Committee was dissolved when the OCC Consent Order was terminated on March 25, 2015. The Directors Loan Committee meets bi-weekly before each Bank board meeting or more often as necessary. In addition tothat is comprised of the Bank’s Chairman, President and Chief Executive Officer, Chief OperatingFinancial Officer and Chief Lending Officer,Officer. In addition, the following Directors are members of this committee: Gerard A. Champi, Dominick L. DeNaples, Louis A. DeNaples, Keith W. Eckel, and Thomas J. Melone. The Directors Loan Committee meets bi-weekly before each Bank Board meeting or more often as necessary. In 2015,2016, this committee met thirty-seven (37) times. Prior to being dissolved, the Bank Board’s Compliance Committee met monthly or more often as necessary. The following Directors were members of the Compliance committee: William G. Bracey, Joseph Coccia, Keith W. Eckel, Thomas J. Melone and John P. Moses. In 2015, the Bank Board’s Compliance Committee met four (4 times).

 

During 2015, the Company’s2016, FNCB’s Board of Directors held eighteen (18) meetings. Each of the directors attended at least 75% of the meetings of the Company’sFNCB’s Board of Directors and of the committees on which hethey served. Pursuant to the Company’sFNCB’s policy, the directors are expected to attend the Company’sFNCB’s annual meeting of shareholders. All of FNCB’s directors attended FNCB’s annual meeting of shareholders in 2016.


 

CCommitteesommittees of the Board of Directors

The Company’sFNCB’s Board of Directors has an Audit Committee, Risk Management Committee, Compensation Committee and Corporate Governance Committee. The charters of these committees have been approved by the Board of Directors and are available on the Company’sFNCB’s websitewww.fncb.com under the link for “Investor Relations.” The following table shows the current composition of each standing committee of the FNCB Board of Directors and the number of meetings held by such committees during 2016.

 

 

 

Compensation

Committee

Corporate

Governance

Committee

 

Audit

Committee

 

Risk Management

Committee

 

William G. Bracey

 

X

 

X

 

X

 

X

Joseph Coccia

   

     X(1)

Dominick L. DeNaples

    

Louis A. DeNaples, Jr.

     X(1)

X

X

X

Louis A. DeNaples

    

Keith W. Eckel

 

X

X

X

Thomas J. Melone

X

X

     X(1)

 

John P. Moses

X

     X(1)

X

 

Steven R. Tokach

    

Number of meetings in 2015

 

5

5

6

4

  

Compensation

Committee

Corporate

Governance

Committee

Audit

Committee

Risk Management

Committee

      
 

William G. Bracey

X

X

X

X

 

Gerard A. Champi

    
 

Joseph Coccia

   

X(1)

 

Dominick L. DeNaples

    
 

Louis A. DeNaples, Jr.

   X(1)

X

X

X

 

Louis A. DeNaples

    
 

Keith W. Eckel

 

X

X

X

 

Thomas J. Melone

X

X

   X(1)

 
 

John P. Moses

X

    X(1)

X

 
 

Number of meetings in 2016

5

7

6

4

X

X      Current member

(1)

Chairperson


(1)     ChairpersonDirector Compensation

The following table sets forth information regarding compensation paid to, or earned by, non-employee directors of FNCB during the fiscal year ended December 31, 2016 for service as members of FNCB and Bank Boards of Directors. Directors who also are FNCB or Bank employees (currently Mr. Champi) do not receive any compensation or other fees for service as a Board member.

Name

 

Fees Earned or

Cash Paid

  

Stock

Awards

  

Option

Awards

  

Change in

Pension Value

and Non-

Qualified

Deferred Compensation Earnings

  

All Other Compensation

  

Total

 

William G. Bracey

 $30,000  $-  $-  $-  $-  $30,000 

Gerard A. Champi

  -   -   -   -   -   - 

Joseph Coccia

  30,000   -   -   -   -   30,000 

Dominick L. DeNaples

  30,000   -   -   -   -   30,000 

Louis A. DeNaples

  30,000   -   -   -   -   30,000 

Louis A. DeNaples, Jr.

  30,000   -   -   -   -   30,000 

Keith W. Eckel

  30,000   -   -   -   -   30,000 

Thomas J. Melone

  30,000   -   -   -   -   30,000 

John P. Moses

  30,000   -   -   7,451   -   37,451 

Directors receive no remuneration for attendance at FNCB’s board meetings. All non-employee members of the Bank’s Board of Directors receive an annual retainer of $30,000, payable at a rate of $2,500 per month, for each month or portion thereof that the director serves as a director of the Bank. The aggregate amount of director fees paid in 2016 was $240,000. Members of committees of the Board of Directors of FNCB or the Bank, as applicable, do not receive fees for attending meetings of those committees.

Directors serving on the Board of Directors of the Bank are entitled to participate in the Bank’s Deferred Compensation Plan. Under the Deferred Compensation Plan, directors may voluntarily defer up to 50% of the director fees paid to them for service on the Board of Directors of the Bank. For additional information regarding the Deferred Compensation Plan, refer to “Executive Compensation — Compensation Disclosure and Analysis - Deferred Compensation Plan.”

Directors’ Stock Plan

Directors who are not employees or officers of FNCB or the Bank are eligible to participate in the LTIP. No awards have been made to directors under the LTIP plan.

 

Compensation Committee

 

The Compensation Committee operates under a written charter that has been approved by the Board of Directors. The Chartercharter is reviewed annually by the Compensation Committee with any recommended changes approved by the Board of Directors. The current Compensation Committee charter is available in the Investor Relations section on the Company’sFNCB’s website atwww.fncb.comby clicking on Investor Relations, Corporate Information and then Committee ChartingGovernance Documents under the heading “Compensation Committee Charter.” As noted above, the Board of Directors has determined that each of the directors serving on this committee was determined to meetqualifies as an “independent” director under the standards for independence.applicable standard. The Compensation Committee is responsible for evaluating and approving the Company’sFNCB’s compensation plans, policies and programs. The Compensation Committee has the authority to retain and terminate a compensation consulting firm, including the authority to approve the firm’s fees and other terms of retention. The Compensation Committee also has the authority to delegate responsibility to subcommittees. For a discussion of the role of the Compensation Committee in determining executive and director compensation, see the discussion under the heading “Compensation“Executive Compensation - Compensation Discussion and Analysis.”Analysis” below.


 

RISK MANAGEMENT COMMITTEE

 

The Risk Management Committee operates under a written charter that has been approved by the Board of Directors. The Chartercharter is reviewed annually by the Risk Management Committee with any recommended changes approved by the Board of Directors. The current Risk Management Committee charter is available in the Investor Relations section on the Company’sFNCB’s website atwww.fncb.comby clicking on Investor Relations, Corporate Information and then Governance Documents under the heading “Risk Management Committee Charter.” The Risk Management Committee is responsible for ensuring management has established an enterprise-wide risk management program and for providing oversight and guidance to management regarding the Company’sFNCB’s risks. The Risk Management Committee has authority to retain independent counsel, experts and advisors it believes are appropriate in carrying out its duties, including the authority to approve the advisor’s fees and other terms of retention. The Risk Management Committee also has the authority to delegate responsibility to subcommittees.

 


Corporate Governance Committee

 

The Corporate Governance Committee operates under a written charter that has been approved by the Board of Directors. The Chartercharter is reviewed annually by the Corporate Governance Committee with any recommended changes approved by the Board of Directors. The current Corporate Governance Committee charter is available in the Investor Relations section on the Company’sFNCB’s website atwww.fncb.comby clicking on Investor Relations, Corporate Information and then Committee ChartingGovernance Documents under the heading “Corporate Governance Committee Charter.” EachThe Board of Directors has determined that each of the directors serving on this committee was determined to meetqualifies as “independent” under the standards for independence.applicable standard. The Corporate Governance Committee: (1) recommends to the Board of Directors for its selection (i) potential nominees for director to stand for election at the Company’sFNCB’s annual meeting of shareholders, including without limitation, those proposed by shareholders, and (ii) individuals to be considered by the Board of Directors to fill vacancies; (2) in its discretion, considers candidates based on criteria for selecting new directors; (3) evaluates the background and qualifications of new director candidates; and (4) evaluates directors before nomination for reelection. The Corporate Governance Committee also oversees and makes recommendations to the Board of Directors with respect to corporate governance of the Company.FNCB.

 

Director Nominations

 

The Corporate Governance Committee recommends director nominees to the Board of Directors. The Corporate Governance Committee seeks individuals who are qualified to be directors based on the committee’s judgment of the potential candidate’s experience, skills and knowledge of business and management practices. If needed, the Corporate Governance Committee will use a third party search firm to assist in finding director candidates. No third parties were engaged to evaluate or assist in identifying potential director nominees in 20152016 or 2016.2017.

 

The Corporate Governance Committee and the Board of Directors have not established a specific diversity component in their consideration of candidates for director and instead consider the diversity of directors as part of the overall mix of factors when identifying and evaluating candidates for the Board of Directors. The CompanyFNCB considers diversity broadly to include differences of viewpoint, professional experience, individual characteristics, qualities and skills, resulting in naturally varying perspectives among the directors and individual skills that complement the full Board. Therefore, the Board, as a unit, possesses the appropriate skills and experience to oversee the Company’sFNCB’s business.


 

The Corporate Governance Committee will give appropriate consideration to qualified persons recommended by shareholders for nomination as directors and will evaluate such qualified persons in the same manner as other identified candidates, when submitted prior to the shareholder proposal date referred to in the “Submission of Shareholder Proposals for 20172018 Annual Meeting” section of this Proxy Statement (the “Proposals Section”), provided such recommendations comply with the advance notice procedures in the Company’sFNCB’s bylaws, which are summarized in the Proposals Section. Such recommendations must also include: (1) sufficient biographical information about the proposed nominee to permit the Corporate Governance Committee to evaluate their qualifications and experience, and (2) the nominee’s consent to serving as a director if elected. Shareholders must deliver any proposals or nominations in writing to the Corporate Governance Committee or the Secretary of First National CommunityFNCB Bancorp, Inc. at its principal executive office, 102 E. Drinker Street, Dunmore, Pennsylvania 18512.

 


Any nomination for director not made in accordance with Section 1.07 of the Company’sFNCB’s bylaws will be disregarded by the presiding officer of the annual meeting, and votes cast for each such nominee will be disregarded by the Judge of Election. In the event that the same person is nominated by more than one shareholder, if at least one nomination for such person complies with Section 1.07, the nomination will be honored and all votes cast for the nominee will be counted.

 

AUDIT COMMITTEE

 

The Board of Directors has a standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Board of Directors has determined that each of the members of the Audit Committee is considered independent, as that term is defined by the SEC and in the NASDAQ listing standards related to audit committees. The current Audit Committee charter is available in the Investor Relations section on the Company’sFNCB’s website atwww.fncb.comby clicking on Investor Relations, Corporate Information and then on Committee ChartingGovernance Documents under the heading “Audit Committee Charter.” The principal duties of the Audit Committee, as set forth in its charter, include reviewing significant audit and accounting principles, policies and practices, reviewing the effectiveness of the internal auditing function, reviewing reports of examination received from regulatory authorities, and reviewing the performance and independence of and recommending, annually, to the Board of Directors the engagement of an independent certified public accountant.

 

Currently, the Board has identified Thomas J. Melone, CPA as the Audit Committee financial expert. Mr. Melone qualifies as a financial expert based on his extensive accounting experience as a certified public accountant and as a partner of the Albert B. Melone Company.Company Certified Public Accountants.

 

Report of the Audit Committee

 

To the Shareholders of First National CommunityFNCB Bancorp, Inc.:

 

The Audit Committee provides oversight of the Company’sFNCB’s financial reporting process on behalf of the Board of Directors. Management is responsible for the financial statements and the financial reporting process, including internal controls. In fulfilling its oversight responsibilities, the Audit Committee discussed the financial statements in the annual report with management, including a discussion of the quality, not just acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements.

 

The Audit Committee discussed with the independent auditors their judgments as to the quality, not just the acceptability, of the Company’sFNCB’s accounting principles, and such other matters as required to be discussed with the Audit Committee under the standards of the Public Company Accounting Oversight Board (United States). The independent auditors are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles. In addition, the Audit Committee has discussed with the independent registered public accounting firm the auditors’ independence from management and the Company,FNCB, including the matters in written disclosures required by the Independence Standards Board, and considered the compatibility of non-audit services with the auditors’ independence.

 


The Audit Committee discussed with the Company’sFNCB’s internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’sFNCB’s internal controls and the overall quality of the Company’sFNCB’s financial reporting.


 

Based on these discussions, the Audit Committee has recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the annual report on Form 10-K for the year ended December 31, 2015,2016, for filing with the Securities and Exchange Commission.

 

Audit Committee

 

/s/Thomas J. Melone, Chairman

/s/William G. Bracey

/s/Louis A. DeNaples, Jr.

/s/Keith W. Eckel

/s/John P. Moses

EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

The CompanyFNCB is committed to responsible compensation practices and strives to balance sound risk management with the need to attract, hire, motivate and retain executive team members who will maximize successful performance. The CompanyFNCB intends to provide executives with a balanced mix of fixed and variable pay. The purpose of all incentive plans is to motivate, reward and reinforce performance and achievement of team and/or individual goals in support of the Company’sFNCB’s strategic objectives for growth and profitability. They provide the opportunity for reward for meeting and exceeding established financial goals as well as recognition of individual achievements.

 

This Compensation Discussion and Analysis and the series of tables that follow contain information about the compensation earned or paid in 20152016 to the Company’sFNCB’s named executive officers. For 2015,At December 31, 2016, the following individuals were serving as our named executives are:executives:

 

●

Mr. Steven R. Tokach,Gerard A. Champi, the President and Chief Executive Officer and PEO of the CompanyFNCB

 

●

Mr. James M. Bone, Jr., the Chief Financial Officer/Treasurer and PFO of the CompanyFNCB

●

Mr. Gerard A. Champi, the Chief Operating Officer of the Bank

 

●

Mr. Brian C. Mahlstedt, Chief Lending Officer of the Bank

 

●

Ms. Mary Griffin Cummings, the General Counsel of the Bank

●

Ms. Lisa L. Kinney, the Retail Lending Officer of the Bank

During 2016, our “named executive officers” also included Steven R. Tokach, who served as President and Chief Executive Officer and a member of the Board of Directors until he retired on June 30, 2016. Gerard A. Champi, who formerly served as our Chief Operating Officer, was appointed our President and Chief Executive Officer effective July 1, 2016.


 

The overall executive compensation philosophy and strategy and primary objective of the Board of Directors with respect to executive compensation at the CompanyFNCB is to provide a total compensation package that meets a number of interrelated goals. The Company’sFNCB’s compensation package is designed to:

 

●

●

Be balanced and competitive in the external market in a manner consistent with the Company’sFNCB’s size and industry;

●

●

Correlate with the Company’sFNCB’s strategic business plan;

●

●

Align the interests of executives with those of shareholders;

●

●

Drive superior performance and reward executives for achievement;

●

●

Enable the CompanyFNCB to attract, motivate, develop and retain key executives whose experience, expertise and abilities will promote the Company’sFNCB’s performance for the benefit of its shareholders without encouraging undue risk-taking that could materially threaten the safety and soundness of the Company;FNCB;

 


●

●

Achieve an appropriate mix of fixed and variable compensation;

●

●

Equally support annual and long-term financial and strategic performance objectives as well as the stability of the organization;

●

●

Ensure compliance with applicable regulations;

●

●

Deliver executive compensation in a manner that is prudent and cost-effective; and

●

●

Support the mission, vision and values of the Company.FNCB.

 

Design of Compensation Program

 

In 2015,2016, executive compensation decisions were made by the Compensation Committee of the Board of Directors. The Compensation Committee’s fundamental policy is to provide our executive officers with competitive compensation for their positions and to provide opportunities based upon their contributions to the Company’sFNCB’s development and financial success as well as their personal performance in accordance with the overall design of the Company’sFNCB’s compensation package.

 

The Role of ConsultantsConsultant

 

In 2014, management2016, the Compensation Committee engaged Mosteller and Associates, a Pennsylvania-based human resources consulting firm, to conduct an Executive Compensation Review (“the 2014 Report”).Review. Mosteller and Associates’ review included: (1) a market review of the Company’sFNCB’s compensation for the named executive officer positions againstin comparison to the compensation levels of executive positions at other similar financial institutions; and (2) recommendations for enhancements to the Company’sFNCB’s overall executive compensation programs. Mosteller and Associates’ review has served as a foundation for executive compensation decisions in 2014 and 2015.

In 2015, management engaged Mosteller and Associates to provide a recommendation regarding an appropriate design for additional variable pay component for key executives. Mosteller and Associates’ recommendation was used as the basis for the creation of the supplemental executive retirement plans that the Company and/or the Bank provided to Messrs. Champi, Bone and Mahlstedt during 2015.2016.

  

The CompanyCompensation Committee continues to engage Mosteller and Associates to provide consulting services on an ongoing basis, advising with regard toon executive and broad-based compensation matters. Mosteller and Associates was chosen because of its expertise in the field of human resources and the financial services industry and thein FNCB’s geographic footprint of the Bank and its understanding of the organization.footprint. The Compensation Committee has evaluated the independence of Mosteller and Associates under the applicable standard set forth in the NASDAQ rules and concluded that no conflict of interest exists.

During 2015,Mosteller and Associates is independent considering the Company engaged the law firm of Cozen and O’Connor to provide advisory support for the creation of the employment agreements and supplemental executive retirement plans that the Company and/or the Bank provided to Messrs. Champi, Bone and Mahlstedt.appropriate factors.

 

 

 

The Role of Management

 

The Compensation Committee makes, or has final approval authority regarding, all compensation decisions with respect to all of our executives. Input from senior management, including the President and Chief Executive Officer and the Human Resources Officer, along with the Company’sFNCB’s external consultants was critical in order to permit the Board of Directors and Compensation Committee to make informed and appropriate decisions.decisions regarding compensation for executive officers other than the President and Chief Executive Officer. The Compensation Committee has the sole responsibility for setting the compensation for our President and Chief Executive Officer. For 2015,2016, input from senior management included:

 

 

●

Performance summaries for management team members and recommendations regarding compensation;

●

Results from executive compensation studies and related recommendations and analysis; and

 

●

Data and recommendations for changes necessary to ensure the continued market competitive nature of the Company’sFNCB’s overall compensation package and/or the individual components of executive compensation.

 

Each member of senior management excuses himself or herself from all Board and Compensation Committee discussions of that individual’s compensation.

 

Benchmarking and Peer Group

 

During 2015,2016, the CompanyCompensation Committee utilized a peer group to provide comparative market data for executive compensation pay levels. The peer group, which is based on industry, asset size, organizational structure, performance levels and geographic location. The Company selected that peer group to provide comparative market data for executive compensation pay levels.

This peer grouplocation, included financial organizations from the Mid-Atlantic statesStates with asset size ranging from approximately $650$730 million to almost $2.2$1.8 billion. The CompanyCompensation Committee believes these companies were an appropriate group against which to benchmark compensation for 2015.2016.

 

Below is a listing of the peer group used by the CompanyCompensation Committee in 20152016 to benchmark its executive compensation:

 

ACNB Corp.Corporation

 

Codorus ValleyESSA Bancorp, Inc.

 

Norwood Financial Corp.

AmeriServeAmeriserve Financial, Inc.

 

ESB Financial Corp.Fidelity D & D Bancorp, Inc.

 

Orrstown Financial Services, Inc.

Bryn Mawr Bank Corp.Chemung Financial Corporation

 

ESSA Bancorp, Inc.First Keystone Corporation

 

Peapack-Gladstone Financial Corp.Penns Woods Bancorp, Inc.

Chemung Financial Corp.Citizens and Northern Corporation

 

Fidelity D&D Bancorp, Inc.First United Corporation

 

Peoples Financial Services Corp.

Citizens and Northern Corp.Financial Services

 

First Keystone CorpFranklin Financial Services Corporation

 

Univest Corp of PennsylvaniaQNB Corp.

CNB Financial Corp.Codorus Valley Bancorp, Inc.

 

First United Corporation Mid Penn Bancorp, Inc.

 

.

  

Material Differences in Named Executive Officers’ Compensation

 

The overallCompensation Committee considers the following factors, that come into considerationamong others, when making executive compensation decisions include the following:decisions:

 

 

●

Compensation philosophy and strategy;

 

●

Individual performance relative to goals;

 

●

Corporate performance;

 

●

Budgetary constraints;

 

●

Regulatory requirements;

 

●

Competitive market data for the individual position;

 

●

Best practices in the marketplace;

 

●

Ability to retain and attract executive employees;

 

●

External economic and industry environment; and

 

●

Risk assessment considerations.

 

 

 

The named executive officers receive base salaries and incentives commensurate with their positions, responsibilities and responsibilities.accomplishments. In determining the appropriate types and amounts of compensation for the President and Chief Executive Officer each year, the Compensation Committee evaluates both corporate and individual performance. The corporate factors include the financial performance of the Company,FNCB, including return on stockholders’ equity, return on assets, asset quality and trends in the foregoing measures, the performance of the Company’sFNCB’s stock price, comparative results achieved by the Company’sFNCB’s peer group institutions, and progress in realizing the Company’sFNCB’s long-term strategic plan. The individual factors include initiation and implementation of successful business strategies, formationdevelopment of an effective management team and various personal qualities, including leadership.leadership qualities.

 

In determining the appropriate types and amounts of compensation for the named executive officers other than the President and Chief Executive Officer, the Compensation Committee takes into consideration the officer’s experience, expected personal performance and salarytotal compensation levels for comparable positions.

 

Compensation Components

 

The compensation package for each named executive officer is comprised primarily of base salary, short-term incentives in the form of cash bonuses and long-term stock-based incentive awards. Three of the five named executive officers also receive contributions under the SERP. The Companya Supplemental Executive Retirement Plan (“SERP”). FNCB also offers executives who meet the eligibility requirements the opportunity to participate in a nonqualified deferred compensation plan, in addition to a 401(k) Plan and health and welfare benefits available to all of the Bank’sBank employees.

 

Base Salary -The Bank has established salary ranges that are competitive with its peer group and the banking industry in our region. Each job classification has been evaluated based upon the required skills, knowledge, responsibility and experience needed. Salary increases are based upon merit, performance, quality of work, and other job related factors. Salary increases are not guaranteed and a satisfactory performance review may not warrant an increase. The base salary for each named executive officer is determined based upon responsibilities, experience, personal performance, salary levels in effect for comparable positions in the banking industry, and internal base salary comparability considerations and the responsibilities assumed by the named executive officer. The weights given to these factors differ from individual to individual as the Board determines is appropriate.considerations. Base salaries are reviewed annually and adjusted from time to time, based on the Company’s review of market data and assessment of CompanyFNCB and individual executive performance. Salary increases are based upon merit and are not guaranteed.

 

Please refer to “Executive Compensation Tables” below for additional information on compensation of the Company’sFNCB’s named executive officers.

 

Short-Term Incentive Program/Cash Bonuses -The CompanyFNCB has an Executive Incentive Plan (“EIP”) which is designed to link annual cash bonus awards to specific bank financial targets and individual performance metrics. According to the terms of the EIP, the Board of Directors is responsible for establishing the Bank-wide financial targets which are utilized to trigger funding of the EIP. The Board of Directors determines the individual performance goals used to evaluate the President and Chief Executive Officer. For all other executives, theThe President and Chief Executive Officer and Chief Operating Officer areis responsible for establishing individual performance goals for all other executives which, in conjunction with achievement of Bank-wide financial goals, are used to determine individual awards. The EIP provides for a potential claw-back of award payments if the relevant performance measures on which they are based are restated or otherwise adjusted with a 36-month period following the public release of the financial information.

 

 

 

On February 25, 20152016, the Board approved a 2015 Performance Targetperformance target for purposes of the 20152016 Incentive Plans.Plans (the “2016 Performance Target”). The 20152016 Performance Target was the budgeted Net Incomenet income for the 20152016 fiscal year (excluding certain non-core items). Based on the Bank’s 20152016 financial results in which core banking net income exceeded the budgetary target, the Board authorized the 20152016 EIP to be paid in March 2016.2017. The 20152016 Performance TargetsTarget for the Company’seach of FNCB’s named executive officers under the EIP arewere as follows:

 

Name

Position

Target EIP Award

Steven R. TokachGerard A. Champi

President and CEO

25% of base salary

James M. Bone, Jr. CPA

Chief Financial Officer

15% of base salary

Gerard A. ChampiBrian C. Mahlstedt

Chief OperatingLending Officer

15% of base salary

James M. Bone, Jr. CPAMary G. Cummings

Chief Financial OfficerGeneral Counsel

15%10% of base salary

Brian C. MahlstedtLisa L. Kinney

ChiefRetail Lending Officer

15% of base salary

Mary G. Cummings

General Counsel

10% of base salary

 

Long-Term Incentive Programs -The CompanyFNCB has a Long-term Incentive Plan (“LTIP”) which was formally adopted. The LTIP is designed to reward directors, executives and key employees for their contributions to the long-term success of FNCB, primarily as measured by the Board of Directors on October 23, 2013 and approved by the shareholders at the 2013 Annual Meeting of Shareholders on December 23, 2013.increase in FNCB’s stock price. The LTIP authorizes the Board to grant up to 1.2 million shares of the Company’sFNCB’s common stock over a 10-year period.period, which can be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares.

 

The CompanyFNCB believes that stock ownership by management and equity-based performance compensation arrangements are useful tools to align the interests of management with those of the Company’sFNCB’s shareholders. Where executives are shareholders themselves, the executives will realize a direct benefit by achieving the objective of maximizing shareholder value.

 

TheOn February 25, 2016 and upon the recommendation of the Compensation Committee, the Board approved awards under the terms of the LTIP is designed to reward directors, executivesnamed executive officers and key employees for their contributionsemployees. The 2016 grants were awarded on March 1, 2016 and were comprised solely of restricted stock. For more information about these awards to FNCB’s named executive officers, see the long-term successSummary Compensation Table and the Grants of the Company, primarily as measured by the increase in the Company’s stock price. The LTIP design provides the Board with the authority to offer several different types of long-term incentives, including stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares.Plan-Based Awards Table.   

 

On February 25, 201522, 2017 and upon the recommendation of the Compensation Committee, the Board approved awards under the terms of the LTIP to executives and key employees. The 20152017 grants were awarded on March 1, 20152017 and were comprised solely of 54,549 shares of restricted stock. For more information about these awardsstock, of which 27,672 shares were awarded to the Company’sFNCB’s named executive officers, see the Summary Compensation Table and the Grants of Plan-Based Awards Table.   officers.

 

Prior Plans

 

During 2015, the Company2016, FNCB had in place two expireda stock incentive plans:plan, the 2000 Stock Incentive Plan (the “Stock Incentive Plan”) and the 2000 Independent Directors’ Stock Incentive Plan (the “Directors’ Stock Plan,” and together with the Stock Incentive Plan, the “Company Plans”), each of which expired on August 30, 20102010. Only incentive stock options were ever awarded under the Stock Incentive Plan, and as such, no additional awards have been granted from the Company Plans, though theStock Incentive Plan since its expiration. The expiration of the Company Plans doesStock Incentive Plan did not affect any awards outstanding as of the expiration date of the Company Plans.date.

  

Under the Stock Incentive Plan, shares of common stock are subject to issuance upon the exercise of incentive stock options (“ISOs”), non-incentive stock options (“Non-ISOs”) and stock appreciation rights (“SARs”), and the award of shares of restricted stock to such key officers or other employees of the Company or the Bank as the Compensation Committee may designate. However, only ISOs were ever awarded under the Stock Incentive Plan. The exercise price of qualified stock options under the Stock Incentive Plan was not permitted to be less than 100% of the fair market value of the common stock on the date of grant, as determined in the Stock Incentive Plan.

 


Under the Stock Incentive Plan, the time period during which any qualified incentive stock option is exercisable, as determined by the Compensation Committee, doesdid not commence before the expiration of six (6) months or continue beyond the expiration of ten (10) years after the date such option is awarded.

 


Tax and Accounting Considerations

 

To the extent the recipient of an incentive award recognizes ordinary income, generally the CompanyFNCB will be entitled (subject to the requirement of reasonableness, the provisions of Code Section 162(m), and the satisfaction of any tax reporting obligations) to a corresponding income tax deduction. Wherever possible, the CompanyFNCB structures compensation for its executive officers in a way that preserves tax deductibility under Section 162(m).

 

The CompanyFNCB does not generally consider the tax consequences to named executive officers of cash compensation or of equity-based compensation, though it considers the tax treatment to the CompanyFNCB for non-qualified options and the non-qualifying disposition of qualified options to be favorable.

 

Employee Stock Grant Plans -On November 25, 2015, the Board of Directors adopted the 2015 Employee Stock Grant Plan (the “2015 Grant Plan”), which became effective upon implementation on the same date, pursuant to which the Board authorized the grant of up to 13,550 common shares in order to make one-time grants of 50 common shares to each active full and part-time employee of the Company, including the named executive officers. This program was implemented to provide all of the Company’s employees with a long-term financial interest in its future growth and profitability by providing them with Company ownership in the form of common shares.

Profit Sharing and 401(k) Plan -The Bank has adopted the First National Community Banka 401(k) Profit Sharing Plan (the “401(k) Plan”), a tax qualified retirement savings plan pursuant to which the Bank’s employees, including the named executive officers, are able tocan make pre-tax or Roth contributions from their cash compensation. The 401(k) Plan provides for a discretionary employer contribution, which is determined each year by the Board of Directors, in the form of profit sharing. For the year 2015, theThe Board of Directors did not declare a profit sharing contribution.contribution for the 2016 fiscal year.

 

The 401(k) Plan permits the Bank to match employee 401(k) contributions to employees who are 21 on the first day of the month following their day of hire. The Board of Directors has approved a 100% match of employee salary deferrals up to 2% for each employee. The match is subject to amendment at the Board of Director’s discretion.

 

Supplemental Executive Retirement Plan - On September 30, 2015, the Board of Directors authorized providing Supplemental Executive Retirement Plans (each, a “SERP”) to Messrs. Bone, Champi and Mahlstedt. The purpose of each SERP agreement was to further align shareholder interests with the compensation of these three (3) key executives and to provide them with a long termlong-term retention incentive. The provisions of each executive’s SERP are identical except for the amounts that the Bank is required to contribute to each executive’s SERP account as described below. Each SERP is a non-qualified plan and each participant has the status of a general unsecured creditor to the Bank.

 

Upon execution of the SERP Agreements in 2015, each executive received a one-time contribution to their SERP account. Mr. Champi received $50,000, Mr. Bone received $50,000 and Mr. Mahlstedt received $30,000.

 


Each SERP provides thatfor required annual contributions by the Bank is required to make additional annual contributions to that executive’s SERP account. This annual contribution for each executive is as follows: Mr. Champi, $35,000, Mr. Bone, $25,000 and Mr. Mahlstedt, $20,000. In addition, each executive is eligible to receive an annual Performance Based Contribution to their SERP account. Should the Board authorize a payment to that executive under the terms of the EIP; each executive will receive a performance-based contribution to his or her SERP account in an amount equal to the difference between the amount that we arethe Bank is required to contribute and the amount of such cash payment under the EIP. Should the executive not receive a payment from the EIP that exceeds the amount of the Bank’s required contribution for that fiscal year, the executive will not receive a performance-based contribution under their SERP for that year.

  

Each participant becomes fully vested in the fair market value of their individual SERP account upon the first to occur of the following: (1) the participant becoming disabled, (ii) the participant’s involuntary termination of employment from the Bank without cause, (iii) the participant’s death, (iv) change of control of the Company,FNCB, or (v) the participant reaching age 62 prior to a separation from service or other termination of employment.      


Account balances in each executive’s SERP account will receive an interest credit on December 31st of each year. TheIn 2016, the annual amount of interest credited on the account balance iswas equal to 1.0% plus the average of the one year Treasury Bill rates in effect on and between December 1 and December 15, of the Plan year to which the rate of interest applies.2016.

 

Deferred Compensation Plan -All officers of the Bank employed at the beginning of a year for at least two years with earnings in excess of $40,000 annually are entitled to participate in the Bank’s Director’s and Officer’s Deferred Compensation Plan, as amended (“Deferred Compensation Plan”). The Deferred Compensation Plan allows named executive officers who have been employed by the Bank for 10 or more years to defer up to 25% of their compensation, including base salary and cash bonuses. All other eligible named executive officers may defer up to 15% of their compensation. The Deferred Compensation Plan is designed to provide a long-term incentive to remain in the employ of the Bank.

 

An account for each participant is maintained and credited with deferred compensation on the date such compensation would have been paid to a participant had no election to defer been made. InterestIn 2016, interest paid on amounts in each participant’s account is determined annuallywas based on 1% plus the average of the one-year U.S. Treasury Bill rates in effect on and between December 1 and December 15, of the Plan Year to which it applies. There is no minimum interest rate. The Bank does not match participant deferrals to the Deferred Compensation Plan.2016

 

The Bank’s obligation under the Deferred Compensation Plan is an unfunded and unsecured promise to pay. As such, participants’ account balances in the Deferred Compensation Plan are unsecured and at-risk, meaning the balances are subject to the Bank’s creditors.

 

Participants, including each of the named executive officers, are immediately vested in their account balance in the deferred compensation plan. The benefit payments to be made to a participant under the Deferred Compensation Plan begin on the first business day of the month after the participant’s “normal retirement date,” which is the date on which a participant reaches age 60, the date on which he has been a participant for five years, or his or her termination of service, whichever is later. “Termination of service” means the participant’s ceasing to serve as a director or officer of the Bank for any reason whatsoever, voluntary or involuntary, including by reason of death or disability. The participant will receive equal monthly or annual installments over the period chosen, the amount of such payments being determined by annuitizing the amount in his Deferred Compensation Plan account, plus interest.

 

Distributions are paid in a lump sum or in annual or monthly installments according to the participant’s designation, provided, however, that the Bank may, subject to approval by the Board of Directors, pay the participant’s deferred compensation account in annual payments upon such Participant’s termination of service. All distributions are also subject to any regulatory requirements, as in effect from time to time.

 


Additional Employee Benefit Plans -The Bank also provides additional benefit programs to employees, including the named executive officers, including health, vision and dental insurance, life insurance, long-term and short-term disability insurance and an employee assistance program.

   

Supplemental Life Insurance for Certain Executive Officers -Certain executive officers also participate in the Company’sFNCB’s supplemental executive life insurance plan which provides a split-dollar share of death benefits to the executive’s beneficiary, depending upon the executive’s eligibility to receive payments. The plan is funded with bank-owned lifeinsurance and is used to provide an additional benefit to certain executives with a minimal cost to the Company.FNCB. Split-dollar life insurance plans are widely available in the banking industry, because it allows the employer to recover its plan costs upon the death of the executive, and the executive’s beneficiary to receive a split of the insurance proceeds.

 

These benefits are provided to further incent longevity with the CompanyFNCB and also to provide an executive benefit package that is fully competitive within the Company’sFNCB’s industry and market place. The costs of providing such benefits to all eligible employees are not considered when determining specific salaries of the named executive officers and are seen as a worthwhile investment in employees that will help keep the employee productive and engaged.


Perquisites -The CompanyFNCB provides a Company-ownedcompany-owned vehicle to several of the named executive officers, as their positions require travel offsite frequently for Bank business. The provision of a Company vehicle to these individuals is viewed by the Board of Directors as a normal benefit in the highly competitive financial services industry.

 

Country club memberships, themembership dues for which are paid by the Company, are provided toFNCB for certain of the Company’sFNCB’s named executive officers andare used as a vehicle to attract, retain and expand customer relationships. TheyCountry club memberships are viewed as an important resource for certain named executive officers to further the business of the Bank.

 

Employment and Severance Arrangements -On September 30, 2015 and upon the recommendation of the Compensation Committee, the Board of Directors authorized Employment Agreements (“Agreements”) for Messrs. Bone, Champi and Mahlstedt. Accordingly, on October 1, 2015, the CompanyFNCB and the Bank entered into an Employment Agreement with Mr. Bone and the Bank entered into Employment Agreements with Mr. Champi and Mr. Mahlstedt. Employment Agreements are commonly used by the banking industry and by the Company’sFNCB’s peer group to define an overall compensation package that is aligned with shareholder interests and to retain key executives. There were no written Employment Agreements in place prior to October 1, 2015. Below is a summary of each executive’s Agreement.

 

The provisions under the Employment Agreements for Mr. Champi, Mr. Bone and Mr. Mahlstedt are identical in all respects except for each executive’s base salary. The base salaries for each executive as specified in the Agreement are:2015 Agreements were: Mr. Champi, $252,500; Mr. Bone, $207,000 and Mr. Mahlstedt, $192,000. Each Agreement specifies that the base salary is subject to annual review by the Compensation Committee and the Board. Each of these executives have received salary adjustments subsequent to October 1, 2015.

 

Each Agreement states that the executive is eligible to participate in the EIP and LTIP according to the terms of those Plans. The Agreement also states that each executive will be provided with a SERP whose terms are described elsewhere in this document. The Agreement specifies that each executive will be reimbursed for annual country club dues and use of a Bank provided automobile.

 


Each executive’s Agreement has a term of three years, with consideration for an annual renewal of an additional three years on March 31st of each calendar year.

 

In the event of a Change of Control during which his employment with the Bank is terminated without Cause“without cause” (as defined in the Agreements), 1) within 120 days immediately prior to and in conjunction with a Change in Control or within one year following consummation of a Change in Control or 2) the terms and conditions of his position are substantially altered as defined in the Agreement, each executive will receive a total Severanceseverance payment equal to 2.99 years base salary at the highest rate in effect during the 12-month period immediately preceding his last day of employment plus the average Executive Incentive Plan cash award received over the last three preceding years. Each executive will remain eligible to participate in the Bank’s medical benefits program while receiving severance.

  

In the event that the executive is released without cause“without cause” while the Agreement is in effect, he will receive a total Severanceseverance payment equal to 2.99 years base salary at the highest rate in effect during the 12-month period immediately preceding his last day of employment plus the average cash award paid to him over the last three preceding years from the Executive Incentive Plan.EIP.


 

Each executive will remain eligible to participate in the Bank’s medical benefits program while receiving severance from either involuntary separation not for cause or because of a Change of Control.Control (as defined in the Agreements).

 

Each executive’s contract would terminate upon his death except that any remaining separation payments due to the executive as a result of a change of control or involuntary separation not for cause will be paid to the executive’s beneficiary.

 

Each executive’s Agreement includes a non-compete clause which will be in effect for twelve months after an involuntary separation by the Bank or after a Change of Control termination as defined in his Agreement.

 

Inter-Relationship of Elements of Total Compensation and Outcome of 2015 Say-on-Pay Vote

 

The Company’sFNCB’s executive compensation philosophy and strategy is intended to be competitive in the marketplace to reward executives for strong performance through multiple compensation vehicles. All of the components are balanced, integrated, and designed to provide a total compensation environment which will enhance the executives’ relationship with the CompanyFNCB and support the growth of overall shareholder value.

 

The various elements of the total compensation package are subtly interrelated but are intended to focus the executive on both short-term and long-term performance of the Company.FNCB. While there is not a direct relationship between components, if in a given year the Board of Directors or Compensation Committee decides, for purposeful reasons, to “overweight” one component of total compensation (as compared to the market) they may “underweight” another so that total compensation remains competitive. The Company holds

FNCB provides its shareholders with the opportunity to cast an annual advisory vote on executive compensation, commonly referred to as a say-on-pay vote. At FNCB’s Annual Meeting of Shareholders held in May 2016, approximately 96.9% of the votes cast on the say-on-pay proposal at the meeting were voted in favor of our executive compensation program. The Compensation Committee believes this vote affirms the shareholders’ support of executives on an annual basis.FNCB’s approach to executive compensation; however, the Compensation Committee will continue to oversee the executive compensation programs consistent with objectives set forth herein and consider the outcome of FNCB’s future say-on-pay votes, regulatory changes and best practices in the industry when making future compensation decisions for the named executive officers.

 

Equity Ownership Guidelines

 

The CompanyFNCB has no equity or security ownership requirements or guidelines for executive officers other than Steven R. Tokach who, as director of the Company and the Bank, is required to own shares of the Company’s common stock.officers. However, all of theFNCB’s executive officers own common stock, restricted stock or options to purchase common stock pursuant to its equity compensation plans. Pursuant to the Company’sFNCB’s bylaws, shareholders who submit proposals for inclusion in the Company’sFNCB’s proxy statement must disclose details regarding hedged positions.


  

Risk Analysis of Incentive Compensation Programs

 

TheDuring 2016, the Compensation Committee evaluated the Company’sFNCB’s compensation policies and practices for its employees and concluded that its compensation programs (1) are appropriately structured to reward prudent risk taking, (2) do not encourage or promote inappropriate risk taking, (3) do not pose a material risk to the Company,FNCB, and (4) are not reasonably likely to have a material adverse effect on the Company.FNCB. The Compensation Committee presented their findings to the Board of Directors in 2015.during 2016. The Compensation Committee intends to conduct aan annual risk analysis of the Incentive Compensation Programs on an annual basis.Programs.


 

Compensation Committee Report

The following report is not deemed to be “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by FNCB under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act. The Compensation Committee of FNCB’s Board of Directors (collectively, the “Committee”) submitted the following report for inclusion in this proxy statement:

Our Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on our Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, our Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in FNCB’s Annual Report on Form 10-K for fiscal year 2016 and this proxy statement for the 2017 annual meeting of shareholders for filing with the SEC.

The foregoing report is provided by the following directors, who constitute the Compensation Committee as of April 5, 2017:

Compensation Committee

Louis A. DeNaples, Jr., Chairman

William G. Bracey

Thomas J. Melone

John P. Moses


Summary Compensation Table - 2015

 

Shown below is information concerning the annual compensation for services in all capacities to the CompanyFNCB and the Bank for the fiscal years ended December 31, 2016, 2015, and 2014 and 2013 of the Chief Executive Officer, the Chief Financial Officer, and the three other most highly compensatedpaid to or earned by our named executive officers of the Company and the Bank, to the extent such persons’ total compensation exceeded $100,000.for 2016.

 

Name and Principal Position

 Year 

Salary

  

Non Equity

Incentive Plan

Awards (1)

  

Stock Awards

(2)

  

Change in

pension value

and non-

qualified

deferred

compensation

earnings (3)

  

All Other

Compensation

  

Total

 

Steven R. Tokach, President

 2015 $318,292  $55,000  $91,108  $-  $7,021(4) $471,421 

and Chief Executive

 2014  308,422   -   51,221   -   9,600(4)  369,243 

Officer of the Company

 2013  300,300   -   213   -   6,727(4)  307,240 

and the Bank

                          
                           

James M. Bone, Jr.,

 2015 $206,746  $38,000  $58,333  $710  $62,557(5) $366,346 

Executive Vice President and

 2014  195,504   -   35,811   502   12,962(5)  244,779 

Chief Financial Officer/Treasurer

 2013  190,300   -   213   426   7, 208(5)  198,147 

of the Company and the Bank

                          

and former Chief Information

                          

Officer of the Bank

                          
                           

Gerard A. Champi, Chief

 2015 $252,292  $45,000  $72,133  $5,614  $65,545(6) $440,584 

Operating Officer of the

 2014  242,455   -   42,511   3,968   14,438(6)  303,372 

Bank and former Interim

 2013  235,505   -   213   3,371   43,136(6)  282,225 

President and Chief

                          

Executive Officer of the

                          

Company and Bank

                          
                           

Brian C. Mahlstedt,

 2015 $189,885  $35,000  $52,008  $1,505  $41,131(7) $319,529 

Executive Vice President and

 2014  177,517   -   23,081   1,064   9,733(7)  211,395 

Chief Lending Officer

                        - 
                           

Mary C. Cummings, Senior

 2015 $162,823  $18,000  $27,571  $-  $1,254(8) $209,648 

Vice President and

 2014  153,773   -   18,391   -   -   172,164 

General Counsel

 2013  140,301   -   213   -   -   140,514 

Name and Principal Position

 

Year

 

Salary

  

Non Equity

Incentive

Plan

Awards

(1)

  

Stock

Awards (2)

  

Change in

pension value

and non-

qualified

deferred

compensation

earnings (3)

  

All Other

Compensation

  

Total

 

Gerard A. Champi, President and Chief

 

2016

 $320,477  $80,000  $52,535  $7,986  $141,269   602,267 
Executive Officer of FNCB and the Bank and 

2015

  252,292   45,000   72,133   5,614   65,545   440,584 
former Chief Operating Officer of the Bank (4) 

2014

  242,455   -   42,511   3,968   14,438   303,372 
                           

James M. Bone, Jr., Executive Vice President

 

2016

 $260,333  $40,000  $35,945  $2,212  $66,975   405,465 
and Chief Financial Officer/Treasurer 

2015

  206,746   38,000   58,333   710   62,557   366,346 
of FNCB and the Bank 

2014

  195,504   -   35,811   502   12,962   244,779 
                           

Brian C. Mahlstedt, Executive Vice President

 

2016

 $240,408  $37,000  $33,180  $2,649  $65,836   379,073 
and Chief Lending Officer of the Bank 

2015

  189,885   35,000   52,008   1,505   41,131   319,529 
  

2014

  177,517   -   23,081   1,064   9,733   211,395 
                           

Mary C. Cummings, Senior Vice President

 

2016

 $192,288  $18,000  $17,143  $-  $3,666   231,097 
and General Counsel of the Bank 

2015

  162,823   18,000   27,571   -   1,254   209,648 
  

2014

  153,773   -   18,391   -   -   172,164 
                           

Lisa L. Kinney, Senior Vice President

 

2016

 $159,208  $14,000  $13,825  $550  $5,328   192,911 
and Retail Lending Officer of the Bank                          
                           

Steven R. Tokach, Former President and Chief

 

2016

 $258,746  $-  $25,486  $-  $6,332   290,564 
Executive Officer of FNCB and the Bank (5) 

2015

  318,292   55,000   91,108   -   7,021   471,421 
  

2014

  308,422   -   51,221   -   9,600   369,243 

___________________________

(1) The amounts listed represent the amounts earned by the named executive officers under the Company’sFNCB’s EIP for theeach fiscal year ended December 31, 2015.year.

 

(2) The amounts listed represent the grant date fair market value of the shares computed in accordance with ASC Topic 718. Additional information about the Company’sFNCB’s accounting for stock-based compensation is contained in Note 2 and Note 16 to the Company’s13 of FNCB’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2015.2016.

 

(3) The amounts listed reflect onlyon the above market earnings on the balances in the named executive officers non-qualified deferred compensation plan accounts.

 


(4) For Mr. Tokach, this amount represents country club dues inChampi was appointed President and Chief Executive Officer of FNCB and the amountBank effective July 1, 2016. Previously, Mr. Champi served as Chief Operating Officer of $3,391, $6,188FNCB and $3,500 and an automobile allowance in the amount of $3,630, $3,412 and $3,227 for 2015, 2014 and 2013, respectively.Bank.

 

(5) For Mr. Bone, this amount includes an initial one-time contribution to his SERP inTokach retired as the amountPresident and Chief Executive Officer of $50,000 in 2015, earnings onFNCB and the balance in his SERP of $825, the Bank’s matching contribution to his account under its 401(k) Plan in the amount of $3,983, $3,800 and $3,800, premiums paid to purchase split-dollar life insurance in the amounts of $127, $118 and $108, country club dues of $4,771, $4,755 and $2,250 and an automobile allowance of $2,851, $4,289 and $1,050, in each case, for 2015, 2014 and 2013, respectively.

(6) For Mr. Champi, this amount includes an initial one-time contribution to his SERP in the amount of $50,000 in 2015, earnings on the balance in his SERP of $825, the Bank’s matching contributions to his account under its 401(k) Plan in the amount of $5,044, $4,846 and $4,704, premiums paid to purchase split-dollar life insurance in the amounts of $135, $127 and $118, country club dues in the amounts of $6,691, $6,525 and $7,130, an automobile allowance of $2,850, $2,940 and $2,914, in each case, for 2015, 2014 and 2013, respectively and a vacation payout in the amount of $28,270 in 2013.

(7) For Mr. Mahlstedt, this amount includes an initial one-time contribution to his SERP in the amount of $30,000 in 2015, earning on the balance in his SERP of $495, the Bank’s matching contributions to his account under its 401(k) Plan in the amount of $3,420 and $3,182, country club dues in the amount of $4,313 and $4,420 and an automobile allowance in the amount of $2,903 and $2,131, in each case, for 2015 and 2014, respectively.

(8) For Ms. Cummings, this amount includes the Bank’s matching contributions to her account under its 401(k) Plan in the amount of $1,254 in 2015.Bank effective June 30, 2016.

  

The Company’s compensation philosophy isfollowing table provides the detail for the amount presented under “All Other Compensation” paid to provide executives with a balanced mixor earned by each of compensation components to enable the Company to attract, retain and motivate key executives. It is also the Company’s compensation philosophy to provide for base compensation levels that are in line with the market together with a more conservative bonus opportunity also in alignment with the market. Where appropriate, the Company adjusts the base salaries of its key executives to reflect market-competitive compensation levels and to recognize current responsibilities and expectations. The Company made restricted stock awards under the LTIP to allFNCB’s named executive officers during 2015.for the 2016 fiscal year.

  

Gerard A.

  

James M.

  

Brian C.

  

Mary C.

  

Lisa L.

  

Steven R.

 

Benefits and Perquisites

 

Champi

  

Bone, Jr.

  

Mahlstedt

  

Cummings

  

Kinney

  

Tokach

 

FNCB annual contributions to SERP

 $80,000  $40,000  $37,000  $-  $-  $- 

FNCB performance-based contribution to SERP

  45,000   15,000   17,000   -   -   - 

FNCB contributions to 401(k) Plan

  5,300   4,145   4,108   3,666   2,944   - 

Automobile allowance

  3,245   2,845   3,258   -   2,384   6,077 

Country club dues

  7,580   4,850   4,470   -   -   255 

Split dollar life insurance premiums

  144   135   -   -   -   - 

Total

 $141,269  $66,975  $65,836  $3,666  $5,328  $6,332 

 

 

 

20152016 Grants of Plan-Based Awards

 

The following table provides information about non-equity incentive plan awards granted to the Company’sour named executive officers in connection withfor the year ended December 31, 2015.2016. The non-equity awards arewere made under the terms of the Company’sFNCB’s EIP and were subject to the satisfaction of 20152016 performance objectives. The actual awards indicated in the table were earned for 2016, but were paid in 2016.March, 2017.

 

   

Estimated Future Payouts Under

Non-Equity Incentive Plan Award (1)

         

Name

 

Grant Date

 

Target

($)

  

Stretch

($)

  

Maximum

($)

  

Actual

Award

($)

  

All Other

Stock

Awards:

Number of

Shares of

Stock or

Units

(#)

  

Grant Date

Fair Value of

Stock Awards

($)

 

Gerard A. Champi

Gerard A. Champi

 $77,875  $101,238  $109,025  $80,000         
                    

3/1/2016

                  9,500(2) $52,535 
   

 

Estimated Future Payouts Under

Non-Equity Incentive Plan Award (1)

  

All Other

Stock

Awards:

Number of

Shares of

Stock or

  

Grant Date

Fair Value

of Stock

                           
 

Grant

 

Target

  

Stretch

  

Maximum

  

Actual Award

  

Units

  

Awards

 

Name

 

Date

 ($)  ($)  ($)  ($)  

(#)

  ($) 

Steven R. Tokach

 $47,775  $62,108  $66,885  $55,000         
 

3/1/2015

                  15,800(2) $90,850 
 

11/25/2015

                  50(3) $258 
                          

James M. Bone, Jr. CPA

 $31,050  $40,365  $43,470  $38,000         
 

3/1/2015

                  10,100(2) $58,075 
 

11/25/2015

                  50(3) $258 
                          

Gerard A. Champi

 $37,875  $49,238  $53,025  $45,000         
 

3/1/2015

                  12,500(2) $71,875 

James M. Bone, Jr., CPA

James M. Bone, Jr., CPA

 $33,525  $43,583  $46,935  $40,000         
 

11/25/2015

                  50(3) $258  

3/1/2016

                  6,500(2) $35,945 
                                                    

Brian C. Mahlstedt

Brian C. Mahlstedt

 $28,800  $37,440  $40,320  $35,000         

Brian C. Mahlstedt

 $29,700  $38,610  $41,580  $37,000         
 

3/1/2015

                  9,000(2) $51,750  

3/1/2016

                  6,000(2) $33,180 
 

11/25/2015

                  50(3) $258                           
                          

Mary G. Cummings

Mary G. Cummings

 $16,330  $21,190  $22,820  $18,000         

Mary G. Cummings

 $16,800  $21,840  $23,520  $18,000         
 

3/1/2015

                  4,750(2) $27,313  

3/1/2016

                  3,100(2) $17,143 
 

11/25/2015

                  50(3) $258                           

Lisa L. Kinney

Lisa L. Kinney

 $13,900  $18,070  $19,460  $14,000         
 

3/1/2016

                  2,500(2) $13,825 
                          

Steven R. Tokach

Steven R. Tokach

 $81,875  $106,438  $114,625  $-         
 

3/1/2016

                  4,305(2)  $25,486 

_____________________________

(1) The amounts represent target, stretch, maximum and actual awards under the EIP, which equal a specified percentage of base salary in effect on December 31 of the year before payment is made. The EIP awards earned by the named executive officers in 2015for 2016 were paid in 2016March, 2017 and are set forth in the Summary Compensation Table under the column entitled “Non-Equity Incentive Plan Compensation.”

 

(2) Shares of restricted stock granted pursuant to the 2013 LTIP. For Mr. Tokach, the shares of stock vest ratably over 2 years and forrepresent number of shares awarded net of shares forfeited upon his retirement on June 30, 2016. For Messrs. Bone, Champi, and Mahlstedt, and Ms. Cummings and Kinney the shares of stock vest ratably over 3 years. Unvested shares of restricted stock are subject to forfeiture upon termination of employment for any reason. For employees who retire in good standing, all unvested restricted stock vests on a pro rata basis for the number of months since the immediately preceding vesting date and the total number of months remaining in the restricted period. Unvested shares of restricted stock do not have voting or dividend rights.

  

(3) The shares of stock granted to all employees pursuant to the 2015 Employee Stock Grant Plan. The shares of stock are fully vested and have voting and dividend rights, but are restricted as to transferability until January 1, 2017.

The Company’sFNCB’s equity compensation plans include the Directors’ Stock Plan and thea Stock Incentive Plan which werewas approved by shareholders on May 16, 2001. Both of the Company PlansThis Plan expired on August 30, 2010. No2010 and there were no stock options were awarded under either of the Company Plansthis Plan in 2013, 20142016, 2015 or 2015.

On November 25, 2015, the Board of Directors adopted the 2015 Employee Stock Grant Plan pursuant to which the Board of Directors granted 50 shares of the Company’s common stock to each eligible employee of the Company, including executive officers.2014.

 

On March 1, 2015,2016, the Board of Directors granted awards of restricted stock to executive officers under the terms of the LTIP.

 

 

 

Outstanding Equity Awards at Fiscal Year-End

 

The following table summarizes the equity awards the CompanyFNCB has made to our 2016 named executive officers which arewere outstanding at December 31, 2015.2016. All options were granted with an exercise or base price of 100% of market value as determined in accordance with the applicable plan. The number of shares subject to each award as well as the exercise and/or base price has been adjusted to reflect all stock dividends and stock splits effected after the date of such award but have not otherwise been modified.

 

 

Outstanding Equity Awards at Fiscal Year End

  

Outstanding Equity Awards at Fiscal Year End

 
 

Option Awards

  

Stock Awards

  

Option Awards

  

Stock Awards

 

Name

 

Number of

Securities

Underlying

Unexercised

Options Exercisable

(1)

  

Number of

Securities

Underlying

Unexercised

Options

Unexercisable

  

Option

Exercise

Price

  

Option

Expiration Date

  

Number of

Shares or

Units of

Stock

That Have

Not Vested

(#) (2)

  

Market

Value of

Shares or

Units of

Stock That

Have Not

Vested

($) (3)

  

Number of

Securities Underlying Unexercised

Options

Exercisable

(1)

  

Number of

Securities Underlying Unexercised

Options Unexercisable

  

Option

Exercise

Price

  

Option

Expiration

Date

  

Number of

Shares or

Units of

Stock That

Have Not

Vested (#) (2)

  

Market

Value of

Shares or

Units of

Stock That

Have Not

Vested ($) (3)

 

Steven R. Tokach

  -   -   -   -   19,600  $102,900 

Gerard A. Champi

  3,500   -  $16.90  

11/13/2017

   19,933(2) $120,595 
  5,600   -  $10.81  

1/5/2019

         
                                                

James M. Bone, Jr.

  1,650   -  $23.13   11/29/2016   13,633  $71,573   2,500   -  $16.90  

11/13/2017

   14,999(2) $90,744 
  2,500   -  $16.90   11/13/2017         
  4,000   -  $10.81  

1/5/2019

         
                        

Gerard A. Champi

  2,337   -  $23.13  

11/29/2016

   16,700  $87,675 
  3,500   -  $16.90  

11/13/2017

         
  5,600   -  $10.81  

1/5/2019

           4,000   -  $10.81  

1/5/2019

         
                                                

Brian C. Mahlstedt

  -   -   -   -   11,266  $59,147   -   -   -   -   13,133(2) $79,455 
                                                

Mary G. Cummings

  -   -   -   -   6,550  $34,388   -   -   -   -   7,167(2) $43,360 
                        

Lisa L. Kinney

  1,000   -  $16.90  

11/13/2017

   6,167(2)  $37,310 
  1,600   -  $10.81  

1/5/2019

         
                        

Steven R. Tokach

  -   -   -   -   -  $- 

_____________________________

(1) All options listed in this table are fully vested.

 

(2) Shares of restricted stock granted to the President and CEO generally vest in two equal installments over a two-year period on either March 1 or May 15 of each year. Shares of restricted stock granted to all otherthe named executive officers generally vest in three equal installments over a three-year period on either March 1 or May 15 of each year. The restricted stock reflected in this column was granted on March 1, 2014 and March 1, 2015.

 

(3) Based on the closing market value of the Company’sFNCB’s common stock on December 31, 20152016 of $5.25$6.05 per share, as reported on the OTCQX for the last trading day of the year.

 


Options Exercised and Stock Vested

 

None of theour 2016 named executive officers exercised any options during 2015.2016. The table provides additional information about the value realized to theby our 2016 named executive officers from stock awards that vested during 2015.2016.

 

 

Stock Awards

  

Stock Awards

 
 

Number of Shares

  

Value Realized

  

Number of Shares

  

Value Realized

 
 

Acquired on Vesting

  

on Vesting

  

Acquired on Vesting

  

on Vesting

 

Name

 

(#)

  ($) (1)  

(#)

  ($) (1) 

Steven R. Tokach

  3,800  $21,850 

Gerard A. Champi

  6,267  $35,198 

James M. Bone, Jr.

  1,767  $10,160   5,134  $28,829 

Gerard A. Champi

  2,100  $12,075 

Brian C. Mahlstedt

  1,134  $6,521   4,133  $23,245 

Mary G. Cummings

  900  $5,175   2,484  $13,942 

Lisa L. Kinney

  2,250  $12,627 

Steven R. Tokach

  17,585  $100,567 

 

____________________________

(1)Due to the illiquid nature of the Company’sFNCB’s common stock, the value realized on the restricted stock is the fair value on the date of vesting as defined in the plan documents, aswhich is an average of the high and low prices for the Company’sFNCB’s common stock for the 10 trading days preceding the grant date.


 

Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

 

The following table provides information as of and for the year ended December 31, 20152016 for the named executive officersMessrs. Champi, Bone and Mahlstedt regarding their participation in the Deferred Compensation Plan and the SERP. The other 2016 named executive officers did not participate in these plans during 2016. The aggregate earnings listed in this table are included in the non-qualified deferred compensation earnings column of the Summary Compensation Table. For a discussion of thetypes of compensation permitted to be deferred (and any limitations), the measures for calculating interest and the material terms with respect to payouts, withdrawals and other distributions, see the above discussion under the heading “Compensation Components—Deferred Compensation Plan.”

 

Non-Qualified Deferred Compensation Table

Non-Qualified Deferred Compensation Table

 

December 31, 2016

December 31, 2016

 

Name

 

Plan

 

Executive

Contributions

in Last FY

  

Registrant

Contributions in

Last FY

  

Aggregate

Earnings in Last

FY

  

Aggregate

Withdrawals/

Distributions

  

Aggregate

Balance at Last

FYE

  

Plan

 

Executive Contributions

in Last FY

  

Registrant Contributions

in Last FY (1)

  

Aggregate

Earnings in

Last FY (3)

  

Aggregate

Withdrawals/

Distributions

  

Aggregate

Balance at Last

FYE

 

Gerard A. Champi

 

Deferred Compensation

 $-  $-  $6,398  $-  $352,261 
 

SERP: Annual Contribution

  -   35,000(1)  1,588   -   87,413 
 

SERP: Performance-based Contribution

  -   45,000(2)  -   -   - 
                      

James M. Bone, Jr.

 

Deferred Compensation

 $-  $-  $710(2) $-  $43,730  

Deferred Compensation

  -   -   809   -   44,539 
 

SERP

  -   50,000(1)  825(1)  -   50,825  

SERP: Annual Contribution

  -   25,000(1)  1,403   -   77,228 
                      

Gerard A. Champi

 

Deferred Compensation

  -   -   5,614(2)  -   345,862 
 

SERP

  -   50,000(1)  825(1)  -   50,825  

SERP: Performance-based Contribution

  -   15,000(2)  -   -   - 
                                            

Brian Mahlstedt

 

Deferred Compensation

  -   -   1,505(2)  -   92,722  

Deferred Compensation

  -   -   1,715   -   94,437 
 

SERP

  -   30,000(1)  495(1)  -   30,495  

SERP: Annual Contribution

  -   20,000(1)  934   -   51,429 
 

SERP: Performance-based Contribution

  -   17,000(2)  -   -   - 

_________________________

(1) Amount is included in the Summary Compensation Table under the column “All Other Compensation” for the respective named executive officer.

 

(2) Amount represents the participant’s performance-based contribution which is equal to the participant’s non-equity incentive plan award earned under FNCB’s EIP and the participant’s annual SERP contribution for the fiscal year ended December 31, 2016. In accordance with the SERP agreement, the performance-based contribution was credited to the participant’s account on February 15, 2017, the date the Compensation Committee certified the amount of the Participant’s award under the EIP. The award is contingent upon the Participant being employed by FNCB on such date. Amount is included in the Summary Compensation Table under the column “All Other Compensation” for the respective named executive officer.

(3) Amount is included in the Summary Compensation Table under the column “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” for the respective named executive officer.

 

 

 

PPotentialotential Payments upon Termination or ChangeinControl

 

The table below summarizes the payments theour 2016 named executive officers (other than Mr. Tokach who retired on June 30, 2016) would receive if they were terminated as of, or a change in control occurred on, December 31, 2015.2016.

 

 

 

Before Change in Control

After Change in Control

 

Termination

for Death or

Disability

Involuntary

Termination

for Cause

Involuntary

Termination

without

Cause

Voluntary

Termination

for Good

Reason

Involuntary

Termination

without

Cause

Voluntary

Termination

for Good

Reason

Steven R. Tokach

Restricted stock

vesting (1)

$50,191

$0

$50,191

$0

$102,900

$102,900

Potential reduction

in payout due to

operation of Code

Section 280G

$0

$0

$0

$0

$0

$0

            

Before Change in Control

  

After Change in Control

 

Total

$50,191

$0

$50,191

$0

$102,900

$102,900

    

Termination

for Death or

Disability

  

Involuntary

Termination

for Cause

  

Involuntary

Termination

without

Cause

  

Voluntary

Termination

for Good

Reason

  

Involuntary

Termination

without

Cause

  

Voluntary

Termination for

Good Reason

 

James M. Bone, Jr.

Severance (2)

$0

$0

$612,582

$0

$612,582

$612,582

 

Severance (2)

  $0  $0  $652,716  $0  $652,716  $652,716 

Welfare continuation (3)

$0

$0

$24,337

$0

$24,337

$24,337

 

Welfare continuation (3)

  $0  $0  $45,750  $0  $45,750  $45,750 

Restricted stock

vesting (1)

$37,397

$0

$37,397

$0

$71,573

$71,573

 

Restricted stock vesting (1)

  $64,729  $0  $64,729  $0  $90,744  $90,744 

SERP payout

$50,825

$0

$50,825

$0

$50,825

$50,825

 

SERP payout

  $77,228  $0  $77,228  $0  $77,228  $77,228 

Potential reduction

in payout due to

operation of Code

Section 280G

$0

$0

$0

$0

($196,732)

($196,732)

 

Potential reduction in payout due to operation of Code Section 280G

  $0  $0  $0  $0  $(210,574) $(210,574)

Total

$88,222

$0

$725,141

$0

$562,585

$562,585

 

Total

  $141,957  $0  $840,423  $0  $655,863  $655,863 

Gerard A Champi

Severance (2)

$0

$0

$747,232

$0

$747,232

$747,232

 

Severance (2)

  $0  $0  $808,295  $0  $808,295  $808,295 

Welfare continuation (3)

$0

$0

$12,547

$0

$12,547

$12,547

 

Welfare continuation (3)

  $0  $0  $18,300  $0  $18,300  $18,300 

Restricted stock vesting (1)

$45,453

$0

$45,453

$0

$87,675

$87,675

 

Restricted stock vesting (1)

  $82,763  $0  $82,763  $0  $120,595  $120,595 

SERP payout

$50,825

$0

$50,825

$0

$50,825

$50,825

 

SERP payout

  $87,413  $0  $87,413  $0  $87,413  $87,413 

Potential reduction

in payout due to

operation of Code

Section 280G

$0

$0

$0

$0

($82,309)

($82,309)

 

Potential reduction in payout due to operation of Code Section 280G

  $0  $0  $0  $0  $(109,245) $(109,245)

Total

$96,278

$0

$856,057

$0

$815,969

$815,969

 

Total

  $170,176  $0  $996,771  $0  $925,358  $925,358 

Brian C. Mahlstedt

Severance (2)

$0

$0

$568,192

$0

$568,192

$568,192

 

Severance (2)

  $0  $0  $603,029  $0  $603,029  $603,029 

Welfare

continuation (3), (4)

$0

$0

$0

$0

$0

$0

 

Welfare continuation (3), (4)

  $0  $0  $0  $0  $0  $0 

Restricted stock

vesting (1)

$29,083

$0

$29,083

$0

$59,152

$59,152

 

Restricted stock vesting (1)

  $54,396  $0  $54,396  $0  $79,461  $79,461 

SERP payout

$30,495

$0

$30,495

$0

$30,495

$30,495

 

SERP payout

  $51,429  $0  $51,429  $0  $51,429  $51,429 

Potential reduction

in payout due to

operation of Code

Section 280G

$0

$0

$0

$0

($136,772)

($136,772)

 

Potential reduction in payout due to operation of Code Section 280G

  $0  $0  $0  $0  $(79,205) $(79,205)

Total

$59,578

$0

$627,770

$0

$521,067

$521,067

 

Total

  $105,825  $0  $708,854  $0  $654,713  $654,713 

Mary C. Cummings

Restricted stock

vesting (1)

$18,254

$0

$18,254

$0

$34,388

$34,388

 

Restricted stock vesting (1)

  $31,140  $0  $31,140  $0  $43,360  $43,360 

Potential reduction

in payout due to

operation of Code

Section 280G

$0

$0

$0

$0

$0

$0

 

Potential reduction in payout due to operation of Code Section 280G

  $0  $0  $0  $0  $0  $0 

Total

$18,254

$0

$18,254

$0

$34,388

$34,388

 

Total

  $31,140  $0  $31,140  $0  $43,360  $43,360 

Lisa L. Kinney

 

Restricted stock vesting (1)

  $27,460  $0  $27,460  $0  $37,304  $37,304 
 

Potential reduction in payout due to operation of Code Section 280G

  $0  $0  $0  $0  $0  $0 
 

Total

  $27,460  $0  $27,460  $0  $37,304  $37,304 

 

(1) Restricted stock vests immediately upon change in control.

(2) For severance and welfare continuation calculation, and time and form of such payments, see “Employment and Change in Control Agreements.”

(3) Assumes no increase in the cost of welfare benefits.

(4) Mr. Mahlstedt does not currently receive welfare benefits from the Company.FNCB.

 

 

 

Directors’ and Officers’ Deferred Compensation Plan

 

TheOur 2016 named executive officers and all other participants are vested in their account balancebalances in the Deferred Compensation Plan. As such, upon ceasing to serve as an officer of the BankFNCB for any reason whatsoever, voluntary or involuntary, including involuntary termination for cause, termination on a change of control, voluntary termination, early retirement or by reasonbecause of death or disability, the amount of the Deferred Compensation Plan account balance of such named executive officer will be payable pursuant to the terms of the Deferred Compensation Plan. Amounts payable under the Deferred Compensation Plan are unsecured, unfunded obligations of the Bank. Information regarding amounts to which our 2016 named executives would be entitled under any such termination scenario, in the event of a termination as of December 31, 2015,2016, are set forth in the preceding table. See the narrative detail above under “Compensation Discussion & Analysis — Deferred Compensation Plan” for additional information on the timing of such payments, which are subject in part to an election by such officer, and the age and length of such officer’s service with the Bank.FNCB.

 

Equity Incentive Plans

 

Options issued under the Company PlansStock Incentive Plan are subject to accelerated vesting and remain exercisable upon or in connection with the occurrence of certain change of control events; all currently outstanding stock options under the Company PlansStock Incentive Plan are fully vested. In addition, any such stock option awards may remain exercisable for up to three months (or longer in the case of death or disability) upon the termination of any of the Company’sFNCB’s named executive officers’ employment for any reason. As of April 8, 2016,7, 2017, based on the closing market price of $5.95$7.00 per share, the exercise price of all options held by executive officers is greater than the current market price per share. Therefore, the CompanyFNCB does not expect that the options would be exercised upon a change in control or termination of employment.

 

Notwithstanding any other provisions of the LTIP, and except as otherwise provided in an award agreement, if there is a change in control, all stock-based awards granted under the LTIP will immediately vest 100% infor each Participant, including incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units. However, no stock-based award granted or made during a period when the CompanyFNCB is subject to FDIC Part 359 golden parachute requirements will be subject to acceleration of vesting pursuant to the LTIP. In addition, no stock-based awards, whenever granted or made, will vest if the Change in Control occurs during a period when the CompanyFNCB is subject to FDIC Part 359.

 

The foregoing narrative regarding payments on a change in control or other termination of employment does not reflect payments that would be provided to each named executive officer under the 401(k) Plan following termination of employment, or under the Company’sFNCB’s disability or life insurance plan in the event of death or disability, as applicable, on the last business day of the fiscal year ended December 31, 20152016 because these plans are generally available to all regular salaried employees.

 


Director Compensation

The following table sets forth information regarding compensation paid to, or earned by, non-employee directors of the Company during the fiscal year ended December 31, 2015 for service as members of the Company and Bank Boards of Directors.

DIRECTOR COMPENSATION TABLE

December 31, 2015

Name

 

Fees Earned or

Paid in Cash

  

Stock Awards

  

Option

Awards

  

Change in

Pension value

and Non-

Qualified

Deferred

Compensation

Earnings

  

All Other

Compensation

  

Total

 

William G. Bracey

 $30,000  $-  $-  $-  $-  $30,000 

Michael J. Cestone (2)

  34,231(1)  -   -   -   -   34,231 

Joseph Coccia

  30,000   -   -   -   -   30,000 

Dominick L. DeNaples

  30,000   -   -   -   -   30,000 

Louis A. DeNaples

  30,000   -   -   -   -   30,000 

Louis A. DeNaples, Jr.

  30,000   -   -   -   -   30,000 

Keith W. Eckel

  30,000   -   -   -   -   30,000 

Thomas J. Melone

  30,000   -   -   -   -   30,000 

John P. Moses

  30,000   -   -   6,538   -   36,538 

Steven R. Tokach (3)

  -   -   -   -   -   - 

(1) Includes a $30,000 director’s fee and $4,231 for service as Secretary of the Board of Directors through May 20, 2015.

(2) Mr. Cestone retired as director as of December 31, 2015.

(3) Mr. Tokach does not receive compensation as a member of the Board of Directors.

Directors receive no remuneration for attendance at the Company’s board meetings. All non-employee members of the Bank’s Board of Directors receive an annual retainer of $30,000, payable at a rate of $2,500 per month, for each month or portion thereof that the director serves as a director of the Bank. The aggregate amount of director fees paid in 2015 was $274,231. Members of committees of the Board of Directors of the Company or the Bank, as applicable, do not receive fees for attending meetings of those committees.

Directors serving on the Board of Directors of the Bank are entitled to participate in the Bank’s Deferred Compensation Plan. Under the Deferred Compensation Plan, directors may voluntarily defer up to 50% of the director fees paid to them for service on the Board of Directors of the Bank. For additional information regarding the Deferred Compensation Plan, refer to Executive Compensation — Compensation Disclosure and Analysis - Deferred Compensation Plan.”

Directors’ Stock Plan

Directors who were not employees or officers of the Company were eligible to be granted options to purchase stock of the Company under the Directors’ Stock Plan. The Directors’ Stock Plan expired during 2013, and no additional awards may be made thereunder. There were no awards outstanding thereunder at December 31, 2015.

Directors who are not employees or officers of the Company are eligible to participate in the LTIP. No awards have been made to directors under the LTIP plan.


Equity Compensation Plan Information

 

The Company PlansStock Incentive Plan expired on August 30, 2010, and as such, no new grants of awards have been or will be made pursuant to these Company Plans.this Plan.  Options outstanding under the Stock Incentive Plan, however, can be exercised up to ten years following their date of grant; accordingly, exercisable options remain outstanding. 

  


The following table summarizes ourFNCB’s equity compensation plan information as of December 31, 2015.2016. Information is included for both equity compensation plans approved by First National Community Bancorp, Inc.FNCB shareholders and equity compensation plans not approved by First National Community Bancorp, Inc.FNCB shareholders.

 

  

Number of

  

Weighted Average

  

Securities Remaining

 
  

Securities to be

  

Exercise Price

  

Available for Future

 
  

Issued upon Exercise of

  

of Outstanding

  

Issuance Under Equity

 
  

Outstanding Options,

  

Options, Warrants

  

Compensation Plans (Excluding

 
  

Warrants, and Rights (1)(2)

  

and Rights (1)(2)

  

Securities in Column [a]) (2)

 

Plan Category

 

[a]

  

[b]

  

[c]

 

Equity compensation plans approved by FNCB Bancorp, Inc. shareholders

  37,700  $13.15   - 
             

Equity compensation plans not approved by FNCB Bancorp, Inc. shareholders (3) (4) (5) (6)

  -   -   2,450 

Total

  37,700  $13.15   2,450 

Equity Compensation Plan Information

December 31, 2015

  

Number of

  

Weighted Average

  

Securities Remaining

 
  

Securities to be

  

Exercise Price

  

Available for Future

 
  

Issued upon Exercise of

  

of Outstanding

  

Issuance Under Equity

 
  

Outstanding Options,

  

Options, Warrants

  

Compensation Plans (Excluding

 
  

Warrants, and Rights (1)(2)

  

and Rights (1)(2)

  

Securities in Column [a]) (2)

 

Plan Category

 

[a]

  

[b]

  

[c]

 

Equity compensation plans approved by

First National Community Bancorp, Inc.

shareholders

  50,746  $15.20   - 
             

Equity compensation plans not approved

by First National Community Bancorp, Inc.

shareholders (3) (4) (5)

  -   -   2,450 

Total

  50,746  $15.20   2,450 

 

(1)  The number of shares to be issued upon exercise of outstanding options and the weighted average exercise price includes any options that become exercisable within sixty (60) days after December 31, 2014.2016.

 

(2)   The Company’sFNCB’s equity compensation plans include the Directors’ Stock Plan and the Stock Incentive Plan which werewas approved

by shareholders on May 16, 2001.  All share and per share information has been adjusted to reflect prior stock dividends paid.

 

(3) On December 17, 2012, 15,050 common shares were issued to FNCB employees under the 2012 Employee Stock Grant Plan.  Recipients of grants made pursuant to the 2012 Employee Stock Grant Plan may not sell the shares granted under this plan until after January 1, 2014. The Board of Directors authorized the grant of up to 16,000 common shares, but the CompanyFNCB does not intend to issue any additional shares pursuant to this plan.

 

(4) On December 2, 2013, 14,400 common shares were issued to FNCB employees under the 2013 Employee Stock Grant Plan.  Recipients of grants made pursuant to the 2013 Employee Stock Grant Plan may not sell the shares granted under this plan until after January 1, 2015. The Board of Directors authorized the grant of up to 15,000 common shares, but the CompanyFNCB does not intend to issue any additional shares pursuant to this plan.

 

(5) On December 1, 2014, 12,850 common shares were issued to FNCB employees under the 2014 Employee Stock Grant Plan.  Recipients of grants made pursuant to the 2014 Employee Stock Grant Plan may not sell the shares granted under this plan until after January 1, 2016. The Board of Directors authorized the grant of up to 13,500 common shares, but the CompanyFNCB does not intend to issue any additional shares pursuant to this plan.

 

(6) On November 25, 2015, 13,300 common shares were issued to FNCB employees under the 2015 Employee Stock Grant Plan Recipients of grants made pursuant to the 2015 Employee Stock Grant Plan may not sell the shares granted under this plan until January 1, 2017. The Board of Directors authorized the grant of up to 13,550 common shares, but the CompanyFNCB does not intend to issue any additional shares under this plan.

 

Compensation Committee Interlocks and Insider Participation

  

Louis A. DeNaples, Jr., William G. Bracey, Thomas J. Melone and John P. Moses currently serve as the members of the Compensation Committee. Certain employees of the Company,FNCB, as discussed under the heading “Role of Management,” participate in the deliberations of the Board concerning named executive officer compensation. Nocompensation other than the compensation of the Chief Executive Officer. None of the members of the Compensation Committee during fiscal 2016 (i) had any relationships requiring disclosure by us under the SEC’s rules requiring disclosure of related party transactions or (ii) was an executive officer of the Company served as a director or a membercompany of the compensation committee of another company,which any one of whoseour executive officers serves asis a memberdirector. The Compensation Committee is responsible for establishing and administering our executive compensation policies. Members of the Company’s Board of Directors or participates in the Company’s compensation decisions.our Compensation Committee do not have any interlocks with other companies.

 

 

Compensation Committee Report

The following report is not deemed to be “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act. The Compensation Committee of the Company’s Board of Directors (collectively, the “Committee”) submitted the following report for inclusion in this proxy statement:

Our Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on our Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, our Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for filing with the SEC.

The foregoing report is provided by the following directors, who constitute the Compensation Committee as of April 7, 2016:

Compensation Committee

Louis A. DeNaples, Jr., Chairman

William G. Bracey

Thomas J. Melone

John P. Moses


STOCK PERFORMANCE GRAPH AND TABLE

 

The following graph compares the cumulative total shareholder return (i.e. price change, reinvestment of cash dividends and stock dividends received) on the Company’sFNCB’s common shares against the cumulative total return of the NASDAQ Stock Market (U.S. Companies) Index, the SNL Bank Index for banks with $500 million to $1 billion in assets and the SNL Bank Pink for banks with over $500 million in total assets. The stock performance graph assumes that $100 was invested on December 31, 2010.2011. The graph further assumes the reinvestment of dividends into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the relevant fiscal year. The yearly points marked on the horizontal axis correspond to December 31 of that year. The CompanyFNCB calculates each of the referenced indices in the same manner. All are market-capitalization-weighted indices, so companies judged by the market to be more important (i.e. more valuable) count for more in all indices.

 

First National Community Bancorp, Inc.

 

Period Ending

Index

12/31/10

12/31/11

12/31/12

12/31/13

12/31/14

12/31/15

First National Community Bancorp, Inc.

100.00

83.06

100.66

289.04

199.34

174.42

NASDAQ Composite

100.00

99.21

116.82

163.75

188.03

201.40

SNL Bank $500M-$1B

100.00

87.98

112.79

146.26

160.46

181.11

SNL Bank Pink > $500M

100.00

98.32

108.42

131.77

154.48

171.37

 
  Period Ending 

Index

 

12/31/11

  

12/31/12

  

12/31/13

  

12/31/14

  

12/31/15

  

12/31/16

 

FNCB Bancorp, Inc.

  100.00   121.20   348.00   240.00   210.00   245.80 

NASDAQ Composite

  100.00   117.45   164.57   188.84   201.98   219.89 

SNL Bank $500M-$1B

  100.00   128.21   166.25   182.39   205.86   277.96 

SNL Bank Pink > $500M

  100.00   110.28   134.03   157.12   174.30   203.22 

 

 

  

PROPOSAL 2

ADVISORY VOTE ON COMPENSATION OF THE COMPANY’SFNCB’S

NAMED EXECUTIVE OFFICERS

 

Pursuant to SEC rules, the Company is asking youour Board annually asks our shareholders to vote in favor of an advisory proposal to approve the compensation of its named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and any related material contained in this Proxy Statement.

 

This proposal, commonly known as a “Say-on-Pay” proposal, gives you as a shareholder the opportunity to endorse or not endorse the Company’sFNCB’s executive pay program and policies through a non-binding advisory vote on the following resolution:

 

“Resolved, that the Shareholders approve the compensation of the Company’sFNCB’s named executives, as disclosed in the Compensation Discussion and Analysis, the compensation tables and any related material contained in this Proxy Statement.”

 

The vote on this proposal is advisory and non-binding. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.

 

Board Recommendation

 

The Company’sFNCB’s Board of Directors recommends that shareholders voteFORthis proposal to approve, on an advisory basis, the named executive officers’ compensation as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables, and any related information contained in this Proxy Statement. Proxies solicited by the Board of Directors will be voted in favor of PROPOSAL 2 unless shareholders specify otherwise.

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

The CompanyFNCB and the Bank have engaged in and intend to continue to engage in banking and financial transactions in the ordinary course of business with directors and officers of the CompanyFNCB and the Bank and their affiliates on comparable terms and with similar interest rates as those prevailing from time to time for other Bank customers not related to FNCB or the Bank. TheFNCB’s Code of Business Conduct and Ethics applies to all directors, officers and employees of the CompanyFNCB and provides guidelines for those covered persons who may have a potential or apparent conflict of interest. Pursuant to the Code, a “conflict of interest” exists any time a covered person’s private interest interferes/conflicts, or even appears to interfere/conflict, in any way with the interests of the CompanyFNCB and the Bank. Under the Code, if a conflict of interest arises, the Board must act with care to avoid even the appearance that any actions were not in the best interest of the CompanyFNCB and the Bank.

 

Board of Directors approval is required for the CompanyFNCB to do business with a company in which a member of the Board of Directors, an officer, an employee or a family member of a director, officer or employee owns, directly or indirectly, an interest. To identify related party transactions, each year, the CompanyFNCB submits and requires its directors and officers to complete Director and Officer Questionnaires identifying any transaction with the CompanyFNCB or any of its subsidiaries in which the officer or director or their family members have an interest. The Board of Directors reviews related party transactions due to the potential for a conflict of interest. Each year, the Company’sFNCB’s directors and executive officers also review our Code.

 

 

 

Additionally, the CompanyFNCB has further obligations for the review and approval of loans that are made to directors and officers pursuant to Regulation O (Loans to Executive Officers, Directors and Principal Shareholders of Member Banks) and the Company’sFNCB’s written Loan Policy. Any business dealing, including extensions of credit, between the CompanyFNCB or the Bank and a director or officer of the CompanyFNCB or the Bank, or with an affiliate of a director or officer, other than a deposit, trust service or other product or service provided by a bank in the ordinary course of business, is required to be approved by a majority of disinterested directors. In considering a proposed insider transaction, the disinterested directors are to reasonably determine whether the transaction would be in the best interest of the CompanyFNCB or the Bank and onwhether the terms and conditions, including price, are substantially the same as those prevailing at the time for comparable transactions with non-insiders. The responsibility for monitoring compliance with Regulation O rests with the Bank’s Credit Administration Unit and Internal Auditor as required by the Bank’s Loan Policy.

  

There have beenwere no loan transactions originated during 20152016 which were required to be reported where such policy and procedures were not followed. Except for those loans described in more detail below, loans to directors, executive officers and their related parties (i) were made in the ordinary course of business, (ii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons not related to the CompanyFNCB or Bank and (iii) did not involve more than the normal risk of collection or present other unfavorable features. Each of these transactions was made in compliance with applicable law, including the Exchange Act and the Federal Reserve Board Regulation O.

 

The BankOn January 27, 2016, the Board of Directors authorized the payment on March 1, 2016 of all interest that FNCB had extended a line of credit (“line”previously been deferring on its unsecured subordinated debentures due September 1, 2019 (the “Notes”) to a corporation wholly owned by Joseph Coccia, a director of. On March 1, 2016, FNCB paid all previously deferred and accrued interest on the Company. This line of credit performed in accordance withNotes for the terms of the agreement andperiod September 1, 2010 through May 31, 2015 totaling $10.8 million, which included $3.9 million that was paid off in its entirety in the first quarter of 2016. The total aggregate outstanding amount of this line as of December 31, 2015 was $11.0 million. Mr. Coccia had a participation agreement with the Bank to purchase up to a maximum of a $5.2 million interest in this line from the Bank. This line bore interest at a rate of 3.25%. The largest aggregate outstanding amount of principal outstanding under this line during 2015 was $12.7 million. Under the line, $26.9 million was advanced and $27.4 million in principal and $279,000 in interest was paid during 2015. The total amount paid by the Bank to Mr. Coccia with respect to his participation in this line during 2015 was $112,000. The Bank received a 25 basis point annual servicing fee from Mr. Coccia on the participation balance. Mr. Coccia also received dealer reserve payments in the amount of $146,000 in 2015. The Bank paid an additional $129,000 to a corporation that provides vehicle restoration services on repossessed automobiles. Mr. Coccia owns 18% of this corporation.

Subordinated notes held byFNCB’s directors and/or their related parties totaled $8.6 million at December 31, 2015 and $9.0 million at December 31, 2014. On June 12, 2015, the Company solicited consent from all existing Noteholders to amend the Notes by reducing the interest rate payable on the Notes from 9.00% to 4.50% effective July 1, 2015, and prepaying 44% of the principal amount outstanding on June 30, 2015. A group of Noteholders holding $14.0 million of the principal balance outstanding on the Notes at June 12, 2015, comprised of both related parties or their interests and non-related parties, offered to purchase the Notes of any Noteholder who did not wish to consent to the amendments. There were seven, non-related party Noteholders, who elected to have their Notes purchased by the group, for a total principal balance of $10.0 million. Of the $10.0 million, $6.4 million was purchased by related parties or their interests. On June 30, 2015, the Company made an $11.0 million principal reduction on the Notes. Total principal payments on Notes held by directors and/or their related parties totaled $6.8 million, of which $6.4 million was used to purchase the Notes referenced above.parties.

 

For the year ended December 31, 2016, FNCB made all quarterly interest payments due on the Notes totaling $641 thousand, of which $395 thousand was paid to directors and/or their related interests. For the year ended December 31, 2015, the CompanyFNCB made the quarterly interest payments due on the NotesNote for the periods of June 1, 2015 through August 31, 2015, and September 1, 2015 through November 30, 2015, totaling $453 thousand, of which $233 thousand was paid to directors and/or their related interests. There was no interest paid to directors on these Notes for the year ended December 31, 2014.parties. Interest expense recorded on the Notes to directors and/or their related interestsparties amounted to $606$386 thousand and $921$606 thousand for the years ended December 31, 20152016 and 2014,2015, respectively. Interest accrued and unpaid on the Notes to directors and/or their related interestparties totaled $3.9 million$24 thousand and $3.6$3.9 million at December 31, 2016 and 2015, and 2014, respectively.


On January 27, 2016 the board of directors authorized the FNCB made an accelerated $4.0 million principal payment on Marchthe Notes on December 1, 2016, of all interest that the Company had previously been deferring on the Notes. On March 1, 2016, the Company made an aggregate payment totaling $11.0which $2.4 million which included all deferred interest and interest that was due and payable on March 1, 2016. Of the $11.0 million paid, interest paid to FNCB’s directors and/or their related interests totaled $4.0parties. This payment was scheduled date for payment was September 1, 2017. Notes held by directors and/or their related parties were $6.2 million on March 1, 2016.at December 31, 2016 and $8.6 million at December 31, 2015.

 

Certain Business Relationships

 

In the course of its operations, the CompanyFNCB acquires goods and services from and transacts business with various companies of related parties. The CompanyFNCB believes these transactions were made on the same terms as those for comparable transactions. The Companytransactions with unaffiliated parties. FNCB recorded aggregate payments for these services of $2.6 million, $2.1 million, and $2.7 million in 2016, 2015, and $2.6 million in 2015, 2014, and 2013, respectively. None of these transactions exceeded $120,000, except as described below.

 

Louis A. DeNaples’ son-in-law and brother-in-law to Louis A. DeNaples, Jr. is a principal owner of an insurance agency that provides services for the Company.FNCB. In 2015,2016, the total amount paid by the CompanyFNCB for the services was approximately $514,000$522,000 and represents premiums paid for insurance coverage. Mr. DeNaples son-in-law acts as an agent and derives a commission on the placement of insurance coverage. These services were awarded based on the results of a competitive bidding process.

 


Dominick L. DeNaples’ son

Coccia Ford, Inc., an automobile dealership wholly owned by Joseph Coccia, received approximately $141,000 in dealer reserve payments from the Bank. In addition, the Bank paid approximately $136,000 for vehicle restoration services on repossessed automobiles to a corporation that is an attorney at a law firm that provides legal services to the Company. In 2015, the total amount paid18% owned by the Company for these services was approximately $91,000. Mr. DeNaples’ son does not receive any direct payment for these services. Additionally, he is not a partner in this firm and therefore, does not derive any interest in the law firm’s profit from these payments.Coccia.

  

PROPOSAL 3

RATIFICATION OF APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

As discussed in the Joint Audit Committee Report in this proxy statement, Baker Tilly Virchow Krause, LLP (“Baker Tilly”), an independent registered public accounting firm, audited the consolidated financial statements of the CompanyFNCB for the years ended December 31, 20152016 and 2014.2015.

 

A representative of Baker Tilly is expected to be present at the 2016 annual meeting of shareholders and will have the opportunity to make a statement if he or she desires to do so, and will also be available to respond to appropriate questions.

 

Required Vote

 

The ratification of the appointment of the independent registered public accounting firm requires the affirmative vote of a majority of the votes cast in person or by proxy at the 2016 annual meeting of shareholders.meeting.

 

Board Recommendation

 

The Company’sFNCB’s Board of Directors recommends that shareholders voteFORthis proposal to ratify the appointment of Baker Tilly Virchow Krause, LLP as the Company’sFNCB’s independent registered public accounting firm.firm for the year ending December 31, 2017. Proxies solicited by the Board will be voted in favor of PROPOSAL 3 unless the shareholder specifies otherwise.


 

FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The following table sets forth the aggregate fees billed to the CompanyFNCB by Baker Tilly for services rendered for the fiscal yearyears ended December 31, 20152016 and 2014.2015.

 

  

2016

  

2015

 

Audit fees (1)

 $212,000  $245,700 

Audit-related fees

  -   - 

Tax fees (2)

  21,646   28,458 

All other fees

  -   - 

  

2015

  

2014

 

Audit fees (1)

 $245,700  $250,356 

Audit-related fees

  -   - 

Tax fees (2)

  28,458   12,979 

All other fees

  -   - 

_____________________________

(1)

Audit fees include fees billed for professional services rendered for the audit of annual financial statements and review of financial statements included in the Company’sFNCB’s reports on Form 10-K and Form 10-Q and for services normally provided in connection with statutory and regulatory filings.

(2)

Tax fees include fees billed for tax advisory services.


 

The Audit Committee has considered whether, and determined that, the provision of services rendered above was compatible with maintaining the independence of Baker Tilly in 20152016 and 20142015 as the independent registered public accounting firms.firm. The Audit Committee concluded that the independence of the firm was maintained.

 

Pursuant to the Audit Committee Charter, the CompanyFNCB is required to obtain pre-approval by the Audit Committee for all audit and permissible non-audit services obtained from its independent registered public accounting firm to the extent required by applicable law. In accordance with this pre-approval policy, the Audit Committee pre-approved all audit and tax services for fiscal years 20152016 and 2014.2015.

  

SECTION 16(a) BENEFICIAL

OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Exchange Act requires the Company’sFNCB’s officers and directors, and persons who own more than ten percent of a registered class of the Company’sFNCB’s equity securities (“10% Shareholders”) to file reports of ownership and changes in ownership with the SEC. Officers, directors and 10% Shareholders are required to furnish the CompanyFNCB with copies of all Section 16(a) forms they file.

 

The CompanyFNCB reviewed of the copies of such reports received and the written representations from the officers, directors and 10% shareholders. Based on this review, the CompanyFNCB believes that all such filing requirements were met during 2015 with the following exceptions:2016.

●

On May 19, 2015, Joseph J. Earyes, First Senior Vice President and Operations and Technology Services Officer of the Bank, as sole trustee for an irrevocable family trust, caused the trust to distribute 1,000 shares of the Company’s common stock to the beneficiaries of the trust. Mr. Earyes is also a beneficiary of the trust along with two other siblings. As part of this transaction, Mr. Earyes received 333 shares of the Company’s common stock, which are held individually in his name. Mr. Earyes was required to file a Form 4 by May 22, 2015 but did not. Mr. Earyes filed the Form 4 on May 28, 2015.

●

On April 9, 2015, James M. Bone, Jr., Executive Vice President and Chief Financial Officer of the Company and the Bank received 341shares of stock as a gift from his father. Mr. Bone is now the co- owner of these shares with his father and three siblings. Mr. Bone was required to file a Form 4 by April 12, 2015 but did not. Mr. Bone filed a Form 5 on March 3, 2016 for this transaction in lieu of filing a Form 4.


 

OTHER MATTERS

 

The Board of Directors knows of no other business which will be presented for consideration at the meeting other than as stated in the Notice of Meeting. However, if other matters properly come before the meeting, the shares of common stock represented by the signed proxies will be voted in accordance with the recommendations of the Board of Directors, and authority to do so is included in the proxy.

 

ADDITIONAL INFORMATION

 

A copy of the Company’sFNCB’s annual report to shareholders for its fiscal year ended December 31, 2015,2016, was mailed on April 18, 2016.17, 2017. Any shareholder may obtain additional copies of the Company’sFNCB’s Annual Report on Form 10-K for the year ended December 31, 2015,2016, including the financial statements and related schedules and exhibits, required to be filed with the SEC, without charge, from the Company’sFNCB’s website atwww.fncb.com or via email to stephanie.westington@fncb.com. This information may also be obtained by submitting a written request to Joseph Coccia, Secretary, at FNCB’s principal executive offices located at 102 East Drinker Street, Dunmore, Pennsylvania 18512.

 

In accordance with SEC Rule 14a-3(3)(1), in the future, the CompanyFNCB intends to deliver only one annual report and proxy statement to multiple shareholders sharing an address unless the CompanyFNCB receives contrary instructions from one or more of the shareholders. This method of delivery is known as “householding”.“householding.” Upon written or oral request, the CompanyFNCB will promptly deliver a separate copy of the annual report or proxy statement, as applicable, to a shareholder at a shared address to which a single copy of the documents was delivered. Further, shareholders can notify the CompanyFNCB by writing or calling Joseph Coccia, Secretary of First National CommunityFNCB Bancorp, Inc. at 102 E. Drinker Street, Dunmore, PA 18512 or (570) 346-7667 and inform the CompanyFNCB that the shareholder wishes to receive a separate copy of an annual report or proxy statement in the future. In addition, if you are receiving multiple copies of the Company’sFNCB’s annual report or proxy statement, you may request that we deliver only a single copy of annual reports or proxy statements by notifying us at the above address or telephone number.

 

By Order of the Board of Directors,

 

/s/Dominick L. DeNaples 

Dominick L. DeNaples,

Chairman of the Board

April 18, 201617, 2017

 

 

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