We believe the Board should represent a broad and diversifieddiverse spectrum of experienced and qualified individuals who are able to contribute value to our success.business. The Nominating and Corporate Governance Committee is responsible for the review of and recommendation to the Board of Directors of nominees for election as directors. The Committee works with the full Board to develop criteria for open Board positions, taking into account the factors that it deems appropriate. These factors may include identifying a nominee whose array and diversity of talents, experiences, qualifications, personal attributes, and skills would complement those already represented on the Board; the level of independence from us; our current needs, business priorities, objectives and goals; and the need for a certain specialized expertise. In applying these criteria, the Committee considers a candidate's general understanding of elements relevant to the success of a service company in the current business environment, the understanding of our business and our risk factors, senior operating experience with a service company, public company, or other organizations, and a broad understanding of and direct experience in corporate business and service delivery, as well as the candidate's educational and professional background. The Board believes that diversity of professional experience, professional training and personal accomplishments are important factors in determining the composition of the Board. The Committee considers candidates suggested by other Board members, management and shareholders. The Committee may also retain a qualified independent third-party search firm to identify and review candidates. Mr. Haught was referred to the Company by Board member Karl J. Warnke.

Once a prospective nominee has been identified, the Committee will make an initial determination as to whether to continue with a full review and evaluation. In making this determination, the Committee will take into account all information provided to the Committee, as well as the Committee's own expertise and experience. The Committee will then consider the potential candidate to ensure he or she has exhibited the criteria that the Committee has established for the position.

If the prospective nominee passes the preliminary review, members of the Committee, as well as other Board members as deemed appropriate, will interview the nominee. Upon completion of this process, the Committee will confer and make a recommendation to the Board. The Board, after reviewing the Committee's report, will make the final determination whether to nominate the candidate. Selection for persons identified to be appointed to a Board position will be conducted in the manner described above. Any shareholder who desires to recommend a prospective nominee for the Board should notify our Corporate Secretary in the manner described below in "Shareholder Nominations for Director."

Shareholders may nominate candidates for election as directors if they followby following the procedures and complycomplying with the deadlines specified in our CodeRegulations. Under those procedures, any shareholder who proposes to nominate one or more candidates for election as director must, not less than 30 days prior to the meeting at which the directors are to be elected, notify the Corporate Secretary of Regulations,the shareholder's intention to make the nomination and provide the Company with all of the information about each of the candidates as maywould be amended from time-to-time.required

under the rules of the SEC to be included in a proxy statement soliciting proxies for the election of the candidate, including (i) name, age, and business and residence addresses, (ii) principal occupations or employment during the last five years, (iii) the number of shares of the Company beneficially owned by the candidate, (iv) transactions between the candidate and the Company, and (v) all other information required under the rules of the SEC. A copy of our Code ofthe Regulations is available to any shareholder who makes a written request to the Corporate Secretary, and shareholders may submit nominations in writing by sending the submission to the Corporate Secretary, at The Davey Tree Expert Company, 1500 North Mantua Street, Kent, Ohio 44240.

The Nominating and Corporate Governance Committee and the Board considers a diverse group of experiences, characteristics, attributes and skills when considering a director nominee and the Board composition as a director by, not less than 30 days priorwhole. The Board seeks to the meeting at which the directors are to be elected, notifying our Corporate Secretarycomprise itself of his or her intention to make the nomination. The shareholder must provide us with allmembers who possess a range of the information about each of the candidates so nominated as would be required under the rules of the SEC to be included in a proxy statement.

The Board reviews, at least annually, director independence. As part of that review, the Board considers transactions and relationships between each director and any member of his or her family, and the Company and its subsidiaries and affiliates. AllAny such relationships are reported under the heading "Transactions with Related-Persons,Related Persons, Promoters and Certain Control Persons" in this Proxy Statement. The purpose of this review is to determine whether any relationships or transactions existed or exist that could be considered inconsistent with a determination that the director is independent. Although our common shares are not listed on the New York Stock Exchange ("NYSE") or on any other exchange, with respect to determining if a director or a director nominee is independent, we useutilize the same definition of independenceSEC approved standards as useddeveloped by the NYSE, a national securities exchange.NYSE.

As a result of theirits most recent review, the Board determined that the following Directors have been identified as beingdirectors and nominees are independent: Mr. Brown, Mr. Cunningham,Ms. Evans, Mr. Ginn, Mr. Hall, Mr. Haught, Ms. Harbrecht, Ms. Kilbane, Mr. Stapleton and Mr. Warfel.Warnke. No director has been identified as a

lead independent director. Mr. Warnke,Covey, our Chairman, President and Chief Executive Officer, and Mr. Covey, our President and Chief Operating Officer,a current employee of the Company, is not considered an independent director.

There are not deemed to be independent directors.no family relationships between any director, executive officer or director nominee.

The Company also determined by due inquiry that no director has a relationship with our principal independent auditor, ErnstDeloitte & YoungTouche LLP ("Deloitte").

Our Corporate Governance Guidelines provide that could be considered inconsistent withincumbent directors are not eligible to stand for election at the end of their three-year term if they have reached the age of 70 prior the date of the Annual Meeting of Shareholders at which their term expires. However, the Board may choose to re-nominate a determination thatdirector who is above the director is independent.age limit because of such director’s unique qualifications or for business reasons necessitating continuity of the Board.

The present members of the Compensation Committee are Messrs. Cunningham (Chair), Ginn, Hall, and Warfel. The Compensation Committee, which is composed entirely of independent directors as that term is defined bywho meet the NYSE,NYSE's independence standards, which we follow. The Compensation Committee recommends to the Board of Directors the salaries and other compensation of our executive officers, and supervises the administration of our benefit programs.programs and assesses the risk of our compensation policies and practices. As more fully set out in the "Compensation Discussion and Analysis" in this Proxy Statement, the Compensation Committee does not delegate its authority to set compensation; however, the BoardCompensation Committee does review recommendations from our Chief Executive Officer regarding the compensation of other officers. Furthermore, the Compensation Committee periodically retains outside consultants to review and discuss compensation and benefit plans. The Compensation Committee met threetwo times in 2015.2020.

When utilized, the outside consultants are provided with specific instructions relating to the research to be performed. Once engaged to conduct a salary and bonus-level review, the consultants are directed to compare our plans with those of companies of similar size and in similar industries. Similarly, the consultants are directed to compare and contrast benefit plans that are applicable to private and public companies of similar size and with similar governance structures. Findings by the consultants are reviewed by the Compensation Committee and with the full Board, which then makes the final decisions regarding compensation. The Compensation Committee directed the executive officers to engage Pay Governance LLC ("Pay Governance") in 2013 to review the material features of our compensation structure in 2019, which was completedhad been previously reviewed and updated in 2014, and to update the study in 2015.2017. The Compensation Committee considered the results of these reviews and in 2015 made adjustments to thenext compensation structure as outlinedreview is scheduled to occur in the "Compensation Discussion and Analysis" beginning on page 11.2021.

Pay Governance has not provided other professional services to date, including advice related to our insurance and employee benefit programs. In 2015, we paid Pay Governance $29,600 for compensation analysis and review services. In order to perform the services that are required of them, Pay Governance does have access to certain confidential information about us; however, they do not participate in the final strategic decision-making process. Further, Pay Governance is compensated on a fee-based structure and no portion of any payment made to them is dependent upon achieving a certain result or is otherwise commission-based.

The present members of the Audit Committee allis composed entirely of whomindependent directors who meet the independence requirements under the NYSE's listing standards and SEC rules, are Messrs. Cunningham, Ginn, Hall (Chair), and Ms. Harbrecht. It is anticipated that Mr. Brown will become a member of the Audit Committee.rules. The Board has determined that Messrs.Mr. Brown and Cunningham qualifyqualifies as an audit committee financial expertsexpert pursuant to the SEC's rules. The Audit Committee met twofive times in 2015. In addition, the Chair and members met with management and the independent auditors by teleconference four times in 2015.2020.

The Audit Committee assists the Company's Board of Directors in fulfilling its oversight responsibilities relating to: the integrity of the Company's financial statements and financial reporting process; the Company's systems of internal accounting and financial controls; the performance of the Company's internal and independent auditors; the independent auditors' qualifications and independence; and compliance with the Company's compliance withCode of Conduct and related ethics policies and legal and regulatory requirements. Specifically, the Audit Committee oversees the appointment, engagement, compensation, termination and oversight of the Company's independent auditors, including conducting a review of their independence, reviewing and approving the planned permitted scope of the Company's annual audit, overseeing the independent auditors' audit work, reviewing and preapproving any audit and nonauditpermitted non-audit services that may be performed by the Company's independent auditors, reviewing with management and the Company's independent auditors the adequacy and effectiveness of the Company's internal control over financial reporting and disclosure controls, and reviewing the Company's critical accounting policies and the application of accounting principles.

In addition, the Audit Committee establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting control over financial reporting or auditing matters and the confidential anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The Audit Committee's role also includes meeting to review the Company's annual audited financial statements and quarterly financial statements with management and the Company's independent auditors. The Audit Committee annually reviews the independence and performance of the independent auditor in connection with any determination of whether to retain the independent auditor or engage another firm as our independent auditor. In the course of these reviews, the Committee considers, among other things, the historical and recent performance, and an analysis of known legal risks and significant proceedings.

The present members of the Corporate Governance Committee are Messrs. Covey, Warfel (Chair),Stapleton and Warnke and Ms. Harbrecht. It is anticipated that Mr. Brown will become a member of the Corporate Governance Committee. Messrs. BrownMss. Evans and Warfel and Ms. Harbrecht are independent directors who meet the NYSENYSE's independence standards.standards; the other Committee member, Mr. Covey, is not. The Nominating and Corporate Governance Committee screens and recommends candidates for election as directors and recommends committee members and committee chairpersons for appointment by the Board of Directors. The Committee will consider nominees for the Board of Directors recommended by our shareholders.

The Committee also conducts annual performance evaluations of the Board and the committees of the Board.Board and sets and interprets the Board standards for the determination of director independence. The Nominating and Corporate Governance Committee met two times in 2015.2020.

NonindependentNon-independent directors may not serve on the Compensation or Audit Committee. Independent directors generally serve on at least two committees.

The Board met five times in 2015.2020. All incumbent directors attended at least 75%100% of the meetings of the Board of Directors and of the committees on which they served during the period that they served. We encourage our directors to attend the Annual Meeting of Shareholders. In 2015,2020, all of our then-serving directors attended the virtual Annual Meeting of Shareholders.

The Board recognizes that it is neither possible nor prudentreasonable to eliminate all risk, and that in order to remain competitive, certain risk-taking is an essential element of every business decision and part of our business strategy. However, the Board also understands that within any business framework, steps must be taken to properly safeguard the assets of the Company, implement and maintain appropriate financial and other controls, and ensure that business is conducted sensiblyprudently and in compliance with applicable laws and regulations and proper governance.

Assessing and managing risk is the responsibility of management. It is the responsibility of the Board of Directors to oversee risk management. As part of this responsibility, the Board oversees and reviews certain aspects of our risk management efforts. For example, the Board requires that an annual overall assessment of risk be performed and has delegated this oversight of thethis process to the Audit Committee. This enterprise-wide risk management assessment is designed to review and identify potential events that may affect us,

including cybersecurity risks, manage risks within our risk profile and provide reasonable assurance regarding the achievement of our objectives. The Audit Committee reviews and discusses with management our major financial risk exposures and the steps management has taken to monitor and control such exposures, including our financial risk assessment and risk management policies. Other strategic and operational risk exposures monitored and assessed by the Board may include regulatory, human capital and reputation risks. The Compensation Committee oversees risks related to our employment policies and our compensation and benefit arrangements. In addition, management and the Board have recently focused on risks relating to, and impact on the Company from, the COVID-19 pandemic during the last 12 months, and will continue to do so while the pandemic is ongoing.

We are aware that cybersecurityCybersecurity is an integral part of our risk analysis and discussions. While all entities are at some risk of a cybersecurity attack, the Company has taken steps deemed appropriate by the Company to detect and limit the severity of a cybersecurity attack. These measures include, among other things, robust password requirements, firewalls, and limiting access to sensitive information. To date, the Company is not aware of any successful system-wide cybersecurity attack. The Company maintains employee and customer information and has developed contingencyresponse plans butin the event such information is compromised due to a cybersecurity attack. The Company also has not developed a system-wide cybersecuritythird party on a retainer to assist with forensics and remediation should an attack cost matrix.occur.

Company representatives meet annually in executive session with the Audit Committee. The General AuditorManager of Internal Audit and the Chief Financial Officer review with the Audit Committee each year's annual internal audit plan, which focuses on significant areas of financial, operating and compliance risk. The Audit Committee also receives regular reports from management on the results of internal audits.

As further described under "Compensation Risk Analysis," the Compensation Committee is responsible for the oversight of risks relating to employment policies and our compensation and benefits arrangements. To assist in satisfying these oversight responsibilities, the Committee may retain a compensation consultant and meets regularly with management to understand the financial, human resource and shareholder implications of compensation decisions that are made by the Board. The philosophy, process and rationale the Compensation Committee utilizedutilizes as part of its responsibilities is discussed in detail in the "Compensation Discussion and Analysis" included in this Proxy Statement beginning on page 11.28.

Mr. WarnkeCovey is the Chairman of our Board of Directors and our President and Chief Executive Officer. OurOfficer, having assumed responsibility as Chairman of our Board hasof Directors effective March 6, 2020 from Mr. Warnke who retired as chairman but remains on the authority to choose its chairman in any way it deems best for us at any given point in time. Board.

Historically, we have combined the positions of chief executive officer and chairman. We believe this is appropriate because we are an Employee Stock Ownership Plan ("ESOP"(“ESOP”) company and combining the chairman and chief executive officer positions gives our employee-owners a clear leader and improves efficiencies in the decision-making process. We believeFurther, we have greatly benefited from having a single

person setting our tone and direction and having primary responsibility for managing our operations. This structure has also allowed the Board to carry out its oversight responsibilities with the full involvement of our independent directors. To date,

Although the Board's role inBoard does not intend to appoint a lead independent director, the Board believes that it is able to effectively provide independent oversight of risk assessment has not caused it to identify any changes toour business and affairs, including risks facing the currentCompany, through the composition of our board of directors and the strong leadership structure. However,of our independent directors.

The Board believes there isthat no single leadership structure that would beis the most effective in all circumstances and therefore, retains the authority to evaluate and modify the Company’s leadership structure at such times as it deems appropriate. The Board’s role in risk oversight has not impacted our leadership structure to best address our circumstances as and when appropriate.structure.

We have established procedures to permit communications with the Board of Directors regarding the Company. Interested parties may communicate with the Board of Directors by contacting the Chairman, the chairs of the Audit, Compensation and Nominating and Corporate Governance Committees of the Board, or with any independent Directordirector by sending a letter to the following address: The Davey Tree Expert Company, Corporate Secretary, 1500 North Mantua Street, Kent, Ohio 44240.

All communications directed to our Board of Directors or Board Committees are reviewed by management and communicated with the appropriate Board member or members.

The current compensation structure for nonemployee directors is designed to fairly pay directors for work required based on our size, scope and industry. The primary goal of the directors is to enhance the long-term interests of our shareholders by establishing company-wide general goals and objectives and identifying executive officers capable of carrying out those goals and objectives. In order to align director compensation with Related-Persons, Promotersthese objectives, the Compensation Committee reviews director compensation and Certain Control Personsrecommends changes to the Board. To assist with this review, the Compensation Committee periodically directs the Company to engage Pay Governance, an independent compensation consulting firm, to review and evaluate director compensation. Pay Governance assists us in developing a framework for director compensation based on market conditions, our compensation philosophy, and comparisons to companies of similar size and complexity. A review by Pay Governance was completed in 2020 and the Compensation Committee recommended no changes be made to director compensation. Another review is scheduled to occur in 2021.

We compensate nonemployee directors with a retainer of $60,000 per year, unless there are more than 20 meetings total per year, in which case each director would receive an additional fee of $1,000 per meeting. Committee Chairs received an additional retainer as follows: Audit Committee Chair - $10,000/year; Compensation Committee Chair - $6,000/year; and Nominating and Corporate Governance Committee Chair - $5,000/year. If the Chairman of the Board is a non-employee director, the Chairman will receive an additional retainer of $7,500/year. Directors has adoptedare also reimbursed for their reasonable business expenses such as travel and lodging in connection with their attendance of our Board meetings.

Each nonemployee director receives an annual stock award grant of DRSUs equal to a written policy regarding related-party transactions. Under that policy, all transactionsfixed amount of $36,000. In 2020, the annual grant, at the then-fair value price of $24.20, equaled 1,488 DRSUs awarded to each director. The number of DRSUs associated with or involving a related-personthe award will fluctuate based on the fair value price of the Company's common shares; however, the value of $36,000 will remain constant. The award will vest over three years and vesting will accelerate upon retirement. Beginning with the 2017 award, an award may be paid in one-to-five-year installments, but must be disclosedpaid in full by age 75.Vested DRSUs will generally be paid to and approvednonemployee directors on March 15 of the year following the year in advance by the Corporate Governance Committee. Further, each officer andwhich their service on our Board ceases. Nonemployee directors may make a deferral election with respect to DRSUs. A nonemployee director is requested, on an annual basis,may elect to confirm the existence of any related-person transaction. Even if disclosed, each such transaction must have a legitimate business purpose and be on terms no less favorabledeferred payment made in a single lump sum payment during a specified year not later than that which could be obtained from unrelated third parties. Related-party transactions are considered when determining if a director is deemed to be an independent director.

Directors may defer all or indirect material interest. Further, no related-person has proposed such a transaction. For purposespart of this discussion, a related-person is a director, a nominee for director, an executive officer, an immediate family member (including nonrelated-persons sharing the same household)their fees in cash or SEUs until their retirement as directors.

The following table shows, as of March 17, 2016,12, 2021, the number and percent of our common shares beneficially owned by each nominee, director, and officer listed in the "2015"2020 Summary Compensation Table," and all directors, nominees and officers as a group.

To our knowledge, as of March 17, 2016,12, 2021, no person or entity was an owner, beneficial or otherwise, of more than five percent of our outstanding common shares. Argent Trust Company, trustee of the 401KSOP and ESOP Plan, 1100 Abernathy Road, 500 Northpark, Suite 550, Atlanta, GA 30328, had, as of March 17, 2016,12, 2021, certain trustee-imposed rights and duties with respect to common shares held by it. The number of common shares held in the 401KSOP and ESOP Plan as of March 17, 2016,12, 2021, was 3,785,447,5,077,409 or 28.48%22.18% of our outstanding common shares.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and persons who own more than ten percent of our common shares to file reports of ownership and changes in ownership of our common shares held by them with the SEC. Currently, we file these reports on behalf of our directors and executive officers. Based on our review of these reports, we believe during the year ended December 31, 2015, except as follows,2020, all reports were timely filed. The Form 4 for the exercise

The Compensation Discussion and Analysis section of the Proxy Statement providesdiscusses the Company's shareholders withcompensation of the NEOs and includes an overview of our 2020 performance, as well as a description of the major elements of the Company's executive officer compensation plans and programs, as well asand the principles and factors that are considered in making compensation decisions.

The members of the Compensation Committee of the Board of Directors, ("we" or "us" as used in this Compensation Discussion and Analysis), which is composed entirely of independent, nonemployee directors, assistassists the Board of Directors ("Board" or "Board of Directors") in carrying out its responsibilities for management succession matters, for developing, approving and administering the Company's executive officer incentive and benefits programs for its executive officers, for establishing the base salary and other compensation for the Chief Executive Officer, and for recommending director compensation. In this role, we are carefulthe Compensation Committee's objective is to align executive officer compensation with the interests of the Company's shareholders, review all proposed compensation programsshareholders.

2020 Financial and program changes,Operating Highlights

Our results in 2020 exceeded our expectations. Revenues increased by $143,832,000, or 12.6%, and discuss recommendationsincome from operations was $94,201,000, an increase of 34.7% from 2019. During 2020, the Company dealt with the full Board for final approval.

We consistently return significant value to our shareholders in the form of dividends and is discussed under the Annual Incentive Compensation Plan captionrepurchases of our stock. Dividends paid in Section IV2020 totaled $2,271,000 and repurchases of this Compensation Discussion and Analysis.stock totaled $39,079,000.

In 2020, the Company, with approval from the Compensation Committee and Board of Directors, amended the Long-Term Incentive Plan to discontinue the stock option program for 2021 and going forward and replace the value to recipients of those awards with performance-

Our compensation philosophy is to drive and support the Company's business goals by recognizing the attainment of measurable performance and the achievement of approved goals and objectives. In addition, we regularly assess whether the Company's compensation structure establishes appropriate incentives for management and employees, and validate that awards are made with due consideration of balancing risks and rewards.

The Company's compensation programs are designed to reward employees for producing sustainable growth for the Company's shareholders and to attract and retain qualified and experienced talent. ATo drive this philosophy, a significant part of the compensation for senior executives is tied to Company performance or achievement of certainapproved performance goals and, therefore, is not guaranteed. If the Company or an executive fails to perform within established parameters for a given fiscal year, incentive compensation may be changed, reduced or eliminated.eliminated, and if our stock price decreases, stock-based compensation will become less valuable.

The main objectives of theour compensation programs are to:

In order to meet these objectives, we design the Company's compensation programs such that shareholders' interests are advanced before we approve any incentive payments to the executive officers. To the extent that the efforts of the executive officers result in higher

earnings and enhanced shareholder value, we believe theour officers should be rewarded. As a result, we intend for theour compensation programs to create a significant incentive to properly manage the Company, which in turn will create long-term benefits for the shareholders without encouraging the taking of excessive risks that could be detrimental to the growth of the Company or the interests of theour shareholders.

Our executive compensation program providesprograms provide a balanced mix of salary, incentive bonuses and equity awards. By creating a compensation program that includes both long- and short-term goals and targets, we believe that each element of the overall program, comprised of base salary, annual cash incentive plan awards, and longer-term stock options, stock appreciation rights, and performance-based restricted stock unit grants,PRSUs, complements and rewards annual performance, as well as ensurespromotes long-term viability, growth and shareholder value. Conversely, in order to reduce the risk of focusing on too narrow a result, currently no portion of an award under the compensation programs is based solely on an increase in the Company's stock price. Further, no award isAwards are not grossed-up or otherwise adjusted to account for its tax consequences, and the calculation of awards under the programs is established, except as otherwise indicated, based on U.S. GAAP financial measures consistent with our audited financial statements. Additionally, to retain and attract qualified executive and management talent, the Board has approved several retirement benefit plans.plans and certain limited perquisites.

We understandbelieve that compensation programs should be designed to reduce the opportunity for participants to take unnecessary risks to the detriment of the shareholders or the Company's future viability in order to achieve identified performance targets.viability. We have designed the Company's executive compensation programs to address these risks and minimize the opportunity for any individual to manipulate or undermine the programs. We have accomplished this by tailoring the

Role of Independent Compensation Consultants

TheTo ensure that our compensation programs continue to meet our philosophy and are responsive to economic changes, the Compensation Committee has the authority to, and we do, periodically retainretains outside consultants to assess the adequacy and fairness of the Company's compensation programs. WeThe Compensation Committee also meetmeets frequently with the PEOCEO to obtain management's recommendations on compensation issues; however, Company management personnel are not involved in approving executive compensation programs. In 2013, we instructed theThe Company to retainretained Pay Governance, an independent consulting firm, to provide an updateda review and guidance of the officer compensation structure in 2019, which had been previously reviewed and updated in 2017. The next review and analysis is scheduled to occur in 2021.

After considering the information provided by Pay Governance, the Compensation Committee determined that no significant changes were necessary to the Company's overall compensation structure. This study was completedThe Compensation Committee will continue to review all aspects of our executive compensation program, taking into account our commitment to align executive compensation to augment shareholder value and reviewed in 2014,positive financial results, and was updatedwill make changes as necessary to reflect pertinent market, economic and reviewed again in 2015.competitive conditions.

In 2014,2020, the Company's shareholders approved, on an advisory, nonbinding basis, the compensation of the NEOs by an overwhelming majority (the so called "say-on-pay" vote). Specifically, as a percentage, 96.4%93.4% of the shares voted were to approve the compensation. Given the strong level of shareholder support, the Board of Directors determined that no material changes to the Company's compensation plans were necessary as a result of the 20142020 say-on-pay vote. Nonetheless, as has been our practice, we regularly evaluate these plans and recommend changes, as we deem appropriate. The Board of Directors and the Compensation Committee value the opinions of the Company's shareholders and will continue to evaluate any concerns raised by the shareholders regarding executive compensation.

At the 2014 annual meeting,2017 Annual Meeting, the Company'sCompany’s shareholders also cast an advisory vote to review executiveNEO compensation every three years. Thus,years, and that recommendation was adopted by the Board of Directors. Both the next say-on-pay vote on the NEO compensation and the next advisory, nonbinding vote on the frequency of future say-on-pay votes willon the compensation of our NEOs are expected to occur at the 2017our 2023 Annual Meeting of Shareholders.

Although both of these shareholder votes are on an advisory, nonbinding basis, we consider the results to be a strong affirmation of the actions taken by the Board of Directors in establishing the compensation plans for the NEOs and will continue to monitor the shareholders' opinions regarding executive compensation.

The Compensation of the NEOs outlined in the Proxy Statement is a combination of realized and realizable pay. We define realized pay as compensation that is actually awarded to ana NEO, or paid on that NEO's behalf, as a result of the performance or achievement of certain goals and objectives for a given year. We define realizable pay as the potential value of future payments that may be awarded over a specific periodperiods of time in the future. The Company is required to value realizable pay, even though it is not yet available to the NEO, at a specific point in time, either at the time of grant of the potential award or as of the end of the fiscal year. Depending on a number of factors, including the long-term increase in shareholder value, these contingent future payments and contingent payment opportunities may be more or less than the value assigned to these awards in this Proxy Statement.

The compensation plans discussed in the Proxy Statement, as well as their category, are as follows:

Each element of the NEOs' compensation, including additional information regarding the alignment of pay and performance for each program, is discussed in more detail below.

Base Salaries

WeAlthough not tied to a specific benchmark or pre-determined formula, we pay executive officers a base salary that generally is near 90% of the market "midpoint" for similar positions at companies that areof approximately theour same size and complexity. Although weWe have not established a unique peer group for compensation competitiveness studies,studies. However, we periodically retain Pay Governance an independent compensation consulting firm, to determine the adequacy of base salaries, as well as all other compensation of the Company's executive officers. Further, even though annual base salary adjustments are not directly tied to a benchmark or other predetermined formula, we utilize Pay Governance toThis review includes examining market data as part of itsthe evaluation process. We engaged Pay Governance to review compensation in 2013, which was completed and reviewed by us2019, with the next review scheduled to occur in 2014, and again in 2015, which was completed and reviewed by us in December 2015.2021.

WeIn addition, we evaluate the PEOCEO based on the Company's annual performance, as well as other performance objectives as established by us,the Compensation Committee, including demonstrated capabilities, scope of responsibility, experience, expertise, achievement of results, and development of management employees. These other objectives can and do change annually and may incorporate such things as management succession activities, board governance issues and other objective and individual measures of significance to us. As noted above, for 2015the Company. For 2020, these measures included meeting a specified operating profit target, achieving sales growth consistent with the Vision 2020 developmentour strategic plan, and obtaining a specified average invested capital. Other considerations continue to includeincluded targeted acquisitions in selected markets and ongoing management succession planning. Similarly, the NEOs are evaluated not only on performance related to achieving certain financial objectives, but on other defined objectives, and on their scope of responsibility, experience and expertise. Annually, the salaries of other executive officers are reviewed by usthe Compensation Committee with the PEOCEO to determine merit and performance increases based on the PEO's evaluation, as well as our evaluation. We periodically review the NEOs' performance and haveincreases. The Compensation Committee also has the opportunity to interact with senior executives at various times during the year, which aids in our assessment of each individual's performance.

The base salary disclosed in the "2015"2020 Summary Compensation Table" on page 2145 for each NEO in 20152020 and prior years reflects the philosophy outlined above as it relates to executive compensation. The increase in their 20152020 over 20142019 base salary reflects the NEOs' achievement of the specific objectives noted above, as well as adjustments based on the results of the 2013 and 20152019 Pay Governance studiesstudy to continue to align executive compensation with similar industry objectives.

Annual Incentive Compensation Plan

To align executive officer compensation with the interests of the Company's shareholders, we have established a policy whereby an appreciablea significant portion of the NEOs' compensation is contingent on the Company's profitability. Under the Management Incentive Compensation Plan ("MICP"),MICP, the executive officers and other key personnel have an opportunity to earn an incentive bonus award based primarily on annual operating profit achieved;achieved, an assessment considered to be a significant measure of financial success for the Company and the shareholders. The focus of this element of the overall compensation program is to reward achievement of annual goals set by us. Consistent with the results of the 2013 and 2015 Pay Governance studies and as approved by the Board, we updated the MICP to more appropriately align NEO compensation with competitive norms of at or above market median levels. Consistent with the Board's

objective of

The MICP was designed with Pay Governance's assistance to provide competitive incentive opportunities at or above market median levels and the MICP percent of total annual salary range for each NEO is based on that NEO's duties and responsibilities for certain segments and operations of the business. Earning this target incentive is dependent on the Company achieving the overallThe Board establishes, as a percentage of revenue, a target operating profit percentage.percentage each year, calculated as described below. To the extent that the target operating profit percentage is overachieved, the NEOs'NEO's incentive award will increase. At 120% of the annual target, the formula is increased such that 150% of the normal target percentage of base salary is granted. At or above 121% of the annual target, an amount equal to 25% of the excess operating profit over 120% of our annual target is added to the annual incentive pool. However, in no event will the annual incentive payments for all participants be greater than 15% of the actual operating profit for that year. We may consider extraordinary or nonrecurring events affectingIf the Company's actual operating profit percentage is below 80% of the annual results,target as wellset by the Board, generally no incentive bonus awards are paid.

For a given year, each NEO has a target bonus percentage set between 70% and 85%. For 2020, NEO target bonus percentages were set by the Compensation Committee pursuant to the 2019 Pay Governance study and were as thefollows: Mr. Covey -- 85%, and all other NEOs -- 70%. Each NEO is then evaluated for achievement of nonfinancialthe goals such as management succession or customer benchmarks, in evaluatingand objectives described above and a NEO's failure to achieve these goals and objectives may impact the achievement of performance targets. To provide motivation for the NEOs to look beyond the current year results, continue to maintain sustainable results, and to continue to emphasize the importance of employee ownership, the NEOs receive shares of stock for 10% of the amount of anNEO's incentive award above $25,000. We also paid discretionary bonuses to many office personnel and paid bonuses under various retention, production and sales programs to eligible field employees.award.

For 2015, we set2020 and 2019, the target operating profit percentage was set at 6.2%, and the. The operating profit percentage actually achieved for fiscal year 2015years 2020 and 2019 was 6.6%. We set the7.9% and 6.7%, respectively. The target operating profit percentage was determined based on a number of factors, including competitive, economic and environmental factors. While this percentage is deemedmay appear to be aggressive,conservative, we continue to believe that even with the current economic and regulatory pressures, ongoing litigation costs, and including consideration ofconsidering unforeseen developments, it is realistic and achievable. Incentive awards are calculated after year-end financial results are reviewed, and no award is paid until the annual financial statements are certified by the Company's independent auditors and approved by usthe Compensation Committee and the Board. Although no NEO's annual incentive award is based solely on achieving the target

We calculate operating profit percentage that factor is an important measure of performance for the Company. As discussed above, other factors such as cash flow, debt levels, and management succession planning contribute to the determination of each individual's annual incentive award. These factors are reviewed by us and the failure to achieve certain goals can negatively impact incentive awards.

Compensation Table" on page 21,45, due to the actual operating profit percentage being slightly lowerhigher than in 2014,2019, the payments to Messrs. Warnke, Covey and Paulall NEOs were lower in 2015higher than in 2014. Messrs. Marshall and Stief received higher payments due to the factors outlined in footnote 5 to the "Summary Compensation Table" on page 22.prior year.

Because a high level of performance is expected from the NEOs, we implemented the Management Supplemental Bonus Plan ("MSBP"). The Compensation Committee determined that this plan was an important part of recognizing those, who by virtue of their level of responsibility and proven results, bring added value to the organization and achieve results despite continued regulatory, contractual, and economic pressures. More specifically, the NEOs have direct responsibility to implement the Company's Vision 2020, astrategic plan to drive shareholder value by increasing revenues and enhancing operating margins through a focus on client loyalty and employee engagement. TheBonuses under the MSBP isare not subject to a predetermined set of metrics

Long-Term Incentive Compensation: Stock OptionsCompensation

Qualified Retirement PlansPlan

The Company's executive officers, as well as other eligible employees, are entitled to participate in the qualified retirement plan. The plan, the 401KSOP and ESOP Plan ("401K"), was set up pursuant to ERISA regulations and seeks to provide every employee with the opportunity to accumulate funds for retirement.

Under the 401K, an employee who is a noncollective bargaining employee, who is at least 21 years old, and has completed one year of continuous service, is automatically enrolledeligible to voluntarily enroll in the 401K. The employee may then elect to opt out of the 401K, and participants can suspend contributions at any time. Participant contributions are on a before-tax basis and the Company makes an annual contributionquarterly contributions in Company stock equal to 100% of the first 1%3% percent and 50% of the next 3%2% percent of the participant's W-2 wages, subject to the Internal Revenue Service ("IRS") limit of $265,000$285,000 in 2015 and 2016, which is the2020 (the government-imposed annual compensation limit required for qualified retirement plans.plans), which will be 100% vested. This represents a potential maximum contribution of 2.5%4%. Participant contributions are always 100% vested, and Company contributions become 100% vested after three years of continuous service, or upon death, permanent disability or retirement of a participant. The 401K offers a variety of investment options with varying levels of risks and returns for the participant's contributions; however, the participant's investment in Company stock is limited to 25% of the participant's annual contributions. The value of the account eligible for distribution is the vested investment value at the time of distribution, and there is no guarantee of any rate of return or investment value.

As described in previous filings, The Davey Tree Expert Company Employee Retirement Plan ("ERP") was terminated in 2019 having been frozen effectivesince December 31, 2008. UnderThe Company entered into an agreement to purchase a guaranteed group annuity contract from a third-party insurance company which unconditionally and irrevocably guarantees the frozen ERP, benefits currently being paidfull-payment of all annuity payments to retirees will continue and benefits accrued through December 31, 2008 for employees covered by the ERP will not be affected. However, no further benefits will be accrued underremaining participants in the ERP. Thus, eligible participants who retire will still choose the same payment options and forms of retirement, beginning as early as age 55. The agreement transferred all remaining ERP benefit formula will remain .30% of covered compensation for each full or partial year of benefit service, plus .30% of compensation in excess of covered compensation for each full or partial year of benefit service. The minimum guaranteed benefit remains $80 per month. Covered compensation refersobligations to the average of the participant's social security taxable wage bases for their years of service, to a maximum of 35 years, ending with the calendar year in which the participant reaches social security retirement age. If a participant is vested and terminates employment before he or she is eligible for retirement and the value of the benefit is less than $5,000, the participant will receive a one-time lump sum payment. The value of each of the NEOs ERP benefit is included in the "2015 Pension Benefits" table on page 27.third-party insurance company.

Non-Qualified Retirement Plans

The nonqualifiednon-qualified retirement plan is The Davey Tree Expert Company 401KSOP Match Restoration Plan ("Match Plan"). The Davey Tree Expert Company Supplemental Executive Retirement Plan ("SERP") was closed effective 2013 and frozen in May of 2015, and the Davey Tree Expert Company Retirement Benefit Restoration Plan ("Restoration Plan") was frozen effective December 31, 2008. Payments made under these plans will be made from the Company's general assets.

Pursuant to the Match Plan, an employee who has elected to contribute the maximum amount to the 401K, but who iswas precluded by Internal Revenue Code ("IRC") restrictions from receiving the full matching contribution paid by the Company, is eligible to participate in the Match Plan. The Match Plan allows the eligible employee to accumulate an amount that could have been matched if the IRC restrictions had not been in effect. Each participant has two potential match criteria. If the participant is unable to contribute the full matching percentage permitted, the Company will increase the participant's Company match such that it, when added to the match under the 401K, will equal 50% of the permitted percentage. Further, the Company will contribute an amount equal to 50% of 3% for any amount above the maximum compensation level, which is set at $265,000$285,000 and $290,000 for 20152020 and 2016.2021, respectively. The Company maintains an account record for each employee who meets thisthese criteria to reflect that employee's interest in the Match Plan. Interest on each account record currently set at 7%, is accrued annually on December 31. On March 3, 2017, the Board approved an amendment to the Match Plan, effective as of January 1, 2017. The amendment provided for (1) a change in the definition of a participant to limit new entrants to those individuals designated as a participant in our Long-Term Incentive Plan and (2) a change in the interest rate for employee accounts maintained under the Restoration Plan from seven percent per annum to the rate in effect under our payroll savings program.

In 2013, the Board of Directors elected to close the SERPSupplemental Executive Retirement Plan ("SERP") to future participants. Prior to the closure the SERP provided a retirement benefit of an amount equal to 30% multiplied by a participant's Final Average Compensation ("FAC") calculation, which was then reduced by the sum of the participant's Restoration Plan benefit, qualified ERP benefit, 401K benefit, Match Plan benefit and one-half of the employee's Social Security benefit. This amount was further reduced if a participant had less than 20 years of service at age 65. FAC was based on the average of the highest three annual earnings out of the last five years prior to retirement. If at actual retirement the calculation set out above for a participant, excluding the 30% SERP component, was greater than or equal to 30% of FAC, no benefit was payable under the SERP. When the SERP was closed, the decision was made to allow current participants to continue to earn limited benefits because, at the time, these participants had relied on the provisions of this plan in making retirement planning and timing decisions. Since that time, the remaining participants have had the opportunity to adjust their retirement planning, including by participating in the long-term incentive compensation plan outlined below. Therefore, inIn keeping with our decisions related to the ERP and Restoration Plan, in May 2015 we made the decision to freeze the benefit level of the SERP for the remaining participants. Pursuant to this decision, no further accruals under the SERP will bewere made tofor any NEO after 2015. Further, in December of 2016, we set the annual SERP retirement benefit for the three remaining active participants. This allowed us to set the Company's future liability for retirement payments to these participants at a fixed amount per year.

The present value ofPayments made under these plans will be made from the NEOs nonqualified retirement plansCompany's general assets.

More information regarding the NEOs' benefits under the Restoration Plan and the SERP is presented in the "2015"2020 Pension Benefits" table on page 27.

Other Benefit Plans

Other benefit plans that are available to all eligible employees, including executive officers,NEOs, consist of, among others, the Employee Stock Purchase Plan, the payroll savings plan, the group health insurance plan, the disability plan, the life insurance plan, the dental and vision insurance plans, and the vacation and paid-time-off plans.

With regard to the purchase and sale of stock, other than as described above or in plan documents, executive officers may generally purchase stock on the same basis as any other employee, either through the Employee Stock Purchase Plan or through direct purchase.

Board of Directors Authority

The Board retains the authority to determine eligibility and participation by employees in the plans. Further, except as described above, even though it has no current plan to do so, the Board may amend the plans, and change the costs and the allocation of benefits between persons and groups.

Although we consider the NEOs integral to the Company's success, no NEO or other executive officer has an employment or severance agreement with the Company.

Insider Trading Policy/Policy / Pledging / Clawback / Stock Redemption Policy

For many years, we have had an Insider Trading and Public Disclosure Policy in place that prevents NEOs, other officers and management personnel from conducting Company stock transactions based on insider information of any kind. Under this policy, certain persons cannot engage in stock transactions using material nonpublic information that could either positively or adversely affect the value of the Company's stock either through direct transactions with the Company or through the 401K. Because of the unique nature of the restriction on ownership and sale of stock, as well as the fact that the Company's stock is not publicly traded, we have not identified a need to implement a clawback policy or a prohibition on pledging Company securities. In addition, because of these unique features, we do not have any policies relating to, or prohibitions regarding, hedging by employees (including executive officers) or directors as it is not feasible to hedge Company stock. However, we will continue to monitor our policies and review the effects of implementing such policies.

We also maintain a Stock Redemption Policy. Under this policy, executive officers, as well as other officers and executive managers, may only redeem stock during a 60-day period, which begins when the year-end stock valuation is released or when the Company's audited annual financial statements are released, whichever is later, or after the release of the midyear stock price.

Change In Control

InFor the eventpurposes of the 2014 Omnibus Stock Plan, a change“change of control” will be deemed to occur if (i) any person, either alone or together with a group, acquires beneficial ownership of 20% or more of our outstanding common shares or commences a tender or exchange offer for 20% or more of our outstanding common shares that is declared by the Compensation Committee to constitute a “change in control,” (ii) we establish a record date for shareholders to vote upon a merger transaction that will result in our shareholders holding less than 80% of the outstanding shares of the surviving or resulting entity in the merger, the disposition of all or substantially all of our assets, or the dissolution of the Company, or (iii) at any time during a consecutive 24-month period, “continuing directors” represent less than a majority of the members of our Board of Directors (“continuing directors” meaning individuals who were directors at the beginning of the 24-month period or whose appointment or nomination for election as defineddirectors was approved by a majority of the continuing directors then in office). 

The Committee reviewedOne such consideration is the potential impact of the limitation on the Company’s federal income tax deduction for certain annual compensation over $1 million paid to a “covered employee” under Section 162(m) of the IRC (“Section 162(m)”). Under Section 162(m), except as otherwise provided in the transition relief provisions of the Tax Cuts and discussed the foregoing Compensation DiscussionJobs Act, compensation paid to any of our covered employees generally will not be deductible, if and Analysis with management and, based thereon, recommended to the Board of Directorsextent that it be includedexceeds $1 million in the 2016 Proxy Statement and incorporated by reference in the Company's Annual Report on Form 10-K for the fiscalany year ended December 31, 2015.

As outlined under the "Compensation Philosophy and Structure" section of the "Compensation Discussion and Analysis," theThe Compensation Committee addresses compensation risk analysis as an integral part of its ongoing analysis of compensation programs. As part of the compensation structure review, Pay Governance was engaged in 2013 and 20152019 to review our compensation plans. The Board is not presently aware of any information that would lead it to believe that risks arising from the Company's employee compensation policies and practices are reasonably likely to have a material adverse effect on the Company. The Committee will continue to regularly consider risk factors associated with any business entity, including the individual components of the compensation plans, as well as the manipulation of sales, expenses or electronic data; and the Committee believes the Company has sufficient controls in place to prevent such occurrence.

As described in the "Compensation Discussion and Analysis," a NEO's compensation is based on a number of factors, as determined by the Board of Directors. In setting compensation, the Board utilizes a number of quantitative and qualitative performance-related factors. Although we have not established a specific peer group, the Pay Governance studiesstudy completed in 2014 and updated in 20152019 reviewed competitive norms and market medians. In general, base salary is generally set near 90% of the market midpoint for similar positions at companies of approximately the same size and complexity. Incentive plan compensation is based primarily upon achieving an annual predetermined target operating profit percentage. PRSU SARs, ISO and NQSO awards areand, prior to 2019, SARs, were granted pursuant to authority under the 2004 or 2014 Omnibus Stock Plan andPlan. PRSU awards are earned based on achievingthe achievement of predetermined performance targets, as well as achieving other goals and objectives set by the Board. No NEO has an employment agreement or arrangement with the Company and each NEO is considered an employee-at-will.