UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ Preliminary Proxy Statement
☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Pursuant to §240.14a-12
Berkshire Hills Bancorp, Inc.
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| (Name of Registrant as Specified In Its Charter) |
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Payment of Filing Fee (Check the appropriate box):
☒ No fee required.
☐ Fee paid previously with preliminary materials.
☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
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| | | | | | | | April 5, 2024 |
| | April 8, 2022 |
| Dear Berkshire Hills Bancorp Shareholder: |
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| It is our pleasure to invite you to attend the 20222024 Annual Meeting of Shareholders, which will be held virtually on Wednesday,Thursday, May 18, 202216, 2024 at 10:00 a.m.a.m, Eastern Time by visitingat our offices at: www.virtualshareholdermeeting.com/BHLB2022, where you will be able to listen to the meeting live, submit questions and vote online. You will be asked to enter the 16-digit control number located on your proxy card.
Berkshire Bank 99 North Street Pittsfield, MA 01201 |
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| CEO, Nitin J. Mhatre | | Please see the Notice of Annual Meeting on the next page for more information about our meeting procedures. |
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| | We urge you to vote your proxy online, or by telephone, or by completing and returning a proxy card by mail as soon as possible, even if you plan to attend the Annual Meeting. |
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| Your vote is important to us. Thank you for your attention to the enclosed materials, and for your continued support of our company. |
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| Chairperson, David M. Brunelle | | |
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| | Nitin J. Mhatre, Chief Executive Officer |
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| | David M. Brunelle, Chairperson of the Board of Directors |
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| Notice of Annual Meeting of Shareholders | | |
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Performance.
Progress. |
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Notice of 20222024 Annual Meeting of Shareholders of Berkshire Hills Bancorp, Inc. |
| When: | | Where: | | Record Date: |
Wednesday,Thursday, May 18, 202216, 2024 | Virtual MeetingBerkshire Bank, 99 North Street | March 25, 202221, 2024 |
| 10:00 a.m. | www.virtualshareholdermeeting.com/BHLB2022Pittsfield, Massachusetts 01201 | |
We are holding this meeting for the following purposes:
1. To elect as directors the nominees named in the Proxy Statement each to serve a one-year term or until their successors are duly elected and qualified;
2. To provide an advisory vote on executive compensation practices;
3.To ratify the appointment of Crowe LLP as the Company’s independent registered public accounting firm for fiscal year 2022;2024; and
4. To approve the Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan;
5. To transact any other Company business that may properly come before the meeting.
The Board of Directors unanimously recommends that you vote “FOR” each of the proposed director nominees and “FOR” the other proposals to be presented at the annual meeting.Annual Meeting.
Shareholders of record at the close of business on March 25, 202221, 2024 are entitled to vote at the meeting, either at the virtual annual meetingin person or by proxy. There are several ways to vote. You can vote your shares online, by telephone, by regular mail or in person at the virtual annual meeting.Annual Meeting.
To access your proxy materials and vote online, please visit www.proxyvote.comand follow the instructions. The notice provided to youYour proxy card or voting instruction form contains the necessary codes required to vote online. If you wish to vote by telephone, please call 1-800-690-6903 using a touch-tone phone and follow the prompted instructions. You may also vote by mail by requesting a papercompleting and returning your proxy card using the instructions provided to you in the notice.envelope provided. Finally, you may vote in person at the virtual annual meeting,Annual Meeting, even if you have previously submitted a proxy.
Whatever method you choose, please vote in advance of the meeting to ensure that your shares will be voted as you direct.
Boston, Massachusetts
April 8, 20225, 2024
By order of the Board of Directors
Wm. Gordon Prescott
EVP,Senior Executive Vice President, General Counsel and Corporate Secretary
Admission Procedures
The meeting is open to shareholders of Berkshire Hills Bancorp, Inc. To participate and voteEveryone attending the meeting should
bring a photo ID. If your shares atare registered in the Annual Meeting, you will need the 16-Digit Control Number included onname of a bank, broker, or other holder of record,
please also bring documentation of your Noticestock ownership as of Internet Availability of the proxy materials, on your proxy card or on the instructions that accompanied your proxy materials. March 21, 2024 (such as a brokerage
statement). Whether or not you plan to attend the meeting, we urge you to vote by proxy in advance to ensure your vote is counted if you decide not to attend the virtual meeting.
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IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 18, 2022:16, 2024: The Notice of Annual Meeting, 20222024 Proxy Statement, 20212023 Summary Annual Report, and 20212023 Annual Report on SEC Form 10-K are each available at www.proxyvote.com or ir.berkshirebank.com |
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| Table of Contents | | |
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| Purpose.
Performance.
Progress. |
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| Proxy Summary | |
| | 20212023 Company PerformanceHighlights | |
| | 20212023 Executive Compensation Highlights | |
| | Shareholder Engagement and Responsiveness | |
| | Environmental, Social, Governance (ESG) & Corporate Responsibility and Sustainability | |
| Proposal 1 - Election of Directors | |
| | Information Regarding Directors and Director Nominees | |
| | Corporate Governance | |
| | Director Compensation | |
| Proposal 2 - Advisory (Non-Binding) Vote on Executive Compensation | |
| Compensation Discussion and Analysis (CD&A) | |
| | Compensation Committee Report | |
| Executive Compensation | |
| | Summary Compensation and Other Tables | |
| | Pay Versus Performance | |
| Proposal 3 - Ratification of the Appointment of the Independent Registered Public Accountant | |
| | Audit Committee Report | |
| Proposal 4 - Approval of the Berkshire Hills Bancorp, Inc. 2022 Equity Incentive PlanAdditional Information | |
| | Additional Information |
| | Stock Ownership | |
| | Information About Voting | |
| | Other Information Relating to Directors and Executive Officers | |
| | Submission of Business Proposals and Shareholder Nominations | |
| | Shareholder Communications | |
| | Miscellaneous | |
| | Other Matters | |
| Appendix A | A-1 |
| | Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan | |
| Appendix B | |
| | Summary of and Reconciliation of Certain Non-GAAP Financial Measures | A-1 |
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1 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
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| Berkshire Hills Bancorp, Inc. Proxy Statement | | |
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Proxy Statement Summary
This summary gives you an overview of selected information in this year’s proxy statement. We encourage you to read the entire proxy statement carefully before voting. We have also provided you with the 20212023 Summary Annual Report and the 20212023 Annual Report on SEC Form 10-K.
Annual Meeting of Shareholders
Time and Date: 10:00 a.m. Eastern Time, Wednesday,Thursday, May 18, 202216, 2024
Place: Virtual meeting at www.virtualshareholdermeeting.com/BHLB2022Berkshire Bank, 99 North Street, Pittsfield, Massachusetts 01201
The only way to attend the meeting or vote at the meeting is through the internet.
Record Date: Shareholders as of the close of business on March 25, 202221, 2024 are entitled to vote
We are providing this proxy statement to you in connection with the solicitation of proxies for the 20222024 Annual Meeting of Shareholders and to transact any other business that may properly come before the meeting. In this proxy statement, we also refer to Berkshire Hills Bancorp, Inc. as “Berkshire” or the “Company”. We also refer to its subsidiary, Berkshire Bank, as the “Bank”“Bank". We are mailing a notice of the annual meetingAnnual Meeting and this proxy statement to shareholders of record as of March 25, 2022,21, 2024, beginning on or about April 8, 2022.5, 2024.
Summary of Proposals for 20222024
1 - Election of Directors. The Company’s Board of Directors is presenting twelve (12)eleven (11) nominees for election as directors at our Annual Meeting. OneTwo of the thirteen current director isdirectors, Messrs. Adofo-Wilson and Zaitzeff, are not standing for re-election. Director Callahan was appointed by the Board in September 2023. All nominees currently serve as directors on our Board of Directors.In 2021,2023, all director nominees received at least 96%98% of the votes cast regarding their nomination. Provided with this proposal is information about our directors, director nominees, corporate governance, and director compensation.
2 - Advisory Vote on Executive Compensation. This advisory vote is for the approval of the Company’s Named Executive Officer compensation as set forth within this proxy statement. Berkshire strives to promote shareholder value and sound risk management by aligning executive pay and company performance. The Compensation Discussion and Analysis (“CD&A”) explains the Board’s processes and decisions with respect to executive compensation. In 2021,2023, 97% of the votes cast were in favor of the proposal “FOR” the advisory approval of our Executive Compensation. Provided with this proposal is the Compensation Discussion and Analysis, the Compensation Committee Report, and Summary Compensation and Other Tables.
3 - Ratification of Independent Registered Public Accounting Firm. This advisory vote ratifies the selection of Crowe LLP (“Crowe”) as the Company’s independent registered public accounting firm for fiscal year 2022.2024. Crowe has served in this capacity since fiscal year 2017. In 2021,2023, 99% of the votes cast were in favor of the proposal for the appointment of Crowe.
4 - Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan. This vote is for the approval of the proposed Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan as set forth within the proxy statement. Provided with this proposal is a description of the proposed plan, and the plan is included as Appendix A.
2 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROXY STATEMENT | PROXY STATEMENT SUMMARY
2021
2023 Company PerformanceHighlights
In 2021, Berkshire rebounded from the COVID-19 pandemic related loss in 2020 and posted higher earnings than in the prepandemichad a solid year of 2019. performance in 2023, building on core elements of its strategy to strengthen operations, deliver growth, and improve its long-term outlook. Earnings per share ("EPS") totaled $2.39$1.60 in 2021 increasing 21% over $1.97 reported2023 compared to $2.02 in 2019, and were recovered from2022. Results in 2023 included a $25 million ($0.58 per share) non-operating charge for the losssale of $10.60securities. The Company's non-GAAP measure of operating earnings totaled $2.14 per share in 2020. Return on equity nearly doubled to 10.18% in 2021,2023 compared to 5.75% reported$2.19 in 2019,2022. This measure is reconciled to GAAP measures in Exhibit A.
Bank industry operations in 2023 were affected by rising market interest rates and advanced more rapidly than peers. Earnings improvement reflected stronger credit performancethe related impacts on profitability, liquidity and capital, especially following a banking emergency in the first quarter that resulted in the second, third, and fourth largest bank failures in U.S. history. Berkshire maintained steady operations and proactively responded to changing industry conditions while also included gains achievedpursuing its longer term strategic objectives:
•Talent Recruitment. The Company opportunistically recruited executives and front-line commercial relationship talent with an emphasis on deposit, private banking, and wealth management professionals.
•Balance Sheet Growth. Total loans increased 8% and total deposits increased 3% year-over-year, producing a 7% increase in disposingnet interest income.
•Balance Sheet Strength. Capital, liquidity, and asset quality metrics all remained solid and supportive of lower return business lines.financial soundness, organic growth, and shareholder returns through dividends and buybacks.
•Expense Management. Ongoing procurement and optimization activities resulted in further branch consolidations, the sales of excess premises, and a workforce realignment.
PROFITABILITY – PREPANDEMIC TO 2021•Technology. The Company introduced its new mobile/digital banking platform, which positions the Bank well to respond to changing customer needs and competitive market offerings.
Note:Source – S&P Global Market Intelligence. ROE for 2020 was a loss due to Berkshire goodwill write-down.
Peers are LTI Industry Index median.
Berkshire also reintroduced share repurchases in 2021, after suspending this program in 2020 dueDue to the pandemic. Total shareholder distributions including stock buybackschallenges of the environment, one year and dividends in 2021 more than doubled year-over-year to 8.2% of tangible common equity, and also exceeded the peer average of 7.6% of tangible common equity.
Note:Source – S&P Global Market Intelligence. Peers are LTI Industry Index median.Ratio is sum of common dividends and common stock repurchases divided by average tangible common equity.
3 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROXY STATEMENT | PROXY STATEMENT SUMMARY
With improved earnings generation and increased shareholder distributions, Berkshire’s share price grew strongly and resulted in a 69%two year total shareholder return (TSR), nearly twice the return registered bywas negative for Berkshire, its proxy peers, and the KBW Regional BankBanking Index (KRX). While Northeastern banks underperformed this national index in both years, Berkshire was favorable to both its proxy peers and more thanthe national index for the two year TSR. Over three times higher than the returnyears, BHLB's 55% TSR exceeded both of the New York Stock Exchange Composite Index (NYA).
The 2021 stock price gain also included recognition of Berkshire’s Exciting Strategic Transformation (BEST) plan which was unveiled shortly before the 2021 Annual Shareholder Meeting This plan targets improved sustainable earnings and profitability,these industry groups as well as a stronger franchise based on leading rankings for customer satisfaction and environmental, social and governance (ESG) matters. The plan is targeted towards the Company’s vision to be a high-performing, leading socially responsible community bank in New England and beyond.S&P 500 index (SPX).
20212023 Executive Compensation Highlights
Included later in this report are compensation tables, including a Summary Compensation Table which details executive compensation provided in 2021,2023, as well as a Compensation Discussion and Analysis which provides information about the compensation management process and compensation decisions.
2021 was the first year under the leadership of Nitin Mhatre, who joined the Company as President and CEO in January 2021. During the year, the Company also filled key leadership roles, namely Subhadeep Basu as the CFO, Lucia Bellomia as the Head of Retail Banking and Ellen Steinfeld as the Head of Consumer Lending and Payments.
The Compensation Committee took amaintained the same overall balanced position towardsstructure for compensation decisionsmanagement in 2021, recognizing the challenges and uncertainties related to recent and expected performance due to the pandemic, while maintaining a compensation structure that supported management succession and incentivized improved performance. The Committee also recognized that the new CEO and the executive team should have near-term financial flexibility to invest in and initiate revised long-term strategies to achieve higher profitability.2023.
There were no material changes in our NEO target direct compensation in 2021 compared to 2020 and 2019. •Direct compensation includes salary, the cash-based short- termshort-term incentive, and the equity-based long-term incentive.
•Performance based compensation constitutes the majority of targeted direct compensation.
The cash-based short-term incentive
For those Named Executive Officers who served in their positions for the full year, total targeted direct compensation increased 7% year-over-year, reflecting higher salaries and incentives. Total direct compensation earned by the NEO’s in 2021 exceeded thethese positions was 1% below target due to the Company’s outperformance compared to goals setand decreased by the Board for executive management. Our performance reflected stronger credit performance as well as better operating efficiencies. In comparison, 2020 short-term incentives were paid below the original target due to8% year-over-year, including the impact of the pandemic on Company performance.performance below objectives in 2023.
The maturing three year long-term incentive performance compensation was forfeited in 2021 for the second year in a row due primarily to the 2020 pandemic impacts on relative performance. This reflects our continuing pay-for-performance philosophy.
4 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROXY STATEMENT | PROXY STATEMENT SUMMARY
The Committee’s decisions resulted in a compensation structure that rewarded outperformance where it was accomplishedthe achievement of Company objectives and decreased compensation from targets where objectives were not met. The positive stock performance in 2021, resulting in a 69% total shareholder return, and the long-term programs initiated under the BEST plan were viewed as critical accomplishmentsCompensation management was aligned with shareholder interests.interests and provides ongoing incentives to improve shareholder value.
3 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
PROXY STATEMENT | PROXY STATEMENT SUMMARY
Shareholder Engagement and Responsiveness
We have anIn addition to its active engagement program that reaches outoutreach and interactions with the investment community, the Company also solicits discussion and feedback annually to the governance and proxy voting teams of ouron corporate stewardship with its thirty largest institutional shareholders to solicit their feedback and answer their questions. This is in addition to our ongoing conversations with investors about the potential for our vision of purpose based performance to enhance value for all stakeholders.Further, we monitor position papers of proxy advisory firms and of our largest shareholders expressing current priorities and focus areas for corporate governance. We also spoke with advisors and other knowledgeable third parties, obtaining valuable additional feedback on our governance, compensation, and strategy.Based on these ongoing discussions, in recent years we have made several enhancements to our governance programs, including:shareholders.
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l | Declassified Board of Directors; all director positions are up for election in 2022 |
l | Increased Board diversity and added cyber-security and additional financial expertise |
l | In 2019, adopted new corporate guidelines implementing age and tenure limits to facilitate consistent Board refreshment |
l | Added new relative performance measures related to total shareholder return (“TSR”) and changes in return on equity to the long-term incentive plan |
l | Increased the three-year performance-based shares portion of long-term incentive compensation to 60% from 50% |
l | Made changes to target performance metrics in the short-term incentive plan to better align these measures with shareholder value maximization |
l | Increased the focus on long-term equity compensation |
l | Created a new Board-level Corporate Responsibility and Culture Committee, strengthening the Board’s oversight of human capital management and diversity, equity and inclusion initiatives |
During 2021,2023, the most frequent topics in our governance-relatedthese discussions have included our Berkshire’s Exciting Strategic Transformation (“BEST”) plan; our BEST Community Comeback financing plan; our focus on human capitalprocesses for managing board membership and shareholder meetings; governance of corporate sustainability programs; management including diversity, equity,of growth, efficiency, and inclusion; our pandemic response; climate change initiatives;employee turnover; and cyber security management.connecting strategy and compensation through the Company.
There is discussion ofrelated to these matters in following sections of the following section on Corporate Responsibility, as well as in our Summary Annual Report, our Annual Report on SEC Form 10-K, and our annual Corporate Social Responsibility Report. We believe that our top quartile ranking among U.S. Banks in our ESG ratings index evidences the recognition that we have earned through our response on many of these important issues. Additionally, basedproxy statement. Based on the affirmative shareholder vote of 96%97% or higher for all items on last year’s annual meetingAnnual Meeting agenda and based on the strong outperformanceinvestor feedback and recognition of our stock in 2021,Berkshire's vision, positioning, and initiatives, we believe that our investors are strongly supportive of our programs for governance and company performance.
5 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROXY STATEMENT | PROXY STATEMENT SUMMARY
Our Commitment to Environmental, Social, Governance (ESG) & Corporate Responsibility and Sustainability
Berkshire's Approach
Since its founding in 1846, Berkshire is committedremains a purpose-driven and values-guided institution working to purpose-driven, community-centered banking that enhances value for all stakeholders as it pursuesachieve its vision of beingbecoming a high performing, leading socially responsible community bankhigh-performing, relationship-driven, community-focused bank. Berkshire empowers the financial potential of its stakeholders by delivering industry-leading financial expertise and a full suite of tailored banking solutions through its consumer banking, commercial banking and wealth management divisions to clients in New England and beyond. We’reNew York. For more than 175 years, Berkshire has provided strength, stability and trusted advice to create a bank with a purpose:positive impact for its clients and communities while upholding equitable, ethical, responsible and sustainable business practices.
Berkshire’s longstanding commitment to empoweroperating equitably, responsibly and sustainably is interwoven into the financial potential of individuals, familiescompany’s vision, mission, business practices, and businesses in our communities. We providestrategic goals. Berkshire’s integrated approach to managing environmental, social and governance externalities helps reduce risk and unlock new business opportunities to create an ecosystem of socially responsible financial solutions, actively engagepositive impact and value, which in turn drives Berkshire’s commercial performance, creating capacity to invest more in its business, employees, customers, shareholders and communities.
2023 Highlights
•Record high employee engagement contributing to declining turnover
•Allocated an amount equal to the proceeds of Berkshire’s $100MM sustainability bond to create affordable/workforce housing and green building development
•100% on-premises renewable electricity and reduced Greenhouse Gas emissions
•Recognized with our communities,the Communitas Award for Leadership in Corporate Social Responsibility, named one of America’s Most Trustworthy Companies and harness the powerAmerica’s Best Regional Banks by Newsweek and America’s Best Midsize Employers by Forbes.
•Top 20% aggregated ESG rating*, achieving one of our entirefive major strategic goals
*National ranking among U.S. banks as of December 31, 2023
Oversight & Responsibility
The management of material environmental, social and governance factors is integral to Berkshire’s business to fuel the economy, promote thriving neighborhoods, foster financial access and success, and invest in a low-carbon future.
At Berkshire, our most important investment for 175 years has been the one we make in each other. We know that where you bank matters and building stronger communities requires a better approach to banking. As such, ESG factors are central to our vision, mission,practices, risk management practices,program, competitive positioning and Berkshire’s Exciting Strategic Transformation (BEST).
BEST Community Comeback
In 2021, welaunched the BEST Community Comeback, a transformational $5 billion commitmentits ability to empower our stakeholders’ financial potential. The plan focusesdeliver on four key areas: supporting small business growth; community financingits strategic priorities and philanthropy; financial access and empowerment; and funding environmental sustainability. Through this far-reaching initiative,vision. Berkshire aims to help create more businesses and jobs, help more families achieve the dream of owning a home, and aid communities in becoming more environmentally efficient and eco-friendly.
Ongoing Pandemic Support
As 2021 continued to present new challenges, we remained committed to serving our customers and communities. We’re guided by our Be FIRST Values of Belonging, Focusing, Inclusion, Respect, Service, and Teamwork. These values fueled our efforts to navigate the pandemic with the goal of supporting the health and economic resiliency of all our stakeholders. During the height of the pandemic, Berkshire created the You FIRST employee assistance fund to help staff impacted by unexpected financial hardships, provided additional paid sick time, flexible work schedules for remote staff, and maintained full pay for those with reduced schedules as a result of the pandemic. Small businesses and consumers were helped with loan forbearances and government assistance programs. We also launched a fund to assist businesses in the LGBTQIA+ and Black, Indigenous and People of Color (BIPOC) communities.
ESG Program & Business Integration
We’re committed to integrating social, environmental and reputational considerations into all business decision making through our strong foundation of governance systems, including:
•Corporate Responsibility & Culture Committee of our Board of Directors,
•Environmental, Social and Governance (ESG) Management Committee,
•Diversity Equity & Inclusion Management Committee,
•Responsible & Sustainable Business Policy,
•Strong collection of Social & Environmental risk management practices, and
•Senior managers of Corporate Responsibility and of Diversity
Berkshire engages directly with its stakeholders to share information about the progress we’ve made in our ESG and DEI performance, including through our Corporate Responsibility website, corporate annual report, and proxy statement. Additionally, our annual Corporate Responsibility Report, which is aligned with Sustainability Accounting Standards Board (“SASB”) commercial bank disclosure topics, details the Company's ESG efforts and programs.
6 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROXY STATEMENT | PROXY STATEMENT SUMMARY
ESG Oversight
The Board of Directors ultimately oversees the strategy and activities of the Company including ESG. In order to drive forward our vision to be a leading socially responsible community bank, we werewas one of the first banks in the country to establish a dedicated committee of ourits Board of Directors to oversee ESG matters.corporate culture, diversity and sustainability. The Company is a leader among community banks in integrating these practices into its business strategy and operations.
The Corporate Responsibility andCompany’s strong foundation of governance systems include:
•Board level oversight of Culture, Committee is responsible for overseeing the management of the Company’s enterprise-wide Corporate Responsibility/ESG, Environmental Sustainability, Community, Climate Change, and Diversity Equity
•Environmental, Social and Governance (ESG) Committee
•Responsible & Inclusion,Sustainable Business Policy and Culture programs. It complements other Committees of the Board who oversee material topics within their scope of responsibilities to provide full oversight to ESG matters.Climate Risk Management Program
•Lending, credit, deposit and investment policies which incorporate environmental and social considerations along with due diligence requirements
In addition to the Board•Active involvement from business unit leaders and its Committees, an ecosystem of management-level committees support various components of our ESG strategy. Our ESG Committee, which is comprised of members of the executive management team, monitorsfront lines in managing externalities and approves strategies designed to identify, measure, control,risks
•Senior leadership for corporate responsibility and enhance the Company’s ESG/Corporate Responsibility performance.
sustainability
74 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROXY STATEMENT | PROXY STATEMENT SUMMARY
The Board of Directors including its Corporate Responsibility & Culture Committee (CRCC) has ultimate oversight responsibility for environmental, social and governance matters. The CRCC meets quarterly to review performance, examine related risks, and approve relevant policies. Berkshire’s comprehensive approach ensures that the board receives regular reports from management on environmental and social dimensions of its business such as human capital management, diversity, stakeholder relations, climate change, community impact, and cybersecurity. It allows the board to develop a sufficient understanding of the Company’s impacts, management’s programs to mitigate those risks and capture opportunities. It helps inform strategic planning, create accountability and, along with management committees and senior leaders, provides visibility throughout the organization.
Berkshire regularly engages directly with its stakeholders to share information about the progress it’s made in its performance, including through its website, corporate annual report, and proxy statement. Additionally, Berkshire’s Sustainability Report, which is informed by Sustainability Accounting Standards Board (“SASB”) and Task Force on Climate-Related Financial Disclosure (TCFD) disclosure standards, details the Company's programs and performance. The report is available at berkshirebank.com/esg
Climate Change
Climate change poses unprecedentedmanifesting in the form of both physical or transition risks and opportunities to the world, including Berkshire, its customers and communities. The impacts which can occur from climate change cancould adversely affect either directly and/or indirectly, impact the CompanyBerkshire’s operations, businesses, customers, communities, and its stakeholders. As the transition to a low-carbon economy accelerates, new policy emerges,policies emerge, and market dynamics shift, Berkshire expects that its efforts to manage its environmental footprint, mitigate the risks associated with climate change, and support the transition will allow it to strengthen its positioning as a high performing, leading socially responsible community bank.competitive positioning. The Company continues to evolve its practices to reflectalign with its community bank mission, current and expected regulations as well as the size, scope, and complexity of its operations.
Berkshire enhancedClimate change and its governance over material environmental matters in 2021 by formalizing an Environmental, Socialassociated physical and Governance management committeetransition risks are managed through Berkshire’s formal Climate Risk Management Program which outlines roles and completing a formal climate change risk assessment to evaluateresponsibilities for the bank’s operations and lending activities for potential exposure to transition and physical risks resulting from climate change.
•The results of the risk assessment guide Berkshire’s forward climateboard, management and all employees, definitions, along with procedures for identifying, measuring and assessing climate risk. The program also lays out Berkshire’s system of controls which include governance mechanisms, formal policies, due diligence and insurance requirements, exclusionary criteria, business continuity planning, external relations, and employee education. Finally, the program sets expectations for responses to risk events or elevated risk levels, reporting and external disclosure. Further information on Berkshire’s environmental sustainability strategies.
•We have setactivities and its approach to governance, risk management, strategy, metrics & targets to help finance the green transition, reduce its Greenhouse Gas (GHG) emissions and source 100% of our electricity from renewable sources by the end of 2024.
•As the Company moves further alongnext steps can be found in its climate journey, it expects to continue to enhance its plans, disclosures, programs and initiatives to reduce its emissions as well as capitalize on the many business opportunities arising from the transition to a lower-carbon economy.most recent Sustainability Report.
Ratings, Awards & Recognition
We’re proud to be recognized for our performance with local, regional, national, and international awards as well as leading third party ESG ratings* including:
•MSCI ESG- BBB
•ISS ESG Quality Score - Environment: 3, Social: 1, Governance: 2
•Bloomberg ESG Disclosure- 47.81
•The Company is also rated by Sustainalytics
•Banking Northeast Community Champion Award
•Communitas Award for Leadership in Corporate Social Responsibility
•Bloomberg Gender-Equality Index
•Human Rights Campaign Corporate Equality Index Best Place to Work for LGBTQ+ equality- 100% Score
*As of December 31, 2021
8 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROXY STATEMENT | PROXY STATEMENT SUMMARY
HUMAN CAPITAL MANAGEMENT
Berkshire’s people are the core of its ability to deliver on its Berkshire’s Exciting Strategic Transformation (BEST) plan and vision of being a high performing, leading socially responsible community bank in New England and beyond. The Company’s approach to human capital management is grounded in its Be FIRST values and focuses on:
•Strong oversight and risk management practices
•Recruitment
•Compensation & Benefits
•Retention, Training, Development & Engagement
•Health & Wellness
Oversight
The Board of Directors has ultimate responsibility for the strategy of the Company. The Compensation Committee of the Board of Directors oversees executive compensation matters and the Corporate Responsibility & Culture committee oversees company culture, diversity, and employee engagement. The Company proactively identifies potential human capital related risks, such as the labor market shortage, rising labor costs, and employee retention and designs strategies to mitigate those risks. Strong human capital management is viewed as integral to the Company's strategic transformation.
Recruitment
Berkshire operates in a highly competitive labor market with strong competition for top talent. To help power Berkshire’s transformation, it relies on and continues to recruit employees with the right mix of skills, expertise and experiences. The Company leverages several strategies to support its talent pipeline and talent acquisition activities including internship placements, affinity group relationships, and the use of experienced recruiters for key management and specialized positions.
Berkshire continues to pursue a hybrid work model to expand its access to top talent and provide its employees with workplace flexibility. These strategies have proved effective in meeting the demand for talent demonstrated by the Company’s strong track record attracting new talent across retail, commercial, wealth management, business banking and operational areas. In addition, as market disruptions from mergers remain, Berkshire will continue to leverage its differentiated brand and unique market positioning to hire community-focused bankers from its competitors.
Compensation & Benefits
While the labor market shortage and other factors can contribute to increased labor costs, Berkshire continually evaluates its strategies and looks at best practices to provide competitive pay and benefits packages that reward performance and retain top talent at all levels of the Company. The Company offers comprehensive medical coverage, paid vacation and personal time, along with other benefits, all of which are available to married same-sex or different-sex couples as well as domestic partners. In addition to its compensation and health benefits, Berkshire offers volunteer-time off, an employee assistance program, regular performance reviews and the You FIRST Fund to help employees impacted by personal financial hardships.
Retention, Training, Development & Engagement
Strong employee retention will help reduce expense, create efficiencies and contribute to the success of BEST. In addition to compensation and benefits packages, Berkshire employs a collection of strategies to strengthen employee retention. The Company offers a menu of development and training programs consistent with one’s job responsibilities and professional goals including a mentoring program to pair high potential junior employees with senior staff. Berkshire continues to reskill and upskill employees from across the Company to take on new responsibilities and roles. For employees looking to expand their professional experience in the classroom, the Company offers an education assistance program. In 2021, Berkshire further enhanced its commitment to creating a strong workplace culture by rolling out a comprehensive employee engagement survey to identify strengthens and opportunity areas within the organization. Action plans were developed in areas that did not meet the Company’s high expectations. It expects to continue to enhance its efforts through intentional actions including offering a new employee rewards and recognition program.
9 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROXY STATEMENT | PROXY STATEMENT SUMMARY
Health & Wellness
Like all businesses, Berkshire has been impacted by the ongoing COVID-19 pandemic and continues to proactively manage impacts to protect the health and safety of its employees, customers and communities as well as retain and attract top talent. During the height of the pandemic, the Company provided protective equipment to front-line employees, including masks and gloves, and offered all additional paid sick time, paid vaccine time, paid quarantine/isolation leave, job protected personal leave, flexible work schedules for remote employees, premium pay for onsite employees and maintained full pay for employees with reduced schedules, as a result of the pandemic. The Company continues to maintain a largely hybrid working environment with the majority of non-branch staff working remotely at least part-time.
Future of the Workplace
Berkshire continues to evolve and enhance its human capital management strategies to help drive organizational growth in support of BEST while combating risks, such as the labor market shortage and rising labor costs. The Company intends to continue to evolve its workplace model into a hybrid environment over the long-term. It also plans to pursue its DigiTouch™ service delivery model, a powerful combination of personal service driven by bankers fused with the convenience of user-centric technology that combined, delivers a superior customer experience. While technology will play a bigger role in the future of Berkshire helping to improve processes and drive efficiencies, people will always be at the core of its ability to deliver value to its customers and communities. The Company remains confident that the Berkshire brand, value proposition and socially-responsible vision will continue to be a differentiator in the market and help overcome labor market disruptions.
Diversity, Equity & Inclusion
Creating a diverse, equitable,accessible, inclusive and inclusiveequitable workplace is an essential enabler to advancing the Company’s strategic goals, social and environmental commitments and vision. Ultimately Berkshire’s goal is to attract and retain individuals from a critical component towide range of backgrounds, cultures and experiences so that the successworkforce, executives and board composition reflect the diversity of Berkshire’s Exciting Strategic Transformation (BEST) and its BEST Community Comeback. At the core of Berkshire’s strategy is a goal to ensure that its workforce reflects the communities in which it operates, that itsoperates. It also seeks to ensure equity, accessibility, fairness and impartiality in all aspects of the Company’s workplace, banking practices and financial solutions while fostering an inclusive environment where all employees feel that they are valued, respected and can reach their full potential and that it leverages its core business to improve the access and affordability of financial solutions to support economic growth of under-represented populations and communities.empowered.
The Company instituted a strong foundation ofadvances those goals through an integrated approach that includes:
•Strong oversight and governance practices to ensure that diversity, equity and inclusion is embedded into Berkshire’s business activities. This includesthrough the Corporate Responsibility & Culture Committee of the Board of Directors which has ultimate oversight responsibility.and management committees
•Talent management and recruitment
•Education and training and workplace programming
•Seven employee resource groups
•Workplace programming
•Multicultural community engagement
•Equitable product and service development and supplier diversity
Additional detailed information on Berkshire’s Human Capital Management and Diversity, Equity & Inclusion Committee, which reports into the Board committee, provides additional management level oversight topractices can be found in the Company’s programmingannual SEC report on Form 10-K and performance. To further strengthen those efforts in 2021, Berkshire named a Senior Vice President/Chief Diversity Officer.
The Company continues to work to improve representation within its workplace leveraging a combination of strategies. Berkshire identifies opportunities in targeted marketsannual Sustainability Report, which details the company's environmental, social and business lines, develops deeper partnerships with non-profit organizations and affinity groups and uses external recruitment professionals to ensure it receives candidate pools that reflect the rural and urban communities in which it operates. In addition, the Company regularly reviews the gender and ethnic diversity of its workforce at the employee, manager and executive management level.
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Diversity & Inclusion* | ◦ | Percent of women in workforce | 67 | % |
◦ | Percent of ethnic minorities in workforce | 15 | % |
◦ | Percent of women on the Board | 25 | % |
◦ | Percent of ethnic minorities on the Board | 33 | % |
◦ | Percent of women in management (officer+) | 20 | % |
◦ | Percent of ethnic minorities in management (officer+) | 4 | % |
*Employee metrics reported are as of December 31, 2021. Board metrics based on 2022 Board nominees.
governance programs.
105 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROXY STATEMENT | PROXY STATEMENT SUMMARY
Berkshire provides a full suite of diversity, equity & inclusion trainings to build understanding and afford employees with strategies they can put into practice. All employees complete training annually. In addition, Berkshire offers seven Employee Resource Groups (ERGs) each playing an integral role for employees and the culture of the company. Every Employee Resource Group provides a safe space for dialogue, education, and collective action on topics relevant to their members and the Company. Through the ERGs, employees concerns and ideas to strengthen Berkshire’s culture are elevated to members of management and the Diversity, Equity & Inclusion Committee for action, empowering employees to collectively be engines of positive change within the workplace.
Find out more about Berkshire’s Commitment to Environmental, Social and Governance matters and our BEST Community Comeback in our 2021 Corporate Responsibility Report.
11 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
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| Proposal 1: Election of Directors for a One-Year Term | | |
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The Company’s Board of Directors has nominated and recommends a vote “FOR” each of the twelve (12)eleven (11) nominees listed below for election as a director. All of the nominees currently serve on the Company’s Board of Directors.
Background. The Company’s Board of Directors is presenting twelve (12)eleven (11) nominees for election as directors at our Annual Meeting. EachTwo of the thirteen current directors, Messrs. Adofo-Wilson and Zaitzeff, are not standing for re-election. All of the nominees currently serve as a directordirectors on the Company's Board of Directors. Each director elected at the meeting will serve for a one-year term until our 2023 annual meeting2025 Annual Meeting or until a successor is duly elected and qualified. Each director nominee has consented to being named in this proxy statement and to serving as a director if elected. If a nominee is unable to be a candidate when the election takes place, the shares represented by valid proxiesproxies will be voted in favor of the remaining nominees. The Board of Directors does not currently anticipate that any of the nominees will be unable to be a candidate for election. Director Rheo A. Brouillard (age 68, 3 years of service) is not standing for re-election. Directors Nina A. Charnley, Mihir A. Desai, and Jeffrey W. Kip are new directors elected by the Board during the year and are standing for their first shareholder election.
Agreement with HoldCo Asset Management. On March 7, 2021, the Company entered into a cooperation agreement (the “Cooperation Agreement”) with HoldCo Asset Management, LP (“HoldCo”), an investment adviser which owns approximately 3.5% of the Company’s outstanding shares. Pursuant to the Cooperation Agreement, the Company agreed that it would nominate Michael Zaitzeff, Co-Founder and Managing Member of VM GP II LLC, the general partner of HoldCo, as a new independent director. Mr. Zaitzeff has agreed to stand for re-election in 2022. Pursuant to the Cooperation Agreement, Mr. Zaitzeff may select a replacement for his position, subject to the terms stated in the agreement.
The foregoing description is qualified in its entirety by reference to the Cooperation Agreement, a copy of which is attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 8, 2021.
Election. The affirmative vote of a plurality of the Company’s outstanding common stock present at the virtual annual meetingAnnual Meeting or by proxy at the Annual Meeting is required to elect the nominees for directors; provided, however, in the case of an uncontested election of directors, it is the Company’s policy that if a director is elected by a plurality but not a majority of the votes cast for such director, such director must submit his or her resignation to the Board of Directors, which will be subject to review by the Corporate Governance/Nominating Committee of the Board of Directors. The Corporate Governance/Nominating Committee will then make a recommendation to the Board of Directors as to whether to accept or reject the director’s resignation. Unless otherwise instructed, the proxy holders will vote the proxies received by them “FOR” the election of the nominees as directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF ITS DIRECTOR NOMINEES.
126 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES
Information Regarding Directors and Director Nominees
20222024 Nominees for Election to the Board of Directors
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BAYE ADOFO-WILSON, CEO OF BAW DEVELOPMENT, LLC |
| Mr. Adofo-Wilson, Esq. is CEO of BAW Development, LLC, a national real estate development company concentrating on redevelopment and consulting services in diverse communities. He is also Of Counsel at Post Polak, PA focusing on redevelopment law and specializing in New Jersey’s urban transitioning communities and municipalities, He has over 20 years of experience in law and business development, with a focus on community development, including the position of Deputy Mayor/Director, Economic and Housing Development for the City of Newark, New Jersey.
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Independent | Qualifications, Skills, and Experience: |
Years of Service: 3 | | Business Operations/Strategic | | Regulated Industry |
Age: 53 | | Planning | | Corporate Responsibility/ |
Board Committees: | | Financial Expertise/Literacy | | Community Leader |
| Audit | | Talent Management | | Small Business Owner/Operator |
| Compliance & Regulatory | | Real Estate | | Legal Expertise |
| Corporate Responsibility | | | | |
| and Culture | | | | |
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DAVID M. BRUNELLE, CHAIRPERSON OF THE BOARD OF DIRECTORS OF BERKSHIRE HILLS BANCORP, INC.,CO-FOUNDER AND MANAGING DIRECTOR OF NORTH POINTE WEALTH MANAGEMENT |
| Mr. Brunelleis Co-Founder and Managing Director of North Pointe Wealth Management in Worcester, Massachusetts. He has over 20 years of experience in financial services working with businesses, individuals, families and charitable foundations. Mr. Brunelle is a former Director of Commerce Bancshares Corp. and Commerce Bank & Trust Company and served on Commerce’s audit and loan committees. He has also served as trustee or corporator for numerous non-profit entities in and around Worcester, including The Nativity School of Worcester, The Worcester Regional Research Bureau, The Worcester Educational Development Foundation, the UMass/Memorial Foundation, Becker College and the Greater Worcester Community Foundation. |
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| Independent | Qualifications, Skills, and Experience:Board Committees: |
Years of Service: 46 | | Public Company Board | | Talent ManagementCompensation |
Age: 5153 | | Business Operations/Strategic | | Regulated Industry |
Board Committees: | | Planning | | Corporate Responsibility/ |
| Corporate | | Financial Expertise/Literacy | | Community Leader |
| Governance/Nominating (Chair) | | Risk Management | | Small Business Owner/Operator |
| | Compensation | Wealth Management/Insurance | | |
| Corporate Responsibility & | | | | |
| Regulatory | | | | Culture |
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| MARY ANNE CALLAHAN |
| Ms. Callahan has more than 35 years of investment banking expertise, most recently as a Managing Director in the Financial Services Group at Piper Sandler Companies where her responsibilities included advising bank management and boards of directors in the Northeast region on a broad range of strategic and financial topics. Previously she was a principal in Sandler O’Neill & Partners, L.P.’s investment banking group advising banks, thrifts and specialty finance companies and worked in the financial institutions group at Merrill Lynch and CIBC World Markets. |
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| Independent | Board Committees: |
| Years of Service: <1 | | Compensation |
| Age: 61 | | Risk Management, Capital & Compliance |
137 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES
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| NINA A. CHARNLEY, FORMER SENIOR MANAGING DIRECTOR, TIAA |
| Ms. Charnley was Senior Managing Director, Enterprise Customer Experience Executive at TIAA. Ms. Charnley led the strategy, development and execution of a significant portfolio of technology projects launching the company's mobile app and a digital bank, building digital capabilities enabling employees and customers. Previously, she was an executive at Bank of America managing diverse businesses including a de novo sustainable energy lending program and created the strategy, infrastructure, template and accountabilities matrix for Bank of America's Diversity and Inclusion program. Ms. Charnley has been designated by the Board of Directors as a financial expert under the rules of the Securities and Exchange Commission
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| Independent | Qualifications, Skills, and Experience:Board Committees: |
Years of Service: <12 | | Financial Institution Executive | | Talent ManagementAudit |
Age: 6668 | | Business Operations and Strategic | | Regulated IndustryCorporate Responsibility & Culture |
| Board Committees: | Planning | | Corporate Responsibility/ |
| Compensation | | Financial Expertise/Literacy | | Community Leader |
| Compliance & Regulatory | | Risk Management, | | Information Technology/Cyber |
| Corporate Responsibility | | | | |
| Capital, & Culture | | | | Compliance |
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JOHN B. DAVIES, AGENT EMERITUS WITH MASSACHUSETTS MUTUAL LIFE INSURANCE |
| Mr. Davies is a former Executive Vice President of Massachusetts Mutual Life Insurance and is currently an Agent Emeritus with Massachusetts Mutual, providing high net worth counseling with a focus on tax efficiency and intergenerational transfers of wealth. Mr. Davies currently serves on the Westfield State University Foundation Board. Mr. Davies is a former director of Woronoco Bancorp, Inc.
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Independent | Qualifications, Skills, and Experience: |
Years of Service: 16 | | Public Company Board | | Regulated Industry |
Age: 72 | | Financial Institution Executive | | Wealth Management/Insurance |
Board Committees: | | Business Operations/Strategic | | Talent Management |
| Compensation (Chair) | | Planning | | Corporate Responsibility/ |
| Corporate | | Financial Expertise/Literacy | | Community Leader |
| Governance/Nominating | | | | |
14 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES
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| MIHIR A. DESAI, PROFESSOR OF FINANCE, HARVARD BUSINESS SCHOOL & PROFESSOR OF LAW, HARVARD LAW SCHOOL |
| Dr. Desai is the Mizuho Financial Group Professor of Finance at Harvard Business School, and Professor of Law at Harvard Law School. Dr. Desai is an accomplished author and expert in finance and tax policy. He is a Research Associate in the National Bureau of Economic Research’s Public Economics and Corporate Finance Programs. In addition to his work at Harvard University, his professional experiences include CS First Boston, McKinsey & Co., and advising a number of firms and governmental organizations. |
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| Independent | Qualifications, Skills, and Experience:Board Committees: |
Years of Service: <12 | | Financial Expertise/Literacy | | Legal ExpertiseCompensation |
Age: 5456 | | Business Operations and Strategic | | Corporate Responsibility/ |
Board Committees: | | Planning | | Community Leader |
| Risk Management, Capital & Capital | | Risk Management | | |
| Compliance & Regulatory | | | | |
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| WILLIAM H. HUGHES III, PRESIDENT AND CEO OF EDUCATION DESIGN LAB |
| Mr. Hughes is President and CEO of Education Design Lab, an innovation engine that applies human-centered designa national nonprofit focused on expanding opportunity at the intersection of learning and work in order to provide alternative career pathways and close the skills gap. As a technology industry executive, Mr. Hughes has launched, led and advised multiple new ventures, providing expertise on strategy, innovation and product management.work. He has been a leader, entrepreneur, innovator and board member in educational technology for the past two decades of experience advising senior executives at industry-leading multinationals on corporate strategy, partnerships and technology across several sectors, including education and financial services. He has led and advised multiple mergers, acquisitions and start-ups. Mr. Hughes has served on several corporate and not-for-profit boards. He is a trustee of Education Development Center, a director ofcompanies such as Pearson, Cengage, Kaplan, EDC, FineTune Learning (acquired by Prometric) and aIntellus Learning (acquired by Macmillan). In his earlier career, he held leadership positions in technology and venture partner with 11 Tribes Ventures.development at Sapient and Cambridge Innovation Center. His more than 30 years of business experience spans strategy, product, services, business development, partnerships, AI and cybersecurity.
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| Independent | Qualifications, Skills, and Experience:Board Committees: |
Years of Service: 35 | | Business Operations/Strategic | | Talent ManagementCorporate Governance/Nominating |
Age: 5860 | | Planning | | Regulated Industry |
Board Committees: | | Information Technology | | Corporate Responsibility/ |
| Compensation | | Product Management | | Community Leader |
| Risk Management and | | Cybersecurity | | Small Business Owner Operator |
| Capital (Chair) | | | | |
| Corporate Responsibility & | | | | |
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158 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES
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| JEFFREY W. KIP, CHIEF EXECUTIVE OFFICER OF ANGI INTERNATIONAL |
| Mr. Kip is Chief Executive Officer of Angi International which provides internet tools and resources for home improvement, maintenance, and repair projects. Angi International is a subsidiary of IAC/InterActive Corp (NASDAQ: IAC), which owns and manages popular online brands and services. Prior to his role as Chief Executive Officer, Mr. Kip was the Chief Financial Officer of IAC/InterActive Corp from 2012-2016. Mr. Kip's previous positions include Chief Financial Officer of Panera Bread, LLC from 2006 – 2012. Mr. Kip has been designated by the Board of Directors as a financial expert under the rules of the Securities and Exchange Commission |
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| Independent | Qualifications, Skills, and Experience:Board Committees: |
Years of Service: < 12 | | Financial Expertise | | Talent ManagementAudit |
Age: 5355 | | Business Operations/Strategic | | Information Technology/Cyber |
Board Committees: | | Planning | | |
| Audit | | Marketing/Public Relations | | |
| Compensation | | | | (Chair) |
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| DR. SYLVIA MAXFIELD, DEAN OF THE PROVIDENCE COLLEGE SCHOOL OF BUSINESS |
| Dr. Maxfield is Dean of the Providence College School of Business and was previously ChairmanChair of the Faculty and MBA Program Director at Simmons University in Boston. Additionally, she serves as voting member of the Rhode Island State Investment Commission, which oversees fund performance, including asset allocation and investment-related contracting. Dr. Maxfield also votes on shareholder proxy activity on behalf of the State. Previously, she has served on the boards of the Greater Providence Chamber of Commerce, Social Enterprise Greenhouse and the 21st Century Fund. Dr. Maxfield has been designated by the Board of Directors as a financial expert under the rules of the Securities and Exchange Commission. |
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| Independent | Qualifications, Skills, and Experience:Board Committees: |
Years of Service: 24 | | Business Operations/Strategic | | Talent ManagementAudit (Chair) |
Age: 6365 | | Planning | | Corporate Responsibility/Governance/Nominating |
| Board Committees: | Financial Expertise/Literacy | | Community Leader |
| Audit (Chair) | | Marketing/PR | | |
| Corporate | | | | |
| Governance/Nominating | | | | |
| Risk Management, and Capital | | | | & Compliance |
16 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES
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| NITIN J. MHATRE, PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR OF THE COMPANY |
| Mr. Mhatre was appointed to joined the role of President andCompany as Chief Executive Officer of the Company and Chief Executive Officer of the Banka Director in January 2021. He was also appointed as a Director of the Company and the Bank. Prior to joining the Company, Mr. Mhatre waspreviously Executive Vice President, Community Banking at Webster Bank, where he was a member of Webster Bank's executive team and led consumerits Consumer and business banking businesses. BeforeBusiness Banking groups and Webster Investment Services. Prior to joining Webster, in 2009, Mr. Mhatrehe spent more than 13 years at Citi GroupCitigroup in various leadership roles across consumer-related businesses globally. Mr. Mhatre has served on the Board of the Consumer Bankers Association, headquartered in Washington D.C., since 2014 and was Chairman of the Board from 2019-20. He also serves on the Board of Cradles to Crayons Boston, based in Newton, Massachusetts.
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| Non-Independent | | Qualifications, Skills, and Experience:
Years of Service: 13 | | | Public Company CEO | | Risk Management
Age: 5153 | | | Financial Institution Executive | | Regulated Industry
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| | | Planning | | Community Leader |
| | | Financial Expertise/Literacy | | Talent Management |
9 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES
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| LAURIE NORTON MOFFATT, DIRECTOR & CEO OF THE NORMAN ROCKWELL MUSEUM |
| Ms. Norton Moffatt is the Director and Chief Executive Officer of the Norman Rockwell Museum, Stockbridge, Massachusetts. Since 1986, Ms. Norton Moffatt has overseen the expansion of the museum’s facilities and the creation of a scholars’ research program. Her efforts resulted in the Museum receiving the National Humanities Medal, America’s highest humanities honor. Ms. Norton Moffatt is also an active community leader. She is a founder of 1Berkshire and Berkshire Creative Economy Council and serves as a trustee of Berkshire Health Systems and a director of Berkshire Health Systems, Inc. and Berkshire Medical Center, Inc.
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| Independent | Qualifications, Skills, and Experience:Board Committees: |
Years of Service: 810 | | Business Operations/Strategic | | Marketing/PRCorporate Governance/Nominating |
Age: 6567 | | Planning | | Small Business Owner/Operator |
Board Committees: | | Financial Expertise/Literacy | | Corporate Responsibility/ |
| Corporate | | Talent Management | | Community Leader |
| Governance/ Nominating | | | | |
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| Culture (Chair) | | | | |
17 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES
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JONATHAN I. SHULMAN,KARYN POLITO, FORMER EVP AND TREASURER AT KEYCORPLIEUTENANT GOVERNOR OF MASSACHUSETTS |
| Ms. Polito is currently Principal of Polito Development Corporation, a commercial real estate development firm. Ms. Polito was the 72nd Lieutenant Governor of the Commonwealth of Massachusetts from 2015 to 2023. In that position, she advocated for women’s empowerment and championed renewable energy, climate adaption, workforce development, affordable housing, and the innovation economy. She helped increase aid to local communities and spearheaded efforts to expand offshore wind and educational opportunities for careers in science, technology, engineering and math for women and students. Prior to serving as Lieutenant Governor, Ms. Polito was a member of the Massachusetts House of Representatives and a Partner at Milton, Laurence & Dixon, LLP. |
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| ERIC S. ROSENGREN, FORMER PRESIDENT AND CEO OF THE FEDERAL RESERVE BANK OF BOSTON |
| Mr. ShulmanRosengren is CEO of Rosengren Consulting and Visiting Scholar at the MIT Golub Center for Finance and Policy. He previously served as President and CEO of the Federal Reserve Bank of Boston from 2007 to his retirement in 2021. As a Federal Reserve Bank president, he was formerly Executive Vice President & Treasurer at KeyCorp, a publicly traded U.S. bank.participant and voting member of the Federal Open Market Committee. He also led projects to help rebuild smaller city economies and provide opportunities for diverse populations to prosper. Mr. Shulman possesses deep commercialRosengren joined the Boston Fed in 1985 and held various roles in the Bank’s Research and Supervision, Regulation, and Credit Departments. He has published numerous papers and articles, and is often cited in leading academic journals and is featured in major media on topics including macroeconomics, monetary policy, international banking, experience that includes financial markets, governance, and balance sheetbank supervision, and risk management disciplines. He began his career with KeyCorp in 1989 and served in leadership roles in financial market strategy, asset liability management, wholesale funding and capital planning. Shulman has also held committee membership positions on KeyCorp’s Asset Liability Committee, Market Risk Committee, Model Risk Committee, and Funds Transfer Pricing Committee.management. Mr. ShulmanRosengren has been designated by the Board of Directors as a financial expert under the rules of the Securities and Exchange Commission.
SEC rules.
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Years of Service: 2 | | Financial Institution Executive | | Risk Management |
Age: 59 | | Business Operations/Strategic | | Regulated Industry |
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MICHAEL A. ZAITZEFF, MANAGING MEMBER OF VM GP II LLC |
| Mr. Zaitzeff is a co-founder and managing member of VM GP II LLC, the general partner of HoldCo Asset Management, LP. Mr. Zaitzeff has served as a member of numerous corporate boards, oversight committees and creditor committees. Mr. Zaitzeff served on the Trust Advisory Board of WMI Liquidating Trust, a trust created to implement the Chapter 11 Bankruptcy Plan of Washington Mutual, Inc.
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Independent | Qualifications, Skills, and Experience: |
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Age: 3966 | | Regulated Industry | | Small Business Owner/Operator |
Board Committees(1):
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(1) Pursuant to the Company’s Cooperation Agreement with HoldCo Asset Management, LP, Mr. Zaitzeff was appointed to the Audit Committee and the Risk Management and Capital Committee, and serves as a non-voting observer on the Corporate Governance/Nomination Committee.
1810 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES
Information About Director Nominees
•73% of our director nominees are female and/or racially or ethnically diverse.
•40% of our Board committees are chaired by diverse directors.
11 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Corporate Governance
The Company is committed to strong corporate governance policies, practices, and procedures designed to make the Board more effective in exercising its oversight role. The following sections provide an overview of our corporate governance structure, including independence and other criteria we use in selecting director nominees, our Board leadership structure, and the responsibilities of the Board and each of its Committees. Our Corporate Governance Policy, among other key governance materials, helps guide our Board and management in the performance of their duties and is regularly reviewed by the Board.
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| Key Corporate Governance Documents |
Please visit our investor relations website at ir.berkshirebank.com to view the following documents: |
| | Corporate Governance Policy |
| | Code of Business Conduct |
| | Anonymous (Whistleblower) Reporting Line Policy |
| | Board Committee Charters |
| | Certificate of Incorporation |
| | Company By-Laws |
These documents are available free of charge on our website or by writing to Berkshire Hills Bancorp, c/o Wm. Gordon Prescott, Senior Executive Vice President, General Counsel and Corporate Secretary, 60 State Street, Boston, Massachusetts 02109. |
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The Board and management regularly review best practices in corporate governance and are committed to a program that serves the long-term interests of our shareholders. We believe good governance strengthens accountability and promotes responsible corporate citizenship. Several of our current best practices are highlighted below:
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| Independent Oversight | Shareholder Orientation and Accountability | Good Governance |
Majority independent directors(1) | Declassified Board with all directors standing for election each year | Diverse board membership (skills, tenure, age); annual director education; active board replenishment program |
| Strong and engaged independent Board Chair | Robust stock-ownership guidelines | Annual evaluation of CEO and senior management and review of succession plans |
| All key committees are fully independent and led by the Board chair | Annual shareholder engagement program | Implementation of a Corporate Responsibility & Culture Committee at both Board and employee level |
| Regular executive sessions of independent directors | Plurality voting standard for director elections, with director resignation policy in effect for uncontested elections | Risk oversight by full board and committees |
| Board Chair or Chair of Corporate Governance can call special meeting of the Board at any time for any reason | No poison pill in place; annual election of all directors | Formal ethics code, reporting hotline and ethics training to all employees |
(1)1110 out of 1211 of the director nominees will be designated as independent directors; CEO/Director Mhatre is not independent.
1912 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Board of Directors
The primary functions of Berkshire’s Board of Directors are:
•To oversee management performance on behalf of shareholders;
•To ensure that the interests of the shareholders are being served;
•To monitor adherence to Berkshire’s standards and policies;
•To promote the exercise of responsible corporate citizenship; and
•To perform the duties and responsibilities assigned to the Board by the laws of Delaware, Berkshire’s state of incorporation.
Customarily, the Board elects its members to serve in identical capacities on the Board of Directors of Berkshire Bank, the Company's main operating subsidiary which is chartered in the Commonwealth of Massachusetts.
Talent Development and Succession Planning
One of the Board's primary responsibilities is to oversee the development and retention of key talent within the Company and to ensure that an appropriate succession plan is in place for our Chief Executive Officer and other senior executives. The Board meets regularly with senior management and periodically reviews the readiness of key employees to potentially assume additional roles and responsibilities, including in the event of unexpected circumstances. In addition, our Chief Executive Officer regularly discusses with our Corporate Governance/Nominating Committee recommendations and evaluations as to potential successors for senior positions. The Committee incorporates this feedback into its leadership development and contingency plans. While the Corporate Governance/Nominating Committee has primary responsibility for developing and maintaining a succession plan, the Committee regularly reports to the Board on this matter, and final decisions on senior leadership succession matters, other than the CEO, are made by the CEO in consultation with the full Board. The successful management of executive succession in 2021 was accomplished within the framework discussed above.
Identification of Candidates and Diversity
The Corporate Governance/Nominating Committee regularly reviews the composition of our Board and, as appropriate, recommends steps to be taken to ensure that the Board reflects the desired balance of skills, experience and diversity and meets the requirements of all applicable laws and regulations.
The Board maintains an ongoing refreshment program to identify highly qualified candidates that are aligned with our long-term strategy. Our corporate governance guidelines provide age and tenure limits, of 75 and 12 years respectively, to facilitate appropriate transition and renewal. In accordance with our Corporate Governance Policy, the Corporate Governance/Nominating Committee and Board shall take into account diversity considerations. Diversity is broadly construed to mean not only diversity of gender, race, ethnicity and sexual orientation, but also diversity with respect to personal and professional experiences, backgrounds, opinions, beliefs, education and perspectives.
The Corporate Governance/Nominating Committee is committed to fostering an environment of diversity and inclusion, including among our directors, and is tasked as part of its annual evaluation with determining whether or not the Board is appropriately diverse. The Corporate Governance/Nominating Committee’s continued commitment to diversity is evidenced by the following:
•58% of our director nominees are female and/or racially or ethnically diverse;
•Half of our Board committees are chaired by diverse directors.
20 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Ongoing Board Refreshment
We believe that the Company benefits when the Board is comprised of a mix of experienced directors with diverse and fresh perspectives. To that end, the Board maintains an ongoing refreshment program to seek out highly qualified candidates with skills and experiences that are aligned with our long-term strategy. We have also adopted corporate governance guidelines providing both age and tenure limits, of 75 and 12 years, respectively, to facilitate appropriate transition and renewal. These guidelines as well as the Board’s general commitment to thoughtful refreshment has resulted in a number of changes in recent years.
In 2020, current Directors Sylvia Maxfield and Jonathan I. Shulman were appointed to the Board, effective February 24, 2020. Former Directors Pamela A. Massad and William J. Ryan did not stand for re-election and retired from the Board, effective as of the 2020 Annual Meeting. The number of members of the Board was thirteen (13) at both January 1, 2020 and December 31, 2020.
In 2021, Directors Cornelius D. Mahoney and D. Jeffrey Templeton did not stand for re-election and retired from the Board, effective as of the 2021 Annual Meeting. Directors Deborah P. Bailey and Michael A. Zaitzeff were elected to the Board for the first time at the 2021 Annual Meeting. Subsequently, J. Williar Dunlaevy and Ms. Bailey resigned from the Board in the second half of 2021, and Robert M. Curley passed away early in 2022.During the second half of 2021, the Board appointed Nina A. Charnley and Jeffrey W. Kip as directors, and the Board appointed Mihir A. Desai as a director in March 2022.The number of members of the Board was thirteen (13) at both January 1, and December 31, 2021. There are twelve Board nominees standing for reelection in 2022, reflecting the decision of director Rheo A. Brouillard to retire from the Board effective as of the 2022 Annual Meeting.
Shown below is the recent trend, showing the results of the board’s focus on refreshment, based on the Board nominees each year:
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| (years) | 2019 | 2020 | 2021 | 2022 |
| Average Nominee Age | 67.0 | 63.9 | 60.2 | 59.4 |
| Average Nominee Tenure | 6.5 | 5.7 | 4.0 | 3.8 |
Board Meetings
During 2021,2023, the Board of Directors held sixteen (16)eleven (11) meetings. The average attendance at meetings of the Board and Board Committees during 20212023 was 97%over 90%. During this period, each of the current directors attended at least 75% of the aggregate total number of board meetings and committee meetings held on which such directors served.
In addition, the Board of Directors encourages each director to attend annual meetings of shareholders. Thirteen13out of thirteen14 directors (100%(93%) serving as of the date of the 20212023 Annual Meeting of Shareholders attended the 20212023 Annual Meeting.
2113 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Board Leadership Structure
The Board has reviewed the current Board leadership structure of the Company, which consists of a separate Independent Chairperson of the Board and a Chief Executive Officer. The Independent Board Chairperson performs all duties and has all powers which are commonly incident to the office of Chairperson of the Board or which are delegated to that person by the Board of Directors, including presiding at all meetings of the Board of Directors. The Chief Executive Officer has responsibility for the management and control of the business and affairs of the Company and has general supervision of all other officers, employees and agents of the Company. The Board believes that separating these roles enhances the independence of the Board and its effectiveness in discharging its responsibilities and that this procedure is currently the most appropriate Board leadership structure for the Company.
From time to time, the Board may also appoint a Vice Chairperson in the manner and upon the criteria it deems appropriate. In the absence of the Board Chairperson, this position fulfills the responsibilities of the Board Chairperson and it may also fulfill any other responsibilities assigned by the Board of Directors. In 2021, on the retirement of Chairperson J. Williar Dunlaevy, the Board elected then Vice Chairperson David M. Brunelle to the Chairperson position.
Director Independence
All of the Company’s directors are independent under the listing requirements of The New York Stock Exchange (the “NYSE”), except for Mr. Mhatre who is an officer of the Company and the Bank, and except for Mr. Brouillard, who was CEO of SI Financial Group, Inc., which was acquired by the Company in 2019. Mr. Brouillard is not standing for re-election in 2022.Bank. Additionally, all of the members of the Audit, Compensation and Corporate Governance/Nominating Committees are independent in accordance with the listing standards of the NYSE, and, in the case of members of the Audit and Compensation Committees, applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and the Federal Deposit Insurance Corporation (“FDIC”). In determining the independence of its directors, the Board considered transactions, relationships and arrangements between the Company and its directors that are not required to be disclosed in this proxy statement under the heading “Transactions with Related Persons,” including loans or lines of credit that the Bank has directly or indirectly made to Director Norton Moffatt.
Corporate Governance Policy
The Board of Directors has adopted a corporate governance policy to govern certain activities, including: the duties and responsibilities of directors; the composition, responsibilities and operation of the Board of Directors; the selection of a Chairperson of the Board of Directors; the selection from time to time in the Board’s discretion of a Vice Chairperson of the Board of Directors; the operation of board committees; succession planning; convening executive sessions of independent directors; the Board of Directors’ interaction with management and third parties; director age limits; the maximum length of directors’ tenure on the Board; and the evaluation of the performance of the Board of Directors and of the Chief Executive Officer. A copy of the corporate governance policy is available in the Governance Documents portion of the Company’s Investor Relations website (ir.berkshirebank.com).
Commitment to Corporate Social Responsibility and CultureSustainability
Berkshire BankBank’s longstanding commitment to operating equitably, responsibly and sustainably is a purposeinterwoven into the company’s vision, mission, business practices, and values-driven community bank. Environmental, Social, and Governance factors are central tostrategic goals. The Board of Directors including its community bank mission, risk management practices, reputation and competitive positioning. The Corporate Responsibility & Culture Committee of the Board of Directors is responsible(CRCC) has ultimate oversight responsibility for overseeing the management of the Company’s enterprise-wide Corporate Social Responsibility, Diversity & Inclusion,environmental, social and Culture programs.governance matters. The committee, ledCRCC, chaired by Director Laurie Norton Moffatt, reviews programmeets quarterly to review performance, examinesexamine related risks and ensures accountability for management’s efforts to integrate social, environmental, cultural, and reputational considerations through all aspects of the company for the benefit of all its stakeholders. Berkshire invites you to learn more about all the ways it is a socially responsible and values-driven community bank in this year’s Corporate Responsibility Report: Meaningful Moments: Answering the Call, available online at berkshirebank.com/csr. A summary of the Company’s 2021 social responsibility initiatives was providedapprove relevant policies. Additional detailed information on Berkshire’s programs can be found in the introductory section of this Proxy Statement.proxy statement and in its most recent Sustainability Report, available online at berkshirebank.com/esg.
22 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Director Continuing Education
The Board of Directors conducts annual director education sessions, which include presentations by industry experts based on input from directors regarding topics of interest. Directors also receive an annual update on trending compliance and regulatory matters and new developments from the Bank’s outside compliance advisory firm. Our executive management meets with the Board at every regularly scheduled board meeting and annually to review the Company’s strategic plan.
14 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Board and Committee Self Evaluation
The Corporate Governance/Nominating Committee oversees the annual self-evaluation of the performance of the Board of directors and its committees, the results of which are discussed with the full Board and each individual committee, as appropriate. The purpose of the evaluations is to improve the performance of the overall Board and each specific committee. The evaluations include a review of any areas in which Board or committee members believe the Board and the committees can make a better contribution to the governance and oversight of the Company. The Corporate Governance/Nominating Committee also utilizes the results of the Board and committee evaluation process in assessing and determining the characteristics and critical skills required of prospective candidates for election to the Board and appointment to each committee. The evaluation survey forms include open-ended questions in which directors are invited to share their written comments on a confidential basis.
Committees of the Board of Directors
The Board currently has sixfive standing committees: the Audit Committee; the Compensation Committee; the Corporate Governance/Nominating Committee; the Corporate Responsibility and Culture Committee; and the Risk Management, Capital and Capital Committee; and the Compliance/RegulatoryCompliance Committee. The Board reviews the Committee Charters regularly to ensure it has an effective, efficient committee structure.The Board has determined that all members of the Audit Committee, the Compensation Committee and the Corporate Governance/Nominating Committee are independent in accordance with the listing requirements of the NYSE. Each committee operates under a written charter approved by the Board of Directors that governs its composition, responsibilities and operation. Each committee reviews and reassesses the adequacy of its charter annually or biannually. The current charters of all sixfive committees areare available in the Governance Documents portion of the Investor Relations section of the Company’s website (ir.berkshirebank.com).
The following table shows the structure of the Board of Directors as of the filing date of this Proxy Statement. It also shows the number of times each Committee met in 2021.With2023.Pending the exceptionresults of the appointmentelection of Directors Charnley, Desai,directors at the Company’s Annual Meeting on May 16th, the Board will review its committee memberships and Kip,the resignations of Directors Dunlaevy and Bailey therefrom, and the death of Director Curley, there were no other changes to the board structure and board committees since the Proxy Statement for the 2021 annual meeting.Chair assignments.
2315 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Board Structure and Meetings
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| Director Name, Age & Primary Occupation | Director
Since | Director
Category | Audit(1) | Comp | Corp Gov & Nom | Corp Responsibility & Culture | Risk & Capital | Compliance & Reg |
Baye Adofo-Wilson, Age 53
CEO of BAW Development, LLC
| 2019 | I | O | | | O | | O |
Rheo A. Brouillard(2), Age 68 Former Director, President, and CEO SI Financial Group, Inc. | 2019 | N | | | | | O | O |
David M. Brunelle, Age 51 Chairperson of the Board of Directors of Berkshire Hills Bancorp, Inc. Co-Founder and Managing Director of North Pointe Wealth Management | 2017 | I | | O | C | O | | |
Nina A. Charnley, Age 66
Former Senior Managing Director TIAA | 2021 | I | | O | | O | | O |
John B. Davies, Age 72
Agent Emeritus with Massachusetts Mutual Life Insurance | 2005 | I | | C | O | | | |
Mihir A. Desai, Age 54 Professor of Finance and Law | 2022 | I | | | | | O | O |
William H. Hughes III, Age 58
President of Education Design Lab | 2019 | I | | O | | O | C | |
Jeffrey W. Kip(1), Age 53 Chief Executive Officer Angi International | 2021 | I | O | O | | | | |
Dr. Sylvia Maxfield(1), Age 63 Dean Providence College School of Business | 2020 | I | C | | O | | O | |
Nitin J. Mhatre, Age 51 President and CEO of Berkshire Hills Bancorp, Inc. | 2021 | N | | | | | | |
Laurie Norton Moffatt, Age 65
Director & CEO of the Norman Rockwell Museum | 2013 | I | | | O | C | | |
Jonathan I. Shulman(1), Age 59 Former EVP and Treasurer KeyCorp | 2020 | I | O | | | | O | C |
Michael A. Zaitzeff(3), Age 39 Co-founder and managing member of VM GP II LLC | 2021 | I | O | | | | O | |
| | | | | | | | |
| Number of Meetings in 2021 | 16 (Full Board) | | 15 | 6 | 10 | 5 | 5 | 5 |
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| N = Non-Independent Director | I = Independent Director | C = Chair | O = Committee Member |
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| Director Name, Age & Primary Occupation | Director
Since | Director
Category | Audit(1) | Comp | Corp Gov & Nom | Corp Responsibility & Culture | Risk Management, Capital & Compliance |
Baye Adofo-Wilson (2), Age 55 CEO of BAW Development, LLC
| 2019 | I | O | O | | O | |
David M. Brunelle, Age 53 Chairperson of the Board of Directors of Berkshire Hills Bancorp, Inc. Co-Founder and Managing Director of North Pointe Wealth Management | 2017 | I | | O | C | O | |
Mary Anne Callahan (2), Age 61 Former Managing Director in the Financial Services Group at Piper Sandler Companies | 2023 | I | | O | | | O |
Nina A. Charnley, Age 68 Former Senior Managing Director TIAA | 2021 | I | O | | | O | O |
Mihir A. Desai, Age 56 Professor of Finance and Law | 2022 | I | | O | | | O |
William H. Hughes III, Age 60 President of Education Design Lab | 2019 | I | | | O | O | |
Jeffrey W. Kip(1), Age 55 Chief Executive Officer Angi International | 2021 | I | O | C | | | |
Sylvia Maxfield(1), Age 65 Dean Providence College School of Business | 2020 | I | C | | O | | O |
Nitin J. Mhatre, Age 53 President and CEO of Berkshire Hills Bancorp, Inc. | 2021 | N | | | | | |
Laurie Norton Moffatt, Age 67 Director & CEO of the Norman Rockwell Museum | 2013 | I | | | O | C | |
Karyn Polito, Age 57 Former Lieutenant Governor of Massachusetts | 2023 | I | | | | O | O |
Eric S. Rosengren(1), Age 66 Former President and CEO of the Federal Reserve Bank of Boston | 2023 | I | O | | | | C |
Michael A. Zaitzeff(2), Age 41 Co-founder and managing member of VM GP II LLC | 2021 | I | | O | | | O |
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| Number of Meetings in 2023 | 11 (Full Board) | | 13 | 4 | 6 | 4 | 6 |
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| N = Non-Independent Director | I = Independent Director | C = Chair | O = Committee Member |
(1) Directors Charnley, Kip, Maxfield, and ShulmanRosengren have been designated by the Board as Financial Experts.
(2) Director Brouillard isDirectors Adofo-Wilson and Zaitzeff are not standing for re-electionre-election. Director Callahan was appointed to the Board in 2022.2023 and is now
(3) Director Zaitzeff also serves as a non-voting observer on the Corporate Governance/Nominating Committee.standing for election.
2416 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
25 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Board Committees and Responsibilities
The primary functions of each of the board committees are described below.
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| BOARD COMMITTEES | ROLES AND RESPONSIBILITIES |
| AUDIT COMMITTEE | | Assists the Board of Directors in its oversight of the Company’s accounting and reporting practices |
| |
| All Members Independent | | Reviews the quality and integrity of the Company’s financial reports |
Chair:Chairperson: Dr. Maxfield | | Ensures the Company’s compliance with legal and regulatory requirements related to accounting and financial reporting |
| |
The Board of Directors has determined that Ms. Charnley, Dr. Maxfield, Mr. Kip, and Mr. ShulmanRosengren qualify as Audit Committee Financial Experts under the rules of the Securities and Exchange Commission.
Please also see the discussion related to the Ratification of the Public Accounting Firm in this proxy statement. | | Oversees the Company’s internal audit function |
| Annually reviews and approves the internal and external audit plans |
| Engages with the Company’s independent registered public accounting firm (Crowe) and monitors its performance, reporting, and independence |
|
| COMPENSATION COMMITTEE | | Approves the compensation objectives for the Company and its subsidiaries and establishes the compensation for the Chief Executive Officer and other Named Executive Officers of the Company |
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| All Members Independent | | Reviews the Company’s incentive compensation and other equity plans and recommends changes to the plans as needed |
Chair:Chairperson: Mr. DaviesKip | |
| | Reviews all compensation components for the Company’s Chief Executive Officer and other Named Executive Officers, including base salary, short-term incentive, long-term incentives/equity, benefits, and other perquisites |
See the “Compensation Discussion and Analysis” section for more information regarding the role of the Compensation Committee management and compensation consultants in determining and/or recommending the amount or form of named executive compensation.
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| Reviews competitive market factors and examines the total compensation mix, pay-for-performance relationship, and how all elements, in the aggregate, comprise the named executive officer’s total compensation package |
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| Administers CEO employment agreement, change in control agreements, and equity incentive plans |
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COMPLIANCE & REGULATORY COMMITTEE | | Oversees management’s implementation of compliance programs, policies, and procedures designed to identify and respond to the various compliance and regulatory risks of the Company and its subsidiaries |
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Most of Members Independent | | Monitors the preparations for regulatory examinations of the Company and the Bank |
Chair: Mr. Shulman | |
| | Oversees the Company’s information security program and monitors associated risks |
| |
| | Monitors significant legal or regulatory compliance exposure and oversees responses to material reports or inquiries from government or regulatory agencies |
| |
| | Ensures that the Company, Berkshire Bank and their affiliates have in place sound compliance management systems (“CMS”) as required by all applicable regulators and the Consumer Financial Protection Bureau (“CFPB”) |
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2617 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
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| BOARD COMMITTEES | ROLES AND RESPONSIBILITIES |
| CORPORATE GOVERNANCE/NOMINATING COMMITTEE | | Identifies qualified individuals to serve as Board members |
| Considers and recommends nominees for director to stand for election at the Company’s annual meetingAnnual Meeting of shareholdersShareholders |
| |
| All Members Independent | | Determines the composition of the Board of Directors and its committees |
Chair:Chairperson: Mr. Brunelle | |
| | Annually reviews policy, procedures and criteria for identifying candidates for election or appointment to the Board of Directors |
| |
| | Monitors a process to assess Board effectiveness, including annual Board and committee self-evaluations |
| |
| | Develops and implements the Company’s corporate governance guidelines, including annual reviews of the Company’s Corporate Governance Policy and Code of Business Conduct |
| |
| | RegularlyPeriodically receives reports from executive officers heading the Company’s investor relations and compliance and regulatory programs and periodically receives reports from other committee chairpersons regarding the work being done by their committees |
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| CORPORATE RESPONSIBILITY & CULTURAL COMMITTEE | | Oversee management’s implementation of Corporate Social Responsibility/ESG, Diversity & Inclusion, and Culture programs to foster belonging, enhance reputation, mitigate risk, promote competitive advantage, engage employees, and meet stakeholder expectations |
|
| All Members Independent | |
Chair:Chairperson: Ms. Norton Moffatt | | Review, approve, and recommend programs and policies to the Board that are designed to identify, measure, monitor, control, and enhance Corporate Social Responsibility/ESG, Diversity & Inclusion, and Culture performance;performance |
| |
| |
| | Monitor the performance of Corporate Social Responsibility/ESG, Diversity & Inclusion, and Culture programs and policies by setting goals, examining social and culture risks, as well as reviewing opportunities and threats that could affect the Company |
| |
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RISK MANAGEMENT, CAPITAL & CAPITALCOMPLIANCE COMMITTEE | | Oversees management’s program to limit or control the material business risks that confront the Company |
|
| | Approves policies and procedures designed to lead to an understanding and to identify, control, monitor and measure the material business risks of the Company and its subsidiaries |
Most ofAll Members Independent | |
Chair:Chairperson: Mr. HughesRosengren | | Plans for future capital needs |
| | Reviews material business risks including, but not limited to, credit risk, interest rate risk, liquidity risk, regulatory risk, legal risk, operational risk, strategic risk, cyber-security risk, and reputation risk |
| |
| | Monitors the Company’s enterprise governance, risk management and compliance (“EGRC”) program, including development and implementation of risk management processes in the area of vendor management, data loss prevention, business continuity, policy management and testing and assessment of operational controls |
| |
| |
| |
| | Ensures compliance with regulations pertaining to capital structure and levels |
| |
2718 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Audit Committee
For information about the Audit Committee and Berkshire’s Audit Committee financial experts, please see table above and the discussion related to the Ratification of the Public Accounting Firm in this proxy statement.
Identification and Evaluation of Director Candidates
The Corporate Governance/Nominating Committee is responsible for identifying and recommending to the Board of Directors candidates for Board membership. For purposes of identifying nominees, the Corporate Governance/Nominating Committee may rely on professional networks and contacts of the committee members and other members of the Board of Directors, outside search firms, and its knowledge of members of the communities served by the Company and its subsidiaries. The Corporate Governance/Nominating Committee will also consider director candidates recommended by shareholders in accordance with the policy and procedures set forth below. From time to time the Corporate Governance/Nominating Committee may also use an independent search firm to identify potential nominees.
In evaluating potential nominees, the Corporate Governance/Nominating Committee determines whether the candidate is eligible and qualified for service on the Board of Directors by evaluating the candidate under certain criteria, which are described below under “Director Eligibility Requirements.” If an individual fulfills these criteria, the Corporate Governance/Nominating Committee will conduct a background check and interview the candidate to further assess the qualities of the prospective nominee and the contributions they would make to the Board.
Criteria for Nomination to the Board of Directors
The Corporate Governance/Nominating Committee has adopted a set of criteria that it considers when it selects individuals to be nominated for election to the Board of Directors. A candidate must meet the eligibility requirements set forth in the Company’s bylaws, including a requirement that the candidate not have been subject to certain criminal or regulatory actions. A candidate also must meet any qualification requirements set forth in any Board or committee governing documents.
If the candidate is deemed eligible and qualified for election to the Board of Directors, the Corporate Governance/Nominating Committee will then evaluate the following criteria in selecting nominees:
•financial, regulatory, and business experience;
• expertise in areas that the board considers important to advancing the company’s strategies;
•in most cases,familiarity with and participation in the local communities;
•integrity, honesty, and reputation in connection with upholding a position of trust with respect to customers;
•dedication to the Company and its shareholders; and
•independence.
The Committee will consider a candidate’s background, training, leadership ability and related skills across a broad spectrum of business, professional, entrepreneurial, educational and creative endeavors, as well as technical skills, experience and know-how in fields and professions outside the financial services industry (such as, by way of example, but without limitation, cyber-security, information technology and management, marketing, business and human capital development) that may assist the Company in strengthening, protecting or promoting its business. The Committee also will consider any other factors the Corporate Governance/Nominating Committee deems relevant, including age, diversity, size of the Board of Directors and regulatory disclosure obligations. We do not maintain a specific diversity policy, but diversity is considered in our review of candidates. Diversity is considered in terms of how a candidate’s background, experience, qualifications, attributes, and skills may complement, supplement or duplicate those of the Board.
With respect to nominating an existing director for re-election to the Board of Directors, the Corporate Governance/Nominating Committee will consider and review an existing director’s Board and committee attendance and performance; length of Board service; the experience, skills, and contributions that the existing director brings to the Board; and independence.
2819 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Director Eligibility Requirements:
•No person shall be eligible for election or appointment to the Board of Directors: (i) if such person has, within the previous ten years, been the subject of supervisory action by a financial regulatory agency that resulted in a cease and desist order or an agreement or other written statement subject to public disclosure under 12 U.S.C. 1818(u), or any successor provision; (ii) if such person has been convicted of a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; or (iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation in such a crime.
•No person shall be eligible for election or appointment to the Board of Directors if such person is the nominee or representative of a company, as that term is defined in Section 10 of the Home Owners’ Loan Act or any successor provision, of which any director, partner, trustee or shareholder controlling more than 10% of any class of voting stock would not be eligible for election or appointment to the Board of Directors.
•No person may serve on the Board of Directors and at the same time be a director of more than two other public companies, or their subsidiaries.
•No person shall be eligible for election to the Board of Directors if such person is the nominee or representative of a person or group, or of a group acting in concert (as defined in 12 C.F.R Section 303.81(b)), that includes a person who is ineligible for election to the Board of Directors.
•The Board of Directors shall have the power to construe and apply the provisions of the Company’s bylaws and other governance documents, and to make all determinations necessary or desirable to implement such provisions, including but not limited to determinations as to whether a person is a nominee or representative of a person, a company or a group, whether a person or company is included in a group, and whether a person is the nominee or representative of a group acting in concert.
•Pursuant to our Corporate Governance Policy, individuals first appointed or elected to the Board of Directors on or after January 1, 2019 will no longer be eligible for re-election to the Board of Directors after their 75th birthday or the completion of their 12th year of service on the Board. For Directors serving before January 1, 2019, who have surpassed or are approaching either or both of these age and service time limits, the Chairperson of the Board and the Corporate Governance/Nominating Committee shall work with any such Board members approaching mandatory retirement to ensure that timing issues are given due consideration and an appropriate transition and renewal of the Board occurs.
Consideration of Recommendations by Shareholders. It is the policy of the Corporate Governance/ Nominating Committee of the Board of Directors of the Company to consider director candidates recommended by shareholders who appear to be qualified to serve on the Company’s Board of Directors. The Corporate Governance/Nominating Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the Board of Directors and the Corporate Governance/ Nominating Committee does not perceive a need to increase the size of the Board of Directors. Recommended candidates will generally be considered along with other potential nominees as part of the Board’s annual review process. To avoid the unnecessary use of the Corporate Governance/Nominating Committee’s resources, the Corporate Governance/Nominating Committee will consider only those director candidates recommended in accordance with the procedures set forth below.
2920 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Procedures to be Followed by Shareholders. To submit a recommendation of a director candidate to the Corporate Governance/Nominating Committee, a shareholder must submit the following information in writing, addressed to the Chairman of the Corporate Governance/Nominating Committee, care of the Corporate Secretary, at 60 State Street, Boston, Massachusetts 02109:
1. The name of the person recommended as a director candidate;
2. All information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934;
3. The written consent of the person being recommended as a director candidate to being named in the proxy statement as a nominee and to serving as a director if elected;
4. As to the shareholder making the recommendation, the name and address of such shareholder as it appears on the Company’s books; provided, however, that if the shareholder is not a registered holder of the Company’s common stock, the shareholder should submit their name and address along with a current written statement from the record holder of the shares that reflects ownership of the Company’s common stock; and
5. A statement disclosing whether such shareholder is acting with or on behalf of any other person and, if applicable, the identity of such person.
In order for a director candidate to be considered for nomination at the Company’s annual meetingAnnual Meeting of shareholders,Shareholders, the recommendation must be received by the Corporate Governance/Nominating Committee at least 120 calendar days before the date the Company’s proxy statement was released to shareholders in connection with the previous year’s annual meeting,Annual Meeting, advanced by one year. The Company has not received any recommendations from shareholders for director candidates to be considered for election at the Company’s 20222024 Annual Meeting of Shareholders.
Board Risk Oversight
The Board oversees the Company’s risk profile and management’s processes for assessing and managing risk, both as a whole board and through its committees. At least annually, the Board reviews strategic risks and opportunities facing the company and certain of its businesses. Other important categories of risk are assigned to designated Board committees that report back to the full Board. In general, the committees oversee the following risks:
| | | | | | | | |
| Audit Committee | | Accounting and Financial Reporting |
| Compliance with Legal and Regulatory Requirements Related to Accounting and Financial Reporting |
| Compensation Committee | | Compensation Programs |
| Corporate Governance/ Nominating Committee | | Governance Policies and Procedures |
| Board Organization and Membership |
| Committee Membership and Periodic Rotation of Chairpersons |
| Corporate Responsibility & Culture Committee | | Customer, Community, and Employee Engagement |
| Reputational Risk and Business Development |
| Talent and Culture Development |
| Environmental Sustainability, Including Climate Risk |
Risk Management, Capital & Capital Compliance Committee | | Credit Risk |
| Interest Rate Risk |
| Liquidity and Capital Risk |
| Operational and Strategic Risk |
| Cyber-security |
| Regulatory & Compliance | Legal, Regulatory, and Compliance Risk |
| Information Security |
3021 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |CORPORATE GOVERNANCE
Code of Business Conduct and Anonymous (Whistleblower) Reporting Line Policy
The Company has adopted a Code of Business Conduct that is designed to promote the highest standards of ethical conduct by the Company’s directors, executive officers and employees. The Code of Business Conduct, sets forth the ethical rules and standards ("code of ethics") by which all employees, officers and directors of the Company and its subsidiaries must conduct themselves, and addresses, among other things, conflicts of interest, the treatment of confidential information, general employee conduct and compliance with applicable laws, rules and regulations. The Code of Business Conduct, which also strictly prohibits harassment of any kind in the workplace, is designed to deter wrongdoing and promote honest and ethical conduct, the avoidance of conflicts of interest, a zero tolerance culture and safe environment free from harassment of any kind, full and accurate disclosure and compliance with all applicable laws, rules and regulations.
Paired with the Code of Business Conduct, the Company has also adopted a related AnonymousWhistleblower Reporting Line (also known as the Whistleblower Reporting Line) Policy,under which the Audit Committee maintains and monitors an anonymous “whistleblower” reporting hotline service that all Berkshire personnel are encouraged to use for reporting actual or potential wrongdoing, apparent or suspected violations of the Code of Business Conduct, or other misconduct by any corporate actors. Both the Code of Business Conduct and the AnonymousWhistleblower Reporting Line Policy are reviewed and acknowledged annually by all of Berkshire’s directors, officers and employees, and both are written and implemented to ensure that no retaliation is permitted against any Company personnel who report an incident of harassment or any other misconduct in good faith. Copies of the Company’s Code of Business Conduct and AnonymousWhistleblower Reporting Line (Whistleblower Reporting Line) Policy are available at the Company’s investor relations website (ir.berkshirebank.com).
Anti-Hedging and Pledging Restriction Policy
The Company has adopted a policy that prohibits hedging of Company common stock for all officers of the Company with the title of vice president or higher, all directors, and all persons in the accounting, executive, finance and legal departments (the “Restricted Group”). While there is no prohibition against employees who are not in the Restricted Group to hedge Company common stock, these employees are prohibited from trading Company common stock while in the possession of material non-public information. Under the policy, no person in the Restricted Group may at any time engage in (i) any short sale of Company common stock or other sale of any equity securities of the Company that they do not own, or (ii) any transactions in publicly-traded options, such as puts, calls and other derivative securities based on Company common stock, including, but not limited to, any hedging, monetization or similar transactions designed to decrease the risks associated with holding Company common stock, such as zero-cost collars and forward sales contracts. Generally, a short sale means any transaction whereby one may benefit from a decline in the Company's stock price. In addition, employees, officers and directors are discouraged from pledging Company common stock as collateral for margin purchases or a loan. However, exceptions to this pledging limitation may be granted, if good cause is shown.
3122 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |DIRECTOR COMPENSATION
Director Compensation
The Company uses a combination of cash and restricted stock to attract and retain qualified candidates to serve on the Board. Restricted stock grants are intended to align directors’ interests with those of the Company’s shareholders. The Compensation and Corporate Governance/Nominating Committees review director compensation and benefits annually and make recommendations to the Board. The following table provides the compensation received by individuals who served as directors of the Company during the 20212023 fiscal year. Mr. Mhatre does not receive separate compensation for his service on the Board.
| | | | | | | | | | | | | | | | | |
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards
($) | All Other Compensation ($)(3) | Total
($) |
| Baye Adofo-Wilson | 68,000 | | 50,000 | | — | | 414 | | 118,414 | |
Deborah P. Bailey(4) | 43,050 | | 46,350 | | — | | — | | 89,400 | |
Rheo A. Brouillard(5) | 56,000 | | 50,000 | | — | | 9,227 | | 115,227 | |
David M. Brunelle(6) | 90,550 | | 50,000 | | — | | 2,271 | | 142,821 | |
| Nina A. Charnley | 1,753 | | 34,050 | | — | | — | | 35,803 | |
Robert M. Curley(7) | 56,000 | | 50,000 | | — | | 126,315 | | 232,315 | |
| John B. Davies | 62,000 | | 50,000 | | — | | 2,109 | | 114,109 | |
J. Williar Dunlaevy(8) | 112,000 | | 50,000 | | — | | 2,153 | | 164,153 | |
| William H. Hughes III | 70,000 | | 50,000 | | — | | 414 | | 120,414 | |
| Jeffrey W. Kip | 10,849 | | 37,850 | | — | | — | | 48,699 | |
Cornelius D. Mahoney(9) | 31,000 | | 50,000 | | — | | 2,109 | | 83,109 | |
| Sylvia Maxfield | 60,000 | | 50,000 | | — | | 2,109 | | 112,109 | |
| Laurie Norton Moffatt | 70,000 | | 50,000 | | — | | 2,109 | | 122,109 | |
| Jonathan I. Shulman | 60,000 | | 50,000 | | — | | 2,109 | | 112,109 | |
D. Jeffrey Templeton(9) | 28,000 | | 50,000 | | — | | 2,109 | | 80,109 | |
| Michael A. Zaitzeff | 36,900 | | 46,350 | | — | | — | | 83,250 | |
| | | | | | | | | | | | | | | | | |
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(1)(2) | Option Awards
($) | All Other Compensation ($)(3) | Total
($) |
| Baye Adofo-Wilson | 60,000 | | 65,000 | | — | | 3,281 | | 128,281 | |
David M. Brunelle(4) | 125,000 | | 65,000 | | — | | 3,412 | | 193,412 | |
| Mary Anne Callahan | 16,877 | | 19,500 | | — | | — | | 36,377 | |
| Nina A. Charnley | 68,000 | | 65,000 | | — | | 1,446 | | 134,446 | |
John B. Davies(5) | 31,000 | | 65,000 | | — | | 3,281 | | 99,281 | |
| Mihir A. Desai | 56,000 | | 65,000 | | — | | 633 | | 121,633 | |
| William H. Hughes III | 56,000 | | 65,000 | | — | | 3,281 | | 124,281 | |
| Jeffrey W. Kip | 63,000 | | 65,000 | | — | | 469 | | 128,469 | |
| Sylvia Maxfield | 81,000 | | 65,000 | | — | | 2,862 | | 148,862 | |
| Laurie Norton Moffatt | 62,000 | | 65,000 | | — | | 3,281 | | 130,281 | |
| Karyn Polito | 50,707 | | 59,150 | | — | | — | | 109,857 | |
| Eric S. Rosengren | 48,195 | | 48,239 | | — | | — | | 96,434 | |
Jonathan I. Shulman(5) | 33,000 | | 65,000 | | — | | 2,862 | | 100,862 | |
| Michael A. Zaitzeff | 60,000 | | 65,000 | | — | | 1,645 | | 126,645 | |
(1)On December 10, 2020, the Board of Directors, acting at the recommendation of the Compensation Committee, adopted a New Director Compensation Program, pursuant to which the Board has the discretion to award newly elected or appointed directors pro rata cash fees and equity compensation as of the date they begin their service on the Board. As a result of this program, the following directors received additional cash fees and stock awards in either July 20212023 or January 20222024 that are reported in this table:
a.Following her electionappointment to the Board of Directors for the first time on May 20, 2021,September 13, 2023, Ms. BaileyCallahan was paid a pro rata amount of cash fees in the amount of $8,050$16,877 on JulyJanuary 15, 2021,2024, for the period from May 20September 13 to June 30, 2021,December 31, 2023, and awarded 1,571779 shares of Company stock on July 1, 2021,January 30, 2024, at a value of $46,350,$19,500, for the period from May 20September 13 to December 31, 2021,2023, which were scheduled to vest in three equal installmentsshares all vested on January 30, 2022, January 30, 2023 and January 30, 2024. Ms. Bailey subsequently resigned from the Board of Directors on October 26, 2021, at which time she forfeited the restricted shares awarded to her on July 1, 2022.
b.Following her appointment to the Board for the first time on December 16, 2021,February 3, 2023, Ms. CharnleyPolito was paid a pro rata amount of cash fees in the amount of $1,753$22,707 on JanuaryJuly 15, 2022,2023, for the period from December 16February 3 to December 31, 2021,June 30, 2023, and awarded 1,1782,854 shares of Company stock on January 30, 2022,July 1, 2023, at a value of $34,050,$59,150, for the period from December 16, 2021February 3 to December 31, 2021, of2023, which 392 shares all vested immediately on January 30, 2022, and the remaining 786 shares will vest in equal installments on January 30, 2023 and January 30, 2024.
c.Following his appointment to the Board for the first time on September 22, 2021,April 5, 2023, Mr. KipRosengren was paid a pro rata amount of cash fees in the amount of $10,849$15,195 on JanuaryJuly 15, 2022,2023, for the period from September 22April 5 to December 31, 2021, and awarded 1,309 shares of Company stock on January 30, 2022, at a value of $37,850, for the period from December 16, 2021 to December 31, 2021, of which 436 shares vested immediately on January 30, 2022, and the remaining 873 shares will vest in equal installments on JanuaryJune 30, 2023, and January 30, 2024.
d.Following his election to the Board of Directors for the first time on May 20, 2021, Mr. Zaitzeff was paid a pro rata amount of cash fees in the amount of $6,900 on July 15, 2021, for the period from May 20 to June 30, 2021, and awarded 1,5712,327 shares of Company stock on July 1, 2021,2023, at a value of $46,350,$48,239, for the period from May 20April 5 to December 31, 2021, of2023, which 523 shares all vested on January 30, 2022, and the remaining 1,048 shares will vest in equal installments on January 30, 2023 and January 30, 2024. Mr. Zaitzeff has informed the Company that a fund managed by HoldCo received the economic benefits of the cash fees and vested shares of the stock award, and that a fund managed by HoldCo and VM GP II LLC will receive their proportionate amounts of the economic benefits of the remaining unvested shares from the stock award.
32 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |DIRECTOR COMPENSATION
(2) Represents the grant date fair value of the restricted stock awards which has been computed in accordance with the stock based accounting rules under FASB ASC Topic 718. Amounts shown are the aggregate grant date fair value of restricted stock awards, with the grant date fair value based on the closing price of the Company’s common stock on the applicable grant date. See Note 20 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2021.awards. Since January 30, 2004, no stock options have been granted to any directors. Directors serving as of December 31, 2021,2023 had the following number of unvested shares of restricted stock and stock options outstanding as of that date:
23 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS |DIRECTOR COMPENSATION
| | | | | | | | |
| Name | Unvested Restricted Stock | Stock Options Outstanding |
| Baye Adofo-Wilson | 4,699 3,147 | | — |
Rheo A. Brouillard | 4,699 | | — |
| David M. Brunelle | 4,699 3,147 | | — |
| Mary Anne Callahan | — | | — |
| Nina A. Charnley | — 2,534 | | — |
Robert M. CurleyMihir A. Desai | 4,699 2,099 | | — |
John B. Davies | 4,699 | | — |
| William H. Hughes III | 4,699 3,147 | | — |
| Jeffrey W. Kip | — 2,578 | | — |
| Sylvia Maxfield | 4,162 3,147 | | — |
| Laurie Norton Moffatt | 4,699 3,147 | | — |
Jonathan I. ShulmanKaryn Polito | 4,162 2,854 | | — |
| Eric S. Rosengren | 2,327 | | — |
| Michael A. Zaitzeff | 1,571 2,665 | | — |
(3)Reflects dividends paid when restricted stock becomes vested.
(4) Ms. Bailey resigned from the Company and Bank Boards of Directors, effective as of October 26, 2021.
(5) Includes $8,813 in imputed income on split dollar insurance recognized by Mr. Brouillard.
(6) Includes $162$130.50 in imputed income on split dollar insurance recognized by Mr. Brunelle.
(7) The total amount included in “All Other Compensation” reflects Mr. Curley’s annual salary in the amount of $120,000 as Chairman of the New York region of Berkshire Bank(5) Messrs. Davies and club dues of $4,206.
(8) Includes $44 in imputed income on split dollar insurance recognized by Mr. Dunlaevy. Mr. Dunlaevy retired from the Company and Bank Boards of Directors, effective as of September 22. 2021.
(9) Messrs. Mahoney and TempletonShulman retired from the Company and the Bank Boards of Directors, effective as of the 20212023 Annual Meeting on May 20, 2021.18, 2023.
Retainers for Non-Employee Directors.The following table sets forth the applicable retainers that will be paid to our non-employee directors for their service on our Board of Directors during 2022.2024.
| | | | | | | | |
| Annual Cash Retainer for Board Service | | $ | $40,000 | | 40,000 |
| Annual Cash Retainer for Board Chair | | $ | $95,000 | | 95,000 |
Annual Cash Retainer for Board Vice Chair(1) | | $ | $65,000 | | 65,000 |
Annual Equity Retainer for Board Service(2) | | $ | $65,500 | | 65,000 |
| Annual Cash Retainer for Audit Committee Chair | | $ | $13,000 | | 13,000 |
| Annual Cash Retainer for all other Committee Chairs | | $ | $6,000 | | 6,000 |
| Annual Cash Retainer for Attendance at Audit Committee Meetings | | $ | $12,000 | | 12,000 |
| Annual Cash Retainer for Attendance at all other Committee Meetings | | $ | $8,000 | | 8,000 |
(1) This role is not filled at this time.
(2) Beginning in 2022, restrictedRestricted equity grants awarded to non-employee directors will vest in full after one year.
3324 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
| | | | | | | | | | | | | | | | | |
| | | | | |
| Proposal 2: Advisory Vote on Executive Compensation | | |
| |
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| |
| Purpose.
Performance.
Progress. |
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Background. In accordance with Section 14A of the Securities Exchange Act of 1934, shareholders are being given the opportunity to vote on an advisory (non-binding) resolution at the annual meetingAnnual Meeting to approve our executive compensation as described below in the Compensation Discussion and Analysis, compensation tables and narrative discussion of NEO compensation presented in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives shareholders the opportunity to endorse or not endorse the Company’s executive pay program.
The purpose of our compensation policies and procedures is to attract and retain experienced, highly qualified executives critical to the Company’s long-term success and enhancement of shareholder value. The Board of Directors believes the Company’s compensation policies and procedures achieve this objective, and therefore recommend shareholders vote “FOR” the proposal.
“Resolved, that the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Securities and Exchange Commission Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.”
Is the Shareholder Vote Binding on the Company?This is an advisory vote only, and neither the Company nor the Board of Directors will be bound to take action based upon the outcome. The Compensation Committee will consider the vote of the shareholders when considering future executive compensation arrangements.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THIS PROPOSAL.
3425 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
| | | | | | | | | | | | | | | | | |
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|
Compensation Discussion and Analysis | | |
| |
| | Purpose.
Performance.
Progress.
|
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In this section we explain our compensation philosophy, describe the material components of our executive compensation program, and review the 20212023 compensation for our Named Executive Officers (“NEOs”) listed below. Their compensation is set forth in the Summary Compensation Table and other compensation tables contained in this Proxy Statement. The following Compensation DiscussionStatement, which should be reviewed in conjunction with this discussion and Analysis (“CD&A”) focuses on the key factors we believe shareholders should focus on in their evaluation of our “Say-on-Pay” proposal. This section also discusses the role of the Compensation Committee (“the Committee”).analysis.
| | | | | |
Named Executive Officers(1) |
| Nitin J. Mhatre | President, Chief Executive Officer, and Director |
George F. Bacigalupo | Executive Vice President, Head of Commercial Banking |
Subhadeep BasuR. David Rosato | Senior Executive Vice President, Chief Financial Officer |
| Sean A. Gray | Senior Executive Vice President, Chief Operating Officer |
| James Brown | Senior Executive Vice President, Head of Commercial Banking |
| Gregory D. Lindenmuth | Senior Executive Vice President, Chief Risk Officer |
Deborah A. StephensonBrett Brbovic | Executive Vice President, Chief Compliance and Regulatory Officer |
James M. Moses | Senior Managing Director, Former Senior Executive Vice President andInterim Chief Financial Officer |
(1)Titles shown are positions held at Berkshire Hills Bancorp,On February 6, 2023, David Rosato joined the Company as SEVP/CFO and in some cases are different from titles held at Berkshire Bank, a fully owned subsidiary of Berkshire Hills Bancorp. Ms. Stephenson became an NEO forMr. Brbovic returned to his duties as Chief Accounting Officer. James Brown joined the first time at the end of 2021. Ms. Stephenson’s compensation in 2021 was primarily managed by Mr. Lindenmuth.Company on January 18, 2023.
35 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Executive performance and compensation in 2021 were focused on transitioning executive management, setting out a new strategic plan to improve Company performance and franchise value, and executing on 2021 goals while also managing the ongoing impacts of the global COVID-19 pandemic. Overview. The compensation program is manageddesigned so that overall pay depends onlevels reflect performance against targetsover the short-term and is alignedlong-term. Performance metrics are chosen to align with our strategic priorities and drive shareholder interests.value. The Compensation Committee (“the Committee”) considers market data and advice from its independent compensation consultant, Meridian Compensation Partners, LLC ("Meridian") when making its decisions.
Named Executive Officers – A Year2023 Performance Summary
The Committee seeks to improve operational performance over the long-term and carefully selects performance metrics consistent with this goal in the NEOs' incentive programs. The Company’s 2023 operational performance was mixed given rapidly rising interest rates, which increased the cost of Significant Leadership Transitions
The Board approvedfunds and reduced loan growth. Additionally, bank failures impacted deposits and depressed stock valuations for the appointment of Nitin J. Mhatre to serve as the new President and Chief Executive Officer of the Company and the Bank effective January 29, 2021. The terms of Mr. Mhatre’s employment with the Company were disclosedsector. Despite these challenges, Berkshire’syear-over-year performance was favorable on all metrics used in his Employment Agreement, which is attached as Exhibit 10.1its incentive plans compared to the median of its peer group.
| | | | | | | | |
| Year-Over-Year Change |
| Measure | Berkshire | Peers |
| Operating Return on Tangible Common Equity (ROTCE) | (0.02)% | (3.78)% |
| Operating Return on Assets (ROA) | (0.11)% | (0.26)% |
| Operating Pre-Tax Pre-Provision Net Income (PPNR, $ millions) | +$5.88 | $(37.38) |
| Net Loan Charge-offs/Average Loans | (0.01)% | +0.08% |
| ESG Ratings and Impact | Top quartile | NA |
Note: The Company’s Current Reportfinancial incentive metrics are non-GAAP operating measures which are reconciled to GAAP measures in Appendix A. For comparison purposes, the operating ROTCE measure includes unrealized losses on Form 8-K filed with the SEC on January 26, 2021.
Mr. MhatreAFS securities. Peer operating PPNR is a senior banking executive with 25 years of community and global banking experience. He served most recently, as Executive Vice President, Community Banking at Webster Bank. In this role, he was responsible for profitable growth of the Community Banking segment at the $31 billion bank and led a diverse team of more than 1,500 employees. Previously, he spent more than 13 years at Citi Group in various leadership roles across consumer-related businesses globally. Following Mr. Mhatre’s employment, Acting CEO Sean Gray resumed his full time focus on his ongoing responsibilities as the President and Chief Operating Officer of the Bank.
Following the resignation of James Moses as Senior Executive Vice President/Chief Financial Officer of the Company and the Bank in March 2021, the Company recruited Subhadeep Basu to assume these responsibilities. Mr. Basuestimated. Peer data source - S&P Global Market Intelligence. Peer group is a senior executive with more than 20 years of global banking, financial and risk management expertise leading transformation and growth. He served most recently as Senior Vice President of Global Institutional Services at State Street, and prior to that he was Senior Vice President of Finance, leading global regulatory reporting, capital strategy and optimization and finance and risk infrastructure. Before joining State Street, he spent more than 15 years at Citigroup, Bank of America, and Ally Financial.
During 2021, Tami Gunsch resigned from her position as Senior Executive Vice President/Head of Consumer Banking. Her position was divided into two positions. Lucy Bellomia was recruited as Executive Vice President/Head of Retail Banking and Ellen Steinfeld was recruited as Executive Vice President/Head of Consumer Lending and Payments. Deborah Stephenson, existing Senior Executive Vice President/Chief Compliance and Regulatory Officer, was designated as a Named Executive Officer pursuant to SEC guidelines and appears as an NEO for the first time in the compensation tables.peer group discussed below.
The above transitions were handled seamlessly, reflecting the excellent succession plan and transitions protocols in place.Transitions also benefited from strong recruitment and retention of other management and integration of leadership around common goals of charting a new strategic direction and exceeding expectations in delivering on current year objectives. Compensation payments shown in the compensation tables include pro rating of compensation amounts based on time in service in the designated roles.
3626 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
New Strategic Plan
In May 2021, the Company announced its Berkshire’s Exciting Strategic Transformation (BEST) plan. The comprehensive BEST plan is targeted to improve the customer experience, deliver profitable growth, enhance stakeholder value and strengthen Berkshire’s community impact with improved focus on long-term efficiency, its customers, and its communities. The plan has three major pillars; optimize, digitize, and enhance. The BEST plan has five major goals to enhance shareholder value over the three-year plan period:
•Return On Tangible Common Equity (ROTCE):10 -12%
•Return on Assets (ROA):1.00 - 1.05%
•Annual Pre-tax Pre-Provision Net Revenue (PPNR):$180 - 200 million
•Net Promoter Score (NPS) in top quartile among New England banks
•ESG ranking in the top quartile nationally based on composite metrics tracked by the Company
2021 Financial Results and Operations
The Company rebounded strongly from the pandemic impacted performance in 2020. Earnings per share recovered to $2.39 from a loss of $10.60 per share in 2020 and were up 21% over $1.97 reported in 2019. Return on equity nearly doubled to 10.18% in 2021, compared to 5.75% reported in 2019, and advanced more rapidly than peers. Earnings improvement reflected stronger credit performance and also included gains achieved in disposing of lower return business lines.
The Company’s 2021 pandemic support of its markets included processing of loan forgiveness for the Paycheck Protection Program (“PPP”) phase I loans, and facilitating PPP phase II loans in 2021 in partnership with a third party. Collectively, these loans provided more than $1 billion in support to Berkshire’s markets. The Company also continued to work with borrowers needing COVID related loan modifications, which originally totaled more than $1.5 billion, gradually helping nearly all of the borrowers to return to regular payment schedules by year-end 2021.The related improvement in the Company’s credit profile contributed strongly to the reduction in the loan loss provision compared to 2020. The Company’s earnings also benefited from processing of PPP loan forgiveness and loan applications, together with a decrease in nonperforming loans.
The Company supported its workforce with remote work while maintaining physical and digital customer access despite managing branch operating reductions during pandemic surges. The Company’s emphasis on technology and virtual customer service facilitated branch consolidations and other efficiencies that enhanced customer engagement and supported improved profitability.
Under its new executive leadership, the Company is expanding its frontline bankers, its digital technologies, and its fintech partnerships in support of its vision to be a high performing, leading socially responsible community bank in New England and beyond.
20212023 Say on Pay Voting Results.Results
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At the last Annual Meeting of Shareholders on May 18, 2023, shareholders voted 97% in support of our advisory Say on Pay proposal indicating their approval of the NEO compensation as set forth in the Proxy Statement. The Compensation Committee values shareholder feedback and considers such feedback as part of its review and considerations related to executive pay programs. |
At the last annual meeting of shareholders on May 20, 2021, shareholders voted 97% in the affirmative to approve the NEO compensation as set forth in the Proxy Statement. The Compensation Committee values shareholder feedback and considers such feedback as part of its review and considerations related to executive pay programs.
37 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Summary of 20212023 Compensation Decisions
Our executive compensation program targetsphilosophy is to target median NEO pay compared to our peer group when we achieve our goals, with actual pay designed to vary above and below or above target based on our performance against our goals. Our target direct compensation for 2021 was not materially changed from the last two years.
As in the past, short-term incentive compensation was paid in cash and varies to reflect our performance of annual goals/budget. Long-term compensation was granted in the form of restricted stock which continued to consist of 60% performance-based shares with a three-year cliff vesting schedule, and 40% time-based restricted stock with 3 year incremental vesting (i.e. 1/3 each year).
Actual 2021 performance exceeded internal objectives and most external sell-side consensus estimates early in the year, as the Compensation Committee set challenging, yet achievable goals. As a result, the short-term incentive compensation was paid at 150% of target. This compares to 2020 NEO short-term incentive compensation which was paid 50% below the original target due to pandemic impacts on the Company.
The three year long-term incentive performance grants for the performance period 2019 – 2021 did not achieve threshold goals due to the Company’s relative underperformance primarily in 2020, and this component of incentive compensation was forfeited.This compensation had constituted approximately 24% of total direct compensation when granted in 2019. The maturing long-term performance compensation in 2020 was also forfeited in that year.
Compensation earned in 2021 rewarded our performance improvement over 2020 and achievement exceeding our budget and first year BEST goals. In comparison, compensation earned in 2020 was significantly lower than the prior year, as a reflection of 2020 performance and associated challenges.This reflects our continued pay-for-performance philosophy.
actual performance. The Compensation Committee believes the compensation program provided appropriate performance incentives against pre-establishedcompensation levels to incent achieving goals that drive shareholder value.
•Salaries were increased in a range of 3-8% over 2022 for those NEOs who were employed in both years.
•Short-term and long-term incentive opportunities were established as a percentage of salary.
◦Targeted short-term incentive opportunities were increased compared to 2022 for the Chief Financial Officer, Head of Commercial Banking, and Chief Risk Officer positions, reflecting greater market-based opportunities.
◦Targeted long-term incentive opportunities were little changed from 2022.
•Short-term incentive goals reflected both strategic improvement objectives and industry conditions. Management did not fully achieve targets and the incentive pool was funded at 93% of target.
•Long-term financial incentive goals for improvement were mostly unchanged from the prior year.
•For the three NEOs employed in their positions for 2023 and in consideration of2022, total targeted direct compensation increased 7% year-over-year, and incentivized further strategic progress. For the Company’s 69%above three NEOs, total shareholder return in 2021, as well as the development of the BEST plan for future franchise enhancement.direct compensation earned was 1% below target and represented an 8% decrease from 2022 levels.
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COMPENSATION DISCUSSION AND ANALYSIS
Highlights of our Compensation and Governance Programs | | |
| WHAT WE DO |
Pay for Performance:A significant portion of each NEO’s annual direct compensation target is variableat-risk and tied to companyCompany and individual performance results. The Company usesOur incentive plans represent a mixbalance of performance metrics that reflect annual and our short- and long-term plans provide a balanced timeframe for incentive opportunities. Our long-term incentive program grants the majority (i.e., 60%) asthree-year performance shares that vest based on pre-defined performance goals.periods. |
Link Performance Measures with Strategic Objectives:Performance measures and individual goals for incentive compensation are linked to strategic, operating, and financial goals approved by our Board and designed to create long-term shareholder value. |
Annual Say-on-Pay Vote: We conduct an annual Say-on-Pay advisory vote and evaluate voting results. |
Shareholder Engagement: As part of the Company’s shareholder outreach program, members of the Committee and members of management welcome engagement with shareholders and management solicits shareholder input to better understand their perceptions and views on our executive compensation program. |
Independent Compensation Consultant:The Committee engages its own independent compensation consultant to review the Company’s executive compensation program and practices. |
Stock Ownership Guidelines: We have significant stock ownership guidelines requiring our executives and directors to hold substantial equity ownership. |
Clawback Policy: The new mandatory clawback policy we adopted in 2023 allows the Board to recover incentive compensation paid to an executive if the financial results that the compensation was based on are materially restated due to fraud, intentionalmaterial noncompliance with financial reporting requirements or misconduct or gross negligence.by an executive officer. |
Incentivize Sound Risk Management: Our compensation program includes features intended to discourage employees from taking unnecessary and excessive risks, including balanced performance metrics, emphasis on long-term shareholder value creation, and clawback provisions. The Chief Risk Officer conducts an annual risk assessment which is used by the Committee in assessing the soundness of the compensation program. |
| | |
| WHAT WE DON'T DO |
Gross-ups for Excise Taxes:We have not provided change-in-control tax gross-upsgross-up clauses since 2008,2009, nor do we have any intentionintend to include this feature in future contracts. At this time, one legacy NEO change in control agreement remains in place with this feature;place; the potential impact of this contract clause is not material. |
Hedging and Pledging:All of our officers with the title of vice president or higher, non-employee directors, and all persons in the accounting, executive, finance and legal departments are prohibited from engaging in hedging, monetization, derivative or similar transactions with Company securities. We also have a policy that discourages pledging of company securities, with very limited exceptions. |
Employment Contracts:Our executives, with the exception of the CEO, are all employed “at will” and the relationship may be terminated by the Company or the employee at any time without any severance payments. The CEO is employed under a three yearthree-year contract. Documented change-in-control arrangements align management and shareholder interests. |
Dividends on Unvested Equity Awards:We do not pay dividends on any restricted stock compensation until vested. |
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COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy and Decision Making Process
The primary philosophy and objective of our compensation program is to align the interests of our executives with shareholders by rewarding performance against established corporate financial and strategic goals, solid executive leadership and strong individual executive performance. We strive to attract, motivate and retain a highly qualified and talented team of executives who will lead Berkshire to maximize long-term performance and earnings growth. The Committee regularly reviews executive compensation program elements to ensure they are consistent with safe and sound business practices, regulatory requirements, emerging industry best practices and shareholder interests.
Executive Compensation Key Principles
Our philosophy is to provide an executive compensation program that rewards long-term value for our shareholders and promotes sound risk management. The key principles that support our philosophy are:
üAttract and retain highly talented executives committed to our success
ü Pay for performance
ü Align executive interests with those of our shareholders
ü Manage risk through oversight and compensation design features and practices
Important features of our program are:
üA significant portion of direct pay is variableat-risk and performance basedperformance-based
üA meaningful portion of pay is equity-basedin the form of Company stock to align our executives
with shareholder interests
üThe Sixty percent (60%) of the NEOs’ long-term incentive value is 60%granted in the form of performance-based restricted stock (performance shares), which vests at the end of a three-year period based on performancefinancial performance.The remaining 40% of NEO’s long-term incentive value is granted in restricted stock vesting on a pro-rata basis over three years.The time-based portion of the award is meant to support executive retention and 40% based on timesupport meaningful stock ownership by our NEOs.
The chartsinformation below illustrateillustrates our 20212023 target direct compensation for the three NEOs named at year-end. The directwho served the full year in their positions and illustrates that at-risk and equity compensation structure is targeted towardsslightly higher than the average of our peer median, and NEO highlights include:group.
•44% Variable Performance Based
•32% Equity Based
| | | | | | | | | | | | | | |
| CEO | Other Full Year NEOs |
| At-Risk | Equity-Based | At-Risk | Equity-Based |
| Berkshire | 64% | 37% | 55% | 31% |
| Peer Average | 62% | 33% | 53% | 29% |
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COMPENSATION DISCUSSION AND ANALYSIS
Key Principles That Support Our Philosophy | | | | | | | | |
| Attract and retain highly talented executives committed to our success | l | Provide competitive total compensation that enables us to attract and retain highly talented executives with experience and leadership abilities to grow and sustain our business |
| l | Target total compensation opportunities to reflect the median of market; defined as banks similar in size and business model to Berkshire |
| Pay for performance alignment | l | Measure our success through a balanced portfolio of performance metrics that rewards corporate and individual success |
| l | A significant portion of total compensation is “at risk”“at-risk” and based on short and long-term performance |
| l | Financial performance results fund our annual incentive plan and determine a portion of long-term equity vesting |
| l | Long-term equity compensation was granted with 60% of the grant tied to 3-year performance and 40% time-based with vesting over 3 years |
| Align executive interests with those of our shareholders | l | Performance goals are directly aligned with our strategic and operating objectives targeted towards long-term shareholder value |
| l | Rigorous stock ownership requirements to ensure our executives hold stock throughout their tenure as executives |
| l | A significant portion of executive compensation, consisting of our long-term incentive, is in the form of Company shares |
| Manage risk through oversight and compensation design features and practices | l | Total compensation program incorporates a balanced approach that includes pay that is fixed and variable, short- and long-term, and in the form of both cash and equity |
| l | Multiple goals in our incentive plans to reinforce financial, operational, risk, and shareholder considerations |
| l | Committee can apply discretion to negatively adjust incentive compensation in consideration of risk management objectives |
| l | Balance of short-term and long-term incentives, cash and equity, annual and multi-year performance periods, with 3 year3-year performance in the long-term plan |
| l | Incentive plan caps for maximum payments |
| l | Clawback policy that allows for recoupment of compensation for financial restatement or misconduct |
Compensation
Drivers | l | Incentive plans designed to encourage achievement of our strategic business goals and reinforce our business values and support growth in shareholder value |
| l | Pay levels that are fair, competitive, and internally equitable |
| l | A focus on the attainment of our vision, business strategy, operating imperatives, and results |
| l | Recognition of Company and individual performance |
| l | Consideration of market and best practices |
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COMPENSATION DISCUSSION AND ANALYSIS
Decision-Making Process
Our Committee, which is composed solely of independent directors, is responsible for establishing, implementing and continually monitoring all elements of compensation for the NEOs.
| | |
Setting Performance Goals |
•Each year the Committee reviews our compensation program to determine competitiveness and effectiveness, and evaluates whether any changes should be made for the next fiscal year.
•Annually, the Committee establishes Company financial and CEO individual performance goals which are set to be challenging, yet achievable.The CEO sets individual performance goals for each of the other NEOs, subject to the review of the Committee. The individual goals are designed to drive our strategic corporate goals.
•The Committee meets regularly throughout the year, both with management and in executive session to review Company performance against the performance goals.
•In the first quarter of each fiscal year, the Committee approves the components of compensation for each NEO. As part of the planning process, performance goals are set for each corporate performance measure.
•The Committee annually conducts a review of each NEO and the Company’s performance measured against established financial and individual performance goals. As part of this review process, the CEO reviews with the Committee the performance of each NEO relative to the individual goals and presents his compensation recommendations based on his review. The Committee then independently reviews and, if desired, modifies any compensation recommendations prior to approving all compensation decisions for the NEOs.
•The CEO’s performance is reviewed by the Committee in conjunction with a self-assessment and a formal CEO evaluation process and discussion with other independent directors. The CEO is not present when the Committee makes decisions on his compensation. The Committee meets with the CEO to present its decisions and review the Board’s assessment of his performance.
•The Committee’s objective is to ensure that total compensation paid to the NEOs is fair, reasonable and performance based, while aligning with shareholder interests. In addition, the Committee annually conducts an executive compensation review with the compensation consultant to set compensation opportunities and ensure market competitiveness. The consultant also provides periodic assessment of pay-performance alignment.
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Contribution from the Independent Compensation Consultant |
•Each year the Committee meets with the compensation consultant to review industry compensation trends and review current market compensation data. During 2021, the Committee’s independent compensation consultant provided consultations, data and advice to the Committee on request.The Compensation Committee Chair has regular contact with the independent consultant who also meets in executive session with the Committee on request.
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COMPENSATION DISCUSSION AND ANALYSIS
Factors Considered in Compensation Decision Process
The Committee considers many factors when making pay decisions throughout the year. In addition to theThe Committee considers various analyses, information, and input, which routinely include:
> Peer compensation market data provided by the independent consultant the Committee also considers various analyses, information, and input, which may include:
> Overall operational and financial performance
> Total shareholder return on an absolute and relative basis and stock price performance
> Executive individual performance results relative to their individual financial and strategic goals
> Strategic plan progress and performance relative to annual budget
> Demonstration of behaviors that support our culture and brand
> Support of corporate responsibilitySustainability, community impact, and broader environment, social and governance (ESG) goalsprograms
> Support of human capital and diversity, equity & inclusion (DEI) activities
> Executive stock ownership levels
> Qualitative input from the Committee and other independent directors
> External influences, economic conditions, and industry factors
> Risk review considerations
> Income tax factors
> Internal equity
> CEO pay ratio
> Compensation trends and best practices
> Advisory Say on Pay voting results
Due to the pandemic and the CEO transition, the Committee endeavored to be particularly attentive to input from internal and external sources in order to have the most comprehensive understanding and communications related to Company performance and executive compensation.
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COMPENSATION DISCUSSION AND ANALYSIS
Benchmarking Analysis - Compensation Peer Group
The Committee considers the structure of compensation programs and pay levels at other publicly traded banks similar in size and business model to Berkshire when evaluating our compensation program. Typically theThe Committee’s independent compensation consultant conducts a comprehensive competitive market analysis annually using the peer group and other industry survey data. However, given the uncertainty resulting from the pandemic,data to provide reference for the Committee decided not to request a full formal update from its independent compensation consultant since thein setting pay program and targets were remaining generally the same.making pay decisions.
20192023 Peer Group:The peer group developed in 2019 by the consultant in conjunction with management and approved by the Committee is shown below. This is the peer group used to update CEO benchmarking for reference when hiring the new CEO in January 2021. (Note: one 2019 peer bank, CenterState Bank was excluded due to its acquisition by South State Corporation). When it was developed, this group of 24 banks reflected banks approximately ½ to 2x Berkshires’ size and had a median asset size of $13.3 billion, placing Berkshire Hills Bancorp at the 54th percentile compared to this peer group. The peer group is listed below.
| | | | | |
Ameris Bancorp | Home BancShares, Inc. |
Atlantic Union Bankshares Corporation | Independent Bank Corp. |
BancorpSouth Bank | NBT Bancorp, Inc. |
CenterState Bank Corporation | Old National Bancorp |
Community Bank System, Inc. | Renasant Corporation |
Customers Bancorp, Inc. | Simmons First National Corporation |
First Financial Bancorp | South State Corporation |
First Merchants Corporation | TowneBank |
First Midwest Bancorp, Inc. | Trustmark Corporation |
Fulton Financial | United Bankshares, Inc. |
Great Western Bancorp, Inc. | United Community Banks, Inc. |
Heartland Financial USA, Inc. | WesBanco, Inc. |
2021 Peer Group:In June 2021July 2022 the consultant updated the peer group. Thegroup to be used in the fall of 2022 to benchmark executive pay in preparation for setting 2023 pay levels. As in the past, the criteria reflected exchange traded banks in the Northeast of similar size (i.e. approximately ½0.5x to 2x Berkshires’Berkshire's size). Banks involved with mergers, banks with different business models, and smaller banks were excluded. The result was a peer group of 18 banks with a median asset size of $12.2$12.1 billion, positioning Berkshire at the 50th percentile based on asset size. The peer group is listed below:
| | | | | |
| Brookline Bancorp | | | | | Independent Bancorp, Inc. |
Brookline Bancorp | Lakeland Bancorp |
| Community Bank System | NBTLakeland Bancorp, Inc. |
| Connect One | NBT Bancorp Inc. |
| Customers Bancorp, Inc. | Northwest BancsharesOceanFirst Financial Corp. |
| Dime Community | Provident Financial Services |
| Eagle Bancorp, Inc. | OceanFirst Financial Corp.S&T Bancorp |
| Eastern Bankshares | Sandy Spring Bancorp Inc. |
| First Commonwealth Financial | ProvidentTompkins Financial ServicesCorporation |
| Flushing Financial Corporation | S&T Bancorp |
Fulton Financial | Sandy Spring Bancorp |
Independent Bank Corp. | Tompkins Financial |
Investors Bancorp | WSFS Financial Corporation |
4431 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Program Elements and Pay Decisions
Direct compensation consists of three main components: Base Salary, cash based Short-Term Incentive (“STI”), and stock basedstock-based Long-Term Incentive (“LTI”).The total of these three components is referred to as Direct Compensation.Total compensation includes a fourth component of Other Compensation which includes Benefits and Perquisites. Incentive basedIncentive-based compensation includes the use of non-GAAP performance measures. For a reconciliation of non-GAAP measures to their most directly comparable GAAP financial measures, please see Appendix A. Compensation program elements and pay decisions are determined in a balanced framework to achieve program objectives.
Base Salary
| | |
The Company’s base salary program is designed to provide competitive base pay reflective of an executive’s role, responsibilities, contributions, experience, leadership, and performance. Salaries are generally targeted to be within the range of market median and are expected to sufficiently discourage inappropriate risk takingrisk-taking by executives. Incentive compensation targets are tied to base salary, so salary changes flow through to other compensation program components. |
20212023 Salary Summary. Base salaries are typically reviewed at the beginning of each year based on the Committee’s review of market data, executive performance and internal equity. There were no changesBased on the market analysis conducted by the Committee’s independent consultant, the Committee adjusted salaries in the 3% to 8% range. The Chief Financial Officer was hired on February 6, 2023 at an annual salary of $500,000. The Head of Commercial Banking was hired on January 18, 2023 at an annual salary of $470,000. For these two positions, base salaries in the 2021 salaries compared to 2020 salaries for each role shown below. Actualtable reflect actual salaries paid in 2021 were prorated based on time2023.
| | | | | | | | | | | |
| 2022 | 2023 | Percent |
| Role | Salary | Salary | Change |
| President and Chief Executive Officer | $775,000 | $835,000 | 8% |
| Chief Financial Officer | NA | $432,692 | NA |
| Chief Operating Officer | $566,500 | $584,000 | 3% |
| Head of Commercial Banking | NA | $430,231 | NA |
| Chief Risk Officer | $345,000 | $355,350 | 3% |
Note: The salary of the former Interim Chief Financial Officer was increased by 3% to $253,575 in position for the new CEO and CFO.2023 from $245,000 in 2022.
| | | | | | | | |
| 2020 | 2021 |
| Role | Salary | Salary |
| President and Chief Executive Officer | $725,000 | $725,000 |
| Chief Operating Officer | $550,000 | $550,000 |
| Chief Financial Officer | $430,000 | $430,000 |
| Head of Commercial Banking | $375,000 | $375,000 |
| Chief Risk Officer | $300,000 | $300,000 |
| Chief Compliance and Regulatory Officer | $275,000 | $275,000 |
Note:Table does not include adjustments for the COO’s service as Acting CEO in 2020 & 2021, although such pay is reflected in the Summary Compensation values.
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COMPENSATION DISCUSSION AND ANALYSIS
Short-Term Incentive Program (STI)
| | |
The Company’s short-term incentive compensation program is designed to compensate executives for executing the Company’s strategic plan and achieving critical annual performance goals.The STI program provides meaningful “pay-at-risk” that is earned each year based on performance results. It also seeks to motivate and reward achievement of specific Company, business unit and individual performance goals with competitive compensation when performance goals are achieved; above or below median pay when performance results are above or below goals. |
20212023 Short-Term Incentive Summary: There were no material changes to target short-termTarget incentive opportunities which remained unchangedare set as a percentage of salaries (alsobase salaries.Target incentive opportunities were unchanged from the prior year for 2020). Actual incentive payoutsthe Chief Executive Officer and Chief Operating Officer positions and were earnedincreased for the other NEO positions.
Performance metrics and goals were established at 150% of target in 2021 due to outperformance on all targets. In comparison, payouts were only 50%the beginning of the original target in 2020, reflecting our pay-for-performance philosophy with underperformance duringyear.In the pandemic. Individualsecond quarter of 2023, the Committee determined that the macroeconomic environment and related bank failures had a profound effect on the banking industry - beyond the scope of the planning assumptions originally used to develop the Company’s forecasts and budgets.The Committee thoroughly discussed the following: 1) whether management reasonably should have been able to forecast the current environment; 2) the impact of non-achievable goals on potential business performance; and 3) alternatives to ensure that the management team remained focused on financial performance and shareholder value throughout 2023.The Committee determined that it was not usedin the best interests of shareholders to vary payouts in recognitionhave what was perceived as non-achievable goals for the remainder of 2023 that were for the most part outside of the teamworkNEOs' span of control. The Committee also recognized management's leadership in positioning the Company favorably in response to the challenges facing the industry. Therefore, the Committee used the following approach to the Company’s transformation.short-term incentive program for 2023:
•Performance for January 1 through June 30, 2023 was measured using the goals established at the beginning of the year. Overall performance was achieved at 78.2% of target.
•Performance for July 1 through December 31, 2023 was measured using goals that reflected the interest rate environment and the impact of bank failures on certain elements of business performance such as deposits.Overall performance was achieved at 108.5% of target.
•The performance outcomes were averaged, resulting in 93.3% goal achievement for the year. If average performance on the Corporate Scorecard had been over target, the Committee would have capped the STI funding pool to 100% of target.
The Committee considers these actions appropriate given the bank failures and industry funding challenges in 2023.It does not anticipate using this approach in the normal course of its compensation design or ongoing decision making.
Overview of Process.The Participation in the Company’s executive STI program includes a group of executive and senior managers,executives, including the NEOs. The Committee sets and approves incentive award targetstarget payments for each participant (defined as a percentage of salary) at the start of each year, based on competitive market data. An incentive pool is established based on the total of the targetstarget payments of plan participants.
The actual STI pool funding is primarily determined based on a formulaic calculation of Company performance against defined quantitative financial metric goals,measures, without discretion (“the Corporate Scorecard”). The same five measures were used in 2023 and 2022.
The Committee sets threshold, target, threshold and stretch goals for each incentive metricfinancial measure based on the business plan and Board approved budget. Target performance goals (reflective of our budget) are expected to have some stretch and not be “guaranteed”. Threshold performance goals and awards are intended to reward solid performance but at reduced payout levels. Stretch performance is expected to represent strong performance that is unlikely, but possible, if we exceed all our goals. Thresholds are generally set at 80% of target and stretch goals are generally set at 120% of target.
Each metricperformance measure (see tabletables below) is equally weighted (i.e. 20% for each of the five financial metrics)performance measures) The incentive pool funding at year-end is based on actual corporate performance against the
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COMPENSATION DISCUSSION AND ANALYSIS
performance targets, with the total pool funding ranging from 0% - 150% of the payment target. The weighted metricsmeasures arereferred to as the Corporate Scorecard.Additionally, one metric Performance below threshold receives no compensation. Performance at threshold receives 50% of targeted compensation. Performance at stretch receives 150% of target, which is chosen as a trigger or gate, with no funding of the pool if that triggermaximum for each performance goal. Performance between threshold and stretch is not met.compensated proportionately to the variance from target.
The Committee approves the Corporate Scorecard as well as the President and Chief Executive Officer’s individual goals.The CEO prepares goals Goals are developed for NEOs; the Committee can modifyother NEOs to support the goals at its discretion and approves the final goals.Corporate Scorecard. Once the Corporate Scorecard results and pool funding are known, individual performance is assessed to determine and allocate the actual awards from the amount that has been funded to the incentive pool. The Committee determines individual awards in consideration of Individual performance but with the executive's performance. The Committee may use discretion to consider other factors such asincluding Company performance shortfalls and/orshortfalls; regulatory and safety and soundness concerns and/or based onconcerns; and risk management considerations.
The maximum award for any participant, in consideration of Corporate and Individual performance, is capped at 150% of that participant’s payment target. The total awards for all participants do not exceed the total incentive pool. Given the changes to the incentive program for 2023, the Committee decided that the overall STI funding pool would be capped at 100% of target-level performance.
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COMPENSATION DISCUSSION AND ANALYSIS
Target Incentive Opportunities. For 2021, as in previous years, individual NEO STI target amounts were established at and defined as a percent of salary. There were no material changes in 2021 annual incentive targets compared to the original 2020 incentive targets. In 2020, STI target amounts were reduced by 50% from the original target amounts due to the impacts of the emergence of the COVID 19 pandemic. The table below illustrates the annual incentive target payment amounts, expressed as a percentage of salary.
| | 2020 Original | 2021 |
| 2022 | | | 2022 | 2023 |
| Role | Role | Target % of Salary | Target % of Salary | Role | Target % of Salary |
| President and Chief Executive Officer | President and Chief Executive Officer | | 75% | | 75% | President and Chief Executive Officer | 75% |
| Chief Operating Officer | Chief Operating Officer | | 60% | | 60% | Chief Operating Officer | 60% |
| Chief Financial Officer | Chief Financial Officer | | 45% | | 45% | Chief Financial Officer | 45% | 55% |
| Head of Commercial Banking | Head of Commercial Banking | | 45% | | 45% | Head of Commercial Banking | 45% | 55% |
| Chief Risk Officer | Chief Risk Officer | | 30% | | 30% | Chief Risk Officer | 30% | 45% |
| Chief Compliance and Regulatory Officer | | 30% | | 30% |
Note:Table does The former Interim CFO was not include adjustments fora participant in the COO’s serviceexecutive incentive program. His incentive compensation was based on his ongoing responsibilities as Acting CEO in 2020 & 2021.Chief Accounting Officer.
Company MeasuresGoals and Funding of the Incentive Pool
The Committee establishes performance goals for the Corporate Scorecard that determine the pool available for payout of incentive compensation. TheIn 2023, as in prior years, the Committee also establishesestablished plan goals near the start of the year based on its 2023 performance expectations, which generally targeted improvements over year-end 2022 run rate levels. During the first quarter, a minimum trigger or gate levelnumber of performance, which is defined as 75%large bank failures led to concerns about the stability of targeted core earnings per share, which must be achievedbanking industry deposits, and the Federal Reserve Bank created an emergency funding facility to support the industry. In this environment, funding costs increased in orderthe industry, leading to lower profitability through the rest of the year. As a result, the Committee established new goals for the plansecond half of 2023, reflecting lowered expectations for financial performance and providing an incentive for initiatives to fund any compensation.Oncemitigate the minimum is achieved,earnings impact of industry conditions.
During the incentivefirst half of 2023, the Company's financial performance was generally in the midrange between threshold and target for the four financial measures in the STI scorecard. The banking industry crisis described earlier began to affect funding costs and margins in March, with continuing impact through the rest of the year. Based on the scorecard achievement, a pool funding is determinedrate of 78.2% was achieved for the first half of the year.
Significant management actions included:
•Increased collateral pledging and lengthening of funding maturities to further enhance liquidity.
•Maintained momentum of diversified loan growth.
•Talent recruitment taking advantage of opportunities resulting from bank failures, as well as ongoing impacts of bank mergers.
•Early in 2023, the Company also completed the recruitment of a new Chief Financial Officer and Head of Commercial Banking, which were two NEO positions which were vacant at the start of the year. These new hires brought considerable talent and expertise and integrated well with the existing team.
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COMPENSATION DISCUSSION AND ANALYSIS
During the second half of 2023, the Company's financial performance was at or above target based on Company performance relative its performance goals.
The Committee established five corporate performance metrics, evenly weighted, to constitute the performance measuresrevised goals for the operationfinancial measures in the scorecard. Based on the scorecard achievement, a pool funding rate of 108.5% was achieved for the second half of the 2021 STI (the “Corporate Scorecard”). This is similar toyear. Significant management actions included:
•Through careful pricing disciplines, the approach in years prior to 2020. The five measures chosen for 2021 are shown below. These goals were establishedpace of margin erosion declined in the second quarterhalf of 2021the year.
•Loan growth was continued, albeit at a reduced rate.
•Focused risk management resulted in orderproblem asset resolutions and increased recoveries, with the net charge-off rate declining to include consideration of input and plans from new executive management that joined the Companya five-quarter low in the firstfourth quarter.
•Procurement and expense management procedures were intensified.
•Management pursued a number of initiatives to help mitigate earnings pressures, including:
◦Consolidating four branches
◦Disposing of excess back-office premises
◦Establishing a plan for a company-wide workforce realignment implemented after year-end
◦Executing a securities sale near year-end with proceeds used to reduce higher costing borrowed funds, benefiting future net interest income.
The Committee also establishedpool funding rates for the plan trigger at 75%two halves of the EPS target shown below, or $0.79 per share. A Core EPSyear were equally weighted, with the result below this trigger would result in nobeing that the pool funding rate for the plan.full year 2023 was 93.3%.
| | | | | | | | | | | | | | | | | |
| Plan Goals |
| Performance Measure | Definition | Weight | Threshold | Target | Stretch |
| EPS ($) | Core Earnings Per Share | 20% | $0.84 | $1.05 | $1.26 |
| ROE (%) | Core Return on Equity | 20% | 3.63% | 4.54% | 5.45% |
| ROA (%) | Core Return on Assets | 20% | 0.37% | 0.46% | 0.55% |
| Efficiency Ratio (%) | Core Efficiency Ratio | 20% | 80.10% | 76.10% | 72.10% |
| Asset Quality - NCO (%) | Net Charge-offs/Avg Loans % | 20% | 0.77% | 0.64% | 0.51% |
•Maintained Berkshire's ranking based on its ESG index in the top quartile in all quarters.
•Improved human capital performance, declining employee turnover, and record high employee engagement.
•Allocated amounts equivalent to the full $100 million sustainability bond to create affordable/workforce housing and enable green building development.
•Achieved 100% on-premise renewable electricity goal and implemented Climate Risk Management Program.
•Exceeded targets for low-moderate income, minority, and green lending
The plan goals and results for the first and second halves of 2023 are shown below.
35 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Note:The measures identified as CoreOperating are non-GAAP financial measures. These measures are identified as “Adjusted” measures in the SEC Form 10-K. They exclude items not viewed as related to ongoing operations. Their use, definitions, and reconciliations to GAAP measures are discussed more fully in the Form 10-K. For a summary of the reconciliation of these non-GAAP performance measures, please see Appendix B.A. ESG represents Environmental, Social, and Governance programs.
The measures used in the prepandemic year of 2019 also included Core EPS, Core Return on Assets, and the Efficiency Ratio. The previous asset quality metric measured the level of criticized assets.This metric was changed in 2021 to more directly focus on the loan charge-off ratio as a measure impacting financial condition. The Committee added a fifth metric of Core Return on Equity in 2021 to introduce a measure more correlated with the market valuation of the Company’s stock.
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COMPENSATION DISCUSSION AND ANALYSIS
For the earnings measures, the thresholds were set at 80% of target and stretch goals were set at 120%. The efficiency ratio ranges were set at approximately 5% above or below target. The charge-off ratio ranges were set at approximately 20% above or below target. These ranges were broadened out from the prepandemic year of 2019 to reflect the greater range of strategies, outcomes, and uncertainties in the current environment. For the efficiency and charge-off ratios, a lower result is better.
The 2021 core earnings related targets reflected expected improvement from 2020 results. They also reflected prevailing trends and conditions, and were generally consistent with mean consensus estimates of Company 2021 performance at the time that the targets were set.
The Core EPS and efficiency targets anticipated that near term impacts of new strategic initiatives might require higher investment in expenses and delays in revenue growth as transformational initiatives were implemented while loan runoff was still ongoing. Additionally, these targets allowed management flexibility to accumulate liquid short term investments which held back 2021 earnings, in order to benefit from anticipated interest rate increases in 2022 and beyond.
The net charge-off target reflected the elevated credit loss allowance and uncertainties about pandemic impacts on problem loan collections. The charge-off target was generally similar to the consensus estimates based on the Company’s credit profile and industry expectations.It was also within a range consistent with the allowance for credit losses on loans in the Company’s audited statement of financial condition at year-end 2020.
The 2021 STI performance and payout results are shown below. Management outperformed the stretch goals on all five measures and achieved a 150% pool funding as a result.
•This was primarily due to stronger credit performance as economic conditions improved and management’s programsrates for credit administration of loans to COVID-sensitive industries resulted in most credit related metrics improving to prepandemic levels by the end of 2021.
•This improvement resulted in lower credit loss provision expense than anticipated, which contributed to outperformance of the earnings based measures, along with the asset quality measure.
•The efficiency ratio also outperformed the stretch goal, and initiatives to lower funding costs and operating costs resulted in stronger operating earnings compared to plan and consensus.
By the endtwo halves of the year our performance contributed to an improved outlookwere equally weighted, with the result that the pool funding rate for future loan growth and interest income growth. The Company’s improved results and condition were supportive of further stock repurchases and the Company announced a new stock repurchase program in January 2022. The Company’s relative stock outperformance continued after 2021 performance results were announced, with its stock price reaching near twofull year highs.
| | | | | | | | | | | | | | | | | |
| Plan Goals |
| Performance Measure | Definition | Weight | Result | Payout Funding | Pool Allocation |
| EPS ($) | Core Earnings Per Share | 20% | $1.69 | 1.50% | 30.00% |
| ROE (%) | Core Return on Equity | 20% | 7.20% | 1.50% | 30.00% |
| ROA (%) | Core Return on Assets | 20% | 0.70% | 1.50% | 30.00% |
| Efficiency Ratio (%) | Core Efficiency Ratio | 20% | 69.96% | 1.50% | 30.00% |
| Asset Quality - NCO (%) | Net Charge-offs/Avg Loans % | 20% | 0.29% | 1.50% | 30.00% |
| | Total Payout | 150.00% |
In addition to performance exceeding 2021 targets, management announced a three year strategic transformative plan intended to achieve double digit return on tangible common equity and an ROA over 100 basis points, along with other franchise enhancing targets such as customer satisfaction and ESG performance.2023 was 93.34%. Together with assessing financial performance results, the Committee also considered any risk, regulatory or shareholder issues and determined that there was no basis for adjusting the pool funding downward in 2021.2023.
48 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Individual PerformancePayout Considerations.Once the pool funding was determined, the Committee evaluated individual incentive fundingspayouts for each NEO.of the NEOs. As it did in 2020,recent years, the Committee decided to provide all NEO’sNEO awards at the Corporate93% STI pool funding rate, which was 150%rate. The Committee recognized:
•Mr. Mhatre's executive recruitment and executive and management leadership through the challenges of target in 2021. This reflected the goal of recognizing leadership teamwork in a transformative year while also responding tomaintaining focus on the ongoing pandemic challengesCompany's strategic transformation initiatives.
•Mr. Gray's oversight of branch and the interconnections between short-termpremises consolidation and long-term initiativesimplementation of new digital/mobile technology supporting improved customer and seamless execution in serving the Company’s communities.The Committee noted the following NEO contributions to 2021 results:employee engagement.
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Mr. Mhatre, President and Chief Executive Officer |
•Joined the CompanyMr. Rosato's introduction of enhanced expense management and led Berkshire to outperformanceproduct pricing disciplines, strengthening of financial planning, and superior shareholder returns in his first year.
•Successfully accomplished executive recruitment while maintaining strong senior management retentionoversight of liquidity and performance.
•Engaged throughout the year with investors to communicate the Company’s vision and transformational plan, and responded to input about capitalbalance sheet management strategies.
•Focused the Company on core strengths, recruiting new front-line bankers across many business lines,Mr. Brown's oversight of ongoing balanced loan growth, opportunistic recruitment of seasoned frontline deposit focused talent, and selling and realizing capital valueintegration of less core insurance operations..
•Led development of DigiTouchTM strategy combining leading edge technology initiatives with personal service as central approach toprivate banking service.
•Led rollout of Berkshire Community Comeback $5 billion community lending and financing plan to support economic recovery, access to services, and evolution of our communities.
•Oversaw deepening of ESG programs and improvements to ESG ratings with the objective of being the leading socially responsible bank in New England and beyond.overall commercial team.
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Mr. Bacigalupo, Head of Commercial Banking |
•Oversaw successful Paycheck Protection Program (“PPP”) Phase II for critical business support during pandemic. Also managed SBA forgiveness procedure for PPP borrowers.
•Managed down credit exposure to COVID sensitive industries while working with borrowers to graduate from pandemic related loan modifications back to scheduled debt service payments.
•Oversaw recruitment and expansion in New Haven, Providence, Asset-Based Lending, and other targeted markets.
•Maintained solid credit performance through processesMr. Lindenmuth's oversight of credit selectionmanagement, strong asset quality management, and administration.solid compliance and regulatory relations management.
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Mr. Basu, Chief Financial Officer |
•Joined company and successfully led financial aspects of Company outperformance of objectives
•Recruited and strengthened key functions within financial division.
•Worked with new investor relations officer to deepen relationships with investment community and expand research coverage of BHLB stock.
•Developed and implemented stock repurchase program in 2021 and announcement of new program in 2022.
•Oversaw new procurement management function to target improved procurement, efficiency, and resource management across the company.
•Introduced new analytics and reporting to support business lines.
4936 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
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Mr. Gray, Chief Operating Officer |
•Successfully led Company through completion of the transition of the CEO role.
•Completed sale of Mid-Atlantic branch operations and consolidated 16 branch offices on time and on plan to support improved focus and efficiency of Company operations. Executed sale of insurance operations while maintaining a referral partnership.
•Managed shifts in operations due in response to changing pandemic conditions.
•Oversaw technology and strategic planning functions in year of transformation.
•Oversaw expansion of targeted business lines including SBA lending, wealth management, and private banking.
•Provided leadership for human capital management, corporate responsibility, and internal and external communications in support of all stakeholder relationships.
•Supported development of Berkshire Community Comeback and supported deepening of ESG programs and development of ESG Committee.
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Mr. Lindenmuth, Chief Risk Officer |
•Outperformed net loan charge-off objective, contributing to asset quality and earnings outperformance.
•Achieved pre-pandemic levels for most asset quality metrics.
•Oversaw regulatory relations and approvals of shareholder distributions.
•Expanded and deepened enterprise risk management processes.
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Ms. Stephenson, Chief Compliance & Regulatory Officer |
•Maintained strong ongoing compliance profile.
•Supported evolution of compliance program to support new initiatives in strategic transformation program.
•Upgraded compliance training and compliance programs.
•Managed compliance oversight through shifting regulatory and state directives during the pandemic response.
50 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Long-term Incentive Plan (LTI)
| | |
The Company’s long-term incentive/equity compensation program is designed to align senior executives with long-term interests of the Company and shareholders through stock-based compensation. The program also seeks to provide rewardrewards for targeted multi-year performance, encourage stock ownership, and enhance our ability to retain our top performers. |
20212023 Long-Term Incentive Summary. As in recent years, the 20212023 long-term incentive program was comprised of 60% performance shares that cliff-vest after three years based on pre-defined goals, and 40% time-based restricted shares which vest over three years, with 1/3 vesting at each grant date anniversary. Target opportunities were mostly unchanged as a percentage of base salary. Actual grant amounts were near target opportunities. Performance goals were unchanged from the end of eachprior year. There were no major changes in the amount of theLTI grants for the lasttwo years.
LTI Program Overview. Each year in the first quarter the Committee determines the terms of the long-term incentive program, including participants, target opportunities for each role (defined as % of base salary), and the form and amount of compensation granted. These determinations included input andconsideration of peer market data and practices as well as recommendations provided by the compensation consultant.
Long-term incentive compensation is intended to:
•Provide a meaningful portion of total compensation in stock-based awards
•Align executives with our shareholders
•Reward long-term performance and avoid excessive risk taking
•Encourage retention of our key senior executives
•Balance compensation rewards with risk through long-term vesting tied to performance
The Committee also considered incentives provided by different award types, shareholder returns, avoiding excessive risk takingrisk-taking and encouraging and maximizing employee retention. As in recent years, the Committee decided that performance shares and time-based restricted stock grants with three-year vesting schedules were the most appropriate form of equity compensation for the long-term incentive grant. The total award granted is split into two components: 60% performance shares and 40% time-based shares.
5137 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Targets and Grants. The target long-term incentive compensation is set as a percentage of salary utilizing peer market data and input from the compensation consultant. The program provides the flexibility to vary the grant value +/- 25% of target percentages are listed below. Actual grant values may be by higher or lower than the target opportunity, to a maximum of up to 150% of the target incentive opportunity,value, based on the Committee’s assessment of a variety of factors, including Company performance, individual performance, retention considerations and affordability. For 2021,The actual grants were near the annual grantstarget amounts for participating NEOs as shown in the table below.
Due to their hire dates in early 2023, the NEO’s were made at target.Chief Financial Officer and Head of Commercial Banking did not participate in the LTI plan in 2023. The table below describes each executive’s target long-term incentive opportunity as a percentage of salary.
| | | | | | | | |
| Title | 2020 Target Long-Term Incentive Opportunity | 2021 Target Long-Term Incentive Opportunity |
| President and Chief Executive Officer | 105% | 95% |
| Chief Operating Officer | 80% | 85% |
| Chief Financial Officer | 60% | 60% |
| Head of Commercial Banking | 60% | 60% |
| Chief Risk Officer | 40% | 40% |
| Chief Compliance and Regulatory Officer | 40% | 40% |
Note:Table does not include adjustments for the COO’s service as Acting CEO in 2020 & 2021.
The former CFOChief Financial Officer received a grant at target in January which was subsequently forfeited at the timethree-year award of his resignation.time-based shares totaling $200,000. The new CFO joined the Company after the LTI program grants were made in January. The new CFOHead of Commercial Banking received a one-time $100,000 (23%two-year award of salary) stocktime-based shares totaling $150,000. These awards have annual incremental vesting over the term of the award.
| | | | | | | | |
| Title | 2023 Long-Term Incentive (Target Grant % of Salary) | 2023 Long-Term Incentive (Actual Grant % of Salary) |
| President and CEO | 105% | 108% |
| Chief Operating Officer | 85% | 88% |
| Chief Financial Officer | NA | NA |
| Head of Commercial Banking | NA | NA |
| Chief Risk Officer | 45% | 45% |
Note: The Former Interim CFO was not a participant in the executive incentive program. His incentive compensation target was based on his ongoing responsibilities as Chief Accounting Officer.He received a $50,002 grant when he joined the Company. Theon January 30, 2023 and a $61,272 grant vestson April 1, 2023. Both were time based grants with 50% in annual incrementsincremental vesting over 3three years and 50% cliff vestvesting after 3 years’ service.three years.
LTI Vesting
Once the grant value is determined, 60% is granted as performance shares and 40% is granted as time-based restricted stock. Time-based restricted stock vests 1/3 each year over three years. Performance shares cliff-vest at the end of the three-year performance period based on actual performance compared to predefined goals as described below.
Performance Share Metrics and Goals
The performance shares are tied to performancefinancial metrics and goals approved by the Committee in the first quarter of 2021 for a three-year performance period (i.e., 20212023 - 2023)2025). In 2021,2023, the Committee maintained the same two performance goal categories from 2020: Relative Change in Core ROTCEcompared to the previous year: absolute Operating Return on Tangible Common Equity ("Operating ROTCE") and Relative TSR.relative Total Shareholder Return ("TSR"). Each performance metric was assigned a 50% weight for determining future performance against goals.weighting. The actual number of performance shares that vest will beis determined at the end of the three-year period depending on Company performance against the three-year goals. Both of the performance measures evaluate our relative performance compared to an objective Industry Index.
The first measure, relative Change in Core ROTCE, is a relative measure of growth in core return on tangible common equity (“Core ROTCE”), which is one of the most significant financial measures utilized by shareholders in valuing the Company. Positioning this goal as a relative measure incentivizes our NEOs to grow Core ROTCE at a rate that exceeds our peer group to achieve targeted compensation, thereby rewarding outperformance.
The second measure, relative TSR is formulated to measure our ability to deliver superior share price returns relative to our peer group over the defined three-year time period. The threshold, target, and stretch performance levels are set at 30th percentile, 50th percentile, and 75th percentile for the relative TSR.
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COMPENSATION DISCUSSION AND ANALYSIS
Our performance is measured relative to a defined Industry Index comprised of all publicly-tradedexchange-traded banks and thrifts between $7 billion and $30$25 billion in assets located in the United States.
The first measure is average annual increase in Operating ROTCE, which is a non-GAAP measure and is reconciled to the GAAP measure in Appendix A. The goal is an average annual increase in the range of 75 -142 basis points compared to the base year. The Company will calculate the year-over-year increase in its Operating ROTCE in each of the three years. The average for these three years will be compared to the performance goal. The targeted average annual increase is 109 basis points.
38 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
The second measure, relative TSR, measures our ability to deliver stock price appreciation and dividends relative to an index group over the three-year performance period. The target is the 50th percentile. The Company ranked in the 47th47th percentile of this group of 81 banks based on total assets when it was defined. In order to be counted in the final calculations, a peer company must remain a publicly-tradedpublicly traded institution at the end of the performance period ending at year-end 2023.2025. The Committee did not significantly change the index criteria for the 20212023 grant from the criteria used for the 2020 grant.2022 program.
2019The table below shows the performance measures, as well as the threshold, target, and stretch performance goals established by the Committee.For the ROTCE measure, the threshold and stretch goals were each set at approximately a 30% difference from the target.
| | | | | | | | | | | | | | |
| | Performance Goals |
| Performance Measure | Weight | Threshold | Target | Stretch |
| Average Annual Increase in Operating ROATCE | 50% | 75 basis points | 109 basis points | 142 basis points |
| TSR | 50% | 25th percentile | 50th percentile | 75th percentile |
| Payout (% of shares granted) | 100% | 50% | 100% | 150% |
2021 to 20212023 Long-Term Incentive Plan Results
The 2021 year concludes the performance grant made under the 2018 Long-term Incentive Plan which was established in the first quarter of 2019 and was intended to reward performance results over the three-year period, 2019 to 2021. The final number of shares earned pursuant to those awards was determined based on the Company’s actual results for the three-year period. For the second year in a row, there was no payout under the long-term performance incentive due to the impact of the pandemic on the Company’s performance.
The terms of the 20192021 LTI grant were discussed in the 20202022 Proxy Statement.Statement and covered a three-year performance period, 2021 - 2023. The two equally weighted performance measures were relative improvement in Core Return on Tangible Common EquityOperating ROTCE and relative Total Shareholder Return (TSR).
TSR. The Company’s relative performance based on these two measures was compared to the Industry Index.The Company's Operating ROTCE increased by 0.49% more than the Industry Index during the performance period. This result was near the target and duedemonstrated that the Company was improving profitability more strongly than the Index banks compared to performance impacted by the pandemic, actual results did not achieve our threshold level of performance and as a result, the grant was forfeited.
2020 base period.The performance based LTI incentive compensation constituted 24% of the NEO direct compensation granted in 2019.All of this compensation was forfeited for NEOs remainingCompany's relative TSR placed in the plan and82nd percentile during the plan operatedperformance period, which exceeded stretch goals. The total payout was 124.54% as intended to withhold compensation that does not achieve Company objectives.shown in the table below.
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| | Long Term Incentive Plan 2021 - 2023 Performance and Payout |
| Performance Measures | Weight | Threshold | Target | Stretch | Actual | % Funding | Pool Allocation |
Relative Change in Operating ROTCE | 50% | -0.20% | 0.50% | 1.20% | 0.49% | 99.07% | 49.54% |
| TSR | 50% | 25th percentile | 50th
percentile | 75th percentile | 82.6th percentile | 150.00% | 75.00% |
| Payout (% of shares granted) | 100.0% | 50% | 100% | 150% | Total Payout | 124.54% |
The actual shares which were vested under the 2021 three year performance incentive were as follows:
2021 Performance Shares Vesting
| | | | | | | | | | | |
| Participants | Grant Date | Share Grant | Cliff Vesting - 3-Year Results |
| Mhatre | 1/30/2021 | 24,925 | 31,042 |
| Gray | 1/30/2021 | 20,804 | 25,910 |
| Lindenmuth | 1/30/2021 | 4,342 | 5,408 |
39 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Benefits and Perquisites
The Company’s benefits program is designed to be competitive and cost-effective. All employees are provided core benefits including medical, retirement, life insurance, paid time off, and leaves of absence. The Company provides NEOs with perquisites and other benefits that the Committee believes are reasonable and consistent with its overall compensation philosophy. The Committee reviews the NEOs’ total benefits package on a regular basis to determine the competitiveness and appropriateness of providing executive benefits.
In 2019, the Company entered into a supplemental executive retirement agreement with Mr. Gray and in 2021 the Company entered into a supplemental executive retirement agreement with Mr. Mhatre. The Company does not offer other NEOs or any other executive a supplemental retirement arrangement or other non-qualified deferred compensation program. For additional information regarding the supplemental retirement arrangements, please see the section headed “Executive Compensation - Non-qualified Deferred Compensation.”
Some of the Named Executive OfficersCertain NEOs are eligible for modest perquisites such as automobile allowance, financial planning and membership fees.fees. No membership fees were paid in 2021.2023. The CompanyCompany also maintains a long-term care insurance plan to supplement the Company’s disability plan for Mr. Gray. Overall perquisites are a relatively modest element of the compensation program. Benefits and perquisites are reported under All Other Compensation in the Summary Compensation Table,Table.
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COMPENSATION DISCUSSION AND ANALYSIS
Potential Post Termination or Change in Control Benefits
An important consideration in our ability to attract and retain key personnel is our ability to minimize the impact on ourmanagement team of the possible disruption associated with our analysis of strategic opportunities and to be completely aligned with shareholder interests. Accordingly, we believe that it is in the best interest of the Company and its shareholders to provide our NEOs with reasonable financial arrangements in the event of termination of employment following a change in control or involuntary termination of employment for reasons other than cause following a change in control. The Company maintains an employment agreement with its Chief Executive Officer and change in control arrangements with the other NEOs. The employment agreement was intended to ensure that the CEO devotes his energy and attention to the long-term interest of the shareholders. The Company does not have any employment agreements with any other NEO or employee.
Since 2009, the Company no longer enters into an employment or change in control agreement that provides for a tax indemnification payment in the event that the payment under the agreement results in additional tax liability under Section 280G of the Internal Revenue Code (a “Tax Indemnification Payment”). However, the Company maintains one legacy change in control agreement, with Mr. Gray, which was entered into in 2007,2008, prior to the 2009 change, which provides for a potential Tax Indemnification Payment. For additional details, please see section titled “Potential Payments upon Termination of Employment or a Change-In-Control” of this proxy statement.
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COMPENSATION DISCUSSION AND ANALYSIS
Additional Compensation Information
Risk Assessment and Related Considerations
The Chief Risk Officer conducts an annual risk review of the Company’s incentive compensation plans (the short-term and long-term incentive plans) as approved by the Committee for all eligible employeeemployees within the Company. This review for 20212023 reported that the plans fit within established risk parameters and strategic plans. Based on this risk review, theThe Committee concluded that the incentive compensation plans do not motivate excessive risk taking,risk-taking and are not reasonably likely to have a material adverse effect on the Company.
The review determines if these plans encourage behaviors that exposedexpose the Company to unacceptable levels of risk. The review evaluates the balance of compensation elements between cash, performance shares, restricted stock grants, fixed versus variable compensation, and long-term versus short-term compensation. The plans consider the level of potential cash incentive compensation as compared to base salary, the focus of individual and corporate goals, as well as the weighting and balance of goals, and internal controls in place to mitigate possible excessive risk taking. Additionally, the plans include mechanisms for “deferral of payment” and/or “forfeiture of payment” relating to ethical business standards and clawback policies, as approved by the Committee, under which the Company may recover and/or revoke payments of incentive compensation attributable to certain trigger events, including employee misconduct and/or financial restatement.
40 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
During 20212023 the Committee continued to reinforce its risk-based approach to total compensation in various ways, such as incenting on adjusted coreoperating profitability metrics and shareholder return, retaining a risk-based performance measure for Asset Quality and providing risk adjustment features that allows the Committee to reduce incentive awards in light of risk or regulatory concerns. The Committee remains committed to continuing to review and evolve compensation plans and ensure they represent sound and balanced risk management practices. The proper application of risk and governance, within the context of established strategic objectives, remain the driving factors in establishing the incentive compensation plans.
Role of the Compensation Committee, Management and Compensation Consultant
Role of the Compensation Committee.At year-end 2021,2023, the Committee consisted offive six members, all of whom are independent.The Chairperson of the Committee regularly reports on material committee actions at Board meetings.
The Committee ensures that the total compensation paid to the senior executives is fair, reasonable and performance-based while aligning with shareholder interests. The Committee is responsible for establishing, implementing and continually monitoring all elements of compensation for the NEOs. Elements of compensation are reviewed individually and in the aggregate, including base salary, annual cash incentives, long-term incentives/equity awards, total direct compensation, and benefits and perquisites. Additionally, the Committee annuallybiennially reviews its charter, philosophy and executive compensation practices, as well as industry compensation trends and best practices using market data and input from the compensation consultant.
The Committee has the sole authority and resources to obtain advice and assistance from internal or external legal, human resource, accounting, compensation or other advisors or consultants as it deems desirable or appropriate. The Committee has direct access to, communicates, and meets regularly with the compensation consultant independently of management.
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COMPENSATION DISCUSSION AND ANALYSIS
The Committee’s major duties and responsibilities are as follows:
•Review and benchmarking of overall compensation, benefit and perquisites
•Review all compensation components for CEO and each NEO
•Evaluate CEO and other NEOs’ individual performance
•Ensure executive overall pay is aligned with corporate performance results
•Review, evaluate and modify as needed, executive compensation plans
•Ensure executives are not encouraged or rewarded for taking excessive risk
•Approve annual cash incentive payments, annual equity grants, and vesting of performance shares for the CEO and other NEOs in accordance with the terms of the Executive Short-Term and Executive Long-Term Incentive Plans
•Provide oversight to ensure compliance with all regulations related to executive compensation
•Approve the annual Compensation Discussion and Analysis and make a Report to the Board
•Participate with the Board in matters relating to management succession
Role of Management. Although the Committee makes independent determinations on all matters related to compensation of the NEOs, certain members of management may be requested to attend or provide input to the Committee. Input may be sought from the CEO, President,Chief Operating Officer, Chief Human Resources and Culture Officer, Chief Financial Officer, Chief Risk Officer, Investor Relations Officer, or others to ensure the Committee has the information and perspective it needs to carry out its duties.
In particular, the Committee seeks input from the Chief Executive OfficerCEO on matters relating to strategic objectives, Company performance goals and annual business plan. In addition, the CEO provides the Committee summaries of senior executive officer performance and recommendations relating to their compensation. The CEO is not present when the Committee discusses his performance and decides on his compensation. The Committee meets with the CEO to present its compensation decisions and discuss the evaluation of his performance.
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COMPENSATION DISCUSSION AND ANALYSIS
The EVP/Chief Human Resources and Culture Officer assists the Committee on matters of design, administration and operation of the Company’s compensation programs. The EVP/Chief Human Resources and Culture Officer may be requested, on the Committee’s behalf, to provide proposals or work with their independent compensation consultant to develop proposals for the Committee’s consideration. The EVP/Chief Human Resources and Culture Officer reports to the Committee directly on such matters. The Committee also receives updates from the Company’s Chief Risk Officer, Chief Financial Officer and Investor Relations Officer throughout the year as appropriate.
Although the senior Senior executives may provide insight, suggestions or recommendations regarding senior executive compensation, they are not present during the Committee’s deliberations or vote. Only Committee members vote on decisions regarding NEO compensation. The Committee regularly meets in executive session without management present. Only Committee members vote on decisions regarding NEO compensation.
Role of the Compensation Consultant. The Committee has the authority to retain a compensation consultant to advise on executive compensation matters, as well as access to outside legal counsel and other experts as needed. For 2021,2023, the Committee renewed the engagement with Meridian Compensation Partners, LLC (“Meridian” or “the Consultant”) to serve as independent advisor to the Committee. During 2021,2023, Meridian provided data, advice and counsel on executive compensation matters and responded to other ad hoc requests of the Committee.
The Consultant reported directly to the Committee and carried out its responsibilities to the Committee in coordination with the Company’s Human Resources Department, as requested by the Committee. The Committee Chair has regular contact with the Consultant outside of meetings as appropriate. The Committee has reviewed Meridian’s services and determined that Meridian is independent with respect to SEC standards, as well as Company policy, and provides no other services to the company other than compensation consulting.
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COMPENSATION DISCUSSION AND ANALYSIS
Other Compensation and Governance Policies and Practices
Stock Ownership and HoldingRetention Guidelines. The Company maintains Stock Ownership Guidelines for its SEC-reporting senior executives and directors and all other executives, which requires the following minimum investment in Company common stock:
| | | | | |
| Independent Directors | Five times (5.0x) annual cash retainer |
| President and Chief Executive Officer | Four and a half times (4.5x) annual base salary |
| Chief Operating Officer | Three and a half times (3.5x) annual base salary |
| Senior Executive Vice Presidents | Two and a half times (2.5x) annual base salary |
| Executive Vice Presidents | One and a half times (1.5x) annual base salary |
Shares that satisfy the stock ownership guidelines include Company stock owned outright and time-based restricted stock whether or not vested. StockUnexercised stock options areand unvested performance shares do not included in calculating ownership until they are converted into actual shares owned.count toward the guidelines.
Newly hired senior executives, executives, directors and current employees of the Company that first become a senior executive, executive, or director are expected to satisfy the stock ownership guidelines within five years or such other term approved by the Committee, of the date such individual first becomesbecame subject to the guidelines, unless the Committee determines otherwise. The guidelines include a senior executive, executive or director. In order to expedite this,retention policy which requires aminimum of 50% of shares (net of taxes) will be required to be held upon each vesting until the ownership guidelines are met. Senior executives, executives and directors that maintain sufficient stock holdings, but due to an increase in base salary, annual cash retainer, selling Company stock to cover tax withholding or for a reason approved by the Committee,Should covered individuals no longer meet the stock ownership guidelines, shallthey will have 18 months to acquire additional Company stock and during this term such individuals will be deemedin order to satisfy the ownership guidelines.
Stock ownership for senior executives, executives and directors is reviewed annually. Share holdings are evaluated based on the average stock price for the three-year period prior to the Board’s review. These guidelines will allow for extenuating circumstances and discretion in the evaluation process and the The Committee reserves the right to make exceptions as appropriate.
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COMPENSATION DISCUSSION AND ANALYSIS
Clawback Policies. Our Board of Directors has adopted a clawback policy that complies with the New York Stock Exchange listing standards as mandated by the SEC. The Committee shall be responsible forpolicy requires the periodic reviewclawback of incentive-based compensation erroneously received by current or former executive officers after an accounting restatement (calculated based on an error that was subsequently corrected in the accounting restatement), regardless of any misconduct or knowledge of the policy. Any changesofficer who received the compensation. This policy is intended to supplement any other clawback provisions implemented by the Company in effect now, or in the future. In addition to the SEC compliant clawback policy, will require the approval of the Board of Directors. The Committee monitors ownership annually. The NEOs and directors comply withequity awards granted under the Company’s stock ownership policy within2022 Equity Incentive Plan are subject to clawback if the approved grace period to satisfy the stock ownership and holding guidelines.
Clawback Policy. As a condition to receiving incentive compensation from the Company and Berkshire Bank, each executive officer has signed an agreement whereby the executive officer agrees to reimburse the Company or Berkshire Bank an amount up to the entire incentive award made to such executive officer on the basis of having met or exceeded specific targets for performance periods if (1) the Company or Berkshire Bank is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the federal securities laws, and the automatic forfeiture provisions under Section 304 of the Sarbanes-Oxley Act of 2002 apply as a result of Financial Misconduct (as determined by the members of the Board of Directors who are considered “independent” for purposes of the listing standards of the NYSE), or as may be required by applicable laws, regulations, NYSE listing standards or as further requiredresult. The equity awards granted under the Company’s policies, as adopted from time2022 Equity Incentive Plan are also subject to time, or (2) the Company’s Boardcancellation upon a termination of Directors determines that the executive officer committed Personal Misconduct (as defined below). For purposes of this policy, (i) the term “incentive awards” means awards under the Company’s long-term and short-term incentive compensation plans, the amount of which is determined in whole or in part upon specific performance targets relating to the financial results of the Company; (ii) the term executive officer means the CEO and executives who are eligible to receive incentive awards; and (iii) the term Personal Misconduct means fraud, commission of a felony, material violation of any written agreement with or policies of the Company or Berkshire Bank, or any other material breach of fiduciary duty injurious to the Company or Berkshire Bank.employment for cause.
57 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Impact of Taxation on the Form of Compensation. The Committee considers a variety of factors, including the Company’s tax position, the materiality of the payments and tax deductions involved, the objectives of the executive compensation programs and the Company’s compensation philosophy in structuring compensation programs and making compensation decisions. In general, Section 162(m) of the Company may notCode generally limits to $1.0 million the deduction that a company is permitted to take anfor annual deductioncompensation paid to each “covered employee.” A “covered employee” includes any person who served as CEO or CFO of a company at any time during a fiscal year and the three other most highly compensated executive officers for NEO compensationthat fiscal year and any other person who was a covered employee in excess of $1 million unless an exception applies.a previous taxable year after December 31, 2016. Due to the continued importance and benefit to the Company and our shareholders of awarding compensation that is structured to properly incentivize our executive officers, the Committee believes that it is in our best interests to retain flexibility in awarding compensation, even if some awards may be non-deductible compensation expenses to the Company.
The Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis that is required by the rules established by the Securities and Exchange Commission and has discussed it with management. Based on such review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
The Compensation Committee of the Board of Directors of Berkshire Hills Bancorp, Inc.
John B. Davies,Jeffrey W. Kip, Chair
Baye Adofo Wilson
David M. Brunelle
NinaMary Anne Callahan
Mihir A. CharnleyDesai
William H. Hughes III
Jeffrey W. KipMichael A. Zaitzeff
5843 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
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Executive Compensation | | |
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| Purpose.
Performance.
Progress. |
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Summary Compensation Table
The following table provides the total compensation earned by or paid to the Named Executive Officers for the fiscal years ended December 31, 2021, 2020,2023, 2022, and 2019,2021, respectively.
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Name and Principal Position(1) | Year | Salary ($) | Bonus ($) | Stock Awards ($)(2) | Option Awards
($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) ($) | All Other Compensation(4) ($) | Total
($) |
| Nitin J. Mhatre, President, Chief Executive Officer | 2021 | 644,135 | | — | | 688,766 | | — | | 815,625 | | — | | 144,326 | | 2,292,852 | |
| | | | | | | | |
| | | | | | | | |
| George F. Bacigalupo, Executive Vice President, Head of Commercial Banking | 2021 | 375,000 | | — | | 225,007 | | — | | 253,125 | | — | | 27,943 | | 881,075 | |
| 2020 | 375,000 | | — | | — | | — | | 84,375 | | — | | 80,695 | | 540,070 | |
| 2019 | 375,000 | | — | | 225,010 | | — | | 115,000 | | — | | 51,463 | | 766,473 | |
| Subhadeep Basu, Senior Executive Vice President, Chief Financial Officer | 2021 | 325,808 | | — | | 100,000 | | — | | 290,250 | | — | | 13,059 | | 729,117 | |
| | | | | | | | |
| | | | | | | | |
| Sean A. Gray, Senior Executive Vice President, Chief Operating Officer | 2021 | 550,000 | | — | | 574,895 | | — | | 495,000 | | — | | 193,561 | | 1,813,456 | |
| 2020 | 621,500 | | — | | 500,027 | | — | | 201,988 | | — | | 169,938 | | 1,493,453 | |
| 2019 | 550,000 | | — | | 500,008 | | — | | 124,000 | | — | | 178,998 | | 1,353,006 | |
| Gregory D. Lindenmuth, Executive Vice President, Chief Risk Officer | 2021 | 300,000 | | — | | 120,006 | | — | | 135,000 | | — | | 14,648 | | 569,654 | |
| 2020 | 300,000 | | — | | 160,024 | | — | | 45,000 | | — | | 19,214 | | 524,238 | |
| 2019 | 300,000 | | — | | 150,016 | | — | | 36,750 | | — | | 12,949 | | 499,715 | |
| Deborah A. Stephenson, Executive Vice President, Chief Compliance and Regulatory Officer | 2021 | 275,000 | | — | | 110,008 | | — | | 123,750 | | — | | 13,794 | | 522,552 | |
| | | | | | | | |
| | | | | | | | |
| James M. Moses, Former SEVP and Chief Financial Officer | 2021 | 107,500 | | — | | 258,001 | | — | | — | | — | | 13,771 | | 379,272 | |
| 2020 | 430,000 | | — | | 360,018 | | — | | 96,750 | | — | | 45,275 | | 932,043 | |
| 2019 | 400,000 | | — | | 250,108 | | — | | 105,000 | | — | | 38,751 | | 793,859 | |
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Name and Principal Position(1) | Year | Salary ($) | Bonus ($) | Stock Awards ($)(2) | Option Awards
($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) ($) | All Other Compensation(4) ($) | Total
($) | |
| Nitin J. Mhatre, President, Chief Executive Officer | 2023 | 835,000 | | — | | 905,934 | | — | | 584,542 | | — | | 307,905 | | 2,633,381 | | |
| 2022 | 775,000 | | — | | 813,751 | | — | | 871,875 | | — | | 148,974 | | 2,609,600 | | |
| 2021 | 644,135 | | — | | 688,766 | | — | | 815,625 | | — | | 144,326 | | 2,292,852 | | |
| R. David Rosato, Senior Executive Vice President, Chief Financial Officer | 2023 | 432,692 | | — | | 200,000 | | — | | 256,685 | | — | | 94,503 | | 983,880 | | |
| | | | | | | | | |
| | | | | | | | | |
| Sean A. Gray, Senior Executive Vice President, Chief Operating Officer | 2023 | 584,000 | | — | | 516,664 | | — | | 327,063 | | — | | 167,736 | | 1,595,463 | | |
| 2022 | 566,500 | | — | | 577,851 | | — | | 509,850 | | — | | 166,652 | | 1,820,853 | | |
| 2021 | 550,000 | | — | | 574,895 | | — | | 495,000 | | — | | 193,561 | | 1,813,456 | | |
| James C. Brown, Senior Executive Vice President, Head of Commercial | 2023 | 430,231 | | — | | 150,000 | | — | | 241,284 | | — | | 20,154 | | 841,669 | | |
| | | | | | | | | |
| | | | | | | | | |
| Gregory D. Lindenmuth, Senior Executive Vice President, Chief Risk Officer | 2023 | 355,350 | | — | | 160,000 | | — | | 149,258 | | — | | 16,351 | | 680,959 | | |
| 2022 | 345,000 | | — | | 165,625 | | — | | 155,250 | | — | | 15,534 | | 681,409 | | |
| 2021 | 300,000 | | — | | 120,006 | | — | | 135,000 | | — | | 14,648 | | 569,654 | | |
| Brett Brbovic, Senior Managing Director, Former Interim Chief Financial Officer | 2023 | 253,575 | | | 111,274 | | — | | 59,172 | | | 12,163 | | 436,184 | | |
| 2022 | 245,000 | | — | | 32,019 | | — | | 75,000 | | — | | 6,851 | | 358,870 | | |
| | | | | | | | | |
(1)Messrs. Mhatre, BasuRosato and Ms. Stephenson areBrown were Named Executive Officers for the first time in 2021 and, pursuant2023. Mr. Brbovic was a Named Executive Officer for the first time in 2022. Pursuant to SEC rules, compensation for prior years is not required to be reported. Mr. Moses’ 2021 salary reflects the period from January 1, 2021 through March 19, 2021, which was the date of his resignation.reported for these individuals.
(2)The amounts reported are the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718 and
represent an award under the Company’s performance-based, long-term incentive compensation program. Awards consist of restricted stock, a portion of which vests ratably over three years and a portion that vests based on the achievement of certain performance criteria. Since all awards vest after the year in which they are granted, none of the Named Executive Officers recognized any income from the awards in the year they were made. Amounts shown are the aggregate grant date fair value of restricted stock awards. For those restricted stock awards that are subject to performance conditions, the grant date fair values are based on the outcome of such conditions at target level. Total shares and values for stock awards reported in this table may not match other tables due to rounding. See Note 2018 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2021.2023. Based on the fair value at grant date, the following are the maximum potential values of the performance shares for the 2021-20232023-2025 performance period assuming maximum level of performance is achieved: Mr. Mhatre, $619,875;$832,752; Mr. Gray, $517,400; Mr. Bacigalupo $202,500;$474,929; and Mr. Lindenmuth, $108,000;$143,315. Messrs. Rosato, Brown, and Ms. Stephenson, $99,000.Brbovic were not granted performance shares in 2023. For each year shown in the above table, the amounts in the Stock Awards column are determined by multiplying the number of restricted stock awards granted on a particular date by the fair value at that date, and a breakdown for each individual is as follows:
5944 BERKSHIRE HILLS BANCORP, INC. | 20222023 Proxy Statement
| | Number of Restricted Stock Awards Granted | Number of Restricted Stock Awards Granted | Number of Restricted Stock Awards Granted |
| Grant Date | Grant Date | Grant Date Closing Price | Nitin J. Mhatre | George F Bacigalupo | Subhadeep Basu | Sean A. Gray | Gregory B. Lindenmuth | Deborah A. Stephenson | James M. Moses | Grant Date | Grant Date Closing Price | Nitin J. Mhatre | Sean A. Gray | R. David Rosato | James C. Brown | Gregory D. Lindenmuth | Brett Brbovic |
| April 1, 2023 | |
| January 30, 2023 | |
| April 1, 2022 | |
| January 30, 2022 | |
| January 30, 2021 | January 30, 2021 | $ | 16.58 | | 41,542 | | 13,571 | | — | | 34,674 | | 7,238 | | 6,635 | | 15,561 | |
| April 30, 2021 | $ | 22.40 | | — | | — | | 4,465 | | — | | — | | — | | — | |
| January 30, 2020 | $ | 29.09 | | — | | — | | — | | 17,189 | | 5,500 | | — | | 12,370 | |
| January 30, 2019 | $ | 27.91 | | — | | 8,062 | | — | | 17,915 | | 5,375 | | — | | 8,958 | |
(3)The Supplemental Executive Retirement Agreements do not provide for above-market earnings and therefore amounts are not included in this column.
(4)Details of the amounts reported in the “All Other Compensation” column for 20212023 are provided in the following table:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | 401(k) Employer Contribution ($) | Dividends on Restricted Stock
($) | Automobile
($) | Financial Planning
($) | Membership Fees
($) | Long-Term Care Premiums and Imputed Income on Life Insurance
($) | Long-Term Disability
($) | Other **
($) | Total
($) |
| Nitin J. Mhatre | — | | — | | 15,992 | | — | | — | | — | | 3,334 | | 125,000 | | 144,326 | |
| George F. Bacigalupo | 7,500 | | 2,704 | | 15,000 | | 525 | | — | | — | | 2,214 | | — | | 27,943 | |
| Subhadeep Basu | 1,323 | | — | | 11,366 | | — | | — | | — | | 370 | | — | | 13,059 | |
| Sean A. Gray | 11,600 | | 9,057 | | 15,000 | | — | | — | | 440 | | 2,471 | | 154,993 | | 193,561 | |
| Gregory D. Lindenmuth | 11,600 | | 2,581 | | — | | — | | — | | — | | 467 | | — | | 14,648 | |
| Deborah A. Stephenson | 11,000 | | 2,327 | | — | | — | | — | | — | | 467 | | — | | 13,794 | |
| James M. Moses | 4,845 | | 5,464 | | 3,462 | | — | | — | | — | | — | | — | | 13,771 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | 401(k) Employer Contribution ($) | Dividends on Restricted Stock
($) | Automobile
($) | Financial Planning
($) | Membership Fees
($) | Long-Term Care Premiums and Imputed Income on Life Insurance*
($) | Long-Term Disability
($) | Other **
($) | Total
($) |
| Nitin J. Mhatre | — | | 7,782 | | 18,000 | | — | | — | | — | | 4,131 | | 277,992 | | 307,905 | |
| R. David Rosato | 8,846 | | — | | 12,981 | | 1,500 | | — | | — | | 405 | | 70,771 | | 94,503 | |
| Sean A. Gray | 13,107 | | 10,282 | | 15,000 | | — | | — | | 26,902 | | 2,445 | | 100,000 | | 167,736 | |
| James C. Brown | — | | — | | 13,731 | | 6,000 | | — | | — | | 423 | | — | | 20,154 | |
| Gregory D. Lindenmuth | 13,200 | | 2,709 | | — | | — | | — | | — | | 442 | | — | | 16,351 | |
| Brett Brbovic | 10,038 | | 2,125 | | — | | — | | — | | — | | — | | — | | 12,163 | |
| | | | | | | | | |
*Amount shown reflects long-term care premiums in the amount of $26,429 and split dollar life imputed income in the amount of $446.
**The Company credited Mr. Mhatre and Mr. Gray’s Supplemental Executive Retirement Agreement account balances with $125,000 and $100,000, respectively, pursuant to the terms of the agreements.
In addition, the amounts shown for Messrs. Mhatre and Rosato include a housing relocation reimbursement, which was increased to cover income taxes, in the amount of $152,993 and $70,771, respectively.
6045 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
Grants of Plan-Based Awards
The following table provides information concerning the award opportunities granted to the Company’s NEOs in 2021,2023, and the amounts, if any, that may be paid in future years.
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| | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1) | Estimated Future Payouts Under
Equity Incentive Plan Awards(2) | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#) | Grant Date
Fair Value
of Stock
and
Option
Awards(3)
($) |
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
| Nitin J. Mhatre | 1/30/2021 | — | | 543,750 | | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | — | | — | | — | | — | | 16,617 | | 275,510 | |
| 1/30/2021 | — | | — | | — | | 12,462 | | 24,925 | | 37,388 | | — | | — | |
| George F. Bacigalupo | 1/30/2021 | — | | 168,750 | | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | — | | — | | — | | — | | 5,429 | | 90,012 | |
| 1/30/2021 | — | | — | | — | | 4,071 | | 8,142 | | 12,213 | | — | | — | |
| Subhadeep Basu | 1/30/2021 | — | | — | | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | — | | — | | — | | — | | — | | — | |
| Sean A. Gray | 1/30/2021 | — | | 330,000 | | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | — | | — | | — | | — | | 13,870 | | 229,965 | |
| 1/30/2021 | — | | — | | — | | 10,402 | | 20,804 | | 31,206 | | — | | — | |
| Gregory D. Lindenmuth | 1/30/2021 | — | | 90,000 | | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | — | | — | | — | | — | | 2,896 | | 48,016 | |
| 1/30/2021 | — | | — | | — | | 2,171 | | 4,342 | | 6,513 | | — | | — | |
| Deborah A. Stephenson | 1/30/2021 | — | | 82,500 | | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | — | | — | | — | | — | | 2,654 | | 44,003 | |
| 1/30/2021 | — | | — | | — | | 1,991 | | 3,981 | | 5,972 | | — | | — | |
| James M. Moses | 1/30/2021 | — | | — | | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | — | | — | | — | | — | | 6,225 | | 103,211 | |
| 1/30/2021 | — | | — | | — | | 4,668 | | 9,336 | | 14,004 | | — | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1) | Estimated Future Payouts Under
Equity Incentive Plan Awards(2) | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#) | Grant Date
Fair Value
of Stock
and
Option
Awards(3)
($) |
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
| Nitin J. Mhatre | 1/30/2023 | — | | 626,250 | | — | | — | | — | | — | | — | | — | |
| 1/30/2023 | — | | — | | — | | — | | — | | — | | 11,552 | | 350,719 | |
| 1/30/2023 | — | | — | | — | | 8,664 | | 17,327 | | 25,991 | | — | | 555,157 | |
| R. David Rosato | 1/30/2023 | — | | 275,000 | | — | | — | | — | | — | | — | | — | |
| 4/1/2023 | — | | — | | — | | — | | — | | — | | 7,981 | | 200,004 | |
| 1/30/2023 | — | | — | | — | | — | | — | | — | | — | | — | |
| Sean A. Gray | 1/30/2023 | — | | 350,400 | | — | | — | | — | | — | | — | | — | |
| 1/30/2023 | — | | — | | — | | — | | — | | — | | 6,588 | | 200,011 | |
| 1/30/2023 | — | | — | | — | | 4,941 | | 9,882 | | 14,823 | | — | | 316,619 | |
| James C. Brown | 1/30/2023 | — | | 258,500 | | — | | — | | — | | — | | — | | — | |
| 1/30/2023 | — | | — | | — | | — | | — | | — | | 4,941 | | 150,009 | |
| 1/30/2023 | — | | — | | — | | — | | — | | — | | — | | — | |
| Gregory D. Lindenmuth | 1/30/2023 | — | | 159,908 | | — | | — | | — | | — | | — | | — | |
| 1/30/2023 | — | | — | | — | | — | | — | | — | | 2,109 | | 64,029 | |
| 1/30/2023 | — | | — | | — | | 1,581 | | 3,162 | | 4,473 | | — | | 101,310 | |
| Brett Brbovic | 1/30/2023 | — | | 63,394 | | — | | — | | — | | — | | 1,647 | | 50,002 | |
| 4/1/2023 | — | | — | | — | | — | | — | | — | | 2,445 | | 61,272 | |
(1)Amount represents awards granted for future payment to the Named Executive Officers under the Short-Term Incentive Plan (STI). Please see the section titled “Compensation Discussion and Analysis -– Short-Term Incentive Compensation” for a discussion of the STI.
(2)Amount shown reflects the number of restricted stock awards, subject to performance-based vesting, that may be earned under the Long-Term Incentive Plan (LTI). Performance below threshold may result in no award payable to the Named Executive Officer. Please see the section titled “Compensation Discussion and Analysis -– Long-term Incentive Plan” for a discussion of the LTI.
(3)The amounts reported are the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. The grant date per share fair value for the restricted stock award was $16.58.
6146 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
Outstanding Equity Awards at December 31, 2023
The following table provides information concerning unvested stock awards for each Named Executive Officer as of December 31, 2023. The NEOs do not hold any stock options.
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| | Option Awards | Stock Awards | | | | | | | | | |
| Name | Grant Date | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested($)(11) | | | | | | | | | |
| Nitin J. Mhatre | 1/30/2021 | — | | — | | 5,539(1) | 137,533 | | 24,925(7) | 618,888 | | | | | | | | | | |
| 1/30/2022 | — | | — | | 7,504(2) | 186,324 | | 16,882(8) | 419,180 | | | | | | | | | | |
| 1/30/2023 | — | | — | | 11,552(3) | 286,836 | | 17,327(9) | 430,229 | | | | | | | | | | |
| R. David Rosato | 4/1/2023 | — | | — | | 7,981(4) | 198,428 | | — | | — | | | | | | | | | | |
| Sean A. Gray | 1/30/2021 | — | | — | | 4,624(1) | 114,814 | | 20,804(7) | 516,563 | | | | | | | | | | |
| 1/30/2022 | — | | — | | 5,329(2) | 132,319 | | 11,988(8) | 297,662 | | | | | | | | | | |
| 1/30/2023 | — | | — | | 6588(3) | 163,580 | | 9,882(9) | 245,370 | | | | | | | | | | |
| James C. Brown | 1/30/2023 | — | | — | | 4,941(5) | 122,685 | | — | | — | | | | | | | | | | |
| Gregory D. Lindenmuth | 1/30/2021 | — | | — | | 996(1) | 24,731 | | 4,342(7) | 107,812 | | | | | | | | | | |
| 1/30/2022 | — | | — | | 1,528(2) | 37,940 | | 3,436(8) | 85,316 | | | | | | | | | | |
| 1/30/2023 | — | | — | | 2,109(3) | 52,366 | | 3,162(9) | 78,512 | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Brett R. Brbovic | 4/1/2021 | — | | — | | 953(10) | 23,663 | | — | | — | | | | | | | | | | |
| 7/1/2021 | — | | — | | 1,439(10) | 35.703 | | — | | — | | | | | | | | | | |
| 4/1/2022 | — | | — | | 926(10) | 22,993 | | — | | — | | | | | | | | | | |
| 1/30/2023 | — | | — | | 1,647(6) | 40,895 | | — | | — | | | | | | | | | | |
| 4/1/2023 | — | | — | | 2,445(6) | 60,709 | | — | | — | | | | | | | | | | |
(1)Remaining shares granted on January 30, 2021 will vest ratably on each January 30th through 2024.
(2)Remaining shares granted on January 30, 2022 will vest ratably on each January 30th through 2025.
(3)Remaining shares granted on January 30, 2023 will vest ratably on each January 30th through 2026.
(4)Remaining shares granted on April 1, 2023 will vest ratably on each April 1st through 2026.
(5)Remaining shares granted on January 30, 2023 will vest ratably on each January 30th through 2025.
(6)Fifty percent (50%) of the shares granted on January 30, 2023 and April 1, 2023 will vest ratably over three years and the other 50% are subject to a three year cliff vesting schedule.
(7)These shares are subject to vesting based upon the achievement of specific goals. The amounts shown assume the target level of performance is achieved. The actual award, if any, will be determined and vest on the first compensation committee meeting following January 30, 2024 based on the 2021-2023 performance period.
(8)These shares are subject to vesting based upon the achievement of specific goals. The amounts shown assume the target level of performance is achieved. The actual award, if any, will be determined and vest on the first compensation committee meeting following January 30, 2025 based on the 2022-2024 performance period.
(9)These shares are subject to vesting based upon the achievement of specific goals. The amounts shown assume the target level of performance is achieved. The actual award, if any, will be determined and vest on the first compensation committee meeting following January 30, 2026 based on the 2023-2025 performance period.
(10)Remaining shares granted on April 1, 2021 will vest on April 1, 2024; remaining shares granted on July 1, 2021 will vest on July 1, 2024; and remaining shares granted on April 1, 2022 will vest 50% ratably on each April 1st through 2025 and 50% will cliff vest on April 1, 2025.
(11)Computed using the fair market value of the awards.
47 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
Option Exercises and Stock Vesting
The following table provides information concerning the vesting of restricted stock awards for each Named Executive Officer, on an aggregate basis, during 2023. The NEOs do not hold any stock options.
| | | | | | | | | | | | | | |
| Option Awards | Stock Awards |
| Name | Number of
Shares Acquired
on Exercise
(#) | Value Realized
on Exercise
($) | Number of Shares Acquired on Vesting
(#) | Value Realized on Vesting (1) ($) |
| Nitin J. Mhatre | — | — | 9,291 | 282,075 |
| R. David Rosato | — | — | — | — |
| Sean A. Gray | — | — | 9,579 | 290,818 |
| James C. Brown | — | — | — | — |
| Gregory D. Lindenmuth | — | — | 2,461 | 74,718 |
| Brett Brbovic | — | — | 1,470 | 32,305 |
(1)Represents the aggregate value realized in 2023 upon the vesting of restricted stock awards granted in prior years under the Company’s long-term incentive plan and based on the value of the Company’s stock on the applicable vesting dates for each award. The value realized by the NEO upon vesting is also the amount reported as 2023 taxable income.
EmploymentOption Exercises and Change in Control ArrangementsStock Vesting
Employment Agreement.
The Company, the Bank and Mr. Mhatre entered into an employment agreement effective as of January 29, 2021 (the “Employment Agreement”). The term of the Employment Agreement is three years and the term may be extended by mutual consent. The base salary for Mr. Mhatre is $725,000. In addition to base salary, the Employment Agreement provides for, among other things, participation in bonus programs and other benefit plans and arrangements applicable to executive employees.
The Bank may terminate Mr. Mhatre’s employment for “cause” (as defined in the Employment Agreement) at any time, in which event Mr. Mhatre would have no right to receive compensation or other benefits for any period after his termination of employment. Certain events resulting in Mr. Mhatre’s termination of employment entitle him to severance benefits.In the event of Mr. Mhatre’s involuntary termination of employment without “cause” or in the event of a voluntary termination for “good reason” (as defined in the Employment Agreement), Mr. Mhatre would become entitled to a severance payment in the form of a cash lump sum equal to the base salary and the greater of (i) the average cash incentive earned in the prior three years, or (ii) the cash incentive which Mr. Mhatre would have earned during the remaining unexpired term of the agreement.In addition, Mr. Mhatre and his dependents would become entitled, at no expense to him, to the continuation of non-taxable medical and dental coverage for the remaining unexpired term of the Employment Agreement, or if the coverage is not permitted by applicable law or if providing the benefits would subject the Bank to penalties, he will receive a cash lump sum payment equal to the value of the benefits.
In the event of a “change in control” (as defined in the Employment Agreement) of the Company or Bank followed within twenty-four months by the executive’s involuntary termination of employment for a reason other than for cause or upon his voluntary termination for good reason, Mr. Mhatre would become entitled to a severance payment in the form of a cash lump sum equal to three times his base salary and three times the greater of the (i) average cash incentive earned in the prior three calendar years, or (ii) the cash incentive that would be paid at target for the fiscal year in which such termination occurs and full vesting of any equity awards.In addition, Mr. Mhatre would become entitled, at no expense to him, to the continuation of life insurance and non-taxable medical and dental coverage for thirty-six (36) months following his termination of employment, or if the coverage is not permitted by applicable law or if providing the benefits would subject the Bank to penalties, he will receive a cash lump sum payment equal to the value of the benefits.
Upon termination of the executive’s employment (other than following a change in control), Mr. Mhatre will be subject to certain restrictions on his ability to compete or to solicit business or employees of the Bank and the Company for a period of one year following his termination of employment. The Employment Agreement also includes provisions protecting the Company’s and Bank’s confidential business information.
Change in Control Arrangements.
The Company and Berkshire Bank entered into change in control agreements with Messrs. Gray and Bacigalupo. Each change in control agreement has a term of three years and is renewable annually for an additional year at the sole discretion of the boards of directors of the Company and Berkshire Bank. Mr. Basu, Mr. Lindenmuth, and Ms. Stephenson participate in the Berkshire Bank Enhanced Change in Control Severance Plan.See “Potential Payments Upon Termination or Change in Control” for a discussion of the benefits and payments under these agreements.
62 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
Outstanding Equity Awards at December 31, 2021
The following table provides information concerning unvestedthe vesting of restricted stock awards for each Named Executive Officer, as of December 31, 2021.on an aggregate basis, during 2023. The NEOs do not hold any stock optionsoptions.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | Stock Awards |
| Name | Grant Date | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(7) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested($)(7) |
| Nitin J. Mhatre | 1/30/2019 | — | | — | | — | | — | | — | | — | |
| 1/30/2020 | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | 16,617 (3) | 472,421 | | 24,925 (6) | 706,618�� | |
George F. Bacigalupo
| 1/30/2019 | — | | — | | 1,075 (1) | 30,562 | | 4,837 (4) | 137,516 | |
| 1/30/2020 | — | | — | | 3,619 (2) | 102,888 | | — | | — | |
| 1/30/2021 | — | | — | | 5,429 (3) | 154,346 | | 8,142 (6) | 231,477 | |
| Subhadeep Basu | 1/30/2019 | — | | — | | — | | — | | — | | — | |
| 1/30/2020 | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | 4,465 (3) | 126,940 | | — | | — | |
| Sean A. Gray | 1/30/2019 | — | | — | | 2388 (1) | 67,891 | | 10,749 (4) | 305,594 | |
| 1/30/2020 | — | | — | | 4,584 (2) | 130,323 | | 10,313 (5) | 293,199 | |
| 1/30/2021 | — | | — | | 13,870 (3) | 394,324 | | 20,804 (6) | 591,458 | |
Gregory D. Lindenmuth
| 1/30/2019 | — | | — | | 716 | | 20,356 | | 3,225 (4) | 91,687 | |
| 1/30/2020 | — | | — | | 1,467 | | 41,707 | | 3,300 (5) | 93,819 | |
| 1/30/2021 | — | | — | | 2,896 | | 82,333 | | 4,342 (6) | 123,443 | |
| | | | | | |
| Deborah A. Stephenson | 1/30/2019 | — | | — | | 716 (1) | 20,356 | | 3,225 (4) | 91,687 | |
| 1/30/2020 | — | | — | | 1,009 (2) | 28,686 | | 2,269 (5) | 64,508 | |
| 1/30/2021 | — | | — | | 2,654 (3) | 75,453 | | 3,981 (6) | 113,180 | |
| James M. Moses | 1/30/2019 | — | | — | | — | | — | | — | | — | |
| 1/30/2020 | — | | — | | — | | — | | — | | — | |
| 1/30/2021 | — | | — | | — | | — | | — | | — | |
| | | | | | | | | | | | | | |
| Option Awards | Stock Awards |
| Name | Number of
Shares Acquired
on Exercise
(#) | Value Realized
on Exercise
($) | Number of Shares Acquired on Vesting
(#) | Value Realized on Vesting (1) ($) |
| Nitin J. Mhatre | — | — | 9,291 | 282,075 |
| R. David Rosato | — | — | — | — |
| Sean A. Gray | — | — | 9,579 | 290,818 |
| James C. Brown | — | — | — | — |
| Gregory D. Lindenmuth | — | — | 2,461 | 74,718 |
| Brett Brbovic | — | — | 1,470 | 32,305 |
(1)Remaining shares granted on January 30, 2019 will vest ratably on each January 30th through 2022.
(2)Remaining shares granted on January 30, 2020 will vest ratably on each January 30th through 2023.
(3)Remaining shares granted on January 30, 2021 will vest ratably on each January 30th through 2024.
(4)These shares are subject to vesting basedRepresents the aggregate value realized in 2023 upon the achievementvesting of specific goals. The amounts shown assumerestricted stock awards granted in prior years under the target level of performance is achieved. The actual award, if any, will be determinedCompany’s long-term incentive plan and vest on the first compensation committee meeting following January 30, 2022 based on the 2019-2021 performance period.
(5)These shares are subject to vesting based upon the achievement of specific goals. The amounts shown assume the target level of performance is achieved. The actual award, if any, will be determined and vest on the first compensation committee meeting following January 30, 2023 based on the 2020-2022 performance period.
(6)These shares are subject to vesting based upon the achievement of specific goals. The amounts shown assume the target level of performance is achieved. The actual award, if any, will be determined and vest on the first compensation committee meeting following January 30, 2024 based on the 2021-2023 performance period.
(7)Computed using the fair market value of the shares basedCompany’s stock on the Company’s closing stock price of $28.43 on December 31, 2021.applicable vesting dates for each award. The value realized by the NEO upon vesting is also the amount reported as 2023 taxable income.
63 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
Option Exercises and Stock Vesting
The following table provides information concerning the vesting of restricted stock awards for each Named Executive Officer, on an aggregate basis, during 2021.2023. The NEOs do not hold any stock options.
| | Option Awards | Stock Awards |
| Option Awards | | | Option Awards | Stock Awards |
| Name | Name | Number of
Shares Acquired
on Exercise
(#) | Value Realized
on Exercise
($) | Number of Shares Acquired on Vesting
(#) | Value Realized on Vesting
($) | Name | Number of
Shares Acquired
on Exercise
(#) | Value Realized
on Exercise
($) | Number of Shares Acquired on Vesting
(#) | Value Realized on Vesting (1) ($) |
| Nitin J. Mhatre | Nitin J. Mhatre | — | | — | | — | | — | | Nitin J. Mhatre | — | 9,291 | 282,075 |
| George F. Bacigalupo | — | | — | | 1,429 | | 23,693 | |
| Subhadeep Basu | — | | — | | — | | — | |
| R. David Rosato | | R. David Rosato | — |
| Sean A. Gray | Sean A. Gray | — | | — | | 6,009 | | 99,929 | | Sean A. Gray | — | 9,579 | 290,818 |
| James C. Brown | | James C. Brown | — |
| Gregory D. Lindenmuth | Gregory D. Lindenmuth | — | | — | | 1,783 | | 29,562 | | Gregory D. Lindenmuth | — | 2,461 | 74,718 |
| Deborah A. Stephenson | — | | — | | 1,519 | | 25,185 | |
| James M. Moses | — | | — | | 3,731 | | 61,860 | |
| Brett Brbovic | | Brett Brbovic | — | 1,470 | 32,305 |
(1)Represents the aggregate value realized in 20212023 upon the vesting of restricted stock awards granted in prior years under the Company’s long-term incentive plan and based on the value of the Company’s stock on the applicable vesting dates for each award. The value realized by the NEO upon vesting is also the amount reported as 20212023 taxable income.
Executive Compensation
Employment and Change in Control Arrangements
Employment Agreement.
The Company, the Bank and Mr. Mhatre entered into an employment agreement effective as of January 21, 2024 (the “Employment Agreement”). The term of the Employment Agreement is three years and the term may be extended by mutual consent. The base salary for Mr. Mhatre is $835,000 in 2024. In addition to base salary, the Employment Agreement provides for, among other things, participation in bonus programs and other benefit plans and arrangements applicable to executive employees.
The Bank may terminate Mr. Mhatre’s employment for “cause” (as defined in the Employment Agreement) at any time, in which event Mr. Mhatre would have no right to receive compensation or other benefits for any period after his termination of employment. Certain events resulting in Mr. Mhatre’s termination of employment entitle him to severance benefits.In the event of Mr. Mhatre’s involuntary termination of employment without “cause” or in the event of a voluntary termination for “good reason” (as defined in the Employment Agreement), Mr. Mhatre would become entitled to a severance payment in the form of a cash lump sum payment equal to Mr. Mhatre’s base salary for the remaining unexpired term of the Employment Agreement, plus annual cash bonuses for each year (prorated in the event of a partial year) remaining under the unexpired term of the Employment Agreement. For purposes of determining the bonus(es), the amount of the annual cash bonus shall be equal to the greater of (i) the average cash incentive earned in the prior three calendar years, or (ii) the cash incentive that would be paid or payable to Mr. Mhatre receiving the annual incentive at target for the fiscal year in which such termination occurs. In addition, Mr. Mhatre and his dependents would become entitled, at no expense to him, to the continuation of non-taxable medical and dental coverage for the remaining unexpired term of the Employment Agreement, or if the coverage is not permitted by applicable law or if providing the benefits would subject the Bank to penalties, Mr. Mhatre will receive a cash lump sum payment equal to the value of the benefits.
In the event of a “change in control” (as defined in the Employment Agreement) of the Company or Bank followed within twenty-four months by the executive’s involuntary termination of employment for a reason other than for cause or upon his voluntary termination for good reason, Mr. Mhatre would become entitled to a severance payment in the form of a cash lump sum equal to three times his base salary and three times the greater of the (i) average cash incentive earned in the prior three calendar years, or (ii) the cash incentive that would be paid at target for the fiscal year in which such termination occurs and full vesting of any equity awards.In addition, Mr. Mhatre would become entitled, at no expense to him, to the continuation of life insurance and non-taxable medical and dental coverage for thirty-six (36) months following his termination of employment, or if the coverage is not permitted by applicable law or if providing the benefits would subject the Bank to penalties, he will receive a cash lump sum payment equal to the value of the benefits.
Upon termination of the executive’s employment (other than following a change in control), Mr. Mhatre will be subject to certain restrictions on his ability to compete or to solicit business or employees of the Bank and the
48 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
Company for a period of one year following his termination of employment. The Employment Agreement also includes provisions protecting the Company’s and Bank’s confidential business information.
Change in Control Arrangements.
The Company and Berkshire Bank entered into a change in control agreement with Mr. Gray. The change in control agreement has a term of three years and is renewable annually for an additional year at the sole discretion of the boards of directors of the Company and Berkshire Bank. Messrs. Rosato, Brown, Lindenmuth and Brbovic participate in the Berkshire Bank Enhanced Change in Control Severance Plan.See “Potential Payments Upon Termination or Change in Control” for a discussion of the benefits and payments under these agreements.
Non-qualified Deferred Compensation
The following table provides information for the nonqualified deferred compensation plans in which Messrs. Mhatre and Gray participated in 2021.2023. No other named executive officer participated in a nonqualified deferred compensation plan.
| | Name | Name | Plan Name | Registrant Contributions in Last Fiscal Year ($)(1) | Aggregate
Earnings in
2019 ($) | Aggregate Balance at Last Fiscal Year End ($)(2) | Name | Plan Name | Registrant Contributions in Last Fiscal Year ($)(1) | Aggregate Earnings in 2023 ($) | Aggregate Balance at Last Fiscal Year End ($)(2) |
| Nitin J. Mhatre | Nitin J. Mhatre | Supplemental Executive Retirement Agreement | 125,000 | | — | | 125,000 | | Nitin J. Mhatre | Supplemental Executive Retirement Agreement | 125,000 | — | 375,000 |
| Sean A. Gray | Sean A. Gray | Supplemental Executive Retirement Agreement | 100,000 | | — | | 550,000 | | Sean A. Gray | Supplemental Executive Retirement Agreement | 100,000 | — | 500,000 |
(1)Contributions included in the “Registrant Contributions in Last Fiscal Year” column are included as compensation for the Named Executive Officer in the Summary Compensation Table.
(2)Amounts included in the “Aggregate Balance at Last Fiscal Year End” have been reported as compensation for the Named Executive Officer in the Summary Compensation Table.
Supplemental Executive Retirement Agreements
On April 1, 2021, Berkshire Bank entered into a supplemental executive retirement agreement with Mr. Mhatre. Under the terms of the agreement, Mr. Mhatre is entitled to the value of the vested account balance upon his termination of employment or death. Berkshire Bank will credit the account balance with an annual amount of $125,000 as of April 1, 2021, and each subsequent April 1, commencing April 1, 2022, provided that Mr. Mhatre is employed with the Berkshire Bank on the date of such contribution.The account balance is subject to a five year vesting schedule, with 20% of the account balance vesting each year, commencing on April 1, 2022, subject to full vesting in the event of death, disability or a termination of employment within two years following a change in control.In the event of Mr. Mhatre’s termination of employment for a reason other than for cause prior to normal retirement age (age 65) and in connection with or within two years following a change in control (as defined in the agreement), Mr. Mhatre’s account balance shall become fully vested and the amount of the account balance shall be increased to equal the amount that Berkshire Bank would have otherwise credited Mr. Mhatre’s account through the calendar year in which Mr. Mhatre would have attained normal retirement age.Upon a termination of employment or death, the account balance will be paid in a lump sum payment to Mr. Mhatre or his beneficiary, as applicable.See “Potential Payments Upon Termination or Change-in-Control” for a discussion of payments under this agreement.
6449 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
Berkshire Bank and Sean A. Gray entered into a supplemental executive retirement agreement effective as of January 1, 2019. Under the terms of the agreement, Berkshire Bank will credit the account balance with $100,000 commencing on January 1, 2019 and on each January 1st through 2028, provided that the executive is employed with Berkshire Bank on the date of such contribution. Berkshire Bank will make a final contribution as of January 1, 2028 for a total potential contribution of $1.0 million. Mr. Gray is entitled to the value of the vested account balance upon his termination of employment or death. The account balance is subject to a five-year vesting schedule, with 20% of the account balance vesting each year, commencing January 1, 2020 and the executive will be 100% vested on January 1, 2024, subject to full vesting in the event of death, disability or a termination of employment within two years following a change in control. Upon a termination of employment or death, the account balance will be paid in a lump sum payment to the Executive or his beneficiary, as applicable. In the event the Executive's employment is terminated within two years following a change in control (as defined in the agreement), an amount equal to $1.0 million will be paid to the Executive in a single payment. See “Potential Payments Upon Termination or Change-in-Control” for a discussion of payments under this agreement.
Potential Payments Upon Termination or Change-in-Control
The following table summarizes the estimated payments that would be made to the NEOs upon termination of employment as of December 31, 2021,2023, pursuant to each executive’s employment agreement, change in control arrangement, equity awards, benefit plans and other arrangements. The amounts shown do not include the executive’s vested account balance in the Bank’s 401(k) Plan, non-qualified deferred compensation plans and the value of continued long-term care insurance, if applicable. The amounts shown relating to unvested restricted stock awards are based on the fair market value of the Company’s common stock on December 31, 2021,29, 2023, which was $28.43.$24.83. The actual amounts to be paid to an executive can only be determined at the time of such executive’s separation from service with the Company.
The following table provides the estimated amount of compensation payable to Mr. Mhatre for each of the termination events listed below.
| | Termination for Cause ($)(1) | Termination Without Cause or for Good Reason ($)(2) | Payments Due Upon Change in Control With Termination of Employment ($)(3) | Disability($)(4) | Death($)(5) |
| Termination for Cause ($)(1) | | | Termination for Cause ($)(1) | Termination Without Cause or for Good Reason ($)(2) | Payments Due Upon Change in Control With Termination of Employment ($)(3) | Disability($)(4) | Death($)(5) |
| Cash severance | Cash severance | — | | 3,806,250 | | 3,806,250 | | — | | — | | Cash severance | — | 4,689,626 | — |
| In-kind benefits | In-kind benefits | — | | 63,030 | | 65,755 | | 42,020 | | — | | In-kind benefits | — | 73,548 | 76,129 | 49,032 | — |
Restricted stock vesting(8) | — | | — | | 1,181,039 | | 1,181,039 | | 1,181,039 | |
SERP(4) | — | | — | | 2,000,000 | | — | | — | |
Restricted stock vesting(7) | | Restricted stock vesting(7) | — | 2,078,991 |
| SERP | | SERP | — | 150,000 | 1,850,000 | — |
65 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
The following table provides the estimated amount of compensation payable to Messrs. Rosato, Gray, Basu, Bacigalupo,Brown, Lindenmuth, and Ms. StephensonMr. Brbovic upon their termination of employment in connection with a change in control. The change in control agreements entered into with the executives do not provide for any severance payments or benefits in the event of a termination of employment that is not in connection with or subsequent to a change in control.Termination 1)for
Cause ($)(1)for Cause ($)(1) | | | | | | | | | | | | | | | | | |
| R. David Rosato(6) ($) | Sean A. Gray(6)(9) ($) | James Brown(6) ($) | Gregory D. Lindenmuth(6) ($) | Brett Brbovic(6) ($) |
| Cash severance | 2,325,000 | 3,449,373 | 2,185,501 | 1,545,773 | 320,661 |
| In-kind benefits | — | 48,693 | — | 30,613 | 25,312 |
Restricted stock vesting(7) | 198,168 | 1,470,308 | 122,685 | 428,193 | 101,604 |
SERP(8) | — | 600,000 | — | — | — |
| | | | | | | | | | | | | | | | | |
| George F. Bacigalupo(7) | Subhadeep Basu(7) | Sean A. Gray(8)(10) | Gregory D. Lindenmuth(7) | Deborah A. Stephenson(7) |
| Cash severance | 1,631,250 | | 1,870,500 | | 3,144,042 | | 1,170,000 | | 1,072,500 | |
| In-kind benefits | 56,386 | | 2,700 | | 43,668 | | 26,718 | | 7,137 | |
Restricted stock vesting(8) | 553,902 | | 63,456 | | 1,782,788 | | 473,758 | | 393,869 | |
SERP(9) | — | | — | | 760,000 | | — | | — | |
(1)Upon a termination for “cause” (as defined in the applicable agreements), the executive will have no right to receive compensation or other benefits under the employment agreement and SERP. In addition, he will forfeit all non-vested restricted stock awards.
(2)Under the executive’s employment agreement, upon an involuntary termination for a reason other than for cause or if the executive voluntarily resigns for “good reason” (as defined in the employment agreement), the executive (or, upon death, his beneficiary) would be entitled to receive a severance payment in the form of a cash lump sum payment equal to the base salary and the greater of the (i) average cash incentive earned in the prior three calendar years, or (ii) the cash incentive that would be paid or payable to the executive receiving the annual incentive at target for the fiscal year in which the date of termination occurs (or for the prior fiscal year if the incentive opportunity has not yet been determined), as if the executive and Berkshire Bank were to satisfy all performance-related conditions, which the executive would have earned during the remaining unexpired term of the employment agreement plus annual cash bonuses for each year (prorated in the event of a partial year) remaining under the unexpired term of the employment agreement. In addition, he and his dependents would become entitled, at no cost to the executive, to the continuation of non-taxable medical and dental coverage for the remaining unexpired term of the employment agreement. Upon termination of the executive’s employment under these circumstances, the executive must adhere to a one-year non-competition and non-solicitation restriction. The amount shown in this column assumes the remaining term of the contract is three years. Under the executive’s supplemental executive retirement agreement, if Mr. Mhatre separates from service for a reason other than cause, he will receive his vested benefit at the time of separation from service in a lump sum. If Mr. Mhatre is a “specified employee” (as defined in Section 409A of the Code), the amounts payable under the employment agreement and supplemental executive retirement agreement will be paid six months after his separation from service.
50 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
(3)Under the executive’s employment agreement, upon an involuntary termination, other than for cause, or voluntary termination (upon the occurrence of circumstances specified in the agreements) in connection with or following a change in control of the Company or the Bank, the executive would be entitled to a cash severance payment equal to three times base salary and cash incentive, plus the annual cash incentive pro-rated through the date of termination, and life insurance and non-taxable medical and dental coverage substantially identical to the coverage maintained for the executive prior to termination of employment for 36 months at no cost to the executive. Under the supplemental executive retirement agreement, in the event of Mr. Mhatre separates from service for a reason other than for cause prior to normal retirement age (age 65) and in connection with or within two years following a change in control (as defined in the agreement), Mr. Mhatre’s account balance will become fully vested and the amount of the account balance shall be increased to equal the amount that the Bank would have otherwise credited Mr. Mhatre’s account through the calendar year in which Mr. Mhatre would have attained normal retirement age.age and the amount shown reflects the non-vested portion that would become vested upon a qualifying termination of employment following a change in control. If Mr. Mhatre is a “specified employee” (as defined in Section 409A of the Code), the amounts payable under the employment agreement and supplemental executive retirement agreement will be paid six months after his separation from service. The above table does not include the vested benefit under the supplemental executive retirement agreement since the value of the vested benefit is set forth in the table presented above under “ - Non-qualified Deferred Compensation.”
(4)Under the executive’s employment agreement, upon a termination due to “disability” (as defined in the employment agreement), the executive would be entitled to continued non-taxable medical and dental insurance, at no cost to the executive, until the earlier of the second anniversary of the date of termination or age sixty-five (65). This column shows the value of two years of continued insurance. Additionally, the executive would be entitled to receive benefits under the provisions of disability insurance coverage in effect for Berkshire Bank employees and executives. Upon termination due to disability, restricted stock awards granted pursuant to our equity incentive plans automatically vest. The executive does not hold any stock options.
(5)Under the executive’s employment agreement, upon death, the executive’s beneficiary will receive any earned but unpaid compensation and vested benefits due the executive as of the date of death. In addition, the executive’s estate or beneficiary would be entitled to receive benefits under the provisions of any life insurance coverage in effect for Berkshire Bank employees and executives. Upon termination due to death, restricted stock awards granted pursuant to our equity incentive plans automatically vest. The executive does not hold any stock options.
(6)Mr. Gray’s change in control agreement provides that upon an involuntary termination, other than for cause, or voluntary termination (upon the occurrence of circumstances specified in the agreements) following a change in control of the Company or the Bank, the executive would be entitled to a cash severance payment equal to three times his average annual compensation for the five years preceding the change in control, and life insurance and non-taxable medical, dental and disability coverage substantially identical to the coverage maintained for the executive prior to his termination of employment for 36 months following the executive’s termination of employment. The executive would also be entitled to receive a tax indemnification payment if payments under the change in control agreement trigger liability under Section 280G of the Code for the excise tax applicable to “excess parachute payments.” The estimated amount of the tax indemnification payment is $2,619,285$2,685,496 and this amount is not reflected in the above table. Beginning in 2009, the Company determined that it would no longer enter into change in control agreements that provide for a tax gross-up for any taxes as a result of “excess parachute payments” under Section 280G of the Code and Mr. Gray’s change in control agreement was entered into before the Company adopted this position.
66 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
(7)The change in control arrangements entered into with Messrs. Basu, Bacigalupo,Brbovic, Brown, Lindenmuth, and Ms. StephensonRosato provide that upon an involuntary termination, other than for cause, or voluntary termination (upon the occurrence of circumstances specified in the agreements) in connection with or following a change in control of the Company or the Bank, the executive would be entitled to a cash severance payment equal to three times (one times for Mr. Brbovic) base salary and cash incentive, plus the annual cash incentive pro-rated through the date of termination, and life insurance and non-taxable medical and dental coverage substantially identical to the coverage maintained for the executive prior to termination of employment for 36 months following termination of employment, with the executive paying his or her share of the premiums. Under the agreements withFor Messrs. Basu, and Bacigalupo, severance payments will be reduced to avoid liability under Section 280G of the Code for the excise tax applicable to “excess parachute payments” only if such reduction will result in the executive receiving a greater total payment as measured on an after-tax basis, and accordingly, the amount shown in this column may be reduced. It is estimated that Messrs. Basu and Bacigalupo’s payments would not be reduced under this provision. For Mr.Brbovic, Brown, Lindenmuth, and Ms. Stephenson,Rosato, severance payments will be reduced to avoid liability under Section 280G of the Code for the excise tax applicable to “excess parachute payments” and it is estimated that Mr. Lindenmuth’s paymentsMessrs. Brown, Lindenmuth, and Ms. Stephenson’sRosato's payments will be reduced by $460,363$811,315, $534,492, and $327,711,$727,400, respectively, which is not shown in the above table, and Mr. Brbovic’s payments would not be reduced under this provision. The estimated reductions of severance are not reflected in the above table. None of the change in control arrangements entitle the executives to any tax indemnification payment (a “tax gross-up”) if payments trigger liability under Sections 280G and 4999 of the Internal Revenue Code for an excise tax on “excess parachute payments.”
(8)(7)In the event of a change in control of the Company or the Bank, equity awards subject to time-based vesting automatically vest only if an executive experiences a qualifying termination of employment following a change in control (a “double trigger”). The amount shown reflects the value of such awards as well as equity awards subject to performance-based vesting.
(9)(8)The supplemental executive retirement agreement entered into with Mr. Gray provides that upon an involuntary termination, other than for cause, or voluntary termination (upon the occurrence of circumstances specified in the agreement) in connection with or following a change in control of the Company or the Bank, death or disability, the executive would become entitled to a payment in the amount of $1 million. The executive’s benefit is subject to a five yearfive-year vesting schedule, with twenty percent (20%) of the account vesting each year, commencing on January 1, 2020. The amount shown reflects the non-vested portion that would become vested upon a qualifying termination of employment following a change in control.
(10)(9)To supplement the Bank’s disability programs, the Bank implemented a long-term care plan (“LTC Plan”) in 2015. Mr. Gray participates in the LTC Plan. Mr. Gray will become vested upon the earliest of (i) the executive attaining age 62 with ten years of service; (ii) the executive attaining age 55 with 20 years of service; (iii) a change in control; (iv) or disability. Once vested, an individual and his spouse are generally eligible for long-term care benefits during their lifetime, at no cost to the covered individual, and with the Bank paying the cost of such coverage. The above table does not reflect the value of such continued coverage.
51 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
Mr. Moses did not receive any severance or additional payments in connection with his resignation effective as of March 19, 2021.
CEO Pay Ratio
Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following information about the relationship of the annual total compensation of our median compensated employee and the annual total compensation of Nitin J. Mhatre, our CEO as of December 31, 2021.2023.
The 20212023 annual total compensation of our median employee, other than Mr. Mhatre, was $54,367and$59,792 and the 20212023 annual total compensation of Mr. Mhatre, as reported in the 2021 Summary Compensation Table, was $2,292,852.$2,633,381. Based on this information, for 20212023, we estimate the ratio of the annual total compensation of Mr. Mhatre to the annual total compensation of our median employee was 4244 to 1. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u)As of Regulation S-K. In accordance with Item 402(u),December 31, 2022, the date we selected to identify our median employee, we identified our median employee based on compensation paid during 20212022 to all our employees, other than Mr. Mhatre, who were employed by us on December 31, 2021. For2022. We have elected to use the same median employee that we identified in 2022 proxy statement,for the determination of 2023 pay ratio since there has not been a change to our employee population or compensation arrangements that would significantly impact this pay ratio disclosure. Further, we determined the 2021 annual total compensation of our median employee based on total cash compensation, which included base pay, commissions and bonuses, and we included all employees, whether employed on a full-time, part-time or seasonal basis, and no full-time equivalent adjustments were made for part-time employees. We then identified and calculated the elements of this employee’s total compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. With respect to the annual total compensation of Mr. Mhatre, we used the amount reported in the “Total” column of our 2021 Summary Compensation Table, which is included in this Proxy Statement.
The SEC’s rules regarding the identification of the median compensated employee and the process of the calculating the pay ratio, allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
6752 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
Pay Versus Performance Table
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (as defined by SEC rules) and certain financial performance of the Company. The Compensation Committee did not consider the pay versus performance disclosure when making its incentive compensation decisions. For further information about how we align executive compensation with the Company’s performance, see the “Compensation Discussion and Analysis” above. The amounts in the table below are calculated in accordance with SEC rules and do not represent amounts actually earned or realized by Principal Executive Officers (“PEOs”) and non-PEO NEOs, including with respect to restricted stock compensation.
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| PEO | | | | | | | |
| Summary Compensation Table Total(1) | Compensation Actually Paid(2) | Average Summary Compensation Table Total for Non-PEO NEOs(3) ($) | Average Compensation Actually Paid to Non-PEO NEOs(4) ($) | Value of Initial Fixed $100 Fixed Investment from 12/31/19 | | Company-Selected Performance Measure |
| Year | PEO 1
Nitin Mhatre
($) | PEO 2
Sean Gray
($) | PEO 3
Richard Marotta
($) | PEO 1
Nitin Mhatre
($) | PEO 2
Sean Gray
($) | PEO 3
Richard Marotta
($) | Total Shareholder Return ($)(5) | Peer Group Total Shareholder Return ($)(6) | Net Income ($M) | Operating ROTCE(7) |
| 2023 | 2,633,381 | N/A | N/A | 1,658,299 | N/A | N/A | 907,631 | 635,368 | 85.10 | 115.64 | 69,598 | 8.03% |
| 2022 | 2,609,600 | N/A | N/A | 2,984,797 | N/A | N/A | 957,688 | 987,755 | 99.13 | 116.10 | 92,533 | 8.94% |
| 2021 | 2,292,852 | 1,813,456 | N/A | 2,947,138 | 2,662,478 | N/A | 616,334 | 643,915 | 92.51 | 124.74 | 118,664 | 7.74% |
| 2020 | N/A | 1,493,453 | 5,301,126 | N/A | 804,428 | 3,646,629 | 621,554 | 350,331 | 54.70 | 91.29 | (533,017) | 3.18% |
(1) The dollar amounts reported for the PEOs Mr. Mhatre, Mr. Gray and Mr. Marotta under “Summary Compensation Table Total” are the amounts of total compensation reported for those persons for each corresponding year in the “Total” column of the Summary Compensation Table.
(2) The dollar amounts reported for Mr. Mhatre, Mr. Gray, and Mr. Marotta under “Compensation Actually Paid” represent the amount of “compensation actually paid” to those persons, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to them during the applicable year.
(3) The dollar amounts reported under Average Summary Compensation Total for non-PEO NEOs represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding any individual serving as our CEO during such year) in the “Total” column of the Summary Compensation Table in each applicable year. The NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Sean Gray, David Rosato, James Brown, Gregory Lindenmuth, and Brett Brbovic); (ii) for 2022, Sean Gray, Brett Brbovic, George Bacigalupo, Gregory Lindenmuth, and Subhadeep Basu; (iii) for 2021, Subhadeep Basu, George Bacigalupo, Gregory Lindenmuth, Deborah Stephenson and James Moses; and (iv) for 2020, James Moses, George Bacigalupo, Gregory Lindenmuth, and Tami Gunsch.
(4) The dollar amounts reported under Average Compensation Actually Paid for non-PEO NEOs represent the average amount of “compensation actually paid” to the NEOs as a group (excluding the CEO), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group during the applicable year.
(5) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period which is December 31, 2019.
(6) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: KBW NASDAQ Regional Banking Index. The measurement period is from December 31, 2019.
(7) Operating Return on Tangible Common Equity is based on earnings on an operating basis as adjusted for notable items as disclosed in Appendix A. The specific measure used is the Operating Return on Tangible Common Equity, excluding unrealized losses on AFS securities.
In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments in the table below were made to the PEO's and non-PEO NEOs’ total compensation to determine the compensation actually paid in 2023:
53 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
| | | | | | | | |
| PEO | Average Non-PEO NEOs |
| 2023 | 2023 |
| Total Compensation as reported in Summary Compensation Table (SCT) | $2,633,381 | $907,631 |
| Pension values reported in SCT | — | — |
| Fair value of equity awards granted during fiscal year | (905,934) | (227,588) |
| Pension value attributable to current year’s service and any change in pension value attributable to plan amendments made in the current year | — | — |
| Fair value of equity compensation granted and vested in current year—value at vesting date | — | — |
| Fair value of equity compensation granted and outstanding in current year—value at year-end | 677,929 | 186,561 |
| Change in fair value for end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during current fiscal year | 4,274 | (2,660) |
| Change in fair value from end of prior fiscal year to end of current fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | (751,351) | (147,170) |
| Dividends or other earnings paid on stock or options awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | — | — |
| Fair value of awards forfeited in current fiscal year determined at end of prior fiscal year | — | (81,406) |
| Compensation Actually Paid to NEOs | $1,658,299 | $635,368 |
Financial Performance Measures
As described in greater detail in “Proposal 2: Advisory Vote on Executive Compensation—Compensation Discussion & Analysis”, our approach to executive compensation is designed to directly link pay to performance, recognize both corporate and individual performance, promote long-term stock ownership, attract, retain and motivate talented executives, and balance risk and reward while taking into consideration stakeholder feedback as well as market trends and practices. The most important financial measures used by the Company in determining performance based compensation for the Company’s named executive officers for the most recently completed fiscal year are:
•Operating Return on Tangible Common Equity
•Operating Return on Assets
•Operating Pre-tax Pre-Provision Net Revenue
•Net Charge-offs/Average Loans
The operating measures above are non-GAAP financial measures used in the Company's incentive compensation plans and are described in Appendix A.
54 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
Analysis of the Information Presented in the Pay versus Performance Table
While we utilize several performance measures to align executive compensation with performance, all of those measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as defined by SEC rules) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following graphic descriptions of the relationships between information presented in the Pay versus Performance table.
Compensation Actually Paid and TSR
Compensation Actually Paid and Net Income
55 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
Compensation Actually Paid and Operating ROTCE
56 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
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| Proposal 3: Ratification of the Appointment of the Independent Registered Public Accounting Firm | | |
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| Purpose.
Performance.
Progress. |
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The Board of Directors recommends ratification of the Audit Committee’s appointment of Crowe LLP as our independent registered public accounting firm for fiscal year 2022.2024.
Background. The Company’s independent registered public accounting firm (“Accounting Firm”) for the year ended December 31, 20212023 was Crowe LLP (“Crowe”). The Audit Committee has appointed Crowe as the independent registered public accounting firm for the year ending December 31, 2022,2024, subject to ratification by the shareholders at the annual meeting.Annual Meeting. A representative of Crowe is expected to be present at the annual meetingAnnual Meeting to respond to appropriate questions from shareholders and will have the opportunity to make a statement should they desire to do so.
Shareholder ratification of the appointment of Crowe is not required by the Company’s bylaws or otherwise. However, the Board of Directors is submitting the appointment of the Accounting Firm to the shareholders for ratification as a matter of good corporate practice. If the ratification of the appointment of the firm is not approved by a majority of the votes cast by shareholders at the annual meeting,Annual Meeting, other independent registered public accounting firms may be considered by the Audit Committee of the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF CROWE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 20222024 FISCAL YEAR.
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee is responsible for selecting and managing compensation of the accounting firm and overseeing its work. The Audit Committee approves, in advance, all audit and permissible non-audit services to be performed by the Accounting Firm. This process is intended to ensure that the accounting firm does not provide any non-audit services that are prohibited by law or regulation. Requests for services by the Accounting Firm must be specific as to the particular services to be provided for compliance with the auditor services policy. The request may be made with respect to either specific services or a type of service for predictable or recurring services. During the years ended December 31, 20212023 and 2020,2022, respectively, all services were approved, in advance, by the Audit Committee in compliance with these procedures.
Audit Fees
The following table sets forth the fees billed to the Company for the fiscal years ended December 31, 20212023 and 2020,2022, respectively, by Crowe:
| | Fees | Fees | 2021 | 2020 | Fees | 2023 | 2022 |
Audit Fees(1) | Audit Fees(1) | $ | 1,270,000 | | $ | 1,552,000 | |
Audit-Related Fees(2) | Audit-Related Fees(2) | 91,000 | | 119,000 | |
Tax Fees(3) | Tax Fees(3) | 277,000 | | 249,000 | |
| All Other Fees | All Other Fees | — | | — | |
| Total | |
(1) Includes fees for audit of the financial statements and internal control over financial reporting, as well as quarterly reviews. For 2020, fees included work performed for the adoption of ASC 2016-13
(2) Fees in 20212023 and 20202022 related to HUD audit, 401(k) plan audit, and S-3Consent and Registration statement filings.
(3) Fees in 20212023 and 20202022 consist of tax return and estimated payment preparation services.
6857 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | AUDIT COMMITTEE REPORT
Audit Committee Report
The Company’s management is responsible for the Company’s internal controls and financial reporting process, and for preparing the Company’s consolidated financial statements (“financial statements”). The Company’s independent registered public accounting firm performs an independent audit of the financial statements and issues an opinion on the fair presentation of those financial statements in conformity with generally accepted accounting principles. The Accounting Firm also issues an opinion on the Company’s internal control over financial reporting based on criteria issued by the Committee on Sponsoring Organizations of the Treadway Commission. The Audit Committee meets with the Accounting Firm, with and without management present, to discuss the results of its examination, its evaluation of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee oversees the Company’s internal controls and financial reporting process on behalf of the Board of Directors.
In this context, the Audit Committee reviewed and discussed the financial statements with management. Management has represented that these statements were prepared in accordance with generally accepted accounting principles and provided its Report on Internal Control over Financial Reporting, as well as the certifications of the CEO and CFO.
The Audit Committee has reviewed and discussed the financial statements with the Accounting Firm, and has discussed matters required to be discussed under the applicable standards of Public Company Accounting Oversight Board, including Auditing Standard No. 1301, Communications with Audit Committees. These matters include the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of the disclosures in the financial statements. The Audit Committee also discussed with the Accounting Firm the overall scope and plans for its audit.
The Audit Committee has received and discussed the written disclosures and the letter from the Accounting Firm as required by the Public Company Accounting Oversight Board regarding the Accounting Firm’s communications with the Committee concerning the Accounting Firm’s independence. The Audit Committee considered, among other factors, the non-audit services provided by the Accounting Firm, in concluding that the firm is independent.
In performing all of these functions, the Audit Committee acts only in an oversight capacity. It relies on the work and assurances of the Company’s management, which has the primary responsibility for financial statements and reports, and of the Accounting Firm that, in its report, expresses an opinion on the fairness and conformity of the financial statements to generally accepted accounting principles. The Audit Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The Audit Committee’s processes do not assure that the Company’s financial statements are presented fairly in accordance with generally accepted accounting principles or that the audit of the financial statements has been carried out in accordance with generally accepted auditing standards.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20212023 for filing with the Securities and Exchange Commission. The Audit Committee also has approved, subject to shareholder ratification, the selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022.2024.
Audit Committee of the Board of Directors of Berkshire Hills Bancorp, Inc.
Sylvia Maxfield, Chair
Baye Adofo-Wilson
Nina A. Charnley
Jeffrey W. Kip
Jonathan L. ShulmanEric S. Rosengren
Michael A. Zaitzeff
6958 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
PROPOSAL 4: BERKSHIRE HILLS BANCORP, INC. 2022 EQUITY INCENTIVE PLAN
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| Proposal 4:
Berkshire Hills Bancorp, Inc.
2022 Equity Incentive Plan
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| Purpose.
Performance.
Progress. |
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The Board of Directors has adopted, subject to shareholder approval, the Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan (the “2022 Equity Incentive Plan”) to provide the Company with sufficient equity compensation to meet the objectives of appropriately incentivizing our officers, other employees and directors in order to execute on our strategic plan to build shareholder value, while providing appropriate shareholder protections. Upon shareholder approval of the 2022 Equity Incentive Plan, the Company will no longer make grants under the Berkshire Hills Bancorp, Inc. 2018 Equity Incentive Plan (the “2018 Plan”). In addition, the Company will not make any grants under the 2018 Plan from April 2, 2022 through the Annual Meeting to be held on May 18, 2022. Awards outstanding under the 2018 Plan will continue to remain outstanding and subject to the terms and conditions of the 2018 Plan.
Rationale for Adopting the 2022 Equity Incentive Plan
Equity compensation is an important compensation tool designed to align shareholder interests and attract, motivate and retain highly qualified talent in a very competitive labor market.In adopting the 2022 Equity Incentive Plan, the Compensation Committee considered the number of shares required to continue making equity awards at levels consistent with past practice as well as the dilutive impact that the share reserve could have on our shareholders.
The Board of Directors, through its Compensation Committee, and the Compensation Committee’s independent consultant, has evaluated current practices of financial institutions in our marketplace related to equity plan design and equity grant practices and determined that the maximum number of shares of Common Stock that may be available for awards of stock options, restricted stock awards and restricted stock units under the 2022 Equity Incentive Plan is equal to (i) 1,200,000 shares of Common Stock, plus (ii) the number of shares of Common Stock which have been reserved but not issued under the 2018 Plan, which is estimated to be approximately 258,102, plus (iii) any shares of Common Stock returned to the 2018 Plan after the effective date of the 2022 Equity Incentive Plan as a result of expiration, cancellation, or forfeiture of awards issued under the 2018 Plan.
The Company believes that equity awards constitute an important component in a balanced, comprehensive compensation program.The Company has also evaluated its strategic plan and believes the 2022 Equity Incentive Plan is appropriately designed to allow the Company to meet its objectives.Many of the companies with which we compete for officers, employees and directors offer equity compensation as part of their overall compensation programs.By approving the 2022 Equity Incentive Plan, our shareholders will provide us the flexibility we need to continue to attract, motivate and retain highly-qualified officers, employees and directors by offering a competitive compensation program with a component linked to the performance of our Common Stock and, therefore, aligned with the interests of our shareholders.
70 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 4: BERKSHIRE HILLS BANCORP, INC. 2022 EQUITY INCENTIVE PLAN
Highlights of the Equity Incentive Plan
The following summarizes the key features of the 2022 Equity Incentive Plan, which is qualified in its entirety by reference to the provisions of the 2022 Equity Incentive Plan, attached hereto as Appendix A. Unless indicated otherwise, capitalized terms are defined in the 2022 Equity Incentive Plan.
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Key Attribute | Feature | Discussion |
Equity Award Types | Stock Options, Restricted Stock and Restricted Stock Units. | The Plan provides the Company with equity award types predominately used in the marketplace to provide flexibility in meeting its compensation objectives. |
Award Vesting Criteria: Performance Awards Service-Based Awards | The vesting of Awards may be subject to the achievement of performance measures as determined by the Compensation Committee of the Board of Directors (the “Compensation Committee”) or subject to time-based vesting over a period of continuous service (i.e., service-based). | Based on the Compensation Committee’s evaluation of current market practices and past Company practices, it expects a portion of equity award grants under the 2022 Equity Incentive Plan will be subject to performance-based vesting. The Compensation Committee intends to continue to use a third-party independent compensation consultant in determining the vesting criteria of equity award grants. |
Vesting Period | The Compensation Committee will determine the vesting schedule or performance criteria for each Award. At least 95% of the Awards under the Plan will vest no earlier than one year after the grant date. | While the Compensation Committee may set the vesting schedule or conditions, the Committee views equity awards as a longer-term compensation element. |
Prohibition Against Stock Option Repricing | Neither the Compensation Committee nor the Board shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the exercise price of a Stock Option previously granted under the Plan, except in the event of certain corporate transactions set forth in the 2022 Equity Incentive Plan (including stock splits, and stock dividends) or adjustments approved by the Company’s shareholders. | The Compensation Committee believes that repricing Stock Options is contrary to the objectives of Stock Options and would not be in alignment with the interest of shareholders. |
Dividends on Restricted Stock Awards | Dividends paid on restricted stock awards subject to time-based vesting or performance-based vesting shall be distributed to a participant on or after the vesting date of such restricted stock award. If the restricted stock award does not vest, the participant will not receive such dividends. | The Compensation Committee believes that the timing of dividend payments is appropriately aligned with the interests of shareholders. |
Acceleration of Vesting - Termination of Service due to Death and Disability | Unless otherwise specified by the Compensation Committee, Awards vest upon a participant’s termination of service due to death or Disability and Stock Options remain exercisable for one year. | The Compensation Committee believes that recognizing participant contributions and vesting Awards upon death and Disability is appropriately aligned with the interests of shareholders. |
71 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 4: BERKSHIRE HILLS BANCORP, INC. 2022 EQUITY INCENTIVE PLAN
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Key Attribute | Feature | Discussion |
Acceleration of Vesting - Termination of Service for Cause or resignation for any reason (except death, Disability or following a Change in Control) | Unless otherwise specified by the Compensation Committee, no Awards will vest upon a participant’s termination for cause or a voluntary resignation for any reason (except death or disability).
Generally, all vested Stock Options remain exercisable for three months from the date of termination of service due to a resignation for any reason (except death or disability, in which case they will remain exercisable for one year).
Upon a termination for cause, all unvested Awards, including unexercised Stock Options, will be forfeited
| The Compensation Committee believes that acceleration of vesting following a termination of service for reasons other than death, disability, or in certain instances following a Change in Control is not appropriately aligned with the objectives of the 2022 Equity Incentive Plan or the interests of shareholders. |
Acceleration of Vesting - Committee Discretion | Vesting of Awards may be accelerated by the Compensation Committee, at its discretion, except that the Compensation Committee may not accelerate the vesting of any Award within the first year following the date of grant. | The Compensation Committee determined that discretion to accelerate awards is important to allow the Company to respond to employment-related matters or other unforeseen circumstances that could warrant consideration of acceleration. |
Acceleration of Vesting - Termination of Service without Cause or Resignation for Good Reason following a Change in Control (i.e., an Involuntary Termination of Service) | Unless otherwise specified by the Compensation Committee:
All unvested service-based Awards will vest upon an Involuntary Termination of Service following a Change in Control. Stock Options will remain exercisable for one year following an Involuntary Termination of Service following a Change in Control.
All Performance Awards will vest upon an Involuntary Termination of Service following a Change in Control based on the greater of target level of performance or actual annualized performance measured as of the most recent completed fiscal quarter.
| The Compensation Committee determined that a “double trigger” vesting acceleration in connection with a Change in Control is appropriate in providing the Company with a meaningful retention tool as an independent company, and any future acquirer with the ability to appropriately manage human resources during any merger integration. |
72 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 4: BERKSHIRE HILLS BANCORP, INC. 2022 EQUITY INCENTIVE PLAN
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Key Attribute | Feature | Discussion |
Share Limitations,
Freezing of equity grants under the Plan
| The maximum number of shares of Common Stock that may be delivered to participants under the 2022 Equity Incentive Plan is equal to (i) 1,200,000 shares, plus (ii) the number of shares of Common Stock which have been reserved but not issued under the 2018 Plan, which is estimated to be approximately 258,102, plus (iii) any shares of Common Stock returned to the 2018 Plan after the effective date of the 2022 Equity Incentive Plan as a result of expiration, cancellation, or forfeiture of awards issued under the 2018 Plan.
As of April 1, 2022 (the latest practicable date before the printing of this Proxy Statement) the closing price of the Company’s Common Stock, as reported on the New York Stock Exchange, was $28.82.
If shareholders approve the 2022 Equity Incentive Plan, the Company will not make any more grants under the 2018 Plan; the 2018 Plan will be frozen and equity awards that would otherwise be available for grant under that Plan will not be granted. The Compensation Committee will continue to administer outstanding grants under the 2018 Plan.
| The Compensation Committee evaluated a number of factors in determining the appropriate plan size, including past grant practices, the grant practices of peer community banks, the shareholder value transfer to participants, and publications of proxy advisors. |
Limitation of Grants to Non-Employee Directors and Employees | The sum of the grant date fair value of equity awards granted under the 2022 Equity Incentive Plan, including Stock Options, Restricted Stock and Restricted Stock Units may not exceed: (i) for non-employee directors, $100,000 for any calendar year, and (ii) for employees, $2,000,000 for any calendar year. | The Compensation Committee expects that it will continue to use the services of an independent compensation consultant to assist it in making equity award grants, but believes it is important to provide calendar year plan limitations of grant date fair value to participants. |
Recycling of Equity Awards | Only forfeited and expired Awards are available for reissuance under the Plan. | The Compensation Committee believes that conservative recycling of equity awards is an important provision in the 2022 Equity Incentive Plan and properly aligns with the interests of shareholders. |
Automatic Exercise of Stock Options | At the Compensation Committee’s discretion, Stock Options that are exercisable but unexercised as of the day immediately before their expiration date may be automatically exercised on behalf of a participant, in accordance with procedures established by the Compensation Committee. | The Compensation Committee believes that providing for an automatic exercise is in the best interest of the Company and participants and provides for an efficient mechanism to exercise Stock Options. |
73 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 4: BERKSHIRE HILLS BANCORP, INC. 2022 EQUITY INCENTIVE PLAN
| | | | | | | | |
Key Attribute | Feature | Discussion |
Clawback of Equity Awards | The 2022 Equity Incentive Plan provides for a number of forfeiture events including termination for cause, automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 related to accounting restatements, and any clawback policy of the Company. | The Compensation Committee believes it is necessary to maintain strong clawback provisions for equity awards. |
Holding Period Required | The Compensation Committee may require participants to hold a vested Award or Common Stock received upon exercise of a Stock option until the later of (i) 12 months or (ii) the date the individual meets the minimum ownership requirements (if any) applicable to that individual, except in the event of death, Disability, Involuntary Termination following a Change in Control, or, in general, if shares of Stock are withheld to satisfy tax withholding. | The Compensation Committee believes that a required holding period is appropriately aligned with the interests of shareholders. |
74 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 4: BERKSHIRE HILLS BANCORP, INC. 2022 EQUITY INCENTIVE PLAN
Equity Compensation Plan Information
The following table sets forth information, as of December 31, 2021, about Company common stock that may be issued upon exercise of options under stock-based benefit plans maintained by the Company, as well as the number of securities available for issuance under equity compensation plans:
| | | | | | | | | | | | | | | | | | | | |
| Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) |
| Equity compensation plans approved by security holders | | 80,400 | | | $ | 25.21 | | | 536,469 | |
| Equity compensation plans not approved by security holders | | — | | | — | | | — | |
| Total | | 80,400 | | | $ | 25.21 | | | 536,469 | |
Federal Income Tax Considerations
The following is a summary of the federal income tax consequences that may arise in conjunction with participation in the 2022 Equity Incentive Plan.
Non-Qualified Stock Options. The grant of a non-qualified stock option will not result in taxable income to the participant. Except as described below, the participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares acquired over the exercise price for those shares, and the Company will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of exercise.
Incentive Stock Options. The grant of an incentive stock option will not result in taxable income to the participant. The exercise of an incentive stock option will not result in taxable income to the participant provided the participant was, without a break in service, an employee of the Company or a subsidiary during the period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant is disabled, as that term is defined in the Internal Revenue Code). The Company will not be entitled to a tax deduction upon the exercise of an incentive stock option.
The excess of the fair market value of the shares at the time of the exercise of an incentive stock option over the exercise price is an adjustment that is included in the calculation of the participant’s alternative minimum taxable income for the tax year in which the incentive stock option is exercised. For purposes of determining the participant’s alternative minimum tax liability for the year of disposition of the shares acquired pursuant to the incentive stock option exercise, the participant will have a basis in those shares equal to the fair market value of the shares at the time of exercise.
If the participant does not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option or within one year after the exercise of such stock option, then, upon disposition of such shares, any amount realized in excess of the exercise price will be taxed as a capital gain. A capital loss will be recognized to the extent that the amount realized is less than the exercise price.
If the foregoing holding period requirements are not met, the participant will generally recognize ordinary income at the time of the disposition of the shares in an amount equal to the lesser of (i) the excess of the fair market value of the shares on the date of exercise over the exercise price, or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price, and we will be entitled to a corresponding deduction. If the amount realized exceeds the value of the shares on the date of exercise, any additional amount will be a capital gain. If the amount realized at the time of disposition is less than the exercise price, the participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares.
75 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
PROPOSAL 4: BERKSHIRE HILLS BANCORP, INC. 2022 EQUITY INCENTIVE PLAN
Restricted Stock. A participant who has been granted a restricted stock award will not realize taxable income at the time of grant, provided that the stock subject to the award is not delivered at the time of grant, or if the stock is delivered, it is subject to restrictions that constitute a “substantial risk of forfeiture” for federal income tax purposes. Upon the later of delivery or vesting of shares subject to an award, the holder will realize ordinary income in an amount equal to the then fair market value of those shares and the Company will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of delivery or vesting. Dividends paid to the holder during the restriction period, if so provided, will also be compensation income to the participant and we will be entitled to a corresponding deduction for tax purposes. A participant who makes an election under Section 83(b) of the Internal Revenue Code will include the full fair market value of the restricted stock award subject to such election in taxable income in the year of grant at the grant date fair market value. Participants will be able to exercise voting rights with respect to unvested restricted stock awards.
Restricted Stock Units. A participant who has been granted a restricted stock unit will not realize taxable income at the time of grant and will not be entitled to make an election under Section 83(b) of the Internal Revenue Code since no stock is actually transferred to the recipient on the date of grant. At the time a restricted stock unit vests, assuming the award is distributed at that time, the recipient will recognize ordinary income in an amount equal to the fair market value of the Common Stock or the amount of cash received. If the restricted stock unit is not distributed at the time it vests, no income will be recognized at that time and taxation will be deferred until the value of the restricted stock unit is distributed. At the time the recipient recognizes taxable income on a restricted stock unit, we will be entitled to a corresponding tax deduction in the same amount recognized by the award recipient.
Dividend Equivalent Rights. The grant of a dividend equivalent right will not result in taxable income to the participant. At the time of payment of a cash dividend with respect to shares of Company stock underlying a dividend equivalent right, or with respect to a stand-alone dividend equivalent right, the cash received will be taxable to the participant as ordinary income and the Company will be entitled to a corresponding tax deduction.
Withholding of Taxes. We may withhold amounts from participants to satisfy withholding tax requirements. Except as otherwise provided by the Committee, participants may have shares withheld from awards to satisfy the minimum tax withholding requirements.
Change in Control. Any acceleration of the vesting or payment of awards under the 2022 Equity Incentive Plan in the event of a change in control or termination of service following a change in control may cause part or all of the consideration involved to be treated as an “excess parachute payment” under the Internal Revenue Code, which may subject the participant to a 20% excise tax and preclude deduction by Berkshire Hills Bancorp, Inc.
Tax Advice. The preceding discussion is based on federal tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the federal income tax aspects of the 2022 Equity Incentive Plan. A participant may also be subject to state and local taxes in connection with the grant of awards under the 2022 Equity Incentive Plan.
By Accounting Treatment
Under U.S. generally accepted accounting principles, we are required to recognize compensation expense in our financial statements over the requisite service period or performance period based on the grant date fair value of stock options and other equity-based compensation (such as restricted stock awards and restricted stock units).
76 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
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Berkshire Hills Bancorp, Inc. Proxy Statement | | |
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Additional Information
Stock Ownership
Five-Percent Shareholders
The following table provides information as of March 25, 2022,21, 2024, with respect to persons known by the Company to be the beneficial owners of 5% or more of the Company’s outstanding common stock. A person may be considered to own any shares of common stock over which they have, directly or indirectly, sole or shared voting or investing power. Percentages are based on 47,859,73443,463,525 shares outstanding at March 25, 2022.21, 2024.
| | | | | | | | |
| Name and Address | Number of Shares Owned | Percent of Common Stock Outstanding |
BlackRock, Inc.
55 East 52nd Street
50 Hudson Yards New York, New York 1005510001 | 7,167,4416,338,165(1)
| 15.0%14.6% |
The Vanguard Group
100 Vanguard Blvd.
Malvern, Pennsylvania 19355 | 5,202,3465,025,964(2)
| 10.9%11.6% |
Dimensional Fund Advisors LP
Palisades West Building One
6300 Bee Cave Road
Austin, Texas 78746 | 2,775,0072,525,556(3)
| 5.8% |
(1)Based on information contained in a Schedule 13G/A filed with the U.S. Securities and Exchange Commission on January 28, 2022.23, 2024.
(2)Based on information contained in a Schedule 13G/A filed with the U.S. Securities and Exchange Commission on February 13, 2024.
(3)Based on information contained in a Schedule 13G/A filed with the U.S. Securities and Exchange Commission on February 9, 2022.2024.
(3)Based on information contained in a Schedule 13G/A filed with the U.S. Securities and Exchange Commission on February 14, 2022.
77 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
ADDITIONAL INFORMATION | STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Stock Ownership of Directors and Executive Officers
The following table provides information about the shares of Company common stock that are owned by each director or nominee for director of the Company, by NEOsNamed Executive Officers and the aggregate number of shares owned by all directors, nominees for director and Named Executive Officers as a group as of March 25, 2022.21, 2024. A person may be considered to own any shares of common stock over which they have, directly or indirectly, sole or shared voting or investment power. Unless otherwise indicated, each of the named individuals has sole voting and investment power with respect to the shares shown and none of the shares has been pledged. The number of shares and options exercisable within 60 days owned by all directors, nominees for director and Named Executive Officers as a group totaled 2,082,013443,947 of our outstanding common stock as of March 25, 2022.21, 2024. Each director, nominee for director, except for Michael A. Zaitzeff, and Named Executive Officer owned less than 1.0% of our outstanding common stock as of that date. Percentages are based on 47,859,73443,463,525 shares outstanding at March 25, 2022.21, 2024. The correspondence address for each individual is 60 State Street, Boston, Massachusetts 02109.
| | | | | | | | | | | |
| Name | Number of Shares Owned (Excluding Options)(1) | Options
Exercisable
Within 60 Days | Total |
| Directors | | | |
| Baye Adofo-Wilson | 7,933 | | — | | 7,933 | |
Rheo A. Brouillard(2) | 26,311 | | — | | 26,311 | |
David M. Brunelle(3) | 18,654 | | — | | 18,654 | |
| Nina A. Charnley | 3,426 | | — | | 3,426 | |
John B. Davies(4) | 45,209 | | — | | 45,209 | |
| Mihir A. Desai | — | | — | | — | |
| William H. Hughes III | 7,939 | | — | | 7,939 | |
| Jeffrey W. Kip | 13,557 | | — | | 13,557 | |
| Sylvia Maxfield | 6,748 | | — | | 6,748 | |
| Nitin J. Mhatre | 64,165 | | — | | 64,165 | |
| Laurie Norton Moffatt | 16,035 | | — | | 16,035 | |
| Jonathan L. Shulman | 6,998 | | — | | 6,998 | |
Michael A. Zaitzeff(5) | 1,676,498 | | — | | 1,676,498 | |
| Named Executive Officers Who Are Not Directors | | | |
| George F. Bacigalupo | 51,517 | | — | | 51,517 | |
| Subhadeep Basu | 17,444 | | — | | 17,444 | |
| Sean A. Gray | 88,477 | | — | | 88,477 | |
| Gregory D. Lindenmuth | 18,720 | | — | | 18,720 | |
Deborah Stephenson(6) | 12,382 | | — | | 12,382 | |
| All Named Executive Officers and Directors, and Nominees for Directors as a Group (18 persons) | 2,082,013 | | — | | 2,082,013 | |
59 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
ADDITIONAL INFORMATION | STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
All Named Executive Officers and Directors, and Nominees for Directors as a Group (18 persons) | | | | | | | | | | | |
| Name | Number of Shares Owned (Excluding Options)(1) | Options
Exercisable
Within 60 Days | Total |
| Directors | | | |
| Baye Adofo-Wilson | 2,595 | | — | | 2,595 | |
David M. Brunelle(2) | 23,390 | | — | | 23,390 | |
| Mary Anne Callahan | 29,374 | | — | | 29,374 | |
| Nina A. Charnley | 8,430 | | — | | 8,430 | |
| Mihir A. Desai | 6,835 | | — | | 6,835 | |
| William H. Hughes III | 12,905 | | — | | 12,905 | |
| Jeffrey W. Kip | 18,293 | | — | | 18,293 | |
| Sylvia Maxfield | 11,484 | | — | | 11,484 | |
| Nitin J. Mhatre | 113,153 | | — | | 113,153 | |
| Laurie Norton Moffatt | 20,771 | | — | | 20,771 | |
| Karyn Polito | 5,449 | | — | | 5,449 | |
| Eric S. Rosengren | 4,992 | | — | | 4,992 | |
| Michael A. Zaitzeff | 2,595 | | — | | 2,595 | |
| Named Executive Officers Who Are Not Directors | | | |
| Brett Brbovic | 14,505 | | — | | 14,505 | |
| James C. Brown | 10,040 | | — | | 10,040 | |
| Sean A. Gray | 115,911 | | — | | 115,911 | |
| Gregory D. Lindenmuth | 28,896 | | — | | 28,896 | |
| R. David Rosato | 14,329 | | — | | 14,329 | |
| All Named Executive Officers and Directors, and Nominees for Directors as a Group (18 persons) | 443,947 | | — | | 443,947 | |
(1)This column includes the following shares held in trust for such directors and Named Executive Officers:
| | | | | | | | |
| Name | Shares of Granted but
Unvested Restricted Stock
Held In Trust | Shares Held In Trust
in the Berkshire Bank
401(k) Plan |
| Directors | | |
| Baye Adofo-Wilson | 2,595 | | — | |
| David M. Brunelle | 2,595 | | — | |
| Mary Anne Callahan | 2,595 | | |
| Nina A. Charnley | 2,595 | | — | |
| Mihir A. Desai | 2,595 | | — | |
| William H. Hughes III | 2,595 | | — | |
| Jeffrey W. Kip | 2,595 | | — | |
| Sylvia Maxfield | 2,595 | | — | |
| Nitin J. Mhatre | 25,454 | | — | |
| Laurie Norton Moffatt | 2,595 | | — | |
| Karyn Polito | 2,595 | | — | |
| Eric S. Rosengren | 2,595 | | — | |
| Michael A. Zaitzeff | 2,595 | | — | |
| Named Executive Officers Who Are Not Directors | | |
| Brett Brbovic | 8,457 | | 550 | |
| James C. Brown | 8,438 | | — | |
| Sean A. Gray | 14,984 | | 2,639 | |
| Gregory D. Lindenmuth | 4,724 | | 10,304 | |
| R. David Rosato | 14,329 | | — | |
78 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
ADDITIONAL INFORMATION | STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
| | | | | | | | |
| Name | Shares of Granted but
Unvested Restricted Stock
Held In Trust | Shares Held In Trust
in the Berkshire Bank
401(k) Plan |
| Directors | | |
| Baye Adofo-Wilson | 4,832 | | — | |
| Rheo A. Brouillard | 4,832 | | — | |
| David M. Brunelle | 4,832 | | — | |
| Nina A. Charnley | 3,034 | | — | |
| John B. Davies | 4,832 | | — | |
| Mihir A. Desai | — | | — | |
| William H. Hughes III | 4,832 | | — | |
| Jeffrey W. Kip | 3,121 | | — | |
| Sylvia Maxfield | 4,832 | | — | |
| Nitin J. Mhatre | 22,334 | | — | |
| Laurie Norton Moffatt | 4,832 | | — | |
| Jonathan L. Shulman | 4,832 | | — | |
| Michael Z. Zaitzeff | 3,296 | | — | |
| Named Executive Officers Who Are Not Directors | | |
| George F. Bacigalupo | 7,477 | | 798 | |
| Subhadeep Basu | 9,444 | | — | |
| Sean A. Gray | 19,532 | | 2,523 | |
| Gregory D. Lindenmuth | 4,955 | | 6,827 | |
| Deborah A. Stephenson | 3,934 | | — | |
(2)Includes 5,693 shares held in Mr. Brouillard’s ESOP account, and 2,255 shares held in Mr. Brouillard’s individual retirement account.
(3) Includes 4,000 shares held in Mr. Brunelle’s individual retirement account.
(4)Includes 17,001 shares held in Mr. Davies’ individual retirement account
(5) Includes 1,274,279 shares held by a fund managed by HoldCo and 398,923 shares held by VM GP II LLC. Mr. Zaitzeff shares voting and investment power over these securities and disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. For additional details, please see Mr. Zaitzeff’s Statement of Changes in Beneficial Ownership (Form 4) filed with the US Securities and Exchange Commission on March 16, 2022.
(6) Includes 468 shares held in Ms. Stephenson's individual retirement account. .
7960 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
ADDITIONAL INFORMATION | INFORMATION ABOUT VOTING
Information About Voting
Who Can Vote at the Meeting
You are entitled to vote the shares of Berkshire’s common stock that you owned as of the close of business on March 25, 2022.21, 2024. As of the close of business on March 25, 2022,21, 2024, a total of 47,859,73443,463,525 shares of Company common stock was outstanding. Each share of common stock owned by a shareholder has one vote.
The Company’s Certificate of Incorporation provides that a record owner of the Company’s common stock who beneficially owns, either directly or indirectly, in excess of 10% of the Company’s outstanding shares, is not entitled to any vote in respect of the shares held in excess of the 10% limit.
Ownership of Shares; Attending the Meeting
You may own shares of Berkshire Hills in one of the following ways:
•Directly in your name as the shareholder of record;
•Indirectly through a broker, bank or other holder of record in “street name”; or
•Indirectly in the Berkshire Hills Bancorp, Inc. Stock Fund of our 401(k) Plan, or through the trust that holds restricted stock awards issued to directors and employees under our equity plans, or through the Savings Institute Bank and Trust Company Employee Stock Ownership Plan (collectively the "Employee Stock Plans").plans.
If your shares are registered directly in your name, you are the holder of record of these shares. As the holder of record, you have the right to give your proxy directly to us, either through voting by mail, the Internet, or telephone, or to vote in person at the virtual annual meeting. Tomeeting. If you wish to vote at the meeting,meeting, you will needneed to access the meeting through the internet by visiting www.virtualshareholdermeeting.com/BHLB2022 and providing your sixteen digit control number.bring proof of identity.
If you hold your shares indirectly in street name, your broker, bank or other nominee is the holder of record and you are the beneficial owner of the shares. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote by filling out a voting instruction form. Your broker, bank or other nominee may allow you to provide voting instructions by telephone or by the Internet in addition to by mail. Please see the form provided by your broker, bank or other nominee.
If you hold your shares indirectly in street name and wantwish to attend the meeting, you will need to bring proof of ownership to be admitted to the meeting. A recent brokerage statement or letter from a bank or broker are examples of proof of ownership. If you want to vote your shares of Berkshire’s common common stock held in in street name name in person at the virtual annual meeting,meeting, you must obtain a written proxy in your name from the broker, bank or nominee who is the record holder of your shares. You will needalso need to accessbring proof of identity to vote at the meeting through the internet by visiting www.virtualshareholdermeeting.com/BHLB2022 and providing your sixteen digit control number provided to you by your bank or broker.meeting.
Quorum and Vote Required
Quorum. We will have a quorum and will be able to conduct the business of the annual meetingAnnual Meeting if the holders of a majority of the outstanding shares of common stock entitled to vote are present at the meeting, either via the virtual annual meetingin person or by proxy. At this year’s annual meeting,Annual Meeting, shareholders will elect certain directors as proposed. In voting on the election of directors, you may vote in favor of the nominees, withhold votes as to all nominees, or withhold votes as to specific nominees. There is no cumulative voting for the election of directors. Directors must be elected by a plurality of the votes cast at the annual meeting.Annual Meeting. This means that the nominees receiving the greatest number of votes will be elected. However, if a director is elected by a plurality but less than a majority of the votes cast for such director, such director must submit their resignation to the Board of Directors, which resignation may then be accepted or rejected by the Board following a review by the Corporate Governance/Nominating Committee.
In voting on the non-binding proposal to give advisory approval of our executive compensation, you may vote in favor of the proposal, vote against the proposal or abstain from voting. To approve the proposal, the affirmative vote of a majority of the votes cast at the annual meetingAnnual Meeting is required. While this vote is required by law, it will neither be binding on us or the Board of Directors, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on us or the Board of Directors.
8061 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
ADDITIONAL INFORMATION | INFORMATION ABOUT VOTING
In voting on the ratification of the appointment of Crowe LLP as the Company’s independent registered public accounting firm, you may vote in favor of the proposal, vote against the proposal or abstain from voting. To ratify the selection of Crowe as our independent registered public accounting firm for fiscal year 2021,2024, the affirmative vote of a majority of the votes cast at the annual meetingAnnual Meeting is required.
In voting on the proposed Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan, you may vote in favor of the proposal, vote against the proposal or abstain from voting. To approve the proposal, the affirmative vote of a majority of the votes cast at the annual meeting is required.
Routine and Non-Routine Proposals. Applicable rules determine whether proposals presented at shareholder meetings are routine or non-routine. If a proposal is routine, a broker or other entity holding shares for an owner in street name may vote on the proposal without receiving voting instructions from the owner. If a proposal is non-routine, the broker or other entity may vote on the proposal only if the owner has provided voting instructions. The NYSE allows its member-brokers to vote shares held by them for their customers on matters the NYSE determines are routine, even though the brokers have not received voting instructions from their customers. The NYSE currently considers the ratification of our independent auditors (Proposal 3) as a routine matter. Your broker, therefore, may vote your shares in its discretion on this routine matter if you do not instruct your broker how to vote on it. If the NYSE does not consider a matter routine, then your broker is prohibited from voting your shares on the matter unless you have given voting instructions on that matter to your broker. The NYSE does not consider the election of directors compensation or equity incentive planexecutive compensation matters to be routine (Proposals 1 2 and 4)2). Therefore, brokers holding shares for their customers will not have the ability to cast votes with respect to the election of directors or the Company’s executive compensation or the proposed Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan, unless they have received instructions from their customers. It is important, therefore, that you provide instructions to your broker if your shares are held by a broker so that your vote with respect to these non-routine matters is counted.
How We Count Votes. If you return valid proxy instructions or attend the virtual annual meeting,Annual Meeting, we will count your shares to determine whether there is a quorum, even if you abstain from voting. A broker non-vote occurs when a broker returns a proxy to the Company and the proxy reflects a vote on routine Company proposals but does not reflect a vote on non-routine Company proposals. Broker non-votes will be counted to determine the existence of a quorum.
In the election of directors, votes that are withheld and broker non-votes will have no effect on the outcome of the election.
In counting votes on the proposals to give advisory approval of our executive compensation and to ratify the selection of the independent registered public accounting firm and for the approval of the proposed Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan, we will not count abstentions or broker non-votes as votes cast on these proposals. Therefore, abstentions and broker non-votes will have no impact on the outcome of these proposals.proposals
Solicitation of Proxies. The Company will bear the entire cost of soliciting proxies from you. In addition, we will request that banks, brokers and other holders of record send notice of the annual meetingAnnual Meeting to the beneficial owners of Berkshire Hills Bancorp, Inc. common stock and secure their voting instructions, if necessary.
8162 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
ADDITIONAL INFORMATION | INFORMATION ABOUT VOTING
How to Vote
We are making our proxy materials available to our shareholders on the Internet. You may read, print and download our 20212023 Annual Report to Shareholders and our proxy statement at www.proxyvote.com or through our investor relations website at ir.berkshirebank.com. On April 8, 2022, we began mailing
If you are a notice to shareholders containing instructions on how to access our proxy materials and vote online. On an ongoing basis, shareholders may request to receive proxy materials in printed form by mail or electronically by email. Requests for printed copiesholder of materials must be received by May 4, 2022.
Yourecord, you may vote your shares by Internet, by telephone, by regular mail or in person at the virtual annual meeting. Each of these voting options is described in the notice or in the proxy materials.Annual Meeting. You should vote using the Internet or telephone voting options, - or request, completeby completing and return a paperreturning your proxy card, - in order to ensure that your vote is counted at the annual meeting,Annual Meeting, or at any adjournment of the annual meeting,Annual Meeting, regardless of whether you plan to attend. If you return an executed proxy card without marking your instructions, your executed proxy card will be voted “FOR” the election of each of the director nominees named in this proxy statement under Proposal 1, “FOR” the advisory non-binding resolution to approve our executive compensation as described in this proxy statement, and “FOR” the ratification of the appointment of Crowe LLP as the Company’s independent registered public accounting firm for fiscal year 2022, and “FOR” the Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan.2024.
To access your proxy materials and vote online, please visit www.proxyvote.com and follow the on-screen instructions. The notice previously provided to youYour proxy card contains the necessary codes required to access materials and vote online or by telephone. If you wish to vote by telephone, please call 1-800-690-6903 using a touch-tone phone and follow the prompted instructions. You may also vote by mail by requesting a papercompleting and returning your proxy card using the instructions provided in the notice.envelope provided. Finally, you may vote in person at the virtual annual meeting.Annual Meeting.
If you hold your shares indirectly in street name, your broker, bank or other nominee is the holder of record and you are the beneficial owner of the shares. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote by filling out a voting instruction form. Your broker, bank or other nominee may allow you to provide voting instructions by telephone or by the Internet in addition to by mail. Please see the form provided by your broker, bank or other nominee.
If your shares are held in an Employee Stock Plan, you will receive a notice withseparate instructions for obtaining copies of these proxy materials and for voting your shares.Unvoted shares in the plans will be voted by the Plans in the same proportion as shares for which each Plan received voting instructions.
If any matters not described in this proxy statement are properly presented at the annual meeting,Annual Meeting, the persons named as proxies will use their judgment to determine how to vote your shares. This includes a motion to adjourn or postpone the meeting to solicit additional proxies. If the annual meetingAnnual Meeting is postponed or adjourned, your Company common stock may be voted by the persons named in the proxy card on the new meeting date, provided such new meeting occurs within 30 days of the annual meetingAnnual Meeting and you have not revoked your proxy. The Company does not currently know of any other matters to be presented at the meeting.
You may revoke your proxy at any time before the vote is taken at the meeting. To revoke your proxy, you must either advise the Corporate Secretary of the Company in writing before your common stock has been voted at the annual meeting,Annual Meeting, deliver a later dated proxy or attend the meeting and vote your shares at the virtual annual meeting.shares. Attendance at the annual meetingAnnual Meeting will not in itself constitute revocation of your proxy. You may advise the Company’s Corporate Secretary of your revocation in writing to Berkshire Hills Bancorp, Inc. at 60 State Street, Boston, Massachusetts 02109, in care of Wm. Gordon Prescott, Corporate Secretary.
8263 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
ADDITIONAL INFORMATION | OTHER INFORMATION RELATING TO DIRECTORS AND EXECUTIVES
Other Information Relating to Directors and Executive Officers
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers and directors, and persons who own more than 10% of any registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. These individuals are required by regulation to furnish the Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of the reports it has received and written representations provided to the Company from the individuals required to file the reports, the Company identified no delinquent Section 16(a) reports during 2021.2023.
Transactions with Related Persons
The Sarbanes-Oxley Act of 2002 generally prohibits loans by the Company to its executive officers and directors. However, the Sarbanes-Oxley Act contains a specific exemption from such prohibition for loans by the Bank to its executive officers and directors in compliance with federal banking regulations. Federal regulations require that all loans or extensions of credit to executive officers and directors of insured financial institutions must be made on substantially the same terms, including interest rates and collateral requirements, as those prevailing at the time for comparable transactions with other persons and must not involve more than the normal risk of repayment or present other unfavorable features. The Bank is therefore generally prohibited from making any new loans or extensions of credit to executive officers and directors at different rates or terms than those offered to the general public. Notwithstanding this rule, federal regulations permit the Bank to make loans to executive officers and directors of the Bank at reduced interest rates if the loan is made under a benefit program generally available to all other employees and does not give preference to any executive officer or director over any other employee.
The disinterested members of the Board of Directors periodically review, no less frequently than quarterly, a summary of the Company’s transactions with directors and executive officers of the Company and with firms that employ directors, as well as any other related person transactions, for the purpose of determining that the transactions are fair, reasonable and within Company policy and should be ratified and approved. For the 20212023 fiscal year, the Company was not engaged in any transactions with related persons of a type or in such amount that was required to be disclosed pursuant to applicable Securities and Exchange Commission rules and regulations, except as described in the next paragraph.regulations.
Also, in accordance with banking regulations, the Board of Directors reviews all loans made to a director or executive officer in an amount that, when aggregated with the amount of all other loans to such person and their related interests, exceeds $500,000 and such loan must be approved in advance by a majority of the disinterested members of the Board of Directors. Additionally, pursuant to the Company’s Code of Business Conduct, all executive officers and directors of the Company must disclose any existing or emerging conflicts of interest to the Company’s General Counsel. Such potential conflicts of interest include, but are not limited to, the following: (i) the Company conducting business with or competing against an organization in which a family member of an executive officer or director has an ownership or employment interest and (ii) the ownership of more than 1% of the outstanding securities or 5% of total assets of any business entity that does business with or is in competition with the Company.
83 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
ADDITIONAL INFORMATION | OTHER INFORMATION RELATING TO DIRECTORS AND EXECUTIVES
Procedures Governing Related Persons Transactions
We maintain Procedures Governing Related Person Transactions, which are a written set of procedures for the review and approval of transactions involving related persons. Under these procedures, related persons consist of directors, director nominees, executive officers, persons or entities known to us to be the beneficial owner of more than 5% of any outstanding class of the voting securities of the Company or immediate family members or certain affiliated entities of any of the foregoing persons.
64 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
ADDITIONAL INFORMATION | OTHER INFORMATION RELATING TO DIRECTORS AND EXECUTIVES
Transactions covered by the procedures consist of any financial transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, in which:
•the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year;
•the Company is, will, or may be expected to be a participant; and
•any related person has or will have a direct or indirect material interest.
The procedures exclude certain transactions, including:
•any compensation paid to an executive officer of the Company if such compensation is disclosed according to the proxy rules of the Securities and Exchange Commission or the Compensation Committee of the Board approved (or recommended that the Board approve) such compensation;
•any compensation paid to a director of the Company if such compensation is disclosed according to the proxy rules of the Securities and Exchange Commission;
•any transaction with a related person involving the extension of credit provided in the ordinary course of the Company’s business and on substantially the same terms as those prevailing at the time for comparable services provided to unrelated third parties. However, loans on nonaccrual status or that are past due, restructured or potential problem loans are not considered excluded transactions;
•any transaction with a related person in which the amounts due from the related person are for purchases of goods and services subject to usual trade terms, for ordinary business travel and expense payments and for other transactions in the ordinary course of business;
•any transaction with a related person in which the rates or charges involved are determined by competitive bids;
•any transaction with a related person involving services as a bank depository of funds, transfer agent, registrar, trustee under a trust indenture or similar services;
•any transaction with a related person involving the rendering of services as a common or contract carrier or public utility, at rates or charges fixed in conformity with law or governmental authority; and
•any transaction in which the interest of the related person arises solely from the ownership of a class of equity securities and all holders of that class of equity services received the same benefit on a pro rata basis.
Related person transactions will be reviewed by the Board of Directors. In connection with its review, the Board will consider all relevant factors, including:
•whether the terms of the proposed transaction are at least as favorable to the Company as those that might be achieved with an unaffiliated third party;
•the size of the transaction and the amount of consideration payable to the related person;
•the nature of the interest of the related person;
•whether the transaction may involve a conflict of interest as defined in the Company’s Code of Business Conduct; and
•whether the transaction involves the provision of goods and services to the Company that are available and from unaffiliated third parties.
For each periodic review of related persons transactions, the disinterested members of the Board of Directors will determine if the transactions were fair, reasonable, and within Company policy and they should be ratified and approved.
84 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
Submission of Business Proposals and Shareholder Nominations
The Company must receive proposals that shareholders seek to include in the proxy statement for the Company’s 2023 annual meeting2025 Annual Meeting no later than December 9, 2022.7, 2024. If next year’s annual meetingAnnual Meeting is held on a date more than 30 calendar days from May 18, 2023,16, 2025, a shareholder proposal must be received by a reasonable time before the Company begins to print and distribute its proxy solicitation for such annual meeting.Annual Meeting. Any shareholder proposals will be subject to the requirements of the proxy rules adopted by the Securities and Exchange Commission. Additionally, a shareholder intending to engage in a director election contest at next year’s annual meetingAnnual Meeting must give the Company notice of their intent to solicit proxies by providing the names of its nominees and certain other information by March 20, 2023.17, 2025. If next year’s annual meetingAnnual Meeting is held on a date more than 30 calendar days from May 18, 2023,16, 2025, the shareholder must provide such information no later than the 10th day following public announcement of the date of the annual meeting.Annual Meeting.
65 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
The Company’s bylaws provide that, in order for a shareholder to make nominations for the election of directors or proposals for business to be brought before the annual meeting,Annual Meeting, a shareholder must deliver notice of such nominations and/or proposals to the Corporate Secretary not less than 90 days before the date of the annual meeting.Annual Meeting. However, if less than 100 days’ notice or prior public disclosure of the date of the annual meetingAnnual Meeting is given to shareholders, such notice must be received not later than the close of business of the tenth day following the day on which notice of the date of the annual meetingAnnual Meeting was mailed to shareholders or prior public disclosure of the meeting date was made. A copy of the bylaws may be obtained through our website at ir.berkshirebank.com.
Shareholder Communications
The Company encourages shareholder communications to the Board of Directors and/or individual directors. All communications from shareholders and other interested parties should be addressed to Berkshire Hills Bancorp, Inc., 60 State Street, Boston, Massachusetts 02109. Communications to the Board of Directors should be in the care of Wm. Gordon Prescott, Corporate Secretary. Communications to individual directors should be sent to such directors at the Company’s address. Shareholders who wish to communicate with a committee of the Board should send their communications to the care of the Chair of the particular committee, with a copy to David M. Brunelle, the Chairperson of the Board of Directors of the Company. The Corporate Governance/Nominating Committee determines, in its discretion, whether any communication sent to the full Board should be brought before the full Board.
Miscellaneous
The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending notice of the annual meetingAnnual Meeting to the beneficial owners of the Company. Additionally, directors, officers and other employees of the Company may solicit proxies personally or by telephone. None of these persons will receive additional compensation for these activities. Innisfree M&A, Incorporated has been retained to assist in the solicitation of proxies for the 2022 Annual Meeting of Shareholders at a fee of approximately $27,000plus associated costs and expenses.
The Company’s Summary Annual Report to Shareholders and its Annual Report on SEC Form 10-K are available at www.proxyvote.com and also through our Investor Relations website at ir.berkshirebank.com. The Annual Report is not to be treated as part of the proxy solicitation material or as having been incorporated by reference into this proxy statement. You and others who share your address may receive only one notice of the annual meetingAnnual Meeting and/or proxy statement at your address. This practice, known as “householding,” is designed to reduce our printing and postage costs. This consolidated method of delivery will continue unless one or more of the shareholders listed at the same address notifies us that they would like to receive individual copies of proxy materials. Shareholders who participate in householding will continue to receive separate proxy cards or notices that include each shareholder’s unique control number for voting the shares held in each account. Registered shareholders who wish to discontinue householding and receive separate copies of proxy materials may notify Broadridge by calling 1-866-540-7095, or send a written request to our Corporate Secretary at the address of our principal office. Beneficial shareholders may request information about householding from your bank, broker or other holder of record. Whether or not you plan to attend the annual meeting,Annual Meeting, please vote through the Internet, by telephone, or by requesting a papercompleting and returning your proxy card.card using the envelope provided.
85 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
Other Matters
The Board of Directors is not aware of any business to come before the annual meetingAnnual Meeting other than the matters described above in the proxy statement. However, if any matters should properly come before the annual meeting,Annual Meeting, it is intended that the holders of the proxies will act in accordance with their best judgment.
8666 BERKSHIRE HILLS BANCORP, INC. | 20222024 Proxy Statement
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BERKSHIRE HILLS BANCORP, INC.
2022 EQUITY INCENTIVE PLAN
ARTICLE 1 - GENERAL
Section 1.1Purpose, Effective Date and Term. The purpose of this Berkshire Hills Bancorp, Inc. 2022 Equity Incentive Plan (the “Plan”) is to promote the long-term financial success of Berkshire Hills Bancorp, Inc. (the “Company”), and its Subsidiaries, including Berkshire Bank (the “Bank”) by providing a means to attract, retain and reward individuals who contribute to that success and to further align their interests with those of the Company’s stockholders through the ownership of shares of Company Stock. The “Effective Date” of the Plan shall be the date on which the Plan satisfies the applicable stockholder approval requirements. The Plan will remain in effect as long as any Awards remain outstanding; provided, however, that no Awards may be granted under the Plan after the day immediately prior to the ten-year anniversary of the Effective Date. Upon stockholder approval of the Plan, no further awards shall be granted under the Berkshire Hills Bancorp, Inc. 2018 Equity Incentive Plan, which shall remain in existence solely for the purpose of administering outstanding grants under those plans.
Section 1.2Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors (the “Committee”), in accordance with Section 5.1.
Section 1.3Participation. Each individual who is granted or holds an Award in accordance with the terms of the Plan will be a participant in the Plan (a “Participant”). The grant of Awards shall be limited to Employees and Directors.
Section 1.4Definitions. Capitalized terms used in the Plan are defined in Article 8 and elsewhere in the Plan.
ARTICLE 2 - AWARDS
Section 2.1General. Any Award under the Plan may be granted singularly, or in combination with another Award (or Awards). Each Award under the Plan shall be subject to the terms and conditions of the Plan and any additional terms, conditions, limitations and restrictions provided by the Committee with respect to the Award and as evidenced in an Award Agreement. Every Award under the Plan shall require a written Award Agreement. Subject to the provisions of Section 2.2(d), an Award may be granted as an alternative to or replacement of an existing Award under the Plan or any other plan of the Company or any Subsidiary (provided, however, that no reload Awards shall be granted hereunder) or as the form of payment for grants or rights earned or due under any other compensation plan or arrangement of the Company or its Subsidiaries, including without limitation the plan of any entity acquired by the Company or any Subsidiary. The types of Awards that may be granted under the Plan include:
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(a) Stock Options. A Stock Option means a grant under Section 2.2 that represents the right to purchase shares of Stock at an Exercise Price established by the Committee. Any Stock Option may be either an Incentive Stock Option (an “ISO”) that is intended to satisfy the requirements applicable to an “incentive stock option” described in Code Section 422(b), or a Non-Qualified Stock Option (a “Non-Qualified Option”) that is not intended to be an ISO, provided, however, that no ISOs may be granted: (i) after the ten-year anniversary of the Effective Date or the date the Plan is approved by the Board of Directors, whichever is earlier, or (ii) to a non-employee. Unless otherwise specifically provided by its terms, any Stock Option granted under the Plan to an employee shall be an ISO to the maximum extent permitted. Any ISO granted under this Plan that does not qualify as an ISO for any reason (whether at the time of grant or as the result of a subsequent event) shall be deemed to be a Non-Qualified Option. In addition, any ISO granted under this Plan may be unilaterally modified by the Committee to disqualify the Stock Option from ISO treatment such that it shall become a Non-Qualified Option; provided however, that any modification will be ineffective if it causes the Award to be subject to Code Section 409A (unless, as modified, the Award complies with Code Section 409A).
(b) Restricted Stock Awards. A Restricted Stock Award means a grant of shares of Stock under Section 2.3 for no consideration or for such minimum consideration as may be required by applicable law, subject to a time-based vesting schedule or the satisfaction of market conditions or performance conditions.
(c) Restricted Stock Units. A Restricted Stock Unit means a grant under Section 2.4 denominated in shares of Stock that is similar to a Restricted Stock Award except no shares of Stock are actually awarded on the date of grant of a Restricted Stock Unit. A Restricted Stock Unit is subject to a time-based vesting schedule or the satisfaction of market conditions or performance conditions and shall be settled in shares of Stock; provided, however, that in the sole discretion of the Committee, determined at the time of settlement, a Restricted Stock Unit may be settled in cash based on the Fair Market Value of a share of Stock multiplied by the number of Restricted Stock Units being settled.
(d) Performance Awards. A Performance Award means an Award under Sections 2.2, 2.3 or 2.4 that vests upon the achievement of one or more specified performance measures, as further set forth in Section 8.1 under “Performance Award.”
Section 2.2Stock Options.
(a) Grant of Stock Options. Each Stock Option shall be evidenced by an Award Agreement that specifies: (i) the number of Stock Options covered by the Stock Option; (ii) the date of grant of the Stock Option and the Exercise Price; (iii) the vesting period or conditions to vesting; and (iv) such other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Service with the Company as the Committee may, in its discretion, prescribe. Stock Options may be granted as Performance Awards.
(b) Terms and Conditions. A Stock Option shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee. In no event, however, shall a Stock Option expire later than ten (10) years after the date of its grant (or five (5) years with respect to an ISO granted to an Employee who is a 10% Stockholder). The “Exercise Price” of each Stock Option shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant (or, if greater, the par value of a share of Stock); provided, however, that the Exercise Price of an ISO shall not be less than 110% of Fair Market Value of a share of Stock on the date of grant if granted to a 10% Stockholder; further, provided, that the Exercise Price may be higher or lower in the case of Stock Options granted or exchanged in replacement of existing Awards held by an employee or a director of an acquired entity. The payment of the Exercise Price of a Stock Option shall be by cash or, subject to limitations imposed by applicable law, by such other means as the Committee may from time to time permit, including: (i) by tendering, either actually or constructively by attestation, shares of Stock valued at Fair Market Value as of the date of exercise; (ii) by irrevocably authorizing a third party, acceptable to the Committee, to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and to remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise; (iii) by net settlement of the Stock Option, using a portion of the shares obtained on exercise in payment of the Exercise Price of the Stock Option (and if applicable, tax withholding); (iv) by personal, certified or cashier’s check; (v) by other property deemed acceptable by the Committee; or (vi) by any combination thereof. The total number of shares that may be acquired upon the exercise of a Stock Option shall be rounded down to the nearest whole share, with cash-in-lieu paid by the Company, at its discretion, for the value of any fractional share.
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(c) Prohibition of Cash Buy-Outs of Underwater Stock Options. Under no circumstances will any Stock Option with an Exercise Price as of an applicable date that is greater than the Fair Market Value of a share of Stock as of the same date that was granted under the Plan be bought back by the Company without stockholder approval.
(d) Prohibition Against Repricing. Except for adjustments pursuant to Section 3.4 or reductions of the Exercise Price approved by the Company’s stockholders, neither the Committee nor the Board of Directors shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the Exercise Price of a Stock Option previously granted under the Plan, whether through amendment, cancellation (including cancellation in exchange for a cash payment in excess of the Award’s in-the-money value or in exchange for Stock Options or other Awards), replacement grants, or other means.
(e) Prohibition on Paying Dividends. No dividends shall be paid on Stock Options and no Dividend Equivalent Rights may be granted with respect to Stock Options.
Section 2.3. Restricted Stock Awards.
(a)Grant of Restricted Stock. Each Restricted Stock Award shall be evidenced by an Award Agreement, that specifies: (i) the number of shares of Stock covered by the Restricted Stock Award; (ii) the date of grant of the Restricted Stock Award; (iii) the vesting period or conditions to vesting; and (iv) such other terms and conditions not inconsistent with the Plan, including the effect of termination of Participant’s employment or Service with the Company as the Committee may, in its discretion, prescribe. Restricted Stock Awards may be granted as Performance Awards. All Restricted Stock Awards shall be in the form of issued and outstanding shares of Stock. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine, including in book entry on the books and records maintained by the transfer agent. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock (including that the Restricted Stock may not be sold, encumbered, hypothecated or otherwise transferred except in accordance with the terms of the Plan and Award Agreement) and/or that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.
(b)Terms and Conditions. Each Restricted Stock Award shall be subject to the following terms and conditions:
(i) Dividends. No cash dividends shall be paid with respect to any Restricted Stock Awards unless and until the Participant vests in the underlying share(s) of Restricted Stock. Upon the vesting of a Restricted Stock Award, any dividends declared but not paid during the vesting period shall be paid within thirty (30) days following the vesting date. Any stock dividends declared on shares of Stock subject to a Restricted Stock Award shall be subject to the same restrictions and shall vest at the same time as the shares of Restricted Stock from which said dividends were derived. All unvested dividends shall be forfeited by the Participants to the extent their underlying Restricted Stock Awards are forfeited.
(ii) Voting Rights. Unless the Committee determines otherwise with respect to any Restricted Stock Award and specifies such determination in the relevant Award Agreement, a Participant shall have voting rights related to unvested, non-forfeited Restricted Stock Awards and the voting rights may be exercised by the Participant in his or her discretion.
(iii) Tender Offers and Merger Elections. Each Participant to whom a Restricted Stock Award is granted shall have the right to respond, or to direct the response, with respect to the related shares of Restricted Stock, to any tender offer, exchange offer, cash/stock merger consideration election or other offer made to, or elections made by, the holders of shares of Stock.
Section 2.4 Restricted Stock Units.
(a) Grant of Restricted Stock Unit Awards. Each Restricted Stock Unit shall be evidenced by an Award Agreement that specifies: (i) the number of Restricted Stock Units covered by the Award; (ii) the date of grant of the Restricted Stock Units; (iii) the Restriction Period; and (iv) such other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Service with the Company as the Committee may, in its discretion, prescribe.
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(b) Terms and Conditions. Each Restricted Stock Unit Award shall be subject to the following terms and conditions:
(i) A Restricted Stock Unit Award shall be similar to a Restricted Stock Award except that no shares of Stock are actually awarded to the recipient on the date of grant. The Committee shall impose such conditions and/or restrictions on any Restricted Stock Unit Award granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Restricted Stock Unit, time-based restrictions and vesting following the attainment of performance measures, restrictions under applicable laws or under the requirements of any Exchange or market upon which shares of Stock may be listed, or holding requirements or sale restrictions placed by the Company upon vesting of the Restricted Stock Units. The Committee may make grants of Restricted Stock Units upon such terms and conditions as it may determine, which may include, but is not limited to, deferring receipt of the underlying shares of Stock provided the deferral complies with Section 409A of the Code and applicable provisions of the Plan.
(ii) Restricted Stock Units may be granted as Performance Awards.
(iii) Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing with the date of grant of a Restricted Stock Unit for which a Participant’s continued Service is required (the “Restriction Period”), and until the later of (A) the expiration of the Restriction Period or (B) the date the applicable performance measures (if any) are satisfied, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Restricted Stock Units.
(iv) A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.
(v) No dividends shall be paid on Restricted Stock Units. In the sole discretion of the Committee, exercised at the time of grant, Dividend Equivalent Rights may be assigned to Restricted Stock Units. A Dividend Equivalent Right, if any, shall be paid at the same time as the shares of Stock or cash subject to the Restricted Stock Unit are distributed to the Participant and is otherwise subject to the same rights and restrictions as the underlying Restricted Stock Unit.
Section 2.5Vesting of Awards. The Committee shall specify the vesting schedule or conditions of each Award. At least ninety-five percent (95%) of all Awards under the Plan shall be subject to a vesting requirement of at least one year of Service following the grant of the Award, subject to acceleration of vesting, to the extent authorized by the Committee or set forth in the Award Agreement, upon the Participant’s death, Disability or in connection with an Involuntary Termination at or following a Change in Control as set forth in Article IV.
Section 2.6Deferred Compensation. Subject to approval by the Committee before an election is made, an Award of Restricted Stock Units may be deferred pursuant to a valid deferral election made by a Participant. If a deferral election is made by a Participant, the Award Agreement shall specify the terms of the deferral and shall constitute the deferral plan pursuant to the requirements of Code Section 409A. If any Award would be considered “deferred compensation” as defined under Code Section 409A (“Deferred Compensation”), the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the Award Agreement, without the consent of the Participant, to maintain exemption from, or to comply with, Code Section 409A. Any amendment by the Committee to the Plan or an Award Agreement pursuant to this Section 2.6 shall maintain, to the extent practicable, the original intent of the applicable provision without violating Code Section 409A. A Participant’s acceptance of any Award under the Plan constitutes acknowledgement and consent to such rights of the Committee, without further consideration or action. Any discretionary authority retained by the Committee pursuant to the terms of this Plan or pursuant to an Award Agreement shall not be applicable to an Award that is determined to constitute Deferred Compensation, if such discretionary authority would contravene Code Section 409A. Unless otherwise provided in a valid election form intended to comply with Code Section 409A, all Awards that are considered Deferred Compensation hereunder shall settle and be paid in no event later than 2½ months following the end of the calendar year with respect to which the Award’s substantial risk of forfeiture lapsed.
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Section 2.7.Effect of Termination of Service on Awards. The Committee shall establish the effect of a Termination of Service on the continuation of rights and benefits available under an Award and, in so doing, may make distinctions based upon, among other things, the reason(s) for the Termination of Service and type of Award. Unless otherwise specified by the Committee and set forth in an Award Agreement or as set forth in any employment or severance agreement entered into by and between the Company and/or a Subsidiary and the Participant, the following provisions shall apply to each Award granted under this Plan:
(a) Upon the Participant’s Termination of Service for any reason other than due to Disability, death, Retirement or Cause, Stock Options shall be exercisable only as to those shares that were immediately exercisable by the Participant at the date of termination, and may be exercised only for a period of three (3) months following termination and any Restricted Stock or Restricted Stock Units that have not vested as of the date of Termination of Service shall expire and be forfeited.
(b) In the event of a Termination of Service for Cause, all Stock Options granted to a Participant that have not been exercised (whether or not vested), and all Restricted Stock Awards and Restricted Stock Units that have not vested, shall expire and be forfeited.
(c) Upon Termination of Service on account of Disability or death, all Service-based Stock Options shall be fully exercisable, whether or not then exercisable, and all Service-based Restricted Stock Awards and Restricted Stock Units shall immediately vest as to all shares subject to an outstanding Award at the date of Termination of Service. Upon Termination of Service for reason of Disability or death, any Awards that vest based on the achievement of performance targets shall vest, pro-rata, by multiplying (i) the number of Awards that would be obtained based on achievement at target (or if actual achievement of the performance measures is greater than the target level, at the actual achievement level) as of the date of Disability or death, by (ii) a fraction, the numerator of which is the number of whole or partial months the Participant was in Service during the performance period and the denominator of which is the number of months in the performance period. Stock Options may be exercised for a period of one (1) year following Termination of Service due to death or Disability, or the remaining unexpired term of the Stock Option, if less, provided, however, in order to obtain ISO treatment for Stock Options exercised by heirs or devisees of an optionee, the optionee’s death must have occurred while employed or within three (3) months after Termination of Service.
(d) In the event of Termination of Service due to Retirement, a Participant’s vested Stock Options shall be exercisable for one (1) year following Termination of Service, provided that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three (3) months following Termination of Service due to Retirement and all Stock Options that have not vested as of the date of Termination of Service due to Retirement shall expire and be forfeited. In the event of Termination of Service due to Retirement, all Service-based Restricted Stock Awards and Service-based Restricted Stock Units that have not vested as of the date of Termination of Service due to Retirement shall expire and be forfeited and all Restricted Stock Awards and Restricted Stock Units that vest based on the achievement of performance targets shall vest, pro-rata, at the end of the applicable performance period, based on actual performance, by multiplying (i) the number of Awards that would be obtained based on achievement at the actual achievement level, by (ii) a fraction, the numerator of which is the number of whole or partial months the Participant was in Service during the performance period and the denominator of which is the number of months in the performance period.
(e) Notwithstanding anything herein to the contrary, no Stock Option shall be exercisable beyond the last day of the original term of the Stock Option.
(f) Notwithstanding the provisions of this Section 2.7, the effect of a Change in Control on the vesting/exercisability of Stock Options, Restricted Stock Awards, Restricted Stock Units and Performance Awards is as set forth in Article 4.
Section 2.8. Holding Period for Vested Awards. As a condition of receipt of an Award, the Award Agreement may require a Participant to hold a vested Award or shares of Stock received upon exercise of a Stock Option for a period of time specified in the Award Agreement (“Holding Period”). In connection with the foregoing, a Participant may be required to retain direct ownership of such shares until the earlier of (i) the expiration of the Holding Period following the date of vesting or (ii) such person’s Termination of Service with the Company and any Subsidiary. The foregoing limitation, if applicable, shall not apply to the extent that an Award vests due to death, Disability or an Involuntary Termination at or following a Change in Control, or to the extent that (x) a Participant directs the Company to withhold or the Company elects to withhold shares of Stock with respect to the vesting or exercise, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of shares of Stock to cover the amount required to be withheld or (y) a Participant exercises a Stock Option by a net settlement, and in the case of (x) and (y) herein, only to the extent of the shares are withheld for tax purposes or for purposes of the net settlement.
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ARTICLE 3 - Shares Subject to Plan
Section 3.1Available Shares. The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently authorized but unissued, currently held or, to the extent permitted by applicable law, subsequently acquired by the Company, including shares purchased in the open market or in private transactions.
Section 3.2Share Limitations.
(a) Share Reserve. Subject to the following provisions of this Section 3.2, the maximum number of shares of Stock that may be delivered to Participants and their beneficiaries under the Plan shall be equal to (i) 1,200,000 shares of Stock, plus (ii) the number of shares of Stock which have been reserved but not issued under the Company’s 2018 Equity Incentive Plan, which is estimated to be approximately 258,102 as of April 1, 2022, plus (iii) any shares of Stock returned to the Company’s 2018 Equity Incentive Plan after the effective date of this Plan as a result of expiration, cancellation, or forfeiture of awards issued under such plan, and shall be subject to adjustment as provided herein. As of the Effective Date of this Plan, no further grants will be made under the 2018 Equity Incentive Plan. Subject to the limitations set forth in this Section 3.2, Awards under the Plan may be made in any combination of shares of Restricted Stock Awards, Restricted Stock Units or Stock Options and all Awards may be granted as either Restricted Stock Awards, Restricted Stock Units or Stock Options, in the discretion of the Committee, and all Stock Options may be granted as Incentive Stock Options. The aggregate number of shares available for grant under the Plan and the number of shares of Stock subject to outstanding Awards shall be subject to adjustment as provided herein and in Section 3.4.
(b) Computation of Shares Available. For purposes of this Section 3.2 and in connection with the granting of an Award, the number of shares of Stock available for the grant shall be reduced by the number of shares previously granted, subject to the following. To the extent any shares of Stock covered by an Award under the Plan are not delivered to a Participant or beneficiary for any reason, including because the Award is forfeited or canceled or because a Stock Option is not exercised, then the shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Stock available for delivery under the Plan. To the extent that: (i) a Stock Option is exercised by using an actual or constructive exchange of shares of Stock to pay the Exercise Price; (ii) shares of Stock are withheld to satisfy tax withholding upon exercise or vesting of an Award granted hereunder; or (iii) shares are withheld to satisfy the Exercise Price of Stock Options in a net settlement of Stock Options, then the number of shares of Stock available shall be reduced by the gross number of Stock Options exercised or Stock returned to satisfy tax withholding, rather than by the net number of shares of Stock issued.
Section 3.3. Limitations on Grants to Employees and Directors.
(a) Stock Options – Employees. The maximum number of shares of Stock, in the aggregate, that may be covered by a Stock Option granted to any one Employee pursuant to Section 3.2 during any calendar year shall be one hundred and fifty thousand (150,000) shares, all of which may be granted as incentive stock options.
(b) Restricted Stock Awards, Restricted Stock Units and Performance Awards – Employees. The maximum number of shares of Stock, in the aggregate, that may be subject to Restricted Stock Awards, Restricted Stock Units or Performance Awards granted during any calendar year to any one Employee under the Plan shall be a number equal to the quotient of (i) $2,000,000 divided by (ii) the Fair Market Value of a share of Stock on the date of grant.
(c) Stock Options, Restricted Stock Awards and Restricted Stock Units – Non-Employee Directors. The maximum number of shares of Stock, in the aggregate, that may be subject to Stock Options, Restricted Stock Awards or Restricted Stock Units granted to any one individual non‑Employee Director during any calendar year shall be a number equal to the quotient of (i) $100,000 divided by (ii) the Fair Market Value of a share of Stock for a grant of Restricted Stock Awards or Restricted Stock Units on the date of grant or, for Stock Options, the fair value on the date of grant as determined under applicable accounting standards.
(d) Awards Subject to Adjustment. The aggregate number of shares available for grant under this Plan and the number of shares subject to outstanding Awards, including the limit on the number of Awards available for grant under this Plan described in this Section 3.3, shall be subject to adjustment as provided in Section 3.4.
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Section 3.4Corporate Transactions.
(a) General. If the shares of Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of shares for which grants of Awards may be made under the Plan shall be adjusted proportionately, so that the proportionate interest of the grantee immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Stock Options shall not change the aggregate purchase price payable with respect to shares that are subject to the unexercised portion of the Stock Option outstanding but shall include a corresponding proportionate adjustment in the purchase price per share. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Stock Options, Restricted Stock Awards and Restricted Stock Units (including, without limitation, cancellation of Stock Options, Restricted Stock Awards and Restricted Stock Units in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution or exchange of Stock Options, Restricted Stock Awards and Restricted Stock Units using stock of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any parent or Subsidiary or the financial statements of the Company or any parent or Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles.
(b)Merger in which Company is Not Surviving Entity. In the event of any merger, consolidation, or other business reorganization (including, but not limited to, a Change in Control) in which the Company is not the surviving entity, unless otherwise set forth in the agreement relating to the consummation of such merger, consolidation or other business reorganization, any Stock Options granted under the Plan that are outstanding immediately prior to such merger, consolidation or other business combination shall be converted into Stock Options to purchase voting common equity securities of the business entity that survives such merger, consolidation or other business reorganization having substantially the same terms and conditions as the outstanding Stock Options under this Plan and reflecting the same economic benefit (as measured by the difference between the aggregate Exercise Price and the value exchanged for outstanding shares of Stock in such merger, consolidation or other business reorganization), all as determined by the Committee prior to the consummation of such merger. The Committee or the agreement related to such merger, consolidation or other business reorganization may, at any time prior to the consummation of such merger, consolidation or other business reorganization, direct that all, but not less than all, outstanding Stock Options be canceled as of the effective date of such merger, consolidation or other business reorganization in exchange for a cash (or acquirer stock) payment per share of Stock equal to the excess (if any) of the value exchanged for an outstanding share of Stock in such merger, consolidation or other business reorganization over the Exercise Price of the Stock Option being canceled; provided, further, that in the event the Exercise Price of outstanding Stock Options exceeds the value to be exchanged for an outstanding share of Stock (an “Underwater Stock Option”) in such merger, consolidation or other business reorganization, the Committee may, in its discretion, cancel and terminate such Underwater Stock Options without the consent of the holder of the Stock Option and without any payment to such holder.
Section 3.5Delivery of Shares. Delivery of shares of Stock or other amounts under the Plan shall be subject to the following:
(a) Compliance with Applicable Laws. Notwithstanding any other provision of the Plan, the Company shall have no obligation to deliver any shares of Stock or make any other distribution of benefits under the Plan unless such delivery or distribution complies with all applicable laws (including, the requirements of the Securities Act), and the applicable requirements of any Exchange or similar entity.
(b) Certificates. To the extent that the Plan provides for the issuance of shares of Stock, the issuance may be made on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any Exchange.
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ARTICLE 4 - CHANGE IN CONTROL
Section 4.1Consequence of a Change in Control. Subject to the provisions of Section 3.4 (relating to the adjustment of shares and cancellation of Stock Options in exchange for a cash or stock payment of the in-the-money value) and except as otherwise provided in the Plan and unless the Committee determines otherwise:
(a)Upon an Involuntary Termination at or following a Change in Control, all Service-based Stock Options then held by the Participant shall become fully earned and exercisable (subject to the expiration provisions otherwise applicable to the Stock Option). All Stock Options may be exercised for a period of one (1) year following an Involuntary Termination following a Change in Control, provided, however, that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three (3) months following a termination of employment.
(b) Upon an Involuntary Termination at or following a Change in Control, all Service-based Awards of Restricted Stock Awards and Restricted Stock Units, shall be fully earned and vested immediately.
(c) Upon an Involuntary Termination at or following a Change in Control, all Performance Awards shall vest at the greater of the target level of performance or actual annualized performance measured as of the most recent completed fiscal quarter.
(d) Notwithstanding anything in the Plan to the contrary, in the event of a Change in Control in which the Company is not the surviving entity, any Awards granted under the Plan that are outstanding immediately prior to such Change in Control shall become fully vested in the event the successor entity does not assume the Awards granted under the Plan and Performance Awards shall vest at the rate specified in Section 4.1(c) of the Plan.
Section 4.2Definition of Change in Control. For purposes of the Plan, unless otherwise provided in an Award Agreement, a “Change in Control” shall be deemed to have occurred upon the earliest to occur of the following:
(a)A change in ownership occurs on the date that any one person, or more than one person acting as a group (as defined in Treasury regulation section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Bank or Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation.
(b) A change in the effective control of the Bank or Company occurs on the date that either (i) any one person, or more than one person acting as a group (as defined in Treasury regulation section 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Bank or Company possessing 30% or more of the total voting power of the stock of the Bank or Company, or (ii) a majority of the members of the Bank’s or Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Bank’s or Company’s board of directors prior to the date of the appointment or election.
(c) A change in a substantial portion of the Bank’s or Company’s assets occurs on the date that any one person or more than one person acting as a group (as defined in Treasury regulation section 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank or Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of (i) all of the assets of the Bank or Company, or (ii) the value of the assets being disposed of, either of which is determined without regard to any liabilities associated with such assets. For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Treasury regulation section 1.409A-3(g)(5).
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RTICLE 5 - COMMITTEE
Section 5.1Administration. The Plan shall be administered by the members of the Compensation Committee of the Company who are Disinterested Board Members. If the Committee consists of fewer than two Disinterested Board Members, then the Board of Directors shall appoint to the Committee such additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least two Disinterested Board Members. Any members of the Committee who do not qualify as Disinterested Board Members shall abstain from participating in any discussion or decision to make or administer Awards that are made to Participants who at the time of consideration for such Award are persons subject to the short-swing profit rules of Section 16 of the Exchange Act. The Board of Directors, or if necessary to maintain compliance with the applicable listing standards, those members of the Board of Directors who are “independent directors” under the corporate governance statutes or rules of any Exchange on which the Company lists, or has listed or seeks to list its securities, may, in their discretion, take any action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force and effect under the Plan as if done or exercised by the Committee.
Section 5.2Powers of Committee. The Committee’s administration of the Plan shall be subject to the following:
(a) The Committee will have the authority and discretion to select from among the Company’s and its Subsidiaries’ Employees and Directors those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, features, (including automatic exercise in accordance with Section 7.18) performance criteria, restrictions (including without limitation, provisions relating to non-competition, non-solicitation and confidentiality), and other provisions of such Awards, to cancel or suspend Awards (subject to the restrictions imposed by Article 6) and to reduce, eliminate or accelerate any restrictions applicable to an Award at any time after the grant of the Award, or to extend the time period to exercise a Stock Option, provided that such extension is consistent with Code Section 409A. Notwithstanding the foregoing, the Committee will not have the authority or discretion to accelerate the vesting requirements applicable to an Award to avoid the one-year minimum vesting requirement pursuant to Section 2.5 except in the event of a Change in Control as provided under Section 4.1 of the Plan and in the event of termination due to death or Disability.
(b) The Committee will have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.
(c) The Committee will have the authority to define terms not otherwise defined herein.
(d) In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the certificate of incorporation and bylaws of the Company and applicable state corporate law.
(e)The Committee will have the authority to: (i) suspend a Participant’s right to exercise a Stock Option in a particular manner (i.e., such as a “cashless exercise” or “broker-assisted exercise”) during a blackout period (or similar restricted period) (a “Blackout Period”) to the extent that the Committee deems it necessary or in the best interests of the Company in order to comply with the securities laws and regulations issued by the SEC; and (ii) to extend the period to exercise a Stock Option by a period of time equal to the Blackout Period, provided that the extension does not violate Section 409A of the Code, the Incentive Stock Option requirements or applicable laws and regulations.
Section 5.3Delegation by Committee. Except to the extent prohibited by applicable law, the applicable rules of an Exchange upon which the Company lists its shares or the Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3 promulgated under the Exchange Act, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including (a) delegating to a committee of one or more members of the Board of Directors who are not “Disinterested Board Members,” the authority to grant Awards under the Plan to eligible persons who are not then subject to Section 16 of the Exchange Act; or (b) delegating to a committee of one or more members of the Board of Directors who would be eligible to serve on the Compensation Committee of the Company pursuant to the listing requirements imposed by any Exchange on which the Company lists, has listed or seeks to list its securities, the authority to grant awards under the Plan. The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any awards so granted. Any such allocation or delegation may be revoked by the Committee at any time.
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Section 5.4Information to be Furnished to Committee. As may be permitted by applicable law, the Company and its Subsidiaries shall furnish the Committee with data and information it determines may be required for it to discharge its duties. The records of the Company and its Subsidiaries as to a Participant’s employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons entitled to benefits under the Plan must furnish the Committee any evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.
Section 5.5Committee Action. The Committee shall hold meetings, and may make administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. Subject to Section 5.1, all actions of the Committee, including interpretations of provisions of the Plan, shall be final and conclusive and shall be binding upon the Company, Participants and all other interested parties. Any person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other communication signed by a member of the Committee or by a representative of the Committee authorized to sign the same in its behalf.
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ARTICLE 6 - AMENDMENT AND TERMINATION
Section 6.1General. The Board of Directors may, as permitted by law, at any time, amend or terminate the Plan, and the Board of Directors or the Committee may, at any time, amend any Award Agreement, provided that no amendment or termination (except as provided in Section 2.6, Section 3.4 and Section 6.2) may cause the Award to violate Code Section 409A, may cause the repricing of a Stock Option, or, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely impair the rights of any Participant or beneficiary under any Award granted under the Plan before the date the amendment is adopted by the Board of Directors or made by the Committee; provided, however, that, no amendment may (a) materially increase the benefits accruing to Participants under the Plan; (b) other than pursuant to Section 3.4, materially increase the aggregate number of securities that may be issued under the Plan, or (c) materially modify the requirements for participation in the Plan, unless the amendment under (a), (b) or (c) above is approved by the Company’s stockholders.
Section 6.2Amendment to Conform to Law and Accounting Changes. Notwithstanding any provision in this Plan or any Award Agreement to the contrary, the Committee may amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of (i) conforming the Plan or the Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), or (ii) avoiding an accounting treatment resulting from an accounting pronouncement or interpretation thereof issued by the SEC or Financial Accounting Standards Board subsequent to the adoption of the Plan or the making of the Award affected thereby, which in the sole discretion of the Committee, may materially and adversely affect the financial condition or results of operations of the Company. By accepting an Award under this Plan, each Participant agrees and consents to any amendment made pursuant to this Section 6.2 to any Award granted under the Plan without further consideration or action.
ARTICLE 7 - GENERAL TERMS
Section 7.1No Implied Rights.
(a) No Rights to Specific Assets. Neither a Participant nor any other person shall by reason of participation in the Plan acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including any specific funds, assets, or other property that the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right, evidenced by an Award Agreement, to the shares of Stock or amounts, if any, payable or distributable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.
(b) No Contractual Right to Employment or Future Awards. The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating Employee the right to be retained in the employ of the Company or any Subsidiary or any right or claim to any benefit under the Plan, unless the right or claim has specifically accrued under the terms of the Plan. No individual shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to receive a future Award under the Plan.
(c) No Rights as a Stockholder. Except as otherwise provided in the Plan or in an Award Agreement, no Award shall confer upon the holder thereof any rights as a stockholder of the Company before the date on which the individual fulfills all conditions for receipt of such rights.
Section 7.2Transferability. Except as otherwise so provided by the Committee, Stock Options under the Plan are not transferable except: (i) as designated by the Participant by will or by the laws of descent and distribution; (ii) to a trust established by the Participant, if under Code Section 671 and applicable state law, the Participant is considered the sole beneficial owner of the Stock Option while held in trust, or (iii) between spouses incident to a divorce or pursuant to a domestic relations order, provided, however, in the case of a transfer within the meaning of this Section 7.2(iii), the Stock Option shall not qualify as an ISO as of the day of the transfer. The Committee shall have the discretion to permit the transfer of vested Stock Options (other than ISOs) under the Plan; provided, however, that such transfers shall be limited to Immediate Family Members of Participants, trusts and partnerships established for the primary benefit of Immediate Family Members or to charitable organizations, and; provided, further, that the transfers are not made for consideration to the Participant.
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Awards of Restricted Stock shall not be transferable, except in the event of death, before the time that the Awards vest. A Restricted Stock Unit Award is not transferable, except in the event of death, before the time that the Restricted Stock Unit Award vests and property in which the Restricted Stock Unit is denominated is distributed to the Participant or the Participant’s beneficiary.
A Beneficiary, transferee, or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate by the Committee.
Section 7.3Designation of Beneficiaries. A Participant may file with the Company a written designation of a beneficiary or beneficiaries under this Plan and may from time to time revoke or amend the designation. Any designation of beneficiary under this Plan shall be controlling over any other disposition, testamentary or otherwise (unless such disposition is pursuant to a domestic relations order); provided, however, that if the Committee is in doubt as to the entitlement of the beneficiary to any Award, the Committee may determine to recognize only the legal representative of the Participant in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone.
Section 7.4Non-Exclusivity. Neither the adoption of this Plan by the Board of Directors nor the submission of the Plan to the stockholders of the Company for approval (and any subsequent approval by the stockholders of the Company) shall be construed as creating any limitations on the power of the Board of Directors or the Committee to adopt other incentive arrangements as may be deemed desirable, including, without limitation, the granting of Restricted Stock Awards, Restricted Stock Units and/or Stock Options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
Section 7.5Award Agreement. Each Award granted under the Plan shall be evidenced by an Award Agreement. A copy of the Award Agreement, in any medium chosen by the Committee, shall be provided (or made available electronically) to the Participant, and the Committee may, but need not require, that the Participant sign a copy of the Award Agreement. In the absence of a specific provision in the Award Agreement, the terms of the Plan shall control. In the event of a conflict between the terms of an Award Agreement and the Plan, the terms of the Plan will control.
Section 7.6Form and Time of Elections; Notification Under Code Section 83(b). Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof, shall be filed with the Company at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require. Notwithstanding anything herein to the contrary, the Committee may, on the date of grant or at a later date, as applicable, prohibit an individual from making an election under Code Section 83(b). If the Committee has not prohibited an individual from making this election, an individual who makes this election shall notify the Committee of the election within ten (10) days of filing notice of the election with the Internal Revenue Service or as otherwise required by the Committee. This requirement is in addition to any filing and notification required under the regulations issued under the authority of Code Section 83(b).
Section 7.7Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other written information upon which the person is acting considers pertinent and reliable, and signed, made or presented by the proper party or parties.
Section 7.8Tax Withholding.
(a) Payment by Participant. Each Participant shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the Participant for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any taxes from any payment of any kind otherwise due to the Participant. The Company's obligation to deliver evidence of book entry (or stock certificates) to any Participant is subject to and conditioned on tax withholding obligations being satisfied by the Participant.
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(b) Payment in Stock. The Committee may require or permit the Company's tax withholding obligation to be satisfied, in whole or in part, by the Company withholding from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due; provided, however, that the amount withheld does not exceed the maximum statutory tax rate or such lesser amount as is necessary to avoid liability accounting treatment. For purposes of share withholding, the Fair Market Value of withheld shares shall be determined in the same manner as the value of Stock includible in income of the Participants.
Section 7.9Action by Company or Subsidiary. Any action required or permitted to be taken by the Company or any Subsidiary shall be by resolution or unanimous written consent of its board of directors, or by action of one or more members of the board of directors (including a committee of the board of directors) who are duly authorized to act for the board or directors, or (except to the extent prohibited by applicable law or applicable rules of the Exchange on which the Company lists its securities) by a duly authorized officer of the Company or Subsidiary.
Section 7.10Successors. All obligations of the Company under this Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business, stock, and/or assets of the Company.
Section 7.11Indemnification. To the fullest extent permitted by law and the Company’s governing documents, each person who is or shall have been a member of the Committee, or of the Board of Directors, or an officer or Employee of the Company or a Subsidiary to whom authority was delegated in accordance with Section 5.3, shall be indemnified and held harmless by the Company (i) against and from any loss (including amounts paid in settlement), cost, liability or expense (including reasonable attorneys’ fees) that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan; and (ii) against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute or regulation. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s certificate of incorporation or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. The foregoing right to indemnification shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition, provided, however, that, if required by applicable law, an advancement of expenses shall be made only upon delivery to the Company of an undertaking by or on behalf of such persons to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such person is not entitled to be indemnified for such expenses.
Section 7.12No Fractional Shares. Unless otherwise permitted by the Committee, no fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award Agreement. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether the fractional shares or any rights thereto shall be forfeited or otherwise eliminated by rounding down.
Section 7.13Governing Law. The Plan, all awards granted hereunder, and all actions taken in connection herewith shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws, except as superseded by applicable federal law. The federal and state courts located nearest to the Company’s home office within the Commonwealth of Massachusetts shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any Award, each Participant, and any other person claiming any rights under the Plan, agrees to submit himself or herself, and any legal action brought with respect to the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.
Section 7.14Benefits Under Other Plans. Except as otherwise provided by the Committee or as set forth in a Qualified Retirement Plan, non-qualified plan or other benefit plan, Awards to a Participant (including the grant and the receipt of benefits) under the Plan shall be disregarded for purposes of determining the Participant’s benefits under, or contributions to, any Qualified Retirement Plan, non-qualified plan and any other benefit plans maintained by the Participant’s employer. The term “Qualified Retirement Plan” means any plan of the Company or a Subsidiary that is intended to be qualified under Code Section 401(a).
A-13 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
Section 7.15Validity. If any provision of this Plan is determined to be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been included in the Plan.
Section 7.16Notice. Unless otherwise provided in an Award Agreement, all written notices and all other written communications to the Company provided for in the Plan or an Award Agreement shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile, email or prepaid overnight courier to the Company at its principal executive office. Notices, demands, claims and other communications shall be deemed given: (i) in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery; (ii) in the case of certified or registered U.S. mail, five (5) days after deposit in the U.S. mail; or (iii) in the case of facsimile or email, the date upon which the transmitting party received confirmation of receipt; provided, however, that in no event shall any such communications be deemed to be given later than the date they are actually received, provided they are actually received.
If a communication is not received, it shall only be deemed received upon the showing of an original of the applicable receipt, registration or confirmation from the applicable delivery service. Communications that are to be delivered by the U.S. mail or by overnight service to the Company shall be directed to the attention of the Company’s Chief Executive Officer and to the Corporate Secretary, unless otherwise provided in the Participant’s Award Agreement.
Section 7.17Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. These events include, but are not limited to, termination of employment for Cause, termination of the Participant’s provision of Services to the Company or any Subsidiary, violation of material Company or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct of the Participant that is detrimental to the business or reputation of the Company or any Subsidiary.
Section 7.18Automatic Exercise. In the sole discretion of the Committee exercised in accordance with Section 5.2(a), any Stock Options that are exercisable but unexercised as of the day immediately before the expiration date of the Stock Option may be automatically exercised in accordance with procedures established for this purpose by the Committee, but only if the Exercise Price is less than the Fair Market Value of a share of Stock on such date and the automatic exercise will result in the issuance of at least one (1) whole share of Stock to the Participant after payment of the Exercise Price and any applicable minimum tax withholding requirements. Payment of the exercise price and any applicable tax withholding requirements shall be made by a net settlement of the Stock Option whereby the number of shares of Stock to be issued upon exercise are reduced by a number of shares having a Fair Market Value on the date of exercise equal to the Exercise Price and any applicable minimum tax withholding.
Section 7.19Regulatory Requirements. The grant and settlement of Awards under this Plan shall be conditioned upon and subject to compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(k), and the rules and regulations promulgated thereunder.
Section 7.20.Awards Subject to Company Clawback Policies and Restrictions.
(a) Clawback Policies. Awards granted hereunder are subject to any clawback policy that may be adopted by the Company from time to time, whether pursuant to the provisions of Section 954 of the Dodd-Frank Act, implementing regulations thereunder, or otherwise. If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the federal securities laws, and the automatic forfeiture provisions under Section 304 of the Sarbanes-Oxley Act of 2002 apply as a result, any Participant who was an executive officer of the Company at the time of grant or at the time of restatement shall be subject to “clawback” as if such person was subject to Section 304 of the Sarbanes-Oxley Act of 2002.
(b) Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading policies and procedures, as in effect from time to time.
(c) Hedging/Pledging Policy Restrictions. Awards under the Plan shall be subject to the Company’s policies relating to hedging and pledging as such may be in effect from time to time.
A-14 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
ARTICLE 8 - DEFINED TERMS; CONSTRUCTION
Section 8.1 In addition to the other definitions contained herein, unless otherwise specifically provided in an Award Agreement, the following definitions shall apply:
“10% Stockholder” means an individual who, at the time of grant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company.
Award” means any Stock Option, Restricted Stock Award, Restricted Stock Unit or Performance Award or any other right or interest relating to Stock or cash, granted to a Participant under the Plan.
“Award Agreement” means the document (in whatever medium prescribed by the Committee and whether or not a signature is required or provided by a Participant) that evidences the terms and conditions of an Award. A copy of the Award Agreement will be provided (or made available electronically) to each Participant.
“Board of Directors” means the Board of Directors of the Company.
“Cause.” If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of termination for “cause,” then, for purposes of this Plan, the term “Cause” shall have the meaning set forth in such agreement. In the absence of such a definition,
“Cause” means termination because of a Participant’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Bank’s Code of Ethics, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the Chief Executive Officer of the Bank or the Board will likely cause substantial financial harm or substantial injury to the reputation of the Bank, willfully engaging in actions that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Bank, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the contract.
“Change in Control” has the meaning ascribed to it in Section 4.2.
“Code” means the Internal Revenue Code of 1986, as amended, and any rules, regulations and guidance promulgated thereunder, as modified from time to time.
“Director” means a member of the Board of Directors or of a board of directors of a Subsidiary.
“Disability.” If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of “Disability” or “Disabled,” then, for purposes of this Plan, the terms “Disability” or “Disabled” shall have meaning set forth in such agreement. In the absence of such a definition, “Disability” shall be defined in accordance with the Bank’s long-term disability plan. To the extent that an Award hereunder is subject to Code Section 409A, “Disability” or “Disabled” shall mean that a Participant: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Employees. Except to the extent prohibited under Code Section 409A, if applicable, the Committee shall have discretion to determine if a Disability has been incurred.
“Disinterested Board Member” means a member of the Board of Directors who: (a) is not a current Employee of the Company or a Subsidiary, (b) does not receive remuneration from the Company or a Subsidiary, either directly or indirectly, for services rendered as a consultant or in any capacity other than as a Director, except in an amount for which disclosure would not be required pursuant to Item 404 of SEC Regulation S-K in accordance with the proxy rules of the SEC, as amended or any successor provision thereto, and (c) does not possess an interest in any other transaction, and is not engaged in a business relationship, for which disclosure would be required pursuant to Item 404(a) of SEC Regulation S-K under the proxy rules of the SEC, as amended or any successor provision thereto. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to conform to the requirements of a “Non-Employee Directors” under Rule 16b-3 promulgated under the Exchange Act and the corporate governance standards imposed on compensation committees under the listing requirements imposed by any Exchange on which the Company lists or seeks to list its securities.
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“Dividend Equivalent Rights” means the right, associated with a Restricted Stock Unit, to receive a payment, in cash or Stock, as applicable, equal to the amount of dividends paid on a share of Stock, as specified in the Award Agreement.
“Employee” means any person employed by the Company or a Subsidiary, including Directors who are employed by the Company or a Subsidiary.
“Exchange” means any national securities exchange on which the Stock may from time to time be listed or traded.
“Exchange Act” means the Securities Exchange Act of 1934, as amended and the rules, regulations and guidance promulgated thereunder, as modified from time to time.
“Exercise Price” means the price established with respect to a Stock Option pursuant to Section 2.2.
“Fair Market Value” on any date, means (i) if the Stock is listed on an Exchange, national market system or automated quotation system, the closing sales price on that Exchange or over such system on that date or, in the absence of reported sales on that date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) if the Stock is not listed on a an Exchange, national market system or automated quotation system, “Fair Market Value” shall mean a price determined by the Committee in good faith on the basis of objective criteria consistent with the requirements of Code Section 422 and applicable provisions of Section 409A.
“Good Reason.” A termination of employment by an Employee Participant shall be deemed a termination of employment for “Good Reason” as a result of the Participant’s resignation from the employ of the Company or any Subsidiary upon the occurrence of any of the following events:
(i) a material reduction in Participant’s base salary or base compensation;
(ii) a material diminution in Participant’s authority, duties or responsibilities without the written consent of Participant;
(iii) a change in the geographic location at which Participant must perform his duties that is more than twenty-five (25) miles from the location of Participant’s principal workplace on the date of this Agreement; or
(iv) in the event a Participant is a party to an employment or change in control agreement that provides a definition for “Good Reason” or a substantially similar term, then the occurrence of any event set forth in such definition.
Notwithstanding the foregoing, in the event an Award is subject to Code Section 409A, then “Good Reason” shall be defined in accordance with Code Section 409A, including the requirement that a Participant gives sixty (60) days’ notice to the Company or the Subsidiary for whom the Participant is employed of the Good Reason condition and the Company or Subsidiary, as applicable, shall have thirty (30) days to cure the Good Reason condition. Any distribution of an Award subject to Code Section 409A shall be subject to the distribution timing rules of Code Section 409A, including any delay in the distribution of such Award, which rules shall be set forth in the Award Agreement.
“Holding Period” has the meaning ascribed to it in Section 2.8.
“Immediate Family Member” means with respect to any Participant: (i) any of the Participant’s children, stepchildren, grandchildren, parents, stepparents, grandparents, spouses, former spouses, siblings, nieces, nephews, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law, brothers-in-law or sisters-in-law, including relationships created by adoption; (ii) any natural person sharing the Participant’s household (other than as a tenant or employee, directly or indirectly, of the Participant); (iii) a trust in which any combination of the Participant and persons described in section (i) and (ii) above own more than fifty percent (50%) of the beneficial interests; (iv) a foundation in which any combination of the Participant and persons described in sections (i) and (ii) above control management of the assets; or (v) any other corporation, partnership, limited liability company or other entity in which any combination of the Participant and persons described in sections (i) and (ii) above control more than fifty percent (50%) of the voting interests.
“Involuntary Termination” means the Termination of Service of a Participant by the Company or Subsidiary, other than a termination for Cause, or termination of employment by an Employee Participant for Good Reason.
A-16 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
“Incentive Stock Option” or “ISO” has the meaning ascribed to it in Section 2.1(a).
“Non-Qualified Option” means the right to purchase shares of Stock that is either (i) granted to a Participant who is not an Employee, or (ii) granted to an Employee and either is not designated by the Committee to be an ISO or does not satisfy the requirements of Section 422 of the Code.
“Performance Award” means an Award that vests in whole or in part upon the achievement of one or more specified performance measures, as determined by the Committee. Regardless of whether an Award is subject to the attainment of one or more performance measures, the Committee may also condition the vesting thereof upon the continued Service of the Participant. The conditions for grant or vesting and the other provisions of a Performance Award (including without limitation any applicable performance measures) need not be the same with respect to each Participant. A Performance Award shall vest, or as to Restricted Stock Units be settled, after the Committee has determined that the performance goals have been satisfied.
Performance measures can include, but are not limited to: book value or tangible book value per share; basic earnings per share (e.g., earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization; or earnings per share); basic cash earnings per share; diluted earnings per share; return on equity; net income or net income before taxes; net interest income; non-interest income; non-interest expense to average assets ratio; cash general and administrative expense to average assets ratio; efficiency ratio; cash efficiency ratio; financial return ratios; adjusted earnings, capital; increase in revenue; total shareholder return; net operating income, operating income; net interest margin or net interest rate spread; stock price; assets, growth in assets, loans or deposits, asset quality level, charge offs, loan reserves, non-performing assets, loans, deposits, growth of loans, loan production volume, non-performing loans, deposits or assets; regulatory compliance or safety and soundness; achievement of balance sheet or income statement objectives and strategic business objectives, or any combination of these or other measures.
Performance measures may be based on the performance of the Company as a whole or on any one or more Subsidiaries or business units of the Company or a Subsidiary and may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures. The terms of an Award may provide that partial achievement of performance measures may result in partial payment or vesting of the award or that the achievement of the performance measures may be measured over more than one period or fiscal year. In establishing any performance measures, the Committee may provide for the exclusion of the effects of the following items, to the extent the exclusion is set forth in the Participant’s Award Agreement and identified in the audited financial statements of the Company, including footnotes, or in the Management’s Discussion and Analysis section of the Company’s annual report or in the Compensation Discussion and Analysis Section, if any, of the Company’s annual proxy statement: (i) extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) dividends declared on the Company’s stock; (iv) changes in tax or accounting principles, regulations or laws; or (v) expenses incurred in connection with a merger, branch acquisition or similar transaction. Subject to the preceding sentence, if the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company or the manner in which the Company or its Subsidiaries conducts its business or other events or circumstances render current performance measures to be unsuitable, the Committee may modify such performance measures, in whole or in part, as the Committee deems appropriate. Notwithstanding anything to the contrary herein, performance measures relating to any Award hereunder will be modified, to the extent applicable, to reflect a change in the outstanding shares of Stock of the Company by reason of any stock dividend or stock split, or a corporate transaction, such as a merger of the Company into another corporation, any separation of a corporation or any partial or complete liquidation by the Company or a Subsidiary. If a Participant is promoted, demoted or transferred to a different business unit during a performance period, the Committee may determine that the selected performance measures or applicable performance period are no longer appropriate, in which case, the Committee, in its sole discretion, may: (i) adjust, change or eliminate the performance measures or change the applicable performance period; or (ii) cause to be made a cash payment to the Participant in an amount determined by the Committee.
“Restricted Stock” or “Restricted Stock Award” has the meaning ascribed to it in Sections 2.1(b) and 2.3.
“Restricted Stock Unit” has the meaning ascribed to it in Sections 2.1(c) and 2.4.
“Restriction Period” has the meaning set forth in Section 2.4(b)(iii).
A-17 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
“Retirement” means retirement from employment with the Company or a Subsidiary in accordance with the then current retirement policies of the Company or Subsidiary, as applicable. “Retirement” with respect to a non-employee Director means the termination of service from the Board(s) of Directors of the Company and any Subsidiary following written notice to such Board(s) of Directors of the non-employee Directors intention to retire. Notwithstanding the foregoing, unless the Committee specifies otherwise at the time of an Award, an Employee who continues to serve on the Board following retirement as a Director or a Director who continues to serve as an advisory board member or director emeritus shall not be deemed to have terminated due to Retirement until both Service as an Employee and Director, or in the latter case, as a Director and advisory board member or director emeritus has terminated.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended and the rules, regulations and guidance promulgated thereunder and modified from time to time.
“Service” means service as an Employee or non-employee Director of the Company or a Subsidiary, as the case may be, and shall include service as a director emeritus or advisory director. Service shall not be deemed interrupted in the case of (i) any approved leave of absence for military service or sickness, or for any other purpose approved by the Company or a Subsidiary, if the employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing, (ii) transfers among the Company, any Subsidiary, or any successor entities, in any capacity of Employee or Director, or (iii) any change in status as long as the individual remains in the service of the Company or a Subsidiary in any capacity as Employee or Director (except as otherwise provided in the Award Agreement).
“Stock” means the common stock of the Company, $0.01 par value per share.
“Stock Option” has the meaning ascribed to it in Sections 2.1(a) and 2.2.
“Subsidiary” means any corporation, affiliate, bank or other entity which would be a subsidiary corporation with respect to the Company as defined in Code Section 424(f) and, other than with respect to an ISO, shall also mean any partnership or joint venture in which the Company and/or other Subsidiary owns more than fifty percent (50%) of the capital or profits interests.
“Termination of Service” means the first day occurring on or after a grant date on which the Participant ceases to be an Employee or Director (including a director emeritus or advisory director), regardless of the reason for such cessation, subject to the following:
(a) The Participant’s cessation of Service as an Employee shall not be deemed to occur by reason of the transfer of the Participant between the Company and a Subsidiary or between two Subsidiaries.
(b) The Participant’s cessation as an Employee shall not be deemed to occur by reason of the Participant’s being on a bona fide leave of absence from the Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the Participant’s Services provided the leave of absence does not exceed six (6) months, or if longer, so long as the Employee retains a right to reemployment with the Company or Subsidiary under an applicable statute or by contract. For these purposes, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Employee will return to perform Services for the Company or Subsidiary. If the period of leave exceeds six (6) months and the Employee does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the six (6) month period. For purposes of this sub-section, to the extent applicable, an Employee’s leave of absence shall be interpreted by the Committee in a manner consistent with Treasury Regulation Section 1.409A-1(h)(1).
(c) If, as a result of a sale or other transaction, the Subsidiary for whom Participant is employed ceases to be a Subsidiary, and the Participant is not, following the transaction, an Employee of the Company or an entity that is then a Subsidiary, then the occurrence of the transaction shall be treated as the Participant’s Termination of Service caused by the Participant being discharged by the entity by which the Participant is employed or to whom the Participant is providing Services.
A-18 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
(d) Except to the extent Code Section 409A may be applicable to an Award, and subject to the foregoing paragraphs of this sub-section, the Committee shall have discretion to determine if a Termination of Service has occurred and the date on which it occurred. If any Award under the Plan constitutes Deferred Compensation (as defined in Section 2.6), the term Termination of Service shall be interpreted by the Committee in a manner consistent with the definition of “Separation from Service” as defined under Code Section 409A and under Treasury Regulation Section 1.409A-1(h)(ii). For purposes of this Plan, a “Separation from Service” shall have occurred if the employer and Participant reasonably anticipate that no further Services will be performed by the Participant after the date of the Termination of Service (whether as an employee or as an independent contractor) or the level of further Services performed will be less than fifty percent (50%) of the average level of bona fide Services in the thirty-six (36) months immediately preceding the Termination of Service. If a Participant is a “Specified Employee,” as defined in Code Section 409A and any payment to be made hereunder shall be determined to be subject to Code Section 409A, then if required by Code Section 409A, the payment or a portion of the payment (to the minimum extent possible) shall be delayed and shall be paid on the first day of the seventh month following Participant’s Separation from Service.
(e) With respect to a Participant who is a Director, cessation as a Director will not be deemed to have occurred if the Participant continues as a director emeritus or advisory director. With respect to a Participant who is both an Employee and a Director, termination of employment as an Employee shall not constitute a Termination of Service for purposes of the Plan so long as the Participant continues to provide Service as a Director or director emeritus or advisory director.
Section 8.2 In this Plan, unless otherwise stated or the context otherwise requires, the following uses apply:
(a) Actions permitted under this Plan may be taken at any time and from time to time in the actor’s reasonable discretion;
(b) References to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing the statute or its successor, as in effect at the relevant time;
(c) In computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until” and “ending on” (and the like) mean “to, but excluding”;
(d) References to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality;
(e) Indications of time of day mean East Coast time;
(f) The word “including” means “including, but not limited to”;
(g) All references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Plan unless otherwise specified;
(h) All words used in this Plan will be construed to be of such gender or number as the circumstances and context require;
(i) The captions and headings of articles, sections, schedules and exhibits appearing in or attached to this Plan have been inserted solely for convenience of reference and shall not be considered a part of this Plan nor shall any of them affect the meaning or interpretation of this Plan or any of its provisions;
(j) Any reference to a document or set of documents in this Plan, and the rights and obligations of the parties under any such documents, shall mean such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof; and
(k) All accounting terms not specifically defined herein shall be construed in accordance with GAAP.
A-19 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
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| Appendix B | | |
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| Purpose.
Performance.
Progress. |
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Summary and Reconciliation of Certain Non-GAAP Financial Measures
This appendix contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). Non-GAAP performance measures are referred to as “adjusted” in the Company’s Annual Report on Form 10-K and are identified either as “core” or “adjusted” in this document. These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition of the Company. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information, which is included in the Company’s Form 10-K. A reconciliation of non-GAAP financial measures to GAAP measures is provided below, as well as definitions for certain non-GAAP financial measures referenced in the proxy statement. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item which management excludes when computing non-GAAP adjusted earnings can be of substantial importance to the Company’s results for any particular period. The Company’s non-GAAP coreoperating earnings information set forth is not necessarily comparable to non-GAAP information which may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company’s GAAP financial information and discussion of non-GAAP measures in its Form 10-K.
Core earnings (also referred to as core net income) Operating earning is defined as GAAP net income less net non-corenon-operating charges. Net non-corenon-operating charges are the after-tax amount of revenues and expenses which are deemed by the Company as not related to normalized operations. These include net losses/(gains) on securities, goodwill impairment, net gains on the sale of business operations, merger costs, and restructuring costs, and designated dispute settlement costs. The Company utilizes the non-GAAP measure of coreoperating earnings in evaluating operating trends, including components for coreoperating revenue and expense. Non-GAAP adjustments are presented net of an adjustment for income tax expense.
As shown in the Company’s financial statements, these measures are shown net of discontinued national mortgage banking operations for comparison purposes. The Company designated these operations as discontinued in 2019.
CoreOperating EPS is a non-GAAP measure defined as coreoperating net income as a percentage of average diluted shares outstanding during the period.
EfficiencyOperating ratio is a non-GAAP measurement defined as adjusted non-interest expense as a percentage of adjusted total revenue, excluding also amortization of intangibles and reflecting tax credit adjustments.
CoreOperating return on tangible common equity is a non-GAAP measure defined as coreoperating net income as a percentage of total average tangible common shareholders’ equity.
CoreOperating return on assets is a non-GAAP measure defined as coreoperating net income as a percentage of total average assets.
CoreOperating Pre-Tax Pre-Provision Net Revenue (“CoreOperating PPNR”) is a non-GAAP measure defined as coreoperating earnings before credit loss provision expense and tax expense. Related measures are Core PPNR per Share and Core PPNR/Average Assets.
B-1 BERKSHIRE HILLS BANCORP, INC. | 2022 Proxy Statement
The Company views measures related to coreoperating earnings and coreoperating PPNR as important to understanding its operating trends. Analysts also rely on these measures in estimating and evaluating the Company’s performance. Management also believes that the computation of non-GAAP coreoperating earnings and coreoperating earnings per share may facilitate the comparison of the Company to other companies in the financial services industry.
A-1 BERKSHIRE HILLS BANCORP, INC. | 2024 Proxy Statement
The following table summarizes the reconciliation of non-GAAP items recorded for the time periods indicated: | | | | | | | | | | | |
| (Dollars in thousands) | December 31,
2021 | December 31,
2020 | December 31,
2019 |
| GAAP Net income | $ | 118,664 | | $ | (533,017) | | $ | 97,450 | |
| Non-GAAP measures | | | |
| Adj: Net loss/(gain) on securities, net | 787 | | 7,520 | | (4,389) | |
| Adj: Goodwill impairment | — | | 553,762 | | — | |
| Adj: Net gains on sale of business operations and assets | (52,942) | | (1,240) | | — | |
| Adj: Acquisition, restructuring and other | 5,781 | | 5,839 | | 28,046 | |
| Adj: Loss from discontinued operations before income taxes | — | | 26,855 | | 5,539 | |
| Adj: Income taxes | 11,696 | | (29,342) | | (7,799) | |
| Net non-operating charges | (34,678) | | 563,394 | | 21,397 | |
| Adjusted net income (non-GAAP) | $ | 83,986 | | $ | 30,377 | | $ | 118,847 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Total revenue from continuing operations | $ | 434,414 | | $ | 383,089 | | $ | 449,260 | |
| Total non-interest expense from continuing operations | 285,893 | | 840,239 | | 289,857 | |
| Pre-tax, pre-provision net revenue (PPNR) from continuing operations | $ | 148,521 | | $ | (457,150) | | $ | 159,403 | |
| | | |
| Total adjusted revenue | $ | 382,259 | | $ | 389,369 | | $ | 444,871 | |
| Adjusted non-interest expense | 280,112 | | 280,638 | | 261,811 | |
| Adjusted pre-tax, pre-provision net revenue (PPNR) | $ | 102,147 | | $ | 108,731 | | $ | 183,060 | |
| | | |
| (dollars in millions, except share related data) | | | |
| Total average assets - GAAP | $ | 12,056 | | $ | 12,861 | | $ | 12,961 | |
| Total average shareholders’ equity - GAAP | 1,166 | | 1,421 | | 1,694 | |
| Total average tangible shareholders equity - GAAP | 1,134 | | 1,105 | | 1,116 | |
| Total average tangible common shareholders equity - GAAP | 1,134 | | 1,088 | | 1,076 | |
| Average diluted shares outstanding - GAAP (thousands) | 49,554 | | 50,308 | | 49,421 | |
| Earnings per share, diluted | $ | 2.39 | | $ | (10.60) | | $ | 1.97 | |
| Plus: Net adjustments per share, diluted | (0.70) | | 11.20 | | 0.43 | |
| Adjusted earnings per share, diluted | 1.69 | | 0.60 | | 2.40 | |
| Performance Ratios | | | |
| GAAP return on assets | 0.98 | % | (4.15) | % | 0.75 | % |
| Adjusted return on assets | 0.70 | | 0.24 | | 0.93 | |
| GAAP return on equity | 10.18 | | (37.46) | | 5.75 | |
| Adjusted return on equity | 7.20 | | 2.14 | | 7.01 | |
| GAAP return on tangible common equity | 10.80 | | 48.60 | | 9.36 | |
| Adjusted return on tangible common equity | 7.74 | | 3.18 | | 11.35 | |
| Efficiency ratio | 69.96 | | 68.53 | | 55.63 | |
| | | | | | | | | | | |
| (Dollars in thousands) | December 31, 2023 | December 31,
2022 | December 31,
2021 |
| GAAP Net income | $ | 69,598 | | $ | 92,533 | | $ | 118,664 | |
| Non-GAAP measures | | | |
| Adj: Fair value adjustments on securities (1) | — | | 2,037 | | 787 | |
| Adj: Loss/(gain) on sale of AFS securities | 25,057 | | (6) | | — | |
| Adj: Net gains on sale of business operations and assets | — | | — | | (52,942) | |
| Adj: Acquisition, restructuring and other | 6,261 | | 8,909 | | 5,781 | |
| Adj: Income taxes | (7,723) | | (2,940) | | 11,696 | |
| Net non-operating charges | 23,595 | | 8,000 | | (34,678) | |
| Operating net income (non-GAAP) | $ | 93,193 | | $ | 100,533 | | $ | 83,986 | |
| | | |
| Total revenue | $ | 411,829 | | $ | 413,534 | | $ | 434,414 | |
| Total non-interest expense | 301,508 | | 288,716 | | 285,893 | |
| Pre-tax, pre-provision net revenue (PPNR) | $ | 110,321 | | $ | 124,818 | | $ | 148,521 | |
| | | |
| Total operating revenue | $ | 436,886 | | $ | 415,565 | | $ | 382,259 | |
| Operating non-interest expense | 295,247 | | 279,807 | | 280,112 | |
| Operating pre-tax, pre-provision net revenue (PPNR) | $ | 141,639 | | $ | 135,758 | | $ | 102,147 | |
| | | |
| (dollars in millions, except share related data) | | | |
| Total average assets | $ | 11,838 | | $ | 11,216 | | $ | 12,081 | |
| Total average shareholders’ equity, including unrealized losses on AFS securities | 984 | | 1,063 | | 1,191 | |
| Total average shareholders’ equity, excluding unrealized losses on AFS securities | 1,226 | | 1,193 | | 1,166 | |
| Total average tangible shareholders equity, including unrealized losses on AFS securities | 962 | | 1,036 | | 1,159 | |
| Total average tangible shareholders equity, excluding unrealized losses on AFS securities | 1,204 | | 1,166 | | 1,134 | |
| Average diluted shares outstanding - GAAP (thousands) | 43,504 | | 45,914 | | 49,554 | |
| Earnings per share, diluted | $ | 1.60 | | $ | 2.02 | | $ | 2.39 | |
| Plus: Net adjustments per share, diluted | (0.54) | | (0.17) | | (0.70) | |
| Adjusted earnings per share, diluted | 2.14 | | 2.19 | | 1.69 | |
| | | |
| Performance Ratios | | | |
| Return on equity, including unrealized losses on AFS securities | 7.07 | % | 8.70 | % | 9.96 | % |
| Return on equity, excluding unrealized losses on AFS securities | 5.68 | | 7.76 | | 10.18 | |
| Operating return on equity, including unrealized losses on AFS securities | 9.47 | | 9.46 | | 7.05 | |
| Operating return on equity, excluding unrealized losses on AFS securities | 7.60 | | 8.43 | | 7.20 | |
| Return on tangible common equity, including unrealized losses on AFS securities | 7.60 | | 9.29 | | 10.57 | |
| Return on tangible common equity, excluding unrealized losses on AFS securities | 6.07 | | 8.26 | | 10.80 | |
| Operating return on tangible common equity, including unrealized losses on AFS securities | 10.05 | | 10.07 | | 7.58 | |
| Operating return on tangible common equity, excluding unrealized losses on AFS securities | 8.03 | | 8.94 | | 7.74 | |
| Return on assets | 0.59 | | 0.82 | | 0.98 | |
| Operating return on assets | 0.79 | | 0.90 | | 0.70 | |
| Efficiency ratio | 63.88 | | 64.31 | | 69.96 | |
(1)Starting in 2023, fair value adjustments on securities are included in operating income.
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