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Mr. Peter A. Michelotti has been our Chief Operating Officer and Senior Executive Vice President since January 2018. He is a certified financial planner and he was previously the President and Chief Executive Officer as well as a Board member of Community Bank of Bergen Couny, NJ since January 2009. He held various other positions with Community Bank Bank of Bergen Couny, NJ since 1987. He also has held several officer and director positions with banking related associations. Mr. Michelotti has more than 30 years of banking experience, including strategic planning, lending, regulatory compliance, risk management and operations.

NomineesContinuing Directors

Mr. Patrick E. Brady has been the Chief Executive Officer of Heath Alliance for Care of Hackettstown, New Jersey, a not for profit corporation providing housing and services for the elderly, since 1995. Heath Alliance for Care, Inc. is parent to Heath Village, Inc. and Canterbury Village, Inc. Mr. Brady was also formerly a trustee of Cathedral Healthcare Systems. As a Chief Executive Officer, Mr. Brady has experience in many of the issues we deal with, including financial and strategic planning, technology and government relations.

Mr. Richard Branca is the owner and President of Bergen Engineering Company, East Rutherford, New Jersey. He is also the President of Branca Properties, which owns and manages over 1.3 million square feet of office, warehouse and retail space. Mr. Branca also serves as a Principal of Concord Hospitality, an entity which owns or operates over 84 full and select service hotels throughout the United States and Canada. Mr. Branca’s broad based business experience has provided him with insight and understanding of many of the same issues that both our small business customers and we deal with today, including financial and strategic planning, capital allocation and management development.

Ms. Katherine H. Caristia is a certified public accountant and has served as the Chief Operating Officer/Chief Financial Officer of the Jan Group of Companies of Randolph, New Jersey since 2001. She was previously the Controller of the Jan Group of Companies. Her accounting and prior business positions have given Ms. Caristia experience in the service, retail and financial sectors. Ms. Caristia’s financial and accounting background allow her to provide insight to the Board on many of the issues we deal with on a daily basis. In addition, Ms. Caristia’s accounting experience qualifies her to serve as the Chairman ofon our Audit Committee.

Mr. Anthony Labozzetta has been our President and Chief Executive Officer since January 2010. He was previously an Executive Vice President of TD Bank from 2006 to 2010. Prior to joining TD Bank, Mr. Labozzetta served as the Senior Executive Vice President and COO of Interchange Financial Services Corporation until its acquisition by TD Bank in 2006. Mr. Labozzetta also previously served as the Chief Financial Officer of Interchange Financial Services Corporation. He was formerly a certified public accountant with Deloitte & Touche. With more than 2530 years of banking experience, including strategic planning and growth, regulatory compliance, investor relations, risk management, mergers and acquisitions and management development, Mr. Labozzetta has extensive and diverse knowledge of the banking business.

Mr. Edward J. Leppert is a certified public accountant and founder of Leppert Group LLC, and has been in public practice since 1986. Effective January 1, 2012, he was elected Chairman of the Board of both the Company and Sussex Bank. He previously served as Vice Chairman of the Board and has also served as the Chairman of the Audit, Executive, and Nominating and Corporate Governance Committees. His experience with financial and corporate governance matters and knowledge of the customers and communities in the northern New Jersey marketplace are beneficial to us.

Mr. Michael X. McBride, Esq. is an attorney and partner at Connell Foley LLP (“Connell Foley”) in Roseland, New Jersey. His practice focuses on real estate and construction. From 2010 through 2015, Mr. McBride served as Connell Foley’s Managing Partner. He is admitted to the New York State Bar and the New Jersey State Bar. He is a graduate of Stanford University and Georgetown University Law Center. Mr. McBride’s knowledge of the customers and communities in the northern New Jersey marketplace are beneficial to us and provides us valuable insight into the current market.

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Mr. Robert McNerney has been the owner of a real estate company, McNerney & Associates, Inc., since 1981. McNerney & Associates, Inc. provides appraisal, management, brokerage and development services throughout northern New Jersey and New York. He is a licensed appraiser and real estate broker in NJ and NY and holds an MAI and SRA designation from the Appraisal Institute. He holds a CRE designation from the Counselors of Real Estate, which is awarded to individuals nominated by their peers who possess extensive experience in the commercial real estate business. Mr. McNerney’s extensive experience in the real estate markets and as a business owner provides us valuable insight into the current market.

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independent directordirectors by virtue of histheir respective current or former employment with us. Mr. Ursin iswas not an independent director due to certain related-person transactions in excess of $120,000 for 2013 which are described in more detail under the section entitled “Transactions with Related Persons” found elsewhere in this proxy statement. The Board also determined that each member of the Audit, Compensation, and Nominating and Corporate Governance Committees satisfies the independence standards for such committees established by the SEC and the NASDAQ Listing Rules, as applicable.

Code of Ethics and Corporate Governance Guidelines

We have a Code of Conduct, which applies to all our directors, officers and employees. We also have a Senior Management Code of Ethics, which applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions for us, and which requires compliance with the Code of Conduct. The Senior Management Code of Ethics meets the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K.

We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of our Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, by posting such information on our website at the internet address set forth below. We did not amend or grant any waivers of a provision of our Code of Ethics during 2015.

2017.

The Board adopted Corporate Governance Guidelines to assure that it will have the necessary authority and practices in place to review and evaluate our business operations as needed and to make decisions that are independent of our management. The Corporate Governance Guidelines are also intended to align the interests of directors and management with those of our shareholders. The Corporate Governance Guidelines set forth the practices the Board intends to follow with respect to Board independence, composition and selection, Board meetings and involvement of senior executives, senior executive performance evaluation and succession planning, and Board committees and compensation.

The Code of Conduct, the Senior Management Code of Ethics and the Corporate Governance Guidelines are available on our website atwww.sussexbank.com. The inclusion of our website address here and elsewhere in this proxy statement does not include or incorporate by reference the information on our website into this proxy statement.

Board Leadership Structure and Role in Risk Oversight

Board Leadership Structure

The Board does not have a formal policy on separating the roles of Chairman of the Board and Chief Executive Officer and, if separate, whether the Chairman of the Board should be a non-employee director or an employee. The Board believes that no single, one-size fits all, board leadership model is universally or permanently appropriate. The Board prefers to retain the flexibility to structure its leadership from time to time in any manner that is in our best interest and that of our shareholders. The positions of our Chairman of the Board and Chief Executive Officer are currently separated. Separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while allowing the Chairman of the Board to lead our Board in its fundamental role of providing advice to and independent oversight of management. The Board recognizes the time, effort and energy that our Chief Executive Officer must devote to his position in the current business environment, as well as the commitment required to serve as our Chairman, particularly as the Board’s oversight responsibilities continue to grow. The Board also believes that this structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of our Board. The Board recognizes that depending on the circumstances other leadership models, such as combining the role of Chairman of the Board with the role of Chief Executive Officer, might be appropriate. Accordingly, our Board may periodically review its leadership structure.

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Board’s Role in Risk Oversight

Risk is an inherent part of the business of banking. Risks faced by us include credit risk relating to our loans and interest rate risk related to our balance sheet. The Board oversees these risks through the adoption of policies and by delegating oversight to certain Board committees, including the loan and asset-liability committees. These committees exercise oversight by establishing a corporate environment that promotes timely and effective disclosure, fiscal accountability and compliance with all applicable laws and regulations.

Committees of the Board of Directors

The Board has established three committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The following table provides membership and meeting information for the year ended December 31, 2015,2017, for each Board committee:

Name

Audit

Compensation

Nominating and Corporate Governance

Audit

Compensation

Nominating and Corporate Governance

Patrick E. Brady

X

X

X

X

Richard Branca

X

X

Katherine H. Caristia**

X*

X

X

X

Dominick J. D’Agosta

Mark J. Hontz

X

X

X*

X

Edward J. Leppert

X

X*

Timothy Marvil

X*

Edward J. Leppert**

X

X*

Walter E. Loeffler**

Timothy Marvil***

X*

Robert McNerney

X

Charles A. Musilli

X

John E. Ursin

Total meetings in 2015

5

6

1

Michael X. McBride

X

X

Total meetings in 2017

6

6

2

 ____________________

Below is a description of each committee of the Board.

Audit Committee

During 2015,2017, the Audit Committee was chaired by Messr. Marvil with Ms. Caristia, with Messrs. Brady, Hontz and Leppert as members. Effective January 21, 2018, upon the resignation of Messr. Marvil, Messr. Leppert assumed the role Chairman of the Audit Committee. Effective January 24, 2018, Mr. Loeffler was appointed to the Audit Committee. The purpose of the Audit Committee is to assist the Board’s oversight of our accounting and financial reporting process, including our internal audit function and the audits of our financial statements.

The primary duties and responsibilities of the Audit Committee are to:

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The Audit Committee is also responsible for the pre-approval of all audit, review, attest and non-audit services provided by our independent auditors. The Audit Committee pre-approved 100% of the services performed by the independent registered public accounting firm during 2015.

2017.

The Audit Committee may form and delegate authority to one or more subcommittees (including a subcommittee consisting of a single member), as it deems appropriate from time to time under the circumstances. Any decision of a subcommittee to pre-approve audit, review, attest or non-audit services shall be presented to the full Audit Committee at its next scheduled meeting.

The Board reviews the definition of independence for Audit Committee members on an annual basis and has determined that all members of our Audit Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ Listing Rules and Rule 10A-3 under the Exchange Act). The Board has also determined that Ms. Caristia qualifies as an “audit committee financial expert” as defined in applicable SEC rules. The Audit Committee has a written charter, which is available on our website atwww.sussexbank.comwww.sussexbank.com..

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AUDIT COMMITTEE REPORT⁽¹⁾

The Audit Committee has reviewed and discussed the audited financial statements as of and for the fiscal year ended December 31, 20152017 with management and our independent registered public accounting firm, BDO. The Audit Committee has discussed with BDO the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA,Professional Standards, Vol. 1. AU Section 380), as adopted by the Public Company Accounting Oversight Board, or PCAOB, in Rule 3200T. The Audit Committee has also received the written disclosures and the letter from BDO required by applicable requirements of the PCAOB regarding BDO’s communications with the Audit Committee concerning independence, and has discussed with BDO the firm’s independence. Based on the foregoing, the Audit Committee recommended to the Board of Directors that the consolidated audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2017, for filing with the Securities and Exchange Commission.

Sussex Bancorp
Audit Committee

Katherine H. Caristia, Chair

Patrick E. Brady

Edward J. Leppert, Chair
Katherine H. Caristia
Patrick E. Brady
Mark Hontz
Walter Loeffler

________________________

Compensation Committee

During 2015,2017, the Compensation Committee was chaired by Mr. Marvil,Hontz, with Messrs. Brady, Branca Hontz and MusilliMcBride as members. The purpose of the Compensation Committee is to review senior management’s performance and determine compensation, and review and set guidelines for compensation of all employees.

The primary duties and responsibilities of the Compensation Committee are to:

The Compensation Committee has the authority to delegate its authority to subcommittees as it deems appropriate; provided, that any such subcommittee shall report to the entire Compensation Committee on its activities. The Compensation Committee also has the sole authority to retain compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. During the past fiscal year, the Compensation Committee engaged Meyer-Chatfield Compensation Advisors,BFS Group, a compensation consulting firm, to advise the Compensation Committee on executive officer and director compensation.SERP plans. The Compensation Committee instructed the consultant to develop market comparisons and recommendations regarding the compensation ofconsulting firm is reviewing SERPs for certain executive officers and directors. In 2015, Meyer-Chatfield Compensation Advisors provided recommendations regarding the levels of compensation of executive officers and directors relative to our industry peers. The Compensation Committee took into account the recommendations of Meyer-Chatfield Compensation Advisors and utilized information, including peer data, regarding the compensation of our executive officers and directors provided by the consultants in evaluating, recommending and determining compensation levels.officers.

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The Board reviews the definition of independence for Compensation Committee members on an annual basis and has determined that all members of our Compensation Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ Listing Rules and Rule 10C-1 under the Exchange Act). The Compensation Committee has a written charter, which is available on our website atwww.sussexbank.com.

Nominating and Corporate Governance Committee

During 2015,2017, the Nominating and Corporate Governance Committee was chaired by Mr. Leppert, with Ms. Caristia and Messrs. Brady, BrancaHontz, McBride and HontzMcNerney as members. The purpose of the Nominating and Corporate Governance Committee is to identify and evaluate individuals qualified to become directors, and periodically review our organizational documents and corporate governance policies.

The primary duties and responsibilities of the Nominating and Corporate Governance Committee are to:

The Nominating and Corporate Governance Committee is responsible for reviewing with the Board the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board. When we have an opening on the Board, we will always look at a diverse pool of candidates. It is the policy of the Nominating and Corporate Governance Committee to select individuals as director nominees who shall have the highest personal and professional integrity, who shall have demonstrated exceptional ability and judgment and who shall be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term interests of the shareholders. When considering candidates for the Board, the Nominating and Corporate Governance Committee takes into account the candidate’s diversity, skills, such as an understanding of financial statements, financial reporting systems and our market area, and independence from management. We view and define diversity in its broadest sense, which includes gender, ethnicity, education, experience and leadership qualities. If the Nominating and Corporate Governance Committee believes a candidate would be a valuable addition to the Board, it will recommend to the full Board that candidate’s election. The Nominating and Corporate Governance Committee also has the authority to retain any search firm to assist in the identification of director candidates. However, the Nominating and Corporate Governance Committee has not retained any such search firm, and we do not pay a fee to any third party to identify or evaluate director candidates.

The Nominating and Corporate Governance Committee will consider qualified nominations for directors recommended by shareholders. All shareholder recommendations are evaluated on the same basis as any recommendation from members of our Board or management. Recommendations should be sent to Linda Kuipers, Secretary, Sussex Bancorp, 100 Enterprise Drive, Suite 700, Rockaway, New Jersey 07866. Director nominations by shareholders should be received by the Secretary between December 28, 201627, 2018 and January 27, 201725, 2019 for the 20172019 annual meeting of shareholders. For additional information about our director nomination requirements, please see our Amended and Restated By-laws. As of the date of this proxy statement, the Nominating and Corporate Governance Committee and the Secretary had not received any shareholder nominations or recommendations for nominees in connection with the Annual Meeting. All nominees were nominated by the Nominating and Corporate Governance Committee.

The Board reviews the definition of independence for Nominating and Corporate Governance Committee members on an annual basis and has determined that all members of our Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ Listing Rules). The Nominating and Corporate Governance Committee has a written charter, which is available on our website atwww.sussexbank.comwww.sussexbank.com..

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Shareholder Communications with Our Board of Directors

Shareholders wishing to communicate directly with the independent members of the Board may send correspondence to Edward J. Leppert, Chairman of the Board, One County Road 560, Sandyston, New Jersey 07826.

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis section is intended to help our shareholders understand the Company’s compensation philosophy, objectives, components and practices. This section also describes the Committee’s decisions made during 2017 as they relate to the compensation of our named executive officers (NEO). Their compensation is set forth in the Summary Compensation Table and other compensation tables contained in this Proxy Statement.

The following officers have been identified as our named executive officers:

	12
Anthony Labozzetta		—		President and Chief Executive Officer
Steven M. Fusco		—		Senior Executive Vice President and Chief Financial Officer
George Lista		—		Chief Executive Officer, Tri-State Insurance Agency
Sergio Mussacchio(1)		—		Executive Vice President and Chief Lending Officer

2017 Key Strategic and Financial Highlights

The Company continues to execute its strategic goals driven by strong organic growth in each of our key business lines. Fiscal year 2017 represented the fifth consecutive year of successive increase in operating earnings and performance measures (e.g. ROA and ROE). The Company continued to achieve higher performance results driven by commercial lending growth, core deposit growth, market expansion, fee income driven by our insurance agency and further expanding and penetrating the northern NJ and metro NY markets. We are extremely proud of the following key Strategic and Financial highlights for 2017:

Key Strategic Highlights:

Key Financial Highlights:

Executive Compensation Philosophy and Objectives

The Committee believes the success of the Company is driven through the attraction and retention of qualified executives who deliver on our strategic vision, embrace our culture and drive shareholder value. Our executive compensation program is designed to motivate and reward high performance in a manner that is fiscally responsible, ensures regulatory compliance and motivates executives without encouraging undue risk-taking, which could materially threaten the safety and soundness of the Company or any individual business unit.

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The executive compensation program is designed to offer a competitive mix of both cash and equity compensation and benefits that will attract, motivate and retain highly qualified and talented executives who will help maximize the Company’s short and long term performance and shareholder value. The executive compensation program comprises competitive base salaries, cash and equity based incentive and benefits that are designed to be competitive with market and that result in compensation that is commensurate with our performance.

Role of the Compensation Committee, Management and the Compensation Consultant in the Executive Compensation Process

Role of the Compensation Committee

The Compensation Committee is appointed by the Company’s Board of Directors to discharge the Board’s responsibilities relating to compensation of the Company’s executive officers. Four members of our Board of Directors sit on the Committee, each of whom is an independent director under the NASDAQ Stock Market listing requirements. To fulfill its responsibilities, the Committee meets at least quarterly throughout the year (met six times in 2017). The Chair of the Committee reports on Committee actions at meetings of the Board of Directors. Written minutes of Committee meetings are prepared, presented to and accepted by the Board.

The Committee has overall responsibility for evaluating and approving the compensation plans, policies and programs of the Company applicable to its CEO and other key executive officers. In discharging its responsibilities, the Committee establishes the compensation philosophy and oversees the development and implementation of the Company’s executive compensation programs and related policies.

In order to discharge its responsibilities, the Committee has the authority and is provided the resources to obtain advice and assistance from internal or external legal, compensation, human resource, accounting and other advisors or consultants as it deems necessary or appropriate. These services are provided as a matter of practice as requested by the Committee and such advisors report directly to the Committee.

Details on the Committee’s functions are more fully described in its charter. As part of its responsibilities, the Committee reviews its charter in the development of an annual work plan and recommends any proposed changes to the Board for approval. The Compensation Committee has a written charter, which is available on our website atwww.sussexbank.com.

Role of the Compensation Consultant

The Committee has the authority to hire, terminate, and seek the services of compensation consulting and advisory firms as it deems appropriate. These advisors serve as independent counsel and report directly to the Committee, with such fees and retention terms determined at the authority of the Committee.

During the past fiscal year, the Compensation Committee engaged BFS Group, a compensation consulting firm, to advise the Compensation Committee on certain executive SERP plans.

The last benchmark review was conducted in 2015 by Meyer-Chatfield Compensation Advisors who was engaged by the Compensation Committee and provided recommendations regarding the levels of compensation of executive officers and directors relative to our industry peers. The Compensation Committee took into account the recommendation and utilized information, including peer data, regarding the compensation of our executives and directors in determining compensation levels for 2016.

In December 2017, the Committee engaged Meridian Compensation Partners, LLC (“Meridian”), as its independent advisor. Meridian specializes in executive and board compensation and reports directly to the Committee. The Committee assessed, and determined that Meridian is independent and that their engagement complies with the standards adopted by the SEC and by NASDAQ with regard to compensation advisor independence. The analysis for executive and Board compensation will be conducted by Meridian and will be used as reference for 2018 pay decisions.

Role of Management

Although the Committee exercises its independent judgment in reaching compensation decisions, it may request information or perspective from the Company’s executive or senior management. Information and input from senior management is helpful to ensuring the Committee and its advisors have the information

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needed to make informed decisions. Executives may provide insight, suggestions or recommendations regarding executive compensation. However, only Committee members vote on decisions regarding executive compensation. In all cases, no executive officer shall be present at meetings at which their compensation or performance is discussed or determined by the Committee.

Competitive Benchmarking

The Committee last conducted its competitive benchmarking in 2015. In late 2017, the Committee engaged its new consultant to conduct a comprehensive benchmarking review in early 2018. As a result, there was no peer group or competitive benchmarking used for 2017. Details of our most recent analysis will be reported in our 2018 proxy.

Executive Compensation Program Components and 2017 Pay Decisions

The compensation program consists of four components: base salary, annual (cash incentives), long-term (equity incentives) and benefits. The table below summarizes the actual NEO compensation paid for the 2017 performance year, which consists of base salary, annual (cash) incentives and equity grants. Additional details related to these components follow this table.

Anthony Labozzetta		—		President and Chief Executive Officer
Steven M. Fusco		—		Senior Executive Vice President and Chief Financial Officer
George Lista		—		Chief Executive Officer, Tri-State Insurance Agency
Sergio Mussacchio		—		Executive Vice President and Chief Lending Officer

Executive		Base Salary ($)				Annual Incentive Award (Cash) ($)				Restricted Stock Grant ($)				Total Direct Compensation ($)
Anthony Labozzetta			437,908				165,567				165,567				769,042
Steven M. Fusco			238,341				72,224				72,224				382,789
George Lista			185,633				36,164				36,164				257,961
Sergio Mussacchio			220,000				—				—				220,000

Below we summarize our programs and 2017 pay decisions.

Base Salary

The Committee believes the purpose of base salary is to provide competitive and fair base compensation that recognizes the executives’ role, responsibilities, experience and performance. Base salary represents fixed compensation that is targeted to be competitive with the practices of comparable banks similar in size and region.

Typically, the Committee sets base salary for each executive in the first quarter of each year effective January 1. Salaries are determined in consideration of the competitive market for similar roles, as well as each individual’s experience, performance and contributions. Input from the Company’s Chief Executive Officer is considered in setting executive salaries, while the Committee is solely responsible for recommending the Company’s Chief Executive Officer’s salary.

Below is a summary of the salaries approved by the Compensation Committee:

Executive		2016 Base Salary ($)				2017 Base Salary ($)				% Increase
Anthony Labozzetta			394,671				441,511				11.8
Steven M. Fusco			209,463				240,747				15.4
George Lista			174,412				185,974				6.6
Sergio Mussacchio			220,000				220,000				—

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The salary increases from 2016 to 2017 were a result of the Company’s growth, strong performance and was supported by the 2015 Meyer Chatfield executive compensation review.

Executive Incentive Plan

The objective of the Company’s executive incentive plan is to motivate and reward key members of executive management for achieving specific performance goals that support the Company’s strategic plan through the use of cash awards and restricted stock. Awards under this plan represent compensation that must be earned based upon performance. Awards for the CEO and CFO are paid 50% in cash and 50% in equity with subsequent 3 year vesting and the awards for the CEO of Tri-State Insurance Agency is paid 100% in cash with the potential of discretionary stock awards.

The performance goals are developed in conjunction with the annual business plan, approved by the Compensation Committee and presented to the full Board for final approval.

The incentive target opportunities and performance measures for the 2017 compensation year are described below.

Award Opportunity:  The table below summarizes the 2017 incentive award opportunities (expressed as a percentage of base salary) available under our annual executive incentive plan and paid only upon achievement of the performance goals. The total incentive opportunity is allocated in cash (and equity in the case of the CEO, CLO and CFO) in accordance with the table below. The Committee believes payment in stock provides additional retention and deferral of compensation that reinforces our desire to align pay with shareholder interests and provide long-term compensation.

		Total Incentive Opportunity (% of Salary)												Cash Portion (% of Salary)												Restricted Stock Portion (% of Salary)
		Threshold				Target				Maximum				Threshold				Target				Maximum				Threshold				Target				Maximum
Chief Executive Officer			25.0	%			50.0	%			75.0	%			12.5	%			25.0	%			37.5	%			12.5	%			25.0	%			37.5	%
Chief Financial Officer			20.0	%			40.0	%			60.0	%			10.0	%			20.0	%			30.0	%			10.0	%			20.0	%			30.0	%
Chief Executive Officer, Tri-State Insurance Agency			10.0	%			20.0	%			30.0	%			10.0	%			20.0	%			30.0	%			—				—				—
EVP, Chief Lending Officer			20.0	%			40.0	%			60.0	%			10.0	%			20.0	%			30.0	%			10.0	%			20.0	%			30.0	%

Performance Measures:  The 2017 performance measures require our Company to achieve increased levels of profitability and achieve other key goals aligned with our business strategy. All participants have at least 50% of their incentive based on Net Income (Corporate or Division) to reinforce our goal to fund incentives based on earnings. Corporate Net Income was adjusted for significant extraordinary events (including acquisition costs and the impact of tax reform – deferred tax asset write down; see footnote below table for details).

Weightings for performance goals can vary by participant. For the CEO and CFO, performance is strictly formulaic, with 50% of the incentive determined by Corporate Net Income and 50% based on 3-Year Average Return on Equity (ROE). We believe a rolling view of ROE as measured for the prior 3 years is an effective way to reward and motivate sustained performance. The CEO, Tri-State Insurance Agency is measured based on the Business Unit goals: Net Income Before Taxes, Total Commissions Revenue and Efficiency Ratio. The Committee believed these measures would drive the appropriate focus by the executive team on overall performance of the Company. In addition to corporate goals, the CLO is measured on Business Unit goals.

The performance measures and goals were established by the Committee and approved unanimously in January 2017. The following tables summarize the measures, weightings and goals at threshold, target and stretch levels. The last column indicates the 2017 performance results for each goal.

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Dollars are in thousands.

Corporate Officers (Chief Executive Officer and Chief Financial Officer)

		Weighting				Performance Goals
Performance Measure						Threshold				Target				Max				Actual
Net Income			50	%		$	4,928			$	5,476			$	6,571			$	7,699
3-Year Average ROE			50	%			6.94	%			7.19	%			7.69	%			8.30	%

Reported Net income (GAAP) for Fiscal Year 2017 was $5,691 and ROE was 7.17%, which included significant items that impacted financial results. Those items included the following:

Fiscal Year 2017		Net Income				ROE
Reported GAAP		$	5,691				7.17	%
Adjustments for significant extraordinary events:
Merger related expenses net of tax		$	1,021				1.29	%
S-3 Registration filing expenses, net of tax		$	45				0.06	%
Impact of tax reform – deferred tax asset write down		$	942				1.19	%
Total Adjustments		$	2,008				2.54	%
Non-GAAP results		$	7,699				9.71	%

The 3-Year Average ROE 8.30% (adjusted for significant events in 2017) as compared to the reported result of 7.46%. The Non-GAAP results were utilized for the incentive measurement.

Chief Executive Officer, Tri-State Insurance Agency

		Weighting				Performance Goals
Performance Measure						Threshold				Target				Max				Actual
Net Income Before Taxes			60	%		$	1,294			$	1,438			$	2,156			$	1,413
Total Commissions Revenue			20	%		$	4,721			$	5,246			$	7,869			$	5,421
TSIA: Efficiency Ratio			20	%			73.3	%			72.6	%			63.2	%			73.9	%

2017 Performance and Awards:  For 2017, the Corporate performance measures used for the CEO and CFO incentive awards both exceeded the maximum and resulted in a payout equivalent to 120% of target. Performance for the Chief Executive of Tri-State Insurance Agency was determined to be 19.4% of base salary. The Chief Lending Officer was not entitled to any 2017 awards. The executive incentive plan administration guidelines state a participant must be active and on payroll at the time of award. Due to the CLO’s separation from the Company on December 31, 2017, he was no longer an eligible plan participant when awards were processed in early 2018 and therefore received no award under the plan.

The following table summarizes the total 2017 annual incentive awards paid pursuant to the executive incentive plan. Payouts were made in March 2018 to the Chief Executive Officer and the other named executive officers.

		Total								Cash (50% of Total)								Rest Stock (50% of Total)
		% of Salary				Amount $				% of Salary				Amount $				% of Salary				Amount $
Chief Executive Officer			75.0				331,133				37.5				165,567				37.5				165,567
Chief Financial Officer			60.0				144,448				30.0				72,224				30.0				72,224
Chief Executive Officer, Tri-State Insurance Agency			19.4				36,164				19.4				36,164				—				—
EVP, Chief Lending Officer			—				—				—				—				—				—

Executive Benefits

The Company’s executive compensation program include base salary, annual cash incentive awards, long-term incentive awards and other benefit and perquisites, such as retirement programs.

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The Company provides select executives certain benefits and perquisites, which the Committee believes are reasonable and consistent with the Company’s overall compensation philosophy. The Committee regularly reviews and refines executive benefits to ensure market competitiveness.

Executive Perquisites.  The Company provides a limited number of perquisites to key executives that the Committee believes are necessary for conducting business are reasonable and enable us to attract and retain high performing employees for our key senior management positions. These benefits also allow our executives to maintain direct contact and involvement with current and prospective customers, as well as non-profit organizations in the communities in which we do business. The Committee periodically reviews the levels of perquisites and other personal benefits provided to the named executive officers.

The primary perquisites are: corporate owned automobiles for certain executives, club memberships for certain executives and life insurance programs. These perquisites represent a relatively insignificant portion of the total compensation of each named executive officer. The aggregate incremental cost to the Company for these perquisites is set forth in the Summary Compensation Table under the “All Other Compensation” column and elated notes.

Risk Management

The Compensation Committee annually reviews our executive compensation program to ensure it does not encourage unnecessary or excessive risk taking. In reviewing the program for risk, the goal of the Committee is to design an executive compensation program that encourages prudent risk management and discourages inappropriate risk-taking by granting balanced portfolio of executive compensation that includes fixed and variable pay, annual and long-term pay, cash and equity.

Compensation Committee Report on Executive Compensation

The Compensation Discussion and Analysis (CD&A) section of this proxy statement is management’s report on the Company’s executive compensation programs and decisions for 2017. The Compensation Committee has reviewed and discussed the CD&A with management and recommended to the Board that the CD&A be included in this Proxy Statement.

Respectfully Submitted,
The Compensation Committee
Mark J. Hontz,Chair
Patrick E. Brady
Richard Branca
Michael X. McBride
Edward J. Leppert,Ex-Officio

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EXECUTIVE COMPENSATION

TABLES

2017 Summary Compensation Table

The table below sets forth the compensation paid to our Chief Executive Officer, Chief Financial Officer and the two other most highly compensated executive officers, or collectively, the named executive officers, during each of the last twothree completed fiscal years.years (or the completed fiscal years during which the executive was a named executive officer, if less).

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards(1) ($)	Option Awards(1) ($)	All Other Compensation (3) ($)	Total ($)
Anthony Labozzetta,	2015	375,877	140,954	140,956	23,233	91,445	772,465
President and Chief Executive Officer	2014	359,103	90,383	72,304	67,574	61,931	651,295
Steven M. Fusco,	2015	199,489	59,847	59,850	15,596	5,996	340,778
Senior Vice President and Chief Financial Officer	2014	189,763	39,164	29,377	33,787	3,844	295,935
George Lista,	2015	169,332	36,081	12,830	—	178,005	396,248
Chief Executive Officer, Tri-State Insurance Agency	2014	160,039	26,200	8,713	—	154,833	349,785

Name and Principal Position		Year				Salary ($)				Stock Awards(1) ($)				Option Awards(1) ($)				Non-equity Incentive Plan Compensation ($)				All Other Compensation(2) ($)				Total ($)
Anthony Labozzetta, President and Chief Executive Officer			2017				437,908				165,567				—				165,567				106,383				875,425
			2016				393,105				357,512				37,777				148,001				96,079				1,032,474
			2015				375,877				140,956				23,233				140,954				91,445				772,465
Steven M. Fusco, Senior Executive Vice President and Chief Financial Officer			2017				238,341				72,224				—				72,224				8,127				390,916
			2016				208,632				178,054				20,209				62,839				2,352				472,086
			2015				199,489				59,850				15,596				59,847				5,996				340,778
George Lista, Chief Executive Officer, Tri-State Insurance Agency			2017				185,633				36,164				—				36,164				170,871				428,832
			2016				176,218				83,800				—				46,975				167,602				474,595
			2015				169,332				12,830				—				36,081				178,005				396,248
Sergio Mussacchio, Executive Vice President and Chief Lending Officer			2017				220,000				—				—				—				966				220,966

____________________

(1)

The amounts set forth represent the aggregate grant date fair value of the stock awards and option awards, computed in accordance with FASB ASC Topic 718. These amounts do not correspond to the actual value that the named executive officers will recognize. Assumptions used in the calculation of these amounts are included in Note 17 — Stock Incentive Plans to our fiscal year 2017 consolidated financial statements, which is included in our Annual Report on Form 10-K filed with the SEC on March 15, 2018.

(2)

Amounts in this column are set forth in the table below and include life insurance premiums, 401(k) employer contributions, health savings account, or HSA, contributions, Supplemental Executive Retirement Plan, or SERP, contributions and commissions. The named executive officers participate in certain group life, health, disability insurance and medical reimbursement plans not disclosed in the Summary Compensation Table that are generally available to salaried employees and do not discriminate in scope, terms and operation. In addition, for 2015,2017, the named executive officers were provided certain non-cash perquisites and personal benefits that did not exceed $10,000 in the aggregate for any individual, and are not included in the reported figures.

	Life Insurance Premiums ($)	401(k) Employer Contributions ($)	HSA Contributions ($)	SERP Contributions ($)	Commissions ($)	Total ($)
Name								Life Insurance Premiums ($)				401(k) Employer Contributions ($)				HSA Contributions ($)				SERP Contributions ($)				Commissions ($)				Total ($)
Anthony Labozzetta	1,003	7,749	—	82,693	—	91,445			1,301				7,950				—				97,132				—				106,383
Steven M. Fusco	564	5,432	—			5,996			977				7,150				—				—				—				8,127
George Lista	1,822	7,919	1,224	—	164,700	178,005			2,171				7,950				1,250				—				159,500				170,871
Sergio Mussacchio									966				—				—				—				—				966

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2017 Grants of Plan-Based Awards Table

Name		Grant Date				Estimated Future Payouts Under Non-Equity Incentive Plan Awards												Estimated Future Payments Under Equity Incentive Plan Awards												All Other Stock Awards: # of shares of Stock				Grant Date Fair Value of Stock and Option Awards ($)
						Threshold ($)				Target ($)				Maximum ($)				Threshold ($)				Target ($)				Maximum ($)
Anthony Labozzetta			1/25/17				55,189				110,378				165,567				55,189				110,378				165,567				—				165,567
Steven M. Fusco			1/25/17				24,075				48,149				72,224				24,075				48,149				72,224				—				72,224
George Lista			1/25/17				18,686				37,372				56,058				—				—				—				1,222				36,164
Sergio Mussacchio(1)			1/25/17				22,000				44,000				66,000				22,000				44,000				66,000				—

Outstanding Equity Awards at Fiscal Year-End

The table below sets forth information regarding stock options outstanding at December 31, 2015, whether granted in 2015 or earlier, including awards that have been transferred other than for value.

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will adjust, among other award terms, the number and kind of shares or property that may be delivered in connection with awards and the exercise price, grant price or purchase price relating to any award in such manner as the Compensation Committee determines to be necessary to prevent dilution or enlargement of the rights of participants.

Subject to the exceptions described below, upon the occurrence of a “change in control,” as defined in the Equity Plan, all outstanding shares of restricted stock and all stock units will become immediately vested, and the shares of stock subject to outstanding stock units will be delivered immediately before the occurrence of the change in control. In addition, either of the following two actions will be taken:

If we are the surviving entity in any reorganization, merger or consolidation of our Company with one or more other entities that does not constitute a change in control, any option outstanding under the Equity Plan will apply to the securities to which a holder of the number of shares of common stock subject to the option would have been entitled immediately following the transaction, with a corresponding proportionate adjustment of the option exercise price.

The Compensation Committee may provide in any agreement under the Equity Plan for different provisions to apply to an award under the Equity Plan than those described above.

We may reserve the right in an award agreement to cause a forfeiture of the gain realized by a grantee with respect to an award on account of actions taken by, or failed to be taken by, such grantee in violation or breach of, or in conflict with, any employment agreement, non-competition agreement, agreement prohibiting solicitation of employees or clients of the Company or any affiliate, confidentiality obligations with respect to the Company or any affiliate, or otherwise in competition with the Company or any affiliate, to the extent specified in such award agreement. We may annul an outstanding award if the grantee thereof is an employee and is terminated for “Cause” as defined in the applicable award agreement or the Equity Plan, as applicable.

Employment Agreements, Change in Control Agreements and Other Material Agreements

Anthony Labozzetta

Employment Agreement with Anthony Labozzetta.  The Company and Sussex Bank are parties to an employment agreement with Mr. Labozzetta, pursuant to which he will serve as President and Chief Executive Officer of the Company and Sussex Bank. The employment agreement provides for a three-year term which is automatically extended for an additional year annually unless either party provides written notice terminating the automatic extension. The employment agreement provides that Mr. Labozzetta will receive a base salary of at least $315,000, subject to increase or decrease as determined by the Board. He has further beenPursuant to the terms of his employment agreement, Mr. Labozzetta was granted 50,000 shares of our common stock, subject to forfeiture and restricted from transfer during the “Restricted Period,” as such term is defined in the employment agreement. 80% of these shares were vested as of January 1, 2016 and the remaining 20% will vestvested on January 1, 2017, subject2017. He is also entitled to acceleration in the event of a change in control or Mr. Labozzetta’s death or disability. He will also receive customary fringe benefits, including an automobile, or cash allowance, consistent with his position as President and Chief Executive Officer of the Company and Sussex Bank.

Employment Agreement with Steven M. Fusco.  The Company and Sussex Bank entered into an employment agreement, dated June 23, 2010, with Mr. Fusco, pursuant to which he will serve as Executive Vice President and Chief Financial Officer of the Company and Sussex Bank. The employment agreement provides for a two-year term; provided, that at the end of the term, and each year thereafter, the term of the employment agreement shall automatically be renewed for an additional year until either party, by written notice provided at least 90 days prior to the end of the term, elects not to renew. Mr. Fusco’s employment agreement has been automatically renewed for an additional year beginning June 23, 2014. The employment agreement provides that Mr. Fusco will receive a base salary of at least $160,000, subject to increase or decrease as determined by the Board. Mr. Fusco is also entitled to receive customary fringe benefits, including the use of a Company automobile.

Employment Agreement with George Lista.  In September 2006, our Tri-State Insurance Agency subsidiary entered into an employment agreement with Mr. Lista. Under Mr. Lista’s employment agreement, he was to serve as the Chief Executive Officer of Tri-State Insurance Agency for an initial term of five years ending December 31, 2011. The term of the employment agreement will automatically renew for two additional one-year periods unless either Mr. Lista or Tri-State Insurance Agency provides notice of an intention not to renew. Accordingly, Mr. Lista’s employment agreement has been renewed such that it will expire no earlier than December 31, 2018. Mr. Lista currently receives a base salary of $185,974 annually, which is to be adjusted each January 1 to reflect the increase in the consumer price index. Mr. Lista is also entitled to receive commissions on insurance products sold by him, and he is also entitled to participate in our Executive Incentive and Deferred Compensation Plan.

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2017 Outstanding Equity Awards at Fiscal Year-End Table

The table below sets forth information regarding our named executive officers’ stock options and stock awards outstanding at December 31, 2017, whether granted in 2017 or earlier, including awards that have been transferred other than for value.

		Option Awards																				Stock Awards
Name		Grant Date				Number of Securities Underlying Unexercised Options (#) Exercisable				Number of Securities Underlying Unexercised Options (#) Unexercisable				Option Exercise Price				Option Expiration Date				Grant Date				Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested(1) ($)
Anthony Labozzetta(2)			2/24/2016				2,243				8,973				12.83				2/23/2026				1/25/2017				17,065				458,195
			2/6/2015				2,610				3,916				10.25				2/6/2025				2/9/2016				7,458				200,247
			11/5/2014				10,800				7,200				9.97				11/5/2024				2/6/2015				2,352				63,151
Steven M. Fusco(3)			2/24/2016				1,200				4,800				12.83				2/23/2026				1/25/2017				8,499				228,198
			2/6/2015				1,752				2,629				10.25				2/6/2025				2/9/2016				3,167				85,034
			11/5/2014				5,400				3,600				9.97				11/5/2024				2/6/2015				956				25,669
George Lista(4)			—				—				—				—				—				1/25/2017				4,000				107,400
																							2/24/2016				667				17,909
																							2/6/2015				284				7,625
Sergio Musacchio(5)			—				—				—				—				—				3/8/2017				1,050				28,193
																							2/24/2016				2,398				64,386

2017 Option Exercises and Stock Vested Table

The following table sets forth information with respect to the aggregate number of options exercised and stock awards vesting during the last fiscal year and the value realized (no stock options were exercised in 2017):

		Stock Awards
Name		Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)
Anthony Labozzetta			19,800				416,712
Steven M. Fusco			3,495				74,472
George Lista			950				22,248
Sergio Musacchio			1,199				28,896

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2017 Nonqualified Deferred Compensation Table

The following table provides details regarding the named executive officers’ participation in the Company’s nonqualified deferred compensation plans as of December 31, 2017:

Name		Executive Contributions in Last FY ($)				Registrant Contributions in Last FY ($)				Aggregate Earnings in Last FY ($)				Aggregate Withdrawals/ Distributions ($)				Aggregate Balance at Last FYE ($)
Anthony Labozzetta			—				86,828				10,094				—				425,663
Steven M. Fusco			—				—				—				—				—
George Lista			23,488				—				5,177				—				210,398
Sergio Musacchio			—				—				—				—				—

Mr. Labozzetta’s SERP

On July 20, 2011, we entered into a SERP, a non-qualified defined contribution pension plan that provides supplemental retirement income for Mr. Labozzetta. The SERP was effective as of January 1, 2011. Based on the attainment of certain annual performance targets, we will make annual contributions up to a maximum of 22% of Mr. Labozzetta’s annual base salary to the SERP for the benefit of Mr. Labozzetta. Any amounts credited to the SERP will accrue interest equal to that paid by U.S. 10-year Treasury Notes for each applicable year. The SERP provides for the benefits to be paid monthly over a five-year period commencing the first day of the month following the later of Mr. Labozzetta’s 65^th birthday, normal retirement age or termination of employment.

Amended and Restated Executive Incentive and Deferred Compensation Plan

As mentioned above, under the Plan, participants in the Plan (including our named executive officers) have the option to defer some or all of their compensation or cash incentive awards. Amounts so deferred will earn interest at a rate equal to the average interest rate earned by Sussex Bank on its investment portfolio.

Potential Payments Upon Termination or Change-in-Control

The following table shows the estimated benefits payable to our named executive officers in the event of the named executive officer’s termination of employment under various scenarios or upon a change in control of the Company. The amounts shown assume a termination of employment or change in control on December 31, 2017. Market values of equity awards were determined by multiplying the applicable number of shares of stock or units by $26.85, the per share closing price of the Company’s common stock on December 29, 2017, the last trading day of the year. The amounts shown do not include payments or benefits provided under insurance or other plans that are generally available to all salaried employees. The actual amounts to be paid can only be determined at the time of the named executive officer’s separation from the Company or upon the occurrence of a change in control. Mr. Mussachio separated employment with the Company effective December 31, 2017 and will be paid salary continuation and provided medical benefits for the lesser of (i) nine months or (ii) until Mr. Mussachio is employed with another company. If salary continuation and medical benefits are provided for the full nine month period, the value of each would be $165,000 and $22,045, respectively.

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		Termination by Company Without Cause or Resignation by Executive for Good Reason (before a Change In Control)				Termination by Company Without Cause or Resignation by Executive for Good Reason (after a Change In Control)
Anthony Labozzetta
Cash severance		$	437,908			$	1,804,309
SERP		$	425,663			$	425,663
Acceleration of Restricted Stock and Options(1)			—			$	1,033,936
Welfare Benefits(2)		$	29,846			$	89,539
Tax Gross-up(3)			—			$	956,100
Total		$	893,417			$	4,309,547
Steven Fusco
Cash severance		$	238,341			$	476,682
Acceleration of Restricted Stock and Options(1)			—			$	510,606
Welfare Benefits(4)		$	29,972			$	59,944
Total		$	268,313			$	1,047,232	(6)

		Termination by Company Without Cause or Resignation by Executive for Good Reason (before a Change In Control)				Termination by Company Without Cause or Resignation by Executive for Good Reason (after a Change In Control)
George Lista
Cash severance		$	345,133			$	345,133
Acceleration of Restricted Stock and Options			—			$	132,934
Welfare Benefits(5)		$	7,427			$	7,427
Total		$	352,560			$	485,494

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Equity Plan

Subject to the exceptions described below, upon the occurrence of a “change in control,” as defined in the Equity Plan, all outstanding shares of restricted stock and all stock units will become immediately vested, and the shares of stock subject to outstanding stock units will be delivered immediately before the occurrence of the change in control. In addition, either of the following two actions will be taken:

If we are the surviving entity in any reorganization, merger or consolidation of our Company with one or more other entities that does not constitute a change in control, any option outstanding under the Equity Plan will apply to the securities to which a holder of the number of shares of common stock subject to the option would have been entitled immediately following the transaction, with a corresponding proportionate adjustment of the option exercise price.

The Compensation Committee may provide in any agreement under the Equity Plan for different provisions to apply to an award under the Equity Plan than those described above.

Employment Agreements and Other Material Agreements

Employment Agreement with Anthony Labozzetta.  Mr. Labozzetta’s employment agreement permits us to terminate Mr. Labozzetta’s employmenthim for cause (as defined in the agreement) at any time. In the event Mr. Labozzetta is terminated for any reason other than cause, or in the event Mr. Labozzetta resigns his employment because he is reassigned to a position of lesser rank or status than President and Chief Executive Officer, his place of employment is relocated by more than 50 miles from its location on the date of the employment agreement, or his compensation or other benefits are reduced, Mr. Labozzetta, or in the event of his death, his beneficiary, will be entitled to receive his base salary at the time of such termination or resignation for the remaining term of the employment agreement, or one year, whichever is greater. In addition, we will continue to provide Mr. Labozzetta with certain insurance and other benefits through the end of the term of the employment agreement.

Mr. Labozzetta’s employment agreement also contains a change in control provision which would entitle Mr. Labozzetta to receive an amount equal to the base salary he would have received had the employment agreement terminated according to its term, except that after the fifth anniversary of Mr. Labozzetta’s employment, he will be entitled to a payment equal to 2.99 times his then current base salary and 2.99 times the greater of the last bonus actually paid to him or his current bonus eligibility, assuming he performed at the targeted level. Mr. Labozzetta’s employment agreement also contains a “gross-up payment” in the event any excise tax is imposed on the benefits payable to Mr. Labozzetta upon a change in control. Mr. Labozzetta would also be entitled to continuation of his health, medical, hospital and life insurance benefits for a period of three years.

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Supplemental Executive Retirement Plan. On July 20, 2011, we entered into a SERP, a non-qualified defined contribution pension plan that provides supplemental retirement income for Mr. Labozzetta. The SERP was effective as of January 1, 2011. Based on the attainment of certain annual performance targets, we will make annual contributions up to a maximum of 22% of Mr. Labozzetta’s annual base salary to the SERP for the benefit of Mr. Labozzetta. Any amounts credited to the SERP will accrue interest equal to that paid by U.S. 10-year Treasury Notes for each applicable year. The SERP provides for the benefits to be paid monthly over a five-year period commencing the first day of the month following the later of Mr. Labozzetta’s 65th birthday, normal retirement age or termination of employment..  If Mr. Labozzetta’s employment is terminated before normal retirement age, absent a change in control and other than by us for cause, the amount of the benefit payable to Mr. Labozzetta would be a 100% vested interest in his account if he completed at least 10 years of plan participation. If Mr. Labozzetta is terminated by us without cause or as a result of Mr. Labozzetta’s Resignation for Good Reason (as defined in the SERP), Mr. Labozzetta would be entitled to a 100% vested interest in his account regardless of the number of years of plan participation. If Mr. Labozzetta is employed by us at the time of a Change of Control (as defined in the SERP), Mr. Labozzetta would automatically be entitled to a 100% vested interest in his account regardless of the number of years of plan participation. If Mr. Labozzetta would become disabled or die before reaching normal retirement age, either he or his beneficiary would be entitled to a 100% vested interest in his account. The SERP also contains a restrictive covenant conditioning Mr. Labozzetta’s receipt of the benefits on his compliance with the non-compete provisions as defined in his employment agreement.

Employment Agreement with Steven M. Fusco

The Company and Sussex Bank entered into an employment agreement, dated June 23, 2010, with.  Mr. Fusco, pursuant to which he will serve as Executive Vice President and Chief Financial Officer of the Company and Sussex Bank. The employment agreement provides for a two-year term; provided, that at the end of the term, and each year thereafter, the term of the employment agreement shall automatically be renewed for an additional year until either party, by written notice provided at least 90 days prior to the end of the term, elects not to renew. Mr. Fusco’s employment agreement has been automatically renewed for an additional year beginning June 23, 2014. The employment agreement provides that Mr. Fusco will receive a base salary of at least $160,000, subject to increase or decrease as determined by the Board. Mr. Fusco has further been granted an award of 24,725 shares of our common stock pursuant to his employment agreement, subject to forfeiture and restricted from transfer during the “Restricted Period,” as such term is defined in the employment agreement. 80% of these shares were vested as of June 23, 2015 and the remaining 20% will vest June 23, 2016, subject to acceleration in the event of a change in control or Mr. Fusco’s death or disability. Mr. Fusco will also receive customary fringe benefits, including the use of a Company automobile.

The employment agreement permits us to terminate Mr. Fusco’shis employment for cause (as defined in the agreement) at any time. In the event Mr. Fusco is terminated for any reason other than cause, or in the event Mr. Fusco resigns his employment because he is reassigned to a position of lesser rank or status than Chief Financial Officer, his place of employment is relocated by more than 50 miles from its location on the date of the employment agreement, or his compensation or other benefits are reduced, Mr. Fusco, or in the event of his death, his beneficiary, will be entitled to receive a lump sum payment equal to his base salary at the time of such termination or resignation for the remaining term of the employment agreement, or one year, whichever is greater. In addition, we will continue to provide Mr. Fusco with certain insurance and other benefits for the remaining term of the employment agreement, or one year, whichever is greater.

Mr. Fusco’s employment agreement also provides that upon the occurrence of a change in control, as such term is defined in the employment agreement, and in the event Mr. Fusco is subsequently terminated for reasons other than cause or in the event Mr. Fusco, within 18 months of the change in control, resigns his employment for good cause, he will be entitled to receive a lump sum severance payment equal to two times his then current base salary, which may be reduced, if necessary, to an amount which is one dollar ($1.00) less than an amount equal to three times Mr. Fusco’s “base amount,” as determined in accordance with such Section 280G of the Code.

Employment Agreement with George Lista

In September 2006, our Tri-State Insurance Agency subsidiary entered into an employment agreement with Mr. Lista. Under.  Pursuant to the terms of Mr. Lista’s employment agreement, he was to serve as the Chief Executive Officer of Tri-State Insurance Agency for an initial term of five years ending December 31, 2011. The term of the employment agreement will automatically renew for two additional one-year periods unless either Mr. Lista or Tri-State Insurance Agency provides notice of an intention not to renew. Accordingly, Mr. Lista’s employment agreement has been renewed such that it will expire no earlier than December 31, 2016. Mr. Lista currently receives a base salary of $169,332 annually, which is to be adjusted each January 1 to reflect the increase in the consumer price index. Mr. Lista is also entitled to receive commissions on insurance products sold by him, and he is also entitled to participate in our Executive Incentive and Deferred Compensation Plan. Mr. Lista may be terminated for cause (as defined in the agreement). In the event Mr. Lista’shis employment is terminated other than for cause, he will be entitled to receive his then currentthen-current base salary and insurance benefits for the remaining term of the employment agreement.agreement, which currently expires on December 31, 2018.

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Name		Restricted Stock (#)(4)				Options (#)
Patrick E. Brady			1,370				—
Richard Branca			1,370				—
Katherine H. Caristia			1,370				—
Mark J. Hontz			1,370				—
Edward J. Leppert			2,126				4,000
Timothy Marvil			1,370				—
Robert McNerney			1,370				—
Michael X. McBride			636				—
John E. Ursin			—				—

TRANSACTIONS WITH RELATED PERSONS

We have made in the past and, assuming continued satisfaction of generally applicable credit standards, expect to continue to make loans to directors, executive officers and their associates (i.e. corporations or organizations for which they serve as officers or directors or in which they have beneficial ownership interests of 10% or more). These loans have all been made in the ordinary course of our business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than the normal risk of collectability or present other unfavorable features.

Other than the ordinary course lending transactions described above, which must be approved by our Board under bank regulatory requirements, all related-person transactions are reviewed and approved by our Audit Committee. This authority is provided to our Audit Committee under its written charter. In reviewing these transactions, our Audit Committee seeks to ensure that each transaction is no less favorable than a transaction with an unaffiliated third party.

Compensation arrangements for our directors and named executive officers are described above under the sections entitled “Director Compensation” and “Executive Compensation.”

Certain Related-Person Transactions

Other than ordinary course lending transactions and compensation arrangements, the following is a description of transactions since January 1, 20142016 to which we were a participant or will be a participant, and in which:

We rent our Augusta, New Jersey office location from a real estate management company of which our executive officer, Mr. Lista, is a 50% owner. The lease expiresexpired in July 2017. The Company paid to the real estate management company $147,203$148,188 and $145,738147,588 for the years ended December 31, 20152017 and 2014.

2016.

Mr. Ursin, one of our directors,a former director who resigned effective January 25, 2017, is a partner of Schenk, Price, Smith & King LLP, a firm that renders various legal services to us. During 2015, 20142017 and 2013, Schenk,2016, Schenck, Price, Smith & King LLP received fees for legal services of $13,840, $63,156$77,765 and$108,172, $10,070, respectively.Prior to joining Schenk, Price, Smith & King LLP,

Mr. Ursin wasMcBride is a partner of Courter, Kobert & Cohne, PC,Connell Foley, a firm that renderedrenders various legal services to us. During 2013, Courter, Kobert & Cohne, PC2017, Connell Foley received feesfee’s for legal services of $15,889.$19,213.

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