You will be required to present the Annual Meeting Admission Ticket and photo identification to gain admission to lunch and the Annual Meeting. Please markcontrol number found on your proxy
appropriately ifcard.You may vote during the Special Meeting by following the instructions available on the Special Meeting website during the Meeting.
Thank you plan on attending the lunch and Annual Meeting.for your continued support of Penns Woods Bancorp, Inc.
| By Order of the Board of Directors |
| |
|  |
| |
| Richard A. Grafmyre |
| Chief Executive Officer |
September 2, 2022
By Order of the Board of Directors,Richard A. Grafmyre
Chief Executive Officer
Dated: March 23, 2018
Important Notice Regarding Availability of Proxy Materials for the
Annual Meeting of Shareholders to be held on Tuesday, April 24, 2018
The Proxy Statement and Annual Report to Shareholders for the year ended
December 31, 2017 are available at http://www.edocumentview.com/pwod.
PENNS WOODS BANCORP, INC.
300 Market Street
Williamsport, PA 17701
PROXY STATEMENT FOR THE ANNUALSPECIAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, APRIL 24, 2018
NOVEMBER 8, 2022Introduction: Date and Time and Place of AnnualVirtual Special Meeting
This proxy statement is being furnished in connection with the solicitation by the boardBoard of directorsDirectors of Penns Woods Bancorp, Inc. (the “Corporation”), a Pennsylvania business corporation, of proxies to be voted at the AnnualSpecial Meeting (the “Annual“Special Meeting”) of holders of the Corporation'sCorporation’s common stock (the “Common Stock”) to be held virtually via the Internet on Tuesday, April 24, 2018,November 8, 2022, at 12:30 P.M.9:00 A.M., at the Frosty Valley Country Club, 1301 Bloom Road, Danville, PA 17821, and any adjournment or postponement thereof.
Shareholders may attend the Special Meeting by logging in at www.meetnow.global/MR69M5J. To log on, shareholders will need the control number that is printed on the proxy card. If your shares are held in the name of a bank, brokerage firm or other nominee, you should follow the instructions provided by them to participate in the Special Meeting. We recommend that shareholders log in 15 minutes before the start of the Special Meeting to ensure sufficient time to complete any check in procedures. If you encounter any difficulties logging onto www.meetnow.global/MR69M5J or during the Meeting, there will be a 1-800 number available on the website to assist you. Technical support will be available 30 minutes prior to the start of the Meeting and through the conclusion of the Meeting.
The principal executive office of the Corporation is located at 300 Market Street, Williamsport, PA 17701. All inquiries should be directed to Richard A. Grafmyre, Chief Executive Officer of the Corporation, at (570) 322-1111. Jersey Shore State Bank (“JSSB”) and Luzerne Bank ("Luzerne",(“Luzerne” and together with JSSB referred to as the "Banks"“Banks”) are wholly owned subsidiaries of the Corporation.
Solicitation and Revocability of Proxies
This proxy statement and enclosed proxy card are first being sent to shareholders of the Corporation on or about March 23, 2018.September 2, 2022. Shares properly represented by the proxy will be voted in accordance with the specifications made thereon by the shareholders. Any proxy not specifying to the contrary will be voted “FOR” the Class 2 nominees noted, "FOR" the approvalproposal to amend Article 13 of the advisoryCorporation’s articles of incorporation (the “Articles Amendment”) to eliminate the 66-2/3% supermajority shareholder vote on executive compensation,required by Article 13 to approve a merger, consolidation, liquidation, or dissolution of the Corporation, or any action that would result in the sale or disposition of all or substantially all of the assets of the Corporation, provided that the subject transaction is approved in advance by the affirmative vote of 75% or more of the members of the Corporation’s Board of Directors and “FOR” the ratificationproposal to approve of one or more adjournments of the appointment of S.R. Snodgrass, P.C. asSpecial Meeting, if necessary or appropriate, to solicit additional proxies in the independent registered public accounting firmevent that there are not sufficient votes at the time of the Corporation forSpecial Meeting to approve the year ending December 31, 2018.Articles Amendment (the “Adjournment Proposal”). The execution and return of the enclosed proxy card will not affect the right of a shareholder of record to attend the AnnualSpecial Meeting and to vote in person if such shareholder gives written notice toduring the Secretary ofSpecial Meeting by following the Corporation. Shareholderinstructions available on the Special Meeting website. Shareholders may also vote by telephone or Internet as provided on the enclosed proxy card.
The cost of assembling, printing, mailing, and soliciting proxies and any additional material that the Corporation may furnish shareholders in connection with the AnnualSpecial Meeting will be borne by the Corporation. In addition to the solicitation of proxies by use of the mails, directors, officers, and employees of the Corporation and/or the Banks may solicit proxies, without additional compensation, by telephone, telegraph,electronic transmission, or personal interview, with nominal expense to the Corporation. We have engaged Alliance Advisors LLC (“Alliance Advisors”) to assist with the solicitation of proxies for an estimated fee of $18,000, plus reimbursement of expenses. We have agreed to indemnify Alliance Advisors against certain liabilities arising out of our agreement with Alliance Advisors. The Corporation will also pay the standard charges and expenses of brokerage houses or other nominees or fiduciaries for forwarding proxy soliciting material to the beneficial owners of shares.
Shareholders with questions regarding the Special Meeting, including how to vote at the Special Meeting, may contact Alliance Advisors at the following toll-free number: (855) 200-8321.
A shareholder of record who returns a proxy may revoke the proxy at any time before it is voted (1) by giving written notice of revocation to Richard A. Grafmyre, Chief Executive Officer, Penns Woods Bancorp, Inc., 300 Market Street, Williamsport, PA 17701, (2) by executing a later-dated proxy and giving written notice thereof to the Secretary of the Corporation, or (3) by voting in person after giving written notice toat the Secretary of the Corporation.
Special Meeting.If your shares are held in “street name” (that is, through a broker, trustee, or other holder of record), you will receive a proxy card from your broker seeking instructions as to how your shares should be voted. If no voting instructions are given, your broker or nominee has discretionary authority to vote your shares on your behalf on certain routine matters. A “broker non-vote” results on a matter when your broker or nominee returns a proxy but does not vote on a particular proposal because it does not have discretionary authority to vote on that proposal and has not received voting instructions from you. Under the rules of The New York Stock Exchange, only the proposal to approve the Articles Amendment (“Proposal No. 3 (the ratification of the appointment of the Corporation’s independent registered public accounting firm) is1”) would not be considered a routine matter and, therefore is the only proposal for whichaccordingly, your broker or nominee has discretionary authority to vote. Your broker or nominee doeswould not have discretionary authority to vote on Proposal No. 1 (the election1. The Adjournment Proposal would be considered a routine matter under the rules of the five Class 2 directors)New York Stock Exchange and, Proposal No. 2 (advisory vote on executive compensation). You may not vote shares held in “street name” at the Annual Meeting unless you obtain a legal proxy fromaccordingly, your broker or holder of record.
nominee would have discretionary authority to vote on the Adjournment Proposal (“Proposal No. 2”).Quorum
Under the Corporation’s bylaws, the presence, in person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast will constitute a quorum for transaction of business at the AnnualSpecial Meeting.
Votes withheld, abstentions and broker non-votes will be counted in determining the presence of a quorum.Voting Securities
Securities/Required VoteHolders of record of the Common Stock at the close of business on March 1, 2018August 15, 2022 will be entitled to notice of and to vote at the AnnualSpecial Meeting. On March 1, 2018August 15, 2022 there were 4,689,5637,052,242 shares of Common Stock outstanding. Each share of Common Stock outstanding as of the close of business on March 1, 2018,August 15, 2022, is entitled to one vote on each matter that comes before the meeting, and holders do not have cumulative voting rights with respect to the election of directors.
Special Meeting.Under Pennsylvania law and the BylawsArticle 13 of the Corporation,Corporation’s articles of incorporation, the presenceaffirmative vote of a quorumholders of at least 66-2/3% of the outstanding shares of Common Stock is required for each matter to be acted on atapprove the Annual Meeting. For purposesproposed amendment to Article 13 of the Annual Meeting, a quorum consistsCorporation’s articles of the presence, in person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast. Votes withheld, abstentions and broker non-votes will be counted in determining the presence of a quorum for each matter.
Assuming the presence of a quorum, the five nominees for director receiving the highest number of votes cast by shareholders entitled to vote for the election of directors will be elected. Votes withheld from a particular nominee and broker non-votes will not constitute or be counted as votes cast for such nominee.
incorporation (“Proposal No. 1”). The affirmative vote of a majority of votes cast by shareholders at the
AnnualSpecial Meeting
is required to approve the proposal to approve of one or more adjournments of the Special Meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the Special Meeting to approve the Articles Amendment (“Proposal No. 2”). Because abstentions and broker non-votes are not affirmative votes in favor of Proposal No. 1, broker non-votes and abstentions will affect the outcome of the vote on Proposal No. 1, which requires the affirmative vote of at least 66-2/3% of the outstanding shares of Common Stock. Because, under Pennsylvania law and the Corporation’s articles of incorporation and bylaws, abstentions and broker non-votes are not counted as votes “cast,” broker non-votes and abstentions will not affect the outcome of the vote on Proposal No. 2.All proxies properly executed and not revoked will be voted as specified.
PROPOSAL NO. 1
AMENDMENT TO ARTICLES OF INCORPORATION
Background/Purpose and Effect of Articles of Amendment
In evaluating the current voting requirement contained in Article 13 of the articles of incorporation, the Board of Directors considered, among other matters, positions for and against the current voting standard imposed by the articles of incorporation and the viewpoints regarding supermajority voting provisions expressed by investors, and reviewed trends and practices in corporate governance, as well as the corporate governance practices and policies of other financial services corporations. Supermajority voting requirements, such as those contained in Article 13, are intended to promote corporate stability and provide protection against non-negotiated attempts to acquire control of the Corporation by requiring broad shareholder consensus to approve certain fundamental changes. Although the Board of Directors believes that supermajority voting provisions for potential change of control transactions can benefit shareholders, the Board of Directors also recognizes that supermajority voting provisions can make negotiated transactions involving a change in control of the Corporation, including transactions supported by all or a substantial majority of the Board of Directors, more difficult or costly to complete due to the necessity of soliciting and obtaining a supermajority vote of shareholders. Over the past three annual meetings of shareholders from 2020 through 2022, the percentage of outstanding shares represented in person and by proxy at the annual meeting has been declining, and was 79.1%, 75.8%, and 73.2%, in 2020, 2021, and 2022, respectively.
Currently, Article 13 of the articles of incorporation provides, in relevant part, that no merger, consolidation, liquidation or dissolution of the Corporation nor any action that would result in the sale or other disposition of all or substantially all of the assets of the Corporation shall be valid unless first approved by the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of Common Stock.
The proposed Articles Amendment, which has been approved unanimously by the Board of Directors, would add an exception to the requirement for a 66-2/3% affirmative vote of holders of shares of outstanding Common Stock to approve a merger, consolidation, liquidation or dissolution of the Corporation, or any action that would result in the sale or other disposition of all or substantially all of the assets of the Corporation, if 75% or more of the members of the Board of Directors approve the transaction in advance; in such a case, the transaction would be subject to the default shareholder approval standard under the Pennsylvania Business Corporation Law of 1988, as amended (the “BCL”), which provides that, except as otherwise provided in the BCL or in a bylaw adopted by the shareholders, whenever any corporate action is to be taken by a vote of shareholders, it will be authorized upon receiving the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon (and, if any shareholders are entitled to vote thereon as a class, upon receiving the affirmative vote of a majority of the votes cast by shareholders entitled to vote as a class). For these purposes, abstentions and broker non-votes are not considered votes “cast.” Accordingly, the effect of the proposed Articles Amendment would be to reduce the shareholder vote required to approve a merger, consolidation, liquidation or dissolution of the Corporation, or any action that would result in the sale or other disposition of all or substantially all of the assets of the Corporation, which was approved in advance by 75% or more of the members of the Board of Directors, from 66-2/3% of the outstanding shares of Common Stock to a majority of votes cast at the meeting of shareholders at which the transaction is considered. Correspondingly, if a subject transaction were not approved in advance by 75% or more of the members of the Board of Directors, the shareholder approval voting standard would remain at 66-2/3% of the outstanding shares of Common Stock.
The Board of Directors believes that the Articles of Amendment will permit the Board greater flexibility to evaluate any proposal relating to a potential change of control of the Corporation, with the higher shareholder vote required for any transaction not affirmatively approved in advance by at least 75% of the members of the Board of Directors while also reducing the shareholder vote requirement for a transaction affirmatively approved in advance by 75% of more of the members of the Board of Directors. Although the Corporation is not a party to any agreement, arrangement or understanding with any third party, or engaged in any discussions with any third party, involving a potential change in control of the Corporation, the Board of Directors believes that the Articles Amendment will provide greater flexibility to negotiate and complete a change in control transaction involving the Corporation should the opportunity for a favorable potential transaction arise in the future. The Board also believes that the Articles Amendment is prudent in light of a declining trend in the percentage of outstanding shares present in person or by proxy and voting over the past three annual meetings of shareholders, which could limit the ability of the Board of Directors to negotiate or complete a transaction otherwise considered to be in the best interests of the Corporation.
The Proposed Articles Amendment
The proposal to approve the Articles Amendment provides for Article 13 of the Corporation’s articles of incorporation to be amended to read in its entirety as follows (with additions shown as underlined):
“13. No merger, consolidation, liquidation or dissolution of the corporation nor any action that would result in the sale or other disposition of all or substantially all of the assets of the corporation shall be valid unless first approved by the affirmative vote of the holders of at least sixty-six and 2/3 percent (66-2/3%) of the outstanding shares of Common Stock. The immediately preceding sentence shall not apply to any merger, consolidation, liquidation or dissolution of the corporation nor any action that would result in the sale or other disposition of all or substantially all of the assets of the corporation if any such transaction or action is approved in advance by the affirmative vote of seventy-five percent (75%) or more of the members of the Board of Directors.
Notwithstanding the foregoing, this Article 13 shall not apply to any merger, consolidation, share exchange or similar transaction involving the Corporation if (i) members of the Board of Directors of the Corporation will constitute at least a majority of the Board of Directors of the surviving or new corporation or entity immediately after the transaction and (ii) shareholders of the Corporation will hold in the aggregate voting shares of the surviving or new corporation or entity to be outstanding immediately after completion of the transaction entitled to cast at least a majority of the votes entitled to be cast generally for the election of directors. This Article may not be amended unless first approved by the affirmative vote of the holders of at least sixty-six and two thirds percent (66-2/3%) of the outstanding shares of Common Stock in addition to any other vote of security holders otherwise required by these Articles of Incorporation or by law.”
Legal Effectiveness of Proposed Articles Amendment
If shareholders approve the Articles Amendment by an affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of Common Stock, the Corporation will file with the Secretary of State of the Commonwealth of Pennsylvania articles of amendment setting forth the Articles Amendment. The Articles Amendment will become effective upon such filing. The Board of Directors reserves the right, notwithstanding shareholder approval of the Articles Amendment and without further action by our shareholders, not to proceed with the Articles Amendment at any time before the filing the articles of amendment.
If shareholders do not approve the Articles Amendment by the requisite vote, then the articles of amendment setting forth the Articles Amendment will not be filed with the Secretary of State of the Commonwealth of Pennsylvania, and the current provisions of Article 13 of the Corporation’s articles of incorporation will continue to apply without change.
Required Vote
The affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of Common Stock entitled to vote is required for approval of the other non-election mattersArticles Amendment. Consequently, broker non-votes and abstentions will effectively act as a vote against approval of the Articles Amendment. All proxies will be voted ”FOR” the approval of the Articles Amendment, unless a shareholder specifies to the contrary on such shareholder’s proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” PROPOSAL NO. 1 TO APPROVE THE ARTICLES AMENDMENT.
PROPOSAL NO. 2
AUTHORIZATION TO VOTE ON ADJOURNMENT PROPOSAL
General
If, at the Special Meeting, the number of shares of Common Stock, present in person or by proxy, is insufficient to constitute a quorum or the number of shares of Common Stock voting in favor is insufficient to approve the Articles Amendment, the Corporation’s management intends to adjourn the Special Meeting in order to provide the Corporation’s Board of Directors more time to solicit additional proxies. In that event, the Corporation will ask its shareholders to vote only upon the Adjournment Proposal and not the proposal relating to approval of the Articles Amendment.
In this Proposal No. 2, the Corporation is requesting shareholders to grant discretionary authority to the holder of any proxy solicited by the Corporation’s Board of Directors so that such holder can vote “FOR” the proposal to adjourn the Special Meeting to solicit additional proxies, if necessary or appropriate. If shareholders approve the Adjournment Proposal, the Corporation could adjourn the Special Meeting, and any adjourned session of the Special Meeting, and use the additional time to solicit additional proxies, including the solicitation of proxies from shareholders who have previously voted.
Generally, if the Special Meeting is adjourned, no notice of the adjourned meeting is required to be consideredgiven to shareholders, other than an announcement at the Annual Meeting.Special Meeting of the place, date and time to which the meeting is adjourned.
Required Vote
The affirmative vote of a majority of all votes cast at the Special Meeting is required to approve Proposal No. 2. Abstentions and broker non-votes will not constitute or be counted as votes cast and, consequently, will not affect the outcomevote on the other non-election matters.
this adjournment proposal. All proxies properly executed and not revoked will be voted as specified.
“FOR” approval of Proposal No. 2, unless a shareholder specifies to the contrary on such shareholder’s proxy card.THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Corporation maintained the following standing committees for 2017, the current non-employee members of which are as follows:
|
| | | | |
| | | | Number of Times
Met During 2017
|
ASSET LIABILITY COMMITTEE: | | Daniel K. Brewer, Michael J. Casale, Jr., William J. Edwards, James M. Furey, II, D. Michael Hawbaker, Leroy H. Keiler, III, Cameron W. Kephart, Joseph E. Kluger, John G. Nackley, R. Edward Nestlerode, Jr., William H. Rockey, Jill Fortinsky Schwartz, Ronald A. Walko | | 4 |
| | | | |
AUDIT: | | Daniel K. Brewer, Michael J. Casale, Jr., William J. Edwards, James M. Furey, II, D. Michael Hawbaker, Leroy H. Keiler, III, Cameron W. Kephart, Joseph E. Kluger, John G. Nackley, R. Edward Nestlerode, Jr., William H. Rockey, Jill Fortinsky Schwartz, Ronald A. Walko | | 4 |
| | | | |
COMPENSATION: | | Michael J. Casale, Jr., William J. Edwards, D. Michael Hawbaker, R. Edward Nestlerode, Jr. | | 2 |
| | | | |
EXECUTIVE: | | Michael J. Casale, Jr., James M. Furey, II, Joseph E. Kluger, R. Edward Nestlerode, Jr. | | — |
| | | | |
NOMINATING AND CORPORATE GOVERNANCE: | | Daniel K. Brewer, Michael J. Casale, Jr., William J. Edwards, James M. Furey, II, D. Michael Hawbaker, Leroy H. Keiler, III, Cameron W. Kephart, Joseph E. Kluger, John G. Nackley, R. Edward Nestlerode, Jr., William H. Rockey, Jill Fortinsky Schwartz, Ronald A. Walko | | 2 |
The Audit Committee of the Corporation was composed of all independent directors within the meaning of Nasdaq listing standards. The Audit Committee operates under a written charter, a copy of which is available on our website, www.jssb.com, under Investor Relations/Financial Information/Governance Documents and is available upon written request to the Chief Executive Officer. The board of directors has designated Daniel K. Brewer as the Audit Committee financial expert. The Audit Committee is responsible for the appointment, compensation, oversight, and termination of the Corporation’s independent auditors. The Audit Committee is required to pre-approve audit and certain non-audit services performed by the independent auditors. The Audit Committee also assists the board of directors in providing oversight over the integrity of the Corporation’s financial statements, compliance with applicable legal and regulatory requirements, and the performance of our internal audit function. The Audit Committee also is responsible for, among other things, reporting to the board of directors on the results of the annual audit and reviewing the financial statements and related financial and non-financial disclosures included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Importantly, from a corporate governance perspective, the Audit Committee regularly evaluates the independent auditors’ independence, including approving consulting and other legally permitted, non-audit services provided by the auditors and the potential impact of the services on the auditors’ independence. The Audit Committee meets periodically with the independent auditors and the internal auditors outside of the presence of management, and possesses the authority to retain professionals to assist it in meeting its responsibilities without consulting with management. The Audit Committee reviews and discusses earnings releases with management, including the use of pro-forma information. The Audit Committee also discusses with management and the independent auditors the effect of accounting initiatives. The Audit Committee also is responsible for receiving and retaining complaints and concerns relating to accounting and auditing matters.
The board of directors of the Corporation met seventeen (17) times during 2017. All directors attended at least 80% of the aggregate of all meetings of the board of directors and the committees of which they were members.
Board Leadership Structure
Our board of directors maintains the freedom to choose whether the roles of Chairman of the Board and Chief Executive Officer should be combined or separated, based on what it believes is best for the Corporation and its shareholders at any given time. The board of directors has determined that it is appropriate to separate the roles of Chief Executive Officer and Chairman of the Board for the Corporation. Accordingly, R. Edward Nestlerode, Jr. serves as Chairman of the Board of the Corporation while Richard A. Grafmyre serves as Chief Executive Officer of the Corporation. The board of directors believes this arrangement provides stronger corporate governance and conforms to industry best practices.
Board Risk Oversight
Each member of the board of directors has a responsibility to monitor and manage risks faced by the Corporation. At a minimum, this requires the members of the board of directors to be actively engaged in board discussions, review materials provided to them, and know when it is appropriate to request further information from management and/or engage the assistance of outside advisors. Furthermore, because the banking industry is highly regulated, certain risks to the Corporation are monitored by the board of directors through its review of the Corporation’s and its banking subsidiaries compliance with regulations set forth by the banking regulatory authorities. Because risk oversight is a responsibility for each member of the board of directors, the board’s responsibility for risk oversight is not concentrated into a single committee. Instead, oversight is delegated, to a large degree, to the various board committees with an independent director serving in the capacity of committee chairman. These committees meet formally, as needed, to discuss risks and monitor specific areas of the Corporation’s performance with their findings reported at the next scheduled full meeting of the board of directors. In addition, the composition of the board of directors and normal agenda allow for the continuous oversight of risk by providing an environment which encourages the directors to ask specific questions or raise concerns and allots them sufficient time and materials to do so effectively. The overlap of committee membership provides a broad perspective of various risks and the actions undertaken to manage risks in today’s environment.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee operates under a written charter, a copy of which is available on our website, www.jssb.com, under Investor Relations/Financial Information/Governance Documents and is available upon request to the President. All members of the Committee are independent within the meaning of Nasdaq listing standards, and the Committee met twice during 2017. The Committee will consider candidates recommended by shareholders. Shareholders desiring to submit a candidate for consideration as a nominee of the board of directors must submit the same information with regard to the candidate as required to be included in the Corporation’s proxy statement with respect to nominees of the board of directors in addition to any information required by the Bylaws of the Corporation. Shareholder recommendations should be submitted in writing to Penns Woods Bancorp, Inc., 300 Market Street, Williamsport, PA 17701 (Attention: Chief Executive Officer), on or before December 31 of the year preceding the year in which the shareholder desires the candidate to be considered as a nominee. Although the board of directors at this time does not utilize any specific written qualifications, guidelines, or policies in connection with the selection of director nominees, candidates must have a general understanding of the financial services industry or otherwise be able to provide some form of benefit to the Corporation’s business, possess the skills and capacity necessary to provide strategic direction to the Corporation, be willing to represent the interests of all shareholders, be able to work in a collegial board environment, and be available to devote the necessary time to the business of the Corporation. In addition to these requirements, candidates will be considered on the basis of diversity of experience, skills, qualifications, occupations, education, and backgrounds, and whether the candidate’s skills and experience are complementary to the skills and experience of other board members. Candidates recommended by shareholders will be evaluated on the same basis as candidates recommended by the independent directors.
Nominations for director to be made at the Annual Meeting by shareholders entitled to vote for the election of directors must be submitted to the Secretary of the Corporation not less than ninety (90) days or more than one hundred fifty (150) days prior to the Annual Meeting, which notice must contain certain information specified in the Bylaws. No notice of nomination for election as a director has been received from any shareholder as of the date of this proxy statement. If a nomination is attempted at the Annual Meeting that does not comply with the procedures required by the Bylaws or if any votes are cast at the Annual Meeting for any candidate not duly nominated, then such nomination and/or such votes may be disregarded.
COMPENSATION OF DIRECTORS
Director Compensation Table
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Fees Earned or Paid in Cash | | Stock Awards | | Option Awards | | Non-Equity Incentive Plan Compensation | | Change in Pension Value and Non-qualified Deferred Compensation Earnings | | All Other Compensation | | Total |
| Name | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| Daniel K. Brewer | | $ | 65,500 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 65,500 |
|
| Michael J. Casale, Jr. | | 55,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 55,500 |
|
| William J. Edwards | | 60,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 60,500 |
|
| James M. Furey, II | | 60,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 60,500 |
|
| D. Michael Hawbaker | | 60,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 60,500 |
|
| Leroy H. Keiler, III | | 55,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 55,500 |
|
| Cameron W. Kephart (1) | | 34,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 34,500 |
|
| Joseph E. Kluger | | 55,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 55,000 |
|
| John G. Nackley | | 50,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 50,000 |
|
| R. Edward Nestlerode, Jr. | | 65,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 65,500 |
|
| William H. Rockey | | 55,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 55,500 |
|
| Jill F. Schwartz | | 50,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 50,000 |
|
| Hubert A. Valencik (2) | | 26,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 26,500 |
|
| Ronald A. Walko | | 55,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 55,500 |
|
| |
(1) | Appointed to the Corporation's board during 2017. |
| |
(2) | Retired from the board of directors in April 2017. |
The Corporation pays a retainer fee to each director of the Corporation of $28,000. In addition, JSSB and Luzerne pay a retainer fee to each director of $27,500 and $22,000, respectively. For the Corporation, Mr. Nestlerode received $5,000 for serving as Chairman of the Board and Mr. Brewer received $5,000 for serving as the Audit Committee Chairman. Mr. Furey and Mr. Kluger each received $5,000 for serving as Chairman of the Board for JSSB and Luzerne, respectively. Members of the succession planning committee received payment of $5,000 during 2017. In the aggregate, the existing board of directors of the Corporation earned $750,500 for all board service during 2017. Directors do not receive additional fees for board or committee meeting attendance.
JSSB and Directors Casale, Furey, Rockey, and Walko have entered into director fee agreements pursuant to which each participating director may defer payment of all or a portion of his director’s fees earned for service on the boards of directors of the Corporation and JSSB. JSSB has established a deferral account for each participating director on its books. Benefits are funded by each director’s fees and JSSB’s general assets and are payable upon retirement, early termination, disability, death, or the occurrence of a change in control of the Corporation or JSSB. Interest is credited to each deferral account at an annual rate equal to 50% of the Corporation’s return on equity for the immediately prior year, compounded monthly. Following termination of service, interest is credited to a deferral account at a rate based on the yield of the 10-year treasury note.UNANIMOUSLY RECOMMENDS A participating director may receive a payment of his account if the board of directors has determined that, following a request by a participating director, such director has suffered a severe unforeseeable financial hardship and becomes payable at the board's discretion. Generally, the amounts are payable, at the participating director’s prior election, in a lump sum or in 60 equal monthly installments. Following the occurrence of a triggering event, payments will commence within 30 days after, at the participating director’s prior election, his retirement or termination of service, or the occurrence of a change in control of the Corporation or JSSB. If payments are not triggered until the participating director’s death, the benefits will be paid within 90 days following receipt of the director’s death certificate.
Luzerne maintains a director deferred fee plan in which all Luzerne directors, including Mr. Kluger, Mr. Nackley and Ms. Schwartz, participate. The plan is a non-qualified deferred compensation plan into which Luzerne directors can defer up to 100% of the board fees earned during a calendar year. All amounts deferred by a director are fully vested at all times and currently earn an annual interest rate equal to prime plus 3%, with a floor of 6%. Balances accrued in the plan prior to December 31, 2012 earn
interest at 10%. Upon cessation of a Luzerne director’s service with Luzerne, Luzerne will pay the director all amounts credited to the director’s deferred fee account.
Directors who are also employees of the Corporation (currently Mr. Grafmyre and Mr. Knepp) do not receive any separate compensation for serving as a director of the Corporation or the Banks.
VOTE “FOR” PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Corporation's Bylaws provide that the board of directors shall consist of not less than five (5) nor more than twenty-five (25) directors who are shareholders, the exact number to be fixed and determined from time to time by resolution of the full board of directors or by resolution of the shareholders at any annual or special meeting with the number currently set at fifteen (15). The articles of incorporation and bylaws further provide that the directors shall be divided into three (3) classes, as nearly equal in number as possible, known as Class 1, Class 2 and Class 3. The directors of each class serve for a term of three (3) years and until their successors are elected and qualified. Under Pennsylvania law, directors of the Corporation can be removed from office by a vote of shareholders only for cause. The directors of the Corporation serve as follows:
|
| | | | |
Nominees for election as Class 2 | | Class 3 Directors | | Class 1 Directors |
Directors whose term expires in 2021: | | to serve until 2020: | | to serve until 2019: |
William J. Edwards (age 46) | | James M. Furey, II (age 70) | | Daniel K. Brewer (age 55) |
Leroy H. Keiler, III (age 54) | | Richard A. Grafmyre (age 64) | | Michael J. Casale, Jr. (age 66) |
Cameron W. Kephart (age 41) | | D. Michael Hawbaker (age 50) | | Joseph E. Kluger (age 54) |
Jill F. Schwartz (age 64) | | Brian L. Knepp (age 43) | | R. Edward Nestlerode, Jr. (age 65) |
Ronald A. Walko (age 71) | | John G. Nackley (age 65) | | William H. Rockey (age 71) |
The board of directors has affirmatively determined that all of the directors are independent within the meaning of the Nasdaq listing standards, except for Richard A. Grafmyre, Chief Executive Officer of the Corporation and Brian L. Knepp, President and Chief Financial Officer of the Corporation. The board categorically determined that a lending relationship resulting from a loan made by one of the Corporation's banking subsidiaries (Jersey Shore State Bank or Luzerne Bank), to a director would not affect the determination of independence if the loan complies with Regulation O under the federal banking laws. The board also categorically determined that maintaining with the Banks a deposit, savings, or similar account by a director or any of the director’s affiliates would not affect the determination of independence if the account is maintained on the same terms and conditions as those available to similarly situated customers.
The proxies solicited hereunder will be voted “FOR” (unless otherwise directed) the five (5) director nominees of the board of directors listed previously for election as Class 2 directors. Each nominee has agreed to serve if elected and qualified. The Corporation does not contemplate that any nominee will be unable to serve as a director for any reason. However, in the event one or more of the nominees should be unable to stand for election, proxies will be voted for the remaining nominees and such other persons selected by the board of directors, in accordance with the best judgment of the proxy holders.
INFORMATION AS TO NOMINEES AND DIRECTORS
Set forth below is the principal occupation and certain other information regarding the nominees and other directors whose terms of office will continue after the annual meeting. In addition, below we provide the particular experience, qualification, attributes, or skills that led the board of directors to conclude that each director and nominee should serve as a director. Share ownership information for each director and nominee is included under “Beneficial Ownership and Other Information Regarding Directors and Management.”
NOMINEES FOR DIRECTOR
William J. Edwards is President and owner of JEB Environmental Technologies, Inc., a storage tank construction company. Mr. Edwards has served as a director since 2012. Mr. Edwards, one of our youngest board members, adds to the diversity of the board and helps to ensure that the board will develop board members with a depth of knowledge of the Corporation, in order to avoid knowledge and experience voids as older board members retire. In addition, Mr. Edwards’ business involvement in various communities provides insight into the economic health of the communities, while also providing insight into potential customer relationships.
Leroy H. Keiler, III operates Leroy H. Keiler, Attorney at Law. Mr. Keiler has served as a director since 2006. Because banking is a highly regulated industry and success in the industry is dependent on adequately managing certain lending risks, Mr. Keiler’s experience as an attorney is helpful to the board in reviewing the Corporation’s legal matters and documentation related to residential lending matters. Additionally, Mr. Keiler’s relatively younger age adds to the diversity of the board and helps to ensure that the board will develop board members with a depth of knowledge of the Corporation, in order to promote continuity in the board.
Cameron W. Kephart is Executive Vice President of Susquehanna Transit Company and Susquehanna Trailways LLC, a third-generation, family-owned motorcoach company based in Avis, Pennsylvania. Mr. Kephart was appointed to the board during 2017. Mr. Kephart has over 20 years’ experience in the transportation industry and is responsible for the day to day operations of the school bus and motorcoach divisions of the company, which includes financial planning and budgeting as well as strategic planning. Mr. Kephart is knowledgeable in government regulations pertaining to the industry at the state and federal levels.
Jill F. Schwartz is the senior partner of Wyoming Weavers, Swoyersville, PA and President of Fortune Fabrics, Inc., positions she has held since 1985. She is also the owner of Gosh Yarn It!, a yarn boutique located in Kingston, PA. Ms. Schwartz has served as a director since 2013. As president of a local manufacturing company along with many years of experience as a bank director, Ms. Schwartz provides the board with an understanding of the local business climate and growth opportunities for the Corporation.
Ronald A. Walko is a retired President and Chief Executive Officer of the Corporation. Mr. Walko remains active in various civic organization's in the Williamsport area. Mr. Walko has served as a director since 2000. With 25 plus years of service with the Corporation, Mr. Walko possesses a deep understanding of the Corporation’s operations, which assists the board in strategic planning and management oversight.
DIRECTORS CONTINUING IN OFFICE
Daniel K. Brewer is a Certified Public Accountant and the principal and owner of Brewer & Company, LLC, a private CPA firm. Mr. Brewer has served as a director since 2012. Mr. Brewer’s experience and knowledge of financial standards and reporting is valuable to the Audit Committee of which he serves as the Chairman. Mr. Brewer’s business and social involvement in the greater area of Columbia and Montour Counties provides insight into the economic stability of this region. In addition, Mr. Brewer’s knowledge of financial statements assists the board in their review of certain loan requests.
Michael J. Casale, Jr. is the principal of Michael J. Casale, Jr., LLC. Mr. Casale has served as a director since 1999. Because banking is a highly regulated industry and success in the industry is dependent on adequately managing certain lending risks, Mr. Casale’s legal, business, and real estate experience is helpful to the board in reviewing the Corporation’s legal matters and documentation related to commercial lending matters. In September 2017, Mr. Casale entered voluntary guilty pleas in the Court of Common Pleas of Lycoming County Court to one count of criminal trespass and one count of wiretapping in connection with a personal domestic matter. Mr. Casale received probation for the offenses, and has paid all costs and fines.
James M. Furey, II is the retired President and former owner of Eastern Wood Products. Mr. Furey has served as a director since 1990. Through Mr. Furey’s professional experience in the lumber industry, which is significant in the Williamsport region, he has developed strong ties to the community. From these community relationships, Mr. Furey provides the board with insight as to the growth opportunities and real estate industry within the Williamsport region.
Richard A. Grafmyre has served as Chief Executive Officer of the Corporation since joining the Corporation in October 2010. Prior to joining the Corporation, Mr. Grafmyre served as President, Chief Executive Officer, and Chairman of FNB Bank since 1997. For the efficient operation of the board, the board believes that the Chief Executive Officer should have a position on the board to act as a liaison between the board and management and to assist with the board’s oversight responsibilities by ensuring the board receives information from management in a timely and accurate manner to permit the board to carry out its responsibilities effectively. Mr. Grafmyre’s extensive professional banking experience within a larger holding company structure enables him to provide the board with insight as to how the Corporation’s operations, policies, and implementation of strategic plans compare to those of its peers.
D. Michael Hawbaker is Executive Vice President of Glenn O. Hawbaker, Inc., a provider of heavy construction services and products throughout the company’s market area in Centre County, Pennsylvania. Mr. Hawbaker has served as a director since 2007. Mr. Hawbaker is one of our youngest board members, adds to the diversity of the board, and helps to ensure that the board will develop board members with a depth of knowledge of the Corporation, in order to avoid knowledge and experience voids as older board members retire. Additionally, Mr. Hawbaker understands the community and political landscape of the Centre County area where the board intends to continue to grow the Corporation’s business. Mr. Hawbaker possesses a level of financial acumen important to his service as a member of the Audit Committee.
Joseph E. Kluger is Vice Chairman of the Board of the Corporation and a Managing Principal of Hourigan, Kluger & Quinn P.C., where he has practiced law primarily in the fields of banking and finance, real estate, estates, and for-profit and not-for-profit corporate and business law for more than 29 years. Mr. Kluger has served as a director since 2013. Mr. Kluger’s experience as an attorney is helpful to the board in reviewing the Corporation’s legal matters, real estate affairs, corporate governance issues, and documentation related to lending and workout matters.
Brian L. Knepp joined the Corporation in 2005. He has served as the Chief Financial Officer of the Corporation since 2008 and was appointed President of the Corporation in 2017. The board believes that Mr. Knepp's experience and knowledge of the Corporation's business lines coupled with his ability to act as a liaison, in conjunction with the Chief Executive Officer, between the board and management and to assist with the board’s oversight responsibilities by ensuring the board receives information from management in a timely and accurate manner will enhance board performance. Mr. Knepp also serves as the Chief Executive Officer of JSSB's wholly owned subsidiary, The M Group, Inc. d/b/a The Comprehensive Financial Group. Mr. Knepp's twenty years of banking experience coupled with experience in the manufacturing sector enables him to relate to the needs of the board.
John G. Nackley is President and Chief Executive Officer of InterMetro Industries Corporation after serving as Vice President and Executive Vice President.Mr. Nackley has served as a director since 2013. Mr. Nackley’s experience in a Fortune 500 company provides the board with leadership in the business climate, financial reporting, strategic planning, marketing, and governance.
R. Edward Nestlerode, Jr. is the Chairman of the Board of the Corporation and is President and Chief Executive Officer of Nestlerode Contracting Co., Inc., which specializes in bridge building. Mr. Nestlerode has served as a director since 1995. Mr. Nestlerode maintains strong community ties in the Clinton County area, which is a region that the Corporation intends to grow its business. Through his business, Mr. Nestlerode has developed knowledge of the construction industry, which provides the board with insight regarding the development of potential customer relationships and opportunities. In addition, Mr. Nestlerode’s previous experience as a Chief Financial Officer is valuable as a member of the Audit Committee.
William H. Rockey is a retired former Senior Vice President of the Corporation. He was the president of the former First National Bank of Spring Mills. Mr. Rockey has served as a director since 1999. Mr. Rockey’s ties to Centre County will assist the Corporation in growing its business in the Centre County region. In addition, Mr. Rockey’s former position with the Corporation, along with his long-time professional banking experience in Centre County combined with his knowledge and familiarity of the Corporation’s culture and operating procedures, provide the board with significant business development resources and experience.
PRINCIPAL OFFICERSAUTHORIZE ONE OR MORE ADJOURNMENTS OF THE CORPORATION
The following table lists the executive officers of the Corporation as of March 1, 2018:
SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES IN THE EVENT THAT THERE ARE NOT SUFFICIENT VOTES AT THE TIME OF THE SPECIAL MEETING TO APPROVE THE ARTICLES AMENDMENT.
|
| | | | | | | | | | |
| Name | | Age | | Position and/or Offices With the Corporation | |
Employee Since | | Number of Shares of the Corporation | | Year First Elected an Officer |
| Richard A. Grafmyre | | 64 | | Chief Executive Officer of the Corporation | | 2010 | | 2,859 | | 2010 |
| Brian L. Knepp | | 43 | | President and Chief Financial Officer of the Corporation | | 2005 | | 2,031 | | 2005 |
| Aron M. Carter | | 45 | | Senior Vice President - Enterprise Risk Management of the Corporation | | 2013 | | 422 | | 2013 |
| Michelle M. Karas | | 51 | | Senior Vice President, Secretary, & Chief Operating Officer of the Corporation | | 2012 | | 471 | | 2012 |
Biographical information for Mr. Grafmyre and Mr. Knepp is set forth above under the caption “Information as to Nominees and Directors.”
Mr. Carter joined the Corporation in 2013 as a Senior Vice President - Enterprise Risk Management. Mr. Carter previously was employed as a bank examiner with the Office of the Comptroller of the Currency.
Ms. Karas joined the Corporation in 2012 as a Vice President - Head of Institutional Advancement and was promoted to Senior Vice President - Chief Operating Officer in 2016 and Secretary in 2017. Ms. Karas previously was employed in various management positions at several community banks.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL OWNERS
As of March 1, 2018, there were no persons who owned of record or who are known by the board of directors to be beneficial owners of more than 5% of the Common Stock.
BENEFICIAL OWNERSHIP AND OTHER INFORMATION REGARDING DIRECTORS AND MANAGEMENT
The following table sets forth, as of March 1, 2018,August 15, 2022, information regarding the number of shares and percentage of the outstanding shares of Common Stock beneficially owned by each director, executive officer, and all directors and executive officers as a group.group, and by each person known by the Corporation to beneficially own 5% or more of the Common Stock. Unless otherwise indicated in a footnote, shares of our common stockCommon Stock have not been pledged as security.
Executive Officers and
Directors | | Principal Occupation for Past Five Years | | Amount & Nature
of Beneficial
Ownership | | | % of Total
Shares
Outstanding | |
| Daniel K. Brewer | | Retired; Former Principal of Brewer and Company, LLC | | | 9,748 | (1) | | | 0.14 | % |
| Aron M. Carter | | Senior Vice President of the Corporation | | | 935 | (2) | | | 0.01 | % |
| Michael J. Casale, Jr. | | Chairman of the Board of JSSB, Principal, Michael J. Casale, Jr., Esq., LLC | | | 30,398 | (3) | | | 0.43 | % |
| William J. Edwards | | President & Owner of JEB Environmental Technologies, Inc. | | | 43,663 | (4) | | | 0.62 | % |
| James M. Furey, II | | Retired President & Former Owner of Eastern Wood Products | | | 20,009 | (5) | | | 0.28 | % |
| Richard A. Grafmyre | | Chief Executive Officer of the Corporation | | | 17,493 | (6) | | | 0.25 | % |
| D. Michael Hawbaker | | Executive Vice President of Glenn O. Hawbaker, Inc. | | | 9,298 | (7) | | | 0.13 | % |
| Michelle M. Karas | | Senior Vice President, Secretary, & Chief Data Officer of the Corporation | | | 1,525 | (8) | | | 0.02 | % |
| Leroy H. Keiler, III | | Leroy H. Keiler, III, Attorney at Law | | | 3,674 | (9) | | | 0.05 | % |
| Cameron W. Kephart | | Executive Vice President of Susquehanna Transit Company | | | 5,175 | (10) | | | 0.07 | % |
| Brian L. Knepp | | President & Chief Financial Officer of the Corporation | | | 15,481 | (11) | | | 0.22 | % |
| Charles E. Kranich, II | | President of Kranich’s Jewelers, Inc. | | | 26,286 | (12) | | | 0.37 | % |
| Robert Q. Miller | | President and co-owner of Miller Brothers Auto Sales, Inc. and Mor Car Rentals | | | 4,977 | (13) | | | 0.07 | % |
| John G. Nackley | | President and CEO of InterMetro Industries Corporation | | | 14,083 | (14) | | | 0.20 | % |
| R. Edward Nestlerode, Jr. | | Chairman of the Board of the Corporation, President and Chief Executive Officer of Nestlerode Contracting Co., Inc. | | | 43,566 | (15) | | | 0.62 | % |
| Jill F. Schwartz | | Senior Partner of Wyoming Weavers; President of Fortune Fabrics, Inc.; Owner of Gosh Yarn It! | | | 24,000 | (16) | | | 0.34 | % |
| Ronald A. Walko | | Retired; Former President & Chief Executive Officer of the Corporation and JSSB | | | 35,711 | (17) | | | 0.51 | % |
| | | | | | 306,022 | | | | 4.34 | % |
|
| | | | | | | | | | | | | |
| Name | | Principal Occupation for Past Five Years | | Year First Became a Director | | Amount & Nature of Beneficial Ownership | | | % of Total Shares Outstanding |
| Daniel K. Brewer | | Principal & Owner, Brewer & Company, LLC | | 2012 |
| | 2,100 |
| (1 | ) | | 0.04 | % |
| Aron M. Carter | | Senior Vice President of the Corporation | | N/A |
| | 422 |
| (2 | ) | | 0.01 | % |
| Michael J. Casale, Jr. | | Principal, Michael J. Casale, Jr., LLC | | 1999 |
| | 22,084 |
| (3 | ) | | 0.47 | % |
| William J. Edwards | | President & Owner of JEB Environmental Technologies, Inc. | | 2012 |
| | 4,065 |
| (4 | ) | | 0.09 | % |
| James M. Furey, II | | Chairman of the Board of JSSB, Retired President & Former Owner of Eastern Wood Products | | 1990 |
| | 13,057 |
| (5 | ) | | 0.28 | % |
| Richard A. Grafmyre | | Chief Executive Officer of the Corporation | | 2010 |
| | 2,859 |
| (6 | ) | | 0.06 | % |
| D. Michael Hawbaker | | Executive Vice President of Glenn O. Hawbaker, Inc. | | 2007 |
| | 2,500 |
| (7 | ) | | 0.05 | % |
| Michelle M. Karas | | Senior Vice President, Secretary, & Chief Operating Officer of the Corporation | | N/A |
| | 471 |
| (8 | ) | | 0.01 | % |
| Leroy H. Keiler, III | | Leroy H. Keiler, III, Attorney at Law | | 2006 |
| | 711 |
| (9 | ) | | 0.02 | % |
| Cameron W. Kephart | | Executive Vice President of Susquehanna Transit Company | | 2017 |
| | 306 |
| (10 | ) | | 0.01 | % |
| Joseph E. Kluger | | Chairman of the Board of Luzerne, Managing Principal of Hourigan, Kluger & Quinn P.C. | | 2013 |
| | 1,178 |
| (11 | ) | | 0.03 | % |
| Brian L. Knepp | | President & Chief Financial Officer of the Corporation | | 2015 |
| | 2,031 |
| (12 | ) | | 0.04 | % |
| John G. Nackley | | President and CEO of InterMetro Industries Corporation | | 2013 |
| | 2,432 |
| (13 | ) | | 0.05 | % |
| R. Edward Nestlerode, Jr. | | Chairman of the Board of the Corporation, President and Chief Executive Officer of Nestlerode Contracting Co., Inc. | | 1995 |
| | 20,961 |
| (14 | ) | | 0.45 | % |
| William H. Rockey | | Retired; Former Senior Vice President of the Corporation and JSSB; Former President of First National Bank of Spring Mills | | 1999 |
| | 33,410 |
| (15 | ) | | 0.71 | % |
| Jill F. Schwartz | | Senior Partner of Wyoming Weavers; President of Fortune Fabrics, Inc.; Owner of Gosh Yarn It! | | 2013 |
| | 26,000 |
| (16 | ) | | 0.55 | % |
| Ronald A. Walko | | Retired; Former President & Chief Executive Officer of the Corporation and JSSB | | 2000 |
| | 23,135 |
| (17 | ) | | 0.49 | % |
| All Executive Officers and Directors as a Group | | 157,722 |
| | | 3.36 | % |
|
| |
| (1) | Shares held individually. |
| (2) | Shares held individually. |
| (3) | Includes 15,4183,141 shares held individually and 27,257 shares held jointly with his spouse, 1,660 shares held by his spouse, and 5,006 shares held by his children.spouse. |
| (4) | Shares held individually. |
| (5) | Includes 9486,994 shares held individually, 2,41710,570 shares held jointly with his spouse, and 7002,445 shares held by his spouse. |
(5) | (6) | Includes 6,54716,693 shares held jointly with his spouse, 4,880 held individually and 1,630800 shares held by his spouse. |
(6) | (7) | Includes 2,6593,048 shares held individually and 200 shares held by his spouse. |
(7) | Shares held jointly with his spouse. |
(8) | Shares held individually. |
(9) | Shares held jointly with his spouse. |
(10) | Includes 270 held individually and 366,250 shares held jointly with his spouse. |
(11) | (8) | Shares held individually. |
| (9) | Includes 2,378 shares held individually and 1,296 shares held jointly with his spouse. |
| (10) | Includes 3,048 shares held individually and 2,127 shares held jointly with his spouse. |
| (11) | Includes 8,367 shares held individually and 7,114 shares held jointly with his spouse. |
| (12) | Shares held individually. |
| (13) | Includes 4,629 shares held individually and 348 shares held jointly with his spouse. |
| (14) | Shares held individually. |
(14) | (15) | Includes 8,88821,824 shares held individually, 16,358 shares held jointly with his spouse, 10,0922,077 shares held individually, 325by his spouse, 608 shares held by his son, and 1,6562,699 shares held by Nestlerode Contracting Co., Inc. |
(15) | (16) | Shares held jointly with his spouse.individually. |
(16) | (17) | Includes 16,4524,653 shares held individually, and 9,548 shares held by the estate of her mother. |
(17) | Includes 19,99530,164 shares held jointly with his spouse and children, 2,571 shares held individually, 435656 shares held by his spouse, and 134238 shares held jointly by his spouse and children. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, and any persons owning ten percent or more of our Common Stock, to file in their personal capacities initial statements of beneficial ownership on Form 3, statements of changes in beneficial ownership on Form 4, and annual statements of beneficial ownership on Form 5 with the Securities and Exchange Commission. Persons filing such beneficial ownership statements are required by SEC regulation to furnish us with copies of all such statements filed with the SEC. The rules of the SEC regarding the filing of such statements require that “late filings” be disclosed in the Corporation’s proxy statement. Based solely on the reports received by us or filed with the SEC and on written representations from reporting persons, we believe all such persons complied with all applicable filing requirements during 2017.
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Discussion and Analysis addresses the following issues: members of the Compensation Committee (the “Committee”) and their role, compensation-setting process, our philosophy regarding executive compensation, and components of executive compensation.
Committee Members and Independence
The Committee is comprised of four (4) independent directors under the requirements set forth in the Nasdaq listing standards. In determining the independence of members of the Compensation Committee, the Board considers all factors specifically relevant to determining whether the director has a relationship to the Corporation that is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including (i) the source of the director’s compensation, including any consulting, advisory or other compensation fees; and (ii) any affiliate relationship between the director and the Corporation or any of its subsidiaries. The members of the Committee are: Michael J. Casale, Jr., William J. Edwards, D. Michael Hawbaker, and R. Edward Nestlerode, Jr.
Role of Committee
The Committee’s focus is to establish a compensation policy and philosophy that will enable the Corporation to attract, retain, motivate, and reward executive officers that are critical to the success of the Corporation. In doing so, the Committee:
reviews and adjusts the principles guiding the compensation policy to maintain alignment with short and long-term strategic goals and to build shareholder value;
establishes performance objectives including, but not limited to, earnings, return on assets, return on equity, total assets, and quality of the loan portfolio;
evaluates the performance of the executive officers in comparison to the performance goals;
determines the compensation of executive officers and the components of the compensation;
administers the retirement plans of the Corporation, including the defined benefit, defined contribution, and 401(k) plans;
administers the 2006 Employee Stock Purchase Plan;
administers the 2014 Stock Option Plan;
recommends changes to compensation plans, cash or equity, to the full board of directors;
reviews and recommends changes to succession plans; and
reviews and recommends changes to director compensation.
Committee Meetings
The Committee meets as often as necessary. The Committee met twice in 2017 to gather input in anticipation of the wage and benefit changes to be approved for the 2018 fiscal year. The Committee maintains a written charter. The Committee works with the Chief Executive Officer to determine the meeting agenda and material to be reviewed. The materials and inputs utilized may include, but are not limited to, the following:
financial reports outlining budget to actual performance;
reports of corporate achievement/recognition by outside parties;
forecasted financial results as compared to the current budget and actual results;
peer financial analysis and comparison;
completion and progress of meeting strategic goals;
peer equity and cash compensation data;
national and regional compensation surveys; and
financial impact of current and proposed compensation programs.
Committee Process
The Committee set the compensation of the executive officers and other employees during the fourth quarter of 2016 for the period covering the 2017 fiscal year. Although the decisions are made at a point in time, the Committee continuously monitors the performance of the Corporation and executives throughout the year as part of the routine full board of directors meetings.
The Committee utilizes the input and assistance of management when making compensation decisions. Management input includes:
employee performance evaluations and compensation recommendations;
reporting actual and forecasting future results;
establishing performance objectives;
review and recommendations of non-cash employee compensation programs; and
assistance with Committee meeting agendas.
The Chief Executive Officer has direct involvement with the Committee during the meetings in order to provide status updates on the attainment of strategic goals, discuss performance evaluations, and make recommendations on executive officer compensation packages, for the named executive officers other than himself.
Annually, the Committee meets to evaluate the performance of the executive officers and to set the compensation for the fiscal year.
Compensation Elements
Base Salary
The Committee believes that the base salary of the named executive officers is the cornerstone of the compensation package and is the primary source of compensation to the executive. The base salary provides a consistent level of pay to the executive, which the Committee feels decreases the amount of executive turnover, promotes the long-term goals of the Corporation, and is a tax deductible expense. The factors used in determining the level of base salary include the executive’s qualifications and experience, tenure with the Corporation, responsibilities, attainment of goals and objectives, past performance, and peer practices. A review of past performance and the attainment of goals and objectives are reviewed annually as part of the formal annual performance review. During the review, objectives and goals for the current and following year and upcoming milestones related to the corporate strategic plan were discussed. Peers for the Corporation are bank holding companies headquartered within Pennsylvania, Maryland, New Jersey, New York, Ohio, and West Virginia with assets between $1 billion and $2 billion and include the following:
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| | | | |
1st Constitution Bancorp | | ACNB Corporation | | Ameriserv Financial, Inc. |
Cenlar Capital Corporation | | Chemung Financial Corp. | | Citizens and Northern Corp. |
Citizens Financial Services, Inc. | | Civista Bancshares, Inc. | | Clifton Bancorp, Inc. |
Codorus Valley Bancorp | | Community Financial Corporation | | DNB Financial Corporation |
ESSA Bancorp, Inc. | | Farmers & Merchants Bancorp | | First United Corp. |
FNCB Bancorp, Inc. | | Franklin Financial Services Co. | | Metropolitan Bank Holding Corp. |
Mid Penn Bancorp, Inc. | | Middlefield Banc Corp. | | MVB Financial Corp. |
Norwood Financial Corp. | | Orrstown Financial Services, Inc. | | Premier Financial Bancorp, Inc. |
QNB Corp. | | Shore Bancshares, Inc. | | Unity Bancorp, Inc. |
Data for these peers is gathered from various sources including, but not limited to, SEC filings, Federal Reserve filings, and other information publicly released by the peer companies. The Committee utilizes such comparative information as a component in determining base salary for such executives. Other components considered by the Committee include the factors described above. The Committee does not assign relative weights to any one component but considers the entire mix of information. The Committee does not consider such comparative information in connection with other elements of the overall compensation of such executives.
Annual Bonus Program
The Committee administers a Performance-Based Cash Incentive Plan in which certain executive officers of the Corporation, including the named executive officers, participate. The plan provides at-risk compensation awards to eligible employees, which include full-time employees of the Corporation (except employees whose compensation is commission based) and part-time employees. To be eligible to receive payments employees must have been employed for a minimum of three months and be actively employed at time of payment. In addition, the employee must receive an overall rating of “Proficient” or higher on his or her most recent individual performance appraisal for the period covered by the performance appraisal. The plan is designed to support organizational objectives and financial goals set forth in the Corporation’s strategic business plan and financial plan. The plan further aligns the interests of the Corporation’s shareholders with employees and assists the Corporation in attracting, retaining, and motivating high-quality personnel, who contribute to the success and profitability of the Corporation.
The Committee for 2017 established five target results criteria. Target results are the quarterly and annual goals of the Banks, which are consistent with the Corporation’s strategic business plan and financial plan, which must be met in order to receive a cash award under the plan. The target results integrate industry peer group standards with the goals set forth in the Corporation’s strategic business plan and financial plan. Targets are weighted to reflect the relative importance of each goal to the Corporation’s goals under its strategic business plan and financial plan. Target measures that may be used by the Committee include, but are not limited to, return on equity, gross loan growth, growth in deposits (excluding brokered deposits), net income, and loan delinquency. Target results are set at levels intended to be challenging, but more likely than not to be achieved, or come substantially close to being achieved.
The Committee has the discretion to exclude nonrecurring or extraordinary items of income, gain, expense, or loss, or any other factor it may deem relevant in its determination as to whether the target results have been satisfied. The Committee must conclude that an award, in such a circumstance, would ensure that the best interests of the Corporation’s shareholders are protected and are not in conflict with the interests of the plan’s participants.
Cash awards are based upon a maximum fixed amount and are paid quarterly. The higher the eligible employee’s position, the greater the cash award. This reflects the Corporation’s belief that the performance of our named executive officers and other members of upper management has relatively greater impact on the performance of the Corporation.
The plan is administered by the Committee, but annual awards determined by the Committee under the plan are subject to the approval of the board of directors of the Corporation. The Committee may only make awards when it deems such awards are in the best interests of the Corporation, the Corporation’s shareholders, and the plan participants. The Committee or the board may take action to amend, modify, suspend, reinstate, or terminate the plan at any time. Such amendments, modifications, suspensions, reinstatements, or terminations may apply retroactively.
For 2017, the Committee established five weighted performance targets under the plan for 2017 for the employees of JSSB, which included Messrs. Grafmyre, Knepp, Carter and Ms. Karas. The performance factors and weightings for each factor for 2017, all of which exclude securities gains or losses where applicable, were as follows: Return on Equity (target: 11.04%; weighting: 20%); Gross Loan Growth (target: $27.052 million; weighting: 20%); Deposit Growth, excluding brokered deposits (target: $37.312 million; weighting: 20%); Net Income (target: $9.945; weighting: 20%); and Loan Delinquency (target: 1.61%; weighting: 20%). JSSB’s actual performance measured against the weighted target performance factors resulted in performance of 100% of targeted
goals with the Committee having the ability to increase the amount paid for exceptional service to the Corporation. Based on these factors, bonuses for 2017 were paid as follows: Mr. Grafmyre - $257,000; Mr. Knepp - $58,000; Mr. Carter - $16,000; and Ms. Karas - $16,000.
Equity Awards
The Committee granted stock options to the named executive officers during 2017 under the 2014 Penns Woods Bancorp, Inc. Equity Incentive Plan. The Committee feels this tool is needed in order to continue to be able to attract top talent, retain management, and to provide a long-term compensation component. Grants of stock options during during 2017 to named executive officers totaled 23,000 shares at an exercise price of $44.21 per share. Total shares granted to each named executive officer were as follows: Mr. Grafmyre - 10,000; Mr. Knepp - 7,000; Mr. Carter - 3,000; and Ms. Karas - 3,000.
Additional Benefits
The named executive officers may participate in other employee benefit programs that are generally available to the other employees of the Corporation. Other perquisites received by the named executive officers are either included in the Summary Compensation Table in this proxy statement or do not exceed $10,000 in the aggregate annually.
Employment and Change in Control Agreements
We have entered into employment agreements with Messrs. Grafmyre, Knepp, Carter and Ms. Karas. A discussion of these agreements follows.
Richard A. Grafmyre. Mr. Grafmyre is a party to an amended and restated employment agreement with the Corporation and JSSB. The initial term of the amended agreement terminates on November 1, 2019 and renews on November 1, 2019 for an additional four-year period ending October 31, 2023 unless either party gives notice of non-renewal no later than November 1, 2018. Under the terms of the amended agreement, Mr. Grafmyre receives an annual base salary of $425,000, subject to discretionary increases by the Corporation or JSSB. Mr. Grafmyre is also entitled to participate in any pension, retirement, profit sharing, stock option, incentive bonus, employee stock ownership, or other plans, benefits, and privileges available to employees and executive officers of the Corporation and JSSB. In addition, Mr. Grafmyre is entitled to the use of a mid-size automobile for business and ancillary personal use and payment of initiation fees, and membership assessments and dues for him and his spouse at two clubs.
The amended agreement may be terminated for cause (as defined in the agreement), in which case the parties’ obligations under the agreement will cease. If the agreement is terminated without cause and there has not been a change-in-control (as defined in the agreement), then the Corporation and JSSB will continue to pay Mr. Grafmyre’s then current annual base salary for the greater of six months or the number of months remaining in the term of his employment agreement and provide Mr. Grafmyre, at no cost to him, with continuation of health and medical benefits for the period during which he is receiving continued payments of base salary. If, following a change-in-control, the agreement is terminated by the Corporation and JSSB without cause or Mr. Grafmyre voluntarily terminates his employment for good reason (as defined in the agreement), the Corporation or JSSB will pay Mr. Grafmyre, in cash, within 30 days of termination, an aggregate amount equal to two times the sum of Mr. Grafmyre’s then base salary and the average of his bonus amounts over the prior three years and provide him with continued health insurance benefits for a period of 24 months. If during the term of the agreement, Mr. Grafmyre voluntarily terminates employment, retires, dies, or becomes disabled (as defined in the agreement), the obligations of the parties under the agreement will cease, unless Mr. Grafmyre dies or becomes disabled after providing notice of termination for good reason following a change in control, in which case, Mr. Grafmyre, or his estate, as the case may be, will be entitled to the amounts described above.
The agreement provides for the reduction of any “change in control” payments to Mr. Grafmyre to the extent necessary to ensure that he will not receive “excess parachute payments” under Section 280G of the Internal Revenue Code, which would result in the imposition of an excise tax to him and a loss of deduction to the Corporation.
The agreement contains noncompete covenants which generally prohibit Mr. Grafmyre from engaging in banking activities with an institution headquartered within twenty-five miles of 300 Market Street, Williamsport, Pennsylvania. These covenants generally extend for a period of one year after Mr. Grafmyre’s termination of employment unless his employment terminates as a result of a delivery of a notice of nonrenewal by the Corporation and JSSB, in which case these covenants end on the date the agreement terminates.
Brian L. Knepp. Mr. Knepp entered into a new employment agreement with the Corporation on September 30, 2017 in connection with his appointment as President of the Corporation, which agreement replaced Mr. Knepp’s prior employment agreement. The employment agreement is for a term ending on December 31, 2018 and renews annually thereafter for successive one-year terms absent notice of nonrenewal by either party. Under the terms of the agreement, Mr. Knepp will receive an annual base salary of at least $184,000, subject to discretionary increases by the Corporation. Mr. Knepp is also entitled to participate in any pension,
retirement, profit sharing, stock option, incentive bonus, employee stock ownership, or other plans, benefits, and privileges available to employees and executive officers of the Corporation.
The agreement may be terminated for cause (as defined in the agreement), in which case the parties’ obligations under the agreement will cease. If the agreement is terminated without cause and there has not been a change-in-control (as defined in the agreement), then the Corporation will continue to pay Mr. Knepp’s then current annual base salary for the greater or six months or the number of months remaining in the term of his employment agreement and provide Mr. Knepp, at no cost to him, with continuation of health and medical benefits for the period during which he is receiving continued payments of base salary. If, following a change-in-control, the agreement is terminated by the Corporation without cause or Mr. Knepp voluntarily terminates his employment for good reason (as defined in the agreement), the Corporation will pay Mr. Knepp, in cash, within 30 days of termination, an aggregate amount equal to two times the sum of Mr. Knepp’s then base salary and the average of his bonus amounts over the prior three years. If during the term of the agreement, Mr. Knepp voluntarily terminates employment, retires, dies, or becomes disabled (as defined in the agreement), the obligations of the parties under the agreement will cease, unless Mr. Knepp dies or becomes disabled after providing notice of termination for good reason following a change in control, in which case, Mr. Knepp, or his estate, as the case may be, will be entitled to the amounts described above.
The agreement provides for the reduction of any “change in control” payments to Mr. Knepp to the extent necessary to ensure that he will not receive “excess parachute payments” under Section 280G of the Internal Revenue Code, which would result in the imposition of an excise tax to him and a loss of deduction to the Corporation.
The agreement contains noncompete covenants which generally prohibit Mr. Knepp from engaging in banking activities within twenty-five miles of 300 Market Street, Williamsport, Pennsylvania. These covenants generally extend for a period of one year after Mr. Knepp’s termination of employment unless his employment terminates as a result of a delivery of a notice of nonrenewal by the Corporation, in which case these covenants end on the date the agreement terminates.
Aron M. Carter. Mr. Carter is a party to an employment agreement with the Corporation and JSSB. The agreement renews annually for one-year terms ending each December 31 absent notice of nonrenewal by either party. Under the terms of the agreement, Mr. Carter will receive an annual base salary of at least $115,000, subject to discretionary increases by the Corporation and JSSB. Mr. Carter is also entitled to participate in any pension, retirement, profit sharing, stock option, incentive bonus, employee stock ownership, or other plans, benefits, and privileges available to employees and executive officers of the Corporation and JSSB.
The agreement may be terminated for cause (as defined in the agreement), in which case the parties’ obligations under the agreement will cease. If the agreement is terminated without cause and there has not been a change-in-control (as defined in the agreement), then the Corporation and JSSB will continue to pay Mr.Carter’s then current annual base salary for the greater of six months or the number of months remaining in the term of his employment agreement and provide Mr. Carter, at no cost to him, with continuation of health and medical benefits for the period during which he is receiving continued payments of base salary. If, following a change-in-control, the agreement is terminated by the Corporation or JSSB without cause or Mr. Carter voluntarily terminates his employment for good reason (as defined in the agreement), the Corporation and JSSB will pay Mr. Carter, in cash, within 30 days of termination, an aggregate amount equal to two times the sum of Mr. Carter’s then base salary and the average of his bonus amounts over the prior three years. If during the term of the agreement, Mr. Carter voluntarily terminates employment, retires, dies, or becomes disabled (as defined in the agreement), the obligations of the parties under the agreement will cease, unless Mr. Carter dies or becomes disabled after providing notice of termination for good reason following a change in control, in which case, Mr. Carter, or his estate, as the case may be, will be entitled to the amounts described above.
The agreement provides for the reduction of any “change in control” payments to Mr. Carter to the extent necessary to ensure that he will not receive “excess parachute payments” under Section 280G of the Internal Revenue Code, which would result in the imposition of an excise tax to him and a loss of deduction to the Corporation.
The agreement contains noncompetition covenants which generally prohibit Mr. Carter from engaging in banking activities within twenty-five miles of 300 Market Street, Williamsport, Pennsylvania. These covenants generally extend for a period of one year after Mr. Carter’s termination of employment unless his employment terminates as a result of a delivery of a notice of nonrenewal by the Corporation and JSSB, in which case these covenants end on the date the agreement terminates.
Michelle M. Karas. Ms. Karas is a party to an employment agreement with the Corporation and JSSB. The agreement renews annually for one-year terms ending each December 31 absent notice of nonrenewal by either party. Under the terms of the agreement, Ms. Karas will receive an annual base salary of at least $80,000, subject to discretionary increases by the Corporation and JSSB. Ms. Karas is also entitled to participate in any pension, retirement, profit sharing, stock option, incentive bonus, employee stock ownership, or other plans, benefits, and privileges available to employees and executive officers of the Corporation and JSSB.
The agreement may be terminated for cause (as defined in the agreement), in which case the parties’ obligations under the agreement will cease. If the agreement is terminated without cause and there has not been a change-in-control (as defined in the agreement), then the Corporation and JSSB will continue to pay Ms. Karas’s then current annual base salary for the greater of six months or the number of months remaining in the term of her employment agreement and provide Ms. Karas, at no cost to her, with continuation of health and medical benefits for the period during which he is receiving continued payments of base salary. If, following a change-in-control, the agreement is terminated by the Corporation or JSSB without cause or Ms. Karas voluntarily terminates her employment for good reason (as defined in the agreement), the Corporation and JSSB will pay Ms. Karas, in cash, within 30 days of termination, an aggregate amount equal to two times the sum of Ms. Karas’s then base salary and the average of her bonus amounts over the prior three years. If during the term of the agreement, Ms. Karas voluntarily terminates employment, retires, dies, or becomes disabled (as defined in the agreement), the obligations of the parties under the agreement will cease, unless Ms. Karas dies or becomes disabled after providing notice of termination for good reason following a change in control, in which case, Ms. Karas, or her estate, as the case may be, will be entitled to the amounts described above.
The agreement provides for the reduction of any “change in control” payments to Ms. Karas to the extent necessary to ensure that he will not receive “excess parachute payments” under Section 280G of the Internal Revenue Code, which would result in the imposition of an excise tax to her and a loss of deduction to the Corporation.
The agreement contains noncompete covenants which generally prohibit Ms. Karas from engaging in banking activities within twenty-five miles of 300 Market Street, Williamsport, Pennsylvania. These covenants generally extend for a period of one year after Ms. Karas’s termination of employment unless her employment terminates as a result of a delivery of a notice of nonrenewal by the Corporation and JSSB, in which case these covenants end on the date the agreement terminates.
COMPENSATION COMMITTEE REPORT
The Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on the Committee’s review and discussion with management, the Committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement and in, through incorporation by reference from this proxy statement, our Annual Report on Form 10-K for the year ended December 31, 2017.
|
| |
| Members of the Compensation Committee |
| Michael J. Casale, Jr. |
| William J. Edwards |
| D. Michael Hawbaker |
| R. Edward Nestlerode, Jr. |
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation for services in all capacities to the Corporation and the Banks for the year ended December 31, 2017 for those persons who served as the principal executive officer or principal financial officer at any time during the last completed fiscal year and the other executive officers for the last completed fiscal year (collectively, the “named executive officers”).
Summary Compensation Table |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal | | | | Salary | | Bonus | | Stock Awards | | Option Awards | | Non-Equity
Incentive Plan Compensation | | Change in Pension
Value and Non-qualified Deferred
Compensation Earnings | | All Other Compensation | | Total |
| Position | | Year | | ($) | | ($)(1) | | ($) | | ($) | | ($)(2) | | ($) | | ($)(3)(4) | | ($) |
| Richard A. Grafmyre | | 2017 | | $ | 538,934 |
| | $ | 250 |
| | $ | — |
| | $ | 7,700 |
| | $ | 257,000 |
| | $ | — |
| | $ | 24,482 |
| | $ | 828,366 |
|
| Chief Executive Officer (5) | | 2016 | | 475,783 |
| | 400 |
| | — |
| | — |
| | 250,000 |
| | — |
| | 25,285 |
| | 751,468 |
|
| | | 2015 | | 447,525 |
| | 600 |
| | — |
| | — |
| | 283,800 |
| | — |
| | 35,016 |
| | 766,941 |
|
| | | | | | | | | | | | | | | | | | | |
| Brian L. Knepp | 2,016 |
| 2017 | | 170,185 |
| | 250 |
| | — |
| | 5,390 |
| | 58,000 |
| | — |
| | 14,764 |
| | 248,589 |
|
| President & Chief Financial | | 2016 | | 164,898 |
| | 400 |
| | — |
| | — |
| | 50,667 |
| | — |
| | 10,406 |
| | 226,371 |
|
| Officer (6) | | 2015 | | 159,407 |
| | 600 |
| | — |
| | — |
| | 65,000 |
| | — |
| | 17,442 |
| | 242,449 |
|
| | | | | | | | | | | | | | | | | | | |
| Aron M. Carter | | 2017 | | 114,640 |
| | 250 |
| | — |
| | 2,310 |
| | 16,000 |
| | — |
| | 8,367 |
| | 141,567 |
|
| Senior Vice President, | | 2016 | | 108,163 |
| | 400 |
| | — |
| | — |
| | 24,391 |
| | — |
| | 6,059 |
| | 139,013 |
|
| Enterprise Risk Management (7) | | 2015 | | 104,306 |
| | 600 |
| | — |
| | — |
| | 26,654 |
| | — |
| | 13,124 |
| | 144,684 |
|
| | | | | | | | | | | | | | | | | | | |
| Michelle M. Karas | | 2017 | | 120,409 |
| | 250 |
| | — |
| | 2,310 |
| | 16,000 |
| | — |
| | 9,484 |
| | 148,453 |
|
| Senior Vice President, Secretary & | | 2016 | | 96,874 |
| | 400 |
| | — |
| | — |
| | 21,925 |
| | — |
| | 5,952 |
| | 125,151 |
|
| Chief Operating Officer (8) | | | |
|
| | | | | | | |
|
| | | |
|
| |
|
|
| |
(1) | Amounts include a holiday bonus paid to all employees of JSSB: $250 for 2017; $400 for 2016; and $600 for 2015. |
| |
(2) | Amounts represent amounts paid under the Corporation’s Performance-Based Bonus Plan. |
| |
(3) | The cost of certain perquisites and other personal benefits for Messrs. Grafmyre, Knepp, Carter, and Ms. Karas are not included because such total does not exceed $10,000. |
| |
(4) | Other compensation includes employer contributions to the 401(k) Plan for the benefit of Messrs. Grafmyre, Knepp, Carter, and Ms. Karas. |
| |
(5) | Mr. Grafmyre joined the Corporation in October 2010 and serves as the Chief Executive Officer of the Corporation, and is also a member of the board of directors of the Corporation. |
| |
(6) | Mr. Knepp serves as President and Chief Financial Officer of the Corporation, and is also a member of the board of directors of the Corporation. |
| |
(7) | Mr. Carter serves as a Senior Vice President - Enterprise Risk Management of the Corporation. |
| |
(8) | Ms. Karas serves as a Senior Vice President, Secretary, & Chief Operating Officer of the Corporation. |
GRANTS OF PLAN-BASED AWARDS
The following table sets forth information concerning awards granted to the named executive officers for the year ended December 31, 2017 under the 2014 Equity Incentive Plan.
|
| | | | | | | | | | | | |
| Name | Grant Date | Board/Committee Action Date | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/SH) | Grant Date Fair Value of Stock and Option Awards ($) |
| Richard A. Grafmyre | 3/23/2017 | 1/10/2017 | — |
| 10,000 |
| $ | 44.21 |
| $ | 7,700 |
|
| Brian L. Knepp | 3/23/2017 | 1/10/2017 | — |
| 7,000 |
| 44.21 |
| 5,390 |
|
| Aron M. Carter | 3/23/2017 | 1/10/2017 | — |
| 3,000 |
| 44.21 |
| 2,310 |
|
| Michelle M. Karas | 3/23/2017 | 1/10/2017 | — |
| 3,000 |
| 44.21 |
| 2,310 |
|
The following table shows information regarding non-equity incentive awards under the Corporation’s Performance-Based Bonus Plan for 2017 for Messrs. Grafmyre, Knepp, Carter, and Ms. Karas.
(For fiscal year ended December 31, 2017)
|
| | | | | | | | | | | | |
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
| Name | | Threshold ($) | | Target ($) | | Maximum ($) |
| Richard A. Grafmyre | | $ | — |
| | $ | 217,000 |
| | $ | 217,000 |
|
| Brian L. Knepp | | — |
| | 58,000 |
| | 58,000 |
|
| Aron M. Carter | | — |
| | 16,000 |
| | 16,000 |
|
| Michelle M. Karas | | — |
| | 16,000 |
| | 16,000 |
|
Awards were paid for 2017 under the Performance-Based Bonus Plan because actual performance measured against weighted performance factors resulted in performance of 174% of targeted performance goals. Cash payments made under the Plan for 2017 are included in the Summary Compensation Table under the column labeled “Non-Equity Incentive Plan Compensation.” For further information on the Performance-Based Bonus Plan, see the “Compensation Discussion & Analysis” section of this proxy statement.
OUTSTANDING EQUITY AWARDS
The following table sets forth information concerning outstanding awards as of December 31, 2017 under the 2014 Equity Incentive Plan.
|
| | | | | | | |
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Option Exercise Price ($) | Option Expiration Date | |
| Richard A. Grafmyre | 10,000 |
| $ | 44.21 |
| 3/23/2027 | |
| Brian L. Knepp | 7,000 |
| 44.21 |
| 3/23/2027 | |
| Aron M. Carter | 3,000 |
| 44.21 |
| 3/23/2027 | |
| Michelle M. Karas | 3,000 |
| 44.21 |
| 3/23/2027 | |
OPTION EXERCISES AND STOCK VESTED
There were no options exercised by or vested for our named executive officers during the 2017 fiscal year.
NONQUALIFIED DEFERRED COMPENSATION
None of our named executive officers participate in a non-qualified deferred compensation plan.
RETIREMENT PLAN
JSSB maintains a noncontributory defined benefit pension plan for all employees hired prior to January 1, 2004, who meet certain age and length of service requirements. Benefits are based primarily on years of service and the average annual compensation earned by an employee, which is the employee’s annual compensation averaged over the five highest paid consecutive calendar years within the final ten years of employment. Annual compensation is based upon the employee’s W-2 wages, which includes base salary, bonus, personal vehicle mileage for certain executive officers, and life insurance coverage that exceeds $50,000. JSSB's funding policy is consistent with the funding requirements of federal law and regulations. Plan assets are primarily comprised of common stocks and U.S. Government and corporate debt securities. The plan was amended, effective January 1, 2004, to cease eligibility for employees with a hire date of January 1, 2004 or later and the plan ceased accruing additional benefits as of December 31, 2014. Because Messrs. Grafmyre, Knepp, Carter, and Ms. Karas joined JSSB in 2010, 2005, 2013, and 2012, respectively, they are not eligible to participate in the pension plan. Employees with a hire date of January 1, 2004 or later are eligible to receive, after one year of service, an annual contribution by JSSB equal to a discretionary percentage of an employee’s base compensation into an account established for the employee under the JSSB’s 401(k) plan. The accrued normal retirement benefit under the plan is determined by the following formula: 1.4% of the average annual compensation up to social security covered compensation multiplied by the credited service, plus 2% of the average annual compensation that is in excess of the Social Security covered compensation multiplied by the number of years of credited service.
CHIEF EXECUTIVE OFFICER − PAY RATIO DISCLOSURE
The following pay ratio information is provided in accordance with the requirements of Item 402(u) of SEC regulation S-K:
For fiscal 2017, the Corporation’s last completed fiscal year:
the median of the annual total compensation of all employees of the Corporation (other than the Chief Executive Officer) was $38,668; and
the annual total compensation of the Corporation’s Chief Executive Officer, Richard A. Grafmyre, was $828,366.
Based on this information, the ratio for 2017 of the annual total compensation of the Chief Executive Officer to the median of the annual total compensation of all employees is 21 to 1.
The following steps to identify the median of the annual total compensation of all employees and to determine the annual total compensation of the median employee and the Chief Executive Officer:
As of December 31, 2017, the employee population consisted of approximately 314 individuals, including any full time, part time, temporary, or seasonal employees employed on that date. This date was selected because it aligned with calendar year end and allowed identification of employees in a reasonably efficient manner.
To determine the median of the annual total compensation of all employees (other than the Chief Executive Officer), wages from our payroll records as reported to the Internal Revenue Service on Form W 2 for fiscal 2017 were used. In making this determination, the compensation of approximately 314 full time and part time permanent employees who were employed on December 31, 2017 was annualized. No full time equivalent adjustments were made for part time employees, of which there were approximately thirty-two (32).
The median employee was identified using this compensation measure and methodology, which was consistently applied to all employees included in the calculation.
After identifying the median employee, all elements of such employee’s compensation for 2017 were added, resulting in annual total compensation of $38,668.
The amount reported in the Total column of our 2017 Summary Compensation Table was used for the total annual compensation of the Chief Executive Officer.
POTENTIAL POST-EMPLOYMENT PAYMENTS
Each of the named executive officers would be entitled to certain contractual benefits if their employment terminates under certain circumstances preceding or following a change in control. The agreements are described under the caption “Employment and Change-in-Control Agreements” included in the Compensation Discussion and Analysis. We calculated the potential post-employment payments due to each of these named executive officers assuming each named executive officer terminated
employment or a change in control occurred on December 31, 2017. Actual amounts payable can only be determined at the time of such executive’s termination. The following table summarizes the potential payments to Messrs. Grafmyre, Knepp, Carter, and Ms. Karas.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Before Change in Control | | After Change in Control |
| | | | | Termination for Death or Disability | | Involuntary Termination for Cause | | Involuntary Termination without Cause | | Voluntary Termination for Good Reason | | Involuntary Termination without Cause | | Voluntary Termination for Good Reason |
| Richard A. Grafmyre | | Severance (1) | | $ | — |
| | $ | — |
| | $ | 888,800 |
| | $ | — |
| | $ | 1,488,933 |
| | $ | 1,488,933 |
|
| | | Welfare continuation (2) | | — |
| | — |
| | 25,215 |
| | — |
| | 27,678 |
| | 27,678 |
|
| | | Value of Accelerated Stock Options | | 23,700 |
| | — |
| | — |
| | — |
| | 23,700 |
| | 23,700 |
|
| | | Potential reduction in payout due to operation of Code Section 280G | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | Total | | $ | 23,700 |
| | $ | — |
| | $ | 914,015 |
| | $ | — |
| | $ | 1,540,311 |
| | $ | 1,540,311 |
|
| Brian L. Knepp | | Severance (1) | | $ | — |
| | $ | — |
| | $ | 182,219 |
| | $ | — |
| | $ | 493,169 |
| | $ | 493,169 |
|
| | | Welfare continuation (2) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | Value of Accelerated Stock Options | | 16,585 |
| | — |
| | — |
| | — |
| | 16,585 |
| | 16,585 |
|
| | | Potential reduction in payout due to operation of Code Section 280G | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | Total | | $ | 16,585 |
| | $ | — |
| | $ | 182,219 |
| | $ | — |
| | $ | 509,754 |
| | $ | 509,754 |
|
| Aron M. Carter | | Severance (1) | | $ | — |
| | $ | — |
| | $ | 113,887 |
| | $ | — |
| | $ | 285,790 |
| | $ | 285,790 |
|
| | | Welfare continuation (2) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | Value of Accelerated Stock Options | | 7,110 |
| | — |
| | — |
| | — |
| | 7,110 |
| | 7,110 |
|
| | | Potential reduction in payout due to operation of Code Section 280G | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | Total | | $ | — |
| | $ | — |
| | $ | 113,887 |
| | $ | — |
| | $ | 292,900 |
| | $ | 292,900 |
|
| Michelle M. Karas | | Severance (1) | | $ | — |
| | $ | — |
| | $ | 123,317 |
| | $ | — |
| | $ | 296,604 |
| | $ | 296,604 |
|
| | | Welfare continuation (2) | | — |
| | — |
| | 7,013 |
| | — |
| | — |
| | — |
|
| | | Value of Accelerated Stock Options | | 7,110 |
| | — |
| | — |
| | — |
| | 7,110 |
| | 7,110 |
|
| | | Potential reduction in payout due to operation of Code Section 280G | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | Total | | $ | — |
| | $ | — |
| | $ | 130,330 |
| | $ | — |
| | $ | 303,714 |
| | $ | 303,714 |
|
|
|
(1) For severance and welfare continuation payment calculation, and time and form of such payments, see “Employment and Change in Control Agreements.” |
(2) Assumes no increase in the cost of welfare benefits. |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the board of directors who served on the Compensation Committee during the 2017 fiscal year was an officer or employee of the Corporation or any if its subsidiaries. None of our executive officers serves as a member of the board of directors or Compensation Committee of any other entity that has one or more of its executive officers serving on our board of directors or Compensation Committee.
AUDIT COMMITTEE REPORT
The Audit Committee of the board of directors is composed of all independent directors as defined under Nasdaq listing standards and SEC rules. The Audit Committee operates under a written charter adopted by the board of directors, a copy of which is available on our website, www.jssb.com, under Investor Relations/Financial Information/Governance Documents and is available upon request to the President.
The Audit Committee has reviewed our audited financial statements for the fiscal year ended December 31, 2017, and discussed them with management and our independent registered public accounting firm, S.R. Snodgrass, P.C. The Audit Committee also
has discussed with our independent auditor the matters required to be discussed by Auditing Standard No. 1301, "Communications with Audit Committees" issued by the Public Company Accounting Oversight Board.
The Audit Committee has received from our independent auditor the written disclosures and letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with management and the independent accountant the accountant’s independence.
Based on the review and discussions described above, the Audit Committee recommended to the board of directors that our audited financial statements for the fiscal year ended December 31, 2017 be included in our Annual Report on Form 10-K for that fiscal year for filing with the SEC.
In connection with standards for independence of our external auditors issued by the Public Company Accounting Oversight Board, during the 2018 fiscal year, the Audit Committee will consider in advance of the provision of any non‑audit services by our independent accountant whether the provision of such services is compatible with maintaining the independence of our external auditors.
This report is not intended to be incorporated by reference into any filing made by Penns Woods Bancorp, Inc. with the SEC under the Securities Act of 1933 or the Securities Exchange Act of 1934.
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| Members of the Audit Committee |
| Daniel K. Brewer |
| Michael J. Casale, Jr. |
| William J. Edwards |
| James M. Furey, II |
| D. Michael Hawbaker |
| Leroy H. Keiler, III |
| Cameron W. Kephart |
| Joseph E. Kluger |
| John G. Nackley |
| R. Edward Nestlerode, Jr. |
| William H. Rockey |
| Jill Fortinsky Schwartz |
| Ronald A. Walko |
PROPOSAL NO. 2
NON-BINDING (ADVISORY) VOTE ON EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, the Corporation is providing shareholders with a non-binding (advisory) vote on the compensation of its named executive officers.
Shareholders are being asked to approve the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. These disclosures appear in this proxy statement under the “Compensation Discussion and Analysis,” in the compensation tables and in the narrative discussion following the compensation tables. Accordingly, shareholders are being asked to approve the following resolution:
“RESOLVED, that the shareholders approve, on a non-binding (advisory) basis, the compensation of the Corporation’s named executive officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure in this proxy statement.”
The vote is advisory and therefore not binding on the Corporation, any committee of the board of directors, or the board of directors. The board of directors and the Compensation Committee of the board of directors value the opinions of shareholders and to the extent that there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, sh
areholder concerns will be considered and the Compensation Committee will evaluate whether any action is necessary to address such concerns.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL, ON A NON-BINDING (ADVISORY) BASIS, OF THE COMPENSATION OF THE CORPORATION’S NAMED EXECUTIVE OFFICERS PURSUANT TO THE ABOVE RESOLUTION. The affirmative vote of a majority of all votes cast at the Annual Meeting is required to approve this advisory proposal. All proxies will be voted “FOR” this advisory proposal unless a shareholder specifies to the contrary on such shareholder’s proxy card.
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The board of directors of the Corporation has appointed the firm of S.R. Snodgrass, P.C. (the “Auditors”) of Cranberry Township, Pennsylvania, as the Corporation’s independent registered public accounting firm for its 2018 fiscal year. The terms of the appointment were reviewed and recommended by the Audit Committee.
Although ratification by the Corporation’s shareholders is not required by our bylaws or otherwise, the board of directors is submitting the selection of the Auditors to shareholders for ratification because the Corporation values its shareholders’ views on the Corporation’s independent registered public accounting firm. If the Corporation’s shareholders fail to ratify the selection, it will be considered as notice to the board of directors and the Audit Committee to consider the selection of a different independent registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Corporation.
A representative from the Auditors is expected to be present at the Annual Meeting. The representative will be given an opportunity to make a statement if he or she desires to do so, and will be available to answer appropriate questions from shareholders.
The Auditors served as the Corporation’s independent registered public accounting firm for the 2017 and 2016 fiscal years, provided assistance to the Corporation in connection with regulatory matters and charged the Corporation for such services at its customary hourly billing rates. The fees paid by the Corporation are summarized below. The non-audit services were approved by the Corporation’s Audit Committee after due consideration of the effect of the performance thereof on the independence of the Auditors and after the conclusions by the Corporation’s board of directors that there was no effect on the independence of the Auditors. The Auditors have advised the Corporation that none of its members have any financial interest in the Corporation.
Audit Fees
The fees for professional services incurred by the Corporation for services rendered by the Corporation’s independent auditors in connection with the audit of the Corporation’s financial statements for the years ended December 31, 2017 and December 31, 2016, and the review of the Corporation’s Forms 10-Q for such fiscal years were $175,604 and $166,430, respectively. All such services were performed by permanent, full-time employees of S.R. Snodgrass, P.C.
Audit-Related Fees
Audit-Related fees for the performance of the audits of the Corporation's employee benefit plans’ financial statements for the years ended December 31, 2017 and December 31, 2016, were $19,811 and $19,910, respectively.
Tax Fees
Tax fees for the years ended December 31, 2017 and December 31, 2016 resulting from services provided by the Corporation’s independent registered public accounting firm totaled $21,200 and $20,800 respectively.
All Other Fees
There were other fees billed to the Corporation by S.R. Snodgrass, P.C. for other services for the years ended December 31, 2017 and December 31, 2016 that totaled $14,758 and $22,418, respectively.
Pre-approval of Audit and Permissible Non-Audit Services
The Audit Committee of the board of directors pre-approves all audit and permissible non-audit services provided by the Corporation’s independent registered public accounting firm. All of the services provided by S.R. Snodgrass, P.C. set forth above were pre-approved by the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF S.R. SNODGRASS, P.C., AS THE CORPORATION’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2018 FISCAL YEAR. The affirmative vote of a majority of all votes cast at the Annual Meeting is required to ratify the appointment. All proxies will be voted “FOR” ratification of the appointment unless a shareholder specifies to the contrary on such shareholder’s proxy card.
SHAREHOLDER PROPOSALS FOR 20192023 ANNUAL MEETING
OF SHAREHOLDERSThe Corporation currently expects to hold its 2023 annual meeting of shareholders as a virtual meeting on April 25, 2023.
Applicable SEC regulations permit shareholders to submit proposals for inclusion in the Corporation’s proxy materials and consideration at annual meetings of shareholders. Any such proposals for the Corporation'sCorporation’s Annual Meeting of Shareholders to be held in 20192023 must be submitted in writing to the President of Penns Woods Bancorp, Inc., at its principal executive office, 300 Market Street, Williamsport, PA 17701, on or before November 23, 2018,26, 2022 and must follow the procedures required by SEC Rule 14a-8 in order to be included in proxy materials relating to that meeting.
A shareholder proposal submitted after November 23, 2018,26, 2022, or which does not otherwise meet the requirements of the SEC, will not be included in the Corporation'sCorporation’s proxy statement for the annual meeting to be held in 2019,2023, but may be presented for consideration at the annual meeting, if submitted to the Secretary of the Corporation not less than ninety (90) days or more than one hundred fifty (150) days prior to the annual meeting, which proposal must contain certain information required by the bylaws. IfThe date of the 2023 annual meeting is presently expected to occur on April 25, 2023. Accordingly, a shareholder intending to present such a proposal has not provided Penns Woods writtenfor consideration at the 2023 annual meeting of shareholders must provide notice of the matter on or beforeno sooner than November 27, 2022 and no later than January 24, 2019,25, 2023 in the manner set forth in the bylaws; otherwise, the proposal may be disregarded for purposes of the 2023 annual meeting of shareholders and, in any event, the proxy holders of the board of directors willwould generally have discretionary authority to vote on such proposal at the annual meeting. However, if
Nominations for director to be made at an annual meeting of shareholders by shareholders entitled to vote for the election of directors must be submitted to the Secretary of the Corporation not less than ninety (90) and not more than one hundred fifty (150) days prior to the date of the 2019an annual meeting, is changed more than 30 days from April 24, 2019,and the anniversarynotice of nomination must contain certain information specified in the bylaws. The date of the 20182023 annual meeting of shareholders is presently expected to occur on April 23, 2023. Accordingly, a shareholder intending to nominate an individual for director at the deadline2023 annual meeting must provide notice and the information specified by the bylaws no sooner than November 7, 2022 and no later than January 25, 2023; otherwise, the nomination may be disregarded for purposes of the 2023 annual meeting of shareholders.
SHAREHOLDERS SHARING THE SAME ADDRESS
The SEC has adopted rules that allow a company to deliver a single proxy statement to an address shared by two or more of its shareholders. This method of delivery, notice toknown as “householding,” permits the Corporation which would restrictto realize significant cost savings, reduces the proxy holdersamount of duplicate information shareholders receive, and reduces the boardenvironmental impact of directors from exercising discretion would be a reasonable time before the Corporation distributes its proxy materials, assuming the notice complies with the requirements of the bylaws.
CERTAIN TRANSACTIONS
Nasdaq rules require that we conduct an appropriate review of related party transactions for potential conflict of interest situations on an ongoing basis,printing and all such transactions must be approved bymailing documents to our Audit Committee or another independent body of the Board of Directors.
Our Code of Ethics and Conflicts of Interest Policy requires all directors, officers, and employees who may have a potential or apparent conflict of interest to notify our Human Resource Director. A potential conflict exists whenever an individual has an outside interest - direct or indirect - which conflicts with the individual’s duty to the Corporation or any of its affiliates or adversely affects the individual’s judgment in the discharge of his or her responsibilities. Prior to consideration, full disclosure of all material facts concerning the relationship and financial interest of the relevant individuals in the transaction is required The Code of Ethics and Conflict of Interest Policy is available for review by contacting the Corporation's Chief Executive Officer.
To identify related party transactions, each year, we submit and require our directors and officers to complete Director and Officer Questionnaires identifying any transaction with us or any of our subsidiaries in which the officer or director or their family members have an interest.
There have been no material transactions, or any material transactions proposed, between the Corporation and the Banks and any director or executive officer of the Corporation and the Banks, or any associate of the foregoing persons. The Corporation and the Banks have had, and intend to continue to have, banking and financial transactions in the ordinary course of business with directors and officers of the Corporation and their associates on comparable terms and with similar interest rates as those prevailing from time to time for persons not related to or associated with the Corporation.
Total loans outstanding from the Banks at December 31, 2017 to the Corporation's officers and directors as a group and members of their immediate families and companies in which they had an ownership interest of 10% or more was $19,011,000, or approximately 13.76%, of the total equity capital of the Corporation. Loans to such persons were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the Corporation, and did not involve more than the normal risk of collectability or present other unfavorable features.
ANNUAL REPORT
Ashareholders. Under this process, certain shareholders will receive only one copy of the Corporation’s Annual Report and Form 10-K for its fiscal year ended December 31, 2017 is enclosed with this proxy statement.
You may access the following proxy materials at http://www.edocumentview.com/pwod:
Noticeand any additional proxy materials that are delivered until such time as one or more of the 2018 Annual Meeting of Shareholders;
2018 Proxy Statement;
Annual Report to Shareholders for the year ended December 31, 2017; and
Proxy Card.
OTHER MATTERS
The board of directors ofthese shareholders notifies the Corporation
that they want to receive separate copies. Any shareholders who object to or wish to begin householding may notify Michelle M. Karas, Corporate Secretary, Penns Woods Bancorp, Inc., 300 Market Street, Williamsport, PA 17701.OTHER MATTERS
This Proxy Statement is posted on the Corporation’s website at https://www.pwod.com/ and is also available from the SEC at its website at www.sec.gov.
The Board of Directors does not aware that any other matters are to be presented for action, other than the matters described in the accompanying Notice of Annual Meeting of Shareholders. Because the Corporation has not received noticeknow of any other matters to be presented for action at the meeting, if any otherSpecial Meeting. Under the Corporation’s bylaws and the BCL, business to be transacted at special meetings of shareholders is confined to the objects stated in the notice and matters properly come before the Meeting, or any adjournments thereof, the proxy holders are authorizedgermane thereto unless all shareholders entitled to vote thereonare present and have otherwise consented thereto. If any additional matters are properly presented at the Special Meeting, the persons named in the enclosed proxy card will have discretion to vote the shares of our Common Stock they represent in accordance with their discretion.
All directorsown judgment on such matters.It is important that your shares of our Common Stock be represented at the Special Meeting, regardless of the Corporationnumber of shares that you hold. You are, expectedtherefore, requested to attendvote by telephone or by using the Corporation’s Annual Meeting of Shareholders. In 2017, eleven directors attendedInternet as instructed on the Annual Meeting of Shareholders.
Shareholders may communicate directly withenclosed proxy card or execute and return, at your earliest convenience, the board of directors ofenclosed proxy card in the Corporation by contacting the Corporation’s Chief Executive Officer, Richard A. Grafmyre, 300 Market Street, Williamsport, PA 17701 (570-322-1111). All bona fide communications received by the Corporation’s Chief Executive Officer will be relayed to the applicable member of the board of directors or, if no specific director is designated to receive the communication, the appropriate board member.
ADDITIONAL INFORMATION
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE CORPORATION’S REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 2017, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SEC PURSUANT TO RULE 13a-1 UNDER THE EXCHANGE ACT, MAY BE OBTAINED, WITHOUT CHARGE, FROM RICHARD A. GRAFMYRE, CHIEF EXECUTIVE OFFICER, PENNS WOODS BANCORP, INC.
By Order of the Board of Directors,
envelope that has also been provided.| By order of the Board of Directors | |
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| Richard A. Grafmyre | |
| Chief Executive Officer | |
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Dated: March 23, 2018September 2, 2022 | |
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| | VOTE BY INTERNET - www.investorvote.com/pwod.com
Use the Internet to transmit your voting instructions and for electronic delivery of information until 11:59 PM Eastern Time on April 23, 2018. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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| VOTE BY PHONE - 1-800-652-8683
Use any touch-tone telephone to transmit your voting instructions until 11:59 PM Eastern Time on April 23, 2018. Have your proxy card in hand when you call and then follow the instructions.
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| VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | |
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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| For
All
| | Withhold
All
| | For All
Except
| | To withhold authority to vote for any individual nominee(s),1UPX Using a black ink pen, mark “For All Except” andyour votes with an X as shown in this example. Please do not write outside the number(s) of the nominee(s) on the line below. | | | |
| designated areas. 03OH1B + + Proposals — The Board of Directors recommends youa vote FOR Proposal 1 and FOR Proposal 2. A 1. Approval to amend Article 13 of the following: | o | | o | | o | | | | | | | | | | | | |
| 1. | ElectionCorporation’s articles of five directors, each setincorporation (the “Articles Amendment”) to serve foreliminate the 66 2/3% supermajority shareholder vote required by Article 13 to approve a termmerger, consolidation, liquidation, or dissolution of three years to expire at the 2021 Annual MeetingCorporation, or any action that would result in the sale or disposition of Shareholders: | | | | | | | | | | | | | | | | | |
| | Nominees: | | | | | | | | | | | | | | | | | | |
| | William J. Edwards | | | | | | | | | | | | | | | | | | |
| | Leroy H. Keiler, III | | | | | | | | | | | | | | | | | | |
| | Cameron W. Kephart | | | | | | | | | | | | | | | | | | |
| | Jill F. Schwartz | | | | | | | | | | | | | | | | | | |
| | Ronald A. Walko | | | | | | | | | | | | | | | | | | |
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| Yourall or substantially all of the Corporation, provided that the subject transaction is approved in advance by the affirmative vote of 75% or more of the members of the Corporation’s Board of Directors recommendsDirectors. For Against Abstain Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. Date (mm/dd/yyyy) — Please print date below. Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below B q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Special Meeting Proxy Card 2. Approval of proposal to authorize one or more adjournments of the Special Meeting, if necessary or appropriate, in the event that you vote FOR the following proposal: | | | | For | | Against | | Abstain | | |
| 2. | Approve a non-binding (advisory) vote on executive compensation | | | | o | | o | | o | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Your Board of Directors recommends that you vote FOR the following proposal: | | | | For | | Against | | Abstain | | |
| 3. | Ratify the appointment of S.R. Snodgrass, P.C. as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2018. | | | | o | | o | | o | | |
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| The undersigned shareholder(s) authorize(s) the individuals designated to vote this proxy to vote, in their discretion, to the extent permitted by applicable law, upon such other matters (none known by the Corporationthere are not sufficient votes at the time of solicitation of this proxy) as may properly come before the AnnualSpecial Meeting to approve the Articles Amendment. 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE______________ SACKPACK_____________ 1234 5678 9012 345 MMMMMMMMM MMMMMMMMMMMMMMM 550348 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND C 1234567890 J N T C123456789 MMMMMMMMMMMM MMMMMMM 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext If no electronic voting, delete QR code and control # Δ≈ Online Go to www.investorvote.com/pwod or any adjournment or postponement. | | | | |
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| | | | | | | | | | | | Yes | | No | | | | | | | | | | |
| Please indicate if you plan to attend this meeting. | | o | | o | | | | | | | | | | |
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| Please sign exactly has your name appears hereon. The signer hereby revokes all prior proxies heretofore given byscan the signer to vote at said meeting or any adjournments thereof. |
| Note: Please fill in, sign, date and return this proxy cardQR code — login details are located in the enclosed envelope. When signing as Attorney, Executor, Administrator, Trusteeshaded bar below. Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/PWOD Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada You may vote online or Guardian, please give full title as such. If shareholder is a corporation, please sign the full corporate name by an authorized officer. If shareholder is a partnership or other entity, an authorized person should sign in the entity’s name. Joint Owners must each sign individually. |
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| Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | Signature (Joint Owners) | | | Date | | | | phone instead of mailing this card. Your vote matters – here’s how to vote! |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Shareholders To Be Held on April 24, 2018:
The Notice of Annual Meeting of Shareholders, Proxy Statement and 2017 Annual Report are available at
http://www.edocumentview.com/pwod.
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PENNS WOODS BANCORP, INC. |
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 24, 2018 |
Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/PWOD Notice of 2022 Special Meeting of Shareholders Proxy Solicited by Board of Directors for Special Meeting – November 15, 2022 Brian L. Knepp and Kimberly R. Yale,Michelle M. Karas, or either of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annualvirtual Special Meeting of Shareholders of Penns Woods Bancorp, Inc. to be held on Tuesday, April 24, 2018November 15, 2022 or at any postponement or adjournment thereof.
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Shares represented by this proxy will be voted as directed on the reverse side hereof. If no such directions are indicated, shares represented hereby will be voted FOR the nominees identified in Proposal 1 (election of directors), FOR Proposal 2 (advisory vote on the approval of executive compensation), and FOR Proposal 3 (ratification of appointment of independent public accounting firm). |
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2. In their discretion, the Proxies are authorizeda re a uthorized to vote upon such other business asb usiness a s may properly come beforec ome b efore the meeting. |
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THIS PROXY IS SOLICITED ON BEHALF OFmeeting, and any a djournment or postponement thereof. (Items to be voted appear on reverse side) Proxy — Penns Woods Bancorp, Inc. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOARD OF DIRECTORS OFBOTTOM PORTION IN THE CORPORATION. |
(This proxy card continues andENCLOSED ENVELOPE. q + + Change of Address — Please print new address below. Comments — Please print your comments below. Non-Voting Items C The 2022 Special Meeting of Shareholders of Penns Woods Bancorp, Inc. will be held on Tuesday, November 15, 2022 at 9:00 A.M. local time, virtually via the internet at www.meetnow.global/MR69M5J. To access the virtual meeting, you must be signed and datedhave the information that is printed in the shaded bar located on the reverse side.) |
| | side of this form. |
