UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

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Securities Exchange Act of 1934 (Amendment No. )

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5790 Widewaters Parkway

DeWitt, New York 13214-1883

  March 28, 2022

Dear Shareholders:

The Annual Meeting of the Shareholders of Community Bank System, Inc. will be held at Wolfert’s Roost Country Club, 120 Van Rensselaer Blvd., Albany, New York 12204 on Wednesday, May 18, 2022 at 12:00 p.m. Eastern Daylight Time.

Whether or not you plan to attend the Meeting, the Board of Directors strongly encourages you to review the enclosed information and vote your shares. Your vote is important.

2021 PERFORMANCE HIGHLIGHTS:

• The Company recorded fully-diluted GAAP and operating earnings per share of $3.48 and $3.49, respectively, both of which were records for the Company.

• In fiscal 2021, the Company delivered record revenues of $620.6 million, representing a 4.0% increase over 2020 total revenues of $596.8 million.

• In spite of the challenges posed by the COVID-19 pandemic, the Company recorded just 0.04% of net charge-offs / average loan during 2021.

• In July, the Board increased the cash dividend to Company Shareholders by 2.4%, marking the 29^th consecutive year of dividend increases. The Company’s unbroken streak puts it in very select company, and signifies the Company’s commitment to robust shareholder returns.

• In October, we entered into a merger agreement to acquire Elmira Savings Bank which will enhance our presence in key markets in the New York Southern Tier and Finger Lakes regions.

CORPORATE AND GOVERNANCE DEVELOPMENTS:

• Continuing the efforts of the Culture and Diversity Council, the Company will appoint a Culture and Diversity Officer in 2022 to advance culture and diversity initiatives and lead key aspects of our ESG strategy.

• The Compensation Committee has redesignedthe 2022 executive long-term incentive program toincrease the percentage of annual at-risk performance-based equity awards to 75% of the total equity awards, further aligning our compensation structure with our Shareholders’ interests.

• In December, the Board appointed Jeffery J. Knauss as a new independent director. His appointment reflects the continuation of the Board’s thoughtful and deliberate process to refresh the Board to ensure that the Board has the appropriate expertise, experience, and diversity to provide effective oversight of the Company and its subsidiaries.

Together with our Board of Directors, we wish to thank our Shareholders for your continued interest and support. The Board remains committed to serving your interests and focused on long-term value creation for all Shareholders.

Sincerely,

Eric E. Stickels Chair of the Board	Mark E. Tryniski President and Chief Executive Officer

 

 
5790 Widewaters Parkway
DeWitt, New York 13214-1883

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of Community Bank System, Inc.:

Community Bank System, Inc., a Delaware corporation (the “Company”), will hold its annual meeting of Shareholders at Wolfert’s Roost Country Club, 120 Van Rensselaer Blvd., Albany, New York 12204, on Wednesday, May 18, 2022 at 12:00 p.m. Eastern Daylight Time for the following purposes:

1.
To elect the 13 current Directors for a one (1) year term and until their successors are elected and qualified;

2.
To hold an advisory vote on executive compensation;

3.
To approve the Community Bank System, Inc. 2022 Long-Term Incentive Plan;

4.
To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2022; and

5.
To transact any other business which may properly come before the Meeting or any adjournment thereof.

The Shareholders of record at the close of business on March 21, 2022 are entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.

Although we intend to hold the Annual Meeting in person, we will continue to monitor the status of the COVID-19 pandemic and, if necessary, we will consider possible contingent plans including the use of a virtual meeting using remote communications via a live audio webcast. If the Company takes this step, it will announce the decision to do so via a press release and post the meeting details on its website, as well as submit any appropriate filings with the SEC. In the event that the Company uses remote communications, in order to participate, Shareholders should be prepared to provide their control number from the Notice of Internet Availability of Proxy Materials or proxy card, as applicable.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on May 18, 2022.The Company uses the “notice and access” delivery method which allows the Company to furnish proxy materials (the Proxy Statement, Form 10-K, and Annual Report) electronically via the Internet.

• If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials in the mail unless you specifically requested them.

• The Notice of Internet Availability of Proxy Materials contains instructions on how you can access the proxy materials on the Internet, as well as instructions on obtaining a paper copy of the proxy materials.

Whether or not you plan to attend the Annual Meeting, please submit your proxy promptly so that your shares will be voted as you desire.

By Order of the Board of Directors

 

Danielle M. Cima

Secretary

March 28, 2022

IMPORTANT NOTICE

The Company urges you to please vote your shares now whether or not you plan to attend the Meeting. Voting by the Internet or telephone is fast and convenient. If you request to receive a paper copy of the proxy materials, you may also vote by completing, signing, dating and returning the accompanying proxy card in the return envelope furnished for that purpose. If you hold your shares through an account with a broker, bank or other holder of record, please follow the instructions you receive from them to vote your shares. Please vote your shares so your vote can be counted.

 

TABLE OF CONTENTS

PROXY STATEMENT FOR ANNUAL MEETING	1
PROXY STATEMENT SUMMARY	1
Annual Meeting Information	1
Voting Items and Board Recommendations	2
Voting Your Shares	2
Board Composition and Refreshment	3
Governance Highlights	5
Executive Compensation Governance Highlights	6
Culture, Community and Responsibility	7
GENERAL INFORMATION FOR VOTING SHARES	8
PROPOSAL ONE: ELECTION OF DIRECTORS	10
Director Nominee Qualification and Experience	10
Compensation of Directors	16
ENVIRONMENTAL, SOCIAL AND GOVERNANCE	18
Commitment to Our People	18
Commitment to Our Community	20
CORPORATE GOVERNANCE	22
Best Practices	22
Majority Voting Standard Policy	22
Director Independence	23
Related Persons Transactions	23
Board Leadership Structure	24
Exective Session	24
Annual Board and Committee Self Evaluation	24
Number of Board Meetings and Attendance at Board and Committee Meeting	24
Key Corporate Governance Documents	24
Current Committee Composition	25
Board Committees	25
Oversight of Risk	26
Stock Ownership Guidelines	28
Prohibition on Short Sales, Hedging and Derivative Transactions	28
Communication with Directors	28

Compensation Committee Interlocks and Insider Participation	28
Code of Ethics	28
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS	29
INFORMATION ABOUT OUR EXECUTIVE OFFICERS	31
COMPENSATION DISCUSSION AND ANALYSIS	32
COMPENSATION COMMITTEE REPORT	45
EXECUTIVE COMPENSATION DISCLOSURE TABLES	46
Pay Ratio	54
PROPOSAL TWO: ADVISORY VOTE ON EXECUTIVE COMPENSATION	55
PROPOSAL THREE: APPROVAL OF THE COMMUNITY BANK SYSTEM, INC. 2022 LONG-TERM INCENTIVE PLAN	56
AUDIT COMMITTEE REPORT	58
PROPOSAL FOUR: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	59
FEES PAID TO PRICEWATERHOUSECOOPERS LLP	60
OTHER MATTERS	61
Electronic Delivery of Future Proxy Materials	61
Elimination of Duplicate Mailings	61
Delinquent Section 16(a) Reports	61
Shareholder Proposals	61
Explanation of Non-GAAP Financial Measures	62
Other Business	62
EXHIBIT A - Summary Description of 2022 Plan	A-1
EXHIBIT B - COMMUNITY BANK SYSTEM, INC. 2022 LONG-TERM INCENTIVE PLAN	B-1

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements included in this Proxy Statement regarding future performance and results, expectations, plans, strategies, priorities, commitments, and other statements that are not historical facts are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are based upon current beliefs, expectations, and assumptions and are subject to significant risks, uncertainties, and changes in circumstances that could cause actual results to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. Readers of this Proxy Statement are cautioned not to place undue reliance on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

  5790 Widewaters Parkway
DeWitt, New York 13214-1883

PROXY STATEMENT

FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 18, 2022

This Proxy Statement is furnished as part of the solicitation of proxies by the Board of Directors (the “Board”) of Community Bank System, Inc. (the “Company”), the holding company for Community Bank, N.A. (the “Bank”), for use at the Annual Meeting of Shareholders of the Company (the “Meeting”) to be held at 12:00 p.m. Eastern Daylight Time on Wednesday, May 18, 2022 at Wolfert’s Roost Country Club, 120 Van Rensselaer Blvd., Albany, New York 12204. This Proxy Statement and the form of Proxy are first being sent to Shareholders on approximately March 28, 2022.

As part of the Company’s continuing monitoring regarding COVID-19, we will consider possible contingent plans including the use of a virtual meeting using remote communications via a live audio webcast. If the Company takes this step, it will announce the decision to do so via a press release and post the meeting details on its website, as well as submit any appropriate filings with the SEC. In the event that the Company uses remote communications, in order to participate, Shareholders should be prepared to provide the control number from the Notice of Internet Availability of Proxy Materials or proxy card, as applicable.

PROXY STATEMENT SUMMARY

This summary highlights information contained in the Proxy Statement. It does not contain all of the information Shareholders should consider in making a voting decision, and Shareholders should read the entire Proxy Statement carefully before voting.

ANNUAL MEETING INFORMATION
Meeting: Annual Meeting of Shareholders	Ticker Symbol: CBU
Date: May 18, 2022	Exchange: New York Stock Exchange
Time: 12:00 PM Eastern Daylight Time	Outstanding Shares of Common Stock: 53,911,509
Location: Wolfert’s Roost Country Club	State of Incorporation: Delaware
120 Van Rensselaer Blvd. Albany, New York 12204

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE SHAREHOLDER MEETING TO BE HELD ON WEDNESDAY, MAY 18, 2022

This Proxy Statement and the Annual Report for the year ended December 31, 2021 (referred to as the “Annual Report”) to Shareholders are available at https://ir.communitybanksystem.com/financials/sec-filings-annual-report/default.aspx.

The information found on, or otherwise accessible through, the Company’s website is not incorporated by reference into, nor does it form a part of, this Proxy Statement.

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VOTING ITEMS AND BOARD RECOMMENDATIONS

			Page Reference
Proposal 1	Election of Director Nominees	FOR each Director Nominee	10
Proposal 2	Advisory Vote on Executive Compensation	FOR	55
Proposal 3	Approve the Community Bank System, Inc. 2022 Long-Term Incentive Plan	FOR	56
Proposal 4	Ratification of Appointment of Independent Registered Public Accounting Firm	FOR	59

VOTING YOUR SHARES

If you are a Shareholder of record as of March 21, 2022, you will be able to vote in four ways: by telephone, by proxy card, in person at the Meeting, or by the Internet before the Meeting as follows:

• By Telephone: 1-800-690-6903

• Online: Visit www.proxyvote.com and enter the control number found in the Notice of Internet Availability.

• By Mail: Complete, sign, date, and return your proxy card in the envelope provided.

• In Person: A Shareholder may vote in person at the Meeting by requesting a ballot from the Inspector of Election.

See “General Information for Voting Shares” on page 8 for more information on voting at the Annual Meeting.

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BOARD COMPOSITION AND REFRESHMENT

The Directors strive to maintain a highly engaged Board with balanced tenure and substantive expertise that has the diversity of skills and backgrounds necessary to effectively oversee the Company’s management team and serve the long-term interests of the Company’s Shareholders.

In December 2021, the Board added Jeffery J. Knauss as an independent director. Mr. Knauss has extensive experience in digital technology and marketing, having served as the CEO and co-founder of Digital Hyve, a digital marketing and advertising firm that was named the 52^nd fastest growing private company in the United States by Inc. Magazine in 2018 and Digital Hyve remained on Inc.’s 5,000, a list of the fastest-growing privately held companies in the United States, for the following three years. Mr. Knauss is Asian American and his appointment, along with the addition of Kerrie D. MacPherson in 2019 and Susan E. Skerritt in 2020, reflects the Board’s focused efforts to refresh the composition of the Board and foster a diverse composition of members.

The following table provides the ages, tenures, independence, diversity, and committee membership of the Director Nominees for the Annual Meeting.

 

A balanced Board composition, supplemented by a thoughtful approach to Director refreshment, is a priority for the Company. The Governance Committee considers the experience, skills, independence and diversity of nominees in the full context of the current composition and needs of the Board. The Governance Committee endeavors to identify nominees that possess diverse business experiences, skill sets, and geographic backgrounds reflecting the Company’s markets. In addition, the Governance Committee believes a stronger Board is one that reflects diversity. The Governance Committee also believes it is desirable to maintain a mix of experienced, tenured directors who possess institutional knowledge along with newer Directors who have different expertise, backgrounds and fresh perspectives in forming a cohesive and dedicated Board.

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Board Refreshment

The charts below summarize the tenure, independence, age, and diversity of the 13 Director Nominees.

 

As compared to the composition of the Board at the Annual Shareholder Meeting held in May 2019, the gender, ethnic, and racial diversity of the Board has increased by 22% with the addition of Mr. Knauss, Ms. MacPherson and Ms. Skerritt:

 

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GOVERNANCE HIGHLIGHTS

The Board is committed to sound and effective corporate governance that conforms to the highest standards of business ethics and integrity, provides robust oversight of management and promotes the long-term interests of our Shareholders. The Board regularly reviews the Company’s governance practices, industry developments, and Shareholder feedback to ensure continued effectiveness. For more information regarding our corporate governance practices, see the disclosure starting on page 22.

Below are selected highlights of the Company’s corporate governance program.

Effective Board Composition and Refreshment
	Highly engaged Board with balanced tenure and substantial, wide ranging experience.
	Strong Board refreshment practices, with more than a third of the Directors having a tenure of under five years.
	Regular refreshment at committee level, with rotation guidelines for members and leadership positions.
	Mandatory retirement policy at age 70.
	Ongoing Director succession planning focused on annual review of skill sets of current Directors and identification of additional skills/experience desired.
	Diverse skills and experience represented on the Board, including financial and accounting expertise, financial services experience, digital technology, marketing, public company, merger and acquisitions, and C-suite experience, and thorough knowledge of the Company’s geographic and financial sector markets.
Robust Shareholder Rights
	All Directors elected annually.
	Majority voting standard for Director elections.
	All Shareholders have the same voting rights.
	No shareholders rights plan.
Board Accountability and Independence
	12 out of 13 current Directors are independent and Audit, Governance and Compensation Committees comprised entirely of independent Directors.
	Stock Ownership requirements for Directors and executives.
	Directors are subject to over-boarding restrictions.
	No pledging or hedging by Directors.
	Conflict of Interest Policy for Directors.
Board Effectiveness
	Engaged independent non-executive Chair of the Board.
	Executive sessions of independent Directors held regularly.
	Annual Board and Committee Self-Evaluations.
	Annual formal process to evaluate CEO performance and compensation.
	Corporate Governance Standards and Committee charters reviewed annually.
	Strong Board engagement in risk management and oversight, including a standalone Risk Committee comprised of all Directors.
	Board and Committee use of outside independent advisors.

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EXECUTIVE COMPENSATION GOVERNANCE HIGHLIGHTS

Set forth below is a table illustrating our sound and balanced compensation practices used to support our business strategies, align with our pay-for-performance philosophy, and exercise strong oversight to mitigate excessive risk-taking:

What We Do:		What We Don’t Do:
	New Long-Term Incentive Plan that is 75% Performance Based. For 2022, the Compensation Committee adopted a new long-term incentive plan structure which ties 75% of the equity awards to the performance of the Company.		No “timing” of equity grants. We only grant equity awards on predetermined dates.
	Pay for Performance. A significant percentage of our named executives’ total compensation is variable and at-risk and based upon our performance, ranging from 62% for the CEO and 52% on average for the other named executives.		No Hedging and Pledging. We prohibit our employees, executive officers, and directors from engaging in hedging of Company stock and derivatives. Without prior written consent, our employees, executive officers, and directors are also prohibited from holding Company stock in a margin account or otherwise pledging our stock.
	Evaluate and Manage Risk. The Compensation Committee reviews incentive compensation programs annually to ensure a balance of short-term and long-term incentives and that our programs do not encourage excessive risk taking.		No Repricing of Stock Options. Our equity incentive plan prohibits the repricing of options without Shareholder approval.
	Independent Expert Advice. Meridian Compensation Partners, which has been determined by the Compensation Committee to be independent and free of conflicts of interest, provides the Committee with expert executive compensation advice.		No tax gross-ups. We do not provide our named executives with tax gross-ups in any of our compensation plans or agreements.
	Require Significant Stock Ownership. Our named executives are subject to robust stock ownership requirements (see page 28) to promote alignment with our Shareholders.		No “Single-Trigger” Change In Control Provisions. Our change in control provisions require both a change in control and a subsequent involuntary termination without “cause” or voluntary resignation for “good reason” in order for a named executive to be eligible to receive severance or accelerated vesting in connection with a change in control transaction.
	Executives Subject to a Robust Clawback Policy. Our named executives are subject to our incentive compensation recoupment policy (“clawback”) in the event of financial restatements and/or violations of law or Company policy as provided in the clawback policy(see page 44).		No Significant Perquisites. Our named executives are entitled to only limited perquisites.
	Capped Incentives. Annual cash incentive compensation is based on the achievement of the objectives set forth in the MIP (as defined below), ranging from 0% to 162.5% based on the threshold, target, and maximum achievement levels.

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CULTURE, COMMUNITY AND RESPONSIBILITY

A core value at Community Bank that is shared by the Company’s employees, executive leadership and Directors is active engagement with not only the Company’s customers, but the civic institutions, non-profits, schools and other organizations that comprise the communities where we live and work. As a community bank, we are committed to supporting volunteerism, implementing environmentally sound practices, working with small businesses, and serving the broad financial service needs of the communities in our geographic markets. In addition, we recognize that the development and support of the Company’s human capital is an essential element of the Company’s success. In 2022, we are focused on furthering our Environmental, Social and Governance (“ESG”) strategy in alignment with our business and evolution of important topics across the banking industry.

Recent highlights of the Company’s commitment to corporate social responsibility, support of our communities and employees and other ESG priorities include:

ESG Highlights

Human Capital Initiatives

• Commitment to appoint a Culture and Diversity Officer to lead the Company’s culture, diversity, equity and inclusion efforts and contribute to elements of our ESG strategy.

• Launched a Company-wide employee engagement survey and program called “MyVoice” to foster a culture of open communication and feedback to enhance our employee experience and make Community Bank a best place to work.

• Continued support of the Company’s Culture and Diversity Council’s efforts to engage our entire workforce in advancing diversity initiatives and our ESG strategy.

• Developing future leaders through our Vital Leadership program to strengthen our succession and leadership capabilities.

Supporting our Communities

• Implementing initiatives in the Company’s vendor management program to expand the pool of vendors who are minority owned enterprises or have a history of creating opportunities for minorities, disadvantaged individuals or Veterans, or otherwise address the needs of underserved populations or communities.

• Donated over $2.3 million to charitable organizations in the Company’s footprint.

• Our employees volunteered over 8,000 hours of their time to over 600 non-profit organizations, including those dedicated to underserved and disadvantaged communities.

• Expanded digital banking services to include online consumer and small business loan applications to reach a broader and potentially more diverse population of qualified borrowers.

• Launching branch initiative to provide in-person tutorials to assist customers to transition to digital banking.

Environmental Sustainability Initiatives

• Updating procedures in the Company’s vendor management program to initiate reviews and action plans with respect to third party vendors with practices that do not align with the Company’s ESG priorities.

• Exploring ways to reduce the Company’s environmental impact, including the possibility of establishing net zero data centers.

• Implemented internal digital workflow procedures for the mortgage lending process to eliminate the use of paper.

• Implemented digital mortgage pre-qualification and application process with 20% of current applications now submitted digitally.

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GENERAL INFORMATION FOR VOTING SHARES

Proxy Materials are Available on the Internet

The Company uses the cost-effective and environmentally-friendly “notice and access” delivery method which allows the Company to furnish proxy materials (the Proxy Statement, Form 10-K, and Annual Report) electronically via the Internet. The Company is sending a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) to its Shareholders, on approximately March 28, 2022, with instructions on how to access the proxy materials online or request a printed copy of the materials.

Shareholders may follow the instructions in the Notice of Internet Availability to elect to receive future proxy materials electronically by email or in print by mail. The Company encourages Shareholders to take advantage of the availability of the proxy materials online to help reduce the environmental impact of the Meetings and reduce the Company’s printing and mailing costs.

The Annual Report of the Company for the fiscal year ended December 31, 2021, incorporating the Form 10-K filed by the Company with the SEC, is being provided to Shareholders with this Proxy Statement.

The proxy materials relating to the 2022 Annual Meeting and the 2021 Annual Report are available on the Internet at www.proxyvote.com. The Notice of Internet Availability contains the necessary codes required to access the proxy materials and to vote online or by telephone. The materials are also available on the Company’s investor relations page at: https://ir.communitybanksystem.com/financials/sec-filings-annual-report/default.aspx.

Voting Rights and Proxies

The Board has fixed the close of business on March 21, 2022 as the record date for determining which Shareholders are entitled to notice of, and to vote at, the Meeting. At the close of business on the record date, 53,911,509 shares of common stock were outstanding and entitled to vote at the Meeting, which is the Company’s only class of voting stock. Each share of outstanding common stock is entitled to one vote with respect to each proposal to come before the Meeting. The Bylaws of the Company provide that one-third of the outstanding shares of the Company, represented in person or by proxy, shall constitute a quorum at a Shareholder meeting.

If shares are registered directly in a Shareholder’s name with the Company’s transfer agent, American Stock Transfer & Trust Company, LLC (“AST”), then such Shareholder is the “shareholder of record” with respect to those shares. If the shares are held in an account at a bank, broker, or other holder of record, then the Shareholder is considered the “beneficial owner of shares held in street name.” As a beneficial owner, the Shareholder has the right to instruct the broker, bank, or other organization holding the shares on how to vote such shares.

Voting Procedures

There are four ways to vote:

Online before the Meeting	If a Shareholder has Internet access, he or she may vote the proxy by visiting www.proxyvote.com and entering the control number found in the Notice of Internet Availability; or if the Shareholder received a printed set of proxy materials, by following the instructions provided on the proxy card. The availability of online voting may depend on the voting procedures of the broker, bank or other organization that holds the shares.
In Person at the Meeting	Shareholders may cast their votes at the Meeting. If the Shareholder is the beneficial owner of shares held in street name and wishes to vote in person at the Meeting, he or she must also obtain a “legal proxy” from the broker, bank or other organization that holds the shares. A legal proxy is a written document that authorizes the beneficial shareholder to vote the shares held in street name at the Meeting. A Shareholder must contact the broker, bank or other organization that holds such shares for instructions prior to the Meeting to obtain a legal proxy. The beneficial shareholder must bring a copy of the legal proxy to the Meeting. In order for the vote to be counted, the beneficial shareholder must hand both the copy of the legal proxy and the completed ballot to the Inspector of Election.
Phone	If the Shareholder requested printed copies of the proxy materials by mail, he or she will receive a proxy card or voting instruction form and may vote by calling the toll free number found on the card or form. The availability of phone voting may depend on the voting procedures of the broker, bank or other organization that holds the shares.

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Mail If the Shareholder received a printed set of the proxy materials by mail, he or she may submit the proxy card by mail by signing the proxy card if his or her shares are registered in the Shareholder’s name or by following the instructions provided by the broker, bank or other organization for shares held beneficially in street name, and returning it in the envelope provided.

All shares represented by valid proxies received prior to the taking of the vote at the Meeting will be voted and, where a Shareholder specifies a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the Shareholder’s instructions. If the Shareholder does not specify how the shares are to be voted, the shares will be voted in the manner recommended by the Board for matters presented for a vote at the Meeting as permitted by applicable law. An abstention by a Shareholder with respect to a matter to be voted on will be counted for purposes of determining the presence of a quorum, but will not be counted as votes cast at the Meeting. Any broker non-votes will be counted as being present for purposes of determining the presence of a quorum, but will not be counted as votes cast at the Meeting. Even if you plan on attending the Meeting, we encourage you to vote your shares in advance online, by phone, or by mail to ensure that your vote will be represented at the Meeting.

A Shareholder may revoke the proxy and change his or her vote at any time before the taking of the vote at the Meeting as follows:

Online before the Meeting	A Shareholder may change the vote using the online voting method described above, in which case only the latest Internet proxy submitted prior to the Meeting will be counted.
In person at the Meeting	A Shareholder may revoke a vote made prior to the Meeting and change his or her vote by attending the Meeting and voting in person. However, attendance at the Meeting will not automatically revoke the proxy unless the Shareholder properly votes at the Meeting or specifically requests that the prior proxy be revoked by delivering a written notice of revocation prior to the Meeting to the Company’s Secretary at the Company’s address set forth above.
Phone	A Shareholder may change his or her vote using the phone voting method described above, in which case only the latest telephone proxy submitted prior to the Meeting will be counted.
Mail	A Shareholder may revoke the proxy and change his or her vote by signing and returning a new proxy card or voting instruction form dated as of a later date, in which case only the latest proxy card or voting instruction form received prior to the Meeting will be counted.

Shareholders who have shares that are registered differently or are in more than one account will receive more than one Notice of Internet Availability. Shareholders with shares registered directly in the Shareholder’s name with the Company’s transfer agent may contact AST at (877) 253-6847 to request consolidation. If the shares are held through a broker, bank or other organization, the Shareholder can contact the broker, bank or other organization to request consolidation.

Proxy Solicitation Costs

The Company will pay its costs relating to the solicitation of proxies. The Company has retained Alliance Advisors, LLC, 200 Broadacres Drive, 3^rd Floor, Bloomfield, New Jersey 07003 to assist in soliciting proxies for a base fee of $8,500 plus reasonable and approved out-of-pocket expenses. Proxies may be solicited by officers, directors, and staff members of the Company personally, by mail, by telephone, or by other electronic means. The Company will also reimburse brokers, custodians, nominees, and fiduciaries for reasonable expenses in forwarding proxy materials to beneficial owners of the Company’s stock.

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PROPOSAL ONE: ELECTION OF DIRECTORS

Our Board currently consists of thirteen (13) members standing for election each year. All Director Nominees have indicated a willingness to serve, and the Board knows of no reason that any Nominee will decline or be unable to serve if elected. Each of the thirteen (13) Nominees is expected to continue to serve on the Board until his or her one-year term expires or until he or she reaches the mandatory retirement age in accordance with the Company’s Bylaws.

The Nominees who receive the greatest number of votes “for,” represented in person or by proxy at the Meeting, will be elected Directors, subject to our majority voting standard set forth below. Abstentions and broker non-votes will not have an impact on the election of Directors. All proxies in proper form which are received prior to the election of Directors at the Meeting will be voted “FOR” the Nominees listed below, unless authority is withheld in the space provided on the proxy card. In the event any Nominee declines or is unable to serve, the proxy agents intend to vote for the election of a successor Nominee, if any, as the Board may recommend.

THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH NOMINEE AS DIRECTOR.

Notwithstanding the application of plurality voting in the election of Directors, under our majority voting standard policy adopted by the Board, if the election of Directors is uncontested, a Director Nominee who does not receive the votes of at least the majority of votes cast with respect to such Nominee’s election is expected to tender to the Board his or her resignation promptly following the certification of election results. The Governance Committee will make a recommendation to the Board whether to accept or reject such resignation. The Board will act on the resignation, taking into consideration the Governance Committee’s recommendation, and will publicly disclose the decision and its rationale within 90 days of the certification of the election results. If the Board does not accept the resignation, the Director will continue to serve until his or her successor is duly elected or any earlier resignation, removal or separation. If the Board accepts the Nominee’s resignation, then the Board may, in its sole discretion, fill any resulting vacancy or decrease the size of the Board pursuant to the Company’s Bylaws.

DIRECTOR NOMINEE QUALIFICATIONS AND EXPERIENCE

In considering candidates for the Board, the Governance Committee and the Board consider the entirety of each candidate’s credentials. Factors considered include, but are not necessarily limited to, outstanding achievement in a candidate’s personal career; broad and relevant experience; integrity; sound and independent judgment; experience and knowledge of the business environment and markets in which the Company operates; business acumen; and willingness to devote adequate time to Board duties. The Governance Committee considers diversity in the context of the Board as a whole including gender, race, ethnicity, personal attributes, experience and background of Directors and nominees to facilitate Board deliberations that reflect a broad range of perspectives. The Board believes that each Director should have an understanding of (i) the principal operational and financial objectives and plans and strategies of the Company, (ii) the results of operations and financial condition of the Company and of any significant subsidiaries or business segments, and (iii) the relative standing of the Company and our business segments in relation to our competitors. Prior to nominating an existing Director for re-election to the Board, the Board and the Governance Committee consider and review, among other relevant factors, the existing Director’s meeting attendance and performance, length of Board service, ability to meet regulatory independence requirements, and the experience, skills, and contributions that the Director brings to the composition of our Board as a whole.

In selecting the current Director Nominees who serve on the Company’s Board, the Governance Committee considered each individual’s business experience set forth below and the foregoing qualifications. In addition, the Governance Committee considered each individual’s experience and knowledge of the banking and financial services industry, knowledge of and standing in key geographic markets in which we operate, experience and knowledge with the organization, business model and strategic plans related to our success, independence in judgment and regulatory standards, special skills relevant to overall composition of the Board, including financial and accounting expertise, service with public companies, and experience in digital technology, ESG matters, real estate and commercial finance. The Governance Committee and the Board believe that each Director and nominee brings his or her own particular expertise, knowledge and experience that provides the Board as a whole with the appropriate mix of skills, characteristics and attributes to work together and fulfill the Board’s oversight responsibilities to the Company’s Shareholders.

The Company’s Bylaws and Governance Guidelines provide for, among other things, (i) a mandatory retirement age of 70, (ii) advance notice prior to serving on another public company board, and (iii) review of continued Board membership in the event of a significant change in the responsibilities or job position of a Director.

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The key qualifications, skills, experience and perspective that each Director brings to the Board are included in their individual biographies. The Board firmly believes that our highly-qualified Director Nominees provide the Board with a diverse complement of specific business skills, experience and perspective necessary to ensure effective oversight. The following biographies describe the Director’s age, position with the Company, when he or she started as a Director with the Company, business experience and other public company board service for the past five (5) years, and the experience and attributes held by the Director relevant to his or her qualifications to serve on the Board:

Brian R. Ace

  Director Since: 2003
Age: 67
Committees:
• Compensation
• Governance
• Risk Brian R. Ace was formerly the owner and President of Laceyville Hardware, a household and construction supply retail business located in Laceyville, Pennsylvania. Mr. Ace brings to the Board his business experience and an understanding of the business environment in our Northeast Pennsylvania market. Prior to joining the Company, Mr. Ace had significant bank director experience with another bank headquartered in Pennsylvania.
Mr. Ace has over 25 years of experience serving as a director of a national bank and public bank holding company and has served on the Company’s Audit, Trust & Financial Services, and Risk Committees, and chaired its Nominating and Compensation Committees in past years.
As a seasoned director, Mr. Ace is thoroughly familiar with the duties and responsibilities of public company audit, nominating and compensation committees and brings this knowledge and expertise to the Board and committees on which he serves.

Mark J. Bolus

  Director Since: 2010
Age: 56
Committees:
• Compensation (Chair)
• Risk
• Strategic/Executive
• Trust & Financial Services Mark J. Bolus is the President and Chief Executive Officer of Bolus Motor Lines, Inc. and Bolus Freight Systems, Inc., a transportation company serving the Northeast, Midwest, and Mid-Atlantic regions of the United States from its headquarters in Scranton, Pennsylvania and has 30 years of management and business experience operating a freight transportation company in the Company’s market.
Mr. Bolus brings his management and business experience to the Board and provides it with insight into the economic and business environment in Upstate New York and Northeast Pennsylvania, key geographic markets for the Company. Mr. Bolus also has considerable experience in real estate matters.

Jeffrey L. Davis

  Director Since: 2017
Age: 69
Committees:
• Audit & Compliance
• Governance (Chair)
• Risk Jeffrey L. Davis is President of J.L. Davis, Inc., a construction and development firm, located in Burlington, Vermont, specializing in permitting and project management services. Mr. Davis has also served as the President of Taft Corners Associates, a development firm, specializing in ownership and leasing of commercial, retail, and office space, and has extensive experience with the New England business environment.
Mr. Davis is the former President of the Champlain Valley Exposition, a not-for-profit organization serving the Vermont region by promoting agriculture, education, arts and culture, commerce and entertainment activities. He is also a trustee emeritus of the University of Vermont in Burlington, Vermont, and a former president of the Vermont Special Olympics.
He has over 25 years of experience in the banking industry having served as a member of the Board of Directors of Merchants Bancshares, Inc. (“Merchants”) and Merchants Bank from 1993 through May 2017. He served as Chairman of Merchants’ Board of Directors from February 2015 through May 2017. Mr. Davis also served on Merchants Bank’s Loan Committee and chaired it for 15 years. Over the course of his tenure on Merchants’ Board of Directors, he participated on its Audit, Compensation and Governance Committees.
Mr. Davis provides the Board with business and management experience, public company governance, and strategic planning experience developed through his tenure on public company boards of directors, and has credit knowledge, crisis and risk management experience, and an understanding of the economics of the New England region.

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Neil E. Fesette

  Director Since: 2010
Age: 56
Committees:
• Compensation
• Governance
• Risk
• Strategic/Executive (Chair) Neil E. Fesette is the President and Chief Executive Officer of Fesette Realty, LLC and Fesette Property Management, located in Plattsburgh, New York, specializing in residential and commercial brokerage, property management, and real estate investment, development and consultation. Mr. Fesette is also involved in the community and serves as a director of Champlain Valley Physicians Hospital and North Country Workforce Partnership, Inc.
Mr. Fesette has extensive expertise in the real estate market in Upstate New York and provides the Board with insights into these key geographic markets where the Company operates its financial service and banking businesses. Plattsburgh is one of the Bank’s primary regions and Mr. Fesette’s knowledge regarding its economic development and areas of opportunity is a substantial benefit to the Board. Mr. Fesette also provides the Board with corporate governance and human capital and succession planning expertise developed over the course of his service on the Board. This experience enhanceshis service as Chair of the Strategic/Executive Committee and as a member of the Compensation, Governance, and Risk Committees.

Jeffery J. Knauss

 
Director Since: 2021
Age: 35
Committees:
• Governance
• Risk Jeffery J. Knauss is the former CEO and co-founder of Digital Hyve, a digital marketing and advertising firm located in Rochester and Syracuse, New York. Digital Hyve was named the 52^nd fastest growing private company in the United States by Inc. Magazine in 2018 and has remained on Inc.’s 5,000, a list of the fastest-growing privately held companies in the United States, for the following three years. Mr. Knauss is also an investor in several businesses including food service and start-ups focused on medical research, professional networking, e-commerce platforms, and mobile payment apps. He is active in the community and is a member of the Board of Directors of CenterState CEO, the Loretto Foundation, the SUNY Oswego Foundation, and the United Way of CNY.
Mr. Knauss has extensive experience in digital marketing and technology development and provides the Board with insights into consumer-centric marketing, digital technology development, cyber security, entrepreneurship and e-commerce matters. His experience and insight enhance the Board’s assessment of its technology and digital marketing strategy. Mr. Knauss serves as a liaison to the Company’s Technology Committee and as a member of the Governance and Risk Committees.

Kerrie D. MacPherson

  Director Since: 2019
Age: 63
Committees:
• Audit & Compliance
• Risk
• Trust & Financial Services Kerrie D. MacPherson was formerly a senior partner of Ernst & Young, LLP (“EY”) where she served as an auditor and in leadership roles in transaction advisory services in EY’s Toronto, Canada and New York offices, working with clients across a broad array of industries over 32 years and developing extensive experience in the financial services sector. Ms. MacPherson is a Fellow of the Chartered Professional Accountants of Ontario, the highest distinction conferred by the organization, and has also been recognized by Consulting Magazine’s Women in Leaders in Consulting and received its 2015 Excellence in Leadership Award.
Ms. MacPherson serves on the Board of Directors of New York City Harvest, a non-profit focused on feeding the hungry in New York City where she Co-Chairs the Governance Committee and is a member of the Executive Committee. She formerly chaired City Harvest’s Audit Committee. She also serves on the Dean’s Advisory Board and Global Advancement Board for the University of Toronto’s Rotman School.
Ms. MacPherson provides the Board and its Audit, Risk, and Trust & Financial Services Committees with considerable finance, mergers and acquisitions, and regulatory oversight experience acquired through her years of serving as a public accountant and advising public companies on their financial statements and mergers and acquisition strategies.
The Board has deemed Ms. MacPherson an “audit committee financial expert” as defined by SEC rules.

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John Parente

  Director Since: 2010
Age: 55
Committees:
• Risk
• Strategic/Executive
• Trust & Financial Services (Chair) John Parente is the Chief Executive Officer of CP Media, LLC, an owner of broadcast television stations headquartered in Wilkes-Barre, Pennsylvania. Over the course of his business career, Mr. Parente has developed broad expertise by serving in various executive and management positions in a range of business ventures, including companies engaged in manufacturing, real estate, construction, banking, distribution, and media. He holds an ownership interest and serves on the Board of Directors of Sordoni Construction Services and Sordoni Construction Company, regional construction companies with operations in Pennsylvania, New Jersey and New York. Mr. Parente has developed significant banking experience through his prior involvement as a founding director of a bank located in Pennsylvania. Mr. Parente has served on the Board of Directors of the Wyoming Valley Health and Education Foundation since 2014, currently serving as Treasurer and Chairman of the Finance Committee.
Mr. Parente provides the Board with significant management,business, finance, and risk management expertise and provides insights into the economic opportunities in the Northeast Pennsylvania region, which is a key geographic area for the Company. He formerly served as the Chair of the Company’s Risk Committee and as a member of its Audit Committee and is thoroughly familiar with the challenges and risks associated with the operations of the Company and its subsidiaries.

Raymond C. Pecor, III

  Director Since: 2017
Age: 53
Committees:
• Compensation
• Risk (Chair) Raymond C. Pecor, III is the President of Lake Champlain Transportation Company, based in Burlington, Vermont, a key regional transportation company responsible for the ferry service for the Lake Champlain area. Mr. Pecor is active in the local community and previously served on the board of the Champlain Valley Exposition, a not-for-profit organization serving the Vermont region by promoting agriculture, education, arts and culture, commerce and entertainment activities.
Mr. Pecor has over 10 years of experience in the banking industry having served as a member of Merchants Bank’s Board of Directors from 2009 through May 2017 and a member of Merchants’ Board of Directors from 2012 through May 2017. Over the course of his tenure on Merchants’ Board of Directors, he served on its Audit, Compensation and Governance Committees, and as the Chair of its Loan Committee. Mr. Pecor has significant entrepreneurial experience developed through participation in various development projects in the Vermont and New England area.
Mr. Pecor provides the Board with business and management experience, public company experience developed through his tenure on the boards of public company financial institutions, and brings expertise with respect to commercial lending and project finance, customer service, crisis response, leadership and risk management experience, and an understanding of the Vermont market and its industries, including transportation and telecommunications.

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Susan E. Skerritt

  Director Since: 2020
Age: 67
Committees:
• Audit & Compliance
• Compensation
• Risk Susan E. Skerritt is currently a Senior Advisor with Boston Consulting Group providing treasury management services to the group’s clients since January 2021. She has also served as a Senior Advisor with Promontory Financial Group, a wholly owned subsidiary of IBM, providing consulting services to financial institutions on regulatory, governance, and risk management matters from February 2018 to June 2021.
Over the course of the last 35 years, she has served in various executive leadership positions, including serving as Chairwoman, Chief Executive Officer and President of Deutsche Bank Trust Company Americas, Deutsche Bank’s U.S. commercial banking entity, from 2016 to 2018. Previously at Deutsche Bank, she led the transaction banking businesses in North and South America, and also led the global correspondent banking business. Prior to Deutsche Bank, Ms. Skerritt spent seven years at Bank of New York Mellon Trust Company, N.A. where she served as an Executive Vice President, and executive member of its Board of Directors.
Ms. Skerritt’s corporate board experience includes service as an independent director on the Board of Directors of the RBC U.S. Group Holdings LLC, the intermediate holding company for Royal Bank of Canada’s U.S. operations, where she served as the Chair of its Human Resources and Corporate Governance Committee, as well as a member of its Audit and Risk Committees.
Ms. Skerritt provides the Board and its Audit and Risk Committees with considerable finance, risk management, governance, financial services, mergers and acquisitions, and regulatory oversight experience acquired through her years of senior leadership positions as an executive at prominent financial institutions.
Ms. Skerritt currently serves as a director of Tanger Factory Outlet Centers, Inc. (NYSE: SKT) since 2019 and IG Group Holdings plc (IGG:L) since July 2021. She served as a director of VEREIT, Inc. (NYSE: VER) from February 2021 through November 2021. She has also served on the Board of Trustees of Hamilton College since 1994, has been a Director of The Brooklyn Hospital Center since 2013, and has been a Director of the Falcon Group since February 2020.
The Board has deemed Ms. Skerritt an “audit committee financial expert” as defined by the SEC rules.

Sally A. Steele

  Lead Director
Director Since: 2003
Age: 66
Committee:
• Governance
• Risk
• Strategic/Executive
• Trust & Financial Services Sally A. Steele is a retired attorney from Tunkhannock, Pennsylvania and has extensive experience in her legal practice with businesses in Northern Pennsylvania and natural gas drilling in the Marcellus Shale region of Pennsylvania and the economic impact of such activities in key markets for the Company.
Ms. Steele is a frequent presenter at BankDirector conferences sharing her expertise with top executives and board members in the financial services industry on topics including board orientation and mergers and acquisitions. Ms. Steele was included in the 2019 WomenInc.’s Most Influential Corporate Directors, a listing of women executives, influencers and achievers contributing leadership to corporate boards on S&P 1000/Mid-Cap publicly held companies.
Ms. Steele is the Board’s Lead Director and previously served as Chair of the Board from January 2017 through December 2021. She has developed extensive public company oversight experience gained from more than 30 years of service as a director of national banks and banking holding companies. Ms. Steele has also gained significant mergers and acquisition experience through her prior board service and has a thorough understanding of the evaluation of acquisition opportunities and issues related to evaluating potential transactions. Ms. Steele provides the Board with significant corporate governance and leadership expertise through her prior experience chairing the Company’s Governance Committee and Strategic/Executive Committee and serving as a member of Audit, Compensation, Risk, and Trust & Financial Services Committees.

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Eric E. Stickels

  Chair of the Board Director Since: 2015
Age: 60
Committees:
•  Risk Eric E. Stickels was formerly the President of Oneida Financial Corp. (“Oneida Financial”) until 2015 and has over 35 years of experience in the banking industry previously serving in various leadership, operational and financial positions with Oneida Savings Bank and its bank holding company, Oneida Financial. He also served on the Board of Directors of Oneida Financial and Oneida Savings Bank and as a member of their Asset/Liability, Trust Investment, Compliance, Information Technology, Loan,and Marketing Committees.
Mr. Stickels has significant ties to the Mohawk Valley region of Central New York and is actively involved in the community serving on a variety of local organizations, including as the President of the Oneida Community Golf Club, a member of NYSARC, Inc.’s investment committee, and President and Director of the Cortland Funding Facilities for the Handicapped, Inc.
Mr. Stickels is Chair of the Board and provides the Board with significant knowledge and experience relating to bank operations, public companies and bank holding companies and their financial reporting obligations and risk management requirements. During the course of his tenure at Oneida Financial, he gained significant financial and risk management experience with direct supervision of the risk management programs at the institution and its financial subsidiaries. Mr. Stickels’ risk management experience has been a great asset to the Board and led to his selection as the Chair of the Stress Testing Subcommittee which existed from 2017 to 2019 as part of the Bank’s preparation for crossing the $10 billion in assets threshold.
The Board has deemed Mr. Stickels an “audit committee financial expert” as defined by the SEC rules.

Mark E. Tryniski

  Director Since: 2006
Age: 61
Committee:
• Risk Mark E. Tryniski has served as the President and Chief Executive Officer (“CEO”) of the Company since 2006, and previously served the Company in the positions of Chief Operating Officer and Chief Financial Officer. Prior to joining the Company in 2003, Mr. Tryniski was a partner of PricewaterhouseCoopers LLP where he gained extensive experience in the financial service industry, manufacturing, and a broad array of business sectors.
Mr. Tryniski serves as a director of CONMED Corporation (NYSE: CNMD), a medical technology public company where he formerly served as the Chairman of the Board of Directors. He also serves on the Board of Directors of the New York Bankers Association and Pursuit Lenders.
The Board believes that the President and CEO should be a member of the Board. As the current President and CEO of the Company, Mr. Tryniski is familiar with all of the Company’s businesses and provides the Board with insights on all aspects of the Company’s challenges, opportunities, and operations. Based on his extensive financial and business experience and his service on another public company board, Mr. Tryniski also provides the Board with a comprehensive perspective on a broad range of business issues including finance, mergers and acquisitions, risk management, regulatory oversight, and corporate governance expertise.
Mr. Tryniski has served as a director of CONMED Corporation since 2007.

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John F. Whipple, Jr.

  Director Since: 2010
Age: 66
Committees:
• Audit & Compliance (Chair)
• Governance
• Risk John F. Whipple, Jr. is the Chief Executive Officer of Buffamante Whipple Buttafaro, P.C., a regional certified public accounting and business advisory firm with offices in Olean, Jamestown and Orchard Park, New York. Mr. Whipple is a certified public accountant with over 30 years of experience in advising Western New York businesses and individuals on tax planning, structuring of business transactions, financing transactions and strategic planning for businesses.
Mr. Whipple serves as the Chair of the Audit Committee and a member of the Governance and Risk Committees and provides the Board with significant management and corporate governance experience, as well as expertise with respect to corporate finance, accounting and the analysis of public company financial statements and related SEC filings.
The Board has deemed Mr. Whipple an “audit committee financial expert” as defined by the SEC rules.

COMPENSATION OF DIRECTORS

The Board has a retainer-based compensation structure based on the recommendation of the Compensation Committee with input from its independent compensation consultant. The following table sets forth the annual retainer fees paid to the Directors for their service on the Board and the various committees on which they serve in 2021:

Position	Board	Audit & Compliance Committee	Compensation Committee	Risk Committee	Governance Committee	Strategic/ Executive Committee	Trust & Financial Services Committee
Chair	$110,000	$20,000	$14,000	$10,000	$10,000	$10,000	$10,000
Member	$60,000	$10,000	$7,000	None	$5,000	None	$5,000

The Company pays the travel expenses incurred by each director in attending meetings of the Board. Any executive officer serving on the Board does not receive compensation for attending Board and committee meetings.

Consistent with aligning director compensation with the long-term interests of Shareholders, the Directors also receive a portion of their total compensation in the form of equity grants under the Company’s 2014 Long-Term Incentive Compensation Plan, as amended (the “2014 Incentive Plan”). In 2021, the Directors received the equity component of their compensation in the form of deferred stock units. The Board believes that providing part of the Directors’ compensation in the form of an annual equity award is consistent with the Company’s overall compensation philosophy of aligning the interests of individual directors with the long-term interests of the Company’s Shareholders, and assist the Company to attract highly qualified individuals to serve on the Board.

The equity award grants reflected in the Director Compensation Table below were made under the 2014 Incentive Plan which allows for the issuance of deferred stock unit grants in an amount determined by the Compensation Committee. Directors are allowed to defer receipt of the units to a future date of up to ten years following the grant date. The value of the deferred stock units track the market value of the Company stock and are ultimately paid out in shares of the Company stock on the deferred payment date. The Director equity grants are designed to provide a reasonable component of total Director compensation that aligns Director compensation with the long-term interests of the Shareholders.

The following table summarizes the annual compensation paid to each non-employee Director for his or her service to the Board and its committees in 2021. The Company does not make payments (or have any outstanding commitments to make payments) to director legacy programs or similar charitable award programs.

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DIRECTOR COMPENSATION

Name(1)	Fees Earned or Paid in Cash ($)	Deferred Stock Awards ($)(2)	Total ($)
Brian R. Ace	$72,000	$45,327	$117,327
Mark J. Bolus	$79,500	$45,327	$124,827
Jeffrey L. Davis	$75,000	$45,327	$120,327
Neil E. Fesette	$79,000	$45,327	$124,327
Kerrie D. MacPherson	$75,000	$45,327	$120,327
John Parente	$75,000	$45,327	$120,327
Raymond C. Pecor, III	$72,000	$45,327	$117,327
Susan E. Skerritt	$73,500	$45,327	$118,827
Sally A. Steele	$110,000	$45,327	$155,327
Eric E. Stickels	$80,000	$45,327	$125,327
John F. Whipple, Jr.	$85,000	$45,327	$130,327

(1)
Mr. Knauss joined the Board on December 16, 2021 and did not receive any compensation in 2021. Mark E. Tryniski, President and CEO, does not receive any compensation for his service as a director. Mr. Tryniski’s compensation is set forth in the Summary Compensation Table.

(2)
The amounts in this column reflect the grant date fair value of deferred stock units computed in accordance with ASC Topic 718 for equity awards granted in 2021 pursuant to the 2014 Incentive Plan. The deferred stock unit award was made and vested on March 16, 2021. As of December 31, 2021, each director had the following number of deferred stock units outstanding: Mr. Ace 5,355; Mr. Bolus 576; Mr. Davis 2,748; Mr. Fesette 2,723; Ms. MacPherson 1,444; Mr. Parente 576; Mr. Pecor 2,127; Ms. Skerritt 576; Ms. Steele 576; Mr. Stickels 2,039; and Mr. Whipple 576.

Directors may elect to defer all or a portion of their cash director fees pursuant to the Company’s Deferred Compensation Plan for Directors. Directors who elect to participate in the plan designate the percentage of their director fees which they wish to defer (the “deferred fees”) and the date to which they wish to defer payment of benefits under the plan (the “distribution date”). The plan administrator establishes an account for each participating director and credits to such account (i) on the date a participating director would have otherwise received payment of his or her deferred fees, the number of deferred shares of the Company’s common stock which could have been purchased with the deferred fees, and (ii) from time to time such additional number of deferred shares which could have been purchased with any dividends which would have been received had shares equal to the number of shares credited to the account actually been issued and outstanding. On the distribution date, the participating director shall be entitled to receive shares of Company common stock equal to the number of deferred shares credited to the director’s account either in a lump sum or in annual installments over a three, five, or ten year period. The effect of the plan is to permit directors to invest deferred director fees in Company stock, having the benefit of any stock price appreciation and dividends as well as the risk of any decrease in the stock price. To the extent that directors participate in the plan, the interests of participating directors will be more closely associated with the interests of the Shareholders. No earnings are deemed above-market or preferential on compensation deferred under the Deferred Compensation Plan for the Directors. Directors currently participating in the plan hold at risk share equivalent units (based on cash fees directors have deferred under the plan), which are subject to market price fluctuations in the Company’s stock in the following amounts as of December 31, 2021: Mr. Ace 9,782 units; Mr. Davis, 62,390⁽¹⁾ units; Mr. Fesette 7,458 units; Mr. Pecor, 12,116⁽¹⁾ units; Ms. Steele 13,099 units; and Mr. Whipple 9,776 units.

(1)
Included in the units for Mr. Davis and Mr. Pecor are 57,690 and 8,783 share units, respectively, that are a result of deferred directors fees from Merchants which were converted to Company stock at the time of the merger.

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Environmental, Social and Governance

In 2022, we are focused on continuing to build upon our strategy and initiatives with respect to Environmental, Social and Governance (“ESG”) topics. We recognize the continuing importance of these matters and will continue to align our business strategies with these goals. We understand that a thoughtful, coordinated approach to ESG will support a healthier, more sustainable future for our stakeholders including our investors, employees, communities we serve, and customers. We expect to build upon our core values as a community financial institution and our core mission of serving the financial needs of our communities. We expect our developing ESG strategy will align with the nature and scale of our business in respecting the environment and the evolution of ESG principles in our industry.

Some of our specific efforts and commitments for 2022 are summarized below.

Environmental	Social	Governance
• Migrated mortgage loan documentation to digital only process to eliminate the use of paper as part of the Bank’s initiative to implement a digital workstream for the Bank’s processes.	• Appointment of a Culture and Diversity Officer to drive the Company’s culture and diversity initiatives and lead key aspects of our ESG strategy.	• Commitment to diversity on the Board, demonstrated by three new candidates in the last three years contributing to the ethnic and gender diversity on our Board of Directors.
• Commitment to expanding digital documentation processes and energy efficiency throughout the organization.	• Launched a Company-wide employee engagement survey and program called “MyVoice.” Employee engagement is an important part of our human capital focus and thisprocess will allow us to track our progress.	• Implementing a new Long-Term Incentive Compensation Plan with increased pay-for-performance alignment based on feedback from shareholder engagement.
• Responsible waste management and recycling practices including recycling of electronic equipment.	• Continuation of our active Culture and Diversity Council that fosters diversity and inclusion by providing a platform for an open dialogue on how to make the Company a more diverse and open workplace.	•  Engagement of independent compensation consultant in design of new long-term executive incentive compensation program and other matters.
• Updated the Company’s VendorManagement program to assess our vendors’ alignment with our ESG strategy.	• Updated the Company’s Vendor Management programas part of initiative to increase the pool of diverse vendors.	• 12 of 13 Directors are independent.
• Exploring net zero data centers to reduce the Company’s carbon emissions.	• We contributed over $2.3 million to over 2,000 charities and our employees volunteered over 8,000 hours to over 600 organizations in our footprint during 2021.	• Majority voting standard and annual election of Directors.

COMMITMENT TO OUR PEOPLE- HUMAN CAPITAL INITIATIVES

We recognize that our people are essential to our success and are committed to supporting the development and well-being of each individual in a collaborative and inclusive environment.

Role of Our Diversity Council. We are committed to having an inclusive environment for the Company’s workforce that enhances the culture of shared identity, civility, dignity, and respect. In 2020, the Company formed a Diversity Council (now expanded in scope and renamed Culture and Diversity Council) to provide strategic direction and an employee forum for diversity and inclusion initiatives. The Council’s members, consisting of 25 employees and 100 Ambassadors from various business units and geographic locations, all serve as representatives of our 2,900 plus employees to foster a culture of valuing diversity and inclusion through the development of ongoing Council initiatives. The Culture and Diversity Council has developed a set of initiatives to increase focus on: diversity and equity across the key areas of talent acquisition and retention; employee community service spotlights; senior leadership composition; a collaborative learning and development campaign centered on greater awareness of unconscious bias; and vendor selection development and monitoring. The Council also organizes a calendar of monthly events to celebrate and remember significant events in our country’s history, such as Martin Luther King Day, Black History Month, Pride Month, Holocaust Remembrance Day, Native American History Month, Women’s History Month, National Disability Employment

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Awareness Month, Autism Awareness Month, and Hispanic Heritage Month, in order to provide greater awareness and celebrate the diversity of our employees. Although sponsored by the CEO and supported by a liaison from the Board of Directors, the Council is led by employees from across the Company in order to be more responsive to the issues and concerns identified by our employees.

Appointment of Cultural and Diversity Officer. For 2022, the Company is committed to enhancing its commitment to diversity by appointing a Culture and Diversity Officer to lead the Company’s diversity and inclusion efforts. This individual will have a central role in creating, managing, and optimizing all efforts related to making the workplace a fairer, more-equitable environment for all employees. The Culture and Diversity Officer will also lead and coordinate key aspects of our overall ESG strategy.

Alignment of Management Incentive Objectives with Goals. In order to demonstrate the Board’s commitment to achieving the Company’s culture and diversity goals, the Compensation Committee, in reviewing management objectives for 2021, included a specific performance objective in the 2021 Management Incentive Plan which required the implementation and execution of an employee engagement survey for the purpose of formulating appropriate programs that will drive ongoing efforts towards a productive, evolving and diverse workforce. The Company completed this objective and implemented the employment engagement survey which is the first step in the Company’s process to increase employee engagement. In 2022, the Compensation Committee again included a performance objective in the 2022 Management Incentive Plan tied to increasing employee engagement and cultivating a dynamic and inclusive workforce with the use of the data derived from the 2021 engagement survey as a foundation to the establishment of an engagement program in 2022.

Commitment to Employee Engagement – Implementing “MyVoice Program”. The Company is committed to creating a world class workplace with highly satisfied and engaged employees. The Company believes that open and honest communication among employees, managers and executive leadership fosters an open and collaborative work environment where everyone can participate, develop and thrive. In November 2021, the Company launched a Company-wide engagement program called “MyVoice” resulting from the 2021 engagement survey which gauged employee sentiment in areas such as culture, career development, and manager performance, with 83% of the Company’s employees participating in the initial survey. The collective results from the survey highlighted that engagement, performance, and employee development are interlinked and interdependent. The Company’s primary objective in 2022 will be to provide managers with the tools to take daily responsibility for engagement and development by identifying and building individual team action plans from the engagement and performance data gathered from the engagement survey results. These action plans will be created at the local and department level by having frequent, meaningful conversations with individuals on their teams to identify and then take ownership of improving the workplace experience for their team.

Commitment to Our Core Values. Through its Human Capital programs, the Company has established the following set of core values to guide our employees and exemplify our commitment to each other, our customers, and the communities we serve:

Core values by which we act:
Strong work ethic	We do our best and go above and beyond to assist our customers and colleagues.
Integrity	We are honest in all of our actions.
Respect	We recognize, by our behavior, the inherent worth and dignity of everyone we work with every day.
Responsibility	We’re accountable for our job performance.
Transparency	Without compromising confidentiality, we are open and direct.
Humility	We acknowledge we can always do better, grow and improve.

Commitment to Talent Management and Employee Development. The Company is committed to enabling a culture that celebrates talent sharing, career development and agility across the Company and generally posts all roles internally first before sharing them externally. The Company offers programs designed to develop each individual’s talents in an open and productive work place to develop its next generation of leaders. In 2021, the Company implemented a new Human Resources operating system which includes several features to support talent development, enhanced performance management tools, and other features that provide a more streamlined employee experience.

The Company’s Human Resources function oversees and facilitates corporate-wide in-house and external leadership and professional development programs to provide various offerings that drive efforts toward a cohesive, evolving and diverse workforce. The focus is to bring self-awareness regarding biases and to drive behavioral change to build positive working relationships. Various programs, workshops and initiatives address key elements promoting inclusion, cultural

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diversity, gender equality, women leadership and development, and a multi-generational workforce. The Human Resources function utilizes a dynamic online learning platform, in conjunction with in person learning, that is available to all employees at its various geographical locations to deliver interactive educational and training modules. These educational modules, which are required for all employees, include training on diversity and inclusion, awareness of biases, anti-discrimination, and compliance. In addition, the system provides a vast library of industry-specific and development courseware to promote a learning culture and development of each individual’s potential. The Company also works to continue to broaden the scope of its talent development initiatives across our widening geographically diverse footprint in order to sustain a value-driven and growth-oriented environment where employees can perform at their peak and the next generation of leaders are prepared to lead. The Company’s Human Resources function offers a variety of programs and continuing education dedicated to strengthening employee engagement, personal accountability, productivity, and emotional well-being.

Prioritizing Our Employees and Customers during the COVID-19 Pandemic. As the COVID-19 challenges continued throughout 2021, the Company continued to implement various plans, strategies and protocols to protect its employees, customers and stakeholders. In order to protect its employees and assure workforce continuity and operational redundancy, the Company continued and adjusted as appropriate many of its protocols in order to conduct the Company’s operations in a safe and efficient manner. The safety of our customers, employees, stakeholders and communities will remain a top priority for the Company.

COMMITMENT TO OUR COMMUNITY- ESG INITIATIVES

We continue to look for opportunities to integrate sustainability and corporate responsibility into our business practices as we develop our ESG strategy to focus on delivering community focused products and services while creating long-term sustainable value for all of our stakeholders. Set forth below are some of the environmental and social initiatives we focused on in 2021 and early 2022:

Focus on Vendor Policies and Sustainable Business Operations. The Company holds itself to a standard of integrity, professional conduct, and environmentally responsible business practices. This allows us to establish trust with our employees, customers, stakeholders, and vendors. We expect the same level of commitment and conduct of our vendors as we focus on ensuring that we are operating in a socially responsible manner. This year, the Company is implementing an initiative as part of its vendor management program to increase the pool of vendors who are minority owned or have a history of creating opportunities for minority, disadvantaged individuals or Veterans, or otherwise address the needs of underserved populations or communities. This effort will be led by our Culture and Diversity Officer. We have also amended our vendor management policy to appropriately respond with respect to vendors where we identify that their practices do not align with our principles regarding operating in a socially responsible manner, including fair labor standards, acting responsibly with the security and confidentiality of our customer information, engaging in environmentally responsible business practices and acting consistently with our codes of conduct and ethical behavior.

Commitment to Helping Others. We remain committed to strengthening the communities we serve through employee volunteerism and corporate engagement and support with a focus on serving those who are underserved in the local communities where we do business. We do this through financial support, in-kind donations, community engagement, and volunteer service. The Company made over $2.3 million in donations, grants and sponsorships in the Bank’s footprint of Upstate New York, Northeast Pennsylvania, Vermont and Western Massachusetts in 2021. During 2021, our employees gave generously of their time and expertise by donating over 8,000 volunteer hours. They actively participated in over 600 causes and organizations, often by serving on the boards of leading community charities and organizations and supporting these organization in other ways.

Commitment to Community-Focused Mortgage Banking. For more than 150 years, the Bank has focused on serving the financial needs of its customers. The Bank offers severallending programs sponsored by state and federal agencies designed to encourage first time home ownership, affordable home mortgages for those in lower and moderate-income groups, and mortgages for those living in rural areas that would not be eligible for traditional mortgage products. The Bank has expanded its mortgage marketing efforts to those who live in economically disadvantaged areas. In addition, the Bank offers a “No Closing Cost” mortgage product that facilitates the ability of borrowers to attain home ownership with a product that provides for the Bank to absorb mortgage related closing costs, such as filing fees, bank legal fees, appraisal, application, and underwriting/processing fees, provided that the borrower does not prepay the mortgage within three years of the closing.

The Bank has implemented a digital mortgage pre-qualification and application program that has been utilized by 20% of new applicants. This digital program has enabled the Bank to reach a broader and potentially more diverse group of qualified borrowers, including those who are banking at home due to the COVID-19 pandemic.

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Commitment to Supporting Local Businesses. The Bank’s staff of consumer and commercial lending professionals are dedicated to servicing those living in under-served markets within the Bank’s footprint with the goal of promoting financial literacy and access to financial services and products. Because small businesses are engines for our local economies by keeping money close to home and supporting neighborhoods and communities, the Bank also works with government agencies to offer lending programs to small businesses and agricultural loan products. The Bank has financed business projects that help enrich and revitalize the communities where it operates, including financing for health care facilities, solar energy companies, farming operations, addiction counseling services, places of worship, ambulance companies, and community theaters. In connection with the United States Small Business Administration’s Paycheck Protection Program (“PPP”), the Bank implemented a digital application process that enabled it to reach a broader population of small businesses. The Bank made over 5,700 PPP loans during the program’s duration. The goal of all of these efforts is to provide support and opportunities to cultivate robust communities for the Company’s customers, employees, and stakeholders.

Protecting our Customers’ Data. We are committed to providing a high level of customer care including measures to safeguard our customers’ data. The Company’s employees and business partners continually look for ways to provide the Company’s clients with enhanced product offerings while maintaining its cyber and information security controls to protect the Bank’s data, applications and networks. The Company has invested significant resources to address cybersecurity matters. We believe it is important for all employees to have an understanding of the risks and regulations for security and cyber activities and require employees to participate in on-going training programs on this topic.

Ethical Business Practices and Balancing Business Risk. Our Code of Ethics and the Code of Conduct make clear our expectation for the conduct of our Directors, officers and employees. We ensure compliance with these Codes through training and monitoring so that we can maintain our track record of business success based upon the highest level of ethics and professionalism. Our banking employees are required to complete online training and testing to verify their understanding of the legal requirements, including training on unfair, deceptive or abusive acts and practices, fair lending, and anti-money laundering.

We also carefully monitor Enterprise Risk Management topics through our risk management team with Board oversight over the various areas of our business. We encourage active engagement among the different areas within the Company responsible for our risk management oversight. Through our risk management process and oversight by various Board committees, our governance structure ensures that appropriate information gathering and monitoring is in place to oversee the Company’s risks.

Environmental Initiatives. The Company supports environmental and sustainability objectives by encouraging recycling and responsible waste management practices, and energy conservation throughout the organization. We continue to evaluate opportunities to reduce energy consumption in areas such as facilities, equipment, and operations by moving to more efficient equipment, HVAC systems, lighting and use of technology solutions to reduce our energy usage. We recycle all of our electronics through appropriate channels to ensure that harmful substances do not pollute the environment. We are also exploring the possibility of transitioning our data centers to “net zero data centers” to minimize the direct and indirect greenhouse gas emissions derived from our centers by increasing our energy and water efficiency.

The Company has an ongoing initiative to eliminate paper from its work streams and move to completely digital documentation in its business activities where possible. The Bank provides and encourages the use of digital banking and e-statements to its customers, has expanded the use of online platforms for account opening, lending products, communications, remote deposit capture, and various statements and notices, as well as the use of digital workflow and processing in its internal operating and administrative systems. In 2021, the Bank saw a 23% increase in customers using its mobile banking app.

In 2021, as part of the Company’s initiative to transition to fully digital processes for certain business operations, the Bank migrated its mortgage documentation work stream to a fully digital documentation and storage process which significantly reduced the amount of paper used by the Bank. The Bank is committed to expanding its digital documentation initiative and adding new digital platforms to preserve natural resources and streamline its business processes.

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CORPORATE GOVERNANCE

We are committed to strong corporate governance policies, practices, and procedures designed to make the Board more effective in exercising its oversight role. The following section provides an overview of the Company’s corporate governance structure, including key governance documents that guide the Board and management in the performance of their duties which are regularly reviewed by the Board.

BEST PRACTICES

The Board and management regularly review best practices in corporate governance and are committed to a structure that fosters principled actions, informed and effective decision-making, and appropriate monitoring of compliance and performance. The Company’s current best practices are highlighted below:

Independent Oversight	Long-Term Alignment with Shareholders	Strong Commitment to Excellence on the Board
All Directors on the Board are independent Directors with the exception of the President and CEO.	Annual election of Directors.	Addition of three new independent Directors over the last three years to enhance the Board’s ethnic and gender diversity, expertise and skill sets.
Strong and engaged independent Chair of the Board. Separation of the Chair of the Board and CEO roles allows the CEO to focus on leadership and management of the Company while utilizing the independent Chair’s experience and perspective.	Robust stock ownership guidelines for Directors and named executives.	Annual Board and Board Committee evaluations focused on improving Board and Committee performance.
All key committees (Governance, Compensation, and Audit and Compliance) are fully independent.	Majority voting standard for uncontested elections of Directors provides for heightened accountability to the Company’s Shareholders.	Annual evaluation of CEO and senior management and review of succession plans.
Regular executive sessions of independent Directors.	Annual Shareholder engagement process.	The Company’s policies prohibit short sales, transactions in derivatives, and hedging of Company stock by Directors, executive officers and employees, and prohibits pledging of Company stock without prior written consent from the Company.

The Company is dedicated to being a financial industry leader in corporate governance and business ethics. The Board is composed of independent Directors, other than the CEO, with diverse backgrounds who bring a wealth of knowledge and business experience to the Company. The Company has significantly increased the Board’s ethnic and gender diversity and the level of identified skill sets over the last three years.

From the top down, the Company is committed to fostering an effective risk management environment to serve the interests of the Company, its customers, and its Shareholders. The Board has adopted the Code of Ethics and the Code of Conduct to make clear its expectation for the conduct of our Directors, officers and employees. The Company ensures compliance with these Codes through training and monitoring so that the Company can maintain its track record of business success based upon the highest level of ethics and professionalism.

MAJORITY VOTING STANDARD POLICY

The Board has adopted a majority voting standard policy to provide Shareholders with more effective input in the direction of the Company. Under the policy, if the election of Directors is uncontested, a Director Nominee who does not receive the votes of at least the majority of votes cast with respect to such nominee’s election is expected to tender to the Board his or her resignation promptly following the certification of election results. The Governance Committee will make a recommendation to the Board that it either accept or reject such resignation based on relevant considerations. The Board will act on the resignation, taking into consideration the Governance Committee’s recommendation, and will publicly disclose its decision and the rationale behind its decision within 90 days of the certification of the election

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results. If the Board does not accept the resignation, the Director may continue to serve until his or her successor is duly elected or any earlier resignation, removal or separation. If the Board accepts the nominee’s resignation, then the Board may, in its sole discretion, fill any resulting vacancy or decrease the size of the Board pursuant to the Company’s Bylaws.

DIRECTOR INDEPENDENCE

The New York Stock Exchange (“NYSE”) listing standards and the Company’s Corporate Guidelines require the Board to be comprised of at least a majority of independent Directors. The Board has determined that 12 of the 13 Directors nominated to serve on the Board are independent under the NYSE standards and the Company’s Corporate Governance Guidelines.

For a Director to be considered independent, the Board must determine that the Director does not have any direct or indirect material relationship with the Company. To assist it in determining director independence, the Board uses standards which conform to, or are more exacting than, the NYSE independence requirements. Under these standards, absent other material relationships, transactions or interests, a Director will be deemed to be independent unless, within the preceding three years: (i) the Director was employed by the Company or received more than $120,000 per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation payments for prior service, (ii) the Director was a partner of or employed by the Company’s independent auditor, (iii) the Director is part of an interlocking directorate in which an executive officer of the Company serves on the Compensation Committee of another company that employs the Director, (iv) the Director is an executive officer or employee of another company that makes payments to, or receives payments from, the Company for property or services in an amount which, in any fiscal year, exceeds the greater of one million dollars or 2% of the other company’s consolidated gross revenues, or (v) the Director had an immediate family member in any of the categories in (i) – (iv). In determining whether a Director is independent, the Board reviews the stated standards but also considers whether a Director has any direct or indirect material relationships, transactions or interests with the Company that might be viewed as interfering with the exercise of his or her independent judgment.

Based on these independence standards, the Board determined that the following individuals who served as Directors during all or part of the last fiscal year were independent Directors during such year and continue to be deemed independent by the Board: Brian R. Ace, Mark J. Bolus, Jeffrey L. Davis, Neil E. Fesette, Jeffery J. Knauss, Kerrie D. MacPherson, John Parente, Raymond C. Pecor, III, Susan E. Skerritt, Sally A. Steele, Eric E. Stickels, and John F. Whipple, Jr.

RELATED PERSONS TRANSACTIONS

Various Directors, executive officers and other related persons of the Company and the Bank (and members of their immediate families and corporations, trusts, and other entities with which these individuals are associated) may have loans with the Bank including business and consumer loans which are offered in the ordinary course of business by the Bank. All such loans are made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Bank, and do not involve more than the normal risk of collectability or present other unfavorable features. The Company expects that the Bank will continue to have banking transactions in the ordinary course of business with its Directors, executive officers and other related persons on substantially the same terms, including interest rates and collateral, as those then prevailing for comparable transactions with others.

The Company also has a Related Party Transaction Policy, administered by the Audit and Compliance Committee, which provides procedures for the review and approval of related party transactions involving the Company’s Directors, executive officers, Director Nominees, and other related persons. In deciding whether to approve such related party transactions, the Audit and Compliance Committee will consider, among other factors it deems appropriate, whether the transaction is on terms comparable to those generally available to nonaffiliated parties and is consistent with the best interests of the Company. For purposes of this policy, a “related party transaction” is a transaction, arrangement, or relationship or series of similar transactions, arrangements or relationships in which (i) the Company or one of its subsidiaries is involved, (ii) the amount involved exceeds $100,000 in any calendar year, and (iii) a related party has a direct or indirect material interest. Related persons include executive officers, Directors, Director Nominees, beneficial owners of more than 5% of the Company’s stock, immediate family members of any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons has a direct or indirect material interest. The Audit and Compliance Committee reviews and approves all related person transactions after its determination that such transactions are performed at market terms and consistent with the best interests of the Company.

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BOARD LEADERSHIP STRUCTURE

The Company’s long-standing practice is to have a separation of the position of Board Chair and the Chief Executive Officer. In addition, the Company maintains a Lead Director structure to provide an additional source of independent leadership for the Board in the event the Chair of the Board is not deemed to be independent for some reason. In the event the Chair is deemed not to be an independent Director at any time, the Lead Director will preside at meetings and executive sessions of the Board.

The duties of the Lead Director include, but are not limited to, the following: (i) presiding at all meetings of the Board and at executive sessions of the Board at which the Chair is not present, (ii) serving as a liaison between the Chair and the independent Directors, (iii) making recommendations and approving matters to be considered by the Board including agenda items, information to be provided to the Board and the schedule of meetings, (iv) authority to call meetings of the independent Directors, and (v) serving as an independent point of contact for Shareholders wishing to communicate with the Board.

Both the Board Chair and Committee Chairs are subject to four year term rotation guidelines, unless waived by the Board, providing for continuous development of strong leadership qualities on the Board. In addition, the Company encourages Committee Chairs and Directors to participate in continuing board education opportunities and includes educational topics as a component of Board meetings over the course of each year.

EXECUTIVE SESSIONS

Pursuant to the Company’s Corporate Governance Guidelines, the independent Directors meet in executive sessions at the end of Board and Committee meetings as appropriate on a regular basis, without the Company’s management and non-independent Directors present, to facilitate full discussion of important matters.

ANNUAL BOARD AND COMMITTEE SELF-EVALUATIONS

The Board conducts an annual self-evaluation that is intended to determine whether the Board, its committees, and each member of the Board are functioning effectively, and to provide Directors with an opportunity to reflect upon and improve processes and effectiveness. The Chair of the Governance Committee leads the evaluation process which includes a solicitation of Director comments on an anonymous basis and compilation of written evaluative comments to identify issues and areas of focus in a robust discussion of the Board’s performance.

Each committee conducts its own annual self-evaluation and reports the results to the Board. Each committee’s evaluation includes an assessment of the committee’s compliance with its charter and the Company’s policies and procedures, as well as ways to improve committee processes and effectiveness.

NUMBER OF BOARD MEETINGS AND ATTENDANCE AT BOARD AND COMMITTEE MEETINGS

The business of the Board is conducted at regular and special meetings of the Board and its Committees. The Board held 10 regular meetings and four special meetings during the fiscal year ended December 31, 2021. During this period, each Director of the Company attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by committees of the Board on which he or she served.

The Company encourages all Directors to attend each Annual Meeting of Shareholders. All of the Directors attended the Company’s Annual Meeting of Shareholders held on May 13, 2021.

KEY CORPORATE GOVERNANCE DOCUMENTS

Visit the Company’s Investor Relations website at https://ir.communitybanksystem.com/corporate-overview/documents/default.aspx to view the following documents:

• Code of Ethics for Senior Executive Officers

• Code of Ethics applicable to the Company’s Directors, executive officers and employees

• Code of Conduct applicable to the Bank’s Directors, executive officers and employees

• Corporate Governance Guidelines

• Audit and Compliance Committee Charter

• Compensation Committee Charter

• Governance Committee Charter

• Whistleblower Policy

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These documents are available free of charge on the Company’s website or by writing the Company at Community Bank System, Inc., 5790 Widewaters Parkway, DeWitt, New York 13214, Attention: Board Secretary/Investor Relations to any Shareholder or interested party who requests a copy.

CURRENT COMMITTEE COMPOSITION

Among its standing committees, the Company has an Audit and Compliance Committee, Compensation Committee, Governance Committee, Risk Committee, Strategic/Executive Committee, and Trust & Financial Services Committee.

 

BOARD COMMITTEES

Set forth below is a description of the primary duties of the standing committees of the Board and its members as of the date of this Proxy Statement. In addition to the standing committees listed below, the Board also has a Strategic/Executive Committee that leads the Board’s annual strategic planning meeting and other strategic matters identified from time to time. Mr. Fesette is the Chair of the Strategic/Executive Committee and Messrs. Bolus and Parente, and Ms. Steele are members of the Committee, all of whom are independent Directors.

Audit and Compliance Committee

Committee Members: John F. Whipple, Jr., Chair Jeffrey L. Davis Kerrie D. MacPherson Susan E. Skerritt Seven meetings during 2021

• Reviews internal and external audits of the Company and the Bank. • Reviews the adequacy of the Company’s and the Bank’s accounting, financial, and compliance controls, oversees regulatory compliance matters. • Selects the Company’s independent auditors.   See the Audit Committee Report contained on page 58 of this Proxy Statement.   The Board has determined that each member of the Audit and Compliance Committeeis independent as defined by the NYSE rules. The Board has determined that three of the Committees members are “Audit Committee Financial Experts” as defined under SEC rules and regulations.

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Compensation Committee

Committee Members: Mark J. Bolus, Chair Brian R. Ace Neil E. Fesette Raymond C. Pecor, III Susan E. Skerritt Four regular meetings and one special meeting during 2021

• Reviews and makes recommendations to the Company’s and the Bank’s Boards regarding compensation and employee benefits matters. • Reviews the compensation of employees in the aggregate, and the salaries and performance of named executive officers are reviewed individually. • Reviews the Company’s objectives regarding human capital management.   See the Compensation Committee Report contained on page 45 of this Proxy Statement.   The Board has determined that each member of the Compensation Committeeis independent as defined by the NYSE rules.

Governance Committee

Committee Members: Jeffrey L. Davis, Chair Brian R. Ace Neil E. Fesette Jeffery J. Knauss Sally A. Steele John F. Whipple, Jr. Two regular meetings and one special meeting during 2021

• Evaluates and maintains corporate governance policies to ensure effective governance policies are in effect for the Board and corporate organization as a whole. • Considers and makes recommendations for nominees to serve as Directors on the Board. • Conducts annual review and evaluation of Board and Director effectiveness.   The Board has determined that each member of the Governance Committeeis independent as defined by the NYSE rules.

Risk Committee

Committee Members: Raymond C. Pecor, III, Chair Entire Board Six meetings during 2021

• Reviews the Bank’s credit risk, liquidity, and interest rate risk. • Monitors the quality and risk profile of the Bank’s loan portfolio and credit administration. • Evaluates the Company’s securities portfolio to ensure that the Company’s objectives related to diversification, asset quality, liquidity, profitability, and pledging are met. • Oversees the Company’s enterprise risk management functions. • Oversees the Company’s information security and cybersecurity functions.

Trust & Financial Services Committee
Members: John Parente, Chair Mark J. Bolus Kerrie D. MacPherson Sally A. Steele Four meetings during 2021	• Provides oversight with respect to the business activities of the Company’s financial service subsidiaries. • Provides oversight in accordance with regulatory requirements for the Bank’s exercise of its fiduciary powers and trust functions. • Oversees significant compliance matters relating to fiduciary and investment matters.

OVERSIGHT OF RISK

Our management is responsible for managing risks in our business, including development of appropriate controls and processes to assess and monitor risks. Management does not view risk in isolation, but considers risk as part of its regular consideration of business strategy and business decisions. The Board views its role as one of oversight and of responsibility for establishing policies and perspective that risk management should be properly integrated with our strategy and culture. The Board focuses on understanding management’s risk management processes, the effectiveness of those processes, and the way in which management proactively manages risks. The Board oversees and reviews various aspects of the Company’s risk management efforts, either directly or through its committees, and exercises its risk oversight function in several ways. The Board oversees risk management through reporting of the Company’s risk management and internal audit functions, the oversight of various Board committees, and reports from management.

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The Board and its committees review and approve various policies that address and mitigate material risks. These include policies addressing credit risks, interest rate risks, investment risks, liquidity risks, operational risks, strategic risks, reputational risks, and compliance/legal risks, among other matters. With respect to cybersecurity risk, the Risk Committee oversees the Company’s efforts to manage cybersecurity risk and senior management is responsible for the day-to-day management of cybersecurity risk, and for designing and implementing policies, processes and procedures to address and mitigate this risk. The Board also reviews and monitors enterprise risks through various reports presented by management, internal and external auditors, and regulatory examiners.

While the Board has primary responsibility for the oversight of the Company’s risk management, the Board’s standing committees support the Board by regularly addressing various risks in their respective areas of oversight. Each of the committee chairs updates the full Board at its regular meetings concerning the activities of the committee, the significant issues it has discussed and the actions taken by the committee. The following table highlights the role of the Board and each committee in risk oversight:

	Primary Responsibility for Risk Management
The Board	• Assesses management’s risk management processes, the effectiveness of those processes, and the way in which management proactively manages risks. • Receives and reviews regular reports provided by management and monitors risks that have been delegated to the standing committees. • Considers risks related to the reputation of the Company and the general industry in which its operate.
Risk Committee- consisting of the entire Board of Directors	• Committee reviews periodic reports from management on risks related to   • credit risk,   • interest rate risk,   • liquidity risk,   • information and cybersecurity risk,   • enterprise risk management,   • the Company’s corporate insurance program,   • lending activities and asset quality, and   • the investment portfolio.
Audit and Compliance Committee- consisting of entirely independent Directors	• Committee approves and reviews information related to   • the engagements and periodic reports of the Company’s independent auditor and internal audit department related to the Company’s financial statements and oversees areas of regulatory compliance, including Sarbanes-Oxley compliance,   • the Company’s major financial and other financial reporting risk exposures, and   • the procedures and actions management has taken to monitor and control such exposures.
Compensation Committee-consisting of entirely independent Directors	• Committee reviews and considers information related to   • risks related to the Company’s compensation policies, including incentive plans to determine whether these plans subject the Company to excessive risks and provide forappropriate alignment of interests, and   • oversees human capital management efforts and alignment, including any related risks.
Governance Committee-consisting of entirely independent Directors	• Committee conducts annual evaluations of the effectiveness of the Board, conducts new director searches and ensures selection of the nominees to the Board with appropriate skills, experience, attributes, and temperament, and ensures appropriate corporate governance policies are in place.
Trust & Financial Services Committee	• Committee reviews and considers information related to   • the Bank’s trust and wealth management activities to ensure sound risk management practices are in place and that adequate policies, procedures, and controls have been adopted for the size and complexity of the trust and wealth management businesses, and   • the Company’s financial service subsidiaries, which are significant segments of the Company’s business, to ensure sound risk management practices are in place and that adequate policies, procedures, and controls have been adopted for the size and complexity of each financial services subsidiary’s business.

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STOCK OWNERSHIP GUIDELINES

The Board has adopted stock ownership guidelines for senior executives of the Company which require (i) the CEO to own shares of Company common stock and share equivalents equal to at least four times his base salary, and (ii) the Chief Financial Officer and other Executive Vice Presidents to own shares of common stock or share equivalents equal to at least two times their base salary. Senior executive officers are required to retain shares received from stock option exercises or other equity awards, net of taxes, until they have satisfied the equity ownership requirements. All executive officers are in compliance with, or exceed, the requirements of the stock ownership guidelines established by the Company.

The Board has also adopted stock ownership guidelines for Directors of the Company which require each Director to own shares of Company common stock and share equivalent units equal in value to at least five times the annual base Board member retainer within six years of becoming a Director. Under the guidelines, the qualifying share equivalent units consist of at risk units resulting from the Director’s deferment of cash director fees under the deferred compensation plan. In addition, new Directors are required to own at least $25,000 of common stock within one year of joining the Board. All Directors are in compliance, or exceed, the requirements of the stock ownership guidelines.

PROHIBITION ON SHORT SALES, HEDGING AND DERIVATIVE TRANSACTIONS

The Company’s Policy Prohibiting Insider Trading (“Insider Trading Policy”) prohibits short sales, hedging, and transactions in put options, call options, or other derivative securities in the Company’s securities for all Company personnel, including Directors, executive officers, and employees. In addition, the Insider Trading Policy also prohibits holding stock in a margin account or pledging of Company stock as collateral by Directors, executive officers, and other employees unless written pre-approval is obtained from the Compliance Officer designated in the Insider Trading Policy.

COMMUNICATION WITH DIRECTORS

Shareholders and any interested parties may communicate directly with the Board by sending correspondence to the address shown below. The receipt of any such correspondence addressed to the Board and the nature of its content will be reported at the next Board meeting and appropriate action, if any, will be taken. If a Shareholder or an interested party desires to communicate with a specific director, the correspondence should be addressed to that Director. Correspondence addressed to a specific director will be delivered to the Director promptly after receipt by the Company. The Director will review the correspondence received and, if appropriate, report the receipt of the correspondence and the nature of its content to the Board at its next meeting, so that the appropriate action, if any, may be taken.

Correspondence should be addressed to:

Community Bank System, Inc.

Attention: [Board of Directors or Specific Director]

5790 Widewaters Parkway

DeWitt, New York 13214-1883

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Brian R. Ace, Mark J. Bolus, Neil E. Fesette, Raymond C. Pecor, III, and Susan E. Skerritt served on the Compensation Committee for all or part of 2021. There were no Compensation Committee interlocks or insider (employee) participation during 2021.

CODE OF ETHICS

The Company has a Code of Ethics for its Directors, officers and employees. The Code of Ethics requires that individuals avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity and in the best interests of the Company. In addition, the Code of Ethics requires individuals to report illegal or unethical behavior they observe.

The Company also has adopted a Code of Ethics for Senior Executive Officers that applies to its chief executive officer, chief financial officer, and other senior officers performing similar functions. This Code of Ethics is intended to promote honest and ethical conduct, full and accurate reporting, and compliance with laws and regulations.

The text of each Code is posted on the Company’s website at https://ir.communitybanksystem.com/corporate-overview/documents/default.aspx and is available in print free of charge to any Shareholder or interested party who requests it. The Company intends to report and post on its website any amendment to or waiver from any provision in the Code of Ethics for Senior Executive Officers as required by SEC rules.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of March 21, 2022, by

• Each person, or group of affiliated persons, known to us to beneficially own more than 5% of the outstanding shares of the Company’s common stock;

• Each Director;

• Each person who was a named executive officer; and

• All of the Company’s Directors and executive officers as a group.

The percentages shown in the following table are based upon 53,911,509 shares of common stock outstanding as of March 21, 2022. Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting and investment power with respect to shares. The number of shares beneficially owned by a person includes shares subject to options held by that person that were exercisable as of March 21, 2022, or within 60 days of that date. The shares issuable under those options are treated as if they were outstanding for computing the percentage of ownership of the person holding those options, but are not treated as if they were outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated below, to the Company’s knowledge, all persons named in the table have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by a spouse under applicable law.

Set forth below is information about the number of shares of the Company’s common stock beneficially owned by the Directors and executive officers of the Company:

Name	Amount and Nature of Beneficial Ownership(a)(b)(c)	Percentage of Class
Directors
Brian R. Ace	​95,002(d)	*
Mark J. Bolus	​124,031	*
Jeffrey L. Davis	​14,853(d)	*
Neil E. Fesette	​11,581(d)	*
Jeffery J. Knauss	​264
Kerrie D. MacPherson	​1,482	*
John Parente	​79,585	*
Raymond C. Pecor, III	​18,348(d)	*
Susan E. Skerritt	​380	*
Sally A. Steele	​79,585(d)	*
Eric E. Stickels	​41,868	*
Mark E. Tryniski	​292,110	​.54%
John F. Whipple, Jr.	​25,836(d)	*
Executive Officers
Joseph E. Sutaris	​25,114	*
Dimitar A. Karaivanov	​14,795	*
George J. Getman	​88,194	*
Joseph F. Serbun	​35,304	*
Number of shares of Company common stock beneficially owned by all Directors, persons chosen to become Directors and executive officers of the Company as a group (19 persons)	​949,500	​1.75%

*
Represents less than .25% of the Company’s outstanding shares.

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(a)
Represents all shares as to which the named individuals possessed sole or shared voting or investment power as of March 21, 2022. Includes shares held by, in the name of, or in trust for, the spouse and dependent children of the named individual and other relatives living in the same household, even if beneficial ownership has been disclaimed as to any of these shares by the nominee or Director.

(b)
The listed amounts include shares as to which certain Directors and named executive officers are beneficial owners but not the sole beneficial owners as follows: Mr. Ace holds 6,193 shares jointly with his wife, his wife holds 152 shares, and 20,188 shares are held in Mr. Ace’s simplified employee pension plan; Mr. Bolus holds 53,801 shares jointly with his wife, 7,120 shares as Trustee of the Mark Bolus Trust, 5,200 shares as Trustee of the Austin Bolus Trust, 5,200 shares as Trustee of the Noah Bolus Trust, 5,200 shares as Trustee of the Paige Bolus Trust, 5,200 shares as Trustee of the Taylor Bolus Trust, and 857 shares are held by his children; Mr. Davis’ spouse holds 882 shares; Mr. Getman’s wife holds 895 shares and he is the beneficial owner of 6,703 shares held by the Company’s 401(k) Plan; Mr. Karaivanov is the beneficial owner of 48 shares held by the Company’s 401(k) Plan; Mr. Pecor holds 8,787 shares in trust as trustee for trusts holding Company stock for the benefit of his niece and nephew (Mr. Pecor disclaims beneficial ownership of the shares held in these trusts); Mr. Serbun is the beneficial owner of 1,866 shares held by the Company’s 401(k) Plan; Mr. Stickels’ wife is the beneficial owner of 9,124 shares held by the Company’s 401(k) Plan; Ms. Steele holds 47,403 shares jointly with her husband and 2,585 shares are owned jointly with her brother; Mr. Sutaris is the beneficial owner of 2,197 shares held by the Company’s 401(k) Plan; and Mr. Tryniski holds 98,512 shares as the Trustee of the Phyllis Tryniski Family Trust, Mr. Tryniski’s wife is the Trustee of the Mark Tryniski Family Trust that holds 27,264 shares, and he is the beneficial owner of 19,997 shares held by the Company’s 401(k) Plan.

(c)
Includes shares that the following individuals currently have the right to acquire, or will have the right to acquire within 60 days of March 21, 2022, through exercise of stock options issued by the Company: Mr. Ace, 28,263 shares; Mr. Bolus, 12,354 shares; Mr. Fesette, 3,631 shares; Mr. Getman, 40,783 shares; Mr. Parente, 15,638 shares; Mr. Pecor, 1,194 shares; Mr. Serbun, 19,556 shares; Ms. Steele, 20,001 shares; Mr. Sutaris, 14,045 shares; Mr. Tryniski, 114,922 shares; and Mr. Whipple, 23,206 shares. These shares are included in the total number of shares outstanding for the purpose of calculating the percentage ownership of the foregoing individuals and of the group as a whole, but not for the purpose of calculating the percentage ownership of other individuals listed in the foregoing table.

(d)
In addition to the number of shares of common stock reported as beneficially owned, the following Directors have elected to defer cash director fees under the director deferred compensation plan resulting in such Directors holding at risk share equivalent units (“units”), which are subject to fluctuations in the market price of the Company’s stock, in the following amounts as of March 21, 2022: Mr. Ace, 6,572 units; Mr. Davis 63,008 units; Mr. Fesette, 7,500 units; Mr. Pecor, 12,448 units; Ms. Steele, 9,892 units; and Mr. Whipple, 9,830 units.

Set forth below is information about the number of shares held by persons the Company knows to be the beneficial owners of more than 5% of the Company’s outstanding common stock as of March 21, 2022.

Name and Address of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned	Percent of Class(5)
BlackRock, Inc. 55 East 52nd Street New York, NY 10055	7,892,484(1)	​14.64%
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355	6,330,728(2)	​11.74%
State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111	​4,389,496(3)	​8.14%
Neuberger Berman Group LLC Neuberger Berman Investment Advisers LLC 1290 Avenue of the Americas New York, NY 10104	2,730,455(4)	​5.06%

(1)
The information is based on a Schedule 13G filed with the SEC on January 27, 2022 reporting the beneficial ownership as of December 31, 2021. BlackRock, Inc. reported that it has sole voting power with respect to 7,796,785 shares and sole dispositive power with respect to all shares listed.

(2)
The information is based on a Schedule 13G filed with the SEC on February 9, 2022 reporting the beneficial ownership as of December 31, 2021. The Vanguard Group, Inc. reported that it has sole voting power with respect to 0 shares and sole dispositive power with respect to 6,238,936 shares.

(3)
The information is based on a Schedule 13G filed with the SEC on February 11, 2022 reporting the beneficial ownership as of December 31, 2021. State Street Corporation reported that it has sole voting power with respect to 0 shares and sole dispositive power with respect to 0 shares.

(4)
The information is based on a Schedule 13G filed with the SEC on February 11, 2022 reporting the beneficial ownership as of December 31, 2021. Neuberger Berman Group LLC and Neuberger Berman Investment Advisers LLC reported that they have sole voting power with respect to 0 shares and sole dispositive power with respect to 0 shares.

(5)
The ownership percentages set forth in this column are based on the assumption that each of the beneficial shareholders continued to own the number of shares reflected in the table above on March 21, 2022.

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INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The following provides certain business experience for the past five (5) years with respect to individuals who served as the Company’s executive officers during fiscal year 2021. Information concerning Mr. Tryniski, who serves as the Company’s Chief Executive Officer and President, is provided in “Proposal One- The Election of Directors” above.

Executive Officers Who Are Not Directors
Name	Age	Position with the Company
Joseph E. Sutaris	54	EVP and Chief Financial Officer
George J. Getman	65	EVP and General Counsel
Maureen Gillan-Myer	54	EVP and Chief Human Resources Officer
Dimitar A. Karaivanov	40	EVP of Financial Services and Corporate Development
Jeffrey M. Levy	60	President, Commercial Banking
Joseph F. Serbun	61	President, Retail Banking

Joseph E. Sutaris currently serves as EVP and CFO. From November 2017 to June 2018, Mr. Sutaris was the SVP – Finance and Accounting. From September 2016 to November 2017, he served as the Bank’s Director of Municipal Banking. From April 2011 to September 2016, he was the SVP of the Central Region of the Bank. Prior to April 2011, Mr. Sutaris was the EVP, CFO, Treasurer and Secretary of Wilber Corp. and Wilber National Bank.

George J. Getman currently serves as EVP and General Counsel. Prior to January 2008, Mr. Getman was a senior partner at the law firm of Bond, Schoeneck & King, PLLC in Syracuse, New York, and served as corporate counsel to the Company on a broad range of matters, including mergers and acquisitions, SEC and regulatory reporting, banking law and corporate governance.

Maureen Gillan-Myer joined the Company as EVP and Chief Human Resources Officer on October 1, 2021. Prior to joining the Company, she served as the Chief Human Resources Officer of HSBC US from February 2016 through September 2021 and as its Senior Vice President- Talent Acquisition from May 2009 through February 2016.

Dimitar A. Karaivanov joined the Company as EVP of Financial Services and Corporate Development on June 4, 2021. Prior to joining the Company, he served as Managing Director of Lazard Middle Market’s Financial Institutions Group from June 2018 through June 2021. Prior to Lazard, he was the Managing Director of RBC Capital Markets’ Financial Institutions Group from April 2011 through June 2018.

Jeffrey M. Levy was appointed President, Commercial Banking in January 2022. From June 2021 to December 2021, he served as SVP, Commercial Banking Sales Executive, from June 2019 to June 2021, he served as SVP, Regional President of Capital Region, and from January 2018 to June 2019, he served as SVP, Commercial Banking Team Leader. Prior to the Bank, he served as the EVP and President of Commercial Banking at NBT Bank, N.A. from December 2006 to August 2016.

Joseph F. Serbun was appointed President, Retail Banking in January 2022. From March 2020 through December 2021, he served as EVP and Chief Banking Officer, from June 2018 through March 2020, he served as EVP and Chief Credit Officer (‘‘CCO”), and from June 2010 through June 2018,he served as SVP and CCO. He previously served as a Vice President and Commercial Team Leader of the Bank from January 2008 through June 2010. Prior to January 2008, Mr. Serbun was a Vice President at JPMorgan Chase Bank, N.A. in Syracuse, New York.

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) provides an overview of the principles and practices underlying our executive compensation program and the decisions made by the Compensation Committee of the Board related to compensation in fiscal year 2021.

This CD&A and the Executive Compensation Tables starting on page 46 provide compensation information for our “named executives” who are identified as follows:

Name	Title
Mark E. Tryniski	President and Chief Executive Officer (“CEO”)
Joseph E. Sutaris	Executive Vice President and Chief Financial Officer (“CFO”)
Dimitar A. Karaivanov	Executive Vice President of Financial Services and Corporate Development
George J. Getman	Executive Vice President and General Counsel
Joseph F. Serbun	President, Retail Banking

EXECUTIVE SUMMARY

Financial Performance Highlights

Successful Year In Spite of Challenges. In fiscal year 2021, despite the challenges caused by the COVID-19 pandemic and difficult interest rate market conditions, the Company delivered strong operating performance. The Company’s Total Revenues and Operating Net Income increased 4.0% and 9.9%, respectively, while GAAP Earnings per Share and Operating Earnings per Share were up $0.40, or 13.0%, and $0.25 or 7.7%, respectively.

	2021	2020	Percentage Change
Net Interest Income	$374.4 million	$368.4 million	1.6%
Non-interest Income	$246.2 million	$228.4 million	7.8%
Total Revenues	$620.6 million	$596.8 million	4.0%
Total Operating Expenses(1)	$387.3 million	$368.7 million	5.1%
Net Income	$189.7 million	$164.7 million	15.2%
GAAP Earnings per Share	$3.48	$3.08	13.0%
Operating Net Income(2)	$190.3 million	$173.1 million	​9.9%
Operating Earnings per Share(2)	$3.49	$3.24	7.7%
Net Charge-Offs/ Average Loans	0.04%	0.07%	(42.9)%
Dividends Declared per Share	$1.70	$1.66	2.4%

(1)
Excluding acquisition expenses and special charges.

(2)
Excludes, net of tax, acquisition expenses, acquisition-related provision for credit losses, acquisition-related contingent consideration adjustment, unrealized gain/loss on equity securities, litigation accrual expense, and gain on debt extinguishment.

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Strong Total Shareholder Returns. The Company has consistently returned significant value to its Shareholders. Its total annualized shareholder returns as compared to bank-specific indices and our peer group over multiple periods are set forth below:

Total Annualized Shareholder Returns⁽¹⁾⁽²⁾

	1 Year	3 Years	5 Years	10 Years
Community Bank System	22.3%	11.2%	6.4%	13.6%
Peer Group Median(3)	​32.0%	8.0%	2.4%	​9.6%
S&P 600 Commercial Bank Index	35.7%	12.9%	4.9%	13.4%
KBW Regional Bank Index (KRX)	36.7%	15.6%	5.4%	12.5%

(1)
Annual equivalent through December 31, 2021, including reinvestment of dividends.

(2)
Source: Bloomberg, L.P.

(3)
See page 37 for Peer Group information.

29^th Consecutive Year of Dividend Increases. Reflecting the Company’s focus on sustainable long-term returns for its Shareholders, the Company increased its quarterly cash dividend to Shareholders by 2.4%, to $0.43 per share, in July 2021, marking the 29^th consecutive year of annual increases in its cash dividend.

Agreement to acquire Elmira Savings Bank. On October 3, 2021, the Bank entered into a merger agreement to acquire Elmira Savings Bank. This acquisition will enhance the Bank’s presence in the New York Southern Tier and Finger Lakes regions, which are key markets for the Bank.

Compensation Decisions for 2021

Executive Compensation Payouts for 2021. After considering the Company’s operating performance, financial results, and achievement level of predetermined plan objectives, the Compensation Committee took the following actions relating to 2021 short-term and long-term incentive compensation decisions with respect to its named executives and other key employees:

• Above Target Payouts for Cash Awards. Approved annual cash incentive awards at the level of 125% of the target amount based on achievement measured against pre-established performance objectives without adjustments or application of discretion by the Committee, as described on pages 38 to 40.

• Annual Equity Award Grants at Target Level. Granted stock options and restricted stock awards at target levels based on the Committee’s assessment of the named executives’ performance. These equity awards are subject to a five year pro rata vesting schedule and, with respect to the stock options, require stock price appreciation before the stock options are exercised in order to produce any value for the named executives.

• No Payout for Three-Year Performance-Based Equity Award. With respect to the long-term performance-based equity award for executives covering the performance period for 2019-2021, the Compensation Committee determined that no shares would vest based on the failure to achieve pre-established threshold achievement levels. The performance metric for this equity award was based on the Company’s total shareholder return (“TSR”) as compared to the TSR for the KBW Regional Banking Index (KRX) as of December 31, 2021.The three year TSR for the period ended December 31, 2021 was 37.7% for the Company resultingin an average annualized TSR of 12.6% over the three year performance period, which is a strong return for the Company’s Shareholders. However, the three year TSR for the period ended December 31, 2021 was 54.6% for the KRX resulting in anaverage annualized TSRof 18.2%, for an annualized variance of (5.6%), which was below the threshold performance level established by the Committee.

Pay-for-Performance Alignment. A significant portion of executive pay is in the form of performance-based pay (cash and equity) that promotes the achievement of the Company’s annual and long-term performance goals, placing significant weight on improvement in operating earnings per share (“EPS”) each year, and achievement of total shareholder returns aboveits peer group andthe KRX market index. The Company believes operating EPS reflects the best measurement of its performance and progress towards continuously increasing Shareholder value.

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Snapshot of Compensation Governance

The Company continues to implement its executive compensation program in a manner that is designed to reinforce its philosophy of aligning each named executive’s compensation with the Company’s short-term and long-term performance goals. The Company uses the following practices in order to align its compensation philosophy with practices generally considered to promote Shareholder value.

What We Do:		What We Don’t Do:
✔	Pay for Performance. A significant percentage of our named executives’ total compensation is variable and at-risk and based upon our performance, ranging from 62% for the CEO and 52% on average for the other named executives.	✘	No “timing” of equity grants. We only grant equity awards on predetermined dates.
✔	Evaluate and Manage Risk. The Compensation Committee reviews incentive compensation programs annually to ensure a balance of short-term and long-term incentives and that our programs do not encourage excessive risk taking.	✘	No Hedging and Pledging. We prohibit our employees, executive officers, and Directors from engaging in hedging of Company stock and derivatives. Without prior written consent, our employees, executive officers, and Directors are also prohibited from holding Company stock in a margin account or otherwise pledging our stock.
✔	Independent Expert Advice.The Compensation Committee engages a consultant that is independent and free of conflicts of interest, provides the Committee with expert executive compensation adviceon executive compensation matters, including the structure of the new performance equity awards and the adoption of the 2022 Long-Term Equity Incentive Plan.	✘	No Repricing of Stock Options. Our equity incentive plan prohibits the repricing of options without Shareholder approval.
✔	Require Significant Stock Ownership. Our named executives are subject to robust stock ownership requirements to promote alignment with our Shareholders.	✘	No tax gross-ups. We do not provide our named executives with tax gross-ups in any of our compensation plans or agreements.
✔	Executives Subject to a Robust Clawback Policy. Our named executives are subject to our incentive compensation recoupment policy (“clawback”) in the event of financial restatements and/or violations of law or Company policy as provided in the clawback policy.	✘	No “Single-Trigger” Change In Control Provisions. Our change in control provisions require both a change in control and a subsequent involuntary termination without “cause” or voluntary resignation for “good reason” in order for a named executive to be eligible to receive severance or accelerated vesting in connection with a change in control transaction.
✔	Capped Incentives. Annual cash incentive compensation is based on the achievement of the objectives set forth in the MIP, ranging from 0% to 162.5% based on the threshold, target, and maximum achievement levels.	✘	No Significant Perquisites. Our named executives are entitled to only limited perquisites.

Changes in 2022 Long-Term Equity Program

As part of its oversight, the Compensation Committee considers the results of the Shareholders’ annual advisory vote on executive compensation (“say-on-pay proposal”). At the Company’s Annual Meeting of Shareholders held in May 2021, approximately 93% of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the Company’s executive compensation program. The Committee believes that these voting results reflect strong Shareholder support for the Company’s current compensation practices. As contemplated last year, the Committee has modified the structure of the 2022 long-term equity awards to provide for an annual performance award cycle rather than a triennial award cycle. The new equity program is described in more detail on page 42.

The Committee will continue to oversee the executive compensation programs consistent with the objectives set forth herein and consider the outcome of the Company’s future say-on-pay votes, regulatory changes and emerging best practices when making future compensation decisions for the named executives.

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OUR COMPENSATION PHILOSOPHY

The Compensation Committee reviews and administers the Company’s compensation policies and practices for the executive officers of the Company, including the named executives. The Company is focused on rewarding long-term sustained performance. We strive to consistently maintain strong financial performance while balancing a relatively conservative risk profile to deliver financial returns to our Shareholders. In administering compensation policies and practices, the Committee seeks to achieve the following compensation objectives:

Our Compensation Objectives include:
	Linking the executive compensation program with the Company’s performance to ensure that a significant portion of their total compensation is variable and tied to the Company’s performance.
	Aligning the executives’ interests with those of the Company’s Shareholders.
	Attracting and retaining talented leadership to sustain competitive advantage.
	Providing a framework that encourages strong financial results and positive shareholder returns consistent with our risk profile.

The Committee achieves these objectives by using a combination of base salary, incentive-based cash awards, and equity award components. Compensation consists of the following three elements:

• Base Salary. The Company targets base salaries to be competitive with the median for corresponding executives in the Peer Group selected by our independent compensation consultant and affirmed by the Committee. The executives’ base salaries are the foundation for other pay programs to the extent they are expressed as percentages of base salary and as a result, the Committee carefully considers the appropriate base salary amounts to ensure proper pay mix and positioning.

• Annual Cash Bonus Pursuant to the Management Incentive Plan (”MIP”). The Company’s annual cash incentive program is a variable, at-risk component of the named executives’ compensation that is directly tied to the achievement of specific performance metrics and strategic goals. The Committee establishes these pre-determined goals and achievement levels each year in this MIP, which are approved by the Board, with the goal of focusing the efforts of the named executives and management on objectives which will drive the growth and sustainability of the organization.

• Equity-Based Long-term Incentives. The Committee uses a combination of time-based vested restricted stock, performance-based equity awards, and stock options. The program provided grants of performance-based restricted stock awards once every three years and stock options and time-based restricted stock each year. The Committee believes this approach provides a meaningful portion of performance-based awards at risk based on performance. In addition, equity based compensation also aligns the interests of the named executives with the interests of the Company’s Shareholders and helps retain a high-performing executive team over the longer term through the use of vesting schedules that generally require continuous service over a five year vesting period.

 
In 2021, the program provided time-based restricted stock and stock options awards, since the performance-based restricted stock grant was made in 2019 for the period from 2019-2021. As noted earlier, the 2019-2021 grant did not vest, as performance did not meet the threshold performance goal.

The Company’s ability to attract and retain talented employees and executives with the skills and experience to develop and execute on business opportunities is essential to its success and providing value to its Shareholders. The Company seeks to provide fair and competitive compensation to its employees by structuring compensation principally around two general parameters:

• Total target compensation is intended to be competitive with the median of our Peer Group.

• When the Company’s performance exceeds its performance goals and the performance of the KRX market index, the Company’s total compensation is designed to reward employees with pay above their target level. Similarly, if the Company’s performance does not meet its goals or falls below the KRX market index, the Company’s compensation is designed to fall below that target level.

To support this pay-performance alignment, a significant amount of the Company’s executives’ total compensation is variable and incentive based, and tied to the achievement of Company performance goals and long-term Shareholder value. The Company believes pay-performance alignment should be evaluated over a multiple year period since much of its pay is related to longer-term performance results.

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(1)
For purposes of this chart, the value of the long-term performance based equity awards is calculated by dividing the target value of the three-year grant by three in order to derive an annual value.

ROLE OF COMPENSATION COMMITTEE, COMPENSATION CONSULTANTS AND EXECUTIVE OFFICERS

The Compensation Committee is responsible for the development, oversight and administration of the Company’s compensation and benefit programs. The Compensation Committee currently consists of five members of the Board, each of whom is an independent, non-employee Director. In carrying out its duties, the Committee reviews and approves the Company’s goals and objectives with respect to the CEO and other executives and seeks to align compensation with the Company’s business objectives and performance. The Compensation Committee also evaluates the performance of the CEO and the other executives in light of such goals and objectives and determines compensation levels based on such evaluation. The Committee also oversees the administration of broad-based compensation plans for the Company and its subsidiary entities, the review of succession planning for key positions in the Company, and the review and approval of executive level employment agreements.

The Compensation Committee has retained Meridian Compensation Partners, LLC (“Meridian”) to serve as an independent compensation consultant with respect to executive and Board compensation. Meridian’s work has included a review and refreshment of the Company’s Peer Group and a comprehensive assessment of the Company’s executive compensation programs and pay levels for the named executives compared to the Peer Group, including advice and counsel related to market trends and best practices regarding the structure and governance of our executive compensation programs. The Committee has assessed the independence of Meridian pursuant to SEC rules and concluded that no conflict of interest exists that would prevent Meridian from service as an independent advisor to the Committee. Meridian provided no services to the Company or its management other than services related to the Company’s compensation programs.

Although the Compensation Committee makes independent determinations on all matters related to compensation of the named executives utilizing executive sessions without management present, certain members of management are requested to attend and provide input to the Committee throughout the year. The Compensation Committee receives input from Company management, including the CEO, CFO, Chief Human Resources Officer, General Counsel and others as needed to ensure that it has the information and perspective needed to carry out its duties.

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PEER GROUP AND BENCHMARKING

Benchmarking Process

Understanding the industry’s landscape is an essential element of establishing the Company’s program targets and making compensation decisions. The Company regularly reviews competitive market data and compares executive pay and performance to market norms to ensure alignment. It has been the Committee’s practice to benchmark the named executives’ compensation against a refreshed group of peers every three years. In 2020, the Compensation Committee engaged Meridian to update the Peer Group to reflect the Company’s growth and changes in the banking landscape. The Committee targets total compensation to be competitive with the median for corresponding executives within its Peer Group. The Compensation Committee used the updated Peer Group information to make determinations regarding the 2021 base salaries and other elements of compensation for the named executives.

Updated Peer Group

In 2020, Meridian updated the peer group to reflect changes in the Company and industry peers. The objective selection criteria included commercial banks of similar size, geography and business model with a goal to position the Company at the median for asset size and revenue. The following peer group (the “Peer Group”) was used to conduct benchmarking and assess our program for 2021.

Peer Group used for 2021 Compensation Decisions
Atlantic Union Bankshares Corporation	Berkshire Hills Bancorp Inc.	Customers Bancorp, Inc.
First Busey Corp.	First Commonwealth Financial Corporation	First Financial Bancorp.
First Merchants Corporation	First Midwest Bancorp, Inc.	Fulton Financial Corporation
Independent Bank Corp.	NBT Bancorp, Inc.	Old National Bancorp
Park National Corporation	Sandy Springs Bancorp, Inc.	S&T Bancorp, Inc.
United Bankshares, Inc.	WesBanco, Inc.	Webster Financial Corp.

Industry comparisons are only one element of the Compensation Committee’s holistic review of our executive compensation programs. As described above, although the Compensation Committee views market data as an essential element in its compensation determination process, it believes that market data should be used in conjunction with the Compensation Committee’s overall review and analysis of the Company’s and its executives’ performance as well as the Company’s business and retention needs in making compensation decisions.

2021 COMPENSATION PROGRAM AND PAY DECISIONS

The compensation program for senior executives is built around our pay-for-performance philosophy. The Company’s compensation program consists of three primary elements:

• base salary;

• annual cash bonus pursuant to the Management Incentive Plan (“MIP”); and

• equity-based and long-term performance incentives.

These compensation elements and 2021 pay decisions are described in more detail below.

Base Salary

The Company uses the base salary element of total compensation to provide the foundation of a fair and competitive compensation opportunity for each individual named executive. The Compensation Committee reviews the base salaries of our named executives annually to determine whether any adjustments are advisable based on market analysis, individual performance and contributions, and the Company’s performance and retention needs. Base salaries are generally intended to be competitive with the median for corresponding executives in the Peer Group. The Committee recognizes that base salaries are the foundation for many other pay programs to the extent they are expressed as percentages of base salary (e.g., the target cash incentive under the MIP is a percentage of the executive’s base salary). As a result, the Committee carefully considers the appropriate base salary amounts to ensure proper pay mix and positioning.

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In December 2020, the Compensation Committee approved the base salary adjustments shown in the following table for the named executives:

Name	2020 Base Salary	% Increase	2021 Base Salary
Mark E. Tryniski	$844,600	2.0%	$861,492
Joseph E. Sutaris	$400,000	2.0%	$408,000
Dimitar A. Karaivanov(1)	N/A	N/A	$480,000
George J. Getman	$432,800	2.0%	$441,456
Joseph F. Serbun	$400,000	2.0%	$408,000

(1)
Mr. Karaivanov joined the Company in June 2021.

Annual Incentive Payments under the Management Incentive Plan (“MIP”)

Annual incentives under the MIP are designed to be awarded upon the satisfaction of performance-based achievements relative to specified, pre-determined Company performance goals. The goals are intended to focus management’s attention on strategic priorities in the operation of the Company.

Each of our named executives is assigned a target bonus opportunity under the MIP defined as a percentage of base salary (which remained unchanged from fiscal 2020, except for Mr. Karaivanov who joined the Company in 2021 and his target was established at 55%). The Compensation Committee periodically reviews target bonuses to ensure that they remain appropriate based on market analysis, individual performance and contributions, and the Company’s performance and retention needs. Each named executive’s fiscal 2021 target bonus percentage is set forth in the table below:

Name	2021 Target Bonus (as percentage of Base Salary)
Mark E. Tryniski	70%
Joseph E. Sutaris	50%
Dimitar A. Karaivanov	55%
George J. Getman	40%
Joseph F. Serbun	50%

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At the beginning of each fiscal year, the Compensation Committee establishes annual corporate performance goals to be used in determining awards based on achievement levels. Corporate goals are proposed by the CEO, reviewed and approved by the Committee, and also approved by the Board. The Committee considers and assigns a relative weight to each goal to appropriately focus efforts on corporate goals that are intended to enhance Shareholder value. The Company’s corporate goals under the 2021 MIP are summarized in the table below, including each goal’s (i) weight, (ii) threshold, target, and maximum levels of achievement, (iii) achievement level in 2021, and (iv) weighted attainment percentage based on 2021 performance:

Achievement Levels
Goal	Weight	Level	Goal	Percentage Achieved	Actual Achievement in 2021	Weighted Attainment Percentage in 2021
Operating EPS Growth(1)	25%	Threshold	1%	50%	7.7%	50%
		Target	3%	100%
		Maximum	> 6%	200%
Operating Efficiency Ratio(2)	10%	Threshold	64%	50%	60.2%	10%
		Target	62%	100%
		Maximum	< 60%	150%
Retail Banking Objectives(3)	15%	Threshold	Achievement of 2 Objectives	50%	Three Objectives Attained	15%
		Target	Achievement of 3 Objectives	100%
		Maximum	Achievement of 4 Objectives	150%
Strategic Objectives(4)	10%	Threshold	Achievement of 1 Objectives	50%	One Objective Attained	5%
		Target	Achievement of 2 Objectives	100%
		Maximum	Achievement of 3 Objectives	150%
Commercial Banking Growth	15%	Threshold	Increase commercial loan balance by 3.0%, or increase commercial deposit and deposit sweep by 3.0%	50%	One objective achieved: Commercial deposit and sweep balances increased 12.5%	7.5%
		Target	Achievement of one objective	100%
		Maximum	Achievement of both objectives	150%
Net Charge-Off Ratio(5)	10%	Threshold	0.35%	50%	0.04%	15%
		Target	0.25%	100%
		Maximum	< 0.15%	150%
Growth in Pre-Tax Operating Earnings of Financial Services Business(6)	15%	Threshold	2%	50%	20.5%	22.5%
		Target	4%	100%
		Maximum	> 8%	150%
Total Weighted Attainment Percentage						125.0%

(1)
Operating EPS Growth means the increase in 2021 operating earnings per share over 2020 operating earnings per share (expressed as a percentage).

(2)
Operating Efficiency Ratio as reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The Committee selected the same maximum, target and threshold achievement levels for the operating efficiency ratio for the 2020 and 2021 MIP, even though the Company’s operating efficiency ratio for 2020 was 59.57%, because operating at the selected maximum level of efficiency is a successful outcome and a stretch goal for the Company to achieve year-over-year. The Committee believes that lowering the maximum level to an amount less than 60% could encourage the named executives to make decisions that may not be in the long-term interests of the Shareholders.

(3)
Retail Banking Objectives for fiscal 2021 included (i) total Individual, Partnership, Corporation (“IPC”) deposit and deposit sweep growth of 2%, (ii) increase in mortgage and home equity balances of at least 3%, (iii) consumer installment growth of at least 2%, and (iv) year-over-year growth in banking-related non-interest income of at least 3%. The Committee considered the lower and negative population growth rates of the markets where we operate in setting appropriate achievement levels based on its determination of an appropriate target level goal. Actual achievement was as follows: (a) total IPC deposit and sweep growth goal was 12.2%, (b) increase in mortgage and home equity balance goal was 6.2%, (c) consumer installment growth goal was 14.4%, and (d) year-over-year decrease in non-interest income goal was 2.7%.

(4)
Strategic Objectives for fiscal 2021 included three objectives related to implementation of certain retail objectives, execution of commercial efficiencyand business model project, and the implementation and execution of an employee engagement survey platform. One out of the three objectives were attained.

(5)
Net Charge-Off Ratio as reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The Committee set the maximum achievement level to less than 0.15% for 2021, the same level that was established for the 2020 MIP. The Company’s actual net charge-off ratio for 2020 was 0.07%, but 0.15% was set as the 2021 goal because achieving net charge-offs of less than 0.15% was deemed by the Committee to be an appropriate measurement of a well-managed lending portfolio that appropriately balances business opportunities, including loan portfolio growth objectives and the underlying risks. The Committee does not believe that setting the maximum level at a lower amount would be an appropriate stretch goal for the named executives based on the historical credit-related performance of the Company’s loan portfolio and potential disincentive to meet loan portfolio growth objectives.

(6)
Growth in Pre-Tax Operating Earnings of Financial Services Business is measured as the year-over-year increase in pre-tax operating earnings of the Company’s Employee Benefits and All Other segments (expressed as a percentage).

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The weighted attainment percentage for each corporate goal as shown in the table above is calculated by the following formula:

Weight X Percentage Achieved = Weighted Attainment Percentage

Performance is not interpolated for achievement between the threshold and target or target and maximum levels described above. The Compensation Committee did not exercise discretion with respect to fiscal 2021 payments and has not exercised such discretion in the last six years. The weighted attainment percentages for each corporate goal are summed to yield a total weighted attainment percentage, which was 125.0% for fiscal 2021 as shown in the table above. If the Company were to achieve target for all of the established goals, the weighted attainment percentage would be 100%. The maximum possible total weighted attainment percentage in fiscal 2021, if all corporate goals had been achieved at the “maximum” level, was 162.5%. Each named executive is eligible to receive a payout under the MIP equal to the following:

Total Weighted Attainment
Percentage X Target Bonus = Payout

For the 2021 MIP payments, which were paid in 2022, the following table shows each named executive’s target bonus and actual bonus paid:

Name	2021 Base Salary	Total Weighted Attainment Percentage	2021 Target Bonus (as percentage of Base Salary)	2021 Actual Bonus (as percentage of Base Salary)	2021 Management Incentive Plan Payment(1)
Mark E. Tryniski	$861,492	125.0%	70%	87.5%	$753,806
Joseph E. Sutaris	$408,000	125.0%	50%	62.5%	$255,000
Dimitar A. Karaivanov	$480,000	125.0%	55%	68.8%	$330,000
George J. Getman	$441,456	125.0%	40%	50.0%	$220,728
Joseph F. Serbun	$408,000	125.0%	50%	62.5%	$255,000

(1)
These amounts are also reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table, below.

Equity-Based and Other Long-Term Incentive Compensation

The Compensation Committee believes that the interests of the Company’s Shareholders are best served when a significant percentage of executive compensation is comprised of equity-based and other long-term incentives that appreciate in value contingent upon increases in the share price of the Company’s stock and other indicators that reflect improvements in business fundamentals. Accordingly, in determining total compensation levels, the Compensation Committee includes annual grants of equity-based awards to the named executives and other key employees which are designed to accomplish long-term objectives of the Company’s compensation program. All equity grants were awarded under the 2014 Incentive Plan.

Our long-term incentive program consisted of a combination of “annual grants” of restricted stock and stock options and a triennial grant of performance-based equity granted in 2019 which covered the performance period of 2019-2021. This portfolio approach helps achieve multiple objectives focused on (i) aligning value of grants with future performance (stock price and predefined performance goals), (ii) encouraging stock ownership, (iii) providing retention incentives for the Company’s top talent, and (iv) aligning executives with Shareholder interest. Stock options and restricted stock can also serve as an effective tool in recruiting key individuals to work for the Company and vesting requirements encourage those individuals to continue in the employ of the Company.

The annual equity awards are awarded each year based on a combination of the Company’s performance and individual performance determined by the Compensation Committee with the target level of such awards tied to the named executive’s base salary and responsibilities.

The triennial performance-based restricted stock was granted to the named executives every three years (i.e., for performance period 2019-2021), which represented 25 percent of each named executive’s target equity compensation on an annual basis (with the remaining 75 percent of annual target equity compensation granted half in the form of time vested stock options and half in the form of time vested restricted stock in each case vesting over a five-year period). The triennual grant cycle for the performance-based restricted stock reflected the Compensation Committee’s belief that the annual grants of options – which only have value if the price of our common stock appreciates in value after the

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grant date – are inherently performance-based, while being less sensitive to short-term market swings than performance-based restricted stock, which may vest or be forfeited (resulting in widely divergent outcomes for the named executives) depending on short-lived fluctuations in market prices.

In 2022, the Committee has redesigned the performance-based equity grant so that this component will be granted each year along with the stock options and time-based restricted stock. See the section entitled “New 2022 Long-term Equity Program” on page 42 for more details about the new performance-based equity grants.

The Compensation Committee sets target award opportunities for equity grants that are designed to be competitive with our Peer Group and consistent with the named executive’s position. The table below provides the annualized target equity award opportunities for each of the named executives in 2021:

Name	2021 Target Equity Grant (as percentage of Base Salary)
Mark E. Tryniski	90%
Joseph E. Sutaris	50%
Dimitar A. Karaivanov	90%
George J. Getman	55%
Joseph F. Serbun	50%

Mr. Karaivanov was granted an initial equity grant in June of 2021 as a signing bonus pursuant to the terms of his employment agreement, which is described on page 53. He received 10,826 shares of restricted stock with a three-year vesting period, 2,700 shares of restricted stock with a five-vesting period, and 11,714 stock options with an exercise price of $80.01 that vest over five years.

Please see the Summary Compensation Table and the Grants of Plan-Based Awards Table presented on pages 46 to 47 and the accompanying narrative disclosure for more information regarding the stock options and restricted stock received by each of the named executives in connection with the annual equity awards.

Three-Year Performance Equity Award (2019-2021).Prior to the changes being implemented in the 2022 long-term incentive program, in March 2019, the Committee granted a long-term performance equity award to the named executives and senior management consisting of shares of performance restricted stock, the terms of which provide that between zero and 200% of the target award may be earned over the three-year performance period starting January 1, 2019 and ending December 31, 2021. The performance metric used to determine the level of achievement over the three-year performance period is based on the difference, measured in percentage points, between the Company’s average annual total shareholder return (stock price and dividends) and a benchmark total return index. The Committee selected the KRX Index as the benchmark index because it was deemed to be an objective and industry relevant measure for the Company’s performance, reflecting the Company’s pay for performance structure.

The Committee determined the target performance levels based on appropriate stretch performance goals taking into consideration the benchmark index, performance period, and range of performance measure criteria tied to the payout opportunity. The performance restricted stock award includes a dividend equivalent right that will accrue, in the form of additional shares of common stock, but only paid if the performance restricted stock is earned and vested at the end of the performance period. The table below sets forth the performance measure and the threshold, target, and maximum payout levels established for the grant:

Performance Levels Established by the Compensation Committee

Performance Measure	Threshold	Target	Maximum
Company average annual Total Shareholder Return (“TSR”) compared to benchmark KBX annual Total Shareholder Return (“KRX TSR”) (both measured in terms of percentage point increase or decrease over the performance period)	Company TSR is less than KRX TSR by 5 percentage points or more on an average annual basis, then the payment opportunity is zero.	Company TSR is equal to or within 1.99 percentage points on an average annual basis of the KRX TSR, then the payment opportunity is 100% of Target Amount.	Company TSR exceeds the KRX TSR by 5 percentage points or more on an average annual basis, then payment opportunity is 200% of Target Amount.

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After the end of the three-year performance period (December 31, 2021), the Compensation Committee determined that the Company’s average annualized TSR was 12.6% and the average annualized KRX TSR was 18.2%, for an annualized variance of (5.6%), which was below the threshold performance level of 5% less than the KRX TSR. Accordingly, no payment was made to the executives participating in the Three-Year Performance Equity Award covering the 2019-2021 performance period.

NEW 2022 LONG-TERM EQUITY INCENTIVE PROGRAM

Starting in 2022, the Committee has redesigned the mix and structure of the Company’s equity awards. Effective for grants beginning in March 2022, the annual equity grants will be structured to be comprised of (i) 50% performance-based restricted stock, (ii) 25% stock options, and (iii) 25% time-based restricted stock grants. Thus, effective for grants beginning in March 2022, 75% of the annual equity awards will be performance-based awards dependent the Company’s performance:

 

Three components of our long-term equity awards are described as follows:

1.
Annual Performance-Based Restricted Stock Grant- 50% of Annual Equity Grant. The Committee has established a new annual performance-based restricted stock grant that will be measured at the end of a three year performance period. For the performance period from 2022 through 2024, the Committee has selected two performance metrics: (1) the Company’s three-year total shareholder return as compared and ranked against the group of 50 peer banks identified in the KBW Regional Bank Index (KRX) as of January 2022, and (2) the three-year average core return on average tangible common equity (“Core ROATCE”) measured by the Company’s percentile rank of the three-year average Core ROATCE against the KRX peer banks. Starting in March 2022, the named executives will receive 50% of their total long-term equity grant in the form of performance-based restricted stock.

2.
Annual Stock Option Grants- 25% of Annual Equity Grant. The Committee believes that the grant of stock options, which vest over a five year period, is an essential element of the executive compensation program because the options only have value if the price of our common stock appreciates in value after the grant date, are inherently performance-based, while being less sensitive to short-term market swings than performance-based restricted stock, which may vest or be forfeited (resulting in widely divergent outcomes for the named executives) depending on short-lived fluctuations in market prices. Starting in March 2022, the named executives will receive 25% of their total long-term equity grant in the form of stock options.

3.
Annual Restricted Stock Grant- 25% of Annual Equity Grant. The Committee believes that granting time vested restricted stock aligns the value of grants with future performance (stock price and predefined performance goals), encourages stock ownership, provides retention incentives for the Company’s top talent by having a three-year vesting period, and aligns executives with Shareholder interest. Starting in March 2022, the named executives will receive 25% of their total long-term equity grant in the form of time-based restricted stock.

The 2022 financial performance metrics were chosen to be in alignment with the Company’s strategic plan as approved by the Board. The measures were designed to support the Company’s continuing efforts in increasing our financial strength and increasing Shareholder value. We use core results to more accurately measure management’s performance against our operating plan. Core results adjust our actual results for nonrecurring revenue and expense items including certain nonrecurring charges primarily related to our acquisition-related activities. Below are the performance measures and threshold, target and maximum achievement levels as set forth in the table below for the 2022-2024 performance cycle for the performance grants:

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Performance Measures	Weight	Threshold	Target	Maximum
Three-year TSR Rank – Relative to the population of KRX constituents	50%	25th Percentile	50th Percentile	100th Percentile
Three-year Core ROATCE – Relative to the population of KRX consistuents	50%	25th Percentile	50th Percentile	100th Percentile
Payout Range (% of Target)	100%	50%	100%	200%

Corporate performance results between threshold and target and between target and maximum are calculated on a straight-line interpolation basis. Incentive awards are calculated based on actual performance as compared to the goals described above. The Compensation Committee has the discretion to reduce or increase the payouts to the extent it determines appropriate to reflect the business environment and market conditions that may affect the Company’s financial and stock price performance. The potential payout range is from 0% to 200% and will be determined on the achievement of both performance goals separately. When TSR is negative, the payouts cannot exceed 100% of target for the entire performance-based equity grant regardless of the actual performance results.

Retirement and Other Benefits

Pension Plan and 401(k) Plan Benefits. The Company provides retirement benefits through a combination of the tax-qualified Community Bank System, Inc. Pension Plan (the “Pension Plan”) and a 401(k) plan for most of its regular employees, including the named executives. The Pension Plan is more fully described under the section entitled “Retirement Plan Benefits” on page 49. The Pension Plan is available to all of the Company’s employees after one year of service. The 401(k) Employee Stock Ownership Plan (the “401(k) Plan”) allows employees to contribute up to 90 percent of their base salaries to the 401(k) Plan on a pre-tax or after-tax basis, subject to various limits imposed by the Internal Revenue Code. The Company provided a matching contribution (in Company common stock) up to 4.5 percent of the contributing participant’s salary in 2021 subject to various limits imposed by the Internal Revenue Service (“IRS”).

Certain named executives are also covered by an individual supplemental retirement agreement that generally provides for non-qualified retirement benefits that cannot be provided to the named executives under the Pension Plan due to Internal Revenue Code limitations. The Company’s supplemental retirement agreements are described under the section entitled “Retirement Plan Benefits.”

The Company offers the named executives and certain other senior level executives the ability to participate in the Deferred Compensation Plan for Certain Executive Employees of Community Bank System, Inc. (the “Deferred Compensation Plan”). The named executives may elect to defer cash compensation into the Deferred Compensation Plan as described under the section entitled “Nonqualified Deferred Compensation Plan.” The Company does not make contributions to the Deferred Compensation Plan for participants in the plan.

Effective June 1, 2018, the Board adopted the Community Bank System, Inc. Restoration Plan (the “Restoration Plan”). The Restoration Plan is an unfunded, non-qualified deferred compensation plan which covers selected executives who are not covered by a supplemental retirement plan agreement, including Messrs. Sutaris, Karaivanov, and Serbun. Messrs. Tryniski and Getman are not covered by the Restoration Plan because they have separate supplemental retirement agreements. The Restoration Plan is designed to provide credits that cannot be provided to eligible executives under the Pension Plan and 401(k) Plan as a result of the Internal Revenue Code limit on annual compensation that may be taken into account under those plans. The compensation limit in effect in 2021 was $290,000. A participant’s benefit in the Restoration Plan is expressed as an individual (bookkeeping) account balance that is increased annually by an amount generally designed to equal the credit and contribution that cannot be provided to the participant under the tax-qualified plans as a result of the compensation limit. A participant’s account balance is credited with interest annually until distributed and will be paid to the participant following his or her separation from service subject to the terms of the Restoration Plan.

Other Benefits. Although other personal benefits are not a key element of the Company’s compensation program, the Company’s named executives, along with certain other senior level executives, are provided a limited number of benefits for the purpose of supporting those executives in their business functions. The Company provides the following benefits to the named executives, as quantified in the Summary Compensation Table:

• local club memberships to enable executives to interact and foster business relationships with customers and the local business and community leaders. Memberships do not exceed $12,200 for each named executive;

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• a car allowance or use of a Company-owned vehicle for those executives responsible for managing geographic territories which span the Company’s market from Northeastern Pennsylvania to the Canadian border and throughout Vermont and into Western Massachusetts; and

• group term life insurance coverage in excess of limits generally available to employees.

Please see the Summary Compensation Table and accompanying narrative disclosures presented on pages 46 to 47 for more information on personal benefits the Company provides to the named executives.

MISCELLANEOUS COMPENSATION PRACTICES

Tax Considerations

Section 162(m) of the Internal Revenue Code (the “Code”) generally limits to $1 million the tax deduction available to public companies for compensation paid to “covered employees,” which, for taxable years after December 31, 2017, includes a company’s chief executive officer, chief financial officer, the three other most highly compensated executive officers, and anyone who is (or was) a covered employee for any taxable year beginning after December 31, 2016. Prior to the enactment of the Tax Cuts and Jobs Act in December 2017, this limitation did not apply to compensation that was considered “qualified performance-based compensation” under the rules of Section 162(m); however, the Tax Cuts and Jobs Act eliminated that exception and, as a result, compensation paid to our covered employees in excess of $1 million per year will generally not be deductible. Because corporate objectives may not always be consistent with the requirements of tax deductibility, the Committee is prepared, when it deems it appropriate, to enter into compensation arrangements under which payments will not be deductible under Section 162(m). Thus, deductibility will be only one of many factors considered by the Committee in ascertaining appropriate levels or modes of compensation.

Compensation Recovery

In 2021, the Company approved revisions to update its clawback policy to expand the trigger events for recoupment of incentive-based compensation received by an executive. As revised, if a named executive has (i) engaged in fraud or intentional misconduct that caused or otherwise contributed to the need for a material restatement to the Company’s financial results, or (ii) engaged in intentional misconduct, fraud or knowingly violated any law, regulation or Company policy in connection with his or her employment that results in significant reputational or financial harm to the Company, then the Board will determine the impact of the restatement or the legal regulatory or compliance violation and will seek an appropriate recoupment of incentive-based compensation received by such executive. Any recoupment under the clawback policy will be in addition to any other disciplinary action the Board may determine, including the termination of employment.

Stock Ownership Guidelines

Our stock ownership guidelines for senior executives of the Company require (i) the CEO to own shares of Company common stock and share equivalents equal to at least four times his base salary, and (ii) the Chief Financial Officer and other Executive Vice Presidents to own shares of common stock or share equivalents equal to at least two times their base salary. These senior executive officers are required to retain shares received from stock option exercises or other equity awards, net of taxes, until they have satisfied the equity ownership requirements. As of March 21, 2022, all senior executive officers are in compliance with, or exceed, the requirements of the stock ownership guidelines established by the Board.

Policy Regarding Derivatives, Pledging and Hedging

The Company has adopted a policy that prohibits all of its Directors and employees, including the named executives, from engaging in short sale transactions, trading in derivative securities of the Company’s common stock, or engaging in the purchase or sale of any other financial instruments that are designed to hedge or offset any decrease in the market value of the Company’s common stock. Named executives are prohibited from pledging shares on margin without the prior written consent of the Compliance Officer designated in the Insider Trading Policy.

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon its review and discussion with management, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Mark J. Bolus, Chair

Brian R. Ace

Neil E. Fesette

Raymond C. Pecor, III

Susan E. Skerritt

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EXECUTIVE COMPENSATION DISCLOSURE TABLES

The following table summarizes the compensation of the named executives for the fiscal years ended December 31, 2021, 2020, and 2019. The named executives are the Company’s CEO, CFO, and the three other most highly compensated executive officers ranked by their total compensation in the table below. The material terms of the employment agreements with the named executives are set forth under the section entitled “Employment Agreements.” In the table below, the “Adjusted SEC Total” is a column that is not required by the SEC’s requirements; however, the Compensation Committee believes it is a more accurate depiction of the compensation decisions that it has made for the applicable years, as more fully described in footnote 6 to the table.

SUMMARY COMPENSATION TABLE for Fiscal Years Ended December 31, 2021, 2020 and 2019
Name and Principal Position	Year	Salary ($)	Stock Awards ($)(1)	Option Awards ($)(2)	Non-Equity Incentive Plan Compensation ($)(3)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4)	All Other Compensation ($)(5)	SEC Total ($)	Adjusted SEC Total(6)
Mark E. Tryniski President, Chief Executive Officer and Director	2021	$861,492	$290,759	$290,752	$753,806	$921,103	$37,057	$3,154,969	$2,233,866
	2020	$844,600	$285,053	$285,053	$502,537	$3,232,612	$36,936	$5,186,791	$1,954,179
	2019	$824,000	$850,282	$279,872	$721,000	$2,448,071	$36,802	$5,160,027	$2,711,956
Joseph E. Sutaris, EVP and Chief Financial Officer	2021	$408,000	$91,768	$91,800	$255,000	$52,778	$14,019	$913,365	$860,587
	2020	$400,000	$74,981	$74,999	$170,000	$100,510	$27,019	$847,509	$746,999
	2019	$386,250	$221,416	$72,882	$241,406	$122,170	$27,793	$1,071,917	$949,747
Dimitar A. Karaivanov(7) EVP of Financial Services and Corporate Development	2021	$269,538	$1,086,004	$216,006	$330,000	$1,135	$10,895	$1,913,578	$1,912,443
George J. Getman EVP and General Counsel	2021	$441,456	$91,051	$91,044	$220,728	$155,170	$29,507	$1,028,956	$873,786
	2020	$432,800	$89,286	$89,269	$147,152	$794,359	$29,217	$1,582,083	$787,724
	2019	$422,300	$266,305	$87,650	$211,150	$273,406	$26,782	$1,287,593	$1,014,187
Joseph F. Serbun President, Retail Banking	2021	$408,000	$76,474	$76,503	$255,000	$65,303	$43,210	$924,490	$859,187
	2020	$400,000	$54,015	$53,996	$185,000	$72,240	$44,229	$809,480	$737,240
	2019	$334,750	$153,503	$50,537	$167,375	$68,507	$37,011	$811,683	$743,176

(1)
The amounts in this column reflect the grant date fair value of restricted stock awards issued pursuant to the Company’s 2014 Incentive Plan computed in accordance with FASB ASC Topic 718. Additional information about the Company’s accounting for stock-based compensation arrangements is contained in footnote L to the Company’s audited financial statements for the fiscal year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2022. Included in the 2019 award is a performance restricted stock award granted pursuant to the 2014 Incentive Plan. This long-term equity award vested based upon the achievement of objective performance metrics measuring the Company’s total shareholder return against the KBW Regional Banking Index (KRX) over the three-year measurement period of 2016-2018.

(2)
The amounts in this column reflect the grant date fair value of stock option awards in the applicable year pursuant to the 2014 Incentive Plan, computed in accordance with FASB ASC Topic 718. These amounts are based on the Black-Scholes option pricing model, which may not be reflective of the current intrinsic value of the options. Assumptions used in the calculation of these amounts are included in footnote L to the Company’s audited financial statements for the fiscal year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K which was filed with the SEC on March 1, 2022.

(3)
For all named executives, the amounts shown in this column reflect amounts earned under the Company’s Management Incentive Plan, an annual cash award plan based on performance and designed to provide incentives for employees. Cash payments are typically paid in the subsequent year. The awards for the 2021, 2020, and 2019 plan year (paid in 2022, 2021 and 2020) were approximately 125%, 85%, and 125%, respectively, of the target amount, subject to adjustment for individual performance.

(4)
The amounts shown in this column include the aggregate change in the actuarial present value of the named executive’s accumulated benefit under the Company’s Pension Plan, the Company’s Restoration Plan and the named executive’s individual supplemental executive retirement agreements (collectively, the “Company Retirement Plans”). There were no changes in the terms of the Company Retirement Plans or level of benefits provided to the named executives under the Company Retirement Plans in 2021. No earnings are deemed above-market or preferential on compensation deferred under the Company’s non-qualified Deferred Compensation Plan for Executives (the “Executive Deferred Comp Plan”), and all amounts in the Executive Deferred Comp Plan are funded solely from the executive’s elective deferral of their compensation and the Company makes no contributions other than to the Company’s Pension and Restoration Plans.

(5)
The amounts in this column include: (a) the reportable value of the personal use of Company-owned vehicles or allowances amounting to $11,230 for Mr. Tryniski, $0 for Mr. Sutaris, $4,924 for Mr. Karaivanov, $11,755 for Mr. Getman, and $16,037 for Mr. Serbun; (b) the value of group term life and long term disability insurance benefits in excess of $50,000 under a plan available to all full-time employees for which Messrs. Tryniski, Sutaris, Karaivanov, Getman and Serbun received $1,931, $969, $156, $1,931 and $1,931, in 2021, respectively; (c) the Company’s contributions to the 401(k) Plan, a defined

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contribution plan, amounting to $13,050 for Mr. Tryniski, Mr. Sutaris, Mr. Getman, and Mr. Serbun and $5,815 for Mr. Karaivanov; and (d) the Company’s payment for country and/or social club memberships amounting to $10,846 for Mr. Tryniski, $2,771 for Mr. Getman, and $12,192 for Mr. Serbun. The Company does not maintain any “split-dollar” arrangements for the named executives.

(6)
We are providing this supplemental column entitled “Adjusted SEC Total” to show how the Compensation Committee views the named executives’ annual compensation. This column adjusts the amounts reported in the SEC Total column by subtracting the change in pension value under the Company’s Retirement Plans reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column to show how year-over-year changes in pension value impact total compensation. The amounts reported in this column differ substantially from, and are not a substitute for, the amounts reported in the SEC Total column.

(7)
Mr. Karaivanov joined the Company on June 4, 2021 and received a signing bonus of 10,826 shares of restricted stock with a three-year vesting period, 2,700 shares of restricted stock with a five-year vesting period, and 11,714 stock options with an exercise price of $80.01 that vest over five years. The value of these grants are reflected in Mr. Karaivanov’s 2021 compensation.

The following Grants of Plan-Based Awards Table provides information about equity and non-equity incentive plan awards granted to the named executives in connection with the year ended December 31, 2021. All equity awards are made under the terms of the 2014 Incentive Plan and the non-equity awards are made under the terms of the Company’s Management Incentive Plan. The Management Incentive Plan awards were subject to the satisfaction of 2021 performance objectives and were paid in 2022.

GRANTS OF PLAN-BASED AWARDS
		Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)			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 options awards	Grant date fair value of stock and option awards
Name	Grant Date	Threshold ($)	Target ($)	Maximum ($)
Mark E. Tryniski		$0	$603,044	$979,947
	3/16/21					15,776(2)	$79.66	$290,752
	3/16/21				3,650(3)			$290,759
Joseph E. Sutaris		$0	$204,000	$331,500
	3/16/21					4,981(2)	$79.66	$91,800
	3/16/21				1,152(3)			$91,768
Dimitar A. Karaivanov		$0	$264,000	$429,000
	6/10/21					11,714(2)	$80.01	$216,006
	6/10/21				13,526(3)			$1,086,004
George J. Getman		$0	$176,582	$286,946
	3/16/21					4,940(2)	$79.66	$91,044
	3/16/21				1,143(3)			$91,051
Joseph F. Serbun		$0	$204,000	$331,500
	3/16/21					4,151(2)	$79.66	$76,503
	3/16/21				960(3)			$76,474

(1)
The amounts in this column represent target awards under the Management Incentive Plan, which equal a specified percentage of base salary in effect on December 31 of the year before payment is made. The actual awards for the 2021 plan year (paid in 2022) were approximately 125% of the target amount set forth in this table due to the performance levels achieved for 2021 being above target by 25%. The Management Incentive Plan awards could be increased for above targeted performance and reduced for less than targeted performance based upon the corporate goals described under the section entitled “Annual Incentive Payments under the Management Incentive Plan” and personal performance. The Management Incentive Plan awards earned by the named executives in 2021 and paid in 2022 are set forth in the Summary Compensation Table under the column entitled “Non-Equity Incentive Plan Compensation.” These amounts were determined based upon the satisfaction of the 2021 Management Incentive Plan performance objectives.

(2)
The stock options are granted pursuant to the 2014 Incentive Plan. The options are subject to time vesting requirements. The options become exercisable over the course of five years, with one-fifth of the options becoming exercisable on March 16, 2022, 2023, 2024, 2025 and 2026. Upon the named executive’s termination, the named executive generally has three months to exercise any vested options. Except for employees retiring in good standing, all unvested options at the date of termination are forfeited. For employees who retire in good standing, all unvested options will become vested as of the retirement date. Such retirees may exercise the options before the expiration date.

(3)
The shares of restricted stock are granted pursuant to the 2014 Incentive Plan. The restricted stock vests ratably over five years (except for 10,826 shares granted to Mr. Karaivanov that vest ratably over three years) and are subject to forfeiture upon termination of employment for any reason, except for employees retiring in good standing. In such case, all unvested restricted stock will become vested as of the retirement date. During the vesting period, the named executive has all of the rights of a shareholder including the right to vote such shares at any meeting of the shareholders and the right to receive all dividends. Nonvested shares are subject to forfeiture and may not be sold, exchanged or otherwise transferred.

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The following table summarizes the equity awards the Company has made to the named executives which are outstanding as of December 31, 2021.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards(1)					Stock Awards(1)
Name	Number of Securities Underlying Unexercised Options (#) Exercisable(2)	Number of Securities Underlying Unexercised Options (#) Unexercisable(2)	Option Exercise Price ($/Sh)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)(3)	Market Value of Shares or Units of Stock That Have Not Vested ($)(4)	Equity incentive plan awards: number of unearned shares, unit or other rights that have not vested (#)(5)	Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(5)
Mark E. Tryniski	26,761	0	$35.36	3/18/2025	13,705	$1,020,748	19,081	$1,421,153
	28,863	0	$38.02	3/16/2026
	5,249	20,999	$51.64	3/17/2030
	12,705	8,471	$55.92	3/20/2028
	13,476	3,369	$57.12	3/15/2027
	7,906	11,859	$59.41	3/20/2029
	0	15,776	$79.66	3/16/2031
Joseph E. Sutaris	2,388	0	$35.36	3/18/2025	3,277	$244,071	4,969	$370,091
	2,061	0	$38.02	3/16/2026
	1,381	5,525	$51.64	3/17/2030
	935	624	$55.92	3/20/2028
	1,202	301	$57.12	3/15/2027
	2,058	3,089	$59.41	3/20/2029
	0	4,981	$79.66	3/16/2031
Dimitar A. Karaivanov	0	11,714	$80.01	6/09/2031	13,526	$1,007,416	0	$0
George J. Getman	10,151	0	$35.36	3/18/2025	4,343	$323,467	5,976	$445,092
	10,948	0	$38.02	3/16/2026
	1,644	6,576	$51.64	3/17/2030
	3,979	2,653	$55.92	3/20/2028
	5,111	1,278	$57.12	3/15/2027
	2,476	3,714	$59.41	3/20/2029
	0	4,940	$79.66	3/16/2031
Joseph F. Serbun	3,053	0	$35.36	3/18/2025	2,686	$200,053	3,445	$256,584
	2,935	0	$37.77	3/19/2024
	4,029	0	$38.02	3/16/2026
	944	3,978	$51.64	3/17/2030
	1,667	1,112	$55.92	3/20/2028
	1,885	472	$57.12	3/15/2027
	1,427	2,142	$59.41	3/20/2029
	0	4,151	$79.66	3/16/2031

(1)
Stock options and restricted stock are not transferable.

(2)
Employee stock options generally vest in five equal installments on the anniversary of the grant date over a five year period. For each grant listed above, the vesting date for the final portion of the stock options is the fifth anniversary of the grant date and the expiration date is the tenth anniversary of the grant date (i.e., for options expiring on January 1, 2021, the final portion of the award vested on January 1, 2016).

(3)
Employee restricted stock generally vests in five equal installments over a five year period on either January 1 or March 1 of each year. The restricted stock reflected in this column was granted on March 15, 2017, March 20, 2018, March 20, 2019, March 17, 2020 and March 16, 2021; however, Mr. Karaivanov’s restricted stock was granted on June 10, 2021 and 10,826 shares of his restricted stock vest in three equal installments over a three year period and 2,700 shares vest in five equal installments over a five year period.

(4)
Based on the closing market value of the Company’s common stock on December 31, 2021 of $74.48 per share, as reported on the NYSE for the last trading day of the year.

(5)
These shares are performance-based restricted stock granted to the named executives in March 2019 and based on the Company’s performance at the end of the three-year performance period ending on December 31, 2021, the performance objectives were not met and the shares were forfeited effective January 18, 2022 and the named executives did not receive any payment.

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The following Option Exercises and Stock Vested table provides additional information about the value realized to the named executives on option awards exercised and stock awards vested during the year ended December 31, 2021.

OPTION EXERCISES AND STOCK VESTED
	Option Awards		Stock Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)(1)	Number of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)(2)
Mark E. Tryniski	18,026	$680,842	5,013	$356,875
Joseph E. Sutaris	4,822	$157,979	786	$55,955
Dimitar A. Karaivanov	0	$0	0	$0
George J. Getman	16,424	$545,905	​1,698	$120,881
Joseph F. Serbun	0	$0	786	$55,955

(1)
The value realized equals the fair market value of the shares on the date of exercise less the exercise price.

(2)
The value realized on the restricted stock is the fair market value on the date of vesting.

RETIREMENT PLAN BENEFITS

The table below shows the present value of accumulated benefits payable to the named executives, including the number of years of service credited to each named executive, under the Pension Plan and named executives’ individual supplemental retirement agreements. Such amounts were determined by using the interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements.

PENSION BENEFITS
Name	Plan Name	Number of Years Credited Service (#)	Present Value of Accumulated Benefit ($)	Payments During Last Fiscal Year ($)
Mark E. Tryniski	Community Bank System, Inc. Pension Plan	19	$3,376,630	$0
	Supplemental Executive Retirement Agreement	19	$9,345,153	$0
Joseph E. Sutaris	Community Bank System, Inc. Pension Plan	11	$907,150	$0
	Community Bank System, Inc. Restoration Plan	11	$45,113	$0
Dimitar A. Karaivanov	Community Bank System, Inc. Pension Plan	1	$1,135	$0
	Community Bank System, Inc. Restoration Plan	1	$0	$0
George J. Getman	Community Bank System, Inc. Pension Plan	14	$1,670,848	$0
	Supplemental Executive Retirement Agreement	14	$1,078,884	$0
Joseph F. Serbun	Community Bank System, Inc. Pension Plan	14	$427,563	$0
	Community Bank System, Inc. Restoration Plan	14	$48,734	$0

Pension Plan

The named executives participate in the Company’s Pension Plan, as do the other salaried employees. The Pension Plan is a tax-qualified defined benefit pension plan with the participants’ benefits calculated under a cash balance formula rather than a traditional defined benefits formula.

Under the cash balance formula, benefits are expressed in the form of a hypothetical account balance. Each year a participant’s cash balance account is increased by (i) service credits based on the participant’s covered compensation and compensation in excess of the Social Security taxable wage base for that year, and (ii) interest credits based on the participant’s account balance as of the end of the prior year. Service credits accrue at a rate between 5% and 6.10%, based on the participant’s age and date of participation. Effective March 1, 2010, cash balance plan participants accrue their pension benefits under a plan design called WRAP (“Worker Retirement Accumulation Plan”). Under this amended plan design, service credits are earned as described above under the pre-amendment plan formula. Interest credits are no longer contributed to the cash balance plan but instead are contributed to each participants’ account in the Company’s 401(k) Plan. Interest rates are determined each year and are not less than the yield on the 30-year Treasury Notes as of November of the prior year, nor more than 6%. Pension benefits earned under the cash balance formula may be distributed as a lump sum or as an annuity.

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Supplemental Retirement Agreements. In addition to the Pension Plan, certain named executives are covered by an individual supplemental retirement agreement (“SERP”) that generally provides for non-qualified retirement benefits that cannot be provided to the named executives under the Pension Plan due to Internal Revenue Code limitations. Messrs. Tryniski and Getman have entered into SERP agreements providing such post-retirement benefits.

Mark E. Tryniski. Under Mr. Tryniski’s SERP, the Company has agreed to provide Mr. Tryniski with an annual SERP benefit equal to the product of (i) 3% (and 3.75% for years of service earned after 2017) times (ii) Mr. Tryniski’s years of service with the Company, times (iii) his final five-year average compensation. The benefit payable under this formula is capped at 60% of Mr. Tryniski’s final five-year average compensation and is then reduced by the amount of other Company provided retirement benefits, including benefits under the Pension Plan and Company contributions to the Company’s 401(k) Plan. Mr. Tryniski’s SERP benefit is payable beginning on the first day of the seventh month that follows separation from service with the Company. Unless Mr. Tryniski elects payment in another equivalent life annuity form, the benefit is payable in the form of an actuarially equivalent joint and 100% survivor annuity.

George J. Getman. Under the terms of Mr. Getman’s SERP Agreement, the Company has agreed to provide Mr. Getman with an annual retirement benefit equal to the product of (i) 2.0%, times (ii) Mr. Getman’s years of service up to a maximum of 20 years, times (iii) his final five-year average compensation. The benefit payable under this formula is reduced by the amount of other Company provided retirement benefits, including benefits under the Pension Plan and Company contributions to the Company’s 401(k) Plan. Mr. Getman’s retirement benefit is payable beginning on the first day of the seventh month that follows his separation from service with the Company. Unless Mr. Getman elects payment in another equivalent life annuity form, the benefit is payable in the form of an actuarially equivalent joint and 100% survivor annuity.

Restoration Plan. Effective June 1, 2018, the Company began to provide certain select executives, including Messrs. Sutaris, Karaivanov, and Serbun, with benefits under the Restoration Plan. The Restoration Plan is an unfunded, non-qualified deferred compensation plan designed to provide benefits and contributions that cannot be provided to eligible executives under the Company’s Pension Plan and 401(k) Plan as a result of the Internal Revenue Code limit on annual compensation that may be taken into account under those plans for benefit and contribution purposes. For 2021, the compensation limit in effect under the Internal Revenue Code was $290,000. A participant’s benefit in the Restoration Plan will be expressed as an individual (bookkeeping) account balance that will be increased annually by an amount generally designed to equal the credit and contribution that cannot be provided to the participant under the tax-qualified plans as a result of the compensation limit. A participant’s account balance will be credited with interest annually until distributed and will be paid to the participant following his or her separation from service subject to the terms of the Restoration Plan. Messrs. Tryniski and Getman have separate supplemental retirement agreements and, therefore, are not entitled to any benefits under the Restoration Plan.

Nonqualified Deferred Compensation Plan

The following table shows the executive contributions, earnings and account balances for the named executives in the Deferred Compensation Plan for Executive Employees of the Company. The Company does not make any contributions to the Plan on behalf of the named executives.

NONQUALIFIED DEFERRED COMPENSATION
Name	Plan Name	Executive Contributions in Last FY ($)(1)	Registrant Contributions in Last FY ($)	Aggregate Earnings in Last FY ($)	Aggregate Withdrawals/ Distributions ($)(2)	Aggregate Balance at Last FYE ($)
Mark E. Tryniski	Community Bank System, Inc. Deferred Compensation Plan	$0	$0	$154,120	$0	$701,407
Joseph E. Sutaris	Community Bank System, Inc. Deferred Compensation Plan	$163,462	$0	$95,637	$0	$279,793
Dimitar A. Karaivanov	Community Bank System, Inc. Deferred Compensation Plan	$16,615	$0	$404	$0	$17,019
George J. Getman	Community Bank System, Inc. Deferred Compensation Plan	$0	$0	$124,959	$0	$146,711
Joseph F. Serbun	Community Bank System, Inc. Deferred Compensation Plan	$84,346	$0	$14,529	$0	$101,953

(1)
The amount in this column was also reported as “Salary” in the Summary Compensation Table.

(2)
Amounts in this column reflect transfers to the Supplemental Account Balances in the Company’s Pension Plan from an individual participant’s voluntary contributions to the Deferred Compensation Plan. The account balances in the table have been reduced by the amount transferred. The earnings credited in the Deferred Compensation Plan are based on the account balance prior to the transfers.

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Potential Payment on Termination or Change in Control

The Company has entered into employment agreements that provide severance benefits to certain named executives. Under the terms of the respective named executive’s agreement, the executives are entitled to post-termination payments in the event that they are no longer employed by the Company because of death, disability, involuntary retirement or a change in control. The triggers for post-termination payments under the respective employment agreements are set forth in the descriptions of such agreements under the section entitled “Employment Agreements.” Payments under the employment agreement may be made in a lump sum or in installments. In addition to the employment agreements, the SERP agreements provide for post-termination benefits (notwithstanding the retirement benefits intended to be conferred in the SERP agreements) in certain situations in the event of death, disability and a change in control.

The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the named executives would be entitled upon termination of employment, assuming a December 31, 2021 termination date.

Name	Expected Post- Termination Payments ($)	Incremental pension benefit (present value) ($)(1)	Continuation of Medical/Welfare Benefits (present value) ($)	Acceleration of Equity Awards ($)(2)	Total Termination Benefits ($)(3)
Mark E. Tryniski
• Death	$215,373	$0	$0	$1,894,788	$2,110,161
• Disability	430,746	0	0	​1,894,788	​2,325,534
• Involuntary termination without cause	​3,816,005	0	0	​1,894,788	​5,710,793
• Involuntary or good reason termination after CIC	4,092,087	370,147	36,775	​1,894,788	​6,393,797
Joseph E. Sutaris
• Death	102,000	0	0	​433,621	​535,621
• Disability	204,000	0	0	​433,621	​637,621
• Involuntary termination without cause	1,534,631	0	0	​433,621	​1,968,252
• Involuntary or good reason termination after CIC	1,734,000	59,010	51,042	​433,621	​2,277,673
Dimitar A. Karaivanov
• Death	​120,000	0	0	​1,007,416	​1,127,416
• Disability	​240,000	0	0	​1,007,416	​1,247,416
• Involuntary Termination without cause	1,885,630	0	0	​1,007,416	​2,893,046
• Involuntary or good reason termination after CIC	$1,440,000	​35,545	​53,533	​1,007,416	​2,536,494
George J. Getman
• Death	110,364	0	0	​601,059	​711,423
• Disability	220,728	0	0	​601,059	​821,787
• Involuntary termination without cause	1,030,064	0	0	​601,059	​1,631,123
• Involuntary or good reason termination after CIC	1,765,824	140,990	50,788	​601,059	​2,558,661
Joseph F. Serbun
• Death	102,000	0	0	​352,023	​454,023
• Disability	204,000	0	0	​352,023	​556,023
• Involuntary termination without cause	1,011,500	0	0	​352,023	​1,363,523
• Involuntary or good reason termination after CIC	1,734,000	64,080	40,506	​352,023	​2,190,609

(1)
The amounts set forth in this column reflect the present value of an additional three years of accumulated benefits under the Company’s Pension Plan. There would be no additional benefits accrued under the individual supplemental executive retirement agreements.

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(2)
The amounts set forth in this column reflect the value (based on the closing market price of the Company’s common stock on December 31, 2021 of $74.48 per share) of any unvested shares of restricted stock that would become vested upon termination and the intrinsic value of unvested stock options based on the closing market price of the Company’s common stock on December 31, 2021 of $74.48 per share that would become vested upon termination.

(3)
The Company is not obligated to pay any excise tax gross-up amounts under any employment agreements.

The amounts shown in the table above do not include payments and benefits to the extent they are provided on a nondiscriminatory basis to salaried employees generally upon termination of employment, including accrued salary and vacation pay, regular pension benefits under the Company’s Pension Plan, and distribution of plan balances under the Company’s 401(k) Plan.

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with the named executives as set forth and summarized below. The employment agreements provide for payments, as set forth in the chart above, upon termination in certain situations as further described below:

Mark E. Tryniski. The Company has an employment agreement with Mr. Tryniski that provides for his employment as the President and CEO of the Company and the Bank during the period from January 1, 2021 to December 31, 2023. The agreement provides for severance pay in the event of a termination by the Company (for reasons other than cause, death, or disability), or termination by Mr. Tryniski for good reason, equal to the greater of (i) 200% of the sum of Mr. Tryniski’s annual base salary at the time of termination and the most recent payment to him under the Company’s Management Incentive Plan, or (ii) amounts of base salary and expected Management Incentive Plan payments payable to Mr. Tryniski through the unexpired term of his employment agreement. In addition, all of Mr. Tryniski’s unvested stock options would vest and all restrictions on his restricted stock would be waived. Mr. Tryniski is subject to non-compete provisions which restrict his ability to engage in competing business activities for one year following termination of employment (unless such termination is by the Company without cause or by Mr. Tryniski for good reason) or to solicit customers or employees of the Company or the Bank for two years following termination of employment.

Upon Mr. Tryniski’s termination of employment because of death or disability, all of his unvested stock options would vest and all restrictions on his restricted stock would be waived. In the case of death, Mr. Tryniski’s estate would be entitled to continued payment of Mr. Tryniski’s base salary for 90 days.

Change in Control Provision. If Mr. Tryniski’s employment is terminated by the Company for reasons other than cause, death, or disability within two years following a change in control or if Mr. Tryniski voluntarily resigns during this period for good reason, the Company will pay him an amount equal to three times the sum of his then current base salary plus all amounts payable to him under the Management Incentive Plan during the 12 months immediately preceding the change in control, will provide fringe benefits for a 36 month period, will waive all restrictions on any restricted stock previously granted to him and his stock options will become fully exercisable.

Joseph E. Sutaris. The Company has an employment agreement with Mr. Sutaris that provides for his employment as the Executive Vice President and Chief Financial Officer of the Company and the Bank during the period from January 1, 2021 to December 31, 2023. The agreement provides for severance pay in the event of a termination by the Company (for reasons other than cause, death, or disability), or termination by Mr. Sutaris for good reason, equal to the greater of (i) 175% of the sum of Mr. Sutaris’ annual base salary at the time of termination and the most recent payment to him under the Company’s Management Incentive Plan, or (ii) amounts of base salary and expected Management Incentive Plan payments payable to Mr. Sutaris through the unexpired term of his employment agreement. In addition, all of Mr. Sutaris’ unvested stock options would vest and all restrictions on his restricted stock would be waived. Mr. Sutaris is subject to non-compete provisions which restrict his ability to engage in competing business activities for one year following termination of employment (unless such termination is by the Company without cause or by Mr. Sutaris for good reason) or to solicit customers or employees of the Company or Bank for two years following termination of employment.

Upon Mr. Sutaris’ termination of employment because of death or disability, all of his unvested stock options would vest and all restrictions on his restricted stock would be waived. In the case of death, Mr. Sutaris’ estate would be entitled to continued payment of Mr. Sutaris’ base salary for 90 days.

Change in Control Provision. If Mr. Sutaris’ employment is terminated by the Company for reasons other than cause, death, or disability within two years following a change in control or if Mr. Sutaris voluntarily resigns during this period for good reason, the Company will pay him an amount equal to three times the sum of his then current base salary plus all amounts payable to him under the Management Incentive Plan during the 12 months immediately preceding the change in control, will provide fringe benefits for a 36 month period, will waive all restrictions on any restricted stock previously granted to him and his stock options will become fully exercisable.

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Dimitar A. Karaivanov. The Company has an employment agreement with Mr. Karaivanov that provides for his employment as the Executive Vice President of Financial Services and Corporate Development of the Company and the Bank during the period from June 4, 2021 to December 31, 2023. The agreement provides for severance pay in the event of a termination by the Company (for reasons other than cause, death, or disability), or termination by Mr. Karaivanov for good reason, equal to the greater of (i) 175% of the sum of Mr. Karaivanov’s annual base salary at the time of termination and the most recent payment to him under the Company’s Management Incentive Plan, or (ii) amounts of base salary and expected Management Incentive Plan payments payable to Mr. Karaivanov through the unexpired term of his employment agreement. In addition, all of Mr. Karaivanov’s unvested stock options would vest and all restrictions on his restricted stock would be waived. Mr. Karaivanov is subject to non-compete provisions which restrict his ability to engage in competing business activities for one year following termination of employment (unless such termination is by the Company without cause or by Mr. Karaivanov for good reason) or to solicit customers or employees of the Company or Bank for two years following termination of employment.

Upon Mr. Karaivanov’s termination of employment because of death or disability, all of his unvested stock options would vest and all restrictions on his restricted stock would be waived. In the case of death, Mr. Karaivanov’s estate would be entitled to continued payment of Mr. Karaivanov’s base salary for 90 days.

Change in Control Provision. If Mr. Karaivanov’s employment is terminated by the Company for reasons other than cause,death, or disability within two years following a change in control or if Mr. Karaivanov voluntarily resigns during thisperiod for good reason, the Company will pay him an amount equal to three times the sum of his then current base salaryplus all amounts payable to him under the Management Incentive Plan during the 12 months immediately preceding thechange in control, will provide fringe benefits for a 36 month period, will waive all restrictions on any restricted stockpreviously granted to him and his stock options will become fully exercisable.

George J. Getman. The Company has an employment agreement with Mr. Getman that provides for his continued employment as the Executive Vice President and General Counsel of the Company and the Bank from January 1, 2020 to December 31, 2022. The employment agreement provides for severance pay, in the event of a termination by the Company (for reasons other than cause, death, or disability), or termination by Mr. Getman for good reason, equal to the greater of (i) 175 percent of the sum of Mr. Getman’s annual base salary at the time of termination and the most recent payment to him under the Company’s Management Incentive Plan, or (ii) amounts of base salary and expected Management Incentive Plan payments payable to Mr. Getman through the unexpired term of his employment. In addition, all of Mr. Getman’s unvested stock options would vest and all restrictions on his restricted stock would be waived. Mr. Getman is subject to non-compete provisions which restrict his ability to engage in competing business activities for one year following termination of employment (unless such termination is by the Company without cause or by Mr. Getman for good reason) or to solicit customers or employees of the Company or Bank for two years following termination of employment.

Upon Mr. Getman’s termination of employment because of death or disability, all of his unvested stock options would vest and all restrictions on his restricted stock would be waived. In the case of death, Mr. Getman’s estate would be entitled to continued payment of Mr. Getman’s base salary for 90 days.

Change in Control Provision. If Mr. Getman’s employment is terminated by the Company for reasons other than cause, death, or disability within two years following a change in control or if Mr. Getman voluntarily resigns during this period for good reason, the Company will pay him an amount equal to three times the sum of his then current base salary plus all amounts payable to him under the Management Incentive Plan during the 12 months immediately preceding the change in control, will provide fringe benefits for a 36 month period, will waive all restrictions on any restricted stock previously granted to him and his stock options will become fully exercisable.

Joseph F. Serbun. The Company has an employment agreement with Mr. Serbun that provides for his continued employment as the President, Retail Banking of the Company and the Bank from January 1, 2022 to December 31, 2024. The employment agreement provides for severance pay, in the event of a termination by the Company (for reasons other than cause, death, or disability), or termination by Mr. Serbun for good reason, equal to the greater of (i) 175 percent of the sum of Mr. Serbun’s annual base salary at the time of termination and the most recent payment to him under the Company’s Management Incentive Plan, or (ii) amounts of base salary and expected Management Incentive Plan payments payable to Mr. Serbun through the unexpired term of his employment. In addition, all of Mr. Serbun’s unvested stock options would vest and all restrictions on his restricted stock would be waived. Mr. Serbun is subject to non-compete provisions which restrict his ability to engage in competing business activities for one year following termination of employment (unless such termination is by the Company without cause or by Mr. Serbun for good reason) or to solicit customers or employees of the Company or the Bank for two years following termination of employment.

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Upon Mr. Serbun’s termination of employment because of death or disability, all of his unvested stock options would vest and all restrictions on his restricted stock would be waived. In the case of death, Mr. Serbun’s estate would be entitled to continued payment of Mr. Serbun’s base salary for 90 days.

Change in Control Provision. If Mr. Serbun’s employment is terminated by the Company for reasons other than cause, death, or disability within two years following a change in control of the Company, or if Mr. Serbun voluntarily resigns during this period for good reason, the Company will pay him an amount equal to three times the sum of his then current base salary plus all amounts payable to him under the Management Incentive Plan during the 12 months immediately preceding the change in control, will provide fringe benefits for a 30 month period, will waive all restrictions on any restricted stock previously granted to him and his stock options will become fully exercisable.

PAY RATIO

As required by the Dodd-Frank Act, the Company is providing the following information about the relationship of the annual total compensation of its median employee and the annual total compensation of Mr. Tryniski, the Company’s President and CEO. For 2021, the annual total compensation of the median employee of the Company (other than the CEO) was $35,666 and the annual total compensation of the CEO, as reported in the Summary Compensation Table on page 46, was $3,154,969. Based on this information, the ratio of the annual total compensation of the CEO to the annual total compensation of the Company’s median employee for 2021 was 89 to 1. Using the Adjusted SEC Total set forth in the Summary Compensation Table for the CEO’s total annual compensation, the ratio of the CEO’s annual total compensation to the annual total compensation of the Company’s median employee for 2021 was 63 to 1.

To determine the median employee, the Company considered all employees of the Company on December 31, 2021, the determination date. The Company determined the median employee by: (i) collecting the 2021 base salary information contained in its payroll records (base salary of employees hired during the year was annualized) for each such employee, (ii) ranking such base salary of all such employees except for the CEO from lowest to highest, and identifying the employee with the median base salary and (iii) confirming that the median employee’s compensation did not contain any anomalous characteristics which would have a significant impact on the pay ratio. It is important to note that the pay ratio is a number the Company is required to calculate and disclose pursuant to SEC regulations, but it is not a number it uses to determine compensation for any of its employees. The Company cautions Shareholders from using the ratio as a comparison among different companies because the methodology used to determine the median employee by companies may differ and the results will vary based on each company’s industry, geographic location of its workforce, size, and compensation structure.

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PROPOSAL TWO: ADVISORY VOTE ON

EXECUTIVE COMPENSATION

The Company is seeking a non-binding advisory vote from the Shareholders to approve the compensation of the named executives as disclosed in this Proxy Statement pursuant to SEC rules. The compensation of the Company’s named executives is disclosed in the Compensation Discussion and Analysis, the compensation tables, and the other related tables and narrative disclosure contained on pages 32 to 54 of this Proxy Statement. As discussed in those sections, the Board believes that the Company’s pay for performance philosophy and programs provide a strong link between executive compensation and the Company’s short and long-term performance and creation of shareholder value.

For the year ended December 31, 2021, the Company produced very favorable operating results, including net income of $189.7 million. Improved net interest income, disciplined management of operating expenses, and solid and favorable asset quality contributed to these strong results in 2021, as noted in the “Compensation Discussion and Analysis” section beginning on page 32. The Company has consistently returned significant value to its Shareholders. Its total annualized shareholder returns as compared to bank-specific and our peer group indices over multiple periods are set forth below:

Total Annualized Shareholder Returns(1)(2)
	1 Year	3 Years	5 Years	10 Years
Community Bank System	22.3%	11.2%	6.4%	13.6%
Peer Group Median(3)	​32.0%	8.0%	2.4%	​9.6%
S&P 600 Commercial Bank Index	35.7%	12.9%	4.9%	13.4%
KBW Regional Bank Index (KRX)	36.7%	15.6%	5.4%	12.5%

(1)
Annual equivalent through December 31, 2021, including reinvestment of dividends

(2)Source: Bloomberg, L.P.

(3)See page 37 for Peer Group information.

Other 2021 milestones include the increase in the Company’s quarterly cash dividend to Shareholders by 2.4%, to $0.43 per share, marking the 29^th consecutive year of annual increases, the Company delivered record revenues of $620.6 million representing a 4.0% increase over 2020 total revenues of $596.8 million, and the Company recorded 0.04% of net charge offs / average loans during 2021.

The Company’s Compensation Committee considered the Company’s overall levels of achievement of performance objectives identified in the Compensation Discussion and Analysis, including the performance factors noted above, and approved 2021 compensation decisions reflective of the Company’s strong operating performance in fiscal 2021.

The Company is asking the Shareholders to indicate their support for its executive pay program and policies as described in this Proxy Statement. This Proposal, commonly known as a “Say-on-Pay” proposal, gives you as a Shareholder the opportunity to endorse or not endorse the Company’s executive pay program and policies through a non-binding advisory vote on the following resolution:

RESOLVED, that the Shareholders approve, on an advisory basis, the compensation of the Company’s named executives, as described in the Compensation Discussion and Analysis, the compensation tables and the other related tables and narrative disclosures contained in this Proxy Statement.

The vote on this Proposal is advisory and non-binding. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. Last year, at the Annual Meeting of Shareholders held in May 2021, the Shareholders approved the Say-on-Pay proposal with approximately 93% of the votes cast voting in favor of the Company’s executive compensation programs.

Vote Required

A majority of the votes present in person or represented by proxy at the Meeting is required to approve this Proposal No. 2. Abstentions and broker non-votes are not treated as votes cast and will have no effect on the vote for this Proposal. If no voting instructions are given, the proxy will be voted in favor of this Proposal No. 2.

Board Recommendation

The Board unanimously recommends a vote “FOR” this Proposal No. 2 to approve, on a non-binding advisory basis, the named executives’ compensation as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables, and any related information contained in this Proxy Statement.

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PROPOSAL THREE: APPROVAL OF THE COMMUNITY

BANK SYSTEM, INC. 2022 LONG-TERM INCENTIVE PLAN

The Company currently provides equity-based awards to employees pursuant to the Community Bank System, Inc. 2014 Long-Term Incentive Plan (“Prior Plan”). At the Meeting, the Company’s Shareholders will be asked to approve a new plan, the Community Bank System, Inc. 2022 Long-Term Incentive Plan (“2022 Plan”) that will provide for grants to employees and non-employee Directors. If the 2022 Plan is approved by the Company’s Shareholders, (i) no additional awards will be granted under the Prior Plan, (ii) the Prior Plan will be terminated; however, the Prior Plan would continue to govern awards previously granted under it, and (iii) shares available for grant under the Prior Plan as of the date of Shareholder approval of the 2022 Plan (“Effective Date”) will be transferred to the 2022 Plan. A summary of the 2022 Plan is attached to this Proxy Statement as Exhibit A and the entire text of the 2022 Plan is attached hereto as Exhibit B.

REASONS FOR THE 2022 PLAN

The 2022 Plan is intended to promote the interests of the Company and its Shareholders by offering competitive long-term incentives to those employees responsible for the Company’s long-term profitable growth as well as to the Company’s non-employee Directors. The Board believes the interests of the Company and its Shareholders will be advanced if the Company can continue to offer eligible employees and Directors the opportunity to acquire or increase their proprietary interest in the Company through equity awards made under the 2022 Plan.

The Company’s ability to attract, retain and motivate high-caliber qualified personnel and Directors is vital to our efforts to implement changes in our business development strategies that we believe are necessary to create consistent and sustainable growth and profitability. The Compensation Committee believes that it is in the Company’s best interests to provide shares of common stock for grant under the 2022 Plan. The Company’s use of equity compensation allows it to offer market competitive compensation packages that effectively align employee and director incentives with the success of our business development efforts and Shareholder interests.

As of March 21, 2022, 413,865 shares of our common stock remained available for future award grants under the Prior Plan. Based on our current run rate (annual level of shares granted under equity awards), the Company believes that this pool of shares will be exhausted by March 2024. Without shares of common stock available for grants to our employees and nonemployee Directors, our ability to offer competitive compensation packages to existing employees and Directors and to attract additional talented employees and Directors will be compromised.

Accordingly, on March 15, 2022, the Compensation Committee recommended to the Board and the Board on March 16, 2022 approved the 2022 Plan, subject to Shareholder approval, with the number of shares of common stock available for issuance under the 2022 Plan equal to the sum of (i) the number of shares of common stock available for grant under the Prior Plan immediately prior to the Effective Date that are transferred to the 2022 Plan on the Effective Date, (ii) 1,500,000 shares of common stock subject to the approval of the Shareholders, and (iii) any shares of common stock subject to any Awards (as defined below) granted under the Prior Plan that are outstanding on the Effective Date and that return to the share reserve due to lapse, forfeiture, expiration, termination or cancellation.

FACTORS CONSIDERED IN SETTING SIZE OF REQUESTED SHARE RESERVE

In setting the proposed number of shares reserved and issuable under the 2022 Plan, the Compensation Committee and the Board considered a number of factors. These factors included:

• The Company’s three-year average burn rate. Our three-year average “burn rate” was 0.73% for fiscal years 2019 through 2021. We define burn rate as the total number of shares subject to Awards granted to plan participants in a single year expressed as a percent of our weighted average shares outstanding. We believe our historical burn rate is reasonable for a company of our size in our industry.

• Estimated duration of shares available for issuance under the 2022 Plan. Based on the requested number of shares to be reserved under the 2022 Plan (and shares transferred from the Prior Plan to the 2022 Plan) and on our three-year average burn rate, we expect that the share reserve will cover Awards for approximately seven years. We believe the expected life of the share reserve is reasonable and will ensure sufficient funding for equity awards for a significant number of years.

• Expected dilution. As of December 31, 2021, our estimated existing overhang as it relates to the Prior Plan was 3.8%. We define existing overhang as the sum of the following items expressed as a percentage of our weighted average

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shares outstanding during 2021: (i) the total number of shares subject to outstanding Awards and (ii) the total number of shares of common stock available for future grants. Our total overhang as of that same date would be 6.4% based on including the additional 1,500,000 shares that would be available for issuance under the 2022 Plan upon its approval by the Shareholders. We believe that the expected dilution that will result from the 2022 Plan is reasonable for a company of our size in our industry.

PRINCIPAL FEATURES OF THE PROPOSED 2022 PLAN

The material terms of the 2022 Plan are set forth in the Summary Description of 2022 Plan attached as Exhibit A. The principal features of the 2022 Plan include:

A broad range of equity awards. The 2022 Plan allows the Company to grant the following types of awards: stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance awards, dividend equivalents, and other stock-based awards (collectively referred to herein as “Awards”). We believe that the breadth of Awards available under the 2022 Plan will provide the Compensation Committee the flexibility to structure appropriate incentives and respond to market-competitive changes in compensation practices.

A fixed reserve of shares of our common stock. The 2022 Plan provides for a fixed reserve of shares of our common stock to fund awards. The 2022 Plan does not contain an evergreen provision; accordingly, any increase in the share reserve requires Shareholder approval.

Conservative share-counting provisions. For purposes of determining the number of shares of common stock remaining available for issuance under the 2022 Plan, we may not add back shares of common stock (i) repurchased on the open market with proceeds from the exercise of a stock option, (ii) tendered or withheld to pay the exercise price of a stock option or grant price, if applicable, of a SAR, (iii) tendered or withheld to pay withholding tax, and (iv) that are not issued in connection with the stock settlement of a SAR.

Limits on dividends and dividend equivalents. The 2022 Plan prohibits the issuance of dividends and dividend equivalents on stock options and SARs; and prohibits the current payment of dividends or dividend equivalents on any Awards subject to performance-based vesting criteria until all applicable performance objectives have been achieved.

Limits on the duration of stock options and SARs. The 2022 Plan sets ten (10) years as the maximum term for stock options and SARs.

No stock option repricing. The 2022 Plan prohibits the repricing of stock options and SARs without prior Shareholder approval.

No discounted stock options or SARs. The 2022 Plan requires the exercise price of stock options and the grant price of SARs to be not less than the fair market value of a share of common stock on the date of grant.

Compensation recoupment policy. Awards (including any shares subject to an Award) are subject to any Company policy providing for recovery, recoupment, clawback and/or other forfeiture.

Limits on Equity Grants to Nonemployee Directors. The 2022 Plan generally provides that “fair value” of annual equity awards granted to each nonemployee Director may not exceed $150,000. For this purpose, the Committee determines fair value under applicable financial accounting standards.

Limited term. The 2022 Plan terminates ten (10) years from the date it is approved by the Company’s Shareholders.

Vote Required

The approval of the 2022 Plan requires the affirmative vote of a majority of the votes cast in person or by proxy at the Meeting. Abstentions and broker non-votes are not treated as votes cast and will have no effect on this Proposal No. 3.

Board Recommendation

Based upon the foregoing description, the Board recommends that Shareholders vote “FOR” this Proposal No. 3 to approve the 2022 Plan. Proxies solicited by the Board will be voted in favor of Proposal No. 3 unless Shareholders specify otherwise.

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AUDIT COMMITTEE REPORT

The Audit and Compliance Committee assists the Board in its oversight of the quality and integrity of the accounting, auditing, and financial reporting practices of the Company and the Bank. A copy of the Committee Charter, which more fully describes the role of the Committee, is available at the Company’s website at https://ir.communitybanksystem.com/corporate-overview/documents/default.aspx and in print to any Shareholder or interested party who requests it. The Company’s management has responsibility for establishing and maintaining adequate internal controls, preparing the financial statements and the public reporting process. PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm for 2021, is responsible for expressing opinions on these financial statements and on the Company’s internal controls over financial reporting based on their integrated audits performed in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). The Committee reviews internal and external audits of the Company and the Bank and the adequacy of the Company’s and the Bank’s accounting, financial, and compliance controls, oversees major policies with respect to risk assessment and management, and selects the Company’s independent registered public accounting firm (subject to ratification by the Shareholders).

The Audit and Compliance Committee is currently comprised of four directors, each of whom the Board has determined to be independent as defined by the SEC Rules and the NYSE Rules. Each member of the Committee is financially literate and meets the NYSE standard of having “accounting or related financial management expertise.” In addition, the Board has determined that Ms. MacPherson, Ms. Skerritt, and Mr. Whipple qualify as “audit committee financial experts” as defined by the SEC Rules.

In discharging its oversight responsibilities, the Committee has reviewed and discussed the Company’s 2021 audited consolidated financial statements with management of the Company and its independent registered public accounting firm and has discussed with the Company’s independent registered public accounting firm all matters required to be discussed by the applicable requirements of the PCAOB and the SEC. The Committee regularly holds separate executive sessions at its meetings with the Company’s independent registered public accounting firm, the chief risk officer, and the director of internal audit.

The Committee has also received the written disclosures from PricewaterhouseCoopers LLP as required by applicable requirements of the PCAOB and has discussed with PricewaterhouseCoopers LLP its independence. In concluding that PricewaterhouseCoopers LLP is independent, the Committee considered, among other factors, the non-audit services provided by PricewaterhouseCoopers LLP as described in the section entitled “Fees Paid to PricewaterhouseCoopers LLP.” The Committee reviews its performance on an annual basis pursuant to its Committee Charter, as well as reviewing the performance of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm.

Based on the reviews and discussions with management referred to above, the Committee recommended to the Board of Directors that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for filing with the SEC.

John F. Whipple, Jr., Chair

Jeffrey L. Davis

Kerrie D. MacPherson

Susan E. Skerritt

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PROPOSAL FOUR: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit and Compliance Committee engaged the firm of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm for fiscal year 2021. PricewaterhouseCoopers LLP performed the 2021 integrated audit of the consolidated financial statements and internal controls over financial reporting of the Company and its subsidiaries, and advised the Company in connection with various other matters as described below in the section entitled “Fees Paid to PricewaterhouseCoopers LLP.”

Following a review and assessment of the auditor’s performance, independence, fees and other factors, the Audit and Compliance Committee has selected PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022. PricewaterhouseCoopers LLP has acted in such capacity since its appointment in fiscal year 1984. In reviewing the auditor’s performance, the Committee reviews and discusses the auditor’s most recent PCAOB inspection report and its system of quality control. The Committee also reviews and discusses proposed staffing levels and the selection of the lead engagement partner from the independent registered public accounting firm.

Shareholder ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws or otherwise. However, the Board is submitting the selection of PricewaterhouseCoopers LLP to the Shareholders for ratification as a matter of good corporate practice. If the Shareholders fail to ratify the selection, the Audit and Compliance Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit and Compliance Committee in its discretion may appoint a different firm at any time during the year if it determines that such a change would be in the best interests of the Company.

Representatives of PricewaterhouseCoopers LLP will be present at the Meeting and will be given the opportunity to make a statement, if the representatives desire, and will be available to respond to appropriate questions from Shareholders.

Vote Required

The ratification of the appointment of the independent registered public accounting firm requires the affirmative vote of a majority of the votes cast in person or by proxy at the Meeting. Abstentions and broker non-votes are not treated as votes cast and will have no effect on the vote for this Proposal No. 4.

Board Recommendation

The Board recommends that Shareholders vote “FOR” this Proposal No. 4 to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. Proxies solicited by the Board will be voted in favor of Proposal No. 4 unless Shareholders specify otherwise.

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FEES PAID TO PRICEWATERHOUSECOOPERS LLP

The following table sets forth the aggregate fees billed to the Company by PricewaterhouseCoopers LLP for professional services rendered for the fiscal years ended December 31, 2021 and 2020.

	2021	2020
Audit Fees(1)	$1,222,093	$1,311,805
Audit Related Fees(2)	45,000	46,000
Tax Fees(3)	128,700	218,000
All Other Fees(4)	7,560	2,916

(1)
Includes fees incurred in connection with the audits of Community Bank System, Inc. and its subsidiaries Northeast Retirement Services, LLC and Global Trust Company, Inc. as well as $32,500 in 2021 related to the acquisition of Fringe Benefits Design of Minnesota, Inc. and the assets of Thomas Gregory Associates Insurance Brokers, Inc. Included in 2020 was $215,000 related to the acquisition of Steuben Trust Corporation and the CARES Act.

(2)
Includes fees related to the Uniform Single Attestation Program for Mortgage Bankers and compliance with the requirements of the Consolidated Audit Guide for Audits of HUD Programs for 2021 and 2020 and the filing of a Form S-4 registration statement in 2020.

(3)
Includes tax preparation and compliance fees of $108,700 and $183,000 for 2021 and 2020, respectively and fees incurred in connection with tax consultation related to acquisitions, state tax planning, tax reform and other matters of $15,000 and $35,000 for 2021 and 2020, respectively.

(4)
Includes a license fee to Disclosure Checklist in 2020, a product of PwC Product Sales, LLC, a subsidiary of PricewaterhouseCoopers LLP and a subscription fee to Viewpoint in 2021 and 2020, a PricewaterhouseCoopers LLP trademarked product.

Pursuant to the Audit and Compliance Committee Charter, the Company is required to obtain pre-approval by the Audit and Compliance Committee for all audit and permissible non-audit services obtained from its independent auditors to the extent required by applicable law. In accordance with this pre-approval policy, the Audit and Compliance Committee pre-approved all audit and non-audit services for fiscal 2020 and fiscal 2021.

In addition to the services described above, PricewaterhouseCoopers LLP provides audit, non-audit and tax compliance services to certain collective investment trusts for which Global Trust Company, Inc. (a wholly owned subsidiary of the Company) is the Trustee. The collective investment trusts are not part of the Company’s consolidated financial statements. All of the fees for such services are paid by the collective investment trusts (not by Global Trust Company, Inc.) and are not included in the table above. PricewaterhouseCoopers LLP directly billed the collective investment trusts a total of $3.4 million and $3.8 million, for these professional services rendered for the fiscal years ended December 31, 2021 and 2020, respectively.

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OTHER MATTERS

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If a Shareholder would like to receive future proxy materials electronically via e-mail or the Internet, he or she can choose to sign up for electronic delivery by following the instructions to vote using the Internet and, when prompted, indicate that he or she agrees to receive or access proxy materials electronically in future years.

ELIMINATION OF DUPLICATE MAILINGS

The Company has adopted a procedure called “householding.” Under this procedure, the Company may deliver a single copy of the Notice of Internet Availability and, if requested printed versions by mail, of this Proxy Statement and the Annual Report to multiple shareholders who share the same address, unless the Company has received contrary instructions from one or more of the Shareholders. This procedure reduces the environmental impact of the annual meetings and reduces the Company’s printing and mailing costs. Shareholders who participate in householding will continue to receive separate proxy cards and voting forms. Upon written or oral request, the Company will deliver promptly a separate copy of the Notice of Internet Availability or this Proxy Statement and the Annual Report to any Shareholder that elects not to participate in householding.

To receive, free of charge, a separate copy of the Notice of Internet Availability or this Proxy Statement or the Annual Report, or separate copies of any future notice, proxy statement, or annual report, registered Shareholders may call Broadridge Investor Communication Solutions, Inc. at (866) 540-7095 or write to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717, and the Company will deliver a separate copy promptly.

A Shareholder who holds shares through a broker, bank, or other organization can participate in householding by contacting the broker, bank, or other organization that holds such shares to request information about eliminating duplicate mailings.

DELINQUENT SECTION 16(A) REPORTS

Section 16(a) of the Exchange Act requires the Company’s Directors, executive officers and holders of more than 10% of the Company’s common stock (collectively, “Reporting Persons”) to file with the SEC initial reports of ownership and reports of changes in ownership of the common stock. Such persons are required by regulations of the SEC to furnish the Company with copies of all such filings. Based solely on its review of the copies of such filings received by it and written representations of the Reporting Persons with respect to the fiscal year ended December 31, 2021, the Company believes that all Reporting Persons complied with all Section 16(a) filing requirements in the fiscal year ended December 31, 2021.

SHAREHOLDER PROPOSALS

If Shareholder proposals are to be considered by the Company for inclusion in a proxy statement for a future meeting of the Company’s Shareholders, such proposals must be submitted on a timely basis and must meet the requirements established by the SEC for Shareholder proposals. Shareholder proposals seeking inclusion in the proxy statement for the Company’s 2023 Annual Meeting of Shareholders will not be deemed to be timely submitted pursuant to Rule 14a-8 unless they are received by the Company at its principal executive offices no later than November 28, 2022.

The Company’s Bylaws establish advance notice procedures with regard to Shareholder nominations to the Board and other Shareholder proposals that are not submitted for inclusion in the proxy statement, but that a Shareholder instead wishes to present directly at an annual meeting. With respect to director nominees, any nominations must be delivered to the Secretary of the Company not less than 60 days or more than 90 days prior to the annual meeting (provided, however, if the Company delivers the notice for the annual meeting with less than 60 days’ notice, the Shareholder’s written nomination must be received no later than the close of business on the 10^th day following the date on which the Company’s notice is mailed) in order for the nomination to be considered timely, and the nomination must contain the information set forth in the Bylaws. Written notice of such other Shareholder proposals that are to be presented at an annual meeting must be received by the Secretary of the Company no later than 45 days prior to the date of the annual meeting (provided, however, if the Company delivers the notice for the annual meeting with less than 60 days’ notice, the Shareholder’s written notice must be received no later than the close of business on the 15^th day following the date on which the Company’s notice is mailed) in order to be considered timely, and must contain the information set forth in the Bylaws.

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These advance notice provisions are in addition to, and separate from, the requirements that a Shareholder must meet in order to have a proposal included in the proxy statement under the rules of the SEC. A proxy granted by a Shareholder will give discretionary authority to the proxies to vote on any matters introduced pursuant to the advance notice Bylaw provisions, subject to applicable rules of the SEC. Shareholder proposals, together with any supporting statements, should be directed to the Secretary of the Company at its principal executive offices. Shareholders submitting director nominations and proposals are urged to submit their nominations and proposals by certified mail, return receipt requested.

EXPLANATION OF NON-GAAP FINANCIAL MEASURES

Information on how the Company calculates and reconciles the Operating Earnings per Share and Operating Net Income measures (presented on page 32) is disclosed in the “Reconciliation of GAAP to Non-GAAP Measures” section of the Company’s Annual Report on Form 10-K for 2021 filed with the SEC on March 1, 2022.

OTHER BUSINESS

The Board of the Company is not aware of any other matters that may come before the Meeting. However, the proxies may be voted with discretionary authority with respect to any other matters that may properly come before the Meeting.

Date: March 28, 2022

By Order of the Board of Directors

 

Danielle M. Cima

Secretary

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EXHIBIT A

Summary Description of 2022 Plan

Summary Description of 2022 Plan

The following is a summary of the principal features of the 2022 Plan. The summary is not a complete description of all the terms of the 2022 Plan and is qualified in its entirety by reference to the complete text of the 2022 Plan which is attached to this Proxy Statement as Exhibit B. To the extent there is a conflict between this summary and the actual terms of the 2022 Plan, the terms of the 2022 Plan will govern. Awards to be made under the 2022 Plan will be entirely in the discretion of the Compensation Committee and are therefore not currently determinable.

Administration

The Compensation Committee will have the exclusive authority to administer the 2022 Plan with respect to Awards made to our non-employee Directors, executive officers and other eligible employees. The Compensation Committee may at any time appoint a secondary committee of one or more Directors to have separate but concurrent authority with the Committee to make Awards to such other eligible individuals. The Compensation Committee may also delegate authority to one or more officers of the Company with respect to Awards granted to other eligible employees who are not officers of the Company.

The term “plan administrator,” as used in this summary, shall refer to the Compensation Committee and any delegates with respect to Awards granted to our employees, shall refer to all non-management Directors with respect to Awards granted to Directors, and shall refer to the entire Board with respect to Awards that may be granted to advisors.

Eligibility

All employees, non-employee Directors, and certain advisors of the Company and its subsidiaries will be eligible to participate in the 2022 Plan. Approximately 2,927 employees, including the current 11 executive officers, and 12 non-employee Directors could be eligible to participate in the 2022 Plan. The plan administrator has not made a determination as to which of these eligible individuals will receive Awards under the 2022 Plan.

Share Reserve

Subject to capitalization adjustments described below, 1.5 million shares of common stock will be reserved for issuance under the 2022 Plan (plus any shares available for issuance under the Prior Plan as of the date of the Annual Meeting, which are transferred to the 2022 Plan). The shares of common stock issuable under the 2022 Plan may be drawn from shares of our authorized but unissued common stock or from treasury shares (including shares of our common stock that we purchase on the open market or in private transactions).

Share Counting RuleS

Any shares of common stock that are withheld by the Company or tendered (by either actual delivery or attestation) by a 2022 Plan participant (i) to pay the exercise price of a stock option or (ii) to satisfy tax withholding obligations associated with an Award, will not be added back to the share reserve and will not become available for future grants under the 2022 Plan.

Any shares of common stock that were subject to a SAR or stock option granted under the 2022 Plan that were not issued upon the exercise of such SAR or option will not be added back to the share reserve and will not become available for future grants under the 2022 Plan.

Any shares of common stock that were purchased by the Company on the open market with the proceeds from the exercise of a stock option will not be added back to the share reserve and will not become available for future grants under the 2022 Plan.

Any shares of common stock related to an Award granted under the 2022 Plan that terminates by expiration, forfeiture, cancellation or otherwise without the issuance of such shares, are settled in cash in lieu of such shares, or are exchanged with the Compensation Committee’s permission, prior to the issuance of such shares, for Awards not involving shares of common stock will be added back to the share reserve and will be available again for future grants under the 2022 Plan.

A-1

 

One-Year Minimum Vesting Standard

Any Award granted under the 2022 Plan will be subject to a minimum vesting period of at least one year. However, (i) the Compensation Committee may permit and authorize acceleration of vesting of Awards in accordance with the provision of the 2022 Plan, (ii) the Committee may grant Awards covering up to five percent (5%) of the total number of shares reserved under the 2022 Plan without respect to the one-year minimum vesting period, and (iii) Substitute Awards (as defined in the 2022 Plan) are not be subject to the minimum vesting period.

Awards

Under the 2022 Plan, participants may be granted stock options, SARs, restricted stock, restricted stock units, performance share units, performance units and other stock-based Awards. The plan administrator will have complete discretion to determine which eligible individuals are to receive Awards, the type of Awards to be granted, the time or times when those Awards are to be granted, the number of shares subject to each Award, the vesting and issuance schedule (if any) to be in effect for the Award, the exercise price or other consideration for the shares of common stock subject to the Award, the maximum term for which stock options or SARs are to remain outstanding, and the status of any stock option as either an incentive stock option or a non-qualified option under the federal tax laws.

A detailed description of each type of Award follows.

• Stock Options

Under the 2022 Plan, the plan administrator may grant Awards in the form of an option to purchase shares of common stock (“Stock Options”) that are intended to meet the requirements of Section 422 of the Internal Revenue Code (the “Code”) (referred to as “Incentive Stock Options”) and other Stock Options that do not meet such requirements (referred to as “Non-Qualified Stock Options”). The applicable Award agreement will specify whether a stock option is an Incentive Stock Option or Non-Qualified Stock Option. A Stock Option will grant the holder the right to purchase a specific number of shares of common stock at a fixed price (“Option Price”) over a period not to exceed ten (10) years from the date of the grant.

The exercise price per share may not be less than one hundred (100) percent of the fair market value of a share of common stock on the date a Stock Option is granted.

No grant of an Incentive Stock Option may be made more than ten (10) years after the adoption of the 2022 Plan by the Board.

Each Stock Option will be evidenced by an Award Agreement that specifies the (i) exercise price, (ii) number of shares of common stock on which the Stock Option is based, (iii) exercise period, (iv) vesting and forfeiture conditions, (v) term, (vi) the impact of a holder’s termination of service with the Company, and (vii) other conditions and provisions determined by the plan administrator.

The plan administrator may impose such restrictions on shares of common stock acquired pursuant to the exercise of a stock option as it determines advisable.

• Stock Appreciation Rights

Under the 2022 Plan, the plan administrator may grant Awards in the form of a SAR. A SAR will allow the holder to exercise that right as to a specific number of shares of common stock over a period not to exceed ten (10) years to receive the appreciated value of such shares. The appreciated value is equal to the excess of (i) the fair market value of the shares of common stock as to which the right is exercised (determined as of the date of exercise) over (ii) the aggregate grant price for those shares. The applicable Award Agreement will specify whether this value will be paid in cash, shares of common stock, or a combination of both.

The grant price per share may not be less than one hundred (100) percent of the fair market value per share of common stock on the date the SAR is granted.

Each SAR will be evidenced by an Award Agreement that specifies the (i) grant price, (ii) number of shares of common stock on which the SAR is based, (iii) exercise period, (iv) vesting and forfeiture conditions, (v) term, (vi) the impact of a holder’s termination of service with the Company, and (vii) other conditions and provisions determined by the plan administrator.

The plan administrator may impose such restrictions on shares of common stock acquired pursuant to the exercise of a SAR as it determines advisable.

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• Repricing/Cash-Out

The plan administrator may not implement any of the following repricing or cash-out programs without obtaining Shareholder approval: (i) a reduction in the exercise price or grant price of any previously granted Stock Option or SAR, (ii) a cancellation of any previously granted Stock Option or SAR in exchange for another Stock Option or SAR with a lower exercise price or grant price, respectively, or (iii) a cancellation of any previously granted Stock Option or SAR in exchange for cash or another Award if the exercise price of the Stock Option or the grant price of the SAR exceeds the fair market value of a share of the Company’s common stock on the date of such cancellation, in each case other than in connection with a change in control or the capitalization adjustment provisions in the 2022 Plan.

• Restricted Stock and Restricted Stock Units

Under the 2022 Plan, the plan administrator may grant Awards denominated in shares of common stock (“Restricted Stock”) or stock units (“Restricted Stock Units” or “RSUs”) subject to a period in which such shares or units are subject to forfeiture based on discontinued service, the failure to achieve performance criteria, and/or the occurrence of other events as determined by the plan administrator. Each RSU corresponds in value to a single share of common stock. Restricted Stock Units may be paid in cash, shares of common stock or a combination of the two as determined by the plan administrator and set forth in the applicable Award Agreement. Restricted Stock Awards are settled in shares of common stock.

The plan administrator may impose such conditions or restrictions on Restricted Stock or RSUs as it deems advisable. Holders of Restricted Stock will have the same voting rights and dividend rights as holders of shares of common stock unless such rights are expressly limited by the plan administrator in the applicable Award Agreement. No RSU will confer any voting rights. The plan administrator will determine and set forth in each applicable Award Agreement the extent to which a holder of RSUs has the right to receive dividend equivalents on each unit and the conditions under which such dividend equivalents will be paid to the holder. No dividends or dividend equivalents will be paid on performance-based Restricted Stock and RSUs unless the applicable performance goals are satisfied.

Each grant of Restricted Stock and RSUs will be evidenced by an Award Agreement that specifies the (i) number of shares of common stock on which the Restricted Stock or RSU is based, (ii) vesting and forfeiture conditions, (iii) the impact of a holder’s termination of service with the Company, (iv) timing and form of settlement, and (v) other conditions and provisions determined by the plan administrator.

The plan administrator may impose such restrictions on shares of common stock acquired pursuant to the settlement of Restricted Stock and RSUs as it determines advisable.

• Performance Share Units and Performance Units

Under the 2022 Plan, the plan administrator may grant an Award denominated in shares of common stock (“Performance Share Units” or “PSUs”) or denominated in dollar units (“Performance Units” or “PUs”) that are earned based on the achievement of one or more performance goals over a specified performance period. The number of PSUs or PUs earned over a performance period may vary based on the level of achieved performance.

Each PSU will have a value that corresponds to the fair market value of a share of common stock. Each PU will have an initial dollar value as determined in the discretion of the plan administrator. The dollar value of PUs may vary based on the level of achieved performance over the applicable performance period. PSUs and PUs may payable in the form of cash, shares of common stock, or a combination of the two as determined by the plan administrator and set forth in the applicable Award Agreement.

The plan administrator will determine and set forth in each applicable Award Agreement the extent to which a holder of PSUs has the right to receive dividend equivalents on each unit and the conditions under which such dividend equivalents will be paid to the holder. No dividends equivalents will be paid on PSUs unless the applicable performance goals are satisfied.

Each grant of PSUs and PUs will be evidenced by an Award Agreement that specifies the: (i) number of PSUs and PUs granted, (ii) nominal dollar value of each Performance Unit, (iii) performance period, (iv) performance goal(s), (v) payout amounts at various levels of achieved performance, (vi) forfeiture conditions, (vii) the impact of a holder’s termination of service with the Company, (viii) timing, and form of settlement, and (ix) other conditions and provisions determined by the plan administrator.

The plan administrator may impose such restrictions on shares of common stock acquired pursuant to the settlement of PSUs and PUs as it determines advisable.

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• Other Stock-Based Awards

Under the 2022 Plan, the plan administrator may grant Awards, not otherwise described by the terms of the 2022 Plan, that are denominated in stock (“Other Stock-Based Awards”). The plan administrator will determine the terms and conditions applicable to each Other Stock-Based Award which may include a vesting requirement based on the completion of a service period with the Company or achievement of a specified performance goal(s) and form of payment in shares of common stock, cash, or a combination of the two.

Each grant of Other Stock-Based Award will be evidenced by an Award Agreement that specifies the (i) initial value or number of such Award, (ii) applicable vesting requirements, (iii), forfeiture conditions, (iv) the impact of a holder’s termination of service with the Company, (v) timing, and form of settlement, and (vi) other conditions and provisions determined by the plan administrator.

The plan administrator may impose such restrictions on shares of common stock acquired pursuant to the settlement of Other Stock-Based Awards as it determines advisable.

• Performance Measures

The plan administrator may grant Awards that are intended to provide compensation solely on account of the attainment of one or more pre-established, objective performance criteria. The vesting, level of payout, or value of such Awards will be determined by the attainment of one or more goals based on one or more of the performance measures (“Performance Measures”), which include, but are not limited to, the following:

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Net earnings or net income (before or after taxes);

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Earnings per share;

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Earnings before or after taxes, depreciation, and/or amortization;

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Net sales or revenue growth (whether in general or by type of product or service or by type of customer);

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Revenues or sales;

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Net operating profit;

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Net operating income or net operating earnings per share (excluding acquisition expenses and other non-recurring charges);

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Return measures (including, but not limited to, GAAP, operating, core or adjusted return on assets, regulatory capital, capital, tangible capital, invested capital, equity, sales, or revenue);

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Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);

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Gross or operating margins;

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Productivity and financial performance ratios;

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Share price (including, but not limited to, growth measures and total shareholder return);

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Expense targets and operating expenses;

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Margins (including, but not limited to, net interest margin);

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Completion of acquisitions of business or companies;

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Completion of divestitures or asset sales;

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Asset quality metrics;

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Achievement of business operational objectives;

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Operating efficiency;

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Deposit market share;

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Customer satisfaction;

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Working capital targets and change in working capital;

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Customer account growth and new account openings; and

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Any one or a combination of any of the foregoing business criteria.

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Any Performance Measure(s) may be used to measure the performance of the Company, subsidiary, and/or any affiliate of the Company as a whole or any business unit of the Company, subsidiary, and/or affiliate or any combination thereof, as the Compensation Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select Performance Measure above as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures.

The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (iv) any reorganization and restructuring programs, (v) extraordinary nonrecurring items as described in FASB Accounting Standards Codification 225-20 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year, (vi) acquisitions or divestitures, and (vii) foreign exchange gains and losses.

Change in Control and Vesting Acceleration

The following paragraphs describe how Awards under the 2022 Plan would be affected in the event of a change in control (as defined below), except as otherwise provided in the Award Agreement or other agreement between the individual and the Company.

• Definition of Change in Control. A “Change in Control” will be deemed to occur if (i) there are certain changes in the composition of our Board of Directors, (ii) any person or group of related persons becomes directly or indirectly the beneficial owner of more than thirty (30) percent of the total combined voting power of the Company’s then outstanding voting securities, (iii) a tender offer or exchange offer is made and consummated for the ownership of securities of the Company representing thirty (30) percent or more of the combined voting power of the Company’s then outstanding voting securities, (iv) we are acquired in a merger, consolidation, reorganization or similar transaction, or (v) we sell substantially all of our assets to an unrelated third party.

• Vesting Acceleration. Upon a Change in Control all then-outstanding Awards shall immediately vest and be settled in accordance with the paragraphs below, except as may otherwise be provided in a then-effective written agreement (including an Award Agreement) between a participant and the Company. However, such immediate vesting shall not apply to the extent that another award meeting the requirements of a “Replacement Award”, as determined by the plan administrator is provided to the participant.

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All outstanding Stock Options and SARs will become fully vested and immediately exercisable upon a Change in Control.

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All Awards, other than Stock Options and SARs, that are not vested and as to which vesting depends solely upon the satisfaction of a service obligation by the holder shall become fully vested upon a Change in Control and will be paid in the form specified in the applicable Award Agreement within thirty (30) days following the effective date of the Change in Control.

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All Awards, other than Stock Options and SARs, that are not vested and as to which vesting depends upon the satisfaction of one or more performance conditions will immediately vest and all performance conditions will be deemed satisfied as if target performance was achieved (or as otherwise set forth in the Award Agreement) and will be paid in the form specified in the applicable Award Agreement, within thirty (30) days following the effective date of a Change in Control.

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All other Awards not covered by the foregoing will vest and be paid as determined by the plan administrator unless otherwise provided in the applicable Award Agreement.

Changes in Capitalization

If an equity restructuring causes the per share value of the Company’s common stock to change, such as by reason of a stock dividend, extraordinary cash dividend, stock split, spinoff, rights offering, recapitalization or otherwise, equitable adjustments will be made to the number of shares available for issuance under the 2022 Plan and to the terms of outstanding Awards in a manner designed to preclude any dilution or enlargement of the 2022 Plan and any outstanding Awards.

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Fair Market Value

For any Award made pursuant to the 2022 Plan, the fair market value per share of the Company’s common stock as of any date will be deemed to be equal to the closing price of the Company’s common stock as reported on the New York Stock Exchange (“NYSE”) or other established stock exchange (or exchanges) on such date, or determined pursuant to such other method as may be selected by the plan administrator.

Shareholder Rights and Transferability

No participant will have any shareholder rights with respect to the shares subject to a Stock Option or SAR until such participant has exercised the Stock Option or SAR and paid the exercise price for the purchased shares (in the case of Stock Options), and any related withholding taxes. Subject to the terms of the applicable Award Agreement, a participant will have full shareholder rights with respect to any shares of common stock issued under the 2022 Plan, whether or not the participant’s interest in those shares is vested. A participant will not have any shareholder rights with respect to the shares of common stock subject to a RSU, PSU, PU or Other Stock-Based Award until that Award vests and shares of common stock are actually issued under such Awards.

Awards are not transferable other than by will or the laws of descent and distribution or, subject to the consent of the plan administrator, pursuant to a domestic relations order entered into by a court of competent jurisdiction. However, the plan administrator may, in its discretion, determine that any or all Awards may be transferable, without compensation to the transferor, to and exercisable by such transferees, and subject to such terms and conditions, as the plan administrator may deem appropriate; provided, however, no Award may be transferred for value without Shareholder approval.

Withholding

The plan administrator may provide holders of Awards with the right to have the Company withhold cash or a portion of the shares otherwise issuable to such individuals in satisfaction of any applicable withholding taxes to which they become subject in connection with the exercise, vesting or settlement of their Awards. Alternatively, the plan administrator may allow such individuals to deliver cash or previously acquired shares of our common stock in payment of such withholding tax liability.

Deferral Programs

The plan administrator may structure one or more Awards so that the participants may be provided with an election to defer the payment of the compensation associated with those Awards for federal income tax purposes.

Clawback and Forfeitures for Cause

All Awards will be subject to the Company’s Policy on Recoupment of Incentive-Based Compensation. In addition, the plan administrator may specify in an Award Agreement that the participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable treatment of an Award. Upon a participant’s termination of service for cause, the participant will forfeit, as of the date immediately preceding such termination of service, outstanding and exercisable Stock Options and SARs and any outstanding and unvested Restricted Stock, RSUs, PSUs, PUs, and Other Stock-Based Awards previously granted to the participant.

Amendment and Termination

The Board may, at any time, amend, suspend, or terminate the 2022 Plan in whole or in part. No amendment of the 2022 Plan may result in the “repricing” of any outstanding Stock Options or SARs without Shareholder approval. To the extent necessary under any applicable law, regulation, or exchange requirement, no amendment will be effective unless approved by the Shareholders of the Company. No termination, amendment, or suspension of the 2022 Plan may adversely affect in any material way any Award previously granted under the 2022 Plan without the written consent of the Award recipient subject to certain exceptions. These exceptions permit the Board or plan administrator to amend outstanding Awards to adjust for the occurrence of certain unusual or non-recurring events and to conform to legal requirements without the written consent of the Award recipient.

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Summary of Federal Income Tax Consequences of Awards Granted under the 2022 Plan

The following is a summary of the United States Federal income tax treatment applicable to the Company and the participants who receive Awards under the 2022 Plan. This discussion does not address all aspects of the United States Federal income tax consequences of participating in the 2022 Plan that may be relevant to participants in light of their personal investment or tax circumstances and does not discuss any state, local or non-United States tax consequences of participating in the 2022 Plan. Each participant is advised to consult his or her particular tax advisor concerning the application of the United States Federal income tax laws to such participant’s particular situation, as well as the applicability and effect of any state, local or non-United States tax laws before taking any actions with respect to any Awards.

Stock Options

Options granted under the 2022 Plan may be either Incentive Stock Options which satisfy the requirements of Section 422 of the Code or Non-Qualified Stock Options which are not intended to meet such requirements. The Federal income tax treatment for the two types of options differs as follows:

Incentive Stock Options. No taxable income is recognized by the participant upon the grant of an Incentive Stock Option, and no taxable income is recognized for regular tax purposes at the time the Incentive Stock Option is exercised, although taxable income may arise upon exercise for alternative minimum tax purposes. The participant will recognize taxable income in the year in which the shares of common stock acquired upon the exercise of an Incentive Stock Option are sold or otherwise made the subject of certain other dispositions. For Federal tax purposes, dispositions are divided into two categories: (i) qualifying, and (ii) disqualifying. A qualifying disposition occurs if the sale or other disposition is made more than two (2) years after the date the related Incentive Stock Option was granted and more than one (1) year after the date such Incentive Stock Option was exercised for those shares. If the sale or disposition occurs before both of these two periods are satisfied, then a disqualifying disposition will result.

Upon a qualifying disposition, the participant will recognize long-term capital gain in an amount equal to the excess of (i) the amount realized upon the sale or other disposition of the acquired shares of common stock over (ii) the exercise price paid for those shares. If there is a disqualifying disposition of the acquired shares of common stock, then the excess of (i) the fair market value of those shares on the exercise date or (if less) the amount realized upon such sale or disposition over (ii) the exercise price paid for the shares will be taxable as ordinary income to the participant. Any additional gain recognized upon the disposition will be a capital gain. We will not be entitled to any income tax deduction if the participant makes a qualifying disposition of the shares.

If the participant makes a disqualifying disposition of the purchased shares, then we will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the holder in connection with the disqualifying disposition.

Non-Qualified Options. No taxable income is recognized by a participant upon the grant of a Non-Qualified Stock Option. The participant will recognize ordinary income in the year in which the Non-Qualified Stock Option is exercised, equal to the excess of the fair market value of the shares of common stock acquired upon the exercise of the Non-Qualified Stock Option on the exercise date over the exercise price paid for the shares (and subject to any applicable income tax withholding). Subject to the deductibility limitations of Code Section 162(m), we will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant with respect to an exercised Non-Qualified Stock Option.

Stock Appreciation Rights

No taxable income is recognized by a participant upon the grant of a SAR. The participant will recognize ordinary income in the year in which the SAR is exercised, in an amount equal to the fair market value of the shares of common stock issued to the participant upon the exercise of the SAR (or the amount of the cash payment made to the participant upon the exercise of the SAR) and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), we will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant with respect to an exercised SAR.

Restricted Stock

No taxable income is recognized by a participant upon the grant of Restricted Stock, unless the participant makes an election to be taxed at the time of grant. If such election is made, the participant will recognize compensation taxable as ordinary income (and subject to any applicable income tax withholding) at the time of the grant in an amount equal to the excess of the fair market value of the shares of common stock subject to such grant at such time over the amount, if any, paid for those shares.

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If the participant does not make an election to be taxed at the time of grant, the participant will recognize ordinary income when shares of common stock subject to the grant subsequently vest in an amount equal to the excess of the fair market value of the shares on the vesting date over the amount, if any, paid for the shares (and subject to any applicable income tax withholding). Subject to the deductibility limitations of Code Section 162(m), we will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant in connection with the vesting of a Restricted Stock Award.

In addition, a participant receiving dividends with respect to Restricted Stock for which the above-described election has not been made and prior to the time the restrictions lapse will recognize compensation taxable as ordinary income (and subject to any applicable income tax withholding), rather than dividend income, in an amount equal to the dividends paid and we will be entitled to a corresponding deduction, except to the extent the deduction limits of Code Section 162(m) apply.

Restricted Stock Units

No taxable income is recognized by a participant upon the grant of RSUs. The participant will recognize ordinary income in the year in which the RSU grant is settled and paid in an amount equal to the fair market value of the shares of common stock issued to the participant upon the settlement of the RSUs (or the amount of the cash payment made to the participant upon the settlement of the RSUs) and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), we will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant at the time the RSU is settled and paid.

In addition, a participant eligible to receive dividend equivalents with respect to a grant of RSUs will recognize compensation taxable as ordinary income (and subject to any applicable income tax withholding), rather than dividend income, in the year in which the dividend equivalent is paid in an amount equal to such payment if made in cash (or, if such payment is made in shares of common stock, then the fair market value of such shares on the date of payment). Subject to the deductibility limitations of Code Section 162(m), we will be entitled to a corresponding deduction.

Performance Share Units

No taxable income is recognized by a participant upon the grant of PSUs. The participant will recognize ordinary income in the year in which the PSU grant is settled and paid in an amount equal to the fair market value of the shares of common stock issued to the participant upon the settlement of the PSUs (or cash paid to the participant upon the settlement of the PSUs) and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), we will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant at the time the PSU is settled and paid.

In addition, a participant eligible to receive dividend equivalents with respect to a grant of PSUs will recognize compensation taxable as ordinary income (and subject to any applicable income tax withholding), rather than dividend income, in the year in which the dividend equivalent is paid in an amount equal to such payment (or, if such payment is made in shares of common stock, then the fair market value of such shares on the date of payment). Subject to the deductibility limitations of Code Section 162(m), we will be entitled to a corresponding deduction.

Performance Units

No taxable income is recognized by a participant upon the grant of PUs. The participant will recognize ordinary income in the year in which the PUs are settled and paid in an amount equal to the cash payment made to the participant upon the settlement of the PUs (or the fair market value of the shares of common stock issued to the participant upon the settlement of the PU) and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), we will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant at the time the PUs are settled and paid.

Other Stock-Based Awards

The Company may grant Other Stock-Based Awards to participants that are not otherwise described by the above Awards. No taxable income is recognized by a participant upon the grant of such Awards unless at the time of grant any shares of common stock issued or cash paid to the participant is fully vested and non-forfeitable. In this case, the participant would recognize ordinary income equal to the fair market value of the shares of common stock issued to the participant at the time of grant or the amount of the cash payment made to the participant at the time of grant and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), we will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant at the time the Award is settled and paid. The deduction will be allowed for the taxable year in which such ordinary income is recognized by the participant.

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Other Stock-Based Awards may be subject to vesting and forfeiture provisions. In this case, a participant will not recognize taxable income upon the grant of such Awards but will recognize ordinary income in the year in which such Awards are settled and paid in an amount equal to the fair market value of the shares of common stock issued to the participant upon the settlement of such Awards and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), we will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant at the time such Awards are settled and paid.

The number of Awards to be made pursuant to the 2022 Plan is subject to the discretion of the Compensation Committee and therefore cannot be determined with certainty at this time. However, the Company anticipates that the Compensation Committee will continue in future years to make annual equity awards as described above. Under the Prior Plan during fiscal year 2022, a total of (i) 173,518 stock options were awarded, (ii) 43,215 shares of restricted stock were awarded, (iii) 7,728 shares of deferred stock were awarded, and (iv) 35,815 performance shares (at maximum) were awarded.

On March 21, 2022, the closing price of our common stock on the NYSE was $71.45.

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EXHIBIT B

COMMUNITY BANK SYSTEM, INC. 2022

LONG-TERM INCENTIVE PLAN

Table of Contents

1.	ESTABLISHMENT	B-2
2.	PURPOSE	B-2
3.	ELIGIBILITY	B-2
4.	DEFINITIONS	B-2
5.	SHARES AVAILABLE UNDER THE PLAN	B-4
6.	GRANTS OF OPTION RIGHTS GENERALLY	B-5
7.	SPECIAL RULES FOR GRANTS OF INCENTIVE STOCK OPTIONS	B-5
8.	SPECIAL RULES FOR GRANTS OF NONQUALIFIED STOCK OPTIONS	B-6
9.	STOCK APPRECIATION RIGHTS	B-6
10.	RESTRICTED STOCK AWARDS	B-7
11.	RESTRICTED STOCK UNIT AWARDS	B-8
12.	DEFERRED STOCK AWARDS	B-8
13.	PERFORMANCE SHARES, PERFORMANCE SHARE UNITS AND PERFORMANCE UNITS	B-8
14.	OTHER STOCK-BASED AWARDS	B-9
15.	DIVIDEND EQUIVALENTS.	B-9
16.	PERFORMANCE MEASURES.	B-10
17.	TRANSFERABILITY	B-11
18.	ADJUSTMENTS	B-11
19.	CHANGE IN CONTROL	B-11
20.	FRACTIONAL SHARES	B-14
21.	ADMINISTRATION OF THE PLAN	B-14
22.	AMENDMENTS, TERMINATION, ETC.	B-15

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COMMUNITY BANK SYSTEM, INC.

2022 Long-Term Incentive Plan

1. Establishment. Community Bank System, Inc., a Delaware corporation, establishes an incentive compensation plan to be known as Community Bank System, Inc. 2022 Long-Term Incentive Plan (“Plan”), as set forth in this document. The Plan permits the grant of various forms of equity-based awards. The Plan shall become effective upon shareholder approval (the “Effective Date”) and shall remain in effect until the tenth anniversary of the Effective Date. The Plan and each Award granted hereunder are conditioned on and shall be of no force or effect until the Plan is approved by the shareholders of the Company.

2. Purpose. The purpose of the Plan is to promote the interests of the Company and its shareholders by providing current and future directors, officers, key employees and advisors with an equity or equity-based interest in the Company, so that the interests of such directors, officers, employees and advisors will be closely associated with the interests of shareholders by reinforcing the relationship between shareholder gains and compensation. Rights granted pursuant to this Plan, which include stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, deferred stock awards, performance shares, performance share units, performance units and other stock-based awards may also be used to attract, retain and motivate eligible individuals.

3. Eligibility. Directors, officers, and key employees of the Company and its Subsidiaries, and Advisors to the Company or the Board of Directors shall be eligible to participate in the Plan to the extent determined by the Committee in its sole discretion. Employee participants shall be selected by the Committee based upon such factors as the employee’s past and potential contributions to the success, profitability, and growth of the Company.

4. Definitions. As used in this Plan,

(a) “Advisor” shall mean any natural person who is engaged to render bona fide consulting or advisory services to the Company or the Board of Directors, other than a person who provides such services in connection with the offer or sale of securities in a capital-raising transaction.

(b) “Award” shall mean, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Deferred Stock Awards, Performance Shares, Performance Share Units, Performance Units or Other Stock-Based Awards, in each case subject to the terms of this Plan.

(c) “Award Agreement” shall mean either (i) a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (ii) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof. The Committee may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.

(d) “Board of Directors” shall mean the Board of Directors of the Company.

(e) “Change in Control Price” shall mean the price per share of Common Stock on a fully-diluted basis offered in conjunction with any transaction resulting in a Change in Control, as determined in good faith by the Committee as constituted before the Change in Control, if any part of the offered price is payable other than in cash, and if the entire offered price is payable only in cash, then it shall mean such cash amount per share of Common Stock.

(f) “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.

(g) “Committee” shall mean the committee appointed by the Board of Directors to administer the Plan in accordance with Paragraph 21.

(h) “Common Stock” shall mean the Common Stock, par value $1.00, of the Company.

(i) “Company” shall mean Community Bank System, Inc.

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(j) “Deferred Stock Award” shall mean an award of Common Stock to an Eligible Employee, Director or Advisor that is subject to the restrictions described in Paragraph 12.

(k) “Director” shall mean a member of the Board of Directors.

(l) “Eligible Employees” shall mean persons treated by the Company for payroll and employment tax purposes as common law employees of the Company or a Subsidiary and described in Paragraph 3.

(m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

(n) “Exercise Price” shall means the price at which a share of Common Stock may be purchased by a Participant pursuant to an Option Right.

(o) “Fair Market Value” shall mean a price that is based on the opening, closing, actual, high, low, or average selling prices of a share of Common Stock reported on the New York Stock Exchange (“NYSE”) or other established stock exchange (or exchanges) on the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Committee in its discretion. Unless the Committee determines otherwise, Fair Market Value shall be deemed to be equal to the reported closing price of a share of Common Stock on the most recent date on which shares of Common Stock were publicly traded. In the event shares of Common Stock are not publicly traded at the time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate.

(p) “Grant Price” shall mean the price established at the time of grant of a Stock Appreciation Right pursuant to Paragraph 9, and used to determine whether these is any payment due upon exercise of the Stock Appreciation Right.

(q) “Incentive Stock Option” shall mean the right granted to an Eligible Employee to purchase Common Stock under this Plan, the grant, exercise and disposition of which are intended to comply with, and to be governed by, Code Section 422.

(r) “Insider” shall mean an individual who is, on the relevant date, an officer or Director of the Company, or more than ten percent (10%) beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board of Directors in accordance with Section 16 of the Exchange Act.

(s) “Nonqualified Stock Option” shall mean the right granted to an Eligible Employee, Director or Advisor to purchase Common Stock under this Plan, the grant, exercise and disposition of which are not intended to be subject to the requirements and limitations of Code Section 422.

(t) “Optionee” shall mean the Eligible Employee, Director or Advisor to whom an Option Right is granted pursuant to an Award Agreement evidencing an outstanding Incentive Stock Option or Nonqualified Stock Option.

(u) “Option Right” shall mean the right to purchase a share of Common Stock upon exercise of an outstanding Incentive Stock Option or Nonqualified Stock Option.

(v) “Other Stock-Based Award” shall mean an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Paragraph 14.

(w) “Participant” shall mean any Eligible Employee, Director or Advisor to whom an Award is granted and remains outstanding.

(x) “Performance Measures” shall mean measures as described in Paragraph 16.

(y) “Performance Period” shall mean the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

(z) “Performance Share” shall mean a grant of a stated number of shares of Common Stock to a Participant under the Plan that is forfeitable by the Participant until attainment of the specified performance goals, or until otherwise determined by the Committee or in accordance with the Plan, subject to the continuous employment of the Participant through the applicable Performance Period.

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(aa) “Performance Share Unit” shall mean a Participant’s contractual right to receive a stated number of Shares or, if provided by the Committee on or after the grant date, cash equal to the Fair Market Value of such Shares, under the Plan at a specified time that is forfeitable by the Participant until the attainment of specified performance goals, or until otherwise determined by the Committee or in accordance with the Plan, subject to the continuous employment of the Participant through the applicable Performance Period.

(bb) “Performance Unit” shall mean a Participant’s contractual right to receive a cash-denominated award, payable in cash or shares of Common Stock, under the Plan at a specified time that is forfeitable by the Participant until the attainment of specified performance goals, or until otherwise determined by the Committee or in accordance with the Plan, subject to the continuous employment of the Participant through the applicable Performance Period.

(cc) “Prior Plan” shall mean the Community Bank System, Inc. 2014 Long-term Incentive Plan.

(dd) “Restricted Stock Award” shall mean an award of Common Stock to an Eligible Employee or Advisor that is subject to the restrictions and vesting conditions described in Paragraph 10 and subject to tax under Code Section 83.

(ee) “Restricted Stock Unit Award” shall mean the right to receive one or more payments described in Paragraph 11. Restricted Stock Units represent a contingent right to receive a payment in the future; Restricted Stock Units are not subject to tax under Code Section 83 (because Restricted Stock Units are not property).

(ff) “Stock Appreciation Right” shall mean the right to receive one or more payments described in Paragraph 9.

(gg) “Subsidiary” shall mean any corporation in which (at the time of determination) the Company owns or controls, directly or indirectly, 50 percent or more of the total combined voting power of all classes of stock issued by the corporation.

(hh) “Substitute Award” means an Award granted upon the assumption of, or in substitution or exchange for, outstanding awards granted by a company or other entity acquired by the Company, Subsidiary or any Affiliate or with which the Company, Subsidiary or any Affiliate combines.

5. Shares Available Under the Plan.

(a) The shares of Common Stock which may be made the subject of awards granted pursuant to this Plan may be either (i) shares of original issue, (ii) treasury shares, (iii) shares held in a grantor trust maintained by the Company, or (iv) a combination of the foregoing.

(b) Subject to adjustments in accordance with Paragraph 18 of this Plan, the maximum number of shares of Common Stock available for issuance to Participants under this Plan shall be equal to the sum of (i) 1,500,000 shares of Common Stock authorized by the shareholders of the Company with the shareholders’ approval of this Plan as of the Effective Date) and (ii) any shares of Common Stock available for grant under the Prior Plan that are transferred to the Plan as of the Effective Date and (iii) any shares of Common Stock subject to any awards granted under the Prior Plans that are outstanding on the Effective Date and that return to the share reserve in accordance with Paragraph 5(d).

(c) From the total shares of Common Stock available for awards as described in subparagraph 5(b) , and subject to adjustments in accordance with Paragraph 18 of this Plan, the maximum number of shares of Common Stock with respect to which Incentive Stock Options may be granted under this Plan shall not exceed an aggregate of 1.5 million shares of Common Stock.

(d) Notwithstanding any other term or provision of the Plan, if any shares of Common Stock covered by an Award granted under the Plan or Prior Plan that on or after the Effective Date terminates by expiration, forfeiture, cancellation or otherwise without the issuance of the shares of Common Stock (or with the forfeiture of shares of Common Stock in connection with a Restricted Stock Award), is settled in cash in lieu of Shares or is exchanged with the Committee’s permission, prior to the issuance of shares of Common Stock, for an Award not involving Shares shall become available again for grant under the Plan.

(e) The full number of Option Rights and Stock Appreciation Rights granted that are to be settled by the issuance of shares of Common Stock shall be counted against the number of shares of Common Stock available for award under the Plan, regardless of the number of shares of Common Stock actually issued

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upon settlement of such Option Rights or Stock Appreciation Rights. In addition, any shares of Common Stock withheld to satisfy tax withholding obligations on an Award issued under the Plan, shares of Common Stock tendered to pay the exercise price of an Award under the Plan, and shares of Common Stock repurchased on the open market with the proceeds of an Option Right exercise will not be eligible to be again available for grant under this Plan

(f) Shares of Common Stock subject to Substitute Awards shall not be counted against the share reserve specified in Paragraph 5(b).

(g) The Committee shall approve all Awards to Nonemployee Directors. The terms and conditions of any grant of any Award to a Nonemployee Director shall be set forth in an Award Agreement. The maximum aggregate value of equity Awards granted to any Nonemployee Director during any calendar year shall not exceed $150,000. The value of an equity-based Award shall be based on the Award’s grant date fair value as determined under applicable accounting standards.

(h) Any Award granted under this Plan shall be subject to a minimum vesting period of at least one year. Notwithstanding the immediately preceding sentence, (i) the Committee may permit and authorize acceleration of vesting of Awards pursuant to Paragraph 21(b)(vi) of this Plan, (ii) the Committee may grant Awards covering up to five percent (5%) of the total number of Shares authorized under this Plan without respect to the minimum vesting standards set forth in this Paragraph 5(h), and (iii) Substitute Awards shall not be subject to the minimum vesting period.

6. Grants of Option Rights Generally. The Committee, or the full Board of Directors, may, from time to time and upon such terms and conditions as it may determine, authorize the granting of Option Rights to Directors, Eligible Employees or Advisors. Each such grant may utilize any or all of the authorizations, and shall be subject to all of the limitations, contained in the following provisions:

(a) Each grant shall specify whether it is intended as a grant of Incentive Stock Options or Nonqualified Stock Options.

(b) Each grant shall specify the number of shares of Common Stock to which it pertains.

(c) Each grant shall specify an Exercise Price not less than 100 percent of the Fair Market Value per share of Common Stock on the date the Option Right is granted.

(d) Successive grants may be made to the same Optionee whether or not any Option Rights previously granted to such Optionee remain unexercised.

(e) The period of each Option Right by its terms shall be not more than ten years from the date the Option Right is granted as specified by the Committee.

(f) Upon exercise of an Option Right, the entire Exercise Price shall be payable (i) in cash, (ii) by the transfer to the Company by the Optionee of shares of Common Stock with a value (Fair Market Value per share times the number of shares) equal to the total Exercise Price, (iii) by a combination of such methods of payment described in (i) and (ii) above, or (iv) any other lawful means of payment acceptable to the Committee. Payment may not be made with Common Stock issued to the Optionee by the Company upon his or her prior exercise of an Incentive Stock Option under this Plan or any other option plan unless the Common Stock received upon that prior exercise shall have been held by the Optionee for at least one year.

(g) Each grant of Option Rights shall be evidenced by an Award Agreement executed on behalf of the Company by any officer designated by the Committee for this purpose and delivered to and accepted by the Optionee and shall contain such terms and provisions, consistent with this Plan, as the Committee may approve.

7. Special Rules for Grants of Incentive Stock Options.

(a) As provided in Paragraph 6(c), the Exercise Price of an Incentive Stock Option shall not be less than 100 percent of the Fair Market Value per share of Common Stock on the date of the grant of the option; provided, however, that, if an Incentive Stock Option is granted to any Eligible Employee who, immediately after such option is granted, is considered to own stock possessing more than ten percent of the combined voting power of all classes of stock of the Company, or any of its subsidiaries, the Exercise Price per share shall be not less than 110 percent of the Fair Market Value per share of Common Stock on the date of the grant of the option, and such option may be exercised only within five years of the date of the grant.

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(b) The period of each Incentive Stock Option by its terms shall be not more than ten years from the date the Option Right is granted as specified by the Committee.

(c) The Committee shall establish the time or times within the option period when the Incentive Stock Option may be exercised in whole or in such parts as may be specified from time to time by the Committee, except that Incentive Stock Options shall not be exercisable earlier than one year, nor later than ten years, following the date the option is granted. The date of grant of each Option Right shall be the date of its authorization by the Committee.

(d) Except as provided in Paragraph 19, or as may be provided by the Committee at the time of grant, (i) in the event of the Optionee’s termination of employment due to any cause, including death or retirement, rights to exercise Incentive Stock Options shall cease, except for those which are exercisable as of the date of termination, and (ii) rights that are exercisable as of the date of termination shall remain exercisable for a period of three months following a termination of employment for any cause other than death, disability, or retirement in good standing, and for a period of one year following a termination due to death, disability, or retirement in good standing. However, no Incentive Stock Option shall, in any event, be exercised after the expiration of ten years from the date such option is granted, or such earlier date as may be specified in the Option Right.

(e) No Incentive Stock Options shall be granted hereunder to any Optionee that would allow the aggregate fair market value (determined at the time the option is granted) of the stock, including the Incentive Stock Option in question, which such Optionee may exercise for the first time during any calendar year, to exceed $100,000.

8. Special Rules for Grants of Nonqualified Stock Options.

(a) Except as provided in Paragraph 19, or as may be provided by the Committee at the time of grant, (i) in the event of the Optionee’s termination of employment due to death, disability, or retirement in good standing, rights to exercise Nonqualified Stock Options that are exercisable as of the date of termination shall remain exercisable for two years following termination, (ii) in the event of the Optionee’s termination of employment due to any other reason, the rights to exercise Nonqualified Stock Options that are exercisable as of the date of termination shall remain exercisable for three months following termination, and (iii) the right to exercise Nonqualified Stock Options that are not exercisable as of the date of termination shall be forfeited.

(b) The Company shall not create any record or evidence of Common Stock ownership for an Optionee who exercises a Nonqualified Stock Option, unless payment of the required lawful withholding taxes has been made to the Company by check, payroll deduction or other arrangements satisfactory to the Committee.

9. Stock Appreciation Rights.

(a) Upon such conditions and limitations it deems advisable, the Committee may authorize the grant of Stock Appreciation Rights with respect to one or more shares of Common Stock. Upon the valid exercise of a vested Stock Appreciation Right, the holder of such Stock Appreciation Right shall receive a lump sum payment for each applicable share of Common Stock equal to the excess (if any) of (i) the Fair Market Value of one share of Common Stock on the date of exercise, over (ii) the Stock Appreciation Right’s Grant Price.

(b) Each Stock Appreciation Right shall specify a Grant Price of not less than 100 percent of the Fair Market Value per share of Common Stock on the date the Stock Appreciation Right is granted.

(c) Successive grants may be made to a holder of Stock Appreciation Rights whether or not any Stock Appreciation Rights previously granted remains unexercised.

(d) The period of each Stock Appreciation Right by its terms shall be not more than ten years from the date the Stock Appreciation Right is granted as specified by the Committee.

(e) At the sole discretion of the Committee, the settlement of an exercised Stock Appreciation Right may be made in the form of shares of Common Stock, in lieu of, or in combination with cash.

(f) Except as provided in Paragraph 19, or as may be provided by the Committee at the time of grant, (i) in the event the holder of Stock Appreciation Rights incurs a termination of employment due to death, disability, or retirement in good standing, such Stock Appreciation Rights that are exercisable as of the date

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of termination shall remain exercisable for two years following such termination, (ii) in the event of the holder of Stock Appreciation Rights termination of employment due to any other reason, the rights to exercise the Stock Appreciation Rights that are exercisable as of the date of termination shall remain exercisable for three months following termination, and (iii) the right to exercise Stock Appreciation Rights that are not exercisable as of the date of termination shall be forfeited.

(g) Each grant of Stock Appreciation Rights shall be evidenced by an Award Agreement executed on behalf of the Company by any officer designated by the Committee for this purpose and delivered to and accepted by the grantee and shall contain such terms and provisions, consistent with this Plan, as the Committee may approve.

10. Restricted Stock Awards.

(a) Shares of Common Stock granted pursuant to a Restricted Stock Award issued under the Plan shall not be sold, exchanged, transferred, assigned, pledged, hypothecated, or otherwise disposed of, prior to the satisfaction of such performance, service and/or elapsed time conditions (“Vesting Conditions”) as may be determined by the Committee in its absolute discretion. Except as provided in Paragraph 19, or as may be provided by the Committee at the time of grant, if the recipient’s service with the Company or any of its Subsidiaries terminates prior to the satisfaction of all of the Vesting Conditions for any reason other than death, disability, or retirement in good standing, the recipient shall, on the date service terminates, forfeit and surrender to the Company the number of shares of Common Stock with respect to which the Vesting Conditions have not been satisfied as of the date service terminates.

(b) The Committee may grant or limit the right of a recipient of a Restricted Stock Award to receive dividends declared on Common Stock underlying such Award to the extent the Award is not yet vested. The terms of any right to dividends shall be as set forth in the applicable Award Agreement, including the time and form of payment and whether such dividends shall be credited with interest or deemed to be reinvested in additional shares of Restricted Stock. If the Committee grants the right of a recipient of a Restricted Stock Award to receive dividends declared on shares of Common Stock subject to an unvested Restricted Stock Award, then, at the discretion of the Committee and as provided in the underlying Award Agreement, such dividends shall (i) upon the dividend payment date (or shortly thereafter), be paid such dividends or (ii) be subject to the same performance conditions and/or service conditions, as applicable, to the underlying Restricted Stock Award.

(c) Upon each grant of a Restricted Stock Award, the Committee shall fix the Vesting Conditions. The Committee also shall determine the manner in which the grant recipient’s contingent ownership of the awarded Common Stock shall be recorded until the Vesting Conditions have been satisfied. If the Committee elects to issue certificates or use other records of ownership for the awarded shares of Common Stock, each certificate or other record of ownership of Common Stock shall bear a legend or other disclosure to reflect the Vesting Conditions until all of the Vesting Conditions are satisfied. The Committee also may require a written representation by the recipient that he or she is acquiring the shares for investment.

(d) When the Vesting Conditions with respect to shares of Common Stock held in escrow have been satisfied, a certificate or other record of ownership for such shares shall be issued or created, free of any escrow; such certificate or other record shall not bear a legend or other disclosure relating to the Vesting Conditions.

(e) Unless otherwise provided by the Committee at the time of grant, if a recipient dies, terminates employment with the Company because of disability, or retires with good standing before the satisfaction of all of the applicable Vesting Conditions, the Vesting Conditions on any Restricted Stock held by the recipient shall be considered satisfied (i) on the date of death, or (ii) on the date that employment terminates because of disability or retirement.

(f) Each grant of Stock Appreciation Rights shall be evidenced by an Award Agreement executed on behalf of the Company by any officer designated by the Committee for this purpose and delivered to and accepted by the grantee and shall contain such terms and provisions, consistent with this Plan, as the Committee may approve.

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11. Restricted Stock Unit Awards.

(a) Upon such conditions and limitations it deems advisable, including the imposition of one or more Vesting Conditions, the Committee may authorize the grant of Restricted Stock Units. Upon or following the satisfaction of all of the applicable Vesting Conditions, the holder of such Restricted Stock Units shall receive one or more payments for each vested Restricted Stock Unit equal to the Fair Market Value per share of one share of Common Stock on the date as of which the last of the applicable Vesting Conditions was satisfied.

(b) Except as provided in Paragraph 19, or as may be provided by the Committee at the time of grant, if the recipient’s service with the Company or any of its Subsidiaries terminates prior to the satisfaction of all of the Vesting Conditions for any reason other than death, disability, or retirement in good standing, the recipient shall, on the date service terminates, forfeit and surrender to the Company the number of Restricted Stock Units with respect to which the Vesting Conditions have not been satisfied as of the date service terminates.

(c) A recipient of Restricted Stock Units shall not be entitled to any dividends that might be payable with respect to Common Stock.

(d) Unless otherwise provided by the Committee at the time of grant, if a recipient dies, terminates employment with the Company because of disability, or retires with good standing before the satisfaction of all of the applicable Vesting Conditions, the Vesting Conditions on any Restricted Stock Units held by the recipient shall be considered satisfied (i) on the date of death, or (ii) on the date that employment terminates because of disability or retirement.

(e) Each grant of Restricted Stock Units shall be evidenced by an Award Agreement executed on behalf of the Company by any officer designated by the Committee for this purpose and delivered to and accepted by the grantee and shall contain such terms and provisions, consistent with this Plan, as the Committee may approve.

12. Deferred Stock Awards. The Committee may make awards to Directors, Eligible Employees or Advisors, in lieu of cash compensation for future services, in the form of freely-transferable shares of Common Stock whose delivery is deferred for later distribution in accordance with the Director’s, Eligible Employee’s or Advisor’s election. A Director’s deferral and distribution elections, as well as all other rights with respect to deferred Director compensation, shall be governed by the terms of the separate Community Bank System, Inc. Deferred Compensation Plan for Directors, as that plan may be amended from time to time. Deferral and distribution elections by Eligible Employees and Advisors shall be made pursuant to such separate plans or agreements as shall be acceptable to the Committee in its sole discretion, taking into account the applicable provisions of Code Section 409A.

13. Performance Shares, Performance Share Units and Performance Units.

(a) Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Performance Shares, Performance Share Units and/or Performance Units (collectively referred to as “Performance Awards”) to Eligible Employees, Directors and/or Advisors in such amounts and upon such terms as the Committee shall determine.

(b) Each Performance Share and each Performance Share Unit shall have an initial value equal to the Fair Market Value of a share of Common Stock on the date of grant. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the value and/or number of Performance Shares, Performance Share Units and/or Performance Units that will be paid out to the Participant.

(c) Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Awards shall be entitled to receive payout on the value and number of Performance Shares, Performance Share Units and/or Performance Units earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

(d) Payment of earned Performance Awards shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay

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earned Performance Awards in the form of cash or in shares of Common Stock (or in a combination thereof) equal to the value of the earned Performance Awards at the close of the applicable Performance Period. Payment shall be made in accordance with the Award Agreement. Any shares of Common Stock may be granted subject to any restrictions deemed appropriate by the Committee.

(e) The Committee may grant or limit the right of a recipient of a Performance Share Award to receive dividends declared on Common Stock underlying such Award to the extent the Award is not yet vested. The terms of any right to dividends shall be as set forth in the applicable Award Agreement, including the time and form of payment and whether such dividends shall be credited with interest or deemed to be reinvested in additional Performance Shares. If the Committee grants the right of a recipient of a Performance Share Award to receive dividends declared on shares of Common Stock subject to an unvested Performance Share Award, then, at the discretion of the Committee and as provided in the underlying Award Agreement, such dividends shall (i) upon the dividend payment date (or shortly thereafter) , be paid such dividends or (ii) be subject to the same performance conditions, as applicable, to the underlying Performance Share Award.

(f) Each grant of Performance Awards shall be evidenced by an Award Agreement executed on behalf of the Company by any officer designated by the Committee for this purpose and delivered to and accepted by the grantee and shall contain such terms and provisions, consistent with this Plan, as the Committee may approve.

14. Other Stock-Based Awards

(a) The Committee may grant to Eligible Employees, Directors and/or Advisors other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted shares of Common Stock) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Awards may involve the transfer of actual shares of Common Stock to Participants, or payment in cash or otherwise of amounts based on the value of shares of Common Stock and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

(b) Each Other Stock-Based Award shall be expressed in terms of shares of Common Stock or units based on shares of Common Stock, as determined by the Committee. The Committee may establish performance goals in its discretion. If the Committee exercises its discretion to establish performance goals, the number and/or value of Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the performance goals are met.

(c) Payment, if any, with respect to an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash or Shares as the Committee determines. Payment shall be made in accordance with the Award Agreement.

(d) Each grant of Awards under this Paragraph 14 of the Plan shall be evidenced by an Award Agreement executed on behalf of the Company by any officer designated by the Committee for this purpose and delivered to and accepted by the grantee and shall contain such terms and provisions, consistent with this Plan, as the Committee may approve.

15. Dividend Equivalents.

Any Participant selected by the Committee may be granted dividend equivalents based on the dividends declared on shares of Common Stock that are subject to any Award, to be credited or paid as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests or expires, as determined by the Committee. Such dividend equivalents shall be converted to cash or additional shares of Common Stock by such formula and at such time and subject to such limitations as may be determined by the Committee and shall be paid either upon dividend payment date or accrued and paid to the extent the underlying Award becomes earned and vested. Notwithstanding the foregoing, if any Award for which dividend equivalents have been granted has its vesting or grant dependent upon the achievement of one or more Performance Measures, then the dividend equivalents shall accrue and only be paid to the extent the Award becomes earned and vested. Under no circumstances may dividend equivalents be granted for any Option Right or Stock Appreciation Right.

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16. Performance Measures.

(a) The performance goals upon which the payment or vesting of an Award granted to a Participant may include, but not be limited to, the following:

1.
Net earnings or net income (before or after taxes);

2.
Earnings per share;

3.
Earnings before or after taxes, depreciation, and/or amortization;

4.
Net sales or revenue growth (whether in general or by type of product or service or by type of customer);

5.
Revenues or sales;

6.
Net operating profit;

7.
Net operating income or net operating earnings per share (excluding acquisition expenses and other non-recurring charges);

8.
Return measures (including, but not limited to, GAAP, operating, core or adjusted return on assets, regulatory capital, capital, tangible capital, invested capital, equity, sales, or revenue);

9.
Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);

10.
Gross or operating margins;

11.
Productivity and financial performance ratios;

12.
Share price (including, but not limited to, growth measures and total shareholder return);

13.
Expense targets and operating expenses;

14.
Margins (including, but not limited to, net interest margin);

15.
Completion of acquisitions of business or companies;

16.
Completion of divestitures or asset sales;

17.
Asset quality metrics;

18.
Achievement of business operational objectives;

19.
Operating efficiency;

20.
Deposit market share;

21.
Customer satisfaction;

22.
Working capital targets and change in working capital;

23.
Customer account growth and new account openings; and

24.
Any one or a combination of any of the foregoing business criteria.

Any Performance Measure(s) may be used to measure the performance of the Company, Subsidiary, and/or any affiliate of the Company as a whole or any business unit of the Company, Subsidiary, and/or affiliate or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select Performance Measure above as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures specified in this Paragraph 16(a).

(b) The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (iv) any reorganization and restructuring programs, (v) extraordinary nonrecurring items as described in FASB Accounting Standards Codification 225-20 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year, (vi) acquisitions or divestitures, and (vii) foreign exchange gains and losses.

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(c) In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval.

17. Transferability.

(a) Transferability of Awards. Except as provided in Paragraph 17(b), Awards shall not be transferable other than by will or the laws of descent and distribution or, subject to the consent of the Committee, pursuant to a domestic relations order entered into by a court of competent jurisdiction. Notwithstanding the foregoing, ISOs may only be transferred by will or the laws of descent and during the lifetime of the Participant may only be exercised by the Participant in accordance with Code Section 422 and the applicable regulations thereunder. No Awards shall be subject, in whole or in part, to attachment, execution or levy of any kind; and any purported transfer in violation of this Paragraph 17(a) shall be null and void. The Committee may establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable or shares of Common Stock deliverable in the event of, or following, the Participant’s death may be provided.

(b) Committee Action. The Committee may, in its discretion, approve a Participant’s transfer, by gift, of an Award (except in the case of an ISO which can only be transferred as provided above) , on such terms and conditions as the Committee deems appropriate and to the extent permissible and in compliance with Code Sections 409A and 83 and applicable securities laws and exchange rules, (i) to an “Immediate Family Member” (as defined below) of the Participant, (ii) to an inter vivos or testamentary trust in which the Award is to be passed to the Participant’s designated beneficiaries, or (iii) to a charitable institution. Any transferee of the Participant’s rights shall succeed and be subject to all of the terms of the applicable Award Agreement and the Plan, including restrictions on further transferability, compliance with applicable securities laws, and providing required investment representations. “Immediate Family Member” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, a trust in which these persons have more than fifty (50%) percent of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty (50%) percent of the voting interests.

(c) Restrictions on Share Transferability. The Committee may impose such restrictions on any shares of Common Stock acquired by a Participant under the Plan as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such shares of Common Stock are then listed or traded or under any blue sky or state securities laws applicable to such shares of Common Stock, provided no such restriction shall cause the shares of Common Stock not to be “service recipient stock” within the meaning of Code Section 409A to the extent applicable for Options and Stock Appreciation Rights.

18. Adjustments. The Committee shall make or provide for such adjustments in the maximum number of shares of Common Stock specified in Paragraph 5 of this Plan, in the numbers of shares of Common Stock covered by other rights granted hereunder, and in the prices per share applicable under all such rights, as the Committee determines is equitably required to prevent dilution or enlargement of the rights of Optionees that otherwise would result from any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, merger, consolidation, spin-off, reorganization, partial or complete liquidation, issuance of rights or warrants to purchase securities, or any other transaction or event having an effect similar to any of the foregoing.

19. Change in Control.

(a) Upon a Change in Control all then-outstanding Awards shall immediately vest and be settled in accordance with paragraphs (i) and (ii) below, except as may otherwise be provided in a then-effective written agreement (including an Award Agreement) between a Participant and the Company. The immediately preceding sentence shall not apply the extent that another award meeting the requirements of Paragraph 19(b) (“Replacement Award”) is provided to the Participant to replace an Award (“Replaced Award”) subject to Paragraphs 19(b) and 19(c).

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(i) Outstanding Awards Subject Solely to a Service Condition. Upon a Change in Control, a Participant’s then-outstanding Awards, other than Options and Stock Appreciation Rights, that are not vested and as to which vesting depends solely on the satisfaction of a service condition by the Participant to the Company or any Affiliate shall become fully vested and shall be settled in cash, shares of Common Stock or a combination thereof, as determined by the Committee as constituted immediately prior to the Change in Control, within thirty (30) days following such Change in Control (except to the extent that settlement of the Award must be made pursuant to its original schedule in order to comply with Code Section 409A). Upon a Change in Control, a Participant’s then-outstanding Options and Stock Appreciation Rights that are not vested and as to which vesting depends solely on the satisfaction of a service obligation by the Participant to the Company or any Affiliate shall immediately become fully vested and exercisable over the exercise period set forth in the applicable Award Agreement. Notwithstanding the immediately preceding the sentence, the Committee may elect to cancel such outstanding Options or Stock Appreciation Rights and pay the Participant an amount of cash (less normal withholding taxes) equal to the excess of (i) the value, as determined by the Committee, of the consideration (including cash) received by the holder of a Share as a result of the Change in Control (or if the Company shareholders do not receive any consideration as a result of the Change in Control, the Fair Market Value of a Share on the day immediately prior to the Change in Control) over (ii) the exercise price of such Options or the grant price of such Stock Appreciation Rights, multiplied by the number of Shares subject to each such Award in accordance with Code Section 409A to the extent applicable. No payment shall be made to a Participant for any Option or Stock Appreciation Right if the exercise price or grant price for such Option or Stock Appreciation Right, respectively, exceeds the value, as determined by the Committee, of the consideration (including cash) received by the holder of a Share as a result of Change in Control.

(ii) Outstanding Awards Subject to a Performance Condition. Upon a Change in Control, a Participant’s then-outstanding Awards, other than Options and Stock Appreciation Rights, that are not vested and as to which vesting depends upon the satisfaction of one or more performance conditions shall immediately vest and all performance conditions shall be deemed satisfied as if target performance was achieved, and shall be settled in cash, shares or a combination thereof, as determined by the Committee, within thirty (30) days following such Change in Control (except to the extent that settlement of the Award must be made pursuant to its original schedule in order to comply with Code Section 409A) , notwithstanding that the applicable performance period, retention period or other restrictions and conditions have not been completed or satisfied. Upon a Change in Control, a Participant’s then-outstanding Options and Stock Appreciation Rights that are not vested and as to which vesting depends upon the satisfaction of one or more performance conditions shall immediately vest and all performance conditions shall be deemed satisfied as if target performance was achieved. Such vested Options and/or Stock Appreciation Rights shall be deemed exercised as of the date of the Change in Control and shall be settled cash within thirty (30) days following such Change in Control (except to the extent that settlement of the Award must be made pursuant to its original schedule in order to comply with Code Section 409A) in an amount equal to the excess of (i) the value, as determined by the Committee, of the consideration (including cash) received by the holder of a Share as a result of the Change in Control (or if the Company shareholders do not receive any consideration as a result of the Change in Control, the Fair Market Value of a Share on the day immediately prior to the Change in Control) over (ii) the exercise price of such Options or the grant price of such Stock Appreciation Rights, multiplied by the number of Shares subject to each such Award in accordance with Code Section 409A to the extent applicable. No payment shall be made to a Participant for any Option or Stock Appreciation Right if the exercise price or grant price for such Option or Stock Appreciation Right, respectively, exceeds the value, as determined by the Committee, of the consideration (including cash) received by the holder of a Share as a result of Change in Control.

(b) An Award shall meet the conditions of this Paragraph 19(b) (and hence qualify as a Replacement Award) if: (i) it is of the same type as the Replaced Award (or, if it is of a different type as the Replaced Award (such as a deferred cash equivalent award) , the Committee, as constituted immediately prior to the Change in Control, finds such type acceptable); (ii) it has a value at least equal to the value of the Replaced Award; (iii) it relates to publicly traded equity securities listed on a U.S. national securities exchange of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control, except in the case of a Replacement Award granted in the form of a deferred cash equivalent award; (iv) its terms and conditions comply with Paragraph 19(c); and (v) its other terms and conditions are not less favorable to the grantee than the terms and conditions of the Replaced

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Award (including the provisions that would apply in the event of a subsequent Change in Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this Paragraph 19(b) are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.

(c) Upon a Participant’s involuntary termination without Cause or voluntary termination for Good Reason occurring at any time following the Change in Control, all Replacement Awards held by the Participant shall become fully vested and free of restrictions and, in the case of Replacement Awards in the form of (i) stock options or stock appreciation rights shall be fully exercisable, (ii) performance-based Awards shall be deemed to be satisfied at target performance and paid upon or within 60 days of such Termination of Service, (iii) service-based Awards (other than stock options or stock appreciation rights) shall be paid upon or within 60 days of such Termination of Service. Notwithstanding the foregoing, with respect to any Award that is considered deferred compensation subject to Code Section 409A, settlement of such Award shall be made pursuant to its original schedule if necessary to comply with Code Section 409A.

(d) For purpose of this Plan, a “Change in Control” shall mean the occurrence of any one of the following events:

(i) An acquisition by any individual, entity or group (within the meaning of Section 13(d) (3) or 14(d) (2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (4) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this Section 19(d); or

(ii) A change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board (such Board being hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Paragraph 19(d)(ii), that any individual who becomes a member of the Board subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this provision) shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

(iii) Consummation of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (1) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 70% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 30% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting

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power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (3) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction.

Notwithstanding any of the foregoing, however, in any circumstance or transaction in which compensation resulting from or in respect of an Award would result in the imposition of an additional tax under Code Section 409A if the foregoing definition of “Change in Control” were to apply, but would not result in the imposition of any additional tax if the term “Change in Control” were defined herein to mean a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5) , then “Change in Control” shall mean a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5), but only to the extent necessary to prevent such compensation from becoming subject to an additional tax under Code Section 409A.

(e) For purposes of this Paragraph 19, “good reason” shall mean action taken by the Company that results in: (1) an involuntary and material adverse change in the Eligible Employee’s title, duties, responsibilities, or total remuneration; (2) an involuntary and material relocation of the office from which the Eligible Employee is expected to perform the Eligible Employee’s duties; or (3) an involuntary and material adverse change in the general working conditions (including travel requirements) applicable to the Eligible Employee.

(f) Termination “for cause” for purposes of this Paragraph 19 shall include, but not be limited to, any of the following: (1) any act of dishonesty, misconduct or fraud, acts of moral turpitude, or the commission of a felony; (2) unreasonable neglect or refusal to perform the duties assigned to the Eligible Employee, unless cured within 30 days; (3) breach of duty or obligation to the Company or receipt of financial or other economic profit or gain as a result of or in any way arising out of the Eligible Employee’s position with the Company and failure to account to the Company for such profits or other gains; or (4) disclosure of confidential or private Company information or aiding a competitor of the Company (or any affiliate of the Company) to the detriment of the Company (or any affiliate of the Company) .

20. Fractional Shares. The Company shall not be required to issue any fractional shares of Common Stock pursuant to this Plan. The Committee may provide for the elimination of fractions or for the settlement of fractions in cash.

21. Administration of the Plan.

(a) This Plan shall be administered by the Committee, which shall consist of at least three members of the Board of Directors each of whom shall (i) meet the independence requirements of the New York Stock Exchange listing standards and any other applicable laws, rules and regulations governing independence, as determined by the Board of Directors; and (ii) qualify as “non-employee directors” as defined under Section 16 of the Exchange Act. Members of the Committee and the Chair of the Committee shall be appointed by the Board of Directors and may be replaced at any time by the Board of Directors. At any time deemed necessary or appropriate by the Board of Directors, the full Board of Directors may act as the Committee. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested individuals.

(b) The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of this Plan and any Award Agreement or other agreement or document ancillary to or in connection with this Plan, to determine eligibility for Awards and to adopt and interpret such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, (i) selecting Award recipients, (ii) establishing all Award terms and conditions, including the terms and conditions set forth in Award Agreements and any ancillary document or materials, (iii) granting Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, (iv) construing any ambiguous provision of the Plan or any Award Agreement, (v) subject to Paragraph 22, adopting modifications and amendments to this Plan or any Award Agreement, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its affiliates, and/or its Subsidiaries operate, (vi) waiving any restrictions, conditions, limitations, vesting

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conditions and performance conditions imposed on an Award at the time the Award is granted or at any time thereafter, including upon, or in connection with, a termination of employment and, (vii) making any other determination and taking any other action that it deems necessary or desirable for the administration or operation of the Plan and/or any Award Agreement.

(c) To the extent consistent with applicable Code requirements, the Committee may delegate to one or more of its members or to one or more officers of the Company, and/or its Subsidiaries and affiliates or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan. The Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as can the Committee: (i) designate Eligible Employees to be recipients of Awards; and (ii) determine the size of any such Awards; provided, however, (I) the Committee shall not delegate such responsibilities to any such officer for Awards granted to a Nonemployee Director, an Advisor or an Eligible Employee who is considered an Insider; (II) the resolution providing such authorization sets forth the total number of shares of Common Stock and/or Awards such officer(s) may grant; (III) the officer(s) shall report periodically to the Committee regarding the nature and scope of the shares of Common Stock and/or Awards granted pursuant to the authority delegated; and (IV) no delegation shall be effective to the extent inconsistent with applicable Code requirements.

(d) Notwithstanding any other provision of this Plan, the Committee may impose such conditions on the exercise of any right granted hereunder (including, without limitation, the right of the Committee to limit the time of exercise to specified periods) as may be required to satisfy the requirements of applicable law, including Section 16 (or any successor rule) of the Exchange Act.

(e) The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.

(f) The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy applicable federal, state and local tax withholding requirements, domestic or foreign, with respect to any taxable event arising as a result of the grant, vesting, exercise or settlement of an Award to the Participant under the Plan. Unless otherwise required by the Committee, the Company may withhold, or permit a Participant to elect to have withheld from a “Share Payment” the number of Shares having a Fair Market Value equal to the minimum statutory withholding requirements. Notwithstanding the immediately preceding sentence, the Company, in its discretion, may withhold Shares or permit a Participant to elect to have withheld from a Share Payment, the number of Shares having a Fair Market Value up to, but not in excess of, the maximum statutory withholding requirements. The term Share Payment shall mean the issuance or delivery of Shares upon the grant, vesting, exercise or settlement of an Award, as the case may be. All Participant elections under this paragraph (f) shall be irrevocable, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

22. Amendments, Termination, Etc.

(a) The Board of Directors and/or the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan and/or any Award Agreement in whole or in part; provided, however, that no material amendment of this Plan shall be made without shareholder approval if shareholder approval is required by applicable law, regulation, or stock exchange rule. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Paragraph 22 to any Award granted under the Plan without further consideration or action. This Plan, however, shall not be the exclusive means by which the Board of Directors or the Compensation Committee of the Board of Directors may authorize the grant of stock options, restricted stock or other equity, equity-based or incentive compensation.

(b) Notwithstanding any other provision of the Plan to the contrary, (i) the Plan may be terminated at any time by resolutions of the Board of Directors, and (ii) no rights shall be granted pursuant to this Plan after May 18, 2032.

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(c) Notwithstanding any other provision of the Plan to the contrary (other than Paragraph 22(f)), no termination, amendment, suspension, or modification of the Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award.

(d) Notwithstanding any other provision of the Plan to the contrary, the Board of Directors may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under the Plan, a Participant agrees to any amendment made pursuant to this Paragraph 22(d) to any Award granted under the Plan without further consideration or action.

(e) The Board of Directors intends that awards granted pursuant to this Plan shall be exempt from, or satisfy the applicable requirements of, Code Section 409A. The Plan shall be interpreted and applied to carry out such intent. Accordingly, by way of example and not limitation, to the extent that Code Section 409A applies (i) distributions of benefits payable following an employee’s termination of employment shall commence as of the date required by this Plan and any implementing Award Agreement or, if later, the earliest date permitted by Code Section 409A (generally six months after termination, if the employee is a “specified employee” within the meaning of Code Section 409A), and (ii) the phrase “termination of employment” (and similar terms and phrases) shall be construed to mean “separation from service” within the meaning of Code Section 409A. Notwithstanding anything statement herein, the Company and Committee make no representations that Awards granted under the Plan shall be exempt from or comply with Section 409A of the Code and make no undertaking to preclude Section 409A of the Code from applying to Awards granted under the Plan and shall not be liable for any penalties or costs to a Participant resulting from the application of Section 409A to the Plan or any Award granted hereunder.

(f) The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or transfer upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of employment for cause, termination of the Participant’s provision of services to the Company, any affiliate of the Company, and/or Subsidiary, violation of material Company, any affiliate of the Company, and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company, its affiliates, and/or its Subsidiaries.

(g) Any Award pursuant to this Plan shall be subject to the Company’s Policy on Recoupment of Incentive-Based Compensation, as in effect from time to time.

(h) In the event that any one or more of the provisions of this Plan shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. If, in the opinion of any court of competent jurisdiction such covenants are not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of these covenants as to the court shall appear not reasonable and to enforce the remainder of these covenants as so amended.

(i) The Plan, the granting and exercising of Awards thereunder, and any obligations of the Company under the Plan, shall be subject to all applicable federal and state laws, rules, and regulations, and to such approvals by any regulatory or governmental agency as may be required, and to any rules or regulations of any exchange on which the Shares are listed. The Company, in its discretion, may postpone the granting and exercising of Awards, the issuance or delivery of shares of Common Stock under any Award or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such shares of Common Stock or other required action under any federal or state law, rule, or regulation and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of shares of Common Stock in compliance with applicable laws, rules, and regulations. The Company shall not be obligated by virtue of any provision of the Plan to recognize the exercise of any Award or to otherwise sell or issue shares of Common Stock in violation of any such laws, rules, or regulations, and

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any postponement of the exercise or settlement of any Award under this provision shall not extend the term of such Awards. Neither the Company nor its directors or officers shall have any obligation or liability to a Participant with respect to any Award (or shares of Common Stock issuable thereunder) that shall lapse because of such postponement.

(j) Nothing in the Plan shall be construed to limit the right of the Company to establish other plans or to pay compensation to its employees, in cash or property, in a manner which is not expressly authorized under the Plan.

(k) Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s or a Subsidiary’s or an affiliate’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company or a Subsidiary or an affiliate to take any action which such entity deems to be necessary or appropriate.

(l) The Committee may require any individual receiving shares of Common Stock pursuant to an Award under this Plan to represent and warrant in writing that the individual is acquiring the shares of Common Stock for investment and without any present intention to sell or distribute such shares of Common Stock.

(m) To the extent that this Plan provides for issuance of certificates to reflect the transfer of shares of Common Stock, the transfer of such shares of Common Stock may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

(n) Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries, and/or its affiliates may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other individual. To the extent that any individual acquires a right to receive payments from the Company, its Subsidiaries, and/or its affiliates under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company, a Subsidiary, or an affiliate, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company, a Subsidiary, or an affiliate, as the case may be and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.

(o) Except as may otherwise be specifically stated under any employee benefit plan, policy or program, no amount payable in respect of any Award shall be treated as compensation for purposes of calculating a Participant’s right under any such plan, policy or program.

(p) To the extent permitted by applicable law, the Company may (i) deliver by email or other electronic means (including posting on a web site maintained by the Company or by a third party under contract with the Company) all documents relating to the Plan or any Award thereunder (including without limitation, prospectuses required by the U.S. Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements), and (ii) permit Participants to electronically execute applicable Plan documents (including, but not limited to, Award Agreements) in a manner prescribed by the Committee.

(q) Notwithstanding any provision of the Plan to the contrary, the Company, its affiliates and Subsidiaries, the Board and the Committee neither represent nor warrant the tax treatment under any federal, state, local or foreign laws and regulations thereunder (individually and collectively referred to as the “Tax Laws”) of any Award granted or any amounts paid to any Participant under the Plan including, but not limited to, when and to what extent such Awards or amounts may be subject to tax, penalties and interest under the Tax Laws.

(r) Subject to requirements of Delaware state law, each individual who is or shall have been a member of the Board, or a committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with this Plan, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval,

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or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless such loss, cost, liability, or expense is a result of his/her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

(s) This Plan shall be construed and governed in accordance with the laws of the State of Delaware.

(t) The jurisdiction of any proceeding arising out of, or with respect to, this Plan shall be in a court of competent jurisdiction in New York State, and venue shall be in Onondaga County. Each party shall be subject to the personal jurisdiction of the courts of New York State.

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