UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule 14a-101)
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed
by the Registrant ☑
Filed by a Party other than the Registrant ☐
Check
the appropriate box:
☐ Preliminary Proxy Statement
☐
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☑ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Pursuant to §240.14a-12
Tompkins
Financial Corporation
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment
of Filing Fee (Check the appropriate box):
☑
No fee required.
☐ Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
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Title of each class of securities
to which transaction applies:
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Aggregate number of securities to which transaction
applies:
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state
how it was determined):
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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☐
Fee paid previously with preliminary materials.
☐
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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March 29, 2018
NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS
OF TOMPKINS FINANCIAL CORPORATION
The Annual Meeting
of Shareholders (the “Annual Meeting”) of Tompkins Financial Corporation (the “Company”) will be held on
Tuesday, May 8, 2018 at 5:30 p.m., at the Country Club of Ithaca, 189 Pleasant Grove Road, Ithaca, New York, for the following purposes:
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1.
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To elect the twelve (12) Directors named in the Proxy Statement for a term of one year expiring
in 2019;
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2.
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To conduct an advisory vote to approve the compensation paid to the Company’s named executive
officers;
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3.
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To ratify the appointment of the independent registered public accounting firm, KPMG LLP,
as the Company’s independent auditor for the fiscal year ending December 31, 2018; and
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4.
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To transact such other business as may properly come before the Annual Meeting or any adjournment
thereof.
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The Company’s
Board of Directors (the “Board”) has fixed the close of business on March 12, 2018 as the record date for determining
shareholders entitled to notice of and to vote at the Annual Meeting. Only shareholders of record at the close of business on that
date are entitled to vote at the Annual Meeting. A shareholders’ information meeting for our shareholders in Western New
York will be held at 5:30 p.m. on May 9, 2018, at the Genesee Country Village & Museum, 1410 Flint Hill Rd., Mumford,
New York, 14511. A shareholders’ information meeting for our shareholders in the Hudson Valley will be held at 6:00 p.m.
on May 10, 2018, at Mt. Kisco Country Club, 10 Taylor Rd., Mt. Kisco, New York, 10549. A shareholders’ information meeting
for our shareholders in Pennsylvania will be held at 4:30 p.m. on May 15, 2018, at the DoubleTree by Hilton Hotel Reading, 701
Penn St., Reading, Pennsylvania, 19601.
Enclosed with this
notice are a Proxy Statement, a Form of Proxy and return envelope, instructions for voting by telephone or the Internet, the Company’s
Annual Report on Form 10-K for fiscal year 2017, and the Company’s 2017 Corporate Report to shareholders. Please refer to
the enclosed Proxy Statement with respect to the business to be transacted at the Annual Meeting.
The Board of Directors
unanimously recommends that you vote “
FOR
” each of the Director nominees named in the enclosed Proxy Statement,
“
FOR
” advisory approval of the compensation paid to the Company’s Named Executive Officers, and “
FOR
”
ratification of the appointment of KPMG, LLP as the Company’s independent auditor for the fiscal year ending December 31,
2018.
Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the Annual Meeting,
you are urged to read and carefully consider the enclosed Proxy Statement. You may vote by telephone, via the Internet, or mark,
sign, date, and return the enclosed Form of Proxy in the accompanying pre-addressed postage-paid envelope. Your proxy may be revoked
prior to its exercise by filing a written notice of revocation or a duly executed proxy bearing a later date with the Corporate
Secretary of the Company prior to the Annual Meeting, or by attending the Annual Meeting and filing a written notice of revocation
with the Corporate Secretary at the Annual Meeting prior to the vote and voting in person.
By Order of the Board of Directors,
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Thomas R. Rochon
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Kathleen A. Manley
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Chairman
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Asst. Vice President & Corporate Secretary
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TOMPKINS FINANCIAL CORPORATION, P.O. BOX
460, ITHACA, NEW YORK 14851 (607) 273-3210
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS FOR THE SHAREHOLDER
MEETING TO BE HELD MAY 8, 2018
This Proxy Statement, the Company’s
Annual Report on Form 10-K, and the Company’s Corporate Report to shareholders are available under the “SEC Filings”
tab at www.tompkinsfinancial.com.
ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD MAY 8, 2018
This Proxy Statement
together with the Form of Proxy are being mailed to shareholders on or about March 29, 2018 in connection with the solicitation
by the Board of Directors of Tompkins Financial Corporation (the “Company”) of proxies to be used at the Annual Meeting
of Shareholders (the “Annual Meeting”) to be held at the Country Club of Ithaca, 189 Pleasant Grove Road, Ithaca, New
York on Tuesday, May 8, 2018 at 5:30 p.m.
Voting
Only shareholders of
record at the close of business on March 12, 2018 will be entitled to vote. On March 12, 2018, there were 15,299,528 shares of
the Company’s common stock, par value $0.10 per share (our “common stock”), outstanding and entitled to vote.
Each share of common stock is entitled to one vote on each matter to be voted on at the Annual Meeting.
Shareholders whose
shares are registered in their own names may vote by mailing a completed proxy, via the Internet or by telephone, or by voting
in person at the Annual Meeting. Instructions for voting via the Internet or by telephone are set forth on the enclosed Form of
Proxy. To vote by mailing a proxy, sign and return the enclosed Form of Proxy in the enclosed pre-addressed postage-paid envelope.
Shares of common stock covered by a proxy that is properly executed and returned will be voted and, if the shareholder who executes
such proxy specifies therein how such shares shall be voted on such proposals, the shares will be voted as so specified. Executed
proxies with no instructions will be voted “FOR” each proposal for which no instruction is given. Other than the election
of Directors, the advisory vote to approve the compensation paid to the Company’s Named Executive Officers; and the proposal
to ratify the appointment of the independent registered public accounting firm, KPMG LLP, as our independent auditor for the
fiscal year ending December 31, 2018, the Board is not aware of any other matters to be presented for shareholder action at
the Annual Meeting. However, if other matters do properly come before the Annual Meeting, the Board intends that the persons named
in the accompanying proxy will vote the shares represented by all properly executed proxies on any such matters in accordance with
the judgment of the person or persons acting under the proxy.
The presence of a shareholder
at the Annual Meeting will not automatically revoke a proxy previously delivered by that shareholder. A shareholder may, however,
revoke his or her proxy at any time prior to its exercise by: (1) delivering to the Corporate Secretary a written notice of
revocation prior to the Annual Meeting, (2) delivering to the Corporate Secretary a duly executed proxy bearing a later date,
or (3) attending the Annual Meeting and filing a written notice of revocation with the Corporate Secretary at the Annual Meeting
prior to the vote and voting in person.
The presence, in person
or by proxy, of the holders of at least a majority of the shares of common stock entitled to vote at the Annual Meeting is necessary
to constitute a quorum for the conduct of business at the Annual Meeting.
Vote Required and Board Recommendations
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Proposal No. 1
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Vote Required
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Board of Directors Recommendation
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Election of Directors
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A plurality of votes cast by holders of common stock entitled to vote thereon
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“FOR” all Director nominees named in the Proxy Statement
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Proposal No. 2
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Vote Required
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Board of Directors Recommendation
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Advisory Approval of the Compensation Paid to the Company’s Named Executive Officers
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A majority of votes cast by the holders of common stock entitled to vote thereon
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“FOR” advisory approval of the compensation paid to the Company’s Named Executive Officers
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Proposal No. 3
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Vote Required
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Board of Directors Recommendation
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Ratification of the appointment of the independent registered public accounting firm, KPMG LLP, as the Company’s independent auditor for the fiscal year ending December 31, 2018
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A majority of votes cast by the holders of common stock entitled to vote thereon
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“FOR” the ratification of the appointment of the independent registered public accounting firm, KPMG LLP, as the Company’s independent auditor for the fiscal year ending December 31, 2018
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Abstentions and Broker Non-votes
At the Annual Meeting,
abstentions, votes cast in person or by proxy and broker non-votes will each be counted for purposes of determining the presence
of a quorum. A “broker non-vote” occurs when a broker, bank, or other nominee holding shares for a beneficial owner
does not vote on a particular proposal because the nominee does not have discretionary voting power on that matter and has not
received instructions from the beneficial owner. At the Annual Meeting, broker non-votes and abstentions will have no effect on
the outcome of any of the Company’s proposals. Brokers, banks or other nominees will not have discretionary authority to
vote on Proposal Nos. 1 or 2, but will have discretionary authority to vote on Proposal No. 3.
Solicitation of Proxies
The enclosed proxy
is being solicited by the Board of Directors of the Company. The total cost of solicitation of proxies in connection with the Annual
Meeting will be borne by the Company. In addition to solicitation by mail, our Directors, officers and employees may solicit proxies
for the Annual Meeting personally or by telephone or electronic communication without additional remuneration. The Company will
also provide brokers and other record owners holding shares in their names or in the names of nominees, in either case which are
beneficially owned by others, proxy material for transmittal to such beneficial owners and will reimburse such record owners for
their expenses in doing so.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting
twelve (12) Directors will be elected for a one-year term expiring at the 2019 Annual Meeting, and with respect to each Director,
until his or her successor is elected and qualified. All 12 Director nominees—John E. Alexander, Paul J. Battaglia, Daniel
J. Fessenden, James W. Fulmer, Susan A. Henry, Patricia A. Johnson, Frank C. Milewski, Thomas R. Rochon, Stephen S. Romaine, Michael
H. Spain, Alfred J. Weber and Craig Yunker—are currently serving as Directors. Their terms expire in 2018, and each is standing
for re-election at the Annual Meeting. Each Director was identified and nominated by the Nominating and Corporate Governance Committee
for election at the Annual Meeting. The 12 nominees receiving the highest number of affirmative votes of the shares entitled to
vote at the Annual Meeting will be elected to the Board. The persons named in the Proxy to represent shareholders at the Annual
Meeting are Francis M. Fetsko and Kathleen A. Manley. The Proxies will vote as directed and, in the absence of instructions, will
vote the shares represented by properly-executed proxies in favor of the election of nominees named below.
In the event any nominee
is unable or declines to serve as a Director at the time of the Annual Meeting, the proxies will be voted for the nominee, if any,
who may be designated by the Board, upon recommendation of the Nominating and Corporate Governance Committee, to fill the vacancy.
As of the date of this Proxy Statement, the Board is not aware that any nominee is unable or will decline to serve as a Director.
Vote Required and Recommendation
Shareholders may vote
“for” all Director nominees as a group, may “withhold” authority to vote for all Director nominees as a
group, or may withhold authority to vote only for specified Director nominees. A plurality of votes cast by holders of shares of
common stock entitled to vote thereon is required to elect the nominees. Under a plurality vote standard, the nominees who receive
the highest number of votes “for” their election will be elected. Votes to “withhold” in an uncontested
election will have no effect on the outcome of the vote on Proposal No. 1. Broker non-votes will not constitute or be counted as
votes cast for purposes of this Proposal, and therefore will have no impact on the outcome of this Proposal.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES. SHARES OF COMMON STOCK COVERED BY
EXECUTED PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES
NAMED BELOW UNLESS THE SHAREHOLDER SPECIFIES A DIFFERENT CHOICE.
The following table
sets forth each Director nominee and each continuing Director and includes such person’s name, age, the year he or she first
became a Director, the expiration of his or her current term as Director, and whether he or she has been determined to be an Independent
Director, as that term is defined in the listing standards of the NYSE American Company Guide. Biographies of the Director nominees
follow the table. Unless otherwise indicated, all Directors have been employed in their current positions for at least five years.
The nominees identified below as “Independent” are referred to in this Proxy Statement as the Independent Directors.
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Name
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Age
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Year
First
Elected
Director
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Term to
Expire
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Independent
(1)
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Board Nominees for Terms to Expire in 2018:
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John E. Alexander
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65
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1993
(2)
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2018
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Yes
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Paul J. Battaglia
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66
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2010
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2018
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Yes
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Daniel J. Fessenden
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52
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2009
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2018
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Yes
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James W. Fulmer
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66
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2000
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2018
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Yes
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Susan A. Henry
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71
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2010
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2018
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Yes
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Patricia A. Johnson
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62
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2006
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2018
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Yes
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Frank C. Milewski
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67
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2012
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2018
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Yes
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Thomas R. Rochon
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65
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2009
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2018
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Yes
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Stephen S. Romaine
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53
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2007
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2018
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No
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Michael H. Spain
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60
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2000
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2018
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No
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Alfred J. Weber
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65
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2012
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2018
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Yes
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Craig Yunker
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67
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2000
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2018
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Yes
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(1)
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Independence
has been affirmatively determined by the Company’s Board of Directors in accordance
with Section 803A of the listing standards of NYSE American Company Guide.
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(2)
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Served
as a Director of Tompkins Trust Company, prior to the formation of Tompkins Financial
Corporation in 1995.
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Director
Qualifications, including Director Nominees
The following paragraphs provide information
as of the date of this Proxy Statement regarding each nominee’s specific experience, qualifications, attributes and skills
that led our Board to the conclusion that he or she should serve as a Director. The information presented includes information
each Director has given us about positions he or she holds, his or her principal occupation and business experience for the past
five years, certain non-profit boards on which he or she serves, and the names of other publicly-held companies of which he or
she currently serves as a director or has served as a director during the past five years.
John E. Alexander
has served as
a Director of the Company since 1995 and as a Director of Tompkins Trust Company since 1993. Mr. Alexander was a principal shareholder
and served as President and Chief Executive Officer of The CBORD Group, Inc. (“CBORD,”) a computer software company
which Mr. Alexander founded in 1975, until July 2004. Mr. Alexander served as Chairman of the Board of CBORD through February 2008.
Prior to CBORD, Mr. Alexander was a Vice President in the Money Market Division of Bankers Trust Company. He currently serves on
the Development Committee of the Food Bank of the Southern Tier, is a Director Emeritus of the United Way of Tompkins County, and
Trustee Emeritus and Presidential Councilor of Cornell University. He also serves as a director of Incodema 3D, LLC, a leader in
Direct Metal 3D Printing, as well as Sound Reading Solutions, Inc., an EdTech startup. We believe Mr. Alexander’s qualifications
to sit on our Board of Directors include his executive leadership and management experience, as well as the financial expertise
he has brought to bear during more than two decades of board service with our organization. In addition, Mr. Alexander has a long
track record of community involvement in the Ithaca area, including the aforementioned service on the Board of the United Way of
Tompkins County, the Advisory Council of the Sciencenter, the Board of Directors of the Children’s Reading Connection, and
as Trustee Emeritus of Cornell University. He is a founding member of the Cayuga Venture Fund, a regional venture capital fund
now in its fifth iteration. He is Vice President of the Cornell Research Foundation. He also chaired the Audit Committee of Cornell
University, leading the university through the process of compliance with the requirements of the Sarbanes-Oxley Act of 2002.
Paul J. Battaglia
has served as
a Director of the Company since 2010 and was a Director of TFA Management, Inc. f/k/a AM&M Financial Services, Inc. from April-December
2010. He has served as a Director for the Bank of Castile since January 2011. He became Chairman of the Audit Committee in May
2011. In 2015 he was appointed to the Board of Directors of TFA Management, Inc. and to the Corporate Credit Oversight Committee
of the Company’s Board of Directors. Mr. Battaglia retired from Freed Maxick CPAs, P.C., a 300-person “Top 100”
public accounting firm headquartered in Western New York, in 2017, where he served as a Managing Director. As a Managing Director,
Mr. Battaglia managed the operations of the firm’s Batavia office in addition to providing consulting services on various
transactions, including mergers and acquisitions, design and implementation of financing plans, estate planning and business succession
planning. He served on the firm’s Executive and Compensation Committee and Finance Committee, and was a Trustee for the firm’s
retirement plan. He is a Certified Public Accountant, a member of the American Institute of Certified Public Accountants and the
New York State Society of Certified Public Accountants. Mr. Battaglia currently continues to work part-time for Freed Maxick and
also provides consulting services to some of his clients. Mr. Battaglia currently serves as the Chairman of the Board of Directors
of the Genesee County Economic Development Center and the Genesee County Funding Corporation; and is a director of the Genesee
Gateway Local Development Corporation. He was recently appointed to the Batavia Downtown Revitalization Initiative Committee and
he and his wife Mary are chairing the YMCA/United Memorial Medical Center capital campaign to build a healthy living campus in
Batavia, NY. Mr. Battaglia has served as a director or volunteer for over 30 not-for-profit or educational organizations in his
career. In 2010, Mr. Battaglia received the “Distinguished Citizen” award from the Boy Scouts of America (Iroquois
Trail Council), was named the “Honorary Chairman of the Centennial Celebration for the City of Batavia, New York in 2015,
and has received numerous other community recognitions. We believe Mr. Battaglia’s qualifications to serve on our Board of
Directors include his 44 years of experience in public accounting dealing with financial and accounting matters for complex organizations.
He has acquired a deep understanding of the Western New York business environment during his years of working with commercial clients
in the region. We note that Mr. Battaglia has demonstrated significant involvement with local civic organizations through his years
of service on the above-referenced boards of directors.
Daniel J. Fessenden
has served as
a Director of the Company since 2009, as a Director of Tompkins Trust Company since January 2009, and as a Director of TFA Management,
Inc. since 2011. Mr. Fessenden served as a member of the New York State Assembly from 1993 to 1999. He currently serves as the
Executive Director of the Fred L. Emerson Foundation, a family foundation located in Auburn, New York. From 2004 to 2006 he served
as the founding Executive Director of the Cornell Agriculture & Food Technology Park, Geneva, New York. Prior to 2004, Mr.
Fessenden served as a key member of the government relations team for the Carrier Corporation, Syracuse, New York. Raised on his
family’s dairy farm, Mr. Fessenden is a graduate of Cornell University. Mr. Fessenden has been actively engaged with numerous
business, civic and educational organizations throughout the Central New York region for more than 25 years. He currently serves
as a director of Midstate Mutual Insurance Company, Finger Lakes Regional Prosperity Network, and is a member of the Cornell University
Council. We believe Mr. Fessenden’s qualifications to sit on our Board of Directors include his extensive experience in government
and public service, his executive experience in the private sector, his active engagement with civic organizations, and his deep
connections to the Central New York business community.
James W. Fulmer
served as President
of the Company from 2000 through 2006, has served as a Director of the Company since 2000, and Vice Chairman of the Company since
January 1, 2007. He serves as the Chairman of Tompkins Bank of Castile, and has served in such capacity since 1991. Mr. Fulmer
previously served as President and Chief Executive Officer of the Bank of Castile from 1988 until his retirement on December 31,
2014. Mr. Fulmer also serves as a Director of Tompkins Mahopac Bank and Tompkins VIST Bank; and Chairman and Director of Tompkins
Insurance Agencies, Inc. He served as the President and Chief Executive Officer of Letchworth Independent Bancshares Corporation
from 1991 until its merger with the Company in 1999. He served as a member of the Board of Directors of the Federal Home Loan Bank
of New York from January 2007 to December 2017, and served as Vice Chairman from January 2015 to December 2017. Mr. Fulmer is a
past President of the Independent Bankers Association of New York State, and he also actively serves as a member of the Board of
Directors of Erie and Niagara Insurance Association of Williamsville, the Cherry Valley Cooperative Insurance Company of Williamsville,
and board member and past Chairman of the WXXI Public Broadcasting Council. We believe Mr. Fulmer’s qualifications to sit
on our Board of Directors include his nearly 40 years of experience in the banking industry, including service as our Vice Chairman,
and as the former President and Chief Executive Officer of Tompkins Bank of Castile. Mr. Fulmer is also actively involved with
the prominent Western New York Community organizations described above.
Susan A. Henry
has served as a Director
of the Company since 2010 and as a Director of Tompkins Trust Company since April 2010. Dr. Henry is the Ronald P. Lynch Dean
emerita
,
College of Agriculture and Life Sciences, Cornell University, where she has been a Professor of Molecular Biology and Genetics
since July 2010. Prior to her appointment at Cornell, Dr. Henry was Dean of Science of the Mellon College of Science at Carnegie
Mellon University. Dr. Henry is a member of the Board of Directors of Seneca Foods Corporation (NASDAQ: SENEA), where she serves
on the Compensation and Nominating Committee. She formerly served as a member of the Board of Directors of Agrium, Inc. (NYSE:
AGU), where she served on the Governance Committee, and the Human Resources and Compensation Committee. We believe Dr. Henry’s
qualifications to sit on our Board of Directors include her extensive experience in the management and administration of a large
non-profit organization, coupled with the regulatory and compliance experience she has gained while serving on the boards of other
publicly-traded companies.
Patricia A. Johnson
has served as
a Director of the Company since 2006, and served as a Director of Tompkins Trust Company from 2002 to 2014. In January 2014, Ms.
Johnson became the Vice President for Finance and Administration with Lehigh University in Bethlehem, PA. She has served as a Director
of Tompkins VIST Bank since April 2014. She had previously been with Cornell University, starting as the Assistant Treasurer in
1995, and later serving as Associate Vice President & Treasurer. She is currently a Director and the Finance Chair for Market
Matters, a not for profit located in Ithaca, New York which provides business training to residents of South Africa. She also serves
as Director, Manufacturers’ Resource Center; Director, Ben Franklin Technology Partners of Northeastern Pennsylvania; Director,
Community Action Committee of Lehigh Valley; Director, Lehigh Valley Economic Development Corporation; and Director, Centennial
School. She was also a member of the NACUBO Accounting Principles Council and the Association for Financial Professionals. We believe
Ms. Johnson’s qualifications to sit on our Board of Directors include her accounting expertise and her ability to understand
and evaluate the Company’s complex financial operations, based in part on her prior work in the banking industry. In addition,
Ms. Johnson has demonstrated civic leadership through service on the boards of many local charitable organizations.
Frank C. Milewski
has served as
a Director of the Company since August 2012, when he was appointed by the Board to fill a vacancy following the Company’s
acquisition of VIST Financial Corporation (“VIST”) in 2012. Mr. Milewski served as Vice Chairman of the Board of VIST
from 2007 to 2012, where he served as a Director from 2002 until its acquisition by the Company. Mr. Milewski served as a Director
of Merchants Bank from 1985 until VIST acquired Merchants in 1999. He has served as a Director on the Board of Directors of Tompkins
VIST Bank since 1999. Mr. Milewski retired in early 2017 from his position as a Regional Vice President of Molina Health Care (NYSE:
MOH) which provides and manages government-sponsored social services. Formerly, he was the Regional President of Providence Service
Corporation, (NASDAQ: PRSC) prior to its acquisition by Molina, and was the founder, President and Chief Executive Officer of The
ReDCo Group prior to its acquisition by Providence Service Corporation in 2004. Mr. Milewski was responsible for oversight and
direction of Molina’s separate operating companies in the northeast region. Mr. Milewski currently serves as a member of
the Schuylkill Economic Development Corporation (SEDCO’s) Board of Directors and as such is involved in fostering economic
growth, development, and job creation in the greater Schuylkill County region. Previously he served on a number of community-oriented
not-for-profit boards and currently serves as a member of the non-profit Board of Directors of Consolidated Training and Services
Corporation. We believe Mr. Milewski’s qualifications to sit on our Board of Directors include his executive experience in
a leadership position with a publicly-traded company, his prior service on VIST’s Audit/Examining Committee and the Tompkins
VIST Bank Board of Directors, and his involvement with economic development and other civic engagement in the Schuylkill County
region.
Thomas R. Rochon
has served as a
Director of the Company since 2009, and was elected Chairman of the Board in May 2014. He has served as a Director of Tompkins
Mahopac Bank since July 2017, and served as a Director of Tompkins Trust Company from January 2009 to June 2017. In July 2017,
Dr. Rochon joined the Educational Records Bureau (ERB), a not-for-profit educational testing and assessment company based in New
York. He was named President of ERB in December 2017. From July 2008 through June 2017, Dr. Rochon served as President of Ithaca
College. Prior to that, from 2003 to 2008 he was Executive Vice President and Chief Academic Officer for the University of St.
Thomas in Minnesota, following a career as professor of political science on the faculties of Princeton University and Claremont
Graduate University. From 2000 to 2003 he was Executive Director of the Graduate Record Examinations Program at the Educational
Testing Service (ETS). He is actively involved with several local charitable and community service organizations. We believe Dr.
Rochon’s qualifications to sit on our Board of Directors include his many years of management experience, including as President
of ERB and as former President of Ithaca College, as well as an understanding of the challenges faced by organizations that operate
in a heavily regulated sector.
Stephen S. Romaine
has served as
a Director of the Company since January 1, 2007. Mr. Romaine was appointed President and Chief Executive Officer of the Company
effective January 1, 2007. He had served as President and Chief Executive Officer of Tompkins Mahopac Bank from January 1, 2003
through December 31, 2006. Prior to this appointment, Mr. Romaine was Executive Vice President, Chief Financial Officer of Mahopac
National Bank. In addition to the Company Board, Mr. Romaine serves on the boards of each of its affiliates and has served as the
Chairman of the Board of Directors of Tompkins Trust Company since May 2014. Mr. Romaine currently serves on the Board of the New
York Bankers Association, and served as its Chairman from March 2016 through March 2017. His civic involvement includes service
as a member of the Board of Directors of the Ithaca Aviation Heritage Foundation and the TC3 Foundation. We believe Mr. Romaine’s
qualifications to sit on our Board of Directors include his more than 30 years as an executive in the financial services industry,
including his current position as President and Chief Executive Officer of the Company.
Michael H. Spain
has served as a
Director of the Company since 2000, and as a Director of Tompkins Mahopac Bank since 1992. He was appointed the Chairman of the
Board of Directors of Tompkins Mahopac Bank in June 2017. Mr. Spain serves as a Vice President of Brown & Brown, an insurance
agency located in Mahopac, New York. Mr. Spain previously served as President of the Spain Agency, Inc., from 1989 through April
2015, when it became wholly owned by Brown & Brown. Mr. Spain is also President of Sleeping Indian, LLC, and Trail Properties,
Inc., real estate holding companies; and President of Wind River, LLC and Indian Paintbrush, LLC, companies engaged in real estate
development. He has demonstrated civic leadership through service on the boards of several charitable organizations in the Hudson
Valley, including past President of Mahopac Rotary, The Putnam Alliance, Putnam Independent Insurance Agencies, and has served
on the Hudson Valley Hospital Board and Foundation and various United Way boards, along with over 20 years of service as a Tompkins
Mahopac Bank Director. We believe Mr. Spain’s qualifications to sit on our Board of Directors include his extensive executive
experience in the financial services industry.
Alfred J. Weber
has been a member
of our Board of Directors since August 2012 when he was appointed by the Board to fill a vacancy following the VIST acquisition.
Mr. Weber served as Chairman of the Board of VIST Financial Corporation from 2005 to 2012, where he served as a Director from 1995
until its acquisition by the Company in August 2012. He currently serves on the Board of Directors of Tompkins VIST Bank, and has
served as its Chairman since 2005. He has been in the consulting industry since 1974 and has been president of his own business,
Tweed-Weber, Inc., a management consulting firm, since 1984. The fundamental focus of his work is to help clients build and implement
strategies to gain and sustain competitive advantage in their marketplace. He has worked with hundreds of businesses, not-for-profit
organizations, health and home care agencies, and associations across the country. Mr. Weber currently serves on the Boards of
Berks County Community Foundation, Our City Reading, New Standard Corporation, Misco Products Corporation, and Boscov’s LLC.
He previously served on the Boards of Alvernia University, the United Way of Berks County, the Berks County Chamber of Commerce,
the Berks County Workforce Investment Board, the Greater Berks Development Fund, and the Burn Prevention Foundation. We believe
Mr. Weber’s qualifications to sit on our Board of Directors include his experience in leading change initiatives and his
expertise in the area of strategic planning.
Craig Yunker
has served as a Director
of the Company since 2000 and as a Director of Tompkins Bank of Castile since 1991. He has been the Managing Partner of CY Farms,
LLC since 1976; and of CY Properties, LLC; CY Heifer Farm, LLC; and Batavia Turf, LLC since 1998; companies engaged in farming.
Since 2001, he has served as a Trustee of Cornell University. Mr. Yunker is closely involved with the Western and Central New York
business community, and he currently serves in leadership roles on both state and national agricultural organizations, including
the New York State Agriculture Society, the Association of Agricultural Production Executives, and as a Trustee and member of the
Audit Committee of the Farm Foundation. He is a Director of the Genesee County Economic Development Center and previously served
as Chair of the Genesee County Legislature. Mr. Yunker also sits on the Board of Directors of Liberty Pumps, a manufacturing company
in Bergen, New York, currently serving as the Chair of its Compensation Committee. He was a delegate to the first New York State
agricultural trade mission to Cuba in 2008. We believe Mr. Yunker’s qualifications to sit on our Board of Directors include
his extensive executive experience, particularly in the agribusiness sector, and his corporate strategy acumen, along with over
20 years of service as a Tompkins Bank of Castile Director.
The names and ages
of the Company’s executive officers, including the Named Executive Officers identified in the Summary Compensation Table
in this Proxy Statement, their positions and offices held with the Company, their term of office and experience are set forth in
Part I of the Company’s Annual Report on Form 10-K for the Company’s 2017 fiscal year, a copy of which is enclosed
with this Proxy Statement.
MATTERS RELATING TO THE BOARD OF DIRECTORS
During fiscal 2017,
the Board of Directors held four regular meetings and three strategic planning meetings. As a matter of practice, the Independent
Directors met in executive session at the end of each regular meeting, for a total of four such sessions during 2017. During this
period, all of the Directors attended more than 75% of the aggregate of the total number of meetings of the Board held during the
periods that he or she served and the total number of meetings held by all committees of the Board on which each such Director
served during the period that he or she served.
The Board currently
maintains and appoints the members of the following six standing committees: Executive, Compensation, Audit/Examining, Nominating
and Corporate Governance, Qualified Plans Investment Review, and Corporate Credit Oversight.
Board of Directors: Committee Membership
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
Executive
|
|
Compensation
|
|
Audit/
Examining
|
|
Nominating/
Corporate Governance
|
|
Qualified Plans
Inv. Review
|
|
Corporate
Credit
Oversight
|
John E. Alexander
|
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X
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X
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—
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—
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|
Chair
|
|
—
|
Paul J. Battaglia
|
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X
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|
—
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|
Chair
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—
|
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—
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|
X
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Daniel J. Fessenden
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X
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|
—
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—
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Chair
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—
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—
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James W. Fulmer
|
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X
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—
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—
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|
—
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|
—
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|
Chair
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Susan A. Henry
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—
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—
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X
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—
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X
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—
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Patricia A. Johnson
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—
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—
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X
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—
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—
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—
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Frank C. Milewski
|
|
—
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|
—
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|
X
|
|
—
|
|
—
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|
X
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Thomas R. Rochon
|
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Chair
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X
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—
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X
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—
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—
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Stephen S. Romaine
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X
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|
—
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—
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—
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X
|
|
X
|
Michael H. Spain
|
|
X
|
|
—
|
|
—
|
|
—
|
|
X
|
|
—
|
Alfred J. Weber
|
|
—
|
|
—
|
|
—
|
|
X
|
|
—
|
|
—
|
Craig Yunker
|
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X
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Chair
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|
—
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X
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—
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|
—
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Executive Committee.
The Board has adopted a written charter for the Executive Committee. A copy of the Executive Committee’s charter is posted
in the “Corporate Governance” section of the Company’s website (www.tompkinsfinancial.com). The Executive Committee
did not meet during fiscal 2017. The Executive Committee acts, as necessary, on behalf of the Board of Directors pursuant to the
Company’s Second Amended and Restated Bylaws (the “Bylaws”).
Compensation Committee.
The Board has adopted a written charter for the Compensation Committee (as used in this paragraph, the “Committee”).
A copy of the Committee’s charter is posted in the “Corporate Governance” section of the Company’s website
(www.tompkinsfinancial.com). The Committee met five times during fiscal 2017. The Committee reviews executive performance and approves,
or recommends to the Independent Directors for approval, salaries and other matters relating to executive compensation, except
that the compensation of the Chief Executive Officer is determined by the Independent Directors upon recommendation by the Committee.
It also administers the Company’s equity incentive plans, including reviewing and granting equity incentive awards to executive
officers and other employees. The Committee also reviews and approves various other compensation policies and matters, senior management
planning, and is responsible for ensuring that executive officers are compensated effectively, appropriately, and in a manner consistent
with the Company’s objectives. Please see the heading
“Role of the Compensation Committee, Management, and Consultants”
on Page 16 for information about this Committee’s responsibilities and activities. Each of the members of this Committee
is an “Independent Director” as defined in Section 803A of the NYSE American Company Guide, and also meets the
heightened independence standards for compensation committee members set forth in NYSE American Rule 805(c).
Audit/Examining
Committee.
The Board has adopted a written charter for the Audit/Examining Committee (as used in this paragraph, the “Committee”).
A copy of the Committee’s charter is posted in the “Corporate Governance” section of the Company’s website
(www.tompkinsfinancial.com). The Committee met ten times during fiscal 2017. This Committee assists the Board in its general oversight
of accounting and financial reporting, internal controls and audit functions, and is directly responsible for the appointment,
compensation and oversight of the work of the Company’s independent auditors. The responsibilities and activities of the
Committee are described in greater detail in the “Report of the Audit/Examining Committee of the Board of Directors”
included in this Proxy Statement. The Board has determined that Paul J. Battaglia, Susan A. Henry, Patricia A. Johnson, and Frank
C. Milewski each qualify as an “Audit Committee Financial Expert” as defined in Item 407(d) of Regulation S-K
and that each of the members of the Audit/Examining Committee is an “Independent Director” as defined in Section 803A
of the NYSE American Company Guide, and also satisfies the heightened independence standards applicable to Audit Committee members
of Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Nominating and Corporate
Governance Committee.
The Board has adopted a written charter for the Nominating and Corporate Governance Committee (as used
in this paragraph and in the next four paragraphs, the “Committee”). A copy of the Committee’s charter is posted
in the “Corporate Governance” section of the Company’s website (www.tompkinsfinancial.com). The Committee met
three times during the 2017 fiscal year. This Committee is responsible for assisting the Board in developing corporate governance
policies and practices that comply with applicable laws and regulations, including NYSE American listing standards and corporate
governance requirements, and the corporate governance requirements of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010.
The Nominating &
Corporate Governance Committee is responsible for identifying, evaluating and recommending qualified candidates for election to
the Board. The Committee will evaluate candidates who are identified by shareholders, by other members of the Board, and occasionally
by members of the Company’s leadership team, which is comprised of the Company’s executive officers. To be considered,
shareholder recommendations of director candidates must be received by the Chairman of the Nominating and Corporate Governance
Committee, Tompkins Financial Corporation, P.O. Box 460, Ithaca, NY 14851, no later than December 1
st
of the year preceding
the annual meeting at which such nominee is proposed to be nominated. The recommendations should include the name, address, and
supporting information as to why the candidate should be considered by the Committee. The same procedures are used to evaluate
all candidates, regardless of the source of the recommendation. To be considered, each candidate must possess the following minimum
qualifications and attributes: high personal values, judgment and integrity; an ability to understand the regulatory and policy
environment in which the Company conducts its business; a demonstrated, significant engagement in one of the market areas served
by the Company, based on one or more of the following within such market area—professional/business relationships, residence,
and involvement with civic, cultural or charitable organizations; and experience which demonstrates an ability to deal with the
key business, financial and management challenges that face financial service companies. The Committee believes that such connections
with one of the Company’s local communities foster ties between the Company and that community, and also allow the Director
to better understand the banking and financial services needs of its local stakeholders.
In identifying potential
nominees, the Committee also considers whether a particular candidate adds to the overall diversity of the Board. The Committee
seeks nominees with a broad diversity of experience, professions, skills, geographic representation and backgrounds. The Company
believes that the backgrounds and qualifications of the Directors, considered as a group, should comprise an array of experience,
knowledge and abilities to allow the Board to most effectively carry out its responsibilities. Although the Committee does take
diversity into account when evaluating a particular candidate, it is only one of several criteria used during the Committee’s
assessment process, and the Committee has not formalized its diversity practices into a written policy.
While individual experiences
and qualifications serve as a baseline for consideration, the Committee recognizes that the Board of Directors governs as a whole,
and not as a collection of individuals. The effectiveness of the Board is not a function of the individual attributes of its members;
rather, it depends on the overall chemistry of the Board. Therefore, the Committee assesses whether a particular candidate will
be able to function within this broader context by evaluating his or her: ability to understand, and willingness to engage, the
issues presented to the Board; ability to exercise prudence and judgment, but also decisiveness; and ability to effectively communicate
his or her ideas to the other members of the Board. In the case of incumbent Directors, these assessments are made based on past
experience with a particular Director and, in the case of first-time nominees, these issues are explored during the interview and
vetting process described below.
Once the Committee
has determined its interest in a potential nominee, it begins discussions with him or her as to his or her willingness to serve
on the Board and one of the Company’s subsidiary boards and, for first-time nominees, an interview will be conducted. If
the nominee is an incumbent Director, the Committee will consider prior Board performance and contributions as described above;
in the case of a first-time nominee, the Committee will evaluate its discussions with the candidate, and the Committee may also
seek to verify its preliminary assessment of the candidate by discussing his or her particular attributes with other appropriate
parties who have had prior professional experiences with him or her. At the conclusion of this process, the Committee will recommend
qualified candidates that best meet the Company’s needs to the full Board, which then selects candidates to be nominated
for election at the next annual meeting of shareholders. The Committee uses the same process for evaluating all candidates, whether
recommended by shareholders, Directors or management. The Company expects all Board members to own at least 2,000 shares of the
Company’s common stock, which shares may be accumulated over a period of three years following a Director’s initial
election to the Board. Shares held in a rabbi trust as deferred stock compensation for a given Director, are included in this calculation.
Qualified Plans
Investment Review Committee.
The Board has adopted a written charter for the Qualified Plans Investment Review Committee (as
used in this paragraph, the “Committee”). This Committee met two times during fiscal 2017, and it is responsible for
reviewing and setting the investment goals and objectives of the Tompkins Financial Corporation Retirement Plan, monitoring the
performance of the third-party investment manager engaged to invest plan assets, and overseeing changes to plan holdings. This
Committee also serves in a fiduciary capacity for the Company’s 401(k) retirement plan, which duties include, but are not
limited to: investment fund selection; establishing investment policy objectives; benchmarking and evaluating the reasonableness
of fund fees, overall plan expenses, revenue-sharing arrangements, and performance of the investment funds and the third-party
administrator.
Corporate Credit
Oversight Committee.
The Board has adopted a written charter for the Corporate Credit Oversight Committee (as used in this
paragraph, the “Committee”). This Committee met seven times in 2017, and is charged with the general oversight of the
commercial, consumer and residential lending mortgage portfolios across the affiliates of the Company. In addition, the Committee
will be asked to approve larger commercial relationships in excess of $20 million in borrowings.
Director Compensation
It is the general policy
of the Board that employee directors are not paid for their service on the Company’s Board of Directors beyond their regular
employee compensation.
2017 Director Compensation
Name
|
|
|
Fees Earned or
Paid in Cash
(1)
|
|
|
Stock
Awards
(2)
|
|
|
All Other
Compensation
|
|
|
Total
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Alexander
|
|
|
|
—
|
|
|
|
42,780
|
|
|
|
—
|
|
|
|
42,780
|
|
Battaglia
|
|
|
|
—
|
|
|
|
65,745
|
|
|
|
—
|
|
|
|
65,745
|
|
Fessenden
|
|
|
|
25,925
|
|
|
|
30,626
|
|
|
|
—
|
|
|
|
56,551
|
|
Fulmer
|
|
|
|
55,125
|
|
|
|
—
|
|
|
|
—
|
|
|
|
55,125
|
|
Henry
|
|
|
|
—
|
|
|
|
45,765
|
|
|
|
—
|
|
|
|
45,765
|
|
Johnson
|
|
|
|
43,935
|
|
|
|
—
|
|
|
|
—
|
|
|
|
43,935
|
|
Milewski
|
|
|
|
58,525
|
|
|
|
—
|
|
|
|
—
|
|
|
|
58,525
|
|
Rochon
|
|
|
|
—
|
|
|
|
87,675
|
|
|
|
—
|
|
|
|
87,675
|
|
Spain
|
|
|
|
20,000
|
|
|
|
20,575
|
|
|
|
—
|
|
|
|
40,575
|
|
Weber
|
|
|
|
17,568
|
|
|
|
27,007
|
|
|
|
—
|
|
|
|
44,575
|
|
Yunker
|
|
|
|
13,890
|
|
|
|
36,550
|
|
|
|
—
|
|
|
|
50,440
|
|
|
(1)
|
Amounts
disclosed for certain Directors include cash compensation for service on subsidiary boards.
For a more detailed discussion of such fees, see “Subsidiary Board Service Compensation”
below.
|
|
(2)
|
The
stock awards disclosed here reflect grant date fair value in accordance with ASC Topic
718, and were earned by the Directors and deferred under Tompkins’ Amended and
Restated Plan for Eligible Directors of Tompkins Financial Corporation and Wholly-Owned
Subsidiaries (the “Retainer Plan”). The stock awards under the Retainer Plan
are discussed in more detail below under the heading “Timing and Manner of Payment
of Director Compensation.” Dividends are reinvested pursuant to the Company’s
Dividend Reinvestment and Stock Purchase and Sale Plan.
|
Effective January 1,
2017, the Company’s non-employee Directors were compensated for service on the Board as follows. An annual $15,225 retainer
payable in quarterly installments of $3,806.25 each was paid at the beginning of each quarter to non-employee Directors. In addition,
non-employee Directors received $1,470 for each of the four regularly-scheduled Board meetings the Director attended, as well as
$890 for each Audit/Examining, Compensation, Nominating and Corporate Governance Committee or Credit Oversight Committee meeting
attended and $470 for each Qualified Plans Investment Review Committee meeting attended. The Chair of the Audit/Examining Committee
received an additional $11,710 annual fee paid in quarterly installments of $2,927.50, and the Chairs of the Compensation, and
Nominating and Corporate Governance Committees received an additional $4,725 annual fee paid in quarterly installments of $1,181.25.
The Chair of the Qualified Plans Investment Review Committee received an annual fee of $1,155 paid in quarterly installments of
$288.75. All non-employee Directors’ fees paid for service on the Board were paid in cash or, if a valid election was made
by the Director prior to January 1, 2017, such Directors’ fees were deferred pursuant to (i) the Retainer Plan or (ii)
pursuant to a Deferred Compensation Agreement. In addition to these fees, Directors are eligible to receive equity awards granted
pursuant to the Company’s 2009 Equity Plan, though none were issued to Directors during fiscal 2017.
In lieu of any retainer,
Board meeting and/or committee fees, an annual retainer was paid in deferred stock to Thomas R. Rochon in 2017 for his service
as Chairman of the Tompkins Financial Corporation Board of Directors, as well as his service on the Boards of our Tompkins Trust
Company and Mahopac Bank subsidiaries, in the amount of $87,675 paid in quarterly installments of $21,918.75. Effective January
1, 2017, in lieu of any Board meeting and/or committee fees, James W. Fulmer received $55,125 paid in quarterly installments of
$13,781.25 for his service as Vice Chairman of the Board, as well as his service on the Boards of our Mahopac Bank, VIST Bank,
Bank of Castile, and Tompkins Insurance Agencies subsidiaries.
Subsidiary Board Service Compensation
Any non-employee member
of the Company’s Board of Directors who also sits on the Board of Tompkins Bank of Castile received an additional annual
$16,600 Board Retainer Fee paid in quarterly installments of $4,150. During 2017, Paul J. Battaglia, James W. Fulmer and Craig
Yunker sat on the Board of Directors of Tompkins Bank of Castile. Any non-employee member of the Company’s Board of Directors
who also sits on the Board of Tompkins Mahopac Bank received an additional annual Board Retainer Fee of $25,000 paid in quarterly
installments of $6,250. During 2017, James W. Fulmer and Michael H. Spain sat on the Board of Directors of Tompkins Mahopac Bank;
and beginning in August 2017, Thomas R. Rochon also sat on the Board of Directors of Tompkins Mahopac Bank, but did not receive
any additional compensation for his subsidiary board service. Any non-employee member of the Company’s Board of Directors
who also sits on the Board of Tompkins Trust Company received an additional annual $16,600 Board Retainer Fee paid in quarterly
installments of $4,150. In addition, non-employee Directors who served on the Trust Committee and/or the Board Loan Committee of
Tompkins Trust Company’s Board of Directors received fees of $470 per meeting attended, and the Chair of each of those committees
received a $1,100 annual fee paid in quarterly installments of $275 at the beginning of each quarter. During 2017, John E. Alexander,
Daniel J. Fessenden, and Susan A. Henry, sat on the Board of Directors of Tompkins Trust Company; Thomas R. Rochon also sat on
the Board of Directors of Tompkins Trust Company through June 2017. Any non-employee member of the Company’s Board of Directors
who also sits on the Board of Tompkins VIST Bank received an additional annual $16,600 Board Retainer Fee paid in quarterly installments
of $4,150. The VIST Bank Board Chair, Alfred J. Weber, also received an annual fee of $3,310 paid in quarterly installments of
$827.50. In addition, non-employee Directors who served on the Board Loan Committee of Tompkins VIST Bank’s Board of Directors
received fees of $470 per meeting attended, and the Chair of that Committee received a $1,155 annual fee paid in quarterly installments
of $288.75. During 2017, James W. Fulmer, Frank C. Milewski and Alfred J. Weber sat on the Board of Directors of Tompkins VIST
Bank.
Timing and Manner of Payment of Director
Compensation
All retainers for service
on the Company’s Board, as well as service on the Board of Directors of one or more of our subsidiaries, are payable quarterly,
either in cash or, if a timely election is made by the Director, in stock pursuant to the Retainer Plan. Non-employee Directors
may also elect to receive compensation in deferred cash pursuant to a Deferred Compensation Agreement. If a Director elects to
receive deferred stock compensation under the Retainer Plan, his or her fees are transferred to a Rabbi Trust. The trustee acquires
shares of common stock pursuant to the Company’s Dividend Reinvestment and Stock Purchase and Sale Plan. A Director has no
rights in or to the shares of common stock held in the Rabbi Trust until distribution is made in accordance with the Retainer Plan.
An aggregate of 4,247 shares of common stock was acquired by the Rabbi Trust under the Retainer Plan in 2017, representing Board
and committee fees and retainers paid and expensed in 2017.
In 2017, the Nominating
and Corporate Governance Committee undertook an evaluation of the Company’s Director compensation program. The Committee
examined the director compensation programs of the peer group companies listed on Page 18, and considered the various components
of director compensation at these peer companies, as well as the compensation amounts. The Committee recognized the need to prudently
manage the Company’s overall Director compensation expense, while also ensuring that individual director compensation was
sufficient to attract and retain qualified directors for our Board. The Committee translated this principle into proposed changes
to the Company’s board compensation program, and then retained the services of an independent compensation consultant, Meridian
Compensation Partners, LLC (“Meridian”), to evaluate and provide an opinion on the Committee’s proposed director
compensation changes. Meridian concluded that, while the proposed changes to 2018 director compensation represent a meaningful
increase in the total board compensation over 2017, the individual director compensation levels remain conservative relative to
peers. Meridian also validated the Committee’s elimination of per-meeting fees as being in line with emerging industry trends.
It is expected that Directors will prepare for and attend meetings consistently as part of their commitment to service on our Board.
Based on Meridian’s
analysis, as well as the Committee’s recommendation, the Board approved the following fees to be paid to the Company’s
non-employee Directors, effective January 1, 2018: For service on the Company’s Board, each non-employee Director will receive
an annual retainer of $25,000, and for service on a Company subsidiary’s board, each non-employee Director receives an additional
annual retainer of $18,000. Committee members receive additional amounts for each committee on which they serve, and committee
chairs and subsidiary board chairs also receive a supplemental amount in recognition of the higher time commitment expected of
such roles. The Chairman and Vice Chairman of the Company’s Board each receive an annual retainer of $112,400 and $75,000,
respectively, in lieu of any committee fees, subsidiary board fees, or chair supplements. Consistent with the Company’s historical
practice, these fees are payable pursuant to a Director’s timely election to receive their compensation in the form of cash,
deferred cash, or deferred stock.
The Committee formally
assessed the independence of Meridian pursuant to SEC rules and exchange requirements, and has concluded that no conflict of interest
exists that would impair Meridian’s ability to independently represent the Committee. The Committee made this determination
based on its receipt of representations from Meridian addressing the independence of Meridian, including their employees involved
in the engagement, which addressed the following factors: (1) other services provided to us by Meridian; (2) fees paid by the Company
as a percentage of Meridian’s total revenue, which were less than 1% of Meridian’s total revenue; (3) policies and
procedures maintained by Meridian that are designed to prevent a conflict of interest; (4) the absence of any business or personal
relationships between Meridian, including their employees involved in the engagement, and any member of the Committee; (5) the
fact that no Company stock is owned by Meridian or any of their employees involved in the engagement; and (6) the absence of any
business or personal relationships between our executive officers, directors, and Meridian. In addition, the Company confirmed
the content of Meridian’s responses to items (4) and (6) above directly with the Company’s directors and executive
officers.
Due to the elimination
of meeting fees, an administrative amendment was made to the Retainer Plan in 2017 to align with the updated compensation program.
CORPORATE GOVERNANCE MATTERS
Corporate Governance Guidelines
The Board has adopted
Corporate Governance Guidelines (the “Guidelines”), which reflect many of the Company’s long-standing practices,
in order to strengthen our commitment to corporate governance best practices. A copy of the Guidelines is posted in the “Corporate
Governance” section of our website (www.tompkinsfinancial.com). The Guidelines summarize the Company’s corporate governance
practices and procedures, and the following issues, in addition to others, are covered in the Guidelines: board size; director
independence; chairman independence; director retirement; director resignation following a change in job responsibility; director
candidate identification and nomination; director common stock ownership; responsibilities of directors; meeting attendance; executive
sessions of independent directors; Board committees; succession planning and management evaluation; director education; failure
to receive a majority of votes cast; pledging/hedging policy; and board assessments. Our Nominating and Corporate Governance Committee
periodically reviews the Guidelines and, as necessary or appropriate, recommends changes to the Guidelines.
Board and Director Assessments
The Board, under the
leadership of the Nominating and Corporate Governance Committee, conducts annual self-evaluations to determine whether the Board
and its committees are functioning effectively and in the best interests of the Company and its shareholders. Through this process,
the Board also assesses Board composition by evaluating the qualifications, skills and experience of the Directors on the Board.
As part of this annual self-assessment, Directors are able to provide feedback on the performance of other Directors. A summary
of the results of the Board self-assessment and the individual self-assessments are reviewed by the Nominating and Corporate Governance
Committee and the Board.
Shareholder Communications with Directors
Shareholders may communicate
with the Company’s Board of Directors by writing to the following address: Board of Directors, Tompkins Financial Corporation,
P.O. Box 460, Ithaca, New York 14851. All such communications from shareholders will be reviewed by the Chairman
of the Board or the Chairman of the Nominating and Corporate Governance Committee, each of whom is an Independent Director, and,
if s/he determines that a communication should be reviewed by the full Board, it will be presented to the Board for review and
consideration.
Policy Regarding Director Attendance
at Annual Meetings; Annual Meeting Attendance
The Board strongly
encourages the attendance of all Directors at Annual Meetings of Shareholders. The Annual Meeting of Shareholders for fiscal 2016
was held on May 8, 2017 and all of the Company’s Directors were in attendance.
Code of Ethics
The Board has adopted
the Tompkins Financial Corporation Code of Ethics for the Chief Executive Officer and Senior Financial Officers which applies to
the Company’s Chief Executive Officer and Chief Financial Officer (who also serves as our principal accounting officer).
A copy of the Code of Ethics is available in the “Corporate Governance” section of the Company’s website (www.tompkinsfinancial.com).
The Company will post material amendments to or waivers from the Code of Ethics for the Chief Executive Officer and Senior Financial
Officer at this location on its website.
Board Leadership Structure, Risk Oversight
and Director Education
Presently, the roles
of Chief Executive Officer and Chairman of the Board are separate, as the Board feels this model offers advantages of including
additional input and a range of prior experience within our leadership structure. However, no single leadership model is right
for the Company at all times, and the Board does not have a policy that these roles will always be separate. The Board recognizes
that other leadership models can be appropriate for the Company, given different circumstances.
The Board has an active
role, both at the full Board and also at the committee level, in overseeing management of the Company’s risks. The Board
regularly reviews information regarding asset quality, capital, securities portfolio, liquidity, operations and other matters,
as well as the risks associated with each. The Compensation Committee oversees risks associated with compensation arrangements
and the Audit/Examining Committee oversees management of financial risks. The Board’s role in the risk oversight process
has not directly impacted its leadership structure.
The Board is committed
to ongoing director education. Our Nominating and Corporate Governance Committee maintains a list of pertinent topics, including
topics on which our Directors have specifically requested additional information, and a different topic is typically covered at
each Board meeting. In addition, Directors connect professional experiences and development or training opportunities from their
full-time occupations, where relevant, to their work on the Board. These experiences are shared with fellow Directors.
Risk and Influence on Compensation Programs
The Board’s Compensation
Committee also considers risk and its influence on the Company’s compensation programs. This Committee reviews each compensation
element individually and in the aggregate to ensure that the overall compensation program provides a balanced perspective that
ultimately aligns pay with performance while also ensuring bonus / incentive programs do not motivate inappropriate risk-taking.
Since the bonuses are discretionary, the Committee has the ability to reduce bonus amounts should it be determined that certain
actions or practices by the executive officers are promoting unnecessary or excessive risk. Equity award levels and practices are
set to foster shared interests between management and shareholders, but are not considered by the Committee to be at levels that
would drive inappropriate behavior. In the Committee’s judgment, the compensation policies and practices of the Company do
not give rise to material risks.
In addition, we are
subject to guidance issued by our primary banking regulators designed to ensure that incentive compensation arrangements at banking
organizations appropriately tie rewards to longer-term performance and do not undermine the safety and soundness of the firm or
create undue risks to the financial system. This guidance embodies three core principles, which are: (1) incentive compensation
arrangements at a banking organization should provide employees incentives that appropriately balance risk and financial results
in a manner that does not encourage employees to expose their organizations to imprudent risks; (2) these arrangements should be
compatible with effective controls and risk management, and (3) these arrangements should be supported by strong corporate governance,
including active and effective oversight by the organization’s board of directors. We believe that our incentive compensation
programs are in compliance with this guidance.
Affirmative Determination of Director
Independence
A majority of the Board
of Directors, and each member of the Audit/Examining Committee, Compensation Committee, and Nominating and Corporate Governance
Committee, is independent, as affirmatively determined by the Board, consistent with the criteria established by NYSE American
and as required by our Bylaws.
The Board has conducted
an annual review of director independence for all nominees for election as Directors. During this review, the Board considered
transactions and relationships during the preceding three years between each Director or nominee or any member of his or her family
and the Company, and its executive officers, subsidiaries, affiliates and principal shareholders, including those transactions
and relationships described below under “Transactions with Related Persons.” The purpose of this review was to determine
whether any such relationships or transactions were inconsistent with a determination that the Director is independent.
As a result of this
review, the Board affirmatively determined that the Directors identified as “Independent” in the table on Page 3 meet
the standards of independence described above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following tables set forth certain
information, as of March 12, 2018, with respect to the beneficial ownership of our common stock by: (1) each shareholder known
by the Company to be the beneficial owner of more than 5% of the Company’s common stock; (2) each Director and nominee; (3)
each executive officer named in the Summary Compensation Table, below; and (4) all executive officers and Directors as a group.
Except as otherwise indicated, each of the shareholders named below has sole voting and investment power with respect to the outstanding
shares of Common Stock beneficially owned.
|
|
Common Stock Ownership
|
|
Directors, Nominees and Executive Officers
|
|
Phantom Stock Held
in Deferred Trust
(1)
|
|
|
Shares of Common Stock
Beneficially Owned
(2)
|
|
|
Percent of
Class
(2)(3)
|
|
John E. Alexander++
|
|
|
15,142
|
|
|
|
44,605
|
(4)
|
|
|
**
|
|
Paul J. Battaglia++
|
|
|
7,863
|
|
|
|
4,330
|
(5)
|
|
|
**
|
|
David Boyce*
|
|
|
—
|
|
|
|
31,134
|
(6)
|
|
|
**
|
|
Daniel J. Fessenden++
|
|
|
3,177
|
|
|
|
1,287
|
|
|
|
**
|
|
Francis M. Fetsko*
|
|
|
—
|
|
|
|
26,175
|
(7)
|
|
|
**
|
|
James W. Fulmer++
|
|
|
—
|
|
|
|
81,549
|
(8)
|
|
|
**
|
|
Scott Gruber*
|
|
|
—
|
|
|
|
15,929
|
(9)
|
|
|
**
|
|
Gregory J. Hartz*
|
|
|
—
|
|
|
|
27,793
|
(10)
|
|
|
**
|
|
Susan A. Henry++
|
|
|
5,455
|
|
|
|
2,168
|
|
|
|
**
|
|
Patricia A. Johnson++
|
|
|
2,867
|
|
|
|
130
|
|
|
|
**
|
|
Frank C. Milewski++
|
|
|
—
|
|
|
|
17,963
|
|
|
|
**
|
|
Thomas R. Rochon++
|
|
|
10,588
|
|
|
|
236
|
(11)
|
|
|
**
|
|
Stephen S. Romaine*++
|
|
|
—
|
|
|
|
91,475
|
(12)
|
|
|
**
|
|
Michael H. Spain++
|
|
|
6,601
|
|
|
|
175,584
|
(13)
|
|
|
1.14
|
%
|
Alfred J. Weber++
|
|
|
2,688
|
|
|
|
10,789
|
|
|
|
**
|
|
Craig Yunker++
|
|
|
7,203
|
|
|
|
20,529
|
|
|
|
**
|
|
All Directors and executive officers as a group (24 persons)
|
|
|
61,584
|
|
|
|
678,245
|
|
|
|
4.43
|
%
|
|
*
|
Named
Executive Officer
|
|
++
|
Currently
a Director of the Company and a Director Nominee
|
|
(1)
|
Each
share of phantom stock is the economic equivalent of one share of common stock. Phantom
stock represents deferred stock compensation under the Amended and Restated Retainer
Plan for Eligible Directors of Tompkins Financial Corporation and its Wholly-Owned Subsidiaries
(the “Retainer Plan.”). These shares are held in a deferred trust account
(the “Rabbi Trust”) pending distribution upon the occurrence of certain events
specified in the Retainer Plan. The Director has no voting or investment power over the
shares prior to such distribution. The shares of common stock held in deferred trust
accounts for non-employee Directors are voted by Tompkins Trust Company (the “Trust
Company”) as trustee of the Rabbi Trust.
|
|
(2)
|
Does
not include shares of phantom stock held in the Rabbi Trust.
|
|
(3)
|
The
number of shares beneficially owned by each person or group as of March 12, 2018, includes
shares of common stock that such person or group had the right to acquire on or within
60 days after March 12, 2018, including, but not limited to, upon the exercise of options.
For each individual and group included in the table, percentage ownership is calculated
by dividing the number of shares beneficially owned by such person or group by the sum
of the 15,299,528 shares of common stock outstanding and entitled to vote on March 12,
2018 plus the number of shares of common stock that such person or group had the right
to acquire on or within 60 days after March 12, 2018. The percentages listed in this
column do not include shares acquired pursuant to the Retainer Plan and held in the Rabbi
Trust; Directors have no voting or investment power with respect to such shares. For
a more detailed discussion of the Retainer Plan, refer to “
Timing and Manner
of Payment of Director Compensation
”, Page 10. For a description of the vesting
provisions for the restricted stock referenced in the footnotes below, see the “2017
Outstanding Equity Awards at Fiscal Year-End” table, below.
|
|
(4)
|
Includes
564 shares owned by Mr. Alexander’s spouse.
|
|
(5)
|
Shares
owned by Mr. Battaglia’s spouse.
|
|
(6)
|
Includes
5,774 shares held in the Company’s Employee Stock Ownership and Investment &
Stock Ownership Plans, 6,911 shares of restricted stock, and 3,491 shares that Mr. Boyce
may acquire by exercise of options exercisable at March 12, 2018 or within 60 days thereafter.
|
|
(7)
|
Includes
8,135 shares held in the Company’s Employee Stock Ownership and Investment &
Stock Ownership Plans, 7,101 shares of restricted stock, and 3,637 shares that Mr. Fetsko
may acquire by exercise of options exercisable at March 12, 2018 or within 60 days thereafter.
|
|
(8)
|
Includes
36,155 shares held by Mr. Fulmer’s spouse.
|
|
(9)
|
Includes
3,517 shares held in the Company’s Employee Stock Ownership and Investment &
Stock Ownership Plans, 6,663 shares of restricted stock, and 3,637 shares that Mr. Gruber
may acquire by exercise of options exercisable at March 12, 2018 or within 60 days thereafter.
|
|
(10)
|
Includes
6,424 shares held in the Company’s Employee Stock Ownership and Investment &
Stock Ownership Plans, 6,911 shares of restricted stock, and 1,489 shares that Mr. Hartz
may acquire by exercise of options exercisable at March 12, 2018 or within 60 days thereafter.
|
|
(11)
|
Includes
13 shares owned by Dr. Rochon’s spouse as Custodian for each of their two sons.
|
|
(12)
|
Includes
12,438 shares held in the Company’s Employee Stock Ownership and Investment &
Stock Ownership Plans, 16,524 shares of restricted stock, and 38,569 shares that Mr.
Romaine may acquire by exercise of options exercisable at March 12, 2018 or within 60
days thereafter.
|
|
(13)
|
Includes
Mr. Spain’s indirect ownership of 42,071 shares as Trustee for Christina Bass Spain.
|
As of March 12, 2018, no person or group
was known by the Company to be the beneficial owner of more than 5% of the outstanding shares of the Company’s common stock,
except as follows:
Name and Address of Beneficial Owner
|
|
Phantom
Stock Held in
Deferred
Trust
|
|
Shares of
Common
Stock
Beneficially
Owned
|
|
Percent of
Class
|
Tompkins Trust Company in the fiduciary capacity indicated:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Executor, Trustee or Co-Trustee
|
|
|
582,477
|
(2)
|
|
|
|
|
|
|
3.81
|
%
|
Agent or Custodian
|
|
|
820,420
|
(3)
|
|
|
|
|
|
|
5.36
|
%
|
Tompkins Trust Company in the fiduciary capacity indicated (Plan shares held in custody by Prudential Investment)
|
|
|
848,536
|
(4)
|
|
|
|
|
|
|
5.55
|
%
|
Trustee for the Tompkins Financial Employee Stock Ownership Defined Contribution and Investment & Stock Ownership Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock, Inc.
(5)
|
|
|
|
|
|
|
1,679,158
|
|
|
|
10.97
|
%
|
55 East 52
nd
Street, New York, NY 10055
|
|
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group
(6)
|
|
|
|
|
|
|
1,497,266
|
|
|
|
9.79
|
%
|
100 Vanguard Blvd., Malvern, PA 19355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
Trust Company’s address is P.O. Box 460, Ithaca, New York, 14851.
|
|
(2)
|
Represents
shares held in a fiduciary capacity as executor, trustee or co-trustee. Where the Trust
Company is sole executor or trustee, such shares, generally, will be voted only if the
legal instrument provides for voting the stock at the direction of the donor or a beneficiary
and such direction is in fact received. When acting in a co-fiduciary capacity, such
shares will be voted by the co-fiduciary or fiduciaries in the same manner as if the
co-fiduciary or fiduciaries were the sole fiduciary.
|
|
(3)
|
Represents
shares held as agent or custodian with the voting power retained by the owner.
|
|
(4)
|
Represents
shares held and administered by Prudential Investment Management Services, LLC, of which
647,634 shares, or 4.23% of the outstanding shares (calculated as described above), are
held by the Company’s Employee Stock Ownership Plan; and 199,334 shares, or 1.30%
of the outstanding shares (calculated as described above), are held by the Company’s
Investment & Stock Ownership Plan. All such shares have been allocated to participant
accounts. Individual plan participants are entitled to vote these shares, and as a result
these shares are not voted by the Trust Company, which serves as Trustee for these plans.
|
|
(5)
|
This
information is based on a Schedule 13G/A filed by BlackRock, Inc. for itself and on behalf
of its subsidiaries named therein on January 17, 2018 (reporting sole voting power with
respect to 1,648,037 shares and sole dispositive power with respect to 1,679,158 shares).
|
|
(6)
|
This
information is based on a Schedule 13G/A filed by The Vanguard Group for itself and on
behalf of its subsidiaries named therein on February 7, 2018 (reporting sole voting power
with respect to 16,177 shares, shared voting power with respect to 878 shares, sole dispositive
power with respect to 1,481,411 shares, and shared dispositive power with respect to
15,855 shares).
|
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Overview
It is the position
of the Compensation Committee and the Board of Directors that Tompkins Financial Corporation has long operated within the spirit
of the guidance provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulations. Management and
the Board have been careful to avoid many of the risks of incentive programs, choosing to reward proven results on a discretionary
basis as opposed to tying payments to any particular metric. The result is that no individual or group is incentivized to take
unnecessary risk with respect to a customer, the organization or our shareholders. We believe that these efforts are supported
by an effective risk management system and strong corporate governance.
The Board of Directors
has delegated to the Compensation Committee (the “Committee”) the responsibility for determining or recommending to
the Independent Directors of the Board the compensation of the Company’s executive officers, including the executive officers
identified in the Summary Compensation Table (the “Named Executive Officers”).
The Company has continued
to exhibit strong recent financial performance relative to its peer group. In recognition of Company financial performance and
the contributions made by the Named Executive Officers in 2017-2018 the following compensation actions were approved:
|
●
|
Merit
Increases.
Effective April 2017, most of the Company’s executives received
salary rate increases, including all of the Named Executive Officers.
|
|
●
|
Cash
Bonuses.
In February 2017 and 2018, cash bonus awards were paid to many senior officers
of the Company, including all of the Named Executive Officers.
|
|
●
|
Long-Term
Equity-Based Awards.
The Committee uses discretion in determining the frequency of
awards and generally considers awards every 12 months. In November 2017, a number
of executives received long-term equity based awards. Among this group were the Named
Executive Officers who received shares of restricted stock.
|
These
decisions as well as the Committee’s process in making compensation recommendations are described below.
Compensation Philosophy and Objectives
The primary goal of
the Committee is to offer executive compensation that is fair and reasonable, consistent with the Company’s size and the
compensation practices of the financial services industry generally. Key objectives of the compensation package are to attract,
develop, and retain high caliber executives who are capable of maximizing the Company’s performance over the long-term for
the benefit of its shareholders. The Committee rewards long-term value creation, and avoids an emphasis on short-term metrics,
such as annual fluctuations in our stock price. The Board and the Committee maintain full discretion over the components and payment
of compensation in order to preserve the flexibility necessary to ensure the Board’s ability to act in the Company’s
best interests.
Tax and Accounting Considerations
The accounting and
tax treatment of compensation generally has not been a significant factor in determining the amounts of compensation for our executive
officers. However, the Compensation Committee and management have considered the accounting and tax impact of various program designs
to balance the potential cost to the Company with the benefit/value to the executive.
Section 162(m) of the
Internal Revenue Code generally denies publicly-held corporations a federal income tax deduction for compensation exceeding $1,000,000
paid to the chief executive officer, or any of the three other highest paid executive officers (other than the chief financial
officer), excluding performance-based compensation. In 2017, the Company was unable to deduct $874,552 in executive compensation
expenses, which amount exceeded the Section 162(m) limitation; it should be noted, however, that this amount is largely attributable
to a 2017 exercise of stock options with original grant dates in 2007. This Section 162(m) limitation on deductibility has historically
excluded performance-based compensation (which remained deductible) but, with the passage of the Tax Cuts and Jobs Act of 2017,
generally, performance-based compensation will no longer be excluded from the calculation of this Section 162(m) limitation applicable
to compensation earned on and after January 1, 2018. The Committee will continue to monitor the potential impact of the changes
to Section 162(m) and the Company’s ability to deduct executive compensation.
While the tax impact
of any compensation arrangement is one factor to be considered, that impact is evaluated in light of the Committee’s overall
compensation philosophy and objectives. One of the Committee’s goals is to maximize the deductibility of executive compensation.
However, the Committee retains the discretion to compensate officers in a manner commensurate with performance and the competitive
environment for executive talent. Accordingly, the Committee may award compensation to the executive officers that is not fully
deductible if it determines the compensation is consistent with its philosophy and is in the Company’s and its shareholders’
best interests. Section 409A of the Internal Revenue Code imposes an additional tax on certain forms of deferred compensation.
The Committee takes Section 409A into account in determining the form and timing of compensation paid to the Company’s executives.
The Company values
equity incentive awards under FASB ASC Topic 718. More information regarding the application of ASC Topic 718 by the Company may
be found in Note 12 (Stock Plans and Stock Based Compensation) to the Company’s audited financial statements filed with the
SEC in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
Compensation Committee and Process
Role of the Compensation Committee,
Management, and Consultants
The Committee is responsible
for general oversight of personnel policies for the Company and its subsidiaries, including review and administration of: non-qualified
deferred compensation; administrative and non-fiduciary aspects of retirement and supplemental executive retirement plans; long-term
equity compensation; and executive compensation plans. Each of the members of this Committee is an “Independent Director”
as defined in Section 803A of the NYSE American Company Guide, and also meets the heightened independence standards for compensation
committee members set forth in NYSE American Rule 805(c). The Independent Directors, under the leadership of our independent Chairman,
are responsible for establishing the annual performance goals and objectives of the Chief Executive Officer and evaluating his
performance in light of such goals and objectives. The Committee makes recommendations concerning the compensation of our Chief
Executive Officer, and those recommendations are reviewed and approved by our Independent Directors. The Committee reviews the
competitiveness of the Company’s compensation programs and also oversees the succession planning process for executive officers,
other than the Chief Executive Officer, for whom succession planning is conducted at the full Board level. The Committee also discusses
and considers the results of the shareholders’ advisory vote on the compensation paid to our Named Executive Officers. As
permitted by law and by the rules of the NYSE American, the Committee may delegate all or a portion of its duties and responsibilities
to a subcommittee of the Committee.
Executive officers
do not play a role in determining their own compensation decisions, but they are called on to make recommendations concerning those
individuals that report to them.
The Compensation Committee
has the authority to retain such outside counsel, experts, and other advisors as it determines appropriate to assist it in the
full performance of its functions. In 2017 the Committee retained the services of Pearl Meyer to (a) review the current group of
peer financial institutions used for benchmarking purposes (the “Existing Peer Group”) and make recommendations to
add or remove institutions as appropriate, and (b) provide compensation analysis, including benchmark data from the updated peer
group, regarding the compensation of executive officers (the “Pearl Meyer Executive Compensation Study”). Pursuant
to this engagement, Pearl Meyer recommended changes to Existing Peer Group, as described in more detail on the following page.
The Pearl Meyer Executive Compensation Study included recommended changes to the Existing Peer Group, and was considered by the
Committee in establishing the 2017 annual bonuses (paid in 2018) and Long Term, Equity Based Awards for our Named Executive Officers.
The Committee has assessed
the independence of Pearl Meyer (referred to as the “Compensation Consultants”) pursuant to SEC rules and exchange
requirements, and has concluded that no conflict of interest exists that would impair the Compensation Consultants’ ability
to independently represent the Compensation Committee. The Company made this determination based on its receipt of representations
from the Compensation Consultants addressing the independence of the Compensation Consultants, including their employees involved
in the engagement, which addressed the following factors: (1) other services provided to us by the Compensation Consultants; (2)
fees paid by the Company as a percentage of the Compensation Consultants’ total revenue, which were less than 1% of each
of the Compensation Consultant’s total revenue; (3) policies and procedures maintained by the Compensation Consultants that
are designed to prevent a conflict of interest; (4) the absence of any business or personal relationships between the Compensation
Consultants, including their employees involved in the engagement, and any member of the Compensation Committee; (5) the fact that
no Company stock is owned by the Compensation Consultants or any of their employees involved in the engagement; and (6) the absence
of any business or personal relationships between our executive officers and the Compensation Consultants. In addition, the Company
confirmed the content of the Compensation Consultants’ responses to items (4) and (6) above directly with the Company’s
directors and executive officers.
Process of Determining Named Executive
Officer Compensation
In furtherance of its
objective to attract, develop and retain high caliber executives who are capable of maximizing the Company’s performance
for the benefit of its shareholders, the Committee periodically compares its compensation levels, practices, and financial performance
to survey and publicly available data for a group of banking institutions of similar size, geographic market or structure. In years
when a compensation consultant has been retained for this purpose, the committee utilizes the peer group identified by the consultant.
Toward that end, the
Committee utilized information from the publicly filed proxy statements of the following companies for benchmarking purposes when
considering the 2017 Base Salary component of compensation of its Chief Executive Officer and the other Named Executive Officers.
This is the “Existing Peer Group” referred to on the previous page, under the heading “Role of the Compensation
Committee, Management, and Consultants”:
Arrow Financial Corporation
|
Old National Bancorp
|
Berkshire Hills Bancorp, Inc.
|
Park National Corporation
|
Bryn Mawr Bank Corp
|
S&T Bancorp, Inc.
|
Camden National Corporation
|
Sandy Spring Bancorp, Inc.
|
Community Bank NA
|
Union First market Bankshares Corp.
|
Independent Bank Corp (Ionia MI)
|
Univest corporation of Pennsylvania
|
NBT Bancorp, Inc.
|
Washington Trust Bancorp, Inc.
|
Northwest Bancshares, Inc.
|
WSFS Financial Corporation
|
The Committee engaged
Pearl Meyer to undertake a review of the Existing Peer Group, and to make recommendations to add or remove institutions from the
Existing Peer Group, as appropriate. Pearl Meyer thus conducted a peer group study during 2017, which considered commercial banks
and savings banks/thrifts listed on a national exchange, located in the contiguous U.S. in the Northeast or Middle-Atlantic regions
(including IN, OH and VA), and asset size approximately 0.5x-2.5x Tompkins’ 2017 Q1 assets ($3.0B-$15.7B). Pearl Meyer
recommended, and the Committee adopted, the below peer group (the “New Peer Group”) in the third quarter of 2017. The
Committee utilized this New Peer Group* when considering annual bonuses and Long Term, Equity based compensation earned during
2017:
1st Source Corp
|
Independent Bank Corp
|
Brookline Bancorp Inc
|
Lakeland Bancorp Inc
|
Century Bancorp Inc
|
Lakeland Financial Corp
|
Community Bank (Pasadena CA)
|
NBT Bancorp Inc
|
ConnectOne Bancorp Inc
|
Park National Corp
|
Eagle Bancorp Inc
|
S&T Bancorp Inc
|
First Commonwealth Financial Corp
|
Sandy Spring Bancorp Inc
|
First Financial Bancorp
|
Towne Bank
|
First Menasha Bancshares Inc
|
Union Bankshares Corp
|
First Merchants Corp
|
Univest Corp of Pennsylvania
|
Flushing Financial Corp
|
Washington Trust Bancorp Inc
|
*It should be noted
that the Committee adopted Pearl Meyer’s recommendations for the New Peer Group in the third quarter of 2017, at which time
the 2017 Base Salary component of compensation had already been determined with reference to the Existing Peer Group.
The Committee believes
that a certain level of discretion is appropriate in determining the Named Executive Officers’ compensation. Information
from comparative groups is only one factor in the Committee’s assessment of appropriate compensation levels, policies, and
practices. The Committee does not have a formal policy of targeting a certain percentile of the market data or using market data
to establish the mix of compensation (including the allocation between cash and non-cash compensation and short and long-term equity
compensation). The Committee also does not have a formal policy regarding the relationship between compensation levels provided
to the Chief Executive Officer and other Named Executive Officers. Presently, there is not a generally accepted calculation methodology
for realizable pay, nor has such disclosure been mandated. Because many different metrics currently exist, creating substantial
differences in how these measures are calculated and reported by different companies, the Committee has determined not to provide
realizable pay calculations at this time.
The factors considered
for fiscal 2017 compensation were:
Adjustments to
Actual Earnings & 2017 Tax Act.
For fiscal 2017, the Committee considered a number of quantitative and qualitative performance
factors to evaluate the performance of its executive officers, including its Chief Executive Officer. The 2016 annual performance
factors were considered for the purpose of determining 2017 merit increases to base salary while the 2017 annual performance factors
were used to determine executive bonuses earned for 2017 and paid in 2018. The enactment of the Tax Cuts and Jobs Act (the “2017
Tax Act”) required companies to revalue and reassess deferred tax assets and liabilities reflecting the new federal income
tax rate, which resulted in a one-time, non-cash write-down of net deferred tax assets of $14.9 million in the fourth quarter
of 2017. Because the Committee chooses to reward proven results on a discretionary basis, as opposed to tying payments to any
particular metric the Committee may consider adjustments to reported (GAAP) net income for purposes of determining executive compensation.
The Committee considers such adjustments when, in the Committee’s judgment, the reported (GAAP) net income included unusual
or one-time items that do not fairly reflect the Company’s financial performance in a given year. Due to the unanticipated
impact on these quantitative performance factors outside of the control of the Names Executive Officers, and the fact that this
write-down did not occur as a result of the Company’s performance or operating activities, the Committee excluded the impact
of the Tax Cuts and Jobs Act from its consideration of bonus payouts for 2017. The Committee accordingly chose to adjust the Company’s
reported net income of $52.5 million to $67.4 million for purposes of calculation the performance factors in the following table:
The Company’s net income as compared to the Company’s internal targets (in
thousands of dollars):
|
|
|
|
|
Actual (Adj.)
|
|
|
Target
|
|
|
%
Variance
|
|
|
|
2017
|
|
|
|
67,438
|
|
|
|
63,067
|
|
|
6.93%
|
|
|
|
2016
|
|
|
|
59,340
|
|
|
|
55,918
|
|
|
6.12%
|
Earnings per share (diluted EPS):
|
|
|
|
|
Actual (Adj.)
|
|
|
%
Change from prior year
|
|
|
|
2017
|
|
|
$
|
4.42
|
|
|
|
13.04
|
%
|
|
|
2016
|
|
|
|
3.91
|
%
|
|
|
7.71
|
%
|
The Company’s return on assets (ROA), as ranked in the Federal
Reserve Bank Holding Company Performance Report for its peer group as of December 31st:
|
|
|
|
|
Actual
|
|
|
Ranking*
|
|
|
|
2017
|
|
|
|
1.06
|
%
|
|
|
32
nd
percentile
|
|
|
|
2016
|
|
|
|
1.01
|
%
|
|
|
51
st
percentile
|
|
The Company’s total return as compared to KBW Regional
Banking Index over the following time periods (Annual Equivalent), as of December 31, 2017:
|
|
|
|
1 Year
|
|
|
5 Year
|
|
|
10 Year
|
|
|
|
TMP
|
|
-12.10
|
%
|
|
18.98
|
%
|
|
12.18
|
%
|
|
|
KBW Index
|
|
1.82
|
%
|
|
17.70
|
%
|
|
6.35
|
%
|
The Company’s return on equity (ROE), as ranked in
the Federal Reserve Bank Holding Company (Performance Report for its peer group):
|
|
|
|
Actual
|
|
|
Ranking*
|
|
|
2017
|
|
11.68
|
%
|
|
55
th
percentile
|
|
|
2016
|
|
10.85
|
%
|
|
72
nd
percentile
|
*The Company’s
ranking is based on actual (non-adjusted) earnings, and thus reflects a non-recurring charge of $14.9 million, attributable to
the write-down of the net deferred tax assets described below; it should also be noted that the peer group referred to in this
table differs from the “Existing Peer Group” described under “Process of Determining Named Executive Officer
Compensation” above and is instead derived from the Federal Reserve Board data for bank holding companies with assets between
$3.0 billion and $10.0 billion as of December 31, 2017.
The Company’s
financial performance in 2017 continues to be strong (after adjusting for the non-recurring deferred tax asset charge described
above), and the Committee factored the Company’s excellent operating results into its 2017 compensation decisions. With respect
to individual performance, the measure of individual performance is determined by comparing the individual’s overall performance
for the year with the individual’s performance goals that are, in the case of Mr. Romaine, established by the Compensation
Committee at the beginning of the year and, in the case of the other Named Executive Officers, established by Mr. Romaine (and
discussed with the Compensation Committee), at the beginning of the year. The Compensation Committee also has the discretion to
reward achievements that are not the subject of any pre-established goals. The Committee determined that each of the named executive
officers performed well against their respective individual performance goals in 2017, and this is reflected in the compensation
decisions described in this Report. The Committee believes that the total compensation provided to the Company’s executive
officers is competitive, and that the Company’s compensation practices for fiscal 2017 were appropriate.
Consideration of Say-on-Pay Results
In 2017, the Company’s
shareholders approved, on an advisory basis, the option to hold an advisory vote on executive compensation every year. An advisory
vote on executive compensation was also held in 2017, and the shareholders adopted a resolution approving, on an advisory basis,
the compensation paid to our Named Executive Officers by an affirmative vote in excess of the majority percentage required. Because
the vote was advisory, it was not binding upon the Board or Committee; however, the Committee values the input of our shareholders
and took into account the outcome of the vote when considering 2017 executive compensation arrangements. At the Annual Meeting,
shareholders are again being asked to approve, on an advisory basis, the compensation paid to our Named Executive Officers. See
“Proposal No. 2 – Advisory Vote on Executive Compensation”, below.
Components of Compensation
The major components
of the Company’s executive officer compensation are: (i) base salary, (ii) annual bonus, (iii) long-term,
equity-based awards, and (iv) retirement and other benefits.
Base Salary.
The Company’s base salary program is designed to recognize the roles and responsibilities of executive officers’ positions
and their performance in those roles. The Committee annually reviews the salaries of the Company’s executives. When setting
base salary levels for recommendation to the Independent Directors on the Board, the Committee considers (a) competitive market
conditions for executive compensation, (b) the Company’s performance and (c) the individual’s performance.
The Company’s performance is measured by the Company’s strategic and financial performance in the fiscal year, with
particular emphasis on earnings per share growth and return on shareholders’ equity for the year. Although the Committee
considers year-to-year changes in stock price in its evaluation of overall Company performance, the Committee does not use this
criterion on an individual level because the Committee does not believe that short-term fluctuations in stock price necessarily
reflect the underlying strength or future prospects of the Company. Individual performance is measured by the strategic and financial
performance of the particular executive officer’s operational responsibility in comparison to targeted performance criteria.
The Company maintains
a common anniversary date for the merit review process, and related increases in compensation rates occur in April. Following an
analysis of the factors described in the preceding paragraph, most of the Company’s executives received salary rate increases
at this time, including all of the Named Executive Officers. Mr. Romaine’s annual salary rate was increased to $613,000
representing an increase of 4.8%. Messrs. Fetsko, Gruber, Boyce and Hartz received annual salary rate increases to $355,000 (+4.4%),
$348,000 (+3.1%), $318,000 (+2.9%), and $287,700 (+3.6%) respectively. In October, after reviewing the Pearl Meyer Executive Compensation
Study, Mr. Fetsko received a market adjustment which was approved by Mr. Romaine and the Committee, increasing his annual salary
rate to $400,000; this market adjustment was made to ensure that Mr. Fetsko’s compensation remains competitive with the levels
described in the study.
Annual Bonus.
The Company chooses to pay annual cash bonuses in order to motivate executives to work effectively to achieve the Company’s
financial performance objectives and to reward them if objectives are met. The Board maintains full discretion in the payment of
bonuses in order to preserve the flexibility necessary to ensure its ability to act in the Company’s best interests. In determining
annual bonus amounts, The Committee rewards long-term value creation, and avoids an emphasis on short-term metrics, such as annual
fluctuations in our stock price. The Compensation Committee considers a number of quantitative and qualitative performance factors
to evaluate the performance of the Named Executive Officers. These performance factors include, but are not limited to: (i) achievement
of individual goals; (ii) contribution to business unit results; and (iii) contribution to corporate results measured
by (a) the Company’s net income as compared to the Company’s internal targets, (b) increases in earnings
per share of the Company’s common stock for the latest 12 months, (c) the Company’s return on assets, as
ranked in the Federal Reserve Bank Holding Company Performance Report (Peer Group percentile), and (d) the Company’s
return on equity, as ranked in the Federal Reserve Bank Holding Company Performance Report (Peer Group percentile). In February
2018, bonus awards were paid to several executives of the Company, including all of the Named Executive Officers. The Committee
considered the Pearl Meyer Executive Compensation Study as it determined the bonus award amounts, among the other factors described
in this Report. These bonus awards were also reflective of individual performance and the Company’s outstanding operating
results in 2017. Messrs. Fetsko, Gruber, Boyce and Hartz received bonuses of $158,000, $121,000, $109,000, and $98,000 respectively.
Mr. Romaine received a bonus of $307,000, which was based upon the effectiveness of his leadership, the number of important accomplishments
of the Company during 2017, and the other performance factors described above. While this amount represents a material increase
from his 2016 annual bonus amount, the Board determined that this increase was warranted for the reasons described in this report,
and in order to endure that Mr. Romaine’s compensation levels remain competitive with the levels observed in the Pearl Meyer
Executive Compensation Study.
Long-Term, Equity-Based
Awards.
The Company chooses to award equity-based compensation because such grants (1) align executive interests with
shareholder interests by creating a direct link between compensation and shareholder return, (2) give executives a significant,
long-term interest in the Company’s success and (3) help retain key executives in a competitive market for executive
talent. While the Committee recognizes that the executives of the Company can exert very little influence on short-term fluctuations
in stock price, the Committee does believe that long-term stock price appreciation reflects achievement of strategic goals and
objectives. Equity awards are granted based on the performance of the individual executive and his or her anticipated contribution
to the achievement of the Company’s strategic goals and objectives. The Committee has traditionally authorized grants vesting
over five or more years to encourage retention of executives. This practice means that at any time there are a significant number
of awards granted that are not vested and therefore not exercisable and/or transferable.
We maintain the Tompkins
Financial Corporation 2009 Equity Plan, a shareholder-approved plan that gives the Company flexibility in the types of equity grants
awarded in order to align executive and shareholder interests. A total of 1,602,000 shares have been authorized for issuance under
the 2009 Equity Plan. Of this amount, 722,109 remained available for granting as of December 31, 2017. Under this Plan, the Committee
may also award shares of the Company’s common stock through the profit sharing component of the Tompkins Financial Corporation
Employee Stock Ownership Plan. For a more detailed discussion of the profit sharing component, and other deferred compensation
and retirement plans, please see the text accompanying the tables following this section.
The Committee uses
discretion in determining the frequency and level of awards. Generally, the Committee will consider market data, including the
total economic value and mix of award types utilized by the New Peer Group, the Company’s financial performance, and individuals’
performance before deciding whether an award should be made and the number of shares to be granted. The Committee grants equity-based
compensation only at times when participants are not in possession of material non-public information. In November 2017, a number
of executives received long-term equity-based awards. Among that group were the Named Executive Officers, who each received shares
of restricted stock. In 2017, Messrs. Fetsko, Gruber, Boyce and Hartz each received 1,320 shares of restricted stock. In determining
how to structure the 2017 equity award, the Committee considered the Pearl Meyer Executive Compensation Study; this study included
data from the New Peer Group and found that members of this group generally granted equity awards consisting entirely of restricted
shares. The Committee considered this market research, as well as the relative merits of other forms of equity awards, and determined
that an equity award consisting entirely of restricted stock was most appropriate for 2017. In 2017, Mr. Romaine received 4,625
shares of restricted stock. While this amount represents a material increase from his 2016 equity award, the Compensation Committee
determined that this increase was warranted for the reasons described in this report, and in order to ensure that Mr. Romaine’s
compensation levels remain competitive with the levels observed in the Pearl Meyer Executive Compensation Study. More information
about the terms and conditions of these grants is available in the “Grants of Plan-Based Awards” table and related
narrative.
Retirement and Other Benefits
Retirement Plans.
The Company maintains several retirement programs that are designed to assist Company employees with their long-term retirement
planning. Substantially all Company employees, including the Named Executive Officers, are eligible to participate in the Investment
& Stock Ownership (401(k)) Plan (the “ISOP”) and the Employee Stock Ownership Plan (the “ESOP”). The
Committee believes that, in addition to providing retirement income, these plans have the added benefit of linking compensation
to the Company’s stock performance. The Company also maintains defined contribution and defined benefit pension plans.
Named Executive Officers
may also participate in a non-qualified deferred compensation plan and all of our Named Executive Officers are parties to Supplemental
Executive Retirement Plan (SERP) Agreements with the Company. These plans provide retirement income that may be limited in the
qualified plans due to IRS limitations or are intended to provide additional retirement benefits. The Committee believes that the
plans and the level of benefits that are provided are appropriate to promote retention and to recognize and reward long-term service
to the Company.
For more information
regarding these plans, please refer to the narrative accompanying the “Pension Benefit” and “2017 Non-Qualified
Deferred Compensation” tables on Pages 27 and 32, respectively, in this Proxy Statement. Information regarding SERP benefits
is explained under “Potential Payments upon Termination or Change in Control.”
Life Insurance Benefits.
As a part of its comprehensive and competitive approach to compensation, the Company provides life insurance benefits to certain
officers of the Company, including all of the Named Executive Officers, with respect to which the Company has entered into life
insurance contracts. These insurance contracts are carried at cash surrender value on the Company’s consolidated statements
of financial condition. Increases in the cash surrender value of the insurance are reflected as noninterest income, and the related
mortality expense is recognized as other employee benefits expense, in the Company’s consolidated statements of income. The
value of premiums paid with respect to such life insurance on behalf of the Named Executive Officers is included as “All
Other Compensation” in the Summary Compensation Table.
Post-Retirement
Life Insurance.
The Company offers post-retirement life insurance coverage to employees who have worked for the Company for
10 or more years and who retire at or after age 55. All of the Named Executive Officers are entitled to receive life insurance
coverage under this policy.
Perquisites.
Perquisites for the Named Executive Officers are limited to personal use of a Company-owned vehicle. The Committee believes that
this limited benefit assists the Named Executive Officers in the performance of their duties by providing convenience in light
of the significant demands on our Named Executive Officers’ time, including frequent car travel on business.
Termination of Employment
and Change-in-Control Arrangements.
The Company does not have employment contracts with the Named Executive Officers. However,
the Company is obligated to provide certain payments to the Named Executive Officers upon termination as part of their Supplemental
Executive Retirement Plan (SERP) Agreements. Some of these agreements contain severance provisions carried over from previous agreements
with acquired companies. In addition, under the Company’s equity incentive plans, outstanding unvested equity awards may
fully vest if a Named Executive Officer is terminated in connection with a change of control of the Company. SERP payments, accelerated
vesting of equity awards and other benefits due upon termination are explained under the “Potential Payments upon Termination
or Change in Control” section of this Proxy Statement. These payments/benefits are subject to a “double trigger”
as described in greater detail under that section as well.
Compensation Committee Report
The information
contained in this report shall not be deemed to be “soliciting material” or “filed” or incorporated by
reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent
that the Company specifically requests that it be treated as soliciting material or specifically incorporates it by reference into
a document filed under the Securities Act or the Exchange Act.
The Compensation Committee
has reviewed and discussed the “Compensation Discussion and Analysis” with the management of the Company. Based on
the Compensation Committee’s review and discussion, the Committee recommended to the Board that the “Compensation Discussion
and Analysis” be included in this Proxy Statement and incorporated by reference into the Company’s 2017 Annual Report
on Form 10-K.
Members of the Compensation
Committee:
Craig Yunker, Chair
Thomas R. Rochon
John E. Alexander
Compensation Committee Interlocks and
Insider Participation
The members of the
Company’s Compensation Committee are identified above under “Compensation Committee Report.” No member of the
Compensation Committee was during fiscal 2017 or before an officer or employee of the Company or any of the Company’s subsidiaries,
or had any relationship requiring disclosure under “Transactions with Related Persons” in this Proxy Statement. During
2017, no executive officer of the Company served on the board of directors or compensation committee of any other entity, one of
whose executive officers served as a member of the Company’s Board of Directors or the Compensation Committee.
2017 Summary Compensation Table
The following table
sets forth information concerning the total compensation earned by the Company’s Chief Executive Officer and Chief Financial
Officer and the next three most highly-compensated executive officers of the Company in the fiscal year ended December 31,
2017. These five officers are referred to as the “Named Executive Officers” in this Proxy Statement.
Name and Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
(1)
|
|
|
Stock Awards
(2)
|
|
|
Option Awards
(3)
|
|
|
Non-Equity Incentive Plan Compensation
|
|
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings
(4)
|
|
|
All Other Compensation
(5)
|
|
|
Total
|
|
|
|
|
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
Stephen S. Romaine
|
|
|
2017
|
|
|
|
605,461
|
|
|
|
307,000
|
|
|
|
367,688
|
|
|
|
—
|
|
|
|
—
|
|
|
|
766,637
|
|
|
|
69,423
|
|
|
|
2,116,209
|
|
President & CEO of
|
|
|
2016
|
|
|
|
577,885
|
|
|
|
225,000
|
|
|
|
200,709
|
|
|
|
22,299
|
|
|
|
—
|
|
|
|
395,381
|
|
|
|
59,951
|
|
|
|
1,481,225
|
|
Tompkins Financial
|
|
|
2015
|
|
|
|
555,385
|
|
|
|
206,100
|
|
|
|
173,373
|
|
|
|
43,322
|
|
|
|
—
|
|
|
|
4,158
|
|
|
|
70,356
|
|
|
|
1,052,694
|
|
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis M. Fetsko
|
|
|
2017
|
|
|
|
357,885
|
|
|
|
158,000
|
|
|
|
104,940
|
|
|
|
—
|
|
|
|
—
|
|
|
|
389,676
|
|
|
|
44,177
|
|
|
|
1,054,678
|
|
Executive Vice
|
|
|
2016
|
|
|
|
336,015
|
|
|
|
98,400
|
|
|
|
92,818
|
|
|
|
10,313
|
|
|
|
—
|
|
|
|
253,150
|
|
|
|
39,860
|
|
|
|
830,556
|
|
President COO &
|
|
|
2015
|
|
|
|
323,462
|
|
|
|
89,000
|
|
|
|
80,213
|
|
|
|
20,026
|
|
|
|
—
|
|
|
|
57,811
|
|
|
|
53,976
|
|
|
|
624,488
|
|
CFO of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Gruber
|
|
|
2017
|
|
|
|
345,173
|
|
|
|
121,000
|
|
|
|
104,940
|
|
|
|
—
|
|
|
|
—
|
|
|
|
183,280
|
|
|
|
55,558
|
|
|
|
809,951
|
|
President & CEO of
|
|
|
2016
|
|
|
|
333,800
|
|
|
|
96,200
|
|
|
|
92,818
|
|
|
|
10,313
|
|
|
|
—
|
|
|
|
114,544
|
|
|
|
50,754
|
|
|
|
698,429
|
|
Tompkins VIST Bank
|
|
|
2015
|
|
|
|
321,615
|
|
|
|
89,500
|
|
|
|
80,213
|
|
|
|
20,026
|
|
|
|
—
|
|
|
|
67,437
|
|
|
|
48,346
|
|
|
|
627,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Boyce
|
|
|
2017
|
|
|
|
315,577
|
|
|
|
109,000
|
|
|
|
104,940
|
|
|
|
—
|
|
|
|
—
|
|
|
|
388,049
|
|
|
|
41,972
|
|
|
|
959,538
|
|
President & CEO of
|
|
|
2016
|
|
|
|
306,439
|
|
|
|
87,100
|
|
|
|
92,818
|
|
|
|
10,313
|
|
|
|
—
|
|
|
|
222,928
|
|
|
|
38,577
|
|
|
|
758,175
|
|
Tompkins Insurance
|
|
|
2015
|
|
|
|
298,154
|
|
|
|
81,000
|
|
|
|
80,213
|
|
|
|
20,026
|
|
|
|
—
|
|
|
|
22,035
|
|
|
|
46,221
|
|
|
|
547,649
|
|
Agencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory J Hartz
|
|
|
2017
|
|
|
|
284,496
|
|
|
|
98,000
|
|
|
|
104,940
|
|
|
|
—
|
|
|
|
—
|
|
|
|
286,191
|
|
|
|
63,878
|
|
|
|
837,505
|
|
President & CEO
|
|
|
2016
|
|
|
|
274,654
|
|
|
|
79,100
|
|
|
|
92,818
|
|
|
|
10,313
|
|
|
|
—
|
|
|
|
160,461
|
|
|
|
57,351
|
|
|
|
674,697
|
|
of Tompkins
|
|
|
2015
|
|
|
|
265,385
|
|
|
|
73,500
|
|
|
|
80,213
|
|
|
|
20,026
|
|
|
|
—
|
|
|
|
50,723
|
|
|
|
42,125
|
|
|
|
531,972
|
|
Trust Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These
amounts represent cash awards for performance bonuses. Of these amounts, Messrs. Fetsko
and Boyce deferred 15% and 25%, respectively, under the Tompkins Financial Corporation
Deferred Compensation Plan for Selected Officers.
|
|
(2)
|
Reflects
the fair value of the awards at the grant date, in accordance with FASB ASC Topic 718
for financial statement reporting purposes, excluding the effect of estimated forfeitures.
For additional information as to the assumptions made in valuation, see Note 12 to the
consolidated financial statements filed with the SEC in the Company’s 2017 Annual
Report on Form 10-K. Amounts shown in the table are based on the Company’s accounting
expense for these awards, and do not necessarily correspond to the actual value that
may be recognized by the Named Executive Officers.
|
|
(3)
|
Represents
awards of stock-settled SARs, which were issued in 2015 and 2016, but not in 2017.
|
|
(4)
|
This
amount reflects: 1) changes in pension value under the Tompkins Financial Corporation
Retirement Plan (“Pension Plan”), 2) changes in pension value under the Supplemental
Executive Retirement Plan, and 3) changes in pension value under the New DB SERP (Messrs.
Romaine, Boyce and Fetsko). The amounts included in this column do not represent current
cash benefits payable to the Named Executive Officers or the annual cost of these benefits.
Rather, these amounts represent the difference between the actuarial present value of
each Named Executive Officer’s accrued benefit under the Pension Plan and/or the
SERPs at December 31
st
of the applicable year and at December 31
st
of the preceding year, using the actuarial assumptions in effect at these respective
dates. These amounts may experience significant increases/decreases from year to year
due to changes in discount rates and/or mortality tables used to determine present value.
The following assumptions were used by the Company’s retirement plan actuaries
to calculate the Change in Pension Value from year-end 2016 to year-end 2017.
|
Discount
Rate: Pension plan(s) 3.43% at 12/31/2017, 3.89% at 12/31/2016; SERP(s): 3.55% at 12/31/2017, 4.10% at 12/31/2016.
Retirement
Plan Mortality: SOA RP2014 rolled back to 2006 with fully generational MP2017 improvements at 12/31/2017; SOA RP2014 rolled back
to 2006 with fully generational MP2016 improvements at 12/31/2016
|
(5)
|
The
year-over-year decrease between 2015 and 2016 for Messrs. Romaine, Boyce and Fetsko is
attributable to these executives opting out of the defined contribution retirement plan
which is disclosed in this column and commencing participation in the New DB SERP which
is disclosed in the Change in Pension Value column. Messrs. Hartz and Gruber have remained
in the defined contribution retirement plan and therefore show an increase from 2015
to 2016 and 2016 to 2017. The amount in this column also includes: employer matching
contributions pursuant to the ISOP and amounts paid pursuant to profit sharing and Supplemental
profit sharing as explained in the “Qualified Savings Plans and Profit Sharing”
section on Page 25; a contribution to the New Defined Contribution SERP (Messrs. Gruber
and Hartz); the dollar value of the applicable life insurance premiums paid on the Named
Executive Officers’ behalf by the Company; and perquisites and other personal benefits
or property.
|
For Mr. Romaine the amounts
were as follows: Company profit sharing contributions to the ESOP, $13,500; Company cash profit sharing, $10,800; supplemental
profit sharing $30,192; Company match on salary deferral to the ISOP, $10,800; dollar value of life insurance premiums, $3,059;
personal use of Company-owned vehicle, $1,072.
For Mr. Fetsko the amounts
were as follows: Company profit sharing contributions to the ESOP, $13,500; Company cash profit sharing, $10,800; supplemental
profit sharing, $7,910; Company match on salary deferral to the ISOP, $10,800; dollar value of life insurance premiums, $903; personal
use of Company-owned vehicle, $264.
For Mr. Gruber the amounts
were as follows: Company profit sharing contributions to the ESOP, $13,500; Company cash profit sharing, $10,800; supplemental
profit sharing, $6,766; Company match on salary deferral to the ISOP, $10,800; Company contributions to defined contribution retirement
plan, $11,700; Defined Contribution SERP Plan, $1,800; personal use of Company-owned vehicle, $192.
For Mr. Boyce the amounts
were as follows: Company profit sharing contributions to the ESOP, $13,500; Company cash profit sharing, $10,800; supplemental
profit sharing, $4,102; Company match on salary deferral to the ISOP, $10,800; dollar value of life insurance premiums, $1,002;
personal use of Company-owned vehicle, $1,768.
For Mr. Hartz the amounts were
as follows: Company profit sharing contributions to the ESOP, $13,500; Company cash profit sharing, $10,800; supplemental profit
sharing, $1,305; Company match on salary deferral to the 401(k) plan, $7,554; 2015 Defined Contribution Retirement Plan, $14,946;
Defined Contribution SERP Plan, $10,299; personal use of Company-owned vehicle, $5,474.
Long-Term Equity-Based Awards and Stock
Grants
The Company maintains
the 2009 Equity Plan as a vehicle to encourage the continued employment of key employees of the Company and its subsidiaries, and
to align their interests with those of the Company’s shareholders by facilitating the employees’ ownership of a stock
interest in Tompkins Financial Corporation. The Committee believes that an equity plan is in the best interests of the Company
and its shareholders since it enhances the Company’s ability to continue to attract and retain qualified Directors, officers
and other key employees. The Committee’s practice is to grant awards to Named Executive Officers under the 2009 Equity Plan
on an annual basis.
Each of the Named Executive
Officers received an award of restricted stock with a 5-year vesting schedule. This schedule provides for zero percent vesting
in year one and 25% vesting in years two through five.
Option/Equity Grants in Fiscal 2017
Grants of Plan-Based Awards
|
|
Grant Date
|
|
All other stock
awards: Number of
shares of stock or
units
|
|
All other option
awards: Number of
securities
underlying options
|
|
Exercise or base
price of the
option awards
|
|
Grant date fair
value of stock and
option awards
|
|
|
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
($)
|
Stephen S. Romaine
|
|
Nov. 9, 2017
|
|
4,625
|
|
n/a
|
|
n/a
|
|
367,688
|
Francis M. Fetsko
|
|
Nov. 9, 2017
|
|
1,320
|
|
n/a
|
|
n/a
|
|
104,940
|
Scott Gruber
|
|
Nov. 9, 2017
|
|
1,320
|
|
n/a
|
|
n/a
|
|
104,940
|
David S. Boyce
|
|
Nov. 9, 2017
|
|
1,320
|
|
n/a
|
|
n/a
|
|
104,940
|
Gregory J. Hartz
|
|
Nov. 9, 2017
|
|
1,320
|
|
n/a
|
|
n/a
|
|
104,940
|
The 2009 Equity Plan
allows awards at the discretion of the Committee and does not have threshold, target, or maximum amounts payable for performance;
therefore, it is not an equity incentive plan as defined under FASB ASC Topic 718 (formerly FAS 123). Stock Awards are valued
at the closing market price for our common stock on the NYSE American on November 9, 2017 of $79.50.
The vesting schedule
for the November 9, 2017 restricted stock awards is as follows: five-year vesting schedule with zero percent vesting in year one
and 25% vesting in years two through five. Holders of time-vested restricted stock received dividends with respect to such shares,
as and when dividends are paid on the Company’s common stock, and have voting rights with respect to such shares, during
the restricted period.
Outstanding Equity Awards of Named Executive
Officers
The following table
shows the aggregate number of unexercised options, stock appreciation rights, and unvested restricted stock awards outstanding
as of December 31, 2017 for each of the Named Executive Officers.
2017 Outstanding Equity Awards at Fiscal
Year-End
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(1)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(2
)
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
|
|
Option
Exercise
Price ($)
|
|
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)
|
|
Stephen S. Romaine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,625
|
|
|
376,244
|
|
|
|
|
—
|
|
|
1,734
|
|
|
—
|
|
|
76.90
|
|
|
11/09/2026
|
|
|
2,610
|
|
|
212,324
|
|
|
|
|
821
|
|
|
4,014
|
|
|
—
|
|
|
56.29
|
|
|
11/04/2025
|
|
|
2,557
|
|
|
208,012
|
|
|
|
|
2,560
|
|
|
4,970
|
|
|
—
|
|
|
49.22
|
|
|
11/21/2024
|
|
|
3,360
|
|
|
273,336
|
|
|
|
|
3,197
|
|
|
3,073
|
|
|
—
|
|
|
40.60
|
|
|
05/03/2023
|
|
|
2,877
|
|
|
234,044
|
|
|
|
|
8,925
|
|
|
1,575
|
|
|
—
|
|
|
37.00
|
|
|
08/19/2021
|
|
|
495
|
|
|
40,268
|
|
|
|
|
22,000
|
|
|
—
|
|
|
—
|
|
|
41.71
|
|
|
09/17/2019
|
|
|
|
|
|
|
|
Total
|
|
|
37,503
|
|
|
15,366
|
|
|
—
|
|
|
|
|
|
|
|
|
16,524
|
|
|
1,344,228
|
|
Francis M. Fetsko
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,320
|
|
|
107,382
|
|
|
|
|
—
|
|
|
802
|
|
|
—
|
|
|
76.90
|
|
|
11/09/2026
|
|
|
1,207
|
|
|
98,189
|
|
|
|
|
379
|
|
|
1,856
|
|
|
—
|
|
|
56.29
|
|
|
11/04/2025
|
|
|
1,183
|
|
|
96,237
|
|
|
|
|
1,181
|
|
|
2,294
|
|
|
—
|
|
|
49.22
|
|
|
11/21/2024
|
|
|
1,551
|
|
|
126,174
|
|
|
|
|
1,558
|
|
|
1,497
|
|
|
—
|
|
|
40.60
|
|
|
05/03/2023
|
|
|
1,402
|
|
|
114,053
|
|
|
|
|
—
|
|
|
788
|
|
|
—
|
|
|
37.00
|
|
|
08/19/2021
|
|
|
248
|
|
|
20,175
|
|
Total
|
|
|
3,118
|
|
|
7,237
|
|
|
—
|
|
|
|
|
|
|
|
|
6,911
|
|
|
562,210
|
|
Scott Gruber
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,320
|
|
|
107,382
|
|
|
|
|
—
|
|
|
802
|
|
|
—
|
|
|
76.90
|
|
|
11/09/2026
|
|
|
1,207
|
|
|
98,189
|
|
|
|
|
379
|
|
|
1,856
|
|
|
—
|
|
|
56.29
|
|
|
11/04/2025
|
|
|
1,183
|
|
|
96,237
|
|
|
|
|
1,181
|
|
|
2,294
|
|
|
—
|
|
|
49.22
|
|
|
11/21/2024
|
|
|
1,551
|
|
|
126,174
|
|
|
|
|
1,558
|
|
|
1,497
|
|
|
—
|
|
|
40.60
|
|
|
05/03/2023
|
|
|
1,402
|
|
|
114,053
|
|
Total
|
|
|
3,118
|
|
|
6,449
|
|
|
—
|
|
|
|
|
|
|
|
|
6,663
|
|
|
542,035
|
|
David S. Boyce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,320
|
|
|
107,382
|
|
|
|
|
—
|
|
|
802
|
|
|
—
|
|
|
76.90
|
|
|
11/09/2026
|
|
|
1,207
|
|
|
98,189
|
|
|
|
|
379
|
|
|
1,856
|
|
|
—
|
|
|
56.29
|
|
|
11/04/2025
|
|
|
1,183
|
|
|
96,237
|
|
|
|
|
1,181
|
|
|
2,294
|
|
|
—
|
|
|
49.22
|
|
|
11/21/2024
|
|
|
1,551
|
|
|
126,174
|
|
|
|
|
520
|
|
|
1,497
|
|
|
—
|
|
|
40.60
|
|
|
05/03/2023
|
|
|
1,402
|
|
|
114,053
|
|
|
|
|
892
|
|
|
788
|
|
|
—
|
|
|
37.00
|
|
|
08/19/2021
|
|
|
248
|
|
|
20,175
|
|
Total
|
|
|
2,972
|
|
|
7,237
|
|
|
—
|
|
|
|
|
|
|
|
|
6,911
|
|
|
562,210
|
|
Gregory J. Hartz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,320
|
|
|
107,382
|
|
|
|
|
—
|
|
|
802
|
|
|
—
|
|
|
76.90
|
|
|
11/09/2026
|
|
|
1,207
|
|
|
98,189
|
|
|
|
|
379
|
|
|
1,856
|
|
|
—
|
|
|
56.29
|
|
|
11/04/2025
|
|
|
1,183
|
|
|
96,237
|
|
|
|
|
591
|
|
|
2,294
|
|
|
—
|
|
|
49.22
|
|
|
11/21/2024
|
|
|
1,551
|
|
|
126,174
|
|
|
|
|
—
|
|
|
1,497
|
|
|
—
|
|
|
40.60
|
|
|
05/03/2023
|
|
|
1,402
|
|
|
114,053
|
|
|
|
|
—
|
|
|
788
|
|
|
—
|
|
|
37.00
|
|
|
08/19/2021
|
|
|
248
|
|
|
20,175
|
|
Total
|
|
|
970
|
|
|
7,237
|
|
|
—
|
|
|
|
|
|
|
|
|
6,911
|
|
|
562,210
|
|
|
(1)
|
Options/SARs
reported in this column are vested and currently exercisable.
|
|
(2)
|
Options/SARs
reported in the table with an expiration date in 2026 have a five-year vesting schedule
with zero percent vesting in year one and 25% vesting in years two through five. All
other Options/SARs reported in the table all have a seven-year vesting schedule with
zero percent vesting in year one, 17% vesting in years two through six and 15% vesting
in year seven.
|
|
(3)
|
Restricted
stock awards reported in the table that were granted in 2016 and 2017 (4,625 and 2,610
for Mr. Romaine and 1,320 and 1,207 for the other Named Executive officers listed) have
a five-year vesting schedule with zero percent vesting in year one and 25% vesting in
years two through five. All other restricted stock awards reported in the table all have
a seven-year vesting schedule with zero percent vesting in year one, 17% vesting in years
two through six and 15% vesting in year seven.
|
|
(4)
|
Market
value for shares of restricted stock that have not vested is calculated using the closing
sales price of our common stock on the NYSE American on December 31, 2017 of $81.35.
|
Options Exercised and Stock Vested
During Fiscal 2017
The following table
sets forth information concerning the exercise of options and vesting of shares of restricted stock for each Named Executive Officer
during fiscal 2017 and the value realized upon exercise or vesting.
2017 Option Exercises and Stock Vested
|
|
Option Awards
(3)
|
|
|
Stock Awards
|
|
|
|
Number of
Shares Acquired
on Exercise
|
|
|
Value Realized
on Exercise
(1)
|
|
|
Number of
Shares Acquired
on Vesting
|
|
|
Value Realized
on Vesting
(2)
|
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
Stephen S. Romaine
|
|
|
16,501
|
|
|
|
787,428
|
|
|
|
2,947
|
|
|
|
244,037
|
|
Francis M. Fetsko
|
|
|
1,785
|
|
|
|
82,271
|
|
|
|
1,408
|
|
|
|
116,452
|
|
Scott Gruber
|
|
|
—
|
|
|
|
—
|
|
|
|
1,128
|
|
|
|
95,681
|
|
David S. Boyce
|
|
|
—
|
|
|
|
—
|
|
|
|
1,408
|
|
|
|
116,452
|
|
Gregory J. Hartz
|
|
|
2,002
|
|
|
|
87,415
|
|
|
|
1,408
|
|
|
|
116,452
|
|
|
(1)
|
Equal
to the difference between the market price of our common stock on the NYSE American at
exercise and the exercise price for such equity awards.
|
|
(2)
|
Equal
to the market price of our common stock on the NYSE American at vesting multiplied by
the number of shares that vested.
|
|
(3)
|
Includes
Incentive Stock Options (ISOs), Non-qualified Stock Options (NSOs) and Stock Settled
Appreciation Rights (SSARs)
|
Qualified Savings Plans and Profit Sharing
The Company maintains
an Investment & Stock Ownership Plan (the “ISOP”) that covers substantially all of the employees of the Company
and its subsidiaries. The ISOP is a profit-sharing plan with a salary deferral arrangement meeting the requirements of Section 401(k)
of the Internal Revenue Code of 1986, as amended. Pursuant to the ISOP, an employee may defer a portion of the employee’s
base pay, within limits specified in the ISOP. The ISOP further provides that the Company will match 100% of an employee’s
contribution up to 3% of the employee’s base pay, and will match 50% of an employee’s additional contribution to the
ISOP that is greater than 3%, but not more than 5%, of the employee’s base pay.
In addition, the ISOP
has a profit sharing component. Profit sharing contributions are discretionary contributions determined by the Company’s
Board of Directors. A component of these contributions is paid in cash; however, the ISOP allows employees to elect to defer all
or a portion of their profit sharing cash component (which deferral is not eligible for matching by the Company). The profit sharing
cash component amounts for the Named Executive Officers are included as “All Other Compensation” in the Summary Compensation
Table, above, and described in Note 5 to that table.
The Company also maintains
the Tompkins Financial Corporation Employee Stock Ownership Plan (the “ESOP”), which covers substantially all employees
of the Company. The purpose of the ESOP is to permit the Company to make discretionary profit sharing contributions to employees
in the form of shares of common stock of the Company in order to facilitate stock ownership by employees. Contributions are determined
by the Company’s Board of Directors and are limited to a maximum amount as stipulated in the ESOP. Amounts accrued for the
accounts of the Named Executive Officers are included as “All Other Compensation” in the Summary Compensation Table,
above, and described in Note 5 to that table.
Eligible compensation
used to determine profit sharing contributions is limited to the annual IRS mandated compensation limit ($270,000 for 2017). However,
the Company provides a “Supplemental profit sharing” cash amount to Named Executive Officers which represents the profit
sharing attributable to eligible compensation in excess of the IRS mandated compensation limit under Section 415 of the United
States Internal Revenue Code (the “Code Section 415 Limit”).
Retirement Plans
The Company has a defined
benefit pension plan, called the Tompkins Financial Corporation Retirement Plan (the “Pension Plan”), which covers
substantially all employees of the Company and its subsidiaries employed prior to January 1, 2010. The Pension Plan does not
require or allow employee contributions. The assets of the Pension Plan are held in a separate trust and administered by the Qualified
Plans Investment Review Committee of the Board.
On January 1, 2010,
in order to more effectively control the volatility of plan expense, the Company closed the Pension Plan to new employees and adopted
the Tompkins Financial Corporation Defined Contribution Retirement Plan (the “2010 Contribution Plan.”) Under the 2010
Contribution Plan, the Company provides contributions to participating employees based on age and length of service.
On July 31, 2015, the
Pension Plan was frozen; and active participants in this plan ceased to earn an accrued benefit after this date (the “Pension
Plan Freeze”). As a replacement plan for these individuals, the Tompkins Financial Corporation 2015 Defined Contribution
Retirement Plan (the “2015 Contribution Plan”) was adopted effective August 1, 2015. Under the 2015 Contribution Plan,
the Company provides contributions to participating employees based on age and length of service.
The original Supplemental
Executive Retirement Plans (the “Original SERPs”) entered into with Messrs. Romaine, Boyce, Fetsko and Hartz provided
an annual retirement benefit equal to 75% of their final average earnings, less their benefit under the Pension Plan, less their
social security benefit. Due to the Pension Freeze, Messrs. Romaine, Fetsko, Boyce, and Hartz ceased receiving accruals under the
Pension Plan and the Pension Plan offset formula no longer worked as the parties originally intended. Accordingly, in 2016, a one-time
choice was offered to those Named Executive Officers who had participated in the Pension Plan. Mr. Gruber joined our Company in
2013, at which time the Pension Plan was closed to new participants, and thus Mr. Gruber is not eligible to participate in the
Pension Plan. Messrs. Romaine, Fetsko, Boyce and Hartz were offered a choice of one of the following two options:
Option 1 - The executive would
discontinue participation in the 2015 Contribution Plan effective with the 2016 plan year and begin participation in the New Defined
Benefit SERP (the “New DB SERP”). The New DB SERP is essentially an unsecured promise by the Company to provide executives
with the benefit that would have been provided in the Pension Plan had it not been frozen. In addition, the New DB SERP would be
adjusted down to account for the contribution that had already been made in the 2015 Contribution Plan for the 2015 plan year.
Option 2 - The executive would
continue to participate in the 2015 Contribution Plan. Any contributions to the 2015 Contribution Plan that would bring the total
of all contributions to Company sponsored qualified defined contribution plans in excess of the government-mandated annual 415
limit would be made to the New Defined Contribution SERP (the “New DC SERP”). The New DC SERP is essentially an unsecured
promise by the Company to provide the executive with any 2015 Contributions Plan contributions that are limited by IRC Section
415 of the code.
On November 9, 2016,
the Company entered into the New DC SERP with Messrs. Gruber and Hartz, who are continuing their participation in the DC Plan.
The New DC SERP is intended to provide a non-qualified deferred compensation plan to receive Company contributions that cannot
be made to the DC Plan due to applicable federal income tax rules which limit the total contributions which can be deferred in
a qualified plan in a given plan year. Such contributions will be accumulated in an unfunded, interest-bearing deferred compensation
account (the “DC SERP Account”). Messrs. Gruber and Hartz may elect to receive the New DC SERP balance at retirement
in one payment or in five or ten annual payments. Upon the executive’s death, the balance of the DC SERP Account will be
payable as a lump sum to his or her beneficiary.
On November 9, 2016,
Messrs. Romaine, Boyce and Fetsko elected to permanently and irrevocably opt-out of the DC Plan, and instead entered into the New
DB SERP with the Company. The New DB SERP is a defined benefit plan that, together with the Amended SERP and the single year of
DC Plan participation in 2015, is designed to address the impact of the Pension Plan Freeze. Because the New DB SERP is intended
to replace the Pension Plan accruals that were lost when the Pension Plan was frozen, the New DB SERP provisions mirror those in
the Pension Plan, which are described below under the heading “Pension Benefits”.
On November 9, 2016,
the Company also entered into Amended and Restated Supplemental Executive Retirement Plans (the “Amended SERPs”) with
each of the Named Executive Officers, which amended and restated the Original SERPs and are described in further detail below under
the heading “Potential Payments upon Termination or Change in Control.”
The following table
provides information with respect to each pension plan that provides for payments or other benefits at, following, or in connection
with retirement. This includes a tax-qualified defined benefit plan and a supplemental executive retirement plan, but it does not
include defined contribution plans (whether tax-qualified or not).
Pension Benefits
|
|
Plan Name
|
|
Number of Years
of Credited Service
(1)
|
|
|
Present Value of
Accumulated Benefit
|
|
|
Payments During
the Last Fiscal Year
|
|
Stephen Romaine
|
|
Tompkins Financial Corporation Retirement Plan
|
|
|
14.58
|
|
|
$
|
490,064
|
|
|
|
—
|
|
|
|
Amended and Restated Supplemental Executive Retirement Plan
|
|
|
23.83
|
|
|
$
|
3,505,498
|
|
|
|
—
|
|
|
|
Amended and Restated New DB SERP
|
|
|
2.42
|
|
|
$
|
50,645
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
4,046,207
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis Fetsko
|
|
Tompkins Financial Corporation Retirement Plan
|
|
|
18.75
|
|
|
$
|
986,164
|
|
|
|
—
|
|
|
|
Amended and Restated Supplemental Executive Retirement Plan
|
|
|
21.25
|
|
|
$
|
1,049,754
|
|
|
|
—
|
|
|
|
Amended and Restated New DB SERP
|
|
|
2.42
|
|
|
$
|
117,028
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
2,152,946
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Gruber
|
|
Tompkins Financial Corporation Retirement Plan
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
—
|
|
|
|
Amended and Restated Supplemental Executive Retirement Plan
|
|
|
4.75
|
|
|
$
|
584,234
|
|
|
|
—
|
|
|
|
Total
|
|
|
|
|
|
$
|
584,234
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Boyce
|
|
Tompkins Financial Corporation Retirement Plan
|
|
|
14.25
|
|
|
$
|
415,534
|
|
|
|
—
|
|
|
|
Amended and Restated Supplemental Executive Retirement Plan
|
|
|
29.00
|
|
|
$
|
1,296,874
|
|
|
|
—
|
|
|
|
Amended and Restated New DB SERP
|
|
|
2.42
|
|
|
$
|
93,827
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
1,806,235
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greg Hartz
|
|
Tompkins Financial Corporation Retirement Plan
|
|
|
12.92
|
|
|
$
|
436,550
|
|
|
|
—
|
|
|
|
Amended and Restated Supplemental Executive Retirement Plan
|
|
|
15.42
|
|
|
$
|
1,119,564
|
|
|
|
—
|
|
|
|
Total
|
|
|
|
|
|
$
|
1,556,114
|
|
|
|
—
|
|
|
(1)
|
Pension
Plan service represents service with Tompkins Financial Corporation. This service has
been frozen effective July 31, 2015 due to the Pension Plan freeze. Supplemental Executive
Retirement Plan service represents service with Tompkins Financial Corporation and any
entities acquired by Tompkins Financial Corporation. New DB SERP represents service with
Tompkins Financial Corporation following the Pension Plan freeze effective July 31, 2015.
|
The present value of
accumulated benefits shown in the Pension Benefits table above is based on benefits accrued as of December 31, 2017. The amounts
reflect the method and assumptions used in calculating our pension liability under U.S. GAAP as of that date, except that (1) each
participant is assumed to commence benefits on his or her normal retirement date, and (2) there is no assumed mortality prior to
the benefit commencement date. For additional information regarding assumptions used in calculating the value of participant benefits
under the Pension Plan and the SERP Agreements, see Note 13 to the consolidated financial statements included in the Company’s
2017 Annual Report on Form 10-K.
The Pension Plan provides
a monthly benefit payable at retirement. This benefit is determined by the accumulation of credits which are earned as the participant
works for the Company. The credits earned for each plan year are based on the sum of the participant’s age and years of service
at the beginning of that plan year. When a participant terminates employment or retires, the credits earned for all plan years
are summed and multiplied by the “Average Final Earnings” under the Plan, and the result is then converted into a monthly
annuity. This type of plan is often referred to as a “pension equity plan.”
“Average Final
Earnings” is the average of the participant’s compensation over the five consecutive Plan Years out of the last ten
which produce the highest average. “Compensation” generally consists of total W-2 earnings, less incentive bonuses,
fringe benefits and compensation from stock option exercises. A participant is eligible for an unreduced benefit upon the attainment
of his or her “Normal Retirement Date,” which is generally the first day of the month following his or her 65
th
birthday.
A participant’s
retirement benefit is fully vested upon the completion of three years of service. Participants are eligible for a reduced benefit
upon retirement prior to age 65. Benefits under the Pension Plan are not subject to any reduction for Social Security benefits
or other offset amounts. Benefits may be paid in certain alternative forms having actuarial equivalent values.
In addition to the
Pension Plan, each of the Named Executive Officers receives retirement benefits under one or more SERP agreements with the Company,
as follows:
|
●
|
Amended SERPs
. For each of the Named Executive Officers other than Mr. Gruber, the Amended
SERP provides each executive with supplemental retirement income upon the attainment of age 65 with at least 10 years of service.
Executives are eligible for a reduced early retirement benefit upon the attainment of age 55 with at least 10 years of service.
The benefit is further reduced by 5% for each year the executive officer’s service, as defined in the agreement, is less
than 20 years. The retirement benefit is payable monthly until the executive officer’s death and is subject to reduction
depending upon the executive officer’s age as of the date of benefit commencement prior to age 65. The SERP benefit formula
is 75% of the executive’s “Average Compensation,” minus the participant’s Pension Plan benefit had it not
been frozen, minus his or her Social Security benefit. “Average Compensation” is the average of the executive officer’s
five highest calendar years of base salary. For Mr. Gruber, the Amended SERP provides supplemental retirement income upon the attainment
of age 65, with no eligibility for early retirement. Mr. Gruber’s SERP benefit formula is 25% of his “Average Compensation,”
with no reduction for Pension Plan or Social Security benefits. “Average Compensation” is the average of his five highest
calendar years of base salary.
|
|
●
|
New DB SERPs.
For Messrs. Romaine, Boyce and Fetsko, the New DB SERP is equal to the benefit
under the Pension Plan had it not been frozen in 2015 minus the frozen Pension Plan benefit. There is also an additional offset
for the partial year contribution the executives received under the 2015 Defined Contribution Plan for the 2015 Plan Year. The
New DB SERP is essentially an unsecured promise by the Company to provide executives with the benefit that would have been provided
in the Pension Plan had it not been frozen.
|
|
●
|
New DC SERPs
. For Messrs. Gruber and Hartz, the New DC SERP benefit is equal to the portion
of the 2015 Defined Contribution Retirement Plan benefit that would bring the total of all contributions to Company sponsored qualified
defined contribution plans in excess of the Code Section 415 Limit. The New DC SERP benefit equals the sum of Messrs. Gruber’s
and Hartz’s benefits under the 2015 Defined Contribution Retirement Plan, ESOP profit sharing, 401(k) contribution and Company
match, minus the government mandated limit of $54,000.
|
Potential Payments upon Termination
or Change in Control
On November 9, 2016,
the Company entered into Amended SERPs with each of the Named Executive Officers. The primary reason for the Amended SERPs was
to address the Pension Plan offset formula in the Original SERPs, which no longer worked as the parties originally intended (see
above, under the heading “Retirement Plans”). The following is a summary of the death, disability, severance and change
of control benefits under the Amended SERPs:
|
●
|
Disability Benefits
. The Original SERP provided for full acceleration of vesting and years
of service upon the executive’s total and permanent disability. The Amended SERP replaces this “acceleration”
feature with a two-tiered disability structure. If the executive is unable to engage in any substantial gainful activity and this
is expected to last for a continuous period of at least 12 months, the executive will separate from service with the Company; his
or her years-of-service will be frozen as of the date of the disability, and he or she will begin receiving his or her retirement
benefit under the Amended SERP at his or her social security normal retirement age. If the executive is unable to perform the duties
of his or her job and this is expected to last for a continuous period of at least six months, and the executive separates from
service with the Company, his or her years-of-service will be frozen as of the date of the disability, and he will begin receiving
his or her retirement benefit under the Amended SERP at the later to occur of his or her attaining age 55 or termination of employment.
|
|
●
|
Change in Control and Severance Benefits
. In the event of a change in control, each Named
Executive Officer will be deemed to have completed 20 years of service and will be 100% vested in the benefit payable under
the Amended SERP. If, within two (2) years following a change in control, the executive officer is terminated, other than for cause,
or if the executive officer resigns with Good Reason (described in more detail below), the executive officer is entitled for a
period of three years to (a) payment of his or her or her compensation in effect immediately prior to the change in control,
but subject to reduction by 20% to 100% depending on the executive officer’s age at the time of his or her termination, (b) the
executive officer’s bonus and profit sharing compensation, which will be the average of the executive officer’s bonus
and profit sharing compensation earned for the two most recently completed fiscal years of the Company and (c) continuation
of all welfare benefits that he or she was participating in immediately prior to the change in control. The Amended SERP updates
the definition of “change in control” to more closely align with the safe harbor established by Treasury Regulations
§1.409A-3(i)(5). Under the Amended SERP, a change in control generally includes: (i) an acquisition of more than 50% of the
Company’s stock; (ii) the replacement of a majority of the Company’s Board of Directors during any 12-month; or (iii)
the acquisition of more than 70% of the Company’s assets.
|
Both the Original SERP and the
Amended SERP provide that, in the event of a change in control, the executive will generally be deemed to have completed 20 years
of service and will be 100% vested in the benefit payable under the Amended SERP. However, the Amended SERP permits the Compensation
Committee of the Company’s Board of Directors to avoid such acceleration by freezing the Amended SERP (a “Retirement
Benefit Freeze”), as long as the Retirement Benefit Freeze does not become effective during the two years preceding a change
in control.
The Amended SERP continues to
provide for “double-trigger” severance benefits in connection with a change in control. The executive will be entitled
to benefits if a change in control occurs, and (a) the executive’s employment is thereafter involuntarily terminated without
cause, or (b) the executive voluntarily terminates employment for good reason (i) within two years after a change in control, or
(ii) in anticipation of a change in control which then occurs within two years after such termination. The amount, form, and calculation
method of the severance benefit remains unchanged from the Original SERPs for Messrs. Romaine, Boyce, Fetsko and Hartz; however,
for all executives the window during which the occurrence of the “second trigger” (i.e., the termination of employment)
that entitles the executive to a severance benefit was shortened from three to two years. In the case of Mr. Gruber, the period
of salary continuation following a qualifying termination was increased from two years to three years to be consistent with the
benefits payable to the other executives.
The Amended SERP further provides
that if the executive’s employment is involuntarily terminated (other than for cause) at any time, or, for all executives
other than Mr. Gruber, the executive voluntarily resigns after reaching age 55 and completing 10 years of service, but prior to
his or her designated retirement age in his or her Amended SERP, he or she will be entitled to payment of his or her retirement
benefits on his or her designated retirement date, or, in the event of his or her death, his or her spouse will be entitled to
payment of the death benefits described in the Amended SERP.
|
●
|
Death Benefits.
If an executive has elected to receive a joint-and-survivor benefit then,
in the event of the executive’s death (i) after retirement, his or her spouse will be paid (monthly) 50% of the executive
officer’s annual retirement benefit until the spouse’s death, and (ii) prior to retirement, his or her spouse
will be paid (monthly) 50% of the vested portion of the executive officer’s annual retirement benefit until the spouse’s
death, provided the spouse survives until the executive officer’s designated retirement age in the Amended SERP.
|
|
●
|
Good Reason and Involuntary Termination
. The Amended SERP replaces the definition of “good
reason”, for purposes of severance and retirement benefits, to clarify what constitutes a “significant reduction”
in the executive’s role or compensation. An executive will have good reason to resign – and it will be treated as an
involuntary termination – in the event of (i) a material diminution in base compensation, authority, duties or responsibilities;
(ii) a material change in job location; or (iii) a material breach by the Company or its successor of the Amended SERP or any other
agreement between the Company and the executive.
|
|
●
|
Retirement Benefit Freeze & Plan Amendments
. The Amended SERPs preserve the Compensation
Committee’s ability to declare a Retirement Benefit Freeze and to amend, suspend or terminate the Amended SERPs at any time,
so long as such action does not reduce a previously-accrued benefit. However, the Amended SERP clarifies, consistent with the parties’
intent in the Original SERP, that (a) a Retirement Benefit Freeze occurring before an executive is vested does not affect his or
her ability to retain any benefit he or she had accrued through the date of the freeze, and (b) severance and change in control
benefits are deemed accrued upon signing, and are not subject to amendment, suspension or termination without the executive’s
consent, except as described above in connection with a Retirement Benefit Freeze.
|
|
●
|
Covenants
. The Amended SERP requires that the executive sign a release in favor of the Company
to avoid forfeiture of benefits and contain a mutual non-disparagement commitment between the Company and the executive. The Amended
SERP confirms that the executive will forfeit all benefits thereunder if he is discharged for cause, or if he or she competes with
the Company or solicits the Company’s customers or employees, but in order to better align these covenants with applicable
case law, the Amended SERP shortens the noncompetition/nonsolicitation covenant period in the event of involuntary termination
(including resignation with good reason) to two years following termination.
|
Upon termination or
a change in control of the Company, our Named Executive Officers are also entitled to certain rights with respect to their equity
awards. As described below, these rights may include acceleration of vesting, or additional time periods in which to exercise a
vested award.
2001 Stock Option
Plan.
Under the 2001 Stock Option Plan, all outstanding options become fully vested and immediately exercisable upon a change
in control of the Company. In the event of an optionee’s termination of employment without “cause,” other than
by reason of death, disability, or retirement, this plan provides that the optionee will have the right to exercise the vested
portion of his or her unexercised options for up to 30 days following his or her termination date, as long as the option period
does not otherwise expire during such 30-day period. In the event that the optionee retires from the Company or any of its subsidiaries
on a scheduled retirement date, the optionee will have the right to exercise the vested portion of his or her unexercised options
for up to 90 days following his or her retirement date, as long as the option period does not otherwise expire during such
90-day period. Upon the death of an optionee, any vested but unexercised options may be exercised within one year after the date
of the optionee’s death, but only (i) by the optionee’s estate or other legal representative, and (ii) prior
to the expiration of the term of the option. If an optionee’s employment is terminated because he or she has become permanently
and totally disabled (as defined in Section 22(e)(3) of the Internal Revenue Code), the optionee will have the right to exercise
the vested portion of his or her unexercised options for up to one year following his or her termination date, as long as the option
period does not otherwise expire during such one-year period. Finally, if an optionee is terminated for “cause,” all
of his or her outstanding options—whether or not exercisable—are terminated. Under the 2001 Stock Option Plan, “cause”
is defined as the optionee’s dishonesty, malfeasance, misfeasance or the commission of a criminal offense.
2009 Equity Incentive
Plan.
Under the 2009 Equity Plan, if the Company is acquired by another company (the “Acquirer”), and if the Acquirer
does not assume the outstanding stock awards or does not substitute equivalent stock awards, then all stock awards will immediately
vest and, in the case of restricted performance stock and performance units, the targeted performance criteria will be deemed fully
attained as of the effective date of such change in control. Incentive stock options, (“ISOs”) will be adjusted in
a manner to preserve such status. If the Company is the surviving corporation following a Change in Control, or if the Acquirer
assumes the outstanding options, SARs, restricted stock, restricted performance stock or performance units or substitutes equivalent
equity awards relating to the securities of such Acquirer, then all such awards or such substitutes shall remain outstanding and
be governed by their respective terms and the provisions of the Amended 2009 Plan. The Amended 2009 Plan provides that, within
a two-year period following a Change in Control, if an employee is terminated (without cause) by the Company, or if the employee
voluntarily terminates for “good reason,” then all of his or her outstanding awards shall immediately vest and become
exercisable. The criteria for “good reason” resignation will be established by the Committee within the parameters
of the safe harbor of Code Regulation 1.409A-1(n)(2) for “Separations from service for good reason.” The safe harbor
conditions include material reduction in salary or responsibilities, a job relocation involving a substantial distance, and certain
other materially adverse changes. An employee who voluntarily terminates employment without good reason following a Change in Control
will not be entitled to accelerated vesting.
Under the 2009 Equity
Plan, unvested or unexercisable awards are forfeited or terminated upon an awardee’s termination of employment. If the Named
Executive Officer’s employment is terminated for any reason other than death, disability, retirement or “cause,”
he or she would have the right to exercise the vested portion of his or her unexercised awards for up to three months following
his or her termination date, as long as the award period does not otherwise expire during such three-month period. Upon a termination
for “cause,” any equity awards (whether or not exercisable) will terminate immediately, and any unvested restricted
stock awards will be forfeited. If a Named Executive Officer dies, any equity awards which are exercisable will continue to be
exercisable at any time before the earlier of (i) one year following his or her death or (ii) the expiration date of
the award. Similarly, if a Named Executive Officer’s termination is due to disability or retirement, his or her equity awards
which are exercisable will continue to be exercisable at any time before the earlier of (i) one year following his or her
termination of employment or (ii) the expiration date of the award. However, a stock option which is intended to qualify as
an Incentive Stock Option will only be treated as such to the extent it complies with the requirements of Section 422 of the
Internal Revenue Code.
The Committee has the
authority to establish or amend the terms and conditions of each award, subject to certain limitations described in the Plan. In
2016, the Committee authorized a program where the Company, on a case-by-case basis, may agree to amend existing award agreements
with eligible retirees to permit continued vesting post-retirement, so long as (a) the Company does not exceed the Plan allowance
of 5% of total Plan shares which may be awarded with less than a one-year vesting period, and (b) the retiree complies with certain
restrictive covenants, including a non-solicitation covenant. Under this program, eligible retirees (including the Named Executive
Officers) would continue to vest for a period of 3 years after retirement in all equity awards that are unvested at the time the
executive retires. The following criteria must be met to be eligible for this continued vesting:
|
●
|
The executive must be in good standing with the Company at retirement and remain in good standing
for the 3-year period after retirement (including compliance with the applicable restrictive covenant);
|
|
●
|
The executive must be at least age 55 and have at least 10 years of service at retirement;
|
|
●
|
The sum of age and service at retirement must equal or exceed 75.
|
This program may be
altered or suspended by the Committee at any time, and the foregoing description is qualified entirely by reference to the specific
terms and conditions of each Award Agreement, including any authorized amendments thereto.
In addition, the Amended
SERP with Mr. Romaine provides that in the event that the covered executive officer’s employment is terminated without cause
(other than upon a change of control, death or disability), then he is entitled to (a) payment of his base salary in effect
immediately prior to his termination of employment and (b) participation, at his option, in the Company’s welfare benefits.
These severance benefits are payable for a period of 12 months to Mr. Romaine.
Further, under the
Amended SERPs, in the event that a Named Executive Officer’s employment is involuntarily terminated (other than for cause)
at any time, or, for Named Executive Officers other than Mr. Gruber, the executive voluntarily resigns after reaching age 55 and
after completing 10 years of service, but prior to his designated retirement age in his Amended SERP, he or she will be entitled
to payment of his retirement benefits on his designated retirement date, or, in the event of his death, his spouse will be entitled
to payment of the death benefits described above.
No benefits are payable
under the Amended SERPs if the covered executive officer’s employment is terminated for cause, or if he or she competes with
the Company. If the executive officer voluntarily terminates his or her employment before age 55 and completion of 10 years
of service, or in Mr. Gruber’s case prior to age 65, other than because of death, disability or change of control, he or
she will not be entitled to payment of any retirement benefits. The Amended SERPs are not employment agreements and do not confer
upon the covered executive officers any right to continued employment with the Company or any of its subsidiaries.
Potential Payments upon Change in Control
as of December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP Accumulated
Annual Benefit prior
to Change of Control
|
|
|
SERP Accumulated
Annual Benefit after
Change of Control
|
|
|
Increase in
Benefit
|
|
|
Other Benefits:
Payable each
Year for 3
Years
(1)
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Romaine
|
|
|
328,010
|
|
|
|
328,010
|
|
|
|
—
|
|
|
|
930,232
|
|
Francis Fetsko
|
|
|
97,373
|
|
|
|
97,373
|
|
|
|
—
|
|
|
|
557,921
|
|
Scott Gruber
|
|
|
41,717
|
|
|
|
75,383
|
|
|
|
33,666
|
|
|
|
485,655
|
|
David Boyce
|
|
|
132,023
|
|
|
|
132,023
|
|
|
|
—
|
|
|
|
442,608
|
|
Greg Hartz
|
|
|
92,448
|
|
|
|
119,933
|
|
|
|
27,485
|
|
|
|
399,713
|
|
|
(1)
|
If terminated
by the Company without cause, or duties or compensation of Named Executive Officer are
significantly reduced due to change in control, Named Executive Officer receives for
a period of three years continuation of compensation (base pay plus average of bonus
and profit sharing compensation for last two years) as well as all current employee welfare
benefits. Compensation is reduced by a factor of 20% to 100% dependent upon the executive
officer’s age at the time of termination.
|
In addition to the
above, Named Executive Officers would be entitled to awards of options/SARs otherwise deemed “unexercisable” and awards
of restricted stock otherwise deemed “not vested”. These values are disclosed in the Outstanding Equity Awards at Fiscal
Year-End Table.
The table above shows
the potential incremental value transfer to each Named Executive Officer under a change-in-control scenario as of December 31,
2017, the last business day of fiscal 2017. The actual amounts to be paid out can only be determined at the time of such Named
Executive Officer’s separation from the Company.
Compensation Upon Other Termination
Events as of December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Romaine
|
|
|
Francis
Fetsko
|
|
|
Scott Gruber
|
|
|
David Boyce
|
|
|
Greg Hartz
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Retirement
(1)
|
|
|
—
|
(1)
|
|
|
—
|
(1)
|
|
|
—
|
(1)
|
|
|
—
|
(1)
|
|
|
—
|
(1)
|
Voluntary Resignation
(1)
|
|
|
—
|
(1)
|
|
|
—
|
(1)
|
|
|
—
|
(1)
|
|
|
—
|
(1)
|
|
|
—
|
(1)
|
Termination Without Cause
(2)
|
|
|
617,137
|
|
|
|
—
|
(2)
|
|
|
—
|
(2)
|
|
|
—
|
(2)
|
|
|
—
|
(2)
|
Termination for Cause
(3)
|
|
|
—
|
(3)
|
|
|
—
|
(3)
|
|
|
—
|
(3)
|
|
|
—
|
(3)
|
|
|
—
|
(3)
|
Death
(4)
|
|
|
1,892,196
|
|
|
|
1,021,000
|
|
|
|
1,392,000
|
|
|
|
1,272,000
|
|
|
|
1,150,800
|
|
Disability
(5)
|
|
|
240,000
|
|
|
|
240,000
|
|
|
|
208,800
|
|
|
|
190,800
|
|
|
|
172,620
|
|
|
(1)
|
Pension
Plan Benefits would be available to Romaine, Fetsko, Boyce and Hartz upon Retirement
or Voluntary Resignation as of 12/31/2017. Mr. Hartz is the only Named Executive Officer
eligible to receive a benefit under the Supplemental Executive Retirement Plan as of
12/31/2017 upon Retirement or Voluntary Resignation. The actuarial present value of the
benefits payable under the Retirement Plan and Supplemental Executive Retirement Plan
are fully disclosed in the Pension Benefits Table.
|
|
(2)
|
Pension
Plan Benefits would be available to Romaine, Fetsko, Boyce and Hartz upon Termination
Without Cause as of 12/31/2017. Mr. Hartz is the only Named Executive Officer eligible
to receive a benefit under the Supplemental Executive Retirement Plan as of 12/31/2017
upon Termination Without Cause. For Mr. Romaine, the amount shown represents 12 months
base salary plus the value of 12 months of welfare benefits. Any benefits payable to
the executive for voluntary resignation with good cause following a Change of Control
are disclosed on the “Potential Payments Upon Change of Control” table above.
The actuarial present value of the benefits payable under the Retirement Plan and Supplemental
Executive Retirement Plan are fully disclosed in the Pension Benefits Table.
|
|
(3)
|
This
section shows amounts payable immediately upon Termination for Cause as of 12/31/2017
under the Pension Plan. No Supplemental Executive Retirement Plan benefits are payable
to the Named Executive Officers if they are Terminated for Cause. Pension Plan Benefits
would be available to Messrs. Romaine, Fetsko, Boyce and Hartz upon Termination for Cause
as of 12/31/2017. The actuarial present value of the benefits payable under the Pension
Plan are fully disclosed in the Pension Benefits Table.
|
|
(4)
|
This
section shows amounts payable immediately upon death as of 12/31/2017 under Bank Owned
Life Insurance and/or Group Term Life Insurance and Death Benefit Obligation agreements.
In addition to the amounts shown, the surviving spouse upon death would receive an annuity
death benefit from the Pension Plan payable immediately and Supplemental Executive Retirement
Plan payable as early as the date the executive would have attained retirement age as
defined under the SERP. The actuarial present value of the benefits payable to the surviving
spouse is less than half of the actuarial present values disclosed in the Pension Benefits
table.
|
|
(5)
|
This
section shows annual amounts payable upon disability as of 12/31/2017 under the Long-Term
Disability Plan.
|
Deferred Compensation Plan for Selected Officers
The Company maintains
a nonqualified deferred compensation plan for a select group of officers, including the Named Executive Officers. This plan allows
participating employees to defer receipt of all or a portion of bonuses, excess awards under the Company’s 401(k) plan, and
profit sharing payments otherwise payable to them until a future date. Amounts deferred under the deferred compensation plan on
the part of the Named Executive Officers are included as “Bonus” or “All Other Compensation,” as applicable,
in the Summary Compensation Table above.
The bonuses listed
in the Summary Compensation Table are reported for the year in which they were earned. The payment for said bonuses is made in
the following year. If the Named Executive Officer elects to defer a bonus or profit sharing payment, the amount credited to his
or her account under the deferred compensation plan is the net amount after Social Security and Medicare are withheld.
Amounts deferred by
participating officers are credited to a bookkeeping account maintained for each officer. Such amounts then accrue interest on
a quarterly basis, at a rate equal to the higher of either the highest yielding Treasury constant maturity bond for that calendar
year, as reported in the Federal Reserve Statistical Release, or the prime rate, as published in The Wall Street Journal on the
first business day of that calendar year. During 2017, interest accrued under the deferred compensation plan at the prime rate,
3.75%. Earnings reported in the table below are not considered “above-market” or “preferential” under applicable
SEC rules and therefore are not reported in the Summary Compensation Table.
At the time an officer
elects to participate in the deferred compensation plan, he or she also selects a deferral payment date, on which payments under
the plan will commence. Payments will be either in a lump sum or in the number of annual installments specified by the officer
at the time he or she selects the deferral payment date. The deferral payment date must occur no earlier than the calendar year
after the officer’s 60
th
birthday, and no later than the calendar year after the officer’s 65
th
birthday.
An officer may at any
time terminate his or her election to defer payments under the deferred compensation plan. Any such election is effective on the
last day of the calendar year in which the election was made.
All payments under
the deferred compensation plan are made in cash. Upon the death of a participant in the deferred compensation plan, any remaining
balance in his or her account will be paid in a lump sum to his or her estate or designated beneficiaries. A participating officer
may, under certain circumstances specified in the deferred compensation plan, be entitled to a hardship distribution of all or
any portion of his or her account.
2017 Non-Qualified Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Contributions
in Last FY
|
|
|
Registrant
Contributions
in Last FY
|
|
|
Aggregate
Earnings
in Last FY
|
|
|
Aggregate
withdrawals /
Distributions
|
|
|
Aggregate
Balance
at Last FYE
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Stephen S. Romaine
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Francis M. Fetsko
(1)
|
|
|
17,202
|
|
|
|
—
|
|
|
|
6,920
|
|
|
|
—
|
|
|
|
190,490
|
|
Scott Gruber
(2)
|
|
|
—
|
|
|
|
0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0
|
|
David S. Boyce
(3)
|
|
|
21,775
|
|
|
|
—
|
|
|
|
8,610
|
|
|
|
—
|
|
|
|
236,802
|
|
Gregory J. Hartz
(4)
|
|
|
11,865
|
|
|
|
2,959
|
|
|
|
5,271
|
|
|
|
—
|
|
|
|
144,057
|
|
|
(1)
|
Mr. Fetsko
has elected to defer 15% of his bonus and profit sharing payment, which is the amount
included in the “Executive Contributions in the Last Fiscal Year.” The aggregate
balance column includes deferrals since Mr. Fetsko’s election to participate
in the plan in 2002.
|
|
(2)
|
Mr. Gruber’s
New DC SERP benefit of $1,800 that was earned in 2017 is not included in the “Registrant
Contributions in Last Fiscal Year” since the contribution was not paid until 2018.
This contribution, however, is reflected in the 2017 Summary Compensation Table. Information
regarding the New DC SERP benefit can be found under the “Retirement Plans”
section above.
|
|
(3)
|
Mr. Boyce
has elected to defer 25% of his bonus, which is the amount included in the “Executive
Contributions in the Last Fiscal Year.” The aggregate balance includes deferrals
since Mr. Boyce’s election to participate in the plan in 2003.
|
|
(4)
|
Mr. Hartz
has elected to defer 15% of his bonus, which is the amount included in the “Executive
Contributions in the Last Fiscal Year.” Mr. Hartz’s New DC SERP benefit of
$2,959 that was earned in 2016 is included in the “Registrant Contributions in
Last Fiscal Year” since it was paid in 2017. Mr. Hartz’s New DC SERP benefit
of $10,299 that was not paid until 2018. This contribution, however, is reflected in
the 2017 Summary Compensation Table. The aggregate balance includes deferrals since Mr. Hartz’s
election to participate in the plan in 2003, plus his New DC SERP benefit paid in 2017.
Information regarding the New DC SERP benefit can be found under the “Retirement
Plans” section above.
|
CEO Pay Ratio
. We determined that
the 2017 annual total compensation of the median compensated of all our employees who were employed as of December 31, 2017, other
than our Chief Executive Officer, Mr. Romaine, was $60,607; the 2017 annual total compensation of Mr. Romaine was $2,116,209; and
the ratio of these amounts was 35:1.
As of December 31, 2017, the date we selected
to identify our median employee, our total employee population consisted of 1,098 employees, all of whom work in the United States.
To identify the median compensated employee, we used a Consistently Applied Compensation Measure (CACM) equal to the method used
to determine the 2017 total compensation as reported in the Summary Compensation Table on Page 22. Further, we annualized pay for
those individuals not employed for a full year in 2017.
PROPOSAL NO. 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with
Section 14A of the Securities Exchange Act of 1934, we are asking shareholders to approve, on a non-binding, advisory basis, the
compensation paid to our Named Executive Officers (NEOs) as described in this Proxy Statement in accordance with the SEC’s
rules. This Proposal is commonly known as “Say on Pay.” Accordingly, we will ask our shareholders to vote “FOR”
the following resolution at the Meeting:
“RESOLVED,
that the compensation paid to Tompkins Financial Corporation’s Named Executive Officers (NEOs), as disclosed pursuant to
the compensation disclosure rules of the Securities Exchange Commission in the Company’s Proxy Statement for the 2018 Annual
Meeting of Shareholders (which disclosure includes the Compensation Discussion and Analysis, the Executive Compensation Tables,
and narrative discussion) is hereby APPROVED.”
As discussed in the
“Compensation Discussion and Analysis,” we believe that our executive compensation program is effective and appropriate,
and that the 2017 compensation packages for our executive officers are reasonable and strongly focused on pay for performance principles.
We emphasize compensation opportunities that reward our executives when they deliver desired financial and strategic results, with
a focus on long-term value creation rather than short-term, market-driven measures. Through equity grants with a five-year vesting
period, we also align the interests of our executives with our shareholders and the long-term goals of the Company. The Board and
the Committee maintain full discretion over the variable components of our compensation program; accordingly, executives are not
incentivized to take risks which are misaligned with the Board-approved risk appetite and long-term strategic goals. We believe
that the fiscal year 2017 compensation of our NEOs was appropriate and aligned with Company results, and that it will facilitate
the Company’s growth in future years.
Because your vote is
advisory, it will not be binding upon the Company, the Board of Directors or the Compensation Committee. However, our Board of
Directors and the Compensation Committee value the opinions of our shareholders and will take into account the outcome of the vote
when considering future executive compensation decisions as it deems appropriate.
Following the 2017
Annual Meeting of Shareholders, the Board of Directors determined to hold a Say on Pay vote every year until the next vote on the
frequency of Say on Pay votes, which is scheduled to take place in 2023.
Vote Required and Recommendation
Shareholders may vote
“for”, “against”, or “abstain” on Proposal No. 2. The affirmative vote of a majority of
the votes cast on the Proposal is required for approval of this Proposal. Abstentions and broker non-votes will not constitute
or be counted as votes cast for purposes of this Proposal, and therefore will have no impact on the outcome of this Proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS (NEOs)
AS DESCRIBED IN THIS PROXY STATEMENT. SHARES OF COMMON STOCK COVERED BY EXECUTED PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL
BE VOTED “FOR” PROPOSAL NO. 2, UNLESS THE SHAREHOLDER SPECIFIES A DIFFERENT CHOICE.
PROPOSAL NO. 3
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, KPMG LLP, AS INDEPENDENT AUDITOR
The Audit/Examining
Committee of the Board of Directors of the Company has appointed the independent registered public accounting firm, KPMG LLP
(“KPMG”), as the Company’s independent auditor for the fiscal year ending December 31, 2018. Although our
Bylaws do not require the submission of the selection of the independent auditor to our shareholders for approval, the Board believes
it is appropriate to give shareholders the opportunity to ratify the decision of the Audit/Examining Committee. Neither the Audit/Examining
Committee nor the Board will be bound by the shareholders’ vote at the meeting but may take the shareholders’ vote
into account in future determinations regarding the retention of the Company’s independent auditor.
Vote Required and Recommendation
Shareholder may vote
“for”, “against” or “abstain” on Proposal No. 3. The affirmative vote of a majority of the
votes cast on the Proposal is required for approval of this Proposal. Abstentions and broker non-votes will not constitute or be
counted as votes cast for purposes of this Proposal, and therefore will have no impact on the outcome of this Proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM, KPMG LLP, AS THE INDEPENDENT AUDITOR OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018. SHARES
OF COMMON STOCK COVERED BY EXECUTED PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” PROPOSAL NO. 3,
UNLESS THE SHAREHOLDER SPECIFIES A DIFFERENT CHOICE.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires the Company’s Directors and officers, and persons who own more
than 10% of the Company’s common stock, to file with the SEC initial reports of ownership and reports of changes in ownership
of the Company’s capital stock. Officers, Directors and greater than 10% shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company’s
knowledge, based upon on a review of the copies of such reports furnished to the Company and written representations that no other
reports were required, during fiscal 2017 all Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% shareholders were satisfied in a timely manner.
TRANSACTIONS WITH RELATED PERSONS
Certain Directors and
executive officers of the Company, members of their immediate families and companies or firms with which they are associated, were
customers of, or had other transactions with, the Company or its wholly-owned subsidiaries in the ordinary course of business during
fiscal 2017. Any and all loans and commitments to lend to such individuals were made 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 Company and
did not involve more than the normal risk of collectability or present other unfavorable features. As of December 31, 2017,
the balance of all such loans was $8,781,159 and committed unadvanced balances totaled $1,446,364. None of the loans outstanding
to Directors or executive officers of the Company, or members of their immediate families or companies or firms with which they
are associated, were nonperforming at December 31, 2017.
The Board maintains
a written policy governing the procedures by which the Company and any of its subsidiaries may enter into transactions with related
parties (the “Policy”). The Policy defines an “Interested Transaction” as any transaction, arrangement
or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness)
in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) the Company
or any if its subsidiaries is a participant, and (3) any Related Party has or will have a direct or indirect interest (other
than solely as a result of being a director or beneficial owner of less than 10 percent of another entity). A “Related
Party” is any (a) person who is or was an executive officer of the Company during the prior 12 months, a Director of
the Company or a nominee for election as a Director of the Company, (b) greater than 5 percent beneficial owner of the
Company’s common stock, or (c) immediate family member of any of the foregoing. The Company’s Nominating and Corporate
Governance Committee is apprised of any potential Interested Transaction, and this Committee is charged with evaluating and approving,
as appropriate, any such transactions. The Committee takes into account, among other factors it deems appropriate, whether the
Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same
or similar circumstances and the extent of the Related Party’s interest in the transaction. In its implementation of the
Policy, the Committee also has reviewed certain types of Interested Transactions and has established standing pre-approval for
these types of transactions, subject in all cases to compliance with applicable regulations of the SEC, federal and state bank
regulatory authorities, and other regulatory agencies. Examples of pre-approved transactions include executive compensation (so
long as it is approved by the Compensation Committee, properly disclosed in our proxy statement or other required regulatory filings,
and the executive in question is not an immediate family member of another executive officer or a Director); Director compensation
(so long as it is properly disclosed in our proxy statement or other regulatory filings); and transactions which involve payments
to our shareholders on a pro-rata basis (e.g., dividends). In addition, the provision of certain banking services to a Related
Party have been pre-approved, as follows: (a) services as a bank depositary of funds, transfer agent, registrar, trustee under
a trust indenture, or similar services, (b) any extension of credit to a Related Party which is reviewed and approved by the Board
of Directors of a subsidiary in accordance with Federal Reserve Board Regulation “O”, or (c) an extension of credit
made by a banking subsidiary to a Related Party who is not subject to Regulation “O” when the extension of credit is
made (i) in the ordinary course of business, (ii) on substantially the same terms (including interest rates and collateral) as
are prevailing at the time for comparable transactions with persons not related to the Company, and (iii) does not involve more
than the normal risk of collectability or present other unfavorable features.
Director Michael Spain’s
brother, William D. Spain, Jr. is a 50% owner of the law firm of Spain & Spain, PC. During 2017, the Company, through its subsidiary,
Tompkins Mahopac Bank, paid $176,714 in legal fees to Spain & Spain, PC. Of this amount, $53,872 was paid as a general retainer,
and $122,842 was paid for litigation fees. An additional amount of $161,950 was paid for mortgage closing services, the cost of
which was reimbursed by the borrowers in connection with the mortgage closings.
REPORT OF THE AUDIT/EXAMINING COMMITTEE
OF THE BOARD OF DIRECTORS
The information
contained in this report shall not be deemed to be “soliciting material” or “filed” or incorporated by
reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent
that the Company specifically requests that it be treated as soliciting material or specifically incorporates it by reference into
a document filed under the Securities Act or the Exchange Act.
The Audit/Examining
Committee is appointed by the Board to assist the Board in fulfilling its oversight responsibilities. The Audit/Examining Committee
is composed of four non-employee Directors, all of whom are “Independent Directors” under Section 803 of the NYSE
American Company Guide and Rule 10A-3 under the Exchange Act.
The Audit/Examining
Committee operates under a written charter approved by the Board. The Audit/Examining Committee’s primary duties and responsibilities
are: to oversee the Company’s accounting and financial reporting process and the audit of the Company’s financial statements
and to monitor the integrity of the Company’s financial statements; to monitor the independence and qualifications of the
Company’s independent auditor; to monitor the performance of the Company’s independent auditor and internal auditing
department; to provide an avenue of communication among the Company’s independent auditor, management, the internal auditing
department, and the Board of Directors; and to monitor compliance by the Company with legal and regulatory requirements. The Audit/Examining
Committee is also directly responsible for the appointment and compensation of the Company’s independent auditor.
The Audit/Examining
Committee met ten times during fiscal 2017 and reports to the Board on a quarterly basis. The Audit/Examining Committee schedules
its meetings with a view to ensuring that it devotes appropriate attention to all of its tasks. The Audit/Examining Committee’s
meetings include, whenever appropriate, executive sessions with the Company’s independent auditors and with the Company’s
internal auditors, in each case without the presence of the Company’s management.
The Audit/Examining
Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities. It has direct access to
the independent auditors and to any employee or officer of the Company it deems necessary. The Audit/Examining Committee has the
ability to retain, at the Company’s expense and at compensation it deems appropriate, special legal, accounting, or other
consultants or experts it deems necessary in the performance of its duties.
Management is responsible
for the Company’s internal controls and financial reporting process. The Company’s independent registered public accounting
firm, KPMG, is responsible for performing an independent audit of the Company’s consolidated financial statements and an
audit of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting
Oversight Board (United States).
In connection with
its responsibilities, the Audit/Examining Committee reviewed and discussed with management and with KPMG the Company’s audited
consolidated financial statements for the fiscal year ended December 31, 2017. The Audit/Examining Committee also discussed
with KPMG the firm’s assessment of the Corporation’s internal controls and the matters required to be discussed by
Public Company Accounting Oversight Board Auditing Standard No. 1301, “
Communications with Audit Committees
.”
The Audit/Examining Committee also received and discussed the written disclosures and the letter from KPMG LLP required by Public
Company Accounting Oversight Board Rule 3526, “
Communication with Audit Committees Concerning Independence
”
and has discussed with KPMG LLP its independence.
Based upon the Audit/Examining
Committee’s discussions with management, the Company’s internal auditor, and KPMG and the Audit/Examining Committee’s
review of the information described in the preceding paragraph, the Audit/Examining Committee recommended to the Board that the
Company’s audited consolidated financial statements for the fiscal year ended December 31, 2017 be included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2017, for filing with the SEC.
Members of the Audit/Examining Committee:
Paul J. Battaglia, Chair
Susan A. Henry
Patricia A. Johnson
Frank C. Milewski
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit/Examining
Committee has appointed KPMG to continue as the Company’s independent registered public accounting firm engaged for
the purpose of auditing the consolidated financial statements of the Company for the fiscal year ending December 31, 2018.
A representative of KPMG is expected to attend the Annual Meeting and will have an opportunity to make statements and respond to
appropriate questions from shareholders.
Audit and Non-Audit Fees
KPMG, a registered
public accounting firm, is engaged as the Company’s independent auditor. The following table sets forth the aggregate audit
fees billed to the Company for the fiscal years ended December 31, 2017 and December 31, 2016 by KPMG.
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2017
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2016
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Audit Fees:
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$
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825,000
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(1)
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$
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623,000
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Audit-Related Fees:
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$
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9,500
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(2)
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$
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10,000
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Tax Fees:
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0
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0
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All Other Fees:
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0
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0
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(1)
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2017 Audit fees include
additional fees related to the Company’s core system conversions.
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(2)
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Audit related fees
include fees in connection with consents for SEC filings.
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Audit Fees:
These are fees for professional services rendered for the audit of the Company’s consolidated annual financial statements
and review of the consolidated financial statements included in the Company’s periodic reports under the Exchange Act, and
for services that would normally be provided by the Company’s auditor in connection with statutory and regulatory filings
or engagements for the periods covered. Audit Fees also include activities related to internal control reporting under Section 404
of the Sarbanes-Oxley Act.
Audit-Related Fees:
These include fees for assurance and related services provided by the independent auditor that are reasonably related to the performance
of the audit or review of the Company’s financial statements and are not reported under “Audit Fees.” All fees
billed by KPMG for services related to the audit or review of the Company’s financial statements are reported as “Audit
Fees” above.
Tax Fees:
These
are fees for professional services rendered regarding tax compliance, tax advice or tax planning. More specifically, these include
fees billed for tax return preparation, quarterly estimates, tax planning, and tax related research.
All Other Fees:
These are fees for all other products and services provided by the independent auditor that do not fall within the previous categories.
The Company’s
principal independent auditor, KPMG, did not perform any services other than financial audit services and audit-related services
described above during fiscal 2017 and 2016.
Audit/Examining Committee Pre-Approval Policy
The Audit/Examining
Committee pre-approves all audit services and permitted non-audit services (including the fees and terms of such services) to be
provided to the Company by its independent auditor, other than non-audit services falling within the
de minimis
exception
described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit/Examining Committee prior to the completion
of the audit. The Audit/Examining Committee may delegate to one or more designated members of the Audit/Examining Committee the
authority to grant pre-approvals of audit services and permitted non-audit services, provided that decisions of such designated
member(s) to pre-approve one or more such services shall be reported to the full Audit/Examining Committee at its next scheduled
meeting.
All audit services
provided by KPMG, the independent registered public accounting firm engaged for the purpose of auditing the consolidated financial
statements of the Company for fiscal 2017 and fiscal 2016, were pre-approved by the Company’s Audit/Examining Committee.
SHAREHOLDER PROPOSALS
Proposals of shareholders
of the Company that are intended to be presented by such shareholders at the Company’s 2019 Annual Meeting and that shareholders
desire to have included in the Company’s Proxy materials relating to such meeting must be received by the Company no later
than November 29, 2018, which is 120 calendar days prior to the anniversary of the Company’s mailing of this Proxy Statement,
and must be in compliance with SEC Rule 14a-8 in order to be considered for possible inclusion in the Proxy Statement and
Form of Proxy for that meeting.
OTHER ANNUAL MEETING BUSINESS
Under the Company’s
Bylaws, in order for a matter to be deemed properly presented at the 2019 Annual Meeting outside of the Rule 14a-8 process described
above, notice must be delivered to the Corporate Secretary of the Company at the principal executive offices of the Company no
later than the close of business on November 29, 2018 (120 calendar days prior to the anniversary of the Company’s mailing
of this Proxy Statement). The shareholder’s notice must set forth, as to each matter the shareholder proposes to bring before
the annual meeting (a) a description in reasonable detail of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Company’s
books, of the shareholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made, (c) the
number of shares of the Company that are owned beneficially and of record by the shareholder proposing such business and by the
beneficial owner, if any, on whose behalf the proposal is made, and (d) any personal or other material interest of such shareholder
proposing such business and the beneficial owner, if any, on whose behalf the proposal is made in such business. In addition, a
shareholder seeking to submit such business at an annual meeting shall promptly provide any other information reasonably requested
by the Company. If a shareholder gives notice of such a proposal after the Bylaw deadline, the shareholder will not be permitted
to present the proposal to the shareholders for a vote at the meeting. SEC rules permit the proxy holders to vote in their discretion
in certain cases if the shareholder does not comply with this deadline, and in certain other cases notwithstanding the shareholder’s
compliance with this deadline.
FORM 10-K
A copy of the Company’s
Annual Report on Form 10-K filed with the SEC is available without charge at our website (http://www.tompkinsfinancial.com)
or by writing to: Tompkins Financial Corporation, ATTN: Francis M. Fetsko, Executive Vice President & Chief Financial
Officer, P.O. Box 460, Ithaca, New York 14851. In addition, the Annual Report on Form 10-K (with exhibits) is available
at the SEC’s Internet site (http://www.sec.gov).
OTHER MATTERS
The Company’s
Board of Directors knows of no business to be presented for shareholder action at the Company’s Annual Meeting other than
the election of Directors, the advisory approval of the compensation paid to the Company’s Named Executive Officers, and
the ratification of the appointment of the independent registered public accounting firm, KPMG LLP, as the Company’s
independent auditor for the fiscal year ending December 31, 2018. If any additional matters should be presented, it is intended
that the enclosed proxy will be voted in accordance with the judgment of the person or persons acting under the proxy.
Your vote is important
regardless of the number of shares you own. Whether or not you plan to attend the Company’s Annual Meeting, you are urged
to vote your proxy promptly. You may vote by telephone, via the Internet, or mark, sign, date, and return the enclosed Proxy Card
in the accompanying pre-addressed postage-paid envelope. Your proxy may be revoked prior to its exercise by delivering to the Company’s
Corporate Secretary prior to the Company’s Annual Meeting a written notice of revocation or a duly executed proxy bearing
a later date, or by attending the Company’s Annual Meeting, filing a written notice of revocation with the Corporate Secretary
at the Company’s Annual Meeting prior to the vote, and voting in person. To obtain directions to be able to attend the Annual
Meeting and vote in person, please contact our Corporate Secretary at (607) 274-2078.
Dated: March 29, 2018
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By Order of the Board of Directors
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Asst. Vice President & Corporate Secretary
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HOUSEHOLDING OF PROXY STATEMENT
The SEC permits companies
and intermediaries such as brokers to satisfy delivery requirements for Proxy Statements and Annual Reports with respect to two
or more shareholders sharing the same address by delivering a single Proxy Statement or Annual Report, as applicable, addressed
to those shareholders. As permitted by the Exchange Act, only one copy of this Proxy Statement is being delivered to shareholders
residing at the same address, unless shareholders have notified the Company of their desire to receive multiple copies of the Proxy
Statement. This process, which is commonly referred to as “householding,” potentially provides extra convenience for
shareholders and cost savings for companies.
If, at any time, you
no longer wish to participate in householding and would prefer to receive a separate Proxy Statement, or if you are receiving multiple
copies of this Proxy Statement and wish to receive only one, please contact the Investor Relations department of the Company. The
Company will promptly deliver, upon oral or written request, a separate copy of this Proxy Statement to any shareholder residing
at an address to which only one copy was mailed. Requests for additional copies from the Company should be directed to:
Tompkins Financial Corporation
P.O. Box 460
Ithaca, NY 14851
(607) 274-2078
Attention: Ms. Kathleen A. Manley, Assistant Vice President
and Corporate Secretary
P.O. Box 460, Ithaca, New York 14851
(607) 273-3210
www.tompkinsfinancial.com
ANNUAL MEETING OF SHAREHOLDERS OF
TOMPKINS FINANCIAL CORPORATION
Tuesday, May 8, 2018
PROXY
VOTING INSTRUCTIONS
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INTERNET
-
Access “
www.voteproxy.com
” and follow the on-screen instructions or scan the QR code with your smartphone.
Have your proxy card available when you access the web page.
TELEPHONE
- Call toll-free
1-800-PROXIES
(1-800-776-9437)
in the United States or
1-718-921-8500
from foreign countries from any touch-tone
telephone and follow the instructions. Have your proxy card available when you call.
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Vote online/phone
until 11:59 PM EST, Monday, May 7, 2018.
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COMPANY
NUMBER
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MAIL
- Sign, date and mail your proxy card in the envelope provided as soon as possible.
IN
PERSON
- You may vote your shares in person by attending the Annual Meeting.
GO
GREEN
- e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements
and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy
online access.
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ACCOUNT
NUMBER
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
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THE
SHAREHOLDER MEETING TO BE HELD ON MAY 8, 2018
:
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The
Notice of Meeting/Proxy Statement, Corporate Report, and Form 10-K
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are
available at www.tompkinsfinancial.com/proxy.
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Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet.
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21230300000000000000 2
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050818
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
ALL NOMINEES LISTED UNDER PROPOSAL 1 BELOW,
AND “FOR” PROPOSALS 2 AND 3.
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PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
☒
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FOR
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AGAINST
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ABSTAIN
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Proposal
No. 2.
Advisory approval of the compensation paid to the Company’s Named Executive
Officers.
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☐
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☐
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☐
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FOR
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AGAINST
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ABSTAIN
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Proposal
No. 3.
Ratify the appointment of the independent
registered public accounting firm, KPMG LLP, as the Company’s independent auditor for the fiscal year ending December 31,
2018.
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☐
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☐
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☐
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In
their discretion, the proxies will vote upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
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TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE
SIDE OF THIS CARD.
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Signature of Shareholder
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Date:
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Signature of Shareholder
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Date:
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Note:
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Please sign exactly as your
name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the shareholder is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If shareholder is a partnership, please sign in partnership name by
authorized person.
|
|
ANNUAL MEETING
OF SHAREHOLDERS OF
TOMPKINS FINANCIAL CORPORATION
Tuesday, May 8, 2018
GO
GREEN
|
e-Consent makes it easy to go paperless. With e-Consent,
you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper
waste. Enroll today via www.astfinancial.com to enjoy online access.
|
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR
THE SHAREHOLDER MEETING TO BE HELD ON MAY 8, 2018
:
The Notice of Meeting/Proxy Statement, Corporate Report, and Form 10-K
are
available at www.tompkinsfinancial.com/proxy.
Please sign, date and mail
your proxy card in the
envelope
provided as soon
as possible.
Please detach along perforated line and mail in
the envelope provided.
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21230300000000000000 2
|
050818
|
|
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
ALL NOMINEES LISTED UNDER PROPOSAL 1 BELOW,
AND “FOR” PROPOSALS 2 AND 3.
|
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
☒
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FOR
|
AGAINST
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ABSTAIN
|
|
Proposal
No. 2.
Advisory approval of the compensation paid to the Company’s Named Executive
Officers.
|
☐
|
☐
|
☐
|
|
|
|
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FOR
|
AGAINST
|
ABSTAIN
|
|
Proposal
No. 3.
Ratify the appointment of the independent
registered public accounting firm, KPMG LLP, as the Company’s independent auditor for the fiscal year ending December 31,
2018.
|
☐
|
☐
|
☐
|
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In
their discretion, the proxies will vote upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
|
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TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE
SIDE OF THIS CARD.
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Signature of Shareholder
|
|
Date:
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Signature of Shareholder
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Date:
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Note:
|
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Please sign exactly as your
name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the shareholder is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If shareholder is a partnership, please sign in partnership name by
authorized person.
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TOMPKINS
FINANCIAL CORPORATION
Annual
Meeting of Shareholders to be held
Tuesday,
May 8, 2018
YOUR
VOTING CARD IS ATTACHED BELOW.
You
may vote by telephone, via the Internet, by conventional mail,
or
in person at the Annual Meeting.
Please
read the other side of this card carefully for instructions.
However
you decide to vote, your representation at the
Annual
Meeting of Shareholders is important to Tompkins Financial Corporation.
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1
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PROXY/VOTING
INSTRUCTION CARD
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TOMPKINS
FINANCIAL CORPORATION
FOR
THE ANNUAL MEETING OF SHAREHOLDERS ON TUESDAY, MAY 8, 2018
The
undersigned shareholder of TOMPKINS FINANCIAL CORPORATION (the “Company”) hereby constitutes and appoints Francis
M. Fetsko and Kathleen A. Manley, and each of them, as agent and proxy of the undersigned, with full power of substitution and
revocation, to vote all shares of Common Stock of the Company standing in his or her name on the books of the Company and that
the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held at 5:30 p.m. at the Country Club of Ithaca,
189 Pleasant Grove Road, Ithaca, NY, on Tuesday, May 8, 2018, or at any adjournment thereof, with all the powers which the undersigned
would possess if personally present, as designated on the reverse side.
THE
UNDERSIGNED HEREBY INSTRUCTS THE SAID PROXIES TO VOTE IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED ON THE REVERSE SIDE. IF NO
INSTRUCTION IS GIVEN ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF ALL NOMINEES FOR DIRECTOR
LISTED ON THE REVERSE SIDE; “FOR” ADVISORY APPROVAL OF THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE
OFFICERS; AND “FOR” RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, KPMG LLP,
AS THE COMPANY’S INDEPENDENT AUDITOR FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018. THE PROXIES WILL VOTE IN THEIR DISCRETION WITH
RESPECT TO SUCH OTHER MATTERS (INCLUDING MATTERS INCIDENT TO THE CONDUCT OF THE MEETING), AS MAY PROPERLY COME BEFORE THE MEETING.
The
undersigned hereby acknowledges receipt of the Notice of Meeting and Proxy Statement dated March 29, 2018 relating to the Annual
Meeting of Shareholders to be held May 8, 2018. (Signature on the reverse side is required.)
(Continued
and to be marked, signed and dated on reverse side.)
1.1
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14475
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