WNEB Western New England Bancorp Inc

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101) 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities 

Exchange Act of 1934 (Amendment No.   )

Payment of Filing Fee (Check all boxes that apply): 

March 31, 2023

Dear Fellow Shareholder:

You are cordially invited to attend the 2023 Annual Meeting of Shareholders (the “Annual Meeting”) of Western New England Bancorp, Inc. (the “Company” or “WNEB”), the holding company for Westfield Bank (the “Bank”), which will be held on May 11, 2023, at 10:00 a.m., Eastern Daylight Time, at the Sheraton Springfield Monarch Place Hotel, One Monarch Place, Springfield, Massachusetts, 01144.

The enclosed Notice of Annual Meeting of Shareholders and Proxy Statement describe the formal business that we will transact at the Annual Meeting, which includes

•The election of four (4) directors;

•An advisory, non-binding vote on our 2022 executive compensation;

•An advisory, non-binding proposal on the frequency of an advisory vote on the compensation of our named executive officers;

•Ratification of the appointment of Wolf and Company, P.C. (“Wolf & Company”) as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and

•Act upon such other business as may properly come before the meeting.

The Board of Directors of the Company (the “Board”) has fixed the close of business on March 15, 2023, as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting. Directors and officers of the Company will be present to answer any questions that you and other shareholders may have. Our Annual Report on Form 10-K, which contains detailed information concerning the activities and operating performance of the Company, is available for review on our website at wneb.q4ir.com/financials/proxy-materials and www.viewproxy.com/WNEB/2023.

It is important that your shares be represented at the Annual Meeting and voted in accordance with your wishes. Whether or not you plan to attend the Annual Meeting, please promptly submit your proxy by telephone, internet or mail. Your vote is important regardless of the number of shares you own. Voting by proxy will not prevent you from voting in person at the Annual Meeting, but will assure that your vote is counted if you cannot attend.

The Board has determined that an affirmative vote on the matters to be considered at the Annual Meeting is in the best interests of Western New England Bancorp, Inc. and its shareholders, and the Board unanimously recommends a vote in support of their recommendations on all matters. We appreciate your participation and interest in Western New England Bancorp, Inc.

Sincerely yours,

James C. Hagan Chief Executive Officer	Lisa G. McMahon Chairperson

IF YOU HAVE ANY QUESTIONS, PLEASE CALL US AT (413) 568-1911.

WESTERN NEW ENGLAND BANCORP, INC.

141 Elm Street
Westfield, Massachusetts 01085
(413) 568-1911

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

DATE	Thursday, May 11, 2023
TIME	10:00 A.M. Eastern time
PLACE	Sheraton Springfield Monarch Place Hotel One Monarch Place Springfield, Massachusetts 01114
ITEMS OF BUSINESS	(1)	Election of the nominees named in the attached Proxy Statement as directors to serve on the Board for a term of office stated.
	(2)	Consideration and approval of a non-binding advisory resolution on the compensation of our Named Executive Officers.
	(3)	Consideration and approval of a non-binding advisory vote on the frequency of an advisory vote on the compensation of our Named Executive Officers.
	(4)	Ratification of the appointment of Wolf & Company as our independent registered public accounting firm for the fiscal year ending December 31, 2023.
	(5)	Consideration of any other business properly brought before the Annual Meeting and any adjournment or postponement thereof.
RECORD DATE	The record date for the Annual Meeting is March 15, 2023. Only shareholders of record as of the close of business on that date may vote at the Annual Meeting or any adjournment thereof.
PROXY VOTING	You are cordially invited to attend the Annual Meeting in person. Whether or not you expect to attend the Annual Meeting, please promptly submit your proxy by telephone, internet or, if you have received printed materials, by signing and returning the Proxy Card by mail. Submitting a proxy will not prevent you from attending the Annual Meeting and voting in person. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from that record holder.

By Order of the Board of Directors,
Western New England Bancorp, Inc.

James C. Hagan
Chief Executive Officer

Westfield, Massachusetts
March 31, 2023

It is important that your shares be represented and voted at the Annual Meeting. Shareholders whose shares are held in registered form have a choice of voting by Proxy Card, telephone or the internet, as described on your Proxy Card. Shareholders whose shares are held in the name of a broker, bank or other holder of record must vote in the manner directed by such holder. Check your Proxy Card or the information forwarded by your broker, bank or other holder of record to see which options are available to you.

Important Notice Regarding the Availability of Proxy Materials for the 2023 Annual Meeting of Shareholders: This Proxy Statement for the 2023 Annual Meeting of Shareholders, the 2022 Annual Report to Shareholders, the Proxy Card and voting instructions are available free of charge on our website at wneb.q4ir.com/financials/proxy-materials and www.viewproxy.com/WNEB/2023.

TABLE OF CONTENTS

WESTERN NEW ENGLAND BANCORP, INC.
141 Elm Street
Westfield, Massachusetts 01085
(413) 568-1911

Voting Procedures

Your vote is important and you are encouraged to vote your shares promptly. Each proxy submitted will be voted as directed. For all matters to be voted on, you may vote “FOR” or “AGAINST” or abstain from voting. However, if a proxy solicited by the Board does not specify how it is to be voted, it will be voted as the Board recommends—that is:

•Proposal 1 – “FOR” the election of each of the four (4) nominees for director named in this Proxy Statement;

•Proposal 2 – “FOR” the approval, on an advisory basis, of the compensation of our Named Executive Officers;

•Proposal 3 – “FOR” the approval, on an advisory basis, that the advisory vote on executive compensation be conducted every ONE year; and

•Proposal 4 – “FOR” the ratification of the appointment of Wolf and Company.

The procedures for voting are as follows:

Shareholder of Record: Shares Registered in Your Name

If you are a shareholder of record, you may (a) vote in person at the Annual Meeting, or (b) vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy over the telephone, internet or by mail as instructed below to ensure your vote is counted. You may still attend the Annual Meeting and vote in person even if you have already voted by proxy.

•To vote in person, come to the Annual Meeting and we will give you a ballot when you arrive.

•To vote over the telephone, dial toll-free 1-866-804-9616 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the Control Number from your Notice. Your vote must be received by 11:59 P.M., Eastern Daylight Time on May 10, 2023, to be counted.

•To vote on the internet, go to www.AALvote.com/WNEB to complete an electronic Proxy Card. You will be asked to provide the Control Number from your Notice. Your vote must be received by 11:59 P.M., Eastern Daylight Time on May 10, 2023, to be counted.

•To vote by mail, simply request a copy of the Proxy Statement as indicated above, which will include a Proxy Card and then complete, sign and date the Proxy Card and return it promptly in the envelope provided. If you return your signed Proxy Card to us before the Annual Meeting, the designated proxy holders will vote your shares as you direct.

If you sign the Proxy Card but do not make specific choices, your proxy will vote your shares “FOR” Proposals 1, 2, and 4 and “FOR EVERY ONE YEAR” for Proposal 3 as set forth in the Notice of Annual Meeting of Shareholders.

If any other matter is presented at the Annual Meeting, your proxy will vote the shares represented by all properly executed proxies on such matters as a majority of the Board determines. As of the date of this Proxy Statement, we know of no other matters that may be presented at the Annual Meeting, other than those listed in the Notice of Annual Meeting of Shareholders.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If on March 15, 2023, your shares were held not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the shareholder of record for purposes of voting at the Annual Meeting.

As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You should have received a Proxy Card and voting instructions with these proxy materials from that organization rather than from us. Simply complete and mail the Proxy Card and voting instructions to ensure that your vote is counted. Alternatively, you may vote by telephone or over the internet as instructed by your broker or bank, if applicable. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.

Employee Stock Ownership Plan

Each participant in our Employee Stock Ownership Plan Trust (the “ESOP”) has the right to direct True Integrity Fiduciary Services, as trustee of the ESOP (“TI-Trust”), as to how to vote his or her proportionate interests in all allocated shares of common stock held in the ESOP. TI-Trust will vote any unallocated shares, as well as any allocated shares as to which no voting instructions are received, in the same proportion as the shares for which voting instructions have been received. TI-Trust’s duties with respect to voting the common stock in the ESOP is governed by the fiduciary provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The fiduciary provisions of ERISA may require, in certain limited circumstances, that TI-Trust override the votes of participants with respect to the common stock held by TI-Trust and to determine, in TI-Trust’s best judgment, how to vote the shares. Your voting instructions must be received by 11:59 P.M., Eastern Daylight Time on May 4, 2023, to be counted.

401(k) Plan Shares

Each participant in our 401(k) Plan has the right to direct Delaware Charter & Trust Company, a Delaware Corporation conducting business under the trade name of The Principal Trust Company, as trustee of the 401(k) Plan (“Principal Trust”), as to how to vote his or her proportionate interests in all allocated shares of common stock held in the 401(k) Plan. Principal Trust will vote any unallocated shares, as well as any allocated shares as to which no voting instructions are received, in the same proportion as the shares for which voting instructions have been received. Principal Trust’s duties with respect to voting the common stock in the 401(k) Plan are governed by the fiduciary provisions of ERISA. The fiduciary provisions of ERISA may require, in certain limited circumstances, that Principal Trust override the votes of participants with respect to the common stock held by Principal Trust and to determine, in Principal Trust’s best judgment, how to vote the shares. Your voting instruction must be received by 11:59 P.M., Eastern Daylight Time on May 4, 2023, to be counted.

Quorum Requirement

A quorum is necessary to hold a valid Annual Meeting. A quorum will be present if shareholders holding at least a majority of our outstanding shares of common stock entitled to vote at the Annual Meeting are present at the Annual Meeting in person or are represented by proxy. On the record date, there were 22,328,211 shares of common stock outstanding and entitled to vote. Thus, the holders of 11,387,388 shares of common stock must be present in person or represented by proxy at the Annual Meeting to have a quorum.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the Annual Meeting or vote by proxy over the telephone or the internet as instructed above. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of shares present at the Annual Meeting in person or represented by proxy may adjourn the Annual Meeting to another date.

Proposals and Vote Requirements

Proposal 1: Election of Directors

Directors will be elected by a plurality of the votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. Plurality means that the individuals who receive the largest number of “FOR” votes cast are elected as directors up to the maximum number of directors to be chosen at the Annual Meeting. Abstentions and broker non-votes will not affect the outcome of the election of directors. You may not vote your shares cumulatively for the election of directors.

Proposal 2: Consideration and Approval of a Non-Binding Advisory Resolution on the Compensation of Our Named Executive Officers

The approval of the non-binding advisory resolution on the compensation of our Named Executive Officers will require “FOR” votes from a majority of the votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy and entitled to vote on this proposal. Abstentions are not counted as votes cast and they will have no effect on the vote. Brokers do not have discretionary authority to vote shares on this proposal without direction from the beneficial owner. Therefore, broker non-votes will have no effect on the vote.

Proposal 3: Consideration and Approval of a Non-Binding Advisory Vote on the Frequency of an Advisory Vote on the Compensation of Our Named Executive Officers

The choice receiving the greatest number of “FOR” votes – every year, every two years or every three years – will be the frequency that shareholders will be deemed to have approved. Broker non-votes and abstentions will have no effect on the vote.

Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm

The ratification of Wolf & Company, as our independent registered public accounting firm for the fiscal year ending December 31, 2023, will require “FOR” votes from a majority of the votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy and entitled to vote on this proposal.

Effect of Broker Non-Votes

Broker non-votes are proxies received from brokers or other nominees holding shares on behalf of their clients who have not been given specific voting instructions from their clients with respect to non-routine matters. Brokers who hold their customers’ shares in “street name” may, under the applicable rules of the exchange and other self-regulatory organizations of which the brokers are members, sign and submit proxies for such shares and may vote such shares on routine matters, which typically include the ratification of the appointment of our independent registered public accounting firm. Proposals 1, 2 and 3 are considered “non-routine” under New York Stock Exchange Rules (“NYSE”), which govern NYSE brokerage members.

If your broker returns a proxy but does not vote on a proposal, this will constitute a broker non-vote. A broker non-vote will have no effect on the outcome of any proposal.

Confidential Voting Policy

The Company maintains a policy of keeping shareholder votes confidential. Only the Inspector of Election and certain employees of our independent tabulating agent examine the voting materials. We will not disclose your vote to management unless it is necessary to meet legal requirements.

Revoking Your Proxy

You may revoke your grant of proxy at any time before the final vote at the Annual Meeting. If you are the shareholder of record, you may revoke your proxy in any one of the following four ways:

•filing a written revocation of the proxy with our Secretary;

•entering a new vote over the internet or by telephone;

•attending and voting in person at the Annual Meeting; or

•submitting another signed Proxy Card bearing a later date.

If your shares are held by your broker, bank or another party as a nominee or agent, you should follow the instructions provided by such party in order to revoke your proxy.

Your personal attendance at the Annual Meeting does not revoke your proxy. Your last vote, prior to or at the Annual Meeting, is the vote that will be counted.

Solicitation of Proxies

We will bear the cost of solicitation of proxies, including preparation, assembly, printing and mailing of the Notice of Annual Meeting of Shareholders, the Proxy Card and any additional information furnished to shareholders. We have engaged Alliance Advisors as our proxy solicitor to help us solicit proxies for a fee of $15,000, plus reasonable out-of-pocket expense. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of our common stock beneficially owned by others to forward to such beneficial owners. We may reimburse persons representing beneficial owners of our common stock for their costs of forwarding solicitation materials to such beneficial owners. Original solicitation of proxies by mail may be supplemented by telephone, telegram or personal solicitation by our directors, officers or other regular employees or by a firm engaged to do the same by such individuals. No additional compensation will be paid to directors, officers or other regular employees for such services.

INFORMATION ABOUT OUR BOARD OF DIRECTORS

General

Our Board currently consists of ten (10) members, each who have the highest ethical character and personal and professional reputations consistent with the Company’s image and reputation, and also who demonstrate integrity and a willingness to appropriately challenge management. The name, age and length of service of each of our nominees and the continuing members of our Board are set forth below:

⁽¹⁾At May 11, 2023

⁽²⁾Includes terms served on the Board of the Bank, as applicable.

In accordance with the Company’s Bylaws, no person shall be eligible for election, reelection, appointment or reappointment to the Board if such person reached seventy-two (72) years of age or older on appointment or reappointment to the Board.

Board Diversity

The Company and the Board strongly believe diversity is critical to the Company’s success and ability to create long-term value for our shareholders. The Board and Executive Management have adopted diversity and inclusion as a key focus of the Company’s overall strategic plan. In 2020, the Company proudly announced its first female Chairperson in its 169-year history. With respect to the Board, it is acknowledged that a Board consisting of individuals with diverse backgrounds ensures broader representation and inspires deeper commitment to management, employees and the communities we serve. While not specific to a particular policy, the Board prioritizes diversity in gender, ethnic background and professional experience when considering candidates for director as part of its commitment to diversity. At present, 30% of the Company’s Board is diverse from a gender, race or ethnic perspective. In 2022, as required by NASDAQ, the Company began collecting and disclosing diversity information for our directors. Each of our directors voluntarily self-identified as follows:

Board Refreshment

Our Board believes that a fully engaged Board is a strategic asset of the Company and that knowledgeable and fresh viewpoints and perspectives are important for informed decision making. The Board also believes that appropriate tenure can facilitate members developing greater institutional knowledge and deeper insight into the Company’s operations across a variety of economic and competitive environments.

Even before vacancies arise, the Board periodically evaluates whether it collectively has the right mix of skills, experience, attributes and diverse viewpoints necessary for it to drive shareholder value. The results of this evaluation are used to help inform the desirable skills set for potential Board nominees and to screen director candidates. At the same time, as part of planning for Board refreshment and director succession, the Nominating and Corporate Governance Committee’s practice has been to periodically consider potential director candidates. As a result of this ongoing review, in the last twelve years, the Board has nominated eight new directors, and in the last eight years, the Board has nominated four new directors. The average tenure for the Board is 9.8 years.

With the Board’s recommended slate of four nominees, the Board believes that it has an appropriately balanced Board and will continue to consider opportunities to strengthen the Board’s composition over time. As a group, the average tenure of the four nominees for election to the Board is 10.5 years.

Director Competencies

Our Board believes that a balance of diversity and tenure is a strategic asset. Our Nominating and Corporate Governance Committee routinely considers director attendance, past performance on the Board and Board committees, institutional knowledge of the Company, as well as any other director board commitments when evaluating directors for nomination. While the Company has not yet instituted a formal policy with regard to its directors’ service on other boards, the Company asks that all directors annually disclose the number of boards they serve on and further asks that they devote adequate time for preparation and attendance at all Board and Board committee meetings. During 2022, none of the Company’s directors served on the boards of more than three publicly traded companies.

Our Nominating and Corporate Governance Committee also factors in director competencies when placing an existing director into nomination for reelection to the Board. We believe our Board collectively offers a diverse range of qualifications, experiences and key skills that provide an appropriate and diverse mix of qualifications necessary for our Board to effectively fulfill its oversight responsibilities. The summary below is not intended to be an exhaustive list for each director, but rather a summary to convey the general breadth of our directors’ collective experience and qualifications. Our directors use these skills and experiences when they oversee the Company’s strategy, performance, culture and enterprise risk. Additional information about each Board member’s background, business experience and other matters in their biographical information is provided.

Director Nominees

The biographies of the nominees below contain information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experience, qualifications, attributes or skills that caused the Nominating and Governance Committee and the Board to determine that the person should serve as a director.

Laura Benoit has been a director of our Board since 2014. Ms. Benoit retired in August 2022 as Treasurer and Co-Owner of Bay State Fuel Oil, Inc., a fuel distribution company located in West Springfield, Massachusetts, since 1985. Bay State Fuel Oil, Inc. was the recipient of an Excellence in Risk Management Award for ten consecutive years. Ms. Benoit served on the Board of Directors for EMaxx Insurance from 2017 through 2022, where she served as chairperson of their Investment and Audit Committees. Ms. Benoit currently serves as President of Buddy Realty, LLC and oversees the management of several properties. Ms. Benoit gained extensive education and knowledge of cybersecurity and information technology of the Payment Card Industry Data Security Standards and compliance requirements through her businesses. During the past five years, Ms. Benoit has attended multiple cybersecurity educational conferences provided by CMD Technology. Further, during the past twenty years, Ms. Benoit has annually received training through EMaxx conferences. Ms. Benoit is a former member of the board of directors of the Western Mass Fuel Dealers Association, where she served from 1995 through 2010 in the capacity of treasurer and president. Ms. Benoit’s finance, accounting and small business management experience provides her with the qualifications and skills to serve as a director.

Donna J. Damon has been a director of our Board since 2011. Ms. Damon is the President and owner of New England Concrete Cutting, Inc., a construction company specializing in concrete cutting and drilling located in Agawam, Massachusetts. She also serves as an executive officer and the office manager for two separate companies: Witch Equipment of New England, Inc. and Witch Enterprises, Inc. Ms. Damon’s experience in human resources, office management and business administration, including financial management and employee benefit administration, provides her with the qualifications and skills to serve as a director.

Lisa G. McMahon has been a director of our Board since 2014 and has served as our Chairperson since 2020, making her the first female Board Chairperson in the Company’s 169-year history. Ms. McMahon is the Vice President of Institutional Advancement and Executive Director of the Westfield State Foundation, Inc. at Westfield State University. Ms. McMahon began at Westfield State University in 2013 after leaving Merrill Lynch where she obtained her general securities license and license to become a registered investment advisor representative. Ms. McMahon currently serves as President of the Westfield Academy Foundation and is the past president of the executive board of the Genesis Spiritual and Conference Center – a division of the Sisters of Providence Health Systems. From 2007 to 2012, Ms. McMahon was the Executive Director of the Westfield Business Improvement District, Inc. Ms. McMahon has served on numerous boards and committees in a leadership capacity. Ms. McMahon received a Bachelor of Science degree from Our Lady of the Elms College and an honorary doctorate degree in Public Service from Westfield State University. Ms. McMahon’s business experience and extensive work with micro businesses, nonprofit management and community relations provides her with the qualifications and skills to serve as a director.

Steven G. Richter has been a director of our Board since 2011. Dr. Richter is the founder, former owner, operator and President of Micro Test Laboratories, Inc., a contract testing and manufacturing organization for the medical device, pharmaceutical and biotechnology industries. During his 30 years at the helm of Micro Test, Dr. Richter was involved with financial responsibilities and strategic initiatives. Micro Test was acquired and then merged with Cambrex, Inc. in 2014. Computer knowledge was obtained from various sources, including formal training and classroom activities. Human Resource experience developed over 30 years at Micro Test is important to the Company’s Compensation Committee. Dr. Richter’s regulatory experience began at the Food and Drug Administration (“FDA”) with Federal and State regulatory authority. His experience with filing FDA-related documents and compliance to FDA laws gives the Board additional compliance optics. Dr. Richter is a consultant at RichCo Laboratories, LLC for the industries stated above. His experience with risk management programs is important to the Company’s Finance and Risk Management Committee. His ability to review a business plan and financial statements is essential for participation in the Company’s Executive Committee. Dr. Richter continues to give back to his alma maters, both Holyoke Community College and the University of Massachusetts. At Holyoke Community College, Dr. Richter is involved with the life science community and was instrumental in obtaining a $4 million grant for their lab build out. At the University of Massachusetts, Dr. Richter served on the board of the IALS institute from its inception. Currently, RichCo Laboratories, LLC supports student undergraduate research work that helps identify PFOS/PFAS toxicology issues in zebrafish models. Dr. Richter is a graduate of the University of Massachusetts with a Bachelor’s of Science in Microbiology and went on to receive his Master of Sciences degree in Biological Sciences from the University of Massachusetts-Lowell and his Ph.D. in Sterilization Sciences from Columbia Pacific University. Dr. Richter’s experience in small business administration and management, including financial and business operations matters, provides him with the qualifications and skills to serve as a director.

Continuing Directors

Gary G. Fitzgerald has been a director of our Board since October 2016. Previously, Mr. Fitzgerald served on the boards of legacy Chicopee Savings Bank and legacy Chicopee Bancorp, Inc. since 2009, up until their merger with and into the Company. Mr. Fitzgerald is a Certified Public Accountant and is a Managing Principal of Downey, Pieciak, Fitzgerald & Co., P.C., a CPA firm located in South Hadley, Massachusetts. Mr. Fitzgerald currently serves on the board of directors of the Chicopee Savings Bank Charitable Foundation, an affiliate with Westfield Bank, a position he has held since 2021. Mr. Fitzgerald received a Bachelor of Science degree from Western New England University, a Master of Science in Taxation degree from Bentley University and has been licensed as a Certified Public Accountant since 1996. His extensive background in accounting and taxation provides him with the qualifications and skills to serve as a director and as the Company’s financial expert.

James C. Hagan has been a director of our Board since 2009, our Chief Executive Officer since December 31, 2008, and our President since June 2005. Mr. Hagan served as Chief Operating Officer from June 2005 until December 2008. Prior to that, he served as Senior Vice President and Commercial Loan Department Manager from 1998 and was a Vice President from 1994. Prior to 1994, Mr. Hagan worked as a commercial lender and manager at other New England-based banking institutions. Mr. Hagan currently serves on the boards of Sullivan Paper Company since 2017, the Chicopee Savings Bank Charitable Foundation since 2016 (an affiliate with the Bank), Stanley Park of Westfield, Inc. since 2005 and the Western MA Baseball Hall of Fame since 2017. Mr. Hagan has also been serving as a class agent for Suffield Academy since 2008. Mr. Hagan received a Bachelor of Science from Westfield State University and received a Master of Business Administration from American International College. Mr. Hagan’s expertise in credit administration, commercial lending and management through his various roles within the Company and within other New England-based financial institutions provides him with the qualifications and skills to serve as a director.

William D. Masse has been a director of our Board since October 2016. Previously, Mr. Masse served on the boards of legacy Chicopee Savings Bank and legacy Chicopee Bancorp, Inc. since 1998 and 2006, respectively, up until their merger with and into the Company. Mr. Masse retired on January 1, 2021, as the President of Granfield, Bugbee & Masse Insurance Agency in Chicopee, Massachusetts. He had been in the insurance industry for 40 years. Mr. Masse holds a Bachelor of the Arts degree from Williams College where he majored in economics. Mr. Masse has, in the past, served as chairman and/or president of the board of directors of area non-profit organizations. His experience, as well as business and community contacts, provide him with the qualifications and skills to serve as a director.

Gregg F. Orlen has been a director of our Board since October 2016. Previously, Mr. Orlen served on the boards of legacy Chicopee Savings Bank and legacy Chicopee Bancorp, Inc. since 1999 and 2006, respectively, up until their merger with and into the Company. Mr. Orlen is the owner of Gregg Orlen Custom Homebuilders and works as an excavating contractor. Mr. Orlen currently serves on the board of directors of the Chicopee Savings Bank Charitable Foundation, an affiliate with Westfield Bank, a position he has held since its inception in 2006. Mr. Orlen served on the development committee for South Hadley’s municipal golf course, The Ledges, and was responsible for the oversight of its construction phase. Mr. Orlen remained on the golf course commission, while a resident of South Hadley. Mr. Orlen holds a Bachelor of Science Degree in Business Management. Mr. Orlen is a well-established premier builder of residential homes within our market and brings to the Board his extensive knowledge of the local housing market.

Paul C. Picknelly has been a director of our Board since October 2016. Previously, Mr. Picknelly served on the boards of legacy Chicopee Savings Bank and legacy Chicopee Bancorp, Inc. since 2000 and 2006, respectively, up until their merger with and into the Company. Mr. Picknelly is a premium hotel owner and operator, as well as a commercial real estate developer. Mr. Picknelly currently serves as President of Monarch Enterprises, LLC (Monarch Place Office Tower, Sheraton Springfield, and the Hilton Garden Inn Hotels in Springfield and Worcester, Massachusetts) and further manages various commercial real estate properties in the local area. Mr. Picknelly brings to the Board his unique and extensive knowledge of the customers, communities and political climate within our marketplace from a premier hotel management and real estate developer perspective.

Philip R. Smith has been a director of our Board since 2009. Prior to Mr. Smith’s directorship, he served as Secretary to the Company. Mr. Smith has been a partner at Bacon & Wilson, P.C., one of the largest regional law firms in western Massachusetts, specializing in Real Estate, Business Law and Estate Planning, since 2001.  Mr. Smith has served as a past board member of the Westfield Chamber of Commerce in Westfield, Massachusetts, and of the Westfield State College Foundation. Mr. Smith is a past member of the Westfield Community Development Corporation board of directors. He is a graduate of the University of New Hampshire and received a Juris Doctor from the New England School of Law and an LL.M. in taxation from Boston University. Mr. Smith’s experience in commercial and residential lending and business law, through his many years of legal practice, provides him with the qualifications and skills to serve as a director.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

The executive officers of the Company, as of March 31, 2023, are as follows. Ages reflected are as of the Annual Meeting date of May 11, 2023.

Allen J. Miles, III, age 60, was appointed to Executive Vice President in December 2008 and serves as the Bank’s Senior Lender. Previously, Mr. Miles served as Senior Vice President and Senior Lender of the Company and the Bank since August 2005. From 1998 to 2005, Mr. Miles served as Vice President and Commercial Loan Officer.

Kevin C. O’Connor, age 63, was appointed to Executive Vice President and Chief Banking Officer in February 2017. Previously, Mr. O’Connor held the position of Senior Vice President of Retail Banking since February 2015 and served as Vice President since 2010. Mr. O’Connor has over twenty-five years’ experience in retail and branch banking and had previously worked at both national and regional banking institutions as a vice president and regional manager of retail banking and sales, including small business sales.

Guida R. Sajdak, age 50, was appointed as Chief Financial Officer and Treasurer in April 2017 and as an Executive Vice President in October 2016. Mrs. Sajdak previously served as the Chief Risk Officer from October 2016 to April 2017. Previous to October 2016, Mrs. Sajdak served as a Senior Vice President and the Chief Financial Officer and Treasurer of legacy Chicopee Bancorp, Inc. and legacy Chicopee Savings Bank, where she held those positions since 2010. Mrs. Sajdak served Chicopee Savings Bank in various capacities since 1989, including that of Internal Auditor and Commercial Lender. Mrs. Sajdak also serves on the board of the Chicopee Savings Bank Charitable Foundation (an affiliate with the Bank) as its Chairperson and President.

John E. Bonini, age 55, was appointed to Senior Vice President and General Counsel upon the retirement of his predecessor in January 2021 and previously served as Senior Vice President and Associate General Counsel upon his joining the Company in August 2020.  Prior to joining the Company, Mr. Bonini was employed at Barings LLC, an international investment management firm owned by MassMutual, where he was a managing director and senior counsel for Barings Real Estate since 2005.  Mr. Bonini has extensive experience in real estate transactions, corporate and investment law and corporate governance.  He is a graduate of Wesleyan University and received his Juris Doctor from Suffolk University Law School. 

Filipe B. Goncalves, age 58, was appointed as an Executive Officer in January 2023 as Senior Vice President and Associate Chief Credit Officer and is also responsible for overseeing Loan Administration. Prior to his appointment to Associate Chief Credit Officer, Mr. Goncalves served as a Commercial Lending Team Leader. Prior to Mr. Goncalves joining the Company in 2019, he held the position of Chief Lending Officer at a mutual savings bank serving central and western Massachusetts. Mr. Goncalves received a Master of Business Administration Degree with a focus in finance and economics from Western New England University.

Louis O. Gorman, age 63, serves as Senior Vice President of Credit Administration and Chief Credit Officer. Mr. Gorman has served as Chief Credit Officer since 2010. Previously, Mr. Gorman served as Vice President of Credit Administration since 2009 and as a commercial loan officer since 2000. Mr. Gorman performed a similar function at other New England-based banking institutions prior to joining the Bank.

Darlene Libiszewski, age 57, serves as Senior Vice President and Chief Information Officer. Ms. Libiszewski has been serving in her current position since October 2016. Previously, Ms. Libiszewski served as the Senior Vice President of Information Technology for legacy Chicopee Savings Bank where she held the position since December 2007.

Daniel Marini, age 51, was appointed as an Executive Officer in January 2023 and serves as Senior Vice President of Retail Banking and Marketing, a position he has held since January 2022. Previously, Mr. Marini served in various capacities since 2011 within the Retail Banking and Marketing divisions. Mr. Marini has extensive experience in retail banking sales and service, retirement services, cash management services, marketing and sales administration. Mr. Marini received his Bachelor’s Degree in Economics from the University of Massachusetts.

Christine Phillips, age 50, was appointed to Senior Vice President and Human Resources Director in November 2020 upon joining the Company.  Previously, Ms. Phillips served as the First Vice President of Human Resources for PeoplesBank, headquartered in Massachusetts, since 2014. There she was responsible for overseeing the operations of the Human Resources Department and employee engagement. Ms. Phillips brings with her extensive leadership and human resources management including strategic planning, compensation, benefits, talent management and employee training programs.  Ms. Phillips received a Master’s Degree in Business Administration at the Isenberg School of Management at the University of Massachusetts.

Leo R. Sagan, Jr., age 60, was appointed to Senior Vice President and Chief Risk Officer in 2017. Previously, Mr. Sagan served as the Chief Financial Officer since December 2008, as Vice President and Controller from 2003 to 2008, as Controller from 2002 to 2003 and as Assistant Treasurer from 1999 to 2002.

Retired Executive Officers

Cidalia Inacio retired from the Company in September 2022. Ms. Inacio served as Senior Vice President of Retail Banking since October 2016. She also supervised the Bank’s investment services division – Westfield Investment Services.

CORPORATE GOVERNANCE

The Company is dedicated to being a financial industry leader in corporate governance and business ethics. Our Board is composed of directors with diverse professional and business experience. All of our directors, other than Mr. Hagan, are independent. They all share a commitment to fostering an effective risk environment coupled with a strong internal audit structure. Their unwavering commitment protects our clients, shareholders and reputation. Our Code of Ethics for our Senior Financial Officers and our Code of Conduct reflect the Company’s expectation for the conduct of our directors, officers and employees. Through recurring training and disclosures, as well as periodic communication related to specific topics, the Company maintains the highest level of ethical conduct. The Nominating and Corporate Governance Committee receives annual education related to corporate social responsibility, as well as to trends and best practices for directors.

Board of Directors

The Board oversees our business and monitors the performance of our management team. In accordance with our corporate governance procedures, the Board does not involve itself in our day-to-day operations. Our executive officers and management oversee our day-to-day operations. Our directors fulfill their duties and responsibilities by attending regular meetings of the Board, which are generally held on a monthly basis. Our directors also discuss business and other matters with the Chairperson and the President, other key executives and our principal external advisers (legal counsel, auditors, financial advisors and other consultants).

The Company’s Board held four regular meetings during the fiscal year ended December 31, 2022, and the Bank’s Board held 11 regular meetings and one strategic planning meeting. Each incumbent director attended at least 75% of the total of (i) the meetings of the Board held during the period for which he or she has been a director, and (ii) the meetings of the committee(s) on which that particular director served during such period. The Board and their subcommittees scheduled a total of 51 meetings during the year ended December 31, 2022, for which member attendance totaled 98%.

It is our policy that all directors and nominees attend the Annual Meeting. At the 2022 Annual Meeting, 9 of the 10 members then serving on the Board were in attendance. In addition to the Company’s regularly scheduled Board of Director meetings, all members of the Board participated in an all-day strategic planning session.

Board of Directors Independence

Rule 5605 of the NASDAQ Marketplace Rules (the “NASDAQ Listing Rules”) requires that independent directors compose a majority of a listed company’s board of directors. In addition, the NASDAQ Listing Rules require that, subject to specified exceptions, each member of a listed company’s Audit, Compensation and Nominating and Corporate Governance Committees be independent and that Audit Committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. Under Rule 5605(a)(2) of the NASDAQ Listing Rules, a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 under the Exchange Act, a member of an Audit Committee of a listed company may not, other than in his or her capacity as a member of the Audit Committee, the Board or any other Board committee: (i) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries; or (ii) be an affiliated person of the listed company or any of its subsidiaries. In addition to satisfying general independence requirements under the NASDAQ Listing Rules, members of a Compensation Committee must also satisfy independence requirements set forth in Rule 10C-1 under the Exchange Act and NASDAQ Listing Rule 5605(d)(2). Pursuant to Rule 10C-1 under the Exchange Act and NASDAQ Listing Rule 5605(d)(2), in affirmatively determining the independence of a member of a Compensation Committee of a listed company, the Board of Directors must consider all factors specifically relevant to determining whether that member has a relationship with the Company which is material to that member’s ability to be independent from management in connection with the duties of a Compensation Committee member, including: (a) the source of compensation of such member, including any consulting, advisory or other compensatory fee paid by the Company to such member; and (b) whether such member is affiliated with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company.

The Board consults with our legal counsel to ensure that their determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent NASDAQ Listing Rules, as in effect from time to time.

Consistent with these considerations, the Board has affirmatively determined that all of its directors, including the director nominees, satisfy general independence requirements under the NASDAQ Listing Rules, other than Mr. Hagan. In making this determination, the Board found that none of the directors, other than Mr. Hagan, had a material or other disqualifying relationship with us that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and that each director, other than Mr. Hagan, is “independent” as that term is defined under Rule 5605(a)(2) of the NASDAQ Listing Rules. The Board determined that Mr. Hagan, President and Chief Executive Officer, is not an independent director by virtue of his current employment with the Company. The Board also determined that each member of the Audit, Nominating and Corporate Governance and Compensation Committees satisfies the independence standards for such committees established by the SEC and the NASDAQ Listing Rules, as applicable.

Code of Ethics and Corporate Governance Guidelines

We have adopted a Conflict of Interest Policy and Code of Conduct, which applies to all of our employees and officers. We have also adopted a Code of Ethics for Senior Financial Officers, which applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions for us in 2022, and which requires compliance with the Conflict of Interest Policy and Code of Conduct. The Code of Ethics for Senior Financial Officers meets the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K.

We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of our Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions in 2022, by posting such information on our website at the internet address set forth below. We have not amended or granted any waivers of a provision of our Code of Ethics during 2022.

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

The Code of Ethics for Senior Financial Officers and our Corporate Governance Guidelines are available to shareholders on our investor relations website at wneb.q4ir.com. The inclusion of our website address here and elsewhere in this Proxy Statement does not include or incorporate by reference the information on our website into this Proxy Statement.

Hedging and Pledging of Company Securities

On an annual basis, all directors, executive management and senior officers, as defined therein, are required to review the Company’s Insider Trading Policy and are provided with the Company’s scheduled blackout periods. The policy details trading guidelines and prohibitions for those directors and officers, subject to Section 16 of the Exchange Act , and serves to educate such directors, executive management and senior officers as to their individual and corporate responsibilities as insider shareholders on such matters as trading on material non-public information and short-swing transactions, as well as the potential criminal and civil liability and/or disciplinary actions for insider trading and/or tipping of material non-public information. The policy requires Company insiders to obtain pre-clearance prior to commencing any trade of the Company’s securities and prohibits short-selling of the Company’s securities by insiders. The policy further prohibits the exercise of stock options during scheduled blackout periods. A signed Certification of Acknowledgment from all directors, executive management and senior financial officers is collected and retained by the Corporate Secretary.

⁽¹⁾Ms. Benoit has served on the Nominating and Corporate Governance Committee since May 2022. Prior to that, Ms. Benoit served on the Compensation Committee from 2014 through May 2022.

⁽²⁾Mr. Fitzgerald is the Company’s designated Financial Expert.

⁽³⁾Mr. Richter has served on the Finance and Risk Management Committee since May 2022. Prior to that, Mr. Richter served on the Nominating and Corporate Governance Committee from 2015 through May 2022.

⁽⁴⁾See Executive Committee below.

Executive Committee

The Executive Committee exercises the powers of the Board between Board meetings and is responsible for reviewing and approving all the Bank’s extensions of credit above and beyond management’s authority. The Executive Committee takes action to review and approve extensions of credit either through meetings, as noted above, or virtually through the Company’s online board portal. In addition to meeting eighteen (18) times during 2022, the Executive Committee also took action reviewing and approving extensions of credit between scheduled meetings using the Company’s secure online board portal. During 2022, the Executive Committee was chaired by Ms. McMahon with Messrs. Hagan, Richter and Smith serving as members.

Audit Committee

The Audit Committee is chaired by Mr. Fitzgerald with Ms. Benoit and Messrs. Masse and Picknelly serving as members. The Audit Committee assists the Board by overseeing the audit coverage and monitoring the accounting, financial reporting, data processing, regulatory and internal control environments. The primary duties and responsibilities of the Audit Committee are to:

•oversee and monitor the financial reporting process and internal controls system;

•review and evaluate the audit performed by outside auditors and report any substantive issues found during the audit to the Board;

•appoint, compensate and oversee the work of the independent auditors;

•review and approve all transactions with affiliated parties; and

•provide an open avenue of communication among the independent auditors, financial and senior management, the internal audit department and the Board.

The Board reviews the NASDAQ Listing Rules’ definition of independence for Audit Committee members on an annual basis and has determined that all members of our Audit Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ Listing Rules and Rule 10A-3 under the Exchange Act). The Board has also determined that Mr. Fitzgerald qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of Regulation S-K. The Board has adopted a written charter for the Audit Committee that is available to shareholders on our investor relations website at wneb.q4ir.com.

Pre-approval of Services

The Audit Committee shall pre-approve all auditing services and permitted non-audit services (including the fees and terms) to be performed for us by our independent registered public accounting firm, subject to the de minimis exception for non-audit services described below, which are approved by the Audit Committee prior to completion of the audit. The pre-approval requirement set forth above shall not be applicable with respect to non-audit services if:

•the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid by us to our auditor during the fiscal year in which the services are provided;

•such services were not recognized by us at the time of the engagement to be non-audit services; and

•such services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit by the Audit Committee or by one or more members of the Audit Committee who are members of the Board to whom authority to grant such approvals has been delegated by the Audit Committee.

Delegation

The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant required pre-approvals. The decisions of any member to whom authority is delegated under this paragraph to pre-approve activities under this subsection shall be presented to the full Audit Committee at its next scheduled meeting.

The Audit Committee pre-approved 100% of the services performed by the independent registered public accounting firm for the fiscal year ending December 31, 2022, pursuant to the policies outlined above.

In accordance with our Bylaws, nominations of individuals for election to the Board at an Annual Meeting of shareholders may be made by any shareholder of record entitled to vote for the election of directors at such meeting who provides timely notice in writing to our Secretary at our principal executive office. To be timely, a shareholder’s notice must be delivered to or received by our Secretary not less than 120 calendar days in advance of the anniversary date of our Proxy Statement released to shareholders in connection with the previous year’s Annual Meeting of shareholders. Submissions must include the full name of the proposed nominee and include a detailed background of the suggested candidate, and a representation that the nominating shareholder is a beneficial or record holder of our common stock. If a nomination is not properly brought before the Annual Meeting in accordance with our Bylaws, the Chairperson of the Annual Meeting may determine that the nomination was not properly brought before the Annual Meeting and shall not be considered. For additional information about our director nomination requirements, please see our Bylaws.

All director nominees were nominated by the Nominating and Corporate Governance Committee. As of the date of this Proxy Statement, the Nominating and Corporate Governance Committee had not received any shareholder recommendations for nominees in accordance with our Bylaws in connection with the Annual Meeting.

Compensation Committee

The Compensation Committee is chaired by Mr. Orlen with Mses. Damon and McMahon and Messrs. Fitzgerald and Richter serving as members. In the month of May 2022, Ms. Benoit rotated off this Committee to serve on the Company’s Nominating and Corporate Governance Committee. Each member of the Compensation Committee is a non-employee director within the meaning of Rule 16b-3 under the Exchange Act, each is an outside director as defined by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and each is an independent director under the corporate governance standards of the NASDAQ Listing Rules and the independence requirements of Rule 10C-1 under the Exchange Act. As required by its charter, the Compensation Committee meets at least three times annually and with greater frequency, if necessary. The Board has adopted a written charter for the Compensation Committee that is available to shareholders on our investor relations website at wneb.q4ir.com. Pursuant to its charter, the Compensation Committee’s responsibilities include:

•evaluating the performance of the Chief Executive Officer and other executive officers in light of approved performance and objectives. In evaluating and determining CEO compensation, the Committee considers the results of the most recent shareholder advisory vote on executive compensation (“Say on Pay Vote”) required by the Exchange Act;

•making recommendations to the Board for, and setting the compensation of the Chief Executive Officer and other executive officers, based upon the evaluation of the performance of the Chief Executive Officer and the other executive officers, respectively; and

•making recommendations to the Board with respect to profit sharing, performance-based and equity-based compensation plans.

The Compensation Committee also reviews and discusses with management the “Compensation Discussion and Analysis” section of our Proxy Statements and considers whether to recommend to the full Board that it be included in our Proxy Statement and other filings.

Compensation Decision-Making and Policy-Making

Our Bylaws require that our business and affairs be under the direction of the Board, which includes executive officer compensation. Executive compensation is set by the Board after recommendation of the Compensation Committee. As a company listed on NASDAQ, we must observe governance standards and listing requirements that require executive officer compensation decisions to be made by a majority of independent directors of our Board, by a committee of independent directors or, in exceptional and limited circumstances, a compensation committee comprised of at least three members where only one member is not independent.

The Compensation Committee has been delegated authority from our Board to oversee executive compensation by approving salary increases for Senior Vice Presidents and above by reviewing general personnel matters, such as staff performance evaluations, for such Senior Vice Presidents and above. The Compensation Committee has established a compensation program and has a formal charter, which was adopted in December of 2006 and amended in 2007, 2013, 2017, 2022 and in February of 2023, and advises senior management on the average salary increases for all employees under the compensation program. The compensation program consists of three components: (1) base salary; (2) annual bonuses (short-term incentives); and (3) long-term incentives (e.g., omnibus equity grants, employment and change-in-control agreements, deferred compensation, retirement and fringe benefits).

The Compensation Committee considers the expectations of the Chief Executive Officer with respect to his own compensation and his recommendations with respect to the compensation of other executive officers, as well as empirical data and the recommendations of advisors both internal and external. Compensation decisions made by the Compensation Committee are reported by the Compensation Committee’s Chairperson to the Board, which approves, disapproves or amends the Compensation Committee’s action. The Compensation Committee does not delegate its duties to others. The Compensation Committee also confirms and approves the Compensation Discussion and Analysis included in this Proxy Statement in accordance with the rules and regulations of the SEC.

In addition, pursuant to its charter, the Compensation Committee has the sole authority to retain compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms.

The positions of our Chairperson of the Board and Chief Executive Officer are currently separated. Separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while allowing the Chairperson of the Board to lead our Board in its fundamental role of providing advice to, and independent oversight of, management. The Board recognizes the time, effort and energy that our Chief Executive Officer must devote to his position in the current business environment, as well as the commitment required to serve as our Chairperson, particularly as the Board’s oversight responsibilities continue to grow. The Board also believes that this structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of our Board. The Board recognizes that depending on the circumstances, other leadership models, such as combining the role of Chairperson of the Board with the role of Chief Executive Officer, might be appropriate. Accordingly, the Board may periodically review its leadership structure.

Board’s Role in Risk Oversight

The Board is responsible for consideration and oversight of risk management and is responsible for ensuring that material risks are identified and managed appropriately. The Board believes an effective risk management system will (1) timely identify the material risks that the Company faces; (2) communicate necessary information on material risks to senior management and, as appropriate, to the Board or relevant Board committee; (3) implement responsive risk management strategies appropriate to the Company’s risk profile; and (4) integrate risk management into the Company’s decision making. 

The Board’s role in the Company’s risk oversight process includes receiving regular reports from members of senior management on areas of material risk to the Company, including credit, liquidity, interest rate, operational, financial, legal, regulatory, technology, cybersecurity, strategic and reputational risks. The Board receives these reports to enable it to understand the Company’s risk identification, risk management and risk mitigation strategies. While the Board has the ultimate oversight responsibility for the risk management process, various committees of both management and the Board also have responsibility for risk management. The Board has established a Finance and Risk Management Committee of the Board to assist in fulfilling this responsibility. The Board and the Finance and Risk Management Committee approve the Bank’s business strategies and, in so doing, ultimately approve the level of risks the Bank takes. Senior management is responsible for implementing the Board’s strategies in such a way as to limit the associated risks the Bank takes and for ensuring that the staff complies with applicable laws and regulations.

To further assist the Board and the Finance and Risk Management Committee in carrying out its responsibility, the Chief Risk Officer serves as the primary risk management officer for establishing policy and designing and implementing the overall Enterprise Risk Management framework. While business unit managers are primarily responsible for managing risk inherent in their areas of responsibility, the objective of the Chief Risk Officer is to promote risk management practices throughout the organization that are well defined, repeatable and allow a comprehensive understanding of the Company’s risk profile.

Our Chief Risk Officer provides reports and updates to the Finance and Risk Management Committee on risk management initiatives. The chair of the Finance and Risk Management Committee reports to the full Board with respect to any notable risk management issues and coordinates with other Board and management-level committees, as necessary. The Board also meets regularly in executive session, without management, to discuss a variety of topics, including risk. In these ways, the full Board is able to monitor our risk profile and risk management activities on an on-going basis.

The Audit Committee provides quarterly updates to the Board relating to our internal and external audit functions. The Board reviews all reports of examination by regulatory agencies, including the Bank’s primary regulator, the Office of the Comptroller of the Currency. All policies and procedures affecting the risk factors listed above are reviewed and approved by the Board on a monthly, quarterly and annual basis, as the case may be.

We believe that through our current reporting structure, the Board maintains strong and effective oversight of all risk factors affecting us. This oversight is maintained through active involvement by all members of the Board on various committees, with elected chairpersons for each such committee, which ensures that diverse leadership exists throughout the Board and prevents centralization of control within one, or a group of individuals. Oversight is also maintained through the Executive Committee, which, pursuant to our Bylaws, has the ability to exercise the powers of the Board between Board meetings, and through the Board’s monthly meetings. Recommendations of the Board at these meetings are then implemented by senior management and the results are subsequently reported to the Board.

Environmental, Social and Governance Highlights

The Company is committed to strengthening the communities we serve through volunteerism and corporate philanthropy, as well as environmental responsibility, serving as a cornerstone of the local community, and maintaining transparency and diversity in governance. We strive to have positive impacts on the communities in which we live and work by focusing on certain core initiatives, including financial empowerment and education; diversity, equity and inclusion in governance; volunteerism and environmental sustainability. Below are some of our significant initiatives and events of 2022:

We promote economic development and education through investment in community-strengthening initiatives like small business and affordable housing lending programs, as well as no-cost, first-time homebuyer educational seminars open to the public and financial literacy programs in the communities we serve. The following are a few examples:

•First-Time Homebuyer Program: This program provides home loans with special incentives, such as low down payments and closing cost credits, to individuals purchasing a primary residence for the first time. In 2022, the Bank lent over $25 million under this program to 95 borrowers;

•Basic Banking for Massachusetts Program: This program is coordinated by the Massachusetts Community & Banking Council and recognizes Massachusetts banks that expand access to low-cost bank products and services. In 2022, the Company was recognized in both the checking and savings categories;

•Second Chance Checking Program: Through this program, we work with individuals to help rehabilitate their past bank deposit account charge-off record, which provides them with the opportunity to access mainstream financial services. After twelve (12) months of satisfactory performance, accounts are automatically converted to standard products;

•Ready, Set, Grow Program: This proprietary program encourages youth savings and is available through participating schools and all branch locations; and

•Financial Literacy: We promote financial literacy through a number of educational programs, including:

oOur First-Time Homebuyer seminars, which help promote the joy and responsibility of homeownership;

oOur educational partnerships with community centers and local schools with Bank personnel providing instruction about personal finance and banking.

The Company has received an “Outstanding” rating in each of its last three Community Reinvestment Act examinations performed by the Office of the Comptroller of Currency. These examinations assess our responsiveness to the financial needs of the communities we serve, with a special emphasis on meeting the needs of low-to-moderate income consumers and small businesses. Throughout our footprint, we have facilitated more than 52 community development loans totaling in excess of $167 million during 2022 and have partnered with numerous local- and state-based small business development agencies to foster successful business relationships.

We support environmental awareness and sustainability by encouraging and empowering recycling, responsible waste management practices and energy conservation throughout the organization. The following are a few examples:

•We continue to utilize recycled paper, stationery products and janitorial supplies, and partner with a local information destruction vendor for bulk shredding services that ensures all paper waste is recycled back into the marketplace;

•We continue to reduce the amount of paper and other waste we create by expanding initiatives geared at the electronic storage of documents, replacing customer mailings with statement messages and email options, allowing electronic delivery and signing of documents by customers and working toward complete electronic implementation and storage of account documentation, emphasizing client use of monthly electronic statements and maintaining completely paperless Board and Board committee meetings;

•During 2022, we partnered with our information destruction vendor to host four community shred events at our branch locations that provided members of the communities we serve an opportunity to dispose of their personal, sensitive documents in a safe and environmentally conscious manner;

•We have continued our initiative to reduce consumption of electricity through the installation and use of motion-activated lighting in our offices and the replacing of interior and exterior lighting to LED sourced bulbs throughout our organization;

•We have installed filtered water refilling stations in all of our branch and office locations to promote a reduction in waste associated with single-use plastic water bottles;

•We collaborate with a local electronic recycling company and recycled more than 3,500 pounds of LED lighting, computer and mixed electronic equipment in 2022; and

•We have continued our initiative of reducing automobile emissions that impact our environment by encouraging virtual meetings and trainings for numerous departments throughout the organization despite our return to office.

The Company continually evaluates opportunities to reduce energy dependence in areas such as facilities, equipment, operations, shipping and business travel, and remains cognizant of our impact on the environment.

Philanthropy

Philanthropy has always been one of our Company’s core values as we continually focus on strengthening the communities we serve through our support of economic development and charitable organizations. We accomplish this through a culture of employee volunteerism, corporate sponsorships and grants, non-profit board service by employees, and organized employee fundraising donations for non-profit groups and associations in our communities.

The following are some examples of these philanthropic activities:

•In 2022, the Company donated in excess of $920,000 in grants and sponsorships to hundreds of non-profit organizations as well as to economic development groups located within our footprint. As of December 31, 2022, the Company had $166,250 in outstanding multi-year pledged commitments.

•We promote volunteerism in our communities by providing paid-time-off to our employees for performing volunteer work, and we formally partner with, and source volunteers for, numerous community groups and non-profits. Our employees volunteered more than 3,000 hours across more than 100 organizations in 2022.

Diversity, Equity and Inclusion

The Company and the Board strongly believe diversity is critical to the Company’s success and creating long-term value for our shareholders. The Board and Executive Management have adopted diversity, equity and inclusion as a key focus of the Company’s overall strategic plan and have committed to a formal training initiative for all employees and Board members in 2023.

With respect to the Board, it is acknowledged that a Board consisting of individuals with diverse backgrounds ensures broader representation and inspires deeper commitment to management, employees and the communities we serve. While not specific to a particular policy, the Board prioritizes diversity in gender, ethnic background and professional experience when considering candidates for director as part of its commitment to diversity. At present, 30% of our Board is diverse from a gender, race or ethnic perspective. For additional information regarding the composition and diversity of our current Board, see “Information About Our Board Of Directors” on page 6.

In addition, the Company is committed to a culture of inclusiveness, equality and diversity at all levels of the organization’s workforce. The Company aims to maintain a workplace that presents a respectful, productive environment for everyone and enables individuals to achieve their full potential. Engaging a diverse workforce is sought by creating a culture of inclusion where similarities, differences, complexities and constructive dialogue are valued. As of December 31, 2022, 33% of our senior management team were diverse from a gender, race or ethnic perspective. Our workforce is also representative of our commitment to recruit, develop, and retain diverse individuals wherein 21% of our employees are either ethnic minorities, veterans or persons with disabilities. We remain focused on bolstering our workforce through inclusive hiring and retention practices, which we feel reflects and better serves our communities. Developing employees and providing them with the skills and opportunities they need to advance within the Company is a priority and led to the initiation of a customized Corporate Leadership Development Program in 2021. During 2022, fifty employees completed the program upon being identified as qualified candidates by Management. The Company respects, values and invites diversity in our Board, workforce, customers, suppliers, marketplace and community. Our Board is 30% gender diverse in accordance with ISS and NASDAQ gender diversity standards, and we actively seek to recruit diversified candidates throughout our communities.

Shareholder Engagement

The Nominating and Corporate Governance Committee and the Board value open dialogue and discourse with our shareholders. We believe that engaging and receiving feedback from our shareholders enhances our oversight of best governance practices and provides the Nominating and Corporate Governance Committee and the Board with valuable tools to ensure the best interest of all shareholders.

On an annual basis, we solicit our top 25 institutional investors to engage with various members of senior management regarding our governance practices, compensation disclosures and equity and diversity plans. During the fall of 2022, one shareholder engaged management on several topics related to best governance practices for the Board that we have taken under advisement. We believe the historically low response to our engagement efforts reflects the general satisfaction shareholders have with the effectiveness of our compensation and governance practices.

COMPENSATION DISCUSSION AND ANALYSIS

This section details the Company’s executive compensation philosophy and contains a discussion of each material element of the Company’s 2022 executive compensation program as it relates to the following “Named Executive Officers” or “NEOs”:

•James C. Hagan, President and Chief Executive Officer;

•Allen J. Miles, III, Executive Vice President and Chief Lending Officer; and

•Guida R. Sajdak, Executive Vice President, Chief Financial Officer and Treasurer.

In this section, “Committee” and the “Compensation Committee” are used interchangeably to refer to the Compensation Committee.

Executive Summary

In 2022, the Company delivered a strong performance and demonstrated a continued focus on core banking initiatives, disciplined expense management, loan growth and a focus on growing and retaining core deposits while controlling liability costs in a rising interest rate environment. The Company continued to build franchise value for our shareholders through solid earnings, stable asset quality, a strong capital position and an increased cash dividend. Our strategic priorities for the coming year are similar to our prior strategic initiatives, which are to continue to service our existing markets and continue to build our base in our new Connecticut markets.

Company Performance

For the fiscal year ended December 31, 2022:

•For the twelve months ended December 31, 2022, the Company reported net income of $25.9 million, or $1.18 per diluted share, compared to $23.7 million, or $1.02 per diluted share, for the twelve months ended December 31, 2021. Return on average assets and return on average equity were 1.02% and 11.85% for the twelve months ended December 31, 2022, respectively, compared to 0.96% and 10.64% for the twelve months ended December 31, 2021, respectively.

•At December 31, 2022, total assets were $2.6 billion, an increase of $14.7 million, or 0.6%, from December 31, 2021. During the twelve months ended December 31, 2022, cash and cash equivalents decreased $73.1 million, or 70.7%, to $30.3 million, investment securities decreased $45.1 million, or 10.5%, to $383.4 million and total loans increased $126.7 million, or 6.8%, to $2.0 billion.

•The Company maintained its focus on credit quality. Nonperforming assets to total assets was 0.22% at December 31, 2022, compared to 0.20% at December 31, 2021. The allowance for loan losses as a percentage of total loans was 1.00% at December 31, 2022, compared to 1.06% at December 31, 2021. At December 31, 2022, the allowance for loan losses as a percentage of nonperforming loans was 350.0%, compared to 398.6%, at December 31, 2021.

•At December 31, 2022, total deposits were $2.2 billion, a decrease of $27.5 million, or 1.2%, from December 31, 2021. Core deposits, which the Company defines as all deposits except time deposits, decreased $37.1 million, or 2.0%, from $1.9 billion, or 82.2% of total deposits, at December 31, 2021, to $1.8 billion, or 81.5% of total deposits at December 31, 2022. The loan-to-deposit ratio increased from 82.6% at December 31, 2021, to 89.3% at December 31, 2022.

•The Company’s book value per share was $10.27 at December 31, 2022, compared to $9.87 at December 31, 2021. As of December 31, 2022, the Company’s and the Bank’s regulatory capital ratios remain in compliance with regulatory “well-capitalized” requirements under federal banking regulations and internal target minimum levels.

•In 2022, the Company repurchased 720,975 shares and increased the quarterly dividend from $0.05 per share to $0.06 per share beginning in the first quarter of 2022.

Advisory Vote on NEO Compensation

At our Annual Meeting of shareholders held on May 11, 2022, we held an advisory vote on executive compensation. Although the vote was non-binding, the Committee has considered, and will continue to consider, the outcome of the vote when determining compensation policies and setting NEO compensation. Approximately 97% of the shares of our common stock that were voted on the proposal were voted for the approval of the compensation of the NEOs, as disclosed in our 2022 Proxy Statement.

The Committee will continue to consider the outcome of our Say-on-Pay proposal, regulatory changes and emerging best practices when making future recommendations regarding compensation for our executives.

Role of the Compensation Consultant

In 2022, the Compensation Committee engaged the consulting services of Pearl Meyer & Partners, LLC (“Pearl Meyer”) to provide independent advice and counsel related to executive and Board compensation. The Compensation Committee has also used the services of several law firms to ensure compensation plans and programs are properly administered, documented and meet legal and regulatory requirements.

The Compensation Committee considered the independence of Pearl Meyer and its outside legal advisors in light of SEC and NASDAQ rules for compensation committees and compensation consultants, legal counsel and other advisers.

Role of Management

Management provides information and input as requested by the Compensation Committee to facilitate decisions related to executive compensation. Members of management may be asked to provide input relating to potential changes in compensation programs for review by the Compensation Committee. The Compensation Committee occasionally requests members of management to be present at meetings where executive compensation and Company or individual performances are discussed and evaluated. Executives are free to provide insight, suggestions or recommendations regarding executive compensation. However, only Compensation Committee members are allowed to vote on decisions regarding executive compensation.

In 2022, Christine Phillips, the Company’s Senior Vice President and Director of Human Resources, served as management’s liaison to the Compensation Committee. Mrs. Phillips assisted in the administration of executive compensation programs, prepared Compensation Committee and Board meeting materials, worked with consultants and legal counsel engaged by the Compensation Committee and performed work as requested, including the preparation of peer analyses, based on a peer group selected by the Compensation Committee. Guida R. Sajdak, the Company’s Chief Financial Officer, provided the Compensation Committee with periodic updates of the Company’s financial performance measures under the short- and long-term incentive compensation programs. James C. Hagan, the Company’s Chief Executive Officer and President, made recommendations with respect to base salary, annual incentive awards and equity compensation for executive officers who report to him. Mr. Hagan was not present at any Compensation Committee meetings in which his own compensation was discussed or voted upon.

Although executives may provide insight, suggestions or recommendations regarding executive compensation, they are not present during the Compensation Committee’s deliberations or vote. Only Compensation Committee members vote on decisions regarding executive compensation. The Compensation Committee periodically meets in executive session without management present.

Compensation Philosophy

Our compensation philosophy is to align the interest of the NEOs with the interest of its shareholders and to provide competitive compensation that rewards executives for performance and management of risk. The Company’s executive compensation program is reviewed on an annual basis to ensure the program remains in alignment with the Company’s compensation philosophy and business objectives and also reflects emerging best practices. The Compensation Committee continues to subscribe to the philosophy that the most effective compensation program is one that is designed to attract and retain qualified and experienced executive officers and is reasonable, competitive and aligned with the Company’s pay for performance philosophy while maximizing performance for the benefit of the Company’s shareholders.

The Compensation Committee believes that an effective program is one component of the overall management of the Company and that it helps to support and promote a culture that recognizes and rewards the individuals, behaviors and results that the Company and shareholders value. The Company’s compensation philosophy is one that recognizes the importance of individual achievements and strives to reward these behaviors while also emphasizing overall corporate achievement and also being fair and competitive.

Compensation Components

In support of our executive compensation philosophy and objectives, our executive compensation program consists of the following three key components: base salary, short-term annual incentive awards (cash component) and long-incentive incentive awards (equity component).

The Committee reviews the various elements of executive compensation provided by the Company with a view toward aligning executive interests with those of the Company’s shareholders and the long-term interests of the Company. The Committee determines the allocation of compensation by reviewing data from the Company’s Proxy Peer Group (described below), as well as using salary surveys and review of industry trends.

The elements of the Company’s NEO compensation program include the following:

We also provide modest levels of perquisites, described later, to our NEOs and participation in other benefit programs that are generally available to the Company’s broader workforce on the same basis as other employees (e.g., health care, disability, life insurance and a defined contribution plan). See “Summary Compensation Table” on page 31 for additional information on these perquisites and benefits.

The Committee maintains a flexible policy for the allocation of compensation components. Allocations of compensation among the various components are intended to align compensation with achievement of short- and long-term performance goals and appropriate risk management while remaining competitive in comparison to the Company’s peer group.

Base Salary

Base salary recognizes and compensates for competencies, experience and knowledge that we believe our NEOs must possess. Base salary is determined by individual factors, such as the executive’s role in the organization, scope and complexity of responsibility of the position, the market value of his or her job, the level of an individual’s expertise in the role and his or her performance in the position. In determining base salary, the Committee also considers the level of achievement of corporate strategic and operational objectives established by the Committee. The Committee also utilizes the compensation surveys and the Proxy Peer Group data as sources of information in determining base salary for Messrs. Hagan and Miles and Mrs. Sajdak.

In early 2022, performance evaluations of the executive officers were completed with respect to their 2021 performance. The Committee approved base salary increases for all executive officers, which were derived from the evaluation of their individual performance.

The Committee approved the following base salaries for the Company’s NEOs:

2022 Short-Term Incentive Plan

The Company’s Short-Term Incentive Plan (the “STI Plan”) is a short-term (annual) cash incentive compensation plan intended to reward performance of key employees, including the NEOs. The STI Plan is designed to motivate employees to attain desired short-term objectives and to encourage teamwork and collaboration while aligning compensation with overall Company performance.

The STI Plan is a key element of the total compensation provided to the NEOs and allows the Company to remain competitive with the market by providing an opportunity for the NEOs to receive cash incentives. The design of the STI Plan is intended to ensure that benefits paid to NEOs and other officers are in alignment with both the Company’s strategic plan and the achievement of individual performance goals. The award opportunities are linked to specific target and range of performance results for multiple performance measures and are calculated as a percentage of base salary in effect on the last day of the calendar year during the relevant performance period, which runs from January 1^st to December 31^st. The Company typically makes payments in the first quarter immediately following the end of the annual performance period.

The Compensation Committee sets and approves award targets as a percentage of base salary. The incentive pool funding ranges from 0% - 150% of target based on actual performance. The maximum award for any participant, in consideration of corporate and individual performance, is capped at 150% of target.

Each year, in the first quarter, the Compensation Committee sets specific incentive metrics and goals that align with the Company’s strategic plan. The Compensation Committee sets threshold, target and stretch goals for each incentive metric. Target performance goals are expected to have some stretch and not be “guaranteed.” Threshold performance goals are intended to reward solid performance but at reduced payout levels. Stretch performance goals are expected to represent strong performance that is unlikely, but possible, if the Company exceeds its goals.

The Compensation Committee approves the NEOs’ goals and awards. The Compensation Committee can modify the goals at its discretion and approves the final goals at the beginning of each year. Once the performance goals and pool funding are known, individual performance is assessed to determine and allocate the actual awards from the amount that has been funded to the pool. The Compensation Committee determines awards in consideration of individual performance, but with the discretion to consider other factors such as (i) Company performance shortfalls, (ii) regulatory and safety and soundness concerns and/or (iii) risk management considerations.

For 2022, the individual targets were defined as a percentage of base salary. Mr. Hagan’s target was 45% of base salary and Mr. Miles’ and Mrs. Sajdak’s targets were each 30% of base salary. The STI Plan targets were unchanged from the prior year. Similarly, all NEOs had the same four Company performance goals and weightings described in the table below. The Committee, working with management and Pearl Meyer, established and approved the Company’s 2022 performance metrics within the STI Plan.

Company Performance Component (75% of annual incentive award)

On February 16, 2022, the Compensation Committee established and approved performance goals and awards to determine the pool available for payout of incentive compensation. The Compensation Committee also established a minimum trigger or gate level of performance, which is defined as (i) 70% of budgeted net income and (ii) the Bank receiving satisfactory regulatory ratings from its regulatory examiner.

The Committee worked with Pearl Meyer to design the 2022 STI Plan framework. The Compensation Committee determined that the four corporate performance goals listed below reflect a broad measurement of corporate performance, including bottom-line profitability, top line revenue objectives and safety and soundness. The assessment of corporate goals was based on the reported financial results of the Company. Financial results are subject to adjustment at the discretion of the Compensation Committee and may exclude the impact of one-time extraordinary gains or losses, which may have the effect of either increasing or decreasing calculated payouts under the STI Plan.

Once the minimum trigger is achieved, the incentive pool funding is determined based on Company performance compared against four performance goals. After reviewing the performance metrics under the STI Plan, the Compensation Committee did not make any changes to the 2022 performance metrics.

The table below outlines the 2022 performance objectives and corporate performance results under the STI Plan:

The considerations in setting the 2022 corporate targets and evaluating performance are shown below.

Net Interest Margin (NIM), on a Tax-Equivalent Basis

NIM, on a tax-equivalent basis, represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets. The target NIM, on a tax-equivalent basis, for 2022 was established at 3.07%, which was a decrease of nine basis points from the 2021 actual results of 3.16%. During 2022, the Federal Reserve increased interest rates 425 basis points as an attempt to fight the highest inflation in 40+ years. Management developed strategies to manage the balance sheet to offset the impact of the rapidly changing interest rate environment and protect the net interest margin. The NIM, on a tax-equivalent basis, was 3.33% and exceeded target of 3.07%. Using interpolation, a payout factor of 121% was established for this metric.

Expense Ratio

The expense ratio is defined as expenses over average assets. The expense ratio target was established at 2.20% in 2022, compared to actual results from 2021 of 2.22%. The actual performance of 2.24% did not meet target of 2.20%. Management earned 92% of the targeted payout for this measure.

Pre-Tax, Pre-Provision Income (PTPPI)

PTPPI is defined as income before provision for loan losses and income tax provision. In order to focus on the earnings of the Company and to remove the uncertainty of the provision for loan losses and income tax provision, the Company measures PTPPI. The target for this metric for 2022 was set at $27.2 million, compared to the 2021 actual of $30.8 million, which included $6.8 million in interest and fee income from the Paycheck Protection Program. The actual result for 2022 was $35.3 million, which outperformed the stretch metric of $32.6 million. Management earned 150% of the targeted payout for this measure.

Non-Performing Loans to Total Loans (NPL)

The NPL goal measures the level of non-performing loans to total loans. The target for this metric was set at 0.75% for 2022. In addition, the metric was used to mitigate any unintended results of utilizing the PTPPI metric. If the provision, which was excluded from the PTPPI metric, was elevated due to loan growth, this NPL metric would remain at acceptable levels. If the provision was elevated due to asset quality issues in the portfolio, the NPL would negatively exceed the target and reduce the overall payout. The actual result for 2022 was 0.29%, compared to 0.27% in 2021, which represented ongoing strong asset management. Management earned 150% of the targeted payout for this measure.

Individual Performance Component (25% of annual incentive awards)

In addition to the corporate performance component, each 2022 STI award was determined based on individual performance. The individual component for each NEO, with the exception of Mr. Hagan, was assessed by Mr. Hagan based on each NEO’s annual performance evaluation and was reviewed and approved by the Compensation Committee. The review of Mr. Hagan’s individual component was based on the Compensation Committee’s and the full Board’s performance evaluation of Mr. Hagan.

Multiple factors were considered in this assessment, including but not limited to:

•Overall corporate performance;

•Progress on key strategic initiatives;

•Regulatory relationships and evaluations;

•The performance of each individual’s business line or department; and

•Extraordinary unplanned accomplishments outside of the planned annual goals but which significantly contributed to organizational success and increased shareholder value.

The table below details the STI Plan opportunities and awards earned and paid for each NEO for 2022:

The Compensation Committee has the discretion to adjust any payouts to reflect the business environment and market conditions. After reviewing the Company’s performance, combined with its evaluation of the individual achievement of the NEOs, the Compensation Committee did not make any adjustments and authorized individual incentive payments for 2022 at 132.6% of target on January 18, 2023.

Long-Term Incentive Plan

The Company’s Long-Term Incentive Plan (the “LTI Plan”) is designed to provide key employees, including NEOs, with a reward opportunity that aligns the interests of the participants with those of the Company’s shareholders by focusing on the Company’s performance over a longer period of time and encouraging balance between growth and prudent risk-taking. The restricted stock awards, granted under the LTI Plan, have a retentive effect because they vest over a period of time, typically three years from the date of grant. Vesting of the restricted stock may be accelerated under certain circumstances, such as the executive’s death, disability or retirement, or if an executive’s employment is terminated in connection with a change in control of the Company.

The Compensation Committee sets and approves award targets as a percentage of base salary. The LTI Plan incentive pool funding ranges from 0% - 150% of target based on actual performance. The maximum award for any participant, in consideration of corporate and individual performance, is capped at 150% of target.

Each year, in the first quarter, the Compensation Committee determines, at its discretion, the terms of the LTI Plan, the timing of the awards, the recipients who may be granted awards and the form and the amount of awards. The Compensation Committee works with its compensation consultant, Pearl Meyer, to continue to improve upon the LTI Plan framework with the following objectives:

•Align executives with our shareholders by matching incentives with increases in shareholder value;

•Attract and retain talented executives to drive the Company’s success;

•Ensure sound risk management by providing a balanced view of performance and aligning rewards with the time horizon of risk;

•Position the Company’s total compensation to be competitive with the market for meeting performance goals; and

•Motivate and reward long-term sustained performance and avoid excessive risk taking.

Long-Term Incentive Plan Awards for 2019-2021 Performance Period

In 2019, the Compensation Committee selected Return on Average Equity (“ROAE”) as its long-term performance goal and assigned a 100% weight. The grants were made and awarded as 50% performance-based shares and 50% time-based shares. The overall long-term incentive compensation for all NEOs remained unchanged from prior years. Mr. Hagan’s target was 30% of his base salary and Mr. Miles’ and Mrs. Sajdak’s targets remained at 20% of their respective base salaries. Grants for the performance period provided for the possibility of awards at a threshold, target and stretch level based on the Company’s performance.

The framework for establishing specific goals for the 2019 long-term incentive grant was similar to previous years. The goals were based on the Company’s business strategic plan at the end of 2018. The goals motivated improved performance to align results to shareholders’ expectations.

The performance goals and actual outcomes for the period are set forth below:

As of December 31, 2021, the three-year performance period for the 2019 LTI Plan ended. Of the 40,003 performance-based shares granted in 2019 eligible to vest, 60,009 performance-based shares vested and were issued to eligible recipients. Of the total 60,009 performance-based shares that vested, Mr. Hagan earned 11,690 shares; Mr. Miles earned 4,413 shares and Mrs. Sajdak earned 3,906 shares.

2019 Performance Measure. The actual ROAE results for 2019 were 5.79%, and management obtained 94.5% of target.

2020 Performance Measure. The actual ROAE results for 2020 were 4.86%, and management missed the threshold of 6.00%. The 2020 shares within the 2019 LTI Plan were added to the “catch-up” provision. The 2020 Plan year included $7.8 million in provision for loan losses related to the uncertainty of the COVID-19 Global Pandemic.

2021 Performance Measure. The actual ROAE results for 2021 was 10.64%, and management exceeded stretch of 8.00%. In 2021, the provision for loan losses decreased from $7.8 million in 2021 to a credit for loan losses of $925,000.

The 2019 Plan included a “catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods to be earned at the end of the three year period based on final year performance. Therefore, the 2019 Plan paid out the performance-based shares at the stretch level of 150%.

Long-Term Incentive Plan Awards for 2020-2022 Performance Period

In 2020, the Compensation Committee selected ROAE and the Three-Year Cumulative Diluted Earnings per Share (“EPS”) as its long-term performance goals. The Committee believes that these measures are appropriate to evaluate performance over a three-year period. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest was determined at the end of the three-year period, based upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares. The overall long-term incentive compensation for all NEOs remained unchanged from prior years. Mr. Hagan’s target was 30% of his base salary and Mr. Miles’ and Mrs. Sajdak’s targets remained at 20% of their respective base salaries. Grants for the performance period provided for the possibility of awards at a threshold, target and stretch level based on the Company’s performance.

For each performance-based goal, achieving threshold performance pays at 50% of target value and achieving stretch performance pays at 150% of target value. To the extent earned at the end of the performance period, performance shares will be paid in the form of vested shares of common stock at a date determined by the Compensation Committee within seventy-five (75) days following the end of the performance period. The goals were based on the Company’s business strategic plan at the end of 2019. The goals motivated improved performance to align results to shareholders’ expectations.

The performance goals and weighting for the period are set forth below:

As of December 31, 2022, the three-year performance period for the 2020 LTI Plan ended. The 2020 LTI Plan included a “catch-up” provision allowing unearned performance-based shares from the 2020 and 2021 performance periods to be earned at the end of the three-year period based on the final year performance. Of the 50,156 performance-based shares granted in 2020 based on achieving target, 59,268 performance-based shares vested and were issued to eligible recipients based on achieving stretch. Of the total 59,268 performance-based shares that vested, Mr. Hagan earned 13,539 shares; Mr. Miles earned 4,970 shares and Mrs. Sajdak earned 4,398 shares.

Long-Term Incentive Plan Awards for 2021-2023 Performance Period

In 2021, the Compensation Committee selected ROAE and EPS as its long-term performance goals. The Committee believes that these measures are appropriate to evaluate performance over a three-year period. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares. The overall long-term incentive compensation for all NEOs remained unchanged from prior years. Mr. Hagan’s target was 30% of his base salary and Mr. Miles’ and Mrs. Sajdak’s targets remained at 20% of their respective base salaries. Grants for the performance period provided for the possibility of awards at a threshold, target and stretch level based on the Company’s performance.

LTI Plan grants with respect to the 2021-2023 performance period have not yet been earned. For each performance-based goal, achieving threshold performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2021 Plan includes a “catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods to be earned at the end of the three year period based on final year performance.

To the extent earned at the end of the performance period, performance shares will be paid in the form of vested shares of common stock at a date determined by the Compensation Committee within seventy-five (75) days following the end of the performance period.

The framework for establishing specific goals for the 2021 long-term incentive grant was similar to previous years. The goals were based on the Company’s business strategic plan at the end of 2020. The goals motivated improved performance to align results to shareholders’ expectations.

The performance goals and weighting for the period are set forth below:

Long-Term Incentive Plan Awards for 2022-2024 Performance Period

In 2022, the Compensation Committee selected ROAE and EPS. The Committee believes that these measures are appropriate to evaluate performance over a three-year period. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares. Mr. Hagan’s target was increased to 35% of his base salary, and Mr. Miles’ and Mrs. Sajdak’s targets remained at 20% of their respective base salaries. Grants for the performance period provided for the possibility of awards at a threshold, target and stretch level based on the Company’s performance.

LTI Plan grants with respect to the 2022-2024 performance period have not yet been earned. For each performance-based goal, achieving threshold performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2022 Plan includes a “catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods to be earned at the end of the three year period based on final year performance. To the extent earned at the end of the performance period, performance shares will be paid in the form of vested shares of common stock at a date determined by the Compensation Committee within seventy-five (75) days following the end of the performance period.

The framework for establishing specific goals for the 2022 long-term incentive grant was similar to previous years. The goals were based on the Company’s business strategic plan at the end of 2021. The goals motivated improved performance to align results to shareholders’ expectations.

The performance goals and weighting for the period are set forth below:

The table below outlines the awards value and the number of shares granted to each Named Executive Officer in 2022:

Clawback Policy

Under the LTI and STI Plans, if the Board or an appropriate Board committee has determined that any fraud or intentional misconduct by one or more executive officers caused, directly or indirectly, the Company to restate its financial statements, the Board or Committee may require reimbursement of any bonus or incentive compensation awarded to such officers and/or effect the cancellation of awards. This policy operates in addition to any (a) recoupment provisions contained in the terms of other compensation awards or programs and (b) recoupment requirements imposed under applicable laws. We intend to review our current Clawback Policy and plan to update it, as appropriate, in accordance with the SEC’s recently adopted rules and the related NASDAQ listing standards.

Stock Ownership Guidelines

We maintain stock ownership guidelines for our NEOs. These guidelines were established to promote a long-term perspective in managing the Company and to align the interests of our shareholders and NEOs. The stock ownership goal for each of these individuals is a multiple of 1x base salary. The guidelines provide the NEOs five years to comply. As of December 31, 2022, all NEOs were in compliance with the stock ownership guidelines. Information about stock ownership guidelines for our non-employee directors can be found in “Director Compensation” of this Proxy Statement.

Other Benefits

Qualified Retirement Plans

Westfield Bank Pension Plan. The Company sponsors a tax-qualified, non-contributory defined benefit pension plan, the Westfield Bank Pension Plan, (the “Pension Plan”) covering substantially all employees hired before September 30, 2016, including Mr. Hagan and Mr. Miles. The plan was frozen to new employees hired after that date. On October 31, 2022, the Board of Director’s previously approved termination of the Pension Plan became effective, subject to regulatory approvals. Once the Company has received regulatory approval to terminate the Pension Plan, the Company, if necessary, will make an additional cash contribution likely during the second quarter of 2023 in order to fully fund the Pension Plan on a plan termination basis, followed by the purchase of annuity contracts to transfer its remaining liabilities under the Pension Plan, for those participants who do not opt for a one-time lump sum payment. The actual amount of this cash contribution, if any, will depend upon the nature and timing of participant settlements, as well as prevailing market conditions.

401(k) Plan. The Company also maintains a tax-qualified defined contribution plan (the “Profit Sharing Plan” or “401(k) Plan”) that provides for deferral of federal and state income taxes on employee contributions allowed under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). Participants may make pre-tax salary deferrals to the plan not to exceed $20,500 (which was the 2022 limit; the limit is adjusted annually for IRS-announced cost-of-living increases). If a participant is over the age of 50, they may contribute an additional $6,500 to the 401(k) Plan. In addition to salary deferrals, in 2022, the Company matched up to 50% of the first 6% of the participant’s eligible compensation (for a total maximum employer matching contribution of 3% of a participant’s eligible compensation).

Effective January 1, 2023, the Company converted to a Safe Harbor 401(k) Plan. In addition to salary deferrals, in 2023, the Company will match up to 100% of the first 4% of the participant’s eligible compensation (for a total maximum employer matching contribution of 4% of a participant’s eligible compensation). In addition, on an annual basis, the Company may make a discretionary profit share contribution to each participant.

Employee Stock Ownership Plan. In addition to the Pension Plan and the 401(k) Plan, the Company maintains an employee stock ownership plan (“ESOP”). The ESOP is a tax-qualified defined contribution plan in which our employees, including our Named Executive Officers, are eligible to participate when they reach the age of 21 and have completed 1,000 hours of service in the previous 12-month period. In general, pursuant to the terms of the ESOP, the Company contributes funds to the ESOP trust fund, and the contributed funds are allocated among all the participants’ accounts according to their relative levels of compensation (subject to IRS limits).

Perquisites

The Committee supports providing benefits and perquisites to the NEOs that are substantially the same as those offered to officers of comparative financial institutions, which we believe are reasonable, competitive and consistent with our overall compensation program. In addition, we may also make available to certain NEOs the use of a Company automobile, as was the case in 2022 for the NEOs.

Employment Agreements and Change of Control Agreements

The Committee believes that our continued success depends, to a significant degree, on the skills and competence of certain senior officers. The employment agreements are intended to ensure that we continue to maintain and retain experienced senior management. We currently have employment agreements with our President and Chief Executive Officer, Mr. Hagan; our Executive Vice President and Chief Lending Officer, Mr. Miles and our Executive Vice President and Chief Financial Officer, Mrs. Sajdak, in order to retain such executives. The employment agreements of Messrs. Hagan and Miles and Mrs. Sajdak provide for an initial three-year term subject to separate one-year extensions as approved by the Board at the end of each applicable fiscal year with minimum annual salaries, discretionary cash bonuses and other fringe benefits.

The employment agreements also provide uninsured death and disability benefits, as well as protection for the executives in the event the Company experiences a change in ownership or control. If the Company experiences a change in ownership, a change in effective ownership or control, or a change in the ownership of a substantial portion of the Company’s assets, as contemplated by Section 280G of the Code, a portion of any severance payments under the employment agreements might constitute an “excess parachute payment” under current federal tax laws. Any excess parachute payment would be subject to a federal excise tax payable by the executive and would be non-deductible by the Company for federal income tax purposes. The employment agreements do not provide a tax indemnity.

Benchmarking Data and Use of Compensation Consultants

The Compensation Committee believes that utilization of appropriate benchmarks for compensation analyses is an effective method for evaluating executive and director compensation. Accordingly, approximately every three years, the Compensation Committee engages the compensation consultant to conduct market competitive reviews, which, generally include an assessment of compensation compared to market (e.g., industry-specific surveys and proxy peer group, where applicable), recommendations for total compensation opportunity guidelines (e.g., base salary, annual and long-term incentive targets) and a high-level assessment of performance relative to peers. The Compensation Committee uses this information to determine appropriate salary and incentive levels for executive officers and directors.

The competitive review was conducted in 2021 for reference with 2022 to 2024 pay decisions. This peer group was selected in December 2021 and included financial institutions of generally similar asset size and regional location. At that time, the Company was positioned approximately at the median of the peer group in terms of total assets, with asset size ranging from $1.8 billion to $5.3 billion. All banks were publicly-traded financial institutions located within the Northeast. The peer group used in the report presented for consideration of 2022 compensation decisions consisted of the following institutions:

⁽¹⁾Peer group listed in order of asset size from largest to smallest.

It is expected that Pearl Meyer will continue to support the Compensation Committee in its 2023 executive compensation actions.

⁽¹⁾The figures shown for salary represent amounts earned for the fiscal year, whether or not actually paid during such year.

⁽²⁾Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 with respect to restricted stock awards granted to our NEOs. For more information concerning the assumptions used for these calculations, please refer to the notes to the financial statements contained in the 2022 Annual Report on Form 10-K. The stock award column does not include the value of dividends paid on unvested restricted stock, which are included in the Summary Compensation Table under the caption “All Other Compensation.”

⁽³⁾Amounts shown in this column reflect cash awards earned under the STI Plan, whether or not paid. For the 2020 year, however, due to the COVID-19 pandemic and the impact it had on our community, borrowers and employees, each of the NEOs unilaterally reduced their approved cash payouts under the STI Plan. In 2020, Mr. Hagan earned $191,700 but reduced his payout by 31% to $131,570, and Mrs. Sajdak and Mr. Miles earned $62,300 and $70,400, respectfully, and decreased their payouts by 27% each to $45,412 and $51,312, respectively. Amounts payable under the STI Plan were paid in February of the following calendar year.

⁽⁴⁾Amounts in this column represent the increase (if any) for each respective year in the present value of the individual’s accrued benefit (whether or not vested) under each tax-qualified and non-qualified actuarial or defined benefit plan calculated by comparing the present value of each individual’s accrued benefit under each such plan in accordance with FASB ASC Topic 715, Retirement Benefits, as of the plan’s measurement date in such year to the present value of the individual’s accrued benefit as of the plan’s measurement date in the prior fiscal year. With respect to Mr. Hagan and Mr. Miles, this column includes the aggregate change in the accumulated benefits under the Pension Plan. For 2022, the aggregate change in actuarial present value of accumulated benefits for Mr. Hagan was a decrease of $497,169. For 2022, the aggregate change in actuarial present value of accumulated benefits for Mr. Miles was a decrease of $473,536. However, applicable SEC rules do not permit the Company to report a negative number in this column; therefore, these amounts are not included in the Summary Compensation Table under the caption “Change in Pension Value and Nonqualified Deferred Compensation Earnings” for 2022. Mrs. Sajdak does not participate in the Pension Plan.

⁽⁵⁾Amounts in this column for the year 2022 are set forth in the table below and include life insurance premiums, 401(k) Plan matching contributions, ESOP contributions, dividends on unvested restricted stock and contributions under the Benefit Restoration Plan. The NEOs participate in certain group life, health, disability insurance and medical reimbursement plans, not disclosed in the Summary Compensation Table, that are generally available to salaried employees and do not discriminate in scope, terms and operation. In addition, we provide certain non-cash perquisites and personal benefits to each NEO that do not exceed $10,000 in the aggregate for any individual and are not included in the reported figures.

Compensation Actually Paid

As required by Item 402(v) of Regulation S-K, the information below reflects the relationship between executive compensation actually paid by us (“CAP”) to our CEO, as principal executive officer, and other non-CEO NEOs (“Other NEOs”) and our financial performance for the years ended December 31, 2022, and 2021. The disclosure included in this section is required by SEC rules and does not necessarily align with how the Company or the Compensation Committee views the link between the Company’s performance and the compensation of its NEOs. 

The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years presented. For a discussion of how the Company views its executive compensation structure, including alignment with Company performance, see “Compensation Discussion and Analysis” beginning on page 21 of this Proxy Statement.

The following table sets forth information regarding actual compensation paid to our CEO and Other NEOs for service during each of the last two completed fiscal years, as applicable.

⁽¹⁾As a smaller reporting company, the Company is required to provide information for the prior two completed fiscal years.

⁽²⁾For all years presented our CEO was James C. Hagan and our Other NEOs consisted of Allen J. Miles, III and Guida R. Sajdak.

⁽³⁾Column (b) shows the amount for the CEO included in the Summary Compensation Table.

⁽⁴⁾Columns (c) and (e) show the total compensation paid to the Company’s CEO and average compensation paid to the Other NEOs, respectively, for the applicable years adjusted by changes in equity award values and change in pension value, if any. The following table sets forth the adjustments made to the amounts disclosed in columns (c) and (e) reflect to arrive at compensation “actually paid” to our CEO and Other NEOs during each of the years disclosed:

⁽⁵⁾Column (d) shows the average amount of the total compensation shown in the Summary Compensation Table for the Other NEOs for the applicable years.

⁽⁶⁾The calculation for each year is based on a fixed investment of $100 from the market close on the last trading day before the earliest year in the PVP table through the end of each applicable year in the table, assuming reinvestment of dividends. The calculation will begin at December 31, 2020, and, in the first year, extend through December 31, 2022.

⁽⁷⁾Column (g) provides the Company’s Net Income for each year.

As shown in the following chart, the Company’s net income increased $2.2 million, or 9%, while the CEO and Other NEOs’ CAP increased 24% and 14%, respectively. This is due in large part to the emphasis the Company places on short-term and long-term equity incentives, which are tied to the Company’s financial performance. The Company does not use net income to determine compensation levels or incentive plan payouts.

As shown in the following chart, the Company’s TSR increased 14%, or 11% year-over-year, while the CEO and Other NEOs’ CAP increased 24% and 14%, respectively. This is due primarily to the Company’s use of short-term and long-term equity incentives, which are tied directly to the Company’s financial performance. The Company does not use TSR to determine compensation levels or incentive plan payouts.

CEO Pay Ratio Disclosure

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing this disclosure regarding the relationship of the annual total compensation of the individual identified as the median paid employee of our Company and the annual total compensation of James C. Hagan, our President and Chief Executive Officer.

The individual identified as the median-compensated employee was determined using a census of all employees as of December 31, 2022, which totaled 350 employees, excluding the CEO. In order to identify the median compensated employee, we included compensation reported in Box 5 of Form W-2 for the full year of 2022, annualizing pay for those full-time and part-time employees who were hired during 2022.

The annual total compensation for the median employee was calculated using the same methodology shown for the CEO in the “Summary Compensation Table” on page 31.

Based on this methodology, the annual total compensation of the CEO for 2022 was $1,324,377 and the annual total compensation of the employee identified at median for 2022 was $50,555. The ratio of these amounts was 26 to 1. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above.

Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

⁽¹⁾The market values of these shares are based on the closing market price of the Company’s common stock on the NASDAQ Stock Market of $9.46 on December 31, 2022.

⁽²⁾Shares granted on February 25, 2020, were under the Company’s LTI Plan, are time-based and vest ratably over a three-year period beginning December 31, 2020. Shares granted on May 20, 2021, were under the Company’s LTI Plan, are time-based and vest ratably over a three-year period beginning December 31, 2021. Shares granted on March 2, 2022, were under the Company’s LTI Plan, are time-based and vest ratably over a three-year period beginning December 31, 2022.

⁽³⁾Shares granted on February 25, 2020, were under the Company’s LTI Plan, are performance-based and are subject to the achievement of annual 2020 LTI performance metrics before vesting is realized after a three-year period. Shares granted on May 20, 2021, were under the Company’s LTI Plan, are performance-based and are subject to the achievement of annual 2021 LTI performance metrics before vesting is realized after a three-year period. Shares granted on March 2, 2022, were under the Company’s LTI Plan, are performance-based and are subject to the achievement of annual 2022 LTI performance metrics before vesting is realized after a three-year period.

⁽¹⁾The figure shown for option awards was determined by multiplying the number of shares of the Company’s common stock to which the exercise of the option related by the difference between the per-share closing price of the Company’s common stock on the date of exercise and the exercise price of the options. The figure shown for stock awards includes the amount realized during the fiscal year upon the vesting of restricted stock, based on the closing sales price for a share of our common stock on the vesting date. Unvested restricted stock may not be transferred for value.

Pension Benefits

The Company, through the Bank, maintains the Westfield Bank Pension Plan, which is a defined benefit pension plan covering substantially all employees hired before September 30, 2016, including Messrs. Hagan and Miles. The Pension Plan was frozen to new entrants as of September 30, 2016. On October 31, 2022, the Board of Director’s previously approved termination of the Pension Plan became effective, subject to regulatory approvals. Once the Company has received regulatory approval to terminate the Pension Plan, the Company will make an additional cash contribution likely during the second quarter of 2023, if necessary, in order to fully fund the Pension Plan on a plan termination basis, followed by the purchase of annuity contracts to transfer its remaining liabilities under the Pension Plan, for those participants who do not opt for a one-time lump sum payment. The actual amount of this cash contribution, if any, will depend upon the nature and timing of participant settlements, as well as prevailing market conditions.

In general, participants in the Pension Plan who retire upon attaining the plan’s normal retirement age of 65 are entitled to a monthly payment equal to one-twelfth of the product of (a) the sum of (i) 0.90% of the participant’s “final average compensation” (generally, the participant’s average annual compensation during the five consecutive plan years in the last ten plan years of his or her employment with the Company affording the participant the highest average annual compensation), plus (ii) 0.55% of the participant’s average final compensation in excess of the average Social Security wage base for the 35-year period ending in the year in which the participant attains his or her Social Security retirement age multiplied by (b) the participant’s number of years of credited service (not in excess of 35 years).

All employees hired before September 30, 2016, who have completed one year of service, in which the employee worked a minimum of 1,000 hours, who attained 21 years of age and were enrolled in the Pension Plan prior to September 30, 2016, are eligible to participate in the Pension Plan. Participants became 100% vested in their accrued benefit after completion of five years of service. Service prior to age 18 and for years of service in which fewer than 1,000 hours were worked are excluded for vesting purposes.

The following table provides details of the present value of the accumulated benefit and years of credited service for Mr. Hagan and Mr. Miles under the Pension Plan as of December 31, 2022. The accumulated benefit shown in the table has been calculated assuming each executive terminated employment as of December 31, 2022. The present value of the accumulated benefit was then calculated assuming the executive will start receiving his pension at age 65. Mrs. Sajdak does not participate in the Pension Plan.

⁽¹⁾The figures shown are determined as of the Pension Plan’s measurement date during 2022 under FASB ASC Topic 715, Retirement Benefits, for purposes of our audited financial statements. For the discount rate and other assumptions used for this purpose, please refer to Note 10 in the Notes to Consolidated Financial Statements attached to the Annual Report on Form 10-K for the year ended December 31, 2022.

Non-Qualified Deferred Compensation

Benefit Restoration Plan. We have also established the Benefit Restoration Plan in order to provide restorative payments to executives who are prevented from receiving the full benefits contemplated by the ESOP’s benefit formula as well as the 401(k) Plan’s benefit formula. The restorative payments consist of payments in lieu of shares that cannot be allocated to participants under the ESOP due to the legal limitations imposed on tax-qualified plans and, in the case of participants who retire before the repayment in full of the ESOP’s loans, payments in lieu of the shares that would have been allocated if employment had continued through the full term of the loans. The restorative payments also consist of amounts unable to be provided under the 401(k) Plan due to certain legal limitations imposed on tax-qualified plans.

The following table sets forth information regarding nonqualified deferred compensation earned by our NEOs during the last fiscal year under the Benefit Restoration Plan.

⁽¹⁾Registrant contributions are included under the caption “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the “Summary Compensation Table” on page 31 and, as permitted by applicable SEC rules, are aggregated with the aggregate change in actuarial present value of accumulated benefits under the Pension Plan. However, for 2022, the aggregate change in actuarial present value of accumulated benefits under the Pension Plan for Mr. Hagan was a decrease of $497,169, and applicable SEC rules do not permit the Company to report a negative number in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column; therefore, these registrant contributions are not reflected in the Summary Compensation Table for 2022.

⁽²⁾Earnings did not accrue at above-market or preferential rates and are not reflected in the Summary Compensation Table.

⁽²⁾The amounts in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The grant date fair value of the restricted shares awarded to directors in 2022 was $9.11 per share. Shares fully vested on December 31, 2022.

⁽³⁾Amounts represent dividends paid on shares of restricted common stock granted to our non-employee directors.

Because the restricted shares awarded to directors in 2022 fully vested on December 31, 2022, no director held outstanding stock awards as of December 31, 2022. The following table provides information about our outstanding non-employee director equity retainer granted on March 8, 2023, under the Company’s 2021 Omnibus Incentive Plan. These shares will fully vest on December 31, 2023:

Stock Ownership Guidelines

We maintain stock ownership guidelines for our directors. These guidelines were established to promote a long-term perspective in managing the Company and to align the interests of our shareholders and our directors. The stock ownership goal for the directors is a multiple of 1x retainer. The guidelines provide the directors three years to comply. As of December 31, 2022, all directors were in compliance with the stock ownership guidelines.

Non-Employee Director Stock Election Program

In 2019, at the recommendation of our Compensation Committee, our Board adopted a Non-Employee Director Stock Election Program (the “Program”) to enable the Company’s non-employee directors to annually elect to receive shares of common stock of the Company in lieu of all or a portion of their cash compensation ordinarily payable to them for their service on the Board. Once directors elect to participate in the Program, the election will continue in effect for subsequent years absent a revocation for the following calendar year. No shares of common stock of the Company delivered under the Program may be deferred pursuant to the Director’s Deferred Compensation Plan maintained by the Company. The Program was very well received by our Board. Beginning on January 1, 2020, and pursuant to the Program, TI-Trust quarterly purchases stock in the open market on behalf of the participants and with respect to the Company’s Insider Trading Policies. During the year 2022 and up through our March 31, 2023, mailing date, TI-Trust purchased a total of 15,475 shares of common stock of the Company on behalf of our directors participating in the Program.