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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No.  )
Filed by Registrant
Filed by Party other than the Registrant
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NBT Bancorp Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
 
 
 
Fee paid previously with preliminary materials.
 
 
 
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rule 14a-6(i)(1) and 0-11.


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Notice of 2022 Annual Meeting of Stockholders
NBT Bancorp Inc. (“NBT”) will hold an annual meeting of stockholders on May 17, 2022 at 10:00 a.m. EDT (the “Annual Meeting”). You can attend the 2022 Annual Meeting online and vote your shares electronically. The Annual Meeting will be virtual and conducted through the online means described below.
The Annual Meeting is being held for the following purposes:
1.
To elect the thirteen director nominees named in the proxy statement, each for a one-year term (Proposal 1);
2.
To approve, on a non-binding, advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and other related tables and narrative discussion (“Say-on-Pay”) (Proposal 2);
3.
To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022 (Proposal 3); and
4.
To transact such other business as may properly come before the NBT Annual Meeting.
We have fixed the close of business on March 21, 2022 as the record date for determining those stockholders of NBT entitled to vote at the NBT Annual Meeting and any adjournments or postponements of the meeting. Only holders of record of NBT common stock at the close of business on that date are entitled to notice of and to vote at the NBT Annual Meeting.
By Order of the Board of Directors of
NBT Bancorp Inc.
/s/ Martin A. Dietrich
Martin A. Dietrich
Chairman of the Board
Norwich, New York
April 7, 2022
Important Notice regarding the Internet availability of Proxy Materials for the Annual Meeting to be held on May 17, 2022 – The proxy statement and 2021 Annual Report are available free of charge at www.nbtbancorp.com/bncp/proxy.html. Your vote is very important. We urge all stockholders to vote on the matters listed above and described in the proxy statement as soon as possible, whether or not they plan to attend the virtual Annual Meeting.

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Proxy Statement
Annual Meeting of Stockholders
May 17, 2022
This proxy statement and accompanying proxy card are furnished to the stockholders of NBT Bancorp Inc. (“NBT” or the “Company”) in connection with the solicitation of proxies on behalf of the Board of Directors to be used at the 2022 Annual Meeting of Stockholders (the “Annual Meeting”). This proxy statement, together with the enclosed proxy card, is being provided to stockholders on or about April 7, 2022.
NBT Annual Meeting Will Be Virtual
NBT will host a virtual Annual Meeting. You may attend the webcast of the meeting via the Internet at www.virtualshareholdermeeting.com/NBTB2022 when you enter your 16-digit control number included with the Notice of Internet Availability or proxy card. Instructions on how to attend and participate in the Annual Meeting via the webcast are posted on www.virtualshareholdermeeting.com/NBTB2022. You will be able to vote your shares by following the instructions on the website. You may visit www.proxyvote.com at any time prior to the Annual Meeting to ask questions of our executive management that may be addressed in the Annual Meeting and to access information about the Company.
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong internet or WiFi connection wherever they intend to participate in the Annual Meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear audio prior to the start of the Annual Meeting.
What Will Be Voted on at the NBT Annual Meeting
At our Annual Meeting, our stockholders will be asked to consider and vote upon the following proposals:
To elect the thirteen director nominees named in the proxy statement, each for a one-year term (Proposal 1);
To approve, on a non-binding, advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and other related tables and narrative discussion (“Say-on-Pay”) (Proposal 2);
To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022 (Proposal 3); and
To transact such other business as may properly come before the Annual Meeting.
We may take action on the above matters at our Annual Meeting on May 17, 2022, or on any later date to which the Annual Meeting is postponed or adjourned.
We are unaware of other matters to be voted on at our Annual Meeting. If other matters do properly come before our Annual Meeting, including consideration of a motion to adjourn the Annual Meeting to another time and/or place for the purpose of soliciting additional proxies, we intend that the persons named in this proxy will vote the shares represented by the proxies on such matters as determined by a majority of our Board.
Stockholders Entitled to Vote
We have set March 21, 2022 as the record date to determine which of our stockholders will be entitled to vote at our Annual Meeting. Only those stockholders who held their shares of record as of the close of business on that date will be entitled to receive notice of and to vote at our Annual Meeting. As of March 21, 2022, there were 43,006,547 outstanding shares of our common stock held by holders of record. Each of our stockholders on the record date is entitled to one vote per share.
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Proxy Statement
Quorum Requirement
The presence, of at least a majority of the total number of issued and outstanding shares of common stock entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. Abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum for the transaction of business.
Vote Required to Approve the Proposals
Assuming the presence of a quorum at the Annual Meeting, the voting requirements for the matters presented are as follows:
For a nominee to be elected as a director, more votes must be cast FOR the nominee than AGAINST (Proposal 1).
The affirmative vote of a majority of the outstanding shares of our common stock which are present in person or represented by Proxy at the Annual Meeting and entitled to vote is required to approve the Say-on-Pay Proposal (Proposal 2) and to ratify the appointment of our independent registered public accounting firm (Proposal 3).
Our Board urges our stockholders to vote via the Internet, by telephone or by completing, dating and signing the accompanying proxy card and returning it promptly in the enclosed postage-paid envelope.
Effect of Abstentions and Broker Non-Votes
If you abstain from voting on any of the proposals, you will still be considered present at the virtual Annual Meeting for purposes of determining a quorum. Abstentions will have no effect on the outcome of the election of directors. For the purpose of the Say-on-Pay Proposal and the ratification of the appointment of our independent registered public accounting firm, abstentions will have the effect of a vote against the proposal.
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. Proposals 1 and 2 are considered “non-routine” and Proposal 3 is considered “routine” under the applicable rules. Broker non-votes will not be counted as a vote cast or entitled to vote on any matter presented at the Annual Meeting and will therefore have no effect on the outcome of the voting on any matter presented at the Annual Meeting.
Voting Your Shares
Our Board is soliciting proxies from our stockholders. When you deliver a valid proxy, the shares represented by that proxy will be voted by a named agent in accordance with your instructions.
If you are a stockholder and vote by proxy but make no specification on your proxy card that you have otherwise properly executed, the named persons will vote the shares represented by your proxy:
FOR electing the thirteen persons nominated by our Board as directors (Proposal 1);
FOR approving on a non-binding, advisory basis, the compensation of the Company’s named executive officers (Proposal 2); and
FOR ratifying the appointment of KPMG LLP as our independent registered public accounting firm (Proposal 3).
If any other matters are properly brought before the Annual Meeting, the persons named in the proxy will vote the shares represented by such proxy or such matters as determined by a majority of the board of directors.
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Proxy Statement
If you are a stockholder whose shares are registered in your name, you may vote your shares by using one of the following methods:
Via the Internet. If you hold NBT common stock in your own name and not through a broker or other nominee, you can vote your shares of NBT common stock electronically via the Internet. Internet voting procedures are designed to authenticate stockholders by using the individual control number on your proxy card. If you vote via the Internet, you do not need to return your proxy card.
Before the Meeting – Go to www.proxyvote.com. Internet voting is available 24 hours a day until 11:59 p.m. Eastern Time on May 16, 2022 for shares held directly and by 11:59 p.m. Eastern Time on May 12, 2022 for shares held in a Plan.
During the Meeting – Go to www.virtualshareholdermeeting.com/NBTB2022
Mail. To grant your proxy by mail, please complete your proxy card and sign, date and return it in the enclosed envelope. To be valid, a returned proxy card must be signed and dated.
Telephone. If you hold NBT common stock in your own name and not through a broker or other nominee, you can vote your shares of NBT common stock by telephone by dialing the toll-free telephone number 1-800-690-6903. Telephone voting is available 24 hours a day until 11:59 p.m. Eastern Time on May 16 2022 for shares held directly and by 11:59 p.m. Eastern Time on May 12, 2022 for shares held in a Plan. Telephone voting procedures are designed to authenticate stockholders by using the individual control number on your proxy card. If you vote by telephone, you do not need to return your proxy card.
If your shares are registered in the name of a bank or brokerage firm you will receive instructions from your holder of record that must be followed in order for the record holder to vote the shares per your instructions. Many banks and brokerage firms have a process for their beneficial holders to provide instructions over the telephone or via the Internet.
Changing Your Vote
Any NBT stockholder of record giving a proxy may revoke the proxy in one or more of the following ways:
Delivering a written notice of revocation to the Corporate Secretary of NBT bearing a later date than the proxy;
Submitting a later-dated proxy by mail, telephone or via the Internet; or
Voting during the meeting via the Internet at www.virtualshareholdermeeting.com/NBTB2022
You should send any written notice of revocation or subsequent proxy to NBT Bancorp Inc., 52 South Broad Street, Norwich, New York 13815, Attention: Catherine Scarlett, Corporate Secretary. Any later-dated proxy submitted by telephone or via the Internet must be submitted prior to 11:59 p.m. Eastern Time on May 16, 2022 for shares held directly and by 11:59 p.m. Eastern Time on May 12, 2022 for shares held in a Plan.
If you hold shares through a bank or brokerage firm, you must contact that firm to revoke any prior voting instructions.
Solicitation of Proxies and Costs
We will bear our own costs of soliciting of proxies. We will reimburse brokerage houses, fiduciaries, nominees and others for their out-of-pocket expenses in forwarding proxy materials to owners of shares of our common stock held in their names. In addition to the solicitation of proxies by use of the mail, we may solicit proxies from our stockholders by directors, officers and employees acting on our behalf in person or by telephone, facsimile or other appropriate means of communications. We will not pay any additional compensation, except for reimbursement of reasonable out-of-pocket expenses, to our directors, officers and employees in connection with the solicitation. You may direct any questions or requests for assistance regarding this proxy statement to Catherine Scarlett, Corporate Secretary, by telephone at (607) 337-6530 or by email at [email protected].
Annual Report
A copy of our 2021 Annual Report accompanies this Proxy Statement. NBT is required to file an annual report on Form 10-K for its 2021 fiscal year with the Securities and Exchange Commission (“SEC”). Stockholders may obtain, free of charge, a copy of the Form 10-K by writing to: NBT Bancorp Inc., 52 South Broad Street, Norwich, New York 13815, Attention: Catherine Scarlett, Corporate Secretary. Our annual report on Form 10-K is available on our website www.nbtbancorp.com.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO US. PLEASE VOTE BY TELEPHONE, VIA THE INTERNET USING THE INTERNET ADDRESS ON YOUR PROXY CARD OR BY COMPLETING, SIGNING, DATING AND PROMPTLY RETURNING THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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PROPOSAL 1: Election of Directors
PROPOSAL 1: Election of Directors
The Company elects all directors annually. Therefore, all thirteen directors are standing for election at the 2022 Annual Meeting.
The persons named in the enclosed proxy intend to vote the shares of our common stock represented by each proxy properly executed and returned to us FOR the election of the aforementioned nominees as directors, but if the nominees should be unable to serve, they will vote such proxies for those substitute nominees as our Board shall designate to replace those nominees who are unable to serve. Our Board currently believes that each nominee will stand for election and will serve if elected as a director. Assuming the presence of a quorum at the Annual Meeting, in order for each of the thirteen director nominees to be elected, more votes must be cast FOR the director nominee than AGAINST(Proposal 1). A director who fails to receive more votes FOR his or her election than AGAINST will tender his or her resignation to the Board of Directors for consideration, and our Nominating and Corporate Governance Committee will recommend to the Board of Directors whether to accept or reject the resignation, or whether other action should be taken. The Board of Directors will consider the recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of election results.
Information as to Nominees
Information regarding the nominees is provided below. Each biography contains information regarding each person’s 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 Corporate Governance Committee and the Board of Directors to determine that such person should serve as a director at the time of filing of this proxy statement. Unless otherwise stated, each individual has held his or her current occupation for the last five years. The age indicated in each director’s biography is as of December 31, 2021. There are no family relationships among the directors or executives. All nominees are or will become members of the board of directors of NBT Bank, N.A. (“NBT Bank”).
Directors Retiring in 2022



Patricia T. Civil

Patricia T. Civil, 72, will retire as a director upon the expiration of her term at the 2022 annual meeting, in accordance with the required retirement age set forth in the Company’s Bylaws with respect to directors. The Board of Directors acknowledges the leadership and guidance Ms. Civil has provided to the Company over 18 years beginning in 2003 when she became a director of NBT Bancorp and NBT Bank. Ms. Civil was the longstanding Chair of the Audit/Risk Management and Risk Management Committees, and her accounting knowledge and leadership has been invaluable.



John C. Mitchell

John C. Mitchell, 71, will also retire as a director upon the expiration of his term at the 2022 annual meeting, in accordance with the required retirement age set forth in the Company’s Bylaws with respect to directors. Mr. Mitchell became a director of NBT Bank in 1993 and NBT in 1994 and has served as Lead Director. Throughout his tenure with the Company as a director, Mr. Mitchell’s commitment to NBT and his faithfulness to the Company’s community banking values have been unwavering. His contributions to the success of the Company are greatly appreciated by the Board of Directors.
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PROPOSAL 1: Election of Directors
Board Nominees for 2022



Age: 63
Director Since: 2016

Committees
Risk Management
John H. Watt, Jr.

John H. Watt, Jr., 63, has served as the President and Chief Executive Officer (“CEO”) of the Company since 2016. Prior to that, Mr. Watt was an Executive Vice President of the Company and President of NBT Bank. He became a member of the Company’s executive management team in 2015. He joined the Company and NBT Bank in 2014. Mr. Watt provided executive leadership for key functions, including commercial and consumer lending, credit administration and marketing. Mr. Watt became a director of NBT and NBT Bank in December 2016. Mr. Watt also serves on the NBT Financial Services, Inc. Board, which is an affiliate of the Company. Mr. Watt has over thirty-five years of experience in the financial services industry. Prior to joining the Company, he was executive vice president of commercial banking, investment management and bank operations at Alliance Bank, N.A. He was also a member of the board of directors for Alliance Bank and Alliance Financial Corporation, which merged with the Company in 2013. Previously, he was employed by JP Morgan Chase and its predecessors. Mr. Watt has served on numerous community-oriented boards in upstate New York, most recently on the finance committee of the Foundation of The Episcopal Diocese of Central New York, the finance committee of the Allyn Foundation, treasurer of the St. James Episcopal Foundation, member of the Board of Directors of the Chenango County United Way and as President of the board of On Point for College in Syracuse, NY. He is a graduate of Rutgers University with a bachelor’s degree in political science and earned his Juris Doctor from The National Law Center at George Washington University. Mr. Watt’s past experience and current leadership as President and CEO of NBT and NBT Bank provides him with thorough knowledge of the Company’s opportunities, challenges and operations.

Skills and Qualifications:
Accounting/Finance, Regulatory, Legal, Technology/cybersecurity, Banking, CEO, Human Resources, Risk Management, Non-profit, Government, Corporate Board, Public Company Board



Age: 66
Director Since: 2005

Committees
Risk Management
Martin A. Dietrich

Martin A. Dietrich, 66, served as the President and Chief Executive Officer of the Company and NBT Bank from 2004 through 2016. Prior to that, Mr. Dietrich was President and Chief Operating Officer of NBT Bank from September 1999 to December 2003. He has served as Chair of the NBT and NBT Bank Boards since May 2016. Mr. Dietrich has been a director of NBT Bank since 2003, and of NBT since 2005. Mr. Dietrich also serves on the Board of NBT Financial Services, Inc., which is an affiliate of the Company. He is currently a director of Preferred Mutual Insurance Company, New York Bankers Association and Norwich Building Tomorrow Foundation Inc. Mr. Dietrich’s past leadership as President and Chief Executive Officer of NBT and NBT Bank provides him with thorough knowledge of the Company’s opportunities, challenges and operations.

Skills and Qualifications:
Accounting/Finance, Regulatory, Legal, Technology/cybersecurity, Banking, CEO, Human Resources, Risk Management, Non-profit, Government, Corporate Board, Public Company Board
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PROPOSAL 1: Election of Directors



Age: 45
Director Since: 2020

Committees
Nominating and Corporate Governance
Risk Management
Johanna R. Ames

Johanna R. Ames, 45, has been President of Ames Linen Service, Inc. since 2007. Ames Linen Service, Inc. is a woman-owned commercial laundry and linen rental company located in Cortland, New York that serves approximately 1,000 customers in the education, food and beverage, healthcare and hospitality industries throughout Central New York. Ms. Ames was appointed to the NBT and NBT Bank Boards in September 2020. Ms. Ames served on NBT Bank’s Southern Tier Advisory Board from 2016 to 2020. Ms. Ames is also on the Boards of Directors for Guthrie Healthcare System, Inc. and the Cortland County Business Development/Industrial Development Agency. Ms. Ames chairs the Cortland College Foundation Board of Directors and is a member of the Colgate University Alumni Council. Ms. Ames’ experience as a business owner in NBT’s market area provides the Board with insight into the needs of NBT’s customers, and she is well suited to advise NBT with its challenges, opportunities and operations.

Skills and Qualifications:
Accounting/Finance, Regulatory, CEO, Human Resources, Risk Management, Non-profit, Corporate Board



Age: 54
Director Since: 2021

Committees
Audit
Compensation and Benefits
J. David Brown

J. David Brown, 54, has been employed by the Capital District YMCA in Albany, New York since 1993, and has been its President & CEO since 2007. Mr. Brown has previously served as a Director of the Saratoga National Bank and the NBT Bank Capital District Advisory Board. Mr. Brown was a member of the Siena College Board of Trustees, Governor’s Regional Economic Council and the Diversity & Inclusion Council for the YMCA of the USA. His awards and recognitions include the Director of the Year from the Association of YMCA Professionals, NYS Governor’s African American Community Distinction, 40 Elite Alumni Honoree and 40 Under Forty Honoree by the Capital District Business Review. His strong executive experience in the non-profit sector and knowledge of NBT’s Capital Region market make Mr. Brown a valuable addition to the Board.

Skills and Qualifications:
Accounting/Finance, Regulatory, Legal, Banking, CEO, Human Resources, Risk Management, Non-profit, Government, Corporate Board, Public Company Board



Age: 59
Director Since: 2011

Committees
Compensation and Benefits (Chair)
Audit
Timothy E. Delaney

Timothy E. Delaney, 59, is the President of the Wesson Group LLC. Mr. Delaney is Founder and former President of The Delaney Group, Inc. and is a former Executive Vice President of its successor company, Tetra Tech Construction, Inc. and President of Tetra Tech Canada Construction. Together, these companies make up the North American Renewable Construction division of Tetra Tech, Inc. (NASDAQ: TTEK), a public company, and they are principally engaged in energy related heavy civil engineering and construction since 1982. Mr. Delaney has been a director of NBT since January 2011 and has been a director of NBT Bank since 2006. He currently serves as Chair of the Compensation and Benefits Committee of the Company. Mr. Delaney’s experience as a business owner in NBT’s market area and experience as an NBT Bank director provides the Board with insight into the needs of NBT’s customers, executive management and insight into NBT’s challenges, opportunities and operations. Mr. Delaney also serves on the NBT Financial Services, Inc. Board which is an affiliate of the Company.

Skills and Qualifications:
Accounting/Finance, Regulatory, Legal, Banking, CEO, Human Resources, Risk Management, Non-profit, Corporate Board
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PROPOSAL 1: Election of Directors



Age: 70
Director Since:2011

Committees
Nominating and Corporate Governance (Chair)
Audit
James H. Douglas

James H. Douglas, 70, is the former Governor of Vermont, a position he held for four, two-year terms, starting in 2002 and ending in 2010. Mr. Douglas has been a director of NBT and NBT Bank since January 2011. He currently serves as Chair of the Nominating and Governance Committee of the Company. Mr. Douglas served the people of Vermont for more than 35 years, having been elected to the Vermont House of Representatives after graduating from Middlebury College in 1972. Mr. Douglas was elected Secretary of State in 1980, a position he held until 1992. He was then elected as State Treasurer in 1994, a position he held until his election as Governor. Outside of government, Mr. Douglas is an executive in residence at Middlebury College and has been active in numerous community organizations. In addition, he is a director for National Life Group and National Life Insurance Company, as well as a director for Union Mutual of Vermont. Mr. Douglas’ experience in state politics provides the Board with insight into one of NBT’s newer market areas. Mr. Douglas also brings executive management and governance experience from his previous positions. Further, the skills he developed as State Treasurer provide the Board with additional finance experience.

Skills and Qualifications:
Accounting/Finance, Regulatory, CEO, Human Resources, Risk Management, Non-profit, Government, Corporate Board


Age: 52
Director Since: 2022

Committees
Audit
Compensation and Benefits
Heidi M. Hoeller

Heidi M. Hoeller, 52, is a retired partner of PricewaterhouseCoopers LLP (“PwC”) with over 25 years of experience as a leader in audit and financial services. Ms. Hoeller held numerous positions at PwC from November 1993 until her retirement in June 2019. She spent most of her career in the Northeast, where she served as audit partner on a diverse portfolio of clients within the insurance sector. Prior to her retirement, she was a financial services partner in PwC’s National Quality Organization for three years. She is a director of Preferred Mutual Insurance Company, Vice Chair of the Utica University Board of Trustees, a member of the American Institute of Certified Public Accountants and a CPA licensed in New York. Ms. Hoeller was appointed to the NBT and NBT Bank Boards in January 2022.

Skills and Qualifications:
Accounting/Finance, Regulatory, Legal, Technology/cybersecurity, Banking, Human Resources, Risk Management, Non-profit, Corporate Board, Public Company Board


Age: 64
Director Since: 2016

Committees Compensation and Benefits
Risk Management
Andrew S. Kowalczyk III

Andrew S. Kowalczyk III, 64, is an attorney and partner at Kowalczyk & Deery, LLP in Utica, New York. His practice focuses on banking, business, corporate and real estate law. He was admitted to the New York State Bar in 1983. Mr. Kowalczyk is a graduate of St. Lawrence University and Albany Law School. He is a member of the Oneida County Bar Association, the New York State Bar Association and the American Bar Association. He served on the NBT Bank Advisory Board from 2006 through 2010. He was appointed to NBT Bank’s board in October 2010 and NBT’s board in May 2016. He is a member of the board of trustees of each of Mohawk Valley Health Services (“MVHS”) a not for profit, Faxton St. Luke’s Hospital and St. Elizabeth Hospital, each a not for profit hospital corporation. MVHS is the active parent of each hospital. Mr. Kowalczyk participates as a board member and is a member of each of the audit, investment and pension committees. Mr. Kowalczyk also serves on the NBT Financial Services, Inc. Board which is an affiliate board of the Company. Mr. Kowalczyk brings leadership experience, legal technical expertise and Utica and Mohawk Valley area market knowledge.

Skills and Qualifications:
Accounting/Finance, Regulatory, Legal, Technology/cybersecurity, Banking, Human Resources, Risk Management, Non-profit, Corporate Board
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PROPOSAL 1: Election of Directors


Age: 65
Director Since: 2016

Committees
Audit
Nominating and Corporate Governance
V. Daniel Robinson II

V. Daniel Robinson II, 65, has served on the Board of Directors of New York Central Mutual Fire Insurance Company (NYCM) since 1986, and is currently its Chairman of the Board. From 2002 to February 2022, he was the President and Chief Executive Officer of NYCM. Formerly the President and Chief Executive Officer of automobile insurer A. Central Insurance Company, a subsidiary of NYCM, from 1999 to February 2022, Mr. Robinson is now its Chairman of the Board. He has been a director of A.F. Stager Independent Adjustors since 1991 and was its President from 2018 through February 2022. He has been a member of the Excellus BlueCross BlueShield Utica Regional Advisory Board since 2014. He has served on the Board of A. O. Fox Hospital, an affiliate association with Bassett Health Care Network, from 2012 through July 2016 and continues his board membership with Basset Health Care Network. Mr. Robinson earned his bachelor’s degree in marketing from St. Bonaventure University. He was appointed to NBT Bank’s board in March 2008 and NBT’s board in May 2016. Mr. Robinson also serves on the NBT Financial Services, Inc. Board which is an affiliate of the Company. Mr. Robinson provides executive leadership experience and knowledge of NBT’s Central New York market.

Skills and Qualifications:
Accounting/Finance, Regulatory, Legal, Technology/cybersecurity, Banking, CEO, Human Resources, Risk Management, Non-profit, Government, Corporate Board, Public Company Board



Age: 66
Director Since: 2016

Committees
Audit (Chair)
Compensation and Benefits
Risk Management
Matthew J. Salanger

Matthew J. Salanger, 66, was the longest-serving President and Chief Executive Officer of United Health Services, Inc. (“UHS”), having held the position from 2007-2017. He also served as President and Chief Executive Officer for UHS Hospitals, including UHS Binghamton General Hospital and UHS Wilson Medical Center from 1994-2017. Upon his retirement as President and Chief Executive Officer, Mr. Salanger continues to provide guidance to UHS in a Senior Strategic Advisor role and as a member of the UHS Board and Executive Committee. Mr. Salanger is a Fellow of the American College of Healthcare Executives, is a member of the Binghamton University Council and completed his appointment by New York State Governor Paterson on the State’s Board of Examiners of Nursing Home Administrators. He earned his Bachelor of Arts degree at the University at Albany/SUNY and his master’s degree in hospital and health administration at Xavier University. He was appointed to NBT Bank’s board in January 2011 and NBT’s board in May 2016. He serves as Chair of the Audit Committee of NBT. Mr. Salanger brings executive leadership experience, board experience and knowledge of our Binghamton area market.

Skills and Qualifications:
Accounting/Finance, Regulatory, Legal, Banking, CEO, Human Resources, Risk Management, Non-profit, Corporate Board
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PROPOSAL 1: Election of Directors


Age: 69
Director Since: 2000

Committees
Nominating and
Corporate Governance
Joseph A. Santangelo

Joseph A. Santangelo, 69, is President and Chief Executive Officer of Arkell Hall Foundation Inc. Mr. Santangelo has been a director of NBT Bank and NBT since 1991 and 2000, respectively. Mr. Santangelo’s service on the Nominating and Corporate Governance Committee and past experience on the Compensation and Benefits Committee provides the Board with strong corporate governance and executive compensation experience. In addition, his twenty plus years of service on the Board along with his considerable experience in operating one of the largest private foundations in the upstate NY region provides him with a seasoned view of NBT’s operations and the challenges facing NBT. Mr. Santangelo also serves on the NBT Financial Services, Inc. Board which is an affiliate of the Company.

Skills and Qualifications:
Accounting/Finance, Regulatory, Banking, CEO, Human Resources, Risk Management, Non-profit, Government, Corporate Board, Public Company Board


Age: 69
Director Since: 2013

Committees
Audit
Nominating and Corporate Governance
Lowell A. Seifter

Lowell A. Seifter, 69, was Senior Counsel of St. Joseph’s Hospital Health Center in Syracuse, New York through December 31, 2021. He was a founding member of Green & Seifter Attorneys, PLLC, now known as Bousquet Holstein Attorneys, PLLC, where he practiced law from 1977 until 2011. He has returned to that firm on an Of Counsel basis beginning January 1, 2022. From 2002 until 2006, Mr. Seifter was a member of the board of directors of Bridge Street Financial, Inc. and its banking subsidiary, Oswego County National Bank. From 2006 until the merger with NBT, Mr. Seifter served on the Board of Directors of Alliance Financial Corporation and its subsidiary Alliance Bank where he was Chairman of the Compensation Committee and member of the Governance, Business Development and Risk Committees. Mr. Seifter received a B.S. degree from Syracuse University, a Juris Doctor degree from Syracuse University College of Law and is a non-practicing certified public accountant. Mr. Seifter brings technical expertise, leadership experience, industry knowledge and an understanding of the Syracuse market area. Mr. Seifter also serves on the NBT Financial Services, Inc. Board which is an affiliate of the Company.

Skills and Qualifications:
Accounting/Finance, Regulatory, Legal, Technology/cybersecurity, Banking, CEO, Human Resources, Risk Management, Non-profit, Government, Corporate Board, Public Company Board
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PROPOSAL 1: Election of Directors


Age: 69
Director Since: 2013

Committees
Risk Management
Jack H. Webb

Jack H. Webb, 69, was the Chairman and Chief Executive Officer of Alliance Financial Corporation from January 2002 until March 2013 when the company merged with NBT, at which time Mr. Webb became Executive Vice President of Strategic Support for NBT until May 2015. In March 2013, Mr. Webb also became a director of NBT and NBT Bank. Prior to the merger, he was also the President and Chief Executive Officer of Alliance Bank. He joined Alliance Financial Corporation in May 2000 after a 26-year career with Chase Manhattan Bank. He is the Chairman of the Board of Managers for Dolphin Green & Gold Fund, LLC and a member of the McNeil Academy Advisory Board for the Madden School of Business at Lemoyne College. Mr. Webb graduated from the Rochester Business Institute. His day-to-day leadership of Alliance Financial Corporation and Alliance Bank provides him with thorough knowledge of the financial services industry as well as NBT’s Syracuse market. Mr. Webb previously served on the NBT Financial Services, Inc. Board which is an affiliate board of the Company and served on the advisory board of CNY Lifetime Healthcare.

Skills and Qualifications:
Accounting/Finance, Regulatory, Legal, Technology/cybersecurity, Banking, CEO, Human Resources, Risk Management, Non-profit, Government, Corporate Board, Public Company Board
The Board of Directors unanimously recommends that stockholders vote “FOR” the election of all of its director nominees.
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PROPOSAL 1: Election of Directors
Board Diversity, Experience and Skills
The Corporate Governance and Nominating Committee does not have a specific diversity policy with respect to the director nomination process. Rather, the Committee considers diversity in the broader sense of how a candidate’s viewpoints, experience, skills, background and other demographics could assist the Board in light of the Board’s composition at the time. The Board believes that each director contributes to the overall diversity by providing a variety of personal and professional experiences and backgrounds. As shown below, the current directors and nominees reflect a broad diversity of gender, age, race, geographical background and experience. The Board is committed to considering diversity issues in evaluating its composition.
The following summarizes the diversity, independence, age, tenure and the main experience and skills of our Board of Directors.


Board Diversity Matrix
The Board of Directors views its diversity as an important strength, as our commitment to diversity of experience, gender, and ethnicity is a key driver of the Company’s success. The following table sets forth the diversity of the Board of Directors.
Board Diversity Matrix (As of April 7, 2022)
Total Number of Directors:
13
Part I: Gender Identity
Female
Male
Did Not Disclose Gender
Directors
2
10
1
Part II: Demographic Background
African American or Black
1
White
2
9
Did Not Disclose Demographic Background
1
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PROPOSAL 1: Election of Directors

(*)
Designated experience and skills were identified as “moderate” or “strong” by each director in his/her self-assessment
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Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, as of February 28, 2022, with respect to the beneficial ownership of the Company’s Common Stock by: (1) each director and nominee; (2) each named executive officer; and (3) all executive officers and directors as a group. Except as otherwise indicated, each of the stockholders named below effectively exercises sole, or shared with spouse, voting and investment power with respect to the outstanding shares of Common Stock beneficially owned.
Directors, Nominees for Director
and Named Executive Officers
Number
of Shares
Owned
Options
Exercisable
Within 60
Days (1)
Total Beneficial
Ownership of
NBT Bancorp
Common Stock
Percent
of Shares
Outstanding
Johanna R. Ames (2)
206,273
206,273
*
J. David Brown
908
908
*
Patricia T. Civil (3)
30,788
3,630
34,418
*
Timothy E. Delaney (4)
47,773
47,773
*
Martin A. Dietrich (5)
123,582
123,582
*
James H. Douglas
11,680
11,680
*
Heidi M. Hoeller
232
232
*
Andrew S. Kowalczyk III
10,468
10,468
*
John C. Mitchell (3)
36,635
36,635
*
V. Daniel Robinson II (6)
557,299
557,299
1.29%
Matthew J. Salanger
22,610
22,610
*
Joseph A. Santangelo (7)
104,283
104,283
*
Lowell A. Seifter
48,786
48,786
*
Jack H. Webb
52,061
52,061
*
John H. Watt, Jr.
99,520
99,520
*
Scott A. Kingsley
10,500
10,500
*
Annette L. Burns
15,104
15,104
*
John V. Moran
469
469
*
Joseph R. Stagliano
86,652
86,652
*
Sarah A. Halliday
26,808
26,808
*
Amy Wiles
21,300
21,300
*
Directors and Executive Officers as a Group
(23 persons)
1,528,992
3,630
1,532,622
3.55%
(*)
Less than one percent.
(1)
Shares under option from the 2008 Omnibus Incentive Plan, which are exercisable within 60 days of February 28, 2022.
(2)
Includes 204,186 shares held by a trust for which Ms. Ames has voting discretion.
(3)
Ms. Civil and Mr. Mitchell will retire as directors upon the expiration of their terms at the 2022 annual meeting.
(4)
Includes 12,020 shares held by a trust for which Mr. Delaney has voting discretion.
(5)
Includes 5,523 shares held by a trust for which Mr. Dietrich has voting discretion.
(6)
Includes 537,558 shares held by NYCM of which Mr. Robinson was President and CEO and 4,705 shares held by a trust for which Mr. Robinson has voting discretion.
(7)
Includes 83,625 shares held by Arkell Hall Foundation Inc. of which Mr. Santangelo is President and CEO and shares investment and voting powers with that foundation’s Board of Trustees.
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Beneficial Ownership of Principal Holders of Voting Securities of NBT
Beneficial Ownership of Principal Holders of Voting Securities of NBT
The following table sets forth information as of February 28, 2022, except as indicated below, with respect to the beneficial ownership of common stock by any person or group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”) who is known to the Company to be the beneficial owner of more than five percent of the common stock. As of February 28, 2022, the Company had 43,125,676 outstanding shares of common stock.
Name and Addresses of Beneficial Owners
Number of Shares
Nature of Beneficial
Ownership (1)
Percent of Common
Stock Owned
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
6,337,141 (2)
14.69%
The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, PA 19355
4,714,262 (3)
10.93%
(1)
Based on information in the most recent Schedule 13D or 13G filed with the SEC pursuant to the Exchange Act with respect to holdings of the Company’s common stock as of December 31, 2021. In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to be the beneficial owner, for purposes of this table, of any shares of Company common stock if such person has or shares voting power and/or investment power with respect to the security, or has the right to acquire beneficial ownership at any time within 60 days from February 28, 2022. As used herein, “voting power” includes the power to vote or direct the voting of shares and “investment power” includes the power to dispose or direct the disposition of shares.
(2)
BlackRock, Inc. reported that it has sole dispositive power over 6,337,141 shares (14.68% of outstanding shares) and sole voting power over 6,261,694 shares (14.51% of outstanding shares) of Company common stock as of December 31, 2021.
(3)
The Vanguard Group, Inc. reported that it has sole dispositive and voting power over 4,638,357 shares and shared dispositive and voting power over 75,905 shares of NBT common stock as of December 31, 2021, or an aggregate of 10.92% of Company shares outstanding as of such date.
Section 16(a) Beneficial Ownership Reporting Compliance
Our directors and executive officers must, under Section 16(a) of the Exchange Act, file certain reports of their initial ownership of our common stock and of changes in beneficial ownership of our securities. Based solely on a review of reports submitted to NBT, or written representations from reporting persons that all reportable transactions were reported, the Company believes that during the fiscal year ended December 31, 2021 all Section 16(a) filing requirements applicable to NBT’s officers and directors were complied with on a timely basis with the exception of one transaction for Mr. Brown reported in a late filing by the Company.
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Corporate Governance
Corporate Governance
The business and affairs of the Company are managed under the direction of the Board of Directors. Members of the Board are kept informed of the Company’s business through discussions with the Company’s executive officers, by reviewing materials provided to them and by participating in meetings and strategic planning sessions of the Board and its committees. The Board has adopted corporate governance practices and policies which the Board and senior management believe promote sound and effective corporate governance.
Director Independence
Based on a review of the responses of the directors to questions regarding employment and compensation history, affiliations and family and other relationships and on individual discussions with directors, the Board has determined that all directors, excluding Mr. Watt, meet the standards of independence set forth by the NASDAQ Stock Market. In making this determination, the Board considered transactions and relationships between each director or his or her immediate family and the Company and its subsidiaries, including those reported under “Compensation Committee Interlocks and Insider Participation” and “Certain Relationships and Related Party Transactions” included herein. Mr. Watt is not independent because he is the current President and Chief Executive Officer of the Company.
The independent members of the Board meet at least twice annually in an executive session where the non-independent director and management are excused. Lead Director John Mitchell chaired these executive sessions.
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that applies to all employees, as well as each member of the Company’s Board of Directors. The Code of Business Conduct and Ethics is available at the Company’s website at www.nbtbancorp.com/bncp/corporategov.html.
Board Policy Regarding Communications with the Board
The Board of Directors maintains a process for stockholders to communicate with the Board of Directors. Stockholders wishing to communicate with the Board of Directors should send any communication to Corporate Secretary, NBT Bancorp Inc., 52 South Broad Street, Norwich, New York 13815. Any such communication must state the name of the stockholder and the number of shares beneficially owned by the stockholder making the communication. The Corporate Secretary will forward such communication to the full Board of Directors or to any individual director or directors to whom the communication is directed unless the communication is unduly hostile, threatening, illegal or similarly inappropriate. At each Board meeting, a member of management presents a summary of all communications received since the last meeting, if applicable, that were not forwarded and makes those communications available on request.
The Board’s Role in Risk Oversight
The Board of Directors, together with the Audit Committee, the Risk Management Committee, the Nominating and Corporate Governance Committee, and the Compensation and Benefits Committee coordinate with each other to provide enterprise-wide oversight of our management and handling of risk. These committees report regularly to the full Board of Directors on risk-related matters and provide the Board of Directors with insight about our management of strategic, credit, interest rate, liquidity, compliance, operational and reputational risks. In addition, at meetings of the Board of Directors and its committees, directors receive regular updates and reports from management regarding risk management practices, including credit quality, financial reporting, technology, internal controls, compliance, legal matters and asset liability and liquidity management, among others. Furthermore, current risk management issues are discussed regularly with the Board of Directors and its committees.
The Risk Management Committee consists of seven directors, of which six are independent directors, as follows: Ms. Civil (Chair), Ms. Ames, Mr. Dietrich, Mr. Kowalczyk, Mr. Salanger, Mr. Watt and Mr. Webb. Ms. Hoeller was added to the Committee upon her appointment to the Board in January 2022. The primary purpose of the Risk Management Committee is to assist the Board of Directors in:
Overseeing the Company’s risk management activities and the effectiveness of the Company’s enterprise risk management (“ERM”) framework;
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Corporate Governance
Overseeing management’s policies and procedures to identify, measure, monitor and control operational, compliance, regulatory, legal, strategic and reputational risks that confront the Company;
Establishing and aligning risk appetite with strategic objectives and strategic planning; and
Overseeing the performance of the Company’s Risk Management Division personnel.
The Risk Management Committee charter outlines more specific duties and responsibilities of the committee.
Board Leadership Structure
The Board of Directors does not have a policy on whether the same person may serve as both the chief executive officer and chair of the board or, if the roles are separate, whether the chair should be selected from the non-employee directors. The Board believes that it should have the flexibility to make these determinations at any given point in time in the way that it believes best to provide appropriate leadership for the Company at that time. Currently, Mr. Watt serves as the Chief Executive Officer of the Company, while Mr. Dietrich serves as the Chair of the Board of Directors. The Board of Directors believes that this leadership structure best serves the Company at this time because it allows Mr. Watt to focus on the Company’s operations and strategy, while Mr. Dietrich, among other things, can provide leadership for the Board of Directors, set the agenda for meetings and enable other directors to raise issues and concerns for Board consideration without immediately involving the Chief Executive Officer or other management. The Board of Directors believes it currently benefits from having a director, who is also a former executive officer of the Company, as its Chair. Mr. Mitchell serves as the Lead Director, providing an independent point of contact for the Board of Directors.
Director Attendance at Board Meetings and Annual Meetings
During 2021, the Board held eight meetings. Each incumbent director attended at least 75% of the aggregate of: (1) the total number of meetings of the Board held during the period that the individual served; and (2) the total number of meetings held by all committees of the Board on which the director served during the period that the individual served. In addition, as reflected in our Corporate Governance Guidelines, we have adopted a policy strongly encouraging directors to attend our Annual Meeting of stockholders. All directors attended the 2021 Annual Meeting, and we expect that all directors will attend the 2022 Annual Meeting.
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Corporate Governance
Committees of the Board of Directors
Our Board has a number of standing committees, including a Nominating and Corporate Governance Committee, Audit Committee, Compensation and Benefits Committee and Risk Management Committee. The Board has determined that all of the directors who serve on the Nominating and Corporate Governance Committee, Audit Committee and Compensation and Benefits Committee are independent for purposes of NASDAQ Rule 5605 and that the members of the Audit Committee are also “independent” for purposes of Section 10A(m)(3) of the Exchange Act. A table showing the members of each of these committees follows:
Director
Nominating and
Corporate Governance
Audit
Compensation and
Benefits
Risk Management
Johanna R. Ames
J. David Brown
Patricia T. Civil
Chair
Timothy E. Delaney
Chair
Martin A. Dietrich
James H. Douglas
Chair
Heidi M. Hoeller
Andrew S. Kowalczyk III
John C. Mitchell
V. Daniel Robinson II
Matthew J. Salanger
Chair
Joseph A. Santangelo
Lowell A. Seifter
John H. Watt, Jr.
Jack H. Webb
A description of each of these committees follows:
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for determining the qualification of and nominating persons for election to the Board of Directors, including (if applicable) stockholder nominations that comply with the notice procedures set forth by SEC rules and the Company’s Bylaws. The Nominating and Corporate Governance Committee also formulates our corporate governance guidelines and functions to ensure successful development of management at the senior level and succession planning, as applicable. The Nominating and Corporate Governance Committee regularly evaluates our corporate governance process against current trends and provides recommendations to the Board of Directors. The Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee, a copy of which is available on the Company’s website at www.nbtbancorp.com/bncp/corporategov.html. This committee met five times during 2021.
The Board of Directors believes that it should be comprised of directors who possess the highest personal and professional ethics, integrity and values, and who shall have demonstrated exceptional ability and judgment and who shall be most effective in representing the long-term interests of the stockholders. While the Board of Directors and Nominating and Corporate Governance Committee have no formal policy on board diversity, diversity is considered by the Nominating and Corporate Governance Committee in determining the qualification of and nominating persons for election to the Board of Directors.
When considering candidates for the Board of Directors, the Nominating and Corporate Governance Committee takes into account the candidate’s qualifications, experience and independence from management. In addition, in accordance with the Company’s Bylaws:
Every director must be a citizen of the United States;
Each director must own $1,000 aggregate book value of the Company’s common stock (see ownership guidelines for continuing directors included herein); and
No person shall serve as a director beyond the Company’s Annual Meeting following the date upon which he or she shall have attained the age of 72 years.
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Corporate Governance
When seeking candidates for director, the Nominating and Corporate Governance Committee may solicit suggestions from incumbent directors, management or others. The Committee also has the authority to retain any search firm to assist in the identification of director candidates. The Committee will review the qualifications and experience of each candidate. If the Committee believes a candidate would be a valuable addition to the Board, it will recommend to the full Board that candidate’s election.
The Company’s Bylaws also permit stockholders eligible to vote at the Annual Meeting to nominate director candidates, but only if such nominations are made pursuant to timely notice in writing to the CEO of NBT. To be timely, notice must be delivered to, or mailed to and received at, the principal executive offices of NBT at least 150 days prior to the one-year anniversary of the date immediately preceding the prior year’s Annual Meeting of stockholders. The Nominating and Corporate Governance Committee will consider candidates for director suggested by stockholders applying the criteria for candidates described above and considering the additional information required by Article III, Section 4 of the Company’s Bylaws, which must be set forth in a stockholder’s notice of nomination. Article III, Section 4 of the Company’s Bylaws requires that the notice include: (1) as to each person whom the stockholder proposes to nominate for election as a director, (a) the name and address of such person and (b) the principal occupation or employment of such person; and (2) as to the stockholder giving notice (a) the name and address of such stockholder, (b) the number of shares of the Company that will be voted for the proposed nominee by such stockholder (including shares to be voted by proxy) and (c) the number of shares of the Company which are beneficially owned by such stockholder.
Audit Committee
The Audit Committee represents our Board in fulfilling its statutory and fiduciary responsibilities for independent audits of NBT’s consolidated financial statements, including monitoring accounting and financial reporting practices and financial information distributed to stockholders and the general public. Directors on our Audit Committee meet the expanded independence requirements of audit committee members. In addition, our Board of Directors has determined that Ms. Civil, Ms. Hoeller and Mr. Seifter are “audit committee financial experts” as that term is defined in Item 407(d)(5) of Regulation S-K.
This Committee met four times in 2021. Responsibilities and duties of this Committee are discussed more fully in the Audit Committee Report herein and in the Audit Committee’s charter, which is available on the Company’s website at www.nbtbancorp.com/bncp/corporategov.html.
Compensation and Benefits Committee
All of the Company’s Compensation and Benefits Committee members are independent directors, as determined by the Board, and as such term is defined in the NASDAQ Marketplace Rules as they apply to the Company.
The Committee is responsible for the development, oversight and administration of the Company’s compensation program. The Committee works closely with the Company’s CEO and Executive Vice President of Human Resources to implement our compensation program. In addition, the Committee engages in executive sessions without Company management present.
The Committee regularly reviews our compensation practices and policies and recommends to the Board of Directors the compensation and benefits for the CEO, directors and executive management team, including the named executive officers. In making compensation recommendations to the Board of Directors for the named executive officers, the Committee relies substantially on the recommendations of the CEO and, in the case of the CEO’s compensation, upon the recommendation of the Chair of the Board. The Committee generally determines the compensation for the named executive officers at its December meeting preceding the commencement of the fiscal year in which the compensation will be paid or earned, or in its January meeting of such fiscal year.
The CEO’s compensation reflects the Committee’s evaluation of his performance measured against the following criteria: (1) implementation of the Company’s short and long-term strategies; (2) financial and operating performance; (3) management development; (4) customer service; and (5) leadership in positioning the Company to meet the significant operational and regulatory challenges of the evolving financial services industry. The Committee may use its discretion to deviate from or modify compensation policies and recommendations, but does so rarely, and typically, only in unusual circumstances.
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Corporate Governance
The Committee also administers the Company’s Defined Benefit Pension Plan (“Pension Plan”), 401(k) & Employee Stock Ownership Plan (the “401(k) Plan & ESOP”), the 2008 Omnibus Incentive Plan (the “2008 Plan”) and the 2018 Omnibus Incentive Plan (the “2018 Plan,” and together with the 2008 Plan, the “Omnibus Plans”) and awards outstanding under prior equity plans. Pursuant to the terms of the Company’s 2018 Plan, which is the Company’s active equity plan, the Committee may delegate its authority to grant awards to nonexecutive officers under such plan to a member of the Board and the Committee has granted such authority, within certain defined limits, to Mr. Watt. A charter that reflects these responsibilities and delegated authority, which the Committee and the Board periodically review and revise, governs the Committee. A copy of the charter is available on the Company’s website at www.nbtbancorp.com/bncp/corporategov.html. The Committee met four times in 2021.
Risk Management Committee
The Risk Management Committee was established in 2018 and oversees the Company’s risk management activities and the effectiveness of its ERM framework. The Committee also reviews periodic reports related to the Company’s compliance program and legal and regulatory matters. The Committee is responsible for oversight of operational risk, including Company action related to information security, technology, fraud, privacy, business continuity and disaster recovery, vendor management, data governance and insurance coverage.
Environmental, Social and Governance
Our Board of Directors recognizes that Environmental, Social and Governance (“ESG”) principals are important to the Company’s various stakeholders including stockholders, customers, communities and employees, and desires to drive positive social and environmental impact. The Board further believes that the Company’s reputation for integrity and corporate responsibility are bedrock principles and the ESG framework provides an opportunity to define, measure, and highlight our values to the Company’s stakeholders. Accordingly, the Board has committed to the following:
Oversight of ESG matters at the Board level and active participation and monitoring of the Company’s ESG efforts within the Nominating and Governance Committee;
Commitment to each of the three pillars – Environmental, Social, and Governance – with action plans for each pillar;
Regular assessment of existing ESG practices within the Company and identification of opportunities for further development;
Public disclosure of the Company’s efforts and measurement of progress and results;
Environmental
The Company offers a financing product to homeowners on a national basis which provides an opportunity to power their homes with sustainable solar energy. It enables households to reduce their carbon footprint at an affordable price. Services like mobile and online banking, remote deposit capture, electronic loan payments, eStatements and combined statements enable us to support all customers in their efforts to consume less fuel and paper. We continue to digitize loan origination and deposit account opening processes, reducing trips to the bank and paper documents for our customers. Across our footprint, we host community shred days with multiple confidential document destruction companies to promote safe document disposal and recycling.
The Company is focused on the environment and committed to business practices and activities that encourage sustainability and minimize our environmental impact. In larger facilities, the Company conserves energy through the use of building energy management systems and motion sensor lighting controls. In new construction and renovations, the Company incorporates high-efficiency mechanical equipment, LED lighting, and modern building techniques to reduce our carbon footprint wherever possible. The Company has an ongoing initiative to replace existing lighting with LED lighting to reduce energy consumption.
Social – Commitment to Our Communities
We are committed to strengthening the communities we serve through volunteerism and philanthropy, serving as a leader in our local communities. The Company is engaged in the communities where we do business and where our employees and directors live and work. We live out our core values of community involvement through investments of both money and the time of our employees.
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Corporate Governance
Through our active contribution program, administered by market-based committees with representation from all lines of business, the Company contributed nearly $2.0 million in 2021, a 43% increase from 2020. Our teams’ efforts to distribute philanthropic resources across our footprint ensure alignment with local needs and support for hundreds of organizations that provide health and human services and promote education, affordable housing, economic development, the arts and agriculture.
A consistent way that the Company and our employees support our communities across our markets is through giving to United Way chapters in the form of corporate pledges and employee campaign contributions. In 2021, these commitments resulted in over $375,000 in funding for United Way chapters that provide resources to local organizations offering critical education, financial, food security and health services.
In addition to corporate financial support of community organizations and causes, employees are encouraged and empowered to volunteer and be a resource in their communities. They invest their financial and other expertise as board members and serve in roles where they offer direct support to those in need by engaging in all manner of volunteer activities. New employees participate in an onboarding experience that includes a community service activity.
We are also committed to helping the individuals in our communities develop their financial health. The Company offers a comprehensive array of financial products and services with options that are beneficial to unbanked and underbanked individuals. Deposit accounts include low balance savings and checking options that features minimal or no monthly service fees, provide assistance rebuilding positive relationships, and assistance for those just starting a new banking relationship. The new NBT iSelect Account was certified as meeting the Bank On National Account Standard with no monthly charges for maintenance, inactivity or dormancy, no overdraft fees and no minimum balance requirement. An enhanced digital banking platform incorporates ready access through online and mobile services to current credit score information and a personal financial management tool for budget and expense tracking.
The Company is focused on making home ownership accessible to everyone in the communities we serve. Our suite of home lending products features innovative and flexible options, including government guaranteed programs like Federal Housing Administration and U.S. Department of Veterans Affairs loans as well as programs developed in-house like our First Home Loan, Habitat for Humanity, Home in the City and Portfolio 97 programs. Our home lending team includes affordable housing loan originators, and we maintain longstanding relationships with affordable housing agency partners across our banking footprint that offer first-time homebuyer education programs and assistance with down payments and closing costs.
Social – Commitment to Our People
The Company has a long-standing commitment to diversity, equity and inclusion (“DEI”) and has retooled our initiatives to take into consideration our remote and hybrid working conditions over the past 18 months. Our Chief Diversity Officer led both grassroots and Executive sponsored strategies to continue our DEI journey. Executive sponsored strategies include providing leadership opportunities with cross-functional/geographic teams, webinars and virtual sessions on topics such as working parents and providing contribution support to employee interests such as fundraisers for the LGBTQ community. Grassroot efforts include more focus and awareness of various cultural and diverse interest from our company-wide DEI Roundtable. The Roundtable also provided an internal forum called NBT Communities where employees with similar interest across our footprint have a way to get to know each other. Our DEI Steering Committee is comprised of members of the executive team, including our Chief Executive Officer. The plan is shared with our Board of Directors, management and employees, who are often included in implementing specific action items. Both the Roundtable and the Steering Committee utilized data from our September 2021 Employee Engagement survey to understand perspectives and create specific initiatives addressing employee feedback and perceptions. More information can be located on the Company’s website at https://www.nbtbank.com/about-us/Diversity-and-Inclusion/.
The Company’s focus on investing in our people includes key initiatives to attract, develop and retain our valued employees. Talent acquisition and more importantly, retention, are top priorities in the post-coronavirus (“COVID-19”) “great resignation” and boomer generation transition to retirement. While our employee retention rate remains consistently high, significant effort is placed on retaining our valued employees - various compensation strategies, stay interviews, career planning conversations, an on-going coaching process instead of annual performance appraisals, and enhanced communications all play a part in employee satisfaction. Our 2021 Employee Engagement
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survey provided insights leading to specific initiatives to enhance future engagement including clarity around business strategies, decision making and development opportunities. The Company offers total rewards that address employees at various stages of their personal lives and careers, including a student loan repayment program, enhanced financial and emotional wellness programs and initiatives, undergraduate and graduation tuition, paid parental leave, recently enhanced paid time off, additional flexibility in work schedules with hybrid and remote work, paid leave benefits and a retirement transition option. The Company’s incentive programs recognize all full-time employees at all levels and are designed to motivate employees to support achievement of company success, with appropriate risk assessment and prevention measures designed to prevent fraud.
The Company focuses on the future by encouraging and promoting internal talent development. During the pandemic, emphasis was placed on connecting our employees using Microsoft Teams to ensure employees would be successful working and leading in a remote work environment. This past year the Company doubled the number of participants in our development programs to encourage individual growth and foster retention. The Management Development Program aims at attracting qualified diverse college graduates. The program consists of accelerated advancement, mentoring with senior executives and targeted benefit programs. The Professional Development Program provide an entry point for early career professionals. This 12-18 month program provides an overview of banking functions ultimately placing employees with working knowledge in positions of responsibility around the Company. The Emerging Leaders program is intended for employees who have approximately 5-7 years of professional experience who may or may not have had prior leadership experience but shows potential for becoming a future leader for the Company. This program works on developing the essential leadership skills and building confidence. The Star Impact program is designed to further develop leaders who are already established in their leadership roles who demonstrate potential for assuming expanded responsibility in role or through promotion. This program is designed to further develop and strengthen leadership styles and it includes feedback, coaching, networking and team building. Employees have access to career paths and career exploration programs throughout a variety of business areas, supported by mentors, individual development plans and internal learning resources. To support this process, we employ an internal career manager to work as a liaison with employees and managers to direct their personal career aspirations. The Company also has a robust talent review and succession planning process. Significant time is spent at the Board and Management level identifying and providing development opportunities for potential successors.
The Company seeks to further refine its workforce programs through its employee engagement survey which is planned on an annual basis with follow up pulse surveys in the interim. In addition to the pulse surveys conducted to understand employee well-being, attitudes about remote work, productivity and work-life balance during the last 18 months, a full Engagement Survey was completed in September 2021 to discover more about overall employee engagement. We were pleased at the high level of participation and overall engagement at the same high level as pre-pandemic. Divisional and Corporate actions have been developed to address areas employees would like to be more knowledgeable and involved in. The Company believes our engaged employees will drive retention and effort, ultimately correlating to a better experience for our customers.
Governance
We are dedicated to being a financial industry leader in corporate governance and business ethics. The Company’s Board of Directors is composed of individuals with diverse professional and business experience. All of our directors, other than the Chief Executive Officer, 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, stockholders and reputation. Our Code of Ethics reflects 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.
Our Board of Directors believes that a fully engaged Board of Directors is a strategic asset of the Company, and that knowledgeable and fresh viewpoints and perspectives are important for informed decision-making. The Board of Directors regularly evaluates whether it collectively has the right mix of skills, experience, attributes and diverse viewpoints necessary for it to drive stockholder value. The results of this evaluation are used to help identify the desirable skills for potential Board of Directors nominees and to screen director candidates. In the past four years, the Board of Directors has nominated three new directors to the Board, two of them diverse. The Board will continue to seek and recruit highly-talented and diverse director candidates in the future, as we expect several Board positions will become available through natural refreshment due to the Company’s age of 72 retirement standard.
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Corporate Governance
In addition to the foregoing commitments, our Board of Directors believes in strong governance practices, including:
A non-classified Board with annual director elections
Maintenance of independent committees of the Board with independent chairs and an Independent Lead Director
Regular executive sessions of the Board of Directors independent of management
Meaningful stock ownership guidelines for directors
Finally, our Board understands the importance of aligning performance with compensation. Our compensation philosophy and programs for executives are balanced and risk appropriate, demonstrate long-term alignment with sustained performance and stockholder interests, and provide a competitive and effective program to attract, motivate, and retain the best talent.
Cybersecurity
The Company is committed to cybersecurity and vigilantly protecting all clients, resources and information from unauthorized access. The Company has implemented a strategic approach to cybersecurity and performs semi-annual cybersecurity penetration tests and formal cybersecurity maturity assessments via a third party to ensure that we are consistent with security best practices. The Company's cybersecurity approach incorporates a layered portfolio of technology products and tools, documented policies, end-user training and dedicated resources to manage and monitor the evolving threat landscape. We employ dedicated cybersecurity personnel to focus on preventing, identifying, and detecting cybersecurity risks. We use advanced next generation protection technologies to rapidly detect and investigate any evidence of malicious activity, which allows us to quickly isolate systems to contain and prevent damage and restore systems. Incidents are required to be internally reported, including to the Board of Directors, if material or appropriate. The Board of Directors is responsible for overseeing cybersecurity risks and management provides the Board of Directors with updates on current cybersecurity projects and industry trends on at least a quarterly basis. Our cybersecurity personnel regularly evaluate risks and opportunities to improve our cybersecurity program. In addition, controls related to the Company's information technology environment are tested as part of our Sarbanes-Oxley audit.
Policy on Recovery of Awards
Incentive Compensation Clawback Policy
In the event of a restatement of incorrect financial results, the Company’s Compensation and Benefits Committee (the “Committee”) will review all cash and equity incentive awards made under the Company’s Omnibus Plans that were paid or awarded to executive officers (within the meaning of Rule 3b-7 of the Exchange Act) for performance periods beginning on and after January 1, 2019, which occur during the restatement period. If any such awards would have been lower had the level of achievement of applicable financial performance goals been calculated based on such restated financial results, the Committee will, if it determines appropriate in its sole discretion, to the extent permitted by governing law, require the reimbursement of the incremental portion of the awards in excess of the awards that would have been paid based on the restated financial results.
Furthermore, if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company as a result of misconduct with regard to any financial reporting requirement under applicable securities laws, the individuals subject to the automatic forfeiture provisions under Section 304 of the Sarbanes-Oxley Act of 2002 and any other employee who knowingly engaged in the misconduct, was grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct or was grossly negligent in failing to prevent the misconduct, shall reimburse the Company the amount of any payment in settlement of an award earned or accrued during the 12-month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document that contained such material noncompliance.
Equity Compensation Clawback Policy
The Committee may specify in an award that a grantee’s rights, payments, and benefits with respect to the award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of the award. Such events may include, but
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Corporate Governance
shall not be limited to, termination of employment for cause, termination of the grantee’s provision of services to the Company, violation of material Company policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the grantee, or other conduct by the grantee that is detrimental to the business or reputation of the Company. These provisions will generally be limited to a three year look-back from the occurrence of the event that gives rise to the forfeiture.
Director Compensation
A directors’ compensation analysis, including a peer comparison, was completed in 2020. The goal of the study was to evaluate our director compensation against our peer group to ensure the Company’s compensation practices for our directors is consistent with banks our size and within our similar markets. The analysis revealed that director compensation was aligned with peer median after adjusting board chair and equity retainer in 2019 from $30,000 to $35,000. No changes were made to director compensation in 2021. The peer group methodology used in the director compensation analysis was consistent with the methodology outlined herein.
Set forth below is the fee schedule for non-executive directors as of December 31, 2021:
 
Cash
Restricted Stock Units
Annual Retainer Fees
Chair:
NBT Bancorp Inc. Board
$50,000
$17,500
NBT Bank, N.A. Board
$50,000
$17,500
Audit Committee
$15,000
$
Risk Committee
$15,000
$
All Other Committees
$10,000
$
Affiliate Board
$3,000
$
Member:
NBT Bancorp Inc. Board
$22,500
$17,500
NBT Bank, N.A. Board
$22,500
$17,500
Fee per Board Meeting
$1,500
$
Fee per Committee Meeting
$1,200
$
The restricted stock unit awards in 2021 were issued pursuant to the 2018 Plan. The restricted stock units awarded to the non-employee directors vest one-third annually beginning on the first anniversary of the grant date.
Director Compensation Table
Name
Fees Earned or
Paid in Cash
($) (1)
Stock
Awards
($) (2) (3)
All Other
Compensation
($) (4)
Total
($)
Johanna R. Ames
71,100
33,069
71
104,240
J. David Brown
60,600
33,069
93,669
Patricia T. Civil (5)
98,100
33,069
2,526
133,695
Timothy E. Delaney
83,800
33,069
734
117,603
Martin A. Dietrich
129,700
33,069
10,643
173,412
James H. Douglas
87,100
33,069
120,169
Andrew S. Kowalczyk III
78,000
33,069
2,475
113,544
John C. Mitchell (5)
77,100
33,069
9,330
119,499
V. Daniel Robinson II
76,200
33,069
109,269
Matthew J. Salanger
93,300
33,069
1,079
127,448
Joseph A. Santangelo
75,000
33,069
9,958
118,027
Lowell A. Seifter
75,000
33,069
5,830
113,899
Robert A. Wadsworth (6)
11,700
1,319
13,019
Jack H. Webb
85,900
33,069
1,725
120,694
(1)
Includes all fees earned during the fiscal year, whether such fees were paid currently or deferred.
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(2)
These amounts reflect the aggregate grant date fair value of restricted stock unit awards computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The director restricted stock unit awards granted for fiscal year ending December 31, 2021, were issued as of May 25, 2021, and the per share fair market value was $38.63. Assumptions used in the calculation of these amounts are materially consistent with those that are included in footnote 13 to the Company’s audited consolidated financial statements contained in its Annual Report on Form 10-K.
(3)
The aggregate number of outstanding awards as of December 31, 2021, is as follows:
Name
Options Exercisable
Stock Units
Unvested Restricted
Johanna R. Ames
1,414
J. David Brown
908
Patricia T. Civil
2,045
3,630
Timothy E. Delaney
2,045
Martin A. Dietrich
2,045
James H. Douglas
2,045
Andrew S. Kowalczyk III
2,045
John C. Mitchell
2,045
V. Daniel Robinson II
2,045
Matthew J. Salanger
2,045
Joseph A. Santangelo
2,045
Lowell A. Seifter
2,045
Jack H. Webb
2,045
(4)
All other compensation includes: cash dividends received on restricted stock and deferred stock granted pursuant to the Non-Employee Directors’ Restricted and Deferred Stock Plan and the Omnibus Plans for all non-employee directors totaling $28,154; and in the case of Ms. Civil and Mr. Mitchell only, also includes health and/or dental/vision insurance offered through the Company as part of legacy director benefit plans no longer offered, in the amount of $142 and $3,654, respectively. Mr. Seifter’s all other compensation also includes dividends paid through the Alliance Financial Corporation Deferred Compensation Plan. Mr. Dietrich’s all other compensation also includes amounts earned as an employee of the Company prior to retirement as follows: $6,705 in health and life insurance premiums and $3,938 for the value of split dollar life insurance premiums paid.
(5)
Ms. Civil and Mr. Mitchell will retire as directors upon the expiration of their terms at the 2022 annual meeting.
(6)
Mr. Wadsworth retired as a director upon the expiration of his term at the 2021 annual meeting.
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Compensation Discussion and Analysis
Compensation Discussion and Analysis
This section discusses the Company’s executive compensation philosophy, guidelines and programs, and the material factors affecting the Company’s decisions regarding the compensation of its named executive officers (“NEOs”). This information is presented to give our stockholders a clear and comprehensive picture of the Company’s executive compensation program and its individual components. It also describes the process followed by the Compensation and Benefits Committee (the “Committee”) for making compensation decisions, as well as its rationale for specific decisions related to 2021.
Named Executive Officers of NBT Bancorp Inc.
The following table sets forth certain information for the Named Executive Officers (“NEOs”) of the Company in 2021.
Name
Age at December 31, 2021
Positions Held with NBT and NBT Bank
John H. Watt, Jr.
63
President and Chief Executive Officer (“CEO”)
Scott A. Kingsley
57
Executive Vice President and Chief Financial Officer (“CFO”)
Annette L. Burns (1)
49
Senior Vice President and Chief Accounting Officer
Former Interim Chief Financial Officer
John V. Moran (2)
45
Former Executive Vice President and Chief Financial Officer
Joseph R. Stagliano
53
Executive Vice President, President of Retail Community
Banking and Chief Information Officer
Sarah A. Halliday
51
Executive Vice President and President of Commercial Banking
Amy Wiles
63
Executive Vice President and Chief Credit and Risk Officer
(1)
Ms. Burns held the position of Interim CFO effective May 8, 2021 through July 5, 2021.
(2)
Mr. Moran resigned from his position as CFO effective May 7, 2021.
Biographical information regarding the NEOs is set forth below. Information regarding Mr. Watt can be found under the section Board Nominees for 2022 found herein.
Scott A. Kingsley, has been Executive Vice President and Chief Financial Officer since he joined the Company on July 6, 2021. Prior to joining NBT, he was a member of the leadership team at Community Bank System, Inc. where he served as Chief Operating Officer and prior to that as Chief Financial Officer. Mr. Kingsley started his career with PricewaterhouseCoopers and was employed there for eight years before joining the Carlisle Companies, Inc., a large publicly traded manufacturer and distributor, where he served first as Corporate Controller and then as Chief Financial Officer of its Carlisle Engineered Products operating division. A Certified Public Accountant, Mr. Kingsley earned his bachelor’s degree in Accounting at Clarkson University. He is a community leader and volunteer, serving on the Crouse Health Foundation Board of Trustees and on the Audit and Finance Committee for the Catholic Diocese of Syracuse.
Annette L. Burns, Senior Vice President and Chief Accounting Officer, served as interim Chief Financial Officer from May 8, 2021 to July 5, 2021. A Certified Public Accountant, Ms. Burns has over 25 years of experience in accounting and finance. She joined the Company in March 2013 when NBT acquired Alliance Bank and was promoted to Corporate Controller later that year. At Alliance, Ms. Burns held the position of Vice President of Financial Reporting and Accounting Policy. Prior to that, she held leadership positions in finance with Pathfinder Bank as Controller, and PricewaterhouseCoopers, LLP as Business Assurance Manager. Ms. Burns earned her bachelor’s degree in business administration from St. Bonaventure University. She currently serves on the Board of Directors for the Chenango Arts Council and United Way of Chenango County.
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John V. Moran, was Executive Vice President and Chief Financial Officer from November 2019 to May 7, 2021. Prior to joining NBT, he was Senior Vice President and Director of Corporate Development & Strategy for Old National Bancorp, a $20 billion financial services holding company based in Evansville, Indiana. In addition to his role at Old National Bancorp, Mr. Moran has significant experience in corporate finance and investment research. Prior to joining Old National Bancorp he was previously employed by Macquarie Capital and, prior to that by Cohen & Company and Ryan Beck & Co. Mr. Moran graduated from Rutgers University with a BA and an MBA and earned a MS in Real Estate Development from Columbia University. Mr. Moran is also a CFA Charterholder.
Joseph R. Stagliano, has been Executive Vice President and President of Retail Community Banking since January 2019 and Chief Information Officer since 2006. Mr. Stagliano joined the Company in 1999 and held a number of leadership positions in Operations. In 2008, Mr. Stagliano was promoted to Executive Vice President and joined NBT’s Executive Management Team. He advanced to the position of Executive Vice President, Operations and Retail Banking in 2016. Mr. Stagliano has over twenty-five years of experience in the financial services industry. Prior to joining the Company, he was employed by MetLife where he held leadership roles in customer service and call center management. Mr. Stagliano holds a Bachelor’s Degree in business and public management from SUNY Polytechnic Institute, formerly the State University of New York Institute of Technology in Utica. His community activities include serving on the Board of Directors of UHS Chenango Memorial Hospital and Norwich Building Tomorrow Foundation Inc. He is a past member of the board of education for the Norwich City School District.
Sarah A. Halliday has been Executive Vice President and President of Commercial Banking, with responsibility for NBT’s Commercial Banking Division since she joined the Company in January 2017. She has thirty years of experience in banking and commercial lending. Prior to joining the Company, she was employed at M&T Bank as Capital Region Market President. Ms. Halliday also worked for the New York Business Development Corporation for eleven years as Vice President and Loan Officer. She started her career with Fleet Bank. Ms. Halliday earned her Bachelor of Arts degree from Colgate University, graduating with honors in Economics. She is involved in several community and professional organizations, including the Junior Achievement of Northeastern New York, the foundation for the St. Anne Institute (emeritus board member) and on the Community Scholars committee of Union College.
Amy Wiles is Executive Vice President and Chief Credit and Risk Officer. She joined the Company in 2015 as Senior Vice President and Chief Credit Officer. In 2017, she assumed the additional role of Chief Risk Officer, providing leadership for the Company’s Credit Administration and Risk Management Division. Prior to joining the Company, Ms. Wiles was Executive Vice President and Group Credit Executive for Key Bank’s Community Bank Division. Ms. Wiles previously was employed by JP Morgan Chase. A native of Syracuse, New York, Ms. Wiles earned her Bachelor’s Degree from Colgate University and her MBA from the University of Pennsylvania’s Wharton School of Business. Ms. Wiles is a member of the national Risk Management Association’s Credit Risk Council and its Mid-Tier Bank Council. She also serves on the boards of the Volunteer Lawyers Project of Central New York, Inc. and Community Memorial Hospital Foundation.
Executive Summary
The Company has a strong pay for performance culture. Our executive compensation programs are designed to reward the NEOs for making decisions that lead to consistent financial performance and value creation for our stockholders. In 2021, the Company achieved record earnings. The NEOs achieved 113% of their targeted opportunity under the annual Executive Incentive Compensation Plan (“EICP”) and 120.0% of their targeted opportunity in performance-vesting stock awards in the first year of the performance period.
2021 Business Highlights
The following highlights demonstrate the Company’s financial performance during 2021:
Increased diluted earnings per share by 49.4%.
Increased net income by 48.4% from 2020.
Loan growth was 5% excluding Paycheck Protection Program (“PPP”) loans.
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Participated in the Small Business Administration’s PPP which provided over 6,100 loans totaling $835 million in 2020 and 2021, supporting small businesses in our footprint.
Strong credit quality metrics including charge-offs of 0.13% and allowance to loans at 1.23% of total loans.
Below is a summary of key financial metrics and results for 2021. Refer to the “Pay for Performance” section herein for a summary of our pay for performance analysis.
Performance Metric
2021
Net Income ($ Millions)
$154.9
Diluted earnings per share
$3.54
Return on Average Assets (“ROAA”)
1.33%
Return on Average Equity
12.71%
Return on Average Tangible Equity (“ROATE”)
16.92%
Loan Growth
4.7%
Average Demand Deposit Growth
23.2%
Nonperforming Assets (“NPA”) to Total Assets
0.27%
The following table provides the non-GAAP reconciliation:
(Dollars in Millions)
2021
Net Income
$154.9
Amortization of Intangible Assets (Net of Tax)
2.1
Net Income, Excluding Intangible Amortization
$157.0
Average Stockholders’ Equity
$1,218.4
Less: Average Goodwill and Other Intangibles
290.8
Average Tangible Common Equity
$927.6
Return on Average Tangible Common Equity
16.92%
Say-on-Pay Results
The Company’s continued focus is on aligning its compensation plans with business objectives, performance, stockholder interests and the practices of its peers. The Company considered the 97.0% non-binding advisory basis approval of the executive compensation of its NEOs by its stockholders at the Annual Meeting on May 25, 2021 to be a strong endorsement of its compensation programs. The Company also considered feedback from stockholders and commentary received from proxy advisory groups and independent compensation consultants to evaluate compensation practices. Proxy advisory groups were generally supportive of the Company’s pay practices, and no significant concerns have been identified.
Based on the results of the most recent non-binding stockholder advisory vote on the frequency of stockholder votes on executive compensation, the Compensation Committee and the Board determined that a stockholder advisory vote on executive compensation will take place every year, until and unless our stockholders vote to hold such an advisory vote with a different frequency, at which time the Board will carefully consider the stockholder vote resulting from the proposal and continue to evaluate the options for how frequently it holds “say-on-pay” votes.
What Guides Our Program
Overview
Recently, the Compensation Committee of the Board (“the Committee”) adopted a formal Executive Officer Compensation Philosophy to guide compensation decisions. At the heart of this is a belief in a strong pay for performance culture and that its executive compensation philosophy must create long-term stockholder value. The strategy of the Committee is to design an executive compensation program that is both competitive with comparably sized financial institutions and furthers the objectives of the Company through strong performance results. The Committee regularly evaluates the compensation components in order to ensure that the NEOs’ compensation remains competitive and aligned with Company performance.
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Compensation Discussion and Analysis
The primary objectives of the Company’s executive compensation program are to:
Attract and retain talented senior executives;
Align executive compensation with our overall business strategies, values and stockholder interests; and,
Motivate senior executives by rewarding them for outstanding corporate and individual performance.
The following guiding principles are at the core of the Company’s executive compensation program. Executive compensation should be:
Closely aligned with both short-term and long-term stockholder interests;
Appropriately balanced to reflect performance related to the achievement of corporate and individual goals;
Designed to encourage senior executives to build and maintain significant equity investments in the Company; and
Determined by a committee composed entirely of independent directors having sufficient resources to do its job, including access to independent, qualified experts.
Compensation Programs and Best Practices
The Company recognizes and rewards results that are consistent with its strategy and business objectives.
Executives should balance potential outcomes with appropriate risk-taking. Executives must comply with Company risk policies and control mechanisms.
It is expected that executives act in a manner consistent with the highest ethical standards. The Company has incorporated this thinking into all compensation programs, practices and policies. Results obtained through deceptive tactics or are inconsistent with our values and culture are not rewarded and are subject to, but are not limited to, clawbacks, discretionary downward adjustments to incentive compensation, employment decisions and disciplinary actions.
Executives are also subject to clawbacks in cases of fraud, errors/omissions and improper risk-taking for material adverse outcomes in the years following incentive compensation payouts.
The Company’s policies and practices promote strong compensation governance by:
Linking a significant portion of compensation to performance through the use of short-term (cash) and long-term (equity) compensation to encourage both proactivity and long-term sustainability.
Employing a variety of performance metrics to fully assess performance and mitigate excessive risk. Metrics should consider the environmental, social and governance impact. Eliminated a single metric for all incentives programs which may encourage focus on a single performance metric without regard to other critical measures.
Building in appropriate levels of negative discretion to adjust incentive payouts if results are not aligned with credit quality, regulatory compliance or leading indicators of future financial results. Positive discretion is permitted under special circumstances.
Assessing fairness of pay by analyzing the CEO pay ratio and pay equity for women and unrepresented groups. There is a formal commitment to increase Board and Management diversity.
Executive must inherently believe in, and visibly exhibit, the Company’s values and commitment to diversity and inclusion.
Using equity incentives to promote total return to stockholders, long-term performance and executive retention.
Utilizing an independent compensation consultant who advises and reports directly to the Committee.
Prohibiting hedging and pledging of Company stock.
Requiring meaningful stock ownership from our executive officers.
Including clawback policies applicable to incentive and equity compensation.
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Compensation Discussion and Analysis
While we have an obligation to protect stockholder interests, we also are accountable to other key stakeholders including our employees, customers and community. Our compensation programs, practices and policies recognize this responsibility.
Our Compensation Components
Factors such as performance, knowledge, skills and experience play a role in compensation decision-making for individual executives. Discretionary factors are also considered in making appropriate compensation decisions in a balanced and wholistic approach. It is strongly believed that executive performance should be considered in tandem with our values. These include Customer Focus, Integrity, Accountability, Teamwork, Positive Attitude, Mutual Respect and Community Involvement.
The Company’s compensation program centers on Total Direct Compensation (“TDC”), which is the sum of base salary, short-term incentives and long-term equity-based incentives. Our TDC is weighted heavily toward rewarding results, with a substantial portion of direct total compensation “at risk” and performance-based. The following table shows the principal components of TDC, each one contributing to the accomplishment of our compensation program goals:
Compensation Component
Description
Purpose
Base Salary
Pay to recognize executive’s role, responsibilities, skills, experience, individual achievements and Company performance.
To provide competitive and fair fixed compensation.
Short-Term Cash Incentive Compensation
Annual cash rewards for achievement of pre-determined level of EPS, ROAA and individual goals.
To provide market competitive compensation.

To motivate and reward executives for achieving annual Company, department and individual goals which support our long-term strategic plan.
Long-Term Equity-Based Incentive Compensation
Performance-based restricted stock units earned based on Company performance over a designated period.

Time-vesting restricted stock units granted based on individual performance and earned over a designated time-period.

Both allow for negative discretion based on an NEO’s individual performance.
To strengthen pay for performance relationship, a significant portion of equity awards is performance-based.

To align executives with long-term interests of the Company and stockholders, provide a reward for superior performance, encourage stock ownership and enhance our ability to retain our top talent.
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Our ability to attract and retain an exceptional leadership team is also dependent on having a full complement of compensation tools available to us and the flexibility to use them. This includes retirement and other limited benefits and perquisites, as well as the ability to leverage employment, change of control and severance agreements:
Compensation Component
Description
Purpose
Retirement Benefits
NEOs participate in Company-wide tax-qualified plans, including the Pension Plan (a defined benefit pension plan) and the 401(k) Plan & ESOP.

Certain NEOs are eligible to receive a discretionary Company contribution to the deferred compensation plan based on Company and individual performance.

The CEO participates in a Supplemental Executive Retirement Plan (“SERP”).
To provide market-competitive and reasonable retirement benefits.

To enhance Company’s ability to attract and retain the executives.
Perquisites and Other Personal Benefits
Benefits may include automobiles, life and disability insurance, long-term care insurance and club dues. Eligibility for each perquisite varies depending on the position of the NEO.
To attract and retain superior executive employees and foster continuity in executive leadership.
Termination and Severance Pay
The NEOs have employment agreements providing post-termination severance compensation under certain scenarios, including a change in control.
To assist in attracting and retaining the NEOs and to minimize the impact on the executives when exploring or executing strategic change in control opportunities.
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Risk Management
Risk management controls are developed to reduce the potential for imprudent risk taking. Controls are in place for the proper administration and oversight of the compensation programs.
All components of NBT’s executive incentive compensation plans include mechanisms through metric selection, discretion and/or plan design to adjust compensation payments for risk. Poor risk management practices and imprudent risk-taking will lead to an adverse impact on incentive compensation, such as reductions or loss of current and/or previously awarded incentive compensation.
The Committee involves the Company’s control functions (e.g., internal audit, risk and compliance) as well as outside advisors in its deliberations. Risk assessments of the Company’s compensation programs are conducted regularly.
Regulatory Guidance
We operate within the rules, regulations and laws concerning compensation, employee rights and protections. Compensation programs, practices and policies are designed to promote the long-term sustainability of our Company, stockholders, employees and the communities we serve.
The Committee approves the compensation for “Named Executive Officers” as defined under SEC Item 402 of Regulation S-K.
Roles of the Committee, Management and Consultant
The Role of the Committee. The Committee operates under a written charter that establishes its responsibilities. A copy of the Committee Charter can be found on the Company’s website at www.nbtbancorp.com. The Committee reviews the charter annually to ensure that the scope of the charter is consistent with the Committee’s expected role. Under the charter, the Committee is charged with general responsibility for the oversight and administration of the Company compensation program. The charter gives the Committee the responsibility for determining the compensation of the CEO based on the Committee’s evaluation of his performance The Committee reviews and approves the CEO’s recommendations for the compensation of the remaining NEO’s. The charter also authorizes the Committee to engage consultants and other professionals without management approval to the extent deemed necessary to discharge its responsibilities. The Committee utilizes a documented Compensation Philosophy as a roadmap in setting overall compensation. The Philosophy is reviewed annually.
The Role of CEO. The CEO does not provide recommendations concerning his own compensation, nor is he present when his compensation is discussed by the Committee. The Committee, with input from its independent compensation consultant, discusses the elements of his compensation in executive session and makes a recommendation to all of the non-management members of the Board for discussion and final approval. The CEO provides compensation recommendations for the other NEOs.
The Role of the Independent Consultant. The Committee has the sole authority to retain and terminate a compensation consultant and to approve the consultant’s fees and all other terms of the engagement. The independent compensation consulting firm performs a competitive assessment of the Company’s executive compensation programs and a pay analysis. The annual executive compensation assessment includes, but is not limited to, an assessment of the Company’s compensation program compared to its peers, recommendations for total direct compensation opportunities (base salary, short-term incentives and long-term incentives), an assessment of the Company’s financial performance relative to its peers, and a review of the alignment of pay and performance. The assessments provide the Committee with a broad array of information from which to evaluate the effectiveness of its compensation programs and serve as a foundation for compensation decisions.
In addition to providing annual assessments, the consultant advises the Committee on best practices in light of the changes in the banking and corporate regulatory environment and assists the Committee in designing compensation arrangements that reflect the Company’s compensation philosophy. While the Committee considers input from the consultant when making compensation decisions, the Committee’s final decisions reflect many factors and considerations.
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Compensation Discussion and Analysis
Pearl Meyer served as the Committee’s compensation consultant in 2020 and in determining 2021 compensation decisions. Meridian Compensation Partners, LLC (“Meridian”) was engaged in mid-2021 to serve as the Committee’s compensation consultant for 2022 compensation decisions. Both consultants reported directly to the Committee and did not provide any other services to the Company. The Committee has analyzed the work of both consulting firms to determine any conflicts of interest, taking into consideration the following factors, among others: (1) the provision of other services to the Company; (2) the amount of fees from the Company paid as a percentage of each firm’s total revenue; (3) internal policies and procedures within each consulting firm that are designed to prevent conflicts of interest; (4) any business or personal relationship of either Pearl Meyer or Meridian or the individual compensation advisors employed by each with an executive officer of the Company; (5) any business or personal relationship of the individual compensation advisors with any member of the Committee; and (6) any stock of the Company owned by the firms or the individual compensation advisors employed. The Committee has determined, based on its analysis of the above factors, among others, that the work of Pearl Meyer and Meridian and the individual compensation advisors employed by each as compensation consultants to the Company has not created any conflict of interest.
Benchmarking
The compensation review process entailed the use of survey data and peer group information prepared and presented by the consultant. The peer group used as reference for 2021 total direct compensation and financial performance comparisons consists of community-based banking organizations in the Northeast and in the Midwest with assets between $6.7 billion and $17.9 billion (approximately 0.5x – 2x of the Company’s asset size), operating in a market similar to the Company’s and competing for comparable executive talent. The peer group utilized for the 2021 pay analysis consisted of the following companies:
Berkshire Hills Bancorp, Inc.
First Merchants Corporation
Park National Corporation
Brookline Bancorp, Inc.
First Midwest Bancorp, Inc.
Provident Financial Services, Inc.
Community Bank System, Inc.
Heartland Financial USA, Inc.
S&T Bancorp, Inc.
Customers Bancorp, Inc.
Independent Bank Corp.
TriState Capital Holdings, Inc.
First Busey Corporation
Northwest Bancshares, Inc.
Tompkins Financial Corporation
First Commonwealth Financial Corporation
Ocean First Financial Corp.
WesBanco, Inc.
First Financial Bancorp.
The Committee generally sets target TDC (base salary, short-term incentives and long-term incentives) for the NEOs at levels that are commensurate with individual’s role and market practice. After reviewing the benchmark study, the Committee determined the TDC targets are appropriate and consistent with this approach. It is important to note that this market data was not the sole determinant in setting executive pay levels. The Committee also considers Corporate and individual performance, the nature of an individual’s role within the Company, as well as his or her experience and contributions to his or her current role when making its compensation-related decisions.
Pay for Performance
At the request of the Committee, the consultant conducts regular analyses to monitor pay and performance alignment (both financial and operational), particularly with regards to the CEO. The goal is to use this information proactively to set appropriate pay opportunity ranges and retroactively to assess the actual pay delivered based on performance.
It is the Committee’s philosophy to reward the NEOs for operational excellence. Operational excellence is achieved by selecting a composite of key financial metrics which define management’s strategic objectives and tie to strategy execution and the resulting increase in stockholder value. The Committee reviews TDC regularly in light of the Company’s financial performance. The 2021 study revealed that TDC of the Company’s CEO and top five executives (combined, including CEO) is aligned with operational performance using a composite of five key metrics (ROAA, ROATE, NPA/Total Assets, Efficiency Ratio, and Net Interest Margin). The table below indicates the percentile rankings for the Company in one-year and three-year average performance periods as of year-end 2020, and TDC, versus the peer group. This analysis informed the Committee of the Company’s pay and performance alignment.
 
For This Level
of Performance…
…TDC Was At This Percentile
of the Peer Group
 
Composite Measures
CEO
Top 5 Executives
One-Year Performance
74th percentile
53rd percentile
42nd percentile
Three-Year Performance
74th percentile
37th percentile
32nd percentile
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Compensation Discussion and Analysis
2021 Compensation Decisions
Base Salary
The Committee reviews executive base salaries annually. Base salary is the only fixed portion of compensation for salaried employees of the Company, including the NEOs. The Company has entered into employment agreements with each NEO providing for a minimum base salary, subject to annual adjustments upon the Committee’s approval.
In 2021, the Committee determined the base salaries of the NEOs based on the Company’s guiding principles, unique pandemic environment and the competitive market. Messrs. Watt and Stagliano maintained their current salaries for 2021. Ms. Wiles received a 4% salary increase, Mr. Moran and Ms. Burns each received a 6% salary increase and Ms. Halliday received a 7% salary increase in order to maintain market competitive base salaries and recognize their performance and contributions. The Committee’s recommendations were in line with the results of the compensation analysis. Below are the base salaries for the NEOs for 2021.
Named Executive Officer
January 1, 2021 Base Salary
2021 Base Salary Increase
John H. Watt, Jr.
$ 800,000
Scott A. Kingsley (1)
$500,000
Annette L. Burns (2)
$277,750
6%
John V. Moran
$439,900
6%
Joseph R. Stagliano
$422,240
Sarah A. Halliday
$372,625
7%
Amy Wiles
$361,191
4%
(1)
Mr. Kingsley entered into an employment agreement with the Company on August 5, 2021, which provided for an annual base salary of $500,000.
(2)
Ms. Burns received a salary increase on May 8, 2021 pursuant to the terms of being the Interim Chief Financial Officer.
Variable Compensation
In addition to fixed base salaries, the Company provides cash and equity-based incentive compensation. Incentive compensation varies in amount depending on the factors discussed below and is designed to promote superior performance and achievement of corporate goals, to encourage the growth of stockholder value, and to share the long-term growth and profitability of the Company with key employees.
Executive Incentive Compensation Plan (“EICP”)
The EICP is a component of the 2018 Omnibus Plan, a stockholder-approved incentive plan authorizing several forms of cash and equity- based incentive compensation.
The EICP is a short-term cash incentive plan that directly ties annual cash awards to the Company’s performance as measured by EPS, ROAA and individual performance objectives. EICP target opportunities are defined as a percentage of base salary with payouts considering a combination of corporate performance goals and individual performance objectives reflecting each executive’s role and responsibilities. If the threshold EPS goal is not achieved, no awards will be paid to any executives. When determining the payouts under the EICP, the Committee may objectively adjust the reported performance results considering any of the following events that occur during a performance period: (1) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (2) any reorganization and restructuring programs, (3) acquisitions or divestitures activity and related expenses and (4) other unusual or unplanned events.
At the beginning of each year, the Committee determines the participants, performance metrics and goals under the EICP. The Committee recognizes the current interest rate environment and macroeconomic conditions when setting the performance targets, with a long-term view in building stockholder value, and discourages undue risk taking for short-term gains. The primary incentive funding metric is EPS with potential negative adjustments for ROAA and individual performance. The EPS target level for 2021 was set at $2.13, a 10.1% decrease from 2020 reported EPS primarily due to forecasted margin compression and the uncertainties associated with the COVID-19 pandemic on Company’s earnings, including an increase in expected credit losses. The Committee maintained the target award opportunities for each participant given the desire to retain the alignment of NEOs’ TDC with peer median to retain and attract executive talent in the Company’s markets.
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Compensation Discussion and Analysis
The following table depicts the range of potential payouts to the NEOs under the EICP for 2021 as a percentage of base salary at the end of the year. The potential payout range is 50-113% of each participant’s target opportunity. Once the EPS result and corresponding payout is calculated, the actual payout can then be negatively adjusted based on the ROAA modifier and individual performance.
EICP Payout Level
EPS Performance
Level
ROAA Negative
Modifier
% Payout
from Target
CEO
Potential Total
Payouts
(% of base salary)
Messrs. Kingsley,
Stagliano, Mmes. Halliday
and Wiles (1)
Potential Total Payouts
(% of base salary)
Level 1
$1.84
0.74%
50%
32.50%
21.15%
Level 2
$1.98
0.80%
75%
48.75%
31.73%
Level 3
$2.07
0.83%
90%
58.50%
38.07%
Level 4 (Target)
$2.13
0.85%
100%
65.00%
42.30%
Level 5
$2.26
0.91%
113%
73.13%
47.59%
(1)
Mr. Moran resigned from his position as CFO effective May 7, 2021 and was not eligible to receive an EICP award in 2021. Ms. Burns did not participate in the EICP and received short-term incentive awards under an employee bonus program, a target payout percentage of 26%, a minimum payout percentage of 13% and a maximum payout percentage of 29.26%.
ROAA is an additional corporate performance component of the short-term incentive award. Once the EPS performance level is determined, 15% of the CEO’s award and 10% of the other NEOs’ awards may be reduced if the ROAA modifier for each EPS performance level is not met. The target level of ROAA was set at 0.85% in 2021.
In addition to the EPS performance levels and ROAA negative modifier, the Committee approves individual performance objectives as a component of the overall payout for each of the NEOs. The Committee sets the individual performance objectives for the CEO. The CEO provides input for the individual performance objectives for the other NEOs. Each NEO has several individual performance objectives that are tied to both the NEO’s respective corporate responsibilities and the Company’s overall strategic plan. Objectives more critical to the Company are given more significant weight than other objectives. The calculated payout level based on EPS performance is subject to reduction based upon each NEO’s individual performance objectives with the maximum possible reduction being 100% of the award otherwise payable.
For 2021, the Company’s EPS of $3.54 was 166.2% of target EPS performance of $2.13 and above the maximum level. Based on these results, and in accordance with the plan, the payout represented achievement above Level 5 and resulted in a payout of 113% of target. The Company’s ROAA of 1.33% exceeded the Level 5 ROAA of 0.91% and resulted in 100% payout of the ROAA corporate component of the short-term incentive award. There was no reduction in the payout level (“ROAA reduction factor”).
Each NEO’s individual performance achievement is evaluated against the predefined goals at year-end. The achieved payout level based on Company performance may be reduced based on each NEO’s performance objectives.
The Committee’s evaluation of Mr. Watt’s performance is primarily based on corporate earnings; however, the Committee has discretion to reduce the amount of his award based on individual performance achievements. In 2021, Mr. Watt led the Company through the continued global COVID-19 pandemic while at the same time reenergizing the company with forward looking strategies. He authorized the advancement of new technologies that add value, efficiency and ease of use for both customers and employees. Mr. Watt directed the Company’s transition from LIBOR. He led the progressive growth in our markets. He relentlessly strengthened NBT’s culture and the pursuit of putting employees first which led to high engagement scores, continued high retention, successes in our DEI initiatives and open communications. The Company’s performance and these achievements resulted in Mr. Watt earning 100% of his total potential incentive at Level 5.
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Compensation Discussion and Analysis
For the 2021 performance year, the Committee also set the following individual performance objectives and the payout percentage for the other NEOs who remained with the Company at the end of 2021:
Mr. Kingsley, Executive Vice President and Chief Financial Officer. Mr. Kingsley was hired in July of 2021. Mr, Kingsley received a prorated award based on his numerous contributions in the areas of strategic planning, budgeting and forecasting and investor relations.
Ms. Burns, Senior Vice President and Chief Accounting Officer, Former Interim Chief Financial Officer. Ms. Burns’ invaluable leadership provided stability during transitional times. She evolved our capital plan and stress testing for regulatory compliance, completed the foundation for technology advancements in several of our financial systems, and supported DEI initiatives including by providing development opportunities for staff. These achievements resulted in Ms. Burns earning 100% of her potential incentive at level 5.
Mr. Stagliano, Executive Vice President, President of Retail Community Banking and Chief Information Officer. Mr. Stagliano’s individual performance objectives were aligned with the Company’s strategic focus areas of organic growth, investment in human capital, optimizing our cost structure and enhancing our customer and employee experiences. Further, he was instrumental in driving our key initiative of evolving our technology roadmap with a focus on innovation, efficiencies and end user awareness. Mr. Stagliano’s continued leadership during the second year of the COVID-19 pandemic provided a steady hand during the constant shifting of the pandemic and resulting protocols for customers and employees. Mr. Stagliano provided an environment for continuous learning and coaching whether remote, hybrid or onsite. Mr. Stagliano achieved the majority of his revenue and operational goals in Retail Banking, Business Banking, Operations, IT and Marketing. These achievements resulted in Mr. Stagliano earning 100% of his potential incentive at Level 5.
Ms. Halliday, Executive Vice President and President of Commercial Banking. Ms. Halliday’s individual performance goals were aligned with the Company’s strategic focus areas of growth, optimizing our cost structure, investment in human capital, and enhancing our customer and employee experiences. Ms. Halliday provided pivotal leadership in achieving disciplined net loan growth, expanding our customer base with organic growth, successful implementation of our new commercial loan origination system that improves both our customer and employee experiences, and actively supporting our DEI initiatives. These achievements earned Ms. Halliday 100% of her potential incentive at level 5.
Ms. Wiles, Executive Vice President, Chief Credit and Risk Officer. Ms. Wiles’ individual performance objectives were aligned with the Company’s strategic focus areas of optimizing our cost structure, enhancing our customer and employee experiences and motivating and retaining our workforce. Ms. Wiles assisted with the Libor transition, co-lead our ESG efforts, drove our risk and compliance initiatives related to our growth – particularly CFPB requirements as we crossed $10B, developed more sophisticated ERM program and successfully implemented numerous organizational change strategies including technology advancements, career pathing, employee development and diversity actions. Ms. Wiles achieved 100% of her potential incentive at level 5.
The Committee considered such results together with the corporate component results in determining awards under the EICP as follows:
Named Executive Officer (1)
2021
Target Incentive
($)
Actual Performance
Achievement
(% of Target)
2021
Incentive Earned
($)
John H. Watt, Jr.
$520,000
113%
$585,040
Scott A. Kingsley (2)
$105,750
113%
$118,975
Joseph R. Stagliano
$178,608
113%
$200,944
Sarah A. Halliday
$157,620
113%
$177,332
Amy Wiles
$152,784
113%
$171,891
(1)
Mr. Moran resigned from his position as CFO effective May 7, 2021 and was not eligible to receive an EICP award in 2021. Ms. Burns did not participate in the EICP and received a short-term incentive award under an employee bonus program.
(2)
Mr. Kingsley’s incentive compensation was prorated based on date of hire.
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Compensation Discussion and Analysis
Long-Term Incentive Awards
The 2018 Omnibus Plan provide NEOs, and other eligible employees, with annual and long-term incentives in the form of cash, equity and performance-based awards. Long-term incentive grants made in 2021 consisted of two components as indicated below:
Current Long-Term Incentive Plan:
Executive Long-Term Incentive and Retention Equity Awards
Two Components
1. Performance Units (50% of target award): Performance-based Restricted Stock Units that vest dependent upon two-year relative performance based upon a composite score of performance metrics. The composite score includes the following performance metrics: ROAA, ROATE, Net Interest Margin, NPAs to Total Assets and Efficiency Ratio. Units are released one year following completion of
the two-year performance period (i.e. three year vesting period).
2. Retention Units (50% of target award): Time-based Restricted Stock Units subject to a five-year vesting schedule.
2021 Executive Long-Term Incentive and Retention Equity Awards
In March 2021, the Committee granted Long-Term Incentive and Retention Equity Awards under the Omnibus Plan to each NEO. The 2021 awards (in the form of restricted stock units) are long-term, equity-based incentive awards that link executive compensation to the Company’s profitability and stockholder value. The awards consist of a grant of:
Performance Units (50% of target), which vest based on the Company’s achievement of specific performance goals established on the grant date (the outcome of which is substantially uncertain on such date) over a two-year performance period; and
Retention Units (50% of target), which are subject to a time-based vesting schedule (over five years) and a reduction, at the time of grant, based upon the grantee’s achievement of individual performance factors for the 2021 calendar year.
The Committee determined the number of Performance Units and Retention Units underlying the awards based on a percentage of the grantee’s base salary as of the grant date, which was then converted to a number of units based on the fair market value of the Company’s common stock on the date of grant. In determining the size of the awards, the Committee considered several factors, including the grantee’s organizational position, historical performance, prior awards, current performance and potential future contribution to the Company. No dividends or dividend equivalents are currently paid on any unvested awards. At the time of grant, both the Performance Units and Retention Units could be reduced based on individual performance.
Ms. Burns was not granted any Executive Long-Term Incentive and Retention Equity Awards, but she did receive retention equity awards based on individual performance. Mr. Moran was not eligible to receive 2021 equity awards due to his resignation in May 2021.
With respect to the 2021 Performance Units, the performance award amount for each NEO for the first year of the performance period is based on the Company’s composite score ranking of several performance metrics against a comparative peer group for the year ended December 31, 2021. The composite score includes the following performance metrics: ROAA, ROATE, Net Interest Margin, NPAs to Total Assets and Efficiency Ratio. There is a potential for a reduction in the performance award amount in 2022 based upon the Company’s composite score ranking for the full year 2022 performance against a comparative peer group. Full vesting and payout of the Performance Units occurs in 2023 following the completion of an additional one-year time-based vesting requirement after the end of the two-year performance period (subject to acceleration upon certain terminations or a change in control). The following table depicts the composite score performance levels for the 2021 long-term incentive award.
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Compensation Discussion and Analysis
Composite Score
Ranking
% Payout Level
CEO
Potential Payout %
of Base Salary
Mr. Stagliano and
Ms. Halliday
Potential Payout %
of Base Salary
Ms. Wiles
Potential Payout %
of Base Salary
1
150.0%
67.5%
41.3%
33.8%
2
145.0%
65.3%
39.9%
32.6%
3
140.0%
63.0%
38.5%
31.5%
4
135.0%
60.8%
37.1%
30.4%
5
130.0%
58.5%
35.8%
29.3%
6
125.0%
56.3%
34.4%
28.1%
7
120.0%
54.0%
33.0%
27.0%
8
115.0%
51.8%
31.6%
25.9%
9
110.0%
49.5%
30.3%
24.8%
10
105.0%
47.3%
28.9%
23.6%
11
100.0%
45.0%
27.5%
22.5%
12
83.4%
37.5%
22.9%
18.8%
13
66.7%
30.0%
18.3%
15.0%
14
50.0%
22.5%
13.8%
11.3%
15 to 20
0.0%
0.0%
0.0%
0.0%
For the 2021 performance year, the Company’s composite score ranking was 7, which resulted in a target level payout percentage of 120.0% for the performance component of the award.
As shown in the table below, Messrs. Watt and Stagliano and Mmes. Halliday and Wiles received the following long-term equity compensation awards in 2021. In granting these awards, the Committee considered market data, as well as individual performance contributing to the Company’s success.
Named Executive Officer
Retention Units (1)
Performance Units (2)
John H. Watt, Jr.
9,020
10,824
Joseph R. Stagliano
2,909
3,491
Sarah A. Halliday
2,568
3,081
Amy Wiles
2,036
2,444
(1)
Such NEOs met their individual performance objectives and received a grant in 2021. The retention units vest 20% each year over the five-year vesting period.
(2)
Such NEOs met their individual performance objectives. The performance units are based on meeting the composite score ranking of 7 during the performance period for the full year ending December 31, 2021. The amount of the award above is subject to a potential reduction as of December 31, 2022 based upon the quartile ranking of the Company’s composite score ranking against a comparative group of peer institutions, with full vesting and payout occurring following the completion of an additional one-year time-based vesting requirement after the end of the two-year performance period. The following table outlines the quartile peer ranking and the corresponding adjustment factor:
Composite Score Performance Factor
Percentile Ranking
Adjustment Factor
Above 50th percentile
100%
Third quartile
75%
Bottom quartile
50%
2022 Compensation Changes
In assessing Mr. Watt’s TDC for 2022, the Committee considered individual and Company performance, current compensation trends, peer group data and feedback from proxy advisory groups. Given Company and individual achievements in 2021 as well as considering peer data, the following adjustments were made to Mr. Watt’s compensation:
Base salary increased to $835,000 (4% increase); and
Short-term incentive target compensation increased to 75% of base pay.
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Salary Increases: Mr. Kingsley received a 2.5% increase, Mmes. Halliday and Wiles each received a 3.0% increase and Mr. Stagliano received a 4.0% increase.
In addition, the Committee is actively monitoring the continued effects of the COVID-19 pandemic on the economy, our operations and future results. In light of these developments, the Committee may re-evaluate the performance goals and incentives associated with incentive compensation during 2022. Any material changes will be communicated in accordance with applicable disclosure requirements.
Other Compensation Practices, Policies and Guidelines
Stock Ownership Guidelines
To more directly align their interests with stockholders’ interests, the Committee maintains stock ownership guidelines for the Board of Directors and the Company’s executive management team, including the NEOs. The guidelines include retention requirements for restricted stock units and the NEOs’ required ownership levels are based on a multiple of salary. The guidelines require directors to own 5,000 shares of Company common stock. The NEO share requirements are based upon a multiple of salary with the CEO to own a number of shares of Company common stock equal to at least 3 times his base salary, each of Messrs. Kingsley and Stagliano and Ms. Halliday to own a number of shares of Company common stock equal to at least 1.5 times their base salary and Ms. Wiles to own a number of shares of Company common stock equal to at least 0.75 times her base salary. Vested restricted stock units are included in an individual’s ownership for purposes of compliance with guidelines. The executives and Board members must comply with the guidelines within five years from the date of promotion to the executive management team or election to the Board of Directors. Failure to meet the guidelines could, at the Committee’s discretion, affect future equity-based awards. As of December 31, 2021, all NEOs (other than Mr. Moran, who resigned on May 7, 2021 and Ms. Burns, who is not subject to the stock ownership guidelines) and all directors were in compliance or expect to be in compliance with the guidelines.
Hedging and Pledging Policies
All directors and employees, including the NEOs, are prohibited from engaging in any speculative transaction designed to hedge or offset any decrease in the market value of the Company’s securities, including hedging of the Company’s common stock. The Company also prohibits any pledging of Company securities in a margin account and restricts all other pledging of any Company securities by requiring directors and employees to obtain the prior approval of the CEO, CFO or General Counsel before entering into any such agreement.
Clawback Policy
The Company has a clawback policy to require NEOs to reimburse the Company, all or in part, for incentive compensation awards received in a period where restatement was required due to incorrect financial results. Furthermore, if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company as a result of misconduct, with regard to any financial reporting requirement under the securities laws, the NEOs’ incentive compensation would also be subject to clawback.
Risk Assessment
A formal risk assessment of the Company’s incentive compensation plans is performed annually. A risk assessment matrix is used which considers and analyzes the following factors:
Type of award and who was eligible for the award;
Performance metrics associated with each plan;
Conditions of payout;
Party responsible for granting awards and assessing performance;
Potential risk features in plan design;
Major business risks that might be impacted by performance metrics;
Correlation of plan’s performance metrics to the Company’s overall business objectives;
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Consideration of internal controls present to prevent the manipulation of the budgeting process or performance outcomes;
Determination of the plan’s risk level as low, moderate or high;
Plan provisions for risk mitigation; and
Assessment of the plan’s probability to result in adverse material risk.
The annual risk assessment is overseen by the Chief Risk Officer and Chief Human Resources Officer/Chief Ethics Officer and reviewed annually by the Committee.
Retirement Plans
Defined Benefit Pension Plan
The eligible NEOs participate in the Pension Plan, which is a noncontributory, tax-qualified defined benefit pension plan. The Pension Plan is available to all Company employees who have attained age 21 and have completed one year of service, as defined in the Pension Plan. The Pension Plan provides for 100% vesting after three years of qualified service. The Pension Plan has a cash balance feature, in which all of the eligible NEOs participate. The footnotes to the Pension Benefits Table included herein, including the narrative discussion that follows such table, contain a detailed description of the defined benefit/cash balance pension plan, including a description of the eligibility, crediting, vesting, mortality, and other terms and assumptions used for the calculation of Pension Plan benefits. Participants in the Pension Plan are eligible for additional discretionary contributions to the 401(k) Plan & ESOP in lieu of interest credits to the cash balance portion of the Pension Plan.
Supplemental Retirement Benefits
The CEO participates in a SERP, which is principally designed to restore benefits that would have been paid to him if certain federal tax limitations were not in effect, as well as to attract and retain qualified and experienced executive officers. The SERP is embodied in an agreement between the Company and the CEO. The narrative that follows the Nonqualified Deferred Compensation table included herein contains a detailed description of the SERP.
401(k) Plan & Employee Stock Ownership Plan
The 401(k) Plan & ESOP is a tax-qualified defined contribution retirement savings plan available to all Company employees who have attained age 21 and are either scheduled to complete one year of service or have completed one year of service (1,000 hours of service in a twelve-month period), as defined by the 401(k) Plan & ESOP. Employees are eligible to enroll on the first of the month following 30 days of service. Participants in the 401(k) Plan & ESOP may contribute up to the limit prescribed by the Internal Revenue Service on a before-tax or after-tax basis. The Company matches 100% of the first 1% of pay contributed to the plan plus 50% of the next 5% of compensation for a total matching contribution of 3.5% of compensation. Additionally, the Company can make discretionary contributions to the 401(k) Plan & ESOP based on its financial performance. All Company contributions to this retirement plan since 2013 have been made in cash and vest at the rate of 20% per year with full vesting following five years of benefit service. Prior to 2013, Company contributions were made in Company stock. The NEOs participate in the 401(k) Plan & ESOP. The Company may make discretionary contributions to the 401(k) portion of the 401(k) Plan & ESOP to offset the elimination of interest credits to the Pension Plan, as described above. The value of Company contributions to the 401(k) Plan & ESOP are included in the Summary Compensation Table included herein.
Deferred Compensation Plan and Other Compensation Deferrals
The Deferred Compensation Plan allows the NEOs, and such other key employees as the Committee may approve annually, to defer some or all of their salary, commissions and/or bonus, to a future date. The Deferred Compensation Plan also permits the Company to make discretionary contributions to the accounts of eligible employees. Eligible employees are generally those employees determined to be highly-compensated employees of the Company. In addition, the Omnibus Plans permit award recipients to defer receipt of vested equity awards to a future date. Certain NEOs elected to defer compensation or received discretionary contributions as detailed in the Nonqualified Deferred Compensation table included herein. The Company awarded Messrs. Watt, Kingsley, Stagliano and Mmes. Halliday and Wiles $284,000, $76,875, $65,870, $57,571, and $55,804, respectively, as discretionary contributions to the Deferred Compensation Plan based upon their 2021 performance. Company contributions are not subject to vesting provisions.
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Compensation Discussion and Analysis
Perquisites and Other Personal Benefits
The Company provides NEOs with perquisites and other personal benefits that the Committee and the Company believe are reasonable and consistent with the Company’s guiding compensation principles. These benefits enable the Company to attract and retain superior employees for key positions. During 2021, these benefits included the use of Company-owned automobiles or car allowance, disability insurance, long-term care insurance, and for certain NEOs, club memberships. For the CEO, the Company also maintains a split-dollar bank-owned life insurance policy for the benefit of the Company and the CEO. For NEOs that have the use of a Company-owned automobile, any personal mileage incurred by the executive is taxed as additional compensation in accordance with Internal Revenue Service (“IRS”) regulations. The Committee periodically reviews the levels of perquisites and other personal benefits provided to NEOs. The dollar amount of these benefits is reflected in the Summary Compensation Table included herein. The aggregate amounts of perquisites and other personal benefits paid to Messrs. Kingsley, Moran and Stagliano and Mmes. Burns, Halliday and Wiles were determined to be less than the established reporting thresholds for detailed disclosure.
Tax and Accounting Matters
Section 162(m)
Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally disallows a tax deduction to a company for compensation in excess of one million dollars paid per year to a company’s chief executive officer, chief financial officer and each of its three other most highly compensated executive officers, including certain former executive officers. Prior to January 1, 2018, certain “performance based” compensation exceeding one million dollars annually paid to such executive officers was excluded from Section 162(m)’s limitation and was deductible if certain requirements were met, and compensation paid to the Company’s chief financial officer and former executive officers were excluded from Section 162(m)’s limitation. Compensation arrangements that qualify for transition relief under certain “grandfather” rules may continue to be deductible in the future, but it is uncertain whether previous compensation that the Committee believed to be “performance based” compensation or believed would not otherwise be subject to Section 162(m)’s limitation will be deductible going forward.
The Committee considers the tax deductibility of compensation as one factor when considering executive compensation program alternatives. The Committee has in the past approved and has reserved the right in the future to approve compensation that does not qualify for deductibility in circumstances it deems in the Company’s best interests. The Committee believes that its primary responsibility is to provide a compensation program that attracts, retains and rewards the executive talent necessary for our success.
Section 409A
Section 409A of the Internal Revenue Code (“Section 409A”) generally provides that amounts deferred under a nonqualified deferred compensation plan are currently includible in a service provider’s gross income to the extent not subject to a substantial risk of forfeiture, unless certain requirements are met or exemptions apply. Section 409A applies to most forms of deferred compensation, including but not limited to, nonqualified deferred compensation plans or arrangements, certain equity-based performance awards, and severance plans or individual severance arrangements contained within employment agreements. Generally, under Section 409A, any severance arrangement not in compliance with Section 409A covering an NEO pursuant to an employment or change in control agreement, any deferrals under a nonqualified deferred compensation plan that do not comply with Section 409A, or any stock option award grants with an exercise price of less than fair market value on the date of grant may subject the applicable service provider to: (1) current income inclusion of the relevant amounts; (2) interest at the IRS underpayment rate; and (3) an additional 20% excise tax. The Nonqualified Deferred Compensation Table included herein provides detailed information about the Company’s nonqualified deferred compensation arrangements.
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Compensation Discussion and Analysis
Sections 4999 and 280G
Section 4999 of the Internal Revenue Code imposes a 20% excise tax on certain “excess parachute payments” made to “disqualified individuals.” Under Section 280G of the Internal Revenue Code, such excess parachute payments are also nondeductible to the Company. If payments that are contingent on a change in control to a disqualified individual (which terms include the NEOs) equal or exceed three times the individual’s “base amount,” they constitute “excess parachute payments” to the extent they exceed one times the individual’s base amount.
All the Company’s NEO employment agreements provide for a cutback of change in control benefits in circumstances where the executive would not be better off on a net after-tax basis by at least $50,000 by being paid the full change in control benefit. In circumstances where the executive will be better off by at least $50,000 on a net after-tax basis by being paid the full change in control benefit owed, the executive will be responsible for the payment of all excise taxes. However, neither the Company nor NBT Bank will be permitted to claim a federal income tax deduction for the portion of the change in control benefit that constitutes an “excess parachute payment.”
Accounting Considerations
The Committee is informed of the financial statement implications of the components of the compensation program for NEOs. However, a compensation component’s contribution to the objectives of the Company’s compensation program and its projected economic cost, which may or may not be reflected on the Company’s financial statements, are the main elements of NEO compensation decisions.
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Compensation Discussion and Analysis
Executive Compensation
The following table sets forth information regarding compensation earned by each of the NEOs. The compensation received by each NEO was a combination of cash and equity compensation and short-term and long-term compensation. The Committee concluded that this mix reflects the compensation principles discussed in the Compensation Discussion and Analysis, as applied to each NEO’s responsibilities and performance.
Summary Compensation Table
Name and Principal Position
Year
Salary
($) (1)
Bonus
($) (2)
Stock
Awards
($) (3)
Non-Equity
Incentive Plan
Compensation
($) (4)
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) (5)
All Other
Compensation
($) (6)
Total ($)
John H. Watt, Jr.
President and
Chief Executive Officer
2021
800,000
725,136
585,040
317,897
338,068
2,766,141
2020
800,000
652,239
365,040
282,164
312,786
2,412,229
2019
761,000
571,660
445,185
306,977
308,111
2,392,933
Scott A. Kingsley
Executive Vice President
and Chief Financial Officer
2021
238,462
114,065
118,975
85,272
556,774
Annette L. Burns
Senior Vice President, Chief
Accounting Officer and Former
Interim Chief Financial Officer
2021
273,181
50,000
187,091
81,270
4,463
13,761
609,766
John V. Moran
Former Executive Vice
President and Chief
Financial Officer
2021
173,885
11,793
185,678
2020
415,000
232,619
123,252
2,347
65,597
838,815
2019