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. )
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Preliminary Proxy Statement | |
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Definitive Proxy Statement | |
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Soliciting Material Pursuant to §240.14a-12 |
FINANCIAL INSTITUTIONS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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LETTER FROM OUR CHAIR
DEAR FINANCIAL INSTITUTIONS, INC. SHAREHOLDERS:
On behalf of the independent directors of the company, I join Marty and the management team in thanking you for investing in Financial Institutions, Inc. Our Board remains committed to building long-term value for our shareholders and I am proud to work with our management team and my fellow directors to ensure that Financial Institutions, Inc. is a well-governed, shareholder-focused company.
Our Board and management are jointly accountable in preparing for the future by overseeing the companys strategy. We collaborate with management in the creation of the plan and throughout the year our board regularly receives updates on managements progress in achieving the goals established in our plan. The plan defines strategic priorities and contains annual and multi-year goals and objectives to deliver on them. We also engage regularly with the companys executive management team to discuss opportunities and challenges and the environment in which it operates.
During our 2019 multi-day annual strategic planning session, we spent significant time analyzing the companys growth markets, considering the planned digital banking platform transformation, receiving economic updates on community banking, reviewing all key lines of the companys business, reviewing long-term financial forecast scenarios and reviewing the organizations human capital change readiness assessment.
We believe that we have developed a strong corporate governance framework to support the companys strategy. As further described in this Proxy Statement, our Board is actively engaged in the oversight of risk, succession planning and ensuring that the structure of our compensation programs provide reasonable and appropriate incentives for executive leadership while ensuring alignment of their interests with those of shareholders. We also regularly engage with our regulators, customers and community leaders to gain further insight on our performance and potential opportunities. The Board is also focused on its own succession planning and the need to have the appropriate balance of experience and fresh perspective as well as the skills and expertise we need to serve as a strategic governing body.
In 2019, our Board met regularly with management to discuss results, plans, strategies and initiatives. We have observed a commitment to pursuing technology and transformational investments that we believe will lead to improved customer and associate experiences and operating efficiencies. We have also witnessed managements commitment to an effective, efficient, and sustainable risk and control environment that is equipped to address evolving risks.
In the current challenging operating and financial environment created by COVID-19, we have observed the rapid activation of the companys business continuity plan and execution of social-distancing initiatives to protect associates and customers, prompt development of relief measures for our customers and a continual adaption to ever-changing conditions. We thank our associates for their flexibility, creative ideas and support of the company as we all navigate a public health and economic crisis of uncharted proportions.
We look forward to an ongoing delivery of value to our customers, shareholders and communities. On behalf of my fellow directors, thank you for your ongoing support of our Board and the company.
Thank you again for your commitment to Financial Institutions, Inc.
Sincerely,
Robert N. Latella
Chair of the Board
April 28, 2020
Financial Institutions, Inc.
LETTER FROM OUR CEO
FELLOW SHAREHOLDERS:
As I write this letter, COVID-19 has disrupted nearly every aspect of life in our country and around the globe, including preparations for annual shareholder meetings. At this time, large gatherings are prohibited in the state of New York and we do not know how long this will last. Therefore, we are adjusting our shareholder meeting plans to include a virtual meeting.
I invite you to attend our Annual Meeting of Shareholders on June 17, 2020, at Five Star Bank Plaza in downtown Rochester, New York or via our virtual meeting at www.virtualshareholdermeeting.com/FISI2020. We are sensitive to concerns our shareholders may have regarding the novel coronavirus pandemic and understand that even if we are able to conduct a physical meeting, they may not want to attend in person. In the event we decide to hold the Annual Meeting by means of remote communication only, we will make an announcement as soon as possible. The business to be conducted at the meeting is explained in the attached Notice of Annual Meeting and Proxy Statement.
As I said in my Annual Report letter this year, 2019 was a year of great accomplishment for our company. We generated the highest net income and pre-tax pre-provision income in company history and strengthened our capital ratios. We have a dedicated and talented workforce that delivered these results, and they continue to come to work every day, no matter the challenge, to serve our customers and improve our communities.
Ours is an essential business and we remain open. It is now more critical than ever that individuals and businesses continue to have access to their bank, investment, and insurance accounts and the ability to work with their trusted financial advisors. In many ways, we bring certainty to the customers, friends and neighbors dealing with so much uncertainty right now.
I am proud of our collective resiliency and adaptation to many changes social distancing, working remotely, and heightened concern for our health and the health of our loved ones. Despite all these very serious issues and challenges, our communities need us and the special way we provide service, dedication and optimism. We are in this together and we will get through it together.
We are pleased to furnish proxy materials to our shareholders over the Internet this year. We believe that this e-proxy process expedites shareholders receipt of proxy materials while lowering expenses and reducing the environmental impact of our Annual Meeting.
Whether or not you plan to attend the meeting, in person or virtually, please read the Proxy Statement and vote your shares. Instructions for voting by Internet, phone or mail are included in your Notice of Internet Availability of Proxy Materials or proxy card (if you receive a full set of materials by mail). We hope that after you have reviewed the Proxy Statement you will vote in accordance with the Boards recommendations.
Thank you for your continued support and investment in Financial Institutions, Inc.
Cordially,
Martin K. Birmingham
President and Chief Executive Officer
April 28, 2020
Financial Institutions, Inc.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 17, 2020
NOTICE AND ACCESS
To expedite delivery, reduce costs and decrease the environmental impact of our proxy materials, Financial Institutions, Inc. is using for the first time this year, a Securities and Exchange Commission rule that allows us to furnish proxy materials over the Internet instead of mailing paper copies to each shareholder. Accordingly, beginning on or about April 28, 2020, shareholders were sent a Notice of Internet Availability of Proxy Materials (the Notice) containing instructions on how to access our proxy materials, including this proxy statement and the annual report, over the Internet. If you received the Notice this year, you will not receive paper copies of the proxy materials unless you request the materials by following the instructions in the Notice. The Notice is not a proxy card that can be submitted to vote your shares. Instead, the Notice provides instructions on how to vote via the Internet. Shareholders who have requested paper copies of the proxy materials will receive printed copies in the mail.
This proxy statement and the 2019 Annual Report, which includes our Annual Report on Form 10-K for the year ended December 31, 2019, are available at http://materials.proxyvote.com/317585 and on our website www.fiiwarsaw.com.
2020 Proxy Statement
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NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
2020 ANNUAL MEETING INFORMATION
For additional information about our Annual Meeting, see Information About the Meeting on page 61.
Meeting Date: |
June 17, 2020 |
In Person Meeting Place: |
Five Star Bank Plaza |
100 Chestnut Street
Rochester, NY 14604
Virtual Meeting Place: |
www.virtualshareholdermeeting.com/FISI2020 |
You will need the multi-digit Control Number provided in your proxy materials to access the virtual meeting.
Meeting Time: |
10:00 a.m. (Eastern) |
Record Date: |
April 20, 2020 |
At this time, we intend to hold the Annual Meeting in person and through remote communication. However, we are sensitive to the concerns our shareholders may have regarding the novel coronavirus (COVID-19) pandemic and the protocols that federal, state and local governments may issue. Accordingly, we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication via the virtual meeting at www.virtualshareholdermeeting.com/FISI2020. In the event we determine to hold the Annual Meeting solely by means of remote communication, we will announce such decision as promptly as practicable.
ANNUAL MEETING BUSINESS
The Annual Meeting of Shareholders of Financial Institutions, Inc. will be held for the following purposes:
1. | To elect four directors nominated by the Board of Directors (the Board) to serve until the 2023 annual meeting |
2. | To approve, on an advisory basis, the compensation of our named executive officers |
3. | To ratify the appointment of RSM US LLP as our independent registered public accounting firm for 2020 and |
4. | To transact such other business as may properly come before the annual meeting. |
VOTING
Your vote is important. Owners of Financial Institutions, Inc. common stock at the close of business on the meeting record date of April 20, 2020, or their legal proxy holders, are entitled to vote at the annual meeting. Whether or not you expect to attend the annual meeting in person or remotely, via the online virtual meeting at www.virtualshareholdermeeting.com/FISI2020, we urge you to vote as soon as possible by one of these methods:
By Internet | By Phone | By Mail | ||
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Vote 24/7
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Dial toll-free 24/7
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Cast your ballot, sign your proxy card and send by pre-paid mail |
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NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
Shareholders may also vote in person at the annual meeting. For more information on how to vote your shares, please refer to Voting Matters on page 61.
By Order of the Board of Directors,
Samuel J. Burruano Jr.
Corporate Secretary
Warsaw, New York
April 28, 2020
2020 Proxy Statement
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CORPORATE GOVERNANCE AND BOARD MATTERS
DIRECTOR AND EXECUTIVE STOCK OWNERSHIP POLICIES
To demonstrate the strong commitment of our Board and Executive Management Committee (EMC) (members identified by footnote 1 to Executive Officers listing on page 57) to our performance and sound corporate governance, we have adopted the following share ownership requirements:
Position
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Required Ownership
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CEO
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3x Annual Base Salary
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CFO / Chief Banking and Revenue Officer
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1.5x Annual Base Salary
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Other Members of the Executive Management Committee |
1x Annual Base Salary | |
Non-employee Directors
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Shares with a value equal to at least $150,000
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2020 Proxy Statement
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CORPORATE GOVERNANCE AND BOARD MATTERS
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CORPORATE GOVERNANCE AND BOARD MATTERS
We encourage our associates to live our promise through key actions:
| Teamwork |
| Partner with others across the organization to get things done |
| Respect and consider the opinions and ideas of others |
| Deliver Excellence Every Day |
| Support and adapt quickly to change |
| Take responsibility and initiative for meeting expectations and goals |
| Do the Right Thing |
| Take action and do what you say you will do |
| Take ownership of mistakes and/or issues and see them through to resolution |
| Care for Our Customers |
| Give customers and coworkers your full attention when interacting with them |
| Follow up to ensure customer needs are met |
| Know Your Stuff |
| Share your knowledge and expertise to empower others to be successful |
| Know our products/services and demonstrate pride in talking about them |
2020 Proxy Statement
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CORPORATE GOVERNANCE AND BOARD MATTERS
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CORPORATE GOVERNANCE AND BOARD MATTERS
2020 Proxy Statement
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PROPOSAL 1. ELECTION OF DIRECTORS
PROPOSAL 1. ELECTION OF DIRECTORS
Our Bylaws provide for a classified Board of Directors, with directors divided into three classes of approximately equal number. One class is elected at each annual meeting of shareholders for a term expiring at the third successive annual meeting and until their respective successors have been elected and qualified. The Board of Directors is authorized by our Bylaws to determine, from time to time, the number of directors that constitute our Board. The Board size is currently set at ten members. The nominees for director at the Annual Meeting are:
| Donald K. Boswell |
| Andrew W. Dorn, Jr. |
| Robert M. Glaser and |
| Susan R. Holliday |
Each of these individuals has been nominated by the Board of Directors, upon the recommendation of the NG Committee, to stand for election for a term expiring at the companys annual meeting to be held in 2023 and until his or her respective successor is duly elected and qualified.
The nominees recommended by the Board of Directors have consented to serve as nominees for election to the Board and to serve as members of the Board if elected by the companys shareholders. As of the date of this proxy statement, the company has no reason to believe that any nominee will be unable or unwilling to serve if elected as a director. However, if for any reason a nominee becomes unable to serve or for good cause will not serve if elected, the Board upon the recommendation of the NG Committee may designate substitute nominees, in which event the shares represented by proxies returned to us will be voted for such substitute nominees.
The following pages contain a biography of each director nominee and director with information regarding the individuals service as a director, business and other experiences, director positions and information regarding experiences, qualifications, attributes and skills considered by the NG Committee and the Board.
Ages shown are as of December 31, 2019. No director, director nominee, or executive officer has any family relationship with any director, executive officer or person nominated or chosen by the company to become a director or executive officer.
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The Board of Directors unanimously recommends that shareholders elect nominees Donald K. Boswell, Andrew W. Dorn, Jr., Robert M. Glaser and Susan R. Holliday and recommends that you vote FOR all nominees
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PROPOSAL 1. ELECTION OF DIRECTORS
DIRECTOR NOMINEES
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PROPOSAL 1. ELECTION OF DIRECTORS
DIRECTORS CONTINUING IN OFFICE
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PROPOSAL 1. ELECTION OF DIRECTORS
DIRECTORS CONTINUING IN OFFICE
2020 Proxy Statement
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PROPOSAL 1 ELECTION OF DIRECTORS
The following areas of experience are among those we believe make our nominees and directors qualified to serve as members of our Board of Directors.
Director |
Bank Industry |
Corporate / Strategic Development / M&A |
Leadership | Public Board |
Risk Oversight |
Not-for-Profit Board / Community Development |
Public Policy / Government Relations |
Technology | ||||||||
Anderson |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Birmingham |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Boswell |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Burlew |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Dorn |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||
Glaser |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Gullo |
✓ | ✓ | ✓ | ✓ | ||||||||||||
Holliday, Vice Chair |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Latella, Chair |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
VanGelder |
✓ | ✓ | ✓ | ✓ | ✓ |
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PROPOSAL 1 ELECTION OF DIRECTORS
DIVERSITY OF SKILLS AND EXPERIENCES REPRESENTED ON OUR BOARD
The Board believes that its director nominees bring the following skills, experience and expertise, among others, to the Board as a result of their experience and perspectives:
✓ Accounting & preparation of financial statements
✓ Active involvement in educational, charitable and community organizations in the communities we serve
✓ Business ethics
✓ Complex regulated industries
✓ Compliance
✓ Community development
✓ Corporate governance
✓ Credit evaluation
✓ Demonstrated management ability
✓ Extensive experience in the public, private or not-for-profit sectors |
✓ Government, public policy & regulatory affairs
✓ Human capital management
✓ Knowledge of growth markets
✓ Leadership and expertise in their respective fields
✓ Operations
✓ Public company board
✓ Reputational considerations
✓ Risk management
✓ Strategic thinking
✓ Technology and cyber security | |
The Board meets on a regularly scheduled basis throughout the year to review significant developments and act on matters that require Board approval. It also holds special meetings when an important matter requires Board action between regularly scheduled meetings. During 2019, our Board of Directors met 11 times. All directors attended more than 75% of the Board meetings and the meetings of Board committees on which they serve.
The Board has six standing committees: Audit, Executive, Management Development & Compensation, Nominating and Governance, Risk Oversight and Technology & Data (established in June 2019). All committees are comprised of independent directors. Committees function under written charters that outline their respective authority, membership, meetings, duties and responsibilities. Committee charters are reviewed at least annually by the Board and are available on our website at www.fiiwarsaw.com by clicking on Governance, then on Governance Documents.
2020 Proxy Statement
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PROPOSAL 1 ELECTION OF DIRECTORS
The current composition of each committee of the Board and the number of meetings each committee held in 2019 are provided below.
Director |
Audit Committee |
Executive Committee |
Management Development & Compensation Committee |
Nominating and Governance Committee |
Risk Oversight Committee |
Technology & Data Committee | ||||||
Anderson |
🌑 | Chair | ||||||||||
Boswell |
🌑 | 🌑 | 🌑 | |||||||||
Burlew |
🌑 | 🌑 | 🌑 | |||||||||
Dorn |
🌑 | Chair | 🌑 | |||||||||
Glaser |
Chair | |||||||||||
Gullo |
🌑 | 🌑 | ||||||||||
Holliday, Vice Chair(1) |
🌑 | 🌑 | Chair | |||||||||
Latella, Chair(2) |
Chair | |||||||||||
VanGelder |
🌑 | 🌑 | Chair | |||||||||
2019 Meetings |
8 | 4 | 7 | 6 | 5 | 1(3) |
(1) | Vice Chair of the Board since June 2019. |
(2) | Chair of the Board since 2014. |
(3) | New committee established in June 2019. |
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PROPOSAL 1 ELECTION OF DIRECTORS
2020 Proxy Statement
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PROPOSAL 1 ELECTION OF DIRECTORS
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PROPOSAL 1 ELECTION OF DIRECTORS
We use a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on our Board of Directors. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties, the skill levels required, and the competitive market for director compensation.
During 2019, directors were eligible to receive annual cash retainers for serving on our Board of Directors and the board of directors of the Bank, our wholly-owned subsidiary. Directors may elect to receive any portion of their annual retainer in an equivalent grant of shares of our common stock. We also reimburse directors, other than the chair, for reasonable travel expenses to attend meetings.
The following chart sets forth the amount we pay non-employee directors for their service on the Board and the board of directors of the Bank, including the leadership roles noted below:
Company | Five Star Bank |
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Annual Retainer Fees: |
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Chair |
$ | 70,000 | $ | 35,000 | ||||
Vice-Chair and Chair of the NG Committee |
47,000 | 23,000 | ||||||
Chair of the Audit and Executive Committees |
40,000 | 20,000 | ||||||
Chair of the MD&C, Risk Oversight and Technology & Data Committees |
37,000 | 18,000 | ||||||
Other Directors |
33,500 | 16,500 |
Non-employee members of the Board also received a grant of restricted shares with a value of $25,000 on June 19, 2019, the date of the 2019 annual meeting of shareholders. The number of shares issued was based upon the closing price of the companys common stock on the date of the grant.
Fifty percent (50%) of the shares vest immediately upon the date of the grant, and if the director remains in continuous service as our director, the remaining fifty percent (50%) of the shares vest on the day prior to our 2020 annual meeting of shareholders. Subject to the terms of individual award agreements, if a director ceases to serve as our director prior to the shares vesting, the shares will be immediately forfeited. The 2019 restricted share awards do not entitle directors to receive any dividends paid with respect to unvested shares of restricted stock.
Directors who have not met their individual share ownership requirements are required to elect to receive at least 50% of their annual retainer in an equivalent grant of shares of common stock. For additional information regarding our stock ownership requirements for Directors, please see the discussion under Stock Ownership Requirements on page 5.
2020 Proxy Statement
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PROPOSAL 1 ELECTION OF DIRECTORS
Compensation paid to directors in 2019 for service on the Boards of both the company and the Bank is summarized below.
Director Name |
Fees Earned ($) |
Stock ($) |
All
Other ($) |
Total ($) |
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Karl V. Anderson, Jr. |
55,000 | 24,980 | | 79,980 | ||||||||||||
Donald K. Boswell |
50,000 | 24,980 | | 74,980 | ||||||||||||
Dawn H. Burlew |
50,000 | 24,980 | | 74,980 | ||||||||||||
Andrew W. Dorn, Jr. |
55,000 | 24,980 | | 79,980 | ||||||||||||
Robert M. Glaser |
60,000 | 24,980 | | 84,980 | ||||||||||||
Samuel M. Gullo |
50,000 | 24,980 | | 74,980 | ||||||||||||
Susan R. Holliday |
70,000 | 24,980 | | 94,980 | ||||||||||||
Robert N. Latella |
105,000 | 24,980 | 9,000 | 138,980 | ||||||||||||
Kim E. VanGelder |
55,000 | 24,980 | | 79,980 |
(1) | Annual retainer, including the portion elected to be paid in shares of common stock in lieu of cash. The number of shares of stock received by each director in lieu of cash during 2019: Ms. Burlew838 shares, Mr. Glaser1,509 shares, and Ms. VanGelder1,845 shares. |
(2) | Aggregate grant date fair value, calculated in accordance with FASB Topic ASC 718, of 914 shares of restricted stock granted under the 2015 Long-Term Incentive Plan to each director. |
(3) | Each director held 457 shares of unvested restricted stock awards as of December 31, 2019. No director held any stock options as of December 31, 2019. |
(4) | Car allowance of $750 per month for service as Chair of the Board during 2019. |
Directors are expected to attend the Annual Meeting, either in person or virtually, absent extenuating circumstances. All directors attended last years annual meeting except one director who was absent due to an unexpected travel delay.
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PROPOSAL 2. ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
PROPOSAL 2. ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
We believe that our compensation programs are designed to align the interests of our executive officers with those of our shareholders. Our compensation philosophy is to provide market-competitive programs that ensure we attract and retain high-performing talent and properly incentivize executives to continually improve company performance and increase shareholder value over time. We are providing our shareholders the opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. This proposal, commonly known as a Say on Pay proposal, gives you as a shareholder the opportunity to endorse the compensation for our named executive officers. We encourage you to review the tables and our narrative discussion included in this proxy statement.
At the 2018 annual meeting, shareholders approved an advisory resolution to vote annually to approve, on an advisory basis, the compensation of our named executive officers. In accordance with the results of this vote, the Board determined to implement an advisory vote on executive compensation, as required pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the Exchange Act), every year until the next vote on the frequency of shareholder votes on executive compensation, which will occur at the 2024 annual meeting.
Our executive officers, including our named executive officers, as identified in Executive Compensation Compensation Discussion and Analysis (NEOs), are critical to our success. We design our executive compensation program to drive performance relative to our short-term operational objectives and long-term strategic goals; align our executives interests with those of our shareholders by placing a substantial portion of total compensation at risk; and attract and retain highly-qualified executives.
This vote is not intended to address any specific item of compensation, but the overall compensation of our NEOs and the philosophy, program elements and process described in this proxy statement. Accordingly, we recommend that you vote FOR the following resolution at the Annual Meeting:
RESOLVED, that on an advisory basis, the 2019 compensation paid to the Companys named executive officers, as disclosed pursuant to the compensation rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and related disclosures in this proxy statement for its 2020 Annual Meeting of Shareholders is hereby approved.
This Say on Pay vote is advisory and therefore will not be binding on the company, the MD&C Committee or our Board of Directors. However, our Board of Directors and our MD&C Committee value the opinions of our shareholders. To the extent there is any significant vote against the NEOs compensation as disclosed in this proxy statement, we will consider our shareholders concerns and the Committee will evaluate whether any actions are necessary to address those concerns.
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The Board of Directors unanimously recommends that shareholders approve the Say on Pay resolution and, accordingly, recommends that you vote FOR this proposal.
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2020 Proxy Statement
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EXECUTIVE COMPENSATION
2020 Proxy Statement
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EXECUTIVE COMPENSATION
Compensation Component |
Purpose and Objectives |
Key Features and Performance Metrics | ||
Base Salary (Cash) |
● Salaries provide market-competitive fixed pay to reflect job responsibilities |
Annual adjustments based on achievement of individual performance goals, competitive considerations and changes in scope/responsibilities | ||
Annual Incentive Plan (AIP) (Cash) |
● Motivate and reward NEOs for achievement of strategic and execution-based goals over a one-year period |
Gateway criteria for award payout: ● Meet or exceed target CAMELS rating ● NEO must be employed on date of payment ● Minimum satisfactory performance evaluation rating in NEOs annual review
Business performance metrics for 2019: EPS (40%) Total Loan Growth (20%) Core Deposit Growth (20%) Net Charge-offs/Average Loans (20%)
Individual performance: 25% of NEO award can be adjusted up or down based on individual performance | ||
Long-Term Incentive Plan (LTIP) Time-Vested RSU |
● Promotes retention of talent ● Aligns NEO interests with long-term shareholder value creation ● Promotes meaningful stock ownership |
● 50% of total long-term incentive at target ● RSU awards vest three years from the date of grant based on continued satisfactory employment ● NEO must be employed on the date of vesting | ||
Long-Term Incentive Plan (LTIP) relative TSR PSU |
● Aligns NEO interests with long-term shareholder value creation through appreciation in stock price |
● 25% of total long-term incentive at target ● Gateway criteria for award payout: Meet or exceed target CAMELS rating Positive absolute TSR for the measurement period NEO must be employed on date of vesting ● Relative TSR PSU awards based on the companys three-year TSR relative to the S&P Market Intelligence Small Cap U.S. Bank & Thrift Index ● 100% of award is subject to forfeiture if relative TSR performance is below the 30th percentile of the index | ||
Long-Term Incentive Plan (LTIP) ROAA PSU | ● Incentivize NEO achievement of long-term value creation through achievement of strategic business objectives |
● 25% of total long-term incentive at target ● Gateway criteria for award payout: Meet or exceed target CAMELS rating NEO must be employed on date of vesting ● ROAA PSU awards based on achievement of performance goals in the final year of the three-year performance period |
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EXECUTIVE COMPENSATION
2019 AIP target and actual business performance levels for the four plan measures are shown below:
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(1) | EPS equals net income available to common shareholders divided by weighted average diluted shares outstanding. |
(2) | Total loan growth equals growth in gross loans excluding loans held for sale, including deferred costs (fees) and prior to reductions for allowance for loan losses. Our strategy to downscale the consumer indirect loan portfolio as we focus on growing relationship-based commercial and residential loan categories, enacted after 2019 AIP performance measures were determined, resulted in a decrease of 7.6% in the consumer indirect loan portfolio. Excluding the consumer indirect loan portfolio, loans increased more than 9% from year-end 2018. |
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EXECUTIVE COMPENSATION
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(3) | Core Deposit Growth equals growth in non-public deposits. |
(4) | Net charge-offs/average loans equals net charge-offs divided by average loans. A lower percentage indicates better performance. |
2017 LTI Results
On February 22, 2017, NEOs were granted RSUs and PSUs under the 2015 Long-Term Incentive Plan. The RSUs vested on February 22, 2020, three years from the grant date. The number of units earned under the 2017 PSU awards was based on relative performance of our TSR measured against the SNL Small Cap U.S. Bank & Thrift Index for the performance period January 1, 2017 through December 31, 2019.
Relative TSR Performance |
2017 RSU Payout Percentage of Target | |
80th Percentile and above |
150% | |
50th Percentile |
100% | |
30th Percentile |
25% | |
Below 30th Percentile |
0% |
Our relative TSR for the period was 15.68% and ranked in the 27th percentile for the performance period, below the minimum threshold 30th percentile TSR of 16.82% required for payout.
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EXECUTIVE COMPENSATION
Best Practices:
The MD&C Committee has continued to utilize sound governance and risk management practices that align with our compensation philosophy:
What we do |
What we dont do | |
We include clawback provisions in compensation plans |
We do not allow pledging of FISI stock | |
We incorporate pay-for-performance by aligning a substantial portion of NEO compensation to the achievement of short- and long-term business objectives |
We do not allow hedging of FISI stock | |
We include aggressive gateway requirements for performance-based payment under incentive plans, including: Minimum CAMELS ratings Individual performance ratings |
We do not allow holding FISI stock in margin accounts | |
We use an external, independent compensation consultant |
We do not gross-up payments to offset tax obligations | |
We consider risks and adjust controls as appropriate when making pay decisions |
We do not pay dividends or dividend equivalents on unvested awards | |
We require robust stock ownership levels for NEOs |
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We include a double trigger provision for accelerated vesting of grants in the event of a change in control |
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We seek shareholder feedback with a say on pay vote annually |
Our executive stock ownership policies regarding stock ownership requirements, clawback provisions and derivatives, pledging and hedging are described on page 5.
PROGRAM ELEMENTS AND PAY DECISIONS
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EXECUTIVE COMPENSATION
The MD&C Committee approved the following base salary adjustments in 2019:
Name |
12/31/2018 Annual Salary |
2/1/2019 Annual Salary |
12/31/2019 Annual Salary |
% Change |
||||||||||||
Martin K. Birmingham |
$ | 560,000 | $ | 576,800 | $ | 576,800 | 3.0 | % | ||||||||
William L. Kreienberg |
$ | 349,650 | $ | 365,384 | $ | 365,384 | 4.5 | % | ||||||||
Justin K. Bigham |
$ | 280,000 | $ | 288,400 | $ | 325,000 | 1 | 16.1 | % | |||||||
Kevin B. Klotzbach |
$ | 310,000 | $ | 319,300 | $ | 175,000 | 2 | -43.5 | % | |||||||
Joseph L. Dugan |
$ | 241,000 | $ | 249,435 | $ | 249,435 | 3.5 | % | ||||||||
Valerie C. Benjamin |
$ | 225,000 | $ | 231,750 | $ | 231,750 | 3.0 | % |
1. | Effective November 4, 2019 |
2. | Effective April 1, 2019 |
Annual Cash Incentive Plan (AIP)
Our AIP is a performance-based cash plan designed to reward eligible employees, including our NEOs, for the achievement of corporate financial goals and demonstrated successful individual performance. The primary objective of the plan is to provide our NEOs with a direct link between their compensation and attainment of pre-established annual performance goals. We believe that the performance measures for rewards under the plan contribute to the company attaining and surpassing its annual business plan and achieving long-term strategic goals.
Incentive Opportunity
We set target incentive opportunities based on a percentage of base salary that reflects a market-level target compensation opportunity for each NEO. The threshold and maximum percentages reflect both the MD&C Committees review of market practices, consultation with its compensation consultant and aligning the level of award opportunity appropriate for the performance goals established. The differences in opportunity also reflects each NEOs relative influence on achieving performance goals based on his or her position. The actual amount of an award is based on the level of business results and individual performance attained and is referred to below as the Award Percentage Achievement and is subject to discretionary adjustment by the MD&C Committee.
Name |
2019 AIP Award Opportunity as a Percent of Salary (Interpolated between performance levels) | |||||
Threshold | Target | Maximum | ||||
Martin K. Birmingham |
12.5% | 50% | 75% | |||
William L. Kreienberg |
10% | 40% | 60% | |||
Justin K. Bigham |
7.5% | 30% | 45% | |||
Kevin B. Klotzbach1 |
1/1/2019 3/31/2019: 10% 4/1/2019 12/31/2019: 6.25% |
1/1/2019 3/31/2019: 40% 4/1/2019 12/31/2019: 25% |
1/1/2019 3/31/2019: 60% 4/1/2019 12/31/2019: 38% | |||
Joseph L. Dugan |
7.5% | 30% | 45% | |||
Valerie C. Benjamin |
7.5% | 30% | 45% |
1. | Mr. Klotzbachs AIP opportunity changed upon accepting the role of Executive Vice President, Senior Finance Advisor in April 2019. Mr. Klotzbachs 2019 AIP award was prorated for three months at the 40% target level, and 9 months at the 25% target level. |
2020 Proxy Statement
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EXECUTIVE COMPENSATION
2019 company performance goals and results:
Weighting of | 2019 Actual | |||||||||
Performance | Performance | 2019 AIP Performance Goals
|
||||||||
Measure | Measure | Threshold | Target | Maximum | Results | |||||
EPS |
40% | $2.50 | $2.65 | $2.95 | $2.96 | |||||
Total Loan Growth1 |
20% | 8.0% | 9.0% | 14.0% | 4.4% | |||||
Core Deposit Growth |
20% | 6.0% | 8.3% | 12.0% | 2.9% | |||||
NCO |
20% | 0.38% | 0.37% | 0.32% | 0.37% |
1. | The indirect portfolio downscaling referenced in the discussion of 2019 business results and 2019 AIP results was not considered at the time the total loan growth targets were determined. |
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EXECUTIVE COMPENSATION
2019 performance highlights for our NEOs include:
NEO |
Performance Highlights | |
Martin K. Birmingham | ● Mr. Birminghams 2019 performance goals aligned with enhancement of shareholder value and were primarily based on business performance, growth and organizational development
● In addition, he is charged with ensuring the companys active community involvement, strong regulatory relationships and shareholder engagement
● Key positive performance measures for 2019 include (as compared to 2018): growth in EPS from $2.39 to $2.96; improvement in ROAA from 0.95% to 1.14% and in ROAE from 10.18% to 11.61%; and an increase in common book value per share from $23.79 at December 31, 2018 to $26.35 at December 31, 2019
● Meaningful transformation of the balance sheet and business model continued in 2019, contributing to strong operating performance as well as strengthening of the companys overall capitalization, illustrated by the increase in common equity to assets ratio from 8.79% at December 31, 2018 to 9.62% December 31, 2019 | |
William L. Kreienberg | ● Oversaw strong growth in commercial lending and residential mortgage lines of business
● Successfully transitioned retail branch leadership
● Wealth management subsidiaries met revenue and EBITDA goals and exceeded AUM (assets under management) goals; oversaw continued integration of the companys wealth management subsidiaries
● Developed new business strategy for residential mortgage line of business resulting in production exceeding target in last four months of 2019
● Effectively managed consumer indirect lending production to decrease portfolio size and related loan concentration while maintaining acceptable yields, and led profitable portfolio sale, in line with the companys strategy to downscale the indirect consumer loan portfolio
● Transitioned leadership of the Office of General Counsel to an emerging company leader, consistent with internal planning | |
Justin K. Bigham | ● Established Financial Planning & Analysis discipline with formal realignment of resources to lead short and long-term planning and forecasting
● Established enhanced Board of Director and Executive Management financial analysis and reporting protocol
● Effectively managed balance sheet repositioning initiatives: 1) Reduction of the relative size of the investment securities portfolio by rotating investment securities into higher-yielding loans and 2) Downscaling of the consumer indirect loan portfolio as we focus on growing relationship-based commercial and residential loan categories
● Effectively transitioned into the Chief Financial Officer role in April 2019 | |
Kevin B. Klotzbach | ● Successfully transitioned the role of CFO to successor
● Served as advisor to finance through December 31, 2019 | |
Joseph L. Dugan | ● Led cross functional corporate initiative identifying digital banking solution to implement functionality to be launched in 2020
● Successfully led effort to enhance enterprise customer experience through realignment of corporate call center, enhanced service call levels and overall customer service satisfaction as indicated by customer survey results
● Launched revised consumer deposit product suite resulting in fee income in excess of budget
● Led effort to enhance corporate strategy related to data and technology | |
Valerie C. Benjamin | ● Completed total rewards optimization project and enterprise-wide salary grade realignment; established new leadership development framework
● Worked with MD&C Committee on compensation consultant change and incorporation of enhancements to executive compensation plans |
2020 Proxy Statement
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EXECUTIVE COMPENSATION
2019 AIP awards are summarized below:
Name |
Company Component | Individual Component | ||||||||||||||||||||||||||||||
Weighting | Award Percentage Achievement |
Company Component Total |
Weighting | Individual Performance Adjustment |
Award Percentage Achievement |
Individual Component Total |
2019 AIP Award |
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Martin K. Birmingham |
75 | % | 45.00 | % | $ | 194,670 | 25 | % | 125 | % | 45.00 | % | $ | 81,113 | $ | 275,783 | ||||||||||||||||
William L. Kreienberg |
75 | % | 36.00 | % | $ | 98,654 | 25 | % | 115 | % | 36.00 | % | $ | 37,817 | $ | 136,471 | ||||||||||||||||
Justin K. Bigham |
75 | % | 27.00 | % | $ | 65,813 | 25 | % | 100 | % | 27.00 | % | $ | 21,938 | $ | 87,750 | ||||||||||||||||
Kevin B. Klotzbach1 |
75 | % | 25.88 | % | $ | 33,961 | 25 | % | 100 | % | 25.88 | % | $ | 11,320 | $ | 45,281 | ||||||||||||||||
Joseph L. Dugan |
75 | % | 27.00 | % | $ | 50,511 | 25 | % | 100 | % | 27.00 | % | $ | 16,837 | $ | 67,347 | ||||||||||||||||
Valerie C. Benjamin |
75 | % | 27.00 | % | $ | 46,929 | 25 | % | 100 | % | 27.00 | % | $ | 15,643 | $ | 62,573 |
(1) | Mr. Klotzbachs Award Percentage Achievement reflects 3 months at the 40% target opportunity and 9 months at 25% target opportunity. |
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EXECUTIVE COMPENSATION
Performance Measures & Measurement Period(1) |
2019 Performance Goals | |||||
Threshold | Target | Maximum | ||||
3-Year Relative TSR Ranking (2) (01/01/2019 12/31/2021) |
30th Percentile |
50th Percentile |
80th Percentile | |||
Return on Average Assets (ROAA) (01/01/2021 12/31/2021) |
1.00% | 1.07% | 1.10% |
(1) | PSUs are granted at the target level and results are interpolated for performance between Threshold and Target and between Target and Maximum. |
(2) | If our absolute TSR is less than 0% for the performance period and our performance relative to the peer group is greater than the 50th percentile, the number of shares earned will not exceed Target. |
The grant date value of 2019 RSUs and PSUs were as follows:
2019 Grant Date Value of RSUs as a % of Base Salary on Grant Date | ||||||||
Name |
Time-Based | Performance-Based PSUs | ||||||
RSUs | Threshold | Target | Maximum | |||||
Martin K. Birmingham |
30% | 7.5% | 30% | 45% | ||||
William L. Kreienberg |
20% | 5.0% | 20% | 30% | ||||
Justin K. Bigham |
17.5% | 4.375% | 17.5% | 26.25% | ||||
Kevin B. Klotzbach |
17.5% | 4.375% | 17.5% | 26.25% | ||||
Joseph L. Dugan |
17.5% | 4.375% | 17.5% | 26.25% | ||||
Valerie C. Benjamin |
17.5% | 4.375% | 17.5% | 26.25% |
2020 Proxy Statement
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EXECUTIVE COMPENSATION
RSUs and PSUs granted on February 26, 2019 were as follows:
Name |
Time-Based RSUs | Performance-Based PSUs (1) | ||||||
Threshold | Target | Maximum | ||||||
Martin K. Birmingham |
5,774 | 1,442 | 5,774 | 8,660 | ||||
William L. Kreienberg |
2,439 | 609 | 2,439 | 3,658 | ||||
Justin K. Bigham |
1,685 | 420 | 1,685 | 2,527 | ||||
Kevin B. Klotzbach |
1,865 | 466 | 1,865 | 2,797 | ||||
Joseph L. Dugan |
1,457 | 364 | 1,457 | 2,185 | ||||
Valerie C. Benjamin (2) |
1,354 | 338 | 1,354 | 2,030 |
(1) | Performance for PSUs will be determined after the end of the performance period on 12/31/2021. PSUs are granted at the Target level and results are interpolated for performance between Threshold and Target and between Target and Maximum. |
(2) | Upon Ms. Benjamins departure, her outstanding and unvested RSUs and PSUs were forfeited according to their terms. |
More information on the status of existing equity grants is included in the Outstanding Equity Awards at December 31, 2019 table on page 47.
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EXECUTIVE COMPENSATION
Set forth below is the MD&C Committees annual workplan:
Month | Work Plan, Decision and Actions | |
January February |
● Determine payouts for AIP and LTI based on prior year company financial performance and individual performance ● Review prior year performance goals and objectives for our CEO and evaluate performance considering these goals and objectives ● Review performance evaluations for NEOs and certain senior executives who report directly to our CEO ● Approve the corporate performance objectives and target metrics for coming year executive and senior management compensation programs, which include our AIP and our LTI plans | |
March | ● Review year-to-date financial performance for AIP and period-to-date performance for LTI (PSU) ● Review and approve Board of Director compensation ● Review and approve this Compensation Discussion and Analysis | |
May | ● Review year-to-date financial performance for AIP and period-to-date performance for LTI (PSU) ● Review management reports on succession planning and management development ● Evaluate risks associated with compensation philosophy and all compensation programs, including the companys incentive compensation plans | |
October | ● Review year-to-date financial performance for AIP and period-to-date performance for LTI (PSU) ● Review Employee Benefit Program for the following year ● Review Executive and Board of Director compensation and market information provided by independent compensation consultant | |
December | ● Review year-to-date financial performance and estimated results for AIP and period-to-date performance for LTI (PSU) ● Discuss preliminary design and target compensation levels of executive compensation programs for the next year ● Establish Peer Group for use in the next compensation planning cycle ● Review Equal Employment Opportunity and Affirmative Action Plans ● Begin executive officer performance evaluations |
2020 Proxy Statement
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EXECUTIVE COMPENSATION
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EXECUTIVE COMPENSATION
2020 Proxy Statement
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EXECUTIVE COMPENSATION
The MD&C Committee considered competitive market data from 2018 from the following peer group when determining 2019 NEO compensation:
1st Source Corporation |
Great Southern Bancorp, Inc. | |
Arrow Financial Corporation |
Horizon Bancorp, Inc. | |
Bar Harbor Bankshares |
Lakeland Bancorp, Inc. | |
Brookline Bancorp, Inc. |
Midland States Bancorp, Inc. | |
Camden National Corporation |
MidWestOne Financial Group, Inc. | |
City Holding Company |
Nicolet Bankshares, Inc. | |
CNB Financial Corporation |
Peoples Bancorp Inc. | |
First Busey Corporation |
S&T Bancorp, Inc. | |
First Commonwealth Financial Corporation |
Tompkins Financial Corporation | |
First Financial Corporation |
United Community Financial Corp. | |
First Mid-Illinois Bancshares, Inc. |
Washington Trust Bancorp, Inc. | |
German American Bancorp, Inc. |
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EXECUTIVE COMPENSATION
1st Source Corporation |
Lakeland Bancorp, Inc. | |
Arrow Financial Corporation |
Lakeland Financial Corporation | |
Bar Harbor Bankshares |
Merchants Bancorp | |
Camden National Corporation |
Peoples Bancorp Inc. | |
City Holding Company |
S&T Bancorp, Inc. | |
CNB Financial Corporation |
Stock Yards Bancorp, Inc. | |
First Commonwealth Financial Corporation |
Tompkins Financial Corporation | |
First Financial Corporation |
TriState Capital Holdings, Inc. | |
German American Bancorp, Inc. |
United Community Financial Corp. | |
Horizon Bancorp, Inc. |
Washington Trust Bancorp, Inc. |
OTHER FACTORS AFFECTING EXECUTIVE COMPENSATION
2020 Proxy Statement
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EXECUTIVE COMPENSATION
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Financial Institutions, Inc.
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EXECUTIVE COMPENSATION
MANAGEMENT DEVELOPMENT & COMPENSATION COMMITTEE REPORT
The MD&C Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the MD&C Committee recommended to the Board that the Compensation Discussion and Analysis be included in the companys Annual Report on Form 10-K and in this proxy statement.
THE MANAGEMENT DEVELOPMENT & COMPENSATION COMMITTEE
Andrew W. Dorn, Jr., Chair
Dawn H. Burlew
Samuel M. Gullo
Susan R. Holliday
2020 Proxy Statement
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EXECUTIVE COMPENSATION
The following table contains information concerning the compensation earned by our NEOs in each of the fiscal years ended December 31, 2019, 2018 and 2017 for which each officer was an NEO.
Name & Principal Position |
Year | Salary ($) |
Stock Awards ($)(4) |
Non-equity ($) |
Change in Pension ($)(5) |
All Other ($)(6) |
Total ($) |
|||||||||||||||||||||
Martin K. Birmingham |
2019 | 574,603 | 316,155 | 275,783 | 150,918 | 13,898 | 1,331,357 | |||||||||||||||||||||
President and Chief Executive Officer |
2018 | 560,000 | 251,225 | 311,780 | | 12,277 | 1,135,282 | |||||||||||||||||||||
2017 | 530,000 | 248,233 | 321,882 | 81,576 | 10,475 | 1,192,166 | ||||||||||||||||||||||
William L. Kreienberg |
2019 | 363,327 | 133,547 | 136,471 | 17,629 | 9,023 | 659,997 | |||||||||||||||||||||
EVP, Chief Banking and Revenue |
2018 | 349,650 | 125,613 | 155,368 | 13,888 | 10,807 | 655,326 | |||||||||||||||||||||
Officer |
2017 | 315,000 | 118,044 | 158,455 | 14,756 | 7,408 | 613,663 | |||||||||||||||||||||
Justin K. Bigham (1) |
2019 | 291,525 | 92,261 | 87,750 | 16,460 | 20,855 | 508,851 | |||||||||||||||||||||
EVP, Chief Financial Officer |
||||||||||||||||||||||||||||
Kevin B. Klotzbach (2) |
2019 | 215,409 | 102,117 | 45,281 | 171,079 | 21,516 | 555,402 | |||||||||||||||||||||
Former EVP, Chief Financial Officer |
2018 | 310,000 | 97,353 | 129,952 | 22,597 | 24,642 | 584,544 | |||||||||||||||||||||
and Treasurer |
2017 | 300,000 | 98,327 | 142,335 | 101,612 | 21,121 | 663,395 | |||||||||||||||||||||
Joseph L. Dugan |
2019 | 248,332 | 79,777 | 67,347 | 18,542 | 21,049 | 435,047 | |||||||||||||||||||||
SVP, Chief Experience and Go To |
2018 | 241,000 | 54,044 | 81,453 | 13,299 | 17,413 | 407,209 | |||||||||||||||||||||
Market Officer |
2017 | 225,500 | 52,689 | 83,148 | 14,152 | 15,963 | 391,452 | |||||||||||||||||||||
Valerie C. Benjamin (3) |
2019 | 230,868 | 74,138 | 62,573 | 15,798 | 7,151 | 390,528 | |||||||||||||||||||||
Former SVP, Chief Human |
||||||||||||||||||||||||||||
Resources Officer |
(1) | Mr. Bigham was promoted to his position as Executive Vice President, Chief Financial Officer effective April 1, 2019. |
(2) | Mr. Klotzbach retired from his position as Executive Vice President, Chief Financial Officer and Treasurer effective March 31, 2019 and was elected to the position of Executive Vice President, Senior Financial Advisor, effective April 1, 2019 until retiring from his position and the company effective December 31, 2019. |
(3) | Ms. Benjamins employment with the company ended on March 5, 2020. |
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(4) | The grant date fair value of all stock awards has been calculated in accordance with FASB ASC Topic 718. In the case of RSUs, the value is determined by multiplying the number of RSUs granted by the closing price of our stock on the grant date reduced by the present value of the dividends expected to be paid on the underlying shares. For PSUs awarded during 2019, amounts shown reflect the grant date fair value of such awards for the one- and three-year performance period beginning in 2021 and 2019, respectively, based on the probable outcome of performance conditions related to these PSUs at the grant date. The 2019 PSUs include both internal (ROAA) and market-related (TSR) performance goals as described under the caption Long-Term Equity-Based Incentive Plan in the Compensation Discussion and Analysis section on page 34. Consistent with the applicable accounting standards, the grant date fair value of the market-related TSR component has been determined using a Monte Carlo simulation model, which is a risk analysis method that selects a random value from a range of estimates. The table below sets forth the grant date fair value for the PSUs granted during 2019: |
Executive Name |
Probable Outcome of Grant Date Fair Value |
Market-related Grant Date Fair Value |
Maximum Outcome of Performance Conditions Grant Date Fair Value ($) |
|||||||||
Martin K. Birmingham |
77,834 | 82,655 | 199,392 | |||||||||
William L. Kreienberg |
32,891 | 34,900 | 84,237 | |||||||||
Justin K. Bigham |
22,727 | 24,106 | 58,184 | |||||||||
Kevin B. Klotzbach |
25,154 | 26,683 | 64,400 | |||||||||
Joseph L. Dugan |
19,654 | 20,843 | 50,310 | |||||||||
Valerie C. Benjamin |
18,252 | 19,383 | 46,747 |
* | Amounts shown represent the grant date fair value of PSUs subject to the internal ROAA performance goal (i) based on the probable or target outcome as of the date the goals were set and (ii) based on achieving the maximum level of performance for the one-year performance period beginning in 2021. The grant date fair value of the ROAA goal component of the PSUs awarded on February 26, 2019 was $26.96 per share, which was the closing share price of our common stock on that date reduced by the present value of the dividends expected to be paid on the underlying shares. |
** | Amounts shown represent the grant date fair value of PSUs subject to the market-related TSR goal component of the PSUs, for which expense recognition is not subject to probable or maximum outcome assumptions. The weighted-average grant date fair value of the market-related TSR goal component of the PSUs awarded on February 26, 2019 was $28.63 per share, which was determined using a Monte Carlo simulation model. The significant assumptions used in this simulation model were a volatility rate of 21.3%, a risk-free interest rate of 2.43%, and a dividend yield rate of 3.20%. |
(5) | The amounts reported in this column reflect the aggregate change in the actuarial present value of each NEOs accrued pension benefit under our defined benefit pension plan based on the assumptions used for FASB ASC Topic 715 at each measurement date. As such, changes reflect changes in value due to an increase or decrease in the FASB ASC Topic 715 discount rates, changes in the mortality tables, and changes due to the accrual of plan benefits. The actuarial present value of Mr. Birminghams accrued pension benefit in 2018 decreased by $5,535. |
(6) | Amounts reported in this column for 2019 are itemized in the table below captioned All Other Compensation. |
The following table sets forth details of the All Other Compensation column to the Summary Compensation Table for 2019.
Executive Name |
Use of Company Vehicle ($) |
Club Memberships ($) |
Other ($)(1) |
Total ($) |
||||||||||||
Martin K. Birmingham |
9,899 | 3,309 | 690 | 13,898 | ||||||||||||
William L. Kreienberg |
5,075 | 1,968 | 1,980 | 9,023 | ||||||||||||
Justin K. Bigham |
12,042 | 8,363 | 450 | 64,750 | ||||||||||||
Kevin B. Klotzbach |
8,164 | 9,542 | 3,810 | 21,516 | ||||||||||||
Joseph L. Dugan |
6,985 | 12,774 | 1,290 | 21,049 | ||||||||||||
Valerie C. Benjamin |
6,461 | | 690 | 7,151 |
(1) | This column discloses the taxable portion of group term life insurance. |
2020 Proxy Statement
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2019 GRANTS OF PLAN-BASED AWARDS
The following table shows the plan-based awards granted during the fiscal year ended December 31, 2019 to each of our NEOs.
Estimated future payouts under non-equity incentive plan awards(1) |
Estimated future payouts |
Grant ($) |
||||||||||||||||||||||||||||||||||||
Executive Name |
Award Description |
Grant Date |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
||||||||||||||||||||||||||||||
Martin K. Birmingham |
Annual Incentive Plan |
72,100 | 288,400 | 432,600 | ||||||||||||||||||||||||||||||||||
RSU (4) | 02/26/19 | 5,774 | 155,667 | |||||||||||||||||||||||||||||||||||
PSU (5) | 02/26/19 | 721 | 2,887 | 4,330 | 82,655 | |||||||||||||||||||||||||||||||||
PSU (6) | 02/26/19 | 721 | 2,887 | 4,330 | 77,834 | |||||||||||||||||||||||||||||||||
William L. Kreienberg |
Annual Incentive Plan |
36,538 | 146,154 | 219,231 | ||||||||||||||||||||||||||||||||||
RSU (4) | 02/26/19 | 2,439 | 65,755 | |||||||||||||||||||||||||||||||||||
PSU (5) | 02/26/19 | 304 | 1,219 | 1,828 | 34,900 | |||||||||||||||||||||||||||||||||
PSU (6) | 02/26/19 | 305 | 1,220 | 1,830 | 32,891 | |||||||||||||||||||||||||||||||||
Justin K. Bigham |
Annual Incentive Plan |
24,375 | 97,500 | 146,250 | ||||||||||||||||||||||||||||||||||
RSU (4) | 02/26/19 | 1,685 | 45,428 | |||||||||||||||||||||||||||||||||||
PSU (5) | 02/26/19 | 210 | 842 | 1,263 | 24,106 | |||||||||||||||||||||||||||||||||
PSU (6) | 02/26/19 | 210 | 843 | 1,264 | 22,727 | |||||||||||||||||||||||||||||||||
Kevin B. Klotzbach |
Annual Incentive Plan |
12,578 | 50,313 | 75,469 | ||||||||||||||||||||||||||||||||||
RSU (4) (7) | 02/26/19 | 1,865 | 50,280 | |||||||||||||||||||||||||||||||||||
PSU (5) (7) | 02/26/19 | 233 | 932 | 1,398 | 26,683 | |||||||||||||||||||||||||||||||||
PSU (6) (7) | 02/26/19 | 233 | 933 | 1,399 | 25,154 | |||||||||||||||||||||||||||||||||
Joseph L. Dugan |
Annual Incentive Plan |
18,708 | 74,830 | 112,246 | ||||||||||||||||||||||||||||||||||
RSU (4) | 02/26/19 | 1,457 | 39,281 | |||||||||||||||||||||||||||||||||||
PSU (5) | 02/26/19 | 182 | 728 | 1,092 | 20,843 | |||||||||||||||||||||||||||||||||
PSU (6) | 02/26/19 | 182 | 729 | 1,093 | 19,654 | |||||||||||||||||||||||||||||||||
Valerie C. Benjamin |
Annual Incentive Plan |
17,381 | 69,525 | 104,288 | ||||||||||||||||||||||||||||||||||
RSU (8) | 02/26/19 | 1,354 | 36,504 | |||||||||||||||||||||||||||||||||||
PSU (8) | 02/26/19 | 169 | 677 | 1,015 | 19,383 | |||||||||||||||||||||||||||||||||
PSU (8) | 02/26/19 | 169 | 677 | 1,015 | 18,252 |
(1) | This represents the annual cash incentive opportunity under our 2019 annual cash incentive plan at threshold, target or maximum performance. The amount actually paid for 2019 is set forth in the Summary Compensation Table under the Non-equity Incentive Plan Compensation column. Please refer to the Compensation Discussion and Analysis under the caption Annual Cash Incentive Plan on page 31 for additional information about the performance conditions applicable to each payment. |
(2) | For PSUs, these columns show the potential number of shares that our NEOs could earn under our 2015 Long-Term Incentive Plan at threshold, target or maximum performance. The measures and potential payouts are described in more detail in the Compensation Discussion and Analysis section of this proxy statement under the caption Long-Term Equity-Based Incentive Plan on page 34. For RSUs, these columns show only the target number of shares that our NEOs could earn under these awards because there is no threshold or maximum amount. |
(3) | See footnote 4 to the Summary Compensation Table for a description of the method used to determine the grant date fair value of stock awards. |
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(4) | The RSUs vest on the third anniversary of the grant date, subject to the recipients continued employment with the company. |
(5) | The PSUs vest on the third anniversary of the grant date, subject to satisfaction of the gateway performance criteria and meeting the TSR performance measure and the recipients continued employment with the company. |
(6) | The PSUs vest on the third anniversary of the grant date, subject to satisfaction of the gateway performance criteria and meeting the ROAA performance measure and the recipients continued employment with the company. |
(7) | Pursuant to the Retirement Agreement, a pro-rata portion of these RSUs vested upon Mr. Klotzbachs retirement on December 31, 2019 based on the number of completed months in the vesting period. Pursuant to the PSU award agreements, once the performance period for these PSUs has been completed, Mr. Klotzbach will be entitled to receive a pro-rata portion of the PSUs that are earned based on the performance achieved and the number of completed months in the performance period. |
(8) | The RSUs and PSUs were forfeited effective March 5, 2020 following Ms. Benjamins departure from the Company. |
For additional information regarding our annual cash incentive plan and our long-term equity-based incentive plan, please see the discussions under Annual Cash Incentive Plan on page 31 and Long-Term Equity-Based Incentive Plan on page 34 in the Compensation Discussion and Analysis.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2019
Stock awards | ||||||||||||||||
Executive Name |
Number of (#) |
Market value ($)(7) |
Equity (#) |
Equity ($)(7) |
||||||||||||
Martin K. Birmingham |
14,092 | (1) | 452,353 | 5,687 | (8) | 182,553 | ||||||||||
William L. Kreienberg |
6,505 | (2) | 208,811 | 2,540 | (8) | 81,534 | ||||||||||
Justin K. Bigham |
3,685 | (3) | 118,289 | 1,053 | (8) | 33,801 | ||||||||||
Kevin B. Klotzbach |
3,009 | (4) | 96,589 | 744 | (8) | 23,882 | ||||||||||
Joseph L. Dugan |
3,235 | (5) | 103,844 | 1,355 | (8) | 43,496 | ||||||||||
Valerie C. Benjamin |
2,854 | (6) | 91,613 | 846 | (6) | 27,157 |
(1) | 3,802 shares vested on February 22, 2020, 4,516 shares vest on February 27, 2021 and 5,774 shares vest on February 26, 2022. |
(2) | 1,808 shares vested on February 22, 2020, 2,258 shares vest on February 27, 2021 and 2,439 shares vest on February 26, 2022. |
(3) | 2,000 shares vest on December 19, 2021 and 1,685 shares vest on February 26, 2022. |
(4) | Upon his retirement on December 31, 2019, a pro-rata portion of Mr. Klotzbachs outstanding RSUs vested based on the number of completed months in the applicable RSUs vesting period, and the balances were forfeited. |
(5) | 807 shares vested on February 22, 2020, 971 shares vest on February 27, 2021 and 1,457 shares vest on February 26, 2022. |
(6) | These unvested equity awards were forfeited effective March 5, 2020 following Ms. Benjamins departure from the Company. |
(7) | Market values calculated using $32.10 per share, which was the closing market price of our common stock on December 31, 2019. |
(8) | Represents the threshold number of PSUs subject to a TSR performance measure granted on February 22, 2017, February 27, 2018 and February 26, 2019 and the target number of PSUs subject to a ROAA performance measure granted on February 26, 2019. Of the PSUs reported for Messrs. Birmingham, Kreienberg, Bigham, Klotzbach and Dugan, 950, 452, 0, 376 and 201, respectively, vested on February 22, 2020, as the threshold TSR performance measure was satisfied; 1,129, 564, 0, 291 and 243, respectively, will vest on February 27, 2021, subject to satisfaction of the gateway performance criteria and meeting the TSR performance measure and the recipients continued employment with the company; 721, 304, 210, 77 and 182, respectively, will vest on February 26, 2022, subject to satisfaction of the gateway performance criteria and meeting the TSR performance measure and the recipients continued employment with the company; and 2,887, 1,220, 843, 0 and 729, respectively, will vest on February 26, 2022, subject to satisfaction of the gateway performance criteria and meeting the ROAA performance measure and the recipients continued employment with the company. |
2020 Proxy Statement
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EXECUTIVE COMPENSATION
RESTRICTED STOCK VESTED IN 2019
The following table provides information about restricted stock held by our NEOs that vested in 2019.
Executive Name |
Number of (#) |
Value ($) |
||||||
Martin K. Birmingham |
4,327 | 141,454 | ||||||
William L. Kreienberg |
1,313 | 39,889 | ||||||
Justin K. Bigham |
| | ||||||
Kevin B. Klotzbach |
1,414 | 42,957 | ||||||
Joseph L. Dugan |
1,500 | 46,740 | ||||||
Valerie C. Benjamin |
| |
(1) | Represents the number of vested shares multiplied by the closing market price of our common stock on the date of vesting. |
We maintain a defined benefit pension plan in which our NEOs included below have an accumulating benefit. The following Pension Benefits table provides information regarding the present value of the accumulated benefit and years of credited service for our NEOs under the New York State Bankers Retirement System Volume Submitter Plan as adopted by Financial Institutions, Inc. (the New York Bankers Retirement Plan). None of our NEOs received pension payments during 2019.
Executive Name |
Plan Name |
Number of (#) |
Present Accumulated ($) |
|||||||
Martin K. Birmingham |
New York Bankers Retirement Plan | 13.8 | 508,716 | |||||||
William L. Kreienberg |
New York Bankers Retirement Plan | 4.0 | 59,523 | |||||||
Justin K. Bigham |
New York Bankers Retirement Plan | 1.0 | 16,460 | |||||||
Kevin B. Klotzbach |
New York Bankers Retirement Plan | 17.3 | 1,009,228 | |||||||
Joseph L. Dugan |
New York Bankers Retirement Plan | 3.0 | 45,993 | |||||||
Valerie C. Benjamin |
New York Bankers Retirement Plan | 1.0 | 15,798 |
(1) | The Present Value of Accumulated Benefits was determined using the same assumptions used for financial reporting purposes under U.S. generally accepted accounting principles. For a discussion of the valuation method and all material assumptions applied in quantifying the present value of the accumulated benefits, refer to Note 19 Employee Benefit Plans to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019. |
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EXECUTIVE COMPENSATION
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EXECUTIVE COMPENSATION
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
Each of the agreements includes a continuation multiple and a continuation period which are used to calculate potential payments under the agreement as follows:
Executive Name |
Continuation Multiple |
Continuation Period |
||||||
Martin K. Birmingham |
2.99 | 36 months | ||||||
William L. Kreienberg |
2.00 | 24 months | ||||||
Justin K. Bigham |
2.00 | 24 months | ||||||
Kevin B. Klotzbach |
2.00 | 24 months | ||||||
Joseph L. Dugan |
2.00 | 24 months | ||||||
Valerie C. Benjamin |
2.00 | 24 months |
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EXECUTIVE COMPENSATION
Executive Name |
Benefit | Resignation ($) |
Termination ($)(5) |
Death, ($) |
||||||||||
Martin K. Birmingham |
Pay continuation | | 2,631,045 | | ||||||||||
Equity award vesting(4) | | 904,706 | 904,706 | |||||||||||
Health benefits continuation | | 56,424 | | |||||||||||
Total | | 3,592,175 | 904,706 | |||||||||||
William L. Kreienberg |
Pay continuation | | 1,030,964 | | ||||||||||
Equity award vesting(4) | | 417,621 | 417,621 | |||||||||||
Health benefits continuation | | 1,979 | | |||||||||||
Total | | 1,450,564 | 417,621 | |||||||||||
Justin K. Bigham (1) |
Pay continuation | | 825,500 | | ||||||||||
Equity award vesting(4) | | 172,377 | 172,377 | |||||||||||
Health benefits continuation | | 32,945 | | |||||||||||
Total | | 1,030,822 | 172,377 | |||||||||||
Kevin B. Klotzbach (2) |
Pay continuation | | 561,712 | | ||||||||||
Equity award vesting(4) | | 328,768 | 328,768 | |||||||||||
Health benefits continuation | | 1,979 | | |||||||||||
Total | | 892,459 | 328,768 | |||||||||||
Joseph L. Dugan |
Pay continuation | | 653,502 | | ||||||||||
Equity award vesting(4) | | 207,719 | 207,719 | |||||||||||
Health benefits continuation | | 37,616 | | |||||||||||
Total | | 898,837 | 207,719 | |||||||||||
Valerie C. Benjamin (3) |
Pay continuation | | 588,646 | | ||||||||||
Equity award vesting(4) | | 135,077 | 135,077 | |||||||||||
Health benefits continuation | | 37,616 | | |||||||||||
Total | | 761,339 | 135,077 |
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EXECUTIVE COMPENSATION
(1) | Mr. Bigham was promoted to his position as Executive Vice President, Chief Financial Officer effective April 1, 2019. |
(2) | Mr. Klotzbach retired from his position as Executive Vice President, Chief Financial Officer and Treasurer effective March 31, 2019 and was elected to the position of Executive Vice President, Senior Financial Advisor, effective April 1, 2019 until retiring from his position and the company effective December 31, 2019. |
(3) | Ms. Benjamins employment with the company ended on March 5, 2020. |
(4) | The figures shown reflect the value of those equity awards that would accelerate, calculated using a price per share of $32.10 which was the closing price for a share of our common stock on December 31, 2019. |
(5) | The agreements also include a provision that limits change-in-control payments to executives in order to eliminate any potential excise taxes under Section 4999 of the Internal Revenue Code. In the event the calculated payment exceeds the Section 280G limit, the benefits will be reduced to an amount below the limit. |
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PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
RSM US LLP (RSM), an independent registered public accounting firm, audited the financial statements and internal control over financial reporting of the company and its subsidiaries for 2019 and has been selected to do so for 2020. Representatives of RSM are expected to be present at the Annual Meeting, will be able to make a statement or speak if they wish to do so, and will be available to answer appropriate questions from shareholders. Following the Audit Committees completion of a competitive process to select our independent registered public accounting firm for the fiscal year ending December 31, 2018, on March 16, 2018, the Audit Committee appointed RSM as our independent registered public accounting firm, effective as of April 1, 2018. This action resulted in the dismissal of KPMG as our independent registered public accounting firm. KPMG had audited our financial statements from 1995 to 2017.
The audit reports of KPMG on our consolidated financial statements for the fiscal year ended December 31, 2017 (Fiscal 2017) did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During Fiscal 2017, and subsequently through April 1, 2018, there were: (i) no disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions between the Company and KPMG on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to KPMGs satisfaction, would have caused KPMG to make reference to them in its reports; and (ii) no reportable events within the meaning of Item 304(a)(1)(v) of Regulation S-K.
Selection of the companys independent registered public accounting firm is not required to be submitted to a vote of shareholders for ratification. However, our Board of Directors is submitting this matter to shareholders as a matter of good corporate governance.
If shareholders fail to ratify the appointment, the Board will reconsider whether to retain RSM, and may retain that firm or another without re-submitting the matter to the companys shareholders. Even if the appointment is ratified, the Board in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Board determines that such change would be in the best interests of the company and our shareholders.
The following table presents fees for professional services rendered by RSM for the audit of our annual financial statements for 2019 and 2018, and fees billed for other services rendered by RSM.
2019 | 2018 | |||||||
Audit Fees(1) |
$ | 492,155 | $ | 451,731 | ||||
Audit Related Fees(2) |
| | ||||||
Tax Fees(3) |
| | ||||||
All Other Fees(4) |
| | ||||||
Total fees |
$ | 492,155 | $ | 451,731 |
(1) | Audit fees include fees for services that normally would be provided by RSM in connection with statutory and regulatory filings or engagements and that generally only an independent accountant can provide. In addition to fees for the audit of our annual financial statements, the audit of the effectiveness of our internal control over financial reporting and the review of our quarterly financial statements in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory audits, consents, and assistance with and review of documents filed with the SEC. |
(2) | Audit related fees consist of fees related to audit and attest services not required by statute or regulations, due diligence related to mergers, acquisitions and investments and consultations concerning financial accounting and reporting standards. RSM did not perform any services for us under the audit related fees category during 2019. |
(3) | Tax fees are fees for professional services for tax compliance, tax advice, and tax planning. RSM did not perform any professional services for us under the tax fees category during 2019. |
(4) | There were no additional fees, other than those reported as audit fees, audit related fees and tax fees, paid or payable to RSM for the fiscal year ended December 31, 2019. |
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PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Boards Audit Committee pre-approves all permissible services to be performed by the independent accountant, including fees and other compensation to be paid to the independent accountant, except for certain routine additional professional services that may be performed at the request of management without pre-approval. The additional routine professional services include tax assistance, research and compliance, assistance researching accounting literature and assistance in due diligence activities. All accounting services and fees reflected in the table above were reviewed and approved by the Audit Committee.
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The Board of Directors unanimously recommends that shareholders vote FOR the ratification of the appointment of RSM as our independent registered public accounting firm for 2020.
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AUDIT COMMITTEE REPORT
Our Audit Committee assists the Board of Directors in its general oversight of financial reporting process, internal controls and audit functions as well as risk management relating to those areas. The Audit Committee conducts business in accordance with its charter and meets regularly. The Audit Committee met eight times during 2019. At various times during the 2019 fiscal year, the Audit Committee met with RSM US LLP (RSM) and the internal auditors, with and without management present.
Management is responsible for our internal controls and financial reporting process. Our independent registered public accounting firm in 2019, RSM, was responsible for performing an independent audit of (i) our consolidated financial statements and (ii) the effectiveness of our internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and to issue reports thereon. The Audit Committees responsibility is to monitor and oversee the financial reporting and audit processes.
In connection with these responsibilities, our Audit Committee met with management and the independent accountants and reviewed and discussed our December 31, 2019 audited consolidated financial statements. The Audit Committee also discussed with the independent accountants matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. The Audit Committee received written disclosures and the letter from the independent accountants required by the applicable sections of the Public Company Accounting Oversight Board regarding the independent accountants communications with the audit committee, concerning independence, discussed with the independent accountant the independent accountants independence from management and the company, and considered the compatibility of non-audit services with RSMs independence.
Based upon the Audit Committees discussions with management and the independent accountants and its review of the information described above, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019, to be filed with the SEC.
THE AUDIT COMMITTEE
Robert M. Glaser, Chair
Karl V. Anderson Jr.
Donald K. Boswell
Samuel M. Gullo
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OUR EXECUTIVE OFFICERS
The Executive Officers of the company and the Bank as of April 20, 2020, are identified below. Biographical information, including offices and periods served as an Executive Officer of the company or the Bank are also provided. Ages shown are as of December 31, 2019.
Name |
Age | Office & Position(s) | ||||
Martin K. Birmingham(1) |
53 | President and Chief Executive Officer | ||||
William L. Kreienberg(1) |
61 | Executive Vice President, Chief Banking and Revenue Officer | ||||
Justin K. Bigham(1) |
46 | Executive Vice President, Chief Financial Officer | ||||
Samuel J. Burruano Jr(1) |
51 | Senior Vice President, General Counsel and Corporate Secretary | ||||
Joseph L. Dugan(1) |
57 | Senior Vice President, Chief Experience and Go To Market Officer | ||||
Sean M. Willett(1) |
48 | Senior Vice President, Chief Administration Officer | ||||
Sonia M. Dumbleton |
57 | Senior Vice President, Controller |
(1) | Member of the Executive Management Committee as of April 20, 2020 |
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OUR EXECUTIVE OFFICERS
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STOCK INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial Ownership of Directors and Named Executive Officers
The following table shows, as of April 20, 2020, the beneficial ownership of shares of Financial Institutions, Inc. common and preferred stock by (a) all current directors and nominees, (b) all named executive officers, and (c) all of our current directors, nominees and executive officers as a group. Beneficial ownership means that the individual has or shares voting power or investment power with respect to the shares of stock or the individual has the right to acquire the shares of stock within 60 days of April 20, 2020.
Name |
Title of class |
Number of shares beneficially owned |
Number of shares included in the previous column which the individual or group has the right to acquire within 60 days of April 20, 2020 |
Percent of class outstanding(1) |
||||||||||||
Directors(2): |
||||||||||||||||
Karl V. Anderson, Jr. |
Common | 16,009 | | * | ||||||||||||
Martin K. Birmingham |
Common | 100,347 | | * | ||||||||||||
Donald K. Boswell |
Common | 4,530 | | * | ||||||||||||
Dawn H. Burlew |
Common | 4,121 | | * | ||||||||||||
Andrew W. Dorn, Jr. |
Common | 21,442 | | * | ||||||||||||
Robert M. Glaser |
Common | 20,336 | | * | ||||||||||||
Samuel M. Gullo |
Common | 26,738 | | * | ||||||||||||
Susan R. Holliday |
Common | 27,837 | | * | ||||||||||||
Robert N. Latella |
Common | 22,753 | | * | ||||||||||||
Kim E. VanGelder |
Common | 9,705 | | * | ||||||||||||
Named executive officers who are not Directors(2): |
||||||||||||||||
Valerie C. Benjamin |
Common | | (3) | | * | |||||||||||
Justin K. Bigham |
Common | | (4) | | * | |||||||||||
Joseph L. Dugan |
Common | 13,687 | | * | ||||||||||||
Kevin B. Klotzbach |
Common | 27,747 | | * | ||||||||||||
William L. Kreienberg |
Common | 25,860 | | * | ||||||||||||
All current directors and executive officers as a group (18 persons) |
Common | 327,926 | | 2.05 | % |
* | Denotes less than 1% |
(1) | As reported by such persons as of April 20, 2020 with percentages based on 16,019,384 shares of Common Stock, 1,435 shares of Series A Preferred Stock and 171,847 shares of Series B-1 Preferred Stock, respectively, outstanding on April 20, 2020, including shares the individual or group has a right to acquire within 60 days of April 20, 2020 (as indicated in the column above), which increases both the number of shares owned by such individual or group and the number of shares outstanding. |
(2) | Except as set forth in the footnotes below, each person has sole investment and voting power with respect to the stock beneficially owned by such person. |
(3) | Information based on most recent Form 4 (filed with the SEC on February 27, 2020). |
(4) | Mr. Bigham joined the company in October 2018 and was named CFO in April 2019. |
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STOCK INFORMATION
Beneficial Ownership of Owners of More Than 5% of the Companys Common Shares
The following table sets forth certain information concerning each person (including any group) known to us to beneficially own more than 5% of the outstanding shares of common stock of the company as of April 20, 2020.
Name and Address of Beneficial Owner |
Number of shares beneficially owned |
Percent of outstanding common stock (1) |
||||||
Dimensional Fund Advisors LP 6300 Bee Cave Road Austin, Texas 78746 |
1,337,901 | (2) | 8.35 | % | ||||
BlackRock, Inc. 55 East 52nd Street New York, New York 10055 |
1,256,256 | (3) | 7.84 | % |
(1) | Based on 16,019,384 shares of Common Stock outstanding as of April 20, 2020. |
(2) | Based on information set forth in Amendment number 4 to Schedule 13G filed with the SEC on February 12, 2020 by Dimensional Fund Advisors LP (Dimensional) reporting beneficial ownership in the following manner: sole voting power, 1,285,600 shares; and sole dispositive power, 1,337,901 shares. Dimensional reports beneficial ownership for four investment companies it advises and certain other comingled funds, group trusts and separate accounts it advises or sub-advises. Dimensional disclaims beneficial ownership of all such shares. |
(3) | Based on information set forth in Amendment number 10 to Schedule 13G filed with the SEC on February 5, 2020 by BlackRock, Inc. reporting beneficial ownership in the following manner: sole voting power, 1,213,622 shares; and sole dispositive power, 1,256,256 shares. Blackrock, Inc. is reporting beneficial ownership for the following subsidiaries: BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock Investment Management, LLC, BlackRock Asset Management Schweiz AG and BlackRock Investment Management (UK) Limited. |
You may submit proposals for consideration at our 2021 annual meeting of shareholders. For a shareholder proposal to be considered for inclusion in our proxy statement for the 2021 annual meeting pursuant to Rule 14a-8 of the Exchange Act, our Corporate Secretary must receive the written proposal at our corporate headquarters no later than December 29, 2020. Such proposals also must comply with Rule 14a-8 of the Exchange Act. Proposals should be addressed to:
Corporate Secretary
Financial Institutions, Inc.
220 Liberty Street
Warsaw, New York 14569
For a shareholder to bring business before the annual meeting of shareholders that is not intended to be included in our proxy statement pursuant to Rule 14a-8 of the Exchange Act, including a proposal or a nominee for election to the Board of Directors, the shareholder must give timely notice to our Corporate Secretary in accordance with our Bylaws and include in such notice the information required by our Bylaws. In general, our Bylaws require that the notice be received by our Corporate Secretary no later than 90 days and not earlier than 120 days prior to the one-year anniversary date of the Annual Meeting. However, if the 2021 annual meeting is more than thirty days before or more than sixty days after the one-year anniversary date of the Annual Meeting, then notice will need to be received by our Corporate Secretary by the later of (i) 90 days prior to the 2021 annual meeting or (ii) 10 days following the date public disclosure of the date of the 2021 annual meeting was first made public.
In addition, for any shareholder proposals submitted outside of Rule 14a-8 of the Exchange Act to be considered timely for purposes of Rule 14a-4(c) of the Exchange Act, the proposal must be received at our principal executive offices at the address listed above not later than 60 days prior to the scheduled date of the 2021 annual meeting of shareholders.
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INFORMATION ABOUT THE MEETING
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INFORMATION ABOUT THE MEETING
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VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on June 16, 2020 for shares held directly and by 11:59 p.m. Eastern Time on June 14, 2020 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/FISI2020 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on June 16, 2020 for shares held directly and by 11:59 p.m. Eastern Time on June 14, 2020 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.FINANCIAL INSTITUTIONS, INC. 220 LIBERTY STREET WARSAW, NY 14569 ATTN: SAMUEL J. BURRUANO, JR. D14445-P35185 For All Withhold All For All Except FINANCIAL INSTITUTIONS, INC. To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote FOR the following: ! ! ! 1. Election of Directors Nominees: 01) Donald K. Boswell 02) Andrew W. Dorn, Jr. 03) Robert M. Glaser 04) Susan R. Holliday The Board of Directors recommends you vote FOR proposals 2 and 3: For Against Abstain ! ! ! 2. Advisory Vote to Approve Compensation of Our Named Executive Officers. ! ! ! 3. Ratification of Appointment of Independent Registered Accounting Firm. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement and Annual Report
on Form 10-K are available at www.proxyvote.com.
D14446-P35185
FINANCIAL
INSTITUTIONS, INC.
Annual Meeting of Shareholders
June 17, 2020 10:00 AM
This proxy is solicited by the Board of Directors
The shareholder(s) hereby
appoint(s) Justin K. Bigham and Samuel J. Burruano, Jr., or either of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of
the shares of stock of FINANCIAL INSTITUTIONS, INC. that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to be held at 10:00 AM, EDT on June 17, 2020, at Five Star Bank Plaza, 100 Chestnut Street, Rochester, New York
14604, and any adjournment or postponement thereof.
At this time, we intend to hold the Annual Meeting in person and through remote communication. However, we are
sensitive to the concerns our shareholders may have regarding the novel coronavirus (COVID-19) pandemic and the protocols that federal, state and local governments may issue. Accordingly, we are planning for the possibility that the
Annual Meeting may be held solely by means of remote communication via the virtual meeting at www.virtualshareholdermeeting.com/FISI2020. In the event we determine to hold the Annual Meeting solely by means of remote communication, we will announce
such decision as promptly as practicable.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy
will be voted in accordance with the Board of Directors recommendations.
Continued and to be signed on reverse side