CITIZENS FINANCIAL SERVICES, INC. COMPENSATION/HUMAN RESOURCES COMMITTEE CHARTER
The Compensation/Human Resources Committee ("C/HRC") is responsible for personnel policies, salaries and benefits and incentive compensation.
The C/HRC is comprised of a minimum of three members and meets regularly at least three times per year. Special meetings may be called by the Chairman of the C/HRC or by any other C/HRC member. C/HRC members are appointed by the Board on the recommendation of the Governance and Nominating Committee. C/HRC members may be replaced by the Board. The C/HRC's chairperson shall be designated by the Chairman of the Board. All C/HRC members shall meet the definitions of a "nonemployee director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
AUTHORITY AND RESPONSIBILITIES:
- The C/HRC shall review and recommend benefit, compensation, and perquisite plans and arrangements applicable to the executive officers of the Company and Bank for ratification by the Board. The executive officers of the Company and Bank are: Chief Executive Officer (CEO), Executive Vice President of Banking Services, and the Chief Financial Officer (CFO).
- The C/HRC shall coordinate an evaluation by each of the outside directors on the performance of the Chief Executive Officer. In connection with such evaluation, the outside directors shall convene in executive session without the CEO being present to discuss the annual performance evaluation. The Chairman and Vice Chairman of the Board will conduct the CEO annual performance evaluation. The Chairman and Vice Chairman of the Board will request input from the C/HRC and the Board for incorporation during the performance evaluation. The C/HRC shall annually review and recommend corporate goals and objectives to the Chairman and Vice Chairman of the Board relevant to CEO compensation, evaluate the CEO's performance in light of those goals and objectives, determine and approve the CEO's compensation based on this evaluation, and recommend the CEO's compensation for ratification by the Board. In determining the long-term incentive component of CEO compensation, the C/HRC shall consider, among other factors, the Company's and Bank's performance and relative stockholder return, the value of similar incentive awards to CEOs at comparable companies, and the awards given to the CEO in past years.
- The C/HRC shall review and approve, for the CEO and the current executive officers of the Company and Bank, (a) the annual base salary level, (b) the annual incentive opportunity level, (c) the annual long-term incentive opportunity level, (d) employment agreements, severance arrangements, and change in control agreements, and (e) any special supplemental benefits. The C/HRC shall recommend that the Board ratify the CEO's compensation.
- The C/HRC shall review on an annual basis director compensation and recommend any changes to the Board for approval. Upon the request of the Compensation/Human Resources Committee, senior management shall gather information and present different scenarios on the Company's director compensation practices based on a survey of compensation practices of comparable financial institutions based on factors such as, but not limited to, size, location and/or charter type. The Compensation/Human Resources Committee shall recommend any changes to director compensation to the Board. Any changes to be approved by the Board shall be consistent and competitive with the compensation practices of the Company's competition. Management directors do not receive any additional compensation for their service as directors.
- The C/HRC shall make recommendations to the Board with respect to the Company's and Bank's incentive compensation and benefit plans, which may include amendments to existing plans, cash- and equity-based incentive compensation plans, and non-qualified deferred compensation and retirement plans, and discharge any responsibilities assigned to the C/HRC by any of these plans.
- If required, the C/HRC shall produce an annual report on executive officer compensation for inclusion in the Company's proxy statement, in accordance with applicable rules and regulations of the Securities and Exchange Commission.
- The C/HRC shall make recommendations on retaining and terminating any compensation consultant to be used to assist in the evaluation of executive compensation and make recommendations on the consultant's fees and other retention terms for ratification by the Board.
- The C/HRC may, in its discretion, form and delegate all or a portion of its authority to subcommittees, executive management or the CEO. The C/HRC shall make regular reports to the Board summarizing the matters reviewed and actions taken at each C/HRC meeting.
- The C/HRC shall review and assess the adequacy of this Charter annually. The C/HRC may recommend amendments to this Charter at any time and submit amendments for approval to the Board.