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Codorus Valley Bancorp Inc. – ‘DEFC14A’ on 4/4/22 re: Codorus Valley Bancorp Inc.

On:  Monday, 4/4/22, at 7:30am ET   ·   Accession #:  897101-22-376   ·   File #:  0-15536

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 4/04/22  Codorus Valley Bancorp Inc.       DEFC14A                1:1.7M Codorus Valley Bancorp Inc.       American Fin’l P… Inc/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEFC14A     Definitive Proxy Statement - Contested              HTML    540K 
                Solicitation                                                     

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.   )

April 4, 2022

Dear Fellow Shareholders of Codorus Valley Bancorp, Inc.:

On behalf of the Codorus Valley Bancorp, Inc.’s (the “Corporation”) Board of Directors (the “Board”), I am pleased to invite you to attend the Corporation’s 2022 Annual Meeting of Shareholders or any adjournments or postponements thereto, (the “Annual Meeting”) scheduled to be held on Tuesday, May 17, 2022, at 9:00 a.m. Eastern Time. In light of public health concerns regarding the ongoing COVID-19 pandemic, the Annual Meeting will be held in a virtual-only format at www.cesonlineservices.com/cvly22_vm. To participate in the Annual Meeting, you must pre-register at www.cesonlineservices.com/cvly22_vm by 9:00 a.m. Eastern Time, on Monday, May 16, 2022.

At the Annual Meeting, shareholders as of March 25, 2022 , the record date, will have the opportunity to ask questions and to make comments. The Proxy Statement, accompanying BLUE Proxy Card and the Corporation’s 2021 Annual Report to Shareholders (including the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021) were first sent or given to our shareholders on April 4, 2022. You should also have received a BLUE Proxy Card or voting instruction form and postage-paid return envelope, through which your vote is being solicited on behalf of the Board.

The principal business of the Annual Meeting is to:

Shareholders will also transact any other business that is properly presented at the Annual Meeting.

The Notice of Annual Meeting and Proxy Statement accompanying this letter describe the specific business to be acted upon in more detail.

I am delighted that you have invested in the Corporation, and I hope that, whether or not you plan to virtually attend the Annual Meeting, you will vote as soon as possible, either through the Internet, by telephone or by completing, signing and dating the enclosed BLUE Proxy Card and returning the BLUE Proxy Card in the envelope provided. The prompt return of your BLUE Proxy Card will save the Corporation expenses involved in further communications, and will ensure your representation at the Annual Meeting even if you do not attend virtually.

Your vote will be especially important at the Annual Meeting. As you may know, Driver Management Company LLC, Driver Opportunity Partners I LP and J. Abbott R. Cooper (collectively, “Driver Management”) have notified the Corporation that they intend to nominate three candidates (the “Driver Nominees”) to the Board for election as directors at the Annual Meeting. Although Driver Management notified the Corporation of its intention to nominate three candidates to the Board for election as directors at the Annual Meeting, there are only two director positions up for election at the Annual Meeting. The Board does NOT endorse the election of any of the Driver Nominees and urges you NOT to sign or return any proxy card sent to you by Driver Management. If you have previously submitted a proxy card sent to you by Driver Management, you can revoke that proxy and have your shares voted for the Board’s nominees and on other matters to be voted on at the Annual Meeting by completing, signing, dating and returning the enclosed BLUE Proxy Card or by following the instructions provided on the BLUE Proxy Card to submit a proxy over the Internet, or by telephone or by attending the Annual Meeting and voting your shares in person (virtually).

We are confident that our slate of Board candidates has the right mix of professional achievement, skills, experiences and reputations that qualify each of the Corporation’s candidates to serve as shareholder representatives overseeing the management of the Corporation. We are committed to engaging with our shareholders and continuing to respond to shareholder concerns about the Corporation, and we believe we are in the best position to oversee the execution of our long-term strategic plan to grow and realize shareholder value. The Board unanimously recommends you vote “FOR” the election of Cynthia A. Dotzel and Craig L. Kauffman to the Board as Class B directors.

After reading the Notice of Annual Meeting of Shareholders and the Proxy Statement, please mark your votes on the accompanying BLUE Proxy Card or voting instruction form, sign it and promptly return it in the accompanying postage-paid envelope. You may also vote by submitting a proxy by Internet or by telephone as instructed in the Proxy Statement or in the BLUE Proxy Card or voting instruction form. Please vote by whichever method is most convenient for you to ensure that your shares are represented at the Annual Meeting.

You may receive proxy solicitation materials from Driver Management, including proxy statements and proxy cards. The Board recommends that you disregard them. We are not responsible for the accuracy of any information provided by or relating to Driver Management or the nominees contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Driver Management or any other statements that Driver Management or its representatives have made or may otherwise make. The Board, including all of its independent directors, strongly urges you NOT to sign or return any proxy card sent to you by or on behalf of Driver Management. Signing, dating and returning any proxy card that Driver Management, or any of its affiliates may send to you, even with instructions to vote “withhold” with respect to Driver Management’s nominees, will cancel any proxy you may have previously submitted to have your shares voted for the Board’s nominees on a BLUE Proxy Card. Again, if you have previously submitted a proxy card sent to you by or on behalf of Driver Management, you can revoke that proxy and vote for your Board’s nominees and in accordance with the Board’s recommendations on the other matters to be voted on at the Annual Meeting by using the enclosed BLUE Proxy Card or voting by Internet or telephone by following the instructions specified on the BLUE Proxy Card.

It is very important that your shares be represented and voted at the Annual Meeting. Whether or not you plan to attend, we hope you will vote as soon as possible. You may vote over the Internet, as well as by telephone, or by mailing the BLUE Proxy Card or voting instruction form. Returning the proxy card or voting by Internet or telephone does not deprive you of your right to attend the Annual Meeting and to vote your shares.

We continue to evaluate the benefits of moving toward the electronic delivery of proxy materials in the future. If you would be strongly opposed to receiving proxy materials via the Internet, please let us know. Thank you for your ongoing support of Codorus Valley Bancorp, Inc. Your vote and participation, no matter how many or how few shares you own, are very important to us. Your cooperation is greatly appreciated.

		Sincerely,
		Craig L. Kauffman
		President and Chief Executive Officer

If you have any questions or require assistance in authorizing a proxy or voting your shares of common stock, or if you would like additional copies of the proxy materials, please contact:

509 Madison Avenue Suite 1206 

New York, NY 10022

Shareholders Call Toll Free: (800) 662-5200
Banks and Brokers Call Collect: (203) 658-9400

Email: CVLY@investor.morrowsodali.com

CODORUS VALLEY BANCORP, INC.

NASDAQ TRADING SYMBOL: CVLY

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

AND

PROXY STATEMENT

2022

www.peoplesbanknet.com

PROXY STATEMENT 

Dated and to be mailed on or about April 4, 2022

Codorus Valley Bancorp, Inc.

Codorus Valley Corporate Center

105 Leader Heights Road

York, Pennsylvania 17403

ANNUAL MEETING OF SHAREHOLDERS 

TO BE HELD ON MAY 17, 2022

TABLE OF CONTENTS

CODORUS VALLEY BANCORP, INC.

CODORUS VALLEY CORPORATE CENTER

105 LEADER HEIGHTS ROAD

YORK, PENNSYLVANIA 17403

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 17, 2022

TO THE SHAREHOLDERS OF CODORUS VALLEY BANCORP, INC.:

NOTICE IS HEREBY GIVEN that the 2022 Annual Meeting of the Shareholders and any adjournments or postponements thereto, (the “Annual Meeting”) of Codorus Valley Bancorp, Inc. (“Corporation”) will be held in a virtual-only format on Tuesday, May 17, 2022, at 9:00 a.m. Eastern Time, for the purpose of considering and voting upon the following matters:

Shareholders may also consider such other business as may properly be brought before the Annual Meeting.

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice of Annual Meeting of Shareholders. The Board recommends a vote “FOR” each of the two director nominees named in the accompanying Proxy Statement and a vote “FOR” each of Proposals 2, 3 and 4 on the enclosed BLUE Proxy Card.

Only those shareholders of record at the close of business on March 25, 2022 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting. The Annual Meeting may be adjourned or postponed from time to time. At any adjourned or postponed meeting, action with respect to matters specified in this Notice may be taken without further notice to shareholders, unless required by law or the Corporation’s Amended and Restated By-Laws.

All shareholders as of the Record Date are cordially invited to attend the virtual Annual Meeting. Whether or not you expect to attend the virtual Annual Meeting, we encourage you to submit your proxy as soon as possible using one of three convenient methods by (i) accessing the Internet site described in the BLUE Proxy Card or voting instruction form provided to you, (ii) calling the toll-free number in the BLUE Proxy Card or voting instruction card provided to you, or (iii) completing, signing, dating and returning the BLUE Proxy Card or voting instruction form provided to you. You are urged to complete and submit the enclosed BLUE Proxy Card, even if your shares were sold after the Record Date.

If your shares of common stock are held in a brokerage account or by a bank, trust or other nominee (i.e., your shares are held in “street name”), then you will receive voting instructions from the holder of record. You must provide voting instructions by filling out the voting instruction form in order for your shares to be voted. We recommend that you instruct your broker, bank, trust or other nominee to vote your shares on the enclosed BLUE Proxy Card. The proxy is revocable and will not affect your right to vote if you attend the virtual Annual Meeting.

The Annual Meeting will be held via a live webcast at www.cesonlineservices.com/cvly22_vm. There is no physical address for the Annual Meeting. To participate in the Annual Meeting, you must pre-register at www.cesonlineservices.com/cvly22_vm by 9:00 a.m. , Eastern Time, on Monday, May 16, 2022.

Your vote will be especially important at the Annual Meeting. As you may know, Driver Management Company LLC, Driver Opportunity Partners I LP and J. Abbott R. Cooper (collectively, “Driver Management”) have notified the Corporation that they intend to nominate three candidates to the Board for election as directors at the Annual Meeting. Although Driver Management notified the Corporation of its intention to nominate three candidates to the Board for election as directors at the Annual Meeting, there are only two director positions up for election at the Annual Meeting. The Board does NOT endorse the election of any of Driver Management’s nominees and urges you NOT to sign or return any proxy card sent to you by Driver Management. If you have previously submitted a proxy card sent to you by or on behalf of Driver Management, you can revoke that proxy and have your shares voted for the Board’s nominees and on other matters to be voted on at the Annual Meeting by completing, signing, dating and returning the enclosed BLUE Proxy Card or by following the instructions provided on the BLUE Proxy Card to submit a proxy over the Internet, or by telephone or by attending the Annual Meeting and voting your shares in person (virtually).

The Board strongly and unanimously recommends that you vote on the BLUE Proxy Card or voting instruction form “FOR” the election of Cindy A. Dotzel and Craig L. Kauffman as Class B directors.

The Corporation’s candidates for election as directors of the Corporation are listed in the accompanying Proxy Statement and BLUE Proxy Card.

It is important that your shares be represented at the Annual Meeting, even if you plan to attend the meeting, to ensure that your shares will be represented. You do not need to attend the virtual Annual Meeting to vote if you vote your shares before the virtual Annual Meeting. If you are a record holder, you may vote your shares by mail, telephone or the Internet as described in the BLUE Proxy Card. If your shares are held by a broker, bank, trustee or other nominee, you must follow the instructions provided by your broker, bank, trustee or other nominee to vote your shares and you may not vote your shares in person (virtually) at the Annual Meeting unless you obtain a “legal proxy” from the broker, bank, trustee or other nominee that holds your shares giving you the right to vote the shares at the virtual Annual Meeting.

	BY ORDER OF THE BOARD OF DIRECTORS
	Timothy J. Nieman, Esq.
	Secretary

York, Pennsylvania

April 4, 2022

YOUR VOTE IS IMPORTANT. PLEASE VOTE PROMPTLY, EITHER ELECTRONICALLY THROUGH THE INTERNET, BY TELEPHONE, OR BY COMPLETING, SIGNING, DATING AND RETURNING YOUR BLUE PROXY CARD.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on May 17, 2022. This Notice of Annual Meeting and Proxy Statement, BLUE Proxy Card and 2021 Annual Report are available at: www.proxyvote.com. Information on this website, other than the Proxy Statement, is not part of the Proxy Statement.

Important Notice Regarding the Availability of Proxy Materials for the

ANNUAL Meeting to Be Held on MAY 17, 2022.

Please complete, sign, date and promptly return the enclosed BLUE Proxy Card in the envelope provided, or grant a proxy and give voting instructions by Internet or telephone, so that you may be represented at the Annual Meeting. Instructions are on your BLUE Proxy Card or on the voting instruction form provided by your broker, bank, trust or other nominee.

Brokers cannot vote on any of the proposals without your instructions.

********************

The accompanying Proxy Statement provides a detailed description of the business to be conducted at the Annual Meeting. We urge you to read the accompanying Proxy Statement, including the annexes, carefully and in their entirety.

If you have any questions concerning the business to be conducted at the Annual Meeting, or if you would like additional copies of proxy materials, or require assistance in authorizing a proxy or voting your shares of Common Stock, please contact:

509 Madison Avenue Suite 1206 

New York, NY 10022 

Shareholders Call Toll Free: (800) 662-5200

Banks and Brokers Call Collect: (203) 658-9400

Email: CVLY@investor.morrowsodali.com

GENERAL

Introduction

This Proxy Statement and the accompanying BLUE Proxy Card are being furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Codorus Valley Bancorp, Inc. (the “Corporation”) to be voted at the 2022 Annual Meeting of Shareholders and any adjournment or postponement thereto, (the “Annual Meeting”). This Proxy Statement and the related BLUE Proxy Card, along with the 2021 Annual Report to Shareholders (including the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021) are being first distributed to shareholders on or about April 4, 2022.

The Annual Meeting will be held on Tuesday, May 17, 2022, at 9:00 a.m. Eastern Time. In light of public health concerns regarding the ongoing COVID-19 pandemic, the Annual Meeting will be held in a virtual-only format. You will not be able to physically attend the Annual Meeting and to be admitted to the meeting at www.cesonlineservices.com/cvly22_vm, you must pre-register at www.cesonlineservices.com/cvly22_vm by 9:00 a.m. Eastern Time, on Monday, May 16, 2022. Shareholders of record at the close of business on March 25, 2022 (the “Record Date”), are entitled to vote at the Annual Meeting.

At the Annual Meeting, shareholders will vote to:

Why did I receive these proxy materials?

We are providing this Proxy Statement in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting because you own shares of the Corporation’s common stock, par value $2.50 per share (the “Common Stock”) as of the close of business on the Record Date and, therefore, are entitled to vote at the Annual Meeting on the following proposals:

We will also consider any other business that properly comes before the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the persons named in the enclosed BLUE Proxy Card or voting instruction form will vote the shares they represent in accordance with the instructions of the Board to the extent permitted by Rule 14a-4(c) of the Exchange Act.

Who is allowed to vote at the Annual Meeting?

The Common Stock is the only class of capital securities of the Corporation that may be voted at the Annual Meeting. As of the close of business on the Record Date, 9,528,056 shares of Common Stock were issued and outstanding. A shareholder of record who holds shares of Common Stock that are entitled to be voted at the Annual Meeting may cast one vote for each share held on each matter that is submitted to shareholders. Shares of Common Stock may be voted at the Annual Meeting only if the shareholder of record holding such shares or the beneficial owner of such shares with a legal proxy is attending the virtual Annual Meeting or if such shares are represented by a valid proxy.

Who is allowed to virtually attend the Annual Meeting?

Attendance at the Annual Meeting will be limited to shareholders of the Corporation as of the close of business on the Record Date and guests of the Corporation. You will not be able to attend the Annual Meeting in person at a physical location. In order to attend the virtual Annual Meeting, you will need to pre-register by 9:00 a.m. Eastern Time, on Monday, May 16,  2022. To pre-register for the meeting, please follow these instructions:

Registered Shareholders

Shareholders of record as of the Record Date may register to participate in the Annual Meeting remotely by visiting the website www.cesonlineservices.com/cvly22_vm. Please have your BLUE Proxy Card, or Notice, containing your control number available and follow the instructions to complete your registration request. After registering, shareholders will receive a confirmation email with a link and instructions for accessing the virtual Annual Meeting. Requests to register to participate in the Annual Meeting remotely must be received no later than 9:00 a.m., Eastern Time, on Monday, May 16, 2022.

Beneficial Shareholders

Shareholders whose shares are held through a broker, bank, trustee or other nominee as of the Record Date may register to participate in the Annual Meeting remotely by visiting the website www.cesonlineservices.com/cvly22_vm.

Please have your voting instruction form, Notice, or other communication containing your control number available and follow the instructions to complete your registration request. After registering, shareholders will receive a confirmation email with a link and instructions for accessing the virtual Annual Meeting. Requests to register to participate in the Annual Meeting remotely must be received no later than 9:00 a.m., Eastern Time, on Monday, May 16,  2022.

If you have any questions or require any assistance with pre-registering, please contact:

509 Madison Avenue Suite 1206

New York, NY 10022

Shareholders Call Toll Free: (800) 662-5200
Banks and Brokers Call Collect: (203) 658-9400

Email: CVLY@investor.morrowsodali.com

Your vote is very important. Please submit your BLUE Proxy Card even if you plan to attend the virtual Annual Meeting.

Is my vote important?

Your vote will be particularly important at the Annual Meeting. As you may know, the Corporation has received a notice from Driver Management regarding its intent to nominate three candidates for election as directors (the “Driver Nominees”), in opposition to the re-election of Cynthia A. Dotzel and Craig L. Kauffman, who have been recommended for re-election by the Board. Although Driver Management notified the Corporation of its intention to nominate three candidates to the Board for election as directors at the Annual Meeting, there are only two director positions up for election at the Annual Meeting. You may receive proxy solicitation materials from Driver Management, including proxy statements and proxy cards. The Board recommends that you disregard them. We are not responsible for the accuracy of any information provided by or relating to Driver Management, the Driver Nominees or any proposal contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Driver Management or any other statements that Driver Management or its representatives have made or may otherwise make.

The Board recommends a vote “FOR” the election of each of the director nominees recommended by the Board and named in this Proxy Statement on the enclosed BLUE Proxy Card, and strongly and unanimously urges you to NOT sign or return any proxy card(s) or voting instruction form(s) that you may receive from Driver Management.

To vote “FOR” all of the Board’s nominees, you must complete, sign, date and return the enclosed BLUE Proxy Card or follow the instructions provided in the BLUE Proxy Card for submitting a proxy over the Internet or by telephone or vote in person at the virtual Annual Meeting.

If you have previously signed any proxy card sent to you by Driver Management in respect of the Annual Meeting, you can revoke it by completing, signing, dating and returning the enclosed BLUE Proxy Card or by following the instructions provided in the BLUE Proxy Card for submitting a proxy to vote your shares over the Internet or by telephone or voting at the virtual Annual Meeting. Completing, signing, dating and returning any proxy card that Driver Management may send to you, even with instructions to vote “withhold” with respect to the Driver Nominees, will cancel any proxy you may have previously submitted to have your shares voted for the Board’s nominees as only your latest proxy card or voting instruction form will be counted. Beneficial owners who own their shares in “street name” should follow the voting instructions provided by their broker, bank, trustee or other nominee to ensure that their shares are represented and voted at the Annual Meeting, or to revoke prior voting instructions. The Board urges you to complete, sign, date and return only the enclosed BLUE Proxy Card.

How do I cast my vote?

Shareholders of record may vote (i) by completing, signing and dating the BLUE Proxy Card that was included with this Proxy Statement and returning it in the envelope provided to the Corporation at the address noted on the BLUE Proxy Card, (ii) by calling the toll-free number found on the BLUE Proxy Card, or (iii) online at the internet voting website provided on the BLUE Proxy Card. Shareholders of record may also vote in person at the Annual Meeting. If you are a beneficial owner of shares held in street name, you will receive instructions from your broker, bank, trustee or other nominee on how to vote your shares. If you received printed copies of the proxy materials by mail, you may also vote by filling out the voting instruction form and returning it in the envelope provided. The availability of online or phone voting may depend on the voting process of the organization that holds your shares. Beneficial owners who want to attend and also vote in person at the Annual Meeting will need to obtain a legal proxy, in PDF or Image (gif, jpg, or png) file format, from the organization that holds their shares giving them the right to vote their shares in person at the Annual Meeting and by presenting it with their online ballot during the meeting.

By properly completing a proxy, you appoint Diane E. Baker and Matthew A. Clemens as proxy holders to vote your shares as indicated on the proxy card. Any signed BLUE Proxy Card not specifying to the contrary will be voted FOR election of the director nominees identified in this Proxy Statement, FOR approval of the advisory, non-binding resolution regarding executive compensation, FOR approval of the amendments to the 2007 Codorus Valley Bancorp, Inc. Employee Stock Purchase Plan, and FOR ratification of Crowe as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2022.

Even if you plan to attend the virtual Annual Meeting, we recommend that you also submit your proxy by Internet, telephone or mail so that your vote will be counted if you later decide not to attend the virtual Annual Meeting. The Internet and telephone voting facilities will close at 11:59 p.m. , Eastern Time, on May 16, 2022 for beneficial shareholders as of the Record Date. Shareholders who vote by Internet or telephone need not return a proxy card or the voting instruction form sent by brokers, banks, trusts or other nominees.

If you have any questions or require assistance in submitting a proxy for your shares, or if you would like additional copies of the proxy materials, please contact Morrow Sodali by phone at (800) 662-5200 (toll free for shareholders) or (203) 658-9400 (call collect for brokers, banks, trustees or other nominees), or by email at CVLY@investor.morrowsodali.com.

Who is soliciting my vote?

The Board is soliciting your proxy to vote your shares of Common Stock on all matters scheduled to come before the Annual Meeting, whether or not you attend the virtual Annual Meeting. By completing, signing, dating and returning the BLUE Proxy Card or voting instruction form, or by submitting your proxy and voting instructions over the Internet or by telephone, you are authorizing the persons named as proxies to vote your shares of Common Stock at the Annual Meeting as you have instructed. Proxies will be solicited on behalf of the Board by the Corporation’s directors, director nominees, and certain executive officers and other employees of the Corporation. Such persons are listed in Annex A to this Proxy Statement.

Additionally, the Corporation has retained Morrow Sodali LLC (“Morrow Sodali”), a proxy solicitation firm, which may solicit proxies on the Board’s behalf. You may also be solicited by press releases issued by us, investor presentations, or other communications issued by us, postings on our corporate website or other websites or otherwise. Unless expressly indicated otherwise, information contained on our corporate website is not part of this Proxy Statement. In addition, none of the information on the other websites, if any, listed in this Proxy Statement is part of this Proxy Statement. Such website addresses are intended to be inactive textual references only.

Will there be a proxy contest at the Annual Meeting?

Driver Management has announced its intention to nominate the Driver Nominees for election as directors to the Board at the Annual Meeting.

The Driver Nominees have NOT been endorsed by the Board. You may receive proxy solicitation materials from Driver Management, including proxy statements and proxy cards. The Board recommends that you disregard them. We are not responsible for the accuracy of any information provided by or relating to Driver Management or the Driver Nominees contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Driver Management or any other statements that Driver Management or its representatives have made or may otherwise make.

The Board is pleased to nominate for election as directors the following two persons—Cynthia A. Dotzel and Craig L. Kauffman, each of whom are incumbent directors of the Corporation and are named in this Proxy Statement and on the enclosed BLUE Proxy Card. Ms. Dotzel serves as Chair of the Board and Mr. Kauffman serves as President and CEO of the Corporation. We believe our two candidates have the breadth of relevant and diverse experiences, integrity and commitment necessary to continue to grow the Corporation for the benefit of all of the Corporation’s shareholders.

Will there be any other items of business on the agenda?

We do not expect that any other items of business will be presented for consideration at the Annual Meeting other than those described in this Proxy Statement. However, by completing, signing, dating and returning a BLUE Proxy Card or submitting your proxy or voting instructions over the Internet or by telephone, you will give to the persons named as proxies discretionary voting authority with respect to any matter that may properly come before the Annual Meeting, and of which we did not have notice at least by February 16, 2022 and such persons named as proxies intend to vote on any such other matter in accordance with the instructions of the Board to the extent permitted by Rule 14a-4(c) of the Exchange Act.

What are the Board’s recommendations?

The Board unanimously recommends that you vote by proxy using the BLUE Proxy Card with respect to the proposals as follows:

Why is the Board making such recommendations?

We describe each proposal and the Board’s reason for its recommendation with respect to each proposal on pages 20, 21 and 59 through 62 and elsewhere in this Proxy Statement.

Can I revoke or change my vote after I deliver my proxy?

You may revoke a previously delivered proxy by delivering written notice of revocation to Timothy J. Nieman, Esq., Secretary of the Corporation, or by executing a later dated proxy and giving written notice of the revocation to Mr. Nieman at any time before the proxy is voted at the Annual Meeting. If you submitted your proxy by Internet or by telephone, you can vote again by voting over the Internet or by telephone. We will honor the latest vote received. Proxy holders will vote shares represented by written proxies, if properly signed and returned to the Corporate Secretary, in accordance with instructions of the shareholders.

If you have already voted using a proxy card sent to you by or on behalf of Driver Management, you have every right to change your vote. We urge you to revoke that proxy by voting in favor of the Board’s nominees by using the enclosed BLUE Proxy Card. Only the latest dated and validly executed proxy that you submit will count. If you hold your shares in an account at a broker, bank, trustee or other nominee, follow the instructions provided to change your vote.

If you are a participant in the Codorus Valley Bancorp, Inc. Dividend Reinvestment and Stock Purchase Plan, the enclosed proxy will serve as a voting instruction card for your shares held in the Plan. Equiniti Trust Company, the Plan administrator, will vote your shares held in the Dividend Reinvestment and Stock Purchase Plan in the same manner as you indicate on your proxy card.

At the close of business on the Record Date for the Annual Meeting, the Corporation had 9,528,056 shares of Common Stock issued and outstanding. Each share is entitled to one vote on all matters submitted to a vote of the shareholders.

What is the difference between a shareholder of “record” and a “street name” holder?

If your shares are registered directly in your name, then you are considered the shareholder of record with respect to those shares. The Corporation sent the proxy materials directly to you.

If your shares are held in a stock brokerage account or by a bank, trustee or other nominee, then the broker, bank, trustee or other nominee is considered to be the shareholder of record with respect to those shares. In that case, you are considered to be the beneficial owner of those shares, your shares are said to be held in “street name,” and the proxy materials will be forwarded to you by that nominee. Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trustee or other nominee how to vote their shares. If you do not provide voting instructions to your broker, then your shares will not be voted at the 2021 Annual Meeting on any proposal with respect to which your broker does not have discretionary authority. To the extent that Driver Management provides a proxy card to a broker who holds shares for a beneficial owner, none of the matters to be voted on at the Annual Meeting will be considered a discretionary matter under the rules of the various regional and national exchanges of which your nominee is a member (the “Broker Rules”), which means that a broker that is subject to the Broker Rules will not have authority to vote shares held in street name without instructions from the beneficial owner. If you own your shares in street name, please instruct your broker, bank, trustee or other nominee how to vote your shares using the voting instruction form provided by your broker, bank, trustee or other nominee so that your vote can be counted. The voting instruction form provided by your broker, bank, trustee or other nominee holding your shares may also include information about how to submit your voting instructions over the Internet or by telephone. The BLUE Proxy Card accompanying this Proxy Statement will provide information regarding Internet and telephone voting.

What happens if I do not specify how I want my shares voted? What is discretionary voting? What is a broker non-vote?

As a shareholder as of the close of business on Record Date for the Annual Meeting, if you properly complete, sign, date and return a BLUE Proxy Card or voting instruction form, you shares of Common Stock will be voted as you specify. However, if you return your signed and dated BLUE Proxy Card or submit your proxy by telephone or Internet but do not specify how you want your shares voted, then your shares will be voted by the persons named as proxies in accordance with the recommendations of the Board.

A “broker non-vote” occurs when a broker holding shares for a beneficial owner has not received voting instructions from the beneficial owner and the broker does not have discretionary authority to vote the shares. If you own your shares beneficially in “street name” through a broker and do not provide voting instructions to your broker, then your broker will not have the authority to vote your shares on any proposal presented at the Annual Meeting unless it has discretionary authority with respect to that proposal. In that case, your shares will be considered to be broker non-votes and will not be voted on that proposal. Whether a broker has discretionary authority depends on your agreement with your broker and the Broker Rules. Accordingly, it is very important that you instruct your broker on how to vote shares that you hold in street name.

To the extent that Driver Management provides a proxy card to a broker who holds shares for a beneficial owner, none of the matters to be voted on at the Annual Meeting will be considered a discretionary matter under the Broker Rules, which means that a broker that is subject to the Broker Rules will not have authority to vote shares held in street name without instructions from the beneficial owner. Any shares held by a broker who has not received instructions from the beneficial owner as to how such shares are to be voted will have no effect on the outcome of Proposals 1, 2, 3 and 4 and such shares will not be counted for establishing the presence of a quorum. As a result, if you are a beneficial owner, then we encourage you to provide voting instructions to the broker that holds your shares by carefully following the instructions provided to you by that broker.

Has the Corporation received notice from one or more shareholders that they intend to nominate director candidates or bring proposals at the Annual Meeting?

Yes. Based on recently available public filings, Driver Management has indicated that it beneficially owns an aggregate of 640,880 shares of Common Stock (representing approximately 6.76% of outstanding Common Stock). Driver Management has delivered notice to the Corporation of its intention to nominate three candidates for election in opposition to Cindy A. Dotzel and Craig L. Kauffman who have been nominated by the Board. Although Driver Management notified the Corporation of its intention to nominate three candidates to the Board for election as directors at the Annual Meeting, there are only two director positions up for election at the Annual Meeting. The Board urges you NOT to sign or return any proxy cards or voting instruction forms that you may receive from or on behalf of Driver Management, including to vote “withhold” with respect to the Driver Nominees. If you wish to vote pursuant to the recommendation of the Board, you should disregard any proxy card that you receive other than the BLUE Proxy Card.

What does it mean if I receive more than one notice from the Corporation or BLUE Proxy Card?

Because Driver Management has submitted the Driver Nominees for election as directors to the Board, we may conduct multiple mailings prior to the Annual Meeting to ensure shareholders have our latest proxy information and materials to vote. In that event, we will send you a new BLUE Proxy Card or voting instruction form with each mailing, regardless of whether you have previously voted. You may also receive more than one set of proxy materials, including multiple BLUE Proxy Cards, if you hold shares that are registered in more than one account—please vote the BLUE Proxy Card for every account you own. The latest dated proxy you submit will be counted. IF YOU WISH TO VOTE AS RECOMMENDED BY THE BOARD, THEN YOU SHOULD ONLY SUBMIT BLUE PROXY CARDS.

What should I do if I receive proxy materials from Driver Management?

Driver Management has announced its intention to nominate the Driver Nominees for election as directors to the Board in opposition to the re-election of Cynthia A. Dotzel and Craig L. Kauffman who have been unanimously nominated by the Board. We expect that you may receive proxy solicitation materials from Driver Management, including opposition proxy statements and proxy cards.

The Board strongly and unanimously urges you to NOT sign or return any proxy cards or voting instruction forms that you may receive from or on behalf of Driver Management, not even for the purpose of voting “WITHHOLD” with respect to the Driver Nominee. We are not responsible for the accuracy of any information provided by or relating to Driver Management, the Driver Nominees or any proposal contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Driver Management or any other statements that Driver Management or its representatives have made or may otherwise make. If you have already voted using the proxy card provided by or on behalf of Driver Management, you have every right to change your vote by completing, signing, dating and returning the enclosed BLUE Proxy Card or by voting over the Internet or by telephone by following the instructions provided on the enclosed BLUE Proxy Card or voting instruction form. Only the latest proxy you submit will be counted. If you vote “withhold” on the Driver Nominees using the proxy card sent to you by or on behalf of Driver Management, your vote will not be counted as a vote for any of the director candidates recommended by the Board, but will result in the revocation of any previous vote you may have cast on the BLUE Proxy Card. If you wish to vote pursuant to the recommendation of the Board, you should disregard any proxy card that you receive other than the BLUE Proxy Card. If you have any questions or need assistance voting, or would like additional copies of proxy materials, please contact Morrow Sodali by phone at (800) 662-5200 (toll free for shareholders) or (203) 658-9400 (call collect for brokers, banks, trustees and other nominees), or by email at CVLY@investor.MorrowSodali.com.

Voting to “withhold” with respect to any of the Driver Nominees on its proxy card is not the same as voting for the Board’s nominees. This is because a vote to “withhold” with respect to any of Driver Management’s nominees on its proxy card will revoke any previously proxy submitted by you. The Board unanimously recommends a vote “FOR” the election of the Board’s nominees on the BLUE Proxy Card. The Board urges you not to sign or return any proxy card sent to you by Driver Management, even as a protest vote.

Who will pay for the solicitation of proxies?

The costs and expenses of the Board’s soliciting of proxies, including the preparation, assembly and mailing of this Proxy Statement, the BLUE Proxy Card, the Notice of Annual Meeting of Shareholders and any additional information furnished to shareholders will be borne by the Corporation. Solicitation of proxies may be in person, by telephone, electronic mail or personal solicitation by our directors, officers or staff members. Other than the persons described in this Proxy Statement, no general class of employee of the Corporation will be employed to solicit shareholders in connection with this proxy solicitation. However, in the course of their regular duties, our employees, officers and directors may be asked to perform clerical or ministerial tasks in furtherance of this solicitation. None of these individuals will receive any additional or special compensation for doing this, but they may be reimbursed for reasonable out-of-pocket expenses. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodian holding shares of the Common Stock in their names that are beneficially owned by others to forward to those beneficial owners. We will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation material to the beneficial owners of Common Stock.

We have engaged Morrow Sodali to assist in the solicitation of proxies in connection with the Annual Meeting, for a service fee and the reimbursement of customary disbursements, which are not expected to exceed $175,000 in total. Morrow Sodali expects that approximately 30 of its employees will assist in the solicitation.

Our aggregate expenses, including legal fees for attorneys, accountants, public relations and other advisors, printing, advertising, postage, transportation, litigation and other costs incidental to the solicitation, but excluding (i) costs normally expended for a solicitation for an election of directors in the absence of a proxy contest and (ii) costs represented by salaries and wages of Corporation employees and officers, are expected to be approximately $975,000, of which $450,000 has been incurred as of the date of this Proxy Statement.

When will the voting results be announced?

The final voting results will be reported on Form 8-K, which will be filed with the Securities and Exchange Commission (the “SEC”) within four business days after the Annual Meeting. If our final voting results are not available within four business days after the Annual Meeting, we will file a Form 8-K reporting the preliminary voting results and subsequently file the final voting results in an amendment to the Form 8-K within four business days after the final voting results are known to us.

Do I have appraisal or dissenters’ rights?

None of the applicable Pennsylvania law, the Corporation’s Articles of Incorporation or its Amended and Restated By-Laws (the “Bylaws”) provide for appraisal or other similar rights for dissenting shareholders in connection with any of the proposals set forth in this Proxy Statement. Accordingly, you will have no right to dissent and obtain payment for your shares in connection with such proposals.

What constitutes a quorum?

The presence, in person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast on the particular matter constitutes a quorum for the conduct of business at the Annual Meeting. Under Pennsylvania law and the Bylaws, the presence of a quorum is required for each matter to be acted upon at the Annual Meeting. Broker non-votes will not be counted for purposes of determining the presence of a quorum at the Annual Meeting. Abstentions will be counted for purposes of determining the presence of a quorum at the Annual Meeting.

What is the required vote?

In the case of the election of directors, the two nominees receiving the highest number of votes shall be elected. Votes that are withheld, broker non-votes or shares that are not voted will have no effect on the outcome of the election of directors.

The approval of each of the other proposals identified in this Proxy Statement requires the affirmative vote of holders of a majority of the Common Stock having voting power at the Annual Meeting, in person (virtually) or by proxy. Abstentions will have the effect of a vote against each of these other proposals. Broker non-votes will have no effect on these other proposals.

Although the Board knows of no other business to be presented at the Annual Meeting at this time, in the event that any other matters are properly brought before the Annual Meeting, any proxy given pursuant to this solicitation will be voted in accordance with the instructions of the Board as permitted by Rule 14a-4(c) of the Exchange Act.

Whom should I contact if I have questions?

Morrow Sodali is assisting us with our effort to solicit proxies. If you have additional questions about the election of directors, this Proxy Statement or the Annual Meeting, or if you need assistance voting your shares, please contact:

509 Madison Avenue Suite 1206 

New York, NY 10022 

Shareholders Call Toll Free: (800) 662-5200
Banks and Brokers Call Collect: (203) 658-9400

Email: CVLY@investor.morrowsodali.com

THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF THE BOARD’S NOMINEES ON PROPOSAL 1, “FOR” PROPOSAL 2, “FOR” PROPOSAL 3 AND “FOR” PROPOSAL 4, USING THE ENCLOSED BLUE PROXY CARD OR VOTING INSTRUCTION FORM.

Cautionary Statement Regarding Forward-Looking Statements

This Proxy Statement and the documents that have been incorporated herein by reference may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated therein (the “Exchange Act”). In some cases, these statements can be identified by the use of words such as “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “target,” “will,” “would” and similar expressions. Actual results and trends could differ materially from those set forth in such statements due to various risks, uncertainties and other factors. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: ineffectiveness of our business strategy due to changes in current or future market conditions; the effects of competition, and of changes in laws and regulations, including industry consolidation and development of competing financial products and services; interest rate movements; changes in credit quality; inability to achieve merger-related synergies; difficulties in integrating distinct business operations, including information technology difficulties; volatilities in the securities markets; and deteriorating economic conditions, and other risks and uncertainties, including those detailed in our filings with the SEC.

Although forward-looking statements help provide additional information about us, investors should keep in mind that forward-looking statements are only predictions, at a point in time, and are inherently less reliable than historical information. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Proxy Statement. We assume no obligation to update any forward-looking statement in order to reflect any event or circumstance that may arise after the date of this Proxy Statement, other than as may be required by applicable law or regulation.

GOVERNANCE OF THE CORPORATION

The Board believes that the purpose of corporate governance is to maximize long-term shareholder value in a manner consistent with applicable law and with the highest standards of integrity. The Board adheres to corporate governance practices that the Board and management believe promote this purpose, are sound and represent best practices. We continually review these governance practices against changes in applicable federal and Pennsylvania (the state in which we are incorporated) law, the rules and listing standards of the NASDAQ Stock Market, and the rules and regulations of the SEC, as well as best practices suggested by recognized governance authorities. The Board has not adopted any policies concerning employee, officer or director hedging practices with regard to the Corporation’s equity securities.

Director Independence

Currently, the Board has eight (8) members. The Board has determined that the following seven (7) directors are independent in accordance with the independence standards of the NASDAQ Stock Market: Cynthia A. Dotzel, CPA, Chair; Sarah M. Brown; Brian D. Brunner; Keith Cenekofsky, CPA; John W. Giambalvo, Esq.; Jeffrey R. Hines, P.E.; and J. Rodney Messick, Vice Chair.

In determining the directors’ independence, in addition to matters disclosed under “Related Person Transactions”, the Board considered each director’s beneficial ownership of Common Stock and loan transactions between the Corporation’s wholly-owned bank subsidiary, PeoplesBank, A Codorus Valley Company (the “Bank” or “PeoplesBank”), and the directors, their family members and businesses with whom they are associated, as well as any contributions made by the Bank to non-profit organizations with whom such persons are associated. In each case, the Board determined that none of the transactions above impaired the independence of the director.

Board Structure

The Corporation’s senior leadership is currently shared between the President and Chief Executive Officer and the Chair of the Board. The Board believes that having an independent, non-employee director serve as Chair is the appropriate leadership structure for the Corporation at this time because it allows the President and Chief Executive Officer to focus on the day-to-day business of the Corporation, while allowing the Chair to lead the Board in its fundamental role of providing advice to, and oversight of, the executive management team. In making this determination, the Board recognizes the time, effort and energy that the President and Chief Executive Officer is required to devote to his position in the current business and regulatory environment, particularly as the Board’s oversight responsibilities continue to grow.

Our Chair is currently responsible for ensuring the smooth functioning and efficient operation of our Board by guiding the processes of our Board, presiding at Board meetings and at shareholder meetings, and acting as a liaison between our Board and our management team. In this regard, our Chair consults regularly with our executives over business matters and provides our executives with consultation and advice on matters that require prompt attention.

Meetings and Committees of the Board

The Board met fifteen (15) times during 2021, which includes four (4) joint meetings with the Board of the Bank. During 2021, all directors attended at least 75% of the meetings of the Board and of the various committees on which they served. While the Corporation has no formal policy in place, directors are strongly encouraged to attend the Annual Meeting of Shareholders. All of our then-serving directors attended the 2021 Annual Meeting of Shareholders, and we anticipate that all directors will attend this year’s Annual Meeting.

The Board has a standing Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee, each of which is described below.

Audit Committee. The Audit Committee of the Board is comprised solely of directors who meet the applicable standards for independence of audit committee members of the NASDAQ Stock Market and the rules and regulations of the SEC for membership on audit committees, and possess the requisite knowledge or experience to serve on the Audit Committee. The current members of the Audit Committee are: Keith M. Cenekofsky, CPA (Chair); Jeffrey R. Hines, P.E. (Vice Chair); and John W. Giambalvo, Esq. The Audit Committee met four (4) times during 2021.

The principal duties of the Audit Committee, as set forth in its charter, include reviewing significant audit and accounting principles, policies and practices, reviewing performance of internal auditing procedures and recommending to the Board the engagement of the Corporation’s independent registered public accounting firm. The Audit Committee has the authority to engage legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities.

Keith Cenekofsky, CPA, Chair of the Committee, has been designated by the Board as the Audit Committee financial expert. In designating Mr. Cenekofsky as the Audit Committee financial expert, the Board considered his more than 35 years of experience as a practicing certified public accountant, and his significant experience as Partner in Charge of numerous public financial institutions’ audits. Furthermore, the Board believes that each Audit Committee member has sufficient knowledge in financial and auditing matters to serve on the committee.

The Audit Committee operates under a written charter, which is available on the Corporation’s website at www.peoplesbanknet.com. Click on the “Your Business” link at the top of the home page, click on “Investor Relations” under the “Connect” heading, and then click on the “Governance Documents” link.

Compensation Committee. All members of the Compensation Committee are independent under applicable independence standards of the NASDAQ Stock Market. The current members of the Compensation Committee are: John W. Giambalvo, Esq. (Chair); Jeffrey R. Hines, P.E. (Vice Chair); Brian D. Brunner; Cynthia A. Dotzel, CPA; and J. Rodney Messick. The Compensation Committee met five (5) times during 2021.

The principal duties of the Compensation Committee include evaluating and recommending to the Board compensation plans, policies, and programs for the executive officers of the Corporation and its subsidiaries. The Compensation Committee may delegate any of its responsibilities to a subcommittee comprised of three (3) or more members of the committee.

The Compensation Committee’s processes and procedures for consideration and determination of executive compensation are described below in the section titled “Compensation Discussion and Analysis” entitled “Role of the Compensation Committee, Management and Compensation Consultant in the Executive Compensation Process.”

The Compensation Committee operates pursuant to a written charter, which is available on the Corporation’s website at www.peoplesbanknet.com. Click on the “Your Business” link at the top of the home page, click on “Investor Relations” under the “Connect” heading, and then click on the “Governance Documents” link. The Committee has the authority under its charter to select, retain and terminate counsel, consultants and other experts. For information concerning Meridian Compensation Partners, LLC, the compensation consultant currently retained by the committee, see the section of “Compensation Discussion and Analysis” entitled “Role of the Compensation Consultant.”

Corporate Governance and Nominating Committee. All members of the Corporate Governance and Nominating Committee are independent under applicable independence standards of the NASDAQ Stock Market. The current members of the Corporate Governance and Nominating Committee are: Jeffrey R. Hines, P.E. (Chair); Brian D. Brunner (Vice Chair); Cynthia A. Dotzel, CPA; John W. Giambalvo, Esq.; and Sarah Brown. The Corporate Governance and Nominating Committee met two (2) times during 2021.

The principal duties of the Corporate Governance and Nominating Committee include developing and recommending to the Board criteria for selecting qualified director candidates, identifying individuals qualified to become Board members, evaluating and selecting, or recommending to the Board, director nominees for each election of directors, considering committee member qualifications, appointment and removal, recommending codes of conduct and codes of ethics applicable to the Corporation and providing oversight in the evaluation of the Board and each committee.

The Corporate Governance and Nominating Committee operates pursuant to a written charter, which is available on the Corporation’s website at www.peoplesbanknet.com. Click on the “Your Business” link at the top of the home page, click on “Investor Relations” under the “Connect” heading, and then click on the “Governance Documents” link.

Role of the Board in Risk Oversight

The Board is responsible for oversight of the various risks facing the Corporation. In this regard, the Board seeks to understand and oversee the most critical risks relating to the Corporation’s business, to allocate responsibilities for the oversight of risks among the full Board and its committees, and to see that management has in place effective systems and processes for managing risks facing the Corporation. Overseeing risk is an ongoing process, and risk is inherently tied to strategy and to strategic decisions. Accordingly, the Board considers risk throughout the year and with respect to specific proposed actions. While the Board oversees risk, management is charged with identifying and managing risk within the risk parameters set by the Board.

The Board implements its risk oversight function both as a whole and through delegation to various committees. These committees meet regularly and report back to the full Board. The following committees play particularly significant roles in carrying out the risk oversight function.

The committee is comprised of the Chief Risk Officer, President and Chief Executive Officer of the Bank, General Counsel, Chief Financial Officer, Chief Credit Officer, BSA and Security Officer, and Loan Review Officer, as well as representatives from the Board (currently Sarah M. Brown). Ms. Brown chairs the committee. The Enterprise Risk Management Committee met six (6) times during 2021. The Enterprise Risk Management Committee takes minutes at each of its meetings, and those minutes are reviewed and accepted by the Board.

Director Nomination Process

The Corporate Governance and Nominating Committee is responsible for identifying and evaluating individuals qualified to become members of the Board and to recommend such individuals to the Board for consideration and nomination. The Corporate Governance and Nominating Committee and the Board endeavor to recruit and retain Board members who demonstrate intellectual capacity, strong interpersonal skills, good business instinct, objectivity and the highest level of personal and professional integrity. When evaluating current members of the Board and prospective candidates for the Board, the Committee seeks to balance the skill sets and attributes of existing Board members with the need for other complementary skills, talents and qualities that will position the Corporation to successfully implement its strategic vision.

In addition to requiring that each existing director and candidate for nomination possesses unquestionable character and a commitment to contribute to the success of the Corporation and the stewardship of the community, the Corporate Governance and Nominating Committee’s evaluation of director candidates includes an assessment of issues and factors regarding the individual’s education, business experience, accounting and financial expertise, age, diversity, reputation, civic and community relationships and knowledge and experience in matters that impact diversified community financial institutions. The Committee will also take into account the director candidate’s ability to devote adequate time to corporate matters, including being prepared for, and participating in, all meetings of the Board and any committees to which he or she may be assigned. When the Corporate Governance and Nominating Committee is considering current members of the Board for nomination for reelection, the Committee considers prior performance, as well as meeting attendance records.

The current practice of the Corporate Governance and Nominating Committee is to identify potential director candidates through a variety of sources. The Committee considers recommendations made by current or former directors or members of management. Potential candidates may also be identified through contacts in the business, civic, academic, legal and non-profit communities served by the Corporation. The Chair of the Corporate Governance and Nominating Committee determines how best to approach director candidates regarding a potential nomination.

Regarding new director candidates, the Corporate Governance and Nominating Committee will evaluate whether the nominee is independent, as independence is defined under applicable standards of the NASDAQ Stock Market, and whether the nominee meets the qualifications for directors outlined above, as well as any special qualifications applicable to membership on any committee to which the nominee may be appointed to serve if elected. A majority of the Board must meet the criteria for “independence” established by the NASDAQ Stock Market, and the Committee will consider any conflicts of interest that might impair that independence prior to making a decision.

The Corporate Governance and Nominating Committee will consider recommendations received from the Corporation’s shareholders. Shareholders may recommend qualified director candidates by writing to:

Timothy J. Nieman, Esq. 

Corporate Secretary 

Codorus Valley Bancorp, Inc.

105 Leader Heights Road 

York, Pennsylvania 17403

Submissions must include information regarding a candidate’s citizenship, age, background, business and personal addresses, qualifications, experience, principal occupation or employment, directorships and other positions held by the candidate in business, charitable and community organizations and his/her willingness to serve as a member of the Board. Based on a preliminary assessment of the candidate’s qualifications, the Corporate Governance and Nominating Committee may conduct interviews with, and request additional information from, the candidate.

The Board does not have a formal policy for considering director candidates recommended by shareholders due to the infrequency of nominations, but its policy is to give due consideration to any and all candidates, and there are no differences in how the Corporate Governance and Nominating Committee evaluates a candidate for director based on whether the candidate is recommended by the Committee or by a shareholder.

Nomination of Directors

Article 10, Section 10.1 of the Bylaws requires that nominations for election as a director be made pursuant to timely notice in writing to the Corporate Secretary. To be timely, a shareholder’s notice must be delivered to or received at the principal executive office of the Corporation at least ninety (90) days prior to the first anniversary of the date that the Corporation’s proxy statement is released to shareholders in connection with the preceding year’s annual meeting; provided, however, that if the Corporation did not hold an annual meeting the preceding year or if the date of the annual meeting is changed by more than thirty (30) days from the date of the preceding year’s annual meeting, to be timely, notice by the shareholder must be made not later than the ninetieth (90^th) day nor earlier than the one hundred twentieth (120^th) day prior to the date of the annual meeting (or, if later the tenth (10^th) day following the day on which public announcement is first made of the date of the annual meeting). The notice must provide the specific information required by Section 10.1 of the Bylaws. The Board is required to determine whether nominations have been made in accordance with the requirements of the Bylaws. If the Board determines that a nomination was not made in accordance with the Bylaws, the shareholder may be given an opportunity to cure any deficiency in accordance with the Bylaws.

You may obtain a copy of the Bylaws by writing to Timothy J. Nieman, Esq., Corporate Secretary, Codorus Valley Bancorp, Inc., 105 Leader Heights Road, York, Pennsylvania 17403. Additionally, a copy of the Bylaws has been filed with the SEC as Exhibit 3.1 to Form 8-K filed December 20, 2021.

Deadline for Submission of Shareholder Proposals

In order for a shareholder to include a proposal in the Corporation’s Proxy Statement for presentation at the 2023 Annual Meeting of Shareholders, the proposal must be received by the Corporation at its principal executive offices c/o Timothy J. Nieman, Esq., Corporate Secretary, Codorus Valley Bancorp, Inc., 105 Leader Heights Road, York, Pennsylvania 17403, no later than December 5, 2022. Any such proposal must comply with Rule 14a-8 of Regulation 14A of the proxy rules of the SEC. If a shareholder proposal is submitted to the Corporation after December 5, 2022 , it will not be included in the Corporation’s 2023 Proxy Statement.

For any proposal that is not submitted for inclusion in next year’s proxy statement (as described in the preceding paragraph), but is instead sought to be presented directly at the next annual meeting, the Bylaws require shareholders to give advance notice of such proposals. The required notice, which must include the information and documents set forth in Section 2.6(b) of the Bylaws, must be given not fewer than ninety (90) days nor greater than one hundred twenty (120) days before the first anniversary of the date of the Corporation’s proxy statement release to shareholders in connection with the preceding year’s annual meeting; provided, however, that if the Corporation did not hold an annual meeting the preceding year or if the date of the annual meeting is changed by more than thirty (30) days from the date of the preceding year’s annual meeting, to be timely, notice by the shareholder must be made not later than the ninetieth (90^th) day nor earlier than the one hundred twentieth (120^th) day prior to the date of the annual meeting (or, if later the tenth (10^th) day following the day on which public announcement is first made of the date of the annual meeting). If notice is not received by the Corporation within this timeframe, the Corporation will consider such notice untimely. Under Rule 14a-4(c)(1) of the Exchange Act, if any shareholder proposal intended to be presented at the Annual Meeting without inclusion in our proxy statement is received within the required timeframe and is properly presented, then a proxy will have the ability to confer discretionary authority to vote on the proposal.

Communicating with Directors

The Board has established a process for shareholders and other interested parties to communicate directly with the Chair of the Board or its independent directors, individually, or the Board, collectively, by submitting written correspondence to the following address:

Chair of the Board of Directors (or Lead Director) 

c/o Timothy J. Nieman, Esq. 

Corporate Secretary 

Codorus Valley Bancorp, Inc.

105 Leader Heights Road 

York, Pennsylvania 17403

The Corporate Secretary may facilitate direct communications with the Board or individual, independent directors by reviewing and summarizing such communications. All such communications will be referred to the Chair of the Board or individual, independent directors for consideration unless otherwise instructed by the Board.

HUMAN CAPITAL MANAGEMENT

Human Capital

The Board and Executive Leadership Team have established the following mission, vision and values:

Mission: To be community builders with an unwavering commitment to: 

Vision: To attract lifetime clients by being best in class

Values: Act Honorably, Care Deeply & Go Further, Create Opportunities, Pursue Growth, Drive Performance and Live We Before Me

We recognize that our ability to create value on a consistent basis is highly dependent upon the effectiveness of our team.

The Corporation’s key human capital management objectives are to attract and retain diverse talent that fits our values and culture. Our talent strategy focuses on acquiring new associates through branding and outreach programs, developing employees through an extensive onboarding program, ongoing development, mentoring and performance management and retaining associates through recognition, engagement and a competitive total rewards package.

Diversity and Inclusion

The Corporation is committed to creating value through relationships, and in 2021 established a Diversity, Equity and Inclusion Advisory Team to assist with our DE&I initiative. Our DE&I Advisory Team, in partnership with senior leaders, plays a key role in cultivating a work environment where our differences make a difference. At PeoplesBank, diversity and inclusion are not just about who we are, but the way we carry out our mission. This includes the way we work together; the way we think about and solve problems; the way we engage our associates and tap into the unique strengths each of us brings to the workplace; and the way we ensure a safe and sound place to work and grow.

Compensation and Benefits

The Corporation offers competitive compensation to attract and retain talent. Our generous total rewards package includes market-competitive salaries, bonuses or sales commissions, equity incentives, healthcare and retirement benefits and paid time off. Associates have regular performance reviews and merit salary adjustments commensurate with performance.

Learning and Development

The Corporation provides an extensive learning and development program that supports our culture, prepares employees for their immediate role, develops them for long-term success at the bank, and supports personal development. We offer functional training, culture building exercises, personal development, PeoplesBank history, PeoplesBank integration and ongoing technical training throughout each year. Associates also have access to additional educational and development opportunities including tuition reimbursement and certification programs.

Communication and Engagement

The Corporation believes in the importance of employee communication and engagement. We utilize several methods to foster engagement, including activities such as recognition programs, service awards, yearly associate meetings, engagement surveys and community service programs. We believe keeping our team well informed, connected and appreciated adds to the success of our organization.

Board Diversity

The following table summarizes voluntary disclosure of diversity characteristics of the Board.

PROPOSAL 1 – ELECTION OF DIRECTORS

The Bylaws provide that the Board shall consist of not less than five (5) nor more than twenty-five (25) persons. The Bylaws also provide that the Board shall be divided into three (3) classes, with directors of each class to be elected for a term of three (3) years, so that the term of office of one (1) class of directors expires at the annual meeting each year. Each class consists, as nearly as possible, of one-third of the directors. The Board determines the number of directors in each class.

A majority of the Board may increase or decrease the number of directors between meetings of the shareholders. Any vacancy occurring on the Board, whether due to an increase in the number of directors, resignation, retirement, death, or any other reason, may be filled by appointment by the remaining directors. Any director who is appointed to fill a vacancy holds office until the expiration of the term of the class of directors to which he or she was appointed. The Bylaws mandate the retirement of directors at age 75.

The Board has fixed the number of directors at eight (8). There are two (2) nominees for the Board for election at the Annual Meeting. The Board has nominated the following two (2) individuals for election to the Board, each for a three-year term:

Nominees for Class B Directors 

For a Three-Year Term Expiring in 2025

Cynthia A. Dotzel, CPA 

Craig L. Kauffman

Each of the Corporation’s nominees presently serves as a director of the Corporation. Each of the Corporation’s nominees has consented to (i) serve as a nominee, (ii) be named as a nominee in this Proxy Statement, and (iii) serve as a director if elected.

If the nominees should become unavailable for any reason, proxies received from shareholders will be voted in favor of substitute nominees, as the Board shall determine. The Board has no reason to believe that the nominees will be unable to serve if elected.

Required Vote and the Board’s Recommendation

Cumulative voting does not exist in the election of directors. If Driver Management does not withdraw its nominations, directors will be elected by a plurality of the votes cast in connection with the election of directors. “Plurality” means that, among the Board’s nominees and the Driver Nominees, the two nominees who receive the largest number of “FOR” votes of the shares entitled to be voted in the election of directors will be elected. Votes that are withheld, broker non-votes or shares that are not voted will have no effect on the outcome of the election of directors.

The Board unanimously recommends a vote “FOR” each of the foregoing nominees.

Your vote is very important.

Information about Nominees and Continuing Directors

Information, as of April 4, 2022, concerning the Corporation’s two nominees for election to the Board and the six continuing directors appears below. Each of the Corporation’s nominees and continuing directors also serves as a director of the Bank. There are no family relationships among any of our directors or executive officers. There are no arrangements or understandings between any of our directors and any other person pursuant to which any person was selected as a director.

INFORMATION CONCERNING SECURITY OWNERSHIP

Beneficial ownership of shares of the Common Stock is determined in accordance with SEC Rule 13d-3, which provides that a person should be credited with the ownership of any stock held, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, in which the person has or shares:

Beneficial Ownership of Principal Holders

The following table shows, to the best of the Corporation’s knowledge, those persons or entities who owned of record or beneficially, on December 31, 2021, more than 5% of the Common Stock.

Beneficial Ownership of Executive Officers and Directors

The following table sets forth, as of March 25, 2022, and from information supplied by the respective persons, the amount and the percentage, if over 1%, of the Common Stock beneficially owned by each director, each nominee for director, each of the named executive officers and all executive officers and directors of the Corporation as a group.

Executive Officers

The following table identifies each of the executive officers of the Corporation, their age as of April 4, 2022, the position they currently hold and their professional experience during the prior five years, or longer if material.

INFORMATION CONCERNING COMPENSATION

Executive Compensation

Compensation Discussion and Analysis

The Compensation Committee (referred to in this discussion as the “Committee”) assists the Board and maintains responsibility for establishing and implementing the Corporation’s executive compensation philosophy for the Corporation and the Bank (hereinafter referred to as the compensation policies of the Corporation), as well as monitoring adherence to the policies and practices of compensation programs maintained by the Corporation for all associates (including equity and non-equity-based incentive programs and retirement programs). This Compensation Discussion and Analysis section is intended to help our shareholders understand the Corporation’s compensation philosophy, objectives, components and practices. This section also describes the Committee’s decisions made during 2021 as they relate to the compensation of our named executive officers.

The following officers have been identified as our named executive officers:

Executive Summary

Key 2021 Business Accomplishments

2021 was very successful for the Corporation despite the challenges posed by the ongoing worldwide COVID-19 pandemic. As we look back on 2021 as an organization, we are extremely proud of the following key accomplishments:

Key Strategic Accomplishments:

Key Financial Accomplishments:

Key 2021 Compensation Program Attributes

The Committee strives to implement an executive compensation program that is aligned with the philosophy of the Corporation, as well as achieves the Corporation’s desired objectives. Overall, we believe that our compensation programs are fair, reasonable, competitive with our peers and reflective of best practices. Listed below are some key attributes of our compensation program:

2021 Compensation Decisions

The Corporation’s significant accomplishments in 2021, including those identified above, led to a number of decisions by the Committee and Board throughout the year that reflect the desire to retain and motivate an employee base and executive team that will continue to challenge each other for performance results. Key highlights as they relate to compensation programs or actions include:

The remainder of this Compensation Discussion & Analysis, as well as the Summary Compensation Table and supporting tabular disclosures, are intended to provide greater detail on the compensation philosophy, roles, programs, processes, and actions in 2021.

Executive Compensation Philosophy and Objectives

The Committee believes the success of the Corporation is driven through hiring, developing and retaining qualified executives who are motivated to perform for the benefit of our shareholders, the community, clients and associates. The executive compensation program is designed to:

The Corporation seeks to provide all of its executive officers with a comprehensive program of compensation and benefit opportunities consistent with prevailing practices among publicly-traded financial services organizations of similar asset size (including those slightly smaller and slightly larger), market profiles, operating circumstances and regionally similar geographic locations. The Committee believes that this level of market competitiveness appropriately positions the Corporation to attract, motivate, reward and retain the caliber of executive talent required to enable the Corporation to achieve its short- and long-term strategic goals and objectives.

The executive compensation program is intended to provide participating executives with a balanced and market-competitive mix of fixed and performance-based variable compensation and benefit provisions. The variable compensation features include annual cash incentives to reward short-term performance relative to our annual business plans and long-term incentives, in the form of equity grants, to reward future performance of the Corporation and increased shareholder value. Short- and long-term incentives are designed to focus executives’ efforts on the strategic goals and objectives of the Corporation and to link executives’ financial rewards with the interests of the Corporation’s shareholders.

All components of compensation, both fixed and variable, are targeted at the median of our industry peer group, as identified by the Committee in consultation with its compensation consultant. The variable incentive award opportunities allow executives to earn total compensation, which is above the median of industry norms when their individual and collective performance exceeds established goals and objectives as outlined in the Corporation’s strategic plan or goals and objectives established for their positions. When corporate and or individual performance is below goals and objectives, variable compensation plans are designed to result in compensation that lags behind the market.

Role of the Compensation Committee, Management and the Compensation Consultant in the Executive Compensation Process

Role of the Compensation Committee

The Compensation Committee is appointed by the Board to discharge the Board’s responsibilities relating to compensation of the Corporation’s executive officers and other key associates of its subsidiaries. Five (5) members of the Board sit on the Committee, each of whom is an independent director under the NASDAQ Stock Market listing requirements. To fulfill its responsibilities, the Committee meets at least quarterly throughout the year (it met six (6) times in 2021). The Chair of the Committee reports on Committee actions at meetings of the Board. Written minutes of Committee meetings are prepared, presented to and accepted by the Board.

The Committee has overall responsibility for evaluating and approving the compensation plans, policies and programs of the Corporation applicable to its key executives. In discharging its responsibilities, the Committee establishes the Corporation’s general compensation philosophy, and oversees the development and implementation of the Corporation’s executive compensation programs and related policies.

The Committee reviews the operation and effectiveness of the executive compensation program on a continuous basis discussing current regulatory issues, industry trends and internal Corporation needs with respect to executive compensation.

The Committee may request information from management about the Corporation, the performance of the business and the executive compensation program to evaluate effectiveness and to recommend program modifications and changes for Board consideration. It may also recommend to the Board changes in the scope of its responsibilities beyond the positions currently designated as “executive” to include other critical positions in the Corporation.

Based upon corporate goals and objectives approved by the Board, the Compensation Committee annually reviews and approves corporate goals and objectives that are specifically relevant to the Chief Executive Officer’s compensation and evaluates their respective performance in light of those goals and objectives. Based on such evaluation, the Committee sets the compensation including base salary, incentive compensation, employment terms (such as severance agreements, employment agreements and change of control agreements, if and when appropriate, and equity-based awards or special or supplemental benefits) of the Bank’s Chief Executive Officer, subject to ratification by the full Board. In determining compensation, the Compensation Committee may consider, among other factors, the Corporation’s performance and relative shareholder return, the nature, extent and acceptability of risks that the and Chief Executive Officer may be encouraged to take by such compensation, the value of similar incentive awards to chief executive officers at comparable companies, and the awards given to the Bank’s Chief Executive Officer in past years.

In addition to determining the Chief Executive Officer compensation, the Committee annually reviews and recommends to the Board for approval the compensation of executive officers other than the Chief Executive Officer.

The Committee is also responsible for reviewing the Bank’s executive incentive compensation plans, equity-based plans, retirement plans, deferred compensation plans and welfare benefit plans. Unless their administration is otherwise delegated in accordance with the provisions of such plans, the Committee administers such plans, including determining any incentive or equity-based awards to be granted to executive officers, and other key associates under such plans.

In order to discharge its responsibilities, the Committee has the authority and is provided the resources to obtain advice and assistance from internal or external legal, compensation, human resource, accounting and other advisors or consultants as it deems necessary or appropriate. These services are provided as a matter of practice as requested by the Committee, and such advisors report directly to the Committee.

Details on the Committee’s functions are more fully described in its charter. As part of its responsibilities, the Committee reviews its charter in the development of an annual work plan and recommends any proposed changes to the Board for approval. The Committee’s charter can be viewed at the Corporation’s website, www.peoplesbanknet.com by clicking on “Your Business” at the top of the page, click on “Investor Relations” under the “Connect” heading, and then click on “Governance Documents”.

The Committee will continue to review, evaluate and revise the compensation philosophy as appropriate to meet its desired objectives.

Role of the Compensation Consultant

The Committee has the authority to hire, terminate and seek the services of compensation consulting and advisory firms as it deems appropriate. These advisors serve as independent counsel and report directly to the Committee. As a matter of general policy the Committee does not prohibit its advisors from providing services to management, but any such engagements must be approved by the Committee.

The Committee hired the independent outside consulting firm Meridian Compensation Partners, LLC, Newton, MA, sometimes referred to in this discussion as Meridian, which specializes in executive and board compensation. Meridian reports directly to the Committee and carries out its responsibilities to the Committee in coordination with the human resources department, as requested by the Committee. Meridian only provides services on behalf of the Committee and did not perform any additional services to the Corporation during 2021.

Role of Management

The Committee often requests other non-committee members of the Board and one or more members of the Bank’s Executive Leadership Team, such as the Chief Executive Officer and the Chief Administrative Officer, to be present at Committee meetings where executive compensation and corporate or individual performances are discussed and evaluated. Although the Committee is ultimately responsible for executive compensation decisions, information and input from executive leadership is critical to ensuring the Committee and its advisors have the information needed to make informed decisions. Executives may provide insight, suggestions or recommendations regarding executive compensation. However, only Committee members vote on decisions regarding executive compensation. In all cases, no executive officer shall be present at meetings at which their compensation or performance is discussed or determined by the Committee.

Below is a summary of the role of management in assisting the Committee to discharge its responsibilities:

Factors Considered in Determining Executive Compensation

The Committee’s compensation decisions throughout the year were supported by various analyses, information and input including, but not limited to:

Competitive Benchmarking

In 2021, Meridian was retained by the Committee to conduct a comprehensive review of the Corporation’s executive compensation program. The purpose of this review was to provide an independent and objective analysis of all elements of compensation (individually and in the aggregate), including pay and performance alignment relative to the practices of a new market and peer group prompted by the growth of the organization. In addition, the Committee reviewed best/emerging practices as provided by Meridian in relation to key compensation governance institutions and shareholder advisory firms. Ultimately, the combination of information derived from Meridian regarding competitive market data and the Committee’s review of compensation governance best practices was determined to support the compensation decisions previously made and, yet to be made, for the organization.

A primary data source used in setting competitive market practices for the named executive officers is the information publicly disclosed by a peer group of other publicly-traded bank holding companies. This peer group was developed by Meridian using objective parameters that reflect institutions of similar asset size operating within our geographic region, and was ultimately discussed with and approved by the Committee. The peer group will be reviewed and updated from time to time, as appropriate, since comparable institutions may change depending on the current size of the Corporation, acquisitions and business focus of the Corporation or peer institutions. Overall, the goal is to maintain data from a group of comparative bank holding companies that provide a market perspective for executive compensation.

The 2021 peer group consisted of 24 bank holding companies in the Mid-Atlantic Region ranging from approximately $1 billion to $5 billion in assets, positioning the Corporation slightly below the median in terms of asset size.

The following is the peer group used as a result of the November 2021 review conducted by Meridian:

In addition to the peer group data, Meridian used several other sources of data to identify general compensation trends with respect to cash compensation (i.e., base salary and incentives), including comparative data from industry surveys using the appropriate scope (asset size and region) and a proprietary database of national banking compensation data. Data utilized reflected institutions representing similar asset size and region to the Corporation.

Information derived from the competitive market analysis was used by Meridian to develop market competitive guidelines intended to support the Corporation’s total compensation philosophy. Using this information, Meridian then presented to the Committee the guidelines for base salary, short- and long-term incentive targets and estimated total direct compensation (assuming all elements paid at expectation/goal levels), so the Committee could see the potential pay and range of pay for each executive role. These guidelines provided a framework for consideration by the Committee in setting future compensation levels as described below.

Total Compensation and Performance Alignment

The Committee seeks to ensure that the total compensation package paid to executives is considered in the aggregate (i.e., the sum of its parts) and is properly aligned with the Corporation’s performance. The Corporation’s performance is evaluated relative to a number of factors, including corporate and individual performance in light of our own performance targets and industry/peer results, overall financial performance and strategic accomplishments that position the Corporation for success going forward. Performance goals in our incentive plans are positioned at levels that are achievable, but require increased effort on the part of our executive officers and other key associates.

The Committee receives regular updates on the Corporation’s performance relative to performance goals and industry realities.

The Committee will continue to refine its assessment processes and peer groups to ensure its comparisons are appropriate.

Risk Assessment/Mitigation Considerations

As a bank holding company with a Pennsylvania-chartered bank as its principal subsidiary, both of which are subject to significant federal and state regulation and regulatory oversight, the Corporation has always adhered to defined risk guidelines, practices and controls designed to ensure the safety and soundness of the organization. Our management and Board conduct regular reviews of our business to ensure we remain within appropriate regulatory guidelines and appropriate practice, supplemented by our internal audit and compliance function.

Annually, the Committee reviews the Bank’s executive incentive plan and assesses the extent to which the established incentives relate to or influence excessive risk-taking on the part of participating associates. The Committee reviewed the plan in January 2022, including the performance goals driving awards under the plan. The performance goals include measures intended to ensure that participating executives do not engage in activities or behaviors that create undue risk for the Corporation.

The Committee approved a clawback policy in 2016 that requires, to the extent legally permitted, the return, repayment or forfeiture of any annual or long-term incentive compensation payment or award made or granted to any current or former executive officer if the payment or award was based on financial statements filed with the SEC within the prior three (3) years that were subject to a restatement due to noncompliance with the rules and regulations of the SEC or misconduct by an executive officer or other key associates.

Assessing Industry Competitiveness

Based on the information provided by Meridian, as well as national and regional compensation practice survey reports for financial services companies with assets of similar size and scope to the Corporation, the Committee believes the types and levels of compensation provisions included in our executive compensation program are consistent with current features and “best practices” among organizations of similar size, regional geography and type.

Compensation Components and 2021 Decisions

The Corporation’s compensation program consists of four main components: Base Salary, Annual Incentives, Long-Term Incentive/Equity, and Benefits and Perquisites. The following section summarizes the role of each component in the decision-making process, how decisions are made and the resulting 2021 decisions with respect to the named executive officers.

Base Salary

Objective. The Corporation believes the purpose of base salary is to provide competitive and fair base compensation that recognizes the executives’ role, responsibilities, experience and performance. Base salary represents fixed compensation that is targeted to be competitive with the practices of comparable financial institutions in the region.

Typically, the Committee sets base salary for each executive effective in January of each year. Salaries are determined in consideration of the competitive market for similar roles, as well as each individual’s experience, performance and contributions. Input from the Bank’s Chief Executive Officer is considered in setting executive salaries, while the Committee is solely responsible for recommending the Chief Executive Officer’s salary.

Annual opportunities for salary increases may be affected by changes in the market value of the position, but are based primarily on the performance of the individual during the most recent performance period.

2021 and 2022 Decisions. The Committee elected not to approve any base salary adjustments for the Executive Leadership Team during 2020. Base salaries for 2021 are reflected below:

Base Salary Adjustments

Annual Incentives

Objectives and Process. The objective of the Bank’s annual executive incentive plan, adopted on January 29, 2021, is to motivate and reward key members of the Executive Leadership team for achieving specific corporate and individual performance goals that support the Corporation’s strategic plan through the use of cash awards. Awards under this plan represent compensation that must be earned (and re-earned each year) based upon corporate and individual performance.

The proposed corporate performance goals for the incentive plan are developed by the Chief Executive Officer of the Bank based on budget projections and is typically presented by the Chief Executive Officer to the Committee by February of each year. To support and enhance the team dynamics among the executive group, the corporate performance goals are identical for each participant. Each member of the executive group also has personal performance goals that reflect each executive’s unique role and responsibilities. Once the performance goals are finalized and approved by the Committee, the goals are presented to the full Board for final approval.

The annual executive incentive plan provides target payout opportunities that are intended to be consistent with those offered by the Corporation’s peers. The targets and performance measures for the 2021 compensation year are described below. In the event that awards are not triggered in a plan year due to a failure to achieve the threshold goal, the Board may create a pool equal to 3% of the base compensation of plan participants, other than the current Chief Executive Officer of the Bank, and pay awards to such participants in such amounts as the Board deems appropriate to reflect exceptional individual performance, if any.

Pursuant to the provisions of the 2021 Executive Incentive Plan, the Compensation Committee may terminate, modify, or amend this plan. Amendments can include adjustments to award calculations for any significant extraordinary financial items” occurring in any given time period.

Award Opportunity: The table below illustrates the 2021 award opportunities (expressed as a percentage of base salary) available under our annual executive incentive plan upon achievement of the approved Corporate performance metrics.

Trigger/Gate: Prior to the payment of any award under the plan, the Corporation’s external auditors must attest to the financial performance of the Corporation to determine whether the performance measure was achieved. The Bank’s Chief Executive Officer reviews the financial performance generally and in relation to the strategic goals.

Performance Measures: The 2021 performance measures were aligned with the corporate strategy and business plan and included financial performance of the Bank based on pre-tax, pre-provision income, return on equity and efficiency ratio as well as individual goals as determined by the Bank’s Chief Executive Officer. The Committee believed these measures would drive the appropriate focus by the executive team on overall performance of the Corporation.

Weightings for each measure were established by the Committee and approved unanimously in January 2021. The following table summarizes the goals and actual performance in 2021.

⁽¹⁾ The Board directed the 2021 actual performance measures to be adjusted to remove the financial performance benefit of the unbudgeted 2021 round of the Payroll Protection Program (“PPP”) Loans. Fees and net interest income related to this program totaled $2.74 million. Excluding this program, the adjusted performance measures for the purpose of calculating the Executive Incentive Plan payments for 2021 were as follows: Pre-Tax, Pre-Provision Income - $19,509; Return on Equity - 6.47%; Efficiency Ratio - 73.71%.

2021 Awards: For 2021, the weighted performance fell between target and stretch. The following table summarizes the 2021 annual incentive awards paid pursuant to the annual executive incentive plan adopted in January 2021 to the Executive Chair, Chief Executive Officer and the other named executive officers.

Long-Term Incentive/Equity Compensation

Objectives. The granting of equity-based incentives is viewed as a desirable long-term incentive compensation strategy because it closely links the interest of management with shareholder value, aids in associate retention, and motivates executives to improve the long-term stock market performance of our Common Stock.

When granting equity-based incentives to executives, the Committee considers the competitive market practice, corporate performance and individual performance. The Committee also considers the Bank’s Chief Executive Officer’s recommendations for other named executive officers, which are based upon each executive’s level of responsibility and contribution towards achievement of our business plan and objectives. The Committee is authorized, in its discretion, to grant equity-based awards under the Corporation’s existing Corporation’s 2017 Long-Term Incentive Plan (the “2017 Plan”) and upon such terms and conditions as the Committee may determine. Historically, equity-based incentive awards have been granted on an annual basis in the form of stock options and restricted stock.

2021 Award Decisions. In January 2021, the Chief Executive Officer presented recommendations for equity-based long-term incentive awards to executive officers (other than themselves) in the form of restricted stock grants to the Committee. The recommendations were based on an analysis of best practices among our peer group relative to equity awards and guidelines provided by Meridian. On the basis of the recommendations and the guidelines provided by Meridian, the Committee approved equity awards in the form of restricted stock grants to the Bank’s Executive Chairman and Chief Executive Officer and to other key executives, which vest in equal amounts over a three-year period. The 2021 grants awarded to the named executive officers on March 9, 2021 are summarized below and in the Grants of Plan-Based Awards Table on page 45 . All awards were made under the 2017 Plan.

2021 Awards

In total, the Corporation granted 52,763 shares of restricted stock and 15,564 restricted stock units under the 2017 Plan to the Corporation’s executive and other officers in 2021. The 2017 Plan originally reserved 337,385 shares (adjusted for stock dividends) of the Common Stock for issuance, of which 243,482 shares remain available for issuance as of December 31, 2021.

Perquisites and Other Benefits

The Corporation provides select executives perquisites and other benefits described below, which the Committee believes are reasonable and consistent with the Corporation’s overall compensation philosophy. The Committee regularly reviews and refines executive benefits to ensure market competitiveness.

Executive Perquisites. The Corporation provides a limited number of perquisites to key executives that the Committee believes are necessary for conducting business, are reasonable and enable us to attract and retain high performing associates for our key executive officers. These benefits also allow our executives to maintain direct contact and involvement with current and prospective clients, as well as non-profit organizations in the communities in which we do business. The Committee periodically reviews the levels of perquisites and other personal benefits provided to the named executive officers.

The primary perquisites are: corporate owned automobiles for certain executives, club memberships for certain executives and life and disability insurance programs. These perquisites represent a relatively insignificant portion of the total compensation of each named executive officer. The aggregate incremental cost to the Corporation for these perquisites is set forth in the Summary Compensation Table under the “All Other Compensation” column and related notes.

Employment and Change of Control Agreements with Named Executive Officers. The Corporation is party to employment agreement with Mr. Kauffman, President and Chief Executive Officer of the Corporation. The Corporation is party to change of control agreements with Mr. Pickett, Executive Vice President and Chief Financial Officer of the Bank; Ms. Doll, Senior Vice President, Chief Commercial Banking and Lending Officer of the Bank; and Ms. Baker, Executive Vice President, Chief Risk Officer of the Bank. The Board views such agreements as integral in ensuring the continued dedication of the executives to the Corporation and promoting stability of management, particularly in the event of a change of control of the Corporation. These agreements are described further under “Employment Agreements” on page 49 .

Supplemental Long-Term Disability Program. The Corporation provides supplemental long-term disability insurance for Mr. Kauffman, Mr. Pickett, Ms. Baker, Ms. Doll and other key executives. The policy is designed to supplement coverage, in the event of a disability, to bridge the gap between payments under the Corporation’s general short- and long-term disability plans and the executive’s salary.

Employee Stock Bonus Plan. In 2001, the Corporation implemented an Employee Stock Bonus Plan, administered by non-employee members of the Board, under which the Corporation may issue shares of its Common Stock to associates as performance-based compensation. As of December 31, 2021, 21,117 shares of Common Stock were reserved for possible issuance under this plan, subject to future adjustment in the event of specified changes in the Corporation’s capital structure. No shares were issued under the Employee Stock Bonus Plan in 2021.

Codorus Valley Bancorp, Inc. Employee Stock Purchase Plan. The Employee Stock Purchase Plan (“ESPP”) was designed to encourage and enable associates of the Corporation and its subsidiaries to acquire an ownership interest in the Corporation through a regular investment program. The Corporation believes that associates who participate in the ESPP will have a closer identification with the Corporation by virtue of their ability, as shareholders, to participate in the Corporation’s growth and earnings, and will be motivated to improve their job performance accordingly. Under the terms of the ESPP, associates may use payroll deductions to purchase stock of no more than 2,000 shares per year. The purchase price for shares purchased under the ESPP currently represents a 15% discount to the fair market value of the shares on the semi-annual purchase date.

401(k) Retirement Plan. The Bank maintains and sponsors a defined contribution 401(k) retirement plan. The 401(k) plan is administered by a committee, which is appointed by the Board. The 401(k) plan is subject to the Internal Revenue Code of 1986, as amended, and to the regulations promulgated thereunder. Participants are entitled to certain rights and protection under the Employee Retirement Income Security Act of 1974, as amended.

Each Bank associate who has attained the age of 21, and at the time of hire is expected to complete 1,000 hours of service within 12 months of employment, may participate in the 401(k) plan on the first day of the month following the third month of employment, providing he/she remains employed as of that date. An eligible associate may elect to contribute certain portions of salary, wages, or commissions to the 401(k) plan. Generally, eligible associates may contribute up to 100% of their compensation, subject to statutory deductions and limitations. In 2021, the Bank matched 100% of each associate’s contribution up to 4% of the associate’s eligible wages. Associate and employer contributions to the 401(k) plan vest immediately.

Officer Group Term Replacement Insurance Plans. The Bank provides an officers’ life insurance program for certain Bank officers, including each of the named executive officers. This program provides a death benefit to the named executive officer’s beneficiary in an amount equal to three (3) times the officer’s highest base salary during employment up to $1,000,000; provided, the officer is employed by the Corporation at the time of his or her death. Under this program, the Bank is the beneficiary of any death proceeds remaining after an officer’s death benefit is paid to his or her beneficiary. The Committee believes that this benefit helps the Corporation attract and retain talented individuals to the management team. It also believes that it is an appropriate compensation strategy to provide for the continuing lifestyle of the officers’ families in the case of death.

Other Benefits. The named executive officers also participate in the Corporation’s other benefit plans on the same terms as other associates. These plans include medical and dental insurance, short- and long-term disability insurance, and discounts on the Corporation’s products and services.

Impact of Accounting and Tax on the Form of Compensation

The Compensation Committee and management consider the accounting and tax (individual and corporate) consequences of the compensation plans prior to making changes to the plans.

The Committee has considered the impact of Accounting Standards Codification Topic 718, as issued by the FASB, on the Corporation’s use of equity incentives as a key retention tool.

Section 162(m) of the Internal Revenue Code limits the deduction of compensation paid to named executive officers to $1,000,000. Prior to the enactment of the Tax Cuts and Jobs Act (the “Act”) in December 2017, “performance based” compensation was an exception under Code Section 162(m) and thus not subject to the $1,000,000 limit on deductibility. The Act, however, removed the exception under Code Section 162(m) for qualified performance-based compensation with certain limited exceptions. In the Corporation’s case, based on the current compensation of the named executive officers, the Corporation does not believe Section 162(m) will be triggered for our Chief Executive Officer, Chief Financial Officer or the other named executive officers in 2022, but will consider this in future years.

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis that is required by the rules established by the SEC. Based on such review and discussion, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation Committee of the Board of 

Codorus Valley Bancorp, Inc. 

John W. Giambalvo, Esq. (Chair)

Jeffrey R. Hines, P.E. (Vice Chair) 

Brian D. Bruner 

Cynthia A. Dotzel, CPA

J. Rodney Messick

Executive Compensation Tables

The following tables set forth for the fiscal years ending December 31, 2021, 2020, and 2019 the compensation that the Corporation and its subsidiaries paid to its named executive officers.

2021 Summary Compensation Table

The table below reflects information concerning the annual compensation for services in all capacities to the Corporation and its subsidiaries of those persons who were:

ALL OTHER COMPENSATION

CEO PAY RATIO

Pursuant to the mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule requiring annual disclosure of the ratio of the median associate’s annual total compensation to the total compensation of the principal executive officer. This ratio is commonly referred to as the “CEO Pay Ratio.” The Corporation’s CEO is Mr. Kauffman.

The median associate was identified by examining a list of all associates as of November 30, 2021, and applying total (gross) compensation as reported on the 2021 W-2 forms. Upon the identification of the median associate, that individual’s 2021 total compensation was calculated in accordance with the requirements of the Executive Summary Compensation Table on page 41.

The following table sets forth the calculation of the 2021 CEO Pay Ratio:

Grants of Plan-Based Awards Table

The following table presents information concerning awards granted to the named executive officers for 2021 under the annual executive incentive plan and the Corporation’s equity incentive and stock option plans.

Outstanding Equity Awards at Fiscal Year-End Table

The following table presents outstanding stock option and non-vested stock awards as of December 31, 2021.

⁽¹⁾ Includes shares issued under the Corporation’s 2007 Long-Term Incentive Plan and 2017 Long-Term Incentive Plan.

⁽²⁾ As adjusted for stock dividends distributed through December 31, 2019.

⁽³⁾ Based on the closing price of the Common Stock of $21.52 on December 31, 2021.

⁽⁴⁾ 602 shares vest on March 9, 2022. 324 shares vest on December 10, 2022. 601 shares vest on March 9, 2023. 602 shares vest on March 9, 2024.

⁽⁵⁾ 634 shares vest on December 10, 2022. 1,324 shares vest on March 9, 2022 and 2024. 1,325 shares vest on March 9, 2023.

9,338.4 units are performance based and vest on December 31, 2024. 2,075 units vest on November 9, 2022 and 2023. 2,075.6 units vest on November 9, 2024.

⁽⁶⁾ 339 shares vest on December 10, 2022. 636 shares vest on March 9, 2022 and 2024. 637 shares vest on March 9, 2023.

⁽⁷⁾ 339 shares vest on December 10, 2022. 636 shares vest on March 9, 2022 and 2024. 637 shares vest on March 9, 2023.

Option Exercises and Stock Vested

The following table presents a summary of options exercised and stock vested during the year ended December 31, 2021.

⁽¹⁾  Includes shares from reinvested cash dividends received during the vesting period that were subject to the same restrictions as the stock awards.

⁽²⁾ Vested shares are valued at the closing price of the Common Stock on the vesting date.

Non-qualified Deferred Compensation Table

The Corporation maintains non-qualified deferred compensation plans for the benefit of the Executive Leadership Team, including salary continuation plans (“SERPs”) between the Bank and Mr. Miller and Ms. Baker, an Elective Deferred Compensation Plan available to members of the Executive Leadership Team and select other members of the Senior Leadership Team, and a Bank Contribution Deferred Compensation Agreement for Mr. Kauffman. Information regarding these arrangements is summarized in the following narrative and table.

Mr. Miller’s SERP was originally executed on October 1, 1998, and provides for certain payments to Mr. Miller following his normal retirement date and continuing for 240 months. The SERP provided for an annual benefit at normal retirement age (age 60) of $130,433. On December 23, 2008, the SERP was amended to increase the amount of normal retirement benefit at an annual rate of 4% for each month the executive remains employed beyond his normal retirement age, up to a maximum of five (5) years. On May 10, 2016, the SERP was further amended to extend the post-normal retirement age employment period during which the normal retirement benefit would increase at an annual rate of 4% from five (5) years to one hundred two (102) months. Following the impact of these amendments, the annual benefit under the Plan is $182,060. The agreement contains provisions for early retirement, disability benefits, death benefits and payments on specified changes of control. The agreement also contains non-competition provisions that prohibit him from competing with the Corporation or the Bank within fifty (50) miles of the Bank’s registered office for a period of three (3) years following a termination of employment for any reason other than a change of control.

Ms. Baker’s SERP was executed on January 29, 2019 and provides for certain payments to Ms. Baker following her normal retirement age and continuing for 180 months. The SERP provides an annual benefit at normal retirement age (age 63) of $75,000. The agreement contains provisions for early termination, disability benefits, death benefits and payments on specified changes in control. The agreement also contains non-competition provisions that prohibit Ms. Baker from competing with the Corporation or the Bank within fifty (50) miles of the Bank’s registered office for a period of three (3) year following a termination of employment for any reason other than a change of control.

Because payments due under the SERPs vest gradually over a period of time, the SERP serves to encourage longevity with the Corporation and Bank. The Committee believes that it is appropriate to reward long-term executives with benefits that provide for a retirement lifestyle commensurate with that they experienced during their professional careers.

The Elective Deferred Compensation Plan was adopted on February 20, 2019 to provide supplemental retirement benefits to a select group of management or highly compensated associates (“participants”). Participants may elect annually to defer a portion of base salary and/or cash bonus to be held in a deferral account and credited with interest at a rate of 50% of the Bank’s ROE from the immediately preceding calendar year. The plan is unfunded, and provides for distribution of benefits at normal retirement, as well as provisions for early termination, disability, death or specified change of control. Participant accounts are vested immediately; however, the Plan contains provisions related to termination for cause and non-competition. During 2021, Mr. Kauffman, Mr. Pickett, and Ms. Baker were the only named executive officers who participated in the Elective Deferred Compensation plan.

A Bank Contribution Deferred Compensation Agreement was executed on February 21, 2019 between the Bank and Mr. Kauffman. Under the terms of this agreement, the Bank provided an initial contribution to Mr. Kauffman’s deferral account in the amount of $5,034, with additional monthly contributions totaling 15% of total annual base salary, plus interest credited at a rate of 75% of the Bank’s ROE from the immediately preceding calendar year. Mr. Kauffman’s agreement provides for distribution provisions as a result of normal retirement, early termination, disability, death, and specified change of control. The agreement further provides for forfeiture of non-distributed benefit, in the event that Mr. Kauffman would violate the non-competition provisions of his Employment Agreement or of the Bank Contribution Deferred Compensation Agreement.

These deferred compensation arrangements, collectively, are intended to recognize the value of the services provided, as well as encourage continued employment and achievement of corporate objectives.

⁽¹⁾ Reflects the named executive officers’ contributions made to the Elective Deferred Compensation Plan. In 2021, Mr. Miller and Ms. Doll did not participate in the Elective Deferred Compensation Plan.

⁽²⁾ The Corporation’s contributions toward nonqualified deferred compensation for each of the named executive officers are listed in this column.

⁽³⁾ Reflects contributions to the Supplemental Executive Retirement Plans for Ms. Baker. This amount is also reflected on the Summary Compensation Table under the column “Non-Qualified Deferred Compensation Earnings”.

⁽⁴⁾ Reflects the amount credited via the Bank Contribution Deferred Compensation Agreement for Mr. Kauffman. This amount is also reflected on the Summary Compensation Table under “Other Compensation” as noted.

⁽⁵⁾ Reflects interest credited during 2021 to the Elective Deferred Compensation Plan available to all named executive officers, as well as the Bank Contribution Deferred Compensation Agreement established for Mr. Kauffman.

⁽⁶⁾ Reflects the total balance including the named executive officers’ elective deferrals, the Corporation’s contributions, and Aggregate Earnings for plans as outlined above.

Employment Agreements

The Corporation and the Bank have entered into an employment agreement with Mr. Kauffman, the material terms of which are described below.

Craig L. Kauffman, President and Chief Executive Officer of the Corporation and the Bank. On August 6, 2018, the Corporation, the Bank and Mr. Kauffman entered into an employment agreement to be effective as of August 16, 2018. The agreement provides for an initial two (2) year term and will be automatically renewed on August 16 of each year for successive two (2) year terms, unless either the Corporation or Mr. Kauffman gives written notice of non-renewal to the other party at least ninety (90) days prior to August 16 of any year, in which case the agreement will continue in effect for a term ending one (1) year from the annual renewal date immediately following such notice.

Mr. Kauffman may terminate his employment for “good reason” (as defined in the agreement) after notice to the Corporation or the Bank within ninety (90) days after the initial existence of the condition giving rise to the right to terminate and the failure of the Corporation or Bank to cure the situation within thirty (30) days after receipt of such notice.

The agreement provides for a lump sum payment to Mr. Kauffman and certain benefit continuation if his employment is involuntarily terminated without “cause,” as defined in the agreement, or if Mr. Kauffman terminates his employment for “good reason.” The amount of the payment and duration of the benefit continuation varies depending upon whether the termination follows a “change of control,” as defined in the agreement.

Specifically, if Mr. Kauffman’s employment is terminated within two (2) years following a change of control, he will be paid an amount equal to two (2) times the sum of: (A) his then current base salary and (B) the highest cash bonus paid to him with respect to one of the three (3) calendar years preceding the year of termination and his benefits will be continued for two (2) years from the date of termination.

Absent a change of control, if Mr. Kauffman’s employment is terminated more than two (2) years after the date of the agreement, he will be paid an amount equal to one (1) times his current annual base salary and his benefits will be continued for one (1) year from the date of termination.

The agreement provides that the total payments due Mr. Kauffman in connection with a termination of employment following a change of control shall be reduced to avoid the imposition of an excise tax and loss of deductibility under Section 280G of the Code. The agreement also contains provisions intending that any payments to Mr. Kauffman comply with Section 409A of the Code.

Under the agreement, Mr. Kauffman also is subject to confidentiality obligations both during the period of his employment and following any termination of his employment. During the course of his employment with the Corporation and the Bank, and for a period of 12 months following the termination of employment for any reason (whether such termination is voluntary or involuntary), Mr. Kauffman is prohibited from contacting or soliciting or engaging in business with or otherwise providing services to (either directly or indirectly) any of the Bank’s customers, vendors, suppliers and referral sources, nor will he recruit or encourage any associates of the Corporation or the Bank to terminate their relationship with the Corporation or the Bank or to seek employment with another entity. Mr. Kauffman also agreed that, during his employment and for a period of 12 months after his employment terminates for any reason, he will not compete with the Corporation or the Bank, or provide assistance to any person engaged in either banking or lending or financial services or insurance business within a fifty (50) mile radius of any branch banking office of the Bank.

On September 14, 2021, the Corporation, the Bank and Mr. Kauffman entered into Amendment No. 1 to Mr. Kauffman’s employment agreement between the Corporation, the Bank and Mr. Kauffman, dated August 6, 2018 (the “Amendment”), to reflect his appointment as President and Chief Executive Officer of the Corporation. The Amendment sets Mr. Kauffman’s annual base salary at $510,000, increases the initial term of the employment agreement from two (2) to three (3) years and increases the lump sum payment due to Mr. Kauffman if he is terminated other than “for cause” or if Mr. Kauffman terminates his employment for “good reason” within two (2) years following a change in control of the Corporation or the Bank, from two (2) times to three (3) times the sum of his base salary and bonus. The Amendment also increases the period of benefit continuation for Mr. Kauffman in the event of a termination of employment as described above from two (2) years to three (3) years. The Amendment is effective as of October 1, 2021.

Change of Control Agreements

The named executive officers and other associates of the Bank have built the Corporation into the successful enterprise that it is today, and the Compensation Committee believes that it is important to protect them in the event of a change of control. Further, it is the Committee’s belief that the shareholders will be best served if the interests of management are aligned with the interests of the shareholders. Providing change of control benefits should eliminate, or at least reduce, the reluctance of management to pursue potential change of control transactions that may be in the best interests of the Corporation. Relative to the overall value of the Corporation, these potential change of control benefits are relatively minor. The level of change of control benefits are based on industry practices and negotiations with the affected named executive officers and other executive officers.

Change of control benefits for Mr. Kauffman are described above in the section describing his employment agreement. The other named executive officers with an agreement providing for change of control benefits are Ms. Baker, Ms. Doll, and Mr. Pickett, which are described below.

Diane E. Baker, Executive Vice President, Chief Risk Officer; Amy Doll, Senior Vice President, Chief Commercial Banking and Chief Lending Officer and Larry Pickett, Executive Vice President and Chief Financial Officer. On June 23, 2016, the Corporation and the Bank entered into a change of control agreement with each of Ms. Baker and Ms. Doll. On August 9, 2018, the Corporation and the Bank entered into a change of control agreement with Mr. Pickett (each change of control agreement with Ms. Baker, Ms. Doll and Mr. Pickett, a “Change of Control Agreement” and collectively, the “Change of Control Agreements”). Each Change of Control Agreement contains substantially similar terms to those contained in the other Change of Control Agreements.

The terms and condition of the Change of Control Agreements provide that Ms. Baker, Ms. Doll and Mr. Pickett are entitled to receive certain cash compensation and employee benefits in the event that their respective employment is terminated by the Corporation or Bank (or an acquirer or successor thereof) without “good cause,” or, in certain specified circumstances, by Ms. Baker, Ms. Doll or Mr. Pickett, in each case within two (2) years after the occurrence of a “change of control.”

More specifically, the Change of Control Agreements provide that upon a termination pursuant to a “change of control,” Ms. Baker, Ms. Doll, and Mr. Pickett are entitled to be paid cash compensation in an amount equal to one (1) times the sum of his or her highest annual base salary during one of the three immediately preceding calendar years, plus his or her highest cash bonus earned during the same time period. Payment of this cash compensation is to be made in a single lump sum within ten (10) days after the termination of employment. In addition, each would be entitled to continue participation in the Bank’s employee benefit plans for a period of one (1) year; provided that if participation in any health, medical, life insurance or disability plan is barred, the Bank will be required to pay for an individual plan with substantially equivalent coverage.

As used in the agreement, a “change of control” means:

“Good cause” is defined in the Change of Control Agreements to mean: the willful failure to substantially perform his or her duties as an officer of the Corporation or Bank following receipt of written notice of such failure; the willful engaging in misconduct injurious to the Corporation or Bank; dishonesty or gross negligence in the performance of his or her duties; breach of a fiduciary duty involving personal profit; the violation of any law, rule or regulation governing banks or bank officers or any final cease and desist order issued by a bank regulatory authority, any of which materially jeopardizes the business of the Corporation or Bank; or moral turpitude or other conduct which brings public discredit to the Corporation or Bank.

Should Ms. Baker, Ms. Doll or Mr. Pickett terminate his or her employment for any of the following reasons following a change of control of the Corporation or the Bank, he or she will be entitled to receive the benefits payable under their respective Change of Control Agreement: reduction in title or responsibilities or authority which are inconsistent with, or assignment of duties inconsistent with, his or her position; removal from office other than for “good cause”; reassignment to a principal place of employment which is more than twenty-five (25) miles from his or her respective principal place of employment immediately preceding the termination of employment; reduction in annual base salary; failure to provide Ms. Baker, Ms. Doll or Mr. Pickett with benefits as favorable as those enjoyed by he or she prior to the termination of employment; requirement that he or she travel in the performance of his or her duties for a significantly greater period of time than was required of he or she during the year preceding the change of control; or any material breach of the agreement by the Corporation or Bank.

The Change of Control Agreements provide that in the event the amounts and benefits payable to Ms. Baker, Ms. Doll and Mr. Pickett under the Change of Control Agreements resulting from a change of control, when added to all other benefits and amounts which may become payable to them in such a circumstance, are such that they become subject to Section 280G of the Code and, therefore, to the excise tax provisions of Section 4999 of the Code, then the Bank shall reduce the amounts payable to Ms. Baker, Ms. Doll and Mr. Pickett under the Change of Control Agreements so that the amounts payable to each of them under the Change of Control Agreements and any other agreements, plans or programs of the Bank shall be $1.00 less than the amount which would trigger the excise tax under Section 4999 of the Code and corresponding lack of deduction to the Corporation.

Potential Payments upon Termination or Change of Control

The tables below show the value of estimated payments pursuant to the employment agreements and Change of Control Agreements, stock incentive plans and other non-qualified plans described above upon a termination of employment. The payments represent the maximum possible payments under interpretations and assumptions most favorable to the executive officer. All termination events are assumed to occur on December 31, 2021, and termination upon a change of control is assumed to be involuntary. Corporation payments to a terminated executive may be more or less than the amounts contained in the various agreements and plans. In addition, certain amounts currently are vested and, thus, do not represent an increased amount of benefits.

Craig L. Kauffman

Assuming one of the following events had occurred on December 31, 2021, Mr. Kauffman’s payments and benefits had an estimated value as follows: