DEF 14A of Arrow Financial Corp
Filed Apr 24, 2025 · FY20240000717538-25-000039
Class C Nominees (terms expiring in 2028, if elected)
Class C Nominees (terms expiring in 2028, if elected)
Class C Nominees (terms expiring in 2028, if elected)
| | Tenée R. Casaccio, AIA Ms. Casaccio, age 59, was appointed Chair of the Arrow Board of Directors in June 2024 and has been a Director of the Company since 2014; she also served as a Director of the Company's subsidiary banks, GFNB and SNB, now named Arrow Bank, since 2010 and 2022, respectively. Ms. Casaccio has served as President of JMZ Architects and Planners, PC, a nationally certified Women-Owned Business Enterprise located in Glens Falls, New York, since 2009. She earned a Bachelor of Architecture degree from Virginia Tech and holds licenses to practice architecture in New York and several other states. She has been with JMZ since 1993. Ms. Casaccio has significant executive experience and a strong understanding of the New York business climate. | | | James M. Dawsey Mr. Dawsey, age 72, was appointed a Director of the Company in November 2024; he also served as a Director of the Company’s subsidiary banks, SNB and GFNB, now named Arrow Bank, since 2010 and 2022, respectively; and a Director of the Company’s insurance subsidiary Upstate Agency, since 2022. Mr. Dawsey is the President of MLB Construction Services, LLC. He has more than 45 years of experience in construction management and operations oversight. He earned a Bachelor of Civil Engineering degree from Manhattan College and a Master of Arts in Management from the State University of New York, Plattsburgh. Mr. Dawsey holds general contractor licenses in more than 10 states and is a Commonwealth of Massachusetts Construction Supervisor Member. He also sits on the board of directors of Local Union 157 and the Eastern Contractors Association. Mr. Dawsey's ability to ensure financial strength and operational efficiency will provide valuable insight to the Board. |
Class C Nominees (terms expiring in 2028, if elected)
| | Colin L. Read, Ph.D. Dr. Read, age 65, has been a Director of the Company since 2013; he also served as a Director of the Company's subsidiary banks, GFNB and SNB, now named Arrow Bank, since 2010 and 2022, respectively. Dr. Read is a professor of economics and finance in the State University of New York system. He served as Mayor of the City of Plattsburgh, New York in 2016, after three years of service on the Clinton County Legislature. He is President of ESG Analytics Group, has taught money and finance since 1987 and teaches sustainability. He is a published author, with various contributions to print, online and television media, as well as 12 books on global finance. Dr. Read has a Ph.D. in economics from Queen’s University, an MBA from the University of Alaska, a law degree from the University of Connecticut and a master’s degree in Taxation from the University of Tulsa. Dr. Read's expertise in economics and understanding of the Plattsburgh, New York area are key strengths. | | | Philip C. Morris Mr. Morris, age 70, was appointed a Director of the Company in November 2024; he also served as a Director of the Company’s subsidiary banks, SNB and GFNB, now named Arrow Bank, since 2017 and 2022, respectively; and as a Director of the Company's insurance subsidiary, Upstate Agency, since 2022. Mr. Morris is the CEO of Proctors Collaborative, a performing arts center in Schenectady, New York, with regional subsidiaries, TheRep, in downtown Albany, New York and Universal Preservation Hall in downtown Saratoga Springs, New York. Active in the community, Mr. Morris currently serves on the Capital Region Economic Development Council. Mr. Morris brings extensive expertise in cultural facilities and development to the Board. |
Class A Nominee (term expiring in 2026, if elected)
Class A Nominee (term expiring in 2026, if elected)
Class A Nominee (term expiring in 2026, if elected)
| | Daniel J. White Mr. White, age 60, was appointed a Director of the Company and its subsidiary banks, GFNB and SNB, now named Arrow Bank, in November 2024. He is a retired Managing Partner of the KPMG, LLP ("KPMG"), Albany Upstate New York offices. Mr. White also served as a KPMG Securities and Exchange Commission ("SEC") reviewing partner that included work with some of the firm's large community bank clients in the Northeast and Midwest. He is a graduate of Siena College and a licensed CPA in New York state. He has 37 years of diversified experience serving financial services-rated entities, including publicly traded bank holding companies, community banks, foreign-owned banks, thrifts, broker-dealers, mortgage banks, asset-based lenders and commercial paper conduits. Mr. White provides the Board with extensive financial and regulatory expertise, offering valuable insight into risk management and strategic growth. |
Class B Nominee (term expiring in 2027, if elected)
Class B Nominee (term expiring in 2027, if elected)
Class B Nominee (term expiring in 2027, if elected)
| | Kristine D. Duffy, Ed.D. Dr. Duffy, age 59, was appointed a Director of the Company in November 2024; she also served as a Director of the Company’s subsidiary banks, GFNB and SNB, now named Arrow Bank, since 2019 and 2022, respectively; and as a Director of the Company’s insurance subsidiary Upstate Agency, since 2020. Dr. Duffy has served as the seventh President of SUNY Adirondack since 2013, and will retire from that role in July 2025. Before her current position, she served as Vice President of Enrollment Management and Student Services at Onondaga Community College and as Dean of Enrollment Management at Cayuga Community College. Dr. Duffy holds a Doctor of Education in Executive Leadership from St. John Fisher College, a Master of Science in Guidance and Counseling from Russell Sage College and a Bachelor of Science in Business Administration from SUNY Brockport. Dr. Duffy currently serves on the Warren County Economic Development Corporation. With more than 35 years of New York state higher education experience, Dr. Duffy brings personnel, strategic planning and capital fundraising expertise to the Board. |
Continuing Class A Directors (terms expiring in 2026)
Continuing Class A Directors (terms expiring in 2026)
Continuing Class A Directors (terms expiring in 2026)
| | Mark L. Behan Mr. Behan, age 64, was appointed Vice-Chair of the Arrow Board of Directors in June 2024 and has been a Director of the Company since 2017; he also served as a Director of the Company’s subsidiary banks, GFNB and SNB, now named Arrow Bank, since 2015 and 2022, respectively. Mr. Behan founded Behan Communications, Inc. in 1988. Behan Communications, Inc. is a public affairs and strategic communications firm serving national and regional clients and is an adviser to chief executives in major businesses and non-profit organizations in the Capital Region of New York state. Mr. Behan serves as a director or trustee of several nonprofit organizations. Mr. Behan is a graduate of Colgate University. Mr. Behan is also a former newspaper executive with extensive knowledge of the economic, political and community issues of the Capital Region and the Adirondacks of New York state. |
Continuing Class A Directors (terms expiring in 2026)
| | Gregory J. Champion Mr. Champion, age 70, has been a Director of the Company since 2021; he also served as a Director of the Company's subsidiary banks, GFNB and SNB, now named Arrow Bank, since 2018 and 2022, respectively. Mr. Champion is a retired attorney who previously served as Chief Legal Officer for Syncromune, Inc., a privately held clinical stage biopharmaceutical company seeking to develop intra-tumoral immunotherapy treatment for metastatic cancer patients, and prior to that served as the managing member of the Albany, New York office of Bond, Schoeneck & King, PLLC law firm. Mr. Champion has a B.A. from St. Lawrence University and a J.D. (summa cum laude) from Syracuse University College of Law. Mr. Champion brings more than 30 years of legal experience, including advising both privately held and publicly traded companies on corporate governance matters and serving as corporate secretary. |
Continuing Class A Directors (terms expiring in 2026)
| | Elizabeth A. Miller Ms. Miller, age 71, has been a Director of the Company since 2017; she also served as a Director of the Company's subsidiary banks, GFNB and SNB, now named Arrow Bank, since 2015 and 2022, respectively. Ms. Miller is President and Chief Executive Officer of Miller Mechanical Services, Inc. and Miller Industrial Manufacturing in Glens Falls, New York. She is a leading commercial and residential investor in downtown Glens Falls. She holds bachelor’s and master’s degrees from the College of Saint Rose. Ms. Miller has a strong understanding of the community and its business base, particularly local manufacturing. |
Continuing Class B Directors (terms expiring in 2027)
Continuing Class B Directors (terms expiring in 2027)
Continuing Class B Directors (terms expiring in 2027)
| | David S. DeMarco Mr. DeMarco, age 63, has been a Director of the Company since 2023; he also served as a Director of the Company's subsidiary banks, GFNB and SNB, now named Arrow Bank, since 2022 and 2012, respectively. He has been President and Chief Executive Officer of Arrow Financial Corporation and Arrow Bank, formerly GFNB, since 2023. Mr. DeMarco joined the Company in 1987 as a commercial lender and has since served in positions of increasing responsibility within the organization. In 2013, he was named President and CEO of SNB. He earned a bachelor's degree in finance from the University of Texas at Austin. He is a graduate of the Adirondack Regional Chamber of Commerce's Leadership Program and the Stonier Graduate School of Banking. Active in the community, he serves as Chair of the Capital Region Chamber of Commerce Board of Directors and sits on the boards of various non-profits dedicated to healthcare and economic development. Mr. DeMarco brings a strategic vision, industry and community expertise and a commitment to sustainable growth to the Board. |
Continuing Class B Directors (terms expiring in 2027)
| | David G. Kruczlnicki Mr. Kruczlnicki, age 72, has been a Director of the Company since 1989; he also served as a Director of the Company's subsidiary banks, SNB and GFNB, now named Arrow Bank, since 2015 and 2022, respectively. Mr. Kruczlnicki is President of a consulting firm that advises nonprofits on business planning, and teaches at Siena College, Clarkson University Graduate School and UNC/Chapel Hill. He was President and CEO of Glens Falls Hospital, a large regional medical center, from 1989 until his retirement in 2013. Mr. Kruczlnicki received a bachelor’s degree from Siena College and a master’s degree from Rensselaer Polytechnic Institute. He also served on the board of directors of several affiliates of Glens Falls Hospital, numerous other health-related organizations and Pruyn & Company, a local, privately-owned paper company. As a former health care executive, Mr. Kruczlnicki has significant experience overseeing finance and human resources, as well as directorship experience from his service as a director of numerous private and regional organizations. |
Continuing Class B Directors (terms expiring in 2027)
| | Raymond F. O’Conor Mr. O'Conor, age 69, has been a Director of the Company since 2017; he also served as a Director of the Company's subsidiary banks, SNB and GFNB, now named Arrow Bank, since 1996 and 2022, respectively. Mr. O'Conor is CEO of Saratoga County Capital Resource Corporation, a community development agency. He was a Senior Vice President of the Company from 2009 until his retirement in 2012, and also served as President and CEO of SNB from 1995 until his retirement. He is also a published author. Mr. O'Conor has an extensive knowledge of community banking, and more specifically, the Company, as a former member of the executive management team. |
Continuing Class B Directors (terms expiring in 2027)
Director Compensation: The Compensation Committee makes recommendations to the full Board regarding Director compensation. The Board itself, however, is responsible for determining the compensation payable to Directors for their services. Amounts paid for service on the boards of directors of Arrow Bank, formerly GFNB and SNB, prior to its merger with GFNB, are considered by the Board in its periodic review of total Director compensation.
• Director Compensation for 2024
• Director Compensation for 2024 With respect to 2024 Director compensation, at its January 2024 meeting, the Arrow Board of Directors approved the following Director retainer fees for 2024:
• Director Compensation for 2024
| 2024 Director Compensation Table | | | Annual Retainer | Position | | $30,000 | Arrow Director | | $24,000 | GFNB Director | | $12,000 | SNB Director | | $4,000 | Member, Audit Committee | | $2,500 | Member, Compensation Committee | | $2,500 | Member, Governance Committee | | $2,500 | Member, NCIA Board and Wealth Management Committee | | $2,500 | Manager, Upstate Agency, LLC | | $10,000 | Chair, Audit Committee | | $10,000 | Chair, Compensation Committee | | $10,000 | Chair, Governance Committee | | $7,500 | Chair, NCIA Board and Wealth Management Committee | | $5,000 | Chair, Upstate Agency, LLC | | $25,000 | Chair, Arrow Board | | $10,000 | Chair, GFNB Board | | $10,000(1) | Chair, SNB Board | | (1) At the September 2024 meeting, the Arrow Board of Directors eliminated the Annual Retainer for the Chair, SNB Board. | |
• Director Compensation for 2024
Only non-management Directors receive compensation for their services as Directors. Management Directors (those persons who are also officers) receive no additional compensation for their services as Directors. Therefore, Mr. DeMarco, our President and CEO who is also a Director, did not receive Director compensation in 2024, although he was entitled to reimbursement of any expenses incurred in connection with his service as Director. Further, upon his appointment as Chair of the Board and until his retirement, Mr. Owens waived the member fees for each of the committees on which he served. The 2024 quarterly Director payments included a portion of the fees payable in shares of Company common stock in accordance with the Arrow Financial Corporation 2023 Directors' Stock Plan (the "2023 DSP"). In accordance with the 2023 DSP, a portion of the 2024 Directors’ fees, as determined by the Board in its sole discretion, was payable to the Directors in shares of Company common stock, as opposed to cash or any other form of compensation, subject to applicable law and the provisions of the plan. Each Director elected the percentage of their directors’ fees payable in common stock from the portion that would otherwise be payable to the Director. With respect to director compensation payable in 2024, Directors Dake, Dawsey and Miller elected to increase the portion of their fees payable in shares of the Company's common stock such that 100% of their fees would be payable in shares of the Company's common stock.
2024 Director Compensation Table
2024 Director Compensation Table The following Director Compensation Table summarizes all compensation paid by the Company, Arrow Bank and, prior to its merger with GFNB, SNB, to the non-management Directors of the Company for the fiscal year ended December 31, 2024. Management Directors (who, in 2024, consisted solely of Mr. DeMarco) do not receive any compensation for service as Directors of the Company or its subsidiaries. Compensation received in 2024 by Mr. DeMarco is reported in the “Summary Compensation Table” within the Executive Compensation section.
2024 Director Compensation Table
| Director | Fees Earned or Paid in Cash (a) | Stock Awards (b) | Restricted Stock Awards (c) | Dividends Paid on Unvested Restricted Stock Awards | Change in Pension Value/ Nonqualified Deferred Compensation Earnings | All Other Compensation | 2024 Director Compensation Total | | Mark L. Behan | $37,063 | $37,062 | $10,415 | $227 | $— | $— | $84,767 | | Tenée R. Casaccio | 48,413 | 46,337 | 10,415 | 227 | — | — | 105,392 | | Gregory J. Champion | 36,250 | 36,250 | 10,415 | 227 | — | — | 83,142 | | Gary C. Dake | — | 78,500 | 10,415 | 227 | — | — | 89,142 | | James M. Dawsey (e) | — | 41,000 | 5,208 | 113 | — | — | 46,321 | | Kristine M. Duffy (e) | 21,750 | 21,750 | 5,208 | 113 | — | — | 48,821 | | David G. Kruczlnicki | 40,000 | 40,000 | 10,415 | 227 | — | 1,170(d) | 91,812 | | Elizabeth A. Miller | — | 72,500 | 10,415 | 227 | — | — | 83,142 | | Philip C. Morris (e) | 20,500 | 20,500 | 5,208 | 113 | — | — | 46,321 | | Raymond F. O'Conor | 36,959 | 36,959 | 10,415 | 227 | — | — | 84,560 | | William L. Owens (f) | 25,250 | 25,250 | 10,415 | — | — | — | 60,915 | | Colin L. Read | 39,250 | 39,250 | 10,415 | 227 | — | — | 89,142 | | Daniel J. White (g) | — | — | — | — | — | — | — |
2024 Director Compensation Table
(a)Represents the cash portion of the Basic Annual Retainer and fees relating to service on Boards and Committees. (b)Represents that portion of each listed Director’s total 2024 Directors’ fees that were paid in shares of Company stock, in accordance with the 2023 DSP. For purposes of determining the number of shares of the Company’s common stock distributable to these Directors, the shares are valued at the market price of the Company’s common stock on the date of distribution, in accordance with FASB ASC TOPIC 718. In 2024, the Directors received, as payment of that portion of their basic annual retainer fee regularly payable in such year, shares of Company stock and a quarterly distribution of shares at a per share price based on the closing price of Company stock on the date of distribution. As of December 31, 2024, no non-employee Directors held any unvested stock awards under the DSP. (c)Restricted stock awards granted to Directors are valued in accordance with FASB ASC TOPIC 718. The restricted stock awards were granted May 29, 2024. The restricted stock vests ratably over a period of four years following the date of grant. As of December 31, 2024, each non-employee Director held the following number of unvested restricted stock awards: Behan 412, Casaccio 412, Champion 412, Dake 412, Dawsey 206, Duffy 206, Kruczlnicki 412, Miller 412, Morris 206, O'Conor 412, Read 412 and White 0. As of December 31, 2024, each non-employee Director held the following aggregate number of unexercised stock options (whether vested or not vested): Behan 6,665, Casaccio 7,896, Champion 2,637, Dake 6,701, Dawsey 1,591, Duffy 1,591, Kruczlnicki 4,910, Miller 6,439, Morris 1,591, O'Conor 4,310, Owens 6,395, Read 7,011 and White 0. (d)Represents interest earned by the listed Director during 2024 on the principal balance of the Director’s account under the Directors’ Deferred Compensation Plan. (e)Since Directors Dawsey, Duffy and Morris were appointed to the Arrow Board in November 2024, each of these Directors' compensation is reflective of their respective term of service as a Director of GFNB and SNB. (f)Mr. Owens retired in June 2024 and his 2024 Director compensation is reflective of the term of his service as a Director. (g)As Director White was appointed to the Board in November 2024, he did not receive any Director compensation in 2024.
Short-Term Incentive Plan ("STIP")
Short-Term Incentive Plan ("STIP") Our STIP is based on a comprehensive quantitative and qualitative assessment of both Company and individual performance. In setting annual goals under the STIP, the Compensation Committee considers multiple inputs, including but not limited to: specific financial goals, trend analysis regarding our financial performance, general business and economic outlook and individual goals and objectives. The Compensation Committee, in its sole discretion, will determine, on a case-by-case basis, whether an NEO will receive a bonus award for the year and, if so, the amount of this bonus. The Compensation Committee meets at the beginning of each year to determine the STIP awards for the previous year when the Company’s final year-end performance is known.
2022 LTIP
2022 LTIP The 2022 LTIP aligns the interests of our NEOs with those of our shareholders and foster a long-term performance orientation. The LTIP allows for grants of various types of equity awards, such as restricted stock, restricted stock units and stock options. The Company’s annual stock awards are typically granted shortly after the close of the Company’s fiscal year, and generally vest is equal increments over a four year period.
Peer Group Considerations
Peer Group Considerations Executive Leadership uses peer group data as a point of reference to provide a competitive level of total compensation to our executive team. We do not target our compensation levels solely based on peer group data. The starting point for our peer group analysis is the New York Bankers Association ("NYBA") Pearl Meyer Survey Report, supplemented by additional data from appropriate peers based on comparable attributes such as size, product offerings and geographical location. Our compensation benchmarking process resulted in the following combined peer group:
Peer Group Considerations
| Bar Harbor Bank & Trust Brookline Bancorp Canandaigua National Corporation Camden National Corporation Chemung Financial Corporation Columbia Bank (NJ) ConnectOne Bancorp, Inc. | Eastern Bank Five Star Bancorp HarborOne Bank Kearny Bank NBT Bank, NA. Needham Bank Northwest Bankshares Inc. | OceanFirst Bank Pathfinder Bancorp, Inc. PeoplesBank The Washington Trust Company Trustco Bank Corp. NY Tompkins Financial Corporation |
Peer Group Considerations
Periodically, we commission an independent outside consulting firm to conduct a comprehensive review of the Company’s executive compensation program. These periodic reviews provide an independent and objective analysis of all elements of compensation, individually and in aggregate, relative to market and peer group practices.
STIP Award Decisions
STIP Award Decisions The Compensation Committee receives input from the CEO for the assessment of the other NEOs performance, which is primarily based on execution of the Company's strategic plan. Similarly, the Compensation Committee determines the STIP for the CEO based on the Company's execution of its strategic plan and the CEO's overall leadership performance. The Compensation Committee sets goals that will result in bonus awards based on the financial performance of the Company. The chart below reflects each individual's target STIP opportunity. The maximum opportunity is 150% of target.
STIP Award Decisions
| Named Executive Officer | Base Salary | Target STIP % | Threshold STIP Payout Opportunity | Target STIP Amount | Maximum STIP Payout Opportunity | | David S. DeMarco | $695,000 | 50% | $173,750 | $347,500 | $431,250 | | Penko Ivanov | $410,000 | 40% | $82,000 | $164,000 | $234,000 | | David D. Kaiser | $365,000 | 40% | $73,000 | $146,000 | $210,000 | | Andrew J. Wise | $365,000 | 40% | $73,000 | $146,000 | $210,000 | | Marc J. Yrsha | $325,000 | 40% | $65,000 | $130,000 | $120,250 |
STIP Award Decisions
The following tabular list shows the most important financial performance measures and goal weighting for 2024.
STIP Award Decisions
| Company Performance Measure | Target Weight (% of Financial Goals Only) | Target Goal | Actual Achieved(1) | Actual Result | | Earnings Per Share (EPS) | 80% | $2.35 | $2.05 | Between Threshold & Target | | Tangible Book Value (TBV) Growth | 5% | 6.50% | 6.52% | Between Target & Maximum | | Return on Assets (ROA) | 5% | 0.95% | 0.81% | Between Threshold & Target | | Non-Performing Loans | 5% | 0.50% | 0.62% | Between Threshold & Target | | Net Charge-Offs | 5% | 0.15% | 0.06% | Maximum |
STIP Award Decisions
(1) Actual performance measures achieved have been adjusted for non-core financial items that were approved by the Board of Directors and the Compensation Committee, as disclosed in the Company's fourth quarter investor deck filed as an attachment to the Current Report on Form 8-K filed January 30, 2025. The following table shows the 2024 STIP award payments that were made in February 2025, which were determined in the sole discretion of the Compensation Committee.
STIP Award Decisions
| Named Executive Officer | 2024 Annual Incentive Actual Awards | | | | Amount | % of Base Target | | David S. DeMarco | $312,750 | 90.0% | | Penko Ivanov | $151,700 | 92.5% | | David D. Kaiser | $135,050 | 92.5% | | Andrew J. Wise | $135,050 | 92.5% | | Marc J. Yrsha | $120,250 | 92.5% |
LTIP Award Decisions
LTIP Award Decisions At its February 2024 meeting, the Compensation Committee awarded restricted stock to our NEOs which vest 25% per year over a four year period:
LTIP Award Decisions
| Named Executive Officer | Restricted Stock Awards in May 2024 (# shares) | Grant Date Fair Value of May 2024 Restricted Stock Awards | | David S. DeMarco | 4,111 | $103,926 | | Penko Ivanov | 1,713 | $43,305 | | David D. Kaiser | 2,056 | $51,976 | | Andrew J. Wise | 2,056 | $51,976 | | Marc J. Yrsha | 1,439 | $36,378 |
LTIP Award Decisions
In early 2025, the Compensation Committee approved the following restricted stock awards to our NEOs:
LTIP Award Decisions
| Named Executive Officer | Restricted Stock Awards in January 2025 (# shares) | Grant Date Fair Value of January 2025 Restricted Stock Awards | | David S. DeMarco | 8,798 | $243,265 | | Penko Ivanov | 3,708 | $102,526 | | David D. Kaiser | 3,301 | $91,273 | | Andrew J. Wise | 3,301 | $91,273 | | Marc J. Yrsha | 2,939 | $81,263 |
Executive Compensation
| Name and Principal Position | Year | Salary | Bonus (a) | Restricted Stock Awards (b) | Option Awards (c) | | Non-Equity Incentive Plan Compensation (d) | Change in Pension Value and Non-qualified Deferred Compensation Earnings (e) | All Other Compen- sation (f) | Total | | David S. DeMarco, Senior Executive Vice President and CEO | 2024 | $695,000 | — | $103,926 | | — | $312,750 | $96,736 | $25,274 | $1,233,686 | | | 2023 | 502,308 | — | — | 40,100 | | 215,625 | 151,195 | 34,304 | 943,532 | | | 2022 | 395,000 | — | — | 38,250 | | 176,557 | 98,377 | 34,005 | 742,189 | | Penko Ivanov, Senior Executive Vice President, CFO, Treasurer and CAO | 2024 | 410,000 | — | 43,305 | — | | 151,700 | 11,329 | 43,487 | 659,821 | | | 2023 | 310,154 | 40,000 | — | — | | 97,500 | — | 21,678 | 469,332 | | David D. Kaiser, Senior Executive Vice President and CCO | 2024 | 365,000 | — | 51,976 | — | | 135,050 | 46,984 | 35,935 | 634,945 | | | 2023 | 336,538 | — | — | 40,100 | | 105,000 | 108,509 | 34,489 | 624,636 | | | 2022 | 325,000 | — | — | 38,250 | | 145,268 | 71,538 | 32,769 | 612,825 | | Andrew J. Wise, Senior Executive Vice President and CRO (g) | 2024 | 365,000 | — | 51,976 | — | | 135,050 | 24,759 | 48,344 | 625,129 | | | 2023 | 336,538 | — | — | 40,100 | | 105,000 | 47,382 | 41,458 | 570,478 | | | 2022 | 325,000 | — | — | 38,250 | | 145,268 | 21,388 | 40,358 | 570,264 | | Marc J. Yrsha, Senior Executive Vice President and CBO | 2024 | 325,000 | — | 36,378 | — | | 120,250 | 10,126 | 45,437 | 537,191 |
Executive Compensation
(a) Mr. Ivanov received a sign-on bonus of $40,000 after 90 days of employment. (b) This column sets forth the grant date fair value of the restricted stock granted under the Company’s 2022 LTIP for each of the listed years, calculated in accordance with FASB ASC TOPIC 718 using the assumptions referred to in the Company's financial statements, footnotes to financial statements and Management's Discussions and Analysis in the Company's Form 10-K for the year ended December 31, 2024. The estimated value of each share of restricted stock granted in 2024 under the 2022 LTIP was $25.28, the closing price of our common stock on the date of the grant. (c) This column sets forth the grant date fair value of option awards granted under the Company’s compensatory stock plans for each of the listed years, calculated in accordance with FASB ASC TOPIC 718 using the assumptions referred in the Company's financial statements, footnotes to financial statements and Management's Discussions and Analysis in the Company's Form 10-K for the year ended December 31, 2024. The grant date fair value of each stock option granted under the 2022 LTIP, in each case using the Black-Scholes model to estimate fair value, was $7.65 per option share in 2022 (all grants were made January 26, 2022) and $8.02 per option share in 2023 (all grants were made February 1, 2023). All such stock options vest ratably in equal installments over the first four anniversaries following the date of grant. (d) This column sets forth the STIP payments made for each of the listed years, based on the financial performance of the Company, strategic Company results and individual performance factors during that year, as applicable. STIP amounts payable for a given year are generally paid in February of the succeeding year. (e) This column sets forth the actuarial increase during each of the listed years in the present value of the retirement benefits under qualified pension plans and nonqualified deferred compensation plans established by the Company that cover such NEO, determined using interest rate, mortality rate and other assumptions consistent with those used in the Company’s financial statements. The net increase (decrease) in the present value of retirement benefits reported for each of the NEOs for 2024 includes (i) under the Company’s Employees’ Pension Plan (“Pension Plan”), $318,761 for Mr. DeMarco, $11,329 for Mr. Ivanov, $137,374 for Mr. Kaiser, $56,036 for Mr. Wise and $10,126 for Mr. Yrsha and (ii) under the Company's SERP, $(222,025) for Mr. DeMarco, $(90,390) for Mr. Kaiser and $(31,277) for Mr. Wise. (f) All Other Compensation includes the following components for 2024:
Executive Compensation
| Name | Company Contribution to ESOP | Life Insurance & Long Term Disability Premiums Paid by Company for Benefit of NEO | Dollar Value of Discount in Share Price for Company Common Stock Purchased Under Employees' Stock Purchase Plan | Perquisites Received Greater than $10,000 (1) | Dividends Paid on Unvested Restricted Stock Awards | Total Other Compensation | | David S. DeMarco | $20,700 | $1,146 | $1,167 | $— | $2,261 | $25,274 | | Penko K. Ivanov | 17,977 | 2,159 | 940 | 21,469 | 942 | 43,487 | | David D. Kaiser | 20,700 | 1,146 | 61 | 12,897 | 1,131 | 35,935 | | Andrew J. Wise | 20,700 | 1,146 | 1,222 | 24,145 | 1,131 | 48,344 | | Marc J. Yrsha | 20,700 | 477 | 500 | 22,969 | 791 | 45,437 |
Executive Compensation
(1)Each of our NEOs received both a country club membership and personal use of a Company vehicle. (g) Mr. Wise served as the COO of the Company until his appointment on February 1, 2024 as the CRO. Grants of Plan-Based Awards Table: As noted in the Compensation Discussion and Analysis, the Company may award officers and key employees with both an annual STIP and an LTIP award to attract and retain such individuals and to motivate them to improve the Company’s short- and long-term performance, respectively. The STIP bonus payable to covered individuals, including NEOs, is based on a comprehensive quantitative and qualitative assessment of both Company and individual performance. Because the STIP bonus payment is discretionary, no NEO has a contractual right to a bonus under the STIP for any given year. The Company’s 2022 LTIP (and its predecessors) authorizes the granting of stock-based awards as a long-term incentive component within the overall compensation program.
Executive Compensation
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan | | | Estimated Future Payouts Under Equity Incentive Plan | | | All Other Stock Awards: Number of Shares of Stock or Units | All Other Share Awards: Number of Securities Underlying Restricted Stock Awards | Grant Date Fair Value of Restricted Stock | | | | Threshold (a) | Target | Max | Threshold | Target | Max | | | | | David S. DeMarco | | $173,750 | $347,500 | $521,250 | — | — | — | — | — | — | | | 5/29/2024 | | | | | | | 4,111 | 4,111 | $103,926 | | Penko Ivanov | | 82,000 | 164,000 | 246,000 | — | — | — | — | — | — | | | 5/29/2024 | | | | | | | 1,713 | 1,713 | 43,305 | | David D. Kaiser | | 73,000 | 146,000 | 219,000 | — | — | — | — | — | — | | | 5/29/2024 | | | | | | | 2,056 | 2,056 | 51,976 | | Andrew J. Wise | | 73,000 | 146,000 | 219,000 | — | — | — | — | — | — | | | 5/29/2024 | | | | | | | 2,056 | 2,056 | 51,976 | | Marc J. Yrsha | | 70,000 | 130,000 | 210,000 | — | — | — | — | — | — | | | 5/29/2024 | | | | | | | 1,439 | 1,439 | 36,378 |
Executive Compensation
(a)The threshold incentive award to any covered person under the STIP, including an NEO, is not the minimum bonus payment such person may receive under the STIP. The Compensation Committee may choose to pay a bonus under the STIP to any covered person, including an NEO, that is less than their threshold incentive award, or not to pay such person any bonus under the STIP, even if applicable performance thresholds or targets have been met by the Company and/or such person for the year in question. Outstanding Equity Awards at Fiscal Year-End Table: The following table shows all outstanding stock-based awards held by each NEO as of December 31, 2024. Such awards consist of stock options to acquire the Company’s common stock and shares of restricted stock granted under the Company’s 2022 LTIP (or predecessor plans).
Executive Compensation
| Name | Securities Underlying Unexercised Options (Exercisable) | Securities Underlying Unexercised Options (Unexer- cisable) (a) | Equity Incentive Plan Awards: Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | Number of shares or units of stock that have Not Vested (a) | Market Value of shares or units of stock that have Not Vested (a) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | David S. DeMarco | 6,150 | — | — | $30.26 | 1/25/2027 | — | — | — | — | | | 5,970 | — | — | $27.47 | 1/31/2028 | — | — | — | — | | | 5,796 | — | — | $27.35 | 1/30/2029 | — | — | — | — | | | 5,627 | — | — | $31.34 | 1/29/2030 | — | — | — | — | | | 4,098 | 1,366 | — | $27.04 | 1/27/2031 | — | — | — | — | | | 2,653 | 2,652 | — | $33.78 | 1/26/2032 | — | — | — | — | | | 1,287 | 3,863 | — | $31.47 | 2/1/2033 | — | — | — | — | | | — | — | — | — | — | 4,111 | 118,027 | — | — | | Penko Ivanov | — | — | — | — | — | 1,713 | 49,180 | — | — | | David D. Kaiser | 6,150 | — | — | $30.26 | 1/25/2027 | — | — | — | — | | | 5,971 | — | — | $27.47 | 1/31/2028 | — | — | — | — | | | 5,797 | — | — | $27.35 | 1/30/2029 | — | — | — | — | | | 5,627 | — | — | $31.34 | 1/29/2030 | — | — | — | — | | | 4,098 | 1,366 | — | $27.04 | 1/27/2031 | — | — | — | — | | | 2,653 | 2,652 | — | $33.78 | 1/26/2032 | — | — | — | — | | | 1,287 | 3,863 | — | $31.47 | 2/1/2033 | — | — | — | — | | | — | — | — | — | — | 2,056 | 59,028 | — | — | | Andrew J. Wise | 614 | — | — | $30.26 | 1/25/2027 | — | — | — | — | | | — | — | — | $27.35 | 1/30/2029 | — | — | — | — | | | 5,628 | — | — | $31.34 | 1/29/2030 | — | — | — | — | | | 2,116 | 1,367 | — | $27.04 | 1/27/2031 | — | — | — | — | | | 2,652 | 2,652 | — | $33.78 | 1/26/2032 | — | — | — | — | | | 1,287 | 3,863 | — | $31.47 | 2/1/2033 | — | — | — | — | | | — | — | — | — | — | 2,056 | 59,028 | — | — | | Marc J. Yrsha | 845 | — | — | $31.34 | 1/29/2030 | — | — | — | — | | | 819 | 274 | — | $27.04 | 1/27/2031 | — | — | — | — | | | 1,061 | 1,061 | — | $33.78 | 1/26/2032 | — | — | — | — | | | 773 | 2,317 | — | $31.47 | 2/1/2033 | — | — | — | — | | | — | — | — | — | — | 1,439 | 41,314 | — | — |
Executive Compensation
(a)Stock options and restricted stock granted to employees vest ratably in equal installments over the first four anniversaries following the date of the grant. Option Exercises and Stock Vested Table: The following table sets forth information regarding stock option exercises and shares vested for each NEO during 2024:
Executive Compensation
| Name | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting (a) | Value Realized on Vesting (b) | | David S. DeMarco | — | — | — | — | | Penko Ivanov | — | — | — | — | | David D. Kaiser | — | — | — | — | | Andrew J. Wise | 5,953(c) | $28,594 | — | — | | Marc J. Yrsha | — | — | — | — |
Executive Compensation
a.Represents the total number of shares of restricted stock that vested during the year. b.Represents the “spread” of options on the date of exercise, i.e., the difference between the dollar value of the shares of common stock for which options were exercised, based on the closing price of the Company's common stock on the date of exercise and the exercise price (purchase price) of such shares under the options. c.Represents the gross number of options exercised, the actual number of shares received was net of shares surrendered to pay the exercise price. Pension Benefits and Table: The Company maintains a qualified retirement plan for eligible employees who have attained the age of 18, completed one year of service and work a minimum of 1,000 hours per calendar year. Eligible compensation under the retirement plan includes salary, overtime, sick pay, bonuses and other cash and non-cash benefits. Participants in the retirement plan with 25 years of service may retire at any age, participants with 10 years of service may retire at or after age 55, and participants with five years of service may retire at or after age 65. For early retirement prior to age 65, annuity payments, if elected, would be reduced by 0.25% for each month the participant elects to retire before age 65. Participants who are eligible to retire may not commence receipt of their benefit prior to age 55, unless the lump sum present value of the accrued benefit does not exceed $50,000. The Company maintains an unfunded, non-qualified SERP, in part for the benefit of NEOs, as determined by the Compensation Committee on a case-by-case basis. The SERP contains both a qualified retirement plan “makeup” benefit feature and a special additional SERP benefit feature. For those NEOs who qualify and are selected to participate in the “makeup” benefit feature, the award provides enhanced installment payments post-retirement that are designed to give the NEO the overall level of retirement payments they would have received under the qualified retirement plan alone if there were no limitations on compensation for high-paid personnel under the Internal Revenue Code. Under the additional SERP benefit feature, the Compensation Committee is authorized to grant to selected executive officers additional payments upon their retirement, beyond their SERP “make-up” benefit payments. Such additional payments are also typically structured as post-retirement installment payments, the amounts of which are determined on a case-by-case basis by the Compensation Committee at or before the time of retirement. Messrs. DeMarco, Kaiser, Wise, Ivanov and Yrsha participate in the “make-up” benefit feature of the SERP. In 2024, none of the NEOs, participated in the special additional benefit feature of the SERP. Effective December 31, 2024, the retirement plan was amended to increase the account balances for certain NEOs by their SERP balances at the time of amendment. This will provide for more favorable tax treatment to the recipients as well as provide additional payment options upon retirement. The following table sets forth the present value of accumulated benefits under both the qualified and non-qualified retirement plans of the Company payable to each NEO as of December 31, 2024, and the number of years of service credited to them under the plans. The present value was determined using interest rate and mortality rate assumptions consistent with those described in Note 13 in Item 8 of the Company’s consolidated financial statements as of and for the fiscal year ended December 31, 2024, as included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Executive Compensation
| Name | Plan Name | Years of Credited Service | Value of Accumulated Benefit as of 12/31/24 (2) | Payments During Last Fiscal Year | | David S. DeMarco | Retirement Plan | 37.08 | 1,141,715 | — | | | SERP (1) | 12.00 | — | — | | Penko Ivanov | Retirement Plan | 1.00 | 11,329 | — | | | SERP (1) | 1.00 | — | — | | David D. Kaiser | Retirement Plan | 24.00 | 747,189 | — | | | SERP (1) | 8.00 | — | — | | Andrew J. Wise | Retirement Plan | 8.00 | 169,277 | — | | | SERP (1) | 6.00 | — | — | | Marc J. Yrsha | Retirement Plan | 9.00 | 90,982 | — | | | SERP | 1.00 | — | — |
Executive Compensation
(1) SERP account balance transferred to Retirement Plan balance in chart. (2) The increase in present value of retirement benefits reported for each of the Named Executive Officers for 2024 includes the Company's contribution. Nonqualified Deferred Compensation: The Company has an Executive Officer Deferred Compensation Plan under which an executive officer may elect on a year-to-year basis to defer until retirement all or a portion of his salary or bonus payments otherwise payable to them during and for such year. Amounts deferred earn interest at a rate equal to the highest rate currently paid on individual retirement accounts by Arrow Bank. None of the NEOs elected to defer under the plan in or for 2024 or the prior two years. Pay Ratio Disclosure: As of December 31, 2023, the date we selected to identify our median employee, our total employee population, excluding Mr. DeMarco, consisted of 539 employees who were all located in the United States. To identify the median compensated employee, we used Box 5 of Form W-2 compensation for the full year 2023 for all such employees, annualizing compensation for those employees hired during 2023. As of December 31, 2024, our total employee population, excluding Mr. DeMarco, consisted of 556 employees who were all located in the United States. We used the same median employee as was used for 2023 as there have been no material changes in our employee population or employee compensation arrangements that we believe would result in a significant change to the pay ratio. The 2024 annual total compensation of our median employee was $57,067. Mr. DeMarco's total annual compensation as reported in the Summary Compensation Table for 2024 was $1,233,686; the ratio of these amounts was 22:1.
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive “compensation actually paid” (“CAP”) and certain Company performance for the fiscal years listed below. You should refer to the Compensation Discussion and Analysis ("CD&A") for a complete description of how executive compensation relates to Company performance and how the Compensation Committee makes its decisions.
Pay Versus Performance Table
Pay Versus Performance Table The following table provides the information required for our NEOs and Principal Executive Officer ("PEO") for each of the fiscal years ended December 31, 2024, December 31, 2023, December 31, 2022, December 31, 2021, and December 31, 2020 along with the financial information required to be disclosed for each fiscal year:
Pay Versus Performance Table
| | | | | | | | Year-end value of $100 invested on December 31, 2019 in: | | | | | Year | Summary Compensation Table Total for PEO (Murphy) | Compensation Actually Paid to PEO (Murphy) | Summary Compensation Table Total for PEO (DeMarco) | Compensation Actually Paid to PEO (DeMarco) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | Arrow Financial Corporation | ABA NASDAQ Community Bank Index (TR) | Net Income (in millions) | Earning Per Share | | | (1) | (1)(2)(3)(4) | (1) | (1)(2)(3)(4) | (5) | (2)(3)(4)(5) | | | | (6) | | 2024 | N/A | N/A | $1,233,686 | $1,230,215 | $614,197 | $614,702 | $103.22 | $108.39 | $29.70 | $1.77 | | 2023 | $1,662,004 | $692,271 | $943,532 | $811,730 | $541,482 | $480,734 | $96.33 | $97.22 | $30.10 | $1.77 | | 2022 | $1,742,204 | $1,922,576 | N/A | N/A | $584,089 | $562,080 | $107.97 | $102.65 | $48.80 | $2.87 | | 2021 | $2,146,089 | $2,013,535 | N/A | N/A | $557,166 | $601,047 | $105.51 | $113.25 | $49.90 | $2.93 | | 2020 | $1,692,259 | $1,430,452 | N/A | N/A | $481,414 | $436,109 | $84.42 | $85.57 | $40.80 | $2.42 |
Pay Versus Performance Table
(1) The PEO in each reporting years 2020 through 2023 was Thomas J. Murphy, who was an executive officer until May 12, 2023. The PEO in the reporting year 2024 was David S. DeMarco, our current PEO. (2) Subtractions from, and additions to, total compensation in the Summary Compensation table by year to calculate CAP include:
Pay Versus Performance Table
| | | 2024 | | 2023 | | | 2022 | | 2021 | | 2020 | | | | | PEO (DeMarco) | Average Non-CEO NEOs | PEO (Murphy) | PEO (DeMarco) | Average of Other Non-PEO NEOs | PEO | Average of Other Non-PEO NEOs | PEO | Average of Other Non-PEO NEOs | PEO | Average of Other Non-PEO NEOs | | Total Compensation from from Summary Compensation Table | | $1,233,686 | $614,197 | $1,662,004 | $943,532 | $541,482 | $1,742,204 | $584,089 | $2,146,089 | $557,166 | $1,692,259 | $481,414 | | Adjustments for Pension | | | | | | | | | | | | | | | Adjustment Summary Compensation Table Pension | $(96,736) | $(23,300) | $(1,031,417) | $(151,195) | $(51,964) | $(470,237) | $(52,579) | $(908,942) | $(46,099) | $(614,685) | $(49,985) | | | Amount added for current year service cost | $87,095 | $22,704 | $530,040 | $65,438 | $24,772 | $595,215 | $33,255 | $571,465 | $31,163 | $482,936 | $29,857 | | Total Adjustments for Pension | | $(9,641) | $(595) | $(501,377) | $(85,757) | $(27,192) | $124,978 | $(19,324) | $(337,477) | $(14,936) | $(131,749) | $(20,128) | | Adjustments for Equity Awards | | | | | | | | | | | | | | | Adjustment for grant date values in the Summary Compensation Table | $(103,926) | $(45,909) | $(242,704) | $(40,100) | $(26,733) | $(226,485) | $(38,251) | $(187,798) | $(24,251) | $(184,917) | $(24,950) | | | Year-end fair value of unvested awards granted in the current year | $118,027 | $52,137 | $— | $32,551 | $21,701 | $230,583 | $32,940 | $279,970 | $54,023 | $173,356 | $27,724 | | | Year-over-year difference of year-end fair values and vest date fair values for awards granted in prior years | $(5,821) | $(3,475) | $— | $(35,652) | $(25,412) | $38,559 | $18,756 | $106,511 | $29,766 | $(110,642) | $(21,395) | | | Fair values at vest date for awards granted and vested in current year | $— | $— | $99,539 | $— | $— | $— | $— | $— | $— | $— | $— | | | Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years | $(4,372) | $(2,652) | $(159,079) | $(2,844) | $(3,112) | $(986) | $1,098 | $(6,543) | $(721) | $(18,867) | $(6,556) | | | Forfeitures during current year equal to prior year-end fair value | $— | $— | $(169,874) | $— | $— | $— | $(17,228) | $— | $— | $— | $— | | | Dividends or dividend equivalents not otherwise included in total compensation | $2,261 | $999 | $3,762 | $— | $— | $13,723 | $— | $12,783 | $— | $11,012 | $— | | Total Adjustments for Equity Awards | | $6,169 | $1,101 | $(468,356) | $(46,045) | $(33,557) | $55,394 | $(2,685) | $204,923 | $58,817 | $(130,058) | $(25,177) | | Compensation Actually Paid (as calculated) | | $1,230,215 | $614,702 | $692,271 | $811,730 | $480,734 | $1,922,576 | $562,080 | $2,013,535 | $601,047 | $1,430,452 | $436,109 |
Pay Versus Performance Table
(3) The following table illustrates the valuation assumptions used for stock option awards included as part of CAP: •Expected life of each stock option is based on the "simplified method" using an average of the remaining vest and remaining term, as of the vest/fiscal year end ("FYE"). •Number of options and exercise price are valued as of FYE 2024 point-in-time. •Risk-free-rate is based on the Treasury Constant Maturity rate closest to the remaining expected life as of the vest/FYE. •Historical volatility is based on daily price history for each expected life (years) prior to each vest/FYE. Closing prices provided by S&P Capital IQ are adjusted for dividends and splits.
Pay Versus Performance Table
| | For Stock Options Vesting in | | | | | | | 2024 | 2023 | 2022 | 2021 | 2020 | | Expected volatility | 31% - 40% | 35% - 40% | 36% - 39% | 36% - 41% | 28% - 29% | | Expected dividend yield | 4.0% - 4.3% | 3.3% - 3.3% | 3.1% - 3.1% | 3.4% - 3.6% | 2.9% - 3.0% | | Expected term, in years | 3.0 - 4.5 | 3.0 - 4.5 | 3.0 - 4.5 | 3.0 - 4.5 | 3.0 - 4.5 | | Risk-free interest rate | 3.8% - 4.2% | 3.6% - 4.0% | 1.4% - 1.7% | 0.2% - 0.5% | 1.3% - 1.4% |
Pay Versus Performance Table
(4) The following table illustrates the valuation assumptions as of the vesting date for restricted stock awards that vested in each of 2024, 2023, 2022, 2021 and 2020 (note that no awards vested during 2020):
Pay Versus Performance Table
| | Weighted Average Fair Value | | | | | | | 2024 | 2023 | 2022 | 2021 | 2020 | | Weighted Average Fair Value at vesting | N/A | $22.56 | $34.35 | $27.61 | N/A |
Pay Versus Performance Table
(5) Non-PEO NEOs reflect the average Summary Compensation Table total compensation and average CAP for Penko Ivanov, David D. Kaiser, Andrew J. Wise and Marc J. Yrsha in the 2024 reporting year, Penko Ivanov, David D. Kaiser and Andrew J. Wise in the 2023 reporting year, and Edward J. Campanella, David S. DeMarco, David D. Kaiser and Andrew J. Wise in the 2020-2022 reporting years. (6) Earnings per Share is defined in the Compensation Discussion and Analysis section of this Proxy Statement.
Pay Versus Performance: Graphical Description
Pay Versus Performance: Graphical Description The illustrations below provide a graphical description of CAP (as calculated in accordance with the SEC rules) and the following measures: •the Company’s cumulative TSR and the Peer Group’s cumulative TSR; •the Company’s Net Income; and •the Company Selected Measure, for which we have selected Earnings per Share. CAP and Cumulative TSR / Cumulative TSR of the Peer Group CAP and Company Net Income as Reported CAP and Company Selected Measure, Earnings per Share as Reported
The description below is based on a theoretical termination or change of control on December 31, 2024 for
The description below is based on a theoretical termination or change of control on December 31, 2024 for our NEOs.