DEF 14A of Financial Institutions Inc, Apr 12, 2024

DEF 14A of Financial Institutions Inc

Filed Apr 12, 2024 · FY20230001193125-24-094622

Open on EDGAR

  1. BOARD COMPOSITION AND DIRECTOR NOMINEES

    BOARD COMPOSITION AND DIRECTOR NOMINEES

  2. PROPOSAL 1. ELECTION OF DIRECTORS

    PROPOSAL 1. ELECTION OF DIRECTORS Our Bylaws provide for a classified Board of Directors, with directors divided into three classes of approximately equal number. One class is elected at each annual meeting of shareholders for a term expiring at the third successive annual meeting and until their respective successors have been elected and qualified. The Board of Directors is authorized by our Bylaws to determine, from time to time, the number of directors that constitute our Board. The Board size is currently set at twelve members. The nominees for director at the 2024 Annual Meeting are:

  3. PROPOSAL 1. ELECTION OF DIRECTORS

    | • | Dawn H. Burlew |

  4. PROPOSAL 1. ELECTION OF DIRECTORS

    | • | Robert N. Latella |

  5. PROPOSAL 1. ELECTION OF DIRECTORS

    | • | Mauricio F. Riveros |

  6. PROPOSAL 1. ELECTION OF DIRECTORS

    | • | Mark A. Zupan |

  7. PROPOSAL 1. ELECTION OF DIRECTORS

    Ms. Burlew and Messrs. Latella, Riveros, and Zupan have been nominated by the Board of Directors, upon the recommendation of the Board’s Governance Committee, to stand for election for a term expiring at the Company’s annual meeting to be held in 2027 and until his or her respective successor is duly elected and qualified. The nominees recommended by the Board of Directors have consented to serve as nominees for election to the Board and to serve as members of the Board if elected by the Company’s shareholders. As of the date of this proxy statement, the Company has no reason to believe that any nominee will be unable or unwilling to serve if elected as a director. However, if for any reason a nominee becomes unable to serve or for good cause will not serve if elected, the Board, upon the recommendation of the Board’s Governance Committee, may designate substitute nominees, in which event the shares represented by proxies returned to us will be voted for such substitute nominees. The following pages contain a biography of each director nominee and director continuing in office with information regarding the individual’s service as a director, business and other experiences, director positions and information regarding experiences, qualifications, attributes, and skills considered by the Board’s Governance Committee and the Board. Ages shown are as of December 31, 2023. No director, director nominee or executive officer has any family relationship with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer.

  8. PROPOSAL 1. ELECTION OF DIRECTORS

    | | The Board of Directors unanimously recommends that shareholders elect nominees Dawn H, Burlew, Robert N. Latella, Mauricio F. Riveros, and Mark A. Zupan and recommends that you vote “FOR ALL NOMINEES” |

  9. PROPOSAL 1. ELECTION OF DIRECTORS

    | 2024 Proxy Statement | 13 |

  10. BUSINESS EXPERIENCE AND QUALIFICATIONS OF DIRECTORS

    BUSINESS EXPERIENCE AND QUALIFICATIONS OF DIRECTORS

  11. DIRECTOR BIOGRAPHIES — NOMINEES

    DIRECTOR BIOGRAPHIES — NOMINEES

  12. DAWN H. BURLEW

    DAWN H. BURLEW

  13. DAWN H. BURLEW

    | Director Since: 2017 Term Expires: 2024 Age: 59 Independent Committee Membership: ● Technology & Data (Chair) ● Management Development & Compensation ● Risk Oversight | Business Experience – President, Watkins Glen International since January 2024 – Director of Government Affairs & Business Development, Global Government Affairs Division of Corning Incorporated (2008-2024) – Town of Erin Supervisor since 2014 – Corning Incorporated: Corporate Real Estate Portfolio Manager (2002–2008); progressive corporate and management roles (1984–2002) Current Nonprofit Boards – Bethany Village (Chair); Chemung County Industrial Development Agency (Vice Chair); Chemung County Property Development Corp. (Vice Chair); Chemung County Chamber of Commerce (Vice Chair); Guthrie Corning Hospital (Vice Chair); Incubator Works; International Motor Racing Research Center; Southern Tier Central Regional Planning & Development; Southern Tier Economic Growth; and Southern Tier Regional Economic Development Council Past Nonprofit Boards – Business Council of New York State (Vice Chair); Corning Community College Housing LLC; Corning’s Gaffer District; Corning Community College Development Foundation; Healthcare Association of New York State (HANYS); Three Rivers Development Corp. (Vice Chair) Education – Cazenovia College and Keuka College |

  14. ROBERT N. LATELLA

    ROBERT N. LATELLA

  15. ROBERT N. LATELLA

    | Director Since: 2005 Chair: 2014–2021 Vice Chair: 2012–2014 Term Expires: 2024 Age: 81 Independent Committee Membership: ● Executive ● Nominating & Governance ● Technology & Data | Business Experience – Of Counsel at the law firm Barclay Damon, LLP since 2009; Partner (2004–2009) – Previous Roles: Chief Operating Officer of Integrated Nano-Technologies, LLC; Chief Operating Officer of the Genesee Corporation; Chief Financial Officer of The Case Hoyt Corporation; and Managing Partner of Harter Secrest & Emery LLP Past Public Company Boards – Genesee Corporation Past Other Company Boards – Marine Midland Bank–Rochester Current Nonprofit Boards – University of Rochester Medical Center (Member, Executive Committee and Past Chair); Highland Hospital of Rochester (Senior Member of Board and Past Chair); Highland Community Development Corporation; Highland Living Center; and The Highlands at Brighton Past Nonprofit Boards – Monroe Community College (Trustee and Chair); Monroe Community College Foundation, Inc.; and several additional community and nonprofit boards Education – Fordham College – LLB, Vanderbilt University School of Law – LLM, New York University School of Law |

  16. ROBERT N. LATELLA

    | 14 | Financial Institutions, Inc. |

  17. DIRECTOR BIOGRAPHIES — NOMINEES

    DIRECTOR BIOGRAPHIES — NOMINEES

  18. MAURICIO F. RIVEROS

    MAURICIO F. RIVEROS

  19. MAURICIO F. RIVEROS

    | Director Since: 2021 Term Expires: 2024 Age: 48 Independent Committee Membership: ● Technology & Data | Business Experience – Chief Operating Officer of Pike Construction Services LTD since 2023 – Chief Operating Officer of Pike Companies LTD (2021-2022) – President of LECESSE Construction Services, a division of Pike Companies LTD (2017–2021) – Chief Innovation Officer of Pike Companies LTD (2014–March 2021) – Pike Companies LTD: Vice President – Project Controls (2011–2014) and Director of Retail Division (2007–2011) – President of Riveros Contracting (2004–2007) – National Director of Canadian Executive Service Organization (Bolivia) (2003–2004) – Director of Strategic Planning for the Government of Bolivia (1999–2003) Current Nonprofit Boards – St. Ann’s Community Past Nonprofit Boards – Center for Governmental Research; YMCA of Greater Rochester; and Roberts Wesleyan College Education – Master of Economic Law, La Universidad Andina Simon Bolivar (Bolivia) – Law Degree, La Universidad Católica Boliviana (Bolivia) |

  20. MARK A. ZUPAN, PHD

    MARK A. ZUPAN, PHD

  21. MARK A. ZUPAN, PHD

    | Director Since: 2021 Term Expires: 2024 Age: 64 Independent Committee Membership: ● Audit ● Risk Oversight | Business Experience – President of Alfred University since 2016 – Simon Business School at the University of Rochester: Director of the Bradley Policy Center and Olin Professor of Economics and Public Policy (2014–2016) and Dean and Professor of Economics and Public Policy (2004–2014) – Dean and Professor of Economics at Eller College of Management, University of Arizona (1997– 2003) – Visiting Professor, Amos Tuck School of Business Administration at Dartmouth College (Fall 1995) – Marshall School of Business at the University of Southern California: Associate Dean (1992–1994), Associate Professor (1991–1996) and Assistant Professor (1986–1991) Past Public Company Boards – Constellation Brands – PaeTec Holding Corporation – Steuben Trust Company Current Nonprofit Boards – Allegany County Economic Development Committee Past Nonprofit Boards – Harley School; Western New York Regional Economic Development Council; and United Way of Southern Arizona Education – BA, Economics, Harvard University – Ph.D., Economics, Massachusetts Institute of Technology (MIT) |

  22. MARK A. ZUPAN, PHD

    | 2024 Proxy Statement | 15 |

  23. DONALD K. BOSWELL

    DONALD K. BOSWELL

  24. DONALD K. BOSWELL

    | Director Since: 2017 Term Expires: 2026 Age: 72 Independent Committee Membership: ● Nominating & Governance (Chair) ● Technology & Data | Business Experience – President and CEO, Seven Film & Theater Productions, since 2022 – President and CEO Emeritus and Consultant for the Western New York Public Broadcasting Association (WNED-TV; WBFO-FM) since 2021; President and CEO (1998–2021) – North Texas Public Broadcasting, Inc., Dallas/Fort Worth/Denton: Executive Vice President and COO (1997); Acting President (1996–1997); Vice President of Marketing and Corporate Development (1986–1996); and Vice President of Development (1982–1986) – KCTS-TV, Seattle: Vice President of Development (1981–1982) – WVIA-TV/FM, Pittston, Pennsylvania: Corporate Underwriting Specialist and Director of Community Relations/Producer (1977–1981) Current Other Company Boards – Vice Chair of Independent Health, since 2020 Past Public Company Boards – HSBC Bank USA, N.A. Past Other Company Boards – HSBC Bank USA, N.A. – Blue Cross Blue Shield (Health Now) – New Era Cap Company Current Nonprofit Boards – Artpark & Company; 43 x 79 Group; American Public Television; AAA of Central and Western New York, Inc.; AAA National Board; The John R. Oishei Foundation; and PBS (Past Vice Chair) Past Nonprofit Boards – Buffalo AKG Art Museum; Buffalo Philharmonic Orchestra; Buffalo Science Museum; and University of Buffalo Foundation; American Friends of the Art Gallery of Ontario (Chair) Education – Pennsylvania State University; BS and M.Ed. – Management Development Certificate, The Wharton School at The University of Pennsylvania – Honorary Doctorate of Laws and Letters, Canisius College and D’Youville College |

  25. MARTIN K. BIRMINGHAM

    MARTIN K. BIRMINGHAM

  26. MARTIN K. BIRMINGHAM

    | Director Since: 2013 Term Expires: 2025 Age: 57 President & CEO | Business Experience – President and Chief Executive Officer of the Company and the Bank since March 2013 – President and Chief of Community Banking of the Bank (2012–2013) – Commercial Banking Executive and Rochester Region President of the Bank (2005–2012) – President, CEO and Director of former subsidiary, The National Bank of Geneva, 2005 – President of Rochester Region, Bank of America (2004–2005) – Progressive corporate banking roles including Regional President, Fleet Financial Group/Bank of America (1989– 2004) Current Nonprofit Boards – New York Bankers Association (Chair and Past Treasurer); AAA of Central and Western New York, Inc. (Past Chair and Past Vice Chair); Greater Rochester Chamber of Commerce; MCC Foundation; ROC2025; St. John Fisher College (Past Chair); The Business Council of New York State; and University of Rochester Medical Center Past Nonprofit Boards – Federal Reserve Bank of NY Community Depository Institutions Advisory Council; The Strong National Museum of Play; St. Ann’s of Greater Rochester Foundation; United Way of Greater Rochester; American Red Cross; Seneca Park Zoo Society; and YMCA of Greater Rochester Education – St. Lawrence University – MBA, Simon Business School at the University of Rochester – Honorary Doctorate of Humane Letters, St. John Fisher College |

  27. MARTIN K. BIRMINGHAM

    | 16 | Financial Institutions, Inc. |

  28. MARTIN K. BIRMINGHAM

    ANDREW W. DORN, JR.

  29. MARTIN K. BIRMINGHAM

    | Director Since: 2014 Term Expires: 2026 Age: 73 Independent Committee Membership: ● Management Development & Compensation (Chair) ● Executive ● Risk Oversight | Business Experience – Chair, Coal Ash Recycling, LLC, a private company focused on the beneficial reuse of coal ash to make lower carbon “green” concrete, since 2021 – Co-Managing Director of Energy Solutions Consortium, LLC (2015–2021) – Managing member of Moundsville Power LLC (2012–2015) – Chair and Chief Financial Officer of Demand Response Partners, Inc. (2008–2015) – President and Chief Investment Officer of Hunterview LLC (2008–2013) – Led formation of Great Lakes Bancorp, parent company of Greater Buffalo Savings Bank; President and Chief Executive Officer (1997–2008) – Led formation of Jamestown Savings Bank; President and Chief Executive Officer (1994–1997) Past Public Company Boards – Great Lakes Bancorp Current Nonprofit Boards – D’Youville College (Past Chair) – Health Foundation for Western & Central New York – The Western New York Foundation Past Nonprofit Boards – Brooks Memorial Hospital (Vice Chair); Buffalo Urban League; Chautauqua County Fund for the Arts (Chair); Northern Chautauqua Chamber of Commerce (President); United Way of Chautauqua County (Vice Chair); and several additional community and nonprofit boards in Erie and Chautauqua counties Education – University at Buffalo–State University of New York – MBA, Canisius College |

  30. ROBERT M. GLASER

    ROBERT M. GLASER

  31. ROBERT M. GLASER

    | Director Since: 2014 Term Expires: 2026 Age: 77 Independent Committee Membership: ● Audit (Chair) ● Executive | Business Experience – Certified Public Accountant and President of Glaser Consulting, LLC, a strategic consulting company, since 2016 – Retired Chair of the Board of Freed Maxick CPAs, P.C. (1994–2015) – Joined Freed Maxick CPAs, P.C. as a partner in 1981 and served as Chair and Managing Director (1994–2011) – Price Waterhouse (1968–1981) Past Appointed Positions – Chair of the Erie County Fiscal Stability Authority – Independent Judicial Election Qualification Commission for the Eighth Judicial District Current Private Company Boards – NA Realty Fund II – Noco, Inc. Past Nonprofit Boards – Audit Committee for Kaleida Health; CPA Associates, Inc.; and several nonprofit and cultural boards in Western New York Education – Canisius College |

  32. ROBERT M. GLASER

    | 2024 Proxy Statement | 17 |

  33. ROBERT M. GLASER

    | Director Since: 2000 Term Expires: 2025 Age: 75 Independent Committee Membership: ● Audit ● Management Development & Compensation | Business Experience – Owner and operator of Family Furniture, a retail furniture sales business in Perry, NY, since 1976 and real estate owner and developer for more than 40 years in Wyoming, Genesee and Livingston counties – Owner and Chief Executive Officer of American Classic Outfitters (2002–2009) – Director of former subsidiary Wyoming County Bank until its merger with the Bank in 2005 Current Nonprofit Boards – Chair and Director of the Wyoming County Business Center; Perry Rotary Club (Current Foundation Chair and Past President) Past Nonprofit Boards – Current member, past Director and past President of the Wyoming County Chamber of Commerce (formerly the Wyoming County Business Development Corporation); Iroquois Trail Council, Boy Scouts of America Education – Niagara University |

  34. BRUCE W. HARTING

    BRUCE W. HARTING

  35. BRUCE W. HARTING

    | Director Since: 2022 Term Expires: 2026 Age: 66 Independent Committee Membership: ● Audit ● Risk Oversight | Business Experience – Managing Director, Wedbush Securities, since 2023 – Team Chief Investment Officer, Private Wealth Advisor at Rockefeller Capital Management (2022) – Managing Director, Investment Banking, Deutsche Bank (2017–2022) – Managing Director, Investment Banking, Credit Suisse (2015–2017) – Managing Director, Investment Banking, Barclays Capital (2012–2015) – Managing Director, Equity Research, Barclays Capital/ Lehman Brothers (1996–2012) – Senior Analyst, Equity Research, Salomon Brothers (1988–1996) Past Nonprofit Boards – Brooklyn Youth Choir Education – American University – M.A., University of Pennsylvania |

  36. BRUCE W. HARTING

    | 18 | Financial Institutions, Inc. |

  37. SUSAN R. HOLLIDAY

    SUSAN R. HOLLIDAY

  38. SUSAN R. HOLLIDAY

    | Director Since: 2002 Chair Since: 2021 Vice Chair: 2020–2021 Term Expires: 2026 Age: 68 Independent Committee Membership: ● Executive (Chair) | Business Experience – Chief Executive Officer of Dumbwaiter Design, LLC, a full-service web and app design and development firm, since 2011 – President and Publisher of the Rochester Business Journal (1988–2016) Past Public Company Boards – Rochester Gas & Electric Corp Current Private Company Boards – Complemar Partners, Inc. Past Other Company Boards – Key Bank of New York Current Nonprofit Boards – Greater Rochester Chamber of Commerce (Past Chair); Health Care Trustees of New York State (Past Chair); Healthcare Association of New York State; Riedman Foundation (Trustee); Rochester Institute of Technology (Vice Chair); and University of Rochester Medical Center (Past Chair) Past Nonprofit Boards – MCC Foundation; Rochester Museum & Science Center (Chair); United Way of Greater Rochester (Vice Chair); and various additional community and nonprofit boards Education – Cornell University – MBA, Rochester Institute of Technology |

  39. KIM E. VANGELDER

    KIM E. VANGELDER

  40. KIM E. VANGELDER

    | Director Since: 2016 Term Expires: 2025 Age: 59 Independent Committee Membership: ● Risk Oversight (Chair) ● Nominating & Governance ● Technology & Data | Business Experience – Chief Information Officer of Eastman Kodak Company, a global manufacturer focused on commercial print and advanced materials and chemicals, since 2004 – Progressive information technology leadership roles at Kodak with responsibilities including cybersecurity, global applications, and global technology infrastructure – Also served as Kodak’s Director of Worldwide Customer Operations from 2011 to 2014 Current Nonprofit Boards – Rochester Institute of Technology – Western New York Society for Information Management Past Nonprofit Boards – Rochester Area Community Foundation – Dean’s Advisory Council for Golisano College of Computing and Information Sciences, Rochester Institute of Technology Education – Rochester Institute of Technology |

  41. KIM E. VANGELDER

    | 2024 Proxy Statement | 19 |

  42. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION We use a combination of cash and stock-based compensation to attract and retain qualified candidates to serve as non-employee members on our Board of Directors. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties, the skill levels required, and the competitive market for director compensation.

  43. DIRECTOR COMPENSATION

    | 26 | Financial Institutions, Inc. |

  44. DIRECTOR COMPENSATION

    Every two years, the Board’s MD&C Committee reviews Director compensation and considers peer review related compensation guidance provided by its independent compensation consultant. The Board sets Director compensation based on recommendations provided by its MD&C Committee. During 2023, independent directors were eligible to receive a cash retainer for serving on our Board of Directors and the Board of Directors of the Bank, our wholly-owned subsidiary, and leadership positions. Independent directors may elect to receive any portion of their annual retainer in an equivalent grant of shares of our common stock. We provide our Chair a car allowance and reimburse other independent directors for reasonable travel expenses to attend meetings. The following chart sets forth the amount we pay non-employee directors for their service on the FII Board and the Board of Directors of the Bank, including the leadership roles noted below:

  45. DIRECTOR COMPENSATION

    | | FII | Five Star Bank | | Annual Retainer Fees: | | | | Chair | $70,000 | $35,000 | | Chair of the Audit Committee | 43,500 | 21,500 | | Chair of the MD&C and Risk Oversight Committees | 40,000 | 20,000 | | Chair of the Nominating & Governance and Technology & Data Committees | 38,500 | 19,000 | | Other Directors | 33,500 | 16,500 |

  46. DIRECTOR COMPENSATION

    The stock-based compensation of non-employee members of the Board was in the form of receipt of a grant of restricted shares with a value of $30,000 on June 21, 2023, the date of the 2023 annual meeting of shareholders. The number of shares issued was based upon the June 21, 2023 closing price of the Company’s common stock. Fifty percent (50%) of the shares vest immediately upon the date of the grant, and the remaining fifty percent (50%) of the shares vest on the day prior to our 2024 Annual Meeting of shareholders, provided that the director remains in continuous service as a director. Subject to the terms of individual award agreements, if a director ceases to serve as our director prior to the shares vesting, the shares will be immediately forfeited. The 2023 restricted share awards do not entitle directors to receive any dividends paid with respect to unvested shares of restricted stock. For additional information regarding Stock Requirements for Directors, please see the discussion under “Stock Ownership Requirements” on page 5.

  47. DIRECTOR COMPENSATION

    | 2024 Proxy Statement | 27 |

  48. DIRECTOR COMPENSATION

    Compensation paid to directors in 2023 for service on the Boards of both FII and the Bank is summarized below.

  49. DIRECTOR COMPENSATION

    | Director Name | Fees Earned or Paid in Cash (1) ($) | Stock Awards (2)(3) ($) | All Other Compensation (4) ($) | Total ($) | | Donald K. Boswell | 57,500 | 29,984 | — | 87,484 | | Dawn H. Burlew | 57,500 | 29,984 | — | 87,484 | | Andrew W. Dorn Jr. | 60,000 | 29,984 | — | 89,984 | | Robert M. Glaser | 65,000 | 29,984 | — | 94,984 | | Samuel M. Gullo | 50,000 | 29,984 | — | 79,984 | | Bruce W. Harting | 50,000 | 29,984 | — | 79,984 | | Susan R. Holliday | 105,000 | 29,984 | 9,000 | 143,984 | | Robert N. Latella | 50,000 | 29,984 | — | 79,984 | | Mauricio F. Riveros | 50,000 | 29,984 | — | 79,984 | | Kim E. VanGelder | 60,000 | 29,984 | — | 89,984 | | Mark A. Zupan | 50,000 | 29,984 | — | 79,984 |

  50. DIRECTOR COMPENSATION

    | (1) Annual retainer, including the portion elected to be paid in shares of common stock in lieu of cash. The number of shares of stock received by each director in lieu of cash during 2023: Mr. Boswell—544 shares, Ms. Burlew—1,878 shares, Mr. Glaser—3,540 shares, Ms. VanGelder—3,268 shares and Mr. Zupan—1,361 shares. |

  51. DIRECTOR COMPENSATION

    | (2) Aggregate grant date fair value, calculated in accordance with FASB Topic ASC 718, of 1,835 shares of restricted stock granted under the 2015 Long-Term Incentive Plan to each director. |

  52. DIRECTOR COMPENSATION

    | (3) Each director held 917 shares of unvested restricted stock awards as of December 31, 2023. No director held any stock options as of December 31, 2023. |

  53. DIRECTOR COMPENSATION

    | (4) Car allowance of $750 per month for service as Chair of the Board during 2023. |

  54. 2023 Executive Compensation Program Highlights

    | ● | Operating in a pay-for-performance environment by tying a significant portion of executive compensation to the achievement of performance goals aligned with the Company’s annual business plan, long-term strategic plan and ongoing shareholder value creation |

  55. 2023 Executive Compensation Program Highlights

    | ● | Amendment to the Director and EMC Executive Stock Ownership requirements on June 21, 2023, based on independent compensation consultant observations that the terms of the Company’s existing Stock Requirements placed it at a competitive disadvantage relative to recruiting and retaining executive talent. |

  56. 2023 Executive Compensation Program Highlights

    | ● | Modification of the Executive Incentive Plan and Long Term Incentive Plan Performance Stock Unit threshold payout from 25% to 50% based on independent compensation consultant peer benchmarking. |

  57. 2023 Executive Compensation Program Highlights

    | (1) ROAA, ROAE, RSU, PSU and EIP are defined on the following pages. |

  58. 2023 Executive Compensation Program Highlights

    | Compensation Component | Purpose and Objectives | Key Features and Performance Metrics | | Base Salary (Cash) | ● Salaries provide market-competitive fixed pay to reflect job responsibilities | Annual adjustments based on achievements and development in the prior year, competitive considerations, changes in scope/responsibilities, and the results of peer compensation reviews | | Executive Incentive Plan (“EIP”) (Cash) | ● Motivate and reward NEOs for achievement of strategic goals over a one-year period | Gateway criteria for award payout: ● Meet or exceed target capital funding levels measured using Basel III framework ● NEO generally must be employed on date of payment Company performance metrics for 2023: – Pre-Provision Net Income (“PPNI”) (40%) – Total Loan Growth (20%) – Core Deposit Growth (20%) – Net Charge-offs (20%) Financial performance funds a total bonus pool for plan participants that allows for discretion to modify the award calculation based on individual and executive team performance up to 25%. | | Long-Term Incentive Plan (“LTIP”) – Time-Vested Restricted Stock Units (“RSU”) | ● Promotes retention of talent ● Aligns NEO interests with long-term shareholder value creation through appreciation in stock price ● Promotes meaningful stock ownership | ● 50% of total long-term incentive at target ● RSU awards vest three years from the date of grant based on continued satisfactory employment ● NEO generally must be employed on the date of vesting | | LTIP – Relative Return on Average Equity (“ROAE”) Performance Stock Unit (“PSU”) | ● Promotes achievement of long-term value creation through achievement of strategic business objectives ● Aligns NEO interests with long-term shareholder value creation through appreciation in stock price ● Promotes meaningful stock ownership | ● 25% of total long-term incentive at target ● Gateway criteria for award payout: – Meet or exceed target capital funding levels measured using Basel III framework – NEO must receive a minimum individual performance evaluation rating of satisfactory or better for the performance period – NEO generally must be employed on date of vesting ● Relative ROAE PSU awards based on the Company’s three-year ROAE against the CBNK – NASDAQ Bank Index as the basis for comparison for the 2023 award ● 100% of the award is subject to forfeiture if relative ROAE performance is below the 30th percentile of the peer group |

  59. 2023 Executive Compensation Program Highlights

    | Compensation Component | Purpose and Objectives | Key Features and Performance Metrics | | LTIP – Return on Average Assets (“ROAA”) PSU | ● Promotes achievement of long-term value creation through achievement of strategic business objectives ● Aligns NEO interests with long-term shareholder value creation through appreciation in stock price ● Promotes meaningful stock ownership | ● 25% of total long-term incentive at target ● Gateway criteria for award payout: – Meet or exceed target capital funding levels measured using Basel III framework – NEO must receive a minimum individual performance evaluation rating of satisfactory or better for the performance period – NEO generally must be employed on date of vesting ● ROAA PSU awards based on achievement of three-year average ROAA performance goals for the three-year performance period |

  60. 2021 LTIP Results (2021 – 2023 Performance Period)

    2021 LTIP Results (2021 – 2023 Performance Period) On March 19, 2021, NEOs were granted RSUs and PSUs under the 2015 LTIP. The RSUs and PSUs vested on March 19, 2024, three years from the grant date. The performance measures for the 2021 PSUs were based on relative ROAE (50% of units) and ROAA (50% of units). Relative ROAE performance was measured against our peer group for the performance period January 1, 2021 through December 31, 2023. The peer group previously used to measure performance was the SNL Small Cap U.S. Bank & Thrift Index. The SNL Small Cap U.S. Bank & Thrift Index was discontinued on August 6, 2021. On advice of professional advisors it retains, the MD&C Committee approved application of a survivorship peer group of the SNL Small Cap U.S. Bank & Thrift Index as the basis for measuring relative performance for the 2021 relative ROAE-based PSU. The survivorship peer group consisted of the members of the SNL Small Cap U.S. Bank & Thrift index that remained in the index through the discontinuance date in August 2021 that also remained in the S&P index through the end of the performance period.

  61. 2021 LTIP Results (2021 – 2023 Performance Period)

    | Relative ROAE Performance | 2021 PSU Payout Percentage of Target | | 80th Percentile and above | 150% | | 50th Percentile | 100% | | 30th Percentile | 25% | | Below 30th Percentile | 0% |

  62. 2021 LTIP Results (2021 – 2023 Performance Period)

    Our relative ROAE for the period was 13.33% and ranked in the 77th percentile for the performance period which resulted in a payout of 145.05% of target for the relative ROAE-based PSUs ROAA performance was measured against internal threshold, target and maximum goals for a three-year average for years 2021, 2022 and 2023.

  63. 2021 LTIP Results (2021 – 2023 Performance Period)

    | ROAA Performance | 2021 PSU Payout Percentage of Target | | Maximum (1.009% and above) | 150% | | Target (.970%) | 100% | | Threshold (.950%) | 25% | | Below Threshold (below .950%) | 0% |

  64. 2021 LTIP Results (2021 – 2023 Performance Period)

    | 36 | Financial Institutions, Inc. |

  65. 2021 LTIP Results (2021 – 2023 Performance Period)

    Our ROAA for the period was 1.10% which resulted in a payout of 150% of target for the ROAA-based PSUs.

  66. SHAREHOLDER INPUT AND OUTREACH

    | ● | Compensation goals should include a balance of goals tied to the achievement of our annual business plan and progress toward our long-term strategic plan. |

  67. SHAREHOLDER INPUT AND OUTREACH

    | ● | Incentive plans should be strongly weighted on operational metrics where executives have a direct and measurable impact. |

  68. SHAREHOLDER INPUT AND OUTREACH

    | ● | Compensation plans should include a selection of performance goals that include goals based on both individual executive performance and our overall performance. |

  69. Compensation Philosophy

    | ● | Drive performance relative to our clearly-defined goals, balancing short-term operational objectives with long-term strategic goals; |

  70. Compensation Philosophy

    | ● | Align our executives’ long-term interests with those of our shareholders by placing a substantial portion of total compensation at risk and contingent on our performance and the executive’s continued employment; |

  71. Compensation Philosophy

    | ● | Encourage our executives to think and act as long-term shareholders with stock-based compensation; |

  72. Base Salary

    | (1) Base pay adjustments reflecting competitive market positioning were awarded on January 9, 2023 to Messrs. Plants, Quinn, Burruano and Ms. Collins based on a 2022 benchmarking analysis of our peer group. Additionally, a 3% base pay adjustment to all NEOs was awarded on February 20, 2023 based on 2022 individual performance and the general increase of the cost of labor. Lastly, additional base pay adjustments reflecting a 2023 benchmarking analysis of our peer group were awarded on December 25, 2023 to Messrs. Plants and Burruano, and Ms. Collins. |

  73. Executive Incentive Plan

    Executive Incentive Plan The EIP is a performance-based cash plan designed to reward eligible executives, including our participating NEOs, for the achievement of corporate financial goals and demonstrated successful individual performance. The primary objective of the EIP is to provide participating NEOs with a direct link between their compensation and attainment of pre-established annual performance goals. We believe that the performance measures under the EIP contribute to our attaining and surpassing our annual business plan and achieving long- term strategic goals. The 2023 EIP utilized the same metrics used to calculate the funding of the award pool as last year, but was modified to adjust how the pool was funded at threshold performance. Based on plan design benchmarking of our peer group, the calculated pool funding at threshold performance was increased from 25% to 50% of the target payout level for each NEO. The MD&C Committee has the ability to adjust the final calculated award pool based on performance levels of the executive team as measured on their Executive Performance Scorecards in order to reward individual and team performance. Executive performance scorecards are developed jointly on an annual basis between the CEO, NEOs and the MD&C Committee with a 50/50 weighting of individual executive and executive team goals directly aligned to our strategic plan. Incentive Opportunity We set target incentive opportunities and the total award pool under the EIP based on a percentage of base salary that reflects a market- level target compensation opportunity for each participating executive. The threshold and maximum percentages reflect both our review of market practices and judgment of the level of award opportunity appropriate for the performance goals established. The differences in opportunity also reflect each executive’s relative influence on achieving our performance goals based on his or her position. The actual amount of an executive’s award is based on our business results, subject to adjustment based on the executive’s individual performance within a total award pool. In 2023, the EIP target award opportunity for our NEOs as a percentage of their base salary was increased from 35% to 40% for Messrs. Plants, Bigham, Willett and Quinn based on a peer-based compensation benchmarking analysis.

  74. Executive Incentive Plan

    | 2024 Proxy Statement | 39 |

  75. Executive Incentive Plan

    | Name | 2023 Executive Incentive Plan Award Opportunity as a Percent of Salary (Interpolated between performance levels) | | | | | Threshold | Target | Maximum | | Martin K. Birmingham | 25.0% | 50% | 75.0% | | W. Jack Plants II | 20.0% | 40% | 60.0% | | Justin K. Bigham | 20.0% | 40% | 60.0% | | Sean M. Willett | 20.0% | 40% | 60.0% | | Kevin B. Quinn | 20.0% | 40% | 60.0% | | Samuel J Burruano Jr. | 17.5% | 35% | 52.5% | | Laurie R. Collins | 17.5% | 35% | 52.5% |

  76. Executive Incentive Plan

    Gateway Performance Criteria Our EIP for 2023 required the following gateway performance criteria to be achieved for executives to receive payment of an award under the plan:

  77. Executive Incentive Plan

    | 1. | The Bank must achieve a Tier 1 Capital Ratio determined by the MD&C Committee following the US Basel III capital framework. (The gateway performance requirement was set at 8.5% and the actual ratio as of December 31, 2023 was 9.76%.) |

  78. Executive Incentive Plan

    | 2. | With appropriate discretion in the case of separation or retirement, executives must be employed at the time of payment. |

  79. Executive Incentive Plan

    The Tier Capital ratio was met; however, Justin Bigham and Sean Willett were not employed at the time of payment and did not receive the 2023 EIP award. Company Performance Goals and Results Performance in the EIP for 2023 was measured based on four financial metrics that the MD&C Committee chose to reward our NEOs for generating profits for shareholders, growing outstanding balances for both total loans and core deposits, and maintaining strong credit quality: PPNI, Total Loan Growth, Core Deposit Growth and Net Charge-offs. The MD&C Committee set the goals for each performance measure based on our performance expectations in the long-term strategic plan and the 2023 operating plan in early 2023. Achievement of each performance measure is weighted to calculate the overall performance measurement relative to target. The MD&C Committee established weighting, threshold, target, and maximum levels for each performance measure after analyzing the performance required and the potential shareholder value created at each award level, and consulting with its independent compensation consultant. Our 2023 performance goals and results:

  80. Executive Incentive Plan

    | Performance | Weighting of Performance | 2023 EIP Performance Goals | | | 2023 Actual | Weighted | | Measure | Measure | Threshold | Target | Maximum | Results | Performance | | PPNI(1) ($MM) | 40% | $62.12 | $73.08 | $84.04 | $60.44 | 0.0% | | Total Loan Growth | 20% | 6.14% | 8.19% | 10.24% | 10.19% | 29.8% | | Core Deposit Growth | 20% | 4.05% | 5.40% | 6.75% | 5.06% | 17.5% | | Net Charge-offs (“NCO”) | 20% | 0.44% | 0.35% | 0.27% | 0.20% | 30.0% |

  81. Executive Incentive Plan

    | (1) PPNI is a non-GAAP measure that we believe is useful in understanding our financial performance and condition. Refer to the GAAP to Non-GAAP Reconciliations in Appendix A. |

  82. Executive Incentive Plan

    | 40 | Financial Institutions, Inc. |

  83. We Consider Individual Performance

    Awards for 2023 Performance Company performance goal achievement for 2023 was as follows: below Threshold for PPNI, between Target and Maximum for Loan Growth, between Threshold and Target for Core Deposit Growth and above Maximum for Net Charge-offs, yielding a calculated Award Percentage Achievement of 77.3% of the target award. 2023 EIP awards are summarized below:

  84. Long-Term Equity-Based Incentive Plan

    Long-Term Equity-Based Incentive Plan We award long-term incentives in the form of performance-vesting PSUs and time-vesting RSUs to reward executives for long-term growth in profitability and shareholder value through the successful execution of our strategic plan. We, in consultation with and based on market intelligence provided by our independent compensation consultant, annually review our long-term incentives to ensure the design and grant-date value fall within a competitive range of long-term incentives relative to peer group companies. Structure of Awards

  85. Long-Term Equity-Based Incentive Plan

    | ● | Awards are granted in the form of RSUs and PSUs. RSUs and PSUs are grants valued in terms of company stock, but Company stock is not issued at the time of grant. As a result, there are no dividends or dividend equivalents paid on RSUs and PSUs, and RSUs and PSUs do not have voting rights. Upon vesting, RSUs and PSUs are settled in shares of company common stock. |

  86. Long-Term Equity-Based Incentive Plan

    | ● | 2023 RSUs cliff vest subject to continuous employment through the third anniversary of the grant date. |

  87. Long-Term Equity-Based Incentive Plan

    | ● | 2023 PSUs are subject to the following gateway performance requirements: |

  88. Long-Term Equity-Based Incentive Plan

    | o | The Bank must achieve a Tier 1 Capital Ratio determined by the MD&C Committee following the US Basel III capital framework. (The gateway performance requirement was set at 8.5% and the actual ratio as of December 31, 2023 was 9.76%.) |

  89. Long-Term Equity-Based Incentive Plan

    | o | The NEOs must receive a minimum individual performance evaluation rating on their individual executive performance scorecard of satisfactory or better for the performance period. |

  90. Long-Term Equity-Based Incentive Plan

    | ● | 2023 PSUs are earned based on achievement of two performance metrics: |

  91. Long-Term Equity-Based Incentive Plan

    | o | 50% of PSUs are based on a relative ROAE measure for the 1/1/2023 – 12/31/2025 performance period, compared to the CBNK – NASDAQ Bank Index peer group. |

  92. Long-Term Equity-Based Incentive Plan

    | o | 50% of the PSUs are based on average absolute ROAA for the 1/1/2023 – 12/31/2025 performance period. |

  93. Long-Term Equity-Based Incentive Plan

    | 2024 Proxy Statement | 43 |

  94. Long-Term Equity-Based Incentive Plan

    | o | Performance levels required for vesting of PSU awards are reflected in the following chart: |

  95. Long-Term Equity-Based Incentive Plan

    | Performance Measures & Measurement Periods(1) | 2023 Performance Goals | | | | | Threshold | Target | Maximum | | 3-Year Relative ROAE Ranking (2) (01/01/2023 – 12/31/2025) | 30th Percentile | 50th Percentile | 80th Percentile | | Return on Average Assets (ROAA) (01/01/2023 – 12/31/2025) | 0.995% | 1.015% | 1.056% |

  96. Long-Term Equity-Based Incentive Plan

    | (1) PSUs are granted at the target level and results are interpolated for performance between Threshold and Target, and between Target and Maximum. |

  97. Long-Term Equity-Based Incentive Plan

    | (2) If our absolute ROAE is less than 0% for the performance period and our performance relative to the peer group is greater than the 50th percentile, the number of shares earned will not exceed Target. |

  98. Long-Term Equity-Based Incentive Plan

    | ● | For NEOs, the grant date value of the annual 2023 RSUs and PSUs awards is based on a percentage of base salary as shown below. |

  99. Long-Term Equity-Based Incentive Plan

    | | 2023 Grant Date Value of RSUs and PSUs as a % of Base Salary | | | | | Name | Time-Based | Performance-Based PSUs | | | | | RSUs | Threshold | Target | Maximum | | Martin K. Birmingham | 30.00% | 15.00% | 30.00% | 45.00% | | W. Jack Plants II | 17.50% | 8.75% | 17.50% | 26.25% | | Justin K. Bigham(1) | 17.50% | 8.75% | 17.50% | 26.25% | | Sean M. Willett(1) | 17.50% | 8.75% | 17.50% | 26.25% | | Kevin B. Quinn | 17.50% | 8.75% | 17.50% | 26.25% | | Samuel J. Burruano Jr. | 17.50% | 8.75% | 17.50% | 26.25% | | Laurie R. Collins | 17.50% | 8.75% | 17.50% | 26.25% |

  100. Long-Term Equity-Based Incentive Plan

    | (1) 2023 LTIP grants for Messrs. Bigham and Willet will not be earned as they have left employment. |

  101. Long-Term Equity-Based Incentive Plan

    The units awarded for the annual RSU and PSU grants on March 21, 2023 as described above were as follows:

  102. Long-Term Equity-Based Incentive Plan

    | Name | Time-Based RSUs | Performance-Based PSUs (1) | | | | | | Threshold | Target | Maximum | | Martin K. Birmingham | 10,672 | 5,336 | 10,672 | 16,008 | | W. Jack Plants II | 2,898 | 1,449 | 2,898 | 4,347 | | Justin K. Bigham(2) | 3,278 | 1,639 | 3,278 | 4,917 | | Sean M. Willett(2) | 2,954 | 1,477 | 2,954 | 4,431 | | Kevin B. Quinn | 2,684 | 1,342 | 2,684 | 4,026 | | Samuel J. Burruano Jr. | 2,416 | 1,208 | 2,416 | 3,624 | | Laurie R. Collins | 2,254 | 1,127 | 2,254 | 3,381 |

  103. Long-Term Equity-Based Incentive Plan

    | (1) Performance for PSUs will be determined after the end of the performance period on 12/31/2025. PSUs are granted at the Target level and results are interpolated for performance between Threshold and Target and between Target and Maximum. |

  104. Long-Term Equity-Based Incentive Plan

    | (2) 2023 LTIP grants for Messrs. Bigham and Willet will not be earned as they have left employment. |

  105. Long-Term Equity-Based Incentive Plan

    More information on the status of existing equity grants is included in the Outstanding Equity Awards at December 31, 2023 table on page 56.

  106. Long-Term Equity-Based Incentive Plan

    | 44 | Financial Institutions, Inc. |

  107. The MD&C Committee

    | Month | Work Plan, Decision and Actions | | January – February | ● Approve payouts for EIP and LTIP based on prior year Company financial performance and individual performance ● Review prior year performance goals and objectives for our CEO and evaluate performance considering these goals and objectives ● Review and approve performance evaluations for EMC members ● Approve annual base pay merit adjustments for the CEO and EMC members ● Approve the plan design, corporate performance objectives and target metrics for coming year executive and senior management compensation programs, which include our EIP and our LTIP performance metrics and awards ● Review the MD&C Committee Charter and recommend any changes to the Board ● Review compensation consultant independence ● Approve the pool of annual shares available for the CEO Equity Award Program | | March | ● Approve the grant of annual LTIP awards ● Approve the committee charter and the company compensation philosophy and policy ● Review an update on Human Capital (periodic Human Capital Reports include updates on applicable ESG and DEI activities) ● Prepare for the Annual Meeting, review the draft CDA and other applicable sections of the proxy ● Review share ownership guidelines of executives for any recommended updates and executive compliance ● Approve enterprise-wide line of business incentive plans ● Approve annual employee RSU and PSU equity grants and form of awards. | | May | ● Review Board of Directors’ compensation with support from independent compensation consultant and make recommendations to the Board for approval ● Review organization charts and management reports on succession planning and management development ● Review and approve the Chief Risk Officer’s certification of compensation plans that evaluate risks associated with compensation philosophy and all compensation programs, including our incentive compensation plans | | July | ● Review succession planning and management development strategy ● Approve social and country club perquisite ● Review year-to-date executive performance ● Review year-to-date usage of the CEO Equity Award program ● Establish peer group for use in the next compensation planning cycle ● Review year-to-date financial performance for EIP and MIP and period-to-date performance for LTIP awards (PSUs) ● Review defined benefit pension plan performance |

  108. The MD&C Committee

    | Month | Work Plan, Decision and Actions | | October | ● Review year-to-date financial performance for EIP and MIP and period-to-date performance for LTIP awards (PSUs) ● Review the employee benefit program for the following year ● Review executives’ peer review compensation analysis and other relevant market information provided by independent compensation consultant ● Review an update on Human Capital ● Review executive compensation consultant update on emerging trends and regulatory and compliance updates | | December | ● Review year-to-date financial performance and estimated results for EIP and MIP and period-to-date performance for LTIP awards (PSUs) ● Discuss preliminary design and target compensation levels of executive compensation programs for the next year ● Review Equal Employment Opportunity and Affirmative Action Plans ● Begin executive performance evaluations ● Review year-to-date usage of the CEO Equity Award program ● Executive Compensation Consultant Performance Review |

  109. The MD&C Committee Independent Compensation Consultant

    The MD&C Committee Independent Compensation Consultant The MD&C Committee has retained Pearl Meyer & Partners, LLC (“Pearl Meyer”) as its independent compensation consultant since April 2019. Pearl Meyer reported directly to the Chair of the MD&C Committee, and regularly attended committee meetings. Pearl Meyer does not have a personal or business relationship with any member of the MD&C Committee. In addition to the services specifically authorized by the MD&C Committee, Pearl Meyer also provided additional services to the Company not exceeding $120,000 in 2023.

  110. The MD&C Committee Independent Compensation Consultant

    | 2024 Proxy Statement | 47 |

  111. The MD&C Committee Independent Compensation Consultant

    The MD&C Committee assessed the independence of Pearl Meyer considering SEC rules regarding compensation consultant independence. As part of this assessment, the MD&C Committee reviewed Pearl Meyer’s compensation consultant independence letter and concluded that the services provided by Pearl Meyer to the MD&C Committee do not raise any conflict-of-interest issues. The MD&C Committee currently retains Pearl Meyer to:

  112. The MD&C Committee Independent Compensation Consultant

    | ● | Provide analysis on compensation levels, programs, practices and reported pay for both executives and directors within certain peer groups and the broader market; and |

  113. The MD&C Committee Independent Compensation Consultant

    | ● | Provide the MD&C Committee with a report on compensation trends among our peers and the broader market. |

  114. The MD&C Committee Independent Compensation Consultant

    While Pearl Meyer provided reports and recommendations to the MD&C Committee regarding our executive compensation programs, the MD&C Committee is solely responsible for determining the form of compensation, the final amount, and the level of performance targets used in our executive compensation plans. During 2023, the MD&C Committee requested Pearl Meyer to provide the following assistance:

  115. The MD&C Committee Independent Compensation Consultant

    | ● | Review and update our peer group based on parameters determined by the MD&C Committee; |

  116. The MD&C Committee Independent Compensation Consultant

    | ● | Review the CD&A for the proxy statement; |

  117. The MD&C Committee Independent Compensation Consultant

    | ● | Analyze and present competitive market data of total executive compensation including base pay, annual cash incentive awards, long-term equity-based incentive awards and elements of other compensation; |

  118. The MD&C Committee Independent Compensation Consultant

    | ● | Assist in the review and design of annual and long-term incentives; |

  119. The MD&C Committee Independent Compensation Consultant

    | ● | Analyze and present competitive market data on director compensation; |

  120. The MD&C Committee Independent Compensation Consultant

    | ● | Provide a regulatory update report; and |

  121. The MD&C Committee Independent Compensation Consultant

    | ● | Provide a study and benchmark report on Executive and Director Share Ownership requirements. |

  122. Assessment of Compensation Risk

    | ● | Use both short- and long-term compensation and performance measures to balance the time horizon of decision-making; |

  123. Assessment of Compensation Risk

    | ● | Use a variety of performance measures that ensure a balanced focus on performance; |

  124. Peer Group for 2023 Compensation Decisions

    Peer Group for 2023 Compensation Decisions To attract, retain and motivate qualified executives, we periodically complete a market analysis of the total compensation package we offer members of the EMC against a peer group of comparable institutions in our industry whose executives manage similarly sized balance sheets and constituencies. We believe that our peer group fairly represents the market for executive talent in which we compete and includes institutions that share our business and market challenges. We use survey and peer group information as a point of reference, but we do not benchmark or target our compensation levels against this competitive information. The peer group that we used for 2023 compensation decisions includes publicly traded financial institutions that generally adhere to the following criteria:

  125. Peer Group for 2023 Compensation Decisions

    | ● | Headquarters in New England, Midwest and Middle Atlantic U.S., excluding major metropolitan areas; |

  126. Peer Group for 2023 Compensation Decisions

    | ● | Asset size from $3.3 billion to $9.6 billion (which represents approximately 0.5x to 2.0x FISI asset size); and |

  127. Peer Group for 2023 Compensation Decisions

    | ● | Additional refinement to exclude banks due to merger and acquisition activity or other considerations the MD&C Committee determines relevant. |

  128. Peer Group for 2023 Compensation Decisions

    In determining the peer group, we considered whether the peers identified by proxy advisory firm Institutional Shareholder Services adhered to our criteria and included them if we believed they fit the criteria for our peers. We considered competitive market data from 2022 from the following peer group when determining 2023 compensation for the members of the EMC:

  129. Peer Group for 2023 Compensation Decisions

    | 1st Source Corporation | Independent Bank Corporation | | Arrow Financial Corporation | Lakeland Financial Corporation | | Bar Harbor Bankshares | Midland States Bancorp, Inc. | | Camden National Corporation | Park National Corporation | | CNB Financial Corporation | Peoples Bancorp Inc. | | Community Trust Bancorp, Inc. | QCR Holding, Inc. | | First Commonwealth Financial Corporation | S&T Bancorp, Inc. | | First Financial Corporation | Stock Yards Bancorp, Inc. | | German American Bancorp, Inc. | Tompkins Financial Corporation | | Horizon Bancorp, Inc. | Washington Trust Bancorp, Inc |

  130. Peer Group for 2024 Compensation Decisions

    Peer Group for 2024 Compensation Decisions We review peer group criteria annually to ensure continued proper market alignment with our executive talent. In July 2023, in consultation with Pearl Meyer, the MD&C Committee reviewed the peer group using similar criteria described above for 2023 compensation decisions in order to establish the 2024 peer group. The MD&C Committee determined that no changes were necessary from the 2023 peer group.

  131. Executive Agreements

    Executive Agreements We have entered into executive agreements with Messrs. Birmingham, Plants, Bigham, Willett, Quinn and Burruano and Ms. Collins that provide for change-in-control severance benefits, protection of our confidential and proprietary information and non-competition and non-solicitation restrictions in the event the executive’s employment with us terminates. The executive agreements with Messrs. Bigham and Willett terminated upon their respective terminations of employment with us.

  132. Executive Agreements

    | 2024 Proxy Statement | 49 |

  133. Executive Agreements

    We believe that severance protection, particularly in the context of a change-in-control transaction, can play a valuable role in attracting and retaining key executive officers in the banking industry. We consider these severance protections to be an important part of an executive’s compensation and to be consistent with similar benefits offered by our competitors. The occurrence or potential occurrence of a change-in-control transaction will create uncertainty regarding the continued employment of our executive officers. These transactions often result in significant organizational changes, particularly at the executive level. We believe that change-in-control benefits mitigate against the potential negative consequences to executives of actively pursuing possible change-in-control transactions that may be in the best interest of shareholders. The agreements provide for certain compensation and benefits if certain events occur during a protection period of six months before to 24 months following a change in control (the “Protection Period”), as defined in the agreements. The agreements also contain provisions for the protection of our confidential and proprietary information, as well as non-competition and non-solicitation restrictions. Each of the agreements is effective for an initial term of three years and automatically extends for additional terms of one year, unless, at least 90 days prior to the expiration of the initial term or an additional term, we give written notice to the executive that we do not intend to extend such term. Under the agreements, in the event of an executive’s termination for a reason other than for cause, as defined in the agreements, or if an executive terminates voluntarily under one or more of the specified circumstances that constitute a good reason within the Protection Period, the executive will receive an amount equal to the following: for Mr. Birmingham 2.99x; for Messrs. Plants, Bigham, Willett and Burruano 2.00x; and for Mr. Quinn and Ms. Collins 1.25x, the sum of his or her base salary for the most recent calendar year ending before the date on which the change in control occurred plus the average of the executive’s annual cash incentive compensation for the three most recent calendar years ending before the date on which the change in control occurred. Such amount will be paid in a lump sum, less applicable deductions and withholdings, within 10 days of the executive’s termination date. We will also continue to pay for health and dental coverage, as follows: for and up to 36 months for Mr. Birmingham; for and up to 24 months for Messrs. Plants, Bigham, Willett and Burruano, and up to 18 months for Mr. Quinn and Ms. Collins, for the executive and his or her covered dependents. In addition, all RSUs, PSUs and other rights that the executive may hold to purchase or otherwise acquire company stock will immediately fully vest, and in the case of PSUs, such PSUs will vest at the greater of target performance or actual performance through the executive’s termination date. RSUs and PSUs will be paid as soon as practicable following the executive’s termination date. The non-competition and non-solicitation provisions of the agreements are effective for a period of six months following the executive’s termination of employment provided that such termination does not entitle the executive to compensation or benefits under the agreement or another arrangement with us. In the event the executive’s employment terminates and such termination entitles the executive to compensation or benefits under another arrangement with us, the non-competition and non-solicitation provisions of the agreement will be effective for the period of time equal to the greater of: (i) the period of time during which the executive is receiving any compensation or benefits from us; or (ii) a period of six months following the executive’s termination of employment. In the event of termination that entitles the executive to compensation or benefits under his agreement, the non-competition and non-solicitation provisions of the agreements are effective 24 months for Mr. Birmingham; 18 months for Messrs. Plants, Bigham, Willett, and Burruano; and 9 months for Mr. Quinn and Ms. Collins following the executive’s termination of employment. In all cases, the executive’s payments and benefits will be reduced, if necessary, to ensure that the payments and benefits to the executive will not be subject to the “golden parachute” excise tax imposed by Section 4999 of the Internal Revenue Code and the payments will be deductible by us. Messrs. Bigham and Willett terminated employment in December 2023 and their agreements are no longer applicable. Further information regarding the benefits under the agreements is included under the Potential Payments Upon Termination of Employment or Change in Control section starting on page 59.

  134. Executive Agreements

    | 50 | Financial Institutions, Inc. |

  135. Tax and Accounting Implications

    Tax and Accounting Implications The financial reporting and income tax consequences of individual compensation elements are important considerations for the MD&C Committee when analyzing the overall level of executive compensation and the individual components of executive compensation. Overall, the MD&C Committee seeks to balance our objective of ensuring an effective compensation package for our NEOs with the benefit from deductibility of compensation, while ensuring an appropriate and transparent impact on reported earnings and other closely followed financial measures. Section 162(m) of the Internal Revenue Code generally places a $1 million deduction limit on the amount of compensation paid by a publicly traded company in any one year to certain executive officers. The MD&C Committee believes that tax deductibility is one of many factors that should be considered in developing an appropriate compensation program for its executive officers, but reserves the right to approve compensation for an executive officer that exceeds the deduction limit of Section 162(m) in order to provide competitive compensation packages. Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, we are required to recognize compensation expense on our income statement over the requisite service period or performance period based on the grant date fair value of RSUs and PSUs.

  136. SUMMARY COMPENSATION TABLE

    SUMMARY COMPENSATION TABLE The following table contains information concerning the compensation earned by our NEOs in each of the fiscal years ended December 31, 2023, 2022 and 2021 for which each officer was a NEO.

  137. SUMMARY COMPENSATION TABLE

    | Name & Principal Position | Year | Salary ($) | Stock Awards ($)(3) | Non-equity Incentive Plan Compensation ($) | Change in Pension Value ($)(4) | All Other Compensation ($)(5) | Total ($) | | Martin K. Birmingham | 2023 | 713,863 | 355,591 | 318,638 | 61,032 | 23,760 | 1,472,884 | | President and Chief Executive | 2022 | 691,578 | 373,097 | 406,046 | 0 | 19,956 | 1,490,677 | | Officer | 2021 | 656,355 | 364,277 | 435,550 | 21,893 | 12,294 | 1,490,369 | | W. Jack Plants II | 2023 | 331,339 | 96,561 | 130,089 | 17,237 | 12,809 | 588,035 | | EVP, Chief Financial Officer & | 2022 | 298,967 | 123,505 | 110,585 | 0 | 10,151 | 543,208 | | Treasurer | 2021 | 247,289 | 79,761 | 131,801 | 18,768 | 10,570 | 488,189 | | Justin K. Bigham(1) | 2023 | 346,740 | 109,223 | 0 | 19,023 | 287,818 | 762,804 | | EVP, Chief Community Banking | 2022 | 364,046 | 143,932 | 132,862 | 0 | 15,558 | 656,398 | | Officer | 2021 | 348,369 | 111,864 | 160,491 | 16,402 | 20,267 | 657,393 | | Sean M. Willett(1) | 2023 | 338,603 | 98,427 | 0 | 19,712 | 28,356 | 485,098 | | EVP, Chief Administrative | 2022 | 328,033 | 132,662 | 119,719 | 0 | 43,877 | 624,291 | | Officer | 2021 | 289,706 | 92,558 | 144,615 | 15,945 | 9,478 | 552,302 | | Kevin B. Quinn | 2023 | 307,130 | 89,431 | 109,845 | 17,604 | 20,913 | 544,923 | | SVP, Chief Commercial | 2022 | 285,472 | 119,278 | 104,186 | 12,796 | 20,918 | 542,650 | | Banking Officer | 2021 | 255,000 | 81,416 | 125,851 | 15,851 | 15,352 | 493,470 | | Samuel J. Burruano Jr. | 2023 | 276,517 | 80,501 | 93,477 | 20,424 | 10,290 | 481,209 | | EVP, Chief Legal Officer & | 2022 | 259,520 | 111,060 | 82,281 | 94 | 9,690 | 462,645 | | Corporate Secretary | 2021 | 242,437 | 79,761 | 98,066 | 15,639 | 7,529 | 443,432 | | Laurie R. Collins(2) | 2023 | 257,949 | 75,103 | 83,050 | 14,826 | 9,300 | 440,228 | | SVP, Chief Human Resources | | | | | | | | | Officer | | | | | | | |

  138. SUMMARY COMPENSATION TABLE

    | (1) Mr. Bigham’s employment with the company ended on December 7, 2023 and Mr. Willet’s employment with the company ended on December 28, 2023. |

  139. SUMMARY COMPENSATION TABLE

    | (2) Pursuant to SEC rules, compensation for prior years is not required to be reported for Ms. Collins. |

  140. SUMMARY COMPENSATION TABLE

    | (3) The grant date fair value of all stock awards has been calculated in accordance with FASB ASC Topic 718. In the case of RSUs, the value is determined by multiplying the number of RSUs granted by the closing price of our stock on the grant date reduced by the present value of the dividends expected to be paid on the underlying shares. For PSUs awarded during 2023, amounts shown reflect the grant date fair value of such awards for the three-year performance period beginning in 2023, based on the probable outcome of performance measures related to these |

  141. SUMMARY COMPENSATION TABLE

    | 2024 Proxy Statement | 53 |

  142. SUMMARY COMPENSATION TABLE

    | PSUs at the grant date. The 2023 PSUs include both ROAA and relative ROAE performance measures as described under the caption “Long-Term Equity-Based Incentive Plan” in the Compensation Discussion and Analysis section on page 43. The table below sets forth the grant date fair value for the PSUs granted during 2023: |

  143. SUMMARY COMPENSATION TABLE

    | Executive Name | Probable Outcome of Performance Measures Grant Date Fair Value ($)* | Maximum Outcome of Performance Measures Grant Date Fair Value ($)* | | Martin K. Birmingham | 177,796 | 266,693 | | W. Jack Plants II | 48,281 | 72,421 | | Justin K. Bigham(6) | 54,611 | 81,917 | | Sean M. Willett(6) | 49,214 | 73,820 | | Kevin B. Quinn | 44,715 | 67,073 | | Samuel J. Burruano Jr. | 40,251 | 60,376 | | Laurie R. Collins | 37,552 | 56,327 |

  144. SUMMARY COMPENSATION TABLE

    | * Amounts shown represent the grant date fair value of PSUs subject to the ROAA and relative ROAE performance measures (i) based on the probable or target outcome as of the date the goals were set and (ii) based on achieving the maximum level of performance for the three-year performance period beginning in 2023. The grant date fair value of the ROAA- and the relative ROAE-based PSUs awarded on March 21, 2023 was $16.66 per share, which was the closing share price of our common stock on that date reduced by the present value of the dividends expected to be paid on the underlying shares. |

  145. SUMMARY COMPENSATION TABLE

    | (4) The amounts reported in this column reflect the aggregate change in the actuarial present value of each NEO’s accrued pension benefit under our defined benefit pension plan based on the assumptions used for FASB ASC Topic 715 at each measurement date. As such, changes reflect changes in value due to an increase or decrease in the FASB ASC Topic 715 discount rates, changes in the mortality tables, and changes due to the accrual of plan benefits. The methodology applies the “no negative number” position for reporting the change in pension value. |

  146. SUMMARY COMPENSATION TABLE

    | (5) Amounts reported in this column for 2023 are itemized in the following table captioned “All Other Compensation.” |

  147. SUMMARY COMPENSATION TABLE

    | (6) 2023 LTIP grants for Messrs. Bigham and Willet will not be earned as they have left employment. |

  148. 2023 GRANTS OF PLAN-BASED AWARDS

    2023 GRANTS OF PLAN-BASED AWARDS The following table shows the plan-based awards granted during the fiscal year ended December 31, 2023 to each of our NEOs.

  149. 2023 GRANTS OF PLAN-BASED AWARDS

    | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards (#) | Grant Date Fair Value of Stock Awards(3) ($) | | Executive Name | Award Description | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Martin K. Birmingham | EIP(1) | | 179,269 | 358,538 | 537,807 | | | | | | | | RSU(4) | 3/21/2023 | | | | | | | 10,672 | 177,796 | | | PSU(5) | 3/21/2023 | | | | 2,668 | 5,336 | 8,004 | | 88,898 | | | PSU(6) | 3/21/2023 | | | | 2,668 | 5,336 | 8,004 | | 88,898 | | W. Jack Plants II | EIP(1) | | 70,140 | 140,280 | 210,420 | | | | | | | | RSU(4) | 3/21/2023 | | | | | | | 2,898 | 48,281 | | | PSU(5) | 3/21/2023 | | | | 725 | 1,449 | 2,174 | | 24,140 | | | PSU(6) | 3/21/2023 | | | | 725 | 1,449 | 2,174 | | 24,140 | | Justin K. Bigham | EIP(1) | | 75,493 | 150,987 | 226,480 | | | | | | | | RSU(4,7) | 3/21/2023 | | | | | | | 3,278 | 54,611 | | | PSU(5,7) | 3/21/2023 | | | | 820 | 1,639 | 2,459 | | 27,306 | | | PSU(6,7) | 3/21/2023 | | | | 820 | 1,639 | 2,459 | | 27,306 | | Sean M. Willett | EIP(1) | | 68,025 | 136,051 | 204,076 | | | | | | | | RSU(4,7) | 3/21/2023 | | | | | | | 2,954 | 49,214 | | | PSU(5,7) | 3/21/2023 | | | | 739 | 1,477 | 2,216 | | 24,607 | | | PSU(6,7) | 3/21/2023 | | | | 739 | 1,477 | 2,216 | | 24,607 | | Kevin B. Quinn | EIP(1) | | 61,800 | 123,600 | 185,400 | | | | | | | | RSU(4) | 3/21/2023 | | | | | | | 2,684 | 44,715 | | | PSU(5) | 3/21/2023 | | | | 671 | 1,342 | 2,013 | | 22,358 | | | PSU(6) | 3/21/2023 | | | | 671 | 1,342 | 2,013 | | 22,358 | | Samuel J. Burruano Jr. | EIP(1) | | 50,400 | 100,800 | 151,200 | | | | | | | | RSU(4) | 3/21/2023 | | | | | | | 2,416 | 40,251 | | | PSU(5) | 3/21/2023 | | | | 604 | 1,208 | 1,812 | | 20,125 | | | PSU(6) | 3/21/2023 | | | | 604 | 1,208 | 1,812 | | 20,125 | | Laurie R. Collins | EIP(1) | | 46,725 | 93,450 | 140,175 | | | | | | | | RSU(4) | 3/21/2023 | | | | | | | 2,254 | 37,552 | | | PSU(5) | 3/21/2023 | | | | 564 | 1,127 | 1,691 | | 18,776 | | | PSU(6) | 3/21/2023 | | | | 564 | 1,127 | 1,691 | | 18,776 |

  150. 2023 GRANTS OF PLAN-BASED AWARDS

    | (1) This represents the annual cash incentive opportunity under our 2023 Executive Incentive Plan at threshold, target or maximum performance. The amount actually paid for 2023 is set forth in the Summary Compensation Table under the “Non-equity Incentive Plan Compensation” column. Please refer to the Compensation Discussion and Analysis under the caption “Executive Incentive Plan” starting on page 39 for additional information about the performance measures applicable to each payment. |

  151. 2023 GRANTS OF PLAN-BASED AWARDS

    | (2) For PSUs, these columns show the potential number of shares that our NEOs could earn under our 2015 LTIP at threshold, target or maximum performance. The measures and potential payouts are described in more detail in the Compensation Discussion and Analysis section of this proxy statement under the caption “Long- Term Equity-Based Incentive Plan” on page 43. |

  152. 2023 GRANTS OF PLAN-BASED AWARDS

    | (3) See footnote 1 to the “Summary Compensation Table” for a description of the method used to determine the grant date fair value of stock awards. |

  153. 2023 GRANTS OF PLAN-BASED AWARDS

    | (4) The RSUs are granted annually to the NEOs as a component of their complete compensation package and vest on the third anniversary of the grant date, subject to the recipient’s continued employment with the company. |

  154. 2023 GRANTS OF PLAN-BASED AWARDS

    | (5) The PSUs vest on the third anniversary of the grant date, subject to satisfaction of the gateway performance criteria and meeting the relative ROAE performance measure and the recipient’s continued employment with the company. |

  155. 2023 GRANTS OF PLAN-BASED AWARDS

    | (6) The PSUs vest on the third anniversary of the grant date, subject to satisfaction of the gateway performance criteria and meeting the ROAA performance measure and the recipient’s continued employment with the company. |

  156. 2023 GRANTS OF PLAN-BASED AWARDS

    | (7) 2023 LTIP grants for Messrs. Bigham and Willet will not be earned as they have left employment. |

  157. 2023 GRANTS OF PLAN-BASED AWARDS

    For additional information regarding our EIP and our LTIP, please see the discussions under “Executive Incentive Plan” on page 39, and “Long-Term Equity-Based Incentive Plan” on page 43 in the Compensation Discussion and Analysis.

  158. 2023 GRANTS OF PLAN-BASED AWARDS

    | 2024 Proxy Statement | 55 |

  159. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

  160. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | | Stock awards | | | | | Executive Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(8) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#)(9) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)(8) | | Martin K. Birmingham | 23,632(1) | 503,362 | 20,559 | 437,907 | | W. Jack Plants II | 6,948(2) | 147,992 | 4,986 | 106,202 | | Justin K. Bigham | —(3) | — | — | — | | Sean M. Willett | —(4) | — | — | — | | Kevin B. Quinn | 6,692(5) | 142,540 | 4,852 | 103,348 | | Samuel J. Burruano | 6,254(6) | 133,210 | 4,551 | 96,936 | | Laurie R. Collins | 7,536(7) | 160,517 | 2,213 | 47,137 |

  161. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | (1) 6,604 shares vest on March 19, 2024, 6,356 shares vest on March 16, 2025, and 10,672 shares vest on March 21, 2026. |

  162. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | (2) 1,446 shares vest on March 19, 2024, 2,604 shares vest on March 16, 2025, and 2,898 shares vest on March 21, 2026. |

  163. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | (3) All non-vested equity awards were forfeited on the executive’s last day of employment, which was December 7, 2023. |

  164. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | (4) All non-vested equity awards were forfeited on the executive’s last day of employment, which was December 28, 2023. |

  165. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | (5) 1,476 shares vest on March 19, 2024, 2,532 shares vest on March 16, 2025 and 2,684 shares vest on March 21, 2026. |

  166. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | (6) 1,446 shares vest on March 19, 2024, 2,392 shares vest on March 16, 2025 and 2,416 shares vest on March 21, 2026. |

  167. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | (7) 3,000 shares vest on October 27, 2024, 2,282 shares vest on March 16, 2025 and 2,254 shares vest on March 21, 2026. |

  168. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | (8) Market values calculated using $21.30 per share, which was the closing market price of our common stock as of December 31, 2023. |

  169. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | (9) Projected vesting of maximum (150%) for the number of PSUs subject to ROAA performance measure granted on March 19, 2021, maximum (150%) for the number of PSUs subject to relative ROAE performance measure granted on March 19, 2021, below threshold (0%) number of RSUs subject to ROAA performance measure granted on March 16, 2022, between target and maximum (121%) number of RSUs subject to relative ROAE performance measure granted on March 16, 2022, below threshold (0%) number of RSUs subject to ROAA performance measure granted on March 21, 2023, between target and maximum (128%) number of RSUs subject to relative ROAE performance measure granted on March 21, 2023. |

  170. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

    | 56 | Financial Institutions, Inc. |

  171. RESTRICTED STOCK VESTED IN 2023

    RESTRICTED STOCK VESTED IN 2023 The following table provides information about restricted stock held by our NEOs that vested in 2023.

  172. RESTRICTED STOCK VESTED IN 2023

    | Executive Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(1) ($) | | Martin K. Birmingham | 14,178 | 348,397 | | W. Jack Plants II | 985 | 24,339 | | Justin K. Bigham | 4,565 | 112,801 | | Sean M. Willett | 3,562 | 88,017 | | Kevin B. Quinn | 1,500 | 23,325 | | Samuel J. Burruano Jr. | 2,726 | 67,359 | | Laurie R. Collins | — | — |

  173. RESTRICTED STOCK VESTED IN 2023

    | (1) Represents the number of vested shares multiplied by the closing market price of our common stock on the date of vesting. |

  174. PENSION BENEFITS

    PENSION BENEFITS We maintain a defined benefit pension plan in which our NEOs included below have an accumulating benefit. The following Pension Benefits table provides information regarding the present value of the accumulated benefit, years of credited service and the amount of any pension payments made in 2023 for our NEOs under the New York State Bankers Retirement System Volume Submitter Plan as adopted by Financial Institutions, Inc. (the “New York Bankers Retirement Plan”).

  175. PENSION BENEFITS

    | Executive Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit(1) ($) | | Martin K. Birmingham | New York Bankers Retirement Plan | 17.75 | 569,761 | | W. Jack Plants II | New York Bankers Retirement Plan | 4.00 | 52,267 | | Justin K. Bigham | New York Bankers Retirement Plan | 5.00 | 72,237 | | Sean M. Willett | New York Bankers Retirement Plan | 6.00 | 81,940 | | Kevin B. Quinn | New York Bankers Retirement Plan | 3.00 | 46,251 | | Samuel J. Burruano Jr | New York Bankers Retirement Plan | 7.00 | 93,618 | | Laurie R. Collins | New York Bankers Retirement Plan | 2.00 | 26,017 |

  176. PENSION BENEFITS

    | (1) The Present Value of Accumulated Benefit was determined using the same assumptions used for financial reporting purposes under U.S. generally accepted accounting principles. For a discussion of the valuation method and all material assumptions applied in quantifying the present value of the accumulated benefits, refer to Note 20 – Employee Benefit Plans to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023. |

  177. PENSION BENEFITS

    | 2024 Proxy Statement | 57 |

  178. PENSION BENEFITS

    Benefits for Tier 1 participants under the defined benefit pension plan for employees with a Date of Participation prior to January 1, 2016 (Mr. Birmingham) are based on years of service and the NEO’s highest average compensation during five consecutive years of employment. Compensation used to determine benefits is all wages and other compensation as reported on the NEO’s form W-2. Normal retirement age for NEOs who first participated in our plan prior to January 1, 2004 is age 62 with ten years of vesting service, as defined in the plan. Normal retirement age is age 65 for any NEO who first participated in the plan on or after January 1, 2004. The normal retirement benefit is an annual pension benefit calculated as follows:

  179. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL As discussed under “Other Factors Affecting Executive Compensation,” on page 49, we have entered into executive agreements, which include change of control provisions, with Messrs. Birmingham, Plants, Bigham, Willett, Quinn, and Burruano and Ms. Collins. The agreements are designed to promote stability and continuity of our senior management. The agreements include a “double trigger” structure which provides that the executive officer will not receive a “change of control” payment unless both (i) a change in control occurs and (ii) the executive’s employment terminates involuntarily for reasons other than for cause or voluntarily for good reason, in either case, in connection with the change in control. Under the agreements, a change of control will be deemed to have occurred if:

  180. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | 1. | any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than FII or a subsidiary of FII, becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of FII securities possessing 25% or more of the voting power for the election of directors of FII; or |

  181. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | 2. | there is consummated |

  182. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | i. | any consolidation, share exchange or merger in which FII is not the continuing or surviving corporation or pursuant to which any shares of our common stock are to be converted into cash, securities or other property, provided that the transaction is not with a corporation which was a subsidiary of FII immediately before the transaction; or |

  183. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | ii. | any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of FII; or |

  184. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | 3. | “approved directors” constitute less than a majority of the entire Board of Directors, with “approved directors” defined to mean the members of the Board of Directors of FII as of the date of the agreements and any subsequently elected members who are nominated or approved by at least a majority of the approved directors on the Board prior to such election. |

  185. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    A change-in-control termination under the agreements requires that within 6 months prior to or 24 months following a change in control: (i) the executive’s employment is terminated other than for cause; or (ii) the executive terminates employment for “good reason.” Termination for “good reason” means that the executive has terminated employment because the executive’s compensation has been reduced, or the executive’s job duties have been materially changed or the executive’s principal place of employment has changed by more than 75 miles. If the circumstances that create the “good reason” are resolved upon notice, a “good reason” termination is generally not available. Each of the agreements requires that the executive not disclose or use confidential information of the Company both during and after the conclusion of the executive’s employment, and not solicit employees of FII and not compete with FII during the term of the agreement and during the greater of any period for which the executive is entitled to receive compensation or six months thereafter. Each of the agreements includes a continuation multiple and a continuation period which are used to calculate potential payments under the agreement as follows:

  186. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | Executive Name | Continuation Multiple | Continuation Period | | Martin K. Birmingham | 2.99 | 36 months | | W. Jack Plants II | 2.00 | 24 months | | Kevin B. Quinn | 1.25 | 18 months | | Samuel J. Burruano Jr. | 2.00 | 24 months | | Laurie R. Collins | 1.25 | 18 months |

  187. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    In the event an executive experiences a termination that qualifies after a change in control, compensation and benefits under the agreements include: (1) payment of the sum of the base salary for the most recent calendar year ending before

  188. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | 2024 Proxy Statement | 59 |

  189. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    the date of the change in control and the average of the annual cash incentive compensation earned for the three most recent calendar years ending before the date of the change in control multiplied by the continuation multiple, payable in equal installments over the continuation period; (2) the immediate vesting of all stock options, restricted shares and RSUs; and (3) payment of the cost to continue medical and dental benefits over the continuation period. The agreements also include a provision that limits change-in-control payments to executives in order to eliminate any potential excise taxes under Section 4999 of the Internal Revenue Code. In the event the calculated payment exceeds the Section 280G limit, the benefits will be reduced to an amount below the limit. The equity awards outstanding as of December 31, 2023 for each of the NEOs were issued under the Financial Institutions, Inc. 2015 LTIP. Under the Financial Institutions, Inc. 2015 LTIP, upon death or disability of a participant, the following will occur: (1) full vesting of all equity awards that are subject solely to the passage of time; and (2) the vesting of a pro rata portion of all equity awards whose vesting is based wholly or partially based on the achievement of performance-based goals, as determined by the MD&C Committee in its sole discretion. The following table includes the amount of compensation payable to each of the NEOs upon a termination of employment under certain circumstances on December 31, 2023.

  190. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | Executive Name | Benefit | Termination Without Cause or For Good Reason Following a Change in Control(2) ($) | Death or Disability ($) | | Martin K. Birmingham | Pay continuation | 3,329,236 | — | | | Equity award vesting(1) | 1,006,723 | 1,006,723 | | | Health benefits continuation | 58,694 | — | | | Total | 4,394,653 | 1,006,723 | | W. Jack Plants II | Pay continuation | 895,268 | — | | | Equity award vesting(1) | 274,685 | 274,685 | | | Health benefits continuation | 39,129 | — | | | Total | 1,209,082 | 274,685 | | Kevin B. Quinn | Pay continuation | 530,023 | — | | | Equity award vesting(1) | 263,779 | 263,779 | | | Health benefits continuation | 24,980 | — | | | Total | 818,783 | 263,779 | | Samuel J. Burruano Jr. | Pay continuation | 783,315 | — | | | Equity award vesting(1) | 245,120 | 245,120 | | | Health benefits continuation | 0 | — | | | Total | 1,028,435 | 245,120 | | Laurie R. Collins | Pay continuation | 428,373 | — | | | Equity award vesting(1) | 235,834 | 235,834 | | | Health benefits continuation | 24,980 | — | | | Total | 689,187 | 235,834 |

  191. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | (1) The figures shown reflect the value of those equity awards that would accelerate, calculated using a price per share of $21.30 which was the closing price for a share of our common stock as of December 31, 2023. |

  192. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | (2) The agreements also include a provision that limits change-in-control payments to executives in order to eliminate any potential excise taxes under Section 4999 of the Internal Revenue Code. In the event the calculated payment exceeds the Section 280G limit, the benefits will be reduced to an amount below the limit. |

  193. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | 60 | Financial Institutions, Inc. |

  194. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    Mr. Bigham and the Bank entered into a Separation Agreement and Release of All Claims (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Bigham’s employment terminated as of the close of business on December 7, 2023. The Bank made a lump sum cash payment to Mr. Bigham in an amount equal to $250,000, less required withholdings on January 12, 2024. The payment set forth in the Separation Agreement was in exchange for Mr. Bigham executing and not revoking the general release of claims and complying with certain obligations including, but not limited to, standard confidentiality, cooperation, and non-disparagement provisions as well as non-solicitation of Bank employees and customers provisions. Mr. Willett did not receive any severance or additional payments in connection with his resignation as of December 28, 2023.

  195. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    | 2024 Proxy Statement | 61 |

  196. CEO PAY RATIO

    CEO PAY RATIO In accordance with SEC rules, we are disclosing the ratio of the annual total compensation of our CEO, Martin K. Birmingham, to the annual total compensation of our median employee. For 2023:

  197. CEO PAY RATIO

    | ● | The annual total compensation of our median employee was $50,040. |

  198. CEO PAY RATIO

    | ● | The annual total compensation of Mr. Birmingham, as reported on page 53 in the Summary Compensation Table, was $1,472,884. |

  199. CEO PAY RATIO

    | ● | Based upon this information, the ratio of the annual total compensation of Mr. Birmingham to the median employee was 29 to 1. |

  200. CEO PAY RATIO

    Our median employee for 2023 was identified among all employees (other than Mr. Birmingham) as of December 31, 2023 based on annualized Medicare wages as reported in Box 5 of each employee’s 2023 W-2. Once we identified our median employee, we determined the median employee’s annual total compensation using a methodology consistent with that used for the Summary Compensation Table. We did not make any assumptions, adjustments or estimates with respect to annual total compensation. The pay ratio identified above is a reasonable estimate calculated in a manner consistent with SEC rules. Pay ratios that are reported by our peers may not be directly comparable to ours because of differences in the composition of each company’s workforce, as well as the assumptions and methodologies used in calculating the pay ratio, as permitted by SEC rules.

  201. CEO PAY RATIO

    | 62 | Financial Institutions, Inc. |

  202. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive “compensation actually paid” (as defined by SEC rules) and certain financial performance of the Company. The MD&C Committee did not consider the pay versus performance disclosure when making its incentive compensation decisions. For further information about how we align executive compensation with the Company’s performance, see “Compensation Discussion and Analysis” starting on page 30. The following table provides information regarding compensation paid to our principal executive officer (“PEO”) and other NEOs along with our Total Shareholder Return (“TSR”), the TSR of the S&P U.S. SmallCap Banks Index (“Peer Group”), our net income, and the Company’s PPNI, which is the most important financial performance measure used by the Company to link compensation paid to the NEOs, for 2023, to Company performance.

  203. PAY VERSUS PERFORMANCE

    | Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs (3) | Value of Initial Fixed $100 Investment Based On: Total Shareholder Return (4) | Peer Group Total Shareholder Return (4) | Net Income ($’000) | Company- Selected Measure (PPNI (5) ) ($’000) | | 2023 | $1,472,884 | $1,300,579 | $550,383 | $409,868 | $104.38 | $140.55 | $50,264 | $60,440 | | 2022 | $1,490,677 | $1,352,023 | $591,637 | $546,792 | $111.94 | $139.85 | $56,573 | $66,474 | | 2021 | $1,490,370 | $1,928,396 | $526,957 | $602,225 | $139.92 | $158.62 | $77,697 | $71,497 | | 2020 | $1,459,283 | $1,153,554 | $528,013 | $414,981 | $95.59 | $113.94 | $38,332 | $58,551 |

  204. PAY VERSUS PERFORMANCE

    | (1) Martin K. Birmingham, President and Chief Executive Officer, was the PEO for each of the years presented in the table. |

  205. PAY VERSUS PERFORMANCE

    | 2024 Proxy Statement | 63 |

  206. PAY VERSUS PERFORMANCE

    | (2) SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine “compensation actually paid” as reported in the Pay Versus Performance Table. “Compensation actually paid” does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. In general, “compensation actually paid” is calculated as Summary Compensation Table total compensation adjusted to include the change in fair value of equity awards as of December 31 of the applicable year or, if earlier, the vesting date (rather than the grant date) and the pension value attributable to the applicable years’ service and any change in pension value attributable to plan amendments made in the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments in the table below were made to Mr. Birmingham’s total compensation to determine the compensation actually paid: |

  207. PAY VERSUS PERFORMANCE

    | | Martin Birmingham | | | | | | 2023 | 2022 | 2021 | 2020 | | Total Compensation as reported in Summary Compensation Table (SCT) | $1,472,884 | $1,490,677 | $1,490,370 | $1,459,283 | | Minus pension values reported in SCT | $61,032 | $— | $21,893 | $157,872 | | Minus fair value of equity awards granted during fiscal year | $355,591 | $373,097 | $364,277 | $320,720 | | Plus pension value attributable to current year’s service and any change in pension value attributable to plan amendments made in the current year | $11,877 | $45,610 | $49,376 | $41,473 | | Plus air value of equity compensation granted in current year—value at end of year-end | $372,537 | $309,664 | $420,015 | $283,680 | | Plus change in fair value for end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during current fiscal year | $3,021 | $3,088 | $(3,365) | $(8,031) | | Plus change in fair value from end of prior fiscal year to end of current fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | $(143,117) | $(123,919) | $358,170 | $(144,259) | | Plus dividends or other earnings paid on stock or options awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | $— | $— | $— | $— | | Plus fair value of awards forfeited in current fiscal year determined at end of prior fiscal year | $— | $— | $— | $— | | Compensation Actually Paid | $1,300,579 | $1,352,023 | $1,928,396 | $1,153,554 |

  208. PAY VERSUS PERFORMANCE

    | 64 | Financial Institutions, Inc. |

  209. PAY VERSUS PERFORMANCE

    | (3) In 2023, the non-PEO NEOs include W. Jack Plants II, EVP, Chief Financial Officer and Treasurer, Justin W. Bigham, EVP, Chief Community Banking Officer, Sean M. Willett, EVP, Chief Administrative Officer, Kevin B. Quinn, SVP Chief Commercial Banking Officer, Samuel J. Burruano Jr., EVP Chief Legal Officer and Corporate Secretary, and Laurie R. Collins, SVP and Chief Human Resources Officer; in 2022, the non-PEO NEOs include W. Jack Plants II, EVP, Chief Financial Officer and Treasurer, Justin W. Bigham, EVP, Chief Community Banking Officer, Sean M. Willett, EVP, Chief Administrative Officer, and Kevin B. Quinn, SVP, Chief Commercial Banking Officer; in 2021, the non-PEO NEOs include W. Jack Plants II, SVP, Chief Financial Officer and Treasurer, Justin W. Bigham, EVP, Chief Community Banking Officer, Sean M. Willett, EVP, Chief Administrative Officer, and Samuel J. Burruano, EVP, Chief Legal Officer and Corporate Secretary; and in 2020, the Non PEO NEOs include Justin W. Bigham, EVP, Chief Financial Officer, Joseph L. Dugan, Former SVP, Chief Experience and Go To Market Officer, Sean M. Willett, SVP, Chief Administrative Officer, Craig Burton, SVP, Commercial Real Estate Executive, and William L. Kreienberg, Former EVP, Chief Banking and Revenue Officer. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments in the table below were made to the NEO’s total compensation to determine the compensation actually paid: |

  210. PAY VERSUS PERFORMANCE

    | | Average NEOS | | | | | | 2023 | 2022 | 2021 | 2020 | | Total Compensation as reported in SCT | $550,383 | $591,637 | $526,957 | $528,013 | | Minus pension values reported in SCT | $18,138 | $3,199 | $16,521 | $16,217 | | Minus fair value of equity awards granted during fiscal year | $91,541 | $129,844 | $89,072 | $90,587 | | Plus pension value attributable to current year’s service and any change in pension value attributable to plan amendments made in the current year | $10,159 | $12,316 | $10,967 | $10,811 | | Plus fair value of equity compensation granted in current year—value at end of year-end | $59,640 | $107,769 | $102,701 | $55,620 | | Plus change in fair value for end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during current fiscal year | $(1,512) | $(2,535) | $4,978 | $(3,048) | | Plus change in fair value from end of prior fiscal year to end of current fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | $(23,250) | $(29,352) | $62,215 | $(26,039) | | Plus dividends or other earnings paid on stock or options awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | $— | $— | $— | $— | | Plus fair value of awards forfeited in current fiscal year determined at end of prior fiscal year | $(75,873) | $— | $— | $(43,572) | | Compensation Actually Paid | $409,868 | $546,792 | $602,225 | $414,981 |

  211. PAY VERSUS PERFORMANCE

    | (4) TSR is determined based on the value of an initial fixed investment of $100 on December 31, 2019 and calculated on December 31 of each 2023, 2022, 2021 and 2020, respectively. The TSR peer group consists of the S&P U.S. SmallCap Banks, which is the same peer group used by the Company for purposes of Item 201(e) of Regulation S-K under the Exchange Act in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. |

  212. PAY VERSUS PERFORMANCE

    | (5) PPNI is a non-GAAP measure that we believe is useful in understanding our financial performance and condition. Refer to the GAAP to Non-GAAP Reconciliations in Appendix A. |

  213. PAY VERSUS PERFORMANCE

    | 2024 Proxy Statement | 65 |

  214. RELATIONSHIP DISCLOSURE

    | (i) Compensation Actually Paid vs. TSR |

  215. RELATIONSHIP DISCLOSURE

    | (ii) Compensation Actually Paid vs Net Income |

  216. RELATIONSHIP DISCLOSURE

    | (iii) | Compensation Actually Paid vs PPNI (Company-Selected Measure) |