DEF 14A 1 codorus220513_def14a.htm DEFINITIVE PROXY STATEMENT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.)

Filed by the Registrant ☒
Filed by a party other than the Registrant ☐
Check the appropriate box:
☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material under §240.14a-12

CODORUS VALLEY BANCORP, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):
☒		No fee required
☐		Fee paid previously with preliminary materials
☐		Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

April 15 , 2022

Dear Fellow Shareholders of Codorus Valley Bancorp, Inc.:

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

At the Annual Meeting, shareholders as of March 25, 2022, the record date, will have the opportunity to ask questions and to make comments. The Proxy Statement, accompanying Proxy Card and the Corporation’s 2021 Annual Report to Shareholders (including the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021) were first sent or given to our shareholders on April 15, 2022. You should also have received a Proxy Card or voting instruction form and postage-paid return envelope, through which your vote is being solicited on behalf of the Board.

The principal business of the Annual Meeting is to:

●

elect three Class B directors, each to serve for a term of three years and until his or her successor is elected and qualified;

●

approve an advisory, non-binding resolution regarding executive compensation;

●

approve amendments to the 2007 Codorus Valley Bancorp, Inc. Employee Stock Purchase Plan; and

●

ratify the appointment of Crowe LLP as Codorus Valley Bancorp, Inc.’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2022.

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

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

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

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

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

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

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

		Sincerely,


		Craig L. Kauffman
		President and Chief Executive Officer

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

509 Madison Avenue Suite 1206

New York, NY 10022

Shareholders Call Toll Free: (800) 662-5200

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

Email: CVLY@investor.morrowsodali.com

CODORUS VALLEY BANCORP, INC.

NASDAQ TRADING SYMBOL: CVLY

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

AND

PROXY STATEMENT

2022

www.peoplesbanknet.com

PROXY STATEMENT

Dated and to be mailed on or about April 15 , 2022

Codorus Valley Bancorp, Inc.

Codorus Valley Corporate Center

105 Leader Heights Road

York, Pennsylvania 17403

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 17, 2022

TABLE OF CONTENTS

	Page

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS	1

GENERAL	4

GOVERNANCE OF THE CORPORATION	1 2

PROPOSAL 1 – Election of Directors	1 8

INFORMATION CONCERNING SECURITY OWNERSHIP	2 4

INFORMATION CONCERNING COMPENSATION	2 7

Executive Compensation	2 7

Director Compensation	5 5

RELATED PERSON TRANSACTIONS AND POLICIES	5 7

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE	5 7

PROPOSAL 2 Advisory Vote Regarding Executive Compensation	5 8

PROPOSAL 3 Vote on Amendments to the 2007 Employee Stock Purchase Plan	5 8

PROPOSAL 4 Ratification of Independent Registered Public Accounting Firm	6 1

REPORT OF THE AUDIT COMMITTEE	6 2

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	6 3

HOUSEHOLDING OF PROXY MATERIALS	6 4

ADDITIONAL INFORMATION	6 4

OTHER MATTERS	6 4

INTERNET AVAILABILITY OF PROXY MATERIALS	6 4

ANNEX A	6 5

CODORUS VALLEY BANCORP, INC.

CODORUS VALLEY CORPORATE CENTER

105 LEADER HEIGHTS ROAD

YORK, PENNSYLVANIA 17403

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 17, 2022

TO THE SHAREHOLDERS OF CODORUS VALLEY BANCORP, INC.:

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

To elect three Class B directors, each to serve for a three-year term and until his or her successor is elected and qualified (Proposal 1);

To approve an advisory, non-binding resolution regarding executive compensation (Proposal 2);

To approve amendments to the 2007 Codorus Valley Bancorp, Inc. Employee Stock Purchase Plan (Proposal 3); and

To ratify the appointment of Crowe LLP as Codorus Valley Bancorp, Inc.’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2022 (Proposal 4).

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

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

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

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

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

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

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

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

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

	BY ORDER OF THE BOARD OF DIRECTORS


	Timothy J. Nieman, Esq.
	Secretary

York, Pennsylvania

April 15, 2022

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

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

Important Notice Regarding the Availability of Proxy Materials for the ANNUAL Meeting to Be Held on MAY 17, 2022.

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

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

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

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

509 Madison Avenue Suite 1206

New York, NY 10022

Shareholders Call Toll Free: (800) 662-5200

Brokers, Banks, Trustees and Other Nominees Call Collect: (203) 658-9400

Email: CVLY@investor.morrowsodali.com

GENERAL

Introduction

This Proxy Statement and the accompanying Proxy Card are being furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Codorus Valley Bancorp, Inc. (the “Corporation”) to be voted at the 2022 Annual Meeting of Shareholders and any adjournment or postponement thereto, (the “Annual Meeting”). This Proxy Statement and the related Proxy Card, along with the 2021 Annual Report to Shareholders (including the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021) are being first distributed to shareholders on or about April 15, 2022.

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

At the Annual Meeting, shareholders will vote to:

●

Elect three Class B directors, each to serve for a three-year term and until his or her successor is elected and qualified;

●

Approve an advisory, non-binding resolution regarding executive compensation;

●

Approve amendments to the 2007 Codorus Valley Bancorp, Inc. Employee Stock Purchase Plan; and

●

Ratify the appointment of Crowe LLP (“Crowe”) as the Corporation’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2022.

Why did I receive these proxy materials?

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

●

Proposal 1: To elect three Class B directors, each to serve for a three-year term and until his or her successor is elected and qualified;

●

Proposal 2: To approve an advisory, non-binding resolution regarding executive compensation;

●

Proposal 3: To approve amendments to the 2007 Codorus Valley Bancorp, Inc. Employee Stock Purchase Plan; and

●

Proposal 4: To ratify the appointment of Crowe as the Corporation’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2022.

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

Who is allowed to vote at the Annual Meeting?

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

Who is allowed to virtually attend the Annual Meeting?

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

Registered Shareholders

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

Beneficial Shareholders

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

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

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

509 Madison Avenue Suite 1206

New York, NY 10022

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

Email: CVLY@investor.morrowsodali.com

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

How do I cast my vote?

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

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

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

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

Who is soliciting my vote?

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

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

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

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

What are the Board’s recommendations?

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

●

”FOR” the election of Cynthia A. Dotzel, Craig L. Kauffman and John E. Kiernan, Esq. to the Board as Class B directors (Proposal 1);

●

“FOR” the approval, on an advisory, non-binding resolution regarding executive compensation (Proposal 2);

●

“FOR” the approval of amendments to the 2007 Codorus Valley Bancorp, Inc. Employee Stock Purchase Plan (Proposal 3); and

●

“FOR” the ratification of the appointment of Crowe as the Corporation’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2022 (Proposal 4).

Why is the Board making such recommendations?

We describe each proposal and the Board’s reason for its recommendation with respect to each proposal on pages 18 , 19 and 5 8 through 6 1 and elsewhere in this Proxy Statement.

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

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

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

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

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

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

If your shares are held in a stock brokerage account or by a bank, trustee or other nominee, then the broker, bank, trustee or other nominee is considered to be the shareholder of record with respect to those shares. In that case, you are considered to be the beneficial owner of those shares, your shares are said to be held in “street name,” and the proxy materials will be forwarded to you by that nominee. Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trustee or other nominee how to vote their shares. If you do not provide voting instructions to your broker, then your shares will not be voted at the 2021 Annual Meeting on any proposal with respect to which your broker does not have discretionary authority. If you own your shares in street name, please instruct your broker, bank, trustee or other nominee how to vote your shares using the voting instruction form provided by your broker, bank, trustee or other nominee so that your vote can be counted. The voting instruction form provided by your broker, bank, trustee or other nominee holding your shares may also include information about how to submit your voting instructions over the Internet or by telephone. The Proxy Card accompanying this Proxy Statement will provide information regarding Internet and telephone voting.

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

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

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

Any shares held by a broker who has not received instructions from the beneficial owner as to how such shares are to be voted will have the same effect as a vote against Proposals 1, 2, 3 and 4 and such shares will be counted for establishing the presence of a quorum only if such shares have been voted at the Annual Meeting on a matter other than a procedural motion . As a result, if you are a beneficial owner, then we encourage you to provide voting instructions to the broker that holds your shares by carefully following the instructions provided to you by that broker.

Who will pay for the solicitation of proxies?

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

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

When will the voting results be announced?

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

Do I have appraisal or dissenters’ rights?

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

What constitutes a quorum?

The presence, in person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast on the particular matter constitutes a quorum for the conduct of business at the Annual Meeting. Under Pennsylvania law and the Bylaws, the presence of a quorum is required for each matter to be acted upon at the Annual Meeting. Broker non-votes will be counted for purposes of determining the presence of a quorum at the Annual Meeting only if such shares have been voted at the meeting on a matter other than a procedural motion . Abstentions will be counted for purposes of determining the presence of a quorum at the Annual Meeting.

What is the required vote?

In the case of the election of directors, the affirmative vote of holders of a majority of the shares of C ommon S tock present , in person (virtually) or by proxy, at the Annual Meeting and entitled to vote with respect to the election of directors is required to elect the three nominees. Votes that are withheld, shares that are not voted and broker non-votes will have the same effect as a vote against the election of directors.

The approval of each of the other proposals identified in this Proxy Statement requires the affirmative vote of holders of a majority of the Common Stock having voting power at the Annual Meeting, in person (virtually) or by proxy. Abstentions and broker non-votes will have the same effect as a vote against each of these other proposals.

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

Whom should I contact if I have questions?

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

509 Madison Avenue Suite 1206

New York, NY 10022

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Email: CVLY@investor.morrowsodali.com

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

Cautionary Statement Regarding Forward-Looking Statements

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

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

GOVERNANCE OF THE CORPORATION

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

Director Independence

Currently, the Board has nine (9) members. The Board has determined that the following eight (8) directors are independent in accordance with the independence standards of the NASDAQ Stock Market: Cynthia A. Dotzel, CPA, Chair; Sarah M. Brown; Brian D. Brunner; Keith Cenekofsky, CPA; John W. Giambalvo, Esq.; Jeffrey R. Hines, P.E.; J. Rodney Messick, Vice Chair; and John E. Kiernan, Esq.

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

Board Structure

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

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

Meetings and Committees of the Board

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

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

Audit Committee. The Audit Committee of the Board is comprised solely of directors who meet the applicable standards for independence of audit committee members of the NASDAQ Stock Market and the rules and regulations of the SEC for membership on audit committees, and possess the requisite knowledge or experience to serve on the Audit Committee. The current members of the Audit Committee are: Keith M. Cenekofsky, CPA (Chair); Jeffrey R. Hines, P.E. (Vice Chair); John W. Giambalvo, Esq.; and John E. Kiernan, Esq. Mr. Kiernan was appointed to the Audit Committee on April 12, 2022. The Audit Committee met four (4) times during 2021.

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

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

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

Compensation Committee. All members of the Compensation Committee are independent under applicable independence standards of the NASDAQ Stock Market. The current members of the Compensation Committee are: John W. Giambalvo, Esq. (Chair); Jeffrey R. Hines, P.E. (Vice Chair); Brian D. Brunner; Cynthia A. Dotzel, CPA; J. Rodney Messick; and John E. Kiernan, Esq. Mr. Kiernan was appointed to the Compensation Committee on April 12, 2022. The Compensation Committee met five (5) times during 2021.

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

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

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

Corporate Governance and Nominating Committee. All members of the Corporate Governance and Nominating Committee are independent under applicable independence standards of the NASDAQ Stock Market. The current members of the Corporate Governance and Nominating Committee are: Jeffrey R. Hines, P.E. (Chair); Brian D. Brunner (Vice Chair); Cynthia A. Dotzel, CPA; John W. Giambalvo, Esq.; Sarah Brown; and John E. Kiernan, Esq. Mr. Kiernan was appointed to the Corporate Governance and Nominating Committee on April 12, 2022. The Corporate Governance and Nominating Committee met two (2) times during 2021.

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

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

Role of the Board in Risk Oversight

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

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

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The Enterprise Risk Management Committee: The Enterprise Risk Management Committee operates pursuant to a written charter, and provides general risk oversight and is generally responsible for risk management, which includes monitoring and ensuring that credit risk, interest rate risk, liquidity risk, price risk, transaction risk, compliance risk, strategic risk and reputation risk assumed by the Corporation is consistent with the levels established by the Board.

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

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The Compensation Committee: The Compensation committee evaluates the risks and rewards associated with the Corporation’s compensation philosophy and programs.

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The Audit Committee: The Audit Committee oversees the Corporation’s processes for assessing risks and the effectiveness of the Corporation’s system of internal controls. In performing this function, the Audit Committee considers information from the Corporation’s independent registered public accounting firm, internal auditors, and other consultants as it determines appropriate, and discusses relevant issues with management and the independent registered public accounting firm.

Director Nomination Process

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

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

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

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

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

Timothy J. Nieman, Esq.

Corporate Secretary

Codorus Valley Bancorp, Inc.

105 Leader Heights Road

York, Pennsylvania 17403

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

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

Nomination of Directors

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

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

Deadline for Submission of Shareholder Proposals

In order for a shareholder to include a proposal in the Corporation’s Proxy Statement for presentation at the 2023 Annual Meeting of Shareholders, the proposal must be received by the Corporation at its principal executive offices c/o Timothy J. Nieman, Esq., Corporate Secretary, Codorus Valley Bancorp, Inc., 105 Leader Heights Road, York, Pennsylvania 17403, no later than December 1 6 , 2022. Any such proposal must comply with Rule 14a-8 of Regulation 14A of the proxy rules of the SEC. If a shareholder proposal is submitted to the Corporation after December 1 6 , 2022, it will not be included in the Corporation’s 2023 Proxy Statement.

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

Communicating with Directors

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

Chair of the Board of Directors (or Lead Director)

c/o Timothy J. Nieman, Esq.

Corporate Secretary

Codorus Valley Bancorp, Inc.

105 Leader Heights Road

York, Pennsylvania 17403

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

HUMAN CAPITAL MANAGEMENT

Human Capital

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

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

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Helping our clients achieve their dreams and live confidently

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Cultivating a work environment where our associates can thrive and make a difference

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Delivering value and prosperity for our shareholders

Vision: To attract lifetime clients by being best in class

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

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

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

Diversity and Inclusion

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

Compensation and Benefits

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

Learning and Development

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

Communication and Engagement

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

Board Diversity

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

Board Diversity Matrix (As of 4/15/2022)
Total Number of Directors		#
		Female	Male	Non-Binary	Did Not Disclose Gender
Part I: Gender Identity
	Directors	2	7	0	0
Part II: Demographic Background
	African American or Black	0	0	0	0
	Alaskan Native or Native American	0	0	0	0
	Asian	0	0	0	0
	Hispanic or Latino	0	0	0	0
	Native Hawaiian or Pacific Islander	0	0	0	0
	White	2	7	0	0
	Two or More Races or Ethnicities	0	0	0	0
	LGBTQ+	0
	Did not Disclose Demographic Background	0

PROPOSAL 1 – ELECTION OF DIRECTORS

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

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

The Board has fixed the number of directors at nine (9). There are three (3) nominees for the Board for election at the Annual Meeting. The Board has nominated the following three (3) individuals for election to the Board, each for a three-year term:

Nominees for Class B Directors

For a Three-Year Term Expiring in 2025

Cynthia A. Dotzel, CPA

Craig L. Kauffman

John E. Kiernan, Esq.

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

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

Required Vote and the Board’s Recommendation

Cumulative voting does not exist in the election of directors. Directors will be elected by the affirmative vote of holders of a majority of the shares of Common Stock present, in person (virtually) or by proxy, at the Annual Meeting and entitled to vote with respect to the election of directors. Votes that are withheld, shares that are not voted and broker non-votes will have the same effect as a vote against the election of directors.

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

Your vote is very important.

Information about Nominees and Continuing Directors

Information, as of April 15, 2022, concerning the Corporation’s three nominees for election to the Board and the six continuing directors appears below. Each of the Corporation’s nominees and continuing directors also serves as a director of the Bank. There are no family relationships among any of our directors or executive officers. Except as described elsewhere in this Proxy Statement, there are no arrangements or understandings between any of our directors and any other person pursuant to which any person was selected as a director. Except as described elsewhere in this Proxy Statement, none of our directors, director nominees, officers or any of their associates has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon at the Annual Meeting, other than elections to office.

Name and Age	Director Since	Principal Occupation and Business Experience for the Past Five Years and Positions Held With Codorus Valley Bancorp, Inc. and Subsidiaries
Class B – Continuing Directors with Terms Expiring in 2022

Cynthia A. Dotzel, CPA (67)	2011	Ms. Dotzel currently serves as Chair of the Board. She is a lifelong resident of York County and has been a practicing CPA with the public accounting firm of Dotzel & Company, Inc. since January 2019. Until January 2019, she practiced as a Director of Baker Tilly Virchow Krause, LLP, a leading advisory, tax and assurance firm, which acquired SF & Company, CPAs & Business Advisors, in November 2015, where she practiced as a CPA since 2009. Ms. Dotzel has served as a director of both the Corporation and Bank since November 8, 2011 and has served on the Corporation’s Audit Committee (Chair), Compensation Committee and Corporate Governance Committee and the Bank’s Wealth Management Committee. She has over 35 years of experience in the accounting industry. Additionally, Ms. Dotzel has numerous civic, charitable and professional affiliations, many of which involve leadership roles, and previously served as a Board Member and Audit Committee Chair for Waypoint Financial Corp., the holding company for Waypoint Bank, and York Financial Corp., a bank holding company of York Federal Savings & Loan Association. Ms. Dotzel is currently serving as Board Chair for the York Water Company, a Pennsylvania public utility and NASDAQ listed company. The Corporation believes that Ms. Dotzel’s professional and financial services experience, as well as her roles in civic, charitable and professional organizations, enable her to provide continued business and financial expertise to the Board and has nominated her for re-election.

Craig L. Kauffman (58)	2019	Mr. Kauffman has served as President and Chief Executive Officer of the Corporation since October 2021. From August 2018 through September 2021, Mr. Kauffman served as Executive Vice President and Chief Operating Officer of the Corporation. Mr. Kauffman has served as President and Chief Executive Officer of the Bank since August 2018. Previously, he served as Regional President of BB&T Bank, Lancaster, Pennsylvania, a full-service regional bank, from 2015 to August 2018; and Pennsylvania Division Head of Susquehanna Bank, Lancaster, Pennsylvania, a community focused bank, from 2013 through 2015. Mr. Kauffman has served as a director of the Corporation since October 8, 2019 and a director of the Bank since August 14, 2018. Mr. Kauffman is a 1985 graduate of Millersville University with a B.S. in Business Administration and a 1990 graduate of Pennsylvania State University in Harrisburg with an MBA. The Corporation believes that Mr. Kauffman’s 30 plus years of experience in the financial services industry enables him to provide continued business and financial expertise to the Board and has nominated him for re-election.
John E. Kiernan, Esq. (55)	2022	Mr. Kiernan has served as a director of the Corporation since April 12, 2022. He is a member of the Corporation’s Corporate Governance and Nominating Committee, the Corporation’s Compensation Committee and the Corporation’s Audit Committee. Since July 1, 2019, Mr. Kiernan has served as the President and Chief Operating Officer of Alico, Inc. (ALCO-NASDAQ), the largest citrus producer in the United States. Mr. Kiernan also serves on the Alico Board of Directors. From June 2015 through June 2019, Mr. Kiernan served as Alico’s Executive Vice President and Chief Financial Officer. Prior to joining Alico, Mr. Kiernan served as Chief Financial Officer of Greenwich Associates, Treasurer of Capital Markets & Risk Management for Global Crossing, Vice President of Investor Relations of Misys plc, Director of Corporate Development of IBM, and Managing Director of Bearn Stearns. The Corporation believes that his 30 plus years of experience in various finance roles, including publicly traded companies, enables Mr. Kiernan to provide unique expertise to the Board and has nominated him for re-election.
Class A – Continuing Directors with Terms Expiring in 2024

Brian D. Brunner (66)	2016	Mr. Brunner has served as a director of the Corporation since January 12, 2016 and the Bank since September 15, 2015. He is a member of the Corporation’s Corporate Governance and Nominating Committee, the Corporation’s Compensation Committee and Chair of the Bank’s Strategic Technology and Cybersecurity Committee. Mr. Brunner serves as the Division President of Account and Item Processing Sales within the Global Sales Organization of Fiserv, Inc., a global fintech and payments company, and is also a member of the Association for Financial Technology, a resource for networking and professional development in the financial technology industry. Mr. Brunner was an organizer and founding director of Bay Net Community Bank, a de novo bank established in the Baltimore, Maryland region. Mr. Brunner previously served as an independent director on the Board of Madison Bancorp, Inc., a Maryland-based financial institution, which was acquired by Codorus Valley Bancorp, Inc. on January 16, 2015. The Corporation believes that his 30 plus years of experience in the financial services industry, extensive knowledge of the Maryland markets and expertise in financial services technology enables Mr. Brunner to provide unique expertise to the Board.

Jeffrey R. Hines, P.E. (60)

2011

Mr. Hines has served as a director of both the Corporation and the Bank since November 8, 2011. He is currently Chair of the Corporation’s Corporate Governance and Nominating Committee, Vice Chair of the Compensation Committee and Vice Chair of the Audit Committee. From 2008 to March 1, 2020, Mr. Hines, currently retired, served as President and Chief Executive Officer, and currently serves as a member of the Board of Directors, of The York Water Company, a Pennsylvania public utility and NASDAQ listed company. Mr. Hines served in various additional capacities with The York Water Company since 1995, including Vice President of Engineering, Secretary, Chief Operating Officer and Engineering Manager. Mr. Hines also serves in leadership roles on numerous non-profit and trade organizations.

The Corporation believes that the attributes, skills and qualifications Mr. Hines has developed through his business background, his leadership role at The York Water Company, Inc., and his leadership roles in non-profit and trade organizations enable him to provide continued business expertise to the Board.

J. Rodney Messick (51)

2020

Mr. Messick has served as a director of the Bank since August 26, 2019, and director of the Corporation since February 11, 2020, and is currently Vice Chair of the Board. He is Chair of the Bank’s Wealth Management Committee and the Corporation’s Compensation Committee. Mr. Messick is Chief Executive Officer of Homesale Realty Service Group, Inc., headquartered in Lancaster, Pennsylvania and servicing clients with custom-tailored coverage in the Baltimore, South Central Pennsylvania and Southeastern Pennsylvania areas. Mr. Messick served on the Board of Metro Bank from December 2012 through February 2016. Mr. Messick is a 1994 graduate of the United States Naval Academy and served eight years as a naval flight officer. He is also a graduate of the University of Pennsylvania’s Wharton School and School of Engineering and Applied Science.

The Corporation believes that the attributes, skills and qualifications Mr. Messick has developed through his professional experiences as a business leader, as well as his knowledge and experience as a director of the Bank and Corporation, enable her to provide continued business expertise to the Board.

Class C – Continuing Directors with Terms Expiring in 2023

Sarah M. Brown (40)	2020	Ms. Brown has served as a director of the Bank since August 13, 2019, and director of the Corporation since February 11, 2020. She is Chair of the Corporation’s Enterprise Risk Management Committee, and is a member of the Corporate Governance and Nominating Committee. Ms. Brown currently serves as President and Chief Executive Officer of Keller-Brown Insurance Services, a fifth generation, family owned insurance agency located in York County, Pennsylvania. Ms. Brown is a 2004 graduate of Duquesne University, with a BS degree in Business Administration. The Corporation believes that the attributes, skills and qualifications Ms. Brown has developed through her professional experiences as a business leader and insurance specialist, as well as her knowledge and experience as a director of the Bank and Corporation, enable her to provide continued business expertise to the Board.
John W. Giambalvo, Esq. (52)	2017	Mr. Giambalvo has served as a director of the Bank since January 12, 2017, and director of the Corporation since July 11, 2017. He is a member of the Corporation’s Corporate Governance and Nominating Committee, Chair of the Compensation Committee, member of the Audit Committee and is also a member of the Bank’s Strategic Technology and Cybersecurity Committee. Mr. Giambalvo is the President and CEO of Jack Giambalvo Motor Co., Inc., an automotive company, and has over 20 years’ experience in the auto industry. Mr. Giambalvo started his professional career as a law clerk for the Honorable John C. Uhler, and then became an Assistant District Attorney in York, Pennsylvania. Mr. Giambalvo previously served as a member of the Board of Directors of the PA Automobile Dealers Association, which advocates on behalf of car and truck dealers in the Commonwealth of Pennsylvania and seeks economies of scale. The Corporation believes that the attributes, skills and qualifications Mr. Giambalvo has developed through his professional experiences as a business leader and lawyer, as well as his knowledge and experience as a director of the Bank and Corporation, enable him to provide continued business expertise to the Board.
Keith M. Cenekofsky, CPA (63)	2022	Mr. Cenekofsky has served as a director of the Bank since September 14, 2021, and a director of the Corporation since January 1, 2022. He is Chair of the Corporation’s Audit Committee. Mr. Cenekofsky is a retired CPA who during his thirty-six years in public accounting focused on public and private financial institutions. From 2013 through 2018, Mr. Cenekofsky practiced with BDO USA LLP, which delivers assurance, tax and financial advisory services. Prior to that, he practiced with Parente Beard from 2005 through 2013, Simon Lever from 1987 through 2005, and Stoy Malone from 1981 through 1987. The Corporation believes that Mr. Cenekofsky’s professional and financial services experience, as his knowledge and experience as a director of the Bank and Corporation, enable him to provide continued business and financial expertise to the Board.

Cooperation Agreement

John E. Kiernan, Esq. was appointed to the Board on April 12, 2022 consistent with that certain Cooperation Agreement, by and among the Corporation, Driver Opportunity Partners I LP, Driver Management Company LLC and J. Abbott R. Cooper (collectively, “Driver Management”), dated as of April 12, 2022 (the “Cooperation Agreement”). Pursuant to the Cooperation Agreement, the Corporation agreed to, among other things, appoint Mr. Kiernan to the Board as a director with a term expiring at the Annual Meeting and to the Corporate Governance and Nominating Committee, the Compensation Committee and the Audit Committee. Additionally, the Corporation agreed to nominate Mr. Kiernan for election at the Annual Meeting. Subject to the terms and conditions of the Cooperation Agreement, the Corporation has further agreed to begin a process to identify and appoint two additional independent directors to the Board no later than June 30, 2022. Pursuant to the Cooperation Agreement, Driver Management withdrew its notice of intent to nominate candidates for election to the Board at the Annual Meeting. Further, pursuant to the Cooperation Agreement, the Corporation has agreed to provide Driver Management up to $500,000 in the aggregate in exchange for its general release of claims with respect to the Corporation and its affiliates and to reimburse Driver Management for its expenses.

The foregoing description of the Cooperation Agreement does not purport to be complete and is qualified in its entirety by reference to the Cooperation Agreement, a copy of which is filed with the SEC on a Current Report on Form 8-K dated April 14, 2022.

INFORMATION CONCERNING SECURITY OWNERSHIP

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

●

Voting power, which includes power to vote or to direct the voting of the stock;

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Investment power, which includes the power to dispose or direct the disposition of the stock; or

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The right to acquire beneficial ownership within 60 days after March 25, 2022.

Beneficial Ownership of Principal Holders

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

Name & Address	Amount & Nature of
of Beneficial Owner	Beneficial Ownership	Percent of Class
FMR LLC	857,091⁽¹⁾	8.99%
245 Summer Street
Boston MA 02210

Fourthstone LLC	641,647⁽²⁾	6.73%
13476 Glayton Road
St Louis MO 63131

Driver Management Company LLC	640,880⁽³⁾	6.76%
250 Park Avenue, 7th Floor
New York NY 10177

⁽¹⁾This information is based solely on Schedule 13G/A filed by FMR LLC with the SEC on February 8, 2022, reporting ownership as of December 31, 2021.
⁽²⁾This information is based solely on Schedule 13G/A filed jointly by Fourthstone LLC, Fourthstone Master Opportunity Fund Ltd, Fourthstone QP Opportunity LLC, Fourthstone Small-Cap Financials Fund LP, Fourthstone GP and L. Phillip Stone IV with the SEC on February 14, 2022, reporting ownership as of December 31, 2021.
⁽³⁾This information is based solely on Schedule 13D/A filed jointly by Driver Opportunity Partners I LP, Driver Management Company LLC, J. Abbot R. Cooper, Aashish R. Kamat, John E. Kiernan and A. Dwight Utz with the SEC on March 10, 2022, reporting ownership as of March 10, 2022.

Beneficial Ownership of Executive Officers and Directors

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

Name of Individual or Identity of Group	Amount and Nature of Beneficial Ownership⁽¹⁾	Percent of Class
Name of Individual or Identity of Group	Amount and Nature of Beneficial Ownership⁽¹⁾	Percent of Class
Directors and Nominees
Sarah M. Brown	4,366	*
Brian D. Brunner	43,961⁽²⁾	*
Keith M. Cenekofsky, CPA	1,506	*
Cynthia A. Dotzel, CPA	56,356⁽³⁾	*
John W. Giambalvo, Esq.	36,718⁽⁴⁾	*
Jeffrey R. Hines, P.E.	17,684⁽⁵⁾	*
Craig L. Kauffman	33,734⁽⁶⁾	*
J. Rodney Messick	6,562	*
Robert E. Kiernan, Esq.	__	*

Named Executive Officers

Larry D. Pickett	9,344⁽⁷⁾	*
Diane E. Baker, CPA	38,191⁽⁸⁾	*
Amy L. Doll	29,074⁽⁹⁾	*

All Executive Officers and Directors as a Group	393,924	4.09%
(19 persons)

* Indicates beneficial ownership of less than 1%.

⁽¹⁾Unless otherwise indicated, to the knowledge of the Corporation, all persons listed have sole voting and investment power with respect to their shares of Corporation common stock, except to the extent authority is shared by spouses under applicable law. Fractional shares beneficially owned by such individuals have been rounded down to the number of whole shares beneficially owned. Pursuant to the rules of the SEC, the number of shares of common stock deemed outstanding includes shares issuable pursuant to options held by the respective person or group that are currently exercisable or may be exercised within 60 days of March 25, 2022 (“presently exercisable stock options”).
⁽²⁾Includes 36,320 shares held jointly with Mr. Brunner’s spouse.
⁽³⁾Includes 7,398 shares issuable pursuant to presently exercisable stock options.
⁽⁴⁾Includes 6,037 shares held in a profit sharing plan for his benefit.
⁽⁵⁾Includes 4,878 shares held jointly with Mr. Hines’ spouse, 1,785 shares held by his spouse and 9,462 shares issuable pursuant to presently exercisable stock options.
⁽⁶⁾Includes 10,394 shares of unvested restricted stock and 15,214 shares held in Mr. Kauffman’s IRA.
⁽⁷⁾Includes 800 shares held jointly with Mr. Pickett’s spouse, 4,600 shares of unvested restricted stock.
⁽⁸⁾Includes 4,825 shares of unvested restricted stock and 17,231 shares issuable pursuant to presently exercisable stock options.
⁽⁹⁾Includes 4,825 shares of unvested restricted stock and 17,160 shares issuable pursuant to presently exercisable stock options.

Executive Officers

The following table identifies each of the executive officers of the Corporation, their age as of April 15, 2022, the position they currently hold and their professional experience during the prior five years, or longer if material.

Name	Age	Position and Prior Professional Experience
Craig L. Kauffman	58	President and Chief Executive Officer of the Corporation since October 2021; Executive Vice President and Chief Operating Officer of the Corporation from August 2018 to October 2021; President and Chief Executive Officer of the Bank since August 2018; Regional President of BB&T Bank, Lancaster, Pennsylvania from 2015 to August 2018; Pennsylvania CEO of Susquehanna Bank, Lancaster, Pennsylvania, 2013 through 2015.
Timothy J. Nieman, Esq.	56	Secretary and General Counsel of the Corporation and Bank since February 2018; General Counsel of the Corporation and Bank from January 2018 to February 2018; and Partner at Rhoads & Sinon, LLP, a law firm, from January 2003 to December 2017.
Larry D. Pickett	60	Treasurer of the Corporation since August, 2018; Executive Vice President and Chief Financial Officer of the Bank since August 2018; Executive Vice President and Chief Financial Officer of Bay Bancorp, Inc., Columbia, Maryland, a bank holding company, from January 2014 to June 2018.
Diane E. Baker, CPA	51	Vice President of the Corporation since 2002; Secretary of the Corporation from July 2017 to February 2018; Assistant Treasurer and Assistant Secretary of the Corporation since February 2018; Executive Vice President, Chief Risk Officer of the Bank since January 11, 2022; Executive Vice President, Chief Operations Officer and Chief Risk Officer of the Bank from October 1, 2020 to January 11, 2022; Executive Vice President, Chief Operating Officer and Chief Risk Officer of the Bank from February 2018 to October 1, 2020; Senior Vice President and Chief Risk Officer of the Bank from March 2016 to February 2018; Enterprise Risk Management Officer of the Bank from 2014 to March 2016.

INFORMATION CONCERNING COMPENSATION

Executive Compensation

Compensation Discussion and Analysis

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

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

Larry J. Miller

Former Chair, President and Chief Executive Officer of the Corporation; Former Executive Chair of the Bank

Craig L. Kauffman

President and Chief Operating Officer of the Corporation; President and Chief Executive Officer of the Bank

Larry D. Picket t

Treasurer of the Corporation; Executive Vice President and Chief Financial Officer of the Bank

Diane E. Baker

Vice President, Assistant Treasurer and Assistant Secretary of the Corporation; Executive Vice President, Chief Risk Officer of the Bank

Amy L. Doll

Senior Vice President, Chief Commercial Banking and Lending Officer of the Bank

Executive Summary

Key 2021 Business Accomplishments

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

Key Strategic Accomplishments:

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Successfully implemented the Corporation’s succession plan with Craig L. Kauffman being named President and Chief Executive Officer of the Corporation and Cindy A. Dotzel being named Chair of the Board.

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Continued to successfully navigate the hurdles imposed by the COVID-19 pandemic, which required a team effort led by the Board and management team.

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Established a Diversity, Equity and Inclusion Advisory Team to assist with the organization’s DE&I initiative. More information concerning the DE&I initiative and other ways the Corporation and Bank positively impacts the community can be found at: https://www.peoplesbanknet.com/2021-community-impact-report/.

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Continued to align delivery systems for strategic purposes, including the closure of the Dover Financial Center and the Young Manor loan production office.

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Established the first York County Connections Center at the Bank’s West York location. This new Connections Center features concierge staff, interactive screens to develop personal and business vision boards, self-serve and full-serve account opening, non-traditional seating, video conferencing, as well as a small teller area. Additionally, the Bank’s vision board experience was deployed across all markets in 2021.

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Deployed several new technologies in 2021 to advance the Bank’s operational effectiveness, including privileged accounts monitoring (PAM) to improve controls for associates with elevated entitlements, a redesigned branch network model, a more robust workload automation platform to optimize daily job processing, an enhanced vulnerability scanner for client and server systems and a robotics process automation (RPA) platform to automate manual data entry procedures and business processes.

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Launched nCino Commercial Loan Origination for end-to-end management of the lending process, reducing manual touch points by 45% with more opportunity identified and being pursued.

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Institutionalized a new Vendor Management framework to ensure vendors are selected, scored and monitored effectively to minimize risk to the Bank.

Key Financial Accomplishments:

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Total assets surpassed $2.4 billion by the end of 2021, total loans exceeded $1.5 billion and total deposits exceeded $2.1 billion, reflecting continued organic growth throughout the year in both our core business and retail banking activities.

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Total deposits grew by 15.0 percent in 2021. While overall loans were flat, excluding Payroll Protection Program (PPP) loans, commercial loans grew at an annualized pace of 8.5% in 2021.

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The average cost of interest bearing deposits decreased by over 50% in 2021 to complete the year with a cost of 0.48%

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Overall noninterest income increased by $0.5 million or 3% in 2021, supported by wealth management revenue of $5.9 million, a 17% increase. Assets under management finished 2021 at $858 million.

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Mortgage closings in 2021 were 530 units and $126.5 million. The sale related gains were $2.9 million.

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Earnings for the year ended December 31, 2021 were $1.51 per share basic and $1.50 per share diluted, with a return on average equity of 7.38 percent.

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Book value per share increased to $20.64 at December 31, 2021, an increase of 2.4 percent over December 31, 2020.

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Dividends per share were 54.0 cents for the year ended December 31, 2021.

Key 2021 Compensation Program Attributes

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

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Our salaries are competitive with the median for comparably-sized financial institutions.

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Our overall compensation program is performance-oriented and reflects our pay-for-performance culture.

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We have risk-mitigating design principles, such as placing caps on our annual incentive opportunities, assessing performance across multiple measures - including asset quality, and including vesting requirements on our long-term incentive awards.

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We seek and receive advice from independent experts in executive compensation.

2021 Compensation Decisions

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

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A promotional salary adjustment for Mr. Kauffman to more closely reflect market value for his new position as President and Chief Executive Officer of the Corporation.

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A promotional equity award was granted to Mr. Kauffman consisting of performance and time-based restricted stock units.

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Continued inclusion of performance goals and caps in our annual executive incentive plan to promote short-term, but responsible, growth.

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Continued reliance on equity grants with various vesting periods to incent retention and promote long-term stock appreciation.

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

Executive Compensation Philosophy and Objectives

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

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Further the strategic goals of the Corporation.

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Align the interests of our executives with our shareholders.

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Be competitive with our peers.

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Motivate and reward executives for achievement of high levels of performance against defined goals and objectives – both short- and long-term.

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Enable the Corporation to attract and retain key executives capable of maximizing the Corporation’s performance.

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Be prudent and fiscally responsible.

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Ensure regulatory compliance.

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Provide for a balanced mix of fixed and variable compensation.

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Motivate and reward executives without encouraging undue risk-taking, which could materially threaten the safety and soundness of the Corporation or any individual business unit.

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

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

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

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

Role of the Compensation Committee

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

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

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

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

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

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

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

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

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

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

Role of the Compensation Consultant

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

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

Role of Management

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

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

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The Bank’s Chief Executive Officer develops recommendations for corporate goals and corresponding weightings and incentive performance metrics for the annual executive incentive plan and presents the same to the Committee for its consideration. The Committee has final approval of the goals, weightings and metrics to be used for purposes of the annual executive incentive plan.

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The Bank’s Chief Executive Officer presents performance summaries and recommendations relating to the other named executive officers and other key executives’ compensation to the Committee for its review and approval. The Committee Chair ensures feedback is shared with the full Board for the purposes of making informed compensation decisions.

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As deemed necessary, the Chief Executive Officer and Chief Administrative Officer provide the Committee with data necessary to evaluate and implement compensation proposals and programs.

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The Chief Administrative Officer coordinates external legal support related to employment agreements and retirement programs.

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The Chief Administrative Officer provides data and information to the Committee, as requested, and also assists the Committee Chair in determining the logistics and agenda for the meeting.

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At the direction of the Committee, the Chief Administrative Officer works with outside consultants to provide data and information relative to the Committee’s needs and objectives.

Factors Considered in Determining Executive Compensation

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

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Total compensation philosophy and objectives.

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Pay target guidelines as developed in consultation with our independent compensation consultant.

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Strategic plans and performance relative to annual goals.

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Competitive benchmarking reviews conducted by our independent compensation consultant.

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Risk assessment/mitigation considerations.

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Individual performance, overall leadership, and potential.

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Individual performance related to leading and upholding the Corporation’s vision, mission and values.

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External influences, economic conditions and industry factors.

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Executive recruitment and retention considerations.

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Best/emerging practices as provided by outside consultants.

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Changing regulations.

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Director and Committee input as gathered during executive sessions.

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Internal equity considerations.

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Cost, tax, and accounting considerations.

Competitive Benchmarking

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

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

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

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

Arrow Financial Corporation	Citizens and Northern Corp.
FVCBankcorp, Inc.	Peoples Financial Services Corp.
Chemung Financial Corporation	BCB Bancorp, Inc.
Penns Woods Bancorp, Inc.	Capital Bancorp, Inc.
First Bank	Norwood Financial Corp.
The Community Financial Corporation	Orrstown Financial Services, Inc.
ACNB Corporation	First Community Bancshares, Inc.
Howard Bancorp, Inc.	C & F Financial Corporation
American National Bankshares Inc.	Unity Bancorp, Inc.
Parke Bancorp, Inc.	Primis Financial Corp.
Shore Bancshares, Inc.	1^stConstitution Bancorp.
Mid Penn Bancorp, Inc.	Evans Bancorp, Inc.

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

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

Total Compensation and Performance Alignment

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

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

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

Risk Assessment/Mitigation Considerations

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

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

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

Assessing Industry Competitiveness

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

Compensation Components and 2021 Decisions

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

Base Salary

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

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

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

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

Base Salary Adjustments

Named Executive Officer	Bank Title	2021 Base Salary		% Increase	2022 Base Salary
Larry J. Miller⁽¹⁾	Executive Chairman	$ 375,000		-	$ -
Larry D. Pickett	EVP, Chief Financial Officer	$ 264,500		3.8%	$ 274,500
Craig L. Kauffman⁽²⁾	Chief Executive Officer	$ 510,000	⁽³⁾	1.0%	$ 515,100
Diane E. Baker	EVP, Chief Risk Officer	$ 277,000		1.1%	$ 280,000
Amy L. Doll	SVP, Chief Commercial Banking & Lending Officer	$ 276,500		1.8%	$ 281,500
⁽¹⁾Mr. Miller served as Executive Chairman of the Bank up through and including December 31, 2021, and President and Chief Executive Officer of the Corporation through September 30, 2021.
⁽²⁾Mr. Kauffman was appointed as President and Chief Executive Officer of the Corporation on October 1, 2021, and continues to serve as President and Chief Executive Officer of PeoplesBank.
⁽³⁾Reflects $87,500 increase granted October 1, 2021 in recognition of Mr. Kauffman’s promotion to President and Chief Executive Officer of the Corporation.

Annual Incentives

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

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

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

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

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

Participant	Threshold Performance	Target Performance	Maximum Performance
Executive Chair	15%	30%	45%
Chief Executive Officer & President of the Bank	15%	30%	45%
Other Named Executive Officers	12.5%	25%	37.5%

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

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

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

Performance Measure	Weighting	Threshold	Target	Stretch	2021 Actual Performance⁽¹⁾
Performance Measure	Weighting	Threshold	Target	Stretch	2021 Actual Performance⁽¹⁾
Pre-Tax, Pre-Provision Income	30%	$17,846	$19,862	$21,848	$22,250
Return on Equity	35%	5.33%	5.92%	6.51%	7.38%
Efficiency Ratio	20%	76.17%	73.40%	71.74%	71.13%
Individual Performance	15%	Personal Goals as Determined by Compensation Committee
TOTAL	100%

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

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

Named Executive Officer	Bank Title	2021 Non-Equity Incentive Awards	Percentage of Base Salary
Larry J. Miller	Executive Chairman	$ 126,594	33.8%
Larry D. Pickett	EVP, Chief Financial Officer	$ 74,409	28.1%
Craig L. Kauffman	President & Chief Executive Officer	$ 172,168	33.8%
Diane E. Baker	EVP, Chief Risk Officer	$ 77,926	28.1%
Amy L. Doll	SVP, Chief Commercial Banking & Lending Officer	$ 77,785	28.1%

Long-Term Incentive/Equity Compensation

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

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

2021 Award Decisions. In January 2021, the Chief Executive Officer presented recommendations for equity-based long-term incentive awards to executive officers (other than themselves) in the form of restricted stock grants to the Committee. The recommendations were based on an analysis of best practices among our peer group relative to equity awards and guidelines provided by Meridian. On the basis of the recommendations and the guidelines provided by Meridian, the Committee approved equity awards in the form of restricted stock grants to the Bank’s Executive Chairman and Chief Executive Officer and to other key executives, which vest in equal amounts over a three-year period. The 2021 grants awarded to the named executive officers on March 9, 2021 are summarized below and in the Grants of Plan-Based Awards Table on page 44. All awards were made under the 2017 Plan.

2021 Awards

Named Executive Officer	Bank Title	Grant Date	Restricted Shares Granted (#)		Option Awards (#)	Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Stock and Option Awards ($)
Larry J. Miller	Executive Chairman	3/9/2021	3,199		-		$ 61,997
Larry D. Pickett	EVP, Chief Financial Officer	3/9/2021	1,805		-		$ 34,981
Craig L. Kauffman	President & Chief Executive Officer	3/9/2021	3,973		-		$ 76,997
Craig L. Kauffman	President & Chief Executive Officer	11/9/2021	15,564	⁽¹⁾			$ 359,995
Diane E. Baker	EVP, Chief Operating and Risk Officer	3/9/2021	1,909		-		$ 36,996
Amy L. Doll	SVP, Chief Revenue & Lending Officer	3/9/2021	1,909		-		$ 36,996
⁽¹⁾Restricted Stock Units granted in recognition of Mr. Kauffman’s promotion to President and Chief Executive Officer of the Corporation. This grant was split as follows: 40% of grant vests ratably over 3 years, and 60% issued as Performance Restricted Shares.

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

Perquisites and Other Benefits

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

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

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

Employment and Change of Control Agreements with Named Executive Officers. The Corporation is party to employment agreement with Mr. Kauffman, President and Chief Executive Officer of the Corporation. The Corporation is party to change of control agreements with Mr. Pickett, Executive Vice President and Chief Financial Officer of the Bank; Ms. Doll, Senior Vice President, Chief Commercial Banking and Lending Officer of the Bank; and Ms. Baker, Executive Vice President, Chief Risk Officer of the Bank. The Board views such agreements as integral in ensuring the continued dedication of the executives to the Corporation and promoting stability of management, particularly in the event of a change of control of the Corporation. These agreements are described further under “Employment Agreements” on page 4 8 .

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

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

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

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

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

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

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

Impact of Accounting and Tax on the Form of Compensation

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

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

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

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis that is required by the rules established by the SEC. Based on such review and discussion, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. John E. Kiernan, Esq. was appointed to the Board and the Compensation Committee of the Board on April 12, 2022 and did not participate in the Committee’s review of the Compensation Discussion and Analysis included in this Proxy Statement.

Compensation Committee of the Board of

Codorus Valley Bancorp, Inc.

John W. Giambalvo, Esq. (Chair)

Jeffrey R. Hines, P.E. (Vice Chair)

Brian D. Bruner

Cynthia A. Dotzel, CPA

J. Rodney Messick

Executive Compensation Tables

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

2021 Summary Compensation Table

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

●

the Chief Executive Officer and Chief Financial Officer;

●

the President and Chief Executive Officer of the Bank;

●

the two most highly compensated executive officers of the Bank other than the Chief Executive Officer, President and CEO of the Bank, and Chief Financial Officer who were serving at December 31, 2021;

Name and Principal Position⁽¹⁾	Year	Salary ($)	Bonus ($)	Stock Awards ($)⁽²⁾		Option Awards ($)⁽³⁾	Non-equity Incentive Plan Compensation ($)⁽⁴⁾	Non-qualified Deferred Compensation Earnings ($)		All Other Compensation ($)⁽⁷⁾⁽⁸⁾	Total ($)
Larry J. Miller, President and Chief Executive Officer of the Corporation, Executive Chairman of PeoplesBank	2021	375,000	14,000	62,000	--	--	126,594			93,345	670,939
	2020	375,000	--	--	--	--	62,239			35,410	472,649
	2019	375,000	--	38,990	--	--	42,355	76,108	(5)	30,773	563,226

Name and Principal Position(1)	Year	Salary ($)	Bonus ($)	Stock Awards ($)(2)		Option Awards ($)(3)	Non-equity Incentive Plan Compensation ($)(4)	Non-qualified Deferred Compensation Earnings ($)		All Other Compensation ($)(7)(8)	Total ($)
Larry D. Pickett, Treasurer of the Corporation and Executive Vice President & Chief Financial Officer of PeoplesBank	2021	264,500	--	35,000		--	74,409			11,143	385,052
	2020	256,500	--	--		--	35,119	841	(6)	11,073	303,533
	2019	256,500	--	21,980		--	23,177	110	(6)	12,622	314,389
Craig L. Kauffman, Chief Operating Officer of the Corporation and President & Chief Executive Officer of PeoplesBank	2021	441,346	--	436,992	(9)	--	172,168			93,232	1,143,738
	2020	410,000	--	--		--	78,044	9,462	(6)	85,106	582,612
	2019	388,462	--	42,989		--	46,309	2,566	(6)	89,505	569,831
Diane E. Baker, CPA, Executive Vice President & Chief Risk Officer of PeoplesBank	2121	277,000	--	37,000		--	77,926	45,599	(5)(6)	9,987	447,512
	2020	269,000	--	--		--	36,779	46,899	(5)(6)	10,210	362,888
	2019	269,000	--	22,997		--	24,306	42,701	(5)(6)	12,375	371,379
Amy L. Doll, Senior Vice President & Chief Commercial Banking & Lending Officer of PeoplesBank	2021	276,500	--	37,000		--	77,785	--		21,838	413,123
	2020	268,500	--	--		--	36,713	--		24,511	329,724
	2019	268,500	--	22,997		--	24,261	--		23,839	339,597
(1) Pursuant to SEC rules, compensation is only shown for each Named Executive Officer in each of the years in which the individual met the criteria of a Named Executive Officer.
(2) Amounts represent the grant date fair values of restricted stock awards computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 12 to the Corporation’s audited consolidated financial statements for the fiscal year ended December 31, 2021, included in the Corporation’s Annual Report filed on Form 10-K with the SEC on or about March 8, 2022.
(3) Amounts represent the grant date fair values of the options computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 12 to the Corporation’s audited consolidated financial statements for the fiscal year ended December 31, 2021, included in the Corporation’s Annual Report filed on Form 10-K with the SEC on or about March 8, 2022.
(4) Payments characterized as “Non-Equity Incentive Plan Compensation” for the fiscal year ended December 31, 2021 were earned through the Executive Incentive Plan. The payments were approved by the Compensation Committee on February 22, 2022 and paid March 10, 2022.
(5) Reflects change in the present value of future benefits payable under Supplemental Executive Retirement Plans (SERPS), described on page 47 under the heading “Nonqualified Deferred Compensation Table.”
(6) Reflects “above market or preferential portion” of interest credited (i.e. the portion of interest, if any, above the 120% long-term AFR) to named executive officer during the fiscal year under the deferred compensation plans, described on page 47 under the heading “Nonqualified Deferred Compensation Table.”
(7) All other compensation primarily consists of matching contributions allocated by the Corporation to each Named Executive Officer pursuant to the Corporation’s 401(k) Retirement Plan, which is more fully described on page 39 under the heading “401(k) Retirement Plan”, and the imputed cost of life and supplemental disability insurance. The table below details the foregoing payments for 2021.
(8) In 2021, the amount attributable to other perquisites for Messrs. Miller, Kauffman, and Doll exceeded $10,000 and is shown in the “Other Perquisites” column in the table below. The amounts attributable to perquisites in 2021 for Mr. Pickett and Ms. Baker were less than $10,000. Mr. Miller’s perquisites included country/social club dues totaling $10,398 as well as the personal benefits associated with the use of a vehicle owned by the Corporation, totaling $10,068. Mr. Kauffman’s perquisites included country club dues totaling $4,840, as well as the personal benefits associated with the use of a vehicle owned by the Corporation, totaling $9,950. Ms. Doll’s perquisites included the personal benefits associated with the use of a vehicle owned by the Corporation, totaling $10,354. Mr. Miller’s “Other Compensation” reflects taxable income and taxes paid on his behalf associated with the transfer of ownership of his bank-owned automobile. Mr. Kauffman’s “Other Compensation” reflects the Corporation’s contribution to his Bank Contribution Deferred Compensation Agreement as detailed on page 47 under the heading “Nonqualified Deferred Compensation Table.” The calculation of the automobile benefit consists of the incremental cost attributable to Corporation-provided automobiles, as well as insurance premiums, maintenance, and repair costs. The incremental cost attributable to Corporation-provided automobiles (calculated in accordance with Internal Revenue Service guidelines) are included on the W-2 of named executive officers who receive such benefits and the named executive officer is responsible for paying income tax on such amounts.
(9) Includes Mr. Kauffman’s annual Restricted Stock Grant dated March 9, 2021 valued at $76,997, and the November 9, 2021 Restricted Stock Unit grant in recognition of his promotion to President and Chief Executive Officer of the Corporation, valued at $359,995.

ALL OTHER COMPENSATION

Name	Year	401(k) Match	Life Insurance	Disability Insurance	Other Compensation	Other Perquisites	Total All Other Compensation
Larry J. Miller	2021	11,600	4,328	-	56,951	20,466	93,345
	2020	11,400	4,980	-	-	19,030	35,410
	2019	11,200	4,527	2,977	-	12,069	30,773
Larry D. Pickett	2021	9,868	1,275	-	-	-	11,143
	2020	9,931	1,142	-	-	-	11,073
	2019	8,366	1,019	3,237	-	-	12,622
Craig L. Kauffman	2021	11,050	1,190	-	66,202	14,790	93,232
	2020	11,400	1,130	-	61,500	11,076	85,106
	2019	10,904	1,009	4,864	58,565	14,163	89,505
Diane E. Baker	2021	9,418	569	-	-	-	9,987
	2020	9,684	526	-	-	-	10,210
	2019	8,960	501	2,914	-	-	12,375
Amy L. Doll	2021	11,160	324	-	-	10,354	21,838
	2020	10,740	290	-	-	13,481	24,511
	2019	10,740	274

SEC Form DEF 14A filed by Codorus Valley Bancorp Inc