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NBT Bancorp Inc. (“NBT”) will hold an annual meeting of stockholders on May 16, 2023 at 10:00 a.m. EDT (the “Annual Meeting”). You can attend the 2023 Annual Meeting online and vote your shares electronically. The Annual Meeting will be virtual and conducted through the online means described below.

The Annual Meeting is being held for the following purposes:

We have fixed the close of business on March 20, 2023 as the record date for determining those stockholders of NBT entitled to vote at the Annual Meeting and any adjournments or postponements of the meeting. Only holders of record of NBT common stock at the close of business on that date are entitled to notice of, and to vote at, the Annual Meeting.

By Order of the Board of Directors of

NBT Bancorp Inc.

/s/ Martin A. Dietrich

Martin A. Dietrich

Chairman of the Board of Directors

Norwich, New York

April 6, 2023

Important Notice regarding the Internet availability of Proxy Materials for the Annual Meeting to be held on May 16, 2023 – The proxy statement and 2022 Annual Report are available free of charge at https://www.nbtbancorp.com/bn/annual-reports.html. Your vote is very important. We urge all stockholders to vote on the matters listed above and described in the proxy statement as soon as possible, whether or not they plan to attend the virtual Annual Meeting.

This proxy statement and accompanying proxy card are furnished to the stockholders of NBT Bancorp Inc. (“NBT” or the “Company”) in connection with the solicitation of proxies on behalf of the board of directors of the Company (the “Board”) to be used at the 2023 Annual Meeting of Stockholders (the “Annual Meeting”). This proxy statement, together with the enclosed proxy card, is being provided to stockholders on or about April 6, 2023.

NBT will host a virtual Annual Meeting. You may attend the webcast of the meeting via the Internet at www.virtualshareholdermeeting.com/NBTB2023 when you enter your 16-digit control number included with the Notice of Internet Availability or proxy card. Instructions on how to attend and participate in the Annual Meeting via the webcast are posted on www.virtualshareholdermeeting.com/NBTB2023. You will be able to vote your shares by following the instructions on the website. You may visit www.proxyvote.com at any time prior to the Annual Meeting to ask questions of our executive management that may be addressed in the Annual Meeting and to access information about the Company.

The virtual meeting platform is fully supported across browsers (Microsoft Edge, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong internet or WiFi connection wherever they intend to participate in the Annual Meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear audio prior to the start of the Annual Meeting.

At our Annual Meeting, our stockholders will be asked to consider and vote upon the following proposals:

We may take action on the above matters at our Annual Meeting on May 16, 2023, or on any later date to which the Annual Meeting is postponed or adjourned.

We are unaware of other matters to be voted on at our Annual Meeting. If other matters do properly come before our Annual Meeting, including consideration of a motion to adjourn the Annual Meeting to another time and/or place for the purpose of soliciting additional proxies, we intend that the persons named in this proxy will vote the shares represented by the proxies on such matters as determined by a majority of our Board.

We have set March 20, 2023 as the record date to determine which of our stockholders will be entitled to vote at our Annual Meeting. Only those stockholders who held their shares of record as of the close of business on that date will be entitled to receive notice of and to vote at our Annual Meeting. As of March 20, 2023, there were 42,904,332 outstanding shares of our common stock held by holders of record. Each of our stockholders on the record date is entitled to one vote per share.

The presence of at least a majority of the total number of issued and outstanding shares of common stock entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. Abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum for the transaction of business.

Assuming the presence of a quorum at the Annual Meeting, the voting requirements for the matters presented are as follows:

Our Board urges our stockholders to vote via the Internet, by telephone or by completing, dating and signing the accompanying proxy card and returning it promptly in the enclosed postage-paid envelope.

If you abstain from voting on any of the proposals, you will still be considered present at the virtual Annual Meeting for purposes of determining a quorum. Abstentions will have no effect on the outcome of the election of directors or the Say-on-Frequency Proposal. For the purpose of the Say-on-Pay Proposal and the ratification of the appointment of our independent registered public accounting firm, abstentions will have the effect of a vote against the proposal.

Broker non-votes are proxies received from brokers or other nominees holding shares on behalf of their clients who have not been given specific voting instructions from their clients with respect to non-routine matters. Brokers who hold their customers’ shares in “street name” may, under the applicable rules of the exchange and other self-regulatory organizations of which the brokers are members, sign and submit proxies for such shares and may vote such shares on “routine” matters. Proposals 1, 2 and 3 are considered “non-routine” and Proposal 4 is considered “routine” under the applicable rules. Broker non-votes will not be counted as a vote cast or entitled to vote on any matter presented at the Annual Meeting and will therefore have no effect on the outcome of the voting on any matter presented at the Annual Meeting.

Our Board is soliciting proxies from our stockholders. When you deliver a valid proxy, the shares represented by that proxy will be voted by a named agent in accordance with your instructions.

If you are a stockholder and vote by proxy but make no specification on your proxy card that you have otherwise properly executed, the named persons will vote the shares represented by your proxy:

If any other matters are properly brought before the Annual Meeting, the persons named in the proxy will vote the shares represented by such proxy or such matters as determined by a majority of the board of directors.

If you are a stockholder whose shares are registered in your name, you may vote your shares by using one of the following methods:

Via the Internet. If you hold NBT common stock in your own name and not through a broker or other nominee, you can vote your shares of NBT common stock electronically via the Internet. Internet voting procedures are designed to authenticate stockholders by using the individual control number on your proxy card. If you vote via the Internet, you do not need to return your proxy card.

Mail. To grant your proxy by mail, please complete your proxy card and sign, date and return it in the enclosed envelope. To be valid, a returned proxy card must be signed and dated.

Telephone. If you hold NBT common stock in your own name and not through a broker or other nominee, you can vote your shares of NBT common stock by telephone by dialing the toll-free telephone number 1-800-690-6903. Telephone voting is available 24 hours a day until 11:59 p.m. Eastern Time on May 15, 2023 for shares held directly and by 11:59 p.m. Eastern Time on May 11, 2023 for shares held in a Plan. Telephone voting procedures are designed to authenticate stockholders by using the individual control number on your proxy card. If you vote by telephone, you do not need to return your proxy card.

If your shares are registered in the name of a bank or brokerage firm, you will receive instructions from your holder of record that must be followed in order for the record holder to vote the shares per your instructions. Many banks and brokerage firms have a process for their beneficial holders to provide instructions over the telephone or via the Internet.

Any NBT stockholder of record giving a proxy may revoke the proxy in one or more of the following ways:

You must send any written notice of revocation or subsequent proxy to NBT Bancorp Inc., 52 South Broad Street, Norwich, New York 13815, Attention: M. Randolph Sparks, Corporate Secretary. Any later-dated proxy submitted by telephone or via the Internet must be submitted prior to 11:59 p.m. Eastern Time on May 15, 2023 for shares held directly and by 11:59 p.m. Eastern Time on May 11, 2023 for shares held in a Plan.

If you hold shares through a bank or brokerage firm, you must contact that firm to revoke any prior voting instructions.

We will bear our own costs of soliciting of proxies. We will reimburse brokerage houses, fiduciaries, nominees and others for their out-of-pocket expenses in forwarding proxy materials to owners of shares of our common stock held in their names. In addition to the solicitation of proxies by use of the mail, we may solicit proxies from our stockholders by directors, officers and employees acting on our behalf in person or by telephone, facsimile or other appropriate means of communications. We will not pay any additional compensation, except for reimbursement of reasonable out-of-pocket expenses, to our directors, officers and employees in connection with the solicitation. You may direct any questions or requests for assistance regarding this proxy statement to M. Randolph Sparks, Corporate Secretary, by telephone at (607) 337-6141 or by email at rsparks@nbtbank.com.

A copy of our 2022 Annual Report accompanies this Proxy Statement. NBT is required to file an annual report on Form 10-K for its 2022 fiscal year with the Securities and Exchange Commission (“SEC”). Stockholders may obtain, free of charge, a copy of the Form 10-K by writing to: NBT Bancorp Inc., 52 South Broad Street, Norwich, New York 13815, Attention: M. Randolph Sparks, Corporate Secretary. Our annual report on Form 10-K is available on our website www.nbtbancorp.com.

REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO US. PLEASE VOTE BY TELEPHONE, VIA THE INTERNET USING THE INTERNET ADDRESS ON YOUR PROXY CARD OR BY COMPLETING, SIGNING, DATING AND PROMPTLY RETURNING THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

The Company elects all directors annually. Therefore, all twelve directors are standing for election at the 2023 Annual Meeting.

The persons named in the enclosed proxy intend to vote the shares of our common stock represented by each proxy properly executed and returned to us FOR the election of the aforementioned nominees as directors, but if the nominees should be unable to serve, they will vote such proxies for those substitute nominees as our Board shall designate to replace those nominees who are unable to serve. Our Board currently believes that each nominee will stand for election and will serve if elected as a director. Assuming the presence of a quorum at the Annual Meeting, in order for each of the twelve director nominees to be elected, more votes must be cast FOR the director nominee than AGAINST (Proposal 1). A director who fails to receive more votes FOR his or her election than AGAINST will tender his or her resignation to the Board of Directors for consideration, and our Nominating and Corporate Governance Committee will recommend to the Board of Directors whether to accept or reject the resignation, or whether other action should be taken. The Board of Directors will consider the recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of election results.

Information regarding the nominees is provided below. Each biography contains information regarding each person’s business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experience, qualifications, attributes or skills that caused the Nominating and Corporate Governance Committee and the Board of Directors to determine that such person should serve as a director at the time of filing of this proxy statement. Unless otherwise stated, each individual has held his or her current occupation for the last five years. The age indicated in each director’s biography is as of December 31, 2022. There are no family relationships among the directors or executives. All nominees are or will also become members of the board of directors of NBT Bank, N.A. (“NBT Bank”).

The Board of Directors unanimously recommends that stockholders vote “FOR” the election of all of its director nominees.

The Corporate Governance and Nominating Committee does not have a specific diversity policy with respect to the director nomination process. Rather, the Committee considers diversity in the broader sense of how a candidate’s viewpoints, experience, skills, background and other demographics could assist the Board in light of the Board’s composition at the time. The Board believes that each director contributes to the overall diversity by providing a variety of personal and professional experiences and backgrounds. As shown below, the current directors and nominees reflect the Board’s continued effort to foster diversity of gender, age, race, geographical background and experience. The Board is committed to considering diversity issues in evaluating its composition.

The following summarizes the diversity, independence, age, tenure and the identified experience and skills of our Board of Directors as of April 6, 2023.

 

The Board of Directors views its diversity as an important strength, as our commitment to diversity of experience, gender, and ethnicity is a key driver of the Company’s success. The following table sets forth the diversity of the Board of Directors.

 

The following table sets forth information, as of February 28, 2023, with respect to the beneficial ownership of the Company’s Common Stock by: (1) each director and nominee; (2) each named executive officer; and (3) all executive officers and directors as a group. Except as otherwise indicated, each of the stockholders named below effectively exercises sole, or shared with spouse, voting and investment power with respect to the outstanding shares of common stock beneficially owned.

The following table sets forth information as of February 28, 2023, except as indicated below, with respect to the beneficial ownership of common stock by any person or group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”) who is known to the Company to be the beneficial owner of more than five percent of the common stock. As of February 28, 2023, the Company had 42,903,487 outstanding shares of common stock.

Our directors and executive officers must, under Section 16(a) of the Exchange Act, file certain reports of their initial ownership of our common stock and of changes in beneficial ownership of such stock. Based solely on a review of reports submitted to NBT, or written representations from reporting persons that all reportable transactions were reported, the Company believes that during the fiscal year ended December 31, 2022 all Section 16(a) filing requirements applicable to NBT’s officers and directors were complied with on a timely basis.

The business and affairs of the Company are managed under the direction of the Board of Directors. Members of the Board are kept informed of the Company’s business through discussions with the Company’s executive officers by reviewing materials provided to them and by participating in meetings and strategic planning sessions of the Board and its committees. The Board has adopted corporate governance practices and policies which the Board and senior management believe promote sound and effective corporate governance.

Based on a review of the directors’ responses to questions regarding employment and compensation history, affiliations and family and other relationships, and on individual discussions with directors, the Board has determined that all directors, excluding Mr. Watt, meet the standards of independence set forth by the Nasdaq Stock Market. In making this determination, the Board considered transactions and relationships between each director or his or her immediate family and the Company and its subsidiaries, including those reported under “Compensation Committee Interlocks and Insider Participation” and “Certain Relationships and Related Party Transactions” included herein. Mr. Watt is not independent because he is the current President and Chief Executive Officer of the Company.

The independent members of the Board meet at least twice annually in an executive session where the non-independent director and management are excused. Lead Director James Douglas chairs these executive sessions.

The Company has adopted a Code of Business Conduct and Ethics that applies to all employees, as well as each member of the Company’s Board of Directors. The Code of Business Conduct and Ethics is available at the Company’s website at https://www.nbtbancorp.com/bn/corporate-governance.html.

The Board of Directors maintains a process for stockholders to communicate with the Board of Directors. Stockholders wishing to communicate with the Board of Directors should send any communication to Corporate Secretary, NBT Bancorp Inc., 52 South Broad Street, Norwich, New York 13815. Any such communication must state the name of the stockholder and the number of shares beneficially owned by the stockholder making the communication. The Corporate Secretary will forward such communication to the full Board of Directors or to any individual director or directors to whom the communication is directed unless the communication is unduly hostile, threatening, illegal or similarly inappropriate. At each Board meeting, a member of management presents a summary of all communications received since the last meeting, if applicable, that were not forwarded and makes those communications available on request.

The Board of Directors, together with the Audit Committee, the Risk Management Committee, the Nominating and Corporate Governance Committee and the Compensation and Benefits Committee coordinate with each other to provide enterprise-wide oversight of our management and handling of risk. These committees report regularly to the full Board of Directors on risk-related matters and provide the Board of Directors with insight about our management of strategic, credit, interest rate, liquidity, compliance, operational and reputational risks. In addition, at meetings of the Board of Directors and its committees, directors receive regular updates and reports from management regarding risk management practices, including credit quality, financial reporting, technology, internal controls, compliance, legal matters and asset liability and liquidity management, among other topics. Furthermore, current risk management issues are discussed regularly with the Board of Directors and its committees.

The Risk Management Committee consists of seven directors, of which six are independent directors, as follows: Mr. Salanger (Chair), Ms. Ames, Mr. Dietrich, Mr. Kowalczyk, Mr. Seifter, Mr. Watt and Mr. Webb. The primary purpose of the Risk Management Committee is to assist the Board of Directors in:

The Risk Management Committee charter outlines more specific duties and responsibilities of the committee.

The Board of Directors does not have a policy on whether the same person may serve as both the chief executive officer and chair of the board or, if the roles are separate, whether the chair should be selected from the non-employee directors. The Board believes that it should have the flexibility to make these determinations at any given point in time in the way that it believes best to provide appropriate leadership for the Company at that time. Currently, Mr. Watt serves as the Chief Executive Officer of the Company, while Mr. Dietrich serves as the Chair of the Board of Directors. The Board of Directors believes that this leadership structure best serves the Company at this time because it allows Mr. Watt to focus on the Company’s operations and strategy, while Mr. Dietrich, among other things, can provide leadership for the Board of Directors, set the agenda for meetings and enable other directors to raise issues and concerns for Board consideration without immediately involving the Chief Executive Officer or other management. The Board of Directors believes it currently benefits from having a director, who is also a former executive officer of the Company, as its Chair. Mr. Douglas serves as the Lead Director, providing an independent point of contact for the Board of Directors.

During 2022, the Board held eight meetings. Each incumbent director attended at least 75% of the aggregate of: (1) the total number of meetings of the Board held during the period that the individual served; and (2) the total number of meetings held by all committees of the Board on which the director served during the period that the individual served. In addition, as reflected in our Corporate Governance Guidelines, we have adopted a policy strongly encouraging directors to attend our Annual Meeting of stockholders. All directors attended the 2022 Annual Meeting, and we expect that all directors will attend the 2023 Annual Meeting.

Our Board has a number of standing committees, including a Nominating and Corporate Governance Committee, Audit Committee, Compensation and Benefits Committee and Risk Management Committee. The Board has determined that all of the directors who serve on the Nominating and Corporate Governance Committee, Audit Committee and Compensation and Benefits Committee are independent for purposes of Nasdaq Rule 5605 and that the members of the Audit Committee are also “independent” for purposes of Section 10A(m)(3) of the Exchange Act. A table showing the members of each of these committees follows.

A description of each of these committees follows.

The Nominating and Corporate Governance Committee is responsible for determining the qualification of and nominating persons for election to the Board of Directors, including (if applicable) stockholder nominations that comply with the notice procedures set forth by SEC rules and the Company’s Bylaws. The Nominating and Corporate Governance Committee also formulates our corporate governance guidelines and functions to ensure successful development of management at the senior level and succession planning, as applicable. The Nominating and Corporate Governance Committee regularly evaluates our corporate governance process against current trends and provides recommendations to the Board of Directors. The Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee, a copy of which is available on the Company’s website at https://www.nbtbancorp.com/bn/corporate-governance.html. This committee met three times during 2022.

The Board of Directors believes that it should be comprised of directors who possess the highest personal and professional ethics, integrity and values, who shall have demonstrated exceptional ability and judgment and who shall be most effective in representing the long-term interests of the stockholders. While the Board of Directors and Nominating and Corporate Governance Committee have no formal policy on board diversity, diversity is considered by the Nominating and Corporate Governance Committee in determining the qualification of and nominating persons for election to the Board of Directors.

When considering candidates for the Board of Directors, the Nominating and Corporate Governance Committee takes into account the candidate’s qualifications, experience and independence from management. In addition, in accordance with the Company’s Bylaws:

When seeking candidates for director, the Nominating and Corporate Governance Committee may solicit suggestions from incumbent directors, management or others. The Committee also has the authority to retain any search firm to assist in the identification of director candidates. The Committee will review the qualifications and experience of each candidate. If the Committee believes a candidate would be a valuable addition to the Board, it will recommend to the full Board that candidate’s election.

The Company’s Bylaws also permit stockholders eligible to vote at the Annual Meeting to nominate director candidates, but only if such nominations are made pursuant to timely notice in writing to the CEO of NBT. To be timely, notice must be delivered to, or mailed to and received at, the principal executive offices of NBT at least 150 days prior to the one-year anniversary of the date immediately preceding the prior year’s Annual Meeting of stockholders. The Nominating and Corporate Governance Committee will consider candidates for director suggested by stockholders by applying the criteria for candidates described above and considering the additional information required by Article III, Section 4 of the Company’s Bylaws, which must be set forth in a stockholder’s notice of nomination. Article III, Section 4 of the Company’s Bylaws requires that the notice include: (1) as to each person whom the stockholder proposes to nominate for election as a director, (a) the name and address of such person and (b) the principal occupation or employment of such person; and (2) as to the stockholder giving notice (a) the name and address of such stockholder, (b) the number of shares of the Company that will be voted for the proposed nominee by such stockholder (including shares to be voted by proxy) and (c) the number of shares of the Company which are beneficially owned by such stockholder.

The Audit Committee represents our Board in fulfilling its statutory and fiduciary responsibilities for independent audits of NBT’s consolidated financial statements, including monitoring accounting and financial reporting practices and financial information distributed to stockholders and the general public. Directors on our Audit Committee meet the expanded independence requirements of audit committee members. In addition, our Board of Directors has determined that Ms. Hoeller and Mr. Seifter are “audit committee financial experts” as that term is defined in Item 407(d)(5) of Regulation S-K.

This Committee met four times in 2022. Responsibilities and duties of this Committee are discussed more fully in the Audit Committee Report herein and in the Audit Committee’s charter, which is available on the Company’s website at https://www.nbtbancorp.com/bn/corporate-governance.html.

All of the Company’s Compensation and Benefits Committee members are independent directors, as determined by the Board, and as such term is defined in the Nasdaq Marketplace Rules as they apply to the Company.

The Committee is responsible for the development, oversight and administration of the Company’s compensation program. The Committee works closely with the Company’s CEO and Chief of Staff to implement our compensation program. In addition, the Committee engages in executive sessions without Company management present.

The Committee regularly reviews our compensation practices and policies and recommends to the Board of Directors the compensation and benefits for the CEO, directors and executive management team, including the named executive officers. In making compensation recommendations to the Board of Directors for the named executive officers, the Committee relies substantially on the recommendations of the CEO and, in the case of the CEO’s compensation, upon the recommendation of the Chair of the Board. The Committee generally determines the compensation for the named executive officers at its December meeting preceding the commencement of the fiscal year in which the compensation will be paid or earned, or in its January meeting of such fiscal year.

The CEO’s compensation reflects the Committee’s evaluation of his performance measured against the following criteria: (1) implementation of the Company’s short and long-term strategies; (2) financial and operating performance; (3) succession planning and leadership development; (4) customer service; and (5) leadership in positioning the Company to meet the significant operational and regulatory challenges of the evolving financial services industry. The Committee may use its discretion to deviate from or modify compensation policies and recommendations, but does so rarely, and typically only in unusual circumstances.

The Committee also administers the Company’s Defined Benefit Pension Plan (“Pension Plan”), 401(k) & Employee Stock Ownership Plan (the “401(k) Plan & ESOP”), the 2008 Omnibus Incentive Plan (the “2008 Plan”) and the 2018 Omnibus Incentive Plan (the “2018 Plan,” and together with the 2008 Plan, the “Omnibus Plans”) and awards outstanding under prior equity plans. Pursuant to the terms of the Company’s 2018 Plan, which is the Company’s active equity plan, the Committee may delegate its authority to grant awards to nonexecutive officers under such plan to a member of the Board, and the Committee has granted such authority, within certain defined limits, to Mr. Watt. A charter that reflects these responsibilities and delegated authority, which the Committee and the Board periodically review and revise, governs the Committee. A copy of the charter is available on the Company’s website at https://www.nbtbancorp.com/bn/corporate-governance.html. The Committee met six times in 2022.

The Risk Management Committee was established in 2018 and oversees the Company’s risk management activities and the effectiveness of its ERM framework. The Committee also reviews periodic reports related to the Company’s compliance program and legal and regulatory matters. The Committee is responsible for oversight of operational risk, including Company action related to information security, technology, fraud, privacy, business continuity and disaster recovery, vendor management, data governance and insurance coverage.

Our Board of Directors recognizes that Environmental, Social and Governance (“ESG”) principles are important to the Company’s various stakeholders, including stockholders, customers, communities and employees, and desires to drive positive social and environmental impact. The Board further believes that the Company’s reputation for integrity and corporate responsibility are bedrock principles and the ESG framework provides an opportunity to define, measure and highlight our values to the Company’s stakeholders. Accordingly, the Board has committed to the following:

The Company is focused on the environment and committed to business practices and activities that encourage sustainability and minimize our environmental impact. In larger facilities, the Company conserves energy through the use of building energy management systems and motion sensor lighting controls. In new construction and renovations, the Company incorporates high-efficiency mechanical equipment, LED lighting, and modern building techniques to reduce our carbon footprint wherever possible. The Company has an ongoing initiative to replace existing lighting with LED lighting to reduce energy consumption.

The Company offers a financing product to homeowners on a national basis which provides an opportunity to power their homes with sustainable solar energy and reduce their carbon footprint at an affordable price. Services like mobile and online banking, remote deposit capture, electronic loan payments, eStatements and combined statements enable us to support all customers in their efforts to consume less fuel and paper. We continue to digitize loan origination and deposit account opening processes, reducing trips to the bank and paper documents for our customers. Across our footprint, we host community shred days with multiple confidential document destruction companies to promote safe document disposal and recycling.

We are committed to strengthening the communities we serve through volunteerism and philanthropy, serving as a leader in our local communities. The Company is engaged in the communities where we do business and where our employees and directors live and work. We live out our core values of community involvement through investments of both money and the time of our employees.

Through our active contribution program, administered by market-based committees with representation from all lines of business, the Company contributed nearly $2.0 million in 2022. Our teams’ efforts to distribute philanthropic resources across our footprint ensure alignment with local needs and support for hundreds of organizations that provide health and human services and promote education, affordable housing, economic development, the arts and agriculture.

A consistent way that the Company and our employees support our communities across our markets is through giving to United Way chapters in the form of corporate pledges and employee campaign contributions. In 2022, these commitments resulted in over $365,000 in funding for United Way chapters that provide resources to local organizations offering critical education, financial, food security and health services.

In addition to corporate financial support of community organizations and causes, employees are encouraged and empowered to volunteer and be a resource in their communities. They invest their financial and other expertise as board members and serve in roles where they offer direct support to those in need by engaging in all manner of volunteer activities. New employees participate in an onboarding experience that includes a community service activity.

In 2022, the Bank and CEI-Boulos Capital Management, LLC announced the launch of the NBT CEI-Boulos Impact Fund, LLC a $10 million real estate equity investment fund with NBT Bank as the sole investor. The fund is designed to support individuals and communities with low- and moderate income through investments in high-impact, community-supported, commercial real estate projects located within the Bank’s Community Reinvestment Act assessment areas in New York. A Social Impact Advisory Board was also appointed to review proposed investments based on each project’s social and environmental impact, alignment with community needs and community support. Areas of the fund’s targeted impact include: projects that support job creation; affordable and workforce housing; Main Street revitalization/historic preservation developments that do not contribute to displacement; developments that serve non-profit organizations; and environmentally sustainable real estate developments.

We are also committed to helping the individuals in our communities develop their financial health. The Company offers a comprehensive array of financial products and services with options that are beneficial to unbanked and underbanked individuals. Deposit accounts include low balance savings and checking options that feature minimal or no monthly service fees, provide assistance rebuilding positive relationships, and assistance for those just starting a new banking relationship. The new NBT iSelect Account was introduced in 2021 and certified as meeting the Bank On National Account Standard for 2021-2022 and again for 2023-2024. Over 3,200 NBT iSelect Accounts have been opened. These accounts feature no monthly charges for maintenance, inactivity or dormancy, no overdraft fees and no minimum balance requirement. An enhanced digital banking platform incorporates ready access through online and mobile services to current credit score information and a personal financial management tool for budget and expense tracking.

The Company is focused on making home ownership accessible to everyone in the communities we serve. Our suite of home lending products features innovative and flexible options, including government guaranteed programs like Federal Housing Administration and U.S. Department of Veterans Affairs loans as well as programs developed in-house like our First Home Loan, Habitat for Humanity, Home in the City and Portfolio 97 programs. Our home lending team includes affordable housing loan originators, and we maintain longstanding relationships with affordable housing agency partners across our banking footprint that offer first-time homebuyer education programs and assistance with down payments and closing costs.

The Company has a long-standing commitment to diversity, equity and inclusion (“DEI”) and our initiatives remain stronger than ever. In 2022 the Company named a full-time Chief Diversity Officer after several years of leaders executing the responsibility of this role in a shared capacity. With full-time focus, the Chief Diversity Officer will continue to advance our DEI journey with strategies connected to engagement, careers and recruitment, innovation and measurement.

The Company’s DEI strategy has a commitment to enhancing our diversity, making us more innovative and effective at meeting the needs of our customers and communities. The Company utilizes a variety of approaches to maximize

diversity within each pool of candidates through both internal and external recruitment practices. It is the Company’s belief that these efforts will provide equitable opportunities and contribute to improved products and services, better customer engagement and ultimately enhanced stockholder return.

Both grassroots and executive-sponsored strategies continue to be critical to our DEI initiatives. Executive-sponsored strategies support leadership opportunities with cross functional/geographic teams, panel discussions and a fireside chat in support of women’s empowerment and being your authentic self and a financial contribution to a community center supporting LGBTQ youth. Our DEI Inclusion Roundtable supports grassroots efforts focusing on raising awareness of various cultural and diverse interests. NBT Communities is an internal social media forum where employees with similar interests across the footprint can connect and get to know each other around a variety of topics. In addition, the Inclusion Roundtable launched Coffee and Connections as a way for employees to convene for thirty minutes over coffee in a virtual setting to discuss generational diversity, neurodiversity, travel interests and more.

The Company has a DEI steering committee comprised of members of the executive team, including the Chief Executive Officer. The plan is shared with our Board of Directors, management and employees, who are often included in implementing specific action items.

More information can be located on the Company’s website at https://www.nbtbank.com/about-us/Diversity-and-Inclusion/.

The Company’s focus on investing in our people includes key initiatives to attract, develop and retain our valued employees. Talent acquisition, and more importantly, retention continue to be top priorities, especially in the post-pandemic environment and considering the current challenges in the labor market. An Employee Referral Program was implemented in the third quarter resulting in current employees referring 18% of the new employees hired in 2022. While our employee retention rate remains consistently high, significant effort is placed on retaining our valued employees - stay interviews, career planning conversations, an ongoing coaching process, goal setting, individual development plans and enhanced communications all play a part in employee satisfaction. Our 2022 Employee Engagement survey provided insights leading to specific initiatives to enhance future engagement including clarity around business strategies, decision making and development opportunities. Positive feedback relating to high levels of interaction between managers and employees was received. The Company offers total benefits that address employees at various stages of their personal lives and careers, including a student loan repayment program, enhanced financial wellness programs, undergraduate and graduate tuition, paid parental leave, more flexibility in work schedules and paid leave benefits and a retirement transition option. The Company’s incentive programs recognize employees at all levels and are designed to motivate employees to support achievement of Company success, with appropriate risk assessment and prevention measures designed to prevent fraud.

The Company’s main priority is to attract and retain top talent by encouraging and promoting internal development. We invested in a variety of development tools and resources for all employees, including the introduction of LinkedIn Learning Library. The LinkedIn Learning Library is intended to make learning and development accessible to all employees in a concise, easily consumable format that enables employees to get the development they need to achieve individual career aspirations. In addition to the library, there are distinct training and development programs strategically designed to attract top talent early in their careers and to further foster the growth and retention of our high-potential and emerging leaders. These programs have been designed to meet the objectives outlined in our succession plan. Our Management Development Program aims to attract diverse talent, primarily college seniors by offering accelerated career advancement and mentoring with senior executives. The Company also offers two programs designed for high-potential employees, one for employees with prior professional experience and another one targeted to our more experienced employees with direct leadership responsibility. Both programs include a mentor, a coach, 360-degree feedback, individual development plans, presentation skill development and increased visibility to executive leadership. The programs accommodate delivery in both remote and in-person learning environments, made possible by utilizing our Microsoft Teams technology which was implemented across the Company to strengthen internal communications, collaboration and talent development. To support career development, we employ an internal career manager to work as a liaison with employees and managers. The Company also has a robust annual talent review and succession planning process that includes the Board of Directors and senior management.

The Company seeks to further refine its culture by soliciting employee opinions using engagement surveys. In addition, the Company regularly uses pulse surveys to explore further the sentiments behind employee well-being,

attitudes about remote work, productivity, and work-life balance. A full Engagement Survey was completed in September 2022 to assess the overall level of employee engagement. We were pleased at the high level of engagement and participation in the survey. Divisional and Corporate actions have been developed to address areas employees suggested would be helpful. The Company believes engaged employees will drive retention, encourage discretionary employee effort and ultimately produce better experiences for our customers.

We are dedicated to being a financial industry leader in corporate governance and business ethics. The Company’s Board of Directors is composed of individuals with diverse professional and business experience. All of our directors, other than the Chief Executive Officer, are independent. They all share a commitment to fostering an effective risk environment coupled with a strong internal audit structure. Their unwavering commitment protects our clients, stockholders and reputation. Our Code of Ethics reflects the Company’s expectation for the conduct of our directors, officers and employees. Through recurring training and disclosures, as well as periodic communication related to specific topics, the Company maintains the highest level of ethical conduct.

Our Board of Directors believes that a fully engaged Board of Directors is a strategic asset of the Company, and that knowledgeable and fresh viewpoints and perspectives are important for informed decision-making. The Board of Directors regularly evaluates whether it collectively has the right mix of skills, experience, attributes and diverse viewpoints necessary for it to drive stockholder value. The results of this evaluation are used to help identify the desirable skills for potential Board of Directors nominees and to screen director candidates. In the past four years, the Board of Directors has nominated three new directors to the Board, two of them diverse. The Board will continue to seek and recruit highly talented and diverse director candidates in the future, as we expect several Board positions will become available through natural refreshment due to the Company’s age of 72 retirement standard.

In addition to the foregoing commitments, our Board of Directors believes in strong governance practices, including:

Finally, our Board understands the importance of aligning compensation with performance. Our compensation philosophy and programs for executives are balanced and risk-appropriate, demonstrate long-term alignment with sustained performance and stockholder interests and provide a competitive and effective program to attract, motivate and retain the best talent.

The Company is committed to cybersecurity and vigilantly protecting all clients, resources and information from unauthorized access. The Company has implemented a strategic approach to cybersecurity and performs semi-annual cybersecurity penetration tests and formal cybersecurity maturity assessments via a third party to ensure that we are consistent with security best practices. The Company's cybersecurity approach incorporates a layered portfolio of technology products and tools, documented policies, end-user training and dedicated resources to manage and monitor the evolving threat landscape. We employ dedicated cybersecurity personnel to focus on preventing, identifying and detecting cybersecurity risks. We use advanced next-generation protection technologies to rapidly detect and investigate any evidence of malicious activity, which allows us to quickly isolate systems to contain and prevent damage and restore systems. Incidents are required to be internally reported, including to the Board of Directors, if material or appropriate. The Board of Directors is responsible for overseeing cybersecurity risks and management provides the Board of Directors with updates on current cybersecurity projects and industry trends on at least a quarterly basis. Our cybersecurity personnel regularly evaluate risks and opportunities to improve our cybersecurity program. In addition, controls related to the Company's information technology environment are tested as part of our Sarbanes-Oxley audit.

In the event of a restatement of incorrect financial results, the Company’s Compensation and Benefits Committee (the “Committee”) will review all cash and equity incentive awards made under the Company’s Omnibus Plans that were paid or awarded to executive officers (within the meaning of Rule 3b-7 of the Exchange Act) for performance periods beginning on and after January 1, 2019, which occur during the restatement period. If any such awards would have been lower had the level of achievement of applicable financial performance goals been calculated based on such restated financial results, the Committee will, if it determines appropriate in its sole discretion, to the extent permitted by governing law, require the reimbursement of the incremental portion of the awards in excess of the awards that would have been paid based on the restated financial results.

Furthermore, if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company as a result of misconduct with regard to any financial reporting requirement under applicable securities laws, the individuals subject to the automatic forfeiture provisions under Section 304 of the Sarbanes-Oxley Act of 2002 and any other employee who knowingly engaged in the misconduct, was grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct or was grossly negligent in failing to prevent the misconduct, shall reimburse the Company the amount of any payment in settlement of an award earned or accrued during the 12-month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document that contained such material noncompliance.

The Committee may specify in an award that a grantee’s rights, payments and benefits with respect to the award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of the award. Such events may include, but shall not be limited to: termination of employment for cause, termination of the grantee’s provision of services to the Company, violation of material Company policies, breach of noncompetition, confidentiality or other restrictive covenants that may apply to the grantee or other conduct by the grantee that is detrimental to the business or reputation of the Company. These provisions will generally be limited to a three year look-back from the occurrence of the event that gives rise to the forfeiture.

A compensation analysis, including a peer comparison, was completed in 2022. The goal of the study was to evaluate our director compensation against our peer group to ensure the Company’s compensation practices for our directors is consistent with banks our size and within our similar markets. The analysis identified current trends and levels of director fees. The committee agreed that after several years without an increase, and to remain competitive and aligned with overall Company performance, a modest increase was reasonable. The peer group methodology used in the director compensation analysis was consistent with the methodology outlined herein.

Set forth below is the fee schedule for non-executive directors as of December 31, 2022:

The restricted stock unit awards in 2022 were issued pursuant to the 2018 Plan. The restricted stock units awarded to the non-employee directors vest one-third annually beginning on the first anniversary of the grant date.

This section discusses the Company’s executive compensation philosophy, guidelines and programs, and the material factors affecting the Company’s decisions regarding the compensation of its named executive officers (“NEOs”). This information is presented to give our stockholders a clear and comprehensive picture of the Company’s executive compensation program and its individual components. It also describes the process followed by the Compensation and Benefits Committee (the “Committee”) for making compensation decisions, as well as its rationale for specific decisions related to 2022.

The following table sets forth certain information for the Named Executive Officers (“NEOs”) of the Company in 2022.

Biographical information regarding the NEOs is set forth below. Information regarding Mr. Watt can be found under the section Board Nominees for 2023 found herein.

The Company has a strong pay for performance culture. Our executive compensation programs are designed to reward the NEOs for making decisions that lead to consistently high financial performance and value creation for our stockholders. In 2022, the Company achieved strong operating performance at 25% above targeted expectations. The NEOs achieved 150% of their targeted opportunity under the annual Executive Incentive Compensation Plan (“EICP”) and 110.0% of their targeted opportunity in performance-vesting stock awards in the first year of the performance period.

The following highlights demonstrate the Company’s financial performance during 2022.

Below is a summary of key financial metrics and results for 2022. Refer to the “Pay for Performance” section herein for a summary of our pay for performance analysis.

The following table provides the non-GAAP reconciliation.

The Company’s long-standing focus has been to align its compensation plans with business objectives, performance, stockholder interests and the practices of its peers. The Company considered the 95.6% non-binding advisory basis approval of the executive compensation of its NEOs by its stockholders at the Annual Meeting on May 17, 2022 to be a strong endorsement of its compensation programs. The Company also considered feedback from stockholders and commentary received from proxy advisory groups and independent compensation consultants to evaluate compensation practices. Proxy advisory groups were generally supportive of the Company’s pay practices, and no significant concerns have been identified.

Based on the results of the most recent non-binding stockholder advisory vote on the frequency of stockholder votes on executive compensation, the Compensation Committee and the Board determined that a stockholder advisory vote on executive compensation will take place every year, until and unless our stockholders vote to hold such an advisory vote with a different frequency, at which time the Board will carefully consider the stockholder vote resulting from the proposal and continue to evaluate the options for how frequently it holds “say-on-pay” votes.

The Committee has adopted a formal Executive Officer Compensation Philosophy to guide compensation decisions. At the heart of this is a belief in a strong pay for performance culture and that its executive compensation philosophy must create long-term stockholder value. The strategy of the Committee is to design an executive compensation program that is both competitive with comparably sized financial institutions and furthers the objectives of the Company through strong performance results. The Committee regularly evaluates the compensation components in order to ensure that the NEOs’ compensation remains competitive and aligned with Company performance.

The primary objectives of the Company’s executive compensation program are to:

The following guiding principles are at the core of the Company’s executive compensation program. Executive compensation should be:

The Company recognizes and rewards results that are consistent with its strategy and business objectives.

Executives should balance potential outcomes with appropriate risk-taking. Executives must comply with Company risk policies and control mechanisms.

It is expected that executives act in a manner consistent with the highest ethical standards. The Company has incorporated this thinking into all compensation programs, practices and policies. Results obtained through tactics that are deceptive or are inconsistent with our values and culture are not rewarded and are subject to penalties including, but not limited to, clawbacks, discretionary downward adjustments to incentive compensation, employment decisions and disciplinary actions.

Executives are also subject to clawbacks in cases of fraud, errors/omissions and improper risk-taking for material adverse outcomes in the years following incentive compensation payouts.

The Company’s policies and practices promote strong compensation governance by:

While we have an obligation to protect stockholder interests, we also are accountable to other key stakeholders including our employees, customers and community. Our compensation programs, practices and policies recognize this responsibility.

Factors such as performance, knowledge, skills and experience play a role in compensation decision-making for individual executives. Discretionary factors are also considered in making appropriate compensation decisions in a balanced and holistic approach. It is strongly believed that executive performance should be considered in tandem with our values. These include Customer Focus, Integrity, Accountability, Teamwork, Positive Attitude, Mutual Respect and Community Involvement.

The Company’s compensation program centers on Total Direct Compensation (“TDC”), which is the sum of base salary, short-term incentives and long-term equity-based incentives. Our TDC is weighted heavily toward rewarding results, with a substantial portion “at risk” and performance-based. The following table shows the principal components of TDC, each one contributing to the accomplishment of our compensation program goals:

 

Our ability to attract and retain an exceptional leadership team is also dependent on having a full complement of compensation tools available to us and the flexibility to use them. This includes retirement and other limited benefits and perquisites, as well as the ability to leverage employment, change in control and severance agreements.

Risk management controls are developed to reduce the potential for imprudent risk taking. Controls are in place for the proper administration and oversight of the compensation programs.

All components of NBT’s executive incentive compensation plans include mechanisms through metric selection, discretion and/or plan design to adjust compensation payments for risk. Poor risk management practices and imprudent risk-taking will lead to an adverse impact on incentive compensation, such as reductions or loss of current and/or previously awarded incentive compensation.

The Committee involves the Company’s control functions (e.g., internal audit, risk and compliance) as well as outside advisors in its deliberations. Risk assessments of the Company’s compensation programs are conducted regularly.

We operate within the rules, regulations and laws concerning compensation, employee rights and protections. Compensation programs, practices and policies are designed to promote the long-term sustainability of our Company, stockholders, employees and the communities we serve.

The Committee approves the compensation for “Named Executive Officers” as defined under SEC Item 402 of Regulation S-K.

In addition to providing annual assessments, the consultant advises the Committee on best practices in light of the changes in the banking and corporate regulatory environment and assists the Committee in designing compensation arrangements that reflect the Company’s compensation philosophy. While the Committee considers input from the consultant when making compensation decisions, the Committee’s final decisions reflect many factors and considerations.

Meridian Compensation Partners, LLC (“Meridian”) was engaged to serve as the Committee’s compensation consultant for 2022 and 2023 compensation decisions. Meridian reported directly to the Committee and did not

provide any other services to the Company. The Committee has analyzed the work of Meridian and determined there were no conflicts of interest, taking into consideration the following factors, among others: (1) the provision of other services to the Company; (2) the amount of fees from the Company paid as a percentage of the firm’s total revenue; (3) internal policies and procedures within each consulting firm that are designed to prevent conflicts of interest; (4) any business or personal relationship of Meridian or the individual compensation advisors employed by each with an executive officer of the Company; (5) any business or personal relationship of the individual compensation advisors with any member of the Committee; and (6) any stock of the Company owned by the firms or the individual compensation advisors employed.

The compensation review process entailed the use of survey data and peer group information prepared and presented by the consultant. The peer group used as reference for 2022 TDC and financial performance comparisons consists of community-based banking organizations with assets between $5 billion and $20 billion (approximately 0.5x – 2x the Company’s asset size), operating in a market similar to the Company’s and competing for comparable executive talent. The peer group utilized for the 2022 pay analysis consisted of the following companies.

The Committee generally sets target TDC, which reflects base salary, short-term incentives and long-term incentives that are commensurate with market median (or practice) for each individual’s role. After reviewing the benchmark study, the Committee determined the TDC targets are appropriate and consistent with this approach. It is important to note that this market data was not the sole determinant in setting executive pay levels. The Committee also considers corporate and individual performance, the nature of an individual’s role within the Company, as well as his or her experience and contributions to his or her current role when making its compensation-related decisions.

At the request of the Committee, the consultant conducts regular analyses to monitor pay and performance alignment (both financial and operational) resulting from its pay decisions for the CEO. The goal is to use this information as a reference for assessing the effectiveness of the pay programs and pay decisions. The consultant analyzes the actual realized pay delivered based on performance. Realizable pay is defined as the current value of compensation granted during the measurement period including annual cash salary paid, annual short-term incentive payments, current value of time-based equity granted and current value of long-term performance equity awards.

It is the Committee’s philosophy to reward the CEO for operational excellence. Operational excellence is achieved by selecting a composite of key financial metrics which define management’s strategic objectives They are tied, for the most part, to the primary performance metrics used in the short and long-term incentive plans. The Committee reviews these regularly in light of the Company’s financial performance. The 2022 study revealed that realizable pay of the Company’s CEO is aligned with operational performance for both the one-year and three-year performance periods using key metrics (normalized diluted EPS growth, ROAA, ROATE, NPA/Total Assets, Efficiency Ratio, TSR and Net Interest Margin).

The Committee reviews executive base salaries annually. Base salary is the only fixed portion of compensation for salaried employees of the Company, including the NEOs. The Company has entered into employment agreements with each NEO providing for a minimum base salary, subject to annual adjustments upon the Committee’s approval.

In 2022, the Committee determined the base salaries of the NEOs based on the Company’s guiding principles, unique pandemic environment and the competitive market. Messrs. Watt and Stagliano each received a 4% salary increase and Mr. Kingsley and Ms. Mahoney each received a 2.5% salary increase in order to maintain market-competitive base salaries and recognize their performance and contributions. The Committee’s recommendations were in line with the results of the compensation analysis. Below are the base salaries for the NEOs for 2022.

In addition to fixed base salaries, the Company provides cash and equity-based incentive compensation. Incentive compensation varies in amount depending on the factors discussed below and is designed to promote superior performance and achievement of corporate goals, to encourage the growth of stockholder value, and to share the long-term growth and profitability of the Company with key employees.

The EICP is a component of the 2018 Plan, a stockholder-approved incentive plan authorizing several forms of cash and equity- based incentive compensation.

The EICP is a short-term cash incentive plan that directly ties annual cash awards to the Company’s performance as measured by EPS and individual performance objectives. The EICP target opportunities are defined as a percentage of base salary with payouts considering a combination of corporate performance goals and individual performance objectives reflecting each executive’s role and responsibilities. If the threshold EPS goal is not achieved, no awards will be paid to any executives. When determining the payouts under the EICP, the Committee may objectively adjust the reported performance results considering any of the following events that occur during a performance period: (1) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (2) any reorganization and restructuring programs, (3) acquisitions or divestitures activity and related expenses and (4) other unusual or unplanned events. No adjustments were made to reported results in 2022.

The Committee increased the target award opportunity for the CEO to 75% in 2022 from 65% in 2021. For other NEOs the Committee increased the target award opportunity to 45% in 2022 from 42.30% in 2021. The target award level was increased to retain the alignment of NEOs’ TDC with peer median to retain and attract executive talent in the Company’s markets.

At the beginning of each year, the Committee determines the performance metrics and goals under the EICP. The Committee considers the Company’s strategic plan, current interest rate environment and macroeconomic conditions when selecting the performance metrics and goals. The incentive metrics are selected within a context of a long-term objective of building stockholder value and discouraging undue risk taking for short-term gains. The primary incentive funding metric is EPS with potential adjustments for individual performance. The EPS target level for 2022 was set at $2.81, a decrease from 2021 reported EPS, primarily due to a projected $7 million ($0.12 EPS) decrease in debit card fee income as a result of the adoption of the Durbin Amendment in 2022, combined with an increase in projected provision for credit losses of $31.1 million ($0.55 EPS). In 2022, the Company forecasted provision expense to normalize and return to historical trends, expecting to provide for forecasted loan growth and charge-offs. During 2021, the Company experienced significant allowance for credit loss reserve releases due to improvements in economic conditions compared to the prior year’s worsened economic conditions during the height of the COVID-19 pandemic. The Committee also considered the impact of increased wage pressures and a planned higher success rate of filling open positions in the 2022 target setting process.

The following table summarizes the EPS goals, potential payout range and the target opportunities at each performance level for each NEO under the EICP for 2022 as a percentage of base salary at the end of the year. The potential payout range is 50-150% of each participant’s target opportunity. EPS achieved between these levels will be calculated using straight line interpolation. Once the EPS result and corresponding payout is calculated, the actual payout can then be negatively adjusted based on individual performance.

In addition to the EPS performance levels, the Committee considers individual performance objectives when approving the overall payout for each of the NEOs. The Committee sets the individual performance objectives for the CEO. The CEO provides input for the individual performance objectives for the other NEOs. Each NEO has several individual performance objectives that are tied to both the NEO’s respective corporate responsibilities and the Company’s overall strategic plan. Objectives more critical to the Company are given more significant weight than other objectives. The calculated payout level based on EPS performance is subject to reduction based upon each NEO’s individual performance objectives with the maximum possible reduction being 100% of the award otherwise payable.

For 2022, the Company’s EPS of $3.52 was 125% of target EPS performance of $2.81 and above the maximum level of $3.06. Based on these results, and in accordance with the plan, the payout represented a payout of 150% of target.

For 2022, the Committee also considered individual performance and has direction to reduce the payout level based on each NEO’s achievement of performance objectives.

Mr. Watt, President and Chief Executive Officer. Mr. Watt exceeded financial expectations, lead strategies on disciplined growth, drove our long-term strategic digital future specifically around fin-tech and payments, honed our regulatory, ESG and investor initiatives and implemented new development tools for employee career growth. He advanced our DEI initiatives with a new full-time Chief Diversity Officer, diverse board and executive team. The Company’s engagement and retention levels are at record highs. The Company’s performance and these achievements resulted in Mr. Watt earning 100% of his total potential incentive at 150% of Target.

For the 2022 performance year, the Committee also set the following individual performance objectives and the payout percentage for the other NEOs.

Mr. Kingsley, Executive Vice President and Chief Financial Officer. Mr. Kingsley’s individual performance objectives were aligned with the Company’s strategic focus areas of strategic planning, improving financial reporting tools with enhanced technology and increased engagement in investor relations. In addition, he provided leadership in our DEI and management development objectives. These achievements resulted in Mr. Kingsley earning 100% of his potential incentive at 150% of Target.

Mr. Stagliano, Executive Vice President, President of Retail Community Banking and Chief Information Officer. Mr. Stagliano’s individual performance objectives were aligned with the Company’s strategic focus areas of organic growth, investment in human capital, expense management and optimization and enhancing our customer and employee experiences. Mr. Stagliano refreshed our Technology Roadmap and implemented numerous strategic technology advances including Workday, financials and line of business applications. Mr. Stagliano achieved the majority of his revenue and operational goals in Retail Banking, Business Banking, Operations, IT and Marketing. These achievements resulted in Mr. Stagliano earning 95% of his potential incentive at 150% of Target.

Ms. Mahoney, Executive Vice President, President of Wealth Management and Regional President for the Capital District and North Country. Ms. Mahoney’s individual performance goals were aligned with the Company’s strategic focus areas of growth, investment in human capital and enhancing our customer and employee experiences. Ms. Mahoney provided pivotal leadership in developing new products to support our customers’ needs including Private Banking and increased the commitment to operation excellence which included regulatory focus. Ms. Mahoney actively supported our DEI initiatives by leading our NBT*Empowerment women’s group and actively participated in our DEI Steering Committee. These achievements earned Ms. Mahoney 90% of her potential incentive at 150% of Target.

Mr. Sparks, Executive Vice President, General Counsel and Corporate Secretary. Mr. Sparks was hired in April of 2022. As part of the compensation package in his offer, Mr. Sparks was provided a guaranteed bonus or the amount of prorated EICP, whichever was higher. The prorated amount was higher and determined his final amount. Mr. Sparks’ significant experience was drawn upon for numerous legal, merger and acquisition and regulatory matters.

The Committee considered such results together with the corporate component results in determining awards under the EICP as follows:

The 2018 Plan provides NEOs, and other eligible employees, with annual and long-term incentives in the form of cash, equity and performance-based awards. Long-term incentive grants made in 2022 consisted of two components as indicated below:

In March 2022, the Committee granted Long-Term Incentive and Retention Equity Awards under the 2018 Plan to each NEO. The 2022 awards (in the form of restricted stock units) are long-term, equity-based incentive awards that link executive compensation to the Company’s profitability and stockholder value. The awards consist of a grant of:

Each participant has a target opportunity, defined as a percentage of base salary as follows:

The Committee determined the number of Performance Units and Retention Units underlying the awards based on a percentage of the grantee’s base salary as of the grant date, which was then converted to a number of units based on the fair market value of the Company’s common stock on the date of grant. In determining the size of the awards, the Committee considered several factors, including the grantee’s organizational position, historical performance, prior awards, current performance and potential future contribution to the Company. No dividends or dividend equivalents are currently paid on any unvested awards. At the time of grant, both the Performance Units and Retention Units could be reduced based on individual performance.

With respect to the 2022 Performance Units, the performance award amount for each NEO for the first year of the performance period is based on the Company’s composite score ranking of several performance metrics against a comparative peer group for the year ended December 31, 2022. The composite score includes the following performance metrics: ROAA, ROATE, Net Interest Margin, NPAs to Total Assets and Efficiency Ratio. There is a potential for a reduction in the performance award amount in 2023 based upon the Company’s composite score ranking for the full year 2023 performance against a comparative peer group. Full vesting and payout of the Performance Units occurs following the completion of an additional one-year time-based vesting requirement after the end of the two-year performance period (subject to acceleration upon certain terminations or a change in control). The following table depicts the composite score performance levels for the 2022 long-term incentive award.

For the 2022 performance year, the Company’s Composite Score ranking was 9, which resulted in earning 110.0% of target for the performance component of the award.

As shown in the table below, Messrs. Watt, Kingsley, Stagliano and Sparks and Ms. Mahoney received the following long-term equity compensation awards in 2022. In granting these awards, the Committee considered market data, as well as individual performance contributing to the Company’s success.

In assessing Mr. Watt’s TDC for 2023, the Committee considered individual and Company performance, current compensation trends, peer group data and feedback from proxy advisory groups. Given Company and individual achievements in 2022 as well as considering peer data Mr. Watt’s base salary increased 4% to $860,000. No adjustments were made to Mr. Watt’s other components of compensation.

Salary Increases for other NEOs were as follows: Messrs. Kingsley, Stagliano and Sparks and Ms. Mahoney received a 2.5% increase.

In addition, the Committee approved changes to the methodology of both the short and long-term incentive plans beginning in 2023. The short-term incentive plan will use a multi-factor objective and subjective approach while the long-term incentive plan will use 2 distinct measures with a three-year performance period. The minimum, target and maximum payout levels remain the same.

To more directly align their interests with stockholders’ interests, the Committee maintains stock ownership guidelines for the Board of Directors and the Company’s executive management team, including the NEOs. The guidelines include retention requirements for restricted stock units and the NEOs’ required ownership levels are based on a multiple of salary.

Stock Ownership Guidelines

Vested restricted stock units are included in an individual’s ownership for purposes of compliance with guidelines. The executives and Board members must comply with the guidelines within five years from the date of promotion to the executive management team or election to the Board of Directors. Failure to meet the guidelines could, at the Committee’s discretion, affect future equity-based awards. As of December 31, 2022, all NEOs and all directors were in compliance or expected to be in compliance with the guidelines.

All directors and employees, including the NEOs, are prohibited from engaging in any speculative transaction designed to hedge or offset any decrease in the market value of the Company’s securities, including hedging of the Company’s common stock. The Company also prohibits any pledging of Company securities in a margin account and restricts all other pledging of any Company securities by requiring directors and employees to obtain the prior approval of the CEO, CFO or General Counsel before entering into any such agreement.

The Company has a clawback policy to require NEOs to reimburse the Company, in full or in part, for incentive compensation awards received in a period where restatement was required due to incorrect financial results. Furthermore, if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company as a result of misconduct, with regard to any financial reporting requirement under the securities laws, the NEOs’ incentive compensation would also be subject to clawback.

A formal risk assessment of the Company’s incentive compensation plans is performed annually. A risk assessment matrix is used which considers and analyzes the following factors.

The annual risk assessment is overseen by the Chief Risk Officer and Chief Human Resources Officer/Chief Ethics Officer and reviewed annually by the Committee.

The eligible NEOs participate in the Pension Plan, which is a noncontributory, tax-qualified defined benefit pension plan. The Pension Plan is available to all Company employees who have attained age 21 and have completed one year of service, as defined in the Pension Plan. The Pension Plan provides for 100% vesting after three years of qualified service. The Pension Plan has a cash balance feature, in which all of the eligible NEOs participate. The footnotes to the Pension Benefits Table included herein, including the narrative discussion that follows such table, contain a detailed description of the defined benefit/cash balance pension plan, including a description of the eligibility, crediting, vesting, mortality, and other terms and assumptions used for the calculation of Pension Plan benefits. Participants in the Pension Plan are eligible for additional discretionary contributions to the 401(k) Plan & ESOP in lieu of interest credits to the cash balance portion of the Pension Plan.

The CEO participates in a SERP, which is principally designed to restore benefits that would have been paid to him if certain federal tax limitations were not in effect, as well as to attract and retain qualified and experienced executive officers. The SERP is embodied in an agreement between the Company and the CEO. The narrative that follows the Nonqualified Deferred Compensation table included herein contains a detailed description of the SERP.

The 401(k) Plan & ESOP is a tax-qualified defined contribution retirement savings plan available to all Company employees who have attained age 21 and are either scheduled to complete one year of service or have completed one year of service (1,000 hours of service in a twelve-month period), as defined by the 401(k) Plan & ESOP. Employees are eligible to enroll on the first of the month following 30 days of service. Participants in the 401(k) Plan & ESOP may contribute up to the limit prescribed by the Internal Revenue Service on a before-tax or after-tax basis. The Company matches 100% of the first 1% of pay contributed to the plan plus 50% of the next 5% of compensation for a total matching contribution of 3.5% of compensation. Additionally, the Company can make discretionary contributions to the 401(k) Plan & ESOP based on its financial performance. All Company contributions to this retirement plan since 2013 have been made in cash and vest at the rate of 20% per year with full vesting following five years of benefit service. Prior to 2013, Company contributions were made in Company stock. The NEOs participate in the 401(k) Plan & ESOP. The Company may make discretionary contributions to the 401(k) portion of the 401(k) Plan & ESOP to offset the elimination of interest credits to the Pension Plan, as described above. The value of Company contributions to the 401(k) Plan & ESOP are included in the Summary Compensation Table included herein.

The Deferred Compensation Plan allows the NEOs, and such other key employees as the Committee may approve annually, to defer some or all of their salary, commissions and/or bonus, to a future date. The Deferred Compensation Plan also permits the Company to make discretionary contributions to the accounts of eligible employees. Eligible employees are generally those employees determined to be highly-compensated employees of the Company. In addition, the Omnibus Plans permit award recipients to defer receipt of vested equity awards to a future date. Certain NEOs elected to defer compensation or received discretionary contributions as detailed in the Nonqualified Deferred Compensation table included herein. The Company awarded Messrs. Watt, Kingsley, Stagliano and Sparks and Ms.

Mahoney $292,400, $78,797, $67,516, $61,346, and $62,250, respectively, as discretionary contributions to the Deferred Compensation Plan based upon their 2022 performance. Company contributions are not subject to vesting provisions.

The Company provides NEOs with perquisites and other personal benefits that the Committee and the Company believe are reasonable and consistent with the Company’s guiding compensation principles. These benefits enable the Company to attract and retain superior employees for key positions. During 2022, these benefits included the use of Company-owned automobiles or car allowance, disability insurance, long-term care insurance and for certain NEOs, club memberships and moving related expenses. For the CEO, the Company also maintains a split-dollar bank-owned life insurance policy for the benefit of the Company and the CEO. For NEOs that have the use of a Company-owned automobile, any personal mileage incurred by the executive is taxed as additional compensation in accordance with Internal Revenue Service (“IRS”) regulations. The Committee periodically reviews the levels of perquisites and other personal benefits provided to NEOs. The dollar amount of these benefits is reflected in the Summary Compensation Table included herein. The aggregate amounts of perquisites and other personal benefits paid to Mr. Stagliano were determined to be less than the established reporting thresholds for detailed disclosure.

Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally disallows a tax deduction to a company for compensation in excess of one million dollars paid per year to a company’s CEO, CFO and each of its three other most highly compensated executive officers, including certain former executive officers. Prior to January 1, 2018, certain “performance based” compensation exceeding one million dollars annually paid to such executive officers was excluded from Section 162(m)’s limitation and was deductible if certain requirements were met, and compensation paid to the Company’s CFO and former executive officers were excluded from Section 162(m)’s limitation. Compensation arrangements that qualify for transition relief under certain “grandfather” rules may continue to be deductible in the future, but it is uncertain whether previous compensation that the Committee believed to be “performance based” compensation or believed would not otherwise be subject to Section 162(m)’s limitation will be deductible going forward.

The Committee considers the tax deductibility of compensation as one factor when considering executive compensation program alternatives. The Committee has in the past approved and has reserved the right in the future to approve compensation that does not qualify for deductibility in circumstances it deems in the Company’s best interests. The Committee believes that its primary responsibility is to provide a compensation program that attracts, retains and rewards the executive talent necessary for our success.

Section 409A of the Internal Revenue Code (“Section 409A”) generally provides that amounts deferred under a nonqualified deferred compensation plan are currently includible in a service provider’s gross income to the extent not subject to a substantial risk of forfeiture, unless certain requirements are met or exemptions apply. Section 409A applies to most forms of deferred compensation, including but not limited to, nonqualified deferred compensation plans or arrangements, certain equity-based performance awards and severance plans or individual severance arrangements contained within employment agreements. Generally, under Section 409A, any severance arrangement not in compliance with Section 409A covering an NEO pursuant to an employment or change in control agreement, any deferrals under a nonqualified deferred compensation plan that do not comply with Section 409A, or any stock option award grants with an exercise price of less than fair market value on the date of grant may subject the applicable service provider to: (1) current income inclusion of the relevant amounts; (2) interest at the IRS underpayment rate; and (3) an additional 20% excise tax. The Nonqualified Deferred Compensation Table included herein provides detailed information about the Company’s nonqualified deferred compensation arrangements.

Section 4999 of the Internal Revenue Code imposes a 20% excise tax on certain “excess parachute payments” made to “disqualified individuals.” Under Section 280G of the Internal Revenue Code, such excess parachute payments are also nondeductible to the Company. If payments that are contingent on a change in control to a disqualified individual (which terms include the NEOs) equal or exceed three times the individual’s “base amount,” they constitute “excess parachute payments” to the extent they exceed one times the individual’s base amount.

All the Company’s NEO employment agreements provide for a cutback of change in control benefits in circumstances where the executive would not be better off on a net after-tax basis by at least $50,000 by being paid the full change in control benefit. In circumstances where the executive will be better off by at least $50,000 on a net after-tax basis by being paid the full change in control benefit owed, the executive will be responsible for the payment of all excise taxes. However, neither the Company nor NBT Bank will be permitted to claim a federal income tax deduction for the portion of the change in control benefit that constitutes an “excess parachute payment.”

The Committee is informed of the financial statement implications of the components of the compensation program for NEOs. However, a compensation component’s contribution to the objectives of the Company’s compensation program and its projected economic cost, which may or may not be reflected on the Company’s financial statements, are the main elements of NEO compensation decisions.

The following table sets forth information regarding compensation earned by each of the NEOs. The compensation received by each NEO was a combination of cash and equity compensation and short-term and long-term compensation. The Committee concluded that this mix reflects the compensation principles discussed in the Compensation Discussion and Analysis, as applied to each NEO’s responsibilities and performance.

The following table provides information about plan-based awards to the NEOs under the Company’s cash and equity incentive plans during 2022.

The following table provides information about outstanding equity awards under the Company’s equity compensation plans at December 31, 2022, whether granted in 2022 or earlier, including awards that have been transferred other than for value.