Peoples Financial Services Corp

This non-binding management proposal asks shareholders to approve, on an advisory basis, the compensation programs and disclosures for the Company’s named executive officers as set forth in the proxy statement (the CD&A, compensation tables and narrative). Management seeks shareholder approval to validate its pay philosophy—linking base salary, annual cash incentives and long-term equity awards to performance, retention and alignment with shareholder interests—and to continue the compensation framework described in the CD&A. The Company emphasizes a mix of base salary, annual incentives (determined by a balanced scorecard) and long-term equity (RSUs and performance RSUs) to balance short-term results and long-term value creation; the proxy details grant timing and the committee’s governance controls such as clawbacks and recoupment policies. Although advisory and not binding, management and the compensation committee state they will carefully consider shareholder feedback and a significant negative vote would trigger a formal review of compensation practices and potential adjustments. The board recommends a vote FOR, asserting the program has delivered improved financial results in 2025 and aligns management incentives with the bank’s strategic priorities after the FNCB merger and integration activities. The proposal sits in the context of recent favorable say-on-pay support (approximately 93% in favor at the 2025 meeting) and follows enhanced disclosures about pay benchmarking, pay-for-performance metrics and retention-focused long-term awards. A thoughtful investor analysis should weigh the program’s demonstrated outcomes in 2025, governance safeguards, the non-binding nature of the vote, and potential implications of a strong negative vote on future compensation design and shareholder engagement.

This advisory management proposal asks shareholders to select the frequency—every one year, two years, or three years—for future advisory votes on the compensation of named executive officers. The board recommends an annual vote, arguing that compensation decisions are made and reviewed on an annual cycle and that annual shareholder feedback should be part of that recurring process; the proxy explains this allows shareholder sentiment to be considered each year as pay decisions are reviewed and approved. The vote is non-binding, so while the board will consider the outcome, it is not required to change its schedule; nevertheless a shareholder majority in favor of a different cadence could lead to changes in practice and in the timing of engagement. Contextually, the Company has historically solicited annual say-on-pay votes and cites its desire for timely investor input in the post-merger integration period and ongoing compensation program refinements. For investors evaluating the issue, the trade-off is between more frequent accountability and administrative burden: annual votes allow more regular input on evolving pay practices, while multi-year votes reduce voting frequency and may emphasize long-term alignment. Management emphasizes that an annual cadence aligns with its compensation governance and the timing of performance measurement, but also notes that the board retains discretion to change the frequency in the future if it determines shareholder or company interests warrant different timing. The board’s formal recommendation for "1 YEAR" signals that it prefers the most frequent option to facilitate ongoing shareholder engagement and oversight.

This management proposal requests shareholder approval to amend the Company’s 2023 Equity Incentive Plan to increase the maximum share reserve to 300,000 shares (and to set the Incentive Stock Option aggregate limit to 300,000). Management and the compensation committee state the increase is advisable to permit continued issuance of equity awards needed for recruiting, retention and long‑term incentive alignment after the Company’s 2024 merger and based on current award practices. The proxy notes that as of March 23, 2026 only 12,649 shares remained available under the Plan, which the board says is insufficient to make anticipated 2026 grants consistent with 2025 long-term incentive practices—mixes of time‑vested RSUs and performance‑vested RSUs targeted at 10–35% of base salary for certain officers. The amendment, if approved, would preserve governance controls described in the Plan (administration by the compensation committee, repricing restrictions without shareholder approval, anti‑dilution adjustments, and Section 409A and clawback considerations) while providing the headroom needed for multi‑year equity programs and director awards. From a shareholder perspective, the proposal dilutes current holders modestly (300,000 shares represents roughly 3% of the roughly 10.0 million shares outstanding as of the record date) while enabling the company to pursue retention and performance‑linking equity grants key to its post‑merger integration and growth strategy. The board recommends FOR, citing the need to continue regular equity grant programs for employees and directors and to maintain competitive compensation. Investors should evaluate the proposed increase in the context of the company’s recent performance, the detailed award practices described in the proxy, anti‑dilution protections, and the board’s stated use of awards (including performance‑based elements) to align management and shareholder interests.