Document

DEF 14A 1 proxystatement-2021xwdeskf.htm DEF 14A Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

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	Definitive Proxy Statement
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	Soliciting Material under §240.14a-12

		CHEMUNG FINANCIAL CORPORATION
		(Name of Registrant as Specified In Its Charter)

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

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Proxy Statement - 2021

One Chemung Canal Plaza

Elmira, New York 14901

April 27, 2021

Dear Fellow Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of Chemung Financial Corporation on Tuesday, June 8, 2021 at Chemung Canal Trust Company, located at One Chemung Canal Plaza, Elmira, New York, at 2:00 p.m., Eastern Time. We continue to actively monitor the coronavirus (COVID-19) situation and are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state and local governments may impose. Due to the nature of the ongoing situation, and for the safety and well-being of our shareholders, we will provide a telephone conference line for shareholders to listen to the meeting as disclosed under “General Voting Information.”

The Annual Meeting will begin with a review of the matters to be voted upon by the shareholders, as described in the accompanying Notice of Annual Meeting of Shareholders and related Proxy Statement. In addition to the formal business matters upon which shareholder action is required, we will report to you on the condition of your Company, what we accomplished in 2020, and our plans for the future.

Your vote is important. We want to be sure that your shares are represented and that your vote is properly accounted for and, whether or not you plan to attend the Annual Meeting, we request that you vote your shares. You may vote your shares by telephone, by the Internet or by returning the enclosed proxy card, as further explained in the Proxy Statement. Please see the attached Notice of Annual Meeting of Shareholders and accompanying Proxy Statement for additional information regarding how to vote your shares.

We encourage you to review the following Proxy Statement for a better understanding of the Corporation, its compensation practices and corporate governance structure, as well as a summary of the matters that will be voted on this year. We have attempted to present the information contained in the Proxy Statement in a straightforward and easily understood manner. However, much of the information presented is required by law to be included in a certain format. We appreciate your taking the time to read our Proxy Statement and hope that we have addressed the issues that interest you, our shareholders. Thank you for your support and investment in Chemung Financial Corporation.

Sincerely,

Anders M. Tomson

President & Chief Executive Officer

One Chemung Canal Plaza

Elmira, New York 14901



NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS

To Our Shareholders:

NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting of the Shareholders of Chemung Financial Corporation (“the Annual Meeting”) will be held at Chemung Canal Trust Company, located at One Chemung Canal Plaza, Elmira, New York, on Tuesday, June 8, 2021 at 2:00 p.m., Eastern Time. We continue to actively monitor the coronavirus (COVID-19) situation and are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state and local governments may impose. Due to the nature of the ongoing situation, and for the safety and well-being of our shareholders, we will provide a telephone conference line for shareholders to listen to the meeting as disclosed under “General Voting Information.”

The Annual Meeting of Shareholders of Chemung Financial Corporation will consider and vote upon the following matters, as described more thoroughly in the Proxy Statement attached to this notice:

1.Election of Directors [Proposal 1]:

a. The election of four directors for a term of three years expiring in 2024;

b. The election of one director for a term of two years expiring in 2023;

c. The election of one director for a term of one year expiring in 2022;

2.Advisory approval of our 2020 executive compensation (“Say-On-Pay”) [Proposal 2];

3.Approval of the Chemung Financial Corporation 2021 Equity Incentive Plan. [Proposal 3];

4.Ratification of the appointment of Crowe LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021 [Proposal 4]; and

5.Any other business that may properly come before the 2021 Annual Meeting, or any adjournment or postponement thereof. At the present time, the Board of Directors knows of no other business to come before the Annual Meeting.

Shareholders of record as of the close of business on April 9, 2021 will be entitled to vote at the 2021 Annual Meeting or any adjournment or postponement thereof. Please see the “Additional Voting Information” section of the Proxy Statement for more information on how to vote.

Please ensure that your shares are represented at the 2021 Annual Meeting, as your vote is very important.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on June 8, 2021: The Corporation’s 2020 Annual Report to Shareholders on Form 10-K, an abbreviated report for the twelve-month period, the 2021 Proxy Statement and the form of Proxy for the Annual Meeting are available at http://www.astproxyportal.com/ast/01079.


			By Order of the Board of Directors

			Kathleen S. McKillip Corporate Secretary April 27, 2021 Elmira, New York

Proxy Statement Table of Contents


General Voting Information			1

Additional Voting Information			2

Additional Shareholder Information			4

Voting Proposal 1 – Election of Directors			5

Voting Proposal 2 – Advisory Approval of the Corporation’s 2020 Executive Compensation (“Say-on-Pay”)			11

Voting Proposal 3 – Approval of the 2021 Equity Incentive Plan			12

Voting Proposal 4 – Ratification of the Selection of Crowe LLP as Our Independent Registered Public Accounting Firm for 2021			19

Audit Committee Report			20

Corporate Governance			21

Named Executive Officers			28

Stock Ownership Information			29

Compensation Discussion and Analysis			31

Tax and Accounting Matters			37

Executive Officers			38

Executive Compensation			39

Agreements with Named Executive Officers			45

Delinquent Section 16(a) Reports			46

Shareholder Proposals for Inclusion in the 2022 Proxy Statement			46

Appendix A: Chemung Financial Corporation’s 2021 Equity Incentive Plan			47

Exhibit A: Directors’ Deferred Fee Plan			66


General Voting Information

This Proxy Statement is provided in connection with the solicitation of proxies by the Board of Directors (the “Board”) for use at the Annual Meeting of Shareholders (the “Annual Meeting”) of Chemung Financial Corporation (the “Corporation” or “Chemung Financial”) to be held on Tuesday, June 8, 2021, at One Chemung Canal Plaza, Elmira, New York 14901. Shareholders may also listen to the Annual Meeting via telephone by calling 1-888-390-3967 (United States & Canada) or 1-862-298-0701 (Internationally). In the Proxy Statement, the “Bank” refers to Chemung Canal Trust Company, a New York-chartered commercial bank and wholly-owned subsidiary bank of Chemung Financial.

The Corporation’s 2021 Proxy Statement, 2020 Annual Report to Shareholders on Form 10-K, an abbreviated report for the twelve-month period, and a proxy card (collectively, the “Proxy Materials”) are scheduled to be mailed on or about April 27, 2021, to shareholders of record as of the close of business on April 9, 2021, the voting record date. Only shareholders of record at the close of business on that date are entitled to notice of and to vote at the Annual Meeting. On the record date there were 4,662,801 shares of common stock of the Corporation outstanding and entitled to vote. Each share of common stock of the Corporation is entitled to one vote on each matter that properly comes before the Annual Meeting. Please be sure that your shares are represented at the Annual Meeting by completing and submitting your Proxy by telephone, online or by returning a completed paper proxy card.

Vote Required and Board Recommendations

Proposal

Item

Votes Required for Approval

Board of Directors Recommendation

Effect of Abstentions

Effect of Uninstructed Shares Held by Broker, Bank or Other Agent

Voting Proposal 1

Election of Directors

A plurality of votes cast by holders of shares of common stock of the Corporation entitled to vote

“FOR” each of the Corporation’s six nominees

Not Voted

Voting Proposal 2

Approval, on an advisory basis, of the Corporation’s 2020 Executive Compensa-tion (Say-On-Pay)

An affirmative vote of a majority of all votes cast by the holders of common stock of the Corporation entitled to vote

“FOR,” on an advisory basis, the Corporation’s executive compensation (Say-On-Pay)

Not Voted

Voting Proposal 3

Approval of the Chemung Financial Corporation 2021 Equity Incentive Plan

An affirmative vote of a majority of all votes cast by the holders of common stock of the Corporation entitled to vote

“FOR” the approval of the Chemung Financial Corporation 2021 Equity Incentive Plan

Not Voted

Voting Proposal 4

Ratification of the Selection of Crowe LLP as the Corporation’s Independent Registered Public Accounting Firm for 2021

An affirmative vote of a majority of all votes cast by the holders of common stock of the Corporation entitled to vote

“FOR” the ratification of the appointment of the independent registered public accounting firm, Crowe LLP, as the independent registered public accounting firm of the Corporation for the year ending December 31, 2021

Not Voted

Discretionary Vote

Additional Voting Information

Frequently Asked Questions:

Who is entitled to vote?

The Corporation has one class of stock outstanding, common stock, $0.01 par value per share. At the close of business on the record date of April 9, 2021, there were 4,662,801 shares outstanding. The holders of these shares are considered shareholders of record and will be entitled to vote at the Annual Meeting or any adjournment or postponement thereof. Each of these shareholders will receive notice of the Annual Meeting and instructions on how to vote their shares. Each share outstanding on the record date is entitled to vote. Shares held in treasury by the Corporation are not eligible to vote and do not count toward a quorum.

What are “broker non-votes” and how are they voted at the Annual Meeting?

Shares of the Corporation common stock can be held in (i) certificate form; (ii) by “book entry” at the Corporation’s transfer agent, American Stock Transfer & Trust Company, LLC; or (iii) in “street name” at a broker. When shares owned by you are held in street name, the broker will solicit your vote and provide the Corporation with the results of the vote for all of the Corporation shares it holds in your account. On “routine” matters, if you as the beneficial owner of the shares do not provide the broker with voting instructions, the broker has the right to vote these shares in its own discretion. However, a broker is not allowed to exercise its discretion on voting shares held in street name on any “non-routine” matter. On such matters, these shares may only be voted by the broker in accordance with express voting instructions received by the broker from you, the beneficial owner of the shares. The votes attached to such shares, that is, shares that may or may not be voted by a broker except in accordance with the owner’s voting instructions, are referred to as “broker non-votes.”

This year, the only matter that will be considered a “routine” matter is Proposal 4, the ratification of the Corporation’s independent registered public accounting firm. Proposal 1, the election of directors, Proposal 2, Say-On-Pay and Proposal 3, the 2021 Equity Incentive Plan are non-routine matters; therefore, shares held by a broker in street name cannot be voted on by the broker at his or her discretion for those proposals. If your shares are held at a broker, the Corporation urges you to provide voting instructions to your broker so that your vote may be counted.

How are Dividend Reinvestment Plan shares voted?

Shares owned by you in the Chemung Financial Corporation Dividend Reinvestment Plan (“DRIP”) on the record date will be combined with all other shares owned by you directly on that date and presented to you with voting instructions.

What constitutes a quorum?

A quorum of shareholders is necessary to hold a valid meeting. A quorum will be present if shareholders holding at least a majority of the outstanding shares are present at the Annual Meeting in person or represented by proxy. Holders of 2,331,402 shares must be present in person or represented by proxy in order to have a quorum. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted by your broker, bank or other nominee) or if you vote in person at the meeting. Abstentions and broker non-votes will be counted for purposes of whether a quorum is present. If there is no quorum, the holders of the majority of shares present at the Annual Meeting in person or represented by proxy may adjourn the Annual Meeting to another date.

How many votes are required for approval of Proposal 1?

The first item on the agenda is the election of six directors. The affirmative vote of the holders of a plurality of the shares of common stock present in person or represented by proxy at the Annual Meeting and eligible to vote on such matter is required for the election of each director. A “plurality” means receiving a higher number of votes for such position than any other candidate, up to the maximum number of directors to be chosen at the Annual Meeting. Because there are only as many nominees (six) as there are directors to be elected (six) at this year’s meeting, a director nominee is assured of being elected if he or she receives any “For” votes, regardless of how many negative votes (“Withhold Authority”) are cast for that director. Broker non-votes are ineligible to vote on Proposal 1.

How many votes are required for approval of Proposal 2?

The second item on the agenda is the advisory approval of the executive compensation, Say-On-Pay. The affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and voting on this proposal is required to approve, by advisory vote, the compensation paid to the NEOs. Abstentions and broker “non-votes” will not be counted in determining the number of votes cast and; therefore, will have no effect on the outcome of this vote. A proxy or ballot marked “Abstain” on Proposal 2 will not have the same effect as a vote “Against” such proposal. A proxy or ballot marked “Against” on Proposal 2 is an actual vote (and counts in the total number of votes cast on the proposal). Therefore, a vote “Against” Proposal 2 makes it more difficult to achieve shareholder advisory approval of Say-On-Pay than a vote to “Abstain.”

How many votes are required for approval of Proposal 3?

The third item on the agenda is approval of the 2021 Equity Incentive Plan. The affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and voting on the proposal is required to approve the 2021 Equity Incentive Plan. Abstentions and broker “non-votes” will not be counted in determining the number of votes cast and, therefore, will have no effect on the outcome of this vote. A proxy or ballot marked “Abstain” on Proposal 3 will not have the same effect as a vote “Against” such proposal. A proxy or ballot marked “Against” on Item 3 is an actual vote (and counts in the total number of votes cast on the proposal). Therefore, a vote “Against” proposal 3 makes it more difficult to approve the 2021 Equity Incentive Plan than a vote to “Abstain.”

How many votes are required for approval of Proposal 4?

The fourth item on the agenda is ratification of the independent registered public accounting firm, Crowe LLP. The affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and voting on this proposal is required for ratification. Brokers will be eligible to vote on Proposal 4. A proxy or ballot marked “Abstain” on Proposal 4 will not have the same effect as a vote “Against” such proposal. A proxy or ballot marked “Against” on Proposal 4 is an actual vote (and counts in the total number of votes cast on the proposal). Therefore, a vote “Against” Proposal 4 makes it more difficult to achieve shareholder ratification than a vote to “Abstain.”

How do I vote?

If you are a shareholder of record as of the close of business on April 9, 2021, you will be entitled to vote at the Annual Meeting, or any adjournment or postponement thereof. You can ensure that your shares are voted properly by completing, signing and dating the enclosed proxy card and submitting it by mail or by calling 1-800-PROXIES (1-800-776-9437 from the United States) or 1-718-921-8500 from foreign countries, or by visiting www.proxyvote.com. In order for your vote to count, it has to be received by 11:59 p.m., Eastern Time, on June 7, 2021. If your shares are held by a broker, bank or other agent, you must follow the voting instructions on the form you receive from your broker, bank or other agent. If you hold shares through a broker or bank or other agent and wish to vote in person at the Annual Meeting, you must obtain a “legal” proxy from your broker, bank or other agent.

May I revoke my proxy?

A shareholder may revoke a proxy at any time before it is voted by: (1) delivering written notice of revocation bearing a later date than the proxy to the Secretary of the Corporation at One Chemung Canal Plaza, Elmira, New York 14901; (2) submitting a later-dated proxy by mail, telephone or via the internet; or (3) by voting in person at the Annual Meeting. Attendance at the Annual Meeting will not by itself constitute a revocation of a proxy. To revoke your proxy, you must complete and submit a ballot at the Annual Meeting or submit a later-dated proxy. If your shares are registered in the name of your broker, bank or other agent, you should follow your broker’s, bank’s or other agent’s instructions regarding the revocation of proxies.

How are proxies being solicited?

Proxies are being solicited electronically, by telephone and by mail. Proxies may also be solicited without additional compensation by directors, officers and other employees personally, by telephone or other means. The Corporation will bear all costs of proxy solicitation. The Corporation has retained Laurel Hill Advisory Group, LLC to assist in soliciting proxies, and has agreed to pay Laurel Hill Advisory Group, LLC a fee of $5,000 plus reasonable expenses for these services. The Corporation may also request nominees, brokerage houses, custodians and fiduciaries to forward soliciting material to beneficial owners of the Corporation’s common stock and will reimburse such intermediaries for their reasonable expenses in forwarding proxy materials.

Additional Shareholder Information

Additional Matters for Consideration at the 2021 Annual Meeting:

Please note the deadline for submission of proposals by shareholders for consideration at the 2021 Annual Meeting has passed. This applies to proposals that shareholders might wish to include in the Corporation’s Proxy Statement for the Annual Meeting (this Proxy Statement), proposals that shareholders might wish to include in their own proxy materials, which they would prepare, file with the SEC and disseminate to shareholders, or proposals that shareholders might wish to submit directly to a shareholder vote, in person, at the Annual Meeting. Therefore, no additional matters may be proposed by any shareholder for submission, or submitted, to a vote of the shareholders generally at the Annual Meeting, other than procedural issues such as adjournment, postponement or continuation. On such procedural issues, all shares represented at the Annual Meeting by proxy may be voted at the discretion of the attorneys-in-fact named in the proxies, to the extent permitted by law.

Proxy Cards Returned Without Specific Voting Instructions:

Shares represented by properly executed proxies will be voted as directed. If you return a proxy card without specific voting instructions for any or all proposals, your shares will be voted “FOR” each of the Board’s six director nominees on Proposal 1; “FOR” Say-On-Pay on Proposal 2; “FOR” the approval of the 2021 Equity Incentive Plan on Proposal 3; “FOR” ratification of the appointment of Crowe LLP on Proposal 4; and, “FOR” any other procedural matter properly submitted for shareholder consideration, in such manner as the shareholders’ attorneys-in-fact may determine, in their discretion, to be appropriate and in the best interests of shareholders generally.

Voting Proposal 1 - Election of Directors

The Board is divided into three classes of directors, as equal in number as possible, with one class to be elected each year for a term of three years. With the election of two new directors in recent months, and to preserve class size, there will be three different classes to be voted upon in this 2021 Proxy Statement.

Shareholders will be entitled to elect four directors for a three-year term expiring at the 2024 Annual Meeting of Shareholders, to elect one director for a two-year term expiring at the 2023 Annual Meeting of Shareholders and to elect one director for a one-year term expiring at the 2022 Annual Meeting of Shareholders, or until their respective successor has been duly elected and qualified. Should any nominee become unable to serve as a director, the persons named as proxies will vote for any alternative nominee who may be nominated by the Board. The Board has nominated for election Raimundo C. Archibold Jr., David J. Dalrymple, Denise V. Gonick, Thomas R. Tyrrell, Richard E. Forrestel Jr. and Larry H. Becker to terms listed below.

All six nominees were unanimously recommended by the Nominating and Governance Committee to the Board, have been determined to be qualified, and have consented to serve if elected.

There are no arrangements or understandings between any director or director nominee and any other persons pursuant to which he or she was selected as a director or nominee. None of the directors are party to any agreement or arrangement that would require disclosure pursuant to Listing Rule 5250(b)(3) of NASDAQ®, where the Corporation’s common stock is listed. This rule requires disclosure of agreements or arrangements between a director and a third party related to the director’s service on the Board.

The Board is not aware that any nominee named in this Proxy Statement will be unable or unwilling to serve as a director. Under applicable law and the Corporation’s Bylaws, directors are elected by a plurality of the shares voted at the Annual Meeting, meaning the nominees receiving the most “For” votes will be elected.

•Vote Recommendation: Your Board recommends you vote “For” each of the Corporation’s six nominees:

Raimundo C. Archibold Jr., David J. Dalrymple, Denise V. Gonick, Thomas R. Tyrrell, Richard E.

Forrestel Jr., and Larry H. Becker

Director Nomination Process:

The Nominating and Governance Committee is responsible for identifying and recommending to the full Board suitable nominees to serve as directors. Director nominees are selected based upon the following criteria:

•Individual Strengths: The candidate’s knowledge, skill, experience and business expertise.

•Board Composition: The objective of achieving certain characteristics for the Board as a

group, such as diversity of experience, skills, gender, race, ethnicity and

age are factors, among others, considered in this process.

The Nominating and Governance Committee reviews annually with the Board the composition of the Board as a whole and considers whether the Board reflects an appropriate balance of knowledge, experience, skills and expertise of diversity. Among other factors, the Committee looks for director nominees who know the communities and industries that the Corporation serves. The Committee utilizes the following process when identifying and evaluating the individuals that it recommends to the Board as director nominees:

•The Committee reviews the qualifications of each candidate who has been properly recommended or nominated by the shareholders, as well as those candidates who have been identified by management, individual members of the Board or, if the Committee determines, a search firm.

•The Committee evaluates the performance and qualifications of individual members of the Board eligible for reelection at the annual meeting of shareholders.

•The Committee considers the suitability of each candidate, including the current members of the Board, in light of the current needs of the Board. In evaluating the suitability of the candidates, the Committee considers many factors including character, judgment, independence, business expertise, experience, other commitments, and such other factors as the Committee determines are pertinent.

•After such review and consideration, the Nominating and Governance Committee recommends that the Board select the slate of director nominees.

The Board will give substantial weight to the recommendations of the Nominating and Governance Committee in selecting director nominees. For information on how shareholders may participate in the director nomination process, see below.

Annual Meeting Shareholder Proposal Process:

Shareholder Submissions of Director Nominees for the 2022 Annual Meeting:

Any shareholder submission of a candidate for the Board to consider as one of its nominees for director at the 2022 Annual Meeting of Shareholders must be directed in writing not later than 120 days prior to the anniversary date on which the Corporation’s proxy statement was mailed to shareholders in connection with the previous year’s annual meeting, or if such nomination is to be made at a meeting of shareholders other than an annual meeting, a reasonable time before the mailing of the Corporation’s proxy material to the Corporate Secretary, One Chemung Canal Plaza, Elmira, New York 14901, and must include: (i) the name and address of the shareholder proposing a nominee for consideration; (ii) the number of shares owned by the notifying shareholder and the date the shares were acquired; (iii) any material interest of the notifying shareholder in the nomination and a statement in support of the nominee with references; (iv) the name, age, address and contact information for each proposed nominee; (v) the principal occupation or employment of each proposed nominee; (vi) the number of shares of the Corporation’s common stock that are owned by the nominee as of the record date; (vii) detailed information of any relationship or understanding between the proposing shareholder and the nominee; (viii) detailed information of any relationship between the nominee and the Corporation within the last three years; and, (ix) other information regarding the nominee as would be required to be included in the Proxy Statement pursuant to Regulation 14A of the Exchange Act.

A shareholder may act directly to nominate his or her own director candidates at our 2022 Annual Meeting of Shareholders by following the procedures set forth in the subsection titled “Shareholder Proposals for Inclusion in the 2022 Proxy Statement.” Such direct nominations by shareholders not involving the Board’s nomination are subject to the deadlines and procedures described and set forth in our Bylaws and applicable rules of the SEC, including minimum advance notice to the Board.

Nominee and Continuing Director Biographies:

The biography of each of the nominees and continuing directors listed on the following page contain information regarding the individuals’ service as a director, business experience, and other positions, if any, held currently or at any time during the last five years, and individual experience, qualifications, and skills that contribute to the Board’s effectiveness as a whole.

Nominees for Election (terms expiring in 2024, if elected)


			Raimundo C. Archibold Jr., age 62, has served as a director since February 2021. Since 2010, he has been a Managing Director of Schwartz Heslin Group, a business advisory and investment banking firm servicing family and entrepreneur-owned businesses. Prior to 2010, he worked for various investment banking firms servicing technology companies as well as financial institutions. Qualifications to serve on the Board include strategic planning, corporate finance and accounting, mergers and acquisitions, community development, and financing for over 30 years.


			David J. Dalrymple, age 67, has served as a director since 1993, and is currently Chairman of the respective Boards of the Corporation and the Bank. Since 2014, he has served as President of Dalrymple Gravel and Contracting, a company specializing in producing construction materials for highway construction. He previously held the position of President of Dalrymple Holding Corporation from 1993 until 2014. He is the brother of Robert H. Dalrymple, also a director of the Corporation and Bank. Qualifications to serve on the Board include over 30 years of experience in business ownership, financial planning experience and strong managerial and organizational skills.


			Denise V. Gonick, age 54, has served as director since 2018. She is the founder of Cross Sound Concepts, a strategic advisory firm. From 2012 through 2019, she served as President & CEO of MVP Health Care, a family of companies offering a range of health benefit plans and options combined with leading-edge wellness programs that help reduce health risks and control health care costs. Prior to that she was the Chief Legal Officer and Corporate Secretary of MVP Health Care. Qualifications to serve on the Board include five years as CEO of a health insurer, 17 years corporate legal experience, leadership, transactions, strategic planning, executive management, financial management, compliance and government relations.


			Thomas R. Tyrrell, age 70, has served as a director since 2014. Since 2014, he has served as Vice President of Rose & Kiernan, Inc., a general insurance agency in the North East. He was formerly Albany Area Chairman of Arthur J. Gallagher & Co., a company specializing in providing contract surety and property and casualty insurance and risk management products and services to the construction industry with particular emphasis on the heavy highway, bridge, and general building construction disciplines. Qualifications to serve on the Board include business management skills, sales experience, business ownership experience and service on several boards in the Albany area in the non-profit arena.

Nominee for Election (terms expiring in 2023, if elected)


			Richard E. Forrestel Jr., age 63, has served as a director since October 2020. Since 1987, he has served as Treasurer of Cold Spring Construction Company, a highway construction firm. He is a CPA. Qualifications to serve on the Board include experience in accounting, auditing, strategic planning and his former experience serving on the board of directors of a community bank for 22 years where he gained experience and knowledge in all aspects of banking.

Nominee for Election (terms expiring in 2022, if elected)


			Larry H. Becker, age 81, has served as a director since 2011. Since 1983, he has served as COO of Windsor Development, Inc., a regional full service real estate development company that specializes in the development, acquisition and management of supermarket-anchored properties. Prior to founding Windsor Development, Mr. Becker was a founding member of Teal, Becker & Chiaramonte CPAs, an accounting firm in the New York State Capital Region. Qualifications to serve on the Board include more than 40 years of experience owning and managing various business entities in the Capital Region of New York State, experience in corporate finance and accounting and his experience serving on the Board of Directors of Capital Bank & Trust Company.

Continuing Directors (terms expiring in 2023)


			Stephen M. Lounsberry III, age 67, has served as a director since 1995. Since 1981, he has served as President of Applied Technology Manufacturing Corp., a manufacturer of machined industrial and railroad component parts. He was formerly a commercial bank internal auditor and vice president of a community bank. Qualifications to serve on the Board include experience in management, marketing, sales, operation, strategic planning and his knowledge of all aspects of banking.

			Anders M. Tomson, age 54, has served as a director since 2016. Since December 2016, he has served as President & Chief Executive Officer (“CEO”) of the Corporation and the Bank. From 2015 through 2016, he served as President and Chief Operating Officer (“COO”) of the Bank and was responsible for Retail Client Services during that time. Formerly, from 2011 through 2015, he served as President, Capital Bank, a Division of Chemung Canal Trust Company. Qualifications to serve on the Board include over 15 years of experience in the banking industry, and leadership, management, strategic planning and organizational skills.

			G. Thomas Tranter Jr., age 66, has served as a director since 2014. He retired on June 30, 2020, after serving 20 years, as President of Corning Enterprises and Director of Government Affairs for Corning Incorporated, a diversified manufacturing company. He formerly served 26 years in public administration and management, including being elected Chemung County Executive for three four-year terms. Qualifications to serve on the Board include leadership, business development and managerial skills together with extensive experience in government relations and community development.

Continuing Directors (terms expiring in 2022)


			Ronald M. Bentley, age 68, has served as a director since 2007. From January 1, 2018 through December 31, 2018, he served as a consultant of the Corporation and Bank. He formerly served, from April 2007 to July 2015, as President & CEO of the Corporation and the Bank. Prior to that, from July 2006 through April 2007, he served as President & COO of the Corporation and Bank. Qualifications to serve on the Board include 35 years of experience in the banking industry, and leadership, management, strategic planning and organizational skills.

			David M. Buicko, age 67, has served as director since 2018. Since 2016, he has served as President & CEO of Galesi Group, a diverse real estate company with a commitment to investing in the Capital Region, its infrastructure, and its people. From 1986 to 2016, Mr. Buicko was Chief Operating Officer of Galesi Group. Qualifications to serve on the Board include strategic planning, corporate finance and accounting, mergers and acquisitions, community development, and real estate development and financing for over 35 years.

			Robert H. Dalrymple, age 70, has served as a director since 1995. Since 1994, he has served as Secretary and Vice President of Dalrymple Holding Corporation, the parent company for several construction materials and highway construction companies. He also serves as President of Seneca Stone Corporation and Vice President of Chemung Contracting Corporation, both subsidiaries of Dalrymple Holding Corporation. He is the brother of David J. Dalrymple, also a director of the Corporation and Bank. Qualifications to serve on the Board include experience in all aspects of business ownership, strategic planning skills and financial management experience.

			Jeffrey B. Streeter, age 53, has served as a director since 2018. Since 2002, he has served as President of Streeter Associates, a general construction firm based in Elmira, New York. Qualifications to serve on the Board include experience in all aspects of business ownership, strategic and financial planning, people management and organizational skills.

Director Retiring as of the 2021 Annual Meeting


			Richard W. Swan, age 72, has served as a director since 1984. He retired in June 2016 after serving 9 years as Chairman of the Board of Swan & Sons-Morss Co., Inc., an insurance brokerage agency. Qualifications to serve on the Board include business management skills, sales experience and all aspects of business ownership. Mr. Swan will retire from the Corporation’s and Bank’s Boards as of June 8, 2021.

Director Compensation:

The Compensation Committee periodically reviews and is responsible for the design, implementation and administration of the Corporation’s compensation program for members of the Board of Directors and makes recommendations to the Board with respect to the type and amounts of compensation payable to the directors for service on the Boards of the Corporation, Bank and respective board committees. At its January 2020 meeting, with respect to 2020 Board compensation, the Board determined that all director fees would remain the same for the Corporation’s and Bank’s Board and committees.

Each non-employee director of the Corporation and Bank receives a fixed basic annual retainer fee for serving as a director. This fee is paid quarterly. Non-employee directors serving as Chair of the Corporation’s and Bank’s Board, or Audit Committee, receive a supplemental annual retainer commensurate with the increased responsibility accompanying such position. All non-employee directors receive fees for attending meetings of the Corporation’s and Bank’s Board and committees. Mr. Tomson received no cash compensation for his service as a director in 2020.

The following table presents the various cash fees paid to non-employee directors in 2020 for their service on the Corporation’s and Bank’s Boards and committees.


BASIC ANNUAL RETAINER FEES(1)
			Corporation
2020			($)

Basic Annual Retainer			11,500

Chair of the Board Supplemental Retainer			7,750

Chair of Audit Committee Supplemental Retainer			2,875

MEETING FEES(2)
			($)

Board of Directors			500

Chair of the Board			600

Committees of the Board			500

Chair of Committees			600

(1) Annual Retainer fees are paid on a quarterly basis.

(2) Based on per meeting attendance.

The Directors’ Deferred Fee Plan allows non-employee directors of the Corporation or the Bank to elect to defer receipt of fees payable to the director for service as a member of the Board of Directors of the Corporation or the Bank. At the election of a director, the deferred fees are converted into units and allocated to a unit value account, which appreciates or depreciates as would an actual share of common stock of the Corporation. A director’s unit value account is credited with declared dividends pursuant to a formula described in the Plan. The units are paid to the director in the form of common stock of the Corporation. The common stock of the Corporation payable under the Directors’ Deferred Fee Plan is paid to the director either at a specified age or time elected by the director, at termination of the director’s service with the Corporation and/or Bank, or upon the occurrence of a change in control as defined in the Directors’ Deferred Fee Plan. The

number of shares of common stock of the Corporation payable to a director with a unit value account under the Plan represents, at all times, a general unfunded obligation of the Bank, and each director participating in the Directors’ Deferred Fee Plan will be a general creditor of the Bank with respect to the value of his or her unit value accounts. Currently, there are two participants in the Directors’ Deferred Fee Plan with one receiving his final distribution in May, 2021.

Pursuant to the provisions of the Corporation’s Directors’ Compensation Plan, additional compensation is paid to each non-employee director in shares of the Corporation’s common stock in an amount equal to the total amount of cash fees earned by each director during the year, determined as the average of the closing prices of a share of the Corporation’s common stock as quoted on the NASDAQ® Stock Market for each of the prior thirty trading days ending on December 31 of each year and paid in January of the following year. Due to McLagan’s findings in 2018 that stock compensation was within peer bank compensation, the directors waived their right to the stock compensation for the additional cash retainer fee paid in 2019 and 2020. For his service as a director on the respective Boards of the Corporation and the Bank, pursuant to the Directors’ Compensation Plan, Mr. Tomson is paid a director’s fee in shares of common stock of the Corporation in an amount equal in value to the average cash compensation awarded to non-employee directors who served as directors for twelve (12) months in the previous year.

2020 Director Compensation Table

The following Director Compensation Table summarizes all compensation paid by the Corporation and Bank to the non-employee directors of the Corporation and Bank for the fiscal year ended December 31, 2020.


Directors	Fees Earned or Paid in Cash	Number of Shares Awarded(1)	Stock Awards Market Value(2)	All Other Compensation		2020 Total Compensation
	($)	(#)	($)	($)		($)

Larry H. Becker	27,500	629	22,229	—		49,729
Ronald M. Bentley	30,000	702	24,809	3,505	(3)(4)	58,314
Bruce W. Boyea	10,250	212	7,492	—		17,742
David M. Buicko	32,375	687	24,279	—		56,654
David J. Dalrymple	47,750	1,221	43,150	—		90,900
Robert H. Dalrymple	32,200	766	27,070	—		59,270
Richard E. Forrestel Jr.	6,875	158	5,584	—		12,459
Denise V. Gonick	27,000	614	21,699	—		48,699
Stephen M. Lounsberry III	32,800	784	27,707	—		60,507
Jeffrey B. Streeter	27,500	629	22,229	—		49,729
Richard W. Swan	30,600	719	25,409	—		56,009
G. Thomas Tranter Jr.	31,500	746	26,364	—		57,864
Thomas R. Tyrrell	29,300	681	24,067	—		53,367

(1)Represents the total number of shares awarded as determined by dividing the total amount of the annual retainer and directors’ fees by the grant price of the shares. Any fractional shares are rounded up to the next whole share. As stated in the “Director Compensation” section, the directors waived their right to stock compensation for the additional cash retainer fee in 2020.
(2) Represents the grant date fair value. Although these amounts were paid in January 2021, they were for service in 2020.
(3) Represents mileage paid to certain directors to attend Board and committee meetings during 2020.
(4) Represents $2,000 in Advisory Board fees earned by Mr. Bentley during 2020.

Voting Proposal 2 - Advisory Approval of the Corporation's 2020 Executive Compensation ("Say-On-Pay")

Summary and Board Recommendation:

Proposal 2 is a proposal to approve, on an advisory basis, the Corporation’s 2020 executive compensation (“Say-On-Pay”), as described in the “Compensation Discussion and Analysis” section. This vote is not intended to address a specific item of compensation, but rather the overall compensation of the Named Executive Officers (“NEOs”) and the philosophies, policies and practices as described in this Proxy Statement. Say-On-Pay is an advisory proposal, which means that the vote on executive compensation is not binding on the Corporation, Board or the Compensation Committee of the Board.

At the 2020 Annual Meeting, shareholders voted to approve the compensation program of the Corporation’s NEOs for the fiscal year ended December 31, 2019. After a comprehensive market review and in light of strong stockholder support, we concluded that no substantial changes to our executive compensation program were required. Approval of Say-On-Pay will require the affirmative vote of the holders of a majority of the shares of common stock present or represented by proxy at the Annual Meeting and voting on this proposal.

•Vote Recommendation: Your Board recommends you vote “For,” on an advisory basis, the Corporation’s executive compensation (Say-On-Pay).

Say-On-Pay Details:

The Compensation of the Corporation’s NEOs is disclosed in the “Compensation Discussion and Analysis,” the summary compensation table, and the other related tables and narrative disclosures contained elsewhere in this Proxy Statement. As discussed in those disclosures, the Board believes that our executive compensation philosophy, policies, and practices provide a strong link between each NEO’s compensation and our short and long-term performance. The objective of our executive compensation program is to provide compensation which is competitive with our peers of comparable size and business model based on our performance, and aligned with the long-term interest of our shareholders.

•Change in Control Agreements: Consistent with shareholder advisory guidance, the Corporation’s executive change in control agreements provide for “double trigger” severance benefits upon the NEO’s qualifying termination event in connection with a change in control.

•Balanced: The Corporation’s bonus program is a balanced program based on predefined goals of both the Corporation and the individual executive’s performance.

•Annual Review: The annual bonus is based on predefined goals that are reviewed and updated yearly and are set to encourage long-term profitability within accepted conservative risk parameters.

•Shareholder Aligned: Long-term equity-based incentives, such as restricted stock awards, recognize and encourage an alignment of executives’ goals over the long term with those of the shareholders. Awards under the Restricted Stock Plan provide for vesting over a five year period.

Voting Proposal 3 - Chemung Financial Corporation 2021 Equity Incentive Plan

Summary and Board Recommendation:

The Board of Directors has approved the submission of the Chemung Financial Corporation 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”) for approval by our stockholders. The 2021 Equity Incentive Plan will provide officers, employees and directors of the Corporation and the Bank with additional incentives to promote the growth and performance of the Corporation. By approving the 2021 Equity Incentive Plan, our stockholders will give us the flexibility we need to continue to attract and retain highly qualified officers and directors by offering a competitive compensation program that is linked to the performance of our common stock. In addition, the 2021 Equity Incentive Plan is intended to further align the interests of our directors and management with the interests of our stockholders by potentially increasing the ownership interest of directors and officers in the common stock of the Corporation. If the 2021 Equity Incentive Plan is approved by stockholders, no more awards will be granted under the Chemung Financial Corporation 2014 Omnibus Plan, including the following component plans: (1) the Chemung Financial Corporation Restricted Stock Plan, as amended and restated effective December 14, 2014; (2) the Chemung Financial Corporation Incentive Compensation Plan, as amended and restated effective January 1, 2012; and (3) the Chemung Financial Corporation Directors’ Compensation Plan, as amended and restated effective January 1, 2012. Notwithstanding the foregoing, the Chemung Financial Corporation/Chemung Canal Trust Company Directors’ Deferred Fee Plan, as amended and restated effective December 19, 2018 (the “Directors’ Deferred Fee Plan”), shall be a component plan of the 2021 Equity Incentive Plan.

The following is a summary of the material features of the 2021 Equity Incentive Plan (including the Directors’ Deferred Fee Plan), which is qualified in its entirety by reference to the provisions of the 2021 Equity Incentive Plan, attached hereto as Appendix A. In the event of conflict between the terms of this disclosure and the terms of the 2021 Equity Incentive Plan, the terms of the 2021 Equity Incentive Plan will control.

General

Subject to permitted adjustments for certain corporate transaction, the maximum number of shares of Corporation common stock that may be delivered to participants under the 2021 Equity Incentive Plan is equal to 170,000 shares of Corporation common stock (the “Share Limit”). Shares of Corporation common stock subject to the Share Limit may be issued pursuant to grants of stock options, restricted stock awards or restricted stock units, provided, however that no more than the number of shares of Corporation common stock equal to the Share Limit may be delivered pursuant to the exercise of stock options that are granted as incentive stock options. The Share Limit is reduced, on a one-for-one basis, for each share of common stock subject to a stock option, restricted stock award or restricted stock unit.

If any award granted under the 2021 Equity Incentive Plan expires, terminates, is canceled or is forfeited without being settled or exercised or is settled without the issuance of shares of common stock, shares of the Corporation common stock subject to such award will be made available for future grant under the 2021 Equity Incentive Plan. If any shares are surrendered or tendered to pay the exercise price of a stock option, such shares will not again be available for grant under the 2021 Equity Incentive Plan. In addition, shares of Corporation common stock withheld in payment for purposes of satisfying tax withholding obligations with respect to an award do not become available for re-issuance under the 2021 Equity Incentive Plan.

The 2021 Equity Incentive Plan will be administered by the members of the Corporation’s Compensation Committee (the “Committee”) who are “Disinterested Board Members,” as defined in the 2021 Equity Incentive Plan. The Committee has full and exclusive power within the limitations set forth in the 2021 Equity Incentive Plan to make all decisions and determinations regarding: (i) the selection of participants and the granting of awards; (ii) establishing the terms and conditions relating to each award; (iii) adopting rules, regulations and guidelines for carrying out the 2021 Equity Incentive Plan’s purpose; and (iv) interpreting the provisions of the

2021 Equity Incentive Plan and any award agreement. The 2021 Equity Incentive Plan also permits the Committee to delegate all or part of its responsibilities and powers to any person or persons selected by it.

The closing sale price of the Corporation’s common stock as reported on the NASDAQ® Global Select Market on April 9, 2021, the record date, was $44.13.

Set forth below is information as of December 31, 2020 regarding equity compensation plans categorized by those plans that have been approved by shareholders and those plans that have not been approved by shareholders.



Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights	Weighted Average Exercise Price	Number of Securities Remaining Available for Issuance Under Plan(1)
	(#)	($)	(#)

Equity compensation plans approved by shareholders	--	--	252,862

Equity compensation plans not approved by shareholders	--	--	--

Total	--	--	252,862


(1) Represents the number of shares that may be granted as other stock awards under the Corporation’s stock-based compensation plans.

Summary of Directors’ Deferred Fee Plan:

The Directors’ Deferred Fee Plan allows non-employee directors of the Corporation and the Bank to elect to defer receipt of fees payable to the director for service as a member of the Corporation’s and Bank’s Board of Directors. At the election of a director, the deferred fees are converted into units and allocated to a unit value account, which appreciates or depreciates as would an actual share of common stock of the Corporation. A director’s unit value account is credited with declared dividends pursuant to a formula described in the Directors’ Deferred Fee Plan. The units are paid to the director in the form of common stock. The common stock payable under the Directors’ Deferred Fee Plan is paid to the director either at a specified age or time elected by the director, at the termination of the director’s service with the Corporation and/or Bank, or upon the occurrence of a change in control as defined in the Directors’ Deferred Fee Plan. The number of shares of common stock payable to a director with a unit value account under the Plan represents at all times the general unfunded obligation of the Bank, and each director participating in the Directors’ Deferred Fee Plan will be a general creditor of the Bank with respect to the value of his or her unit value account.

As of April 9, 2021, there are two (2) participants in the Directors’ Deferred Fee Plan and the aggregate number of units allocated to participants therein is 18,366. One of the participants will receive his final distribution of approximately 2,707 shares in May, 2021.

Eligibility

Employees and directors of the Corporation or its subsidiaries are eligible to receive awards under the 2021 Equity Incentive Plan, except that non-employees may not be granted incentive stock options. As of April 9, 2021, there were thirteen (13) non-employee directors and forty-one (41) employees eligible to participate and receive awards under the Plan. There are also two (2) participants in the Directors’ Deferred Fee Plan, with one retired director receiving his final distribution in May, 2021.

Types of Awards

The Committee may determine the type, terms and conditions of awards under the 2021 Equity Incentive Plan, which shall be set forth in an award agreement delivered to each participant. Awards may be granted as incentive and non-statutory stock options, restricted stock awards, restricted stock units or any combination thereof, as follows:

Stock Options. A stock option gives the recipient or “optionee” the right to purchase shares of common stock at a specified price for a specified period of time. The exercise price may not be less than the fair market value on the date the stock option is granted. Fair market value for purposes of the 2021 Equity Incentive Plan means the final sales price of the Corporation’s common stock as reported on NASDAQ® on the date the option is granted, or if the Corporation’s common stock was not traded on such date, then the day prior to such date or on the next preceding day on which the Corporation’s common stock was traded, and without regard to after-hours trading activity. The Committee will determine the fair market value, in accordance with Section 422 of the Internal Revenue Code and applicable requirements of Section 409A of the Internal Revenue Code, if it cannot be determined in the manner described herein. Further, the Committee may not grant a stock option with a term that is longer than 10 years.

Stock options are either “incentive” stock options or “non-qualified” stock options. Incentive stock options have certain tax advantages and must comply with the requirements of Section 422 of the Internal Revenue Code. Only employees are eligible to receive incentive stock options. Shares of common stock purchased upon the exercise of a stock option must be paid for in full at the time of exercise by either: (i) by tendering, either actually or constructively by attestation, shares of stock valued at fair market value as of the day of exercise; (ii) by irrevocably authorizing a third party, acceptable to the Committee, to sell shares of stock (or a sufficient portion of the shares) acquired upon exercise of the stock option and to remit to the Corporation a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise; (iii) by a net settlement of the stock option, using a portion of the shares obtained on exercise in payment of the exercise price of the stock option (and if applicable, any minimum required tax withholding); (iv) by personal, certified or cashier’s check; (v) by other property deemed acceptable by the Committee; or (vi) by any combination thereof.

Under no circumstances will the Corporation buy back underwater stock options without stockholder approval.

Restricted Stock. A restricted stock award is a grant of common stock, subject to vesting requirements, to a participant for no consideration or minimum consideration as may be required by applicable law. Restricted stock awards under the 2021 Equity Incentive Plan will be granted only in whole shares of common stock and are subject to vesting conditions and other restrictions established by the Committee as set forth in the 2021 Equity Incentive Plan or the award agreement. Awards will be evidenced by award agreements approved by the Committee, which set forth the terms and conditions of each award. Prior to their vesting, unless otherwise determined by the Committee, the recipient of a restricted stock award may exercise any voting rights with respect to common stock subject to an award and receive any dividends and distributions with respect to the common stock. Unless otherwise determined by the Committee, dividends on unvested restricted stock awards on a time-based vesting schedule will be distributed immediately. However, no dividends on unvested restricted stock awards subject to performance-based vesting conditions will be distributed unless and until the participant vests in the restricted stock award.

Restricted Stock Units: Restricted stock units are similar to restricted stock awards except that no shares of common stock are actually issued to the award recipient at the time of grant. Restricted stock units are denominated in shares of common stock. Restricted stock units granted under the 2021 Equity Incentive Plan will be settled in shares of our common stock or, in the sole discretion of the Committee determined at the time of settlement, in cash or a combination thereof, and are subject to vesting conditions and other restrictions set forth in the 2021 Equity Incentive Plan or the recipient’s award agreement. Participants have no voting rights

with respect to any restricted stock units granted under the 2021 Equity Incentive Plan. No dividends will be paid on restricted stock units. In the sole discretion of the Committee, exercised at the time of grant, dividend equivalent rights may be paid on restricted stock units. Dividend equivalent rights will be paid when the restricted stock unit is settled or at the same time as the shares subject to such restricted stock unit are distributed to the participant.

Performance Awards. A performance award is a restricted stock award or restricted stock unit, the vesting of which is subject to the achievement of one or more performance conditions specified by the Committee and set forth in the 2021 Equity Incentive Plan.

Prohibition Against Repricing of Options. The 2021 Equity Incentive Plan provides that neither the Committee nor the Board of Directors is authorized to make any adjustment or amendment that reduces or would have the effect of reducing the exercise price of a stock option previously granted, except for adjustments pursuant to certain corporate transactions.

Limitation on Awards under the 2021 Equity Incentive Plan

No more than the Share Limit may be issued in the aggregate as incentive stock options under the 2021 Equity Incentive Plan. In the event of a corporate transaction involving the stock of the Corporation, such as a recapitalization, stock dividend, extraordinary cash dividend or a stock split, the number of shares covered by awards then outstanding under the 2021 Equity Incentive Plan, the limitation on awards under the 2021 Equity Incentive Plan and/or the exercise price of the outstanding stock options and other equitable substitutions or adjustments will be made proportionally and uniformly to reflect such corporate transaction, as applicable.

Performance Features

The performance measures that may be used for such awards will be based on any one or more of the following performance measures, as selected by the Committee: book value or tangible book value per share; basic earnings per share; basic cash earnings per share; diluted earnings per share; diluted cash earnings per share; return on equity; net income or net income before taxes; cash earnings; net interest income; non-interest income; non-interest expense to average assets ratio; cash general and administrative expense to average assets ratio; efficiency ratio; cash efficiency ratio; return on average assets; cash return on average assets; return on average stockholders’ equity; cash return on average stockholders’ equity; return on average tangible stockholders’ equity; cash return on average tangible stockholders’ equity; core earnings; operating income; operating efficiency ratio; net interest rate margin or net interest rate spread; growth in assets, loans, deposits; loan production volume; non-performing loans; cash flow; strategic business objectives consisting of one or more objectives based upon meeting specified cost targets; business expansion goals; and goals relating to acquisitions or divestitures, or goals relating to capital raising and capital management; or any combination of the foregoing.

Performance measures may be based on the performance of the Corporation as a whole or of any one or more subsidiaries or business units of the Corporation or a subsidiary, may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures. The term of an award may provide that partial achievement of performance measures may result in partial payment or vesting of the award or that the achievement of the performance measures may be measured over more than one period or fiscal year. In establishing any performance measures, the Compensation Committee may provide for the exclusion of the effects of one or more items, including, but not limited to: (i) extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) dividends declared on the Corporation’s stock; (iv) changes in tax or accounting principles, regulations or laws; or (v) expenses incurred in connection with a merger, branch acquisition or similar transaction.

Vesting of Awards

The Committee shall specify the vesting schedule or conditions of each award.

Awards made under the 2021 Equity Incentive Plan are subject to a minimum vesting period of one year from the date of grant, provided, however, that the following awards would not be subject to the one year minimum vesting requirement: (1) substitute awards granted in connection with awards that are assumed, converted or substituted pursuant to a merger, acquisition or similar transaction; (2) awards to non-employee directors that vest on the earlier of the one-year anniversary of the date of grant or the next annual meeting of stockholders that is at least 50 weeks after the immediately preceding year’s annual meeting; and (3) up to 5% of the available share reserve authorized for issuance under the 2021 Equity Incentive Plan.

Notwithstanding the foregoing, vesting (including the reduction or elimination of any restrictions) may be accelerated in the event of death, disability, or upon involuntary termination of employment or service following a change in control.

Change in Control

The 2021 Equity Incentive Plan uses a double trigger change in control feature, providing for an acceleration of vesting only upon an involuntary termination of employment or service simultaneous with or following a Change in Control. Also, if an acquiring corporation fails to assume awards granted under the 2021 Equity Incentive Plan (other than performance-based awards, addressed below), such awards will vest immediately upon the effective time of the Change in Control.

•Unless otherwise stated in an award agreement, at the time of an involuntary termination following a Change in Control, all stock options then held by the participant shall become fully earned and exercisable (subject to the expiration provisions otherwise applicable to the stock option). All stock options may be exercised for a period of one year following the participant’s involuntary termination provided, however, that no stock option shall be eligible for treatment as an incentive stock option in the event such stock option is exercised more than three months following involuntary termination.

•At the time of an involuntary termination following a Change in Control, all awards of restricted stock, restricted stock units, and performance shares shall become earned and fully vested immediately.

•In the event of a Change in Control, any performance measure attached to a performance award under the 2021 Equity Incentive Plan shall be deemed satisfied at the greater of (i) the target level of performance on a pro-rata basis for time elapsed in the performance period and (ii) the actual level of performance.

Amendment and Termination

The Board of Directors may, as permitted by law, at any time, amend or terminate the 2021 Equity Incentive Plan or any award granted under the 2021 Equity Incentive Plan. However, except as provided in the 2021 Equity Incentive Plan, no amendment or termination may adversely impair the rights of an outstanding award without the participant’s (or affected beneficiary’s) written consent. The Board of Directors may not amend the provision of the 2021 Equity Incentive Plan related to repricing, materially increase the aggregate number of securities that may be issued under the 2021 Equity Incentive Plan (other than as provided in the 2021 Equity Incentive Plan), materially increase the benefits accruing to a participant, or materially modify the requirements for participation in the 2021 Equity Incentive Plan, without approval of stockholders. Notwithstanding the foregoing, the Board may, without stockholder approval, amend the 2021 Equity Incentive Plan at any time, retroactively or otherwise, to ensure that the 2021 Equity Incentive Plan complies with current or future law and the Board of Directors may unilaterally amend the 2021 Equity Incentive Plan and any outstanding award, without participant consent, in order to maintain an exemption from, or to comply with, Section 409A of the Internal Revenue Code and its applicable regulations and guidance.

Duration of Plan

The 2021 Equity Incentive Plan will become effective upon approval by the stockholders at this meeting. The 2021 Equity Incentive Plan will remain in effect as long as any awards under it are outstanding; however, no awards may be granted under the 2021 Equity Incentive Plan on or after the day immediately prior to the 10-year anniversary of the effective date of the 2021 Equity Incentive plan. At any time, the Board of Directors may terminate the 2021 Equity Incentive Plan. However, any termination of the 2021 Equity Incentive Plan will not affect outstanding awards.

Federal Income Tax Considerations

The following is a summary of the federal income tax consequences that may arise in conjunction with the participation in the 2021 Equity Incentive Plan.

Non-Qualified Stock Options. The grant of a non-qualified stock option will not result in taxable income to the participant. Except as described below, the participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares acquired over the exercise price for those shares, and the Corporation will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of exercise.

Incentive Stock Options. The grant of an incentive stock option will not result in taxable income to the participant. The exercise of an incentive stock option will not result in taxable income to the participant provided the participant was, without a break in service, an employee of the Corporation or a subsidiary during the period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant is disabled, as that term is defined in the Internal Revenue Code). The Corporation will not be entitled to a tax deduction upon the exercise of an incentive stock option.

The excess of the fair market value of the shares at the time of the exercise of an incentive stock option over the exercise price is an adjustment that is included in the calculation of the participant’s alternative minimum taxable income for the tax year in which the incentive stock option is exercised. For purposes of determining the participant’s alternative minimum tax liability for the year of disposition of the shares acquired pursuant to the incentive stock option exercise, the participant will have a basis in those shares equal to the fair market value of the shares at the time of exercise.

Provided a participant does not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option or within one year after the exercise of such stock option, then, upon disposition of such shares, any amount realized in excess of the exercise price will be taxed as a capital gain. A capital loss will be recognized to the extent that the amount realized is less than the exercise price.

If the foregoing holding period requirements are not met, a participant will generally recognize ordinary income at the time of the disposition of the shares in an amount equal to the lesser of (i) the excess of the fair market value of the shares on the date of exercise over the exercise price; or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price, and the Corporation will be entitled to a corresponding deduction. If the amount realized exceeds the value of the shares on the date of exercise, any additional amount will be a capital gain. If the amount realized at the time of disposition is less than the exercise price, the participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares.

Restricted Stock. A participant who has been granted a restricted stock award will not realize taxable income at the time of grant, provided that the stock subject to the award is not delivered at the time of grant or if the stock is delivered, it is subject to restrictions that constitute a “substantial risk of forfeiture” for federal income tax purposes. Upon the later of delivery or vesting of shares subject to an award, the holder will realize ordinary income in an amount equal to the then fair market value of those shares and the Corporation will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of delivery or vesting. Any dividends paid to the holder during the restriction period will also be compensation income to the participant, and the Corporation will be entitled to a corresponding deduction for tax purposes. A participant who makes an election under Section 83(b) of the Internal Revenue Code will include the full fair market value of the restricted stock award subject to such election in taxable income in the year of the grant at the grant date fair market value.

Restricted Stock Units. A participant who has been granted a restricted stock unit will not realize taxable income at the time of grant and will not be entitled to make an election under Section 83(b) of the Internal Revenue Code since no stock is actually transferred to the recipient on the date of grant. At the time a restricted stock unit vests, assuming the award of common stock or cash is distributed at that time, the recipient will recognize ordinary income in an amount equal to the fair market value of the common stock or the amount of cash received. If the restricted stock unit is not distributed at the time it vests, no income will be recognized at the time and taxation will be deferred until the common stock or cash associated with the restricted stock unit is distributed. At the time the recipient recognizes taxable income on a restricted stock unit, the Corporation will be entitled to a corresponding tax deduction in the same amount recognized by the award recipient.

Withholding of Taxes. The Corporation may withhold amounts from participants to satisfy withholding tax requirements. Except as otherwise provided by the Committee, participants may have shares withheld from awards to satisfy the minimum tax withholding requirements.

Change in Control. Any acceleration of the vesting or payment of the awards under the 2021 Equity Incentive Plan in the event of a change in control or termination of service following a change in control may cause part or all of the consideration involved to be treated as an “excess parachute payment” under Section 280G of the Internal Revenue Code, which may subject the participant to a 20% excise tax and preclude deduction by the Corporation related to awards.

Deduction Limits. Section 162(m) of the Internal Revenue Code generally limits the Corporation’s ability to deduct for tax purposes compensation in excess of $1.0 million per year for our Chief Executive Officer, Chief Financial Officer and three other most highly compensated officers (each, a “covered employee”), as well as any employee who has been designated as a covered employee for any fiscal year beginning after December 31, 2016. Compensation resulting from awards under the 2021 Equity Incentive Plan will be counted toward the $1.0 million limit.

Tax Advice. The preceding discussion is based on federal tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the federal income tax aspects of the 2021 Equity Incentive Plan. A participant may also be subject to state and local taxes in connection with the grant of awards under the 2021 Equity Incentive Plan.

Accounting Treatment

Under U.S. generally accepted accounting principles, the Corporation is required to recognize compensation expense in its financial statements over the requisite service period or performance period based on the grant date fair value of stock options and other equity based compensation (such as restricted stock awards, and restricted stock units).

Awards to be Granted

The Board of Directors approved the submission of the 2021 Equity Incentive Plan for approval by stockholders, and the Committee intends to meet after stockholder approval to determine the specific terms of the awards, including the allocation of awards to officers, employees and non-employee directors. At the present time, except as described above with respect to the Directors’ Deferred Fee Plan, no specific determination has been made as to the grant or allocation of awards.

Awards Subject to Clawback Policy

Awards granted under the Plan are subject to clawback if the Corporation is required to prepare an accounting restatement due to material noncompliance of the Corporation, as a result of misconduct with any financial reporting requirement under the federal securities laws and the forfeiture provisions of the Sarbanes-Oxley Act of 2002 apply. Awards may also be subject to clawback under any other clawback policy adopted by the Corporation from time to time, whether pursuant to the Dodd-Frank Act or otherwise.

Required Vote and Recommendation of the Board

In order to approve the 2021 Equity Incentive Plan, the proposal must receive the affirmative vote of a majority of the votes cast at the meeting.

•Vote Recommendation: Your Board recommends you vote “For” the approval of the Chemung Financial Corporation 2021 Equity Incentive Plan.

Voting Proposal 4 – Ratification of the Selection of Crowe LLP as the Corporation’s Independent Registered Public Accounting Firm for 2021

Summary and Board Recommendation:

The Audit Committee of the Corporation has selected the independent registered public accounting firm, Crowe LLP (“Crowe”), as the Corporation’s independent registered public accounting firm for the year ending December 31, 2021. The selection process included a thorough review of Crowe’s performance in prior years, the quality and expertise of the Crowe management team, its understanding and expertise in the industries in which the Corporation operates, the appropriateness of the fees charged, and its familiarity with the Corporation’s internal controls and accounting policies and practices.

Although shareholder approval of the appointment of Crowe is not required, the Board believes that it is important to give shareholders an opportunity to ratify the decision of the Audit Committee. If the selection is not ratified, the Audit Committee will consider the shareholders’ views in future retention of the Corporation’s independent registered public accounting firm.

A representative of Crowe is expected to be present at the Annual Meeting.

Ratification of the selection of Crowe will require the affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and voting on this proposal.

•Vote Recommendation: Your Board recommends you vote “For” the ratification of the independent registered public accounting firm, Crowe LLP, as the independent registered public accounting firm of the Corporation for the year ending December 31, 2021.

Audit Committee Report

In accordance with its written charter adopted by the Board of Directors, the Corporation’s Audit Committee assists the Board in fulfilling its oversight responsibilities for the integrity of the Corporation’s financial statements, systems of internal accounting and financial controls, compliance with legal regulatory requirements, and the independent auditor’s qualifications, independence and performance as well as the performance of its internal audit function. The members of the Audit Committee meet the independence requirements of applicable laws and rules as determined by the Board. Five meetings of the Audit Committee were held during 2020. The charter was approved in February 2021 and can be viewed on the Bank’s website at: https://chemungfinancial.q4ir.com/corporate-information/documents/default.aspx

On March 16, 2021, the Audit Committee appointed the independent registered public accounting firm, Crowe LLP, as the Corporation’s independent auditors for the year ending December 31, 2021.

The Audit Committee has reviewed and discussed with management and with Crowe LLP, the Corporation’s audited consolidated financial statements for the year ended December 31, 2020. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; and, received the written disclosures and the letter from the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and have discussed with the independent registered public accounting firm their independence from the Corporation. The Audit Committee also discussed the quality and adequacy of the Corporation’s internal controls with management and the independent auditors. In addition, the Audit Committee reviewed with Crowe LLP their audit plans, audit scope and identification of audit risks.

Based upon the above-mentioned reviews and discussions with management and Crowe, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020 to be filed with the Securities and Exchange Commission.

The Audit Committee:

David M. Buicko, Chairman Jeffrey B. Streeter

Larry H. Becker G. Thomas Tranter Jr.

David J. Dalrymple Thomas R. Tyrrell

Richard E. Forrestel Jr.

This foregoing Audit Committee Report is not “soliciting material,” is not deemed “filed” with the SEC, and shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing of ours under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this report by reference.

Fees Paid to Independent Registered Public Accounting Firm

Fees billed by Crowe LLP relating to the years ended December 2020 and 2019 are provided in the following table. All services provided by Crowe in 2020 and 2019 were pre-approved by the Audit Committee.



Type of Service	Fiscal Years Ended December 31,

	2020	2019
	($)	($)

Audit Fees	371,800	305,000
Audit-Related Fees	8,000	7,639
Tax Fees	—	—
Captive Insurance Subsidiary Fees	22,750	22,750
All Other Fees	—	—

Total Fees	402,550	335,389

The audit fees were for professional services rendered for the audit of the Corporation’s annual financial statements, the independent auditor’s report on internal control over financial reporting, review of financial statements included in the Corporation’s Quarterly Reports filed on Form 10-Q, additional audit procedures required to be performed in response to the COVID-19 pandemic, and services that are normally provide by Crowe LLP in connection with statutory and regulatory filings or engagements.

The $8,000 in Audit-Related Fees for 2020 consisted of an attestation of the Corporation’s financial statements as of December 31, 2019 and December 31, 2018 related to the S-3 filing on April 27, 2020 for the Corporation’s Shelf Registration. The $7,639 in Audit-Related Fees for 2019 consisted of an additional billing for the integrated audit of the consolidated financial statements.

The Captive Insurance Subsidiary Fees for 2020 and 2019 were for audit and tax services.

Audit Committee Pre-Approved Policies and Procedures

The Audit Committee pre-approves the audit and permissible non-audit services provided by the independent auditors. These services may include audit services, non-audit services, audit-related services, tax services and other services. Crowe LLP and management periodically report to the Audit Committee regarding the extent of services provided by the independent auditor in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve additional services on a case-by-case basis. In the period between meetings of the Audit Committee, the Audit Committee Chair or a delegated sub-committee is authorized to pre-approve such services provided that such pre-approval is ratified by the Audit Committee at its next regularly-scheduled meeting.

Corporate Governance

The business of the Corporation is managed under the direction of its Board of Directors in accordance with the laws of New York State. The Board serves as the ultimate decision-making body of the Corporation, except for those matters reserved to or shared with the shareholders. The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Corporation. The directors are responsible to exercise their business judgment as they reasonably believe will further the long-range best interests of the Corporation, its shareholders and other stakeholders. The Board believes that the success of the Corporation depends on its financially sound performance to further its strategic objectives and its adherence to high standards of business ethics focusing on the letter and spirit of regulatory and legal mandates. At least once a year, the Board will take an active role in reviewing strategic planning of the Corporation and will exercise oversight over the implementation of strategic planning.

The Nominating and Governance Committee of the Board is responsible for ensuring that the Board is properly constituted to meet its fiduciary obligations to shareholders and the Corporation has and follows appropriate governance standards. This assessment includes whether individual directors or nominees qualify as independent under applicable laws and guidelines, as well as consideration of diversity, age, skills and experience of the directors as a group in the context of the needs of the Board. A majority of the directors must meet the criteria for general Board independence as required and defined by NASDAQ®.

The Board’s membership is divided into three classes, as equal in number as possible, with one class generally to be elected each year by the Corporation’s shareholders to a term of three years. The Nominating & Governance Committee identifies and recommends to the full Board suitable candidates for nomination for Director, including, when appropriate, incumbent directors. In making its recommendations, the Nominating and Governance Committee will consider any proposals it properly receives from shareholders for director nominees. Shareholders may propose a director candidate for consideration by the Nominating and Governance Committee by following the rules described under the heading “Shareholder Proposals for

Inclusion in the 2022 Proxy Statement” in the Additional Shareholder Information section. The Nominating and Governance Committee’s recommendations of candidates for nomination will be based on its determination as to the suitability of the particular individuals, and the slate as a whole, to serve as directors of the Corporation and Bank, taking into account the criteria described in the “Director Nomination Process” in the “Voting Proposal 1 – Election of Directors” section.

The Board does not believe that directors should be subject to term limits. While term limits may in some cases enhance the flow of fresh ideas and viewpoints in the boardroom, they may also result in the loss of knowledgeable and experienced directors, whose insights into the Corporation and its operations typically expand and deepen over time. When evaluating whether incumbent directors should be re-nominated, the Nominating and Governance Committee will consider, in addition to the incumbent’s prior performance on the Board, each such director’s attendance record for meetings of the Corporation’s Board, its subsidiary bank’s Board and committees on which the director serves, as applicable, and the same general qualities and attributes, such as suitability, personal character, integrity, general experience and background that it applies to new candidates for director. Additionally, the Corporation’s Bylaws provide that directors will retire from the Board at the first Annual Meeting of Shareholders held on or after they attain the age of 72. The Board may waive the limitation in its discretion or establish a greater age in the future.

Board Leadership Structure:

Chemung Financial is managed under the direction of its Board. All members of the Corporation’s Board also serve on the Board of the Bank. The Board establishes policies and strategies and regularly monitors the effectiveness of management in carrying out these policies and strategies. Members of the Board are kept informed of the Corporation’s business activities through discussions with key members of the management team, by reviewing materials provided to the Board and by participating in meetings of the Board and its committees. The Board currently consists of fourteen members. The Corporation separates the roles of CEO and Chairman of the Board, which provides the appropriate balance between strategy development and independent oversight of management and a higher degree of independence and transparency between the Board and management. The CEO is familiar with the Corporation’s business and industry and is responsible for identifying strategic priorities and leading the discussion and execution of strategy. The Chairman of the Board presides at all executive sessions of the Board, facilitating teamwork and communication between management and the Board, while providing guidance to the CEO. Mr. David J. Dalrymple served as Chairman of the Board in 2020. The Corporation believes that oversight by the Chairman of the Board, combined with the Corporation’s overall corporate governance structure, policies and practices as outlined earlier, maximizes the effectiveness of Board leadership. The Nominating and Governance Committee and the independent directors will continue to evaluate the Board’s leadership structure as part of its regular reviews of corporate governance and succession planning to ensure that it remains best suited for the Corporation and shareholders.

Anti-Hedging Policy:

The Corporation’s anti-hedging and anti-pledging provisions are covered in the Corporation’s Insider Trading Policy. Under the policy, directors and executive officers are prohibited from engaging in short sales of Corporation stock and from engaging in transactions in publicly-traded options, such as puts, calls and other derivative securities based on Corporation stock including any hedging, monetization or similar transactions designed to decrease the risks associated with holding Corporation stock. In addition, directors and executive officers are prohibited from pledging Corporation stock as collateral for any loan or holding Corporation stock in a margin account.

Board Committees:

The Board has four standing committees whose membership and responsibilities must meet certain NASDAQ® and SEC requirements. These standing committees are the Audit, Enterprise Risk, Nominating and Governance and Compensation and Personnel Committees (collectively, the “Committees”). The Board may from time to time establish or maintain additional committees, as it deems necessary or appropriate, the membership of which may include one or more directors, as well as non-directors. One such additional committee that the Board has established is the Executive Committee, which is described later in this section.

Committee Membership

The Nominating and Governance Committee regularly reviews committee membership and makes recommendations for changes on an annual basis, with consideration given to the qualifications and preferences of individual directors and the specific requirements, if any, of NASDAQ® and the SEC for service on such Committees. The Board gives consideration to rotating committee members periodically, to the extent feasible under applicable laws and regulations governing the membership requirements of the Committees, but the Board does not believe rotation should be mandated as policy, nor that service by a director on a committee should be subject to term limits. All members of the four standing Committees are independent directors, as defined (and generally required) under applicable law, rules and regulations (see “Director Independence” later in this section for more detail). A table showing the current members of each of the standing Committees follows:

Director

Audit
Committee

Enterprise
Risk
Committee

Compensation
& Personnel Committee

Nominating & Governance Committee

Raimundo C. Archibold Jr.

✔

Larry H. Becker

✔

Ronald M. Bentley

✔

David M. Buicko

Chair

David J. Dalrymple

✔

Chair

✔

Robert H. Dalrymple

✔

Richard E. Forrestel Jr.

✔

Denise V. Gonick

✔

Stephen M. Lounsberry III

✔

Chair

✔

Jeffrey B. Streeter

✔

Richard W. Swan

✔

G. Thomas Tranter Jr.

✔

Thomas R. Tyrrell

✔

Chair

Each of the four standing Committees has its own charter that sets forth the purposes, goals and responsibilities of the committee, as well as the qualifications for membership, procedures for appointing members, structure and operations, and policies for Board oversight of the committee. Each has the power to hire, at the Corporation’s expense, independent accounting, compensation, financial, legal or other consultants, as the members may deem necessary and appropriate, consistent with the overall authority to retain such advisors as set forth in the committee’s charter, including budgeting or professional conditions and limitations. Management approval will not be required for engagement of consultants, although management normally will be advised and consulted prior to any such engagement to avoid, among other things, conflicts of interest. The charters of each committee can be viewed on the Bank’s website at: https://chemungfinancial.q4ir.com/corporate-information/documents/default.aspx

Committee Descriptions

A description of each of the four standing Committees, as well as the Executive Committee, follows:

•Audit Committee: Mr. Buicko is the Chair of the Audit Committee; he has served in this role since 2019. The primary responsibilities of the Audit Committee include the appointment of independent auditors, the pre-approval of all audit and non-audit services performed by the Corporation’s independent auditors, the review of the adequacy of internal accounting and disclosure controls of the Corporation, reviewing the financial statements and audit report with management and the Corporation’s independent auditors and reviewing the earnings and financial releases and quarterly and annual reports filed with the SEC. In accordance with applicable rules, the Audit Committee must specifically approve, in advance, all services performed by the independent auditor. The Audit Committee met five times in 2020. For additional information, see the “Audit Committee Report” section.

•Compensation and Personnel Committee: Mr. Lounsberry is the Chair of the Compensation and Personnel Committee (the “Compensation Committee”); he has served in this role since 2012. The Compensation Committee’s primary responsibilities include to exercise authority, in its sole discretion, to retain and terminate, or obtain the advice of any adviser to be used to assist in the performance of its duties, but only after taking into consideration factors relevant in the adviser’s independence from management as specified in NASDAQ® Listing Rule 5605(d)(3), or any successor provision thereto, exercise authority or make recommendations to the Board (depending on the terms of the compensation plan) relating to the compensation of the executive officers, including to review and determine the compensation of the CEO and the other Named Executive Officers, review the Corporation’s compensation plans and programs affecting other employees, review management’s proposals for the election and promotion of officers, monitor compensation trends; and, select a peer group of companies against which to compare the Corporation’s compensation for the CEO, executive officers and chief auditor. The Compensation Committee’s oversight of the Bank’s incentive compensation plans, including setting corporate measures and goals consistent with principles of safety and soundness, make recommendations to the Board relating to awards and long-term equity awards. Director compensation is established by the Corporation’s Board of Directors upon the recommendation of the Compensation Committee. The Compensation Committee met seven times in 2020. For additional information, see the “Director Compensation” section.

•Nominating and Governance Committee: Mr. Tyrrell is the Chair of the Nominating and Governance Committee; he has served in this role since 2019. The Nominating and Governance Committee’s primary responsibilities include oversight of the Corporation’s corporate governance matters on behalf of the Board of Directors, identifying, evaluating and recommending qualified director nominees, considering shareholder nominees for election to the Board, reviewing annually and reporting to the Board regarding the independence of the directors, reviewing committee structure and making recommendations to the full Board for committee membership, recommending Corporate Governance Guidelines to the Board, and overseeing the Board and committee self-evaluation process. The Nominating and Governance Committee met three times in 2020.

•Enterprise Risk Committee: Mr. David J. Dalrymple is the Chair of the Enterprise Risk Committee; he has served in this role since the establishment of the committee in 2016. The responsibilities of the Enterprise Risk Committee include monitoring the Corporation’s compliance with legal and regulatory requirements, key risk areas to assess the effectiveness of risk management policies and procedures, reviewing management’s assessment of the enterprise risk profile of the Corporation including applicable ratios, trends and key risk indicators for credit, market, liquidity, operational, compliance and legal reputation and strategic risk, environmental, social and corporate governance risk, and the aggregation and correlation of individual risk exposures. At least annually, the committee will review a vendor report which provides a third party risk management program overview, including any vendor

issues along with status of critical, high risk, and new vendor due diligence. The committee will review a physical safety and security annual report which provides a timeline of all incidents related to workplace safety and health as well as physical security for the previous twelve (12) months. The committee reviews the information security report on a quarterly basis outlining strategic objectives, program changes, phishing tests and vulnerability management and trends. The committee is provided with an annual incentive compensation evaluation which reviews all incentive compensation plans and assigns a risk rating to each plan. The committee will be apprised of environmental, social and governance initiatives from our management-level committee through the Enterprise Risk Management Dashboard, which is presented to the committee on a quarterly basis. Major fraud losses are reported to the committee on an annual basis citing any trends, concerns, and recommendations for improvement. At the beginning of the year, a training plan for the employees and directors is presented to the committee for review; this outlines all regulatory required training for the Corporation. The Enterprise Risk Committee met four times in 2020.

•Executive Committee: The main purpose of the Executive Committee is to act on matters that may require immediate attention at a time when it is impractical or inconvenient to convene the entire Board and serves in a dual capacity for the Corporation and the Bank. The Executive Committee has the full authority of the Board, except those powers that are expressly reserved to the Board under law or the Corporation’s Bylaws. For example, the committee is not authorized pursuant to the Bylaws to make submissions to shareholders of any action that requires shareholders’ approval, fill vacancies on the Board of Directors or in any committee, fix compensation of the Board or any committee, amend or repeal the Bylaws or the adoption of new Bylaws or amend or repeal any resolution of the Board. Because the Board believes proper governance involves the entire Board in the Corporation’s decision-making process, the Board strives to keep meetings of the Executive Committee to a minimum. The Executive Committee is currently comprised of the Board Chair, Mr. D. Dalrymple and Messrs. Bentley, R. Dalrymple, Swan, Tomson and Tranter. In 2020, the Executive Committee met two times.

Executive Session with Independent Directors

In addition to regular Board and committee meetings, directors meeting the general independence test under NASDAQ® meet, at least, two times a year in Executive Session to discuss any matters deemed relevant to the Corporation’s operation and condition. No current members of management are in attendance during these sessions, which are chaired by the Chairman of the Board. Due to the informality and expectation of confidentiality that characterize Executive Sessions, typically no binding corporate decisions or actions are taken nor official records maintained for them. The independent directors held two Executive Sessions in 2020.

Attendance

In 2020, the Corporation’s Board held twelve regularly-scheduled meetings and the Board of the Bank also held twelve regularly-scheduled meetings. Each then-current director attended at least 75% of the Board meetings and committee meetings to which he or she were assigned. The Corporation does not have a formal policy regarding attendance by a member of the Board at the Corporation’s Annual Meeting of Shareholders. In 2020, ten of thirteen then-current directors attended the Annual Meeting of Shareholders.

Code of Ethics

The Board of Directors has adopted a Code of Ethics for senior financial officers, which applies to the Bank’s CEO, CFO, Chief Auditor and other senior officers performing accounting, auditing, financial management or similar functions. This Code of Ethics supplements a Code of Business Conduct and Ethics, which governs all employees, officers and directors. Both codes can be viewed on the Bank’s website at the following link https://chemungfinancial.q4ir.com/corporate-information/documents/default.aspx.

Director Independence:

Under applicable law and regulation, it is the responsibility of the Board, through recommendation of the Nominating and Governance Committee, to review and make a determination regarding the independence and qualifications of each member, as well as additional review and determination for members of certain committees.

The Corporation’s Governance Guidelines require that the Board consist of a majority of independent directors. Based upon a review of the annual Directors’ Questionnaires and the responses of the directors to questions regarding affiliation, compensation history, employment, and relationships with family members and others, the Board determined that all directors except for Mr. Tomson meet the independence requirements of the applicable laws and rules and NASDAQ® listing standards. In connection with its evaluation of director independence during 2020, there were no transactions considered other than those described under the section titled “Related Party Transactions.”

There were no “Compensation Committee Interlocks,” as defined under the SEC rules, in existence during the fiscal year 2020. No member of the Compensation Committee is a current or former employee of the Corporation or Bank. No member of the Compensation Committee is party to any related party transaction with the Corporation requiring disclosure by the Corporation or Bank.

In addition to meeting NASDAQ® general independence standards applicable to directors, the directors who serve on the Audit and/or Compensation Committees must meet certain additional independence or regulatory requirements some of which may be more rigorous than the general standards. The Board has determined that Directors Buicko, Becker, D. Dalrymple, Forrestel, Streeter, Tranter and Tyrrell, who constitute the Audit Committee, all meet the SEC’s more stringent independence requirements for Audit Committee members. The Board has also determined that Directors Becker, Buicko and Forrestel each qualify as an “Audit Committee Financial Expert,” as defined by the SEC rules (not all Audit Committee members are required to be financial experts). Further, the Board has determined that Directors Lounsberry, D. Dalrymple, R. Dalrymple, Gonick, Swan and Tranter, who constitute the Compensation Committee, all meet the independence requirements of NASDAQ® and the SEC for Compensation Committee members.

Related Party Transactions:

•Loans and Extensions of Credit: The Sarbanes-Oxley Act generally prohibits publicly-traded companies from making loans to their executive officers and directors, however it contains a specific exemption from such prohibition for loans made by federally insured financial institutions, such as the Bank, to their executive officers and directors in compliance with federal banking regulations.

The Bank is engaged, and expects to engage in the future, in banking transactions in the ordinary course of business with executive officers, directors and their related parties, on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with persons not related to the Bank and that do not involve more than the normal risk of collectability or present other unfavorable features. Additionally, any transactions that would be required to be reported must be reviewed by the Audit Committee or another independent body of the Board of Directors. Any transaction with a director is reviewed by and subject to approval of the members of the Board of Directors who are not directly involved in the proposed transaction to confirm that the transaction is on terms that are no more favorable than those that would be available to us from an unrelated third party through an arms-length transaction.

The aggregate outstanding amount of our loans to the executive officers, directors and their related parties was $56.1 million as of December 31, 2020. At December 31, 2020, all loans to directors, executive officers and their related parties were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Bank, and did not involve more than the normal risk of

collectability or present other unfavorable features. These loans were performing according to their original terms at December 31, 2020, and were made in compliance with federal banking regulation.

•Other Transactions: Mr. Buicko is President and CEO of Galesi Group and a member of Westcott Road Development LLC from which the Bank has leased, since 2018, its branch located at 2 Rush Street, Schenectady, New York, under a lease agreement through February 2033 with a monthly rent payment of $9,000. The total estimated lease payments beginning in January 2021 through the end of the term of the lease are expected to be $1,005,015. Mr. Becker is COO of Windsor Development Group, Inc. and the Bank leases its branch located at 1365 New Scotland Road, Slingerlands, New York, under a lease agreement through July 2027 with monthly rent payment of $4,000. The total estimated lease payments beginning January 2021 through the end of the term of the lease are expected to be $248,442.

Board Risk Oversight:

The Board is responsible for establishing the level of risk that the Corporation will take. The Board approves the Corporation’s overall business strategies and significant policies, including those related to managing risks. The Board has approved significant policies to establish tolerances for the institution’s activities and periodically reviews risk exposure limits to align with the changes in the institution’s strategies, address new activities and products, and react to changes in the industry and market conditions. The Board has charged the Enterprise Risk Committee with the oversight of risk management. The Chief Risk Officer (the “CRO”) reports to the CEO and the Enterprise Risk Committee. The CRO is responsible for developing and maintaining a comprehensive process for identifying, assessing, monitoring, and reporting key risks to the organization. The CRO ensures that the risk triggers are appropriate for the nature and complexity of the Corporation’s and Bank’s business activities and are consistent with the risk parameters established by the Board. The CRO makes regular reports to the Board and Enterprise Risk Committee regarding the status of risk management.

As it relates to the risks inherent in the Corporation’s incentive compensation plans, the CRO prepares and presents an annual report to the Compensation Committee and the Enterprise Risk Committee verifying the plans do not encourage excessive risk-taking. This risk assessment includes an evaluation of the design of the Bank’s incentive plans to ensure they satisfy bank regulatory requirements and do not encourage excessive or imprudent risk-taking, the Board’s oversight of our incentive compensation program to ensure that there is effective governance over the program and the internal controls over determining incentive payments and a review of the accuracy of the incentive payments and any related accruals. At the present time, the Compensation Committee, Enterprise Risk Committee and the Board do not believe these plans create risks that are reasonably likely to have a material adverse effect on the Corporation due to the existence of internal controls and the fact that the incentive payments comprise of a moderate portion of the employees’ total compensation. For more information, see the “Compensation Discussion and Analysis” section.

Environmental, Social and Governance:

The Enterprise Risk Committee has primary oversight of our efforts to be responsible stewards of the environment, to be a good corporate citizen in our communities, and to maintain strong governance practices. The oversight assists the Corporation and Bank to focus better on how we impact our key stakeholders and communities, while also strengthening our business performance.

As presented on the Bank’s website, “Chemung Financial embraces its corporate responsibility and commits to fully supporting every community within our footprint. This responsibility requires inclusion, volunteerism, financial support, thoughtful partnerships and the responsible management of our environmental impact. The value we provide to these communities is an integral part of who we are. Our employees’ leadership and service in charitable and civic organizations is foundational to our corporate citizenship. We serve diverse communities and value a representative work force and Board of Directors. Our community-banking mission

focuses equally on all of our stakeholders and promotes the long-term sustainability of our communities.” For more information, visit the Bank’s website at www.chemungcanal.com.

Shareholder Communication with the Board:

Shareholders may communicate to the Board, to an individual director or directors, or to a particular committee of the Board by directing such communication either by email to kmckillip@chemungcanal.com or in writing to: Board of Directors – Shareholder Communications, c/o Corporate Secretary, Chemung Financial Corporation, One Chemung Canal Plaza, Elmira, New York 14901. If a shareholder intends such communication to be delivered to an individual director, specific directors, or particular committee of the Board, we request that this information be prominently displayed at the beginning of the communication.

Named Executive Officers

The Corporation’s Named Executive Officers for 2020 were Anders M. Tomson, President and CEO; Karl F. Krebs, Executive Vice President, Chief Financial Officer (“CFO”) and Treasurer; Loren D. Cole, Executive Vice President and Chief Information Officer (“CIO”); Peter K. Cosgrove, Executive Vice President, Chief Credit Officer (“CCO”) and Chief Risk Officer (“CRO”), Louis C. DiFabio (retired December 31, 2020), Executive Vice President – Lending Services. The Corporation’s Named Executive Officers for 2020 were Anders M. Tomson, President and CEO; Karl F. Krebs, Executive Vice President, Chief Financial Officer (“CFO”) and Treasurer; Loren D. Cole, Executive Vice President and Chief Information Officer (“CIO”); Peter K. Cosgrove, Executive Vice President, Chief Credit Officer (“CCO”) and Chief Risk Officer (“CRO”), Louis C. DiFabio (retired December 31, 2020), Executive Vice President – Lending Services.

Stock Ownership Information

The following table sets forth the beneficial ownership of the Corporation’s common stock, as defined under SEC rules, as of April 9, 2021, the record date for the 2021 Annual Meeting, for each director, director nominee and NEO of the Corporation, as well as for all directors and executives as a group. Unless otherwise indicated, each of the beneficial owners named below has sole voting and investment authority with respect to the shares listed. Under Rule 13d-3 of the Exchange Act, a person is considered a beneficial owner of a security if they have or share voting power or investment power over the security or has the right to acquire beneficial ownership of the security within 60 days from the date of this filing. “Voting Power” is the power to vote or direct the voting of shares. “Investment Power” is the power to dispose or direct the disposition of shares.



Name of Beneficial Owner	Number of Shares Beneficially Owned		Percentage of Shares Beneficially Owned
Directors, Nominees and NEOs:	(#)		(%)

Raimundo C. Archibold Jr.	—	(1)	—	%
Larry H. Becker	37,730		*
Ronald M. Bentley	51,116		1.10	%
David M. Buicko	5,210		*
David J. Dalrymple	38,847	(2)	*
Robert H. Dalrymple	262,083	(3), (9)	5.62	%
Richard E. Forrestel Jr.	12,158		*
Denise V. Gonick	2,527	(4)	*
Stephen M. Lounsberry III	18,207	(5)	*
Jeffrey B. Streeter	6,080	(6)	*
Richard W. Swan	72,754	(7), (9)	1.56	%
Anders M. Tomson	41,106	(8)	*
G. Thomas Tranter Jr.	24,340		*
Thomas R. Tyrrell	6,552		*
Loren D. Cole	6,571	(8), (9), (10)	*
Peter K. Cosgrove	1,315	(10)	*
Louis C. DiFabio	24,050	(10) (11)	*
Karl F. Krebs	10,237	(8), (10)	*
Directors and executive officers as a group (18 people)	620,883		13.32	%

*Less than 1% based upon 4,662,801 outstanding shares as of April 9, 2021.

(1) Raimundo C. Archibold joined the Board in February 2021.

(2) Includes 19,110 shares held solely by David J. Dalrymple and 19,737 shares held in trust over which Mr. Dalrymple has voting and dispositive powers.

(3) Includes 766 shares held solely by Robert H. Dalrymple and 50% of the 24,758 shares held by Dalrymple Holding Corporation of which Robert H. Dalrymple is an officer, director and 50% principal shareholder. Includes 234,486 shares held by RD Wood, LLC, which Robert H. Dalrymple and Elizabeth T. Dalrymple manage and have shared voting and dispositive power over. Includes 14,452 shares held by Mr. Dalrymple’s spouse as to which he disclaims beneficial ownership.

(4) Includes 1,327 shares held solely by Denise V. Gonick and 1,200 shares held jointly with her spouse.

(5) Excludes 15,659 shares that Stephen M. Lounsberry has credited to his account in memorandum unit form under the Corporation’s Directors’ Deferred Fee Plan. The deferred fees held in memorandum unit form will be paid solely in shares of the Corporation’s common stock pursuant to the terms of the Plan and the election of the plan participants. Shares held in memorandum unit form under the Plan have no voting rights.

(6) Includes 1,526 shares held solely by Jeffrey B. Streeter and 4,554 shares held jointly with his spouse.

(7) Includes 36,949 shares held solely by Richard W. Swan and 27,015 shares held in four trusts over which Mr. Swan has voting and dispositive power. Includes 4,316 shares held in trust for the benefit of Mr. Swan, as income beneficiary, and 4,474 shares held by Mr. Swan’s spouse as to which he disclaims beneficial ownership.

(8) Includes all shares of common stock of the Corporation held for the benefit of certain executive officers by the Bank as trustee of the Bank’s Profit Sharing, Savings and Investment Plan. Messrs. Tomson, Cole and Krebs own 11,364, 3,223, and 5,389 shares, respectively.

(9) Includes 18,926 shares owned by spouses of certain officers and directors of which such officers and directors disclaim beneficial ownership.

(10) Includes all unvested shares of the Corporation’s common stock held in a restricted stock account at American Stock Transfer and Trust Company LLC on behalf of certain executive officers. Messrs. Cole and Cosgrove own 2,584 and 1,254 shares, respectively. Mr. DiFabio’s restricted stock vested on his retirement date, December 31, 2020. Mr. Krebs’ restricted stock vested in February, 2021, when he turned 65.

(11) Mr. DiFabio retired on December 31, 2020.

5% Shareholders:

The following table sets forth the beneficial ownership of the Corporation’s common stock as of April 9, 2021, the record date for the 2021 Annual Meeting, by three holders known by us to be the beneficial owner of more than 5% of the outstanding shares of the Corporation’s common stock on such date. Beneficial ownership includes all shares of common stock for which the person or entity has sole or shared voting power or investment power.



Name	Number of Shares Owned		Percentage of Shares Owned
More than 5% Owner (other than directors):	(#)		(%)

Chemung Canal Trust Company	294,739	(1)	6.32	%
One Chemung Canal Plaza, P.O. Box 1522
Elmira, New York 14902-1522

Dalrymple Family Limited Partnership	339,242	(2)	7.28	%
Henry M. Dalrymple
Matthew D. Dalrymple
2105 S. Broadway
Pine City, New York 14871

RD Wood LLC	262,083	(3)	5.62	%
Robert H. Dalrymple
Elizabeth T. Dalrymple
5 Woodland Way
Ithaca, New York 14850-9802

(1) Shares held by the Bank in various fiduciary capacities, either alone or with others. Includes 302,739 shares held with shared voting power. There are 199,736 shares held with shared dispositive powers. Shares held in a co-fiduciary capacity by the Bank are voted by the co-fiduciary in the same manner as if the co-fiduciary were the sole fiduciary. Shares held by the Bank as sole trustee will be voted by the Bank only if the trust instrument provides for voting of the shares at the direction of the grantor or beneficiary and the Bank actually receives voting instructions.

(2) Mr. David J. Dalrymple no longer has shared powers or voting rights of Dalrymple Family Limited Partnership. Mr. Dalrymple’s sons, Henry M. and Matthew D. Dalrymple, are general partners of Dalrymple Family Limited Partnership of which each hold 50% ownership. Based on information reported in a Schedule 13G filed with the SEC on February 10, 2021, the Dalrymple Family Limited Partnership and Henry M. Dalrymple and Matthew D. Dalrymple have shared voting and dispositive power over all the shares.

(3) Includes 766 shares held solely by Mr. Robert H. Dalrymple and 50% of the 24,758 shares held by Dalrymple Holding Corporation of which Robert H. Dalrymple is an officer, director and 50% principal shareholder. Includes 14,452 shares held by Mr. Dalrymple’s spouse as to which he disclaims beneficial ownership. Based on the information reported in a Schedule 13G filed with the SEC on February 11, 2021, RD Wood, LLC has shared voting and dispositive power over 234,486 shares; Robert H. Dalrymple has shared voting and dispositive power over 259,244 shares; and, Elizabeth T. Dalrymple has shared voting and dispositive power over 234,486 shares.

Compensation Discussion and Analysis

The Compensation Discussion and Analysis section of this Proxy Statement provides our shareholders with an explanation of the Corporation’s compensation philosophies, objectives, processes, practices and other relevant factors in setting NEO compensation. For more information on the Corporation’s Named Executive Officers see the “Named Executive Officers” section.

Compensation Philosophy and Objectives:

As discussed in the “Committee Description” section, the Compensation Committee reviews and administers the Corporation’s compensation policies and practices for NEOs. The Corporation’s compensation philosophy is designed to attract, motivate and retain highly qualified financial services professionals capable of maximizing business performance for the benefit of shareholders. The Compensation Committee believes in a simple, straight-forward approach to executive compensation and, therefore, has limited the number and types of plans used to compensate NEOs. For more information on the plans, see the “Elements of Compensation” section.

The Corporation’s and Bank’s compensation plans and practices are designed to reward NEOs for satisfying both corporate and individual performance goals. In 2020, compensation components of NEO compensation consisted of base salary, short and long term performance-based incentives, and retirement and other benefits. The Compensation Committee reviews quantitative and qualitative/subjective measures before applying its judgment to determine appropriate compensation for its NEOs. As a result, incentive plan pay is not tied directly to any specific set of metrics. As such, the Compensation Committee has not established rigid formulas for the allocation between cash and non-cash components, the allocation of short-term and long-term equity incentive compensation, or the percentage by which other NEOs’ compensation opportunity should be in relation to the CEO’s compensation. The Compensation Committee uses peer group data to provide a competitive level of total compensation targeted at the average level of comparably-sized financial institutions. As described below, the Compensation Committee also utilizes an independent compensation consultant to periodically evaluate NEO compensation levels and mix of cash and stock compensation. In 2020, the Compensation Committee believes that the relationship between the NEOs’ total compensation (base salary plus cash and stock-based incentive compensation) and the Corporation’s financial results demonstrates the alignment the Corporation has established between pay and business performance.

Setting Executive Compensation:

The Compensation Committee is responsible for the design, implementation and administration of our compensation plans and practices for the NEOs. The Compensation Committee periodically engages an independent outside consulting firm to conduct a comprehensive review of the Corporation’s executive compensation program. In 2020, McLagan conducted an independent and objective analysis of all elements of compensation, individually and in aggregate, relative to market and peer group practices. A primary data source used in the McLagan Report for determining the competitive market for NEO compensation was the information publicly disclosed by a peer group of other publicly traded banks. This peer group was developed by McLagan, with input from the Compensation Committee, using objective parameters that reflect bank holding companies of similar asset size and business model located in our general geographic region.

The peer group, which is listed below, consists of twenty-two (22) bank holding companies in Connecticut, Maine, Massachusetts, New York, Ohio and Pennsylvania that range from $1 billion to $5 billion in assets:


ACNB Corp.	CNB Financial Corp.	Financial Institutions Inc.	Orrstown Financial Services
Arrow Financial Corp.	ENB Financial Corp.	First Bancorp Inc.	Peoples Financial Services
Bar Harbor Bank Shares	Enterprise Bancorp Inc.	Franklin Financial Services	Rhinebeck Bancorp Inc.
Citizens & Northern Corp.	Evans Bancorp Inc.	Greene County Bancorp Inc.	Salisbury Bancorp Inc.
Civista Bancshares Inc.	Farmers National Banc Corp.	LCNB Corp.	SB Financial Group Inc.
Codorus Valley Bancorp. Inc.	Fidelity D & D Bancorp. Inc.

The Compensation Committee evaluates the peer group annually for suitability and may modify the peer group from time-to-time based on mergers and acquisitions within the industry or other relevant factors. The Corporation uses the peer bank data to inform it of the pay levels and practices of the Corporation’s peers as they most closely represent the labor market in which the Bank competes for key talent. Informed by this data, the Compensation Committee’s goal is to provide a competitive level of total compensation targeted at the average level of comparably-sized financial institutions, although actual compensation paid to an NEO may vary based on other factors such as the individual’s performance, experience, responsibilities and competitive conditions.

Role of Management:

Although the Compensation Committee is ultimately responsible for designing our Executive Compensation Program, input from the CEO is critical in ensuring that the Compensation Committee has the appropriate information needed to make informed decisions. The CEO participates in compensation-related actions associated with the other NEOs purely in an informational and advisory capacity and he presents the other NEOs’ performance summaries and recommendations relating to their compensation to the Compensation Committee for its review and recommendation to the full Board for approval. The CEO neither recommends nor participates in Compensation Committee deliberations regarding his own compensation.

Previous Say-On-Pay Vote Results:

Following our Annual Meeting of Shareholders on May 13, 2020, the Compensation Committee reviewed the results of the shareholder advisory vote on executive compensation with respect to 2019 compensation actions and decisions for our NEOs, which resulted in approximately 88.3% of the votes cast on the proposal. After a comprehensive market review and in light of strong shareholder support, we concluded that no substantial changes to our Executive Compensation Program were required.

Elements of Compensation:

In 2020, the mix of base salary and incentive compensation (which is incentive cash compensation and equity awards) places the average variable pay received by NEOs, other than the CEO, at approximately 53% of their base salary. The CEO’s incentive pay comprised of cash and unrestricted stock, represented approximately 66% of his base pay. Awards under the incentive plans are based on the Compensation Committee’s independent business judgement after evaluating the performance of each executive officer against pre-established Bank and individual goals. The Compensation Committee regularly reviews these elements of compensation in order to ensure that, as a whole, they conform to the Bank’s philosophy and objectives.

•Base Salary: Base salary paid to executives is reviewed against market on an annual basis. Base salary levels reflect the Compensation Committee’s perceived value of the position, both in the context of the market data of the Bank’s peer group for similar positions, as well as the individual fulfilling the duties of the position. The CEO reviews the base salaries of the other NEOs with the Compensation Committee and a recommendation for approval is submitted to the full Board. The recommendations are based upon an evaluation process which includes professional and leadership performance and the attainment of goals set forth in the Corporation’s annual business plan and base salary levels of each NEO relative to peers.

In December 2020, the Compensation Committee reviewed the NEOs’ base salaries utilizing the same methodology (relevant market data of our peer group and individual performance) and increased the base salaries as follows:In December 2020, the Compensation Committee reviewed the NEOs’ base salaries utilizing the same methodology (relevant market data of our peer group and individual performance) and increased the base salaries as follows:



Named Executive Officer	2019 Salary	2020 Raise		2020 Salary	Nature of Increase
		% of Base Salary	Amount of Increase
	($)	(%)	($)	($)

Anders M. Tomson	460,000	4.3	20,000	480,000	Merit and Market-Based

Loren D.Cole	192,610	12.2	23,500	216,110	Merit, Market-Based and Additional Responsibilities

Peter K. Cosgrove	225,000	3.0	6,750	231,750	Merit, Market-Based and Additional Responsibilities

Louis C. DiFabio	208,302	8.0	16,715	225,017	Merit and Market-Based

Karl F. Krebs	231,854	10.3	23,840	255,694	Merit and Market-Based

Based on a similar assessment of the NEOs’ performance in 2019, the Compensation Committee increased each NEO’s base salary as follows:



Named Executive Officer	2018 Salary	2019 Raise		2019 Salary	Nature of Increase
		% of Base Salary	Amount of Increase
	($)	(%)	($)	($)

Anders M. Tomson	417,000	10.3	43,000	460,000	Merit and Market-Based

Loren D.Cole	175,100	10.0	17,500	192,610	Merit and Market-Based

Peter K. Cosgrove	—	—	—	—	—

Louis C. DiFabio	193,769	7.5	14,533	208,302	Merit and Market-Based

Karl F. Krebs	225,102	3.0	6,752	231,854	Merit and Market-Based

The Compensation Committee conducts an annual performance review of the CEO. The CEO’s performance objectives are defined consistent with, and in support of, the Corporation’s annual business plan. Performance is also measured against progress towards the attainment of the Corporation’s long-term strategic plan. These goals include, but are not limited to, metrics related to net income, return on equity, efficiency, asset quality, bank performance against its peer group and progress in achieving long-term strategic objectives. For purposes of comparing the relevant financial metrics, the same peer group is used to assess total compensation. For more information on the peer group, see the “Setting Executive Compensation” section.

In January 2021, the Compensation Committee determined that Mr. Tomson achieved his 2020 goals and he received a base salary increase of $38,000 for 2021 in order to align his salary more closely with the market with respect to chief executive officers in our peer group. For more information on total base salaries earned by the NEOs in 2020, see the “Summary Compensation Table” section.

Additionally, in the context of structuring of our incentive compensation plans, the Compensation Committee assesses the individual contributions made by the NEOs, which includes assessing their accountability for specific financial, organization, operational and risk management objectives that are otherwise measurable performance objectives, the attainment of which contributes significantly to the growth and profitability of the Bank’s business operations. As a result, the Compensation Committee believes the Bank’s incentive compensation plans incentivize the NEOs to effectively plan, organize, supervise, monitor and evaluate the key

functional area and department for which they are responsible and through which the Corporation’s most important corporate objectives are achieved.

The NEOs are eligible for the same benefits available to all other employees of the Bank including life and health insurance, vacation, holidays, and personal and sick leave.

•Short and Long-Term Performance-Based Incentive Compensation: The Corporation has adopted incentive compensation plans to motivate and reward senior officers (including the NEOs) for achieving predefined goals. The Compensation Committee and the Board do not subscribe to formula-driven incentive plans, but believe in maintaining discretion over the payment of incentive compensation. This discretion permits the Compensation Committee to make compensation decisions in the best interests of the Corporation and shareholders when events beyond the control of management positively or negatively influence financial results. In certain circumstances, the Compensation Committee may reduce or increase incentive payments. Each senior officer’s incentive award opportunity is not limited to a specified percentage of the incentive pool.

The Compensation Committee employs cash and restricted stock awards to recognize significant efforts or individual contributions of senior officers, including the NEOs. In determining these awards, many factors are considered including, but not limited to, the Bank’s net earnings vs. original plan, the financial results delivered by the senior officer’s division against goal, service quality results vs. goal, individual success in implementing business plan initiatives, and other contributions made by the senior officer to the Bank’s success. The senior officers eligible for an award, the criteria used to determine individual awards, and actual awards are reviewed with the Compensation Committee. There is no expectation that these awards will be paid each year. The Compensation Committee approved a cash bonus pool representing 30% of the aggregate base salaries of NEOs and 20% of the aggregate base salaries of senior officers. In 2020, the cash awards totaled $799,500 and the value of the restricted stock awards totaled $445,500 for a total of $1,245,000 representing approximately 37% of the aggregate base salaries of plan participants. As previously stated, these two components of incentive compensation for NEOs (other than the CEO) represent approximately 53% of the NEOs’ base salaries. In 2020, the CEO’s cash award totaled $157,500 and the value of the unrestricted stock award totaled $157,500 (which includes $26,258 for the Directors’ Stock Compensation Plan which Mr. Tomson is a participant) for a total of $315,000.

The following paragraphs provide further description of these plans:

•Omnibus Plan: In 2014, the Board approved an Omnibus Plan to aggregate into one document all current compensation plans, programs and arrangements that provide restricted stock, unrestricted stock, and cash awards to eligible employees and to members of the Board of the Corporation and the Bank and its affiliates. The Omnibus Plan incorporates all of the provisions of the Corporation’s Restricted Stock Plan, Incentive Compensation Plan, Directors’ Compensation Plan and the Corporation’s and Bank’s Directors’ Deferred Fee Plan. The Component Plans are generally intended to enhance the Corporation’s and Bank’s ability to attract and retain highly qualified officers, directors, key employees and other persons and to motivate such persons and to expend maximum efforts to improve the business results and earnings of the Corporation and the Bank by providing to such persons an opportunity to acquire or increase a direct proprietary interest in its operations and future success.

•Chemung Financial Corporation Amended and Restated Restricted Stock Plan (the “Restricted Stock Plan”): In 2010, the Board approved a Restricted Stock Plan for officers of the Bank, excluding the CEO. The Compensation Committee may recommend to the full Board discretionary grants of restricted shares of the Corporation’s common stock to officers selected to participate in the Plan. The Compensation Committee believes that these awards accomplish the following:

▪Align the interest of the Bank’s executives and senior officers with the interest of the Corporation and its shareholders;

•Ensure that the Corporation’s compensation practices are competitive and comparable with its peers; and

•Promote retention of select management level employees.

The awards are based on performance, responsibility and contributions of the NEOs, other senior officers and subject matter experts. Mr. Tomson recommends to the Compensation Committee (other than his own compensation) the number of shares to be awarded to senior officers, including NEOs and subject matter experts, which is subject to the Compensation Committee’s recommendation to the Board. The awards may not exceed fifteen thousand (15,000) shares per year in the aggregate. Twenty senior officers including Messrs. Cole, Cosgrove and Krebs were awarded restricted stock in 2020. Mr. DiFabio did not receive restricted stock in 2020 as he was granted all cash due to his retirement on December 31, 2020. These shares vest over a five-year period, lapse with termination of employment unless otherwise waived by the Compensation Committee and vest immediately in case of death, disability or a change in control. In light of the deficit of shares remaining available for distribution in the long-term equity plans, additional cash was paid out in 2020 to senior officers and NEOs who participated in the plan. For additional information, see the “Summary Compensation Table” section.

•Chemung Financial Corporation Incentive Compensation Plan (the “Incentive Compensation Plan”): The Incentive Compensation Plan provides for the grant of unrestricted stock and/or cash awards to select officers and key employees designated annually in the sole discretion of the Board as a reward for attainment of annual and long-term performance goals. Mr. Tomson was the only executive participant in the Incentive Compensation Plan in 2020. The maximum number of shares that can be awarded as unrestricted stock is ten thousand (10,000) per calendar year. The maximum cash bonus is $300,000 per calendar year. In January 2021, the Compensation Committee approved granting an Incentive Compensation award of $315,000 to the CEO for the year ending December 31, 2020. The awards were based on Mr. Tomson’s performance measured against his predetermined individual and Bank goals to include, but not limited to, metrics related to net income, return on equity, efficiency, asset quality, bank performance against peers, progress in achieving long-term strategic objectives, and other qualitative information considered by the Compensation Committee. Mr. Tomson received $157,500 in cash and $161,242 in the Corporation’s common stock which amounted to 4,603 shares (which includes shares received from the Incentive Compensation Plan and Directors’ Compensation Plan) and the award was paid in January 2021.

•Retirement and Other Benefits: The Corporation sponsors the Chemung Canal Trust Company 401(k) Defined Contribution Profit Sharing, Savings and Investment Plan (the “401(k) Plan”) which covers all employees. The Corporation contributes a non-discretionary 3% of gross annual wages for each participant, regardless of the participant’s deferral, in addition to a 50% match up to 6% of gross annual wages. All contributions made on or after January 1, 2017 will vest immediately, while all previous contributions continue vesting on a five-year vesting schedule. The 401(k) Plan’s assets consist of Chemung Financial Corporation common stock, as well as other common and preferred stocks, U.S. Government securities and corporate bonds and notes. The Bank instituted a total “freeze” of any future benefit accruals under the Chemung Canal Trust Company Pension Plan (the “Pension Plan”) effective January 1, 2017. Messrs. Tomson, Cole, Cosgrove, DiFabio and Krebs received a 3% non-discretionary contribution to the 401(k) Plan subject to limitations imposed by the Internal Revenue Code of 1986, as amended (the “Code”), and applicable regulations. Effective January 1, 2017, as a result of the total “freeze” of the Pension Plan, all eligible employees will participate in the 401(k) Plan subject to limitations imposed by the Code and applicable regulations.

•Defined Contribution Supplemental Executive Retirement Plan (the “Defined Contribution SERP”): In June 2012, the Compensation Committee adopted the Defined Contribution SERP to attract and retain high-quality talent. Messrs. Tomson, Cole, Cosgrove, DiFabio and Krebs are credited with an annual contribution from the Bank in an amount equal to 20% of their base salary, which such annual contribution will cease upon the earlier of their (1) termination of employment for any reason or (2) the discontinuation of their participation in the Defined Contribution SERP.

The Bank may discontinue future contributions to any participant at any time. Benefits are payable upon the earlier of retirement, disability, death or a change in control. The annual Bank contribution is credited as of the last day of the applicable plan year provided that the participant is actively employed on that date. As of each valuation date, the cumulative value of each participant’s account shall be credited with simple interest at a rate of return equal to the average yield on 5-year U.S. treasury notes for the calendar quarter ending immediately prior to the valuation date.

•Chemung Canal Trust Company Deferred Compensation Plan (the “Deferred Compensation Plan”): The Bank maintains the Deferred Compensation Plan that allows the NEOs and other senior officers that the Compensation Committee may approve annually, to defer amounts up to all of their compensation to be paid at a future date as elected by the officer. Although all of the NEOs are eligible to participate, Messrs. Tomson, Cosgrove, DiFabio and Krebs were the only NEOs who participated in the plan in 2020. For more information on the Deferred Compensation Plan, see the “Deferred Compensation Plan” section.

•Perquisites: The NEOs are granted perquisites which the Compensation Committee believes are modest, reasonable and similar to those provided to executive officers at peer financial institutions and are designed to assist the executives in carrying out their duties. Club memberships are provided to the NEOs to enable them to interact and foster relationships with clients and local business people. Mr. Tomson has the use of a Bank-owned vehicle for business purposes and periodically uses a car service in order to continue facilitating meetings and conducting business, as necessary, during his travel time. Messrs. Tomson, Cole, Cosgrove, DiFabio and Krebs each received mileage and gas reimbursements in 2020.

•Change in Control Agreements: The Bank has entered into individual change in control agreements with Messrs. Tomson, Cole, Cosgrove, DiFabio and Krebs, which were amended and restated in December 2019. The purpose of the change in control agreements is to retain and secure key executives and encourage their attention and dedication to their assigned duties in the event of a change in control of the Bank. The agreements, as amended, have a double trigger change in control provision such that in the event of the executive’s voluntary termination without cause or voluntary termination for good reason within twelve (12) months following the effective date of a change in control of the Corporation or the Bank, each executive would be entitled to receive a severance benefit equal to 2.0 times or 2.99 times (for Mr. Tomson) his highest annual rate of base salary and highest annual incentive award (paid in the form of cash and/or unrestricted stock, as applicable) paid by the Bank to, or earned by, the executive during the calendar year of the change in control or either of the two (2) calendar years immediately preceding the change in control. Severance pay will be reduced by all amounts that are required to be withheld or deducted under the federal, state or municipal law. Such benefit would be payable to each executive in equal monthly installments for twenty-four (24) months or thirty-six (36) months (for Mr. Tomson).

Compensation Committee Report:

The Compensation Committee of the Board has reviewed and discussed with management the Compensation Discussion and Analysis section, as required by item 402(b) of the SEC’s Regulation S-K. Based on its review

and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in the Proxy Statement.

Stephen M. Lounsberry III, Chairman Denise V. Gonick

David J. Dalrymple Richard W. Swan

Robert H. Dalrymple G. Thomas Tranter Jr.

Tax and Accounting Matters

Section 162(m): Under Section 162(m) of the Code, companies are subject to limits on the deductibility of executive compensation. Deductible compensation is limited to $1 million per year for each executive officer listed in the “Summary Compensation Table” with the exception of the executive listed as a result of serving as the principal financial officer. Compensation that is “qualified performance-based compensation” under the Code’s definition is exempt from this limit.

The Tax Cuts and Jobs Act (the “Tax Act”) enacted on December 22, 2017, significantly modified Section 162(m) of the Code. The Act eliminated the “qualified performance-based compensation” exception to the deductibility limitation under Section 162(m) for tax years commencing after December 31, 2017. The Tax Act provides “grandfathered” treatment for qualified performance-based compensation in excess of $1 million that meets the requirements of Section 162(m), is payable pursuant a written binding contract in effect as of November 2, 2017, and is not modified in any material respect. In addition, the Tax Act expands the definition of “covered employee” to include the principal financial officer as well as any employee who has been designated a covered employee for any fiscal year beginning after December 31, 2016.

The Compensation Committee has historically attempted to structure its compensation arrangements to achieve deductibility under Section 162(m) of Code, unless the benefit of such deductibility is considered by the Compensation Committee to be outweighed by the need for flexibility or the attainment of other objectives. As was the case prior to the enactment of the Tax Act, the Compensation Committee will continue to monitor issues concerning the deductibility of executive compensation. Since corporate objectives may not always be consistent with the requirements for tax deductibility, the Compensation Committee is prepared, when it deems appropriate, to enter into compensation arrangements under which payments will not be deductible under Section 162(m) of the Code. Thus, deductibility will be one of many factors considered by the Compensation Committee in ascertaining appropriate levels or modes of compensation.

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

Executive Officers

The following table sets forth certain information regarding the NEOs and other executive officers of the Corporation and Bank:


Name	Age	Position

Anders M. Tomson	54	CEO of the Corporation and the Bank (2016); President and COO of the Bank (2015); President of Capital Bank, a division of Chemung Canal Trust Company (2011). Mr. Tomson has been with the Bank since 2011.

Loren D. Cole	48	Executive Vice President and Chief Information Officer of the Bank (2018); Senior Vice President and Chief Information Officer of the Bank (2017); Senior Vice President of Bank of Oklahoma (2017); Executive Vice President of SpiritBank Corp. (2011). Mr. Cole has been with the Bank since 2017.

Peter K. Cosgrove	60	Executive Vice President, Chief Credit Officer and Chief Risk Officer (2020); Executive Vice President and Chief Credit Officer (2019); Regional Sales Executive, East Region, at KeyBank (2016); and member of the Merger Integration Leadership Team at KeyBank (2015-2017). Mr. Cosgrove has been with the Bank since 2019.

Louis C. DiFabio	57	Vice President of the Corporation (2015) and Executive Vice President of the Bank responsible for Lending Services (2015); Executive Vice President of the Bank (2011) responsible for Retail Client Services. Mr. DiFabio has been with the Bank since 1987 and retired from both the Corporation and the Bank on December 31, 2020.

Daniel D. Fariello	44	President of Capital Bank, a division of Chemung Canal Trust Company (2018); Senior Vice President of Capital Bank (2013); Relationship Manager (Commercial Loan Officer) of First Niagara Bank N.A. (2005). Mr. Fariello has been with the Bank since 2013. Mr. Fariello is not an NEO.

Kimberly A. Hazelton	53	Executive Vice President of the Bank (2016) responsible for Retail Client Services; Chief Operation Officer (2014) at Alternatives Federal Credit Union; Market President, Retail (2007-2013) at TD Bank. Mrs. Hazelton has been with the Bank since 2016. Mrs. Hazelton is not an NEO.

Jeffrey P. Kenefick	54	Regional President of the Bank (January 4, 2021); Senior Vice President (2019-2021); Executive Vice President, Commercial & Strategic Development and Regional President, Five Star Bank (2016); Executive Vice President, Commercial Banking and Regional President (2013-2016). Mr. Kenefick has been with the Bank since 2019. Mr. Kenefick is not an NEO.

Karl F. Krebs	65	Chief Financial Officer and Treasurer of the Corporation and Executive Vice President, Chief Financial Officer and Treasurer of the Bank (2013); Executive Vice President and Chief Financial Officer of Financial Institutions (2009). Mr. Krebs has been with the Bank since 2013.

Thomas W. Wirth	55	Executive Vice President of the Bank (2015) responsible for the Wealth Management Group; Senior Vice President of the Bank (2004) responsible for Investment Services. Mr. Wirth has been with the Bank since 1987. Mr. Wirth is not an NEO.

Executive Compensation

This Executive Compensation section includes several tables with details of the compensation actually paid and/or awarded to certain NEOs of the Corporation for each of the last three fiscal years, where applicable. Tables included in this section are as follows:

•Summary Compensation

•All Other Compensation

•Grants of Plan-Based Awards

•Outstanding Equity Awards at December 31, 2020

•Vested Equity Awards at December 31, 2020

•Equity Compensation Plan

•Pension Benefits

•Defined Contribution SERP

•Deferred Compensation

•Potential Payments Under Change in Control

Summary Compensation Table:



Name and Principal Position	Year	Salary (1)	Cash Bonus (1)	Stock Awards		Change in Pension Value(4)	All Other Compensation (5)	Total

		($)	($)	($)		($)	($)	($)

Anders M. Tomson	2020	480,000	157,500	161,242	(2)	—	151,223	949,965
President & CEO	2019	460,000	125,000	115,637	(2)	—	162,833	863,470
	2018	417,000	125,000	125,039	(2)	—	134,958	801,997

Karl F. Krebs	2020	256,186	108,500	46,525	(3)	—	83,276	494,487
Executive Vice President,	2019	235,540	62,500	67,500	(3)	—	89,436	454,976
CFO and Treasurer	2018	225,361	65,000	65,010	(3)	—	84,443	439,814

Loren D. Cole	2020	216,542	84,000	36,019	(3)	—	69,193	405,754
Executive Vice President	2019	196,283	42,500	47,500	(3)	—	60,066	346,349
and CIO	2018	175,773	40,000	40,000	(3)	—	13,229	269,002

Peter K. Cosgrove(6)	2020	232,010	77,000	33,032	(3)	—	76,868	418,910
Executive Vice President,	2019	78,144	15,000	17,500	(3)	—	18,821	129,465
CCO and CRO

Louis C. DiFabio(7)	2020	225,017	110,000	—		105,743	75,010	515,770
Executive Vice President	2019	211,714	35,000	40,000	(3)	121,352	77,243	485,309
Lending Services	2018	194,327	20,000	50,000	(3)	—	74,305	338,632

(1) The amounts shown for salary and bonus represent amounts earned in 2020, 2019 and 2018.

(2) The amounts shown for Mr. Tomson were made under the terms of the Incentive Compensation Plan. The awards are fully vested upon grant and reflect the grant date fair value. The stock award granted to Mr. Tomson in 2020, 2019 and 2018 includes director fees in the amounts of $26,258, $22,653 and $24,886, respectively.

(3) The amounts shown for Messrs. Krebs, Cole, Cosgrove and DiFabio represent shares granted under the Restricted Stock Plan and reflect the grant date fair value as reported in Note 15 of the Corporation’s audited consolidated financial statements contained in the Corporation’s Form 10-K. Twenty percent of the restricted stock awarded vests each year commencing with the first anniversary date of the award and is 100 percent vested on the fifth anniversary date. For more information on the restricted stock granted, see the “Grants of Plan-Based Awards Table” section. The amount of the awards are determined in the discretion of the Compensation Committee as discussed in the “Elements of Compensation” section.

(4) The amounts shown represent the aggregate change, during the respective year, in the present value of the NEO’s accumulated pension benefit from the Pension Plan. The Board approved a total “freeze” of the Pension Plan effective January 1, 2017. For more information on the Pension Plan, see the “Elements of Compensation” section. Mr. DiFabio was the only NEO that participated in the Pension Plan.

(5) The amounts shown include non-discretionary and matching contributions made by the Bank to the 401(k) Plan, dividends paid on unvested restricted stock, Defined Contribution SERP contributions and perquisites such as car allowance, personal portion of Bank-owned vehicles, gas reimbursement, mileage reimbursement (“Automobile Allowance/Usage”) and club memberships.

(6) Mr. Cosgrove joined the Bank in August 2019.

(7) Mr. DiFabio retired on December 31, 2020.

All Other Compensation Table:



Name	Employer Contributions to 401(k)	Dividends on Restricted Stock Awards	Automobile Allowance/ Usage	Club Memberships	Defined Contribution SERP	Total
	($)	($)	($)	($)	($)	($)

Anders M. Tomson	17,100	—	12,843	25,280	96,000	151,223

Karl F. Krebs	17,097	4,489	148	10,305	51,237	83,276

Loren D. Cole	15,628	2,111	56	8,089	43,309	69,193

Peter K. Cosgrove	13,539	408	628	15,891	46,402	76,868

Louis C. DiFabio	17,046	3,172	169	9,620	45,003	75,010

Grants of Plan-Based Awards Table:



Name	Grant Date	All Other Stock Awards: Number of Shares of Stock		Grant Date Fair Value of Stock Awards
		(#)		($)

Anders M. Tomson	01/20/2021	3,860	(1)	134,984
	01/15/2021	743	(2)	26,258

Karl F. Krebs	12/16/2020	1,324	(3)	46,525

Loren D. Cole	12/16/2020	1,025	(3)	36,019

Peter K. Cosgrove	12/16/2020	940	(3)	33,032

(1) This grant was awarded to Mr. Tomson as part of a year-end bonus pursuant to the Incentive Compensation Plan, paid January 20, 2021, and reflects the grant date fair value.

(2) This grant was awarded to Mr. Tomson as part of the Directors' Compensation Plan and reflects the grant date fair value.

(3) These amounts represent the grant date fair value as reported in Note 15 of the Corporation's audited consolidated financial statements contained in the Corporation's Form 10-K for the year ended December 31, 2020. The stock was awarded under the Restricted Stock Plan.

Outstanding Equity Awards at December 31, 2020 Table:

The following table shows all outstanding restricted stock awards held by each NEO under the Restricted Stock Plan as of December 31, 2020.



Name	Grant Date	Number of Shares or Units of Stock That Have Not Yet Vested(1)	Fair Value of Shares or Units of Stock That Have Not Vested(2)
		(#)	($)


Karl F. Krebs	12/16/2020	1,324	44,950
	12/18/2019	1,208	41,012
	12/19/2018	912	30,962
	12/20/2017	524	17,790
	12/20/2016	275	9,336

Loren D. Cole	12/16/2020	1,025	34,799
	12/18/2019	851	28,891
	12/19/2018	562	19,080
	12/20/2017	146	4,957

Peter K. Cosgrove	12/16/2020	940	31,913
	12/18/2019	314	10,660

(1) Restricted stock awards vest over a five-year period after the date of the grant.

(2) These amounts represent the fair value of $33.95, the closing price for the Corporation's common stock on December 31, 2020.

Restricted Stock Vested During the Year Ended December 31, 2020 Table:

The following table shows all restricted stock awards held by each NEO under the Restricted Stock Plan that vested during the year-ended December 31, 2020.


Name	Vested Date	All Other Stock Awards: Number of Shares of Stock	Vested Date Fair Value of Stock Awards
		(#)	($)


Karl F. Krebs	12/16/2020	255	8,759	(1)
	12/18/2020	275	9,543	(2)
	12/18/2020	261	9,057	(2)
	12/18/2020	304	10,549	(2)
	12/18/2020	302	10,479	(2)

Loren D. Cole	12/18/2020	72	2,498	(2)
	12/18/2020	187	6,489	(2)
	12/18/2020	212	7,356	(2)

Peter K. Cosgrove	12/18/2020	78	2,707	(2)

Louis C. DiFabio	12/16/2020	218	7,488	(1)
	12/18/2020	214	7,426	(2)
	12/18/2020	191	6,628	(2)
	12/18/2020	234	8,120	(2)
	12/18/2020	179	6,211	(2)
	12/31/2020	2,014	68,375	(3)

(1) These amounts represent the fair value of $34.35, the closing price of Chemung Financial Corporation’s common stock on the 12/16/2020 vesting date.

(2) These amounts represent the fair value of $34.70, the closing price of Chemung Financial Corporation’s common stock on the 12/18/2020 vesting date.

(3) This amount represents the fair value of $33.95 on the 12/31/2020 vesting date.

Deferred Compensation Plan:

The Deferred Compensation Plan allows a select group of management and employees to defer all or a portion of their annual compensation to a future date. Eligible employees and generally highly-compensated employees are designated by the Board of Directors from time to time. Messrs. Tomson, Cosgrove, DiFabio and Krebs were the only NEOs who participated in the Deferred Compensation Plan in 2020. Investments in the plan are recorded as trading assets and deferred amounts are an unfunded liability of the Corporation. The Deferred Compensation Plan requires deferral elections be made before the beginning of the calendar year during which the participant will perform the services to which the compensation relates. Participants in the Deferred Compensation Plan are required to elect a form of distribution, either lump sum payment or annual installments not to exceed ten years, and a time of distribution, either a specified age or a specified date. The terms and conditions for the deferral of compensation are subject to the provisions of Section 409A of the IRS Code. The income from investments and cost of the plan are recorded as dividend, non-interest income, and non-interest expenses, respectively, in the consolidated statements of income.

Deferred Compensation Table:

As previously discussed in the “Deferred Compensation Plan” section, the Bank maintains a Deferred Compensation Plan that allows a select group of management and employees to defer all or a portion of their annual compensation to a future date. Eligible employees are generally highly-compensated employees and are designated by the Board from time to time. The following table sets forth the contributions made by the NEOs for 2020.



Name	Year	Employee Contribution	Registrant Contribution	Aggregate Earnings(1)	Aggregate Balance(2)
		($)	($)	($)	($)

Anders M. Tomson	2020	30,250	—	812	34,102

Peter K. Cosgrove	2020	265,644	—	7,152	370,795

Louis C. DiFabio	2020	50,253	—	5,181	276,329

Karl F. Krebs	2020	25,635	—	6,843	232,934

(1) These amounts are not reported in the "Summary Compensation Table" section.

(2) Amounts reflected in the "Summary Compensation Table" section for previous years include $157,650 for Mr. Krebs. Messrs. Tomson, Cosgrove and DiFabio did not participate in the Deferred Compensation Plan in prior years or were not considered NEOs at that time.

Pension Benefits:

•Tax Qualified Pension Plan: The Bank adopted the Pension Plan, which is a non-contributory defined benefit pension plan and a “qualified plan” under the Code and therefore must be funded. Contributions are deposited to the plan and held in trust. The Pension Plan assets may only be used to pay retirement benefits and eligible plan expenses. The Bank instituted a total “freeze” of any future benefit accruals under the Chemung Canal Trust Company Pension Plan (the “Pension Plan”) effective January 1, 2017. Mr. DiFabio is the only NEO who participated in the Pension Plan.

Under the Pension Plan, pension benefits are based upon final average annual compensation where the annual compensation is total base earnings paid plus salary deferrals. Bonuses, overtime, commissions and dividends are excluded. The normal retirement benefit equals 1.2% of final average compensation (highest consecutive five years of annual compensation in the prior ten years) times years of service (up to a maximum of 25 years), plus 1% of average monthly compensation for each additional year of service (up to a maximum of 35 years), plus 0.65% of average monthly compensation in excess of covered compensation for each year of credited service up to 35 years. Covered compensation is the average of the social security taxable wage bases in effect for the 35 year period prior to normal social security retirement age. Compensation for purposes of determining benefits under the Pension Plan is reviewed annually. On September 21, 2016, the Board amended the Pension Plan to cease future benefit accruals effective January 1, 2017. During the fourth quarter of 2018, the Corporation offered terminated, vested employees, the option to receive lump sum settlement payments. The effects of these changes are reflected in Note 14 of the 10-K under pension plan disclosures as of December 31, 2018.

Normal retirement age under the Pension Plan is age 65. Participants may commence their retirement benefit prior to the age of 65 if they have at least five years of credited service and have attained age 55. The retirement benefit payable before age 65 is reduced to recognize the greater number of years during which the participant will receive the retirement benefit. The reduction is 6.67% for each year between age 60 and 65 that the benefit commences prior to the age of 65. The reduction prior to age 60, if the benefit commences between age 55 and 60, is 5.33% per year.

Pension Benefits Table:

The accumulated benefit is the benefit to which the executive would be entitled had he or she terminated employment on December 31, 2020 and elected to commence his or her benefit at the earliest age at which he or she would receive an unreduced benefit, payable as a monthly benefit for as long as the executive lived. The expected benefit payments are discounted using an interest rate of 2.61%, and mortality based upon the 2021 mortality table as specified in IRS Regulation 1.430(h)(3)-1, applied on a static basis.



Name	Plan Name	Number of Years Credited Service	Present Value of Accumulated Benefit(1)
			($)


Louis C. DiFabio	Chemung Canal Trust Company Pension Plan	27	712,373

(1) Mr. DiFabio retired on December 31, 2020 with the intent to commence his benefit at a future date.

The accumulated benefit is the benefit to which the executive would be entitled had he or she terminated employment on December 31, 2019 or December 31, 2020 and elected to commence his or her benefit at the earliest age at which he or she would receive an unreduced benefit, payable as a monthly benefit for as long as the executive lived. The expected benefit payments are discounted using interest and mortality assumptions to produce the present value of the accumulated benefits as of December 31, 2019 and December 31, 2020. The assumed interest rate is 3.33% for December 31, 2019 and 2.61% for December 31, 2020. The mortality assumption for December 31, 2019 is based upon the 2020 mortality table as specified in IRS Regulation 1.430(h)(3)-1, applied on a static basis. The morality assumption for December 31, 2020 is based upon the 2021 mortality table as specified in IRS Regulation 1.430(h)(3)-1, applied on a static basis.



Name	Plan Name	Increase in Actuarial Present Value of Accumulated Benefit(1)
		($)


Louis C. DiFabio	Chemung Canal Trust Company Pension Plan	105,743


(1) The increase in the actuarial present value of accumulated benefits is the difference between the actuarial present value of accumulated benefits as of December 31, 2019 and December 31, 2020, taking into account the changes in the discount rate assumption, the mortality assumption, and the fact that each participant is one year closer to expected retirement. Since benefits under both Pension Plans were frozen at December 31, 2016, there were no increases in the accrued benefits under the pension plan during 2020. As mentioned above, the mortality basis has changed effective December 31, 2020, to reflect the 2021 mortality table as specified in IRS Regulation 1.430(h)(3)-1, applied on a static basis, and the discount rate decreased from 3.33% to 2.61%. The net impact of these two changes increased the present value of all pension benefits under the Pension Plan and the Executive Supplemental Pension Plan, from December 31, 2019 to December 31, 2020.

•Defined Contribution Supplemental Executive Retirement Plan (the “Defined Contribution SERP”): The Defined Contribution SERP is provided to certain executives to motivate and retain key management by providing a non-qualified retirement benefit that is payable at retirement, disability, death and certain other events. The NEOs who participated in the plan in 2020 are as follows: Messrs. Tomson, Cole, Cosgrove, DiFabio and Krebs.

The Defined Contribution SERP is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly-compensated employees under Section 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974. The Defined Contribution SERP’s expense is the Corporation’s annual contribution plus interest credits.

Defined Contribution SERP Table:



Name	Registrant Contribution(1)	Aggregate Earnings(1)	Aggregate Balance(2)
	($)	($)	($)

Anders M. Tomson	96,000	2,862	634,164

Karl F. Krebs	51,237	1,504	333,997

Loren D. Cole	43,309	210	82,775

Peter K. Cosgrove	46,402	84	62,114

Louis C. DiFabio	45,003	641	165,506

(1) Contributions are reflected in the “Summary Compensation Table” section for 2020. No aggregate earnings were reported in the “Summary Compensation Table” section.

(2) Amounts reflected in the “Summary Compensation Table” section for previous years for Messrs. Tomson, Krebs, Cole, Cosgrove and DiFabio include $505,529, $267,103, $39,257, $0 and $117,363, respectively.

Pay Ratio Disclosure:

The Bank’s compensation program is designed to motivate all employees to carry out the Corporation’s Mission of value for our shareholders, value for our clients, value for our employees and value for our communities. The Corporation aims to pay appropriate compensation at all levels within the Bank.

The following is a reasonable estimate calculation, prepared in accordance with SEC rules, of the ratio of the total annual compensation paid to Mr. Tomson, our President & CEO, to the median of the total annual compensation of all of the Bank’s employees except Mr. Tomson, for 2020.

Our median employee for this calculation was determined using wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for all of our active employees, excluding Mr. Tomson, as of December 31, 2020. We included all employees, whether employed on a full-time, part-time or seasonal basis. We annualized the data used in the calculation only for our full-time employees who were hired during 2020.

After identifying the median employees as described above, we determined that the median employee had a total annual compensation of $42,665.65 for 2020, which was determined using the same methodology as required by the SEC for named executive officers as set forth in the “Summary Compensation Table” section. The total annual compensation for Mr. Tomson for the same period shown in the “Summary Compensation Table” section was $772,484.20. The ratio of Mr. Tomson’s annual compensation for 2020 to the median total annual compensation of all other employees for 2020 was estimated to be 1-to-18.

Agreements with Named Executive Officers

The following paragraph summarizes the estimated amounts payable to each of the NEOs under an employment agreement or change in control agreement assuming employment was terminated December 31, 2020.

The Bank has entered into a Change in Control Agreement with Mr. Tomson, President and CEO. If within 12 months following a change in control, Mr. Tomson’s employment is terminated without cause or Mr. Tomson resigns for good reason, the agreement provides for a cash severance payment equal to 2.99 times the highest annual rate of base salary and highest annual incentive award paid to, or earned by, Mr. Tomson for any of the two calendar years ending with the year in which Mr. Tomson’s employment ended. See “Potential Payments Table” below for more information.

The Bank has entered into Change in Control Agreements with executive officers Cole, Cosgrove, Krebs and DiFabio. If within 12 months following a change in control, the executive’s employment is terminated without cause or the executive resigns for good reason, the agreements provide for payments of 2.0 times the executive’s highest annual rate of base salary and highest annual incentive award paid to, or earned by, the executive for any of the two calendar years ending with the year in which the executive’s employment ended. Payments would be made in equal monthly installments for twenty-four (24) months following the effective date of the termination. The executive’s shares of restricted stock shall immediately vest and all restrictions thereon shall lapse. See “Potential Payments Table” below for more information.

Potential Payments Table:



Name and Principal Position	Type of Payment	Involuntary Termination Without Cause or Voluntary Termination For Good Reason Within One Year of Change in Control	Voluntary Resignation	Retirement	Disability	Death	Involuntary Termination With Cause	Involuntary Termination Without Cause or Voluntary Termination for Good Reason
		($)	($)	($)	($)	($)	($)	($)

	Severance	2,309,728	—	—	—	—	—	—
Anders M. Tomson	Restricted Stock	—	—	—	—	—	—	—
President and CEO	Non-Qualified SERP	634,164	507,331	507,331	634,164	634,164	—	507,331
	Disability	—	—	—	308,841	—	—	—
	Total	2,943,892	507,331	507,331	943,005	634,164	—	507,331

	Severance	822,371	—	—	—	—	—	—
Karl F. Krebs	Restricted Stock	144,050	—	—	144,050	144,050	—	—
Executive Vice President,	Non-Qualified SERP	333,997	233,798	233,798	333,997	333,997	—	233,798
CFO and Treasurer	Disability	—	—	—	45,786	—	—	—
	Total	1,300,418	233,798	233,798	523,833	478,047	—	233,798

	Severance	673,085	—	—	—	—	—	—
Loren D. Cole	Restricted Stock	87,727	—	—	87,727	87,727	—	—
Executive Vice President,	Non-Qualified SERP	82,775	—	—	82,775	82,775	—	—
and CIO	Disability	—	—	—	415,356	—	—	—
	Total	843,587	—	—	585,858	170,502	—	—

	Severance	684,019	—	—	—	—	—	—
Peter K. Cosgrove	Restricted Stock	42,573	—	—	42,573	42,573	—	—
Executive Vice President,	Non-Qualified SERP	62,114	—	—	62,114	62,114	—	—
CCO and CRO	Disability	—	—

SEC Form DEF 14A filed by Chemung Financial Corp