DEF 14A

DEF 14A 1 d79395ddef14a.htm DEF 14A DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

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FINANCIAL INSTITUTIONS, INC.

(Name of Registrant as Specified In Its Charter)

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


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LOGO

LETTER FROM OUR CHAIR

DEAR FELLOW SHAREHOLDERS:

2020 was a year of unprecedented global challenges creating the most difficult operating and financial environment in our history; and we are extremely proud of the effort expended by all of our associates to work through a myriad of challenges to emerge stronger than ever. Management’s rapid activation of our business continuity plan and implementation of initiatives to protect associates and support customers was quick and effective. We thank all our associates for their adaptability and dedication.

Our Board and management worked more closely than ever in 2020, albeit in a virtual format, with additional meetings and interim updates on actions and changing business and economic conditions. There was also regular engagement on strategic priorities and management’s progress in achieving goals established in our 2020 and long-term plans. The Board’s 2020 multi-day annual strategic planning session focused on several topics including economic outlook, technology and the future of banking, transition to agility, line of business profitability and reviews, and business continuity and resiliency.

Our strong corporate governance framework continues to support the company’s strategy and the Board is actively engaged in the oversight of risk, compensation programs, corporate responsibility, diversity and sustainability, and succession planning.

The company has invested in talent and provided meaningful leadership development in recent years, culminating in the February 2021 announcement of an optimized organizational structure to meet evolving customer needs and expectations. Several internal promotions were included in the restructuring, demonstrating our confidence in these individuals to lead our organization as it expands and matures. Their strong experience and industry knowledge will benefit all stakeholders.

The Board continues to focus on its own succession planning and board refreshment. I am pleased to announce two new nominees on this year’s slate of directors: Mauricio Riveros and Mark Zupan. Mauricio and Mark are exceptional candidates who will bring diverse work and life experiences to our Board. I would also like to take this opportunity to thank retiring Board member Karl Anderson for his 15 years of dedicated service. We have benefitted from Karl’s strong legal and banking experiences and leadership of Board committees, and we wish him all the best in his future endeavors.

We believe that strong corporate governance includes consistent engagement with our shareholders and it remains a priority. We look forward to engaging with you and incorporating your feedback and insights.

On behalf of my fellow directors, thank you for investing in Financial Institutions, Inc.

Sincerely,

LOGO

Robert N. Latella

Chair of the Board

April 29, 2021

Financial Institutions, Inc.

LETTER FROM OUR CEO

FELLOW SHAREHOLDERS:

I am proud of the many accomplishments of our organization in 2020. We successfully navigated the public health and economic crisis by delivering uninterrupted banking, investment and insurance services, providing critical support to our customers and adapting work environments to ensure the health safety of associates and customers.

We also made significant progress on strategic initiatives as demonstrated by growth in loans and deposits, increased liquidity, the successful second quarter launch of our new online and mobile banking platform, a streamlining of processes and operations to enhance customer experiences while driving our efficiency ratio lower, and the execution of capital market activities to provide important balance sheet flexibility. These things were all made possible because of the commitment and dedication of our Board, management team and all Five Star associates.

The events of 2020 also highlighted the issue of social justice. We are committed to supporting our people and fostering a company culture that values and respects all individuals. To further this commitment, we established a Diversity & Inclusion Advisory Council to evaluate effective practices and provide learning opportunities for our leadership and all associates. As CEO, I am committed to doing all we can to support a more inclusive and diverse organization and we look forward to reporting our progress in future reports.

I invite you to attend our Annual Meeting of Shareholders on June 16, 2021, via our virtual meeting at www.virtualshareholdermeeting.com/FISI2021. We made the difficult decision to hold a virtual-only meeting due to ongoing concerns regarding the COVID-19 pandemic. The business to be conducted at the meeting is explained in the attached Notice of Annual Meeting and Proxy Statement.

We are pleased to once again furnish proxy materials to our shareholders over the Internet. We believe that this process expedites shareholders’ receipt of proxy materials and lowers expenses, while reducing the environmental impact of our meeting.

Whether or not you plan to attend the meeting, in person or virtually, please read the Proxy Statement and vote your shares. Instructions for voting by Internet, phone or mail are included in your Notice of Internet Availability of Proxy Materials or proxy card (if you receive a full set of materials by mail). We hope that after you have reviewed the Proxy Statement you will vote in accordance with the Board’s recommendations.

On behalf of the senior leadership team at Financial Institutions, Inc., we want to thank you for your support and investment in our company. We look forward to executing our strategies and taking advantage of opportunities to deliver enhanced experiences for our associates and customers and stronger returns for shareholders.

Cordially,

LOGO

Martin K. Birmingham

President and Chief Executive Officer

April 29, 2021

Financial Institutions, Inc.

TABLE OF CONTENTS


Notice of the Annual Meeting of Shareholders			1

Corporate Governance and Board Matters			3

Separate Chair and Chief Executive Officer			3

Board of Directors Role in Risk Oversight			3

Succession Planning			3

Shareholder Engagement			3

Director Resignation Policy			4

Director and Executive Stock Ownership Policies			4

Stock Ownership Requirements			4

Clawback Provision			5

Derivatives, Pledging and Hedging Policy			5

Certain Relationships and Related Party Transactions			5

Corporate Responsibility and Sustainability			5

Corporate Citizenship			5

Culture			6

Advancing Inclusion and Diversity			7

Ethics			7

Supporting Our Communities			8

Environmental Sustainability			9

Corporate Strategy and Enterprise Risk Management			9

Board Composition and Director Nominees			10

Director Independence and Qualifications			10

Board Self-Assessment			10

Shareholder Nominees			10

Communication with Our Board			10

Proposal 1. Election of Directors			11

Business Experience and Qualification of Directors			12

Director Nominees			12

Directors Continuing in Office			14

Retiring Director			17

Board of Director Qualifications			18

Diversity and Tenure of Our Director Nominees and Directors Continuing in Office			19

Diversity of Skills and Experiences Represented on our Board			20

Board Meetings and Committees			20

Committees of the Board			21

Director Compensation			24

Annual Meeting Attendance			25

Proposal 2. Advisory Vote to Approve the Compensation of Our Named Executive Officers			26

Executive Compensation			27

Compensation Discussion and Analysis (CD&A)			27

Introduction			27



Executive Summary			27

Shareholder Input and Outreach			33

Compensation Philosophy and Best Practices			34

Program Elements and Pay Decisions			35

Compensation Process			43

Other Factors Affecting Executive Compensation			46

Management Development & Compensation Committee Report			48

Executive Compensation Tables			49

Summary Compensation Table			49

All Other Compensation			50

2020 Grants of Plan-Based Awards			51

Outstanding Equity Awards at December 31, 2020			52

Restricted Stock Vested in 2020			53

Pension Benefits			53

Potential Payments Upon Termination of Employment or Change in Control			55

Management Development & Compensation Committee Interlocks and Insider Participation			58

CEO Pay Ratio			58

Proposal 3. Approval of Amended and Restated 2015 Long-Term Incentive Plan

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SEC Form DEF 14A filed by Financial Institutions, Inc.