pbhc-def14a_20220513.htm

DEF 14A 1 pbhc-def14a_20220513.htm DEF 14A pbhc-def14a_20220513.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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

Exchange Act of 1934 (Amendment No. )

Filed by the Registrant x

Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐	Preliminary Proxy Statement

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x	Definitive Proxy Statement

☐	Definitive Additional Materials

☐	Soliciting Material Pursuant to §240.14a-12

PATHFINDER BANCORP, INC.

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check all boxes that apply):

x	No fee required

☐	Fee paid previously with preliminary materials

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

April 8, 2022

Dear Shareholder:

We cordially invite you to attend the Annual Meeting of Shareholders of Pathfinder Bancorp, Inc. The Annual Meeting will be held at 10:00 a.m., Eastern Time, on May 13, 2022. We are pleased that this year’s Annual Meeting will be conducted solely online via live webcast. There is no physical location for the Annual Meeting. You will be able to attend and participate in the Annual Meeting online, vote your shares electronically and submit your questions prior to and during the meeting by visiting: www.meetnow.global/MY9FFMD. There is no password requirement for this meeting. Please note that this virtual meeting service is not supported by Internet Explorer.

The enclosed Notice of Annual Meeting and Proxy Statement describe the formal business to be transacted. During the Annual Meeting, we will also report on our operations. Directors and officers, as well as a representative of our independent registered public accounting firm, will be present to respond to questions that shareholders may properly present.

The Annual Meeting is being held so that shareholders may consider the election of six directors and the appointment of Bonadio & Co., LLP, as our independent registered public accounting firm for the year ending December 31, 2022.

For the reasons set forth in the Proxy Statement, the Board of Directors unanimously recommends a vote “FOR” the election of the nominated directors and “FOR” the ratification of the appointment of Bonadio & Co., LLP as our independent registered public accounting firm for the year ending December 31, 2022.

On behalf of the Board of Directors, we urge you to sign, date and return the enclosed proxy card as soon as possible, or vote by telephone or internet as directed on our Proxy Card enclosed, even if you currently plan to attend the Annual Meeting. This will not prevent you from voting at the Annual Meeting, but will assure that your vote is counted if you are unable to attend the meeting. Your vote is important, regardless of the number of shares that you own.

Sincerely,

Thomas W. Schneider

President and Chief Executive Officer

Pathfinder Bancorp, Inc.
214 West First Street
Oswego, New York 13126
(315) 343-0057

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS – May 13, 2022

Notice is hereby given that the Annual Meeting of Pathfinder Bancorp, Inc. will be held at 10:00 a.m., Eastern Time, on May 13, 2022. This year’s Annual Meeting will be conducted solely online via live webcast. There is no physical location for the Annual Meeting. You will be able to attend and participate in the Annual Meeting online, vote your shares electronically and submit your questions prior to and during the meeting by visiting: www.meetnow.global/MY9FFMD. There is no password requirement for this meeting. Please note that this virtual meeting service is not supported by Internet Explorer. Details regarding how to participate in the meeting online are more fully described in the accompanying proxy statement.

A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.

The Annual Meeting is for the purpose of considering and acting upon:

(1)

The election of six directors; and

(2)

The ratification of the appointment of Bonadio & Co., LLP as our independent registered public accounting firm for the year ending December 31, 2022; and

such other matters as may properly come before the Annual Meeting, or any adjournments thereof. The Board of Directors is not aware of any other business to come before the Annual Meeting.

Any action may be taken on the foregoing proposals at the Annual Meeting on the date specified above, or on any date or dates to which the Annual Meeting may be adjourned. Shareholders of record at the close of business on March 24, 2022 are the shareholders entitled to vote at the Annual Meeting, and any adjournments thereof.

EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE BY TELEPHONE OR INTERNET AS DIRECTED ON OUR PROXY CARD ENCLOSED. ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING WITH OUR CORPORATE SECRETARY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. ANY SHAREHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE ELECTRONICALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING. HOWEVER, IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED TO REGISTER IN ADVANCE TO ATTEND THE ANNUAL MEETING VIRTUALLY ON THE INTERNET. OUR PROXY STATEMENT, ANNUAL REPORT TO SHAREHOLDERS AND PROXY CARD ARE AVAILABLE ON THE INTERNET AT WWW.PATHFINDERBANK.COM/ANNUALMEETING.

By Order of the Board of Directors

April 8, 2022William O’Brien, Secretary

IMPORTANT: A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.

TABLE OF CONTENTS


			PAGE #
I.	Information about this Proxy Statement and the Annual Meeting			4
	A.	Date, Time and Place			4
	B.	Voting Securities and Principal Holders Thereof			4
	C.	Proxy Solicitation Costs			5
	D.	Revocation of Proxies			5
	E.	Conduct of Meeting			6
	F.	Attendance of Directors at the Annual Meeting			6
	G.	Other Matters			6
	H.	Smaller Reporting Company			6
II.	Our Governance and Beneficial Ownership			6
	A.	Leadership Structure and Risk Oversight Rule of the Board of Directors			6
	B.	Independence and Diversity of Directors			6
	C.	Security Ownership of Certain Beneficial Owners and Management			7
	D.	Delinquent Section 16(a) Reports			9
	E.	Transactions with Certain Related Persons			9
	F.	Anti-Hedging Policy			10
	G.	Code of Ethics			10
	H.	Shareholder Communications			10
III.	Meetings and Committees of the Board of Directors			10
	A.	Nominating/Governance Committee			11
	B.	Compensation Committee			12
	C.	Audit Committee			12
	D.	Asset/Liability Committee (ALCO)			13
	E.	Executive/Loan Committee			13
	F.	Other Committees			13
IV	Compensation Disclosure			13
	A.	Executive Compensation			13
	B.	Compensation of our Named Executive Officers			15
	C.	Directors’ Compensation			19
V.	Proposal 1 – Election of Directors			20
	A.	Composition of our Board			20
	B.	Nominees			21
	C.	Continuing Directors			23
	D.	Executive Officers who are not Directors			24
VI.	Proposal 2– Ratification of Appointment of Auditors			24
	A.	Audit and Related Fees for 2021			25
	B.	Audit Committee Report			25
VII.	Next Year			26

Pathfinder Bancorp, Inc.
214 West First Street
Oswego, New York 13126
(315) 343-0057

I.	INFORMATION ABOUT THIS PROXY STATEMENT AND THE ANNUAL MEETING

DATE, TIME AND PLACE

This proxy statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Pathfinder Bancorp, Inc. (the “Company”) to be used at our Annual Meeting of Shareholders (the “Annual Meeting”), which will be held on May 13, 2022 at 10:00 a.m., Eastern Time, and all adjournments of the Annual Meeting. The accompanying notice of Annual Meeting and this proxy statement are first being mailed to shareholders on or about April 8, 2022.

The Annual Meeting will be a completely virtual meeting of shareholders, which will be conducted exclusively by webcast. You are entitled to participate in the Annual Meeting only if you were a shareholder of the Company as of the close of business on March 24, 2022 (the “Record Date”), or if you hold a valid proxy for the Annual Meeting. No physical meeting will be held. If you are unable to access the virtual meeting and need assistance finding a place to access the Annual Meeting on the internet, please contact the Company at 315-207-8039 prior to May 10, 2022.

You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.meetnow.global/MY9FFMD. There is no password requirement for this meeting. Please note that this virtual meeting service is not supported by Internet Explorer. You also will be able to vote your shares online by attending the Annual Meeting by webcast. To participate in the Annual Meeting, you will need to review the information included on your proxy card or on the instructions that accompanied your proxy materials. The online meeting will begin promptly at 10:00 a.m. Eastern Time. We encourage you to access the meeting prior to the start time leaving ample time for the check in. Please follow the registration instructions as outlined in this proxy statement.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

Holders of record of our common stock, par value $0.01 per share, as of the close of business on the Record Date, are entitled to one vote for each share they own. As of the Record Date, we had 4,603,184 shares of voting common stock outstanding. The presence at the Annual Meeting or by proxy of a majority of the outstanding shares of voting common stock entitled to vote is necessary to constitute a quorum at the Annual Meeting. If a shareholder holds shares in street name (i.e., the shares are held in a stock brokerage account or by a bank, trust, or other institution) and does not provide voting instructions to the holder of the account for non-discretionary voting items such as the election of directors, such shares will be considered “Broker non-votes.” Broker non-votes and proxies marked “abstain” will be counted for purposes of determining that a quorum is present, but will not be considered as votes cast as to the matters to be considered.

As to the election of directors, shareholders may cast their votes “For” or “Withhold.” As to the ratification of our independent registered public-accounting firm, shareholders may cast their votes “For,” “Against” or “Abstain.

Directors are elected by a plurality of votes cast, without regard to either broker non-votes, or proxies as to which the authority to vote for the nominees being proposed is withheld. The affirmative vote of holders of a majority of the total votes cast at the Annual Meeting or by proxy, without regard to broker non-votes or proxies as to which shareholders abstain, is required for the ratification of Bonadio & Co., LLP as our independent registered public accounting firm (the “Auditors”) for the year ending December 31, 2022.

In accordance with the provisions of our Articles of Incorporation, record holders of common stock who beneficially own in excess of 10% of the outstanding shares of our voting common stock (the “Limit”) are not entitled to any vote with respect to the shares held in excess of the Limit unless approved by our Board of Directors. Our Articles of Incorporation authorize the Board of Directors (i) to make all determinations necessary to implement and apply the Limit, including determining whether

persons or entities are acting in concert, and (ii) to demand that any person who is reasonably believed to beneficially own stock in excess of the Limit supply information to us to enable the Board of Directors to implement and apply the Limit. However, pursuant to our Articles of Incorporation, our employee stock ownership plan will not be deemed to beneficially own any “over the limit Company stock” held under such plan. Castle Creek Capital Partners VII, L.P. has been approved by the Board of Directors to vote shares held in excess of the Limit.

If you participate in the Pathfinder Bank (“Pathfinder Bank” or the “Bank”) Employee Stock Ownership Plan (the “ESOP”), you will receive a voting instruction card so that you may direct the trustee to vote on your behalf under the plan. Under the terms of the ESOP, the ESOP trustee votes all shares held by the ESOP, but each ESOP participant may direct the trustee how to vote the shares of voting common stock allocated to his or her account. The ESOP trustee, subject to the exercise of its fiduciary responsibilities, will vote all unallocated shares of Pathfinder Bancorp, Inc. common stock held by the ESOP and allocated shares for which no voting instructions are received in the same proportion as shares for which it has received timely voting instructions. The deadline for returning your ESOP voting instructions is May 4, 2022.

If you are a registered shareholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the Annual Meeting virtually on the Internet. Please follow the instructions on the proxy card that you received.

If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the Annual Meeting virtually on the Internet.

To register to attend the Annual Meeting online by webcast you must submit proof of your proxy power (legal proxy) reflecting your Company holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 11, 2022.

You will receive a confirmation of your registration by email after we receive your registration materials. Requests for registration should be directed to us at the following:

•

By email - Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com

•

By mail:

Computershare

Pathfinder Bancorp, Inc. Legal Proxy

P.O. Box 43001

Providence, RI 02940-3001

PROXY SOLICITATION COSTS

The Company will pay all costs relating to the solicitation of proxies. Proxies may be solicited by officers, directors, and staff members of the Company personally, by mail, by telephone, or by other electronic means. The Company will also reimburse brokers, custodians, nominees, and fiduciaries for reasonable expenses in forwarding proxy materials to beneficial owners of the Company’s stock.

REVOCATION OF PROXIES

Shareholders who sign the proxies we are soliciting will retain the right to revoke them in the manner described below. Unless so revoked, the shares represented by such proxies will be voted at the Annual Meeting and all adjournments thereof. Proxies solicited on behalf of the Board of Directors will be voted in accordance with the directions given thereon. Where no instructions are indicated, validly executed proxies will be voted in favor of all proposals. If any other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy will vote the shares as directed by a majority of the Board of Directors in attendance at the Annual Meeting. We know of no additional matters that will be presented for consideration at the Annual Meeting.

Proxies may be revoked by sending written notice of revocation to our Secretary, at the address shown above, by delivering to us a duly executed proxy bearing a later date or by attending the Annual Meeting and voting. The presence at the Annual Meeting of any shareholder who had returned a proxy will not revoke the proxy unless the shareholder votes electronically at

the Annual Meeting or delivers a written revocation to our Secretary prior to the voting of the proxy. If you are a shareholder whose shares are not registered in your name, you must register in advance following the instructions described above.

CONDUCT OF MEETING

In accordance with our bylaws, and by action of the Board of Directors, the Chair of the Board will preside over the Annual Meeting. The Chair of the Board has broad authority to ensure the orderly conduct of the meeting. This includes discretion to recognize shareholders who have questions, and the right to determine the extent of discussion on each item of business. Rules governing the conduct of the meeting have been established and will be available at the meeting along with the agenda of the matters to be considered at the Annual Meeting.

ATTENDANCE OF DIRECTORS AT THE ANNUAL MEETING

The Company does not have a policy regarding the attendance of Board members at the Annual Meeting, although all are encouraged to attend. Eight directors attended the 2021 Annual Meeting.

OTHER MATTERS

The Board of Directors is not aware of any business to come before the Annual Meeting other than the matters described in this Proxy Statement. However, if any matters should properly come before the Annual Meeting, it is intended that holders of the proxies will act as directed by a majority of the Board of Directors, except for matters related to the conduct of the Annual Meeting, as to which they shall act in accordance with their best judgment. The Board of Directors intends to exercise its discretionary authority to the fullest extent permitted under Maryland Law and the Securities Exchange Act of 1934.

SMALLER REPORTING COMPANY

The Company has elected to prepare this Proxy Statement and other annual and periodic reports as a “Smaller Reporting Company” consistent with rules of the Securities and Exchange Commission.

II.	OUR GOVERNANCE AND BENEFICIAL OWNERSHIP

LEADERSHIP STRUCTURE AND RISK OVERSIGHT ROLE OF THE BOARD OF DIRECTORS

Our Board has a separate person serve as Chief Executive Officer (“CEO”) and Chair of the Board and has functioned in that manner since the year 2000. Mr. Burritt, our Chair, is an independent director as defined by NASDAQ’s listing requirements. The Company has spent significant time evaluating its leadership structure and has determined that, under the present circumstances, separating the Chair and CEO positions is appropriate. We believe this separation allows our Board to concentrate on policy and strategy and our CEO the time to concentrate on executing such strategy. Additionally, we believe this structure is most appropriate given the Board’s role in monitoring the Company’s execution of its business plan and the risk elements associated with such execution.

The primary risks facing the Bank, as the operating subsidiary of the Company, are interest rate risk, liquidity risk, investment risk, credit risk, risks associated with inadequate allowance for loan losses, cyber security risks, competitive risks and regulatory risks. While the full Board is actively engaged in monitoring all of the noted risks, we have further assigned specific responsibilities to Board Committees for detailed review. The Asset/Liability Committee, with the assistance of professional consultants, monitors interest rate risk, investment risk and liquidity risk. The Executive/Loan Committee, with the assistance of a professional loan review consultant, monitors the credit risks and risks associated with allowance for loan losses. The Technology Steering Committee, with the assistance of professional experts, monitors and responds to cyber risks. In addition, we purchase internet liability and other insurance to protect us against cyber security risks. The Audit/Compliance Committee monitors regulatory risks. Every member of our Board engages in continuing education in an effort to monitor Enterprise Risk Management issues so that they can effectively engage in their oversight role.

INDEPENDENCE AND DIVERSITY OF DIRECTORS

Our common stock is listed on the NASDAQ Capital Market. The Board of Directors has determined that all of its directors, with the exception of Mr. Schneider and Mr. Funiciello, are “independent” pursuant to NASDAQ’s listing requirements. In

evaluating the independence of our independent directors, we considered the following transactions between us and our independent directors during 2021 that are not required to be disclosed under “Transactions with Certain Related Persons:”

•

The law firm of which our Director William A. Barclay is a partner, was paid for real estate loan closings by borrowers and other legal matters in the amount of $38,445.

•

The firm of which our Director David A. Ayoub is a partner, was paid $43,293 in fees associated with their assistance in the preparation of application forms for the Paycheck Protection Program, including referrals made to Pathfinder Bank.

Our Board of Directors has determined that these transactions did not impair the independence of the named directors. Our independent directors hold executive sessions no less than twice a year.

Although the Nominating Committee does not have a formal policy with regard to the consideration of diversity in identifying a director nominee, diversity is considered in our review of candidates. The Nominating Committee hopes to continue to diversify our Board membership. As considered by our Board, diversity includes not only gender and ethnicity, but the various perspectives that come from having differing viewpoints, geographic and cultural backgrounds, and life experiences.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Persons and groups who beneficially own in excess of 5% of the Company's voting common stock are required to file Schedule 13G or Schedule 13D reports with the Securities and Exchange Commission (the “SEC”) regarding such ownership. The following table sets forth, as of the date of the most recent reports, the shares of voting common stock beneficially owned by each person or entity that was the beneficial owner of more than 5% of our outstanding shares of voting common stock. None of the shares beneficially owned by directors, executive officers or nominees to the board of directors have been pledged as security or collateral for any loans.

The following table represents the ownership of our Schedule 13D and 13G filers as of the Record Date:

Name and Address of Beneficial Owners	Amount Beneficially Owned		Percentage of Shares of Voting Common Stock Outstanding
Castlecreek Capital Partners VII, LP⁽¹⁾		409,908	8.9%
Castlecreek Capital VII LLC
6051 El Tordo
PO Box 1329
Rancho Santa Fe, CA 92067

Pathfinder Bank Employee Stock Ownership Plan Trust ⁽²⁾		405,383	8.8%
c/o Pentegra Services, Inc.
2 Enterprise Drive, Suite 408
Shelton, CT 06484

Minerva Advisors, LLC ⁽³⁾		251,746	5.5%
Minerva Group, LP
Minerva GP, LP
Minerva GP, Inc.
David P. Cohen
50 Monument Road, Suite 201
Bala Cynwyd, PA 19004

(1)

Based on information reported on a Schedule 13D/A filed with the Securities and Exchange Commission on November 17, 2020, Castle Creek Capital Partners VII, LP and Castle Creek Capital VII, LLC reported shared voting power for 409,908 shares of our voting common stock and shared dispositive power over 409,908 shares of our voting common stock.

(2)

Based on information reported on a Schedule 13G/A filed with the Securities and Exchange Commission on February 11, 2022, Pentegra Trust Company, the trustee for the Pathfinder Bank Employee Stock Ownership Plan, reported sole voting power for 72,366 shares of our voting common stock, shared voting power for 333,017 shares of our voting common stock, sole dispositive power over 376,886 shares of our voting common stock and shared dispositive power over 28,497 shares of our voting common stock.

(3)

Based on information reported on a Schedule 13G/A filed with the Securities and Exchange Commission on February 14, 2022, Minerva Advisors, LLC, Minerva Group, LP, Minerva GP, LP, Minerva GP, Inc., and David P. Cohen reported sole dispositive and voting power with respect to 204,250 shares of our voting common stock and Minerva Advisors, LLC and David P. Cohen reported shared dispositive and voting power with respect to 47,496 shares of our voting common stock.

The following table sets forth as of the Record Date, the shares of common stock beneficially owned by directors, executive officers and other management for whom we file Section 16 reports.

Name and Address of Beneficial Owners	Number of Shares Owned and Nature of Beneficial Ownership ⁽¹⁾		Number of Unexercised Stock Options which are included in Beneficial Ownership⁽²⁾		Percentage of Shares of Voting Common Stock Outstanding
Directors and Executive Officers⁽³⁾	#		#		%
David A. Ayoub ⁽⁴⁾		39,948		17,023		0.9
William A. Barclay ⁽⁵⁾		90,750		8,787		2.0
Chris R. Burritt ⁽⁶⁾		56,691		8,787		1.2
John P. Funiciello ⁽⁷⁾		45,537		8,787		1.0
Adam C. Gagas ⁽⁸⁾		201,052		17,023		4.4
Melanie Littlejohn ⁽⁹⁾		12,302		8,787		0.3
John F. Sharkey, III ⁽¹⁰⁾		51,538		-		1.1
Lloyd "Buddy" Stemple⁽¹¹⁾		71,570		-		1.6
Thomas W. Schneider ⁽¹²⁾		94,114		21,407		2.0
James A. Dowd ⁽¹³⁾		67,863		13,556		1.5
Ronald Tascarella ⁽¹⁴⁾		99,219		13,556		2.2
Daniel R. Phillips ⁽¹⁵⁾		60,646		33,793		1.3
Calvin L. Corriders⁽¹⁶⁾		49,477		17,055		1.1
Walter F. Rusnak ⁽¹⁷⁾		76,495		13,222		1.7
William O'Brien⁽¹⁸⁾		32,397		17,055		0.7
All Directors and Executive Officers as a Group (15 persons)		1,049,599		198,838		22.8
Section 16 Filers

Robert G. Butkowski		27,075		3,136		0.6
Ronald G. Tascarella		22,844		3,609		0.5

(1)

A person is deemed to be the beneficial owner, for purposes of this table, of any shares of voting common stock if he has shared voting or investment power with respect to such security, or has a right to acquire beneficial ownership at any time within 60 days from the Record Date. As used herein, “voting power” is the power to vote or direct the voting of shares and “investment power” is the power to dispose or direct the disposition of shares. This table includes all shares held directly, as well as by spouses and minor children, in trust and other indirect ownership, over which shares the named individuals effectively exercise sole or shared voting and investment power. Unless otherwise indicated, the named individual has sole voting and investment power. ESOP shares allocated to the officers are also included within their respective totals.

(2)

These options are exercisable within 60 days of the Record Date. They cannot be voted until exercised.

(3)

The mailing address for each person listed is 214 West First Street, Oswego, New York 13126.

(4)

Mr. Ayoub’s shares include 17,763 in a 401(k) plan and 1,647 in an IRA.

(5)

Mr. Barclay has sole voting and investment power over 19,987 shares and shared investment and voting power over 61,976 shares.

(6)

Mr. Burritt’s shares include 25,000 in an IRA.

(7)

Mr. Funiciello’s shares include 5,000 in an IRA.

(8)

Mr. Gagas’s shares include 14,300 in an IRA. He has sole voting and investment power over 34,365 shares and shared investment and voting power over 149,664 shares.

(9)

Ms. Littlejohn has sole voting and investment power over 3,515 shares.

(10)

Mr. Sharkey’s shares include 20,000 in an IRA.

(11)

Mr. Stemple has sole voting and investment power over 69,070 shares and shared investment and voting power over 2,500 shares.

(12)

Mr. Schneider’s shares include 23,362 in Pathfinder Bank’s 401(k) plan and 19,233 in Pathfinder Bank’s ESOP. He also has 2,259 restricted stock units that will vest within 60 days of the record date.

(13)

Mr. Dowd’s shares include 16,607 in Pathfinder Bank’s 401(k) plan and 18,055 in Pathfinder Bank’s ESOP. He also has 1,054 restricted stock units that will vest within 60 days of the record date.

(14)

Mr. Tascarella’s shares include 20,292 in Pathfinder Bank’s 401(k) plan and 7,821 in Pathfinder Bank’s ESOP. He has sole voting and investment power over 79,611 shares and shared investment and voting power over 5,000 shares. He also has 1,054 restricted stock units that will vest within 60 days of the record date.

(15)

Mr. Phillip’s shares include 6,021 in Pathfinder Bank’s 401(k) plan and 11,510 in Pathfinder Bank’s ESOP. He also has 1,054 restricted stock units that will vest within 60 days of the record date.

(16)

Mr. Corrider’s shares include 15,974 in Pathfinder Bank’s 401(k) plan and 5,695 in Pathfinder Bank’s ESOP.

(17)

Mr. Rusnak’s shares include 25,000 in an IRA and 3,133 in Pathfinder Bank’s ESOP.

(18)

Mr. O’Brien’s shares include 3,255 in Pathfinder Bank’s 401(k) plan and 7,201 in Pathfinder Bank’s ESOP.

DELINQUENT SECTION 16(a) REPORTS

Our common stock is registered with the SEC pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”). Our executive officers and directors and beneficial owners of greater than 10% of our common stock (“10% beneficial owners”) are required to file reports on Forms 3, 4 and 5 with the SEC disclosing beneficial ownership and changes in beneficial ownership of the common stock. SEC rules require disclosure in our Proxy Statement and Annual Report on Form 10-K of the failure of an executive officer, director or 10% beneficial owner of our common stock to file a Form 3, 4, or 5 on a timely basis. Thomas Schneider filed one late Form 4 reporting four transactions that occurred over a four day period.

TRANSACTIONS WITH CERTAIN RELATED PERSONS

The Sarbanes-Oxley Act of 2002 generally prohibits an issuer from (i) extending or maintaining credit; (ii) arranging for the extension of credit; or (iii) renewing an extension of credit in the form of a personal loan for an officer or director. There are several exceptions to this general prohibition, however, one of which is applicable to us. This prohibition does not apply to loans made by a depository institution that is insured by the FDIC and is subject to the insider lending restrictions of the Federal Reserve Act. Regulations permit executive officers and directors to receive the same loan terms through programs that are widely available to other employees, as long as the executive officer or director is not given preferential treatment compared to the other participating employees. The Bank currently has loans to each of the following officers and/or directors or their immediate families: David Ayoub, Chris Burritt, James Dowd, John Funiciello, William O’Brien, Daniel Phillips, Thomas Schneider, John Sharkey III, Lloyd Stemple and Ronald Tascarella.

After one year of service at the Bank, full-time employees and directors are entitled to receive a primary residence mortgage loan at an interest rate of 0.25% below market, consistent with applicable laws and regulations. Until 2021, the rate was at 0.50% below market.

The chart below lists the executive officers and directors who participated in the employee mortgage loan program during the years ended December 31, 2021 and 2020 and certain information with respect to their loans. No other directors or executive officers participated in the employee mortgage loan program during the years ended December 31, 2021 and 2020.

	Largest Aggregate				Non-		Principal		Principal Paid		Interest Paid
	Balance 01/01/20		Interest		Employee		Balance		01/01/2020 to		01/01/20 to
	to 12/31/21		Rate		Interest Rate		12/31/2021		12/31/2021		12/31/2021
Name	$		%		%		$		$		$
Thomas Schneider		151,364		5.250		5.750		-		151,364		9,965
Thomas Schneider		244,000		2.700		2.950		240,466		3,534		4,782
James Dowd		69,804		2.625		3.125		-		68,904		1,168
James Dowd		147,000		2.250		2.500		-		147,000		4,014
James Dowd		208,000		2.125		2.375		208,000		-		189
Lloyd Stemple		148,063		2.750		3.250		110,593		37,470		7,165
William O'Brien		127,178		2.500		3.000		94,583		32,596		5,816
Daniel Phillips		60,435		3.625		4.125		-		60,435		1,059

Other than the loans noted in the above table, all other loans made to directors or executive officers:

•

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 Company; and

•

did not involve more than normal risk of collectability or present other unfavorable features.

All transactions between us and our executive officers, directors, holders of 10% or more of the shares of the Company’s common stock and affiliates thereof, must be approved by a majority of our independent outside directors not having any interest in the transaction, pursuant to our Code of Ethics.

On December 28, 2020, the Bank sold a parcel of property and an existing dwelling that was in the process of being developed into a new branch location to 506 West Onondaga Associates, LLC. Director John P. Funiciello is a member of 506 West Onondaga Associates, LLC. The purchase price of the property was $612,000.

In January of 2021, the Bank entered into a lease agreement with 506 West Onondaga Associates, LLC to lease the entire building located at 506 West Onondaga Street, Syracuse, New York and the vacant property located at 303 Slocum Avenue, Syracuse, New York. The term of this lease will be for a period of thirty-two years and sixty days commencing on February 1, 2021. The Bank will pay the landlord, as total rent for the first twelve months of the lease, the annual sum of $201,168. After the first anniversary of the lease, and for every 12 month period following until the end of the lease term, the Bank will pay the landlord, as total rent, the annual sum of $261,996.

The property will continue to be developed by 506 West Onondaga Associates, LLC up to a total project cost of $2.8 million. All development costs over $2.8 million will be the responsibility of the Bank and treated as leasehold improvements.

Anti-Hedging Policy

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

CODE OF ETHICS

We have adopted a Code of Ethics that is applicable to our officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Ethics is available at the Corporate Information page on our website at https://ir.pathfinderbank.com. Amendments to, and waivers from, the Code of Ethics will also be disclosed on our website.

SHAREHOLDER COMMUNICATIONS

The Board of Directors has established a process for shareholders to send communications to a director by either United States mail or electronic mail. Any shareholder who desires to communicate directly with our directors should send their communication to Board of Directors, Pathfinder Bancorp, Inc., 214 West First Street, Oswego, New York 13126 or by email to directors@pathfinderbank.com. The communication should indicate that the author is a shareholder and if shares are not held of record, should include appropriate evidence of stock ownership. Depending on the subject matter, management will:

•

Forward the communication to the director or directors to whom it is addressed;

•

Attempt to handle the inquiry directly, for example where it is a request for information about us or it is a stock-related matter; or

•

Not forward the communication if it is primarily commercial in nature, relates to an improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate.

At each Board meeting, management shall present a summary of all communications received since the last meeting that were not forwarded and make those communications available to the directors.

III.	MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

The business of the Board of Directors is conducted through meetings and activities of the Board and its committees. During the year ended December 31, 2021, the Board of Directors held twelve regular meetings. During the year ended December 31, 2021, no director attended fewer than 75 percent of the total meetings of the Board of Directors and committees on which such director served.

Much of our work is performed in Committees which is then reported to the full Board. Members in committees are described in the following table:

Director	Asset/Liability Committee (ALCO) Member	Audit Committee Member	Compensation Committee Member	Nominating and Governance Committee Member	Executive Loan Review Committee Member

David A. Ayoub	X	Chair	X		X
William A. Barclay			X	Chair	X
Chris R. Burritt	X	X	X	X	Chair
John P. Funiciello	X				X
Adam C. Gagas	X		Chair		X
Melanie Littlejohn		X		X	X
Thomas W. Schneider					X
John F. Sharkey, III	X	X	X	X	X
Lloyd "Buddy" Stemple	Chair		X	X	X

NOMINATING/GOVERNANCE COMMITTEE

The Nominating/Governance Committee met nine times in the year ended December 31, 2021 to address issues concerning corporate governance, succession planning, and to nominate directors to fulfill the terms of the upcoming year. In the year ended December 31, 2021, the Nominating/Governance Committee was comprised of Directors, Barclay, Burritt, Littlejohn, Sharkey and Stemple, each of whom are “independent” pursuant to the NASDAQ listing requirements. The Nominating/Governance Committee has a charter which is available at our Corporate Information page on our website at https://ir.pathfinderbank.com.

Among other things, the functions of the Nominating/Governance Committee include the following:

•

to lead the search for individuals qualified to become members of the Board and to select director nominees to be presented for shareholder approval;

•

to review and monitor compliance with the requirements for board independence; and

•

to review the committee structure and make recommendations to the Board regarding committee membership.

The Nominating/Governance Committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are first considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any member of the Board does not wish to continue in service, or if the Nominating/Governance Committee or the Board decides not to re-nominate a member for re-election, or if the size of the Board is increased, the Nominating/Governance Committee would solicit suggestions for director candidates from all Board members. In addition, the Nominating/Governance Committee is authorized by its charter to engage a third party to assist in the identification of director nominees.

The Nominating/Governance Committee would seek to identify a candidate who, at a minimum, satisfies the following criteria:

•

has personal and professional ethics and integrity and whose values are compatible with ours;

•

has had experiences and achievements that have given him or her the ability to exercise and develop good business judgment;

•

is willing to devote the necessary time to the work of the Board and its committees, which includes being available for Board and committee meetings;

•

is familiar with the communities in which we operate and/or is actively engaged in community activities;

•

is involved in other activities or interests that do not create a conflict with his or her responsibilities to us and our shareholders;

•

has the capacity and desire to represent the balanced, best interest of our shareholders as a group, and not primarily a special interest group or constituency; and

•

has had a principal residence for two years on a continuous basis within the following counties in New York – Oswego, Jefferson, Lewis, Oneida, Onondaga or Cayuga. Our Bylaws provide that this provision may be overridden by two-thirds vote of the Board of Directors.

The Nominating/Governance Committee will also take into account whether a candidate satisfies the criteria for “independence” under the NASDAQ corporate governance listing standards and, if a nominee is sought for service on the Audit Committee, the financial and accounting expertise of a candidate, including whether an individual qualifies as an Audit Committee Financial Expert. Diversifying our board membership is also an important consideration.

The Nominating/Governance Committee will consider candidates for the Board of Directors recommended by shareholders. In order to make a recommendation to the Board of Directors, a shareholder must own no less than 500 shares of the Company. Shareholders who are so qualified may send their recommendations to our Corporate Secretary for forwarding to the Nominating/Governance Committee. In light of the due diligence required to evaluate recommendations, said recommendations for candidates for the 2023 annual meeting must be received by the Nominating/Governance Committee by June 30, 2022.

Shareholders may submit the names of candidates to be considered in writing to our Corporate Secretary, at 214 West First Street, Oswego, New York 13126. The submission must include the following information:

•

the name and address of the shareholder as it appears on our books, and number of shares of our common stock that are owned beneficially by such shareholder (if the shareholder is not a holder of record, appropriate evidence of the shareholder’s ownership will be required);

•

the name, address and contact information for the candidate, and the number of shares of our common stock that are owned by the candidate (if the candidate is not a holder of record, appropriate evidence of the shareholder’s ownership should be provided);

•

a statement of the candidate’s business and educational experience;

•

such other information regarding the candidate as would be required to be included in the proxy statement pursuant to SEC Regulation 14A;

•

a statement detailing any relationship between us and the candidate;

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a statement detailing any relationship between the candidate and any of our customers, suppliers or competitors;

•

detailed information about any relationship or understanding between the proposing shareholder and the candidate; and

•

a statement that the candidate is willing to be considered and willing to serve as a director if nominated and elected.

The Nominating/Governance Committee will consider shareholder recommendations made in accordance with the above similarly to any other nominee proposed by any other source. We have not paid a fee to any third party to identify or evaluate any potential nominees. Moreover, the Nominating/Governance Committee has not received within the last year a recommended nominee from any shareholder.

COMPENSATION COMMITTEE

The Compensation Committee meets periodically to review the performance of officers and to determine compensation programs and adjustments. The entire Board of Directors ratifies the recommendations of the Compensation Committee. In the year ended December 31, 2021, the members of the Compensation Committee were Directors Gagas, Ayoub, Barclay, Burritt, Sharkey and Stemple. All of these directors are “independent” pursuant to NASDAQ listing requirements. The Compensation Committee met five times during the year ended December 31, 2021. The Compensation Committee has a charter which is available at the Corporate Information page at our website at https:/ir.pathfinderbank.com.

Any shareholder who wishes to communicate directly with a member of the compensation committee should do so by e-mail to compcommittee@pathfinderbank.com.

AUDIT COMMITTEE

In 2021, the Audit Committee consisted of Directors Ayoub, Burritt, Littlejohn and Sharkey. The Audit Committee meets on a periodic basis with the internal auditor to review audit programs and the results of audits of specific areas, on regulatory compliance issues, as well as to review information to further their financial literacy skills. The Audit Committee meets with the independent registered public accounting firm to review quarterly and annual filings, the results of the annual audit and other related matters. The Chairman of the Audit Committee may meet with the Auditors on quarterly filing issues in lieu of

the entire committee. The Audit Committee met five times in 2021. Each member of the Audit Committee is “independent” as defined in the listing standards of NASDAQ and SEC Rule 10A(m)-3. Our Board of Directors has adopted a written charter for the Audit Committee which is available at the Corporate Information page on our website at https://ir.pathfinderbank.com. The Audit Committee maintains an understanding of our key areas of risk and assesses the steps management takes to minimize and manage such risks and:

•

selects and evaluates the qualifications and performance of the Auditors;

•

ensures that the internal and external auditors maintain no relationship with management and/or us that would impede their ability to provide independent judgment;

•

oversees the adequacy of the systems of internal control;

•

reviews the nature and extent of any significant changes in accounting principles; and

•

oversees that management has established and maintained processes reasonably calculated to ensure our compliance with all applicable law, regulations, corporate policies and other matters contained in our Code of Ethics which is available at the Corporate Information page on our website at https://ir.pathfinderbank.com.

The Audit Committee has established procedures for the confidential, anonymous submission by employees of concerns regarding accounting or auditing matters.

The Board of Directors has determined that Mr. Ayoub qualifies as an Audit Committee financial expert serving on the committee. Mr. Ayoub meets the criteria established by the Securities and Exchange Commission.

ASSET/LIABILITY COMMITTEE (ALCO)

Pathfinder Bank, the operating subsidiary of the Company has an Asset/Liability Committee. The purpose of the committee is to oversee the asset/liability, interest rate risk, liquidity, capital adequacy, funds management and investment functions of the Bank. Members in 2021 consisted of Directors Stemple, Ayoub, Burritt, Funiciello, Gagas and Sharkey. The committee met four times in 2021, each time being assisted by a professional consultant in ALCO matters.

EXECUTIVE/LOAN COMMITTEE

Pathfinder Bank’s most significant asset is its loan portfolio. The loan portfolio produces most of the Bank’s revenue but also exposes the Bank to credit and interest rate risk. The Executive/Loan Committee is primarily responsible for monitoring this asset. All of the board of directors are members of the committee. The committee meets generally every other week to respond to customer demands. In addition, the Executive Loan Committee has the authority to make some decisions on behalf of the whole Board when expediency is required.

OTHER COMMITTEES

Pathfinder Bank and the Company have a number of other standing and adhoc committees such as Strategic Planning, Facilities and Technology Steering, etc. Board members are encouraged to, and do, attend various committee meetings even if they are not official members in order to get a broader understanding of Bank operations and to give Bank management the benefit of their experience.

IV.	COMPENSATION DISCLOSURES

EXECUTIVE COMPENSATION

As a smaller reporting company, we are not required to include a Compensation Discussion and Analysis (“CD&A”) under Item 402(b) of Regulation S-K. Nevertheless, we do want our shareholders to understand our compensation policies and procedures so we incorporate many, but not all, of the required disclosures of a full CD&A.

Our Compensation Philosophy. The Company’s ability to attract and retain talented employees and executives with skills and experience is essential to providing value to its shareholders. The Company seeks to provide fair and competitive compensation to its employees (including the Named Executive Officers described below) by providing the type and amount of compensation consistent with our peers. We also seek to drive performance through short-term incentive compensation and to align our executives’ interest with shareholders with appropriate equity awards.

Compensation Best Practices. Our compensation program is designed to retain and reward our Named Executive Officers by aligning their compensation with short-term and long-term performance. Toward that end, we use the following compensation best practices:

•

Our cash-based bonus payments are tied to both financial and non-financial performance measures and are subject to a “clawback” policy, providing for the partial or total return of the cash bonus in the event of a restatement of our financial statements which makes the performance measures no longer valid;

•

No tax “gross ups” are included in any employment related agreements;

•

Our perquisites and personal benefits are limited to those that support a documented business purpose;

•

Our change in control provisions in the Company’s employment and other agreements with its Named Executive Officers provide for payment only upon termination of employment or job diminishment in connection with a change in control (also called “double trigger” event);

•

We use appropriate peer groups when establishing compensation; and

•

We balance short and long-term incentives.

Compensation Program Elements. The Compensation Committee, with the assistance of our consultants, when engaged, has incorporated the following elements into the corporate program to meet the documented corporate philosophy:

•

Cash based salary and employment benefits that are competitive with our peers;

•

Cash based bonus, directly linking pay to both Company and individual performance;

•

An equity plan designed to align the executives’ interest with the Company’s shareholders in achieving long-term performance;

•

A qualified 401(k) plan allowing executives to defer “pre-tax” earnings toward retirement;

•

An employee stock ownership plan rewarding long-term service to the Company;

•

A defined contribution supplemental executive retirement plan (“SERP”) rewarding long-term service to the Company for certain members of senior management;

•

An executive non-qualified deferred compensation plan allowing executives to defer income for retirement purposes;

•

Insurance programs designed to replace income in the event of sickness, accident or death; and

•

Limited perquisites based on demonstrated business purpose.

Role of the Compensation Committee and Consultants. The Committee annually reviews the performance of the CEO and other executive officers and recommends to the Board of Directors changes to base compensation, as well as the amount of any bonus to be awarded. In determining the compensation of an officer, the Committee and the Board of Directors take into account individual performance, performance of the Company and information regarding compensation paid to executives of peer group institutions performing similar duties. The CEO recommends to the Compensation Committee, compensation arrangements for the Executive Vice Presidents and Senior Vice Presidents. He does not recommend compensation arrangements for himself or Board members.

While the Compensation Committee and the Board of Directors do not use strict numerical formulas to determine changes in compensation for the CEO, Executive Vice Presidents and Senior Vice Presidents, and while they weigh a variety of different factors in their deliberations, both company-wide and individually-based performance objectives are used in determining the compensation of the CEO, Executive Vice Presidents and Senior Vice Presidents. Company-wide performance objectives emphasize earnings, profitability, earnings contribution to capital, capital strength, asset quality, and return on equity which are customarily used by similarly-situated financial institutions in measuring performance. Individually-based performance objectives include non-quantitative factors considered by the Compensation Committee and the Board of Directors such as general management oversight of the Company, the quality of communication with the Board of Directors, the productivity of employees and execution of the Bank’s Strategic Plan. Finally, the Compensation Committee and the Board of Directors considers the standing of the Company with customers and the community, as evidenced by customer and community complaints and compliments.

Generally, the Company retains a compensation consultant triannually coincident with our “Say-on-Pay” vote. Accordingly, in late 2020, the Compensation Committee retained the services of McLagan Partners, Inc. (McLagan) as its independent compensation advisor. McLagan’s report benchmarked senior executive pay, including our Named Executive Officers, against the same pay of the same officers of our peers in the following areas: base salary; annual short-term incentives and long-term incentive compensation. Survey data was also available to supplement the public disclosures of our peers. Since we will have our next “Say-on-Pay” vote in 2024, a compensation consultant will be retained in 2023.

COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Summary Compensation Table. The following table shows the compensation of Thomas W. Schneider, our principal executive officer, and the two other most highly compensated executive officers (“Named Executive Officers”) that received total compensation of $100,000 or more during the past fiscal year for services to Pathfinder Bancorp, Inc. or any of its subsidiaries. The table includes the compensation awarded, paid to, or earned by, our Named Executive Officers during the years ended December 31, 2021 and 2020, respectively.

Summary Compensation Table

Name and Principal

Bonus

Stock Options

Restricted Stock Units

Non-Qualified Deferred Compensation Earnings

All Other Compensation

Total

Position

Year

Salary

($) ⁽¹⁾

($)

($) ⁽²⁾

($) ⁽³⁾

($)

Thomas W. Schneider

2021

360,350

130,147

─

659,942

1,150,439

President and Chief

2020

360,350

67,081

─

6,555

130,120

SEC Form DEF 14A filed by Pathfinder Bancorp Inc.