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Section 1: DEF 14A (DEF 14A)

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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 ☒

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))
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Pursuant to §240.14a-12

Berkshire Hills 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 the appropriate box):
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each class of securities to which transaction applies:
 
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 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
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☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
 
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Form, Schedule or Registration Statement No.:
 
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(5)
Date Filed:
 
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April 3, 2020
 
Dear Berkshire Hills Bancorp Shareholder:
 
 
 
It is our pleasure to invite you to attend the 2020 Annual Meeting of Shareholders, which will be held virtually at 3:00 p.m. Eastern Time by visiting www.virtualshareholdermeeting.com/BHLB2020, where you will be able to listen to the meeting live, submit questions and vote online. You will be asked to enter the 16-digit control number located on your proxy card.
 
 
 
 
 
 
 
 
CEO, Richard M. Marotta
 
Please see the Notice of Annual Meeting on the next page for more information about our meeting procedures.
 
 
 
 
 
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We urge you to vote your proxy online, or by telephone, or by completing and returning a proxy card by mail as soon as possible, even if you plan to attend the Annual Meeting.
 
 
 
 
 
 
Your vote is important to us. Thank you for your attention to the enclosed materials, and for your continued support of our company.
 
 
 
 
 
 
Chairman, J. Williar Dunlaevy
 
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Richard M. Marotta, Chief Executive Officer
 
 
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J. Williar Dunlaevy, Chairman of the Board of Directors



 
Notice of Annual Meeting of Shareholders
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Notice of 2020 Annual Meeting of Shareholders of Berkshire Hills Bancorp, Inc.
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When:
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Where:
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Record Date:
Thursday, May 14, 2020
Virtual Meeting
March 19, 2020
3:00 p.m. Eastern Time
www.virtualshareholdermeeting.com/BHLB2020 
 
We are holding this meeting for the following purposes:
1.
To elect as directors the nominees named in the Proxy Statement each to serve a one-year term or until their successors are duly elected and qualified;
2.
To provide an advisory vote on executive compensation practices;
3.
To ratify the appointment of the Company’s independent registered public accounting firm for fiscal year 2020; and
4.
To transact any other Company business that may properly come before the meeting.

The Board of Directors unanimously recommends that you vote “FOR” each of the proposed director nominees and “FOR” the proposals to be presented at the annual meeting.

Shareholders of record at the close of business on March 19, 2020 are entitled to vote at the meeting, either at the virtual annual meeting or by proxy. There are several ways to vote. You can vote your shares online, by telephone, by regular mail or at the virtual annual meeting.

To access your proxy materials and vote online, please visit www.proxyvote.com and follow the instructions. The notice provided to you contains the necessary codes required to vote online. If you wish to vote by telephone, please call 1-800-690-6903 using a touch-tone phone and follow the prompted instructions. You may also vote by mail by requesting a paper proxy card using the instructions provided to you in the notice. Finally, you may vote at the virtual annual meeting, even if you have previously submitted a proxy.

Whatever method you choose, please vote in advance of the meeting to ensure that your shares will be voted as you direct.

Boston, Massachusetts    
April 3, 2020
By order of the Board of Directors

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Wm. Gordon Prescott
EVP, General Counsel and Corporate Secretary

Admission Procedures

The meeting is open to shareholders of Berkshire Hills Bancorp, Inc. To participate and vote your shares at the Annual Meeting, you will need the 16-Digit Control Number included on your Notice of Internet Availability of the proxy materials, on your proxy card or on the instructions that accompanied your proxy materials. Whether or not you plan to attend the meeting, we urge you to vote by proxy in advance to ensure your vote is counted if you decide not to attend the virtual meeting.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 14, 2020:
The Notice of Annual Meeting, 2020 Proxy Statement, and Annual Report to Shareholders for fiscal 2019 are each available at www.proxyvote.com or ir.berkshirebank.com.



 
Table of Contents
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Proxy Summary
 
Proposal 1 - Election of Directors
 
 
Information Regarding Directors and Director Nominees
 
 
Corporate Governance
 
 
Director Compensation
 
Proposal 2 - Advisory (Non-Binding) Vote on Executive Compensation
 
Compensation Discussion and Analysis
 
 
Compensation Committee Report
 
Executive Compensation
 
 
Summary Compensation and Other Tables
 
Proposal 3 - Ratification of the Appointment of the Independent Registered Public
 
 
Audit Committee Report
 
Additional Information
 
 
Stock Ownership
 
 
Information About Voting
 
 
Other Information Relating to Directors and Executive Officers
 
 
Submission of Business Proposals and Shareholder Nominations
 
 
Shareholder Communications
 
 
Miscellaneous
 
 
Other Matters
 
Appendix A
 
 
Summary of and Reconciliation of Certain Non-GAAP Financial Measures
 
Appendix B
 
 
Long Term Incentive Equity Compensation Component Industry Index
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


 
Berkshire Hills Bancorp, Inc. Proxy Statement
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Proxy Summary

This summary gives you an overview of selected information in this year’s proxy. We encourage you to read the entire proxy statement carefully before voting. We have also provided you with the 2019 Summary Annual Report and the 2019 Annual Report on SEC Form 10-K.

Annual Meeting of Shareholders

Time and Date: 3:00 p.m. Eastern Time, Thursday, May 14, 2020

Place: Virtual meeting at www.virtualshareholdermeeting.com/BHLB2020
The only way to attend the meeting or vote at the meeting is through the internet.

Record Date: Shareholders as of the close of business on March 19, 2020 are entitled to vote

We are providing this proxy statement to you in connection with the solicitation of proxies for the 2020 Annual Meeting of Shareholders and to transact any other business that may properly come before the meeting. In this proxy statement, we also refer to Berkshire Hills Bancorp, Inc. as “Berkshire” or the “Company”. We also refer to its subsidiary, Berkshire Bank, as the “Bank”. We are mailing a notice of the annual meeting to shareholders of record as of March 19, 2020, beginning on April 3, 2020.

Summary of Proposals for 2020

1 - Election of Directors. The Company’s Board of Directors is presenting thirteen (13) nominees for election as directors at our Annual Meeting. As of 2019, all Directors are elected on an annual basis. All nominees currently serve as directors on our Board of Directors. William J. Ryan served as a director in 2019 and will not stand for re-election in 2020 due to health reasons. Director Pamela A. Massad served as a director in 2019 and will not stand for re-election in 2020 in order to devote more time to her family and to her business and financial interests.
In 2019, all director nominees received at least 96% of the votes cast regarding their nomination. Provided with this proposal is information about our directors, director nominees, corporate governance, and director compensation.

2 - Advisory Vote on Executive Compensation. This advisory vote is for the approval of the Company’s Named Executive Officer compensation as set forth within this proxy statement. Berkshire strives to promote shareholder value and sound risk management by aligning executive pay and company performance. The Compensation Discussion and Analysis (“CD&A”) explains the Board’s processes and decisions with respect to executive compensation. In 2019, 97% of the votes cast were in favor of the proposal “FOR” the advisory approval of our Executive Compensation. Provided with this proposal is the Compensation Discussion and Analysis, the Compensation Committee Report, and Summary Compensation and Other Tables.

3 - Ratification of Independent Registered Public Accounting Firm. This advisory vote ratifies the selection of Crowe LLP (“Crowe”) as the Company’s independent registered public accounting firm for fiscal year 2020. Crowe has served in this capacity since fiscal year 2017. In 2019, 99% of the votes cast were in favor of the proposal for the appointment of Crowe.



2BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROXY STATEMENT | PROXY SUMMARY


2019 Executive Compensation

The primary change in executive compensation in 2019 was related to the promotions of Messrs. Marotta and Gray due to the Company’s leadership changes in November 2018. These leadership changes and the resulting impacts on 2019 compensation were presented and discussed in the 2019 Proxy Statement. During 2019, aggregate total compensation to the top five NEOs during the year decreased by 17% compared to 2018. This reduction reflected the leadership changes, the combination of the President and COO responsibilities, and the reduction in the short term incentive payout due to lower earnings performance.

This proxy relates to 2019 performance and compensation, neither of which were affected by the COVID-19 pandemic. The COVID-19 pandemic could significantly impact 2020 financial results and compensation outcomes. The Company’s CEO, Richard Marotta, has addressed the Company’s response to this pandemic in his letter in our 2019 Summary Annual Report. The Board and Management are actively responding to the pandemic, and future Company SEC filings will include discussion of the impact of the pandemic on business operations and of the Company’s actions in response.

2019 Company Performance

In 2019, the Company launched new strategic initiatives towards building a 21st century purpose driven community bank targeted to future-proof the Company in coming decades. The Company reshaped its business focus and balance sheet structure to improve its financial condition and adjust to margin pressures while investing in community oriented products and services. The Company also successfully completed a significant market extension bank acquisition which increased both assets and deposits by approximately 14%. Per share earnings declined due mainly to one commercial loan write-off as well as margin compression. The Company had a strong 26% total stock return which exceeded peers.

Shareholder Engagement and Responsiveness

We have an active engagement program that focuses on gathering feedback from the governance teams of our largest institutional shareholders. Based on these ongoing discussions, in the last three years we have made several enhancements to our governance programs which include:
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Declassified Board of Directors: annual election of all directors fully phased-in
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In 2019, increased Board diversity; added cyber-security expertise
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Adopted new Board policies related to tenure and Board refreshment
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Added new relative measures related to total shareholder return (“TSR”) and changes in return on equity to the long-term incentive plan
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Increased the three-year performance-based shares portion of long-term incentive compensation to 60% from 50% going forward
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Created a new Board-level Corporate Responsibility and Culture Committee
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Made changes to its incentive performance metrics in the short-term incentive plan to better align these measures with shareholder interests
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Increased the focus on long-term performance-based equity compensation

What We Did:
Proactively reached out to our largest shareholders to solicit their feedback.
Had extensive dialogue with a diverse group of our shareholders during the year and obtained additional feedback from advisors and other knowledgeable third parties.
Solicited feedback and answered questions about our executive compensation programs and Board governance practices.


3BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROXY STATEMENT | PROXY SUMMARY


Leading the Way Forward with Purpose Driven Performance

In early 2019, the Company rolled out its Be FIRST values of Belonging, Focusing, Inclusion, Respect, Service, and Teamwork to serve as the foundation of its efforts to futureproof the company. Berkshire’s 2019 corporate responsibility, sustainability and culture performance reflect this evolution and focus on long-term value creation for all stakeholders. Additional highlights include:
Established Corporate Responsibility & Culture Committee of the Board of Directors, chaired by Laurie Norton Moffat
Created Diversity & Inclusion Employee Committee and launched seven new Employee Resource Groups
Implemented a Responsible & Sustainable Business Policy
Enhanced social, environmental & culture risk management program
Opened Reevx Labs and launched the Friends & Family Fund
Unveiled The Be FIRST Commitment, Berkshire’s comprehensive plan to build a responsible workforce, foster sustainable communities and finance the future.
Provided $4.7 million in financial contributions and 100% employee participation in the XTEAM® employee volunteer program for communities
Improved third party ESG (Environmental, Social Governance) ratings used by socially responsible investors

As a result of the collective actions of the Company, its employees and stakeholders, Berkshire was recognized with:
North American Employee Engagement Award for Social Responsibility
US Chamber of Commerce Foundation Top Corporate Steward Citizen Award
Communitas Award for Leadership in Corporate Social Responsibility
Berkshire was listed in the Bloomberg Gender Equality Index for the first time.

Berkshire’s 2019 Corporate Responsibility Report, Leading the Way Forward: Purpose Driven Performance, highlights the company’s progress on The Be FIRST Commitment and its environmental, social and governance practices. It is available on the Investor Relations and Bank website at berkshirebank.com/csr.


4BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement



 
 
 
 
 
 
 
Proposal 1:
Election of Directors for a One-Year Term
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The Company’s Board of Directors has nominated and recommends a vote “FOR” each of the thirteen (13) nominees listed below for election as a director. Each nominee currently serves on the Company’s Board of Directors.

Background. The Company’s Board of Directors is presenting thirteen (13) nominees for election as directors at our Annual Meeting. All nominees currently serve as directors on the Company Board of Directors. Each director elected at the meeting will serve for a one-year term until our 2021 annual meeting or until a successor is duly elected and qualified. Each director nominee has consented to being named in this proxy statement and to serving as a director if elected. If a nominee is unable to be a candidate when the election takes place, the shares represented by valid proxies will be voted in favor of the remaining nominees. The Board of Directors does not currently anticipate that any of the nominees will be unable to be a candidate for election. Mr. Ryan and Ms. Massad, who are currently members of the Company Board of Directors, have chosen not to stand for re-election at the 2020 Annual Meeting.

Additional Information. Information regarding the director nominees is set forth below under the heading
“- Information Regarding Directors and Director Nominees.”

The affirmative vote of a plurality of the Company’s outstanding common stock present at the virtual annual meeting or by proxy at the Annual Meeting is required to elect the nominees for directors; provided, however, in the case of an uncontested election of directors, it is the Company’s policy that if a director is elected by a plurality but not a majority of the votes cast for such director, such director must submit his or her resignation to the Board of Directors, which will be subject to review by the Corporate Governance/Nominating Committee of the Board of Directors. The Corporate Governance/Nominating Committee will then make a recommendation to the Board of Directors as to whether to accept or reject the director’s resignation. Unless otherwise instructed, the proxy holders will vote the proxies received by them “FOR” the election of the nominees as directors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF ITS DIRECTOR NOMINEES.


5BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES


Information Regarding Directors and Director Nominees

2020 Nominees for Election to the Board of Directors
 
BAYE ADOFO-WILSON, CEO OF BAW DEVELOPMENT, LLC
 
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Mr. Adofo-Wilson, Esq. is CEO of BAW Development, LLC, a national real estate development company concentrating on redevelopment and consulting services in diverse communities. He is also Of Counsel at Post Polak, PA focusing on redevelopment law and specializing in New Jersey’s urban transitioning communities and municipalities, He has over 20 years of experience in law and business development, with a focus on community development, including the position of Deputy Mayor/Director, Economic and Housing Development for the City of Newark, New Jersey.



 
 
 
 
 
 
 
 
Independent
Qualifications, Skills, and Experience:
 
Years of Service: 1
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Business Operations/Strategic
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Regulated Industry
 
Age: 51
 
Planning
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Corporate Responsibility/
 
Board Committees:
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Financial Expertise/Literacy
 
Community Leader
 
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Audit
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Talent Management
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Small Business Owner/Operator
 
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Corporate
 
 
 
 
 
 
Governance/ Nominating
 
 
 
 
 
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Corporate Responsibility
 
 
 
 
 
 
and Culture
 
 
 
 
 
RHEO A. BROUILLARD, FORMER DIRECTOR, PRESIDENT, AND CHIEF EXECUTIVE OFFICER OF SI FINANCIAL GROUP, INC.
 
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Mr. Brouillard is the former Director, President and Chief Executive Officer of SI Financial Group, Inc. before its merger with Berkshire in May 2019. Mr. Brouillard has more than 40 years of experience in the financial services industry holding key roles at multiple financial services institutions. He has been a staunch supporter of community development associations throughout his career and a champion for the communities he served in Southeast New England.


 
 
 
 
 
 
 
 
Non-Independent
Qualifications, Skills, and Experience:
 
Years of Service: 1
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Public Company CEO
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Risk Management
 
Age: 66
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Public Company Board
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Talent Management
 
Board Committees:
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Financial Institution Executive
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Regulated Industry
 
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Compliance & Regulatory
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Business Operations and Strategic
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Corporate Responsibility/
 
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Risk Management and Capital
 
Planning
 
Community Leader
 
 
 
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Financial Expertise/Literacy
 
 




6BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES


 
DAVID M. BRUNELLE, CO-FOUNDER AND MANAGING DIRECTOR OF NORTH POINTE WEALTH MANAGEMENT
 
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Mr. Brunelle is Co-Founder and Managing Director of North Pointe Wealth Management in Worcester, Massachusetts. He has over 20 years of experience in financial services working with businesses, individuals, families and charitable foundations. Mr. Brunelle is a former Director of Commerce Bancshares Corp. and Commerce Bank & Trust Company and served on Commerce’s audit and loan committees. He has also served as trustee or corporator for numerous non-profit entities in and around Worcester, including The Nativity School of Worcester, The Worcester Regional Research Bureau, The Worcester Educational Development Foundation, the UMass/Memorial Foundation, Becker College and the Greater Worcester Community Foundation.

 
 
 
 
 
 
 
 
Independent
Qualifications, Skills, and Experience:
 
Years of Service: 2
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Public Company Board
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Talent Management
 
Age: 49
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Business Operations/Strategic
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Regulated Industry
 
Board Committees:
 
Planning
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Corporate Responsibility/
 
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Audit (Chair)
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Financial Expertise/Literacy
 
Community Leader
 
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Corporate
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Risk Management
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Small Business Owner/Operator
 
 
Governance/Nominating
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Wealth Management/Insurance
 
 

 
ROBERT M. CURLEY, CHAIRMAN OF THE NEW YORK REGION OF BERKSHIRE BANK
 
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Mr. Curley is Chairman of the New York region of Berkshire Bank. He previously served as Chairman and President for Citizens Bank in New York from 2005 to 2009. Prior to joining Citizens, Mr. Curley served at Charter One Bank where he was President for New York and New England. During the period of 1976 to 1999, Mr. Curley was employed by KeyCorp, where he rose to the position of Vice Chairman of KeyBank N.A., and served as President and Chief Executive Officer of four subsidiary banks.


 
 
 
 
 
 
 
 
Non-Independent
Qualifications, Skills, and Experience:
 
Years of Service: 9
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Financial Institution Executive
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Talent Management
 
Age: 72
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Business Operations/Strategic
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Regulated Industry
 
Board Committees:
 
Planning
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Corporate Responsibility/
 
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Risk Management & Capital
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Financial Expertise/Literacy
 
Community Leader
 
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Compliance & Regulatory
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Risk Management
 
 



7BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES


 
JOHN B. DAVIES, AGENT EMERITUS WITH MASSACHUSETTS MUTUAL LIFE INSURANCE
 
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Mr. Davies is a former Executive Vice President of Massachusetts Mutual Life Insurance and is currently an Agent Emeritus with Massachusetts Mutual, providing high net worth counseling with a focus on tax efficiency and intergenerational transfers of wealth. Mr. Davies currently serves on the Westfield State University Foundation Board. Mr. Davies is a former director of Woronoco Bancorp, Inc.

 
 
 
 
 
 
 
 
Independent
Qualifications, Skills, and Experience:
 
Years of Service: 14
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Public Company Board
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Regulated Industry
 
Age: 70
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Financial Institution Executive
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Wealth Management/Insurance
 
Board Committees:
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Business Operations/Strategic
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Talent Management
 
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Compensation (Chair)
 
Planning
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Corporate Responsibility/
 
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Corporate
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Financial Expertise/Literacy
 
Community Leader
 
 
Governance/Nominating
 
 
 
 

 
J. WILLIAR DUNLAEVY, CHAIRMAN OF THE BOARD OF DIRECTORS OF BERKSHIRE HILLS BANCORP, INC.
 
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Mr. Dunlaevy is the Chairman of the Board of Directors of the Company. He previously served as Chief Executive Officer and Chairman of the Board of Legacy Bancorp, Inc. and Legacy Banks (collectively, “Legacy”). Mr. Dunlaevy served as the Chief Executive Officer and Chairman of the Board of Legacy from 1996 until their merger with Berkshire in 2011. A community leader, Mr. Dunlaevy currently serves as a director of the Berkshire Bank Foundation, and previously served as Chairman of the Berkshire Taconic Community Foundation. Mr. Dunlaevy has also been a director of the Depositors Insurance Fund, Massachusetts Bankers Association, and Savings Bank Life Insurance Company of Massachusetts (“SBLI”). Mr. Dunlaevy has been designated by the Board of Directors as a financial expert under the rules of the Securities and Exchange Commission.

 
 
 
 
 
 
 
 
Independent
Qualifications, Skills, and Experience:
 
Years of Service: 8
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Public Company CEO
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Risk Management
 
Age: 73
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Public Company Board
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Talent Management
 
Board Committees:
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Financial Institution Executive
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Regulated Industry
 
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Compensation
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Business Operations/Strategic
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Corporate Responsibility/
 
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Corporate
 
Planning
 
Community Leader
 
 
Governance/Nominating (Chair)
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Financial Expertise/Literacy
 
 




8BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES


 
WILLIAM H. HUGHES III, FOUNDER AND PRESIDENT OF OPEN4 LEARNING
 
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Mr. Hughes is the founder and President of Open4 Learning, an advisory business that is focused on innovation and growth in the education technology and employment technology sectors. He is also the founding Manager of CyberHabits LLC, which is a learning-centered cybersecurity solutions company. He has over 30 years of business experience with expertise in strategy develop and execution, technology services and cybersecurity.


 
 
 
 
 
 
 
 
Independent
Qualifications, Skills, and Experience:
 
Years of Service: 1
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Business Operations/Strategic
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Talent Management
 
Age: 56
 
Planning
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Regulated Industry
 
Board Committees:
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Information Technology
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Corporate Responsibility/
 
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Compensation
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Product Management
 
Community Leader
 
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Risk Management and
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Cybersecurity
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Small Business Owner Operator
 
 
Capital (Chair)
 
 
 
 
 
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Corporate Responsibility &
 
 
 
 
 
 
Culture
 
 
 
 
 
CORNELIUS D. MAHONEY, FORMER CHAIRMAN, PRESIDENT AND CEO OF WORONOCO BANCORP, INC.
 
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Mr. Mahoney is the former Chairman, President and Chief Executive Officer of Woronoco Bancorp, Inc. and Woronoco Savings Bank before their merger with Berkshire in June 2005. He is a former Chairman of America’s Community Bankers and the Massachusetts Bankers Association and a former Director of the Federal Home Loan Bank of Boston. He was a member of the Thrift Institution Advisory Council to the Federal Reserve Board of Governors and is a past Chairman of the Board of Trustees of Westfield State College.

 
 
 
 
 
 
 
 
Independent
Qualifications, Skills, and Experience:
 
Years of Service: 14
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Public Company CEO
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Risk Management
 
Age: 74
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Public Company Board
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Talent Management
 
Board Committees:
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Financial Institution Executive
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Regulated Industry
 
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Compensation
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Business Operations/Strategic
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Corporate Responsibility/
 
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Compliance &
 
Planning
 
Community Leader
 
 
Regulatory (Chair)
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Financial Expertise/Literacy
 
 




9BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES


 
RICHARD M. MAROTTA, PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR OF THE COMPANY
 
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Mr. Marotta was appointed to the role of President and Chief Executive Officer of the Company and Chief Executive Officer of the Bank in November 2018. Prior to these appointments, Mr. Marotta served as Senior Executive Vice President of the Company and President of the Bank from 2015. Mr. Marotta joined the Company in 2010 as Executive Vice President, Chief Risk Officer and has held additional positions including Chief Credit Officer and Chief Administrative Officer.



 
 
 
 
 
 
 
 
Non-Independent
Qualifications, Skills, and Experience:
 
Years of Service: 2
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Public Company CEO
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Risk Management
 
Age: 61
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Public Company Board
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Regulated Industry
 
 
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Financial Institution Executive
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Corporate Responsibility/
 
 
 
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Business Operations/Strategic
 
Community Leader
 
 
 
 
Planning
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Talent Management
 
 
 
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Financial Expertise/Literacy
 
 

 
DR. SYLVIA MAXFIELD, DEAN OF THE PROVIDENCE COLLEGE SCHOOL OF BUSINESS
 
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Dr. Maxfield is Dean of the Providence College School of Business and was previously Chairman of the Faculty and MBA Program Director at Simmons University in Boston. Additionally, she serves as voting member of the Rhode Island State Investment Commission, which oversees fund performance, including asset allocation and investment-related contracting. Maxfield also votes on shareholder proxy activity on behalf of the State. Previously, she has served on the boards of the Greater Providence Chamber of Commerce, Social Enterprise Greenhouse and the 21st Century Fund. Dr. Maxfield has been designated by the Board of Directors as a financial expert under the rules of the Securities and Exchange Commission.

 
 
 
 
 
 
 
 
Independent
Qualifications, Skills, and Experience:
 
Years of Service: <1
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Business Operations/Strategic
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Talent Management
 
Age: 61
 
Planning
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Corporate Responsibility/
 
Board Committees:
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Financial Expertise/Literacy
 
Community Leader
 
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Audit
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Marketing/PR
 
 
 
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Risk Management and Capital
 
 
 
 



10BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES


 
LAURIE NORTON MOFFATT, DIRECTOR & CEO OF THE NORMAN ROCKWELL MUSEUM
 
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Ms. Moffatt is the Director and Chief Executive Officer of the Norman Rockwell Museum, Stockbridge, Massachusetts. Since 1986, Ms. Moffatt has overseen the expansion of the museum’s facilities and the creation of a scholars’ research program. Her efforts resulted in the Museum receiving the National Humanities Medal, America’s highest humanities honor. Ms. Moffatt is also an active community leader. She is a founder of 1Berkshire and Berkshire Creative Economy Council and serves as a trustee of Berkshire Health Systems and a director of Berkshire Health Systems, Inc. and Berkshire Medical Center, Inc.



 
 
 
 
 
 
 
 
Independent
Qualifications, Skills, and Experience:
 
Years of Service: 6
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Business Operations/Strategic
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Marketing/PR
 
Age: 63
 
Planning
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Small Business Owner/Operator
 
Board Committees:
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Financial Expertise/Literacy
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Corporate Responsibility/
 
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Corporate
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Talent Management
 
Community Leader
 
 
Governance/ Nominating
 
 
 
 
 
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Corporate Responsibility &
 
 
 
 
 
 
Culture (Chair)
 
 
 
 
 
JONATHAN I. SHULMAN, FORMER EVP AND TREASURER AT KEYCORP
 
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Mr. Shulman was formerly Executive Vice President & Treasurer at KeyCorp, a publicly traded U.S. bank. Shulman possesses deep commercial banking experience that includes financial markets, governance, and balance sheet and risk management disciplines. He began his career with KeyCorp in 1989 and served in leadership roles in financial market strategy, asset liability management, wholesale funding and capital planning. Shulman has also held committee membership positions on KeyCorp’s Asset Liability Committee, Market Risk Committee, Model Risk Committee, and Funds Transfer Pricing Committee. Mr. Shulman has been designated by the Board of Directors as a financial expert under the rules of the Securities and Exchange Commission.

 
 
 
 
 
 
 
 
Independent
Qualifications, Skills, and Experience:
 
Years of Service: <1
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Financial Institution Executive
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Risk Management
 
Age: 57
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Business Operations/Strategic
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Regulated Industry
 
Board Committees:
 
Planning
 
 
 
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Audit
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Financial Expertise/Literacy
 
 
 
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Risk Management and Capital
 
 
 
 
 
 
 
 
 
 
 



11BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES


 
D. JEFFREY TEMPLETON, OWNER AND PRESIDENT OF THE MOSHER COMPANY, INC.
 
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Mr. Templeton is the owner and President of The Mosher Company, Inc., located in Chicopee, Massachusetts, a manufacturer of buffing and polishing compounds, abrasive slurries and a distributor of related grinding, polishing and lapping machinery. Mr. Templeton is a former director of Woronoco Bancorp, Inc.


 
 
 
 
 
 
 
 
Independent
Qualifications, Skills, and Experience:
 
Years of Service: 14
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Public Company Board
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Talent Management
 
Age: 78
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Business Operations/Strategic
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Small Business Owner/Operator
 
Board Committees:
 
Planning
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Corporate Responsibility/
 
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Compliance and Regulatory
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Financial Expertise/Literacy
 
Community Leader
 
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Corporate Responsibility &
 
 
 
 
 
 
Culture
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


12BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | CORPORATE GOVERNANCE


Corporate Governance

The Company is committed to strong corporate governance policies, practices, and procedures designed to make the Board more effective in exercising its oversight role. The following sections provide an overview of our corporate governance structure, including independence and other criteria we use in selecting director nominees, our Board leadership structure, and the responsibilities of the Board and each of its Committees. Our Corporate Governance Policy, among other key governance materials, help guide our Board and management in the performance of their duties and are regularly reviewed by the Board.

 
Key Corporate Governance Documents
 
Please visit our investor relations website at ir.berkshirebank.com to view the following documents:
 
 
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Corporate Governance Policy
 
 
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Code of Business Conduct
 
 
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Anonymous Reporting Line Policy
 
 
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Board Committee Charters
 
 
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Certificate of Incorporation
 
 
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Company By-Laws
 
These documents are available free of charge on our website or by writing to Berkshire Hills Bancorp, c/o Wm. Gordon Prescott, Executive Vice President, General Counsel and Corporate Secretary, 60 State Street, Boston, Massachusetts 02109.
 

The Board and management regularly review best practices in corporate governance and are committed to a program that serves the long-term interests of our shareholders. We believe good governance strengthens accountability and promotes responsible corporate citizenship. Our current best practices are highlighted below:
Independent Oversight
Shareholder Orientation
Good Governance
Majority independent directors(1)
Rigorous board and committee
self-assessments conducted annually
Diverse board membership (skills, tenure, age); annual director education
Strong and engaged independent chairman of the board
Robust stock-ownership guidelines
Annual evaluation of CEO and senior management and review of succession plans
All key committees are fully independent
Annual shareholder engagement program
Implementation of a Corporate Responsibility & Culture Committee at both Board and employee level
Regular executive sessions of independent directors
Majority voting, with director resignation policy for uncontested elections
Risk oversight by full board and committees
Chair of Corporate Governance or Chairman can call special meeting of the Board at any time for any reason
No poison pill in place; annual election of all directors
Formal ethics code, reporting hotline and ethics training to all employees
(1)
Current directors Pamela A. Massad and William J. Ryan have chosen not to stand for re-election to the Board at the Company’s 2020 Annual Meeting. 10 out of 13 of the remaining members will be designated as independent directors.



13BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | CORPORATE GOVERNANCE


Board of Directors

The primary functions of Berkshire’s Board of Directors are:
To oversee management performance on behalf of shareholders;

To ensure that the interests of the shareholders are being served;

To monitor adherence to Berkshire’s standards and policies;

To promote the exercise of responsible corporate citizenship; and

To perform the duties and responsibilities assigned to the Board by the laws of Delaware, Berkshire’s state of incorporation.

Board Meetings

During 2019, the Board of Directors held nine (9) meetings. The average attendance at meetings of the Board and Board Committees during 2019 was 91%. During this period, each of the current directors attended at least 75% of the aggregate of the total number of board meetings and committee meetings held on which such directors served.

In addition, the Board of Directors encourages each director to attend annual meetings of shareholders. Seven out of eleven directors serving at that time attended the 2019 annual meeting of shareholders.

Board Leadership Structure

The Board has reviewed the current Board leadership structure of the Company, which consists of a separate Independent Chairman of the Board and a Chief Executive Officer. The Independent Chairman performs all duties and has all powers which are commonly incident to the office of Chairman of the Board or which are delegated to him by the Board of Directors, including presiding at all meetings of the Board of Directors. The Chief Executive Officer has responsibility for the management and control of the business and affairs of the Company and has general supervision of all other officers, employees and agents of the Company. The Board believes that separating these roles enhances the independence of the Board and its effectiveness in discharging its responsibilities and that this procedure is currently the most appropriate Board leadership structure for the Company.

Director Independence

All of the Company’s directors are independent under the listing requirements of The New York Stock Exchange (the “NYSE”), except for Messrs. Marotta and Curley, who are officers of the Company and the Bank, and except for Mr. Brouillard, who was CEO of SI Financial Group, Inc. which was acquired by the Company in 2019. Additionally, all of the members of the Audit, Compensation and Corporate Governance/Nominating Committees are independent in accordance with the listing standards of the NYSE, and, in the case of members of the Audit and Compensation Committees, applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and the Federal Deposit Insurance Corporation (“FDIC”). In determining the independence of its directors, the Board considered transactions, relationships and arrangements between the Company and its directors that are not required to be disclosed in this proxy statement under the heading “Transactions with Related Persons,” including loans or lines of credit that the Bank has directly or indirectly made to Directors Mahoney, Massad, Moffatt, and Templeton. Independent directors Pamela A. Massad and William J. Ryan have elected to retire from the Boards of Directors of the Company and the Bank, effective as of the 2020 Annual Meeting.

Corporate Governance Policy

The Board of Directors has adopted a corporate governance policy to govern certain activities, including: the duties and responsibilities of directors; the composition, responsibilities and operation of the Board of Directors; the selection of a Chairman of the Board of Directors; the operation of board committees; succession planning; convening executive sessions of independent directors; the Board of Directors’ interaction with management and third parties; director age limits; the maximum length of directors’ tenure on the Board; and the evaluation of the performance of the Board of Directors and of the Chief Executive Officer. A copy of the corporate governance


14BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | CORPORATE GOVERNANCE


policy is available in the Governance Documents portion of the Investor Relations section of the Company’s website (ir.berkshirebank.com).

Commitment to Corporate Social Responsibility and Culture

In 2018, Berkshire launched a corporate diversity and inclusion initiative partnering with prominent experts to expand and deepen these initiatives, with the ultimate goal of creating a culture that embodies diversity, inclusion, mutual respect and belonging. In order to take a top-down approach to this cause the Board established in 2019 a Corporate Responsibility and Culture Committee, led by Laurie Norton Moffatt, which provides oversight into these initiatives. The Board and senior leadership believe that a workforce that brings together diverse perspectives, ideas and experiences based on competencies, not backgrounds, leads to stronger financial performance, improved reputation, increased market share, reduced risk and the ability to attract and retain the best talent.

In 2019, the Company recruited a seasoned culture creator and strategist as Executive Vice President, Chief Experience and Culture Officer. The Company also appointed a Senior Vice President, Corporate Responsibility & Culture to integrate and expand the Bank’s corporate social responsibility efforts into all areas of the business. Berkshire inaugurated a “Corporate Social Responsibility Report” which summarizes many of the ways Berkshire strives to be a good corporate citizen by conducting business in a socially responsible manner, being a caring neighbor and employer, and being as transparent as possible in its governance. It may be found on our investor relations website (ir.berkshirebank.com).

Director Continuing Education

The Board of Directors conducts annual director education sessions, which include presentations by industry experts based on input from directors regarding topics of interest. Directors also receive an annual update on trending compliance and regulatory matters and new developments from the Bank’s outside compliance advisory firm. Our executive management meets with the Board at every regularly scheduled board meeting and annually to review the Company’s strategic plan.

Board and Committee Self Evaluation

The Corporate Governance/Nominating Committee oversees the annual self-evaluation of the performance of the Board of directors and its committees, the results of which are discussed with the full Board and each individual committee, as appropriate. The purpose of the evaluations is to improve the performance of the overall Board and each specific committee. The evaluations include a review of any areas in which Board or committee members believes the Board and the committees can make a better contribution to the governance and oversight of the Company. The Corporate Governance/Nominating Committee also utilizes the results of the Board and committee evaluation process in assessing and determining the characteristics and critical skills required of prospective candidates for election to the Board and appointment to each committee. The evaluation survey forms include open-ended questions in which directors are invited to share their written comments on a confidential basis. In concert with its other diversity and inclusion efforts cited above, the Board is committed to maintaining an appropriately sized membership comprised of diverse individuals from a wide range of backgrounds, experiences and perspectives.

Committees of the Board of Directors

The Board has six standing committees: the Audit Committee; the Compensation Committee; the Corporate Governance/Nominating Committee; the Corporate Responsibility and Culture Committee; the Risk Management and Capital Committee; and the Compliance/Regulatory Committee. The Board has determined that all members of the Audit Committee, the Compensation Committee and the Corporate Governance/Nominating Committee are independent in accordance with the listing requirements of the NYSE. Each committee operates under a written charter approved by the Board of Directors that governs its composition, responsibilities and operation. Each committee reviews and reassesses the adequacy of its charter at least annually. The current charters of all six committees are available in the Governance Documents portion of the Investor Relations section of the Company’s website (ir.berkshirebank.com).


15BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | CORPORATE GOVERNANCE


2020 BOARD STRUCTURE
Nominee Name, Age & Primary Occupation
Director
Since
Director
Category
Audit
Comp
Corp Gov & Nom
Corp Responsibility & Culture
Risk & Capital
Compliance & Reg
Baye Adofo-Wilson, Age 51
CEO of BAW Development, LLC

2019
I
O
 
O
O
 
 
Rheo A. Brouillard, Age 66
Former Director, President, and CEO
SI Financial Group, Inc.
2019
N
 
 
 
 
O
O
David M. Brunelle, Age 49
Co-Founder and Managing Director of North Pointe Wealth Management
2017
I
C
 
O
 
 
 
Robert M. Curley, Age 72
Chairman of the New York Region of Berkshire Bank
2010
N
 
 
 
 
O
O
John B. Davies, Age 70
Agent Emeritus with Massachusetts Mutual Life Insurance
2005
I
 
C
O
 
 
 
J. Williar Dunlaevy, Age 73
Chairman of the Board of Directors of Berkshire Hills Bancorp, Inc.
2011
I
 
O
C
 
 
 
William H. Hughes III, Age 56
Founder and President Open4 Learning
2019
I
 
O
 
O
C
 
Cornelius D. Mahoney, Age 74
Former Chairman, President and CEO of Woronoco Bancorp, Inc.
2005
I
 
O
 
 
 
C
Richard M. Marotta, Age 61
President and CEO of Berkshire Hills Bancorp, Inc.
2018
N
 
 
 
 
 
 
Dr. Sylvia Maxfield, Age 61
Dean Providence College School of Business
2020
I
O
 
 
 
O
 
Laurie Norton Moffatt, Age 63
Director & CEO of the Norman Rockwell Museum
2013
I
 
 
O
C
 
 
Jonathan I. Shulman, Age 57
Former EVP and Treasurer KeyCorp
2020
I
O
 
 
 
O
 
D. Jeffrey Templeton, Age 78
Owner and President of The Mosher Company, Inc.
2005
I
 
 
 
O
 
O
N = Non-Independent Director
I = Independent Director
C = Chair
O = Committee Member

*Note: Current directors Pamela A. Massad and William J. Ryan have elected not to stand for re-election to the Board at the Company’s 2020 Annual Meeting and are not shown in the chart above. Ms. Massad currently serves on the Culture and Responsibility Committee and the Compliance Committee. Mr. Ryan currently serves on the Compensation Committee and the Corporate Governance/Nominating Committee.

Directors Shulman and Maxfield were appointed to the Board of Directors on February 24, 2020. Both of them serve on the Audit Committee and have been designated by the Board as Financial Experts.

Director Dunlaevy served on the Audit Committee until March 31, 2020.


16BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | CORPORATE GOVERNANCE


Board Committees and Responsibilities

The primary functions of each of the board committees are described below.
BOARD COMMITTEES
ROLES AND RESPONSIBILITIES
AUDIT COMMITTEE
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Assists the Board of Directors in its oversight of the Company’s accounting and reporting practices
 
 
All Members Independent
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Reviews the quality and integrity of the Company’s financial reports
Chair: Mr. Brunelle
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Ensures the Company’s compliance with legal and regulatory requirements related to accounting and financial reporting
 
 
The Board of Directors has determined that Dr. Maxfield and Mr. Shulman qualify as Audit Committee Financial Experts under the rules of the Securities and Exchange Commission.
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Oversees the Company’s internal audit function
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Annually reviews and approves the internal and external audit plans
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Engages with the Company’s independent registered public accounting firm (Crowe) and monitors its performance, reporting, and independence
 
COMPENSATION COMMITTEE
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Approves the compensation objectives for the Company and its subsidiaries and establishes the compensation for the Chief Executive Officer and other Named Executive Officers of the Company
 
 
All Members Independent
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Reviews the Company’s incentive compensation and other equity plans and recommends changes to the plans as needed
Chair: Mr. Davies
 
 
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Reviews all compensation components for the Company’s Chief Executive Officer and other Named Executive Officers, including base salary, short-term incentive, long-term incentives/equity, benefits, and other perquisites
See the “Compensation Discussion and Analysis” section for more information regarding the role of the Compensation Committee management and compensation consultants in determining and/or recommending the amount or form of named executive compensation.

 
 
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Reviews competitive market factors and examines the total compensation mix, pay-for-performance relationship, and how all elements, in the aggregate, comprise the named executive officer’s total compensation package
 
 
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Administers CEO employment agreement, change in control agreements, and equity incentive plans
 
 
COMPLIANCE & REGULATORY COMMITTEE
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Oversees management’s implementation of compliance programs, policies, and procedures designed to identify and respond to the various compliance and regulatory risks of the Company and its subsidiaries
 
 
 
Majority of Members Independent
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Monitors the preparations for regulatory examinations of the Company and the Bank
Chair: Mr. Mahoney
 
 
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Oversees the Company’s information security program and monitors associated risks
 
 
 
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Monitors significant legal or regulatory compliance exposure and oversees responses to material reports or inquiries from government or regulatory agencies
 
 
 
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Ensures that the Company, Berkshire Bank and their affiliates have in place sound compliance management systems (“CMS”) as required by all applicable regulators and the Consumer Financial Protection Bureau (“CFPB”)
 
 
 
 


17BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | CORPORATE GOVERNANCE


BOARD COMMITTEES
ROLES AND RESPONSIBILITIES
CORPORATE GOVERNANCE/NOMINATING COMMITTEE
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Identifies qualified individuals to serve as Board members
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Considers and recommends nominees for director to stand for election at the Company’s annual meeting of shareholders
 
 
All Members Independent
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Determines the composition of the Board of Directors and its committees
Chair: Mr. Dunlaevy
 
 
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Annually reviews policy, procedures and criteria for identifying candidates for election or appointment to the Board of Directors
 
 
 
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Monitors a process to assess Board effectiveness, including annual Board and committee self-evaluations
 
 
 
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Develops and implements the Company’s corporate governance guidelines, including annual reviews of the Company’s Corporate Governance Policy and Code of Business Conduct
 
 
 
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Regularly receives reports from executive officers heading the Company’s investor relations and compliance and regulatory programs and periodically receives reports from other committee chairpersons regarding the work being done by their committees
 
 
 
 
CORPORATE RESPONSIBILITY & CULTURAL COMMITTEE
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Oversee management’s implementation of Corporate Social Responsibility, Diversity & Inclusion, and Culture programs to foster belonging, enhance reputation, mitigate risk, promote competitive advantage, engage employees, and meet stakeholder expectations
 
Majority of Members Independent
 
Chair: Ms. Moffatt
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Review, approve, and recommend programs and policies to the Board that are designed to identify, measure, monitor, control, and enhance Corporate Social Responsibility, Diversity & Inclusion, and Culture performance;
 
 
 
 
 
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Monitor the performance of the Corporate Social Responsibility, Diversity & Inclusion, and Culture programs and policies by setting goals, examining social and culture risks, as well as reviewing opportunities and threats that could affect the Company
 
 
 
 
​RISK MANAGEMENT & CAPITAL COMMITTEE
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Oversees management’s program to limit or control the material business risks that confront the Company
 
 
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Approves policies and procedures designed to lead to an understanding and to identify, control, monitor and measure the material business risks of the Company and its subsidiaries
Majority of Members Independent
 
Chair: Mr. Hughes
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Plans for future capital needs
 
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Reviews material business risks including, but not limited to, credit risk, interest rate risk, liquidity risk, regulatory risk, legal risk, operational risk, strategic risk, cyber-security risk, and reputation risk
 
 
 
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Monitors the Company’s enterprise governance, risk management and compliance (“EGRC”) program, including development and implementation of risk management processes in the area of vendor management, data loss prevention, business continuity, policy management and testing and assessment of operational controls
 
 
 
 
 
 
 
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Ensures compliance with regulations pertaining to capital structure and levels
 
 


18BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | CORPORATE GOVERNANCE


Audit Committee

For information about the Audit Committee and Berkshire’s Audit Committee financial experts, please see table above and the discussion related to the Ratification of the Public Accounting Firm in this proxy statement.

Identification and Evaluation of Director Candidates

The Corporate Governance/Nominating Committee is responsible for identifying and recommending to the Board of Directors candidates for Board membership. For purposes of identifying nominees, the Corporate Governance/Nominating Committee relies on personal contacts of the committee members and other members of the Board of Directors, as well as its knowledge of members of the communities served by the Company and its subsidiaries. The Corporate Governance/Nominating Committee will also consider director candidates recommended by shareholders in accordance with the policy and procedures set forth below. The Corporate Governance/Nominating Committee has not previously used an independent search firm to identify nominees.

In evaluating potential nominees, the Corporate Governance/Nominating Committee determines whether the candidate is eligible and qualified for service on the Board of Directors by evaluating the candidate under certain criteria, which are described below under “Director Eligibility Requirements.” If an individual fulfills these criteria, the Corporate Governance/Nominating Committee will conduct a background check and interview the candidate to further assess the qualities of the prospective nominee and the contributions they would make to the Board.

Criteria for Nomination to the Board of Directors

The Corporate Governance/Nominating Committee has adopted a set of criteria that it considers when it selects individuals to be nominated for election to the Board of Directors. A candidate must meet the eligibility requirements set forth in the Company’s bylaws, including a requirement that the candidate not have been subject to certain criminal or regulatory actions. A candidate also must meet any qualification requirements set forth in any Board or committee governing documents.

If the candidate is deemed eligible and qualified for election to the Board of Directors, the Corporate
Governance/Nominating Committee will then evaluate the following criteria in selecting nominees:
financial, regulatory, and business experience;
familiarity with and participation in the local communities;
integrity, honesty, and reputation in connection with upholding a position of trust with respect to customers;
dedication to the Company and its shareholders; and
independence.

The Committee will consider a candidate’s background, training, leadership ability and related skills across a broad spectrum of business, professional, entrepreneurial, educational and creative endeavors, as well as technical skills, experience and know-how in fields and professions outside the financial services industry (such as, by way of example, but without limitation, cyber-security, information technology and management, marketing, business and human capital development) that may assist the Company in strengthening, protecting or promoting its business. The Committee also will consider any other factors the Corporate Governance/Nominating Committee deems relevant, including age, diversity, size of the Board of Directors and regulatory disclosure obligations. We do not maintain a specific diversity policy, but diversity is considered in our review of candidates. Diversity is considered in terms of how a candidate’s background, experience, qualifications, attributes, and skills may complement, supplement or duplicate those of the Board.

With respect to nominating an existing director for re-election to the Board of Directors, the Corporate Governance/Nominating Committee will consider and review an existing director’s Board and committee attendance and performance; length of Board service; the experience, skills, and contributions that the existing director brings to the Board; and independence.



19BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | CORPORATE GOVERNANCE


Director Eligibility Requirements:

No person shall be eligible for election or appointment to the Board of Directors: (i) if such person has, within the previous ten years, been the subject of supervisory action by a financial regulatory agency that resulted in a cease and desist order or an agreement or other written statement subject to public disclosure under 12 U.S.C. 1818(u), or any successor provision; (ii) if such person has been convicted of a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; or (iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation in such a crime.
No person shall be eligible for election or appointment to the Board of Directors if such person is the nominee or representative of a company, as that term is defined in Section 10 of the Home Owners’ Loan Act or any successor provision, of which any director, partner, trustee or shareholder controlling more than 10% of any class of voting stock would not be eligible for election or appointment to the Board of Directors.
No person may serve on the Board of Directors and at the same time be a director of more than two other public companies, or their subsidiaries.
No person shall be eligible for election to the Board of Directors if such person is the nominee or representative of a person or group, or of a group acting in concert (as defined in 12 C.F.R Section 303.81(b)), that includes a person who is ineligible for election to the Board of Directors.
The Board of Directors shall have the power to construe and apply the provisions of the Company’s bylaws and other governance documents, and to make all determinations necessary or desirable to implement such provisions, including but not limited to determinations as to whether a person is a nominee or representative of a person, a company or a group, whether a person or company is included in a group, and whether a person is the nominee or representative of a group acting in concert.
Pursuant to our Corporate Governance Policy, individuals first appointed or elected to the Board of Directors on or after January 1, 2019 will no longer be eligible for re-election to the Board of Directors after their 75th birthday or the completion of their 12th year of service on the Board. For Directors serving before January 1, 2019, who have surpassed or are approaching either or both of these age and service time limits, the Chairman of the Board and the Corporate Governance/Nominating Committee shall work with any such Board members approaching mandatory retirement to ensure that timing issues are given due consideration and an appropriate transition and renewal of the Board occurs.

Consideration of Recommendations by Shareholders. It is the policy of the Corporate Governance/ Nominating Committee of the Board of Directors of the Company to consider director candidates recommended by shareholders who appear to be qualified to serve on the Company’s Board of Directors. The Corporate Governance/Nominating Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the Board of Directors and the Corporate Governance/ Nominating Committee does not perceive a need to increase the size of the Board of Directors. To avoid the unnecessary use of the Corporate Governance/Nominating Committee’s resources, the Corporate Governance/Nominating Committee will consider only those director candidates recommended in accordance with the procedures set forth below.

Procedures to be Followed by Shareholders. To submit a recommendation of a director candidate to the Corporate Governance/Nominating Committee, a shareholder must submit the following information in writing, addressed to the Chairman of the Corporate Governance/Nominating Committee, care of the Corporate Secretary, at 60 State Street, Boston, Massachusetts 02109:
1.
The name of the person recommended as a director candidate;
2.
All information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934;
3.
The written consent of the person being recommended as a director candidate to being named in the proxy statement as a nominee and to serving as a director if elected;
4.
As to the shareholder making the recommendation, the name and address of such shareholder as it appears on the Company’s books; provided, however, that if the shareholder is not a registered holder of the Company’s common stock, the shareholder should submit their name and address along with a current written statement from the record holder of the shares that reflects ownership of the Company’s common stock; and
5.
A statement disclosing whether such shareholder is acting with or on behalf of any other person and, if applicable, the identity of such person.


20BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | CORPORATE GOVERNANCE


In order for a director candidate to be considered for nomination at the Company’s annual meeting of shareholders, the recommendation must be received by the Corporate Governance/Nominating Committee at least 120 calendar days before the date the Company’s proxy statement was released to shareholders in connection with the previous year’s annual meeting, advanced by one year. The Company has not received any recommendations from shareholders for director candidates to be considered for election at the Company’s 2020 Annual Meeting of Shareholders.

Board Risk Oversight

The Board oversees the Company’s risk profile and management’s processes for assessing and managing risk, both as a whole board and through its committees. At least annually, the Board reviews strategic risks and opportunities facing the company and certain of its businesses. Other important categories of risk are assigned to designated Board committees that report back to the full Board. In general, the committees oversee the following risks:
Audit Committee
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Accounting and Financial Reporting
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Compliance with Legal and Regulatory Requirements Related to Accounting and Financial Reporting
Compensation Committee
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Compensation Programs
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Talent Acquisition, Retention, and Development
Corporate Governance/ Nominating Committee
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Governance Policies and Procedures
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Board Organization and Membership
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Committee Membership and Periodic Rotation of Chairpersons
Corporate Responsibility & Culture Committee
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Customer, Community, and Employee Engagement
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Reputational Risk and Business Development
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Talent Acquisition, Retention, and Development
Risk Management & Capital
Committee
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Credit Risk
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Interest Rate Risk
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Liquidity and Capital Risk
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Operational and Strategic Risk
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Cyber-security
Regulatory & Compliance
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Legal, Regulatory, and Compliance Risk
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Information Security



21BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | CORPORATE GOVERNANCE


Code of Business Conduct and Anonymous Reporting Line Policy

The Company has adopted a Code of Business Conduct that is designed to promote the highest standards of ethical conduct by the Company’s directors, executive officers and employees. The Code of Business Conduct, sets forth the ethical rules and standards by which all employees, officers and directors of the Company and its subsidiaries must conduct themselves, and addresses, among other things, conflicts of interest, the treatment of confidential information, general employee conduct and compliance with applicable laws, rules and regulations. The Code of Business Conduct, which also strictly prohibits harassment of any kind in the workplace, is designed to deter wrongdoing and promote honest and ethical conduct, the avoidance of conflicts of interest, a zero tolerance culture and safe environment free from harassment of any kind, full and accurate disclosure and compliance with all applicable laws, rules and regulations.

Paired with the Code of Business Conduct, the Company has also adopted a related Anonymous Reporting Line (also known as the Whistleblower Reporting Line) Policy, under which the Audit Committee maintains and monitors an anonymous “whistleblower” reporting hotline service that all Berkshire personnel are encouraged to use for reporting actual or potential wrongdoing, apparent or suspected violations of the Code of Business Conduct, or other misconduct by any corporate actors. Both the Code of Business Conduct and the Anonymous Reporting Line Policy are reviewed and acknowledged annually by all of Berkshire’s directors, officers and employees, and both are written and implemented to ensure that no retaliation is permitted against any Company personnel who report an incident of harassment or any other misconduct in good faith. Copies of the Company’s Code of Business Conduct and Anonymous Reporting Line (Whistleblower Reporting Line) Policy are available in the Governance Documents portion of the Investor Relations section of the Company’s website (ir.berkshirebank.com).

Anti-Hedging and Pledging Restriction Policy

The Company has adopted a policy that prohibits hedging of Company common stock for all officers of the Company with the title of vice president or higher, all directors, and all persons in the accounting, executive, finance and legal departments (the “Restricted Group”). While there is no prohibition against employees who are not in the Restricted Group to hedge Company common stock, these employees are prohibited from trading Company common stock while in the possession of material non-public information. Under the policy, no person in the Restricted Group may at any time engage in (i) any short sale of Company common stock or other sale of any equity securities of the Company that they do not own, or (ii) any transactions in publicly-traded options, such as puts, calls and other derivative securities based on Company common stock, including, but not limited to, any hedging, monetization or similar transactions designed to decrease the risks associated with holding Company common stock, such as zero-cost collars and forward sales contracts. Generally, a short sale means any transaction whereby one may benefit from a decline in the Company's stock price. In addition, employees, officers and directors are discouraged from pledging Company common stock as collateral for margin purchases or a loan. However, exceptions to this pledging limitation may be granted, if good cause is shown.




22BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | DIRECTOR COMPENSATION


Director Compensation

The Company uses a combination of cash and restricted stock to attract and retain qualified candidates to serve on the Board. Restricted stock grants are intended to align directors’ interests with those of the Company’s shareholders. The Compensation and Corporate Governance/Nominating Committees review director compensation and benefits annually and make recommendations to the Board. The following table provides the compensation received by individuals who served as directors (except for Mr. Marotta, whose compensation is reported in the Summary Compensation Table) of the Company during the 2019 fiscal year. The stock award amounts increased in 2019 to $45,000 from $35,000 in the prior year. Mr. Marotta did not receive separate compensation for his service on the Board.
Name
Fees Earned or Paid in Cash
($)
Stock Awards
($)(1)
Option Awards
($)
All Other Compensation
($)(2)
Total
($)
Baye Adofo-Wilson(3)
$
28,000

$

$

$

$
28,000

Paul T. Bossidy(4)
$
33,000

$
45,000

$

$
1,923

$
79,923

Rheo A. Brouillard(3)(5)
$
28,000

$

$

$
7,201

$
35,201

David M. Brunelle(6)
$
61,000

$
45,000

$

$
413

$
106,413

Robert M. Curley(7)
$
56,000

$
45,000

$

$
126,406

$
227,406

John B. Davies
$
62,000

$
45,000

$

$
1,923

$
108,923

J. Williar Dunlaevy(8)
$
66,000

$
45,000

$

$
1,958

$
112,958

William H. Hughes III(3)
$
28,000

$

$

$

$
28,000

Cornelius D. Mahoney
$
59,000

$
45,000

$

$
1,923

$
105,923

Pamela A. Massad(9)
$
60,000

$
45,000

$

$
693

$
105,693

Laurie Norton Moffatt
$
63,000

$
45,000

$

$
1,923

$
109,923

Richard J. Murphy(10)
$
59,000

$
45,000

$

$
1,923

$
105,923

William J. Ryan(11)
$
112,000

$
45,000

$

$
1,923

$
158,923

Patrick J. Sheehan(4)
$
28,000

$
45,000

$

$
1,753

$
74,753

D. Jeffrey Templeton
$
56,000

$
45,000

$

$
1,923

$
102,923

(1)
Represents the grant date fair value of the restricted stock awards which has been computed in accordance with the stock based accounting rules under FASB ASC Topic 718. Amounts shown are the aggregate grant date fair value of restricted stock awards, with the grant date fair value based on the closing price of the Company’s common stock on the applicable grant date. See Note 22 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2019. Since January 30, 2004, no stock options have been granted to any directors. Directors serving as of December 31, 2019, (except for Mr. Marotta, whose compensation is reported in the Summary Compensation Table below) had the following number of unvested shares of restricted stock and stock options outstanding:
Name
Unvested Restricted Stock
Stock Options Outstanding
Baye Adofo-Wilson

Rheo A. Brouillard

David M. Brunelle
2,233

Robert M. Curley
2,562

John B. Davies
2,562

J. Williar Dunlaevy
2,562

William H. Hughes III

Cornelius D. Mahoney
2,562

Pamela A. Massad
2,233

Laurie Norton Moffatt
2,562

William J. Ryan(11)
2,562

D. Jeffrey Templeton
2,562

(2)
Reflects dividends paid when restricted stock becomes vested.


23BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


PROPOSAL 1: ELECTION OF DIRECTORS | DIRECTOR COMPENSATION


(3)
Messrs. Adofo-Wilson, Brouillard and Hughes were elected to the Company and Bank Boards of Directors on May 30, 2019.
(4)
Messrs. Bossidy and Sheehan retired from the Company and Bank Boards of Directors, effective as of the 2019 Annual Meeting.
(5)
Includes $7,201 in imputed income on split dollar insurance recognized by Mr. Brouillard.
(6)
Includes $136 in imputed income on split dollar insurance recognized by Mr. Brunelle.
(7)
The total amount included in “All Other Compensation” reflects Mr. Curley’s salary in the amount of $120,000 as Chairman of the New York region of Berkshire Bank and club dues of $4,483
(8)
Includes $35 in imputed income on split dollar insurance recognized by Mr. Dunlaevy.
(9)
Includes $416 in imputed income on split dollar insurance recognized by Ms. Massad. Ms. Massad will retire from the Company and Bank Boards of Directors, effective as of the 2020 Annual Meeting.
(10)
Mr. Murphy retired from the Company and Bank Boards of Directors, effective as of September 19, 2019.
(11)
Mr. Ryan will retire from the Company and Bank Boards of Directors, effective as of the 2020 Annual Meeting, due to health reasons.

Retainers for Non-Employee Directors. The following table sets forth the applicable retainers that will be paid to our non-employee directors for their service on our Board of Directors during 2020.
Annual Cash Retainer for Board Service
 
$
40,000

Annual Cash Retainer for Chairman of the Board of Directors
 
$
90,000

Annual Equity Retainer for Board Service
 
$
50,000

Annual Cash Retainer for Audit Committee Chair
 
$
13,000

Annual Cash Retainer for all other Committee Chairs
 
$
6,000

Annual Cash Retainer for Attendance at Audit Committee Meetings
 
$
12,000

Annual Cash Retainer for Attendance at all other Committee Meetings
 
$
8,000



24BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement




 
 
 
 
 
 
 
Proposal 2:
Advisory Vote on Executive Compensation
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The Board of Directors recommends approval of its Named Executive Officer (“NEO”) compensation as set forth herein.

Background. In accordance with Section 14A of the Securities Exchange Act of 1934, shareholders are being given the opportunity to vote on an advisory (non-binding) resolution at the annual meeting to approve our executive compensation as described below in the Compensation Discussion and Analysis, compensation tables and narrative discussion of NEO compensation presented in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives shareholders the opportunity to endorse or not endorse the Company’s executive pay program.

The purpose of our compensation policies and procedures is to attract and retain experienced, highly qualified executives critical to the Company’s long-term success and enhancement of shareholder value. The Board of Directors believes the Company’s compensation policies and procedures achieve this objective, and therefore recommend shareholders vote “FOR” the proposal.

“Resolved, that the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Securities and Exchange Commission Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.”

Is the Shareholder Vote Binding on the Company? This is an advisory vote only, and neither the Company nor the Board of Directors will be bound to take action based upon the outcome. The Compensation Committee will consider the vote of the shareholders when considering future executive compensation arrangements.

THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THIS PROPOSAL.


25BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement



 
 
 
 
 
 
 

Compensation Discussion and Analysis
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In this section we explain our compensation philosophy, describe the material components of our executive compensation program, and review the 2019 compensation for our Named Executive Officers (“NEOs”) listed below. Their compensation is set forth in the Summary Compensation Table and other compensation tables contained in this Proxy Statement. The following Compensation Discussion and Analysis (“CD&A”) focuses on the key factors we believe shareholders should focus on in their evaluation of our “Say-on-Pay” proposal. This section also discusses the role of the Compensation Committee (“the Committee”).
Named Executive Officers(1)
Richard M. Marotta (2)
Chief Executive Officer
Sean A. Gray (2)
President and Chief Operating Officer
James M. Moses
Senior Executive Vice President and Chief Financial Officer
George F. Bacigalupo
Senior Executive Vice President, Commercial Banking
Gregory D. Lindenmuth (3)
Senior Executive Vice President, Chief Risk Officer
 
 
(1)
The principal positions listed above represent the titles of each of the Named Executive Officers at Berkshire Bank, the wholly owned subsidiary of Berkshire Hills Bancorp, Inc. The principal position of each of the Named Executive Officers at Berkshire Hills Bancorp, Inc. is as follows: Mr. Marotta is President and Chief Executive Officer, Mr. Gray is Senior Executive Vice President, Mr. Moses is Senior Executive Vice President and Chief Financial Officer and Mr. Bacigalupo is Senior Executive Vice President.
(2)
Mr. Marotta was appointed to Chief Executive Officer of the Bank and Mr. Gray was appointed to President and Chief Operating Officer of the Bank effective November 26, 2018. Prior to these appointments Mr. Marotta served as President of the Bank and Mr. Gray served as Chief Operating Officer of the Bank.
(3)
Mr. Lindenmuth was identified as an NEO at the end of 2019. The fifth NEO at December 31, 2018 was Linda Johnston, SEVP, Chief Human Resources Officer, who retired at the end of March 2019. Throughout this discussion, reference is sometimes made to the other four NEOs, who are referred to as “Continuing NEOs”. Mr. Lindenmuth’s compensation in 2019 was primarily managed by Mr. Marotta prior to Mr. Lindenmuth’s identification as an NEO.



26BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

Company Performance Overview

In 2019, the Company launched new strategic initiatives towards building a 21st century purpose driven community bank targeted to future-proof the Company in coming decades. The Company reshaped its business focus and balance sheet structure to improve its financial condition and adjust to margin pressures while investing in community oriented products and services. The Company also successfully completed a significant market extension bank acquisition which increased both assets and deposits by approximately 14%. Per share earnings declined due mainly to one commercial loan write-off as well as margin compression. The Company had a strong 26% total stock return which exceeded peers.

Executive Compensation Key Principles

Our philosophy is to provide an executive compensation program that rewards long-term value for our shareholders and promotes sound risk management. The key principles that support our philosophy are:

ü    Attract and retain highly talented executives committed to our success

ü    Pay for performance

ü    Align executive interests with those of our shareholders

ü    Manage risk through oversight and compensation design features and practices

The Compensation Committee considered input from shareholder engagement, third party proxy analyses, and the results of the advisory 2019 “Say on Pay” vote. The Committee noted this advisory vote showed strong approval in 2019. The 2019 Proxy Statement included discussion and disclosure or the 2019 direct compensation decisions for the CEO and President, which are the major elements driving total NEO compensation as reported in this Proxy Statement.

2019 Compensation Overview

NEO compensation is targeted to be in the midrange compared to similar size peers, subject to performance conditions. NEO compensation changes in 2019 were primarily the result of the promotions of Messrs. Marotta and Gray to the positions of CEO and Bank President, respectively. These position changes and the 2019 compensation impact were discussed in the 2019 Proxy Statement. Compensation for these two positions decreased from prior periods due to the higher compensation amounts paid to the prior CEO. Additionally, the position of Chief Operating Officer was combined with the President’s position, eliminating this as the third highest compensated position.

The other NEOs also received salary increases due to the Company’s strong 2018 performance and growth. Short and long term incentive compensation opportunities for all NEOs are linked to salaries. The short term incentive payout is based totally on achievement of performance goals. The percentage of the long term incentive based on performance was increased in 2019 to 60% from 50%, and the long term component was increased as a percentage of total compensation based on market competitiveness and to further incent long term value creation and shareholder alignment.

Performance based compensation paid in 2019 decreased because Company performance was below target. Short term NEO compensation was 47% of the target opportunity amount and performance based long term compensation vesting in 2019 was 67% of the target opportunity amount.

Overall, the plan operates as designed by paying less when performance targets are not achieved. The Committee believes that compensation is reasonable and responsive to results, and that pay-performance alignment remains appropriate relative to peers.



27BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Highlights of our Compensation and Governance Programs
WHAT WE DO
Pay for Performance: A significant portion of each NEO’s annual compensation target is variable and tied to company and individual performance results. The Company uses a mix of performance metrics and our short- and long-term plans provide a balanced timeframe for incentive opportunities.
Link Performance Measures with Strategic Objectives: Performance measures and individual goals for incentive compensation are linked to strategic, operating and financial goals designed to create long-term shareholder value.
Annual Say-on-Pay Vote: We conduct an annual Say-on-Pay advisory vote and evaluate voting results.
Shareholder Engagement: As part of the Company’s shareholder outreach program, members of the Compensation Committee and members of management welcome engagement with shareholders to better understand their perceptions and views on our executive compensation program.
Independent Compensation Consultant: The Compensation Committee engages its own independent compensation consultant to review the Company’s executive compensation program and practices.
Stock Ownership Guidelines: We have significant stock ownership guidelines requiring our executives and directors to hold substantial equity ownership.
Clawback Policy: The clawback policy allows the Board to recover incentive compensation paid to an executive if the financial results that the compensation was based on are materially restated due to fraud, intentional misconduct or gross negligence.
Incentivize Sound Risk Management: Our compensation program includes features intended to discourage employees from taking unnecessary and excessive risks, including balanced performance metrics, emphasis on long-term shareholder value creation, and clawback provisions. The Chief Risk Officer conducts an annual risk assessment which is used by the Committee in assessing the soundness of the compensation program.
WHAT WE DON'T DO
Gross-ups for Excise Taxes: We have not provided change-in-control tax gross-ups clauses since 2008, nor do we have any intention to include this feature in future contracts. At this time, one legacy NEO change in control agreement remains in place with this feature; the potential impact of this contract clause is not material.
Hedging and Pledging: All of our officers with the title of vice president or higher,  directors, and all persons in the accounting, executive, finance and legal departments are prohibited from engaging in hedging, monetization, derivative or similar transactions with Company securities. We also have a policy that discourages pledging of company securities, with very limited exceptions.
Contracts: Our executives, with the exception of the CEO, are all employed “at will” and the relationship may be terminated by the Company or the employee at any time without any severance payments.
Dividends: We do not pay dividends on any restricted stock compensation until vested.

Compensation Philosophy and Objectives

The primary philosophy and objective of our compensation program is to align the interests of our executives with shareholders by rewarding performance against established corporate financial and strategic goals, solid executive leadership and strong individual executive performance. We strive to attract, motivate and retain a highly qualified and talented team of executives who will lead Berkshire to maximize long-term performance and earnings growth. The Committee regularly reviews executive compensation program elements to ensure they are consistent with safe and sound business practices, regulatory requirements, emerging industry best practices and shareholder interests.



28BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Key Principles That Support Our Philosophy
Attract and retain highly talented executives committed to our success
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Provide competitive total compensation that enables us to attract and retain highly talented executives with experience and leadership abilities to grow and sustain our business
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Target total compensation opportunities to reflect the median of market; defined as banks similar in size and business model to Berkshire
Pay for performance alignment
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Measure our success through a balanced portfolio of performance metrics that rewards corporate and individual success
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A significant portion of total compensation is “at risk” and based on short and long-term performance
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Financial performance results fund our annual incentive plan and determine a portion of long-term equity vesting
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Long-term equity compensation was granted with 60% of the grant tied to 3-year performance and 40% vested over 3 years
Align executive interests with those of our shareholders
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Performance goals are directly aligned with our strategic and operating objectives targeted towards long-term shareholder value
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Rigorous stock ownership requirements to ensure our executives hold stock throughout their tenure as executives
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A significant portion of executive compensation, consisting of our long-term incentive, is in the form of Company shares
Manage risk through oversight and compensation design features and practices
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Total compensation program incorporates a balanced approach that includes pay that is fixed and variable, short- and long-term, and in the form of both cash and equity
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Multiple goals in our incentive plans to reinforce financial, operational, risk, and shareholder considerations
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Committee can apply discretion to negatively adjust incentive compensation in consideration of risk management objectives
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Balance of short-term and long-term incentives, cash and equity, annual and multi-year performance periods, with 3 year performance in the long-term plan
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Incentive plan caps for maximum payments
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Clawback policy that allows for recoupment of compensation for financial restatement or misconduct
Compensation
Drivers
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Incentive plans designed to encourage achievement of our strategic business goals and reinforce our business values
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Pay levels that are fair, competitive and internally equitable
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A focus on the attainment of our vision, business strategy, operating imperatives, and results
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Recognition of Company and individual performance
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Consideration of market and best practices



29BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Decision-Making Process

Our Committee, which is composed solely of independent directors, is responsible for establishing, implementing and continually monitoring all elements of compensation for the NEOs.
Setting Performance Goals
Each year, along with its independent compensation consultant, the Committee reviews our compensation program to determine competitiveness and effectiveness, and evaluate whether any changes should be made for the next fiscal year. In the first quarter of each fiscal year, the Committee approves the components of compensation for each NEO and the performance goals for each corporate performance measure.
Annually the Committee establishes Company financial and CEO individual performance goals; the CEO sets individual performance goals for each of the other NEOs, subject to the review of the Committee. The individual goals are designed to drive our strategic corporate goals.
The Committee meets regularly throughout the year, both with management and in executive session to review Company performance against the performance goals.

Determining Compensation
The Committee annually conducts a review of each NEO and the Company’s performance measured against established financial and individual performance goals. As part of this review process, the CEO reviews with the Committee the performance of each NEO relative to the individual goals and presents his compensation recommendations based on his review. The Committee then independently reviews and, if desired, modifies any compensation recommendations prior to approving all compensation decisions for the NEOs.
The CEO’s performance is reviewed by the Committee in conjunction with a self-assessment and a formal CEO evaluation process and discussion with other independent directors. The CEO is not present when the Committee makes decisions on his compensation. The Committee meets with the CEO to present its decisions and review the Board’s assessment of his performance.
The Committee’s objective is to ensure that total compensation paid to the NEOs is fair, reasonable and performance based, while aligning with shareholder interests. In addition, the Committee annually conducts an executive compensation review with the compensation consultant to set compensation opportunities and ensure market competitiveness. The consultant also provides periodic assessment of pay-performance alignment.

Contribution from the Independent Compensation Consultant
During 2019, the Committee’s independent compensation consultant provided a number of consultations and presentations to the Committee. These included a presentation on executive compensation trends and external developments, an annual competitive evaluation of NEO compensation, draft review and comments on the CD&A, development of the peer group used for competitive analysis and attended committee meetings as requested by the Committee Chair.



30BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Factors Considered in Compensation Decision Process

The Committee considers many factors when making pay decisions throughout the year. In addition to the market data provided by the independent consultant, the Committee also considers various analyses, information, and input including, but not limited to:
>    Overall operational and financial performance
>    Total shareholder return on an absolute and relative basis and stock price performance
>    Executive individual performance results relative to their individual financial and strategic goals
>    Strategic plan progress and performance relative to annual budget
>    Demonstration of behaviors that support our culture and brand
>    Executive stock ownership levels
>    Qualitative input from the Committee and other independent directors
>    External influences, economic conditions and industry factors
>    Risk assessment considerations
>    Income tax factors
>    Internal equity
>    CEO pay ratio
>    Compensation trends and best practices
>    Advisory Say on Pay voting results



31BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Benchmarking Analysis - Compensation Peer Group

The Committee considers the structure of compensation programs and pay levels at other publicly traded banks similar in size and business model to Berkshire when evaluating our compensation program. Annually, the Committee’s independent compensation consultant conducts a comprehensive competitive market analysis using the peer group and other industry survey data. The peer group is developed by the consultant in conjunction with management and approved by the Committee as part of our use in analyzing and setting annual salaries and incentive target opportunities. The Committee annually reviews and updates the peer group, as necessary upon recommendation of the compensation consultant. The compensation consultant used the peer group and other published industry surveys to conduct the competitive review. They also used peer and their proprietary banking industry database to share general industry compensation trends.

Peer Group Criteria: The peer group developed in 2018 to apply to 2019 pay program targets included exchange traded banks nationwide ranging from $8 to $20 billion in assets, with similar business models, revenues and regulatory hurdles to Berkshire. Due to the large number of banks and to refine to a reasonable number of institutions, the peer group excluded banks located in the West and in Texas. The following group shows the peer companies identified in 2018 and used for 2019 pay program considerations:
Peer
Ticker
Ameris Bancorp
ABCB
Atlantic Union Bankshares Corporation
AUB
BancorpSouth Bank
BXS
CenterState Bank Corporation
CSFL
Community Bank System, Inc.
CBU
Customers Bancorp, Inc.
CUBI
FCB Financial Holdings, Inc.
FCB
First Financial Bancorp
FFBC
First Merchants Corporation
FRME
First Midwest Bancorp, Inc.
FMBI
Great Western Bancorp, Inc.
GWB
Heartland Financial USA, Inc.
HTLF
Home BancShares, Inc.
HOMB
Independent Bank Corp.
INDB
NBT Bancorp, Inc.
NBTB
Old National Bancorp
ONB
Renasant Corporation
RNST
Simmons First National Corporation
SFNC
South State Corporation
SSB
TowneBank
TOWN
Trustmark Corporation
TRMK
United Bankshares, Inc.
UBSI
United Community Banks, Inc.
UCBI
WesBanco, Inc.
WSBC



32BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Compensation Program Elements and Pay Mix

Direct compensation consists of three main components: Base Salary, cash based Short-Term Incentive (“STI”), and stock based Long Term Incentive (“LTI”). Total compensation includes a fourth component of Other Compensation consisting of Benefits and Perquisites. Incentive based compensation mostly utilizes non-GAAP performance measures. For a reconciliation of non-GAAP measures to their most directly comparable GAAP financial measures, please see Appendix A. Total direct NEO compensation opportunity granted by the Committee in 2019 was as follows:
 
Variable - Performance Based
Long Term - Equity Based
CEO
50%
40%
All Five NEO's
44%
35%

Base Salary
The Company’s base salary program is designed to provide competitive base pay reflective of an executive’s role, responsibilities, contributions, experience, leadership and performance. Salaries are generally targeted to be within the range of market median and are expected to sufficiently discourage inappropriate risk taking by executives. Salary increases are effective in January of each year.

2019 Salary Summary. Mr. Marotta received a 24% salary increase in 2019 and Mr. Gray’s increase was 19%. These increases were primarily due to their promotions to CEO and President, respectively, in November 2018. These increases were described in the 2019 proxy statement. The combined salaries for these positions remain lower than the prior year before the CEO change. Additionally, the separate position of Chief Operating Officer was combined with the President position, eliminating this separate third highest compensated position. Mr. Moses and Mr. Bacigalupo each received 7% raises due to Company performance and growth, including the approximate 14% increase in total assets and deposits related to the bank acquisition in 2019. The salary for Mr. Lindenmuth was the same as for Ms. Johnston who was an NEO in 2018 before her retirement.



33BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Short-Term Incentive Program (STI)
The Company’s short-term incentive compensation program is designed to align executives’ interests with the Company’s strategic plan and critical annual performance goals by providing meaningful “pay-at-risk” that is earned each year based on performance results. It also seeks to motivate and reward achievement of specific Company, business unit and individual performance goals with competitive compensation when performance goals are achieved; above or below median pay when performance results are above or below goals.

The Committee sets and approves award targets as a percentage of base salary. Our incentive pool funding is the total of participants’ target opportunities with a goal to fund payouts at target for achieving pre-defined “target” performance goals. The incentive pool funding ranges from 0% - 150% of target based on actual performance. The maximum award for any participant, in consideration of Corporate and Individual performance is capped at 200% of target.

Each year, in the first quarter, the Committee sets specific incentive metrics and goals that align with our strategic plan. The Committee sets threshold and stretch goals for each incentive metric. Target goals (in other words, our budget) are expected to have some stretch and not be “guaranteed”. Threshold performance goals and awards are intended to reward solid performance but at reduced payout levels. Stretch performances is expected to represent strong performance that is unlikely, but possible, if we exceed all our goals.
 
The Committee approves the Corporate Scorecard as well as the Chief Executive Officer’s individual goals. The CEO prepares goals for NEOs; the Committee can modify the goals at its discretion and approves the final goals at the beginning of each year. Once the Corporate Scorecard results and pool funding are known, individual performance is assessed to determine and allocate the actual awards from the amount that has been funded to the pool. The Committee determines awards in consideration of Individual performance but with the discretion to consider other factors such as Company performance shortfalls and/or regulatory and safety and soundness concerns and/or based on risk management considerations.

2019 STI Program Summary. For 2019, the Corporate Scorecard and STI funding pool (at target) increased due to the promotions and salary growth described above. The individual targets were defined as a percent of salary: the CEO’s target was 75%, the President’s target was 55%; the CFO and Commercial executive targets were 45%; and the Risk Officer was 30%. These percentages were unchanged from the prior year. The targets for Mr. Marotta and Mr. Gray reflected their promotions to CEO and President in November 2018, and were previously described in the 2019 Proxy Statement.

While the STI targets increased in 2019, the STI payments decreased due to lower plan achievement. The NEO incentive payout measured 47% of target in 2019, compared to 124% in 2018. The lower 2019 payout percentage was primarily due to the impact of one large commercial loan write-off during the year, as well as margin compression. The total STI payout for the four continuing NEOs decreased by 49% in 2019 compared to 2018, as the lower payout ratio more than offset the increase in the targets.

Overall, the incentive operated as designed by paying less when performance targets are not achieved.



34BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Company Measures and Funding of the Incentive Pool

The Committee established an incentive pool for the twelve senior executives of the Company, based on the total of the incentive opportunities for each executive (defined as a percentage of each person’s salary). The Committee establishes performance goals for the Corporate Scorecard that determine the pool available for payout of incentive compensation. The Committee also establishes a minimum trigger or gate level of performance, which is defined as 75% of targeted core earnings, which must be achieved in order for the plan to fund any compensation.

Once the minimum is achieved, the incentive pool funding is determined based on Company performance relative to four performance goals, evenly weighted. In 2019, the Committee replaced the Core Earnings performance measure with a Core EPS measure to better align with shareholder interests. The other performance measures were unchanged from 2018.

The Core Earnings trigger is a non-GAAP measure that excludes certain amounts which the Company has identified as unrelated to its normal operations; described as “adjusted net income” in Form 10-K. For a summary of certain non-GAAP performance measures, please see Appendix A. Below is a summary of the Corporate Scorecard metrics:
Performance Measure
Definition
Core EPS
Core EPS (a non-GAAP measure calculated as core earnings per share on a diluted basis.
Expense Management

Efficiency Ratio (a non-GAAP measure calculated as adjusted non-interest expense as a percentage of adjusted revenue; adjusted for designated items, intangibles, and tax credit adjustments)
Asset Quality

Criticized Asset Ratio (calculated as criticized assets as a percentage of the sum of Bank Tier 1 capital and the loan loss allowance; criticized assets are those assets rated Special Mention or worse in Berkshire Bank’s risk rating system)
Core Return on Assets

Core Return on Assets (a non-GAAP measure calculated as core earnings as a percentage of total average assets)

Each goal has a defined range of performance; threshold funds the pool at 50%; target performance funds the pool at 100% and stretch performance funds at 150%. Funding is interpolated proportionally based on actual performance within these ranges. These funding ranges are unchanged from the prior year and are viewed as within a normal range among Company peers. The Committee will consider and discuss overall risk and can also adjust the pool downward to reflect any risk, regulatory or shareholder issues. The objective is to ensure our incentive plan is funded appropriately based on profits and strategic results.



35BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

2019 Corporate Scorecard Metrics, Goals, and Results

The core earnings goal for 2019 was $133 million, which was higher than the $125 million originally reported core EPS result in 2018 due to the planned acquisition of SI Financial in 2019. The 2019 STI trigger was set at 75% of the goal, or $100 million. Actual core earnings totaled $119 million in 2019, which exceeded the trigger and therefore allowed for the funding of the total STI pool based on performance compared to target. The loss from discontinued operations was excluded from core results in 2019.

Each Corporate performance measure has defined goals for threshold, target and stretch performance. The goals for threshold and stretch represent approximately +/-10% for Core EPS, +/-7% for Expense Management, +/- 25% for Asset Management, and +/- 5% for Core Return on Assets. These ranges were broadened out in 2019 from the ranges used in 2018, which were approximately +/- 5% for Core EPS, +/-5% for Expense Management, +/- 15% for Asset Quality, and +/- 5% for Core Return on Assets. This change allowed the Committee to better differentiate performance at the Company and individual levels.

The table below summarizes the performance goals, results and incentive funding for 2019:
Performance Measure
Weighting
Threshold
Target
Stretch
Result
Funding
Core EPS
25%
$2.42
$2.69
$2.96
$2.40
0%
Expense Management
25%
59.0%
55.0%
51.0%
55.6%
92%
Asset Quality
25%
21.0%
17.0%
13.0%
19.3%
71%
Core Return on Assets
25%
0.98%
1.03%
1.08%
0.93%
0%
Weighted Funding
 
 
 
 
 
41%

The considerations in setting the 2019 corporate targets and evaluating performance are shown below.

The core EPS target was established at $2.69 which was similar to the $2.71 actual result originally reported in 2018. In 2019, changes in expected purchase accounting were expected to decrease EPS, and management was incented to develop initiatives to offset the impact of this decrease. Actual core EPS in 2019 was $2.40, including the $0.23 per share after-tax impact of one large commercial loan write-off. EPS in 2019 was also pressured by margin compression driven by the effect of unexpected lower market interest rates on the Company’s asset sensitive balance sheet. Core EPS did not meet the $2.42 EPS threshold and the payout allocation for Core EPS was therefore zero.

The expense management goal is reflected by our efficiency ratio, and was targeted at 55.0%, which was better than the 58.3% actual result originally reported in 2018. This target goal required strong expense management to offset the impact of lower accretion revenue noted above and to capture the benefits of non-core merger and restructuring costs incurred in prior years. The actual performance of 55.6% was just slightly below the target of 55.0%, illustrating our achievement of most of the targeted improvement from the prior year. Core expenses were managed below budget in 2019 to help offset the impact of unanticipated decreases in market interest rates. Management earned 92% of the targeted payout for this measure, based on interpolation between actual and threshold amounts for the efficiency ratio.

The asset quality goal measures the level of criticized assets in relation to regulatory capital. The target for this metric was set at 17%, which was unchanged from the 17% actual performance in 2018. The target anticipated continued strong asset management and problem loan resolutions. The actual result was 19%, which represented ongoing strong asset management but did not achieve the target. Using interpolation, a payout factor of 71% was established for this metric.

The core return on assets target goal was set at 1.03%, compared to actual results of 1.07% originally reported in 2018. The factors discussed above for core EPS had similar impacts on setting this target, along with the impact of increasing assets with the SI Financial merger. The actual core ROA in 2019 was 0.93%, which was below the 0.98% performance threshold for core ROA. Accordingly, the payout factor for this metric was zero.



36BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

The above metrics were each weighted at 25%, and actual performance resulted in a total weighted pool funding of 41%. The pool funding was mostly impacted by the one large loan loss and the margin compression previously described. As discussed in the Form 10-K, management undertook a number of steps in 2019 towards its objective of building a 21st century community bank focused on purpose driven performance. These mission related initiatives are long term and strategic and are targeted to future-proof the company in coming decades. From a financial perspective, management conducted a strategic review in 2019 and developed several initiatives to respond to current conditions and to target more sustainable long term profitability. Management also completed the acquisition and integration of SI Financial in 2019, resulting in a strengthened regional footprint. These and other actions are more fully discussed in Management’s Discussion and Analysis in the Form 10-K.

The Committee also considered any risk, regulatory or shareholder issues and determined that there was no basis for adjusting the pool funding downward in 2019. Enterprise risk and regulatory measures remained appropriate. The Company’s TSR was a strong 26% in 2019 and exceeded the industry peer index as reported in Item 5 of the 2019 Form 10-K. Shareholders received a 5% dividend increase in 2019.

Once incentive pool funding was determined, the Committee reviewed each NEO’s progress against his or her individual performance goals and contributions to overall company performance and strategic accomplishments to determine individual compensation. Incentive opportunities are based on a percentage of salary for each NEO, and an NEO could receive an award from 0% to 200% of the incentive opportunity. The Committee determined that Messrs. Marotta, Gray, and Lindenmuth earned 41% of their individual incentive opportunity, which was equal to the pool funding ratio. The Committee determined that Mr. Moses earned 58% of his incentive opportunity and that Mr. Bacigalupo earned 68% of his incentive opportunity. Collectively, the NEO’s in 2019 earned 47% of their short term incentive funding opportunity based on their overall contribution to the incentive pool funding earned by the twelve senior executives as a group.

A summary of the individual incentive fundings is below:
 
2019 Salary
Target Percent
Target
 
2019 Incentives
% target
Marotta
$675,000
75%
$506,250
 
$206,550
41%
Gray
$550,000
55%
$302,500
 
$124,000
41%
Moses
$400,000
45%
$180,000
 
$105,000
58%
Bacigalupo
$375,000
45%
$168,750
 
$115,000
68%
Lindenmuth
$300,000
30%
$90,000
 
$36,750
41%

Performance contributions in 2019 from the NEOs included the following:
Mr. Marotta, CEO
In his new role as CEO, introduced and led the development of our strategic vision for building a 21st century community bank with a focus on purpose driven performance to create value for all stakeholders
Oversaw the strategic review and initiatives to offset margin compression, strengthen the balance sheet, and develop more sustainable profitability
In his new role as CEO, worked with the Board to evolve governance and leadership in support of our culture, values, and strategic vision
Achieved core elements of the Company’s 2019 budget before the impact of one commercial loan write-off and the unexpected decrease in market interest rates


37BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Mr. Gray, President and COO
In his new role as Bank President, supported the rollout of the Company’s new strategic vision across the Bank’s market and operating teams
Completed the closing and integration of the SI Financial acquisition, the Company’s second largest acquisition, which strengthened the franchise with the acquired operations
Achieved most of the initiatives to improve efficiency and achieve merger related cost saves
Provided leadership to oversee the new Regional President positions to drive performance for community stakeholders
Mr. Moses, CFO
Constructed and implemented financial framework for strategic initiatives undertaken in 2019
Achieved balance sheet restructuring objectives to support liquidity and capital goals
Oversaw market operations and financial reporting in support of asset sales and merger integration
Oversaw stock repurchase program and effectively managed investor communications about company initiatives and values based strategic initiatives to serve all stakeholders
Mr. Bacigalupo, SEVP Commercial
Supported strategic focus on relationship and return objectives for loan portfolio and release of less strategic assets
Maintained strong business development pipeline with focus on strategic disciplines for business selection
Oversaw commercial side of merger integration in support of sustaining market penetration in new markets
Supported efficiency strategies, organized commercial verticals, and supported regional leadership initiatives
Mr. Lindenmuth, SEVP – Risk
Expanded and deepened enterprise risk management processes and regulatory relations
Generally maintained favorable asset quality metrics and oversaw CECL accounting preparation
Took on compliance oversight


38BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Long-term Incentive Plan (LTI)

The Company’s long-term incentive/equity compensation program is designed to align senior executives with long-term interests of the Company and shareholders through stock-based compensation. The program also seeks to provide reward for superior multi-year performance, encourage stock ownership, and enhance our ability to retain our top performers.

2019 LTI Awards Summary. Grants were made in January and awarded as 60% performance shares and 40% time-based restricted stock. This was changed from the 50%/50% mix previously provided based on shareholder feedback in 2018 and to more closely align with shareholder value. Growth in 2019 target awards was partly due to the promotions of Messrs. Marotta and Gray to their new roles as CEO and President/COO; these awards were previously disclosed in the 2019 Proxy Statement. The Committee increased overall long-term incentive compensation for all NEOs based on its annual review of market competitiveness and to further incent long term value creation with compensation based on future results achieved. The CEO’s long term grant increased to approximately 120% of salary from 100% and the President’s grant increased to 90% from 70%. The LTI grant was increased to 65% of salary from 55% for Mr. Moses and to 60% from 25% for Mr. Bacigalupo.

LTI Program Overview. Each year in the first quarter the Committee determines, at its discretion, the terms of the equity incentive plan, the timing of the awards, the recipients who may be granted awards, and the form and amount of awards.

Long-term incentive awards are intended to:
Provide a meaningful portion of total compensation in stock-based awards
Align executives with our shareholders
Reward long-term performance and avoid excessive risk taking
Encourage retention of our key senior executives
Balance compensation rewards with risk through long-term vesting tied to performance

In determining the form and amount of equity awards to be granted to our NEOs in 2019, the Committee considered competitive market practices, including the market range for each position, Company performance and individual performance, expected future contributions by each individual, recommendations from the CEO (for NEOs other than himself) and each NEO’s total compensation, as well as the financial and economic environment and total stock returns. The Committee also considered incentives provided by different award types, shareholder returns, avoiding excessive risk taking and encouraging employee retention. As in recent years, the Committee decided that performance shares and time-based restricted stock grants with three year vesting schedules were the most appropriate form of equity compensation for the long-term incentive grant. The total award granted is split into two components: 60% performance shares and 40% time-based shares.
403506809_cdagraphic.jpg


39BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

The performance shares are tied to performance goals for a three-year performance period (i.e. 2019 - 2021). In 2018, the Committee used Core EPS and Relative TSR as the two measures used for the performance component of the award. In 2019, the Committee replaced core EPS with a relative measure of improvement in core return on tangible equity to better align with shareholder value. With this change, both of the LTI performance metrics are relative, compared to the LTI Industry Index. The Committee believes that these relative measures are preferable to static measures for evaluating performance over a three year period. Each of these two measures is independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period depending upon Company performance against the three-year goals and aligning to shareholder value.

Relative performance will be measured using an objectively defined Industry Index of predefined banks selected using the following criteria: all exchange traded banks between $7B and $30B located in the US. In order to be counted in the final calculations, a peer company must remain an exchange traded bank at the end of the performance period. The index for the 2019 - 2021 performance cycle has been provided in Appendix B.

The Company believes that the measure of core return on tangible common equity (“Core ROTCE”) is one of the most significant financial measures utilized by shareholders in valuing the Company. The metric is formulated to measure the relative improvement in this measure compared to peers, in order to incent management to improve shareholder value. In order to earn any incentive compensation for this measure, the change in Core ROTCE for the Company must be favorable to the change for the industry index average. The target is a change that is 0.30% favorable to the index change, and stretch is a change that is 0.60% favorable to the index change, based on average performance over the three year period compared to the 2018 base year. As in the past, the target for relative TSR is set at the peer median as measured over the performance period for 2019 - 2021. The threshold for the TSR payout will be the 30th percentile, with a 50th percentile target, and the stretch will be the 75th percentile.

2017 to 2019 Long-Term Incentive Plan Payout

The 2019 year concludes the performance grant made under the 2017 Long Term Incentive Plan which was established in the first quarter of 2017 and rewards performance results over the three year period, 2017 to 2019. The final number of shares earned pursuant to those awards is based on the Company’s actual results for the three-year period. Actual results for each year are based on results as they were reported in that year.

The framework for establishing specific goals for the 2017 long-term incentive grant was similar to previous years. The goals were based on the Company’s business situation and plan at the end of 2016. The goals motivated improved performance based on absolute and relative considerations. The year 2017 marked the substitution of relative TSR for core ROE, and this is the first three year plan including the TSR target. The core EPS target anticipated core EPS growth averaging approximately 8% per year from the 2016 base period, when actual core EPS was $2.20. The Company exceeded its core EPS objectives through 2018, but did not achieve the objective in 2019, as previously discussed. As a result, the funding allocation was determined to be 65% of target. The relative TSR was determined to be the 36th percentile and achievement was determined to be 69% of target as a result. Each of these components was weighted at 50%, and the total LTI funding was set at 67% for each of the NEOs remaining at year-end 2019. Performance awards for NEOs who left the Company were forfeited. A summary of the performance and payout is as follows:
2017 - 2019 Performance and Payout
 
Threshold
Target
Stretch
2017- 2019 Result
Core EPS 50%(1)
$7.25
$7.64
$8.02
$7.40
Relative TSR(1) 50%
30th percentile
50th percentile
75th percentile
36th percentile
Payout
50%
100%
150%
67.2%
Source: S&P Global Market Intelligence and company data.
(1)
For a summary of certain non-GAAP performance measures, please see Appendix A. Core EPS based on amounts originally reported. The measure of core EPS in 2019 core measures treat the Company’s national mortgage banking operations as discontinued and non-core. The core measures originally reported in 2018 and 2017 treated these operations as core, although the 2019 Form 10-K shows results with these operations as non-core for purposes of financial statement comparability.


40BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Benefits and Perquisites

Our benefits program is designed to be competitive and cost-effective. All employees are provided core benefits including medical, retirement, life insurance, paid time off, and leaves of absence. The Company provides NEOs with perquisites and other benefits that the Committee believes are reasonable and consistent with its overall compensation philosophy. The Committee reviews the NEOs’ total benefits package on a regular basis to determine the competitiveness and appropriateness of providing executive benefits.

The Company maintains an amended and restated supplemental executive retirement agreement with Mr. Marotta and in 2019, the Company entered into a supplemental executive retirement agreement with Mr. Gray. We do not offer our other NEOs or any other executive a supplemental retirement arrangement or other non-qualified deferred compensation program. For additional information regarding the supplemental retirement arrangements, please see the section headed “Executive Compensation - Non-qualified Deferred Compensation.”

Named Executive Officers are eligible for modest perquisites such as automobile allowance, financial planning and membership fees. The Company also maintains a long term care insurance plan to supplement the Company’s disability plans for Mr. Marotta and Mr. Gray. Overall perquisites are a relatively modest element of the compensation program.

Potential Post Termination or Change in Control Benefits

An important consideration in our ability to attract and retain key personnel is our ability to minimize the impact on our management team of the possible disruption associated with our analysis of strategic opportunities. Accordingly, we believe that it is in the best interest of the Company and its shareholders to provide our NEOs with reasonable financial arrangements in the event of termination of employment following a change in control or involuntary termination of employment for reasons other than cause following a change in control. The Company maintains an employment agreement with its Chief Executive Officer and change in control agreements with the other NEOs. In 2019, the Company entered into an employment agreement with Mr. Marotta which replaced his prior three-year executive change in control agreement. This agreement is intended to ensure that the CEO devotes his energy and attention to the long term interest of the shareholders. The Company does not have any employment agreements with any other NEO or employee.

Beginning in 2009, the Company determined that it would no longer enter into an employment or change in control agreement that provides for a tax indemnification payment in the event that the payment under the agreement results in additional tax liability under Section 280G of the Internal Revenue Code (a “Tax Indemnification Payment”). However, the Company maintains one legacy change in control agreement, with Mr. Gray, which was entered into in 2007, existed prior to 2009 as part of his change-in-control agreements and which provides for a potential Tax Indemnification Payment. For additional details, please see section titled “Potential Payments upon Termination of Employment or a Change-In-Control” of this proxy statement.



41BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Additional Compensation Information

Risk Assessment and Related Considerations

The Chief Risk Officer conducts an annual risk assessment of the Company’s incentive compensation plans (the short-term and long-term incentive plans) for all employee levels within the Company. This review for 2019 reported that the plans fit within established risk parameters and strategic plans. Based on this risk assessment review, the Committee concluded that the incentive compensation plans do not motivate excessive risk taking, and are not reasonably likely to have a material adverse effect on the Company.

The review determines if these plans encourage behaviors that exposed the Company to unacceptable levels of risk. The review evaluates the balance of compensation elements between cash, performance shares, restricted stock grants, fixed versus variable compensation, and long-term versus short-term compensation. It considers the level of potential cash incentive compensation as compared to base salary, the focus of individual and corporate goals, as well as the weighting and balance of goals, and internal controls in place to mitigate possible excessive risk taking. Additionally, the plans include mechanisms for “deferral of payment” and/or “forfeiture of payment” relating to ethical business standards and clawback policies, as approved by the Committee, under which the Company may recover and/or revoke payments of incentive compensation attributable to certain trigger events, including employee misconduct and/or financial restatement.

During 2019 the Committee continued to reinforce our risk-based approach to total compensation in various ways, such as incenting on core profitability and shareholder return, retaining the risk-based performance measure for Asset Quality and providing risk adjustment features that allows the Committee to reduce incentive awards in light of risk or regulatory concerns. The Committee remains committed to continuing to review and evolve compensation plans and ensure they represent sound and balanced risk management practices. The proper application of risk and governance, within the context of established strategic objectives, remain the driving factors in establishing the incentive compensation plans.

Role of the Compensation Committee, Management and Compensation Consultant

Role of the Compensation Committee. During 2019, the Committee consisted of five members of the Board, all of whom are independent. The Chairperson of the Committee regularly reports on material committee actions at Board meetings.

The Committee ensures that the total compensation paid to the senior executives is fair, reasonable and performance-based while aligning with shareholder interests. The Committee is responsible for establishing, implementing and continually monitoring all elements of compensation for the NEOs. Elements of compensation are reviewed individually and in the aggregate, including base salary, annual cash incentives, long-term incentives/equity awards, total direct compensation, and benefits and perquisites. Additionally, the Committee annually reviews its charter, philosophy and executive compensation practices, as well as industry compensation trends and best practices.

The Committee has the sole authority and resources to obtain advice and assistance from internal or external legal, human resource, accounting, compensation or other advisors or consultants as it deems desirable or appropriate. The Committee has direct access to and meets periodically with the compensation consultant independently of management.

The Committee’s major duties and responsibilities are as follows:
Review and benchmarking of overall compensation, benefit and perquisites
Review all compensation components for CEO and each NEO
Evaluate CEO and other NEOs’ individual performance
Ensure executive overall pay is aligned with corporate performance results
Review, evaluate and modify as needed, executive compensation plans
Ensure executives are not encouraged or rewarded for taking excessive risk
Approve annual cash incentive payments, annual equity grants, and vesting of performance shares for the CEO and other NEOs in accordance with the terms of the Executive Short-Term and Executive Long-Term Incentive Plans
Provide oversight to ensure compliance with all regulations related to executive compensation


42BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

Approve the annual Compensation Discussion and Analysis

Role of Management. Although the Committee makes independent determinations on all matters related to compensation of the NEOs, certain members of management may be requested to attend or provide input to the Committee. Input may be sought from the CEO, President, SVP/Chief Human Resources Officer, Chief Financial Officer, or others to ensure the Committee has the information and perspective it needs to carry out its duties.

In particular, the Committee seeks input from the Chief Executive Officer on matters relating to strategic objectives, Company performance goals and annual business plan. In addition, the CEO provides the Committee summaries of senior executive officer performance and recommendations relating to their compensation. The CEO is not present when the Committee discusses his performance and decides on his compensation. The Committee meets with the CEO to present its compensation decisions and discuss the evaluation of his performance.

The SVP/Chief Human Resources Officer assists the Committee on matters of design, administration and operation of the Company’s compensation programs. The SVP/Chief Human Resources Officer may be requested, on the Compensation Committee’s behalf, to provide proposals or work with their independent compensation consultant to develop proposals for the Committee’s consideration. The SVP/Chief Human Resources Officer reports to the Committee directly on such matters. The Committee also receives updates from the Company’s Chief Risk Officer, Chief Financial Officer and Investor Relations Officer throughout the year as appropriate.

Although the senior executives may provide insight, suggestions or recommendations regarding senior executive compensation, they are not present during the Committee’s deliberations or vote. Only Committee members vote on decisions regarding NEO compensation. The Committee regularly meets in executive session without management present.

Role of the Compensation Consultant. The Committee has the authority to retain a compensation consultant to advise on executive compensation matters, as well as access to outside legal counsel and other experts as needed. For 2019, the Committee engaged Meridian Compensation Partners, LLC (“Meridian” or “the Consultant”) to serve as independent advisor to the Committee. During 2019, Meridian presented an annual education session to the Committee, conducted executive and board compensation benchmarking analyses, assisted with the development of the peer group, and responded to other ad hoc requests of the Committee.

The Consultant reported directly to the Committee and carried out its responsibilities to the Committee in coordination with the Company’s Human Resources Department, as requested by the Committee. The Committee Chair has regular contact with the Consultant outside of meetings as appropriate. The Committee has reviewed Meridian’s services and determined that Meridian is independent with respect to SEC standards, as well as Company policy, and provides no other services to the company other than compensation consulting.

Other Compensation and Governance Policies and Practices

Stock Ownership and Holding Guidelines. The Company maintains Stock Ownership Guidelines for its SEC-reporting senior executives and directors and all other executives, which requires the following minimum investment in Company common stock:
Independent Directors
Four times (4.0x) the annual cash retainer
Chief Executive Officer
Four and a half times (4.5x) the annual base salary
President
Three and a half times (3.5x) the annual base salary
Senior Executives
Two and a half times (2.5x) the annual base salary
Executives
One and a half times (1.5x) the annual base salary

Shares that satisfy the stock ownership guidelines include Company stock owned outright and restricted stock whether or not vested. Stock options are not included in calculating ownership until they are converted into actual shares owned.

Newly hired senior executives, executives, directors and current employees of the Company that first become a senior executive, executive, or director are expected to satisfy the stock ownership guidelines within five years, or such other term approved by the Committee, of the date such individual first becomes a senior executive, executive


43BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

or director. In order to expedite this, a minimum of 50% of shares (net of taxes) will be required to be held upon each vesting until ownership guidelines are met. Senior executives, executives and directors that maintain sufficient stock holdings, but due to an increase in base salary, annual cash retainer, selling Company stock to cover tax withholding or for a reason approved by the Committee, no longer meet the stock ownership guidelines, shall have 18 months to acquire additional Company stock and during this term such individuals will be deemed to satisfy the ownership guidelines.

Stock ownership for senior executives, executives and directors is reviewed annually as part of the annual senior executive performance evaluation process and as part of the Board review. Share holdings are evaluated based on the average stock price for the three-year period prior to the Board’s review. These guidelines will allow for extenuating circumstances and discretion in the evaluation process and the Committee reserves the right to make exceptions as appropriate. The Committee shall be responsible for the periodic review of the policy. Any changes to the policy will require the approval of the Board of Directors. The Committee monitors ownership annually. Our Chief Executive Officer, other NEOs and directors comply with the Company’s stock ownership policy within the approved grace period to satisfy the stock ownership and holding guidelines.

Clawback Policy. As a condition to receiving incentive compensation from the Company and Berkshire Bank, each executive officer has signed an agreement whereby the executive officer agrees to reimburse the Company or Berkshire Bank an amount up to the entire incentive award made to such executive officer on the basis of having met or exceeded specific targets for performance periods if (1) the Company or Berkshire Bank is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws as a result of Financial Misconduct (as determined by the members of the Board of Directors who are considered “independent” for purposes of the listing standards of the NYSE), or as may be required by applicable laws, regulations, NYSE listing standards or as further required under the Company’s policies, as adopted from time to time, or (2) the Company’s Board of Directors determines that the executive officer committed Personal Misconduct (as defined below). For purposes of this policy, (i) the term “incentive awards” means awards under the Company’s long term and short term incentive compensation plans, the amount of which is determined in whole or in part upon specific performance targets relating to the financial results of the Company; (ii) the term executive officer means the CEO and executives who are eligible to receive incentive awards; and (iii) the term Personal Misconduct means fraud, commission of a felony, material violation of any written agreement with or policies of the Company or Berkshire Bank, or any other material breach of fiduciary duty injurious to the Company or Berkshire Bank.

Impact of Taxation on the Form of Compensation. The Committee considers a variety of factors, including the Company’s tax position, the materiality of the payments and tax deductions involved, the objectives of the executive compensation programs and the Company’s compensation philosophy in structuring compensation programs and making compensation decisions. For taxable years beginning on and after January 1, 2018, the Tax Cuts and Jobs Act generally eliminated the “performance-based” compensation exception under 162(m) of the Internal Revenue Code and expanded the $1 million per covered employee annual limitation on deductibility to a larger group of named executive officers. In addition, the Tax Cuts and Jobs Act provides that any named executive officer who was a covered employee in taxable years beginning on and after January 1, 2017, will continue to be a covered employee for all subsequent taxable years. As a result, the Company may no longer take an annual deduction for any compensation paid to an expanded number of covered employees in excess of $1 million per covered employee unless an exception applies.


44BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis that is required by the rules established by the Securities and Exchange Commission, and has discussed it with management. Based on such review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

The Compensation Committee of the Board of Directors of Berkshire Hills Bancorp, Inc.
John B. Davies, Chair
J. Williar Dunlaevy
William H. Hughes III
William J. Ryan


45BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement



 
 
 
 
 
 
 

Executive Compensation
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Summary Compensation Table

The following table provides the total compensation earned by or paid to the Named Executive Officers for the fiscal years ended December 31, 2019, 2018, and 2017, respectively.
Name and Principal Position(1)
Year
Salary ($)
Bonus ($)
Stock Awards ($)(2)
Option Awards
($)
Non-Equity Incentive Plan Compensation ($)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(3)
($)
All Other Compensation(6) ($)
Total ($)
Richard M. Marotta, Chief Executive Officer

2019
675,000


804,003


206,550


446,602

2,132,155

2018
542,324


375,032


381,108


186,013

1,484,477

2017
500,000


325,034


400,000


206,370

1,431,404

Sean A. Gray, President and Chief Operating Officer

2019
550,000


500,008


124,000


178,998

1,353,006

2018
461,225


300,033


287,448


104,053

1,152,759

2017
425,000


250,023


300,000


79,375

1,054,398

James M. Moses, Senior Executive Vice President and Chief Financial Officer
2019
400,000


250,018


105,000


38,751

793,769

2018
375,000


200,034


209,571


35,499

820,104

2017
350,000


175,013


241,500


22,059

788,572

George F. Bacigalupo, Senior Executive Vice President, Commercial Banking
2019
375,000


225,010


115,000


51,463

766,473

2018
350,000


80,006


195,599


55,425

681,030

2017
350,000


120,017


120,000


43,755

633,772

Gregory D. Lindenmuth, Senior Executive Vice President, Chief Risk Officer(4)
2019
300,000


150,016


36,750


12,949

499,715

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
The principal positions listed above represent the titles of each of the Named Executive Officers at Berkshire Bank, the wholly owned subsidiary of Berkshire Hills Bancorp, Inc. The principal position of each of the Named Executive Officers at Berkshire Hills Bancorp, Inc. is as follows: Mr. Marotta is President and Chief Executive Officer, Mr. Gray is Senior Executive Vice President; Mr. Moses is Senior Executive Vice President and Chief Financial Officer, Mr. Bacigalupo is Senior Executive Vice President and Mr. Lindenmuth is Senior Executive Vice President.
(2)
The amounts reported are the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718 and represents an award under the Company’s performance-based, long-term incentive compensation program. Awards consist of restricted stock, a portion of which vest ratably over three years and a portion that vests based on the achievement of certain performance criteria. Since all awards vest after the year in which they are granted, none of the Named Executive Officers recognized any income from the awards in the year they were made. Amounts shown are the aggregate grant date fair value of restricted stock awards, with the grant date fair value based on the closing price of our common stock on the applicable grant date. For those restricted stock awards that are subject to performance conditions, the grant date fair values are based on the outcome of such conditions at target level. Total values for stock awards reported in this table may not match other tables due to rounding. See Note 21 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2019. Based on the fair value at grant date, the following are the maximum potential values of the performance shares for the 2019-2020 performance period assuming maximum level of performance is achieved: Mr. Marotta, $723,595; Mr. Gray, $450,020; Mr. Moses, $224,983; Mr. Bacigalupo $202,515; and Mr. Lindenmuth $135,029. For each year shown in the above table, the amounts in the Stock Awards column are determined by multiplying the number of restricted stock awards granted on a particular date by the Company’s stock price on the same grant date, and a breakdown for each individual is as follows:


46BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


EXECUTIVE COMPENSATION

Number of Restricted Stock Awards Granted
Grant Date
Stock Price
Richard M. Marotta
Sean A. Gray
James M. Moses
George F Bacigalupo
Gregory B. Lindenmuth
January 30, 2019
$
27.91

28,807

17,915

8,958

8,062

5,375

January 30, 2018
$
37.65

9,961

7,969

5,313

2,125


January 30, 2017
$
35.55

9,143

7,033

4,923

3,376


(3)
The Supplemental Executive Retirement Agreements do not provide for above-market earnings and therefore amounts are not included in this column.
(4)
Mr. Lindenmuth is a Named Executive Officer for the first time in 2019 and, pursuant to SEC rules, compensation for prior years is not required to be reported.
(5)
Details of the amounts reported in the “All Other Compensation” column for 2019 are provided in the following table:

Name
401(k) Employer Contribution ($)
Dividends on Restricted Stock
($)
Automobile
($)
FInancial Planning
($)
Membership Fees
($)
Long-Term Care Premiums and Imputed Income on Life Insurance
($)
Long-Term Disability*
($)
Other **
($)
Total
($)
Richard M. Marotta
11,200

23,957

4,041

1,900

2,390

26,357

26,757

350,000

446,602

Sean A. Gray
11,200

18,473

15,000


5,410

26,429

2,486

100,000

178,998

James M. Moses
11,200

2,222

15,000


7,500


2,649


38,571

George F. Bacigalupo
9,231

18,267

15,000

5,988



2,977


51,463

Gregory D. Lindenmuth
11,200

1,279





470


12,949

*
Mr. Marotta’s Long Term Disability represents $2,722 for long term disability insurance, $16,168 for supplemental disability insurance and $7,867 as a tax gross up payment on these amounts.
**
The Company credited Mr. Marotta and Mr. Gray’s Supplemental Executive Retirement Agreement account balance with $350,000 and $100,000, respectively, pursuant to the terms of the agreement.



47BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


EXECUTIVE COMPENSATION

Grants of Plan-Based Awards

The following table provides information concerning the award opportunities granted to the Company’s NEOs in 2019, and the amounts, if any, that may be paid in future years.
 
 
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
Estimated Future Payouts Under
Equity Incentive Plan Awards(2)
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
Grant Date
Fair Value
of Stock
and
Option
Awards(3)
($)
Name
Grant Date
Threshold ($)
Target ($)
Maximum ($)
Threshold (#)
Target (#)
Maximum (#)
Richard M. Marotta

1/30/2019
253,125

506,250

1,012,500






1/30/2019






11,523

321,607

1/30/2019



8,642

17,284

25,926


482,396

Sean A. Gray

1/30/2019
151,250

302,500

605,000






1/30/2019






7,166

200,003

1/30/2019



5,375

10,749

16,124


300,005

James M. Moses

1/30/2019
90,000

180,000

360,000






1/30/2019






3,584

100,029

1/30/2019



2,687

5,374

8,061


149,989

George F. Bacigalupo

1/30/2019
83,375

168,750

337,500






1/30/2019






3,225

90,010

1/30/2019



2,419

4,837

7,256


135,000

Gregory D. Lindenmuth
1/30/2019
45,000

90,000

180,000






1/30/2019






2,150

60,007

1/30/2019



1,613

3,225

4,838


90,009

(1)
Amount represents awards granted for future payment to the Named Executive Officers under the Short-Term Incentive Plan (STI). Company performance below threshold and/or individual performance may result in no award payable to the Named Executive Officer. Please see the section titled “Compensation Discussion and Analysis - Short-Term Incentive Compensation” for a discussion of the STI.
(2)
Amount shown reflects the number of restricted stock awards, subject to performance-based vesting, that may be earned under the Long-Term Incentive Plan (LTI). Performance below threshold may result in no award payable to the Named Executive Officer. Please see the section titled “Compensation Discussion and Analysis - Long-term Incentive Plan” for a discussion of the LTI.
(3)
The amounts reported are the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. The grant date per share fair value for the restricted stock award was $27.91, which was the closing price of the Company’s stock on the date of grant.

Employment and Change in Control Arrangements

Employment Agreement. On February 21, 2019, the Company and Berkshire Bank entered into an employment agreement with Richard M. Marotta, which superseded his prior three-year executive change in control agreement that the Company, Berkshire Bank, and Mr. Marotta entered into as of April 21, 2016.

The employment agreement provides that Mr. Marotta will continue to serve as President and Chief Executive Officer of the Company and Chief Executive Officer of Berkshire Bank for a term of three years. Commencing as of April 1, 2020, and on each subsequent April 1 thereafter, the compensation committees of the boards of directors may renew the agreement for an additional year so that the remaining term will again become three years. The agreement provides that Mr. Marotta will continue to receive an annual base salary of $675,000, and the base salary may be increased. Mr. Marotta’s current base salary is $720,000. In addition to base salary, the agreement provides for, among other things, participation in bonus programs and other benefit plans and arrangements applicable to executive employees.

Berkshire Bank may terminate the executive’s employment for “cause” (as defined in the agreement) at any time,


48BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


EXECUTIVE COMPENSATION

in which event he would have no right to receive compensation or other benefits for any period after his termination of employment. Certain events resulting in the executive’s termination of employment entitle him to severance benefits. In the event of the executive’s involuntary termination of employment or in the event of a voluntary termination for “good reason” (as defined in the agreement), then the executive would become entitled to a severance payment in the form of a cash lump sum equal to the base salary and the cash incentive which the executive would have earned during the remaining unexpired term of the agreement. In addition, he and his dependents would become entitled, at no expense to him, to the continuation of non-taxable medical and dental coverage for the remaining unexpired term of the employment agreement, or if the coverage is not permitted by applicable law or if providing the benefits would subject Berkshire Bank to penalties, he will receive a cash lump sum payment equal to the value of the benefits.

In the event of a “change in control” (as defined in the agreement) of the Company or Berkshire Bank followed within twenty-four months by the executive’s involuntary termination of employment for a reason other than for cause or upon his voluntary termination for good reason, he would become entitled to a severance payment in the form of a cash lump sum equal to three times his base salary and cash incentive and he and his dependents would become entitled, at no expense to him, to the continuation of life insurance and non-taxable medical and dental coverage for thirty-six (36) months following his termination of employment, or if the coverage is not permitted by applicable law or if providing the benefits would subject Berkshire Bank to penalties, he will receive a cash lump sum payment equal to the value of the benefits. In addition, all of the executive’s stock options, restricted stock awards and performance awards (shares) will become fully earned and vested.

Upon termination of the executive’s employment (other than following a change in control), he will be subject to certain restrictions on his ability to compete or to solicit business or employees of Berkshire Bank and the Company for a period of one year following his termination of employment. The agreement also includes provisions protecting the Company’s and Berkshire Bank’s confidential business information.

See “Potential Payments Upon Termination or Change in Control” for a discussion of the payments under this agreement.

Change in Control Arrangements. The Company and Berkshire Bank entered into change in control agreements with Messrs. Gray, Moses, and Bacigalupo. Each change in control agreement has a term of three years and is renewable annually for an additional year at the sole discretion of the boards of directors of the Company and Berkshire Bank. Mr. Lindenmuth participates in the Berkshire Bank Enhanced Change in Control Severance Plan. See “Potential Payments Upon Termination or Change in Control” for a discussion of the benefits and payments under these agreements.Summ



49BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


EXECUTIVE COMPENSATION

Outstanding Equity Awards at December 31, 2019

The following table provides information concerning unvested stock awards for each Named Executive Officer as of December 31, 2019. The NEOs do not hold any stock options.
 
 
Option Awards
Stock Awards
Name
Grant Date
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(7)
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested($)(7)
Richard M. Marotta

1/30/2017


1,523(1)
50,076

4,572 (4)

150,327

1/30/2018


3,320(2)
109,162

4,981 (5)

163,775

1/30/2019


11,523(3)
378,876

17,284 (6)

568,298

Sean A. Gray

1/30/2017


1,172(1)
38,535

3,517 (4)

115,639

1/30/2018


2,656 (2)
87,329

3,985 (5)

131,027

1/30/2019


7,166 (3)
235,618

10,749 (6)

353,427

James M. Moses

1/30/2017


821 (1)
26,994

2,462 (4)

80,951

1/30/2018


1,771 (2)
58,230

2,657 (5)

87,362

1/30/2019


3,584 (3)
117,842

5,374 (6)

176,697

George F. Bacigalupo

1/30/2017


562 (1)
18,479

1,688 (4)

55,501

1/30/2018


708 (2)
23,279

1,063 (5)

34,951

1/30/2019


3,225 (3)
106,038

4,837 (6)

159,041

Gregory D. Lindenmuth (8)
1/30/2017


2,250 (1)
73,980



1/30/2018


664 (2)
21,832



1/30/2019


2,150 (3)
70,692



(1)
Remaining shares granted on January 30, 2017 will vest ratably on each January 30th through 2020.
(2)
Remaining shares granted on January 30, 2018 will vest ratably on each January 30th through 2021.
(3)
Remaining shares granted on January 30, 2019 will vest ratably on each January 30th through 2022.
(4)
These shares are subject to vesting based upon the achievement of specific goals. The amounts shown assume the target level of performance is achieved. The actual award, if any, will be determined as of January 30, 2020 based on the 2017-2019 performance period.
(5)
These shares are subject to vesting based upon the achievement of specific goals. The amounts shown assume the target level of performance is achieved. The actual award, if any, will be determined and vest on the first compensation committee meeting following January 30, 2021 based on the 2018-2020 performance period.
(6)
These shares are subject to vesting based upon the achievement of specific goals. The amounts shown assume the target level of performance is achieved. The actual award, if any, will be determined and vest on the first compensation committee meeting following January 30, 2022 based on the 2019-2021 performance period.
(7)
Computed using the fair market value of the shares based on the Company’s closing stock price of $32.88 on December 31, 2019.
(8)
Remaining shares granted on October 1, 2015 will vest in October 2020.



50BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


EXECUTIVE COMPENSATION

Option Exercises and Stock Vesting

The following table provides information concerning the vesting of restricted stock awards for each Named Executive Officer, on an aggregate basis, during 2019. The NEOs do not hold any stock options.
 
Option Awards
Stock Awards
Name
Number of
Shares Acquired
on Exercise
(#)
Value Realized
on Exercise
 ($)
Number of Shares Acquired on Vesting
(#)
Value Realized on Vesting
(#)
Richard M. Marotta


10,450

306,757

Sean A. Gray


8,089

237,377

James M. Moses


1,705

47,587

George F. Bacigalupo


6,645

194,936

Gregory D. Lindenmuth


895

24,979

(1)
Represents the aggregate value realized in 2019 upon the vesting of restricted stock awards granted in prior years under the Company’s long-term incentive plan and based on the value of the Company’s stock on the applicable vesting dates for each award. The value realized by the NEO upon vesting is also the amount reported as 2019 taxable income.

Executive Compensation

Non-qualified Deferred Compensation

The following table provides information for the nonqualified deferred compensation plan in which Richard M. Marotta participated in 2019.
Name
Plan Name
Registrant
Contributions
in Last Fiscal
Year ($)(1)
Aggregate
Earnings in
2019 ($)
Aggregate Balance at
Last Fiscal Year End
($)(2)
Richard M. Marotta
Supplemental Executive Retirement Agreement
350,000


650,000

Sean A. Gray
Supplemental Executive Retirement Agreement
100,000


100,000

(1)
Contributions included in the “Registrant Contributions in Last Fiscal Year” column are included as compensation for the Named Executive Officer in the Summary Compensation Table.
(2)
Amounts included in the “Aggregate Balance at Last Fiscal Year End” have been reported as compensation for the Named Executive Officer in the Summary Compensation Table.


On February 21, 2019, Berkshire Bank entered into an amended and restated supplemental executive retirement agreement with Mr. Marotta, which superseded his prior supplemental executive retirement agreement entered into between the executive and Berkshire Bank effective as of July 1, 2016. Under the terms of the agreement, Mr. Marotta is entitled to the value of the vested account balance upon his termination of employment or death. Berkshire Bank credited the account balance with $300,000 from 2016 through 2018, and Berkshire Bank will credit the account balance with an annual amount of $350,000 on each subsequent January 1 (commencing January 1, 2019) through January 1, 2025, provided that Mr. Marotta is employed with the Berkshire Bank on the date of such contribution. Berkshire Bank will make a final contribution as of January 1, 2025 for a total potential contribution of $2,750,000. The account balance is subject to a four-year vesting schedule, with 25% of the account balance vesting each year, commencing in 2017, subject to full vesting in the event of death, disability or a termination of employment within two years following a change in control. Upon a termination of employment or death, the account balance will be paid in a lump sum payment to Mr. Marotta or his beneficiary, as applicable. See “Potential Payments Upon Termination or Change in Control” for a discussion of the payments under this agreement.

On February 21, 2019, Berkshire Bank entered into a supplemental executive retirement agreement with Sean A. Gray. The agreement contains substantially identical terms as the amended and restated supplemental executive retirement agreement entered into with Mr. Marotta, except that (i) the annual credit is $100,000 (for up to 10 years and a maximum contribution of $1.0 million); and (ii) the vesting schedule is 20% per year, commencing January 1, 2020, and the executive will be 100% vested on January 1, 2024. Under the terms of the SERP, Mr. Gray is entitled to the value of the vested account balance upon his termination of employment or death. Berkshire Bank will credit the account balance with $100,000 commencing on January 1, 2019 and on each January 1st through 2028, provided that the executive is employed with Berkshire Bank on the date of such contribution. Berkshire Bank


51BERKSHIRE HILLS BANCORP, INC. | 2020 Proxy Statement


EXECUTIVE COMPENSATION

will make a final contribution as of January 1, 2028 for a total potential contribution of $1.0 million. Upon a termination of employment or death, the account balance will be paid in a lump sum payment to the Executive or his beneficiary, as applicable. In the event the Executive's employment is terminated