Governance & Nominating Committee Charter

Governance and Nominating Committee Charter

PURPOSE:

The Governance and Nominating Committee (“GNC”) is appointed by the Board of Directors of Citizens Financial Services, Inc. (the “Company”) (1) to assist the Board by identifying individuals qualified to become Board members and to recommend to the Board nominees for director; (2) to develop and recommend to the Board a set of effective corporate governance policies and procedures applicable to the Company and implement and monitor such guidelines as adopted by the Board; (3) to oversee the Board’s compliance with financial, legal and regulatory requirements and its ethics program as set forth in the Company’s Code of Ethics (the “Code”); (4) to review and make recommendations to the Board on matters involving the general operation of the Board, including the size and composition of the Board and the structure and composition of Board committees; (5) to oversee an annual assessment of the Board’s performance as a whole and of individual directors, as required by applicable law and regulations; (6) to recommend Board committee appointments and removals; (7) to recommend to the Board a determination of each outside director’s “independence” under applicable rules and guidelines and to assist management in the preparation of disclosure regarding director independence and the operations of the GNC as required by the Securities and Exchange Commission (the “SEC”) to be included in the Company’s annual proxy statement; (8) to recommend to the Board candidates for new local board appointments; and (9) to consider corporate governance issues that may arise from time to time and make recommendations to the Board with respect thereto.

MEMBERSHIP:

The GNC shall be comprised of a minimum of three independent directors of the Board.  Members of the GNC shall be appointed and may be removed by the Board in its discretion.  Each member of the GNC must satisfy the independence requirements of The Nasdaq Stock Market LLC, any rules and regulations promulgated by the SEC and any other applicable laws relating to independence, as determined by the Board in its business judgment.  Members of the GNC are appointed by the Board and may be replaced by the Board.  

AUTHORITY AND RESPONSIBILITIES:

  1. Director Nominees.  The GNC shall identify individuals believed to be qualified as candidates to serve on the Board and recommend to the Board the selection of candidates for all directorships to be filled by the Board or by the stockholders at an annual or special meeting.  This responsibility includes working with the full Board to establish criteria for Board membership, reviewing candidates’ qualifications and any potential conflicts with the Company’s interests, assessing the contributions of current directors in connection with their re-nomination to the Board, and making recommendations to the full Board with respect to these matters and with respect to the removal of a director.
  2. Director Criteria.  The GNC shall select individuals as director nominees who shall have the highest personal and professional integrity, who shall have demonstrated exceptional ability and judgment and who shall be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term interests of the Company and its shareholders.  In selecting director nominees, the GNC shall assess the nominee’s independence and may consider, among other things, the following, all in the context of an assessment of the perceived needs of the Board at that time:
    • diversity, age, background, skills and experience;
    • personal qualities and characteristics, accomplishments, and reputation in the business community;
    • knowledge and contacts in the communities in which the Company conducts business and in the Company’s industry or other industries relevant to the Company’s business;
    • ability and willingness to devote sufficient time to serve on the Board and committees of the Board;
    • knowledge and expertise in various areas deemed appropriate by the Board; and
    • fit of the individual’s skills, experience, and personality with those of other directors in maintaining an effective, collegial, and responsive Board.
  1. Committee Structure.  The GNC shall periodically review the Board’s committee structure, including all standing or any ad hoc committees of the Board, and recommend to the Board for its approval such changes in number, function or composition of committees of the Board as the GNC deems appropriate.  In evaluating directors to serve as members of each committee of the Board, the GNC (i) shall take into account the applicable requirements for members of committees of boards of directors under the Securities Exchange Act of 1934, as amended, the corporate governance listing requirements of The Nasdaq Stock Market LLC, and any other applicable laws, regulations and standards, as in effect from time to time, and (ii) may take into account such other factors or criteria as the committee deems appropriate, including directors’ desires, judgment, skill, integrity and business or other experience.  The GNC shall review and recommend committee composition annually and shall recommend additional committee members to fill vacancies as needed. 
  2. Corporate Governance Policy.  The GNC shall develop and recommend to the Board a set of corporate governance policies and procedures applicable to the Company.  The GNC shall periodically review and assess the adequacy of the Corporate Governance Policy of the Company and recommend any proposed changes as necessary to the Board for approval.
  3. Board Operations and Compliance.  The GNC, at least annually and more frequently as it deems necessary or appropriate, shall review and make recommendations, as the GNC deems appropriate, to the Board regarding the general operations of the Board, including its size and composition and matters relating to the retirement of Board members.  The GNC also shall (i) advise the Board periodically with respect to the Company’s compliance with its Corporate Governance Policy and applicable laws and regulations and (ii) consider corporate governance issues that arise from time to time and make recommendations to the Board with respect thereto (including on any remedial or corrective actions to be taken), as the GNC may deem appropriate.   
  4. Director Independence.  The GNC shall review and recommend a determination to the Board with respect to each outside director’s “independence” under the listing rules of The Nasdaq Stock Market LLC and other applicable laws and regulations.  The GNC shall assist management in the preparation of the disclosure regarding director independence and the operations of the GNC as required by the SEC to be included in the Company’s annual proxy statement.
  5. Performance Evaluations.  The GNC shall oversee the annual evaluation process for the Board, management and the other committees of the Board and shall report to the Board the results of such evaluations.  At least annually, the GNC shall undertake a performance evaluation of the GNC, including an assessment of its performance in light of the duties and responsibilities set forth in this Charter and such other matters as the GNC may deem necessary or appropriate in its discretion.  In connection with such performance evaluation, the GNC also shall review and assess the adequacy of this Charter, and propose to the Board for its review and approval any changes to this Charter deemed necessary or appropriate.  The GNC may recommend amendments to this Charter at any time and submit amendments for approval to the Board. 
  6. Other.  The GNC shall have such other power, authority, duties and responsibilities as may be assigned to it by the Board from time to time.

COMMITTEE, STRUCTURE AND OPERATIONS

  1. Meetings.  The GNC shall meet with such frequency and at such intervals as it shall determine is necessary to carry out its duties and responsibilities, but in any case the GNC shall meet at least four times per year.  The GNC shall establish a schedule of meetings to be held each year and may schedule additional meetings as it determines to be necessary or appropriate.  Special meetings may be called by the Chairperson of the GNC or any other member of the GNC.  The GNC may meet by telephone or videoconference and may take action by unanimous written consent.  The GNC may invite to meetings such officers of the Company or other persons as the GNC deems necessary or appropriate in its discretion.  Minutes of each meeting shall be kept and distributed to each member of the GNC.  
  2. Chairperson.  The Chairperson of the GNC shall be appointed by the Board.  The Chairperson shall be responsible for leadership of the GNC, including presiding, when present, at all meetings of the GNC, preparing the agenda, making committee assignments and reporting for the GNC to the Board at its next regularly scheduled meeting following a meeting of the GNC.  If the Chairperson is not present at a meeting of the GNC, the members present at the meeting shall designate one such member as the acting Chairperson for the meeting. 
  3. Delegation of Authority to Subcommittees.  The GNC may, in its discretion, form and delegate all or a portion of its authority to subcommittees; provided that any delegate shall report any actions taken by the delegate to the full GNC at its next regularly scheduled meeting.
  4. Retention and Termination of Outside Advisors.  The GNC shall have the authority to obtain advice and seek assistance from internal or external legal, accounting or other advisors.  The GNC shall have the sole authority to retain and terminate outside legal or other advisors to the GNC as it deems necessary or appropriate in its sole discretion, including any search firm to be used in identifying director candidates.  In selecting any such outside advisor, the GNC shall consider the outside advisor’s independence, as determined by the GNC in its business judgment.  The GNC shall have the sole authority to approve the fees and other retention terms for such outside advisors.  The Company shall provide appropriate funding for payment of the compensation (as determined by the GNC in its sole reasonable opinion) of such outside advisors retained by the GNC, as well as reasonable ordinary administrative expenses of GNC that are necessary or appropriate in carrying out its duties.
  5. Reporting to the Full Board.  The GNC shall make regular reports to the Board summarizing the matters reviewed and the actions taken at each GNC meeting and make appropriate recommendations for action by the Board.

DISCLOSURE

This Charter, as may be amended from time to time, shall be posted on the Company’s website.  The Company shall state in its annual proxy statement that this Charter is available on the Company’s website and provide the website address.

 

Approved:  November 17, 2020