CNB FINANCIAL CORPPA

The Corporation’s compensation program consists of four elements: base salary, annual or short-term incentives, long-term incentives (equity), and benefits. The following section summarizes the role of each element, how decisions are made and the resulting 2023 decision process as it relates to our NEOs.

Base Salary

The Corporation believes that a competitive base salary is essential to hire and retain our NEOs. To that end, the Corporation aims to provide a competitive fixed pay (base salary) related to the role and contribution of the NEO.

The ECC uses the benchmark data provided by Meridian as a reference when setting the base salary of each NEO. The ECC targets a range around the peer group median but considers each NEO’s specific role with CNB that may differ from similar positions at peers, as well as the respective NEO’s experience, contribution and performance, in determining base salaries.

Close to each calendar year end, the ECC meets and reviews and sets each NEO’s base salary for the following calendar year to reflect competitive market conditions, individual experience, expertise and performance. The ECC considers input from the Corporation’s President & CEO when setting the base salaries of the other NEOs, but is solely responsible for determining the President & CEO’s base salary.

In determining the NEO’s base salaries for 2023 as reflected in the section "Summary Compensation Table", the ECC reviewed the market range for each NEO position and the relative salaries of the executive team, as well as competitive market data, individual performance and contributions. Base salary adjustments for 2023 were made for the NEOs to ensure compensation for the NEOs continues to be reasonably in line with market practices while also recognizing each respective executive’s performance and contribution.

The 2023 salary adjustments were as follows:

(1) Mr. Peduzzi was appointed President and Chief Executive Officer of CNB Financial Corporation, effective December 31, 2022. Following his promotion, Mr. Peduzzi’s salary was increased to $623,000 based on a review of the compensation of the chief executive officers of the Corporation’s compensation peer group and a related market range analysis and aligns with the median compensation of the peer group. Mr. Peduzzi’s current employment agreement set $623,000 as his minimum salary amount.

(2) Mr. Lima's salary increase in 2023 included a component aimed at adjusting his salary to more closely align with market peers.

(3) Mr. Griffith's salary increase in 2023 included a component aimed at adjusting his salary to more closely align with market peers.

Annual Incentives

The primary objective of our annual incentive program is to motivate and reward key members of management for achieving corporate, department, and individual goals that support our strategic plan. Through our 2023 NEO Non-Equity Incentive Plan (“Incentive Plan”), we offer an annual cash incentive opportunity to a select group of key executives, including the NEOs, whose efforts largely determine the achievement of corporate goals and short-term objectives. For each NEO other than the CEO, these short-term objectives are determined using six absolute metrics. For the CEO, the Board established four short-term incentive elements that are determined using absolute metrics, while a fifth incentive component is based on his performance for the calendar year via a ratings assessment of his performance objectives as completed by the independent directors of the Board. The results of the collectively compiled Board assessments are used to guide the Board in approving a qualitative short-term incentive for Mr. Peduzzi.

Each NEO has a target opportunity based on his or her position at the Corporation and competitive market data provided by Meridian, and there was no change to each NEO’s target opportunity (as a percentage of base salary) for 2023. An NEO receives 50% of his or her incentive target opportunity for achieving minimum performance goals, 100% of target opportunity for achieving target performance goals and 150% of target opportunity for achieving stretch performance goals. If performance falls between minimum performance and target performance levels, there is no interpolation of payout percentages. If target performance levels have been exceeded, then the payout percentage of target opportunity is interpolated between target and stretch performance levels. If the minimum performance goal has not been achieved with respect to a performance goal, then no payout would be earned with respect to that performance goal.

The performance measures and goals are selected and approved by the ECC, and then affirmed by the full Board, at the beginning of each year. The performance measures selected by the ECC were based on providing management and the Corporation’s staff at large with incentives that are closely aligned with the interests of our shareholders. The ECC believes the execution on these metrics leads to increased shareholder value.

For 2023, the ECC selected and the Board approved (1) Fully-diluted EPS; (2) Commercial Loan Revenue; (3) Noninterest-Bearing Deposit Growth; (4) Interest-Bearing Deposit Growth (Excluding Time Deposits); (5) Efficiency Ratio; and (6) Wealth & Asset Management Fees for all NEOs other than Mr. Peduzzi. For Mr. Peduzzi, the ECC selected and the Board approved (1) Fully-diluted EPS; (2) Noninterest-Bearing Deposit Growth; (3) Interest-Bearing Deposit Growth (Excluding Time Deposits); (4) Efficiency Ratio; and (5) a Qualitative portion based on his Board-rated performance with respect to certain objectives for the year. Efficiency Ratio is calculated from non-interest expense, less core deposits intangible amortization, divided by the sum of non-interest income and net interest income, adjusted to include the tax equivalent income on tax exempt income from investments and loans. The ECC reviews the Corporation’s Incentive Plan annually and, for 2023 modified the Incentive Plan to include components for deposit growth as discussed above. This change was made given the economic and interest rate environment for 2023, in replacement of the growth in Mortgage, Home Equity, and Consumer Loans reflected in the Incentive Plan for 2022.

Actual performance versus all incentive goals for the NEOs was measured, compiled, and reviewed and approved by the ECC, and affirmed by the full Board, in January 2024, with the related accruals being accurately reflected in the year-end 2023 financial results. The resulting Incentive Plan payouts were made in February 2024.

The tables below summarizes the Incentive Plan performance measures, goals and actual performance and the actual incentive percentage achieved for (i) Mr. Peduzzi and (ii) for each other NEO.

Michael D. Peduzzi – President & Chief Executive Officer:

(1) In thousands

Remaining NEOs:

(1) In thousands

Based on the ratio of net charge-offs to average loans, the Incentive Plan payouts are subject to a reduction in accordance with the following table:

This provision supports the Corporation’s disciplined asset quality profile by reducing the overall incentive payouts, under the Incentive Plan, if loan charge-off results indicate that undue credit risks may have been taken to generate growth and revenues in achievement of short-term incentives. Loan charge-offs significantly in excess of 34 basis points could affect the payout of the total incentive based on the facts and circumstances surrounding the loss, subject to the recommendation of the President and CEO, and review by the ECC and full Board.

For the year ended December 31, 2023, the CNB Bank’s ratio of net charge-offs to average loans was 0.04%. As a result, no incentive reductions for the NEOs were required under the Incentive Plan.

The following table summarizes the actual incentive award earned by each NEO for 2023, under the Corporation’s Incentive Plan (with such incentives accrued with the year-end 2023 financial results, and paid to the respective NEO in February 2024):

Long-Term Incentives

We believe that our NEOs should be invested in the Corporation and have greater alignment with the same risks and rewards as our shareholders. The purpose of the long-term incentive program is to align the interests of the NEOs with the long-term interests of the Corporation and our shareholders, encourage stock ownership and enhance our ability to retain top performers.

The 2023 Long-Term Incentive Program (“LTIP”) consists of a combination of performance-based common stock awards and time-based restricted stock awards. We believe it is important for our LTIP to include both the time-based and performance-based components, to balance the results-driven orientation of the performance-based share awards with the management retention and shareholder alignment focus of time-based share awards. Also, our LTIP is comprised entirely of common equity compensation to ensure alignment with our institutional and retail common shareholders. Each NEO has a target long-term incentive opportunity that is defined as a percentage of base salary and that is positioned to be competitive with the market median of the compensation peer group. All NEOs received their respective share awards as a 50% / 50% mix between performance-based share awards, if performance targets are achieved, and time-based restricted stock awards which are granted but vest over time.

Time-based restricted stock vests in equal increments over three years (e.g., one third of the shares awarded vest per year beginning on the first anniversary of grant), while performance shares cliff vest at the end of the three-year performance period contingent upon the Corporation’s performance. The key measures for the performance-based stock awards are EPS Growth and Return on Average Equity as compared to the S&P U.S. Small Cap Banks Index Constituents excluding Thrifts with assets between $2.5 billion and $10 billion as of the first trading day of the performance period (“Performance Comparator Group”). The metrics were selected to reflect performance goals that are aligned with the enhancement of long-term shareholder value. The metrics are weighted equally with common stock awards ranging from 0% to 150% of target depending on the Corporation’s ranking at the end of the three-year period (see below table for payout range). Actual performance between threshold, target and stretch will be interpolated. The performance shares will vest after the performance period and when relative performance, as compared to the Corporation’s Performance Comparator Group results, are reviewed and approved by the ECC and affirmed by the full Board.

Decisions regarding the size of long-term incentive awards are recommended by the ECC and approved by the full Board after careful consideration of corporate and individual performance, market data, retention considerations, impact on dilution, and existing equity holdings of each NEO. The Board does not select the grant dates of any long-term incentive awards in coordination with our release of material non-public information, nor do we have any program, plan or practice to do so. We believe that the strategy described above both aligns the interests of the NEOs and our shareholders and facilitates the retention of our NEOs.

Long-term incentive grant value targets are generally set to be equal in value for respective corporate levels of the NEOs, and are determined by the ECC based on consideration of a market range for long-term incentives of comparable peers that is provided by the compensation consultant, Meridian, with potential adjustments made by the ECC based on the Corporation’s performance and the individual NEO’s performance, role, contributions, and long-term potential with the Corporation. The long-term incentive grants made to the NEOs in 2023 are summarized below.

(1) The number of shares granted is determined by the grant value divided by the grant date closing price.

Benefits

CNB Bank maintains a 401(k) Savings Plan to attract and retain employees and help them meet their retirement goals. NEOs are eligible to participate in the 401(k) Savings Plan and receive matching employer contributions subject to plan and IRS limits. Further information is provided under the “Retirement Plan” section below.

The Corporation and/or CNB Bank also maintains certain non-qualified retirement and deferred compensation plans. We believe that these non-qualified plans are an important element in retaining NEOs, as well as helping them meet their post-employment financial management goals. We provide:

•Supplemental Executive Retirement Plan (“SERP”) – Each of Messrs. Peduzzi, Lima, Greslick, Griffith and Ms. Kassab participate in a defined benefit SERP, which is designed to attract and retain qualified and experienced executive officers. Each SERP and the relevant provisions are established in a formal agreement between CNB Bank and the respective NEO. The narrative that follows the “Pension Benefits” table below contains a detailed description of each SERP.

•Defined Contribution Plan – Effective as of January 2, 2022, Mr. Lima and Ms. Kassab commenced participation in a defined contribution plan pursuant to which the Corporation contributed an amount to the plan each year, on January 1st, equal to 20% of Mr. Lima’s and 35% of Ms. Kassab’s annual base salary. The plan was established in an agreement between the Corporation and the respective NEO. The narrative that follows the “Nonqualified Deferred Compensation” table below contains a detailed description of each defined contribution plan. In connection with the amendments to the SERP described in section "Supplemental Executive Retirement Plans" below, and in order to ensure consistency of benefits for similarly-leveled NEOs, effective September 30, 2023, this plan was frozen to prohibit future contributions and fully vest all contributions for Mr. Lima and Ms. Kassab made through such date. Mr. Lima and Ms. Kassab became participants in the SERP on October 1, 2023.

•Executive Deferred Compensation Plan – Each NEO can participate in this plan, which allows them to defer up to 75% of base compensation and 100% of annual incentive compensation until a date in the future. If 100% of incentive compensation is deferred, the executive is responsible for payment of applicable payroll taxes. The Corporation provides no inducement (matching or discretionary contribution) for NEOs to participate.

The Corporation provides certain NEOs with perquisites that the ECC believes are reasonable and consistent with its overall compensation philosophy and consistent with executive benefits that are customary in the financial services industry. Specifically, the Corporation provides each of Messrs. Peduzzi, Lima, Greslick, and Griffith and Ms. Kassab the option to use a company-provided vehicle, as well as payment of club dues, both of which are included in taxable income. The ECC believes that these perquisites assist the NEOs in the performance of their respective job duties by providing a corporate-supported means to travel to the various banking divisions among the Corporation’s footprint, and opportunities to use club membership rights to develop and expand business contacts.

The ECC believes that the Corporation’s continued success depends, to a significant degree, on the skills and competence of certain members of our executive management team. The Corporation and the Bank have entered into executive employment contracts with Messrs. Peduzzi, Lima, Greslick, and Griffith and Ms. Kassab (collectively, the “Employment Contracts”). These Employment Contracts are intended to ensure that the Corporation and the Bank will continue to maintain and retain experienced executive management.

The Corporation, the Bank and Mr. Peduzzi entered into an updated Employment Contract on November 27, 2023, with the initial term expiring on December 31, 2024. Thereafter, Mr. Peduzzi’s Employment Contract renews automatically for successive 36-month periods unless terminated by either party upon 120 days’ written notice. The Employment Contracts for Messrs. Lima, Greslick, and Griffith and Ms. Kassab shall automatically renew for successive terms of one year unless either party gives the other party ninety days written notice of intent not to renew the contract prior to the end of the then-current term.

The Employment Contracts provide for a base salary to be established annually by the Board and for annual increases, stock, stock options/rights and bonuses as may from time to time be awarded by the Board. Each Employment Contract contains a covenant not to compete against the Corporation and the Bank, their parent, affiliates or subsidiaries during the term of employment and thereafter for a period of twenty-four months, in the case of Messrs. Peduzzi and Griffith, and a period of thirty-six months, in the case of Mr. Lima, and, in the case of Mr. Greslick and Ms. Kassab, until the earlier of (i) the third anniversary of the executive’s termination of employment or (ii) the date of a change in control of the Corporation or the Bank. In addition, each Employment Contract contains a covenant to protect the Corporation’s and the Bank’s confidential information.

The Employment Contracts also provide for severance payments in the event an NEO is terminated without “cause” (as such term is defined in the Employment Contracts) regardless of whether such termination is in connection with a change in control, or voluntarily terminates employment under certain specific “good reason” circumstances following a change in control. Such “good reason” circumstances include a material reduction in authorities, duties or responsibilities or assignment of duties inconsistent with current responsibilities, a material reduction in salary or other benefits, and reassignment to a location greater than 25 miles from the current location. Following such a termination of employment, if such NEO timely executed and does not revoke a general release of claims, (a) Mr. Greslick will be entitled to receive a lump sum cash payment equal to 2.99 times the sum of (i) his base salary plus (ii) the average incentive bonus paid over the preceding three-year period; (b) Messrs. Peduzzi, Lima, and Griffith will be entitled to receive a lump sum cash payment equal to 2.50 times the sum of (i) his base salary, plus (ii) the average incentive bonus paid over the preceding three-year period; and (c) Ms. Kassab will be entitled to receive a lump sum cash payment equal to 2.50 times the sum of (i) her average base salary over the preceding five-year period, plus (ii) the average incentive bonus paid over the preceding five-year period. Mr. Peduzzi and his family are also eligible to receive up to 6 months of continued group medical, dental, and vision coverage at the then-current active employee contribution rate for such coverage. Additionally, accelerated vesting of outstanding time-based unvested restricted stock awards will occur and restrictions will lapse. Outstanding performance-based awards will vest and restrictions will lapse, prorated by the number of full months from award date to the change in control or termination without cause date, and the denominator of which equals 36, with the performance goals measured as of the most recently completed fiscal quarter.

Cash and benefits paid to a NEO under the Employment Contracts together with payments under other benefit plans following a change in control may constitute an “excess parachute” payment under Section 280G of the Code, resulting in the imposition of a 20% excise tax on the recipient and the denial of the deduction for such excess amounts to the Corporation or the Bank. If amounts payable to the NEO would be excess parachute payments, then the NEO’s severance benefits will be reduced to that amount that would result in no portion being an excess parachute payment unless payment of the full severance amount would result in the executive receiving an amount equal to or greater than 110% of the reduced amount on an after-tax basis. The Employment Contracts do not provide for tax indemnity for any such potential excise taxes that may be due by the NEOs.