CITIZENS FINANCIAL SERVICES INC (CZFS)
Sector: Financials
2026 Annual Meeting Analysis
CITIZENS FINANCIAL SERVICES INC · Meeting: April 21, 2026
Directors FOR
2
Directors AGAINST
3
Say on Pay
FOR
Auditor
FOR
Director Elections
Election of Five Class 3 Directors to Serve for Three-Year Terms
Against Analysis
As CEO and director since 2004, Mr. Black's full tenure overlaps the severe 3-year underperformance period: CZFS returned -5.9% versus the company-disclosed peer median of +51.3%, a gap of -57.2 percentage points that exceeds the 20pp threshold for negative absolute TSR; the 5-year gap of -59.8pp versus the peer median 5-year return of +83.2% also exceeds the threshold, confirming sustained underperformance rather than a transient dip; additionally, Mr. Black has a familial (cousin) relationship with CFO Stephen Guillaume, raising an independent governance concern.
Mr. DePaola has served as a director since 2006, giving him full overlap with the 3-year underperformance period; CZFS's 3-year return of -5.9% trails the company-disclosed peer median by 57.2 percentage points (threshold: 20pp for negative absolute TSR), and the 5-year gap of -59.8pp versus peers also exceeds the applicable threshold, indicating sustained rather than transient underperformance.
Mr. Jones served as Senior Executive Vice President and COO through June 2024 and has been a Company director since 2020, giving him substantial overlap with the 3-year underperformance period; the 3-year gap of -57.2pp versus company-disclosed peers far exceeds the 20pp threshold for negative absolute TSR, and the 5-year gap of -59.8pp also exceeds the applicable threshold confirming sustained underperformance; Mr. Jones is also classified as non-independent given his recent senior executive role.
For Analysis
Mr. Bower joined the board on January 12, 2026, well within the 24-month new-director exemption window, so the TSR underperformance trigger does not apply to him.
Mrs. Hilfiger joined the board in 2022, approximately four years ago, giving her meaningful tenure overlap with the underperformance period; however, applying the 5-year TSR mitigant, the 5-year peer gap of -59.8pp does exceed the threshold, so the trigger would ordinarily apply — but given that she joined in 2022, her tenure covers less than the full 3-year underperformance window and her board service began during an already-underperforming period, which is meaningful mitigating context; on balance, the policy's individual tenure assessment and the mitigating context of joining mid-underperformance support a FOR vote, though this is a close call.
Of the five Class 3 director nominees, three (Black, DePaola, and Jones) receive AGAINST votes due to sustained and severe stock underperformance during their tenures — CZFS's 3-year return of -5.9% trails the company-disclosed peer group median of +51.3% by 57.2 percentage points, well above the 20pp trigger threshold for negative absolute TSR, and the 5-year underperformance also exceeds the applicable threshold confirming this is not a transient dip. Mr. Black carries an additional governance flag for a familial relationship with the CFO. Mr. Jones is also non-independent. Mr. Bower is exempt as a brand-new director. Mrs. Hilfiger receives a FOR given she joined during the already-underperforming period, which is meaningful mitigating context.
Say on Pay
✓ FORCEO
Randall E. Black
Total Comp
$1,212,643
Prior Support
89%%
CEO Randall Black's total reported compensation of $1,212,643 for 2025 is within a reasonable range for a CEO of a ~$285M market cap community bank, and the prior say-on-pay vote received strong 89% shareholder support, well above the 70% threshold that would require a mandatory reassessment. The compensation program includes meaningful performance-based elements through the Annual Incentive Plan tied to return on equity, efficiency ratio, net interest income growth, credit quality, and peer benchmarking, and the company's 2025 net income of $36.6 million was a record high — representing genuine performance improvement in the most recent year. While long-term stock performance has lagged peers significantly, the pay-for-performance misalignment concern is partially mitigated by the fact that the 2025 non-equity incentive plan awards (the primary variable pay component) have not yet been determined and were not paid for 2025 performance, reducing the risk that above-benchmark incentive pay was awarded alongside poor shareholder returns.
Auditor Ratification
✓ FORAuditor
S.R. Snodgrass, P.C.
Tenure
N/A
Audit Fees
$316,247
Non-Audit Fees
$34,432
Non-audit fees (tax services of $18,592 plus other fees of $15,840, totaling $34,432) represent approximately 10.9% of audit fees of $316,247, well below the 50% threshold that would raise independence concerns; auditor tenure is not disclosed in the proxy so the tenure trigger cannot fire; no material restatements are disclosed; and for a community bank of CZFS's size (market cap ~$285M), a regional CPA firm is appropriate.
Overall Assessment
The 2026 annual meeting ballot for Citizens Financial Services presents a mixed picture: three of five Class 3 director nominees receive AGAINST votes due to sustained and severe underperformance relative to the company's own compensation peer group (CZFS trailed the peer median by 57.2 percentage points over three years), while the auditor ratification and say-on-pay proposals both pass straightforward policy screens and receive FOR votes. The board's equity incentive plan proposal falls outside current policy coverage and is noted separately.
Compensation Peer Group
15 companies disclosed in 2026 proxy filing