Company: NWFL
Filing Date: 2025-03-18
Form Type: DEF 14A
Source: 0001193125-25-056227
Chunk: 26

Company: NORWOOD FINANCIAL CORP
Filing Date: 2025-03-18
Form: DEF 14A
Chunk 26
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 pre-definedperformance criteria and attainment of such performance during the fiscal year. Depending on the Company’s targeted performance measures for the year, the Committee establishes a cash incentive bonus pool generally based on a percentage of pre-taxearnings. Specific bonus amounts are awarded to each NEO based on attainment of pre-determinedfinancial performance targets and individual performance goals as determined by the Committee. Discretionary cash bonuses are also distributed to employees at all levels based on merit as determined by the President and approved by the Committee at the end of the fiscal year. Any adjustments to the financial performance measures utilized to determine the bonus pool for a plan year must be approved by the Board of Directors. Effective in 2023, the Company adopted an Incentive-Based Compensation Recovery Policy to enable the Company to seek recover of any erroneously awarded compensation. 18

Historically, this bonus pool percentage has varied from 3.0% to 5.3% of pre-taxearnings. For 2024, the Board approved a bonus pool in December 2024 equal to $1,500,000, even though net income for the year was negative. Awards from the bonus pool were distributed to all NEOs within the discretion of the Compensation Committee and to other officers and employees. The Committee retains the authority to reduce bonus awards if it determines that excessive risk has been taken in obtaining such performance or if significant regulatory issues exist with respect to such performance. Cash bonuses approved by the Committee in December 2024 for the NEOs were made based on the Committee’s discretion and its assessment of individual performance as follows:

| Name              |     | Bonus |         |     | % of Base Salary |    |   |
|:------------------|:----|:------|--------:|:----|:-----------------|---:|:--|
| James O. Donnelly |     | $     | 134,500 |     |                  | 25 | % |
| Vincent G. O’Bell |     | $     |  58,000 |     |                  | 24 | % |
| John F. Carmody   |     | $     |  56,332 |     |                  | 24 | % |

401(k) Plan and ESOP.The Bank maintains a defined contribution profit-sharing and 401(k) Plan which is open to all employees over the age of 21 who have met the eligibility requirements. The 401(k) Plan permits employees to make pre-taxcontributions of between 2% and 10