Exhibit 10.1

Changes to Director Compensation Arrangement

Directors of Peoples Bancorp, Inc. also serve as directors of its subsidiary,
Peoples Bank of Kent County, Maryland (the “Bank”), but they are compensated
only for serving on the Bank’s Board and its committees. The fees paid to
non-employee directors of the Bank are typically re-evaluated by the Bank’s
Personnel/Compensation Committee in May of each year. On May 24, 2006, the
Bank’s Board of Directors, upon the recommendation of the Personnel/Compensation
Committee, approved increases in the fees paid to non-employee directors for
attending regular and committee meetings. Effective as of that date,
non-employee directors of the Bank’s Board now receive $416 (previously $390)
for each regular Board meeting attended; the Chairman and the Secretary now
receive $425 (previously $400) and $420 (previously $395), respectively, for
each regular Board meeting attended; non-employee members of the Executive
Committee now receive $280 (previously $265) for each committee meeting
attended, except for the Chairman of that committee who now receives $290
(previously $275) for each committee meeting attended; and members of all other
committees now receive $190 (previously $180) for each committee meeting
attended. No change was made to the annual director retainer fee, which is
$1,000. Directors who serve as trustees of the Bank’s Employee Retirement Plan
and its Profit Sharing 401(k) Plan receive an annual retainer fee of $215
(previously $200). Non-employee directors emeritus receive $208 per Board
meeting attended, up from the $195 paid last year. Currently, E. Roy Owens is
the only director emeritus.

 
 

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