Exhibit 10.1


 


Peoples
Security Bank and Trust Company

Executive Cash Bonus Plan


 


Amended and Restated as
of May 8, 2020


 


WHEREAS, Peoples Financial Services Corp.
(“Corporation”) and Peoples Security Bank and Trust Company (“Bank”) designed their compensation program
to provide a competitive base salary as well as provide incentives to executive officers to effectively lead and manage the Corporation
and Bank and implement their quality, earnings and growth strategies;


 


WHEREAS, the Corporation and Bank believe
that executive compensation should be closely aligned with the long-term interests of shareholders, along with corporate goals
and strategies, and should include significant performance-based criteria related to long term shareholder value, which should
reflect upside potential and downside risk; and


 


WHEREAS, the Corporation and Bank believe
that the implementation of a Cash Bonus Plan (“Plan”) will create a strong and objective link between executive compensation
and shareholder value creation.


 


NOW THEREFORE, in consideration of the premises
above and the covenants herein contained, and intending to be legally bound, the Bank agrees as follows


 


Section
1.                  Term.
The Plan was originally adopted effective as of January 1, 2011 and is amended and restated as of May 8, 2020. The Plan may be
terminated by the Board of Directors at any time. The Plan Year shall be a calendar year.


 


Section
2.                  Committee.
The Plan shall be administered by the Compensation Committee of the Board of Directors (“Committee”). The Committee
shall be vested with full authority to establish goals and grant Awards under the Plan; to adopt, amend, and rescind such rules,
regulations and procedures as it deems necessary or desirable to administer the Plan; to interpret the provisions of the Plan;
and to make all other determinations necessary in connection with the administration of the Plan. Any determination, decision or
action of the Committee in connection with the construction, interpretation, administration or application of the Plan shall be
final, conclusive and binding. No member of the Committee shall be liable for any determination, decision or action made in good
faith with respect to the Plan or any Award granted under the Plan.


 


Section
3.                  Participants.
The participants are designated executive officers that are in a position to contribute to the long term success of the organization.
Each calendar year, the Committee shall designate those executive officers who shall participate in the Plan for that Plan Year
(“Participant”).


 


Section
4.                  Awards.
A Participant’s Award shall be determined based upon the attainment of written performance goals approved by the Committee.
The performance goals shall be based upon criteria which may or may not be objective. The Committee may adjust measurements and
weighting based upon individual circumstances which it believes warrant such adjustments.


 






    


     


    

 


The maximum Award which may be earned by
a Participant shall also be determined and, to the extent possible, communicated to the Participant by the Committee prior to the
Plan Year.


 


In addition to annual Awards, Participants
may receive cash bonuses at times and in amounts determined by the Committee in its discretion from time to time.


 


Section
5.                  Payment
of Awards. All payments in respect of annual Awards under this Plan shall be made as soon as possible after the completion
of the Plan Year. Other discretionary bonuses shall be made at such times determined by the Committee.


 


Section
6.                  Clawback.
In the event that Corporation or the Bank is required to prepare an accounting restatement because of the material noncompliance
of the Corporation or Bank with any financial reporting requirement and if within the previous three years a Participant received
an Award based upon the erroneous data, the Participant shall return and refund to the Bank the excess amount over what would have
been paid to the Participant under the accounting restatement. In the event that the Corporation or the Bank is required to prepare
an accounting restatement because of a Participant’s misconduct or fraudulent activity, then the Participant shall return
and refund to the Bank the entire Award received based upon the erroneous data. Additionally, any amounts paid under this Plan
will be subject to recoupment in accordance with any clawback policy that the Corporation or the Bank adopts, including any policy
adopted pursuant to the listing standards of any national securities exchange or association on which the Corporation’s securities
are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law.
No recovery of compensation under this Plan or any clawback policy will be an event giving rise to a right to resign for “good
reason” (or similar term) under any agreement with the Corporation or the Bank.


 


Section
7.                  Termination
of Employment. In the event that a Participant’s employment is terminated prior to December 31st of the year in which
an annual Award is earned, he shall not be eligible to receive an Award under this Plan. A Participant must be employed by the
Bank on December 31st to receive an annual Award. In the event that a Participant is terminated as a result of being convicted
of a crime, for dishonesty or gross negligence, for breach of fiduciary duty, for fraud or misappropriation, or for a violation
of any law, rule or regulation governing banks, bank holding companies or bank officers, or for “cause” (or similar
term) under any agreement with the Corporation or the Bank, then the Participant shall not be entitled to any Award under this
Plan and all of the Participant’s rights under this Plan shall terminated immediately.


 


Section
8.                  Effect on
Employment. Neither the Plan nor any action taken hereunder shall be construed as giving any Participant or other person any
right to continue to be employed by or perform services for the Corporation or Bank, and the right to terminate the employment
of or performance of services by any Participant at any time and for any reason is specifically reserved to the Corporation or
Bank.


 






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Section
9.                  Section
409A of the Internal Revenue Code. Any payments made pursuant to this Plan, to the extent of payments made through March 15th
of the calendar year, are intended to constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) and thus payable
pursuant to the “short-term deferral” rule set forth in Treas. Reg. §1.409A-1(b)(4).


 


Section
10.              Applicable Law. The Plan shall
be construed, administered, regulated, and governed in all respects under and by the laws of the Commonwealth of Pennsylvania,
except as preempted by federal law.


 


IN WITNESS WHEREOF, this instrument has
been executed by an authorized officer of the Bank.


 


	ATTEST	 	PEOPLES SECURITY BANK AND TRUST COMPANY
	 	 	 
	 	 	 
	/s/	 	/s/ Craig W. Best
	 	 	Name:	Craig W. Best
	 	 	Title:	President & CEO




 






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