Table of Contents

Table of Contents

April 2, 2013

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders of Berkshire Hills Bancorp, Inc. to be held at:

The Crowne Plaza Hotel

One West Street

Pittsfield, Massachusetts 01201

Thursday, May 9, 2013

10:00 a.m., local time

The notice of annual meeting and proxy statement appearing on the following pages describe the formal business to be transacted at the meeting. Directors and officers of the Company, as well as a representative of PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, will be present to respond to appropriate questions of stockholders.

It is important that your shares are represented at this meeting, whether or not you attend the meeting in person and regardless of the number of shares you own. To make sure your shares are represented, we urge you to complete and mail the enclosed proxy card promptly. If you attend the meeting, you may vote in person even if you have previously voted.

The Board of Directors unanimously recommends that you vote “FOR” each of the proposals to be presented at the annual meeting.

Sincerely,

Table of Contents

24 North Street

Pittsfield, Massachusetts 01201

(413) 443-5601

NOTICE OF 2013 ANNUAL MEETING OF STOCKHOLDERS

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 9, 2013—THIS PROXY STATEMENT AND BERKSHIRE HILLS BANCORP, INC.’S 2012 ANNUAL REPORT TO STOCKHOLDERS ARE EACH AVAILABLE AT HTTP://BHLB.INVESTORROOM.COM.

Table of Contents

Berkshire Hills Bancorp, Inc.

Proxy Statement

Table of Contents

Table of Contents

Berkshire Hills Bancorp, Inc.

Proxy Statement

General Information

We are providing this proxy statement to you in connection with the solicitation of proxies by the Board of Directors of Berkshire Hills Bancorp, Inc. for the 2013 Annual Meeting of Stockholders and for any adjournment or postponement of the meeting. In this proxy statement, we may also refer to Berkshire Hills Bancorp, Inc. as “Berkshire Hills,” the “Company,” “Berkshire,” “we,” “our” or “us.”

Berkshire Hills is the holding company for Berkshire Bank and Berkshire Insurance Group, Inc. In this proxy statement, we may also refer to Berkshire Bank as the “Bank.”

We are holding the 2013 Annual Meeting at The Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts on May 9, 2013 at 10:00 a.m., local time.

We intend to mail this proxy statement and the enclosed proxy card to stockholders of record beginning on or about April 2, 2013.

Information About Voting

Who Can Vote at the Meeting

You are entitled to vote the shares of Berkshire Hills common stock that you owned as of the close of business on March 14, 2013. As of the close of business on March 14, 2013, a total of 25,331,698 shares of Company common stock were outstanding. Each share of common stock has one vote.

The Company’s Certificate of Incorporation provides that a record owner of the Company’s common stock who beneficially owns, either directly or indirectly, in excess of 10% of the Company’s outstanding shares, is not entitled to any vote in respect of the shares held in excess of the 10% limit. To our knowledge, there are no such record owners as of March 14, 2013.

Ownership of Shares; Attending the Meeting

You may own shares of Berkshire Hills in one of the following ways:

·                                          Directly in your name as the stockholder of record;

·                                          Indirectly through a broker, bank or other holder of record in “street name”; or

·                                          Indirectly in the Berkshire Hills Bancorp, Inc. Stock Fund of our 401(k) Plan, the trust that holds restricted stock awards issued to directors and employees under our equity plans, or through the Rome Bancorp, Inc. Employee Stock Ownership Plan, Beacon Federal Retirement Savings Plan, or Beacon Federal Employee Stock Ownership Plan.

If your shares are registered directly in your name, you are the holder of record of these shares and we are sending these proxy materials directly to you. As the holder of record, you have the right to give your proxy directly to us or to vote in person at the meeting. If you wish to vote at the meeting, you will need to bring proof of identity.

1

Table of Contents

If you hold your shares in street name, your broker, bank or other holder of record is sending these proxy materials to you. As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote by filling out a voting form that accompanies your proxy materials. Your broker, bank or nominee may allow you to provide voting instructions by telephone or by the Internet. Please see the form provided by your broker, bank or nominee that accompanies this proxy statement.

If you hold your shares in street name and wish to attend the meeting, you will need to bring proof of ownership to be admitted to the meeting. A recent brokerage statement or letter from a bank or broker are examples of proof of ownership. If you want to vote your shares of Berkshire Hills common stock held in street name in person at the meeting, you must obtain a written proxy in your name from the broker, bank or nominee who is the record holder of your shares. You will also need to bring proof of identity to vote at the meeting.

Quorum and Vote Required

Quorum. We will have a quorum and will be able to conduct the business of the annual meeting if the holders of a majority of the outstanding shares of common stock entitled to vote are present at the meeting, either in person or by proxy.

Votes Required for Proposals. At this year’s annual meeting, stockholders will elect four directors to serve a term of three years.  In voting on the election of directors, you may vote in favor of the nominees, withhold votes as to all nominees, or withhold votes as to specific nominees. There is no cumulative voting for the election of directors.  Directors must be elected by a plurality of the votes cast at the annual meeting. This means that the four nominees receiving the greatest number of votes will be elected. However, if a director is elected by a plurality but less than a majority of the votes cast for such director, such director must submit his or her resignation to the Board of Directors, which resignation may then be accepted or rejected by the Board following a review by the Corporate Governance/Nominating Committee.

In voting on the Berkshire Hills Bancorp, Inc. 2013 Equity Incentive Plan (“2013 Equity Incentive Plan”), you may vote in favor of the proposal, vote against the proposal, or abstain from voting. To approve the Berkshire Hills Bancorp, Inc. 2013 Equity Incentive Plan, the affirmative vote of a majority of the votes cast at the annual meeting is required.

In voting on the non-binding proposal to give advisory approval of our executive compensation, you may vote in favor of the proposal, vote against the proposal or abstain from voting. To approve the proposal, the affirmative vote of a majority of the votes cast at the annual meeting is required.  While this vote is required by law, it will neither be binding on us or the Board of Directors, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on us or the Board of Directors.

In voting on the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm, you may vote in favor of the proposal, vote against the proposal or abstain from voting. To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2013, the affirmative vote of a majority of the votes cast at the annual meeting is required.

Routine and Non-Routine Proposals. Applicable rules determine whether proposals presented at stockholder meetings are routine or non-routine. If a proposal is routine, a broker or other entity holding shares for an owner in street name may vote on the proposal without receiving voting instructions from the owner. If a proposal is non-routine, the broker or other entity may vote on the proposal only if the owner has provided voting instructions. The New York Stock Exchange (“NYSE”) allows its member-brokers to vote shares held by them for their customers on matters the NYSE determines are routine, even

2

Table of Contents

though the brokers have not received voting instructions from their customers. The NYSE currently considers the ratification of our independent auditors (Item 4) as a routine matter. Your broker, therefore, may vote your shares in its discretion on this routine matter if you do not instruct your broker how to vote on it. If the NYSE does not consider a matter routine, then your broker is prohibited from voting your shares on the matter unless you have given voting instructions on that matter to your broker. The NYSE no longer considers the election of directors or compensation matters to be routine (Items 1, 2 and 3). Therefore, brokers holding shares for their customers will not have the ability to cast votes with respect to the election of directors, the Company’s 2013 Equity Incentive Plan and the Company’s executive compensation, unless they have received instructions from their customers. It is important, therefore, that you provide instructions to your broker if your shares are held by a broker so that your vote with respect to these non-routine matters are counted.

How We Count Votes. If you return valid proxy instructions or attend the meeting in person, we will count your shares to determine whether there is a quorum, even if you abstain from voting. Broker non-votes also will be counted to determine the existence of a quorum.

In the election of directors, votes that are withheld and broker non-votes will have no effect on the outcome of the election.

In counting votes on the proposals to approve the Berkshire Hills Bancorp, Inc. 2013 Equity Incentive Plan, to give advisory approval of our executive compensation, and to ratify the selection of the independent registered public accounting firm, we will not count abstentions or broker non-votes as votes cast on these proposals. Therefore, abstentions and broker non-votes will have no impact on the outcome of these proposals.

Solicitation of Proxies. The Company will bear the entire cost of soliciting proxies from you. In addition to solicitation of proxies by mail, we will request that banks, brokers and other holders of record send proxies and proxy materials to the beneficial owners of Berkshire Hills Bancorp, Inc. common stock and secure their voting instructions, if necessary. We have also made arrangements with Phoenix Advisory Partners to assist us in soliciting proxies and have agreed to pay them a fee of $6,500 plus reasonable expenses for their services. If necessary, we may also use several of its employees, who will not be specially compensated, to solicit proxies from stockholders, personally or by telephone, facsimile or letter.

Voting by Proxy

The Company’s Board of Directors is sending you this proxy statement to request that you allow your shares of Company common stock to be represented at the annual meeting by the persons named as proxies on the enclosed proxy card. All shares of Company common stock represented at the meeting by properly executed and dated proxies will be voted according to the instructions indicated on the proxy card. If you sign, date and return a proxy card without giving voting instructions, your shares will be voted as recommended by the Company’s Board of Directors.

The Board of Directors unanimously recommends that you vote “FOR” each of the nominees for director, “FOR” the Berkshire Hills Bancorp, Inc. 2013 Equity Incentive Plan, “FOR” our executive compensation as described in this proxy statement, and “FOR” ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2013.

If any matters not described in this proxy statement are properly presented at the annual meeting, the persons named as proxies on the proxy card will use their judgment to determine how to vote your shares. This includes a motion to adjourn or postpone the meeting to solicit additional proxies. If the annual meeting is postponed or adjourned, your Company common stock may be voted by the persons

3

Table of Contents

named in the proxy card on the new meeting date, provided such new meeting occurs within 30 days of the annual meeting and you have not revoked your proxy. The Company does not currently know of any other matters to be presented at the meeting.

You may revoke your proxy at any time before the vote is taken at the meeting. To revoke your proxy, you must either advise the Corporate Secretary of the Company in writing before your common stock has been voted at the annual meeting, deliver a later dated proxy or attend the meeting and vote your shares in person by ballot. Attendance at the annual meeting will not in itself constitute revocation of your proxy. You may advise the Company’s Corporate Secretary of your revocation in writing to Berkshire Hills Bancorp, Inc. at 24 North Street, P.O. Box 1308, Pittsfield, Massachusetts 01202, care of Wm. Gordon Prescott, Corporate Secretary.

Participants in the Berkshire Bank 401(k) Plan

If you invest in Berkshire Hills common stock through the Berkshire Hills Bancorp Stock Fund in our 401(k) Plan, you will receive a voting instruction card that reflects all shares you may vote under the plan. Under the terms of the 401(k) Plan, a participant is entitled to direct the trustee how to vote the shares in the Berkshire Hills Bancorp, Inc. Stock Fund credited to his or her account. The trustee will vote all shares for which it does not receive timely instructions from participants in the same proportion as shares for which the trustee received voting instructions. Your voting instructions must be received by May 2, 2013.

Former Participants in the Rome Bancorp, Inc. Employee Stock Ownership Plan, Beacon Federal Employee Stock Ownership Plan, and Beacon Federal Retirement Savings Plan

As a result of our acquisitions of Rome Bancorp, Inc. and Beacon Federal Bancorp, Inc., the Rome Bancorp, Inc. Employee Stock Ownership Plan, Beacon Federal Employee Stock Ownership Plan, and Beacon Federal Retirement Savings Plan (collectively, the “Plans”) hold Berkshire Hills common stock.  If you are a former participant in any of these Plans, you are entitled to direct the applicable Plan Trustee on how to vote the shares of Berkshire Hills common stock allocated to your account.  Each former participant in the Plan will receive a voting instruction card that reflects all the shares that he or she is entitled to vote.  The applicable Plan Trustee will vote all shares for which it does not receive timely instructions from participants in the same proportion as shares for which the applicable Plan Trustee received voting instructions.  Your voting instructions must be received by May 2, 2013.

Holders of Non-Vested Restricted Stock Awards

If you have been granted a restricted stock award under the Berkshire Hills Bancorp, Inc. Amended and Restated 2003 Equity Compensation Plan or the 2011 Equity Incentive Plan (collectively referred to as the “Incentive Plan”), you will receive a voting instruction card that reflects all unvested shares of Berkshire Hills common stock subject to the restricted stock award that you may vote under the Incentive Plan. Under the terms of the Incentive Plan, a participant is entitled to direct the trustee how to vote the unvested shares of restricted Berkshire Hills common stock awarded to him or her. The trustee will vote the shares of Berkshire Hills common stock held in the Incentive Plan Trust in accordance with instructions it receives from you and other stock award recipients. Your voting instructions must be received by May 2, 2013.

4

Table of Contents

Corporate Governance

Director Independence

The Company’s Board of Directors currently consists of 13 members, all of whom are independent under the listing requirements of The New York Stock Exchange, except for Messrs. Daly and Curley, who are officers of Berkshire Hills and Berkshire Bank, and Mr. Dunlaevy, by reason of his Non-Competition and Consulting Agreement with the Company, dated April 6, 2011, pursuant to Legacy Bancorp, Inc.’s merger with and into the Company. In determining the independence of its directors, the Board considered transactions, relationships and arrangements between the Company and its directors that are not required to be disclosed in this proxy statement under the heading “Transactions with Related Persons,” including loans or lines of credit that the Bank has directly or indirectly made to Directors Altmeyer, Auriemma, Daly, Mahoney, Phelps, Raser and Templeton.

Corporate Governance Policy

The Board of Directors has adopted a corporate governance policy to govern certain activities, including: the duties and responsibilities of directors; the composition, responsibilities and operation of the Board of Directors; the operation of board committees; succession planning; convening executive sessions of independent directors; the Board of Directors’ interaction with management and third parties; and the evaluation of the performance of the Board of Directors and of the Chief Executive Officer. A copy of the corporate governance policy is available in the Governance Documents portion of the Investor Relations section of the Company’s website (www.berkshirebank.com).

Committees of the Board of Directors

The following table identifies our standing committees and their members.  All members of the Audit Committee, the Compensation Committee and the Corporate Governance/Nominating Committee are independent in accordance with the listing requirements of The New York Stock Exchange. Each committee operates under a written charter that is approved by the Board of Directors that governs its composition, responsibilities and operation. Each committee reviews and reassesses the adequacy of its charter at least annually.  The charters of all five committees are available in the Governance Documents portion of the Investor Relations section of the Company’s website (www.berkshirebank.com).

*                 Denotes Chairperson

**          Mr. Auriemma was appointed to the Board of Directors of the Company on May 10, 2012.

***   Mr. Phelps has determined that he will not stand for re-election at the 2013 Annual Meeting of Stockholders.

5

Table of Contents

Audit Committee

The Audit Committee assists the Board of Directors in its oversight of the Company’s accounting and reporting practices, the quality and integrity of the Company’s financial reports and the Company’s compliance with legal and regulatory requirements related to accounting and financial reporting. The Audit Committee oversees the Company’s internal audit function and annually reviews and approves an internal audit plan. The Committee is also responsible for engaging the Company’s independent registered public accounting firm and monitoring its performance and independence. Each member of the Audit Committee is independent under the listing requirements of The New York Stock Exchange and the rules of the Securities and Exchange Commission applicable to audit committee members. The Board of Directors has designated Director Hill as an audit committee financial expert under the rules of the Securities and Exchange Commission.

Compensation Committee

The Compensation Committee approves the compensation objectives for the Company and its subsidiaries and establishes the compensation for the Chief Executive Officer and other executives. The Compensation Committee also reviews the Company’s incentive compensation and other equity plans and recommends changes to the plans as needed. The Compensation Committee reviews all compensation components for the Company’s Chief Executive Officer and other highly compensated executive officers, including base salary, annual incentive, long-term incentives/equity, benefits and other perquisites. In addition to reviewing competitive market factors, the Compensation Committee also examines the total compensation mix, pay-for-performance relationship, and how all elements, in the aggregate, comprise the executive’s total compensation package. Decisions by the Compensation Committee with respect to the compensation of executive officers are approved by the full Board of Directors. See “Compensation Discussion and Analysis” for more information regarding the role of the Compensation Committee, management and compensation consultants in determining and/or recommending the amount or form of executive compensation.

Corporate Governance/Nominating Committee

The Company’s Corporate Governance/Nominating Committee assists the Board of Directors in: (1) identifying qualified individuals to serve as Board members, (2) determining the composition of the Board of Directors and its committees, (3) monitoring a process to assess Board effectiveness and (4) developing and implementing the Company’s corporate governance guidelines. The Corporate Governance/Nominating Committee also considers and recommends the nominees for director to stand for election at the Company’s annual meeting of stockholders.

Minimum Qualifications. The Corporate Governance/Nominating Committee has adopted a set of criteria that it considers when it selects individuals to be nominated for election to the Board of Directors. A candidate must meet the eligibility requirements set forth in the Company’s bylaws, which include a residency requirement and a requirement that the candidate not have been subject to certain criminal or regulatory actions. A candidate also must meet any qualification requirements set forth in any Board or committee governing documents.

These qualifications include:

·                                          No person shall be eligible for election or appointment to the Board of Directors: (i) if such person has, within the previous 10 years, been the subject of supervisory action by a financial regulatory agency that resulted in a cease and desist order or an agreement or other written statement subject to public disclosure under 12 U.S.C. 1818(u), or any successor provision; (ii) if such person has been convicted of a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding

6

Table of Contents

one year under state or federal law; (iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation in such a crime; and (iv) except for persons serving as members of the initial Board of Directors or except as otherwise approved by the Board of Directors, unless such person has been, for a period of at least one year immediately prior to his or her nomination or appointment, a resident of a county in which the Company or its subsidiaries maintains a banking office or a county contiguous to any such county.

·                                          No person shall be eligible for election or appointment to the Board of Directors if such person is the nominee or representative of a company, as that term is defined in Section 10 of the Home Owners’ Loan Act or any successor provision, of which any director, partner, trustee or shareholder controlling more than 10% of any class of voting stock would not be eligible for election or appointment to the Board of Directors.

·                                          No person may serve on the Board of Directors and at the same time be a director of more than two other public companies, or their subsidiaries.

·                                          No person shall be eligible for election to the Board of Directors if such person is the nominee or representative of a person or group, or of a group acting in concert (as defined in 12 C.F.R Section 574.4(d)), that includes a person who is ineligible for election to the Board of Directors.

·                                          The Board of Directors shall have the power to construe and apply the provisions of the Company’s bylaws and other governance documents, and to make all determinations necessary or desirable to implement such provisions, including but not limited to determinations as to whether a person is a nominee or representative of a person, a company or a group, whether a person or company is included in a group, and whether a person is the nominee or representative of a group acting in concert.

If the candidate is deemed eligible and qualified for election to the Board of Directors, the Corporate Governance/Nominating Committee will then evaluate the following criteria in selecting nominees:

·                                          financial, regulatory and business experience;

·                                          familiarity with and participation in the local communities;

·                                          integrity, honesty and reputation in connection with upholding a position of trust with respect to customers;

·                                          dedication to the Company and its stockholders; and

·                                          independence.

The Committee also will consider any other factors the Corporate Governance/Nominating Committee deems relevant, including age, diversity, size of the Board of Directors and regulatory disclosure obligations. We do not maintain a specific diversity policy, but diversity is considered in our review of candidates. Diversity is considered in terms of how a candidate’s background, experience, qualifications, attributes and skills may complement, supplement or duplicate those of other prospective candidates.

With respect to nominating an existing director for re-election to the Board of Directors, the Corporate Governance/Nominating Committee will consider and review an existing director’s Board and

7

Table of Contents

committee attendance and performance; length of Board service; the experience, skills and contributions that the existing director brings to the Board; and independence.

Director Nomination Process. The Corporate Governance/Nominating Committee has adopted a process to identify and evaluate individuals to be nominated for election to the Board of Directors. For purposes of identifying nominees, the Corporate Governance/Nominating Committee relies on personal contacts of the committee members and other members of the Board of Directors, as well as its knowledge of members of the communities served by the Company and its subsidiaries. The Corporate Governance/Nominating Committee will also consider director candidates recommended by stockholders in accordance with the policy and procedures set forth below. The Corporate Governance/Nominating Committee has not previously used an independent search firm to identify nominees.

In evaluating potential nominees, the Corporate Governance/Nominating Committee determines whether the candidate is eligible and qualified for service on the Board of Directors by evaluating the candidate under certain criteria, which are described above under “Minimum Qualifications.” If such individual fulfills these criteria, the Corporate Governance/Nominating Committee will conduct a check of the individual’s background and interview the candidate to further assess the qualities of the prospective nominee and the contributions he or she would make to the Board.

Consideration of Recommendations by Stockholders. It is the policy of the Corporate Governance/Nominating Committee of the Board of Directors of the Company to consider director candidates recommended by stockholders who appear to be qualified to serve on the Company’s Board of Directors. The Corporate Governance/Nominating Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the Board of Directors and the Corporate Governance/Nominating Committee does not perceive a need to increase the size of the Board of Directors. To avoid the unnecessary use of the Corporate Governance/Nominating Committee’s resources, the Corporate Governance/Nominating Committee will consider only those director candidates recommended in accordance with the procedures set forth below.

Procedures to be Followed by Stockholders. To submit a recommendation of a director candidate to the Corporate Governance/Nominating Committee, a stockholder should submit the following information in writing, addressed to the Chairman of the Corporate Governance/Nominating Committee, care of the Corporate Secretary, at the main office of the Company:

1.                                      The name of the person recommended as a director candidate;

2.                                      All information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934;

3.                                      The written consent of the person being recommended as a director candidate to being named in the proxy statement as a nominee and to serving as a director if elected;

4.                                      As to the stockholder making the recommendation, the name and address of such stockholder as it appears on the Company’s books; provided, however, that if the stockholder is not a registered holder of the Company’s common stock, the stockholder should submit his or her name and address along with a current written statement from the record holder of the shares that reflects ownership of the Company’s common stock; and

5.                                      A statement disclosing whether such stockholder is acting with or on behalf of any other person and, if applicable, the identity of such person.

8

Table of Contents

In order for a director candidate to be considered for nomination at the Company’s annual meeting of stockholders, the recommendation must be received by the Corporate Governance/Nominating Committee at least 120 calendar days before the date the Company’s proxy statement was released to stockholders in connection with the previous year’s annual meeting, advanced by one year.

Leadership Structure

The President and Chief Executive Officer of the Company also serves as the Chairman of the Board of Directors of the Company, effective January 1, 2013. On that date, the Company appointed Mr. Bossidy, the former Chairman of the Board, as the Company’s Lead Independent Director of the Board of Directors. Mr. Bossidy’s responsibilities as Lead Independent Director of the Board include: (1) presiding at meetings of the Board at the invitation of the Chairman and at all meetings at which the Chairman is not present, including executive sessions of the non-management directors; (2) serving as a liaison between the independent directors of the Board and the Chairman; (3) developing agendas for Board and Board Committee meetings; (4) advising the Chairman of the Board as to the quality, quantity, and timeliness of the information submitted by the Company’s management to the Board; and (5) assisting the Board and the Company’s management with corporate governance issues.

The Board of Directors values independent board oversight as an essential component of corporate governance and believes that the creation of the new position of Lead Independent Director will further enhance the corporate governance of the Company. The Board believes that combining the Chairman and Chief Executive Officer positions is the best governance structure for the Company, particularly given the experience and performance of Mr. Daly during his tenure as President and Chief Executive Officer.

Capital Committee

The Capital Committee assists the Board of Directors in planning for future capital needs.  The Capital Committee is also responsible for ensuring compliance with regulations pertaining to capital structure and levels.  In accordance with its charter, a majority of the directors serving on the Capital Committee must meet the definition of independent director under the listing requirements of The New York Stock Exchange.  The committee presently has four directors and is chaired by Mr. Mahoney.

Risk Management Committee

The Risk Management Committee assists the Board of Directors in: (1) overseeing management’s program to limit or control the material business risks that confront the Company; and (2) approving policies and procedures designed to lead to an understanding of and to identify, control, monitor and measure the material business risks of the Company and its subsidiaries. These material business risks include, but are not limited to, credit risk, interest rate risk, liquidity risk, regulatory risk, legal risk, operational risk, strategic risk and reputation risk. The Risk Management Committee presently has four members and is chaired by Mr. Curley.

Board and Committee Meetings

During 2012, the Board of Directors held 10 meetings. All of the current directors attended at least 75% of the total number of the board meetings and committee meetings held on which such directors served during 2012.

Director Attendance at Annual Meeting of Stockholders

The Board of Directors encourages each director to attend annual meetings of stockholders. All but four directors attended the 2012 annual meeting of stockholders.

9

Table of Contents

Code of Business Conduct

The Company has adopted a Code of Business Conduct that is designed to promote the highest standards of ethical conduct by the Company’s directors, executive officers and employees. The Code of Business Conduct, which applies to all employees and directors, addresses conflicts of interest, the treatment of confidential information, general employee conduct and compliance with applicable laws, rules and regulations. In addition, the Code of Business Conduct is designed to deter wrongdoing and promote honest and ethical conduct, the avoidance of conflicts of interest, full and accurate disclosure and compliance with all applicable laws, rules and regulations. A copy of the Code of Business Conduct can be found in the Governance Documents portion of the Investor Relations section of the Company’s website (www.berkshirebank.com).

Audit Committee Report

The Company’s management is responsible for the Company’s internal controls and financial reporting process. The Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and issuing an opinion on the fair presentation of those financial statements in conformity with generally accepted accounting principles. The independent registered public accounting firm is also responsible for issuing an opinion on the Company’s internal control over financial reporting based on criteria issued by the Committee on Sponsoring Organizations of the Treadway Commission. The Audit Committee oversees the Company’s internal controls and financial reporting process on behalf of the Board of Directors.

In this context, the Audit Committee has met and held discussions with management and the independent registered public accounting firm. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles and provided its Report on Internal Control over Financial Reporting. The Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm matters required to be discussed by Statement on Auditing Standards No. 61 (Communication With Audit Committees), including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of the disclosures in the financial statements. The Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope and plans for its audit. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of its examination, its evaluation of the Company’s internal controls, and the overall quality of the Company’s financial reporting.

In addition, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning the independent registered public accounting firm’s independence. In concluding that the registered public accounting firm is independent, the Audit Committee considered, among other factors, whether the non-audit services provided by the firm were compatible with its independence.

In performing all of these functions, the Audit Committee acts only in an oversight capacity. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for financial statements and reports, and of the independent registered public accounting firm that, in its report, expresses an opinion on the fairness and conformity of the Company’s financial statements to generally accepted accounting principles. The Audit Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations.

10

Table of Contents

Furthermore, the Audit Committee’s considerations and discussions with management and the independent registered public accounting firm do not assure that the Company’s financial statements are presented fairly in accordance with generally accepted accounting principles, that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that the Company’s independent registered public accounting firm is “independent.”

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for filing with the Securities and Exchange Commission. The Audit Committee also has approved, subject to stockholder ratification, the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2013.

Audit Committee of the Board of Directors of

Berkshire Hills Bancorp, Inc.

Susan M. Hill, Chair

David E. Phelps

Barton D. Raser

D. Jeffrey Templeton

Director Compensation

The Company uses a combination of cash, restricted stock and stock options to attract and retain qualified candidates to serve on the Board. Equity compensation provides the opportunity to earn more based on the Company’s total stockholder return and to align directors’ interests with those of the Company’s stockholders. The Corporate Governance/Nominating Committee reviews director compensation and benefits annually and makes recommendations to the Board. The following table provides the compensation received by individuals who served as non-employee directors (except for Mr. Curley who is the Chairman of the New York region of Berkshire Bank) of the Company during the 2012 fiscal year. This table excludes perquisites, which did not exceed $10,000 in the aggregate for each director.

(1)         Represents the grant date fair value of the restricted stock awarded under the Amended and Restated Berkshire Hills Bancorp, Inc. 2003 Equity Compensation Plan, and/or the 2011 Equity Incentive Plan. The grant date fair value of the restricted stock awards has been computed in accordance with the stock based accounting rules under FASB ASC Topic 718 (formerly FAS 123(R)). For Mr. Curley only, the stock award amount includes $30,012 for his service as a director and $50,006 for his service as Chairman of the New York region of Berkshire Bank. A discussion of the assumptions used in calculating the award values may be found at Note 19 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012.  No option awards were granted to any director in 2012. As of December 31, 2012, each non-employee director and Mr. Curley had the following number of unvested shares of restricted stock and stock options outstanding:

11

Table of Contents

(2)         Reflects the dollar value of dividends paid on stock awards.

(3)         Mr. Altes retired from the Board on December 11, 2009, but by agreement continued to receive Board fees through May 2012, when his term otherwise would have expired.

(4)         Mr. Auriemma became a non-employee director on May 10, 2012, and his 2012 compensation figures reflect compensation paid to Mr. Auriemma beginning with that date.

(5)         The total amount included in “All Other Compensation” reflects Mr. Curley’s salary in the amount of $120,000 as Chairman of the New York region of Berkshire Bank, a cash bonus of $25,000, dividends of $497, and a non-elective 401(k) contribution of $3,600.

(6)         Mr. Dunlaevy was paid $145,833 in 2012 pursuant to a non-competition and consulting agreement entered into with us, which was effective on July 21, 2011, and he recognized $1,351 in imputed income on split dollar insurance.

(7)         Ms. Hill recognized $1,316 in imputed income on split dollar insurance.

(8)         Mr. Mahoney recognized $30,400 in imputed income on split dollar insurance.

(9)         Ms. Miller retired from the Board of Directors on December 13, 2012 and her 2012 compensation figures reflect compensation paid to Ms. Miller through that date.

(10)  Mr. Phelps has determined that he will not stand for re-election at the 2013 Annual Meeting of Stockholders.

(11)  Mr. Raser recognized $9 in imputed income on split dollar insurance.

(12)  Mr. Thurston retired from the Board of Directors on August 18, 2011, but by agreement continued to receive Board fees through May 2012, when his term otherwise would have expired.

Retainers for Non-Employee Directors. The following table sets forth the applicable retainers that will be paid to our non-employee directors for their service on our Board of Directors during 2013.

Agreement with J. Williar Dunlaevy.  We entered into a Non-Competition and Consulting Agreement with Mr. J. Williar Dunlaevy effective July 21, 2011, which is the same date we acquired Legacy Bancorp, Inc.  Under the agreement, Mr. Dunlaevy agreed to perform consulting services as a liaison to Legacy Banks Foundation for a period of twelve months.  In addition, for a period of twenty-four months, Mr. Dunlaevy also agreed not to solicit or offer employment to any employee of Berkshire Hills or our subsidiaries.  In exchange for the consulting services and the agreement not to compete or solicit, we agreed to pay Mr. Dunlaevy $400,000, with $150,000 paid on July 21, 2011 and $250,000 payable in monthly installments over the twelve month consulting period.

Agreement with Geno Auriemma. We entered into an Endorsement Agreement with Mr. Geno Auriemma effective May 10, 2012. Under the agreement, Mr. Auriemma has agreed to serve as a marketing spokesman for Berkshire Bank for a period of four years. In exchange for his services, we have agreed to pay Mr. Auriemma $120,000 annually for a term of four years.

12

Table of Contents

Stock Ownership

The following table provides information as of March 14, 2013, with respect to persons known by the Company to be the beneficial owners of more than 5% of the Company’s outstanding common stock. A person may be considered to own any shares of common stock over which he or she has, directly or indirectly, sole or shared voting or investing power. Percentages are based on 25,331,698 shares outstanding at March 14, 2013.

(1)         Based on information contained in a Schedule 13G/A filed with the U.S. Securities and Exchange Commission on February 11, 2013.

(2)         Based on information contained in a Schedule 13G/A filed with the U.S. Securities and Exchange Commission on February 8, 2013.

(3)         Based on information contained in a Schedule 13G filed with the U.S. Securities and Exchange Commission on February 13, 2013.

The following table provides information about the shares of Company common stock that are owned by each director or nominee for director of the Company, by the executive officers named in the Summary Compensation Table (the “Named Executive Officers” or the “NEOs”) and the aggregate number of shares owned by all directors, nominees for director and executive officers of the Company as a group as of March 14, 2013. A person may be considered to own any shares of common stock over which he or she has, directly or indirectly, sole or shared voting or investment power. Unless otherwise indicated, each of the named individuals has sole voting and investment power with respect to the shares shown and none of the shares shown have been pledged. The number of shares and options exercisable within 60 days owned by all directors and Named Executive Officers as a group totaled 2.8% of our outstanding common stock as of March 14, 2013.  Each director and Named Executive Officer owned less than 1.0% of our outstanding common stock as of that date. Percentages are based on 25,331,698 shares outstanding at March 14, 2013.

13

Table of Contents

(1)         This column includes the following:

(2)         Includes 69,518 shares held in a trust.

(3)         Includes 3,400 shares held by an LLC.

(4)         Includes 8,457 shares held by Mr. Dunlaevy’s spouse and 5,226 shares held in an employee stock ownership plan.

(5)         Includes 322 shares held by Ms. Hill’s spouse’s IRA.

(6)         Includes 31,355 shares pledged as security.

(7)         Includes 12,404 shares held by a company.

(8)         This table excludes John W. Altmeyer, who was appointed by the Board of Directors on March 18, 2013 to fill the vacancy created by Catherine B. Miller’s retirement on December 13, 2012. Mr. Altmeyer’s term expires at the 2014 Annual Meeting of Stockholders.

(9)  David E. Phelps has determined that he will not stand for re-election to the Board of Directors at the 2013 Annual Meeting of Stockholders.

(10)  Laurie Norton Moffatt is a director nominee to the Board of Directors with a proposed term to expire at the 2016 Annual Meeting of Stockholders.

14

Table of Contents

Proposals to be Voted on by Stockholders

Proposal 1 — Election of Directors

The Company’s Board of Directors currently consists of 13 members. The Board is divided into three classes, each with three-year staggered terms, with one-third of the directors elected each year. The nominees for election this year are John B. Davies, Rodney C. Dimock, Laurie Norton Moffatt, and J. Williar Dunlaevy, all of whom are current directors of the Company and the Bank except for Ms. Moffatt, who is a nominee. Mr. Phelps, whose term expires at the 2013 Annual Meeting of Stockholders, has determined that he will not stand for re-election to the Boards of Directors of the Company and the Bank. Accordingly, the Board of Directors of the Company, after due consideration of Ms. Moffattt’s qualifications, experience and commitment to the community, has selected her as a nominee to the Board of Directors for a term to expire at the 2016 Annual Meeting of Stockholders.

In addition, on March 18, 2013 the Board of Directors appointed John W. Altmeyer to the Board of Directors for a term to expire at the 2014 Annual Meeting of Stockholders. Mr. Altmeyer was appointed to fill the vacancy created by Catherine B. Miller’s retirement from the Board of Directors in December 2012.

It is intended that the proxies solicited by the Board of Directors will be voted for the election of the nominees named above. If any nominee is unable to serve, the persons named in the proxy card will vote your shares to approve the election of any substitute proposed by the Board of Directors. At this time, the Board of Directors knows of no reason why any nominee might be unable to serve.  Except as indicated herein, there are no arrangements or understandings between the nominees and any other person pursuant to which such nominees were selected.

The Board of Directors recommends a vote “FOR” the election of all nominees.

Information regarding the nominees and the directors continuing in office is provided below. Unless otherwise stated, each individual has held his or her current occupation for the last five years. The age indicated in each nominee’s biography is as of December 31, 2012. There are no family relationships among the directors or executive officers. The indicated period for service as a director includes service as a director of the Bank.

Board Nominees for Terms Ending in 2016

John B. Davies is a former Executive Vice President of Massachusetts Mutual Life Insurance and is currently an Agent Emeritus with Massachusetts Mutual providing high net worth counseling with a focus on tax efficiency and intergenerational transfers of wealth. Mr. Davies is a former director of Woronoco Bancorp, and provides the Board with knowledge and understanding of our Springfield and Central Massachusetts markets, as well as experience in financial institution management, and expertise in financial services including insurance and wealth management. Age 63. Director since 2005.

Rodney C. Dimock is a Principal at Arrow Capital, LLC, a private investing property development and consulting services company, located in West Granby, Connecticut. He was formerly President, Chief Operating Officer and a director of Cornerstone Properties, a $4.8 billion office building real estate investment trust and before that he was President of Aetna Realty Investors, Inc., one of the country’s largest real estate investment management advisors. Mr. Dimock provides experience in financial institution management, as well as experience and perspective on commercial real estate markets and the business climate and opportunities in Southern New England. Age 66. Director since 2006.

Laurie Norton Moffatt is a director nominee for election to the Board of Directors of the Company. She has served as Director and Chief Executive Officer of the Norman Rockwell Museum, Stockbridge, Massachusetts, from 1986 to the present. During her tenure, Ms. Moffatt has overseen the

15

Table of Contents

expansion of the museum’s facilities and the creation of a scholars’ research program. Her efforts resulted in the Museum receiving the National Humanities Medal, America’s highest humanities honor. Ms. Moffatt is also an active community leader. She is a founder of 1Berkshire and Berkshire Creative Economy Council and serves as a trustee of Berkshire Health Systems. Ms. Moffatt also holds a business degree from the University of Massachusetts. Her management and marketing experience developing and expanding the Norman Rockwell Museum and her community involvement will serve the Board’s efforts to continually enhance its business presence in the Berkshires and throughout the Company’s business footprint. Age 56.

J. Williar Dunlaevy is the former Chief Executive Officer and Chairman of the Board of Legacy Bancorp, Inc. and Legacy Banks (collectively, “Legacy”).  Mr. Dunlaevy served as the Chief Executive Officer and Chairman of the Board of Legacy since 1996, and he currently serves as the Chairman of the Berkshire Bank Foundation — Legacy Region, Inc.  Mr. Dunlaevy’s extensive banking experience and knowledge of local markets enhances the breadth of experience of the Board.  Age 66.  Director since 2011.

Directors with Terms Ending in 2014

Michael P. Daly is Chairman of the Board of Directors, President and Chief Executive Officer of the Company and the Bank. Before these appointments, Mr. Daly served as Executive Vice President and Senior Loan Officer of the Bank. He has been an employee of the Bank since 1986. Mr. Daly’s extensive banking experience and knowledge of local markets enhances the breadth of experience of the Board of Directors. Age 51. Director since 2002.

Susan M. Hill is President of Hill & Thompson, P.C., a certified public accounting firm located in Manchester Center, Vermont. She served as a director of Factory Point Bancorp, Inc. and Factory Point National Bank of Manchester Center from 1992 until their acquisition by Berkshire Hills in September 2007. As an accountant, Ms. Hill provides knowledge and expertise to the Board in the areas of financial statement preparation and reporting, and serves as the Company’s Audit Committee Financial Expert. Ms. Hill is designated as a Certified Financial Planner and adds value in the oversight of the Company’s financial services and wealth management business. She also provides experience and perspective concerning operations in our Vermont region. Age 63. Director since 2007.

Cornelius D. Mahoney served as President, Chief Executive Officer and Chairman of the Board of Woronoco Bancorp and Woronoco Savings Bank before their merger with the Company and the Bank in June 2005. He is a former Chairman of America’s Community Bankers and the Massachusetts Bankers Association and a former Director of the Federal Home Loan Bank of Boston. He was a member of the Thrift Institution Advisory Council to the Federal Reserve Board of Governors and is a past Chairman of the Board of Trustees at Westfield State College. Mr. Mahoney provides valuable experience and insight as a successful banking executive and nationally recognized industry contributor, as well as knowledge of and involvement with our Springfield region markets. Age 67. Director since 2005.

John W. Altmeyer has served as President and Chief Executive Officer of Carlisle Syntec, Inc., Carlisle, Pennsylvania, a roofing manufacturer, since 1997.  Carlisle Syntec is a key segment of Carlisle Companies, a New York Stock Exchange listed company.  He previously held several corporate positions at Carlisle Companies from 1987 to 1997, with a focus on business development. Mr. Altmeyer also served on the Boards of Directors of Beacon Federal Bancorp, Inc. and Beacon Federal from 1992 until their acquisition by the Company and the Bank. He was also employed by Carrier Corporation from 1981 to 1987. Mr. Altmeyer provides valuable experience from his management of a company connected to the construction industry, as well as his prior service as a director of a community bank. Age 53. Director since 2013.

16

Table of Contents

Directors with Terms Ending in 2015

Lawrence A. Bossidy held the positions of Chairman and Chief Executive Officer of Honeywell International, Inc. and before that he was Chairman and Chief Executive Officer of AlliedSignal. Before that, he held the positions of Chief Operating Officer of General Electric Credit, President of General Electric’s Services and Materials Sector and Vice Chairman of General Electric. Mr. Bossidy has served as a member of the Boards of Directors of Merck & Co., Inc., JPMorgan Chase, and K&F Industries Holdings. Mr. Bossidy has authored two prominent books on business leadership and is nationally recognized and respected for his business success and contributions to corporate governance and to the arts of business execution and leadership development. Age 78. Director since 2002.

Robert M. Curley served as Chairman and President for Citizens Bank in New York from 2005 to 2009. Prior to joining Citizens, Mr. Curley served at Charter One Bank where he was President for New York and New England. During the period of 1976 to 1999, Mr. Curley was employed by KeyCorp., where he rose to the position of Vice Chairman of KeyBank N.A., and served as President and Chief Executive Officer of four subsidiary banks. Mr. Curley was hired by the Company and the Bank as Chairman of their New York bank and appointed as a non-independent director of the Company and the Bank in December 2009. He brings a wealth of knowledge to the Board concerning the banking industry in the Northeastern United States generally, and our New York Capital District region specifically, as well as the day-to-day management and oversight of a highly successful bank.  Age 65.  Director since 2009.

Barton D. Raser is the co-owner and Vice President of Carr Hardware, with its headquarters located in Pittsfield, Massachusetts.  Mr. Raser has served in this capacity since 1990.  Mr. Raser served as director of Legacy Bancorp, Inc. and Legacy Banks from 2001 to 2011, during which time he served on Legacy Bancorp’s Audit Committee, Trust Committee and Governance and Nominating Committee and chaired Legacy Banks’ Credit/ALCO Committee.  Mr. Raser enhances the Board with his knowledge of the Berkshire County economy and marketplace, as well as his experience with day to day management and oversight of a successful retail/wholesale business.  Age 48.  Director since 2011.

D. Jeffrey Templeton is the owner and President of The Mosher Company, Inc., located in Chicopee, Massachusetts, a manufacturer of buffing and polishing compounds, abrasive slurries and a distributor of related grinding, polishing and lapping machinery. Mr. Templeton is a former director of Woronoco Bancorp and provides experience and perspective as a successful business owner in our Springfield and Central Massachusetts markets. Age 71. Director since 2005.

Geno Auriemma has been head coach of the University of Connecticut women’s basketball team since 1986. He is a seven-time national Coach-of-the-Year and has won or shared the BIG EAST Coach-of-the-Year award eight times. He has served as President of the Women’s Basketball Coaches Association. He has also served as a director of The Connecticut Bank and Trust Company. A successful businessman and accomplished author and speaker, he is involved in numerous regional and state charitable and educational efforts and the national V Foundation for Cancer Research. Mr. Auriemma brings his skills in team building, organizational management and communication to Berkshire, as well as experience with the banking industry in Berkshire’s Central Connecticut market, following the merger of The Connecticut Bank and Trust Company with Berkshire Bank on April 20, 2012. Age 59. Director since 2012.

Proposal 2 — Approval of the Berkshire Hills Bancorp, Inc. 2013 Equity Incentive Plan

The Board of Directors has approved for submission to stockholders for approval of the Berkshire Hills Bancorp, Inc. 2013 Equity Incentive Plan.  The 2013 Equity Incentive Plan is designed to provide officers, employees and directors of Berkshire Hills and its subsidiaries, including Berkshire Bank, with incentives to promote the growth and performance of Berkshire Hills.  The 2013 Equity Incentive Plan is

17

Table of Contents

subject to stockholder approval and will become effective upon its implementation by the Board of Directors subsequent to satisfaction of applicable stockholder approval requirements.  Most of the companies that we compete with for directors and management-level employees are public companies that offer equity compensation as part of their overall director and officer compensation programs.  The 2013 Equity Incentive Plan will give us the flexibility we need to continue to attract and retain highly qualified individuals by offering a competitive compensation program that is linked to the performance of our common stock.

The Company’s stockholders approved the 2011 Equity Incentive Plan at the Company’s 2011 Annual Meeting of Stockholders.  The number of restricted stock awards that remain available to be granted under the Company’s 2011 Equity Incentive Plan may not be sufficient to allow the Company to make equity awards consistent with past practices or to have sufficient equity awards available to recruit key employees.  Consequently, in order for the Company to continue to offer equity awards to attract, maintain and retain highly qualified individuals, the Company has submitted the 2013 Equity Incentive Plan for stockholder approval.

Effective Date and Duration of Plan

The 2013 Equity Incentive Plan will become effective upon its implementation by the Board of Directors subsequent to satisfaction of applicable stockholder approval requirements.  It is expected that the 2013 Equity Incentive Plan will give us the flexibility we need to make sufficient grants of restricted stock awards, incentive stock options, and non-qualified stock options for the next three to four years.  Consequently, we do not currently anticipate the need to submit another equity incentive plan to stockholders for approval until 2016, although future circumstances may dictate the need to present an equity plan to stockholders for approval at an earlier time.

The 2013 Equity Incentive Plan will remain in effect as long as any awards under it are outstanding; however, no awards may be granted under the 2013 Equity Incentive Plan on or after the 10-year anniversary of the effective date of the 2013 Equity Incentive Plan.  At any time, the Board of Directors may terminate the 2013 Equity Incentive Plan. However, any termination of the 2013 Equity Incentive Plan will not affect outstanding awards.

The following is a summary of the material features of the 2013 Equity Incentive Plan, which is qualified in its entirety by reference to the provisions of the 2013 Equity Incentive Plan, attached hereto as Appendix A.

General

Subject to permitted adjustments for certain corporate transactions, the 2013 Equity Incentive Plan authorizes the issuance or delivery to participants of up to 1,030,000 shares of Company common stock pursuant to grants of restricted stock awards, incentive stock options, and non-qualified stock options.

The 2013 Equity Incentive Plan will be administered by the members of Berkshire Hills’s Compensation Committee who are each independent directors, as defined in the NYSE rules, and “Disinterested Board Members,” as defined in the 2013 Equity Incentive Plan (the “Committee”).  The Committee has the authority and discretion within the limitations set forth in the 2013 Equity Incentive Plan to make all decisions and determinations regarding the selection of participants and the granting of awards; establishing the terms and conditions relating to each award; adopting rules, regulations and guidelines for carrying out the 2013 Equity Incentive Plan’s purposes; and interpreting and otherwise construing the 2013 Equity Incentive Plan.  The 2013 Equity Incentive Plan also permits the Committee to delegate its responsibilities and powers to any one or more of its members or other persons, including one or more officers of Berkshire Hills, the power to: (i) designate officers and employees who will

18

Table of Contents

receive awards; and (ii) determine the number of awards to be received by them, provided that such delegation is not prohibited by applicable law or the rules of the stock exchange on which our common stock is traded.  Awards intended to be “performance-based” under Section 162(m) of the Internal Revenue Code shall be granted by the Committee in order to be exempt from the $1.0 million limit on deductible compensation for tax purposes.

The Committee may grant an award under the 2013 Equity Incentive Plan as an alternative to or replacement of an existing award under the 2013 Equity Incentive Plan or any other plan of Berkshire Hills or its subsidiaries, or as the form of payment for grants or rights earned or due under any other plan or arrangement of Berkshire Hills or its subsidiaries, including the plan of any entity acquired by Berkshire Hills or its subsidiaries.

The 2013 Equity Incentive Plan may be funded with authorized but unissued shares or with shares repurchased in open market transactions.  Depending on market and financial conditions at the time of the establishment and implementation of the 2013 Equity Incentive Plan, we expect to fund awards under the 2013 Equity Incentive Plan with shares repurchased in open market transactions.

Eligibility

Employees and directors of Berkshire Hills and its subsidiaries, including Berkshire Bank, are eligible to receive awards under the 2013 Equity Incentive Plan, except that non-employees may not be granted incentive stock options.

Types of Awards

The Committee may determine the type and terms and conditions of awards under the 2013 Equity Incentive Plan, which shall be set forth in an award agreement delivered to each participant.  Each award shall be subject to conditions established by the Committee that are set forth in the recipient’s award agreement, and shall be subject to vesting conditions and restrictions as determined by the Committee.  Awards may be granted in a combination of incentive and non-qualified stock options or restricted stock, as follows:

Stock Options.  A stock option is the right to purchase shares of common stock at a specified price for a specified period of time.  The exercise price may not be less than the fair market value of a share of our common stock on the date the stock option is granted.  Fair market value for purposes of the 2013 Equity Incentive Plan means the final sales price of Berkshire Hills’s common stock as reported on the New York Stock Exchange on the date in question, or if Berkshire Hills’s common stock was not traded on such date, then on the day prior to such date or on the next preceding day on which Berkshire Hills’s common stock was traded, and without regard to after-hours trading activity.  The Committee will determine the fair market value of the common stock, in accordance with Section 422 of the Internal Revenue Code, if it cannot be determined in the manner described above.  Further, the Committee may not grant a stock option with a term that is longer than 10 years.

Stock options are either “incentive” stock options or “non-qualified” stock options.  Incentive stock options have certain tax advantages that are not available to non-qualified stock options, and must comply with the requirements of Section 422 of the Internal Revenue Code.  Only employees are eligible to receive incentive stock options.  Outside directors may only receive non-qualified stock options under the 2013 Equity Incentive Plan.  Shares of common stock purchased upon the exercise of a stock option must be paid for at the time of exercise either (i) by personal, certified or cashiers check, (ii) by tendering stock of Berkshire Hills owned by the participant in satisfaction of the exercise price, or (iii) by a “cashless exercise” through a third party.  The total number of shares that may be acquired upon the exercise of a stock option will be rounded down to the nearest whole share.

19

Table of Contents

Restricted Stock.  A restricted stock award is a grant of common stock, subject to vesting requirements, to a participant for no consideration or such minimum consideration as may be required by applicable law or regulation.  Restricted stock awards may be granted only in whole shares of common stock and are subject to vesting conditions and other restrictions established by the Committee as set forth in the 2013 Equity Incentive Plan or the award agreement.  Prior to vesting of the restricted stock award, unless otherwise determined by the Committee, the recipient of a restricted stock award may exercise any voting rights with respect to common stock subject to an award; however, unless otherwise determined by the Committee, any dividends declared on shares of restricted stock shall be held by the Committee and distributed only when the underlying shares vest in the participant.

Prohibition Against Repricing of Options.  The 2013 Equity Incentive Plan provides that neither the Committee nor the Board is authorized to make any adjustment or amendment that reduces or would have the effect of reducing the exercise price of a stock option previously granted.

Limitation on Awards Under the 2013 Equity Incentive Plan

The following limit applies to awards under the 2013 Equity Incentive Plan:

·                  The maximum number of shares of stock that may available for award as stock options and/or restricted stock is 1,030,000.  Awards under the Plan may be made in any combination of shares of restricted stock or stock options and all awards may be granted as either restricted stock or stock options, in the discretion of the Committee, and all stock options may be granted as incentive stock options.

·                  The maximum number of shares of stock that may be subject to stock options granted to any employee in any calendar year shall be 150,000 shares.

To the extent any shares of stock covered by an award (including restricted stock awards) under the 2013 Equity Incentive Plan are not delivered to a participant or beneficiary for any reason, including because the award is forfeited or canceled or because a stock option is not exercised, then such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of stock available for delivery under the 2013 Equity Incentive Plan.  To the extent (i) a stock option is exercised by using an actual or constructive exchange of shares to pay the exercise price, (ii) shares of stock covered by an award are withheld to satisfy withholding taxes upon exercise or vesting of the award, or (iii) stock options are exercised by a net settlement of such stock options, then the number of shares of stock available shall be reduced by the gross number of stock options exercised rather than the net number of shares of stock issued.

In the event of a corporate transaction involving the stock of Berkshire Hills (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, spin-off, combination or exchange of shares), the foregoing share limitations and all outstanding awards will automatically be adjusted proportionally and uniformly to reflect such event to the extent that the adjustment will not affect the award’s status as “performance-based compensation” under Section 162(m) of the Internal Revenue Code, if applicable; provided, however, that the Committee may adjust awards to preserve the benefits or potential benefits of the awards, including the prevention of automatic adjustments if appropriate.

Performance Features

General. A federal income tax deduction for Berkshire Hills is generally unavailable for annual compensation in excess of $1.0 million paid to its chief executive officer and three other most highly compensated officers (other than its chief financial officer) named in the summary compensation table. However, amounts that constitute “performance-based compensation” (under Section 162(m) of the

20

Table of Contents

Internal Revenue Code) are not counted toward the $1.0 million limit.  The 2013 Equity Incentive Plan is designed so that stock options will be considered performance-based compensation.  The Committee may designate whether any restricted stock awards granted to any participant are intended to be performance-based compensation. Any restricted stock awards designated as performance-based compensation will be conditioned on the achievement of one or more performance measures, to the extent required by Section 162(m) of the Internal Revenue Code.

Performance Measures. The performance measures that may be used for such awards will be based on any one or more of the following performance measures, as selected by the Committee: basic earnings per share; basic cash earnings per share; diluted earnings per share; core earnings per share; diluted cash earnings per share; net income; cash earnings; net interest income; non-interest income; general and administrative expense to average assets ratio; cash general and administrative expense to average assets ratio; efficiency ratio; cash efficiency ratio; return on average assets; core return on average assets; cash return on average assets; return on average stockholders’ equity; cash return on average stockholders’ equity; core return on stockholders’ equity; return on average tangible stockholders’ equity; cash return on average tangible stockholders’ equity; core earnings; operating income; operating efficiency; core operating efficiency ratio; net interest margin; growth in assets, loans (including home equity lines of credit), or deposits; loan production volume; non-performing loans; cash flow; capital preservation (core or risk-based); interest rate risk exposure-net portfolio value; interest rate risk-sensitivity; liquidity parameters; strategic business objectives, consisting of one or more objectives based upon meeting specified cost targets, business expansion goals, and goals relating to acquisitions or divestitures, or goals relating to capital raising and capital management; stock price (including, but not limited to, growth measures and total shareholder return); operating expense as a percentage of average assets; core deposits as a percentage of total deposits; net charge-off percentage; average percentage past due; classified assets to total assets; compliance/audit exam findings; capital ratio; management achievement of strategic plan goals; system knowledge and utilization of core applications; customer service survey; or any combination of the foregoing. Performance measures may be based on the performance of Berkshire Hills as a whole or of any one or more subsidiaries or business units of Berkshire Hills or a subsidiary and may be measured relative to a peer group, an index or a business plan. The Committee may adjust performance measures after they have been set, but only to the extent the Committee exercises negative discretion as permitted under applicable law for purposes of an exception to Section 162(m) of the Internal Revenue Code. In establishing the performance measures, the Committee may provide for the inclusion or exclusion of certain items. Additionally, the grant of an award intended to be performance-based compensation and the establishment of any performance-based measures shall be made during the period required by Section 162(m) of the Internal Revenue Code.

Vesting of Awards

The Committee may specify vesting requirements on any award.  If the vesting of an award under the 2013 Equity Incentive Plan is conditioned on the completion of a specified period of service with Berkshire Hills or its subsidiaries, without the achievement of performance measures or objectives, then the required period of service for full vesting shall be determined by the Committee and evidenced in an award agreement.   Unless the Committee specifies otherwise, awards will vest at the rate of 20% per year, commencing one year after the date of grant, subject to acceleration of vesting in the event of death or disability.  The Committee may determine that all stock options then held by a participant shall become fully exercisable (subject to expiration provisions otherwise applicable to such award) and all restricted stock awards, other than awards subject to performance-based vesting conditions, shall be fully earned and vested immediately.    No award that is intended to be performance-based compensation under Code Section 162(m) shall accelerate vesting on retirement or other termination of service (other than due to death or disability).  In the event of a participant’s retirement, a performance-based award will vest pro-rata at the end of the performance period, based on the period of the participant’s active employment and level of achievement of the performance measures, provided that the participant was employed for a minimum of one year during the performance period.

21

Table of Contents

Change in Control

Unless otherwise stated in an award agreement as determined by the Committee, upon the occurrence of a change in control of Berkshire Hills, all stock awards then held by a participant will become fully vested and all stock option awards shall become fully exercisable. For the purposes of the 2013 Equity Incentive Plan, a change in control occurs when: (a) an event that would be required to be reported in response to Item 5.01 of the current report on Form 8-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934; (b) any person is or becomes the beneficial owner, directly or indirectly, of securities of Berkshire Hills representing 20% or more of the combined voting power of Berkshire Hills’s then outstanding voting securities; (c) the Incumbent Directors (as defined in the 2013 Equity Incentive Plan) cease, for any reason, to constitute a majority of the Whole Board (as defined in the 2013 Equity Incentive Plan); or (d) a plan of reorganization, merger, consolidation or similar transaction involving Berkshire Hills and one or more other corporations or entities is consummated, other than a plan of reorganization, merger, consolidation or similar transaction that is defined in the 2013 Equity Incentive Plan as an Excluded Transaction, or the stockholders of Berkshire Hills approve a plan of complete liquidation of Berkshire Hills, or a sale, liquidation or other disposition of all or substantially all of the assets of Berkshire Hills or Berkshire Bank is consummated; or (e) a tender offer is made for 20% or more of the outstanding voting securities of Berkshire Hills and the stockholders owning beneficially or of record 20% or more of the outstanding voting securities of Berkshire Hills have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.

Forfeiture

The Committee may specify that rights and benefits with respect to any award may be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events in addition to any otherwise applicable vesting or performance conditions.  Such events include termination for cause; termination of service, violations of material policies; breach of noncompetition, confidentiality or other restrictive covenants; or any other conduct that is detrimental to Berkshire Hills’s business or reputation, its affiliates and/or its subsidiaries.

If Berkshire Hills is required to prepare an accounting restatement due to the material noncompliance of Berkshire Hills, as a result of misconduct, with any financial reporting requirement under the securities laws, any participant who is subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 or any similar securities laws shall reimburse Berkshire Hills the amount of any payment in settlement of an award earned or accrued during the twelve-month period following the first public issuance or filing with the Securities and Exchange Commission of the financial document embodying such financial reporting requirement. In addition, in the event of an accounting restatement, the Committee, in its sole and exclusive discretion, may require that any participant reimburse Berkshire Hills for all or any part of the amount of any payment in settlement of any award granted hereunder.

Amendment and Termination

The Board of Directors may, at any time, amend or terminate the 2013 Equity Incentive Plan or any award granted under the 2013 Equity Incentive Plan, provided that, except as provided in the 2013 Equity Incentive Plan, no amendment or termination may adversely impair the rights of an outstanding award without the participant’s (or affected beneficiary’s) written consent. The Board of Directors may not amend the provision of the 2013 Equity Incentive Plan related to repricing, materially increase the original number of securities that may be issued under the 2013 Equity Incentive Plan (other than as provided in the 2013 Equity Incentive Plan), materially increase the benefits accruing to a participant, or materially modify the requirements for participation in the 2013 Equity Incentive Plan, without approval of stockholders. Notwithstanding the foregoing, the Board may, without stockholder approval, amend the 2013 Equity Incentive Plan at any time, retroactively or otherwise, to ensure that the 2013 Equity

22

Table of Contents

Incentive Plan complies with current or future law and the Board of Directors may unilaterally amend the 2013 Equity Incentive Plan and any outstanding award, without participant consent, in order to maintain an exemption from, or to comply with, Section 409A of the Internal Revenue Code, and its applicable regulations and guidance.

Federal Income Tax Considerations

The following is a summary of the federal income tax consequences that may arise in conjunction with participation in the 2013 Equity Incentive Plan.

Non-Qualified Stock Options. The grant of a non-qualified option will not result in taxable income to the participant. Except as described below, the participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares acquired over the exercise price for those shares, and Berkshire Hills will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of exercise.

Incentive Stock Options. The grant of an incentive stock option will not result in taxable income to the participant. The exercise of an incentive stock option will not result in taxable income to the participant provided the participant was, without a break in service, an employee of Berkshire Hills or a subsidiary during the period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant is disabled, as that term is defined in the Internal Revenue Code).

The excess of the fair market value of the shares at the time of the exercise of an incentive stock option over the exercise price is an adjustment that is included in the calculation of the participant’s alternative minimum taxable income for the tax year in which the incentive stock option is exercised. For purposes of determining the participant’s alternative minimum tax liability for the year of disposition of the shares acquired pursuant to the incentive stock option exercise, the participant will have a basis in those shares equal to the fair market value of the shares at the time of exercise.

If the participant does not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option or within one year after the exercise of such stock option, then, upon disposition of such shares, any amount realized in excess of the exercise price will be taxed as a capital gain. A capital loss will be recognized to the extent that the amount realized is less than the exercise price.

If the foregoing holding period requirements are not met, the participant will generally realize ordinary income at the time of the disposition of the shares, in an amount equal to the lesser of (i) the excess of the fair market value of the shares on the date of exercise over the exercise price, or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price, and Berkshire Hills will be entitled to a corresponding deduction. If the amount realized exceeds the value of the shares on the date of exercise, any additional amount will be a capital gain. If the amount realized is less than the exercise price, the participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares.

Restricted Stock. A participant who has been granted a restricted stock award will not realize taxable income at the time of grant, provided that that the stock subject to the award is not delivered at the time of grant, or if the stock is delivered, it is subject to restrictions that constitute a “substantial risk of forfeiture” for federal income tax purposes. Upon the later of delivery or vesting of shares subject to an award, the holder will realize ordinary income in an amount equal to the then fair market value of those shares and Berkshire Hills will be entitled to a corresponding deduction for tax purposes.  Gains or losses

23

Table of Contents

realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of delivery or vesting. Dividends paid to the holder during the restriction period, if so provided, will also be compensation income to the participant and Berkshire Hills will be entitled to a corresponding deduction for tax purposes.  A participant who makes an election under Section 83(b) of the Internal Revenue Code will include the full fair market value of the restricted stock award in taxable income in the year of grant at the grant date fair market value.

Withholding of Taxes.  Berkshire Hills may withhold amounts from participants to satisfy withholding tax requirements.  Except as otherwise provided by the Committee, participants may have shares withheld from awards or may tender previously owned shares to Berkshire Hills to satisfy the minimum tax withholding requirements.

Change in Control.  In the event of a change in control, outstanding unvested awards under the 2013 Equity Incentive Plan may be considered parachute payments that would cause an “excess parachute payment” under the Internal Revenue Code.  An excess parachute payment may subject the participant to a 20% excise tax and preclude deduction by Berkshire Hills.

Deduction Limits.  Section 162(m) of the Internal Revenue Code generally limits Berkshire Hills’s ability to deduct for tax purposes compensation in excess of $1.0 million per year for its chief executive officer and the three other most highly compensated executives (excluding the chief financial officer) named in the summary compensation table (“covered employees”).  Restricted stock awards, other than performance-based restricted stock awards, and other awards that are not subject to performance goals may be subject to this deduction limit if income recognized on the awards plus other compensation of the executive that is subject to the limit exceed $1.0 million.  “Qualified performance-based compensation” is not subject to this limit and is fully deductible by Berkshire Hills.  “Qualified performance-based compensation” is compensation that is subject to a number of requirements such as stockholder approval of possible performance goals, and objective quantification of those goals in advance.  Stock options available for award under the 2013 Equity Incentive Plan will be considered “qualified performance-based compensation” even if such awards vest solely due to the passage of time during the performance of services.  Accordingly, if an award is not exempt from Section 162(m), income recognized on such award by a covered employee will be subject to the $1.0 million deduction limit on compensation.

In the case of performance-based awards granted to a covered employee that are not distributed until after the covered employee’s retirement or other termination of employment, the $1.0 million deduction limit will not apply and the award will be fully deductible.  Performance awards may provide for accelerated vesting upon death, disability, or a change in control and still be considered exempt from the $1.0 million deduction limit.  The 2013 Equity Incentive Plan is designed so that stock options and performance-based restricted stock awards that are subject to performance goals may qualify as qualified performance-based compensation that is not subject to the $1.0 million deduction limit.  Berkshire Hills expects that the Committee will take these deduction limits into account in setting the size and the terms and conditions of awards.  However, the Committee may decide to grant awards that result in executive compensation that exceeds the deduction limit.

Tax Advice.  The preceding discussion is based on federal tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the federal income tax aspects of the 2013 Equity Incentive Plan. A participant may also be subject to state and local taxes in connection with the grant of awards under the 2013 Equity Incentive Plan. Berkshire Hills suggests that participants consult with their individual tax advisors to determine the applicability of the tax rules to the awards granted to them in their personal circumstances.

24

Table of Contents

Accounting Treatment

Under Financial Accounting Standards Board Accounting Codification Standards Topic 718, Berkshire Hills is required to recognize compensation expense on its income statement over the requisite service period or performance period based on the grant date fair value of stock options and restricted stock.

Awards to be Granted

At the present time, no specific determination has been made as to the grant or allocation of awards under the 2013 Equity Incentive Plan.

Required Vote

In order to approve the 2013 Equity Incentive Plan, the proposal must receive the affirmative vote of a majority of the votes cast at the annual meeting.

The Board of Directors recommends a vote “FOR” the approval of the 2013 Equity Incentive Plan.

Proposal 3 — Advisory (Non-Binding) Vote on Executive Compensation

In accordance with Section 14A of the Exchange Act, stockholders are being given the opportunity to vote on an advisory (non-binding) resolution at the Annual Meeting to approve our executive compensation, as described above under “Compensation Discussion and Analysis,” compensation tables and narrative discussion of Named Executive Officer compensation in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives stockholders the opportunity to endorse or not endorse the Company’s executive pay program.

The purpose of our compensation policies and procedures is to attract and retain experienced, highly qualified executives critical to the Company’s long-term success and enhancement of stockholder value. The Board of Directors believes the Company’s compensation policies and procedures achieve this objective, and therefore recommend stockholders vote “FOR” the proposal.

“Resolved, that the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Securities and Exchange Commission Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.”

Is the Stockholder Vote Binding on the Company? This is an advisory vote only, and neither the Company nor the Board of Directors will be bound to take action based upon the outcome. The Compensation Committee will consider the vote of the stockholders when considering future executive compensation arrangements.

The Board recommends that stockholders vote “FOR” this proposal.

Proposal 4 — Ratification of the Independent Registered Public Accounting Firm

The Audit Committee of the Board of Directors has appointed PricewaterhouseCoopers LLP to be the Company’s independent registered public accounting firm for the 2013 fiscal year, subject to ratification by stockholders. On February 24, 2011, the Audit Committee dismissed Wolf & Company, P.C. (“Wolf”) as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2011 and any quarterly periods therein.  Such decision became effective upon completion by Wolf of its audit of consolidated financial statements of the Company for the year ended December 31,

25

Table of Contents

2010, the filing of the related Form 10-K, and the Company’s annual filing with the U.S. Department of Housing and Urban Development.  The decision to dismiss Wolf was approved by the Audit Committee.

The audit reports on the consolidated financial statements of the Company for the years ended December 31, 2010 and 2009 did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified, as to uncertainty, audit scope or accounting principles.

During the fiscal years ended December 31, 2010 and 2009 and the subsequent interim period through February 24, 2011, there were no: (1) disagreements with Wolf on any matter of accounting  principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Wolf’s satisfaction, would have caused Wolf to make reference to the subject matter of such disagreements in its reports, or (2) reportable events under Item 304(a)(1)(v) of Regulation S-K.

The Company requested that Wolf furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not Wolf agreed with the above statements.  A copy of Wolf’s letter is provided as an Exhibit to our Form 8-K, filed with the Securities and Exchange Commission on March 1, 2011.

On February 24, 2011, the Company engaged PricewaterhouseCoopers LLP as the Company’s new principal accountants for the fiscal year ending December 31, 2011.  The engagement was approved by the Audit Committee of the Board of Directors of the Company.  During the fiscal years ended December 31, 2010 and 2009, and the subsequent interim period prior to February 24, 2011, the Company did not consult with PricewaterhouseCoopers LLP regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

A representative of PricewaterhouseCoopers LLP is expected to be present at the annual meeting to respond to appropriate questions from stockholders and will have the opportunity to make a statement should he or she desire to do so.

If the ratification of the appointment of the firm is not approved by a majority of the votes cast by stockholders at the annual meeting, other independent registered public accounting firms may be considered by the Audit Committee of the Board of Directors.

The Board of Directors recommends a vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the 2013 fiscal year.

Audit Fees.  The following table sets forth the fees billed to the Company for the fiscal years ended December 31, 2012 and 2011, respectively, by PricewaterhouseCoopers LLP:

(1)              Includes fees for the financial statement and internal control over financial reporting audits and quarterly reviews.

(2)              Fees in 2012 relate to purchase accounting, systems conversion, employee benefit plans, and comfort letter issuance. Fees in 2011 relate to purchase accounting, systems conversion, tax credit limited partnership investments, employee benefit plan, and comfort letter issuance.

(3)              Consists of tax return preparation, and tax-related compliance and services.  PricewaterhouseCoopers LLP did not perform any tax return preparation, or tax-related compliance and services, for the Company in 2012.

26

Table of Contents

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm

The Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. In accordance with its charter, the Audit Committee approves, in advance, all audit and permissible non-audit services to be performed by the independent registered public accounting firm. Such approval process ensures that the external auditor does not provide any non-audit services to the Company that are prohibited by law or regulation.

In addition, the Audit Committee has established a policy regarding pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm. Requests for services by the independent registered public accounting firm must be specific as to the particular services to be provided for compliance with the auditor services policy.

The request may be made with respect to either specific services or a type of service for predictable or recurring services.

During the years ended December 31, 2012 and 2011, respectively, all services were approved, in advance, by the Audit Committee in compliance with these procedures.

Compensation Discussion and Analysis

This section explains how we compensate Named Executive Officers listed in the Summary Compensation Table that follows.  The Named Executive Officers consist of the CEO and members of the executive team.  Compensation for our executive team is determined by the Compensation Committee of the Board of Directors.

Executive Summary

The following section highlights our key performance results and pay considerations for our 2012 executive compensation program.

Berkshire made strong progress in 2012 in improving the strength of its franchise and in progressing towards our goal to become a top-performing financial institution.  Our major achievements included:

·                  Produced strong organic growth in targeted loan and deposit products, with successful integration of the new Westborough commercial lending team, and the opening of four de novo branch offices in the Albany area market.

·                  Completed the acquisition of The Connecticut Bank and Trust Company, which added eight branch offices and expanded our presence into Connecticut.

·                  Completed the acquisition of  Beacon Federal Bancorp, which added seven branch offices and expanded our presence into the Syracuse market.

·                  Recruited a mortgage banking team operating from eight offices in Eastern Massachusetts with a strong market position.

·                  Converted our core banking and related systems to new scalable technology intended to support product enrichment, service enhancement, targeted relationship management, and improved teamwork and efficiency.

27

Table of Contents

Our 2012 financial results demonstrate the benefits of our recent initiatives:

Berkshire’s progress has brought us to a new level of capability, which we believe will enhance long-term shareholder value.  Our assets now total more than $5 billion, placing us among the 100 largest exchange traded banks and thrifts in the U.S.  At this asset size, we believe we are well positioned to continue to target market share gains from national banks and to deliver products and efficiencies that are unavailable to smaller banks.

We further diversified our revenue streams and wallet share opportunities in 2012, including expanded mortgage banking, enhanced commercial products, reorganized small business lending, and our new MyBanker personalized retail service.  Our franchise now extends from the Boston area to Syracuse, and from Hartford into Vermont.  We are centrally located in our New England and Upstate New York footprint and can continue to explore market opportunities within this franchise and in all directions from our headquarters. Our diversified revenue streams provide multiple opportunities for the achievement of further earnings growth objectives in changing market conditions.

Strong Pay and Performance Alignment

Our compensation program is based on an overarching goal to reward our executives commensurate with the performance achieved and value delivered to our shareholders.  We ensure this alignment by:

·                  Measuring our success through a balanced portfolio of performance metrics that reward corporate and individual success.

·                  Focusing a significant amount of executive compensation on variable/performance-based pay for both short and long-term.

·                  Placing significant emphasis on long-term equity incentive pay, in order to reinforce a sustained, multi-year view of performance and enhance the alignment of executives’ goals with those of our shareholders.

·                  Providing a significant portion of our incentive compensation in equity based compensation to further align executive interests with those of our shareholders.

28

Table of Contents

The Board believes that its compensation practices successfully incent performance that creates shareholder value.  In 2012, we performed well against all of our key incentive measures:

Non-GAAP Incentive Performance Measures: Core earnings is defined as GAAP net income before the after-tax impact of non-core items including securities gains, merger related items, systems conversion costs, and discontinued operations identified in the statement of income. Core earnings per share is the result of dividing core earnings by average diluted shares.  The core efficiency ratio is the efficiency ratio adjusted for non-core revenue and expense. The Company provides further detail on and discussion of these adjustments in its quarterly earnings releases filed with the SEC on Form 8-K. Core measures are intended to identify the recurring level of revenue, expense, and earnings. Merger related items in 2012 primarily arose from the acquisitions of The Connecticut Bank and Trust Company and Beacon Federal Bancorp, Inc.  Merger related costs are recorded as current period expense under GAAP, while the Company views these costs as part of the overall economic investment for the acquisition of the merged banks.  Other non-core items primarily consist of costs related to the Company’s core systems conversion in 2012.  The Board, in its acceptance of the financial statements, reviews and approves the classification of revenue and expense items as non-core.  The Criticized Assets Ratio is the ratio of Criticized Assets to the sum of Tier 1 Capital and the Loan Loss Allowance.  Criticized assets are those assets rated Special Mention or worse in Berkshire’s risk rating system.  Tier 1 Capital is a regulatory capital measure of Berkshire Bank.  This ratio compares asset quality to capital as a measure of soundness.

Creating Shareholder Value

Our shareholders realized the following benefits from owning our shares in 2012:

·     10.9%  Total Shareholder Return

·     3.1%    Dividend Yield

·     6.0%    Increase in Quarterly Dividend to 18 Cents

Note:  The dividend yield is based on the $0.69 total per share dividend payments in 2012 divided by the $22.54 average closing share price of our stock during the year.  The dividend increase is based on the increase from $0.17 to $0.18 per share in the fourth quarter of 2012.

Our stock market capitalization recently exceeded $600 million.  Our outstanding shares increased by approximately 19% to 25 million in 2012, which we believe will provide greater liquidity in the markets for our stock.  We transferred our stock listing to the New York Stock Exchange in 2012 to further enhance the visibility and recognition of our stock.

While our shareholders showed strong support (with approximately 84% voting in favor during last year’s vote on executive pay), the Compensation Committee is committed to continuing to review and evolve programs and practices to ensure alignment with emerging best practices and regulatory guidelines.

29

Table of Contents

2012 Compensation Program Highlights

We develop our programs to attract, motivate and retain the talent necessary to help us achieve our objectives.  Ultimately our compensation programs are designed to achieve overarching goals that motivate and reward performance, ensure sound risk management, and deliver long-term value to our shareholders.  To achieve these objectives, the Compensation Committee regularly reviews and modifies our compensation and incentive programs to ensure they align with these core objectives.  We assess our program from the perspective of our shareholders and regulators, considering best practices and making improvements as appropriate.

Highlights of Compensation Program and 2012 Results:

·                  Managed base salaries in a conservative manner while monitoring market competitiveness.

·                  Balanced incentive award opportunities approximately half as cash and half as stock based compensation, to reflect our desire to focus on annual business objectives while keeping a focus on long-term results and shareholder alignment.

·                  Funded a short term incentive pool at 136% of target based on exceeding all of our 2012 incentive goals (core earnings, efficiency ratio and criticized assets), and exceeding our strategic goals.

·                  Granted long-term incentives with 50% performance shares (vest based on 3 year performance results) and 50% time vesting shares, to provide balance between performance and retention.

Role of the Compensation Committee, Management and Compensation Consultant

Role of the Compensation Committee.  The Compensation Committee of the Board of Directors is responsible for discharging the Board’s duties in executive compensation matters and for administering the Company’s incentive and equity-based plans. The Committee oversees the development and implementation of the total compensation program for Berkshire’s Named Executive Officers.  Throughout the following discussion and analysis, we refer to the Compensation Committee as “the Committee.”

The Compensation Committee has the responsibility for establishing, implementing and continually monitoring adherence with our compensation philosophy.  The Committee ensures that the total compensation paid to senior executives is fair, reasonable, performance-based and align with shareholder interests.

Details on the Committee’s functions are more fully described in its charter, which has been approved by the Board of Directors and is available on our website.  To fulfill its charter and responsibilities, the Committee met throughout the year, meeting 7 times in 2012, and also may take action by written consent. The Chair of the Committee regularly reports on Committee actions at meetings of the Company’s Board.

The Committee reviews all compensation components for the Company’s Chief Executive Officer and other executive officers, including base salary, annual incentive, long-term incentives/equity, benefits and other perquisites. In addition to reviewing competitive market values, the Committee examines the total compensation mix, pay-for-performance relationship, and how all elements, in aggregate comprise the executive’s total compensation package. The Committee also reviews the employment contract with the Chief Executive Officer and the Change in Control agreements with other executive officers.

The Committee reviews the Chief Executive Officer’s performance annually and makes decisions regarding the Chief Executive Officer’s compensation, including base salary, incentives and equity grants

30

Table of Contents

based on this review. Input and data from the Executive Vice President of Human Resources and outside consultants and advisors are provided as a matter of practice and as requested by the Committee to provide external reference and perspective. While the Chief Executive Officer makes recommendations on other Named Executive Officers, the Committee is ultimately responsible for approving compensation for all Named Executive Officers. The Compensation Committee reviews its decisions with the full Board of Directors.

The Committee has the authority and resources to obtain advice and assistance from internal or external legal, human resource, accounting or other advisors, or consultants as it deems desirable or appropriate.

Role of the Compensation Consultant.  The Committee has the sole authority to retain and terminate a compensation consultant and to approve the consultant’s fees and all other terms of the engagement.  The Committee has direct access to outside advisors and consultants throughout the year as they relate to executive compensation.  The Committee has direct access to and meets periodically with the compensation consultant independently of management.

During 2012, the Committee retained the services of Pearl Meyer & Partners (“PM&P” or the “Consultant”), an independent outside consulting firm specializing in executive and board compensation, to assist the Committee. Services include conducting benchmarking studies, establishing compensation guidelines, designing incentive programs, assisting with proxy disclosure, and providing insight on emerging regulations and best practices. The Consultant reports directly to the Committee and carries out its responsibilities to the Committee in coordination with the Company’s Human Resources Department, as requested by the Committee.  The Committee has reviewed all services provided by the Consultant in 2012, and has determined that the Consultant is independent with respect to SEC standards as well as Company policy.  The Committee also relied on Luse Gorman Pomerenk & Schick, P.C. for legal advice.

Role of Management.  Although the Committee makes independent determinations on all matters related to compensation of the Named Executive Officers, certain members of management may be requested to attend or provide input to the Committee.  Input may be sought from the Chief Executive Officer, Executive Vice President Human Resources, Chief Financial Officer, Executive Vice President Risk Management or others to ensure the Committee has the information and perspective it needs to carry out its duties.

In particular, the Committee will seek input from the Chief Executive Officer on matters relating to strategic objectives, Company performance goals and input on his assessment of the Named Executive Officers.  The Executive Vice President Human Resources often assists the Committee on matters of design, administration and operation of the Company’s compensation programs.  In some cases, the Committee delegates responsibilities to the Executive Vice President of Human Resources to assist in development of design considerations.  The Executive Vice President of Human Resources may be requested, on the Committee’s behalf, to work with their independent consultant to develop proposals for the Committee’s consideration.  The Executive Vice President of Human Resources reports to the Compensation Committee directly on such matters.  The Committee also receives regular updates from the Company’s Risk Officer and Chief Financial Officer throughout the year as appropriate.

Although executives may provide insight, suggestions or recommendations regarding executive compensation, they are not present during the Compensation Committee’s deliberations or vote.  Only Compensation Committee members vote on decisions regarding executive compensation.  The Committee always meets in executive session without management present.

31

Table of Contents

Compensation Philosophy & Pay Considerations

The overall principle guiding executive compensation at the Company is to reward executives commensurate with performance.

The Committee believes that the success of our Company depends on our ability to attract and retain talented executives motivated to drive the Company’s growth goals and deliver value to its stockholders. Our brand and culture is to be “America’s Most Exciting Bank” and we seek the high performing talent needed to help us execute on our vision.

Performance is defined to reflect both short and long-term performance, and both our absolute performance goals and relative performance compared to the industry.  We believe our balanced and holistic view of performance helps ensure we motivate the right behaviors and results that are in line with the long-term interests of our shareholders.  We assess our success in measured steps but also take the broader, longer term view that is needed to ensure sustained success over many years.  Our compensation management is performed within the context of our overall budgeting, planning and cost management programs.

As a result of our holistic/balanced perspective, our compensation reflects a combination of different reward elements, which work together to recognize multiple “views” and allow us to reward performance without overemphasizing any one element, one performance measure or one period of time.

In summary, we provide a total compensation program that is competitive, performance-oriented, shareholder aligned, balanced, and reflects sound risk management practices.  We set specific aggressive performance goals that align with our strategy and support our annual plans, but also recognize the need to be responsive and flexible in today’s challenging environment.  We believe this approach also helps to ensure our program does not motivate our executives to take undue risks.

How our Philosophy and Decisions Support our Objectives.

The following table summarizes the key objectives of our total compensation program and how our program supports these goals.

32

Table of Contents

Compensation Decision Process and Factors Considered

The Committee’s decisions throughout the year are supported by various analyses, information and input including, but not limited to:

·                Competitive benchmarking reviews

·                  Total compensation philosophy and pay targets and guidelines

·                  Tally sheets

·                  Strategic plans and performance relative to annual budget

·                  Pay-performance alignment

·                  Individual performance

·                  Demonstration of behaviors that support America’s Most Exciting Bank culture and brand

·                  External influences, economic conditions and industry factors

·                Executive attraction and retention considerations

·                Internal equity considerations

·                Executive stock ownership levels

·                Risk assessment considerations

·                Best/emerging practices

·                Director and Committee input

·                Company’s performance and stock price compared to peers and market indices

·                Advisory shareholder vote and other relevant shareholder input

Further details on several of these analysis and factors are described in the following sections.

33

Table of Contents

Competitive Benchmarking.  In the fall of each year, the compensation consultant conducts a review of its executive total compensation program. Our 2011 peer group was used to assess competitiveness of our 2010 decisions and provide market guidelines for 2012 pay programs.   Our 2012 peer group was used to assess the effectiveness of our 2011 decisions, assess pay-performance alignment for 2011 and provide input for 2013 programs.  The purpose of these reviews is to provide regular, independent, and objective analyses of all elements of compensation (individually and in the aggregate), relative to market and peer group practice.  In addition to a competitive benchmarking, the consultant conducted several analyses assessing the pay-performance relationship to assist the Committee in monitoring longer-term effectiveness.  The results of the competitive pay and performance assessment and recommendations conducted in 2011 were presented to the Committee in October and December to facilitate upcoming year-end decisions and to set target pay opportunities for the 2012 program.

A primary data source used in the competitive assessment for the Named Executive Officers is the information publicly disclosed by a peer group of other publicly traded banks. This peer group is developed by PM&P using objective parameters that reflect banks of similar asset size and located in the Northeast/Mid Atlantic region.  The peer group excludes recent conversions and banks with different business models or those subject to mergers and acquisitions.  The peer group is approved by the Compensation Committee.  The peer group is reviewed annually and updated as appropriate, since the comparable banks may change depending on acquisitions, growth and/or business focus of Berkshire or our peer institutions. Overall, the goal is to have approximately 18-22 comparative banks that provide a market perspective for executive total compensation.

For the 2012 peer group, the selection criteria were expanded to position Berkshire approximately at median for asset size.  As a result, three lower end asset range peer banks are excluded and two banks from Ohio are added to the 2012 peer group.

The following shows the 2011 and 2012 peer groups used by the Compensation Committee:

* New peer banks to 2012 peer group

** 2011 peer banks excluded from the 2012 peer group

In addition to the peer group data, the consultant used several other sources of data to identify general compensation trends, including PM&P’s Northeast Banking Compensation Survey Report as well as published industry surveys and a proprietary database of national banking compensation data. Data reflects banks representing similar asset size and region to the Company.

Tally Sheets.  The Committee reviews tally sheets annually that summarize all elements of executive compensation and benefits. The tally sheets enable the Committee to see a snapshot of all compensation elements in a singular summary. Tally sheets are discussed annually with the full Board to ensure all members understand the components of executive compensation. While it is treated primarily for information and understanding, it is an additional view the Committee may consider in making

34

Table of Contents

compensation decisions or program changes in the future.

Internal Equity.  The Committee receives feedback from the Chief Executive Officer related to key executive roles and relationships. In some cases, there is a goal to retain similar pay levels (e.g. to support a “team” approach) whereas, at other times there is a desire to provide differentiation to reflect unique roles, contribution, or performance. The Chief Executive Officer provides input to the Committee regularly so that such internal relationships can be reviewed and considered by the Committee in pay decisions. The Committee also reviews the relationship between the Chief Executive Officer and other senior executives. The goal is to ensure that relationships between executives appropriately reflect differences in roles and performance.

Pay-Performance Analysis.  Ensuring and sustaining a proper pay-performance relationship is a key objective for the Compensation Committee.  As such, the Compensation Committee’s independent consultant conducts regular analyses to monitor pay-performance alignment, particularly with regards to the Chief Executive Officer.  The goal is to use this information proactively to set appropriate pay opportunity ranges and retroactively to assess the actual pay delivered based on performance. During 2012, the consultant provided the following information/analyses to facilitate the Committee’s ongoing review:

·                  Actual pay delivered — the level of pay received/granted for the fiscal year (considers base salary, annual incentives and equity grants which represent potential value).  Unlike the Summary Compensation Table, equity awards reflect the year of performance considered (e.g. 2013 equity grants based on FY 2012 performance). It reflects the Committee’s intention and pay decisions for the year.

·                  Total pay opportunity ranges — the target opportunities and potential compensation that could be received/granted based on the Company’s total pay guidelines and minimum and stretch performance.  This provides the Committee an advance view of the range of pay that might result under different performance scenarios.

·                  Realizable pay — three year cumulative pay realized based on performance and stock price (considers base salary, actual bonus, current in the money value of stock options and current value of stock awards).  This is compared to peers to determine relative alignment.

·                  Performance — three year total shareholder return from 2009 — 2011 and other key financial metrics are reviewed and considered for Berkshire and peers.

Best Practices.  The Committee regularly seeks education and information related to emerging best practices. Regular updates, presentations and information from the Committee’s advisors and consultants were provided throughout the year.  In addition, the Committee requests the Compensation Consultant to provide a formal education session annually to include input on best practices and emerging trends.

Compensation Components and 2012 Decisions

The Company’s compensation program consists of four main components: Base Salary, Annual Incentives, Long-Term Incentive/Equity, and Benefits and Perquisites.  The following section summarizes the role of each component, how decisions are made and the resulting 2012 decision process as it relates to the Named Executive Officers.

Base Salary

Purpose, Philosophy and Process.  The Company believes the purpose of base salary is to provide competitive and fair base compensation that recognizes each executive’s role, responsibilities, experience and performance. Base salary represents fixed compensation that is targeted to be competitive with the practices of comparable financial institutions in the region. Each year our compensation

35

Table of Contents

consultant, PM&P, provides pay range guidelines based on its competitive assessment considering a composite of market data from the custom proxy peer group as well as other data sources of banking compensation information.  Our competitive range reflects a range around market median. The Committee uses this range in making ongoing base salary decisions for each executive.

In December of each year, the Committee reviews each executive’s base pay to reflect competitive market conditions, individual experience, expertise, performance and contributions in preparation for January considerations. Input from the Chief Executive Officer is considered in setting the executive salaries while the Committee is solely responsible for determining the Chief Executive Officer’s salary.

2012 Decisions.  The Compensation Committee’s review of executive salaries typically occurs in January of each year but does not necessarily always result in a base pay adjustment. The Committee considers the market range for the positions and relative salaries, as well as the financial and economic environment.  In January 2012 upon review of market data, the Committee, with support of the CEO, elected not to increase salaries for its Named Executive Officers.

Executive Incentive Plan — Annual Incentives

Purpose, Philosophy and Process.  The primary objective of our Executive Incentive Plan is to motivate and reward executives for achieving specific Company, department and individual goals that support our strategic plan. Rewards under this plan represent compensation that must be earned each year based on Company and individual performance.

Company goals are defined each year and approved by the full Board. At the beginning of each year, the Chief Executive Officer proposes draft goals for the Company component of the incentive plan with the Compensation Committee.  The Compensation Committee discusses the proposed Company goals with the Chief Executive Officer, incorporates appropriate modifications and once approved, reviews with the full Board.

The Committee then works with the Chief Executive Officer to jointly define his individual goals. The Chief Executive Officer develops individual goals for each executive based on the strategic plan/budget and reflective of his/her role.

Incentive award targets and ranges are reviewed and established annually by the Committee based on the consultant’s market benchmarking analysis of similarly sized financial institutions and in line with our goal to provide a meaningful, but risk balanced, portion of total compensation that is based on annual results. For 2012, target incentive opportunities were 50% of base salary for the Chief Executive Officer and 35% for other Named Executive Officers. Actual payouts, however, are expected to vary each year based on a combination of Company and individual performance from 0% - 200% of target based on performance. (Annual incentives for Named Executive Officers represent approximately 20% — 25% of an executive’s target total direct compensation).

Funding of the Plan.  In order for the Plan to pay any awards, the Company must first achieve a trigger/gate level of performance.  The gate for 2012 was defined at 75% of the budgeted core net income. Once the gate is achieved, the size of the incentive pool is determined based on Company performance relative to three goals:  Core Earnings (50%), Expense Management (25%), and Asset quality (25%).  Each goal has a weight and a defined range of acceptable performance (threshold, target and stretch).  If threshold is achieved, 50% of the pool is funded for that metric.  Target performance funds the pool at 100% and stretch performance funds at 130%.  The Committee also considers the achievement of the Company’s strategic plan/goals and can modify the pool +/- 15% based on their assessment of performance of these broader initiatives. In addition, the committee will consider and discuss overall risk and can adjust the pool downward to reflect any risk or regulatory issues.  As a result, the Plan incentive

36

Table of Contents

pool can range from 50% to 150% of target (i.e. maximum of 130% + up to 15%) assuming the gate is met and performance achieves threshold levels.  The objective is to ensure our incentive plan is funded appropriately based on profits and strategic results.

The funding determines the pool available to award incentives to all participants in the plan and is determined and approved by the Compensation Committee.  In order to achieve the threshold related to earnings, management had to increase core net income by 37%.  This translates into a 10% increase in core earnings per share. The following is a summary of the Company funding measures set at the beginning of the year:

BERKSHIRE BANK 2012 CORPORATE SCORECARD — DETERMINES INCENTIVE POOL FUNDING

Strategic Plan Goals: Compensation Committee assesses achievement of strategic plan and can modify pool +/- 15%.  The Compensation Committee can also adjust the pool downward to reflect risk management considerations.

The measures above are non-GAAP Performance Measures, which were further described in an earlier section of the Compensation Discussion and Analysis

Individual Awards: Once the incentive pool is approved by the Committee, awards are then allocated based on each participant’s individual performance and contributions toward the Company’s strategic goals as well as their individual performance. This design is intended to provide a balance of “team” through the overall plan funding, but allows actual allocation of the awards to reflect individual contributions toward the Company’s success.

Process: At the end of each year, the Chief Executive Officer oversees the allocation of incentives to executive officers and shares a summary of the proposed payouts with the Committee.  For the Named Executive Officers, the Chief Executive Officer provides the Committee with a summary of each executive’s performance and incentive recommendations based on their individual performance results relative to specific goals set at the start of the year. The Committee conducts a similar review of the Chief Executive Officer, which includes input concerning the Chief Executive Officer’s performance from the Board of Directors, assessing individual goals and overall contributions for the year. The Committee determines the Chief Executive Officer award and approves the executive officer awards. The Compensation Committee retains the discretion to modify all forms of incentive payouts based on significant individual or Company performance shortfalls and/or regulatory and safety and soundness considerations. The Committee also has the discretion to make the award, or a portion of the award, payable in the form of equity, if desired, to facilitate executives’ ownership guidelines.

2012 Decisions.  The Company exceeded its targeted performance for all three corporate scorecard metrics. Based on the weightings, this resulted in a funding of 118.5% of target.  The Committee then considered achievements relative to key strategic initiatives and adjusted the funding 15% (out of the maximum of 15%) to bring the total pool to 136.3% (of a potential maximum of 150%).

The factors the Committee considered for the Strategic Accomplishment multiplier include the following:

·                  The Company successfully completed a company-wide core conversion, an important investment in infrastructure for future growth.

37

Table of Contents

·                  The Company’s successful commercial expansion into Central/Eastern Massachusetts, with continuing improvement in portfolio diversification and the build out of commercial talent in Connecticut region.

·                  The Company strengthened overall talent throughout the organization.

·                  Continued focus on overall safety and soundness.

·                  In addition to the stronger profitability, capital ratios increased and asset quality improved across many measures.

·                  The Company continued to be very active with disciplined M&A opportunities, successfully completing two bank integrations and one mortgage company acquisition. Due to the acquisitions, market position and revenue sources were enhanced.

·                  Liquidity remained strong and the interest rate risk profile remained asset sensitive in order to protect future earnings from the impact of potential future interest rate increases.

These were all above and beyond the short term goals and all contribute importantly to future strategic results in the company.

Below is a summary of the specific 2012 results and funding for the management incentive plan:

Once the Pool was funded, individual awards were determined for Named Executive Officers based on an assessment of individual performance.  Individual awards can range from 50% to a maximum payout of 200% of their target.  Actual awards ranged from 122% to 166% of target and reflect the combination of individual and corporate performance.  Awards were granted by the Committee as indicated in the table below:

38

Table of Contents

Long-Term Incentive/Equity Compensation

Purpose, Philosophy and Process.  The Company’s long-term/equity incentive program is designed to align executives with long-term interests of the Company and shareholders, provide reward for superior performance, encourage stock ownership and enhance our ability to retain our top performers.

Each year in January, executives are considered for long-term incentive awards.  Awards are granted as part of the Company’s 2011 Equity Incentive Plan.  The Committee determines the form and amount of equity awards based on consideration of competitive market practice, Company performance and individual performance.  The Compensation Committee is authorized, at its discretion, to grant equity compensation in proportion and upon such terms and conditions as the Committee may determine.

2012 Plan Design and Awards.   Grants are allocated with the goal to provide competitive awards that provide a meaningful portion of total compensation in stock-based awards. The awards are intended to reward superior performance, provide retention of our key executives, balance compensation rewards with risk through long-term vesting tied to performance, and align executives with our stockholders.

For 2012, target equity grants were defined as 60% of base salary for the Chief Executive Officer and 40% of base salary for other Named Executive Officers.

For 2012, the long-term incentive plan had two award components:

·                  Performance Shares (50% of the total grant vests based on our 3-year performance)

·                  Restricted Stock (50% of the total grant vests incrementally over 3 years)

Restricted Stock awards are allocated based on a combination of company and individual performance and vest incrementally over three years.  The objective of these awards is to reward performance, encourage ownership and help retain our key executives.

The 2012 Performance Shares vest after three years (i.e. 2014) based on achievement of our long-term performance.   Performance (and vesting) will be defined using a matrix allocating 50% for Core ROE growth and Average Core ROE compared to an industry index; and 50% cumulative CORE EPS (an internal goal).  We use an industry index to represent an objective/external comparator with predefined criteria (exchange traded banks and thrifts between $2 billion to $12 billion in assets located in New England or Mid Atlantic regions, excluding MHCs). The Core EPS goal represents a cumulative three year goal that is set at the start of the performance period.  This target is consistent with the Company’s expectation to grow EPS greater than 10% per year.    The Company focuses on measures of Core EPS and Core ROE which reflect underlying operating trends rather than GAAP measures which include non-recurring charges, particularly related to merger and acquisition activity.  The Board requires satisfactory support for all non-core items recorded by management as part of its overall performance management review.

39

Table of Contents

The table below shows the matrix that will be used by the Committee after the performance period ends (1/1/12 — 1/31/2014) to determine vesting for the 2012 performance shares.

2012 LONG TERM INCENTIVE PLAN MATRIX

Note:  Core return on equity and core EPS are based on the non-GAAP measure of core earnings, which was further described in an earlier section in this Compensation Discussion and Analysis.

The 2012 grants awarded in January are summarized below and in our “Grants of Plan Based Awards” table herein.

2012 Long-Term Awards Granted