Purpose:

Acting pursuant to Section 2.10 of the Code of Regulations of Peoples Bancorp Inc. (the “Company”), the Board of Directors (the “Board”) has established a Compensation Committee for the purpose of reviewing and approving, on behalf of the Board, management recommendations regarding all forms of compensation to be provided to the executive officers and directors of the Company and its subsidiaries, including stock-based compensation, and all bonus and stock-based compensation, incentives, perquisites, employee benefits, salary programs and human resources policies and procedures for all employees of the Company and its subsidiaries.  In addition, the Compensation Committee shall produce an annual report on executive compensation to be included in the Company’s proxy statement, in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”).

The Compensation Committee shall have the authority to undertake the specific responsibilities listed below and shall have the authority to undertake such other specific responsibilities as the Board from time to time may prescribe.

Membership:

The Compensation Committee shall consist of a minimum of three members of the Board of Directors, each of whom shall be recommended by the Governance and Nominating Committee and appointed by and serve at the pleasure of the Board.  Each member of the Compensation Committee shall be free of any relationship, which, in the opinion of the Board, may interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director of the Company. All Compensation Committee members must:

• satisfy the independence requirements prescribed by the applicable rules of   The Nasdaq Stock Market, Inc. (“Nasdaq”);

• be “Non-Employee Directors” as defined by Rule 16b-3 under the Securities   Exchange Act of 1934, as amended (the “Exchange Act”); and

• be “Outside Directors” as defined by Section 162(m) of the Internal Revenue   Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder.

Responsibilities:

The Compensation Committee shall be responsible for the consideration and approval of stock-based plans, performance goals and incentive awards, and the overall coverage and composition of the compensation package for the Company’s Chief Executive Officer, other executive officers and employees including (but not limited to) the following:

1. Developing and maintaining the compensation philosophy for executive officers and directors of the Company, and such other employees of the Company and its subsidiaries as directed by the Board that strengthens the relationship between pay levels and corporate performance and returns to shareholders. 

2. Reviewing and approving goals and objectives relevant to the compensation of the Company’s executive officers and other officers as determined from time to time, evaluating such officers’ performance in light of those goals and objectives and determining such officers’ compensation based on this evaluation.

3. Reviewing with Company management and approving all forms of compensation (including all compensation under a “plan,” as such term is defined in Item 402(a)(7) of Regulation S-K promulgated by the SEC, and all non-plan compensation) to be provided to the executive officers and other officers, as determined from time to time, of the Company and its subsidiaries, including (but not limited to) all of the Company’s employee benefit plans, salary programs and human resources policies and procedures.

4. Acting as the administrator of each of the Company’s  Equity Plans.  In its administration of each of the Company’s Equity Plans, the Compensation Committee may, pursuant to authority delegated by the Board, (a) determine the individuals eligible to participate in each Equity Plan, (b) grant equity awards to individuals eligible for such grants (including grants to individuals subject to Section 16 of the Exchange Act), and (c) amend such equity awards to the extent permitted by the applicable provisions of Rule 16b-3 under the Exchange Act, Section 162(m) of the Code and the rules promulgated thereunder, and Nasdaq rules.  The Compensation Committee shall also make recommendations to the Board with respect to amendments to the Company’s Equity Plans and changes in the number of common shares reserved for issuance thereunder in accordance with the then applicable rules and regulations of the SEC and, if applicable, Nasdaq.

5. Preparing the annual report on executive compensation (to be included in the Company’s proxy statement) which describes (a) the criteria on which compensation paid to the Company’s Chief Executive Officer for the last completed fiscal year is based, (b) the relationship of such compensation to the Company’s performance for the last completed fiscal year and (c) the Compensation Committee’s executive compensation policies applicable to executive officers, specifically addressing the other “named executive officers” identified in the proxy statement.

6. Reviewing and discussing management succession and development activities no less frequently than annually.

7. Evaluating the performance of the Company’s Chief Executive Officer (and such other executive officers or other officers of the Company as deemed appropriate by the Board) in light of the company’s current business environment and the Company’s strategic objectives.

8. Reviewing with Company management and approving recommendations with regard to aggregate salary budget and guidelines for all Company employees.
 
9. Evaluating the need for, and provisions of, employment contracts/severance arrangements for the Company’s Chief Executive Officer, other executive officers of the Company and other key officers of the Company.
 
10. Monitoring summary data on the Company’s employee population (e.g., total personnel costs, compensation benchmark data, employee diversity, turnover levels, etc.).

11. Recommending to the Board the compensation and benefits for directors (including committee and committee chair’s fees, equity grants and other similar items as appropriate).

12. Approving any award (with or without ratification by the Board) as may be required to comply with applicable tax laws, including, without limitation, Section 162(m) of the Code and the regulations promulgated thereunder.

13. Reviewing and approving appropriate insurance benefits coverage for officers, directors and employees.

14. Reviewing and reassessing this Charter and submitting any suggested changes to the Board for review.

15.  Reviewing and discussing the Company’s Compensation Discussion and Analysis (CD&A) with management and recommending to the Board that the CD&A be included in the Company’s annual report and proxy statement in accordance with the rules and regulations of the Securities and Exchange Commission.

16. Annually reviewing the overall performance of the Committee as a whole and having the Chair report the findings to the Board of Directors.

Authority:

The Compensation Committee may from time to time engage advisors and consultants, including attorneys and accountants, and may seek advice from the Company’s General Counsel as deemed necessary.  The Compensation Committee shall have sole authority to retain and terminate any compensation consulting firm, including sole authority to approve the firm’s fees and other retention terms.  The Company shall provide for appropriate funding, as determined by the Compensation Committee, for payment of compensation to any consulting firm or other advisors retained by the Compensation Committee.

Meetings and Reports:

The Compensation Committee shall hold regular meetings at least four times each year generally in conjunction with the regularly scheduled meetings of the Board, and such special meetings as the Chair of the Compensation Committee or the Chairman of the Board may direct.  The Compensation Committee shall be chaired by one of its members nominated by the Governance and Nominating Committee and appointed by the Board.  All members of the Compensation Committee are expected to attend each meeting, in person or via teleconference or other means of electronic communications permitted under applicable law and the Company’s Amended Articles of Incorporation and Code of Regulations.  The Compensation Committee shall maintain written minutes of its meetings, which minutes shall be filed with the minutes of the meetings of the Board.  The Compensation Committee may act by a majority of its members at a meeting or without a meeting if all members consent to the action in writing or by any means of electronic transmission permitted under applicable law.  At each regularly scheduled meeting of the Board, the Chair of the Compensation Committee shall provide the Board with a report of the Committee’s activities and proceedings or the full minutes from the Compensation Committee meetings may be used in lieu of a report.

The Compensation Committee may have in attendance at its meetings such members of management or human resources, compensation consultants or others as the Compensation Committee may deem necessary or desirable to provide the information the Compensation Committee needs to carry out its responsibilities.  Notwithstanding the foregoing, the compensation of the Company’s Chief Executive Officer and all other executive officers must be determined by the Compensation Committee voting in executive session. 

Good Faith Reliance:

In performing their responsibilities, Compensation Committee members are entitled to rely in good faith on information, opinions, reports or statements prepared or presented by:

• One or more officers or employees of the Company whom the Compensation Committee members reasonably believe to be reliable and competent in the   matters prepared or presented;

• Counsel, compensation consultants or other persons as to matters which the Compensation Committee members reasonably believe to be within the   professional or expert competence of such persons; and

• Another committee of the Board, upon which the Compensation Committee members do not serve, as to matters within such other committee’s designated authority, which committee the Compensation Committee members reasonably believe to merit confidence.