Peoples Bancorp of North Carolina : 2023 Proxy Statement and Annual Report

Notice of 2023 Annual Meeting,

Proxy Statement and

Annual Report

PEOPLES BANCORP OF NORTH CAROLINA, INC.

PROXY STATEMENT

Table of Contents

Page

NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS .......................................................................... i

PROXY STATEMENT ............................................................................................................................................... 1

INFORMATION ABOUT THE ANNUAL MEETING ........................................................................................... 1

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT .......................... 5

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ................................................... 7

PROPOSAL 1 ELECTION OF DIRECTORS ......................................................................................................... 7

Director Nominees ................................................................................................................................................... 7

Executive Officers of the Company ........................................................................................................................ 9

How often did our Board of Directors meet during 2022? ................................................................................. 10

What is our policy for director attendance at Annual Meetings? ..................................................................... 10

How can you communicate with the Board or its members? ............................................................................. 10

Board Leadership Structure and Risk Oversight ............................................................................................... 11

Code of Business Conduct and Ethics .................................................................................................................. 12

Diversity of the Board of Directors ...................................................................................................................... 12

How can a shareholder nominate someone for election to the Board of Directors? ........................................ 12

Who serves on the Bank Board? .......................................................................................................................... 13

Board Committees ................................................................................................................................................. 13

Compensation Discussion and Analysis ................................................................................................................... 15

Compensation Committee Processes and Procedures ........................................................................................ 15

Compensation Philosophy ..................................................................................................................................... 15

Elements of the Executive Compensation Program ............................................................................................ 16 2022 Compensation Disclosure Ratio of the Median Annual Total Compensation of All Company

Employees to the Annual Total Compensation of the Company's Chief Executive Officer ........................... 17

EXECUTIVE COMPENSATION ............................................................................................................................ 19

Summary Compensation Table ............................................................................................................................ 19

Grants of Plan-Based Awards .............................................................................................................................. 20

Outstanding Equity Awards at Fiscal Year End ................................................................................................ 20

Option Exercises and Stock Vested ...................................................................................................................... 21

Pension Benefits ..................................................................................................................................................... 21

Nonqualified Deferred Compensation ................................................................................................................. 21

Employment Agreements ...................................................................................................................................... 22

Potential Payments upon Termination or Change in Control ........................................................................... 22

Omnibus Plans ....................................................................................................................................................... 23

Pay Versus Performance ....................................................................................................................................... 24

Financial Performance Measures ......................................................................................................................... 25

Analysis of the Information Presented in the Pay Versus Performance Table ................................................ 26

Compensation Actually Paid and Cumulative TSR ........................................................................................... 26

Director Compensation ......................................................................................................................................... 28

Indebtedness of and Transactions with Related Persons ................................................................................... 30

Equity Compensation Plan Information .............................................................................................................. 30

i

PROPOSAL 2 RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM .............................................................................................................................................. 31

Audit Fees Paid to Independent Auditors ........................................................................................................... 31

DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS ............................................................................... 32

OTHER MATTERS .................................................................................................................................................. 32

MISCELLANEOUS .................................................................................................................................................. 32

Appendices

Appendix A - Annual Report

ii

PEOPLES BANCORP OF NORTH CAROLINA, INC.

Post Office Box 467

518 West C Street

Newton, North Carolina 28658-0467

[phone]

NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the 2023 Annual Meeting of Shareholders (the "Annual Meeting") of Peoples Bancorp of North Carolina, Inc. (the "Company") will be held virtually on May 4, 2023 at 11:00 a.m., Eastern Time. The purpose of the Annual Meeting is to consider and vote upon the following proposals:

•

To elect 11 persons to serve as members of the Board of Directors until the 2024 Annual Meeting of Shareholders or until their successors are duly elected and qualified;

•

To ratify the appointment of Elliott Davis, PLLC as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2023; and

to consider and act on any other matters that may properly come before the Annual Meeting or any adjournment thereof.

We will again hold our Annual Meeting in a "virtual only" format, via live audio webcast.

Shareholders will have an opportunity to participate remotely (online) in the Annual Meeting regardless of their geographic locations.

Shareholders desiring to attend in the Annual Meeting should email the Company's Assistant Corporate Secretary, Krissy Price, [e-mail] on or before 5:30 p.m., Eastern Time, on Wednesday, May 3, 2023, stating (1) such shareholder's name, address, phone number and the 16-digit identification code that appears on such shareholder's proxy card, (2) the number of shares of the Company's common stock that they held of record as of March 8, 2023 and (3) that they desire to participate in the Annual Meeting. The Company will then take measures to verify such shareholder's identity. After verifying such shareholder's identity, those shareholders desiring to participate remotely at the Annual Meeting will be sent a response email providing information to enable them to participate in the Annual Meeting. Regardless of whether a shareholder intends to participate remotely in the Annual Meeting, all shareholders are encouraged to vote their shares prior to the Annual Meeting, as directed on the proxy cards.

The Board of Directors has established March 8, 2023, as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting. If an insufficient number of shares is present to constitute a quorum at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies by the Company.

Your vote is important. We urge you to vote as soon as possible so that your votes will be properly recorded. You may vote by executing and returning your proxy card in the accompanying envelope, or by voting electronically over the Internet or by telephone. Please refer to the proxy card for information on voting electronically and by phone. If you participate remotely at the Annual Meeting, you may vote in person, in which event your proxy will not be used.

By Order of the Board of Directors,

Lance A. Sellers

President and Chief Executive Officer

Newton, North Carolina

March 27, 2023