UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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Soliciting Material Pursuant to §240.14a-12

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Berkshire Hills Bancorp, Inc.

(Name of Registrant as Specified In Its Charter)

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Notice of Annual Meeting
of Shareholders

We are holding this meeting for the following purposes:

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To vote to phase out classification of the Board of Directors by approving amendments to the Certificate of Incorporation of the Company;

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To elect as directors the nominees named in the Proxy Statement each to serve a one-year term (if Proposal 1 is approved) or a three-year term (if Proposal 1 is not approved), or until their successors are duly elected and qualified;

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To provide an advisory vote on executive compensation practices;

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To vote on the frequency of advisory votes on executive compensation;

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To ratify the appointment of the Company’s independent registered public accounting firm for fiscal year 2017; and

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To transact any other Company business that may properly come before the meeting.

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The Board of Directors unanimously recommends that you vote “FOR” each of the proposals to be presented at the annual meeting and “FOR” the One-Year Frequency option with regard to proposal 4.

Shareholders of record at the close of business on March 20, 2017, are entitled to vote at the meeting, either in person or by proxy. There are several ways to vote. You can vote your shares via the internet, by telephone, by regular mail or in person at the annual meeting. To access your proxy materials and vote online, please visit www.proxyvote.com and follow the instructions. The notice previously provided to you contains the necessary codes required to vote online. If you wish to vote by telephone, please call 1-800-690-6903 using a touch-tone phone and follow the prompted instructions. You may also vote by mail by requesting a paper proxy card using the instructions provided to you in the notice. Finally, you may vote in person at the annual meeting, even if you have previously submitted a proxy.

Whatever method you choose, please vote in advance of the meeting to ensure that your shares will be voted as you direct.

Pittsfield, Massachusetts
April 7, 2017
By order of the Board of Directors

Wm. Gordon Prescott, Corporate Secretary

Admission Procedures

The meeting is open to shareholders of Berkshire Hills Bancorp. Everyone attending the meeting should bring a photo ID. If your shares are registered in the name of a bank, broker, or other holder of record, please also bring documentation of your stock ownership as of March 20, 2017 (such as a brokerage statement).

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 2017 Annual Meeting of Shareholders 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 mailing a notice of the annual meeting to shareholders of record (March 20, 2017) beginning on April 7, 2017.

Proxy Summary

This proxy summary is intended to provide a broad overview of information contained elsewhere in this proxy statement. We encourage you to read the entire proxy statement carefully before voting.

Annual Meeting of Shareholders

Time and Date: 10:00 a.m. Eastern time, Thursday, May 18, 2017

Place: The Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts

Record Date: Shareholders as of the close of business on March 20, 2017 are entitled to vote

Matters to Be Voted on

Summary of Proposals for 2017

1 — Vote on Phasing Out the Current Classified Board Structure. After extensive conversation with our shareholders, the Board of Directors recommends amending the Company’s Certificate of Incorporation to eliminate the classified board structure so that all directors would stand for election on an annual basis. We believe the declassified board structure promotes greater director accountability and is overall more shareholder friendly.

2 — Election of Directors. This year, we have 3 (out of 11) directors up for election. If Proposal 1 passes, the Board will begin the declassification process and the elected directors will be serving one-year terms. If Proposal 1 fails, directors’ terms of service on the board will remain classified and the elected directors will be serving three-year terms. The Board has nominated Messrs. Bossidy, Daly and Mahoney for re-election in 2017.

3 — Advisory Vote on Executive Compensation. We strive to promote long-term value for our shareholders and sound risk management practices through the alignment of executive pay and company performance. This vote is to advise the Board on approval of its Named Executive Officer compensation as set forth within this proxy statement.

4 — Frequency of Advisory Votes on Executive Compensation. We believe annual Say-on-Pay votes are in the best interest of our shareholders and the Company. We also believe the feedback we get from investors through the advisory Say-on-Pay vote and our year-round shareholder engagement program is critical to fostering good investor relationships. We have included the advisory vote on executive compensation at each annual meeting since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and recommend continuing to do so.

5 — Ratification of Independent Registered Public Accounting Firm. There are no recommended changes to our independent registered public accounting firm this year. PricewaterhouseCoopers LLP (“PwC”) has acted as our independent registered public accounting firm for 6 years and remains objective, competent and diligent. In 2016, a new PwC partner was assigned to manage the audit engagement, in accordance with normal rotation of this responsibility.

Corporate Governance Highlights

The Board and management regularly review best practices in corporate governance and are committed to a program that serves the long-term interests of our shareholders. We believe good governance strengthens accountability and promotes responsible corporate citizenship. Our current best practices are highlighted below.

Board of Directors

Our directors exhibit an effective mix of diversity, experience and perspective.

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The directors come from a variety of backgrounds including financial services, healthcare, manufacturing and non-profit.

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The Board engages in annual director evaluations and periodic board refreshment to foster the sharing of ideas and diverse perspectives.

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Company guidelines require directors to build an ownership position equivalent to at least 4 times their annual cash retainer. All but one of our directors have achieved this, and this director is in the process of increasing her stock ownership to become compliant with these guidelines.

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Shareholder Engagement and Responsiveness

Every year since the implementation of Say-on-Pay, we have received support above 90% for our Advisory Vote on Executive Compensation. However, in 2016 we received 67% of votes in favor. We were disappointed in these results and the Board of Directors took actions over the past year to engage shareholders to better understand their views and make enhancements to our compensation and governance practices.

Our Compensation Practices and Philosophy

We seek to provide an executive compensation program that is consistent with promoting sound risk management and long-term value creation to our shareholders. The key principles that support our philosophy are:

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Attract and retain highly talented executives committed to our success

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Pay for Performance

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Align executive interests with those of our shareholders

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Manage risk through oversight and compensation design features and practices

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Our Compensation Practices and Policies

Pay for Performance Results

Named Executive Officer direct compensation is made up of base salary, short term cash incentive and long term equity incentive. The target mix is 57% performance-based for the Chief Executive Officer and 47% performance based for other NEOs. Long-term equity incentive awards are earned over a 3 year period and made up of 50% performance shares and 50% time-based shares.

Reflecting our pay-for-performance compensation program, the strong results delivered for our shareholders translated into the payouts highlighted below:

(1)

For a summary of certain non-GAAP performance measures, please see Appendix A.

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2016 Company Performance

Through a combination of solid organic growth and smart acquisitions, Berkshire has grown to $9.2 billion in assets with a regional footprint across the Northeast and a national customer reach. It is our culture, diverse footprint, earnings momentum, disciplined acquisition strategy, and focus on driving profitability and shareholder value that has set us apart from other regional banks and positions us for future continued success.

In 2016 we reported record financial results, grew our franchise through additional products, services and geographies, and made significant investments in strengthening our platform and teams. These advances were reflected in solid net income and earnings per share growth, improved profitability and 30% total return for our stock.

Improving our return on assets, return on equity and efficiency remain key corporate goals for us and we are showing progress. Return on assets and return on equity have each improved steadily year over year. Our expenses to average assets has also shown steady improvement, bringing our efficiency ratio below 60% for the year and helping us to deliver positive operating leverage. Our asset quality metrics remain excellent and we continue to operate within comfortable capital and liquidity ranges.

(1)

Reflects the year-to-year performance indexed to a 2014 base year, at 100.

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(2)

Peer group consists of long term incentive comparator index.

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Strategically, we improved market share, grew loans and deposits, upgraded some key roles and completed two acquisitions this year. These acquisitions included First Choice Bank, which expanded our footprint into central New Jersey and the Philadelphia area with 8 branches and $1.1 billion in assets and brought along with it a best-in-class national mortgage operation, and 44 Business Capital, also based in the Philadelphia area, which primarily originates and sells SBA 7(a) loans and contributed significant fee income in 2016. Berkshire Bank is now ranked among the top 50 U.S. banks in production of residential mortgages and SBA 7(a) loans.

All of our growth and profitability improvements are driving toward better shareholder returns. Our stock price rose over 38% in the last two years, outperforming the broad market. We have a 45% dividend payout ratio of EPS and a 3% dividend yield, and maintaining that growing dividend is an important part of our objective.

Phase Out Classified Board by Approving Amendments
to the Certificate of Incorporation of the Company

The Board of Directors recommends approval of a proposal to phase out the classification of the Board of Directors over a three-year period beginning in 2017 and instead provide for the annual election of directors.

Background. The Board is currently divided into three classes under Article SIXTH of our current Certificate of Incorporation. Each class consists, as nearly equal in number as possible, of one-third of the total number of directors, with members of each class being elected every three years to a three-year term. The term of one class expires at each annual meeting of shareholders. At each annual meeting of shareholders, only one class of directors is subject to shareholder vote.

The Board of Directors considered arguments in favor of and against continuation of the classified Board of Directors and determined that it is in the Company’s best interest to seek shareholder approval to declassify the Board of Directors. Annually elected boards are perceived by many shareholders as increasing the accountability of directors to such shareholders. In February 2017, the Board of Directors adopted, subject to shareholder approval, amendments to the Company’s Certificate of Incorporation to eliminate the classified Board of Directors so that all directors would stand for election on an annual basis. The Board has also adopted amendments to the Bylaws of the Company to declassify the Board, contingent upon shareholder approval of the amendments to the Company’s Certificate of Incorporation.

Approval of the amendment to the Certificate of Incorporation requires the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of capital stock of the Company entitled to vote generally in the election of directors.

Proposal Logistics. Under Article SIXTH of the Company’s Certificate of Incorporation, the Board of Directors is divided into three classes, as nearly equal in number as possible, composed of directors each serving terms of office of three years. If Proposal 1 is approved by our shareholders in 2017, the directors who have been elected previously to three-year terms ending in 2018 and 2019 would complete those three-year terms, and thereafter would be eligible for annual re-election after completion of their current terms. Directors who are elected at this year’s Annual Meeting will serve one-year terms and and will be subject to re-election next year. If the proposed measure is approved, beginning with the 2020 Annual Meeting of Shareholders, the Board of Directors will be completely declassified and all directors will be subject to annual election to one-year terms.

If Proposal 1 is not approved by our shareholders, the Board will remain classified and our directors will continue to be subject to the Certificate of Incorporation’s current classification. Directors who are elected at this year’s Annual Meeting will serve three-year terms and and will be subject to re-election at the 2020 Annual Meeting of Shareholders.

The proposed amendments to the Certification of Incorporation to phase out the classification of the Board of Directors and provide for the annual election of directors will be approved if 80% of the shares outstanding are voted in favor of the proposal and the proposal will become effective upon the filing of the amendments with the Secretary of State of the State of Delaware.

Proposed amendments to Article SIXTH, Section A are set forth below, with additions indicated in bold and underline, and deletions indicated in strikethrough.

A.

The number of Directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board. The Directors shall be divided into three classes, as nearly equal in number as reasonably possible, with each Director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders following such initial classification and election, held before the 2017 annual meeting of stockholders, the class of Directors elected to succeed those Directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of

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Proposed amendments to Article SIXTH, Section B are set forth below.

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Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of Directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office, or other cause may be filled only by a majority vote of the Directors then in office, though less than a quorum, and Directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been chosen expires, except that Directors elected to fill vacancies after the 2020 annual meeting of stockholders shall hold office for a term expiring at the next annual meeting of stockholders. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director.

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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” PROPOSAL 1.

Election of Directors for a One-Year Term (If Proposal 1 is
Approved) or a Three-Year Term (If Proposal 1 is Not Approved)

The Board of Directors has nominated and recommends Paul T. Bossidy, Michael P. Daly and Cornelius D. Mahoney for election as directors, to serve until the 2018 Annual Meeting (if Proposal 1 is approved) or to serve until the 2020 Annual Meeting (if Proposal 1 is not approved), or in either case until their successors are duly elected and qualified.

Background. The Company’s Board of Directors currently consists of 11 members. The Board is currently 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 Paul T. Bossidy, Michael P. Daly and Cornelius D. Mahoney. All three of the nominees currently serve on the Board.

If Proposal 1 is approved, the shareholders will vote to elect the above-referenced nominees to hold office for a one-year term. If Proposal 1 is not approved, the shareholders will vote to elect the above-referenced nominees to hold office for a three-year term. If a nominee is unable to be a candidate when the election takes place, the shares represented by valid proxies will be voted in favor of the remaining nominees. The Board of Directors does not currently anticipate that any of the nominees will be unable to be a candidate for election.

Additional Information. Information regarding the director nominees is set forth below under the heading “—Information Regarding Directors and Director Nominees.”

The affirmative vote of a plurality of the Company’s outstanding common stock present in person or by proxy at the Annual Meeting is required to elect the nominees for directors; provided, however, in the case of an uncontested election of directors, it is the Company’s policy that if a director is elected by a plurality but not a majority of the votes cast for such director, such director must submit his or her resignation to the Board of Directors, which will be subject to review by the Corporate Governance and Nominating Committee of the Board of Directors. The Corporate Governance/Nominating Committee will then make a recommendation to the Board of Directors as to whether to accept or reject the director’s resignation. Unless otherwise instructed, the proxy holders will vote the proxies received by them “FOR” the election of the nominees as directors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF ITS DIRECTOR NOMINEES.

Information Regarding Directors and Director Nominees

Since our last annual meeting, the Board took actions to engage shareholders, advisors and other knowledgeable third-parties to discuss a number of important topics and better understand their views. We appreciate the honest feedback, open exchange of ideas and opportunity to learn from one another. As a result of those conversations and our own commitment to good governance, the Board made the following governance changes this year:

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Committee rotation and appointment of new Chairs occurred throughout the year, which included new Audit and Corporate Governance/Nominating Committee Chairs.

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As noted in Proposal 1, the Board is recommending a change to the Company’s Certificate of Incorporation to phase out the classified Board structure so that all directors would stand for election on an annual basis by 2020.

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Disclosure around the compostion of the Board has been enhanced, including more information on skill sets, background and our recruiting and nomination process.

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The Board also adopted a strict anti-hedging policy as laid out on page 26 of this proxy statement.

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2017 Nominees for Election to the Board of Directors

Directors with Terms Ending in 2018

Directors with Terms Ending in 2019

2017 COMMITTEE STRUCTURE

M = Management Director         I = Independent Director         C = Chair

Corporate Governance

The Company is committed to strong corporate governance policies, practices and procedures designed to make the Board more effective in exercising its oversight role. The following sections provide an overview of our corporate governance structure, including independence and other criteria we use in selecting director nominees, our Board leadership structure, and the responsibilities of the Board and each of its Committees. Our Corporate Governance Policy, among other key governance materials, help guide our Board and management in the performance of their duties and are regularly reviewed by the Board.

The Board and management regularly review best practices in corporate governance and are committed to a program that serves the long-term interests of our shareholders. We believe good governance strengthens accountability and promotes responsible corporate citizenship. Our current best practices are highlighted below:

Board of Directors

The primary functions of Berkshire’s Board of Directors are:

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To perform the duties and responsibilities assigned to the Board by the laws of Delaware, Berkshire’s state of incorporation.

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Board Meetings

During 2016, the Board of Directors held ten meetings. The average attendance at meetings of the Board and Board Committees during 2016 was 93%. During this period, each of the current directors attended at least 75% of the aggregate of the total number of board meetings and committee meetings held on which such directors served.

In addition, the Board of Directors encourages each director to attend annual meetings of shareholders. Eleven out of fifteen directors attended the 2016 annual meeting of shareholders.

Board Leadership Structure

The Board has reviewed the current Board leadership structure of the Company, which consists of a separate Independent Chairman of the Board and a Chief Executive Officer. The Independent Chairman performs all duties and has all powers which are commonly incident to the office of Chairman of the Board or which are delegated to him by the Board of Directors, including presiding at all meetings of the Board of Directors. The Chief Executive Officer has responsibility for the management and control of the business and affairs of the Company and has general supervision of all other officers, employees and agents of the Company. The Board believes that separating these roles enhances the independence of the Board and its effectiveness in discharging its responsibilities and that this procedure is currently the most appropriate Board leadership structure for the Company.

Director Independence

The Company’s Board of Directors currently consists of 11 members, all of whom are independent under the listing requirements of The New York Stock Exchange (the “NYSE”), except for Messrs. Daly and Curley, who are officers of the Company and the Bank. Additionally, all of the members of the Audit, Compensation and Corporate Governance/Nominating Committees are independent in accordance with the listing standards of the NYSE, and, in the case of members of the Audit and Compensation Committees, the rules of the SEC. 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 Daly, Mahoney, Moffatt, Murphy, Sheehan 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 selection of a Chairman 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).

Director Continuing Education

The Board of Directors holds an annual director education day led by the Chairman, which includes presentations by outside experts based on input from directors regarding topics of interest. Past topics have included cyber-security, stress testing and the Dodd-Frank Act regulatory thresholds, and investor views and perceptions. Directors also receive an annual update on trending compliance and regulatory matters and new developments from Berkshire Bank’s outside compliance advisory firm. Our senior management meets with the Board at every regularly scheduled board meeting and annually to review the Company’s strategic plan.

Committees of the Board of Directors

The Board has five standing committees: the Audit Committee; the Compensation Committee; the Corporate Governance/Nominating Committee; the Risk Management and Capital Committee; and the Compliance/Regulatory Committee. The Board has determined that 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 NYSE. Each committee operates under a written charter 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 current 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).

C

Denotes Committee Chairperson.

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Thomas R. Burton, Rodney C. Dimock, Susan M. Hill and Barton D. Raser retired from the Board of Directors on December 15, 2016.

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Mr. Ryan was appointed Chair of the Corporate Governance/Nominating Committee on June 23, 2016, taking over from Mr. Dimock. Mr. Bossidy was appointed Chair of the Audit Committee on June 23, 2016, taking over from Ms. Hill.

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Patrick J. Sheehan was elected to the Board of Directors at the Company’s 2016 Annual Meeting on May 5, 2016.

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Richard D. Suski did not stand for re-election to the Board of Directors at the Company’s 2016 Annual Meeting and retired from the Board on May 5, 2016.

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Board Committees and Responsibilities

The primary functions of each of the board committees are described below.

Audit Committee

For information about the audit committee and the audit committee financial expert, please see table above and pages 65-66 in this proxy statement.

Identification and Evaluation of Director Candidates

The Corporate Governance/Nominating Committee is responsible for identifying and recommending to the Board of Directors candidates for Board membership. 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 shareholders 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 below under “Director Eligibility Requirements.” If an individual fulfills these criteria, the Corporate Governance/Nominating Committee will conduct a background check

and interview the candidate to further assess the qualities of the prospective nominee and the contributions he or she would make to the Board.

Criteria for Nomination to the Board of Directors

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, including a residency requirement, which may be waived for otherwise qualified individuals with Board approval, 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.

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:

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

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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 the Board.

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

Director Eligibility Requirements:

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No person shall be eligible for election or appointment to the Board of Directors: (i) if such person has, within the previous ten 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 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.

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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.

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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.

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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 303.81(b)), that includes a person who is ineligible for election to the Board of Directors.

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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.

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Consideration of Recommendations by Shareholders. It is the policy of the Corporate Governance/​Nominating Committee of the Board of Directors of the Company to consider director candidates recommended by shareholders 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 Shareholders. To submit a recommendation of a director candidate to the Corporate Governance/Nominating Committee, a shareholder 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:

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The name of the person recommended as a director candidate;

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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;

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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;

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As to the shareholder making the recommendation, the name and address of such shareholder as it appears on the Company’s books; provided, however, that if the shareholder is not a registered holder of the Company’s common stock, the shareholder 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

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

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In order for a director candidate to be considered for nomination at the Company’s annual meeting of shareholders, 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 shareholders in connection with the previous year’s annual meeting, advanced by one year. The Company has not received any recommendations from shareholders for director candidates to be considered for election at the Company’s 2017 Annual Meeting of Shareholders.

Board Risk Oversight

The Board oversees the Company’s risk profile and management’s processes for assessing and managing risk, both as a whole board and through its committees. At least annually, the Board reviews strategic risks and opportunities facing the company and certain of its businesses. Other important categories of risk are assigned to designated Board committees that report back to the full Board. In general, the committees oversee the following risks:

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. 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. In addition, the Code of Business Conduct encourages and provides a mechanism for all employees to report apparent or suspected violations of the Code or other misconduct by means of an anonymous “whistleblower” hotline administered by the Company’s Audit Committee through an independent third-party vendor. A copy of the Code of Business Conduct can be found in the Governance Documents portion at the Company’s investor relations website (ir.berkshirebank.com).

Anti-Hedging and Pledging Restriction Policy

The Company discourages the practices of hedging and/or pledging of Company common stock by officers and directors, and has policies relating to such practices. Pursuant to the Company’s insider trading policy and stock ownership guidelines, officers and directors of the Company are prohibited from engaging in any hedging transactions (which include short sale transactions, purchases of Company common stock on margin, and buying or selling any puts, calls or other options that have the effect of reducing the economic exposure to the shares of common stock). In addition, officers and directors are discouraged from pledging company securities as collateral for margin purchases or a loan. However, exceptions to this pledging limitation may be granted, if good cause is shown.

Director Compensation

The Company uses a combination of cash and restricted stock to attract and retain qualified candidates to serve on the Board. Restricted stock grants are intended to align directors’ interests with those of the Company’s shareholders. The Compensation and Corporate Governance/Nominating Committees review director compensation and benefits annually and make recommendations to the Board. The following table provides the compensation received by individuals who served as directors (except for Mr. Daly, whose compensation is reported in the Summary Compensation Table) of the Company during the 2016 fiscal year. The stock award amounts in 2016 were unchanged from the prior year. Mr. Daly does not receive separate compensation for his service on the Board.

(1)

Represents the grant date fair value of the restricted stock awards which has been computed in accordance with the stock based accounting rules under FASB ASC Topic 718. Amounts shown are the aggregate grant date fair value of restricted stock awards, with the grant date fair value based on the closing price of the Company’s common stock on the applicable grant date. All 2016 awards vest over a three-year period. See Note 19 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2016. Since January 30, 2004, no stock options have been granted to any directors. As of December 31, 2016, each director (except for Mr. Daly, whose compensation is reported in the Summary Compensation Table below) had the following number of unvested shares of restricted stock and stock options outstanding:

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(2)

Reflects dividends paid when restricted stock becomes vested.

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(3)

Mr. Burton recognized $10,013 in imputed income on split dollar insurance.

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(4)

The total amount included in “All Other Compensation” reflects Mr. Curley’s salary in the amount of  $100,000 as Chairman of the New York region of Berkshire Bank, dividends of  $3,200 on restricted stock awards that vested during 2016, a non-elective 401(k) contribution of  $3,000, and club dues of  $3,590.

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(5)

Mr. Dunlaevy recognized $103 in imputed income on split dollar insurance.

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(6)

Ms. Hill recognized $1,900 in imputed income on split dollar insurance.

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(7)

Mr. Raser recognized $14 in imputed income on split dollar insurance.

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(8)

Thomas R. Burton, Rodney C. Dimock, Susan M. Hill and Barton D. Raser retired from the Board of Directors on December 15, 2016. Richard D. Suski did not stand for re-election to the Board of Directors at the Company’s 2016 Annual Meeting and retired from the Board of Directors on May 5, 2016.

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(9)

Reflects $63,000 in retirement benefits paid during the period.

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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 2017. These amounts are unchanged from the prior year.

The Board of Directors recommends approval of its Named Executive Officer (“NEO”) compensation as set forth herein.

Background. In accordance with Section 14A of the Securities Exchange Act of 1934, shareholders are being given the opportunity to vote on an advisory (non-binding) resolution at the annual meeting to approve our executive compensation as described below in the Compensation Discussion and Analysis, compensation tables and narrative discussion of NEO compensation presented in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives shareholders 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 shareholder value. The Board of Directors believes the Company’s compensation policies and procedures achieve this objective, and therefore recommend shareholders 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 Shareholder 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 shareholders when considering future executive compensation arrangements.

THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THIS PROPOSAL.

Compensation
Discussion and Analysis

In this section we explain our compensation philosophy, describe the material components of our executive compensation program, and review the 2016 compensation decisions for our Named Executive Officers (“NEOs”) listed below. Their compensation is set forth in the Summary Compensation Table and other compensation tables contained in this Proxy Statement. The following Compensation Discussion and Analysis (“CD&A”) focuses on the key factors we believe shareholders should focus on in their evaluation of our “Say-on-Pay” proposal.

(1)

The principal positions listed above represent the titles of each of the Named Executive Officers at Berkshire Bank, the wholly owned subsidiary of Berkshire Hills Bancorp, Inc. The principal position of each of the Named Executive Officers at Berkshire Hills Bancorp, Inc. is as follows: Mr. Daly is President and Chief Executive Officer, Mr. Moses is Senior Executive Vice President and Chief Financial Officer, Mr. Marotta is Senior Executive Vice President, Mr. Gray is Senior Executive Vice President, and Mr. Bacigalupo is Executive Vice President.

​

(2)

Mr. Moses joined the Company on July 25, 2016.

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(3)

Ms. Iannelli resigned from the Company effective as of July 5, 2016.

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Table of Contents

Executive Summary

Business Overview

Over the last several years we have grown our company through disciplined expansion from $5.5 billion to more than $9 billion in total assets. Our strategy is to improve profitability through positive operating leverage driven by revenue growth and expense discipline. We are developing a valuable franchise that will be attractive to our markets and the investment community.

We have made key investments in people and infrastructure, including hiring seasoned lending teams across our market, expanding and upgrading our personnel and systems in compliance, risk and finance, and restructuring our executive team to include more diversity and better engagement and accountability. We have added economies of scale by acquiring whole banks within and adjacent to our footprint that deepen and expand our market presence. We have refocused and improved the talent of our wealth management and insurance businesses to better serve our customers, and our strategic lines of business have been built out organically and through acquisition, including specialty lending, wholesale banking and residential mortgage banking.

These initiatives have diversified our revenue streams, created efficiencies and improved profitability. They also provide a solid foundation for delivering stronger returns to our shareholders. We now serve more customers across our expanded footprint, and are operating greater numbers of business lines in both regional and national markets. By bringing together a strong employee base, a dedicated strategy and operational efficiency, we can continue to offer our customers the products and services they need, our employees an inspirational workplace, our communities the support they seek and our shareholders the returns they deserve.

Strategic Highlights

Berkshire had a record year for revenues and earnings in 2016, and it was one of our best years ever in improving our profits and expanding our business.

*

Please see our 2016 Summary Annual Report and 2016 Annual Report on Form 10-K for more information regarding our performance.

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Shareholder Engagement and Responsiveness

Since the implementation of Say-on-Pay, we have received support above 90% for our Advisory Vote on Executive Compensation. In 2016 we received 67% of votes in favor. We were disappointed in these results and the Board of Directors took actions over the past year to engage shareholders to better understand their views and make enhancements to our compensation and governance practices.

Executive Compensation Key Principles

Our philosophy is to provide an executive compensation program that is consistent with creating long-term value for our shareholders and promoting sound risk management. The key principles that support our philosophy are:

✓

Attract and retain highly talented executives committed to our success

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✓

Pay for Performance

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✓

Align executive interests with those of our shareholders

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✓

Manage risk through oversight and compensation design features and practices

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Key Elements of our Compensation Programs

*

For reconciliation of non-GAAP measures to their most directly comparable GAAP financial measures, please see Appendix A.

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Highlights of our Compensation and Governance Programs

Summary Description of 2016 Compensation Results

The table below summarizes the Compensation Committee’s 2016 compensation actions which were consistent with our long-standing commitment of aligning pay with performance and the interests of our shareholders. For more details on the program design and decisions made in 2016, please see pages 41-48 in this CD&A. For reconciliation of non-GAAP measures to their most directly comparable GAAP financial measures, please see Appendix A.

NEO Pay-For-Performance Alignment

The graph below demonstrates the alignment over the past five years of shareholder value creation and key operational metrics with NEO total annual direct compensation, which consists of base salary, short-term and long-term incentive awards. Most of the performance goals have been increased by the Compensation Committee over the last five years and all increased last year. Compensation reflects performance, as well as promotions and increases in responsibility due to growth, as reflected in net income. Total shareholder return has been positive in all years with a 30% gain in 2016.

(1)

Reflects the year-to-year performance indexed to a 2011 base year for total shareholder return (“TSR”), and a 2012 base year for other performance metrics, at 100. Prior year TSR is shown to correspond with the timing of annual compensation decisions.

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(2)

Direct compensation totals are made up of base salary, Short Term Incentive (“STI”) and Long Term Incentive (“LTI”). This measure excludes sign-on bonuses and special grants, where were supported by specific events.

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(3)

TSR consists of stock price appreciation plus reinvested dividends; source: SNL Financial

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Compensation Philosophy and Objectives

The primary philosophy and objective of our compensation program is to align the interests of our executives with shareholders by rewarding performance against established corporate financial and strategic goals, solid executive leadership and strong individual executive performance. We strive to attract, motivate and retain a highly qualified and talented team of executives who will lead Berkshire to maximize long-term performance and earnings growth. The Compensation Committee regularly reviews executive compensation program elements to ensure they are consistent with safe and sound business practices, regulatory requirements, emerging industry best practices and shareholder interests.

Key Principles That Support Our Philosophy

2016 Target Pay Mix

Our compensation program places significant focus on performance-based pay that aligns CEO and NEO pay levels with the Company’s performance. The program rewards our achievements on an annual basis and our ability to deliver long-term value to our shareholders. We have a balanced, risk-appropriate approach to total compensation that includes a mix of fixed/base pay and variable/performance–based pay, cash and equity, and short- and long-term compensation.

Berkshire’s target pay mix is established by the Compensation Committee through an annual review of peer practices, pay for performance incentives, risk management objectives and shareholder alignment. For 2016, our compensation targets and pay mix were as follows and are designed to be in-line with market practice:

(1)

Market averages provided by independent compensation consultant and determined by using pay practices at peers listed elsewhere in this proxy statement.

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Decision-Making Process

Our Compensation Committee, which is composed solely of independent directors, is responsible for establishing, implementing and continually monitoring all elements of compensation for the Company’s CEO and NEOs.

Factors Considered in Compensation Decision Process

The Compensation Committee considers many factors when making pay decisions throughout the year. In addition to the market data provided by the independent consultant, the Compensation Committee also considers various analyses, information and input including, but not limited to:

Overall operational and financial performance

Stock price performance and total shareholder return on an absolute and relative basis

Executive’s individual performance results relative to their individual financial and strategic goals

Strategic plan progress and performance relative to annual budget

Tally sheets

Demonstration of behaviors that support our culture and brand

Executive stock ownership levels

Qualitative input from the Compensation Committee and other independent directors

External influences, economic conditions and industry factors

Risk assessment considerations

Internal equity

Compensation trends and best practices

Benchmarking Analysis — Compensation Peer Group

The Compensation Committee considers the structure of compensation programs and pay levels at other publicly traded banks similar in size and region to Berkshire when evaluating our compensation program. Annually, the Compensation Committee’s independent compensation consultant conducts a comprehensive competitive market analysis using the peer group and other industry survey data, as well as compensation best practices. The peer group is developed by the independent compensation consultant, approved by the Compensation Committee and used as part of the perspective consideration by the Compensation Committee to analyze and set annual salaries and incentive target opportunities. The Compensation Committee annually reviews and updates the peer group, as necessary upon recommendation of the Compensation Consultant.

Peer Group Criteria: The peer group is based on objective parameters that reflect institutions of similar asset size (approximately ½ – 2x Berkshire’s assets) and located in the Northeast/Mid-Atlantic region plus Ohio.

The following group shows the peer companies identified in 2015 and used for 2016 pay program considerations:

(1)

National Penn Bancshares, Inc. was acquired by BB&T Corporation on April 1, 2016.

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(2)

Asset size and market cap as of 12/31/16; revenue FY2016; source: SNL Financial.

​

(3)

Peer group median asset size in 2015 (when this peer group was identified) was $6.4B compared to Berkshire’s assets of  $7.2B at the time.

​

The Compensation Consultant used several other sources of data to identify general compensation trends, as well as published industry surveys and a proprietary database of national banking compensation data.

2016 Compensation Program & 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 sections summarize the role of each component, how decisions are made and the resulting 2016 decision process as it relates to the NEOs.

Base Salary

When setting NEO’s base salary, the Compensation Committee aims to provide competitive and fair base compensation that reflects roles and contributions. Each year our independent compensation consultant provides market 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.

In December of each year, the Compensation Committee reviews each NEO’s base pay relative to competitive market practice, individual experience, expertise, performance and contributions, as well as the financial and economic environment, in preparation for January considerations. Base salary increases are not guaranteed and the review does not always result in a base pay adjustment. Input from the Chief Executive Officer is considered in setting the other named executive officer salaries; however, the Compensation Committee is solely responsible for determining the Chief Executive Officer’s salary.

2016 Decisions. No salary adjustments were made during the January 2016 or January 2017 annual review process, other than two pay increases. As part of the Compensation Committee’s annual salary review process for 2016, it was decided that it was appropriate to increase Mr. Bacigalupo’s base to $350,000 from $325,000 and Ms. Iannelli’s base to $400,000 from $350,000. These increases were reflective of market factors and specific performance and contributions of the executives. Mr. Moses received a starting salary of  $350,000 when he joined the Bank in July 2016, reflective of his experience and market dynamics. He also received a one-time $100,000 cash sign-on bonus as recruitment inducement.

(1)

Mr. Moses joined the Company on July 25, 2016

​

(2)

Ms. Iannelli resigned from the Company effective as of July 5, 2016

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Short-Term Incentive Awards (STI)

At the start of each year, the Compensation Committee defines the corporate STI goals which serve as the basis for the granting of annual cash awards and approves the individual goals which will be used to determine the payout. Each year in January, performance is assessed and the NEOs are then considered for short-term incentive awards based on achievement of those Company and individual goals.

•

Rewards under this plan represent compensation that must be re-earned each year based on Company and individual performance results.

​

•

The Compensation Committee approves the Chief Executive Officer’s individual goals based on the strategic plan/budget.

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•

The CEO prepares goals for NEOs that support our strategic plan and budget and reflect each NEO’s role. The Compensation Committee can modify the goals at their discretion and approves the final goals.

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•

NEO incentive award targets and pay-out ranges are reviewed and established annually by the Compensation Committee based on the Company’s overall performance and the independent compensation consultant’s benchmarking analysis.

​

•

Award targets are designed to be in-line with our goal to provide a meaningful, but risk balanced, portion of total compensation that is based on annual results.

​

•

For 2016, target annual incentive opportunities were 55% of base salary for the CEO and 40% for other NEOs. Actual payouts, however, vary each year based on a combination of Company and individual performance.

​

•

Maximum incentive pool funding is capped at 150% of target; maximum award for any participant (based on individual performance) is capped at 200% of target.

​

The incentive pool is funded based on Corporate Scorecard results consisting of financial goals and a strategic modifier. Once the pool funding is known, individual performance is assessed to determine and allocate the actual awards. The Chief Executive Officer provides the Compensation Committee with a summary of each NEO’s performance and incentive recommendations based on individual performance results relative to specific goals set at the start of the year. The Compensation Committee conducts a similar review of the Chief Executive Officer, with input from the independent directors of the board. The Compensation Committee determines the Chief Executive Officer award and approves the named executive officer awards. The Compensation Committee retains the discretion to modify incentive payouts based on significant individual or Company performance shortfalls and/or regulatory and safety and soundness concerns and in consideration of risk management goals.

Company Measures and Funding of the Incentive Pool. The Compensation Committee has established four performance goals that determine the pool that will be available for incentive awards:

*

For a summary of certain non-GAAP performance measures, please see Appendix A.

​

The Compensation Committee also established a minimum trigger or gate level of performance, which is defined at 75% of the targeted core earnings, which must be achieved in order for the plan to fund any awards. Once the minimum is achieved, the incentive pool funding is determined based on Company performance relative to the four performance goals, evenly weighted.

Each goal has a defined range of acceptable performance; threshold funds the pool at 50%; target performance funds the pool at 100% and stretch performance funds at 150%. Funding is interpolated proportionally based on actual performance within these ranges. These ranges are unchanged from the prior year and are viewed as within a normal range among Company peers. The Committee also considers the achievement of the Company’s strategic plan/goals and can modify the pool +/- 15% based on its assessment of performance of these broader initiatives. The Committee will consider and discuss overall risk and can also adjust the pool downward to reflect any risk, regulatory or shareholder issues. The objective is to ensure our incentive plan is funded appropriately based on profits and strategic results.

In 2016, a new measure for core return on assets was added to the performance goals. This reflects the Company’s emphasis on continued profitability improvement. Specific targets set for 2016 were based on the Company’s strategic plans, as well as an assessment of economic and competitive conditions. The earnings, efficiency and asset quality targets represented a significant increase over 2015 targets. The range from target to threshold or stretch was not changed for earnings and efficiency. The range from threshold to stretch was widened for asset quality to allow for more uncertainty in economic conditions and potential merger impacts. The range established for core ROA was viewed as consistent with the earnings and efficiency ranges.

2016 Results

The specific performance goals for each of threshold, target and stretch level achievement, as well as the actual level of performance achieved for fiscal year 2016, are displayed in the following table.

Our financial results equaled or exceeded target for all measures, with two measures achieving the stretch level. This represented improved performance compared to 2015 for all of these measures and was viewed as strong performance in light of economic and competitive conditions that prevailed in 2016. Based on the weightings factors, the pool resulted in funding at 126% of target. The Compensation Committee determined to reduce the funding pool to 112% and not to include any modifier for the Company’s strategic accomplishments in expanding its markets and building its compliance programs. This determination was made in consideration of feedback from the Company’s shareholder engagement activities and was part of an assessment of overall shareholder engagement and pay for performance alignment. While our incentive plan traditionally has focused on our internal strategic plan and growth initiatives, we recognize that some of these investments do not materialize in immediate shareholder returns and the Compensation Committee considered this broader perspective when allocating 2016 incentive pool funding.

Individual Performance.

The 2016 individual goals for each of our NEOs were set in January 2016. The Compensation Committee believes that our NEO’s performance goals should support and help achieve the Company’s strategic objectives, encourage the RIGHT (Respect, Integrity, Guts, Having Fun and Teamwork) behaviors and be tied to their areas of responsibility. Individual goals for the CEO were established with oversight by the Compensation Committee. Individual goals for the other executives were proposed by the CEO and reviewed and approved by the Compensation Committee.

Once the funding of the incentive pool is approved by the Compensation Committee, awards are then allocated based on each participant’s individual performance and contributions toward the Company’s strategic goals. 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.

At the end of the fiscal year, the Compensation Committee reviewed each named executive officer’s progress against his individual performance goals and contributions to overall company performance and strategic accomplishments. Based on this assessment, an NEO could receive an award from 0% to 200% of the targeted annual incentive. When making the award determinations, the Compensation Committee does not assign a specific weight to any individual goals, but instead reviews each NEO’s progress in aggregate.

The 112% funding results could be adjusted up or down based on individual contribution, provided total awards do not exceed the incentive pool funding. Below is a summary of each NEO’s individual awards and the individual performance contributions considered by the Committee in determining the awards: