Frank Sorrentino III
About Frank Sorrentino III
Chairman and Chief Executive Officer of ConnectOne Bancorp, Inc. and ConnectOne Bank since July 1, 2014; founding organizer of ConnectOne Bank; prior career as a builder and construction manager in Bergen County, NJ. Age 63; Director since 2014. 2024 performance context: net income available to common stockholders fell to $67.8M (EPS $1.76) amid margin pressure; net interest margin declined to 2.72% (vs. 2.82% in 2023). Over 2019–2024, CNOB’s cumulative TSR was roughly flat at $101 (vs. KBW Bank Index at $131). Management highlights: tangible book value per share rose 3.4% in 2024; loan-to-deposit ratio improved to 105.8%; leverage ratio increased to 11.33%; CRE concentration ratio declined to 436%.
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| ConnectOne Bancorp, Inc. | Chairman & CEO | 2014–present | Led public company since merger closing; senior executive insight into operations and strategy. |
| Legacy ConnectOne Bancorp, Inc. & ConnectOne Bank | Chairman & CEO | Pre-2014–2014 | Guided predecessor organization into 2014 merger; brought clients/investors via market relationships. |
| ConnectOne Bank | Founding Organizer | Pre-2014 | Foundational role in bank formation and growth. |
| Private sector (Bergen County, NJ) | Builder & construction manager | Prior to banking | Real estate experience leveraged in CRE-focused banking market. |
External Roles
| Category | Details |
|---|---|
| Public company boards | None disclosed per proxy (no CNOB director currently serves as a director of a Section 12/15(d) registrant or registered investment company). |
Fixed Compensation
| Year | Base Salary ($) |
|---|---|
| 2023 | 945,000 |
| 2024 | 972,000 |
| 2025 | 992,000 |
- Perquisites: $1,250/month car allowance; “All Other Compensation” includes $15,000 annual car allowance (2022–2024).
Performance Compensation
2024 Annual Incentive (target 95% of base; payout mechanics)
| Metric | Threshold | Target | Stretch | Actual 2024 | Weight | Payout Factor | Payout Contribution |
|---|---|---|---|---|---|---|---|
| Core ROA | 0.60% | 0.80% | 1.00% | 0.79% (just below target) | 18.75% | 0.9499 | 17.81% |
| Efficiency Ratio | 60.0% | 55.0% | 50.0% | 55.6% (just below target) | 18.75% | 0.9403 | 17.63% |
| Tangible Book Value/Share | $23.25 | $24.00 | $24.75 | $23.91 (just below target) | 18.75% | 0.9467 | 17.75% |
| PPNR | 1.00% | 1.20% | 1.40% | 1.15% (below target) | 18.75% | 0.8752 | 16.41% |
| Strategic Performance | – | – | – | Between Target & Stretch | 25.00% | 1.25 | 31.25% |
| Total | – | – | – | – | 100.00% | – | 100.85% |
| 2024 Annual Incentive Award | Target ($) | Actual ($) |
|---|---|---|
| Frank Sorrentino III | 923,400 | 931,249 |
- Plan design: Company metrics + strategic modifier; individual modifier not used in 2024.
Long-Term Incentives (equity)
| Award Type | Target # Shares | Grant Date Fair Value ($) | Vesting/Performance |
|---|---|---|---|
| Performance Shares (PSUs) | 35,153 | 668,259 | 3-year performance period (2024–2026); Core ROA relative to industry index; modified ±25% by relative TSR; vest 0–150% of target. |
| Deferred Stock Units (DSUs) | 28,761 | 546,747 | Time-based; vest ratably over three years; forfeitable if service ends pre-vesting. |
| Total 2024 LTI | – | 1,215,006 | – |
- Prior PSU cycle: 2022–2024 PSUs vested at 138.4% of target (Core ROA 1.06% ranked 69.2%).
- No stock options granted; repricing not permitted.
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficial Ownership (3/31/2025) | 797,267 shares; 2.07% of outstanding (includes 46,925 in IRA; 416 in spouse IRA). |
| Beneficial Ownership (4/1/2024) | 781,637 shares; 2.04% (includes trusts/spouse holdings noted). |
| Unvested time-based shares (12/31/2024) | 69,246; market value $1,586,426. |
| Unearned performance shares (12/31/2024) | 83,186; market/payout value basis $1,905,791. |
| Ownership Guidelines | CEO must hold 6x base salary; all executives in compliance at YE 2024. |
| Hedging/Pledging | Hedging and new pledging prohibited; pre-11/23/2021 pledges grandfathered. No pledge disclosed for Sorrentino. |
Deferred Compensation and SERP
| Plan | 2024 Registrant Contribution ($) | Aggregate Balance at 12/31/2024 ($) | Benefit Formula |
|---|---|---|---|
| Nonqualified Deferred/ SERP (CEO) | 648,624 | 2,179,636 | SERP targeted at 37.5% of final salary (excl. bonus/benefits). |
Employment Terms
| Provision | Terms |
|---|---|
| Agreement Term | Initial 3 years; auto-renews 1 year unless non-renewal notice. |
| Base/Benefits | Base at least $735,000; eligible for incentive plans/benefits; $1,250/month car allowance; expense reimbursement. |
| Severance (no CIC) | 2.5x (base + target cash bonus) lump sum; pro-rata bonus; up to 18 months health/welfare benefits. “Without cause” or “good reason.” |
| Change-in-Control (double trigger) | 3x (base + target cash bonus) lump sum; pro-rata bonus (based on actual performance); up to 18 months health/welfare; equity acceleration and SERP acceleration as applicable; 280G cutback applies. |
| Clawback/Policies | Dodd-Frank/NASDAQ-compliant clawback on restatements; no excise tax gross-ups; no dividends on unearned equity. |
Potential Payments Illustration (as of 12/31/2024; per proxy)
| Scenario | Cash Compensation ($) | Health/Welfare ($) | Equity Acceleration ($) | SERP Acceleration ($) |
|---|---|---|---|---|
| Involuntary Termination (no CIC) | 4,738,500 | 30,504 | – | – |
| CIC Only (no termination) | – | – | 3,146,459 | – |
| CIC + Qualifying Termination | 5,686,200 | 30,504 | 3,146,459 | 420,011 |
Board Governance (including dual-role implications)
- Roles: Combined Chairman & CEO structure; Board cites benefits in unified vision/coordination. Lead Independent Director (Stephen T. Boswell) presides over executive sessions, sets agendas with CEO, and acts as liaison.
- Independence: Sorrentino (CEO/Chair) and Bank President are not independent; majority of board is independent under NASDAQ standards.
- Attendance: 15 Board meetings in 2024; each Director attended ≥75% of aggregate Board/committee meetings.
- Committee memberships: CEO is not listed on Audit & Risk, Compensation, or Nominating & Corporate Governance committees (all-independent).
- Say-on-Pay: Shareholder approval improved to 95.2% in 2024 (from 65.6% in 2023 after investor outreach and plan changes, including TSR modifier and higher PSU mix).
Related Party Transactions (governance red flags screening)
- Branch lease: CNOB leases its John Street, Hackensack branch from an LLC in which board members (including Sorrentino) collectively own 44.4%; Sorrentino’s indirect interest is 11.1%. 2024 rent paid: $234,552. Board assessed independence considering relative economic interest.
Performance & Track Record
Key Financials and Margins
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income Available to Common ($M) | 119.2 | 81.0 | 67.8 |
| Diluted EPS ($) | 3.01 | 2.07 | 1.76 |
| Net Interest Margin (%) | 3.69 | 2.82 | 2.72 |
Total Shareholder Return vs Benchmarks (Value of $100 invested; calendar year-end)
| Year | CNOB | KBW Bank Index | Nasdaq |
|---|---|---|---|
| 2019 | 100.00 | 100.00 | 100.00 |
| 2020 | 78.59 | 91.32 | 145.05 |
| 2021 | 131.92 | 124.79 | 177.27 |
| 2022 | 99.76 | 116.15 | 119.63 |
| 2023 | 97.86 | 115.69 | 173.11 |
| 2024 | 101.06 | 130.96 | 224.34 |
Risk Indicators
- Concentrations and balance sheet: CRE concentration ratio 436%; loan-to-deposit ratio 105.8%; leverage ratio 11.33% (all 2024 year-end).
- Credit trends: Special mention loans rose to $149.4M (1.8% of loans); substandard loans to $72.4M (0.9%); nonaccrual loans $57.3M (0.69% of loans). Allowance for credit losses 1.00% of loans; 2024 net charge-offs 0.16% of average loans.
Compensation Structure Analysis (alignment and trend signals)
- Increased at-risk equity: For CEO, 55% of annual equity grant is performance-based PSUs (vs. 50% previously); addition of a relative TSR modifier after shareholder feedback in 2023.
- Pay outcomes vs performance: 2024 annual cash incentive paid near target (100.85%) as operating metrics were just below target but strategic objectives (including FLIC merger progress) exceeded target.
- Governance practices: Clawback policy; prohibition on hedging and new pledging; no option repricing; no excise tax gross-ups.
- Ownership alignment: Meaningful skin-in-the-game (2.07% ownership), stock ownership guideline 6x salary; all executives in compliance.
- Say-on-Pay recovery: Significant improvement to 95.2% support in 2024 after design changes and outreach.
Employment Terms (Severance & CIC Economics)
- Double-trigger CIC with 3x multiple plus equity/SERP acceleration; 280G cutback, no gross-ups; severance 2.5x absent CIC. See potential payout estimates above.
Board Governance (Committee/Independence Snapshot)
- Combined Chair/CEO role; Lead Independent Director structure active. Independent committees: Audit & Risk (8 meetings in 2024), Compensation, and Nominating & Corporate Governance.
Director Compensation (for context)
- Non-employee directors receive $60,000 cash + $60,000 in restricted stock annually; committee chair stipends (Audit $25,000; Compensation $13,500; NCG $12,000); Lead Independent Director $15,000. (CEO receives no director fees.)
Equity Vesting & Potential Insider Selling Pressure
- Time-based DSUs vest one-third annually over three years; performance shares cliff-vest after three years subject to Core ROA (relative) and TSR modifier. Significant unvested/unearned balances (69,246 DSUs; 83,186 PSUs as of 12/31/2024) imply periodic tax-driven sales could occur at vest events; hedging is prohibited and pledging not permitted (grandfathered only).
Say‑on‑Pay & Shareholder Feedback
- 2024 Say-on-Pay approval 95.2%; 2023 approval 65.6% with targeted investor outreach driving subsequent design changes (higher PSU mix, TSR modifier, chair participation in engagements).
Investment Implications
- Alignment: High insider ownership (2.07%), 6x salary ownership guideline, and 55% PSU mix with relative TSR modifier support pay-for-performance; no hedging/pledging and robust clawback are positive governance signals.
- Retention/CIC: Double-trigger 3x CIC multiple with equity/SERP acceleration could be value-relevant in M&A; 280G cutback reduces shareholder-unfriendly optics.
- Execution risk: Credit watchpoints include increased special mention and substandard balances and continued CRE concentration; however, capital and liquidity metrics improved in 2024.
- Trading flows: Upcoming multi-year equity vesting cadence (DSUs annually; PSUs in 2026) may create episodic supply but is bounded by anti-hedging/pledging policies.
- Governance balance: Combined Chair/CEO role mitigated by an active Lead Independent Director and fully independent key committees; Say-on-Pay recovery to 95.2% suggests investor confidence in revised pay design.