Craig W. Best
About Craig W. Best
Craig W. Best (age 64) is President (since January 14, 2025) and became a Class A director on January 16, 2025; he succeeded as President & Chief Executive Officer on May 2, 2025 following the prior CEO’s retirement . He previously served as CEO and director of Peoples Financial Services Corp./Penn Security Bank & Trust (May 2020–Dec 31, 2024), President & CEO of Peoples Financial Services Corp./Peoples Security Bank & Trust (Nov 2013–May 2020), President & CEO of Penseco Financial Services/Penn Security Bank & Trust (2006–Nov 2013), and COO of First Commonwealth Bank (July 2000–Dec 2005) . Under Franklin’s pay-versus-performance framework, company TSR and net income are tracked alongside executive pay; 2024 net income was $11.1 million and value of $100 investment at 12/31/2024 was $94.90 (peer group $129.69) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Peoples Financial Services Corp. / Penn Security Bank & Trust | Chief Executive Officer and Director | May 2020 – Dec 31, 2024 | Led a regional community bank; board-level oversight and execution responsibilities . |
| Peoples Financial Services Corp. / Peoples Security Bank & Trust | President & Chief Executive Officer | Nov 2013 – May 2020 | Executive leadership of merged franchise post-Penseco transaction . |
| Penseco Financial Services Corp. / Penn Security Bank & Trust | President & Chief Executive Officer | 2006 – Nov 2013 | CEO through pre-merger phase, driving strategic growth and integration . |
| First Commonwealth Bank | Chief Operating Officer | Jul 2000 – Dec 2005 | Enterprise operations leadership at $6.2B institution . |
External Roles
| Organization | Capacity | Years | Notes |
|---|---|---|---|
| Peoples Financial Services Corp. | Public company director | 2020 – 2024 | Served as CEO and director prior to joining Franklin Financial . |
Fixed Compensation
| Component | Detail | Notes |
|---|---|---|
| Base Salary | $414,986 initial annual base; increases to $523,198 no later than April 30, 2025 | Per Employment Agreement effective Jan 14, 2025 . |
| Restricted Stock Grant | 1,500 shares of FRAF common stock | Vests six months and one day after Jan 14, 2025; subject to grant agreement . |
| Perquisites | Company automobile; club membership dues | Provided during employment per agreement . |
| Relocation | Up to $50,000 reimbursement | Requires primary residence within 35 miles of HQ (Chambersburg, PA) . |
Performance Compensation
Best is eligible to be considered for annual short- and long-term incentives under company plans . Franklin’s 2024 structure (in place at his arrival) ties awards to Net Income vs Budget and ROE vs peer group, plus individual and discretionary components for short-term incentives, and uses restricted stock for long-term incentives .
Short-term incentive structure (CEO template – 2024):
| Metric | Weight | Threshold Payout (as % of salary) | Target Payout | Outstanding Payout |
|---|---|---|---|---|
| Net Income vs Budget | 35% | 20% | 35% | 50% . |
| ROE vs Peer Median | 35% | 20% | 35% | 50% . |
| Individual Goals | 15% | 20% | 35% | 50% . |
| Discretionary | 15% | 20% | 35% | 50% . |
Long-term incentive structure (restricted stock; awards made for prior-year performance):
| Metric | Weight | Threshold | Target | Outstanding |
|---|---|---|---|---|
| Net Income vs Budget | 40% | 95%–99% of budget | 100%–110% | >110% . |
| ROE vs Peer Median | 60% | 95%–99% of peer median | 100%–110% | >110% . |
Clawback: The board has adopted a clawback policy for erroneously awarded incentive-based compensation .
Equity Ownership & Alignment
- Beneficial ownership as of Dec 31, 2024: not applicable (joined January 2025). The 12/31/2024 ownership table lists “–” for Craig W. Best .
- New-hire equity: 1,500 restricted shares granted January 14, 2025; vest on “six (6) months and a day” after grant; dividends apply to vested portions; forfeiture if terminated for cause or restrictive covenant breach .
- Shares outstanding: 4,440,442 as of March 10, 2025 (context for scale) .
- Hedging/pledging: The board reports it has not adopted a hedging policy for directors, officers and employees; pledging restrictions are not specified in the proxy’s anti-hedging/pledging section .
- Insider trading policy: The company maintains an Insider Trading Policy for directors, officers and employees .
Employment Terms
| Term | Provision | Notes |
|---|---|---|
| Agreement Duration | 3-year term beginning Jan 14, 2025 (through Jan 13, 2028) | Employment Agreement . |
| Role & Reporting | President until Transition; then President & CEO (no later than Apr 30, 2025); reports to boards | “Transition Date” defined; CEO by/before Apr 30, 2025; prior CEO retired May 2, 2025 . |
| Location | Must relocate primary residence within 35 miles of HQ | Relocation support up to $50,000 . |
| Non-Compete/Non-Solicit | 2-year non-compete and non-solicit post-termination within counties served or within 100 miles of any bank facility | Broad geographic scope; includes solicitation limits for customers and employees . |
| Severance (No CIC) | If terminated without cause or resigns for Good Reason: one year of base salary paid monthly plus up to one year of benefits continuation or reimbursement | Applies absent a Change in Control . |
| Severance (With CIC) | If terminated without cause after a Change in Control: lump sum of 1.5x base if within first 18 months of agreement; 2.99x base if after 18 months; plus up to two years of benefits continuation or reimbursement | Paid within 30 days of separation; subject to Code 409A . |
| Clawback/Code Sections | Arrangements structured to comply with 409A; 280G cutback applies if needed | Code 409A and 280G provisions included . |
Board Governance
- Board service: Class A director since January 16, 2025 .
- Independence: Not independent (executive officer); the board noted only the CEO and the President (Best) are not independent .
- Committees: Standing committees are chaired by independent directors; Best is not listed on standing committees in the committee matrix .
- Board leadership: Independent Chairman (G. Warren Elliott); committees include Audit, Compensation & Personnel, Nominating & Corporate Governance, Asset-Liability, Strategic, Enterprise Risk, Executive, Trust .
- Executive sessions: Independent directors meet at least quarterly in executive session .
- Attendance/engagement: In 2024, the board and committees held 60 meetings; all directors attended at least 75% and the annual meeting .
Performance & Track Record (Company Context)
Company profitability and shareholder return trends relevant to incentive metrics:
| Metric | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Net Income ($000s) | 12,800 | 14,938 | 13,598 | 11,099 |
| Value of $100 Investment (FRAF) | 127.49 | 113.44 | 103.53 | 94.90 |
| Value of $100 (Peer Group) | 109.72 | 116.90 | 129.69 | 129.69 |
Additional 2025 context: By March 31, 2025, net interest margin improved to 3.05% (vs 2.88% in Q1’24), assets grew to $2.26B, and market value per share rose to $35.45 from $29.90 at year-end 2024 .
Say‑on‑Pay & Shareholder Feedback
- 2025 Annual Meeting (April 29, 2025): Say‑on‑Pay approved (For 2,075,905; Against 148,048; Abstain 87,443; 586,870 broker non‑votes) .
- 2025 ESPP approved (For 2,179,769; Against 71,789; Abstain 59,838; 586,870 broker non‑votes) .
- 2024 Proxy noted prior year Say‑on‑Pay was approved by a majority of votes cast; the Compensation & Personnel Committee maintained its policies and practices accordingly .
Compensation Committee Analysis
- Independence: Compensation & Personnel Committee is fully independent .
- Consultant: In 2024, the committee retained PRJ Consulting (fees: $53,000) to advise on director and executive compensation and incentive plan design .
- Incentive design: Balanced mix of financial (Net Income, ROE vs peers) and individual/discretionary factors; long‑term incentives delivered in restricted stock, typically vesting over three years (one‑year for directors), and subject to clawback .
Equity Vesting & Potential Selling Pressure
- Time‑based vesting: Best’s 1,500 restricted shares vest six months and one day after grant (post‑July 2025), which can create a one‑time liquidity event upon vesting; no automatic sale is implied or disclosed .
Related Party, Hedging/Pledging, and Risk Flags
- Related party transactions are reviewed per policy; loans to insiders were on market terms; no problematic insider loans disclosed .
- Hedging/pledging: The company reports no adopted hedging policy for insiders; pledging restrictions not specified; Insider Trading Policy applies .
- Clawback policy in place covering short‑ and long‑term incentive compensation .
- No SEC investigations or legal proceedings disclosed as material in the 2024 Form 10‑K .
Investment Implications
- Alignment: Best’s package blends market‑rate base pay with at‑risk incentives linked to Net Income and ROE vs peers, plus a meaningful but modest new‑hire equity grant with near‑term vesting and a robust clawback—supportive of pay‑for‑performance alignment .
- Retention/Transition: A three‑year term, one‑year severance protection, and generous CIC protections (up to 2.99x salary after 18 months) reduce leadership transition risk as he assumes CEO duties; non‑compete and relocation covenants further anchor retention to the franchise .
- Governance: Independent chair, fully independent compensation/audit committees, and quarterly executive sessions mitigate dual‑role risks associated with an executive director who is not independent .
- Performance Base: Recent results show solid loan/deposit growth and margin improvement into 2025, but multi‑year TSR underperformed the peer group through 2024; the incentive mix (ROE vs peers and earnings) provides a credible line‑of‑sight for improvement under Best’s leadership .
Appendix: Key Company Voting and Capital Data
- Shares outstanding: 4,440,442 as of March 10, 2025 .
- 2025 Annual Meeting outcomes: Director elections passed; Say‑on‑Pay approved; ESPP approved; Auditor ratified .