Neelesh Kalani
About Neelesh Kalani
Neelesh Kalani, CPA (age 50), is Executive Vice President and Chief Financial Officer of Orrstown Financial Services, Inc. and Orrstown Bank, appointed in April 2021 after joining in 2020 as Senior Vice President and Chief Accounting Officer . He previously served over seven years as Chief Accounting Officer at Sun Bancorp, held comparable accounting leadership roles at Harleysville National Corporation and Willow Financial Bancorp, and spent seven years in KPMG’s financial services audit practice, bringing deep public company reporting and bank audit expertise . Recent performance under his tenure includes Adjusted Net Income of $52.0 million versus a $34.0 million target and Adjusted ROAE of 13.25% versus a 12.19% target for 2024 , and three-year total shareholder return at the 100th percentile versus compensation peers; the company achieved its 18% cost-savings integration target following the Codorus Valley merger by year-end 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Orrstown Financial Services, Inc. | EVP & CFO | Since Apr 2021 | Finance leadership; capital allocation; investor and regulatory reporting |
| Orrstown Financial Services, Inc. | SVP & Chief Accounting Officer | 2020–Apr 2021 | Led SEC reporting, accounting controls and policy |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Sun Bancorp, Inc. | Chief Accounting Officer | Over 7 years | Public company financial reporting leadership |
| Harleysville National Corporation | Accounting leadership (comparable roles) | — | Bank reporting and controls |
| Willow Financial Bancorp, Inc. | Accounting leadership (comparable roles) | — | Bank reporting and controls |
| KPMG LLP | Financial services audit | 7 years | External audit; GAAP/ICFR expertise |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | 331,500 | 338,130 |
| Year-over-Year Change (%) | — | 2.0% |
| Cash Bonus ($) | — | — |
Performance Compensation
| STIP Structure (2024) | Threshold | Target | Maximum | Actual |
|---|---|---|---|---|
| % of Base Salary | 20% | 40% | 60% | 60% |
| $ Potential / Paid | $67,626 | $135,252 | $202,878 | $202,878 |
| Performance Metrics | Net Income (50%) | ROAE (50%) | Credit quality modifier | Achieved maximum on Net Income and ROAE; modifier satisfied |
| LTIP Awards (Granted in 2025 for 2024 Performance) | Target Opportunity ($) | Payout as % of Target | Total Value ($) | Time-Vested Award ($ / #) | Performance RSU ($ / #) | Vesting Terms |
|---|---|---|---|---|---|---|
| 2025 Grants (Feb 16, 2025) | 135,252 | 150% | 202,850 | $101,425 / 3,015 shares (vest 33% each on Feb 16, 2026–2028) | $101,425 / 3,015 units (vest Feb 16, 2028; ROAA + TSR modifier) | ROAA three-year goals + TSR ±20% modifier; contingent on 2025 Plan approval |
| 2024 Grant of Plan-Based Awards | Grant Date | Time-Vested RS (Target #) | Performance RSU (Target #) | Integration Performance RS (Target/Max #) | Grant Date Fair Value ($) |
|---|---|---|---|---|---|
| Annual LTIP | 2/16/2024 | 4,316 | 4,316 | — | $119,337 (each LTIP component) |
| Merger Integration Award | 7/1/2024 | — | — | 7,500 / 10,000 (vest Jul 28, 2025 if 18–20% cost savings achieved) | $273,600 |
| Vesting Outcomes (Prior Cycle) | Initial RSU Award at Target | RSUs Earned at Target | RSUs After TSR Modifier |
|---|---|---|---|
| 2022 RSU Cycle (vested in 2024) | 2,848 | 2,848 | 3,417 (TSR +20% at 96th percentile) |
Equity Ownership & Alignment
| Ownership Detail (as of dates shown) | Value |
|---|---|
| Common shares beneficially owned (Mar 3, 2025) | 39,693 |
| Shares outstanding (record date for 2025 meeting) | 19,505,444 |
| Ownership as % of shares outstanding | ~0.20% (computed from above) |
| Unvested time-based restricted shares (12/31/2024) | 20,888; MV $764,710 (@ $36.61) |
| Unearned performance RSUs (12/31/2024) | 10,888; MV $398,610 (@ $36.61) |
| Options (exercisable/unexercisable) | None outstanding for NEOs at 12/31/2024 |
| Stock grants contingent on 2025 Plan | 3,015 RSUs (CFO) |
| Stock ownership guidelines for NEOs | Company does not maintain NEO ownership guidelines (unless also directors) |
| Hedging/pledging | Prohibited for directors/executives (anti-hedging/anti-pledging policy) |
| Clawback policies | Nasdaq Rule 10D-1 compensation recovery policy; broad plan-level clawbacks; automatic clawback if Bank not “well-capitalized” |
| Stock Vested in 2024 | Shares | Value Realized ($) |
|---|---|---|
| RS/RSU vesting (CFO) | 15,620 | 426,974 |
Employment Terms
| Executive Employment Agreement Key Terms | Details |
|---|---|
| Term | CFO has a three-year term; auto-extends one year unless non-renewed with ≥60 days’ notice |
| Severance (no CIC) | If terminated without cause or resigns for “good reason”: base salary plus average cash bonus over past three years, paid for the greater of remaining term or six months; six months benefits or cash in lieu; 150% life insurance premium for 3 years |
| Good Reason | Material breach; adverse changes to duties/comp/benefits/reporting; relocation ≥75 miles |
| Death/Disability | Lump-sum 6 months base salary; COBRA health coverage; disability: 6 months base salary + COBRA + 150% life insurance premium for 3 years; thereafter 60% of base salary to age 65 (offsets) |
| Non-compete/Non-solicit | During employment and for greater of six months post-termination or severance period (not to exceed 24 months) |
| Potential Benefits if Terminated (no CIC) — as of 12/31/2024 | Involuntary without Cause | Voluntary for Good Reason | Retirement | Disability | Death |
|---|---|---|---|---|---|
| Cash Severance ($) | 965,823 | 965,823 | 169,065 | 169,065 | 169,065 |
| Health & Welfare ($) | 2,160 | 2,160 | 2,160 | 2,160 | — |
| Total ($) | 967,983 | 967,983 | 171,225 | 171,225 | 169,065 |
| Change-in-Control (CIC) Benefits — assumed CIC + termination at 12/31/2024 | Cash Benefit ($) | Equity Acceleration ($) | Health/Welfare ($) | Total ($) |
|---|---|---|---|---|
| CFO (Kalani) | 1,461,151 | 764,710 | 22,080 | 2,247,941 |
Additional CIC provisions: time-based restricted stock fully vests upon a “change of control or ownership”; RSUs vest per award agreement; the CVLY merger triggered acceleration of time-based restricted stock but RSUs remained outstanding . Non-PEO NEOs (including CFO) have 280G cutback/optimization; only the CEO has an excise tax gross-up .
Compensation Structure and Peer Benchmarking
- Pay mix links cash and equity to performance: STIP and LTIP determined by Net Income and ROAE (50% each) with LTIP forward performance vesting based on ROAA and TSR modifier up to ±20% .
- 2024 outcomes: Adjusted Net Income $52.0M vs $34.0M target and Adjusted ROAE 13.25% vs 12.19% target drove maximum payouts under STIP/LTIP initial earnouts; STIP paid at maximum and credit-quality modifier was satisfied .
- Peer benchmarking: For 2024, compensation was assessed against a 18-bank peer set (assets $2.2–$6.0B); a larger 20-bank peer group was adopted for 2025 post-merger. TSR ranked at the 100th percentile versus both the existing and new peer groups over 2022–2024 .
- Shareholder feedback: 80.5% say-on-pay approval at 2024 meeting; ongoing engagement with holders of ~43% of outstanding shares, with positive feedback on merger integration, performance, and comp design .
Related Policies, Governance, and Committees
- Anti-hedging/anti-pledging policy for directors/executives (risk mitigation) .
- Clawbacks: Nasdaq 10D-1 compensation recovery policy; plan-level clawback/forfeiture; automatic clawback if not “well-capitalized” .
- 2025 Stock Incentive Plan: No evergreen; minimum 1-year vesting; no liberal share recycling; no option re-pricing without shareholder approval; independent committee oversight; 440,000 share pool; clawback applies .
- Compensation Committee: John W. Giambalvo (Chair), Scott V. Fainor, J. Rodney Messick, Michael J. Rice, Joel R. Zullinger ; independent consultant Aon engaged in 2024, with independence affirmed .
Investment Implications
- Pay-for-performance alignment: Cash and equity awards are tightly linked to Net Income/ROAE (annual) and ROAA/TSR (three-year), reinforcing shareholder value creation and disciplined credit quality; TSR outperformance supports incentive calibration .
- Retention vs supply dynamics: Material unvested equity (time-based and performance RSUs) through 2028 and a near-term integration grant vesting on July 28, 2025 could create mechanical share withholding/sales for tax, modestly increasing short-term supply, while enhancing retention incentives through multi-year vesting .
- Governance and risk: Robust clawback, anti-hedging/pledging, and no option re-pricing limits mitigate misalignment; absence of NEO stock ownership guidelines is a neutral factor partly offset by significant unvested/equity-based incentives and prohibitions on pledging .
- CIC economics: CFO’s CIC package totals ~$2.25M including equity acceleration tied to performance awards; 280G cutback provisions (no tax gross-up) limit shareholder-unfriendly payouts and reduce parachute risk compared to typical small-cap banks .
Overall, Kalani’s compensation structure is performance-weighted with clear ROAA/TSR hurdles and clawback protections. Upcoming vesting events and strong TSR execution indicate management confidence; watch integration milestones and vesting dates (Feb 16, 2026–2028; Jul 28, 2025) for potential flow-through effects on insider share settlements and monitor Form 4 activity for actual selling.