Frank A. Cavallaro
About Frank A. Cavallaro
Senior Executive Vice President and Chief Financial Officer of Peapack-Gladstone Financial Corporation (Peapack Private Bank & Trust). Joined October 2022 as SEVP and became CFO in November 2022; has more than 30 years of experience across financial institutions and CPA firms; B.S. in Accounting from Rutgers University and Certified Public Accountant . 2024 performance context: core deposits grew $1.2B (+30%) with top-decile peer rankings, liquidity ratio improved to 17.1% (from 12.1%), loan-to-deposit improved to 90% (from 103%), and one-year TSR ranked at the 82nd percentile vs NJ bank peers; three-year TSR at 50th percentile and five-year at 55th percentile . Executive compensation structure emphasizes pay-for-performance: STI tied 60% to EPS and 40% to pre-tax income before credit loss provision; LTI vests 60% on 3-year performance vs peers (EPS growth, TSR, core deposit growth, credit quality) and 40% time-based .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Republic Bank | EVP & Chief Financial Officer | 2009–2022 | Senior finance leadership; 30+ years industry experience referenced in background |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| None disclosed | — | — | — |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $375,000 | $386,250 (3% increase) |
| All Other Compensation ($) | $38,077 | $20,700 (Company 401(k) contribution) |
2022 included a $200,000 bonus at hire and $57,693 salary (partial year) .
Performance Compensation
Short-Term Incentive (STI) – Cash
| Item | Details |
|---|---|
| Metrics & Weighting | EPS (60%) and pre-tax income before provision for credit losses (40%); minimum 75% Company performance weighting; up to 25% individual/strategic weighting |
| 2024 Company Performance vs Budget | Adjusted EPS $2.44 vs budget $2.27 (+7%); adjusted pre-tax before credit losses $65.76mm vs budget $69.45mm (−5%); overall deemed Target level |
| 2024 Individual/Strategic Rating | Target+ applied to NEOs’ STI payout determination |
| 2024 STI Paid | $248,624, equal to 64.37% of base salary (Company-related 48.28% + Individual-related 16.09%) |
| STI Schedule (% of Base Salary) | Threshold | Target | Maximum |
|---|---|---|---|
| Cavallaro (2024 plan paid March 2025) | 45% | 60% | 95% |
Long-Term Incentive (LTI) – Restricted Phantom Stock Units (granted March 20, 2024)
| Grant Date | Total Grant Fair Value ($) | Units (Total) | Time-Vested Units | Performance-Vested Units (Target) | Vesting Terms |
|---|---|---|---|---|---|
| 3/20/2024 | $262,474 | 10,973 | 4,389 ($140,667 mkt at 12/31/24) | 6,584 ($211,017 mkt at 12/31/24) | Time-based vests in 3 equal annual installments beginning on the anniversary of the grant date; performance-based cliff vests after 3 years based on relative metrics vs peer group |
| Performance Metrics (60% of LTI) | Weight | Measurement |
|---|---|---|
| EPS Growth (relative) | 30% | 3-year relative EPS growth vs compensation peer group |
| Total Shareholder Return (relative) | 30% | 3-year relative TSR vs compensation peer group |
| Core Deposit Growth (relative) | 20% | 3-year relative core deposit growth vs peers |
| Credit Quality (relative) | 20% | Two credit quality metrics vs peers |
| LTI Award Opportunity Mix (% of Base Salary) | Threshold | Target | Maximum |
|---|---|---|---|
| Cavallaro (2024 LTI grant based on 2023 performance) | 70% | 110% | 170% |
Company transitioned to cash-settled phantom stock in 2024 to mitigate dilution; dividends on unvested awards are not paid until vesting; awards subject to clawback; no option repricing/cash-out without shareholder approval .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (3/5/2025) | 8,542 shares; includes 1,614 restricted stock units; “Percent of class” is less than one-half of one percent (“*”) |
| Outstanding Unvested Units (12/31/2024) | 4,389 phantom (time-based); 6,584 phantom (performance-target); total market values $140,667 and $211,017, respectively at $32.05 |
| Ownership Guidelines | Executives must maintain one times base salary in Company stock; until achieved, must retain 100% of net shares from grants; NEOs are in compliance |
| Hedging/Pledging | Hedging prohibited; pledging/margin accounts prohibited |
| Trading Controls | Section 16 officers must pre-clear transactions; blackout periods apply |
Employment Terms
| Provision | Terms |
|---|---|
| Agreement Term | 3-year term; auto-renews annually to maintain 3-year remaining term unless notice given at least 30 days before renewal |
| Base Salary Adjustment | May be increased but not decreased without executive’s written consent |
| Severance (No CIC) | If involuntary termination without cause or resignation for good reason: severance equals greater of (1) 2x base salary or (2) remaining-term salary; payable over 2 years |
| Severance (CIC – Double Trigger) | If terminated without cause or resigns for good reason within 24 months of CIC: lump sum equal to 3x (base salary + greater of average annual cash bonus for prior 3 years at least target, or most recent annual bonus); plus COBRA reimbursements for 18 months and potential further 18 months cap |
| Restrictive Covenants | One-year non-compete/non-solicit post-termination (except following CIC provisions) |
| Clawback | EPP awards subject to clawback (SOX 304; Dodd-Frank policy); 2025 plan includes clawback triggers |
| Tax Gross-Ups | No 280G excise tax gross-ups |
Potential Payments – Cavallaro (Hypothetical at 12/31/2024)
| Scenario | Cash Severance | Equity Acceleration | Phantom Acceleration | Welfare Benefits Continuation | Total |
|---|---|---|---|---|---|
| Death/Disability | — | $103,522 | $351,684 | — | $455,206 |
| Voluntary Resignation/Cause | — | — | — | — | $0 |
| Retirement | — | $103,522 | $351,684 | — | $455,206 |
| Dismissal Without Cause (no CIC) | $772,500 | — | — | — | $772,500 |
| Dismissal Without Cause or Good Reason (post-CIC) | $1,627,500 | $103,522 | $351,684 | $56,572 | $2,139,278 |
Say-on-Pay & Shareholder Feedback
- 2024 Say-on-Pay support: 87% of votes cast approved NEO compensation .
- Shareholder engagement drove move to cash-settled phantom stock (reduce dilution) and rebalancing of STI/LTI mix while preserving performance emphasis .
Compensation Peer Group and Benchmarking
- Committee uses an external 20-bank peer set for market benchmarking; does not target fixed percentiles, applying judgment across market data, performance, role scope, skill needs, and succession .
- LTI performance is assessed relative to peers on EPS growth, TSR, core deposit growth, and credit quality .
Performance Context (Company-Level)
| Metric | 2024 Reported | 2024 Adjusted | 2024 Budget | Variance (Reported vs Budget) | Variance (Adjusted vs Budget) |
|---|---|---|---|---|---|
| Pretax income before provision for loan losses ($mm) | $52.45 | $65.76 | $69.45 | −$17.00 (−24%) | −$3.69 (−5%) |
| Diluted EPS ($) | $1.85 | $2.44 | $2.27 | −$0.42 (−19%) | +$0.17 (+7%) |
Additional highlights: core deposits +$1.2B (+30%) with top-decile peer percentile ranks; liquidity ratio 17.1% (from 12.1%); loan-to-deposit improved to 90% (from 103%); one-year TSR 82nd percentile vs NJ bank peers; TBV/share up 5% to $31.89 .
Investment Implications
- Compensation alignment: STI and LTI designs explicitly tie payouts to EPS and pre-tax performance vs budget and multi-year relative peer metrics; clawback, anti-hedging/pledging, and stock ownership requirements strengthen alignment and risk controls .
- Dilution mitigation: 2024 shift to cash-settled phantom units reduces equity burn and shareholder dilution while maintaining performance-based vesting; dividends deferred until vesting .
- Retention risk: Strong severance economics (3x salary+bonus on double-trigger CIC) and multi-year LTI cliff vesting bolster retention; one-year non-compete/non-solicit provides transition protection .
- Near-term selling pressure: Time-based phantom units from the March 2024 grant vest in three equal installments beginning on the anniversary of grant, creating predictable vesting events; pre-clearance and blackout policies limit opportunistic trading .
- Pay-for-performance credibility: 2024 STI paid at 64.37% of salary reflects Target company performance and Target+ individual performance; say‑on‑pay support (87%) and peer-relative improvement in 1‑year TSR support compensation strategy credibility .