Orrstown Financial Services Inc. (NASDAQ:ORRF) has entered into new compensatory arrangements with key executives, as disclosed in a recent SEC filing. The company, headquartered in Harrisburg, Pennsylvania, reported on Thursday that it had finalized agreements to incentivize the continued service of Craig L. Kauffman and Thomas R. Quinn, Jr.
The Salary Continuation Agreement with Craig L. Kauffman, the Executive Vice President and Chief Operating Officer, outlines benefits payable in monthly installments over a 15-year period after his separation from service, assuming certain conditions are met. The benefits, which commence following Kauffman’s retirement or termination under specific circumstances, could amount to an annual benefit of $357,260, subject to incremental increases if separation occurs after the normal retirement age.
Additionally, the company has amended the existing Salary Continuation Agreement with President and CEO Thomas R. Quinn, Jr. This amendment increases the annual benefit payable to Mr. Quinn upon separation or death. The adjustment reflects an increase of 0.3274% per month for each full month beyond the normal retirement age until separation or death, up to a maximum of 60 months. Mr. Quinn reached the age of 65 on April 25, 2024.
The agreements include provisions for early termination, change in control, disability, and posthumous benefits, with specific conditions leading to forfeiture of these benefits, including termination for cause or competition with the company. Orrstown Bank, a wholly-owned subsidiary of Orrstown Financial Services, has also secured a whole life insurance policy on Mr. Kauffman, with the bank as the beneficiary.
InvestingPro Insights
As Orrstown Financial Services Inc. (NASDAQ:ORRF) reinforces its executive retention strategy, it's also noteworthy to consider the company's financial health and market performance. With a market capitalization of $546.4 million and a trailing P/E ratio of 15.09, Orrstown Financial shows a solid valuation framework. The company's commitment to shareholder returns is evident, as it has raised its dividend for 9 consecutive years, and boasts a healthy dividend yield of 2.96% as of the latest data.
InvestingPro Tips highlight that Orrstown Financial is currently trading at a low P/E ratio relative to near-term earnings growth, which could signal an attractive entry point for value investors. Additionally, analysts predict the company will be profitable this year, reaffirming its financial stability. It's important for investors to note that while the company has maintained dividend payments for 10 consecutive years, it does suffer from weak gross profit margins. These insights, along with 3 additional InvestingPro Tips available on the platform, can help investors make informed decisions.
Interested readers can gain further exclusive insights and benefit from additional tips by using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro. With a next earnings date set for July 23, 2024, stakeholders will be keenly anticipating the company's financial updates and the impact of the new executive compensation agreements on its long-term growth trajectory.
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