UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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Securities Exchange Act of 1934
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ORRSTOWN FINANCIAL SERVICES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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March 19, 202031, 2023
Dear Shareholder:
On behalf of the Board of Directors, management and managementemployees of Orrstown Financial Services, Inc. (the “Company”), the holding company for Orrstown Bank, I cordially invite you to attendparticipate in our 20202023 Annual Meeting of Shareholders (the “Annual Meeting”). The Annual Meeting will again be held at the H. Ric Luhrs Performing Arts Center, 1871 Old Main Drive, Shippensburg, Pennsylvaniavirtually via live webcast on Tuesday, April 28, 2020,May 2, 2023, at 9:00 a.m., local time. Shareholders will not be able to attend the Annual Meeting in person. The proxy statement included with this letter details how you can participate in the Annual Meeting.
The attached Notice of Annual Meeting and Proxy Statement describe the formal business we expect to act upon at the Annual Meeting. We will also report on our results of operations. Our directors and officers, as well as representatives of Crowe LLP, our independent registered public accounting firm, will be present to respond to shareholder questions.
You will be asked to: (i) elect the Board’s three nominees for director; (ii) provide a non-binding advisory vote approving the compensation paid to our Named Executive Officers as disclosed in the attached proxy statement (“Say-on-Pay”); and (iii) ratify the Audit Committee’s selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. The Board of Directors of the Company has determined that the affirmative vote "FOR" all nominees for director and "FOR" all proposals to be considered at the Annual Meeting is in the best interests of the Company and its shareholders and unanimously recommends a vote “FOR” the election as directors to Class A of the three"FOR" all nominees listed in the enclosed Proxy Statement; “FOR”, approval of the advisory vote on compensation paid to our Named Executive Officers; and “FOR” ratification of the Audit Committee’s selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.proposals.
Your vote is important, regardless of the number of shares you own. We encourage you to vote by proxy so that your shares will be represented and voted at the Annual Meeting even if you cannot attend. There are a number ofMeeting. We offer several ways for shareholders to vote. Voting can vote.You can votebe completed by returning the enclosed Proxy Card,proxy card, online, or by phone orusing your mobile device. Voting by proxy will not prevent you may vote in person at the meeting if you so choose. If you do decide to attendfrom voting during the Annual Meeting, and feel for whatever reasonbut will ensure that you want to change your vote at that time,is counted if you will be able to do so.cannot participate.

We thank you for your continued support of the Company and Orrstown Bank, and look forward to your participation at the Annual Meeting. 
Sincerely,
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Thomas R. Quinn, Jr.
President and Chief Executive Officer




 

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ORRSTOWN FINANCIAL SERVICES, INC.
77 East King Street
Shippensburg, Pennsylvania 17257

 
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 2020MAY 2, 2023

The Annual Meeting of Shareholders of Orrstown Financial Services, Inc. (the “Company”), the holding company for Orrstown Bank, will be held virtually on Tuesday, April 28, 2020, May 2, 2023, at 9:00 a.m., at the H. Ric Luhrs Performing Arts Center, 1871 Old Main Drive, Shippensburg, Pennsylvania, local time, to consider and take action on the following matters:
1.Elect three (3) directors toTo elect four Class A director nominees to serve on our Board of Directors for three (3) year termsa three-year term expiring in 2023;2026;
2.ApproveTo approve a non-binding advisory vote regarding the compensation paid to our Named Executive Officers (“Say-On-Pay”);
3.RatifyTo approve a non-binding advisory vote on the frequency of holding the Say-On-Pay vote ("Say-On-Frequency"); and
4.To ratify the Audit Committee’s selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020; and2023.
4.Transact such other business as may properly come before the annual meeting.

Any action may be taken on the foregoing matters at the Annual Meeting on the date specified above, or on any date or dates to which the Annual Meeting may be adjourned, or to which the Annual Meeting may be postponed.
Your Board of Directors recommends a vote “FOR” the election of all nominees as directors to Class A of the three nominees listed in the enclosed proxy statement; “FOR” approval of the non-binding advisory vote onregarding the compensation paid to our Named Executive Officers; “FOR” approval of the non-binding advisory vote to hold our Say-On-Pay vote annually; and “FOR” ratification of the Audit Committee’s selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2023.
This Notice of Annual Meeting of Shareholders, the proxy statement and the enclosed proxy card are being mailed on or about March 19, 202031, 2023 to shareholders of record at the close of business on March 12, 2020.3, 2023. A copy of the Annual Report on Form 10-K for the year ended December 31, 20192022 is also enclosed.

Sincerely,
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Robert G. Coradi
Secretary
March 31, 2023
March 19, 2020
Important Notice Regarding Internet Availability of Proxy Materials
for the Annual Meeting of Shareholders to be
Held Virtually on April 28, 2020May 2, 2023 at 9:00 a.m.
The Proxy Statement and Annual Report to
Shareholderson Form 10-K are available on the Internet at

http:https://www.cstproxy.com/orrstown/20202023



Table of Contents
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Section 16(a) Beneficial Ownership Reporting Compliance9 
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Nomination of Directors10 
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Director Independence12 
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Compensation Of Directors15 
2019 Director Compensation Table15 
Information About Executive Officers 16 
Compensation Discussion and Analysis17 
2019 Pay Ratio Disclosure29 
Methodology for Determining Median Employee Compensation29 
Potential Payments Upon Termination Or Change in Control29 
Compensation Committee Report33 
Compensation Risk Assessment33 
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A Non-Binding Advisory Vote to Approve the Compensation Paid to Our Named Executive Officers.34 
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ABOUT ORRSTOWN
Orrstown Financial Services, Inc. (NASDAQ: ORRF) ("Orrstown" or the "Company"), a Pennsylvania corporation, is the financial holding company for its wholly-owned subsidiary Orrstown Bank (the "Bank"). The Company’s principal executive offices are located at 77 East King Street, Shippensburg, Pennsylvania, with additional executive and administrative offices at 4750 Lindle Road, Harrisburg, Pennsylvania. The Company was organized on November 17, 1987 for the purpose of acquiring the Bank and such other banks and bank-related activities as are permitted by law and desirable. The Company provides banking and financial advisory services located in south central Pennsylvania, principally in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania, and in Anne Arundel, Baltimore, Howard and Washington Counties, Maryland, as well as Baltimore City, Maryland. The Company’s lending area also includes adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia.

CORPORATE SOCIAL RESPONSIBILITY AND ESG
We understand the importance of corporate social responsibility and environmental, social and governance (“ESG”) matters to our stakeholders and are working diligently to have a positive social impact and contribute to environmental sustainability inside and outside of our communities.
The Board of Directors plays an important role in assessing our corporate social responsibility and ESG efforts and understanding the various risks and potential impact that these issues may have on our businesses. The Board of Directors monitors our corporate social responsibility and ESG practices directly and through its various standing committees. The Board and its committees receive periodic updates on the status of our corporate social responsibility and ESG initiatives, and review and manage the risks associated with these areas. For example, the Compensation Committee and the Nominating and Governance Committee each reviews our diversity and inclusion initiatives and the Enterprise Risk Management Committee assesses the environmental risks to our businesses, including the potential risks associated with climate change. In addition, throughout the COVID-19 pandemic, the Board of Directors and various committees were actively engaged managing the Company’s response to the pandemic and ensuring the safety of our employees, clients and communities, and remain focused on their safety as COVID-19 transitions to endemic status.
Highlights of our corporate social responsibility and ESG initiatives in 2022, as well as the impact these efforts have had, are discussed below.
Community Engagement and Impact. As a community bank, commitment to our clients, employees and the communities we serve is at the core of who we are, and focusing on social issues is part of our 103 year DNA. This commitment is made explicit in our mission statement: we create value for our shareholders by providing outstanding client experiences through community engagement and local decisions from people you know and trust. We continue to promote first time homebuyer programs, participate in Baltimore’s Healthy Neighborhoods program, and have taken a boots-on-the-ground approach to disaster relief wherever it is most needed. We offer the BankOn certified checking account to increase access to the unbanked and underbanked through a no fee account offering. Our employees contributed thousands of hours of volunteer service during 2022, and we encourage them to be active in their local communities.
In 1919, when the Bank was established, we committed to supporting the people of Orrstown and surrounding communities. In 2006, The Orrstown Bank Foundation (the "Foundation") was created to carry that legacy forward. The Foundation strives to make a positive impact on the quality of life throughout our market area by providing financial aid to a wide variety of charitable organizations that address humanitarian and civic needs. In 2022, the Foundation made aggregate charitable donations of $83,000 to numerous charitable organizations within our market area. In addition, the Foundation places an emphasis on developing future leaders through an active scholarship program that promotes higher education by offering scholarships to high school students within the communities that we serve who wish to further their education. The Foundation awarded approximately $17,000 in scholarship money to such students in 2022. The Bank also maintained involvement in the Commonwealth’s Educational Improvement Tax Credit program, donating $750,000 to qualifying entities in 2022 and began participating in the Commonwealth's Neighborhood Assistance program, donating $125,000 to qualifying entities in 2022.
Perhaps the most impactful example of our commitment to community engagement was our participation in the U.S. Small Business Administration's Paycheck Protection Program ("PPP"). Initially, the Bank viewed PPP primarily as an opportunity to support its existing clients during unprecedented times. However, it quickly became apparent that many businesses in the Bank's market area were not gaining access to PPP funding through other financial institutions. Because Orrstown had the ability to provide the much needed support and attention that these businesses desperately needed, we pivoted and expanded our efforts to serve small businesses across our footprint, regardless of client status. As a result of these efforts, we were able to introduce over 2,500 new clients to the Orrstown Bank relationship-based business model, which we believe is helping to accelerate the Bank's growth efforts. Ultimately, the Bank originated nearly 6,500 PPP loans totaling $699.4 million with an average loan size of $107,636, helping to save approximately 50,000 jobs for the life of the program. We are proud of the positive impact that our efforts have had on our clients, their employees and their local communities.

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About
Diversity and Inclusion. For the first 96 years following the Bank's founding in 1919, the Bank served a relatively small and demographically homogeneous market. As the world has changed in the years since 1919, Orrstown Bank has changed with it. Beginning with the 2015 expansion into the Company’s Eastern market, centered in Lancaster County, Pennsylvania, the Company has expanded into markets with higher degrees of cultural and ethnic diversity, and adapted our products and services to the needs of these communities. The Bank’s previously discussed success in PPP lending serves as an example of direct outreach to a specific underserved community within the Company’s markets. Upon understanding that the Latino community of Lancaster was not getting sufficient access to PPP funds, Orrstown translated the PPP loan application to Spanish and engaged in educational efforts about the program through appearances on Spanish language radio. As a result of this outreach, we made 75 PPP loans for $530,000 to Latino-owned businesses, savings hundreds of jobs in the process.
The Company and its Board of Directors believes that it is critically important that our employee base reflect the communities that we serve. Each of the Company's regional advisory boards, comprised of a diverse group of local business leaders, serves an important role in promoting Orrstown Bank among their contacts in the community and also benefits the Bank by providing an important perspective on local conditions. Additionally, our regional advisory boards serve as a potential source of new directors as the Company continues to ensure that the make up of its Boards are reflective of the communities we serve. The Bank’s Diversity & Inclusion Council, which is comprised of 11 employees with diverse points of view from all levels within the organization, took concrete steps in 2022 to diversify the Bank’s job applicant pool. Orrstown Bank job openings are posted directly at Historically Black Colleges and Universities within the Company’s market area. The Diversity & Inclusion Council has adopted a strategic plan with the following objectives:
•Communicate the organization's top-down commitment to diversity and inclusion;
•Create a more diverse workforce reflective of the communities we serve;
•Harness diversity as a competitive advantage;
•Highlight important cultural holidays and months;
•Select and implement meaningful training and employee experiences;
•Address financial literacy disparities in the communities we serve;
•Partner with existing community-based organizations to enhance educational and employment opportunities for diverse persons in our community; and
•Become a thought and action leader among our peers and the communities we serve.
In addition, the Company's President and Chief Executive Officer, Thomas R. Quinn, Jr., has signed the CEO ACTION for Diversity & Inclusion Pledge, which makes the following commitments:
•We will continue to make our workplaces trusting places to have complex, and sometimes difficult, conversations about diversity and inclusion;
•We will implement and expand unconscious bias education;
•We will share best—and unsuccessful—practices; and
•We will create and share strategic inclusion and diversity plans with our Board of Directors.
The Board of Directors receives periodic reports on the progress of these initiatives and takes an active role in overseeing their implementation, providing support and guidance as appropriate.
The Board of Directors continuously reviews applications for Board membership. The Board of Directors believes that a diversity of backgrounds and experiences results in a diversity of opinions, which in turn results in more rigorous debate and analysis and, ultimately, better outcomes. Although the Company was already in compliance with the Nasdaq Stock Market's Board diversity rules, the Board of Directors appointed a director who identifies as a member of an ethnic minority to the Board of Directors of the Company and the Bank in 2022, and the Nominating and Governance Committee is actively recruiting additional qualified candidates who identify either as female, a member of an ethnic or racial minority, or LGBTQ+.
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Orrstown Financial Services, Inc. (NASDSAQ: ORRF) isEnvironmental. Environmental issues and concerns have risen in prominence with investors in recent years. While, as a financial services provider, the holding companyCompany does not engage in activities resulting in the risk of significant environmental degradation, as a community bank, we are conscious that we have an obligation to serve as a good steward for Orrstown Bank, which tracesthe environment. We continue to engage in alternative energy (solar) lending, employ recycling programs at all facilities, and have no direct exposure to fracking or the fossil fuel extraction industry. Additionally, bank regulators have identified climate change as a significant risk for financial institutions and are believed to be working on a framework to assess and quantify risks (business, credit, and other) associated with climate change.
The Company has received an increasing number of inquiries regarding its rootspolicies on various social and environmental issues. The following table answers many of the questions asked, whether or not they are relevant to the year 1919banking industry.
Environmental, Social, and the town of Orrstown, Pennsylvania, and Wheatland Advisors, Inc. Today, Orrstown is a trusted financial partner of more than 87,000 clients with a product offering that includes a full suite of retail and commercial banking services as well as wealth management. We operate in four distinct markets or regions. Though these markets share economic ties, there are unique economic features to each, and they remain culturally independent. As such, Orrstown operates in each region with a market president empowered to make business decisions within a strong risk management environment.
otblocationsc1.jpgGovernance Matters Q&A
Key Performance Indicators (at 12/31/2019)InquiriesYes/No/NAExplanation
Does the Company have an enterprise level environmental policy?NoThe Company lacks an enterprise-wide environmental policy. As a financial services provider, the Company does not engage in activities resulting in the risk of significant environmental degradation.
If the Company suffered a major environmental controversy, has it failed to provide an adequate response?NAThe Company has never been involved with a major environmental controversy.
Does the Company disclose a Code of Vendor Conduct?NoThe Company’s policies regarding vendor contracts provide that contracts may be terminated if a vendor does not comply with federal, state, and local laws and regulations.
Does the Company make investments in low carbon opportunities?YesAs of December 31, 2022, the Company had approximately $446,000 in solar-related investments and had approximately $14.2 million of solar-related loans outstanding. In addition, during 2022, the Company purchased one issuer green designation bond in the aggregate principal amount of $8.1 million. The bond proceeds are being used for public improvements in a densely populated Midwestern city. In 2021, the Company purchased four issuer green designation bonds of which we continue to own an aggregate principal amount of $9.2 million. One such bond is being utilized to finance certain capital improvements to, and conservation programs for, a major West Coast city’s municipal light and power plant system. Two such bonds are being utilized to expand the recycled water system as well as make other infrastructure improvements for a southern California municipality. The fourth bond is being utilized by a major Midwestern state university to construct and improve the campus.
Does the Company have policy surrounding carbon emissions?No
Market CapAt present, Orrstown does not have a policy regarding greenhouse emission or carbon footprint goals.(1)The Company lacks measurement systems to fully assess carbon emissions.On apartial basis, the Company used 3.3 megawatt hours in 2022, a 2.5% increase from 2021 and an 11.8% decrease from 2019 (the year before the pandemic), excluding premises on a gross lease.The Company is undertaking a feasibility study of converting its Harrisburg Regional Office to solar; this property represents half the Company’s electricity consumption.
Does the Company disclose a clear framework for evaluating projects in critical habitats or other areas with recognized high biodiversity value?$253.3 millionNoOrrstown Bank has not undertaken any projects in “critical habitats or other areas with recognized high biodiversity value.” That said, all loans made to clients require compliance with federal, state, and local environment laws and regulations including, but not limited to, environmental impact statements as required by various authorities.
AssetsDoes the Company have a hazardous waste policy/procedure?$2.4 billionNoThough the Company does not have a written policy or procedure regarding hazardous waste, the Company is not a significant producer of hazardous waste. Additionally, the Company’s HVAC systems that do rely on hazardous materials are maintained by third-party vendors bound by federal, state, and local laws and regulations regarding material handling.
LoansDoes the Company have a non-hazardous waste policy/procedure?$1.6 billion
DepositsYes$1.9 billion
Net Interest Margin3.43% 
Return on Average Assets0.76% 
Return on Average Equity8.21% 
Efficiency Ratio71.10% 
(1) $22.62 per share closing priceAll facilities are equipped with systems for recycling appropriate materials and 11,199,874 shares outstanding on 12/31/2019.
are required to use such systems.
Orrstown Bank experienced meaningful growth and significant change over the past decade. The great recession (December 2007- June 2009) negatively impacted results for many financial institutions, including ours, although the impact was later in our markets than the national trend.
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Starting in 2012, the Bank began proactively addressing credit quality issues and emerged a much stronger organization. The table below demonstrates our growth since then in terms of scale, geographic reach, and work force expansion.

($ in 000's)12/31/201312/31/2019ChangeChange
Total Assets$1,177,812  $2,383,274  $1,205,462  102 %
Total Loans$672,973  $1,629,675  $956,702  142 %
Total Deposits$1,000,390  $1,875,522  $875,132  87 %
Primary Markets Served (Counties (1))
5127140 %
Employees34146912838 %
(1) 12/31/2019 includes the City of Baltimore which is a municipality distinct from Baltimore County.

Strategic Highlights of the Past Five Years
Following the Company’s recovery from the great recession, its Board of Directors and Management determined that prudent risk management called for diversification. The Company began the process of geographic expansion while varying the exposures within the Company’s loan portfolio. The growth of the organization began in earnest in 2015 and continues through the present.
2015:Investments in customer-facing talent to take advantage of market disruption
•Reorganized under Regional Market President structure to ensure autonomy and local decision making as the Bank began to expand:
◦Hired a Lancaster County Market President and began commercial lender team acquisitions from larger, more sophisticated, financial institutions
◦Began LPO and branching efforts in Lancaster County, Pennsylvania
◦Hired an experienced Treasury Management team

2016: Continued investments in talent and support infrastructure
•14 new client-facing hires
•Continued our expansion in Lancaster County and opened a regional office and branch in greater Harrisburg area (Dauphin County)

2017: Reaped rewards of previous investments
•Continued organic expansion with double digit loan and deposit growth
•Improved efficiency ratio by 870 basis points
•Net interest margin improvement

2018: M&A activity and continued organic growth
•Announced two whole bank acquisitions, Mercersburg Financial Corporation and Hamilton Bancorp, Inc.
•Continued organic growth with three new branches in Lancaster County and LPO in York County
•Net income improvement of +40% year over year
•Closed the Mercersburg transaction in Q4


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2019: Integration of acquired banks and build out of Maryland market
•Successful core conversion of Mercersburg in Q1 and exceeded 45% expense reduction goal
•Closed Hamilton transaction in Q2 and successful core conversion in Q3
•Market President for Maryland region joined in July
•Reinvested Hamilton cost saves into new commercial banking team of eight
•New Chief Financial Officer joined in July
•Announced closure of five underperforming financial centers and sale of ~50,000 square feet of excess operational capacity(1)

(1)Five branches were closed effective 1/31/2020. Sale of operations center scheduled for the second quarter of 2020.

Investments in our Employees
We understand that our employees are the key to our current and future success. Our investment in human capital extends beyond hiring the best talent we can attract. We offer a full suite of competitive employee benefits. Our Learning & Development team has expanded over the past several years to train and retain best-in-class bankers. Associated with that effort, we engage in career development for our employees, helping to map each stage of their time with Orrstown to realize their potential.
Employee Benefits Include:
Choice of traditional “Blues” plan or high deductible plan with employer funded HSAInquiriesGymYes/No/NAExplanation
Does the Company have a water use policy?No
The Company does not use water on an industrial or agricultural scale.All wastewater is disposed of in accordance with local wastewater standards as governed by federal and state regulations.The Company used 1.12 million gallons of water in 2022, excluding premises on a gross lease, a decrease of 2.3% from 2021 and a 3.9% decrease from 2019 (the year before the pandemic).
If the Company suffered a major controversy linked to human rights or corruption, has it failed to provide an adequate response?NAThe Company has not experienced any controversy (major or otherwise) linked to human rights.
Does the Company have an enterprise level human rights policy?NoAs a matter of policy, the Company abides by all federal, state, and local laws including U.S. Code, Title 22, Chapter 78. Employees are encouraged to report any misconduct via an anonymous whistleblower hotline.
Does the Company disclose a formal grievance reporting process for concerns related to human rights?YesThe formal grievance process is detailed in the employee handbook and Human Resources periodically advises the employees of their rights.
Does the Company supplier policy prohibit the use of child and / or forced labor?YesThe Company’s vendor engagement policy mandates that all vendors be in compliance with all federal, state, and local laws.
Has the Company suffered a controversy related to labor standards or a “living wage?”NoThe Company has not experienced any labor-related controversies. The Company’s pay structure is on par with peers in our Harrisburg Regional Office (more than 100 employees at this facility)marketplace and reviewed periodically to remain competitive.
Dental and Vision coverage included in both program choicesWhat is the scope of the Company's disclosed training or professional development programs for employees?Discounts on outside gym memberships, private weight loss coaching, healthy cooking classes, etc.NAThe Company provides a multitude of training opportunities, both online and in-person. Though much of the training is related to compliance responsibilities, for specific positions, all employees have access to courses for professional development provided by a third-party. Additionally, Orrstown University provides on-site training for employee development and advancement.
Family friendly organization: availability of flex hours and/or work from home (role dependent)Does the Company monitor employee satisfaction and engagement?Discounts on stress reduction classes, acupuncture, chiropractic, yoga, pilates and tai chiYesThe Company periodically conducts employee surveys.
Short and Long Term Disability plansDoes the Company publicly disclose a gender diversity strategy or similar commitment to ensure appropriate gender representation at the board, senior management, or workforce levels?All workspacesYesThe Company provides the charter of the Nominating and campuses are non-smokingGovernance Committee of the Board of Directors on the Company’s investor relations website. The Board has three female directors, one of whom self-identifies as a member of an ethnic minority, and strives to have a mix of directors that represents a diversity of backgrounds and experiences.
Group life insurance
Does the Company publicly disclose a diversity strategy or similar commitment to ensure workforce equality beyond gender at the board, senior management, or workforce levels?

FSA/Dependent care programYesThe Company is an Equal Opportunity Employer dedicated to a policy of nondiscrimination in all areas of employment without regard to race, color, creed, religion, sex (including gender identity and sexual orientation), national origin, age, marital status, or the presence of non-job-related medical condition or disability. Furthermore, as discussed in more detail above, the Company has a Diversity & Inclusion Council comprised of employees from all levels of the organization to identify and implement strategies to make the Company’s job applicant pool to be more diverse. In addition, Mr. Quinn signed the CEO ACTION for Diversity & Inclusion Pledge, pursuant to which the Company made several diversity and inclusion related commitments.
Employee Assistance program (mental health counselling)Does the Company's publicly disclosed labor rights policy address discrimination (including gender, race, disability, ethnicity, nationality, religion, LGBTQ), workforce equality, or fair employment?Generous paid time off program, including paid time off for part time employees
Orrstown University (conducted more than 800 learning sessions in 2019)YesPromoting work/life balanceThe Company is written into our strategic plan
Employee Stock Ownership ProgramTuition reimbursement programan Equal Opportunity Employer dedicated to a policy of nondiscrimination in all areas of employment without regard to race, color, creed, religion, sex (including gender identity and sexual orientation), national origin, age, marital status, or the presence of non-job-related medical condition or disability.

Equally important to our growing organization is the development of a diverse work force, including an emphasis on women and minorities in positions of leadership. In 2019, Orrstown initiated a formal mentor/mentee program to encourage internal development of future leadership talent. Orrstown has an equal Employment Opportunity plan with goals for hiring and promotion. We met the goals of the plan in 2018 and 2019.
Cybersecurity Posture
Protecting Against Known Threats
Security is most effective when implemented in layers. Although no single implementation or practice is impenetrable, many layered together creates a strong weave of protection. Orrstown endeavors to employ the latest in threat intelligence automation, firewalls, intrusion prevention, and anti-malware technologies to protect the Bank against external threats. Orrstown also recognizes that insiders can do as much damage to the safety and privacy of client information as the external threats, whether accidental or malicious. To help protect against the malicious insider, Orrstown employs the principle of least privilege, meaning that access to only what is absolutely necessary to accomplish a job role is granted to the user. Additionally, Orrstown invests in controls designed to ensure that sensitive information is not accidentally or purposely lost or stolen by insiders.
Protecting Against Unknown Threats
Orrstown understands that threats evolve and as such we need to be able to detect anomalies that may indicate a new attack vector. Additionally, we recognize preventative controls cannot thwart every insider abuse. Therefore, Orrstown utilizes multiple layers of detective controls including, but not limited to, behavior monitoring and reconciliation processes.
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Board Overview
The independence and skill set of the Board of Directors is crucial to the continued success of Orrstown. The Board evaluates needed skill sets through the use of a matrix which evaluates Board members and prospective Board members for specific expertise such as, but not limited to, accounting, risk management, technology, and market or regional knowledge. More than half of the directors have led companies headquartered within Orrstown’s market areas and represent significantly different industry backgrounds. Aside from sitting on the Board of Orrstown, 36% of the Board have extensive careers in financial services. Ten of eleven directors, or 91%, meet the regulatory definition of an “independent director.” For more information on the Board, go to page 10.
Executive Compensation Highlights
For the year 2019, Orrstown exceed the targeted thresholds for net income and ROAE for the incentive compensation of the Company’s Named Executive Officers (NEOs). As such, payouts were above target. Additionally, given the unusual level of effort required to successfully convert two acquired banks’ core systems and integrate the banks culturally, including but not limited to risk and sales cultures, the Compensation Committee viewed NEOs discretionary bonuses as warranted. However, the 2019 compensation plan was implemented to prior to receiving the nonbinding Say-on-Pay vote from shareholders.
The 2019 Say-on-Pay vote was 57% in favor. Subsequently, the Company began implementing a comprehensive shareholder outreach plan. As a result of shareholder engagement, the Compensation Committee determined it was appropriate to:
•Make a portion of long-term incentives performance-vesting;
•Use different performance measurement metrics for performance-vesting awards and those linked to incentive compensation tied to more backward-looking criteria; and
•Refrain from the use of discretionary bonuses in 2020.
For more information on Executive compensation, go to page 24.

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Cautionary Note Regarding Forward-looking Statements:
InquiriesYes/No/NAExplanation
Does the Company publicly disclose data on workforce equality connected with gender, race, disability, ethnicity, nationality, religion, LGBTQ, or other potentially-protected classes?YesThe Company files an annual Affirmative Action Plan with the Equal Employment Opportunity Commission that is available upon request. The Company’s 2022 report indicated that the only areas the Company should improve upon are related to hiring veterans and persons with disabilities. Furthermore, our data gathering in this area is voluntary and not all employees choose to participate.
Does the Company disclose a labor rights or other formal policy that encompasses freedom of association and the right to collective bargaining?YesAll employment law data, including rights, is included in legal postings at each location.
Does the Company disclose a policy that specifically addresses occupational health and safety?YesThe Company complies with all U.S. Occupational Safety and Health Administration policies, as well as any applicable state and local regulations. All OSHA disclosures are placed in each location in a manner that is easily accessible to all employees, including general safety guidelines and reporting requirements.
Does the Company’s occupational health and safety policy extend to vendors?YesThe Company’s vendor engagement policy mandates that all vendors be in compliance with all federal, state, and local laws.
Does the Company have a publicly disclosed Business Ethics Policy or Code of Conduct?YesThe Company has adopted a Code of Conduct, a copy of which is available on its investor relations page.
What is the highest level of executive oversight for the Company's anti-bribery or anti-corruption program?YesThe Company’s anti-bribery and anti-corruption program are described within its Code of Conduct, which is overseen by the Board of Directors.
Does the Company's anti-bribery or anti-corruption policy specifically prohibit personnel from receiving and giving gifts, bribes, or facilitation payments?YesThe Company’s Code of Conduct addresses permissible and impermissible gifts and entertainment expenditures and prohibits “facilitation” payments.
Does the Company provide anti-corruption training to all employees, including management?YesEvery employee is required to complete training related to, and to acknowledges familiarity and compliance with, the Company's Code of Conduct.
Does the Company maintain internal monitoring, whistleblower, or reporting systems, which include metrics related to the number of inquiries, complaints, or issues received by the legal or compliance office?YesA report, which includes metrics related to the number of inquiries, is provided annually to the Audit Committee of the Board of Directors. A follow-up report on each complaint received is also provided as needed.
Does the Company use corporate funds for the purposes of political advocacy, including lobbying, campaign contributions, and contributions to tax-exempt groups including trade associations?YesThe Company maintains membership in the Pennsylvania Bankers Association and American Bankers Association, which advocate for the banking industry in general. Specific issues for which these associations advocate may or may not be beneficial to the Company; however, the Company views the industry-wide lobbying efforts to be favorable. The Company itself does not provide campaign contributions.
Does the Company operate an anti-money laundering program, including customer due diligence (Know Your Customer)?YesThe Company has a well-documented and regulated program covering the Bank Secrecy Act, Anti-Money Laundering, and Know Your Customer. The programs are periodically reviewed in detail by bank regulators. The Company does not disclose details of the program as a matter of prudence to avoid providing nefarious agents too much information.
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InquiriesYes/No/NAExplanation
What is the Company’s approach to identifying and addressing data security risks?YesThe Company has a Chief Information Security Officer ("CISO") who reports to the Chief Risk Officer. The CISO is responsible for implementing a multi-layer approach to data threats the Company receives, focused on detection and prevention including firewalls, intrusion prevention, and anti-malware technologies. Additionally, to limit the risk from the Company’s own employees the Company uses the principal of least privilege, meaning users only receive access to systems and information needed to complete their role within the Company. In addition, the Company is a regulated depository institution. As such, all data security measures are examined by appropriate bank regulators.
Does the Company disclose information on data security breaches?YesThe Company discloses data security breaches to clients and regulators in compliance with all bank regulations and state laws. The Company has disclosed data breaches in public filings with the Securities and Exchange Commission as required, most recently in 2018.

Ethics
Since our founding in 1919, we have grown to employ over 400 employees, operating 22 full-service banking offices, four business offices and five standalone ATMs in Cumberland, Dauphin, Franklin, Lancaster, and Perry counties in Pennsylvania, Washington County, Maryland and the Baltimore metropolitan area. Over our 100-year history we have seen numerous exciting changes, both in our Company and in the banking industry as a whole. However, despite these changes, our focus and values have remained the same; they guide us as we conduct our daily business. Our Code of Business Conduct and Ethics and Code of Ethics for Senior Financial Officers have been developed to provide guidance to all of our employees and directors on these values, proper behavior within the Company, and to aid in the maintenance of a responsible and ethical work environment. Our Code of Ethics is a critical element of our culture of compliance and ethics. All of our decisions must be driven by the following core values:
•We are accountable to our clients and each other.
•We strive to communicate timely and clearly with openness and respect.
•We are actively engaged in our communities.
•We constantly strive to innovate and are committed to continuous improvement.
•We act with integrity to earn the trust of our clients and the communities we serve.
Maintaining high standards of honesty, integrity, impartiality and personal conduct is essential to assure the performance of our business and the preservation of the public’s confidence and trust.

Risk Oversight
The Board of Directors considers a rigorous risk management program to be a critical component of the Company’s operations. The Company has adopted a comprehensive risk management policy which establishes a framework for the development and maintenance of an enterprise-wide risk management program. The enterprise risk management policy applies to all activities and functions within the organization and its business lines and is designed to ensure an integrated, consistent approach to risk management in the alignment of risks against expected returns. The enterprise risk management program is designed to ensure that all elements of the risk management process are in place and operating effectively across all risk categories, and that the management of all risks is well integrated into the operations and culture of the organization.
Our Board-level Enterprise Risk Management Committee oversees risk reporting to the Board of Directors and plays an important role in our risk management program. Our risk management program is overseen by our Chief Risk Officer, who is responsible for effectuating effective risk management oversight, identification, measurement, monitoring and reporting across the entire organization. The Chief Risk Officer chairs our management-level Enterprise Risk Management Committee, which provides integrated oversight of the many risks affecting our organization, including strategic, reputational, financial, credit, market and interest rate, liquidity, operational, compliance, technological, climate and other external risks. The Chief Risk Officer has direct access to the Board-level Enterprise Risk Management Committee and full Board of Directors to communicate any current or emerging risks, as well as the performance of risk management activities throughout the organization.
The Board of Directors, Board-level Enterprise Risk Management Committee, management-level Enterprise Risk Management Committee and executive management team all devote significant time and attention to managing the risks with the highest potential to affect our clients and reputation. We are committed to protecting client information and complying with applicable privacy and
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data security law and regulations. We have implemented policies, procedures, and internal controls that are designed to comply with anti-money laundering requirements. These policies, procedures and internal controls focus on compliance with the Bank Secrecy Act and the USA PATRIOT Act, which contain anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities. We provide our employees with anti-money laundering training, have a designated Bank Secrecy Act compliance officer, and undergo an annual, independent audit to assess the effectiveness of our anti-money laundering program. We also comply with the numerous laws and regulations designed to protect consumers, including the Community Reinvestment Act (“CRA”) and fair lending laws. The CRA is intended to encourage banks to help meet the credit needs of their service areas, including low- and moderate-income neighborhoods, consistent with safe and sound business practices. The Bank received a CRA rating of “Satisfactory” in its most recent examination.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-lookingamended (the "Exchange Act"), which are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, we may make other written and oral communications, from time to time, that contain such statements. Such forward-looking statements reflect the current views of the Company's management with respect to, among other things, future events and the Company's financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-lookingForward-looking statements are statements that include projections, predictions, expectations, estimates or beliefs about events or results or otherwise are not statements of historical facts, and are based on current expectations, estimates and projections about the Company's industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company's control. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements and there can be no assurances that the Company will achieve the desired level of new business development and new loans, growth in the balance sheet and fee-based revenue lines of business, successful merger and acquisition activity, or cost savings initiatives, or be able to continue to successfully execute on our strategic growth plan into Dauphin, Lancaster, Yorkreduce risk assets and Berks counties, Pennsylvania, andmitigate losses in the greater Baltimore market in Maryland, with newer markets continuing to be receptive to our community banking model; to take advantage of market disruption; to experience sustained growth in loans and deposits or maintain the momentum experienced to date from these actions; and to realize cost savings from our branch consolidation efforts.future. Factors which could cause the actual results of the Company's operations to differ materially from expectations include, but are not limited to:to, the following: the failure to obtain court approval of the proposed settlement of the SEPTA litigation; the number of plaintiffs who opt-out of the proposed settlement; whether the proposed settlement is appealed; ineffectiveness of the Company'sCompany’s strategic growth plan due to changes in current or future market conditions; the effects of competition and how it may impact our community banking model, including industry consolidation and development of competing financial products and services; the integration of the Company's strategic acquisitions; the inability to fully achieve expected savings, efficiencies or synergies from mergers and acquisitions and cost savings initiatives, or taking longer than estimated for such savings, efficiencies and synergies to be realized; changes in laws and regulations; interest rate movements; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatilitiesvolatility in the securities markets; the demand for our products and services; deteriorating economic conditions; geopolitical tensions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; expenses associated with pending litigation and legal proceedings; and other risks and uncertainties, including those set forth under the heading "Risk Factors" in the Company's 20192022 Annual Report on Form 10-K and subsequent filings. The foregoing list of factors is not exhaustive.
If one or more events related to these or other risks or uncertainties materialize, or if the Company's underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for the Company to predict those events or how they may affect it. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this proxy statement are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company's behalf may issue.

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ORRSTOWN FINANCIAL SERVICES, INC.
77 East King Street
Shippensburg, Pennsylvania 17257

  
PROXY STATEMENT

General Information About the Annual Meeting


Annual Meeting Information
This proxy statement contains information about the Annual Meeting of Shareholders (the “Annual Meeting”) of Orrstown Financial Services, Inc. (the “Company”), the holding company for Orrstown Bank (the "Bank"), to be held virtually on Tuesday, April 28, 2020,May 2, 2023, beginning at 9:00 a.m., at the H. Ric Luhrs Performing Arts Center, 1871 Old Main Drive, Shippensburg, Pennsylvania, and at any adjournments or postponements of the Annual Meeting. local time. This proxy statement was prepared at the direction of the Company’s Board of Directors to solicit your proxy for use at the Annual Meeting. This proxy statement and the enclosed form of proxy will bewere mailed to shareholders on or about March 19, 2020.31, 2023.
Why are you holding a virtual Annual Meeting?
We began holding our Annual Meeting of Shareholders virtually in 2020 due to the continuing impacts of COVID-19 and out of concern for the health and safety or our shareholders and employees. While the impact of the pandemic has receded, we have decided to hold the Annual Meeting virtually again this year because the Board of Directors believes that the virtual format allows a greater number of shareholders to participate. As more fully described below, shareholders will have the opportunity to engage management by submitting questions at the Annual Meeting.
Who is entitled to vote?
Shareholders owning shares of the Company’s common stock, no par value per share (the “Company Common Stock”), as of the close of business on March 12, 20203, 2023, the record date, are entitled to votevote at the Annual Meeting or any adjournment or postponement of the Annual Meeting. Each shareholder has one vote per share on all matters to be voted on. As of March 12, 2020, there were 11,165,802If you are a holder of Company Common Stock outstanding.as of the record date, you may vote the shares that you held on the record date even if you sell such shares after the record date. Each outstanding share of Company Common Stock as of the record date entitles its holder to cast one vote for each matter to be voted upon and, with respect to the election of directors, one vote for each director to be elected. Shareholders do not have the right to cumulative voting for the election of directors.
On what am I voting?
YouAt the Annual Meeting, you will be asked to vote on proposals to:
(i)elect three (3) directors tofour Class A director nominees to serve on our Board of Directors for three (3) year termsa three-year term expiring in 2023;2026;
(ii)approve a non-binding advisory vote regarding the compensation paid to our Named Executive Officers as disclosed in this proxy statement (“Say-On-Pay”);
(iii)approve a non-binding advisory vote regarding the frequency of holding our Say-On-Pay vote; and
(iii)(iv)ratify the Audit Committee’s selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2023.
The Board of Directors is not aware of any other matters to be presented for action at the meeting.Annual Meeting. If any other matter requiring a vote of the shareholders would beis presented at the Annual Meeting, the proxiesproxy holders will vote according toin accordance with the directions ofdirection provided by the Board of Directors.
How does the Board of Directors recommend I vote?
The Board of Directors recommends that shareholders vote:
(i)“FOR” the election of each of the threedirector nominees as directors to Class A named in this proxy statement;
(ii)“FOR”"FOR" approval of the non-binding advisory vote onregarding the compensation paid to our Named Executive Officers as disclosed in this proxy;proxy statement;
(iii)“FOR” approval of the non-binding advisory vote to hold our Say-On-Pay vote annually; and
(iii)(iv)“FOR” ratification of the Audit Committee’s selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2023.


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How do I vote?
SignVoting by proxy for shares registered in your own name. If your shares are registered directly in your name with our transfer agent, this proxy statement and a proxy card were mailed directly to you. In that case, you may instruct the proxy holders named in the proxy card how to vote your shares of Company Common Stock in one of the following ways
•Vote online. You can vote online by accessing the proxy materials at www.cstproxy.com/orrstown/2023 and following the prompts. You must have your unique shareholder identification number provided on your proxy card in order to vote online, so please have your proxy card available when you access the web address.
•Vote on your mobile device. You can vote onyour smartphone or tablet by opening the QR Reader and scanning the image on your proxy card. Once the voting site is displayed, enter your unique shareholder identification number provided on your proxy card and follow the prompts in order to vote. You must have your unique shareholder identification number provided on your proxy card in order to vote by mobile device, so please have your proxy card available when you scan the QR code.
•Vote by regular mail. If you would like to vote by mail, please mark, sign, and date eachyour proxy form you receivecard and return it promptly in the postage-paid envelope provided.
Voting by proxy for shares registered in street name. If your shares are held in street name, you signwill receive instructions from your broker, bank or other nominee that you must follow in order to have your shares of Company Common Stock voted.
Please vote each proxy form, but do not mark your choices, your proxies willthat you receive - none are duplicates. Even if you plan to participate in the Annual Meeting, we recommend that you submit a proxy to vote your shares represented by such proxy:in advance so that your vote will be counted if you later are unable to participate in the Annual Meeting.
(i)“FOR” the three persons nominated for election as directors to Class A named in this proxy statement;
(ii)“FOR” approval of the non-binding advisory vote on the compensation paid to our Named Executive Officers as disclosed in this proxy statement; and
(iii)“FOR” ratification of the Audit Committee’s selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.
Can I change my vote after I submit my proxy?
You may revoke your proxy at any time before it is exercised. To do so, you must give written notice of revocation to the Secretary, Orrstown FinancialFinancial Services, Inc., 77 East King Street, Shippensburg, Pennsylvania 17257, submit another properly signed proxy with a more recent date, or vote in persononline at the Annual Meeting after giving notice to the Secretary. Please note that simply attendingparticipating in the Annual Meeting in person without voting will not revoke your proxy.
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You are only entitled to vote at the Annual Meeting if our records show that you heldmay revoke a proxy for shares of Company Common Stock as of the close of business on March 12, 2020. If your shares are held by a bank, broker, or other intermediary,nominee by submitting new voting instructions to the bank, broker, or other nominee or, if you can onlyhave obtained a legal proxy from the bank, broker, or other nominee giving you the right to vote yourthe shares at the Annual Meeting, if you haveby following the voting instructions provided in the legal proxy.
What constitutes a properly executed proxy from the broker or other intermediary which is the record holder of your shares.quorum?
What is a quorum?
A “quorum” is the presence at the meeting, in person or by proxy, of theThe holders of a majority of the shares of Company Common Stock outstanding shares.and entitled to vote on any matter shall constitute a quorum for the Annual Meeting. There must be a quorum for the Annual Meeting to be held. There were 10,728,425 shares of Company Common Stock outstanding and entitled to vote at the Annual Meeting on the record date. Therefore, a quorum will be present if 5,364,213 shares of Company Common Stock are present in person or represented by proxies timely received by us at the Annual Meeting. Shares present virtually during the Annual Meeting will be considered shares of Company Common Stock represented in person at the meeting.
How are abstentions and broker non-votes counted?
AbstentionsUnder Pennsylvania law, abstentions are counted for purposes of determining the presence or absence of a quorum, but are not considered a vote cast under Pennsylvania law.cast.
A broker non-vote"broker non-vote" occurs when a broker, bank or other nominee holding shares on your behalf does not receive voting instructions from you. If that happens, the broker, bank or other nominee may vote those shares only on matters deemed “routine,”“routine” under the New York Stock Exchange ("NYSE") rules, such as the ratification of the appointment of the Company’s independent registered public accounting firm. On non-routine matters, such as the election of directors, Say-On-Pay and Say-on-Pay,Say-On-Frequency, the broker, bank or other nominee cannot vote those shares unless they receive voting instructions from the beneficial owner. A “broker non-vote” occurs when a broker has not received voting instructions and either declines to exercise its discretionary authority to vote on routine matters or is barred from doing so because the matter is non-routine. BrokerUnder Pennsylvania law, broker non-votes are counted to determine if a quorum is present, but are not considered a vote cast under Pennsylvania law.cast.
As a result, abstentions and broker non-votes are not included in the tabulation of the voting results on issues requiring approval of a majority of the votes cast and, therefore, do not have the effect of votes in opposition in such tabulation.
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What vote is required to elect directors?
Directors are elected by a plurality of votes. This means that the four director nominees receiving the highest number of affirmative votes will be elected as directors. You may vote for all of the director nominees, withhold authority to vote your shares for all director nominees, or withhold your authority to vote your shares with respect to any to any one or more of the director nominees. Votes withheld and broker non-votes will have no effect on the election of directors.
What vote is required to approve the other proposals?
A majority of the votes cast by shareholders present in person or by proxy at the Annual Meeting, assuming a quorum is present, is required to approve each of the other proposals. Abstentions and broker non-votes, if any, are not treated as votes cast and, therefore, will have no effect on whether or not a proposal is approved.
How is my vote counted?
If you authorize your proxy to vote your shares online or by using your mobile device, or if you received a proxy card by mail and you properly marked, signed, dated, and returned it, the shares that the proxy represents will be voted in the manner specified on the proxy. If you sign your proxy card, but do not mark your choices, the proxy holders will vote your shares represented by such proxy:
(i)“FOR” the election of each of the director nominees named in this proxy statement;
(ii)“FOR” approval of the non-binding advisory vote regarding the compensation paid to our Named Executive Officers as disclosed in this proxy statement;
(iii)“FOR” approval of the non-binding advisory vote to hold our Say-On-Pay vote annually; and
(iv)“FOR” ratification of the Audit Committee’s selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023.
The Board of Directors is not aware of any other matters to be presented for action at the Annual Meeting. If any other matter requiring a vote of the shareholders is presented at the Annual Meeting, the proxy holders will vote in accordance with the direction provided by the Board of Directors.
Who will count the vote?
The Judge of Election appointed by the Board of Directors will count the votes cast in person or by proxy.
What is the deadline for shareholder proposals for next year’s Annual Meeting?
Shareholders may submit proposals on matters appropriate for shareholder action at future annual meetings by following the rules of the Securities and Exchange Commission (the “SEC”) and the Company’s bylaws. Proposals intended for inclusion in next year’s proxy statement and proxy card must be received by the Company not later than November 19, 2020.30, 2023. In addition, in order to be considered for possible action by the shareholders at the 20212024 Annual Meeting of Shareholders, (the “2021 Annual Meeting”), proposals, including shareholder nominations for director, not included in the Company’s proxy statement must be submitted to the Secretary of the Company not later than November 19, 2020.30, 2023. All proposals should be addressed to the Secretary of the Company. In order
To comply with the SEC’s universal proxy rules, shareholders who intend to be considered timelysolicit proxies in support of director nominations other than the Company’s nominees must provide notice that sets forth the information in Rule 14a-19 under the Company’s bylaws, a shareholder nomination for director must be received by the Secretary of the Company by December 29, 2020.Exchange Act no later than March 4, 2024.
How are proxies being solicited?
This solicitation of proxies is made by and on behalf of the Board of Directors. We will pay the cost of the solicitation of proxies. In addition to solicitation by mail, the officers, directors and employees of the Company may, without additional compensation, solicit proxies by telephone or personal interview. The Company will paybear the costcosts of preparing, printing and mailing and soliciting proxies.these proxy materials. Brokers and other custodians, nominees and fiduciaries will be requested to forward soliciting material to the beneficial owners of Company Common Stock held by such persons and will be reimbursed by the Company for their expenses.

Virtual Meeting Information
How do I participate in the meeting?
To participate in the virtual Annual Meeting, visit www.cstproxy.com/orrstown/2023 and enter the 12-digit control number included on your proxy card that accompanied your proxy materials. You may log into the meeting platform beginning at 8:45 a.m., Eastern Time, on May 2, 2023. The live webcast will begin promptly at 9:00 a.m., Eastern Time. We encourage shareholders to access the
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virtual Annual Meeting website prior to the start of the meeting and to allow sufficient time to complete the online registration process.
Will I have an opportunity to submit a question?
Yes, shareholders will have the opportunity to submit questions if they choose. If you wish to submit a question, you may do so in two ways. If you want to ask a question before the meeting, you may log into www.cstproxy.com/orrstown/2023 and enter your 12-digit control number. Next, click on "Submit a Question," type in your question and click "Submit." Alternatively, if you want to submit your question during the meeting, log into the virtual Annual Meeting platform at www.cstproxy.com/orrstown/2023, click the Q&A button to open the question panel, type your question into the field titled “Submit a Question” and click "Submit.” Questions and answers will be grouped by topic and substantially similar questions will be grouped and answered together.
Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. Shareholders should refer to the Rules of Procedure for the meeting that will be posted on the virtual Annual Meeting website for guidelines regarding the submission of questions, including certain topics and subject matter that we will consider inappropriate for purposes of the meeting. Any questions pertinent to meeting matters that cannot be answered during the meeting due to time constraints will be posted online and answered at www.orrstown.com. The questions and answers will be available as soon as practical after the meeting and will remain available for one week after posting.
Can I participate in the meeting or submit a question if I hold my shares in street name?
Yes. If you hold your position through a bank, broker or other nominee and would like to participate in the virtual Annual Meeting, vote or ask a question, you will need to supply Continental Stock Transfer with a legal proxy. Continental Stock Transfer can be reached by telephone at 917-262-2373 or by email at proxy@continentalstock.com. Upon receipt of a legal proxy, Continental Stock Transfer will provide you with a control number for the meeting. Any shareholder with a valid control number may attend, listen, vote and ask a question during the virtual Annual Meeting.
What if I have lost or misplaced my 12-digit control number?
If you no longer have your control number or were not a shareholder on March 3, 2023, you may still enter the meeting as a guest in listen-only mode. To access the meeting as a guest, visit www.cstproxy.com/orrstown/2023 and enter the requested information on the welcome screen. However, if you attend the meeting as a guest, you will not have the ability to vote or submit questions.
What if I experience technical difficulties accessing the meeting?
If you encounter any technical difficulties with the virtual Annual Meeting platform, please use the telephone numbers listed on the meeting website prior to the start of the meeting and technicians will be available to assist you.
What will happen if we experience technical problems during the meeting webcast?
In the event of technical difficulties or interruptions with the Annual Meeting, we expect that an announcement will be made on the meeting website, www.cstproxy.com/orrstown/2023. If necessary, the announcement will provide updated information regarding the date, time and location of the Annual Meeting. Any updated information regarding the Annual Meeting will also be posted to the investor relations page on our website, www.orrstown.com.
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting of Shareholders to be heldHeld on
April 28, 2020 May 2, 2023
The Notice of Annual Meeting, this proxy statement, the form of proxy and the Company’s Annual Report on Form 10-K are available at:

http:https://www.cstproxy.com/orrstown/2020
2023

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Share Ownership of Certain Beneficial Owners
The Company does not know of any person or group who beneficially owned more than 5% of Company Common Stock on March 12, 2020,3, 2023, except as shown in the following table:
Name and address of Beneficial OwnerCommon Stock Beneficially OwnedPercent of Class
Black Rock, Inc. (1)
55 East 52nd Street
New York, NY 10055
711,495 shares6.4% 
 (1) Based on information set forth in a Schedule 13G, as amended, filed with the Securities and Exchange Commission on February 5, 2020 by Blackrock, Inc.
Name and address of Beneficial OwnerCommon Stock Beneficially OwnedPercent of Class
BlackRock, Inc. (1)
55 East 52nd Street
New York, NY 10055
730,4076.8%
FMR LLC (2)
245 Summer Street
Boston, Massachusetts 02210
538,9445.0%
 (1) Based on information set forth in a Schedule 13G, as amended, filed with the SEC on February 1, 2023 by BlackRock, Inc.
 (2) Based on information set forth in a Schedule 13G filed with the SEC on February 9, 2023 by FMR LLC.



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Share Ownership of Management
The following table shows the number of shares of Company Common Stock beneficially owned by each incumbent director, each nominee and each Named Executive Officer, and by all of the incumbent directors, nominees and executive officers of the Company as a group, as of March 12, 2020,3, 2023, based on information furnished by the persons named and the Company’s records. Except as otherwise indicated, sole voting power and sole investment power with respect to the shares shown in the table are held either by the individual alone or by the individual together with his or her spouse.
Name
Common Stock(1)
Exercisable Stock  Options(1)(2)
Thomas R. Brugger8,405—  
Robert G. Coradi24,081—  
Robert A. DeAlmeida24,583—  
Philip E. Fague39,7974,800  
Cindy J. Joiner9,178—  
Mark K. Keller13,557349  
Thomas D. Longenecker8,826—  
Adam L. Metz16,919—  
Andrea Pugh30,776349  
Thomas R. Quinn, Jr.56,7536,000  
Michael J. Rice10,205—  
Eric A. Segal11,868—  
Glenn W. Snoke22,596349  
Floyd E. Stoner20,105—  
Joel R. Zullinger41,006(3) 349  
Directors, nominees and executive officers as a group (22) persons including those named above)433,40912,196  

Name
Common Stock(1)
Exercisable Stock  Options(2)
Robert G. Coradi41,102— 
Christopher Holt27,640— 
Cindy J. Joiner17,329— 
Neelesh Kalani20,826— 
Mark K. Keller19,288— 
Thomas D. Longenecker16,546— 
Adam L. Metz22,295— 
Meera R. Modi5,037— 
Andrea L. Pugh28,694— 
Thomas R. Quinn, Jr.73,352— 
Michael J. Rice17,294— 
Eric A. Segal19,678— 
Glenn W. Snoke31,408— 
Floyd E. Stoner30,978— 
Joel R. Zullinger44,046— 
Directors, nominees and executive officers as a group (22 persons including those named above)568,230— 
(1)
On March 12, 2020,3, 2023, none of the individuals named in the above table may be deemed to beneficially own more than 1% of the outstanding shares of Company Common Stock. On that date, all of the incumbent directors and executive officers as a group beneficially owned approximately 445,605568,230 shares or 4.0%5.3% of the outstanding shares of Company Common Stock. Fractional shares beneficially owned by such individuals have been rounded down to the number of whole shares beneficially owned.
(2)
The amounts shown reflect the number of shares of Company Common Stock that the indicated individuals and group have the right to acquire within 60 days of March 12, 20203, 2023 through the exercise of stock options granted pursuant to the Company’s stock option plans.
(3)
Includes 220 shares held by Mr. Zullinger’s spouse.
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Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and the beneficial owners of more than 10% of Company Common Stock to file reports of ownership and changes in ownership of their equity securities of the Company with the SEC and to furnish the Company with copies of such reports. Based solely upon a review of these reports (Forms 3, 4 and 5 and any amendments thereto) furnished to the Company, we believe that during 20192022 our directors and executive officers who were subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended, complied with all SEC filing requirements applicable to them.them, except that Ms. Modi and Mr. Stoner each had one late filing due to an administrative oversight. As of the date of this proxy statement, to the best of its knowledge, the Company did not have any beneficial owners of more than 10% of Company Common Stock.
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9

PROPOSAL 1 – ELECTION OF DIRECTORS

 
The bylaws of the Company provide that the Board of Directors shall consist of not less than nine and not more than 15 members, with such directors will serve inbeing divided into three classes, as nearly equal in number as possible, with each class of directors serving a three yearthree-year term of office. At each annual meeting of shareholders, a class of approximately one-third of all of the Company’s directors is elected to hold office for a term expiring at the annual meeting held in the third year following the year of their election and until their successors have been elected and qualified. Accordingly, athis or her election. At the Annual Meeting, the shareholders will be asked to elect three directors tofour Class A director nominees to serve until the annual meetingon our Board of shareholdersDirectors for a three-year term expiring in 2023 or until their successors are elected and qualified.2026.
The Board of Directors has nominated the following persons for election as directors to Class A:

Cindy J. Joiner, CPA
Eric A. Segal
Glenn W. Snoke
Joel R. Zullinger
Cindy J.Ms. Joiner CPA
Eric A.and Messrs. Segal,
Joel R. Snoke and Zullinger

All nominees are presently servingserve as directors of the Company and the Bank.
If you return a properly signed and dated proxy form, your shares of Company Common Stock represented by your proxy will be voted FOR the election of the named nominees unless you mark the proxy form to withhold authority to vote for one or more of the nominees. If one or more of the named nominees is unable or unwilling to serve as a director, the persons named in the proxy will vote for the election of such substitute nominee, if any, as will be named by the Board of Directors. The Company has no reason to believe that any of the named nominees will be unable or unwilling to serve as a director. Each named nominee has expressed a willingness to serve if elected.
The three namedDirectors are elected by a plurality of votes. This means that the four director nominees for election of directors to Class A receiving the highest number of affirmative votes will be elected as directors. You may vote for all of the director nominees, withhold authority to vote your shares for all director nominees, or withhold your authority to vote your shares with respect to any to any one or more of the Boarddirector nominees. Votes withheld and broker non-votes will have no effect on the election of Directors.directors.
The Board of Directors recommends that you vote FOR the election of each of the director nominees named nominees as directors to Class A.in this proxy statement.
Board Overview
The independence and skill set of the Board of Directors is crucial to the continued success of the Company. The Board of Directors evaluates needed skill sets through the use of a matrix which evaluates directors and prospective directors for specific expertise, such as accounting, risk management, technology, and market or regional knowledge, among others. More than half of the directors have led companies headquartered within the Company’s market areas and represent significantly different industry backgrounds. Aside from sitting on the Board of Directors of the Company, 27% of our directors have extensive careers in financial services. Ten of the eleven directors, or 91%, are “independent" under NASDAQ listing rules.
Independent Chairman
The Board of Directors believes that an independent Chairman serves an important corporate governance function by providing separate leadership for the independent directors. In addition to his formal duties as set forth in the Company’s various corporate governance documents, the Chairman meets with regulators, participates in shareholder engagement calls and attends meetings with management. Our independent Chairman also presides over meetings of independent directors in executive session at such times as deemed necessary or appropriate.
Nomination of Directors
In connection with the Annual Meeting, the Nominating and Governance Committee of the Company’s Board of Directors has reviewed the qualifications of, and made recommendations regarding, potential candidates to be nominated by the Board of Directors for election to the Board.as directors. The nominees named above were recommended by the Nominating and Governance Committee, then submitted to, and approved by, the Board of Directors as the threefour nominees for election as directors to Class A.
The Nominating and Governance Committee is responsible for identifying, assessing and recommending the slate of candidates to be nominated for election to the Board of Directors. In addition to meeting the minimum criteria to serve as a director as outlined in the Company’s bylaws, the Nominating and Governance Committee has consideredcommittee uses a variety of methods and considers a variety of factors for identifying and evaluating nominees for director and assesses the mix of skills and the performance of the Board of Directors as a whole on a regular basis. In the course of establishing the slate of nominees for director each year, the committee will consider whether any vacancies on the Board of Directors are expected due to retirement or otherwise, the skills represented by retiring and continuing directors, and additional skills highlighted
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during the Board self-assessment process that could improve the overall quality and ability of the Board to carry out its function. The committee also considers factors including each candidate’s integrity, independence, qualifications, skills, experience (including experience in finance and banking and diversity of experience in relation to other members of the Board of Directors), compatibility with other members of the Board of Directors, the strategic direction of the Company and the Bank, involvement in the communities served by the Bank and such other factors as it has deemeddeems to be in the best interest of the Company, the Bank and the Company’s shareholders, which factors may change from time to time.
The Nominating and Governance Committee will consider the incumbent directors whose terms are expiring at the forthcoming annual meeting, other candidates, if any, recommended to it by shareholders, other qualified individuals within the community, including the Bank’s regional advisory boards, and any candidates nominated by shareholders in accordance with the procedures set forth in the Company’s bylaws. The criteria for consideration of boarddirector candidates nominated by the Company’s shareholders, if nominated in a timely manner, is the same as for other boarddirector nominees.
Director Eligibility Requirements
The Company’s bylaws provide for certain director eligibility requirements for a nominee to be eligible to become a member of the Board. All directors must hold at least 5,000 shares of Company Common Stock. Directors will have one year from the date they join the Board to meet this requirement. In addition, no one may be nominated to serve as a director of the Company if such person: (a) is under indictment or has been convicted of a crime involving a breach of trust with a penalty of imprisonment for more than one year; (b) has been issued within the past 10 years a non-appealable cease and desist order by a federal or state bank regulatory agency related to conduct involving dishonesty or breach of trust; (c) has been found guilty in a final decision, either by any federal or state regulatory agency of: (i) committing a willful violation of any law governing banking, securities, commodities or insurance, or any final cease and desist order issued by a banking, securities, commodities or insurance regulatory agency, or (ii) breaching a fiduciary duty involving personal profit; or (d) has been nominated by someone who is ineligible to serve as a director of the Company under requirements (a)-(c) listed above. In addition, the age of members of the Boarddirectors is limited to 75 years, provided that any director who
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reaches such age during his or her term of office may continue to serve on the Board of Directors until the expiration of theirhis or her term with the prior approval of the Board.Board of Directors.
No recommendations were received by the Nominating and Governance Committee in connection with this Annual Meeting from shareholders or others, nor, as of the date of this proxy statement, had any candidates been nominated by shareholders in accordance with the procedures set forth in the bylaws.
Any future nominations should be submitted in writing addressed to Orrstown Financial Services, Inc., 77 East King Street, Shippensburg, Pennsylvania 17257, Attn: Nominating and Governance Committee.
Shareholder nominations must be made in accordance with the procedures set forth in the Company’s bylaws and must include a statement setting forth the background, education and business experience of the nominee.
A copy of the Nominating and Governance Committee Charter is posted onin the investor relations section of the Company’s website at www.orrstown.com.
Biographical Summaries of Nominees and Directors
The Board of Directors believes that each of the nominees and directors possess such professional experience, recognized achievement in his or her respective field, involvement in the communities served by the Bank, ability to contribute to some aspect of the Company’s business and a willingness to make the commitment of time and effort required of a Company director. Information about the nominees for election as directors to Class A at the Annual Meeting and information about the continuing directors in Class B and Class C demonstrating these characteristics is set forth below. There are no family relationships among any of our directors. Unless otherwise stated, each director has held his or her current occupation for the last five years.
Nominees for Director:
CLASS A DIRECTORS - TERM EXPIRES IN 20202023
Cindy J. Joiner, CPA - 58, has been a member of61, was appointed to the Boards of Directors of the Company and the Bank sincein 2016. She isSince 2007, she has served as the Chief Financial Officer forof The Bowman Group, LLC. The Bowman Group, LLC, is a privately held corporation located in Williamsport, Maryland specializing in transportation, logistics, hospitality and real estate development. Ms. Joiner has held this position since 2007. The Board of Directors values Ms. Joiner’s accounting acumenexpertise and knowledge of multiple industries that align with the Bank’s lending businesses. In addition, the Board believes her familiarity and knowledge of the Maryland market adds significant value to the Company.
Eric A. Segal - 62, has been a member of65, was appointed to the Boards of Directors of the Company and the Bank sincein 2013. Since 2012, Mr. Segal has been Managing Director, and head of the Banking and Financial Institutions Group at CFO Consulting Partners LLC in Princeton, New Jersey since 2008.Jersey. In his role at CFO Consulting Partners, Mr. Segal periodically serves as the interim chief financial officer for public and private companies, including out-of-market financial institutions. The Board of Directors values Mr. Segal’s strong financial acumen
15

and the knowledge and experience he has gained through his consulting experience in many banking organizations in the Mid-Atlantic and other regions.
Glenn W. Snoke - 74, has been a member of the Boards of Directors of the Company and the Bank since 1999. Mr. Snoke is retired. He previously served as the President and Chief Executive Officer of Snoke’s Excavating & Paving, Inc. The Board of Directors values Mr. Snoke’s knowledge, experience and perspective as an entrepreneur and owner of a small business involved in the construction industry and the insight it provides him into the financial services needs and business issues facing many of the Bank’s construction industry clients.
Joel R. Zullinger - 71,74, is Chairman of the Boards of Directors of the Company and the Bank. Mr. Zullinger has served as a director since 1981. Mr. ZullingerHe is an attorney, of counsel, with Zullinger-Davis-Trinh, P.C., with offices in Chambersburg and Shippensburg, Pennsylvania. The Board of Directors values the knowledge, experience and perspective Mr. Zullinger has attainedobtained through his long tenure as a director of the Company and the Bank. The Board of Directors also values the leadership and communication skills manifested by Mr. Zullinger’s service as Chairman.
Continuing Directors:
CLASS C DIRECTORS - TERM EXPIRES IN 20212024
Thomas D. Longenecker - 52, has been a member of55, was appointed to the Boards of Directors of the Company and the Bank sincein 2016. In 2019, he was appointedHe has served as the President and Chief Executive Officer - ElectCEO of Commonwealth Charter Academy, a cyber charter school headquartered in Harrisburg, Pennsylvania, havingsince 2020 and served as its Chief Operating Officer since 2012.from 2012 to 2020. Prior to that, Mr. Longenecker was the Director of Finance for the Carlisle Area School District in Carlisle, Pennsylvania. He is also a professor of public school finance for Wilkes University, Wilkes-Barre, Pennsylvania. The Board of Directors values Mr. Longenecker’s experience in accounting, finance, and technology, and operationsas well as his organizational leadership and knowledge of the market area.
Andrea L. Pugh - 67,70, has been a member of the Boards of Directors of the Company and the Bank since 1996. She iswas formerly the President and sole member of PharmCare Consultants LLC, a pharmacy consulting business.business for thirty nursing homes in Pennsylvania. The Board of Directors values Ms. Pugh’s knowledge, experience and perspective as a woman who iswas an entrepreneur and small business owner and the insight itowner. This experience provides her with insight into the financial services needs of, and business issues facing, many of the Bank’s small business customers,clients, including those that are owned and operated by women.
Floyd E. Stoner - 71,74, has been a member of the Boards of Directors of the Company and the Bank since 2012. Since January 2012, Mr. Stoner has served as a Senior Advisor - Consultant with Alliance Partners, in Chevy Chase, Maryland. Mr. Stoner was the Executive Vice President for Congressional Relations and Public Policy at the American Bankers Association (“ABA”) until his
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retirement in December 2011 and has over 26 years of experience with the ABA. At the ABA, he has beenwas involved at the highest levels in all of the banking policy debates of recent years and he has a nearly unparalleled perspective on the issues facing the banking industry today, which the Board of Directors finds very valuable.
CLASS B DIRECTORS - TERM EXPIRES IN 20222025
Mark K. Keller - 66, has been a member of69, was appointed to the Company’s Board of Directors sincein 2009 and to the Bank’s Board of Directors sincein 2008. Mr. Keller has served as a Representative to the Pennsylvania General Assembly, representing the 86th Legislative District, since 2004.from 2004 to 2020. Mr. Keller is also the owner of Spring-Mar Farm and Mark Keller Auctioneer, as well as a real estate consulting business. The Board of Directors values Mr. Keller’s knowledge of the Bank’s market area attainedobtained through his representation of that area in the General Assembly.Assembly, and as a business owner operating in such market.
Meera R. Modi – 40, was appointed to the Board of Directors of the Company and the Bank in 2022. Ms. Modi is a leading corporate mergers and acquisitions attorney and Member at McNees Wallace & Nurick LLC in Harrisburg, Pennsylvania, where she navigates clients through strategic ventures as well as day-to-day operations. The Board of Directors values Ms. Modi’s experience as a trusted legal advisor to businesses and executives throughout the Bank's market area.
Thomas R. Quinn, Jr. - 60, has served63, was appointed as President and Chief Executive Officer and a director of the Company and of the Bank since 2009. Mr. Quinn joined the Bank in March 2009 as President-elect and served in that capacity until he was appointed President and Chief Executive Officer.2009. The Pennsylvania Banking Code requires that a bank president be a member of the bank’s board of directors. The Board of Directors believes that it is important that the President, who also is the Chief Executive Officer, be a member of the Board of Directors of the Company and the Bank so that the President may interact on a peer-to-peer basis with his fellow directors. In addition, the Board of Directors believes that the knowledge, experience and perspective that Mr. Quinn possesses as a result of his prior service as a senior executive with Fifth Third Bancorp and Citigroup have been, and will continue to be, valuable to the Company as it continues to execute its strategic plan as a relationship-based community bank.
Michael J. Rice - 58,61, joined the Boards of Directors of the Company and the Bank in October, 2018 concurrent with the closing of the Company's acquisition of Mercersburg Financial Corporation ("Mercersburg"). He is the President of Mt. Parnell Fisheries, Inc.Co., a producer and international marketer of ornamental goldfish and koi carp. Prior to his appointment to the boardsBoards of directorsDirectors of the
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Company and the Bank, he served more than 10 years on the boards of Mercersburg and its wholly ownedwholly-owned bank subsidiary. The Board of Directors values Mr. Rice's experience on a community banking board and his long tenure as an active participant in the business community in Franklin County.
Glenn W. Snoke - 71, has been a member of the Boards of Directors of the Company and the Bank since 1999. Mr. Snoke is the Chief Executive Officer of Snoke’s Excavating & Paving, Inc. The Board of Directors values Mr. Snoke’s knowledge, experience and perspective as an entrepreneur and owner of a small business involved in the construction industry and the insight it provides him into the financial services needs and business issues facing many of the Bank’s construction industry customers.
Robert A. DeAlmeida - 65, joined the Boards of Directors of the Company and the Bank in May, 2019, concurrent with the closing of the Company’s acquisition of Hamilton Bancorp Inc. (“Hamilton”). Mr. DeAlmeida is the former President & CEO of Hamilton and served in that role since 2005. Mr. DeAlmeida joined Hamilton in 1990 as Chief Financial Officer. The Board of Directors values Mr. DeAlmeida’s insights into the Maryland market as well as his experience as the chief executive officer of a community bank.
Director Independence
The Board of Directors of the Company has adopted the definition of “independent director” as set forth in Rule 5605(a)(2) of the NASDAQNasdaq Stock Market and has determined that each director is independent under this rule, other than Mr. Quinn due to his position as President and Chief Executive Officer of the Company. Under NASDAQ rules, employees of the Company are deemed not to be independent. In making this determination with respect to the remaining directors, the Board of Directors was awareconsidered the employment and affiliations, including family and other relationships, of and considered,the directors, the loan and deposit relationships and other transactions with directors and their related interests, which the Company or the Bank enters into in the ordinary course of business. Except as noted abovebusiness, and for loans, deposits, fiduciaryall other facts and other similar relationshipscircumstances the Board of Directors deemed relevant in determining independence, including those described under “Transactions with the Company or the Bank, no director or any of his or her related interests has engaged in any transaction or series of transactions, or is involved in any relationships, as a result of which the director would not be independent under the rules of the NASDAQ Stock Market.Related Persons, Promoters and Certain Control Persons”.

Shareholder Communications with the Board of Directors
The Company has a formal process by which shareholders may send communications to the Board of Directors. Our policy is to recommend that all correspondence from shareholders be addressed to the Chief Executive Officer of the Company, who shares such correspondence with the Board of Directors. As a matter of practice, shareholder communications received by the Chief Executive Officer are included under the topic “Correspondence” with the Board of Directors’ meeting materials routinely furnished by management to directors in connection with meetings of the Board of Directors. In addition, shareholder communications determined by the Chief Executive Officer, at his discretion, to require immediate attention also are promptly furnished by him to the Chairman. When and as appropriate, the Company seeks to provide a timely response to shareholder communications it receives.
Board Self-Assessment
12The Board of Directors annually conducts a self-assessment of the effectiveness of the full Board and its committees. The evaluation process is managed by the Nominating and Governance Committee. During the assessment process, each director completes a written questionnaire designed to secure constructive feedback from each director about the effectiveness of the full Board and each committee on which the director serves. Responses to the questionnaires are reviewed by the Nominating and Governance Committee and discussed with the full Board and each applicable committee in executive sessions. The Board of Directors uses this feedback to improve Board and committee practices and procedures.

Board Structure, Committees and Meeting Attendance
During 2019, the Boards of Directors of the Company and the Bank both met 12 times. The Board of Directors of the Company hasis currently comprised of 11 members, each of whom also serves as a Compensation Committee, an Audit Committeedirector of the Bank.During 2022, the Board of Directors of the Company met 25 times and a Nominating and Governance Committee.the Board of Directors of the Bank met 10 times. During 2019,2022, all of the directors attended at least 75% of all meetings of the respective Boards and Committees on which they served. While the Board of Directors does not have a formal policy regarding director attendance at, or participation in, the Annual Meeting, all directors are encouraged to do so.
With the exception of Mr. Quinn, all of the directors of the Company and the Bank are independent as defined in Rule 5605(a)(2) of the NASDAQNasdaq Stock Market. Leadership of the Boards of Directors of the Company and the Bank is entrusted to an independent Chairman. The Board of Directors believes that this independent leadership structure helps to provide an appropriate check and balance on the influence of the executive management team, generally, and the President and Chief Executive Officer, more specifically, particularly in consideration of the President and Chief Executive Officer’s membership on the Boards of Directors and Executive Committee.Directors. In addition, the independent directors generally have at least two meetings each year in which theyperiodically, but not less than twice annually, meet in executive session without Mr. Quinn being present. The directors also may meet inpurpose of these executive session at additional times as necessary.sessions is to promote open and candid discussion among the independent directors.
Compensation Committee
The Compensation Committee discharges the responsibilities of the Board of Directors relating to the compensation ofpaid to the Company’s Chief Executive Officer, and other executive officers and of the Board of Directors. The Compensation Committee Charter is posted onin the investor relations section of the Company’s website at www.orrstown.com.
The Compensation Committee Charter provides that the Compensation Committee is to be composedcomprised of three or more members, each of whom is to be “independent” as defined in NASDAQ Rule 5605(a)(2), an “outside director” within the meaning of Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), Section 162(m) and a “non-employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended.Act. The members of the Compensation Committee are to be appointed by the Board of Directors upon the recommendation of the Nominating and Governance Committee.
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The members of the Compensation Committee during 20192022 were Floyd E. Stoner (Chair), Michael J. Rice, Glenn W. Snoke, and Joel R. Zullinger, and Cindy J. Joiner,each of whom the Board of Directors has determined to be independent, an outside director and a non-employee director. Each of these members currently serves on the Compensation Committee. The Compensation Committee held nine formal meetings to conduct the business of the Compensation Committee, two of which included the Company's independent compensation consultant.
The Compensation Committee Charter provides that the Compensation Committee is to meet at least two times each year and at such other times as it deems necessary to fulfill its responsibilities. The Compensation Committee met 10 times during 2019.
Nominating and Governance Committee
The Nominating and Governance Committee exercises general oversight with respect to the governance of the Board of Directors. ItDirectors and the Company. The committee reviews the qualifications of, and recommends to the Board of Directors proposed nominees for, election to the Board.As discussed above, itBoard, as well as resignations from the Board as covered in the Nominating and Governance Committee Charter. The committee also is responsible for evaluating and recommending to the Board corporate governance practices applicable to the Company and for leading the Board in its self-evaluation process. In addition to those duties, the Nominating and Governance Committee reviews the formal succession plan of the organization semi-annually to ensure executive development.
The Nominating and Governance Committee reviews its Charter annually and recommends proposed changes for Board approval. The members of the Nominating and Governance Committee at the end of 2019during 2022 were Glenn W. Snoke (Chair), Andrea L. Pugh, Thomas D. Longenecker, Michael J. Rice and Joel R. Zullinger. Each of these members currently serves on the Nominating and Governance Committee. Each Director serving on the Nominating and Governance Committee has been determined to be independent an outside director and a non-employee director. The Nominating and Governance Committee Charter is posted on the Company’s website at www.orrstown.com. The Nominating and Governance Committee met 11eight times in 2019.in 2022.
Audit Committee
The Audit Committee provides oversight of the qualifications, independence and performance of the Company’s independent auditors;auditors and the performance of the Company’s internal audit function; andfunction. The committee also oversees management’s implementation of athe Company's system of controls, which are designed to safeguard the Company’s assets and income, assure the integrity of the Company’s financial statements, and maintain compliance with applicable law and regulations as well as the Company’s ethical standards, policies, plans and procedures, and with laws and regulations.procedures. The Audit Committee Charter is posted onin the investor relations section of the Company’s website at www.orrstown.com.
The Audit Committee Charter provides that the Audit Committee is to be composedcomprised of not less than three members, each of whom is to be “independent” as defined in NASDAQ Stock Market Rule 5605(a)(2) and SEC Rule 10A-3(b)(1); has not participated in the preparation of the Company’s financial statements at any time during the past three years; and is able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement, statement of comprehensive income, statement, and cash flow statement. In addition, at least one member of the Audit Committee is to have had current or past employment experience in finance or accounting, or other comparable experience or background, which results in the member’s financial sophistication as contemplated by NASDAQ Stock Market Rules.
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Members of the Audit Committee for 2019 were Cindy J. Joiner, CPA (Chair), Robert A. DeAlmeida, Mark K. Keller, Thomas D. Longenecker and Andrea Pugh. Each of the directors serving on the Audit Committee has been determined to be independent.
In addition, the The Board of Directors has determined that Cindy J. Joiner, CPA, has the requisite financial sophistication required by the Audit Committee Charter to serve as the Audit Committee financial expert. Ms. Joiner has experience as a CPA and Chief Financial Officer for a multi-state logistics and real estate enterprise where all finance and accounting functions report directly to her. Ms. Joiner has had ultimate responsibility for overseeing and assessing the performance of the respective organizations in the preparation of their respective financial statements which, together with her tenure as a member of the Audit Committee, has provided her with an understanding of, and familiarity with, accounting principles generally accepted in the United States of America.
Members of the Audit Committee for 2022 were Cindy J. Joiner, CPA (Chair), Mark K. Keller, Thomas D. Longenecker, and Andrea L. Pugh. Each of these members currently serves on the Audit Committee.
The Audit Committee Charter provides that the Audit Committee is to meet at least four times each year. The Audit Committee met 13eight times during 2019.2022.
Other Committees
The Company and the Bank also have a standing Enterprise Risk Management Committee and Asset-Liability Committee, and the Bank has a standing Trust Committee and Technology Steering Committee.
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Audit Committee Report
The Audit Committee has reviewed and discussed with management the Company’s audited financial statements for the year ended December 31, 2019.2022. The Audit Committee also has discussed with Crowe LLP the matters required to be discussed by the Statement on Auditing Standards, No 61, as amended (AICPA Professional Standards, Vol. 1 Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T; received from Crowe LLP the written disclosures and letter required by applicable requirements of the Public Company Accounting Oversight Board regarding Crowe LLP’s communications with the Audit Committee concerning independence,independence; and has discussed with Crowe LLP that firm’s independence. In that regard, the Audit Committee has considered whether the provision by Crowe LLP of certain limited permissible non-audit services in addition to its audit services is compatible with maintaining that firm’s independence and has determined that they are independent. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019,2022, filed with the Securities and Exchange Commission.SEC.
Submitted by the Audit Committee:
Cindy J. Joiner, CPA, Chair
Robert A. DeAlmeida
Mark K. Keller
Thomas D. Longenecker
Andrea L. Pugh


This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act, of 1934, as amended, and shall not otherwise be deemed filed under such Acts.
Compensation Committee Interlocks and Insider Participation
As noted previously, members of the Compensation Committee during 20192022 were Floyd E. Stoner, (Chair), CindyMichael J. Joiner,Rice, Glenn W. Snoke, and Joel R. Zullinger, each of whom the Board of Directors has determined to be independent, an outside director and a non-employee director. There are no interlocking relationships, as defined by SEC regulations under the Securities Exchange Act, of 1934, as amended, involving members of the Compensation Committee or the overall Board of Directors of the Company.

Transactions with Related Persons, Promoters and Certain Control Persons
During 2019, some2022, certain of the directors and executive officers of the Company and the Bank, members of their immediate families and some of the companies with which they are associated had banking transactions in the ordinary course of business with the Bank and may have similar transactions in the future. These transactions were made on substantially the same terms, including interest rates, collateral requirements and repayment terms, as those prevailing at the time for comparable transactions with non-affiliated persons and did not involve more than the normal risk of collectability or present other unfavorable features to the Company.
Any business dealing, including extensions of credit, between the Company or the Bank and a director of the Company or the Bank, or with any entity controlled by such a director, other than a deposit, trust service or other product or service provided by the Bank in the ordinary course of business, is required to be reviewed and approved by a majority of the disinterested directors. In considering a proposed insider transaction, the disinterested directors are to reasonably determine whether the transaction would be in the best interest of the Company or the Bank and on terms and conditions, including price, substantially the same as those prevailing at the time for comparable transactions with non-insiders.
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Extensions of credit by the Bank to a director of the Company or of the Bank, or to a related interest of such a director, are subject to Federal Reserve Board Regulation O. Although Regulation O requires the prior approval of such an extension of credit by the Bank’s disinterested directors if the aggregate amount of all extensions of credit to such director and the related interests of the director would exceed $500,000, the Company requires prior approval of all such extensions of credit. ReferPlease refer to the Company's Annual Report on Form 10-K for additional information on the Company's related party transactions.

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Compensation of Directors
The following table sets forth compensation received by directors of the Company in 2019,2022, other than Thomas R. Quinn, Jr., President and Chief Executive Officer. Mr. Quinn does not receive compensation in his capacity as a director.
20192022 DIRECTOR COMPENSATION TABLE 
NameFees Earned or
Paid in Cash ($)		Stock 
Awards ($)(1)
Option 
Awards ($) (2)
Non-Equity
Incentive Plan Compensation ($)
Change in Pension
Value and Nonqualified
Deferred Compensation
Earnings ($) (3)
All Other
Compensation ($)(4)		Total ($)
Robert A. DeAlmeida (5)
35,333  21,020  —  —  —  —  56,353  
Cindy J. Joiner53,000  21,020  —  —  —  7,850  81,870  
Mark K. Keller53,000  21,020  —  —  18,051  —  92,071  
Thomas D. Longenecker53,000  21,020  —  —  —  5,500  79,520  
Andrea Pugh53,000  21,020  —  —  7,604  —  81,624  
Michael J. Rice53,000  21,020  —  —  —  —  74,020  
Eric A. Segal53,000  21,020  —  —  —  10,500  84,520  
Glenn W. Snoke53,000  21,020  —  —  5,509  —  79,529  
Floyd E. Stoner53,000  21,020  —  —  —  27,500  101,520  
Joel R. Zullinger66,000  31,530  —  —  15,693  —  113,223  

NameFees Earned or
Paid in Cash ($)
Stock 
Awards ($)(1)
Option 
Awards ($)
Non-Equity
Incentive Plan Compensation ($)
Change in Pension
Value and Nonqualified
Deferred Compensation
Earnings ($) (2)
All Other
Compensation ($)(3)
Total ($)
Cindy J. Joiner26,500 51,130 — — — 7,850 85,480 
Mark K. Keller26,500 51,130 — — 10,858 — 88,488 
Thomas D. Longenecker26,500 51,130 — — — 5,500 83,130 
Meera R. Modi21,563 46,189 — — — — 67,752 
Andrea L. Pugh26,500 51,130 — — 10,169 — 87,799 
Michael J. Rice26,500 51,130 — — — — 77,630 
Eric A. Segal26,500 51,130 — — — 10,500 88,130 
Glenn W. Snoke26,500 51,130 — — 7,430 — 85,060 
Floyd E. Stoner26,500 51,130 — — — 27,500 105,130 
Joel R. Zullinger33,000 69,942 — — 13,804 — 116,746 
(1)
The grant date fair value of stock awards was calculated by multiplying the number of shares subject to the award by the fair value of Company Common Stock on the grant date ($21.02)25.20 per share on January 26, 2022 and $24.62 per share on April 27, 2022). Each director, other than Mr. Zullinger and Ms. Modi, received a grantgrants of 1,052 and 1,000 shares of Company Common Stock.Stock, respectively, on these dates. Mr. Zullinger received grants of 1,310 and 1,500 shares of Company Common Stock, respectively, on these dates. Ms. Modi received grants of 919 shares with a grantfair value of 1,500 shares.$23.47 per share on March 23, 2022 and 1,000 shares with a fair value of $24.62 per share on April 27, 2022.
(2)
The aggregate number of shares underlying unexercised but exercisable option awards at December 31, 2019 was as follows: Mr. Keller - 349; Ms. Pugh - 349; Mr. Snoke - 349; and Mr. Zullinger - 349. Mr. DeAlmeida, Ms. Joiner, Mr. Longenecker, Mr. Segal, and Mr. Stoner have not received option awards from the Company.
(3)
Represents the annual expense impact related to the value of the directors’ accumulated benefit under defined benefit and supplemental plans for the year ended December 31, 2019.2022. This includes both the director’s retirement and “brick” plans.
(4)
(3)		Represents amounts contributed by the Company into the Deferred Compensation Plan.
(5)
Mr. DeAlmeida joined the boards of the Company and the Bank on May 1, 2019.
Director Fees
To further align director compensation with shareholder interests, and in response to direct shareholder input arising from shareholder engagement with members of both management and the Compensation Committee, the Compensation Committee has determined that 50% of non-employee director compensation will be paid in cash with the remaining 50% being paid in restricted shares of Company Common Stock. Each non-employee director is also granted restricted shares of Company Common Stock at each year's annual meeting of shareholders.
Cash Compensation.During 2019,2022, each non-employee director of the Company and the Bank was paid an annual fee of $53,000,$26,500 in cash, except for Mr. Zullinger, who received $33,000 in cash, and Ms. Modi, who received a prorated amount of $21,563, due to her appointment to the Board Chairman who received $66,000. Mr. DeAlmeida received total payments of $35,333 in 2019, which represents his pro-rata share basedDirectors of the Company and Bank on the date he joined the Boards.March 10, 2022. Fees are paid quarterly in arrears on the first businesslast day of the months of January, April, July and October.each calendar quarter.
Restricted Stock Awards
In August 2019,Awards. On January 26, 2022, each non-employee Directors weredirector, except Mr. Zullinger and Ms. Modi, was granted $26,510 of restricted shares of Company Common Stock with a 16-month vesting period as part of their 2019his or her 2022 compensation. AnBased on the fair value of the Company Common Stock on the date of the grant, this amounted to an equity award of 1,052 restricted shares of Company Common Stock for each such non-employee director. Ms. Modi was granted a pro-rated award of 919 restricted shares of Company Common Stock with a 14-month vesting period on March 23, 2022 and a grant date fair value of $21,569 after her appointment to the Board of Directors on March 10, 2022. In addition, on April 27, 2022, each such non-employee director, except for Mr. Zullinger, was granted 1,000 restricted shares of Company Common Stock was granted to all Directors on August 28, 2019 with a 13-month vesting period and a grant date fair value of $21,020.$24,620. Mr. Zullinger receivedwas granted 1,310 restricted shares of Company Common Stock with a 16-month vesting period on January 26, 2022 and 1,500 restricted shares of Company Common Stock with a grant date fair value of $31,530,13-month vesting period on April 27, 2022 to compensate him for his role as Board Chairman. These awardsThe grant date fair values of the restricted shares of Company Common Stock awarded to Mr. Zullinger were granted with a one-year vesting restriction.$33,012 and $36,930, respectively.
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Deferred Compensation Plan
In 1995, the Company and the Bank established a non-qualified deferred compensation plan for directors and executive officers. Participation in the plan is voluntary.voluntary and, for directors, is limited to directors who joined the Board prior to September 1, 2018. Each participant may elect each year to defer all or a portion of his or her directors’ fees or, in the case of an executive officer, compensation. Directors deferring compensation must begin withdrawals from the plan by age 75 or termination of service as a director, whichever occurs later. Executive officers must begin withdrawals by age 65 or retirement, whichever occurs later. Payments may be made in equal monthly or annual installments over not more than ten years. Immediate distributions mayare to be made in the event the Company would experience a hostile takeover, an acquiring bank or bank holding company would fail to approve the plan, or the Bank, or any acquiring bank or bank holding company, would experience bankruptcy.takeover. If a participant wouldwere to die before payment of his or her entire account, the Company will pay the balance to his or her beneficiary in a
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single lump sum payment. The amounts deferred are invested in a rabbi trust with the trust department of the Bank as trustee. The participants direct the investment of their own accounts among various publicly available mutual funds designated by the Bank’s Trust Investment Policy Committee. Growth of each participant’s account is a result of investment performance and the public markets and is not a result of an interest factor or interest formula established by the participant or by the Company or the Bank. The Company may make contributions on behalf of directors to this rabbi trust from time to time.
The Company’s accrued benefit obligations related to this plan totaled $1.8$2.0 million at December 31, 2019.2022.
Director Retirement Plan
The Bank has entered into director retirement agreements with Ms. Pugh, and Messrs. Keller, Snoke and Zullinger. Each director retirement agreement provides the respective director with a normal retirement benefit in a specified amount, payable in 120 consecutive monthly installments commencing the month following the director’s termination of service as a director after having reached the normal retirement age of 65. Generally, the amount of a director’s annual normal retirement benefit is determined using his or her directors’ fees during the year in which he or she became a party to a director retirement agreement, projected to the normal retirement age of 65 with annual increases of four percent.4%. For every complete plan year after normal retirement age and before termination of service, the amount of the annual benefit will increase by four percent.4%. In 2018, the Board of Directors determined there would be no new director retirement benefits offered to current or future directors.
A director will forfeit his or her benefits under his or her director retirement agreement if the Bank terminates his or her service as a director for gross negligence or gross neglect of duties, commission of a felony or gross misdemeanor involving moral turpitude or fraud, disloyalty or willful violation of any law or policy committed in connection with the director’s service resulting in an adverse effect on the Bank or if the director, after termination of service (other than following a change in control of the Bank), competes with the Bank within a 50 mile radiusin violation of its main officethe restrictive covenants included in Shippensburg, Pennsylvania.his or her director retirement agreement. The Bank also would not be obligated to pay any benefit under a director retirement agreement to the extent the benefit would constitute an excess parachute payment under Section 280G of the Internal Revenue Code.
If a director is in active service of the Bank at the time of a change in control of the Bank, as defined in Section 409A of the Internal Revenue Code, the director will be entitled to begin receiving his or her normal retirement benefit following the later of the director’s termination of service as a director or attaining normal retirement age. The director retirement agreement provides for an early termination benefit in a specified amount in the event of an early termination of service as a director before normal retirement age, a disability benefit in the event of an early termination of service as a director due to disability and a death benefit.
The amount of the expense associated with the Director Retirement Plan includes increases in 20192022 in the net present value of the accrued benefit under the directors’ retirement agreement and is reported in the 20192022 Director Compensation Table for each participating director in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column. The Company's accrued benefit obligations related to this plan totaled $1.6$1.5 million at December 31, 2019.2022.
Brick Plan
Mr. Zullinger participates in a so-called “brick plan” that provides Mr. Zullinger or his beneficiaries with a monthly cash benefit for a period of 10 years beginning at age 65. The change in the net present value of Mr. Zullinger’s accrued benefit under his brick plan during 20192022 is reported in the 20192022 Director Compensation Table above in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column. Under the brick plan, Mr. Zullinger’s annual benefit, which became fully vested following his service as a director for the five-year period beginning August 1, 1982, would be $21,804 as of December 31, 2019.2022.

Board Diversity
The Nasdaq Stock Market has adopted listing rules related to board diversity (the “Board Diversity Rules”) which require NASDAQ-listed companies, subject to certain exceptions, to have (or explain why they do not have)(1) at least one director who self-identifies as a female and (2) at least one director who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities, or as LGBTQ+. A smaller reporting company, such as the Company, may satisfy the Board Diversity Rules by having at least two directors who self-identify as female. If a
21

NASDAQ-listed company does not have the required number of diverse directors, it must explain why it does not have at least two diverse directors on its board. The Board Diversity Rules are to be phased in over the next several years; however, although the Company is not yet required to comply with the Board Diversity Rules, the Company believes that it is presently in compliance with the rules. In addition to meeting the diversity requirements described above, the Board Diversity Rules also require the Company to disclose statistical information about its directors related to each director’s self-identified gender, race, and self-identification as LGBTQ+. These disclosures are set forth in the matrix below.
Board Diversity Matrix
Total Number of Directors11

Female

Male

Non-Binary
Did Not Disclose Gender
Part I: Gender Identity
Directors38——
Part II: Demographic Background
African American or Black————
Alaskan Native or Native American————
Asian1———
Hispanic or Latinx————
Native Hawaiian or Pacific Islander————
White28——
Two or More Races or Ethnicity————
LGBTQ+————
Did Not Disclose Demographic Background————
Definitions:
a.Non-Binary – Refers to genders that are not solely man or woman. Someone who is non-binary may have more than one gender, no gender, or their gender may not be in relation to the gender binary.
b.African American or Black (not of Hispanic or Latinx origin) – A person having origins in any of the Black racial groups of Africa.
c.Alaskan Native or Native American – A person having origins in any of the original peoples of North and South America (including Central America), and who maintain cultural identification through tribal affiliation or community recognition.
d.Asian – A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent, including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam.
e.Hispanic or Latinx – A person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race. The term Latinx applies broadly to all gendered and gender-neutral forms that may be used by individuals of Latin American heritage, including individuals who self-identify as Latino/a/e.
f.Native Hawaiian or Pacific Islander – A person having origins in any of the peoples of Hawaii, Guam, Samoa, or other Pacific Islands.
g.White (not of Hispanic or Latinx origin) – A person having origins in any of the original peoples of Europe, the Middle East, or North Africa.
h.Two or More Races or Ethnicities – A person who identifies with more than one of the above categories.
i.Underrepresented Individual in Home Country Jurisdiction – A person who self-identifies as an underrepresented individual based on national, racial, ethnic, indigenous, cultural, religious or linguistic identity in the country of the Foreign Issuer’s principal executive offices (as reported on the Foreign Issuer’s Forms F-1, 10-K, 20-F or 40-F).
j.LGBTQ+ – A person who identifies as any of the following: lesbian, gay, bisexual, transgender or as a member of the queer community.
22

Information About Executive Officers
In addition to Thomas R. Quinn, Jr., President and Chief Executive Officer of the Company and of the Bank, who also serves as a director of the Company and of the Bank, information about the other executive officers of the Company and the Bank are:is set forth below. Unless otherwise stated, each executive officer has held his or her current occupation for the last five years.
Luke BernsteinAdam Bonanno - 41,46, joined the Bank in 2017 as a Senior Vice President. He was named Executive Vice President and Chief Retail Officer, including marketing and corporate communications, in 2018. Prior to joining the Bank, he was a Senior Vice President with the Pennsylvania Bankers Association from 2015 to 2017 and Deputy Chief of Staff, Office of the Governor, Commonwealth of Pennsylvania from 2011 to 2015.
Barbara E. Brobst - 61, joined the Bank in 1997. She was named Executive Vice President and Chief Human Resources Officer in 2015. Previously she was Senior Vice President - Human Resources since 2011. Prior to that, she served as Senior Vice President - Wealth Services from 2000 to 2011.
Thomas R. Brugger - 53, joined the Company and the Bank in July, 2019,2022 as Executive Vice President, Chief Operations and Chief FinancialTechnology Officer. From 2012January 2022 through May 2022, he served as Executive Vice President, Technology at WSFS Financial Corp. From 2019 to 2018,2022, he served as Executive Vice President, Chief FinancialTechnology Officer at Sun Bancorp, Inc.Bryn Mawr Trust Company. Mr. Bonanno previously served as Chief Data Officer for BB&T from 2015 to 2019.
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Robert G. Coradi - 58,61, joined the Company and the Bank in 2012, and was named Secretary of the Company and the Bank in 2018. He has been Executive Vice President and Chief Risk Officer of the Company and the Bank since April 2014. From October 2012 to April 2014, he served as Senior Vice President, Chief Credit Officer of the Bank. From 2008 to 2012, he served as a Commercial Sales Manager in the Pennsylvania Division of Susquehanna Bank.
Matthew Dyckman - 54, joined the Company and the Bank in 2021 as Executive Vice President, General Counsel. From 2013 to 2021, he served as Counsel at Goodwin Procter LLP, a global law firm. Mr. Dyckman previously served as a partner at the law firms Dentons LLP and Thacher Proffitt & Wood LLP. He has over 25 years of experience representing financial institutions on a wide variety of corporate, transactional and regulatory matters.
Philip E. Fague - 60,63, joined the Bank in 1988. He isSince 2016, he has served as Executive Vice President and Assistant Secretary of the Company and Executive Vice President and Chief Trust Officer of the Bank. From August 2012 until September 2016, he was Executive Vice President - Trust andHe served as Chief Mortgage Officer of the Bank.
Robert J. Fignar - 54, joined the Bank in 2018 following the acquisition of Mercersburg Financial Corporation. He initially served as an Executive Vice President and Market President and has been Executive Vice President and Chief Operations and Logistics Officer since April 2019. Prior to joining the Bank, he was the President and CEO of Mercersburg Financial Corporation and First Community Bank of Mercersburg since 2008.from January 2020 through September 2022.
Jeffrey S. Gayman - 47,50, joined the Bank in 1996. He was appointed to anExecutive Vice President, Chief Mortgage and Retail Officer in October 2022. He served as Executive Vice President and Market President position in 2018.for the South Central Pennsylvania region from 2018 through September 2022. Prior to that, he wasserved as Executive Vice President - Retail Banking and Consumer Lending since February 2016. Previously, hefrom 2016 to 2018. He was Senior Vice President - Retail Banking sincefrom 2012 to 2016 and Chief Commercial Officer from 2009 to 2012.
Christopher D. Holt – 56,59, joined the Bank in 2019 as Executive Vice President and Market President for the Maryland region. Prior to his tenure at Orrstown,joining the Bank, Mr. Holt spent more thanover 30 years in the banking industry in roles of increasing responsibility, including 21 years with Susquehanna Bankmost recently as Regional President, Maryland, for BB&T and its successor BB&T.predecessor, Susquehanna Bank.
David T. Hornberger - 55,58, joined the Bank in 20152016 as Executive Vice President and Market President for the Eastern Pennsylvania region. Prior to joining the Bank, he had served as Regional President for Susquehanna Bank and its predecessor Graystone Bank since 2005.
Neelesh Kalani, CPA - 48, joined the Company and the Bank in 2020 as Senior Vice President, Chief Accounting Officer. In April 2021, he was appointed Executive Vice President, Chief Financial Officer of the Company and Market Executivethe Bank. Prior to joining the Company and the Bank, Mr. Kalani served as the Chief Accounting Officer of Sun Bancorp, Inc. for Susquehanna Bank since 2010.over seven years and served in previous comparable roles at Harleysville National Corporation and Willow Financial Bancorp, Inc. Prior to that, he worked for seven years in the financial services audit group at KPMG, LLP.
Zachary Khuri – 36,39, joined the Bank in 20192019. He has served as Executive Vice President and Market President for the Central region.Pennsylvania region since October 2022. Prior to his tenure at Orrstown,that, he served as Executive Vice President and Market President for the Capital region from 2019 through September 2022. Prior to joining the Bank, Mr. Khuri held similar roles of increasing responsibility at FNB Corporation and Commerce/Metro Bank. All told, Mr. Khuri has more than 15 years of financial institution experience.
Adam L. Metz - 4851, joined the Bank in 2016. He has been an Executive Vice President and Chief Revenue Officer of the Bank since February 2019 and served as Executive Vice President and Chief Lending Officer of the Bank prior to that.that time. From 2011 to 2016, he served as Senior Vice President, Chief Lending Officer of Metro Bank, headquartered in Harrisburg, PA.Pennsylvania.
William J. Ziegler, CPA – 59, joined the Bank in 2021 as Executive Vice President, Chief Credit Officer. From 2016 to 2021, he served as Senior Vice President, Senior Credit Officer for FNB Corporation. Prior to his tenure at FNB, Mr. Ziegler spent 22 years with Truist and its predecessors in roles of increasing responsibility to include Senior Vice President, Senior Credit Officer and Regional Loan Administrator.

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COMPENSATION DISCUSSION AND ANALYSIS

In this section, we describe the objectives and elements of our compensation philosophy, policies and practices with respect to the compensation of each individual who served as our principal executive officer or principal financial officer during 2022, as well as our three most highly compensated executive officers who appear in the “Summary Compensation table for 2019” below (referred to collectively(other than our principal executive officer and principal financial officer). References throughout this section asproxy statement to our “Named Executive Officers” or “NEOs”). refer to each of the individuals named in the table below. Our NEOs for the fiscal year ended December 31, 2019,2022 were:
Named Executive OfficerTitle
Thomas R. Quinn, Jr.President and Chief Executive Officer
Thomas R. BruggerNeelesh KalaniExecutive Vice President and Chief Financial Officer
Robert G. CoradiExecutive Vice President and Chief Risk Officer
Adam L. MetzExecutive Vice President and Chief Revenue Officer
Philip E. FagueChristopher D. HoltExecutive Vice President and Chief Trust OfficerMarket President (Maryland Region)
David P. BoyleFormer Executive Vice President and Chief Financial Officer

EXECUTIVE SUMMARY

Our 2019 Performance2022 Compensation Actions

In 2022, we continued the robust shareholder engagement campaign that we have held annually since 2019. We offered engagement meetings to shareholders representing approximately 30% of our outstanding shares. During this engagement, shareholders expressed their general satisfaction with the Company's performance and the modifications we made to our compensation program beginning with the 2021 performance year, modifications which emphasized the alignment between executive compensation and objective corporate performance over a variety of performance metrics and timeframes. As a result of steady leadership,these changes as well as 89% support on our 2022 Say-on-Pay proposal, the Compensation Committee determined to maintain the design of the 2021 incentive program for the 2022 performance year.
The hallmarks of our 2022 incentive programs were:
•Objective performance goals of Net Income and Return on Average Equity (“ROAE”) for all executive officers. These metrics were selected because the Compensation Committee considers them the most significant indicators of the Company's annual financial performance.
•Incentive compensation, if any, would be paid based on the achievement of Company results against a range (threshold, target and maximum) of pre-established performance metrics. If corporate results are above or below the targets, awards for executives are adjusted on an interpolated straight-line basis within the performance range. Performance below threshold for a given performance results in 2019,no incentive award for that metric.
•Provided that performance is at or above threshold for at least one of the two performance goals, the Compensation Committee has the ability to adjust awards upward or downward by up to 20% of the earned award. This adjustment potential is intended to provide the Compensation Committee with a flexible tool to recognize Company produced solid earnings and balance sheet growth while maintaining strong capital levels, completing one acquisition and integratingor individual performance considerations outside of the two acquisitions.objective performance measures.

•Use of a credit quality modifier on our cash Short-Term Incentive Plan (“STIP”) awards, whereby awards would have been reduced or eliminated based on unacceptable credit risk outcomes.
•The use of forward-looking performance-vesting conditions on 50% of the Long-Term Incentive Plan (“LTIP") awards granted to each executive. Performance-vested awards vest, if at all, based on the Company’s Return on Average Assets (“ROAA”) and Total Shareholder Return (“TSR”) over a three-year period beginning in the year of grant, and awards will be forfeited if a minimal acceptable level of ROAA is not achieved. These metrics were selected because the Compensation Committee considers them to be important long-term indicators of the Company’s success and because they provide for a different view of performance than the net income and ROAE performance required to initially earn the grant.
Our 2022 Compensation Outcomes
Base Salary
Base salary increases for 2021 ranged from 2.0% to 24.6% depending on performance, compensation history, competitive market positioning and other factors.
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ObjectiveFiscal Year 2019 Performance
Building Shareholder Value
•Generated 27.9% total return
•Increased declared dividends by 17.7% from 2018
•Increased tangible book value 5.5% from $16.73 to $17.65(1) despite the impact of an acquisition
•Increased net income from $12.8 million to $16.9 million
Balance Sheet Growth
From December 31, 2018 to December 31, 2019:
•Increased total assets 23.2%
•Increased loans outstanding 31.8%
•Increased deposit balances 20.3%
Managing Risk
•Net charge-off ratio of 0.02%
•Ratio of nonperforming assets to total assets of 0.46%
•Increased Leverage Ratio from 8.4% to 8.5%
•Improved funding mix by reducing exposure to wholesale borrowings, brokered deposits, and listing service deposits
(1)
Tangible book value is a financial measure determined other than in accordance with U.S. GAAP. Refer to Supplemental Reporting of Non-GAAP Measures in our Annual Report on Form 10-K for the year ended December 31, 2019 for additional information regarding our use of non-GAAP measures, including a reconciliation of the calculation of tangible book value (a non-GAAP measure) to book value (the most directly comparable GAAP measure).
2022 Incentive Compensation

Overall, Orrstown’s 2019Incentive awards link annual compensation to annual Company performance exceededand link the long-term compensatory interests of NEOs to the interests of shareholders in the long-term success and growth of the Company. Our incentive compensation program for 2022 provided cash opportunities through the STIP and equity opportunities through the LTIP, which consists of time-vested and performance-vested equity awards. Incentive compensation to our NEOs in 2022 was targeted expectations for both net incomeevenly between cash and returnequity award opportunities, with actual awards initially earned based on average equity (“ROAE”), while successfully integrating two acquisitions, converting the Company’s trust operating system,our Net Income and welcoming 144 new associates.
2019 Compensation Highlights
Our fiscal year 2019 results and compensation decisions continue to illustrate the application of our pay-for-performance philosophy, with pay being driven byROAE performance in 2022.
In reviewing actual performance results for calculation of initial STIP and LTIP awards, the Compensation Committee determined that it was appropriate to exclude two one-time expenses that were incurred in 2022 and that the Committee believes will drive long-term growth, improve operating efficiencies in future years and therefore enhance long-term shareholder value. While the Committee annually has the ability to exclude one-time positive or negative items, 2022 was the first time it has chosen to do so.
These one-time expenses reflected the following ways:actions in 2022 and associated expenses:
•Fiscal Year 2019 Base Salary. Except for increasesClosure of five branch locations in connection with promotionsPennsylvania and new hiring, NEOs receivedstaffing model adjustments designed to drive long-term growth and improve operating efficiencies. As a 3.0% increaseresult of these initiatives to base pay, in-line withstreamline our physical footprint, the Company recorded a costpre-tax restructuring charge of living increase.$3.2 million.
•Settlement of a ten-year-old litigation matter, which resulted in a pre-tax provision for legal settlement of $13.0 million, to avoid the cost, risks and distraction of continued litigation.
The fiscal year 2019 Annual Incentive payout was above target. The combined weighted average payout foractual amounts earned under the NEOs was 117.0% of the target amount.2022 incentive programs based on adjusted performance in 2022 are described below:
•Adjusted netNet income (1)for 20192022 was $20.4$34.8 million compared to $29.0 million at target, resulting in cash and stock awardsrewards payable under both the planSTIP and LTIP at 116.6%the maximum of targetthe performance range with respect to this performance metric.
•Adjusted ROAE (1)for the period2022 was 11.3%,14.25% compared to 10.40% at target, resulting in cash and stock awards payable under both the planSTIP and LTIP at 117.4%the maximum of targetthe performance range with respect to this performance metric.
(1)
Adjusted net income and ROAE exclude the impact of non-recurring expenses associated with 2019 acquisition and branch consolidation activity.
ResponseThe Compensation Committee has the discretion to 2019 Say-on-Pay Vote
At the 2017 Annual Meeting of Shareholders, a majorityadjust both STIP and LTIP awards upward or downward by up to 20% of the shareholders approved an advisory vote recommendingearned award under certain limited circumstances. The Compensation Committee exercised this discretion to decrease awards from 150% of target to 130% for our CEO and 138% for our other NEOs. The Committee determined this downward adjustment was appropriate in light of the adjustments for one-time expenses and the fact that such Say-on-Pay vote be taken annually. The Company continues to follow this advisory votethe Company’s actual GAAP performance was lower than its adjusted performance results.
STIP awards were additionally contingent on the annual frequencyCompany maintaining an acceptable level of such Say-on-Pay votes. Allcredit quality, a condition which was satisfied for 2022. As a result, STIP awards were paid in cash at as described in more detail below.
LTIP awards were granted in early 2023 at 130% and 138% of target to our CEO and other NEOs, as applicable. Awards consisted of 50% time-vested restricted stock awards and 50% performance-vested restricted stock units.
Time-vested restricted stock awards will vest 33% on each of the structural elements of our NEOs’ 2019 compensation program were determined prior to the 2019 advisory vote of executive compensation (“Say-on-Pay”). Though Say-on-Pay votes are nonbinding, our Board and the Compensation Committee take the opinions of our shareholders very seriously and consider feedback from the shareholders when making decisions. At the 2019 annual shareholder meeting only approximately 57%first three anniversaries of the votes cast were in favorgrant date, provided the NEO is employed on the vesting date.
Performance-vested restricted stock units will vest 100% after three years, with the number of our advisory Say-on-Pay proposal. Whilerestricted stock units that vest dependent on performance against pre-established goals during the 2019 Say-on-Pay proposal was approved bythree-year performance period from 2023-2025 as well as continued employment. The performance measurement on these awards uses a majority of votes casttwo-step measurement process:
1.First, the Company’s Return on Average Assets (“ROAA”) is tracked against internal expectations that are communicated at the meeting,time of grant based on budgeted performance expectations at that time.
2.After determining the 57% approval fell short of our goal and expectations, prompting us to initiate a constructive dialogue with our shareholdersinitial vesting amount based on the subjectCompany's performance relative to ROAA targets, the Company’s total shareholder return will be measured against an index of executive compensation.
We offered engagement opportunities to 93 of our shareholders, representing 48.3% ownership of our outstanding shares; 60 shareholders representing 33.3% ownership, accepted our offer. The Company’s Chairman orsimilarly-sized banks determined on the Chairmandate of the Compensation Committee attended meetings with shareholders who represented 33.0%award. The number of restricted stock units earned using the outstanding shares. All meetingsROAA performance measures then will be adjusted upward or downward by up to 20% based on the Company’s total shareholder return performance against the index.
Equity Awarded in 2022 for 2021 Performance
Based on 2021 performance against our net income and ROAE goals, executives were attended by a membergranted equity awards in 2022 at 125%-130% of the Board of Directors.
There were diverse views regarding pay structure provided by shareholders, generally dependent on whether the given shareholder was more interestedtarget in the dividend growthamounts, and under the conditions, set forth in the 2022 Grant of Plan-Based Awards Table in the Company,section entitled “Equity Granted in a position of “permanent capital” (i.e. index fund manager), or active institutional money manager.2022” below. The consensus view held that there needed to be greater disclosure surrounding not only the components of compensation but also the Board’s rationale behind each component. That said, therestock awards were some majority views,split evenly between time-vested restricted stock awards and performance-vested restricted stock units, which will vest, if at all, based on our Compensation Committee dedicated considerable time reviewing our compensation programs to design a framework that was moreperformance against pre-established three-year ROAA and TSR goals.
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directly performance-basedSHAREHOLDER ENGAGEMENT
Since 2019, the Company has recognized the value of consistent communication with shareholders to be implemented beginningbetter understand their views on a variety of topics, including executive compensation programs and ESG issues, involving the Company. The Company annually engages in 2020. In orderextensive dialogue with shareholders regarding the Company’s performance and compensation practices through a formal shareholder engagement program. The Company’s shareholder engagement program is now a year-round process whereby the Company offers engagement to address shareholder’s suggestions aboutinterested institutional shareholders and retail shareholders owning 10,000 or more shares of the performance-based approachCompany's Common Stock through periodic telephonic meetings, as well as in-person or virtual meetings with institutional shareholders and/or their representatives as requested. Our shareholder engagement program assists management and the Board of Directors in better understanding shareholder opinions and priorities, in making thoughtful and deliberate decisions, and in ensuring that these decisions are aligned with the interests of shareholders.
Likewise, the Compensation Committee has made the Company’s shareholder engagement program part of its annual compensation decision-making process. The Company has experienced improving Say-on-Pay proposal vote results, with 57%, 71%, 85% and 89% of votes cast being cast in favor of the Company’s Say-on-Pay proposals at the annual meetings in 2019, 2020, 2021 and 2022, respectively. The Compensation Committee believes that this improvement is, in part, the result of the Company’s enhanced shareholder engagement efforts. Though the Say-on-Pay votes are nonbinding and the results have improved, the Board of Directors and the Compensation Committee seriously consider the opinions of, and feedback from, our shareholders when making compensation decisions. The Company continues to compensation, we adoptedmaintain an annual frequency of Say-on-Pay votes.
Between the 2022 Annual Meeting of Shareholders and the date of this proxy statement, the Company offered engagement opportunities to holders of approximately 30% of its outstanding shares. During these meetings, shareholders expressed their general satisfaction with the Company's performance and the modifications to our compensation programs, as summarized below,program made for 2021, plan designs which are being implemented in 2020. These changes are applicable to all NEOs.were maintained for 2022.

What We HeardModifications Beginning in 2020
Long-Term Incentive Plan (LTIP) only time vestsHalf of LTIP will vest based on performance as measured at the end of a three-year period
LTIP and Short-Term Incentive Plan (STIP) use same metrics for measurementSTIP and portion of LTIP that performance vest will use different metrics for performance measurement
Some Change of Control Agreements are single triggeredGoing forward, all newly awarded Change of Control Agreements will have a double trigger

Aside from asking for greater disclosure surrounding the rationale behind the use of discretionary bonuses, shareholders did not explicitly comment about the validity of discretionary bonuses. However, the Compensation Committee’s interpretation of comments surrounding performance vesting resulted in a commitment to refrain from awarding discretionary bonuses in 2020.
HOW WE SET COMPENSATION
Role of Compensation Committee in Setting Named Executive Officer Compensation
OurThe Company's Compensation Committee, which is composedcomprised entirely of independent directors, is responsible for overseeing the development and approval of compensation and benefits amounts paid to ourthe Company's NEOs and non-employee directors, and administering ourthe Company's incentive plans, which includes the determination of grant amounts and vesting terms of awards under such plans. In addition, ourthe Compensation Committee is responsible for the development and approval of employment agreements with our NEOs. OurThe Compensation Committee is responsible for determining whether ourits executive compensation policies are reasonable and appropriate, meet the stated objectives of those policies and effectively serve the best interests of the Company and ourits shareholders. OurThe Compensation Committee has discretion to approve, disapprove or modify recommendations made by ourits Chief Executive Officer. However, our Chief Executive Officer is not present during deliberations or voting by our Compensation Committee relating to his own compensation.
Roles of Executive Officers and Management in Setting Executive Compensation
The Compensation Committee occasionally requests one or more members of executive management to be present at committee meetings where executive compensation and Company or individual performance are discussed and evaluated. Executives may provide insight, suggestions or recommendations regarding executive compensation; however, only Compensation Committee members vote on decisions regarding executive compensation.
The Company’s Chief Executive Officer provides recommendations to the Compensation Committee on matters relating to the compensation of the executive management team other than his own compensation. In addition, the Chief Executive Officer provides specific recommendations regarding base salary adjustments and STIP and LTIP awards for members of the executive management team other than himself to the Compensation Committee. The Compensation Committee retains sole discretion with respect to compensation decisions regarding the Company’s executive management team.
Role of Compensation Consultant
Pursuant to its charter, ourthe Company's Compensation Committee may, atin its sole discretion, retain or obtain the advice and assistance of a compensation consultant, legal counsel or other adviser. OurThe Compensation Committee may retain or obtain the advice of an adviser only after taking into consideration factors related to that person’s independence from management, including each of the factors it is required to take into consideration under the Corporate Governance Standards under NASDAQ Rule 5600, subject to limited exceptions. OurThe Compensation Committee is responsible for the appointment, compensation, and oversight of any adviser it retains. The Company is obligated to provide appropriate funding for the compensation of any such adviser.
In October 2019,For 2022, the Company, at the behest of the Compensation Committee, we engagedretained the services of Aon, which is an independent executive compensation consultant, Korn Ferry,consulting firm. In 2022, Aon did not provide any other services to provide guidance on shareholder outreach efforts. A fundamental component of Korn Ferry’s engagement was to assess whether changes the Compensation Committee enacted alignedCompany and worked with the feedback provided in our shareholder engagements. As previously mentioned, structural changes recommended by the Compensation Committee, and subsequently approved by the Board were effective as of January 1, 2020.
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2019Company’s executive management team only on matters for which the Compensation Committee is responsible. The Compensation Committee assessed the independence of Aon in 2022 pursuant to SEC and NASDAQ requirements and concluded that no conflict of interest exists that would prevent Aon from serving as an independent consultant to the Compensation Committee. The Compensation Committee periodically seeks input from Aon on a range of external market factors, including evolving compensation trends, appropriate peer group companies, and market survey data. Aon also provides general observations on the Company’s compensation programs, but it does not determine or recommend the amount or form of compensation for the NEOs.
2022 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Overview
Our compensation philosophy is designed to retain talent and align pay with performance of the Company. The following table lists and describes the purpose of the key elements of 2019 compensation for our NEOs:
Element of PayDescriptionPurpose
Base SalaryFixed cash compensationTo attract and retain key executive talent by providing a stable source of compensation for services rendered during the fiscal year
Short-Term Incentive Plan (STIP)Performance-based cash payment based on financial, operational, and strategic metricsTo motivate executive officers to achieve the Company’s annual strategic and financial goals and reward individual performance
Long-Term Incentive Plan (LTIP)Plan—Time-VestingPerformance-based share awards with multi-year vesting periods; award sizes are based on financial metricsTo align long-term interests of executives and shareholders and provide appropriate balance of at-risk compensation that incentivizes long-term value creation and retention
Discretionary BonusesLong-Term Incentive Plan—Performance-VestingCash payments made to recognizeRestricted Stock Unit (RSU) grants with multi-year vesting and performance periods; RSUs vest based on achievement of specific financial operational, and strategic successmetricsTo award NEOs for individualalign long-term interests of executives and shareholders and provide appropriate balance of at-risk compensation that incentivizes executives to achieve long-term performance and contributions that aided the Company in achieving strong performance or were extraordinarygoals
Supplemental Employee RetirementDeferred Compensation Plans (SERP)IncludesInclude deferred compensation plans and salary continuation plansTo provide NEOs an economic incentive for long-term service to the Company
Limited PerquisitesCar allowances and/or club membership duesTo defray the NEOs’ expenses for recruitment or client entertainment and reduce the Company’s mileage reimbursement expense
The STIP and LTIP were earned on performance metrics measuring 2019 results and adjusted on a payout scale depending on performance relative to targeted metrics. The STIP was paid in cash in 2020 and capped at 25% of the NEO’s base salary, which is lower than the previous year. The Compensation Committee decided that any amount earned in the STIP greater than 25% of the NEO’s base salary would be awarded in restricted stock in 2020, with a three-year cliff vesting, to better align management with shareholder interests. The LTIP was paid in restricted stock in 2020 with a three-year cliff vesting.
The Company has claw-back provisions in place for losses arising from individual instances of fraud or malfeasance, including legal costs. Additionally, if the Bank were ever not to be considered “well-capitalized” as defined by U.S. banking regulations, all unvested LTIP awards are subject to automatic claw-back. The Compensation Committee has discretion over other circumstances that may trigger a claw-back provision.
Benchmarking of Compensation Levels
In making compensation decisions for 2019,2022, the Compensation Committee reviewed market data related to base salary, annual bonus and total compensation from the most recent public information available for the peer group identified in the table below. This peer group did not change from 2018 to 2019. While initial consideration was given to banks in PA, MD, NJ, NY, PA, and VA, with assets between $1 billion and $5 billion, the Compensation Committee narrowed this list to a peer group of banks which met the following basic criteria:
•Commercial banks:banks;
•Having assets of approximately $1.2$1.4 billion to $4.6$5.3 billion at December 31, 2021, compared to Orrstown,the Company, which had approximately $2.4$2.8 billion in assets as of December 31, 2019;2021;
•Domiciled in the states of PA, MD, NJ, NY, PA, and VA;VA, but not headquartered in New York City or on Long Island; and
•Having similar business models, including a commercial banking focus with a wealth management and trust and/or mortgage businesses.business.
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Applying these criteria resulted in the following 2122 institutions, believedwhich the Compensation Committee determined to be most closely comparable to the Company:
ACNB CorporationAmerican National Bankshares, Inc.Arrow Financial Corporation
BCB Bancorp, Inc.Bryn Mawr Bank CorporationC&F Financial CorporationCarter Bankshares, Inc.
Chemung Financial CorporationCitizens & Northern CorporationCity Holding Company
CNB Financial Corporation
Codorus Valley Bancorp, Inc.Evans Bancorp, Inc.
Financial Institutions, Inc.First BankFirst Community Bancshares, Inc.
First United CorporationMid Penn Bancorp, Inc.Old Line Bancshares, Inc.
Peapack-Gladstone Financial CorporationPenns Woods Bancorp, Inc.People'sPeoples Financial Services Corp.
Shore Bancshares,Primis Financial Corp.Summit Financial Group, Inc.Southern National Bancorp of Virginia, Inc.UnivestThe Community Financial Corporation
TrustCo Bank Corp NY
The Compensation CommitteeCompany reviewed both the data from this peer group and other industry surveys. The Compensation CommitteeWhen comparing the Company and its peers, the Company did not use a formulaic approach to benchmarking compensation for individual job positions. The Compensation Committee also considered data relatedpositions, due primarily to three-year average total compensation for executive officer positions, as that is a metric available through S&P Global Market Intelligence for banks in the Mid-Atlantic region with assets between $1 billionlack of direct comparability among job functions and $5 billion.responsibilities, and individual experience.
Components of Our Compensation Program
Base Salary
Base salaries for our NEOs are set annually by the Compensation Committee and are designed to compensate each executive for the experience, education, responsibilities and other qualifications of the executive that are essential to the specific role the executive serves within the organization. Our NEOsBase salaries are set at levels competitive within the industry and the local market area in order to attract and retain executive officers who possess the knowledge, skills and abilities necessary to successfully execute their duties and responsibilities. The base salaries for 2019 were determined by pre-existing employment agreements.each of our NEO's for the two most recent fiscal years and the year-over-year change are set forth in the table below.
2018 Base Salary ($)2019 Base Salary ($)Year-Over-Year Change (%)2021 Base Salary ($)2022 Base Salary ($)Year-Over-Year Change (%)
Thomas R. Quinn, Jr.Thomas R. Quinn, Jr.514,723  530,165  3.2Thomas R. Quinn, Jr.561,707700,00024.6
Thomas R. Brugger(1)
—  143,750  —
Neelesh Kalani
Neelesh Kalani
285,000325,00014.0
Adam L. MetzAdam L. Metz265,502  273,467  3Adam L. Metz289,737295,5322.0
Robert G. CoradiRobert G. Coradi221,731  245,382  10.7Robert G. Coradi267,753295,00010.2
Philip E. Fague236,480  242,857  2.7
Christopher D. HoltChristopher D. Holt341,250348,0752.0
(1) Mr. Brugger has an annual salary of $325,000. The 2019 amount above is indicated from his starting employment date.
As previously mentioned,In determining 2022 base salaries for all NEOs, increased in-line with the Company’s cost of living increase for employees. The one exception was Mr. Coradi. In anticipation of the closing of the Hamilton transaction, the Compensation Committee realizedconsidered the Company’s record earnings performance in 2021 on measures such as net income and return on average equity, as well as the uniquely challenging labor market and inflationary wage pressures the Bank was experiencing at that time. The Committee also considered factors specific to each NEO, such as individual and departmental performance, compensation history, competitive market positioning and other factors. In particular, the Compensation Committee increased Mr. Quinn's base salary to reflect his performance as Chief Executive Officer of the Company, would be largerhis leadership through the challenging times of the COVID-19 pandemic, and more geographically diverse with a more complex and robust Enterprise Risk Management requirement.the Company's improved financial performance. Mr. Coradi’sKalani's base salary increase was deemed commensurate withincreased one year after his appointment as the additional responsibilitiesCompany's Chief Financial Officer after an evaluation of his positionperformance and in-line with roles at companiescontributions to the Company's success. Mr. Coradi's base salary was increased to reflect additional duties and responsibilities. Mr. Metz and Mr. Holt received customary annual base salary increases.
Incentive Compensation
General
Incentive awards link annual compensation to annual Company performance, and link the long-term compensatory interests of a similar size.
Annual Incentive Plan
The Company’s Annual Incentive Plan was createdNEOs to motivate executives, promote strong corporatethe interests of shareholders in the long-term success and growth and ultimately align executive pay with company performance. The Annual Incentive Plan providesof the Company. Our incentive compensation program for 2022 provided cash opportunities through the STIP and equity opportunities through the LTIP, which provides for both time-vested restricted stock awards and performance-vested restricted stock units awards. Incentive compensation to our NEOs based on 2022 performance was targeted evenly between cash opportunities under the STIP and equity award opportunities under the LTIP, respectively. The Annual Incentive Plan was last approved bywith actual awards in both programs initially earned based on our shareholders at our 2018 annual meetingNet Income and made available 881,920 shares available for award.ROAE performance in 2022.
BothAwards under the STIP and LTIP are made early each year based on achievementthe Company’s performance in the previous year. Upon completion of financial goals as established byeach fiscal year, the Compensation Committee atdetermines each NEO’s STIP award and LTIP award relative to corporate performance against the beginning of each fiscal year.pre-established metrics and targets. For 2019,2022, the Compensation Committee selected net incomeNet Income and ROAE as the operative financial metrics.metrics that determined initial award amounts for both STIP and LTIP awards. The Committee also set challenging performance targets that align with the Company’s overall business strategy. If corporate results are above or below the targets, payouts for executives are adjusted based on a performance range.Compensation
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For 2019,Committee further selected ROAA and total shareholder return as the threshold, target, and maximum award opportunities underperformance metrics to determine the Annual Incentive Plan available to NEOs is described in the table below.
Threshold Opportunity
(37.5% of base salary)		Target Opportunity
(50% of base salary)		Maximum Opportunity (75% of base salary)
Thomas R. Quinn, Jr.$198,812$265,083$397,624
Thomas R. Brugger(1)
53,90671,875107,813
Adam L. Metz102,550136,734205,100
Robert G. Coradi92,018122,691184,037
Philip E. Fague91,071121,429182,143
(1) Mr. Brugger’s amounts are indicated using his starting employment date.
Any awards earned under the Annual Incentive Plan are then paid out in both cash and equity following completionvesting, if any, of the fiscal year. For 2019, the Committee determined to cap the cash portion of the award at 25% of the NEO’s base salary. The remaining portion of the award was provided in equity and granted in the year following the performance period. For example, if the CEO earned the maximum award opportunity $397,624, $132,541 (representing 25% of the CEO’s base salary) would be paid in cash while the remaining $265,083 would be granted in time-based equity. The equity grant will cliff vest after a three-year period. Additionally, Mr. Quinn and Mr. Brugger received a discretionary restricted stock grant with a grant date fair value of $73,815 and $21,090, respectively. TheLTIP awards cliff vest after three years andthat are subject to claw-back provisions.future performance vesting. These metrics were selected because the Compensation Committee considers them the most significant indicators of the Company’s financial performance.
In assessingObjective Performance Evaluation
Under both the Company's performance relative toSTIP and the LTIP, each of the two objective performance goals for purposes of determining payouts under the plan, the Compensation Committee considered the impact of non-recurring expenses associated with 2019 acquisition and branch consolidation activities. After considering such impact, the Compensation Committee determined it to be appropriate and equitable to exclude the impact of the acquisition and branch consolidation activity on target net incomeNet Income and ROAE since including such charges wouldrepresented 50% of each NEOs’ total target incentive payout between the two plans. The target performance for these goals equalled the Company’s budgeted Net Income and ROAE for 2022.
Each NEO’s STIP award and initial LTIP award is targeted at a specified percentage of base salary based on the specific tier to which the officer is assigned. For 2022, Mr. Quinn was the only serve to penalize the plan participants for successfully executing the strategic plan articulated by the Board.
NEO in Tier 1; Messrs. Kalani, Metz, Coradi, and Holt were all in Tier 2. The following table represents the Net Income and ROAE targets for 2022 as approved by the Compensation Committee and the corresponding payout scale as a percentage of base salary:salary.
Performance targets set by the Compensation Committee in 2019:
Net Income (dollars in thousands) $Payout % of Base SalaryROAEPayout % of Base Salary
Maximum
Bonus as % of Base Salary
28,184  37.50 %12.00 %37.50 %75.00 %Net IncomeReturn on Average Equity
25,622  35.00 %13.00 %35.00 %70.00 %Total Incentive Payout % of BaseTotal Incentive Payout % of Base
23,293  32.50 %12.25 %32.50 %65.00 %Performance LevelTier 1Tier 2PerformanceTier 1Tier 2
21,175  30.00 %11.50 %30.00 %60.00 %($000)(CEO)(Other NEOs)Level(CEO)(Other NEOs)
19,250  27.50 %10.75 %27.50 %55.00 %
ThresholdThreshold26,500 25.0 %20.0 %9.5 %25.0 %20.0 %
TargetTarget17,500  25.00 %10.00 %25.00 %50.00 %Target29,000 50.0 %40.0 %10.4 %50.0 %40.0 %
16,625  23.75 %9.75 %23.75 %47.50 %
15,794  22.50 %9.50 %22.50 %45.00 %
15,004  21.25 %9.25 %21.25 %42.50 %
14,254  20.00 %9.00 %20.00 %40.00 %
13,541  18.75 %8.78 %18.75 %37.50 %
MaximumMaximum33,000 75.0 %60.0 %11.8 %75.0 %60.0 %

 Performance Relative to Targets and Payout Calculations for 2019
Target
2019 Results(1)
% of TargetWeightingPayout % of TargetPayout % of Base
Net Income, as adjusted$17,500  $20,406  116.6 %50.0 %58.3 %29.2 %
ROAE, as adjusted10.00 %11.30 %117.4 %50.0 %58.7 %29.3 %
Total100.0 %117.0 %58.5 %
(1) Excludes the impact of non-recurring expenses associated with the 2019 acquisition and branch consolidation activity.
If the target performance levels are attained, the Net Income and ROAE portions of the incentive awards would be initially earned at target levels. Performance between threshold and target or between target and maximum would result in interpolated payouts on a straight-line basis. If performance is below threshold for a given performance goal, no incentive would be paid for that goal. Performance above maximum for a given goal would result in payout at maximum for that goal.
As discussed in detail in the “Long-Term Incentive Plan” section, 50% of LTIP awards initially earned based on performance in 2022 are subject to future performance vesting and continue to be at risk for three additional years based on the Company’s performance against pre-established ROAA and TSR goals.
One-Time Adjustments
Under the terms of the incentive compensation plans, the Compensation Committee has the authority to adjust financial performance metrics used to determine initial STIP awards and LTIP awards for one-time positive or negative events outside of the Company's normal operations which have a material effect on the Company’s results. Potential adjustments include but are not limited to tax-related matters, merger-related costs, gains or losses arising from security sales, changes in regulation, and other significant events. While the Committee annually has the ability to exclude one-time items, before 2022 it had not elected to do so.
The Company’s GAAP Net Income and ROAE for the year ended December 31, 2022 were $22.0 million and 9.02%, respectively. These results were negatively affected by two material one-time charges which were outside the Company’s normal operations, and which the Compensation Committee believes were prudent to facilitate the Company’s long-term growth strategy and improve operating efficiencies. Specifically, during 2022, the Company announced the closure of five branch locations in Pennsylvania and staffing model adjustments designed to drive long-term growth and improve operating efficiencies in 2023 and forward. As a result of these initiatives, the Company recorded a pre-tax restructuring charge of $3.2 million. In addition, to avoid the cost, risks and distraction of continued litigation, the Company agreed to settle a ten-year-old litigation matter, which resulted in a provision for legal settlement ("legal settlement") of $13.0 million, before the tax effect. Because these events are expected to drive long-term growth and improve operating efficiencies in 2023 and forward and therefore enhance long-term shareholder value, the Compensation Committee determined that it was appropriate to apply the Company's adjusted performance results to its target performance metrics when determining awards under the STIP and LTIP.
Excluding the impact of the legal settlement and the restructuring charge, Net Income and ROAE were $34.8 million and 14.25%, respectively, for the year ended December 31, 2022. These adjusted figures are sometimes referred to in this proxy statement as Adjusted Net Income and Adjusted ROAE, respectively.
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BasedThe following table summarizes the Company’s 2022 performance relative to the Net Income and ROAE targets established by the Compensation Committee for both the STIP and LTIP, both on a GAAP basis and adjusted to exclude the effects of the restructuring charges and legal settlement.
2022 Incentive Plan Performance
Dollars in thousandsThresholdTargetMaximum2022 GAAP Results
2022 Adjusted Results(1)
Net Income$26,500 $29,000 $33,000 $22,037 $34,799 
Return on Average Equity9.50 %10.40 %11.80 %9.02 %14.25 %
(1) Adjusted to exclude the impact of the restructuring charge and legal settlement for the year ended December 31, 2022.
Subjective Performance Evaluation
If the Company’s performance executivesis at or above threshold for a given performance goal, following the calculation of awards earned based on objective performance, the Compensation Committee has the ability to adjust STIP and/or LTIP awards upward or downward by up to 20% of the earned award. This adjustment potential is intended to provide the Compensation Committee with a flexible but limited tool to recognize company or individual performance results, whether positive or negative, outside of the two objective performance measures. The Compensation Committee has the flexibility to consider any factors it deems relevant to its adjustment of earned awards, including but not limited to growth, risk, compliance and technology factors, special projects or initiatives, and other factors. The Compensation Committee expects to use this flexibility only rarely.
Although the Compensation Committee determined that it was appropriate to apply the Company's adjusted performance results to its target performance metrics when determining awards under the STIP and LTIP, the Compensation Committee determined that it was also appropriate to use its discretion to reduce incentive compensation awards in light of the fact that the Company's actual GAAP results were eligiblelower than its adjusted performance results. As a result, STIP and initial LTIP awards were paid at 130% and 138% of target rather than at 150% of target for the Tier 1 NEO and Tier 2 NEOs, respectively.
Short-Term Incentive Plan (STIP) Awards with Credit Quality Modifier
STIP awards displayedare paid in the table below. As noted above, cash compensation paid to each executive was cappedcash. Each NEO’s STIP award is targeted at 25%a specified percentage of base salary for 2019.based on the specific tier to which the officer is assigned, as described above. The remainderbase salary used in incentive calculations will generally be the NEO’s annualized salary rate as of the Annuallast day of the relevant fiscal year. In the case of a mid-year salary increase associated with a change in role, the Compensation Committee retains the discretion to pro-rate the salary used in the calculation based on the date of the salary increase.
Any incentive awards under the STIP are contingent on the Company maintaining an acceptable level of credit quality, as defined by the ratio of non-performing assets to total assets. If the ratio of non-performing assets to total assets is greater than 2%, STIP awards will be reduced by 30%. If the ratio of non-performing assets to total assets is greater than 4%, STIP awards will be eliminated.
For the year ended December 31, 2022, Adjusted Net Income was $34.8 million, compared to $29.0 million at target, and Adjusted ROAE was 14.25%, compared to 10.40% at target, resulting in cash awards payable, before any discretionary adjustment, under the STIP at the maximum of the performance range with respect to both performance metrics. As discussed above, the Compensation Committee determined that it was appropriate to use its discretion to reduce incentive compensation awards in light of the fact that the Company's actual GAAP results were lower than were lower than its adjusted performance results. In addition, the Company’s non-performing assets to total assets ratio was less than 2%, so no further downward modification was applied to the awards.
The following table summarizes the STIP opportunities available, and actual payments made, to NEOs for 2022 performance.
% of Base SalaryPotential Payout Amounts ($)Actual
ThresholdTargetMaximumThresholdTargetMaximumCash Incentive Award ($)
Thomas R. Quinn, Jr.25 %50 %75 %175,000 350,000 525,000 455,000 
Neelesh Kalani20 %40 %60 %65,000 130,000 195,000 178,750 
Adam L. Metz20 %40 %60 %59,106 118,213 177,319 162,543 
Robert G. Coradi20 %40 %60 %59,000 118,000 177,000 162,250 
Christopher D. Holt20 %40 %60 %69,615 139,230 208,845 191,441 
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Long-Term Incentive AwardPlan (LTIP)
The Compensation Committee believes that equity awards under the LTIP effectively align executives with interests of shareholders by providing individuals who have responsibility for management and growth of the Company with an opportunity to increase their ownership of Company Common Stock, to have a meaningful interest in the future of the Company and sustained shareholder value creation and to receive compensation that varies based on multi-year performance.
As discussed in the “Incentive Compensation” section, the initial value of each NEO’s LTIP award is targeted at a specified percentage of base salary based on the specific tier to which the officer is assigned and is subsequently expressed as a number of shares of Company Common Stock valued on the date of grant. Fractional shares cannot be distributed. The base salary used in incentive calculations will generally be the NEO’s annualized salary rate as of the last day of the relevant fiscal year. In the case of a mid-year salary increase associated with a change in role, the Compensation Committee retains the discretion to pro-rate the salary used in the calculation based on the date of the salary increase.
Awards initially earned under the LTIP based on performance against the plan’s Net Income and ROAE goals are granted in early 2023 and consist of 50% time-vested restricted stock awards and 50% performance-vested restricted stock units.
Time-Vested Restricted Stock Awards
Time-vested restricted stock awards vest 33% in each of the first three years following the grant date, provided the NEO is employed on the vesting date.
Performance-Vested Restricted Stock Units With Total Shareholder Return Modifier.
Performance-vested restricted stock units vest 100% after three years, with the number of restricted stock units that vest dependent on the Company’s performance against pre-established goals during the performance period from beginning in the year of grant and ending following two additional fiscal years, as well as the NEO’s continued employment through the vesting date. The performance measurement on these awards uses a two-step measurement process which considers the Company's performance against a ROAA goal as well as the Company’s total shareholder return:
1.First, the Company’s ROAA is tracked against internal expectations that are communicated at the time of grant based on budgeted performance expectations at that time.
2.After determining the initial vesting amount based on the Company's performance relative to ROAA targets, the Company’s total shareholder return will be measured against an index of similarly-sized banks determined on the date of the award. The number of restricted stock units earned using the ROAA performance measures then will be adjusted upward or downward by up to 20% based on the Company’s total shareholder return performance against the index.
The three-year ROAA goal has a defined threshold, target and maximum performance levels based on budgeted ROAA levels at the time the plan was granted as equity.established. We have elected not to disclose these performance levels for either the 2022 or 2023 awards until the conclusion of the performance period for competitive reasons. The table below illustrates the payout relationships between threshold, target and maximum for the ROAA goal.
NameTarget Opportunity ($)Payout as % of TargetFinal Annual Incentive Award ($)
Cash Award (Capped at 25% of base salary) ($)
Value of Restricted Stock Award(1)($)
Thomas R. Quinn, Jr.267,480  145 %386,794  133,740  253,054  
Thomas R. Brugger75,685  145 %109,649  37,84371,806  
Adam L. Metz137,970  117 %161,438  68,98592,453  
Robert G. Coradi127,502  117 %149,190  63,75185,439  
Philip E. Fague122,526  117 %143,368  61,26382,105  
% of Target Payout
Threshold PerformanceTarget PerformanceMaximum Performance
50%100%200%

Performance between threshold and target or between target and maximum will result in interpolated vesting on a straight-line basis. If performance is below threshold, no restricted stock units will vest. Performance above maximum will result in vesting at maximum.
After determining the initial vesting amount based on the Company's performance relative to ROAA targets, the Company’s total shareholder return will be measured against an index of 91 publicly-traded banks between $2 billion and $5 billion in total assets as of December 31, 2022. The number of restricted stock units earned using the ROAA performance measures then will be adjusted upward or downward by up to 20% based on the Company’s total shareholder return performance against the above referenced index.
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The following table illustrates the percentage of payout modified under the total shareholder return modifier for restricted stock units performance-vesting under the LTIP:
Three-Year Total Shareholder Return
Orrstown Total Shareholder Return Compared to Index 50th Percentile
Modifier
Underperform the 50th by 20% or more(20)%
Perform at the 50th—%
Outperform the 50th by 20% or more20%

Unlike restricted stock awards, performance-vested restricted stock units are not eligible to vote or receive dividends until vested and settled into shares of Company Common Stock.
The Compensation Committee views the bifurcation of a) the metrics to determine the grant of STIP awards and LTIP awards and b) the vesting metrics of the performance-vested restricted stock units as consistent with feedback from shareholders that they prefer incentive plans to consider a variety of performance measures and time horizons. Incentive awards link annual compensation to annual Company performance, and link the compensatory interests of NEOs to the interests of shareholders in the long-term success and growth of the Company.
Equity Awarded in 2023 for 2022 Performance
For the year ended December 31, 2022, Adjusted Net Income was $34.8 million, compared to $29.0 million at target, and Adjusted ROAE was 14.25%, compared to 10.40% at target, resulting in equity awards payable, before any discretionary adjustment, under the LTIP at the maximum of the performance range with respect to both performance metrics. As discussed above, the Compensation Committee determined that it was appropriate to use its discretion to reduce incentive compensation awards in light of the fact that the Company's actual GAAP results were lower than its adjusted performance results.
The following table summarizes the equity awards made pursuant to the terms of the LTIP under the Company’s 2011 Stock Incentive Plan to NEOs in 2023 based on 2022 performance. In accordance with SEC reporting rules, these awards will be disclosed as 2023 compensation in the Summary Compensation Table of the Company’s 2024 proxy statement.
NameTarget Opportunity ($)
Payout as % of Target(1)
Total Value of Equity Incentive Award ($)
Time-Vested Restricted Stock Award(2)($)
Time-Vested Restricted Stock Award(#)
Performance-Vested Restricted Stock Unit Award(3)($)
Performance-Vested Restricted Stock Unit Award(#)
Thomas R. Quinn, Jr.350,000 130 %454,992 227,496 9,479 227,496 9,479 
Neelesh Kalani130,000 138 %178,752 89,376 3,724 89,376 3,724 
Adam L. Metz118,213 138 %162,552 81,288 3,387 81,264 3,386 
Robert G. Coradi118,000 138 %162,240 81,120 3,380 81,120 3,380 
Christopher D. Holt139,230 138 %191,448 95,736 3,989 95,712 3,988 
(1)
At December 31, 2022, the Company exceeded the Maximum Threshold Targets after excluding the effects of the restructuring charge and the litigation settlement, resulting in the Tier 1 NEO receiving 65%% of the base salary and Tier 2 NEOs receiving 55%% of their base salaries, after giving effect to the discretionary reduction made by the Compensation Committee. The Payout as a % of Target is calculated as the percentage of the Total Value of Equity Incentive Award divided by the percentage for Target Opportunity.
(2)Granted inon February 2020.10, 2023. Restricted stock shares cliffawards vest after a33% on February 16, 2024, 2025 and 2026, provided the NEO is employed on the vesting date.
(3)Granted on February 10, 2023. Restricted stock units vest on February 16, 2026 contingent on performance against pre-established goals during the three-year period. Includes a discretionary grant to Mr. Quinn totaling $73,815 and to Mr. Brugger totaling $21,090.performance period (2023-2025) as well as continued service through the vesting date using the two-step measurement process described above.
As discussed earlier, the performance-vested RSU award is subject to future performance conditions on pre-established performance metrics, including an internal ROAA goal and the Company’s TSR compared to an index of 91 publicly-traded banks between $2 billion and $5 billion in assets as of December 31, 2022.
32

Equity granted in 2019
Equity grantedAwarded in early 2019 was2022 for 2021 Performance
In accordance with SEC reporting rules, equity awarded in 2022 based on performance in 2018. The table below indicates the cash value of the award and the corresponding number of shares granted. In addition, the table below includes equity granted to Mr. Brugger upon attaining 90 days of employment. These grants are included2021 is reported in the Summary Compensation and GrantsTable as 2022 compensation, even though we consider those awards as part of Plan the 2021 compensation program.
Based Awards tables. All shareson 2021 performance, executives were granted initial equity awards in 2019 cliff vest after a three-year period.2022 at the maximum of the performance range in the amounts shown below.
2019 GRANT OF PLAN-BASED AWARDS TABLE
NameGrant
Date
All Other Stock Awards: Number of Shares of Stock or Units (#) (1)
Grant Date Fair Value of Stock and Option Awards ($) (2)
Thomas R. Quinn, Jr.1/23/20198,388  162,727  
Thomas R. Brugger10/15/20195,000  108,700  
Adam L. Metz1/23/20194,326  83,924  
Robert G. Coradi1/23/20193,613  70,092  
Philip E. Fague1/23/20193,842  74,535  
David P. Boyle1/23/20195,281  
(3)
102,451  

NameTarget Opportunity ($)
Payout as % of Target(1)
Total Value of Equity Incentive Award ($)
Time-Vested Restricted Stock Award(2) ($)
Time-Vested Restricted Stock Award(#)
Performance-Vested Restricted Stock Unit Award(3)($)
Performance-Vested Restricted Stock Unit Award(#)
Thomas R. Quinn, Jr.280,854 130 %365,121 182,548 7,299182,573 7,300
Neelesh Kalani114,000 125 %142,507 71,279 2,85071,228 2,848
Adam L. Metz115,895 125 %144,858 72,404 2,89572,454 2,897
Robert G. Coradi107,101 125 %133,879 66,927 2,67666,952 2,677
Christopher D. Holt136,500 125 %170,618 85,309 3,41185,309 3,411
(1)
At December 31, 2021, the Company exceeded the Maximum Threshold Targets resulting in the Tier 1 NEO receiving 65% of the base salary and Tier 2 NEOs receiving 50% of their base salaries. The awarded restricted stock vests January 21, 2022.Payout as a % of Target is calculated as the percentage for Maximum Opportunity divided by the percentage for Target Opportunity.
(2)
The fair valueGranted on February 16, 2022. Restricted stock awards vest 33% on each of the award is the fair valuefirst three anniversaries of the Company Common Stockgrant date, provided the NEO is employed on the date of grant ($19.40) multiplied by the number of shares granted, except for Mr. Brugger, which had a grant date fair value of $21.74.vesting date.
(3)
TheseGranted on February 16, 2022. Restricted stock awards were forfeited upon Mr. Boyle’s resignationunits vest contingent on May 8, 2019.performance against pre-established goals during the three-year performance period (2022-2024 for 2021) as well as continued service through the vesting date using the two-step measurement process described above.

EquityAs discussed earlier, 50% of the equity award was granted under the Company’s incentive compensation plan is subject to the Company’s anti-hedging and anti-pledging provisions covered in the Company’s Insider Trading Policy. Board members, executive officers, and related persons are prohibited from purchasing, selling, or making any offer to purchase or offer to sell, derivative securities relating to securitiesform of time-vested restricted stock awards, which vest 33% in each of the Company orfirst three years following the grant date provided the executive remains employed. The remaining 50% of the award was granted in the form of performance-vested restricted stock units, which cliff vest in 2025, if at all, based on the Bank’s performance against a three-year internal ROAA goal and the bank’s TSR performance compared to enter into private contracts removing the economic risk associated with owning the Company’s securities from the Board member, executive officer, or related persons. Board members, executive officers,an index of 82 publicly-traded banks between $2 billion and related persons are prohibited from pledging the Company’s securities$5 billion in a loanassets as of any kind, including, but not limited to, a margin loan or a Non-Purpose Loan as defined by Regulation U.
Discretionary Cash Bonus
In 2019, the Compensation Committee approved discretionary cash bonuses to certain NEOs. Overall, 2019 was a very successful year for the Company. The Company increased total assets by 23.2%, total loans by 31.8%, and total deposit balances by 20.3% from December 31, 20182020. We have elected not to December 31, 2019. The Company completeddisclose the acquisition of Hamilton and converteddefined ROAA performance levels until the Mercersburg and Hamilton core systems to the Company’s systems. This was a significant undertaking and critical to the ongoing successconclusion of the Company. Additionally, the Company upgraded its trust operating system in 2019. All of these factors, combined with solid financial performance as measured by net income, resulted in a 27.9% total returnperiod for shareholders. Discretionary cash bonuses were awarded as follows during 2019:competitive reasons.
23

NameAmount ($)Discretionary Bonus as % of Base Salary
Adam L. Metz5,000  1.8 %
Robert G. Coradi5,000  2.0 %
•Mr. Metz and Mr. Coradi received a discretionary cash bonus in recognition of their work surrounding conversion related efforts for the Hamilton acquisition.Split-Dollar Life Insurance Arrangement
The Compensation Committee believes that discretionary cash bonuses represent the best opportunity for rewarding NEOs for their individual efforts to advance the Company’s strategic initiatives. As circumstances change throughout the year, there may arise occasions that require extraordinary effort and time to resolve. Working through these challenges can be taxing directly on the individuals involved and indirectly on their families. The Compensation Committee considers it appropriate to recognize those efforts.
The Compensation CommitteeBank has decided to refrain from awarding discretionary bonuses for NEOs in 2020.
Discretionary Restricted Stock Grants
Discretionary restricted stock grants were awarded as follows during 2019:
NameAmount ($)Discretionary Bonus as % of Base Salary
Thomas R. Quinn73,815  13.8 %
Thomas R. Brugger21,090  13.9 %
•entered into a split-dollar life insurance arrangement with Mr. Quinn received a discretionary restricted stock grant in recognition of his work surrounding conversion related efforts for the Hamilton and Mercersburg transactions and significant recruitment of talent to the organization.
•Mr. Brugger received a discretionary restricted stock grant in recognition of his workorder to provide a new business plandeath benefit to improve profitabilitythe executive’s beneficiaries and to allow the executive access to the cash surrender value of the Company andpolicy in excess of the amount of premiums paid by the Bank upon his efforts related to operational efficiency improvement.
retirement. The Compensation Committee has decided to refrain from awarding discretionary awards for NEOs in 2020.split-dollar life insurance arrangement will provide Mr. Quinn with a $1,350,707 lifetime death benefit as of December 31, 2022.
Other Awards and Compensation Perquisites
Messrs,Mr. Quinn Metz, and Fague have eachhas been provided a vehicle allowance or thewith personal use of a Company vehicle. Eachvehicle and Mr. Metz has been provided a vehicle allowance. Both of these positions require extensive travel across the Company’s market area, which continues to grow.area. In each case, an analysis was conducted to determine if reimbursement of mileage to a NEO was a less expensive alternative for the Company.
Messrs, Quinn,During 2022, Messrs. Metz and Fague haveHolt had country club memberships provided by the Bank. Their positions require extensive client entertainment and recruitment of top-flight human capital. Initiation dues paid by the Company will be recouped by the Company on a pro-rated basis when the NEO relinquishes their membership.membership on a pro-rated basis during the year of termination.
401(k) Plan
The Bank maintains a 401(k) plan for the benefit of eligible employees. The Bank makes annual matching contributions of up to 50% of employee contributions under the plan, up to 3% of an employee’s annual compensation.

Anti-Hedging and Anti-Pledging
2020 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Overview
As will be described in further detail in the proxy statement for our 2021 Annual Meeting of Shareholders, the Compensation Committee has made significant modificationsDirectors, executive officers, and related persons are prohibited from purchasing, selling, or making any offer to the 2020 compensation program for our NEOs. The Company believes our new compensation program properly incorporates the commentary provided by our shareholders during the aforementioned outreach program, strengthens pay for performance, and further aligns the interests of our executivespurchase or offer to the long-term successsell, derivative securities relating to securities of the Company. The table below indicatesCompany or to enter into private contracts removing the components of NEO compensation for 2020. Significant changes relative to 2019 include:
•Elimination of discretionary bonuses;
•50.0% of NEOs LTIP awards will now performance-vest, meaningeconomic risk associated with owning the shares will only vest if predetermined long-term financial goals are met;
•performance-vesting LTIP awards will be inCompany’s securities from the form of restricted stock units which will not receive dividendsdirector, executive officer, or provide voting rights until vested;related persons. Directors, executive officers, and
2433

•metrics usedrelated persons are prohibited from pledging the Company’s securities in a loan of any kind, including, but not limited to, a margin loan or a Non-Purpose Loan as defined by Regulation U.
Clawback and Forfeiture Provisions
The Company has clawback and forfeiture provisions in place for performance measurement forlosses arising from individual instances of fraud or malfeasance, including legal costs. Our 2011 Stock Incentive Plan, which is the STIPplan pursuant to which we make all of our equity awards, and time-vesting portion ofrelated award agreements contains broad language regarding clawbacks and forfeitures and make all awards under the 2011 Stock Incentive Plan subject to recoupment, forfeiture or reduction to the extent determined by the Compensation Committee. Additionally, if the Bank were to ever not be considered “well-capitalized” as defined by U.S. banking regulations, all unvested LTIP will be different than those used forawards are subject to automatic claw-back. The Compensation Committee also has discretion over other circumstances that may trigger the performance-vesting portion of the LTIP:
◦STIP and time-vesting portion of the LTIP will continue to use Net Income and ROAE; and
◦performance-vesting portion of LTIP will use Return on Average Assets (ROAA).clawback provision.

Compensation Committee Report
We, the members of the Compensation Committee of the Board of Directors of Orrstown Financial Services, Inc., have reviewed and discussed the Compensation Discussion and Analysis set forth above with the management of the Company and, based on such review and discussion, have recommended to the Board of Directors of the Company inclusion of the Compensation Discussion and Analysis in this proxy statement and, through incorporation by reference from this proxy statement, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Submitted by the Compensation Committee:
Element of PayFloyd E. Stoner, ChairDescriptionPurpose
Base SalaryMichael J. RiceFixed cash compensationTo attract and retain key executive talent by providing a stable source of compensation for services rendered during the fiscal year
Short-Term Incentive Plan (STIP)Glenn W. SnokePerformance-based cash payment based on financial, operational, and strategic metricsTo motivate executive officers to achieve the Company’s annual strategic and financial goals and reward individual performance
Long-Term Incentive Plan—Time-Vesting (LTIPTV)Joel R. ZullingerPerformance-based share awards with multi-year vesting periods; awards are based on financial metricsTo align long-term interests of executives and shareholders and provide appropriate balance of at-risk compensation that incentivizes long-term value creation and retention
Long-Term Incentive Plan—Performance-Vesting (LTIPPV)Restricted Stock Unit (RSUs) awards with multi-year vesting periods; awards vest based on financial metricsTo align long-term interests of executives and shareholders and provide appropriate balance of at-risk compensation that incentivizes long-term value creation and retention
Supplemental Employee Retirement Plans (SERP)Include deferred compensation plans and salary continuation plansTo provide NEOs an economic incentive for long-term service to the Company
PerquisitesCar allowances and/or club membership duesTo defray the NEOs’ expenses for recruitment or client entertainment and reduce the Company’s mileage reimbursement expense
Except as set forth above, this report shall not be deemed to be incorporated by reference, by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act, and shall not otherwise be deemed filed under such acts.

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Summary Executive Compensation
The following table sets forth information as to the compensation paid or accrued by the Company for the year ended December 31, 20192022 for services rendered in all capacities by each individual who served as our principal executive officer or principal financial officer during fiscal 2019, as well as our three most highly compensated executive officers (other than our principal executive officer and principal financial officer).NEOs.
20192022 SUMMARY COMPENSATION TABLE
Name and 
Principal Position
Year

Salary
 ($)
Cash Bonus 
($)
Stock
Awards
($)(1)
Option
Awards
($)(1)
Non-Equity
Incentive Plan
Compensation
($)
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(2)
All Other
Compensation
($)(3)
Total
 ($)
Thomas R. Quinn, Jr.2019530,165  —  253,054  —  133,740  443,498  31,823  1,392,280  
President and2018514,723  95,000  394,959  —  162,730  290,051  78,729  1,536,192  
Chief Executive Officer2017499,635  70,000  111,750  —  134,954  273,200  60,059  1,149,598  
Thomas R. Brugger2019143,750  38,923  71,806  —  37,843  —  573  292,895  
Executive Vice President and2018—  —  —  —  —  —  —  —  
Chief Financial Officer2017—  —  —  —  —  —  —  —  
Adam L. Metz2019273,467  5,000  92,453  —  68,985  —  28,091  467,996  
Executive Vice President and2018265,502  10,000  135,535  —  83,939  —  19,660  514,636  
Chief Revenue Officer2017258,531  19,000  22,350  —  69,611  —  16,634  386,126  
Robert G. Coradi2019245,382  5,000  85,439  —  63,751  113,418  9,600  522,590  
Executive Vice President and2018221,731  45,000  123,761  —  70,100  91,872  8,680  561,144  
Corporate Secretary2017215,273  23,000  44,700  —  57,563  —  8,421  348,957  
Philip E. Fague2019242,857  —  82,105  —  61,263  45,061  20,861  452,147  
Executive Vice President and2018236,480  —  74,543  —  74,543  42,692  27,894  456,152  
Chief Trust Officer2017231,160  18,000  105,088  —  62,425  40,212  25,752  482,637  
David P. Boyle (4)
2019144,634  —  —  —  —  72,869  12,617  230,120  
Former Executive Vice2018324,068  65,000  159,004  —  102,455  168,269  20,512  839,308  
President and CFO2017314,629  28,000  78,225  —  84,966  161,680  19,600  687,100  

Name and 
Principal Position
Year

Salary
 ($)
Cash Bonus 
($)
Stock & RSU
Awards
($)(1)
Option
Awards
($)(1)
Non-Equity
Incentive Plan
Compensation
($)
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(2)
All Other
Compensation
($)(3)
Total
 ($)
Thomas R. Quinn, Jr.2022694,681 — 365,121 — 455,000 992,095 19,801 2,526,698 
President and2021552,448 — 159,604 — 365,110 875,735 14,160 1,967,057 
Chief Executive Officer2020534,959 — 253,059 — 159,719 765,537 25,906 1,739,180 
Neelesh Kalani2022299,281 — 142,507 — 178,750 — 8,567 629,105 
Executive Vice President and2021263,769 — 123,498 — 142,500 — 7,591 537,358 
Chief Financial Officer2020— — — — — — — — 
Adam L. Metz2022293,526 — 144,858 — 162,543 20,000 24,142 645,069 
Executive Vice President and2021284,961 — 82,330 — 144,870 — 21,088 533,249 
Chief Revenue Officer2020275,940 — 92,459 — 82,438 — 25,863 476,700 
Robert G. Coradi2022275,465 — 133,879 — 162,250 129,775 11,828 713,197 
Executive Vice President and2021263,340 — 76,083 — 133,878 124,694 11,464 609,459 
Chief Risk Officer2020255,003 — 85,436 — 76,191 118,472 9,972 545,074 
Christopher D. Holt2022345,713 — 170,618 — 191,441 266,215 13,372 987,359 
Executive Vice President and2021335,625 — 96,968 — 170,626 231,724 12,712 847,655 
Market President2020325,000 — 21,090 — 97,074 91,250 5,622 540,036 
(1)
Stock and option awards are valued based on the aggregate grant date fair value of awards granted during the year computed for financial reporting purposes pursuant to FASB ASC Topic 718. There is no assurance the value realized by an executive officer will be at or near the value estimated by ASC Topic 718. The actual value, if any, an executive officer may realize will depend upon the excess of the stock price over the exercise price on the date the option is exercised or the value of stock awards when they vest. Please see the 20192022 Outstanding Equity Awards at Fiscal Year-End Table below for more information regarding stock awards and options outstanding at December 31, 2019.2022.
(2)
Represents the aggregate increase in the present value of the officer’s accumulated benefit under the salary continuation plan.
(3)
See 20192022 All Other Compensation Table below.
(4)
 Mr. Boyle resigned effective May 8, 2018. His salary amount reflects earnings through that date.
 
35
26

2019 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
Option AwardsRestricted Stock Awards
Name
Number of Securities Underlying Unexercised Options (#) Exercisable (1)



Option Exercise Price ($)



Option Expiration Date
Number of shares or units of stock that have not vested (#)
Market value of shares or units of stock that have not vested ($) (2)
Equity incentive plan awards: number of unearned shares that have not vested (#)Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)
Thomas R. Quinn, Jr6,00021.147/21/202048,7861,103,53913,786311,839
Thomas R. Brugger———5,000113,100——
Adam L. Metz———10,610239,9987,110160,828
Robert G. Coradi———10,438236,1085,938134,318
Philip E. Fague4,80021.1407/21/20209,939224,8206,339143,388
The compensation represented by the amounts set forth in the “All Other Compensation” column in the 2022 Summary Compensation Table is detailed in the following table.

2022 ALL OTHER COMPENSATION TABLE
Vehicle
Allowance or
Personal useCountrySplit DollarCompany Contributions
of CompanyClubInsuranceLife Insuranceto Retirement and
NameYearVehicle ($)Dues ($)
Premiums ($)(1)
Benefit ($) (2)
401(k) Plans ($)Total ($)
Thomas R. Quinn, Jr.20224,683 — 3,564 2,404 9,150 19,801 
20215,597 — 3,564 1,854 3,145 14,160 
20205,082 13,634 3,564 3,626 — 25,906 
Neelesh Kalani2022— — 810 — 7,757 8,567 
2021— — 779 — 6,812 7,591 
2020— — — — — — 
Adam L. Metz20228,400 7,162 1,242 — 7,338 24,142 
20218,400 6,948 1,242 — 4,497 21,087 
20208,400 12,514 810 — 4,139 25,863 
Robert G. Coradi2022— — 3,564 — 8,264 11,828 
2021— — 3,564 — 7,900 11,464 
2020— — 2,322 — 7,650 9,972 
Christopher D. Holt2022— 1,900 2,322 — 9,150 13,372 
2021— 1,690 2,322 — 8,700 12,712 
2020— — 2,322 — 3,300 5,622 
(1)
There were no un-exercisable options at December 31, 2019.The reported insurance premiums are paid by the Bank as part of the Bank’s sponsored group term life insurance benefit.
(2)
Calculated usingRepresents the December 31, 2019 closing stock priceaggregate increase in the present value of $22.62.the officer’s benefit under the Bank's split dollar life insurance arrangement with the officer.

36
2019 OPTION EXERCISES AND STOCK VESTED

Grants of Plan-Based Awards
The following table sets forth information concerning plan-based awards made to the NEOs during the last fiscal year.
2022 GRANT OF PLAN-BASED AWARDS TABLE
Option Awards  
Stock Awards  
NameNumber of Shares
Acquired on Exercise (#)		Value Realized on
Exercise ($)		Number of Shares
Acquired on Vesting (#)
Value Realized on Vesting ($) (1)
Thomas R. Quinn, Jr.—  —  3,000  56,880  
Thomas R. Brugger—  —  —  —  
Adam L. Metz—  —  4,500  94,435  
Robert G. Coradi—  —  13,500  302,880  
Philip E. Fague—  —  13,500  302,880  
David P. Boyle—  —  2,500  47,400  

Payouts under non-equity incentive plan awards (1)
Estimated future payments under equity incentive plan awards (2)
NameGrant dateThreshold ($)Target ($)Maximum ($)Threshold (#)Target (#)Maximum (#)
All other stock awards: number of shares of stock or units (#) (3)
Grant date fair value of stock and option Awards (4) ($)
Thomas R. Quinn, Jr.2/16/2022140,427 280,854 365,110 — — — — — 
2/16/2022— — — 2,920 7,300 17,520 — 182,573 
2/16/2022— — — — — — 7,299 182,548 
Neelesh Kalani2/16/202257,000 114,000 142,500 — — — — — 
2/16/2022— — — 1,139 2,848 6,835 — 71,228 
2/16/2002— — — — — — 2,850 71,279 
Adam L. Metz2/16/202257,947 115,895 144,869 — — — — — 
2/16/2022— — — 1,159 2,897 6,953 — 72,454 
2/16/2022— — — — — — 2,895 72,404 
Robert G. Coradi2/16/202253,551 107,101 133,877 — — — — — 
2/16/2022— — — 1,071 2,677 6,425 — 66,952 
2/16/2022— — — — — — 2,676 66,927 
Christopher D. Holt2/16/202268,250 136,500 170,625 — — — — — 
2/16/2022— — — 1,364 3,411 8,186 — 85,309 
2/16/2022— — — — — — 3,411 85,309 
(1)These amounts illustrate the threshold, target, and maximum cash awards payable under the annual incentive compensation plan. Cash awards were paid out at the maximum of the performance range.
(2)Restricted stock units vest, if at all, three years from the date of the grant, subject to performance on pre-established ROAA and TSR goals.
(3)Represents time-vested restricted stock awards. Except as otherwise noted, all time-vested restricted stock awards vest 33% in each of the first three years following the grant date.
(4)The fair value of the award is the fair value of the Company Common Stock on the date of grant ($25.01 per share) multiplied by the number of shares granted.
2022 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
Option AwardsRestricted Stock Awards / Units
Name
Number of Securities Underlying Unexercised Options (#) Exercisable (1)



Option Exercise Price ($)



Option Expiration Date
Number of shares or units of stock that have not vested (#)
Market value of shares or units of stock that have not vested ($) (2)
Equity incentive plan awards: number of unearned shares that have not vested (#)Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)
Thomas R. Quinn, Jr———35,310817,78031,810736,720
Neelesh Kalani———12,378286,6747,378170,874
Adam L. Metz———14,670339,75714,670339,757
Robert G. Coradi———13,557313,98013,557313,980
Christopher D. Holt———13,115303,74312,115280,583
(1)There were no outstanding or exercisable options at December 31, 2022.
(2)Calculated using the December 30, 2022 closing stock price of $23.16 per share.

37

2022 OPTION EXERCISES AND STOCK VESTED TABLE
Option Awards  
Stock Awards  
NameNumber of Shares
Acquired on Exercise (#)		Value Realized on
Exercise ($)		Number of Shares
Acquired on Vesting (#)
Value Realized on Vesting ($) (1)
Thomas R. Quinn, Jr.— — 8,388 205,758 
Neelesh Kalani— — — — 
Adam L. Metz— — 4,326 106,117 
Robert G. Coradi— — 3,613 88,627 
Christopher D. Holt— — 6,900 169,602 
(1)Calculated using the closing market price of the Company's Common Stock on the date of vesting.

Supplemental Employee Retirement Plans
The Bank has established salary continuation plans for certain of its executive officers, including Messrs. Quinn Coradi, Fague, and BoyleCoradi, in order to provide them with supplemental retirement income (the “Salary Continuation Agreements”). The purpose of the plans is to provide an incentive to such persons to continue in the employ of the Bank.
The Salary Continuation Agreements provide the executive officers with certain specified benefits upon a separation from service as a result of normal retirement, early termination, disability, death or a change in control. In the event of early termination by the Company other than for cause, or by the executive, unrelated to a change in control transaction and prior to reaching normal retirement age, the executive would receive the accumulated benefit described in the 20192022 Pension Benefit Table.
Benefits are payable in monthly installments over a 15-year period beginning within 60 days following the executive officer’s separation from service upon or after the executive reaching normal retirement age, within 60 days following the executive officer reaching normal retirement age in the cases of early termination and change in control, or within 60 days after separation from service in the case of disability. The Salary Continuation Agreement with Mr. Quinn provides for an annual normal retirement benefit of $400,000 at age 65;65 and Mr. Coradi of $100,000 at age 65 and Mr. Fague of $73,000 at age 65. The Company has also entered into a deferred compensation agreement with Mr. Quinn as discussed below.
The Company has purchased whole life insurance where certain NEOs are the insured and the Bank (Company)Company is the death beneficiary. Such policies are in place forfor Mr. Quinn, Mr. CoradiHolt and Mr. Fague. Coradi. During the NEOs employment, the Company earns income on the life insurance policy. In 2019,2022, the Company earned $2.0$2.3 million on all life insurance policies, tax free.
In the event of an early separation from service or a separation from service due to disability prior to normal retirement age, the amount of the benefit under the plan will be actuarially reduced from the normal retirement benefit. In the event of a change in control, the amount of the benefit will be the amount of the normal retirement benefit. In the event an executive officer dies while in active
27

service, the officer’s beneficiary will be entitled to receive the normal retirement benefit payable in monthly installments over a 15-year period. In the event an executive officer dies after benefit distributions have commenced, the Bank will continue to distribute the remaining benefits to the officer’s beneficiary at the same time and in the same amounts as would have been distributed to the executive officer had he or she survived.
Benefits under the Salary Continuation Agreement will be forfeited by an executive officer who is terminated for cause, orcause; if the executive officer commits suicide within two years after the effective date of the Salary Continuation Agreement; if an insurance company which issued a life insurance policy covering the executive officer and owned by the Bank denies coverage because of misstatements of fact made by the executive officer on an application for life insurance; if the executive officer is subject to a final removal or prohibition order issued by a federal banking agency pursuant to the Federal Deposit Insurance Act; or the executive officer becomes interested as a sole proprietor, partner, substantial shareholder, officer, director,competes with the Company or employeethe Bank in a competitorviolation of the Bank within a 50 mile radius of the Bank’s headquarters in Shippensburg, Pennsylvania.

2019 PENSION BENEFITS TABLE
NamePlan NameNumber of
Years Credited
Service (#)		Present Value
of Accumulated
Benefit ($)		Payments During Last
Fiscal Year ($)
Thomas R. Quinn, Jr.Salary Continuation Agreement102,538,300  —  
Robert G. CoradiSalary Continuation Agreement2205,290  —  
Philip E. FagueSalary Continuation Agreement30473,199  —  
David P. BoyleSalary Continuation Agreement4634,112  —  

In this table:
•The number of years of credited service equals the number of years of employment service.
•The present value of accumulated benefits shown in the table above has been determined using the assumptionsrestrictive covenants set forth in the audited consolidated financial statements for the year ended December 31, 2019.his or her Salary Continuation Agreement.
•No amounts were actually paid or provided to the NEOs during 2019.
•Upon his resignation, Mr. Boyle had vested in an annual benefit of $81 thousand with respect to which payments will commence in the month following Mr. Boyle attaining age 65.
A description of the Salary Continuation Agreement appears below under “Potential Payments Upon Termination or Change in Control.”
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Executive Deferred Compensation AgreementAgreements
In 2019, the Bank entered into a deferred compensation agreement with Mr. Quinn.
The deferred compensation agreement is intended to provide Mr. Quinn with the potential for certain retirement benefits payable in monthly installments over a 15-year period beginning the month following the executive’s separation from service upon or after he reaches normal retirement age (age 65), the month following his reaching normal retirement age in the cases of early termination and change in control, or the month following a separation from service in the case of disability.
The agreement provides for the establishment of a deferral account into which the Bank may, but is not required to, make monthly contributions. It is anticipated that theThe Bank will initially makemakes monthly contributions of $33,721 into the deferral account.account and may make additional discretionary contributions from time to time. The Compensation Committee authorized a discretionary contribution to Mr. Quinn’s deferral account under his deferred compensation agreement for 2022 in the amount of $20,000. The deferral account earns interest at a rate equal to the Company’s Return on Average Tangible Equity for the immediately preceding calendar year, not to exceed 15% nor less than 0% during the accumulation period and at a fixed rate of 4.00%4% during the distribution period. Such contributions may be increased or decreased within the sole discretion of the Bank. Assuming the Bank continues a monthly contribution of $33,721, the annual normal retirement benefit is anticipated to be approximately $200,000.
Prior to the earliest to occur of: (i)(1) a separation from service, (ii)(2) disability, (iii)(3) death and (iv)(4) the executive attaining age 70, interest will accrue on amounts credited to the deferral account at the “accumulation period crediting rate,” compounded monthly. Following any of the aforementioned events, interest will accrue at the rate of four percent,4%, except in the event of a change in control, in which case no interest will accrue until normal retirement age and, thereafter, interest will accrue at the rate of four percent.4%.
In order to further link the amount of the benefit to overall corporate performance, the “accumulation period crediting rate” will mirror the Company’s return on average tangible equity (computed annually as described in the agreement); provided, that in no event will the rate be less than zero nor more than fifteen percent.
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15%.
The total benefit payable in the event of normal retirement, early termination or disability is equal to the deferral account balance as of such date, with interest accruing as described above.
The total benefit payable in the event of a separation from service in connection with a change in control and prior to normal retirement age is the greater of the projected deferral account balance and $2,260,638. The projected deferral account balance is the deferral account balance at the date of the separation from service, plus an additional amount equal to the average monthly contribution made by the Bank prior to the separation from service multiplied by the number of months remaining through normal retirement age. Consistent with the Salary Continuation Agreement entered into between the Bank and Mr. Quinn in 2009, in the event that any benefit distributable under the agreement would subject the executive to an excise tax under the excess parachute rules of Internal Revenue Code Section 280G, the agreement provides for the payment of an additional amount equal to:to the executive’s excise penalty tax amount divided by the difference between (one minus the sum of (the penalty tax rate plus the executive’s marginal income tax rate)).
The total benefit payable in the event of a separation from service due to death is the greater of the actual deferral account balance and $2,260,638.
Benefits under the agreement will be forfeited if executive is terminated for cause, or if he commitsdies by suicide within 2two years after the effective date of the agreement, or if any insurance company which issued a life insurance policy covering executive and owned by the Bank denies coverage because of misstatements of fact made by executive on an application for life insurance, or if executive is subject to a final removal or prohibition order issued by a federal banking agency pursuant to the Federal Deposit Insurance Act, or if executive becomes interested as a sole proprietor, partner, substantial shareholder, officer, director, or employee in a competitor of the Bank within a 50 mile radius of the Bank’s headquarters.headquarters, or if the executive solicits the Bank’s customers or employees.
The Bank entered into a deferred compensation agreement with Mr. Holt in 2020 and Mr. Metz in 2022 for the purpose of retaining them through the normal retirement age of 65 or after. The deferred compensation agreements are intended to provide the executives with the potential for certain retirement benefits payable in monthly installments over a 15-year period beginning the month following the executive’s separation from service upon or after they reach normal retirement age, the month following their reaching normal retirement age in the cases of early termination and change in control, or the month following a separation from service in the case of disability.
The agreements provide for the establishment of a deferral account into which the Bank will make annual contributions provided the Company’s Return on Average Tangible Equity is at least 8% for that year. The contributions will be $219,000 per year for Mr. Holt and $83,280 per year for Mr. Metz until the earliest of separation, normal retirement age or death. The deferral account earns interest at a rate equal to the Company’s Return on Average Tangible Equity for the immediately preceding calendar year, not to exceed 15% nor less than 0% during the accumulation period and at a fixed rate of 4% during the distribution period. Assuming the Company’s
39

Return on Average Equity equals or exceeds 8% each year, the annual normal retirement benefit is anticipated to be approximately $225,000 for Mr. Holt and $200,000 for Mr. Metz.
Prior to the earliest to occur of: (i) a separation from service, (ii) disability, (iii) death and (iv) the executive attaining age 65, interest will accrue on amounts credited to the deferral account at the “accumulation period crediting rate,” compounded monthly. Following any of the aforementioned events, interest will accrue at the rate of 4%. In order to further link the amount of the benefit to overall corporate performance, the “accumulation period crediting rate” will mirror the Company’s return on average tangible equity (computed annually as described in the agreement); provided, that in no event will the rate be less than 0% nor more than 15%. The total benefit payable in the event of normal retirement, early termination (inclusive of separation from service prior to normal retirement age following a change in control) or disability is equal to the deferral account balance as of such date, with interest accruing as described above. The total benefit payable in the event of a separation from service due to death is the greater of the actual deferral account balance and $2,544,031 in the case of Mr. Holt and $2,260,909 in the case of Mr. Metz.
Benefits under the agreement will be forfeited if the executive is terminated for cause, or if he dies by suicide within two years after the effective date of the agreement, or if any insurance company which issued a life insurance policy covering executive and owned by the Bank denies coverage because of misstatements of fact made by executive on an application for life insurance, or if executive is subject to a final removal or prohibition order issued by a federal banking agency pursuant to the Federal Deposit Insurance Act, or if the executive becomes interested as a sole proprietor, partner, substantial shareholder, officer, director, or employee in a competitor of the Bank, as defined in the agreements, or if the executive solicits the Bank’s customers or employees.
The following table sets forth information with respect to the pension benefits of each NEO who is a party to a salary continuation agreement or deferred compensation agreement with the Company:
2022 PENSION BENEFITS TABLE
NamePlan NameNumber of
Years Credited
Service (#)		Present Value
of Accumulated
Benefit ($)		Payments During Last
Fiscal Year ($)
Thomas R. Quinn, Jr.Salary Continuation Agreement133,451,648 — 
Deferred Compensation Agreement1,720,000 — 
Adam L. MetzDeferred Compensation Agreement620,000 — 
Robert G. CoradiSalary Continuation Agreement10578,231 — 
Christopher D. HoltDeferred Compensation Agreement3589,189 — 
In this table:
•The number of years of credited service equals the number of years of employment service.
•The present value of accumulated benefits shown in the table above has been determined using the assumptions set forth in the audited consolidated financial statements for the year ended December 31, 2022.
•No amounts were actually paid or provided to the NEOs during 2022.

2019 Pay Ratio Disclosure
2019
Median annual compensation of all employees, executives, CEO56,276
Annual compensation of CEO1,079,450
Ratio of CEO total pay to median pay of all employees19.1 x

Methodology for Determining Median Employee Compensation
The Company, through use of payroll and other internal records, accumulated all compensation paid to all employees consistent with compensation calculated using Item 402(c)(2)(x) of SEC Regulation S-K (the "Total" column in the 2019 Summary Compensation Table). Compensation was annualized for permanent full- and part-time employees who were not employed for the entire fiscal year. The date chosen for identifying the median annual employee compensation was December 31, 2019.

Potential Payments Upon Termination or Change in Control
Executive Employment Agreements
As detailed in the “Compensation Discussion and Analysis” section, theThe Company previously entered intois party to an executive employment agreement with Mr. Quinn providing for a five-year term continuing until 2024, and with Messrs. Kalani, Metz, Coradi and FagueHolt for terms continuing until 2021 and Messrs. Brugger and Metz continuing until 2022.
Sucha three-year term. The employment agreements provide for a term of either three or five years, plus an annual extension of suchits term for an additional year, unless the executive is given at least sixty daysdays' notice of non-renewal. The agreements provide that if the executive is still employed upon attaining age 65, such executive will provide notice of retirement in which event the executive will receive salary continuation for a period of six months plus payment of 150% of the premium cost to maintain the executive’s group life insurance benefit for a period of three years. Such mandatory retirement may be delayed in one-year increments upon Board approval.
In the event that the executive’s employment is terminated by the Company or the Bank during the term of the agreement without cause, or by executive for “good reason” as defined in the agreement, then the executive will be paid severance equal to his or her base salary plus the average cash bonus amount received during the past three years for a period equal to the greater of the remaining term of the agreement or six months. The executive would also be entitled to continue to participate in employee benefit plans for six months or receive a cash contribution in lieu thereof.
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Termination by the executive for good reason shall include if: (i)(1) there has occurred a material breach of the employer’s material obligations under the agreement; (ii)(2) the employer, without executive’s prior written consent, changes or attempts to change in any material respect the authority, duties, compensation, incentive compensation, benefits or other terms or conditions of executive’s
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employment, or executive’s reporting structure, in a manner that is adverse to the executive; or (iii)(3) the employer requires executive to relocate his or her principal business location 75 miles or more from the employer’s then current headquarters.
During the period of employment and for the greater of six months following such termination of employment or the period of severance payments, but not to exceed 24 months, each executive agrees not to directlycompete with or indirectly engage in business competition with the Company or the Bank with respect to its services, products, processes, customers, methods of doing business and similar matters within a 75-mile radius of Shippensburg, Pennsylvania. In addition, during this period, each executive will not solicit or attempt to solicit, divert or appeal to any employees, customers, clients or referral sources of the Company, the Bank or any of their respective subsidiaries.
The following table summarizes potential benefits for Messrs. Quinn, Brugger,Kalani, Metz, Coradi and Fague,Holt, under their employment agreements, in the event of a termination of their employment unrelated to a change in control transaction, if such termination had occurred on December 31, 2019.2022.
Name
Cash Payment Upon
Involuntary Termination
(without  cause) ($)(1)
Cash Payment Upon
Voluntary Termination for “Good Reason”($)(1)
General Health
and Welfare
Benefits ($)(2)
Total ($)
Thomas R. Quinn, Jr.2,524,152  2,524,152  9,278  2,533,430  
Thomas R. Brugger863,885  863,885  5,233  869,118  
Adam L. Metz678,954  678,954  11,585  690,539  
Robert G. Coradi657,011  657,011  11,922  668,933  
Philip E. Fague658,883  658,883  9,670  668,553  

Name
Cash Payment Upon
Involuntary Termination
(without  cause) ($)(1)
Cash Payment Upon
Voluntary Termination for “Good Reason”($)(1)
General Health
and Welfare
Benefits ($)(2)
Total ($)
Thomas R. Quinn, Jr.3,423,870 3,423,870 7,864 3,431,734 
Neelesh Kalani916,584 916,584 2,160 918,744 
Adam L. Metz774,453 774,453 9,726 784,179 
Robert G. Coradi807,052 807,052 9,726 816,778 
Christopher D. Holt991,288 991,288 2,414 993,702 
(1)
Assumes payment of continued salary under existing employment agreement for the remaining term of the agreement in effect as of December 31, 2019.2022. In the event of death, in lieu of this amount, the executive’s estate would receive a payment equal to six months of the then annual base salary.
(2)
Estimated benefits contribution expense for six months post-termination.post-termination and 150% of the premium cost to maintain the NEO's group life insurance benefit for three years.
Change in Control Benefits
The Company and the Bank have entered into Changechange in Control Agreements,control agreements, concurrent with the Employment Agreements,employment agreements, with Messrs. Quinn, Brugger,Kalani, Coradi, Metz Coradi, and Fague. Holt. The Changechange in Control Agreementscontrol agreements provide that the Company and the Bank are to pay to the executive the specified amounts of cash compensation and provide the specified health and welfare benefits in the event that the executive’s employment is terminated by the Company or Bank or any successor, without cause, within two (2) years after the occurrence of a change in control or if such termination is initiated by the Executiveexecutive for any reason, in the case of Messrs. Quinn, Coradi, Metz and Holt, or for good reason, in the case of Mr. Kalani, in each case within six months following a change in control.
Under the Changechange in Control Agreement,control agreement, a “change in control” shall be deemed to occur if: (1) any person or group of persons acting in concert, shall have acquired ownership of more than 50% of the total fair market value or total voting power of the stock of the Company; (2) the composition of the Board of Directors of the Company shall have changed such that, during any period of 12 consecutive months during the term of the Changechange in Control Agreement,control agreement, the majority of such Board is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors of the Company, who were in office before the appointment or election; (iii)(3) any person or group of persons acting in concert acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of 30% or more of the total voting power of the stock of the Company; or (iv)(4) any person or group of persons unrelated to the Company acting in concert acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of a portion of the Company’s assets that has a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company before the acquisition or acquisitions, with the asset values determined without regard to any liabilities associated with such assets.
The Changechange in Control Agreementscontrol agreements provide that, upon a termination pursuant to a change in control, the Company and the Bank are obligated to pay to the executives cash compensation in an amount equal to 2.99 times the sum of (1) annual base salary, plus (2) the highest annual cash bonus and other annual incentive cash compensation awarded over the past three years before the calendar year in which the termination of employment occurred. Payment of this cash compensation is to be made in a single lump sum within fifteen (15) days after the termination of employment.
The Changechange in Control Agreementscontrol agreements further provide that upon a change in control, if the plans governing the vesting and exercise rights of stock options, shares of restricted stock and other equity-based compensation units are silent on the subject of change of control, all
30

such options, shares and units shall immediately become vested and exercisable as to all or part of the shares and rights covered thereby.
The Changechange in Control Agreementscontrol agreements further provide that upon a termination pursuant to a change in control, the Company and the Bank are obligated to provide to the executive for a specified term the life, disability, medical/health insurance and other health and welfare
41

benefits in effect with respect to the executive immediately prior to the termination pursuant to the change in control. For each executive, the term is two years. The executive, however, will continue to be responsible for the costs of such benefits to the same extent as other similarly situated active employees of the Bank and the executive’s spouse and/or eligible dependents will continue to be covered on the same terms that they were covered prior to the termination of employment.
For all Named Executive OfficersNEOs other than Mr. Quinn, the Changechange in Control Agreementscontrol agreements further provide that in the event any benefit or payment from the Company to the Executiveexecutive shall be deemed to be an “Excess Parachute Payment”“excess parachute payment”, as defined in Section 280G(b)(1) of the Internal Revenue Code, of 1986, as amended, then the aggregate present value of amounts or benefits payable to Executivesexecutives shall be reduced to the greater of (i)(1) the highest aggregate present value of the amount due under the agreement that can be made without causing any payments or benefits to be an Excess Parachute Paymentexcess parachute payment or (ii)(2) the largest portion of the amount due under the agreement that after taking into account all applicable state and federal taxes, including any taxes payable pursuant to Section 4999 of the Internal Revenue Code, results in a greater after-tax benefit to the Executiveexecutive than the after-tax benefit to the Executiveexecutive calculated under (i)(1) above.
With respect to Mr. Quinn, inIn order to ensure consistency among the various compensatory agreements to which he is a party, Mr. Quinn’s Change in Control Agreement provides that, in the event that any benefit distributable under the agreement would be deemed to be an Excess Parachute Payment, Mr. Quinnexcess parachute payment, he shall be entitled to the payment of an additional amount equal to: his excise penalty tax amount divided by the difference between (one minus the sum of (the penalty tax rate plus his marginal income tax rate)). This provision mirrors those contained in his Salary Continuation Agreement and Deferred Compensation Agreement, described above, and is necessary to ensure that Mr. Quinn, who has served as President and Chief Executive Officer since 2009 and has guided the Company through its most transformative years, receives the full benefit of those compensatory arrangements should there be a termination of his employment following a change in control of the Company.
If the executive’s employment is terminated following a change in control, for the greater of (i) six months following termination of employment or (ii) the one-year anniversary of the change in control, each executive agrees not to directlycompete with, or indirectly engage in business competition with the Company or the Bank with respect to its services, products, processes, customers, methods of doing business and similar matters within a 75-mile radius of Shippensburg, Pennsylvania. In addition, during this period, each executive will not solicit or attempt to solicit, divert or appeal to any employees, customers, clients or referral sources of, the Company, the Bank or any of their respective subsidiaries.
The following table summarizes potential change in control benefits for each of the NEOs. For the purposes of this table, we assumed a change in control of the Company and a termination of employment by the surviving company without cause (or a resignation by the executive for any reason), and that both events had occurred on December 31, 2019.2022.

Name
Cash Benefit Under
Change in Control
Arrangement ($) (1)
Cash Benefit Under
Salary Continuation
Agreement($)(1)
General Health
and Welfare
Benefits ($)(2)
Total Benefits ($)
Thomas R. Quinn, Jr.4,257,020  2,785,294  40,632  7,082,946  
Thomas R. Brugger1,131,193  —  14,450  1,145,643  
Adam L. Metz967,448  —  49,860  1,017,308  
Robert G. Coradi280,894  652,262  51,208  984,364  
Philip E. Fague892,065  74,749  42,199  1,009,013  

NameCash Benefit Under
Change in Control
Arrangement ($)
Cash Benefit Under
Deferred Compensation
Agreement($)(1)
General Health
and Welfare
Benefits ($)(2)
Total Benefits ($)
Thomas R. Quinn, Jr.4,735,080 541,431 53,275 5,329,786 
Neelesh Kalani1,640,147 — 17,674 1,657,821 
Adam L. Metz1,582,003 20,000 57,101 1,659,104 
Robert G. Coradi1,458,831 350,620 58,953 1,868,404 
Christopher D. Holt1,694,876 589,189 31,475 2,315,540 
(1)
Present value as of December 31, 20192022 of accumulated benefit under Salary Continuation Agreement and Deferred Compensation Agreement at normal retirement age.accelerated as a part of a change-in-control. Benefit payable over a 15-year period upon executive officer reaching normal retirement age specified in the executive officer’s respective agreement.
(2)
Value of benefits based upon assumptions used for financial reporting purposes under accounting principles generally accepted in the UnitesUnited States of America.


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The compensation represented by the amounts set forth in the “All Other Compensation” column in the 2019 Summary Compensation Table is detailed in the following table.
2019 ALL OTHER COMPENSATION TABLE
Vehicle
Allowance or
Personal useCountrySplit DollarCompany Contributions
of CompanyClubInsuranceLife Insuranceto Retirement and
NameYear
Vehicle ($) (1)
Dues ($)
Premiums ($)(1)
Benefit ($) (2)
401(k) Plans ($)Total ($)
Thomas R. Quinn, Jr.20196,044  8,000  3,564  10,765  3,450  31,823  
20183,864  —  2,322  67,383  5,160  78,729  
20176,724  —  2,322  46,664  4,349  60,059  
Thomas R. Brugger2019—  —  573  —  —  573  
2018—  —  —  —  —  —  
2017—  —  —  —  —  —  
Adam L. Metz20198,400  14,779  810  —  4,102  28,091  
20188,400  6,467  810  —  3,983  19,660  
20178,400  6,073  810  —  1,351  16,634  
Robert G. Coradi2019—  —  2,238  —  7,361  9,599  
2018—  —  2,028  —  6,652  8,680  
2017—  —  1,963  —  6,458  8,421  
Philip E. Fague2019181  3,900  3,451  6,009  7,320  20,861  
2018204  3,900  2,184  14,482  7,124  27,894  
2017104  3,575  2,130  12,982  6,961  25,752  
David P. Boyle20193,274  3,843  1,161  —  4,339  12,617  
20183,625  6,428  1,242  —  9,217  20,512  
20174,768  6,136  1,242  —  7,454  19,600  

(1)
The reported insurance premiums are paid by the Bank in connection with the employee group term replacement plans as described above in the Compensation Discussion and Analysis.
(2)
Represents the aggregate increase in the present value of the officer’s split dollar benefit under the group term replacement plan described in the Compensation Discussion and Analysis.


Other Considerations
Risk Management
The Company believes its compensation programs and practices for its employees are not reasonably likely to have a material adverse effect on the Company. Annual incentive compensation, including both cash and equity awards, is wholly subject to the discretion of the Compensation Committee and the independent directors. Similarly, not only is long-term incentive compensation in the forms of restricted stock and stock options also subject to Compensation Committee and independent director discretion, it also reflects a modest portion of total compensation at lesser levels than among the Company’s peers. With respect to those employees whose compensation may involve a variable component, such as lenders and investment counselors who are paid, in part, based upon production, the Company believes the aggregate absolute amount of such compensation is not material to the Company and that the Company’s internal controls further mitigate the risks that otherwise might be incurred as a result of such activities and compensation practices.Related to feedback from shareholder engagement, certain changes to compensation were made to better assure executive compensation is aligned with shareholders’ interests.
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Tax and Accounting Considerations
The Company considers the tax and accounting implications in the design of its compensation programs. For example, in the selection of long-term incentive instruments, the Compensation Committee reviews the projected expense amounts and expense timing associated with alternative types of awards. Under current accounting rules (i.e., Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718), the Company must expense the grant-date fair value of share-based grants
32

such as stock option awards, restricted stock, performance shares, and stock appreciation rights settled in stock. The grant-date value is amortized and expensed over the service period or vesting period of the grant. In selecting appropriate incentive devices, the Compensation Committee reviews appropriate expense analyses and considers the related tax and accounting issues.
Section 162(m) of the Internal Revenue Code places an annual limit on the tax deduction for certain compensation paid in excess of $1 million to the Chief Executive Officer and the three most highly compensated executive officers of a corporation. All of the compensation the Company paid in 2019 to the Named Executive Officers is expected to be deductible under Section 162(m) of the Internal Revenue Code. Whether all elements of compensation paid by the Company in future years will be fully deductible is dependent upon many factors as required by Section 162(m) of the Internal Revenue Code and applicable regulations. Such factors include the aggregate level of taxable income received by an executive in each year, the structure of various compensation plans, the manner in which incentive compensation goals are established and a determination of satisfaction of those goals, and the relationship between the Company and the directors serving on the committee determining the performance goals related to incentive compensation and the satisfaction of such performance goals. The Compensation Committee retains the flexibility to pay both compensation that will be fully deductible and compensation that may not be deductible in structuring the Company’s compensation programs in its actions to promote the best interests of the Company and its shareholders.
Upon a change in control of the Company, some portion of the severance payments paid to our Executivesexecutives may exceed the deductible limitations under Section 280G of the Internal Revenue Code. The Compensation Committee believes that this flexibility in structuring compensation to our Executivesexecutives is in the best interest of our shareholders.
Under the Company's executive incentive compensation program, effective for 2019, there are in place forfeiture and/or claw-back provisions for the repayment of incentive compensation in the event of excessive risk impacting financial performance and restatement or adjustment of the performance measures in the future after incentive awards have been made. The Company did not utilize provisions for repayment of incentive compensation for 20192022 due to restatement or adjustment of the performance measures. The Company does not currently maintain stock ownership guidelines or equity incentive retention guidelines for its NEOs (unless they also serve on the Board of Directors), but generally such officers hold personal investments in the Company’s stock. Equity granted under the Company’s incentive compensation plan isand any additional personal investments in Company stock are subject to the Company’s anti-hedging and anti-pledging provisions covered in the Company’s Insider Trading Policy.

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PAY VERSUS PERFORMANCE
In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Company provides the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEOs and Company performance for the fiscal years listed below. The Compensation Committee Report
We,did not consider the memberspay versus performance disclosure below in making its pay decisions for any of the years shown.
Pay Versus Performance Table
Year
Summary Compensation on Table Total for PEO ($)(1)
Compensation Actually Paid to PEO ($)(1)(2)
Average Summary Compensation Table Total for Non-PEO NEOs ($)(1)
Average Compensation Actually Paid to Non-PEO NEOs ($)(1)(2)
Total Shareholder Return ($)(3)
Net Income ($)(4)
20222,526,698 2,451,820 743,683 714,211 107.39 22,037,000 
20211,967,057 2,225,978 631,930 722,902 113.34 32,881,000 

(1) During 2021 and 2022, Mr. Quinn was the Company’s PEO and our remaining NEOs consisted of Messrs. Kalani, Coradi, Metz and Holt.
(2) The amounts shown for Compensation CommitteeActually Paid have been calculated in accordance with Item 402(v) of Regulation S-K as applied to smaller reporting companies and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with the following adjustments:
YearSummary Compensation Table Total for PEO ($)Summary Compensation Table Value of Equity Awards ($)Equity Award Adjustments($)(a)Compensation Actually Paid to PEO ($)
20222,526,698 (365,121)290,243 2,451,820 
20211,967,057 (159,604)418,525 2,225,978 

YearAverage Reported Summary Compensation Table Total for Non-PEO NEOs ($)Average Summary Compensation Table Value of Equity Awards for Non-PEO NEOs ($)Equity Award Adjustments($)(a)Average Compensation Actually Paid to Non-PEO NEOs ($)
2022743,683 (147,965)118,493 714,211 
2021631,930 (94,720)185,692 722,902 

(a) The following table sets forth the adjustments made during each year represented in the Pay Versus Performance Table to arrive at compensation “actually paid” to our PEO and non-PEO NEOs during each of the Boardyears in question. Equity values are calculated in accordance with FASB ASC Topic 718.

YearYear End Fair Value of Equity Awards in the Year for PEO ($)Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years for PEO ($)Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year for PEO ($)Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year for PEO ($)Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year for PEO ($)Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation for PEO ($)Total
Equity
Award
Adjustments for PEO ($)
2022338,113 (42,250)— (5,620)— — 290,243 
2021219,542 176,348 — 22,635 — — 418,525 

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YearAverage Year End Fair Value of Equity Awards for Non-PEO NEOs ($)Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years for Non-PEO NEOs ($)Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year Non-PEO NEOs ($)Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year Non-PEO NEOs ($)Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year Non-PEO NEOs ($)Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation Non-PEO NEOs ($)Total
Equity
Award
Adjustments ($)
2022137,020 (15,328)— (3,199)— — 118,493 
2021123,606 54,655 — 7,431 — — 185,692 
(3) Represents the total shareholder return of Directorsan investment of Orrstown Financial Services, Inc., have reviewed and discussed$100 in Company Common Stock on December 31, 2020 through December 31, 2022, assuming the Compensation Discussion and Analysis set forth above withreinvestment of dividends on the managementdate of payment without commissions (“Total Shareholder Return”).
(4) Excluding the impact of the Companylegal settlement and based on such review and discussion, have recommended to the Board of Directors of the Company inclusion of the Compensation Discussion and Analysis in this proxy statement and, through incorporation by reference from this proxy statement, in the Company’s Annual Report on Form 10-Krestructuring charge, Net Income was $34.8 million for the year ended December 31, 2019.2022.
Submitted by
The graphs below display the Compensation Committee:relationship between compensation actually paid to the PEO and the average actual compensation paid to the non-PEO NEOs and the Company's total shareholder return and net income (on a GAAP and adjusted basis).
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2022 PAY RATIO DISCLOSURE
Floyd E. Stoner, Chair2022
Median annual compensation of all employees, excluding CEO$68,420
Cindy J. Joiner, CPAAnnual compensation of CEO$2,526,698
Glenn W. SnokeRatio of CEO total pay to median pay of all employees36.9 
Joel R. Zullingerx
Except as set forth above, this report shallMethodology for Determining Median Employee Compensation
The Company, through use of payroll and other internal records, accumulated all compensation paid to all employees consistent with compensation calculated using Item 402(c)(2)(x) of SEC Regulation S-K (the "Total" column in the 2022 Summary Compensation Table). Compensation was annualized for permanent full- and part-time employees who were not be deemed to be incorporated by reference, by any general statement incorporating by reference this proxy statement into any filing underemployed for the Securities Act of 1933, as amended, orentire fiscal year. The date chosen for identifying the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such acts.
Compensation Risk Assessment
The Compensation Committee periodically conducts a Compensation Risk Self-Assessment. The latest Compensation Risk Self-Assessment, whichmedian annual employee compensation was conducted in December 2017, concluded that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
31, 2022.

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PROPOSAL 2 - ADVISORY VOTE ONREGARDING THE COMPENSATION PAID TO
NAMED EXECUTIVE OFFICERS (“SAY-ON-PAY”)

A Non-Binding Advisory Vote to Approve the Compensation Paid to Our Named Executive Officers
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, requires us to hold a shareholder vote to approve, on a non-binding advisory basis, the compensation paid to our Named Executive Officers as disclosed in this proxy statement in accordance with the SEC’s rules and regulations. This vote is commonly referred to as the Say-On-Pay"Say-On-Pay" vote. As required by the Dodd-Frank Act, the vote sought by this proposal is advisory and is non-binding on the Board of Directors. The Company’s shareholders voted at the 2017 Annual Meeting of Shareholders to hold this vote on executive compensation annually. TheWhile the vote is non-binding, however, the Compensation Committee of the Board of Directors values the opinions expressed by our shareholders and will carefully consider the outcome of the vote in connection with future compensation decisions for our Named Executive Officers.
The Compensation Committee of the Board of Directors believes that our executive compensation program achieves our intended objective to provide fair, reasonable and appropriate levels of compensation and benefits in order to recruit, motivate, reward and retain qualified executive officers and generate long term value for the Company’s shareholders. Accordingly, we ask our shareholders to vote FOR approval of the non-binding advisory vote onregarding the compensation paid to our Named Executive Officers as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the compensation tables and narrative accompanying the tables.
The Board of Directors believes the following key aspects of our executive compensation program support our recommendation to vote FOR approval of the non-binding advisory vote onregarding the compensation paid to our NEOs:
•Fair, Reasonable and Appropriate Levels of Compensation.A study conducted by the Compensation Committee found that overall cash compensation levels for our Named Executive Officers were in line with the competitive market median and long-term incentive awards were within a competitive range of the market. Furthermore, the Company provides limited benefits and perquisites to ourits executives.
•Pay and Performance Alignment. The Compensation Committee believes that increases in salaries, incentive bonus payouts, andrestricted stock optionawards and restricted stock unit awards, when made, are consistent with our performance in relation to our operating plan and the performance of our peers.
•Risk Mitigation. We strive to have a risk appropriate compensation program. We believe that our mix of pay, which is balanced, and our incentive arrangements, which are not highly leveraged, promote a risk-appropriate environment for compensating our executives.
•Long-termLong-Term Incentive Strategy. The strategy of granting equity awards is to balance a mix of restricted stock and/or restricted stock options,units, both of which will have multi-year vesting criteria. This reflects the Compensation Committee’s desire to increase the emphasis of our executive compensation program on achieving long-term performance, as well as to bolster the retentive effects of our stock-based compensation awards.
Additional details on our executive compensation programs and practices and the rationale for decisions made are set forth in the Compensation Discussion & Analysis section of this proxy statement, includingas well as the Summary Compensation Table and supporting tabular and narrative disclosures.
The affirmative vote of a majority of the votes cast by shareholders present in person or by proxy at the Annual Meeting is necessary for the approval of the non-binding advisory vote on compensation paid to our Named Executive Officers as described in this proxy statement.proposal. Abstentions and broker non-votes, if any, are not treated as votes cast and, therefore, will have no effect on whether or not this proposal is approved.
The Board of Directors recommends that you vote FOR approval of the non-binding advisory vote onregarding the compensation paid to our Named Executive Officers as disclosed in this proxy statement.



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PROPOSAL 3 - SAY-ON-PAY FREQUENCY PROPOSAL
A Non-Binding Advisory Vote to Approve the Frequency of the Advisory Vote on the Executive Compensation Paid to Our Named Executive Officers.
The Dodd-Frank Act requires us to include, at least once every six years, a non-binding advisory vote regarding how often the non-binding advisory vote on executive compensation, commonly referred to as the Say-On-Pay vote, is to be presented to shareholders. This vote on the frequency of Say-On-Pay is commonly referred to as the “Say-On-Frequency” vote. Our shareholders may choose from four options: (1) an annual vote, (2) a vote every two years (biennial), (3) a vote every three years (triennial), or (4) abstain from voting on this proposal.
The Board of Directors believes an ANNUAL Say-On-Pay vote is most appropriate for the Company because it:
•Provides the highest level of accountability to shareholders.
•Fosters more frequent communication with shareholders.
•Reflects our desire to hold ourselves to the highest standard of corporate governance.
•Allows our Board of Directors to obtain shareholder feedback on our executive compensation programs.
•Allows us to be more responsive to shareholder concerns regarding our executive compensation programs.
The option of holding the Say-On-Pay vote annually, every two years, or every three years, that receives the highest number of votes cast will be the frequency for holding the Say-On-Pay vote on executive compensation that will have been approved by the shareholders. Because this vote is an advisory and non-binding on the Board of Directors, the Board of Directors, in its discretion, may determine that it is in the best interests of the Company to hold the Say-On-Pay vote on executive compensation more or less frequently than the option approved by the shareholders.
The affirmative vote of a majority of the votes cast by shareholders present in person or by proxy at the Annual Meeting is necessary for the approval of this proposal. Abstentions and broker non-votes, if any, are not treated as votes cast and, therefore, will have no effect on whether or not this proposal is approved.
The Board of Directors recommends that you vote in favor of an ANNUAL Say-On-Pay vote on the executive compensation paid to our Named Executive Officers.

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PROPOSAL 4 – RATIFICATION OF THE AUDIT COMMITTEE’S SELECTION OF CROWE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020

2023
Under the Audit Committee’s Charter, the Audit Committee is responsible for selecting the Company’s independent registered public accounting firm. The Audit Committee evaluates and monitors the auditors’ qualifications, performance and independence. You can learn more about the Audit Committee’s responsibilities with respect to the independent registered public accounting firm in the Audit Committee’s charter, which is posted onin the investor relations section of our website at www.orrstown.com.
On March 10, 2020, the Audit Committee presented its conclusions regarding the independent public accounting firm to our The Board of Directors. Following this presentation, the BoardDirectors has voted unanimously to recommend that shareholders vote to ratify the Audit Committee’s selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2023.
The Audit Committee and the Board of Directors have adopted a policy that, if a majority of the votes cast at the annual meetingAnnual Meeting is against ratification, the Audit Committee will reconsider its selection of Crowe LLP. The Audit Committee, however, will be under no obligation to select a new independent registered public accounting firm. If the Audit Committee does select a new independent registered public accounting firm for 2020,2023, the Company will not seek shareholder ratification of the Audit Committee’s new selection.
The affirmative vote of a majority of the votes cast by shareholders present in person or by proxy at the annual meetingAnnual Meeting is necessary to ratify the Audit Committee’s selection of Crowe LLP, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020approval of this proposal. Abstentions and broker non-votes, if any, are not treated as votes cast and, therefore, will have no effect on whether or not this proposal is approved.
The Board of Directors recommends a vote FOR the ratification of the Audit Committee’s selection of Crowe LLP, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2023.

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Relationship with Independent Registered Public Accounting Firm
Representatives of Crowe LLP, the Company’s independent registered public accounting firm for 2019,2022, are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate shareholder questions.
Audit Fees and Non-Audit Fees
Aggregate fees billed for professional services rendered for the Company and its subsidiaries by Crowe LLP for the fiscal yearyears ended December 31, 20192022 and December 31, 20182021 are set forth below:
20192018
Audit fees$444,510  $397,809  
Audit-Related fees—  —  
Tax fees46,750  44,668  
All other fees—  —  
TOTAL$491,260  $442,477  

20222021
Audit fees$439,488 $354,995 
Audit-Related fees— — 
Tax fees32,236 49,503 
All other fees— — 
TOTAL$471,724 $404,498 
Audit fees were for professional services rendered and related out-of-pocket expenses for the audits of the consolidated financial statements of the Company, quarterly review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, consents, auditCECL-related services, associated with acquisitionsconsents, and other assistance required to complete the year-end audit of the consolidated financial statements, assessment of the Company’s internal controls and in the review of the Company’s Annual Report on Form 10-K. For 2022, audit fees include non-recurring fees related to CECL implementation and consents for Form S-3 and Form S-8 filings totaling $63,260.
Tax fees for 20192022 and 20182021 were in connection with the preparation and amendments to the Company’s tax returns, for 2018 and 2019, and responding to certain taxing authority inquiries and tax consulting.
There were no other fees billed by the Company’s independent registered public accounting firm for 20192022 and 2018.2021.
The Audit Committee pre-approves all audit and non-audit services provided by the independent registered public accounting firm prior to each specific engagement. The Audit Committee does not delegate pre-approval authority to any one or more of its members and in no case is pre-approval waived under the de minimus exception set forth in applicable SEC rules and regulations. In 2019,2022 and 2021, all audit and non-audit services provided by Crowe LLP were pre-approved by the Audit Committee.
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Involvement in Certain Legal Proceedings
On September 27, 2016, the Company entered into a settlement agreement with the SEC resolving an investigation by the SEC of accounting and related matters at the Company for the periods ended June 30, 2010 to December 31, 2011. As part of the settlement of the SEC’s administrative proceedings, and pursuant to the cease-and-desist order, without admitting or denying the SEC’s findings, the Company agreed to pay a civil money penalty of $1 million. In the settlement agreement with the SEC, the Company also agreed to cease and desist from committing or causing any violations and any future violations of Securities Act Sections 17(a)(2) and 17(a)(3) and Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B), and Rules 12b-20, 13a-1 and 13a-13 promulgated thereunder. As part of the settlement of the SEC’s administrative proceedings, and pursuant to the cease-and-desist order, without admitting or denying the SEC’s findings, Thomas R. Quinn, Jr., President and Chief Executive Officer of the Company, agreed to pay a civil money penalty to the SEC in the amount of $100,000, and to cease and desist from committing and/or causing the violations charged, as well as any future violations of these provisions.

ANNUAL REPORT ON FORM 10-K
A copy of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2022, as filed with the Securities and Exchange Commission,SEC, is being mailed with this Proxy Statementproxy statement to all shareholders of the Company. In addition, a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission, may be obtained without charge by written request to Thomas R. Brugger,Neelesh Kalani, Executive Vice President and Chief Financial Officer, Orrstown Financial Services, Inc., 4750 Lindle Road, Harrisburg, PA 17111. The Annual Report on Form 10-K also is available at www.orrstown.com in the investor relations section.

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POTENTIAL CHANGE TO OUR ANNUAL SHAREHOLDER MEETING
AS A RESULT OF THE NOVEL CORONAVIRUS PANDEMIC

March 19, 2020

Dear Shareholders:
As of the date of this mailing, the Coronavirus is impacting our market place.  Government officials and health experts are recommending the avoidance of large gatherings and social distancing to reduce the spread of the virus.
Therefore, we are working diligently to ensure a safe shareholder meeting and, in the near future, we expect to announce alternative methods of attendance, including a teleconferencing option.
Please watch for an additional written communication with further details.  In the interim, we encourage you to vote your shares either online or by phone as further described on the proxy ballot card.
If you have any questions in the meantime, please contact our investor relations department directly at 717-510-7127 or by email at ir@orrstown.com.

Sincerely,
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Thomas R. Quinn, Jr.
President & CEO

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