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| Prudential Bancorp, Inc. |
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January 17, 202015, 2021
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Prudential Bancorp, Inc. Theto be held on Wednesday, February 17, 2021, at 11:00 a.m. Eastern Time. Due to the continuing public health impact of the coronavirus (COVID-19) pandemic, and the related governmental restrictions on public gatherings as well as to support the health and well-being of our shareholders and employees, the annual meeting will be held in a virtual meeting format only. You will not be able to attend the annual meeting physically. In light of the change in meeting structure, we will be streamlining the meeting process.
To participate in the meeting, visit https://www.psbanker.com/shareholder/. You may register for the meeting upon receipt of the annual meeting materials. If you hold your shares through a bank, broker or other nominee, you may need to take additional steps to participate in and vote at Prudential Bank’s administrative offices located at 3993 Huntingdon Pike, Suite 300, Huntingdon Valley, Pennsylvania, on Wednesday, February 19, 2020 at 11:00 a.m., Eastern Time.the meeting, as described in the proxy statement.
The Board of Directors unanimously recommends a vote “FOR” election of our one nomineetwo nominees for director for a three-year term expiring in 20232024 and “FOR” ratification of the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2020.2021. Each of these matters is more fully described in the accompanying materials.
It is very important that you be represented at the annual meeting regardless of the number of shares you own or whether you are able to attend the meeting in person.meeting. We urge you to mark, sign, and date your proxy card today and return it in the envelope provided or vote over the Internet or by telephone, if available, even if you plan to attend the annual meeting. This will not prevent you from voting in person,at the Annual Meeting, should you so choose, but will ensure that your vote is counted if you are unable to attend.
Your continued support of and interest in Prudential Bancorp, Inc. is sincerely appreciated.
Very truly yours,  Dennis Pollack President and Chief Executive Officer |
PRUDENTIAL BANCORP, INC. 1834 West Oregon Avenue Philadelphia, Pennsylvania 19145 | |
| NOTICE OF ANNUAL MEETING OF SHAREHOLDERS | |
TIME | 11:00 a.m., Eastern Time, Wednesday, February |
PLACE | |
ITEMS OF BUSINESS | (1) To elect qualified; (2) To ratify the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, (3) To transact such other business as may properly come before the meeting or at any adjournment thereof. We are not aware of any other such business. |
RECORD DATE | Holders of Prudential Bancorp, Inc. common stock of record at the close of business on |
ANNUAL REPORT | Our |
PROXY VOTING | It is important that your shares be represented and voted at the meeting. You are urged to vote your shares by completing and returning the proxy card sent to you. Most shareholders can also vote their shares over the Internet or by telephone. If Internet or telephone voting is available to you, voting instructions are printed on your proxy card or voting instruction form. You can revoke a proxy at any time prior to its exercise at the meeting by following the instructions in the accompanying proxy statement. |
BY ORDER OF THE BOARD OF DIRECTORS   Sharon M. Slater Corporate Secretary | |
Philadelphia, Pennsylvania January | |
| TABLE OF CONTENTS | ||
| Page | ||
About the Annual Meeting of Shareholders | 1 | |
Information with Respect to the Nominee for Director, Continuing Directors and Executive Officers | 3 | |
Election of Directors (Proposal One) | 3 | |
Members of the Board of Directors Continuing in Office | 4 | |
Committees and Meetings of the Board of Directors | 5 | |
Board Leadership Structure | 6 | |
Board’s Role in Risk Oversight | 6 | |
Director Independence | 6 | |
Directors’ Attendance at Annual Meetings | 7 | |
Directors’ Compensation | 7 | |
Compensation Committee Interlocks and Insider Participation | 7 | |
Director Nominations | 8 | |
Executive Officers Who Are Not Also Directors | 9 | |
Report of the Audit Committee | 9 | |
Management Compensation | 10 | |
Summary Compensation Table | 10 | |
Narrative to Summary Compensation Table | 10 | |
Compensation Policies and Practices as They Relate to Risk Management | 12 | |
Equity Compensation Plans | 12 | |
Employment and Change in Control Agreements | 13 | |
Benefit Plans | ||
| 15 | ||
Long-Term Incentive Compensation | ||
| 16 | ||
Related Party Transactions | 17 | |
Beneficial Ownership of Common Stock by Certain Beneficial Owners and Management | ||
| 18 | ||
| Ratification of Appointment of Independent Registered Public Accounting Firm (Proposal Two) | 20 | |
Audit Fees | 20 | |
Shareholder Proposals, Nominations and Communications with the Board of Directors | 21 | |
Annual Reports | 22 | |
Other Matters | 22 | |
ELECTRONIC DELIVERY We encourage Prudential Bancorp, Inc. shareholders to If you are a registered shareholder, please visit www.investorvote.com/PBIP for simple instructions. If you hold your | ||
PROXY STATEMENT
OF
PRUDENTIAL BANCORP, INC.
_____________________
| ABOUT THE ANNUAL MEETING OF SHAREHOLDERS |
General. This proxy statement is furnished to holders of common stock of Prudential Bancorp, Inc., referred to as the “Company” or “Prudential Bancorp,” the parent holding company of Prudential Bank, referred to as “Prudential Bank” or the “Bank.” Our Board of Directors is soliciting proxies to be used at the Annual Meeting of Shareholders to be held at the administrative offices of Prudential Bank, located at 3993 Huntingdon Pike, Suite 300, Huntingdon Valley, Pennsylvania,virtually, on Wednesday, February 19, 202017, 2021 at 11:00 a.m., Eastern Time, and any adjournment thereof, for the purposes set forth in the attached Notice of Annual Meeting of Shareholders. This proxy statement is first being mailed to shareholders on or about January 17, 2020.15, 2021.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on February 19, 2020.17, 2021. This proxy statement and our 20192020 Annual Report on Form 10-K are available through our website at www.psbanker.com under the “Investor Relations” Quick Link.
What is the purpose of the annual meeting?
At our annual meeting, shareholders will act upon the matters outlined in the attached notice of meeting consisting of the proposals to:
elect one directortwo directors each for a three-year term expiring in 2023;2024; and
ratify the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2020.2021.
Who is entitled to vote?
Only our shareholders of record as of the close of business on the record date for the annual meeting, January 3,December 31, 2020, are entitled to vote at the meeting. On the record date, we had 8,895,4747,996,864 shares of common stock issued and outstanding and no other class of equity securities outstanding. For each issued and outstanding share of common stock you own on the record date, you will be entitled to one vote on each matter to be voted on at the meeting, in person or by proxy.
How do I submit my proxy?
After you have carefully read this proxy statement, indicate on your proxy form how you want your shares to be voted. Then sign, date and mail your proxy form in the enclosed prepaid return envelope as soon as possible. You may also vote over the Internet or by telephone by following the instructions on your proxy card or voting instruction form. This will enable your shares to be represented and voted at the annual meeting.
If my shares are held in “street name” by my broker, could my broker automatically vote my shares?
Your broker may not vote on the election of directors if you do not furnish instructions for such proposal. You should use the voting instruction form or broker card provided by the institution that holds your shares to instruct your broker to vote your shares or else your shares will be considered “broker non-votes.”
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Broker non-votes are shares held by brokers or nominees as to which voting instructions have not been received from the beneficial owners or the persons entitled to vote those shares and the broker or nominee does not have discretionary voting power under rules applicable to broker-dealers. Under these rules, proposal one, the election of directors, is not an item on which brokerage firms may vote in their discretion on behalf of their clients if such clients have not furnished voting instructions.
Your broker may vote in his or her discretion on the ratification of the appointment of our independent registered public accounting firm if you do not furnish instructions.
Can I attend the meeting and vote my shares in person?at the annual meeting?
Due to the COVID-19 pandemic, the annual meeting is only being held virtually. All shareholders are invited to attend the annual meeting virtually. The meeting will be conducted as a live, audio-only webcast. You may register for the meeting upon receipt of the annual meeting materials. Upon registration you will be provided additional information on how to attend the annual meeting, including a password necessary to join the meeting. Shareholders of record can vote in personvirtually at the annual meeting. As a registered stockholder, you received a proxy card with this proxy statement. The proxy card contains instructions on how to register for the virtual annual meeting and includes your 15 digit control number. You will need your control number for voting.
Due to the decision to hold the annual meeting virtually, the focus of the meeting will be on the matters to be acted on at the meeting. You will be able to submit questions during the meeting only applicable to the matters to be acted on as well as vote during the meeting. Instructions for how to do so will be provided at the start of the annual meeting.
If your shares are held in “street name,” then you are not the shareholder of record and you must ask your broker or other nominee about how you can vote at the annual meeting.
Can I change my vote after I return my proxy card?
Yes. If you are a shareholder of record, there are three ways you can change your vote or revoke your proxy after you have sent in your proxy card.
First, you may complete and submit a new proxy card or vote over the Internet or by telephone before the annual meeting. Any earlier proxies will be revoked automatically.
Second, you may send a written notice to our Corporate Secretary, Ms. Sharon M. Slater, Prudential Bancorp, Inc., 1834 West Oregon Avenue, Philadelphia, Pennsylvania 19145, in advance of the annual meeting stating that you would like to revoke your proxy.
Third, you may attend the annual meeting virtually and vote in person.virtually at the annual meeting. Any earlier proxy will be revoked. However, attending the virtual annual meeting without voting in personvirtually at the annual meeting will not revoke your proxy.
If your shares are held in street name and you have instructed a broker or other nominee to vote your shares, you must follow directions you receive from your broker or other nominee on how to change your vote.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a majority of votes that all shareholders are entitled to cast on a particular matter will constitute a quorum. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of votes considered to be present at the meeting.
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What are the Board of Directors’ recommendations?
The recommendations of the Board of Directors are set forth under the description of each proposal in this proxy statement. In summary, the Board of Directors recommends that you vote FOR the one nomineetwo nominees for director described herein, and FOR ratification of the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2020.2021.
The proxy solicited hereby, if properly signed and returned to us and not revoked prior to its use, will be voted in accordance with your instructions. If no contrary instructions are given, each proxy signed and received will be voted in the manner recommended by the Board of Directors and, upon the transaction of such other business as may properly come before the annual meeting, in accordance with the best judgment of the persons appointed as proxies. Proxies solicited hereby may be exercised only at the annual meeting and any adjournment of the annual meeting and will not be used for any other meeting.
What vote is required to approve each item?
The election of directors will be determined by a plurality of the votes cast at the annual meeting. The one nomineetwo nominees for director receiving the most “For” votes will be the directordirectors for a three-year term expiring in 2023,2024, and until his successor istheir respective successors are elected and qualified. The affirmative vote of a majority of the votes cast by shareholders entitled to vote at the annual meeting is required for approval of the proposal to ratify the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2020.2021. Under the provisions of the Pennsylvania Business Corporation Law, abstentions and broker non-votes do not constitute votes cast and will not affect the vote required for the proposal to ratify the appointment of the independent registered public accounting firm.
INFORMATION WITH RESPECT TO THE NOMINEE FOR DIRECTOR, CONTINUING DIRECTORS AND EXECUTIVE OFFICERS |
Election of Directors (Proposal One)
Our Articles of Incorporation provide that the Board of Directors shall be divided into three classes as nearly equal in number as possible. The directors are elected by our shareholders for staggered terms and until their successors are elected and qualified. Generally, one class is elected annually. At this annual meeting, you will be asked to elect one directortwo directors for a three-year term expiring in 20232024 and until his successor istheir respective successors are elected and qualified. Mr. Francis V. Mulcahy, currently a director of the Company whose term expires at the annual meeting, previously announced his decision to retire from the Board and not stand for re-election at the annual meeting. Prudential Bancorp’s Board of Directors has adopted resolutions providing for (i) an amendment of the bylaws to change the range constituting the Board to four to 10 persons from five to 10 persons as currently provided and (ii) to reduce the size of the Board to four members, in each case, such action to be effective as of the annual meeting.
Our Nominating and Corporate Governance Committee has recommended the re-election of Mr. PollackMessrs. John C. Hosier and Bruce E. Miller as a director.directors. No director is related to any other director or executive officer by blood, marriage or adoption. Shareholders are not permitted to use cumulative voting for the election of directors. Our Board of Directors has determined that Messrs. Fanelli, Hosier, Miller and Mulcahy are independent directors as defined in the Nasdaq Stock Market listing standards.
Unless otherwise directed, each proxy signed and returned by a shareholder will be voted for the election of the nomineetwo nominees for director listed below. If theany person named as a nominee should be unable or unwilling to stand for election at the time of the annual meeting,Annual Meeting, the proxies will nominate and vote for a replacement nominee or nominees recommended by our Board of Directors. At this time, the Board of Directors knows of no reason why either of the nomineenominees may not be able to serve as a director if elected.
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The following tables present information concerning either of our nomineetwo nominees for director and our continuing directors, all of whom also serve as directors of Prudential Bank.directors. Ages are reflected as of September 30, 2019.
Name | Age and Position with Prudential Bancorp and Principal Occupation During the Past Five Years | Director Since | ||
John C. Hosier | Director. Vice President with Montgomery Insurance Services, Inc., Media, Pennsylvania since 1986, and Commercial Lines Manager of its affiliate, Allman and Company, Inc., Fort Washington, Pennsylvania since 2007, two full-service insurance agencies. Mr. Hosier brings significant commercial business experience as well as knowledge of the local insurance market to the Board of Directors. Age 56. | 2009 | ||
Bruce E. Miller | Director and Chairman of the Board. President, Imaging Management Associates, operator of five magnetic resonance imaging centers located in Philadelphia, Pennsylvania and Chester and Delaware Counties, Pennsylvania since 2000. Mr. Miller brings significant business experience to the Board as a result of his successful operation of a number of small businesses as well as extensive knowledge of the local market area in which the Bank operates. Age 59. | 2013 |
The Board of Directors recommends that you vote FOR election of our two nominees for director.
Members of the Board of Directors Continuing in Office
Name | Directors Whose Terms Expire in 2022 Age and Position with Prudential Bancorp and Principal Occupation During the Past Five Years | Director Since | ||
A. J. Fanelli | Director. Self-employed owner of a public accounting practice, Philadelphia, Pennsylvania. Mr. Fanelli brings substantial accounting knowledge to the Board of Directors as Chairman of the Audit Committee. Age 83. | 2005 | ||
Raymond J. Vanaria | Director. Member of the certified public accounting firm, Malesardi, Quackenbush, Swift & Company LLC, a firm he joined in 1983. Director of MSB Financial Corp., Millington, New Jersey, and its wholly owned subsidiary, Millington Bank, from January 2016 until July 2020. Director of ConnectOne Bancorp, Inc., Englewood Cliffs, New Jersey, and its wholly owned subsidiary, ConnectOne Bank, from July 2014 until January 2016. Prior to the merger of Center Bancorp, Inc. with ConnectOne Bancorp, Inc. in July 2014, served as Director of Center Bancorp, Inc., Union, New Jersey, and its wholly owned subsidiary, Union Center National Bank, commencing in 2007. Age 62 | 2020 |
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Director Whose Term Expires in 2023
Name | Director Whose Term Expires in 2023 Age and Position with Prudential Bancorp and Principal Occupation During the Past Five Years | Director Since | ||
Dennis Pollack | Director. President and Chief Executive Officer of Prudential Bancorp and Prudential Bank since May 2016. Former Chairman of the Board, Presilient Worldwide, Denver, Colorado, an information technology managed backup and infrastructure service provider, between 2011 and 2017. Director, SI Financial Group, Inc. Willimantic, Connecticut, and its wholly owned subsidiary, Savings Institute Bank and Trust Company, from February 2015 to May 2019; previously served as a director of TF Financial, Inc., Newtown, Pennsylvania, from January 2012 until October 2013; also served as Chief Operating Officer of Paulson & Co., New York, New York, a hedge fund, from 2003-2006 and as President and Chief Executive Officer of the Connecticut Bank of Commerce from 1997-2000 as well as The Savings Bank of Rockland County from 1989-1996. Mr. Pollack brings to the Board the benefit of his substantial experience as president, chief executive officer and director of community banking organizations as well as significant knowledge of community bank lending. Age | 2014 |
Committees and Meetings of the Board of Directors
During the fiscal year ended September 30, 2019,2020, the Board of Directors of Prudential Bancorp met 13 times, including one special meeting. No director of Prudential Bancorp attended fewer than 75% of the aggregate of the total number of Board meetings held during the period for which he has been a director and the total number of meetings held by all committees of the Board on which he served during the periods that he served.
Membership on Certain Board Committees. The Board of Directors of Prudential Bancorp has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each of the committees operates in accordance with a written charter which is available on our website at www.psbanker.com. The following table sets forth the membership of such committees as of the date of this proxy statement.
Directors | Nominating and Corporate Governance | Compensation | Audit | ||||||||||
A. J. Fanelli | * | * | ** | ||||||||||
John C. Hosier | ** | ** | * | ||||||||||
Bruce E. Miller | * | ||||||||||||
| * | * | ||||||||||||
_____________________
* Member
**Chairman
Audit Committee. The Audit Committee reviews with management and the independent registered public accounting firm the systems of internal control, reviews the annual financial statements, including the Annual Report on Form 10-K, and monitors Prudential Bancorp’s adherence in accounting and financial reporting to generally accepted accounting principles. The Audit Committee is comprised of fourthree directors, each of whom is an independent director as defined in the Nasdaq Stock Market listing standards and the rules and regulations of the Securities and Exchange Commission. As of the annual meeting, the Committee will consist of three persons as a result of Mr. Mulcahy’s retirement. The Board of Directors has determined that Mr. Fanelli meets the definition of Audit Committee financial expert, as such term is defined in the rules of the Securities and Exchange Commission. In addition, each of the other members of the Audit Committee has had significant involvement in financial matters. The Audit Committee met four times in fiscal 2019.2020.
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Compensation Committee. It is the responsibility of the Compensation Committee of the Board of Directors to, among other things, oversee Prudential Bancorp’s compensation and incentive arrangements for management. No member of the Compensation Committee is a current or former officer or employee of Prudential Bancorp, Prudential Bank or any subsidiary and all members are independent as defined in the Nasdaq Stock Market listing standards. Each of the members is independent as defined in the Nasdaq Stock Market listing standards. The Compensation Committee held three meetings in fiscal 20192020 to consider management compensation matters.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee reviews and makes nominations for the Board of Directors, which are then sent to the full Board of Directors for their ratification. Each of the members is independent as defined in the Nasdaq Stock Market listing standards. The Nominating and Corporate Governance Committee met oncetwice in fiscal 20192020; once to review and recommend Mr. Vanaria for appointment to the Board and once to select the nominee for the 20192020 annual meeting of shareholders andshareholders; the Committee has net once so far in fiscal 20202021 to select the nomineenominees to be presented at this annual meeting.
Board Leadership Structure
Mr. Pollack serves as our President and Chief Executive Officer and Mr. Bruce E. Miller serves as Chairman of the Board. The board of directors has determined that the separation of the offices of Chairman of the Board and President enhances board independence and oversight. Further, the separation of the Chairman of the Board permits the President and Chief Executive Officer to better focus on his responsibilities on managing the daily operations of the Company, enhancing shareholder value and expanding and strengthening our franchise while allowing the Chairman to lead the board of directors in its fundamental role of providing independent oversight and advice to management. The Chairman also serves as a liaison between the Board of Directors and executive management. Mr. Miller is an independent director under the rules of the Nasdaq Stock Market.
Board’s Role in Risk Oversight
Risk is inherent with every business, particularly financial institutions. We face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputational risk. Management is responsible for the day-to-day management of the risks that Prudential Bancorp faces, while the Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors ensures that the risk management processes designed and implemented by management are adequate and functioning as designed.
One of our current senior executive officers, Mr. Pollack, serves on our Board of Directors. Other members of our senior management regularly attend meetings of the Board of Directors and are available to address any questions or concerns raised by the Board of Directors on risk management or other matters. Prudential Bank has established an Asset-Liability Committee, a Loan Quality Committee, a Management Loan Committee and an Investment Committee composed of members of senior management. The independent directors work together to provide strong, independent oversight of Prudential Bancorp’s management and affairs.
Director Independence
A majority of our directors are “independent” as defined in the rules of the Nasdaq Stock Market. Our Board of Directors has determined that Messrs. Fanelli, Hosier, Miller and Vanaria are independent directors.
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Directors’ Attendance at Annual Meetings
Directors are expected to virtually attend the annual meeting of shareholders absent a valid reason for not doing so. All of our directors attended the annual meeting of shareholders held in February 2019.2020.
Directors’ Compensation
The following table sets forth certain information regarding the compensation paid to our non-employee directors during fiscal year 2019.2020. Mr. Pollack, our President and Chief Executive Officer, is included in the Summary Compensation Table set forth in the section “Management Compensation.”
Name | Fees Earned or Paid in Cash | Stock Awards | Option Awards | All Other Compensation | Total | Fees Earned or Paid in Cash | Stock Awards | Option Awards | All Other Compensation | Total | ||||||||||||||||||||||||||||||
A. J. Fanelli | $ | 63,150 | $ | -- | $ | -- | $ | -- | $ | 63,150 | $ | 66,750 | $ | -- | $ | -- | $ | -- | $ | 66,750 | ||||||||||||||||||||
John C. Hosier | 58,150 | -- | -- | -- | 58,150 | 61,750 | -- | -- | -- | 61,750 | ||||||||||||||||||||||||||||||
Bruce E. Miller | 88,150 | -- | -- | -- | 88,150 | 91,750 | -- | -- | -- | 91,750 | ||||||||||||||||||||||||||||||
Francis V. Mulcahy | 43,150 | -- | -- | -- | 43,150 | |||||||||||||||||||||||||||||||||||
Raymond J. Vanaria(1) | 2,500 | -- | 17,325 | (2) | 19,825 | |||||||||||||||||||||||||||||||||||
_______________________
(1) | Mr. Vanaria was appointed to the Board of Directors effective August 19, 2020. |
(2) | Reflects the grant of options covering 7,500 shares at an exercise price of $10.00 per share. The options vest pro rata over a period of five years starting September 14, 2021. |
We do not pay separate compensation to directors for their service on the Board of Directors of Prudential Bancorp except for Mr. Vanaria who only serves on the board of Prudential Bancorp. Directors who are employees do not receive compensation for service on the board. For fiscal 2019,2020, members of Prudential Bank’s Board of Directors received an annual retainer of $30,000. For fiscal 2020,2021, the annual retainer will remain the same. Mr. Vanaria receives a retainer of $10,000 per year for service on the Board of Directors of Prudential Bancorp. Members also received $2,350 per special meeting attended. For fiscal 2020,2021, special meeting fees will remain the same as for fiscal 2019.2020. For fiscal 2019,2021, members of the Audit Committee, Executive Committee (other than Mr. Pollack) and the Compensation Committee received fees of $1,200 per meeting attended. Such fees will remain the same for fiscal 2020.2021. As Chairman of the Audit Committee, Mr. Fanelli received an annual retainer of $20,000$20,000 for fiscal 2019,2020, which retainer will remain the same for fiscal 2020.2021. As Chairman of the Compensation Committee for fiscal 2019,2020, Mr. Hosier received an annual retainer of $15,000. The Compensation Committee chair retainer will remain the same for fiscal 2020. Mr. Miller, as Chairman of the Board, received an annual retainer for such service for fiscal 20192020 in the amount of $45,000. For fiscal 2020,2021, Mr. Miller’s retainer will remain the same. Board fees are subject to periodic adjustment by the Board of Directors.
No equity awards were made to non-employee directors during fiscal 2020 except for a grant of stock options to Mr. Vanaria.
Compensation Committee Interlocks and Insider Participation
Determinations regarding compensation of our President and Chief Executive Officer, our senior management and our employees are reviewed and approved by Prudential Bancorp’s Compensation Committee. Messrs. Fanelli, Hosier, who is the Committee’s Chairman, Miller and Mulcahy,Miller currently serve as members of the Compensation Committee.
No person who served as a member of the Compensation Committee during fiscal 20192020 was a current or former officer or employee of Prudential Bancorp or Prudential Bank or engaged in certain transactions with Prudential Bancorp or Prudential Bank required to be disclosed by regulations of the Securities and Exchange Commission. Additionally, there were no Compensation Committee “interlocks” during fiscal 2019,2020, which generally means that no executive officer of Prudential Bancorp served as a director or member of the compensation committee of another entity, one of whose executive officers served as a director or member of Prudential Bancorp’s Compensation Committee.
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Director Nominations
Recommendations for nominations of persons to serve as directors of Prudential Bancorp are made by the Nominating and Corporate Governance Committee of the Board of Directors and are approved by the entire Board. The Board of Directors adopted a written charter of the Nominating and Corporate Governance Committee which is available on our website at www.psbanker.com. The charter sets forth certain criteria the Committee may consider when recommending individuals for nomination including:
ensuring that the Board of Directors, as a whole, is diverse (including diversity of race, gender, ethnicity, education and age) by considering:
| o | individuals with various and relevant career experience; |
| o | relevant technical skills; |
| o | industry and/or other specialized knowledge and experience; |
| o | knowledge of and commitment to the communities served by Prudential Bancorp; |
| o | financial expertise (including expertise that could qualify a director as a “financial expert,” as that term is defined by the rules of the Securities and Exchange Commission); |
| o | local or community ties; and |
minimum individual qualifications, including:
| o | strength of character; |
| o | integrity; |
| o | leadership; |
| o | mature judgment; |
| o | familiarity with our business and industry; |
| o | willingness to commit the necessary time required for Board and committee memberships; |
| o | independence of thought; and |
| o | an ability to work collegially. |
The Committee also may consider the extent to which the candidate would fill a present need on the Board of Directors.
The Nominating and Corporate Governance Committee will also consider candidates for director suggested by other directors, as well as our management and shareholders. A shareholder who desires to recommend a prospective nominee for the Board should notify our Secretary or any member of the Nominating and Corporate Governance Committee in writing with whatever supporting material the shareholder considers appropriate. Any shareholder wishing to make a nomination must follow our procedures for shareholder nominations, which are described under “Shareholder Proposals, Nominations and Communications with the Board of Directors.”
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Executive Officers Who Are Not Also Directors
Set forth below is certain information with respect to current executive officers of Prudential Bancorp and its subsidiaries who are not directors. Ages are reflected as of September 30, 2019.2020.
Name | Age and Principal Occupation During the Past Five Years | |
Anthony V. Migliorino | Executive Vice President and Chief Operating Officer of Prudential Bank since September 2015; from July 2015 until September 2015 served as Senior Vice President-Retail Business Development Officer. From September 2000 to September 2014, Mr. Migliorino served in various positions at Sterling National Bank, New York, New York, including Senior Vice President of Branch Banking. Prior to 2000, Mr. Migliorino served as a senior officer at several financial institutions including Stissing National Bank and Savings Bank of Rockland County. Age | |
Robert E. Pollard | Vice President and Controller of Prudential Bancorp and Prudential Bank since November 2017. Prior thereto, Mr. Pollard served as Assistant Controller of First Choice Bank, Kingston, New Jersey from March 2014 to March 2017 and as Controller of First Bank of Delaware, Philadelphia, Pennsylvania, from 2002 until June 2013. Age | |
Jack E. Rothkopf | Senior Vice President, Chief Financial Officer and Treasurer of Prudential Bancorp and Prudential Bank since June 2015; Senior Vice President and Treasurer of Prudential Bancorp from June 2013 until June 2015 and of Prudential Bank from April 2013 until June 2015; from January 2006 to April 2013, served as Vice President and Controller. Prior thereto, Mr. Rothkopf served as Assistant Vice President of Popular Financial from October 2000 to January 2006. Age |
| REPORT OF THE AUDIT COMMITTEE |
The Audit Committee has reviewed and discussed together with management and Prudential Bancorp’s independent registered public accounting firm, S.R. Snodgrass, P.C., Prudential Bancorp’s audited financial consolidated statements and the results of management’s assessment of the effectiveness of Prudential Bancorp’s internal control over financial reporting and the independent registered accounting firm’s audit of internal control over financial reporting.statements. The Audit Committee hasalso discussed with Prudential Bancorp’s independent registered public accounting firm, S.R. Snodgrass, P.C., the matters required to be discussed under Public Company Accounting Oversight Board Auditing Standard No. 16, Communication with Audit Committees. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board under Rule 3526 regarding S.R. Snodgrass, P.C.’s communications with the Audit Committee concerning its independence and the Committee has discussed with S.R. Snodgrass, P.C. its independence. In reliance on the reviews and discussions referred to above in this report, the Audit Committee recommended to the Board of Directors that the audited financial statements and management’s assessment of the effectiveness of Prudential Bancorp’s internal control over financial reporting be included in Prudential Bancorp’s Annual Report on Form 10-K for fiscal year 20192020 filed with the Securities and Exchange Commission.
Members of the Audit Committee
A. J. Fanelli, Chairman
John C. Hosier
Bruce E. Miller
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| MANAGEMENT COMPENSATION |
Summary Compensation Table
The following table summarizes the total compensation paid by Prudential Bank (including amounts deferred, if any, to future periods by the officers) for services rendered in all capacities during the fiscal years ended September 30, 20192020 and 20182019 to the principal executive officer and the two other most highly compensated executive officers of Prudential Bank during fiscal 2019 whose total compensation exceeded $100,000, collectively referred to as our “named executive officers.” The Company has not paid separate cash compensation to our officers.
Name and Principal Position | Fiscal Year | Salary | Bonus(1) | Stock Awards(2) | Option Awards(2) | All Other Compensation(3) | Total | |||||||||||||||||||||||||
Dennis Pollack President and Chief Executive Officer | 2020 2019 | $ | 403,847 | $ | 250,000 | $ | -- -- | $ | 40,056 | $ | 43,072 33,972 | $ | 727,875 | |||||||||||||||||||
Anthony V. Migliorino Executive Vice President and Chief Operating Officer | 2020 2019 | 347,668 295,769 | 200,000 180,000 | -- | 12,740 14,600 | 560,408 530,425 | ||||||||||||||||||||||||||
Jack E. Rothkopf Senior Vice President and Chief Financial Officer | 2020 2019 | 189,769 184,961 | 10,000 | -- -- | -- 11,830 | 7,833 7,221 | 212,602 214,023 | |||||||||||||||||||||||||
___________________
| (1) | Represents discretionary bonuses earned in each fiscal year reflected and which were paid, with respect to fiscal years |
| (2) | Reflects the grant date fair value in accordance with FASB ASC Topic 718 for awards of |
| (3) | Includes for fiscal |
Narrative to Summary Compensation Table
Base salaries as well as bonuses, if any, for our named executive officers (as well as all other executive officers) are determined and approved by the Compensation Committee. The Compensation Committee, in its role as the administrator of the Company’s stock benefit plans, also determines whether to award equity incentive awards and if so, the amount and form of such awards (stock options and/or restricted share awards). In accordance with the Committee’s practices and procedures, the Committee annually reviews executive officers’ compensation in order to address appropriate adjustments, if any, to such persons’ base compensation as well as to consider awarding bonuses to such officers. Consistent with the methodology initially adopted in connection with the annual compensation reviews conducted in fiscal year 2016, the analysis of potential bonuses consists of an assessment by the Compensation Committee both of the Company’s overallconsolidated financial performance over the past year or more, as appropriate, as well as the performance of the individual officer under consideration. With respect to executive officers, especially the named executive officers, the Committee determined that individual performance and its effect on the Company’s performance is still the most relevant factor to be considered in determining both salary adjustments and bonus awards. Consistent with the revised methodology the Committee initially adopted in August 2016, the Committee reaffirmed its determination that years of service is not considered a relevant factor for purposes of analyzing potential adjustments to the compensation of executive officers’ salaries and bonuses. In addition, in connection with its deliberations, the Committee considered a number of factors including the previous salary adjustments effected in fiscal years 2016, 2017, 2018 and 20182019 and the level of bonuses awarded in such years, in particular with respect to bonuses, the level of bonuses awarded in both fiscal 2018.2018 and fiscal 2019. The Committee also analyzed the appropriateness of the level of current salaries of the Company’s executive officers, especially when reviewed in light of peer group data.
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As a result of the foregoing considerations, modest adjustments to each of the named executive officer’s salary in the range of 3%1.6% to 10%14.3% were deemed appropriate in light of both such officers’ performances over the past fiscal year and the role they played in the Company’s significantly improvedcontinued strong operational performance.performance especially in light of the challenges created by the COVID-19 pandemic. Furthermore, in keeping with the Committee’s philosophy to maintain flexibility with regard to compensation and to reward exceptional performance, the Committee determined to recognize and reward the various executive officers’ roles in the Company’s materially improved performance through the use of bonuses rather than significant upward adjustments of salaries. Consequently, the Compensation Committee established salaries for fiscal 20202021 for Messrs. Pollack, Migliorino and Rothkopf of $420,000, $320,000$480,000, $365,000 and $189,000,$193,000, respectively, which amounted to increases of 5%14.3%, 10%14.1% and 3%1.6%, respectively, for such officers. In addition, discretionary bonuses amounting to $250,000, $180,000$275,000, $200,000 and $10,000$15,000 were awarded to Messrs. Pollack, Migliorino and Rothkopf, respectively, based on Prudential Bancorp’s continued significantly improvedstrong performance during fiscal 20192020 and the individual officer’s roles in producing such improved performance.
The Compensation Committee determined to not grant any equity awards (stock options or restricted stock awards) to named executive officers during fiscal 2020, in light of, among other things, the challenges facing Prudential Bancorp in light of the COVID-19 pandemic as well as the level of prior equity grants. During fiscal years 2019 and 2018, the Compensation Committee granted equity awards to the named executive officers as well as to other officers. Until fiscal 2018, after the initial grant of equity awards in February 2015 shortly after receipt of shareholder approval of the 2014 Stock Incentive Plan (“2014 SIP”), subsequent equity awards had been used on a case-specific basis generally to reflect either the recent hiring of an executive officer or in connection with the promotion of an executive officer. However, in light of the Company’s significant improvement in profitability during fiscal years 2016, 2017 and 2018, which continued in fiscal 2019, which improvement reflected the efforts of senior management, in particular, the President and Chief Executive Officer and the Executive Vice President and Chief Operating Officer, the Committee, determined in July 2019 to award grants of equity to Messrs. Pollack, Migliorino and Rothkopf, taking into consideration the significant grants that had been made to such officers in March 2018. Accordingly, stock options, incentive stock options to the extent possible, covering 11,851, 11,851 and 3,500 shares were awarded to Messrs. Pollack, Migliorino and Rothkopf, respectively. No grants of restricted stock awards were made to the named executive officers in fiscal 2019. All of the stock options granted in fiscal 2019 vest pro rata at the rate of 20% per year commencing in July 2020.
At the annual meeting of stockholders of Prudential Bancorp held on February 20, 2019, the shareholders recommended, on an advisory basis, that future advisory votes on executive compensation should be held every three years. Consistent with the shareholder recommendation, the Board of Directors of the Company determined that it will hold an advisory vote on executive compensation every three years. The next advisory vote on the compensation of the named executive officers will be presented at the annual meeting to be held in 2022. Prudential Bancorp is required to hold shareholder advisory votes on the frequency interval every six years.
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Compensation Policies and Practices as They Relate to Risk Management
The Compensation Committee of the Board of Directors has reviewed the Company’s policies and practices applicable to employees, including the Company’s benefit plans, arrangements and agreements, and does not believe that they are reasonably likely to have a material adverse effect on the Company. The Committee does not believe that the Company’s policies and practices encourage officers or employees to take unnecessary or excessive risks or behavior focused on short-term results rather than the creation of long-term value.
Equity Compensation Plans
Grants of Plan-Based Awards for the Year Ended September 30, 2019.2020. The table below sets forth information regardingNo grants of restricted stock awards pursuantor stock options were made to plans ourany of the named executive officers named in the Summary Compensation Table during the fiscal year ended September 30, 2019.2020.
Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options(1) | Exercise or Base Price of Option Awards(2) | Grant Date Fair Value of Stock and Option Awards(3) | |||||||||||||
| Dennis Pollack | 07/17/2019 | -- | 11,851 | $ | 18.16 | $ | 40,056 | |||||||||||
| Anthony V. Migliorino | 07/17/2019 | -- | 11,851 | 18.16 | 40,056 | |||||||||||||
| Jack E. Rothkopf | 07/17/2019 | -- | 3,500 | 18.16 | 11,830 | |||||||||||||
Outstanding Equity Awards at Fiscal Year-End. The table below sets forth outstanding equity awards at September 30, 20192020 held by our executive officers named in the Summary Compensation Table above, which grants were made in fiscal years 2015, 2016, 2018 and 2019.
| Stock Awards | |||||||||||||||||||||
| Market Value | |||||||||||||||||||||
| Option Awards | Number of Shares | of Shares or | |||||||||||||||||||
| Number of Securities Underlying | Option | or Units of Stock | Units of Stock | ||||||||||||||||||
| Unexercised Options | Exercise | Expiration | That Have Not | That Have Not | |||||||||||||||||
| Name | Exercisable | Unexercisable | Price | Date | Vested | Vested(1) | |||||||||||||||
| Dennis Pollack | 24,000(2 | ) | 6,000 | $ | 12.23 | 2/18/2025 | 2,000(2 | ) | $ | 34,020 | |||||||||||
| 6,000(3 | ) | 4,000 | 14.42 | 8/17/2026 | 1,000(3 | ) | 17,010 | ||||||||||||||
| 16,000(4 | ) | 64,000 | 18.46 | 3/21/2028 | 10,000(4 | ) | 170,100 | ||||||||||||||
| -- | 11,851(5 | ) | 18.16 | 7/17/2029 | |||||||||||||||||
| Anthony V. Migliorino | 9,000(3 | ) | 6,000 | 14.42 | 8/17/2026 | 3,000(3 | ) | 51,030 | |||||||||||||
| 9,000(4 | ) | 36,000 | 18.46 | 3/21/2028 | 6,000(4 | ) | 102,060 | ||||||||||||||
| -- | 11,851(5 | ) | 18.16 | 7/17/2029 | |||||||||||||||||
| Jack E. Rothkopf | 5,901(6 | ) | -- | 7.68 | 1/05/2023 | 3,000(2 | ) | 51,030 | |||||||||||||
| 40,000(2 | ) | 10,000 | 12.23 | 2/18/2025 | |||||||||||||||||
| -- | 3,500(5 | ) | 18.16 | 7/17/2029 | |||||||||||||||||
| Stock Awards | |||||||||||||||||||||
| Market Value | |||||||||||||||||||||
| Option Awards | Number of Shares | of Shares or | |||||||||||||||||||
| Number of Securities Underlying | Option | or Units of Stock | Units of Stock | ||||||||||||||||||
| Unexercised Options | Exercise | Expiration | That Have Not | That Have Not | |||||||||||||||||
| Name | Exercisable | Unexercisable | Price | Date | Vested | Vested(1) | |||||||||||||||
Dennis Pollack | 30,000 8,000 32,000 2,370 | (2) (3) (4) (5) | -- 2,000 48,000 9,481 | $ | 12.23 14.42 18.46 18.16 | 2/18/2025 8/17/2026 3/21/2028 7/17/2029 | 500 7,500 | (3) (4) | $ | 5,270 79,050 | |||||||||||
| Anthony V. Migliorino | 12,000 18,000 2,370 | (3) (4) (5) | 3,000 27,000 9,841 | 14.42 18.46 18.16 | 8/17/2026 3/21/2028 7/17/2029 | 1,500 4,500 | (3) (4) | 15,810 47,430 | |||||||||||||
| Jack E. Rothkopf | 5,901 50,000 | (6) (2) | -- -- 2,800 | 7.68 12.23 18.16 | 1/05/2023 2/18/2025 7/17/2029 | ||||||||||||||||
___________________
| (1) | Calculated by multiplying the closing market price per share of our common stock on September 30, |
| (2) | Granted pursuant to our 2014 SIP and vest at a rate of 20% per year commencing on February 18, 2016. |
| (3) | Granted pursuant to our 2008 Stock Option Plan (“2008 SOP”), our 2014 SIP and our 2008 Recognition and Retention Plan (“2008 RRP”), as applicable, and vest at a rate of 20% per year commencing on August 17, 2017. |
| (4) | Granted pursuant to our 2014 SIP, our 2008 RRP and our 2008 SOP, as applicable, and vest at a rate of 20% per year commencing March 21, 2019. |
| (5) | Granted pursuant to our 2014 SIP and vest at a rate of 20% per year commencing on July 17, 2020. |
| (6) | Granted pursuant to our 2008 SOP and vested at a rate of 20% per year commencing January 5, 2014. |
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Option Exercises and Stock Vested. The following table sets forth certain information with respect to restricted stock awards which vested for the named executive officers during the fiscal year ended September 30, 2019.2020. No stock options were exercised by any of the named executive officers during the 2020 fiscal year.
Stock Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired On Vesting(1) | Value Realized On Vesting(2) | Number of Shares Acquired On Vesting(1) | Value Realized On Vesting(2) | ||||||||||||
Dennis Pollack | 2,500 | $ | 44,000 | 2,500 | $ | 30,750 | ||||||||||
2,000 | 36,400 | 2,000 | 34,540 | |||||||||||||
500 | 8,270 | 500 | 5,240 | |||||||||||||
Anthony V. Migliorino | 1,500 | 26,400 | 1,500 | 17,520 | ||||||||||||
1,500 | 24,810 | 1,500 | 18,450 | |||||||||||||
Jack E. Rothkopf | 3,000 | 54,600 | 3,000 | 51,810 | ||||||||||||
_________________
| (1) | Does not reflect the sale or withholding of shares to satisfy income tax withholding obligations. |
| (2) | Based upon the fair market value of a share of Company common stock on the date of vesting. Value is calculated by multiplying the number of shares of Company common stock that vested by the fair market value on the date of vesting. |
Employment and Change in Control Agreements
Employment Agreements. Prudential Bank and Prudential Bancorp entered into an amended and restated employment agreement in December 2016 with Mr. Pollack as well as an employment agreement with Mr. Migliorino. The amended and restated agreement with Mr. Pollack increased the term of the agreement and the severance benefits (as discussed below) as well as his compensation in view of the Compensation Committee’s determination that his performance and value to the Company warranted such enhanced provisions. The employment agreement with Mr. Migliorino superseded the change in control agreement he had previously entered into with the Bank in November 2015 and reflected the Compensation Committee’s determination that his continued employment was critical to the Bank’s and Company’s ongoing performance.
The employment agreements have a term of three years, with respect to Mr. Pollack, and two years, with respect to Mr. Migliorino with the initial terms expiring, if the agreements are not extended, on December 31, 2019 and December 31, 2018, respectively. The term of each agreement is extended annually for one year on each December 31st, starting December 31, 2017 unless either the Company and the Bank or the executive gives notice at least 30 days prior to the annual anniversary date that the agreement shall not be extended. The Compensation Committee determined in November 2019October 2020 to extend the terms of the executives’ employment agreements for an additional year. The agreements are automatically extended for one year upon a change in control. The terms of the employment agreements provide for an initial annual base salary, which is reviewed annually by the Compensation Committee of the Board of Directors. Each of the employment agreements is terminable with or without cause by the Company or the Bank. The executives have no right to compensation or other benefits pursuant to the employment agreements for any period after voluntary termination by the executive without good reason, as defined in the agreements and which includes, among other things, a material change in the officer’s position, salary or entities without the officer’s consent, or termination by the Company and the Bank for cause, disability, retirement or death.
In the event that the executive terminates his employment because of failure to comply with any material provision of the employment agreement by the Company or the Bank or the employment agreement is terminated by the Company or the Bank other than for cause, disability, retirement or death, Messrs. Pollack and Migliorino will be entitled to (i) the payment of two times (Mr. Pollack) and one times (Mr. Migliorino), respectively, the executive’s respective average annual cash compensation (salary and cash bonuses) based upon the five calendar years preceding the date of termination as cash severance, (ii) the maintenance until the earlier to occur of the passage of two years and one year, respectively, from the date of termination or until the executive’s full-time employment with another employer (which provides substantially similar benefits), of the executive’s continued participation in all group insurance, life insurance, health, dental and accident insurance and disability insurance plans at no cost to the officer and (iii) a lump sum cash payment equal to the projected cost of providing the executive with benefits for two years, or one year in the case of Mr. Migliorino, pursuant to other employee benefit plans (excluding retirement plans and stock compensation plans) in which the executive was entitled to participate. In the event the executive’s continued participation in any group insurance plan is barred or would trigger the payment of an excise tax under Section 4980D of the Internal Revenue Code of 1986, as amended (the “Code”), or if any such group insurance plan is discontinued, then the Company or the Bank shall either (1) provide substantially similar benefits under an alternative plan or (2) pay a lump sum cash amount to the executive equal to the projected cost of providing continued coverage to the executive until the two-year, or one-year in the case of Mr. Migliorino, anniversary of the executive’s date of termination.
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In the event that the executive’s employment is terminated in connection with a change in control, as defined in the employment agreements, for other than cause, disability, retirement or death or the executive terminates his employment as a result of certain adverse actions which are taken with respect to the executive’s employment (i.e., good reason) following a change in control, as defined, the executive will be entitled to a cash severance payment equal to three times (Mr. Pollack), or two times (Mr. Migliorino) their respective average annual cash compensation, the maintenance, as described above, of the group insurance plans for three years (Mr. Pollack) or two years (Mr. Migliorino), respectively, or until the executive’s full-time employment with another employer that provides similar benefits plus the aforementioned lump sum cash payment for the projected cost of providing the other employee benefits as noted above until the third anniversary (Mr. Pollack) or second anniversary (Mr. Migliorino) of the executive’s termination.
The employment agreements with respect to Pollack and Migliorino previously provided that in the event any of the payments to be made thereunder or otherwise upon termination of employment are deemed to constitute “parachute payments” within the meaning of Section 280G of the Code, then such payments and benefits received thereunder shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits being non-deductible by the Company or the Bank for federal income tax purposes. In November 2017, the Company and the Bank entered into amendments to each of the employment agreements with Messrs. Pollack and Migliorino addressing the applicability of Sections 4999 and 280G of the Code. The agreements were revised to provide that if the payments that were otherwise payable to Mr. Pollack or Mr. Migliorino, as applicable, in connection with a termination after the occurrence of a change in control would trigger the imposition of an excise tax under Section 4999 of the Code, such amounts would be required to be reduced only if doing so would result in a greater tax amount to be retained by Mr. Pollack or Mr. Migliorino, as applicable.
Change in Control Agreement. The Bank entered into a change in control severance agreement in December 2015 (effective January 1, 2017) with Mr. Rothkopf. The change in control agreement is intended to assist the Bank (and indirectly the Company) in maintaining a stable and competent management base. The change in control severance agreement had an initial term ending December 31, 2017 if the term of the agreement was not extended. The term is extended annually for one year on each December 31st starting December 31, 2017 unless either the Bank or the executive gives notice at least 30 days prior to the annual anniversary date that the agreement shall not be extended. The agreement with Mr. Rothkopf was extended for an additional year in November 2019.October 2020. The agreement automatically extends for one year upon a change in control. The Bank has entered into substantially identical change in control severance agreements with three other officers including Mr. Kevin Gallagher, Senior Vice President and Chief Lending Officer.officers.
Mr. Rothkopf’s agreement provides that in the event of an involuntary termination of employment without cause and other than for retirement, death or disability following a change in control (including a termination by the executive for “good reason,” which includes a material change in the executive’s position, salary or duties without his consent), the executive will be entitled to (i) the payment of two times his average annual cash compensation (salary and cash bonuses) based upon the five calendar years preceding the date of termination as cash severance, (ii) the maintenance until the earlier to occur of the passage of two years from the date of termination or until his full-time employment with another employer (which provides substantially similar benefits) of the executive’s continued participation in all group insurance, life insurance, health, dental, accident insurance and disability insurance plans at no cost to the officer and (iii) a lump sum cash payment equal to the projected cost of providing him with benefits for two years pursuant to other employee benefit plans (excluding retirement plans and stock compensation plans) in which he was entitled to participate. In the event Mr. Rothkopf’s continued participation in any group insurance plan is barred or would trigger the payment of an excise tax under Section 4980D of the Code, or if any such group insurance plan is discontinued, then the Bank shall either (1) provide substantially similar benefits under an alternative plan or (2) pay a lump sum cash amount to him equal to the projected cost of providing continued coverage to him until the two-year anniversary of his date of termination.
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The change in control severance agreement provides that in the event any of the payments to be made thereunder or otherwise upon termination of employment are deemed to constitute “parachute payments” within the meaning of Section 280G of the Code, then such payments and benefits received thereunder shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits being non-deductible by the Bank for federal income tax purposes.
Benefit Plans
Retirement Plan. Prudential Bank participates in the Financial Institutions Retirement Fund, a multiple employer defined benefit plan intended to satisfy the tax-qualification requirements of Section 401(a) of the Code. In November 2015, the retirement plan was frozen such that no new participants can be added and existing participants will receive no further benefit service credit, compensation credit or other accrued benefit increases except for additional service credits which may affect a participant’s vesting or early vesting retirement eligibility or as otherwise required by law to maintain the tax-qualified status of such plan.
The retirement plan provides for a monthly benefit upon a participant’s retirement at or after the age of 65, or if later, the fifth anniversary of the participant’s initial participation in the retirement plan (i.e., the participant’s “normal retirement date”). A participant may also receive a benefit on his early retirement date, which is the date on which he attains age 45 and is partially or fully vested under the terms of the retirement plan. Benefits received prior to a participant’s normal retirement date are reduced by certain factors set forth in the retirement plan. The retirement plan provides a benefit of 1.50% of a participant’s highest 5-year average earnings, multiplied by the participant’s years of benefit service. Earnings are defined as base salary, subject to an annual Internal Revenue Service limit of $265,000 on earnings for 2015. Annual benefits provided under the retirement plan also are subject to Internal Revenue Service limits, which vary by age and benefit payment type. Participants become fully vested in their benefits under the retirement plan upon the completion of five years of vesting service as well as upon the attainment of normal retirement age (age 65).
No named executive officer except for Mr. Rothkopf is a participant in the retirement plan.
401(k) and Profit Sharing Plan. The Bank also provides its employees, including the named executive officers, with tax-qualified retirement benefits through the Prudential Savings Bank Employees Savings and Profit Sharing Plan and Trust (the “401(k) Plan”). The Company previously provided additional benefits through two additional tax-qualified retirement plans: the ESOP and the aforementioned retirement plan. The determination was made to terminate the ESOP effective December 31, 2016. In addition, as noted above, the retirement plan was frozen during November 2015. Such actions were taken as part of the Company’s efforts to effect significant cost savings while still providing a competitive compensation structure. All employees who meet the age and service requirements participate in the 401(k) Plan, on a non-discriminatory basis. The Bank did not provide a 401(k) match to employee contributions for the past several years due to the existence of the benefits provided by the ESOP. However, as a result of the termination of the ESOP, the Bank initiated a 401(k) match commencing in January 2018.
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Endorsement Split Dollar Agreements. The Bank has purchased insurance policies on the lives of certain of its executive officers named in the Summary Compensation Table as well as other officers, and has entered into Endorsement Split Dollar Agreements with each of those officers. The policies are owned by the Bank. Under the agreements with the named executive officers, upon an officer’s death while he or she remains employed by the Bank, the officer’s beneficiary will receive two times the officer’s salary as of the date of death. Pursuant to the terms of the agreements, the Bank has elected generally to not extend such benefits after a termination of employment. Such amounts will be funded from the receipt of the death benefits under the insurance policies on such officer’s life in excess of the cash surrender value. The Bank will receive the full cash surrender value, which is expected to reimburse the Bank in full for its life insurance investment as well as the remainder, if any, in excess of the net proceeds after payments to the officer’s beneficiaries pursuant to the Endorsement Split Dollar Agreements.
The Endorsement Split Dollar Agreements may be terminated at any time by the Bank or the officer or by the Bank upon the officer’s termination of service to Prudential Bank and typically are terminated upon the cessation of employment of the covered officers with the Bank. Upon termination, the Bank may surrender the policy and collect the cash surrender value.
Long-Term Incentive Compensation
The long-term incentive compensation portion of the Company’s compensation program consists of grants of stock options and restricted stock awards under the Company’s 2008 SOP, the 2008 RRP and the 2014 SIP (the 2008 SOP, the 2008 RRP and the 2014 SIP are collectively referred to as the “Equity Plans”). Under the Equity Plans, the Compensation Committee has discretion in determining grants of stock options and restricted stock awards to executive officers, including the timing, amounts and types of awards. The level of an individual’s grants typically has been based in large part on the officer’s position within the organization, his or her individual performance and the length of his or her service. Due to the age of the plans, grantsGrants of new options or restricted stock awards are no longer permitted under the terms of the 2008 SOP and the 2008 RRP.RRP due to the age of the plans.
The exercisability of options and the vesting of restricted stock awards generally depend upon the executive officer continuing to render services to the Company. In addition, although not granted to date, the Company’s 2008 RRP (although no new grants are permitted) and 2014 SIP provide that stock awards may be made based upon specified performance goals. All options granted under the Company’s stock option plans must have an exercise price at least equal to the market value of the common stock on the date of grant. Options may be exercised only for a limited period of time after the optionee’s departure from the Company in most cases. Under the terms of the Equity Plans, the grants cannot vest more rapidly than 20% per year except in certain specified circumstances, such as the death or disability of the award holder or in the event of a change in control (as defined in the Equity Plans) of the Company. To date, all the awards have been granted with five-year vesting schedules.
Under the Company’s 2014 SIP, the Compensation Committee is also authorized to grant share awards, which are a right to receive a distribution of shares of common stock. Shares of common stock granted pursuant to a share award are in the form of restricted stock which vests upon such terms and conditions as established by the Committee. For specific information regarding equity compensation awarded the named executive officers, see “-Equity Compensation Plans.”
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Related Party Transactions
In accordance with applicable federal laws and regulations, Prudential Bank offers mortgage loans to its directors, officers and employees as well as members of their immediate families for the financing of their primary residences and certain other loans. These loans are made on substantially the same terms as those prevailing at the time for comparable loans with persons not related to Prudential Bank except that Prudential Bank provides for a reduced interest rate of one hundred basis points to all employees, officers and directors for a first mortgage on their primary residence and waives the origination fees, other than appraisal and document review fees. Other than as described below, itIt is the belief of management that these loans neither involve more than the normal risk of collectability nor present other unfavorable features.
Amounts Paid During Year | ||||||||||||||||||||||||
Name | Year ended September 30, | Largest Principal Amount Outstanding During Year | Amount Outstanding at Year-End | Principal | Interest | Interest Rate | ||||||||||||||||||
| John C. Hosier | 2019 | $ | 349,484 | $ | 339,182 | $ | 10,302 | $ | 10,774 | 3.125 | % | |||||||||||||
| 2018 | 359,469 | 349,484 | 9,985 | 11,091 | 3.125 | |||||||||||||||||||
| Jack E. Rothkopf | 2019 2018 | 152,897 158,337 | 147,285 152,897 | 5,612 5,440 | 4,698 4,870 | 3.125 3.125 | ||||||||||||||||||
Amounts Paid During Year | ||||||||||||||||||||||||
Name | Year ended September 30, | Largest Principal Amount Outstanding During Year | Amount Outstanding at Year-End | Principal | Interest | Interest Rate | ||||||||||||||||||
| John C. Hosier | 2020 2019 | $ | 339,182 349,484 | $ | 328,554 339,182 | $ | 10,628 10,302 | $ | 10,448 10,774 | 3.125 3.125 | % | |||||||||||||
| Jack E. Rothkopf | 2020 2019 | 147,285 152,897 | 137,032 147,285 | 10,253 5,612 | 4,474 4,698 | 3.125 3.125 | ||||||||||||||||||
BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
The following table sets forth information as to Prudential Bancorp common stock beneficially owned, as of January 3,December 31, 2020, by (i) the only persons or entities, including any “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, who or which was known to Prudential Bancorp to be the beneficial owner of more than 5% of the issued and outstanding Prudential Bancorp common stock, based on filings made with the Securities and Exchange Commission, (ii) each director of Prudential Bancorp, (iii) certain executive officers of Prudential Bancorp and (iv) all directors and executive officers of Prudential Bancorp as a group.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership as of January 3, 2020(1)(2) | Percent of Common Stock | ||||||
Firefly Value Partners, LP 601 West 26th Street Suite 1520 New York, New York 10001 | 475,250(3 | ) | 5.3 | % | ||||
Warren A. Mackey 40 Worth Street, 10th Floor New York, New York 10013 | 871,204(4 | ) | 9.8 | % | ||||
Lawrence B. Seidman 100 Misty Lane, 1st Floor Parsippany, New Jersey 07054 | 831,559(5 | ) | 9.3 | % | ||||
Directors: | ||||||||
A. J. Fanelli | 56,131(6 | (6)) | * | |||||
John C. Hosier | 85,861(6 | (6)) | 1.0 | % | ||||
Bruce E. Miller | 88,550(6 | ) | 1.0 | % | ||||
Francis V. Mulcahy | 77,590(6 | (6)) | * | |||||
Dennis Pollack | 113,214(6) | (6)) | 1.3 | % | ||||
| Certain Executive Officers | ||||||||
Anthony V. Migliorino | 46,137(6) | (6)) | * | |||||
Jack E. Rothkopf | 92,877(6 | ) | 1.0 | % | ||||
Kevin J. Gallagher | 12,791(6 | ) | * | |||||
| All Directors and Executive Officers as a Group (9 persons) | 573,151(6 | ) | 6.2 | % | ||||
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership as of January 3, 2020(1)(2) | Percent of Common Stock | ||||||
Warren A. Mackey 40 Worth Street, 10th Floor New York, New York 10013 | 871,204 | (3) | 10.9 | % | ||||
Lawrence B. Seidman 100 Misty Lane, 1st Floor Parsippany, New Jersey 07054 | 711,666 | (4) | 8.8 | % | ||||
Directors: | ||||||||
A. J. Fanelli | 59,073 | (5)(6) | * | |||||
John C. Hosier | 89,145 | (5)(7) | 1.1 | % | ||||
Bruce E. Miller | 101,555 | (5)(8) | 1.3 | % | ||||
Dennis Pollack | 139,843 | (5)(9) | 1.7 | % | ||||
Raymond J. Vanaria | 25,000 | (5)(10) | * | |||||
| Certain Executive Officers | ||||||||
Anthony V. Migliorino | 69,182 | (5)(11) | * | |||||
Jack E. Rothkopf | 94,497 | (5) | 1.2 | % | ||||
| All Directors and Executive Officers as a Group (8 persons) | 578,295 | (5) | 7.0 | % | ||||
_____________________________
* Represents less than one percent of Prudential Bancorp’s outstanding common stock.
| (1) | Based upon filings made pursuant to the Securities Exchange Act of 1934 and information furnished by the respective individuals. In addition, due to share repurchases by the Company, the ownership percentages reflected in the filings may differ from the percentages reflected in the table above. Furthermore, share ownership reflected on Schedules 13D, 13G and/or 13F may differ from what is actually held by the reporting persons as of |
(Footnotes continued on following page)
| (2) | Each beneficial owner’s percentage ownership is determined by assuming that options held by such person (but not those held by any other person) and that are exercisable within 60 days of |
| (3) |
| Based on a Schedule 13D/A filed with the Securities and Exchange Commission on February 12, 2014 by Warren A. Mackey, Homestead Partners LP, a Delaware limited partnership, Arles Partners LP, a New York limited partnership, and Arles Advisors Inc., a New York corporation. Arles Advisors is the general partner of Homestead Partners and Arles Partners. The sole shareholder, director and executive officer of Arles Advisors is Warren A. Mackey. By virtue of his position with Arles Advisors, Mr. Mackey has the shared investment discretion and voting authority with respect to the 838,676 shares owned by Homestead Partners and Arles Partners. Arles Advisors, as general partner of Homestead Partners and Arles Partners, may be deemed to beneficially own the 838,976 shares owned by these partnerships. Mr. Mackey individually has the sole investment discretion and voting authority with respect to the 32,228 shares held for himself. Additional shares of Prudential Bancorp common stock may have been received in connection with the merger with Polonia |
Based on a Schedule 13D/A filed on December |
Includes shares (i) held in trust by Prudential Bancorp’s 2008 RRP or granted pursuant to the 2014 SIP which have been awarded to the directors and officers and (ii) stock options which have been granted to the directors and officers under Prudential Bancorp’s 2008 SOP or under the 2014 SIP and which are exercisable within 60 days of |
Name | Restricted Stock | Stock Options | ||||||
A.J. Fanelli | 4,570 | 23,423 | ||||||
John C. Hosier | 4,570 | 46,768 | ||||||
Bruce E. Miller | 4,570 | 60,113 | ||||||
Francis V. Mulcahy | 4,570 | 33,423 | ||||||
Dennis Pollack | 13,000 | 52,000 | ||||||
Anthony V. Migliorino | 9,000 | 18,000 | ||||||
Kevin J. Gallagher | 2,400 | 10,000 | ||||||
Jack E. Rothkopf | 3,000 | 55,901 | ||||||
| All directors and executive officers as a group (9 persons) | 45,680 | 299,628 | ||||||
Name | Restricted Stock | Stock Options | |||||||
A.J. Fanelli | 1,714 | 24,564 | |||||||
John C. Hosier | 858 | 49,052 | |||||||
Bruce E. Miller | 858 | 61,254 | |||||||
Dennis Pollack | 8,000 | 72,370 | |||||||
Anthony V. Migliorino | 6,000 | 32,370 | |||||||
Jack E. Rothkopf | -- | 56,601 | |||||||
| All directors and executive officers as a group (8 persons) | 17,430 | 296,211 | |||||||
Includes |
Includes |
| (8) | Includes 8,836 shares held in Mr. Miller’s account in his 401(k) retirement plan. |
| (9) | Includes |
| (10) | Includes 20,000 shares held by Mr. Vanaria’s spouse. |
| (11) | Includes |
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Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the officers and directors, and persons who own more than 10% of Prudential Bancorp’s common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by regulation to furnish Prudential Bancorp with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of such forms furnished to us, or written representations from our officers and directors, we believe that during, and with respect to, the fiscal year ended September 30, 2019,2020, our officers and directors complied in all respects with the reporting requirements promulgated under Section 16(a) of the Securities Exchange Act of 1934 with the exception of Messrs. Fanelli and Mulcahy who were each late in reporting one transaction on Form 4.1934.
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL TWO) |
The Audit Committee of the Board of Directors of Prudential Bancorp has appointed S.R. Snodgrass, P.C. (“S.R. Snodgrass”), an independent registered public accounting firm, to perform the audit of our financial statements for the year ending September 30, 2020,2021, and further directed that the appointment of S.R. Snodgrass as our auditors be submitted for ratification by the shareholders at the annual meeting.
We have been advised by S.R. Snodgrass that neither that firm nor any of its associates has any relationship with Prudential Bancorp or its subsidiaries other than the usual relationship that exists between an independent registered public accounting firm and its clients. S.R. Snodgrass will have one or more representatives at the annual meeting who will have an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.
In determining whether to appoint S.R. Snodgrass as our independent registered public accounting firm, the Audit Committee considered whether the provision of services, other than auditing services, by S.R. Snodgrass is compatible with maintaining its independence. In addition to performing auditing services, our independent registered public accounting firm reviewed our public filings. The Audit Committee believes that S.R. Snodgrass’s performance of these other services is compatible with maintaining the independent registered public accounting firm’s independence.
Audit Fees
The following table sets forth the aggregate fees paid by us to S.R. Snodgrass for professional services in connection with the audit of Prudential Bancorp’s consolidated financial statements for fiscal 20192020 and 20182019 and the fees paid by us to S.R. Snodgrass for audit-related services, tax services and all other services during fiscal 20192020 and 2018.2019.
Year Ended September 30, | Year Ended September 30, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Audit fees (1) | $ | 205,911 | $ | 188,022 | $ | 189,148 | $ | 205,911 | ||||||||
Audit-related fees | -- | -- | -- | -- | ||||||||||||
Tax fees (2) | 22,125 | 21,125 | 22,525 | 22,125 | ||||||||||||
All other fees | -- | -- | -- | -- | ||||||||||||
Total | $ | 228,036 | $ | 209,147 | $ | 211,673 | $ | 228,036 | ||||||||
___________________
| (1) | Audit fees consist of fees incurred in connection with the audit of our annual financial statements and the review of the interim financial statements included in our quarterly reports filed with the Securities and Exchange Commission, as well as work generally only the independent auditor can reasonably be expected to provide, such as statutory audits, consents and assistance with and review of documents filed with the Securities and Exchange Commission. |
| (2) | Tax fees consist of compliance fees for the preparation of tax returns during fiscal |
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The Audit Committee selects our independent registered public accounting firm and pre-approves all audit services to be provided by it to Prudential Bancorp. The Audit Committee also reviews and pre-approves all audit-related and non-audit related services rendered by our independent registered public accounting firm in accordance with the Audit Committee’s Charter. In its review of these services and related fees and terms, the Audit Committee considers, among other things, the possible effect of the performance of such services on the independence of our independent registered public accounting firm. The Audit Committee pre-approves certain audit-related services and certain non-audit related tax services which are specifically described by the Audit Committee on an annual basis and separately approves other individual engagements as necessary. The Chairman of the Audit Committee has been delegated the authority to approve non-audit related services in lieu of the full Audit Committee. On a quarterly basis, the Chairman of the Audit Committee presents any previously approved engagements to the full Audit Committee.
Each new engagement of S.R. Snodgrass was approved in advance by the Audit Committee or its Chairman, and none of those engagements made use of the de minimis exception to pre-approval contained in the Securities and Exchange Commission’s rules.
The Board of Directors recommends that you vote FOR the ratification of the
appointment of S.R. Snodgrass, P.C. for the fiscal year ending September 30, 2020.2021.
SHAREHOLDER PROPOSALS, NOMINATIONS AND COMMUNICATIONS WITH THE BOARD OF DIRECTORS |
Shareholder Proposals. Any proposal which a shareholder wishes to have included in the proxy materials of Prudential Bancorp relating to the next annual meeting of shareholders of Prudential Bancorp, which is expected to be held in February 2021,2022, must be received at the principal executive offices of Prudential Bancorp, 1834 West Oregon Avenue, Philadelphia, Pennsylvania 19145, Attention: Dennis Pollack, President and Chief Executive Officer, no later than September 19, 2020.17, 2021. If such proposal is in compliance with all of the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, it will be included in the proxy statement and set forth on the form of proxy issued for such annual meeting of shareholders. It is urged that any such proposals be sent certified mail, return receipt requested. We did not receive any shareholder proposals for this annual meeting.
Shareholder proposals which are not submitted for inclusion in Prudential Bancorp’s proxy materials pursuant to Rule 14a-8 may be brought before an annual meeting pursuant to Section 2.10 of Prudential Bancorp’s Bylaws. Notice of the proposal must be given in writing and delivered to, or mailed and received at, our principal executive offices by September 19, 2020.17, 2021. The notice must include the information required by Section 2.10 of our Bylaws.
Shareholder Nominations. Our Bylaws provide that, subject to the rights of the holders of any class or series of stock having a preference over the common stock as to dividends or upon liquidation, all nominations for election to the Board of Directors, other than those made by the Board or a committee thereof, shall be made by a shareholder who has complied with the notice and information requirements contained in Section 3.12 of our Bylaws. Written notice of a shareholder nomination generally must be communicated to the attention of the Secretary and either delivered to, or mailed and received at, our principal executive offices not later than, with respect to an annual meeting of shareholders, 120 days prior to the anniversary date of the mailing of proxy materials by us in connection with the immediately preceding annual meeting of shareholders or, in the case of the 2021 annual meeting, by September 19, 2020.17, 2021. We did not receive any shareholder nominations for this annual meeting.
Other Shareholder Communications. Shareholders who wish to communicate with the Board may do so by sending written communications addressed to the Board of Directors of Prudential Bancorp, Inc., c/o Sharon M. Slater, Corporate Secretary, at 1834 West Oregon Avenue, Philadelphia, Pennsylvania 19145. Ms. Slater will forward such communications to the director or directors to whom they are addressed.
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| ANNUAL REPORTS |
A copy of Prudential Bancorp’s Annual Report to Shareholders, which includes the Annual Report on Form 10-K for the year ended September 30, 2019,2020, accompanies this proxy statement. Such Annual Report is not part of the proxy solicitation materials.
Upon receipt of a written request, we will furnish to any shareholder a copy of the exhibits to the Annual Report on Form 10-K. Such written requests should be directed to Mr. Jack E. Rothkopf, Senior Vice President and Chief Financial Officer, Prudential Bancorp, Inc., 1834 West Oregon Avenue, Philadelphia, Pennsylvania 19145.
| OTHER MATTERS |
Management is not aware of any business to come before the annual meeting other than the matters described above in this proxy statement. However, if any other matters should properly come before the meeting, it is intended that the proxies solicited hereby will be voted with respect to those other matters in accordance with the judgment of the persons voting the proxies.
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