The following table shows the value realized upon exercise of stock options and vesting of stock awards for our named executive officers in the fiscal year ended June 30, 2017.2022.
| | Option Awards | | Stock Awards |
| | Number of Shares | | Value | | Number of Shares | | Value |
| | Acquired on | | Realized on | | Acquired on | | Realized on |
Name | | Exercise (#) | | Exercise ($) | | Vesting (#) | | Vesting ($) |
| | | | | | | | |
Craig G. Blunden | | -- | | -- | | 15,000 | | 293,400 |
Donavon P. Ternes | | -- | | -- | | 14,250 | | 278,730 |
Robert "Scott" Ritter | | -- | | -- | | -- | | -- |
David S. Weiant | | 20,000 | | 225,400 | | 6,250 | | 122,250 |
Gwendolyn L. Wertz | | -- | | -- | | -- | | -- |
| | Option Awards | | Stock Awards |
| | Number of Shares | | Value | | Number of Shares | | Value |
| | Acquired on | | Realized on | | Acquired on | | Realized on |
Name | | Exercise (#) | | Exercise ($) | | Vesting (#) | | Vesting ($) |
| | | | | | | | |
Craig G. Blunden | | -- | | -- | | -- | | -- |
Donavon P. Ternes | | -- | | -- | | -- | | -- |
David S. Weiant | | -- | | -- | | -- | | -- |
Pension Benefits
The following information is presented with respect to the nature and value of pension benefits for the named executive officers at June 30, 2017.2022.
Name | | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefit ($) | | Payments During Last Fiscal Year ($) |
| | | | | | | | |
Craig G. Blunden | | Post-Retirement Compensation Agreement | | (1) | | 3,600,392 | | -- |
Donavon P. Ternes | | Post-Retirement Compensation Agreement | | (1) | | 3,143,833 | | -- |
Robert "Scott" Ritter | | -- | | -- | | -- | | -- |
David S. Weiant | | -- | | -- | | -- | | -- |
Gwendolyn L. Wertz | | -- | | -- | | -- | | -- |
___________
Name | | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefit ($) | | Payments During Last Fiscal Year ($) |
| | | | | | | | |
Craig G. Blunden | | Post-Retirement Compensation Agreement | | (1) | | 3,142,788 | | -- |
Donavon P. Ternes | | Post-Retirement Compensation Agreement | | (1) | | 3,689,059 | | -- |
David S. Weiant | | -- | | -- | | -- | | -- |
___________
| | | | | | | | |
(1) | Number of years of credited service is not relevant. Benefit is calculated based on whether the executive has reached age 62 at the time of retirement, or how many months remain until his 62nd birthday. |
Provident Savings Bank has entered into post-retirement compensation agreements with Messrs. Blunden and Ternes. The agreements provide that if the executive terminates employment with the Bank after attaining age 62, the Bank will provide the executive with a monthly benefit for life equal to 50% of his final average monthly salary. The agreement also provides for early retirement benefits and payments in the event of the executive'sexecutive’s death or disability. These payments are described below under "Potential“Potential Payments Upon Termination."”
Potential Payments Upon Termination
We have entered into agreements with the named executive officers that provide for potential payments upon disability, termination, retirement and death. In addition, our equity plans also provide for potential payments upon termination. The following table shows, as of June 30, 2017,2022, the value of potential payments and benefits following a termination of employment under a variety of scenarios.
| | Death ($) | | Disability ($) | | Involuntary Termination ($) | | Change in Control ($) | | Early Retirement ($) | | Normal Retirement ($) |
| | | | | | | | | | | | |
Craig G. Blunden | | | | | | | | | | | | |
Employment Agreement | | -- | | 473,850 | | 1,009,466 | | 1,476,639 | | 229,850 | | 229,850 |
Post-Retirement Compensation Agreement (1) | | 20,093 | | 20,093 | | 20,093 | | 20,093 | | 20,093 | | 20,093 |
Equity Plans | | 1,410,870 | | 1,410,870 | | 1,021,093 | | 1,410,870 | | -- | | -- |
| | | | | | | | | | | | |
Donavon P. Ternes | | | | | | | | | | | | |
Severance Agreement | | -- | | -- | | 684,761 | | 684,761 | | -- | | -- |
Post-Retirement Compensation Agreement (1) | | 15,436 | | 15,436 | | 15,436 | | 15,436 | | 12,154 | | 15,436 |
Equity Plans | | 1,298,113 | | 1,298,113 | | 930,600 | | 1,298,113 | | -- | | -- |
| | | | | | | | | | | | |
Robert "Scott" Ritter | | | | | | | | | | | | |
Severance Agreement | | -- | | -- | | 400,884 | | 400,884 | | -- | | -- |
Equity Plans | | 288,750 | | 288,750 | | -- | | 288,750 | | -- | | -- |
| | | | | | | | | | | | |
David S. Weiant | | | | | | | | | | | | |
Severance Agreement | | -- | | -- | | 461,721 | | 461,721 | | -- | | -- |
Equity Plans | | 201,863 | | 201,863 | | 40,775 | | 201,863 | | -- | | -- |
| | | | | | | | | | | | |
Gwendolyn L. Wertz | | | | | | | | | | | | |
Severance Agreement | | -- | | -- | | 417,198 | | 417,198 | | -- | | -- |
Equity Plans | | 226,575 | | 226,575 | | 41,100 | | 226,575 | | -- | | -- |
___________
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| Death ($) | | Disability ($) | | Involuntary Termination ($) | | Change in Control ($) | | Early Retirement ($) | | Normal Retirement ($) |
| | | | | | | | | | | |
Craig G. Blunden | | | | | | | | | | | |
Employment Agreement (1) | -- | | 215,863 | | 1,096,701 | | 2,330,977 | | -- | | 215,863 |
Post-Retirement Compensation Agreement (2) | 22,292 | | 22,292 | | 22,292 | | 22,292 | | -- | | 22,292 |
Equity Plans (3) | 222,450 | | 222,450 | | -- | | 222,450 | | -- | | -- |
| | | | | | | | | | | |
Donavon P. Ternes | | | | | | | | | | | |
Severance Agreement (1) | -- | | -- | | 799,244 | | 799,244 | | -- | | -- |
Post-Retirement Compensation Agreement (2) | 15,407 | | 15,407 | | 15,407 | | 15,407 | | -- | | 15,407 |
Equity Plans (3) | 222,450 | | 222,450 | | -- | | 222,450 | | -- | | -- |
| | | | | | | | | | | |
David S. Weiant | | | | | | | | | | | |
Severance Agreement (1) | -- | | -- | | 572,684 | | 572,684 | | -- | | -- |
Equity Plans (3) | 100,103 | | 100,103 | | -- | | 100,103 | | -- | | -- |
___________
(1) | MonthlyIncludes cash severance and the estimated value of continued insurance benefits. Does not reflect the impact of any deferrals in the payment of the cash severance to preserve the deductibility of such severance under Section 162(m) of the Internal Revenue Code, with interest equal to 8% per annum to be paid on the amounts deferred as described below. The payments and benefits to Mr. Blunden in the event of a change in control will be reduced by the minimum amount necessary so that they do not trigger the 20% excise tax imposed by Sections 280G and 4999 of the Internal Revenue Code. Any required reduction is not reflected in the above table. If the timing of the change in control permitted tax planning to be done, we believe that the amount of any cutbacks that may be triggered in the future could be reduced or even eliminated. |
(2) | Represents the monthly benefit to the executive or his spouse for life. The lifetime benefits will be discounted to present value and paid in a lump sum. |
(3) | Represents the value of unvested restricted stock awards held by the executive based on the June 30, 2022 closing price of $14.83 per share. |
Employment Agreement. Mr. Blunden'sBlunden’s employment agreement provides for potential payments in the event of his disability, death or termination. If Mr. Blunden becomes entitled to benefits under the terms of the then-current disability plan, if any, of Provident Savings Bank or becomes otherwise unable to fulfill his duties under his employment agreement, he shall be entitled to receive such group and other disability benefits as are then provided by the Bank for executive employees. In the event of his disability, the employment agreement will not be suspended, except that the obligation to paypayments of salary and bonus will be discontinued for as long as Mr. Blunden's salary shall be reduced in accordance with the amount of any disability income benefits he receives such that, on an after-tax basis, he realizes from the sum of disability income benefits and his salary the same amount as he would realize on an after-tax basis from his salary if he had not becomeBlunden is disabled. Upon a resolution adopted by a majority of the disinterested members of the Board of Directors, the Bank may discontinue payment of Mr. Blunden's salary beginning six months after a determination that he has become entitled to benefits under the disability plan or is otherwise unable to fulfill his duties under the employment agreement.
In the event of Mr. Blunden'sBlunden’s death or disability while employed under the employment agreement and prior to any termination of employment, the Bank shall pay to him or his estate, or such person as he may have previously designated, the salary which was not previously paid to him and which he would have earned if he had continued to be employed under the agreement through the last day of the calendar month in which he died or become disabled, together with the benefits provided under the employment agreement through that date.
In the event of Mr. Blunden’s death or disability, or in the event of his normal retirement, the Bank shall continue to provide the following benefits to him or his estate, as applicable: (1) the Bank shall continue in force, without cost to Mr. Blunden, those life and accidental death and dismemberment insurance coverages being provided by the Bank to Mr. Blunden and his spouse and his eligible dependents as of the date of such termination; (2) the Bank shall continue to provide to Mr. Blunden and his eligible dependents life and medical insurance coverage equivalent in benefits, duration and terms to that provided to him and such persons as of the date of such termination; and (3) the Bank shall continue to reimburse Mr. Blunden for the expenses outlined in Section 4(c) of his employment agreement, which includes club dues.
The employment agreement also provides for benefits in the event of Mr. Blunden'sBlunden’s involuntary termination. If Mr. Blunden'sBlunden’s employment is terminated for any reason other than cause, death, permanent disability, retirement or change in control, or Mr. Blunden terminates his own employment because of a material diminution of or interference
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with his duties, responsibilities or benefits, he is entitled to payment and benefits. Specifically, the Bank must make a lump sum payment equal to the discounted present value of the aggregate future base salary payments Mr. Blunden would have received over the then remaining term of the agreement.
If Mr. Blunden'sBlunden’s employment is terminated within 12 months following a change in control of Provident, or he terminates his own employment within 12 months following a change in control for any of the reasons listed in the previous paragraph, the Bank must pay him a lump sum equal to 299% of his base amount (as defined in Section 280G of the Internal Revenue Code) and must provide during the remaining term of the employment agreement substantially the same group life insurance, hospitalization, medical, dental, prescription drug and other health benefits, and long-term disability insurance (if any) for the benefit of Mr. Blunden and his dependents and beneficiaries who would have been eligible for such benefits if he had not suffered involuntary termination. However, if the value of the lump sum and benefits described in the preceding sentence exceeds the amount that could be paid without violating Section 280G (pertaining to golden parachute payments), taking into account other payments due Mr. Blunden in connection with a change in control and other amounts counted against the Section 280G limit, then the value of such lump sum and benefits may be reduced so that Section 280G is not violated.
In the event of Mr. Blunden's death or disability, or in the event of his normal or early retirement,Blunden’s employment agreement provides that if Mr. Blunden’s aggregate compensation from the Bank shall continue to provideexceeds the following benefits to him or his estate, as applicable: (1)maximum amount of compensation deductible by the Bank shall continue in force, without costany calendar year under Section 162(m) of the Internal Revenue Code (the “maximum allowable amount”), then any such amount in excess of the maximum allowable amount will be deferred with interest on the deferred amount at 8% annually to a calendar year such that the amount to be paid to Mr. Blunden those life and accidental death and dismemberment insurance coverages being provided byin that year does not exceed the Bank to Mr. Blunden and his spouse and his eligible dependents as ofmaximum allowable amount. Deferred amounts, including interest, will be paid at the date of such termination, subject to reduction after his 65th birthday; (2) the Bank shall continue to provide to Mr. Blunden and his eligible dependents life and medical insurance coverage equivalent in benefits, duration and terms to that provided to him and such persons as of the date of such termination; and (3) the Bank shall continue to reimburse Mr. Blunden for the expenses outlined in Section 4(c) of his employment agreement, which includes club dues.earliest time permissible.
Severance Agreements. We extended the existing change in control severance agreements with Mr. Ternes Mr. Ritter,and Mr. Weiant and Ms. Wertz effective as of March 1, 2017.2022. The agreements have a term of one year, which may be extended for an additional year on the anniversary of the effective date of the agreement by the Board of Directors. If the employment of the executive is involuntarily terminated, other than for cause, within 12 months following a change in control of Provident or Provident Savings Bank, or the executive terminates his or her own employment within 12 months following a change in control because of any demotion, loss of title, office or significant authority, reduction in the executive'sexecutive’s annual compensation or benefits, or relocation of the executive'sexecutive’s principal place of employment more than 35 miles from the pre-change in control location, the executive would be entitled to payment and benefits. The agreements provide that the Bank must pay a lump sum payment equal to two times the executive's
executive’s then current base salary and a lump sum payment equal to two times the largest annual bonus paid to the executive during the two years prior to termination of employment. The Bank or its successor also would be obligated to continue the executive'sexecutive’s life, medical, dental and disability coverage for a two-year period following termination of employment. Mr. Ritter's agreement provides for the same change of control and other benefits as for the other named executive officers and provides that his bonus will be two times the largest bonus paid to an executive (other than Mr. Ritter or the Chief Executive Officer of Provident) who is a party to a severance agreement.
Post-Retirement Compensation Agreement. Provident Savings Bank entered into a post-retirement compensation agreement with Mr. Blunden, which was amended on December 15, 2005, and a new post-retirement compensation agreement with Mr. Ternes as of July 7, 2009. The agreements provide that if Mr. Blunden and Mr. Ternes terminate employment with the Bank after having attained age 62 (which both have attained), or on account of death, disability or involuntary termination, the Bank will pay the executive a lump sum amount equal in value to a stream of payments, payable over the executive'sexecutive’s life, the annual amount of which is 50% of the executive'sexecutive’s final average monthly salary (reduced in the case of disability by amounts received by the executive from any long-term disability policies maintained by the Bank). If the executive terminates employment prior to attaining age 62, then a reduced lump sum benefit will be provided, payable when the executive attains age 62. This is only applicable to Mr. Ternes as Mr. Blunden has already turned 62. For purposes of the agreements, "final“final average monthly salary"salary” is defined as the average of the executive'sexecutive’s highest paid 36 months of employment with the Bank determined by reference to the average gross amount of his basic monthly salary (before tax withholding and other payroll deductions), excluding bonus or incentive awards, director fees, if any, and accelerated payments of future salary. The value of this lump sum benefit is calculated using National Association of Insurance Commissioners standard mortality tables as of such date, and a discount rate equal to the lesser of the then-current prime rate or the EleventhFreddie Mac Enterprise 11th District cost of funds.COFI Replacement Index – Consumer Products (Single-Family).
Equity Plans. Our 2003 Stock Option Plan, 2006 Equity Incentive Plan and 2010 Equity Incentive Plan provide for accelerated vesting of awards in the event of a change in control. If a change in control occurs prior to the vesting of an award, the vesting date will be accelerated to the effective date of the change in control. The 2013 Stock Option Plan provides for accelerated vesting of awards in the event of a change in control and involuntary termination of the award recipient
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within 12 months of the change in control. The 2003 Stock Option Plan also provides that if a tender offer or exchange offer is commenced, all options granted and not fully exercisable shall become exercisable in full upon the happening of such event. The 2006 Equity Incentive Plan, the 2010 Equity Incentive Plan and the 2013 Equity Incentive Plan also provide that if an award recipient'srecipient’s employment terminates due to death or disability prior to the vesting of an award, the vesting date will be accelerated to the date of termination of service.
Compensation Committee Interlocks and Insider Participation
The members of the Personnel/Compensation Committee are Directors Taylor, Bennett and Thomas. No members of the Committee were officers or employees of Provident or any of its subsidiaries during the year ended June 30, 2017,2022, nor were they formerly Provident officers or had any relationships otherwise requiring disclosure.
PROPOSAL 2 – ADVISORY VOTE ON EXECUTIVE COMPENSATION
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act ("(“Dodd-Frank Act"Act”), we are required to include in this Proxy Statement and present at the meeting a non-binding shareholder resolution to approve the compensation of our named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC. This proposal, commonly known as a "say-on-pay"“say-on-pay” proposal, gives shareholders the opportunity to endorse or not endorse the compensation of Provident'sProvident’s executives as disclosed in this Proxy Statement. The proposal will be presented at the annual meeting in the form of the following resolution:
RESOLVED, that the shareholders approve the compensation of Provident'sProvident’s named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables and related material in Provident'sProvident’s Proxy Statement for the 20172022 annual meeting of shareholders.
This vote will not be binding on our Board of Directors or Personnel/Compensation Committee and may not be construed as overruling a decision by the Board or create or imply any additional fiduciary duty on the Board. It will also not affect any compensation paid or awarded to any executive. The Personnel/Compensation Committee and the Board may, however, take into account the outcome of the vote when considering future executive compensation arrangements.
The purpose of our compensation policies is to attract and retain key executives who are highly qualified and vital to our long-term success, while aligning the interests of executives with shareholders. As discussed in the Compensation Discussion and Analysis, the Personnel/Compensation Committee of the Board of Directors believes that the executive compensation for 20172022 is reasonable and appropriate and is justified by Provident'sProvident’s performance in a highly competitive environment. In considering how to vote on this proposal, the Board requests that you consider the following factors:
The Bank must offer competitive compensation packages to attract and retain well-qualified executives who are critical to Provident'sProvident’s long-term success.
The compensation program entails a balanced approach that considers the short-term and long-term interests of shareholders and safe and sound banking practices.
The compensation program does not encourage excessive and unnecessary risks that would threaten the value of Provident.
The Board of Directors recommends that you vote FOR approval of the compensation of our named executive officers as disclosed in this Proxy Statement.
PROPOSAL 3 – ADVISORY VOTE ON THE FREQUENCYAPPROVAL OF 2022 EQUITY INCENTIVE PLAN
Overview
On September 22, 2022, our Board of Directors unanimously adopted, subject to shareholder approval, the Provident Financial Holdings, Inc. 2022 Equity Incentive Plan. The purpose of the plan is to reward performance and build the participants’ equity interest in Provident by providing long-term incentives and rewards to directors, key employees and other persons who provide services to us and who contribute to our success by their innovation, ability, industry, loyalty and exceptional service.
We strongly believe that the approval of the 2022 Equity Incentive Plan is essential to our continued success. The Personnel/Compensation Committee, the Board and management believe that equity awards motivate high levels of performance, align the interests of our personnel and shareholders by giving directors and employees the perspective of an owner with an equity stake in Provident, and effectively recognize director and employee contributions to Provident’s success. The Committee, Board and management further believe that equity awards are a competitive necessity in our industry, allowing us to recruit and retain the highly qualified officers and other key personnel who help Provident meet its goals, and reward and encourage current directors and employees.
The following summary is a brief description of the material features of the 2022 Equity Incentive Plan. This summary is qualified in its entirety by reference to the plan, a copy of which is attached to this Proxy Statement as Appendix A.
Summary
FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATIONAdministration.
Under the Dodd-Frank Act, we were required to include in the proxy statement for the 2011 annual meeting of shareholders The 2022 Equity Incentive Plan will be administered by a non-binding shareholder vote to consider the timing of future shareholder votes on executive compensation. Shareholders voted in favor of holding an annual vote on executive compensation andcommittee appointed by the Board of Directors, which will consist of at least two members, each of whom will be a non-employee director and an independent director, as those terms are defined in the plan. The Provident and Provident Savings Bank Personnel/Compensation Committee will administer the plan. Among other things, the Committee will (1) interpret the plan, (2) adopt rules for the administration of the plan, (3) select persons to receive awards from among the eligible participants and (4) determine the types of awards and the number of shares to be awarded to participants.
Awards. The 2022 Equity Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, non-qualified stock options, which do not satisfy the requirements for treatment as incentive stock options, and awards of restricted stock, denominated in shares or share units. Subject to adjustments described below under “–Adjustments in the Event of Business Reorganization,” Provident has reserved 375,000 shares of its common stock for issuance under the plan in connection with the exercise of awards, which represents 5.2% of Provident’s common stock outstanding on the voting record date. The fair market value of these shares is $5,381,250, based on the closing price of Provident’s common stock as of the close of business on the voting record date. Only shares actually issued to participants or retained or surrendered to satisfy tax withholding obligations for awards under the plan count against this total number of shares available under the plan.
Under the 2022 Equity Incentive Plan, the Committee may grant stock options that, upon exercise, result in the issuance of 175,000 shares of our common stock. This amount represents 2.4% of Provident’s total issued and outstanding shares on the voting record date. The plan also provides that during any calendar year, the maximum aggregate number of shares with respect to which stock options may be granted to any one individual is 35,000. In addition, the plan provides that the maximum aggregate number of shares with respect to which incentive stock options may be granted is 175,000. The Committee may grant restricted stock for an aggregate of 200,000 shares of our common stock, which represents 2.8% of Provident’s total issued and outstanding shares on the voting record date. The plan also provides that during any calendar year, the maximum aggregate number of shares of restricted stock which may be granted to any one individual is 30,000. Each of the maximum amounts described in this paragraph is subject to adjustments described below under “–Adjustments in the Event of Business Reorganization.”
The 2022 Equity Incentive Plan provides for the use of treasury shares and authorized but unissued shares to fund awards. Treasury shares are previously issued shares of Provident’s common stock that are no longer outstanding
24
as a result of having been repurchased or otherwise reacquired by Provident. It is intended that the restricted stock awards under the plan will be funded with treasury shares and the stock option awards will be funded with authorized but unissued shares. The awards will have the effect of diluting the holdings of persons who own our common stock. Assuming all awards under the plan are awarded and exercised through the use of treasury shares and authorized but unissued common stock, current shareholders would be diluted by approximately 5.2% based on the number of shares outstanding as of the close of business on the voting record date.
Eligibility to Receive Awards. The Committee may grant awards under the 2022 Equity Incentive Plan to directors, advisory directors, directors emeriti, officers and employees of Provident and its affiliates. However, incentive stock options may only be awarded to employees. The Committee will select persons to receive awards among the eligible participants and determine the number of shares for each award granted. Currently, there are approximately 30 individuals who are eligible to receive awards under the plan, consisting of seven directors and 23 employees.
Terms and Conditions of Stock Options. The Committee may grant stock options to purchase shares of our common stock at a price that is not less than the fair market value of the common stock on the date the option is granted. The fair market value is the closing sales price on the grant date as quoted on Nasdaq. Stock options may not be exercised later than 10 years after the grant date. Subject to the limitations imposed by the provisions of the Internal Revenue Code, certain of the options granted under the 2022 Equity Incentive Plan to officers and employees may be designated as “incentive stock options.” Options that are not designated and do not otherwise qualify as incentive stock options are referred to as “non-qualified stock options.”
The Committee will determine the time or times at which a stock option may be exercised in whole or in part and the method or methods by which, and the forms in which, payment of the exercise price with respect to the stock option may be made. Unless otherwise determined by the Committee and set forth in the written award agreement evidencing the grant of the stock option, upon termination of service of the participant for any reason other than for cause, all stock options then currently exercisable by the participant shall remain exercisable for one year for terminations due to adoptdeath, disability or retirement (termination of employment after attaining age 59½), and for three months for other terminations or until the expiration of the stock option by its terms if sooner. Upon any termination of service for cause, all stock options not previously exercised shall immediately be forfeited.
Prohibition Against Option Repricing and Purchase of Underwater Options. Except as provided under “–Adjustments in the Event of Business Reorganization” below, neither the Committee nor the Board may amend or modify the exercise price of a stock option or cancel the stock option at a time when the exercise price is greater than the fair market value of Provident’s common stock in exchange for another award. In addition, neither Provident nor any affiliate may purchase from any option holder any option where the exercise price of the option exceeds the fair market value of the underlying share (i.e., an annual frequency.“underwater option”).
Terms and Conditions of Restricted Stock Awards. The Dodd-Frank Act requiresCommittee is authorized to grant restricted stock, which are shares of Provident common stock that shareholdersare subject to a substantial risk of forfeiture and limits on transfer until the shares vest. The Committee will establish a restricted period, subject to acceleration as described below under “–Acceleration of Vesting,” during which, or at the expiration of which, the restricted stock awards vest and shares of common stock awarded shall no longer be permittedsubject to forfeiture or restrictions on transfer. During the vesting period, unless otherwise provided for in the award agreement, the recipient will not have the power to vote on the frequencyrestricted shares and will not have the right to receive dividends with respect to those shares.
The Committee also may grant share units, which provide for the transfer of future votes on executive compensation at leasta specified number of shares of Provident common stock once every six years. Accordingly, wethe applicable vesting requirements are includingmet. The Committee will establish a restricted period, subject to acceleration as described below under “–Acceleration of Vesting,” after which the specified number of shares of Provident common stock will be transferred to the grantee.
Except as provided under “–Transferability of Awards,” restricted stock and share units generally may not be sold, assigned, transferred, pledged or otherwise encumbered by the participant before the vesting conditions are satisfied. The Committee has the right to determine any other terms and conditions, not inconsistent with the 2022 Equity Incentive Plan, upon which a restricted stock or share unit award shall be granted.
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Acceleration of Stock Option Exercisability and Vesting of Restricted Stock Awards. Unless otherwise provided in this Proxy Statementan award agreement, upon a change in control of Provident followed by an involuntary termination of the award recipient within 12 months of the change in control (change in control and presenting at this year's annual meetinginvoluntary termination as defined in the 2022 Equity Incentive Plan) or upon the termination of the award recipient’s service due to death or disability, all unvested awards under the 2022 Equity Incentive Plan shall become exercisable in the case of stock options, or vest in the case of restricted stock (including the transfer of Provident common stock in connection with a non-binding shareholder voteshare unit), as of the date of the termination. The Committee also has the authority, with the consent of the award recipient, to consider the timingextent deemed necessary by the Committee, to amend or modify the terms of future shareholder votes on executive compensation. This proposal gives shareholdersany outstanding award.
Forfeiture of Awards. If the opportunityholder of an unvested award terminates service other than due to vote on whetherdeath, disability or a resolutionchange in control, the unvested portion of the award will be forfeited by the holder. Upon any termination of service for cause, all stock options not previously exercised shall be forfeited immediately by the holder.
Transferability of Awards. Stock options and unvested restricted stock awards may be transferred upon the death of the holder to whom it was awarded, by will or the laws of inheritance, or pursuant to a domestic relations order. Furthermore, the Committee may approve the compensationtransfer of our named executive officers should be presentednon-qualified stock options and restricted stock awards to shareholders every one, two or three years, or to abstain from voting.certain family members.
Amendment and Termination of the Plan. The 2022 Equity Incentive Plan shall continue in effect for a term of 10 years, after which no further awards may be granted. The Board of Directors believesmay at any time amend, suspend or terminate the plan or any portion thereof, except to the extent shareholder approval is necessary or required for purposes of any applicable federal or state law or regulation or the rules of any stock exchange or automated quotation system on which our common stock may then be listed or quoted. No amendment, suspension or termination of the plan, however, will impair the rights of any participant, without his or her consent, in any award already granted, except in limited circumstances where necessary to comply with certain tax law requirements or regulatory requirements. All awards are subject to “clawback” provisions as required by law, rule, regulation or stock exchange listing, or a policy related thereto.
Adjustments in the Event of Business Reorganization. In the event any recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, exchange of shares or other securities, stock split, stock dividend, special cash dividend or other special and nonrecurring dividend or distribution, liquidation, dissolution or other similar corporate transaction or event, affects the shares of Provident common stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of participants, the Committee must, in such manner as it deems equitable, adjust the number of shares as to which future awards may be made and the number of shares subject to and exercise prices of outstanding awards.
Important Considerations
The 2022 Equity Incentive Plan contains a resolution to approvenumber of provisions that we believe are consistent with the compensationinterests of our named executive officers should be presented to shareholders every year because the Board is committed to strongand sound corporate governance and an annual cycle provides for the greatest accountability to our shareholders.practices, including:
This vote• | Double trigger for acceleration of vesting of awards in connection with a change in control transaction. The plan requires both a change in control and an involuntary termination of the award recipient within 12 months of the change in control in order to accelerate option exercisability and restricted stock vesting in the event of a change in control transaction. |
• | No liberal share counting. The plan prohibits the reuse of shares withheld or delivered to satisfy the exercise price of an option or to satisfy tax withholding requirements. |
• | No repricing of stock options. The plan prohibits the repricing of stock options. |
• | No purchase of underwater options. The plan prohibits Provident from purchasing from any option holder any option where the exercise price exceeds the fair market value of the underlying share. |
• | No discounted stock options. All stock options must have an exercise price equal to or greater than the fair market value of the underlying common stock on the date of grant. |
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• | No dividends on unearned awards. The plan prohibits the payment of dividends on unearned awards, unless provided in an award agreement. |
• | Limit on awards to any one individual. The plan imposes a maximum number of shares that may be granted to any one individual in any 12-month period. |
Provident currently maintains the 2013 Equity Incentive Plan, the 2010 Equity Incentive Plan and the 2006 Equity Incentive Plan. Stock options and shares of restricted common stock were awarded pursuant to these plans and outstanding awards will not be bindingaffected by adoption of the 2022 Equity Incentive Plan. As of October 13, 2022, 28,750 shares were available for award under the existing plans. We believe that the availability of stock compensation programs is an important element of its overall retention, recruitment, incentive compensation and growth strategies and that the adoption of the 2022 Equity Incentive Plan will assist us in meeting the objectives of these strategies.
In determining the number of shares to be reserved for issuance under the 2022 Equity Incentive Plan and analyzing the impact on our Boardshareholders of Directors or Personnel/Compensation Committeemaking equity awards, we considered our burn rate and mayoverhang. Burn rate provides a measure of the potential dilutive impact of our equity award program. Set forth below is a table that reflects our burn rate for fiscal 2022, 2021 and 2020 as well as the average over those years.
Fiscal Year | | Restricted Stock Granted | | Options Granted | | Total Granted | | Basic Weighted Average Number of Common Shares Outstanding | | Gross Burn Rate (1) |
2022 | | 1,000 | | 14,000 | | 15,000 | | 7,404,089 | | 0.2% |
2021 | | -- | | -- | | -- | | 7,464,814 | | -- |
2020 | | -- | | -- | | -- | | 7,467,577 | | -- |
Three-year average | | | | | | | | | | 0.1% |
___________
(1) | Gross Burn Rate is defined as the number of shares of common stock underlying awards granted in the year divided by the basic weighted average number of shares of common stock outstanding. |
The following table provides information as of October 13, 2022 regarding our total outstanding shares of common stock, shares underlying outstanding awards under prior plans and shares that would be added upon stockholder approval of the 2022 Equity Incentive Plan (“overhang”):
As of October 13, 2022
| |
Shares underlying outstanding awards | 608,750 |
Shares outstanding | 7,223,518 |
Overhang (shares underlying outstanding awards/shares outstanding) | 8.4% |
Shares available for grant under prior plans | 28,750 |
Total overhang (shares underlying outstanding awards and plan shares available/shares outstanding) | 8.8% |
Shares Board seeks approval for | 375,000 |
As a percentage of shares outstanding | 5.2% |
The following table provides information regarding our outstanding stock options, broken down by those that expire within the next year and those that expire after one year. We believe a meaningful percentage will not be construedexercised as overruling a decisionresult of the option exercise price greatly exceeding the closing market price of $14.35 per share of Provident’s common stock on October 13, 2022.
Expiration Date | | Exercise Price | | Outstanding Options |
| | | | |
12/20/2022 | | $16.47 | | 19,000 |
Sub-Total | | | | 19,000 |
02/25/2024 | | $15.14 | | 20,000 |
09/30/2024 | | $14.59 | | 262,000 |
09/27/2026 | | $19.79 | | 20,000 |
10/25/2026 | | $18.88 | | 6,000 |
05/30/2029 | | $20.19 | | 90,000 |
12/16/2031 | | $16.70 | | 14,000 |
08/12/2032 | | $14.52 | | 30,000 |
Sub-Total | | | | 442,000 |
Total | | | | 461,000 |
| | | | |
Of the 19,000 options expiring in the next year, none are eligible for re-issue and will expire. For each of these reasons, the potential dilution to our shareholders from our existing equity plans will be less than originally anticipated. Ultimately, the plans worked as designed, rewarding employees when shareholder value was created and limiting dilution when values retrench.
The graph below illustrates the dilutive effects of the 2022 Equity Incentive Plan if all shares were immediately awarded upon approval of the Plan in different scenarios of share price appreciation or depreciation. The graph also illustrates the increase or decrease in shareholder value as defined by market capitalization.
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Federal Income Tax Consequences
The following discussion provides a general overview of the Boardfederal tax consequences that apply to non-qualified stock options, incentive stock options and restricted stock awards, as of the date of this Proxy Statement.
Non-qualified Stock Options. Under current federal tax law, the non-qualified stock options granted under the 2022 Equity Incentive Plan will not result in any taxable income to the optionee or createany tax deduction to Provident at the time of grant. Upon the exercise of a non-qualified stock option, the excess of the market value of the shares acquired over their exercise price is taxable to the optionee as compensation income and is generally deductible by Provident. The optionee’s tax basis for the shares is the market value of the shares at the time of exercise. Upon a sale of the shares, the optionee will recognize a capital gain to the extent of any appreciation in value of the shares from the date of exercise to the date of sale, and such gain will qualify as long-term capital gain if the applicable capital gain holding period is satisfied.
Incentive Stock Options. Neither the grant nor the exercise of an incentive stock option under the 2022 Equity Incentive Plan will result in any federal tax consequences to either the optionee or imply any additional fiduciary dutyProvident, although the difference between the market price on the Board. It alsodate of exercise and the exercise price is an item of adjustment included for purposes of calculating the optionee’s alternative minimum tax. Except as described below, at the time the optionee sells shares acquired pursuant to the exercise of an incentive stock option, the excess of the sale price over the exercise price will not affect whenqualify as a long-term capital gain if the shareholdersapplicable holding period is satisfied. If the optionee disposes of the shares within two years of the date of grant or within one year of the date of exercise, an amount equal to the lesser of (a) the difference between the fair market value of the shares on the date of exercise and the exercise price, or (b) the difference between the exercise price and the sale price will be askedtaxed as ordinary income and Provident will be entitled to vote on executive compensationa deduction in future years.the same amount. The Committeeexcess, if any, of the sale price over the sum of the exercise price and the Board may, however, take into accountamount taxed as ordinary income will qualify as long-term capital gain if the outcomeapplicable capital gains holding period is satisfied. If the optionee exercises an incentive stock option more than three months after his or her termination of employment, he or she generally is deemed to have exercised a non-qualified stock option. The time frame in which to exercise an incentive stock option is extended in the event of the votedeath or disability of the optionee.
Restricted Stock Awards. Recipients of restricted shares granted under the 2022 Equity Incentive Plan will recognize ordinary income on the date that the shares are no longer subject to a substantial risk of forfeiture, or at the time shares of Provident common stock are transferred to the awardee, in the case of share units, in an amount equal to the fair market value of the shares on that date. In certain circumstances, a holder of restricted stock (but not share units) may elect to recognize ordinary income on the date of the grant of the restricted stock in an amount equal to the fair market value of the shares on the grant date. Upon a subsequent sale of the shares, the holder of restricted stock will recognize capital gain or loss based on the difference between the amount received and the amount previously recognized as ordinary income. If an award agreement provides that an owner of restricted stock is entitled to receive dividends, then recipients of shares granted under the plan will also recognize ordinary income equal to their dividend payments when considering when to present shareholders with a resolution to approve executive compensation.these payments are received.
Proposed Awards Under the Plan
No awards have been proposed under the 2022 Equity Incentive Plan as of the date of this Proxy Statement.
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Equity Compensation Plan Information
The following table summarizes share and exercise price information regarding our equity compensation plans as of June 30, 2022:
Plan Category | | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | Weighted-average Exercise Price of Outstanding Options, Warrants and Rights | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding
Securities Reflected in Column (a)) |
| | (a) | | (b) | | (c) |
Equity compensation plans approved by security holders | | 525,750 | | $16.24 | | 111,750 |
| | | | | | |
Equity compensation plans not approved by security holders: | | N/A | | N/A | | N/A |
Total | | 525,750 | | $16.24 | | 111,750 |
Voting Recommendation
The Board of Directors recommends that youshareholders vote FOR conducting an advisory vote on executive compensation every year.the adoption of the Provident Financial Holdings, Inc. 2022 Equity Incentive Plan.
AUDIT COMMITTEE MATTERS
Audit Committee Charter. The Audit Committee operates pursuant to a charter approved by our Board of Directors. The Audit Committee reports to the Board of Directors and is responsible for overseeing and monitoring financial accounting and reporting, the system of internal controls established by management and our audit process. The charter sets out the responsibilities, authority and specific duties of the Audit Committee. The charter specifies, among other things, the structure and membership requirements of the Audit Committee, as well as the relationship of the Audit Committee to the independent auditor,registered public accounting firm, the internal audit department and management.
Report of the Audit Committee. The Audit Committee reports as follows with respect to Provident'sProvident’s audited financial statements for the fiscal year ended June 30, 2017:2022:
The Audit Committee has completed its review and discussion of the 20172022 audited financial statements with management;
The Audit Committee has discussed with the independent auditor,registered public accounting firm, Deloitte & Touche LLP, the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as amended;
The Audit Committee has received written disclosures and the letter from the independent auditorregistered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor'sregistered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent auditorregistered public accounting firm the independent auditor'sregistered public accounting firm’s independence; and
The Audit Committee has, based on its review and discussions with management of the 20172022 audited financial statements and discussions with the independent auditor, recommended to the Board of Directors that Provident's audited financial statements for the year ended June registered public accounting firm,
30 2017 be included in its Annual Report on Form 10-K.
| recommended to the Board of Directors that Provident’s audited financial statements for the year ended June 30, 2022 be included in its Annual Report on Form 10-K. |
The foregoing report is provided by the following directors, who constitute the Audit Committee:
| Audit Committee: | Audit Committee: Joseph P. Barr, Chairman |
Debbi H. Guthrie
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 or the Securities Exchange Act of 1934, and shall not otherwise be deemed filed under such acts.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of any registered class of Provident's equity securities, to file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than 10% shareholders are required by regulation to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms we have received and written representations provided to us by the above-referenced persons, we believe that, during the fiscal year ended June 30, 2017, all filing requirements applicable to our reporting officers, directors and greater than 10% shareholders were properly and timely complied with.
PROPOSAL 4 – RATIFICATION OF APPOINTMENT OFINDEPENDENT AUDITORREGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP served as our independent auditorregistered public accounting firm for the fiscal year ended June 30, 2017.2022. The Audit Committee of the Board of Directors has appointed Deloitte & Touche LLP as independent auditorregistered public accounting firm for the fiscal year ending June 30, 2018,2023, subject to approval by shareholders. A representative of Deloitte & Touche LLP will be present at the annual meeting to respond to shareholders'shareholders’ questions and will have the opportunity to make a statement if he or she so desires.
The following table sets forth the aggregate fees paid to Deloitte & Touche LLP for professional services rendered for the fiscal years ended June 30, 20172022 and 2016.2021.
| Year Ended June 30, | |
| 2017 | | 2016 | |
| | | | |
Audit Fees (1) | | $ | 762,250 | | | $ | 786,750 | |
Tax Fees (2) | | | 59,925 | | | | 74,574 | |
Total | | $ | 822,175 | | | $ | 861,324 | |
| Year Ended June 30, |
| 2022 | | 2021 |
| | | |
Audit Fees (1) | $624,880 | | $613,780 |
Tax Fees (2) | 72,445 | | 80,417 |
Total | $697,325 | | $694,197 |
____________ | ___________
|
(1) | Includes fees paid for the annual audit, quarterly reviews of the consolidated financial statements, and the annual audit of internal controls over financial reporting. | |
(2) | Primarily consists of fees related to the preparation of Provident'sProvident’s income tax returns. | |
The Audit Committee will establish general guidelines for the permissible scope and nature of any permitted non-audit services to be provided by the independent auditorregistered public accounting firm in connection with its annual review of its charter. Pre-approval may be granted by action of the full Audit Committee or by delegated authority to one or more members of the Committee. If this authority is delegated, all approved non-audit services will be presented to the Audit Committee at its next meeting. In considering non-audit services, the Audit Committee or its delegate will consider various factors, including but not limited to, whether it would be beneficial to have the service provided by the independent auditorregistered public accounting firm and whether the service could compromise the independence of the independent auditor.registered public accounting firm.
The Board of Directors recommends that shareholders vote FOR the ratification of the appointment of Deloitte & Touche LLP as independent auditorregistered public accounting firm of Provident for the fiscal year ending June 30, 2018.2023.
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MISCELLANEOUS
The Board of Directors is not aware of any business to come before the annual meeting other than those matters described above in this Proxy Statement. However, if any other matters should properly come before the meeting, it is intended that proxies in the accompanying form will be voted in respect thereof in accordance with the judgment of the person or persons voting the proxies.
We will bear the cost of solicitation of proxies. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of our common stock. In addition to solicitations by mail, our directors, officers and employees may solicit proxies personally or by telecopier or telephone without additional compensation.
Provident's 2017Provident’s 2022 Annual Report to Shareholders, including financial statements, has been mailed to all shareholders of record as of the close of business on the voting record date. Any shareholder who has not received a copy of the Annual Report may obtain a copy by writing to the Secretary of Provident. The Annual Report is not to be treated as part of the proxy solicitation material or having been incorporated herein by reference.
A copy of Provident'sProvident’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017,2022, as filed with the SEC, will be furnished without charge to shareholders of record as of the close of business on the voting record date upon
written request to Donavon P. Ternes, Secretary, Provident Financial Holdings, Inc., 3756 Central Avenue, Riverside, California 92506.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at next year'syear’s annual meeting must be received by us no later than June 27, 201829, 2023 to be considered for inclusion in the proxy materials and form of proxy relating to the annual meeting. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act.
Our Certificate of Incorporation provides that in order for a shareholder to make nominations for the election of directors or proposals for business to be brought before the annual meeting, the shareholder must deliver notice of nominations and/or proposals to the Secretary not less than 30 nor more than 60 days prior to the date of the annual meeting; provided that if less than 31 days'days’ notice of the meeting is given to shareholders, the shareholder'sshareholder’s notice must be delivered not later than the close of the tenth day following the day on which notice of the meeting was mailed to shareholders. As specified in the Certificate of Incorporation, the notice with respect to nominations for election of directors must set forth certain information regarding each nominee for election as a director, including that person'sperson’s written consent to being named in the proxy statement as a nominee and to serving as a director, if elected, and certain information regarding the shareholder giving the notice. The notice with respect to business proposals to be brought before the annual meeting must state the shareholder'sshareholder’s name, address and number of shares of common stock held, and briefly discuss the business to be brought before the annual meeting, the reasons for conducting the business at the meeting and any interest of the shareholder in the proposal.
| BY ORDER OF THE BOARD OF DIRECTORS |
| |
| |
| /s/S/ DONAVON P. TERNES |
| |
| DONAVON P. TERNES
Secretary
|
Riverside, California
October 25, 201727, 2022
APPENDIX A
24PROVIDENT FINANCIAL HOLDINGS, INC.
2022 EQUITY INCENTIVE PLAN
ARTICLE I
PURPOSE
Section 1.1 General Purpose of the Plan.
The purpose of the Plan is to reward performance and build the participants’ equity interest in Provident Financial Holdings, Inc. by providing long-term incentives and rewards to directors, advisory directors, directors emeriti, officers and employees who provide services to Provident Financial Holdings, Inc. and its affiliates and who contribute to its success by their innovation, ability, industry, loyalty and exceptional service. The Plan is not intended to provide any compensation or benefits that would constitute deferred compensation subject to Section 409A of the Code and shall be administered, operated and interpreted accordingly.
ARTICLE II
DEFINITIONS
The following definitions shall apply for the purposes of this Plan, unless a different meaning is plainly indicated by the context:
Affiliate means any “parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Section 424(e) and (f) respectively, of the Code.
Award means the grant by the Committee of an Incentive Stock Option, a Non-Qualified Stock Option or a Restricted Stock Award.
Award Agreement means a written instrument evidencing an Award under the Plan and establishing the terms and conditions thereof.
Beneficiary means the Person designated by a Participant to receive any Shares subject to a Restricted Stock Award made to such Participant that become distributable, or to have the right to exercise any Options granted to such Participant that are exercisable, following the Participant’s death.
Board means the Board of Directors of Provident Financial Holdings, Inc. and any successor thereto.
Change in Control means any of the following events:
(a) any third Person, including a “group” as defined in Section 13(d)(3) of the Exchange Act becomes the beneficial owner of Shares with respect to which 25% or more of the total number of votes that may be cast for the election of the Board (other than a tax-qualified plan of the Company or its Affiliate);
(b) consummation of a plan of reorganization, merger, acquisition, consolidation, sale of all or substantially all of the assets of the Company or a similar transaction in which the Company is not the resulting entity;
(c) as a result of, or in connection with, any cash tender offer, merger or other business combination, sale of assets or contested election(s), or combination of the foregoing, the individuals who were members of the Board on the date of adoption of this Plan (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date of adoption of this Plan whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s shareholders was approved by the nominating committee serving under an Incumbent Board, shall be considered a member of the Incumbent Board; or
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(d) a tender offer or exchange offer for 25% or more of the total outstanding Shares is completed (other than such an offer by the Company).
Code means the Internal Revenue Code of 1986, as amended from time to time.
Committee means the Committee described in Article IV.
Company means Provident Financial Holdings, Inc., a Delaware corporation, and any successor thereto.
Disability means a total and permanent disability, within the meaning of Section 22(e)(3) of the Code, as determined by the Committee in good faith, upon receipt of sufficient competent medical advice from one or more individuals, selected by the Committee, who are qualified to give professional medical advice.
Domestic Relations Order means a domestic relations order that satisfies the requirements of Section 414(p)(1)(B) of the Code, or any successor provision, as if such section applied to the applicable Award.
Effective Date means ____________________, the date on which the Plan is approved by the shareholders of Provident Financial Holdings, Inc.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Exercise Period means the period during which an Option may be exercised.
Exercise Price means the price per Share at which Shares subject to an Option may be purchased upon exercise of the Option. If the Fair Market Value for Exercise Price purposes is determined to be less than fair market value of the underlying Shares as determined under Section 409A (the “Section 409A Fair Market Value”), then the Exercise Price shall automatically be adjusted to be the Section 409A Fair Market Value. The Committee may take such actions as it determines necessary to carry out the preceding sentence.
Fair Market Value means, with respect to a Share on a specified date:
(a) If the Shares are listed on any U.S. national securities exchange registered under the Securities Exchange Act of 1934 (“National Exchange”), the closing sales price for such stock (or the closing bid, if no sales were reported) as reported on that exchange on the applicable date, or if the applicable date is not a trading day, on the trading day immediately preceding the applicable date;
(b) If the Shares are not listed on a National Exchange but are traded on the over-the-counter market or other similar system, the mean between the closing bid and the asked price for the Shares at the close of trading in the over-the-counter market or other similar system on the applicable date, or if the applicable date is not a trading day, on the trading day immediately preceding the applicable date; and
(c) In the absence of such markets for the Shares, the Fair Market Value shall be determined in good faith by the Committee.
In no event shall the Fair Market Value for Exercise Price purposes be less than fair market value of the underlying Shares as determined under Section 409A.
Family Member means with respect to any Participant:
(a) the lineal ascendants and lineal descendants of such Participant or his spouse, or any one or more of them; or
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(b) an entity wholly owned by, including, but not limited to, a trust the exclusive beneficiaries of which are, one or more of the lineal ascendants or lineal descendants of such Participant or his spouse, or wholly owned jointly by one or more of them and the Participant.
Incentive Stock Option means a right to purchase Shares that is granted to an employee of the Company or any Affiliate that is designated by the Committee to be an Incentive Stock Option and that is intended to satisfy the requirements of Section 422 of the Code.
Involuntary Termination shall mean either (a) the termination of the employment of Award recipient by the Company or any Affiliate without the Award recipient’s express written consent, or (b) the Award recipient's voluntarily and complete termination of employment with the Company and all Affiliates following any demotion, loss of title, office or significant authority, reduction in the Award recipient's annual salary, or relocation of the Award recipient's principal place of employment more than thirty-five (35) miles from its location immediately prior to the Change in Control. No other voluntary termination by the Award recipient shall be considered an Involuntary Termination for purposes of this Plan or any Award granted hereunder.
Non-Qualified Stock Option means a right to purchase Shares that is not intended to qualify as an Incentive Stock Option or does not satisfy the requirements of Section 422 of the Code.
Option means either an Incentive Stock Option or a Non-Qualified Stock Option.
Option Holder means, at any relevant time with respect to an Option, the person having the right to exercise the Option.
Participant means any director, advisory director, director emeritus, officer or employee of the Company or any Affiliate who is selected by the Committee to receive an Award.
Permitted Transferee means, with respect to any Participant, a Family Member of the Participant to whom an Award has been transferred as permitted hereunder.
Person means an individual, a corporation, a partnership, a limited liability company, an association, a joint-stock company, a trust, an estate, an unincorporated organization and any other business organization or institution.
Plan means the Provident Financial Holdings, Inc. 2022 Equity Incentive Plan, as amended from time to time.
Restricted Stock Award means an award of Shares or Share Units pursuant to Article VI.
Retirement means the termination of a Participant’s employment with the Company and its Affiliates, other than a Termination for Cause, after the Participant has attained age 59½.
Section 409A means Section 409A of the Code and any regulations or guidance of general applicability thereunder.
Service means, unless the Committee provides otherwise in an Award Agreement, service in any capacity as a director, advisory director, director emeritus, officer or employee of the Company or any Affiliate.
Share means a share of common stock, par value $.01 per share, of Provident Financial Holdings, Inc.
Share Unit means the right to receive a Share at a specified future date.
Termination for Cause means termination upon an intentional failure to perform stated duties, a breach of a fiduciary duty involving personal dishonesty which results in material loss to the Company or one of its Affiliates or a willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or a final cease-and-desist order which results in material loss to the Company or one of its Affiliates. No act or failure to act on Participant’s part
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shall be considered willful unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Company. Notwithstanding the above, if a Participant is subject to a different definition of termination for cause in an employment or severance or similar agreement with the Company or any Affiliate, such other definition shall control.
Treasury Shares mean previously issued Shares that are no longer outstanding as a result of having been repurchased or otherwise acquired by the Company.
Vesting Date means the date or dates on which the grant of an Option is eligible to be exercised or the date or dates on which a Restricted Stock Award ceases to be forfeitable.
ARTICLE III
AVAILABLE SHARES
Section 3.1 Shares Available Under the Plan.
Subject to adjustment under Article VIII, the aggregate number of Shares representing Awards shall not exceed three hundred seventy-five thousand (375,000) Shares.
Section 3.2 Shares Available for Options.
Subject to adjustment under Article VIII and the limitations under Section 3.4 below, the maximum aggregate number of Shares with respect to which Options may be granted under the Plan shall be one hundred seventy-five thousand (175,000) Shares and the maximum aggregate number of Shares with respect to which Incentive Stock Options may be granted under the Plan shall be one hundred seventy-five thousand (175,000) Shares. The maximum aggregate number of Shares with respect to which Options may be granted under the Plan to any one individual in any calendar year shall be thirty-five thousand (35,000) Shares. Shares issued upon the exercise of an Option shall be issued from the Company’s authorized but unissued Shares.
Section 3.3 Shares Available for Restricted Stock Awards.
Subject to adjustment under Article VIII and the limitations under Section 3.4 below, the maximum aggregate number of Shares with respect to which Restricted Stock Awards may be granted under the Plan shall be two hundred thousand (200,000) Shares and the maximum aggregate number of Shares with respect to which Restricted Stock Awards may be granted under the Plan to any one individual in any calendar year shall be thirty thousand (30,000) Shares. Shares issued upon award or vesting of Restricted Stock Awards shall be Treasury Shares.
Section 3.4 Computation of Shares Issued.
For purposes of this Article III, Shares shall be considered issued pursuant to the Plan only if actually issued upon the exercise of an Option or in connection with a Restricted Stock Award. Any Award subsequently forfeited, in whole or in part, shall not be considered issued. Shares used to pay the Exercise Price of an Option and Shares used to satisfy tax withholding obligations shall not be available for future Awards under the Plan. To the extent that Shares are delivered pursuant to the exercise of an Option, the number of underlying Shares as to which the exercise related shall be counted against the number of Shares available for Awards, as opposed to only counting the Shares issued. If any Award granted under the Plan terminates, expires, or lapses for any reason, any Shares subject to such Award again shall be available for the grant of an Award under the Plan.
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ARTICLE IV
ADMINISTRATION
Section 4.1 Committee.
(a) The Plan shall be administered by a Committee appointed by the Board for that purpose and consisting of not less than two (2) members of the Board. Each member of the Committee shall be a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3)(i) under the Exchange Act or a successor rule or regulation and an “Independent Director” and shall satisfy any other membership requirements under the corporate governance rules and regulations imposing independence and other membership standards on committees performing similar functions promulgated by any national securities exchange or quotation system on which Shares are listed.
(b) The act of a majority of the members present at a meeting duly called and held shall be the act of the Committee. Any decision or determination reduced to writing and signed by all members shall be as fully effective as if made by unanimous vote at a meeting duly called and held.
(c) The Committee’s decisions and determinations under the Plan need not be uniform and may be made selectively among Participants, whether or not such Participants are similarly situated.
Section 4.2 Committee Powers.
Subject to the terms and conditions of the Plan and such limitations as may be imposed by the Board, the Committee shall be responsible for the overall management and administration of the Plan and shall have such authority as shall be necessary or appropriate in order to carry out its responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine all questions that may arise under the Plan as to eligibility for participation in the Plan, the number of Shares subject to Awards to be issued or granted, and the terms and conditions thereof;
(b) with the consent of the Participant, to the extent deemed necessary by the Committee, amend or modify the terms of any outstanding Award or accelerate or defer the Vesting Date thereof;
(c) to adopt rules and regulations and to prescribe forms for the operation and administration of the Plan; and
(d) to take any other action not inconsistent with the provisions of the Plan that it may deem necessary or appropriate.
All decisions, determinations and other actions of the Committee made or taken in accordance with the terms of the Plan shall be final and conclusive and binding upon all parties having an interest therein.
ARTICLE V
STOCK OPTIONS
Section 5.1 Grant of Options.
(a) Subject to the limitations of the Plan, the Committee may, in its discretion, grant to a Participant an Option to purchase Shares. An Option must be designated as either an Incentive Stock Option or a Non-Qualified Stock Option and, if not designated as either, shall be a Non-Qualified Stock Option. Only employees of the Company or its Affiliates may receive Incentive Stock Options.
(b) Any Option granted shall be evidenced by an Award Agreement which shall:
(i) specify the number of Shares covered by the Option;
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(ii) specify the Exercise Price;
(iii) specify the Exercise Period;
(iv) specify the Vesting Date; and
(v) contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.
Section 5.2 Size of Option.
Subject to the restrictions of the Plan, the number of Shares as to which a Participant may be granted Options shall be determined by the Committee, in its discretion.
Section 5.3 Exercise Price.
The price per Share at which an Option may be exercised shall be determined by the Committee, in its discretion, provided, however, that the Exercise Price shall not be less than the Fair Market Value of a Share on the date on which the Option is granted.
Section 5.4 Exercise Period.
The Exercise Period during which an Option may be exercised shall commence on the Vesting Date. It shall expire on the earliest of:
(a) the date specified by the Committee in the Award Agreement;
(b) unless otherwise determined by the Committee and set forth in the Award Agreement, the last day of the three-month period commencing on the date of the Participant’s termination of Service, other than on account of death, Disability, Retirement or a Termination for Cause;
(c) unless otherwise determined by the Committee and set forth in the Award Agreement, the last day of the one-year period commencing on the date of the Participant’s termination of Service due to death, Disability or Retirement;
(d) as of the time and on the date of the Participant’s termination of Service due to a Termination for Cause; or
(e) the last day of the ten-year period commencing on the date on which the Option was granted.
An Option that remains unexercised at the close of business on the last day of the Exercise Period shall be canceled without consideration at the close of business on that date.
Section 5.5 Vesting Date.
(a) The Vesting Date for each Option Award shall be determined by the Committee and specified in the Award Agreement.
(b) Unless otherwise determined by the Committee and specified in the Option Award Agreement:
(i) if the Participant terminates Service prior to the Vesting Date for any reason other than death, Disability or a Change in Control, any unvested Option shall be forfeited without consideration;
(ii) if the Participant terminates Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of the Participant’s termination of Service; and
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(iii) if a Change in Control occurs prior to the Vesting Date of an Option Award that is outstanding on the date of the Change in Control, the Vesting Date shall be accelerated to the earlier of (A) the date of the Participant's Involuntary Termination, if such Involuntary Termination occurs within the twelve-month period commencing on the effective date of the Change in Control, or (B) the Vesting Date provided for in Section 5.5(a).
Section 5.6Additional Restrictions on Incentive Stock Options.
An Option designated by the Committee to be an Incentive Stock Option shall be subject to the following provisions:
(a) Notwithstanding any other provision of this Plan to the contrary, no Participant may receive an Incentive Stock Option under the Plan if such Participant, at the time the award is granted, owns (after application of the rules contained in Section 424(d) of the Code) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or its Affiliates, unless (i) the option price for such Incentive Stock Option is at least 110 percent of the Fair Market Value of the Shares subject to such Incentive Stock Option on the date of grant and (ii) such Option is not exercisable after the date five (5) years from the date such Incentive Stock Option is granted.
(b) Each Participant who receives Shares upon exercise of an Option that is an Incentive Stock Option shall give the Company prompt notice of any sale of Shares prior to a date which is two years from the date the Option was granted or one year from the date the Option was exercised. Such sale shall disqualify the Option as an Incentive Stock Option.
(c) The aggregate Fair Market Value (determined with respect to each Incentive Stock Option at the time such Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under this Plan or any other plan of the Company or an Affiliate) shall not exceed $100,000 and the term of the Incentive Stock Option shall not be more than ten years.
(d) Any Option under this Plan which is designated by the Committee as an Incentive Stock Option but fails, for any reason, to meet the foregoing requirements shall be treated as a Non-Qualified Stock Option.
Section 5.7Method of Exercise.
(a) Subject to the limitations of the Plan and the Award Agreement, an Option Holder may, at any time on or after the Vesting Date and during the Exercise Period, exercise his or her right to purchase all or any part of the Shares to which the Option relates; provided, however, that the minimum number of Shares which may be purchased at any time shall be 100, or, if less, the total number of Shares relating to the Option which remain un-purchased. An Option Holder shall exercise an Option to purchase Shares by:
(i) giving written notice to the Committee, in such form and manner as the Committee may prescribe, of his or her intent to exercise the Option;
(ii) delivering to the Committee full payment for the Shares as to which the Option is to be exercised; and
(iii) satisfying such other conditions as may be prescribed in the Award Agreement.
(b) The Exercise Price of Shares to be purchased upon exercise of any Option shall be paid in full:
(i) in cash (by certified or bank check or such other instrument as the Company may accept); or
(ii) if and to the extent permitted by the Committee, in the form of Shares already owned by the Option Holder for a period of more than six (6) months as of the exercise date and having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid;
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(iii) if and to the extent permitted by the Committee, by the Company withholding Shares otherwise issuable upon the exercise having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid; or
(iv) by a combination thereof.
Payment for any Shares to be purchased upon exercise of an Option may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price and applicable tax withholding amounts (if any), in which event the Shares acquired shall be delivered to the broker promptly following receipt of payment.
(c) When the requirements of this Section have been satisfied, the Committee shall take such action as is necessary to cause the issuance of a stock certificate or cause Shares to be issued by book-entry procedures, in either event evidencing the Option Holder's ownership of such Shares. The Person exercising the Option shall have no right to vote or to receive dividends, nor have any other rights with respect to the Shares, prior to the date the Shares are transferred to such Person on the stock transfer records of the Company, and no adjustments shall be made for any dividends or other rights for which the record date is prior to the date as of which the transfer is effected.
Section 5.8Limitations on Options.
(a) An Option by its terms shall not be transferable by the Option Holder other than by will or the laws of descent and distribution, or pursuant to the terms of a Domestic Relations Order, and shall be exercisable, during the life of the Option Holder, only by the Option Holder or an alternate payee designated pursuant to such a Domestic Relations Order; provided, however, that a Participant may, at any time at or after the grant of a Non-Qualified Stock Option under the Plan, apply to the Committee for approval to transfer all or any portion of such Non-Qualified Stock Option which is then unexercised to such Participant’s Family Member. The Committee may approve or withhold approval of such transfer in its sole and absolute discretion. If such transfer is approved, it shall be effected by written notice to the Company given in such form and manner as the Committee may prescribe and actually received by the Company prior to the death of the person giving it. Thereafter, the transferee shall have, with respect to such Non-Qualified Stock Option, all of the rights, privileges and obligations which would attach thereunder to the Participant. If a privilege of the Option depends on the life, Service or other status of the Participant, such privilege of the Option for the transferee shall continue to depend upon the life, Service or other status of the Participant. The Committee shall have full and exclusive authority to interpret and apply the provisions of the Plan to transferees to the extent not specifically addressed herein.
(b) The Company's obligation to deliver Shares with respect to an Option shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Option Holder to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to:
(i) the admission of such Shares to listing on any stock exchange or trading on any automated quotation system on which Shares may then be listed or traded; or
(ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.
(c) An Option Holder may designate a Beneficiary to receive any Options that may be exercised after his death. Such designation and any change or revocation of such designation shall be made in writing in the form and manner prescribed by the Committee. In the event that the designated Beneficiary dies prior to the Option Holder, or in the event that no Beneficiary has been designated, any Options that may be exercised following the Option Holder's death shall be transferred to the Option Holder's estate. If the Option Holder and his or her Beneficiary shall die in circumstances that cause the Committee, in its discretion, to be uncertain which shall have been the first to die, the Option Holder shall be deemed to have survived the Beneficiary.
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Section 5.9 Prohibition Against Option Repricing and Purchase of Underwater Options.
(a) Except as provided in Section 8.3 and the definition of “Exercise Price,” and notwithstanding any other provision of this Plan, neither the Committee nor the Board shall have the right or authority following the grant of an Option pursuant to the Plan to amend or modify the Exercise Price of any such Option, or to cancel the Option at a time when the Exercise Price is greater than the Fair Market Value of the Shares in exchange for another Option or Award.
(b) Neither the Company nor any Affiliate may purchase from any Option Holder (for cash or otherwise) any Option where the Exercise Price of the Option exceeds the Fair Market Value of the underlying Share (i.e., when the Option is “underwater”).
ARTICLE VI
RESTRICTED STOCK AWARDS
Section 6.1 In General.
(a) Each Restricted Stock Award shall be evidenced by an Award Agreement which shall specify:
(i) the number of Shares or Share Units covered by the Restricted Stock Award;
(ii) the amount, if any, which the Participant shall be required to pay to the Company in consideration for the issuance of such Shares or Share Units;
(iii) the date of grant of the Restricted Stock Award;
(iv) the Vesting Date for the Restricted Stock Award; and
(v) as to Restricted Stock Awards awarding Shares, the rights of the Participant with respect to dividends, voting rights and other rights and preferences associated with such Shares; and
such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.
(b) All Restricted Stock Awards consisting of Shares shall be in the form of Treasury Shares that shall be registered in the name of the Participant upon the Vesting Date.
(c) Unless otherwise set forth in the Award Agreement, a Restricted Stock Award by its terms shall not be transferable by the Participant other than by will or by the laws of descent and distribution, or pursuant to the terms of a Domestic Relations Order; provided, however, that a Participant may, at any time at or after the grant of a Restricted Stock Award under the Plan, apply to the Committee for approval to transfer all or any portion of such Restricted Stock Award which is then unvested to such Participant’s Family Member. The Committee may approve or withhold approval of such transfer in its sole and absolute discretion. If such transfer is approved, it shall be effected by written notice to the Company given in such form and manner as the Committee may prescribe and actually received by the Company prior to the death of the person giving it. Thereafter, the transferee shall have, with respect to such Restricted Stock Award, all of the rights, privileges and obligations which would attach thereunder to the Participant. If a privilege of the Restricted Stock Award depends on the life, Service or other status of the Participant, such privilege of the Restricted Stock Award for the transferee shall continue to depend upon the life, Service or other status of the Participant. The Committee shall have full and exclusive authority to interpret and apply the provisions of the Plan to transferees to the extent not specifically addressed herein.
Section 6.2 Vesting Date.
(a) The Vesting Date for each Restricted Stock Award shall be determined by the Committee and specified in the Award Agreement.
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(b) Unless otherwise determined by the Committee and specified in the Restricted Stock Award Agreement:
(i) if the Participant terminates Service prior to the Vesting Date for any reason other than death, Disability or a Change in Control, any unvested Shares shall be forfeited without consideration;
(ii) if the Participant terminates Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of termination of the Participant’s Service with the Company; and
(iii) if a Change in Control occurs prior to the Vesting Date of a Restricted Stock Award that is outstanding on the date of the Change in Control, the Vesting Date shall be accelerated to the earlier of (A) the date of the Participant's Involuntary Termination, if such Involuntary Termination occurs within the twelve-month period commencing on the effective date of the Change in Control, or (B) the Vesting Date provided for in Section 6.2(a).
Section 6.3 Dividend Rights.
Unless otherwise set forth in the Award Agreement, no dividends or distributions shall be paid with respect to Shares subject to a Restricted Stock Award, until the Vesting Date of each Restricted Stock Award. Upon the Vesting Date of each Restricted Stock Award, any dividends or distributions declared and paid with respect to Shares subject to a Restricted Stock Award, whether or not in cash, shall be paid to the Participant at the same time they are paid to all other shareholders of the Company.
Section 6.4 Voting Rights.
Unless otherwise set forth in the Award Agreement, no voting rights will be afforded to the Shares subject to a Restricted Stock Award, until the Vesting Date of each Restricted Stock Award. Upon the Vesting Date of each Restricted Stock Award, voting rights appurtenant to the Shares subject to the Restricted Stock Award shall be exercised by the Participant.
Section 6.5 Designation of Beneficiary.
A Participant who has received a Restricted Stock Award may designate a Beneficiary to receive any unvested Shares that become vested on the date of the Participant’s death. Such designation (and any change or revocation of such designation) shall be made in writing in the form and manner prescribed by the Committee. In the event that the Beneficiary designated by a Participant dies prior to the Participant, or in the event that no Beneficiary has been designated, any vested Shares that become available for distribution on the Participant’s death shall be paid to the executor or administrator of the Participant’s estate.
Section 6.6 Manner of Distribution of Awards.
The Company's obligation to deliver Shares with respect to a Restricted Stock Award shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Participant or Beneficiary to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing on any stock exchange or trading on any automated quotation system on which Shares may then be listed or traded, or (ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.
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ARTICLE VII
ADDITIONAL TAX PROVISION
Section 7.1 Tax Withholding Rights.
The Company shall have the power and the right to deduct or withhold, or require a Person to remit to the Company, an amount sufficient to satisfy Federal, state and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any grant, exercise or payment made under or as a result of the Plan. In this regard, where any Person is entitled to receive Shares, the Company shall have the right to require such Person to pay to the Company or any of its Affiliates the amount of any tax which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the amount required to be withheld. For purposes of determining the amount required to be withheld, the Company may but is not required to assume that the maximum Federal and state income tax rates will apply to the affected Person.
ARTICLE VIII
AMENDMENT AND TERMINATION
Section 8.1 Termination
The Board may suspend or terminate the Plan in whole or in part at any time prior to the tenth anniversary of the Effective Date by giving written notice of such suspension or termination to the Committee. Unless sooner terminated, the Plan shall terminate automatically on the tenth anniversary of the Effective Date. In the event of any suspension or termination of the Plan, all Awards previously granted under the Plan that are outstanding on the date of such suspension or termination of the Plan shall remain outstanding and exercisable for the period and on the terms and conditions set forth in the Award Agreements evidencing such Awards.
Section 8.2 Amendment.
The Board may amend or revise the Plan in whole or in part at any time; provided, however, that, except as required to avoid the application of Section 409A or to comply with the corporate governance standards imposed under the listing or trading requirements imposed by any national securities exchange or automated quotation system on which the Company lists or seeks to list or trade Shares, no such amendment or revision shall be effective if it amends a material term of the Plan unless approved by the holders of a majority of the votes cast on a proposal to approve such amendment or revision.
Section 8.3 Adjustments in the Event of Business Reorganization.
In the event any recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, exchange of Shares or other securities, stock split, stock dividend, special cash dividend or other special and nonrecurring dividend or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of:
(i) the number and kind of securities deemed to be available thereafter for grants of Awards in the aggregate to all Participants;
(ii) the number and kind of securities that may be delivered or deliverable in respect of outstanding Awards; and
(iii) the Exercise Price of Options.
In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including, without limitation, cancellation of Awards in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution of Awards using stock of a successor or other entity) in recognition
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of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any Affiliate or the financial statements of the Company or any Affiliate, or in response to changes in applicable laws, regulations, or accounting principles.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Status as an Employee Benefit Plan.
This Plan is not intended to satisfy the requirements for qualification under Section 401(a) of the Code or to satisfy the definitional requirements for an “employee benefit plan” under Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. It is intended to be a non-qualified incentive compensation program that is exempt from the regulatory requirements of the Employee Retirement Income Security Act of 1974, as amended. The Plan shall be construed and administered so as to effectuate this intent.
Section 9.2 No Right to Continued Service.
Neither the establishment of the Plan nor any provisions of the Plan nor any action of the Board or Committee with respect to the Plan shall be held or construed to confer upon any Participant any right to a continuation of his or her position as a director, advisory director, director emeritus, or employee of the Company or any Affiliate. The Company reserves the right to remove any participating member of the Board or dismiss any Participant or otherwise deal with any Participant to the same extent as though the Plan had not been adopted.
Section 9.3 Construction of Language.
Whenever appropriate in the Plan, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to an Article or Section number shall refer to an Article or Section of this Plan unless otherwise indicated.
Section 9.4 Severability.
In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
Section 9.5 Governing Law.
The Plan shall be construed, administered and enforced according to the laws of the State of Delaware without giving effect to the conflict of laws principles thereof. By accepting any Award granted under this Plan, the Participant, and any other person claiming any rights under the Plan, agrees to submit himself or herself, and any such legal action as he or she shall bring under the Plan, to the sole jurisdiction of the courts of Delaware for the adjudication and resolution of any such disputes.
Section 9.6 Headings.
The headings of Articles and Sections are included solely for convenience of reference. If there is any conflict between such headings and the text of the Plan, the text shall control.
Section 9.7 Non-Alienation of Benefits.
The right to receive a benefit under the Plan shall not be subject in any manner to anticipation, alienation or assignment, nor shall such right be liable for or subject to debts, contracts, liabilities, engagements or torts.
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Section 9.8 Notices.
Any communication required or permitted to be given under the Plan, including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally or three (3) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below, or at such other address as one such party may by written notice specify to the other party:
(a) If to the Committee:
Provident Financial Holdings, Inc.
3756 Central Avenue
Riverside, California 92506
Attention: Corporate Secretary
(b) If to a Participant, to such person’s address as shown in the Company’s records.
Section 9.9 Plan and Awards Not Subject to Section 409A of the Code.
Notwithstanding anything herein to the contrary, it is intended that neither the Plan nor any Award granted hereunder provide compensation or benefits in the nature of deferred compensation subject to Section 409A of the Code. The Plan and all Awards shall be administered, operated and interpreted accordingly. By accepting any Award hereunder, a Participant hereby voluntarily waives any claim against the Company for any violation of Section 409A of the Code that occurs in good faith.
Section 9.10 Approval of Shareholders.
The Plan shall be subject to approval by the Company’s shareholders within twelve months before or after the date the Board adopts the Plan.
Section 9.11 Clawback.
All Awards (whether vested or unvested) shall be subject to such clawback (recovery) as may be required to be made pursuant to law, rule, regulation or stock exchange listing requirement or any policy of the Company adopted pursuant to any such law, rule, regulation or stock exchange listing requirement.
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IMPORTANT ANNUAL MEETING INFORMATION | VOTE
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| Electronic Voting InstructionsYour vote matters - here's how to vote!
Available 24 hours a day, 7 days a week!
InsteadYou may vote online or by phone instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.this card.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 3:00 a.m., Eastern Time, on November 28, 2017.
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2022 Annual Meeting Proxy Card | |
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A Proposals — The Board of Directors recommends a vote FOR all the nominees listed, and FOR Proposals 2, 3 and 4. |
1. Election of Directors:
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| For | Withhold | | For | Withhold | | | For
| Withhold
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01 - Bruce W. Bennett
| [ ] | [ ] | 02 - Debbi H. Guthrie
| [ ] | [ ] | | 03 - Kathy M. Michalak | [ ] | [ ] | | | | |
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A — Proposals — The Board of Directors recommends a vote FOR all the nominees listed, FOR Proposals 2 and 4, and for 1 YEAR for Proposal 3.
| For | Against | Abstain | | For | Against | Abstain |
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2. Advisory approval of the compensation of our named executive
officers as disclosed in the Proxy Statement.
| [ ] | [ ] | [ ] | 3. Adoption of the Provident Financial Holdings, Inc. 2022 Equity Incentive Plan
| [ ] | [ ] | [ ] | |
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1. Election of Directors: | For
| Withhold
| | For | Withhold
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01 - Craig G. Blunden | o | o | 02 - Roy H. Taylor | o | o | | | | |
| For | Against | Abstain | | 1 Year | 2 Years | 3 Years | Abstain |
2. The approval on an advisory (non-binding) basis of our executive compensation as disclosed in the Proxy Statement. | o | o | o | 3. Advisory (non-binding) vote on how often shareholders shall vote on executive compensation. | o | o | o | o |
4. The ratificationRatification of the appointment of Deloitte & Touche, LLP as the independent auditorregistered public accounting firm for Provident Financial Holdings, Inc. for the fiscal year ending June 30, 2018.2023. | £ [ ]
| £ [ ]
| £ [ ]
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B — Non-Voting Items
Change of Address — Please print your new address below. | Comments — Please print your comments below. | |
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box to the right if you plan to [ ]
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| | | attend the Annual Meeting. |
C —B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
Please sign exactly as your name appears on the enclosed card. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder should sign.
Date (mm/dd/yyyy) — Please print date below. | | Signature 1 — Please keep signature within the box. | | Signature 2 — Please keep signature within the box. |
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The 2022 Annual Meeting of Shareholders of Provident Financial Holdings, Inc. will be held on
Tuesday, November 29, 2022, 11:00 A.M. Pacific Time, virtually via the internet at https://meetnow.global/MVVYCLN
To access the virtual meeting, you must have the information that is printed in the shaded bar
located on the reverse side of this form.
Annual Meeting Materials are available
at: http://www.investorvote.com/provwww.edocumentview.com/PROV
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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | REVOCABLE PROXY — PROVIDENT FINANCIAL HOLDINGS, INC. |
REVOCABLE PROXY — PROVIDENT FINANCIAL HOLDINGS, INC.
2022 ANNUAL MEETING OF SHAREHOLDERS
November 28, 201729, 2022
11:00 a.m.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors of Provident Financial Holdings, Inc. (“Provident”) with full powers of substitution to act as attorneys and proxies for the undersigned, to vote all shares of Provident common stock which the undersigned is entitled to vote at the Annual Meeting of Shareholders, to be held at the Riverside Art Museum, located at 3425 Mission Inn Avenue, Riverside, California, on Tuesday, November 28, 2017,29, 2022, at 11:00 a.m., local time,Pacific Time, and at any and all adjournments thereof, as follows:
The Board of Directors recommends a vote FOR the election of the nominees listed in Proposal 1, FOR Proposals 2 and 4, and for ONE YEAR for Proposal 3.all propositions.
This proxy also provides voting instructions to the Trustees of the Provident Savings Bank, F.S.B. Employee Stock Ownership Plan for participants with shares allocated to their accounts.
This proxy will be voted as directed, but if no instructions are specified, this proxy will be voted FOR the election of the nominees listed in Proposal 1, and FOR Proposals 2, 3 and 4, and for ONE YEAR for Proposal 3.4. If any other business is presented at such meeting, this proxy will be voted by the Board of Directors in its best judgment. At the present time, the Board of Directors knows of no other business to be presented at the annual meeting. This proxy also confers discretionary authority on the Board of Directors to vote with respect to the election of any person as director where the nominees are unable to serve or for good cause will not serve and matters incident to the conduct of the Annual Meeting.annual meeting.
Should the above-signed be present and elect to vote at the Annual Meetingvirtual annual meeting or at any adjournment thereof and after notification to the Secretary of Provident at the Annual Meetingannual meeting of the shareholder's decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.
The above-signed acknowledges receipt from Provident prior to the execution of this proxy of the Notice of Annual Meeting of Shareholders, a Proxy Statement dated October 25, 201727, 2022, and the 20172022 Annual Report to Shareholders.
PLEASE PROVIDE YOUR INSTRUCTIONS TO VOTE BY TELEPHONE OR THE INTERNET OR
COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
(Continued, and to be marked, dated and signed, on the other side)
Change of Address — Please print new address below. | Comments — Please print your comments below. |
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IMPORTANT ANNUAL MEETING INFORMATION | VOTE | |
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Using a black ink pen, mark your votes with an X as shown in this example. [X] |
Please do not write outside the designated areas. |
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2022 Annual Meeting Proxy Card |
PLEASE FOLD ALONG THE PERFORATION,IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A — Proposals — The Board of Directors recommends a vote FOR all the nominees listed, and FOR Proposals 2, 3 and 4. |
1. Election of Directors:
| | | | | | | | | |
| For | Withhold | | For | Withhold | |
| For | Withhold |
01 - Bruce W. Bennett
| [ ] | [ ] | 02 - Debbi H. Guthrie
| [ ] | [ ] | | 03 - Kathy M. Michalak | [ ] | [ ] | | | | | | | |
| | | | | | | | | |
A — Proposals — The Board of Directors recommends a vote FOR all the nominees listed, FOR Proposals 2 and 4, and for 1 YEAR for Proposal 3.
1. Election of Directors: | For | Withhold | | For | Withhold | | | | |
01 - Craig G. Blunden | o | o | 02 - Roy H. Taylor | o | o | | | | |
| For | Against | Abstain | | 1 YearFor | 2 Years | 3 YearsAgainst | Abstain |
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2. TheAdvisory approval on an advisory (non-binding) basis of the compensation of our named executive compensation
officers as disclosed in the Proxy Statement.
| o [ ] | o [ ] | o [ ] | 3. Advisory (non-binding) vote on how often shareholders shall vote on executive compensationAdoption of the Provident Financial Holdings, Inc. 2022 Equity Incentive Plan.
| o[ ] | o[ ] | o[ ] | o |
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4. The ratificationRatification of the appointment of Deloitte & Touche, LLP as the independent auditorregistered public accounting firm for Provident Financial Holdings, Inc. for the fiscal year ending June 30, 2018.2022. | £ | £ | £[ ]
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B — Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
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Please sign exactly as your name appears on the enclosed card. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder should sign.
Date (mm/dd/yyyy) — Please print date below. | | Signature 1 — Please keep signature within the box. | | Signature 2 — Please keep signature within the box. |
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Annual Meeting Materials are available
at: http://www.investorvote.com/provwww.edocumentview.com/PROV
PLEASE FOLD ALONG THE PERFORATION,
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | REVOCABLE PROXY — PROVIDENT FINANCIAL HOLDINGS, INC. |
REVOCABLE PROXY — PROVIDENT FINANCIAL HOLDINGS, INC.
2022 ANNUAL MEETING OF SHAREHOLDERS
November 28, 201729, 2022
11:00 a.m.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors of Provident Financial Holdings, Inc. ("Provident") with full powers of substitution to act as attorneys and proxies for the undersigned, to vote all shares of Provident common stock which the undersigned is entitled to vote at the Annual Meeting of Shareholders, to be held at the Riverside Art Museum, located at 3425 Mission Inn Avenue, Riverside, California, on Tuesday, November 28, 2017,29, 2022, at 11:00 a.m., local time,Pacific Time, and at any and all adjournments thereof, as follows:
The Board of Directors recommends a vote FOR the election of the nominees listed in Proposal 1, FOR Proposals 2 and 4, and for ONE YEAR for Proposal 3.all propositions.
This proxy also provides voting instructions to the Trustees of the Provident Savings Bank, F.S.B. Employee Stock Ownership Plan for participants with shares allocated to their accounts.
This proxy will be voted as directed, but if no instructions are specified, this proxy will be voted FOR the election of the nominees listed in Proposal 1, and FOR Proposals 2, 3 and 4, and for ONE YEAR for Proposal 3.4. If any other business is presented at such meeting, this proxy will be voted by the Board of Directors in its best judgment. At the present time, the Board of Directors knows of no other business to be presented at the annual meeting. This proxy also confers discretionary authority on the Board of Directors to vote with respect to the election of any person as director where the nominees are unable to serve or for good cause will not serve and matters incident to the conduct of the Annual Meeting.annual meeting.
Should the above-signed be present and elect to vote at the Annual Meetingvirtual annual meeting or at any adjournment thereof and after notification to the Secretary of Provident at the Annual Meetingannual meeting of the shareholder's decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.
The above-signed acknowledges receipt from Provident prior to the execution of this proxy of the Notice of Annual Meeting of Shareholders, a Proxy Statement dated October 25, 201727, 2022, and the 20172022 Annual Report to Shareholders.
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
(Continued, and to be marked, dated and signed, on the other side)