PRUDENTIAL BANCORP, INC.
At our annual meeting, shareholders will act upon the matters outlined in the attached notice of meeting consisting of the proposals to:
Broker non-votes are shares held by brokers or nominees as to which voting instructions have not been received from the beneficial owners or the persons entitled to vote those shares and the broker or nominee does not have discretionary voting power under rules applicable to broker-dealers. Under these rules, proposal one, the election of directors, proposal two, the non-binding proposal to approve the compensation of our named executive officers and proposal three, the advisory vote on the frequency of non-binding proposals to approve the compensation of our named executive officers areis not itemsan item on which brokerage firms may vote in their discretion on behalf of their clients if such clients have not furnished voting instructions.
Your broker may vote in his or her discretion on the ratification of the appointment of our independent registered public accounting firm if you do not furnish instructions.
Can I attend the meeting and vote my shares in person?at the annual meeting?
Due to the COVID-19 pandemic, the annual meeting is only being held virtually. All shareholders are invited to attend the annual meeting virtually. The meeting will be conducted as a live, audio-only webcast. You may register for the meeting upon receipt of the annual meeting materials. Upon registration you will be provided additional information on how to attend the annual meeting, including a password necessary to join the meeting. Shareholders of record can vote in personvirtually at the annual meeting. As a registered stockholder, you received a proxy card with this proxy statement. The proxy card contains instructions on how to register for the virtual annual meeting and includes your 15 digit control number. You will need your control number for voting.
Due to the decision to hold the annual meeting virtually, the focus of the meeting will be on the matters to be acted on at the meeting. You will be able to submit questions during the meeting only applicable to the matters to be acted on as well as vote during the meeting. Instructions for how to do so will be provided at the start of the annual meeting.
If your shares are held in “street name,” then you are not the shareholder of record and you must ask your broker or other nominee about how you can vote at the annual meeting.
Can I change my vote after I return my proxy card?
Yes. If you are a shareholder of record, there are three ways you can change your vote or revoke your proxy after you have sent in your proxy card.
First, you may complete and submit a new proxy card or vote over the Internet or by telephone before the annual meeting. Any earlier proxies will be revoked automatically.
| ● | First, you may complete and submit a new proxy card or vote over the Internet or by telephone before the annual meeting. Any earlier proxies will be revoked automatically. |
Second, you may send a written notice to our Corporate Secretary, Ms. Sharon M. Slater, Prudential Bancorp, Inc., 1834 West Oregon Avenue, Philadelphia, Pennsylvania 19145, in advance of the annual meeting stating that you would like to revoke your proxy.
| ● | Second, you may send a written notice to our Corporate Secretary, Ms. Sharon M. Slater, Prudential Bancorp, Inc., 1834 West Oregon Avenue, Philadelphia, Pennsylvania 19145, in advance of the annual meeting stating that you would like to revoke your proxy. |
Third, you may attend the annual meeting virtually and vote virtually at the annual meeting. Any earlier proxy will be revoked. However, attending the virtual annual meeting without voting virtually at the annual meeting will not revoke your proxy.
| ● | Third, you may attend the annual meeting and vote in person. Any earlier proxy will be revoked. However, attending the annual meeting without voting in person will not revoke your proxy. |
If your shares are held in street name and you have instructed a broker or other nominee to vote your shares, you must follow directions you receive from your broker or other nominee on how to change your vote.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a majority of votes that all shareholders are entitled to cast on a particular matter will constitute a quorum. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of votes considered to be present at the meeting.
WhatWhat are the Board of Directors’ recommendations?
The recommendations of the Board of Directors are set forth under the description of each proposal in this proxy statement. In summary, the Board of Directors recommends that you vote FOR the one nomineetwo nominees for director described herein, FOR the non-binding resolution to approve the compensation of our named executive officers, FOR EVERY THREE YEARS on the advisory vote on the frequency of the non-binding resolution to approve the compensation of our named executive officers and FOR ratification of the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2019.2021.
The proxy solicited hereby, if properly signed and returned to us and not revoked prior to its use, will be voted in accordance with your instructions. If no contrary instructions are given, each proxy signed and received will be voted in the manner recommended by the Board of Directors and, upon the transaction of such other business as may properly come before the annual meeting, in accordance with the best judgment of the persons appointed as proxies. Proxies solicited hereby may be exercised only at the annual meeting and any adjournment of the annual meeting and will not be used for any other meeting.
What vote is required to approve each item?
The election of directors will be determined by a plurality of the votes cast at the annual meeting. The one nomineetwo nominees for director receiving the most “For” votes will be the directordirectors for a three-year term expiring in 2022,2024, and until his successor istheir respective successors are elected and qualified. The affirmative vote of a majority of the votes cast by shareholders entitled to vote at the annual meeting is required for approval of the proposal to ratify the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2019 and to approve the non-binding resolution approving the compensation of our named executive officers. The frequency of the advisory vote on the non-binding resolution to approve the compensation of our named executive officers receiving the greatest number of votes (either every three years, every two years or every year) will be the frequency that shareholders approve.2021. Under the provisions of the Pennsylvania Business Corporation Law, abstentions and broker non-votes do not constitute votes cast and will not affect the vote required for the proposalsproposal to ratify the appointment of the independent registered public accounting firm and the non-binding resolution approving the compensation of our named executive officers.firm.
INFORMATION WITH RESPECT TO THE NOMINEE FOR DIRECTOR, CONTINUING DIRECTORS AND EXECUTIVE OFFICERS |
Election of Directors (Proposal One)
Our Articles of Incorporation provide that the Board of Directors shall be divided into three classes as nearly equal in number as possible. The directors are elected by our shareholders for staggered terms and until their successors are elected and qualified. Generally, one class is elected annually. At this annual meeting, you will be asked to elect one directortwo directors for a three-year term expiring in 20222024 and until his successor istheir respective successors are elected and qualified.
Our Nominating and Corporate Governance Committee has recommended the re-election of Mr. A.J. FanelliMessrs. John C. Hosier and Bruce E. Miller as a director.directors. No director is related to any other director or executive officer by blood, marriage or adoption. Shareholders are not permitted to use cumulative voting for the election of directors. Our Board of Directors has determined that Messrs. Fanelli, Hosier, Miller and Mulcahy are independent directors as defined in the Nasdaq Stock Market listing standards.
Unless otherwise directed, each proxy signed and returned by a shareholder will be voted for the election of the nomineetwo nominees for director listed below. If theany person named as a nominee should be unable or unwilling to stand for election at the time of the annual meeting,Annual Meeting, the proxies will nominate and vote for a replacement nominee or nominees recommended by our Board of Directors. At this time, the Board of Directors knows of no reason why either of the nomineenominees may not be able to serve as a director if elected.
The following tables present information concerning either of our two nominees for director and our continuing directors, all of whom also serve as directors of Prudential Bank.directors. Ages are reflected as of September 30, 2018.2020.
NomineeNominees for Director for Three-Year Term Expiring in 20222024
| | Age and Position with Prudential Bancorp and Principal Occupation During the Past Five Years | | |
John C. Hosier | | Director. Vice President with Montgomery Insurance Services, Inc., Media, Pennsylvania since 1986, and Commercial Lines Manager of its affiliate, Allman and Company, Inc., Fort Washington, Pennsylvania since 2007, two full-service insurance agencies. Mr. Hosier brings significant commercial business experience as well as knowledge of the local insurance market to the Board of Directors. Age 56. | | 2009 |
| | | | |
Bruce E. Miller | | Director and Chairman of the Board. President, Imaging Management Associates, operator of five magnetic resonance imaging centers located in Philadelphia, Pennsylvania and Chester and Delaware Counties, Pennsylvania since 2000. Mr. Miller brings significant business experience to the Board as a result of his successful operation of a number of small businesses as well as extensive knowledge of the local market area in which the Bank operates. Age 59. | | 2013 |
The Board of Directors recommends that you vote FOR election of our two nominees for director.
Members of the Board of Directors Continuing in Office
|
| Directors Whose Terms Expire in 2022
Age and Position with Prudential Bancorp and Principal Occupation During the Past Five Years | | |
A. J. Fanelli | | Director. Self-employed owner of a public accounting practice, Philadelphia, Pennsylvania. Mr. Fanelli brings substantial accounting knowledge to the Board of Directors as Chairman of the Audit Committee. Age 81.83. | | 2005 |
| | | | |
Raymond J. Vanaria | | Director. Member of the certified public accounting firm, Malesardi, Quackenbush, Swift & Company LLC, a firm he joined in 1983. Director of MSB Financial Corp., Millington, New Jersey, and its wholly owned subsidiary, Millington Bank, from January 2016 until July 2020. Director of ConnectOne Bancorp, Inc., Englewood Cliffs, New Jersey, and its wholly owned subsidiary, ConnectOne Bank, from July 2014 until January 2016. Prior to the merger of Center Bancorp, Inc. with ConnectOne Bancorp, Inc. in July 2014, served as Director of Center Bancorp, Inc., Union, New Jersey, and its wholly owned subsidiary, Union Center National Bank, commencing in 2007. Age 62 | | 2020 |
The Board of Directors recommends that you vote FOR election of our nominee for director.
Members of the Board of Directors Continuing in Office
Director Whose Term Expires in 2023
|
| DirectorsDirector Whose Terms ExpireTerm Expires in 2020
2023
Age and Position with Prudential Bancorp and Principal Occupation During the Past Five Years |
| |
| | | | |
Francis V. Mulcahy | | Director. Residential real estate appraiser and broker, Media, Pennsylvania.
Mr. Mulcahy brings substantial knowledge of the local real estate market to the Board of Directors. Age 85.
| | 2005 |
| | | | |
Dennis Pollack | | Director. President and Chief Executive Officer of Prudential Bancorp and Prudential Bank since May 2016. Former Chairman of the Board, PresidentPresilient Worldwide, Broomfield,Denver, Colorado, an information technology managed backup and infrastructure service provider, between 2011 and 2017. Director, SI Financial Group, Inc. Willimantic, Connecticut, and its wholly owned subsidiary, Savings Institute Bank and Trust Company, sincefrom February 2015;2015 to May 2019; previously served as a director of TF Financial, Inc., Newtown, Pennsylvania, from January 2012 until October 2013; also served as Chief Operating Officer of Paulson & Co., New York, New York, a hedge fund, from 2003-2006 and as President and Chief Executive Officer of the Connecticut Bank of Commerce from 1997-2000 as well as The Savings Bank of Rockland County from 1989-1996. Mr. Pollack brings to the Board the benefit of his substantial experience as president, chief executive officer and director of community banking organizations as well as significant knowledge of community bank lending. Age 68.70. | | 2014 |
| | Directors Whose Terms Expire in 2021
Age and Position with Prudential Bancorp and
Principal Occupation During the Past Five Years
| | |
| | | | |
John C. Hosier | | Director. Vice President with Montgomery Insurance Services, Inc., Media, Pennsylvania since 1986, and Commercial Lines Manager of its affiliate, Allman and Company, Inc., Fort Washington, Pennsylvania since 2007, two full-service insurance agencies.
Mr. Hosier brings significant commercial business experience as well as knowledge of the local insurance market to the Board of Directors. Age 54.
| | 2009 |
| | | | |
Bruce E. Miller | | Director and Chairman of the Board. President, Imaging Management Associates, operator of five magnetic resonance imaging centers located in Philadelphia, Pennsylvania and Chester and Delaware Counties, Pennsylvania since 2000.
Mr. Miller brings significant business experience to the Board as a result of his successful operation of a number of small businesses as well as extensive knowledge of the local market area in which the Bank operates. Age 57.
| | 2013 |
Committees and Meetings of the Board of Directors
During the fiscal year ended September 30, 2018,2020, the Board of Directors of Prudential Bancorp met 1213 times, including one special meetings.meeting. No director of Prudential Bancorp attended fewer than 75% of the aggregate of the total number of Board meetings held during the period for which he has been a director and the total number of meetings held by all committees of the Board on which he served during the periods that he served.
Membership on Certain Board Committees. The Board of Directors of Prudential Bancorp has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each of the committees operates in accordance with a written charter which is available on our website at www.prudentialsavingsbank.com.www.psbanker.com. The following table sets forth the membership of such committees as of the date of this proxy statement.
Directors | | Nominating and Corporate Governance | | Compensation | |
Compensation Audit
|
A. J. Fanelli | |
Audit
|
A. J. Fanelli | | * | | * | | ** |
John C. Hosier | | ** | | ** | | * |
Bruce E. Miller | | * | | ** | | * |
Francis V. Mulcahy Bruce E. Miller | | * | | * | | * |
___________________
_____________________
* Member
** Chairman
Audit Committee. The Audit Committee reviews with management and the independent registered public accounting firm the systems of internal control, reviews the annual financial statements, including the Annual Report on Form 10-K, and monitors Prudential Bancorp’s adherence in accounting and financial reporting to generally accepted accounting principles. The Audit Committee is comprised of fourthree directors, each of whom is an independent director as defined in the Nasdaq Stock Market listing standards and the rules and regulations of the Securities and Exchange Commission. The Board of Directors has determined that Mr. Fanelli meets the definition of Audit Committee financial expert, as such term is defined in the rules of the Securities and Exchange Commission. In addition, each of the other members of the Audit Committee has had significant involvement in financial matters. The Audit Committee met fivefour times in fiscal 2018.2020.
Compensation Committee. It is the responsibility of the Compensation Committee of the Board of Directors to, among other things, oversee Prudential Bancorp’s compensation and incentive arrangements for management. No member of the Compensation Committee is a current or former officer or employee of Prudential Bancorp, Prudential Bank or any subsidiary and all members are independent as defined in the Nasdaq Stock Market listing standards. Each of the members is independent as defined in the Nasdaq Stock Market listing standards. The Compensation Committee held fivethree meetings in fiscal 20182020 to consider management compensation matters.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee reviews and makes nominations for the Board of Directors, which are then sent to the full Board of Directors for their ratification. Each of the members is independent as defined in the Nasdaq Stock Market listing standards. The Nominating and Corporate Governance Committee met oncetwice in fiscal 20172020; once to review and recommend Mr. Vanaria for appointment to the Board and once to select nomineesthe nominee for the 2018 Annual Meeting and2020 annual meeting of shareholders; the Committee has net once so far in fiscal 20192021 to select the nominees to be presented at this annual meeting.
Board Leadership Structure
Mr. Pollack serves as our President and Chief Executive Officer and Mr. Bruce E. Miller serves as Chairman of the Board. The board of directors has determined that the separation of the offices of Chairman of the Board and President enhances board independence and oversight. Further, the separation of the Chairman of the Board permits the President and Chief Executive Officer to better focus on his responsibilities on managing the daily operations of the Company, enhancing shareholder value and expanding and strengthening our franchise while allowing the Chairman to lead the board of directors in its fundamental role of providing independent oversight and advice to management. The Chairman also serves as a liaison between the Board of Directors and executive management. Mr. Miller is an independent director under the rules of the Nasdaq Stock Market.
Board’s Role in Risk Oversight
Risk is inherent with every business, particularly financial institutions. We face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputational risk. Management is responsible for the day-to-day management of the risks that Prudential Bancorp faces, while the Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors ensures that the risk management processes designed and implemented by management are adequate and functioning as designed.
One of our current senior executive officers, Mr. Pollack, serves on our Board of Directors. Other members of our senior management regularly attend meetings of the Board of Directors and are available to address any questions or concerns raised by the Board of Directors on risk management or other matters. Prudential Bank has established an Asset-Liability Committee, a Loan Quality Committee, a Management Loan Committee and an Investment Committee composed of members of senior management. The independent directors work together to provide strong, independent oversight of Prudential Bancorp’s management and affairs.
Director Independence
A majority of our directors are “independent” as defined in the rules of the Nasdaq Stock Market. Our Board of Directors has determined that Messrs. Fanelli, Hosier, Miller and Vanaria are independent directors.
Directors’ Attendance at Annual Meetings
Directors are expected to virtually attend the Annual Meetingannual meeting of Shareholdersshareholders absent a valid reason for not doing so. All of our directors attended the Annual Meetingannual meeting of Shareholdersshareholders held in February 2018.2020.
Directors’ Compensation
The following table sets forth certain information regarding the compensation paid to our non-employee directors during fiscal year 2018.2020. Mr. Pollack, our President and Chief Executive Officer, is included in the Summary Compensation Table set forth in the section “Management Compensation.”
| | Fees Earned or Paid in Cash | | | | | | | | | | | | | | | Fees Earned or Paid in Cash | | | | | | | | | | | | | |
A. J. Fanelli | | $ | 57,166 | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | 57,166 | | | $ | 66,750 | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | 66,750 | |
John C. Hosier | | 53,750 | | | -- | | | -- | | | -- | | | 53,750 | | | 61,750 | | | -- | | | -- | | | -- | | | 61,750 | |
Bruce E. Miller | | 78,250 | | | -- | | | -- | | | -- | | | 78,250 | | | 91,750 | | | -- | | | -- | | | -- | | | 91,750 | |
Francis V. Mulcahy | | 41,500 | | | -- | | | -- | | | -- | | | 41,500 | | |
Raymond J. Vanaria(1) | | | 2,500 | | | -- | | | 17,325 | (2) | | | | | 19,825 | |
| | | | | | | | | | | | | | | | |
_______________________
(1) | Mr. Vanaria was appointed to the Board of Directors effective August 19, 2020. |
(2) | Reflects the grant of options covering 7,500 shares at an exercise price of $10.00 per share. The options vest pro rata over a period of five years starting September 14, 2021. |
We do not pay separate compensation to directors for their service on the Board of Directors of Prudential Bancorp except for Mr. Vanaria who only serves on the board of Prudential Bancorp. Directors who are employees do not receive compensation for service on the board. For fiscal 2018,2020, members of Prudential Bank’s Board of Directors received an annual retainer of $28,200.$30,000. For fiscal 2019,2021, the annual retainer will increase to $30,000,remain the first increase in four years.same. Mr. Vanaria receives a retainer of $10,000 per year for service on the Board of Directors of Prudential Bancorp. Members also received $2,350 per special meeting attended. For fiscal 2018,2021, special meeting fees will remain the same as for fiscal 2020. For fiscal 2021, members of the Audit Committee, Executive Committee (other than Mr. Pollack) and the Compensation Committee received fees of $900$1,200 per meeting attended. Such fees will increase to $1,200 per meeting attendedremain the same for fiscal 2019, also the first increase in such fees in four fiscal years.2021. As Chairman of the Audit Committee, Mr. Fanelli received an annual retainer of $16,000 in fiscal 2018, which increased to $20,000 for fiscal 2019.2020, which retainer will remain the same for fiscal 2021. As Chairman of the Compensation Committee for fiscal 2018,2020, Mr. Hosier received an annual retainer of $12,000.$15,000. The Compensation Committee chair retainer was increased to $15,000will remain the same for fiscal 2019.2020. Mr. Miller, as Chairman of the Board, received an annual retainer for such service for fiscal 20182020 in the amount of $36,000, which was increased to $45,000 for$45,000. For fiscal 2019.2021, Mr. Miller’s retainer will remain the same. Board fees are subject to periodic adjustment by the Board of Directors. For
No equity awards were made to non-employee directors during fiscal 2019, the special meeting fees will remain the same as2020 except for fiscal 2018.a grant of stock options to Mr. Vanaria.
Compensation Committee Interlocks and Insider Participation
Determinations regarding compensation of our President and Chief Executive Officer, our senior management and our employees are reviewed and approved by Prudential Bancorp’s Compensation Committee. Messrs. Fanelli, Hosier, who is the Committee’s Chairman, Miller and Mulcahy,Miller currently serve as members of the Compensation Committee.
No person who served as a member of the Compensation Committee during fiscal 20182020 was a current or former officer or employee of Prudential Bancorp or Prudential Bank or engaged in certain transactions with Prudential Bancorp or Prudential Bank required to be disclosed by regulations of the Securities and Exchange Commission. Additionally, there were no Compensation Committee “interlocks” during fiscal 2018,2020, which generally means that no executive officer of Prudential Bancorp served as a director or member of the compensation committee of another entity, one of whose executive officers served as a director or member of Prudential Bancorp’s Compensation Committee.
Director Nominations
Recommendations for nominations of persons to serve as directors of Prudential Bancorp are made by the Nominating and Corporate Governance Committee of the Board of Directors and are approved by the entire Board. The Board of Directors adopted a written charter of the Nominating and Corporate Governance Committee which is available on our website at www.psbanker.com. The charter sets forth certain criteria the committeeCommittee may consider when recommending individuals for nomination including:
● | ensuring that the Board of Directors, as a whole, is diverse by considering: |
ensuring that the Board of Directors, as a whole, is diverse (including diversity of race, gender, ethnicity, education and age) by considering:
o | individuals with various and relevant career experience; |
o | relevant technical skills; |
o | industry and/or other specialized knowledge and experience; |
o | knowledge of and commitment to the communities served by Prudential Bancorp; |
o | financial expertise (including expertise that could qualify a director as a “financial expert,” as that term is defined by the rules of the Securities and Exchange Commission); |
o | local or community ties; and |
minimum individual qualifications, including:
o | local or community ties; andstrength of character; |
● | minimum individual qualifications, including: |
o | strength of character;integrity; |
o | mature judgment;leadership; |
o | familiarity with our business and industry; |
o | independence of thought;willingness to commit the necessary time required for Board and committee memberships; |
o | independence of thought; and |
o | an ability to work collegially. |
The committeeCommittee also may consider the extent to which the candidate would fill a present need on the Board of Directors.
The Nominating and Corporate Governance Committee will also consider candidates for director suggested by other directors, as well as our management and shareholders. A shareholder who desires to recommend a prospective nominee for the Board should notify our Secretary or any member of the Nominating and Corporate Governance Committee in writing with whatever supporting material the shareholder considers appropriate. Any shareholder wishing to make a nomination must follow our procedures for shareholder nominations, which are described under “Shareholder Proposals, Nominations and Communications with the Board of Directors.”
Executive Officers Who Are Not Also Directors
Set forth below is certain information with respect to current executive officers of Prudential Bancorp and its subsidiaries who are not directors. Ages are reflected as of September 30, 2018.2020.
|
| Age and Principal Occupation During the Past Five Years | |
| | | |
Kevin GallagherAnthony V. Migliorino | | Senior Vice President and Chief Lending Officer since January 1, 2017. Mr. Gallagher served as Chief Lending Officer of Polonia Bank, Huntingdon Valley, Pennsylvania, from November 2015 until completion of the merger of Polonia Bank with and into Prudential Bank on January 1, 2017. From June 2015 to November 2015, he served as Senior Lending Manager of Polonia Bank. From 2013 until June 2015, Mr. Gallagher was a banking consultant providing contractual consulting services focused on commercial lending. Mr. Gallagher previously served as President and CEO of Huntingdon Valley Bank from 2010 until January 2013. Prior to Huntingdon Valley Bank, Mr. Gallagher served as the chief lending officer at several banks, including Continental Bank, First Penn Bank and Republic Bank. Age 62.
| |
Name | | Age and Principal Occupation During the Past Five Years |
| | |
Anthony V. Migliorino | | Executive Vice President and Chief Operating Officer of Prudential Bank since September 2015; from July 2015 until September 2015 served as Senior Vice President-Retail Business Development Officer. From September 2000 to September 2014, Mr. Migliorino served in various positions at Sterling National Bank, New York, New York, including Senior Vice President of Branch Banking. Prior to 2000, Mr. Migliorino served as a senior officer at several financial institutions including Stissing National Bank Pine Plains, New York and Savings Bank of Rockland County, Spring Valley, New York.County. Age 63.65. |
| | |
Robert E. Pollard | | Vice President and Controller of Prudential Bancorp and Prudential Bank since November 2017. Prior thereto, Mr. Pollard served as Assistant Controller of First Choice Bank, Kingston, New Jersey from March 2014 to March 2017 and as Controller of First Bank of Delaware, Philadelphia, Pennsylvania, from 2002 until June 2013. Age 61.63. |
| | |
Jack E. Rothkopf | | Senior Vice President, Chief Financial Officer and Treasurer of Prudential Bancorp and Prudential Bank since June 2015; Senior Vice President and Treasurer of Prudential Bancorp from June 2013 until June 2015 and of Prudential Bank from April 2013 until June 2015; from January 2006 to April 2013, served as Vice President and Controller. Prior thereto, Mr. Rothkopf served as Assistant Vice President of Popular Financial Holdings, Marlton, New Jersey from October 2000 to January 2006. Age 55.57. |
REPORT OF THE AUDIT COMMITTEE |
The Audit Committee has reviewed and discussed together with management and Prudential Bancorp’s independent registered public accounting firm, S.R. Snodgrass, P.C., Prudential Bancorp’s audited financial consolidated statements and the results of management’s assessment of the effectiveness of Prudential Bancorp’s internal control over financial reporting and the independent registered accounting firm’s audit of internal control over financial reporting.statements. The Audit Committee hasalso discussed with Prudential Bancorp’s independent registered public accounting firm, S.R. Snodgrass, P.C., the matters required to be discussed under Public Company Accounting Oversight Board Auditing Standard No. 16, Communication with Audit Committees. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board under Rule 3526 regarding S.R. Snodgrass, P.C.’s communications with the Audit Committee concerning its independence and the Committee has discussed with S.R. Snodgrass, P.C. its independence. In reliance on the reviews and discussions referred to above in this report, the Audit Committee recommended to the Board of Directors that the audited financial statements and management’s assessment of the effectiveness of Prudential Bancorp’s internal control over financial reporting be included in Prudential Bancorp’s Annual Report on Form 10-K for fiscal year 20182020 filed with the Securities and Exchange Commission.
Members of the Audit Committee
A. J. Fanelli, Chairman
John C. Hosier
Bruce E. Miller
Francis V. Mulcahy
Summary Compensation Table
The following table summarizes the total compensation paid by Prudential Bank (including amounts deferred, if any, to future periods by the officers) for services rendered in all capacities during the fiscal years ended September 30, 20182020 and 20172019 to the principal executive officer and the two other most highly compensated executive officers of Prudential Bank during fiscal 20182019 whose total compensation exceeded $100,000, collectively referred to as our “named executive officers.” The Company has not paid separate cash compensation to our officers.
Name and Principal Position | | Fiscal | | | | | | | | | | | | Option | | | | | | | |
Dennis Pollack President and Chief Executive Officer | | | 2018 2017 | | | $
| 398,375 367,593 | | | $
| 200,000 135,000 | | | $
| 230,750 -- | | | $
| 290,400 -- | | | $
| 33,151 9,750 | | | $
| 1,152,676 512,343 | |
Anthony V. Migliorino Executive Vice President and Chief Operating Officer | | | 2018 2017 | | | | 281,538 263,077 | | | | 130,000 84,006 | | | | 138,450 -- | | | | 163,350 -- | | | | 8,371 47,869(4 | ) | | | 721,709 394,946 | |
Kevin Gallagher(5) Senior Vice President and Chief Lending Officer | | | 2018 2017 | | | | 160,462 111,154 | | | | 20,000 5,000 | | | | 55,380 -- | | | | 108,900 31,800 | | | | 4,324 -- | | | | 349,066 147,954 | |
Name and Principal Position | | Fiscal | | | | | | | | | | | | Option | | | All Other Compensation(3) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Dennis Pollack President and Chief Executive Officer | | | 2020 2019 | | | $ | 462,289 403,847 | | | $ | 275,000 250,000 | | | $ | -- -- | | | $ | -- 40,056 | | | $ | 43,072 33,972 | | | $ | 780,361 727,875 | |
Anthony V. Migliorino Executive Vice President and Chief Operating Officer | | | 2020 2019 | | | | 347,668 295,769 | | | | 200,000 180,000 | | | | -- -- | | | | -- 40,056 | | | | 12,740 14,600 | | | | 560,408 530,425 | |
Jack E. Rothkopf Senior Vice President and Chief Financial Officer | | | 2020 2019 | | | | 189,769 184,961 | | | | 15,000 10,000 | | | | -- -- | | | | -- 11,830 | | | | 7,833 7,221 | | | | 212,602 214,023 | |
______________________________________
(1) | Represents discretionary bonuses earned in each fiscal year reflected and which were paid, with respect to fiscal years 20182020 and 2017,2019, prior to the end of fiscal year. Bonuses were discretionarily determined based on Company performance as well as individual performance. |
(2) | Reflects the grant date fair value in accordance with FASB ASC Topic 718 for awards of restricted stock and stock options that were granted during fiscal year 2018 and fiscal year 2017. The valuation of the restricted stock awards granted in fiscal year 2018 is based on a grant date fair value of $18.46 per share.2019. The assumptions used in valuing the stock option awards granted in fiscal year 2018 and fiscal year 20172019 are set forth in Note 13 to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended September 30, 2018.2020. |
(3) | Includes for fiscal 20182020 an automobile allowance ($9,750) and club dues ($16,000)16,500) for Mr. Pollack.Pollack, both of which are used in connection with Mr. Pollack’s duties. Also includes the amount of the matching contribution under the Bank’s 401(k) plan for fiscal 20182020 for each of the named executive officers. |
(4) | Includes the fair market value on December 31, 2016 of the 2,796 shares allocated for plan year 2016 to the employees stock ownership plan (“ESOP”) account of Mr. Migliorino based on a value of $17.12 per share on December 30, 2016 (last trading day of 2016). As of such date, Messrs. Gallagher and Pollack were not participants in the ESOP. The ESOP was terminated effective December 31, 2016. |
(5) | Mr. Gallagher was appointed Senior Vice President and Chief Lending Officer effective January 1, 2017. Consequently, Mr. Gallagher’s salary data for fiscal 2017 only reflects nine months of salary. |
Narrative to Summary Compensation Table
Base salaries as well as bonuses, if any, for our named executive officers (as well as all other executive officers) are determined and approved by the Compensation Committee. The Compensation Committee, in its role as the administrator of the Company’s stock benefit plans, also determines whether to award equity incentive awards and if so, the amount and form of such awards (stock options and/or restricted share awards). In accordance with the Committee’s practices and procedures, the Committee annually reviews executive officers’ compensation in order to address appropriate adjustments, if any, to such persons’ base compensation as well as to consider awarding bonuses to such officers. Consistent with the methodology initially adopted in connection with the annual compensation reviews conducted in fiscal yearsyear 2016, and 2017, the analysis of potential bonuses consists of an assessment by the Compensation Committee both of the Company’s overallconsolidated financial performance over the past year or more, as appropriate, as well as the performance of the individual officer under consideration. With respect to executive officers, especially the named executive officers, the Committee determined that individual performance and its effect on the Company’s performance is still the most relevant factor to be considered in determining both salary adjustments and bonus awards. Consistent with the revised methodology the Committee initially adopted in August 2016, the Committee reaffirmed its determination that years of service is not considered a relevant factor for purposes of analyzing potential adjustments to the compensation of executive officers’ salaries and bonuses. In addition, in connection with its deliberations, the Committee considered a number of factors including the previous salary adjustments effected in fiscal years 2016, 2017, 2018 and 20172019 and the level of bonuses awarded in such years, in particular with respect to bonuses, the level of bonuses awarded in both fiscal 2017.2018 and fiscal 2019. The Committee also analyzed the appropriateness of the level of current salaries of the Company’s executive officers, especially when reviewed in light of peer group data.
As a result of the foregoing considerations, modest adjustments to each of the named executive officer’s salary in the range of 2%1.6% to 3%14.3% were deemed appropriate in light of both such officers’ performances over the past fiscal year and the role they played in the Company’s significantly improvedcontinued strong operational performance.performance especially in light of the challenges created by the COVID-19 pandemic. Furthermore, in keeping with the Committee’s philosophy to maintain flexibility with regard to compensation and to reward exceptional performance, the Committee determined to recognize and reward the various executive officers’ roles in the Company’s materially improved performance through the use of bonuses rather than significant upward adjustments of salaries. Consequently, the Compensation Committee established salaries for fiscal 20192021 for Messrs. Pollack, Migliorino and GallagherRothkopf of $400,000, $290,000$480,000, $365,000 and $164,000,$193,000, respectively, which amounted to increases of 3%14.3%, 14.1% and 1.6%, respectively, for each of such officers. In addition, discretionary bonuses amounting to $275,000, $200,000 $130,000 and $20,000$15,000 were awarded to Messrs. Pollack, Migliorino and Gallagher,Rothkopf, respectively, based on Prudential Bancorp’s materially improvedcontinued strong performance during fiscal 20182020 and the individual officer’s roles in producing such improved performance.
The Compensation Committee determined to not grant any equity awards (stock options or restricted stock awards) to named executive officers during fiscal 2020, in light of, among other things, the challenges facing Prudential Bancorp in light of the COVID-19 pandemic as well as the level of prior equity grants. During fiscal years 2019 and 2018, the Compensation Committee granted equity awards to the named executive officers as well as to other officers. DuringUntil fiscal 2017,2018, after the Committee had determined to only address cash compensation (salaries and bonuses), postponing considering potential equity grants to senior management until at least the Company’s fiscal 2017 operating results were available since the amounts and composition of such awards are very much related to the Company’s performance. Furthermore, a number of the senior officers, including Mr. Pollack, had not served for the entire 2016 fiscal year and thus the Committee wanted to have the benefit of the results of fiscal 2017 operating performance as part of its review of the potential for equity grants to such persons. Since theinitial grant of equity awards in February 2015 shortly after receipt of shareholder approval of the 2014 Stock Incentive Plan (“2014 SIP”), subsequent equity awards had subsequently been used on a case-specific basis generally to reflect either the recent hiring of an executive officer or in connection with the promotion of an executive officer. However, in light of the Company’s significant improvement in profitability during fiscal years 2016, 2017 and 2017,2018, which continued in fiscal 2018,2019, which improvement reflected the efforts of senior management, in particular, the President and Chief Executive Officer and the Executive Vice President and Chief Operating Officer, the Committee, determined in March 2018July 2019 to award grants of equity to Messrs. Pollack, Migliorino and Gallagher.Rothkopf, taking into consideration the significant grants that had been made to such officers in March 2018. Accordingly, stock options, incentive stock options to the extent possible, covering 80,000, 45,00011,851, 11,851 and 30,0003,500 shares were awarded to Messrs. Pollack, Migliorino and Gallagher,Rothkopf, respectively. In addition,No grants of restricted stock awards were made to the named executive officers in the amounts of 12,500, 7,500 and 3,000 shares were also awarded to Messrs. Pollack, Migliorino and Gallagher, respectively.fiscal 2019. All of such awards, boththe stock options and restricted stock awards,granted in fiscal 2019 vest pro rata at the rate of 20% per year commencing in March 2019.July 2020.
At the annual meeting of stockholders of Prudential Bancorp held on February 11, 2013,20, 2019, the stockholdersshareholders recommended, on an advisory basis, that future advisory votes on executive compensation should be held every three years. Consistent with the stockholdershareholder recommendation, the Board of Directors of the Company determined that it will hold an advisory vote on executive compensation every three years. The next advisory vote on the compensation of the named executive officers is beingwill be presented at thisthe annual meeting as describedto be held in this proxy statement.2022. Prudential Bancorp is required to hold stockholdershareholder advisory votes on the frequency interval every six years. As a consequence, at this annual meeting stockholders are being asked to consider the frequency of such advisory votes on executive compensation.