UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to SectionPROXY STATEMENT PURSUANT TO SECTION 14(a) of the SecuritiesExchange Act ofOF THE SECURITIES EXCHANGE ACT OF 1934 (Amendment
(Amendment No. )
| Filed by the Registrant | | Filed by a Party other than the Registrant |
| Check the appropriate box: | |
| Preliminary Proxy Statement |
| Confidential, for Use of the Commission Only (as permitted by Rule |
| Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material |
PROVIDENT FINANCIAL SERVICES, INC.
(Name of Registrant as Specified Inin Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| Payment of Filing Fee (Check | |
| No fee required. |
| Fee paid previously with preliminary materials. |
| Fee computed on table |
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| |
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| 239 Washington Street Jersey City, New Jersey | ||
Dear Fellow Stockholder:
I am pleased to invite you to attendparticipate in the 20192022 Annual Meeting of Stockholders of Provident Financial Services, Inc., which will be held virtually on Thursday, April 25, 2019,28, 2022, at 10:00 a.m., local time, attime. The virtual meeting platform provides for the Renaissance Woodbridge Hotel, 515 U.S. Highway 1 South, Iselin, New Jersey.safe execution of the Annual Meeting in the continuing COVID-19 environment. Information on how you can participate in the virtual Annual Meeting can be found on page 65 of the proxy statement.
At our Annual Meeting you will be asked to elect four directors, approve on an advisory (non-binding) basis the compensation paid to our named executive officers, approve the 2019 Long-Term Equity Incentive Plan, and ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2019.2022.
Your vote is very important regardless of the number of shares you own. Whether or not you plan to attendparticipate in the Annual Meeting, I encourage you to promptly submit your vote by Internet, telephone or mail, as applicable, to ensure that your shares are represented at our Annual Meeting.
On behalf of the board of directors, officers and employees of Provident Financial Services, Inc., we thank you for your continued support and look forward to seeing you at our Annual Meeting.support.
Sincerely,
Christopher Martin
Chairman, President and Chief Executive OfficerChairman
March 15, 201918, 2022
| Table | |
| of Contents | |
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Annual Meeting
of Stockholders
Virtual Meeting Information
THURSDAY, APRIL 25, 201928, 2022
10:00 a.m., Local Time
Renaissance Woodbridge Hotel
515 U.S. Highway 1 South, Iselin, New Jerseywww.virtualshareholdermeeting.com/PFS2022
NOTICE IS HEREBY GIVEN THAT the 20192022 Annual Meeting of Stockholders of Provident Financial Services, Inc. will be held at the Renaissance Woodbridge Hotel, 515 U.S. Highway 1 South, Iselin, New Jersey,in a virtual format on Thursday, April 25, 2019,28, 2022, at 10:00 a.m., local time, to consider and vote upon the following matters:
| 1. | The election of four |
| 2. | An advisory (non-binding) vote to approve the compensation paid to our named executive officers. |
| 3. | |
| The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, | |
| The transaction of such other business as may properly come before the Annual Meeting, and any adjournment or postponement of the Annual Meeting. |
The board of directors of Provident Financial Services, Inc. established March 1, 20192022 as the record date for determining the stockholders who are entitled to notice of, and to vote at the Annual Meeting, and any adjournment or postponement of the Annual Meeting.
You may participate in the virtual Annual Meeting via the internet at www.virtualshareholdermeeting.com/ PFS2022 by using the 16-digit control number included on your proxy card, voting instruction form or notice received by you.
Your vote is very important. Please submit your proxy as soon as possible via the Internet, telephone or mail, as applicable.Stockholders of record who attendparticipate in the Annual Meeting may vote in person,electronically, even if they have previously mailed or delivered a signed proxy or voted by Internet or telephone.
By orderOrder of the Board of Directors
John Kuntz, Esq.
Corporate Secretary
Jersey City, New JerseyMarch 15, 2019
Review your proxy statement and vote in one of four ways: | |||
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INTERNET | BY TELEPHONE | BY MAIL | DURING THE ANNUAL MEETING |
| Visit the website on your proxy card |
Call the telephone number
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Sign, date and return card in the |
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| Please refer to the enclosed proxy materials or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you. | |||
| PROVIDENT FINANCIAL SERVICES, INC. | | | |||
InternetAvailability of Proxy Materials
We are relying upon a U.S. Securities and Exchange Commission rule that allows us to furnish proxy materials to stockholders overvia the Internet. As a result, beginning on or about March 15, 2019,18, 2022, we sent by mail or e-mail a Notice Regarding the Availability of Proxy Materials containing instructions on how to access our proxy materials, including our Proxy Statement and Annual Report to Stockholders, overvia the Internet and how to vote. Internet availability of our proxy materials is designed to expedite receipt by stockholders and lower the cost and environmental impact of our Annual Meeting. However, if you received such a notice and would prefer to receive paper copies of our proxy materials, please follow the instructions included in the Notice Regarding the Availability of Proxy Materials.
If you received your proxy materials via e-mail, the e-mail contains voting instructions, including a control number required to vote your shares, and links to the Proxy Statement and the Annual Report to Stockholders on the Internet. If you received your proxy materials by mail, the Notice of Annual Meeting, Proxy Statement, Proxy Card and Annual Report to Stockholders are enclosed.
If you hold our common stock through more than one account, you may receive multiple copies of these proxy materials and will have to follow the instructions for each in order to vote all of your shares of our common stock.
Important Notice Regarding the Availability of Proxy MaterialsForfor the 20192022 Annual Meeting of Stockholders to be Held in a Virtual Format on April 25, 2019:28, 2022
Our Proxy Statement and 20182021 Annual Report to Stockholders are available
at www.proxyvote.com
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | | | ||
GeneralProposal 1Information Election of Directors
The board of directors of Provident Financial Services, Inc. (“Provident” or “company”) is soliciting proxies for our 2019 Annual Meeting of Stockholders, and any adjournment or postponement of the meeting (“Annual Meeting”). The Annual Meeting will be held on Thursday, April 25, 2019 at 10:00 a.m., local time, at the Renaissance Woodbridge Hotel, 515 U.S. Highway 1 South, Iselin, New Jersey.
A Notice Regarding the Availability of Proxy Materials is first being sent to our stockholders on March 15, 2019.
The 2019 Annual Meeting of Stockholders
Date, Time and Place:Our Annual Meeting of Stockholders will be held on April 25, 2019, 10:00 a.m., local time, at the Renaissance Woodbridge Hotel, 515 U.S. Highway 1 South, Iselin, New Jersey
Record Date:March 1, 2019.
Shares Entitled to Vote:66,592,587 shares of Provident common stock were outstanding on the record date and are entitled to vote at the Annual Meeting.
Purpose of the Annual Meeting:To consider and vote on the election of four directors, an advisory (non-binding) vote to approve the compensation paid to our named executive officers, approval of the 2019 Long-Term Equity Incentive Plan, and the ratification of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2019.
Vote Required:Subject to our majority voting policy described under the heading “Corporate Governance Matters” in this Proxy Statement, directors are elected by a plurality of votes cast, without regard to either broker non-votes or proxies as to which authority to vote for the nominees proposed is withheld. The advisory vote to approve executive compensation, the approval of the long-term equity incentive plan and the ratification of KPMG LLP as our independent registered public accounting firm are each determined by a majority of the votes cast, without regard to broker non-votes or proxies marked “ABSTAIN”.
Board Recommendation:Our board of directors recommends that stockholders vote “FOR” each of the nominees for director listed in this Proxy Statement, “FOR” approval of the compensation paid to our named executive officers, FOR the approval of the 2019 Long-Term Equity Incentive Plan, and “FOR” the ratification of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2019.
Provident:Provident is a Delaware corporation and the bank holding company for Provident Bank, an FDIC-insured New Jersey-chartered capital stock savings bank that operates a network of full-service branch offices throughout northern and central New Jersey and eastern Pennsylvania. Our principal executive offices are located at 239 Washington Street, Jersey City, New Jersey 07302. Our telephone number is (732) 590-9200.
March 1, 2019 is the record date for determining the stockholders of record who are entitled to vote at the Annual Meeting. On March 1, 2019, 66,592,587 shares of Provident common stock, par value of $0.01 per share, were outstanding and held by approximately 4,745 holders of record. The presence, in person or by properly executed proxy, of the holders of a majority of the outstanding shares of our common stock is necessary to constitute a quorum at the Annual Meeting.
Each holder of shares of our common stock outstanding on March 1, 2019 will be entitled to one vote for each share held of record. However, our certificate of incorporation provides that stockholders of record who beneficially own in excess of 10% of the then outstanding shares of our common stock are not entitled to vote any of the shares held in excess of that 10% limit. A person or entity is deemed to beneficially own shares that are owned by an affiliate of, as well as by any person acting in concert with, such person or entity.
The purpose of the Annual Meeting is to elect four directors, vote on an advisory basis on executive compensation, approve the 2019 Long-Term Equity Incentive Plan, and ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2019. We may adjourn or postpone the Annual Meeting for the purpose of allowing additional time to solicit proxies.
Our board of directors is not aware of any other matters that may be presented for consideration at the Annual Meeting. If other matters properly come before the Annual Meeting, we intend that shares represented by properly submitted proxies will be voted, or not voted, by the persons named as proxies in their best judgment.
You may vote your shares:
If you return an executed Proxy Card without marking your instructions, your executed Proxy Card will be voted “FOR” the election of the four nominees for director, “FOR” approval of the executive compensation paid to our named executive officers, “FOR” the approval of the 2019 Long-Term Equity Incentive Plan, and “FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2019.
Participants in Provident Benefit Plans
If you are a participant in our Employee Stock Ownership Plan or 401(k) Plan, or any other benefit plans sponsored by us through which you own shares of our common stock, you will have received a Notice Regarding the Availability of Proxy Materials by e-mail. Under the terms of these plans, the trustee or administrator votes all shares held by the plan, but each participant may direct the trustee or administrator how to vote the shares of our common stock allocated to his or her plan account. If you own shares through any of these plans and you do not vote by April 21, 2019, the respective plan trustees or administrators will vote your shares in accordance with the terms of the respective plans.
The presence, in person or by properly executed proxy, of the holders of a majority of the outstanding shares of our common stock is necessary to constitute a quorum at the Annual Meeting. Abstentions and broker non-votes (unvoted proxies submitted by a bank or broker) will be counted for the purpose of determining whether a quorum is present.
Subject to our majority voting policy described under the heading “Corporate Governance Matters” in this Proxy Statement, directors are elected by a plurality of votes cast, without regard to either broker non-votes or proxies as to which authority to vote for the nominees proposed is “Withheld.” The advisory vote on executive compensation, the approval of the long-term equity incentive plan, and the ratification of the appointment of our independent registered public accounting firm are each determined by a majority of the votes cast, without regard to broker non-votes or proxies marked “Abstain.”
You may revoke your proxy at any time before the vote is taken at the Annual Meeting. You may revoke your proxy by:
Written notices of revocation and other communications regarding the revocation of your proxy should be addressed to:
Provident Financial Services, Inc.
100 Wood Avenue SouthP.O. Box 1001Iselin, New Jersey 08830-1001
If your shares are held in street name, you should follow your bank’s or broker’s instructions regarding the revocation of proxies.
Provident will bear the entire cost of soliciting proxies from you. In addition to solicitation of proxies by mail, we will request that banks, brokers and other holders of record send proxies and proxy materials to the beneficial owners of our common stock and secure their voting instructions, if necessary. We will reimburse such holders of record for their reasonable expenses in taking those actions. Equiniti (US) Services LLC will assist us in soliciting proxies, and we have agreed to pay them a fee of $5,000 plus reasonable expenses for their services. If necessary, we may also use several of our employees, who will not be specially compensated, to solicit proxies from stockholders, personally or by telephone, facsimile, e-mail or letter.
Unless you have provided us contrary instructions, we have sent a single copy of these proxy materials to any household at which one or more stockholders reside if we believe the stockholders are members of the same household. Each stockholder in the household will receive a separate Proxy Card. This process, known as “householding,” reduces the volume of duplicate information and helps reduce our expenses. If you would like to receive your own set of proxy materials, please follow these instructions:
Recommendation of the Board of Directors
Your board of directors recommends that you vote“FOR” each of the nominees for director listed in this Proxy Statement,“FOR” approval of the compensation paid to our named executive officers,“FOR” approval of the 2019 Long-Term Equity Incentive Plan, and“FOR” the ratification of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2019.
Security Ownership of Certain Beneficial Owners and Management
Persons and groups who beneficially own in excess of five percent of Provident’s issued and outstanding shares of common stock are required to file certain reports with the Securities and Exchange Commission (“SEC”) regarding such beneficial ownership. The following table shows, as of March 1, 2019, certain information as to persons who beneficially owned more than five percent of the issued and outstanding shares of our common stock. We know of no persons, except as listed below, who beneficially owned more than five percent of the issued and outstanding shares of our common stock as of March 1, 2019.
Principal Stockholders
| Name and Address of Beneficial Owner | Number of Shares Owned and Nature of Beneficial Ownership | Percent of Shares of Common Stock Outstanding(1) | ||
| Provident Bank Employee Stock Ownership Plan Trust GreatBanc Trust Company, Trustee 801 Warrenville Road, Suite 500 Lisle, Illinois 60532 | 3,960,192 | (2) | 5.9% | |
| Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, Texas 78746 | 5,639,590 | (3) | 8.5% | |
| BlackRock, Inc. 55 East 52ndStreet New York, New York 10055 | 9,345,503 | (4) | 14.0% | |
| The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | 6,344,386 | (5) | 9.5% |
Management
The following table shows certain information about shares of our common stock owned by each nominee for election as director, each incumbent director whose term of office continues following the Annual Meeting, each named executive officer identified in the summary compensation table included elsewhere in this Proxy Statement, and all nominees, incumbent directors and executive officers as a group, as of March 1, 2019.
| Position(s) held with | Shares | Unvested Stock | ||||||||||
| Provident Financial | Shares Owned | Subject | Awards Included | |||||||||
| Services, Inc. and/or | Directly and | to Stock | Beneficial | Percent of | in Beneficial | |||||||
| Name | Provident Bank | Indirectly(1) | Options(2) | Ownership | Class(3) | Ownership | ||||||
| Nominees | ||||||||||||
| Thomas W. Berry | Director | 97,200 | — | 97,200 | * | — | ||||||
| James P. Dunigan | Director | 6,926 | — | 6,926 | * | — | ||||||
| Frank L. Fekete | Director | 66,053 | — | 66,053 | * | — | ||||||
| Matthew K. Harding | Director | 32,433 | — | 32,433 | * | — | ||||||
| Incumbent Directors | ||||||||||||
| Robert Adamo | Director | 9,312 | — | 9,312 | * | — | ||||||
| Laura L. Brooks | Director | 62,281 | — | 62,281 | * | — | ||||||
| Terence Gallagher | Director | 17,507 | — | 17,507 | * | — | ||||||
| Carlos Hernandez | Director | 80,259 | — | 80,259 | * | — | ||||||
| Christopher Martin | Chairman, President and Chief Executive Officer | 541,825 | (4) | 375,821 | 917,646 | 1.4% | — | |||||
| John Pugliese | Director | 89,909 | — | 89,909 | * | — | ||||||
| Executive Officers Who Are Not Directors | ||||||||||||
| Donald W. Blum** | Executive Vice President and Chief Lending Officer | 109,608 | — | 109,608 | * | 3,567 | ||||||
| John Kuntz | Senior Executive Vice President and Chief Administrative Officer | 109,977 | — | 109,977 | * | 4,013 | ||||||
| Thomas M. Lyons | Senior Executive Vice President and Chief Financial Officer | 172,181 | — | 172,181 | * | 19,391 | ||||||
| Valerie O. Murray** | Executive Vice President, Chief Wealth Management Officer and President of Beacon Trust Company | 28,459 | — | 28,459 | * | 3,192 | ||||||
| All directors and executive officers as a group (21 persons) | 1,675,215 | 387,935 | 2,063,150 | 3.0% | 52,195 | |||||||
| Name | 401(k) Plan Shares | ESOP Shares | |
| Christopher Martin | 149,483 | 15,480 | |
| Donald W. Blum | 6,892 | 19,521 | |
| John Kuntz | 5,020 | 19,223 | |
| Thomas M. Lyons | 39,080 | 13,646 | |
| Valerie O. Murray | 10,198 | 4,030 | |
| All executive officers as a group (12 persons) | 212,617 | 110,662 |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and anyone holding 10% or more of our common stock (reporting persons) to file reports with the SEC showing the holdings of, or transactions in, our common stock. Based solely on a review of copies of such reports, and written representations from each such reporting person that no other reports were required, we believe that in 2018 all reporting persons filed the required reports on a timely basis under Section 16(a).
Proposal 1Election of Directors
Our board of directors currently consists of tenfourteen members and is divided into three classes, with one class of directors elected each year. Each member of our board of directors also serves as a director of Provident Bank. Directors are elected to serve for a three-year term and until their respective successors shall have been elected and qualified. A director is not eligible to be elected or appointed to either board of directors after reaching age 73.
Four directors will be elected at the Annual Meeting to serve for a three-year term and until their respective successors shall have been elected and qualified. On the recommendation of our Governance/Nominating Committee, our board of directors nominated Thomas W. Berry, James P. Dunigan, Frank L. Fekete, and Matthew K. Harding and Anthony J. Labozzetta for election as directors at the Annual Meeting.
All of the nominees for election at the Annual Meeting currently serve as directors of Provident and Provident Bank, and other than Mr. Dunigan,Labozzetta, each of themnominee was previously elected by our stockholders. Mr. Dunigan was recommended for consideration by the non-management directors andLabozzetta was appointed to the boards of directors of Provident and Provident Bank on May 24, 2018.following Provident’s acquisition of SB One Bancorp where he served as President and Chief Executive Officer and as a member of the board of directors. No arrangements or understandings exist between any nominee and any other person pursuant to which any such nominee was selected.Unless authority to vote for any or all of the nominees is withheld, it is intended that the shares represented by each fully executed Proxy Card will be voted “FOR” the election of all nominees.
Each of the nominees has consented to be named a nominee. In the event that any nominee is unable to serve as a director, the persons named as proxies will vote with respect to a substitute nominee designated by our current board of directors. At this time, we know of no reason why any of the nominees would be unable or would decline to serve, if elected.
  | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY STATEMENT. |
Our board of directors is comprised of individuals with considerable and varied business experiences, backgrounds, skills and qualifications. Collectively, they have a strong knowledge of our company’s business, strategy and markets and are committed to enhancing long-term stockholder value.
Our Governance/Nominating Committee is responsible for identifying and selecting director candidates who meet the evolving needs of our board of directors. Director candidates must have the highest personal and professional ethics and integrity. Additional criteria weighed by the Governance/Nominating Committee in the director identification and selection process include the relevance of a candidate’s experience to our business, enhancement of the diversity of experienceperspectives of our board, the candidate’s independence from conflict or direct economic relationship with our company, and the candidate’s ability and willingness to devote the proper time to prepare for, attend and participate in meetings. The Governance/Nominating Committee also takes into account whether a candidate satisfies the criteria for independence under our Independence Standards and the New York Stock Exchange listing standards, and if a nominee is sought for service on the Audit Committee, the financial and accounting expertise of a candidate, including whether the candidate qualifies as an Audit Committee financial expert.
While the Governance/Nominating Committee does not have a formal policy regarding diversity, on our board of directors, consideration is given to nominating persons withwhen assessing potential director nominees, gender, racial and ethnic diversity, as well as different perspectives and experience are considered to enhance the deliberation and strategic decision-making processes of our board of directors. Currently, 14% of our directors are women and 14% designate themselves as racially or ethnically diverse.
| PROVIDENT FINANCIAL SERVICES, INC. | | | ||
The following table states the name, the year service as a director commenced, and the term expiration date for each of our nominees for election as directors and each incumbent director whose term of office continues following the Annual Meeting.
| Name | Position(s) held with Provident Financial Services, Inc. and Provident Bank | Director Since(1) | Expiration of Term | ||||
| Nominees | |||||||
| Thomas W. Berry | Director | 2005 | 2019 | ||||
| James P. Dunigan | Director | 2018 | 2019 | ||||
| Frank L. Fekete | Director | 1995 | 2019 | ||||
| Matthew K. Harding | Director | 2013 | 2019 | ||||
| Incumbent Directors | |||||||
| Robert Adamo | Director | 2016 | 2020 | ||||
| Laura L. Brooks | Director | 2006 | 2020 | ||||
| Terence Gallagher | Director | 2010 | 2020 | ||||
| Carlos Hernandez | Director | 1996 | 2020 | ||||
| Christopher Martin | Chairman, President and Chief Executive Officer | 2005 | 2021 | ||||
| John Pugliese | Director | 2014 | 2021 |
The age and business experience of each of our nominees for election as directors, and theour incumbent directors, whose term of office continues following the Annual Meeting, and directorships held by them with other public companies during the past five years, as well as their qualifications, attributes and skills that led our board of directors to conclude that each such person should serve as a director are as follows:
Nominees:
Age 69 |
INDEPENDENT
Term Expires: 2022 Committees: • Audit • Compensation and Human Capital • Risk | Biography: Mr. Dunigan has over 30 years of financial services industry experience having served in executive leadership roles with PNC Asset Management Group, and as Interim Chief Investment Officer of the Pennsylvania State Treasury. Mr. Dunigan is a member of the board of directors of the Philadelphia Chapter of the National Association of Corporate Directors and a member of the board of trustees of the Legacy Foundation of the Union League of Philadelphia. His extensive experience in the financial services industry, and particularly in asset and wealth management, is a strategic asset to the board of directors. |
| FRANK L. FEKETE | ||
Age 70 | INDEPENDENT Director since: 2003(1) Term Expires: 2022 Committees: • Audit • Governance/ Nominating | Biography: Mr. Fekete is a certified public accountant and the Managing Partner of the accounting firm of Mandel, Fekete & Bloom, CPAs, located in Jersey City, New Jersey. He serves as chairman of the board of trustees of the Hackensack Meridian Health Network, chair of the board of trustees of St. Peter’s University, and as member of the board of trustees of John Cabot University in Rome, Italy. He has over 35 years of public accounting experience, including supervision of audits of public companies. His experience benefits our board of directors in its oversight of audit, financial reporting and disclosure issues, and Mr. Fekete qualifies as an Audit Committee financial expert. |
| (1) | Mr. Fekete has served on the board of directors of Provident Bank since 1995. |
| MATTHEW K. HARDING | ||
Age 58 | INDEPENDENT Director since: 2013 Term Expires: 2022 Committees: • Compensation and Human Capital • Technology | Biography: Mr. Harding is Chief Executive Officer and a member of the board of directors of Levin Management Corporation, a leading retail real estate services firm. Mr. Harding serves as Vice President of The Philip and Janice Levin Foundation and as Trustee of the Gill St. Bernard’s School. Mr. Harding’s experience provides our board of directors with a comprehensive understanding of the real estate markets from both a competitive and a credit risk perspective. |
| ANTHONY J. LABOZZETTA | ||
Age 58 | PRESIDENT & CEO Director since: 2020 Term Expires: 2022 | Biography: Mr. Labozzetta has been President and Chief Executive Officer of Provident and Provident Bank since January 2022. Prior to that time he served as President and Chief Operating Officer of Provident and Provident Bank since August 2020. He was previously President and Chief Executive Officer of SB One Bancorp and SB One Bank since January 2010. He was previously Executive Vice President of TD Bank from 2006 to 2010. Prior to his banking career, he was a certified public accountant with Deloitte LLP. Mr. Labozzetta’s over 30-year banking experience brings executive leadership experience and an extensive and diverse knowledge of the banking business to our board of directors. |
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 8 | ||
Incumbent Directors:
| ROBERT ADAMO | ||
Age 67 | INDEPENDENT Director since: 2016 Term Expires: 2023 Committees: • Audit • Risk |
Biography:
Mr. Adamo retired from the international public accounting and consulting firm of Deloitte LLP after a 40-year career where he served as a senior partner and as a member of the board of directors. |
| THOMAS W. BERRY | ||
Age 74 |
INDEPENDENT
Term Expires: 2022 Committees: • Governance/ • Risk |
Biography:
Mr. Berry retired from investment banking in 1998 after a 26-year career with Goldman Sachs & Co. where he served as a partner since 1986. Mr. Berry is a director of the Hyde and Watson Foundation. He has an extensive financial background and considerable experience in investment banking, as well as a strong knowledge of the capital and debt markets and mergers and acquisitions, which skills are valuable to our board of directors in its assessment of Provident’s sources and uses of capital. Mr. Berry will retire from the board of directors following the Annual Meeting. |
| URSULINE F. FOLEY | |||||
Age 61 |
INDEPENDENT
Term Expires: 2024 Committees: • Risk • Technology |
Biography:
Ms. |
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knowledge. |
Age 66 |
INDEPENDENT
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| Term Expires: | |||
• Governance/ • Technology
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Biography:
Mr. Gallagher is President directors. |
| PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 9 | ||
| CARLOS HERNANDEZ | ||
Age 72 |
INDEPENDENT
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• Governance/
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Biography:
Mr. Hernandez is retired. He previously served as President of New Jersey City University, located in Jersey City, New Jersey. Mr. Hernandez currently serves as Lead Director and as Chair of the board of directors of The Provident Bank Foundation. As a |
| (1) | Mr. Hernandez has served on the board of directors of Provident Bank since 1996. |
| EDWARD J. LEPPERT | ||
Age 61 | INDEPENDENT Director since: 2020 Term Expires: 2023 Committees: • Audit • Compensation and Human Capital | Biography: Mr. Leppert is a certified public accountant and founder of Leppert Group LLC, and has been in public practice since 1986. He was formerly Chairman of the Board of both SB One Bancorp and SB One Bank. His experience with audit, financial reporting and disclosure and Environmental, Social and Governance, as well as his knowledge of northern New Jersey marketplace are beneficial to the board of directors. Mr. Leppert qualifies as an Audit Committee financial expert. |
| NADINE LESLIE | ||
Age 59 | INDEPENDENT Director since: 2021 Term Expires: 2023 Committees: • Audit | Biography: Ms. Leslie currently serves as Chief Executive Officer of SUEZ North America, an American water service company. Ms. Leslie serves on the board of trustees of Hackensack Meridian Health Network, the board of directors of Montclair State University Foundation, and is a member of the board of directors of the National Association of Water Companies. Ms. Leslie adds executive experience and environmental expertise to the board of directors. |
| CHRISTOPHER MARTIN | ||
Age 65 | EXECUTIVE Director since: 2005 Term Expires: 2024 | Biography: Mr. Martin has served as Executive Chairman since January 2022. Prior to that time he served as Chief Executive Officer of Provident and Provident Bank since August 2020. He previously served as Chief Executive Officer and President since September 2009. He serves on the board of directors of the Federal Home Loan Bank of New York and previously served on the board of directors of the New Jersey Bankers Association. He also serves on the Board of Trustees and Executive Committee for Elon University. Mr. Martin’s extensive executive leadership and banking experience and his knowledge of financial markets and investments enhance the breadth of experience of our board of directors. |
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | | | ||
Age 63 | INDEPENDENT
Term Expires: 2024 Committees: • Risk |
Biography:
Mr. company valuable insight into current markets. |
| JOHN PUGLIESE | ||
Age 62 |
INDEPENDENT
Term Expires: 2024 Committees: • Compensation and Human Capital • Governance/ • Technology
|
Biography:
Mr. Pugliese is retired. Until January 2021, he served as Chief Executive Officer of Motors Management Corporation which provides management oversight and direction to one of the top automobile dealership groups in the country. He formerly served as EVP and Head of Retail Banking for the Bank of New York Mellon. Mr. Pugliese serves as Chairman of the board of directors of Buzz Points (formerly Fisoc, Inc.), |
| PROVIDENT FINANCIAL SERVICES, INC. | | | ||
The age and business experience of Provident’s executive officers who are not directors are as follows:
Donald W. Blum
Age 62
Mr. Blum has been Executive Vice President and Chief Lending Officer of Provident Bank since January 2005.
Finn M. W. Caspersen, Jr.
Age 49
Mr. Caspersen has been Executive Vice President - Director of Retail Banking Operations of Provident Bank since August 2018. Previously, he held various executive positions at Peapack- Gladstone Bank, including Chief Strategy Officer, Chief Operating Officer, Chief Risk Officer and General Counsel.
James A. Christy
Age 5154
Mr. Christy has been Executive Vice President and Chief Risk Officer of Provident Bank since February 2018, and prior to that time he was Senior Vice President and Chief Risk Officer since January 2012. He previously served as
Robert Capozzoli
Age 51
Mr. Capozzoli has been Senior Vice President & General Auditorand Chief Marketing Officer since January 2009.2019, and prior to that time he was First Vice President and Marketing Director since 2015.
Vito Giannola
Age 45
Mr. Giannola has been Executive Vice President – Chief Retail Banking Officer since August 2020. Prior to that time, he was Senior Executive Vice President and Chief Banking Officer of SB One Bank since March 2018.
Brian Giovinazzi
Age 6467
Mr. Giovinazzi has been Executive Vice President and Chief Credit Officer of Provident Bank since December 2008.
John Kamin
Age 6164
Mr. Kamin has been Executive Vice President and Chief Information Officer of Provident Bank since May 2017, and prior to that time, he was Executive Vice President and Chief Information Officer of Old National Bank located in Evansville, Indiana since 2011.
Janet D. Krasowski
Age 66
Ms. Krasowski has been Executive Vice President and Chief Human Resources Officer of Provident Bank since January 2012.
John Kuntz
Age 6366
Mr. Kuntz has been Senior Executive Vice President, General Counsel and Corporate Secretary of Provident and Senior Executive Vice President and Chief Administrative Officer of Provident Bank since January 2019, and prior to that time, he was Executive Vice President, General Counsel and Corporate Secretary of Provident and Executive Vice President and Chief Administrative Officer of Provident Bank since January 2011.
George Lista
Age 62
Mr. Lista has been President and Chief Executive Officer of SB One Insurance Agency, Inc., a wholly owned subsidiary of Provident Bank, since 2001. Mr. Lista has over 35 years of experience in the insurance industry.
Thomas M. Lyons
Age 5457
Mr. Lyons has been Senior Executive Vice President and Chief Financial Officer of Provident and Provident Bank since January 2019, and prior to that time, he was Executive Vice President and Chief Financial Officer of Provident and Provident Bank since January 2011.
Josephine MoranBennett MacDougall
Age 5550
Ms. MoranMr. MacDougall has been ExecutiveSenior Vice President - Director of Retail Bankingand General Counsel of Provident Bank, General Counsel of Beacon Trust, and Deputy General Counsel of Provident Financial Services, Inc. since August 2018. Prior to that time, she was Senior Vice President - Regional Manager Retirement Services for Webster Bank since 2016. She2021. He previously served as Executive Vice President -Managing Director and Associate General Counsel of Retail for ColumbiaThe Bank of New York Mellon since October 2015, and Executive Vice President - Region President for Santander Bank since 2011.2015.
Valerie O. Murray
Age 4447
Ms. Murray ishas been President of Beacon Trust Company, a wholly owned subsidiary of Provident Bank, since February 2017, and Executive Vice President and Chief Wealth Management Officer of Provident Bank since January 2019. Prior to that time, she was Senior Vice President and Chief Wealth Management Officer of Provident Bank since February 2017. She previously served as Chief Operating Officer of Beacon Trust Company since January 2016, and prior to that time, she served as Executive Managing Director and Vice President of Beacon Trust Company since 2011.2016.
Frank S. Muzio
Age 6568
Mr. Muzio has been Executive Vice President and Chief Accounting Officer of Provident Bank since February 2018, and prior to that time, he served as Senior Vice President and Chief Accounting Officer since 2011.
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Carolyn Powell
Age 56
Ms. Powell has been Executive Vice President and Chief Human Resources Officer since March 2020. She previously served as Vice President, Human Resources for Conduent, a leading business services and solutions company since 2017. Prior to that time she was a Director of Human Resources with Horizon Blue Cross Blue Shield of New Jersey.
Walter Sierotko
Age 58
Mr. Sierotko has been Executive Vice President – Chief Lending Officer since April 2020, and prior to that time was Executive Vice President – Commercial Real Estate since November 2015. He previously held positions with Wells Fargo, Bank of New York and HSBC.
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CorporateEnvironmental, Social and Governance Governance(“ESG”) Matters
Our board of directors and management are committed to maintaining sound corporate governance principles and the highest standards of ethical conduct. The board’s main responsibility is the oversight of the company’s management team, and the board has taken measures to ensure that the board’s composition, organization, and operation are designed to deliver strong performance for the company’s stockholders. We are in compliance with applicable corporate governance laws and regulations. The following
Our company is keenly aware of its responsibilities as a good corporate citizen to all of its stakeholders: its stockholders, customers, employees, and the communities we serve and in which we live and work. Among these responsibilities are some key featuresthe maintenance of ethical business practices in our everyday business dealings, adherence to transparency in our corporate governance practices:protocols, an ongoing focus on diversity and inclusion in our employment practices, and a recognition of the long-term benefits associated with reliance on sustainable resources in the operation of our branch banking offices and support locations. Provident is also cognizant of the challenges posed by the transition to a lower-carbon economy, and the potential impact of climate change on our business and our customers.
| BOARD OVERSIGHT AND ESG COUNCIL |
Our Governance/Nominating Committee leads oversight of the company’s ESG efforts. The Compensation and Human Capital and Risk Committees also play a critical role in overseeing elements of our ESG strategies.
The company formed its ESG Council in 2021. The ESG Council is led by Provident Bank’s General Counsel, and consists of senior representatives from the business as well as control functions. The aim of the ESG Council is to provide guidance to the organization with respect to industry best practices, emerging regulatory and corporate governance developments, and to better inform investors, customers, and stakeholders of the company’s commitment to ESG issues. The ESG Council reports regularly to the Governance/Nominating Committee, the Chief Executive Officer and the executive leadership team, regarding the work of the Council and the progress it has made in building and implementing the ESG program.
| SOCIAL RESPONSIBILITY |
Employee Experience
Attracting Top Talent
Provident has 1,122 full-time and 41 part-time employees. As part of our ongoing efforts to attract qualified, motivated, and diverse employees, Provident has adopted best-in-class practices to see that underrepresented talent is consistently presented to hiring managers. We have expanded our recruitment reach to include additional local colleges, universities and career fairs. We have also enhanced the employee onboarding process through automation and streamlined manager and employee tools. Provident tracks the employee-onboarding life cycle and partners with leaders to attract candidates who will be a good cultural fit for Provident.
| 14 | ||||
Talent Review, Development and Succession Planning
BoardProvident leadership engages in development discussions with employees to better clarify career aspirations, shares general feedback (both positive and developmental), and creates development plans to help employees reach their career aspirations and achieve performance goals. Provident works with its leaders to help identify and cultivate employees that exhibit the guiding principles all future Provident leaders should exemplify. We also continually evaluate succession plans to ensure smooth continuity of Directors Meetingsleadership.
Leadership Development Programs
We recognize that strategic leadership development training provides an opportunity for first–level supervisors up to executive leaders to learn key skills that translate into successful business results. People leaders are offered a combination of instructor-led and Committeesweb-based training on a variety of topics including but not limited to communication, performance management and talent management for leaders and future leaders.
Internship Programs
Provident offers internship opportunities to students seeking a career in financial services. In 2021, we provided internship opportunities for 24 college students. During the ten week program, students had the opportunity to work in various lines of business across the organization. Interns benefited from training, coaching, and mentoring, and interacting with executive leaders. Also in 2021, a newly formed partnership with INROADS reinforced the Bank’s commitment to diversity and inclusion. The partnership with INROADS offers internship opportunities to college students. INROADS is a leader in advancing underserved youth in corporate America. They offer talented, underrepresented youth a pathway from high school to college and throughout their career that helps to close opportunity and wealth gaps.
Associate Recognition Programs
The R.O.C. (“Recognizing Outstanding Commitment”) Awards Program is the company’s internal award program created to acknowledge and reward employees for exhibiting behaviors that support the mission, goals, values, initiatives, and Guiding Principles of our organization when interacting with internal and external customers. We recognize and reward several amazing employees every month who consistently go above and beyond in their day-to-day contribution to our organization.
Volunteer Programs
“Commit to Care” is an employee engagement program that provides employees of the company with opportunities to contribute their unique talents, skills, and knowledge toward improving their communities. Through education, volunteerism, and meaningful engagement, participants aspire to bring about positive change. The company provides paid time off for volunteering that takes place during business hours. As part of the company’s benefits package, employees may donate up to 15 hours per year toward a charitable, civic, or school organization.
Employee Well Being and Benefits
Engagement Survey
Our Executive Leadership Team is committed to addressing the opportunities identified by annual employee engagement surveys and improving the employee experience as valued members of our organization. In 2021, 91% of our employees participated in the Engagement Survey. Moreover, more than 80% of our employees would recommend our products and services to friends and family. Provident is committed to continuing to foster a team-oriented, diverse culture; providing career opportunities and professional development; enhancing the customer experience through tools and education; and communicating our mission, vision and strategic plan for the organization.
Work-Life Integration Programs
Rather than drawing a line between work-life and personal life, we strive to provide employees with viable options that include volunteer time, paid vacation time and leave entitlements. Employees can also work with their managers to engage in several alternative work schedules based on the functions they perform. Options include some remote work, flextime, and employee self-directed movement to focus on personal matters. As a company with strong ties to the community, we wholly support employees taking time to give back and encourage a healthy balance of vacation utilization so employees can take care of themselves, their families and create meaningful contributions when they are at work.
Financial Well-Being
We believe that an employee’s financial circumstance should not be an impediment to her or his access to education. Our Tuition Education Assistance Program provides for advance disbursement of up to $250 per credit up to 12 credits (maximum $3,000 per year) for undergraduate courses leading to an associate or bachelor’s degree. The program offers reimbursement of up to $500 per credit up to 12 credits
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(maximum $5,000 per year) for graduate courses leading to an MBA or Master’s related degree.
Additionally, after three months of employment, employees can benefit from our Student Loan Paydown Program to assist with outstanding education debt. This program offers eligible employees the option to receive $100 per month, for up to 60 months (maximum $6,000) in the repayment of student loans. Employees may also be eligible to receive continuing education assistance and, for certain functions, the option to increase their base salary after the completion of professional certification programs.
Employees also share in our financial success while preparing for retirement through the Employee Stock Ownership Plan, or ESOP. The ESOP gives employees an opportunity to accumulate shares of our common stock and is 100% funded by the company. To further assist our employees with retirement planning, our 401(k) plan has a 25% company match on the first 6% of eligible compensation deferred.
Physical and Emotional Well-Being
In order to protect our employees and customers throughout the COVID-19 pandemic, we instituted state-of-the-art pandemic protocols throughout our branches and corporate offices. Protocols included remote working and social distancing measures.
Provident Women
The Provident Women program was established in 2014 and is committed to providing the resources to allow all women in the company the opportunity to grow personally and professionally through education, networking events and volunteer opportunities in an environment of inclusion and acceptance. ProvidentWomen sponsored a combination of eleven programs/events in 2021.
Diversity, Equity and Inclusion
We recognize the importance of maintaining a socially and culturally diverse employee base. Diversity in the workplace provides a unique opportunity to obtain a variety of perspectives, experiences and resources that better reflect the customers and communities we serve. It is the company’s expectation that our continued actions and behaviors result in a working environment which encourages and respects diversity and provides an equal opportunity for employment, development and advancement. We base employment decisions on merit, considering qualifications, skills and achievements. We treat our co-workers fairly and with respect.
Our company is committed to fostering a safe working environment, which promotes diversity and is free from harassment or discrimination of any kind. We are proud of our diverse workforce, including women holding 63% of all managerial positions. In 2021, the company hired its first Senior Human Resources and Diversity Business Partner as part of its ongoing commitment to advance diversity, equity, and inclusion (“DEI”) initiatives.
Some of our DEI initiatives and proposed initiatives include: partnering with organizations that will help to expand diverse talent pools and create an internal pipeline; enhancing career development through training and mentorship; and expanding inclusion efforts through resource groups, and diversity and inclusion training.
Community Engagement, Investment and Philanthropy
Small Business Loans
The company embraced its role as a community leader with its response to the COVID-19 pandemic. We mobilized quickly to enable our small business customers to access the CARES Act Paycheck Protection Program (“PPP”).
Since the inception of the program, the company processed over 1,300 applications for PPP loans totaling more than $470 million.
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Philanthropy: The Provident Bank Foundation (the “Foundation”)
The Foundation was established in January 2003 with an initial funding of $24.7 million. The Foundation is dedicated to supporting not-for-profit groups, institutions, schools and other 501(c)(3) organizations that provide valuable services to the communities served by the company. The Foundation is committed to strengthening and sustaining its relationship with communities in our marketplace.
As of December 31, 2021, the Foundation had $23.8 million in total assets and for all of 2021 funded 148 grants for a total of $1.2 million. In 2020, despite the impact of the pandemic, the Foundation awarded 109 grants for a total of $949,540, which included $125,000 in COVID-19 Emergency Response Grants of $5,000 each to 25 nonprofit organizations whose communities are served by Provident through three Funding Priority Areas: Community Enrichment, Education, and Health, Youth & Families.
Financial Literacy Efforts
EverFi
The company partnered with global education technology leader EverFi during the pandemic to provide financial literacy programs to high schools within the communities we serve. Through the partnership, we were able to offer free access to over 20 digital courses in a wide variety of subjects to students in grades K through 12.
Financial Wellness Center
The company provides this online resource to provide visitors with an engaging learning experience relating to critical personal financial topics, such as building emergency savings, mortgage education and retirement planning.
Supporting Affordable Housing
The Community Reinvestment Act (“CRA”) encourages depository institutions to help meet the credit needs of the communities in which they operate, including low-and moderate-income neighborhoods, consistent with safe and sound banking operations.
Among its recent CRA activities, in 2021 the company awarded $475,000 in funding to five non-profit organizations as part of the New Jersey Department of Community Affairs, Neighborhood Revitalization Tax Credit Program. The nonprofit organizations used the funding to implement revitalization plans addressing housing and economic development, providing opportunities for entrepreneurs to start businesses and job training for local residents, as well as complementary activities such as social services, recreation activities, and open space improvements.
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| BOARD COMPOSITION |
| (1) | Mr. Fekete has served on the board of directors of Provident Bank since 1995 and Mr. Hernandez has served on the board of directors of Provident Bank since 1996. |
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| BOARD SKILLS |
The following matrix provides information regarding members of our board of directors, meets quarterly,including certain types of knowledge, skills, experiences and attributes possessed by one or more often as mayof them which our board has determined to be necessary.relevant to our business and structure. The board of directors met eight times in 2018. There are five standing committeesmatrix does not encompass all of the knowledge, skills, experiences or attributes of our directors, and the fact that a particular skill is not listed does not mean that a director does not possess the skill. In addition, the lack of a particular knowledge, skill, experience or attribute with respect to any of our directors does not mean the director is unable to contribute to the decision-making process in that area. The degree and type of knowledge, skills, and experience listed below may vary among the board of directors: the Audit, Compensation, Risk, Technology and Governance/Nominating Committees. The board of directors of Provident Bank meets monthly at least 11 times a year, as required by New Jersey banking law.members.
All directors attended no fewer than 75% of the total number of meetings held by the board of directors and all committees of the board on which they served (during the period they served) in 2018. When the Provident and Provident Bank board of directors and committee meetings are aggregated, all directors attended no fewer than 75% of the aggregated total number of meetings in 2018. We have a policy requiring each director to attend the Annual Meeting of Stockholders. All persons serving on the board of directors at the time of the Annual Meeting of Stockholders held on April 26, 2018 attended the meeting.
| Skill | # of Directors | |||
| Audit/Financial | Experience in finance, accounting and/or auditing |  | ||
| Commercial/Real Estate Knowledge | Knowledge of real estate markets and financing |  | ||
| Environmental, Social & Governance | Experience with ESG practices |  | ||
| Executive Experience | Experience managing a sophisticated organization |  | ||
| Industry Knowledge | Experience in banking, investment management and/or insurance |  | ||
| Risk | Experience in management of business risk at a complex organization |  | ||
| Technology/Cyber | Knowledge of cybersecurity, innovative technology and information technology |  |
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Our board of directors believes that combining thehaving an Executive Chairman, and Chief Executive Officer positions, together with the appointment of an independent Lead Director, is the appropriate board leadership structure for our company. Carlos Hernandez currently serves as the Lead Director. Christopher Martin serves as Executive Chairman. Our board of directors has determined that the Chief Executive OfficerChairman is most knowledgeable about our business and corporate strategy, and is in the best position to lead the board of directors, especially in relation to its oversight of corporate strategy formation and execution. Management accountability and our board’s independence from management are best served by maintaining a super majority of independent directors, electing an independent Lead Director, and maintaining standing board committees that are comprised of independent leadership and members. The Lead Director plays an important role on our board of directors and has the following responsibilities:
Our board of directors meets quarterly, or more often as may be necessary. The board of directors met ten times in 2021. There are five standing committees of the board of directors: the Audit, Compensation and Human Capital, Governance/ Nominating, Risk and Technology Committees. The board of directors of Provident Bank meets monthly at least 11 times a year, as required by New Jersey banking law.
All directors attended at least 93% of the total number of meetings held by the board of directors and all committees of the board on which they served (during the period they served) in 2021. When the Provident and Provident Bank board of directors and committee meetings are aggregated, all directors attended at least 95% of the aggregated total number of meetings in 2021. We have a policy requiring each director to attend the Annual Meeting of Stockholders. All persons serving on the board of directors at the time of the Annual Meeting of Stockholders held on April 29, 2021 participated in the meeting which was a virtual only meeting.
The five standing committees are described in greater detail below, including the names of the directors currently serving on the committees and the committee chairs, a summary of each committee’s duties and responsibilities and notes regarding the number of meetings held in 2021.
The following are some additional key features of our corporate governance practices:
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Risk Oversight/Risk Committee
AUDIT COMMITTEE
| Composition | Duties and Responsibilities | 2021 Meetings and Charters |
Committee Chair: Mr. Fekete Other Committee Members: Messrs. Adamo, Dunigan, Leppert, and Ms. Leslie. Each member of the Audit Committee is considered independent as defined in the New York Stock Exchange corporate governance listing standards and under SEC Rule 10A-3. The board of directors believes that Messrs. Adamo, Fekete, and Leppert each qualify as an Audit Committee financial expert as that term is defined in the rules and regulations of the Securities and Exchange Commission (“SEC”). | The duties and responsibilities of the Audit Committee include, among other things: • sole authority for retaining, overseeing and evaluating a firm of independent registered public accountants to audit Provident’s annual financial statements; • in consultation with the independent registered public accounting firm and the internal auditor, reviewing the integrity of Provident’s financial reporting processes, both internal and external; • reviewing the financial statements and the audit report with management and the independent registered public accounting firm; • reviewing earnings and financial releases and quarterly and annual reports filed with the SEC; and • approving all engagements for services by the independent registered public accounting firm. | Our Audit Committee met twelve times during 2021. The Audit Committee reports to our board of directors after each meeting on its activities and findings. The Audit Committee’s charter is posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank. |
Our entire board of directors is engaged in risk management oversight. A separate standing Risk Committee of the board facilitates our board’s risk oversight responsibilities. The current members of the Risk Committee are: Ms. Brooks (Chair) and Messrs. Adamo, Berry and Dunigan. Each member of the Risk Committee is considered independent as defined in the New York Stock Exchange corporate governance listing standards. The Risk Committee’s charter is posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank. The Committee met seven times during 2018.
COMPENSATION AND HUMAN CAPITAL COMMITTEE
The Risk Committee oversees the overall risk management activities employed by management in pursuit of:
| Composition | Duties and Responsibilities | 2021 Meetings and Charters |
Committee Chair: Mr. Harding Other Committee Members: Messrs. Dunigan, Gallagher, Leppert, and Pugliese. Each member of the Compensation and Human Capital Committee (“Compensation Committee”) has been determined to be independent as defined in the New York Stock Exchange corporate governance listing standards. | The Compensation Committee is responsible for, among other things: • reviewing the performance of, and the compensation payable to, our named executive officers, including the President and Chief Executive Officer; • the compensation payable to our non-management directors; • management development and succession planning; • human capital management oversight, including diversity and inclusion and pay equity; • reviewing and evaluating incentive compensation plans and risks associated with such plans; and • engaging the compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”). The Compensation Committee’s oversight of our incentive compensation plans includes setting corporate performance measures and goals consistent with principles of safety and soundness, approving awards and administering long- term equity awards. Director compensation is established by our board of directors upon the recommendation of the Compensation Committee and is discussed in this Proxy Statement under the heading “Director Compensation.” | The Compensation Committee met six times during 2021. The Compensation Committee’s charter is posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank. |
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GOVERNANCE/NOMINATING COMMITTEE
| Composition | Duties and Responsibilities | 2021 Meetings and Charters |
Committee Chair: Mr. Hernandez Other Committee Members: Messrs. Berry, Fekete, Gallagher and Pugliese. Each member of the Governance/ Nominating Committee is considered independent as defined in the New York Stock Exchange corporate governance listing standards. | The functions of our Governance/ Nominating Committee include, among other things: • evaluating and making recommendations to the board concerning the number of directors and committee assignments; • establishing the qualifications, skills, relevant background, diversity and other selection criteria for board members; • making recommendations to the board concerning board nominees; • conducting evaluations of the effectiveness of the operation of the board and its committees; • developing and maintaining corporate governance principles; • recommending revisions to the code of business conduct and ethics; • oversight of ESG Council progress and activities; • making recommendations to the board regarding director orientation and continuing education; and • making recommendations to the board regarding director orientation and continuing education. | The Governance/Nominating Committee met seven times during 2021. The Governance/Nominating Committee’s charter is posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank. |
RISK COMMITTEE
| Composition | Duties and Responsibilities | 2021 Meetings and Charters |
Committee Chair: Mr. Dunigan Other Committee Members: Messrs. Adamo, Berry, McNerney and Ms. Foley. Each member of the Risk Committee is considered independent as defined in the New York Stock Exchange corporate governance listing standards. | Our entire board of directors is engaged in risk management oversight. The separate standing Risk Committee facilitates our board’s risk oversight responsibilities. The Risk Committee oversees the overall risk management activities employed by management in pursuit of: •maintaining an effective culture of discipline that provides proper guidance and support for a sound, effective and coordinated enterprise risk management process designed to identify potential events that may affect our business and to appropriately manage risks in order to provide reasonable assurance that our stated objectives will be achieved; and | |
• | identifying potential emerging risks in a routine and systematic manner, assessing the implications of those risks to our business, and managing those risks in a manner consistent with reducing the probability of their occurrence and potential consequences to our company to an acceptable level. |
Our Risk Committee receives regular reports from management, including the Chief Risk Officer and Chief Information Security Officer, and other standing board committees regarding interest rate, liquidity, credit, operational, compliance, technology, data security, third party and cyber risks, as well as other relevant risks and the actions taken by management to adequately address and mitigate those risks.
Corporate Governance Principles
Our board of directors has adopted Corporate Governance Principles which are posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank. These Corporate Governance Principles cover the general operating policies and procedures followed by our board of directors including:
The Risk Committee met seven times | |
The Corporate Governance Principles provide for our board of directors to meet in regularly scheduled executive sessions without management at least two times a year. Five executive sessions were conducted in 2018. The Lead Director presided over these executive sessions conducted by the non-management directors, all of whom are independent.
Director Independence
The New York Stock Exchange rules provide that a director does not qualify as independent unless the board of directors affirmatively determines that the director has no direct or indirect material relationship with the company. The New York Stock Exchange rules require our board of directors to consider all relevant facts and circumstances in determining the materiality of a director’s relationship with Provident and permit the board of directors to adopt and disclose standards to assist the board in making independence determinations. Accordingly, our board of directors has adopted Independence Standards to assist the board in determining whether a director has a material relationship with the company. These Independence Standards, which should be read with the New York Stock Exchange rules, are availableduring 2021.
The Risk Committee’s charter is posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank.
Our board of directors conducted an evaluation of director independence, based on the Independence Standards and the New York Stock Exchange rules. In connection with this review, our board of directors considered relevant facts and circumstances relating to relationships that each director and his or her immediate family members and their related interests had with Provident. In connection with its evaluation of director independence, the board considered the following relationships and transactions:
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After its evaluation, our board of directors affirmatively determined that Messrs. Adamo, Berry, Dunigan, Fekete, Gallagher, Harding, Hernandez, and Pugliese and Ms. Brooks is each an independent director. The board of directors determined that Mr. Martin is not independent because he serves as President and Chief Executive Officer of Provident.TECHNOLOGY COMMITTEE
Governance/Nominating Committee
The current members of our Governance/Nominating Committee are: Messrs. Hernandez (Chair), Berry, Fekete, and Gallagher. Each member of the Committee is considered independent as defined in the New York Stock Exchange corporate governance listing standards. The Committee’s charter is posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank. The Committee met six times during 2018.
The functions of our Governance/Nominating Committee include, among other things:
| 2021 Meetings and Charters | ||
Committee Chair: Mr. Pugliese Other Committee Members: Ms. Foley and Messrs. Gallagher and Harding. Each member of the Technology Committee is considered independent as defined in the New York Stock Exchange corporate governance listing standards. | The Technology Committee assists the board | |
| significant investments, and technology-related risks, including cyber and data security risks. • Review the major technology risk exposure, including operational aspects of information security and cybersecurity risks, and the steps taken to monitor and control such exposures; • Review the Company’s risk management and risk assessment guidelines and policies regarding technology risk; and • Receive reports from management regarding the Company’s business continuity planning. | The Technology Committee met four times during 2021. Our Technology Committee operates under a written charter approved by our board of directors, which is posted on the | |
BOARD NOMINEE EVALUATION AND SELECTION PROCESS
Our Governance/Nominating Committee identifies nominees for director by first assessing the performance, qualifications and skills of the current members of our board of directors willing to continue service. Current members of the board with skills and experience that are relevant to our business and who are willing to continue service are first considered for re-nomination, balancing the value of continuity of service by existing members of the board with that of obtaining a new perspective.
In the case of a current member of the board of directors, prior to re- nominationre-nomination an evaluation of the board member’s performance is conducted by the Governance/Nominating Committee using a written self- evaluationself-evaluation submitted by the current member, andas well as input from each other director obtainedbased on interviews conducted by the Lead Director. The Lead Director provides feedback to each current member being considered for re-nomination based on the input received from other directors.
If a vacancy should exist on our board, or if the size of the board is increased, the Governance/Nominating Committee will solicit suggestions for director candidates from all board members. In addition, the Governance/Nominating Committee is authorized by its charter to engage a third party to assist in the identification of director nominees. Persons under consideration to serve on our board of directors must have the highest personal and professional ethics and integrity.
Annual Board Performance Evaluation
ANNUAL BOARD AND COMMITTEE PERFORMANCE EVALUATIONS
Each year the board of directors conducts an evaluation of the board’s performance that seeks feedback from directors on the functioning of the board, including the board’s committee structure and leadership, culture, process, skills and resources. Typically, this evaluation is conducted using written questionnaires and the responses are reviewed with the Governance/Nominating Committee and at an executive session of the boardnon-executive directors conducted by the Lead Director. TheIn the past the board of directors has utilized, and annually considers the use of a third party to assist it in the annual performance evaluation.
Each committee of the board of directors conducts an annual written assessment of its performance which is reviewed by the committee and reported to the Governance/Nominating Committee.
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Procedures for the Recommendation of Directors by Stockholders
PROCEDURES FOR THE RECOMMENDATION OF DIRECTORS BY STOCKHOLDERS
If a determination is made that an additional candidate is needed for our board, the Governance/Nominating Committee will consider candidates properly submitted by our stockholders. Stockholders can submit the names of qualified candidates for director by writing to the Corporate Secretary at Provident Financial Services, Inc., 100111 Wood Avenue South, P.O. Box 1001, Iselin, New Jersey 08830-1001. The Corporate Secretary must receive a submission not less than 120 days prior to the date of Provident’s proxy materials for the preceding year’s Annual Meeting. A stockholder’s submission must be in writing and include the following information:
| • | the name and address of the stockholder as they appear on our books, and the number of shares of our common stock that are beneficially owned by such stockholder (if the stockholder is not a holder of record, appropriate evidence of the stockholder’s ownership should be provided); |
| • | the name, address and contact information for the candidate, and the number of shares of our common stock that are owned by the candidate (if the candidate is not a holder of record, appropriate evidence of the candidate’s ownership should be provided); |
| • | a statement of the candidate’s business and educational experience; |
| • | such other information regarding the candidate as would be required to be included in our proxy statement pursuant to SEC Regulation 14A; |
| • | a statement detailing any relationship between the candidate and Provident, Provident Bank and any subsidiaries of Provident Bank; |
| • | a statement detailing any relationship between the candidate and any customer, supplier or competitor of Provident and Provident Bank; |
| • | detailed information about any relationship or understanding between the proposing stockholder and the candidate; and |
| • | a statement that the candidate is willing to be considered and willing to serve as a director if nominated and elected. |
Stockholder submissions that are timely and that meet the criteria outlined above will be forwarded to the Chair of our Governance/Nominating Committee for further review and consideration. A nomination submitted by a stockholder for presentation at an Annual Meeting of our stockholders must comply with the procedural and informational requirements described later in this Proxy Statement under the heading “Advance Notice Of Business To Be Conducted at an Annual Meeting.”
Majority Voting Policy
MAJORITY VOTING POLICY
Our board of directors believes that each director should have the confidence and support of our stockholders. To that end, the board has adoptedwe have a majority voting policy that applies in uncontested elections of directors at a stockholders’ meeting. The policy is not applicable in any contested director election. Under theour majority voting policy, any incumbent director nominee in an uncontested election who receives a greater number of votes “WITHHELD” than votes cast “FOR” at a meeting of stockholders meeting shall promptly tender his or her proposed resignation following the certification of the stockholder vote.
The Governance/Nominating Committee will promptly consider the resignation and will recommend to the board whether to accept the resignation or take other action, including rejecting the resignation and addressing any apparent underlying causes of the failure of the director to obtain a majority of votes “FOR” his or her election. The board will act on the Governance/Nominating Committee’s recommendation no later than 90 days following the certification of the stockholder vote. The company will publicly disclose the board’s decision and process in a periodic or current report filed with or furnished to the SEC within 90 days following the certification of the stockholder vote. Any director who tenders his or her resignation will not participate in the Governance/Nominating Committee’s or full board’s deliberations, considerations or actions regarding whether or not to accept or reject the resignation or take any related action.
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Stockholder and Interested Party Communications with the Board
STOCKHOLDER AND INTERESTED PARTY COMMUNICATIONS WITH THE BOARD
Our stockholders and any other interested party may communicate with the board of directors, the non-managementnonmanagement directors, the Lead Director or with any individual director by writing to the Chair of the Governance/Nominating Committee, c/o Provident Financial Services, Inc., 100111 Wood Avenue South, P.O. Box 1001, Iselin, New Jersey 08830-1001. A communication from a stockholder should indicate that the author is a stockholder and, if shares of our common stock are not held of record, the letter should include appropriate evidence of stock ownership.
Code of Business Conduct and Ethics
CODE OF BUSINESS CONDUCT AND ETHICS
We have a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees, including the principal executive officer, principal financial officer, principal accounting officer, and all persons performing similar functions. Compliance with our Code is essential and promotion of its principles of honesty, integrity and fair dealing, as well as compliance with laws and regulations, is the responsibility of each and every one of our directors, officers and employees. Our Code of Business Conduct and Ethics is posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank. Amendments to and waivers from our Code of Business Conduct and Ethics will also be disclosed on Provident Bank’s website.
Transactions With Certain Related PersonsEthical Business Practices
Our Code of Business Conduct and Ethics outlines our shared values which challenge us to place the needs and well-being of the people we serve first. Everything we do is driven by our shared values that connect us across business units and functional areas of our business. These shared values shape our company’s culture, guiding and enabling each of us to make a positive difference for all of our stakeholders. We have adopted the following Guiding Principles to assist us in our efforts:
Act with Integrity
| • | Be honest, transparent, and trustworthy | |
| • | Do what’s right and hold others to that standard | |
| • | Seek to understand, actively listen, and assume positive intent of others | |
| • | Contribute to a work climate where diversity in background and thought are valued and supported |
Be Accountable
| • | Hold each other to a high standard of ownership and responsibility | |
| • | Set challenging goals without fear of failure | |
| • | Use good judgment and communicate with transparency | |
| • | Align efforts to support the business plans and strategies of the company |
Promote Teamwork
| • | Welcome new team members and seek opportunities to make those around us better | |
| • | Embrace collaboration to achieve greatness | |
| • | Value each other’s abilities and partner together, regardless of level, to achieve shared goals | |
| • | Encourage each other and celebrate our successes |
Pursue Excellence
| • | Strive to perform with the highest degree of competence and professionalism | |
| • | Provide the highest level of service to our customers and each other | |
| • | Deliver our best by engaging the right people and removing barriers to get things done | |
| • | Courageously challenge the way we do our business in pursuit of being even better |
Build for the Future
| • | Develop our collective knowledge, skills, and capabilities through constant learning | |
| • | Foster a culture that embraces positive change and rewards creativity and innovation | |
| • | Make decisions that support the long-term success of the company | |
| • | Build on our legacy of commitment to positively impact our customers, communities, and ourselves |
Our company’s commitment to good corporate citizenship is a fundamental part of creating sustained value for our stakeholders. We also value opportunities to give back to our communities through volunteer activities with non-profits and other organizations throughout the markets we serve, as well as through monetary donations made by our company and The Provident Bank Foundation.
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CORPORATE GOVERNANCE PRINCIPLES
Our board of directors has adopted Corporate Governance Principles which are posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank. These Corporate Governance Principles cover the general operating policies and procedures followed by our board of directors including:
| • | establishing the size and composition of our board of directors and the desired diversity, qualifications and skills of directors; |
| • | setting a minimum stock ownership requirement for directors at an amount having a value equal to five times a director’s annual cash retainer; |
| • | providing for director orientation, continuing education and an annual performance assessment of our board of directors; |
| • | selecting board committee leadership and membership; and |
| • | reviewing annual compensation paid to the non-management directors as recommended by the Compensation and Human Capital Committee. |
The Corporate Governance Principles provide for our board of directors to meet in regularly scheduled executive sessions without management at least two times a year. Five executive sessions were conducted in 2021. Carlos Hernandez, our Lead Director, presided over these executive sessions conducted by the non-management directors, all of whom are independent. Following these executive sessions, the Lead Director and another non-management director met with the Chief Executive Officer to provide real time feedback from the session.
DIRECTOR INDEPENDENCE
The New York Stock Exchange rules provide that a director does not qualify as independent unless the board of directors affirmatively determines that the director has no direct or indirect material relationship with the company. The New York Stock Exchange rules require our board of directors to consider all relevant facts and circumstances in determining the materiality of a director’s relationship with Provident and permit the board of directors to adopt and disclose standards to assist the board in making independence determinations. Accordingly, our board of directors has adopted Independence Standards to assist the board in determining whether a director has a material relationship with the company. These Independence Standards, which should be read with the New York Stock Exchange rules, are available on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank.
Our board of directors conducted an evaluation of director independence, based on the Independence Standards and the New York Stock Exchange rules. In connection with this review, our board of directors considered relevant facts and circumstances relating to relationships that each director and his or her immediate family members and their related interests had with Provident. In connection with its evaluation of director independence, the board considered the following relationships and transactions:
| • | Mr. Harding is an officer of a corporation which has a 1% ownership interest in, and is a general partner of, a limited partnership and is the non-member manager of a limited liability company. Both the limited partnership and the limited liability company are partners of an entity that has a commercial real estate loan and line of credit with Provident Bank. These loans were made in the ordinary course of business, were made on substantially the same terms prevailing for loans made to others unrelated to Provident Bank, and do not involve more than the normal risk of collectability or present other unfavorable features; |
| • | Mr. Leppert’s accounting firm and a real estate company in which he has a financial interest, each had a commercial loan with Provident Bank, which were made by SB One Bank prior to its merger with Provident Bank. He also had a home equity line of credit with no loan balance. All of these loans were paid in full and the home equity line of credit was terminated during 2021. These loans were made prior to Mr. Leppert becoming a member of our board of directors and were made in the ordinary course of business, on substantially the same terms prevailing for loans made to others unrelated to Provident Bank, and did not involve more than the normal risk of collectability or present other unfavorable features; and |
| • | Mr. McNerney’ appraisal firm conducted appraisals for Provident Bank during 2021. His appraisal firm received fees not exceeding $120,000 for appraisal work performed for Provident Bank during 2021. |
After its evaluation, our board of directors affirmatively determined that Ms. Foley and Ms. Leslie and Messrs. Adamo, Berry, Dunigan, Fekete, Gallagher, Harding, Hernandez, Leppert, McNerney, and Pugliese are each an independent director. The board of directors determined that Messrs. Martin and Labozzetta are not independent because they serve as executive officers of Provident and Provident Bank.
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TRANSACTIONS WITH CERTAIN RELATED PERSONS
Federal laws and regulations generally require that all loans or extensions of credit by Provident Bank to directors and executive officers must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with the general public and must not involve more than the normal risk of repayment or present other unfavorable features. However, regulationsRegulations also permit directors and executive officers to receive the same terms through benefit or compensation plans that are widely available to other employees, as long as the director or executive officer is not given preferential treatment compared to participating employees.
As of December 31, 2018,2021, Provident Bank had aggregate loans and loan commitments totaling $57,739$2.68 million to its executive officers or their related entities, none of which originated in 2018.2021. These loans and loan commitments were made on substantially the same terms, including interest rates and collateral, as those prevailing for comparable transactions with the general public and do not involve more than the normal risk of repayment or present other unfavorable features. It is the policy of Provident Bank that no loan or extension of credit of any type shall be made to any member of the board of directors or to their immediate family, or to any entity which is controlled by a member of the board of directors or their immediate family.family and none existed as of December 31, 2021.
Our Code of Business Conduct and Ethics requires directors and executive officers to promptly disclose any interest they may have in any proposed transaction involving Provident or Provident Bank, and any such director or executive officer shall abstain from any deliberation or voting on the transaction. Any such transaction requires the approval of a majority of the directors who have no interest in the proposed transaction. In addition, our directors and executive officers annually disclose any transactions, relationships or arrangements they or their related interests may have with Provident or Provident Bank. These disclosures, together with information obtained from each director’s annual statement of interest form, are used to monitor related party transactions and make independence determinations.
Anti-Hedging PolicyOur insurance agency subsidiary, SB One Insurance Agency, Inc. leases space from a real estate management company of which George Lista, an executive officer, is a 50% owner. We made lease payments of $199,850 to that real estate management company in 2021.
ANTI-HEDGING POLICY
Our stock trading policy prohibits our directors, officers and employees from engaging in any transaction designed to hedge or offset the economic risk of owning shares of our common stock. Accordingly, any hedging, derivative or other similar transaction that is specifically designed to reduce or limit the extent to which declines in the trading price of our common stock would affect the value of the shares of common stock owned by a director, officer or employee, is prohibited. In addition, the policy provides that our directors, officers and employees should avoid pledging their shares of our common stock as collateral for a margin account or loan.
Technology Committee
SHAREHOLDER ENGAGEMENT AND FEEDBACK
Our board of directors formed a Technology Committee in April, 2018. The current membersProvident engages with stockholders to better understand their perspectives on topics including corporate governance, ESG strategy, and executive compensation. In 2021, we concentrated our outreach efforts on approximately 12 institutional holders, which represented approximately 42.3% of our Technology Committee are: Messrs. Pugliese (Chair) and Harding and Ms. Brooks. Each memberownership as of the Technology Committee is considered independent as defined in the New York Stock Exchange corporate governance listing standards.
The Technology Committee assists the board of directors in its oversight responsibility of our technology strategy, including trends and significant investments, and technology-related risks. The Technology Committee met three times in 2018. Our Technology Committee operates under a written charter approved by our board of directors, which is posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank.December 31, 2021.
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ENVIRONMENTAL RESPONSIBILITY
We take seriously our commitment to integrate environmentally conscious considerations into our business strategy and institutional values. Our ESG Council is responsible for developing and reporting to the board on our progress, and we continually evaluate our ESG initiatives in consultation with the Board. We know that advancements toward becoming a more sustainable enterprise tend to be incremental rather than sweeping, but we are confident that the introduction of practices to reduce our carbon footprint will enable us to grow our business in a responsible and sustainable way. We are exploring different ways in which we might lower or mitigate the effects of our business and operations on the climate.
The ESG Council will continue to assess opportunities to grow the business responsibly. We have endeavored to reduce our carbon footprint at our administrative headquarters, located in Iselin, New Jersey, and throughout our network of 96 branch offices and located throughout New Jersey, New York, and Pennsylvania. Our efforts to date have focused mainly on recycling and waste reduction to reduce our overall impact on the climate. We continue to assess ways in which we can further lower our carbon emissions.
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Audit Committee
The current members of our Audit Committee are: Messrs. Fekete (Chair), Adamo, Dunigan, and Harding. Each member of the Audit Committee is considered independent as defined in the New York Stock Exchange corporate governance listing standards and under SEC Rule 10A-3.
The duties and responsibilities of the Audit Committee include, among other things:
Our Audit Committee met ten times during 2018. The Audit Committee reports to our board of directors on its activities and findings. The board of directors believes that Messrs. Adamo and Fekete each qualify as an Audit Committee financial expert as that term is defined in the rules and regulations of the SEC.
Pursuant to rules and regulations of the SEC, this Audit Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Provident specifically incorporates this information by reference, and otherwise shall not be deemed “soliciting material” or to be “filed” with the SEC subject to Regulation 14A or 14C of the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
Our Audit Committee operates under a written charter approved by our board of directors, which is posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank.
Management has primary responsibility for the internal control and financial reporting process, and for making an assessment of the effectiveness of our internal control over financial reporting. Our independent registered public accounting firm is responsible for performing an independent audit of our company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and to issue an opinion on those financial statements, and for providing an attestation report on the company’s internal control over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes.
As part of its ongoing activities, our Audit Committee has:
| • | reviewed and discussed with management, and our independent registered public accounting firm, the audited consolidated financial statements of Provident for the year ended December 31, |
| 2021; | |
| • | discussed with our independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301Communications with Audit Committees, |
| • | received and reviewed the written disclosures and the letter from our independent registered public accounting firm mandated by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with our independent registered public accounting firm its independence from Provident. |
Based on the review and discussions referred to above, the Audit Committee recommended to our board of directors that the audited consolidated financial statements for the year ended December 31, 20182021 and related notes be included in Provident’s Annual Report on Form 10-K for the year ended December 31, 20182021 and filed with the SEC. In addition, the Audit Committee approved the re-appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2019,2022, subject to the ratification of this appointment by our stockholders.
THE AUDIT COMMITTEE OF PROVIDENT FINANCIAL SERVICES, INC.
Frank L. Fekete (Chair)
Robert Adamo
James P. Dunigan
Matthew K. Harding
Edward J. Leppert
Nadine Leslie
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Compensation and Human Capital
Committee Additional Matters
Compensation Committee
The current members of our Compensation Committee are: Messrs. Gallagher (Chair), Harding and Pugliese and Ms. Brooks. Each member of the Compensation Committee has been determined to be independent as defined in the New York Stock Exchange corporate governance listing standards. The Compensation Committee is responsible for reviewing the performance of, and the compensation payable to, our named executive officers, including the Chief Executive Officer; the compensation payable to our non-management directors; management development and succession planning; and reviewing and evaluating incentive compensation plans and risks associated with such plans. The Compensation Committee is also responsible for the engagement of the compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”). The Compensation Committee’s oversight of our incentive compensation plans includes setting corporate performance measures and goals consistent with principles of safety and soundness, approving awards and administering long-term equity awards.
Director compensation is established by our board of directors upon the recommendation of the Compensation Committee and is discussed in this Proxy Statement under the heading “Director Compensation.”
The Compensation Committee’s charter is posted on the “Governance Documents” section of the “Investor Relations” page of Provident Bank’s website at www.provident.bank. The Compensation Committee met seven times during 2018.
Compensation Committee Interlocks and Insider Participation
Messrs. Dunigan, Gallagher, Harding, Leppert and Pugliese and Ms. Brooks served as members of the Compensation and Human Capital Committee (“Compensation Committee”) during 2018.2021. None of these directors has ever been an officer or employee of Provident and, none of them are executive officers of any other entity where one of our executive officers serves on the compensation committee or the board of directors, or which had any transactions or relationships with us in 20182021 that would require specific disclosures in this Proxy Statement under SEC rules.
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CompensationDiscussion and Analysis
| TABLE OF CONTENTS | |||
The following discussion provides an overview and analysis of our Compensation Committee’s philosophy and objectives in designing Provident’s compensation programs, as well as the compensation determinations and rationale for those determinations relating to our Chief Executive Officer, Chief Financial Officer, and the next three most highly compensated executive officers whom weofficers. These individuals named below are collectively referreferred to as our “named executive officers.” Our named executive officers for 2018 were:officers”:
| Name | Title | |
| CHRISTOPHER MARTIN | Executive Chairman | |
| ANTHONY J. LABOZZETTA | President and Chief Executive Officer (served as President and Chief Operating Officer of Provident Financial Services, Inc. and Provident Bank during 2021)(1) | |
| THOMAS M. LYONS | Senior Executive Vice President and Chief Financial Officer of Provident Financial Services, Inc. and Provident Bank | |
| JOHN KUNTZ | Senior Executive Vice President, General Counsel and Corporate Secretary of Provident Financial Services, Inc. and Senior Executive Vice President and Chief Administrative Officer of Provident Bank | |
| VALERIE O. MURRAY | Executive Vice President and Chief Wealth Management Officer of Provident Bank and President of Beacon Trust Company |
| In accordance with our established executive succession plan, effective January 1, 2022 Anthony Labozzetta assumed the role of President and Chief Executive Officer and Christopher Martin became Executive Chairman. |
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Our executive compensation program is designed to align pay with performance in a manner consistent with safe and sound business practices and sustainable financial performance consistent with the interests of our stockholders interests.stockholders. The key features of our executive compensation program are:
| • | A pay for performance philosophy aligning executive compensation with business strategies and generating stockholder returns; |
| • | Executive salaries and total compensation evaluated based on peer group data using a regional group of publicly-traded banks of comparable size and business model; |
| • | Annual cash incentive compensation opportunities tied to key corporate performance goals established by the Compensation Committee; |
| • | Long-term incentive compensation opportunities tied to key corporate performance goals established by the Compensation Committee, subject to a relative total stockholder return modifier, over a multi-year period; |
| • | A significant portion |
| • | No dividends are paid on stock awards subject to either time–vesting or performance-vesting conditions unless and until the awards have vested; |
| • | Incentive compensation plans that provide for risk mitigation and accountability, authorizing our Compensation Committee to condition incentive compensation awards with clawback, deferral, and adjustment provisions, and settlement in stock subject to holding periods; |
| • | Executives are subject to robust share ownership guidelines; |
| • | Executives are prohibited from engaging in hedging transactions to offset the economic risk of owning our common stock; |
| • | Perquisites are |
| limited; | |
| • | No excise tax gross-ups, pursuant to Section 280G of the Internal Revenue Code, are |
| agreements or any other executive compensation arrangements; | |
| • | Active oversight by the Compensation Committee consisting solely of independent directors; and |
| • | Assistance regularly provided to the Compensation Committee by an independent compensation consultant selected by the Compensation Committee. |
Financial and Strategic Highlights
Our Compensation Committee believes that executive compensation should be linked to Provident’s overall strategic success and financial performance and strategic success and the contribution of its executives to that performance.success.
Highlights of Provident’s 20182021 strategic operating and financial and operating performance include:
| • | |
| our customers and employees. | |
| • | |
| • | Our annualized return on average tangible equity |
| the fourth quarter of 2021. | |
| • | |
| • | We had solid loan growth. Excluding the forgiveness of loans made under the Paycheck Protection Program annualized commercial loan growth was 7.1% for 2021. |
| • | Total deposits increased $1.40 billion to $11.23 billion for 2021 and total core deposits represented 93.8% of total deposits at December 31, 2021. |
| • | Our team effectively managed credit risk and asset quality in spite of the COVID-19 pandemic and its impact on borrowers with non-performing loans at a manageable level totaling $48.0 million, or 0.50% of total loans at year-end 2021. Annualized net recoveries as a percentage of average loans outstanding was four basis points for 2021. |
| • | We increased our regular quarterly cash dividend to |
| • | Our capital position remained strong and we exceeded all regulatory requirements for |
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Key Executive Compensation Actions
The Compensation Committee regularly reviews the components of our executive compensation program with advice from its independent compensation consultant and after giving due consideration to the most recent nonbinding stockholder advisory vote on executive compensation, which resulted in a favorable vote of approximately 97%81% of the votes cast on the matter.
Highlights of key compensation actions taken in 20182021 were:
| • | |
| • |
| Ms. Murray’s Target opportunity composition was changed to tie her incentive more directly to our wealth management business which she manages. The incentive composition changed from 100% overall corporate results to 80% wealth business line results and 20% overall corporate results. Ms. Murray earned a cash incentive of 73.72% of base salary, representing 147.45% of Target. | |
| • | |
| • | Vesting of Long-Term Incentives for the 2019-2021 Vesting Period: Performance-vesting stock awards for the 2019-2021 performance period vested on March 4, 2022. For that three-year measurement period, the company achieved performance above the Threshold level, but below Target on both the cumulative Average Core Return on Average Assets and the cumulative Average Core Return on Tangible Equity goals. The Total Shareholder Return modifier was below the 25th percentile and the 80% modifier was applied to the performance-vesting grants attributable to the cumulative Average Core Return on Average Tangible Equity goal. Consequently, the shares vested at approximately 86.5% of Target. |
Our Compensation Committee retained the services of FW Cook to assist with compensation planning and analysis. FW Cook was retained by and reported directly to the Compensation Committee and did not perform any other services for Provident, Provident Bank or their affiliates or their management. The Compensation Committee periodically meets with its compensation consultant in executive session without management.
The Compensation Committee considered the independence of FW Cook in light of SEC rules and New York Stock Exchange corporate governance listing standards, and received a report from FW Cook addressing the independence of the firm and its consultants, which included the following factors: (1) that no other services were provided to Provident; (2) fees paid by Provident as a percentage of the firm’s total revenue; (3) policies or procedures maintained by the firm that are designed to prevent a conflict of interest; (4) that there were no business or personal relationships between the firm and its consultants and any member of the Compensation Committee; (5) any company stock owned by the firm and its consultants; and (6) that there were no business or personal relationships between Provident’s executive officers and the firm and its consultants. The Compensation Committee discussed these considerations and concluded that the work performed by FW Cook and its consultants involved in the engagement did not raise any conflict of interest and concluded that they were independent Compensation Committee consultants.
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Executive Compensation Philosophy
Our Compensation Committee believes that our executive compensation program is consistent with promoting sound risk management and long-term value creation for our stockholders. The program is intended to align the interests of our executive officers and employees with stockholders by rewarding performance against established corporate financial goals, strong executive leadership and superior individual performance. By offering annual cash incentives, long-term equity compensation and competitive benefits, we strive to attract, motivate and retain a highly qualified and talented team of executives who will help maximize long-term financial performance and earnings growth.
The total compensation paid to each named executive officer is based on the executive’s level of job responsibility, corporate financial and market performance measured against annual and three-year goals, an assessment of the executive’s individual performance and the competitive market. For the named executive officers and other members of executive management, annual and long-term incentive compensation is linked more directly to corporate financial performance, because these executives are in leadership roles that influence corporate financial results.
The Compensation Committee is responsible for the design, implementation and administration of the compensation program for our executive officers. FW Cook was engaged in 2017 to reviewreviewed our executive compensation program for 2018,2021, which included a review and recommendation of an appropriate peer group for assessing competitive compensation practices, and for making performance comparisons. The Compensation Committee used the following two peer groups when making its 20182021 executive compensation determinations:
| • | The SNL Small Cap U.S. Bank & Thrift Index (“SNL Index”) was used to compare long-term performance achievement. |
| The SNL Index includes over | |
| • | A regional peer group of 18 publicly traded thrift and banking institutions in the Northeast was used to compare base salary and total compensation. The regional peer group is used for setting compensation levels because these banks are broadly reflective of the environment in which Provident competes for executive talent, and they provide a good indicator of the current competitive range of compensation. Provident’s asset size ($ |
The individual peer banks remained substantially the same as those used in prior years, except that in 2018 F.N.B. Corp. and Signature Bank were removed from the peer group because their asset size significantly exceeded that of the peer group, and Lakeland Bancorp, OceanFirst Financial and Sterling Bancorp were added to the peer group as those companies are more comparable to Provident in asset size, competitive market and business mix. The current members of the peer group are as follows:
| Flushing Financial Corporation | Northwest Bancshares, Inc. | |||
| Fulton Financial Corporation | OceanFirst Financial Corp. | |||
| Community Bank System, Inc. | Independent Bank Corp. | S&T Bancorp, Inc. | ||
| Customers Bancorp, Inc. | Investors Bancorp, Inc. | Sterling Bancorp | ||
| Dime Community Bancshares, Inc. | Lakeland Bancorp, Inc. | Valley National Bancorp | ||
| First Commonwealth Financial Corporation | NBT Bancorp Inc. | WSFS Financial Corporation |
The Compensation Committee evaluates the peer groups annually for suitability and may modify peer groups from time to time based on mergers and acquisitions within the industry or other relevant factors. While our executive compensation program targets each named executive officer’s base salary, annual cash incentives and long-term equity compensation at peer median levels, actual compensation paid to a named executive officer may vary based on other factors, such as the individual’s performance, experience, responsibilities and competitive market conditions.
Although the Compensation Committee is ultimately responsible for designing our executive compensation program, input from our Chief Executive Officer is critical in ensuring that the Compensation Committee has the appropriate information needed to make informed decisions. The Chief Executive Officer participates in compensation-related actions associated with the other named executive officers purely in an informational and advisory capacity. He presents the other named executive officers’ performance summaries and recommendations relating to their compensation to the Compensation Committee for its review and approval. The Chief Executive Officer neither recommends nor participates in Compensation Committee deliberations regarding his own compensation.
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Elements of 20182021 Executive Compensation
We pay our named executive officers in accordance with a pay for performance philosophy by providing competitive compensation for demonstrated performance. The Compensation Committee employs a total compensation approach in establishing executive compensation opportunities, consisting of base salary, annual cash incentive compensation, long-term equity awards (which may include performance- and/or time-vesting restricted stock and/or stock options)are predominately performance-based), a competitive benefits package and limited perquisites.
| Compensation Element | Description or Purpose | Link to Performance | Fixed/ Performance- Based | Short-Long- Term | ||||
| Base Salary | Attract and retain executives | Based on individual performance, experience, and scope of responsibility | Fixed | Short-Term | ||||
| Annual Cash Incentive | Drive annual performance achievement | Links executive compensation to factors that are important for the company’s success | Performance-Based | Short-Term | ||||
| Long-Term Incentive Awards | 75% of the value of equity awards are based on pre-established company performance | Performance-Based | Long-Term | |||||
| Benefits | Supplemental Defined Contribution Benefit Plan | Non-Qualified excess plan to maintain qualified plan benefits limited by IRS rules | Fixed | Long-Term | ||||
| Other Compensation | Retirement plans and health and welfare benefits on the same basis as other | Benefit plans maintain competitive total compensation | Fixed |
As illustrated below, in 2021 approximately 62% of the target compensation (base salary, cash incentives and long-term equity) for Mr. Martin, who served as the Chief Executive Officer in 2021, and approximately 52% of the target compensation to our other named executive officers, was performance-based and not guaranteed. The Compensation Committee expects to continue to emphasize performance-based target compensation for Mr. Labozzetta who assumed the role of President and Chief Executive Officer in 2022.
| (1) | For 2021, Mr. Labozzetta had 38% of fixed pay, 33% of equity and 29% cash incentive. This would give Mr. Labozzetta 62% variable at risk pay. |
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As illustrated below in 2018, 64% of the target compensation (base salary, cash incentives and long-term equity) for Mr. Martin, and 52% of the target compensation to our other named executive officers, was performance-based and not guaranteed.
A competitive base salary is necessary to attract and retain talented executives. Each year, our Compensation Committee evaluates each named executive officer’s base salary level. In general, competitive base salary information and peer market data are furnished to the Compensation Committee by the independent compensation consultant, and each named executive officer’s base salary level is compared to the peer market data at the median. In setting base salary levels the Compensation Committee also assesses each individual named executive officer’s performance, leadership, operational effectiveness, tenure in the role, and experience in the industry, as well as competitive market conditions.
In establishing base salaries for 2018,2021, the Compensation Committee considered our company’s 2020 financial performance as well as the peer group and market compensation analysis performed in 2017 by FW Cook. Based on that information, the Compensation Committee determined that the base salary increases for Mr. Martin and the other named executive officers reflected below were appropriate because of strong financial performance in 2017,2020, our relative positioning to peers and broad merit increase budgets. Mr. Kuntz and Ms. Murray received largerMurray’s increase in base salary increaseswas reflective of her strong performance and efforts to account for largermaintain competitive deficits topositioning of her fixed pay with that of peers in the median base salary of the peer group for comparable roles.wealth management industry.
| Name | 2018 Salary ($) | 2017 Salary ($) | % Change | 2021 Salary | 2020 Salary | % Change | |||||||||||||||
| Christopher Martin | 740,000 | 720,000 | 2.8% | $ | 797,000 | $ | 785,000 | 1.5 | % | ||||||||||||
| Anthony J. Labozzetta | $ | 605,000 | $ | 584,120 | 3.6 | % | |||||||||||||||
| Thomas M. Lyons | 470,000 | 460,000 | 2.2% | $ | 516,000 | $ | 502,000 | 2.8 | % | ||||||||||||
| Donald W. Blum | 375,000 | 360,000 | 4.2% | ||||||||||||||||||
| John Kuntz | 425,000 | 400,000 | 6.3% | $ | 519,000 | $ | 505,000 | 2.8 | % | ||||||||||||
| Valerie O. Murray | 350,000 | 330,000 | 6.1% | $ | 430,000 | $ | 410,000 | 4.9 | % | ||||||||||||
Annual Cash Incentive Payment/Executive Annual Incentive Plan for 20182021
Annual cash incentive opportunities are provided to our named executive officers in order to align the attainment of annual corporate financial performance objectives with executive compensation. At the beginning of each year, the Compensation Committee assigns corporate financial goals and a range of annual cash incentive award opportunities to each named executive officer. The award opportunities are linked to a specific target and range of performance results for multiple corporate financial performance measures and are calculated as a percentage of the named executive officer’s base salary.
Our Compensation Committee established the performance goals for 20182021 under the Executive Annual Cash Incentive Plan which provided the opportunity for a cashan incentive payment based upon the achievement of corporate goals. The targeted levels of incentive opportunity for 20182021 were as follows:
| Annual Cash Incentive as a % of Base Salary | Annual Cash Incentive as a % of Base Salary | ||||||||||||||
| Participant | Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||
| Chief Executive Officer | 40% | 80% | 120% | ||||||||||||
| Chief Executive Officer and President and Chief Operating Officer | 37.5% | 75% | 112.5% | ||||||||||||
| Other Named Executive Officers | 25% | 50% | 75% | 25% | 50% | 75% | |||||||||
In 2021 the Compensation Committee reduced Mr. Martin’s opportunities at the Threshold, Target and Maximum levels from 40%, 80% and 120% to align with Mr. Labozzetta’s opportunities consistent with the establishment of a revised reporting structure associated with our executive succession plan. In addition, the Compensation Committee adjusted Ms. Murray’s incentive opportunity to be based 80% on the financial results of our wealth management business, which she manages, and 20% on general Corporate Goals.
For Mr. Martin and the other named executive officers, the Compensation Committee established the following 20182021 goals (collectively, the “Corporate Goals”) and relative weightings for the Executive Annual Cash Incentive Cash Plan:
| Corporate Goals | Weight | Threshold 90% | Target(1) 100% | Maximum 105% | Achievement | Weight | Threshold 90% | Target(1) 100% | Maximum 115% | Achievement | ||||||||||||||||||||||
| Earnings Per Share | 40% | $ | 1.65 | $ | 1.84 | $ | 1.93 | $ | 1.82 | 40% | $ | 1.27 | $ | 1.41 | $ | 1.62 | $ | 2.16 | ||||||||||||||
| Net Income (in millions) | 40% | $ | 107.4 | $ | 119.4 | $ | 125.3 | $ | 118.4 | 40% | $ | 97.5 | $ | 108.3 | $ | 124.6 | $ | 165.3 | ||||||||||||||
| Expense Ratio(2) | 20% | 2.11% | 1.96% | 1.93% | 1.97% | 20% | 1.98% | 1.87% | 1.82% | 1.86% | ||||||||||||||||||||||
| (1) | Performance is interpolated between the Threshold and Maximum opportunity levels. |
| (2) | Represents the ratio of non-interest expense divided by average annual assets. |
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The Maximum level for goal achievement was increased by the Compensation Committee from 105% in 2020 to 115% in recognition of the potential enhancement of financial results associated with projected credit loss reserve releases anticipated in 2021. Under the Executive Annual Cash Incentive Plan, cash incentive payments based on Provident’s actual 20182021 financial performance would be made if financial performance met or exceeded 90% of any one of the Corporate Goals (“Threshold”). The payout curve under thethis annual incentive plan provides a 50% of Target payout for each metric at Threshold performance achievement and 150% of Target for each metric at Maximum performance achievement. The wealth management business goals, associated with Ms. Murray’s incentive, are based on Total Revenue (weight 30%) with a target of $27.3 million, Total Net Income without allocated expenses (weight 30%) with a target of $8.05 million, AUM from New Business (weight 30%) with a target of $200,000 and Net New Relationships (weight 10%) with a target of 12. Threshold and maximum performance levels are established consistent with the Corporate Goals.
The overall actual achievement of Corporate Goals for 20182021 was above Threshold and slightly below Targetat Maximum for all three performance goals which are measured on a GAAP basis (Earningsthe Earnings Per Share and Net Income corporate goals, and between Target and Maximum for the Expense Ratio).Ratio corporate goal. The overall actual achievement of the Wealth Management goals for 2021 attributable to Ms. Murray was at Maximum for Total Net Income, AUM from New Business and Net New Relationships and between Target and Maximum for Total Revenue.
Under the Executive Annual Cash Incentive Plan authorizes the Compensation Committee has authority to adjust actual financial performance goalsresults for extraordinary, unusual and/or non-recurring items. There were no adjustments to the performance goals madeConsistent with that authority, and with past practices respecting certain strategic acquisitions by Provident, the Compensation Committee in 2018. Based upondetermined that it was appropriate to exclude the foregoing, and giving effect topositive impact of (1) the relative weightingsrelease of the performance goals,credit allowance associated with purchase credit deteriorated loans acquired in the 2020 SB One Bancorp transaction, and (2) the reversal of income recognized from the reduction of accrued contingent performance-based consideration associated with the 2019 acquisition of Tirschwell & Lowey. The Compensation Committee also excluded expenses incurred in connection with damage from Hurricane Ida. As a result the Compensation Committee authorized payouts below the Target level under the Executive Annual Incentive Plan to the named executive officers as notedreduced 2021 earnings in the following table.an aggregate amount of $2.589 million, net of tax.
| Name | Cash Incentive ($) | % of Salary | % of Target |
| Christopher Martin | 536,698 | 72.5% | 95.43% |
| Thomas M. Lyons | 224,261 | 47.7% | 95.43% |
| Donald W. Blum | 150,302 | 40.0% | 95.43% |
| John Kuntz | 202,789 | 47.7% | 95.43% |
| Valerie O. Murray | 167,003 | 47.7% | 95.43% |
Based on the foregoing, each of Mr. Martin and Mr. Labozzetta earned a cash incentive equal to 106.59% of his base salary, representing 142.12% of their Target opportunity. Messrs. Kuntz and Lyons each earned a cash incentive equal to 71.06% of base salary representing 142.12% of their Target opportunity. Ms. Murray earned a cash incentive equal to 73.72% of her base salary, representing 147.45% of Target, with the wealth management component (80%) of the payout being 148.78% of Target.
| Name | Cash Incentive | % of Salary | % of Target | |||||||||||
| Christopher Martin | $ | 849,523 | 106.59% | 142.12% | ||||||||||
| Anthony J. Labozzetta | $ | 644,870 | 106.59% | 142.12% | ||||||||||
| Thomas M. Lyons | $ | 366,670 | 71.06% | 142.12% | ||||||||||
| John Kuntz | $ | 368,801 | 71.06% | 142.12% | ||||||||||
| Valerie O. Murray | $ | 317,013 | 73.72% | 147.45% | ||||||||||
Our 2019 Long-Term Equity Incentive Plan provides the opportunity to grant various forms of equity incentives on a performance-vesting and time-vesting basis. The Compensation Committee believes that stock ownership by our officers and employees provides a significant incentive in building long-term stockholder value by further aligning the interests of officers and employees with stockholders. This component of compensation increases in importance as Provident’s common stock appreciates in value and serves as a retention tool for executives. The inclusion of performance-vesting awards also encourages a long-term strategic focus.
It is the policy of the Compensation Committee to make equity grants when the window for trading by directors and officers in Provident common stock is open under Provident’sour stock trading policy. Throughout the year, equity awards may be granted to new hires and promoted employees, or to existing employees to recognize superior performance with a grant date effective as of the date of the next regularly scheduled Compensation Committee meeting that falls when the window for trading is open under our stock trading policy.
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The Compensation Committee established the equity component of total compensation as a percentage of base salary for Mr. Martin and the other named executive officers based upon competitive total compensation data previously provided by the independent compensation consultant.
To maintain competitive total compensation and to further align executive pay with long-term financial performance, the Compensation Committee generally follows the guidelines below with respect to annual performance-vesting and time-vesting equity grants:
| Participant | Long-Term Equity Target Award as a % of Base Salary | |||
| Chief Executive Officer | 100% | |||
| President and Chief Operating Officer | 89% | |||
| Other Named Executive Officers | 60% | |||
The composition of the 20182021 long-term equity awards was as follows:
| Performance-Vesting | Time-Vesting | Performance-Vesting | Time-Vesting | ||||||||
| Participant | Restricted Stock | Stock Options | Restricted Stock | Restricted Stock | Stock Options | Restricted Stock | |||||
| Chief Executive Officer | 75% | 25% | — | 75% | 25% | — | |||||
| President and Chief Operating Officer | 76% | — | 24% | ||||||||
| Other Named Executive Officers | 75% | — | 25% | 75% | — | 25% | |||||
The Compensation Committee determined that for equity grants made in 20182021 to all named executive officers including Mr.Messrs. Martin, Lyons, and Kuntz and Ms. Murray 75% of the value of the grants would be subject to performance-vesting, and 25% of the value would be time-vesting over three years. The time-vesting component of Mr. Martin’s equity grant was in the form of stock options which the Compensation Committee viewed as performance-based because value is only realized if there is stock price appreciation over the term of the options. The equity grants made to Mr. Labozzetta were 76% performance-vesting and 24% time-vesting over three years. The time-vesting component related to the legacy SB One Bancorp incentive plan.
Performance-vesting grants are measured at the end of a three-year period based upon performance goals established by the Compensation Committee at the time of the equity grant. Currently the performance goals include projections of a multi-year core return on average assets and return on average tangible equity. The core return on average assets measure may exclude unanticipated and non-recurring items of revenue or expense as determined by the Compensation Committee.
The return on average tangible equity portion of the award is subject to a relative total shareholder return (“TSR”) modifier measured against the SNL Small Cap US Banks & Thrifts Index Peer Group.Index. The modifier provides for (i) a downward 20% adjustment of payout if our TSR is below the 25th25th percentile and (ii) an upward 20% adjustment of payout if our TSR is at or above the 75th75th percentile. Between the 25th25th percentile and the 75th75th percentile, the modifier has no impact on payout.
This performance framework is designed to encourage conduct that drives long-term strategic decisions suited to maximizing stockholder value, while maintaining a meaningful impact on total compensation from our three-year relative total shareholder return and maintaining an appropriate level of at-risk compensation for retention purposes.
| 2018-2020 Performance Goals(1) | Threshold | Target | Maximum | ||||||||||
| 2021-2023 Performance Goals(1) | Threshold | Target | Maximum | ||||||||||
| Core Return on Average Assets (ROAA) | 60% Weight | 60% Weight | |||||||||||
| Multi-Year Average Core ROAA | 111 bps. | 122 bps. | 127 bps. | 89 bps. | 99 bps. | 104 bps. | |||||||
| Return on Average Tangible Equity (ROATE)(2) | 40% Weight | 40% Weight | |||||||||||
| Multi-Year ROATE | 11.78% | 13.09% | 13.75% | 10.02% | 11.14% | 11.69% | |||||||
| (1) | Performance is interpolated between the Threshold and Maximum opportunity levels. |
| (2) | ROATE is subject to a Relative Total Shareholder Return (TSR) Modifier. The Modifier provides for (i) a downward 20% adjustment of payout if TSR against the peer group is below the |
The Compensation Committee has determined that the performance goals for long-term equity awards are appropriately set such that participants will attain: (i) the Threshold level of performance if minimum expected levels of performance are achieved, which the Committee believed were reasonably likely to be attained; (ii) the Target level of performance if projected business plan expectations are achieved, which the Committee believed had approximately an even likelihood of either being attained or not being attained; and (iii) the Maximum level of performance, which sets a cap on how much incentive compensation will be paid in the event the Target level is meaningfully exceeded, which the Compensation Committee believes is difficult to achieve.
| 2018 Performance-Vesting Calibration Long-Term Equity Award as a % of Target | |||
| Participant | Threshold | Target | Maximum |
| Chief Executive Officer | 50% | 100% | 150% |
| Other Named Executive Officers | 50% | 100% | 150% |
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| 2021 Performance-Vesting Calibration Long-Term Equity Award as a % of Target | |||||||
| Participant | Threshold | Target | Maximum | ||||
| Chief Executive Officer | 50% | 100% | 150% | ||||
| President and Chief Operating Officer | 50% | 100% | 150% | ||||
| Other Named Executive Officers | 50% | 100% | 150% | ||||
No dividends are paid with respect to any stock award subject to performance-vesting conditions unless and until the performance conditions are met and vesting occurs, and only on that portion of the stock award that actually vests. Similarly, there will be no payment of dividends on time-vesting stock awards made under our 2019 Long-Term Equity Incentive Plan, including the grants made in 2021, until the awards actually vest.
The performance-vesting awards granted in 2019 subject to three-year performance vested on March 4, 2022. For that three-year measurement period the company achieved performance above the Threshold level, but below Target on both the cumulative Average Core Return on Average Assets and the cumulative Average Core Return on Tangible Equity goals. The Total Shareholder Return modifier was below the 25th percentile and the 80% modifier was applied to the performance-vesting grants attributable to the cumulative Average Core Return on Average Tangible Equity goal. Consequently, the shares vested at approximately 86.5% of Target. As a result Messrs. Martin, Lyons, Kuntz, and Ms. Murray received 17,667 shares, 6,774 shares, 6,260 shares, and 5,217 shares, respectively along with the payment of accumulated dividends of $2.78 on each share that vested. Mr. Labozzetta had no grant that vested as he was not employed by Provident in 2019.
Benefits
We offer the named executive officers benefits that are generally available to all employees, including medical and dental, disability insurance, group life insurance coverage, an Employee Stock Ownership Plan (“ESOP”) and a 401(k) Plan with discretionary employer matching contributions. Certain of the named executive officers have accrued benefits under a noncontributory defined benefit pension plan that was frozen as of April 1, 2003 following the adoption of the ESOP. In addition to pension benefits,
medical and life insurance benefits are made available to certain employees when they retire. Although these post-retirement benefits have been eliminated, certain employees with ten or more years of service at the time the benefits were eliminated, including Mr. Martin, still qualify for these post-retirement benefits upon retirement. The named executive officers are also eligible for nonqualified benefits under the Non-Qualified Supplemental Defined Contribution Plan, which is designed to make up for the IRS limits on contributions to the tax-qualified 401(k) Plan and ESOP.
The Compensation Committee believes that perquisites should be provided on a limited basis. The following perquisites are currently provided: a club membership for Mr.Messrs. Martin and Labozzetta; the use of a company-owned automobile for Messrs. Martin and Blum.Labozzetta; and Messrs. Lyons, and Kuntz and Ms. Murray are paid a monthly car allowance. All of the named executive officers are eligible for an annual medical examination at Provident’s expense. These limited perquisites are provided to maintain a competitive compensation package.package relative to our peers.
Elements of Post-Termination Benefits
Employment AgreementAgreements
Provident entered into an Executive Chairman Agreement with Mr. Martin, has aneffective January 1, 2022. The agreement, which replaced his prior employment agreement, withhas a twelve monthtwo-year term that renews on Augustexpiring December 31, 2023 and provides for a base salary of each year for an additional twelve months.no less than $450,000. The employment agreement provides that if Mr. Martin’s employment is terminated for reasons other than for cause, or if he terminates his employment following an event constituting Good Reason (as defined in the agreement), Mr. Martin would be entitled to:to a lump sum cash payment equal to the base salary due for the remaining term of the agreement, plus continued insurance coverage for the remaining term of the agreement (or a cash equivalency payment). These payments would be in addition to any base salary and incentive compensation earned as of the date of
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Mr. Martin may resign from employment for good reason and receive these termination benefits in the event of certain adverse changes in his employment conditions. Under the employment agreement, thetermination. The termination benefits are subject to Mr. Martin’s compliance with non-solicit and non-compete provisions for a one year period of six months following his termination. The employment agreement does not provide for benefits for a termination following Mr. Martin’s death, retirement or disability or following a change in control. Benefits relating to a termination following a change in control are provided for in a separate change in control agreement between Provident and Mr. Martin described in the following section “Change in Control Agreements”.Agreements.”
Mr. Labozzetta had an employment agreement executed in connection with the SB One acquisition that had a term that concluded on December 31, 2021. Commencing on January 1, 2022 and continuing at each January 1 thereafter, the term automatically renews for an additional year.
In the event Mr. Labozzetta terminates his employment for “good reason” or is terminated without “cause” (as each such term is defined in the employment agreement), he would receive: (1) any standard compensation and benefits that have been earned by him as of his date of termination (the “standard termination benefits”); (2) a cash lump sum payment equal to his base salary and cash bonus due for the longer of: (i) the remaining term of the agreement; or (ii) 12 months following the date of termination (the “benefits period”); and (3) continued life, medical, dental and disability coverage during the benefits period, provided, however, that Provident or Provident Bank may make a cash equivalent payment in lieu of such coverage if such coverage is not practicable.
Subject to certain terms and limitations, the employment agreement further provides that during its term and for a period of one year thereafter (except following a change in control), Mr. Labozzetta may not compete with, or solicit customers or employees of, Provident or Provident Bank, provided, however, that upon his termination during any renewal term, any restrictions limiting Mr. Labozzetta from becoming an employee of or providing services to another institution would be reduced to six months.
Change in Control Agreements
Change in control agreements are reserved for a limited number of executives. Benefits are payable under the change in control agreements after the executive’s qualifying termination event as described below following a change in control of Provident. We have entered into a three-year change in control agreement with Messrs. Martin, Blum,Labozzetta, Kuntz, and Lyons and a two-year change in control agreement with Ms. Murray. Each of the agreements renews on the anniversary date of its respective effective date so that the remaining term is three years (or two years in the case of Ms. Murray) unless otherwise terminated.
Under the agreements:
Following a change in control and during the term of the agreement, the executive is entitled to a severance payment if:
Good reason is generally defined to include:
| • | the executive’s employment is terminated, other than for cause, disability, or retirement; or the executive terminates employment for good reason. |
| • | Good reason is generally defined to include: |
| • | the assignment of duties materially inconsistent with the executive’s positions, duties or responsibilities as in effect prior to the change in control; |
| • | a reduction in his or her base salary or fringe benefits; |
| • | a relocation of his or her principal place of employment by more than 25 miles from its location immediately prior to the change in control; or |
| • | a failure by Provident to obtain an assumption of the agreement by its successor. |
TheFor Messrs. Labozzetta, Kuntz and Lyons and Ms. Murray, the change in control severance payment is equal to three times (and in the case of Ms. Murray two times) the highest level of aggregate annualized base salary and other cash compensation paid to the executive during the calendar year termination occurs, or during either of the immediately preceding two calendar years, whichever is greater. In addition, the executive is generally entitled to receive life, health, dental and disability coverage for the remaining term of the agreement.
Provident entered into a Change in Control Agreement with Mr. Martin, effective January 1, 2022, which has a two-year term expiring December 31, 2023 and which replaced his prior three-year change in control agreement. Under this agreement, in the event of a qualifying termination event following a change in control of Provident, Mr. Martin would be entitled to a lump sum cash payment equal to three times the average annual compensation paid to him during the three completed calendar years preceding the year in which the change in control occurs, as well as continued insurance coverage for three years (or a cash equivalency payment). These payments would be in addition to any base salary and incentive compensation earned as of the date of termination.
The gross benefits under the change in control agreements for the named executive officers, other than Mr.Messrs. Martin and Labozzetta are reduced to avoid an excess parachute payment under Section 280G of the Internal Revenue Code if doing so results in a greater after-tax benefit to the executive.
The Compensation Committee considers these severance and change in control benefits to be an important part of the executive compensation program and consistent with market practice. The Compensation Committee believes that providing appropriate severance benefits helps attract and retain highly-qualified executives by mitigating the risks associated with leaving a previous employer and accepting a new position with Provident, and by providing income continuity following an unexpected termination.
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Executive Stock Ownership GuidelinesRequirements
Our Compensation Committee recommended, and our board of directors adopted, stock ownership levels for senior executives expressed as an amount of Provident common stock having a value equal to a multiple of base salary as follows:
| Tier I | President and Chief Executive Officer | 6 times base salary | |||
| Tier II | Other Named Executive Officers | 1.5 times base salary |
Each of the named executive officers currently exceeds these guidelines. An executive’s vested restricted stock awards, unvested time-vesting restricted stock awards, and shares of Provident common stock held in the ESOP and 401(k) Plan count toward compliance with the ownership guidelines.
Our stock trading policy prohibits the named executive officers and others from engaging in any transaction designed to hedge or offset the economic risk of owning shares of our common stock. In addition, the policy provides that they should avoid pledging their shares of our common stock as collateral for a margin account or loan.
Our cash and equity incentive awards are subject to clawback provisions contained in our Omnibus Incentive Compensation Plan Document.Plan. The clawback provisions provide that if the Company is required to prepare an accounting restatement due to the material noncompliance with any financial reporting requirements under the federal securities laws, whether or not as a result of misconduct, any executive officer who received incentive-based compensation based on erroneous data during the three-year period preceding the date of the accounting restatement, is required to reimburse the Company for compensation paid in excess of what would have been paid based on the data reported in the accounting restatement.
The cash and equity incentive awards granted to an employee are also subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events. Such events include termination of employment for cause, violation of material Companycompany policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply, or other conduct that is detrimental to the business or reputation of the Company.company.
The Compensation Committee believes that any risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on Provident. In addition, the Compensation Committee believes that the mix and design of the elements of our executive compensation program do not encourage management to assume excessive risks. The Omnibus Incentive Compensation Plan Document serves as a core governance document for our cash and equity incentive
compensation plans, establishing lines of authority, a foundation for relevant internal controls and procedures, and risk mitigation and accountability features, including clawbacks and deferrals.
The Compensation Committee annually assesses risks posed by the compensation plans maintained for the benefit of, and incentive compensation paid to, officers and employees. This comprehensive risk assessment is performed by our Chief Risk Officer, General Auditor and Chief Compliance Officer and is presented to and reviewed by the Compensation Committee. The risk assessment includes an evaluation of:
| • | the design of incentive plans to ensure they satisfy bank regulatory requirements and do not encourage excessive or imprudent risk taking; |
| • | the internal controls over determining incentive payments and a review of the accuracy of the incentive payments and any related accruals; and |
| • | the board of directors’ oversight of the incentive compensation program to determine if it provides effective governance over the program and satisfies regulatory expectations. |
The risk assessment conducted in 20182021 concluded that our incentive compensation plans provide incentives that appropriately balance risk and reward, are compatible with effective controls and risk management, and are supportive of strong governance, including active oversight by the board of directors.
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Tax Deductibility of Executive Compensation
Under 162(m)In light of the Internal Revenue Code, as amended by the Tax Cut and Jobs Act (“Tax Act”) on December 22, 2017, publicly-held corporations are subject to limits on the deductibility of executive compensation. Deductible compensation is limited to $1 million per year for each covered employee, defined as the publicly-held corporation’s principal executive officer, principal financial officer and three additional highest compensated officers during any taxable yearrepeal of the corporation beginning after December 31, 2016. The Tax Act provides “grandfathered” treatment for certain compensation in excess of the $1 million deductibility limitation, including compensation that is “qualified performance-based compensation” within the meaning of Section 162(m) prior to the Tax Act, if payable pursuant to a written binding contract in effect as of November 2, 2017 that is not modified in any material respect thereafter.
Our stock option grants and other performance-vesting equity grants awarded prior to November 2, 2017 are expected to continue to qualify as qualified performance-based compensation that is exempt from the deductibility limitation under Section 162(m). A number of requirements must be met for particular compensation to qualify for tax deductibility, so there can be no assurance that the incentive compensation awarded will be fully deductible in all circumstances.
The Compensation Committee has historically attempted to structure its compensation arrangements to achieve deductibilityexemption under Section 162(m) of the Internal Revenue Code, unless the benefit of such deductibility is considered by theour Compensation Committee may authorize compensation that is not tax deductible if it is determined to be outweighed byappropriate and in the need for flexibility or the attainment of other objectives. As was the case prior to the enactmentbest interests of the Tax Act, the Compensation Committee will continue to monitor issues concerning the deductibility of executive compensation. Since compensation objectives may not always be consistent with the requirements for tax deductibility, the Compensation Committee is prepared, when it deems appropriate, to enter into compensation arrangements under which payments will not be deductible under Section 162(m) of the Internal Revenue Code. Thus, deductibility will be one of many factors considered by the Compensation Committee in ascertaining appropriate levels or modes of compensation.company and our stockholders.
Compensation and Human Capital Committee Report
Pursuant to rules and regulations of the SEC, this Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Provident specifically incorporates this information by reference, and otherwise shall not be deemed “soliciting material” or to be “filed” with the SEC subject to Regulation 14A or 14C of the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
THE COMPENSATION AND HUMAN CAPITAL COMMITTEE OF PROVIDENT FINANCIAL SERVICES, INC.
Terence Gallagher, Chair
Laura L. Brooks
Matthew K. Harding
(Chair)
James P. Dunigan
Terence Gallagher
Edward J. Leppert
John Pugliese
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The following table shows compensation paid or awarded with respect to our named executive officers during the years indicated. The Compensation Discussion and Analysis contains information concerning how the Compensation Committee viewed its 20182021 compensation decisions for the named executive officers.
| Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | ||||||||
| Christopher Martin | 2018 | 739,231 | 555,000 | 185,000 | 536,698 | — | 178,823 | 2,194,752 | ||||||||
| Chairman, President and Chief Executive Officer | 2017 | 718,846 | 540,000 | 180,000 | 794,074 | 75,240 | 110,314 | 2,418,474 | ||||||||
| 2016 | 689,135 | 517,500 | 172,500 | 725,991 | 34,801 | 138,774 | 2,278,701 | |||||||||
| Thomas M. Lyons | 2018 | 469,615 | 282,000 | — | 224,261 | — | 122,034 | 1,097,910 | ||||||||
| Senior Executive Vice President and Chief Financial Officer | 2017 | 447,500 | 644,100 | — | 317,078 | 11,339 | 97,108 | 1,517,125 | ||||||||
| 2016 | 389,585 | 234,000 | — | 256,464 | 4,583 | 89,087 | 973,719 | |||||||||
| Donald W. Blum | 2018 | 374,423 | 225,000 | — | 150,302 | — | 103,892 | 853,617 | ||||||||
| Executive Vice President and Chief Lending Officer | 2017 | 359,424 | 216,000 | — | 248,148 | 6,204 | 80,313 | 910,089 | ||||||||
| 2016 | 344,654 | 207,000 | — | 226,872 | 2,870 | 87,997 | 869,393 | |||||||||
| John Kuntz | 2018 | 424,039 | 255,000 | — | 202,789 | — | 88,524 | 970,352 | ||||||||
| Senior Executive Vice President, Chief Administrative Officer and General Counsel | 2017 | 398,654 | 240,000 | — | 275,720 | 6,310 | 64,587 | 985,271 | ||||||||
| 2016 | 364,491 | 219,000 | — | 240,030 | 2,993 | 71,344 | 897,858 | |||||||||
| Valerie O. Murray | 2018 | 349,231 | 210,000 | — | 167,003 | — | 49,132 | 775,366 | ||||||||
| Executive Vice President, Chief Wealth Officer and President of Beacon Trust Company | 2017 | 304,674 | 180,000 | — | 227,469 | — | 38,604 | 750,747 | ||||||||
| 2016 | 223,316 | 56,002 | — | 63,901 | — | 28,317 | 371,536 |
| Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | ||||||||
Christopher Martin Executive Chairman (Formerly Chairman, President and Chief Executive Officer) | 2021 | 796,539 | 597,750 | 199,250 | 849,523 | — | 182,499 | 2,625,561 | ||||||||
| 2020 | 814,131 | 588,750 | 196,250 | 744,795 | — | 186,268 | 2,530,194 | |||||||||
| 2019 | 761,069 | 571,500 | 190,500 | 550,627 | — | 203,157 | 2,276,853 | |||||||||
Anthony Labozzetta President & Chief Executive Officer (Formerly President and Chief Operating Officer) | 2021 | 604,197 | 678,091 | — | 644,870 | — | 79,195 | 2,006,353 | ||||||||
| 2020 | 224,661 | — | — | 391,720 | — | 17,688 | 634,069 | |||||||||
Thomas M. Lyons Senior Executive Vice President and Chief Financial Officer | 2021 | 515,462 | 309,600 | — | 366,670 | — | 116,562 | 1,308,294 | ||||||||
| 2020 | 520,616 | 301,200 | — | 313,348 | 18,830 | 115,116 | 1,269,110 | |||||||||
| 2019 | 486,281 | 292,200 | — | 231,520 | 16,798 | 138,408 | 1,165,207 | |||||||||
John Kuntz Senior Executive Vice President, Chief Administrative Officer and General Counsel | 2021 | 518,462 | 311,400 | — | 368,801 | — | 98,845 | 1,297,508 | ||||||||
| 2020 | 521,885 | 303,000 | — | 315,221 | 10,273 | 95,359 | 1,245,738 | |||||||||
| 2019 | 448,943 | 270,000 | — | 213,930 | 8,571 | 106,012 | 1,047,456 | |||||||||
Valerie O. Murray Executive Vice President, Chief Wealth Officer and President of Beacon Trust | 2021 | 429,231 | 258,000 | — | 317,013 | — | 65,220 | 1,069,464 | ||||||||
| 2020 | 424,154 | 246,000 | — | 255,922 | — | 64,092 | 990,168 | |||||||||
| 2019 | 373,943 | 225,000 | — | 178,275 | — | 54,715 | 831,933 |
| (1) | The amounts shown represent base salary earned during each fiscal year covered. The amount shown for Mr. Labozzetta in 2020 reflects a partial year. Mr. Labozzetta’s employment commenced on August 1, 2020. The amounts shown for all NEOs in 2020 reflect an extra pay period equivalent to two weeks pay. |
| (2) | The amounts shown reflect the aggregate grant date fair value of time-vesting and performance-vesting awards computed in accordance with FASB ASC Topic 718. The grant date fair values of the performance-vesting portion of the awards are computed at Target performance achievement. The grant date fair values of the performance-vesting portion of the awards at Maximum performance achievement would be: |
| (3) | The amounts shown reflect the grant date fair value of time-vesting stock options computed in accordance with FASB ASC Topic 718. No performance-vesting stock options were granted in the years presented. |
| (4) | The amounts shown reflect the payment made under the Executive Annual Incentive Plan. Commencing in 2021, Ms. Murray’s cash incentive payment is based on 80% wealth management and 20% company results. |
| PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 43 | ||
| (5) | The amounts in this column reflect the actuarial increase in the present value at each year end compared to the prior year end of the named executive officer’s benefits under all defined benefit pension plans. Mr. Martin rolled over his Pension Plan benefit to the 401(k) Plan on October 16, 2018. For |
| (6) | The amounts in this column represent all other compensation not properly reported in other columns of the Summary Compensation Table including perquisites (non-cash benefits and perquisites such as the use of employer-owned automobiles, car allowances, membership dues and other personal benefits), the value of cash dividend |
All Other Compensation
| Name | Year | Perquisites and Other Personal Benefits ($) | Dividends on Stock Awards ($) | Company Contribution on Employee Medical and Insurance Benefits ($) | Company Contributions to Retirement, 401(k) and Non-Qualified Plans ($) | Total ($) | ||||||
| Christopher Martin | 2021 | 17,355 | 46,742 | 19,015 | 99,387 | 182,499 | ||||||
| 2020 | 15,732 | 82,330 | 19,528 | 68,678 | 186,268 | |||||||
| 2019 | 15,310 | 91,604 | 17,714 | 78,529 | 203,157 | |||||||
| Anthony Labozzetta | 2021 | 16,431 | — | 23,010 | 39,754 | 79,195 | ||||||
| 2020 | 1,022 | — | 8,301 | 8,365 | 17,688 | |||||||
| Thomas M. Lyons | 2021 | 6,000 | 20,180 | 24,557 | 65,825 | 116,562 | ||||||
| 2020 | 6,000 | 36,049 | 25,341 | 47,726 | 115,116 | |||||||
| 2019 | 7,000 | 53,886 | 23,547 | 53,975 | 138,408 | |||||||
| John Kuntz | 2021 | 7,000 | 18,384 | 1,252 | 72,209 | 98,845 | ||||||
| 2020 | 6,000 | 30,283 | 6,320 | 52,756 | 95,359 | |||||||
| 2019 | 6,000 | 34,599 | 9,724 | 55,689 | 106,012 | |||||||
| Valerie O. Murray | 2021 | 6,500 | 15,133 | 1,884 | 41,703 | 65,220 | ||||||
| 2020 | 6,000 | 22,924 | 2,268 | 32,900 | 64,092 | |||||||
| 2019 | 6,000 | 10,251 | 2,195 | 36,269 | 54,715 |
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | | | ||
All Other Compensation
| Name | Year | Perquisites and Other Personal Benefits ($) | Dividends on Stock Awards ($) | Company Contribution on Employee Medical and Insurance Benefits ($) | Company Contributions to Retirement, 401(k) and Non-Qualified Plans ($) | Total ($) | |||||
| Christopher Martin | 2018 | 12,481 | 72,752 | 17,003 | 76,587 | 178,823 | |||||
| 2017 | 12,009 | 570 | 16,993 | 80,742 | 110,314 | ||||||
| 2016 | 13,274 | 24,432 | 15,908 | 85,160 | 138,774 | ||||||
| Thomas M. Lyons | 2018 | 6,000 | 41,595 | 22,265 | 52,174 | 122,034 | |||||
| 2017 | 6,000 | 16,206 | 21,802 | 53,100 | 97,108 | ||||||
| 2016 | 6,000 | 10,991 | 21,002 | 51,094 | 89,087 | ||||||
| Donald W. Blum | 2018 | 7,884 | 25,736 | 21,042 | 49,230 | 103,892 | |||||
| 2017 | 6,727 | 4,432 | 20,696 | 48,458 | 80,313 | ||||||
| 2016 | 7,058 | 9,769 | 19,921 | 51,249 | 87,997 | ||||||
| John Kuntz | 2018 | 6,000 | 27,107 | 2,368 | 53,049 | 88,524 | |||||
| 2017 | 6,000 | 4,757 | 1,649 | 52,181 | 64,587 | ||||||
| 2016 | 6,750 | 9,922 | 1,548 | 53,124 | 71,344 | ||||||
| Valerie O. Murray | 2018 | 6,000 | 7,264 | 2,056 | 33,812 | 49,132 | |||||
| 2017 | 5,000 | 2,671 | 1,984 | 28,949 | 38,604 | ||||||
| 2016 | 250 | 3,735 | 1,638 | 22,694 | 28,317 |
Perquisites
| Name | Year | Personal Use of Company Car/Car Allowance ($)(7) | Club Dues ($) | Total Perquisites and Other Personal Benefits ($)(8) | ||||
| Christopher Martin | 2018 | 6,237 | 6,244 | 12,481 | ||||
| 2017 | 5,937 | 6,072 | 12,009 | |||||
| 2016 | 5,134 | 7,440 | 13,274 | |||||
| Thomas M. Lyons | 2018 | 6,000 | — | 6,000 | ||||
| 2017 | 6,000 | — | 6,000 | |||||
| 2016 | 6,000 | — | 6,000 | |||||
| Donald W. Blum | 2018 | 7,884 | — | 7,884 | ||||
| 2017 | 6,727 | — | 6,727 | |||||
| 2016 | 6,308 | — | 7,058 | |||||
| John Kuntz | 2018 | 6,000 | — | 6,000 | ||||
| 2017 | 6,000 | — | 6,000 | |||||
| 2016 | 6,000 | — | 6,750 | |||||
| Valerie O. Murray | 2018 | 6,000 | 6,000 | |||||
| 2017 | 5,000 | — | 5,000 | |||||
| 2016 | — | — | 250 |
| Name | Year | Personal Use of Company Car/Car Allowance ($)(7) | Club Dues ($) | Total Perquisites and Other Personal Benefits ($)(8) | ||||
| Christopher Martin | 2021 | 10,111 | 7,244 | 17,355 | ||||
| 2020 | 9,344 | 6,388 | 15,732 | |||||
| 2019 | 6,428 | 6,432 | 15,310 | |||||
| Anthony Labozzetta | 2021 | 3,450 | 12,981 | 16,431 | ||||
| 2020 | 1,022 | — | 1,022 | |||||
| Thomas M. Lyons | 2021 | 6,000 | — | 6,000 | ||||
| 2020 | 6,000 | — | 6,000 | |||||
| 2019 | 6,000 | — | 7,000 | |||||
| John Kuntz | 2021 | 6,000 | — | 7,000 | ||||
| 2020 | 6,000 | — | 6,000 | |||||
| 2019 | 6,000 | — | 6,000 | |||||
| Valerie O. Murray | 2021 | 6,000 | — | 6,500 | ||||
| 2020 | 6,000 | — | 6,000 | |||||
| 2019 | 6,000 | — | 6,000 |
| (7) | For Messrs. Martin |
| (8) | The amounts shown |
| PROVIDENT FINANCIAL SERVICES, INC. | | | ||
The following table shows certain information as to grants of plan-based awards during 20182021 made to the named executive officers. The awards granted on January 25, 201828, 2021 represent the cash incentive payments that could be earned based on performance under the Executive Annual Cash Incentive Plan for 2018.2021. The awards granted on March 5, 20183, 2021 are long-term equity incentive awards which are primarily performance-vesting awards. The Compensation Discussion and Analysis contains information about cash- and equity-based incentive awards made to our named executive officers.
GRANTS OF PLAN-BASED AWARDS TABLE FOR THE YEAR ENDED DECEMBERGrants of Plan-Based Awards Table for the Year Ended December 31, 20182021
| All Other | All Other | Grant | ||||||||||||||||||||
| Stock | Option | Date Fair | ||||||||||||||||||||
| Awards: | Awards: | Exercise | Value of | |||||||||||||||||||
| Estimated Possible Payouts | Estimated Possible Payouts | Number | Number of | or Base | Stock | |||||||||||||||||
| Under Non-Equity Incentive | Under Equity Incentive Plan | of Shares | Securities | Price of | and | |||||||||||||||||
| Plan Awards(1) | Awards(2) | of Stock | Underlying | Option | Option | |||||||||||||||||
| Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | or Units | Options | Awards | Awards | ||||||||||||
| Name | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | (#)(4) | ($/Sh) | ($)(5) | |||||||||||
| Christopher Martin | 1/25/2018 | 59,200 | 592,000 | 888,000 | ||||||||||||||||||
| 3/5/2018 | 9,936 | 21,586 | 34,949 | 555,000 | ||||||||||||||||||
| 3/5/2018 | 43,124 | 25.58 | 185,000 | |||||||||||||||||||
| Thomas M. Lyons | 1/25/2018 | 23,500 | 235,000 | 352,500 | ||||||||||||||||||
| 3/5/2018 | 3,787 | 8,226 | 13,319 | 211,500 | ||||||||||||||||||
| 3/5/2018 | 2,756 | 25.58 | 70,500 | |||||||||||||||||||
| Donald W. Blum | 1/25/2018 | 18,750 | 187,500 | 281,250 | ||||||||||||||||||
| 3/5/2018 | 3,021 | 6,563 | 10,626 | 168,750 | ||||||||||||||||||
| 3/5/2018 | �� | 2,199 | 25.58 | 56,250 | ||||||||||||||||||
| John Kuntz | 1/25/2018 | 21,250 | 212,500 | 318,750 | ||||||||||||||||||
| 3/5/2018 | 3,424 | 7,439 | 12,044 | 191,250 | ||||||||||||||||||
| 3/5/2018 | 2,492 | 25.58 | 63,750 | |||||||||||||||||||
| Valerie O. Murray | 1/25/2018 | 17,500 | 175,000 | 262,500 | ||||||||||||||||||
| 3/5/2018 | 2,819 | 6,125 | 9,917 | 157,500 | ||||||||||||||||||
| 3/5/2018 | 2,052 | 25.58 | 52,500 | |||||||||||||||||||
| Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock | All Other Option Awards: Number of Securities Underlying | Exercise or Base Price of Option | Grant Date Fair Value of Stock and Option | |||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | or Units (#)(3) | Options (#)(4) | Awards ($/Sh) | Awards ($)(5) | |||||||||||
| Christopher Martin | 1/28/2021 | 59,775 | 597,750 | 896,625 | ||||||||||||||||||
| 3/3/2021 | 13,063 | 28,318 | 45,764 | 597,750 | ||||||||||||||||||
| 3/3/2021 | 56,605 | 20.66 | 199,250 | |||||||||||||||||||
| Anthony Labozzetta | 1/28/2021 | 45,375 | 453,750 | 680,625 | ||||||||||||||||||
| 3/3/2021 | 11,238 | 24,362 | 39,371 | 514,250 | ||||||||||||||||||
| 3/3/2021 | 7,930 | 20.66 | 163,841 | |||||||||||||||||||
| Thomas M. Lyons | 1/28/2021 | 25,800 | 258,000 | 387,000 | ||||||||||||||||||
| 3/3/2021 | 5,074 | 11,000 | 17,777 | 232,200 | ||||||||||||||||||
| 3/3/2021 | 3,746 | 20.66 | 77,400 | |||||||||||||||||||
| John Kuntz | 1/28/2021 | 25,950 | 259,500 | 389,250 | ||||||||||||||||||
| 3/3/2021 | 5,104 | 11,064 | 17,880 | 233,550 | ||||||||||||||||||
| 3/3/2021 | 3,768 | 20.66 | 77,850 | |||||||||||||||||||
| Valerie O. Murray | 1/28/2021 | 21,500 | 215,000 | 322,500 | ||||||||||||||||||
| 3/3/2021 | 4,229 | 9,167 | 14,815 | 193,500 | ||||||||||||||||||
| 3/3/2021 | 3,122 | 20.66 | 64,500 | |||||||||||||||||||
| (1) | The amounts shown at Target assume achievement of 100% of |
| (2) | Represents the number of restricted stock awards that may vest if performance goals are achieved over the three-year period |
| (3) | Represents the number of three-year time-vesting restricted stock awards granted. |
| (4) | Represents the number of three-year time-vesting stock options granted. |
| (5) | Represents the grant date fair value of the awards determined in accordance with FASB ASC Topic 718. Note |
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | | | ||
Outstanding Equity Awards at Year-End
The following table shows certain information about outstanding equity awards as of December 31, 20182021 for our named executive officers.
OUTSTANDING EQUITY AWARDS AT DECEMBEROutstanding Equity Awards At December 31, 20182021
| Option Awards | Stock Awards | |||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date(1) | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | |||||||||
| Christopher Martin | 29,428 | — | 14.50 | 2/24/2021 | — | — | 69,126 | 1,668,010 | ||||||||||
| 20,000 | — | 14.88 | 2/3/2022 | |||||||||||||||
| 26,755 | — | 15.23 | 2/19/2023 | |||||||||||||||
| 28,000 | 7,000 | 16.38 | 2/19/2024 | |||||||||||||||
| 65,972 | — | 18.34 | 2/19/2025 | |||||||||||||||
| 50,885 | 25,442 | 18.70 | 2/24/2026 | |||||||||||||||
| 14,623 | — | 14.50 | 2/24/2021 | |||||||||||||||
| 22,542 | — | 14.88 | 2/3/2022 | |||||||||||||||
| 25,126 | — | 15.23 | 2/19/2023 | |||||||||||||||
| 14,286 | 28,571 | 26.31 | 3/7/2027 | |||||||||||||||
| 45,762 | — | 16.38 | 2/19/2024 | |||||||||||||||
| — | 43,124 | 25.58 | 3/5/2028 | |||||||||||||||
| Thomas M. Lyons | — | — | — | — | 20,434 | 493,072 | 24,742 | 597,024 | ||||||||||
| Donald W. Blum | — | — | — | — | 4,489 | 108,320 | 20,825 | 502,507 | ||||||||||
| John Kuntz | — | — | — | — | 4,989 | 120,385 | 22,854 | 551,467 | ||||||||||
| Valerie O. Murray | — | — | — | — | 3,591 | 86,651 | 13,005 | 313,811 | ||||||||||
| Option Awards | Stock Awards | |||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date(1) | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | |||||||||
| Christopher Martin | 26,755 | 15.23 | 2/19/2023 | — | — | 77,006 | 1,865,085 | |||||||||||
| 35,000 | — | 16.38 | 2/19/2024 | |||||||||||||||
| 65,972 | — | 18.34 | 2/19/2025 | |||||||||||||||
| 76,327 | — | 18.70 | 2/24/2026 | |||||||||||||||
| 42,857 | — | 26.31 | 3/7/2027 | |||||||||||||||
| 43,124 | — | 25.58 | 3/5/2028 | |||||||||||||||
| 27,790 | 13,895 | 27.25 | 3/4/2029 | |||||||||||||||
| 35,747 | 71,493 | 20.62 | 3/3/2030 | |||||||||||||||
| — | 56,605 | 20.66 | 3/3/2031 | |||||||||||||||
| 25,126 | — | 15.23 | 2/19/2023 | |||||||||||||||
| 45,762 | — | 16.38 | 2/19/2024 | |||||||||||||||
| Anthony Labozzetta | — | — | — | — | 7,930 | 192,065 | 24,362 | 590,048 | ||||||||||
| Thomas M. Lyons | — | — | — | — | 7,075 | 171,357 | 29,676 | 718,753 | ||||||||||
| John Kuntz | — | — | — | — | 7,043 | 170,581 | 29,212 | 707,515 | ||||||||||
| Valerie O. Murray | — | — | — | — | 5,799 | 140,452 | 24,056 | 582,636 | ||||||||||
| (1) | Stock options generally expire 10 years after the grant date. |
| (2) | Amounts shown represent the number of time-vesting stock awards that were not vested at December 31, |
| (3) | Amounts shown are based on the fair market value of Provident common stock on December 31, |
| (4) | Amounts shown represent the number of stock awards that may vest if performance goals are achieved over the three-year periods |
| PROVIDENT FINANCIAL SERVICES, INC. | | | ||
Option Exercises and Stock Vested
The following table shows certain information about restricted stock awards that vested and stock options that were exercised in 2018.2021.
| Stock Awards | Stock Options | ||||||||||||||
| Number of Shares | Value Realized on | Value Realized | |||||||||||||
| Acquired on Vesting | Vesting | Number of Shares | on Exercise | Stock Awards | Stock Options | ||||||||||
| Name | (#) | ($)(1) | Exercised(#) | ($)(2) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | Number of Shares Exercised (#) | Value Realized on Exercise ($)(2) | |||||||
| Christopher Martin | 31,224 | 817,444 | 33,815 | 366,965 | 16,173 | 364,216 | 86,593 | 579,264 | |||||||
| Anthony Labozzetta | — | — | — | — | |||||||||||
| Thomas M. Lyons | 13,539 | 353,943 | 2,560 | 39,173 | 9,191 | 203,164 | — | — | |||||||
| Donald W. Blum | 11,958 | 312,611 | 10,507 | 151,826 | |||||||||||
| John Kuntz | 12,551 | 328,112 | 6,924 | 101,354 | 8,453 | 186,648 | — | — | |||||||
| Valerie O. Murray | 3,256 | 85,053 | — | — | 6,954 | 153,558 | — | — | |||||||
| (1) | The value realized on vesting represents the market value on the day the stock vested. |
| (2) | The value realized on a stock option exercise is the difference between the fair market value on the exercise date and the stock option grant price. |
We maintain a noncontributory defined benefit pension plan which coverscovering full-time employees hired prior towho had attained age 21 with at least one year of service as of April 1, 2003, the date on which the pension plan was frozen. All participants in the pension plan are 100% vested.
Pension plan participants generally become entitled to retirement benefits upon their later attainment of age 65 or the fifth anniversary of participation in the plan, which is referred to as the normal retirement date. The normal retirement benefit is equal to 1.35% of the participant’s average final compensation up to the average social security level, plus 2% of the participant’s average final compensation in excess of the average social security level multiplied by the participant’s years of credited service to a maximum of 30 years.
Vested retirement benefits generally are paid beginning on the participant’s normal retirement date. Participants with accrued benefits in the pension plan prior to April 1, 2003 continued to vest in their pre-April 1, 2003 accrued benefit.
A participant may elect to retire prior to age 65 and receive early retirement benefits if retirement occurs after completion of at least five consecutive years of vested service and attainment of age 55. If an early retirement election is made by a participant, retirement benefits will begin on the first day of any month during the ten-year period preceding the participant’s normal retirement date, as directed by the retiring participant. If a participant elects to retire prior to attaining age 65 and after completing five years of credited service, his or her accrued pension benefit will be a reduced benefit calculated pursuant to the terms of the pension plan. However, if a participant elects to retire early after both attaining age 60 and completing 25 years of credited service, his or her accrued pension benefit will be unreduced. If the termination of service occurs after the normal retirement date, the participant’s benefits will begin on the participant’s postponed retirement date.
The following table shows the present value of accumulated benefits payable to each of our named executive officers, including the number of years of service credited to each named executive officer, under each of the pension plans determined using interest rate and mortality rate assumptions consistent with those used in Provident’s financial statements.
PENSION BENEFITS AT AND FOR THE YEAR ENDED DECEMBER 31, 2018
| Number of Years Credited Service | Present Value of Accumulated Benefit | Payments During Last | ||||||
| Name | Plan Name | (#) | ($)(1) | Fiscal Year | ||||
| Christopher Martin | The First Sentinel Pension Plan | 34 | 541,809 | — | ||||
| Thomas M. Lyons | The First Sentinel Pension Plan | 19 | 57,958 | — | ||||
| Donald W. Blum | Provident Bank Pension Plan | 17 | 44,678 | — | ||||
| John Kuntz | Provident Bank Pension Plan | 17 | 48,147 | — | ||||
| Valerie O. Murray | None applicable | — | — | — |
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | | | ||
Pension Benefits At And For The Year Ended December 31, 2021
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | ||||
| Christopher Martin | None applicable | — | — | — | ||||
| Anthony Labozzetta | None applicable | — | — | — | ||||
| Thomas M. Lyons | The First Sentinel Pension Plan | 22 | 89,343 | — | ||||
| John Kuntz | Provident Bank Pension Plan | 20 | 62,443 | — | ||||
| Valerie O. Murray | None applicable | — | — | — |
| (1) | The amounts shown are determined based on the measurement date of December 31, 2021. For the discount rate and other assumptions used, please refer to note 13 to our audited financial statements contained in our Annual Report on Form 10-K. Mr. Martin’s interest in The First Sentinel Pension Plan was rolled over into the 401(k) Plan on October 16, 2018. |
Non-Qualified Deferred Compensation
The following table shows certain information about the participation by each named executive officer in our non-qualified defined contribution plans at and for the year ended December 31, 2018.2021.
NON-QUALIFIED DEFERRED COMPENSATION AT AND FOR THE YEAR ENDED DECEMBERNon-Qualified Deferred Compensation At And For The Year Ended December 31, 20182021
| Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($)(1) | Aggregate Earnings in Last Fiscal Year ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year-End ($)(3) | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($)(1) | Aggregate Earnings in Last Fiscal Year ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year-End ($)(3) | ||||||||||
| Christopher Martin | — | 41,002 | 25,518 | — | 926,043 | — | 57,775 | 34,601 | — | 1,200,288 | ||||||||||
| Anthony Labozzetta | — | 35,404 | 7,415 | — | 836,158 | |||||||||||||||
| Thomas M. Lyons | — | 18,147 | 2,310 | — | 91,352 | — | 26,759 | 5,088 | — | 181,123 | ||||||||||
| Donald W. Blum | — | 10,214 | 1,708 | — | 64,344 | |||||||||||||||
| John Kuntz | — | 14,286 | 1,871 | — | 73,591 | — | 27,086 | 4,329 | — | 158,246 | ||||||||||
| Valerie O. Murray | — | 7,949 | 151 | — | 12,685 | — | 17,362 | 1,494 | — | 61,933 | ||||||||||
| (1) | The amounts shown represent the estimated Non-Qualified Supplemental Defined Contribution Plan contribution for |
| (2) | The amounts shown include interest and dividends credited under the Non-Qualified Supplemental Defined Contribution |
| (3) | For Mr. Martin the amount shown includes a balance of |
| PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 49 | ||
We maintain a Non-Qualified Supplemental Defined Contribution Plan (the “Supplemental Plan”), which is a non-qualified plan that provides additional benefits to certain employees whose benefits under the 401(k) Plan and ESOP are reduced by tax law limitations applicable to tax-qualified plans. The Supplemental Plan requires a contribution for each participant who also participates in the 401(k) Plan and ESOP equal to the amount that would have been contributed under the terms of the 401(k) Plan and ESOP but for the tax law limitations, less the amount actually contributed under the 401(k) Plan and ESOP. The Supplemental Plan provides for a phantom stock allocation for qualified contributions that may not be accrued in the qualified ESOP and for matching contributions that may not be accrued in the qualified 401(k) Plan due to tax law limitations. Vesting of these supplemental benefits is subject to the same terms and conditions as the benefits provided under the 401(k) Plan and ESOP. The 401(k) portion of the benefit under the Supplemental Plan is credited with interest at an annual rate equal to the bond equivalent yield on United States Treasury Securities adjusted to a constant maturity of ten years. The ESOP portion of the benefit under the Supplemental Plan is credited with dividends payable on Provident common stock.
Benefits payable under the Supplemental Plan are payable to the participant in a lump sum during the calendar year immediately following the calendar year of the earliest to occur of: (i) separation from service; (ii) disability; or (iii) death of the participant. The 401(k) portion of the benefit under the Supplemental Plan is paid in cash and the ESOP portion of the benefit is paid in cash unless the committee administering the Supplemental Plan determines in its sole discretion to pay the equivalent benefit in the form of Provident common stock.
Potential Payments Upon Termination or Change in Control
Provident has entered into an employment agreement and a three-year change in control agreement with Mr.Messrs. Martin and Labozzetta, and three-year change in control agreements with Messrs. Lyons, Blum and Kuntz, and a two-year change in control agreement with Ms. Murray.
The following tables reflect the amount of compensation and benefits payable to each of the named executive officers, at December 31, 20182021 pursuant to such individual’s employment agreement or change in control agreement, as applicable, in the event of termination of such executive’s employment under the
circumstances noted in the tables. No payments are required due to a voluntary termination under the employment agreement and the change in control agreements.
The amount of compensation and benefits payable to each named executive officer upon an involuntary termination without cause or a termination by the executive for Good Reason, in each case following a change in control and in the event of disability (with respect to Mr. Martin’s and Mr. Labozzetta’s employment agreement) is shown in the following tables. The amounts shown assume that such termination was effective as of December 31, 2018,2021, and thus include amounts earned through such time and are estimates of the amounts which would be paid out to the executive upon his or her termination. The amounts shown relating to unvested options and stock awards are based on the fair market value of our common stock on December 31, 20182021 of $24.13$24.22 per share. The actual amounts that may be paid out to each executive can only be determined at the time of such executive’s separation from Provident. The amounts shown in the following tables do not take into account any reductions that may be required in order to comply with Internal Revenue Code Section 280G best net benefit provisions in each of the named executive officers’ agreements. There is no such best net benefit provision in Mr. Martin’s agreement.the agreements with Messrs. Martin and Labozzetta.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL AS OF DECEMBER 31, 2018
| Christopher Martin | Employment | Employment | Change in Control | ||
| Agreement | Agreement | Agreement | |||
| After Change | |||||
| in Control | |||||
| Benefits | Termination w/o Cause or for Good Reason ($)(1) | Disability ($)(2) | Termination w/o Cause or for Good Reason ($) | ||
| Salary | 740,000 | 555,000 | 2,160,000 | ||
| Incentive/bonus | 723,922 | — | 2,382,222 | ||
| Total Cash Payments | 1,463,922 | 555,000 | 4,542,222 | ||
| Medical | 17,620 | 17,620 | 52,861 | ||
| Dental | 1,336 | 1,336 | 4,007 | ||
| Life Insurance | 1,414 | 1,414 | 4,242 | ||
| Long-Term Disability | 796 | 796 | 2,389 | ||
| Vision | 133 | 133 | 398 | ||
| Total Benefits | 21,299 | 21,299 | 63,897 | ||
| Total Cash & Benefits | 1,485,221 | 576,299 | 4,606,119 | ||
| Value Unvested Options | — | 192,400 | 192,400 | ||
| Value Unvested Awards | — | 1,668,010 | 1,668,010 | ||
| TOTAL | 1,485,221 | 2,436,709 | 6,466,529 |
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 50 | ||
Potential Payments Upon Termination or Change in Control as of December 31, 2021
| Christopher Martin | Employment Agreement | Employment Agreement | Change in Control Agreement | ||
| After Change in Control | |||||
| Benefit | Termination w/o Cause or for Good Reason ($)(1) | Disability ($)(2) | Termination w/o Cause or for Good Reason ($)(3) | ||
| Salary | 797,000 | 597,750 | 2,344,000 | ||
| Incentive/Bonus | 849,523 | — | 2,144,945 | ||
| Total Cash Payments | 1,646,523 | 597,750 | 4,488,946 | ||
| Medical | 20,549 | 20,549 | 61,647 | ||
| Dental | 1,392 | 1,392 | 4,175 | ||
| Life Insurance | 1,360 | 1,360 | 4,079 | ||
| Long-Term Disability | 594 | 594 | 1,782 | ||
| Vision | 133 | 133 | 398 | ||
| Total Benefits | 24,028 | 24,028 | 72,081 | ||
| Total Cash & Benefits | 1,670,551 | 621,778 | 4,561,027 | ||
| Value Unvested Options | — | 458,889 | 458,889 | ||
| Value Unvested Awards | — | 1,865,085 | 1,865,085 | ||
| TOTAL | 1,670,551 | 2,945,752 | 6,885,001 |
| (1) | Mr. Martin has a new Employment Agreement effective January 1, 2022 as the Executive Chairman. The Salary benefit is based on 12 months pursuant to the Employment Agreement. |
| (2) | Represents 75% of base salary over a 12 month period along with 12 months of benefit payments. Payments will commence on the effective date of the executive’s termination and will end on the earlier of: (i) the date the executive returns to full-time employment; (ii) full-time employment with another employer; (iii) attaining the age of 65; or (iv) the executive’s death. |
| (3) | Mr. Martin has a new Change in Control Agreement effective January 1, 2022 as the Executive Chairman. Pay to the Executive is in a lump sum on the date of termination representing a cash severance amount equal to three (3) times the average of the Executive’s Annual Compensation during the three completed calendar years preceding the year in which the Change in Control occurs. |
| PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 51 | ||
| Anthony Labozzetta | Employment Agreement | Employment Agreement | Change in Control Agreement | |||
| After Change in Control | ||||||
| Benefit | Termination w/o Cause or for Good Reason ($)(1) | Disability ($)(2) | Termination w/o Cause or for Good Reason ($) | |||
| Salary | 605,000 | 453,750 | 1,815,001 | |||
| Incentive/Bonus | 644,870 | — | 1,934,609 | |||
| Total Cash Payments | 1,249,870 | 453,750 | 3,749,610 | |||
| Medical | 33,232 | 33,232 | 99,696 | |||
| Dental | 2,261 | 2,261 | 6,784 | |||
| Life Insurance | 1,033 | 1,033 | 3,098 | |||
| Long-Term Disability | 594 | 594 | 1,782 | |||
| Vision | 133 | 133 | 398 | |||
| Total Benefits | 37,253 | 37,253 | 111,758 | |||
| Total Cash & Benefits | 1,287,123 | 491,003 | 3,861,368 | |||
| Value Unvested Options | — | — | — | |||
| Value Unvested Awards | — | 782,113 | 782,113 | |||
| TOTAL | 1,287,123 | 1,273,116 | 4,643,481 |
| (1) | Salary benefit is based on 12 months pursuant to the Employment Agreement. |
| (2) | Represents 75% of base salary over a |
| After Change in Control | ||
| Benefit | Termination w/o Cause or for Good Reason ($) | |
| Salary | 1,548,000 | |
| Incentive/Bonus | 1,100,010 | |
| Total Cash Payments | 2,648,010 | |
| Medical | 89,171 | |
| Dental | 4,590 | |
| Life Insurance | 2,643 | |
| Long-Term Disability | 1,782 | |
| Vision | 615 | |
| Total Benefits | 98,801 | |
| Total Cash & Benefits | 2,746,811 | |
| Value Unvested Options | 0 | |
| Value Unvested Awards | 890,110 | |
| TOTAL | 3,636,921 |
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | | | ||
After Change | ||
in Control | ||
| Benefit | Termination w/o Cause or for Good Reason ($) | |
| Salary | 1,557,000 | |
| Incentive/Bonus | 1,106,404 | |
| Total Cash Payments | 2,663,404 | |
| Medical | 61,647 | |
| Dental | 2,824 | |
| Life Insurance | 1,728 | |
| Long-Term Disability | 1,782 | |
| Vision | 398 | |
| Total Benefits | 68,379 | |
| Total Cash & Benefits | 2,731,783 | |
| Value Unvested Options | 0 | |
| Value Unvested Awards | 878,096 | |
| TOTAL | 3,609,879 | |
| After Change | ||
in Control | ||
| Benefit | Termination w/o Cause or for Good Reason ($) | |
| Salary | 1,290,001 | |
| Incentive/Bonus | 951,040 | |
| Total Cash Payments | 2,241,041 | |
| Medical | 61,647 | |
| Dental | 4,590 | |
| Life Insurance | 2,204 | |
| Long-Term Disability | 1,782 | |
| Vision | 398 | |
| Total Benefits | 70,621 | |
| Total Cash & Benefits | 2,311,662 | |
| Value Unvested Options | 0 | |
| Value Unvested Awards | 723,088 | |
| TOTAL | ||
| 3,034,750 |
| PROVIDENT FINANCIAL SERVICES, INC. | | | ||
The following is a reasonable estimate calculation, prepared in accordance with SEC rules, of the ratio of the total annual compensation paid to Mr. Martin, who served as our PresidentChairman and Chief Executive Officer in 2021, to the median of the total annual compensation of all of our employees, except Mr. Martin for 2018.
2021. Our median employee for this calculation was determined using total annual compensation data for all of our active employees, excluding Mr. Martin as of December 31, 2018.2021. We included all active employees. The employees whetherincluded those employed on a full-time, part-time or seasonal basis, and webasis. We did not annualize or prorate the data used in the calculation. Total annual compensation used to arrive at the median employee was consistent with that used to calculate total annual compensation for the named executive officers as required by the SEC, excluding the change in pension value and nonqualified deferred compensation earnings and the value of other benefits available on a non-discriminatory basis to all of our employees, such as company contributions to health, life and disability insurance.
After identifying the median employee as described above, we determined that the median employee had a total annual compensation of $58,024$65,740 for 2018,2021, which was determined using the same methodology as required by the SEC for named executive officers as set forth in the summary compensation table. The total annual compensation for Mr. Martin for the same period shown in the summary compensation table presented earlier was $2,194,752.$2,625,561. The ratio of Mr. Martin’s total annual compensation to the median total annual compensation of all other employees for 20182021 was 38:40:1.
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | | | ||
Elements of Director Compensation
Director Fees
As discussed under this caption, directorDirector compensation is paid to our non-management directors only. Mr.Messrs. Martin receivesand Labozzetta receive no director compensation for histheir service on the board of directors.
Our board of directors establishes director compensation based on the recommendation of the Compensation Committee. Periodically, the Compensation Committee will engage the services of a third party and will consult external surveys to assist it in a review of director compensation.
We pay annual director fees based on a fiscal year covering the period starting May 1 and ending on April 30. We do not pay “per meeting” fees. The current director fee schedule is as follows:
| Board Member Annual Retainer | $50,000 | |
| Lead Director Annual Retainer (paid in quarterly installments) | $20,000 | |
| Committee Annual Retainers (paid in quarterly installments) | $27,500 for Audit and Compensation Committee Chairs | |
$15,000 for each member of the Audit and Compensation Committees | ||
$20,000 for Governance/Nominating, Risk and Technology Committee Chairs | ||
$10,000 for each member of the Governance/Nominating, Risk | ||
| Annual Equity Grant | Shares equivalent to $90,000 based on the grant date price with |
Director Benefits
An annual medical examination is made available to each director under an arrangement with a designated service provider.
Retirement Plan for the Board of Directors of Provident Bank
The Retirement Plan for the Board of Directors of Provident Bank was terminated in 2005 to eliminate the accrual of benefits for directors with less than ten years of service as of December 31, 2006. For directors having ten or more years of service as of December 31, 2006 (includes two current directors), the plan provides cash payments for up to ten years based on age and length of service requirements. The maximum payment under this plan to a board member who terminates service on or after the normal retirement age as defined in the plan with at least ten years of service on the board is 40 quarterly payments of $1,250. We may suspend payments under this plan if Provident Bank fails to meet Federal Deposit Insurance Corporation or New Jersey Department of Banking and Insurance minimum capital requirements. The plan further provides that, in the event of a change in control (as defined in the plan), the undistributed balance of a director’s accrued benefit will be distributed to him or her within 60 days of such change in control.
Voluntary Fee Deferral Plans
Our directors may elect to defer the receipt of all or a portion of the cash compensation paid to them for service on the board of directors. Elections to defer fees and the scheduled distribution of amounts deferred and earnings on those amounts shall comply with the requirements of Section 409A of the Internal Revenue Code. Deferred fees are credited to a memorandum account established for the benefit of each participant, and credited amounts currently earn interest at the prevailing prime rate.
In connection with its acquisition of First Sentinel Bancorp, Inc., Provident assumed the First Savings Bank Directors’ Deferred Fee Plan, which was frozen prior to the completion of the acquisition. This plan will be paid out in accordance with the provisions of its governing documents.
| PROVIDENT FINANCIAL SERVICES, INC. | | | |||
The following table sets forth for the year ended December 31, 20182021 certain information as to total remuneration paid to directors who servedfor their service on the board of directors in 20182021 other than Mr.Messrs. Martin and Labozzetta, who isare not paid director fees. There were no stock options outstanding at December 31, 2021, and no other compensation was paid to the non-executive directors for their service in 2021. Compensation paid to Mr. Martin and Mr. Labozzetta is included in this Proxy Statement under the heading “Executive Compensation--SummaryCompensation-Summary Compensation Table.”
| Change in | ||||||||||||||||||||
| Pension | ||||||||||||||||||||
| Value and | ||||||||||||||||||||
| Fees | Nonqualified | |||||||||||||||||||
| �� | Earned or | Stock | Option | Deferred | All Other | |||||||||||||||
| Name | Paid in Cash ($) | Awards ($)(1) | Awards ($)(2) | Compensation Earnings ($)(3) | Compensation ($) | Totals ($) | Fees Earned or Paid in Cash ($) | Stock ($)(1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(2) | Total ($) | ||||||||||
| Robert Adamo | 75,000 | 90,002 | — | 3,775 | — | 168,777 | 75,000 | 90,022 | 2,816 | 167,838 | ||||||||||
| Thomas W. Berry | 70,000 | 90,002 | — | — | — | 160,002 | 70,000 | 90,022 | — | 160,022 | ||||||||||
| Laura L. Brooks | 92,500 | 90,002 | — | — | — | 182,502 | ||||||||||||||
| James P. Dunigan(4) | 62,502 | 82,513 | — | 1,724 | — | 146,739 | ||||||||||||||
| Laura L. Brooks(3) | 7,500 | — | — | 7,500 | ||||||||||||||||
| James P. Dunigan | 97,500 | 90,022 | 4,958 | 192,480 | ||||||||||||||||
| Frank L. Fekete | 87,500 | 90,002 | — | 3,982 | — | 181,484 | 87,500 | 90,022 | 5,125 | 182,647 | ||||||||||
| Ursuline Foley | 75,000 | 90,022 | — | 165,022 | ||||||||||||||||
| Terence Gallagher | 87,500 | 90,002 | — | — | — | 177,502 | 82,500 | 90,022 | — | 172,522 | ||||||||||
| Matthew K. Harding | 87,500 | 90,002 | — | — | — | 177,502 | 87,500 | 90,022 | — | 177,522 | ||||||||||
| Carlos Hernandez | 90,000 | 90,002 | — | 4,384 | — | 184,386 | 90,000 | 90,022 | 5,197 | 185,219 | ||||||||||
| Edward O’Donnell(5) | 2,500 | — | — | 13,128 | — | 15,628 | ||||||||||||||
| Edward Leppert | 76,250 | 90,022 | — | 166,272 | ||||||||||||||||
| Nadine Leslie(4) | 50,417 | 75,005 | — | 125,422 | ||||||||||||||||
| Robert McNerney | 60,000 | 90,022 | — | 150,022 | ||||||||||||||||
| John Pugliese | 83,750 | 90,002 | — | — | — | 173,752 | 92,500 | 90,022 | — | 182,522 | ||||||||||
| (1) | The amounts shown reflect the aggregate grant date fair value of the restricted stock award made to each non-management director based on the closing price of the stock on the grant date and computed in accordance with FASB ASC Topic 718. |
| (2) | |
| The amounts shown represent the aggregate increase in the present value of a director’s accumulated benefit under the Retirement Plan for the Board of Directors of Provident Bank, which was terminated in 2005 to eliminate the accrual of benefits for directors with less than ten years of service as of December 31, 2006. Messrs. Fekete and Hernandez have benefits under this plan. The amounts shown also include interest earned on deferred director fees for Messrs. Adamo | |
| (3) | Ms. Brooks resigned from the Board of Directors effective May 1, 2021. |
| (4) |
| PROVIDENT FINANCIAL SERVICES, INC. | | | ||
Security Ownership of Certain Beneficial Owners and Management
Persons and groups who beneficially own in excess of five percent of Provident’s issued and outstanding shares of common stock are required to file certain reports with the Securities and Exchange Commission (“SEC”) regarding such beneficial ownership. The following table shows, as of March 1, 2022, certain information as to persons who beneficially owned more than five percent of the issued and outstanding shares of our common stock. We know of no persons, except as listed below, who beneficially owned more than five percent of the issued and outstanding shares of our common stock as of March 1, 2022.
| Name and Address of Beneficial Owner | Number of Shares Owned and Nature of Beneficial Ownership | Percent of Shares of Common Stock Outstanding(1) | |
| Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, Texas 78746 | 5,299,655(2) | 6.89% | |
| BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 11,280,885(3) | 14.67% | |
| The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | 7,960,415(4) | 10.35% |
| (1) | Based on 76,906,331 shares of Provident common stock outstanding as of March 1, 2022. |
| (2) | This information is based on Amendment No. 14 to Schedule 13G filed with the SEC on February 8, 2022 by Dimensional Fund Advisors LP. |
| (3) | This information is based on Amendment No. 13 to Schedule 13G filed with the SEC on February 10, 2022 by BlackRock, Inc. |
| (4) | This information is based on Amendment No. 12 to Schedule 13G filed with the SEC on February 10, 2022 by The Vanguard Group. |
| PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 57 | ||
Management
The following table shows certain information about shares of our common stock owned by each nominee for election as director, each incumbent director, each named executive officer identified in the summary compensation table included elsewhere in this Proxy Statement, and all nominees, incumbent directors and executive officers as a group, as of March 1, 2022.
| Name | Position(s) held with Provident Financial Services, Inc. and/or Provident Bank | Shares Owned Directly and Indirectly(1) | Shares Subject to Stock Options(2) | Beneficial Ownership | Percent of Class(3) | Unvested Stock Awards Included in Beneficial Ownership | ||||||
| Nominees | ||||||||||||
| James P. Dunigan | Director | 26,324 | — | 26,324 | * | 3,627 | ||||||
| Frank L. Fekete | Director | 68,112 | — | 68,112 | * | 3,627 | ||||||
| Matthew K. Harding | Director | 47,331 | — | 47,331 | * | 3,627 | ||||||
| Anthony J. Labozzetta | President and Chief Executive Officer | 449,008 | — | 449,008 | 7,930 | |||||||
| Incumbent Directors | ||||||||||||
| Robert Adamo | Director | 23,210 | — | 23,210 | * | 3,627 | ||||||
| Thomas W. Berry | Director | 112,098 | — | 112,098 | * | 3,627 | ||||||
| Ursuline F. Foley | Director | 21,344 | 21,344 | * | 3,627 | |||||||
| Terence Gallagher | Director | 31,405 | — | 31,405 | * | 3,627 | ||||||
| Carlos Hernandez | Director | 91,157 | — | 91,157 | * | 3,627 | ||||||
| Edward M. Leppert | Director | 193,058 | 193,058 | 3,627 | ||||||||
| Nadine Leslie | Director | 3,428 | 3,428 | 3,428 | ||||||||
| Christopher Martin | Executive Chairman | 729,671(4) | 492,969 | 1,222,640 | 1.58% | — | ||||||
| Robert McNerney | Director | 19,922 | — | 19,922 | * | 3,627 | ||||||
| John Pugliese | Director | 92,627 | 92,627 | 3,627 | ||||||||
| Executive Officers Who Are Not Directors | ||||||||||||
| Thomas M. Lyons | Senior Executive Vice President and Chief Financial Officer | 223,075 | — | 223,075 | * | 7,075 | ||||||
| John Kuntz | Senior Executive Vice President, General Counsel and Corporate Secretary | 143,042 | — | 143,042 | * | 7,043 | ||||||
| Valerie O. Murray** | Executive Vice President, Chief Wealth Management Officer and President of Beacon Trust Company | 50,759 | — | 50,759 | * | 5,799 | ||||||
| All directors and executive officers as a group (25 persons) | 2,809,705 | 492,969 | 3,302,674 | 4.26% | 113,217 | |||||||
| * | Direct, plus 401(K) and ESOP, and IRA’s |
| * | Less than 1% |
| ** | Not officers of Provident Financial Services, Inc. |
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 58 | ||
| (1) | The amounts shown for executive officers include shares held in our 401(k) Plan and shares allocated to the executive officer in our Employee Stock Ownership Plan (“ESOP”) as follows: |
| Name | 401(k) Plan Shares | ESOP Shares | |
| Christopher Martin | 174,456 | 19,856 | |
| Anthony J. Labozzetta | — | — | |
| Thomas M. Lyons | 48,056 | 17,762 | |
| John Kuntz | 6,850 | 24,130 | |
| Valerie O. Murray | 13,822 | 6,782 | |
| All executive officers as a group (13 persons) | 243,607 | 115,647 |
| (2) | Includes shares underlying stock options that are presently exercisable or will become exercisable within 60 days of March 1, 2022. |
| (3) | Based on 76,906,331 shares of Provident common stock outstanding as of March 1, 2022. Shares subject to stock options that are presently exercisable or will become exercisable within 60 days of March 1, 2022 are deemed outstanding for computing the percentage ownership of the person holding such stock options, but are not deemed outstanding for purposes of computing the percentage ownership of other persons. |
| (4) | Includes 17,785 shares held by Mr. Martin in the First Savings Bank Directors’ Deferred Fee Plan. |
| PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 59 | ||
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and anyone holding 10% or more of our common stock (reporting persons) to file reports with the Securities and Exchange Commission showing the holdings of, or transactions in, our common stock. Based solely on a review of copies of such reports, and written representations from each such reporting person that no other reports are required, we believe that in 2021 all reporting persons filed the required reports on a timely basis under Section 16(a).
| Proposal 2 | Advisory Vote to Approve Executive Compensation |
The Compensation Discussion and Analysis appearing earlier in this Proxy Statement describes our executive compensation program and the compensation decisions made by our Compensation Committee with respect to the Chief Executive Officer and other officers named in the Summary Compensation Table (who are referred to as the “named executive officers”). At the 2017 Annual Meeting of Stockholders, our board of directors recommended, and the stockholders approved, a non-binding vote in favor of holding an annual advisory vote on executive compensation. As a result, we determined to hold an annual advisory vote on executive compensation until the next required stockholder vote relating to the frequency of stockholder voting on executive compensation. Pursuant to Section 14A of the Securities Exchange Act of 1934, the board of directors is requesting stockholders to cast a non-binding advisory vote on the following resolution:
“RESOLVED, that the stockholders of Provident Financial Services, Inc. (“Provident”) approve the compensation paid to Provident’s named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and narrative accompanying the tables.”
Our executive compensation program is based on a pay for performance philosophy that is designed to support our business strategy and align the interests of our executives with our stockholders. Our board of directors believes that the link between compensation and the achievement of its long- and short-term business goals has helped our company’s financial performance over time, while not encouraging excessive risk-taking by management.
For these reasons, the board of directors is recommending that stockholders vote“FOR”this proposal. While this advisory vote is non-binding, the Compensation Committee and the board of directors value the views of our stockholders and will consider the outcome of this vote in future executive compensation decisions.
  | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION PAID TO PROVIDENT’S NAMED EXECUTIVE OFFICERS. |
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | | | ||
| Proposal 3 |
Our board of directors has adopted, subject to stockholder approval, the Provident Financial Services, Inc. 2019 Long-Term Equity Incentive Plan (the “2019 Equity Plan”). The purpose of the 2019 Equity Plan is to provide additional incentives for our officers, employees, directors and other service providers to promote our growth and performance and to further align their interests with those of our stockholders. If the 2019 Equity Plan is approved by stockholders, no more awards will be granted under the Provident Financial Services, Inc. Amended and Restated Long-Term Incentive Plan (the “Prior Plan”), which is the only existing equity plan of the company.
Governance Highlights of the 2019 Equity Plan
The 2019 Equity Plan incorporates certain governance best practices, including:
Summary of the 2019 Equity Plan
The following is a summary of the material features of the 2019 Equity Plan, which is qualified in its entirety by reference to the provisions of the 2019 Equity Plan, attached hereto as Appendix A.
Administration
The 2019 Equity Plan will be administered by the Compensation Committee, members of which are “disinterested board members,” as defined in the 2019 Equity Plan. The Compensation Committee has power within the limitations set forth in the 2019 Equity Plan to make all decisions and determinations regarding the selection of participants and the granting of awards; establishing the terms and conditions relating to each award; adopting rules, regulations and guidelines for carrying out the Plan’s purposes; and interpreting and otherwise construing the 2019 Equity Plan.
The Compensation Committee also has the authority to reduce, eliminate or accelerate any restrictions or vesting requirements applicable to an award at any time after the grant of the award.
Approval of the 2019 Equity Plan by the stockholders authorizes the Compensation Committee to determine the number of awards to be granted to non-employee directors, subject to the individual limitations in the 2019 Equity Plan as set forth therein and discussed further below.
Eligibility
Employees and directors of, or service providers to, the company or its subsidiaries are eligible to receive awards under the 2019 Equity Plan, except that non-employees may not be granted incentive stock options. The Compensation Committee has the sole authority to determine the employees, directors and service providers who will be granted an award under the 2019 Equity Plan.
Number of Shares Authorized
The 2019 Equity Plan authorizes the issuance to participants of up to (A) 1,350,000 shares of the company’s common stock, plus (B) the number of shares of our common stock that remain available for awards under the Prior Plan on the day the 2019 Equity Plan is approved by our stockholders (such sum of (A) plus (B) the “Share Limit”) pursuant to grants of restricted stock, restricted stock units and stock options, including incentive stock options and non-qualified stock options, any of which may vest based either on the passage of time or achievement of performance, or a combination of each.
If any award granted under the 2019 Equity Plan or under the Prior Plan expires, terminates, is canceled or is forfeited without being settled or exercised or is settled without the issuance of shares of common stock, shares of the company’s common stock subject to such award will be made available for future grant under the 2019 Equity Plan. In addition, if shares issuable upon the vesting or settlement of an award are withheld by the company, or if shares owned by a participant are surrendered or tendered to the company, in payment of taxes required or permitted to be withheld in respect of the award (other than an award of stock options), such shares will be made available for future grants under the 2019 Equity Plan. If any shares are surrendered or tendered to pay the exercise price of, or satisfy the withholding taxes owed with respect to, a stock option, such shares will not again be available for grant under the 2019 Equity Plan.
As of December 31, 2018, there were 1,457,429 shares of company common stock available under the Prior Plan, which would result in a Share Limit of 2,807,429 shares of company common stock if the 2019 Equity Plan was approved by the stockholders on such date. The actual Share Limit will reflect incremental changes in the number of shares remaining available under the Prior Plan to reflect issuances and forfeitures of awards following such date through the actual date that stockholders approve the 2019 Equity Plan. The following table includes more specific information regarding outstanding equity awards issued under our Prior Plan as reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and shares available for future awards under the Prior Plan as of December 31, 2018.
The following table sets forth information regarding the share usage for each of the last three fiscal years for all Awards reported in our Form 10-Ks for those periods. The share usage has been calculated as the quotient of (i) the sum of (x) all stock options granted in such year and (y), all time-vesting and performance-vesting stock awards granted in such year, divided by (ii) the weighted average number of shares of common stock outstanding during such year.
| Year Ended December 31, | 3-Year | |||||||
| Share Usage Data | 2018 | 2017 | 2016 | Average | ||||
| Stock Options Granted | 43,124 | 42,857 | 76,327 | |||||
| Time- and Performance-Based Restricted Stock Awards Granted | 296,411 | 288,519 | 351,836 | |||||
| Weighted Average Basic Common Shares Outstanding | 64,942,886 | 64,384,851 | 63,643,622 | |||||
| Share Usage | 0.52% | 0.51% | 0.67% | 0.57% | ||||
Limitations
The 2019 Equity Plan includes the following limitations:
Adjustments
In the event of a corporate transaction involving the stock of the company, such as a recapitalization, stock dividend, extraordinary cash dividend or a stock split, the number of shares covered by awards then outstanding under the 2019 Equity Plan, the limitation on awards under the 2019 Equity Plan and/or the exercise price of outstanding stock options and other equitable substitutions or adjustments will be made proportionally and uniformly to reflect such corporate transaction, as applicable.
Types of Awards
The Compensation Committee may determine the type and terms and conditions of awards under the 2019 Equity Plan, which will be set forth in an award agreement delivered to each participant. Each award will be subject to the conditions established by the Compensation Committee as set forth in the recipient’s award agreement and will be subject to vesting conditions and restrictions as determined by the Compensation Committee. Awards may be granted as incentive and non-qualified stock options, restricted stock awards or restricted stock units any of which may vest based either on the passage of time or achievement of performance, as follows:
Stock Options. A stock option is the right to purchase shares of common stock at a specified price for a specified period of time.
Restricted Stock.A restricted stock award is a grant of shares of company common stock to a participant for no consideration (or such minimum consideration as may be required by applicable law) that is subject to certain restrictions as may be determined by the Compensation Committee for a specified period.
Restricted Stock Units. Restricted stock units may be denominated in shares of common stock and are similar to restricted stock awards except that no shares of common stock are actually issued to the award recipient at the time of grant of a restricted stock unit. Rather, the restricted stock units are settled, at the discretion of the Compensation Committee at the time of grant, when the units are earned or at a later date.
Performance Awards. The Compensation Committee may grant any award under the 2019 Equity Plan in the form of a performance award by conditioning the vesting of the award on the satisfaction of certain performance goals of the company and/or the participant.
Performance Measures
The performance measures can include, but are not limited to: book value or tangible book value per share; basic earnings per share (e.g.,earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization; or earnings per share); basic cash earnings per share; diluted earnings per share; return on equity; return on average tangible equity; net income or net income before taxes; net interest income; non-interest income; non-interest expense to average assets ratio; cash general and administrative expense to average assets ratio; efficiency ratio; cash efficiency ratio; financial return ratios; core earnings, capital ratios; increase in revenue; total stockholder return; net operating income, operating income; net interest margin or net interest rate spread; stock price; assets, growth in assets, loans or deposits, asset quality level, charge offs, loan reserves, non-performing assets, loans, deposits, growth of loans, loan production volume, non-performing loans, deposits or assets; regulatory compliance or safety and soundness; achievement of balance sheet or income statement objectives and strategic business objectives, or any combination of these or other measures.
Performance measures may be based on the performance of the company as a whole or on any one or more subsidiaries or business units of the company or a subsidiary and may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures. The terms of an award may provide that partial achievement of performance measures may result in partial payment or vesting of the award or that the achievement of the performance measures may be measured over more than one period or fiscal year. In establishing any performance measures, the Compensation Committee may provide for the exclusion of the effects of one or more items, including but not limited to: (i) extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) dividends declared on the company’s stock; (iv) changes in tax or accounting principles, regulations or laws; or (v) expenses incurred in connection with a merger, branch acquisition or similar transaction.
Vesting of Awards
The Compensation Committee shall specify the vesting schedule or conditions of each award.
Change in Control
The 2019 Equity Plan uses a double trigger change in control feature, providing for an acceleration of vesting upon an involuntary termination of employment or service simultaneous with or following a change in control.
Awards Subject to Clawback Policy
Awards granted under the 2019 Equity Plan are subject to clawback if the company is required to prepare an accounting restatement due to material noncompliance of the company, as a result of misconduct with any financial reporting requirement under the federal securities laws and the forfeiture provisions of the Sarbanes-Oxley Act of 2002 apply. Awards are also subject to clawback provisions contained in our Omnibus Incentive Compensation Plan Document, as described in this Proxy Statement in the Compensation Discussion and Analysis under the heading “Clawback Policy”.
Amendment and Termination
Our board of directors may amend or terminate the 2019 Equity Plan or any award granted under the 2019 Equity Plan. However, except as provided in the 2019 Equity Plan, no amendment or termination may adversely impair the rights of an outstanding award without the participant’s (or affected beneficiary’s) written consent. The board of directors may not amend the 2019 Equity Plan to allow repricing of a stock option, materially increase the aggregate number of securities that may be issued under the Plan (other than as provided in the 2019 Equity Plan), materially increase the benefits accruing to a participant, or materially modify the requirements for participation in the 2019 Equity Plan, without approval of stockholders. Notwithstanding the foregoing, the board may, without stockholder approval, amend the 2019 Equity Plan at any time, retroactively or otherwise, to ensure that the Plan complies with current or future law and our board of directors may unilaterally amend the 2019 Equity Plan and any outstanding award, without participant consent, in order to conform to any changes in the law or any accounting pronouncement or interpretation thereof.
Duration of Plan
The 2019 Equity Plan will have a term of ten years following the date on which it is approved by the stockholders, and no awards may be granted after that date.
Federal Income Tax Considerations
The following is a summary of the federal income tax consequences that may arise in conjunction with participation in the 2019 Equity Plan.
Non-Qualified Stock Options. The grant of a non-qualified stock option will not result in taxable income to the participant. Except as described below, the participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares acquired over the exercise price for those shares, and we will be entitled to a corresponding deduction for tax purposes, provided, however, that such deduction may be limited under Sections 162(m) and 280G of the Code. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of exercise.
Incentive Stock Options. The grant of an incentive stock option will not result in taxable income to the participant. The exercise of an incentive stock option will not result in taxable income to the participant provided the participant was, without a break in service, an employee of the company or a subsidiary during the period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant is disabled, as that term is defined in the Code). We will not be entitled to a tax deduction upon the exercise of an incentive stock option.
The excess of the fair market value of the shares at the time of the exercise of an incentive stock option over the exercise price is an adjustment that is included in the calculation of the participant’s alternative minimum taxable income for the tax year in which the incentive stock option is exercised. For purposes of determining the participant’s alternative minimum tax liability for the year of disposition of the shares acquired pursuant to the incentive stock option exercise, the participant will have a basis in those shares equal to the fair market value of the shares at the time of exercise.
If the participant does not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option or within one year after the exercise of such stock option, then, upon disposition of such shares, any amount realized in excess of the exercise price will be taxed as a capital gain. A capital loss will be recognized to the extent that the amount realized is less than the exercise price. If the foregoing holding period requirements are not met, the participant will generally recognize ordinary income at the time of the disposition of the shares in an amount equal to the lesser of (i) the excess of the fair market value of the shares on the date of exercise over the exercise price, or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price, and we will be entitled to a corresponding deduction. If the amount realized exceeds the fair market value of the shares on the date of exercise, any additional amount will be a capital gain. If the amount realized at the time of disposition is less than the exercise price, the participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares.
Restricted Stock. A participant who has been granted a restricted stock award will not realize taxable income at the time of grant, provided that the stock subject to the award is not delivered at the time of grant, or if the stock is delivered, it is subject to restrictions that constitute a “substantial risk of forfeiture” for federal income tax purposes. Upon the later of delivery or vesting of shares subject to an award, the holder will realize ordinary income in an amount equal to the then fair market value of those shares and we will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of delivery or vesting. Dividends paid to the holder will also be compensation income to the participant and we will be entitled to a corresponding deduction for tax purposes, provided, however,
that such deduction may be limited under Sections 162(m) and 280G of the Code. A participant who makes an election under Code Section 83(b) will include the full fair market value of the restricted stock award (or portion of the award subject to such election) in taxable income in the year of grant at the grant date fair market value. The Compensation Committee has the right to prohibit participants from making Code Section 83(b) elections.
Restricted Stock Units. A participant who has been granted a restricted stock unit will not realize taxable income at the time of grant and will not be entitled to make an election under Code Section 83(b) since no stock is actually transferred to the recipient on the date of grant. At the time a restricted stock unit vests, assuming the award is distributed at that time, the recipient will recognize ordinary income in an amount equal to the fair market value of the common stock or the amount of cash received. If the restricted stock unit is not distributed at the time it vests, no income will be recognized at that time and taxation will be deferred until the value of the restricted stock unit is distributed. At the time the recipient recognizes taxable income on a restricted stock unit, we will be entitled to a corresponding tax deduction in the same amount recognized by the award recipient provided, however, that such deduction may be limited under Sections 162(m) and 280G of the Code.
Withholding of Taxes. We may withhold amounts from participants to satisfy withholding tax requirements. Except as otherwise provided by the Compensation Committee, participants may have shares withheld from awards to satisfy tax withholding requirements up to an amount that will not trigger adverse accounting for the company.
Change in Control.Any acceleration of the vesting or payment of awards under the 2019 Equity Plan in the event of a change in control or termination of service that is contingent upon a change in control may cause part or all of the consideration involved to be treated as an “excess parachute payment” under the Section 280G of the Code, which may subject the participant to a 20% excise tax and preclude deduction by the company.
Deduction Limits. Section 162(m) of the Code generally limits our ability to deduct for tax purposes compensation in excess of $1.0 million per year for each of our chief executive officer, our chief financial officer and three other executive officers named in the summary compensation table (each, a “covered employee”) of our annual proxy statement, as well as any employee who has been designated a covered employee for any fiscal year beginning after December 31, 2016. Compensation resulting from awards under the 2019 Equity Plan will be counted toward the $1.0 million limit.
Tax Advice. The preceding discussion is based on federal tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the federal income tax aspects of the 2019 Equity Plan. A participant may also be subject to state and local taxes in connection with the grant of awards under the 2019 Equity Plan.
Other Information
The number, types and terms of awards to be made pursuant to the 2019 Equity Plan are subject to the discretion of the Compensation Committee and have not been determined at this time.
Required Vote and Recommendation of the Board of Directors
In order to approve the 2019 Equity Plan, the proposal must receive the affirmative vote of at least a majority of the votes cast at the annual meeting, either in person or by proxy.
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| Ratification of the Appointment of our Independent Registered Public Accounting Firm |
Our independent registered public accounting firm for the year ended December 31, 20182021 was KPMG LLP. The Audit Committee has re-appointed KPMG LLP to continue as our independent registered public accounting firm for the year ending December 31, 2019,2022, subject to the ratification by our stockholders at the Annual Meeting. Representatives of KPMG LLP are expected to attend the Annual Meeting, and they will be given an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Stockholder ratification of the appointment of KPMG LLP is not required by our Bylaws or otherwise. However, our board of directors is submitting the appointment of our independent registered public accounting firm to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment of KPMG LLP, our Audit Committee will reconsider whether it should select another independent registered public accounting firm. Even if the selection is ratified, our Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change is in the best interests of Provident and its stockholders.
Audit Fees.Fees
The aggregate fees billed to Provident for professional services rendered by KPMG LLP for the audit of the annual financial statements, review of the financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by KPMG LLP in connection with statutory and regulatory filings and engagements were $954,000$1,244,000 and $934,000$1,518,000 during the fiscal years ended December 31, 20182021 and 2017,2020, respectively. Audit fees for 2020 included additional audit work related to the acquisition of SB One Bancorp and Provident’s implementation of the current expected credit loss accounting standard.
Audit-Related Fees.Fees
The aggregate fees billed to Provident for assurance and related services rendered by KPMG LLP that are reasonably related to the performance of the audit and review of the financial statements and that are not already reported in “Audit Fees” above, were $140,450$143,300 and $123,900$140,460 during the fiscal years ended December 31, 20182021 and 2017,2020, respectively. These services includedwere rendered for audits of our employee benefit plans.
Tax Fees.Fees
No fees were billed to Provident for professional services rendered by KPMG LLP for tax compliance, tax advice and tax planning during the fiscal years ended December 31, 20182021 and 2017,2020, as the Audit Committee currently has a policy that the independent registered public accounting firm shall not perform the preparation and filing of our corporate tax returns, tax compliance and other tax-related services.
All Other Fees.Fees
No fees were billed to Provident for other permissible services rendered by KPMG LLP during each of the fiscal years ended December 31, 20182021 and 2017.2020.
| PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 61 | ||
Pre-Approval Policy
Pre-Approval Policy.Our Audit Committee has delegated pre-approval authority to the Chair of the Audit Committee up to a maximum amount of $25,000 between meetings of the Audit Committee, provided the Chair reports any such approvals to the full Audit Committee at its next meeting. The full Audit Committee pre-approves all other services to be performed by the independent registered public accounting firm and the related fees.
| | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF KPMG LLP AS OUR INDEPENDENT |
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Submissionof Stockholder Proposals
To be eligible for inclusion in our proxy materials for next year’s Annual Meeting of stockholders, any stockholder proposal under SEC Rule 14a-8 to take action at such meeting must be received at our executiveadministrative office at 239 Washington Street, Jersey City,111 Wood Avenue South, P.O. Box 1001, Iselin, New Jersey 07302,08830-1001, no later than November 15, 2019.18, 2022. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934, as amended.
AdvanceNotice of Business to be Conducted at an Annual Meeting
Our Bylaws provide an advance notice procedure for certain business or nominations to our board of directors to be brought before an Annual Meeting of stockholders. For a stockholder to properly bring business before an Annual Meeting, the stockholder must give written notice to our Corporate Secretary not less than 120 days prior to the date of Provident’s proxy materials for the preceding year’s Annual Meeting, or by no later than November 15, 201918, 2022 for next year’s Annual Meeting of stockholders; provided, however, that if the date of the Annual Meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year’s Annual Meeting, notice by the stockholder to be timely must be so delivered not later than the close of business on the tenth day following the day on which public announcement of the date of such Annual Meeting is first made. The notice must include the stockholder’s name, record address, and number of shares owned; describe briefly the proposed business; the reasons for bringing the proposed business before the Annual Meeting; and any material interest of the stockholder in the proposed business. Nothing in this paragraph shall be deemed to require Provident to include in its proxy materials under SEC Rule 14a-8 any stockholder proposal that does not meet all of the requirements for inclusion established by the SEC in effect at the time such proposal is received.
Notice of Solicitation of Proxies
In accordance with Rule 14a-19 promulgated under the Exchange Act, a stockholder intending to engage in a director election contest with respect to the company’s 2023 Annual Meeting of stockholders must give the company notice of its intent to solicit proxies by providing the names of its nominees and certain other information at least 60 calendar days before the anniversary of the previous year’s annual meeting. This deadline is February 27, 2023.
| www.provident.bank | PROVIDENT FINANCIAL SERVICES, INC. | 2022 Proxy Statement | 62 | ||
As of the date of this Proxy Statement, our board of directors knows of no matters that will be presented for consideration at the Annual Meeting other than as described in this document. However, if any other matters shall properly come before the Annual Meeting or any adjournment or postponement thereof and shall be voted upon, the proposed proxy will be deemed to confer authority to the individuals named therein to vote the shares represented by the proxy in accordance with their best judgment as to any such matters.
AN ADDITIONAL COPY OF OUR ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR ENDED DECEMBER 31, 2018,2021, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY, PROVIDENT FINANCIAL SERVICES, INC., 239 WASHINGTON STREET, JERSEY CITY,111 WOOD AVENUE SOUTH, P.O BOX 1001, ISELIN, NEW JERSEY 07302.08830-1001.
THE FORM 10-K IS ALSO AVAILABLE FREE OF CHARGE ON THE “INVESTOR RELATIONS” PAGE OF PROVIDENT BANK’S WEBSITE AT WWW.PROVIDENT.BANK.
THE CHARTERS OF OUR AUDIT, COMPENSATION AND HUMAN CAPITAL, GOVERNANCE/NOMINATING, RISK AND TECHNOLOGY COMMITTEES OF THE BOARD OF DIRECTORS, OUR CORPORATE GOVERNANCE PRINCIPLES, CODE OF BUSINESS CONDUCT AND ETHICS AND INDEPENDENCE STANDARDS ARE AVAILABLE ON THE “GOVERNANCE DOCUMENTS” SECTION OF THE “INVESTOR RELATIONS” PAGE OF PROVIDENT BANK’S WEBSITE AT WWW.PROVIDENT.BANK. COPIES OF EACH WILL BE FURNISHED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY, PROVIDENT FINANCIAL SERVICES, INC., 239 WASHINGTON STREET, JERSEY CITY,111 WOOD AVENUE SOUTH, P.O BOX 1001, ISELIN, NEW JERSEY 07302.08830-1001.
| PROVIDENT FINANCIAL SERVICES, INC. | | ||||
The purpose of this Provident Financial Services, Inc. 2019 Long-Term Equity Incentive Plan (as amended from time to time, the “Plan”) is to promote the long-term financial success of Provident Financial Services, Inc. (the “Company”), and its Subsidiaries, including Provident Bank (the “Bank”) by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s stockholders through the ownership of Company common stock. The “Effective Date” of the Plan is ____________, 2019, which is the expected date of the approval of the Plan by the Company’s stockholders. The Plan shall remain in effect as long as any awards under it are outstanding;provided, however,that no Awards may be granted under the Plan after the day immediately prior to the ten-year anniversary of the Effective Date. Upon stockholder approval of this Plan, no further awards shall be granted under the Prior Plan, and the Prior Plan shall remain in existence solely for the purpose of administering outstanding grants thereunder.
The Plan shall be administered by the Compensation Committee of the Company’s Board of Directors (the “Committee”), in accordance withSection 5.1.
Each Employee or Director of, or service provider to, the Company or any Subsidiary of the Company who is granted an Award in accordance with the terms of the Plan shall be a “Participant” in the Plan. The grant of Awards under the Plan shall be limited to Employees and Directors of, and service providers to, the Company or any Subsidiary.
Capitalized terms used in the Plan are defined inArticle 8 and elsewhere in the Plan.
Any Award under the Plan may be granted singularly, or in combination with another Award (or Awards). Each Award under the Plan shall be subject to the terms and conditions of the Plan and such additional terms, conditions, limitations and restrictions as the Committee shall provide with respect to such Award and as evidenced in the Award Agreement. Every Award under the Plan shall require a written Award Agreement. Subject to the provisions ofSection 2.6, an Award may be granted as an alternative to or replacement (subject toSection 2.7) of an existing award under the Plan or any other plan of the Company or any Subsidiary (provided, however, that no reload Awards shall be granted hereunder) or as the form of payment for grants or rights earned or due under any other compensation plan or arrangement of the Company or its Subsidiaries, including without limitation the plan of any entity acquired by the Company or any Subsidiary. The types of Awards that may be granted under the Plan include:
The Committee shall specify the vesting schedule or conditions of each Award. Notwithstanding any other provision of the Plan to the contrary, Awards granted under the Plan shall vest no earlier than the first anniversary of the date on which the Award is granted;provided, that the following Awards shall not be subject to the foregoing minimum vesting requirement: any (i) substitute Awards granted in connection with awards that are assumed, converted or substituted pursuant to a merger, acquisition or similar transaction entered into by the Company or any of its Subsidiaries, (ii) Awards to Non-Employee Directors that vest on the earlier of the one-year anniversary of the date of grant or the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting, and (iii) any additional Awards the Committee may grant, up to a maximum of five percent (5%) of the available share reserve authorized for issuance under the Plan pursuant to Section 3.2 (subject to adjustment under Section 3.4); and,provided,further, that the foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award or acceleration in the event of death, Disability or a Change in Control in the terms of the Award Agreement or otherwise.
If any Award would be considered “deferred compensation” as defined under Code Section 409A (”Deferred Compensation”), the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the Award Agreement, without the consent of the Participant, to maintain exemption from, or to comply with, Code Section 409A. Any amendment by the Committee to the Plan or an Award Agreement pursuant to this Section shall maintain, to the extent practicable, the original intent
of the applicable provision without violating Code Section 409A. A Participant’s acceptance of any Award under the Plan constitutes acknowledgement and consent to such rights of the Committee, without further consideration or action. Any discretionary authority retained by the Committee pursuant to the terms of this Plan or pursuant to an Award Agreement shall not be applicable to an Award which is determined to constitute Deferred Compensation, if such discretionary authority would contravene Code Section 409A. Unless otherwise provided in a valid election form intended to comply with Code Section 409A, all Awards that are considered Deferred Compensation hereunder shall settle and be paid in no event later than 2 ½ months following the end of the calendar year with respect to which the Award’s substantial risk of forfeiture lapsed.
Except for adjustments pursuant toSection 3.4 or in connection with a Change in Control, and reductions of the Exercise Price approved by the Company’s stockholders, neither the Committee nor the Board shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the Exercise Price of a Stock Option previously granted under the Plan, whether through amendment, cancellation (including cancellation in exchange for a cash payment in excess of the Stock Option’s in-the-money value or in exchange for Stock Options or other Awards) or replacement grants, or other means.
The Committee shall establish the effect of a Termination of Service on the continuation of rights and benefits available under an Award and, in so doing, may make distinctions based upon, among other things, the cause of Termination of Service and type of Award. Unless otherwise specified by the Committee and set forth in an Award Agreement, the following provisions shall apply to each Award granted under this Plan:
The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently authorized but unissued, currently held or, to the extent permitted by applicable law, subsequently acquired by the Company, including shares purchased in the open market or in private transactions.
Delivery of shares of Stock or other amounts under the Plan shall be subject to the following:
Subject to the provisions ofSection 3.4 (relating to the adjustment of shares and cancellation of Stock Options in exchange for a cash or stock payment of the in-the-money value) and except as otherwise provided in the applicable Award Agreement:
For purposes of the Plan, unless otherwise provided in an Award Agreement, a “Change in Control” shall be deemed to have occurred upon the earliest to occur of the following:
The Plan shall be administered by the members of the Compensation Committee of the Company who are Disinterested Board Members. If the Committee consists of fewer than two Disinterested Board Members, then the Board shall appoint to the Committee such additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least two Disinterested Board Members. Any members of the Committee who do not qualify as Disinterested Board Members shall abstain from participating in any discussion or decision to make or administer Awards that are made to Participants who at the time of consideration for such Award are persons subject to the short-swing profit rules of Section 16 of the Exchange Act. The Board (or if necessary to maintain compliance with the applicable listing standards, those members of the Board who are “independent directors” under the corporate governance statutes or rules of any national Exchange on which the Company lists, or has listed or seeks to list its securities, may, in its discretion, take any
action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force and effect under the Plan as if done or exercised by the Committee.
The Committee’s administration of the Plan shall be subject to the following:
Except to the extent prohibited by applicable law, the applicable rules of an Exchange upon which the Company lists its shares or the Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3 promulgated under the Exchange Act, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including (a) delegating to a committee of one or more members of the Board who are not “Disinterested Board Members,” the authority to grant Awards under the Plan to eligible persons who are not then subject to Section 16 of the Exchange Act; or (b) delegating to a committee of one or more members of the Board who would be eligible to serve on the Compensation Committee of the Company pursuant to the listing requirements imposed by any national securities Exchange on which the Company lists, has listed or seeks to list its securities, the authority to grant awards under the Plan. The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any awards so granted. Any such allocation or delegation may be revoked by the Committee at any time.
As may be permitted by applicable law, the Company and its Subsidiaries shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties. The records of the Company and its Subsidiaries as to a Participant’s employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.
The Committee shall hold such meetings, and may make such administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. Subject toSection 5.1, all actions of the Committee shall be final and conclusive and shall be binding upon the Company, Participants and all other interested parties. Any person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other communication signed by a member of the Committee or by a representative of the Committee authorized to sign the same in its behalf.
The Board may, as permitted by law, at any time, amend or terminate the Plan, and may, at any time, amend any Award Agreement, provided that no amendment or termination (except as provided inSection 2.6, Section 3.4 andSection 6.2) may cause the Award to violate Code Section 409A, may cause the repricing of a Stock Option, or, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely impair the rights of any Participant or beneficiary under any Award granted under the Plan prior to the date such amendment is adopted by the Board;provided, however, that, no amendment may (a) materially increase the benefits accruing to Participants under the Plan; (b) materially increase the aggregate number of securities that may be issued under the Plan, other than pursuant toSection 3.4, or (c) materially modify the requirements for participation in the Plan, unless the amendment under (a), (b) or (c) above is approved by the Company’s stockholders.
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NotwithstandingThe board of directors of Provident is soliciting proxies for our 2022 Annual Meeting of Stockholders, and any provisionadjournment or postponement of the meeting. The Annual Meeting will be held in a virtual format on Thursday, April 28, 2022 at 10:00 a.m.
A Notice Regarding the Availability of Proxy Materials is first being sent to our stockholders on March 18, 2022.
The 2022 Annual Meeting of Stockholders
Date and Time: Our Annual Meeting of Stockholders will be held in a virtual format only on April 28, 2022, 10:00 a.m., local time at www.virtualshareholdermeeting.com/PFS2022. The Board of Directors believes that utilizing a virtual meeting format provides an opportunity for a broader group of stockholders to participate in the Annual Meeting, while also reducing the costs and environmental impact associated with holding an in-person meeting. In addition, the virtual meeting format provides a platform for the safe execution of the Annual Meeting in the current COVID-19 environment.
Participation in the Virtual Stockholder Meeting:Stockholders as of the close of business on the record date may attend the Annual Meeting by going to www. virtualshareholdermeeting.com/PFS2022, and logging-in by using the 16-digit control number indicated on their proxy card, voting instruction form, or Notice Regarding the Availability of Proxy Materials. We recommend that stockholders log-in to our virtual annual meeting at least 15 minutes before the scheduled starting time.
Record Date: March 1, 2022.
Shares Entitled to Vote: 76,906,331 shares of Provident common stock were outstanding on the record date and are entitled to vote at the Annual Meeting.
Purpose of the Annual Meeting: To consider and vote on the election of four directors, an advisory (non-binding) vote to approve the compensation paid to our named executive officers, and the ratification of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022.
Vote Required: Subject to our majority voting policy described under the heading “Environmental, Social and Governance-Board Meetings and Committees-Majority Voting Policy” in this PlanProxy Statement, directors are elected by a plurality of votes cast, without regard to either broker non-votes or any Award Agreementproxies as to the contrary, the Committee may amend the Plan or any Award Agreement,which authority to take effect retroactively or otherwise, as deemed necessary or advisablevote for the purposenominees proposed is withheld. The advisory vote to approve executive compensation and the ratification of (i) conforming the Plan or the Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), or (ii) avoiding anKPMG LLP as our independent registered public accounting treatment resulting from an accounting pronouncement or interpretation thereof issuedfirm are each determined by the SEC or Financial Accounting Standards Board subsequent to the adoptiona majority of the Planvotes cast, without regard to broker non-votes or the makingproxies marked “ABSTAIN.”
Board Recommendation: Our board of directors recommends that stockholders vote “FOR” each of the Award affected thereby, whichnominees for director listed in the sole discretionthis Proxy Statement, “FOR” approval of the Committee, may materiallycompensation paid to our named executive officers, and adversely affect“FOR” the financial condition or resultsratification of operationsKPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022.
Provident: Provident is a Delaware corporation and the bank holding company for Provident Bank, an FDIC-insured New Jersey-chartered capital stock savings bank that operates a network of full-service branch offices throughout northern and central New Jersey, eastern Pennsylvania, and Queens County, New York. Our principal administrative offices are located at 111 Wood Avenue South, Iselin, New Jersey 08830. Our telephone number is (732) 590-9200.
March 1, 2022 is the record date for determining the stockholders of record who are entitled to vote at our Annual Meeting. On March 1, 2022, 76,906,331 shares of Provident common stock, par value of $0.01 per share, were outstanding and held by approximately 4,727 holders of record. The virtual presence, by properly executed proxy, of the Company. By accepting an Award under this Plan, each Participant agrees and consentsholders of a majority of the outstanding shares of our common stock is necessary to any amendment made pursuant to thisSection 6.2 orSection 2.6 to any Award granted underconstitute a quorum at the Plan without further consideration or action.Annual Meeting.
Except as otherwise so provided by the Committee, ISOs under the Plan are not transferable except (i) as designated by the Participant by will or by the laws of descent and distribution; (ii) to a trust established by the Participant, if under Code Section 671 and applicable state law, the Participant is considered the sole beneficial owner of the Stock Option while held in trust, or (iii) between spouses incident to a divorce or pursuant to a domestic relations order, provided, however, in the case of a transfer within the meaning of thisSection 7.2(iii), the Stock Option shall not qualify as an ISO as of the day of such transfer. The Committee shall have the discretion to permit the transfer of vested Stock Options (other than ISOs) under the Plan;provided, however,that such transfers shall be limited to Immediate Family Members of Participants, trusts and partnerships established for the primary benefit of such family members or to charitable organizations, and;provided, further,that such transfers are not made for consideration to the Participant.
Restricted Stock Awards shall not be transferable prior to the time that such Awards vest in the Participant. A Restricted Stock Unit Award is not transferable, except in the event of death, prior to the time that the Restricted Stock Unit Award vests and is earned and the property in which the Restricted Stock Unit is denominated is distributed to the Participant or the Participant’s beneficiary.
A Participant hereunder may file with the Company a written designation of a beneficiary or beneficiaries under this Plan and may from time to time revoke or amend any such designation (“Beneficiary Designation”). Any designation of beneficiary under this Plan shall be controlling over any other disposition, testamentary or otherwise (unless such disposition is pursuant to a domestic relations order);provided, however,that if the Committee is in doubt as to the entitlement of any such beneficiary to any Award, the Committee may determine to recognize only the legal representative of the Participant in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone.
Neither the adoption of this Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including, without limitation, the granting of Restricted Stock Awards, Restricted Stock Units or Stock Options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
Each Award granted under the Plan shall be evidenced by an Award Agreement. A copy of the Award Agreement, in any medium chosen by the Committee, shall be provided (or made available electronically) to the Participant, and the Committee may, but need not require, that the Participant sign a copy of the Award Agreement. In the absence of a specific provision in the Award Agreement, the terms of the Plan shall control.
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Each holder of shares of our common stock outstanding on March 1, 2022 will be entitled to one vote for each share held of record. However, our certificate of incorporation provides that stockholders of record who beneficially own in excess of 10% of the then outstanding shares of our common stock are not entitled to vote any of the shares held in excess of that 10% limit. A person or entity is deemed to beneficially own shares that are owned by an affiliate of, as well as by any person acting in concert with, such person or entity.
The purpose of our Annual Meeting is to elect four directors, vote on an advisory basis on executive compensation, and ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022. We may adjourn or postpone the Annual Meeting for the purpose of allowing additional time to solicit proxies.
Our board of directors is not aware of any other matters that may be presented for consideration at the Annual Meeting. If other matters properly come before the Annual Meeting, we intend that shares represented by properly submitted proxies will be voted, or not voted, by the persons named as proxies in their best judgment.
How to Participate in the Virtual Annual Meeting
You may participate in the virtual Annual Meeting by going to www.virtualshareholdermeeting.com/PFS2022, and logging-in by using the 16-digit control number indicated on your proxy card, voting instruction form, or Notice Regarding the Availability of Proxy Materials. We recommend that you log-in to the virtual Annual Meeting at least 15 minutes before the scheduled start time.
You may vote your shares:
| • | By written proxy. Stockholders of record can vote by written proxy card. If you received a printed copy of this Proxy Statement, you may vote by signing, dating and |
| • | At the Annual Meeting. Stockholders of |
Unless otherwise specified herein,If you return an executed Proxy Card without marking your instructions, your executed Proxy Card will be voted “FOR” the election of the four nominees for director, “FOR” approval of the executive compensation paid to our named executive officers, and “FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022.
Participants in Provident Benefit Plans
If you are a participant in our Employee Stock Ownership Plan or 401(k) Plan, or any other benefit plans sponsored by us through which you own shares of our common stock, you will have received a Notice Regarding the Availability of Proxy Materials by e-mail. Under the terms of these plans, the trustee or administrator votes all shares held by the plan, but each election requiredparticipant may direct the trustee or permittedadministrator how to be madevote the shares of our common stock allocated to his or her plan account. If you own shares through any of these plans and you do not vote by any ParticipantApril 24, 2022, the respective plan trustees or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof, shall be filed with the Company at such times,administrators will vote your shares in such form, and subject to such restrictions and limitations, not inconsistentaccordance with the terms of the Plan, as the Committee shall require. Notwithstanding anything herein to the contrary, the Committee may, on the date of grant or at a later date, as applicable, prohibit an individual from making an election under Code Section 83(b). If the Committee has not prohibited an individual from making this election, an individual who makes this election shall notify the Committee of the election within ten (10) days of filing notice of the election with the Internal Revenue Service. This requirement is in addition to any filing and notification required under the regulations issued under the authority of Code Section 83(b).
Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information upon which the person is acting considers pertinent and reliable, and signed, made or presented by the proper party or parties.
Where a Participant is entitled to receive shares of Stock upon the vesting or exercise of an Award, the Company shall have the right to require such Participant to pay to the Company the amount of any tax that the Company is required to withhold with respect to such vesting or exercise, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of shares of Stock to cover the minimum amount required to be withheld. To the extent determined by the Committee or specified in an Award Agreement and no adverse accounting consequences are triggered under FASB ASC Topic 718 or its successor and is permitted under applicable withholding rules promulgated by the Internal Revenue Service or another applicable governmental entity, a Participant shall have the ability to direct the Company to satisfy up to his or her highest marginal tax rate of required federal, state and local tax withholding by, (i) with respect to a Stock Option, reducing the number of shares of Stock subject to the Stock Option (without issuance of such shares of Stock to the Stock Option holder) by a number equal to the quotient of (a) the total maximum amount of tax withholding divided by (b) the excess of the Fair Market Value of a share of Stock on the exercise date over the Exercise Price per share of Stock; and (ii) with respect to Restricted Stock Awards and Restricted Stock Units, withholding a number of shares (based on the Fair Market Value on the vesting date) otherwise vesting that would satisfy the maximum amount of tax withholding. Provided there are no adverse accounting consequences to the Company (a requirement to have liability classification of an award under FASB ASC Topic 718 is an adverse consequence), a Participant who is not required to have taxes withheld may require the Company to withhold in accordance with the preceding sentence as if the Award up to the Participant’s highest marginal tax rate.
Any action required or permitted to be taken by the Company or any Subsidiary shall be by resolution of its Board of Directors, or by action of one or more members of the Board (including a committee of the Board) who are duly authorized to act for the Board, or (except to the extent prohibited by applicable law or applicable rules of the Exchange on which the Company lists its securities) by a duly authorized officer of the Company or such Subsidiary.
All obligations of the Company under this Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business, stock, and/or assets of the Company.
To the fullest extent permitted by law and the Company’s governing documents, each person who is or shall have been a member of the Committee, or of the Board, or an officer of the Company to whom authority was delegated in accordance withSection 5.3, or an Employee of the Company shall be indemnified and held harmless by the Company (i) against and from any loss (including amounts paid in settlement), cost, liability or expense (including reasonable attorneys’ fees) that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan; and (ii) against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute or regulation. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. The foregoing right to indemnification shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition, provided, however, that, if required by applicable law, an advancement of expenses shall be made only upon delivery to the Company of an undertaking by or on behalf of such persons to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such person is not entitled to be indemnified for such expenses.
Unless otherwise permitted by the Committee, no fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated by rounding down.
The Plan, all awards granted hereunder, and all actions taken in connection herewith shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws, except as superseded by applicable federal law. The federal and state courts located in Hudson County, New Jersey shall have exclusive jurisdiction over any claim, action, complaint orrespective plans.
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lawsuit broughtQuorum and Vote Required
The presence, virtually, in person or by properly executed proxy, of the holders of a majority of the outstanding shares of our common stock is necessary to constitute a quorum at the Annual Meeting. Abstentions and broker non-votes (non-voted proxies submitted by a bank or broker) will be counted for the purpose of determining whether a quorum is present.
Subject to our majority voting policy described under the termsheading “Environmental, Social and Governance-Board Meetings and Committees-Majority Voting Policy” in this Proxy Statement, directors are elected by a plurality of votes cast, without regard to either broker non-votes or proxies as to which authority to vote for the nominees proposed is “Withheld.” The advisory vote on executive compensation, and the ratification of the Plan. By acceptingappointment of our independent registered public accounting firm are each determined by a majority of the votes cast, without regard to broker non-votes or proxies marked “Abstain.”
You may revoke your proxy at any award under this Plan, each Participant, and any other person claiming any rights undertime before the Plan, agrees to submit himself or herself, and any legal action that the Participant brings under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.vote is taken at our Annual Meeting. You may revoke your proxy by:
| • | submitting a properly executed proxy bearing a later date; |
| • | voting again by telephone or Internet (provided such new vote is received on a timely basis); or |
| • | voting virtually at the Annual Meeting; however, simply participating in the Annual Meeting without voting will not revoke an earlier proxy. |
Except as otherwiseWritten notices of revocation and other communications regarding the revocation of your proxy should be addressed to:
Provident Financial Services, Inc.
111 Wood Avenue South
P.O. Box 1001
Iselin, New Jersey 08830-1001
Attention: Corporate Secretary
If your shares are held in street name, you should follow your bank’s or broker’s instructions regarding the revocation of proxies.
Provident will bear the entire cost of soliciting proxies. In addition to solicitation of proxies by mail, we will request that banks, brokers and other holders of record send proxies and proxy materials to the beneficial owners of our common stock and secure their voting instructions, if necessary. We will reimburse such holders of record for their reasonable expenses in taking those actions. Alliance Advisors, LLC will assist us in soliciting proxies, and we have agreed to pay them a fee of $5,500 plus reasonable expenses for their services. If necessary, we may also use several of our employees, who will not be specially compensated, to solicit proxies from stockholders, personally or by telephone, facsimile, e-mail or letter.
Unless you have provided by the Committee or as set forth inus contrary instructions, we have sent a Qualified Retirement Plan, Awards to a Participant (including the grant and the receiptsingle copy of benefits) under the Plan shall be disregarded for purposes of determining the Participant’s benefits under, or contributionsthese proxy materials to any Qualified Retirement Plan, non-qualified plan and any other benefit plans maintained byhousehold at which one or more stockholders reside if we believe the Participant’s employer. The term “Qualified Retirement Plan” means any planstockholders are members of the Company orsame household. Each stockholder in the household will receive a Subsidiary that is intendedseparate Proxy Card. This process, known as “householding,” reduces the volume of duplicate information and helps reduce our expenses. If you would like to be qualified under Code Section 401(a).receive your own set of proxy materials, please follow these instructions:
If any provision of this Plan is determined to be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision has never been included herein.
Unless otherwise provided in an Award Agreement, all written notices and all other written communications to the Company provided for in the Plan, or in any Award Agreement, shall be delivered personally or sent byIf your shares are registered or certified mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile, email or prepaid overnight courier to the Company at its principal executive office. Such notices, demands, claims and other communications shall be deemed given:
| in | |
provided, however,that in no event shall any such communications be deemed to be given later than the date they are actually received, provided they are actually received. In the event a communication is not received, it shall only be deemed received upon the showing of an original of the applicable receipt, registration or confirmation from the applicable delivery service. Communications that are to be delivered by the U.S. mail or by overnight service to the Company shall be directed to the attention of the Company’s Chief Operating Officer and to the Corporate Secretary, unless otherwise provided in the Participant’s Award Agreement.
The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events include, but are not limited to, termination of employment for Cause, termination of the Participant’s provision of Services to the Company or any Subsidiary, violation of material Company or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct of the Participant that is detrimental to the business or reputation of the Company or any Subsidiary.
In the sole discretion of the Committee exercised in accordance withSection 5.2(a) above, any Stock Options that are exercisable but unexercised as of the day immediately before the tenth anniversary of the date of grant may be automatically exercised, in accordance with procedures established for this purpose by the Committee, but only if the exercise price is less than the Fair Market Value of a share of Stock on such date and the automatic exercise will result in the issuance of at least one (1) whole share of Stock to the Participant after payment of the exercise price and any applicable minimum tax withholding requirements. Payment of the exercise price and any applicable tax withholding requirements shall be made by a net settlement of the Stock Option whereby the number of shares of Stock to be issued upon exercise are reduced by a number of shares having a Fair Market Value on the date of exercise equal to the exercise price and any applicable minimum tax withholding.
The grant and settlement of Awards under this Plan shall be conditioned upon and subject to compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(k), and the rules and regulations promulgated thereunder.
In addition to the other definitions contained herein, unless otherwise specifically provided in an Award Agreement, the following definitions shall apply:
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Recommendation of the Board of Directors
Your board of directors recommends that you vote “FOR” each of the nominees for director listed in this Proxy Statement, “FOR” approval of the compensation paid to our named executive officers, and “FOR” the ratification of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022.
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Performance measures can include, but are not limited to: book value or tangible book value per share; basic earnings per share (e.g.,earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization; or earnings per share); basic cash earnings per share; diluted earnings per share; return on equity; return on average tangible equity; net income or net income before taxes; net interest income; non-interest income; non-interest expense to average assets ratio; cash general and administrative expense to average assets ratio; efficiency ratio; cash efficiency ratio; financial return ratios; core earnings, capital ratios; increase in revenue; total stockholder return; net operating income, operating income; net interest margin or net interest rate spread; stock price; assets, growth in assets, loans or deposits, asset quality level, charge offs, loan reserves, non-performing assets, loans, deposits, growth of loans, loan production volume, non-performing loans, deposits or assets; regulatory compliance or safety and soundness; achievement of balance sheet or income statement objectives and strategic business objectives, or any combination of these or other measures.
Performance measures may be based on the performance of the Company as a whole or on any one or more Subsidiaries or business units of the Company or a Subsidiary and may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures. The terms of an Award may provide that partial achievement of performance measures may result in partial payment or vesting of the award or that the achievement of the performance measures may be measured over more than one period or fiscal year. In establishing any performance measures, the Committee may provide for the exclusion of the effects of one or more items, including but not limited to: (i) extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) dividends declared on the Company’s stock; (iv) changes in tax or accounting principles, regulations or laws; or (v) expenses incurred in connection with a merger, branch acquisition or similar transaction. Subject to the preceding sentence, if the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company or the manner in which the Company or its Subsidiaries conducts its business or other events or circumstances render current performance measures to be unsuitable, the Committee may modify such performance measures, in whole or in part, as the Committee deems appropriate. Notwithstanding anything to the contrary herein, performance measures relating to any Award hereunder will be modified, to the extent applicable, to reflect a change in the outstanding shares of Stock of the Company by reason of any stock dividend or stock split, or a corporate transaction, such as a merger of the Company into another corporation, any separation of a corporation or any partial or complete liquidation by the Company or a Subsidiary. If a Participant is promoted, demoted or transferred to a different business unit during a performance period, the Committee may determine that the selected performance measures or applicable performance period are no longer appropriate, in which case, the Committee, in its sole discretion, may: (i) adjust, change or eliminate the performance measures or change the applicable performance period; or (ii) cause to be made a cash payment to the Participant in an amount determined by the Committee.
