PROVIDENT FINANCIAL HOLDINGS INC
10-Ks and 10-Qs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
|
||
|
Filed by the registrant [X]
|
||
|
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 14a-6(e)(2))
|
|
|
[X]
|
Definitive proxy statement
|
|
|
[ ]
|
Definitive additional materials
|
|
|
[ ]
|
Soliciting material under Rule 14a-12
|
|
|
PROVIDENT FINANCIAL HOLDINGS, INC.
|
||
|
Name of registrant as specified in its charter)
|
||
|
(Name of person(s) filing proxy statement, if other than the registrant)
|
||
|
Payment of filing fee (Check the appropriate box):
|
||
|
[X]
|
No fee required.
|
|
|
[ ]
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|
|
(1)
|
Title of each class of securities to which transaction applies:
|
|
|
N/A
|
||
|
(2)
|
Aggregate number of securities to which transactions applies:
|
|
|
N/A
|
||
|
(3)
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
|
|
|
N/A
|
||
|
(4)
|
Proposed maximum aggregate value of transaction:
|
|
|
N/A
|
||
|
(5)
|
Total fee paid:
|
|
|
N/A
|
||
|
[ ]
|
Fee paid previously with preliminary materials:
|
|
|
N/A
|
||
|
[ ]
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule and the date of its filing.
|
|
|
(1)
|
Amount previously paid:
|
|
|
N/A
|
||
|
(2)
|
Form, Schedule or Registration Statement No.:
|
|
|
N/A
|
||
|
(3)
|
Filing party:
|
|
|
N/A
|
||
|
(4)
|
Date filed:
|
|
|
N/A
|
||
October 28, 2021
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Provident Financial Holdings, Inc. The meeting will be held on Tuesday, November 30, 2021, at 11:00
a.m., local time. Due to continuing concerns regarding the novel coronavirus (COVID-19) pandemic and to protect the safety and well-being of our shareholders, Board of Directors and employees, our 2021 Annual Meeting of Shareholders will be a
virtual meeting conducted solely online via live webcast. The meeting can be attended by visiting https://meetnow.global/MMZQ4PM. To participate in the annual meeting, registered shareholders will need the control number included on their proxy
card and all other shareholders will need to follow the instructions that accompanied their proxy materials. There is no physical location for the annual meeting.
The Notice of Annual Meeting of Shareholders and Proxy Statement appearing on the following pages describe the formal business to be transacted at the meeting. During the
meeting, we will also report on our operations. Directors and officers will be present to respond to appropriate questions from shareholders.
It is important that your shares are represented at this meeting, whether or not you attend the meeting and regardless of the number of shares you own.
To make sure your shares are represented, we urge you to vote promptly.
You may vote your shares via the Internet or a toll-free telephone number, or by completing and mailing the enclosed proxy card. If you
attend the virtual meeting, you may vote even if you have previously submitted your proxy.
We look forward to seeing you at the meeting.
|
|
Sincerely, |
|
|
|
|
|
|
|
|
/s/ Craig G. Blunden
|
|
|
Craig G. Blunden
Chairman and Chief Executive Officer
|
PROVIDENT FINANCIAL HOLDINGS, INC.
3756 Central Avenue
Riverside, California 92506
(951) 686-6060
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On November 30, 2021
Notice is hereby given that the annual meeting of shareholders of Provident Financial Holdings, Inc. will be held on Tuesday, November 30, 2021, at 11:00 a.m., local time, for
the following purposes:
|
|
Proposal 1. |
Election of two directors to each serve for a term of three years and one director to serve for a term of one year;
|
|
|
Proposal 2. |
Advisory approval of the compensation of our named executive officers as disclosed in this Proxy Statement; and
|
|
|
Proposal 3. |
Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for Provident Financial Holdings, Inc. for the fiscal year ending June 30, 2022.
|
We will also consider and act upon such other matters as may properly come before the meeting or any adjournments or postponements thereof. As of the date of this notice, we are
not aware of any other business to come before the meeting.
Due to concerns regarding the novel coronavirus (COVID-19) pandemic and to protect the safety and well-being of our shareholders, Board of Directors and employees, our 2021
Annual Meeting of Shareholders will be a virtual meeting conducted solely online via live webcast. The meeting can be attended by visiting https://meetnow.global/MMZQ4PM. To participate in the annual meeting, registered shareholders will need the
control number included on their proxy card and all other shareholders will need to follow the instructions that accompanied their proxy materials
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on November 30, 2021.
Our Proxy Statement and Annual Report to Shareholders, are available at http://www.edocumentview.com/prov. The following materials are available for review: Proxy Statement; proxy card; and Annual Report to Shareholders.
The Board of Directors has fixed the close of business on October 14, 2021 as the record date for the annual meeting. This means that shareholders of record at the close of
business on that date are entitled to receive notice of, and to vote at, the meeting and any adjournment thereof.
To ensure that your shares are represented at the meeting, please take the time to vote by submitting
your vote via the Internet or telephone, or by signing, dating and mailing the enclosed proxy card which is solicited by the Board of Directors. The proxy will not be used if you attend the virtual annual meeting and vote. Regardless of the
number of shares you own, your vote is very important. Please act today.
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
|
|
|
/s/ DONAVON P. TERNES
|
|
|
DONAVON P. TERNES
Secretary
|
Riverside, California
October 28, 2021
IMPORTANT: Voting promptly will save us the expense of further requests for proxies in order to ensure a quorum. You may vote via the Internet or by telephone. Alternatively, a proxy card and self-addressed envelope are enclosed for your convenience. No postage is required if mailed in the United States.
PROXY STATEMENT
OF
PROVIDENT FINANCIAL HOLDINGS, INC.
3756 CENTRAL AVENUE
RIVERSIDE, CALIFORNIA 92506
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 30, 2021
The Board of Directors of Provident Financial Holdings, Inc. is using this Proxy Statement to solicit proxies from our shareholders for use at the annual meeting of
shareholders. We are first mailing this Proxy Statement and the enclosed form of proxy to our shareholders on or about October 28, 2021.
The information provided in this Proxy Statement relates to Provident Financial Holdings, Inc. and its wholly-owned subsidiary, Provident Savings Bank, F.S.B. Provident
Financial Holdings, Inc. may also be referred to as “Provident” and Provident Savings Bank, F.S.B. may also be referred to as “Provident Savings Bank” or the “Bank.” References to “we,” “us” and “our” refer to Provident and, as the context requires,
Provident Savings Bank.
INFORMATION ABOUT THE ANNUAL MEETING
Our annual meeting will be held as follows:
|
|
Date: |
Tuesday, November 30, 2021
|
|
|
Time: |
11:00 a.m., local time
|
|
|
Place: |
Virtual meeting at https://meetnow.global/MMZQ4PM
|
Matters to Be Considered at the Annual Meeting
At the meeting, you will be asked to consider and vote upon the following proposals:
|
|
Proposal 1. |
Election of two directors to each serve for a term of three years and one director to serve for a term of one year.
|
|
|
Proposal 2. |
Advisory approval of the compensation of our named executive officers as disclosed in this Proxy Statement.
|
|
|
Proposal 3. |
Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for Provident Financial Holdings, Inc. for the fiscal year ending June 30, 2022.
|
We also will transact any other business that may properly come before the annual meeting. As of the date of this Proxy Statement, we are not aware of any other business to be presented for
consideration at the annual meeting other than the matters described in this Proxy Statement.
Who Is Entitled to Vote?
We have fixed the close of business on October 14, 2021 as the record date for shareholders entitled to notice of and to vote at our annual meeting. Only holders of record of
Provident’s common stock on that date are entitled to notice of and to vote at the annual meeting. You are entitled to one vote for each share of Provident common stock you own. On October 14, 2021, there were 7,470,282 shares of Provident common
stock outstanding and entitled to vote at the annual meeting.
How Do I Vote at the Annual Meeting?
Proxies are solicited to provide all shareholders on the voting record date an opportunity to vote on matters scheduled for the annual meeting and described in these materials.
This answer provides voting instructions for shareholders of record. You are a shareholder of record if your shares of Provident common stock are held in your name. If you are a beneficial owner of Provident common stock held by a broker, bank or
other nominee, please see the instructions below, under “What if My Shares Are Held in Street Name?”
Shares of Provident common stock can only be voted if the shareholder is present virtually or by proxy at the annual meeting.
To ensure your
representation at the annual meeting, we recommend you vote by proxy even if you plan to attend the virtual annual meeting.
You can always change your vote at the meeting if you are a shareholder of record by following the instructions on
the proxy card.
Shareholders may vote by proxy via the Internet or a toll-free telephone number, or by mailing a proxy card. Voting instructions are included on your proxy card. Shares of
Provident common stock represented by properly executed proxies will be voted by the individuals named on the proxy card in accordance with the shareholder’s instructions. Where properly executed proxies are returned to us with no specific
instruction as how to vote at the annual meeting, the persons named in the proxy will vote the shares FOR the election of each of our director nominees, FOR advisory approval of the compensation of our named executive officers as disclosed in this
Proxy Statement and FOR the ratification of the appointment of the independent registered public accounting firm. If any other matters are properly presented at the annual meeting for action, the persons named in the enclosed proxy and acting
thereunder will have the discretion to vote on these matters in accordance with their best judgment. We do not currently expect that any other matters will be properly presented for action at the annual meeting.
You may receive more than one proxy card depending on how your shares are held. For example, you may hold some of your shares individually, some jointly with your spouse and
some in trust for your children. In this case, you will receive three separate proxy cards to vote.
What if My Shares Are Held in Street Name?
If you are the beneficial owner of shares held in street name by a broker, bank or other nominee, the nominee, as the record holder of the shares, is required to vote the shares
in accordance with your instructions. If your common stock is held in street name, you will receive instructions from the nominee that you must follow in order to have your shares voted. The nominee may allow you to deliver your voting instructions
via the telephone or the Internet. Please see the instruction form that accompanies this Proxy Statement. If you do not give instructions to the nominee, the nominee may nevertheless vote the shares with respect to discretionary items, but will not
be permitted to vote your shares with respect to non-discretionary items, pursuant to current industry practice. In the case of non-discretionary items, shares not voted are treated as “broker non-votes.” The proposal to elect directors and the
advisory vote on executive compensation are considered non-discretionary items; therefore, you must provide instructions to the nominee in order to have your shares voted on these matters.
If your shares are held in street name, you must register in advance to participate in the virtual annual meeting. To register to participate in the annual meeting, you must
submit proof of your proxy power (legal proxy) reflecting your Provident holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern
Time, on November 24, 2021. Requests for registration by email may be made by forwarding the email from the nominee who holds yours shares, or attaching an image of your legal proxy and emailing it to legalproxy@computershare.com. Requests for
registration by mail should be sent to Computershare, Provident Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001. You will receive a confirmation of your registration by email after Computershare receives your registration materials.
How Will My Shares of Common Stock Held in the Employee Stock Ownership Plan Be Voted?
We maintain an employee stock ownership plan (“ESOP”) for the benefit of our employees. Each ESOP participant may instruct the ESOP trustee how to vote the shares of Provident
common stock allocated to his or her
2
account under the ESOP by completing the proxy card, which represents a voting instruction to the trustees. If an ESOP participant properly executes the proxy card, the ESOP trustee will vote the
participant’s shares in accordance with the participant’s instructions. Unallocated shares of Provident common stock held by the ESOP and allocated shares for which no voting instructions are received will be voted by the trustee in the same
proportion as shares for which the trustee has received voting instructions.
How Many Shares Must Be Present to Hold the Meeting?
A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, virtually or by proxy, of at least a majority of the shares of Provident
common stock entitled to vote at the annual meeting as of the record date will constitute a quorum. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of the number of shares considered to be present
at the meeting.
What if a Quorum Is Not Present at the Meeting?
If a quorum is not present at the scheduled time of the meeting, a majority of the shareholders present virtually or represented by proxy may adjourn the meeting until a quorum
is present. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given unless the meeting is adjourned for 30 days or more. An adjournment will have no effect on the
business that may be conducted at the meeting.
Vote Required to Approve Proposal 1: Election of Directors
Directors are elected by a plurality of the votes cast at the annual meeting by holders of Provident common stock. Accordingly, the three nominees for election as directors who
receive the highest number of votes actually cast will be elected. Pursuant to our Certificate of Incorporation, shareholders are not permitted to cumulate their votes for the election of directors. Votes may be cast for or withheld from each
nominee. Votes that are withheld and broker non-votes will have no effect on the outcome of the election because the three nominees receiving the greatest number of votes will be elected.
Our Board of Directors
unanimously recommends that you vote FOR the election of each of its director nominees.
Vote Required to Approve Proposal 2: Advisory Approval of Executive Compensation
The advisory (non-binding) vote to approve the compensation of our named executive officers requires the affirmative vote of the majority of the votes cast at the annual meeting
by holders of Provident common stock. Abstentions and broker non-votes do not constitute votes cast and therefore will have no effect on the approval of the proposal.
Our Board of Directors unanimously recommends
that you vote FOR the adoption of an advisory resolution to approve the compensation of our named executive officers as disclosed in this Proxy Statement.
Vote Required to Approve Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm
Ratification of the appointment of the independent registered public accounting firm requires the affirmative vote of a majority of the votes cast at the annual meeting by
holders of Provident common stock. Abstentions and broker non-votes do not constitute votes cast and therefore will have no effect on the approval of the proposal.
Our Board of Directors unanimously recommends
that you vote FOR the ratification of the appointment of Deloitte & Touche LLP as Provident’s independent registered public accounting firm for the fiscal year ending June 30, 2022.
3
You may revoke your proxy before it is voted by:
|
•
|
submitting a new proxy with a later date;
|
|
•
|
notifying the Secretary of Provident in writing before the annual meeting that you have revoked your proxy; or
|
|
•
|
voting at the annual meeting.
|
If you plan to attend the virtual annual meeting and vote during the meeting, instructions for voting will be provided.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 14, 2021, the voting record date, information regarding share ownership of:
|
•
|
those persons or entities (or groups of affiliated persons or entities) known by management to beneficially own more than five percent of Provident’s common stock;
|
|
•
|
each director and director nominee of Provident;
|
|
•
|
each executive officer of Provident or Provident Savings Bank named in the Summary Compensation Table appearing under “Executive Compensation” below (known as “named executive officers”);
and
|
|
•
|
all current directors and executive officers of Provident and Provident Savings Bank as a group.
|
Persons and groups who beneficially own in excess of five percent of Provident’s common stock are required to file with the Securities and Exchange Commission (“SEC”) reports
disclosing their ownership pursuant to the Securities Exchange Act of 1934. To our knowledge, no other person or entity, other than those set forth below, beneficially owned more than five percent of the outstanding shares of Provident’s common
stock as of the close of business on the voting record date.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In accordance with Rule 13d-3 of the Securities Exchange Act, a person is deemed to
be the beneficial owner of any shares of common stock if he or she has voting and/or investment power with respect to those shares. Therefore, the table below includes shares owned by spouses, other immediate family members in trust, shares held in
retirement accounts or funds for the benefit of the named individuals, and other forms of ownership, over which shares the persons named in the table may possess voting and/or investment power. In addition, in computing the number of shares
beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to outstanding options that are currently exercisable or exercisable within 60 days after the voting record date are included in the number of
shares beneficially owned by the person and are deemed outstanding for the purpose of calculating the person’s percentage ownership. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other
person.
4
|
Name
|
Number of Shares
Beneficially Owned (1)
|
Percent of Shares
Outstanding (%)
|
||
|
Beneficial Owners of More Than 5%
|
||||
|
Provident Savings Bank, F.S.B. Employee Stock Ownership Plan Trust (2)
|
783,218
|
10.48
|
||
|
Dimensional Fund Advisors LP
|
566,358 (3)
|
7.58
|
||
|
M3 Funds, LLC
|
413,564 (4)
|
5.54
|
||
|
Renaissance Technologies LLC
|
400,647 (5)
|
5.36
|
||
|
Ameriprise Financial, Inc.
|
392,909 (6)
|
5.26
|
||
|
FJ Capital Management
|
379,788 (7)
|
5.08
|
||
|
Raffles Associates, L.P.
|
375,493 (8)
|
5.03
|
||
|
Directors
|
||||
|
Joseph P. Barr
|
52,018
|
*
|
||
|
Bruce W. Bennett
|
86,596 (9)
|
1.15
|
||
|
Judy A. Carpenter
|
50,700
|
*
|
||
|
Debbi H. Guthrie
|
59,413
|
*
|
||
|
Roy H. Taylor
|
89,404
|
1.19
|
||
|
William E. Thomas
|
133,241 (10)
|
1.78
|
||
|
Director Nominee
|
||||
|
Kathy Michalak
|
--
|
*
|
||
|
Named Executive Officers
|
||||
|
Craig G. Blunden**
|
268,821
|
3.58
|
||
|
Donavon P. Ternes
|
245,261 (11)
|
3.27
|
||
|
David S. Weiant
|
37,903
|
*
|
||
|
All Executive Officers and Directors as a Group (11 persons)
|
1,094,533
|
14.04
|
__________
|
*
|
Less than one percent of shares outstanding.
|
|
**
|
Mr. Blunden is also a director of Provident.
|
|
(1)
|
Shares held in accounts under the ESOP, as to which the holders have voting power but not investment power, are included as follows: Mr. Blunden, 32,230 shares; Mr. Ternes, 14,780 shares;
Mr. Weiant, 10,689 shares; and all executive officers as a group, 63,253 shares. The amounts shown also include the following number of shares which the indicated individuals have the right to acquire within 60 days of the close of business
on the voting record date through the exercise of stock options granted pursuant to our stock option plans: Mr. Barr, Mr. Bennett, Ms. Guthrie, Mr. Taylor and Mr. Thomas, 27,500 shares each; Ms. Carpenter, 45,500 shares; Mr. Blunden, 43,000
shares; Mr. Ternes, 40,000 shares; Mr. Weiant, 17,500 shares; and all executive officers and directors as a group, 323,500 shares.
|
|
(2)
|
The address of the ESOP is 3756 Central Avenue, Riverside, California 92506.
|
|
(3)
|
Based solely on a Schedule 13G/A dated February 16, 2021, reporting sole voting power over 537,303 shares and sole dispositive power over 566,358 shares. The address of Dimensional Fund
Advisors LP is Building One, 6300 Bee Cave Road, Austin, Texas 78746.
|
|
(4)
|
Based solely on a Schedule 13G dated February 10, 2021, reporting that M3 Funds, LLC, M3 Partners, LP, M3F, Inc., Jason A. Stock and William C. Waller have shared voting and dispositive
power over the shares reported. The address of M3 Funds, LLC is 10 Exchange Place, Suite 510, Salt Lake City, Utah 84111.
|
|
(5)
|
Based solely on a Schedule 13G/A dated February 11, 2021, reporting that Renaissance Technologies LLC and Renaissance Technologies Holdings Corporation have sole voting power over 394,66
shares and sole dispositive power over 400,647 shares. The address of Renaissance Technologies LLC is 800 Third Avenue, New York, New York 10022.
|
|
(6)
|
Based solely on a Schedule 13G dated February 12, 2021, reporting that Ameriprise Financial, Inc. and Columbia Management Investment Advisers, LLC have shared voting and dispositive power
over the shares. The address of Ameriprise Financial, Inc. is 145 Ameriprise Financial Center, Minneapolis, Minnesota 55474.
|
|
(7)
|
Based solely on a Schedule 13G dated April 7, 2021, reporting that FJ Capital Management and Martin Friedman have shared voting and dispositive power over 379,788 shares, Financial
Opportunity Fund LLC has shared voting and dispositive power over 347,960 shares, and Financial Opportunity Long/Short Fund LLC has shared voting and dispositive power over 16,853 shares. The address of FJ Capital Management is 1313 Dolley
Madison Boulevard, Suite 306, McLean, Virginia 22101.
|
|
(8)
|
Based solely on a Schedule 13G/A dated February 13, 2019, reporting sole voting and dispositive power over the shares reported. The address of Raffles Associates, L.P. is One Penn Plaza,
Suite 1628, New York, New York 10119.
|
|
(9)
|
Includes 1,980 shares owned by Mr. Bennett’s spouse.
|
|
(10)
|
Includes 10,571 shares owned by the William E. Thomas, Inc. Profit Sharing Plan.
|
|
(11)
|
Includes 47,500 shares owned by Mr. Ternes’ spouse.
|
5
PROPOSAL 1 – ELECTION OF DIRECTORS
Our Board of Directors currently consists of seven members and is divided into three classes. Approximately one-third of the directors are elected annually to serve for a
three-year period or until their respective successors are elected and qualified. The Nominating Committee has nominated Judy A. Carpenter and William E. Thomas for re-election to three-year terms and has also nominated Kathy Michalak for election
to a one-year term. Ms. Michalak was recommended for nomination by a non-management director.
The table below sets forth information regarding each director of Provident and each nominee for director. The Nominating Committee of the Board of Directors selects nominees
for election as directors. Each of our nominees currently serve as directors of Provident and Provident Savings Bank, other than Ms. Michalak. Each nominee has consented to being named in this Proxy Statement and has agreed to serve if elected. If
a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute
nominee, unless you have withheld authority. At this time, we are not aware of any reason why a nominee might be unable to serve if elected.
The Board of Directors recommends a vote FOR the election of Judy A. Carpenter, William E. Thomas and Kathy Michalak.
|
Age as of
|
Year First Elected
|
Term to
|
||||
|
Name
|
June 30, 2021
|
Director (1)
|
Expire
|
|||
|
BOARD NOMINEES
|
||||||
|
Judy A. Carpenter
|
64
|
2012
|
2024 (2)
|
|||
|
William E. Thomas
|
72
|
1997
|
2024 (2)
|
|||
|
Kathy Michalak
|
66
|
--
|
2022 (2)
|
|||
|
DIRECTORS CONTINUING IN OFFICE
|
||||||
|
Joseph P. Barr
|
75
|
2001
|
2022
|
|||
|
Bruce W. Bennett
|
72
|
1993
|
2022
|
|||
|
Debbi H. Guthrie
|
70
|
1994
|
2022
|
|||
|
Craig G. Blunden
|
73
|
1975
|
2023
|
|||
|
Roy H. Taylor
|
70
|
1990
|
2023
|
|||
|
_________
|
||||||
| (1) |
For years prior to 1996, includes prior service on the Board of Directors of Provident Savings Bank.
|
| (2) |
Assuming election or reelection.
|
Set forth below is the principal occupation of each nominee for director and each director continuing in office, as well as a brief description of the qualifications, attributes,
skills and areas of expertise of each nominee or director that makes the director uniquely qualified to serve on Provident’s Board of Directors. All nominees and directors have held their present positions for at least five years unless otherwise
indicated.
Judy A. Carpenter
is the President and Chief Operating Officer of Riverside Medical Clinic, the
largest physician-owned multi-specialty medical group in the Inland Empire. Riverside Medical Clinic is comprised of approximately 180 physicians and 750 employees, with seven clinics and an outpatient surgery center. Ms. Carpenter is a graduate of
California State Polytechnic University - Pomona in Business Administration with a major in Accounting
,
and is a Certified Public Accountant. Ms. Carpenter has over 30 years of healthcare industry
experience, beginning her career in public accounting and joining Riverside Medical Clinic in 1988. Active in the community, she is a member of the Monday Morning Group and the Greater Riverside Chambers of Commerce. In addition, she is Past
Chairman for the Greater Riverside Chambers of Commerce. She currently serves on the boards for the Janet Goeske Senior Center and Foundation, Riverside University Health Foundation, and Riverside Community Health Foundation. Ms. Carpenter
currently serves on our Audit Committee and Nominating and Corporate Governance Committee. Ms. Carpenter is uniquely qualified to serve on our Board of Directors with extensive business knowledge, financial expertise and unparalleled familiarity
with our local markets and communities.
6
William E. Thomas
is the Executive Vice President and General Counsel of The KPC Group (and its affiliates), which own and/or manage a
diversified portfolio of hospitals, medical groups and healthcare management companies in Southern California. Prior to joining The KPC Group in 1998, Mr. Thomas was the founding and managing partner of a private law firm in Riverside, California.
He currently serves as Chairman of our Long Range Planning Committee and Nominating and Corporate Governance Committee, and serves on our Personnel/Compensation Committee. As a practicing attorney, Mr. Thomas has advised boards of directors on
corporate governance, mergers and acquisitions and regulatory matters, providing the Board with a unique understanding of a broad range of legal and regulatory responsibilities.
Kathy Michalak
has served since April 2014 as Executive Director of Habitat for Humanity Riverside, a non-profit that builds and repairs
homes for those in need. From June 2010 to April 2014, she was the Construction Supervisor for Habitat for Humanity Riverside. Prior to that, she worked for 35 years in the newspaper industry, holding positions in circulation, sales and marketing.
Ms. Michalak is a member of the Board of Directors of Habitat for Humanity California and a member of the Board of Directors and Vice Chair of Marketing and Membership of the Greater Riverside Chamber of Commerce. She is also a member of the Grants
Committee of the Community Foundation of Riverside and San Bernardino Counties and a member of Soroptimist International of Riverside, and previously served as the Commissioner of the Community Action Partnership of Riverside County. Ms. Michalak
was nominated for election to Provident’s Board of Directors based on her knowledge of affordable housing in Provident’s market area, as well as her proven leadership skills and extensive community involvement.
Joseph P. Barr
is a Certified Public Accountant in California and Ohio (inactive) and has been in public accounting for more than 46
years. He is a retired partner of the accounting firms of Ernst & Young and most recently Swenson Accountancy Corporation. He also serves or has served on the Board of Directors of the Greater Riverside Chambers of Commerce, the World Affairs
Council of the Inland Empire, the Riverside Art Museum, the Finance and Investment Committee of the Riverside Community Health Foundation and the A. Gary Anderson Graduate School of Management Advisory Committee at the University of California at
Riverside. Mr. Barr currently serves as Chairman of our Audit Committee and serves on our Nominating and Corporate Governance Committee. As a certified public accountant, Mr. Barr brings a wealth of financial and risk management expertise to the
Board and he possesses practical business experience from his many years of advising clients on business opportunities and best practices.
Bruce W. Bennett
provides consulting services to the healthcare industry primarily related to quality assurance, risk management,
marketing and business development. Previously, he was the President and owner of Community Care and Rehabilitation Center, a skilled nursing facility, with which he had been associated since 1973, until he sold the company in 2010. He currently
serves on the National Down Syndrome Congress, previously served on the Board of Directors of Riverside Community Hospital, and is Chairman Emeritus of Riverside Community Health Foundation. Mr. Bennett currently serves on our Personnel/Compensation
Committee and Nominating and Corporate Governance Committee. Mr. Bennett brings entrepreneurial knowledge and business management experience to the Board through his experience owning and operating a business in the highly regulated health care
industry.
Debbi H. Guthrie
currently manages all accounting and property management for her family’s real estate holdings and developments in
Arizona, California, Idaho and Utah. She retired in late 2016 from her position as Executive Vice President and Chief Communications Officer of Raincross Hospitality Corporation, a company contracted by the City of Riverside to manage and operate
the Riverside Convention Center, Riverside Convention & Visitors Bureau and the Riverside Sports Commission. Prior to her position there, she was the President/Chief Financial Officer and Responsible Managing Officer of Roy O. Huffman Roof
Company with which she was associated from 1971 until she sold the company in 2004. Ms. Guthrie continues to be actively involved in leadership positions in multiple community organizations in Inland Southern California. Ms. Guthrie serves on our
Audit Committee and Nominating and Corporate Governance Committee. As an effective community leader, successful business owner and highly efficient manager, she has a broad range of experience that has resulted in her unique knowledge of the
financial needs of businesses and homeowners in the markets and communities we serve.
Craig G. Blunden
has been associated with Provident Savings Bank since 1974, currently serving as Chairman and Chief Executive Officer of
the Bank and Provident, positions he has held since 1991 and 1996, respectively. He served as President of the Bank from 1991 until June 2011 and as President of Provident from its formation in 1996 until
7
June 2011. Mr. Blunden also serves on the Board of Directors of the Western Bankers Association. Mr. Blunden has gained invaluable banking expertise in all areas of banking from his years of
service in the financial services industry.
Roy H. Taylor
recently retired from his positions as President, West Region, Hub International Limited, and the Chief Executive Officer
of Hub International of California, Inc. (“Hub International”), with which he had been associated since 2004. Prior to that, Mr. Taylor was President of Talbot Agency, Inc., an insurance brokerage firm, with which he had been associated since 1972
and which was acquired by Hub International in 2004. Mr. Taylor currently serves as Chairman of our Personnel/Compensation Committee and serves on our Long Range Planning Committee and Nominating and Corporate Governance Committee. Mr. Taylor
brings extensive knowledge of the financial services industry with a specialty in insurance and particular knowledge regarding strategic planning, risk management and mergers and acquisitions.
BOARD OF DIRECTORS’ MEETINGS, BOARD COMMITTEES
AND CORPORATE GOVERNANCE MATTERS
Board of Directors
The Boards of Directors of Provident and Provident Savings Bank conduct their business through board and committee meetings. During the fiscal year ended June 30, 2021, the
Provident Board of Directors held 11 meetings and the Bank Board of Directors held 11 meetings. No director attended fewer than 90% of the total meetings of the boards and committees on which that person served during this period.
Committees and Committee Charters
Provident’s Board of Directors has a standing Nominating and Corporate Governance Committee. The Boards of Directors of Provident and Provident Savings Bank have a joint Audit
Committee and Personnel/Compensation Committee. All of these committees have adopted written charters, copies of which are available on our website at www.myprovident.com.
Audit Committee.
The Audit Committee, which currently consists of Directors Barr (Chairman), Carpenter and Guthrie, is responsible for
reviewing the adequacy of our system of internal accounting controls, approving the services provided by our independent registered public accounting firm and meeting with the firm to discuss the results of the annual audit and any related matters.
The Audit Committee has a charter which specifies its obligations and the Committee believes it has fulfilled its responsibilities under the charter. Each member of the Audit Committee is “independent,” in accordance with the requirements for
companies listed on Nasdaq. The Audit Committee members do not have any relationship with us that may interfere with the exercise of their independence from management and Provident. None of the Audit Committee members are current officers or
employees of Provident or its affiliates. Mr. Barr meets the definition of “audit committee financial expert,” as defined by the SEC. The Audit Committee met four times during the fiscal year ended June 30, 2021.
Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee, which currently consists of Directors
Thomas (Chairman), Barr, Bennett, Carpenter, Guthrie and Taylor, selects the nominees for election as directors. The Committee also assists the Board in identifying individuals to become Board members and in developing and implementing corporation
governance policies. Each member of the Committee is “independent,” in accordance with the requirements for companies listed on Nasdaq. The Nominating and Corporate Governance Committee met once during the fiscal year ended June 30, 2021.
Only those nominations made by the Nominating and Corporate Governance Committee or properly presented by shareholders will be voted upon at the annual meeting of shareholders.
In its deliberations for selecting candidates for nominees as director, the Committee considers the candidate’s knowledge of the banking business; involvement in local community, business and civic affairs; record of accomplishment in his or her
chosen field; depth and breadth of experience at an executive, policy-making level; personal and professional ethics, integrity and values; absence of real and perceived conflicts of interest; ability and willingness to devote sufficient time to
become knowledgeable about Provident and to effectively carry out the duties and responsibilities of service; ability to attend all or almost all Board
8
meetings in person; ability to develop a good working relationship with other Board members; ability to contribute to the Board’s working relationship with senior management; and whether the
candidate would provide for adequate representation of Provident Savings Bank’s market area. Any nominee for director made by the Committee must be highly qualified with regard to some or all of these attributes. Finally, viewpoint, skill,
education, values, race, gender, national origin and culture are considered to provide for diversity on our Board of Directors. These diversity factors are considered when the Nominating and Corporate Governance Committee and Board are seeking to
fill a vacancy or new seat on the Board.
In searching for qualified director candidates to fill vacancies on the Board, the Committee solicits its current Board of Directors for names of potentially qualified
candidates. Additionally, the Committee may request that members of the Board of Directors pursue their own business contacts for the names of potentially qualified candidates. The Committee would then consider the potential pool of director
candidates, select the candidate the Committee believes best meets the then-current needs of the Board, and conduct a thorough investigation of the proposed candidate’s background to ensure there is no past history that would cause the candidate not
to be qualified to serve as a director of Provident. Although the Committee’s charter does not specifically provide for the consideration of shareholder nominees for directors, the Committee will consider director candidates recommended by our
shareholders in accordance with Provident’s Certificate of Incorporation. Because the Certificate of Incorporation provides a process for shareholder nominations, the Committee does not feel it is necessary to provide for shareholder nominations of
directors in a charter. If a shareholder submits a proposed nominee, the Committee will consider the proposed nominee, along with any other proposed nominees recommended by members of our Board of Directors, in the same manner in which the Committee
will evaluate its nominees for director. For a description of the proper procedure for shareholder nominations, see “Shareholder Proposals” in this Proxy Statement.
Personnel/Compensation Committee.
The Personnel/Compensation Committee, currently consisting of Directors Taylor (Chairman), Bennett and
Thomas, is responsible for establishing and implementing all compensation policies of Provident, Provident Savings Bank and its subsidiaries and may delegate lower level policies and procedures to the Human Resource Department. The Committee is also
responsible for evaluating the performance of the Chief Executive Officer of the Bank and approving an appropriate compensation level. The Chief Executive Officer evaluates the performance of all senior officers of the Bank and recommends to the
Committee individual compensation levels for approval by the Committee. The Committee met four times during the fiscal year ended June 30, 2021.
Leadership Structure
The positions of Chairman of the Board and Chief Executive Officer are held by the same person. The Board has determined that it is in the best interests of Provident not to
have a policy regarding the separation of these roles, allowing the Board greater flexibility to establish a leadership structure that fits the needs of Provident at any particular point in time. The current structure makes the best use of the Chief
Executive Officer’s extensive knowledge of our industry and of Provident, recognizes that he is best situated to lead discussions on important matters affecting the business of Provident and creates a firm link between the Board and management
fostering effective communication. Additionally, Director Taylor serves as the lead independent director. In this capacity, he serves as liaison between independent directors and the full Board in discussing issues from the executive sessions of
independent directors, ensuring the flow of information and working in unison with the Chairman and Chief Executive Officer. He is charged with leading the Board’s independent directors to engagement and consensus, making sure that independent
consensus is heard and implemented regarding substantive business matters or governance issues.
In addition to having a lead independent director, the Board of Directors and the Audit and Personnel/ Compensation committees routinely meet in executive session without
management. Executive sessions are held after each regularly scheduled meeting. Executive sessions of the Board are led by the lead independent director and executive sessions of committees are led by the committee chair.
9
Board Involvement in Risk Management Process
We believe that effective risk management is of primary importance to the success of Provident. We have a comprehensive risk management process that monitors, evaluates and
manages the risks we assume in conducting our activities. Our Board’s oversight of the risk management process is conducted through:
|
•
|
the responsibilities of the Board’s standing committees;
|
|
•
|
Board-approved policies and procedures that limit the risk exposure of certain business activities;
|
|
•
|
periodic reports from management to ensure compliance with and evaluate the effectiveness of risk
limits and controls;
|
|
•
|
employees who oversee day-to-day risk management duties, including the internal audit personnel who
report directly to the Audit Committee, and Compliance Officer;
|
|
•
|
selecting, evaluating, and retaining competent senior management; and
|
|
•
|
approval of long and short-term business objectives and goals contained in the Board approved business plan.
|
Directors keep themselves informed of the activities and condition of Provident and of the risk environment in which it operates by regularly attending Board and assigned
Committee meetings, and by review of meeting materials, auditor’s findings and recommendations, and regulatory communications. Directors stay abreast of general industry trends and statutory and regulatory developments by periodic briefings by
senior management, counsel, auditors or other consultants, and by more formal director education.
Corporate Governance
We are committed to establishing and maintaining high standards of corporate governance. The Board of Directors is cognizant of its responsibility to comply with the provisions
contained in the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC adopted thereunder, and the rules of Nasdaq with respect to corporate governance. The Board and its committees will continue to evaluate and improve our corporate
governance principles and policies as necessary and as required.
Governance Highlights.
Highlights of Provident’s corporate governance include the following:
|
•
|
Lead independent director and executive sessions of the Board and committees;
|
|
•
|
Shareholder engagement;
|
|
•
|
Stock ownership policy and retention guidelines
|
|
•
|
Restriction on hedging and pledging; and
|
|
•
|
Clawback of incentive payments.
|
Director Independence.
Our common stock is listed on the Nasdaq Global Select Market. In accordance with Nasdaq requirements, at least a
majority of our directors must be independent directors. The Board has determined that six of our seven directors are independent, as defined by Nasdaq. Directors Barr, Bennett, Carpenter, Guthrie, Taylor and Thomas are all independent. Director
nominee Michalak is independent. Only Craig Blunden, who is our Chairman and Chief Executive Officer, is not independent.
Code of Ethics.
On June 30, 1995, the Board of Directors initially adopted and approved a Code of Ethics. Subsequently, the Code of
Ethics has been reviewed and approved by the Board of Directors each year, with the Board most recently having reviewed and approved the Code of Ethics on June 24, 2021. The Code is applicable to our employees, as well as the Board of Directors,
Chief Executive Officer, Chief Financial Officer, Controller and senior
10
management, and requires individuals to maintain the highest standards of professional conduct. A copy of the Code of Ethics is available on our website at www.myprovident.com.
Shareholder Communication with the Board of Directors.
The Board of Directors maintains a process for shareholders to communicate with
the Board. Shareholders wishing to communicate with the Board of Directors may do so by mailing a letter marked “Confidential” to the Board of Directors, Provident Financial Holdings, Inc., 3756 Central Avenue, Riverside, California 92506. Any
communication must state the number of shares beneficially owned by the shareholder initiating the communication.
Annual Meeting Attendance by Directors.
We do not have a policy regarding Board member attendance at the annual meetings of
shareholders. All members of the Board of Directors attended the 2020 annual meeting of shareholders.
Certain Relationships and Related Transactions.
During the year ended June 30, 2021, neither Provident nor Provident Savings Bank
participated in any transactions, or proposed transactions, in which the amount involved exceeded $120,000 and in which any related person had a direct or indirect material interest.
Shareholder Engagement.
Management and the Board of Directors believe that effective corporate governance should include communication
with shareholders and responsiveness to shareholder concerns.
In June 2021, we sent a corporate governance questionnaire to our largest shareholders, representing approximately 60% of Provident’s outstanding shares at the time. We did not
receive any responses from the shareholders contacted.
Previously, in June 2019, we contacted our largest shareholders, representing approximately 49% of Provident’s outstanding shares at the time and believe the topics and responses
are still relevant today. Topics addressed included content of public filings, corporate governance, executive compensation, including potential payments upon termination and alignment of performance and pay, and audit practices. The shareholders
with whom we communicated were largely supportive of our practices and provided helpful feedback for management and the Board of Directors. The questions and responses are described below. All shareholder comments, suggestions and feedback have
been shared with and considered by the Board.
We asked shareholders whether there is any information in our public filings that is not currently provided that would be helpful in their assessment of Provident. One
shareholder responded that our pubic filings are significantly above average in disclosures and another shareholder requested that we show five quarters of historical consolidated statements of operations in our quarters of historic data. There were
no other shareholder responses to this question. We asked shareholders if there were concerns about the availability of public information and whether they had any recommendations. One shareholder requested that we distribute the quarterly investor
presentation at the same time as the earnings release. There were no other shareholder responses to this question. We recognize that there can be a short delay between the distribution of the earnings release and the upload of the quarterly
investor presentation to our website. We do not intend to change our current practices because the delay is typically not longer than 24 hours.
We also asked shareholders whether they have any concerns with Provident’s alignment of company performance with executive pay. Shareholders who responded were generally
supportive of Provident’s executive pay practices. One shareholder responded that the incentive compensation targets (with thresholds and maximums) are clearly disclosed in the proxy statement and that the targets align with important shareholder
metrics, and further responded that Provident has done a good job of protecting and growing book value. Another shareholder suggested that Provident simplify the metrics to focus on the increase in tangible book value per share and earnings per
share, opining that these two metrics are the best indicator of the company’s overall performance. The shareholder believes that this simplified approach rewards successful execution of share repurchase plans which it believes are an excellent use
of capital at the right price. Yet another shareholder wanted to understand Provident’s use of peer groups when establishing executive compensation and the thinking behind limited long-term equity awards to key personnel in the past few years. This
shareholder encouraged long-term equity awards as part of the compensation package to align shareholder and management interests but would encourage targeted financial results as a vesting requirement rather than a simple tenure-based vesting
requirement.
11
Provident intends to keep its current executive compensation practices unchanged from prior practices. We have historically used peer groups to consider executive compensation
and comparisons of financial results and intend to continue to do so. We agree that long-term equity awards are a necessary component of a competitive compensation package for key personnel to align shareholder and management interests and the Board
of Directors completed the most recent awards on May 30, 2019. Prior to that, awards were granted on September 30, 2014 following Provident’s established practice of awarding long-term equity incentives approximately every three years provided our
financial performance warrants such action (with the exception of newly-hired personnel who may have received awards as a part of a new hire compensation package). We believe our three-prong approach to compensation (salary, annual incentive
compensation and long-term equity based compensation) satisfies the targeted financial results criteria with the equity-based component more heavily weighted toward retention of key personnel.
We asked shareholders whether they have any concerns with the calculation of severance payments for executive officers in connection with a change in control. Shareholders who
responded to this question were supportive of our calculation of severance payments for executive officers in connection with a change in control. As a result, we do not intend to change our current practices for the foreseeable future. However, we
acknowledge that some proxy advisory services have found the use of Section 280G of the Internal Revenue Code to define the base salary amount as “potentially troubling” because it could inflate the salary basis to levels higher than those generally
viewed as reasonable by shareholders. Although our shareholders did not express concerns, we would like to point out that the use of the Section 280G definition is isolated to a single employment agreement to a long-tenured executive officer where
the employment agreement was originated many years ago when such provisions were routine. We do not believe it is equitable to renegotiate the longstanding provision, particularly since it is uncertain that the provision will have an outsized impact
on the severance amount and it is uncertain that the severance will ever be paid.
We asked shareholders whether our corporate governance practices meet their expectations. Shareholders who responded to this question were supportive of our corporate governance
practices; therefore, we do not currently intend to change our current practices.
We also asked shareholders whether they think our Board structure is appropriate. Shareholders who responded to this question were generally supportive but also provided a few
suggestions for our consideration. Suggestions included splitting the Chairman and CEO roles in the future, more investor/shareholder representation on the Board, a lower average director tenure and elimination of the classified board structure. We
recognize that there are different ways to organize the Board structure but we believe that our current Board structure is appropriate. Although we have not split the Chairman and CEO roles, the Board has designated a lead independent director. The
lead independent director serves as liaison between independent directors and the full Board, making certain that independent consensus is heard and implemented regarding substantive business matters or governance issues. Because Provident Savings
Bank is a community bank located in a well-defined geographic area, we believe that shareholders are best served when qualified directors are strongly connected to the communities and markets we serve and where they are recognized as local business
and community leaders. We do not object to having an investor/shareholder as a director and in the past such directors have been Board members. We recognize that we have a higher average director tenure but we view the tenure as a strength given
the incumbents’ long-term knowledge of Provident and the markets it serves. Additionally, we have a mandatory retirement age of 75 for directors, insuring new leadership. We believe that our classified board structure is a strength, providing
continuity of leadership and the ability to implement long-term strategies but we also recognize that some shareholders view a non-classified board structure as a best practice.
We also asked shareholders whether they have any concerns with our audit practices. Shareholders who responded to the question supported our internal control and audit
functions. As a result, we do not intend to change our current practices for the foreseeable future.
Hedging and Pledging Policy.
Provident prohibits its directors and senior officers from purchasing financial instruments, or otherwise
engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Provident’s equity securities. Provident also prohibits its directors and senior financial officers from holding Provident
securities in a margin account or pledging Provident securities as collateral for a loan.
12
Stock Ownership Policy and Retention Guidelines
In 2021, we adopted stock ownership guidelines for our directors and senior officers to encourage them to build their ownership position in our common stock over time. The
guidelines are framed in terms of stock value as a percentage of the base cash retainer or base salary.
|
|
Position |
Stock Value as a Percentage of the Base Cash Retainer or Base Salary
|
|
|
Director |
300%
|
|
|
Chief Executive Officer |
300%
|
|
|
President |
200%
|
|
|
Senior Officer |
100%
|
For incumbent directors and senior officers, the closing price of Provident’s stock on June 30, 2021 and the person’s ownership position on that date will be used for the purposes of determining
compliance with the stock ownership guidelines and to begin the five-year timeline to achieve compliance. As of June 30, 2021, all directors and senior officers were in compliance with the stock ownership guidelines. For new directors and senior
officers, the date appointed to the Board of Directors, the employment date, or the promotion date will be used to establish the stock ownership threshold and begin the five-year timeline to achieve compliance with the stock ownership guidelines.
Under the stock ownership guidelines, once a director or senior officer attains his or her individual ownership level, he or she will remain in compliance with these guidelines
despite future changes in the stock price, base cash retainer, or base salary, as long as his or her holdings do not decline below the recommended number of shares at the time the stock ownership guidelines were met. Shares counted toward the
guidelines include those held by the executive directly or through a broker, shares held in the Employee Stock Ownership Plan, in-the-money unexercised exercisable stock options, and unvested restricted stock.
We have adopted stock retention guidelines for our directors and senior officers. Each director or executive is required to retain 50% of the net shares (after payment of the
applicable exercise price (if any), fees, and taxes) acquired upon the exercise of stock options or vesting of restricted stock. The director or executive is required to hold such shares until the date that he or she satisfies our stock ownership
guidelines; shares may not be sold if they would cause the director or executive officer to not meet the stock retention guidelines. Exceptions may apply for donations of stock to charities, educational institutions or family foundations and for
sales or divisions of property in the case of divorce, disability or death. Waivers may be granted in exceptional circumstances.
DIRECTORS’ COMPENSATION
The following table shows the compensation paid to our directors for the fiscal year ended June 30, 2021, with the exception of Craig G. Blunden, who is our Chairman and Chief
Executive Officer, and whose compensation is included in the section entitled “Executive Compensation.” Directors did not receive stock awards, option awards or non-equity incentive compensation, nor do they have pensions or receive nonqualified
deferred compensation earnings; therefore, these columns have been omitted from the table below.
|
Name
|
Fees Earned or
Paid in Cash ($)
|
All Other
Compensation ($)(1)
|
Total ($)
|
|||
|
Joseph P. Barr
|
38,000
|
7,849
|
45,849
|
|||
|
Bruce W. Bennett
|
37,600
|
359
|
37,959
|
|||
|
Judy A. Carpenter
|
37,600
|
--
|
37,600
|
|||
|
Debbi H. Guthrie
|
37,600
|
8,298
|
45,898
|
|||
|
Roy H. Taylor
|
38,000
|
8,298
|
46,298
|
|||
|
William E. Thomas
|
37,600
|
--
|
37,600
|
|
___________
|
|
|
(1)
|
Comprised of Provident’s cost for each director’s participation in certain group life, health and disability insurance, and medical reimbursement plans that are generally available to
salaried employees and do not discriminate in scope, terms or operation.
|
13
Non-employee directors of Provident currently receive a monthly retainer of $3,000, a fee of $400 for each committee meeting attended and a fee of $1,000 for each special board
meeting attended. The committee chairman receives a fee of $500 per committee meeting attended. In addition, directors are covered under the Bank’s policies for medical, dental and vision care. Dependent coverage is available at the directors’ own
expense. Following retirement from the Board of Directors, Director Taylor will continue to receive this coverage as he was grandfathered into prior benefit practices. Remaining directors are ineligible for coverage subsequent to retirement. No
separate fees are paid for service on Provident Savings Bank’s Board of Directors. Employee directors receive no separate compensation for their services.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Personnel/Compensation Committee.
The Personnel/Compensation Committee of the Provident and Provident Savings Bank Boards of Directors is
responsible for establishing and implementing all compensation policies of Provident, Provident Savings Bank and its subsidiaries. The Committee is also responsible for evaluating the performance of the Chief Executive Officer and approving an
appropriate compensation level. The Chief Executive Officer evaluates the performance of all senior officers and recommends to the Committee individual compensation levels for approval by the Committee.
Objectives and Overview of the Compensation Program.
The Personnel/Compensation Committee believes that a compensation program for
executive officers should take into account management skills, long-term performance results and shareholder returns. The principles underlying our compensation policies are:
|
•
|
to attract and retain key executives who are highly qualified and are vital to the long-term success of Provident and its subsidiaries;
|
|
•
|
to provide levels of compensation competitive with those offered throughout the banking industry;
|
|
•
|
to align the interests of executives with shareholders by having a significant portion of total compensation based on meeting defined performance measures;
|
|
•
|
to motivate executives to enhance long-term shareholder value by helping them build their own ownership in Provident; and
|
|
•
|
to integrate the compensation program with the Bank’s long-term strategic planning and management process.
|
The Committee considers a variety of subjective and objective factors in determining the compensation package for individual executives including: (1) the performance of
Provident and Provident Savings Bank on a consolidated basis with emphasis on annual performance factors and long-term objectives; (2) the responsibilities assigned to each executive; and (3) the performance of each executive of assigned
responsibilities as measured by the progress of Provident and Provident Savings Bank during the year.
Compensation Consultant.
The Personnel/Compensation Committee has the authority to retain compensation advisers at its discretion.
Compensation Program Elements.
The Personnel/Compensation Committee focuses primarily on the following three components in forming the
total compensation package for our executive officers:
|
•
|
base salary;
|
|
•
|
annual incentive compensation; and
|
|
•
|
long-term equity-based compensation.
|
14
The current compensation program involves a combination of salary, at-risk incentives to reward short-term performance, and stock option and restricted stock awards to reward long-term
performance. The Personnel/Compensation Committee monitors the allocation of compensation between long-term and currently paid items on an ongoing basis, with the goal of ensuring that the allocation is competitive in the banking industry.
Base Salary.
Base salary is intended to reward the executive’s ongoing performance and is based on the executive’s
level of responsibility, individual ability, experience, and past and potential performance. The salary levels of our executive officers are designed to be competitive with those of executives at similarly-sized banking institutions in our
geographic area which have similar operations and performance. Individual annual performance is reviewed by the Personnel/Compensation Committee or the Chief Executive Officer, as appropriate, to determine annual salary adjustments. An executive
may receive a material increase in salary upon taking on materially larger duties and responsibilities. Compensation information is obtained by reviewing proxy statements and various compensation surveys including the S&P Global Market
Intelligence Compensation data, the Western Bankers Association Survey and the Employers Group Survey. From these sources, the Personnel/Compensation Committee and the Chief Executive Officer create a compensation framework and set executive officer
compensation based on the range of base salaries and bonuses paid, and equity awards granted, by peer companies.
Annual Incentive Compensation.
Incentive compensation is intended to reward
short-term performance goals, keeping compensation aligned with goals that typically improve shareholder returns. The annual incentive plan is based on Provident’s annual performance compared to the business plan and individual performance
requirements. Each year, management prepares and the Board of Directors approves a one-year and three-year business plan, which establish strategic goals and objectives for Provident and each division of Provident. Each executive is responsible for
his or her specific goals and the objectives outlined in the business plan, which is monitored through the use of individual action plans. Executives are graded each year on their successful completion of the action plans.
The annual incentive plan is designed to provide for a baseline bonus up to 50% of salary for the Chief Executive Officer, up to 50% of salary for the Chief Financial Officer, up
to 25% of salary for senior officers, up to 12% of salary for certain managers (other than department managers) and up to 8% of salary for certain department managers. Actual bonuses may exceed the baseline if Provident performs better than the
business plan and/or the individual employee performs better than the individual performance requirements. The business plan outlines a number of performance goals such as net income, return on assets, return on equity, efficiency ratio and diluted
earnings per share, among others. Individual performance requirements are project related and consistent with the duties and responsibilities of the particular employee. The Personnel/Compensation Committee may use its discretion to modify a
particular award or an individual’s performance requirements, although it has not typically done so.
For the year ended June 30, 2021, the named executive officers had the following performance goals:
|
Threshold
|
Target
|
Maximum
|
Fiscal 2021
Actual
|
||||
|
Net income
|
$7,934,000
|
$9,918,000
|
$14,877,000
|
$7,561,000
|
|||
|
Return on average assets
|
0.68%
|
0.85%
|
1.27%
|
0.64%
|
|||
|
Return on average equity
|
6.38%
|
7.97%
|
11.96%
|
6.05%
|
|||
|
Efficiency ratio
|
68.39%
|
64.38%
|
56.13%
|
73.08%
|
|||
|
Diluted earnings per share
|
$1.05
|
$1.31
|
$1.97
|
$1.00
|
15
Under the annual incentive plan, bonuses are calculated as a percentage of base salary. For the fiscal year ended June 30, 2021, participation levels for the named executive
officers expressed as a percentage of base salary at July 1, 2020 at each performance level were as follows:
|
Threshold (%)
|
Target (%)
|
Maximum (%)
|
|||
|
Craig G. Blunden
|
20.0
|
50.0
|
93.8
|
||
|
Donavon P. Ternes
|
20.0
|
50.0
|
93.8
|
||
|
David S. Weiant
|
10.0
|
25.0
|
46.9
|
We recently adopted a clawback policy which reserves the right of the Board to modify any incentive
compensation agreement before the final bonus amount is determined. Additionally, we may seek to recover incentive compensation paid if any of the following are discovered: (1) unreasonable risk-taking by the employee, (2) risk-taking by the
employee not specifically approved by the Chief Executive Officer or the Board, (c) actions or omissions by the employee in conflict with our policies and procedures, or (d) in the event our financial statements are subject to restatement due to
misconduct, to the extent permitted by governing law.
Equity-based Compensation.
Equity-based compensation is intended to attract
and retain qualified personnel and nonemployee directors, to provide these persons with a proprietary interest in Provident as an incentive to contribute to our success and to reward personnel for outstanding performance. Equity-based compensation
functions as a long-term incentive because awards are generally made with a multiple-year vesting schedule. Awards are made either in the form of stock options or restricted stock.
The equity-based plans are administered and interpreted by the Personnel/Compensation Committee of the Provident Savings Bank Board of Directors. Under the plans, the Committee
determines which officers and key employees will receive awards, the number of shares subject to each option or shares of restricted stock awarded, and the vesting of the awards. The per share exercise price of an option will equal at least 100% of
the fair market value of a share of common stock on the date the option is granted. Awards are made at the discretion of the Committee and approved by the Board of Directors. In addition, newly hired employees may receive awards at the time of
their employment. In determining whether to make option or restricted stock awards, the Personnel/Compensation Committee may take into account historical awards and then-current competitive conditions.
Personnel/Compensation Committee Report
The Personnel/Compensation Committee of the Boards of Directors of Provident and Provident Savings Bank has submitted the following report for inclusion in this Proxy Statement:
We have reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on the Committee’s review of and the discussion
with management with respect to the Compensation Discussion and Analysis, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
The foregoing report is provided by the following directors, who constitute the Personnel/Compensation Committee:
Personnel/Compensation Committee: Roy H. Taylor, Chairman
Bruce W. Bennett
William E. Thomas
This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934, and shall not otherwise be deemed filed under such acts.
16
Compensation Policies and Risk
The Personnel/Compensation Committee strives to develop compensation policies and practices that discourage excessive risk-taking, that focus our executives and employees on
creating long-term sustainable value for our shareholders, and that provide appropriate levels of realized compensation over time. The Personnel/Compensation Committee believes that our compensation policies and practices should provide a blend of
cash and equity, and short-term and longer-term incentives. In addition, the Personnel/Compensation Committee, with the assistance of the Chief Executive Officer, establishes goals and objectives that require a combination of individual, business
unit and company-wide performance measures consistent with effective controls and sound risk management. The Personnel/Compensation Committee reports periodically to the Board of Directors, seeks Board approval of certain significant compensation
policies and practices, and monitors changing market conditions that may influence the competitive landscape for attracting and retaining qualified executive management.
Summary Compensation Table
The following table shows information regarding compensation earned by our named executive officers, who are: (1) Craig G. Blunden, our principal executive officer; and (2)
Donavon P. Ternes and David S. Weiant, our two next most highly compensated executive officers.
|
Name and
Principal Position
|
Year
|
Salary
($)
|
Stock
Awards
($)(1)
|
Option
Awards
($)
|
Non-equity
Incentive
Plan
Compensa-
tion ($)
|
Change in
Pension
Value and
Non-
qualified
Deferred
Compensa-
tion
Earnings ($)
|
All Other
Compensa-
tion
($)(2)(3)
|
Total ($)
|
||||||||
|
Craig G. Blunden
|
2021
|
519,778
|
--
|
--
|
--
|
1,230
|
32,472
|
553,477
|
||||||||
|
Chairman and Chief
|
2020
|
509,580
|
--
|
--
|
--
|
(4)
|
33,102
|
542,682
|
||||||||
|
Executive Officer
|
||||||||||||||||
|
Donavon P. Ternes
|
2021
|
362,869
|
--
|
--
|
--
|
158,632
|
33,519
|
555,020
|
||||||||
|
President, Chief Operating
|
2020
|
353,906
|
--
|
--
|
--
|
162,676
|
34,845
|
551,427
|
||||||||
|
Officer, Chief Financial
|
||||||||||||||||
|
Officer and Secretary
|
||||||||||||||||
|
David S. Weiant
|
2021
|
258,735
|
--
|
--
|
--
|
--
|
31,828
|
290,563
|
||||||||
|
Senior Vice President -
|
2020
|
253,308
|
--
|
--
|
--
|
--
|
37,789
|
291,097
|
||||||||
|
Chief Lending Officer
|
____________
|
(1)
|
Represents the aggregate grant date fair value of awards, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation –
Stock Compensation.” For a discussion of valuation assumptions, see Note 12 of the Notes to Consolidated Financial Statements in Provident’s Annual Report on Form 10-K for the year ended June 30, 2021.
|
|
(2)
|
Please see the table below for more information on the other compensation paid to our named executive officers in the year ended June 30, 2021.
|
|
(3)
|
Provident Savings Bank may provide certain non-cash perquisites and personal benefits to the named executive officers that do not exceed $10,000 in the aggregate for any individual that
are not included. Includes a $2,182 length of service award for Mr. Ternes in 2021.
|
|
(4)
|
The value of Mr. Blunden’s post-retirement compensation agreement decreased by $9,787 in 2020.
|
17
All Other Compensation.
The following table sets forth details of “All Other Compensation,” as presented above in the Summary
Compensation Table.
|
Name
|
401(k)
Matching
Contribution ($)
|
ESOP
Contribution ($)
|
Personal Use of
Company
Car/Car
Allowance ($)
|
Tax
Preparation ($)
|
||||
|
Craig G. Blunden
|
8,522
|
16,787
|
6,413
|
750
|
||||
|
Donavon P. Ternes
|
8,550
|
16,787
|
6,000
|
--
|
||||
|
David S. Weiant
|
7,747
|
15,081
|
9,000
|
--
|
Employment Agreement.
Provident Savings Bank entered into an employment agreement with Mr. Blunden in December 2005 that was extended for
one year on July 30, 2020. The agreement has a term of three years and may be renewed by the Board for an additional year each year unless the Bank or Mr. Blunden has given written notice of their intention not to extend the term of the agreement at
least 90 days prior to the anniversary date. Mr. Blunden’s current base salary under the agreement is $530,200
and is subject to annual review and approval by the Board. Mr. Blunden may also receive
performance-based or discretionary bonuses, as authorized by the Board. Under the agreement, Mr. Blunden is eligible to participate in all benefit programs to the same extent as employees of the Bank as well as any program made available to senior
executives of the Bank, including the use of an employer-provided automobile. The agreement also provides for the reimbursement of expenses incurred by Mr. Blunden in the course of his employment. The agreement provides that compensation may be paid
in the event of disability, death, involuntary termination or a change in control, as described below under “Potential Payments Upon Termination.”
Severance Agreements.
We extended the existing change in control severance agreements with Mr. Ternes and Mr. Weiant effective as of
March 1, 2021. The agreements have a term of one year, which may be extended for an additional year on the anniversary of the effective date of the agreement by the Board of Directors. The agreements provide for compensation in the event of an
involuntary termination, other than for cause, within 12 months following a change in control of Provident or Provident Savings Bank, as described under “Potential Payments Upon Termination.”
Clawback Provision.
Mr. Blunden’s employment agreement and the severance agreements with Mr. Ternes and Mr. Weiant provide for the
clawback of incentive payments, as described above under “Compensation Discussion and Analysis – Compensation Program Elements – Annual Incentive Compensation.”
Grants of Plan-Based Awards
The following table shows information regarding grants of plan-based awards made to our named executive officers for the fiscal year ended June 30, 2021.
|
Name
|
Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards (1)
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(2)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3)
|
|
Exercise or
Base Price
of Option
Awards
($/Sh)
|
Grant Date
Fair Value
of Stock
and Option
Awards ($)
|
||||||
|
Threshold
($)
|
Target ($)
|
Maximum ($) | ||||||||||||
|
Craig G. Blunden
|
104,040
|
260,100
|
487,688
|
--
|
--
|
--
|
--
|
|||||||
|
Donavon P. Ternes
|
72,648
|
181,620
|
340,538
|
--
|
--
|
--
|
--
|
|||||||
|
David S. Weiant
|
25,896
|
64,740
|
121,388
|
--
|
--
|
--
|
--
|
|||||||
__________
| (1) |
Amounts represent the possible payouts under our annual incentive plan. No payouts were made for the fiscal year ended June 30, 2021.
|
| (2) |
No stock awards were granted for the fiscal year ended June 30, 2021.
|
| (3) |
No option awards were granted for the fiscal year ended June 30, 2021.
|
18
Outstanding Equity Awards
The following information with respect to outstanding equity awards as of June 30, 2021 is presented for the named executive officers.
| Option Awards (1) | Stock Awards (1) | |||||||||||||
|
Name
|
Grant
Date
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expir-
ation
Date
|
Number of
Shares or
Units of Stock
That Have
Not Vested
(#)
|
Market Value
of Shares or
Units of Stock
That Have
Not Vested
($)(2)
|
|||||||
|
Craig G. Blunden
|
09/30/14
|
43,000
|
--
|
14.59
|
09/30/24
|
--
|
--
|
|||||||
|
05/30/19
|
--
|
--
|
--
|
--
|
15,000
|
259,050
|
||||||||
|
Donavon P. Ternes
|
09/30/14
|
40,000
|
--
|
14.59
|
09/30/24
|
--
|
--
|
|||||||
|
05/30/19
|
--
|
--
|
--
|
--
|
15,000
|
259,050
|
||||||||
|
David S. Weiant
|
09/30/14
|
17,500
|
--
|
14.59
|
09/30/24
|
--
|
--
|
|||||||
|
05/30/19
|
--
|
--
|
--
|
--
|
6,750
|
116,573
|
||||||||
|
____________
|
||||||||||||||
| (1) |
Awards have a cliff vesting schedule of four years, with 50% vesting two years from the grant date and 50% vesting four years from the grant date.
|
| (2) |
Based on the closing market price of $17.27 per share of Provident’s common stock on June 30, 2021.
|
Options Exercised and Stock Vested
The following table shows the value realized upon exercise of stock options and vesting of stock awards for our named executive officers in the fiscal year ended June 30, 2021.
| Option Awards | Stock Awards | |||||||
|
Number of Shares
|
Value
|
Number of Shares
|
Value
|
|||||
|
Acquired on
|
Realized on
|
Acquired on
|
Realized on
|
|||||
|
Name
|
Exercise (#)
|
Exercise ($)
|
Vesting (#)
|
Vesting ($)
|
||||
|
Craig G. Blunden
|
48,000
|
449,322
|
15,000
|
261,000
|
||||
|
Donavon P. Ternes
|
45,000
|
403,720
|
15,000
|
261,000
|
||||
|
David S. Weiant
|
--
|
--
|
6,750
|
117,450
|
||||
Pension Benefits
The following information is presented with respect to the nature and value of pension benefits for the named executive officers at June 30, 2021.
|
Name
|
Plan Name
|
Number of
Years
Credited
Service (#)
|
Present Value of Accumulated
Benefit ($)
|
Payments
During Last
Fiscal Year ($)
|
||||
|
Craig G. Blunden
|
Post-Retirement Compensation Agreement
|
(1)
|
3,271,835
|
--
|
||||
|
Donavon P. Ternes
|
Post-Retirement Compensation Agreement
|
(1)
|
3,714,327
|
--
|
||||
|
David S. Weiant
|
--
|
--
|
--
|
--
|
__________
|
(1)
|
Number of years of credited service is not relevant. Benefit is calculated based on whether the executive has reached age 62 at the time of retirement, or how many months remain until his
62
nd
birthday.
|
|||
Provident Savings Bank has entered into post-retirement compensation agreements with Messrs. Blunden and Ternes. The agreements provide that if the executive terminates
employment with the Bank after attaining age 62, the
19
Bank will provide the executive with a monthly benefit for life equal to 50% of his final average monthly salary. The agreement also provides for early retirement benefits and payments in the
event of the executive’s death or disability. These payments are described below under “Potential Payments Upon Termination.”
Potential Payments Upon Termination
We have entered into agreements with the named executive officers that provide for potential payments upon disability, termination, retirement and death. In addition, our equity
plans also provide for potential payments upon termination. The following table shows, as of June 30, 2021, the value of potential payments and benefits following a termination of employment under a variety of scenarios.
|
Death ($)
|
Disability
($)
|
Involuntary Termination
($)
|
Change in
Control ($)
|
Early
Retirement
($)
|
Normal
Retirement
($)
|
||||||
|
Craig G. Blunden
|
|||||||||||
|
Employment Agreement (1)
|
--
|
217,061
|
1,080,446
|
2,162,785
|
--
|
217,061
|
|||||
|
Post-Retirement Compensation
Agreement (2)
|
21,886
|
21,886
|
21,886
|
21,886
|
--
|
21,886
|
|||||
|
Equity Plans (3)
|
259,050
|
259,050
|
--
|
259,050
|
--
|
--
|
|||||
|
Donavon P. Ternes
|
|||||||||||
|
Severance Agreement (1)
|
--
|
--
|
767,716
|
767,716
|
--
|
--
|
|||||
|
Post-Retirement Compensation
Agreement (2)
|
14,941
|
14,941
|
14,941
|
14,941
|
14,588
|
14,941
|
|||||
|
Equity Plans (3)
|
259,050
|
259,050
|
--
|
259,050
|
--
|
--
|
|||||
|
David S. Weiant
|
|||||||||||
|
Severance Agreement (1)
|
--
|
--
|
549,636
|
549,636
|
--
|
--
|
|||||
|
Equity Plans (3)
|
116,573
|
116,573
|
--
|
116,573
|
--
|
--
|
___________
| (1) |
Includes cash severance and the estimated value of continued insurance benefits. The payments and benefits to Mr. Blunden in the event of a change in control will be reduced by the minimum amount necessary so that they do not trigger the
20% excise tax imposed by Sections 280G and 4999 of the Internal Revenue Code. Any required reduction is not reflected in the above table. If the timing of the change in control permitted tax planning to be done, we believe that the amount
of any cutbacks that may be triggered in the future could be reduced or even eliminated.
|
| (2) |
Represents the monthly benefit to the executive or his spouse for life. The lifetime benefits will be discounted to present value and paid in a lump sum.
|
| (3) |
Represents the value of unvested restricted stock awards held by the executive based on the June 30, 2021 closing price of $17.27 per share.
|
Employment Agreement.
Mr. Blunden’s employment agreement provides for potential payments in the event of his disability, death or
termination. If Mr. Blunden becomes entitled to benefits under the terms of the then-current disability plan, if any, of Provident Savings Bank or becomes otherwise unable to fulfill his duties under his employment agreement, he shall be entitled to
receive such group and other disability benefits as are then provided by the Bank for executive employees. In the event of his disability, the employment agreement will not be suspended, except that payments of salary and bonus will be discontinued
for as long as Mr. Blunden is disabled.
In the event of Mr. Blunden’s death or disability while employed under the employment agreement and prior to any termination of employment, the Bank shall pay to him or his
estate, or such person as he may have previously designated, the salary which was not previously paid to him and which he would have earned if he had continued to be employed under the agreement through the last day of the calendar month in which he
died or become disabled, together with the benefits provided under the employment agreement through that date.
In the event of Mr. Blunden’s death or disability, or in the event of his normal retirement, the Bank shall continue to provide the following benefits to him or his estate, as
applicable: (1) the Bank shall continue in force, without cost to Mr. Blunden, those life and accidental death and dismemberment insurance coverages being provided by the Bank
20
to Mr. Blunden and his spouse and his eligible dependents as of the date of such termination; (2) the Bank shall continue to provide to Mr. Blunden and his eligible dependents life and medical
insurance coverage equivalent in benefits, duration and terms to that provided to him and such persons as of the date of such termination; and (3) the Bank shall continue to reimburse Mr. Blunden for the expenses outlined in Section 4(c) of his
employment agreement, which includes club dues.
The employment agreement also provides for benefits in the event of Mr. Blunden’s involuntary termination. If Mr. Blunden’s employment is terminated for any reason other than
cause, death, permanent disability, retirement or change in control, or Mr. Blunden terminates his own employment because of a material diminution of or interference with his duties, responsibilities or benefits, he is entitled to payment and
benefits. Specifically, the Bank must make a lump sum payment equal to the discounted present value of the aggregate future base salary payments Mr. Blunden would have received over the then remaining term of the agreement.
If Mr. Blunden’s employment is terminated within 12 months following a change in control of Provident, or he terminates his own employment within 12 months following a change in
control for any of the reasons listed in the previous paragraph, the Bank must pay him a lump sum equal to 299% of his base amount (as defined in Section 280G of the Internal Revenue Code) and must provide during the remaining term of the employment
agreement substantially the same group life insurance, hospitalization, medical, dental, prescription drug and other health benefits, and long-term disability insurance (if any) for the benefit of Mr. Blunden and his dependents and beneficiaries who
would have been eligible for such benefits if he had not suffered involuntary termination. However, if the value of the lump sum and benefits described in the preceding sentence exceeds the amount that could be paid without violating Section 280G
(pertaining to golden parachute payments), taking into account other payments due Mr. Blunden in connection with a change in control and other amounts counted against the Section 280G limit, then the value of such lump sum and benefits may be reduced
so that Section 280G is not violated.
Mr. Blunden’s employment agreement provides that if Mr. Blunden’s aggregate compensation from the Bank exceeds the maximum amount of compensation deductible by the Bank in any
calendar year under Section 162(m) of the Internal Revenue Code (the “maximum allowable amount”), then any such amount in excess of the maximum allowable amount will be deferred with interest on the deferred amount at 8% annually to a calendar year
such that the amount to be paid to Mr. Blunden in that year does not exceed the maximum allowable amount. Deferred amounts, including interest, will be paid at the earliest time permissible.
Severance Agreements.
We extended the existing change in control severance agreements with Mr. Ternes and Mr. Weiant effective as of
March 1, 2021. The agreements have a term of one year, which may be extended for an additional year on the anniversary of the effective date of the agreement by the Board of Directors. If the employment of the executive is involuntarily terminated,
other than for cause, within 12 months following a change in control of Provident or Provident Savings Bank, or the executive terminates his or her own employment within 12 months following a change in control because of any demotion, loss of title,
office or significant authority, reduction in the executive’s annual compensation or benefits, or relocation of the executive’s principal place of employment more than 35 miles from the pre-change in control location, the executive would be entitled
to payment and benefits. The agreements provide that the Bank must pay a lump sum payment equal to two times the executive’s then current base salary and a lump sum payment equal to two times the largest annual bonus paid to the executive during the
two years prior to termination of employment. The Bank or its successor also would be obligated to continue the executive’s life, medical, dental and disability coverage for a two-year period following termination of employment.
Post-Retirement Compensation Agreement.
Provident Savings Bank entered into a post-retirement compensation agreement with Mr. Blunden,
which was amended on December 15, 2005, and a post-retirement compensation agreement with Mr. Ternes as of July 7, 2009. The agreements provide that if Mr. Blunden and Mr. Ternes terminate employment with the Bank after having attained age 62, or on
account of death, disability or involuntary termination, the Bank will pay the executive a lump sum amount equal in value to a stream of payments, payable over the executive’s life, the annual amount of which is 50% of the executive’s final average
monthly salary (reduced in the case of disability by amounts received by the executive from any long-term disability policies maintained by the Bank). If the executive terminates employment prior to attaining age 62, then a reduced lump sum benefit
will be provided, payable when the executive attains age 62. This is only applicable to Mr. Ternes as Mr. Blunden has already turned 62.
21
For purposes of the agreements, “final average monthly salary” is defined as the average of the executive’s highest paid 36 months of employment with the Bank determined by reference to the average
gross amount of his basic monthly salary (before tax withholding and other payroll deductions), excluding bonus or incentive awards, director fees, if any, and accelerated payments of future salary. The value of this lump sum benefit is calculated
using National Association of Insurance Commissioners standard mortality tables as of such date, and a discount rate equal to the lesser of the then-current prime rate or the Eleventh District cost of funds.
Equity Plans.
Our 2006 Equity Incentive Plan and 2010 Equity Incentive Plan provide for accelerated vesting of awards in the event of a
change in control. If a change in control occurs prior to the vesting of an award, the vesting date will be accelerated to the effective date of the change in control. The 2013 Stock Option Plan provides for accelerated vesting of awards in the
event of a change in control and involuntary termination of the award recipient within 12 months of the change in control. The 2006 Equity Incentive Plan, the 2010 Equity Incentive Plan and the 2013 Equity Incentive Plan also provide that if an
award recipient’s employment terminates due to death or disability prior to the vesting of an award, the vesting date will be accelerated to the date of termination of service.
Compensation Committee Interlocks and Insider Participation
The members of the Personnel/Compensation Committee are Directors Taylor, Bennett and Thomas. No members of the Committee were officers or employees of Provident or any of its
subsidiaries during the year ended June 30, 2021, nor were they formerly Provident officers or had any relationships otherwise requiring disclosure.
PROPOSAL 2 – ADVISORY VOTE ON EXECUTIVE COMPENSATION
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), we are required to include in this Proxy Statement and present at the meeting a
non-binding shareholder resolution to approve the compensation of our named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC. This proposal, commonly known as a “say-on-pay” proposal,
gives shareholders the opportunity to endorse or not endorse the compensation of Provident’s executives as disclosed in this Proxy Statement. The proposal will be presented at the annual meeting in the form of the following resolution:
RESOLVED, that the shareholders approve the compensation of Provident’s named executive officers, as disclosed in the Compensation Discussion and Analysis,
the compensation tables and related material in Provident’s Proxy Statement for the 2021 annual meeting of shareholders.
This vote will not be binding on our Board of Directors or Personnel/Compensation Committee and may not be construed as overruling a decision by the Board or create or imply any
additional fiduciary duty on the Board. It will also not affect any compensation paid or awarded to any executive. The Personnel/Compensation Committee and the Board may, however, take into account the outcome of the vote when considering future
executive compensation arrangements.
The purpose of our compensation policies is to attract and retain key executives who are highly qualified and vital to our long-term success, while aligning the interests of
executives with shareholders. As discussed in the Compensation Discussion and Analysis, the Personnel/Compensation Committee of the Board of Directors believes that the executive compensation for 2021 is reasonable and appropriate and is justified
by Provident’s performance in a highly competitive environment. In considering how to vote on this proposal, the Board requests that you consider the following factors:
|
•
|
The Bank must offer competitive compensation packages to attract and retain well-qualified executives who are critical to Provident’s long-term success.
|
|
•
|
The compensation program entails a balanced approach that considers the short-term and long-term interests of shareholders and safe and sound banking practices.
|
22
|
•
|
The compensation program does not encourage excessive and unnecessary risks that would threaten the value of Provident.
|
The Board of Directors recommends that you vote FOR approval of the compensation of our named executive officers as disclosed in this Proxy Statement.
AUDIT COMMITTEE MATTERS
Audit Committee Charter.
The Audit Committee operates pursuant to a charter approved by our Board of Directors. The Audit Committee
reports to the Board of Directors and is responsible for overseeing and monitoring financial accounting and reporting, the system of internal controls established by management and our audit process. The charter sets out the responsibilities,
authority and specific duties of the Audit Committee. The charter specifies, among other things, the structure and membership requirements of the Audit Committee, as well as the relationship of the Audit Committee to the independent registered
public accounting firm, the internal audit department and management.
Report of the Audit Committee.
The Audit Committee reports as follows with respect to Provident’s audited financial statements for the
fiscal year ended June 30, 2021:
|
•
|
The Audit Committee has completed its review and discussion of the 2021 audited financial statements with management;
|
|
•
|
The Audit Committee has discussed with the independent registered public accounting firm, Deloitte & Touche LLP, the matters required to be discussed by Auditing Standard No. 16,
Communications with Audit Committees
, as amended;
|
|
•
|
The Audit Committee has received written disclosures and the letter from the independent registered public accounting firm required 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 the independent registered public accounting firm the
independent registered public accounting firm’s independence; and
|
|
•
|
The Audit Committee has, based on its review and discussions with management of the 2021 audited financial statements and discussions with the independent registered public accounting
firm, recommended to the Board of Directors that Provident’s audited financial statements for the year ended June 30, 2021 be included in its Annual Report on Form 10-K.
|
The foregoing report is provided by the following directors, who constitute the Audit Committee:
|
|
Audit Committee: |
Joseph P. Barr, Chairman
Judy A. Carpenter
Debbi H. Guthrie
|
This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934, and shall not otherwise be deemed filed under such acts.
PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP served as our independent registered public accounting firm for the fiscal year ended June 30, 2021. The Audit Committee of the Board of Directors has
appointed Deloitte & Touche LLP as independent registered public accounting firm for the fiscal year ending June 30, 2022, subject to approval by shareholders. A
23
representative of Deloitte & Touche LLP will be present at the annual meeting to respond to shareholders’ questions and will have the opportunity to make a statement if he or she so desires.
The following table sets forth the aggregate fees paid to Deloitte & Touche LLP for professional services rendered for the fiscal years ended June 30, 2021 and 2020.
|
Year Ended June 30,
|
|||
|
2021
|
2020
|
||
|
Audit Fees (1)
|
$613,780
|
$655,452
|
|
|
Tax Fees (2)
|
80,417
|
68,779
|
|
|
Total
|
$694,197
|
$724,231
|
|
|
____________
|
|
|
(1)
|
Includes fees paid for the annual audit, quarterly reviews of the consolidated financial statements, and the annual audit of internal controls over financial reporting.
|
|
(2)
|
Primarily consists of fees related to the preparation of Provident’s income tax returns.
|
The Audit Committee will establish general guidelines for the permissible scope and nature of any permitted non-audit services to be provided by the independent registered public
accounting firm in connection with its annual review of its charter. Pre-approval may be granted by action of the full Audit Committee or by delegated authority to one or more members of the Committee. If this authority is delegated, all approved
non-audit services will be presented to the Audit Committee at its next meeting. In considering non-audit services, the Audit Committee or its delegate will consider various factors, including but not limited to, whether it would be beneficial to
have the service provided by the independent registered public accounting firm and whether the service could compromise the independence of the independent registered public accounting firm.
The Board of Directors recommends that shareholders vote FOR the ratification of the appointment of Deloitte & Touche LLP as independent registered public
accounting firm of Provident for the fiscal year ending June 30, 2022.
MISCELLANEOUS
The Board of Directors is not aware of any business to come before the annual meeting other than those matters described above in this
Proxy Statement. However, if any other matters should properly come before the meeting, it is intended that proxies in the accompanying form will be voted in respect thereof in accordance with the judgment of the person or persons voting the
proxies.
We will bear the cost of solicitation of proxies. We will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of our common stock. In addition to solicitations by mail, our directors, officers and employees may solicit proxies personally or by telecopier or
telephone without additional compensation.
Provident’s 2021 Annual Report to Shareholders, including financial statements, has been mailed to all shareholders of record as of
the close of business on the voting record date. Any shareholder who has not received a copy of the Annual Report may obtain a copy by writing to the Secretary of Provident. The Annual Report is not to be treated as part of the proxy solicitation
material or having been incorporated herein by reference.
A copy of Provident’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021, as filed with the SEC, will be furnished
without charge to shareholders of record as of the close of business on the voting record date upon written request to Donavon P. Ternes, Secretary, Provident Financial Holdings, Inc., 3756 Central Avenue, Riverside, California 92506.
24
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at next year’s annual meeting must be received by us no later than June 22, 2022 to be considered for inclusion in the proxy
materials and form of proxy relating to the annual meeting. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act.
Our Certificate of Incorporation provides that in order for a shareholder to make nominations for the election of directors or proposals for business to be brought before the
annual meeting, the shareholder must deliver notice of nominations and/or proposals to the Secretary not less than 30 nor more than 60 days prior to the date of the annual meeting; provided that if less than 31 days’ notice of the meeting is given to
shareholders, the shareholder’s notice must be delivered not later than the close of the tenth day following the day on which notice of the meeting was mailed to shareholders. As specified in the Certificate of Incorporation, the notice with respect
to nominations for election of directors must set forth certain information regarding each nominee for election as a director, including that person’s written consent to being named in the proxy statement as a nominee and to serving as a director, if
elected, and certain information regarding the shareholder giving the notice. The notice with respect to business proposals to be brought before the annual meeting must state the shareholder’s name, address and number of shares of common stock held,
and briefly discuss the business to be brought before the annual meeting, the reasons for conducting the business at the meeting and any interest of the shareholder in the proposal.
|
|
BY ORDER OF THE BOARD OF DIRECTORS |
|
|
|
|
|
|
|
|
/s/ DONAVON P. TERNES
|
|
|
DONAVON P. TERNES
Secretary
|
Riverside, California
October 28, 2021
25
VOTE
|
|||
|
|
|||
|
|
|||
|
Your vote matters - here's how to vote!
You may vote online or by phone instead of
mailing this card.
Online
Go to
www. investorvote.com/prov
or scan
the QR code - login details are located in
the shaded bar below.
Phone
Call toll free 1-800-652-VOTE (8683) within
the USA, US territories and Canada
|
|||
|
Using a
black ink
pen, mark your votes with an X as shown in this example.
[X]
Please do not write outside the designated areas.
|
Save paper, time and money!
Sign up for electronic delivery at
www.investorvote.com/prov
|
||
|
|
|
||
|
|
|
2021 Annual Meeting Proxy Card
|
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
| A Proposals — The Board of Directors recommends a vote FOR all the nominees listed, and FOR Proposals 2 and 3. |
|
1. Election of Directors:
Three-year term:
|
|||||||||
|
|
For | Withhold | For | Withhold |
|
|
|||
|
01 - Judy A. Carpenter
|
[ ] | [ ] |
02 - William E. Thomas
|
[ ] | [ ] |
|
|
|
|
|
One-year term:
|
|
|
|||||||
|
For
|
Withhold
|
||||||||
|
03 - Kathy Michalak
|
[ ]
|
[ ]
|
| For | Against | Abstain | For | Against | Abstain |
|
||
|
2. Advisory approval of the compensation of our named executive
officers as disclosed in the Proxy Statement.
|
[ ] | [ ] | [ ] |
3. Ratification of the appointment of Deloitte & Touche LLP as independent registered public accounting firm for Provident Financial Holdings, Inc. for the fiscal year ending June 30, 2022.
|
[ ] | [ ] | [ ] |
|
B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
|
Please sign exactly as your name appears on the enclosed card. When signing as attorney, executor, administrator, trustee or guardian, please
give your full title. If shares are held jointly, each holder should sign.
| Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||||
|
|
|
|||||
The 2021 Annual Meeting of Shareholders of Provident Financial Holdings, Inc. will be
held on
Tuesday, November 30, 2021, 11:00 A.M. local time, virtually via the internet at
https://meetnow.global/MMZQ4PM
To access the virtual meeting, you must have the information that is printed in the shaded bar
located on the reverse side of this form.
Annual Meeting Materials are available
at:
http://www.investorvote.com/prov
|
|
Small steps make an impact
Help the environment by consenting to receive electronic
delivery, sign up at www.investorvote.com/prov
|
|
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
| REVOCABLE PROXY — PROVIDENT FINANCIAL HOLDINGS, INC. |
November 30, 2021
11:00 a.m.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors of Provident Financial Holdings, Inc. (“Provident”) with full
powers of substitution to act as attorneys and proxies for the undersigned, to vote all shares of Provident common stock which the undersigned is entitled to vote at the Annual Meeting of Shareholders, to be held on Tuesday, November 30,
2021, at 11:00 a.m., local time, and at any and all adjournments thereof, as follows:
The Board of Directors recommends a vote FOR all propositions.
This proxy also provides voting instructions to the Trustees of the Provident Savings Bank, F.S.B. Employee Stock
Ownership Plan for participants with shares allocated to their accounts.
This proxy will be voted as directed, but if no instructions are specified, this proxy will be voted FOR the election of
the nominees listed in Proposal 1, and FOR Proposals 2 and 3. If any other business is presented at such meeting, this proxy will be voted by the Board of Directors in its best judgment. At the present time, the Board of Directors knows of
no other business to be presented at the annual meeting. This proxy also confers discretionary authority on the Board of Directors to vote with respect to the election of any person as director where the nominees are unable to serve or for
good cause will not serve and matters incident to the conduct of the annual meeting.
Should the above-signed be present and elect to vote at the virtual annual meeting or at any adjournment thereof and
after notification to the Secretary of Provident at the annual meeting of the shareholder's decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.
The above-signed acknowledges receipt from Provident prior to the execution of this proxy of the Notice of Annual
Meeting of Shareholders, a Proxy Statement dated October 28, 2021, and the 2021 Annual Report to Shareholders.
PLEASE PROVIDE YOUR INSTRUCTIONS TO VOTE BY TELEPHONE OR THE INTERNET OR
COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
(Continued, and to be marked, dated and signed, on the other side)
| C Non-Voting Items |
| Change of Address — Please print new address below. | Comments — Please print your comments below. | |
|
|
||
|
VOTE
|
|||
|
|
|
||
|
|
|||
|
|
|
||
|
Using a
black ink
pen, mark your votes with an X as shown in this example.
[X]
Please do not write outside the designated areas.
|
|
||
|
|
|
2021 Annual Meeting Proxy Card
|
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
| A — Proposals — The Board of Directors recommends a vote FOR all the nominees listed, and FOR Proposals 2 and 3. |
|
1. Election of Directors:
Three-year term:
|
|||||||||
|
|
For | Withhold | For | Withhold |
|
|
|
||
|
01 - Judy A. Carpenter
|
[ ] | [ ] |
02 - William E. Thomas
|
[ ] | [ ] |
|
|
|
|
|
One-year term:
|
|||||||||
|
For
|
Withhold
|
||||||||
|
03 - Kathy Michalak
|
[ ] | [ ] |
| For | Against | Abstain | For | Against | Abstain |
|
||
|
2. Advisory approval of the compensation of our named executive
officers as disclosed in the Proxy Statement.
|
[ ] | [ ] | [ ] |
3. Ratification of the appointment of Deloitte & Touche LLP as independent registered public accounting firm for Provident Financial Holdings, Inc. for the fiscal year ending June 30, 2022.
|
[ ] | [ ] | [ ] |
|
B — Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
|
Please sign exactly as your name appears on the enclosed card. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If shares are held jointly, each holder should sign.
| Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||||
|
|
|
|
||||
Annual Meeting Materials are available
at:
http://www.investorvote.com/prov
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
| REVOCABLE PROXY — PROVIDENT FINANCIAL HOLDINGS, INC. |
2021 ANNUAL MEETING OF SHAREHOLDERS
November 30, 2021
11:00 a.m.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors of Provident Financial Holdings, Inc. ("Provident") with full powers of substitution to
act as attorneys and proxies for the undersigned, to vote all shares of Provident common stock which the undersigned is entitled to vote at the Annual Meeting of Shareholders, to be held, on Tuesday, November 30, 2021, at 11:00 a.m.,
local time, and at any and all adjournments thereof, as follows:
The Board of Directors recommends a vote FOR all propositions.
This proxy also provides voting instructions to the Trustees of the Provident Savings Bank, F.S.B. Employee Stock Ownership Plan for
participants with shares allocated to their accounts.
This proxy will be voted as directed, but if no instructions are specified, this proxy will be voted FOR the election of the
nominees listed in Proposal 1, and FOR Proposals 2 and 3. If any other business is presented at such meeting, this proxy will be voted by the Board of Directors in its best judgment. At the present time, the Board of Directors knows of no
other business to be presented at the annual meeting. This proxy also confers discretionary authority on the Board of Directors to vote with respect to the election of any person as director where the nominees are unable to serve or for
good cause will not serve and matters incident to the conduct of the annual meeting.
Should the above-signed be present and elect to vote at the virtual annual meeting or at any adjournment thereof and after notification to the
Secretary of Provident at the annual meeting of the shareholder's decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.
The above-signed acknowledges receipt from Provident prior to the execution of this proxy of the Notice of Annual Meeting of Shareholders, a
Proxy Statement dated October 28, 2021, and the 2021 Annual Report to Shareholders.
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
(Continued, and to be marked, dated and signed, on the other side)
TABLE OF CONTENTS