UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
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 Pursuant to Section 240.14a-12
Prudential Bancorp, Inc. of Pennsylvania
________________________________________________________________________________
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
________________________________________________________________________________
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: ___________
(2) Aggregate number of securities to which transaction applies: ______________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): __________________
(4) Proposed maximum aggregate value of transaction: __________________________
(5) Total fee paid ____________________________________________________________
[_] Fee paid previously with preliminary materials: ___________________________
[_] 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: ___________________________________________________
(2) Form, Schedule or Registration Statement No.: _____________________________
(3) Filing Party: _________________________________________________
(4) Date Filed: _________________________________________
[PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA LOGO]
January 5, 2007
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Prudential Bancorp, Inc. of Pennsylvania. The meeting will be held at the
Holiday Inn - Philadelphia Stadium, located at 900 Packer Avenue, Philadelphia,
Pennsylvania, on Friday, February 9, 2007 at 11:00 a.m., Eastern Time.
The Board of Directors unanimously recommends a vote "FOR" each of
Prudential Bancorp's nominees for election as directors, Jerome R. Balka, Esq.
and A. J. Fanelli, for three-year terms expiring in 2010 and ratification of the
appointment of Deloitte & Touche LLP as our independent registered public
accounting firm for the fiscal year ending September 30, 2007. Each of these
matters is more fully described in the accompanying materials.
It is very important that you be represented at the annual meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign, and date your white proxy card
today and return it in the envelope provided, even if you plan to attend the
annual meeting. This will not prevent you from voting in person, but will ensure
that your vote is counted if you are unable to attend.
Your continued support of and interest in Prudential Bancorp, Inc. of
Pennsylvania is sincerely appreciated.
Very truly yours,
/s/ Thomas A. Vento
Thomas A. Vento
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA
1834 OREGON AVENUE
PHILADELPHIA, PENNSYLVANIA 19145
--------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------------------------------------------------------------------
TIME...................... 11:00 a.m., Eastern Time, Friday, February 9, 2007
PLACE..................... Holiday Inn - Philadelphia Stadium
900 Packer Avenue
Philadelphia, Pennsylvania
ITEMS OF BUSINESS......... (1) To elect two directors for a three-year term
and until their successors are elected and
qualified;
(2) To ratify the appointment of Deloitte & Touche
LLP as our independent registered public
accounting firm for the fiscal year ending
September 30, 2007; and
(3) To transact such other business, as may
properly come before the meeting or at any
adjournment thereof. We are not aware of any
other such business.
RECORD DATE............... Holders of Prudential Bancorp common stock of
record at the close of business on December 22,
2006 are entitled to vote at the meeting.
ANNUAL REPORT............. Our 2006 Annual Report to Shareholders is enclosed
but is not a part of the proxy solicitation
materials.
PROXY VOTING.............. It is important that your shares be represented and
voted at the meeting. You are urged to vote your
shares by completing and returning the white proxy
card sent to you. Most shareholders whose shares
are held in "street" name can also vote their
shares over the Internet or by telephone. If
Internet or telephone voting is available to you,
voting instructions are printed on the voting
instruction card sent to you. You can revoke a
proxy at any time prior to its exercise at the
meeting by following the instructions in the
accompanying proxy statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Regina Wilson
Regina Wilson
CORPORATE SECRETARY
Philadelphia, Pennsylvania
January 5, 2007
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
Page
----
About the Annual Meeting of Shareholders ................................ 1
Information with Respect to Nominees for Director, Continuing
Directors and Executive Officers ..................................... 3
Election of Directors (Proposal One) .............................. 3
Members of the Board of Directors Continuing in Office ............ 4
Executive Officers Who Are Not Directors .......................... 5
Director Nominations .............................................. 5
Committees and Meetings of the Board of Directors ................. 5
Directors' Attendance at Annual Meetings .......................... 6
Directors' Compensation ........................................... 7
Compensation Committee Interlocks and Insider Participation ....... 7
Management Compensation ................................................. 8
Summary Compensation Table ........................................ 8
Employment Agreements ............................................. 8
Benefit Plans ..................................................... 9
Indebtedness of Management and Related Party Transactions ......... 11
Report of the Compensation Committee .................................... 11
Performance Graph ....................................................... 12
Beneficial Ownership of Common Stock by Certain Beneficial Owners
and Management ....................................................... 13
Section 16(a) Beneficial Ownership Reporting Compliance ........... 14
Ratification of Appointment of Independent Registered Public
Accounting Firm (Proposal Two) ....................................... 14
Audit Fees ........................................................ 15
Report of the Audit Committee ........................................... 16
Shareholder Proposals, Nominations and Communications with the
Board of Directors ................................................... 16
Annual Reports .......................................................... 17
Participants in the Solicitation ........................................ 17
Other Matters ........................................................... 18
Appendix A - Transactions in Prudential Bancorp's Securities in
the Last Two Years ................................................... A-1
PROXY STATEMENT
OF
PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA
-------------------
--------------------------------------------------------------------------------
ABOUT THE ANNUAL MEETING OF SHAREHOLDERS
--------------------------------------------------------------------------------
GENERAL. This proxy statement is furnished to holders of common stock of
Prudential Bancorp, Inc. of Pennsylvania, the parent holding company of
Prudential Savings Bank. Our Board of Directors is soliciting proxies to be used
at the Annual Meeting of Shareholders to be held at the Holiday Inn -
Philadelphia Stadium, located at 900 Packer Avenue, Philadelphia, Pennsylvania,
on Friday, February 9, 2007 at 11:00 a.m., Eastern Time, and any adjournment
thereof, for the purposes set forth in the Notice of Annual Meeting of
Shareholders. This proxy statement is first being mailed to shareholders on or
about January 5, 2007.
PROXY CONTEST PENDING. You may have received proxy soliciting materials
from the Stilwell Group in opposition to management of Prudential Bancorp. The
Nominating and Corporate Governance Committee, consisting of independent,
outside directors unanimously approved the nomination of Messrs. Balka and
Fanelli as directors of Prudential Bancorp. We urge shareholders not to return
the proxy from the Stilwell Group. Your Board of Directors urges you to vote for
our nominees for director, Jerome R. Balka, Esq. and A. J. Fanelli. We are not
responsible for any information provided by or relating to the Stilwell Group
contained in any proxy materials filed or disseminated by the Stilwell Group or
any other statement they make.
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At our annual meeting, shareholders will act upon the matters outlined in
the notice of meeting, including the election of directors and ratification of
our independent registered public accounting firm. In addition, management will
report on the performance of Prudential Bancorp and respond to questions from
shareholders.
WHO IS ENTITLED TO VOTE?
Only our shareholders of record as of the close of business on the record
date for the meeting, December 22, 2006, are entitled to vote at the meeting. On
the record date, we had 12,017,750 shares of common stock issued and outstanding
and no other class of equity securities outstanding. For each issued and
outstanding share of common stock you own on the record date, you will be
entitled to one vote on each matter to be voted on at the meeting, in person or
by proxy.
HOW DO I SUBMIT MY PROXY?
After you have carefully read this proxy statement, indicate on your proxy
form how you want your shares to be voted. Then sign, date and mail your proxy
form in the enclosed prepaid return envelope as soon as possible. This will
enable your shares to be represented and voted at the annual meeting.
1
IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, COULD MY BROKER
AUTOMATICALLY VOTE MY SHARES FOR ME?
Your broker may vote in his or her discretion on the election of directors
and ratification of our independent registered public accounting firm if you do
not furnish instructions and such proposals are not subject to a
counter-solicitation. If, however, there is a proxy contest, your broker will
not be able to vote your shares without receiving instructions from you. Shares
that are not voted by brokers are called "broker non-votes."
CAN I ATTEND THE MEETING AND VOTE MY SHARES IN PERSON?
All shareholders are invited to attend the annual meeting. Shareholders of
record can vote in person at the annual meeting. If your shares are held in
"street name," then you are not the shareholder of record and you must ask your
broker or other nominee how you can vote at the annual meeting.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. If you are a shareholder of record, there are three ways you can
change your vote or revoke your proxy after you have sent in your white proxy
form.
o First, you may send a written notice to our Corporate Secretary, Ms.
Regina Wilson, Prudential Bancorp, Inc. of Pennsylvania, 1834 Oregon
Avenue, Philadelphia, Pennsylvania 19145, in advance of the meeting
stating that you would like to revoke your proxy.
o Second, you may complete and submit a new proxy form before the annual
meeting. Any earlier proxies will be revoked automatically.
o Third, you may attend the annual meeting and vote in person. Any
earlier proxy will be revoked. However, attending the annual meeting
without voting in person will not revoke your proxy.
If your shares are held in street name and you have instructed a broker or
other nominee to vote your shares, you must follow directions you receive from
your broker or other nominee to change your vote.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of votes that all shareholders are entitled to cast on a particular
matter will constitute a quorum. Proxies received but marked as abstentions and
broker non-votes will be included in the calculation of the number of votes
considered to be present at the meeting.
WHAT ARE THE BOARD OF DIRECTORS' RECOMMENDATIONS?
The recommendations of the Board of Directors are set forth under the
description of each proposal in this proxy statement. In summary, the Board of
Directors recommends that you vote FOR the nominees for director described
herein and FOR ratification of the appointment of Deloitte & Touche LLP, our
independent registered public accounting firm for fiscal 2007.
2
The proxy solicited hereby, if properly signed and returned to us and not
revoked prior to its use, will be voted in accordance with your instructions. If
no contrary instructions are given, each proxy signed and received will be voted
in the manner recommended by the Board of Directors and, upon the transaction of
such other business as may properly come before the meeting, in accordance with
the best judgment of the persons appointed as proxies. Proxies solicited hereby
may be exercised only at the annual meeting and any adjournment of the annual
meeting and will not be used for any other meeting.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
The election of directors will be determined by a plurality of the votes
cast at the annual meeting. The two nominees for director receiving the most
"for" votes will be elected directors for a three-year term expiring in 2010,
and until their successors are elected and qualified. The affirmative vote of a
majority of the total votes cast at the annual meeting is required for approval
of the proposal to ratify the appointment of Deloitte & Touche LLP for fiscal
2007. Under the Pennsylvania Business Corporation Law, abstentions do not
constitute votes cast and will not affect the vote required for the proposal to
ratify the appointment of the independent registered public accounting firm. If
there is a proxy contest, broker non-votes are not considered to be votes cast
under the Pennsylvania Business Corporation Law and will have no effect on the
proposals to elect directors and ratify the appointment of the independent
registered public accounting firm.
As indicated below under "Beneficial Ownership of Common Stock by Certain
Beneficial Owners and Management," Prudential Mutual Holding Company owns a
majority of our outstanding common stock. The Mutual Holding Company intends to
vote all of the shares it owns for the nominees for director and for the
ratification of the appointment of Deloitte & Touche LLP, thereby ensuring a
quorum at the annual meeting, and that each of such proposals will be adopted.
--------------------------------------------------------------------------------
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, CONTINUING
DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------------------------------------------------------
ELECTION OF DIRECTORS (PROPOSAL ONE)
Our Articles of Incorporation provide that the Board of Directors shall be
divided into three classes as nearly equal in number as possible. The directors
are elected by our shareholders for staggered terms and until their successors
are elected and qualified. At this annual meeting, you will be asked to elect
two directors for a three-year term expiring in 2010, and until their successors
are elected and qualified.
Our Nominating and Corporate Governance Committee has recommended the
re-election of Messrs. Balka and Fanelli as directors. No nominee for director
is related to any other director or executive officer by blood, marriage or
adoption. Shareholders are not permitted to use cumulative voting for the
election of directors. Our Board of Directors has determined that Messrs.
Fanelli, Mulcahy, Packer and Judge are independent directors as defined in the
Nasdaq listing standards.
Unless otherwise directed, each proxy signed and returned by a shareholder
will be voted for the election of the nominees for director listed below. If any
person named as a nominee should be unable or unwilling to stand for election at
the time of the annual meeting, the proxies will nominate and vote for any
replacement nominee or nominees recommended by our Board of Directors. At this
time, the Board of Directors knows of no reason why any of the nominees listed
below may not be able to serve as a director if elected.
3
As of the date of this proxy statement, the Stilwell Group had filed proxy
soliciting materials in opposition to management of Prudential Bancorp.
Therefore, you may receive proxy soliciting materials from persons other than
the Company. The Board of Directors unanimously recommends a vote for the
election of the Company's nominees FOR election as directors.
PLEASE MARK YOUR VOTE ON THE ENCLOSED WHITE PROXY CARD AND
RETURN IT IN THE ENCLOSED POSTAGE PREPAID ENVELOPE
The following tables present information concerning the nominees for
director, and our continuing directors, all of whom also serve as directors of
Prudential Savings Bank. For certain directors, the indicated period of service
as a director includes service as a director of Prudential Savings Bank prior to
the organization of Prudential Bancorp in 2004. Ages are reflected as of
September 30, 2006.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERMS EXPIRING IN 2010
Position with Prudential Bancorp and Director
Name Age Principal Occupation During the Past Five Years Since
--------------------- --- ------------------------------------------------- --------
Jerome R. Balka, Esq. 77 Director. Solicitor of Prudential Savings Bank. 2000
Partner, Balka & Balka, a law firm, Philadelphia,
Pennsylvania.
A. J. Fanelli 69 Director. Self-employed owner of a public 2005
accounting practice, Philadelphia, Pennsylvania.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
ELECTION OF OUR NOMINEES FOR DIRECTOR.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERM EXPIRES IN 2008
Position with Prudential Bancorp and Director
Name Age Principal Occupation During the Past Five Years Since
--------------------- --- ------------------------------------------------- --------
Francis V. Mulcahy 73 Director. Residential real estate appraiser and 2005
broker, Media, Pennsylvania.
Joseph W. Packer, Jr. 78 Chairman of the Board since October 1992. 1979
Presently retired. Former President and Chief
Executive Officer of Prudential Savings Bank.
DIRECTORS WHOSE TERM EXPIRES IN 2009
Position with Prudential Bancorp and Director
Name Age Principal Occupation During the Past Five Years Since
--------------------- --- ------------------------------------------------- --------
John P. Judge 86 Director. Presently retired. Former President of 1983
Continental Savings and Loan Association,
Philadelphia, Pennsylvania, prior to its merger
with Prudential Savings Bank in 1983.
Thomas A. Vento 72 Director. President of Prudential Savings Bank 1992
since 1992 and President and Chief Executive
Officer since 1993.
4
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is certain information with respect to current executive
officers of Prudential Bancorp and its subsidiaries who are not directors. Ages
are reflected as of September 30, 2006.
Name Age Principal Occupation During the Past Five Years
----------------- --- ------------------------------------------------------
Joseph R. Corrato 45 Executive Vice President and Chief Financial Officer
of Prudential Bancorp since 2005 and Prudential
Savings Bank since 1997. Mr. Corrato joined Prudential
Savings Bank in 1978 and served in a variety of
positions including Treasurer and Controller prior to
becoming Executive Vice President in 1997.
David H. Krauter 65 Vice President and Chief Lending Officer of Prudential
Savings Bank since 1999 and Vice President since 1992.
Jack E. Rothkopf 43 Controller of Prudential Savings Bank since January
2006. Prior thereto, Mr. Rothkopf served as Assistant
Vice President of Popular Financial Holdings, Marlton,
New Jersey from October 2000 to January 2006.
DIRECTOR NOMINATIONS
Nominations for director of Prudential Bancorp are made by the Nominating
and Corporate Governance Committee of the Board of Directors and are ratified by
the entire Board. In November 2004, the Board of Directors adopted a written
charter which is available on our Website at www.prudentialsavingsbank.com. The
Charter sets forth certain criteria the committee may consider when recommending
individuals for nomination including: ensuring that the Board of Directors, as a
whole, is diverse and consists of individuals with various and relevant career
experience, relevant technical skills, industry knowledge and experience,
financial expertise (including expertise that could qualify a director as a
"financial expert," as that term is defined by the rules of the Securities and
Exchange Commission), local or community ties, minimum individual
qualifications, including strength of character, mature judgment, familiarity
with our business and industry, independence of thought and an ability to work
collegially. The committee also may consider the extent to which the candidate
would fill a present need on the Board of Directors. The Nominating and
Corporate Governance Committee will also consider candidates for director
suggested by other directors, as well as our management and shareholders. A
shareholder who desires to recommend a prospective nominee for the Board should
notify our Secretary or any member of the Nominating and Corporate Governance
Committee in writing with whatever supporting material the shareholder considers
appropriate. Any shareholder wishing to make a nomination must follow our
procedures for shareholder nominations, which are described under "Shareholder
Proposals, Nominations and Communications with the Board of Directors."
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended September 30, 2006, the Board of Directors of
Prudential Bancorp met 13 times. No director of Prudential Bancorp attended
fewer than 75% of the aggregate of the total number of Board meetings held
during the period for which he has been a director and the total number of
meetings held by all committees of the Board on which he served during the
periods that he served.
MEMBERSHIP ON CERTAIN BOARD COMMITTEES. The Board of Directors of
Prudential Bancorp has established an Audit Committee, Compensation Committee
and Nominating and Corporate Governance Committee. The following table sets
forth the membership of such committees as of the date of this
5
proxy statement. Members of our Board also serve on committees of Prudential
Savings Bank, including the Budget/Finance Committee.
NOMINATING
AND CORPORATE
DIRECTORS GOVERNANCE COMPENSATION AUDIT
------------------------- ------------- ------------ -----
A. J. Fanelli............ ** * **
Francis V. Mulcahy....... * *
Joseph W. Packer, Jr. ... * ** *
John P. Judge............ * * *
----------
* Member
** Chair
AUDIT COMMITTEE. The Audit Committee reviews with management and the
independent registered public accounting firm the systems of internal control,
reviews the annual financial statements, including the Annual Report on Form
10-K and monitors Prudential Bancorp's adherence in accounting and financial
reporting to generally accepted accounting principles. The Audit Committee is
comprised of three directors who are independent directors as defined in the
Nasdaq listing standards and the rules and regulations of the Securities and
Exchange Commission. The Board of Directors has determined that none of the
members of the Audit Committee meet the definition of Audit Committee Financial
Expert, as such term is defined in the rules of the Securities and Exchange
Commission. However, we believe it is important to note that while no one
individual member of the Audit Committee has been determined to meet the
technical requirements to be an Audit Committee financial expert, each of the
members has had significant involvement in financial matters, two due to service
as chief executive officers of financial institutions. The Audit Committee met
five times in fiscal 2005. The Audit Committee charter as presently in effect
was attached as Appendix A to our proxy statement for the 2006 Annual Meeting of
Shareholders and is available on our Website at www.prudentialsavingsbank.com.
COMPENSATION COMMITTEE. It is the responsibility of the Compensation
Committee of the Board of Directors to, among other things, oversee Prudential
Bancorp's compensation and incentive arrangements for management. No member of
the Compensation Committee is a current or, other than Mr. Packer, former
officer or employee of Prudential Bancorp, Prudential Savings Bank or any
subsidiary. Mr. Packer served as an executive officer of Prudential Savings Bank
prior to 1993. Each of the members is independent as defined in the Nasdaq
listing standards. The report of the Compensation Committee with respect to
compensation and benefits for the Chief Executive Officer and other executive
officers is set forth on page 11. The Compensation Committee met once in
fiscal 2006.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating and Corporate
Governance Committee reviews and makes nominations for the Board of Directors,
which are then sent to the full Board of Directors for their ratification. Each
of the members is independent as defined in the Nasdaq listing standards. The
Nominating and Corporate Governance Committee met once in fiscal 2006.
DIRECTORS' ATTENDANCE AT ANNUAL MEETINGS
Directors are expected to attend the Annual Meeting of Shareholders absent
a valid reason for not doing so. All of our directors attended the prior Annual
Meeting of Shareholders held in February 2006.
6
DIRECTORS' COMPENSATION
We do not pay separate compensation to directors for their service on the
Board of Directors of Prudential Bancorp. In fiscal 2006, members of Prudential
Savings Bank's Board of Directors received an annual retainer of $20,100 if they
attended 10 of the twelve regularly scheduled Board meetings; if a director did
not attend at least 10 meetings, he instead received $1,675 per meeting attended
of the Board, including both regular and special meetings. Such retainer
increased to $21,000 for fiscal 2007 and per meeting fee increased to $1,750.
Members of the Audit Committee, Executive Committee, Compensation Committee and
Budget/Finance Committee receive fees of $750 per meeting attended, which will
increase to $800 for fiscal 2007. As Chairman of the Board, Mr. Packer received
an annual retainer of $66,300 in fiscal 2006 in addition to board and committee
meeting fees. For fiscal 2007, Mr. Packer's annual retainer as Chairman will
increase to $69,750, in addition to standard board and committee meeting fees.
Mr. Judge receives an additional $4,500 per year for service as chairman of
Prudential Savings Bank's Finance Committee, which will increase to $5,000 in
fiscal 2007. As solicitor of Prudential Savings Bank, Mr. Balka received in
fiscal 2006 an annual retainer of $42,600, which will increase to $45,000 in
fiscal 2007. He also received the normal meeting fee for service on the
Executive Committee and the normal annual Board retainer of $20,100. Board fees
are subject to periodic adjustment by the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Determinations regarding compensation of our President and Chief Executive
Officer, our senior management and our employees are reviewed and approved by
Prudential Bancorp's Compensation Committee. Messrs. Fanelli, Mulcahy, Judge and
Packer, who is the Committee's Chairman, currently serve as members of the
Compensation Committee.
No person who served as a member of the Compensation Committee during
fiscal 2006 was a current or, other than Mr. Packer, former officer or employee
of Prudential Bancorp or Prudential Savings Bank or engaged in certain
transactions with Prudential Bancorp or Prudential Savings Bank required to be
disclosed by regulations of the Securities and Exchange Commission. Mr. Packer
served as an executive officer of Prudential Savings Bank prior to 1993.
Additionally, there were no Compensation Committee "interlocks" during fiscal
2006, which generally means that no executive officer of Prudential Bancorp
served as a director or member of the Compensation Committee of another entity,
one of whose executive officers served as a director or member of the
Compensation Committee.
7
--------------------------------------------------------------------------------
MANAGEMENT COMPENSATION
--------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information concerning
the compensation paid by Prudential Savings Bank (including amounts deferred, if
any, to future periods by the officers) for services rendered in all capacities
during the fiscal years ended September 30, 2006, 2005 and 2004 to the President
and Chief Executive Officer and three other executive officers of Prudential
Savings Bank during fiscal 2006 whose salary plus bonus exceeded $100,000.
Effective September 30, 2006, Ms. Cohen retired as our Vice President and
Corporate Secretary. Prudential Bancorp has not paid separate cash compensation
to its officers and directors.
ANNUAL COMPENSATION(1)
FISCAL ---------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3)
------------------------------------------- ------ -------- -------- ---------------
Thomas A. Vento, President and Chief 2006 $250,830 $35,801 $42,332(4)
Executive Officer 2005 235,513 31,350 39,665
2004 220,106 23,092 35,400
Joseph R. Corrato, Executive Vice President 2006 150,000 21,410 11,505
and Chief Financial Officer 2005 130,000 17,306 4,325
2004 115,000 12,065 6,738
Lucy R. Cohen, Vice President and 2006 112,100 16,000 9,440
Corporate Secretary* 2005 109,854 14,623 3,765
2004 104,623 10,976 6,207
David H. Krauter, Vice President and 2006 111,500 9,947 8,400
Chief Lending Officer 2005 101,400 8,436 3,411
2004 92,155 6,054 5,946
----------
* Ms. Cohen retired effective September 30, 2006.
(1) Prudential Savings Bank provides various miscellaneous benefits to the
named executive officers. The costs of providing such benefits to the named
executive officers did not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus reported for each of such individuals.
(2) Represents bonuses earned in fiscal 2006, 2005 and 2004 which were paid in
fiscal 2007, 2006 and 2005, respectively.
(3) Represents the fair market value on December 31, 2005, of a share of our
common stock ($11.85), the date the 1,310.75, 970.89, 708.89 and 796.62
shares were allocated to the Employee Stock Ownership Plan accounts of
Messrs. Vento, Corrato and Krauter and Ms. Cohen, respectively. Amounts for
fiscal 2005 and 2004 represent contributions under the Prudential Savings
Bank 401(k) Plan which were discontinued in fiscal 2006.
(4) Includes for Mr. Vento an aggregate of $26,800 paid in fiscal 2006 as board
or committee meeting fees.
EMPLOYMENT AGREEMENTS
In connection with the reorganization completed in March 2005, Prudential
Savings Bank entered into employment agreements with Messrs. Vento and Corrato.
The employment agreements have a term of three years with respect to Mr. Vento
and two years with respect to Mr. Corrato, in each case beginning on March 29,
2005. The term will be extended annually thereafter unless either Prudential
Savings Bank or the executive gives notice at least 30 days prior to the annual
anniversary date that the agreement shall
8
not be extended. Under the terms of the employment agreements, Messrs. Vento and
Corrato received an initial annual base salary, which shall be reviewed from
time to time by the board of directors. The executives are also entitled to
participate in our benefit plans and programs and receive reimbursement for
reasonable business expenses. Each of the employment agreements is terminable
with or without cause by Prudential Savings Bank. The executives have no right
to compensation or other benefits pursuant to the employment agreements for any
period after voluntary termination by the executive without good cause (as
defined in the agreement) or termination by Prudential Savings Bank for cause,
disability, retirement or death.
In the event that (i) the executive terminates his employment because of
failure to comply with any material provision of the employment agreement by
Prudential Savings Bank or (ii) the employment agreement is terminated by
Prudential Savings Bank other than for cause, disability, retirement or death,
Messrs. Vento and Corrato will be entitled to the payment of two (Mr. Vento) and
one (Mr. Corrato) times their respective average annual cash compensation
(salary and cash bonuses) as cash severance and the maintenance until the
earlier to occur of the passage of two years (Mr. Vento) or one year (Mr.
Corrato) or, until the executive's full time employment with another employer,
of the executive's participation in all employee benefit plans in which the
executive was entitled to participate or similar plans, programs or arrangements
if his continued participation is not permissible.
In the event that the executive's employment is terminated in connection
with a change in control, as defined in the employment agreements, for other
than cause, disability, retirement or death or the executive terminates his
employment as a result of certain adverse actions which are taken with respect
to the executive's employment following a change in control, as defined, Messrs.
Vento or Corrato, as the case may be, will be entitled to a cash severance
payment equal to three and two times their respective average annual cash
compensation and the maintenance, as described above, of the employee benefit
plans for three and two years, respectively, or until the executive's full-time
employment with another employer that provides similar benefits. Benefits under
the employment agreements will be reduced to the extent necessary to ensure that
the executives do not receive any "parachute payment" as such term is defined
under Section 280G of the Internal Revenue Code. In the event of a change in
control, as defined in the agreements, of Prudential Bancorp, the estimated
amounts due Messrs. Vento and Corrato upon termination of employment, based
solely on their current annual compensation and assuming the change of control
had occurred at the end of fiscal 2006 and excluding the value of any benefit
continuation, would be approximately $795,000 and $330,000, respectively.
Although the above-described employment agreements could increase the cost
of any acquisition of control of Prudential Bancorp, we do not believe that the
terms thereof would have a significant anti-takeover effect.
BENEFIT PLANS
RETIREMENT PLAN. Prudential Savings Bank participates in the Financial
Institutions Retirement Fund, a multiple employer defined benefit plan intended
to satisfy the tax-qualification requirements of Section 401(a) of the Internal
Revenue Code. Employees become eligible to participate in the retirement plan
upon the attainment of age 21 and the completion of one year of eligibility
service. For purposes of the retirement plan, a full-time employee earns one
year of eligibility service when he completes 1,000 hours of service within a
one-year eligibility computation period. An employee's first eligibility
computation period is the one-year period beginning on the employee's date of
hire. Subsequent eligibility computation periods begin on January 1 and end on
December 31.
The retirement plan provides for a monthly benefit upon a participant's
retirement at the age of 65, or if later, the fifth anniversary of the
participant's initial participation in the retirement plan (i.e., the
9
participant's "normal retirement date"). A participant may also receive a
benefit on his early retirement date, which is the date on which he attains age
45 and is partially or fully vested under the terms of the retirement plan.
Benefits received prior to a participant's normal retirement date are reduced by
certain factors set forth in the retirement plan. Participants become fully
vested in their benefits under the retirement plan upon the completion of five
years of vesting service as well as upon the attainment of normal retirement age
(age 65).
The following table indicates the annual retirement benefit that would be
payable under the retirement plan upon retirement at age 65 to a participant
electing to receive his or her retirement benefit in the standard form of
benefit, assuming various specified levels of plan compensation and various
specified years of credited service.
YEARS OF BENEFIT SERVICE
FINAL AVERAGE ---------------------------------------------------------
EARNINGS (1)(2) 15 20 25 30 35 50
--------------- ------- ------- ------- ------- ------- -------
$ 50,000 $11,250 $15,000 $18,750 $22,500 $26,250 $37,500
75,000 16,875 22,500 28,125 33,750 39,375 56,250
100,000 22,500 30,000 37,500 45,000 52,500 75,000
125,000 28,125 37,500 46,875 56,250 65,625 93,750
150,000 33,750 45,000 56,250 67,500 78,750 112,500
175,000 39,375 52,500 65,625 78,750 91,875 131,250
200,000 45,000 60,000 75,000 90,000 105,000 150,000
225,000 50,625 67,500 84,375 101,250 118,125 168,750
250,000 56,250 75,000 93,750 112,500 131,250 175,000
----------
(1) The maximum amount of annual compensation which the retirement plan can
consider in computing benefits is $220,000 in 2006, as adjusted for
subsequent years pursuant to the Internal Revenue Code provisions.
(2) The maximum annual benefit payable under the retirement plan in 2006 is
$175,000, as adjusted for subsequent years pursuant to the Internal Revenue
Code provisions.
The approximate full years of credited service, as of September 30, 2006,
for the named executive officers are as follows:
NAME YEARS OF SERVICE
----------------- ----------------
Thomas A. Vento 48
Joseph R. Corrato 21
Lucy R. Cohen 48
David H. Krauter 34
ENDORSEMENT SPLIT DOLLAR AGREEMENTS. Prudential Savings Bank purchased
insurance policies on the lives of its executive officers named in the Summary
Compensation Table above, and has entered into Endorsement Split Dollar
Agreements with each of those officers. The policies are owned by Prudential
Savings Bank. Under the agreements with the named executive officers, upon an
officer's death while he or she remains employed by Prudential Savings Bank,
the officer's beneficiary will receive two times, one times in the case of Mr.
Vento, the officer's salary as of the date of death. Pursuant to the terms of
the agreements, Prudential Savings Bank has elected to not extend such benefits
after a termination of employment. Such amounts will be funded from the receipt
of the death benefits under the insurance policies on such officer's life in
excess of the cash surrender value. Prudential Savings Bank will receive the
full cash surrender value, which is expected to reimburse Prudential Savings
Bank in full for its life insurance investment as well as the remainder, if any,
in excess of the net proceeds after payments to the officer's beneficiaries.
The Endorsement Split Dollar Agreements may be terminated at any time by
Prudential Savings Bank or the officer or by Prudential Savings Bank upon the
officer's termination of service to Prudential
10
Savings Bank. Upon termination, Prudential Savings Bank may surrender the policy
and collect the cash surrender value.
INDEBTEDNESS OF MANAGEMENT AND RELATED PARTY TRANSACTIONS
In accordance with applicable federal laws and regulations, Prudential
Savings Bank offers mortgage loans to its directors, officers and employees as
well as members of their immediate families for the financing of their primary
residences and certain other loans. These loans are generally made on
substantially the same terms as those prevailing at the time for comparable
transactions with non-affiliated persons. It is the belief of management that
these loans neither involve more than the normal risk of collectibility nor
present other unfavorable features.
--------------------------------------------------------------------------------
REPORT OF THE COMPENSATION COMMITTEE
--------------------------------------------------------------------------------
Prudential Bancorp has established a Compensation Committee of the Board of
Directors for the purpose of developing compensation policies and for setting
the compensation for the Chief Executive Officer and Chief Financial Officer as
well as Prudential Bancorp's other senior executive officers. These executive
officers of Prudential Bancorp, who hold identical positions with Prudential
Savings Bank, do not receive additional compensation for service as officers of
Prudential Bancorp.
The Compensation Committee of the Board is comprised entirely of
independent directors as defined by the Nasdaq's listing standards. During the
fiscal year ended September 30, 2006, the Compensation Committee of Prudential
Bancorp met once in October 2005. At such time, the Compensation Committee
reviewed and reassessed the base salaries under the employment agreements with
each of Messrs. Vento and Corrato. Base salaries for all employees, including
Messrs. Vento and Corrato, are reviewed in comparison with salary information
reported for comparable positions in the annual America's Community Bankers
Survey. The Compensation Committee also considers average annual salary
increases reported in The Wall Street Journal. Based on the recommendation of
the Compensation Committee, the base salary amounts for Messrs. Vento and
Corrato were increased to $250,830 and $150,000, respectively, which represented
an increase of 6.5%, and 15.4%, respectively, over their fiscal 2005 base
salaries.
At a meeting held in November 2006, the Compensation Committee also
determined to award a bonus pool for employees of Prudential Savings Bank for
fiscal 2006. In accordance with Prudential Savings Bank's policy, the bonus pool
does not exceed 6.5% of net income, as adjusted for certain extraordinary gains
or losses at the sole discretion of the Compensation Committee and totaled
$250,000 for all employees. Awards to employees are generally calculated using a
service factor that is based on length of service. However, for purposes of
Messrs. Vento and Corrato, it is a fixed multiple. The bonus pool is then
distributed proportionately based on the ratio of a participant's adjusted
salary (the service factor times salary) to the aggregate amount of all
participants' adjusted salaries as a percentage of the bonus pool. For fiscal
2006, Messrs. Vento and Corrato were awarded bonuses of $35,801 and $21,410,
respectively, which represented 14.3% and 8.6%, respectively, of the bonus pool.
The Compensation Committee also uses various compensation plans and
arrangements, in particular, the Prudential Savings Bank Employee Stock
Ownership Plan, to provide equity compensation to our executive officers in
order to align their interest with those of our shareholders.
MEMBERS OF THE COMPENSATION COMMITTEE
Joseph W. Packer, Jr., Chairman
A. J. Fanelli
John P. Judge
Francis V. Mulcahy
11
--------------------------------------------------------------------------------
PERFORMANCE GRAPH
--------------------------------------------------------------------------------
The following graph demonstrates comparison of the cumulative total returns
for the common stock of Prudential Bancorp, the NASDAQ Composite Index and the
SNL Securities Thrift Index for the periods indicated. The graph below
represents $100 invested in our common stock at its closing price on March 30,
2005, the date the common stock commenced trading on the Nasdaq National Market.
The cumulative total returns include the payment of dividends by Prudential
Bancorp.
[GRAPHIC]
PERIOD ENDING
--------------------------------------------------------------------------
INDEX 03/30/05 06/30/05 09/30/05 12/31/05 03/31/06 06/30/06 09/30/06
------------------------------ -------- -------- -------- -------- -------- -------- --------
Prudential Bancorp, Inc. of PA $100.00 $110.36 $121.75 $121.17 $138.51 $134.82 $135.95
NASDAQ Composite 100.00 102.75 107.66 113.43 120.67 112.21 113.94
SNL MHC Thrift Index 100.00 103.89 104.06 106.71 116.09 120.90 132.18
SNL Thrift Index 100.00 104.98 102.32 109.12 112.93 117.61 119.11
12
--------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
--------------------------------------------------------------------------------
The following table sets forth as of December 22, 2006, the voting record
date, certain information as to the common stock beneficially owned by (i) each
person or entity, including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, who or which was known to us to be the
beneficial owner of more than 5% of the issued and outstanding common stock,
(ii) the directors of Prudential Bancorp, (iii) certain executive officers of
Prudential Bancorp; and (iv) all directors and executive officers of Prudential
Bancorp as a group.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP AS OF PERCENT OF
NAME OF BENEFICIAL OWNER OR NUMBER OF PERSONS IN GROUP DECEMBER 22, 2006(1) COMMON STOCK
--------------------------------------------------------------- -------------------------- ------------
Prudential Mutual Holding Company.............................. 6,910,062 57.3%
1834 Oregon Avenue
Philadelphia, Pennsylvania 19145
Stilwell Value Partners I, L.P. Stilwell Partners, L.P.,
Stilwell Value LLC, Joseph Stilwell and John Stilwell....... 1,163,800(2) 9.7%
26 Broadway Street, 23rd Floor
New York, New York 10004
DIRECTORS:
Jerome R. Balka, Esq..................................... 16,070(3) *
A. J. Fanelli............................................ 1,100(4) *
John P. Judge............................................ 10,000(5) *
Francis V. Mulcahy....................................... 2,000 *
Joseph W. Packer, Jr..................................... 20,000(6) *
Thomas A. Vento.......................................... 21,310(7) *
OTHER NAMED EXECUTIVE OFFICERS:
Joseph R. Corrato........................................ 4,968(8) *
Lucy R. Cohen**.......................................... 5,796(9) *
David H. Krauter......................................... 2,780(10) *
All Directors and Executive Officers as a group (10 persons) .. 84,027 0.7%
----------
* Represents less than one percent of Prudential Bancorp's outstanding common
stock.
** Ms. Cohen retired effective September 30, 2006.
(1) Based upon filings made pursuant to the Securities Exchange Act of 1934 and
information furnished by the respective individuals. Under regulations
promulgated pursuant to the Securities Exchange Act of 1934, shares of
common stock are deemed to be beneficially owned by a person if he or she
directly or indirectly has or shares (i) voting power, which includes the
power to vote or to direct the voting of the shares, or (ii) investment
power, which includes the power to dispose or to direct the disposition of
the shares. Unless otherwise indicated, the named beneficial owner has sole
voting and dispositive power with respect to the shares.
(2) Based on information contained in a Schedule 13D/A filed on October 5,
2006, with information as of October 4, 2006. The individual and entities
share the voting and dispositive power with respect to all of the 1,163,800
shares they own, with the exception of John Stilwell who has sole voting
and dispositive power with respect to 3,800 shares. The business address of
Stilwell Value Partners I, L.P., Stilwell Partners, L.P., Stilwell Value
LLC and Joseph Stilwell is 26 Broadway, 23rd Floor, New York, New York
10004.
(FOOTNOTES CONTINUE ON FOLLOWING PAGE)
13
----------
(3) Includes 5,000 shares held by Mr. Balka's 401(k) Plan and 70 shares held by
the estate of Helen Klara for whom Mr. Balka is guardian. Also includes
1,500 shares held by the Marie Montone Drazen Trust, 400 shares held by the
Lillian Montone Allen Trust, 5,000 shares held by the Balka Grandchildren
Trust and 1,000 shares held by the estate of Danielle Thomas Minor, over
which Mr. Balka disclaims beneficial ownership.
(4) Includes 1,000 shares held jointly with Mr. Fanelli's spouse.
(5) The 10,000 shares are held jointly with Mr. Judge's spouse.
(6) Includes 10,000 shares held by Mr. Packer's spouse.
(7) Includes 20,000 shares held in Mr. Vento's account in Prudential Savings
Bank's 401(k) Plan; however, for purposes of voting authority as of
December 22, 2006, Mr. Vento had voting power over 18,550 shares in the
401(k) Plan, and 1,310 shares allocated to Mr. Vento's account in the
Prudential Savings Bank Employee Stock Ownership Plan.
(8) Includes 480 shares held by Mr. Corrato as custodian for his children and
3,367 shares held in Mr. Corrato's account in Prudential Savings Bank's
401(k) Plan; however, for purposes of voting authority, Mr. Corrato had
voting power over 3,128 shares in the 401(k) Plan, and 970 shares
allocated to Mr. Corrato's account in the Prudential Savings Bank Employee
Stock Ownership Plan.
(9) Includes 5,000 shares held in Prudential Savings Bank's 401(k) Plan for the
benefit of Ms. Cohen; however, for purposes of voting authority, Ms. Cohen
had voting power over 4,637 shares in the 401(k) Plan, and 796 shares
allocated to Ms. Cohen's account in the Prudential Savings Bank Employee
Stock Ownership Plan.
(10) Includes 2,072 shares held in Prudential Savings Bank's 401(k) Plan for the
benefit of Mr. Krauter; however, for purposes of voting authority, Mr.
Krauter had voting power over 1,925 shares in the 401(k) Plan, and 708
shares allocated to Mr. Krauter's account in the Prudential Savings Bank
Employee Stock Ownership Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the officers and directors, and persons who own more than 10% of Prudential
Bancorp's common stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than 10% shareholders are required by regulation to furnish Prudential Bancorp
with copies of all Section 16(a) forms they file. We know of no person who owns
10% or more of our common stock.
Based solely on our review of the copies of such forms furnished to us, or
written representations from our officers and directors, we believe that during,
and with respect to, the fiscal year ended September 30, 2006, our officers and
directors complied in all respects with the reporting requirements promulgated
under Section 16(a) of the Securities Exchange Act of 1934.
--------------------------------------------------------------------------------
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL TWO)
--------------------------------------------------------------------------------
The Audit Committee of the Board of Directors of Prudential Bancorp has
appointed Deloitte & Touche LLP, independent registered public accounting firm,
to perform the audit of our financial statements for the year ending September
30, 2007, and further directed that the selection of auditors be submitted for
ratification by the shareholders at the annual meeting.
We have been advised by Deloitte & Touche LLP that neither that firm nor
any of its associates has any relationship with Prudential Bancorp or its
subsidiaries other than the usual relationship that exists between an
independent registered public accounting firm and its clients. Deloitte & Touche
LLP
14
will have one or more representatives at the annual meeting who will have an
opportunity to make a statement, if they so desire, and will be available to
respond to appropriate questions.
In determining whether to appoint Deloitte & Touche LLP as our independent
registered public accounting firm, the Audit Committee considered whether the
provision of services, other than auditing services, by Deloitte & Touche LLP is
compatible with maintaining their independence. In addition to performing
auditing services as well as reviewing our public filings, our independent
registered public accounting firm performed tax-related services, including the
completion of our corporate tax returns, in fiscal 2004. The Audit Committee
believes that Deloitte & Touche LLP's performance of these other services is
compatible with maintaining the independent registered public accounting firm's
independence.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2007.
AUDIT FEES
The following table sets forth the aggregate fees paid by us to Deloitte &
Touche LLP for professional services rendered by Deloitte & Touche LLP in
connection with the audit of Prudential Bancorp's consolidated financial
statements for fiscal 2006 and 2005, as well as the fees paid by us to Deloitte
& Touche LLP for audit-related services, tax services and all other services
rendered by Deloitte & Touche LLP to us during fiscal 2006 and 2005.
Year Ended September 30,
------------------------
2006 2005
-------- --------
Audit fees (1)....................................... $195,950 $149,675
Audit-related fees (2)............................... -- 174,770
Tax fees (3)......................................... -- 9,802
All other fees....................................... -- --
-------- --------
Total............................................. $195,950 $334,247
======== ========
----------
(1) Audit fees consist of fees incurred in connection with the audit of our
annual financial statements and the review of the interim financial
statements included in our quarterly reports filed with the Securities and
Exchange Commission, as well as work generally only the independent auditor
can reasonably be expected to provide, such as statutory audits, consents
and assistance with and review of documents filed with the Securities and
Exchange Commission.
(2) Audit-related fees primarily consist of fees incurred in connection with
review of registration statements in connection with the reorganization of
Prudential Savings Bank during 2005.
(3) Our principal accountant did not prepare our tax returns during fiscal 2006
or 2005, however, they assisted with calculating quarterly estimates of tax
payments during fiscal 2005.
The Audit Committee selects our independent registered public accounting
firm and pre-approves all audit services to be provided by it to Prudential
Bancorp. The Audit Committee also reviews and pre-approves all audit-related and
non-audit related services rendered by our independent registered public
accounting firm in accordance with the Audit Committee's charter. In its review
of these services and related fees and terms, the Audit Committee considers,
among other things, the possible effect of the performance of such services on
the independence of our independent registered public accounting firm. The Audit
Committee pre-approves certain audit-related services and certain non-audit
related tax services which are specifically described by the Audit Committee on
an annual basis and separately approves other individual engagements as
necessary. The Chair of the Audit Committee has been delegated the authority to
approve non-audit related services in lieu of the full Audit Committee. On a
15
quarterly basis, the Chair of the Audit Committee presents any
previously-approved engagements to the full Audit Committee.
Each new engagement of Deloitte & Touche LLP was approved in advance by the
Audit Committee or its Chair, and none of those engagements made use of the de
minimis exception to pre-approval contained in the Securities and Exchange
Commission's rules.
--------------------------------------------------------------------------------
REPORT OF THE AUDIT COMMITTEE
--------------------------------------------------------------------------------
The functions of the Audit Committee include the following: performing all
duties assigned by the Board of Directors, reviewing with management and
independent public accountants the basis for the reports issued by Prudential
Savings Bank and Prudential Bancorp pursuant to federal regulatory requirements,
meeting with the independent public accountants to review the scope of audit
services, significant accounting changes and audit conclusions regarding
significant accounting estimates, assessments as to the adequacy of internal
controls and the resolution of any significant deficiencies or material control
weaknesses, and assessing compliance with laws and regulations and overseeing
the internal audit function. The Audit Committee also reviews and assesses the
adequacy of its Charter on an annual basis.
The Audit Committee has reviewed and discussed Prudential Bancorp's audited
financial statements with management. The Audit Committee has discussed with
Prudential Bancorp's independent registered public accounting firm, Deloitte &
Touche LLP, the matters required to be discussed by the Statement on Auditing
Standards ("SAS") No. 61, "Communication with Audit Committees" as amended by
SAS No. 90. The Audit Committee has received the written disclosures and the
letter from the independent registered public accounting firm required by
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees" and has discussed with Deloitte & Touche LLP, the independent
auditor's independence. Based on the review and discussions referred to above in
this report, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in Prudential Bancorp's Annual Report
on Form 10-K for fiscal year 2006 for filing with the Securities and Exchange
Commission.
MEMBERS OF THE AUDIT COMMITTEE
A. J. Fanelli, Chairman
Joseph W. Packer, Jr.
John P. Judge
--------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS, NOMINATIONS AND COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
--------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS. Any proposal which a shareholder wishes to have
included in the proxy materials of Prudential Bancorp relating to the next
Annual Meeting of Shareholders of Prudential Bancorp, which is expected to be
held in February 2008, must be received at the principal executive offices of
Prudential Bancorp, 1834 Oregon Avenue, Philadelphia, Pennsylvania 19145,
Attention: Joseph R. Corrato, Executive Vice President and Chief Financial
Officer, no later than September 7, 2007. If such proposal is in compliance with
all of the requirements of Rule 14a-8 under the Securities Exchange Act of 1934,
as amended, it will be included in the proxy statement and set forth on the form
of proxy issued for such annual meeting of shareholders. It is urged that any
such proposals be sent certified mail, return receipt requested.
16
Shareholder proposals which are not submitted for inclusion in Prudential
Bancorp's proxy materials pursuant to Rule 14a-8 may be brought before an annual
meeting pursuant to Section 2.10 of Prudential Bancorp's Bylaws. Notice of the
proposal must be given in writing and delivered to, or mailed and received at,
our principal executive offices by September 7, 2007. The notice must include
the information required by Section 2.10 of our Bylaws.
SHAREHOLDER NOMINATIONS. Our Bylaws provide that, subject to the rights of
the holders of any class or series of stock having a preference over the common
stock as to dividends or upon liquidation, all nominations for election to the
Board of Directors, other than those made by the Board or a committee thereof,
shall be made by a shareholder who has complied with the notice and information
requirements contained in Section 3.12 of our Bylaws. Written notice of a
shareholder nomination generally must be communicated to the attention of the
Secretary and either delivered to, or mailed and received at, our principal
executive offices not later than, with respect to an annual meeting of
shareholders, 120 days prior to the anniversary date of the mailing of proxy
materials by us in connection with the immediately preceding annual meeting of
shareholders or, in the case of the 2008 annual meeting, by September 7, 2007.
We did not receive any shareholder nominations for this Annual Meeting.
OTHER SHAREHOLDER COMMUNICATIONS. Shareholders who wish to communicate with
the Board may do so by sending written communications addressed to the Board of
Directors of Prudential Bancorp, Inc. of Pennsylvania, c/o Regina Wilson,
Corporate Secretary, at 1834 Oregon Avenue, Philadelphia, Pennsylvania 19145.
Ms. Wilson will forward such communications to the director or directors to whom
they are addressed.
--------------------------------------------------------------------------------
ANNUAL REPORTS
--------------------------------------------------------------------------------
A copy of Prudential Bancorp's Annual Report on Form 10-K for the year
ended September 30, 2006 accompanies this proxy statement. Such annual report is
not part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, WE WILL FURNISH TO ANY SHAREHOLDER A
COPY OF THE EXHIBITS TO THE ANNUAL REPORT ON FORM 10-K. SUCH WRITTEN REQUESTS
SHOULD BE DIRECTED TO MR. JOSEPH R. CORRATO, EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER, PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA, 1834 OREGON AVENUE,
PHILADELPHIA, PENNSYLVANIA 19145.
--------------------------------------------------------------------------------
PARTICIPANTS IN THE SOLICITATION
--------------------------------------------------------------------------------
GENERAL. Under the proxy solicitation rules of the Exchange Act, Prudential
Bancorp's Chief Executive Officer, Thomas A. Vento, and Corporate Secretary,
Regina Wilson, and each of Prudential Bancorp's directors may be deemed to be a
"participant" in our solicitation of proxies. Information about principal
occupations of directors is set forth under the section "Information with
Respect to Nominees for Director, Continuing Directors and Executive Officers -
Election of Directors (Proposal One)." Information about the present ownership
of the voting stock by each participant, including the right to acquire shares
of the voting stock is set forth under the section "Beneficial Ownership of
Common Stock by Certain Beneficial Owners and Management." Information about Mr.
Vento's employment agreement is set forth under the section "Management
Compensation - Employment Agreements." Information about transactions between
Prudential Bancorp and directors and executive officers is set forth under the
section "Indebtedness of Management and Related Party Transactions." For the
purpose of this proxy statement, the business address of each participant is
1834 Oregon Avenue, Philadelphia, Pennsylvania, 19145. Appendix A sets forth
certain additional information about each participant's purchases and sales
17
of our common stock since March 29, 2005, the date we completed our
reorganization and initial public offering.
OTHER INFORMATION. Except as disclosed elsewhere in this proxy statement,
to the knowledge of Prudential Bancorp, no participant (1) owns of record any
securities of Prudential Bancorp that are not also beneficially owned by them;
(2) is, or was within the past year, a party to any contract, arrangement or
understanding with any person with respect to the securities of Prudential
Bancorp, including, but not limited to, joint ventures, loan or option
arrangement, puts or calls, or the giving or withholding of proxies; (3) has any
substantial interest, direct or indirect, by security holdings or otherwise, in
any matter to be acted upon at the Annual Meeting; or (4) borrowed any funds to
purchase any securities set forth under this section "Participants in the
Solicitation." Except as disclosed elsewhere in this proxy statement, to the
knowledge of Prudential Bancorp, no participant has any arrangement or
understanding with any person (1) with respect to future transaction to which
Prudential Bancorp or any of its affiliates will or may be a party.
--------------------------------------------------------------------------------
OTHER MATTERS
--------------------------------------------------------------------------------
Management is not aware of any business to come before the annual meeting
other than the matters described above in this proxy statement. However, if any
other matters should properly come before the meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
SOLICITATION OF PROXIES. The cost of the solicitation of proxies will be
borne by Prudential Bancorp. Prudential Bancorp will reimburse brokerage firms
and other custodians, nominees and fiduciaries for reasonable expenses incurred
by them in sending the proxy materials to the beneficial owners of Prudential
Bancorp's common stock. In addition to solicitations by mail, directors,
officers and employees of Prudential Bancorp may solicit proxies personally or
by telephone without additional compensation.
18
APPENDIX A
TRANSACTIONS IN PRUDENTIAL BANCORP'S SECURITIES IN THE LAST TWO YEARS.
Listed below are the only purchases and sales of common stock by each
participant since March 29, 2005, the date we completed our reorganization and
initial public offering.
NUMBER OF FORM OF
SHARES TRANSACTION BENEFICIAL
NAME PURCHASED (SOLD) DATE TYPE OWNERSHIP
--------------------- ---------------- --------- ----------- -----------------------
Jerome R. Balka 500 5/24/2005 Purchase Indirect by Estate
Jerome R. Balka 3,000 3/30/2005 Purchase Direct
Jerome R. Balka 5,000 3/29/2005 Purchase Indirect by 401(k) Plan
Jerome R. Balka 6,900 3/29/2005 Purchase Indirect by Trusts
Jerome R. Balka 570 3/29/2005 Purchase Indirect by Estates
Lucy R. Cohen 5,000 3/29/2005 Purchase Indirect by 401(k) Plan
Joseph R. Corrato 150 3/29/2005 Purchase Direct
Joseph R. Corrato 477 3/29/2005 Purchase Indirect by Sons
Joseph R. Corrato 3,370 3/29/2005 Purchase Indirect by 401(k) Plan
A.J. Fanelli 1,000 2/7/2006 Purchase Direct
John P. Judge 10,000 3/29/2005 Purchase Direct
David H. Krauter 2,072 3/29/2005 Purchase Indirect by 401(k) Plan
Francis V. Mulcahy 2,000 12/9/2005 Purchase Direct
Joseph W. Packer, Jr. 10,000 3/29/2005 Purchase Direct
Joseph W. Packer, Jr. 10,000 3/29/2005 Purchase Indirect by Spouse
Carl J. Santoro 7,500 3/29/2005 Purchase Direct
Thomas A. Vento 20,000 3/29/2005 Purchase Indirect by 401(k) Plan
A-1
[X] PLEASE MARK VOTES REVOCABLE PROXY/VOTING INSTRUCTION CARD
AS IN THIS EXAMPLE PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA
THIS PROXY/VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA FOR USE AT THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 9, 2007 AND AT ANY ADJOURNMENT
THEREOF.
The undersigned hereby appoints the Board of Directors of Prudential
Bancorp, Inc. of Pennsylvania or any successors thereto, as proxies with full
powers of substitution, and the trustees of the ESOP and 401(k) Plan, as
applicable, to represent and vote, as designated below, all the shares of common
stock of Prudential Bancorp, Inc. held of record by or allocated to the ESOP or
401(k) Plan account of the undersigned as of December 22, 2006 at the Annual
Meeting of Shareholders to be held at the Holiday Inn - Philadelphia Stadium,
located at 900 Packer Avenue, Philadelphia, Pennsylvania on Friday, February 9,
2007, at 11:00 a.m., Eastern Time, or at any adjournment thereof.
1. ELECTION of directors.
[_] FOR [_] WITHHOLD [_] FOR ALL EXCEPT
NOMINEES for three-year term expiring in 2010: Jerome R. Balka, Esq. and A. J.
Fanelli
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK "FOR
ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
_____________________________________
2. PROPOSAL to ratify the appointment of Deloitte & Touche LLP as Prudential
Bancorp's independent registered public accounting firm for the fiscal year
ending September 30, 2007.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the proxies/trustees are authorized to vote upon such
other business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ALL THE NOMINEES
LISTED ABOVE AND "FOR" THE RATIFICATION OF DELOITTE & TOUCHE LLP.
THE SHARES OF PRUDENTIAL BANCORP'S COMMON STOCK WILL BE VOTED AS SPECIFIED.
IF NOT OTHERWISE SPECIFIED, THIS PROXY/VOTING INSTRUCTION CARD WILL BE VOTED FOR
THE NOMINEES TO THE BOARD OF DIRECTORS AND FOR THE RATIFICATION OF PRUDENTIAL
BANCORP'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND OTHERWISE AT THE
DISCRETION OF THE PROXIES/TRUSTEES. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR
TO THE TIME IT IS VOTED AT THE ANNUAL MEETING AND YOUR VOTING INSTRUCTION CARD
PRIOR TO FEBRUARY 2, 2007.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS OF PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA AND THE ACCOMPANYING
PROXY STATEMENT AND ANNUAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2006, PRIOR
TO THE SIGNING OF THIS PROXY/VOTING INSTRUCTION CARD.
THIS CARD ALSO CONSTITUTES YOUR VOTING INSTRUCTIONS FOR ANY SHARES HELD IN
THE EMPLOYEES' SAVINGS & PROFIT SHARING PLAN ("401(K) PLAN") AND THE PRUDENTIAL
SAVINGS BANK ESOP AND THE UNDERSIGNED HEREBY AUTHORIZES THE RESPECTIVE TRUSTEES
OF SUCH PLANS TO VOTE THE SHARES ALLOCATED TO THE UNDERSIGNED'S ACCOUNT(S) AS
PROVIDED HEREIN. SHARES HELD IN THE ESOP AND 401(K) PLAN ALLOCATED TO
PARTICIPANTS' ACCOUNTS WILL GENERALLY NOT BE VOTED UNLESS THE PROXY/VOTING
INSTRUCTION CARD IS RETURNED. WITH RESPECT TO ANY OTHER MATTER THAT PROPERLY
COMES BEFORE THE MEETING, THE TRUSTEES ARE AUTHORIZED TO VOTE THE SHARES AS
DIRECTED BY PRUDENTIAL BANCORP.
Date
Please be sure to sign in the box below
and date this Proxy/Voting Instruction Card.
-------------------------------------------------------------------------------
Shareholder/Participant sign above Co-holder (if any) sign above
--------------------------------------------------------------------------------
[_] [_]
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA
--------------------------------------------------------------------------------
PLEASE SIGN THIS PROXY/VOTING INSTRUCTION CARD EXACTLY AS YOUR NAME(S)
APPEAR(S) ON THIS PROXY/VOTING INSTRUCTION CARD. WHEN SIGNING IN A
REPRESENTATIVE CAPACITY, PLEASE GIVE TITLE. WHEN SHARES ARE HELD JOINTLY,
ONLY ONE HOLDER NEED SIGN.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY/VOTING INSTRUCTION CARD TODAY
--------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
____________________________________________
____________________________________________
____________________________________________
[PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA]
January 5, 2007
To: Participants in the Prudential Savings Bank Employee Stock Ownership Plan
(the "ESOP") and/or Employees' Savings & Profit Sharing Plan (the "401(k)
Plan") (collectively, the "Plans")
Re: Instructions for voting shares of common stock of Prudential Bancorp, Inc.
of Pennsylvania
As described in the enclosed materials, proxies are being solicited in
connection with the proposals to be considered at the upcoming Annual Meeting of
Shareholders of Prudential Bancorp, Inc. of Pennsylvania. We hope you will take
advantage of the opportunity to direct the manner in which shares of common
stock of Prudential Bancorp allocated to your account(s) in the Prudential
Savings Bank ESOP and/or 401(k) Plan will be voted.
Enclosed with this letter is the Proxy Statement, which describes the
matters to be voted upon, the Annual Report to Shareholders and a Proxy/Voting
Instruction Card. After you have reviewed the Proxy Statement, we urge you to
vote your allocated shares held in the ESOP and/or 401(k) Plan by marking,
dating, signing and returning the enclosed Proxy/Voting Instruction Card in the
envelope provided. IN ORDER TO BE EFFECTIVE, YOUR PROXY/VOTING INSTRUCTION CARD
MUST BE RECEIVED BY REGISTRAR AND TRANSFER COMPANY NO LATER THAN FEBRUARY 2,
2007. Registrar and Transfer Company will tabulate the votes for the purpose of
having those shares voted by the Trustees of the Plans.
We urge each of you to vote, as a means of participating in the governance
of the affairs of Prudential Bancorp. If your voting instructions are not
received, the shares allocated to your ESOP and/or 401(k) Plan account(s)
generally will not be voted by the Trustees. While I hope that you will vote in
the manner recommended by the Board of Directors, the most important thing is
that you vote in whatever manner you deem appropriate. Please take a moment to
do so.
Please note that the enclosed material relates only to those shares of
common stock which have been allocated to you in your accounts under the ESOP
and/or 401(k) Plan. If you also own shares of Prudential Bancorp common stock
outside of the ESOP and/or 401(k) Plan, you should receive other voting material
for those shares owned by you individually. Please return ALL your voting
material so that all your shares may be voted.
Sincerely,
/s/ Thomas A. Vento
Thomas A. Vento
PRESIDENT