Provident Financial Services Inc DEF 14A, filed Mar 15, 2024

Provident Financial Services Inc (PFS)

DEF 14A 2024-03-15 For: 2024-04-25

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Added on June 12, 2026

About this DEF 14A

Provident Financial Services Inc filed this DEF 14A on March 15, 2024.

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Check the appropriate box:
	Preliminary Proxy Statement
	Confidential, for Use of the Commission Only (as permitted by Rule 14A-6(E)(2))
	Definitive Proxy Statement
	Definitive Additional Materials
	Soliciting Material under §240.14a-12

Payment of Filing Fee (Check all boxes that apply):
	No fee required.
	Fee paid previously with preliminary materials.
	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

	Notice of Annual Meeting of Stockholders	5

	Internet Availability of Proxy Materials	6

	Proposal 1 Election of Directors	7
	General	7
	Board of Directors	7
	Executive Officers	11

	Environmental, Social and Governance (“ESG”) Matters	13
	Board Composition and Skills	19
	Board Leadership Structure	21
	Corporate Governance	21

	Audit Committee Matters	29
	Audit Committee Report	29

	Compensation and Human Capital Committee Additional Matters	30
	Compensation Committee Interlocks and Insider Participation	30

	Compensation Discussion and Analysis	31
	Overview	31
	Executive Summary	32
	Strategic Highlights	32
	Key Executive Compensation Actions	33
	Compensation Consultants	33
	Executive Compensation Philosophy	34
	Benchmarking and Peer Groups	34
	Role of Management	34
	Elements of 2023 Executive Compensation	35
	Elements of Post-Termination Benefits	40
	Executive Stock Ownership Requirements	42
	Prohibition on Hedging	42
	Clawback Policies	42
	Risk Assessment	43
	Tax Deductibility of Executive Compensation	43
	Compensation and Human Capital Committee Report	43

	Executive Compensation	44
	Summary Compensation Table	45
	Plan-Based Awards	47
	Outstanding Equity Awards at Year-End	48
	Option Exercises and Stock Vested	49
	Pension Benefits	49
	Non-Qualified Deferred Compensation	50
	Potential Payments Upon Termination or Change in Control	51
	Pay Ratio Disclosure	54

	Pay Versus Performance	55

	Director Compensation	59
	Elements of Director Compensation	59
	Director Compensation Table	61

	Security Ownership of Certain Beneficial Owners and Management	62
	Principal Stockholders	62

	Delinquent Section 16(a) Reports	65

	Proposal 2 Advisory Vote to Approve Executive Compensation	65

	Proposal 3 Advisory Vote to Approve the 2024 Long-Term Equity Incentive Plan	66

	Proposal 4 Ratification of the Appointment of our Independent Registered Public Accounting Firm	75

	Submission of Stockholder Proposals	76

	Advance Notice of Business to be Conducted at an Annual Meeting	76

	Notice of Solicitation of Proxies	76

	Other Matters	77

	General Information	78
	The 2024 Annual Meeting of Stockholders	78
	Who Can Vote	78
	How Many Votes You Have	78
	Matters to Be Considered	79
	How to Participate in the Virtual Annual Meeting	79
	How to Vote	79
	Participants in Provident Benefit Plans	79
	Quorum and Vote Required	79
	Revocability of Proxies	80
	Solicitation of Proxies	80
	Householding	80
	Recommendation of the Board of Directors	80

	Appendix A	81

1.	The election of four nominees named in the attached Proxy Statement to serve as directors, each for a three-year term.
2.	An advisory (non-binding) vote to approve the compensation paid to our named executive officers.
3.	The approval of the 2024 Long-Term Equity Incentive Plan.
4.	The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2024.
5.	The transaction of such other business as may properly come before the Annual Meeting, and any adjournment or postponement of the Annual Meeting.

Review your proxy statement and vote in one of four ways:

INTERNET Visit the website on your proxy card	BY TELEPHONE Call the telephone number on your proxy card	BY MAIL Sign, date and return your proxy card in the enclosed envelope	DURING THE ANNUAL MEETING www.virtualshareholdermeeting.com/PFS2024

Please refer to the enclosed proxy materials or the information forwarded by your bank, broker, or other holder of record to see which voting methods are available to you.

	PROVIDENT FINANCIAL SERVICES, INC. \| 2024 Proxy Statement		5

www.provident.bank		PROVIDENT FINANCIAL SERVICES, INC. \| 2024 Proxy Statement		6

•	Community Enrichment: the Foundation understands that a vibrant community is the cornerstone of a high quality of life. This is why we invest in those institutions that contribute to a sense of community and offer a diversity of beneficial programs. To achieve these ideals and enrich our communities, we fund programs that drive economic development, contribute to a more well-rounded community experience, and provide increased access to information and specialized learning opportunities.
•	Education: the Foundation believes that a good education requires strong academic support and curriculum development. To give people of all ages the tools and knowledge to succeed in an increasingly complex economy, we support innovative programming that expands access to, and improves the quality of, well-rounded educational experiences.
•	Health, Youth, and Families: the Foundation is committed to encouraging better health, having youth reach their full potential, and making families stronger, three ingredients for better communities. This includes having a safe place to live, access to quality healthcare, enough food to eat, mentorship opportunities, and the right academic or professional outlets to enrich oneself. The Foundation supports innovative programs to ensure people of all ages and means have the ability to improve their quality of life.

•	Schedules executive sessions of the non-management directors without management present at least twice each year and advises the Executive Chairman of the schedule for such executive sessions.
•	With input from the non-management directors, develops agendas for, and presides over the executive sessions. The Lead Director, together with another non-management director, provide the Executive Chairman and the President and Chief Executive Officer with timely feedback from the executive sessions.
•	Acts as the principal liaison between the non-management directors and the Executive Chairman and the President and Chief Executive Officer on issues relating to the working relationship between our board and management, including providing input as to the quality and timeliness of information provided by management to ensure that the conduct of board meetings allows adequate time for discussion of important issues and that appropriate information is made available to our board on a timely basis.
•	Provides input to the Executive Chairman regarding board meeting agendas and meeting materials based on requests from the non-management directors.
•	Attends board committee meetings as a non-member at the invitation of the respective committee chair.

•	Our board conducts an annual evaluation of the performance of the board and its committees.
•	The board reviews management talent and executive succession planning on a regular basis.
•	Our board regularly focuses on strategy with management and annually meets off-site for strategy formation and updates.
•	We have robust stock ownership guidelines for our directors and named executive officers.
•	Our board has oversight of risk management with a focus on the significant risks facing our company, including cyber risks.
•	We regularly invite industry experts to meet with our board regarding key market developments.
•	Although there are no term limits for directors, we value board refreshment, and five of our eleven directors have been added to the board in the last five years.

•	the name and address of the stockholder as they appear on our books, and the number of shares of our common stock that are beneficially owned by such stockholder (if the stockholder is not a holder of record, appropriate evidence of the stockholder’s ownership should be provided);
•	the name, address, and contact information for the candidate, and the number of shares of our common stock that are owned by the candidate (if the candidate is not a holder of record, appropriate evidence of the candidate’s ownership should be provided);
•	a statement of the candidate’s business and educational experience;
•	such other information regarding the candidate as would be required to be included in our proxy statement pursuant to SEC Regulation 14A;
•	a statement detailing any relationship between the candidate and Provident, Provident Bank, and any subsidiaries of Provident Bank;
•	a statement detailing any relationship between the candidate and any customer, supplier or competitor of Provident and Provident Bank;
•	detailed information about any relationship or understanding between the proposing stockholder and the candidate; and
•	a statement that the candidate is willing to be considered and willing to serve as a director if nominated and elected.

	•	Be honest, transparent, and trustworthy
	•	Do what’s right and hold others to that standard
	•	Seek to understand, actively listen, and assume positive intent of others
	•	Contribute to a work climate where diversity in background and thought are valued and supported

	•	Hold each other to a high standard of ownership and responsibility
	•	Set challenging goals without fear of failure
	•	Use good judgment and communicate with transparency
	•	Align efforts to support the business plans and strategies of the company

	•	Welcome new team members and seek opportunities to make those around us better
	•	Embrace collaboration to achieve greatness
	•	Value each other’s abilities and partner together, regardless of level, to achieve shared goals
	•	Encourage each other and celebrate our successes

	•	Strive to perform with the highest degree of competence and professionalism
	•	Provide the highest level of service to our customers and each other
	•	Deliver our best by engaging the right people and removing barriers to get things done
	•	Courageously challenge the way we do our business in pursuit of being even better



		239 Washington Street Jersey City, New Jersey 07302

Table
of Contents

	•	Develop our collective knowledge, skills, and capabilities through constant learning
	•	Foster a culture that embraces positive change and rewards creativity and innovation
	•	Make decisions that support the long-term success of the company
	•	Build on our legacy of commitment to positively impact our customers, communities, and ourselves

•	establishing the size and composition of our board of directors and the desired diversity, qualifications, and skills of directors;
•	setting a minimum stock ownership requirement for directors at an amount having a value equal to five times a director’s annual cash retainer;
•	providing for director orientation, continuing education, and an annual performance assessment of our board of directors;
•	selecting board committee leadership and membership; and
•	reviewing annual compensation paid to the non-management directors as recommended by the Compensation Committee.

•	reviewed and discussed with management, and our independent registered public accounting firm, the audited consolidated financial statements of Provident for the year ended December 31, 2023;
•	discussed with our independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301 Communications with Audit Committees, as amended, and as adopted by the Public Company Accounting Oversight Board; and
•	received and reviewed the written disclosures and the letter from our independent registered public accounting firm mandated by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with our independent registered public accounting firm its independence from Provident.

	TABLE OF CONTENTS
	TABLE OF CONTENTS
	Overview		31
	Executive Summary		32
	Strategic Highlights		32
	Key Executive Compensation Actions		33
	Compensation Consultants		33
	Executive Compensation Philosophy		34
	Benchmarking and Peer Groups		34
	Role of Management		34
	Elements of 2023 Executive Compensation		35
	Elements of Post-Termination Benefits		40
	Executive Stock Ownership Requirements		42
	Prohibition on Hedging		42
	Clawback Policy		42
	Risk Assessment		43
	Tax Deductibility of Executive Compensation		43
	Compensation and Human Capital Committee Report		43

	Name		Title
	ANTHONY J. LABOZZETTA		President and Chief Executive Officer
	THOMAS M. LYONS		Senior Executive Vice President and Chief Financial Officer
	JOHN KUNTZ		Senior Executive Vice President and Chief Administrative Officer of Provident Bank⁽¹⁾
	VALERIE O. MURRAY		Executive Vice President and Chief Wealth Management Officer of Provident Bank and President of Beacon Trust Company
	GEORGE LISTA		Executive Vice President and President of Provident Protection Plus

•	A pay for performance philosophy aligning executive compensation with business strategies and generating stockholder returns;
•	Executive salaries and total compensation evaluated based on data from a regional peer group of publicly-traded banks of comparable size and business model;
•	Annual cash incentive compensation opportunities tied to key corporate performance goals established by the Compensation Committee;
•	Long-term incentive compensation opportunities tied to key corporate performance goals established by the Compensation Committee, subject to a relative total stockholder return modifier, over a multi-year period;
•	A significant portion (at least 75%) of the target value of equity grants to our named executive officers are performance-based;
•	No dividends are paid on stock awards subject to either time-vesting or performance-vesting conditions unless and until the awards have vested;
•	Incentive compensation plans that provide for risk mitigation and accountability, authorizing our Compensation Committee to condition incentive compensation awards with clawback, (including the new mandatory clawback policy we adopted during 2023), deferral, and adjustment provisions, and settlement in stock subject to holding periods;
•	Executives are subject to robust share ownership guidelines;
•	Executives are prohibited from engaging in hedging transactions to offset the economic risk of owning our common stock;
•	Perquisites are limited;
•	No excise tax gross-ups, pursuant to Section 280G of the Internal Revenue Code, are contained in employment, change in control agreements or any other executive compensation arrangements;
•	Active oversight by the Compensation Committee consisting solely of independent directors; and
•	Assistance regularly provided to the Compensation Committee by an independent compensation consultant selected by the Compensation Committee.

•	Our management team continued to prepare for the pending merger with Lakeland Bancorp, Inc., to create the premier super-community bank in our region. The teams have worked tirelessly to be ready for conversion while keeping a positive customer and employee experience in the forefront of the planning process.
•	Provident reported solid financial results for 2023 despite challenging market conditions throughout the year. For the year ended December 31, 2023, net income totaled $128.4 million, or $1.72 per basic share and $1.71 per diluted share.
•	Provident grew loans 6.1% for the year and was able to maintain funding costs among the best in our peer group given market conditions. Our fee income from the wealth management and insurance agency businesses continue to make significant contributions to our overall financial success. We’ve been able to maintain our non-interest expense adjusted for merger-related charges, credit loss expense for off-balance sheet credit exposure and contingent litigation reserves as a percentage average assets at a strong 1.90%.
•	Our annualized return on average assets for 2023 was 0.92%. Our annualized return on average tangible equity for 2023 was 10.84%. Our 2023 net interest margin (net interest income divided by average interest earning assets) decreased 21 basis points to 3.16% compared to 3.37% for 2022.
•	Total assets as of December 31, 2023 were $14.2 billion, a $427.4 million increase from December 31, 2022.
•	Our disciplined underwriting has resulted in consistently strong overall credit quality metrics and net charge-offs at low levels.
•	We maintained our regular quarterly cash dividend to stockholders of $0.24 per share in 2023.
•	Our capital position remained strong, and we exceeded all regulatory requirements for well-capitalized status.

•	2023 Base Salary: Mr. Labozzetta’s base salary was increased 26.9% from $650,000 to $825,000, reflecting his performance during his first full year as President and Chief Executive Officer and in consideration of peer group market data, where his total direct compensation was below the 25^thpercentile. The other named executive officers received salary increases of 3.6%, 3.0%, 6.7%, and 3.3% for Messrs. Lyons, Kuntz, Lista, and Ms. Murray respectively. Mr. Lista’s increase reflected his performance during the year and a market adjustment.
•	2023 Cash Incentives: Annual cash incentives were paid at 50% of target for the named executive officers, with the exception of Ms. Murray and Mr. Lista, who earned cash incentives equal to 98.5% and 102.1% of target opportunity, respectively, in accordance with their performance against the incentive plans applicable to their business lines. Annual cash incentive opportunities for Messrs. Labozzetta, Lyons, and Kuntz, are based on the bank’s financial performance against goals, which was adversely impacted during 2023 by unanticipated market events including the liquidity crisis stemming from prominent large bank failures as well as the significant Federal Reserve rate hikes that impacted deposit costs and interest rate margins. These events and the negative consequences associated with them were not contemplated at the time of corporate goal setting, which were set above the prior year’s goals and actual performance, and were viewed as not within management’s control. Based on the strong performance of the executive management team in successfully navigating through the liquidity crisis, maintaining a favorable cost of deposits relative to peers, and managing credit quality under extraordinary circumstances, the Compensation Committee determined a minimum payment at threshold, or 50% of target, was appropriate. Ms. Murray’s and Mr. Lista’s cash incentive plans are based on 20% Bank performance results and 80% on their respecitve business lines results. Ms. Murray’s and Mr. Lista’s cash incentive awards reflects the Bank results at 50% and the results of their respective business lines, at 110.61% for Beacon Trust and 115.14% for Provident Protection Plus. Mr. Lista is also eligible for commissions for certain Provident Protection Plus customers. His earned commissions for 2023 were $318,000.
•	2023 Long-Term Incentives: In accordance with the defined plan, we granted our named executive officers a mix of performance-vesting stock awards (75% of target grant value) and time-vesting stock awards (25% of target grant value). The performance-based awards are eligible to vest at the end of a three-year period based upon the achievement of performance goals which include projections of a multi-year return on core average assets and core return on average tangible equity, subject to a relative total stockholder return (TSR) modifier against an indexed peer group. The time-based awards vest ratably over three years.
•	Vesting of Long-Term Incentives for the 2021-2023 Vesting Period: Performance-vesting stock awards for the 2021-2023 performance period vested on March 3, 2024. The company achieved performance at maximum level for both the cumulative average core return on average assets and the cumulative average core return on tangible equity goals. Our TSR was above the 25^thpercentile but below the 75^thpercentile so no modifier was applied to the return on average tangible equity goal. Consequently the shares vested at 150% of target.

Berkshire Hills Bancorp, Inc.	First Commonwealth Financial Corporation	Northwest Bancshares, Inc.
Brookline Bancorp, Inc.	Flushing Financial Corporation	OceanFirst Financial Corp.
Community Bank System, Inc.	Fulton Financial Corporation	S&T Bancorp, Inc.
Customers Bancorp, Inc.	Independent Bank Corp.	Valley National Bancorp
Dime Community Bancshares, Inc.	Lakeland Bancorp, Inc.	WSFS Financial Corporation
Eastern Bankshares, Inc.	NBT Bancorp Inc.

Compensation Element	Description or Purpose	Link to Performance	Fixed/ Performance- Based	Short or Long- Term
Base Salary	Attract and retain executives	Based on individual performance, experience, and scope of responsibility	Fixed	Short-Term
Annual Cash Incentive	Drive annual performance achievement of critical operating, financial, and/or strategic goals	Links executive compensation to factors that are important for the company’s success	Performance-Based	Short-Term
Long-Term Incentive Awards	Drive multi-year performance to create long-term stockholder value, align executives with stockholder interests, and serve as a retention tool through multi-year vesting	75% of the target value of equity awards is based on pre-established company performance goals	Performance-Based	Long-Term
Benefits	Supplemental Defined Contribution Benefit Plan	Non-Qualified excess plan to maintain qualified plan benefits limited by IRS rules	Fixed	Long-Term
Other Compensation	Retirement plans and health and welfare benefits on the same basis as other employees with limited perquisites	Benefit plans maintain competitive total compensation	Fixed	Short- and Long-Term

Provident Financial Services Inc DEF 14A, filed Mar 15, 2024

About this DEF 14A

Notice of

Internet Availability of Proxy Materials

Proposal 1 Election of Directors

General

Board of Directors

Nominees:

Incumbent Directors:

Executive Officers

Environmental, Social and Governance (“ESG”) Matters

Employee Experience

Attracting Top Talent

Talent Review, Development and Succession Planning

Leadership Development Programs

Internship Programs

Employee Recognition Programs

Volunteer Programs

Employee Well Being and Benefits

Work-Life Integration Programs

Financial Well-Being

Physical and Emotional Well-Being

ProvidentWomen

Provident Salutes

Diversity, Equity, and Inclusion

Our Commitment to Diversity, Equity, and Inclusion

Building a High Performing Culture

Elevating the Employee Experience

Philanthropy: The Provident Bank Foundation (the “Foundation”)

Financial Literacy Efforts

EverFi

Financial Wellness Center

Board Composition and Skills

Board Leadership Structure

Corporate Governance

Ethical Business Practices

Act with Integrity

Be Accountable

Promote Teamwork

Pursue Excellence

Build for the Future

Audit Committee Matters

Audit Committee Report

Compensation and Human Capital Committee Additional Matters

Compensation Committee Interlocks and Insider Participation

Compensation Discussion and Analysis

Overview

Executive Summary

Strategic Highlights

Key Executive Compensation Actions

Compensation Consultants

Executive Compensation Philosophy

Benchmarking and Peer Groups

Role of Management

Elements of 2023 Executive Compensation

Base Salary

Annual Cash Incentive Payment/Executive Annual Incentive Plan for 2023

Long-Term Equity Incentives

2021 Long-Term Equity Awards

Benefits

Perquisites

Elements of Post-Termination Benefits

Employment Agreements

Change in Control Agreements

Executive Stock Ownership Requirements

Prohibition on Hedging

Clawback Policies

Risk Assessment

Tax Deductibility of Executive Compensation

Compensation and Human Capital Committee Report

Executive Compensation

Summary Compensation Table

All Other Compensation

Perquisites

Plan-Based Awards

Grants of Plan-Based Awards Table for the Year Ended December 31, 2023

Outstanding Equity Awards at Year-End

Outstanding Equity Awards At December 31, 2023

Option Exercises and Stock Vested

Pension Benefits

Name	2023 Salary		2022 Salary		% Change
Anthony J. Labozzetta	$	825,000	$	650,000	26.9%
Thomas M. Lyons	$	550,000	$	531,000	3.6%
John Kuntz	$	550,000	$	534,000	3.0%
Valerie O. Murray	$	475,000	$	460,000	3.3%
George Lista	$	320,000	$	300,000	6.7%

	Annual Cash Incentive as a % of Base Salary
Participant	Threshold	Target	Maximum
President and Chief Executive Officer	37.5%	75%	112.5%
Chief Financial Officer, Chief Administrative Officer, Chief Wealth Management Officer	25%	50%	75%
President, Provident Protection Plus	20%	40%	60%

Corporate Goals	Weight	Threshold 85%		Target⁽¹⁾ 100%		Maximum 110%		Achievement*
Earnings Per Share	40%	$	2.05	$	2.42	$	2.67	$	1.84
Net Income (in millions)	40%	$	153.5	$	180.7	$	199.5	$	138.0
Efficiency Ratio⁽²⁾	20%		53.86%		50.89%		48.66%		54.84%

*	Reflects allowable adjustments under the plan, including merger-related charges.
(1)	Performance is interpolated between the Threshold and Maximum opportunity levels.
(2)	Represents the ratio of non-interest expense divided by net revenue.

		Threshold			Target		Max
Metric	Weight		50%		100%		150%		Achievement
Total Net Income (in millions without allocated expenses)	40%		$	7.5	$	8.8	$	9.7	$	8.5
AUM from New Business (in millions)	30%		$	191.0	$	225.0	$	248.0	$	239.9
Retention of Client Relationships	30%			81%		95%		105%		94%
Cash Incentive Plan Achievement Target Plus

Name	Cash Incentive		% of Salary	% of Target
Anthony J. Labozzetta	$	309,375	37.50%	50.00%
Thomas M. Lyons	$	137,500	25.00%	50.00%
John Kuntz	$	137,500	25.00%	50.00%
Valerie O. Murray	$	233,909	49.24%	98.49%
George Lista	$	130,703	41.00%	102.11%

Participant	2023 Opportunity Long-Term Equity Target Award as a % of Base Salary
President and Chief Executive Officer	100%
Chief Financial Officer, Chief Administrative Officer, Chief Wealth Management Officer	60%
President Provident Protection Plus	40%

	Performance- Vesting	Time-Vesting
Participant	Restricted Stock	Restricted Stock
President and Chief Executive Officer	75%	25%
Other Named Executive Officers	75%	25%

2023-2025 Performance Goals⁽¹⁾		Threshold	Target	Maximum
Core Return on Average Assets (ROAA)	60% Weight
Multi-Year Core ROAA		112 bps.	132 bps.	139 bps.
Core Return on Average Tangible Equity (ROATE)	40% Weight
Multi-Year Core ROATE		10.25%	14.52%	16.30%

	2023 Performance-Vesting Calibration Long-Term Equity Award as a % of Target
Participant	Threshold	Target	Maximum
All Named Executive Officers	50%	100%	150%