Document:

Exhibit

2016 DIRECTORS’ COMPENSATION POLICY

OBJECTIVE

Section 1261.22 of the Rules and Regulations of the Federal Housing Finance Agency require the Board of Directors to adopt a written policy to provide for the payment of reasonable compensation to Bank Directors for the performance of their duties as members of the Board of Directors.  Pursuant to that regulation, this Directors' Compensation Policy ("Policy") sets forth the activities and functions for which attendance is necessary and appropriate and may be compensated, and sets forth the methodology for determining the amount of compensation to be paid.  This Policy shall be reviewed annually by the Governance and Public Policy Committee. 

POLICY

Total Compensation

The compensation paid to Directors shall be in conformity with the guidelines set forth in this Policy.  The Policy guidelines on Director Compensation for 2016 are $125,000 for the Chair, $103,750 for the Vice Chair of the Board and for each Committee Chair, and $91,250 for each of the other Directors.  Compensation can exceed the guidelines set forth above based on a Director assuming additional responsibilities, such as chairing a Committee or Board meeting.

Quarterly Retainer

In order to compensate Directors for their time while serving as Directors outside of normal Committee and Board meetings, Directors shall be paid a quarterly retainer.  The retainer shall compensate Directors for their time preparing for meetings, attending Affordable Housing Advisory Council meetings, attending Bank System meetings, Board training sessions, and other activities outside of normal Committee and Board meetings.  The amount of the quarterly retainer varies depending on the responsibilities of the Director as set forth below:

Chairman                    $15,417
Vice Chairman                    $12,983
Committee Chairman                $12,983
Director                    $11,406

Board Meeting Fees 

In order to compensate Directors for their time while serving as Directors, each Director that attends a meeting of the Board of Directors (including Committee meetings and participating by telephone) shall be paid a Board Meeting Attendance Fee.  The amount of the Board Meeting Attendance Fee varies depending on the role served at the meeting.  The following Board Meeting Attendance Fees shall be paid to Directors in attendance at Board of Director's meetings (including telephonic Board meetings):

Chairman                    $5,278
Vice Chairman                    $4,318
Committee Chairman                $4,318
Director                    $3,802

In the absence of the Chairman, the Acting Chairman, whether it be the Vice Chairman or Chairman Pro Tem, shall receive the Chairman Board Meeting Attendance Fee.  Board Meeting Attendance Fees are paid per meeting day. Board meeting fees are rounded down to the nearest dollar.

Standing Committee Meeting Fees

In order to compensate Directors for their time while serving as Directors, each Director that attends a Standing Committee meeting (including participating by telephone) shall be paid a Standing Committee Meeting Attendance Fee.  The amount of the Standing Committee Meeting Attendance Fee varies among Directors in attendance at the meeting.  The following Standing Committee Meeting Attendance Fees shall be paid to Directors in attendance at Committee Director's meetings:

Chairman                    $5,278
Vice Chairman                    $4,318
Committee Chairman                $4,318
Director                    $3,802

Committee Meeting Attendance Fees are paid per meeting day, not per Committee meeting.  No Committee Attendance Fee will be paid if a Board Meeting Attendance Fee is paid for the same day. Committee meeting fees are rounded down to the nearest dollar.

Prorated Fees

A Director’s quarterly retainer fees will be prorated for the number of days in the quarter that they actually served on the Board in the event a Director leaves the Board mid-quarter. 

Methodology

In 2015, McLagan Partners conducted a director compensation study for the FHLBanks, which formed the basis for the Bank’s Director Compensation Policy, both as to the levels of compensation to be paid, as well as to the structure of how it would be paid.  For 2016, the Board did not immediately move Director compensation to the levels recommended by McLagan; instead, the Board will transition to the recommended levels over a period of several years.  

Attendance

Directors must fulfill their responsibilities by regularly attending and participating, either in person or telephonically, in at least 75 percent of meetings of the Board of Directors and assigned Committees within a given calendar year.  The Board of Directors reserves the right to direct the Corporate Secretary to adjust downward or eliminate the fourth quarter retainer payment to any Director who fails to meet this attendance requirement.

Travel

The Directors shall be reimbursed for travel, subsistence and other related expenses incurred in connection with the Directors duties under the terms and conditions of the Bank's Travel and Expense Policy; provided, however, a Director may not be paid or reimbursed for gift or entertainment expenses.

Disclosure

The Bank shall disclose in its annual report to the Federal Housing Finance Agency the following items:

		
	(i)
	the sum of the total compensation paid to its Directors in that year;

		
	(ii)
	the sum of the total expenses paid to its Directors in that year; 

		
	(iii)
	the total compensation paid to each Director in that year;

		
	(iv)
	the total expenses paid to each Director in that year; 

		
	(v)
	the total of all expenses incurred at group functions that are not reimbursed to individual Directors in that year; 

		
	(vi)
	the total number of Board meetings and Committee meetings held in that year; 

		
	(vii)
	the total number of Board and Committee meetings that each Director attended in that year; and

		
	(viii)
	a summary of this Policy. 

	
			
	APPROVAL DATE:
October 23, 2015
	POLICY OWNER:
Managing Director, General Counsel and Corporate Secretary
	REVIEWING MANAGEMENT COMMITTEE:  
Executive Committee

	APPROVAL FREQUENCY:  
Annually
	APPLICABILITY:
Bank-wide
	APPROVING BOARD COMMITTEE:
Governance & Public Policy Committee

POLICY ADMINISTRATION

Approval of Exceptions.  All exceptions under this Policy must be approved by the Managing Director, General Counsel and Corporate Secretary or the President and must be reported to the Approving Committee listed above.

Policy Interpretations.  The Managing Director, General Counsel and Corporate Secretary may make interpretations of this Policy.  All interpretations shall be summarized in a memo and maintained along with the Policy.

COMPLIANCE MONITORING

The Managing Director, General Counsel and Corporate Secretary will be responsible for monitoring the compliance with this Policy.

APPLICABLE LAWS AND REGULATIONS

12 USC § 1427
12 CFR § 1261.22

RELATED POLICIES; BANK-WIDE PROCEDURES

Code of Conduct
Policy Governance Standards

DEFINED TERMS

None

POLICY HISTORY LOG
	
			
	Date
	Change
	Notes

	October 23, 2015
	Annual approval, effective January 1, 2016
	Updated to reflect 2015 McLagan Report. Submitted to FHFA 11-5-2015

	October 24, 2014
	Annual approval
	 

	February 21, 2014
	Updated and approved
	Per request from FHFA

	December 18, 2013
	Annual approvalExhibit

UNIVERSAL DISPLAY CORPORATION
EQUITY COMPENSATION PLAN

EQUITY RETENTION AGREEMENT

This EQUITY RETENTION AGREEMENT (this “Agreement”), effective as of September 10, 2015 (the “Date of Grant”), is delivered by Universal Display Corporation (the “Company”), to Julia J. Brown (the “Grantee”).
RECITALS
The Universal Display Corporation Equity Compensation Plan (the “Plan”) provides for the grant of Stock Awards in accordance with the terms and conditions of the Plan.
The Compensation Committee of the Board of Directors of the Company (the “Committee”) has determined that it is in the best interests of the shareholders to make a significant Stock Award to the Grantee, subject to the restrictions set forth in this Agreement, as an inducement for the Grantee to:
		
	•
	Devote substantial time and attention to promotion and development of the Company at a time that is important for the future success of the Company;

		
	•
	Maintain a significant long-term ownership interest in the Company;

		
	•
	Continue in employment in order to ensure continuity of leadership and vision for the Company; and thereby

		
	•
	Increase shareholder value.

The Committee has determined that the Stock Award is reasonable and appropriate compensation for the services to be provided by the Grantee to the Company.  References in this Agreement to capitalized terms not defined herein shall have the meanings given to those terms in the Plan.
NOW, THEREFORE, the parties to this Agreement, intending to be legally bound, hereby agree as follows:
1.Stock Award.  As approved by the Committee, the Company hereby grants to the Grantee 125,000 shares of common stock of the Company, subject to the terms, conditions and restrictions set forth below and in the Plan (the “Stock Award”).

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2.    Vesting and Restriction on Disposition of the Stock Award.
(a)    The Stock Award shall become vested according to the following schedule, if the Grantee continues to be employed by the Company from the Date of Grant until the applicable vesting date.
	
		
	Vesting Date

	Vested Shares

	March 8, 2017
	25,000

	March 8, 2018
	25,000

	March 8, 2019
	25,000

	March 8, 2020
	25,000

	March 8, 2021
	25,000

The vesting of the Stock Award shall be cumulative, but shall not exceed 100% of the Stock Award.
(b)    Notwithstanding the foregoing, the Stock Award shall vest in accordance with the terms of the Grantee’s Amended and Restated Change in Control Agreement dated November 4, 2008, between the Company and the Grantee (the “Change in Control Agreement”) in the event of a Change in Control, as defined in the Change in Control Agreement (a “Change in Control”). 
(c)    Subject to subsection (b) above and to the Committee’s discretion under Section 8 of the Plan, if the Grantee ceases to be employed by the Company for any reason before the Stock Award is fully vested, the shares of the Stock Award that are not then vested shall be forfeited and must be immediately returned to the Company.  The Stock Award (whether or not vested) may also be forfeited under the circumstances described in Section 4 below.
(d)    In no event may any unvested shares of the Stock Award be assigned, transferred, pledged or otherwise disposed of or encumbered by the Grantee before the shares vest.  After shares of the Stock Award vest, the vested shares (net of any applicable tax withholding) may not be assigned, transferred, pledged or otherwise disposed of or encumbered by the Grantee until the one year anniversary of the of vesting of said shares, except in the event of the Grantee’s death or a Change in Control.  With respect to each share subject to the Stock Award, the “Restriction Period” is the period beginning on the Date of Grant and ending on the first to occur of the one year anniversary of the date of vesting of such share, the Grantee’s death or a Change in Control.  Any attempt to assign, transfer, pledge or otherwise dispose of or encumber the shares contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon such shares, shall be null, void and without effect.
3.    Issuance of Certificates.
(a)    Stock certificates representing the Stock Award, with appropriate legends reflecting the restrictions under this Agreement, may be issued by the Company to the Grantee or may be held in escrow by the Company during the Restriction Period, as determined by the 

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Committee.  When the Grantee obtains a vested right to shares of the Stock Award, the Grantee shall have the right to receive a certificate representing the vested shares (net of any applicable tax withholding), with appropriate legends reflecting the restrictions under this Agreement.  During the Restriction Period, the Grantee shall receive any cash dividends with respect to the shares of the Stock Award, may vote the shares of the Stock Award and may participate in any distribution pursuant to a plan of dissolution or complete liquidation of the Company.  In the event of a dividend or distribution payable in stock or other property or a reclassification, split up or similar event during the Restriction Period, the shares or other property issued or declared with respect to the Stock Award shall be subject to the same terms and conditions relating to vesting and transfer as the shares to which they relate.
(b)    The Company’s obligation to deliver shares pursuant to the Stock Award shall be subject to all applicable laws, rules and regulations and also to such approvals by governmental agencies as may be deemed appropriate to comply with relevant securities laws and regulations.
4.    Clawback.  Notwithstanding any provisions of this Agreement to the contrary, with respect to each share subject to the Stock Award  (whether or not vested), the share shall be forfeited, and must be immediately returned to the Company, upon request by the Committee, in the event that, during the Restriction Period for such share, (i) the Grantee materially breaches a written non-competition, non-solicitation or confidentiality agreement between the Grantee and the Company and the Grantee fails to cure the breach (if such breach is curable) within 30 days after receiving written notice from the Company of the breach; (ii) the Grantee commits an act of dishonesty, fraud, embezzlement or theft in connection with his duties or in the course of the Grantee’s employment with the Company; (iii) the Grantee is convicted of a felony or a crime of moral turpitude; or (iv) the Grantee engages in actions that result in a material restatement of the financial statements of the Company, except that any “restatement” as defined herein shall not include a restatement due to retrospective adoption of new accounting standards or changes or transactions where GAAP requires retrospective adoption.  
5.    Grant Subject to Plan Provisions.  This grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan.  The grant is subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) the registration, qualification or listing of the shares, (ii) changes in capitalization of the Company, and (iii) other requirements of applicable law.  The Committee shall have the authority to interpret and construe the grant pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.
6.    Tax Withholding.  Withholding for any federal, state, local or other taxes required with respect to the vesting of the Stock Award shall be governed by the Plan, except that the Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Stock Award by having shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax liabilities.  The Company shall establish procedures for such an election by the Grantee.

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7.    No Employment or Other Rights.  This grant shall not confer upon the Grantee any right to be retained by or in the employ of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee’s employment at any time. The right of the Company to terminate at will the Grantee’s employment at any time for any reason is specifically reserved.
8.    Assignment by Company.  The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Company without the Grantee’s consent.
9.    Applicable Law.  The validity, construction, interpretation and effect of this instrument shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts of laws provisions thereof.
10.    Notice.  Any notice to the Company provided for in this instrument shall be addressed to the Company care of the Vice President Legal at 375 Phillips Boulevard, Ewing, New Jersey 08618, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing.  Any notice shall be delivered by hand or by a recognized courier service such as FedEx or UPS, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this instrument, and the Grantee has placed his signature hereon.
UNIVERSAL DISPLAY CORPORATION
By:     /s/ Sidney D. Rosenblatt    

Name:     Sidney D. Rosenblatt    

Title:     Executive Vice President and CFO    

Date:     September 11, 2015    

I, Julia J. Brown, hereby accept the grant of the Stock Award described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement.  I hereby further agree that all of the decisions and determinations of the Committee with respect to the Stock Award and this Agreement shall be final and binding.

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/s/ Julie Brown    
Grantee

September 11, 2015    
Date

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