Document:

pcsb-ex101_243.htm

 

Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

 

PCSB BANK

 

 

INCENTIVE COMPENSATION PLAN POLICY

 

 

SEPTEMBER 20, 2017

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Plan Objective

 

The Incentive Compensation Plan (“ICP”) is intended to encourage alignment with vision and strategy.  It is designed to provide an effective means of encouraging, recognizing and rewarding outstanding performance on the part of the Bank’s participating employees for their work in producing results that meet plan objectives.  The plan is designed to:

 

	
 
	
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Focus on critical business initiatives and objectives articulated in the Strategic Business Plan

	
 
	
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Be supported by performance goals which can easily be assessed.

	
 
	
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Include goals that are controllable by incentive plan participants

	
 
	
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Be clearly defined and easy to understand.

 

Plan Oversight

 

The President & CEO will administer the ICP with oversight by the Compensation Committee (“Committee”) of the Board of Directors.  The Board of Directors is responsible for all incentive actions regarding the President & CEO and the Committee is responsible for reviewing the President & CEO’s recommendations for other members of the Executive Management Team.

 

The Committee has overall control of the plan and has full power and authority to:

 

	
 
	
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Interpret the Plan’s provisions

	
 
	
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Approve the Plan participants

	
 
	
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Act on the President & CEO’s recommendations

	
 
	
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Amend or terminate the Plan

	
 
	
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Approve the award for the President & CEO

 

The Administration of the Plan

 

Awards are earned by measuring several performance areas as determined by the Committee, President & CEO and Executive Management Team.  During the annual business planning process, critical organization-wide, department and individual measures and supporting goals are determined.  Once the Board of Directors accepts the Budget and Business Plan, it is the President & CEO’s responsibility to set individual goals for the participants.  Each participant is assigned multiple goals with at least one being a corporate goal (such as net income).  The measures and goals are weighted to reflect the importance of each goal to the overall success of the Bank; all goals have a weight of 10% or more.

 

Each goal should have about a 60% to 70% probability of attainment.  Performance is assessed at the end of each fiscal year.  The degree to which goals have been achieved will be assessed by the President & CEO and the Committee.

 

Incentive awards may not be paid unless a threshold of financial performance is met.  The Committee, upon recommendation by the President & CEO may provide incentive awards to 

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selected participants in extraordinary circumstances.  Generally, such discretionary awards would not exceed the threshold award level.

 

The Plan Mechanics and Payouts

 

The Plan Design, Threshold and Maximum Goal values/ranges are set by Management and approved annually by the Committee and are based on a formula of 12.5% +/- around the Target goal.

 

At the time of the adoption of the plan by the Board of Trustees, (August 16, 2017) the following values/ranges were approved based on recommendations by the Committee’s compensation consultant (Arthur Warren Associates) utilizing peer data information.

 

 

										
	
 
	
 
	
 
	
Below
	
 
	
 
	
 
	
 
	
 
	
Maximum

	
 
	
 
	
 
	
Threshold
	
 
	
Threshold
	
 
	
Target
	
 
	
& Above

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Joseph Roberto
	
President & CEO
	
0%
	
 
	
15%
	
 
	
30%
	
 
	
45%

	
Scott Nogles
	
EVP CFO, Treas
	
0%
	
 
	
10%
	
 
	
20%
	
 
	
30%

	
Mike Goldrick
	
EVP CLO
	
0%
	
 
	
10%
	
 
	
20%
	
 
	
30%

	
Cliff Weber
	
SVP CRO GC
	
0%
	
 
	
10%
	
 
	
20%
	
 
	
30%

	
Rich Petrone
	
SVP CCO
	
0%
	
 
	
10%
	
 
	
20%
	
 
	
30%

	
Robert Farrier
	
SVP Br Admin
	
0%
	
 
	
7.5%
	
 
	
15%
	
 
	
22.5%

	
Ruth Leser
	
SVP HR Corp Secy
	
0%
	
 
	
7.5%
	
 
	
15%
	
 
	
22.5%

	
Carol Bray
	
SVP IT Manager
	
0%
	
 
	
7.5%
	
 
	
15%
	
 
	
22.5%

	
Dave McNamara
	
SVP Compliance
	
0%
	
 
	
7.5%
	
 
	
15%
	
 
	
22.5%

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

The measures used in the ICP are defined by a goal with an associated range appropriate to the responsibilities of the plan participant and established at the beginning of the performance period.  Once these measures and goals have been determined, each participant’s goals are weighted to signify importance.  The goals are internally directed and are based on the bank’s strategic plan.  There is at least one measure that is common to each plan participant to insure that each participant understands how their role impacts the entire Bank.  This common measure is net income and is weighted differently depending upon the actual position responsibilities.

 

Specific goals for each of the measures included in the plan are developed by Management through the Bank’s Board approved Strategic Plan and reviewed by the Committee.  Approval of the President & CEO’s measures is done by the Committee, in discussion with the Board of Directors.  The following guidelines are used in this regard:

 

	
 
	
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The goals should integrate with and support the Strategic Plan

	
 
	
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The goals are not to be confused with broad-based position responsibilities

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The goals must be documented in clear, concise terms which describe specific measures or indicators of success together with a time schedule for completion.

 

Significant Plan Definitions

 

	
 
	
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Plan Year:  Is the performance measurement period running from July 1 through June 30

	
 
	
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Threshold:  Level of performance at which awards begin to be paid.  

	
 
	
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Target:  Level at which Bank meets the annual strategic business plan.

	
 
	
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Maximum and Above:  Level of performance better than planned level.

	
 
	
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Net Income:  Net Income after taxes not including unique transactions deemed by the Committee and Board of Directors as appropriate.

	
 
	
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Net Interest Margin:  Total interest income less Total Interest Expense as a percent of Average Earning Assets

	
 
	
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Loan Growth:  Increase in total loans year over year.

	
 
	
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Deposit Growth:  Increase in total deposits year over year.

	
 
	
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Efficiency Ratio:  “Core Operating Efficiency Ratio” as reported on the Bank’s SEC financial filings.

	
 
	
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Qualitative Measure:  Broad based specific position responsibilities evaluated by the President & CEO for each participant.

	
 
	
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Organic Loan Origination:  Internally driven gross loan originations excluding whole loan or participation purchases.

	
 
	
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Core Deposit Growth:  Internally driven deposit growth excluding certificates of deposit.

	
 
	
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Base Salary:  For purposes of the ICP payment it is defined as earnings paid in the plan year, excluding bonuses and any other compensation.

 

Eligibility

 

New participants must start before July 1st, the beginning of the Bank’s fiscal year, in order to be eligible to participate.  Participants must be an active employee and on the payroll as of the date incentive awards are paid to receive an incentive award.  Incentive awards are forfeited if employment terminates voluntarily or involuntarily before the date the incentive award is paid, even if the participant was employed on the last day of the Plan Year.

 

Award Payments

 

Incentive awards will be calculated after fiscal year end financial information has been reviewed and results are certified.  Approved awards will be paid once a year within two and a half months after the fiscal year in which awards are earned.  At the time a cash payment is made, all applicable taxes (federal, state, FICA) will be withheld from the award.

 

Incentive awards are not guaranteed and may not be paid in any year if the Bank has a Camels composite rating of less than satisfactory or the Bank is subject to regulatory operating restrictions.

 

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The ICP is not a contract between employer and employee and any alteration and or inappropriate manipulation of performance or financial results, or any other infraction of recognized ethical business standards, will subject the participant to disciplinary action up to and including termination of employment.

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Exhibit 10.2

PCSB Financial Corporation

Compensation Clawback Policy

Overview and Purpose

The Board of Directors of PCSB Financial Corporation (the “Company”) believes it to be in the best interests of the Company and its stockholders to keep current with “best practices” in compensation matters and risk management.  The Board, therefore, hereby adopts this Compensation Clawback Policy (this “Policy”) to increase incentives for senior management to take full account of risks to the Company and its stockholders in its decision-making, and to reduce such risks wherever practicable.

This Policy applies to current and former “executive officers” as defined under Section 16 of the Securities Exchange Act of 1934, as amended (“Covered Officers”).  This definition includes the Company’s president, principal financial officer, principal accounting officer, any vice-president in charge of a principal business unit, division or function, and any other person who performs policy-making functions for the Company.  

The Board delegates to the Compensation Committee of the Board the authority and responsibility to administer this Policy, including the determination as to who is considered a Covered Officer subject to this Policy.  

Effect of Restatement of Company Financial Statements

If the Compensation Committee determines that material noncompliance of the Company with any financial reporting requirement under the federal securities laws required the Company to prepare an accounting restatement (“Covered Misconduct”), the Compensation Committee shall, in its discretion, refer such matter and its recommendation as to an appropriate remedy to the full Board for consideration.  The Board, upon review of the Compensation Committee’s recommendations and such independent inquiry or investigation as it determines to be advisable, shall: (i) confirm that Covered Misconduct occurred; and (ii) determine such action as it deems necessary to remedy the Covered Misconduct and prevent its recurrence, including the recovery of certain compensation, as set forth in this Policy.   

Compensation Subject to Recovery; Remedies  

The Compensation Committee and the Board shall have full discretion in remedying Covered Misconduct under this Policy.  Among other things, to the extent permitted by applicable law, the Compensation Committee and the Board may require reimbursement of any performance-based compensation (as defined below) paid to, earned or vested by, the Covered Officer, to the extent such payments and grants were made during the three-fiscal year period preceding the date on which the Company is required to prepare an accounting restatement based on the erroneous data (the “Covered Period”), provided that 

 

the Compensation Committee or Board determine that the amount of any such performance-based compensation actually paid or awarded to the Covered Officer (the “Awarded Compensation”) would have been a lower amount had it been calculated based on such restated financial statements.   

Compensation Committee and Board Discretion

The Compensation Committee and the Board shall have full discretion to decline to seek recovery under this Policy.  In exercising such discretion, the Compensation Committee and the Board may consider the following factors: (i) the likelihood of success in achieving the recovery, given the anticipated cost and management effort required; (ii) whether the assertion of a claim for recovery may prejudice the interests of the Company, including in any related proceeding or investigation; (iii) the passage of time since the Covered Misconduct or (iv) any pending legal proceeding relating to the Covered Misconduct. 

Due Process Rights

Before the Compensation Committee or the Board determines to seek recovery pursuant to this Policy, the Covered Officer will be provided written notice and the opportunity to be heard at a meeting of the Compensation Committee (which may be in-person or telephonic, as determined by the Compensation Committee).

Manner of Repayment

If the Compensation Committee or Board determines to seek a recovery pursuant to this Policy, it shall make a written demand for repayment from the Covered Officer and, if the Covered Officer does not promptly tender repayment in response to such demand, and the Compensation Committee or Board determines that he or she is unlikely to do so, the Compensation Committee or Board may engage counsel and take any action it deems necessary and proper against the Covered Officer to obtain such repayment.

Performance-Based Compensation

For purposes of this policy, the term “performance-based compensation” means all bonuses and other incentive and equity compensation awarded to a Covered Officer, the amount, payment and/or vesting of which was calculated based wholly or in part on the application of objective performance measured during any part of the period covered by the restatement.   

 

Adopted: September 20, 2017

 

[Company Letterhead]

 

 

PCSB Financial Corporation

Compensation Clawback Policy 

 

Adopted by the Board of Directors:  September 20, 2017

 

As a condition of receiving a potential bonus or incentive compensation from PCSB Financial Corporation (the “Company”) or PCSB Bank (the “Bank”), the undersigned agrees that any such bonus or incentive compensation is subject to recovery or “clawback” pursuant to the terms of the PCSB Financial Corporation Compensation Clawback Policy attached hereto (the “Policy”). In addition, the undersigned agrees that any equity compensation awarded to the undersigned after the date of this Acknowledgement shall be subject to clawback pursuant to the Policy.  To the extent the Company’s recovery right conflicts with any other contractual rights I may have with the Company or the Bank, I understand that the terms of the Policy shall supersede any such contractual rights.  The terms of the Policy shall apply in addition to any right of recoupment against me under applicable law.    

 

Acknowledgement:

 

I acknowledge that I have reviewed the Policy and I agree to abide by the provisions of the Policy.

 

 

_______________________________________________________

EmployeeDate

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