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.       )

 

Payment of Filing Fee (Check the appropriate box):

[X]	No fee required.

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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 __________________________________________________________________

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Fee paid previously with preliminary materials: _________________________________

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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:_________________________________________

 

December 30, 2014

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of Prudential Bancorp, Inc.  The meeting will be held at the Holiday Inn – Philadelphia Stadium, located at 900 Packer Avenue, Philadelphia, Pennsylvania, on Monday, February 9, 2015 at 11:00 a.m., Eastern Time.

The Board of Directors unanimously recommends a vote "FOR" election of our two nominees for director for a three-year term expiring in 2018, "FOR" the approval of the Prudential Bancorp, Inc. 2014 Stock Incentive Plan and "FOR" ratification of the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2015.  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 proxy card today and return it in the envelope provided or vote over the Internet or by telephone, if available, 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. is sincerely appreciated.

	Very truly yours,
	Thomas A. Vento
	Chairman, President and Chief Executive Officer

 

 

 

PROXY STATEMENT

OF

PRUDENTIAL BANCORP, INC.

_____________________

General.  This proxy statement is furnished to holders of common stock of Prudential Bancorp, Inc., 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 Monday, February 9, 2015 at 11:00 a.m., Eastern Time, and any adjournment thereof, for the purposes set forth in the attached Notice of Annual Meeting of Shareholders.  This proxy statement is first being mailed to shareholders on or about December 30, 2014.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on February 9, 2015.  This proxy statement and our 2014 Annual Report on Form10-K are available through our website at www.prudentialsavingsbank.com under the "Investor Relations" Quick Link.

What is the purpose of the annual meeting?

At our annual meeting, shareholders will act upon the matters outlined in the attached notice of meeting consisting of the proposals to:

·	elect two directors for a three-year term expiring in 2018;

·	approval of the Prudential Bancorp, Inc. 2014 Stock Incentive Plan; and

·	ratify the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2015.

In addition, management may 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 annual meeting, December 19, 2014, are entitled to vote at the meeting. On the record date, we had 9,366,909 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.  You may also vote over the Internet or by telephone by following the instructions on your proxy card or voting instruction form. This will enable your shares to be represented and voted at the annual meeting.

 

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Broker non-votes are shares held by brokers or nominees as to which voting instructions have not been received from the beneficial owners or the persons entitled to vote those shares and the broker or nominee does not have discretionary voting power under rules applicable to broker-dealers. Under these rules, proposal one, the election of directors, and proposal two, the approval of the Prudential Bancorp, Inc. 2014 Stock Incentive Plan, are not items on which brokerage firms may vote in their discretion on behalf of their clients if such clients have not furnished voting instructions.

Your broker may vote in his or her discretion on the ratification of the appointment of our independent registered public accounting firm if you do not furnish instructions.

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 about 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 proxy card.

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First, you may complete and submit a new proxy card or vote over the Internet or by telephone before the annual meeting.  Any earlier proxies will be revoked automatically.

•

Second, you may send a written notice to our Corporate Secretary, Ms. Regina Wilson, Prudential Bancorp, Inc., 1834 West Oregon Avenue, Philadelphia, Pennsylvania 19145, in advance of the annual meeting stating that you would like to revoke your proxy.

•

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 on how 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.

 

 

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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, FOR approval of the Prudential Bancorp, Inc. 2014 Stock Incentive Plan and FOR ratification of the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2015.

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 2018, and until their successors are elected and qualified.  The affirmative vote of a majority of the votes cast by shareholders entitled to vote at the annual meeting is required for approval of the proposals to approve the Prudential Bancorp, Inc. 2014 Stock Incentive Plan and to ratify the appointment of S.R. Snodgrass, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2015. Under the Pennsylvania Business Corporation Law, abstentions and broker non-votes do not constitute votes cast and will not affect the vote required for the proposals to approve the 2014 Stock Incentive Plan and to ratify the appointment of the independent registered public accounting firm.

 

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.  One class is elected annually. At this annual meeting, you will be asked to elect two directors for a three-year term expiring in 2018, and until their successors are elected and qualified.

Our Nominating and Corporate Governance Committee has recommended the re-election of Messrs. Vento and Hosier as directors.  No 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, Hosier, Miller, Mulcahy and Pollack are independent directors as defined in the Nasdaq Stock Market 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 either of the nominees may not be able to serve as a director if elected.

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Mr. Dennis Pollack was appointed to the Board of Directors in the class of directors whose term expires at the annual meeting of shareholders to be held in 2016 pursuant to an agreement entered into on August 29, 2014 with Seidman and Associates L.L.C., Seidman Investment Partnership, L.P., Seidman Investment Partnership II, L.P., Seidman Investment Partnership III, L.P., LSBK06-08, Broad Park Investors, CBPS, L.L.C., 2514 Multi-Strategy Fund, L.P., Veteri Place Corporation, Ms. Sonia Seidman, Mr. Lawrence B. Seidman and Mr. Pollack (collectively, the "Seidman Group"). Pursuant to the Agreement, Mr. Pollack was also appointed to the Board of Directors of Prudential Savings Bank for a similar term.

During the term of the Agreement, which is scheduled to continue through the date of the Prudential Bancorp's Annual Meeting of Shareholders held in 2016, the Seidman Group will not, among other things, solicit proxies in opposition to any recommendations or proposals of Prudential Bancorp's Board of Directors, initiate or solicit shareholder proposals or seek to place any additional representatives on our Board of Directors other than Mr. Pollack (or any replacement director), oppose any proposal or director nomination submitted by the Board of Directors to our shareholders, vote for any nominee to our Board of Directors other than those nominated or supported by the Board of Directors, seek to exercise any control or influence over the management of Prudential Bancorp or the Boards of Directors of Prudential Bancorp or Prudential Savings Bank (although nothing in the Agreement prevents Mr. Pollack, from expressing his views to other members of the Board at duly convened meetings of the Boards of Directors), propose or seek to effect a merger or sale of Prudential Bancorp or initiate litigation against Prudential Bancorp. In addition, during the term of the Agreement, the Seidman Group has agreed to vote in favor of the Board of Directors' nominees for election or re-election as directors of Prudential Bancorp. The Seidman Group agreed also to vote in favor of the Prudential Bancorp, Inc. 2014 Stock Incentive Plan.

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The following tables present information concerning our nominees for director and our continuing directors, all of whom also serve as directors of Prudential Savings Bank.  For Messrs. Balka and Vento, the indicated period of service as a director includes service as a director of Prudential Savings Bank prior to the organization of the predecessor to Prudential Bancorp in 2004. Ages are reflected as of September 30, 2014.

Nominees for Director for Three-Year Terms Expiring in 2018

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 Terms Expire in 2016

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Directors Whose Terms Expire in 2016 (continued)

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Committees and Meetings of the Board of Directors

During the fiscal year ended September 30, 2014, the Board of Directors of Prudential Bancorp met 15 times, including special meetings. 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.  Each of the committees operates in accordance with a written charter which is available on our website at www.prudentialsavingsbank.com.  The following table sets forth the membership of such committees as of the date of this proxy statement.

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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 five directors, each of whom is an independent director as defined in the Nasdaq Stock Market 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. The Audit Committee met eight times in fiscal 2014.

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 former officer or employee of Prudential Bancorp, Prudential Savings Bank or any subsidiary and all members are independent as defined in the Nasdaq Stock Market listing standards.  Each of the members is independent as defined in the Nasdaq Stock Market listing standards.  The Compensation Committee held nine meetings in fiscal 2014 to consider management compensation matters.

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 Stock Market listing standards.  The Nominating and Corporate Governance Committee met twice in fiscal 2014.

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Board Leadership Structure

Mr. Vento serves as the Chairman, President and Chief Executive Officer of Prudential Bancorp as well as Prudential Savings Bank.  The Board of Directors of Prudential Bancorp has determined that the appointment of our President and Chief Executive Officer as the Chairman of the Board of Prudential Bancorp promotes a unity of vision for Prudential Bancorp as it continues to implement its strategic goals.  In addition, the President and Chief Executive Officer is the director most familiar with our business and operations and is best situated to lead discussions on important matters affecting the business of Prudential Bancorp. By combining the President and Chief Executive Officer and Chairman positions, the Board believes there is a firm link between management and the Board which promotes the development and implementation of our corporate strategy and goals. The Board is aware of the potential conflicts that may arise when an insider chairs the Board, but believes these will be limited by existing safeguards which include the fact that as a bank holding company, the operations of Prudential Bancorp are highly regulated.

Board's Role in Risk Oversight

Risk is inherent with every business, particularly financial institutions. We face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputational risk.  Management is responsible for the day-to-day management of the risks that Prudential Bancorp faces, while the Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management.  In its risk oversight role, the Board of Directors ensures that the risk management processes designed and implemented by management are adequate and functioning as designed.

Two of our senior executive officers, Messrs. Corrato and Vento, serve on our Board of Directors.  Other members of our senior management regularly attend meetings of the Board of Directors and are available to address any questions or concerns raised by the Board of Directors on risk management or other matters.  Prudential Savings Bank has established an Asset-Liability Committee, a Loan Quality Committee and an Investment Committee composed of members of senior management, including Messrs. Corrato and Vento.  The independent directors work together to provide strong, independent oversight of Prudential Bancorp's management and affairs.

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 (other than Mr. Pollack who was not a director at such time) attended the Annual Meeting of Shareholders held in February 2014.

Directors' Compensation

The following table sets forth certain information regarding the compensation paid to our non-employee directors during fiscal year 2014.

 

(footnotes on following page)

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__________________

(1)

Represents the aggregate grant date fair value of the options to purchase 13,345 shares granted to Mr. Miller with an exercise price of $10.68 per share. The option vests pro rata over five years commencing on the first anniversary of the date of grant on January 6, 2014.

(2)

Represents for Mr. Balka, his annual retainer of $60,375 as solicitor of Prudential Savings Bank and $71,599 for additional legal services.

(3)

Mr. Pollack was appointed to the Board in November 2014 and thus did not receive any compensation during fiscal 2014.

We do not pay separate compensation to directors for their service on the Board of Directors of Prudential Bancorp.  For fiscal 2014, members of Prudential Savings Bank's Board of Directors received an annual retainer of $25,200.  Members also received $2,100 per special meeting attended.  For fiscal 2014, members of the Audit Committee, Executive Committee (other than Messrs. Corrato and Vento) and the Compensation Committee received fees of $900 per meeting attended.  As solicitor of Prudential Savings Bank, in fiscal 2014 Mr. Balka received an annual retainer of $60,375 as well as fees earned for providing additional legal services.  He also received the normal meeting fee for service on the Executive Committee and the normal annual Board retainer of $25,200.  For fiscal 2015, Mr. Balka will no longer receive an annual retainer. As Chairman of the Audit Committee, Mr. Fanelli received an annual retainer of $10,000 in fiscal 2014, which will remain the same for fiscal 2015. As Chairman of the Compensation Committee, Mr. Mulcahy received an annual retainer of $7,500 in fiscal 2014 and will receive the same amount in fiscal 2015. Board fees are subject to periodic adjustment by the Board of Directors.  For fiscal 2015, the annual retainer and special meeting fees will increase to $28,200 and $2,350, respectively; committee meeting fees will remain the same for fiscal 2015.

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, Hosier, Miller and Mulcahy, 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 2014 was a current or 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.  Additionally, there were no Compensation Committee "interlocks" during fiscal 2014, 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 Prudential Bancorp's Compensation Committee.

Director Nominations

Recommendations for nominations of persons to serve as directors of Prudential Bancorp are made by the Nominating and Corporate Governance Committee of the Board of Directors and are approved by the entire Board.  The Board of Directors adopted a written charter of the Nominating and Corporate Governance Committee 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 by considering:

o	individuals with various and relevant career experience;

o	relevant technical skills;

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o	industry knowledge and experience;

o	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);

o	local or community ties; and

·	minimum individual qualifications, including:

o	strength of character;

o	mature judgment;

o	familiarity with our business and industry;

o	independence of thought; and

o	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."

Executive Officers Who Are Not Also 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, 2014.

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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, S.R. Snodgrass, P.C., the matters required to be discussed by the Statement on Auditing Standards ("SAS") No. 61, "Communication with Audit Committees" (AICPA, Professional Standards, Vol. 1. AU Section 380), as amended by SAS No. 90, "Audit Committee Communications" as adopted by the Public Company Accounting Oversight Board in Rule 3526.  The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding S.R. Snodgrass, P.C.'s communications with the Audit Committee concerning independence and has discussed with S.R. Snodgrass, P.C., their 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 2014 for filing with the Securities and Exchange Commission.

Members of the Audit Committee

A. J. Fanelli, Chairman

John C. Hosier

Bruce E. Miller

Francis V. Mulcahy

Dennis Pollack

 

 

 

 

 

 

 

 

 

 

 

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Summary Compensation Table

The following table summarizes the total 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, 2014 and 2013 to the principal executive officer and the two other executive officers of Prudential Savings Bank during fiscal 2014 whose total compensation exceeded $100,000, collectively referred to as our "named executive officers."  Prudential Bancorp has not paid separate cash compensation to our officers.

___________________

(1)	Represents bonuses earned in fiscal 2014 which were paid in fiscal 2015.  Under the Prudential Savings Bank 2014 Bonus Program, each named executive officer was eligible to receive a fixed proportionate allocation of the bonus pool for employees based on salary and length of service.

(2)

Reflects the grant date fair value in accordance with FASB ASC Topic 718 for awards of restricted stock and stock options that were granted during the fiscal 2013. The valuation of the restricted stock awards is based on a grant date fair value of $7.25. The assumptions used in valuing the stock option awards are set forth in Note 12 to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended September 30, 2014.

(3)	Includes the fair market value on December 30, 2013 of the 1,547, 1,366 and 952 shares allocated to the Employee Stock Ownership Plan accounts of Messrs. Vento, Corrato and Fratanduono, respectively, based on a value of $10.79 per share on December 31, 2013.

(4)

Includes for each of Messrs. Vento and Corrato an aggregate of $29,400 paid in fiscal 2014 as board meeting fees, reimbursement of Mr. Vento's Philadelphia city wage taxes and the value of the use of automobiles by and the provision of health insurance premiums for Messrs. Vento and Corrato.  The value of the use of automobiles is based on depreciation, as well as insurance, fuel and maintenance expense.

Narrative to Summary Compensation Table

The Compensation Committee, upon review of Mr. Vento's performance and other factors, approved a base salary of $343,105 for Mr. Vento in fiscal 2014, which increased 3.0% from $333,111 in fiscal 2013.  In addition, the Compensation Committee approved base salaries for Messrs. Corrato and Fratanduono for fiscal 2014 of $213,632 and $159,271, respectively, reflecting increases of 3.0% and 10.5%, respectively.  The dollar amounts of their base salaries were generally determined by the Compensation Committee's review of the local market for chief executive officer, chief financial officer and chief lending officer compensation and were intended to ensure that Prudential Savings Bank remained competitive in attracting and retaining qualified senior executive officers.  The Compensation Committee approved the payment of bonuses with respect to fiscal 2014.  For fiscal 2014, a bonus pool of $175,000 was established in December 2014.  The bonus pool was distributed to all eligible employees, including Messrs. Vento, Corrato and Fratanduono, based on salary and length of service. No grants of equity compensation were made during fiscal 2014 to the executive officers. In addition, in fiscal 2014, Messrs. Vento and Corrato each received the use of an automobile to assist them in fulfilling their duties.

 

 

 

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At the Annual Meeting of Shareholders of Prudential Bancorp held on February 11, 2013, Prudential Bancorp's shareholders recommended, on an advisory basis, that the future advisory votes on executive compensation should be held every three years.  Consistent with the shareholder recommendation, the Board of Directors of Prudential Bancorp determined that it will hold an advisory vote on executive compensation every three years. The next advisory vote on the compensation of the named executive officers will be presented at the annual meeting expected to be held in February 2016. Prudential Bancorp is required to hold shareholder advisory votes on the frequency interval every six years.

Outstanding Equity Awards at Fiscal Year-End

The table below sets forth outstanding equity awards at September 30, 2014 to our executive officers named in the Summary Compensation Table above, which grants were made in fiscal 2009 and fiscal 2013. The option awards, and exercise price, and stock awards have been adjusted to reflect the second step conversion completed on October 9, 2013.

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(1)

Each of the option awards and stock awards outstanding as of October 9, 2013 was converted into an option award or stock award to purchase a number of shares of common stock of Prudential Bancorp equal to the product of the number of shares of common stock multiplied by the exchange ratio of 0.9442, rounded down to the nearest whole share. Each option after the exchange has an adjusted exercise price equal to the quotient obtained by dividing the option exercise price by the exchange ratio of 0.9442, rounded up to the nearest whole cent.

(2)	Calculated by multiplying the closing market price per share of our common stock on September 30, 2014, which was $12.23, by the applicable number of shares of common stock underlying the named executive officer's unvested stock awards.

(3)	Granted pursuant to our 2008 Stock Option Plan and 2008 Recognition and Retention Plan, as applicable, and vested at a rate of 20% per year commencing on January 5, 2010, becoming fully vested January 5, 2014.

(4)	Granted pursuant to our 2008 Stock Option Plan and 2008 Recognition and Retention Plan, as applicable, and vest at a rate of 20% per year commencing on January 5, 2014.

Employment Agreements

Prudential Savings Bank entered into amended and restated employment agreements on May 20, 2013 with Messrs. Vento and Corrato as well as an employment agreement with Mr. Rothkopf. Prudential Savings Bank also entered into an amended and restated employment agreement on April 16, 2014 with Mr. Fratanduono. The employment agreements have a term of three years, with respect to Mr. Vento, and two years, with respect to Messrs. Corrato, Fratanduono and Rothkopf.  The term is extended annually on each December 31^st 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 not be extended.  The terms of the employment agreements provide for an initial annual base salary, which is reviewed annually 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 agreements, or termination by Prudential Savings Bank for cause, disability, retirement or death.

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In the event that the executive terminates his employment because of failure to comply with any material provision of the employment agreement by Prudential Savings Bank or the employment agreement is terminated by Prudential Savings Bank other than for cause, disability, retirement or death, the executive will be entitled to the payment of two (Messrs. Vento, Corrato and Fratanduono) and one (Mr. Rothkopf) 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 (Messrs. Vento, Corrato and Fratanduono) or one year (Mr. Rothkopf) 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, the executive will be entitled to a cash severance payment equal to three times (Messrs. Vento and Corrato), two times (Mr. Fratanduono) and one times (Mr. Rothkopf) their respective average annual cash compensation and the maintenance, as described above, of the employee benefit plans for three years, two years and one year, 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.

The agreement with Mr. Fratanduono was amended and restated in April 2014 primarily to revise the severance provisions, increasing the multiplier from one times to two times.

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.  Full-time 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 or after the age of 65, or if later, the fifth anniversary of the participant's initial participation in the retirement plan (i.e., the 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.  The retirement plan provides a benefit of 1.50% of a participant's highest 5-year average earnings, multiplied by the participant's years of benefit service. Earnings are defined as base salary, subject to an annual Internal Revenue Service limit of $260,000 on earnings for 2014.  Annual benefits provided under the retirement plan also are subject to Internal Revenue Service limits, which vary by age and benefit payment type. 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).

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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 the officer's salary, other than Mr. Vento whose benefit totaled $141,853 for 2014, 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 Savings Bank.  Upon termination, Prudential Savings Bank may surrender the policy and collect the cash surrender value.

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 made on substantially the same terms as those prevailing at the time for comparable loans with persons not related to Prudential Savings Bank except that Prudential Savings Bank provides for a reduced interest rate of one hundred basis points to all employees, officers and directors for a first mortgage on their primary residence and waives the origination fees, other than appraisal and document review fees. Other than as described below, it is the belief of management that these loans neither involve more than the normal risk of collectability nor present other unfavorable features.

The table below lists the outstanding loans made by Prudential Savings Bank to related persons, where the amount involved exceeds $120,000 and the interest rate was reduced and loan origination fee was waived.

 

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Two commercial mortgage loans and two lines of credit aggregating approximately $576,008 and $589,375, at September 30, 2014 and 2013, respectively, were extended to a company in which Mr. Vento's daughter was a principal.  In addition, Prudential Savings Bank also extended a single-family residential mortgage loan which had a principal balance of approximately $154,002 and $157,300 at September 30, 2014 and 2013, respectively. All of the loans were restructured during fiscal 2013 and were current at September 30, 2014. However, due to the payment history of the loan relationship, all five loans were classified as substandard and on non-accrual as of September 30, 2014 and 2013.  During fiscal 2014 and 2013, the highest aggregate principal balance of the five loans was approximately $746,675 and $756,638, respectively, principal paid was approximately $16,665 and $16,203, respectively, and interest paid was $34,272 and $57,743, respectively.  The two commercial mortgage loans bear interest at 5.125% (for both 2014 and 2013), the residential loan bears interest at 3.0% (for both 2014 and 2013), and both lines of credit bear interest at 5.25%.  All five loans were made on substantially the same terms, including interest rate and collateral as loans with persons not related to Prudential Savings Bank.  Prudential Savings Bank currently does not anticipate incurring any loss of principal or interest on the five loans.

Description of the Incentive Plan

The following description of the 2014 Stock Incentive Plan is a summary of its terms and is qualified in its entirety by reference to the 2014 Stock Incentive Plan, a copy of which is attached to this proxy statement as Appendix A.

General.  The Board of Directors has adopted the 2014 Stock Incentive Plan (the "Incentive Plan") which is designed to attract and retain qualified personnel in key positions, provide officers and key employees with a proprietary interest in Prudential Bancorp as an incentive to contribute to our success and reward key employees for outstanding performance.  The Incentive Plan is also designed to attract and retain qualified directors for Prudential Bancorp.  The Incentive Plan provides for the grant of incentive stock options intended to comply with the requirements of Section 422 of the Internal Revenue Code, non-qualified or compensatory stock options and share awards of restricted stock, which may be based upon performance goals. Share awards and stock options under the Incentive Plan will be available for grant to officers, key employees and directors of Prudential Bancorp and any subsidiaries.

Administration.  The Incentive Plan will be administered and interpreted by a committee of the Board of Directors that is comprised solely of two or more non-employee directors. Such committee currently is comprised of Messrs. Fanelli, Hosier, Miller and Mulcahy, who also currently serve as the Compensation Committee of the Board of Directors. The Board of Directors has engaged a third party independent consulting firm to assist the Committee in determining the appropriate level of grants.

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Stock Options.  Under the Incentive Plan, the Board of Directors or the committee will determine which officers, key employees and non-employee directors will be granted options, whether such options will be incentive or compensatory options (in the case of options granted to employees), the number of shares subject to each option, the exercise price of each option, whether such options may be exercised by delivering other shares of common stock and when such options become exercisable.  The per share exercise price of a stock option shall be at least equal to the fair market value of a share of common stock on the date the option is granted. In addition, except as provided in connection with a corporate transaction involving Prudential Bancorp (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding options may not be amended to reduce the exercise price of outstanding options or cancel, exchange, buyout or surrender outstanding options in exchange for cash, other awards or options with an exercise price that is less than the exercise price of the original options without prior shareholder approval.

All options granted to participants under the Incentive Plan shall become vested and exercisable at the rate, and subject to such limitations, as specified by the Board of Directors or the committee at the time of grants provided, however, the rate of vesting cannot be more rapid than 20% per year commencing one year from the date of grant.  Notwithstanding the foregoing, no vesting shall occur on or after a participant's employment or service with Prudential Bancorp is terminated for any reason other than his death, disability or a change in control.  Unless the committee or Board of Directors shall specifically state otherwise at the time an option is granted, all options granted to participants shall become vested and exercisable in full on the date an optionee terminates his employment or service with Prudential Bancorp or a subsidiary company because of his death or disability.  In addition, all stock options will become vested and exercisable in full upon a change in control of Prudential Bancorp, as defined in the Incentive Plan.

Each stock option or portion thereof shall be exercisable at any time on or after it vests and is exercisable until the earlier of ten years after its date of grant or six months after the date on which the participant's employment or service terminated, unless extended by the committee or the Board of Directors to a period not to exceed three years from such termination.  Unless stated otherwise at the time an option is granted (i) if a participant terminates his employment or service with Prudential Bancorp as a result of disability or retirement without having fully exercised his options, the optionee shall have three years following his termination due to disability or retirement to exercise such options, and (ii) if an optionee terminates his employment or service with Prudential Bancorp following a change in control of Prudential Bancorp without having fully exercised his options, the optionee shall have the right to exercise such options during the remainder of the original ten year term of the option.  However, failure to exercise incentive stock options within three months after the date on which the optionee's employment terminates will result in the option being treated as a compensatory stock option in the event that it is exercised.  If an optionee dies while serving as an employee or a non-employee director or terminates employment or service as a result of disability or retirement and dies without having fully exercised his options, the optionee's executors, administrators, legatees or distributees of his estate shall have the right to exercise such options during the one year period following his death, provided no option will be exercisable more than ten years from the date it was granted.

Stock options are non-transferable except by will or the laws of descent and distribution. Notwithstanding the foregoing, an optionee who holds non-qualified options may transfer such options to his or her spouse, lineal ascendants, lineal descendants, or to a duly established trust for the benefit of one or more of these individuals.  Options so transferred may thereafter be transferred only to the optionee who originally received the grant or to an individual or trust to whom the optionee could have initially transferred the option.  Options which are so transferred shall be exercisable by the transferee according to the same terms and conditions as applied to the optionee.

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Payment for shares purchased upon the exercise of options may be made (i) in cash or by check, (ii) by delivery of a properly executed exercise notice, together with irrevocable instructions to a broker to sell the shares and then to properly deliver to Prudential Bancorp the amount of sale proceeds to pay the exercise price, all in accordance with applicable laws and regulations, (iii) at the discretion of the board or the committee, by delivering shares of common stock (including shares acquired pursuant to the exercise of an option) equal in fair market value to the purchase price of the shares to be acquired pursuant to the option, (iv) at the discretion of the board or the committee, by withholding some of the shares of common stock which are being purchased upon exercise of an option, or (v) any combination of the foregoing.

Share Awards.  Under the Incentive Plan, the Board of Directors or the committee is authorized to grant share awards, which are a right to receive a distribution of shares of common stock. Shares of common stock granted pursuant to a share award will be in the form of restricted stock which shall vest upon such terms and conditions as established by the committee.  The board or the committee will determine which officers, and key employees and non-employee directors will be granted share awards, the number of shares subject to each share award, whether the share award is contingent upon achievement of certain performance goals and the performance goals, if any, required to be met in connection with a share award.

If the employment or service of a share award recipient is terminated before the share award is completely earned, the recipient will forfeit the right to any shares subject to the share award that has not been earned, except as set forth below. All shares subject to a share award held by a recipient whose employment or service with Prudential Bancorp or a subsidiary company terminates due to death or disability will be deemed fully earned as of the recipient's last day of employment or service.  In addition, all shares subject to a share award held by a recipient will be deemed to be fully earned as of the effective date of a change of control of Prudential Bancorp.

A recipient of a share award will not be entitled to receive any dividends declared on the common stock and will not be entitled to any voting rights with respect to an unvested share award until it vests.  Share awards are not transferable by the recipient and shares subject to a share award may only be earned by and paid to the recipient who was notified in writing of such award by the committee.

The committee may determine to make any share award a performance share award by making such award contingent upon the achievement of a performance goal, or any combination of performance goals.  If an award is so designated, the Committee must establish objectively determinable performance goals for the share award based on one or more of the business criteria set forth in the Incentive Plan. Each performance share award will be evidenced by a written agreement setting forth the performance goals applicable to such award.  All determinations regarding the achievement of any performance goal will be made by the committee.  To the extent a performance share award is intended to be performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code, it will be granted and administered to comply with the requirements of Section 162(m) of the Internal Revenue Code.  Notwithstanding anything to the contrary in the Incentive Plan, a recipient of a performance award shall have no rights as a shareholder until the shares of common stock covered by the performance share award are issued to the recipient according to the terms thereof.

Number of Shares Covered by the Incentive Plan.  A total of 999,800 shares of common stock have been reserved for future issuance pursuant to the Incentive Plan, which is equal to approximately 14.0% of the shares of common stock sold in the second step conversion offering completed in October 2013.  In connection with the offering 7,141,602 shares were sold and an additional 2,403,207 shares were issued in the related exchange to shareholders other than the mutual holding company. No more than 714,145 of the shares reserved under the Incentive Plan may be granted as options and no more than 285,655 shares may be granted as share awards.  These amounts equate to approximately 10.0% and 4.0% of the shares sold in the second-step conversion offering. In the event of a stock split, reverse stock split, subdivision, stock dividend or any other capital adjustment, the number of shares of common stock under the Incentive Plan, the number of shares to which any share award or stock option relates and the exercise price per share under any option shall be adjusted to reflect such increase or decrease in the total number of shares of common stock outstanding after such capital adjustment. In addition, any shares of common stock (i) tendered by an optionee or withheld by Prudential Bancorp in payment of the tax withholding obligation related to an option, (ii) tendered by an optionee or withheld by the Prudential Bancorp, to the extent permitted, as payment for the exercise price of an option, or (iii) reacquired by Prudential Bancorp on the open market or otherwise using cash proceeds from the exercise of an option granted pursuant to the Incentive Plan shall not be added to the aggregate number of shares of common stock available for issuance under the Incentive Plan.

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Amendment and Termination of the Incentive Plan; Revocation of Awards. The Board of Directors may at any time terminate or amend the Incentive Plan with respect to any shares of common stock as to which share awards or stock options have not been granted, subject to any required stockholder approval or any stockholder approval which the board may deem to be advisable. The Board of Directors may not, without the consent of the holder of a share award or stock option, alter or impair any share award or stock option previously granted or awarded under the Incentive Plan except as specifically authorized by the Incentive Plan.

The Board or the committee may by resolution immediately revoke, rescind and terminate any option or share award, or portion thereof, to the extent not yet vested and in the case of options, not yet exercised, previously granted or awarded under the Incentive Plan to an employee who is discharged from the employ of Prudential Bancorp or any subsidiary for cause, which, for purposes of the Incentive Plan,  shall mean termination because of the employee's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.  In addition, the committee may specify in the awards granted to those optionees or recipients of share awards subject to the provisions of Section 304 of the Sarbanes-Oxley Act of 2002 such provisions regarding recoupment as are deemed appropriate. Awards, or portions thereof, to the extent not yet vested and in the case of options, not yet exercised, previously granted or awarded to a non-employee director who is removed for cause pursuant to Prudential Bancorp's Articles of Incorporation or Bylaws or the constituent documents of the involved subsidiary on whose board he serves shall terminate as of the effective date of such removal.

Unless sooner terminated, the Incentive Plan shall continue in effect for a period of ten years from the date that the Incentive Plan is approved by shareholders.  Termination of the Incentive Plan shall not affect any previously granted share awards or stock options.

Awards to be Granted. Prudential Bancorp has not made any determination as to the timing or recipients of grants of share awards or stock options under the Incentive Plan. The Incentive Plan provides that grants to each employee and each non-employee director shall not exceed 25% and 5% of the number of shares of common stock available for each of options (714,145) or share awards (285,655) under the Incentive Plan, respectively.  Awards made to non-employee directors in the aggregate may not exceed 30% of each of the number of shares available under the Incentive Plan for options and share awards.

Awards Granted or Available Under Existing Plans.  As of the date hereof, awards covering 530,077 stock options and 38,115 unvested share awards were outstanding under Prudential Bancorp's existing 2008 stock benefit plans and only 3,737 shares remained available for the grant of options under the 2008 Stock Option Plan and no shares for restricted share awards under the 2008 Recognition and Retention Plan. The 2008 stock benefit plans will expire in November 2018, ten years from the date of their adoption by the Board of Directors.

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Federal Income Tax Consequences. Set forth below is a summary of the federal income tax consequences under the Internal Revenue Code relating to awards which may be granted under the Incentive Plan.

Incentive Stock Options.  No taxable income is recognized by the optionee upon the grant or exercise of an incentive stock option that meets the requirements of Section 422 of the Internal Revenue Code.  However, the exercise of an incentive stock option may result in alternative minimum tax liability for the optionee.  If no disposition of shares issued to an optionee pursuant to the exercise of an incentive stock option is made by the optionee within two years from the date of grant or within one year after the date of exercise, then upon sale of such shares, any amount realized in excess of the exercise price (the amount paid for the shares) will be taxed to the optionee as a long-term capital gain and any loss sustained will be a long-term capital loss, and no deduction will be allowed to Prudential Bancorp for federal income tax purposes.

If shares of common stock acquired upon the exercise of an incentive stock option are disposed of prior to the expiration of the two-year and one-year holding periods described above (a "disqualifying disposition"), the optionee generally will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares on the date of exercise (or, if less, the amount realized on an arm's length sale of such shares) over the exercise price of the underlying options, and Prudential Bancorp will be entitled to deduct such amount.  Any gain realized from the shares in excess of the amount taxed as ordinary income will be taxed as capital gain and will not be deductible by Prudential Bancorp.

An incentive stock option will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment, except in certain cases where the incentive stock option is exercised after the death or permanent and total disability of the optionee.  If an incentive stock option is exercised at a time when it no longer qualifies for the tax treatment described above, the option is treated as a non-qualified stock option.

Non-qualified Stock Options.  No taxable income is recognized by the optionee at the time a non-qualified stock option is granted under the Incentive Plan.  Generally, on the date of exercise of a non-qualified stock option, ordinary income is recognized by the optionee in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise, and Prudential Bancorp receives a tax deduction for the same amount.  Upon disposition of the shares acquired, an optionee generally recognizes the appreciation or depreciation on the shares after the date of exercise as either short-term or long-term capital gain or loss depending on how long the shares have been held.  In general, common stock issued upon exercise of an option granted under the Incentive Plan will be transferable and not subject to a risk of forfeiture at the time issued.

Share Awards.  Upon the receipt of a share award, the holder will realize income for federal income tax purposes equal to the amount received and Prudential Bancorp will be entitled to a deduction for federal income tax purposes in the same amount. Pursuant to Section 83 of the Internal Revenue Code, recipients of share awards will recognize ordinary income in an amount equal to the fair market value of the shares of common stock granted to them at the time that the shares vest and become transferable.   A recipient of a share award may also elect, however, to accelerate the recognition of income with respect to his or her grant to the time when shares of common stock are first transferred to him or her, notwithstanding the vesting schedule of such awards.  Prudential Bancorp will be entitled to deduct as a compensation expense for tax purposes the same amounts recognized as income by recipients of share awards in the year in which such amounts are included in income.

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The above description of tax consequences under federal income tax law is necessarily general in nature and is not complete.  Moreover, statutory provisions are subject to change, as are their interpretations, and their application may vary in individual circumstances.  Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws.

Accounting Treatment.  Prudential Bancorp will recognize the cost of employee services received in share-based payment transactions, including stock options, and measure the cost on the grant-date fair value of the award. That cost will be recognized over the period during which an employee is required to provide service in exchange for the share award or the stock option.   Prudential Bancorp will recognize compensation expense on share awards at the time of vesting.  The amount of compensation expense recognized for accounting purposes is based upon the fair market value of the common stock at the date of grant to recipients, rather than the fair market value at the time of vesting for tax purposes, unless the grants are performance based.   In such event, the fair market value on the date of vesting will be recognized as compensation expense.  The vesting of plan share awards will have the effect of increasing Prudential Bancorp's compensation expense and will be a factor in determining Prudential Bancorp's earnings per share on a fully diluted basis.

Shareholder Approval.  No share awards or stock options can be granted under the Incentive Plan unless the Incentive Plan is approved by shareholders.  Shareholder approval of the Incentive Plan will satisfy certain federal tax requirements applicable to incentive stock options.

The Board of Directors recommends that stockholders vote FOR adoption of the

Prudential Bancorp, Inc. 2014 Stock Incentive Plan.

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(4)

Based on a Schedule 13G filed with the SEC on March 26, 2014 by EJF Capital LLC ("EJF"), Emanuel J. Friedman, EJF Financial Services Fund, L.P. ("EJF Fund"), and EJF Financial Services GP ("EJF Fund GP"), LLC. EJF has shared voting and dispositive power with respect to all the shares. EJF Fund is the record owner of the shares. EJF Fund GP serves as the general partner and investment manager of EJF Fund and may be deemed to share beneficial ownership of the shares of common stock of which EJF Fund is the record owner. EJF is the sole member and manager of EJF Fund GP and may be deemed to share beneficial ownership of the shares of common stock of which such entity may share beneficial ownership. Emanuel J. Friedman is the controlling member of EJF and may be deemed to share beneficial ownership of the shares of common stock over which EJF may share beneficial ownership.

(5)

Based on a Schedule 13D/A filed with the SEC on February 12, 2014 by Warren A. Mackey, Homestead Partners LP, a Delaware limited partnership, Arles Partners LP, a New York limited partnership, and Arles Advisors Inc., a New York corporation.  Arles Advisors is the general partner of Homestead Partners and Arles Partners.  The sole shareholder, director and executive officer of Arles Advisors is Warren A. Mackey.  By virtue of his position with Arles Advisors, Mr. Mackey has the shared investment discretion and voting authority with respect to the 838,676 shares owned by Homestead Partners and Arles Partners. Arles Advisors, as general partner of Homestead Partners and Arles Partners, may be deemed to beneficially own the 838,976 shares owned by these partnerships. Mr. Mackey individually has the sole investment discretion and voting authority with respect to the 32,228 shares held for himself.

(6)

Based on a Schedule 13D/A filed on September 4, 2014 by Lawrence B. Seidman, Seidman and Associates L.L.C. ("SAL"), Seidman Investment Partnership, L.P. ("SIP"), Seidman Investment Partnership II, L.P. ("SIPII"), Seidman Investment Partnership III, L.P. ("SIPIII"), LSBK06-08 ("LSBK"), Broad Park Investors ("Broad Park"), CBPS, L.L.C., JRBC I, LLC ("JRBC"), 2514 Multi-Strategy Fund, L.P. ("2514 MSF"), Veteri Place Corporation ("Veteri"), Sonia Seidman and Dennis Pollack (collectively, the "Seidman Group") a well as Form 3 filed by Mr. Pollack on November 19, 2014. Mr. Seidman (i) as the manager of SAL, may be deemed the beneficial owner of the 114,000 shares owned by SAL, (ii) as the sole officer of Veteri, the corporate general partner of each of SIP and SIPII, may be deemed the beneficial owner of the 77,000 shares owned by SIP and the 91,102 shares owned by SIPII, (iii) as the managing member of JBRC I, LLC, the co-general partner of SIPIII, may be deemed the beneficial owner of the 18,000 shares owned by SIPIII, (iv) as the sole officer of Veteri, the Trading Advisor of LSBK and CBPS, may be deemed the beneficial owner of the 51,426 shares owned by LSBK and the 54,000 shares owned by CBPS, (v) as the investment manager for each of Broad Park and 2514 MSF, may be deemed the beneficial owner of the 56,000 shares owned by Broad Park and the 52,000 shares owned by 2514 MSF, and (vi) as the husband of Sonia Seidman, may be deemed the beneficial owner of the 46,636 shares owned by Sonia Seidman. Accordingly, Seidman may be deemed the beneficial owner of an aggregate of 560,164 shares. In the foregoing capacities, Seidman has sole and exclusive investment discretion and voting authority with respect to all such shares.  Mr. Pollack individually has the sole investment discretion and voting authority with regard to the 11,500 shares owned thereby included in the amount shown in the table.

(7)

Includes shares held in trust by Prudential Bancorp's RRP which have been awarded to the directors and officers and stock options which have been granted to the directors and officers under Prudential Bancorp's Option Plan and which are exercisable within 60 days of the voting record date as follows:

(8)

Includes 4,721 shares held in Mr. Balka's individual retirement account, 14,375 shares held jointly with Mr. Balka's spouse, 1,888 shares held in Mr. Balka's 401(k) Plan and 66 shares held by the estate of Helen Klara for whom Mr. Balka is guardian. Also includes 4,721 shares held by the Balka Grandchildren Trust and 472 shares held by the Danielle Thomas Revocable Trust, over which Mr. Balka disclaims beneficial ownership.

(9)	Includes 6,215 shares (units) and 11,477 shares allocated to Mr. Corrato's accounts in Prudential Savings Bank's 401(k) Plan and Employee Stock Ownership Plan, respectively, over which Mr. Corrato has voting power and 80 shares held by Mr. Corrato as custodian for his son.

(10)	Includes 3,304 shares held jointly with Mr. Fanelli's spouse.

(11)	Includes 5,946 shares held in Mr. Hosier's account in his 401(k) plan.

(Footnotes continued on following page)

 

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(12)	Includes 2,000 shares held jointly with Mr. Mulcahy's spouse and 2,832 shares held directly by Mr. Mulcahy's spouse.

(13)	Includes 1,500 shares held in Mr. Pollack's individual retirement account. Mr. Pollack disclaims beneficial ownership of the 560,164 shares owned by the Seidman Group excluding his shares.

(14)

Includes 22,143 shares held jointly with Mr. Vento's spouse. Includes 36,078 shares (units) and 13,994 shares allocated to Mr. Vento's accounts in Prudential Savings Bank's 401(k) Plan and Employee Stock Ownership Plan, respectively, over which Mr. Vento has voting power and 22,143 shares held jointly with Mr. Vento's spouse.

(15)	Includes 3,906 shares (units) and 6,594 shares allocated to Mr. Fratanduono's accounts in Prudential Savings Bank's 401(k) Plan and Employee Stock Ownership Plan, respectively, over which Mr. Fratanduono has voting power.

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, 2014, our officers and directors complied in all respects with the reporting requirements promulgated under Section 16(a) of the Securities Exchange Act of 1934.

The Audit Committee of the Board of Directors of Prudential Bancorp has appointed S.R. Snodgrass, P.C., an independent registered public accounting firm, to perform the audit of our financial statements for the year ending September 30, 2015, and further directed that the appointment of S.R. Snodgrass as our auditors be submitted for ratification by the shareholders at the annual meeting.

We have been advised by S.R. Snodgrass 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.  S.R. Snodgrass 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 S.R. Snodgrass as our independent registered public accounting firm, the Audit Committee considered whether the provision of services, other than auditing services, by S.R. Snodgrass is compatible with maintaining its independence.  In addition to performing auditing services, our independent registered public accounting firm reviewed our public filings.  The Audit Committee believes that S.R. Snodgrass's performance of these other services is compatible with maintaining the independent registered public accounting firm's independence.

Audit Fees

The following table sets forth the aggregate fees paid by us to S.R. Snodgrass for professional services in connection with the audit of Prudential Bancorp's consolidated financial statements for fiscal 2014 and 2013 and the fees paid by us to S.R. Snodgrass for audit-related services, tax services and all other services during fiscal 2014 and 2013.

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(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)	Tax fees consist of compliance fees for the preparation of tax returns during fiscal 2014 and 2013.

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 Chairman of the Audit Committee has been delegated the authority to approve non-audit related services in lieu of the full Audit Committee.  On a quarterly basis, the Chairman of the Audit Committee presents any previously approved engagements to the full Audit Committee.

Each new engagement of S.R. Snodgrass, P.C. was approved in advance by the Audit Committee or its Chairman, and none of those engagements made use of the de minimis exception to pre-approval contained in the Securities and Exchange Commission's rules.

The Board of Directors recommends that you vote FOR the ratification of the

appointment of S.R. Snodgrass, P.C. for the fiscal year ending September 30, 2015.

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 2016, must be received at the principal executive offices of Prudential Bancorp, 1834 West Oregon Avenue, Philadelphia, Pennsylvania 19145, Attention: Joseph R. Corrato, Executive Vice President and Chief Financial Officer, no later than September 1, 2015.  If such proposal is in compliance with all of the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, 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. We did not receive any shareholder proposals for this annual meeting.

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 1, 2015.  The notice must include the information required by Section 2.10 of our Bylaws.

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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 2016 annual meeting, by September 1, 2015.  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., c/o Regina Wilson, Corporate Secretary, at 1834 West Oregon Avenue, Philadelphia, Pennsylvania 19145.  Ms. Wilson will forward such communications to the director or directors to whom they are addressed.

A copy of Prudential Bancorp's Annual Report to Shareholders, which includes the Annual Report on Form 10-K for the year ended September 30, 2014, 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., 1834 West Oregon Avenue, Philadelphia, Pennsylvania 19145.

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 has retained Georgeson, Inc., a professional proxy solicitation firm, to assist in the solicitation of proxies. The fee arrangement with such firm is $6,000 plus reimbursement for out of pocket expenses. 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.

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PRUDENTIAL BANCORP, INC.

2014 STOCK INCENTIVE PLAN

ARTICLE I

ESTABLISHMENT OF THE PLAN

Prudential Bancorp, Inc. (the "Corporation") hereby establishes this 2014 Stock Incentive Plan (the "Plan") upon the terms and conditions hereinafter stated.

ARTICLE II

PURPOSE OF THE PLAN

The purpose of this Plan is to improve the growth and profitability of the Corporation and its Subsidiary Companies by providing Employees and Non-Employee Directors with a proprietary interest in the Corporation as an incentive to contribute to the success of the Corporation and its Subsidiary Companies, and rewarding Employees and Non-Employee Directors for outstanding performance.  All Incentive Stock Options issued under this Plan are intended to comply with the requirements of Section 422 of the Code and the regulations thereunder, and all provisions hereunder shall be read, interpreted and applied with that purpose in mind.

ARTICLE III

DEFINITIONS

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·	net income or net income per share (before or after taxes, diluted or not diluted (with respect to per share net income) and whether or not excluding specific items, including but not limited to stock-based or other compensation expense);

·	return measures (including, but not limited to, total shareholders' return, return on average assets, return on average shareholders' equity, return of investment and cash return on tangible equity);

·	net interest income and net interest income on a tax-equivalent basis;

·	net interest margin and net interest margin on a tax-equivalent basis;

·	net non-interest expense to average assets;

·	interest sensitivity gap levels;

·	expense targets, efficiency ratio or other expense measures;

·	levels or growth of assets or loans (in total or with respect to specific categories);

·	levels or growth of deposits (in total or with respect to specific categories of deposit accounts);

·	loan origination volume;

·	market share;

·	levels and values of securities investments;

·	asset quality levels;

·	business expansion or consolidation performance;

·	strategic plan development and implementation;

·	share price;

 

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·	regulatory compliance and capital levels;

·	financial ratings;

·	achievement of balance sheet or income statement objectives, or other financial, accounting or quantitative objectives established by the Committee; and

·	any combination of the foregoing.

Performance goals with respect to the foregoing criteria may be specified in absolute terms, in percentages, or in terms of growth from period to period or growth rates over time, as well as measured relative to the performance of a group of comparator companies, or a published or special index, or a stock market index, that the Committee deems appropriate.  Any member of a comparator group or an index that disappears during a measurement period shall be disregarded for the entire measurement period.  Performance Goals need not be based upon an increase or positive result under a business criterion and could include, for example, the maintenance of the status quo or the limitation of economic losses (measured, in each case, by reference to a specific business criterion).

ARTICLE IV

ADMINISTRATION OF THE PLAN

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ARTICLE VII

DETERMINATION OF AWARDS, NUMBER OF SHARES, ETC.

ARTICLE VIII

OPTIONS

Each Option granted hereunder shall be on the following terms and conditions:

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Unless the Board or the Committee shall specifically state otherwise at the time an Option is granted, if an Employee or Non-Employee Director terminates his employment or service with the Corporation or a Subsidiary Company following a Change in Control without having fully exercised his Options, the Optionee shall have the right to exercise such Options during the remainder of the original ten (10) year term (or five (5) year term for Options subject to Section 8.09(b) hereof) of the Option from the date of grant.

If an Optionee dies while in the employ or service of the Corporation or a Subsidiary Company or terminates employment or service with the Corporation or a Subsidiary Company as a result of Disability or Retirement and dies without having fully exercised his Options, the executors, administrators, legatees or distributees of his estate shall have the right, during the one (1) year period following his death, to exercise such Options.

In no event, however, shall any Option be exercisable more than ten (10) years (five (5) years for Options subject to Section 8.09(b) hereof) from the date it was granted.

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ARTICLE IX

SHARE AWARDS

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ARTICLE X

ADJUSTMENTS FOR CAPITAL CHANGES

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ARTICLE XI

AMENDMENT AND TERMINATION OF THE PLAN

The Board may, by resolution, at any time terminate or amend the Plan with respect to any shares of Common Stock as to which Awards have not been granted, subject to any required shareholder approval or any shareholder approval which the Board may deem to be advisable for any reason, such as for the purpose of obtaining or retaining any statutory or regulatory benefits under tax, securities or other laws or satisfying any applicable stock exchange listing requirements.  The Board may not, without the consent of the holder of an Award, alter or impair any Award previously granted or awarded under this Plan except as specifically authorized herein.

ARTICLE XII

EMPLOYMENT AND SERVICE RIGHTS

Neither this Plan nor the grant of any Awards hereunder nor any action taken by the Committee or the Board in connection with the Plan shall create any right on the part of any Employee or Non-Employee Director to continue in such capacity.

ARTICLE XIII

WITHHOLDING

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ARTICLE XIV

EFFECTIVE DATE OF THE PLAN; TERM

ARTICLE XV

SHAREHOLDER APPROVAL

The Corporation shall submit this Plan to shareholders for approval at a meeting of shareholders of the Corporation held within twelve (12) months following the Effective Date in order to meet the requirements of (i) Section 422 of the Code and regulations thereunder, and (ii) Section 162(m) of the Code and regulations thereunder.

ARTICLE XVI

MISCELLANEOUS

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December 30, 2014

To:	Participants in the Prudential Savings Bank Employee Stock Ownership Plan (the "ESOP") and/or Employees' Savings & Profit Sharing Plan (the "401(k) Plan")

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.  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 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 Voting Instruction Card in the envelope provided.  In order to be effective, your Voting Instruction Card must be received by Computershare Shareholder Services no later than February 4, 2015.  Computer Shareholder Services will tabulate the votes for the purpose of having those shares voted by the Trustees.

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 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,

Thomas A. Vento

Chairman, President and Chief Executive Officer

 

 

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