UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to Section 240.14a-12 |
Waterstone Financial, Inc. |
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. |
☐ | Fee paid previously with preliminary materials. |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
April 7, 202211, 2024
Dear Fellow Shareholder,
We invite you to attend the virtual Waterstone Financial, Inc. Annual Meeting of Shareholders, which will be held virtuallyat WaterStone Bank SSB, 11200 W. Plank Ct., Wauwatosa, Wisconsin at 9:00 a.m., Central Time, on Tuesday, May 17, 2022.
To participate in the meeting, visit www.cstproxy.com/wsbonline/2022, and enter the 12 digit control number included on your proxy card. You may register for the meeting as early as 9:00 a.m., Central Time, on May 12, 2022. Beneficial investors, who own their investments through a bank or broker, will need to contact Continental Stock Transfer to receive a control number. If you plan to vote at the meeting you will need to have a legal proxy from your bank or broker, or if you would like to join and not vote Continental will issue you a guest control number with proof of ownership. The contact information for Continental Stock Transfer is 1-917-262-2373, or proxy@continentalstock.com.
If you do not wish to participate in the meeting, but you merely wish to listen to the proceedings, we have set up telephone access for those purposes. In that case, please call, toll-free (within the United States and Canada), 1-800-450-7155. If calling from outside the United States or Canada, please call 1-857-999-9155 (standard rates apply). The passcode for listening by telephone is 1567487#.21, 2024.
We are furnishing proxy materials to our shareholders over the internet, as permitted by rules adopted by the Securities and Exchange Commission. You may read, print and download our 20212023 Annual Report to Shareholders on Form 10-K and our Proxy Statement at www.cstproxy.com/www.cstproxy.com/wsbonline/2022.2024. On April 7, 2022,11, 2024, we mailed our shareholders a notice containing instructions on how to access these materials and how to vote their shares online. The notice provides instructions on how you can request a paper copy of these materials by mail, by telephone or by e-mail. If you requested your materials via e-mail, the e-mail contains voting instructions and links to the materials on the internet.
You may vote your shares by internet, by telephone, or by regular mail.mail or in person at the Annual Meeting. Instructions regarding the various methods of voting are contained on the notice and on the proxy card.
Proxy Card.
The proxy materials describe the formal business to be transacted at the Annual Meeting. Included in the materials is our Annual Report on Form 10-K, which contains detailed information concerning our activities and operating performance.
On behalf of the board of directors, we request that you vote early as ityour shares now, even if you currently plan to attend the Annual Meeting. This will not prevent you from voting in person, but will assure that your vote is counted if there are any unforeseen disruptions between now and May 17, 2022.counted.
Sincerely,
DOUGLAS S. GORDONWILLIAM F. BRUSS
Chief Executive Officer
WATERSTONE FINANCIAL, INC.
11200 W. Plank Ct.
Wauwatosa, Wisconsin 53226
(414) 761-1000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 17, 202221, 2024.
_____________________________
To the Shareholders of Waterstone Financial, Inc.:
The 20222024 annual meeting of shareholders of Waterstone Financial, Inc. will be held virtually on Tuesday, May 17, 2022,21, 2024 at 9:00 a.m., Central Time, at www.cstproxy.com/wsbonline/2022WaterStone Bank SSB, 11200 W. Plank Ct., Wauwatosa, Wisconsin for the following purposes:
(1) | Electing two directors to serve for a term expiring in |
(2) | Ratifying the selection of |
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(4) | Transacting such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
The board of directors has fixed March 23, 202227, 2024 as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting and any adjournment thereof. Only shareholders of record at the close of business on that date will be entitled to vote at the annual meeting and any adjournments thereof.
We call your attention to the Proxy Statement accompanying this notice for a more complete statement regarding the matters to be acted upon at the annual meeting. Please read it carefully.
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By Order of the Board of Directors
William F. Bruss
Chief Executive Officer
Wauwatosa, Wisconsin
April 7, 2022
11, 2024
PROXY STATEMENT
WATERSTONE FINANCIAL, INC.
11200 W. Plank Ct.
Wauwatosa, Wisconsin 53226
(414) 761-1000
______________________
SOLICITATION AND VOTING
This Proxy Statement and accompanying Proxy Card are furnished to the shareholders of Waterstone Financial, Inc. (“Waterstone Financial” or the “Company”) in connection with the solicitation of proxies by the Waterstone Financial board of directors for use at the annual meeting of shareholders to be held virtually at www.cstproxy.com/wsbonline/2022 onWaterStone Bank SSB, 11200 W. Plank Ct., Wauwatosa, Wisconsin at 9:00 a.m., Central Timeon Tuesday, May 17, 2022,21, 2024, and at any adjournment of the meeting. The 20212023 Annual Report on Form 10‑K is enclosed with the Proxy Statement and contains business and financial information concerning Waterstone Financial. Our proxy materials are being made available to shareholders on or about April 7, 2022.
Record Date and Meeting Information. As a registered stockholder, you received a proxy card, which contains instructions on how to attend the virtual annual meeting, including the website along with your control number. You will need your control number for access. If you do not have your control number, contact our transfer agent, Continental Stock Transfer at (917) 262-2373 or proxy@continentalstock.com.
If your shares of Company common stock are held by a bank, broker or other nominee, you will need to contact your bank, broker or other nominee and obtain a legal proxy. Once you have received your legal proxy, contact Continental Stock Transfer to have a control number generated. The contact information for Continental Stock Transfer is (917) 262-2373, or proxy@continentalstock.com.
A question and answer session will be held during the annual meeting, and shareholders will be able to submit questions prior to the meeting by visiting www.cstproxy.com/wsbonline/2022. Questions may be submitted as early as 9:00 a.m., Central Time, on May 12, 2022, but must be submitted by 12:00 p.m. Central Time on May 16, 2022. The Company will try to answer as many shareholder-submitted questions, as time permits, that comply with the meeting rules of conduct posted on the virtual annual meeting website.11, 2024.
Record Date and Meeting Information. The board of directors has fixed March 23, 202227, 2024 as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting and any adjournment thereof. Only holders of record of our common stock, the only class of Waterstone Financial stock outstanding as of the close of business on the record date, are entitled to notice of and to vote at the annual meeting. Each share of common stock is entitled to one vote. As of the record date, there were 24,197,13119,916,843 shares of common stock issued and outstanding.
The board of directors of Waterstone Financial knows of no matters to be acted upon at the annual meeting other than as set forth in the notice attached to this Proxy Statement. If any other matters properly come before the annual meeting, or any adjournment thereof, it is the intention of the persons named in the proxy to vote such proxies in accordance with their best judgment on such matters.
Voting Your Shares. Any shareholder entitled to vote may vote either by mailing a properly executed proxy or online as described in the notice to shareholders and the proxy card. Shares represented by properly executed proxies received by Waterstone Financial will be voted at the annual meeting, or any adjournment thereof, in accordance with the terms of such proxies, unless revoked. Where no instructions are indicated, validly executed proxies will be voted “FOR” the proposals set forth in this Proxy Statement for consideration at the Annual Meeting.
A shareholder may revoke a proxy at any time prior to the time when it is voted by filing a written notice of revocation with our corporate secretary at the address set forth above, by delivering a properly executed proxy bearing a later date, using the internet or telephone voting options explained on the Proxy Card, or by voting virtually at the annual meeting. Virtual attendance at the annual meeting will not in itself constitute revocation of a proxy.Card.
Shares in Employee Plans. Any person who owns shares through an allocation to that person’s account under the WaterStone Bank SSB 2015 Amended and Restated Employee Stock Ownership Plan (the “ESOP”) or who has purchased shares in the Employer Stock Fund in the WaterstoneWaterStone Bank SSB 401(k) Plan (the “401(k) Plan”) will receive separate Vote Authorization Forms to instruct the ESOP Trusteetrustee and 401(k) Plan Trusteetrustee how to vote those shares. The deadline for returning instructions is May 10, 2022.14, 2024. The Trusteetrustee of both the ESOP and 401(k) Plan, Principal Trust Company, will vote shares allocated to a plan participant’s account in accordance with the participant’s instructions. Upon the direction of the plan administrator, the Trusteetrustee will vote the unallocated ESOP shares and any allocated ESOP shares for which no voting instructions are received in the same proportion as allocated shares for which it has received voting instructions. In addition, the Trusteetrustee will vote unvoted shares allocated to participants’ accounts in the 401(k) Plan for which no voting instructions are received in accordance with directions received from the plan administrator.
Quorum and Required Vote. A majority of the votes entitled to be cast by the shares entitled to vote, represented in person or by proxy, will constitute a quorum of shareholders at the annual meeting. Shares for which authority is withheld to vote for director nominees and broker non-votes (i.e., proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owners or other persons entitled to vote shares as to a matter with respect to which the brokers or nominees do not have discretionary power to vote) will be considered present for purposes of establishing a quorum. The inspector of election appointed by the board of directors will count the votes and ballots at the annual meeting.
As to Proposal 1, the election of directors, shareholders may vote “FOR” or “WITHHELD”“WITHHOLD” as to each or all of the nominees. A plurality of the votes cast at the annual meeting by the holders of shares of common stock entitled to vote is required for the election of directors. In other words, the individuals who receive the largest number of votes are elected as directors up to the maximum number of directors in a class to be chosen at the annual meeting. With respect to the election of directors, any shares not voted, whether by withheld authority, broker non-vote or otherwise, will have no effect on the election of directors except to the extent that the failure to vote for an individual results in another individual receiving a comparatively larger number of votes.
As to Proposal 2, the ratification of the independent registered public accounting firm, shareholders may (i) vote “FOR” the ratification; (ii) vote “AGAINST” the ratification; or “AGAINST,” or may(iii) “ABSTAIN” from voting on the matter. The affirmative vote of a majority of the votes cast at the Annual Meeting, without regard to either broker non-votes, or shares as to which the “ABSTAIN” box has been selected on the proxy card, is required to ratify CliftonLarsonAllenFORVIS, LLP as our independent registered public accounting firm for the year ending December 31, 2022.2024.
As to Proposal 3, the advisory, non-binding resolution to approve our executive compensation as described in this Proxy Statement, a shareholder may: (i) vote “FOR” the resolution; (ii) vote “AGAINST” the resolution; or (iii) “ABSTAIN” from voting on the resolution. The affirmative vote of a majority of the votes cast at the Annual Meeting, without regard to either broker non-votes, or shares as to which the “ABSTAIN” box has been selected on the proxy card, is required for the approval of this non-binding resolution. While this vote is required by law, it will neither be binding on Waterstone Financial, Inc. or the board of directors, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on the members of the board of directors.
Expenses and Solicitation. We will pay all expenses incurred in connection with the solicitation of proxies. Proxies will be solicited principally by mail, but may also be solicited by our directors, officers and other employees in person or by telephone, facsimile or other means of communication. Those directors, officers and employees will receive no compensation therefor in addition to their regular compensation, but may be reimbursed for their related out-of-pocket expenses. Brokers, dealers, banks, or their nominees, who hold common stock on behalf of another will be asked to send proxy materials and related documents to the beneficial owners of such stock, and we will reimburse those persons for their reasonable expenses. In addition, we have entered into an agreement with Laurel Hill Advisory Group, LLC to assist in soliciting proxies for the annual meeting and we have agreed to pay them $5,000, plus out-of-pocket expenses, for these services.
Householding. Some banks, brokers, broker-dealers and other similar organizations acting as nominee record holders may be participating in the practice of “householding” proxy materials. This means that only one copy of the notice of meeting and instructions on how to access the proxy materials and the 20212023 Annual Report may have been sent to multiple stockholders in your household. If you would prefer to receive separate copies of these materials for other stockholders in your household, either now or in the future, please contact your bank, broker, broker-dealer or other similar organization serving as your nominee.
Upon written notice to Mark R. Gerke, Chief Financial Officer, Waterstone Financial, Inc., 11200 W. Plank Ct., Wauwatosa, Wisconsin 53226, or via telephone at (414) 761-1000, we will promptly provide separate copies of the 20212023 Annual Report and/or this Proxy Statement. Stockholders sharing an address who are receiving multiple copies of this Proxy Statement and/or the 20212023 Annual Report and who wish to receive a single copy of these materials in the future will need to contact their bank, broker, broker-dealer or other similar organization serving as their nominee to request that only a single copy of each document be mailed to all stockholders at the shared address in the future.
Limitations on Voting. The Company’s Articles of Incorporation provide that, subject to certain exceptions, record owners of the Company’s common stock that is beneficially owned by a person who beneficially owns in excess of 10% of the Company’s outstanding shares are not entitled to any vote any of the shares held in excess of the 10% limit.
STOCK OWNERSHIP
The following table shows the amount of our common stock held by groups who are beneficial owner of more than 5% of our shares as of December 31, 2021,2023, based upon information filed with the SEC. The “Percent of All Common Stock Outstanding” reflects the percentage of our common stock outstanding as of March 23, 2022.27, 2024.
Name of Beneficial Owner | Total Shares Beneficially Owned | Percent of All Common Stock Outstanding | |||
Renaissance Technologies LLC | 1,791,703 | (1) | 7.4% | ||
Renaissance Technologies Holdings Corporation | |||||
800 Third Avenue | |||||
New York, New York 10022 | |||||
Dimensional Fund Advisors LP | 1,856,166 | (2) | 7.7% | ||
Building One | |||||
6300 Bee Cave Road | |||||
Austin, Texas 78746 | |||||
BlackRock, Inc. | 1,822,026 | (3) | 7.5% | ||
55 East 52nd Street | |||||
New York, New York 10055 | |||||
Delaware Charter Guarantee & Trust Company dba Principal Trust Company as | 2,396,067 | (4) | 9.9% | ||
Trustee for the 2010 Amended and Restated Waterstone Bank SSB Employee | |||||
Stock Ownership Plan and the Waterstone Bank 401(k) Plan | |||||
1013 Centre Road Suite 300 | |||||
Wilmington, Delaware 19805-1265 |
Name of Beneficial Owner | Total Shares Beneficially Owned | Percent of All Common Stock Outstanding |
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, Texas 78746 | 1,652,359 (1) | 8.3% |
BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 1,671,665 (2) | 8.4% |
Renaissance Technologies LLC Renaissance Technologies Holdings Corporation 800 Third Avenue New York, New York 10022 | 1,273,136 (3) | 6.4% |
Delaware Charter Guarantee & Trust Company dba Principal Trust Company as Trustee for the 2010 Amended and Restated Waterstone Bank SSB Employee Stock Ownership Plan and the Waterstone Bank 401(k) Plan 1013 Centre Road Suite 300 Wilmington, Delaware 19805-1265 | 2,275,957 (4) | 11.4% |
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(4) | Delaware Charter Guarantee & Trust Company dba Principal Trust Company as Trustee for the 2015 Amended and Restated WaterStone Bank SSB Employee Stock Ownership Plan and the WaterStone Bank SSB 401(k) Plan reported ownership as of December 31, |
The following table shows the amount of our common stock beneficially owned by each of our directors, executive officers and directors and executive officers as a group, as of March 23, 2022.27, 2024. Unless otherwise noted, the persons listed have sole voting and dispositive power over their shares.
Name of Beneficial Owner | Shares Owned Directly | Shares Owned Indirectly(1) | Stock Options Exercisable within 60 Days of Record Date | Total Shares Beneficially Owned | Percent of All Shares Outstanding | Shares Owned Directly | Shares Owned Indirectly (1) | Stock Options Exercisable within 60 Days of Record Date | Total Shares Beneficially Owned | Percent of All Shares Outstanding | |||||||||||||||
Ellen S. Bartel | 15,000 | - | 12,500 | 27,500 | * | 15,000 | - | 25,000 | 40,000 | * | |||||||||||||||
William F. Bruss | 31,668 | 66,512 | - | 98,180 | * | 36,051 | 74,529 | - | 110,580 | * | |||||||||||||||
Thomas E. Dalum(2) | 38,531 | 61,596 | 66,719 | 166,846 | * | ||||||||||||||||||||
Mark R. Gerke | 30,858 | 30,557 | 15,000 | 76,415 | * | 36,264 | 37,752 | 15,000 | 89,016 | * | |||||||||||||||
Julie A. Glynn | 3,492 | 6,961 | 16,000 | 26,453 | * | 10,743 | 13,735 | 20,000 | 44,478 | * | |||||||||||||||
Douglas S. Gordon | 548,061 | 68,296 | - | 616,357 | 2.6 | % | 556,889 | 75,294 | - | 632,183 | 3.2% | ||||||||||||||
Ryan J. Gordon | 8,585 | 36,035 | 10,000 | 54,620 | * | ||||||||||||||||||||
Michael L. Hansen | 79,872 | 186,541 | - | 266,413 | 1.1 | % | 79,872 | 186,541 | 12,500 | 278,913 | 1.4% | ||||||||||||||
Patrick S. Lawton | 49,131 | 10,000 | 25,000 | 84,131 | * | 49,131 | 10,000 | 37,500 | 96,631 | * | |||||||||||||||
Jeffrey R. McGuiness | 7,132 | - | - | 7,132 | * | 3,842 | - | - | 3,842 | * | |||||||||||||||
Kristine A. Rappé | 27,318 | - | 87,500 | 114,818 | * | 27,318 | - | 100,000 | 127,318 | * | |||||||||||||||
Stephen J. Schmidt | 70,078 | - | 87,500 | 157,578 | * | 70,078 | - | 100,000 | 170,078 | * | |||||||||||||||
Derek L. Tyus | 6,440 | - | - | 6,440 | * | 6,440 | - | - | 6,440 | * | |||||||||||||||
All Directors and Executive Officers as a Group | 907,581 | 430,463 | 310,219 | 1,648,263 | 6.7 | % | 900,213 | 433,886 | 320,000 | 1,654,099 | 8.3% |
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| * Less than 1%. |
(1) | Number of shares with sole voting and dispositive power: Mr. Bruss – |
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PROPOSAL 1 – THE ELECTION OF DIRECTORS
Effective upon completion of the annual meeting, Waterstone Financial’s board of directors will consistconsists of seven members. Our bylaws provide that approximately one-third of the directors are to be elected annually. Directors of Waterstone Financial are generally elected to serve for a three-year period and until their respective successors have been duly elected and qualified. Directors Ellen S. BartelDouglas Gordon and Kristine A. Rappé,Patrick Lawton, whose terms expire at the annual meeting, are being nominated for re-election as directors, each for a term expiring at the 20252027 annual meeting of shareholders. Shares represented by proxies will be voted FOR the election of the nominees unless otherwise specified by the executing shareholder. If a nominee declines or is unable to act as a director, proxies may be voted with discretionary authority for a substitute nominee designated by the board. Except as indicated herein, there are no arrangements or understandings between any nominee and any other person pursuant to which such nominee was selected.
The following details include for each of our nominees and directors: their age as of December 31, 2021;2023; the year in which they first became a director of WaterStone Bank, the operating subsidiary of the Company; the year that their term expires; and their business experience for at least the past five years. The members of the Company’s board of directors are the same as the members of the board of directors of WaterStone Bank. None of the directors listed below currently serves as a director, or served as a director during the past five years, of a publicly-held entity (other than Waterstone Financial). The following also includes the particular experience, qualifications, attributes, or skills considered by the Nominating and Corporate Governance Committee that led the board of directors to conclude that such person should serve as a director of Waterstone Financial. The mailing address for each person listed is 11200 W. Plank Ct., Wauwatosa, Wisconsin 53226. The board of directors unanimously recommends that shareholders vote FOR the election of the director nominees listed below.
Name and Age | Principal Occupation and Business Experience | Director Since (1) | ||
Nominees for terms expiring in | ||||
Douglas S. Gordon, 66 | Mr. Gordon is the former Chief Executive Officer of Waterstone Financial and WaterStone Bank, beginning in 2007 to January 2024; President of Waterstone Financial and WaterStone Bank from 2007 to 2022, and Chief Operating Officer of WaterStone Bank from 2005 to 2007; real estate investor. Mr. Gordon brings extensive prior banking experience as an executive officer at M&I Bank and at Security Savings Bank. He has extensive firsthand knowledge and experience with our lending markets and our customers. Mr. Gordon has a B.A. from the University of Wisconsin – Parkside and an M.B.A. from Marquette University. Mr. Gordon is the father of Ryan J. Gordon. | 2005 | ||
Patrick S. Lawton, 67 | Mr. Lawton is the Managing Director of Fixed Income Capital Markets for Baird. Mr. Lawton is also a member of Baird’s board of directors. As a Baird Managing Director, Mr. Lawton brings his investment portfolio expertise to the board of directors. Mr. Lawton has a B.S.B.A. and an M.B.A. from Marquette University. | 2000 | ||
Continuing Directors – Terms expiring in 2025 | ||||
Ellen S. Bartel, | Ms. Bartel is the former President of Divine Savior Holy Angels (DSHA) High School (Milwaukee, Wisconsin) from 1998 until 2018, where she achieved significant improvements in DSHA’s curriculum, facilities, financial infrastructure, image, and reputation. Ms. Bartel balanced DSHA’s budget for 18 consecutive years, oversaw endowment growth from under $1 million to over $14 million, and developed recruitment strategies resulting in an incoming class wait list for 19 consecutive years. Prior to her employment at DSHA, Ms. Bartel held several positions at Alverno College (Milwaukee, Wisconsin) (1986 to 1997), with the most recent being Vice President of Institutional Advancement from 1994 to 1997. Ms. Bartel’s experience overseeing a large educational institution provides the board of directors with significant perspective on financial management and human resources matters. Ms. Bartel has a B.A. and an M.S.A. from the University of Notre Dame. | 2013 | ||
Kristine A. Rappé, | Ms. Rappé is the former Senior Vice President and Chief Administrative Officer of WEC Energy Group (2004 to 2012). Her roles at WEC Energy Group also included Vice President and Corporate Secretary (2001 to 2004) and Vice President of Customer Services (1994 to 2001). In these roles, Ms. Rappé had responsibility for shared services including information technology, human resources, supply chain management, business continuity/corporate security, and the WEC Foundation. Ms. Rappé’s experience overseeing a large corporate entity provides the board of directors with significant perspective on financial management and human resources matters, and she has a long-standing history of community involvement and public service. Ms. Rappé has an M.A. from Northeastern University and a B.A. from the University of Wisconsin – Oshkosh. | 2013 | ||
Continuing Directors – Terms expiring in |
Michael L. Hansen, | Mr. Hansen is a business investor who currently holds significant ownership interests in Jacsten Holdings | 2003 | ||
Stephen J. Schmidt, | Mr. Schmidt is the President of Schmidt and Bartelt Funeral and Cremation Services. Mr. Schmidt has entrepreneurial experience and extensive community relationships throughout the communities served by WaterStone Bank. Mr. Schmidt has an Associate’s Degree from the New England Institute and a B.A. from the University of Wisconsin – Stevens Point. | 2002 | ||
Derek L. Tyus, | Mr. Tyus currently serves as Executive Vice President and Chief Financial Officer of Versiti, Inc., a national leader in innovative blood health solutions. Before joining Versiti, Inc. in 2024, Mr. Tyus was Senior Vice President and Chief Investment Officer of West Bend Mutual Insurance Company. He | 2021 |
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Executive Officers
Information regarding our named executive officers (“Named Executive Officers” or “NEOs”) who are not directors of Waterstone Financial is set forth in the following table. Except as noted below, each of these individuals has held that position for at least the past five years.
Name and Age | Offices and Positions with Waterstone Financial and WaterStone Bank | Executive | ||
William F. Bruss, | Chief Executive Officer since 2024. President since January 2022, Chief Operating Officer | 2005 | ||
Mark R. Gerke, | Executive Vice President since January 2020, Chief Financial Officer since 2016, Chief Accounting Officer | 2016 | ||
Julie A. Glynn, | Executive Vice President since January 2022, Chief Retail Officer of WaterStone Bank since March 2018, Senior Vice President - District Manager of Associated Bank since | 2018 | ||
Jeffrey R. McGuiness, | Executive Vice President/Chief Credit Officer since January 2022, Vice President/Chief Credit Officer 2018 to 2022, Credit Officer 2015 to 2018, Lead Credit Analyst 2012 to 2015, Sr. Credit Analyst 2010 to 2012. Mr. Gordon is the son of Douglas S. Gordon. President and Chief Executive Officer of Waterstone Mortgage Corporation since November 2020. Prior to his role with Waterstone Mortgage Corporation, Chief Sales Officer, Embrace Home Loans – 2015 through November 2020, Chief Executive Officer, Lenders One – 2012 to 2015. | 2022 2020 |
Meetings and Committees
The board of directors of Waterstone Financial met 12 times during the year ended December 31, 20212023 on behalf of Waterstone Financial and 12 times in their capacity as directors of WaterStone Bank. The board of directors consists of a majority of “independent directors” within the meaning of the NASDAQ corporate governance listing standards. The board of directors determines the independence of each director in accordance with NASDAQ Stock Market rules, which include all elements of independence as set forth in the listing requirements for NASDAQ securities. The board of directors has determined that Directors Bartel, Dalum, Hansen, Lawton, Rappé, Schmidt and Tyus are “independent” directors within the meaning of such standards. In evaluating the independence of our independent directors, we found no transactions between us and our independent directors that are not required to be reported in this Proxy Statement and that had an impact on our determination as to the independence of our directors. Additionally, the independent directors regularly meet without management or non-independent directors present. No member of the board of directors or any committee thereof attended fewer than 75% of the aggregate of: (i) the total number of meetings of the board of directors (held during the period for which each director has been a director); and (ii) the total number of meetings held by all committees of the board of directors on which he or she served (during the periods that he or she served).
We conduct business through meetings of the Company’s and Bank’s boards of directors and their committees. The boards of directors of the Company and the Bank have established standing committees discussed below. The standing committees of the Company include an Audit Committee, Compensation Committee, Executive Committee and a Nominating and Corporate Governance Committee. Each of these committees operates under a written charter available on the Company’s website at www.wsbonline.com.
The following table details the composition of our board committees, eachas of whichDecember 31, 2023. Each committee is composed entirely of independent directors.
Director | Audit Committee | Compensation Committee | Executive Committee | Nominating and Corporate Governance Committee |
Ellen S. Bartel | X | X |
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Michael L. Hansen | Chair | X | X | |
Patrick S. Lawton (Chair) |
| X | ||
Kristine A. Rappé | X | Chair | ||
Stephen J. Schmidt | X | X |
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Derek L. Tyus | X | X | X |
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Douglas S. Gordon was appointed to the Executive Committee effective on January 5, 2024.
Audit Committee. The audit committee of Waterstone Financial (the “Audit Committee”) met tensix times during the year ended December 31, 2021.2023. The board of directors has determined that each member of the Audit Committee meets not only the independence requirements applicable to the committee as prescribed by the NASDAQ corporate governance listing standards, but also by the Securities and Exchange Commission. On behalf of the Audit Committee, Mr. Hansen, its chair, also regularly consults with Waterstone Financial’s independent registered public accounting firm about Waterstone Financial’s periodic public financial disclosures. The board believes that all of the members of the Audit Committee have sufficient experience, knowledge and other personal qualifications to be “financially literate” and to be active, effective and contributing members of the Audit Committee. Mr. Hansen has been designated an “audit committee financial expert” pursuant to the Sarbanes-Oxley Act of 2002 and the Securities and Exchange Commission regulations. See also “Report of the Audit Committee” for other information pertaining to the Audit Committee.
Compensation Committee. The compensation committee of Waterstone Financial (the “Compensation Committee”) held tenseven meetings during the year ended December 31, 2021.2023. Each member of the Compensation Committee is considered independent as defined in the NASDAQ corporate governance listing standards. The Compensation Committee has the responsibility for and authority to either establish or recommend to the board: compensation policies and plans; salaries, bonuses and benefits for all officers; salary and benefit levels for employees; determinations with respect to stock options and restricted stock awards; and other personnel policies and procedures. The Compensation Committee has the authority to delegate the development, implementation and execution of benefit plans to management. See also “Compensation Discussion and Analysis” and “Compensation Committee Interlocks and Insider Participation” for other information pertaining to the Compensation Committee.
Executive Committee. The executive committee of Waterstone Financial (the “Executive Committee”) held 11 meetings during the year ended December 31, 2023. The Executive Committee has the responsibility to review and/or approve certain loans made or to be made by the Bank in accordance with the Bank’s Lending Policy. The Executive Committee reviews loan submissions, communicate requests for additional information, and promptly communicate the approval or disapproval of a loan to management.
Nominating and Corporate Governance Committee. The nominating and corporate governance committee (“Nominating Committee”) of Waterstone Financial held two meetingsone meeting during the year ended December 31, 2021.2023. Each member of the Nominating Committee is considered “independent” as defined in the NASDAQ corporate governance listing standards.
The functions of the Nominating Committee include the following:
● | to lead the search for individuals qualified to become members of the board of directors and to select director nominees to be presented for shareholder approval; |
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● | to review the committee structure and |
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● | to develop and recommend to the board of directors for its approval a set of corporate governance guidelines. |
The Nominating Committee identifies nominees by first evaluating the current members of the board of directors willing to continue in service. Current members of the board of directors with skills and experience that are relevant to our business and who are willing to continue in service are first considered for re-nomination, balancing the value of continuity of service by existing members of the board of directors with that of obtaining new perspectives. If any member of the board of directors does not wish to continue in service, or if the committee or the board decides not to re-nominate a member for re-election, the Nominating Committee may solicit suggestions for director candidates from all directors.
Board Diversity. The Boardboard believes that the Company and its shareholders are best served by having a Board of Directors that brings a diversity of education, experience, skills and perspective to Board meetings. While these attributes are considered on an ongoing basis, the Nominating and Corporate Governance Committee and the Board of Directors will particularly consider such diversity in the recruitment and deliberation regarding prospective director nominees.
Board Qualifications. Qualifications of director candidates are described in the Appendix to the Nominating and Corporate Governance Committee Charter, which can be found on our website, at www.wsbonline.com, on the “Investor Relations” link under the “About” tab, then “Corporate Overview” and “Governance Documents.” Factors considered include strength of character, honesty and integrity, an inquiring and independent mind, judgment, skill, diversity, education, experience with businesses and other organizations, the interplay of the candidates’ experience with the experience of other board members and the extent to which the candidate would be a desirable addition to the board and its committees. Nominees must have a background which demonstrates an understanding of business and financial affairs and the complexities of a business organization. Although a career in business is not essential, the nominee should have a proven record of competence and accomplishments through leadership in industry, education, the professions or government. Areas of core competency that should be represented on the board as a whole include accounting and finance, business judgment, management, crisis response, industry knowledge, leadership and strategic vision.
Director Election Voting Standard. A nomineefor director shall be elected to the Board if he or she receives approval on a plurality of votes cast.Since our organization as a Company, we have not yet had a director elected by less than a majority of the votes cast. Given our plurality voting standard, the Board is committed to conducting extensive shareholder outreach to understand any concerns, in the event that a director nominee fails to receive majority support in any future election.
Board Term or Age Limits. The Board does not currently employ formal term or age limits with respect to Board service. Rather than instituting a formal term or age limit, the Board employs an annual assessment to measure how well the skills of board members align with the current strategy of the Company. The foundation of this assessment is summarized in a Director Skills Matrix (detailed below).
Board Evaluation. The Board views the process of collective and individual self-assessment as an opportunity to enhance multiple dimensions of board effectiveness and strengthen governance practices. Currently, this evaluation process takes place in an informal manner before, during and after Board and Committee meetings.The Board is in the process of developing a framework for an annual assessment process that will be utilized to perform evaluations at a Board, Committee and/or Director level.Further, the Board is committed to expanding disclosures in future proxy statements to demonstrate the rigor of the board evaluation process.
Director Skills, Experience and Demographics Matrix. The following matrix provides information about the board of directors, including certain types of knowledge, skills, experience and other attributes possessed by one of more of them which the Board believes are relevant to the Company’s business and industry. The matrix does not capture all of the knowledge, skills and experiences possessed by the directors, and the Board believes that each director has the ability to contribute to the decision-making process in every area listed.
Bartel | Gordon | Hansen | Lawton | Rappé | Schmidt | Tyus | Bartel | Gordon | Hansen | Lawton | Rappé | Schmidt | Tyus | ||
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Financial Industry | ● | ● | ● | ● | ● | ● | ● | ● | |||||||
Risk Management | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
Accounting | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||
Corporate Governance/Ethics | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
Legal/Regulatory | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||
HR/Compensation | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
Executive Experience | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
Investments | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||
Operations | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||
Strategic Planning | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
Technology/Cyber | ● | ● | ● | ● | ● | ● | |||||||||
Mergers and Acquisitions | ● | ● | ● | ● | ● | ● | |||||||||
Crises Response | ● | ● | ● | ● | ● | ● | |||||||||
Race/Ethnicity | |||||||||||||||
Crisis Response | ● | ● | ● | ● | ● | ● | |||||||||
Demographic Background | |||||||||||||||
African American | ● | ● | |||||||||||||
Alaskan Native or Native American | |||||||||||||||
Asian | |||||||||||||||
Hispanic | |||||||||||||||
Native Hawaiian or Pacific Islander | |||||||||||||||
White/Caucasian | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||
Two or More Races or Ethnicities | |||||||||||||||
LGBTQ+ | |||||||||||||||
Gender | |||||||||||||||
Female | ● | ● | ● | ● | |||||||||||
Male | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||
Non-Binary | |||||||||||||||
Board Tenure | |||||||||||||||
Years on Waterstone Financial Inc. | 7 | 16 | 16 | 16 | 7 | 16 | 2 | 9 | 18 | 18 | 18 | 9 | 18 | 4 | |
Years on WaterStone Bank | 8 | 16 | 18 | 21 | 8 | 19 | 2 |
The Nominating Committee will also take into account whether a candidate satisfies the criteria for “independence” under the NASDAQ corporate governance listing standards and, if a nominee is sought for service on the Audit Committee, the financial and accounting expertise of a candidate, including whether an individual qualifies as an “audit committee financial expert.”
The Nominating Committee will consider proposed nominees whose names are submitted to it by shareholders, and it does not intend to evaluate proposed nominees differently depending upon who has made the proposal. Shareholders can submit the names of qualified candidates for director by writing to our Corporate Secretary at 11200 W. Plank Ct., Wauwatosa, Wisconsin 53226. The Corporate Secretary must receive a submission not earlier than the 90th day nor later than the 80th day prior to date of the annual meeting; provided, however, that in the event that less than 90 days’ notice or prior public disclosure of the date of the annual meeting is provided to shareholders, then, to be timely, notice by the stockholder must be so received not later than the tenth day following the day on which public announcement of the date of such meeting is first made. The submission must include the following information:
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● | the name and address of the shareholder as they appear on our books and number of shares of our common stock that are owned beneficially by such shareholder (if the shareholder is not a holder of record, appropriate evidence of the shareholder’s ownership will be required); |
● | the name, address and contact information for the candidate, and the number of shares of common stock that are owned by the candidate (if the candidate is not a holder of record, appropriate evidence of the shareholder’s ownership |
● | a statement of the |
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● | a statement that the candidate is willing to be considered and willing to serve as a director if nominated and elected. |
A nomination submitted by a shareholder for presentation at an annual meeting of shareholders will also need to comply with any additional procedural and informational requirements we may adopt in the future, including those set forth in our Bylaws and in the “Shareholder Proposals and Notices” section of this Proxy Statement.
Waterstone Financial has adopted charters for the Audit, Compensation and Nominating Committees. We will continue to respond to and comply with Securities and Exchange Commission and NASDAQ Stock Market requirements relating to board committees. Copies of the charters for our Audit, Compensation and Nominating Committees (including director selection criteria) and other corporate governance documents can be found on our website, at www.wsbonline.com, on the “Investor Relations” link under the “About” tab, then “Corporate Overview” and “Governance Documents.” If any of those documents are changed, or related documents adopted, those changes and new documents will be posted on our corporate website at that address.
Other Board and Corporate Governance Matters
Board Leadership Structure and Risk Oversight Role. The role of chairman of the board of directors and chief executive officer of the Company are not currently held by the same person. The chairman of the board has never been an officer or employee of the Company or WaterStone Bank. The foregoing structure is not mandated by any provision of law or our Articles of Incorporation or Bylaws, but the board of directors currently believes that this structure provides for an appropriate balance of authority between management and the board. The board of directors reserves the right to establish a different structure in the future.
The board of directors of the Company, all of the members of which are also members of the board of directors of WaterStone Bank, is actively involved in the Company’s and Bank’s risk oversight activities, through the work of numerous committees of the Company and Bank, and the policy approval function of the board of directors of WaterStone Bank.
Communications Between Shareholders and the BoardShareholder Communication. We are committed to open and ongoing dialog with our shareholders and we regularly seek feedback on a variety of issues, including business strategy, governance, executive compensation and any other topics shareholders wish to discuss. To this end, we engage with our shareholders in a variety of ways in order to obtain their feedback. In addition to shareholder outreach, the Board of Directors welcomes communication from our shareholders. A shareholder who wants to communicate with the board of directors or with any individual director can write to our Corporate Secretary at 11200 W. Plank Ct., Wauwatosa, Wisconsin 53226, Attention: Board Administration. The letter should indicate that the author is a shareholder and if shares are not held of record, should include appropriate evidence of stock ownership. Depending on the subject matter, management will:
● | forward the communication to the director or directors to whom it is addressed; |
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At each board meeting, management shall present a summary of all communications received since the last meeting that were not forwarded and make those communications available to the directors.
Board Involvement in Risk Management Process. As part of its overall responsibility to oversee the management, business, and strategy of the Company., one of the primary responsibilities of our Board of Directors is to oversee the amounts and types of risk taken by management in executing the corporate strategy, and to monitor our risk experience against the policies and procedures set to control those risks. The Board’s risk oversight function is carried out through its approval of various policies and procedures, such as our lending and investment policies; ratification or approval of investments and loans exceeding certain thresholds; and regular review of risk elements such as interest rate risk exposure, liquidity, and problem assets. Some oversight functions are delegated to committees of the Board, with such committees regularly reporting to the full Board the results of their oversight activities. For example, the Audit Committee is responsible for oversight of the independent registered public accounting firm and meets directly with the firm at various times during the course of the year.
Board Oversight of Information and Cybersecurity. As a financial institution, cybersecurity presents a significant operational and reputational risk. Accordingly, we take the protection of customer and business information very seriously. We have developed a robust information/cyber security program designed to protect the confidentiality, integrity, and availability of business and customer information. As part of this program, our Chief Information Officer reports to the Board of Directors on a regular basis. Reports include information and cyber security assessment results, business continuity, disaster recovery, and incident response planning and testing, vendor management program status, and independent audit results. All information security-related policies are reviewed and approved annually by the Board.
We promote a culture of continuous learning that has resulted in a highly experienced information security team. In addition to our own experienced information security team, we also partner with industry experts for managed security services such as threat intelligence, firewall, intrusion detection, and intrusion prevention services to ensure protection around the clock. Highlights of the information and cybersecurity program include the following:
● | strong vendor oversight; |
● | deployment of defense-in-depth strategy with multiple layers of controls to provide information protection; |
● | engagement of third-party audit firms to conduct independent security assessments that include vulnerability assessments and penetration tests; |
● | conduct of new and ongoing security awareness training (as well as intermittent testing) for all teammates across the |
● | follow all Federal Deposit Insurance Corporation and Nasdaq requirements for disclosure of security breaches organization. |
Director Attendance at Annual Shareholders’ Meeting. Although we do not have a formal policy regarding director attendance at the annual meeting, we encourage all of our directors to attend. Last year the seven directors serving at that time were present at the annual meeting.
Code of Business Conduct and Ethics. Waterstone Financial has adopted a code of business conduct and ethics that reflects current circumstances and Securities and Exchange Commission and NASDAQ definitions for such codes. The code of business conduct and ethics covers us, WaterStone Bank and other subsidiaries. Among other things, the code of business conduct and ethics includes provisions regarding honest and ethical conduct, conflicts of interest, full and fair disclosure, compliance with law, and reporting of and sanctions for violations. The code applies to all directors, officers and employees of Waterstone Financial and subsidiaries. We have posted a copy of the code of business conduct and ethics on our website, at www.wsbonline.com, on the “Investor Relations” link under the “About” tab, then “Corporate Overview” and “Governance Documents.” As further matters are documented, or if those documents (including the code of business conduct and ethics) are changed, waivers from the code of business conduct and ethics are granted, or new procedures are adopted, those new documents, changes and/or waivers will be posted on the corporate website at that address.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Waterstone Financial board of directors was created in accordance with Section 3(a)(58)(a) of the Securities Exchange Act.Act of 1934, as amended (the “Exchange Act”). The Audit Committee’s functions include meeting with our independent registered public accounting firm and making recommendations to the board regarding the independent registered public accounting firm; assessing the adequacy of internal controls, accounting methods and procedures; review of public disclosures required for compliance with securities laws; and consideration and review of various other matters relating to the our financial accounting and reporting. No member of the Audit Committee is employed by or has any other material relationship with us other than as a customer or shareholder. The members are “independent” as defined in Rule 5605(a)(2) of the NASDAQ listing standards. The board of directors has adopted a written charter for the Audit Committee which can be found on our website.
In connection with its function to oversee and monitor our financial reporting process, the Audit Committee has done the following:
● | reviewed |
● | discussed with |
● | received the written disclosures and the letter from |
The Audit Committee:
Michael L. Hansen, Chairman
Ellen S. Bartel
Thomas E. Dalum
Kristine A. Rappé
Derek L. Tyus
The information contained in the above report will not be deemed to be “soliciting material” or “filed” with the SEC, nor will this information be incorporated into any future filing under the Securities Act of 1933, as amended, (the “Securities Act”), or the Exchange Act except to the extent the Company specifically incorporates such report by reference.
Based on the foregoing, the Audit Committee recommended to the board that those audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2021.2023. In addition, the Audit Committee also considered the fees paid to CliftonLarsonAllenFORVIS LLP for services provided by CliftonLarsonAllenFORVIS LLP during the year ended December 31, 2021.2023.
PROPOSAL 2 – RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of CliftonLarsonAllenFORVIS LLP has audited the financial statements of Waterstone Financial as of and for the year ended December 31, 20212023 and hashad served as Waterstone Financial’s principal independent accountant since 2021. Representatives of CliftonLarsonAllen LLP are expected to be present at the annual meeting to respond to appropriate questions and to make a statement if they so desire.2023.
The Audit Committee of the Board of Directors has selected CliftonLarsonAllenFORVIS LLP as our independent registered public accountants for the fiscal year ending December 31, 2021.2023. We are submitting the selection of independent registered public accountants for shareholder ratification at the annual meeting. Although not required by the Company’s Articles of Incorporation or Bylaws, the Company has determined to ask shareholders to ratify this selection as a matter of good corporate practice. If the appointment of CliftonLarsonAllenFORVIS LLP is not ratified, the Audit Committee will consider the shareholders’ vote when determining whether to continue the firm’s engagement, but may ultimately determine to continue the engagement of the firm or another audit firm without re-submitting the matter to shareholders. Even if the appointment of CliftonLarsonAllenFORVIS LLP is ratified, the Audit Committee may in its sole discretion terminate the engagement of the firm and direct the appointment of another independent registered public accounting firm at any time during the year if it determines that such an appointment would be in the best interests of our Company and our shareholders.
RSM USCliftonLarsonAllen LLP was previously the principal accountants for Waterstone Financial, Inc. On May 27, 2021January 17, 2023, CliftonLarsonAllen, Waterstone Financial, Inc.’s independent registered public accountant, informed the firmCompany that CliftonLarsonAllen would decline to stand for re-appointment after completion of the audit for the year ended December 31, 2022, as a result of CliftonLarsonAllen’s determination to cease providing certain audit services to SEC registrants upon completion of the 2022 audit cycle. On February 28, 2023, CliftonLarsonAllen completed its audit of the Company’s consolidated financial statements as of and for the year ended December 31, 2022. Accordingly, as of February 28, 2023, CliftonLarsonAllen was dismissed as Waterstone Financial's principal accountants. The decision to dismiss RSM US LLP was approved byno longer the Audit Committee of Waterstone Financial.Company’s independent registered public accountant.
DuringCliftonLarsonAllen’s audit reports on the Company’s consolidated financial statements as of and for the years ended December 31, 20202022 and 20192021 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the subsequent interim period through May 27,fiscal years ended December 31, 2022 and 2021, there were no: (1) disagreements with RSM US LLPCliftonLarsonAllen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to their satisfaction, would have caused them to make reference in connection with their opinion to the subject matter of the disagreement, or (2) reportable events under Item 304(a)(1)(v) of Regulation S-K.
The audit reports of RSM US LLPAs previously disclosed on the consolidated financial statements of Waterstone Financial as of and for the years ended December 31, 2020 and 2019 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
A letter from RSM US LLP addressed to the Securities and Exchange Commission stating whether it agrees with the above statements was filed as an exhibit to Waterstone Financial's Report on Form 8-K filed with the Securities and Exchange Commission on June 2, 2021.
On June 2, 2021, Waterstone Financial engaged CliftonLarsonAllen LLP as Waterstone Financial’s new principal accountants for the year ending December 31, 2021. The engagement was approved byJanuary 17, 2023, the Audit Committee of the Board of Directors of Waterstone Financial. DuringFinancial, Inc. approved the years endedappointment of FORVIS LLP to serve as the Company’s independent registered public accounting firm for the year ending December 31, 2020 and 2019, and2023 after a competitive request for proposal process. The appointment of FORVIS LLP was effective upon completion of the subsequent interim period prioraudit of the Company’s consolidated financial statements for the fiscal year ending December 31, 2022 by CliftonLarsonAllen, which occurred on February 28, 2023. Prior to retaining FORVIS LLP, neither the engagement of CliftonLarsonAllenCompany nor anyone acting on its behalf consulted with FORVIS LLP Waterstone Financial did not consult with CliftonLarsonAllen LLP regardingrespect to any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
As reflected in the tables below, Waterstone Financial incurred fees in fiscal year 2021 for professional services provided by CliftonLarsonAllen LLP related to that period. Waterstone Financial incurred fees in fiscal years 2021 and 2020 for professional services provided by RSM US LLP related to such periods.
As reflected in the tables below, Waterstone Financial incurred fees in fiscal years 20212023 and 20202022 for professional services provided by CliftonLarsonAllen LLP and RSM US LLP related to those periods.
Year Ended | ||||||||
CliftonLarsonAllen LLP | December 31, 2021 | December 31, 2020 | ||||||
Audit fees(1) | $ | 299,500 | $ | - | ||||
Audit-related fees(2) | $ | 24,098 | $ | 22,995 |
Year Ended | ||||||||
FORVIS LLP | December 31, 2023 | December 31, 2022 | ||||||
Audit fees(1)…………… | $ | 356,499 | $ | - | ||||
Audit-related fees(2)…… | $ | 60,270 | $ | - | ||||
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RSM US LLP | December 31, 2021 | December 31, 2020 | ||||||
Audit fees(1) | $ | 59,640 | $ | 393,695 | ||||
Audit-related fees(2) | $ | 10,500 | $ | - |
(1) | Audit fees consist of professional services rendered for the audit of our consolidated financial statements and review of SEC |
(2) | Audit-related fees |
Year Ended | ||||||||
CliftonLarsonAllen LLP | December 31, 2023 | December 31, 2022 | ||||||
Audit fees(1)…………. | $ | - | $ | 309,254 | ||||
Audit-related fees(2)… | $ | 28,140 | $ | 10,500 | ||||
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(1) Audit fees consist of professional services rendered for the audit of our consolidated financial statements and review of SEC Filings. Audit fees also include professional fees rendered for the audit of the stand–alone financial statements of Waterstone Mortgage Corporation.
(2) Audit-related fees consisted of the transition and consent on Form S-8 in the 10-k.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of the Independent Registered Public Accounting Firm
The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee has delegated pre-approval authority to its Chairman when expedition of services is necessary. The independent registered public accounting firm and management are required to periodically report to the full Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. All audit services for the past two fiscal years were pre-approved by the Audit Committee.
COMPENSATION DISCUSSION AND ANALYSIS
Overview of Compensation Program
Executive Summary. The Compensation Committee provides our Named Executive Officers with a total compensation package that is market competitive, promotes the achievement of our strategic objectives and is aligned with operating and other performance metrics to support long-term shareholder value. In addition, we have structured our executive compensation program to include elements that are intended to create appropriate balance between risk and reward.
Compensation Philosophy. The primary objectives of our executive compensation programs are to attract and retain highly-qualified executives and to encourage extraordinary management efforts through well-designed incentive opportunities, with the goal of improving the performance of Waterstone Financial, Inc. and its subsidiaries consistent with the interests of our shareholders. We base our compensation decisions on three basic principles:
● | Meeting the Demands of the Market – We compensate our employees at competitive levels that position us as the employer of choice among our peers who provide similar financial services in the markets we serve. |
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● | Driving Performance – We base compensation in part on the attainment of company-wide, business unit and individual performance targets that result in the achievement of both short-term and long-term financial objectives, while ensuring sound risk management. |
Elements of our Executive Compensation and Benefits Program. To achieve our objectives, we have structured an executive compensation program that provides our Named Executive Officers with the following:
● | Competitive Base Salary; |
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● | Executive Agreements. |
The programs are intended to reward the accomplishment of strategic plan goals and objectives as evaluated by members of the Compensation Committee. They are further intended to reward enhanced shareholder value as measured by the trading price of our common stock. The elements of a Named Executive Officer’s total compensation package will vary depending upon the executive’s job position and responsibilities.
Compensation Polices and Highlights
Our compensation programs include, among others, the following best practices:
What We Do
✔ | The Compensation Committee has engaged an independent compensation consultant. |
✔ | The Compensation Committee |
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✔ | We maintain stock ownership guidelines for our |
✔ | We maintain |
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✔ | We provide a say-on-pay advisory vote on an annual basis until the next required vote on the frequency of shareholder votes on executive compensation. |
What We Do Not Do
✖ | We do not encourage excessive risk-taking behavior through our compensation plans. |
✖ | We do not |
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✖ | We do not provide excessive |
✖ | We do not provide excise tax gross ups in our |
✖ | We do not guarantee salary increases. |
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Shareholder Say-on-Pay Advisory Votes
We provide our shareholders with the opportunity to cast an annual advisory vote on executive compensation (a “say-on-pay proposal”). At our 20212023 annual meeting of shareholders, over 96%94% of the votes cast (excluding abstentions and broker non-votes) on the say-on-pay proposal at that meeting were voted in favor of the proposal.
We have held annual say-on-pay votes since 2010, and we will continue to hold annual say-on-pay votes until the next shareholders vote regarding the frequency of say-on-pay votes, which we expect to occur at the 2026 annual meeting of shareholders.
The Compensation Committee will continue to consider the outcome of our say-on-pay vote, regulatory changes and emerging best practices when making future compensation decisions for the Named Executive Officers.
Named Executive Officer Compensation Process, Programs and Polices
Role of the Compensation Committee. The Compensation Committee is responsible for reviewing all compensation components for the Named Executive Officers annually, including base salary, annual incentive, long-term incentives/equity, benefits and other perquisites. The Compensation Committee examines the total compensation mix, pay-for-performance relationship, and how all these elements in the aggregate comprise each executive’s total compensation package to ensure that our compensation is competitive in the market place and that the mix of benefits accurately reflects our compensation philosophy. The Compensation Committee operates under a written charter that establishes its responsibilities. The Compensation Committee and the board of directors review the charter annually to ensure that the scope of the charter is consistent with the role of the Compensation Committee. A copy of the charter can be found on our website on the “Investor Relations” link under the “About” tab, then “Corporate Overview” and “Governance Documents.”
Role of Management. The executive officers who serve as a resource to the Compensation Committee are the President and Chief Executive Officer, with respect to compensation for the other Named Executive Officers, and the President, Chief Operating Officer and General Counsel and the Assistant Vice President and Director of Human Resources, with respect to compensation of other officers and employees of WaterStone Bank. The executives provide the Compensation Committee with data, analyses, input and recommendation. The Compensation Committee considers our Chief Executive Officer’s evaluation of each Named Executive Officer’s performance and recommendation of appropriate compensation. However, our Chief Executive Officer does not participate in any decisions relating to his own compensation.
Role of Compensation Consultant. The Compensation Committee has the authority to engage compensation consultants from time to time to assist it in the compensation governance process for determining the compensation of our Named Executive Officers. In 2021,Over the past three years, the Compensation Committee continued its engagement ofhas utilized Meridian Compensation Partners, LLC, or Meridian, as its independent compensation consultant. Meridian is engaged directly by the Compensation Committee. Pursuant to its engagement, Meridian provides research, data analyses, survey information and design expertise in developing compensation programs for executives and incentive programs for eligible employees. In addition, Meridian keeps the Compensation Committee apprised of regulatory developments and market trends related to executive compensation practices. Meridian does not determine the exact amount or form of executive compensation for and of the Named Executive Officers.
Benchmarking Compensation. The Compensation Committee assesses the components of executive compensation with advice from its independent compensation consultant. During 2018,In prior years, Meridian has provided an analysis of base salary, annual incentive and long-term incentive practices of comparable companies in the financial industry. Meridian considered individual compensation elements as well as the total compensation package. This analysis was considered by the Compensation Committee, and served as a basis, when it established 20212023 compensation opportunities for executives. In conducting this analysis, the Compensation Committee reviewed market data using publicly disclosed compensation information from a peer group of comparable financial institutions ranging in asset size from $1.6$1.5 billion to $4.4$9.4 billion. In addition to asset size, peer group selection was also focused on banks with significant mortgage banking operations, a significant focus on real estate lending and/or banks that were recent mutual-to-stock conversions.
For 2021,2023, the Compensation Committee approved the following peer group for purposes of evaluating the appropriateness of the compensation package for the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Credit Officer, and Chief Retail Officer:
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● | Independent Bank Corporation, Grand Rapids, MI |
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● | RBB Bancorp, Los Angeles, CA |
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● | Territorial Bancorp Inc., Honolulu, HI |
Stock Ownership Guidelines. To align the interests of the Company’s Named Executive Officers and non-employee directors with the interests of the Company’s shareholders, in 2019, the Company implementedmaintains stock ownership guidelines, wherewhereby Named Executive Officers of WaterStone Bank are required to own shares of common stock equal to a specified multiple of their annual base salary and non-employee directors are required to own shares of common stock equal to a multiple of such director’s annual board cash retainer. The applicable levels are as follows:
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Named Executive Officers and non-employee directors have five years from the date that the individual first become subject to the guidelines to meet these ownership requirements. In calculating equity ownership for purposes of this requirement, we include all shares beneficially owned by an individual in the Company’s benefit plans (e.g. 401(k) and Employee Stock Ownership Plan), shares of restricted stock and shares with respect to which an individual has voting or investment power. For purposes of our stock ownership requirements, we do not include unexercised stock options, whether vested or non-vested. As of December 31, 2021,2023, all directors were in compliance with the Company’s stock ownership guidelines. As of December 31, 2021,2023, all Named Executive Officers that have been employed with the Company for at least five years were in compliance with the Company’s stock ownership guidelines.
Clawback Policy.Policies. Our compensation program includes a Clawback Policy, whichPolicies. One of our policies provides that in the event that the Company is required to prepare an accounting restatement due to its material noncompliance with financial reporting requirements under U.S. securities laws, the Company shall, to the extent permitted by governing law, pursue reimbursement of any performance-based compensation paid to aan executive officer, including the Named Executive Officer,Officers, to the extent such payments and grants were made to the Named Executive Officer during the three-year period preceding the date on which the Company is required to prepare an accounting restatement based on the erroneous data, provided that the Compensation Committee or determine that the amount of any such performance-based compensation actually paid or awarded to the Named Executive Officer would have been a lower amount had it been calculated based on such restated financial statements. In addition, we have adopted a second clawback policy, whereby we are required to recover incentive-based compensation erroneously awarded to an executive officer during the three completed fiscal years preceding an accounting restatement, with the amount required to be recovered generally calculated as the difference between what was paid to the executive officer and what the executive officer would have received based on the restated amounts.
Components of Executive Compensation
Overview. Our compensation program consists of five main components: base salary, annual incentives, long-term incentive/equity, broad-based welfare and retirement benefit plans and perquisites. The following section summarizes the role of each component, how decisions are made and the resulting 20212023 decision process as it relates to the named executive officers.Named Executive Officers.
Base Salary. We provide a base salary for Named Executive Officers commensurate with the services provided to the Company. We believe that a portion of total direct compensation should be provided in a form that is fixed and liquid. In determining the base salary of executive officers for 2021,2023, the Compensation Committee reviewed, among other things, third-party surveys of peer institutions, the historical compensation of those officers under review, any increased level of responsibility and performance measures of Waterstone Financial Inc. and its subsidiaries. Base salaries for Named Executive Officers other than the Chief Executive Officer are determined based upon recommendations made by the Chief Executive Officer. Base salary for the Chief Executive Officer is determined by the Compensation Committee.
2021 | 2020 | Change | Change | |||||||||||||
Name and Principal Position | ($) | ($) | ($) | (%) | ||||||||||||
Douglas S. Gordon | 850,000 | 850,000 | - | - | ||||||||||||
Chief Executive Officer of Waterstone Financial and WaterStone Bank | ||||||||||||||||
William F. Bruss | 365,000 | 365,000 | - | - | ||||||||||||
President, Chief Operating Officer and General Counsel of Waterstone Financial and WaterStone Bank | ||||||||||||||||
Mark R. Gerke | 250,000 | 250,000 | - | - | ||||||||||||
Chief Financial Officer of Waterstone Financial and WaterStone Bank | ||||||||||||||||
Julie A. Glynn | 230,000 | 225,000 | 5,000 | 2.3 | ||||||||||||
Chief Retail Officer of WaterStone Bank | ||||||||||||||||
Jeffrey R. McGuiness | 400,000 | 400,000 | - | - | ||||||||||||
Chief Executive Officer and President of Waterstone Mortgage Corporation(1) |
Name and Principal Position | 2023 ($) | 2022 ($) | Change ($) | Change (%) |
Douglas S. Gordon Former Chief Executive Officer of Waterstone Financial and WaterStone Bank (1) | 875,000 | 875,000 | - | - |
William F. Bruss President and Chief Executive Officer of Waterstone Financial and WaterStone Bank (1) | 387,500 | 376,000 | 11,500 | 3.0 |
Mark R. Gerke Chief Financial Officer of Waterstone Financial and WaterStone Bank | 265,500 | 257,500 | 8,000 | 3.1 |
Julie A. Glynn Chief Retail Officer of WaterStone Bank | 244,000 | 236,900 | 7,100 | 3.0 |
Ryan J. Gordon Chief Credit Officer of WaterStone Bank | 233,500 | 226,600 | 6,900 | 3.0 |
Jeffrey R. McGuiness Chief Executive Officer and President of Waterstone Mortgage Corporation | 450,000 | 425,000 | 25,000 | 5.9 |
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Annual Incentive Plan. We maintain an Annual Incentive Plan which provides Named Executive Officers of WaterStone Bank with annual cash incentive opportunities for annual performance. The ability to earn any award is primarily contingent on the Company achieving consolidated financial-based metrics. These metrics are measured against actual results or actual results compared to our annual budget. The objective of our Annual Incentive Plan is to motivate and reward executives for achieving or exceeding annual financial, strategic and operational goals that we believe will help us maintain long-term profitable growth, maintain asset quality and support value creation for shareholders. The Chief Executive Officer of Waterstone Mortgage Corporation did not participate in the Annual Incentive Plan during the year ended December 31, 2021.2023. Mr. McGuiness participated in a cash-based annual incentive plan as set forth in his employment agreement.
Incentive awards are calculated based upon the Company’s performance in one of three or four weighted financial-based measures along with a potential discretionary portion contingent upon achievement of strategic or operational non-financial objectives. With respect to the financial-based measures, performance was measured against the Board-approved 20212023 budget. To receive any award under the Annual Incentive Plan, the named executive officerNamed Executive Officer must be actively employed on the day the award is made.
Performance Measures
In designing the Annual Incentive Program, the Compensation Committee emphasized the Company’s goals of maintaining profitability and enhancing our franchise value through growth of our commercial loan portfolio and core deposits. The Compensation Committee determined that to encourage these goals, the Annual Incentive Plan would include the following performance measures:
Performance Measure | Evaluated Against | Rationale | |
| Budget | Focuses management on achieving budgeted | |
Mortgage Banking Segment Pre-Tax Income | Budget | Focuses management on achieving budgeted pre-tax income. | |
Commercial Loan Growth | Budget | Focuses management on enhancing franchise value through growth of the Commercial Real Estate and Commercial and Industrial segments of the loan portfolio. | |
Core Deposit Growth | Budget | Focuses management on less costly deposits and growth of business and retail checking and savings accounts, which will help to improve net interest margin. | |
Individual Performance | N/A | Contingent on individual achievement of strategic or operational non-financial objectives. |
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Target Annual Incentive Opportunities
Target annual incentive awards are defined at the beginning of the year in consideration of market data, each NEO’sNEOs total compensation package and the Company’s budgetary considerations. The following table sets forth information concerning Annual Incentive Plan opportunities for 2021:2023:
Target | Target | |||||||||||||||||||
Name | Threshold ($) | Amount ($) | % of Annual Base Salary | Maximum ($) | Threshold ($) | Amount ($) | % of Annual Base Salary | Maximum ($) | ||||||||||||
Douglas S. Gordon | 212,500 | 425,000 | 50 | % | 637,500 | 218,750 | 437,500 | 50.0% | 656,250 | |||||||||||
William F. Bruss | 91,250 | 136,875 | 37.5 | % | 182,500 | 96,875 | 155,000 | 40.0% | 213,125 | |||||||||||
Mark R. Gerke | 62,500 | 93,750 | 37.5 | % | 125,000 | 66,375 | 99,563 | 37.5% | 132,750 | |||||||||||
Julie A. Glynn | 46,000 | 69,000 | 30 | % | 92,000 | 61,000 | 91,500 | 37.5% | 122,000 | |||||||||||
Ryan J. Gordon | 58,375 | 87,563 | 37.5% | 116,750 |
Performance Measures
Each NEO had pre-defined performance objectives based upon measurable performance of our Company. In addition, each NEO had the opportunity to earn incentive award based upon individual performance.
The weights of the performance objectives for each NEO for 20212023 are summarized in the following table:
Name | Earnings Per Share | Commercial Loan Growth | Core Deposit Growth | Individual Performance | Community Banking Pre-Tax Income | Community Banking Pre-Tax Income | Commercial Loan Growth | Core Deposit Growth | Individual Performance | ||||||||||||
Douglas S. Gordon | 50 | % | 15 | % | 15 | % | 20 | % | 50% | 10% | 10% | 20% | |||||||||
William F. Bruss | 50 | % | 15 | % | 15 | % | 20 | % | 50% | 10% | 10% | 20% | |||||||||
Mark R. Gerke | 50 | % | 15 | % | 15 | % | 20 | % | 50% | 10% | 10% | 20% | |||||||||
Julie A. Glynn | 20 | % | 20 | % | 40 | % | 20 | % | 50% | - | 10% | 20% | 20% | ||||||||
Ryan J. Gordon | 50% | 10% | 10% | 20% |
The opportunity to earn incentive award based upon individual performance is rooted in each individual’s contribution to the achievement of a variety of tactical and strategic Company goals. While not limited to the following items, the Committee considers each individuals contribution relative to:
● | Maintaining strong asset quality |
● | Maintaining strong expense management controls |
● | Maintaining an effective system of internal controls over financial reporting |
● | Staff attraction, retention and development |
● | Achieving strong ratings from regulatory agencies |
Performance Results and Payouts
The Committee determines the final amount of each participant’s award based upon the attainment of the applicable performance goals. Each element of the annual cash incentive award is independent of the other. Accordingly, the Named Executive Officer may achieve certain performance goals, whileand, at the same time, fail to achieve others. In that case, the Named Executive Officer would be entitled to receive the award for the performance goal achieved, but not an award for a performance goal for which the threshold performance was not achieved. 20212023 performance goals and actual performance were as follows:
2021 Performance Measure | Threshold | Target | Maximum | Actual | Achievement as a % of Target | ||||||||||||||||||||
Earnings Per Share | $ | 1.10 | $ | 1.43 | $ | 1.76 | $ | 2.96 | 207 | % | |||||||||||||||
2023 Performance Measure | Threshold | Target | Maximum | Actual | Achievement as a % of Target | ||||||||||||||||||||
Community Banking Segment Pre-Tax Income | $19,000 | $24,400 | $30,000 | $24,270 | 99.5% | ||||||||||||||||||||
Mortgage Banking Segment Pre-Tax Income | 0 | 3,500 | 8,000 | (13,238) | N/M | ||||||||||||||||||||
Commercial Loan Growth (in thousands) | $ | 10,000 | $ | 25,000 | $ | 40,000 | $ | (43,817 | ) | (175 | )% | 13,500 | 40,000 | 66,500 | 68,751 | 171.9% | |||||||||
Core Deposit Growth (in thousands) | $ | 5,000 | $ | 15,000 | $ | 25,000 | $ | 136,141 | 908 | % | 5,000 | 15,000 | 25,000 | (100,435) | N/M |
Based upon the above financial performance measures and the Compensation Committee’s discretion with respect to individual performance, the 20212023 annual cash incentive payments were awarded as follows relative to the 20212023 target value:
Name | 2021 Annual Incentive Payment ($) | % of 2021 Target Annual Incentive | 2023 Annual Incentive Payment ($) | % of 2023 Target Annual Incentive | ||||||
Douglas S. Gordon | 541,875 | 127.5 | % | 412,992 | 94.4% | |||||
William F. Bruss | 155,125 | 113.3 | % | 140,738 | 90.8% | |||||
Mark R. Gerke | 106,250 | 113.3 | % | 89,207 | 89.6% | |||||
Julie A. Glynn | 73,600 | 106.7 | % | 81,983 | 89.6% | |||||
Ryan J. Gordon | 78,455 | 89.6% |
Annual Incentive Plan – Waterstone Mortgage Corporation. We maintain an Annual Incentive Plan which provides executive officers of Waterstone Mortgage Corporation with annual cash incentive opportunities for annual performance. The ability to earn any award is primarily contingent on the Company achieving financial-based metrics relative to the mortgage banking operation segment. These metrics are measured against actual results or actual results compared to our annual budget. The objective of our Annual Incentive Plan is to motivate and reward executives for achieving or exceeding annual financial, strategic and operational goals that we believe will help us maintain long-term profitable growth, maintain asset quality and support value creation for shareholders. Incentive awards are calculated based upon the Waterstone Mortgage Corporation’s performance relative to pre-tax income. Performance was measured against the Board-approved 20212023 budget. To receive any award under the Annual Incentive Plan, the named executive officerNamed Executive Officer must be actively employed on the day the award is made.
Performance Measure | Evaluated Against | Rationale |
| Budget | Focuses management on achieving budgeted net income. |
Target Annual Incentive Opportunities
Target annual incentive awards are defined at the beginning of the year in consideration of market data, Mr. McGuiness’ total compensation package and the Company’s budgetary considerations. The following table sets forth information concerning Annual Incentive Plan opportunities for 2021:2023:
Target | Target | |||||||||||||||||||
Name | Threshold ($) | Amount ($) | % of Annual Base Salary | Maximum ($) | Threshold ($) | Amount ($) | % of Annual Base Salary | Maximum ($) | ||||||||||||
Jeffrey R. McGuiness | 100,000 | 200,000 | 50 | % | 300,000 | 112,500 | 225,000 | 50% | 337,500 |
Performance Results and Payouts
The Compensation Committee determines the final amount of each participant’s award based upon the attainment of the applicable performance goal. 2021The 2023 performance goals and actual performance were as follows (dollars in thousands):
2021 Performance Measure | Threshold | Target | Maximum | Actual | Achievement as a % of Target | |||||||||||||||
Waterstone Mortgage pre-tax income in excess of a 20% preferred return on average equity | $ | 9,800 | $ | 16,600 | $ | 23,400 | $ | 50,134 | 302 | % |
2023 Performance Measure | Threshold | Target | Maximum | Actual | Achievement as a % of Target |
Waterstone Mortgage pre-tax income | $2,508 | $3,583 | $4,656 | ($13,238) | N/M |
As a result of Waterstone Mortgage Corporation’s achievement of 302% ofperformance relative to the target metric, Mr. McGuiness qualifieddid not qualify for and was awardedor receive the maximum incentive payment of $300,000 for the year ended December 31, 2021.2023.
Equity-Based Compensation. The overall objective for our equity-based compensation is to provide an equitable and competitive means to reward our officers for their contributions to our long-range success. Our goal is to meet the following objectives:
● | Align the interests of our officers with the interests of shareholders by linking the long-term value of the compensation to shareholder |
● | Link each participant’s compensation to our long-term success through the appreciation of the stock |
● | Retention through longer vesting schedules and enhanced shareholder value due to the value of grants being tied to the trading price of our common |
All equity awards granted to the Named Executive Officers of Waterstone Financial Inc. are at the discretion of the Compensation Committee. The Compensation Committee considers the position of the Named Executive Officer, the officer’s level of influence and the corresponding ability to contribute toward the success of Waterstone Financial, Inc., and individual and corporate performance as well as the level of equity awards granted to individuals with similar positions at similar companies.
In recentprior years, we have utilized restricted stock as our primary long-term incentive tool to retain and motivate our key employees. We believe this is an excellent waythe preferred practice to reward them for, and to motivate them toward, superior performance. Restricted stock is an important retention instrument in that it has immediate value to the recipient In 2018, 20,000 incentive stock option awards were granted to the Chief Retail Officer.
In the event of an involuntary termination of employment following a change in control, the unvested equity incentive awards held by each recipient will vest automatically.
2021 Long-Term Performance-Based Equity Compensation Plan. During 2021, our Compensation Committee implementedThe Company maintains a Long-Term Performance-Based Equity Compensation Plan, which provides Named Executive Officers of WaterStone Bank with annual awards of restricted stock. In order to become vested in their restricted stock, our executive officers will need to be employed throughout thea three-year performance period, of 2021 to 2023, which satisfies a retention goal, and the Company must meet certain pre-determined financial performance goals. The Compensation Committee believes it is important for the restricted stock, which is intended to be a long-term incentive, to focus our executive officers on, and reward them for, the achievement of multi-year performance objectives. The performance goals will be set at a target performance level. If the Company meets the target performance level, the executive officers would be vested in the number of shares designated as the “target award.” Performance levels would also be set at a maximum level to provide an incentive for superior performance, and at a threshold level, below which no shares would be earned. Depending on the Company’s performance relative to the performance goals, the executive officers could earn between 0% and 150% of the target award. For the performance period of 2021 to 2023, our Compensation Committee will set the
Performance Measures
In designing the Long-Term Performance-Based Equity Plan, the Compensation Committee emphasized the Company’s goal of maintaining a high level of profitability as we strategically deploy our excess capital. The Compensation Committee determined that to encourage these goals, the Annual Incentive Plan would include the following performance measure:
Performance Measure | Evaluated Against | Rationale |
Return on Average Assets ( | Budget | Focuses management on achieving a level of return that continues to exceed that of our peer group. |
Target Long-Term Performance-Based Equity Award Opportunity
Target equity awards are defined at the beginning of the year in consideration of, market data, each NEO’sNEOs total compensation package and the Company’s budgetary considerations. The following table sets forth information concerning Target Long-Term Performance-Based Equity Award opportunities for 2021:2023:
Target | Target | |||||||||||||||||||
Name | Threshold ($) | ($) | % of Annual Base Salary | Maximum ($) | Threshold ($) | ($) | % of Annual Base Salary | Maximum ($) | ||||||||||||
Douglas S. Gordon | 42,500 | 85,000 | 10 | % | 127,500 | 43,750 | 87,500 | 10% | 131,250 | |||||||||||
William F. Bruss | 18,250 | 36,500 | 10 | % | 54,750 | 19,375 | 38,750 | 10% | 58,125 | |||||||||||
Mark R. Gerke | 12,500 | 25,000 | 10 | % | 37,500 | 13,275 | 26,550 | 10% | 39,825 | |||||||||||
Julie A. Glynn | 11,500 | 23,000 | 10 | % | 34,500 | 12,200 | 24,400 | 10% | 36,600 | |||||||||||
Ryan J. Gordon | 11,675 | 23,350 | 10% | 35,025 |
During 2021, our Compensation Committee awarded 7,132 shares of restricted stock to Mr. McGuiness. The shares had a grant-date fair value of $135,009. In accordance with the terms of his employment contract, the shares will vest on the third anniversary of the grant date.
During 2021,2023, our Compensation Committee awarded grants of 6,1458,192 shares of performance-based restricted stock to Mr. D. Gordon, 2,6393,628 shares to Mr. Bruss, 1,8072,486 shares to Mr. Gerke, and 1,6632,284 shares to Ms. Glynn.Glynn and 2,186 shares to Mr. R. Gordon. The number of shares granted is based upon the assumption of achievement at a “maximum” performance level. The actual number of shares that may ultimately vest for each NEO will be based upon achievement level relative to the Company’s return on average assets for the three-year performance period of 20212023 to 2023.2025. In addition, each NEO will need to be employed through the duration of that same three-year performance period. In the event of an involuntary termination of employment following a change in control, the unvested equity incentive awards held by each recipient will vest automatically.
Performance Results and Payouts – 2021 Long-Term Performance-Based Equity Compensation Plan
The Committee determines the final amount of each participant’s award based upon the attainment of the applicable performance goal. Actual performance was as follows:
Performance Measure | Threshold | Target | Maximum | Actual | Achievement as a % of Target |
Consolidated Return on Average Assets for the fiscal years 2021, 2022 and 2023) | 1.00% | 1.35% | 1.70% | 1.56% | 115.6% |
Based upon the above financial performance measure, shares awarded under the 2021 Long-Term Performance-based Equity Compensation Plan were as follows relative to the target shares:
Name | Shares at Target | Shares Awarded | Value of Shares Awarded (1) |
Douglas S. Gordon | 4,096 | 5,332 | $64,784 |
William F. Bruss | 1,759 | 2,289 | 27,811 |
Mark R. Gerke | 1,205 | 1,568 | 19,051 |
Julie A. Glynn | 1,108 | 1,443 | 17,532 |
Ryan J. Gordon | 1,060 | 1,380 | 16,767 |
(1) | Based on the $12.15 per share closing price of our common stock on date of vest. |
Bonus. During 2023, the Compensation Committee awarded a cash bonus of $62,000 to Mr. D. Gordon. By awarding the cash bonus, it was the intent of the Compensation Committee to recognize the leadership and efforts of Mr. Gordon during his 18 years of service to the Company.
Broad-Based Welfare and Retirement Benefit Plans. The purpose of welfare and retirement benefit plans are to ensure our compensation packages are competitive and to provide an opportunity for retirement savings. We maintain a number of broad-based welfare benefit plans that are available to our employees, including Named Executive Officers. We provide group medical, dental and vision insurance coverage plans to employees, with employees being responsible for a portion of the premiums.
We also offer our employees, including Named Executive Officers, participation in tax-qualified defined contribution retirement plans.
WaterStone Bank Employee Stock Ownership Plan (ESOP). The ESOP is a tax-qualified defined contribution retirement plan that benefits all eligible WaterStone Bank employees proportionately. The ESOP is not separately considered in the review and evaluation of annual executive compensation. ESOP allocations are made annually as of December 31 to all eligible WaterStone Bank employees. An employee must complete a full year of service and be employed by us on December 31 in order to receive an annual allocation each year. A trustee holds the shares purchased by the ESOP in an unallocated suspense account. Shares are released from the suspense account on a pro-rata basis as the ESOP repays the loan. The trustee allocates the shares released among participants on the basis of the participant’s proportional share of compensation relative to all participants. In the event of a plan termination, all allocated benefits become fully vested immediately, any outstanding loan will be repaid from shares in the unallocated suspense account and the amounts remaining in the suspense account will be allocated to participant accounts proportionally. Dividends paid with respect to shares of Waterstone Financial, Inc. stock in the unallocated suspense account may be used to repay the ESOP loan. To the extent the dividends exceeded the annual loan payment, the remaining dividend amount would cause additional shares to be allocated to participants or may be credited proportionately to participant accounts.
WaterStone Bank 401(k) Plan. WaterStone Bank maintains the WaterStone Bank 401(k) Plan, a tax-qualified defined contribution retirement plan, for all WaterStone Bank including Named Executive Officers,employees, who have satisfied the 401(k) Plan’s eligibility requirements.requirements, including Named Executive Officers. All eligible employees can begin participation in the 401(k) Plan on the first day of the month that coincides with or follows the date the employee attains age 18. A participant may contribute up to 90% of his or her compensation to the 401(k) Plan on a pre-tax basis, subject to the limitations imposed by the Internal Revenue Code. A participant is 100% vested in his or her salary deferral contributions. In addition to salary deferral contributions, the 401(k) Plan provides that WaterStone Bank will make matching contributions on 20% of the first 5% of the participant’s salarycompensation that is contributed to the 401(k) Plan.
Waterstone Mortgage 401(k) Plan. Waterstone Mortgage Corporation maintains the Waterstone Mortgage 401(k) Plan, a tax-qualified defined contribution retirement plan, for all Waterstone Mortgage Corporation employees, including Named Executive Officers, who have satisfied the 401(k) Plan’s eligibility requirements. All eligible employees can begin participation in the 401(k) Plan on the first day of the month that coincides with or follows the date the employee attains age 21 and completes 60 days of service. A participant may contribute up to 100% of his or her eligible compensation to the 401(k) Plan on a pre-tax basis, subject to the limitations imposed by the Internal Revenue Code. A participant is 100% vested in his or her salary deferral contributions. In addition to salary deferral contributions, the 401(k) Plan provides that Waterstone Mortgage Corporation will make matching contributions on 50% of the first 6% of the participant’s salarycompensation that is contributed to the 401(k) Plan.
Perquisites. Perquisites comprise a small portion of our total compensation package. The main perquisites we provide are use of a company-owned vehicle or an automobile allowance for selected officers. Although these perquisites may involve personal use, we believe that they are reasonable and consistent with the overall compensation program to assist with attracting and retaining executive officers.
Executive Agreements. WaterStone Bank has entered into executive employment agreements with each of Messrs. D Gordon and McGuiness. For descriptions of the executive employment agreements, see the “Employment Agreements” section following the “Summary Compensation Table.”
Compensation Committee Report
The Compensation Committee has reviewed and discussed the section of this Proxy Statement entitled “Compensation Discussion and Analysis” with management. Based on this review and discussion, the Compensation Committee recommended to the board of directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement.
Compensation Committee:
Thomas E. Dalum, Chairman
Ellen S. Bartel
Patrick S. Lawton (Chair)
Stephen J. Schmidt
Derek L. Tyus
PROPOSAL 3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION
The compensation of our principal executive officer, principal financial officer and the threefour other most highly compensated executive officers of the Company (“Named Executive Officers”) is described above in general and is shown in detail in the Executive Compensation and Compensation Discussion and Analysis sections. Shareholders are urged to read the Executive Compensation and Compensation Discussion and Analysis sections of this Proxy Statement, which discusses our compensation policies and procedures with respect to our Named Executive Officers.
In accordance with Section 14A of the Exchange Act, shareholders will be asked at the Annual Meeting to provide their support with respect to the compensation of our Named Executive Officers by voting on the following advisory, non-binding resolution:
RESOLVED, that the compensation paid to the “Named Executive Officers,” as disclosed in the Company’s Proxy Statement for the 20212023 Annual Meeting of Shareholders pursuant to Item 402 Securities and Exchange Commission Regulation S-K, including the Compensation Discussion and Analysis, the 20212023 compensation tables and narrative discussion is hereby approved.
We will hold annual say-on-pay votes until the next shareholders vote regarding the frequency of say-on-pay votes, which we expect to occur at the 2026 annual meeting of shareholders.
This advisory vote, commonly referred to as a “say-on-pay” advisory vote, is non-binding on the board of directors. Although non-binding, the board of directors and the Compensation Committee value constructive dialogue on executive compensation and other important governance topics with our shareholders and encourage all shareholders to vote their shares on this matter. The board of directors and the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding our executive compensation.
Unless otherwise instructed, validly executed proxies will be voted “FOR” this resolution.
The board of directors unanimously recommends that you vote “FOR” the resolution set forth in Proposal 3.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table shows the compensation of our Named Executive Officers, including Douglas S. Gordon, our principal executive officer, Mark R. Gerke, our principal financial officer, and the threefour other highest paid executive officers who received total compensation of more than $100,000 during the year ended December 31, 2021.2023. The “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column hasand “Options Awards” columns have been omitted because no listed individual earnedsince a Named Executive Officer did not earn any compensation during the listed years of a type required to be disclosed in this column.column during the years listed.
SUMMARY COMPENSATION TABLE | |||||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($) | All Other Compensation ($)(2) | Total ($) | ||||||||||||||||||||
Douglas S. Gordon | 2021 | 850,000 | 541,875 | 127,509 | — | 77,971 | 1,597,355 | ||||||||||||||||||||
Chief Executive Officer of | 2020 | 850,000 | 562,932 | — | — | 63,026 | 1,475,958 | ||||||||||||||||||||
Waterstone Financial and WaterStone Bank | 2019 | 850,000 | 181,688 | — | — | 187,986 | 1,219,674 | ||||||||||||||||||||
William F. Bruss | 2021 | 365,000 | 155,125 | 54,759 | — | 78,055 | 652,939 | ||||||||||||||||||||
President and Secretary of | 2020 | 357,000 | 166,490 | — | — | 67,847 | 591,337 | ||||||||||||||||||||
Waterstone Financial and WaterStone Bank | 2019 | 318,000 | 67,973 | — | — | 86,911 | 472,884 | ||||||||||||||||||||
Mark R. Gerke | 2021 | 250,000 | 106,250 | 37,495 | — | 75,689 | 469,434 | ||||||||||||||||||||
Chief Financial Officer of | 2020 | 242,000 | 45,614 | — | — | 72,667 | 360,281 | ||||||||||||||||||||
Waterstone Financial and WaterStone Bank | 2019 | 206,000 | 44,033 | — | — | 61,353 | 311,386 | ||||||||||||||||||||
Julie A. Glynn | 2021 | 229,807 | 73,600 | 34,507 | — | 72,907 | 410,821 | ||||||||||||||||||||
Senior Vice President and | 2020 | 219,000 | 82,105 | — | — | 57,996 | 359,101 | ||||||||||||||||||||
Director of Retail of WaterStone Bank | 2019 | 190,500 | 73,343 | — | — | 24,629 | 288,472 | ||||||||||||||||||||
Jeffrey R. McGuiness | 2021 | 400,000 | 300,000 | 135,009 | — | 14,308 | 849,317 | ||||||||||||||||||||
President of Waterstone | 2020 | 30,769 | 325,000 | — | — | — | 355,769 | ||||||||||||||||||||
Mortgage Corporation (3) |
SUMMARY COMPENSATION TABLE | |||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(2) | Total ($) |
Douglas S. Gordon Chief Executive Officer of Waterstone Financial and WaterStone Bank | 2023 2022 2021 | 875,000 875,000 850,000 | 62,000 — — | 131,236 131,250 127,509 | 412,992 262,500 541,875 | 75,049 72,839 77,971 | 1,556,285 1,341,589 1,597,355 |
William F. Bruss President, Chief Operating Officer and General Counsel of Waterstone Financial and WaterStone Bank | 2023 2022 2021 | 387,500 376,000 365,000 | 40,000 — — | 58,121 56,405 54,759 | 140,738 82,720 155,125 | 68,232 74,315 78,055 | 654,591 629,440 652,939 |
Mark R. Gerke Chief Financial Officer of Waterstone Financial and WaterStone Bank | 2023 2022 2021 | 265,000 257,500 250,000 | 30,000 — — | 39,826 38,627 37,495 | 89,207 51,500 106,250 | 63,067 70,443 75,689 | 457,100 448,070 469,434 |
Julie A. Glynn Senior Vice President and Director of Retail of WaterStone Bank | 2023 2022 2021 | 244,000 236,900 229,807 | 29,000 — — | 36,590 35,537 34,507 | 81,983 35,535 73,600 | 58,030 66,847 72,907 | 420,603 403,819 410,821 |
Ryan J. Gordon Senior Vice President and Chief Credit Officer of WaterStone Bank | 2023 2022 | 235,500 226,600 | 28,000 — | 35,020 33,983 | 78,455 45,320 | 62,711 74,068 | 409,686 407,971 |
Jeffrey R. McGuiness President of Waterstone Mortgage Corporation | 2023 2022 2021 | 450,000 425,000 400,000 | — — — | 135,009 — — | — — 300,000 | 11,214 10,250 14,308 | 461,214 435,250 849,317 |
(1) | Reflects the aggregate grant-date fair value of the stock |
(2) | A detailed breakdown of “All Other Compensation” for |
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All Other Compensation
Name and Principal Position | 401(k) Match ($) | Employee Stock Ownership Plan ($) | Automobile Expense Allowance ($)(1) | Total ($) | 401(k) Match ($) | Employee Stock Ownership Plan ($) | Automobile Expense Allowance ($)(1) | Dividends on Vested Restricted Shares ($) | Total ($) | ||||||||||||
Douglas S. Gordon | 2,900 | 66,127 | 8,944 | 77,971 | 2,860 | 48,096 | 6,497 | 17,596 | 75,049 | ||||||||||||
William F. Bruss | 988 | 66,127 | 10,940 | 78,055 | 2,379 | 48,096 | 10,203 | 7,554 | 68,232 | ||||||||||||
Mark R. Gerke | 2,900 | 66,127 | 6,662 | 75,689 | 3,597 | 48,096 | 6,200 | 5,174 | 63,067 | ||||||||||||
Julie A. Glynn | 2,900 | 66,127 | 3,880 | 72,907 | 5,399 | 44,098 | 3,771 | 4,762 | 58,030 | ||||||||||||
Ryan J. Gordon | 3,079 | 44,660 | 10,418 | 4,554 | 62,711 | ||||||||||||||||
Jeffrey R. McGuiness | 9,750 | — | 4,558 | 14,308 | 11,214 | — | — | — | 11,214 |
(1) | In lieu of an automobile allowance, Mr. McGuiness received compensation for travel expenses to/from Milwaukee, Wisconsin. |
Realized Compensation
To supplement the SEC required disclosure in the above Summary Compensation Table, the following additional table has been included to show the total compensation realized by each Named Executive Officer in each of the years shown. The Summary Compensation Table, as calculated under the SEC rules, includes items that are impacted by accounting assumptions and also may include amounts that are not ultimately realized, and therefore that table may not necessarily be reflective of realized compensation in a particular year. Accordingly, the Company believes that this table is useful to shareholders.
The table below shows compensation realized by each Named Executive Officer. For purposes of this presentation, realized compensation includes, base salary, performance-based cash bonus and all other compensation, all of which are included in the SEC required disclosure in the above Summary Compensation Table. To approximate an amount that represents realized compensation, the following table also includes an amount that represents the value realized upon the vesting of restricted stock awards and omits the grant date fair value of stock or option awards that have not vested.
REALIZED COMPENSATION | |||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | Value Realized on Stock Awards Vesting ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||
Douglas S. Gordon | 2021 | 850,000 | 541,875 | — | 77,971 | 1,469,846 | |||||||||||||||||
Chief Executive Officer of Waterstone | 2020 | 850,000 | 562,932 | — | 63,026 | 1,475,958 | |||||||||||||||||
Financial and WaterStone Bank | 2019 | 850,000 | 181,688 | 839,500 | 187,986 | 2,059,174 | |||||||||||||||||
William F. Bruss | 2021 | 365,000 | 155,125 | — | 78,055 | 598,180 | |||||||||||||||||
President and Secretary of Waterstone | 2020 | 357,000 | 166,490 | — | 67,847 | 591,337 | |||||||||||||||||
Financial and WaterStone Bank | 2019 | 318,000 | 67,973 | 100,740 | 86,911 | 573,624 | |||||||||||||||||
Mark R. Gerke | 2021 | 250,000 | 106,250 | — | 75,689 | 431,939 | |||||||||||||||||
Chief Financial Officer of Waterstone | 2020 | 242,000 | 45,614 | 59,720 | 72,667 | 420,001 | |||||||||||||||||
Financial and WaterStone Bank | 2019 | 206,000 | 44,033 | 67,640 | 61,353 | 379,026 | |||||||||||||||||
Julie A. Glynn | 2021 | 229,807 | 73,600 | — | 72,907 | 376,314 | |||||||||||||||||
Senior Vice President and Director of | 2020 | 219,000 | 82,105 | — | 57,996 | 359,101 | |||||||||||||||||
Retail of WaterStone Bank | 2019 | 190,500 | 73,343 | — | 24,629 | 288,472 | |||||||||||||||||
Jeffrey R. McGuiness | 2021 | 400,000 | 300,000 | — | 14,308 | 714,308 | |||||||||||||||||
President of Waterstone Mortgage | 2020 | 30,769 | — | — | — | 30,769 | |||||||||||||||||
Corporation |
Employment Agreements
Employment Agreement with Douglas S. Gordon. WaterStone Bank has entered into an employment agreement with Douglas S. Gordon, its Chief Executive Officer. Commencing on January 1, 2015 (the “Anniversary Date”) and continuing each January 1st thereafter, the term shall renew for an additional year such that the remaining term of this Agreement is always three years, unless written notice of non-renewal is provided to Mr. Gordon at least 30 days prior to such Anniversary Date, in which case the term of this Agreement shall become fixed and shall end two years following such Anniversary Date. Under the agreement, Mr. Gordon’s annual base salary for 2022 is $875,000. In addition, Mr. Gordon is entitled to participate in the employee benefit plans, arrangements and perquisites offered by WaterStone Bank and is entitled to participate in any incentive compensation or bonus plan or arrangement of WaterStone Bank or Waterstone Financial in which he is eligible to participate. The Bank will also pay or reimburse him for business expenses incurred, pay or reimburse him for annual country club dues and furnish him an automobile or reimburse him for the expense of leasing an automobile and for reasonable expenses associated with the use of such automobile.
In the event of Mr. Gordon’s involuntary termination of employment for reasons other than cause, disability, death or retirement, or in the event Mr. Gordon resigns during the term of the agreement for “good reason” (as defined in the agreement), subject to his execution and non-revocation of a mutual release of claims, Mr. Gordon will receive a lump-sum severance payment equal to the sum of (i) his earned but unpaid salary as of the date of his termination of employment, (ii) the benefits he is entitled to as a former employee under the employee benefit plans maintained by WaterStone Bank or Waterstone Financial, (iii) the remaining base salary and bonuses Mr. Gordon would have earned if he had continued his employment for the remaining term of the Agreement and had earned a bonus and/or incentive award in each year in an amount equal to the average bonus and/or incentive award earned by him over the three calendar years preceding the year in which the termination occurs, (iv) the annual contributions or payments that would have been made on Mr. Gordon’s behalf to any employee benefit plans of WaterStone Bank or Waterstone Financial as if Mr. Gordon had continued his employment with WaterStone Bank for the remaining term of the Agreement, and (v) the annual payments that would have been made related to membership in a country club and the use of an automobile for the remaining term of the Agreement. Upon the occurrence of an event of termination described above, Mr. Gordon will be entitled to continued life insurance coverage and non-taxable medical and dental insurance coverage for the remaining term of the agreement.
Upon termination of Mr. Gordon’s employment by Waterstone Financial or WaterStone Bank for reasons other than cause following a change in control of Waterstone Financial or WaterStone Bank, or Mr. Gordon’s resignation due to good reason following a change in control, Mr. Gordon will receive a lump sum payment within 30 days after the date of termination substantially similar to the payment that he would receive on such a termination without regard to a change in control, except that such payments will be for a period of 36 months from date of termination. Mr. Gordon’s payment described in clause (iii), above, will be based on the highest annual bonus and/or incentive award earned by him in any of the three calendar years preceding the year in which the termination occurs. Also, the annual contributions or payments that would have been made on Mr. Gordon’s behalf to any employee benefit plans of the Bank or the Company as if Executive had continued his employment with the Bank for a period of 36 months following the Date of Termination, based on contributions or payments made (on an annualized basis) at the Date of Termination and the annual payments that would have been made on Mr. Gordon’s behalf if he had continued his employment with the Bank for a period of 36 months following the Date of Termination. Upon the occurrence of an event of termination described above, Mr. Gordon will be entitled to continued life insurance coverage and non-taxable medical and dental insurance coverage for a period of 36 months from the date of termination.
In the event of Mr. Gordon’s disability and subsequent termination of employment, Mr. Gordon will receive the benefits provided under any disability program sponsored by Waterstone Financial or WaterStone Bank. To the extent such benefits are less than Mr. Gordon’s base salary at the date of termination, and less than 66 2/3% of Mr. Gordon’s base salary after the first year following termination, Mr. Gordon will be entitled to the difference between the disability benefits provided under any disability program sponsored by Waterstone Financial or WaterStone Bank and his base salary for a period of one year. After the first year following termination, Mr. Gordon will be entitled to the difference between the disability benefits provided under any disability program sponsored by Waterstone Financial or WaterStone Bank and 66 2/3% of Mr. Gordon’s base salary, through the earliest to occur of the date of Mr. Gordon’s death, recovery from disability or the date Mr. Gordon attains age 65.
In the event of Mr. Gordon’s death during the term of the agreement, Mr. Gordon’s beneficiary, legal representatives or estate will be paid Mr. Gordon’s base salary for one year and WaterStone Bank will continue to provide Mr. Gordon’s family the same medical, dental, and other health benefits that were provided by WaterStone Bank to Mr. Gordon’s family immediately prior the Mr. Gordon’s death, on the same terms, including cost, for one year.
In the event of termination due to Mr. Gordon’s retirement, no amount or benefit will be due Mr. Gordon under the Agreement.
The employment agreement restricts Mr. Gordon from revealing confidential information of Waterstone Financial and WaterStone Bank. In addition, for one year following termination of employment (other than upon termination following a change in control), Mr. Gordon may not compete with Waterstone Financial and WaterStone Bank or solicit or hire WaterStone Bank’s employees.
Employment Agreement with Jeffrey R. McGuiness. Effective as of November 16, 2020, Waterstone Mortgage Corporation entered into an employment agreement with its President and Chief Executive Officer, Jeffrey McGuiness. The agreement has an initial term continuing through December 31, 2023. Thereafter, the agreement shall renew for successive on year terms such that the remaining term of the agreement would always be one year unless written notice of non-renewal was provided by either party at least 90 days prior to such anniversary date. Under the agreement, Mr. McGuiness is entitled to a base salary in 2022 of $425,000 and participation in company-wide employee benefits, including Waterstone Mortgage Corporation’s 401(k) Plan. Mr. McGuiness is also entitled to annual cash-based performance bonus compensation beginning in 2021. Mr. McGuiness was granted shares of restricted stock in January 2021 with a value of $135,000 on the date of grant. The shares will vest on the third anniversary of the grant date. Mr. McGuiness was eligible for a cash-based sign-on bonus in the amount of $325,000, which was paid by the Company on the date of the Company’s first regularly scheduled payroll of 2021. The sign-on bonus will not be earned in full until December 31, 2023.
Mr. McGuiness may terminate his employment for “good reason,” which includes any material breach of the agreement by Waterstone Mortgage Corporation, including the failure, without “good cause” (as defined in the agreement), to pay the amounts due under the agreement on a timely basis. In the event the agreement is terminated for good reason or in the event Waterstone Mortgage Corporation terminates Mr. McGuiness’s employment for any reason other than “good cause,” Mr. McGuiness will be entitled to receive his earned but unpaid base salary as of the date of his termination with the Company, the vested benefits, if any, to which he is entitled as a former employee under the employee benefit plans and a payment equal to one year’s base salary, subject to the terms of the agreement and shall accelerate or cause to be accelerated the vesting of the restricted stock award. In the event of Mr. McGuiness’s death during the term of the agreement, the agreement will terminate with no payment of severance compensation to Mr. McGuiness’s estate. Similarly, in the event of his termination by the Company for good cause, Mr. McGuiness will not be entitled to any severance compensation.
In the event of Mr. McGuiness’s termination of employment, the agreement contains provisions which prevent him from soliciting business from customers of Waterstone Mortgage Corporation, withdrawing any customers’ business, hiring any employees, consultants or personnel of Waterstone Mortgage Corporation, disclosing confidential information with Waterstone Mortgage Corporation for two years following termination of employment.
Plan-Based Awards
The following table sets forth for the year ended December 31, 2021 certain information as to grants of plan-based cash awards.
GRANTS OF PLAN-BASED NON-EQUITY AWARDS FOR THE YEAR ENDED DECEMBER 31, 2021 | ||||||||||||||||
Estimated Future Payments Under Non-Equity Incentive Plan Awards | ||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum($) | ||||||||||||
Douglas S. Gordon (1) | 2/16/2021 | 212,500 | 425,000 | 637,500 | ||||||||||||
William F. Bruss (1) | 2/16/2021 | 91,250 | 136,875 | 182,500 | ||||||||||||
Mark R. Gerke (1) | 2/16/2021 | 62,500 | 93,750 | 125,000 | ||||||||||||
Julie A. Glynn (1) | 2/16/2021 | 46,000 | 69,000 | 92,000 | ||||||||||||
Jeffrey R. McGuiness (2) | — | 100,000 | 200,000 | 300,000 |
REALIZED COMPENSATION | |||||||
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($) | Bonus ($) | Non-Equity Incentive Plan ($) | Value Realized on Stock Awards Vesting ($) | All Other Compensation ($) | Total ($) | |
Douglas S. Gordon Chief Executive Officer of Waterstone Financial and WaterStone Bank | 2023 2022 2021 | 875,000 875,000 850,000 | 62,008 — — | 412,922 262,500 541,875 | 64,784 — — | 75,049 72,839 77,971 | 1,489,763 1,210,339 1,469,846 |
William F. Bruss President and General Counsel of Waterstone Financial and WaterStone Bank | 2023 2022 2021 | 387,500 376,000 365,000 | 40,000 — — | 140,738 82,720 155,125 | 27,811 — — | 68,232 74,315 78,055 | 624,281 573,035 598,180 |
Mark R. Gerke Chief Financial Officer of Waterstone Financial and WaterStone Bank | 2023 2022 2021 | 265,500 257,500 250,000 | 30,000 — — | 89,207 51,500 106,250 | 19,051 — — | 63,067 70,443 75,689 | 436,825 409,443 431,939 |
Julie A. Glynn Senior Vice President and Director of Retail of WaterStone Bank | 2023 2022 2021 | 244,000 236,900 229,807 | 29,000 — — | 81,983 35,535 73,600 | 17,532 — — | 58,030 66,847 72,907 | 401,545 368,282 376,314 |
Ryan J. Gordon Senior Vice President and Chief Credit Officer of WaterStone Bank | 2023 2022 | 233,500 226,600 | 28,000 — | 78,455 45,320 | 16,767 — | 62,711 74,068 | 391,433 373,988 |
Jeffrey R. McGuiness President of Waterstone Mortgage |
The following table sets forth for the year ended December 31, 2021 certain information as to grants of plan-based equity awards.
GRANTS OF PLAN-BASED EQUITY AWARDS FOR THE YEAR ENDED DECEMBER 31, 2021 | |||||||||||||||||||
Estimated Future Payments Under Equity Incentive Plan Awards | |||||||||||||||||||
Name | Grant Date | Threshold (#) | Target (#) | Maximum (#) | Grant Date Fair Value of Stock Awards ($) | ||||||||||||||
Douglas S. Gordon (1) | 3/16/2021 | 2,048 | 4,096 | 6,145 | 137,509 | ||||||||||||||
William F. Bruss (1) | 3/16/2021 | 880 | 1,759 | 2,639 | 54,759 | ||||||||||||||
Mark R. Gerke (1) | 3/16/2021 | 602 | 1,205 | 1,807 | 37,495 | ||||||||||||||
Julie A. Glynn (1) | 3/16/2021 | 554 | 1,108 | 1,663 | 34,507 | ||||||||||||||
Jeffrey R. McGuiness (2) | 1/26/2021 | — | 7,132 | — | 135,009 |
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Outstanding Equity Awards at Year End. The following table sets forth information with respect to outstanding equity awards as of December 31, 2021. Grants were made under our 2015 and 2020 Equity Incentive Plans.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2021 | ||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | ||||||||||||||||||
William F. Bruss | — | — | — | — | 2,639 | (3) | 57,689 | |||||||||||||||||
Mark R. Gerke | 5,000 | — | 12.75 | 3/4/2025 | 1,807 | (3) | 39,501 | |||||||||||||||||
10,000 | — | 14.98 | 6/21/2026 | — | — | |||||||||||||||||||
Julie A. Glynn | 12,000 | 8,000 | (1) | 17.35 | 3/20/2028 | 1,663 | (3) | 36,353 | ||||||||||||||||
Douglas S. Gordon | — | — | — | — | 6,145 | (3) | 134,330 | |||||||||||||||||
Jeffrey R. McGuiness | — | — | — | — | 7,132 | (4) | 155,906 |
400,000 |
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300,000 |
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10,250 14,308 | 461,214 435,250 714,308 |
Option Exercises and Stock Vested. The following table sets forth information with respect to option exercises and stock that vested during the year ended December 31, 2021.
OPTION EXERCISES AND STOCK VESTED | ||||||||||||||||
DURING THE YEAR ENDED DECEMBER 31, 2021 | ||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting ($) | ||||||||||||
William F. Bruss | 30,000 | 218,861 | — | — | ||||||||||||
Mark R. Gerke | 5,000 | 39,381 | — | — |
Potential Payments Upon Termination or Change in Control
The following table sets forth estimates of the amounts that would become payable to our Named Executive Officers, under employment agreements and/or equity award agreements in the event of their termination of employment on December 31, 2021, under designated circumstances. The table does not include vested or accrued benefits under any tax-qualified benefit plans that do not discriminate in scope, terms or operation in favor of Executive Officers or equity awards or other benefits in which the executive is vested without regard to the change in control. The estimates shown are highly dependent on a variety of factors, including but not limited to the date of termination, interest rates, federal, state, and local tax rates, and compensation history. Actual payments due could vary substantially from the estimates shown. We consider each termination scenario listed below to be exclusive of all other scenarios and do not expect that any of our Executive Officers would be eligible to collect the benefits shown under more than one termination scenario. If a Named Executive Officer is terminated for “cause” as defined in the applicable agreement or award, we have no contractual payment or other obligations under the agreement.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | ||||||||||||||||||||
Mr. Gordon | Mr. Bruss | Mr. Gerke | Ms. Glynn | Mr. McGuiness | ||||||||||||||||
Discharge Without Cause or Resignation With Good Reason — no Change in Control | ||||||||||||||||||||
Severance payment | $ | 3,440,861 | (1) | $ | — | $ | — | $ | — | $ | 400,000 | (1) | ||||||||
Medical, dental and life insurance benefits | 37,768 | (2) | — | — | — | — | ||||||||||||||
Acceleration of vesting of stock options | — | — | — | — | — | |||||||||||||||
Acceleration of vesting of restricted stock | — | — | — | — | 56,248 | (8) | ||||||||||||||
Total | $ | 3,478,629 | $ | — | $ | — | $ | — | $ | 456,248 | ||||||||||
Discharge Without Cause or Resignation With Good Reason — Change in Control Related | ||||||||||||||||||||
Severance payment (lump sum) | $ | 6,185,060 | (3) | $ | — | $ | — | $ | — | $ | 400,000 | (3) | ||||||||
Medical, dental and life insurance benefits | 56,651 | (2) | — | — | — | — | ||||||||||||||
Acceleration of vesting of stock options | — | — | — | 36,080 | (7) | — | ||||||||||||||
Acceleration of vesting of restricted stock | 145,391 | (4) | 62,439 | (4) | 42,754 | (4) | 39,346 | (4) | 168,744 | (4) | ||||||||||
Total | $ | 6,387,102 | $ | 62,439 | $ | 42,754 | $ | 75,426 | $ | 568,744 | ||||||||||
Disability | ||||||||||||||||||||
Severance/disability payment | $ | 566,667 | (5) | $ | — | $ | — | $ | — | $ | — | |||||||||
Acceleration of vesting of stock option | — | — | — | 36,080 | (7) | — | ||||||||||||||
Acceleration of vesting of restricted stock | 40,386 | (8) | 17,344 | (8) | 11,876 | (8) | 10,929 | (8) | 168,744 | (4) | ||||||||||
Total | $ | 607,053 | $ | 17,344 | $ | 11,876 | $ | 47,099 | $ | 168,744 | ||||||||||
Death | ||||||||||||||||||||
Salary continuation payment | $ | 850,000 | (6) | $ | — | $ | — | $ | — | $ | — | |||||||||
Medical, dental and life insurance benefits | 18,172 | (6) | — | — | — | — | ||||||||||||||
Acceleration of vesting of stock options | — | — | — | 36,080 | (7) | — | ||||||||||||||
Acceleration of vesting of restricted stock | 40,386 | (8) | 17,344 | (8) | 11,876 | (8) | 11,929 | (8) | 168,744 | (4) | ||||||||||
Total | $ | 909,270 | $ | 17,344 | $ | 11,876 | $ | 47,099 | $ | 168,744 |
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CEO Pay Ratio Disclosure
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Securities and Exchange Commission Regulation S-K,applicable SEC rules, we are providing the following information:information about the relationship of the annual total compensation for our median employee to the annual total compensation of Mr. Gordon, our Chief Executive Officer during the fiscal year ending December 31, 2023. For 2023, our last completed year:
For 2021:
● | The |
● | The annual total compensation of Mr. Gordon, our |
Based on this information, for 2023 the ratio for 2021 of the annual total compensation of our President and Chief Executive Officer to the median of the annual total compensation of all employees is 20.4our median employee was 22.6 to 1.
We completed the following steps to identify the median employee:
● | As of December 31, |
● | To find the median of the annual total compensation of our employees (other than our CEO), we used wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for fiscal |
● | We identified our median employee using this compensation measure and methodology, which was consistently applied to all our employees included in the |
The required CEO pay ratio information reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodologies and assumptions described above. SEC rules for identifying the median employee and determining the CEO pay ratio permit companies to employ a wide range of methodologies, estimates and assumptions. As a result, the CEO pay ratios reported by other companies, which may have employed other permitted methodologies or assumptions and which may have a significantly different work force structure from the Company’s, is likely not comparable to the Company’s SEC-required CEO pay ratio.
Pay Versus Performance Disclosure
In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer ("PEO") and Non-PEO NEOs and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
PEO | Average Non-PEO NEOs | Value of Initial Fixed $100 Investment (4) | ||||||
Year | Summary Compensation Table Total (1) | Compensation Actually Paid (1,2,3) | Summary Compensation Table Total (1) | Compensation Actually Paid (1,2,3) | TSR
| Peer TSR ($) | Net Income ($ Thousands) | Return on Average Assets (5) |
2023 | $ 1,556,285 | $ 1,391,309 | $ 480,739 | $ 433,348 | $ 90.72 | $ 107.76 | $ 9,375 | 0.44% |
2022 | 1,341,589 | 1,219,309 | 464,910 | 423,514 | 111.95 | 96.44 | 19,487 | 0.96% |
2021 | 1,597,355 | 1,559,400 | 595,628 | 598,819 | 132.89 | 116.46 | 70,791 | 3.20% |
| Douglas S. Gordon was our PEO for each year presented. The individuals comprising the Non-PEO named executive officers for each year presented are listed below. |
2021 | 2022 | 2023 |
William F. Bruss | William F. Bruss | William F. Bruss |
Mark R. Gerke | Mark R. Gerke | Mark R. Gerke |
Julie A. Glynn | Ryan J. Gordon | Ryan J. Gordon |
Jeffrey R. McGuiness | Julie A. Glynn | Julie A. Glynn |
Jeffrey R. McGuiness | Jeffrey R. McGuiness |
2. | The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. |
3. | Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the totals from the Stock Awards column set forth in the Summary Compensation Table. |
Compensation for PEO | 2023 | 2022 | 2021 |
Total compensation as reported in the Summary Compensation Table (SCT) | $ 1,556,285 | $ 1,341,589 | $ 1,597,355 |
Exclusion of change in in pension value | — | — | — |
Exclusion of stock awards granted during the year | (131,236) | (131,250) | (127,509) |
Pension value attributable to current year’s service and any change in pension value attributable to plan amendments made in the current year | — | — | — |
Fair value of equity compensation granted in current year that remained unvested as of the last day of the year—value at end of year-end | — | — | 89,554 |
Change in fair value for end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during current fiscal year | (33,740) | — | — |
Change in fair value from end of prior fiscal year to end of current fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | — | 8,970 | — |
Dividends or other earnings paid on stock or options awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | — | — | — |
Fair value of awards forfeited in current year determined at end of prior fiscal year | — | — | — |
Compensation Actually Paid to CEO | $ 1,391,309 | $ 1,219,309 | $ 1,559,400 |
Compensation for Non-PEO NEOs | 2023 | 2022 | 2021 |
Total compensation as reported in the Summary Compensation Table (SCT) | $ 480,739 | $ 464,910 | $ 595,628 |
Exclusion of change in in pension value | — | — | — |
Exclusion of stock awards granted during the year | (33,911) | (32,910) | (65,443) |
Pension value attributable to current year’s service and any change in pension value attributable to plan amendments made in the current year | — | — | — |
Fair value of equity compensation granted in current year that remained unvested as of the last day of the year—value at end of year-end | — | — | 61,234 |
Change in fair value for end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during current fiscal year | (9,144) | (2,072) | 3,420 |
Change in fair value from end of prior fiscal year to end of current fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | (4,336) | (6,414) | 3,980 |
Dividends or other earnings paid on stock or options awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | — | — | — |
Fair value of awards forfeited in current year determined at end of prior fiscal year | — | — | — |
Compensation Actually Paid to Non-PEO NEOs | $ 433,348 | $ 423,514 | $ 598,819 |
4. | The Peer Total Shareholder Return (“TSR”) set forth in this table represents the cumulative TSR of the S&P Composite 1500 Thrifts & Mortgage Finance Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report on Form 10-K for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting December 31, 2020, through the end of the listed year in the Company and in the S&P Composite 1500 Thrifts & Mortgage Finance Index, respectively. All dollar values assume reinvestment of the pre-tax value of dividends paid by companies, where applicable, included in the peer group. |
5. | We |
Relationship Between Compensation Actually Paid and Certain Financial Performance Measures
The following graph compares compensation actually paid (“CAP”) to our PEO and the average compensation actually paid to our other NEOs to (i) our cumulative total shareholder return (“TSR”), and (ii) S&P Composite 1500 Thrifts & Mortgage Finance Index for the fiscal years ended December 31, 2021, 2022 and 2023.
The following graph compares compensation actually paid (“CAP”) to our PEO and the average compensation actually paid to our other NEOs to the Company’s net income for the fiscal years ended December 31, 2021, 2022 and 2023.
The following graph compares compensation actually paid (“CAP”) to our PEO and the average compensation actually paid to our other NEOs to the Company’s return on average assets for the fiscal years ended December 31, 2021, 2022 and 2023.
Financial Performance Measures
As described in greater detail in the “Compensation Discussion & Analysis,” our approach to executive compensation is designed to directly link pay to performance, recognize both corporate and individual performance, promote long-term stock ownership, attract, retain and motivate talented executives, and balance risk and reward while taking into consideration stakeholder feedback as well as market trends and practices. The most important financial measures used by the Company to link compensation actually paid (as defined by SEC rules) to the Company’s Named Executive Officers for the most recently completed fiscal year to the Company’s performance are:
• | Return on Average Assets; |
• | Earnings Per Share; and |
• | Total Shareholder Return. |
Analysis of the Information Presented in the Pay versus Performance Table
While we utilize several performance measures to align executive compensation with performance, all of those measures are not presented in the Pay Versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the company’s performance measures with compensation that is actually paid (as defined by SEC rules) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following graphic descriptions of the relationships between compensation actually paid and cumulative total shareholder return, net income and return on average assets.
Employment Agreements
Employment Agreement with Douglas S. Gordon. WaterStone Bank has entered into an employment agreement with Douglas S. Gordon, its Chief Executive Officer. Commencing on January 1, 2015 (the “Anniversary Date”) and continuing each January 1st thereafter, the term shall renew for an additional year such that the remaining term of this agreement is always three years, unless written notice of non-renewal is provided to Mr. Gordon at least 30 days prior to such Anniversary Date, in which case the term of this agreement shall become fixed and shall end two years following such Anniversary Date. Under the agreement, Mr. Gordon’s annual base salary for 2023 is $475,000. In addition, Mr. Gordon is entitled to participate in the employee benefit plans, arrangements and perquisites offered by WaterStone Bank and is entitled to participate in any incentive compensation or bonus plan or arrangement of WaterStone Bank or Waterstone Financial in which he is eligible to participate. The Bank will also pay or reimburse him for business expenses incurred, pay or reimburse him for annual country club dues and furnish him an automobile or reimburse him for the expense of leasing an automobile and for reasonable expenses associated with the use of such automobile.
In the event of Mr. Gordon’s involuntary termination of employment for reasons other than cause, disability, death or retirement, or in the event Mr. Gordon resigns during the term of the agreement for “good reason” (as defined in the agreement), subject to his execution and non-revocation of a mutual release of claims, Mr. Gordon will receive a lump-sum severance payment equal to the sum of (i) his earned but unpaid salary as of the date of his termination of employment, (ii) the benefits he is entitled to as a former employee under the employee benefit plans maintained by WaterStone Bank or Waterstone Financial, (iii) the remaining base salary and bonuses Mr. Gordon would have earned if he had continued his employment for the remaining term of the Agreement and had earned a bonus and/or incentive award in each year in an amount equal to the average bonus and/or incentive award earned by him over the three calendar years preceding the year in which the termination occurs, (iv) the annual contributions or payments that would have been made on Mr. Gordon’s behalf to any employee benefit plans of WaterStone Bank or Waterstone Financial as if Mr. Gordon had continued his employment with WaterStone Bank for the remaining term of the agreement, and (v) the annual payments that would have been made related to membership in a country club and the use of an automobile for the remaining term of the Agreement. Upon the occurrence of an event of termination described above, Mr. Gordon will be entitled to continued life insurance coverage and non-taxable medical and dental insurance coverage for the remaining term of the agreement.
Upon termination of Mr. Gordon’s employment by Waterstone Financial or WaterStone Bank for reasons other than cause following a change in control of Waterstone Financial or WaterStone Bank, or Mr. Gordon’s resignation due to good reason following a change in control, Mr. Gordon will receive a lump sum payment within 30 days after the date of termination substantially similar to the payment that he would receive on such a termination without regard to a change in control, except that such payments will be for a period of 36 months from date of termination. Mr. Gordon’s payment described in clause (iii), above, will be based on the highest annual bonus and/or incentive award earned by him in any of the three calendar years preceding the year in which the termination occurs. Also, the annual contributions or payments that would have been made on Mr. Gordon’s behalf to any employee benefit plans of the Bank or the Company as if Executive had continued his employment with the Bank for a period of 36 months following the Date of Termination, based on contributions or payments made (on an annualized basis) at the Date of Termination and the annual payments that would have been made on Mr. Gordon’s behalf if he had continued his employment with the Bank for a period of 36 months following the Date of Termination. Upon the occurrence of an event of termination described above, Mr. Gordon will be entitled to continued life insurance coverage and non-taxable medical and dental insurance coverage for a period of 36 months from the date of termination.
In the event of Mr. Gordon’s disability and subsequent termination of employment, Mr. Gordon will receive the benefits provided under any disability program sponsored by Waterstone Financial or WaterStone Bank. To the extent such benefits are less than Mr. Gordon’s base salary at the date of termination, and less than 66 2/3% of Mr. Gordon’s base salary after the first year following termination, Mr. Gordon will be entitled to the difference between the disability benefits provided under any disability program sponsored by Waterstone Financial or WaterStone Bank and his base salary for a period of one year. After the first year following termination, Mr. Gordon will be entitled to the difference between the disability benefits provided under any disability program sponsored by Waterstone Financial or WaterStone Bank and 66 2/3% of Mr. Gordon’s base salary, through the earliest to occur of the date of Mr. Gordon’s death, recovery from disability or the date Mr. Gordon attains age 65.
In the event of Mr. Gordon’s death during the term of the agreement, Mr. Gordon’s beneficiary, legal representatives or estate will be paid Mr. Gordon’s base salary for one year and WaterStone Bank will continue to provide Mr. Gordon’s family the same medical, dental, and other health benefits that were provided by WaterStone Bank to Mr. Gordon’s family immediately prior the Mr. Gordon’s death, on the same terms, including cost, for one year.
In the event of termination due to Mr. Gordon’s retirement, no amount or benefit will be due Mr. Gordon under the agreement.
The employment agreement restricts Mr. Gordon from revealing confidential information of Waterstone Financial and WaterStone Bank. In addition, for one year following termination of employment (other than upon termination following a change in control), Mr. Gordon may not compete with Waterstone Financial and WaterStone Bank or solicit or hire WaterStone Bank’s employees.
Employment Agreement with Jeffrey R. McGuiness. Effective as of November 16, 2020, Waterstone Mortgage Corporation entered into an employment agreement with its President and Chief Executive Officer, Jeffrey McGuiness. The agreement has an initial term continuing through December 31, 2023. Thereafter, the agreement shall renew for successive on year terms such that the remaining term of the agreement would always be one year unless written notice of non-renewal was provided by either party at least 90 days prior to such anniversary date. Under the agreement, Mr. McGuiness is entitled to a base salary in 2022 of $425,000 and participation in company-wide employee benefits, including Waterstone Mortgage Corporation’s 401(k) Plan. Mr. McGuiness is also entitled to annual cash-based performance bonus compensation beginning in 2021. Mr. McGuiness was granted shares of restricted stock in January 2021 with a value of $135,000 on the date of grant. The shares will vest on the third anniversary of the grant date. Mr. McGuiness was eligible for a cash-based sign-on bonus in the amount of $325,000, which was paid by the Company on the date of the Company’s first regularly scheduled payroll of 2021. The sign-on bonus will not be earned in full until December 31, 2023.
Mr. McGuiness may terminate his employment for “good reason,” which includes any material breach of the agreement by Waterstone Mortgage Corporation, including the failure, without “good cause” (as defined in the agreement), to pay the amounts due under the agreement on a timely basis. In the event the agreement is terminated for good reason or in the event Waterstone Mortgage Corporation terminates Mr. McGuiness’s employment for any reason other than “good cause,” Mr. McGuiness will be entitled to receive his earned but unpaid base salary as of the date of his termination with the Company, the vested benefits, if any, to which he is entitled as a former employee under the employee benefit plans and a payment equal to one year’s base salary, subject to the terms of the agreement and shall accelerate or cause to be accelerated the vesting of the restricted stock award. In the event of Mr. McGuiness’s death during the term of the agreement, the agreement will terminate with no payment of severance compensation to Mr. McGuiness’s estate. Similarly, in the event of his termination by the Company for good cause, Mr. McGuiness will not be entitled to any severance compensation.
In the event of Mr. McGuiness’s termination of employment, the agreement contains provisions which prevent him from soliciting business from customers of Waterstone Mortgage Corporation, withdrawing any customers’ business, hiring any employees, consultants or personnel of Waterstone Mortgage Corporation, disclosing confidential information with Waterstone Mortgage Corporation for two years following termination of employment.
Grants of Plan-Based Awards
The following table sets forth for the year ended December 31, 2023 certain information as to grants of plan-based cash awards.
GRANTS OF PLAN-BASED NON-EQUITY AWARDS FOR THE YEAR ENDED DECEMBER 31, 2023 | ||||
Estimated Future Payments Under Non-Equity Incentive Plan Awards | ||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) |
Douglas S. Gordon (1) | 2/21/2023 | 218,750 | 437,500 | 656,250 |
William F. Bruss (1) | 2/21/2023 | 96,875 | 155,000 | 213,125 |
Mark R. Gerke (1) | 2/21/2023 | 66,375 | 99,563 | 132,750 |
Julie A. Glynn (1) | 2/21/2023 | 61,000 | 91,500 | 122,000 |
Ryan J. Gordon (1) | 2/21/2023 | 58,375 | 87,563 | 116,750 |
Jeffrey R. McGuiness (2) | — | 112,500 | 225,000 | 337,500 |
____________________
(1) | See “Compensation Discussion and Analysis – Annual Incentive Plan” for actual awards made under the |
(2) | See “Compensation Discussion and Analysis – Annual Incentive Plan – Waterstone Mortgage Corporation” for actual awards made under the 2023 Annual Incentive Plan. |
The following table sets forth for the year ended December 31, 2023 certain information as to grants of plan-based equity awards.
GRANTS OF PLAN-BASED EQUITY AWARDS FOR THE YEAR ENDED DECEMBER 31, 2023 | |||||
Estimated Future Payments Under Equity Incentive Plan Awards | |||||
Name | Grant Date | Threshold (#) | Target (#) | Maximum (#) | Grant Date Fair Value of Stock Awards ($) |
Douglas S. Gordon (1) | 2/21/2023 | 2,731 | 5,462 | 8,192 | 131,236 |
William F. Bruss (1) | 2/21/2023 | 1,209 | 2,419 | 3,628 | 58,121 |
Mark R. Gerke (1) | 2/21/2023 | 829 | 1,657 | 2,486 | 39,826 |
Julie A. Glynn (1) | 2/21/2023 | 762 | 1,523 | 2,284 | 36,590 |
Ryan J. Gordon (1) | 2/21/2023 | 729 | 1,458 | 2,186 | 35,020 |
____________________
(1) | See “Compensation Discussion and Analysis – 2023 Long-Term Performance Based Equity Compensation Plan” for details regarding performance and time-based vesting requirements related to these awards. |
Outstanding Equity Awards at Fiscal Year End. The following table sets forth information with respect to outstanding equity awards as of December 31, 2023. Grants were made under our 2015 and 2020 Equity Incentive Plans.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023 | ||||||
Option Awards | Stock Awards | |||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) |
William F. Bruss | — | — | — | — | 2,639 (2) | 37,474 |
— | — | — | — | 2,903 (3) | 41,223 | |
— | — | — | — | 3,628 (4) | 51,518 | |
Mark R. Gerke | 5,000 | — | 12.75 | 3/4/2025 | 1,807 (2) | 25,659 |
10,000 | — | 14.98 | 6/21/2026 | 1,988 (3) | 28,230 | |
2,486 (4) | 35,301 | |||||
Julie A. Glynn | 20,000 | — | 17.35 | 3/20/2028 | 1,663 (2) | 23,615 |
— | — | — | — | 1,829 (3) | 25,972 | |
2,284 (4) | 32,433 | |||||
Ryan J. Gordon | 10,000 | — | 17.20 | 01/24/2028 | 1,590 (2) | 22,578 |
— | — | — | — | 1,749 (3) | 24,836 | |
2,186 (4) | 31,041 | |||||
Douglas S. Gordon | — | — | — | — | 6,145 (2) | 87,259 |
— | — | — | — | 6,755 (3) | 95,921 | |
8,192 (4) | 116,326 | |||||
Jeffrey R. McGuiness | — | — | — | — | 7,132(5) | 101,274 |
____________________
(1) | Based on the $14.20 per share closing price of our common stock on December 31, 2023. |
(2) | Consists of restricted shares awarded on March 16, 2021. The restricted shares vest on March 16, 2024. |
(3) | Consists of restricted shares awarded on March 1, 2022. The restricted shares vest on March 3, 2025. |
(4) | Consists of restricted shares awarded on February 21, 2023. The restricted shares vest on February 21, 2026. |
(5) | Consists of restricted shares awarded on January 26, 2021. These restricted shares vested on January 26, 2024. |
Option Exercises and Stock Vested. During the year ended December 31, 2023, there were no option exercises or stock vested for the Named Executive Officers.
Potential Payments Upon Termination or Change in Control
The following table sets forth estimates of the amounts that would become payable to our Named Executive Officers, under employment agreements and/or equity award agreements in the event of their termination of employment on December 31, 2023, under designated circumstances. The table does not include vested or accrued benefits under any tax-qualified benefit plans that do not discriminate in scope, terms or operation in favor of executive officers or equity awards or other benefits in which the executive is vested without regard to the change in control. The estimates shown are highly dependent on a variety of factors, including but not limited to the date of termination, interest rates, federal, state, and local tax rates, and compensation history. Actual payments due could vary substantially from the estimates shown. We consider each termination scenario listed below to be exclusive of all other scenarios and do not expect that any of our executive officers would be eligible to collect the benefits shown under more than one termination scenario. If a Named Executive Officer is terminated for “cause” as defined in the applicable agreement or award, we have no contractual payment or other obligations under the agreement.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | ||||||||||||||||||||||||
Mr. D. Gordon | Mr. Bruss | Mr. Gerke | Ms. Glynn | Mr. R. Gordon | Mr. McGuiness | |||||||||||||||||||
Discharge Without Cause or Resignation With Good Reason — no Change in Control | ||||||||||||||||||||||||
Severance payment | $ | 2,676,484 | (1) | $ | — | $ | — | $ | — | $ | — | $ | 450,000 | (1) | ||||||||||
Medical, dental and life insurance benefits | 39,603 | (2) | — | — | — | — | — | |||||||||||||||||
Acceleration of vesting of stock options | — | — | — | — | — | — | ||||||||||||||||||
Acceleration of vesting of restricted stock | — | — | — | — | — | 125,303 | (6) | |||||||||||||||||
Total | $ | 2,716,087 | $ _ — | $ | — | $ | — | $ | — | $ | 570,303 | |||||||||||||
Discharge Without Cause or Resignation With Good Reason — Change in Control Related | ||||||||||||||||||||||||
Severance payment (lump sum) | $ | 6,206,223 | (3) | $ | — | $ | — | $ | — | $ | — | $ | 450,000 | (3) | ||||||||||
Medical, dental and life insurance benefits | 59,405 | (2) | — | — | — | — | — | |||||||||||||||||
Acceleration of vesting of stock options | — | — | — | — | — | — | ||||||||||||||||||
Acceleration of vesting of restricted stock | 320,944 | (4) | 139,471 | (4) | 95,539 | (4) | 87,858 | (4) | 84,045 | (4) | 123,740 | (4) | ||||||||||||
Total | $ | 6,586,571 | $ | 139,471 | $ | 95,539 | $ | 87,858 | $ | 84,045 | $ | 573,740 | ||||||||||||
Disability | ||||||||||||||||||||||||
Severance/disability payment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Acceleration of vesting of stock option | — | — | — | — | — | — | ||||||||||||||||||
Acceleration of vesting of restricted stock | 95,071 | (6) | 40,817 | (6) | 27,958 | (6) | 25,729 | (6) | 24,605 | (6) | 123,740 | (4) | ||||||||||||
Total | $ | 95,071 | $ | 40,871 | $ | 27,958 | $ | 25,729 | $ | 24,605 | $ | 123,740 | ||||||||||||
Death | ||||||||||||||||||||||||
Salary continuation payment | $ | 875,000 | (5) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Medical, dental and life insurance benefits | 19,802 | (5) | — | — | — | — | — | |||||||||||||||||
Acceleration of vesting of stock options | — | — | — | — | — | — | ||||||||||||||||||
Acceleration of vesting of restricted stock | 95,071 | (6) | 40,817 | (6) | 27,958 | (6) | 25,729 | (6) | 24,605 | (6) | 123,740 | (4) | ||||||||||||
Total | $ | 989,873 | $ | 40,817 | $ | 27,958 | $ | 25,729 | $ | 24,605 | $ | 123,740 |
_____________________________
(1) The cash severance payment under Mr. D. Gordon’s employment agreement equals (i) the remaining base salary and employee benefits to which he is entitled under his employment agreement over the remaining term of the agreement, assuming he had earned a bonus equal to the average bonus or incentive award earned over the three calendar years preceding the year of termination, as determined under the agreement; (ii) the annual contributions that would have been made on Mr. D. Gordon’s behalf under any employee benefit plans in which he participated; and (iii) the annual payments towards automobile lease and expenses that he would be entitled to for the remaining term of the agreement. Mr. D. Gordon retired effective as of January 5, 2024, and accordingly, these provisions of his employment agreement are no longer effective. The severance payment under Mr. McGuiness’s employment agreement is equal one times his base salary to which he is entitled under his employment agreement payable bi-weekly over a one year period.
(2) Mr. D. Gordon will be entitled to non-taxable medical and dental coverage and life insurance coverage for the remaining term of the agreement, in the event of a termination without cause or for good reason not related to a change in control. In the event of an involuntary termination without cause or for good reason following a change in control, Mr. Gordon will be entitled to the continuation of the same benefits for a period of 36 months from the date of termination.
(3) For Mr. D. Gordon, the cash severance benefit payable on an involuntary termination of employment or termination for good reason in connection with a change in control is the same as the payment in such a termination that occurs without regard to a change in control, except that such payments would be calculated utilizing the highest bonus or incentive award earned over the three calendar years preceding the year of termination and would be based on a 36-month term. For Mr. McGuiness, the severance payment under his employment agreement is equal to one year’s base salary to which he is entitled under his employment agreement over the remaining term of the agreement.
(4) Value is based on the closing price of $14.20 on December 29, 2023 of Waterstone Financial common stock, including dividends declared to date with respect to those shares.
(5) In the event of Mr. D. Gordon’s death, Mr. Gordon’s estate, legal representatives or named beneficiary or beneficiaries a base salary for the remaining year along with the same medical, dental, and other health benefits that that would have been made available to Mr. D. Gordon’s family.
(6) Value is based on the closing price of $14.20 on December 29, 2023 of Waterstone Financial common stock, including dividends declared to date with respect to those shares. The number of shares assumed to have vested is based upon Company performance relative to target and/or months of service provided by the employee relative to the time-based vesting requirement.
Director Compensation
Set forth below is summary compensation for each of our non-employee directors for the year ended December 31, 2021.2023. Compensation includes an annual retainer as well as chairmanship and committee fees.
DIRECTOR COMPENSATION TABLE FOR THE YEAR ENDED DECEMBER 31, 2021 | ||||||||
Name | Fees earned or paid in cash ($) | Total ($) | ||||||
Ellen S. Bartel | 18,000 | 18,000 | ||||||
Nominating Committee Co-chairman | ||||||||
Thomas E. Dalum (1) | 18,000 | 18,000 | ||||||
Compensation Committee Chairman | ||||||||
Michael L. Hansen | 24,000 | 24,000 | ||||||
Audit Committee Chairman | ||||||||
Patrick S. Lawton | 30,000 | 30,000 | ||||||
Chairman of the Board | ||||||||
Kristine A. Rappé | 18,000 | 18,000 | ||||||
Executive Committee Chairman | ||||||||
Stephen J. Schmidt | 18,000 | 18,000 | ||||||
Nominating Committee Co-chairman | ||||||||
Derek Tyus | 33,000 | 33,000 |
_____________________________
|
|
In 2021, we paid each non-officer director annual meeting fees of $18,000. Additional annual fees paid to the Chairman of the Board totaled $12,000 and additional annual fees paid to the Chairman of the Audit Committee totaled $6,000.
DIRECTOR COMPENSATION TABLE FOR THE YEAR ENDED DECEMBER 31, 2023 | |||
Director Name | Board Retainer and Meeting Fees earned or paid in cash ($) | Board Committee Fees earned or paid in cash ($) | Total ($) |
Ellen S. Bartel Nominating Committee Co-chairman | 60,000 | 7,500 | 67,500 |
Michael L. Hansen Audit Committee Chairman | 60,000 | 16,000 | 76,000 |
Patrick S. Lawton Chairman of the Board | 80,000 | 7,500 | 87,500 |
Kristine A. Rappé Executive Committee Chairman | 60,000 | 7,500 | 67,500 |
Stephen J. Schmidt Nominating Committee Co-chairman | 60,000 | 7,500 | 67,500 |
Derek Tyus | 42,000 | — | 42,000 |
As of December 31, 2021,2023, Mr. Tyus had 6,4403,864 unvested shares of restricted stock,stock. Mr. Lawton had 5,000 unvested shares of restricted stock, Mr. Hansen had 4,000 unvested shares of restricted stock, and Ms. Bartel, Mr. Dalum, Ms. Rappé, and Mr. Schmidt had 3,500 unvested shares of restricted stock, respectively. Mr. Dalum had 54,21937,500 vested but unexercised stock options and 25,000 unvested stock options. Mr. Lawton had 12,500 vested but unexercised stock options and 25,000 unvested stock options. Ms. Rappé and Mr. Schmidt had 75,000100,000 vested but unexercised stock options and 25,000 unvested stock options. Ms. Bartel andhad 25,000 vested but unexercised stock options. Mr. Hansen had 25,000 unvested12,500 vested but unexercised stock options.
DELINQUENT SECTION 16(a) REPORTS
Under the federal securities laws, Waterstone Financial directors, its officers and any person holding more than 10% of the common stock are required to report their initial ownership of the common stock and any change in that ownership to the Securities and Exchange Commission. Specific due dates for these reports have been established and we are required to disclose in this Proxy Statement any failure to file such reports by these dates during the last year. We believe that all of our other directors and executive officers complied with these filing requirements on a timely basis for the year ended December 31, 2021.2023.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee was an officer or employee of Waterstone Financial, WaterStone Bank or any subsidiary, nor did any of them have any other reportable interlock.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
WaterStone Bank has had, and expects to continue to have, regular business dealings with its officers and directors, as well as their associates and the firms which they serve. Our historical policy has been that transactions with our directors and executive officers be on terms that are no more beneficial to the director or executive officer than we would provide to unaffiliated third parties. Under our policies and procedures, all of our transactions with officers and directors require review, approval or ratification by the board of directors. Directors and executive officers, and their associates, regularly deposit funds with WaterStone Bank. The deposits are made on the same terms and conditions which are offered to other depositors.
Except for loans to directors made in the ordinary course of business that were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to WaterStone Bank and for which management believes neither involve more than the normal risk of collection nor present other unfavorable features, since January 1, 2021,2023, the beginning of our last fiscal year, we and our subsidiaries have not had any transaction or series of transactions, or business relationships, nor are any such transactions or relationships proposed, in which the amount involved exceeds $120,000 and in which our directors, executive officers or 5% or more shareholders have a direct or indirect material interest.
HUMAN CAPITAL RESOURCES
We believe in the value of teamwork and the power of diversity. We expect and encourage participation and collaboration, and understand that we need each other to be successful. We value accountability because it is essential to our success, and we accept our responsibility to hold ourselves accountable for meeting shareholder commitments and achieving high standards of performance. We encourage employees to contribute to their personal best while respecting the balance between work and personal life. To empower employees to reach their potential, we provide training and developmental programs, including traditional classroom training and coaching and experiential learning through initiatives beyond the scope of our employees’ everyday responsibilities.
The Company’s compensation programs are designed to align the compensation of each employee with Company and individual performance and provide the proper incentives to attract, retain and motivate employees to achieve high standards of performance.
Competitive Pay
• | We provide employee wages that are competitive and consistent with employee positions, skill level, experience, knowledge and geographic location. | |
• | We engage outside compensation and benefits consulting firms to provide benchmarking against our peers within the industry. | |
• | Annual increases and incentive compensation are based upon merit, which is communicated to employees and documented through our talent management process as part of our annual review procedures. | |
• | We align our employees interests and with that of shareholders through participation in our Employee Stock Ownership Plan, which is available to all Bank employees, upon reaching eligibility requirements. |
Benefits
In addition to competitive pay, employees are offered a variety of competitive benefits including, but not limited to:
• | Comprehensive medical, dental and vision programs. | |
• | An employee assistance program, which offers ways to better balance work and personal commitments and reduce stress, including legal and financial services, child and elder care and nutrition and fitness. | |
• | Training and development programs. | |
• | Tuition reimbursement, which enables employees to further their formal education. | |
• | Flexible and remote work options, which encourages employees to structure their schedules to best suit their personal situation. | |
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SOCIAL AND ENVIRONMENTAL COMMITMENT
Management and the Board of Directors of Waterstone Financial, Inc. recognize that environmental and social matters impact WaterSone Bank’s business, employees, customers, and stockholders. To that end, management continues to make a commitment to environmental and social initiatives including:initiatives.
Social Commitment
• | WaterStone Bank employees volunteered over 600 hours for community organizations in | |
• | Bank employees have leadership roles with over | |
• | The WaterStone Bank Foundation awarded more than |
Environmental Awareness
We appreciate the communities we serve and share in the responsibility of minimizing environmental impacts that may be caused by the provision of our services. Our efforts in this regard include:
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• | Recycling paper, plastic, glass, and | ||
• | Committing to produce printed materials with recycled paper. | ||
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SHAREHOLDER PROPOSALS AND NOTICES
Shareholder proposals must be received by the Secretary of Waterstone Financial, William F. Bruss, no later than December 8, 202212, 2024 in order to be considered for inclusion in next year’s annual meeting proxy materials pursuant to Securities and Exchange Commission Rule 14a-8.
Under Securities and Exchange Commission rules relating to the discretionary voting of proxies at shareholder meetings, if a proponent of a matter for shareholder consideration (other than a shareholder proposal) fails to notify Waterstone Financial at least 45 days prior to the month and day of mailing the prior year’s Proxy Statement, then management proxies are allowed to use their discretionary voting authority if a proposal is raised at the annual meeting, without any discussion of the matter in the Proxy Statement. Therefore, any such matters must be received by February 21, 2023 in the case of the 2023 annual meeting of shareholders. Waterstone Financial is not aware of any such proposals for the 2021 annual meeting.
Our Bylaws provide an advance notice procedure for certain business, or nominations to the board of directors, to be brought before an annual meeting of shareholders. In order for a stockholder to properly bring business before an annual meeting, or to propose a nominee to the board of directors, our Secretary must receive written notice not earlier than the 90th day nor later than the 80th day prior to date of the annual meeting; provided, however, that in the event that less than 90 days’ notice or prior public disclosure of the date of the annual meeting is provided to shareholders, then, to be timely, notice by the stockholder must be so received not later than the tenth day following the day on which public announcement of the date of such meeting is first made.
The notice with respect to stockholder proposals that are not nominations for director must set forth as to each matter such stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii) the name and address of such stockholder as they appear on our books and of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of our capital stock which are owned beneficially or of record by such stockholder and such beneficial owner; (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business; and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.
The notice with respect to director nominations must include (i) as to each individual whom the stockholder proposes to nominate for election as a director, (A) all information relating to such person that would indicate such person’s qualification under Article 2, Section 12 of our Bylaws, including an affidavit that such person would not be disqualified under the provisions of Article 2, Section 12 of the Bylaws and (B) all other information relating to such individual that is required to be disclosed in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation; and (ii) as to the stockholder giving the notice, (A) the name and address of such stockholder as they appear on our books and of the beneficial owner, if any, on whose behalf the nomination is made; (B) the class or series and number of shares of our capital stock which are owned beneficially or of record by such stockholder and such beneficial owner; (C) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder; (D) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (E) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934 or any successor rule or regulation. Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected.
The date on which the next Annual Meeting of Shareholders is expected to be held is May 16, 2023.20, 2025. Assuming the next Annual Meeting of Shareholders is held on May 16, 2023,20, 2025, advance written notice for certain business, or nominations to the Board of Directors, to be brought before the next annual meeting must be given to us no earlier than February 16, 202219, 2025 and no later than February 25, 2023.March 1, 2025. If notice is received before February 15, 202319, 2025 or after February 25, 2023,March 1, 2025, it will be considered untimely, and we will not be required to present the matter at the shareholders meeting.
In order to solicit proxies in support of director nominees other than the Company’s nominees for our 20232025 Annual Meeting of Stockholders, a person must provide notice postmarked or transmitted electronically to our executive office, 11200 W. Plank Ct., Wauwatosa, Wisconsin 53226, www.wsbonline.com, no later than March 20, 2023.24, 2025. Any such notice and solicitation shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934.
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By Order of the Board of Directors William F. Bruss Chief Executive Officer
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Wauwatosa, Wisconsin
April 7, 202211, 2024
We will provide a copy of the Waterstone Financial Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 20212023 (without exhibits) without charge to any record or beneficial owner of our common stock on the written request of that person directed to: Mark R. Gerke, Chief Financial Officer, Waterstone Financial, Inc., 11200 W. Plank Ct., Wauwatosa, WI 53226. The 10-K provides a list of exhibits, which will be provided for a reasonable fee to reflect duplication and mailing costs; exhibits are also available through the Securities and Exchange Commission’s website at www.sec.gov.
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Dear Shareholder,
The 2022 Annual Meeting of Shareholders of Waterstone Financial, Inc. will be held at WaterStone Bank SSB, 11200 West Plank Court, Wauwatosa, Wisconsin, on May 17, 2022, at 9:00 a.m. (Central Time).
Proposals to be considered at the Annual Meeting:
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Transacting such other business as may properly come before the 2022 Annual Meeting or any adjournment or postponement thereof.
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WATERSTONE FINANCIAL, INC.
11200 West Plank Court,
Wauwatosa, WI 53226
Important Notice Regarding the Availability Of Proxy Materials For the 2022 Annual Meeting of Shareholders to Be Held On May 17, 2022
The following Proxy Materials are available to you to review at: http://www.cstproxy.com/wsbonline/2022. Included are the Company’s:
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This is not a ballot. You cannot use this notice to vote your shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet or by mail. We encourage you to access and review all of the important information contained in the proxy materials before voting.
If you would like to receive a paper or e-mail copy of these documents, you must request one. There is no charge for such documents to be mailed to you. Please make your request for a copy as instructed below on or before May 6, 2022 to facilitate a timely delivery. You may also request that you receive paper copies of all future proxy materials from the Company.
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YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
Vote by Internet or Telephone - QUICK
EASY
IMMEDIATE - 24 Hours a Day, 7 Days a Week or by Mail
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▲ FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED ▲
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The Board of Directors recommends a vote “FOR”:
1. | Election of Directors | FOR all Nominees listed to the left | WITHHOLD AUTHORITY to vote (except as marked to the contrary for all nominees listed to the left) | FOR | AGAINST | ABSTAIN | ||||||||||||
(1) | Ellen Bartel | 3. | Approving an advisory, non-binding resolution to approve the executive compensation described in the Proxy Statement. | |||||||||||||||
(2) | Kristine Rappé | |||||||||||||||||
(Instruction: To withhold authority to vote for any individual nominee, strike a line through that nominee’s name in the list above) |
Note: Please sign exactly as name appears hereon. When shares are held by joint owners, both should sign. When signing as attorney, executor, administrator, trustee, guardian, or corporate officer, please give title as such.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held May 17, 2022
The proxy statement and our 2021 Annual Report to Shareholders are available at https://www.cstproxy.com/wsbonline/2022
▲ FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED ▲
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
WATERSTONE FINANCIAL, INC.
The undersigned hereby appoints the Board of Directors of Waterstone Financial, Inc. (the “Board of Directors”), and each of them, as proxies, each will full powers of substitution, and authorizes each of the them to represent and vote, as designated on the reverse hereof, all of the shares of common stock of Waterstone Financial, Inc., held of record by the undersigned at the close of business on March 23, 2022, at the Annual Meeting of Shareholders of Waterstone Financial, Inc. to be held exclusively by a live webcast on May 17, 2022 at 9:00 a.m. Central Time. To participate in the meeting, visit https://www.cstproxy.com/wsbonline/2022, and enter the 12 digit control number included on your proxy card. You may register for the meeting as early as 9:00 a.m. Central Time on May 12, 2022. If you hold your shares through a bank, broker or other nominee, you will need to take additional steps to participate in the meeting, as described in the proxy statement.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS INDICATED. IF NO CONTRARY INDICATION IS MADE, THE PROXY WILL BE VOTED IN FAVOR OF ELECTING THE TWO NOMINEES TO THE BOARD OF DIRECTORS IN PROPOSAL 1, AND “FOR” PROPOSALS 2 AND 3, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS PROXY HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
(Continued and to be marked, dated and signed, on the other side)
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
Vote by Internet or Telephone - QUICK EASY
IMMEDIATE - 24 Hours a Day, 7 Days a Week or by Mail
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▲ FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED ▲
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The Board of Directors recommends a vote “FOR”: | ||||||||||||||||||
1. | Election of Directors | FOR all Nominees listed to the left | WITHHOLD AUTHORITY to vote (except as marked to the contrary for all nominees listed to the left) | FOR | AGAINST | ABSTAIN | ||||||||||||
(1) | Ellen Bartel | 3. | Approving an advisory, non-binding resolution to approve the executive compensation described in the Proxy Statement. | |||||||||||||||
(2) | Kristine Rappé | |||||||||||||||||
(Instruction: To withhold authority to vote for any individual nominee, strike a line through that nominee’s name in the list above) |
Note: Please sign exactly as name appears hereon.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held May 17, 2022
The proxy statement and our 2021 Annual Report to Shareholders are available at https://www.cstproxy.com/wsbonline/2022
▲ FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED ▲
ESOP VOTE AUTHORIZATION FORM
THIS ESOP VOTE AUTHORIZATION FORM IS SOLICITED BY THE ESOP TRUSTEE
WATERSTONE FINANCIAL, INC.
The ESOP participant signing on the reverse side hereby directs the ESOP Trustee to vote all shares of common stock of Waterstone Financial, Inc., as to which the ESOP participant is entitled to direct the voting at the Annual Meeting of Shareholders, to be held at WaterStone Bank SSB, 11200 West Plank Court, Wauwatosa, Wisconsin at 9:00 a.m. Central Time, on May 17, 2022. The ESOP Trustee is authorized to cast all votes with respect to the shares held in the ESOP participant account as indicated on the reverse side.
THIS ESOP VOTE AUTHORIZATION FORM WHEN PROPERLY EXECUTED WILL BE VOTED AS INSTRUCTED. IF NO CONTRARY INSTRUCTION IS MADE, THE ESOP VOTE AUTHORIZATION FORM WILL BE VOTED IN FAVOR OF THE NOMINEES IN PROPOSAL 1, AND “FOR” PROPOSALS 2 AND 3.
THE ESOP TRUSTEE WILL VOTE UNALLOCATED ESOP SHARES, ANY ALLOCATED SHARES FOR WHICH IT HAS RECEIVED NO VOTING INSTRUCTIONS, AND SHARES WHICH PARTICIPANTS VOTE TO “ABSTAIN” IN THE SAME PROPORTION AS IT VOTES SHARES FOR WHICH IT HAS RECEIVED INSTRUCTIONS FROM THE PARTICIPANTS. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS ESOP VOTE AUTHORIZATION FORM WILL BE VOTED BY THE ESOP TRUSTEE IN THE BEST INTEREST OF PARTICIPANTS AND BENEFICIARIES OF THE ESOP. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
(Continued and to be marked, dated and signed, on the other side)
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
Vote by Internet or Telephone - QUICK
EASY
IMMEDIATE - 24 Hours a Day, 7 Days a Week or by Mail
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▲ FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED ▲
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The Board of Directors recommends a vote “FOR”: | ||||||||||||||||||
1. | Election of Directors | FOR all Nominees listed to the left | WITHHOLD AUTHORITY to vote (except as marked to the contrary for all nominees listed to the left) | FOR | AGAINST | ABSTAIN | ||||||||||||
(1) | Ellen Bartel | 3. | Approving an advisory, non-binding resolution to approve the executive compensation described in the Proxy Statement. | |||||||||||||||
(2) | Kristine Rappé | |||||||||||||||||
(Instruction: To withhold authority to vote for any individual nominee, strike a line through that nominee’s name in the list above) |
Note: Please sign exactly as name appears hereon.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held May 17, 2022
The proxy statement and our 2021 Annual Report to Shareholders are available at https://www.cstproxy.com/wsbonline/2022
▲ FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED ▲
401 (k) VOTE AUTHORIZATION FORM
THIS 401(k) VOTE AUTHORIZATION FORM IS SOLICITED BY THE 401(k) TRUSTEE
WATERSTONE FINANCIAL, INC.
The 401(k) participant signing on the reverse side hereby directs the 401(k) Trustee to vote all shares of common stock of Waterstone Financial, Inc., as to which the 401(k) participant is entitled to direct the voting at the Annual Meeting of Shareholders, to be held at WaterStone Bank SSB, 11200 West Plank Court, Wauwatosa, Wisconsin at 9:00 a.m. Central Time, on May 17, 2022. The 401(k) Trustee is authorized to cast all votes with respect to the shares held in the 401(k) participant account as indicated on the reverse side.
THIS 401(k) VOTE AUTHORIZATION FORM WHEN PROPERLY EXECUTED WILL BE VOTED AS INSTRUCTED. IF NO CONTRARY INSTRUCTION IS MADE, THE 401(k) VOTE AUTHORIZATION FORM WILL BE VOTED IN FAVOR OF THE NOMINEES IN PROPOSAL 1, AND “FOR” PROPOSALS 2 AND 3.
THE 401(k) TRUSTEE WILL VOTE ANY SHARES FOR WHICH IT HAS RECEIVED NO VOTING INSTRUCTIONS AND SHARES WHICH PARTICIPANTS VOTE TO “ABSTAIN” IN THE SAME PROPORTION AS IT VOTES SHARES FOR WHICH IT HAS RECEIVED INSTRUCTIONS FROM THE PARTICIPANTS. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS 401(k) VOTE AUTHORIZATION FORM WILL BE VOTED BY THE 401(k) TRUSTEE IN THE BEST INTEREST OF PARTICIPANTS AND BENEFICIARIES OF THE 401(k). AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
(Continued and to be marked, dated and signed, on the other side)