wsbf20240328_def14a.htm

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

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Filed by a Party other than the Registrant ☐

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☒	Definitive Proxy Statement

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☐	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)

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April 11, 2024

Dear Fellow Shareholder,

We invite you to attend the Waterstone Financial, Inc. Annual Meeting of Shareholders, which will be held at WaterStone Bank SSB, 11200 W. Plank Ct., Wauwatosa, Wisconsin at 9:00 a.m., Central Time, on Tuesday, May 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 2023 Annual Report to Shareholders on Form 10-K and our Proxy Statement at www.cstproxy.com/wsbonline/2024. On April 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, by regular 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.

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 your 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.

Sincerely,

WILLIAM 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 21, 2024.

_____________________________

To the Shareholders of Waterstone Financial, Inc.:

The 2024 annual meeting of shareholders of Waterstone Financial, Inc. will be held on Tuesday, May 21, 2024 at 9:00 a.m., Central Time, at WaterStone Bank SSB, 11200 W. Plank Ct., Wauwatosa, Wisconsin for the following purposes:

(1)

Electing two directors to serve for a term expiring in 2027;

(2)

Ratifying the selection of FORVIS, LLP as Waterstone Financial, Inc.’s independent registered public accounting firm;

(3)

Approving an advisory, non-binding resolution to approve the executive compensation described in the Proxy Statement; and

(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 27, 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.

By Order of the Board of Directors

William F. Bruss

Chief Executive Officer

Wauwatosa, Wisconsin

April 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 at WaterStone Bank SSB, 11200 W. Plank Ct., Wauwatosa, Wisconsin at 9:00 a.m., Central Timeon Tuesday, May 21, 2024, and at any adjournment of the meeting. The 2023 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 11, 2024.

Record Date and Meeting Information. The board of directors has fixed March 27, 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 19,916,843 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.

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 WaterStone Bank SSB 401(k) Plan (the “401(k) Plan”) will receive separate Vote Authorization Forms to instruct the ESOP trustee and 401(k) Plan trustee how to vote those shares. The deadline for returning instructions is May 14, 2024. The trustee 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 trustee 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 trustee will vote 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 “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 (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 FORVIS, LLP as our independent registered public accounting firm for the year ending December 31, 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 2023 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 2023 Annual Report and/or this Proxy Statement. Stockholders sharing an address who are receiving multiple copies of this Proxy Statement and/or the 2023 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, 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 27, 2024.

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%

(1)

Dimensional Fund Advisors LP reported ownership as of December 31, 2023, on behalf of itself and certain subsidiaries. It reported that it had sole dispositive power for 1,652,359 shares and shared dispositive power for no shares. It further reported that it had sole voting power for 1,623,168 shares and shared voting power for no shares.

(2)

BlackRock, Inc. reported ownership as of December 31, 2023, on behalf of itself and certain subsidiaries. It reported that it had sole dispositive power for 1,671,665 shares and shared dispositive power for no shares. It further reported that it had sole voting power for 1,646,460 shares and shared voting power for no shares.

(3)

Renaissance Technologies LLC reported ownership as of December 31, 2023, on behalf of itself and certain subsidiaries. It reported that it had sole dispositive power for 1,273,136 shares and shared dispositive power for no shares. It further reported that it had sole voting power for 1,273,136 shares and shared voting power for no shares.

(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, 2023, on behalf of the 2015 Amended and Restated WaterStone Bank SSB Employee Stock Ownership Plan and the WaterStone Bank SSB 401(k) Plan. It reported that it had shared dispositive power for 2,275,957 shares and sole dispositive power for no shares. It further reported that it had shared voting power for 2,275,957 shares and sole voting power for no shares.

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 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
Ellen S. Bartel	15,000	-	25,000	40,000	*
William F. Bruss	36,051	74,529	-	110,580	*
Mark R. Gerke	36,264	37,752	15,000	89,016	*
Julie A. Glynn	10,743	13,735	20,000	44,478	*
Douglas S. Gordon	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	12,500	278,913	1.4%
Patrick S. Lawton	49,131	10,000	37,500	96,631	*
Jeffrey R. McGuiness	3,842	-	-	3,842	*
Kristine A. Rappé	27,318	-	100,000	127,318	*
Stephen J. Schmidt	70,078	-	100,000	170,078	*
Derek L. Tyus	6,440	-	-	6,440	*
All Directors and Executive Officers as a Group	900,213	433,886	320,000	1,654,099	8.3%

______________________

* Less than 1%.

(1)

Number of shares with sole voting and dispositive power: Mr. Bruss – 74,529; Mr. Gerke – 37,752; Mr. R. Gordon – 36,035; Ms. Glynn – 13,735; Mr. D. Gordon – 75,294. Number of shares with shared voting and dispositive power; Mr. Hansen – 186,541; Mr. Lawton – 10,000.

PROPOSAL 1 – THE ELECTION OF DIRECTORS

Waterstone Financial’s board of directors consists 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 Douglas Gordon and Patrick Lawton, whose terms expire at the annual meeting, are being nominated for re-election as directors, each for a term expiring at the 2027 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, 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 2027*
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, 69	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, 67	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 2026*

Michael L. Hansen, 73	Mr. Hansen is a business investor who currently holds significant ownership interests in Jacsten Holdings LLC. In addition to extensive entrepreneurial experience, Mr. Hansen is a C.P.A. with 13 years of audit and tax experience at an international public accounting firm. Mr. Hansen brings this experience to the board of directors and to the Audit Committee in particular. Mr. Hansen has a B.B.A. from the University of Notre Dame.	2003

Stephen J. Schmidt, 62	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, 54

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 had been with West Bend since 2016. Before joining West Bend, Mr. Tyus was a director for Northwestern Mutual Wealth Management Company. Mr. Tyus had been in the insurance industry for over 20 years, holding investment positions in private debt and equity, real estate, wealth management as well as strategy and administration. Mr. Tyus is a graduate of Marquette University and received his M.B.A. from the Ross School of Business at the University of Michigan.

2021

(1)

Indicates the date when the director was first elected to the board of WaterStone Bank. Messrs. Lawton, Hansen, Schmidt and Gordon became directors of Waterstone Financial’s predecessor federal corporation in 2005. Ms. Bartel and Ms. Rappé became directors of Waterstone Financial in 2014. Mr. Tyus became a director of Waterstone Financial in 2021.

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 Officer Since
William F. Bruss, 54	Chief Executive Officer since 2024. President since January 2022, Chief Operating Officer from 2013 through 2023, General Counsel and Secretary, Waterstone Financial and WaterStone Bank.	2005
Mark R. Gerke, 49	Executive Vice President since January 2020, Chief Financial Officer since 2016, Chief Accounting Officer since 2014, Senior Vice President, Waterstone Financial and WaterStone Bank since 2014, Controller 2005 to 2016.	2016
Julie A. Glynn, 60	Executive Vice President since January 2022, Chief Retail Officer of WaterStone Bank since March 2018, Senior Vice President - District Manager of Associated Bank since 2013.	2018
Ryan J. Gordon, 37 Jeffrey R. McGuiness, 58	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, 2023 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, 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.

The following table details the composition of our board committees, as of December 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		Co-Chair
Michael L. Hansen	Chair		X	X
Patrick S. Lawton (Chair)		Chair	X
Kristine A. Rappé	X		Chair
Stephen J. Schmidt		X	X	Co-Chair
Derek L. Tyus	X	X	X

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 six times during the year ended December 31, 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 seven meetings during the year ended December 31, 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 one meeting during the year ended December 31, 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;

●

to review and monitor compliance with the requirements for board independence;

●

to review the committee structure and make recommendations to the board of directors regarding committee membership; and

●

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 board 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 nominee for 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
Knowledge, Skills and Experience
Financial Industry		●	●	●			●
Risk Management	●	●	●	●	●	●	●
Accounting	●	●	●		●		●
Corporate Governance/Ethics	●	●	●	●	●	●	●
Legal/Regulatory		●	●	●	●		●
HR/Compensation	●	●	●	●	●	●	●
Executive Experience	●	●	●	●	●	●	●
Investments		●	●	●	●	●	●
Operations	●	●	●	●	●	●
Strategic Planning	●	●	●	●	●	●	●
Technology/Cyber		●	●		●
Mergers and Acquisitions		●	●				●
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.	9	18	18	18	9	18	4

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:

●

a statement that the writer is a shareholder and is proposing a candidate for consideration by the Nominating Committee;

●

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 should be provided);

●

a statement of the candidate’s business and educational experience;

●

such other information regarding the candidate as would be required to be included in the Proxy Statement pursuant to Securities and Exchange Commission Regulation 14A;

●

a statement detailing any relationship between us and the candidate;

●

a statement detailing any relationship between the candidate and any of our customers, suppliers or competitors;

●

detailed information about any relationship or understanding between the proposing shareholder and the candidate; and

●

a statement that the candidate is willing to be considered and willing to serve as a director if nominated and elected.

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.

Shareholder 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;

●

attempt to handle the inquiry directly, i.e. where it is a request for information about us or it is a stock-related matter; or

●

not forward the communication if it is primarily commercial in nature, relates to an improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate.

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 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 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 the audited financial statements for the year ended December 31, 2023 with management;

●

discussed with FORVIS LLP, our independent registered public accounting firm, those matters which are required to be discussed under the applicable standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”); and

●

received the written disclosures and the letter from FORVIS LLP required by the PCAOB and has discussed with FORVIS LLP its independence.

The Audit Committee:

Michael L. Hansen, Chairman

Ellen S. Bartel

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, 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, 2023. In addition, the Audit Committee also considered the fees paid to FORVIS LLP for services provided by FORVIS LLP during the year ended December 31, 2023.

PROPOSAL 2 – RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The firm of FORVIS LLP has audited the financial statements of Waterstone Financial as of and for the year ended December 31, 2023 and had served as Waterstone Financial’s principal independent accountant since 2023.

The Audit Committee of the Board of Directors has selected FORVIS LLP as our independent registered public accountants for the fiscal year ending December 31, 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 FORVIS 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 FORVIS 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.

CliftonLarsonAllen LLP was previously the principal accountants for Waterstone Financial, Inc. On January 17, 2023, CliftonLarsonAllen, Waterstone Financial, Inc.’s independent registered public accountant, informed the Company 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 no longer the Company’s independent registered public accountant.

CliftonLarsonAllen’s audit reports on the Company’s consolidated financial statements as of and for the years ended December 31, 2022 and 2021 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 fiscal years ended December 31, 2022 and 2021, there were no: (1) disagreements with CliftonLarsonAllen 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.

As previously disclosed on January 17, 2023, the Audit Committee of the Board of Directors of Waterstone Financial, Inc. approved the appointment of FORVIS LLP to serve as the Company’s independent registered public accounting firm for the year ending December 31, 2023 after a competitive request for proposal process. The appointment of FORVIS LLP was effective upon completion of the audit 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 Company nor anyone acting on its behalf consulted with FORVIS LLP with respect 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 years 2023 and 2022 for professional services provided by CliftonLarsonAllen LLP and RSM US LLP related to those periods.

	Year Ended
FORVIS LLP	December 31, 2023		December 31, 2022

Audit fees⁽¹⁾……………	$	356,499	$	-
Audit-related fees⁽²⁾……	$	60,270	$	-
_____________________

⁽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 tax compliance fees.

	Year Ended
CliftonLarsonAllen LLP	December 31, 2023		December 31, 2022

Audit fees⁽¹⁾………….	$	-	$	309,254
Audit-related fees⁽²⁾…	$	28,140	$	10,500
_____________________

⁽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.

●

Aligning with Shareholders – We use equity compensation as a key component of our compensation mix to promote a culture of ownership among our key personnel and to align their individual financial interests with the long-term interests of our shareholders.

●

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;

●

Short-Term Cash-Based Incentives;

●

Equity Incentive Awards;

●

Broad-Based Welfare and Retirement Benefit Plans;

●

Perquisites; and

●

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 is composed solely of independent directors.

✔

We maintain stock ownership guidelines for our executive officers.

✔

We maintain stock ownership guidelines for our non-employee directors.

✔

We maintain clawback policies for incentive compensation.

✔

We place restrictions on our directors and officers with respect to (i) holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan or (ii) engaging in hedging transactions in the Company’s securities.

✔

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 reprice underwater stock options.

✖

We do not grant options with an exercise price less than fair market value on date of grant.

✖

We do not provide excessive prerequisites to our NEOs.

✖

We do not provide excise tax gross ups in our compensation plans or employment agreements.

✖

We do not guarantee salary increases.

✖

We do not provide for uncapped bonuses.

✖

We do not provide for “single-trigger” benefits upon a change in control.

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 2023 annual meeting of shareholders, over 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 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. Over the past three years, the Compensation Committee has 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. 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 2023 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 $1.5 billion to $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 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:

●

BankFinancial Corporation, Burr Ridge, IL

●

Cambridge Bancorp, Cambridge, MA

●

Civista Bancshares, Inc., Sandusky, OH

●

ESSA Bancorp, Inc., Stroudsburg, PA

●

Farmers & Merchants Bancorp, Inc., Archbold, OH

●

FS Bancorp, Inc., Mountlake Terrance, WA

●

Greene County Bancorp, Inc., Catskill, NY

●

HarborOne Bancorp, Inc., Brocton, MA

●

Hingham Institution for Savings, Hingham, MA

●

HomeStreet, Inc., Seattle, WA

●

Independent Bank Corporation, Grand Rapids, MI

●

Macatawa Bank Corporation, Holland, MI

●

Metropolitan Bank Holding Corporation, New York, NY

●

MVB Financial Corp., Fairmont, WV

●

Northfield Bancorp, Inc., Woodbridge, NJ

●

RBB Bancorp, Los Angeles, CA

●

Sterling Bancorp, Inc., Southfield, MI

●

Territorial Bancorp Inc., Honolulu, HI

Stock Ownership Guidelines. To align the interests of the Named Executive Officers and non-employee directors with the interests of the Company’s shareholders, the Company maintains stock ownership guidelines, whereby Named Executive Officers 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:

●

Chief Executive Officer3x base salary

●

Chief Financial Officer 2x base salary

●

Other NEOs1x base salary

●

Directors3x annual board cash retainer

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, 2023, all directors were in compliance with the Company’s stock ownership guidelines. As of December 31, 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 Policies. Our compensation program includes Clawback Policies. 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 an executive officer, including the Named Executive 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 2023 decision process as it relates to the 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 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 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.

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

⁽¹⁾

Douglas S. Gordon retired on January 5, 2024. William F. Bruss took over as Chief Executive Officer of Waterstone Financial and WaterStone Bank on January 5, 2024.

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, 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 2023 budget. To receive any award under the Annual Incentive Plan, the Named 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
Community Banking Segment Pre-Tax Income	Budget	Focuses management on achieving budgeted pre-tax income.
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.

Target Annual Incentive Opportunities

Target annual incentive awards are defined at the beginning of the year in consideration of market data, each NEOs total compensation package and the Company’s budgetary considerations. The following table sets forth information concerning Annual Incentive Plan opportunities for 2023:

		Target
Name	Threshold ($)	Amount ($)	% of Annual Base Salary	Maximum ($)
Douglas S. Gordon	218,750	437,500	50.0%	656,250
William F. Bruss	96,875	155,000	40.0%	213,125
Mark R. Gerke	66,375	99,563	37.5%	132,750
Julie A. Glynn	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 2023 are summarized in the following table:

Name	Community Banking Pre-Tax Income	Community Banking Pre-Tax Income	Commercial Loan Growth	Core Deposit Growth	Individual Performance
Douglas S. Gordon	50%	10%	10%	10%	20%
William F. Bruss	50%	10%	10%	10%	20%
Mark R. Gerke	50%	10%	10%	10%	20%
Julie A. Glynn	50%	-	10%	20%	20%
Ryan J. Gordon	50%	10%	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, and, 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. 2023 performance goals and actual performance were as follows:

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)	13,500	40,000	66,500	68,751	171.9%
Core Deposit Growth (in thousands)	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 2023 annual cash incentive payments were awarded as follows relative to the 2023 target value:

Name	2023 Annual Incentive Payment ($)	% of 2023 Target Annual Incentive
Douglas S. Gordon	412,992	94.4%
William F. Bruss	140,738	90.8%
Mark R. Gerke	89,207	89.6%
Julie A. Glynn	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 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 2023 budget. To receive any award under the Annual Incentive Plan, the Named Executive Officer must be actively employed on the day the award is made.

Performance Measure	Evaluated Against	Rationale
Actual pre-tax income relative to forecast	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 2023:

		Target
Name	Threshold ($)	Amount ($)	% of Annual Base Salary	Maximum ($)
Jeffrey R. McGuiness	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. The 2023 performance goals and actual performance were as follows (dollars in thousands):

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 performance relative to the target metric, Mr. McGuiness did not qualify for or receive the incentive payment for 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 returns.

●

Link each participant’s compensation to our long-term success through the appreciation of the stock price.

●

Retention through longer vesting schedules and enhanced shareholder value due to the value of grants being tied to the trading price of our common stock.

All equity awards granted to the Named Executive Officers of Waterstone Financial 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, and individual and corporate performance as well as the level of equity awards granted to individuals with similar positions at similar companies.

In prior years, we have utilized restricted stock as our primary long-term incentive tool to retain and motivate our key employees. We believe this is the preferred practice to reward them for, and to motivate them toward, superior performance.

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.

Long-Term Performance-Based Equity Compensation Plan. The Company maintains a Long-Term Performance-Based Equity Compensation Plan, which provides Named Executive Officers with annual awards of restricted stock. In order to become vested in their restricted stock, our executive officers will need to be employed throughout a three-year performance period, 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.

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

(Over three fiscal years)

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 NEOs 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 2023:

		Target
Name	Threshold ($)	($)	% of Annual Base Salary	Maximum ($)
Douglas S. Gordon	43,750	87,500	10%	131,250
William F. Bruss	19,375	38,750	10%	58,125
Mark R. Gerke	13,275	26,550	10%	39,825
Julie A. Glynn	12,200	24,400	10%	36,600
Ryan J. Gordon	11,675	23,350	10%	35,025

During 2023, our Compensation Committee awarded grants of 8,192 shares of performance-based restricted stock to Mr. D. Gordon, 3,628 shares to Mr. Bruss, 2,486 shares to Mr. Gerke, 2,284 shares to Ms. 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 2023 to 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 employees, who have satisfied the 401(k) Plan’s eligibility 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 compensation 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 compensation 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:

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 four 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 2023 Annual Meeting of Shareholders pursuant to Item 402 Securities and Exchange Commission Regulation S-K, including the Compensation Discussion and Analysis, the 2023 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 four other highest paid executive officers who received total compensation of more than $100,000 during the year ended December 31, 2023. The “Change in Pension Value and Nonqualified Deferred Compensation Earnings” and “Options Awards” columns have been omitted since a Named Executive Officer did not earn any compensation during the listed years of a type required to be disclosed in this column during the years listed.

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

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 awards granted during the years shown as calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The assumptions used in the valuation of these awards are included in the "Stock Based Compensation" footnote to Waterstone Financial's audited financial statements for the years ended December 31, 2023, 2022, and 2021 included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission.

(2)

A detailed breakdown of “All Other Compensation” for 2023 is provided in the table below.

All Other Compensation

Name and Principal Position	401(k) Match ($)	Employee Stock Ownership Plan ($)	Automobile Expense Allowance ($)(1)	Dividends on Vested Restricted Shares ($)	Total ($)
Douglas S. Gordon	2,860	48,096	6,497	17,596	75,049
William F. Bruss	2,379	48,096	10,203	7,554	68,232
Mark R. Gerke	3,597	48,096	6,200	5,174	63,067
Julie A. Glynn	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	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

($)

Non-Equity Incentive Plan Compensation

($)

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

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 Corporation

2023

2022

2021

450,000

425,000

400,000

—

300,000

—

11,214

10,250

14,308

461,214

435,250

714,308

CEO Pay Ratio Disclosure

As required by applicable SEC rules, we are providing the following 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:

●

The annual total compensation of our median employee, other than our Chief Executive Officer, was $68,942; and

●

The annual total compensation of Mr. Gordon, our Chief Executive Officer, as reported in the Summary Compensation Table included elsewhere in this proxy statement was $1,556,285.

Based on this information, for 2023 the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of our median employee was 22.6 to 1.

We completed the following steps to identify the median employee:

●

As of December 31, 2023, our employee population consisted of approximately 698 employees, including any full-time, part-time, temporary, or seasonal employees employed on that date.

●

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 2023. In making this determination, we annualized compensation for full-time and part-time permanent employees who were employed on December 31, 2023, but did not work for us the entire year. No full-time equivalent adjustments were made for part-time employees.

●

We identified our median employee using this compensation measure and methodology, which was consistently applied to all our employees included in the calculation.

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

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.

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

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.

We determined Return on Average Assets to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs in 2023. This performance measure may not have been the most important financial performance measure for years 2022 and 2021 and we may determine a different financial performance measure to be the most important financial performance measure in future years.

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 1^st 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 2023 Annual Incentive Plan.

(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, 2023. Compensation includes an annual retainer as well as chairmanship and committee fees.

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, 2023, Mr. Tyus had 3,864 unvested shares of restricted stock. Mr. Lawton had 37,500 vested but unexercised stock options. Ms. Rappé and Mr. Schmidt had 100,000 vested but unexercised stock options. Ms. Bartel had 25,000 vested but unexercised stock options. Mr. Hansen had 12,500 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 directors and executive officers complied with these filing requirements on a timely basis for the year ended December 31, 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, 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.
•	Short- and long-term disability salary continuation for medical disabilities.

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.

Social Commitment

	•	WaterStone Bank employees volunteered over 600 hours for community organizations in 2023.
	•	Bank employees have leadership roles with over 40 community organizations.
	•	The WaterStone Bank Foundation awarded more than $725,000 in grants to more than 250 community organizations during 2023.

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:

•		Employing a low carbon business model seeks to promote responsibility to all stakeholders.
•		Installing energy-efficient lighting and appliances in its premises.
•		Committing to a hybrid work environment, resulting in reduced fuel consumption.
•		Recycling paper, plastic, glass, and metal.
•		Committing to produce printed materials with recycled paper.
•	Committing to reduce consumption, including the utilization of electronic documents to reduce paper usage.
•	Adopting technology that can reduce our carbon footprint, such as providing direct and remote deposit capabilities and promoting e-statement enrollment to decrease paper and ink use.

SHAREHOLDER PROPOSALS AND NOTICES

Shareholder proposals must be received by the Secretary of Waterstone Financial, William F. Bruss, no later than December 12, 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.

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 20, 2025. Assuming the next Annual Meeting of Shareholders is held on May 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 19, 2025 and no later than March 1, 2025. If notice is received before February 19, 2025 or after 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 2025 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 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.

By Order of the Board of Directors

William F. Bruss

Chief Executive Officer

Wauwatosa, Wisconsin

April 11, 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, 2023 (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.

SEC Form DEF 14A filed by Waterstone Financial Inc.