DEF 14A of FS Bancorp, Inc.
Filed Apr 7, 2025 · FY20240001437749-25-011211
Vote Required to Approve Proposal 1: Election of Directors
Vote Required to Approve Proposal 1: Election of Directors Directors are elected by a plurality of the votes cast, in person or by proxy, at the annual meeting by holders of FS Bancorp common stock. Accordingly, the three nominees for election as directors who receive the highest number of votes actually cast will be elected. Pursuant to our Articles of Incorporation, shareholders are not permitted to cumulate their votes for the election of directors. Votes may be cast for or withheld from each nominee. Votes that are withheld will have no effect on the outcome of the election because the nominees receiving the greatest number of votes will be elected. Our Board of Directors unanimously recommends that you vote FOR the election of each of its director nominees.
PROPOSAL 1 – ELECTION OF DIRECTORS
PROPOSAL 1 – ELECTION OF DIRECTORS Our Board of Directors stays actively engaged with management and currently consists of seven members. For purposes of continuity, and given its efficient size and collaborative involvement with management, the Board is divided into three classes with staggered terms. Approximately one-third of the directors are elected annually to serve for a three-year period or until their respective successors are elected and qualified. The table below sets forth information regarding each director of FS Bancorp and each nominee for director. The Governance, Nominating and Culture Committee of the Board of Directors selects nominees for election as directors, subject to Board approval. Ted A. Leech and Marina Cofer-Wildsmith currently serve as FS Bancorp directors and have been nominated to each serve a three-year term. Terri L. Degner also serves as an FS Bancorp director and has been nominated to serve a one-year term to maintain balanced terms. Ms. Degner was appointed to the Board of Directors of FS Bancorp on September 30, 2024, in connection with the retirement of Director Margaret R. Piesik. Ms. Degner has been serving on the Board of Directors of 1st Security Bank since January 1, 2024, and was recommended for appointment to the Board of Directors of FS Bancorp by the Governance, Nominating and Culture Committee. Each nominee has consented to being named in this proxy statement and has agreed to serve if elected. If a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority. At this time, we are not aware of any reason why a nominee might be unable to serve if elected. The Board of Directors recommends a vote FOR the election of Ted A. Leech, Marina Cofer-Wildsmith and Terri L. Degner.
PROPOSAL 1 – ELECTION OF DIRECTORS
| Name | Age as of December 31, 2024 | Year first elected or appointed director | Term to expire | | Board Nominees | | | | | Ted A. Leech | 77 | 2005 (1) | 2028 (2) | | Marina Cofer-Wildsmith | 57 | 2012 (1) | 2028 (2) | | Terri L. Degner | 62 | 2024 | 2026 (2) | | Directors Continuing in Office | | | | | Michael J. Mansfield | 68 | 2008 (1) | 2026 | | Joseph C. Adams | 65 | 2005 (1) | 2027 | | Pamela M. Andrews | 66 | 2021 | 2027 | | Joseph P. Zavaglia | 76 | 2011 (1) | 2027 |
PROPOSAL 1 – ELECTION OF DIRECTORS
| (1) Includes prior service on the Board of Directors of 1st Security Bank. | | (2) Assuming election or reelection. |
Information Regarding Nominees for Election
Information Regarding Nominees for Election Set forth below is the present principal occupation and other business experience during at least the last five years of each nominee for election, as well as a brief discussion of the particular experience, qualifications, attributes and skills that led the Board to conclude that the nominee should serve as a director of FS Bancorp. Ted A. Leech, Board Chair of FS Bancorp and 1st Security Bank, is retired from Univar Corporation. From January 2003 to February 2005, Mr. Leech was Vice President of Business Development where he conducted feasibility studies and investigated potential investments in China, Hong Kong, Singapore, Australia, Malaysia, Indonesia and Brazil. Prior to that, Mr. Leech was Senior Vice President of Administration for Univar USA where he was responsible for accounting, payables/receivables, information systems, treasury, legal, human resources and internal audit. Additionally, he currently serves as treasurer and board member of a food distribution non-profit. As a result of his professional experiences, Mr. Leech brings strong leadership, management, finance, accounting and human resource skills to our board. Mr. Leech’s expertise also qualifies him as a financial expert, which was the basis of his selection as Chairperson of the Audit Committee. Marina Cofer-Wildsmith has spent 30 years working in nonprofit management and business development. Her background includes serving as Executive Director of Bainbridge Youth Services from 2012 to 2017, business consulting from 2009 to 2012, and Chief Executive Officer of the American Lung Association of Washington and the Northwest from 2003 to 2007. Other American Lung Association positions held from 1990 to 2003 included program development, marketing and communications. Her key career achievements include leading the Washington Smoke Free Restaurants and Bars Initiative, developing with the U.S. Environmental Protection Agency the air quality forecasting model and advocating for other essential air pollution reduction and public health legislation. Ms. Cofer-Wildsmith is very active in the community. Currently, she serves as an Assistant District Governor for Rotary International District 5020 and is a past President of the Rotary Club of Bainbridge Island. Other board service has included Public-at-Large Director for the Puget Sound Clean Air Agency from 2005 to 2013. She has her Bachelor of Science degree in Biology from the College of William and Mary, Williamsburg, Virginia and her Master’s degree in Educational Processes from Maryville University, St. Louis, Missouri. Leadership recognition includes awards from the Chamber of Commerce, Rotary, Environmental Protection Agency, Conservation Federation and Governor Gregoire. As a result of her professional experiences and active community involvement, Ms. Cofer-Wildsmith brings strong leadership, management, organization and interpersonal skills to our organization. Terri L. Degner has over 45 years of banking experience. She was the Executive Vice President, Chief Financial Officer and Treasurer of Anchor Bank from 2004 until its acquisition by 1st Security Bank in 2018. After the acquisition, she served as a consultant to 1st Security Bank from 2018 to 2023, assisting with post-acquisition transition matters. Ms. Degner graduated cum laude from St. Martins College in 1998 with her Bachelor of Arts degree in Accounting. In 2000, she graduated with honors from Pacific Coast Banking School at the University of Washington. Ms. Degner currently serves on the Board of Directors and is Treasurer of NeighborWorks of Grays Harbor, Washington. She is a director at large for The Financial Managers Society, which provides education, networking and resources to finance professionals in the financial industry. Ms. Degner also sits on the St. Martins University Accounting Advisory Board. Additionally, she was a member of the Executive Committee, Providence St. Peter Foundation Christmas Forest from 2011 to 2018. Ms. Degner adds important skills to the Board, including leadership, management and asset liability management, as well as financial expertise.
Information Regarding Incumbent Directors
Information Regarding Incumbent Directors Set forth below is the present principal occupation and other business experience during at least the last five years of each director continuing in office, as well as a brief discussion of the particular experience, qualifications, attributes and skills that led the Board to conclude that the director should serve on FS Bancorp’s Board of Directors. Michael J. Mansfield spent 16 years with Deloitte LLP before joining Moss Adams LLP in 1995, where he was a partner for more than 10 years. During his time with Moss Adams, Mr. Mansfield chaired the Business Owner Succession Services Practice in the Seattle office and he served as a member of the firm’s Tax Committee. He provided taxation, business, and financial accounting services to a variety of clients in the financial services, construction, manufacturing and distribution, and service industries. In January 2008, Mr. Mansfield left Moss Adams to start Family Fortunes, LLC, a consulting company aimed at assisting individuals and business owners develop and execute strategic plans, with the goals of enhancing value proposition and creating a legacy vision for families and business owners. Mr. Mansfield is also a minority owner/part-time Chief Financial Officer for two construction companies (Pacific Pile & Marine, L.P. and R Miller, Inc.) and a minority owner in seven other privately-owned businesses, in addition to serving on the advisory board of four other private companies. Mr. Mansfield’s decades of experience as a public accountant, together with his experience of being part of the management/advisory team of several small- to medium-sized businesses, has provided him with strong leadership, financial and administrative insights that are valuable to FS Bancorp. Joseph C. Adams is a director and has been the Chief Executive Officer of 1st Security Bank of Washington since July 2004. He has also served in those capacities for FS Bancorp since its formation in September 2011. He joined 1st Security Bank of Washington in April 2003 as its Chief Financial Officer. Mr. Adams served as Supervisory Committee Chairperson from 1993 to 1999 when the Bank was Washington’s Credit Union. Mr. Adams is a lawyer, having worked for Deloitte as a tax consultant, K&L Gates as a lawyer and then at Univar USA as a lawyer and Director of Regulatory Affairs. As the Director of Regulatory Affairs for Univar USA, the largest chemical distribution company in the United States, Mr. Adams used his environmental law expertise to ensure Univar stayed in compliance with all relevant local, state and federal environmental laws, rules and regulations. He is a member of the Washington State Bar Association and was a Board member of the Community Bankers of Washington. Mr. Adams graduated with Distinction from the University of Hawaii with a Bachelor of Business Administration in Finance. He also graduated cum laude with a Juris Doctor from the University of Puget Sound School of Law. In addition, Mr. Adams graduated with honors from the Pacific Coast Banking School in 2007, a master’s level program held at the University of Washington. Mr. Adams’s legal and accounting backgrounds, as well as his duties as Chief Executive Officer of 1st Security Bank of Washington, bring a special knowledge of the financial, economic and regulatory challenges faced by the Bank, which makes him well-suited to educating the Board on these matters. Pamela M. Andrews was an active trial attorney in Seattle for over 35 years, practicing in the areas of professional liability, medical malpractice, nursing home/assisted living, mental healthcare and complex civil litigation. She is a member of both the Washington and Wisconsin Bar Associations. She also served as the President of her law firm, Andrews Skinner, P.S., for the last 16 years of her practice. Ms. Andrews was selected as a Fellow of the International Society of Barristers; a Senior Fellow of Litigation Counsel of America; a founding and continuous member of the Bar Register of Preeminent Women Lawyers for the last ten years of her practice and enjoyed a Martindale Hubbell AV rating for 30 years. Ms. Andrews graduated summa cum laude from the University of Wisconsin-Oshkosh and received her Juris Doctor from the University of Wisconsin-Madison. She has been active in community animal welfare groups and associations in the Puget Sound and Pacific Northwest region. Ms. Andrews adds important skills to the Board, including legal, litigation, insurance, human resources, small business experience and operations management. Joseph P. Zavaglia has been the owner and operator since February 2008 of Zavaglia Consulting, L.L.C., which provides retail banking and small business advisory services to community banks. He also runs From the Heart of Italy, an Italian cooking school. Mr. Zavaglia started his career in 1975 and over a period of 49 years has worked in numerous areas of banking, including commercial lending, retail and small business banking, human resources, investments, incentive compensation and executive administration with both large national institutions and community banks. Upon retiring from his last executive banking position, he served as a board member for nine years and was an employee of Pacific Coast Banking School. Mr. Zavaglia then worked with the Washington Bankers Association in co-creating four developmental programs which are now being offered throughout the United States. Mr. Zavaglia received his undergraduate degree in Business Management from Seattle University, and his Masters Degree in Education from Western Washington University. He is also a graduate of Pacific Coast Banking School and formerly held Series 6, 63 and 26 securities licenses and his state insurance license for life and disability. Giving back to the communities he serves has been his passion. Mr. Zavaglia served as Chair of the Board of Regents at Seattle University for three years and as a board member for nine additional years, State Board Chair of the March of Dimes for 15 years, Chair of the Italian Studies Board at the University of Washington and Chair of the Dean’s Advisory Board for Woodring College of Education at Western Washington University for four years. In 2007, he was inducted into the Athletic Hall of Fame at Seattle University. In 2012, he received the Distinguished Alumnus award from the Woodring College of Education, and in 2015, was awarded the University Service Award from Seattle University. Mr. Zavaglia brings strong leadership, management, human resource, and interpersonal skills to our Board.
Director Qualifications and Experience
Director Qualifications and Experience The following table identifies the experience, qualifications, attributes, and skills that the Governance, Nominating and Culture Committee considered in making its decision to nominate directors to our Board. The fact that a particular attribute was not considered does not mean that the director lacks such an attribute.
Director Qualifications and Experience
| | Adams | Andrews | Cofer-Wildsmith | Leech | Mansfield | Degner | Zavaglia | | Experience, Qualification, Skill or Attribute | | | | | | | | | Professional standing in chosen field | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Expertise in financial services or related industry | ✓ | | | | ✓ | ✓ | ✓ | | Certified public accountant or financial expert | ✓ | | | ✓ | ✓ | ✓ | ✓ | | Attorney | ✓ | ✓ | | | | | | | Civic and community involvement | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Leadership and team building skills | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Diversity by race, ethnicity or gender | ✓ | ✓ | ✓ | ✓ | | ✓ | | | Specific skills/knowledge: | | | | | | | | | Finance | ✓ | | ✓ | ✓ | ✓ | ✓ | ✓ | | Technology | | | | | | | | | Securities | ✓ | | | | | ✓ | ✓ | | Marketing | ✓ | | ✓ | ✓ | | | ✓ | | Public affairs | ✓ | | ✓ | | | | | | Human resources | ✓ | ✓ | ✓ | ✓ | | ✓ | ✓ | | Environmental, social and governance | ✓ | | ✓ | | | | ✓ |
Board Independence
Board Independence Our common stock is listed on the Nasdaq Global Select Market. In accordance with Nasdaq requirements, at least a majority of our directors must be independent directors. The Board has determined that six of our seven directors (85.7%) are independent, as defined by Nasdaq. Directors Andrews, Cofer-Wildsmith, Degner, Leech, Mansfield and Zavaglia are all independent. Only Joseph C. Adams, who is our Chief Executive Officer, is not independent. Former Director Piesik was independent.
Diversity
Diversity As part of its director nominee evaluation process, the Board considers diverse viewpoints, backgrounds and experiences, as well as gender, age, race and ethnicity, in the selection of directors to enhance the Board’s diversity. All Board members must also fit the culture of FS Bancorp and 1st Security Bank, including living up to our Core Values and embodying our “Smart, Driven, Kind” commitment.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE MATTERS
AND CORPORATE GOVERNANCE MATTERS
Board of Directors
Board of Directors The Boards of Directors of FS Bancorp and 1st Security Bank conduct their business through board and committee meetings. During the fiscal year ended December 31, 2024, the Boards of Directors of FS Bancorp and 1st Security Bank each held nine meetings. No director of FS Bancorp or the Bank attended fewer than 75% of the total meetings of the boards and committees on which that person served during this period.
DIRECTORS’ COMPENSATION
| | | Stock | Option | All other | | | | Fees earned or | awards | awards | compensation | | | Name | paid in cash ($) | ($)(1)(2) | ($)(1)(3) | ($)(4) | Total ($) | | Pamela M. Andrews | 70,015 | 31,485 | 16,020 | 8,940 | 126,460 | | Marina Cofer-Wildsmith | 69,575 | 31,485 | 16,020 | 7,804 | 124,884 | | Terri L. Degner (5) | 71,335 | 73,465 | 37,905 | 1,750 | 184,455 | | Ted A. Leech | 85,085 | 31,485 | 16,020 | 5,314 | 137,904 | | Michael J. Mansfield | 67,210 | 31,485 | 16,020 | 8,483 | 123,198 | | Joseph P. Zavaglia | 72,710 | 31,485 | 16,020 | 4,506 | 124,271 | | Margaret R. Piesik (6) | 71,335 | 31,485 | 16,020 | 2,104 | 120,944 |
Compensation Philosophy and Objectives
| ● | Alignment with shareholder interests. Executives should be compensated through pay elements (base salaries and short- and long-term equity incentives) designed to enhance shareholder value by making the Bank, which is our primary operating subsidiary, a driving force towards providing shareholders with a suitable rate of return on their investment. |
Compensation Philosophy and Objectives
| ● | Commitment to culture. Our program must recognize the importance of building culture and teamwork as a significant long-term goal of the Bank. |
Best Compensation Practices and Policies
| What We Do | | What We Do Not Do | | | ✔ | Pay for performance | ✘ | No tax gross-ups | | ✔ | Engage independent compensation consultant | ✘ | No significant perquisites for executives | | ✔ | Review compensation programs for risk | ✘ | No supplemental executive retirement plan | | ✔ | Annual say-on-pay vote | ✘ | No repricing of stock options | | ✔ | Maintain stock ownership guidelines for executives and non-employee directors | ✘ | No equity grants below 100% of fair market value without shareholder approval | | ✔ | Double trigger required for accelerated vesting of equity awards under the 2018 Equity Incentive Plan and the proposed 2025 Equity Incentive Plan | ✘ | No dividends paid on unvested restricted stock | | ✔ | Restrict executive officers and directors from engaging in hedging and pledging transactions with respect to FS Bancorp stock | | | | ✔ | Annual shareholder communication | | |
The Decision-Making Process
The Decision-Making Process The Role of the Compensation Committee. The Compensation Committee, which is comprised of independent directors, oversees the executive compensation program for our named executive officers. The Committee works very closely with an independent compensation consultant and management to examine the effectiveness of our executive compensation program throughout the year. The Committee makes all final compensation and equity award decisions regarding our named executive officers, except for the Chief Executive Officer, whose compensation is determined by the independent members of the Board of Directors, based upon recommendations of the Compensation Committee. The Chief Executive Officer is not present during voting or deliberations on his compensation. The Role of Management. Members of our management team attend regular meetings where executive compensation, corporate and individual performance, and competitive compensation levels and practices are discussed and evaluated. Only the Compensation Committee members are allowed to vote on decisions regarding named executive officer compensation. The Chief Executive Officer reviews his recommendations pertaining to all executives’ pay with the Compensation Committee, which provides transparency and oversight. Decisions on non-named executive officer pay are made by the Chief Executive Officer. The Role of the Independent Consultant. The Compensation Committee engages an independent compensation consultant to provide expertise on competitive pay practices, program design, and an objective assessment of any inherent risks of any programs. Pursuant to authority granted to it under its charter, the Compensation Committee has hired Pearl Meyer & Partners, LLC (“Pearl Meyer”) as its independent consultant. Pearl Meyer is retained by, and reports directly to, the Compensation Committee, and provided no other services to FS Bancorp in 2024. [Please confirm] Based on standards promulgated by the SEC and Nasdaq to assess compensation advisor independence, as well as the analysis conducted by Pearl Meyer in its independence review, the Compensation Committee has concluded that Pearl Meyer is an independent and conflict-free advisor to the Committee. The Role of Peer Group Companies. The Compensation Committee strives to establish a competitive level of total compensation for each named executive officer as compared with executive officers in similar positions at peer companies. To support its decisions, the Compensation Committee periodically reviews compensation data from public filings of a selected peer group, consisting of financial institutions with total assets ranging from 0.75 to 2.5 times those of FS Bancorp. Additionally, the Compensation Committee considers industry compensation surveys reflecting financial institutions of similar size and banking business operations. The Compensation Committee determined that the peer group established for purposes of setting pay for 2023 remained appropriate for purposes of setting pay for 2024.
2024 Executive Compensation Program
Mr. Adams’s increase was as a result of his leadership with respect to the Bank’s strong financial performance, risk management, succession planning efforts, and the commitment to the Bank’s culture. Mr. Mullet’s increase was based on his promotion to President. Annual Incentive Compensation. The 2024 annual cash incentives provided our named executive officers the opportunity to earn a performance-based award. Actual award payouts depend on the achievement of quantitative and qualitative performance objectives. Target award opportunities are expressed as a percentage of base salary, based on the named executive officer’s position and salary, as follows:
Long-Term Equity Incentive Plan
Long-Term Equity Incentive Plan In 2018, our Board of Directors unanimously adopted, and shareholders approved, the FS Bancorp, Inc. 2018 Equity Incentive Plan. The purposes of the plan are: (1) to promote the long-term growth and profitability of FS Bancorp; (2) to attract and retain individuals of outstanding competence; and (3) to provide participants with incentives that are closely linked to the interests of all shareholders of FS Bancorp. Stock-based award grants align the interests of executives with those of shareholders. When FS Bancorp performs well, executives are rewarded along with other shareholders. We believe that stock-based awards are of great value in recruiting and retaining highly qualified personnel who are in great demand. The table below shows the long-term equity incentive award values granted to each of the named executive officers on August 19, 2024.
Long-Term Equity Incentive Plan
| Officer | Restricted Stock ($) | Stock Options ($) | Total Grant Date Fair Value ($) | | Joseph C. Adams | 293,860 | 160,860 | 454,720 | | Matthew D. Mullet | 209,900 | 114,900 | 324,800 | | Shana Allen | 104,950 | 57,450 | 162,400 | | Ben Crowl | 104,950 | 57,450 | 162,400 | | Kelli Nielsen | 83,960 | 45,960 | 129,920 |
Long-Term Equity Incentive Plan
Stock options provide meaningful incentives for management to execute on the longer-term financial and strategic growth goals that drive shareholder value creation because they only provide value to the named executive officers if the price of FS Bancorp’s stock appreciates over time. Specifically, the value of the award depends on the price of FS Bancorp’s common stock in the future as compared to the exercise price of the options granted. There can be no assurance that any value will be realized. Stock options typically vest in 20% increments on each of the first five anniversaries of the date of grant. These stock options are also contingent upon the continued employment of the named executive officer through each vesting date. Termination of employment for any reasons other than death, disability or a change in control results in the forfeiture of any unvested options. Restricted stock awards are intended to provide the named executive officers with the economic equivalent of a direct ownership interest in FS Bancorp during the vesting period and provide us with significant retention security regardless of post-grant share price volatility. Grants of restricted stock awards vest in 20% increments on each of the first five anniversaries of the date of grant. Termination of employment for any reasons other than death, disability or a change in control results in the forfeiture of any unvested shares. More information about equity awards made during 2024 is set forth in the Grants of Plan-Based Awards and Outstanding Equity Awards tables that follow.
Other Policies and Guidelines
Shares counted toward the stock ownership requirement include those held directly or through a broker, shares held in the Employee Stock Ownership Plan, the 401(k) Plan, vested stock options and restricted stock with time-based vesting. Once the minimum ownership requirement is met, officers must maintain the required ownership amounts and compliance will be calculated annually. Each director and executive officer is required to retain 50% of net after tax shares acquired upon the exercise of stock options or vesting of restricted stock until the stock ownership requirement is met. Exceptions may apply for donations of stock and for sales or divisions of property in the case of divorce, disability or death, or other limited circumstances. Executive officers have five years from their appointment to comply with the applicable stock ownership requirement. All of the named executive officers were in compliance with these guidelines as of December 31, 2024. Clawback Policy. FS Bancorp, Inc. has maintained a clawback policy since 2012. The policy provides the Board with the authority to withhold and/or recoup bonuses based on the occurrence of one or more of the following:
Practices Related to the Grant of Certain Equity Awards
Practices Related to the Grant of Certain Equity Awards FS Bancorp maintains a structured equity grant timing process designed to ensure compliance with applicable securities laws, corporate governance best practices, and the avoidance of material nonpublic information in granting equity awards. The Compensation Committee approves all equity grants, including stock options and restricted stock awards, on a predetermined schedule, with grant dates set in advance to occur outside of blackout periods and when FS Bancorp is not in possession of material nonpublic information. Stock option exercise prices are set at the closing price of FS Bancorp’s common stock on the grant date, in accordance with FS Bancorp’s equity plan and applicable securities regulations. This process is designed to prevent any appearance of opportunistic grant timing and to ensure that equity awards are made in a manner that reflects long-term shareholder value creation. By adhering to a fixed grant schedule and robust governance framework, FS Bancorp reinforces its commitment to transparency, fairness, and regulatory compliance in equity compensation practices.
Summary Compensation Table
Summary Compensation Table The table below summarizes the total compensation paid to or earned by each of our named executive officers for the fiscal years ended December 31, 2023, 2022 and 2021.
Summary Compensation Table
| | | | | Stock | Option | All Other | | | | | | | Awards | Awards | Compensa- | | | Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | ($)(2) | ($)(2) | tion ($)(3) | Total ($) | | Joseph C. Adams | 2024 | 550,375 | 516,000 | 293,860 | 160,860 | 42,127 | 1,563,222 | | Chief Executive Officer | 2023 | 525,000 | 460,000 | 199,745 | 148,590 | 40,033 | 1,373,368 | | | 2022 | 494,904 | 450,000 | 232,050 | 160,650 | 27,224 | 1,364,828 | | Matthew D. Mullet | 2024 | 377,145 | 371,000 | 209,900 | 114,900 | 29,372 | 1,102,318 | | President and Chief Financial | 2023 | 346,500 | 303,500 | 122,920 | 91,440 | 26,811 | 891,171 | | Officer | 2022 | 330,000 | 280,000 | 139,230 | 96,390 | 20,321 | 865,941 | | Shana Allen (4) | 2024 | 245,000 | 245,000 | 104,950 | 57,450 | 15,993 | 668,393 | | Chief Information Officer | 2023 | 245,000 | 171,500 | 76,825 | 57,150 | 13,207 | 563,682 | | Ben Crowl (5) | 2024 | 245,000 | 170,000 | 104,950 | 57,450 | 19,985 | 597,385 | | Executive Vice President | | | | | | | | | Chief Lending Officer | | | | | | | | | Kelli Nielsen (4) | 2024 | 232,027 | 170,000 | 83,960 | 45,960 | 21,590 | 553,537 | | Executive Vice President, | 2023 | 225,000 | 160,000 | 58,387 | 43,434 | 19,689 | 506,510 | | Chief Retail Banking Officer | | | | | | | |
Summary Compensation Table
| (1) Consists of the annual incentive award and the performance award described above under “Compensation Discussion and Analysis – 2024 Executive Compensation Program – Annual Incentive Compensation” and “–Performance Award and Non-Competition Agreement.” |
Summary Compensation Table
| (2) Represents the aggregate grant date fair value of awards, computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 20 of the Notes to Consolidated Financial Statements in FS Bancorp’s Annual Report on Form 10‑K for the year ended December 31, 2024. |
Summary Compensation Table
| (3) For 2024, consists of the following: |
Summary Compensation Table
| | 401(k) match | ESPP | Life insurance | Dividends on | | | ($) | contribution ($) | premiums ($) | restricted stock ($) | | Joseph C. Adams | 13,800 | 6,000 | 990 | 21,337 | | Matthew D. Mullet | 13,800 | 2,750 | 784 | 12,038 | | Shana Allen | 13,800 | 669 | 1,004 | 520 | | Ben Crowl | 13,800 | 600 | 514 | 5,071 | | Kelli Nielsen | 13,800 | 150 | 756 | 6,884 |
Summary Compensation Table
| (4) Not a named executive officer in 2022. |
Summary Compensation Table
| (5) Not a named executive officer in 2023 or 2022. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table shows information regarding grants of plan-based awards made to our named executive officers for 2024.
Grants of Plan-Based Awards
| | | All other stock | All other option | | | | | | awards: Number of | awards: Number of | Exercise or base | Grant date fair | | | Grant | shares of stock or | securities underlying | price of option | value of stock and | | Name | date | units (#)(1) | options (#)(1) | awards ($/Sh) | option awards (2) | | Joseph C. Adams | 8/15/2024 | 7,000 | 14,000 | 41.98 | 454,720 | | Matthew D. Mullet | 8/15/2024 | 5,000 | 10,000 | 41.98 | 324,800 | | Shana Allen | 8/15/2024 | 2,500 | 5,000 | 41.98 | 162,400 | | Ben Crowl | 8/15/2024 | 2,500 | 5,000 | 41.98 | 162,400 | | Kelli Nielsen | 8/15/2024 | 2,000 | 4,000 | 41.98 | 129,928 |
Grants of Plan-Based Awards
| (1) Awards vest in equal installments of 20% per year beginning on August 15, 2025. |
Grants of Plan-Based Awards
| (2) Represents the aggregate grant date fair value of awards, computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 20 of the Notes to Consolidated Financial Statements in FS Bancorp’s Annual Report on Form 10‑K for the year ended December 31, 2024. |
Outstanding Equity Awards
Outstanding Equity Awards The following table shows information regarding outstanding equity awards as of December 31, 2024 for the named executive officers.
Outstanding Equity Awards
| | Option Awards (1) | | | | | Stock Awards (1) | | | | | | | | | | Market | | | | Number of | Number of | | | Number of | Value of | | | | Securities | Securities | | | Shares or | Shares or | | | | Underlying | Underlying | | | Units of | Units of | | | | Unexercised | Unexercised | Option | Option | Stock That | Stock That | | | Grant | Options (#) | Options (#) | Exercise | Expira- | Have Not | Have Not | | Name | Date | Exercisable | Unexercisable | Price ($) | tion Date | Vested (#) | Vested ($)(2) | | Joseph C. Adams | 08/14/20 | -- | 5,760 | 21.35 | 08/14/30 | | | | | 08/13/21 | 14,400 | 9,600 | 35.46 | 08/13/31 | | | | | 08/15/22 | 9,000 | 13,500 | 30.94 | 08/15/32 | | | | | 08/15/23 | 3,900 | 15,600 | 30.73 | 08/15/33 | | | | | 08/15/24 | -- | 14,000 | 41.98 | 08/15/34 | 21,820 | 895,929 | | Matthew D. Mullet | 08/14/20 | -- | 3,090 | 21.35 | 08/14/30 | | | | | 08/13/21 | 9,000 | 6,000 | 35.46 | 08/13/31 | | | | | 08/15/22 | 5,400 | 8,100 | 30.94 | 08/15/32 | | | | | 08/15/23 | 2,400 | 9,600 | 30.73 | 08/15/33 | | | | | 08/15/24 | -- | 10,000 | 41.98 | 08/15/34 | 13,930 | 571,966 | | Shana Allen | 08/15/23 | 1,500 | 6,000 | 30.73 | 08/15/33 | | | | | 08/15/24 | -- | 5,000 | 41.98 | 08/15/34 | 4,500 | 184,770 | | Ben Crowl | 08/15/19 | 748 | -- | 24.37 | 08/15/29 | | | | | 08/15/20 | 928 | 928 | 21.35 | 08/14/30 | | | | | 08/15/21 | 1,968 | 1,312 | 35.46 | 08/13/31 | | | | | 08/15/22 | 1,320 | 1,980 | 30.94 | 08/15/32 | | | | | 08/15/23 | 1,500 | 6,000 | 30.73 | 08/15/33 | | | | | 08/15/24 | -- | 5,000 | 41.98 | 08/15/34 | 6,610 | 271,407 | | Kelli Nielsen | 08/15/18 | 9,600 | -- | 29.30 | 08/15/28 | | | | | 08/15/19 | 5,680 | -- | 24.37 | 08/15/29 | | | | | 08/14/20 | 5,632 | 1,408 | 21.35 | 08/14/30 | | | | | 08/13/21 | 3,870 | 2,580 | 35.46 | 08/13/31 | | | | | 08/15/22 | 2,322 | 3,483 | 30.94 | 08/15/32 | | | | | 08/15/23 | 1,140 | 4,560 | 30.73 | 08/15/33 | | | | | 08/15/24 | -- | 4,000 | 41.98 | 08/15/34 | 6,245 | 256,420 |
Outstanding Equity Awards
| (1) Awards vest pro rata over a five-year period from the grant date, with the first 20% vesting one year after the grant date. |
Outstanding Equity Awards
| (2) Amounts are based on FS Bancorp’s common stock closing price of $41.06 on December 31, 2024. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table shows the value realized upon the exercise of stock options and the vesting of stock awards for the named executive officers during the year ended December 31, 2024.
Option Exercises and Stock Vested
| | Option awards | | Stock awards | | | | Number of shares | Value realized on | Number of shares | Value realized on | | Name | acquired on exercise (#) | exercise ($) | acquired on vesting (#) | vesting ($) | | Joseph C. Adams | 92,640 | 1,912,757 | 7,920 | 332,482 | | Matthew D. Mullet | 31,320 | 555,343 | 4,560 | 191,429 | | Shana Allen | -- | -- | 500 | 20,990 | | Ben Crowl | 5,776 | 125,487 | 1,996 | 83,792 | | Kelli Nielsen | -- | -- | 2,469 | 103,649 |
Potential Payments Upon Termination
Potential Payments Upon Termination We have entered into agreements with the named executive officers that provide for potential payments upon disability, termination and death. In addition, our equity plans also provide for potential payments upon termination. The following table shows, as of December 31, 2024, the value of potential payments and benefits following a termination of employment under a variety of scenarios.
Potential Payments Upon Termination
| | | | Involuntary | Change in | | | Death ($) | Disability ($) | Termination ($) | Control ($) | | Joseph C. Adams | | | | | | Severance Agreement | -- | -- | 1,180,000 | 1,180,000 | | Equity Awards (1) | 1,348,107 | 1,348,107 | -- | 1,348,107 | | Matthew D. Mullet | | | | | | Change of Control Agreement | -- | -- | -- | 425,000 | | Equity Awards (1) | 838,410 | 838,410 | -- | 838,410 | | Shana Allen | | | | | | Change of Control Agreement | -- | -- | -- | 245,000 | | Equity Awards (1) | 242,150 | 242,150 | -- | 242,150 | | Ben Crowl | | | | | | Change of Control Agreement | -- | -- | -- | 245,000 | | Equity Awards (1) | 374,462 | 374,462 | -- | 374,462 | | Kelli Nielsen | | | | | | Change of Control Agreement | -- | -- | -- | 243,000 | | Equity Awards (1) | 377,292 | 377,292 | -- | 377,292 |
Potential Payments Upon Termination
| (1) Amounts are based on FS Bancorp’s common stock closing price of $41.06 on December 31, 2024. |
Potential Payments Upon Termination
Severance Agreement for Chief Executive Officer. 1st Security Bank entered into a severance agreement with Mr. Adams. The agreement provides that if (1) the Bank terminates Mr. Adams’ employment other than for cause, (2) Mr. Adams terminates his employment for “good reason” or (3) there is a change in control of the Bank, Mr. Adams would be entitled to receive from the Bank a lump sum payment equal to 24 months of his base compensation. “Good reason” means any one or more of the following: (1) reduction of Mr. Adams’ salary or elimination of any significant compensation, unless generally applicable to similarly-situated employees; (2) assignment to Mr. Adams without his consent any authorities or duties materially inconsistent with his position as of the date of the severance agreement; and (3) a relocation or transfer that would materially increase Mr. Adams’ commute. Change of Control Agreements. 1st Security Bank entered into change in control agreements with Mr. Mullet, Ms. Allen, Mr. Crowl and Ms. Nielsen. These agreements provide that if there is a change in control of the Bank during the term of the agreement, the executive will be entitled to a severance payment if the executive suffers an involuntary termination within six months preceding or twelve months following the change in control. The severance payment will be twelve months of the executive’s then current salary, paid in a lump sum within 45 days of the termination. “Involuntary termination” means (1) termination of the executive’s employment other than for cause, (2) a reduction of the executive’s base salary, unless generally applicable to all senior officers of the Bank (any reduction for Mr. Mullet), (3) a material adverse change in the executive’s benefits, contingent benefits or vacation, unless generally applicable to all senior officers of the Bank, (4) a relocation of more than 20 miles from Mountlake Terrace, Washington (50 miles for Mr. Mullet) or (5) a material demotion of the executive, including but not limited to a material diminution of the executive’s title, duties or responsibilities. Receipt of the severance payment is conditioned upon the executive signing a severance agreement containing a comprehensive release of claims. Equity Awards. The 2013 Equity Incentive Plan and the 2018 Equity Incentive Plan provide for acceleration of awards if a recipient of an award terminates service early as a result of death or disability. The 2013 Equity Incentive Plan also provides that in connection with an actual change in control, all unexercisable options will become fully exercisable and all unvested awards of restricted stock will vest in full. The 2018 Equity Incentive Plan provides that if a change in control occurs prior to the vesting date of an award that is outstanding on the change in control date, and the participant experiences an involuntary separation from service, other than a termination for cause, during the 365‑day period following the change in control date, then the vesting date for such non-vested outstanding award will be accelerated to the date of the participant’s involuntary separation from service. However, if upon a change in control the successor to FS Bancorp either does not assume the outstanding award or replace it with an award that is determined by the Compensation Committee to be at least equivalent in value to the outstanding award on the change in control date, then the vesting date of such outstanding award will be accelerated to the change in control date.
Chief Executive Officer Pay Ratio
Chief Executive Officer Pay Ratio In August 2015 pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), the SEC adopted Item 402(u) of Regulation S-K, requiring annual disclosure of the ratio of the annual total compensation of the Chief Executive Officer to the median employee’s annual total compensation. For 2023, this information is as follows:
Chief Executive Officer Pay Ratio
| Mr. Adams, Chief Executive Officer, annual total compensation: | $1,563,222 | | Median employee annual total compensation: | $57,107 | | Ratio of Chief Executive Officer to median employee compensation: | 27 to 1 |
Chief Executive Officer Pay Ratio
In determining the median employee, we used a listing of all full-time employees, excluding our Chief Executive Officer, as of December 31, 2024. To identify our median employee, we used the reported W‑2 income for 2024 of all full-time employees, including 401k and ESPP matching contributions, as our consistently applied compensation measure. As a result of the flexibility permitted by Item 402(u), the method we used to determine our median employee may differ from the methods used by our peers, so the ratios may not be comparable.
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Act, and item 402(v) of Regulation S-K, we are providing the following information about the relationship between compensation actually paid to our principal executive officer (“PEO”), Mr. Adams, and the named executive officers (“NEOs”) excluding Mr. Adams (non-PEO NEOs) and certain financial performance metrics of FS Bancorp using the methodology that has been prescribed by the SEC. Refer to the Compensation Discussion and Analysis in this proxy statement for a complete description of how executive compensation relates to Bank performance and how the Compensation Committee makes its decision.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | | | | Average Summary Compensation Table Total for non-PEO NEOs ($)(1) | | | | | | | | Summary Compensation Table Total for PEO ($)(1) | | | Average Compensation Actually Paid to non-PEO NEOs ($)(2) | | Peer Group Total Shareholder Return ($)(3) | | | | | | | | | Total Shareholder Return ($)(3) | | | | | | | Compensation Actually Paid to PEO ($)(2) | | | | | Net Income ($ in millions) | Return on Assets (%)(4) | | Year | | | | | | | | | | 2024 | 1,563,222 | 1,914,920 | 730,408 | 1,415,125 | 145.99 | 132.44 | 35.0 | 1.18 | | 2023 | 1,373,368 | 1,330,694 | 630,571 | 852,623 | 127.73 | 112.03 | 36.1 | 1.27 | | 2022 | 1,364,828 | 1,246,692 | 562,879 | 453,130 | 111.93 | 111.47 | 29.6 | 1.22 | | 2021 | 1,876,843 | 2,345,458 | 1,362,986 | 1,921,658 | 109.28 | 126.43 | 37.4 | 1.71 | | 2020 | 1,801,481 | 1,322,596 | 1,611,519 | 1,248,859 | 87.58 | 90.82 | 39.3 | 2.02 |
Pay Versus Performance
| (1) The PEO for each year is Joseph C. Adams. The non-PEO NEOs for 2024 are Matthew D. Mullet, Shana Allen, Ben Crowl and Kelli Nielsen. The non-PEO NEOs for 2023 are Matthew D. Mullet, Donn C. Costa, Shana Allen, Kelli Nielsen and Dennis V. O’Leary. The non-PEO NEOs for 2022 are Matthew D. Mullet, Dennis V. O’Leary, Robert B. Fuller and Donn C. Costa. In 2021 and 2020, FS Bancorp was a smaller reporting company. The non-PEO NEOs for 2021 are Dennis V. O’Leary and Donn C. Costa. The non-PEO NEOs for 2020 are Matthew D. Mullet and Donn C. Costa. |
Pay Versus Performance
| (2) The following amounts were deducted from/added to summary compensation table total compensation in accordance with the SEC-mandated adjustments to calculate compensation actually paid for the year ended December 31, 2024. The fair value of stock awards was determined using methodologies and assumptions developed in a manner substantively consistent with those used to determine the grant date fair value of such awards. |
Pay Versus Performance
| | PEO ($) | Average for non-PEO NEOs ($) | | Summary compensation table total | 1,563,222 | 730,408 | | Deduct grant date fair value of equity awards granted in fiscal year | (454,652) | (618,611) | | Add fair value at fiscal year end of outstanding and unvested equity awards granted in fiscal year | 454,285 | 778,774 | | Add change in fair value of outstanding and unvested equity awards granted in prior fiscal years | 213,311 | 296,820 | | Add change in fair value as of vesting date of equity awards granted in prior fiscal years for which applicable vesting conditions were satisfied during the fiscal year | 138,754 | 227,734 | | Compensation actually paid | 1,914,920 | 1,415,125 |
Pay Versus Performance
| (3) Total Shareholder Return (“TSR”) assumes $100 invested in FS Bancorp common stock and the S&P U.S. SmallCap Banks Index on December 31, 2019 with all dividends reinvested. |
Pay Versus Performance
| (4) We determined that return on assets is the most important financial measure used to link compensation actually paid to our NEOs for the most recently completed fiscal year to company performance. |
Pay Versus Performance
Most Important Financial Performance Measures. As required by the SEC’s rules, the following is a list of the most important financial measures used to link “compensation actually paid” to our performance. The roles of each of these performance measures in our executive compensation programs is more thoroughly discussed in the Compensation Discussion and Analysis in this proxy statement, along with a description of how executive compensation relates to our performance and how the Compensation Committee makes its decisions.
Pay Versus Performance
| ● | Net Income |
Pay Versus Performance
| ● | Net Interest Margin |
Pay Versus Performance
| ● | Efficiency Ratio |
Pay Versus Performance
| ● | Return on Assets |
Pay Versus Performance
| ● | Relative Total Shareholder Return |
Pay Versus Performance
Descriptions of the Information Presented in the Pay Versus Performance Table. The illustrations below compare “compensation actually paid” (as calculated in accordance with the SEC’s rules) and the following measures:
Pay Versus Performance
| ● | FS Bancorp’s cumulative TSR and the peer group’s cumulative TSR; |
Pay Versus Performance
| ● | FS Bancorp’s Net Income; and |
Pay Versus Performance
| ● | FS Bancorp’s Return on Assets. |