Laura Lee Stewart
About Laura Lee Stewart
Laura Lee Stewart is President and Chief Executive Officer of Sound Financial Bancorp, Inc. and Sound Community Bank; she joined Sound Community Bank as President in 1989 when it was a credit union and has served on the Company’s Board since 1990; she was age 75 at December 31, 2024, with her current director term expiring in 2026 . Stewart led the organization’s conversion from a $38 million credit union to a $1 billion publicly traded bank and has been repeatedly recognized by American Banker (Top 25 Women to Watch, Most Powerful Women in Banking) and by the Puget Sound Business Journal; she has served on the FDIC Community Bank Advisory Board, the inaugural CFPB board, and currently on the Federal Reserve Bank of San Francisco Head Office Board . Pay-versus-performance data show Total Shareholder Return rising to 126.15 by 2024 (from 91.02 in 2022 and 92.11 in 2023) while Net Income was $4.64 million in 2024 (vs. $7.44 million in 2023 and $8.80 million in 2022) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Sound Community Bank / Sound Financial Bancorp | President and CEO | 1989–present | Led conversion from a $38 million credit union to a $1 billion publicly traded bank and industry leadership roles |
| Great Western Bank | Senior Vice President, Retail Banking | Pre-1989 | Senior retail banking leadership prior to joining Sound Community Bank |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| FDIC Community Bank Advisory Board | Member (inaugural) | Term completed 2011 | Industry advisory service |
| CFPB (inaugural board) | Member | Term completed 2013 | Consumer finance oversight engagement |
| American Bankers Association | Chair, Government Relations Council; ABA Chair (elected Oct 2019) | Multiple; 2019 | National trade association leadership |
| Washington Bankers Association | Chair (two terms) | Multiple | State trade association leadership |
| Federal Reserve Bank of San Francisco | Seattle Branch Board (two terms); Head Office Board | Current Head Office Board in 2024 | Monetary policy and regional oversight engagement |
| National Arthritis Foundation | Board Chair | N/D | Nonprofit governance |
| Woodland Park Zoo | Board Chair | N/D | Nonprofit governance |
| Jamestown/S’Klallam CDFI | Secretary/Treasurer; only non-tribal Board member | Current | Community development finance role |
| American Banker Awards | Most Powerful Women to Watch; Most Powerful Women in Banking | 2011, 2015–2018, 2022–2024; 2019–2021 | Industry recognition |
Fixed Compensation
| Year | Base Salary ($) | Target Bonus (% of Salary) | Actual Bonus Paid ($) | Total “All Other Compensation” ($) |
|---|---|---|---|---|
| 2024 | 515,000 | Up to 50.0% | 282,148 | 198,061 |
| 2023 | 515,000 | Up to 50.0% | 211,051 | 222,357 |
All Other Compensation detail (2024):
| Item | Amount ($) |
|---|---|
| 401(k) matching contribution | 3,505 |
| Non-qualified deferred compensation plan contribution | 142,036 (vests equally over three years commencing Feb 1, 2025) |
| Executive medical benefits | 2,954 |
| Payment for unused vacation | 12,875 |
| ESOP allocation | 26,202 |
| Dividends on restricted stock | 489 |
| Matching charitable contribution | 10,000 |
Performance Compensation
Annual Bonus Plan mechanics (cash):
- Weighting: 50% quantitative; 50% qualitative .
- Quantitative factors: asset size, capital level, delinquency ratio, return on assets, non-interest income and expense, net interest margin, ratio of CDs to total deposits .
- Override: Bonus % adjusted up/down by up to 50% based on actual net income vs target (“Earnings Override Adjustment”) .
- 2024 outcome: Stewart earned 54.79% of base salary after a 15.0% upward override; paid $282,148 .
| Metric/Plan Element | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Annual Bonus (quantitative + qualitative) | 50% + 50% | Not disclosed | 54.79% of salary after 15% earnings override | $282,148 (2024) | Cash (no vesting) |
Equity awards (time-based):
| Award Type | Grant Date | Amount | Exercise/Grant Price | Fair Value ($) | Vesting Schedule |
|---|---|---|---|---|---|
| Restricted Stock | 1/26/2024 | 243 shares | N/A | 9,693 | 3 equal annual installments starting 1/26/2025 |
| Stock Options | 1/26/2024 | 259 options | $39.89 | 2,934 | 3 equal annual installments on 1/26/2025–2027 |
Pay versus performance (Company-level):
| Year | PEO “Compensation Actually Paid” ($) | TSR (Value of $100) | Net Income ($000s) |
|---|---|---|---|
| 2024 | 1,016,742 | 126.15 | 4,640 |
| 2023 | 1,016,690 | 92.11 | 7,439 |
| 2022 | 938,320 | 91.02 | 8,804 |
Equity Ownership & Alignment
As of March 31, 2025, Stewart beneficially owned 95,901 shares (3.7% of 2,566,069 shares outstanding) . Footnote detail indicates holdings include 18,034 shares in her 401(k), 14,909 ESOP shares, options to acquire 2,556 shares, and 162 restricted shares with voting but no dispositive power . Company insider trading policy generally prohibits pledging or hedging of Company stock, with limited exceptions requiring demonstrable repayment capacity and prohibits hedging instruments broadly .
| Ownership Component | Amount | Notes |
|---|---|---|
| Total beneficial ownership | 95,901 shares (3.7%) | Based on 2,566,069 outstanding |
| 401(k) | 18,034 shares | Retirement account holdings |
| ESOP | 14,909 shares | ESOP allocation |
| Options (rights to acquire) | 2,556 shares | No voting/dispositive power |
| Restricted shares | 162 shares | Voting only; no dispositive power |
| Pledging/Hedging | Policy prohibits pledging/hedging, with limited pledge exception; hedging instruments prohibited | Alignment safeguard |
Outstanding equity awards and vesting (12/31/2024):
| Type | Exercisable | Unexercisable | Exercise Price | Expiration | Unvested RS Shares | Market Value (12/31/2024) |
|---|---|---|---|---|---|---|
| Options | 250 | — | $33.50 | 1/25/2029 | — | — |
| Options | 120 | — | 36.26 | 1/31/2030 | — | — |
| Options | 300 | — | 32.46 | 1/27/2031 | — | — |
| Options | 1,200 | 600 (vest 1/27/2025) | 40.13 | 1/27/2033 | 400 (vest 1/27/2025) | $20,980 |
| Options | — | 259 (vest 1/26/2025–2027) | 39.89 | 1/26/2034 | 243 (vest 1/26/2025–2027) | $12,745 |
Employment Terms
| Agreement/Plan | Key Terms | Economics |
|---|---|---|
| Amended Employment Agreement (entered 1/25/2019; auto-renew) | Evergreen one-year extension each Jan 1 unless notice; minimum base salary $413,231 (2019); no salary reductions; participation in standard benefits | If terminated other than for cause, death, retirement, disability, or resigns after certain events, entitled to salary and continued group benefits for remaining term; change-in-control extends term so it expires no earlier than one-year post CoC to ensure at least 1x salary cash severance; all subject to 280G cutback |
| Amended Non-Compete & Non-Solicitation (12/13/2019) | Restricted period 18 months post separation | If terminated for cause or voluntary (not for good reason): bi-monthly $3,542 during restricted period; otherwise: 150% of base salary plus average past 3 years’ short-term bonus, approx $1,015,225 at 12/31/2024, payable in 12 monthly installments; CoC within 24 months with involuntary termination/good reason: 150% in lump sum; forfeiture if breach |
| SERP 1 (effective 8/14/2007; frozen upon SERP 2) | Unfunded, non-contributory defined benefit for Stewart | $53,320 per year for life commencing after separation; starts upon CoC-related involuntary termination; payments cease upon death; subject to 409A timing |
| SERP 2 (effective 12/30/2011) | Additional retirement benefits via underlying annuity | $99,450 per year as of 12/31/2024; if death prior to commencement, beneficiary receives lump sum equal to Bank’s accrual (approx $1.1 million at 12/31/2024); full benefit upon CoC after separation; subject to 409A timing |
| Non-qualified Deferred Compensation Plan | Company contribution vests over 3 years starting 2/1/2025 | 2024 contribution for Stewart: $142,036 |
Board Governance and Committee Roles
- Board independence: 7 of 8 directors are independent; Stewart serves as President, CEO, and Director, and is not independent .
- Leadership: The Chairman role is held by an independent, non-executive director (Tyler K. Myers), separating chair and CEO duties .
- Committee membership: Compensation Committee (Sweeney—chair, Jones, Haddad, Myers) all independent; met 5 times in 2024 . Nominating Committee (Haddad—chair, Riojas, Jones) all independent; met once in 2024 . Audit Committee (Jones—chair, Riojas, Porcelli, Carney, Haddad) all independent; met 4 times in 2024; Jones qualifies as an “audit committee financial expert” .
- Attendance: In 2024, no incumbent director attended fewer than 75% of aggregate board and applicable committee meetings; boards convene quarterly (holding company) and monthly (bank) .
- Director compensation: Stewart receives no separate compensation for board service; non-employee directors received retainers and equity awards; outside directors must own at least $50,000 in stock within two years of joining; pledged shares do not count toward guidelines .
Investment Implications
- Pay-for-performance alignment: Annual bonus ties to core banking metrics (ROA, NIM, asset/capital quality, non-interest mix) with a net income override; 2024 payout at 54.79% of salary reflects above-target performance after override, supporting variable-pay sensitivity to earnings .
- Equity-based supply cadence: Stewart’s unvested equity is time-based, with clustered vesting dates in late January across 2025–2027 (RS and options), which can create predictable windows for potential insider selling pressure should she elect to sell upon vesting .
- Retention and change-in-control economics: Evergreen employment term, meaningful non-compete payout (~150% of salary+bonus, ~$1.015 million), and lifetime SERP benefits ($53,320 + $99,450 per year currently) lower voluntary departure risk and provide defined severance structure; 280G cutback limits parachute exposure .
- Alignment safeguards: Insider policy restricts pledging and prohibits hedging, mitigating misalignment and leverage risks associated with executive holdings .
- Governance checks on dual roles: An independent Chairman and fully independent committees mitigate CEO-director concentration risks; Stewart earns no separate director fees, reducing layering of compensation .
- Shareholder dynamics: A 16% activist holder (Stilwell Group) may heighten governance scrutiny and influence compensation and strategic decisions, a factor for trading and engagement assessments .