Patrick S. Lawton
About Patrick S. Lawton
Independent director and Chairman of the Board at Waterstone Financial, Inc. (WSBF). Lawton is Managing Director of Fixed Income Capital Markets at Baird and serves on Baird’s board; he holds a B.S.B.A. and M.B.A. from Marquette University and brings investment portfolio expertise to WSBF’s board . Age 68; director since 2000 at WaterStone Bank and since 2005 at WSBF’s predecessor federal corporation; his WSBF board tenure is 19 years as of 2024 . WSBF’s board has determined Lawton is independent under NASDAQ standards .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Waterstone Financial, Inc. | Chairman of the Board; Independent Director | Director since 2005 (WSBF predecessor); Board tenure 19 years as of 2024 | Compensation Committee Chair; Executive Committee member |
| WaterStone Bank (subsidiary) | Director | Director since 2000 | Board risk oversight through bank board and committees |
External Roles
| Organization | Role | Tenure | Notes |
|---|---|---|---|
| Baird | Managing Director, Fixed Income Capital Markets; Board member | Not disclosed | Investment portfolio expertise leveraged on WSBF board |
| Public company boards | None (past five years) | — | No other public company directorships disclosed (other than WSBF) |
Board Governance
- Independence: Lawton is classified as an independent director; WSBF’s board majority is independent and independent directors meet without management .
- Leadership: WSBF separates Chairman and CEO roles; the Chairman has never been an officer or employee, supporting independent oversight .
- Committees: Lawton chairs the Compensation Committee and serves on the Executive Committee; all committees are composed entirely of independent directors .
- Attendance and engagement: No board or committee member attended fewer than 75% of meetings in 2024; board met 12 times for WSBF and 12 times for WaterStone Bank .
- Say-on-pay signal: Advisory vote on executive compensation received over 91% support at the 2024 annual meeting, indicating shareholder alignment with compensation oversight .
Board Committees and Roles (as of Dec 31, 2024)
| Director | Audit | Compensation | Executive | Nominating & Corporate Governance |
|---|---|---|---|---|
| Ellen S. Bartel | X | X | Co-Chair | |
| Douglas S. Gordon | X | |||
| Michael L. Hansen | Chair | X | X | |
| Patrick S. Lawton | Chair | X | ||
| Kristine A. Rappé | Chair | |||
| Stephen J. Schmidt | X | X | Co-Chair | |
| Derek L. Tyus | X | X | X |
Fixed Compensation
| Component | 2022 | 2024 |
|---|---|---|
| Board retainer and meeting fees (cash) | $30,000 | $65,000 |
| Committee fees (cash) | Included in above | $32,500 |
| Equity grants (stock/options) | None disclosed in 2022 director table; outstanding options detailed separately | None; outstanding options detailed separately |
| Total director compensation | $30,000 | $97,500 |
- Director stock ownership guidelines: Directors must hold shares equal to 3x annual board cash retainer; all directors were in compliance as of Dec 31, 2024 .
Performance Compensation
- WSBF uses performance-based incentives for executives overseen by the Compensation Committee chaired by Lawton; key annual and long-term metrics below .
Annual Incentive Plan Metrics (2024, WSBF executives)
| Performance Measure | Evaluated Against | Rationale |
|---|---|---|
| Community Banking Segment Pre-Tax Income | Budget | Focuses management on achieving budgeted pre-tax income |
| Mortgage Banking Segment Pre-Tax Income | Budget | Focuses management on achieving budgeted pre-tax income |
| Asset Quality | Budget & Peers | Maintain high asset quality while pursuing loan growth |
| Commercial Loan Growth | Budget | Enhance franchise value via CRE/C&I growth |
| Core Deposit Growth | Budget | Improve net interest margin with low-cost deposits |
| Expense Management | Budget & Peers | Balance expense ratio with growth |
| Individual Performance | N/A | Strategic/operational objectives |
2024 Actual Performance and Payouts (selected)
| Measure | Target | Actual | Achievement vs Target |
|---|---|---|---|
| Community Banking Pre-Tax Income ($mm) | $18.4 | $21.844 | 118.7% |
| Mortgage Banking Pre-Tax Income ($mm) | $3.5 | $1.886 | 53.9% |
| Asset Quality (NPA ratio) | 0.30% | 0.18% | 166.7% |
| Commercial Loan Growth ($000s) | $25,000 | $48,671 | 194.7% |
| Core Deposit Growth ($000s) | $7,500 | $(9,771) | N/M |
| Expense Management (NIE/TA) | 1.40% | 1.41% | 99.3% |
Long-Term Performance-Based Equity Plan (executives)
| Performance Measure | Period | Threshold | Target | Maximum | Actual | Outcome |
|---|---|---|---|---|---|---|
| Consolidated ROAA | 2022–2024 | 1.00% | 1.35% | 1.70% | 0.75% | 0% vesting (threshold not met) |
- Governance structures supporting alignment: clawback policies; hedging/pledging restrictions for directors and officers; independent compensation consultant (Meridian) and defined peer group for benchmarking .
Other Directorships & Interlocks
| Category | Entity | Role | Notes |
|---|---|---|---|
| Public company boards | — | — | No other public directorships in past five years (other than WSBF) |
| Private/company boards | Baird | Board member | Potential information flow; no related-party transactions disclosed |
Expertise & Qualifications
- Investment portfolio and capital markets expertise via Baird MD role; advanced finance education (Marquette MBA) .
- Board skills matrix emphasizes coverage across risk management, governance, and strategic planning; Lawton contributes investment expertise to board deliberations .
Equity Ownership
| Holder | Direct Shares | Indirect Shares | Options (exercisable) | Total Beneficial | % Outstanding | Notes |
|---|---|---|---|---|---|---|
| Patrick S. Lawton | 49,131 | 10,000 (shared power) | 37,500 (vested but unexercised) | 59,131 | <1% | Excludes 201,931 shares transferred to irrevocable trust for family; Lawton not trustee . |
| Shares outstanding (record date) | — | — | — | 19,294,731 | — | As of March 26, 2025 . |
- Ownership guidelines: Directors must hold 3x annual cash retainer; all directors compliant as of Dec 31, 2024 .
- Hedging/pledging: Directors/officers restricted from hedging and pledging Company securities .
Governance Assessment
- Strengths: Independent Board Chair; independent Compensation Committee chaired by Lawton; robust executive pay metrics (ROAA, segment pre-tax, asset quality, etc.) and clawback policies; strong say-on-pay support (91% in 2024); board and committee attendance at or above 75% with frequent meetings .
- Alignment: Lawton’s share ownership plus vested options and compliance with director ownership guidelines; no hedging/pledging; independent sessions and separated Chair/CEO roles .
- Conflicts and related-party risk: No transactions >$120,000 with directors/officers since Jan 1, 2024; director loans made in ordinary course on market terms; while Lawton serves on Baird’s board, no related-party transactions are disclosed with Baird .
- Watch items: Long tenure (19 years) can raise independence/performance refresh concerns; core deposit growth underperformed target in 2024; mortgage banking segment pre-tax under target (implications for incentive plan design and oversight) .
Compensation Structure Analysis (Director)
- Year-over-year, Lawton’s cash compensation increased materially from $30,000 (2022) to $97,500 (2024), reflecting higher board retainer and committee fees; no 2024 equity grants to Lawton reported in the director table .
- Structure remains predominantly cash with legacy options outstanding, indicating moderate at-risk alignment via equity but primarily cash-based director pay .
Compensation Committee Analysis
- Committee members: Bartel, Lawton (Chair), Schmidt, Tyus; no interlocks or insider participation reported .
- Consultant: Meridian Compensation Partners engaged as independent consultant; peer group covers banks with $1.4–$8.1B assets and mortgage/real estate focus (e.g., ESSA, FS Bancorp, RBB, Territorial) .
- Policies: Clawbacks (dual policies covering restatements), stock ownership (directors 3x retainer), restrictions on hedging/pledging .