Business Context and Reporting Period
This Form 8-K Current Report was filed by Waterstone Financial, Inc. on October 23, 2014. The filing discloses the execution of a new employment agreement with Douglas S. Gordon, President and Chief Executive Officer of WaterStone Bank SSB, the Company's wholly-owned subsidiary.
Key Financial Metrics
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. The document focuses exclusively on executive compensation terms.
- Base Salary: $780,000 annually, effective October 23, 2014.
- Contract Term: Initial term through December 31, 2017, with automatic one-year renewals thereafter unless notice is given.
Material Changes
The primary material change is the formalization of Mr. Gordon's compensation and severance terms. The agreement establishes specific financial obligations for the Company in the event of involuntary termination, resignation for "good reason," change in control, disability, or death.
Guidance, Outlook, and Risks
Severance and Change in Control:
- Involuntary Termination/Good Reason: Mr. Gordon is entitled to a lump-sum payment covering earned salary, benefits, and the remaining base salary and bonuses for the rest of the agreement term. Bonuses are calculated based on the average of the preceding three years. All unvested equity awards vest immediately.
- Change in Control: Severance calculations are based on a fixed remaining term of 36 months. Equity awards vest immediately, and medical/life insurance coverage continues for 36 months.
- Disability: The Company provides a salary top-up to 100% of base salary for one year, and 66 2/3% thereafter until age 65, death, or recovery.
- Death: Beneficiaries receive one year of base salary and continued health benefits.
Risks and Restrictions:
- Non-Compete: Mr. Gordon is restricted from competing with the Company or soliciting employees for one year following termination (excluding change in control scenarios).
- Confidentiality: The agreement includes strict restrictions on revealing confidential information.
Investor Verification Checklist
- Verify the total potential cash liability for severance under the "Change in Control" scenario (36-month calculation).
- Review the attached Exhibit 10.1 for the specific definition of "good reason" and "cause."
- Confirm the current status of Mr. Gordon's unvested equity awards under the Wauwatosa Holdings 2006 Equity Incentive Plan to assess the immediate vesting liability.
- Assess the impact of the $780,000 base salary on the Company's future operating expenses.