🧾 What This Document Is — Your Shareholder Ballot & Guide

This is a Definitive Proxy Statement (DEF 14A) for FS Bancorp, Inc. (ticker: FSBW). Think of it as your official voter's guide and ballot for the company's annual shareholder meeting. It explains what proposals you're voting on, provides background on the people running the company, and discloses how much top executives are paid. The company is required by the SEC to send this to shareholders before the meeting so they can make informed voting decisions.

👉 Why it matters: Your shares give you a vote. This document tells you what you're voting on and gives you the information to decide how to vote.

🏢 What The Company Does — A Community Bank in Washington

FS Bancorp, Inc. is the parent company of 1st Security Bank of Washington. In simple terms, it's a community bank focused on serving individuals and businesses in Washington State. It offers typical banking services like checking/savings accounts, loans (mortgages, commercial, etc.), and other financial products. It's not a giant national bank; it's a regional player with a focus on local relationships and culture.

📅 Key Dates & Meeting Logistics

• Annual Meeting: Thursday, May 21, 2026, at 2:00 p.m. Pacific Time.
• Location: 1st Security Bank Administrative Office, 6920 220th Street SW, Mountlake Terrace, Washington.
• Record Date: March 20, 2026. You must own shares by this date to vote.
• Shares Outstanding: 7,501,542 shares entitled to vote.
• How to Vote: You can vote online, by phone, by mail, or in person at the meeting.

🗳️ The 4 Proposals You're Voting On

Here’s what’s on your ballot. The Board recommends a "FOR" vote on all four.

1. Proposal 1: Elect Two Directors. You're voting to elect Terri L. Degner and Michael J. Mansfield to the board for a three-year term. Both are incumbent directors with deep experience in banking and finance.
2. Proposal 2: Approve Executive Pay (Non-Binding). This is the "say-on-pay" vote. You get to express approval (or disapproval) of the compensation paid to the company's top executives, as detailed later in this document.
3. Proposal 3: Adopt the 2026 Equity Incentive Plan. This is a vote to approve a new plan that allows the company to grant stock options and other equity awards to employees and directors as a form of compensation.
4. Proposal 4: Ratify the Auditor. You are asked to formally approve the selection of Baker Tilly US, LLP as the company's independent accounting firm for 2026.

👥 Who's Running The Show — Board & Top Owners

• Board of Directors: The board has 7 members. 6 are considered independent (not company employees). They have a staggered term system for stability.
• Named Executive Officers (NEOs): The top 5 executives whose pay is detailed in the filing:
  • Joseph C. Adams (CEO)
  • Matthew D. Mullet (President)
  • Phillip D. Whittington (CFO)
  • Donn C. Costa (Chief Home Lending Officer)
  • Shana C. Allen (Chief Information Officer)
• Major Shareholders (5%+ owners): Several large investment firms own significant stakes:
  • T. Rowe Price: 13.6%
  • BlackRock: 6.3%
  • Dimensional Fund Advisors: 5.4%
  • The Vanguard Group: 5.3%
  • De Lisle Partners LLP: 5.1%

💰 Executive Compensation — How the Bosses Get Paid

The bank's philosophy is to pay competitively, tie pay to performance, and align executives' interests with shareholders. Here’s the breakdown for 2025:

Executive	Salary ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive ($)	Other Comp ($)	Total ($)
Joseph C. Adams (CEO)	707,692	120,420	78,480	417,500	19,798	1,343,890
Matthew D. Mullet (Pres)	480,769	90,315	58,860	247,500	18,390	895,834
Phillip D. Whittington (CFO)	305,769	45,158	29,430	100,000	11,821	492,178
Donn C. Costa	346,154	45,158	29,430	116,250	14,091	551,083
Shana C. Allen	326,923	45,158	29,430	115,000	11,610	528,121

👉 Key Insight: A large portion of their pay is "at-risk" — tied to company performance through annual cash incentives and long-term stock awards. This is meant to ensure they only get big bonuses if the company does well.

⚖️ Corporate Governance — How the Company is Managed

The board emphasizes strong governance practices. Highlights include:

• Separate Chair & CEO: The Board Chair (Ted A. Leech) is an independent director, which is seen as a good check on management.
• Committees are Independent: The key committees (Audit, Compensation, Governance) are made up entirely of independent directors.
• Risk Oversight: The board actively oversees risks, including cybersecurity, with the CIO reporting directly to the Audit Committee.
• Ethics & Culture: The company has a Code of Conduct, whistleblower policies, and a stated focus on a "Smart, Driven, Kind" workplace culture.
• Stock Ownership: Directors and executives are required to own significant amounts of company stock to align their interests with yours.

🔍 Related Party Transactions — Loans to Insiders

The filing discloses loans made to directors and executives under the bank's standard employee mortgage program. For example, CEO Joseph Adams had two mortgages totaling about $945,000 outstanding, and President Matthew Mullet had one mortgage for about $529,000. These loans were made at prevailing market rates and follow standard underwriting.

🧠 The Analogy

Think of this proxy statement as the annual report card and election handbook for your local community-owned credit union. You, as a member-owner (shareholder), get to see how the managers (executives) are paid, who is on the supervisory board (directors), and you get to cast your ballot on key issues like approving new incentive plans and re-appointing the independent auditor who checks the books.

🧩 Final Takeaway

Your main job as a shareholder is to vote on four proposals that will shape the company's leadership and compensation plans. The board is asking you to re-elect two experienced directors, endorse its executive pay philosophy, approve a new equity incentive plan, and keep the same accounting firm. Your vote, whether by proxy or in person, is your direct voice in how FS Bancorp is governed.