🧾 What This Document Is

This is a Definitive Proxy Statement (DEF 14A) for Lake Shore Bancorp, Inc. It's the official "playbook" sent to shareholders before their annual meeting. It tells them what they'll vote on, who is running the company, and how much the bosses get paid. Think of it as an invitation and a detailed agenda for the company's biggest yearly event.

🏢 What The Company Does

👉 In simple terms… Lake Shore Bancorp is the parent company of Lake Shore Bank, a community bank serving areas in western New York. They make money the classic banking way: taking deposits and making loans. A major recent event was a "second-step" conversion on July 18, 2025, which changed their stock structure. All share numbers in this report are adjusted for that conversion.

📅 The Big Meeting: What, When, & Where

Shareholders are invited to the Annual Meeting on Wednesday, May 20, 2026, at 8:30 a.m. Eastern Time. It will be held in person at The Clarion Hotel, 30 Lake Shore Drive East, Dunkirk, New York 14048. 👉 Your vote counts, whether you attend in person or submit a proxy (which is like an absentee ballot). The record date to own shares and vote was March 23, 2026.

🗳️ The Four Things You're Voting On

Shareholders have four main proposals to decide on:

Elect Three Directors: Vote for Michelle M. DeBergalis, Jack L. Mehltretter, and Dennis S. Pollack to serve until 2029.
"Say on Pay" (Advisory): A non-binding vote to approve the compensation of the top executives.
Frequency of "Say on Pay": Choose if you want to vote on executive pay every 1, 2, or 3 years. The board recommends every year.
Ratify the Auditor: Approve the hiring of Yount, Hyde & Barbour, P.C. as the independent accounting firm for 2026. 👉 The Board of Directors unanimously recommends a "FOR" vote on all proposals.

👥 Who Owns a Lot? Key Shareholders

A few big players have significant ownership as of March 23, 2026:

Stilwell Group (Activist Investor): 9.8% (773,675 shares)
Employee Stock Ownership Plan (ESOP): 7.7% (607,459 shares)
Alliance Bernstein, L.P.: 5.2% (406,423 shares) 👉 This shows a mix of activist, employee, and institutional ownership. The Stilwell Group is particularly important, as they have a special agreement regarding one of the director nominees.

⚖️ The Stilwell Agreement & Director Nominees

This is a crucial detail. The company reached an agreement with the Stilwell Group (the 9.8% owner). As part of it:

The company nominated Dennis S. Pollack for the board at Stilwell's request.
If Pollack can't serve, Stilwell gets to pick a replacement (subject to company approval).
This agreement lasts through the 2029 annual meeting. 👉 This is a common way for activist investors to gain board representation. The three director nominees (DeBergalis, Mehltretter, Pollack) are all standing for election to three-year terms.

👔 The Board & Who Runs the Committees

The board has nine members split into three classes. Here’s a snapshot of key committees and their leaders for 2025:

Audit Committee: Chaired by Ann M. Segarra (she's the designated "financial expert").
Compensation Committee: Chaired by Ronald J. Passafaro.
Nominating & Corporate Governance Committee: Chaired by Sharon E. Brautigam.
Enterprise Risk Committee: Chaired by Jack L. Mehltretter. 👉 The board is led by an independent Chairman, Kevin M. Sanvidge, while the day-to-day company is run by President & CEO Kim C. Liddell. This separation is considered good governance.

💰 Director Pay: How They're Compensated

Non-employee directors are paid for their service. In 2025, their compensation included:

Annual Retainers: Base fees ranging from $24,800 to $57,300 (for the Chairman).
Committee Fees: Additional fees for serving on committees, like $10,000 to chair the Audit Committee.
Stock Awards: They receive restricted stock. In 2025, this was worth between ~$9,000 and ~$85,000 on top of cash fees.
A Unique Perk: Most non-employee directors are in a supplemental retirement plan that guarantees a benefit, often based on 20 years of service, even if they haven't worked that long. 👉 Total 2025 compensation for directors ranged from $56,555 to $151,141.

💼 Executive Pay & Deals

The top executives' pay is detailed, with key agreements:

CEO (Kim C. Liddell): Has an employment agreement with a base salary of $635,250. He's eligible for bonuses and has a supplemental executive retirement plan. If he's fired without cause, he gets 1x his salary + bonus as severance; if it's after a "change in control" (like a sale), it jumps to 3x salary + bonus.
CFO (Taylor M. Gilden): Base salary of $291,500. Similar severance terms: 1x without cause, 3x after a change in control.
Other Executives: Have retention and supplemental benefit agreements. 👉 The Annual Incentive Plan ties bonuses to hitting specific corporate and individual performance goals set each year.

🔮 What's Next

The immediate next step is the May 20, 2026, Annual Meeting. The company will continue operating under its current leadership and strategy, with the newly elected board overseeing it. The presence of the Stilwell Group representative on the board could influence future strategic discussions.

⚖️ Big Picture: Strengths & Risks

👍 Strengths: Stable community bank model, recent strategic conversion, clear governance structure with independent board leadership, and alignment of executive pay with performance metrics.
⚠️ Risks: Banking is highly regulated and sensitive to interest rates. The presence of an activist investor (Stilwell) can lead to strategic shifts or pressure. The generous supplemental retirement plans for directors and some executives represent a long-term financial commitment.

🧠 The Analogy

Think of this proxy statement as the program for a sports team's annual fan meeting. It tells you the game plan (the meeting agenda), introduces the team owners (major shareholders), presents the starting lineup and coaches (the board and executives), and discloses the star players' contracts (executive compensation). The "Say on Pay" vote is like the fans giving a thumbs-up or down on those contracts.

🧩 Final Takeaway

This filing is about governance and accountability. Shareholders are asked to approve the board's choices for directors, the company's pay practices, and its auditor. The key subplot is the agreement with activist investor Stilwell Group, which secured a board seat for their nominee, Dennis Pollack. Your vote shapes who leads the company and approves its big-picture financial and governance decisions.

Lake Shore Bancorp, Inc. /MD/ — DEF 14A Filing