Lake Shore Bancorp Inc

This proposal requests a non-binding, advisory approval of the compensation paid to the company’s named executive officers (NEOs) as disclosed in the proxy statement, a requirement under Section 951 of the Dodd-Frank Act. Management is not seeking new compensation authority or changes to pay arrangements, but rather is asking shareholders to endorse the transparency and design of the disclosed compensation programs. The vote is advisory only and does not alter contractual or board authority to set pay, but the Board has committed to review and consider the results when making future compensation decisions. The context includes the company’s stated pay practices (base salary, performance-based annual incentive plan, restricted stock awards and other benefits) and recent adjustments tied to benchmarking and retention following the Company’s conversion and other transitions. The Board recommends approval to affirm its compensation philosophy and to maintain alignment between management and shareholder interests, emphasizing that executive pay is evaluated annually and linked to corporate performance metrics. A FOR vote signals shareholder support for both pay levels and the governance process used by the Compensation Committee; a significant negative vote could prompt the Committee to reassess plan design, performance metrics, and disclosure. Given the company’s status as a smaller reporting company and recent governance changes (including a 2025 Conversion and updates to employment agreements and supplemental plans), the advisory vote functions as a governance feedback mechanism rather than an operational constraint. The Board notes that broker non-votes do not count as votes cast for this proposal, so shareholder participation matters for the result. Overall, the proposal asks shareholders to ratify past and prospective pay practices through an advisory mechanism, with the Board prepared to respond to the outcome in future compensation determinations.

This proposal asks shareholders, on a non-binding basis, to state their preferred interval—one, two, or three years—for future advisory votes approving the compensation of the company’s named executive officers, consistent with SEC rules implementing the Dodd-Frank Act. Management and the Board recommend an annual vote, arguing that executive compensation is reviewed and adjusted on an annual cycle by the Compensation Committee and Board, and that annual shareholder feedback is therefore most meaningful for ongoing program design and assessment. The choice is advisory only and does not constrain board discretion, but it signals shareholder preferences and influences how often the company will formally solicit that feedback. A vote in favor of annual frequency would enable more frequent shareholder input on pay alignment, while a vote for a longer interval could reduce administrative and disclosure costs but lessen responsiveness to rapidly changing circumstances. The company’s recent organizational changes, including the 2025 Conversion and updated employment agreements and incentive plans, support management’s view that annual engagement is appropriate to monitor evolving compensation outcomes and retention needs. The Board also notes that broker non-votes do not count as votes cast on this matter, so turnout will determine the outcome; the option receiving a plurality will be considered the shareholders’ preference. From a governance perspective, an annual frequency tends to be favored by institutional investors seeking timely recourse on compensation decisions, whereas some issuers prefer triennial votes to limit repetitive advisory ballots. The Board’s recommendation for an annual vote is framed as a balance between governance responsiveness and the annual cadence of performance-based pay decisions.

This agenda item permits the transaction of any other business properly presented at the Annual Meeting and seeks shareholder authorization to consider such matters, including adjournments or postponements. It is procedural in nature and does not propose specific substantive actions; the Company states it is not aware of any other matters to be presented. If any other matters are presented, the Board will vote proxies on those matters as a majority of the Board determines. The inclusion of this item preserves the flexibility to address unforeseen corporate actions or routine procedural items at the meeting. Shareholder approval is requested so that duly submitted additional matters can be acted upon without needing additional proxy solicitations. Because no specific proposal is currently before shareholders under this item, there is no detailed disclosure or analysis to evaluate beyond the procedural authority it confers. The Board’s general recommendation to vote FOR all matters on the agenda implies support for handling any properly presented business in line with Board discretion and governance principles.