HVBC 2018 Proxy Statement

4 and retain highly qualified officers and directors by offering a competitive compensation program that is linked to the performance of our common stock. In addition, the 2018 Equity Incentive Plan is intended to further align the interests of our directors and management with the interests of our stockholders by potentially increasing the ownership interests of directors and officers in the common stock of HV Bancorp, Inc. We completed our mutual-to-stock conversion and related public stock offering on January 11, 2017, raising approximately $21.8 million in gross proceeds. The substantial majority of all financial institutions have adopted equity-based incentive plans following their mutual-to-stock conversion transactions. We note that our prospectus made clear that we intended to adopt an equity incentive plan, described the regulatory requirements applicable to such plan and we included the pro forma effect of awards made under such plan. Highlights of the 2018 Equity Incentive Plan • Share Reserve and Terms Generally Consistent with Industry Standards . In determining the size and terms of the 2018 Equity Incentive Plan, the Board of Directors and Compensation Committee considered a number of factors, including: (1) industry practices related to the adoption of equity-incentive plans by financial institutions following a mutual-to-stock conversion; and (2) applicable regulations related to the adoption of equity-incentive plans by converted financial institutions. In this regard (and as described below), the maximum number of shares of common stock that may delivered pursuant to the exercise of stock options is 10% of the number of shares of common stock sold in our offering, and the maximum number of shares of common stock that may be issued as restricted stock and restricted stock units is 4% of the number of shares of common stock sold in our offering. • Minimum Vesting Periods for Awards . Subject to limited exceptions in the event of death, disability or involuntary termination without cause following a change in control, the 2018 Equity Incentive Plan requires that awards may not vest more rapidly than in equal installments over a period of three years, with the initial installment vesting no earlier than the one-year anniversary of the date of grant. • Limits on Grants to Directors and Employees . The maximum number of shares of common stock, in the aggregate, that may be delivered to any one non-employee director pursuant to the exercise of stock options and pursuant to restricted stock awards or restricted stock units under the 2018 Equity Incentive Plan is 5% (30% in the aggregate for all non-employee directors) of the shares available for grant or award, respectively. The maximum number of shares of common stock that may be delivered to any one employee pursuant to the exercise of stock options and pursuant to restricted stock awards or restricted stock units is 25% of the shares available for grant or award, respectively, under the 2018 Equity Incentive Plan. • Share Counting . The 2018 Equity Incentive Plan provides that, if an award is forfeited or expires, the shares covered by the award will be available for future grant, while shares withheld to cover taxes or used to pay the exercise price of stock options will not be available for future grant. • No Repricing . The 2018 Equity Incentive Plan prohibits repricing and exchange of underwater options for cash or shares without stockholder approval. • No Single-Trigger Vesting of Time-Based Awards. The 2018 Equity Incentive Plan does not provide for vesting of time-based equity awards based solely on the occurrence of a change in control, without an accompanying involuntary termination of service (including a termination for good reason). General The following is a summary of the material features of the 2018 Equity Incentive Plan, which is qualified in its entirety by reference to the provisions of the 2018 Equity Incentive Plan, attached hereto as Appendix A. In the event of conflict between the terms of this disclosure and the terms of the 2018 Equity Incentive Plan, the terms of the 2018 Equity Incentive Plan will control.