SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Shareholders of Westfield Financial

      The following table contains common stock ownership information for persons known to Westfield Financial to "beneficially own" 5% or more of Westfield Financial's common stock as of March 24, 2008. In general, beneficial ownership includes those shares that a person has the power to vote, sell or otherwise dispose of. Beneficial ownership also includes that number of shares that an individual has the right to acquire within 60 days (such as stock options) after March 24, 2008. Two or more persons may be considered the beneficial owner of the same shares. Westfield Financial obtained the information provided in the following table from filings with the SEC and from Westfield Financial.

(1)

The Employee Stock Ownership Plan of Westfield Financial, Inc. (the "ESOP") is a tax qualified employee stock ownership plan under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), with individual accounts for the accrued benefits of participating employees and their beneficiaries. The ESOP is administered by an ESOP Committee ("ESOP Committee"). The ESOP's assets are held in trust by First Bankers Trust Services, Inc., as plan trustee (the "Plan Trustee"). The number of shares listed as beneficially owned represents the entire number of shares of Westfield Financial common stock held by the Plan Trustee as of March 24, 2008. As of March 24, 2008, 375,063 of such shares of Westfield Financial common stock had been allocated to individual accounts established for participating employees and their beneficiaries, and 1,645,393 of such shares were held, unallocated, for allocation in future years. In general, participating employees and their beneficiaries have the power and authority to direct the voting of shares of Westfield Financial common stock allocated to their individual accounts. The ESOP, through the Plan Trustee, has shared voting power over unallocated Westfield Financial common stock. Any unallocated Westfield Financial common stock is generally required to be voted by the Plan Trustee in the same proportion as Westfield Financial common stock which has been allocated to Participants is directed to be voted. The reporting person, through the Plan Trustee (who is instructed by the ESOP Committee) shares dispositive power over all unallocated Westfield Financial common stock held by the ESOP. The ESOP, acting through the Plan Trustee (who is instructed by the ESOP Committee) shares dispositive power over allocated Westfield Financial common stock with participating employees and their beneficiaries, who have the right to determine whether Westfield Financial common stock allocated to their respective accounts will be tendered in response to a tender offer but otherwise have no dispositive power. Any unallocated Westfield Financial common stock is generally required to be tendered by the Plan Trustee in the same proportion as Westfield Financial common stock which has been allocated to Participants is directed to be tendered. In limited circumstances, ERISA may confer upon the Plan Trustee the power and duty to control the voting and tendering of Westfield Financial common stock allocated to the accounts of participating employees and beneficiaries who fail to exercise their voting and/or tender rights. The ESOP disclaims voting power with respect to such allocated Westfield Financial common stock.

(2)

Includes 1,770,000 shares beneficially owned by Keeley Asset Management Corp. and Keeley Small Cap Value Fund.

Security Ownership of Management

      The following table shows the number of shares of Westfield Financial's common stock beneficially owned by each director, each executive officer appearing in the "Summary Compensation Table," and all directors and executive officers of Westfield Financial as a group, as of March 24, 2008. Except as otherwise indicated, each person and each group shown in the table has sole voting and investment power with respect to the shares of common stock listed next to his or her name.

*

Less than 1.0% of the total outstanding shares of common stock.

(1)

See "Principal Shareholders of Westfield Financial" for definition of "beneficial ownership."

(2)

Based on a total of 31,571,591 shares of Westfield Financial's Common Stock outstanding as of March 24, 2008.

(3)

Includes 20,029 unvested shares of restricted stock held in trust as part of the Westfield Financial, Inc. 2002 Recognition and Retention Plan, with respect to which the beneficial owner has voting but not investment power as follows: Mr. Hagan - 20,029 shares. Includes unvested shares of restricted stock awards held in trust as part of the Westfield Financial, Inc. 2007 Recognition and Retention Plan, with respect to which the beneficial owner has voting but not investment power as follows: Messrs. Carra, Colton, Crowley, Lane, Placek, Pohl, Sullivan and Ms. O'Neil each 14,000 shares; Mr. Hagan - 150,029 shares; Ms. Kozaczka - 5,000 shares and Mr. Miles - 91,469 shares.

(4)

Includes shares allocated to the account of the individuals under the Westfield Financial, Inc. Employee Stock Ownership Plan ("ESOP") with respect to which each individual has voting but not investment powers as follows; Mr. Carra - 6,634 shares; Mr. Hagan - 8,875 shares; Mr. Janosco - 10,297 shares; Ms. Kozaczka - 5,754 shares; Mr. Miles - 6,524 shares and Mr. Williams - 11,222 shares. Includes shares held in trust in Westfield Bank's 401(k) Plan as to which each participant has investment and voting powers as follows: Mr. Carra - 44,423 shares; Mr. Hagan - 6,827 shares; Mr. Janosco - 17,082 shares; Ms. Kozaczka - 5,298 shares; Mr. Miles - 5,720 shares and Mr. Williams - 43,311 shares.

(5)

Includes shares of common stock which may be acquired pursuant to vested options issued under the 2002 Stock Option Plan as follows: Mr. Colton - 21,657 shares; Messrs. Crowley, Lane, McClure, Pohl, Sullivan and Ms. O'Neil - 42,655 shares; Mr. Hagan -- 39,376 shares; Mr. Janosco - 236,259 shares; Ms. Kozaczka - 29,532 shares; Mr. Placek - 17,062 shares and Mr. Williams -- 279,870 shares.

(6)

Includes 2,263 shares held in an individual retirement account ("IRA") for the benefit of Mr. Carra's spouse, 2,723 shares held in an IRA for the benefit of Mr. Carra, and 24,935 shares held jointly with Mr. Carra's spouse.

(7)

Includes 4,698 shares held in an IRA for the benefit for Mr. Colton's spouse, 3,071 shares held in an IRA for the benefit of Mr. Colton, and 1,640 shares held jointly with Mr. Colton's spouse.

(8)

Includes 8,203 shares held jointly with Mr. Crowley's spouse.

(9)

Includes 15,839 shares held jointly with Mr. Janosco's spouse, and 54,742 shares held in an IRA for the benefit of Mr. Janosco.

(10)

Includes 4,561 shares held in an IRA for the benefit of Ms. Kozaczka.

(11)

Includes 9,844 shares held jointly with Mr. McClure's spouse.

(12)

Includes 1,312 shares held by Ms. O'Neil's spouse.

(13)

Includes 19,235 shares held by Mr. Placek's spouse

(14)

Includes 32,796 shares held jointly with Mr. Pohl's spouse.

(15)

Includes 13,844 shares held in an IRA for the benefit of Mr. Sullivan.

(16)

Includes 188,821 shares held by the Karen F. Williams 2004 Family Trust.

(17)

The figures shown for each of the executive officers named in the table do not include 1,645,393 shares held in trust pursuant to the ESOP that have not been allocated as of March 24, 2007 to any individual's account and as to which each of the executive officers named in the table share voting powers with the other ESOP participants. The figure shown for all directors and executive officers as a group includes 1,645,393 shares as to which members of Westfield Financial's Compensation Committee (consisting of Directors Carra, O'Neil, and Pohl) may be deemed to have sole investment power, except in limited circumstances, thereby causing each such member to be deemed a beneficial owner of such shares. Each of the members of the Compensation Committee disclaims beneficial ownership of such shares and, accordingly, such shares are not attributed to the members of the Compensation Committee individually. See "Benefit Plans -- Employee Stock Ownership Plan."

PROPOSAL 1

ELECTION OF DIRECTORS

      Upon the recommendation of the Nominating and Corporate Governance Committee, our Board of Directors has nominated the three individuals listed in the table below for election as directors at the annual meeting. All three nominees are currently serving on the Westfield Financial Board of Directors. If you elect all the nominees listed below, they will hold office until the annual meeting in 2011 or until their successors have been elected and qualified.

      We know of no reason why any nominee may be unable to serve as a director. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board. If for any reason these nominees prove unable or unwilling to stand for election, the Board will nominate alternates or reduce the size of the Board of Directors to eliminate the vacancy. The Board has no reason to believe that its nominees would prove unable to serve if elected.

INFORMATION ABOUT OUR BOARD OF DIRECTORS

General

      Westfield Financial's Board of Directors currently consists of ten members. The Board of Directors oversees our business and monitors the performance of our management. In accordance with our corporate governance procedures, the Board of Directors does not involve itself in the day-to-day operations of Westfield Financial. Westfield Financial's executive officers and management oversee our day-to-day operations. Our directors fulfill their duties and responsibilities by attending regular meetings of the Board, which are held on a quarterly basis. Our directors also discuss business and other matters with key executives and our principal external advisers (legal counsel, auditors, financial advisors and other consultants).

      The name, age and length of service of each of our nominees and continuing members of the Westfield Financial Board of Directors is set forth below.

(1)

At December 31, 2007.

(2)

Includes terms served on the Board of Directors of Westfield Bank. All members of the current Board of Directors of Westfield Financial have served as directors since the company's inception in 2001.

Meetings of the Board of Directors

      The Board of Directors of Westfield Financial held four regular meetings and four special meetings during the fiscal year ended December 31, 2007. The Board of Directors of Westfield Bank held twelve meetings during the fiscal year ended December 31, 2007. Each incumbent director attended at least 75% of the meetings of the Board of Directors, plus meetings of committees on which that particular director served during this period.

      It is Westfield Financial's policy that all directors and nominees should attend the annual meeting. At the 2007 Annual Meeting, eight members of the Board of Directors were in attendance.

       Biographical Information

      The principal occupation and business experience of each nominee for election as director and each continuing director of Westfield Financial are set forth below.

Nominees

       Robert T. Crowley, Jr. is a Certified Public Accountant and the Managing Partner of the accounting firm of Downey, Sweeney, Fitzgerald & Co., P.C. The firm provides tax, accounting and auditing services to the public. Mr. Crowley has been a partner with this firm since 1980 and a Certified Public Accountant since 1979.

       Harry C. Lane is the President of John S. Lane & Son, Inc., a quarry and asphalt company located in Westfield, Massachusetts, incorporated in 1904. Mr. Lane has served in this capacity since 1986.

       Paul R. Pohl serves as the President and Owner of Chemi-Graphic, Inc., a name plate manufacturing company located in Ludlow, Massachusetts. Mr. Pohl has served in this capacity since 1964.

Continuing Directors

      The business experience of each director for at least the past five years is set forth below.

       Victor J. Carra served as Executive Vice President of Westfield Bank from 1998 until 2005, and as Executive Vice President of Westfield Financial from its inception in 2001 until 2005. Since 1975, Mr. Carra served in various capacities during his employment with Westfield Bank.

       David C. Colton, Jr. is the former owner and operator of The Colton Agency, Inc., an insurance agency located in Westfield, Massachusetts for the past 65 years.

       Richard C. Placek is the Chairman of Commercial Distributing Company, located in Westfield Massachusetts. Mr. Placek has held this position since 1985. Prior to that, he served as General Manager.

       Mary C. O'Neil is the former Vice President of Development and Community Relations at Noble Health Systems, located in Westfield, Massachusetts. Ms. O'Neil held this position from 1993 to 2006. Prior to that, she served as President of T.L. O'Neil Insurance Agency, Inc. She is now engaged in independent consulting in the area of philanthropy.

       Charles E. Sullivan is the President of Charles E. Sullivan C.P.A., Inc., a public accounting firm located in West Springfield, Massachusetts. Mr. Sullivan has served in this capacity since 1979.

       Donald A. Williams served as President of Westfield Bank from 1983 through 2005 and Westfield Financial from its inception in 2001 through 2005. Mr. Williams has served as Chief Executive Officer of Westfield Bank since 1987 and Westfield Financial since its inception in 2001.

       Retiring Director

       William H. McClure is retiring from the Board of Directors of Westfield Financial and Westfield Bank in 2008. Mr. McClure is the President of the McClure Insurance Agency, Inc., a position he has held since December 1993. He is the owner of 51% of this insurance agency, which sells and services

fire, casualty, life and health insurance. He is also an owner of 103 Van Deene Realty Trust, which is made up of a building located at that same address.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Business Experience of Executive Officers

       Donald A. Williams served as President of Westfield Bank from 1983 through 2005 and Westfield Financial from its inception in 2001 through 2005. Mr. Williams has served as Chief Executive Officer of Westfield Bank since 1987 and Westfield Financial since its inception in 2001.

       James C. Hagan , age 46, has served as President and Chief Operating Officer of Westfield Financial and Westfield Bank since June 2005. Prior to that, he served as Senior Vice President and Commercial Loan Department Manager of Westfield Bank from 1998. From 1994 through 1998, Mr. Hagan was a Vice President at Westfield Bank.

       Gerald P. Ciejka , age 47, was appointed Vice President of Westfield Financial and Westfield Bank on January 4, 2005. Mr. Ciejka also serves as General Counsel and Director of Human Resources of Westfield Financial and Westfield Bank. Mr. Ciejka was previously a partner at the Springfield, Massachusetts law firm of Bulkley, Richardson and Gelinas in the business organization and real estate departments. From 1997 to 2004, he served as branch manager and senior underwriting counsel for First American Title Insurance Company and Chicago Title Insurance Company.

       Michael J. Janosco, Jr . , age 61, has served as the Chief Financial Officer and Treasurer of Westfield Bank since 1999 and of Westfield Financial since its inception in 2001. Mr. Janosco was previously a partner at KPMG Peat Marwick until his retirement in 1993. From 1994 to 1997, he served as the Chief Financial Officer and Treasurer of Primary Bank, located in Peterborough, New Hampshire. From October 1997 to March 1999, he was a consultant to various banks.

       Rebecca S. Kozaczka , age 57, has served as Vice President and Residential Loan Officer at Westfield Financial and Westfield Bank since 1989. She worked as a Mortgage Loan Officer from 1985 to 1987 and as Assistant Vice President from 1987 until 1989.

       Deborah J. McCarthy , age 48, has served as Vice President of Westfield Financial and Westfield Bank since 2001. She is the Manager of the Operations and Information Systems Departments. She has worked for Westfield Bank in numerous capacities since 1979.

       Allen J. Miles, III , age 45, has served as Senior Vice President and Chief Lending Officer of Westfield Financial and Westfield Bank since August 2005. From 1998 to 2005 he served as Vice President and Commercial Loan Officer.

       Leo R. Sagan, Jr. , age 45, has served as the Vice President and Controller of Westfield Financial and Westfield Bank since 2003. Prior to that he served as Controller of Westfield Financial and Westfield Bank from 2002 to 2003 and as Assistant Treasurer of Westfield Financial and Westfield Bank from 1999 to 2002.

CORPORATE GOVERNANCE

      Our Board of Directors has adopted corporate governance guidelines that contain a number of corporate governance initiatives designed to comply with Nasdaq Global Select Market listing standards, the Sarbanes-Oxley Act of 2002, and the rules and regulations of the Securities and Exchange Commission.

Board of Directors Independence

      Westfield Financial has determined that Directors Crowley, Colton, Lane, McClure, O'Neil, Placek, Pohl, and Sullivan are independent as defined under the Nasdaq Global Select Market listing standards. All members of the Audit Committee and Nominating and Corporate Governance Committee are independent as defined under the Nasdaq Global Select Market listing standards. Except for Director Carra, all members of the Compensation Committee are also independent as defined under the Nasdaq Global Select Market listing standards.

      Annually, the Board of Directors reviews the relationships that each director has with us and our affiliates, as well as the criteria and standards for determining independence. Upon review, the Board of Directors affirmatively determines which directors are independent.

Code of Ethics

      Westfield Financial has adopted a Conflict of Interest Policy and Code of Conduct, which applies to all employees and officers of Westfield Financial and Westfield Bank. Westfield Financial has also adopted a Code of Ethics for Senior Financial Officers of Westfield Financial, Inc., which applies to Westfield Financial's principal executive officer, principal financial officer, principal accounting officer or controller or person performing similar functions for Westfield Financial and Westfield Bank, and which requires compliance with the Conflict of Interest Policy and Code of Conduct. The Code of Ethics for Senior Financial Officers of Westfield Financial meets the requirements of a "code of ethics" as defined by Item 406 of Regulation S-K. The Code of Ethics for Senior Financial Officers was filed as Exhibit 14.1 to the Form 10-K filed with the SEC on March 15, 2003. There have been no amendments to the Code of Ethics since that time.

Committees of the Board

      The Board of Directors of Westfield Financial has established the following committees:

       Executive Committee. The Executive Committee exercises the powers of the Board of Directors between Board meetings. The Executive Committee consists of Directors Colton, Lane, O'Neil, Sullivan and Williams. The Executive Committee of Westfield Financial did not meet during the 2007 fiscal year; however, the Executive Committee of Westfield Bank, which serves the same functions and has the identical make-up, met thirty-eight times during the year ended December 31, 2007.

       Audit Committee. The Audit Committee is chaired by Director Placek, with Directors Crowley and McClure as members. The Audit Committee assists the Board by overseeing the audit coverage and monitoring the accounting, financial reporting, data processing, regulatory and internal control environments. The primary duties and responsibilities of the Audit Committee are to: (1) oversee and monitor the financial reporting process and internal controls system; (2) review and evaluate the audit performed by outside auditors and report any substantive issues found during the audit to the Board; (3) appoint, compensate and oversee the work of the independent auditors; (4) review and approve all transactions with affiliated parties; and (5) provide an open avenue of communication among the

independent auditors, financial and senior management, the internal audit department and the Board. All members of the Audit Committee are independent directors as defined under the American Stock Exchange listing standards. Westfield Financial believes that Mr. Crowley qualifies as an Audit Committee Financial Expert as that term is defined by Securities and Exchange Commission regulations. The Board of Directors has adopted a written charter for the Audit Committee, a copy of which is attached as Appendix A hereto.

       Compensation Committee. The Compensation Committee provides advice and recommendations to the Board of Directors in the areas of employee salaries and benefit programs and all actions of the Compensation Committee are approved by the full Board of Directors. The Compensation Committee consists of Directors Carra, O'Neil, and Pohl, with Director Pohl serving as Chairperson of the Committee. Directors O'Neil and Pohl are independent as defined in the Nasdaq Global Select Market listing standards. Director Carra served as Executive Vice President of Westfield Financial from 2001 until his retirement in July 2005, and as a result does not currently qualify as an independent director under Nasdaq Global Select Market listing standards. Under the exception set forth in the Nasdaq Global Select Market listing standard for Compensation Committee members, the Board of Directors of Westfield Financial determined that Director Carra's appointment to the Compensation Committee is in the best interests of Westfield Financial and its shareholders, based on his longstanding commitment to Westfield Financial and his extensive knowledge of its compensation and benefits program. Under the rules of the Nasdaq Global Select Market, Director Carra may not serve on the Compensation Committee for more than two years. His term on the Compensation Committee will expire at the Annual Meeting.

       Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee (the "Nominating Committee") reviews and recommends nominees for election as directors and develops and recommends to the Board corporate governance guidelines. Directors Colton, O'Neil and Sullivan are members of the Nominating Committee. All members of the Nominating Committee are independent directors as defined under the Nasdaq Global Select Market listing standards. The Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee, a copy of which was attached as Appendix A to the proxy statement filed with the SEC on April 14, 2006.

      In accordance with Westfield Financial's bylaws, nominations of individuals for election to the Board at an annual meeting of shareholders may be made by any shareholder of record of Westfield Financial entitled to vote for the election of directors at such meeting who provides timely notice in writing to the Secretary of Westfield Financial. To be timely, a shareholder's notice must be delivered to or received by the Secretary not less than one hundred twenty (120) calendar days in advance of the anniversary date of Westfield Financial's proxy statement released to shareholders in connection with the previous year's annual meeting of shareholders. The shareholder's notice to the Secretary must set forth certain information regarding the proposed nominee and the shareholder making such nomination. If a nomination is not properly brought before the meeting in accordance with Westfield Financial's bylaws, the Chairman of the meeting may determine that the nomination was not properly brought before the meeting and shall not be considered. For additional information about Westfield Financial's director nomination requirements, please see Westfield Financial's bylaws.

      It is the policy of the Committee to select individuals as director nominees who shall have the highest personal and professional integrity, who shall have demonstrated exceptional ability and judgment and who shall be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term interests of the shareholders. Shareholder nominees are analyzed by the Committee in the same manner as nominees that are identified by the Committee. Westfield Financial does not pay a fee to any third party to identify or evaluate nominees.

      Robert T. Crowley, Jr., Harry C. Lane and Paul R. Pohl were each nominated by the Nominating Committee. As of the date of this proxy statement, the Nominating and Corporate Governance Committee had not received any shareholder recommendations for nominees in accordance with the bylaws of Westfield Financial in connection with the 2008 Annual Meeting.

Compensation Committee Interlocks

      None of the executive officers of Westfield Financial served as a member of another entity's Board of Directors or as a member of the compensation committee (or other board committee performing equivalent functions) during 2007, which entity had an executive officer serving on the Board of Directors or as a member of the Compensation Committee of Westfield Financial. There are no interlocking relationships between Westfield Financial and other entities that might affect the determination of the compensation of our executive officers.

Shareholder Communications with our Board of Directors

      Shareholders may contact Westfield Financial's Board of Directors by contacting Philip R. Smith, Secretary, at Westfield Financial, Inc., 141 Elm Street, Westfield, Massachusetts 01085 or at (413) 568-1911. All comments will be forwarded directly to the Board of Directors.

COMPENSATION DISCUSSION AND ANALYSIS

General Philosophy and Overall Program Objectives

      Westfield Financial strives to attract, retain and motivate qualified executives crucial to Westfield Financial's success. Westfield Financial's approach is to compensate executives commensurate with their experience, expertise and performance and to be competitive with the other comparative financial companies of similar size, complexities and business. In addition, Westfield Financial's compensation programs have been designed and implemented to reward executives for sustained financial and operating performance and to encourage such executives to remain with the company for an extended period of time. Westfield Financial designs its compensation program to:

      •

support its strategic plan by communicating what is expected of executives with respect to results and achievement;

      •

retain and recruit executive talent; and

      •

create sustained financial strength and long-term shareholder value.

      Westfield Financial seeks to achieve these objectives through the use of a base salary, annual bonus (short-term incentive) and grants of long-term, equity-based compensation such as stock options and restricted stock, deferred compensation, employment and change of control agreements and fringe benefits. Westfield Financial focuses on both current and future compensation and combines both of these elements in a manner that it believes optimizes the executive's contribution to the company.

      Westfield Financial uses market comparisons for comparative financial companies of similar size, complexities and business as one factor in making compensation decisions along with individual contribution and performance, importance of role and responsibilities, as well as leadership and growth potential. Westfield Financial also relies upon its judgment and the judgment of compensation professionals in making compensation decisions to insure that the strategic, financial and leadership objectives are met. Accordingly, Westfield Financial believes that its compensation programs assists in enhancing shareholder value.

      In making decisions with respect to any element of a named executive officer's compensation, the Compensation Committee considers the total compensation that may be awarded to the officer, including salary, annual bonus and long-term and short-term incentive compensation. In addition, in reviewing and approving employment agreements for named executive officers, the Compensation Committee considers the other benefits to which the officer is entitled by the agreement, including compensation payable upon termination of the agreement under a variety of circumstances. The Compensation Committee's goal is to award compensation that is reasonable when all elements of potential compensation are considered. The Compensation Committee is provided, prior to the end of each fiscal year, a summary compensation schedule for each executive officer, containing the amount of all forms of compensation. This schedule is used as a tool by the Compensation Committee when considering the total compensation of each executive officer.

Compensation Components

       Base Salaries and Annual Bonuses for Named Executive Officers . The minimum salaries for three of the five executives officers named in the "Summary Compensation Table" are determined by employment agreements for the Chief Executive and Chief Financial Officers and any increase over these minimums, and salaries of the other executive officers are determined by the Compensation Committee based on a variety of factors, including:

      •

the nature and responsibility of the position and, to the extent available, salary norms for persons in comparable positions at other financial institutions;

      •

the expertise of the individual executive and (except for their own compensation) the recommendations of the Chief Executive Officer and the President and Chief Operating Officer; and

      •

the alignment of the interests of executives with those of the shareholders.

      Where not specified by contract, salaries are generally reviewed annually and are designed to reward annual achievements and are to be commensurate with the executives responsibilities, leadership abilities and management expertise and effectiveness. In addition, the Compensation Committee considers Westfield Financial's financial and market performance and the creation of long-term shareholder value in determining salaries.

      As in prior years, the compensation program provided for an annual cash bonus based on the company's performance as compared to its operating budget, which was prepared by company management and approved by the Board of Directors at the beginning of the fiscal year. Based on the degree of success, cash bonus percentage of base salary is created by the Compensation Committee at the end of the fiscal year and applied to each executive officer, as well as all other employees of Westfield Financial, on a uniform basis. In 2007, this bonus percentage was 12.5% of base salary.

       Stock-Based Incentives . The stock-based incentive program provides a periodic award that is both performance and retention based in that it is designed to recognize the executive's responsibilities, reward demonstrated performance and leadership and to retain such executives. The objective of the program is to align compensation for named executive officers over a multi-year period directly with the interests of shareholders of Westfield Financial by motivating and rewarding creation and preservation of long-term financial strength, shareholder value and relative shareholder return. The level of long-term incentive compensation is determined based on an evaluation of competitive market factors in conjunction with total compensation provided to named executive officers and the goals of the compensation program. Westfield Financial's long-term incentive compensation generally takes the form of a combination of restricted stock

unit grants and option rewards. These two vehicles reward shareholder value creation in slightly different ways. Stock options (which have exercise prices equal to the market price at date of grant) reward named executive officers only if Westfield Financial's stock price increases. Restricted stock units are impacted by all stock price changes, so the value to named executive officers is affected by both increases and decreases in Company's stock price.

      It is the policy and part of the Compensation Committee's charter that neither the Compensation Committee, nor any member of Westfield Financial's management, shall backdate an equity grant under Westfield Financial's stock-based incentive program or manipulate the timing of a public release of material information with the intent of benefiting a grantee under an equity award. Accordingly, scheduling decisions concerning equity grants are made without regard to anticipated earnings or major announcements by Westfield Financial. In furtherance of this policy the Compensation Committee, in order to ensure the integrity of awards granted under its stock-based incentive program, has adopted the June Board of Directors meeting as the annual grant date for such awards. Grants made outside of this annual grant date must be approved in writing by Westfield Financial's Chief Executive Officer and must be presented and approved at the next subsequent Board of Director's meeting and will be deemed granted on the day approved by Westfield Financial's Board of Directors.

       Restricted Stock . Restricted stock units granted as long-term incentive compensation to named executive officers vest over a period of five years at 20% per year at the anniversary date. In fiscal 2007, restricted stock awards were granted to Messrs. Hagan, Miles and Ms. Kozaczka in order to align these executive officers' interests with those of shareholders. No restricted stock awards were granted to Messrs. Williams and Janosco as the Board of Directors believed that their stock holdings were sufficient to align their interests with those of shareholders.

       Stock Options . Stock options granted to named officers have exercise prices of not less than fair market value of Westfield Financial's stock on the date of grant and vest over five years conditioned on continued employment. The charter of Westfield Financial's Compensation Committee prohibits the committee from granting an award with a price or value less than the fair market value of Westfield Financial stock on a day other than the grant date of such award. Westfield Financial prohibits the repricing of stock options. The Compensation Committee has never granted stock options with exercise prices below the market price of Westfield Financial's stock on the date of grant and has never reduced the exercise price of stock options except to reflect the exchange value in connection with the second step conversion closed on January 3, 2007. In fiscal 2007, stock options were granted to Messrs. Hagan, Miles and Ms. Kozaczka in order to align these executive officers' interests with those of shareholders. No stock options were granted to Messrs. Williams and Janosco as the Board of Directors believed that their stock holdings were sufficient to align their interests with those of shareholders.

Periodic Review . The Compensation Committee has previously and will continue to review both the annual bonus program and the long-term incentive program annually to ensure that their respective key elements continue to meet objectives described above.

Other Benefits

       Benefit Restoration . Westfield Financial has established the Benefit Restoration Plan of Westfield Financial, Inc. in order to provide restorative payments of executives who are prevented from receiving full benefits contemplated by Westfield Financial's employee stock ownership plan's benefit formula as well as the 401(k) plan's benefit formula. Such plan is used to retain and reward the Chief Executive Officer for his demonstrated performance and leadership abilities. The restorative payments consist of payments in lieu of shares that cannot be allocated to participants due to legal limitations imposed on tax-qualified plans. Currently, only the Chief Executive Officer is a participant in the plan. The Compensation Committee

considers the remuneration received under this plan when annually determining the executives' total compensation. The Benefit Restoration Plan was amended in 2007 in order to bring such plan in compliance with Section 409A of the Internal Revenue Code.

       Benefits and Perquisites . The Compensation Committee supports providing benefits and perquisites to the named executive officers that are substantially the same as those offered to other officers of Westfield Financial which Westfield Financial believes are reasonable, competitive and consistent with Westfield Financial's overall compensation program. In addition, Westfield Financial may also make available to certain named officers the use of a company automobile, as was the case in 2007 for the Chief Executive Officer, the President and Chief Operating Officer and the Chief Financial Officer.

      Westfield Financial entered into a deferred compensation agreement with the Chief Executive Officer in June of 1991. Under the deferred compensation agreement, the Chief Executive Officer is guaranteed monthly payments equal to 70% of his monthly salary after retirement for the remainder of the executive's life or 240 months, whichever is greater. The amount of these payments is reduced by any payments received by the executive from Westfield Financial's defined benefit pension plan and trust, as amended, sponsored by the Savings Bank Employee Retirement Association and are also reduced by social security payments received by the executive. The purpose of this Agreement is to provide the executive with benefits otherwise limited to certain provisions of the Internal Revenue Code. The Compensation Committee considers the recommendation received under the deferred compensation agreement when annually determining the executive's total compensation received from Westfield Financial.

       Employment Agreements and Change of Control Agreements . The Compensation Committee believes that Westfield Financial's continued success depends, to a significant degree, on the skills and competence of certain senior officers. The employment agreements are intended to ensure that Westfield Financial continues to maintain and retain experienced senior management.

      Westfield Financial presently has employment agreements with its Chief Executive Officer, Donald A. Williams, its Chief Financial Officer, Michael J. Janosco, Jr. and its Chief Operating Officer, James C. Hagan in order to retain such executives in an executive capacity. Each agreement provides for three-year rolling terms with minimum annual salaries, discretionary cash bonuses and other fringe benefits. The agreements also include protection for the executives if Westfield Financial experiences a change in ownership or control. If such a change in control occurs, a portion of the severance payments might constitute an "excess parachute payment" under current federal tax laws. Under the agreements, Westfield Financial would reimburse Messrs. Williams and Janosco for the amount of this excise tax and would have an additional payment so that, after payment the excise tax and all income and excise imposed on the reimbursement and gross-up payments, Messrs. Williams and Janosco will retain approximately the same net after tax amounts under the employment agreement that they would have retained if there were no 20% excise tax. The effect of this provision is that Westfield Financial, rather than Messrs. Williams and Janosco, bears the financial cost of the excise tax. Mr. Hagan's employment agreement does not provide for tax indemnity.

      Westfield Financial has entered into one-year change of control agreements with five officers: Gerald P. Ciejka, Rebecca S. Kozaczka, Deborah J. McCarthy, Allen J. Miles, III, and Leo Sagan. The purpose of these agreements are to prevent executives from leaving to pursue other employment out of concern for the security of their jobs or being unable to concentrate on their duties and responsibilities. In order to enable executives to focus on the best interests of Westfield Financial shareholders, Westfield Financial have offered these agreements to these selective officers. The term of these agreements is perpetual until Westfield Financial gives notice of non-extension, at which time the term is fixed for one year. Generally, Westfield Financial may terminate the employment of any officer covered under these agreements, with or without cause, at any time prior to a change of control without obligation for severance

benefits. However, if Westfield Financial signs a merger or other business combination agreement, or if a third party makes a tender offer or initiates a proxy contest, Westfield Financial could not terminate an officer's employment without cause without liability for severance benefits. The severance benefits would generally be equal to the value of the cash compensation and fringe benefits that the officer would have received if he or she had continued working for one additional year. Westfield Financial would pay the same severance benefits if the officer resigns after a change of control following a loss of title, office or membership on the Board of Directors, material reduction in duties, functions or responsibilities, involuntary relocation of his other principal place of employment to a location over 25 miles from Westfield Bank's principal office on the day before the change of control and over 25 miles from the officer's principal residence or other material breach of contract which is not cured within 30 days.

      These agreements also provide uninsured death and disability benefits. If Westfield Financial experiences a change in ownership, a change in effective ownership or control or a change in the ownership of a substantial portion of their assets as contemplated by Section 280G of the Internal Revenue Code, a portion of any severance payments under the change of control agreements might constitute an "excess parachute payment" under current federal tax laws. Any excess parachute payment would be subject to a federal excise tax payable by the officer and would be non-deductible by Westfield Financial for federal income tax purposes. The change of control agreements do not provide a tax indemnity.

      All employment and change in control agreements were amended in 2007 in order to bring such agreements in compliance with Section 409A of the Internal Revenue Code.

       Total Compensation . In making decisions with respect to any element of a named executive officer's compensation, the Compensation Committee considers the total compensation that may be awarded to the officer, including salary, annual bonus and long and short-term incentive compensation. In addition, in reviewing and approving employment agreements for named executive officers, the Compensation Committee considers the other benefits to which the officer is entitled by the agreement, including compensation payable upon termination of the agreement under variety of circumstances. The Compensation Committee's goal is to award compensation that is reasonable when all elements of potential compensation are considered. The Compensation Committee is provided, prior to the end of each fiscal year, a summary compensation schedule for each executive officer, containing the amount of all forms of compensation. This schedule is used as a tool by the Compensation Committee when considering the total compensation of each executive officer.

Compensation Decision-Making Policies and Procedures and Director Compensation

       Decision-Making and Policy-Making. Westfield Financial's bylaws require that the business and affairs of Westfield Financial be under the direction of the Board of Directors. This includes executive officer compensation. Executive compensation is set by the Board of Directors after recommendation of the Compensation Committee. As a company listed on the Nasdaq Global Select Market, Westfield Financial must observe governance standards and listing requirements that require executive officer compensation decisions to be made by a majority of independent director members of our board, by a committee of independent directors or in exceptional and limited circumstances, a compensation committee comprised of at least three members where only one member is not independent. Consistent with these requirements, Westfield Financial's Board of Directors has established a Compensation Committee which is comprised of Directors Carra, Pohl and O'Neil with Director Pohl serving as Chairperson of the Committee. Directors Pohl and O'Neil are independent under the Nasdaq Global Select Market listing standards. In accordance with Nasdaq Global Select Market listing requirements, Director Carra may only serve for a two-year period and therefore his membership on the Compensation Committee will terminate at the conclusion of Westfield's Financial's Annual Meeting of Shareholders.

      The Compensation Committee has been delegated authority from Westfield Financial's Board of Directors to oversee executive compensation by approving salary increases for Vice Presidents and above and by reviewing general personnel matters such as staff performance evaluations for Vice Presidents and above. The Compensation Committee has established a compensation program and has a formal charter which was adopted in December of 2006 and amended in 2007 and advises senior management on the average salary increases for all employees under the compensation program. The compensation program consists of three components: (1) base salary; (2) bonuses (short-term incentives); and (3) long-term incentives (e.g., stock options, restricted stock, employment and change of control agreements, deferred compensation, and fringe benefits).

      The Compensation Committee meets four times a year. It considers the expectations of the Chief Executive Officer with respect to their own compensation and their recommendations with respect to the compensation of more junior executive officers, as well as empirical data and the recommendations of advisors both internal and external. Compensation decisions made by the Compensation Committee are reported by the Committee Chairmen to the Board of Directors who approve, disapprove or amend the Committee's action. The Compensation Committee does not delegate its duties to others. The Compensation Committee also confirms and approves the Summary Compensation Tables included in this proxy statement in accordance with the rules and regulations of the Securities and Exchange Commission.

       Use of Outside Advisors and Survey Data. The Compensation Committee uses its own criteria coupled with a peer comparison based on similar companies to establish the Chief Executive Officer's base salary compiled by the same independent outside consultant Westfield Financial uses to determine the compensation of all other employees. The above process is repeated for determining a fair compensation for all members of the Board of Directors and their committees. The Compensation Committee employs an outside compensation consultant, Thomas Warren of Thomas Warren & Associates, Inc., Sherborn, Massachusetts to assist in the evaluation of Westfield Financial's CEO and other selected officers. The Compensation Committee maintains the authority to approve fees and other retention terms with respect to such compensation consultant.

       Director Compensation . Directors' compensation is recommended to the Board of Directors by the Compensation Committee after consultation with Westfield Financial's outside compensation consultant who reviews compensation of directors at similar peer institutions. In developing its recommendations, the Compensation Committee considers whether such directors are fairly paid for the work required in a company of Westfield Financials size and scope and whether such compensation aligns the directors' interest with the interests of the shareholders.

COMPENSATION COMMITTEE REPORT

      The Compensation Committee has reviewed the Compensation Discussion and Analysis included in this proxy statement and has discussed it with management. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Westfield Financial, Inc. Compensation Committee

Paul R. Pohl, Chairperson
Victor J. Carra
Mary C. O'Neil