UNITED STATES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Soliciting Material Pursuant to §240.14a-12 |
East West Bancorp, Inc. | |||||
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2022 PROXY STATEMENT
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held at 2:00 p.m. Pacific Time on May 19, 2020
TO THE STOCKHOLDERS OF EAST WEST BANCORP, INC.:
The Annual Meeting of Stockholders of East West Bancorp, Inc., a Delaware corporation (the “Company”), will be held on May 19, 2020, at 2:00 p.m. Pacific Time, at 135 N. Los Robles Ave., 6th Floor, Pasadena, California, for the following purposes, as more fully described in the accompanying Proxy Statement:
Date and Time: | |
Place: | Virtual Annual Meeting Link: www.meetnow.global/M2GTZK9 We are holding the 2022 Annual Meeting of Stockholders of East West Bancorp, Inc. (the “Annual Meeting”) in a virtual-only meeting format. To |
Items of Business: | 1. Elect nine directors to serve until the next annual meeting of stockholders and to serve until their successors are elected and |
2. | Approve, on an advisory basis, our executive compensation for |
3. | Ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the |
4. | Transact such other business as may properly come before the Annual Meeting or any postponement or adjournment of the Annual Meeting. | |
Record Date: | Stockholders of record of East West Bancorp, Inc. common shares at the close of business on April 1, 2022 are entitled to receive notice of and to vote at the Annual Meeting and any postponement or adjournment thereof. | |
Delivery of Proxy Materials: | On or about April 13, 2022, we began mailing to our stockholders of record a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review this Proxy Statement, our Annual Report on Form 10-K for the year ended December 31, 2021 (“Annual Report on Form 10-K”), how to vote, participate in the Annual Meeting, and request a printed copy of our proxy materials. | |
Internet Availability of Proxy Materials: | Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 26, 2022: Our Proxy Statement and Annual Report on Form 10-K are available at: www.envisionreports.com/EWBC. | |
Voting: | We urge you to submit your proxy promptly whether or not you plan to attend the Annual Meeting. You may vote by telephone, online, or by mailing your signed proxy card in the enclosed return envelope if the Proxy Statement was mailed to you. Voting in any of these ways will not prevent you from virtually attending and voting your shares at the meeting, but it will help ensure the presence of a quorum. For more information on the virtual Annual Meeting, please refer to the “Questions and Answers About the Annual Meeting and Voting” section of the Proxy Statement beginning on page 66. |
By order of the Board of Directors, | ||
Lisa L. Kim, Corporate Secretary | ||
Pasadena, California | April 13, 2022 |
The Board of Directors of the Company has fixed the close of business on March 23, 2020 as the record date for the Annual Meeting. Only holders of our common stock as of the record date are entitled to notice of and to vote at the Annual Meeting. Further information regarding voting rights and the matters to be voted upon is presented in the Proxy Statement.
Properly signed and returned proxy cards permit each proxy holder to vote on any other business that may properly come before the Annual Meeting and at any and all adjournments thereof, in his or her discretion. As of the date of mailing, the Board of Directors of the Company is not aware of any other matters that may come before the Annual Meeting.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS, WE URGE YOU TO SUBMIT YOUR VOTE VIA THE INTERNET, TELEPHONE OR MAIL. Instructions for voting are described in the Company’s Proxy Statement for the Annual Meeting, Notice of Internet Availability of Proxy Materials and proxy card.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 19, 2020:
Pursuant to the Securities and Exchange Commission (“SEC”) rules related to the availability of proxy materials, the Company has made its Proxy Statement and Annual Report on Form 10-K for the fiscal year ended December 31, 2019 available on the Company’s corporate website at www.eastwestbank.com/annual. The proxy materials are also made available at www.envisionreports.com/EWBC.
We intend to hold our 2020 Annual Meeting of Stockholders in person. However, we are actively monitoring coronavirus (COVID-19) developments, and we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state and local governments are imposing and may continue to impose. For that reason, we reserve the right to change the date, time, and means of convening the 2020 Annual Meeting of Stockholders, including through remote communications. If we take this step, we will announce the decision to do so in advance, and details will be issued by press release, posted on our website at http://investor.eastwestbank.com/ and filed with the Securities and Exchange Commission (the “SEC”) as additional soliciting materials. Please monitor our website for updated information. If you are planning to attend our 2020 Annual Meeting of Stockholders, please check the website one week prior to the currently scheduled meeting date.
Due to the business disruption caused by COVID-19, we are making this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 available to stockholders of record at www.envisionreports.com/EWBC. On or about April 9, 2020, we will begin mailing to our stockholders of record a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review this Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. This Notice also instructs you how you may submit your proxy over the internet or via telephone. If you would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting those materials included in this Notice.
This Proxy Statement and the enclosed Proxy and other enclosures will be mailed to our beneficial stockholders on or about April 13, 2020.
We appreciate your continued support of the Company.
By order of the Board of Directors,
TABLE OF CONTENTS
DOUGLAS P. KRAUSE
Corporate Secretary
Pasadena, California
April 3, 2020
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TABLE OF CONTENTS
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Your Vote is ImportantPROXY STATEMENT
This summary highlights information contained elsewhere in the Proxy Statement.
This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information regarding the Company’s 2019our 2021 financial performance, please review our Annual Report on Form 10-K for the year ended December 31, 20192021 (“Annual Report on Form 10-K”).
Annual Meeting of Stockholders
Date and Time: Thursday, May 26, 2022, at 2:00 p.m., Pacific Time
Record Date: April 1, 2022
Place: Virtual Annual Meeting Link: www.meetnow.global/M2GTZK9
This Proxy Statement and the enclosedaccompanying proxy card (the “Proxy”) are furnished in connection with the solicitation of proxies by ourthe Board of Directors (“Board”(the “Board”) of East West Bancorp, Inc., a Delaware corporation (the “Company,” “we,” “us,” or “our”) for use at the 2022 annual meeting of stockholders to be held on May 19, 2020,26, 2022, and any postponements, adjournments, or continuations thereof (the “Annual Meeting”). Only stockholders of record on March 23, 2020 (“Record Date”) are entitled to vote in person or by proxy at the Annual Meeting. The mailing address of the Company’sour principal executive office is 135 N. Los Robles Avenue, 7th Floor, Pasadena, California 91101.
MattersOn or around April 13, 2022, we began sending to be Consideredour common stockholders of record as of the record date a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”). The Notice of Internet Availability includes instructions on how to access this Proxy Statement and Vote RecommendationAnnual Report on Form 10-K and how to vote.
We are asking stockholders to vote on the following matters at the 2020 Annual MeetingSummary of Stockholders:Proposals for 2022
Proposal 1: Election of Directors (page To elect | FOR each Director Nominee – The Board believes that the |
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Proposal 2: Advisory Vote to Approve Executive The Company seeks a non-binding advisory vote from its stockholders to approve the compensation paid to its Named Executive Officers in | FOR – The Board values stockholders’ opinions and the Compensation Committee will |
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Proposal 3: Ratification of Auditors (page
| FOR – The Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as the independent registered public accounting firm of the Company for the year ending December 31, 2022 is in the best interests of the Company and its stockholders. |
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East West Bancorp, Inc.Our Company at a Glance
East West Bancorp, Inc. is the holding company for East West Bank (sometimes, the “Bank”(the “Company”), with total assets of $44.2$60.87 billion as of December 31, 2019.2021, is the publicly traded parent company of East West Bank (the “Bank”). The Bank opened its doors in 1973 in the heart of Chinatown in Los Angeles, California, as athe first federally chartered savings institution to provide access to banking tofocused primarily on serving the underserved immigrant Chinese-American community.financial needs of Chinese Americans. Over the years, this market has grown and flourished, and the Bank has grown and flourished right along with it. In 1995,Today, the Bank converted its charter to a commercialCompany is the largest publicly-traded, independent bank to keep pace with its customers’ expanding commercial banking needs.
Since its public listingheadquartered in 1999, the Company’s assets have grown from $2.1 billion to $44.2 billion and its net earnings have grown from $18 million to $674 million as of December 31, 2019. Starting with one small branch in the heart of Chinatown in Los Angeles, California,Southern California. East West Bank todaywas recognized with the “Best Board of Directors” distinction in Bank Director’s 2022 RankingBanking study. The Bank was also recognized as the “No. 1 Performing Bank” in the $50 billion and above asset category in Bank Director’s 2021 Bank Performance Scorecard.
East West Bank is one ofa full-service commercial bank with more than 120 locations in key cities in the top 25 publicly tradedU.S. and China, serving consumer and commercial customers. Uniquely among U.S.-based regional banks, East West Bank has a commercial business operating license in China, allowing the Bank to open branches, make loans and collect deposits in the country, by market capitalization, and one of the largest independent banks headquartered in California serving a wide array of consumer and commercial interests. The Bank operates over 125 locations worldwide, including in the United States markets of California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. In Greater China, East West operates full-service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. Since the Company’s inception, the size of its workforce has expanded from 370 to over 3,200 employees worldwide.
Over the years, the Bank has steadily evolved the sophistication of its banking products and services to remain relevant and connected to its customers and communities. As one of the only banks to focus primarily onfacilitating our customers’ business transactions between the U.S. and Greater China markets, the Bank continues to expand its extensive global network of contacts and resources to bridge diverse financial needs in and between the world’s two largest markets.China.
The
For the full year 2021, the Company hadachieved record earnings and record revenue. Total revenue grew by 13% and net income grew by 54% year-over-year. Our strong financial results for 2019. The sustained successperformance in 2021 reflected robust interest income and fee income growth, and industry-leading efficiency. For more complete information regarding our 2021 financial performance, please review our Annual Report on Form 10-K. Highlights of the Company’s customer focusstrong 2021 financial performance are provided below.
2021 Financial Performance
Environmental, Social and bridge model is reflected in the following financial resultsGovernance (“ESG”) Highlights
Highlights of our ESG strategic initiatives and rankings:commitments:
Diversity and Inclusion. Diversity of our workforce and leadership. | |
Environmental Conservation.Practice resource conservation through energy efficiency initiatives. Committed to global energy and greenhouse gas reductions by promoting employee ridesharing, encouraging the use of public transportation, providing charging stations for electric vehicles, and investing in videoconferencing capabilities. | |
SASB-Compliant Policies. Lending and investment policies comply with today’s Environmental, Social and Governance and Sustainability Accounting Standards Board (SASB) criteria. | |
Supporting the Arts.The arts play a | |
Financial Literacy. Financial literacy initiatives that help customers and community members learn more about managing their money. These programs provide access to financial education in English, Chinese and Spanish. | |
Support for Small Business. Offers products and services tailored to support small business owners, including business checking, small business loans, and merchant services. | |
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1 Forbes article dated January 22, 2020.
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Throughout its history, the Company has maintained an unwavering spiritWe maintain a culture of giving back to the communities in which it operates. The Bank has been proud to serve local communities by financing affordable housing, providing community development loans and lending to small businesses. The Company also recognizes that adopting environmentally responsible practices is part of good corporate governance and essential to local and global wellbeing. Accordingly, East West Bank has expanded its renewable energy commercial lending and banking business. Along with providing financing for clean energy companies, the Company also invests, through tax credit investments, in renewable energy projects to support a cleaner environment and greener planet.
In addition, the Bank has partnered with a diverse group of non-profit and community-based organizations to bring much-needed services to the underserved in the communities in which it operates. Moreover, the Bank encourages its employees to volunteer in their communities.we operate. As active volunteers, the Bank’sour associates work alongside numerous local organizations to promote a variety of causes including affordable housing, financial literacy, small business development and first-time home ownership in low-to-moderate income areas. The Bank, through its sponsorship and giving, also actively fosters and supports the arts.arts as a bridge to promote diversity and multi-cultural understanding. The following are some examples of the Company’s recent2021 community investments and social programs:
Promoting diversity and inclusion in our workforce and executive leadership is critical to our continued growth and success. Our commitment to diversity is reflected in the composition of our employees.
As of December 31, 2021:
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Board Diversity Matrix (as of April 1, 2022)
Board Size | |||
Total Number of Directors | 9 | ||
Gender: | Male | Female | |
Number of directors based on gender identity | 6 | 3 | |
African American or Black | 0 | 1 | |
Asian | 2 | 2 | |
Hispanic or Latinx | 2 | 0 | |
White | 2 | 0 |
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Summary Information about Director Nominees
The following table provides summary information about each director nominee and continuing director as of March 31, 2020.director.
Name | Age | Director Since
| Primary Occupation | A | B | C | E | N | R |
Molly Campbell*
| 59 | 2014 | Retired, Former Director of the Port Department of the Port Authority of New York and New Jersey | ü FE | ü | ||||
Iris S. Chan*
| 74 | 2010 | CEO of Ameriway
| ü Chair | ü RE | ||||
Archana Deskus*
| 54 | 2019 | Chief Information Officer, Intel Corporation | ü | |||||
Rudolph I. Estrada* (LD)
| 72 | 2005 | CEO of Estradagy Business Advisors | ü | ü | ü | ü Chair | ||
Paul H. Irving*
| 67 | 2010 | Chairman of the Milken Institute’s Center for the Future of Aging | ü | ü | ü | |||
Jack C. Liu*
| 61 | 1998 | Senior Attorney, Alliance International Law Offices
| ü Chair | ü | ||||
Dominic Ng
| 61 | 1991 | Chairman of the Board and CEO of East West Bancorp, Inc. and East West Bank | ü Chair | |||||
Lester M. Sussman*
| 65 | 2015 | Vice President, Advisory Services of Resources Global Professionals
| ü Chair FE | ü RE |
Name | Age | Director Since | Independent | Committee Memberships | Primary Occupation |
Manuel P. Alvarez | 41 | 2022 | R (RE) | Founding Principal of BridgeCounsel Strategies LLC
| |
Molly Campbell | 61 | 2014 |
| A (FE), C, N | Retired, Former Director of the Port Department of the Port Authority of New York and New Jersey |
Iris S. Chan | 76 | 2010 | B (Chair), R (RE) | CEO of Ameriway | |
Archana Deskus | 56 | 2019 | B, R | Chief Information Officer (“CIO”), PayPal Holdings, Inc.
| |
Rudolph I. Estrada | 74 | 2005 | Lead Independent Director | A, B, E, R (RE and Chair) | CEO of Estradagy Business Advisors |
Paul H. Irving | 69 | 2010 | A, B, N (Chair) | Senior Fellow of the Milken Institute | |
Jack C. Liu | 63 | 1998 | C (Chair), N | Senior Attorney, Alliance International Law Offices
| |
Dominic Ng | 63 | 1991 | CEO | E (Chair) | Chairman of the Board and CEO of East West Bancorp, Inc. and East West Bank |
Lester M. Sussman | 67 | 2015 | A (FE and Chair), C, R (RE) | Retired, Deloitte Audit Partner
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A = Audit Committee;B= BSA/AML & OFAC Compliance Steering Committee;C = Compensation Committee;E = Executive Committee;
N = Nominating/Corporate Governance Committee;R = Risk Oversight Committee
* = Independent Director;LD= Lead Director;FE = Audit Committee Financial Expert;RE = Risk Oversight Committee Risk Expert
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Director Dashboard
Corporate Governance Highlights
We are committed to good corporate governance, which promotes the long-term interests of our stockholders and strengthens our Board and management accountability. Highlights of our corporate governance practices include:
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Executive Compensation Highlights
We measure executive officer performance by evaluating both the achievement of specific financial goals and the long-term performance of the Company. We align the pay and performance of our executive officers to the success of our business and the interests of our stockholders. We do this by providing our executive officers short-term cash bonuses tied to our financial and strategic performance and also by granting long-term equity awards. The Company has a commitment to strong governance and transparent compensation practices. The Company continuously reviews its compensation practices to ensure that they are effective. Our executive compensation practices include the following features:following:
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VOTING INFORMATION AND QUESTIONS YOU MAY HAVE
The information provided in the “question and answer” format below is for your convenience only and is merely a summary of the information contained in this Proxy Statement. You should read this entire Proxy Statement carefully.
What matters am I voting on?
You will be voting on:
How does the Board recommend I vote on these proposals?
The Board recommends a vote:
Who is entitled to vote?
Holders of our common stock as of the close of business on March 23, 2020 (the “Record Date”), may vote at the Annual Meeting. As of the Record Date, we had 142,006,764 shares of common stock outstanding. In deciding all matters at the Annual Meeting, each stockholder will be entitled to one vote for each share of common stock held on the Record Date. We do not have cumulative voting rights for the election of directors.
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How do I vote?
If you are a stockholder of record, you may:
If you are a street name stockholder, you will receive instructions from your broker, bank or other nominee. The instructions from your broker, bank or other nominee will indicate the various methods by which you may vote, including whether internet or telephone voting is available.
We intend to hold our 2020 Annual Meeting of Stockholders in person. However, we are actively monitoring coronavirus (COVID-19) developments, and we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state and local governments are imposing and may continue to impose. For that reason, we reserve the right to change the date, time, and means of convening the 2020 Annual Meeting of Stockholders, including through remote communications. If we take this step, we will announce the decision to do so in advance, and details will be issued by press release, posted on our website at http://investor.eastwestbank.com/ and filed with the SEC as additional soliciting materials. Please monitor our website for updated information. If you are planning to attend our 2020 Annual Meeting of Stockholders, please check the website one week prior to the currently scheduled meeting date of May 19, 2020.
Can I change or revoke my vote?
Yes. Subject to any rules that your broker, bank or other nominee may have, you can change your vote or revoke your proxy before the Annual Meeting.
If you are a registered stockholder, you may change your vote by:
If you are a stockholder of record, you may revoke your proxy by providing our Corporate Secretary with a written notice of revocation prior to your shares being voted at the Annual Meeting. The written notice of revocation may be hand delivered to the Company’s Corporate Secretary, or mailed to and received by East West Bancorp at 135 N. Los Robles Ave., 7th Floor, Pasadena, California 91101, Attention: Corporate Secretary.
If you are a street name stockholder, you may change your vote by:
If you are a street name stockholder, you must contact your broker, bank or other nominee that holds your shares to find out how to revoke your proxy.
What is the effect of giving a proxy?
Proxies are solicited by and on behalf of our Board. The persons named in the Proxy have been designated as proxy holders. When Proxies are properly dated, executed and returned, the shares represented by those Proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, however, the shares will be voted in accordance with the recommendations of our Board as described above. If any matter not described in the Proxy Statement is properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the Annual Meeting is adjourned, the proxy holders can vote your shares on the new meeting date as well, unless you have properly revoked your proxy.
How many votes are needed for approval of each matter?
Are there any other matters presented for action at the Annual Meeting?
The enclosed Proxy confers discretionary authority with respect to matters incident to the Annual Meeting and any other proposals of which management did not have notice at least 45 days prior to the date on which the Company mailed its proxy material for last year’s annual meeting of stockholders. As of the date hereof, management is not aware of any other matters to be presented for action at the Annual Meeting. However, if any other matters properly come before the Annual Meeting, the Proxies solicited hereby will be voted by the Proxy holders in accordance with the recommendations of the Board.
What happens if a director nominee does not receive a majority vote?
In an uncontested election, any director nominee who receives a greater number of “Against” votes than votes “For” the nominee’s election shall immediately tender to the Board his or her offer to resign from the Board. The Board, after taking into consideration the recommendation of the Nominating/Corporate Governance Committee, will determine whether or not to accept the
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resignation of any nominee for director who receives a greater number of “Against” votes than votes “For” the nominee’s election. In the event of a contested election, the director nominees who receive the largest number of votes cast “For” their election will be elected as directors.
What is a quorum?
A quorum is the minimum number of shares required to be present at the Annual Meeting for the meeting to be properly held under our Bylaws and Delaware law. The presence, in person or by proxy, of a majority of all issued and outstanding shares of common stock entitled to vote at the Annual Meeting will constitute a quorum at the Annual Meeting.
Abstentions and Broker Non-Votes will be treated as shares present and entitled to vote for purposes of determining the presence of a quorum.
How are proxies solicited for the Annual Meeting? Who pays for the solicitation?
The Board is soliciting proxies for use at the Annual Meeting. All expenses associated with this solicitation will be borne by us. Although there is no formal agreement to do so, we may reimburse brokers, banks and other nominees for their reasonable expense in forwarding these proxy materials to their principals. Proxies will be solicited principally through the mail, however, our directors, officers and employees may also solicit proxies personally, by telephone or via the internet. Directors, officers and employees will not be paid any additional compensation for soliciting proxies.
Is my vote confidential?
Your vote will not be disclosed either within the Company or to third parties, except as necessary to meet applicable legal requirements, to allow for the tabulation of votes and certification of the vote, or to facilitate a successful proxy solicitation.
Important Notice Regarding Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 19, 2020
Pursuant to the SEC rules related to the availability of proxy materials, the Company has made its Proxy Statement and Annual Report on Form 10-K available on the Company’s corporate website at www.eastwestbank.com/annual. Website addresses referenced herein are intended to provide inactive, textual references only, and the information on these websites is not part of this Proxy Statement.
I share an address with another stockholder, and we received multiple copies of the proxy materials. How can we obtain a single copy of the proxy materials?
Stockholders who share an address and receive multiple copies of our proxy materials can request to receive a single copy in the future. To receive a single copy of the proxy materials, stockholders may contact us at:
East West Bancorp, Inc.
Attention: Investor Relations
135 N. Los Robles Avenue, 7th Floor
Pasadena, California 91101
(626) 768-6000
Stockholders who hold shares in street name may contact their broker, bank, or other nominee to request information about “householding” (providing one copy of this Proxy Statement for all stockholders residing at one address).
In some cases, stockholders who hold their shares in street name and who share the same surname and address may receive only one copy of the proxy materials. If you would like to have a separate copy of the proxy materials mailed to you or receive separate copies of future mailings, please submit your request to your broker, bank or other nominee. We will deliver such additional copies promptly upon receipt of such request.
Where can I find the voting results of the Annual Meeting?
We will disclose voting results on a Current Report on Form 8-K to be filed with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to include them in the Form 8-K, we will file a Form 8-K to publish preliminary results and will provide the final results in an amendment to the Form 8-K as soon as final results become available.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Proposal 1: Election of Directors
Proposal Snapshot
Stockholders are being asked to elect
FOR the election of each director
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Board of Directors and Nominees
Our business is managed under the direction of our Board, which is currently composed of eight members. One director, Herman Li, is retiring after 22 years of service and leadership and is not standing for re-election.nine-member Board. The Board is nominating the eightnine director nominees discussed below to serve a one-year term, each of whom wasis recommended for reelectionelection by the Nominating/Corporate Governance Committee.
We seek directors with strong reputation and experience in areas relevant to the strategy and operations of our businesses, particularly industries and growth segments that we serve, as well as key geographic markets where we operate. Each of the nominees for director holds or has held senior leadership and/or executive positions in financial services and/or large, complex organizations, and has operating experience that meets this objective. In these positions, they have also gained experience in core management skills, such as strategic and financial planning, corporate governance, risk management, regulatory oversight, and leadership development, as further described below.development.
We also believe that each of the nominees has other key attributes that are important to an effective Board, including: integrity and high ethical standards; sound judgment; analytical skills; the ability to engage management and each other in a constructive and collaborative fashion; diversity of origin, background, experience, and thought; and the commitment to devote significant time and energy to serviceserve on the Board and its Committees.committees. In 2021, all directors attended 100% of all meetings of the Board.
The proposed nominees collectively bring a wide range of experience to the Board with a focus on our core business of being a financial bridge between the U.S.United States and Greater China.Asia. In addition, the proposed nominees reflect our heritage and leading role as one of the most diverse financial institutions in the country and our leading role as the largest FDIC-insured minority depository institution insured by the Federal Deposit Insurance Corporation (the “FDIC”). Our Board is representative of the rich ethnic diversity and multiculturalism that existsheadquartered in the United States and in California, where we are headquartered.States. Of the eightnine persons being nominated as directors, sixseven are members of minority groups, including threefour Asian-Americans, one African-American, one Hispanic-American and one Indian-American.two Hispanic-Americans. Furthermore, we are committed to gender diversity on the Board, and three of our eightnine director nominees are women. We believe the director nominees represent one of the most diverse boards of publicly tradedamong publicly-traded financial institutions in the U.S.United States.
The following table presents certain information with respect to the Board’s nominees for director. All director nominees of the Company are also directors of the Bank, the Company’s principal subsidiary.Bank. All of the nominees have indicated their willingness to serve. Executive officers serve at the pleasure of the Board, subject to restrictions set forth in their employment agreements. For further details, see the “Other Compensation Policies and Information—Employment Agreements and Potential Payments upon Termination or Change in Control” section of this Proxy Statement.
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Director Nominees | Age | Year First Appointed | Committee Memberships | Current Term Expires |
Manuel P. Alvarez | 41 | 2022 | R (RE) | 2022 |
Molly Campbell * | 61 | 2014 | A (FE), C, N | 2022 |
Iris S. Chan * | 76 | 2010 | B (Chair), R (RE) | 2022 |
Archana Deskus * | 56 | 2019 | B, R | 2022 |
Rudolph I. Estrada (LD)* | 74 | 2005 | A, B, E, R (RE and Chair) | 2022 |
Paul H. Irving * | 69 | 2010 | A, B, N (Chair) | 2022 |
Jack C. Liu * | 63 | 1998 | C (Chair), N | 2022 |
Dominic Ng | 63 | 1991 | E (Chair) | 2022 |
Lester M. Sussman * | 67 | 2015 | A (FE and Chair), C, R (RE) | 2022 |
Director Nominees | Age | Year First Appointed | Committee Memberships | Current Term Expires |
Molly Campbell * | 59 | 2014 | A (FE), C | 2020 |
Iris S. Chan * | 74 | 2010 | B (Chair), R (RE) | 2020 |
Archana Deskus * | 54 | 2019 | R | 2020 |
Rudolph I. Estrada (LD)* | 72 | 2005 | A, B, E, R (Chair) | 2020 |
Paul H. Irving * | 67 | 2010 | A, B, N | 2020 |
Jack C. Liu * | 61 | 1998 | C (Chair), N | 2020 |
Dominic Ng | 61 | 1991 | E (Chair) | 2020 |
Lester M. Sussman * | 65 | 2015 | A (FE and Chair), R (RE) | 2020 |
A = Audit Committee;B = BSA/AML & OFAC Compliance Steering Committee;C = Compensation Committee;E = Executive Committee;
N = Nominating/Corporate Governance Committee;R = Risk Oversight Committee
* = Independent Director;LD= Lead Independent Director;FE = Audit Committee Financial Expert;RE = Risk Oversight Committee Risk Expert
None of the director nominees were selected pursuant to any arrangement or understanding, other than with the directors and executive officers of the Company acting within their capacity as such. There are no family relationships among directors or executive officers of the Company. As of the date of this Proxy Statement, there were no directorships held by any director with a company whichthat has a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (“Exchange Act”) or subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company under the Investment Company Act of 1940, as amended, other than Mr. Ng, who is a director of Mattel, Inc. (Nasdaq: MAT), Ms. Campbell, who is a director of Granite Construction Inc. (NYSE: GVA), and Ms. Deskus who is a director of Cognizant.Cognizant Technology Solutions Corporation (Nasdaq: CTSH).
We have no reason to believe that any of the director nominees will be unable or unwilling to serve if elected. However, if any nominee should become unable for any reason or unwilling for good cause to serve, proxies may be voted for another person nominated as a substitute by the Board, or the Board may reduce the number of directors.
Director Nominee Qualifications and Experience
Our director nominees bring a balance of relevant skills to our Board including:
Each of the director nominees currently serves on the Board. AllWith the exception of Mr. Alvarez, who was appointed as a director of the Company on January 1, 2022, all were elected by the stockholders at the May 21, 201927, 2021 annual meeting of Stockholders except for Ms. Deskus, who joined the Board in October of 2019.stockholders. If elected, each nominee will hold office until the 20212023 annual meeting of stockholders and until his or her successor is elected and qualified.
The principal occupation during the past five years of each director nominee is set forth below. Included in each director nominee’s biography below is an assessment of the specific qualifications, attributes, skills and experience of the nominee based on the qualifications described above. All director nominees have held their present positions for at least five years, unless otherwise stated.
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Director Qualifications and Experience
Manuel P. Alvarez is the Founding Principal of BridgeCounsel Strategies LLC, a minority-owned financial technology consultancy. Before founding BridgeCounsel in 2021, Mr. Alvarez served as California’s chief banking and financial regulator from 2019 to 2021, first as Commissioner of the Department of Business Oversight (“DBO”) and then as the first Senate-confirmed Commissioner of the California Department of Financial Protection & Innovation (“DFPI”), which broadly regulates the state’s banking and financial services industry. From 2014 to 2019, Mr. Alvarez served as General Counsel, Chief Compliance Officer, and Corporate Secretary at Affirm, Inc. (Nasdaq: AFRM), a financial-technology platform providing online point-of-sale consumer financing solutions. Mr. Alvarez is admitted to practice law in California and is an active real estate and angel investor. He serves on the advisory boards of several venture-backed, private fintech companies and enjoys mentoring first-generation law students and professionals. | |
Manuel P. Alvarez Director Since 2022 Committee: Risk Oversight |
| Molly Campbellhas almost 30 years of executive leadership experience, most recently as |
Molly Campbell Retired, Former Director of the Port Department of the Port Authority of New York and New Jersey Director Since 2014 Committees: Audit, Compensation, Nominating/Corporate Governance |
CEO of Ameriway
Director Since 2010
Board Committees:
· BSA/AML & OFAC Compliance (Chair)
· Risk Oversight
Iris S. Chanis currently the CEO of Ameriway, which she founded in 1989. Ameriway focuses on innovative investments and cross-border trade between North America and Asia. She was the former Executive Vice President and Group Head of Wells Fargo’s (NYSE: WFC) National Commercial Banking Group and a member of the Wells Fargo Management Committee. Earlier in her career, Ms. Chan held various management and international banking positions with Bank of America (NYSE: BAC) and Citicorp.
Ms. Chan is involved in many community and professional organizations. Currently, she is on the board of governors of the San Francisco Symphony. Ms. Chan has received various awards and recognition for her work. In 2007 and 2008, she was named one of the “25 Most Powerful Women in Banking” by American Banker magazine. Ms. Chan brings to the Board a deep understanding of commercial lending and credit risk oversight, in addition to her perspectives on U.S.–Asia cross-border trade and investment. | |
CEO of Ameriway Director Since
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Archana Deskusis currently the Ms. Deskus currently serves on the Board of Directors of |
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Rudolph I. Estradais the Lead Independent Director of the Board of East West Bancorp, Inc. and East West Bank. Mr. Estrada is the Mr. Estrada is a decorated veteran of the U.S. Army. | |
Rudolph I. Estrada Lead Independent Director, East West Bancorp, Inc. and East West Bank; CEO of Estradagy Business Advisors, LLC Director Since 2005 Committees: Audit, BSA/AML & OFAC Compliance, Executive, Risk Oversight (Chair) |
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Mr. Irving brings to the Board valuable perspective and insight on corporate governance, regulatory, policy and legal matters with his long experience as an advisor to the financial services industry and leadership roles in professional services and in the non-profit sector, where he | |
Paul H. Irving Director Since 2010 Committees: Audit, BSA/AML & OFAC Compliance, Nominating/Corporate Governance (Chair) |
Senior Attorney, Alliance International Law Offices
Director Since 1998
Board Committees:
· Compensation (Chair)
· Nominating/Corporate Governance
Jack C. Liuis a senior attorney with Alliance International Law
Mr. Liu is admitted to practice law in the jurisdictions of California and Washington, D.C., as well as in Taiwan as a foreign attorney. Mr. Liu is a Leadership Fellow with National Association of Corporate Directors. He is also the Vice Chairman of Taipei Independent Directors Association. Mr. Liu brings to the Board his experience and insight on doing business in Asia, as well as his board-level perspective and leadership on risk management and oversight of | |
Jack C. Liu Senior Attorney, Alliance International Law Offices Director Since 1998 Committees: Compensation (Chair), Nominating/Corporate Governance |
Dominic Ng Chairman of the Board and CEO of East West Bancorp, Inc. and East West BankDirector Since 1991
| Dominic Ng is Chairman of the Board and
Mr. Ng
Besides his industry achievements, Mr. Ng is also known for his |
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Vice President, Advisory Services for Resources Global Professionals
Director Since 2015
Board Committees:
· Audit (Chair)
· Risk Oversight
Lester M. Sussman
Mr. Sussman is a current member of the board of directors of the Braille Institute, as well as the board of directors of the Pacific Southwest chapter of the National Association of Corporate Directors. Mr. Sussman brings over 40 years of financial services experience to East | |
Lester M. Sussman Director Since 2015 Committees: Audit (Chair), Compensation, Risk Oversight |
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We have adopted formal Corporate Governance Guidelines reflecting our commitment to sound corporate governance. These principles are essential to running the Company’s business efficiently and to maintaining our integrity in the marketplace. In addition, we have also adopted a Code of Conduct. The Corporate Governance Guidelines, our Code of Conduct, our Environmental and Social Policy Framework and information about other governance matters of interest to investors are available through our website at www.eastwestbank.comwww.eastwestbank.com/investors by clicking onInvestor Relations — Corporate Information — Governance Documents.
Director Independence, Financial Experts and Risk Management Experience
Our common stock is listed on the Nasdaq Stock Market LLC (“Nasdaq”). Under Nasdaq listing standards, independent directors must comprise a majority of a listed company’s board of directors. In addition, Nasdaq listing standards require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent. Under these listing standards, a director is independent only if the board of directors of a company makes an affirmative determination that the director has no material relationship with the company that would impair his or her independence.
Independence
Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries.
Compensation committee members must also satisfy the independence criteria set forth under the Nasdaq listing standards. In order for a member of a listed company’s compensation committee to be considered independent for purposes of Nasdaq, the listed company’s board of directors must consider all factors specifically relevant to determine whether a director has a relationship to the company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including but not limited to: (1) the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by the company to the director; and (2) whether the director is affiliated with the company, a subsidiary of the company or an affiliate of a subsidiary of the company.
Our Board has undertaken a review of the independence of each director in accordance with the Exchange Act and Nasdaq listing standards. Based on this review, our Board has determined that eight of our nine directors, or Mses. Campbell, Chan and Deskus, and Messrs. Alvarez, Estrada, Irving, Li, Liu and Sussman, are independent as that term is defined under the Nasdaq listing standards. Accordingly, all members of the Company’s Audit, BSA/AML & OFAC Compliance, Compensation, Risk Oversight and Nominating/Corporate Governance Committees satisfy the independence requirements of Nasdaq. All members of the Company’s Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) and Office of Foreign Assets Control (“OFAC”) Compliance Steering Committee and Risk Oversight Committees have also been determined to be independent by our Board, though these committees are not subject to Nasdaq independence requirements. In making this determination,these determinations, our Board considered the relationships that each non-employee director has with us and all other facts and circumstances that the Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock of each non-employee director, as well as relationships that our directors may have with customers and vendors.
Financial Experts
The Board also reviewed whether any members of the Audit Committee meet the criteria to be considered aan “audit committee financial expertexpert” as defined by the SEC.Securities and Exchange Commission (“SEC”), satisfying the requirements for financial sophistication under Nasdaq. Based on its review, the Board determined that two directors, Ms. Campbell and Mr. Sussman,
qualify as “audit committee financial experts,” as defined under the applicable rules of the SEC, by reason of their prior job experience, and current job experience.satisfy the requirements for financial sophistication under Nasdaq.
Lastly, theRisk Management Experience
The Board has reviewed and determined that all members of the Risk Oversight Committee meet the independence requirement of the Federal Reserve’s Enhanced Prudential Standards. We continue to measure the independenceStandards of the committee’s members against these standards even thoughBoard of Governors of the Federal Reserve last year amended these standards, consistent with the Economic Growth, Regulatory Reform, and Consumer Protection Act so that the risk management and risk committee requirements in the Enhanced Prudential Standards no longer apply to bank holding companies with less than $50 billion in total consolidated assets, which includes the Company.System (the “Federal Reserve”). The members of the committee have a general understanding of risk management principles and practices relevant to the Company’s business. In addition, twofour members of the Risk Oversight Committee, Ms. Chan and Mr.Messrs. Alvarez, Estrada, and Sussman, have particular experience identifying, assessing, and managing risk exposures of large, complex financial firms. Specifically, Ms. Chan has held high-level executive and management positions with Wells Fargo, Bank of America and Citicorp for over 20 years. She is experienced with financial oversight and internal controls, for large financial institutions, and has a deep understanding of commercial lending, and credit risk oversight in afor large banking environment, ininstitutions. In addition, toas CEO and founder of Ameriway, she has deep insight into U.S.–Asia cross-border trade and investment. Mr. Alvarez was the founding General Counsel and Corporate Secretary of Affirm, Inc., where he helped build and scale the company’s enterprise risk management function focusing on legal, compliance, and corporate governance. Later, during his tenure as Commissioner of the DFPI, Mr. Alvarez oversaw a large swath of the state’s financial services sector and had primary responsibility for the DFPI’s regulatory and risk oversight of state banks, credit unions, and other licensed entities. Mr. Estrada is the chair of the Risk Oversight Committee and formerly served as the Los Angeles District Director for the SBA. He is experienced at providing management oversight in public and private sectors. Mr. Sussman was an audit partner with Deloitte, where he held leadership positions including Partner in Charge of the Financial Services Group for the Pacific Southwest and Partner in Charge of Capital Markets for the West Region. Moreover, his work at RGP involvesinvolved providing corporate governance, risk management and compliance services to clients globally. Accordingly, Ms. Chan’s and Mr.Messrs. Alvarez, Estrada, and Sussman’s experience in risk management are commensurate with the Company’s structure, risk profile, complexity, activities and size, and, we believe, qualify them as risk experts under the Federal Reserve’s Enhanced Prudential StandardsStandards.
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The Board has responsibility for the oversight and evaluation of the Company’s risk management processes and, either as a whole or through its committees, regularly discusses with committees and management our major risk exposures, their potential impact on our business and the steps we take to manage them. The risk oversight process includes the Board receiving regular reports from its committees and members of senior management to enable the Board to understand the Company’s risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk. While each committee is responsible for evaluating certain risks, as further described in “Board Meetings and Committees” below, and overseeing the management of such risks, the entire Board is regularly informed through reports about such risks. Matters of significant strategic risk are considered by the Board as a whole.
The Board leadership is structured with a Chairman/CEO position and also a Lead Independent Director position that is elected by and from the independent members of the Board. The Board has determined that having the Company’s CEO also serve as Chairman is in the best interest of the Company. The designation of the CEO with the additional title as Chairman is important when dealing with overseas customers and dignitaries in the Greater China, area, where these positions are typically combined. The Company has extensive experience and dealings with persons from this region who may have the perception that they are not dealing with the senior decision maker of the Company unless they are dealing with the Chairman. This structure also makes the best use of the CEO’s extensive knowledge of the Company and its industry, while fostering greater communication between management and the Board.
The Company’s governance structure provides for a strong Lead Independent Director role. The powers and duties of a Chairman and a Lead Independent Director differ only in that the Chairman presides over the normal business portion of the meetings of the Board. Since the Lead Independent Director may call for an executive session of independent directors at any time and has joint control over the agenda and the information provided to directors for Board meetings, the Board believes that it is able to have an open exchange of views or address any issues independent of the Chairman. In addition, much of the
work of the Board is conducted through its committees, and the Chairman is not a member of any committee, other than the Executive Committee.
Among other things, the Lead Independent Director is required to:
preside at any session of the Board where the Chairman is not present; |
their concerns and expectations; |
responsibilities to the |
The Company does not have a policy requiring mandatory separation of the roles of CEO and the Chairman of the Board. The Board believes it is in the best interest of the Company to instead make a determination regarding the separate roles of CEO and Board Chairman on a regular basis based on the position and direction of the Company and the membership composition of the Board at the time. The determination not to separate the roles of Chairman and CEO at this time also recognizes the strong independence of the Board with seveneight of the eight continuingnine directors being independent.
Director Education and Self-Assessment
The Company has a continuing education program to assist directors in further developing their skills and knowledge to better perform their duties. This includes presentations made as part of regular Board and Committeecommittee meetings by qualified persons on various topics. For example, in 2019,2021, our Board received in-Company training on topics ranging fromincluding BSA/AML and OFAC requirements, privacy and identity theft red flag training, fair lending and redlining, the Foreign Corrupt Practices Act, cybersecurity, the California Consumer Privacy Act of 2018 and updates on applicable state, federal and Chinese laws and regulations. In addition, our directors have external continuing education requirements. In 2019,2021, members of our Board participated in external director continuing education programs including those offered by the National Association of Corporate Directors (“NACD”), Deloitte, KPMG, the Western Bankers Association – FDIC Director’s College,Crowe, Protiviti, and the Banker’s Compliance GroupKPMG on topics such as cybersecurityaudit committee issues, SOX compliance, ESG, board oversight of corporate political activity, diversity, compensation, compliance and ethics, and risk oversight and governance, corporate governance, enterprise risk management, Environmental Social Governance (“ESG”) risk management, director roles in credit risk management and balance sheet management, audit functions and oversight, and transformational technologies. One member of our Risk Oversight Committee, Mr. Sussman, earned the CERT Certificate in Cybersecurity Oversight issued by the CERT Division of the
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Software Engineering Institute at Carnegie Mellon University in partnership with the NACD.management. In addition, Messrs. Estrada, Liu, and LiuSussman are active members of the NACD, and Messrs. Estrada and Liu are both NACD Leadership Fellows. Fellows and Mr. Sussman is NACD Directorship Certified.
The Board regularly evaluates, at least annually, its overall effectiveness, committee assignments, Board refreshment, and governance and risk management practices. The Nominating/Corporate Governance Committee determines the process for such evaluation and review, which typically includes a review of how certain attributes affect Board and/or individual director effectiveness, such as Board and Board Committee size, meeting frequency, quality and timing of information provided to the Board and Board Committee members, director communication, director education, director skills and qualifications, director independence and overall performance. Recently, the Board conducted an evaluation process that involved a written assessment which solicited feedback that was then reviewed and discussed by the Board.
The business of the Board is conducted through its meetings, as well as through meetings of its committees. During the fiscal year ended December 31, 2019,2021, the Board held four regularly scheduled meetings, one special meeting, and a multi-day retreat. There were also 2324 meetings of Board committees during 2019.2021. All directors attended all Board meetings, Board committee meetings, and the retreat. In addition, the directors attended 100% of the meetings for the committees on which they served as members. The policy of the Company is to encourage all director nominees to attend the annual meeting of stockholders. All directors were in attendance atattended the 20192021 annual meeting of stockholders.
Our Board has six standing committees: an Audit Committee, a BSA/AML & OFAC Compliance Committee, a Compensation Committee, an Executive Committee, a Nominating/Corporate Governance Committee, and a Risk Oversight Committee, each of which has the composition and responsibilities described below. Members serve on these committees until their resignation or until otherwise determined by our Board. Six Standing Committees:
The standing committees report on their deliberations and actions at each full Board meeting. Each of the committees has the authority to engage outside experts, advisors and counsel to the extent it considers appropriate to assist the committee in its work.
Each of the standing committees operates under a written charter. These charters can be found on the Company’s website atwww.eastwestbank.com www.eastwestbank.com/investors by clicking onInvestor Relations — Corporate Information — CorporateGovernance Documents. Set forth below is a description of the standing committees of the Board.
The current members of our Audit Committee are Ms. Campbell and Messrs. Estrada, Irving and Sussman, with Mr. Sussman serving as chair. Our Board has determined that each of the members of our Audit Committee satisfies the requirements for independence and financial literacy under the rules and regulations of Nasdaq and the SEC. Our Board has also determined that two of the members, Ms. Campbell and Mr. Sussman, are “audit committee financial experts” as defined under the applicable rules of the SEC.SEC and satisfy the financial sophistication requirements of Nasdaq. The Audit Committee held five meetings during the fiscal year ended December 31, 2019.2021.
Our Audit Committee oversees our accounting and financial reporting process, and the audit of our financial statements and assists our Board in monitoring our financial systems and our legal and regulatory compliance. Our Audit Committee is responsible for, among other things:
● Reviewing the Company’s financial statements and related disclosures; |
The Bank also has an Audit Committee, which consists of the same directors as the Company’s Audit Committee. The Bank’s Audit Committee generally meets jointly with the Company’s Audit Committee.
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BSA/AML & OFAC Compliance Committee
The Board created the BSA/AML & OFAC Compliance Committee to provide governance for the enterprise-wide BSA/AML & OFAC program framework and focused oversight of the Company’s program enhancements. Active oversight of BSA/AML & OFAC compliance risk was deemed necessary by the Board and senior management as effective compliance risk management is integral to the safety and soundness of the Bank. The current members of the BSA/AML & OFAC Compliance Committee are Ms. Chan and Messrs. Irving and Estrada, with Ms. Chan serving as chair. The Board has determined that each of the members of the BSA/AML & OFAC Compliance Committee is independent under the rules and regulations of Nasdaq. The BSA/AML & OFAC Compliance Committee held five meetings during the fiscal year ended December 31, 2019.
The BSA/AML & OFAC Compliance Committee is responsible for, among other things:
The current members of our Compensation Committee are Ms. Campbell and Messrs. LiLiu and Liu,Sussman, with Mr. Liu serving as chair. One of the members, Mr. Li, has decided not to stand for re-election. Our Board has determined that each of the members of our Compensation Committee is independent within the meaning of the independent director requirements of Nasdaq. Our Board has also determined that the composition of our Compensation Committee meets the requirements for independence under, and the functioning of our Compensation Committee complies with, any applicable requirements of Nasdaq and SEC rules and regulations. The Compensation Committee held fiveseven meetings during the fiscal year ended December 31, 2019.2021.
The Compensation Committee establishes and administers the executive compensation policies and plans of the Company. Our Compensation Committee is responsible for, among other things:
● Providing input with respect to the Company’s human capital strategy, including talent management and succession planning; | |
The Compensation Committee may form and delegate authority to subcommittees, or, to the extent permitted under applicable laws, regulations and Nasdaq rules, to any other director, in each case to the extent the Compensation Committee deems necessary or appropriate.
The Bank also has a Compensation Committee, which consists of the same directors as the Company’s Compensation Committee. The Bank’s Compensation Committee generally meets jointly with the Company’s Compensation Committee. For a more comprehensive discussion on the responsibilities of the Compensation Committee, see “Compensation Discussion and Analysis – FrameworkCompensation-Setting Process and Process for Determining ExecutiveRoles – Role of the Compensation – Our Compensation PhilosophyCommittee” in this Proxy Statement.
The Compensation Committee has the authority to retain the services and obtain the advice of external advisors, including compensation consultants, legal counsel or other advisors to assist in the evaluation of executive officer and director compensation. In evaluating firms to potentially provide services to the Compensation Committee, the Compensation Committee considers whether the firm provides any other services to the Company. The Compensation Committee makes the decision to hire a consultant and provides direction as to its scope of work in its sole discretion. The Compensation Committee appointed Willis Towers Watson and Meridian Compensation Partners, LLC as its independent compensation consultantsconsultant in 2019.2021. The Compensation Committee uses its compensation consultantsconsultant to:
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● Assist and advise the Compensation Committee during its meetings; |
● Provide information based on third-party data and analysis of compensation programs at comparable financial institutions for the design and implementation of our executive and non-employee director compensation programs; |
● Compile and analyze compensation data for financial services companies; |
● Assist the Compensation Committee in forming a peer group; and |
● Provide independent information as to the reasonableness and appropriateness of the compensation levels and compensation programs of the Company relative to comparable financial services companies. |
Independent Compensation Consultant EvaluationNominating/Corporate Governance Committee
The Compensationcurrent members of our Nominating/Corporate Governance Committee are Ms. Campbell and Messrs. Irving and Liu, with Mr. Irving serving as chair. Our Board has evaluateddetermined that each of the individual relationshipsmembers of Willis Towers Watsonour Nominating/Corporate Governance Committee is independent within the meaning of the independent director requirements of Nasdaq. The Nominating and Meridian Compensation Partners, LLCCorporate Governance Committee held four meetings during the year ended December 31, 2021.
The Nominating/Corporate Governance Committee nominates persons for election as directors and reviews corporate governance matters. Among other things, the Nominating/Corporate Governance Committee members are responsible for:
● Recommending to the Board a slate of nominees for election to the Board in accordance with the Company’s Corporate Governance Guidelines; |
● Recommending to the Board individuals to fill any vacancies on the Board occurring between annual meetings of stockholders; |
● Recommending to the Board the directors who will serve on each committee of the Board; |
● Developing and recommending to the Board a set of corporate governance principles; |
● Periodically reassessing the Company’s corporate governance principles; |
● Conducting an annual assessment of the Board’s structure and performance to determine whether it, its committees and its members are functioning effectively; and |
● Overseeing and monitoring the Company’s ESG framework. |
The Bank also has a Nominating/Corporate Governance Committee, which consists of the same directors as the Company’s Nominating/Corporate Governance Committee. The Bank’s Nominating/Corporate Governance Committee generally meets jointly with boththe Company’s Nominating/Corporate Governance Committee.
The current members of the Risk Oversight Committee are Mses. Chan and Deskus, and Messrs. Alvarez, Estrada, and Sussman, with Mr. Estrada serving as chair. The Risk Oversight Committee held four meetings during the year ended December 31, 2021. Our Board has determined that each of the members of the Risk Oversight Committee is independent. In addition, all the members of the Risk Oversight Committee meet the independence requirement of the Federal Reserve’s Enhanced Prudential Standards (as well as other regulatory risk oversight standards) as the members are not and have not been officers or employees of the Company within the previous three years and the Compensation Committee, including the provision of other servicesare not related to the Company (there are none), fees paid by the Company as a percentage of the consultant’s total annual revenue (less than 1%), policies and procedures of the consultant to mitigate conflicts of interest, businessany officers or personal relationships of the consultant with any member of the Compensation Committee, any Company stock held by the consultant, and any business or personal relationships of the consultant with any executive officeremployees of the Company. Based on these evaluations,Our Board also has determined that Mr. Estrada meets the Compensation Committee concluded that Willis Towers Watson and Meridian Compensation Partners, LLC meetrequirements in the criteriaFederal Reserve’s Enhanced Prudential Standards for the independence of an independent advisor.chairman of the Risk Oversight Committee.
The Risk Oversight Committee has been appointed by the Board to provide focused oversight of the Company’s identified enterprise risk categories, which include: credit, capital, liquidity, operational, information technology, information security,
market, compliance, legal, strategic, and reputation. The Board believes an effective enterprise risk management system is necessary to ensure the successful, safe and sound management of the Bank. Among other things, our Risk Oversight Committee is required to:
● Be responsible for the Company’s risk management standards; |
● Monitor the Company’s risk exposure in the identified enterprise risk categories; |
● Timely identify the material risks that the Company faces; |
● Communicate necessary information on material risks to senior management and, as appropriate, to the Board or relevant Board committee; |
● Approve and/or develop the risk appetite and tolerance levels for the Company; |
● Oversee the Company’s Independent Asset Review function; |
● Oversee the Company’s risk management framework and implement responsive risk management strategies appropriate to the Company’s risk profile; and |
● Integrate risk management into the Company’s decision-making. |
In addition, the Company’s Chief Risk Officer works directly with the Risk Oversight Committee and the CEO. The Bank also has a Risk Oversight Committee, which consists of the same directors as the Company’s Risk Oversight Committee. The Bank’s Risk Oversight Committee generally meets jointly with the Company’s Risk Oversight Committee.
BSA/AML & OFAC Compliance Steering Committee
The Board created the BSA/AML & OFAC Compliance Steering Committee in 2015 as an ad hoc board committee to provide board governance for the enterprise-wide BSA/AML & OFAC program framework and focused oversight of the Company’s program enhancements. The 2021 members of the BSA/AML & OFAC Compliance Steering Committee were Mses. Chan and Deskus, and Messrs. Estrada and Irving, with Ms. Chan serving as chair. The Board has determined that each of the members of the BSA/AML & OFAC Compliance Steering Committee is independent. The BSA/AML & OFAC Compliance Steering Committee held four meetings during the year ended December 31, 2021.
The BSA/AML & OFAC Compliance Steering Committee is responsible for, among other things:
● Reviewing and revising BSA/AML & OFAC policies and procedures; |
● Monitoring BSA/AML & OFAC compliance risks across the Bank; and |
● Reviewing assessments of program enhancements from Internal Audit, regulators and independent third parties, including consultants. |
The Board has determined that a standalone BSA/AML & OFAC Compliance Steering Committee is no longer needed in light of progress made to enhance our BSA/AML and OFAC policies and procedures. Therefore, effective May 26, 2022, the BSA/AML & OFAC Compliance Steering Committee will be dissolved and all BSA/AML & OFAC matters will be addressed by the Risk Oversight Committee.
The Executive Committee currently consists of Messrs. Estrada Li and Ng.Ng, with Mr. Ng servesserving as chair. One of the members, Mr. Li, has decided not to stand for re-election. The Executive Committee is appointed by the Board to provide an efficient means of considering such matters and taking such actions, if any, as may require the attention of the Board in the interim between Board meetings. The Executive Committee is authorized to exercise certain powers of the Board during intervals between Board meetings. The Bank also has an Executive Committee, which consists of the same directors as the Company’s Executive Committee. The Executive Committee did not meet in 2019.
Nominating/Corporate Governance Committee
The current members of our Nominating/Corporate Governance Committee are Messrs. Liu, Irving, and Li, with Mr. Li serving as chair. Mr. Li, has decided not to stand for re-election. A new chair will be elected when Mr. Li’s term is over. Our Board has determined that each of the members of our Nominating/Corporate Governance Committee is independent within the meaning of the independent director requirements of Nasdaq. The Nominating and Corporate Governance Committee held four meetings during the fiscal year ended December 31, 2019.
The Nominating/Corporate Governance Committee nominates persons for election as directors and reviews corporate governance matters. Among other things, the Nominating/Corporate Governance Committee members are responsible for:
The Bank also has a Nominating/Corporate Governance Committee, which consists of the same directors as the Company’s Nominating/Corporate Governance Committee. The Bank’s Nominating/Corporate GovernanceExecutive Committee generally meets jointly with the Company’s Nominating/Corporate GovernanceExecutive Committee. The Executive Committee did not meet in 2021.
Risk Oversight CommitteeExecutive Sessions
The current membersindependent directors generally meet in executive sessions without management or any employee directors present at every regularly scheduled meeting of the Risk Oversight CommitteeBoard. The sessions are Mses. Chan and Deskus, and Messrs. Sussman and Estrada, with Mr. Estrada serving as chair. The Risk Oversight Committee held four meetings during the fiscal year ended December 31, 2019. Our Board has determined that each of the members of the Risk Oversight Committee is independent as definedchaired by the Sarbanes-Oxley Act of 2002 and regulations promulgated thereunder and Nasdaq rules. In addition, all the members of the Risk Oversight Committee meetLead Independent Director. Any director can request an additional executive session to be scheduled.
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the independence requirement of the Enhanced Prudential Standards (as well as other regulatory risk oversight standards) as the members are not and have not been officers or employees of the Company within the previous three years and are not related to any officers or employees of the Company. Our Board also has determined that Mr. Estrada meets the requirements in the Enhanced Prudential Standards for the independence of chairman of the Risk Oversight Committee. The Federal Reserve last year amended the Enhanced Prudential Standards such that the risk management and risk committee requirements do not apply to bank holding companies with less than $50 billion in total consolidated assets, which includes the Company, but we continue to apply these standards to the Risk Oversight Committee.
The Risk Oversight Committee has been appointed by the Board to provide focused oversight of the Company’s identified enterprise risk categories, which include: credit, capital, liquidity, operational, market, compliance, legal, strategic, and reputation. The Board believes an effective enterprise risk management system is necessary to ensure the successful, safe and sound management of the Bank. Among other things, our Risk Oversight Committee is required to:
In addition, the Company’s Chief Risk Officer works directly with the Risk Oversight Committee and the CEO. The Bank also has a Risk Oversight Committee, which consists of the same directors as the Company’s Risk Oversight Committee. The Bank’s Risk Oversight Committee generally meets jointly with the Company’s Risk Oversight Committee.Stockholder Nominees
The policy of the Nominating/Corporate Governance Committee is to consider properly submitted stockholder nominations for Board candidacy as described below in “Identifying and Evaluating Nominees for Directors.” In evaluating these nominations, the Nominating/Corporate Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to meet the membership criteria set forth under “Director Nominee Qualifications and Experience” discussed above. Any stockholder nominations proposed for consideration by the Nominating/Corporate Governance Committee should include the nominee’s name and qualifications for Board membership and should be addressed to:
Corporate Secretary
East West Bancorp, Inc.
135 N. Los Robles Avenue, 7th Floor
Pasadena, California 91101
In addition, nominations for directors may be made by any stockholder entitled to vote for the election of directors if proper notice is given in accordance with the Bylaws.our Amended and Restated Bylaws (the “Bylaws”). Notice of a stockholder’s intention to make any nominations must be made in writing and must be delivered to the Secretary of the Company at the principal executive offices of the Company not less than thirty (30)30 calendar days or more than sixty (60)60 calendar days prior to the meeting at which directors are to be elected. However, in the event that less than forty (40)40 calendar days’ notice of the meeting is given to stockholders, notice by the stockholder, to be timely, must be delivered not later than the close of business on the tenth (1010th) day following the mailing date of the meeting notice to stockholders or such public disclosure was made. TheIn addition to satisfying the foregoing requirements under the Company’s Bylaws, to comply with the SEC’s universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Board’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 27, 2023.The notification shall contain the following information:
We may disregard nominations not made in accordance with the requirements in the Bylaws.
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Identifying and Evaluating Nominees for Directors
Our Corporate Governance Guidelines contain Board membership criteria that apply to the Nominating/Corporate Governance Committee’s nominees for a position on the Board. Under these criteria, members of the Board should have the highest professional and personal ethics and values. They should have broad experience at the policy-making level in business, government, education, finance, accounting, law or public interest, as well as a high level of financial experience, extensive knowledge of the Company’s business and/or industry, risk oversight/management expertise and broad international exposure/Greater China experience. The Nominating/Corporate Governance Committee strives to nominate director candidates with a variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills, and expertise to oversee the Company’s businesses. In addition, the Nominating/Corporate Governance Committee seeks to nominate directors with a diversity of background and experience, including with respect to race, ethnicity, gender and national origin. All directors should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties.
The Nominating/Corporate Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director and regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Committee considers various potential candidates for director. Candidates may come to the attention of the Committee through current Board members, professional search firms, stockholders or other persons. These candidates are evaluated at regular or special meetings of the Committee and may be considered at any point during the year. As described above, the Committee considers properly submitted stockholder nominations for candidates for the Board. Following verification of the stockholder status of persons proposing candidates, recommendations are aggregated and considered by the Committee. If any materials are provided by a stockholder in connection with the nomination of a director candidate, those materials are forwarded to the Committee. In evaluating the nominations, the Nominating/Corporate Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board.
Our Board welcomes suggestions and comments from stockholders. All stockholders are encouraged to attend the Annual Meeting where senior management and representatives from our independent registered public accounting firm, as well as members of the Board, will be available to answer questions. Stockholders may also send written communications to the Board by writing to the Secretary of the Board at East West Bancorp, Inc., 135 N. Los Robles Avenue, 7th Floor, Pasadena, California 91101. All communications (other than commercial communications soliciting the sale of goods or services to, or employment with, the Company or directors of the Company) will be directed to the appropriate committee, the Chairman of the Board, the Lead Independent Director, or to any individual director specified in the communication, as applicable.
The independent directors generally meet in executive sessions without management or any employee directors present at every regularly scheduled meeting of the Board. The sessions are chaired by the Lead Director. Any director can request an additional executive session to be scheduled.
All directors and executive officersNamed Executive Officers are required to own the Company’s common stock to further align the financial interests of our directors and management with those of our stockholders. The stock ownership guideline for directors is three times their annual cash retainer, and the guideline should be met within five years of the date of election. The stock ownership guideline for the CEO is six times his annual base salary, and the stock ownership guideline for Named Executive Officers is one time their annual base salary. These guidelines should be met within five years of the date of hire. The Company’s Stock Ownership Guidelines for directors and Named Executive Officerssenior management are posted on the Company’s website, which can be found atwww.eastwestbank.com www.eastwestbank.com/investors by clicking onInvestor Relations — Corporate Information — Governance Documents.
Named Executive Officers have additional holding requirements for stock acquired as part of their compensation. Named Executive Officers shallare required to hold until retirement at least 51% of any stock acquired upon the exercise of stock options (net of taxes and net of the grant price paid) and at least 51% of any stock received upon vesting (net of taxes) of restricted stock or restricted stock units (“RSUs”).
No Pledging/Hedging of Company Securities
Pursuant to our Insider Trading Policy, directors, officers and employees may not pledge the Company’s securities or engage in hedging strategies, including those designed to hedge or offset any decrease in the market value of the Company’s securities granted as compensation or held directly or indirectly by such person. Additionally, directors, officers and employees may not sell short or trade derivatives involving the Company’s securities.
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Certain Relationships and Related Transactions
Our Code of Conduct and Corporate Governance Guidelines provide guidance for addressing actual or potential conflicts of interests, including those that may arise from transactions and relationships between the Company and its executive officers or directors. In order to provide further clarity and guidance on these matters, the Company has adopted a written policy regarding the review, approval or ratification of related party transactions.
The policy generally provides that the Audit Committee will review and approve in advance, or will ratify, all related party transactions between the Company and our directors, director nominees, executive officers, and persons known by the Company to own more than 5% of our common stock, and any of their immediate family members. Related party transactions include transactions or relationships involving the Company and amounts in excess of $120,000 and in which the above related parties had or will have a direct or indirect material interest. Under the policy, the failure to approve a related party transaction in advance would not invalidate the transaction or violate the policy as long as it is submitted to the Audit Committee for review and ratification as promptly as practicable after entering into the transaction.
The Audit Committee works with our General Counsel in reviewing and considering whether any identified transactions or relationships are covered by the policy. In determining whether to approve or ratify a transaction or relationship that is covered by the policy, the Audit Committee considers, among other things:
During 2019,2021, we did not enter into any related party transactions that required review, approval or ratification under our related party transaction policy. From time to time, we may lend money through our subsidiary, the Bank, to various directors and corporations or other entities in which a director may own a controlling interest. These loans (i) are made in the ordinary course of business, (ii) are made on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other persons, and (iii) do not involve more than a normal risk of collectability and do not present other unfavorable features. As of December 31, 2021, none of these loans were categorized as nonaccrual, past due, restructured, or potential problem loans. We do not have any loans to Named Executive Officers. None of our directors or executive officers, any associate or affiliate of those persons, or persons who beneficially owned more than 5% of our outstanding shares had any transactions or proposed transactions with us greater than $120,000 during the past year.year, other than the aforementioned loans made in the ordinary course of business.
The Compensation Committee is responsible for reviewing and making recommendations to the Board of Directors with respect to the compensation of directors. Employees of the Company and its subsidiaries are not compensated for service as a director of the Company or its subsidiaries and are excluded from the table below. The compensation received by Mr. Ng as an employee of the Company is provided below in the “Summary Compensation Table.”
Director compensation is reviewed by the Compensation Committee of the Board and adjustments are generally considered every two years. The Committee will engage an outside independent consultant to review director compensation amounts and structure at the same group of peer banks used by the Compensation Committee to review the compensation of senior management. In 2019,2021, the Compensation Committee engaged Willis Towers WatsonMeridian Compensation Partners, LLC as its independent compensation consultant for this purpose.
In 2019,2021, non-employee directors received an annual cash retainer of $90,000 and an annual award of $110,000 of common stock. The Lead Independent Director received an additional annual cash retainer of $70,000.$35,000. The Board believes that the role of a Lead Independent Director is essential to maintaining an independent leadership with respect to matters such as Board oversight, corporate strategy, management succession, internal controls, Board composition and functions, and accountability to stockholders, and therefore the annual cash retainer paid for the Lead Independent Director’s additional service is justified. The essential duties of the Lead Independent Director are explained in further detail in the section titled “Board Leadership Structure” above and in our Corporate Governance Guidelines. The Lead Independent Director also acts as the Board representative to the Company’s strategic advisory council of outside community leaders and is charged with developing strategic networks of new business, for which he receivesreceived a cash retainer of $70,000 for such additional Board service.
The committee chairs received an additional annual cash retainer as follows: Audit $20,000; Compensation $20,000; Risk Oversight $20,000; Nominating/Corporate Governance $15,000, and BSA/AML & OFAC Compliance $15,000. Non-employee directors also received a meeting fee of $1,500 for each committee meeting attended.
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The following table summarizes the compensation paid by the Company to non-employee directors for the fiscal year ended December 31, 2019:2021:
2019 Non-Employee Director Compensation Table
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (2) | Total ($) |
Manuel P. Alvarez (1) | N/A | N/A | N/A |
Molly Campbell | 114,073.40 | 109,926.60 | 224,000 |
Iris S. Chan | 117,073.40 | 109,926.60 | 227,000 |
Archana Deskus | 99,073.40 | 109,926.60 | 209,000 |
Rudolph I. Estrada | 234,573.40 | 109,926.60 | 344,500 |
Paul H. Irving | 124,573.40 | 109,926.60 | 234,500 |
Jack C. Liu | 126,573.40 | 109,926.60 | 236,500 |
Lester M. Sussman | 134,073.40 | 109,926.60 | 244,000 |
Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Total ($) | |||||||||
Molly Campbell | 105,039 | 109,961 | 215,000 | |||||||||
Iris S. Chan | 118,539 | 109,961 | 228,500 | |||||||||
Archana Deskus | 69,022 | (2) | 82,478 | (3) | 151,500 | |||||||
Rudolph I. Estrada | 283,039 | 109,961 | 393,000 | |||||||||
Paul H. Irving | 111,039 | 109,961 | 221,000 | |||||||||
Herman Y. Li | 115,539 | 109,961 | 225,500 | |||||||||
Jack C. Liu | 122,039 | 109,961 | 232,000 | |||||||||
Lester M. Sussman | 123,539 | 109,961 | 233,500 |
(1) | Director Manuel P. Alvarez was appointed as a director of the Company on January 1, 2022 and did not receive any compensation in 2021. |
(2) | The Company granted |
COMPENSATION DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis (“CD&A”) describes the structure and guiding principles of our 20192021 executive compensation program for the Company’s Named Executive Officers, (“NEOs”), as set forth below.
2019 Named Executive Officers
2021 Named Executive Officers (“NEOs”) | Dominic Ng | Chairman and Chief Executive Officer |
Irene H. Oh | Executive Vice President, Chief Financial Officer | |
Vice Chairman, Chief Corporate Officer | ||
Parker L. Shi | Executive Vice President, Chief Operating Officer | |
Nick Huang | Executive Vice President, Head of | |
The CD&A provides an overview of our:
The Company’s long-term organizational objective is to build a “financial bridge” between the U.S. and Greater China. Achieving that objective will require the right set of leadership skills and talent. With over 125 locations in the U.S. and Greater China, we have developed a talent strategy to identify, recruit and retain individuals who are highly knowledgeable about our customers’ specialized needs, while also well versed with the complexity of international business operations. At the same time, we actively seek to attract and retain talent who can lead and support our rapidly growing organization as we develop and further scale our business. Our compensation program, with its focus on measurable results forMr. Shi joined the Company while being sensitive to market conditions, is a critical tool we use to motivate talentin March 2021, initially as an independent consultant. In June 2021, Mr. Shi was hired as Executive Vice President, Chief Strategy, Growth, and reinforce our commitment to align pay incentives with performance.
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2019 Performance HighlightsTechnology officer, and was subsequently appointed Executive Vice President, Chief Operating Officer in December 2021. Mr. Huang joined the Company as Executive Vice President, Head of Commercial Banking in November 2021.
2021 Business and Financial Performance Highlights
In 2021, we continued to deliver strong and consistent financial performance. The Company achieved record loans of $41.7 billion, and record deposits of $53.4 billion, and assets of $60.9 billion.
We also outperformed peer banks in terms of ROA, ROE, and total shareholder return (“TSR”). The Compensation Committee believes the Company’s 2019 financial performance reflects2021 pay decisions reflected the continued successful alignment between the Company’s financial and organizational objectives and its executive compensation program.
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Our financial performance also outpaced that of other banks on a relative basis. We have maintainedoutperformed peer banks over time. We consistently achieved a consistently higher ROA and ROE for each of the last fivethree years relative to the median ROA and ROE achieved by (i) our compensation peer group described on page 3540 of this Proxy (the “Peer Group”), and (ii) the banks comprising the KBWKeefe, Bruyette and Woods Nasdaq Regional Banking Index (“KRX”). Overall, the Company ranked in the 81st percentile on ROA and 87th percentile on ROE, relative to its Peer Group; and compared to the KRX, the Company ranked in the 82nd percentile on ROA and 94th percentile on ROE for 2019.
In the charts above, median percentiles were used to represent the ROA and ROE year-end performance of the Peer Group and the banks comprising the KRX.1 The Company believes that ROA and ROE are important performance metrics because they measure the return the Company earned on its stockholders’ investment and the resources it deployed.
1 Source: S&P Global Market Intelligence, a division of S&P Global. ROA for years 2015 and 2016, and ROE for years 2015 through 2018, are slightly different from the numbers presented in last year’s proxy statement for the Peer Group and KRX because one peer bank was acquired by another company and excluded from the Peer Group in 2018 and one peer bank revised its historical financial data.
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We view total return to shareholders (“TSR”) as an important performance metric in stockholder value creation because it correlates directly with the Company’s stock price performance and dividends paid, and is therefore aligned with stockholder interests. For 2019, our TSR was below the median TSR achieved by our Peer Group. Stock price performance in 2019 was impacted, in part, by geopolitical tensions between the U.S. and China. The Company remains focused on achieving strong and consistent financial performance with the goal of delivering long-term value for our stockholders.
The graph of total shareholder return assumes that on December 31, 2014, $100 was invested in the Company’s common stock, the Peer Group and the banks comprising the KRX, and that all dividends were reinvested. The information set forth above in the chart titled “Total Shareholder Return” shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that such information to be treated as soliciting material or specifically to be incorporated by reference into a filing under the Securities Act or the Exchange Act.
32Company Results Compared to Peers
Framework and Process for Determining Executive Compensation
Our Compensation Philosophy
We have designed our executive compensation program to attract and retain excellenttalented managers, while also motivatingrewarding them to deliverfor delivering on our key financial and strategic goals. To support this objective,Guiding principles of our executive compensation program include:
Overview of Our Executive Compensation Program
With input from our stockholders, we included critical components in ourhave designed an executive compensation program that aligns pay with measurable achievement of our corporate goals. Our 2021 executive compensation program remained the same as our 2020 structure. The components of each element of our executive compensation program are designed to:described in the table below.
At
The 2021 pay mix for our NEOs highlights the core ofCompany’s commitment to align compensation outcomes to results and underscores our compensation philosophy is aligningof placing significant emphasis on at-risk, performance-based pay. In 2021, 82% of the CEO’s target pay with measurablewas at risk and linked to performance-based outcomes. For the other NEOs excluding Messrs. Huang and Shi, 68% of target pay, on average, was at risk and tied to direct performance and we reinforce this principal by how we structure compensation for our NEOs.results.
Our compensation program benefits from the collective experience of our Compensation CommitteeCompensation-Setting Process and senior management team, who believe these compensation elements provide the proper alignment of incentives for our leaders while ensuring that we can create strong and sustainable stockholder value. Additionally, we meet with key stockholders to discuss their views on executive compensation and solicit feedback on our specific pay program.Roles
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Role of the Compensation Committee Responsibilities
As outlined in our Corporate Governance Guidelines, the Compensation Committee is responsible for developing and overseeing the Company’s executive compensation policies and programs. The goal of the Compensation Committee is to maintain compensation that is competitive within the markets in which we compete for talent, and thatwhich reflects the long termlong-term interests of our stockholders.
The Compensation Committee is responsible for:
The Compensation Committee is responsible for: | |
● Developing the overall compensation strategy and policies for the Company; |
● Developing, evaluating and approving the goals and objectives of the compensation of the CEO; |
● Evaluating and approving the individual compensation, including bonus and equity incentive compensation and perquisites of each of the NEOs; |
● Establishing the guidelines for stock ownership for |
● With input from the Head of Human Resources and Chief Risk Officer, reviewing our incentive compensation programs to evaluate and ensure that none of them encourage excessive risk; |
● Developing and maintaining a balanced compensation strategy of long-term and short-term incentives; |
● Retaining outside advisors, including compensation consultants, to provide professional counsel; |
● Providing reports to the Board on compensation matters. |
Role of the Compensation Committee Resources in Setting PayConsultant
The independent compensation consultant, Meridian Compensation Partners, LLC, reports directly to the Compensation Committee considers several resources, analytical tools and performance measuresadvises the Compensation Committee on trends and issues in determiningexecutive compensation levels, as presented inand provides comparative compensation information for companies with which the chart below:Company competes for talent. The Compensation Committee has the sole authority to retain and oversee the work of the consultants, who do not provide services to Company management. The Compensation Committee evaluates the independence of the consultant annually.
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The Company’s Human Resources Department provides additional analysis, administrative support and counsel as requested by the Compensation Committee. Members of management do not recommend, determine, or participate in Committee discussions related to their individual compensation arrangements. The CEO provides executive compensation recommendations for his direct reports, including the other NEOs, but does not participate in discussions related to his own compensation.
2021 Stockholder Advisory Vote on Executive Compensation
Our compensation policies and practices continue to evolve based on input and correspondence submitted from our stockholders, our review of market practices, our consideration of the independent compensation consultant’s advice, our review of reports issued by proxy advisory firms, and the results of the most recent annual “Say-on-Pay” vote by stockholders.
Approximately 96.7% of the votes cast at our 2021 annual meeting of stockholders approved the Company’s 2020 executive compensation. The Compensation Committee views the high approval percentage as an indication that stockholders were generally satisfied with the executive compensation structure and how it was designed.
The Compensation Committee, with input from its independent compensation consultant, reviews at least annually the composition of peer companies against which the Company evaluates itself for compensation purposes. In determining the composition, financial institutions of comparable asset size were considered, using a combinationthe primary factor with additional consideration of factors and considerations, including but not limited to other financial metrics (marketsuch as market capitalization, and revenues),revenue, geographic locations, competition for talent, and business model, and complexity of operations.
In December 2019,2020, the Compensation Committee approved our 2019 compensation peer group which was identical to our 2018 compensation peer group, and consisted of 24 banks substantiallybank holding companies with similar in market capitalization and asset size as the Company.Company (the “Peer Group”). The Company used the same Peer Group as the prior year for 2021 compensation purposes. Our Peer Group’s total assets, rangeas of December 31, 2021, ranged from $26$30.60 billion to $145$211.4 billion, with a median total asset size of $49.4$66.7 billion. As of December 31, 2019,2021, the median market capitalization of our Peer Group was $6.5$8.4 billion, with a range of $2.9between $3.6 billion to $22.3and $39.8 billion. With
respect to total assets and market capitalization, the Company ranked in the 44th49th percentile and 55th65th percentile, respectively, relative to the Peer Group as of December 31, 2019.2021.
The companies in the Peer Group are as follows:
| ||
BankUnited, Inc.
| Investors Bancorp (Nasdaq: ISBC) | Regions Financial Corporation (NYSE: RF) |
BOK Financial Corporation
| KeyCorp (NYSE: KEY) | Signature Bank (Nasdaq: SBNY) |
Comerica Inc.
|
| SVB Financial Group (Nasdaq: SIVB) |
Commerce Bancshares (Nasdaq: CBSH) | Northern Trust Corporation
| Synovus Financial (NYSE: SNV) |
Cullen/Frost Bancshares (NYSE: CFR) | PacWest Bancorp
| Umpqua Holdings (Nasdaq: UMPQ) |
First Horizon (NYSE: FHN) | People’s United
|
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First Republic Bank (NYSE: FRC) | Popular (Nasdaq: BPOP) | Western Alliance
|
Huntington Bancshares (Nasdaq: HBAN) | Prosperity Bancshares (NYSE: PB) | Zions |
It is important to note that in determining executive compensation, the Compensation Committee does not solely rely on comparative data from the Peer Group. While comparisons can be useful in identifying general compensation trends and overall pay levels, the Compensation Committee recognizes there may be meaningful differences between us and our peer companies. The listing of NEOs, for example, may vary amongst our peer companies, with titles, compensation, and tenure that do not readily track with ours. The Compensation Committee uses the comparison data as a general indicator of market trends in executive compensation but does not use it exclusively to set compensation levels for the CEO or other NEOs. In addition to peer data, the Compensation Committee also reviewsuses salary data from published industry sources. Any compensation decisions also consider individual and company performance, the position and tenure, responsibilities within the Company and other factors to determine total compensation for the NEOs. See “Factors and Steps in Setting Pay”Compensation-Setting Process” below for a more detailed discussion.
For purposes of determining long-term incentive awards, the Compensation Committee and its independent compensation consultant Meridian Compensation Partners, LLC determined it would be appropriate to continue benchmarking to banks in the KRX (the “Long Term“Long-Term Performance Peer Group”). The use of this benchmark compares our performance to a broader index of financial institutions determined by a third party, aligns with our investors’ perspectives and increases the transparency of the Company’s goal setting process by referring to a broader index of financial institutions compiled by a third party.process.
Factors and Steps in Setting PayCompensation-Setting Process
Compensation for the NEOs and certain other executive officers is typically evaluated and set by the Compensation Committee in the first quarter of each year, using the latest available competitive compensation data provided by the independent compensation consultant, peer data, as well as Company business departments and individual performance data. An executive’s compensation is generally established after considering the following factors:
● Competitive pay data for similar jobs and responsibilities in the |
● The Company’s performance against financial |
● The Company’s performance relative to strategic initiatives approved by the Compensation |
● Individual performance and overall contributions; | |
● The business climate, economic conditions and other |
● The results of the most recent “Say-on-Pay” stockholder vote. |
As a rapidly growing organization, we encounter significant competition for top management talent – those individuals with the strategic vision, understanding of specialized industries and the international banking experience necessary to sustain our growth. This challenge to attract and retain qualified personnel has been an important consideration in our compensation decisions, and we expect it will continue to be a significant consideration going forward.
For the CEO, the Compensation Committee annually reviews and approves the corporate goals and objectives relevant to the CEO’s compensation,performance, evaluates the CEO’s performance against those objectives and approves the CEO’s compensation level based on that evaluation. With assistance from the independent compensation consultant, the Compensation Committee also considers the Company’s Peer Group and other peer data on base pay, performance-based bonus targets and long-term incentive awards when setting compensation types and amounts for the CEO.
With input from the independent compensation consultant, theThe Compensation Committee separately reviews and discusses with the CEO his annual compensation recommendations for the other NEOs. A variety of factors help determine the final approved compensation amounts for the NEOs. For base salary adjustments, compensation data from our Peer Group and survey data for similar jobs and job levels are considered. For annual performance-based bonus payout and long-term incentive awards, the Compensation Committee considers the executive’s achievement against performance goals, along with individual contributions toward Company objectives.
The Compensation Committee does not benchmark to a particular percentile in determining target total direct compensation. Rather, it uses market peer proxy and survey data as a reference point, giving consideration to factors such as tenure, individual performance, any unique circumstances of the NEO’s position based on that individual’s responsibilities, market factors, succession considerations, and retention considerations. We believe this approach drives higher realized compensation when our financial and stockholderstock performance is strong and less realized compensation when our financial and/or stockholderstock performance is lower.
Outreach to Stockholders
Our compensation policies and practices continue to evolve based on input from our stockholders, our review of correspondence submitted by stockholders to our Board and management, our review of market practice, our consideration of the advice of the Compensation Committee’s independent compensation consultant, our review of reports issued by proxy advisory firms and the results of the most recent annual “Say-on-Pay” vote by stockholders.
For example, approximately 94.4% of the Company’s stockholders approved the Company’s 2018 executive compensation at the 2019 annual meeting of stockholders. The Compensation Committee views the high stockholder approval percentage as an indication that stockholders were generally satisfied with the executive compensation structure and how it is designed to incentivize our strong financial performance while balancing the risk inherent in our business. In addition to the annual “Say-on-Pay” vote, we meet with key stockholders to discuss their views on executive compensation and to solicit feedback on our specific pay program.
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Primary Elements of Our Executive Compensation Program
With input from our stockholders, we have designed an executive compensation program that aligns pay with measurable achievement of our corporate goals. At the 2019 annual meeting of stockholders, approximately 94.4% of the Company’s stockholders approved the Company’s 2018 executive compensation. Based on the high approval percentage, our 2019 executive compensation program remained substantially similar to our 2018 structure. The components of, and rationale for, each element of our executive compensation program are described in the table below.
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Base Salary
Base salary is a fixed portion of compensation that is based on Peer Groupdelivered in cash to reflect each executive’s role and ongoing performance. NEO base salary data, salary surveys, and an executive’s skills, responsibilities, experience and relative importance to the Company. Actual, total salaries reflect an individual’s responsibilities within the Company, his or her job performance over time and other factors, such as the assessmentlevels are typically reviewed annually by the Compensation Committee (and byand adjusted as appropriate, typically to reflect merit, promotions or changes in responsibilities, or market adjustments. When determining any base salary increases, the CEO,Compensation Committee considers an individual’s total compensation package, his or her performance, Company performance, comparative peer and market compensation data, internal parity, and other relevant factors, including the scope of the executive’s responsibilities relative to peers and other executives, and retention concerns.
Executive | Title | FY2020 Base Salary ($000s) | FY2021 Base Salary ($000s) | % Change |
Dominic Ng | Chairman and CEO | $1,275.0 | $1,275.0 | 0.0% |
Irene H. Oh | Executive Vice President, Chief Financial Officer | $638.6 | $651.4 | +2.0% |
Douglas P. Krause | Vice Chairman, Chief Corporate Officer | $520.0 | $546.0 | +5.0% |
Parker L. Shi | Executive Vice President, Chief Operating Officer | -- | $800.0 | -- |
Nick Huang | Executive Vice President, Head of Commercial Banking | -- | $750.0 | -- |
Performance-Based Bonus Plan
Our NEOs participate in the case of other NEOs) of an executive’s performance.
Company’s Performance-Based Bonus Plan that provides rewards based on annual corporate and individual performance. Each NEO is assigned a bonus target, stated as a percentage of the individual’s annual base salary. Mr. Shi joined the Company in June 2021, and his 2021 actual bonus is pro-rated based on the months of employment. Mr. Huang joined the Company in November 2021 and was not eligible to participate in the annual performance-based bonus in 2021.
The Compensation Committee developed a cash incentive program (the “Performance-Basedthe Performance-Based Bonus Plan”)Plan to motivate and reward executives for achieving critical Company-wide financial metrics and strategic goals (collectively, “Corporate Goals”), and departmental or individual goals. The Corporate Goals are further divided into financial goals and strategic goals as described below. In general, payout fromprogram in 2021 was structured similarly to the Performance-Based Bonus Plan is based onprogram in 2020 with the achievement of a combination of Corporate Goals and individual or departmental goals. However, payout from the Performance-Based Bonus Plan for the CEO is based entirely on the achievement of Corporate Goals. Of the amount in the Performance-Based Bonus Plan attributable to Corporate Goals, financial metrics constitute 70% and the remaining 30% is based on the attainment of the Company’s strategic goals. The bonus plan is structured so that the percentage achieved for the strategic goals cannot exceed the percentage achieved for the financial goals, even if the Company achieved the maximum level of performance for any of the strategic goals.following features:
● Target incentive opportunities are defined as a percentage of base salary and remained the same as in 2020; |
● Corporate Performance was measured 70% based on financial performance and 30% based on strategic goals; and |
● Individual Performance was measured by goals determined for executives (other than the CEO, whose bonus is paid 100% based on corporate performance). |
The 2019 Performance-Based Bonus Plan was structured to balance financial, rewardsstrategic and business risks by including multiple Company performance measures. The Compensation Committee, at its discretion, reserves the right to adjust downward any bonus payments proposedindividual goal weights for an NEO. Actual bonus payments are subject to the Company having satisfied any regulatory capital requirement administered by the federal banking agencies. Amounts paid outeach NEO were determined as bonuses are also subject to our Executive Recovery Policy, which provides for the clawback of executive compensation if certain triggering events occur. See “Clawbacks for Any Restatement; Executive Compensation Recovery Policy” below.follows:
Executive | Title | Target Bonus % of Salary | Corporate Performance | Individual | |
Financial | Strategic | ||||
Dominic Ng | Chairman and CEO | 100% | 70% | 30% | -- |
Irene H. Oh | Executive Vice President, Chief Financial Officer | 80% | 35% | 15% | 50% |
Douglas P. Krause | Vice Chairman, Chief Corporate Officer | 80% | 35% | 15% | 50% |
Parker L. Shi | Executive Vice President, Chief Operating Officer | 100% | 21% | 9% | 70% |
Nick Huang | Executive Vice President, Head of Commercial Banking | n/a | n/a | n/a | n/a |
20192021 Financial Metrics for Performance-Based Bonus
Financial metrics comprisecomprised 70% of the Performance-Based Bonus Plan Corporate Goals. In 2019, those metrics included the Company’s diluted operating earnings per share, growth in total loans and total deposits, cost of deposits, non-performing assets-to-total assets ratio, and net charge-off ratio. On an annual basis, the Company evaluates the performance metrics used, and modifies the metrics and the weightings as deemed appropriate. For 2019,In 2021, the Company updated the metrics to more closely align with its priorities. As the Company entered its second year of navigating the uncertainties arising from COVID, the 2021 financial metrics as well as relativefocused primarily on growing earnings, total loans, and PTPP income while managing domestic cost of deposits and credit quality. The weighting allocations consisted of 55% on growth, including adjusted EPS, PTPP income, and average total loan (excluding PPP), and 45% on deposits cost and credit quality. Specific to the growth metrics, the weightings were revised to reflect the Bank’s focus on deposit costs20% for adjusted EPS, 15% for PTPP income, and maintaining high asset quality:
2019 Financial Metrics Results: Diluted Earnings Per Share
The 2019 financial objective included a 40% weighting based on achieving target diluted operating earnings per share (“Adjusted EPS”) of $5.05, an increase of 8% from 2018. A threshold of 50% achievement would be achieved if Adjusted EPS were at $4.75 per share, with no achievement for Adjusted EPS less than that amount. An Adjusted EPS of at least $5.35 would translate to a maximum achievement of 200%. The target Adjusted EPS goal of $5.05 was determined based on the Company’s annual financial budget for 2019. Our 2019 Adjusted EPS of $4.84 resulted in 65% achievement of this performance goal. When calculating the earnings per share, we have historically excluded the impact of non-recurring items that are non-operating in nature.
Adjusted EPS is a financial measure not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which is referred to as a non-GAAP financial measure. Please refer to the section titled “Item 7. MD&A — Supplemental Information-Explanation of GAAP and Non-GAAP Financial Measures” in our Annual Report on Form 10-K for the reasons why we use this measure and for reconciliations to the most directly comparable measures calculated in accordance with GAAP. Our reported earnings per share in 2019 were $4.61. For 2019, we excluded the $0.23 per share cumulative impact related to the reversal of certain previously claimed tax credits and associated impairment charges related to the Company’s investments in the DC Solar tax credit funds, as previously disclosed in our Annual Report on Form 10-K. This related to a $5.4 million net pre-tax impairment charge (equivalent to $3.8 million after-tax) and $30.1 million in additional income tax expense to reverse certain previously claimed tax credits. (Refer toItem 7. MD&A
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— Results of Operations — Income Taxes in Annual Report on Form 10-K for a more detailed discussion related to the Company’s investment in DC Solar.)
The Company recognizes that EPS growth is an important metric for stockholders to measure the Company’s performance. We believe that including this metric as a performance measurement aligns the interests of management and those of the stockholders. This 2019 EPS goal was challenging as it required the Company to increase EPS for the tenth consecutive year and at a rate above what analysts projected for our Peer Group.
2019 Financial Metrics Results: Growth in Total Loans
The 2019 financial objectives included a 10% weighting based on achieving total loan growth of 9.7%, equivalent to total loans reaching $35.5 billion. A threshold of 50% achievement would be achieved if total loans grew 5.7%, with no achievement(excluding PPP). The balance of the performance metric ifweightings consisted of 15% for YTD domestic cost of deposits and a total of 30% for credit quality of classified loans ratio (15%) and for special loan growth was less than that amount. Total loan growth of at least 13.7% would translate to a maximum achievement of 200%ratio (15%). As of December 31, 2019, total loans were $34.8 billion, representing a growth of 7.4% from 2018, resulting in a 71% achievement of this performance goal.
Net interestFor 2021, target adjusted EPS was set at 25% higher than the actual 2020 adjusted EPS. Target PTPP income is the largest component of revenue for many banks, including our Bank. As such, the ability to grow total loans, and therefore increase net interest income, is an important financial metric by which to measure performance. Our total loan growth of 7.4% in 2019 compares favorably to the median total loan growth for our Peer Group,2021 were set to be 3% and 6% higher, respectively, than 2020 results, which was 5.2%. The Company’s total loan growth in 2019 was broad-based across commercial, consumer, and commercial real estate loans.
2019 Financial Metrics Results: Growth in Total Deposits
The 2019 financial objectives included a 10% weighting based on achieving total deposit growth of 9.8%, equivalent to total deposits reaching $38.9 billion. A threshold of 50% achievement would be achieved if deposits grew 5.8%, with no achievement ofpositioned the performance metric if total deposit growth was less than that amount. Deposit growth of at least 13.8% would translate to a maximum achievement of 200%. As of December 31, 2019, total deposits were $37.3 billion, representing a growth of 5.3% from 2018 and did not meet the threshold established for this goal.
Our Bank recognizes the importance of having a solid deposit base to support our growth objectives while maintaining a reasonable cost of deposits. While we did not meet our threshold this year, our deposit growth of 5.3% was slightly higher than the median deposit growth for our Peer Group, which was 5.0% in 2019.
2019 Financial Metrics Results: Average Cost of Deposits
The 2019 financial objectives included a 10% weighting based on achieving a target average cost of deposits. The average cost of deposits was 0.71% in 2018 and, had increased considerablyCompany at the end of 2018. Accordingly, the Company’s annual financial budget assumed a year-over-year increasetop quartile (ranked in the cost of deposits. The achievement target76th percentile and 82nd percentile, respectively) against the same metrics provided in the Peer Group’s management guidance and outlook for the average2021. YTD domestic cost of deposits was set at 1.04%0.15%, the forecasted amount in the Company’s annual financial budgetcompared to 0.43% as of December 31, 2020. For credit quality, target metrics for 2019. A threshold of 50% achievement wouldclassified loans and special mention loans ratios were set to be achieved ifequivalent to the average cost of deposit increased to 1.13%,ratios for 2020, with no achievement of the performance metric if the weighted cost of deposit exceeded that rate. An average cost of deposit of no more than 0.95% would translate to a maximum achievement of 200%. The full year 2019 average cost of deposit was 1.04%, resulting in a 100% achievement of this performance goal.
2019 Financial Metrics Results: Non-Performing Assets (“NPA”) to Total Assetsthreshold based on both metrics reaching pre-pandemic levels.
The 20192021 financial objectives included a 15% weighting based on achieving an average quarterly NPA-to-total assets ratio of 0.29%. A threshold of 50% achievement would be achieved if the NPA-to-total assets ratio was 0.50%, and no credit would be given if the ratio exceeded that amount. A ratio of no more than 0.25% would translate to a maximum achievement of 200%. Our average quarterly end-of-period NPA-to-total assets ratio was 0.30% in 2019, resulting in a 98% achievement of this performance goal. At 0.30%, our 2019 average NPA-to-total assets ratio was similar to the 2018 ratio of 0.29%.metrics, measured against actual results, are summarized as follows:
2019 Financial Metrics Results: Net Charge-Off Ratio
The 2019 financial objectives included a 15% weighting based on achieving a full year net charge-off ratio of 0.15% in 2019. A threshold of 50% achievement would be achieved if the full year net charge-off ratio was 0.30%, and no credit would be given if the ratio exceeded that amount. A net charge-off ratio of below 0.10% would translate to a maximum achievement of 200%. For the full year 2019, our net charge-off ratio was 0.16%, resulting in a 97% achievement of this performance goal. The 2019 full year net charge-off ratio of 0.16% compared to a 2018 full year net-charge-off ratio of 0.13%.
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Summary Results of Financial Metrics
The table below outlines the financial metrics and actual results for 2019.
Financial Metrics | Weighting | Threshold | Target | Maximum | 2019 Result | Metric Achievement |
Adjusted Earnings per Share (EPS) | 40% | $4.75 | $5.05 | $5.35 | $4.84* | 65% |
Total Loan Growth | 10% | 5.70% | 9.70% | 13.70% | 7.40% | 71% |
Total Deposit Growth | 10% | 5.80% | 9.80% | 13.80% | 5.30% | 0% |
Average Cost of Deposits | 10% | 1.13% | 1.04% | 0.95% | 1.04% | 100% |
Average Quarterly NPA-to-Total Assets | 15% | 0.50% | 0.29% | 0.25% | 0.30% | 98% |
Full Year Net Charge-Off Ratio | 15% | 0.30% | 0.15% | 0.10% | 0.16% | 97% |
Total for Financial Metrics | 73% |
* Our reported earnings per share in 2019 were $4.61. 2019 Adjusted EPS were $4.84, excluding $0.23 per share loss from reversal of certain previously claimed tax credits and the impact of an impairment charge related to the Company’s investments in the DC Solar tax credit funds. Please refer to the section titled “Item 7. MD&A — Supplemental Information-Explanation of GAAP and Non-GAAP Financial Measures” in our Annual Report on Form 10-K for a full reconciliation.
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2019 Strategic Goals for Performance-Based Bonus
The achievement of certain strategic initiatives, which are tied to building the Company’s platform and positioning it for sustained future growth, comprise 30% of the Performance-Based Bonus Plan. The 2019 strategic goals were focused on five equally weighted areas:
2021 Strategic Metrics and Results
In determining the 2021 Performance-Based Bonus payouts for the strategic component, the Compensation Committee evaluated management’s performance in three key strategic areas: Bridge Banking, Operational Excellence, and Leadership Development and Succession Planning.
The Compensation Committee recognizesBoard recognized that strategic goals are not readily quantified in the same way as the financial metrics, and have more inherent subjectivity in their measurement. In light of these considerations, it has been the Compensation Committee’s practice to limit the achievement of strategic goals to no more than the percentage achieved for the financial goals, even if the Company achievedcontinued to invest in our future on technological and digital innovation, recruited and retained top talent, enhanced our cross-border businesses to drive growth, and strengthened our risk and control environment. By prioritizing the maximum leveldevelopment of performance for any ofa comprehensive executive leadership program, the strategic goals.Company created a highly effective management development initiative and a rigorous talent review process that identifies and retains top talent.
2019 Results of Strategic Goals
Bridge Banking | ● Managed leadership transition in our China subsidiary and our bridge banking business leadership; and ● Improved financial performance in China and Hong Kong, and increased cross-border business and revenue in U.S., China and Hong Kong. |
Operational Excellence | ● The Company capitalized on profitable opportunities by accelerating our digital and geographical footprints, while continuing to focus on prudent risk management and pandemic health/safety; ● Expanded the digital platform adoption for consumer customers by increasing the number of active customers using online banking and/or digital app; ● Strengthened risk management by implementing credit culture named “ACCRUES” across credit supervision team and frontline business units. Substantially improved collaboration and process improvement between credit team and frontline teams; ● Accelerated expansion of footprint outside of California; and ● Effectively managed a smooth return-to-office arrangement and kept the workforce productive throughout 2021. |
Leadership Development and Succussion Planning | ● Continued to develop leaders at the most senior level and created talent program to accelerate the development of top talent; and ● Recruited new leaders in key positions |
At its March 20202022 meeting, the Compensation Committee approved the achievement of the executive team’s efforts at 108% for this component.
2021 Individual Metrics
The Board considered that under Mr. Ng’s leadership, the Company continued to build upon its strong financial momentum from prior years. In 2021, the Company achieved record earnings of $6.10 per diluted share, up by 54% from the previous year, record net income of $873 million, record revenue of $1.8 billion, assets of $60.9 billion, record loans of $41.7 billion, and record deposits of $53.4 billion. In addition, the Company reported a return on average assets of 1.47%, return on average equity of 15.7%, and return on average tangible equity of 17.2% for 2021, as well as delivered three-year TSR of 22% compared to the Peer Group’s 13% and KRX’s 14%. For its financial results, the Company was ranked No. 1 performing bank among the 300 largest publicly traded U.S. banks by Bank Director scorecard. The Board recognized that under Mr. Ng’s leadership, the Company continues to deploy bridge banking strategy, invest in consultation withour technological and digital transformation, improve operational excellence, strengthen our risk and control environment, and actively promote leadership development and retain top talent.
For the CEO, made an assessmentother NEOs, the Compensation Committee concluded as follows: (i) Ms. Oh continued to whetherlead the finance functions, including accounting, financial planning and analysis, investor relations, treasury, tax and facilities; further, she also led fee
income business units, including foreign exchange, derivative contracts, and cash management; (ii) Mr. Krause provided leadership in credit management, strengthened credit culture, and significantly improved asset quality in 2021 while supporting strong loan growth; he also led compliance, CRA efforts, external relations, and security; (iii) Mr. Shi led corporate development strategy and alignment, directed technology transformation in the consumer banking units, and oversaw day-to-day operations across the Company; and (iv) Mr. Huang joined the Company in late 2021 and did not have individual goals in 2021.
2021 Performance-Based Bonus for NEOs
After taking into account the Company’s financial and strategic goals were achieved. The achievement of each goal was measured and the level of achievement established. After discussion with the CEO,performance, the Compensation Committee determined that the overall achievementNEOs had a payout of strategic goals was at 89%. However, the Compensation Committee limited the achievement of strategic goals to no more than the percentage achieved171% for the financial goals. Ascorporate component, which consisted of a result, the final achievement of strategic goals used198% payout for Performance-Based Bonus calculation was capped at 73%, consistent with the Company’s achievement of financial goals.
Performance-Based Bonus for NEOs
In 2019, using the above discussed performance goals, the Company achieved 73% of the target Corporate Goals, consisting of 73% achievement of the financial metrics (70% weighting) and 73% achievement ofa 108% payout for the strategic metrics (30% weighting). Payouts for the individual component (excluding the CEO) ranged from 89% to 95%. Overall payouts (excluding the CEO) ranged from 118% to 132%.
All NEOs exceptFor 2021, each NEO was awarded the CEO, were additionally evaluated based on individual and departmental goals as part of their 2019 Performance-Based Bonus Plan. For the Chief Financial Officer (“CFO”) and the General Counsel and Corporate Secretary, 50% of their performance-based bonus amounts set forth in the table below. Mr. Shi joined the Company in June 2021, and his 2021 actual bonus payout amount was pro-rated based on the achievementmonth of employment. Mr. Huang joined the Corporate Goals as described aboveCompany in November 2021 to oversee commercial lending and 50%operations in Asia. Because he joined late in the year, he was based on individual and department goals. Fornot eligible to participate in the Head of International and Commercial Banking and Head of Consumer Banking and Digital Banking, 30% of theirannual performance-based bonus was based on the achievement of the Corporate Goals and 70% was based on individual and department goals. Individual and departmental goals vary by individual and are set by the CEO, in conjunction with the Compensation Committee.2021.
Target Weightings | 2021 Payout (as a % of Target) | ||||||||
Executive | Target Bonus as % Salary | Corporate Performance | Individual | Corporate Performance | Individual | Total Payout | |||
Financial | Strategic | Financial | Strategic | ||||||
Dominic Ng | 100% | 70% | 30% | - | 198% | 108% | - | 171% | |
Irene H. Oh | 80% | 35% | 15% | 50% | 198% | 108% | 89% | 130% | |
Douglas P. Krause | 80% | 35% | 15% | 50% | 198% | 108% | 94% | 132% | |
Parker L. Shi | 100% | 21% | 9% | 70% | 198% | 108% | 95% | 118% | |
Nick Huang | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a |
Long-Term Incentive (“LTI”) Awards
LTI Awards
LTI awards are compensation awards designed to tiealign the compensation of our executive officers to stockholder returns. These awards are generally granted as stock in the first quarter of each year, allowing the Compensation Committee adequate time to evaluate prior year performance. When determining the annual LTI awards tofor our executive officers, the Compensation Committee believes it is important to take into account not only the grant date values included in the “Summary Compensation Table,”, but also to consider the effect of the year-end value of our stock on those awards over time. The timing of the grants generally follows the filing of the Company’s annual reportsreport on Form 10-K and occurs before the start of the Company’s “blackout period,” during which insiders may not engage in Company stock transactions. LTI awards areissued in 2021were granted under the Company’s 2016 Stock Incentive Plan, as amended (the “2016 Stock Incentive Plan”), which is the Company’s current omnibus stockholder-approved plan for equity awards to employees.
One hundred percentagepercent of the value of LTI awards granted to our NEOs is made through performance-based RSUs.restricted stock units (“PSUs”). Awards are subject to athree one-year performance period of three (3) yearsperiods (for example, January 1, 20192021, through December 31, 2021, January 1, 2022, through December 31, 2022, and January 1, 2023, through December 31, 2023, for awards granted in 2019)2021), and are payable at the end of the three-year period. Each year, an NEO mayis eligible to earn a “target” amountnumber of RSUsPSUs equal to one third of the total RSUs granted.PSUs granted based on actual performance. As described below, however, the actual number of RSUs
PSUs earned may be higher or lower than the target
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amount. Depending amount depending on the Company’s financial performance that year relative to the Long TermLong-Term Performance Peer Group, which is defined as the banks in the KRX, theKRX. The actual number of RSUsPSUs earned in a year can range from 0% to 200% of the target RSUs.PSUs. The Compensation Committee believes this practice further aligns our compensation program with industry best practices for LTI awards and reflects an appropriate balance between financial reward and long-term performance.
The financial performance metrics we use for the LTI award – ROA, ROE and TSR – are common indicators of value creation and serve to focus management’s attention on enhancing results in these areas. ROE is a direct measurement of the return on capital. The Company believes that for long-term strategy and sustainability, ROA is an important and prudent metric, reflecting the Company’s ability to execute on its long term business model. TSR measures the movement of the Company’s stock price and dividends paid over time. The TSR metric underscores the connection between executive pay and stockholder interests by measuring our ability to provide a greater return to our stockholders than our competitors.
We set the “target” level of RSUs that could be earned in a given year at the median, or 50th percentile, of the ROA, ROE and TSR ratios of the Long Term Performance Peer Group. We believe these are challenging goals because of strong competition within the Long Term Performance Peer Group. The actual RSUs that are earned in a given year may be higher or lower than the target amount of RSUs if performance is better (or worse) relative to the Long Term Performance Peer Group. ROA, ROE and TSR ratios of less than the 50th percentile will proportionately reduce the amount of RSUs earned in that year, and no RSUs are earned if the ratios put the Company at less than the 30th percentile of the Long Term Performance Peer Group. A maximum of 200% award relative to the “target” level of RSUs will be earned for performance at or above the 80th percentile, and the award is prorated between 100% and 200% for performance between the 50th and 80th percentiles. The table below illustrates the relative weighting assigned to each financial metric and the performance required to achieve payouts.
Metric | Weighting | Threshold (50% payout) | Target (100% payout) | Maximum (200% payout) |
ROA | 37.5% | 30thpercentile | 50thpercentile | >=80th percentile |
ROE | 37.5% | 30thpercentile | 50thpercentile | >=80th percentile |
TSR | 25% | 30thpercentile | 50thpercentile | >=80th percentile |
In determining the amount of equity awards granted to each NEO, the Compensation Committee considers its overall long-term incentive guidelines for all NEOs, while taking into account the competitive market for executive talent, and the benefits of incentive compensation tied to performance of the Company’s common stock. As described above, the Compensation Committee also considers the Company’s financial performance relative to the Long-Term Performance Peer Group in determining the actual number of PSUs awarded in a particular year. In 2020, the Company’s ROA and ROE of 1.16% and 11.17% respectively, were above the 2020 median ROA and ROE of 0.90% and 7.70% respectively, for the Long-term Performance Peer Group, and ranked 80th percentile and 92nd percentile relative to the Long-term Performance Peer Group. The Company’s TSR in 2020 ranked 94th percentile relative to the Long-term Performance Peer Group. Taking into account the various factors above, the Compensation Committee approved the 2021 LTI awards for each NEO, which are summarized in the table below. The Company calculates the aggregate grant date fair value of awards as of the date of grant in accordance with the same standard it applies for financial accounting purposes. Consistent with SEC regulations,In addition to their annual PSUs, Messrs. Ng and Krause and Ms. Oh were each granted an award of 30 RSUs on February 12, 2021, as part of the grant date fair valueSpirit of 2019 LTI award equity grants for the NEOs are presented in the “Summary Compensation Table” and “Grants of Plan-Based Awards” table below. Total outstanding unexercised or unvested LTI grants are shown in the “Outstanding Equity Awards at Fiscal Year End” table below.Ownership Program. (1)
2019 Pay Mix for NEOsUpon joining the Company, Mr. Parker received a sign-on grant of 4,305 RSUs on June 14, 2021, and an additional grant of 13,237 RSUs on December 1, 2021, in connection with his appointment to Executive Vice President, Chief Operating Officer. Upon joining the Company, Mr. Huang received a sign-on grant of 3,573 RSUs on November 15, 2021.
NEO | 2021 Target PSUs | 2021 RSUs |
Dominic Ng | 65,194 | 30 |
Irene H. Oh | 10,294 | 30 |
Douglas P. Krause | 8,922 | 30 |
Parker L. Shi | 0 | 17,542 |
Nick Huang | 0 | 3,573 |
PSU Payouts
The finalPSUs awarded in 2019 pay mixhad three one-year performance periods, with the last performance period ending on December 31, 2021. The Compensation Committee determined that the PSUs paid out at 150% for our NEOs highlights2019, 199.4% for 2020, and 196.9% for 2021 of target based on the Company’s commitmentperformance for ROA (37.5% weighting), ROE (37.5% weighting), and TSR (25% weighting) relative to align compensation outcomesthe Long-Term Performance Peer Group. Please refer to results,the Option Exercises and underscores our compensation philosophyStock Vested table on
(1) | The Spirit of Ownership Program applies to all employees of the Company and was launched in 1998 with the premise that each employee is a shareholder, with a vested stake in the Companyfs long]term success, growth and profitability. |
page 55 for the number of placing significant emphasisshares each NEO earned. Messrs. Shi and Huang joined the Company in 2021 and did not participate in the 2019-2021 PSU program.
The PSUs awarded in 2020 have three one-year performance periods. The first two performance periods ended on at-risk, performance-based pay. In 2019, over 80%December 31, 2020 and December 31, 2021, respectively. The Compensation Committee determined that the PSUs were earned at 199.4% of target in 2020 and 196.9% of target in 2021 based on the Company’s performance for ROA (37.5% weighting), ROE (37.5% weighting), and TSR (25% weighting) relative to the Long-Term Performance Peer Group. The last performance period ends on December 31, 2022. Earned shares will not be payable until the end of the CEO’s target pay wasthird year.
The PSUs awarded in 2021 have three one-year performance periods. The first performance period ended on December 31, 2021. The Compensation Committee determined that the PSUs were earned at risk and linked to performance-based outcomes. For the other NEOs, a range of 54% to 68%196.9% of target pay (on average, 63%) was at riskin 2021 based on the Company’s performance for ROA (37.5% weighting), ROE (37.5% weighting), and tiedTSR (25% weighting) relative to directthe Long-Term Performance Peer Group. The second and last performance results.periods end on December 31, 2022 and December 31, 2023, respectively. Earned shares will not be payable until the end of the third year.
Retirement Programs and Perquisites
Our NEOs receive the same customary benefits as all other employees, including medical, dental, life, disability, vacation cash-out, and a 401(k) Plan, (the “401(k) Plan”) which includes company matching contributions. The NEOs are eligible to participate in the same plans and to the same extent as most other salaried employees. Employees are allowed to cash out their earned vacation once a year if they metmeet both vacation usage and time away from work requirements set by the Company. The Company maintains a non-qualified deferred compensation plan (“Deferred Compensation Plan”) to help attract and retain executives and key employees. One NEO, Mr. Yen, participated in the Deferred Compensation Plan in 2019. Our Deferred Compensation Plan provides NEOs and other key employees the opportunity to defer a specified percentage of their annual base salary and/or their bonus under the annual cash bonus plan (in each case, up to 80%). In 2021, one NEO, Mr. Shi, participated in the Deferred Compensation Plan. The deferred amounts are credited to a participant’s account and are immediately vested. Amounts in a participant’participant’s account are then hypothetically or “notionally” invested in one or more investment funds selected by such participant, with gains or losses adjusted based on the rate of return on the assets in each notional investment fund. The available investment funds used to track such notional investment returns are substantially the same as those offered under our 401(k) Plan. Returns on participant contributions are not guaranteed. The Company has the discretion to make contributions to the Deferred Compensation Plan on behalf of its participants. In 2019,2021, the Company did not make any such contributions to the Deferred Compensation Plan.
In general, the NEOs do not have different or greater benefits than other employees with the exception of financial planning services, and the use of a Company-owned car for the CEO, and an automobile allowance for the Head of International and Commercial Banking. The financial planning services are intended to help ensure compliance by the CEO with all applicable tax and regulatory requirements. For certain executives, the use of a company car and automobile allowance are permitted in recognition of their extensive business-related travel. The Compensation Committee reviews the perquisites provided to the NEOs annually as part of their overall review of executive compensation. Based on a review of competitive pay data provided by its external independent compensation consultant, the Compensation Committee determined that the perquisites provided in 20192021 are within an appropriate range of competitive compensation practices relative to our Peer Group. Details about the NEOs perquisites, including the cost to the Company, are shown in the “Summary Compensation Table” under the “All“All Other Compensation”Compensation” column on page 5052 together with the accompanying footnotes.
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2019 Compensation Decisions for Named Executive Officers
With input from its compensation consultant, the Compensation Committee considered the following contributions and achievements in determining the 2019 compensation for the NEOs. Performance-based bonus awards were based on the financial performance of 2019 and paid to the NEOs in March 2020.
The Compensation Committee’s determination of each of these matters was based on the recommendation of the CEO (except in the case of his own compensation), the parameters established by the NEO’s employment agreement, if applicable, and the factors described below. In addition, in determining equity awards, the Compensation Committee considered its overall long-term incentive guidelines for all executive officers, which attempt to balance in the context of the competitive market for executive talent, the benefits of incentive compensation tied to performance of the Company’s common stock with the dilutive effect of equity compensation awards.
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1 Forbes article dated January 22, 2020
2 See reconciliations of non-GAAP measures presented in our Annual Report on Form 10-K, “Item 7. MD&A - Supplemental Information - Explanation of GAAP and Non-GAAP Financial Measures.”
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Other Compensation Policies and Information
In addition to adhering to the processes described in the preceding sections, the Compensation Committee maintains a strong corporate governance culture with respect to executive compensation. Over the years, it has adopted policies, including those described below, to further align executive compensation with performance and what the Company believes is in the best interest of the stockholders.
Stock Ownership Guidelines
The Company maintains the following stock ownership and holding guidelines for our NEOs and they are reviewed periodically by the Nominating/Corporate Governance Committee.
CEO | 6x annual base salary |
NEOs (other than CEO) | 1x annual base salary |
NEOs have additional holding requirements for stock acquired as part of their compensation. NEOs shall hold until retirement at least 51% of any stock acquired upon the exercise of stock options (net of taxes and net of the grant price paid) and at least 51% of any stock received upon vesting (net of taxes) of restricted stock or RSUs.
The Nominating/Corporate Governance Committee reviews compliance with the guidelines annually, and all NEOs met the stock ownership and holding guidelines for 2021.
Clawbacks for Any Restatement; Executive Compensation Recovery Policy
The Company has adopted an Executive Compensation Recovery Policy for our NEOs, which was approved by the Compensation Committee in 2012. Under this policy, all annual performance-based bonus payments and annual LTI awards that are based upon the Company’s financial performance may be subject to clawback in the event of a restatement of the Company’s financial statements. The clawback will be required without regard tofor the reason forof the restatement, and the affected officers will be required to repay the Company the amount of any incentive payment or incentive award received in excess of what would have been paid based on the restated numbers.
Trading Restrictions; No Hedging or Pledging of Common Stock
As provided in the Company’s Insider Trading Policy, it is against Company policy for any employee, including any executive officer, to engage in speculative transactions in Company securities, which include but are not limited to trades in puts or calls in Company securities or selling Company securities short. In addition, under our Insider Trading Policy, it is against Company policy for NEOs to pledge shares of common stock in the Company for any purpose.
No Tax Gross Ups
We do not provide for any tax gross ups of excise or other taxes on severance payments or in connection with a change in control.
Compensation Program Risk Analysis
The Compensation Committee reviews the Company’s compensation policies and practices for our NEOs and other employees. The Compensation Committee has determined that our incentive compensation programs are not reasonably likely to have a material adverse effect on the Company. To conduct this review, the Company annually completes an inventory of its incentive compensation plans and policies. This evaluation covers a wide range of practices and policies including: the balanced mix between pay elements, short termelements; short-term and long term programs,long-term programs; caps on incentive payouts,payouts; governance controls in place to establish, review and approve goals,goals; use of multiple performance measures,measures; Compensation Committee discretion on individual awards,awards; use of Stock Ownership Guidelines,Guidelines; use and provisions in severance/change of control policies,policies; use of the Executive Compensation Recovery Policy, and Compensation Committee oversight of compensation programs.
The Compensation Committee, also evaluated, along with the independent compensation consultant, determined that the Company’s Chief Risk Officer,compensation programs do not create risks that are reasonably likely to have a material adverse effect on the conformity of the criteria and targets of our compensation program with the risk profile of the Company and whether the proposed goals or the structure of the awards might have the inadvertent effect of encouraging excessive risk or other undesirable behavior.Company.
Report by Compensation Committee
The following Compensation Committee Report is not deemed to be “soliciting material,” or to be “filed” with the SEC and is not to be incorporated by reference in any other filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except tothe extent the Company specifically incorporates this Report into any such filing by reference.
The Compensation Committee has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis. Based upon this review and our discussions, the East West Bancorp, Inc. Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and be incorporated by reference in its Annual Report on Form 10-K for the year ended December 31, 2019.2021.
THE COMPENSATION COMMITTEE | |
Jack C. Liu, Chairman Molly Campbell Lester M. Sussman |
Jack C. Liu, ChairmanSummary Compensation Table
Molly Campbell
Herman Y. Li
The NEOs only receive compensation for services as executive officers and employees of the Bank, and no separate compensation is paid for their services to the Company. The table below and the accompanying footnotes summarize the 2019, 2018,2021, 2020, and 20172019 compensation for the NEOs:
Summary Compensation TableNEOs.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All O ther Compensation($)(4) | Total ($) | |||||||||||||||||||||||||||
Dominic Ng | 2019 | 1,262,308 | - | 5,100,074 | - | 930,750 | - | 120,109 | 7,413,241 | |||||||||||||||||||||||||||
Chairman and Chief | 2018 | 1,200,000 | - | 4,670,788 | - | 1,621,200 | - | 95,696 | 7,587,684 | |||||||||||||||||||||||||||
Executive Officer | 2017 | 1,165,385 | - | 4,146,023 | - | 2,067,600 | - | 55,076 | 7,434,084 | |||||||||||||||||||||||||||
Irene H. Oh | 2019 | 608,154 | - | 822,634 | - | 400,644 | - | 14,985 | 1,846,416 | |||||||||||||||||||||||||||
Executive Vice President, | 2018 | 534,423 | 200,000 | 728,291 | - | 495,220 | - | 41,029 | 1,998,963 | |||||||||||||||||||||||||||
Chief Financial Officer | 2017 | 454,808 | - | 362,815 | - | 429,962 | - | 12,150 | 1,259,735 | |||||||||||||||||||||||||||
Catherine Zhou | 2019 | 666,200 | - | 502,067 | - | 600,073 | - | 64,550 | 1,832,890 | |||||||||||||||||||||||||||
Executive Vice President, | 2018 | 650,000 | - | 554,554 | - | 675,480 | - | 5,875 | 1,885,909 | |||||||||||||||||||||||||||
Head of Consumer Banking and Digital Banking | 2017 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Douglas P. Krause | 2019 | 496,615 | - | 617,481 | - | 324,400 | - | 32,984 | 1,471,481 | |||||||||||||||||||||||||||
Executive Vice President, | 2018 | 469,615 | - | 520,791 | - | 434,419 | - | 29,856 | 1,454,681 | |||||||||||||||||||||||||||
General Counsel and Corporate Secretary | 2017 | 412,212 | - | 362,815 | - | 407,946 | - | 10,255 | 1,193,228 | |||||||||||||||||||||||||||
Andy Yen | 2019 | 431,294 | - | 309,751 | - | 176,132 | �� | - | 32,273 | 949,450 | ||||||||||||||||||||||||||
Executive Vice President, | 2018 | 411,698 | - | 240,641 | - | 219,335 | - | 39,357 | 911,031 | |||||||||||||||||||||||||||
Head of International and Commercial Banking | 2017 | 404,135 | - | 295,413 | - | 199,868 | - | 38,794 | 938,210 |
Name and Principal Position | Year | Salary ($) | Bonus ($) (4) | Stock Awards | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) (3) | Total ($) | ||||||||
Dominic Ng | 2021 | $1,275,000 | - | $5,065,596 | - | $2,181,270 | $127,306 | $8,649,172 | ||||||||
Chairman and Chief | 2020 | 1,275,000 | - | 4,487,082 | - | 1,034,025 | 137,668 | 6,933,775 | ||||||||
Executive Officer | 2019 | 1,262,308 | - | 5,100,074 | - | 930,750 | 120,109 | 7,413,241 | ||||||||
Irene H. Oh | 2021 | 649,358 | - | 801,528 | - | 677,818 | 15,555 | 2,144,259 | ||||||||
Executive Vice President | 2020 | 635,524 | - | 749,529 | - | 414,324 | 22,012 | 1,821,389 | ||||||||
and Chief Financial Officer | 2019 | 608,154 | - | 822,634 | - | 400,644 | 14,985 | 1,846,417 | ||||||||
Douglas P. Krause | 2021 | 541,900 | - | 694,926 | - | 578,542 | 25,150 | 1,840,518 | ||||||||
Vice Chairman and Chief | 2020 | 516,692 | - | 560,159 | - | 439,088 | 41,932 | 1,557,871 | ||||||||
Corporate Officer | 2019 | 496,615 | - | 617,481 | - | 324,400 | 32,984 | 1,471,480 | ||||||||
Parker L. Shi | 2021 | 400,769(5) | 150,000 | 1,300,071 | - | 519,520 | 392,367 | 2,762,727 | ||||||||
Executive Vice President | 2020 | - | - | - | - | - | - | - | ||||||||
and Chief Operating Officer | 2019 | - | - | - | - | - | - | - | ||||||||
Nick Huang | 2021 | 100,962(5) | 518,750 | 300,061 | - | - | 84,751 | 1,004,524 | ||||||||
Executive Vice President and Head of Commercial | 2020 | - | - | - | - | - | - | - | ||||||||
Banking | 2019 | - | - | - | - | - | - | - |
(1) | Represents the aggregate grant date fair values of the RSUs and performance-based RSUs granted in |
(2) | Represents incentive compensation earned under our Performance-Based Bonus Plan in |
(3) |
Includes: for Mr. |
(4) | Includes: Mr. Shi’s sign-on bonus of $150,000; Mr. Huang’s sign-on bonus of $400,000 and discretionary bonus of $118,750. |
(5) | Mr. Shi and Mr. Huang’s 2021 salary reflect the actual days employed by the Company. |
The table below summarizes all plan-based awards granted by the Compensation Committee to the NEOs in 2019:2021.
Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Award ($) Units(3) (#) | Grant Date Fair Value of Equity(4) | |||||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (3) (#) | Grant Date Fair Value of Stock Award ($) (4) | |||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target | Maximum (#) | ||||||||||||||||||||||||||||||||||||
Dominic Ng | 2/4/2019 | 39 | 2,022 | 02/12/2021 | 30 | 2,015 | ||||||||||||||||||||||||||||||||||||||||||||
3/6/2019 | 637,500 | 1,275,000 | 2,550,000 | 46,650 | 93,299 | 186,598 | - | 5,098,052 | 03/04/2021 | 637,500 | 1,275,000 | 2,550,000 | 32,597 | 65,194 | 130,388 | - | 5,063,581 | |||||||||||||||||||||||||||||||||
Irene H. Oh | 2/4/2019 | 39 | 2,022 | 02/12/2021 | 30 | 2,015 | ||||||||||||||||||||||||||||||||||||||||||||
3/6/2019 | 248,000 | 496,000 | 992,000 | 7,509 | 15,018 | 30,036 | - | 820,612 | ||||||||||||||||||||||||||||||||||||||||||
Catherine Zhou | 2/4/2019 | 39 | 2,022 | |||||||||||||||||||||||||||||||||||||||||||||||
3/6/2019 | 334,750 | 669,500 | 1,339,000 | 4,694 | 9,387 | 18,774 | 9,387 | 500,045 | ||||||||||||||||||||||||||||||||||||||||||
03/04/2021 | 260,549 | 521,098 | 1,042,195 | 5,147 | 10,294 | 20,588 | - | 799,513 | ||||||||||||||||||||||||||||||||||||||||||
Douglas P. Krause | 2/4/2019 | 39 | 2,022 | 02/12/2021 | 30 | 2,015 | ||||||||||||||||||||||||||||||||||||||||||||
3/6/2019 | 200,000 | 400,000 | 800,000 | 5,632 | 11,264 | 22,528 | - | 615,459 | 03/04/2021 | 218,400 | 436,800 | 873,600 | 4,461 | 8,922 | 17,844 | - | 692,911 | |||||||||||||||||||||||||||||||||
Parker L. Shi | 06/14/2021 | 4,305 | 300,015 | |||||||||||||||||||||||||||||||||||||||||||||||
12/01/2021 | 13,237 | 1,000,055 | ||||||||||||||||||||||||||||||||||||||||||||||||
Andy Yen | 2/4/2019 | 39 | 2,022 | |||||||||||||||||||||||||||||||||||||||||||||||
3/6/2019 | 108,750 | 217,500 | 435,000 | 2,816 | 5,632 | 11,264 | 307,729 | |||||||||||||||||||||||||||||||||||||||||||
Nick Huang | 11/15/2021 | 3,573 | 300,061 |
(1) | These grants show the potential payment for our NEOs under our formula-based Performance-Based Bonus Plan. Additional information regarding the Performance-Based Bonus Plan is discussed in the section |
(2) | Represents performance-based RSUs that cliff vest on March |
(3) |
(4) | The assumptions applied in determining the grant date fair value are the same as those set forth in footnote 1 to the “Summary Compensation Table”above. |
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The table below sets forth the outstanding equity awards held by the NEOs as of December 31, 2019.2021. There were no outstanding option awards held by NEOs as of December 31, 2019.2021. With the exception of (i) the broad-based employee RSUs granted on February 16, 20184, 2019, January 24, 2020, and February 4, 2019,12, 2021 as part of the all-employee Spirit of Ownership Program, (ii) Mr. Shi’s sign-on and additional RSUs granted in 2021 and (iii) Mr. Huang’s sign-on RSUs granted in 2021, all of the outstanding equity awards are performance-based awards with payouts that depend on the outcome of the performance criteria and the price of the Company’s common stock on the award certification date. The performance-based awards have a term of three years and will vest based on the achievement of the applicable performance criteria.
Outstanding Equity Awards at Fiscal Year-End
Stock Awards | Stock Awards | ||||||||||||||||||||||||||
Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | Grant Date | Number of Shares or Units of Stock That Have | Market Value of Shares or Units of Stocks That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2) | |||||||||||||||||
Dominic Ng | 3/2/2017 | 122,102 | (3) | 5,946,367 | - | - | 02/04/2019 | 39 | (3) | 3,069 | - | - | |||||||||||||||
2/16/2018 | 30 | (4) | 1,461 | - | - | 03/06/2019 | 169,882 | (4) | 13,366,316 | - | - | ||||||||||||||||
3/8/2018 | 66,578 | (6) | 3,242,349 | 44,386 | (5) (6) | 2,161,598 | 01/24/2020 | 41 | (3) | 3,226 | - | - | |||||||||||||||
2/4/2019 | 39 | (4) | 1,899 | - | - | 03/04/2020 | 148,892 | (5) | 11,714,823 | 75,151 | (5) (7) | 5,912,881 | |||||||||||||||
3/6/2019 | 46,650 | (7) | 2,271,855 | 124,399 | (5) (7) | 6,058,231 | 02/12/2021 | 30 | (3) | 2,360 | - | - | |||||||||||||||
03/04/2021 | 42,784 | (6) | 3,366,245 | 86,926 | (6) (7) | 6,839,338 | |||||||||||||||||||||
Irene H. Oh | 3/2/2017 | 10,685 | (3) | 520,360 | - | - | 02/04/2019 | 39 | (3) | 3,069 | - | - | |||||||||||||||
2/16/2018 | 30 | (4) | 1,461 | - | - | 03/06/2019 | 27,346 | (4) | 2,151,583 | - | - | ||||||||||||||||
3/8/2018 | 10,357 | (6) | 504,386 | 6,905 | (5) (6) | 336,274 | 01/24/2020 | 41 | (3) | 3,226 | - | - | |||||||||||||||
2/4/2019 | 39 | (4) | 1,899 | - | - | 03/04/2020 | 24,816 | (5) | 1,952,523 | 12,526 | (5) (7) | 985,546 | |||||||||||||||
3/6/2019 | 7,509 | (7) | 365,688 | 20,024 | (5) (7) | 975,169 | 02/12/2021 | 30 | (3) | 2,360 | - | - | |||||||||||||||
03/04/2021 | 6,756 | (6) | 531,562 | 13,726 | (6) (7) | 1,079,962 | |||||||||||||||||||||
Catherine Zhou | 10/2/2017 | 33,135 | (4) | 1,613,675 | - | - | |||||||||||||||||||||
2/16/2018 | 30 | (4) | 1,461 | - | - | ||||||||||||||||||||||
3/8/2018 | 8,175 | (6) | 398,123 | - | - | ||||||||||||||||||||||
2/4/2019 | 39 | (4) | 1,899 | - | - | ||||||||||||||||||||||
3/6/2019 | 4,694 | (7) | 228,598 | 12,516 | (5) (7) | 609,529 | |||||||||||||||||||||
Douglas P. Krause | 3/2/2017 | 10,685 | (3) | 520,360 | - | - | 02/04/2019 | 39 | (3) | 3,069 | - | - | |||||||||||||||
2/16/2018 | 30 | (4) | 1,461 | - | - | 03/06/2019 | 20,510 | (4) | 1,613,727 | - | |||||||||||||||||
3/8/2018 | 7,398 | (6) | 360,283 | 4,932 | (5) (6) | 240,188 | 01/24/2020 | 41 | (3) | 3,226 | - | - | |||||||||||||||
2/4/2019 | 39 | (4) | 1,899 | - | - | 03/04/2020 | 18,530 | (5) | 1,457,940 | 9,353 | (5) (7) | 735,894 | |||||||||||||||
3/6/2019 | 5,632 | (7) | 274,278 | 15,019 | (5) (7) | 731,425 | 02/12/2021 | 30 | (3) | 2,360 | - | - | |||||||||||||||
03/04/2021 | 5,856 | (6) | 460,750 | 11,896 | (6) (7) | 935,977 | |||||||||||||||||||||
Andy Yen | 3/2/2017 | 8,700 | (3) | 423,690 | - | - | |||||||||||||||||||||
Parker L. Shi | 06/14/2021 | 4,305 | (3) | 338,717 | - | - | |||||||||||||||||||||
2/16/2018 | 30 | (4) | 1,461 | - | - | 12/01/2021 | 13,237 | (3) | 1,041,487 | - | - | ||||||||||||||||
3/8/2018 | 3,403 | (6) | 165,726 | 2,269 | (5) (6) | 110,500 | |||||||||||||||||||||
2/4/2019 | 39 | (4) | 1,899 | - | - | ||||||||||||||||||||||
3/6/2019 | 2,816 | (7) | 137,139 | 7,510 | (5) (7) | 365,737 | |||||||||||||||||||||
Nick Huang | 11/15/2021 | 3,573 | (3) | 281,124 | - | - |
(1) | Represents grants of performance-based RSUs. The vesting of the performance-based RSUs is subject to meeting the three-year service condition from the grant date and pre-established performance goals in each of the three years ending December 31 of the respective |
(2) | The amounts shown represent the number of shares or units shown in the column immediately to the left multiplied by the closing price on December 31, |
(3) |
Reflects RSUs that will cliff vest three years from the date of grant, assuming that the employee remains employed through such |
(4) | This equity granted on March 6, 2019 cliff vested on March 6, 2022. |
(5) | This equity RSU granted on March 4, 2020 cliff vests on March 4, 2023, assuming that the employee remains employed through such date. |
(6) | This equity granted on March 4, 2021 cliff vests on March 4, 2024, assuming that the employee remains employed through such date. |
(7) | Reflects the maximum potential payout, but the actual number of shares ultimately paid out may vary from the amount shown on the table, with the possibility of payout, ranging from no payout to maximum payout depending on the outcome of the performance criteria. |
The following table summarizes, for the NEOs, the option exercises and stock awards vested during 2019.2021. The amounts reflected below show the number of shares acquired at the time of exercise or vesting, as applicable. The amounts reported as value realized are shown on a before-tax basis:basis.
Option Exercises and Stock Vested
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | ||||||||||||||||
Dominic Ng | - | - | 213,609 | 11,378,951 | - | - | 110,856 | 8,512,403 | ||||||||||||||||
Irene H. Oh | - | - | 18,692 | 995,723 | - | - | 17,271 | 1,326,011 | ||||||||||||||||
Catherine Zhou | - | - | - | - | ||||||||||||||||||||
Douglas P. Krause | - | - | 18,692 | 995,723 | - | - | 12,345 | 947,743 | ||||||||||||||||
Andy Yen | - | - | 14,687 | 782,376 | ||||||||||||||||||||
Parker L. Shi | - | - | - | - | ||||||||||||||||||||
Nick Huang | - | - | - | - |
(1) | The amount represents the number of shares vested multiplied by the closing price of the Company’s common stock on the Nasdaq on the vesting date. It excludes any reduction in value associated with the cancellation of shares for tax withholding purposes. |
The following table summarizes information about NEO participation in our nonqualified Deferred Compensation Plan, which is described on page 4349 above, in the “Retirement Programs and Perquisites” section. In 2019, there were no contributions made by the Company to the Deferred Compensation Plan for the benefit of any NEOs.2021, Mr. YenShi was the only NEO who participated inand made contribution to the Deferred Compensation Plan during 2019.Plan.
Nonqualified Deferred Compensation Table
Name | Executive Contributions in 2019 ($)(1) | Registrant Contributions in 2019 ($) | Aggregate Earnings in 2019 ($)(2) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at December 31, 2019 ($) | |||||||||||||||
Dominic Ng | - | - | - | - | - | |||||||||||||||
Irene H. Oh | - | - | - | - | - | |||||||||||||||
Catherine Zhou | - | - | - | - | - | |||||||||||||||
Douglas P. Krause | - | - | - | - | - | |||||||||||||||
Andy Yen | 217,365 | - | 20,956 | - | 753,959 |
Nonqualified Deferred Compensation in 2021 | ||||||||||
Name | Executive Contributions in 2021 ($) (1) | Registrant Contributions in 2021 ($) | Aggregate Earnings in 2021 ($) (2) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at December 31, 2021 ($) | |||||
Dominic Ng | - | - | - | - | - | |||||
Irene H. Oh | - | - | - | - | - | |||||
Douglas P. Krause | - | - | - | - | - | |||||
Parker L. Shi | 132,308 | - | 2,102 | - | 134,410 | |||||
Nick Huang | - | - | - | - | - |
(1) | The amounts included in this column are included in the Summary Compensation Table for |
(2) | Reflects hypothetical or “notional” gains on account balances based on the NEO’s selected investments. |
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We have two retirement plans. Our 401(k) Plan is a qualified retirement plan under the Internal Revenue Code of 1986, as amended (the “Code”), and is open to all employees of the Company and its subsidiaries with at least three months of service.
We also have a Supplemental Executive Retirement Plan (“SERP”) which was established in 2001 in order to provide supplemental retirement benefits to certain employees whose contributions to the 401(k) Plan are limited under applicable Internal Revenue Service regulations. The SERP was also intended as a retention incentive to ensure the continued employment of the officers participating in the plan. As of December 31, 2019,2021, none of our NEOs were participants in the SERP.
As part of the life insurance contracts purchased when the SERP was established, beneficiaries of the SERP participants would be entitled to a death benefit. Although Mr. Ng and Mr. Krause are not currently participants in the SERP, each was at the time it was established in 2001 and death benefits for their beneficiaries remain in effect. As of December 31, 2019,2021, Mr. Ng’s beneficiaries would be entitled to death benefits of $21,580,000 and Mr. Krause’s beneficiaries would be entitled to death benefits of $7,740,000 under the SERP.
Employment Agreements and Potential Payments upon Termination or Change in Control
The Bank, the Company’s principal subsidiary, has entered into employment agreements with the NEOs.NEOs with the exception of Mr. Huang. This is intended to ensure that the Bank will be able to maintain a stable and competent management base.
Chief Executive Officer
The Bank entered into an employment agreement with its CEO, Mr. Ng, in June 1998 in connection with the sale of the Bank by its prior stockholders (the “Ng Employment Agreement”). The Ng Employment Agreement was reapproved by the Board and amended on March 4, 20202021 to provide for a termination date of March 4, 2023.2024. In addition to a base salary and bonus to be determined annually, the employment agreement provides for, among other things, use of a Company car, participation in stock benefit plans and other fringe benefits applicable to executive personnel and four weeks paid vacation per year.
In the event the Bank chooses to terminate Mr. Ng’s employment for any reason other than for Cause (as defined in the Ng Employment Agreement), or in the event of Mr. Ng’s resignation from the Bank upon (i) failure to re-elect him to his current offices; (ii) a material change in functions, duties or responsibilities; (iii) a relocation of his principal place of employment by more than 25 miles; (iv) liquidation or dissolution of the Bank; (v) a breach of the employment agreement by the Bank; or (vi) his death or permanent disability, Mr. Ng, or, in the event of death, his beneficiary, would be entitled to receive an amount equal to the greater of (i) the remaining payments due to him and the contributions that would have been made on his behalf to any employee benefit plans of the Bank during the remaining term of the employment agreement or (ii) three times the base salary currently in effect plus three times the preceding year’s bonus payable in a lump sum.
Under the assumption that Mr. Ng’s employment with the Company was terminated on December 31, 20192021, for any reason other than Cause, he would be entitled to receive severance payments totaling $6,698,480.$10,458,913. Also, if Mr. Ng’s employment with the Company was terminated for any reason other than Cause, his outstanding and unvested stock options (if any), time-based and performance-based RSUs would become fully vested. If Mr. Ng’s employment with the Company was terminated on December 31, 2021, for any reason other than Cause, on December 31, 2019, the market value of his RSUs, which would accelerate in vesting, is $15,573,846was $34,832,147 based on the closing price of the Company’s common stock as of that date.
Chief Financial Officer
On December 21, 2016, the Bank entered into an Executive Employment Agreement with its Chief Financial Officer, Ms. Oh (the “Oh Employment Agreement”). The Oh Employment Agreement, effective as of December 21, 2016, hashad an initial term of two years and iswas subject to annual renewal thereafter as may be agreed by the Bank’s boardBoard of directorsDirectors and Ms. Oh. The Oh Employment Agreement was reapproved by the Board and amended on December 21, 20192021 to provide for a termination date of December 21, 2020.2022.
The Oh Employment Agreement provides that Ms. Oh will receive an annual base salary, subject to periodic review and increase, and will be eligible to participate in an annual performance-based cash incentivebonus plan. However, any actual bonus for any given year will be determined and paid in accordance with the Bank’s annual bonus plan arrangements applicable to senior executives generally. Ms. Oh will also be eligible to receive annual stock grants as approved by the board of directors.Board. In addition, Ms. Oh will be entitled to participate in all employee benefit plans and perquisite arrangements available to senior executives of the Bank and shall receive reimbursement of reasonable business expenses. Ms. Oh’s employment with the Bank may be terminated by the Bank with or
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without Cause (as defined in the Oh Employment Agreement), in the event of Disabilitydisability (as defined in the Oh Employment Agreement) or death.
The Bank may terminate Ms. Oh’s employment with the Bank at any time without Cause, for any reason or no reason at all, upon one month advance written notice. In addition, it shall be considered termination without Cause by the Bank if (1) Ms. Oh terminates her employment for Just Reason (as defineddue to: (i) relocation of her office more than 50 miles from its current location in Pasadena, California without her consent; (ii) any material breach by the Oh Employment Agreement)Bank of her employment agreement or any other material agreement between her and the Bank which causes her material harm; or (iii) if, (2)following a Change of Control, the successor does not assume all material obligations of the Bank to her. It shall also be considered termination without Cause if without Ms. Oh’s consent, (a) the Oh Employment Agreement is not, whether initially or with respect to any subsequent renewal period, renewed or approved by the Bank’s Board of Directors (other than in connection with a for Cause event), and (b) within one month following the end of the then-current employment term, Ms. Oh resigns from the Bank.
In the event of a termination of Ms. Oh’s employment by the Bank without Cause, and contingent upon Ms. Oh’s execution and non-revocation of a general release of claims, the Bank shall pay to Ms. Oh the following: (1)(i) a single lump sum amount consisting of an amount equal to two times of Ms. Oh’s then annual base salary and an amount equal to the annual cash bonus payout last received by Ms. Oh; and (2)(ii) any annual bonus earned but unpaid with respect to a performance year ending on or preceding the date of termination. Under the assumption that Ms. Oh’s employment with the Company was terminated on December 31, 20192021, for any reason other than Cause, she would be entitled to receive severance payments totaling $1,640,644.$1,980,562.
In addition, any equity awards would continue to vest according to the grant date schedules, provided that performance RSUs will be settled based on performance unit goal achievement, except that if such termination of employment occurs within two (2) years after a Change of Control (as defined in the Oh Employment Agreement), any performance RSUs will be settled as follows: (1)(i) any RSUs for which the performance period has elapsedlapsed will continue to vest based on performance unit goal achievement, and (2)(ii) any RSUs for which the performance period has not lapsed will be converted into time-based units based on the target performance level. The outstanding equity awards held by Ms. Oh as of December 31, 20192021 are disclosed in the table on page 5254 under“Outstanding Equity Awards at Fiscal Year-End”Year-End.”.
In the event of a termination of Ms. Oh’s employment as the result of her death or due to Disability,disability, Ms. Oh or her beneficiary will be entitled to receive (1)(i) the Accrued Obligations (as defined in the Oh Employment Agreement) and (2)(ii) any annual bonus earned but unpaid with respect to a performance year ending on or preceding the date of termination. The Oh Employment Agreement also provides that if Ms. Oh’s employment terminates as a result of death or Disability,disability, all unvested RSUs that have been granted prior to the date of death or Disabilitydisability shall immediately vest. The market value on December 31, 2021 of her RSUs which would have accelerated in vesting as a result of her death or Disability on December 31, 2019disability would have been $2,049,515.$5,677,077.
Head of Consumer BankingVice Chairman and Digital Banking
On September 1, 2017, the Bank entered into an Executive Employment Agreement with its Head of Consumer Banking and Digital Banking, Ms. Zhou (the “Zhou Employment Agreement”). The Zhou Employment Agreement, effective as of October 2, 2017, has an initial term of two years and is subject to annual renewal thereafter as may be agreed by the Bank’s Board of Directors and Ms. Zhou. The Zhou Employment Agreement was reapproved by the Board and amended on October 2, 2019 to provide for a termination date of October 2, 2020.
The Zhou Employment Agreement provides that Ms. Zhou will receive an annual base salary, subject to periodic review and increase, and will be eligible to participate in an annual performance-based cash incentive plan. However, any actual bonus for any given year will be determined and paid in accordance with the Bank’s annual bonus plan arrangements applicable to senior executives generally. Ms. Zhou will also be eligible to receive annual stock grants as approved by the Board of Directors. In addition, Ms. Zhou will be entitled to participate in all employee benefit plans and perquisite arrangements available to senior executives of the Bank and shall receive reimbursement of reasonable business expenses. Ms. Zhou’s employment with the Bank may be terminated by the Bank with or without Cause (as defined in the Zhou Employment Agreement), in the event of Disability (as defined in the Zhou Employment Agreement) or death.
The Bank may terminate Ms. Zhou’s employment with the Bank at any time without Cause, for any reason or no reason at all, upon one month advance written notice. In addition, it shall be considered termination without Cause by the Bank if (1) Ms. Zhou terminates her employment for Just Reason (as defined in the Zhou Employment Agreement) or if (2) without Ms. Zhou’s consent, (a) the Zhou Employment Agreement is not, whether initially or with respect to any subsequent renewal period, renewed or approved by the Bank’s Board of Directors (other than in connection with a for Cause event), and (b) within one month following the end of the then-current employment term, Ms. Zhou resigns from the Bank.
In the event of a termination of Ms. Zhou’s employment by the Bank without Cause, and contingent upon Ms. Zhou’s execution and non-revocation of a general release of claims, the Bank shall pay to Ms. Zhou the following: (1) a single lump sum amount consisting of an amount equal to two times of Ms. Zhou’s then annual base salary; and (2) any annual bonus earned but unpaid with respect to a performance year ending on or preceding the date of termination. Under the assumption that Ms. Zhou’s employment with the Company
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was terminated on December 31, 2019 for any reason other than Cause, she would be entitled to receive severance payments totaling $1,339,000.
In addition, any equity awards would continue to vest according to the grant date schedules, provided that, performance RSUs will be settled based on performance unit goal achievement, except that if such termination of employment occurs within two (2) years after a Change of Control (as defined in the Zhou Employment Agreement), any performance RSUs will be settled as follows: (1) any RSUs for which the performance period has elapsed will continue to vest based on performance unit goal achievement, and (2) any RSUs for which the performance period has not lapsed will be converted into time-based units based on the target performance level. The outstanding equity awards held by Ms. Zhou as of December 31, 2019 are disclosed in the table on page 52 of this Proxy Statement.
In the event of a termination of Ms. Zhou’s employment as the result of her death or due to Disability (as defined in the Zhou Employment Agreement), Ms. Zhou or her beneficiary will be entitled to receive (1) the Accrued Obligations and (2) any annual bonus earned but unpaid with respect to a performance year ending on or preceding the date of termination. The Zhou Employment Agreement also provides that if Ms. Zhou’s employment terminates as a result of death or Disability, all unvested RSUs, that have been granted prior to the date of death or Disability shall immediately vest. The market value of her RSUs which would have accelerated in vesting as a result of her death or Disability on December 31, 2019 would have been $2,548,520.
General Counsel andChief Corporate SecretaryOfficer
The Bank entered into an employment agreement with its General CounselVice Chairman and Chief Corporate Secretary,Officer, Mr. Krause, in 1999 (the “Krause Employment Agreement”). The Krause Employment Agreement was reapproved by the Board of Directors and amended on March 4, 20202021 to provide for a termination date of March 4, 2023.2024. In addition to a base salary and bonus to be determined annually, the Krause Employment Agreement provides for, among other things, participation in stock benefit plans and other fringe benefits applicable to executive personnel and four weeks paid vacation per year.
In the event the Bank chooses to terminate Mr. Krause’s employment for any reason other than for Cause (as defined in the Krause Employment Agreement), or in the event of Mr. Krause’s resignation from the Bank upon (i) a material change in functions, duties or responsibilities; (ii) a relocation of the principal place of his employment by more than 25 miles; (iii) liquidation or dissolution of the Bank; (iv) a breach of the employment agreement by the Bank; or (v) his death or permanent disability, Mr. Krause, or, in the event of death, his beneficiary, would be entitled to receive an amount equal to the greater of (x)(i) the remaining payments due to him and the contributions that would have been made on his behalf to any employee benefit plans of the Bank during the remaining term of the employment agreementagreement; or (y)(ii) three times the base salary currently in effect plus three times the preceding year’s bonus payable in a lump sum.
Under the assumption that Mr. Krause’s employment with the Company was terminated on December 31, 2019,2021, for any reason other than Cause (as defined in the Krause Employment Agreement), he would be entitled to receive severance payments totaling $2,551,660$3,456,882 payable in a lump sum. Also, if Mr. Krause’s employment with the Company was terminated for any reason other than Cause, all unvested RSUs would become fully vested. If Mr. Krause’s employment with the Company was terminated on December 31, 2021, for any reason other than Cause, on December 31, 2019, the market value of his RSUs, which would have accelerated in vesting, is $1,644,088.was $4,395,922.
There is no employment contract with Mr. Krause that provides for any payments, or early vesting of any stock options or any RSUs upon a change of control.
Head of International and Commercial BankingChief Operating Officer
The Bank entered into an employment agreement with its Head of International and Commercial Banking,Chief Operating Officer, Mr. Yen, in 2005Shi, on December 1, 2021 (the “Yen“Shi Employment Agreement”). In addition with an initial term of two years and is subject to a base salaryannual renewal thereafter as may be agreed by the Bank’s Board of Directors and bonus to be determined annually, the YenMr. Shi.
The Shi Employment Agreement provides that Mr. Shi will receive an annual base salary, subject to periodic review and increase, and will be eligible to participate in an annual performance-based bonus plan. However, any actual bonus for among other things, an automobile allowance of not less than $850 per month, participationany given year will be determined and paid in accordance with the Bank’s annual bonus plan arrangements applicable to senior executives generally. Mr. Shi will also be eligible to receive annual stock grants as approved by the Board. In addition, Mr. Shi will be entitled to participate in all employee benefit plans and other fringe benefits applicableperquisite arrangements available to executive personnelsenior executives of the Bank and four weeks paid vacation per year.shall receive reimbursement of reasonable business expenses. Mr. Shi’s employment with the Bank may be terminated by the Bank with or without Cause (as defined in the Shi Employment Agreement), in the event of disability (as defined in the Shi Employment Agreement) or death.
The Bank may terminate Mr. Shi’s employment with the Bank at any time without Cause, for any reason or no reason at all, upon thirty days’ advance written notice.
In the event of termination of Mr. Shi’s employment by the Bank chooseswithout Cause, and contingent upon Mr. Shi’s execution and non-revocation of a general release of claims, the Bank shall pay to terminate Mr. Yen’s employment for any reason other than for Cause, he will receiveShi the following: (i) a severance paymentsingle lump sum amount consisting of six month’s base salary. In addition, the Yen Employment Agreement provides for severance ofan amount equal to two times currentof Mr. Shi’s then annual base salary and a lump sum bonus equal to 100% of Mr. Shi’s then annual base salary; if heMr. Shi is terminated within 12 months of a change of control or if he resigns within 12 months of a change of control upon (i) reduction in his base salary, or automobile allowance, (ii) a material reduction in this duties; or (iii) a relocation ofwithout Cause during the principal placeterm of his employment by more than 35 miles.current contact, he would receive severance payments totaling $2,400,000.
UnderIn addition, as part of his severance, any equity awards would continue to vest according to the assumptiongrant date schedules, provided that performance RSUs would be settled based on performance unit goal achievement, except that if such termination of employment occurs within two years after a Change of Control (as defined in the Shi Employment Agreement), any performance RSUs would be settled as follows: (i) any RSUs for which the performance period has lapsed would continue to vest based on performance unit goal achievement, and (ii) any RSUs for which the performance period has not lapsed will be converted into time-based units based on the target performance level. The outstanding equity awards held by Mr. Yen’s employment with the Company was terminated onShi as of December 31, 2019, for any reason other than Cause, he would2021 are disclosed in the table on page 54 under “Outstanding Equity Awards at Year-End.”
In the event of a termination of Mr. Shi’s employment as the result of his death or due to disability, Mr. Shi or his beneficiary will be entitled to receive severance payments totaling $217,500 or,the Accrued Obligations (as defined in the caseShi Employment Agreement). The Shi Employment Agreement also provides that if Mr. Shi’s employment terminates as a result of a termination in relation to a change in control as described above, $870,000.
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Pursuantdeath or disability, all unvested RSUs that have been granted prior to the termsdate of our 2016 Stock Incentive Plan, in the event Mr. Yen’s employment is terminated without Cause (as defined thereunder) following a change of control, his outstanding unvested RSUs will vest and awards which performance cycles have yet to be completed will vest assuming target performance is achieved. If Mr. Yen’s employment with the Company was terminated for any reason other than Cause following a change in controldeath or disability shall immediately vest. The market value on December 31, 2019, the market value2021 of his RSUs which would have accelerated in vesting as a result of his death or disability is $968,034.$1,380,205.
CEO to Median Employee Pay Ratio
We are providing the following information about the relationship of the total annual compensation of our median employee and the total annual compensation of Mr. Ng, our Chairman and CEO.
For the year ended December 31, 2019,2021, the annual total compensation of our CEO was $7,413,241$8,649,172 as shown onin the “Summary“Summary Compensation TableTable.”. The annual total compensation of our median employee for 2019,2021, excluding the CEO, was $78,992,$107,255, resulting in a ratio of 9481 to 1, which is a reasonable estimate calculated in a manner consistent with the applicable rules. Becausethere have been no significant changes to the Company’s broad-based compensation scheme nor to its employee population, which would significantly impact the compensation of the median employee, the median employee used in 2018 is being used for this 2019 CEO Pay Ratio disclosure.
In determining the median employee, we identified and included all U.S. basedU.S.-based employees of East West Bank, other than the CEO, who were employed with us as of December 31, 2019.2021. Further, we also included all employees of East West Bank outside of the U.S., who are based in Hong Kong whoand were employed with us as of December 31, 2019.2021. The U.S.United States and Hong Kong basedKong-based employees represented 96% of our 3,2443,044 total employees, excluding employees on leave of absence as of December 31, 2019.2021. We excluded our employees of East West Bank (China) Limited, our wholly owned subsidiary in China, and other employees based in China, totaling 135124 or 4% of our total employees. As of December 31, 2019,2021, the Company had 3,010 U.S. based2,838 United States-based employees and 234 non-U.S.206 non-United States employees.
Our definition of “total compensation,” for purposes of determining our median employee, includes total cash compensation paid during 20192021 (excluding 401(k) deferrals and over-timeovertime wages) and the grant date fair value of RSUs (or RSU equivalents) awarded in 2019.2021. We did not annualize the compensation for any employees that were not employed by us for all of 20192021 or make any full-time equivalent adjustments for part-time employees. For our non-U.S. employees who were included in this calculation, we used the foreign exchange rates applicable as of December 31, 20192021 in order to convert their total compensation into U.S. dollars. After determining our median employee, we then calculated such employee’s annual total compensation, in a manner consistent with the requirements of Item 402(u), for purposes of calculating the ratio presented above.
Compensation Committee Interlocks and Insider Participation
During 2019,2021, each of Ms. Campbell and Messrs. Liu and LiSussman served as a member of the Compensation Committee. None of the members of the Compensation Committee is, or ever has been, an officer or employee of the Company or any of its subsidiaries.
Except as provided herein, there are no existing or proposed material transactions between the Company or the Bank and any of its executive officers, directors, or the immediate family or associatesemployees of any of the foregoing persons. During 2019,2021, none of our executive officers served on the board of directors or as a member of the compensation committee (or other committee serving an equivalent function) of any entity that had an executive officer serving as a member of the Board or the Compensation Committee.
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Proposal 2: Advisory Vote to Approve Executive Compensation
Proposal Snapshot
Stockholders are being asked, as required by Section 14A of the Exchange Act, to approve, on an advisory basis, the compensation of the Named Executive Officers for
FOR the advisory vote to approve executive compensation. The Compensation Committee takes very seriously its stewardship responsibility to oversee the Company’s compensation programs and values thoughtful input from stockholders. The Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions. |
This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our NEO compensation as a whole. This vote is not intended to address any specific item of compensation or any specific NEO, but rather the overall compensation of all of our NEOs and the philosophy, policies and practices described in this Proxy Statement. We currentlyOur Board of Directors and management value the opinions of our stockholders, including their advisory votes regarding the compensation paid to our NEOs, and as such, we hold our Say-on-Pay vote every year. We revisit the frequency of our Say-on-Pay votes every 6 years.
We believe that the information provided in “Compensation Discussion and Analysis” beginning on page 2934 demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our stockholders’ interests to support long-term value creation. The sustained success of the Company’s customer focus and bridge banking model between East and West is reflected in the following key metrics:
● Total loans grew 9% in 2021, to a record $41.69 billion; |
● Total deposits grew 19% in 2021, to $53.35 billion; |
● ROA of 1.47% in 2021 was substantially above the KRX median of 1.28% and average of 1.29%; and |
● ROE of 15.7% in 2021 was substantially above the KRX median of 10.58% and average of 11.22%. |
Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders hereby approve, on an advisory basis, the compensation of our Named Executive Officers as reflected in this Proxy Statement and as disclosed pursuant to Item 402 of Regulation S-K, which disclosure includes the compensation discussion and analysis, the compensation tables, narratives and all related material.”
Because your vote is advisory, it will not be binding upon the Board. However, the Board and the Compensation Committee will consider the vote results when evaluating our compensation policies and practices in the future. Currently, we expect to hold an advisory vote on the compensation paid to our NEOs each year and expect that the next such vote will occur at our annual stockholder meeting next year in 2021.2023.
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Proposal 3: Ratification of Auditors
Proposal Snapshot
Stockholders are being asked to ratify the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for the
FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the 2022. |
KPMG LLP has been approved by the Audit Committee of the Company to be the independent registered public accounting firm of the Company for the 2020 fiscal2022 year. The stockholders are being asked to ratify the selection of KPMG LLP. KPMG LLP has
served as our independent registered public accounting firm since 2009. If the stockholders do not ratify suchselection by the affirmative vote of a majorityof the votes cast,present and entitled to vote, the Audit Committee will reconsider its selection. Under applicable SEC regulations, the selection of the independent registered public accounting firm is solely the responsibility of the Audit Committee.
Representatives from the firm of KPMG LLP will be present at the Annual Meeting to respond to stockholders’ questions and will be given the opportunity to make a statement if they desire to do so.
Audit Fees, Audit Related Fees, Tax Fees and All Other Fees
The following is a description of the fees earned by KPMG LLP and other member firms for services rendered to the Company for the years ended December 31, 20192021 and December 31, 2018.2020.
2019 | 2018 | 2021 | 2020 | |||||||
Audit Fees(1) | $ | 3,381,506 | $ | 3,033,772 | $2,692,124 | $2,751,052 | ||||
Audit-Related Fees(2) | 35,142 | 36,453 | 61,224 | 168,224 | ||||||
Tax Fees(3) | 7,660 | 8,090 | 8,336 | 13,201 | ||||||
All Other Fees | - | 29,091 | - | |||||||
$ | 3,424,307 | $ | 3,107,405 | $2,761,684 | $2,932,477 |
(1) | Audit fees relate to the integrated audit of the Company’s consolidated financial statements, internal control over financial reporting, the review of the Company’s interim consolidated financial statements, and other audits provided in connection with regulatory filings provided by KPMG LLP. |
(2) | Audit-related fees consist of fees for certain professional services provided by KPMG Hong Kong in connection with the review of regulatory filings for East West Bank’s Hong Kong |
(3) |
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Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Consistent with SEC rules regarding auditor independence, the Audit Committee is responsible for appointing, setting fees for and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility and in accordance with the Exchange Act, it is the policy of the Audit Committee to pre-approve all permissible services provided by our independent registered public accounting firm, except for minor audit-related engagements which in the aggregate do not exceed 5% of the total fees we pay to our independent registered public accounting firm during the fiscal year in which the services were provided. All of the services listed above for 2021 were approved by the Audit Committee prior to the service being rendered as described in the operating procedures below.
Each year, prior to engaging our independent registered public accounting firm, management submits to the Audit Committee for approval a list of services expected to be provided during that fiscal year within each of the three categories of services described below, as well as related estimated fees, which are generally based on time and materials.
Audit services include audit work performed on the financial statements, as well as work that generally only the independent registered public accounting firm can reasonably be expected to provide, including comfort letters and discussions surrounding the proper application of financial accounting and/or reporting standards.
Audit-related services include assurance and related services that are traditionally performed by the independent registered public accounting firm, including due diligence related to mergers and acquisitions, statutory audits, employee benefit plan audits and special procedures required to meet certain regulatory requirements.
Tax services include compliance and other non-advisory services performed by the independent registered public accounting firm when it is most efficient and effective to use such firm as the tax service provider.
As appropriate, the Audit Committee then pre-approves the services and the related estimated fees. The Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the estimate periodically throughout the year by category of service. During the year, circumstances may arise when it becomes necessary to engage our independent registered public accounting firm for additional services not contemplated in the initial annual proposal. In those instances, the Audit Committee pre-approves the additional services and related fees before engaging our independent registered public accounting firm to provide the additional services.
Report by Audit Committee Report
The following Report by Audit Committee Report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or the liabilities of Section 18 of the Exchange Act and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by the Company under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this Report by Audit Committee by reference therein.
The Audit Committee operates pursuant to a written charter most recently adopted by the Company’s Board on March 3, 2020.April 1, 2022. The Company’s Audit Committee Charter is available through the Company’s website at www.eastwestbank.comwww.eastwestbank.com/investors by clicking onInvestor Relations — Corporate Information — Committee Charting. The Audit Committee held five meetings during the fiscal year ended December 31, 2019.2021. These meetings were attended by all members of the Audit Committee. The meetings of the Audit Committee are designed to facilitate and encourage communication among the Audit Committee, the Company, the Company’s internal audit function and the Company’s independent registered public accounting firm.
The Audit Committee recognizes the importance of maintaining the independence of the Company’s independent registered public accounting firm, both in fact and appearance. Each year, the Audit Committee evaluates the qualifications, performance and independence of the Company’s independent registered public accounting firm and determines whether to re-engage the current independent registered public accounting firm. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the independent registered public accounting firm, and the independent registered public accounting firm’s capabilities, technical expertise and knowledge of the Company’s operations and industry.
Based on this evaluation, the Audit Committee has retained KPMG LLP as the Company’s independent registered public accounting firm for the 2020 fiscal year.year 2022. The members of the Audit Committee and the Board believe that, due to KPMG LLP’s knowledge of the Company and of the industries in which the Company operates, including significant matters in audit, it is in the best interests of the Company and its shareholdersstockholders to continue retention of KPMG LLP to serve as the Company’s independent registered public accounting firm. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, the Audit Committee will continue to recommend that the Board ask the shareholders,stockholders, at the Annual Meeting, to ratify the appointment of the independent registered public accounting firm.
In performing its function, the Audit Committee has among other tasks:
Based on the foregoing review and discussions, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended December 31, 2019,2021 for filing with the SEC.
THE AUDIT COMMITTEE | |
Lester Sussman, Chairman | |
Molly Campbell | |
Rudolph I. Estrada | |
Paul H. Irving |
Lester Sussman, Chairman
Molly Campbell
Rudolph I. Estrada
Paul H. Irving
OTHER INFORMATIONSTOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS, AND MANAGEMENT
Stock Ownership of Principal Stockholders, Directors and Management
The following table presents the beneficial ownership of the Company’s Common Stockcommon stock as of March 31, 2020,April 1, 2022, by (i) each person or entity known to the Company to beneficially own more than 5% of the outstanding common stock (or have the right to acquire within 60 days), (ii) the directors and director nominees, (iii) Named Executive Officers, and (iv) all directors and executives,executive officers, as a group:
Name and Address of Beneficial Owner | Common Stock | Percent of Class | ||||||
5% Holders | ||||||||
BlackRock, Inc.(1) | 16,661,376 | 11.4 | % | |||||
55 East 52nd Street | ||||||||
New York, NY 10055 | ||||||||
The Vanguard Group, Inc.(2) | 13,546,423 | 9.3 | % | |||||
100 Vanguard Boulevard | ||||||||
Malvern, PA 19355 | ||||||||
Directors and Named Executive Officers(3) | ||||||||
Molly Campbell | 8,258 | * | ||||||
Iris S. Chan | 26,932 | * | ||||||
Archana Deskus | 1,893 | * | ||||||
Rudolph I. Estrada(4) | 16,078 | * | ||||||
Paul H. Irving | 30,268 | * | ||||||
Douglas P. Krause | 69,969 | * | ||||||
Herman Y. Li | 25,789 | * | ||||||
Jack C. Liu | 21,472 | * | ||||||
Dominic Ng(5) | 672,232 | * | ||||||
Irene H. Oh | 68,676 | * | ||||||
Lester M. Sussman | 13,677 | * | ||||||
Andy Yen | 61,970 | * | ||||||
Catherine Zhou | 2,512 | * | ||||||
All Directors and Executive Officers, as a group (13 persons) | 1,017,833 | * |
Name and Address of Beneficial Owner | Common Stock Number of Shares | Percent of Class | ||
The Vanguard Group (1) 100 Vanguard Boulevard Malvern, PA 19355 | 13,717,144 | 9.7% | ||
BlackRock, Inc. (2) 55 East 52nd Street New York, NY 10055 | 12,431,829 | 8.8% | ||
Capital International Investors (3) 333 South Hope Street, 55th Fl. Los Angeles, CA 90071 | 12,348,820 | 8.7% | ||
Directors and Named Executive Officers (4) | ||||
Manuel P. Alvarez | 689 | * | ||
Molly Campbell | 11,187 | * | ||
Iris S. Chan | 29,710 | * | ||
Archana Deskus | 6,187 | * | ||
Rudolph I. Estrada (5) | 16,951 | * | ||
Nick Huang | 0 | * | ||
Paul H. Irving | 34,562 | * | ||
Douglas P. Krause | 82,636 | * | ||
Jack C. Liu | 17,130 | * | ||
Dominic Ng (6) | 822,064 | * | ||
Irene H. Oh | 96,204 | * | ||
Parker L. Shi | 0 | * | ||
Lester M. Sussman | 17,771 | * | ||
All Directors and Executive Officers, as a group (15 persons) | 1,141,862 | * |
*Less than 1%.
(1) | Represents shares of the Company’s common stock beneficially owned as of December 31, |
(2) | Represents shares of the Company’s common stock beneficially owned as of December 31, |
(3) | Represents shares of the Company’s common stock beneficially owned as of December 31, 2021, based on the Schedule 13G/A filed by |
Excludes time-based |
53,000 of these shares are held in two trusts, for the benefit of family members, for which Mr. Ng has voting and investment power. |
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the SEC. To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations that no other reports were required to be filed during fiscal 2021, we believe that for fiscal 2021, all required reports were filed on a timely basis under Section 16(a), except for the following: Mr. Nick Huang and Mr. Parker Shi, who were appointed executive officers on December 1, 2021, each filed a late Form 3 on January 11, 2022 due to inadvertent oversight.
Questions and Answers About the Annual Meeting and Voting
The information provided in the “question and answer” format below is for your convenience only and does not contain all of the information you should consider before voting. You should read this entire Proxy Statement carefully before voting.
Important notice regarding availability of proxy materials for the Annual Meeting to be held on May 26, 2022. Pursuant to the SEC rules related to the availability of proxy materials, the Company has made its Proxy Statement and Annual Report on Form 10-K available at www.envisionreports.com/EWBC. |
When is the virtual Annual Meeting and what are the procedures for attending and participating virtually at the Annual Meeting?
Date and Time:Thursday, May 26, 2022 at 2:00 p.m., Pacific Time
Virtual Annual Meeting Link: www.meetnow.global/M2GTZK9
We are holding the Annual Meeting in a virtual-only meeting format.
If you are a registered stockholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the Annual Meeting virtually. Please follow the instructions on the notice or proxy card that you received. If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the Annual Meeting. To register to attend the Annual Meeting, you must submit proof of your proxy power (legal proxy) reflecting your East West Bancorp, Inc. holdings along with your name and email address to Computershare at legalproxy@computershare.com or by mail to P.O. Box 43001, Providence, RI 02940-3001. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 20, 2022.
If you choose to vote during the virtual Annual Meeting, you will need the 15-digit control number appearing on the Notice of Internet Availability or proxy card distributed to you.
If you want to vote shares that you hold in street name during the virtual Annual Meeting, a control number must be obtained in advance to vote during the meeting or to submit questions during the meeting. To obtain a control number, beneficial stockholders must submit proof of their legal proxy issued by their broker, bank, or other nominee that holds their shares by sending a copy of the legal proxy, along with their name and email address, to Computershare via email at legalproxy@computershare.com or by mail to P.O. Box 43001, Providence, RI 02940-3001.
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Requests for a control number must be labeled as “Legal Proxy” and be received by Computershare no later than 5:00 p.m., ET, on Monday, May 20, 2022.
The Annual Meeting will include a question and answer session. Questions may be submitted during the Annual Meeting through the virtual meeting website,www.meetnow.global/M2GTZK9. If we receive substantially similar questions, we may group such questions together and provide a single response to avoid repetition and allow time for additional topics.
We encourage stockholders to log in to the virtual meeting website and access the webcast early, beginning approximately 15 minutes before the Annual Meeting’s 2:00 p.m. (Pacific Time) start time. If you experience technical difficulties, please contact the technical support telephone number posted on www.meetnow.global/M2GTZK9.
Whether or not you choose to participate in the Annual Meeting, it is important that your shares be part of the voting process. In addition, even if you plan to attend the Annual Meeting, we encourage you to return your proxy card or provide your bank, broker or other institution with voting instructions, before the Annual Meeting in order to ensure that your shares are represented.
What matters am I voting on?
You will be voting on:
● The election of nine directors to hold office until the 2023 annual meeting of stockholders or until their successors are duly elected and qualified; |
● A non-binding advisory vote to approve the compensation paid to our Named Executive Officers for 2021, as described in this Proxy Statement; |
● A proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022; and |
● Any other business that may properly come before the Annual Meeting. |
How does the Board recommend I vote on these proposals?
The Board unanimously recommends a vote:
● FOR the election of the nine nominees as directors; |
● FOR the approval, on a non-binding, advisory basis, of the compensation paid to our Named Executive Officers for 2021; and |
● FOR the ratification of the appointment of KPMG LLP to serve as our independent registered public accounting firm for the year ending December 31, 2022. |
Who is entitled to vote?
Holders of our common stock as of the close of business on April 1, 2022 (the “Record Date”), may vote at the Annual Meeting. As of the Record Date, we had 142,256,520 shares of common stock outstanding. In deciding all matters at the Annual Meeting, each stockholder will be entitled to one vote for each share of common stock held on the Record Date. We do not have cumulative voting rights for the election of directors.
● Stockholders of Record. If your shares are registered directly in your name with our transfer agent, you are considered the stockholder of record with respect to those shares, and this Proxy Statement was provided to you directly by us. As the stockholder of record, you have the right to delegate your voting directly to the individuals listed on the proxy card or to vote in person at the virtual Annual Meeting. |
● Beneficial Owner: Street Name Stockholders. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, or a street name stockholder, and this Proxy Statement was forwarded to you by your broker, bank or other nominee, who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote your shares. Beneficial owners are also invited to attend the Annual Meeting. However, because beneficial owners are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you follow your broker’s, bank’s or other nominee’s procedures for obtaining a legal proxy giving you the right to vote your shares at the Annual Meeting. |
How do I vote?
If you are a stockholder of record, you may:
● Instruct the proxy holder or holders on how to vote your shares by using the internet voting site at www.envisionreports.com/EWBC or the toll-free telephone number 1-800-652-VOTE (8683), 24-hours a day, seven days a week, until 2:00 p.m. Pacific Time on May 26, 2022 (have your proxy card in hand when you visit the website or call); |
● Instruct the proxy holder or holders on how to vote your shares by completing and mailing your proxy card to the address indicated on your proxy card (if you received printed proxy materials), which must be received by the time of the Annual Meeting; or |
● Vote by ballot at the virtual Annual Meeting. |
If you are a street name stockholder, you will receive instructions from your broker, bank or other nominee. The instructions from your broker, bank or other nominee will indicate the various methods by which you may vote, including whether internet or telephone voting is available.
● Brokerage firms and other intermediaries holding shares in street name for their customers are generally required to vote those shares in the manner directed by their customers. A “Broker Non-Vote” occurs when the entity holding shares in street name has not received voting instructions from the beneficial owner and either chooses not to vote those shares on a routine matter at the stockholders meeting or is not permitted to vote those shares on a non-routine matter. |
● The only “routine” matter to be decided at the Annual Meeting is the proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022 (Proposal 3). |
● Absent timely direction from you, your broker will not have discretion to vote on the other matters submitted for a vote at the Annual Meeting, which are the election of directors and the non-binding advisory vote to approve our executive compensation for 2021, as they are “non-routine” matters. |
● A “Broker Non-Vote” does not have an effect on the outcome of any proposal. It is important, therefore, that you provide instructions to your broker, bank, trust company or other nominee so that your vote with respect to the proposals is counted. |
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Can I change or revoke my vote?
Yes. Subject to any rules that your broker, bank or other nominee may have, you can change your vote or revoke your proxy before the Annual Meeting.
If you are stockholder of record, you may change your vote by:
● Entering a new vote via internet or telephone by 2:00 p.m. Pacific Time on May 26, 2022; or |
● Returning a later-dated proxy card which must be received by the time of the Annual Meeting; or |
● Completing a ballot in person via webcast at the virtual Annual Meeting. |
If you are a stockholder of record, you may revoke your proxy by providing our Corporate Secretary with a written notice of revocation prior to your shares being voted at the Annual Meeting. The written notice of revocation may be hand delivered to the Company’s Corporate Secretary or mailed to and received by East West Bancorp at 135 N. Los Robles Ave., 7th Floor, Pasadena, California 91101, Attention: Corporate Secretary.
If you are a street name stockholder, you may change your vote by:
● Submitting new voting instructions to your broker, bank or other nominee pursuant to instructions provided by your broker, bank or other nominee; or |
● Completing a ballot at the virtual Annual Meeting, provided you have obtained a legal proxy from your broker, bank or other nominee giving you the right to vote the shares. |
If you are a street name stockholder, you must contact your broker, bank or other nominee that holds your shares to find out how to revoke your proxy.
What is the effect of giving a proxy?
Proxies are solicited by and on behalf of the Board. We have retained Georgeson LLC to assist in the distribution and solicitation of proxies. Georgeson LLC may solicit proxies by personal interview, telephone, fax, mail and email. We expect that the fee for these services will not exceed $12,000, plus reimbursement of customary out-of-pocket expenses. The persons named in the proxy cards have been designated as proxy holders. When proxy cards are properly dated, executed and returned, the shares represented by those proxy cards will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, however, the shares will be voted in accordance with the recommendations of the Board as described above. If any matter not described in this Proxy Statement is properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the Annual Meeting is adjourned, the proxy holders can vote your shares on the new meeting date as well, unless you have properly revoked your proxy.
What is a quorum?
A quorum is the minimum number of shares required to be present at the Annual Meeting for the meeting to be properly held under our Bylaws and Delaware law. The presence, in person or by proxy, of a majority of all issued and outstanding shares of common stock entitled to vote at the Annual Meeting will constitute a quorum at the Annual Meeting.
Abstentions and Broker Non-Votes will be treated as shares present and entitled to vote for purposes of determining the presence of a quorum.
Assuming the presence of a quorum, how many votes are needed for approval of each proposal?
Proposal | Vote Required | Effect of “Abstain” Vote |
Proposal 1 — Election of Directors | Each director nominee must be elected by a vote of the majority of the votes cast, which means that the number of votes cast “FOR” a nominee’s election exceeds the number of votes cast “AGAINST” that nominee | No effect |
Proposal 2 — Proposal 3 — | Each of the other proposals is approved if “FOR” votes are cast by the majority of the shares present, in person or by proxy, and entitled to vote on such proposal | Same effect as “AGAINST” |
What happens if a director nominee does not receive a majority vote?
In an uncontested election, any director nominee who receives a greater number of “AGAINST” votes than votes “FOR” the nominee’s election shall immediately tender to the Board his or her offer to resign from the Board. The Board, after taking into consideration the recommendation of the Nominating/Corporate Governance Committee, will determine whether or not to accept the resignation of any nominee for director who receives a greater number of “AGAINST” votes than votes “FOR” the nominee’s election. In the event of a contested election, the director nominees who receive the largest number of votes cast “FOR” their election will be elected as directors.
How are proxies solicited for the Annual Meeting? Who pays for the solicitation?
The Board is soliciting proxies for use at the Annual Meeting. All expenses associated with this solicitation will be borne by us. Although there is no formal agreement to do so, we may reimburse brokers, banks and other nominees for their reasonable expense in forwarding these proxy materials to their principals. Proxies will be solicited principally through the mail, however, our directors, officers and employees may also solicit proxies personally, by telephone or via the internet. Directors, officers and employees will not be paid any additional compensation for soliciting proxies.
Is my vote confidential?
Your vote will not be disclosed either within the Company or to third parties, except as necessary to meet applicable legal requirements, to allow for the tabulation of votes and certification of the vote, or to facilitate a successful proxy solicitation.
I share an address with another stockholder, and we received multiple copies of the proxy materials. How can we obtain a single copy of the proxy materials?
Stockholders who share an address and receive multiple copies of our proxy materials can request to receive a single copy in the future. To receive a single copy of the proxy materials, stockholders may contact us at:
East West Bancorp, Inc.
Attention: Investor Relations
135 N. Los Robles Avenue, 7th Floor
Pasadena, California 91101
(626) 768-6000
Stockholders who hold shares in street name may contact their broker, bank, or other nominee to request information about “householding” (providing one copy of this Proxy Statement for all stockholders residing at one address).
In some cases, stockholders who hold their shares in street name and who share the same surname and address may receive only one copy of the proxy materials. If you would like to have a separate copy of the proxy materials mailed to you or receive separate copies of future mailings, please submit your request to your broker, bank or other nominee. We will deliver such additional copies promptly upon receipt of such request.
Where can I find the voting results of the Annual Meeting?
We will disclose voting results on a Current Report on Form 8-K to be filed with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to include them in the Form 8-K, we will file a Form 8-K to publish preliminary results and will provide the final results in an amendment to the Form 8-K after final results become available.
Proposals of stockholders intended to be included in the proxy materials for the 20212023 annual meeting of stockholders must be received by the Secretary of East West Bancorp, Inc. at 135 N. Los Robles Avenue, 7th Floor, Pasadena, California 91101 by December 14, 20202022 (120 calendar days prior to the anniversary of this year’s April 13, 20202022 mailing date).
Under Rule 14a-8 adopted by the SEC under the Exchange Act, proposals of stockholders must conform to certain requirements as to form and may be omitted from thethis Proxy Statement and proxy under certain circumstances. In order to avoid unnecessary expenditures of time and money by stockholders and by the Company, stockholders are urged to review this rule and, if questions arise, to consult legal counsel prior to submitting a proposal.
SEC rules also establish a different deadlineIn addition, the Company’s Bylaws provide that for submission of stockholder proposals that are not intendedand nominations for the elections of directors to be included in the Company’s Proxy Statement with respect to discretionary voting (the “Discretionary Vote Deadline”). The Discretionary Vote Deadline for the 2021brought properly before an annual meeting by a stockholder, the notice must be made in writing and must be delivered to the Secretary of stockholders is February 27, 2021 (45the Company at the principal executive offices of the Company not less than 30 calendar days or more than 60 calendar days prior to the anniversarymeeting. However, in the event that less than 40 calendar days’ notice of the meeting is given to stockholders, notice by the stockholder, to be timely, must be delivered not later than the close of business on the 10th day
following the mailing date of this Proxy Statement). If a stockholder givesthe meeting notice ofto stockholders or such a proposal after the Discretionary Vote Deadline, Proxy holders will be allowed to use their discretionary voting authority to vote againstpublic disclosure was made. The Company’s Bylaws require the stockholder proposal without discussion when and ifnotice to set forth certain information as to the proposal is raised atmatter the 2021stockholder proposes to bring before the annual meeting of stockholders.meeting.
The Company has not been notified by any stockholder of his or her intent to present a stockholder proposal from the floor at the Annual Meeting. The enclosed Proxyproxy set forth in the proxy cards grants the Proxyproxy holders discretionary authority to vote on any matter properly brought before the Annual Meeting.
Our financial statements for the fiscal year ended December 31, 20192021 are included in our Annual Report on Form 10-K, which was filed with the SEC and which we will make available to stockholders at the same time as this Proxy Statement. Our annual reportAnnual Report and this Proxy Statement are posted on our website at www.eastwestbank.com and are available from the SEC at its website atwww.sec.gov. www.sec.gov. You may also obtain a copy of our annual reportAnnual Report and any exhibits thereto without charge by sending a written request to Investor Relations, East West Bancorp, Inc., 135 N. Los Robles Avenue, 7th Floor, Pasadena, California 91101. The Company’s Annual Report on Form 10-K will be mailed to all stockholders. The Annual Report on Form 10-K includes financial statements required to be filed with the SEC pursuant to the Exchange Act for the fiscal year ended December 31, 2019,2021, and the report thereon of KPMG LLP, the Company’s independent registered public accounting firm.
Management knows of no business, which will be presented for consideration at the Annual Meeting other than as stated in the Notice of Meeting. If, however, other matters are properly brought before the Annual Meeting, it is the intention of the Proxy holders to vote the shares represented thereby on such matters in accordance with the recommendation of the Board and authority to do so is included in the Proxy.
EAST WEST BANCORP, INC.
DOUGLAS P. KRAUSE
Corporate Secretary
Pasadena, California
April 3, 2020
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01 - Molly Campbell 04 - Rudolph I. Estrada 07 - Dominic Ng 02 - Iris S. Chan 05 - Paul H. Irving 08 - Lester M. Sussman 03 - Archana Deskus 06 - Jack C. Liu For Against Abstain For Against Abstain For Against Abstain 1 U P X East West Bancorp, Inc. Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 038UUC + + Proposals — The Board of Directors recommend a vote FOR A all the nominees listed and FOR Proposals 2 and 3. 2. To approve, on an advisory basis, our executive compensation for 2019. 3. To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. 1. To elect eight directors to serve until the next annual meeting of stockholders and to serve until their successors are elected and qualified: For Against Abstain Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. If the signer is a corporation, partnership or other entity, please sign full entity name by authorized officer, giving full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. 4. To transact such other business as may properly come before the Annual Meeting or any postponement or adjournment of the Annual Meeting. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q 2020 Annual Meeting Proxy Card For Against Abstain You may vote online or by phone instead of mailing this card. Online Go to www.envisionreports.com/EWBC or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Votes submitted electronically must be received by May 18, 2020 at 11:59 p.m., ET Your vote matters – here’s how to vote! Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/EWBC IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
Annual Meeting of Stockholders – Tuesday, May 19, 2020 THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY The undersigned stockholder(s) of East West Bancorp, Inc. (the “Company”) hereby nominates, constitutes and appoints Irene Oh and Douglas P. Krause, and each of them, the attorney, agent and proxy of the undersigned, with full power of substitution, to vote all stock of the Company which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company (the “Meeting”) to be held at 135 N. Los Robles Ave., 6th Floor, Pasadena, California at 2:00 p.m., Pacific Time, on Tuesday, May 19, 2020, and any postponement or adjournments thereof, as fully and with the same force and effect as the undersigned might or could do if personally present thereat, as follows and, in their discretion, to vote and act upon such other business as may properly come before the Meeting: THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 1 (ELECTION OF DIRECTORS); “FOR” PROPOSAL 2 (ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION); “FOR” PROPOSAL 3 (RATIFICATION OF AUDITORS). IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED BY THE PROXY HOLDERS IN THEIR DISCRETION IN ACCORDANCE WITH THE RECOMMENDATIONS OF A MAJORITY OF THE BOARD OF DIRECTORS. THE UNDERSIGNED HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS AND PROXYHOLDERS, OR EITHER OF THEM, OR THEIR SUBSTITUTES, SHALL LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF, AND HEREBY REVOKES ANY AND ALL PROXIES HERETOFORE GIVEN BY THE UNDERSIGNED TO VOTE AT THE MEETING. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING AND THE PROXY STATEMENT ACCOMPANYING SAID NOTICE. (Continued and to be marked, dated and signed, on the other side) REVOCABLE PROXY - EAST WEST BANCORP, INC. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q C Non-Voting Items + + Change of Address — Please print new address below. Comments — Please print your comments below. Meeting Attendance Mark box to the right if you plan to attend the Annual Meeting. Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/EWBC IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
01 - Molly Campbell 04 - Rudolph I. Estrada 07 - Dominic Ng 02 - Iris S. Chan 05 - Paul H. Irving 08 - Lester M. Sussman 03 - Archana Deskus 06 - Jack C. Liu For Against Abstain For Against Abstain For Against Abstain 1 U P X East West Bancorp, Inc. Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 038UVC + + Proposals — The Board of Directors recommend a vote FOR A all the nominees listed and FOR Proposals 2 and 3. 2. To approve, on an advisory basis, our executive compensation for 2019. 3. To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. 1. To elect eight directors to serve until the next annual meeting of stockholders and to serve until their successors are elected and qualified: For Against Abstain Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. If the signer is a corporation, partnership or other entity, please sign full entity name by authorized officer, giving full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. 4. To transact such other business as may properly come before the Annual Meeting or any postponement or adjournment of the Annual Meeting. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q 2020 Annual Meeting Proxy Card For Against Abstain
Annual Meeting of Stockholders – Tuesday, May 19, 2020 THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY The undersigned stockholder(s) of East West Bancorp, Inc. (the “Company”) hereby nominates, constitutes and appoints Irene Oh and Douglas P. Krause, and each of them, the attorney, agent and proxy of the undersigned, with full power of substitution, to vote all stock of the Company which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company (the “Meeting”) to be held at 135 N. Los Robles Ave., 6th Floor, Pasadena, California at 2:00 p.m., Pacific Time, on Tuesday, May 19, 2020, and any postponement or adjournments thereof, as fully and with the same force and effect as the undersigned might or could do if personally present thereat, as follows and, in their discretion, to vote and act upon such other business as may properly come before the Meeting: THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 1 (ELECTION OF DIRECTORS); “FOR” PROPOSAL 2 (ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION); “FOR” PROPOSAL 3 (RATIFICATION OF AUDITORS). IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED BY THE PROXY HOLDERS IN THEIR DISCRETION IN ACCORDANCE WITH THE RECOMMENDATIONS OF A MAJORITY OF THE BOARD OF DIRECTORS. THE UNDERSIGNED HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEYS AND PROXYHOLDERS, OR EITHER OF THEM, OR THEIR SUBSTITUTES, SHALL LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF, AND HEREBY REVOKES ANY AND ALL PROXIES HERETOFORE GIVEN BY THE UNDERSIGNED TO VOTE AT THE MEETING. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF MEETING AND THE PROXY STATEMENT ACCOMPANYING SAID NOTICE. (Continued and to be marked, dated and signed, on the other side) REVOCABLE PROXY - EAST WEST BANCORP, INC. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
Step 1: Go to www.envisionreports.com/EWBC. Step 2: Click on Cast Your Vote or Request Materials. Step 3: Follow the instructions on the screen to log in. www.envisionreports.com/EWBC Online Go to www.envisionreports.com/EWBC or scan the QR code — login details are located in the shaded bar below. East West Bancorp, Inc. Stockholder Meeting Notice 038VTC + + Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders of East West Bancorp, Inc. to be Held on May 19, 2020 Under Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the annual meeting of stockholders, including the Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended December 31, 2019, are available on the Internet. Follow the instructions below to view the materials and vote online or request a copy. The items to be voted on and location of the annual meeting are on the reverse side. Your vote is important! This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 are available at: Obtaining a Copy of the Proxy Materials – If you want to receive a copy of the proxy materials, you must request one. There is no charge to you for requesting a copy. Please make your request as instructed on the reverse side on or before May 9, 2020 to facilitate timely delivery. 2 N O T Easy Online Access — View your proxy materials and vote. When you go online, you can also help the environment by consenting to receive electronic delivery of future materials. Votes submitted electronically must be received by May 18, 2020 at 11:59 p.m., ET Step 4: Make your selections as instructed on each screen for your delivery preferences. Step 5: Vote your shares.
Here’s how to order a copy of the proxy materials and select delivery preferences: Current and future delivery requests can be submitted using the options below. If you request an email copy, you will receive an email with a link to the current meeting materials. PLEASE NOTE: You must use the number in the shaded bar on the reverse side when requesting a copy of the proxy materials. — Internet – Go to www.envisionreports.com/EWBC. Click Cast Your Vote or Request Materials. — Phone – Call us free of charge at 1-866-641-4276. — Email – Send an email to investorvote@computershare.com with “Proxy Materials East West Bancorp, Inc.” in the subject line. Include your full name and address, plus the number located in the shaded bar on the reverse side, and state that you want a paper copy of the meeting materials. To facilitate timely delivery, all requests for a paper copy of proxy materials must be received by May 9, 2020. East West Bancorp, Inc.’s Annual Meeting of Stockholders will be held on May 19, 2020 at 135 N. Los Robles Ave., 6th Floor, Pasadena, California, at 2:00 p.m. Pacific Time. Proposals to be voted on at the meeting are listed below along with the Board of Directors’ recommendations. The Board of Directors recommend a vote FOR all the nominees listed and FOR Proposals 2 and 3: 1. To elect eight directors to serve until the next annual meeting of stockholders and to serve until their successors are elected and qualified: 01 - Molly Campbell 02 - Iris S. Chan 03 - Archana Deskus 04 - Rudolph I. Estrada 05 - Paul H. Irving 06 - Jack C. Liu 07 - Dominic Ng 08 - Lester M. Sussman 2. To approve, on an advisory basis, our executive compensation for 2019. 3. To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. 4. To transact such other business as may properly come before the Annual Meeting or any postponement or adjournment of the Annual Meeting. PLEASE NOTE – YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you must go online or request a paper copy of the proxy materials to receive a proxy card. If you wish to attend and vote at the meeting, please bring this notice with you. Annual Stockholder Meeting Notice