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
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
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☐ Preliminary Proxy Statement
☐Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Pursuant to § 240.14a-12
CATHAY GENERAL BANCORP
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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To Our Stockholders:
We are pleased to invite you to attend the annual meeting of stockholders of Cathay General Bancorp. The meeting will be held on Monday, May 15, 2017, 14, 2018, at 5:00 p.m., local time, at 9650 Flair Drive, El Monte, California 91731.
At the meeting, you will be asked to elect fourfive Class IIII directors to serve until 2020,the 2021 annual meeting of stockholders, to vote on an advisory (non-binding) resolution to approve our executive compensation, and to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 20172018 fiscal year.
Your vote is very important. Whether or not you expect to attend the annual meeting in person, we encourage you to cast your vote via the Internet, by telephone,or if you prefer, by completing, signing, and returning your proxy card in the accompanying return envelope. Specific instructions for voting via the Internet or by telephone are stated on the proxy card. If you hold your shares through an account with a brokerage firm, bank, or other nominee, please follow the instructions you receive from them to vote your shares. Your cooperation is appreciated since a majority of the outstanding shares of our common stock must be represented, either in person or by proxy, for us to transact business at the meeting.
We look forward to seeing you at the meeting.
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Sincerely yours,
Dunson K. Cheng
Executive Chairman of the Board
Los Angeles, California
April 13, 2017
Notice of Annual Meeting of Stockholders
to be Held on May 15, 2017 12, 2018
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 2018
Notice is hereby given that the annual meeting of stockholders of Cathay General Bancorp will be held on Monday, May 15, 2017, 14, 2018, at 5:00 p.m., local time, at our offices located at 9650 Flair Drive, El Monte, California 91731, for the following purposes:
1. | To elect |
2. | To vote on an advisory (non-binding) resolution to approve our executive compensation; |
3. | To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the |
4. | To transact such other business as may properly be brought before the meeting or any adjournments or postponements of the meeting. |
The Board of Directors has fixed April 3, 2017, 2, 2018, as the record date for the meeting. Only holders of record of our common stock at the close of business on the record date are entitled to receive notice of and to vote at the meeting.
Please cast your vote via the Internet, by telephone, or by completing, signing, and returning your proxy card in the accompanying return envelope. If you mail the envelope in the United States, it does not require postage.It is important that you vote via the Internet, by telephone, or by returning your proxy card promptly even if you plan to attend the annual meeting inperson.
We invite you to attend the meeting in person. If you attend, you may choose to vote in person at the meeting. If you do so, your prior voting instructions will be disregarded.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on May |
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By Order of the Board of Directors,
Lisa L. Kim Secretary |
Los Angeles, California
April 13, 2017 12, 2018
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Security Ownership of Nominees, Continuing Directors, and Named Executive Officers | 6 |
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PROPOSAL TWO | 37 |
PROPOSAL THREE | 38 |
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TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS | 41 |
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STOCKHOLDER PROPOSALS FOR | 43 |
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This summary highlights information contained elsewhere in this proxy statement. This summary is designed as an aid and does not contain all of the information that you should consider in deciding how to vote. As such, you should read this entire proxy statement carefully before voting.
Annual Meeting of Stockholders
Date and Time: Record Date: | Monday, May April 2, 2018 | Place: | Cathay Bank Corporate Center 9650 Flair Drive, El Monte, California 91731 |
Voting: | Holders of record of our common stock at the close of business on the record date. | Attendance: | Stockholders and their duly appointed proxies may attend the meeting. |
Proposals and Voting Recommendations
Proposal | Board Recommendation | Page | |||||
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| 1. Election of Directors | FOR EACH NOMINEE | 5 | |||||
2. Advisory (Non-Binding) Vote to Approve our Executive Compensation | FOR | 37 | |||||
3. Ratification of the Appointment of Independent Registered Public Accounting Firm | |||||||
FOR | 38 | ||||||
PROPOSAL ONEProposal One——Election of Directors
The first proposal is to elect fourfive Class IIII directors to serve until the 20202021 annual meeting of stockholders and their successors have been elected and qualified. The following table provides summary information about each nominee.
Name of Nominee | Age | Principal Occupation | Director |
| Nelson Chung | 64 | President of Pacific Communities Builder, Inc. | 2005 |
| Felix S. Fernandez | 66 | Retired Banker | 2013 |
| Ting Y. Liu | 80 | Retired Investor | 2003 |
| Richard Sun | 64 | President of SSS Development, Inc., and Mayor and Council Member of the City of San Marino | N/A |
Name of Nominee | Age | Principal Occupation | Director | |||
Michael M.Y. Chang | 80 | Retired Attorney and Former Secretary of Cathay General Bancorp and Cathay Bank | 1990 | |||
Jane Jelenko | 69 | Retired Financial Services Partner of KPMG LLP | 2012 | |||
Pin Tai | 64 | Chief Executive Officer and President of Cathay General Bancorp and Cathay Bank | 2017 | |||
Anthony M. Tang | 64 | Vice Chairman of Cathay General Bancorp and Cathay Bank | 1990 | |||
Peter Wu | 69 | Vice Chairman of Cathay General Bancorp and Cathay Bank | 2003 |
PROPOSAL TWOProposal Two——Advisory (Non-Binding) Vote to Approve our Executive Compensation
Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), enables our stockholders to vote to approve, on a non-binding basis, the compensation of our Named Executive Officers, as disclosed in this proxy statement in accordance with the rules of the Securities and Exchange Commission.Commission (the “SEC”). Accordingly, the Board of Directors is submitting the following resolution for stockholder consideration:
“RESOLVED, that the compensation paid to our Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and any related material disclosed in this proxy statement, is hereby APPROVED.”
PROPOSAL THREEProposal Three——Ratification of the Appointment of Independent Registered Public Accounting Firm
We are asking our stockholders to ratify the appointment of KPMG LLP (“KPMG”) as our independent registered public accounting firm for our 20172018 fiscal year. Although ratification is not legally required, we are submitting the appointment of KPMG to our stockholders for ratification in the interest of good corporate governance. In the event that this appointment is not ratified, the Audit Committee of the Board of Directors will reconsider the appointment.
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAYProxy Statement 14, 2018
Annual Meeting of Stockholders
May 15, 2017
The Board of Directors of Cathay General Bancorp (the “Board”) is furnishing this proxy statement to the holders of record of our common stock to solicit proxies for use at our 20172018 annual meeting of stockholders and any adjournments or postponements of the meeting. In this proxy statement, “Bancorp,” the “Company,” “we,” “us,” and “our” refer to Cathay General Bancorp, a Delaware corporation. This proxy statement and the enclosed proxy card were first mailed to stockholders on or about April 13, 2017.12, 2018.
INFORMATION ABOUT THE ANNUAL MEETING
What is the purpose of the annual meeting?At the meeting, our stockholders will be asked to:
1. | Elect |
2. | Vote on an advisory (non-binding) resolution to approve our executive compensation; |
3. | Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the |
4. | Transact such other business as may properly be brought before the meeting or any adjournments or postponements of the meeting. |
When and where will the annual meeting be held? The annual meeting will be held on May 15, 2017,14, 2018, at 5:00 p.m., local time, at our offices located at 9650 Flair Drive, El Monte, California 91731.
Who can attend the annual meeting?All stockholders and their duly appointed proxies may attend the meeting.
INFORMATION ABOUT VOTING AND PROXIES
Who is entitled to vote at the annual meeting?The Board has fixed April 3, 2017,2, 2018, as the record date for the meeting. Only holders of record of our common stock at the close of business on the record date are entitled to receive notice of and to vote at the meeting. On the record date, 79,811,67981,207,426 shares of our common stock were outstanding.
How many shares must be present to transact business at the meeting?A quorum is required for our stockholders to transact business at the meeting. The presence in person or by proxy of the holders of a majority of the outstanding shares of our common stock is necessary to transact business at the meeting.constitutes a quorum. Abstentions and broker non-votes will be counted as present for this purpose.towards determining whether or not a quorum is present. If the shares represented at the meeting are not sufficient to
transact business, constitute a quorum, we may adjourn or postpone the meeting to permit the further solicitation of proxies.
What are broker non-votes?The term “broker non-votes” generally refers to shares that are held by a broker or other nominee in its name for the benefit of its clients but that cannot be voted because the broker or nominee is precluded from voting on certain matters“non-routine matters” and has not received voting instructions from the beneficial owner on those matters. Please see “How do I vote my shares,” below for more information if you hold your shares in a brokerage account.
How many votes am I entitled to?Each stockholder of record is entitled to one vote for each share of our common stock registered in the stockholder’s name. Shares may not be voted cumulatively for the election of directors or otherwise.
What is the difference between a “stockholder of record” and a “beneficial owner?”These terms describe how your shares are held. If your shares are registered directly in your name with our transfer agent, then you are a “stockholder of record” of those shares. As a stockholder of record, you have the right to vote by proxy via the Internet, by telephone, by mail, or in person at the meeting.
If your shares are held in an account by a broker, bank, trust company, or other similar organization, then you are a “beneficial owner” of those shares and the organization holding your shares is considered the “stockholder of record” for purposes of voting at the meeting. If you are a beneficial owner, you have the right to direct the organization holding your shares on how to vote the shares held in your account.
How do I vote my shares?If you are a stockholder of record, there are four ways to vote:
In Person. You may vote in person at the annual meeting. You must bring valid picture identification and may be requested to provide proof of stock ownership as of the record date.
Via the Internet. You may vote by proxy via the Internet by following the instructions provided in the proxy card.
By Telephone. You may vote by proxy by calling the toll free number found on the proxy card.
By Mail. You may vote by proxy by filling out the proxy card and returning it in the enclosed postage-prepaid envelope.
If you vote via the Internet, by telephone, or properly complete and mail the proxy card, and we receive it on or before the voting date, your shares will be voted as you direct. Even if you plan to attend the meeting in person, we encourage you to cast your vote by via the Internet, by telephone, or if you prefer, by completing, signing, dating, and returning the proxy card.
If you are a beneficial owner, you have the right to direct the organization holding your shares on how to vote the shares held in your account. If you wish to vote in person at the meeting, you must obtain a valid proxy from the organization holding the shares giving you the right to vote at the meeting. If you hold your shares in a brokerage account and do not give voting instructions to your broker on proposals that are considered “non-routine,” your broker cannot vote them for you and your shares will be treated as broker non-votes. At the meeting, Proposal Three (Ratification of the Appointment of Independent Registered Public Accounting Firm) involves matters that we believe will be considered “routine,” while Proposal One (Election of Directors) and Proposal Two (Advisory (Non-Binding) Vote to Approve Our Executive Compensation) involve matters that we believe will be considered “non-routine.” Therefore, it is important that you provide voting instructions for all proposals.
What if I don’tdon’t vote for some of the items listed in this proxy statement?If you are a stockholder of record and return your signed proxy card, or vote via the Internet or by telephone, the proxy holders will vote your shares, with respect to the items
without specific voting instructions, according to the recommendations of the Board. The Board has designated Heng W. Chen and Lisa L. Kim, and each of them individually, with power of substitution, as proxy holders.
May I change my vote? Yes. If you are a stockholder of record, you may revoke your proxy at any time before it is exercised by filing a written notice of revocation with our Secretary, by delivering to our Secretary a later signed and dated proxy card, or by a later dated vote via the Internet or by telephone. The deadline to vote via the Internet or by telephone is 11:59 p.m., Eastern Time, on May 14, 2017.13, 2018. You may also revoke your proxy if you are present at the meeting and vote in person. Attendance at the meeting will not cause any previously granted proxy to be revoked unless you specifically make that request. Unless you decide to attend the meeting and vote in person, we recommend that you change or revoke your prior instructions in the same manner as you originally gave them and provide enough time for the new voting instructions to reach us before the meeting begins. Once the meeting begins, you may only change or revoke your proxy in person.
How are the shares held by the Cathay Bank Employee Stock Ownership Trust (ESOPT) voted? Each participant of the Cathay Bank Employee Stock Ownership Plan has the power to direct the vote of the shares allocated to his or her account by providing voting instructions. Charles Schwab Bank, as Trustee of the ESOPT, will vote the shares allocated to a participant’s account as directed by the participant and, if no direction is received, in the same proportion of the stock voted by the Trustee on any matter as to which it has received timely directions.
How does the Board recommend that I vote?The Board unanimously recommends that you vote your shares as follows:
• | FOR EACH NOMINEE as Class |
• | FORthe advisory (non-binding) resolution to approve our executive compensation as specified under Proposal Two, and |
• | FORratification of the appointment of KPMG LLP as our independent registered public accounting firm as specified under Proposal Three. |
None of our directors have informed us in writing that he or she intends to oppose any action intended to be taken by us at the annual meeting.
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What is the vote required to elect directors and approve the other proposals?
Proposal One (Election of Directors)
The nominees receiving a majority of votes cast at the meeting will be elected as directors. A majority of votes cast means the number of votes cast “for” the director’sdirector’s election exceeds the number of votes cast “against” that director’s election. Abstentions and broker non-votes will not count as either “for” or “against” votes, so abstentions and broker non-votes will have no effect on the election of a director. If an incumbent director nominee fails to receive the requisite vote in an uncontested election, that director must offer to resign. Our Nomination and Governance Committee and the Board will then act on the tendered offer to resign in the best interest of Bancorp.
Proposal Two (Advisory (Non-Binding) Vote to Approve our Executive Compensation)
The affirmative vote of a majority of our shares of common stock present in person or represented by proxy and entitled to vote at the meeting is required to approve Proposal Two. Abstentions will be treated as present and entitled to vote and therefore will have the same effect as a vote against this proposal. Broker non-votes will not affect the outcome of the advisory vote.
Proposal Three (Ratification of the Appointment of Independent Registered Public Accounting Firm)
The affirmative vote of a majority of our shares of common stock present in person or represented by proxy and entitled to vote at the meeting is required to approve Proposal Three. Abstentions will be treated as present and entitled to vote and therefore will have the same effect as a vote against this proposal. Broker non-votes will not affect the outcome of the vote.
Who will serve as inspector of elections?The inspector of elections for the meeting will be a representative of American Stock Transfer and Trust Company,Election Services, LLC. Under Delaware law, the inspector of elections will rule on the proxies and ballots submitted and may consider evidence deemed to be reliable to reconcile proxies and ballots submitted by or on behalf of banks, brokers, their nominees, or similar persons that represent more votes than the holder of a proxy is authorized by the stockholder of record to cast, or more votes than the stockholder holds of record.
What happens if additional matters are presented at the meeting or a nominee is unable to serve as a director?As of the date of this proxy statement, the Board knows of no matters to be brought before the meeting other than the proposals specifically listed in the notice of annual meeting of stockholders. Nevertheless, if further business is properly presented, the proxy holders named in the enclosed proxy card will vote the shares in their discretion in accordance with their best judgment.
If any nominee for director named in this proxy statement becomes unavailable for any reason, or if any vacancy on the Board occurs before the election, the shares represented by any proxy voting for that nominee will be voted for the person who may be designated by the Board to replace the nominee or to fill that vacancy on the Board. However, at the date of this proxy statement, the Board does not believe that any nominee will be unavailable or that any vacancy will occur.
How will proxies be solicited and who will pay for the solicitation? We will pay the cost of this solicitation of proxies. In addition to use of the mail, the officers, directors, and employees of Bancorp and its subsidiaries may solicit proxies personally or by telephone, facsimile, or electronic means. These individuals will not be specially compensated for these solicitation activities. Arrangements will also be made with brokerage firms and certain other custodians, nominees, and fiduciaries for forwarding solicitation materials to the beneficial owners of shares held of record by these persons, and we will reimburse them for their reasonable expenses incurred in forwarding these materials.
What happens if the meeting is adjourned or postponed?Your proxy will remain valid and the shares may be voted at any adjourned or postponed meeting. You will still be able to change your vote or revoke your proxy until the voting occurs.
Do I have rights or appraisal or similar rights of dissenters with respect to any matter to be acted upon at the annual meeting?None of the proposals to be acted upon at the annual meeting and discussed in this proxy statement carry rights of appraisal or similar rights of dissenters.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Based on the contents of reports filed with the Securities and Exchange Commission (“SEC”) pursuant to Sections 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we believe the entities listed below are the only beneficial owners of more than five percent of our common stock as of April 3, 2017. 2, 2018.
Name and Address of Beneficial Owner | Amount and Nature of | Percentage of Common | ||||
BlackRock, Inc. | 8,862,311 2/ |
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55 East 52nd Street, New York, NY 10055 | ||||||
The Vanguard Group, Inc. | 6, | 8.25% | ||||
100 Vanguard Blvd., Malvern, PA 19355 | ||||||
1/ | The ownership percentage is determined by dividing the number of shares shown in this table by the |
2/ | All information regarding BlackRock, Inc. is based on an amendment to Schedule 13G filed with the SEC on January |
3/ | All information regarding The Vanguard Group, Inc. is based on an amendment to Schedule 13G filed with the SEC on February |
As of April 3, 2017,2, 2018, our directors, director nominees, and executive officers as a group beneficially owned 4,597,9753,982,236 shares of our common stock. The individual security ownership of our directors, director nominees, and named executive officers can be found in “Security Ownership of Nominees, Continuing Directors, and Named Executive Officers.” Our directors and executive officers have informed us that they intend to vote according to the recommendations of the Board.
As of April 3, 2017, 2, 2018, the Cathay Bank Employee Stock Ownership Trust (the “ESOPT”) held 899,697820,931 shares of our
common stock. All the shares of our common stock held by the ESOPT have been allocated among the participants of the Cathay Bank Employee Stock Ownership Plan. Charles Schwab Bank, as Trustee of the ESOPT, will vote the shares allocated to a participant’s account as directed by the participant and, if no direction is received, in the same proportion of the stock voted by the Trustee on any matter as to which it has received timely directions.
ELECTION OF DIRECTORS
Under our certificate of incorporation and bylaws, the Board may consist of between three and 25 directors, and the number within the range may be changed from time to time by the Board. The Board currently consists of 12 directors, each of whom is also a director of Cathay Bank, a California-chartered bank and wholly-owned subsidiary of Bancorp.
The Board has three classes of directors and our bylaws provide that the number of directors in each class should be as nearly equal in number as possible. The term of office of each class of directors is three years. The current term of the Class IIII directors will expire at the 20172018 annual meeting of stockholders and, if elected at the 20172018 annual meeting, the new term will expire at the 2020 annual meeting of stockholders. The current term of the Class I directors will expire at the 20182021 annual meeting of stockholders. The current term of the Class II directors will expire at the 2019 annual meeting of stockholders. The current term of the Class III directors will expire at the 2020 annual meeting of stockholders.
Stockholders are being asked to elect fourfive Class IIII directors. The Class IIII directors will hold office until the 20202021 annual meeting of stockholders and their successors have been elected and qualified. The Board, based on the recommendation of the Nomination and Governance Committee and the unanimous vote of all independent directors of the Board, has nominated Nelson Chung, Felix S. Fernandez, Ting Y. Liu,Michael M.Y. Chang, Jane Jelenko, Pin Tai, Anthony M. Tang, and Richard SunPeter Wu to serve as Class IIII directors. All of the nominees except for Richard Sun, are currently directors of Bancorp and Cathay Bank, and have served continuously in these capacities since the dates indicated in the table below.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTEFOR EACH NOMINEE (NELSON CHUNG, FELIX S. FERNANDEZ, TING Y. LIU, (MICHAEL M.Y. CHANG, JANE JELENKO, PIN TAI, ANTHONY M. TANG, AND RICHARD SUN)PETER WU) AS CLASS III DIRECTORS.I DIRECTORS.
Security Ownership of Nominees, Continuing Directors, and Named Executive Officers
The following table sets forth:
The age of each nominee and director and the periods each has served as a director of Bancorp.
Information on the beneficial ownership, as that term is defined under SEC rules and regulations, of shares of our common stock as of April 2, 2018, by each nominee and
| Compensation Table” under “Remuneration of Executive Officers” (“Named Executive Officers”), and by all nominees, directors, and executive officers as a group. |
Each nominee, director, and executive officer has furnished the information on his or her own beneficial ownership set forth in the following table. Except as otherwise noted in the footnotes below, each of these persons had sole voting and investment power with respect to the common stock owned by him or her.
| Name | Age | Director of Bancorp Since | Amount and | Percentage Ownership | ||||||||||||
| Nominees for Election for the Term Ending in 2020 (Class III): | ||||||||||||||||
| Nelson Chung | 64 | 2005 | 28,285 | 2/ | * / | |||||||||||
| Felix S. Fernandez | 66 | 2013 | 4,785 | 3/ | * / | |||||||||||
| Patrick S.D. Lee****/ | 82 | 1990 | 225,899 | 4/ | * / | |||||||||||
| Ting Y. Liu | 80 | 2003 | 372,713 | 5/ | * / | |||||||||||
| Richard Sun | 64 | N/A | 5,315 | 6/ | * / | |||||||||||
| Directors Currently Serving for the Term Ending in 2018 (Class I): | ||||||||||||||||
| Michael M.Y. Chang | 79 | 1990 | 236,639 | 7/ | * / | |||||||||||
| Jane Jelenko | 68 | 2012 | 5,837 | 8/ | * / | |||||||||||
| Anthony M. Tang | 63 | 1990 | 1,026,032 | 9/ | 1.29 | % | ||||||||||
| Peter Wu**/ | 68 | 2003 | 841,964 | 10/ | 1.05 | % | ||||||||||
| Directors Currently Serving for the Term Ending in 2019 (Class II): | ||||||||||||||||
| Kelly L. Chan | 70 | 1990 | 396,149 | 11/ | * / | |||||||||||
| Dunson K. Cheng***/ | 72 | 1990 | 905,524 | 12/ | 1.13 | % | ||||||||||
| Thomas C.T. Chiu**/ | 69 | 2003 | 288,098 | 13/ | * / | |||||||||||
| Joseph C.H. Poon | 70 | 1990 | 56,725 | 14/ | * / | |||||||||||
| Other Named Executive Officers: | ||||||||||||||||
| Pin Tai | 63 | — | 20,111 | 15/ | * / | |||||||||||
| Heng W. Chen | 64 | — | 84,242 | * / | ||||||||||||
| Irwin Wong | 68 | — | 63,798 | 16/ | * / | |||||||||||
| Donald S. Chow | 66 | — | 16,048 | * / | ||||||||||||
| All nominees, directors, and executive officers as a group (18 persons) | 4,597,975 | 17/ | 5.76 | %18/ | ||||||||||||
Name | Age | Director of | Amount and | Percentage Ownership Stock 1/ | |||||
Nominees for Election for the Term Ending in 2021 (Class I): |
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Michael M.Y. Chang | 80 | 1990 | 238,039 | 2/ | */ | ||||
Jane Jelenko | 69 | 2012 | 7,237 | 3/ | */ | ||||
Pin Tai **/ | 64 | 2017 | 34,558 | 4/ | */ | ||||
Anthony M. Tang | 64 | 1990 | 985,935 | 5/ | 1.21% | ||||
Peter Wu | 69 | 2003 | 805,319 | 6/ | */ | ||||
Directors Currently Serving for the Term Ending in 2019 (Class II): |
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Kelly L. Chan | 71 | 1990 | 411,196 | 7/ | */ | ||||
Dunson K. Cheng **/ | 73 | 1990 | 842,761 | 8/ | 1.04% | ||||
Joseph C.H. Poon | 71 | 1990 | 58,125 | 9/ | */ | ||||
Directors Currently Serving for the Term Ending in 2020 (Class III): |
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Nelson Chung | 65 | 2005 | 29,685 | 10/ | */ | ||||
Felix S. Fernandez | 67 | 2013 | 6,185 | 11/ | */ | ||||
Ting Y. Liu | 81 | 2003 | 374,113 | 12/ | */ | ||||
Richard Sun | 65 | 2017 | 5,315 | 13/ | */ | ||||
Other Named Executive Officers: |
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Heng W. Chen | 65 | — | 99,018 | */ | |||||
Irwin Wong | 69 | — | 59,542 | 14/ | */ | ||||
Kim R. Bingham | 61 | — | 25,208 | */ | |||||
All nominees, directors, and executive officers as a group (16 persons) |
| 3,982,236 | 15/ | 4.90% 16/ |
*/ | Percentage of shares beneficially owned does not exceed one percent. |
**/ |
| A Named Executive Officer as well as a director. |
| 1/ | The percentage for each person in this table |
any other person.
2/ |
| Includes 11,084 shares held jointly by Mr. Chang and his spouse and 208,812 shares held by the Michael and Judy Chang Family Trust. |
3/ | Shares held by the Jelenko-Norris Intervivos Trust. |
4/ | Includes 868 shares held by the ESOPT which have been allocated to Mr. Tai’s account. |
5 | Includes |
6/ | Includes |
7/ | Includes |
| 8/ | Includes 445,577 shares held by the Dunson Cheng and Cynthia Cheng Trust, 182,452 shares held by the Dunson Cheng and Cynthia Cheng Nonmarital Shares Trust, and 102,904 sharesheld by the ESOPT which have been allocated to Mr. Cheng’s account. |
| 9 |
| Includes 46,440 shares held by the Poon Family |
| 10 | Includes |
11/ | Shares held by the Felix and Catherine Fernandez Trust. |
12/ | Includes 353,664 shares held by the |
13/ | Includes 1,100 shares held by Mr. Sun’s spouse and 3,215 shares held by JKLM Limited Partnership. |
1 | Includes |
15/ | In addition to the ownership disclosed for the persons identified in the table above, the beneficial ownership of one additional executive officer is included in the total of the table. Executive officers are those individuals designated as such for purposes of Section 16 of the Exchange Act. The total number of shares beneficially owned by all of our nominees, directors, and executive officers as a group includes |
16/ | The ownership percentage is determined by dividing the number of shares beneficially owned by all our nominees, directors, and executive officers as a group by |
Nominees, Continuing Directors, and Executive Officers
Set forth below is information concerning each nominee for election as a Class IIII director, each of the Class III and IIIII directors whose terms have not yet expired, and each executive officer. Each of the current directors is also a director of Cathay Bank, a wholly-owned subsidiary of Bancorp. The biographical information set forth below includes the person’s principal occupation, business experience over the last five years, positions held, and the experience, qualifications, attributes, or skills that led the Nomination and Governance Committee and the Board to determine that the person should serve as a director. In addition, they each have satisfied other criteria considered by the Nomination and Governance Committee and the Board in evaluating potential nominees and directors, including intelligence, personal character, integrity, and commitment to the community and Bancorp.
Nominees (Class III)(Class I)
Michael M.Y. Chang is a retired attorney, having practiced law in Los Angeles for 30 years until retiring in 2000. He was the Secretary of Bancorp and Cathay Bank from 2001 to 2010. Mr. Chang is one of the founders of the Southern California Chinese Lawyers Association. He formerly served as a director of Chinatown Service Center, a community-based Chinese-American health and human services organization in Southern California. He received a Juris Doctor degree and a Bachelor of Science degree in Accounting. Mr. Chang has been a Director of Cathay Bank since 1983 and of Bancorp since it was formed as a holding company in 1990.
Mr. Chang has been a well-respected attorney in Los Angeles for over 30 years, with the emphasis of his practice being in areas of business law, real estate, corporations, and taxation. The Board benefits from his legal experience and analysis of issues. His participation in the Chinese-American community in Southern California provides knowledge of the local economy, as well as business opportunities for Cathay Bank.
Jane Jelenko was a partner at KPMG LLP, a global audit, tax, and advisory services firm, where she became the first female consulting partner in 1983, and served over 25
years (from 1977 to 2003) in various capacities including the National Industry Director for its Banking and Finance group, a member of the firm’s board of directors, and the leader for the firm’s Banking and Investment Services Consulting group. She has also served on the Countrywide Bank board (Audit and Operations Committees), the Los Angeles Area Chamber of Commerce Executive Committee, and the Organization of Women Executives board. She currently serves on the boards of two SunAmerica Mutual Funds families, and on non-profit boards, including the Center Dance Arts of the Los Angeles Music Center, Dizzy Feet Foundation, The Gabriella Foundation, and the Constitutional Rights Foundation (emeritus). She received a Master of Business Administration degree in Finance. Also, she has been awarded certification by the UCLA Anderson Graduate School of Management’s Director Training and Certification Program. Ms. Jelenko has been a Director of Bancorp and Cathay Bank since 2012.
Ms. Jelenko brings to the Board her extensive managerial and finance experience and community service.
Pin Tai has been Chief Executive Officer and President of Bancorp and Chief Executive Officer of Cathay Bank since October 2016, President and a Director of Cathay Bank since April 2015, and Director of Bancorp since August 22, 2017. Mr. Tai joined Cathay Bank in 1999 as General Manager of New York Region with a goal to establish our footing in the East Coast region. In 2006, Mr. Tai became Executive Vice President and the General Manager of Eastern Regions, and then became the Deputy Chief Lending Officer in 2010 and the Chief Lending Officer in 2013. He has also been a Director of Cathay Bank Foundation since 2004. Mr. Tai has over 32 years of banking experience. Prior to joining Cathay Bank, Mr. Tai worked at Bank of China in its New York office to help establish its commercial lending operations in the United States.
Anthony M. Tang has been Vice Chairman of the Board of Bancorp and Cathay Bank since August 21, 2014 and has over 30 years of banking experience. He was an Executive Vice President of Bancorp from 1994 to September 2013, Senior Executive Vice President of Cathay Bank from 1998 to 2013, Chief Lending Officer of Cathay Bank from 1985 to September 2013, and Executive Vice Chairman of the
Board of Bancorp and Cathay Bank from October 2013 to August 20, 2014. Mr. Tang was formerly the Chief Financial Officer and Treasurer of Bancorp from 1990 to 2003. He received a Master of Business Administration degree. Mr. Tang has been a Director of Cathay Bank since 1986 and of Bancorp since it was formed as a holding company in 1990.
Through his service to Cathay Bank in various capacities for over 25 years, Mr. Tang brings to the Board an in-depth knowledge and understanding of its history and business, as well as his extensive knowledge of its operations including from a financial and accounting standpoint.
Peter Wu, Ph.D., has been Vice Chairman of the Board of Bancorp and Cathay Bank since August 21, 2014, and a Director, Chairman of the Board, President, and Chief Executive Officer of Cathay Bank Foundation since 2005. He was Chief Operating Officer of Bancorp and Cathay Bank from 2003 to June 2014, and Executive Vice Chairman of the Board of Bancorp and Cathay Bank from 2003 to August 20, 2014. He was the Chairman of the Board of GBC Venture Capital, Inc. from 1997 to 2014 and President and Chief Executive Officer of GBC Venture Capital, Inc. from 2003 to 2014. Prior to joining Bancorp, Mr. Wu was a co-founder, Chairman of the Board, President, and Chief Executive Officer of General Bank and its publicly-held bank holding company, GBC Bancorp, until they merged with Cathay Bank and Bancorp in 2003. Mr. Wu received a Ph.D. in Mathematics. He has been a Director of Bancorp and Cathay Bank since 2003.
Mr. Wu provides commercial banking and managerial experience to Bancorp and Cathay Bank gained from his executive management positions with GBC Bancorp and General Bank, of which he was a co-founder, and then Bancorp and Cathay Bank. He also provides institutional knowledge of the history and operations of General Bank and GBC Bancorp.
Continuing Directors (Class II)
Kelly L. Chan is a long-time owner of Phoenix Bakery Inc., a family-owned retail bakery that began in Los Angeles Chinatown and has been serving the Los Angeles area for over 80 years. Effective November 2017, Mr. Chan was appointed Vice President of Finance of Phoenix Bakery. Mr. Chan is a Certified Public Accountant with over 35 years of experience, and received a Master of Business Administration degree. He served in the U.S. Navy from 1970 to 1973 and in the U.S. Naval Reserve until his retirement in 2000 with the rank of Captain. Also, he has been awarded certification by the UCLA Anderson Graduate School of Management’s Director Training and Certification Program. Mr. Chan has been a Director of Cathay Bank since 1981 and of Bancorp since it was formed as a holding company in 1990.
Mr. Chan offers the Board substantial management experience with privately held businesses, which constitute a significant portion of the customers of Cathay Bank. As a Certified Public Accountant, Mr. Chan adds additional expertise in accounting matters, and serves as chairman of the Audit Committee.
Dunson K. Cheng,Ph.D., has been the Executive Chairman of the Board of Bancorp and Cathay Bank since October 1, 2016. He was the Chairman of the Board, President, and Chief Executive Officer of Bancorp and Chairman of the Board and Chief Executive Officer of Cathay Bank from 1994 to September 2016, and the President of Cathay Bank from 1985 to March 2015. Mr. Cheng has over 30 years of banking experience. He also serves on the boards of DiCon Fiberoptics, Inc. (a supplier of optical components, integrated modules, and test equipment for the fiber optics industry) and Tsinghua Education Foundation (N.A.) Inc. He formerly served on the board of directors of the California Bankers Association. Mr. Cheng received a Ph.D. in Physics. He has been a Director of Cathay Bank since 1982 and of Bancorp since it was formed as a holding company in 1990.
Mr. Cheng provides to the Board his extensive banking experience, his broad knowledge of the business and operations of Bancorp and Cathay Bank, and his strong management and leadership skills. His tenure as an officer and a director for over 30 years affords the Board valuable insight regarding all aspects of the business and operations of Bancorp and Cathay Bank.
Joseph C.H. Poon is the President of Edward Properties, LLC, a real estate development company that specializes in residential, industrial, and commercial projects, and has over 30 years of experience in real estate development. He received a Master of Business Administration degree and a Master of Science degree in Civil Engineering. Mr. Poon has been a Director of Cathay Bank since 1981 and of Bancorp since it was formed as a holding company in 1990. He served as the Lead Independent Director of Bancorp from July 2010 to May 2011.
Mr. Poon provides the Board with considerable managerial experience, as well as his extensive knowledge in commercial, industrial, and residential real estate construction and development. He also contributes his academic background in business and engineering.
Continuing Directors (Class III)
Nelson Chungis President of Pacific Communities Builder, Inc., which has built more than 4,000 home sites and developed more than 150 communities in Southern California. He received a Master of Urban Design degree and is a licensed architect, general contractor, and real estate broker in California.
Mr. Chung has been a Director of Bancorp and Cathay Bank since 2005.
Mr. Chung contributes managerial experience and anhis extensive knowledge of residential real estate development in Southern California, with which he has been involved for over 30 years. His academic background in urban design and his experience as an architect, general contractor, and real estate broker provide the Board with a unique perspective of the real estate market.
Felix S. Fernandezhas served as a leader at Wells Fargo in various capacities for over 15 years. In 2011, he retired as a Corporate Executive Vice President and Regional President of Community Banking for Wells Fargo in the
Northern California region,region. He was responsible for up to 150 branches, $15 billion in deposits and $1.5 billion in loans, and 2,700 employees. Prior to working at Wells Fargo, Mr. Fernandez served as Executive Vice President of International Business Banking at State National Bank in El Paso, Texas, where he was responsible for the Mexico business market, and also served in various positions at Valley National Bank of Arizona (later a part of Chase Bank). Mr. Fernandez has been active in the community and business organizations throughout his career, including affiliations with the United Way, Boys and Girls Club of America, Boy Scouts of America, Bankers Association for Finance and Trade, and the Greater Sacramento Chamber of
Commerce. He also served on the board of Sacramento State University Enterprise, Inc., Dignity Health Sacramento Service Region Board, Crocker Art Museum, the California Bankers Association, and Pan American Bank. He received a Master of Business Administration degree, with an emphasis in Finance. Mr. Fernandez has been a Director of Bancorp and Cathay Bank since 2013.
Mr. Fernandez brings with him valuable financial skills and diverse experience, along with a leadership record in the banking industry, all of which enhance the Board’s capacity to guide our future growth and development.
Patrick S.D. Lee is the founder and former President of T.C. Construction Corporation, a company involved in the construction and development of commercial and residential real estate in the greater Los Angeles area. Mr. Lee is active in the Los Angeles Chinese-American community and currently serves as a director of the Chinatown Service Center and as an advisor on the Chinese Chamber of Commerce. He has been a Director of Cathay Bank Foundation since 2004. He received a Bachelor of Science degree in Civil Engineering, and has been licensed as a structural engineer, civil engineer, and general contractor. Mr. Lee has been a Director of Cathay Bank since 1983 and of Bancorp since it was formed as a holding company in 1990. He has been serving as the Lead Independent Director of Bancorp since May 2011.
Mr. Lee provides the Board with considerable managerial experience, as well as extensive experience in commercial and residential real estate construction and development in the Los Angeles area. His active involvement in civic organizations within the Chinese-American community served by Cathay Bank, as well as his tenure as a director, provides valuable insight regarding its business and operations.
In connection with his recent retirement announcement, Mr. Lee will not seek for reelection at this stockholder’s meeting and his term as a Class III director will end on May 15, 2017.
Ting Y. Liu,Ph.D., was a co-founder and a director of General Bank and its publicly-held bank holding company, GBC Bancorp, until they merged with Cathay Bank and Bancorp in 2003. Mr. Liu was an aerospace research scientist for over 12 years, has been a real estate developer of motels and hotels, and co-founded Western Underwriter, an insurance company, in 1985. He also co-founded the Southern California Hotel/Motel Association in the early 1980s and was active in the Holiday Inn Franchisee Association where he served as the regional committee member for many terms. Mr. Liu received a Ph.D. in Aerospace Science. Also, he attended the UCLA Anderson Graduate School of Management’s Director Training and Certification Program. He has been a Director of Bancorp and Cathay Bank since 2003.
Mr. Liu’s extensive experience in commercial real estate development provides a valuable perspective on the real estate market, and his background in the insurance business provides knowledge of the insurance market. His previous service as a director of GBC Bancorp and General Bank provides additional commercial banking and financial institution experience.
Richard Sun is the President of SSS Development, Inc., a real estate investment, development, and management company. He is also the current Mayor and Council Member for the City of San Marino, California.
Dr. Sun received his D.D.S. in Dentistry in 1982 and practiced for 18 years. He also served as the Mayor for the 2012 and 2016 term and Council Member from 2009 to 2017 for the City of San Marino, California. Dr. Sun has over 30 years of experience in real estate investment and 10 years of experience serving on the boards of financial institutions. Simultaneously, he served in numerous leadership and management roles including his directorships on Trust Bank Board of Directors from 1995 to 2004 and on Omni Bank Board of Directors from 2008 to 2009. Dr. Sun is a community leader and served as Council Member for the City of San Marino since 2009 and has many years of civic service. He served on the Board of Governors of the
Los Angeles County Natural History Museum from 2003 to 2017, as President of the Chinese American Elected Officials from 2015 to 2017, as a Committee Member of both the Economic Development Committee for Monterey Park and the Design Review Committee for San Marino from 2001 to 2004, and Board Member of the Workforce Investment Committee for Los Angeles County from 2000 to 2002. He also served on the Methodist Hospital Foundation Board from 2007 to 2016 and chaired the foundation in 2013.
Dr. Sun currently serves on the Board of Governors of the Los Angeles County Natural History Museum, andas a Board Member and President of the Chinese American Elected Officials, a non-profit organization that focuses on civic engagement, membership education, and community outreach. Dr. Sun is also a board member of the Cathay Bank Foundation.
Dr. Sun has been a Director of Bancorp and Cathay Bank since May 2017. He brings with him board experiences at financial institutions as well as his depth of knowledge and experience in both public and private companies. The Board believes that his diversified skills will add valuable entrepreneurial, managerial, and leadership perspectives to the Board.
Executive OfficerContinuing Directors (Class I)s
Michael M.Y. Chang is a retired attorney, having practiced law in Los Angeles for 30 years until retiring in 2000. He was the Secretary of Bancorp and Cathay Bank from 2001 to 2010. Mr. Chang is one of the founders of the Southern California Chinese Lawyers Association. He formerly served as a director of Chinatown Service Center, a community-based Chinese-American health and human services organization in Southern California. He received a Juris Doctor degree and a Bachelor of Science degree in Accounting. Mr. Chang has been a Director of Cathay Bank since 1983 and of Bancorp since it was formed as a holding company in 1990.
Mr. Chang has been a well-respected attorney in Los Angeles for over 30 years, with the emphasis of his practice being in areas of business law, real estate, corporations, and taxation. The Board benefits from his legal experience and analysis of issues. His participation in the Chinese-American community in Southern California provides knowledge of the local economy, as well as business opportunities for Cathay Bank.
Jane Jelenkowas a partner at KPMG LLP, a global audit, tax, and advisory services firm, where she became the first female consulting partner in 1983, and served over 25 years (from 1977 to 2003) in various capacities including the National Industry Director for its Banking and Finance group, a member of the firm’s Board of Directors, and the leader for the firm’s Banking
and Investment Services Consulting group. She has also served on the Countrywide Bank board (Audit and Operations Committees), the Los Angeles Area Chamber of Commerce Executive Committee, and the Organization of Women Executives board. She currently serves on the boards of two SunAmerica Mutual Funds families, and on non-profit boards, including the United States Holocaust Memorial Museum, the Center Dance Arts of the Los Angeles Music Center, Dizzy Feet Foundation, The Gabriella Foundation, and the Constitutional Rights Foundation (emeritus). She received a Master of Business Administration degree in Finance. Also, she has been awarded certification by the UCLA Anderson Graduate School of Management’s Director Training and Certification Program. Ms. Jelenko has been a Director of Bancorp and Cathay Bank since 2012.
Ms. Jelenko brings to the Board her extensive managerial and finance experience and community service.
Anthony M. Tang has been Vice Chairman of the Board of Bancorp and Cathay Bank since August 21, 2014 and has over 30 years of banking experience. He was an Executive Vice President of Bancorp from 1994 to September 2013, Senior Executive Vice President of Cathay Bank from 1998 to 2013, Chief Lending Officer of Cathay Bank from 1985 to September 2013, and Executive Vice Chairman of the Board of Bancorp and Cathay Bank from October 2013 to August 20, 2014. Mr. Tang was formerly the Chief Financial Officer and Treasurer of Bancorp from 1990 to 2003. He received a Master of Business Administration degree. Mr. Tang has been a Director of Cathay Bank since 1986 and of Bancorp since it was formed as a holding company in 1990.
Through his service to Cathay Bank in various capacities for over 25 years, Mr. Tang brings to the Board an in-depth knowledge and understanding of its history and business, as well as extensive knowledge of its operations from a financial and accounting standpoint.
Peter Wu, Ph.D., has been Vice Chairman of the Board of Bancorp and Cathay Bank since August 21, 2014, and a Director, Chairman of the Board, President, and Chief Executive Officer of Cathay Bank Foundation since 2005. He was Chief Operating Officer of Bancorp and Cathay Bank from 2003 to June 2014, and Executive Vice Chairman of the Board of Bancorp and Cathay Bank from 2003 to August 20, 2014. He was the Chairman of the Board of GBC Venture Capital, Inc. from 1997 to 2014 and President and Chief Executive Officer of GBC Venture Capital, Inc. from 2003 to 2014. Prior to joining Bancorp, Mr. Wu was a co-founder, Chairman of the Board, President, and Chief Executive Officer of General Bank and its publicly-held bank holding company, GBC Bancorp, until they merged with Cathay Bank and Bancorp in 2003. Mr. Wu received a Ph.D. in Mathematics. He has been a Director of Bancorp and Cathay Bank since 2003.
Mr. Wu provides commercial banking and managerial experience to Bancorp and Cathay Bank gained from his executive management positions with GBC Bancorp and General Bank, of which he was a co-founder, and then Bancorp
and Cathay Bank. He also provides institutional knowledge of the history and operations of General Bank and GBC Bancorp.
Continuing Directors (Class II)
Kelly L. Chan is an owner of Phoenix Bakery Inc., a family-owned retail bakery that began in Los Angeles Chinatown and has been serving the Los Angeles area for over 75 years. He retired as Vice President of Phoenix Bakery Inc. in 2012. Mr. Chan is a Certified Public Accountant with over 30 years of experience, and received a Master of Business Administration degree. He served in the U.S. Navy from 1970 to 1973 and in the U.S. Naval Reserve until his retirement in 2000 with the rank of Captain. Also, he has been awarded certification by the UCLA Anderson Graduate School of Management’s Director Training and Certification Program. Mr. Chan has been a Director of Cathay Bank since 1981 and of Bancorp since it was formed as a holding company in 1990.
Mr. Chan offers the Board substantial management experience with privately held businesses, which constitute a significant portion of the customers of Cathay Bank. As a Certified Public Accountant, Mr. Chan adds additional expertise in accounting matters, and serves as chairman of the Audit Committee.
Dunson K. Cheng, Ph.D., has been the Executive Chairman of the Board of Bancorp and Cathay Bank since October 1, 2016. He was the Chairman of the Board, President, and Chief Executive Officer of Bancorp and Chairman of the Board and Chief Executive Officer of Cathay Bank from 1994 to September 2016, and the President of Cathay Bank from 1985 to March 2015. Mr. Cheng has over 30 years of banking experience. He also serves on the boards of DiCon Fiberoptics, Inc. (a supplier of optical components, integrated modules, and test equipment for the fiber optics industry) and Tsinghua Education Foundation (N.A.) Inc. He formerly served on the board of directors of the California Bankers Association. Mr. Cheng received a Ph.D. in Physics. He has been a Director of Cathay Bank since 1982 and of Bancorp since it was formed as a holding company in 1990.
Mr. Cheng provides to the Board his extensive banking experience, his broad knowledge of the business and operations of Bancorp and Cathay Bank, and his strong management and leadership skills. His tenure as an officer and a director for over 30 years affords the Board valuable insight regarding all aspects of the business and operations of Bancorp and Cathay Bank.
Thomas C.T. Chiu, M.D., a medical doctor, had served as President and Chief Executive Officer of an independent physicians association, chairman of its governing board, and chair of various committees at a healthcare facility in Monterey Park, California. He had been a director of General Bank and its publicly-held bank holding company, GBC Bancorp, for 10 years until they merged with Cathay Bank and Bancorp in 2003. Dr. Chiu has been a Director of Bancorp and Cathay Bank since 2003.
Dr. Chiu is a well-respected medical doctor in Southern California. He is an active participant in the Chinese-American community, which is served by Cathay Bank. He also provides institutional knowledge of the history and operations of General Bank and GBC Bancorp.
Joseph C.H. Poon is the President of Edward Properties, LLC, a real estate development company that specializes in residential, industrial, and commercial projects, and has over 30 years of experience in real estate development. He received a Master of Business Administration degree and a Master of Science degree in Civil Engineering. Mr. Poon has been a Director of Cathay Bank since 1981 and of Bancorp since it was formed as a holding company in 1990. He served as the Lead Independent Director of Bancorp from July 2010 to May 2011.
Mr. Poon provides the Board with considerable managerial experience, as well as an extensive background in commercial, industrial, and residential real estate construction and development. He also contributes his academic background in business and engineering.
Executive Officers
Pin Taihas been Chief Executive Officer and President of Bancorp and Chief Executive Officer of Cathay Bank since October 1, 2016, and President and a Director of Cathay Bank since April 1, 2015. Mr. Tai joined Cathay Bank in 1999 as General Manager of New York Regions with a goal to establish our footing in the East Coast region. In 2006, Mr. Tai became Executive Vice President and the General Manager of Eastern Regions, and then became the Deputy Chief Lending Officer in 2010 and the Chief Lending Officer in 2013. He has also been a Director of Cathay Bank Foundation since 2004. Mr. Tai has over 32 years of banking experience. Prior to joining Cathay Bank, Mr. Tai worked at Bank of China in its New York office to help establish its commercial lending operations in the United States.
Heng W. Chen has been Executive Vice President, Chief Financial Officer, and Treasurer of Bancorp and Executive Vice President of Cathay Bank since 2003, and Chief Financial Officer of Cathay Bank since 2004. He was Vice President and Chief Financial Officer of Cathay Real Estate Investment Trust from 2003 to 2013 and has been a Director, Vice President, and Chief Financial Officer of GBC Venture Capital, Inc. since
2003. Prior to joining Bancorp, Mr. Chen had over 25 years of experience in the areas of finance, accounting, and banking at City National Bank, and its publicly-held bank holding company, City National Corporation, and at Price Waterhouse. Mr. Chen was formerly a Certified Public Accountant and received a Master of Business Administration degree.
Irwin Wonghas been Senior Executive Vice President of Cathay Bank since 2014 and Chief Operating Officer of Cathay Bank since April 1, 2015. Mr. Wong joined Cathay Bank in 1988 as Vice President of Branch Administration, advanced to Senior Vice President of Branch Administration in 1989, served as Executive Vice President of Branch Administration from 1998 to 2011, as Executive Vice President and Chief Risk Officer from 2011 to 2013, and as Chief Retail Administration and Regulatory Affairs Officer from January 2014 to March 2015. He has also been a Director of Cathay Bank Foundation since 2002, and Chief Financial Officer/Treasurer of Cathay Bank Foundation from 2004 to 2011. Mr. Wong has over 35 years of banking experience. Mr. Wong is active in community organizations and serves as a director of Junior Achievement of Southern California, the California Council on Economic Education, and the Los Angeles Nashi Hongwanji Buddhist Temple.
Donald S. Chow has been an Executive Vice President and Chief Credit Officer of Cathay Bank since 2014. Mr. Chow joined Cathay Bank in August 2013 as a Consultant of the Office of the President. Prior to joining Cathay Bank, Mr. Chow was Executive Vice President and Senior Supervisor at East West Bank from 2009 to 2013 and President of Desert Community Bank, a Division of East West Bank, from 2007 to 2009. Mr. Chow has over 25 years of banking experience in the areas of credit and commercial lending.
Kim R. Bingham has been an Executive Vice President of Cathay Bank since 2004 and Chief Risk Officer of Cathay Bank since 2014. Mr. Bingham joined Cathay Bank in 2004 as Chief Credit Officer and served in that capacity until December 2013. Prior to joining Cathay Bank, Mr. Bingham managed Private Banking for Mellon Bank in the Western United States and prior to this position, Mr. Bingham served
in a series of increasingly responsible staff and management positions in lending and credit for City National Bank. Mr. Bingham has more than 30 years of banking experience.
Mark H. Lee is the Executive Vice President and Chief Credit Officer of Cathay Bank. Mr. Lee joined Cathay Bank in April 2017 as Executive Vice President, Special Advisor to the Office of the President and was appointed as the Chief Credit Officer of Cathay Bank in December 2017. Mr. Lee has more than 27 years of banking experience and provides leadership and support to the Credit Administration function at Cathay Bank.
Prior to joining Cathay Bank, Mr. Lee has held senior leadership roles in Credit Administration and Loan Review, Loan Operations, and Asset Based Lending. He was the Senior Executive Vice President and Head of Corporate Banking of Bank of Hope (formerly known as BBCN Bank) from 2016 to 2017; Senior Executive Vice President and Chief Credit Officer of BBCN Bank (formerly known as Nara Bank) from 2009 to 2016; and Senior Vice President and Deputy Chief Credit Officer of East West Bank from 2007 to 2009.
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
We are committed to maintaining the highest standards of business conduct and corporate governance. The Board has adopted Corporate Governance Guidelines, which, together with our certificate of incorporation, bylaws, and Board committee charters, form the framework for the governance of Bancorp. The Corporate Governance Guidelines and committee charters are available at www.cathaygeneralbancorp.com.
The Board generally holds regular monthly meetings. Special meetings are called when necessary. During 2016,2017, the Board held 1413 meetings. In 2016,2017, each director attended more than 75% of the aggregate total number of meetings of the Board held during the period for which he or she has been a director, and the total number of meetings held by all committees of the Board on which he or she served during the periods that he or she served. It is our policy to invite and strongly encourage all members of the Board to attend Bancorp’s annual meeting of stockholders. All of our directors, except Felix S. Fernandez and Jane Jelenko, attended the 20162017 annual meeting.meeting of stockholders.
Dunson K. Cheng has served as both Chairman of the Board and Chief Executive Officer of Bancorp since 1994. On October 1, 2016, Pin Tai was appointed as the Chief Executive Officer of Bancorp and Dunson K. Cheng continuecontinues to lead the Board in his new role as the Executive Chairman of the Board.
The Chairman of the Board sets the agendas, presides at Board meetings, and generally takes the lead role in the boardroom. In the absence of the Chairman of the Board, a Vice Chairman presides at Board meetings. Any director may suggest the inclusion of items on the agenda and raise at any Board meeting subjects that are not specifically on the agenda for that meeting.
The Chairman of the Board can be designated by the Board as the Chief Executive Officer or the Executive Chairman. The Board does not require the separation of the offices of the Chairman of the Board and the Chief Executive Officer. The Board recognizes no single leadership model is right for all companies and at all times. The Board believes it is
important to maintain flexibility in its Board leadership structure depending on the needs of Bancorp.
The Board believes that separating the roles of the Chief Executive Officer and Chairman of the Board is the most appropriate structure for Bancorp at this time. The Board believes that this structure provides clarity of leadership following the appointment of Mr. Tai as Chief Executive Officer, and that Mr. Cheng is uniquely qualified through his experience and expertise to continue leading Bancorp in his capacity as the Executive Chairman.
In particular, the Board recognizes that managing the Board can be a separate and time intensive responsibility. By separation of
the roles of Chief Executive Officer and Chairman of the Board, it allows Mr. Tai to devote his full attention to the day-to-day supervision, management and control of the business and affairs of Bancorp and Cathay Bank, without the additional responsibilities of Chairman of the Board. The Board also believes that having a separate Chairman of the Board allows Bancorp to continue to benefit from Mr. Cheng’s vast organizational, business and industry experience and expertise in his role as Executive Chairman and from the business synergies and mentoring opportunities.
In accordance with our Corporate Governance Guidelines, if the Chairman of the Board is an employee, or not independent, an independent director shall be elected by the independent directors to serve as the Lead Independent Director.
The Lead Independent Director is elected by the majority of independent directors on an annual basis at the first executive session after the annual stockholders’stockholders’ meeting, and is charged with the following responsibilities:
Presiding at meetings of the independent directors in executive session;
Facilitating communications between other members of the Board and the Chairman of the Board and/or the Chief Executive Officer; and
Consulting with the Chairman of the Board and/or the Chief Executive Officer on matters relating to corporate governance and Board performance.
Currently, Patrick S.D. LeeNelson Chung serves as the Lead Independent Director.
The Board also accomplishes much of its governance and oversight role through its Audit, Compensation, Nomination and Governance, and Risk Committees that, with the exception of the Risk Committee, are made up entirely of independent directors, and the chairs of these committees take the lead in matters coming within their purview. In addition, the independent directors meet at least quarterly in executive session. Finally, the Chairman of the Board serves at the pleasure of the Board, and the independent members of the Board (constituting a majority of the directors) can call special meetings if the need arises. The Board believes that Bancorp’s approach to risk oversight helps to ensure that the Board can choose different leadership structures as appropriate without experiencing a material impact on its oversight or risk.
Our Corporate Governance Guidelines provide that the Board shall be comprised of a majority of directors who, in the opinion of the Board, qualify as “independent directors” pursuant to the listing standards of The Nasdaq Stock Market LLC (“Nasdaq”). An “independent director” for purposes of the Guidelines means a person other than: (i) an executive officer or employee of Bancorp or its subsidiaries, or (ii) any other individual having a
relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board considered relationships, transactions, and/or arrangements with each of its directors, including those disclosed below under “Transactions with Related Persons, Promoters and Certain Control Persons,” and determined that the following eight of its current 12 members are “independent” as defined in the Nasdaq Stock Market Rules: Kelly L. Chan, Michael M.Y. Chang, Nelson Chung, Felix S. Fernandez, Jane Jelenko, Patrick S.D. Lee (who will not seek reelection this year), Ting Y. Liu, and Joseph C.H. Poon. The Board has also determined that Mr.Poon, and Richard Sun, who is nominated for the election at the 2017 annual meeting, is “independent” as defined in the Nasdaq Stock Market Rules.Sun.
In addition, the Board has determined that:
All directors who serve on the Audit, Compensation, and Nomination and Governance Committees are independent under applicable Nasdaq listing standards and Securities and Exchange Commission (“SEC”) rules, and
All members of the Audit and Compensation Committees meet the additional independence requirement that they do not directly or indirectly receive any compensation from us other than their compensation as directors.
The independent directors meet in executive sessions without the presence of any members of Bancorp’sBancorp’s management on a regularly scheduled basis, but not less than four times a year. In 2016,2017, the independent directors met 11 times in executive session.
The Board is responsible for the oversight of risk management, but it looks to Bancorp’sBancorp’s and its subsidiary Cathay Bank’s management to develop and implement policies, processes, and procedures to appropriately identify, manage, and control risk exposure. The Board’s function is, among other things, to review these policies, processes, and procedures and determine whether they are aligned and integrated with the Board’s corporate strategy and risk tolerance, functioning appropriately, and adequately fostering a culture of risk-adjusted decision making within the organization.
In its oversight role, the Board relies to a large extent on its committee structure. Each of the committees considers the management of risk within the particular area of its responsibility. For example, the Compensation Committee has responsibility for monitoring the performance, and regularly reviewing the design and function, of our incentive compensation plans and arrangements and seeks to ensure that they do not encourage executive officers to take unnecessary and excessive risks that threaten our value and do not encourage the manipulation of reported earnings to enhance the compensation of any employee. Separately, the Audit Committee oversees activities performed by the audit and loan review functions of Bancorp. The Board has delegated the
general responsibility for overall risk management oversight to the Risk Committee. The Risk Committee meets periodically with the Chief Risk Officer. The Chief Internal Auditor of Cathay Bank reports on audit matters directly to Cathay Bank’s Audit Committee, which also evaluates the performance of the Chief Internal Auditor.
Risk management oversight is also provided through an internal committee of Cathay Bank, which is chaired by Cathay Bank’sBank’s Executive Vice President and Chief Risk Officer. This group meets at least quarterly and is responsible for evaluating relevant risk information, implementing appropriate strategies to address risks, and reporting the results to executive management, the Risk and Compliance Committee of the Cathay Bank Board of Directors, the Risk Committee, and the Board.
The Board receives regular reports from its committees, including the Risk Committee, regarding their deliberations and actions, as well as a quarterly report from the Chief Risk Officer of Cathay Bank, and regularly discusses and evaluates the risks we are facing and the effectiveness of actions being taken to monitor and control exposure from such risks. In addition, the independent directors meet at least annually in executive session with Cathay Bank’sBank’s Chief Risk Officer, Cathay Bank’s Chief Internal Auditor, and representatives of Bancorp’s independent registered public accounting firm.
The directors of Bancorp are also the directors of Cathay Bank and members of certain of its committees. The Board has five standing committees: Audit Committee, Compensation Committee, Investment Committee, Nomination and Governance Committee, and Risk Committee. Each of these committees has adopted a written charter of which is available on our website at www.cathaygeneralbancorp.com. The following table identifies the current committee membership and the number of meetings held in 2016:2017:
Name | Audit | Compensation | Investment | Nomination | Risk | Audit | Compensation | Investment | Nomination | Risk | ||||||||||
| Kelly L. Chan | Chair | x | x | Chair | X |
| X |
| ||||||||||||
| Michael M.Y. Chang | x | x |
|
|
| X | X | |||||||||||||
| Dunson K. Cheng | Chair | x |
|
| X |
| X | |||||||||||||
| Thomas C.T. Chiu | x | |||||||||||||||||||
| Nelson Chung | Chair |
|
|
|
| X | ||||||||||||||
| Felix S. Fernandez | x |
|
|
|
| X | ||||||||||||||
| Jane Jelenko | x | x | x | X |
|
| X | Chair | ||||||||||||
| Patrick S.D. Lee | x | |||||||||||||||||||
| Ting Y. Liu | x | Chair | x | x | X | Chair |
| X | X | |||||||||||
| Joseph C.H. Poon | x | x | Chair |
| X | Chair | Chair |
| ||||||||||||
Richard Sun | ||||||||||||||||||||
Pin Tai | ||||||||||||||||||||
| Anthony M. Tang |
|
|
|
|
| |||||||||||||||
| Peter Wu | x | x |
|
| X |
| X | |||||||||||||
| Number of Committee Meetings Held in 2016 | 13 | 10 | 2 | 4 | 7 | |||||||||||||||
Number of Committee Meetings Held in 2017 | 15 | 11 | 2 | 4 | 7 | |||||||||||||||
The Audit Committee oversees Bancorp’sBancorp’s financial reporting on behalf of the Board. It appoints and evaluates Bancorp’s independent auditors, and reviews with the independent auditors the proposed scope of, fees for, and results of the annual audit. It reviews the system of internal accounting controls and the scope and results of internal audits with the independent auditors, the internal auditors, and Bancorp management. It considers the audit and non-audit services provided by the independent auditors, the proposed fees to be charged for each type of service, and the effect of non-audit services on the independence of the independent auditors.
As provided by its charter, the Audit Committee shall be comprised of three or more directors, and its members must meet the Nasdaq listing standards, the regulations of the SEC, and the requirements of the Federal Deposit Insurance Corporation.
All members of the Audit Committee are “independent” as defined in the Nasdaq listing standards. The Board conducted a review regarding whether any members of the Audit Committee meet the criteria to be considered an “audit committee financial expert” and determined that Mr. Chan, its Chairman, and Ms. Jelenko each qualifies as an “audit committee financial expert,” as defined in Item 407(d)(5) of the SEC’s Regulation S-K.
The Audit Committee does not have a policy for pre-approving services to be provided by Bancorp’s Bancorp’s
independent auditors. All services to be provided to Bancorp by its independent auditors are subject to review and approval by the Audit Committee in
advance of the performance of the services, provided that the Audit Committee will not approve any non-audit services proscribed by Section 10A(g) of the Exchange Act in the absence of an applicable exemption. The Audit Committee may delegate to a designated member or members of the Audit Committee the authority to approve such services so long as any such approval is reported to the full Audit Committee at its next scheduled meeting. The Audit Committee has not delegated such authority.
The purpose of the Compensation Committee is to exercise oversight with respect to the compensation philosophy, policies, practices, and implementation for our executive officers and directors, the administration of our equity-based compensation plans, and the administration of our incentive and other plans for our executive officers. In addition to its risk management responsibilities as described above, the Compensation Committee has responsibility for: (a) establishing our compensation policies and practices with regard to our Chief Executive Officer and the other executive officers; (b) reviewing and approving, at least annually, goals and objectives with respect to the performance of our Chief Executive Officer and the other executive officers; (c) evaluating, at least annually, the performance of our Chief Executive Officer and the other executive officers in light of the corporate goals and objectives and the performance evaluations; and
(d) administering our equity-based compensation plans, including making awards and determining the terms and conditions of awards.
As provided by its charter, the Compensation Committee is comprised of at least two members of the Board. Each member of the Compensation Committee is required to be and is an “independent director” and otherwise qualifies as a member of the Compensation Committee under the Nasdaq listing standards; qualifies as a “non-employee director” under Rule 16b-3(b)(3)(i) promulgated by the SEC under the Exchange Act; and qualifies as an “outside director” under the rules promulgated by the Internal Revenue Service under Section 162(m) of the Internal Revenue Code.
The Investment Committee oversees Bancorp’sBancorp’s investment and funds management policies at the holding company level. This committee exists alongside the Investment Committee at Bancorp’s subsidiary, Cathay Bank.
Nomination and Governance Committee
All members of the Nomination and Governance Committee are “independent” as defined in the Nasdaq listing standards and the Nomination and Governance Committee shall be comprised of three or more members of the Board. This committee identifies and evaluates candidates qualified to serve as members of the Board and makes recommendations to the Board regarding such candidates. In addition, the committee has the following responsibilities with respect to corporate governance: (a) developing and recommending to the Board a set of corporate governance guidelines, reviewing and reassessing as appropriate the adequacy of any corporate governance guidelines adopted by the Board and recommending any proposed changes to the Board; (b) considering any other corporate governance issues that arise, developing appropriate recommendations for the Board, and addressing matters of corporate governance not otherwise delegated to other committees of the Board; (c) serving in an advisory capacity to the Board on matters of organizational and governance structure; (d) overseeing the implementation of the Board’s annual reviews of director independence; (e) developing and recommending to the Board a process to evaluate performance of the Board and its committees, and implementing and overseeing any process adopted; (f) reviewing and reassessing taking into account the assessments of the relevant committees, the adequacy of the various committee charters and recommending any proposed changes to the Board; and (g) assisting the Board in reviewing our senior management development and succession planning. Nominees for this 20172018 annual meeting of stockholders were recommended by this committee and unanimously approved by all of Bancorp’s independent directors.
The policy of the Nomination and Governance Committee is to consider candidates properly recommended by our stockholders. In evaluating any such candidates, the Nomination and Governance Committee will consider the criteria described below. Any such recommendations should include the nominee’snominee’s name and qualifications for membership on the Board and should be directed to Lisa L. Kim, Secretary, Cathay General Bancorp, 777 North
Broadway, Los Angeles, California 90012. In addition, our bylaws permit stockholders to nominate directors for election at stockholder meetings. To nominate a director, stockholders must give timely notice to our Secretary in accordance with our bylaws, which require that the notice be received by our Secretary within the time periods described under “Stockholder Proposals for 20182019 Annual Meeting of Stockholders” below. The Board and the
Nomination and Governance Committee consider potential nominees based on such criteria as depth and breadth of relevant experience, intelligence, personal character, integrity, commitment to the community and to Bancorp, knowledge of the business of banking, compatibility with the current Board culture, and prominence—all in the context of the perceived needs of the Board at the point in time of the consideration. Nominees must also be acceptable to banking regulators. Bancorp seeks to ensure that at least a majority of the directors are independent under the Nasdaq listing standards and that members of Bancorp’s Audit Committee meet Nasdaq, SEC, and Federal Deposit Insurance Corporation requirements and that at least one of them qualifies as an “audit committee financial expert” under the rules of the SEC. When an independent director retires, resigns or declines to stand for reelection, the Nomination and Governance Committee generally will seek to identify and recommend to the Board candidates for election by the stockholders or by the Board to fill the vacancy who are independent as appropriate under all applicable standards.
Cathay Bank was founded in 1962 in Los Angeles, California, and is today America’sAmerica’s oldest bank founded by Chinese-Americans. Since that time, it has expanded into metropolitan areas of the U.S. that have substantial Chinese-American populations, as well as established a branch in Hong Kong and a representative office in Shanghai, Taipei, and in Taipei.Beijing. To better serve its customers, many of Cathay Bank’s employees speak both English and one or more Chinese dialects or Vietnamese. As Cathay Bank has grown and expanded, the Board and the Nomination and Governance Committee have been considering greater diversity for the Board, in terms of race, gender, national origin, geography, skills, experience, and/or expertise. While there is no specific policy in place with respect to diversity, a conscious effort has been made, and will continue to be made, to add to the Board otherwise qualified individuals who are representative of diverse backgrounds and experiences.
The process for identifying and evaluating candidates is commenced by the Board upon its determination of a need to nominate a director or fill a new position or vacancy on the Board. At the request of the Board, the Nomination and Governance Committee then seeks to identify potential candidates who meet the specific criteria given by the Board at the time of the request based on input from members of the Board and, if the Board deems appropriate, a third-party search firm.
The process begins with the Nomination and Governance Committee conducting inquiries into the backgrounds and qualifications of such candidates. If the Nomination and Governance Committee determines that a candidate is qualified to serve as a director and that he or she should be recommended to the Board, the Board will then review the recommendation and the accompanying information. If the
Board is interested in a proposed candidate, it will designate a member to contact the candidate to discuss the proposed nomination, and determine if the candidate is interested in the nomination and if there is any reason why the Board should not proceed with the nomination. Depending on the outcome, the next step is for the candidate to meet with all members of the Board.
Following these meetings, and using the input from such interviews and the information obtained by the Nomination and Governance Committee, the Nomination and Governance Committee will evaluate whether the candidate meets the
requisite qualifications and criteria and should be recommended to the Board. Candidates recommended by the Nomination and Governance Committee are then presented to the Board for selection as nominees for election by the stockholders or by the Board to fill a vacancy. The Nomination and Governance Committee expects that a similar process will be used to evaluate nominees recommended by stockholders.
A summary of the qualifications and reasons considered by the Board in connection with its nomination of each director nominee is set forth above under the section entitled “Proposal One–One–Election of Directors–Nominees, Continuing Directors, and Executive Officers.”
The purpose of the Risk Committee is to oversee the risk management practices of our operations. This committee exists alongside the Risk and Compliance Committee at Cathay Bank.
The Risk Committee is responsible for, among other things, responsible for documenting, reviewing, and approving, on an oversight basis, our enterprise-wide risk management practices, and overseeing the operation of, on an enterprise wide-basis, an appropriate risk management framework commensurate with our capital structure, risk profile, complexity, activities, size, and other appropriate risk-related factors.
As provided by its charter, the Risk Committee shall be composed of at least three Board members and shall be chaired by an independent director. The independent director chair (a) shall not be an officer or employee and shall not have been an officer or employee during the previous three years, (b) shall not be a member of the immediate family, as defined in Regulation Y, of a person who is, or has been within the last three years, an executive officer, as defined in Regulation O, and (c) shall be an independent director under Item 407 of the SEC’s Regulation S-K.
Our Corporate Governance Guidelines provide that directors should hold shares of our common stock with a value equal to two times the amount of the annual cash retainer paid to directors as of March 15, 2012, or the date the director is elected to the Board, whichever is later. It further provides that directors should achieve such holdings within five years of joining the Board or, in the case of directors serving at the time the Guidelines were first adopted, within five years of March 15, 2012. As of April 2, 2018, we believe all directors meet such holding requirements.
The directors of Bancorp are also the directors of Cathay Bank’sBank’s board of directors (“Bank Board”) and members of certain of its committees.
For 2016,2017, with the exception of Anthony M. Tang and Peter Wu as discussed below, each director who was not also a full-time officer of Bancorp or Cathay Bank was paid an annual retainer
of $50,000$52,000 payable on a monthly basis in cash and a fee of $750 for each committee meeting or executive session of independent directors attended, except for the regular monthly meeting. Board and Bank Board committee meetings that are held on the same day count only as one meeting, except for the Audit Committee and the Bank Board’s Audit Committee. In addition, the following annual retainers were paid: $12,000$20,000 to the Lead Independent Director of Bancorp, $12,000$15,000 to the chair of the Audit Committee, $15,000 to the chair of the Bank Board’s Credit Committee, $10,000 to the chair of the Compensation Committee, and $6,000$7,500 to the chairs of all other Board or Bank Board committees other than the chairs of the Bank Board’s Audit Committee, Investment Committee, and Risk & Compliance Committee who only received retainers for their service as the respective chairs of the Board’s Audit Committee, Investment Committee, and Risk Committee. Bancorp and Cathay Bank reimburse directors for out-of-pocket expenses incurred in attending meetings of the boards and committees and in traveling on company business. The Compensation Committee advises the Board on director compensation.
Effective April 1, 2016, the annual retainers were adjusted as follows: $20,000 to the Lead Independent Director of Bancorp, $15,000 to the chair of the Audit Committee, $10,000 to the chair of the Compensation Committee, and $7,500 to the chairs of all Board or Bank Board committees other than the chairs of the Bank Board’s Audit Committee, Investment Committee, and Risk & Compliance Committee who only received retainers for their service as the respective chairs of the Board’s Audit Committee, Investment Committee, and Risk Committee. Furthermore, the annual retainer of $15,000 to the chair of the Bank Board’s Credit Committee will remain the same.
On March 17, 2016,April 13, 2017, the Board received a presentation by the Director of Human Resources of Cathay Bank, with materials that included a peer analysis and historical data on board and chairperson compensation and a recommendation to increase the compensation payable to our directors based on the data. After reviewing and discussing the materials and recommendation, the Board determined to award each of the non-employee directors and Anthony M. Tang and Peter Wu, who are employee directors, a number of shares of common stock with a target value of $50,000 based on the closing price that day.on the grant day, as additional compensation for their service as directors on the Board and its committees.
Our Corporate Governance Guidelines provide that the Board may makeother exceptions to the policy that a director who is also an officer or employee of Bancorp shall not receive additional compensation for such services as a director.
In addition to the awarded shares stated above, Anthony M. Tang was paid a base salary of $180,000 for his service as Vice Chairman of the Board of Bancorp and Cathay Bank, an annual retainer as chair of the Bank Board’s Credit Committee, an annual retainer as a director, and committee meeting attendance fees.
In addition to the awardedawarded shares stated above, Peter Wu was paid a base salary of $200,000 for his service as Vice Chairman of the Board of Bancorp and Cathay Bank, an annual retainer as a director, and committee meeting attendance fees.
Director Compensation
The following table sets forth for 20162017 a summary of the compensation paid to all directors who were not also a Named Executive Officer:
Name | Fees earned or | Stock | Option | Non-equity | Change in pension | All other | Total | |||||||
| Kelly L. Chan | 98,000 | 49,985 | — | — | — | — | 147,985 | |||||||
| Michael M.Y. Chang | 105,500 | 49,985 | — | — | — | — | 155,485 | |||||||
| Thomas C.T. Chiu | 107,000 | 49,985 | — | — | — | — | 156,985 | |||||||
| Nelson Chung | 72,125 | 49,985 | — | — | — | — | 122,110 | |||||||
| Felix S. Fernandez | 101,750 | 49,985 | — | — | — | — | 151,735 | |||||||
| Jane Jelenko | 83,000 | 49,985 | — | — | — | — | 132,985 | |||||||
| Patrick S.D. Lee | 120,503 | 49,985 | — | — | — | — | 170,488 | |||||||
| Ting Y. Liu | 100,247 | 49,985 | — | — | — | — | 150,232 | |||||||
| Joseph C.H. Poon | 86,375 | 49,985 | — | — | — | — | 136,360 | |||||||
| Anthony M. Tang | 289,9423/ | 49,985 | — | — | — | 7,200 | 347,127 | |||||||
| Peter Wu | 301,7694/ | 49,985 | — | — | — | 8,000 | 359,754 |
1/
No stock options were granted in 2016. The aggregate number of options outstanding as of the close of December 31, 2016, for each named director is as follows: Mr. Chan—3,500, Mr. Chang—3,500, Dr. Chiu—3,500, Mr. Chung—3,500, Mr. Lee—3,500, Mr. Liu—3,500, and Mr. Poon—3,500.
2/
The amount in this column consist of employer contributions under the 401(k) Profit Sharing Plan. Perquisites and other personal benefits, or property, are excluded if the aggregate amount of such compensation was less than $10,000. Group life insurance, health insurance, and long-term disability insurance premiums are also excluded because such premiums are pursuant to a plan that does not favor executive officers or directors and is generally available to all salaried employees.
Name | Fees earned or | Stock | Option | Non-equity | Change in pension | All other | Total | |||||||||||||||||||||
Kelly L. Chan | 106,750 | 49,980 | — | — | — | — | 156,730 | |||||||||||||||||||||
Michael M.Y. Chang | 112,000 | 49,980 | — | — | — | — | 161,980 | |||||||||||||||||||||
Thomas C.T. Chiu 3/ | 112,750 | 49,980 | — | — | — | — | 162,730 | |||||||||||||||||||||
Nelson Chung | 82,832 | 49,980 | — | — | — | — | 132,812 | |||||||||||||||||||||
Felix S. Fernandez | 104,500 | 49,980 | — | — | — | — | 154,480 | |||||||||||||||||||||
Jane Jelenko | 92,250 | 49,980 | — | — | — | — | 142,230 | |||||||||||||||||||||
Patrick S.D. Lee 4/ | 50,667 | 5/ | 49,980 | — | — | — | — | 100,647 | ||||||||||||||||||||
Ting Y. Liu | 105,500 | 49,980 | — | — | — | — | 155,480 | |||||||||||||||||||||
Joseph C.H. Poon | 93,750 | 49,980 | — | — | — | — | 143,730 | |||||||||||||||||||||
Richard Sun | 59,418 | 0 | — | — | — | — | 59,418 | |||||||||||||||||||||
Anthony M. Tang | 290,500 | 6/ | 49,980 | — | — | — | 7,200 | 347,680 | ||||||||||||||||||||
Peter Wu | 306,000 | 7/ | 49,980 | — | — | — | 8,000 | 363,980 | ||||||||||||||||||||
1/ No stock options were granted in 2017. The aggregate number of options outstanding as of the close of December 31, 2017, for each named director is as follows: Mr. Chan—3,500, Mr. Chung—3,500, Mr. Liu—3,500, and Mr. Poon—3,500. 2/ The amount in this column consist of employer contributions under the 401(k) Profit Sharing Plan. Perquisites and other personal benefits, or property, are excluded if the aggregate amount of such compensation was less than $10,000. Group life insurance, health insurance, and long-term disability insurance premiums are also excluded because such premiums are pursuant to a plan that does not favor executive officers or directors and is generally available to all salaried employees. 3/ Dr. Chiu passed away on February 25, 2018. 4/ Mr. Lee retired from his directorship on May 15, 2017. This amount consist of $23,668 for Mr. Lee’s services as Director of the Board, a retainer fee of $19,499 as director of Bancorp and Cathay Bank up to May 15, 2017, and $7,500 as Director Emeritus. 6/ This amount consists of $180,000 for Mr. Tang’s services as Vice Chairman of the Board of Bancorp and Cathay Bank, a retainer fee of $52,000 as a director of Bancorp and Cathay Bank, an annual retainer fee of $15,000 as chair of the Bank Board Credit Committee, and committee meeting attendance fees of $43,500. 7/ This amount consists of $200,000 for Mr. Wu’s services as Vice Chairman of the Board of Bancorp and Cathay Bank, an annual retainer fee of $52,000 as a director of Bancorp and Cathay Bank, and committee meeting attendance fees of $54,000. Compensation Discussion and Analysis This Compensation Discussion and Analysis (“CD&A”) is intended to provide information relevant to an understanding of our executive compensation program, philosophy and objectives, our process for making compensation decisions, and our executive compensation components. We also address the factors most relevant to an understanding of our compensation policies and decisions regarding the Objectives of Our Executive Compensation Program It is our policy to build stockholder value by attracting, motivating, and retaining capable executive management and other key personnel for the purpose of achieving our business goals. We seek to implement this policy, in part, through our executive compensation program. We believe that an effective executive compensation program is one in which executive officers receive compensation that is competitive with the practices of other financial institutions in our market area, but which at the same time ties compensation to our financial and operating performance and does not encourage the taking of unnecessary and excessive risk or encourage the manipulation of reported earnings. In addition, we believe that individual compensation should be based on the experience, performance, and responsibility level of the executive officers and their contributions towards achievement of our business goals. Further, we believe that an effective executive compensation program is one that is designed to align the interests of our executive officers with those of our stockholders through both cash and equity-based incentive compensation that rewards performance as measured against the achievement of our annual, long-term, and strategic goals. Accordingly, our executive compensation program consists of cash and non-cash components, all of which are intended to work together to help fulfill the objectives of our compensation policy, which are to: attract, motivate, and retain capable executive management and other key personnel; optimize the individual performance of our executive officers and our financial and operating performance; align the interests of our executive officers with those of our stockholders and link specific performance to the overall quality and sustainability of our performance and profitability; ensure that we are not unnecessarily exposed to risks or to the manipulation of our reported earnings; We seek to combine these components, which are described below, in such a way as to best achieve these 2017 The following are highlights of our financial performance for Net income increased to $176.0 million from $175.1 million in 2016. Net income was affected by $23.4 million of additional tax expense related to the revaluation of our deferred tax assets and a $2.6 million pretax write-down of low income housing tax credit investments, both as a result of the Tax Cuts and Jobs Act (“TCJA”). Diluted earnings per share (“EPS”) decreased from $2.19 in 2016 to $2.17. It should be noted that the two TCJA-related items referenced in the prior paragraph had the effect of reducing diluted EPS by $0.31. Total loans increased by $1.7 billion, or 14.91%, to $12.9 billion at December 31, 2017, compared with $11.2 billion at December 31, 2016. Total deposits increased by $1.0 billion, or 8.7%, to $12.7 billion at December 31, 2017, from $11.7 billion at December 31, 2016. Cathay Bank’s efficiency ratio for 2017 was 44.40%, compared to 49.79% for 2016. Net interest margin for 2017 increased to 3.63% compared to 3.38% in 2016. Consistent with our continued strong financial performance, our total shareholder return for 2017 The following are significant developments with respect to our Base salaries are adjusted, when appropriate, as of April 1. Salary adjustments as of April 1, 2017 ranged from 0% (for Mr. Cheng) to 7.1% in the case of Mr. Tai. The Compensation Committee adopted a redesigned structure for the bonus plan applicable to officers other than the CEO and the Executive Chair. As described in more detail below, the new plan is based on EPS, return on assets (“ROA”), and individual performance, and provides explicit formulas by which performance against these three metrics is assessed in determining the annual bonus. Components of Our Executive Compensation Program The Compensation Committee believes that the design of our executive compensation program provides a proper balance competitive base salaries, short-term bonuses, and long-term equity incentives. In addition, we provide our executive officers with: retirement benefits under a 401(k) plan and an employee stock ownership plan for employees who met their eligibility requirements prior to January 2003, life, health, dental, disability, and medical reimbursement plans, and perquisites and other personal benefits. Each of these components serves as a means to achieve one or more of the objectives of our executive compensation program. The Compensation Committee does not follow rigid formulas for allocating compensation among these various components. Instead, it utilizes its judgment taking into account our safety and soundness, as well as consideration of our business objectives, fiduciary and corporate responsibilities (including internal equity considerations and affordability), competitive pay practices and trends, and regulatory requirements. We describe below each of these components and how determinations are made in general by the Compensation Committee under our compensation program for our executive officers. The specific amounts paid or awarded to our Named Executive Officers for Base Salaries We provide our executive officers with a base salary to compensate them for services rendered during the year and to attract, motivate, and retain them. The Compensation Committee does not apply any fixed formula for setting base salaries for our executive officers. Instead, it considers a wide range of factors. In particular, the Compensation Committee The evaluation of each executive The Compensation Committee also takes into consideration the base compensation of executive officers in equivalent positions at banks and bank holding companies considered to be similar to Cathay Bank and Bancorp. We believe it is helpful to consider comparative market information about compensation paid to executive officers of other companies in our business and geographic marketplace that seek similarly skilled and talented executives. We want to be able to retain our executive officers and, accordingly, we take into consideration publicly available information about compensation paid to executive officers at other financial institutions in making our decisions about compensation. However, we do not establish compensation levels based on benchmarking and we do not attempt to maintain a certain target percentile within any peer group to determine compensation. We view information on pay practices at other institutions as relevant to a general understanding of the market and for assessing the competitiveness and reasonableness of our executive compensation program. Salary levels are typically considered in March as part of our employee performance review process. Salary levels may also be reviewed and adjusted for an executive officer upon a promotion or change in job responsibility or for special retention purposes. The Compensation Committee does not set any target range or apply any formulas or any particular minimum or maximum percentages. Instead, it considers the base salary increases on a case-by-case and year-by-year basis applying the factors set forth above. Cash Bonuses The Compensation Committee adopted, effective January 1, 2014, an Executive Officer Annual Cash Bonus Program (the “Bonus Program”), pursuant to which our executive officers may be entitled to cash bonus awards that constitute cash awards under our 2005 Incentive Plan, as amended and restated effective May 18, 2015 (the “2005 Incentive Plan”). The purpose of the Bonus Program is to attract, motivate, and retain capable executive management and other key personnel by providing incentives that are commensurate with prudent risk taking, that do not pose a threat to safety and soundness, and that seek to link compensation to our overall strategic goals. To determine a participant’s bonus award, the Compensation Committee may establish for a “program year” company-wide financial criteria, including the achievement of quantifiable financial metrics (e.g., Equity Incentives The 2005 Incentive Plan permits us to grant stock options, stock awards (including shares, stock appreciation rights, stock units and other similar awards), and cash awards. Equity awards under the 2005 Incentive Plan compensate eligible participants for their contributions to our business and encourage them to exert maximum efforts for our success by providing them with an opportunity to benefit from increases in the value of our common stock, thereby aligning the interests of the participants with those of our stockholders. In this manner, the awards serve as an incentive and reward for the achievement of our long-term business goals and a means to attract, motivate, and retain key personnel. The Compensation Committee has authority to determine the number and type of equity awards for executive officers and other employees. Awards are generally based on a qualitative analysis of the overall performance and profitability, taking into account the factors discussed above under “Base Salaries” and “Cash Bonuses.” For general reference purposes only, the Compensation Committee also will consider the size of awards made in the past to each individual and also generally refer to the size of awards made at other banks and bank holding companies of comparable size and complexity. Consideration is also given to the estimated dilutive effect of such awards on our stockholders. For the past several years, the equity incentive awards made by the Compensation Committee have been in the form of Awards generally have been made on meeting dates that are specified in advance of the actual meeting. Awards are also made on occasion during the year to newly hired or newly promoted officers or for special retention purposes. Such awards for new hires, promotions, and retention become effective on the date of approval of the award by the Compensation Committee. All awards are made at or above the fair market value of our common stock as quoted on the Nasdaq Global Select Retirement and Other Benefits schedule for the matching contribution is 0% for less than two years of service, 25% after two years of service and from then on, at an increment of 25% each year until 100% is vested after five years of service. In addition, Cathay Bank maintains the Bank Employee Stock Ownership Plan (the “ESOP”), under which a We also provide group life, health, dental, disability, and medical reimbursement plans that do not discriminate in scope, terms, or operation in favor of our executive officers and that are generally available to all salaried employees. Our executive officers are eligible to participate in all of these plans on the same terms as other Perquisites and Other Personal Benefits We provide our executive officers with perquisites and other personal benefits that the Board and the Compensation Committee believe are reasonable and consistent with our overall compensation program to better enable us to attract and retain employees for key positions. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to the executive officers. Currently, these perquisites consist primarily of automobile expenses and club memberships. For Establishing Our Executive Compensation Role of Compensation Committee The Compensation Committee, which is comprised of independent directors, exercises oversight with respect to the compensation philosophy, policies, practices, and implementation for our executive officers and directors. For information relating to the composition and responsibilities of the Compensation Committee, see “Compensation Committee” under section “Board of Directors and Corporate Governance” above. The Chief Executive Officer and the Compensation Committee review the performance of each executive officer (other than the Chief Executive The Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel, or such other advisors to the Compensation Committee as it, in its sole discretion, deems necessary or advisable to assist it in carrying out its responsibilities. The Compensation Committee is responsible for the appointment, compensation, and oversight of the work of any such compensation consultant or other advisor. Before selecting an advisor or receiving advice, other than from our in-house counsel, the Compensation Committee makes inquiry and assesses the responses to determine whether there are any potential conflicts of interest. In making its determinations with respect to compensation, the Compensation Committee also has access to and seeks input from senior management, the Lead Independent Director, and other directors, as well as receiving administrative support and advice from the General Counsel, the Director of Human Resources of Cathay Bank, the Chief Risk Officer of Cathay Bank, our senior risk officers, and representatives of other departments of Cathay Bank. Compensation Consultant In June 2012, the Compensation Committee retained Frederic W. Cook & Co., Inc. (“FWC”) as its compensation consultant. FWC reports directly to the Compensation Committee. Management has not retained its own compensation consultant. The Compensation Committee has conducted an inquiry and assessment with respect to FWC, and determined that it is independent of management, provides no other services to us or to management, has in place policies and procedures designed to prevent conflicts of interest, and has no conflicts of interest in acting as a compensation consultant to the Compensation Committee. As part of its engagement, FWC informs the Compensation Committee on practices and trends in executive compensation in the banking sector and current guidelines on executive compensation of proxy advisory firms, and provides compensation data with respect to comparable financial institutions. FWC has assisted the Compensation Committee in numerous areas, including (a) designing a compensation plan for certain of our executive officers that can meet, as applicable, the requirements of Section 162(m) of the Internal Revenue Code, (b) structuring our equity compensation program, (c) assessing whether our incentive compensation program will be commensurate with prudent risk-taking and links specific performance to the overall quality and sustainability of our performance and profitability, and (d) reviewing the CD&A in our proxy statements. FWC was consulted by the Compensation Committee as to how annual and long-term incentives might be structured and, in particular, with respect to the design of the Bonus Program and of the performance-based Peer Group As part of its engagement, FWC has advised the Compensation Committee in its selection of a group of peer companies (“Peer Group”) for purposes of assessing the competitiveness of executive compensation and performance. In compared to the • Umpqua Holdings Corporation • Valley National Bancorp • Western Alliance Bancorporation FWC again reviewed Compensation Decisions for Named Executive Officers During Base Salaries.On March Annual Base Salary Before Adjustment ($) Annual Base Salary After Adjustment ($) Kim R. Bingham Bonuses. While Mr. Tai and Mr. Cheng’s bonus structure was continued in Name EPS Percentage ROA Percentage Individual / Departmental Goal Percentage Heng W. Chen Irwin Wong Kim R. Bingham For each metric, the bonus structure provides for EPS Goal ROA Percentage Performance Rating with Respect to Individual / Departmental Goal Minimum Payout of 25% of Target Target Payout of 100% Maximum Payout of 150% $2.913 or greater 1.625% or greater 4.75 or greater There was no bonus payout for performance below minimum levels and, were 90%, 100%, and 110% respectively, a bonus of $78,400 would have been payable, computed as: EPS ROA Individual / Departmental Goal Amount of Target Bonus Payout Percentage Payout Total Payout On March Name Amount of ($) Pin Tai Heng W. Chen Dunson K. Cheng Irwin Wong Kim R. Bingham The basis on which the amounts of the cash bonus awards were determined was as follows for each of the Named Executive Pin In March 2017 the Compensation Committee As part of the bonus process, individual/departmental goals were values and In December 2017, the Heng W. Mr. Chen acquisition of Far East National Bank, the Compensation Committee increased the bonus that was otherwise payable to him by 10%. The Compensation Committee Dunson K. Cheng In March 2017 the Compensation Committee established the Company’s net income as the specific financial performance criteria for the award of a cash bonus to Mr. Cheng for the measurement period of Under the bonus plan, net income Irwin Mr. Wong As described above, the Kim R. Bingham Mr. Bingham’s individual/departmental goals included goals with respect to completion of enterprise risk assessment/appetite statements and enterprise risk management, formulation of the Equity Incentives. FWC was consulted in 2013 by the Compensation Committee with respect to the structure of the program for performance-based the awards. It was determined that executives would be granted a target number of If target performance is achieved, each The number of target If a “change in “retirement” as these terms are defined in the award agreement. Provision is made for cancellation of The Compensation Committee generally determined in December 2017 to follow the 50/25/25 structure adopted in 2016, but with two modifications resulting from the TCJA. The Compensation Committee considered the impact of the TCJA on the deductibility of executive compensation. In particular, it discussed the implications of the amendment of Internal Revenue Code section 162(m), which generally imposes a deduction limit of $1 million on compensation paid to named executive officers. Section 162(m) previously included an exception for compensation that met the rules for performance-based compensation. This exception preserving the deductibility of performance-based compensation was repealed by the TCJA for payments made beginning in 2018, except with respect to payments made pursuant to written binding contracts that were (i) in effect on November 2, 2017 and (ii) not modified in any material respect after that date. These changes to section 162(m) by the TCJA will result in the future payment of bonuses and long-term incentives to Messrs. Tai and Cheng no longer being deductible by the Company to the extent these payments, in combination with other payments to them, exceed the $1 million limit. The base salary rates in effect as of April 1, 2017 for Messrs. Tai and Cheng were $750,000 and $800,000, respectively. The Compensation Committee determined that the Company and its shareholders would be advantaged from an income tax point of view if discretionary cash bonuses of $250,000 and $200,000 were paid in 2017 to Messrs. Tai and Cheng, respectively and the amount of LTI that would otherwise have been awarded to them was reduced by an equivalent amount. These discretionary bonuses would be deductible by the Company, regardless of the changes that were made to section 162(m), because these cash bonuses, when combined with their base salaries, did not exceed the $1 million deduction limit for 2017. In this regard, the Compensation Committee’s decision was also informed by the fact that, unlike the great majority of its peer companies, the structure of the Company’s LTI relies exclusively on performance-based long-term incentives (most peers almost always use time-based restricted stock The Compensation Committee further determined that the total LTI that would have been payable to Messrs. Tai and Cheng absent the TCJA would have been $1.6 million and $.9 million, respectively, as compared to December 2016 grants of $1.5 million and $.875 million. It was also determined that, because management needed more time to consider the impact of the TCJA in order to compute the appropriate 2018-2020 EPS target for RSUs using EPS as the performance metric, such portion of the grant should be made in early 2018. Accordingly, the Compensation Committee Target LTI Dec 2017 Cash Bonus* Dec 2017 LTI Grant Mar 2018 LTI Grant Pin Tai $1.6 mil $.25 mil $.675 mil in the form of • 8,312 TSR RSUs • 7,896 ROA RSUs $.675 mil in the form of • 15,759 EPS RSUs Dunson K. Cheng $.9 mil $.2 mil $.35 mil in the form of • 4,310 TSR RSUs • 4,094 ROA RSUs $.35 mil in the form of • 8,171 EPS RSUs __________ * Awarded in lieu of LTI, resulting in ability to receive tax deduction. With respect to Messrs. Chen, Wong, and Bingham, the target LTI amounts and awards were the following: Target LTI Dec 2017 LTI Grant Mar 2018 LTI Grant Heng W. Chen $.55 mil $.275 mil in the form of • 3,386 TSR RSUs • 3,217 ROA RSUs $.275 mil in the form of • 6,420 EPS RSUs Irwin Wong $.61 mil $.305 mil in the form of • 3,756 TSR RSUs • 3,568 ROA RSUs $.305 mil in the form of • 7,121 EPS RSUs Kim R. Bingham $.34 mil $.17 mil in the form of • 2,093 TSR RSUs • 1,988 ROA RSUs $.17 mil in the form of • 3,969 EPS RSUs In considering the award of performance-based The Compensation Committee discussed an analysis of EPS for the three-year performance period and used a projected cumulative EPS for that period to establish a target EPS. The target EPS, in the opinion of the Compensation Committee, reflects reasonable earnings growth over the performance period and will not involve excessive risk to achieve. If the actual cumulative EPS for the three-year period equals the target, 100% of the For the awards based on TSR, the number of earned the performance period is below the 30th percentile when ranked against each of the peer companies, no For the awards based on ROA, the number of earned Payout of Risk Assessment In June 2010, the federal regulatory agencies, including the Federal Reserve Board, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, jointly issued the “Guidance on Sound Incentive Compensation Policies,” which is based on the following three principles that are to be incorporated in incentive compensation practices: incentive compensation arrangements should balance risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risks; a banking organization’s risk-management processes and internal controls should reinforce and support the development and maintenance of balanced incentive compensation arrangements; and banking organizations should have strong and effective corporate governance to help ensure sound compensation practices. In February 2014, the Board adopted an Incentive Compensation Policy to assist the Compensation Committee in complying with the Guidance, and adopted procedures by management to implement the policy. One of the responsibilities of the Compensation Committee, as set forth in its charter, is to monitor the performance, and regularly review the design and function, of incentive compensation plans and arrangements to ensure that they do not encourage officers to take unnecessary and excessive risks that threaten our value and do not encourage the manipulation of reported earnings to enhance the compensation of any employee. Our Compensation Committee has been meeting on a semi-annual basis with our senior risk officers, namely the Chief Risk Officer, Director of Human Resources of the Bank, and our General Counsel, to review our compensation plans and evaluate the risks, both long-term and short-term, that we face. We conduct a regular review of the business units to identify and examine risks that may be posed to us and our safety and soundness. The Compensation Committee reviews our incentive compensation arrangements to ensure that they do not encourage our executive officers to take any unnecessary or excessive risks that threaten our value, to identify features that could pose risks to us and limit those features to ensure that we are not unnecessarily exposed to risks, and to eliminate any features that would encourage the manipulation of our reported earnings to enhance the compensation of any employee. Among the matters considered are the balance between base and incentive compensation, between cash and equity compensation, and between service-based and performance-based compensation; whether performance goals are realistic and the maximum payout opportunities are reasonable; and whether awards are subject to a clawback. More specifically, in consultation with the senior risk officers, the Compensation Committee determines whether the amounts of the base salaries, the short-term cash bonuses and the Additional Information Relating to Executive Compensation Ownership Guidelines In February 2017, we amended our Corporate Governance Guidelines to provide that our Chief Executive Officer shall hold shares of our common stock with a value equal to three times the amount of his or her annual base salary. We do not require any other officer to maintain a minimum ownership interest in our stock. We believe our stock ownership requirements for the Chief Executive Officer, as well as our directors, further align the interests of the Chief Executive Officer and our directors with those of our stockholders by requiring them to hold substantial equity in Bancorp. Until the stock ownership requirements are met, the Chief Executive Officer may not sell, assign, transfer, or pledge any Bancorp stock. Compensation Recovery Policy A compensation recovery policy (or “clawback”) generally provides that bonuses or other incentive compensation awards are subject to forfeiture and recovery if such payments or awards were made based on materially inaccurate financial statements. also has a clawback provision. We believe the principles of a clawback in the event of materially inaccurate financial statements are consistent with our compensation philosophy, which ties compensation to our financial and operating performance and the overall increase in stockholder value, and which does not encourage the taking of unnecessary and excessive risks that could threaten our value or encourage the manipulation of reported earnings to enhance the compensation of any employee. Employment Agreements With the exception of the Change in Control Employment Agreements described in the next section, we have no employment agreements with any of the Named Executive Officers, with the exception of Mr. Tai, who entered into an employment agreement in connection with his role as the Chief Executive Officer and President of Bancorp and Cathay Bank (the “Employment Agreement”). The Employment Agreement generally provides for a three-year employment term commencing October 1, 2016, subject to automatic one-year extensions unless notice of non-renewal is given at least 90 days in advance of the expiration of the original or extended term. Base salary is initially set at $700,000 subject to annual review, and the Employment Agreement provides that Mr. Tai is generally eligible to participate in the same benefit programs applicable to other senior executives, including eligibility for a country club membership and use of a luxury automobile. In the event Mr. Change of Control Agreements The Board desires to promote stability and continuity of senior management and to help align their interests with those of our stockholders in the event of a change in control or potential change in control of Bancorp. Accordingly, we entered into Change of Control Employment Agreements (the “Control Agreements”) with our executive officers and each Executive Vice President of Cathay Bank. We believe that these agreements help to ensure that our key officers will remain fully engaged during a change in control or potential change in control. The Control Agreements provide for enhanced severance benefits in the event of a voluntary termination of employment for “good reason” or involuntary termination other than for “cause” following a “change in control.” Based on a review of information generally available to the public and the advice of outside legal counsel, the Board determined that these arrangements were competitive and reasonable. The Control Agreements do not influence our decisions surrounding the Named Executive Response to The Board has been annually submitting to our stockholders a proposal to approve, on an advisory (nonbinding) basis, our executive compensation. At the Pledging and Hedging Policy The Board has adopted a policy that prohibits, unless advance approval has been obtained from the Board, all directors and executive officers (including the Named Executive Officers) from holding our securities in a margin account or otherwise pledging or hypothecating our securities as collateral for a loan, entering into hedging or monetization transactions or similar arrangements with respect to our securities, or engaging in certain other speculative trading in our securities. No such requests have been made and consequently no such approvals have been Deductibility of Executive Compensation Nonqualified Deferred Compensation We do not have a deferred compensation program, and we have no current plans to implement such a program. However, we do have two deferred compensation arrangements with Dunson K. Cheng. For details regarding these deferral arrangements, see “Nonqualified Deferred Compensation” below. Accounting for Stock-Based Compensation On January 1, 2006, we adopted FASB Accounting Standards Codification Topic 718,Compensation—Stock Compensation (“FASB ASC Topic 718) on a modified prospective basis. FASB ASC Topic 718 requires an entity to recognize compensation expense based on an estimate of the number of awards expected to actually vest, exclusive of awards expected to be forfeited. With the adoption of FASB ASC Topic 718, the accounting treatment for all forms of stock options changed, thereby prompting us to review the relative merits of nonstatutory stock options and, more recently, restricted stock and We believe that being able to award restricted stock and Compensation Committee Interlocks and Insider Participation No person who was a member of the Compensation Committee during The Compensation Committee has reviewed and discussed with management the foregoing CD&A and, based on such review and discussion, has recommended to the Board that the CD&A be included in this proxy statement and incorporated by reference into Compensation Committee Ting Y. Liu (Chairman) Kelly L. Chan Joseph C.H. Poon3/This amount consists of $180,692 for Mr. Tang’s services as Vice Chairman of the Board of Bancorp and Cathay Bank, a retainer fee of $50,000 as a director of Bancorp and Cathay Bank, an annual retainer fee of $15,000 as chair of the Bank Board Credit Committee, and committee meeting attendance fees of $44,250.4/This amount consists of $200,769 for Mr. Wu’s services as Vice Chairman of the Board of Bancorp and Cathay Bank, an annual retainer fee of $50,000 as a director of Bancorp and Cathay Bank, and committee meeting attendance fees of $51,000.20162017 compensation for each of the executive officers identified in the “Summary Compensation Table” under “Remuneration of Executive Officers” below (the “Named Executive Officers”).●attract, motivate, and retain capable executive management and other key personnel;●optimize the individual performance of our executive officers and our financial and operating performance;●align the interests of our executive officers with those of our stockholders and link specific performance to the overall quality and sustainability of our performance and profitability;●ensure that we are not unnecessarily exposed to risks or to the manipulation of our reported earnings;●•more closely reflect programs that can be utilized on an ongoing basis; and ●• provide incentives that appropriately balance risk and reward, are commensurate with prudent risk-taking, and are compatible with effective controls and risk-management. objectives.objectives.2016 Performance 2016: 2017:●Net income increased 8.7% to $175.1 million from $161.1 million in 2015.●Diluted earnings per share increased 10.6% to $2.19 from $1.98 in 2015.●Total loans, excluding loans held-for-sale, increased by $1.0 billion, or 10.2%, to $11.2 billion at December 31, 2016, compared with $10.2 billion at December 31, 2015.●Total deposits increased by $1.2 billion, or 11.1%, to $11.7 billion at December 31, 2016, from $10.5 billion at December 31, 2015. ●Total nonperforming assets decreased by $7.0 million, or 9.2%, to $69.8 million, from $76.8 million in 2015.20162017 was 24%13.4% and our common stock dividend increased from $.18 per share in the fourth quarter of 2015, to $.21 per share in the fourth quarter of 2016.2016, to $.24 per share in the fourth quarter of 2017. 2016 Executive Compensation Highlights20162017 executive compensation decisions:●Dunson K. Cheng, the Chairman of the Board, President, and Chief Executive Officer, retired from his position as President and Chief Executive Officer of Bancorp and Chief Executive Officer of Cathay Bank, effective September 30, 2016. Pursuant to Bancorp’s succession plan, Pin Tai, the President of Cathay Bank was appointed Chief Executive Officer of Cathay Bank and Chief Executive Officer and President of Bancorp. In connection with these changes the annual base salary of Mr. Cheng, who remains the Executive Chairman of Bancorp, was reduced from $1,000,000 to $800,000, and Mr. Tai entered into a three-year employment agreement, as described further below.●Base salaries are adjusted, when appropriate, as of April 1. Salary adjustments as of April 1, 2016 ranged from 0% (for Mr. Cheng) to an increase from $450,000 to $700,000 in the case of Mr. Tai. Mr. Tai’s adjustment both reflected his previous promotion to President of Cathay Bank and his contemplated promotion to Chief Executive Officer of 17Cathay Bank and Chief Executive Officer and President of Bancorp. Mr. Tai’s annual base salary was not further adjusted when he became Chief Executive Officer of Cathay Bank and Chief Executive Officer and President of Bancorp in October 2016.●•Bonuses were awarded in March 20172018 based on 20162017 performance. Bonus increases for the three Named Executive Officers who occupied the same position throughout the yearActual bonuses ranged from 4%107% to 14%. Reflecting124% of targeted bonus amounts.• The Compensation Committee continued to implement the changes in position that occurred October 1, 2016, Mr. Cheng’s bonus for the year decreased 3% and Mr. Tai’s increased 126%.●Changes to Bancorp’srevised long-term incentive award program were implemented on(“LTI”) plan structure put into place in December 15, 2016. For awards approved2016, which provided that LTI would be awarded in 2016, the program was modified soform of restricted stock units (“RSUs”) and that while 50% of the awards wereare earned based on earnings per share (“EPS”)EPS over the three-year performance period beginning on January 1, 2017, the remaining 50%, which was previously2018, 25% is earned based on Bancorp’s total shareholder return (“TSR”) over the same general three-year performance period compared to comparable banks, was split so that 25% remained based on TSR compared to comparable banks and the remaining 25% wasis earned based on Bancorp’s return on assets (“ROA”) compared to comparable banks over the above-described three-year performance period. For further discussion, seeAs described below, under “Compensation Decisionsas a result of the TCJA, the Compensation Committee determined to award a portion of the LTI for Named2017 in March 2018 and, in order to maximize the deductibility of compensation paid to the CEO and the Executive Officer.”Chair, pay a portion of the LTI in the form of cash bonuses.2016 2017betweenamong the key components, which are:●competitive base salaries,●short-term bonuses, and●long-term equity incentives.●retirement benefits under a 401(k) plan and an employee stock ownership plan for employees who met their eligibility requirements prior to January 2003,●life, health, dental, disability, and medical reimbursement plans, and●perquisites and other personal benefits.20162017 and the rationale are set forth below under “Compensation Decisions for Named Executive Officers.”will considers our overall financial and operating performance and profitability, and its evaluation of each executive officer’s individual performance and contribution toward this overall performance and profitability. Our overall performance and profitability is determined, without any quantified targets or particular weighing, with reference to financial factors such as net income, earnings per share,EPS, return on average assets, return on average stockholders’ equity, efficiency ratio, and percentage increase or decrease in total assets, loans, and deposits.officer’sofficer’s individual performance involves consideration of such factors as the significance of the executive officer’s services, level of responsibility, any changes in those responsibilities, and the achievement of individual performance goals or completion of any strategic initiatives and special projects or assignments that may have been set from year to year, without any particular weight being assigned to these factors. As part of this evaluation, the Compensation Committee may consider the executive officer’s individual skills, experience, length of service, and compensation levels in past years, not only in relation to the individual’s performance in those years compared with the current year, but also in relation to competitive employment opportunities for that individual. Consideration is also given to changes in the cost of living. 18However,When permitted by law, the Compensation Committee takes into consideration the compensation history of the executive officers and will observe past ranges for reference and guidance without being bound or limited by them.diluted earnings per share, return on average assets,EPS, ROA, loan growth, deposit growth, and efficiency ratio) and metric and/or nonmetric individual or department-wide performance goals. Following completion of a program year, the Compensation Committee determines the extent to which the financial criteria and performance goals for each participant have been achieved or exceeded and the amount of the bonus award to be paid. The Bonus Program sets forth factors the Compensation Committee should take into account in determining financial criteria and performance goals and the circumstances in which the results and bonus awards may be adjusted, taking into account safety and soundness and risk-management. Any bonus awards are subject to a three-year clawback provision, whereby under specified circumstances some or all the amounts paid may be recovered or the value recouped. If necessary to comply with the deductibility requirements of Section 162(m) of the Internal Revenue Code, the Compensation Committee will determine a participant’s performance-based bonus award by reference to the pre-established, objective performance criteria and goals, the material terms of which have been approved by our stockholders under our 2005 Incentive Plan. Recent changes to Section 162(m), however, have generally eliminated the “performance-based” exception as further described below, and, as a result, starting in 2018 we expect that executive compensation is not likely to be fully deductible.individual’sindividual’s performance and ourrestricted stock units.RSUs. For the executive officers including the Named Executive Officers, other than equity incentive awards awarded in connection with the Bonus Program, the vesting of these restricted stock unitsRSUs has been based on performance, which through 2015 consistedcurrently consists of diluted earnings per share and(1) EPS, (2) TSR compared to comparable banks. In 2016, this was expanded to include a third metric –banks, and (3) ROA as compared to comparable banks. The restricted stock unitsRSUs awarded to other executive officers are time-based and vest at the end of three years.Market.Market.Bancorp’sBancorp’s primary retirement plan is the 401(k) Profit Sharing Plan, which is available to salaried employees of Cathay Bank who have completed three months of service and have attained the age of 21. Participants can contribute up to 75% of their eligible compensation for the year (subject to Internal Revenue Code limits). After a participant has one year of service, Cathay Bank matches 100% on the first 4% of eligible compensation contributed per pay period. The vesting 19participant’sparticipant’s benefits consist of cash (or cash equivalents) and shares of our common stock allocated to the participant. We have not made contributions since 2004, and do not expect to make any contributions in the future.employees.employees.2016,2017, the aggregate amount of perquisites and other personal benefits provided to our Named Executive Officers was less than $10,000 each, except for our formerExecutive Chairman, Dunson K. Cheng, and Chief Executive Officer Dunson K. Cheng.and President, Pin Tai.Officer)Officer and the Executive Chairman). The conclusions reached and recommendations made based on these reviews, which include salary adjustments, cash bonuses and equity awards, are then taken into account by the Compensation Committee as it makes decisions about compensation of the executive officers. With respect to the Chief Executive Officer and the Executive Chairman, the Compensation Committee reviews and approves the corporate goals and objectives relevant to the Chief Executive Officer’sOfficer’s and Executive Chairman’s compensation, evaluates the Chief Executive Officer’s and Executive Chairman’s performance against those objectives, andapproves the Chief Executive Officer’s and Executive Chairman’s compensation based on that evaluation. Thethose evaluations. Neither the Chief Executive Officer does not participatenor the Executive Chairman participates in any deliberations or voting regarding his own compensation. In addition, commencing October 1, 2016, the Compensation Committee sets the compensation of the Executive Chairman using a process in which neither the Executive Chairman nor the Chief Executive Officer participates. 20restricted stock unitsRSUs that were awarded by the Compensation Committee. In awarding the performance-based restricted stock units,RSUs, the Compensation Committee also consulted with FWC as to the tax and accounting treatment of the units compared to other forms of equity awards, the vesting provisions in the case of events such as death, disability, retirement, and change in control, and the range and scope of clawbacks. The amounts of the cash bonus and restricted stock unitRSU awards were ultimately determined by the Compensation Committee.September 2015,the fall of 2016, FWC reviewed the peer group adopted in 20142015 and reported that Bancorp wastwo of the companies in the 25th percentile in total assets2015 Peer Group (City National Corporation and belowNational Penn Bancshares, Inc.) had been acquired and it was desirable to add two new banks to the median in market capitalization.Peer Group to maintain the size of the group. The Compensation Committee accepted FWC’s recommendation thatand Banc of California and Opus Bank were added to the Peer Group be rebalanced so that Bancorp moved closer to the median in size.Group. As of December 31, 2015,2016, total assets for the new Peer Group ranged from $5.7$6.06 billion to $35.6$34.8 billion, and market capitalization ranged from $0.6$.8 billion to $6.0$7.3 billion. By comparison, our total assets were $13.3$14.5 billion and our market capitalization was $2.5$3.0 billion, which placed us closerat the 48th and 39th percentiles median of the new Peer Group. The new Peer Group consisted of the following 18 companies (the companies added in September 2015 are in boldface):companies:• ●Banc of California• Bank of Hawaii Corporation • ●Hope Bancorp, Inc. (formerly known as BBCN Bancorp, Inc.) • ●Boston Private Financial Holdings, Inc. ●City National Corporation *●•CVB Financial Corp. ●•East West Bancorp, Inc. • ●First Financial Bancorp • ●Flushing Financial Corporation ●•MB Financial, Inc. • ●National Penn Bancshares, Inc.Opus Bank●•PacWest Bancorp • ●Pinnacle Financial Partners, Inc. ●•PrivateBancorp, Inc. ●•Prosperity Bancshares, Inc. • ●Sterling Bancorp ●●●*City National Corporation was acquired by the Royal Bank of Canada on November 2, 2015. Its total assets were computed as of September 30, 2015 and its market capitalization as of October 28, 2015, both of which were at the top of the range.Bancorp’sBancorp’s peer group in the fall of 20162017 and notedconcluded that two companies, City National Corporation and National Penn Bancsharesno changes were no longer available as peers, due to having been acquired. FWC proposed that two new companies, Bank of California and Opus Bank, be added to replace them, which suggestion was accepted by the Compensation Committee. With respect to this new peer group, as of December 31, 2015, Bancorp was at the 50th percentile in terms of total assets and at the 60thpercentile in terms of market capitalization.needed.2016,2017, the Compensation Committee held 1011 meetings to discuss, review, and/or deliberate about our compensation program and the appropriate levels of compensation for the executive officers. As discussed in this CD&A and elsewhere in this proxy statement, the Compensation Committee, consistent with its charter and the objectives of our compensation program, reviewed and considered relevant information available to it in making its compensation decisions.While our policies and decisions with respect to our Named Executive Officers are not materially different than for our other executive officers, the Compensation Committee is not precluded from taking into account exceptional circumstances when making its decisions so long as those policies and decisions are believed to be in our best interests and those of our stockholders. In the case of our former Chief Executive Officer, the greater relative size and range of his total compensation while serving as our Chief Executive Officer until his retirement from the position in September 2016 reflect his length of service, his critical role as the key person responsible for our expansion and growth, and his leadership in guiding us through the recession and financial crisis of recent years back to profitability.17, 2016,16, 2017, the Compensation Committee adjusted the annual base salaries for each of our Named Executive Officers, effective April 1, 2016.2017. The resulting salary increases ranged from 0% to 7.1%. The annual base salaries for the Named Executive Officers before adjustment and after adjustment are as follows:Name Annual Base Salary
Before Adjustment
($) Annual Base Salary
After Adjustment
($) Pin Tai 450,000 700,000 700,000 750,000 Heng W. Chen 425,000 444,000 444,000 460,000 Dunson K. Cheng 1,000,000 1,000,000 800,000 800,000 Irwin Wong 350,000 400,000 400,000 425,000 Donald S. Chow 320,000 336,000 330,000 343,000 The Compensation Committee discussed both merit increases in the base salaries and cash bonuses for the executive officers. In making its determination of merit increases, the Compensation Committee was presented with antook into consideration the executive compensation reports prepared by FWC, the peer analysis, that included company-wide financial criteria, individual or department-wide goalsthe personal ratings and performance for each of the executive officer, historical data of base salariesofficers, and cash bonuses, a survey of competitive 21peers, and proposed performance-based 2016 annual incentive awards.presentation by Mr. Cheng discussed with the Compensation Committee Tai discussing management’s recommendations for merit increases with respect to executive officers other than Mr. Tai and Mr. Cheng.base salary2017 along the same lines as in 2016 (the precise details are described below), the structure of the executive bonus program for executives other than Mr. Tai and cash bonuses. After excusing Mr. Cheng was revised for 2017 to more precisely structure the financial and strategic criteria upon which bonuses were to be paid. While the Compensation Committee reviewedconcluded that the analysis, and discussedprior program had produced satisfactory results, it also concluded that a more precisely structured program had benefits to both the corporate performance index, target earnings per share, the overall percentage for company-wide goals, the overall percentage for individual and department goals, and personal performance for each executive officer. Mr. Cheng’s salary was not increasedexecutives and the increasesCompany in providing more certainty with respect to the computation of the bonuses. As a result of these considerations, a new bonus structure was adopted with the following characteristics:• A target bonus percentage was set as a percentage of base salary for each executive. The target bonus percentages were: Mr. Chen—75%; Mr. Wong—80%; and Mr. Bingham—70%. • For each executive, a portion of the target bonus was based upon achievement of EPS target, achievement of an ROA target, and achievement of individual/departmental goals: 49% 21% 30% 49% 21% 30% 35% 15% 50% Messrs. Chen, Wong,a range of payouts based upon achievement against the goal, as set forth in the following chart: $1.864 1.04% 2 $2.33 1.30% 3.25 Chow rangedwith respect to the EPS and ROA goals, payout occurred on an interpolated basis for performance between threshold and target and between target and maximum. With respect to the performance rating component, the payout percentage advanced in steps, i.e. a performance rating from 4%3.25 to 14%. The significant increasebelow 3.75 resulted in Mr. Tai’s base salarya 100% payout, a rating from 3.75 to $700,000 reflects his new responsibilities as President of Cathay Bank and his contemplated promotion to Chief Executive Officer of Cathay Bank and Chief Executive Officer and President of Bancorp.below 4 resulted in a 110% payout, etc.Subsequent to March 2016, Mr. Cheng’s annualBy way of illustration, if an executive’s base salary was adjusted from $1,000,000 to $800,000, effective October 1, 2016, to reflect his retirement from$100,000, the positionstarget bonus was 80%, the EPS, ROA, and individual/departmental percentages were 50%, 20%, and 30% respectively, and the percentages of Chief Executive Officer and President of Bancorp and Chief Executive Officer of Cathay Bank while continuing as Executive Chairman of the Board and of the Cathay Bank Board of Directors. Although Mr. Tai was appointed Chief Executive Officer and President of Bancorp and as Chief Executive Officer of Cathay Bank at that time as part of Bancorp’s succession plan, his annual base salary was not increased from $700,000, insofar as his salary increase on April 1, 2016 took into account his contemplated promotion to these positions at the time of Mr. Cheng’s retirement.achievementBonuses. $40,000 $16,000 $24,000 90% 100% 110% $36,000 $16,000 $26,400 $78,400 9, 2017, 1, 2018, the Compensation Committee reviewed a schedule showingdetermined the bonus amounts for each Named Executive Officer the base salaries for 2016, the cash bonus for 2015, and the long-term incentive dollar values for restricted stock units awarded in December 2016; a weighing of company-wide financial criteria, corporate goals and individual goals; target bonuses compared with peers; and Mr. Tai’s recommendations for awards with respect to Mr. Chen, Mr. Wong, and Mr. Chow. This schedule was discussed with Mr. Tai, following which he left the meeting and the Compensation Committee discussed the achievement of the previously established financial criteria and other goals by each of the Named Executive Officers.On March 10, 2017, the Compensation Committee awarded cash bonuses to the Named Executive Officers for 2016.2017. The amounts awarded to the Named Executive Officers are as follows: CashTotal Bonus 550,000712,600 340,000422,300 1,300,000Irwin Wong1,026,400 320,000Donald S. Chow 240,000378,400 266,300 The Compensation Committee previously determined the company-wide financial criteria and individual and department-wide goals on March 22, 2016 for the award ofcash bonusesAs will be described below, with respect to theeach Named Executive Officers for 2016 underOfficer, a portion of the Bonus Program. While company-wide financial criteria were established for all the Named Executive Officers, only the financial criteria for Mr. Cheng and Mr. Tai specified maximum bonus amounts related to their base salaries that depend on various levels of achievement. With respect to the company-wide financial criteria for the other Named Executive Officers, no cash bonus targets or percentages of base compensation were established.amount was paid in RSUs.Officers:Officers.Tai.TaiTheset ourestablished the Company’s net income as the specific financial performance criteria for the award of a cash bonus to Mr. Tai for the measurement period of 2016.2017. The terms of Mr. Tai’s pre-established net income goal provided for a range of potentialminimum and maximum bonuses, starting with his eligibility to receive a cash bonus, of up to 106%ranging from (1) 64.33% of his base salary foras of January 1, 2017 based on minimum net income of $115.23$147.2 million to $123.47$152.79 million (noto (2) 187.5% of his base salary as of January 1, 2017 based on net income that exceeded $208.69 million. In the event net income achieved the budgeted amount of $186.33 million, the maximum payout was 123.2% of base pay. Under the plan, no bonus iswould payable to Mr. Tai if the Company’s net income was below $115.23 million) scaling up to 190% of his base salary if net income was over $184.37$147.2 million, withand the Compensation Committee havingoriginally retained the right in its discretion to award a lesser amount than the amounts designated. Additional bonus metricsdesignated by the net income formula. also established for the Named Executive Officers. Mr. Tai’s goals included efforts with respect to management and recruitment of which 70% was based on company-wide financial performancekey officers, representation of the bank in business and the remaining 30% was based on nonquantitative goals. Of the financial criteria, 70% was tied to diluted EPS of $2.158 and 30% was tied to loan growth of 7.34%. The nonquantitative goals related largely to his individual performance and his responsibilities as President of Cathay Bank. These goals consisted of (1) motivating, coaching, and supporting direct reports in meeting or exceeding their goals, (2) recruiting high potential officers to grow Cathay Bank and strengthen the management bench, (3) representing Cathay Bank in various community functions, improving and business activities, (4) making joint calls with relationship managers to strengthen and buildbuilding relationships with current and newkey customers, (5) supporting the Greater China Business Development Department to grow the China related business, (6) coordinating with key executives and Board members to updateProgram, updating the three-year strategic plan, maintaining the bank’s core(7) overseeingcorporate culture, and providing strategic direction.commercial lending, risk management, financeCompensation Committee reviewed the performance of Messrs. Tai and accounting,Cheng and legal functionsdetermined that, based on their performance, they should be awarded the maximum amount of Cathay Bank.bonus provided by the formulas applicable to them. To preserve the deductibility of the bonuses in 2017, when the corporation’s tax rate would be higher than in 2018 when the lower corporate income tax rates under the TCJA take effect, the Compensation Committee modified the bonus plans for Messrs. Tai and Cheng to remove the Compensation Committee’s discretion to award a lower bonus than what had been earned based solely on financial performance. This modification was determined by the Compensation Committee to be necessary in order for the bonuses to be deductible in 2017, even if paid in 2018.Based onUnder the Bonus Program, abonus plan, net income of between $174.5$175.15 million to $179.44and $180.74 million would have entitled Mr. Tai to be eligible for a cash bonus of up to 165%101.8% of his base salary as of January 1, 2016,2017, or $742,500. Our$712,600. The Company’s net income for 20162017 was $175.1 million. In determining the cash bonus award for Mr. Tai, we reported diluted earnings per share for 2016 of $2.19, or 1.48% over the $2.158 target,$176 million and loan growth of 10.2% (excluding loans held for sale). Most of the nonquantitative actions are ongoing and satisfactory progress was made in 2016. Taking these factors into account and Mr. Tai’s role as the Chief Executive Officer and President of Bancorp and Chief Executive Officer of Cathay Bank on October 1, 2016, the Compensation Committee awarded Mr. Tai a cash bonus of $712,600, as required under the plan as amended in December 2017. In addition, the Compensation Committee considered the totality of Mr. Tai’s efforts for the year, both including his performance with respect to the objectives identified above and his extraordinary efforts in connection with the acquisition of Far East National Bank, the overall success of the Company in 2017, and the fact that the TCJA impacted the computation of net income and determined that he should receive an appropriateadditional bonus amount was $700,000, of which 22$550,000 was paid$207,000 payable in cash on March 15, 2017, and $150,000 was paid in restricted stock unitsthe form of RSUs granted on March 27, 20171, 2018 that will vest in three equal installments on the first, second, and third anniversaries of the grant date.date, or earlier in the event of death, disability, retirement, or change in control.Chen.ChenOf the cash bonus criteria for 70% was based on company-wide financial performance and the remaining 30% was based on nonquantitative goals. The sole financial goal was achieving diluted earnings per share of $2.158. The nonquantitative’s individual/departmental goals related largely to his individual performance and his responsibilities as Chief Financial Officer. These included actions relatedefforts with respect to supervising preparation of the Pre-Provision Net Revenue (PPNR) portion of the Dodd-Frank Act Stress Test (DFAST) and the capital plan,financial projections process, reducing the corporation’s effective tax rate, managing capital, through acquisitions, increasing dividends and possible stock buybacks, maintaining an activethe investor relations program, supervisingregulatory compliance, the treasury function, complying with applicable financialsuccession planning, and regulatory reporting requirements, developing executives as partthe integration of a long-term succession plan, and managing functional areas of his responsibility.Far East National Bank.InWith respect to Mr. Chen, the Compensation Committee applied the new bonus structure described above by determining that the cashachievement percentages for the EPS and ROA components of the plan should be computed by adjusting EPS and ROA to eliminate the effects of the TCJA. The TCJA, although beneficial to Bancorp in the future (due to the drop in corporate income tax rates), lowered net income due to $23.4 million of additional tax expense related to the revaluation of our deferred tax assets and a $2.6 million pretax write-down of low income housing tax credit investments. As adjusted, EPS for plan purposes was $2.481 and ROA was 1.36%, resulting in payout percentages for these components of the bonus awardplan of 112.96% and 109.23%, respectively. The individual/departmental goal payout percentage was computed for Mr. Chen, as previously noted, reported diluted earnings per shareresulting in a payout percentage for 2016 were 1.48% over target, andthat portion of the nonquantitative individual actions were taken and progressed satisfactorily.bonus of 110%. Finally, in recognition of the extraordinary efforts of Mr. Chen in connection with theDunson K. Chengset ourfurther determined that 10% of the total bonus should be satisfied through the distribution of a RSU grant that will be payable one year from the March 9, 2018 grant date, except for earlier payment in the event of death.2016.2017. The terms of Mr. Cheng’s pre-established net income goal provided for a range of potentialminimum and maximum bonuses, starting with his eligibility to receive a cash bonus, of up to 114%ranging from (1) 93.3% of his base salary as of January 1, 2016 for2017 based on minimum net income of $115.23$147.2 million to $123.47$152.79 million (noto (2) 208.3% of his base salary as of January 1, 2017 based on net income that exceeded $208.69 million. In the event net income achieved the budgeted amount of $186.33 million, the maximum payout was 148.3% of base pay. Under the plan, no bonus iswould payable to Mr. Cheng if the Company’s net income was below $115.23 million) scaling up to 205% of his base salary if net income was over $184.37$147.2 million, withand the Compensation Committee havingoriginally retained the right in its discretion to award a lesser amount than the amounts designated. In 2015 there had also been preparedbonus designated by the net income formula. For the reasons described in the bonus description for Mr. ChengTai, the discretion to award a list of additional performance measures to be taken into accountlesser amount was eliminated in determining the amount of his bonus, which consisted of a diluted EPS goal (weighted 70%) and individual goals of successful succession planning and management team supervision, which individual goals were collectively weighted at 30%. While a similar list was not prepared for 2016, the Compensation Committee continued to take these factors into account.December 2017.Based onMr. Cheng’s goals included (1) effectively participating in major management decisions in order to continue receiving the Bonus Program, abenefit of his unique expertise stemming from 22 years’ experience as our CEO and implementing the transition process with respect to Mr. Tai’s becoming the CEO, as well as (2) involvement in efforts in helping the Company address future issues in such areas as C&I loans and technology.of between $174.5$175.15 million to $179.44$180.74 million would have entitled Mr. Cheng to be eligible for a cash bonus of up to 178%128.3% of his base salary as of January 1, 2017, or $1,780,000. Our$1,026,400. The Company’s net income for 20162017 was $175.1 million. The$176 million and the Compensation Committee evaluatedawarded Mr. Cheng a cash bonus of $1,026,400, as required under the plan as amended in December 2017. In addition, the Compensation Committee considered the totality of Mr. Cheng’s efforts for the year, including his extraordinary efforts in connection with the acquisition of Far East National Bank, the overall performance, taking into considerationsuccess of the financial goal achieved by BancorpCompany in 2017, and other nonfinancial performance, as well as the fact that for the last three monthsTCJA impacted the computation of the year, Mr. Cheng no longer functioned as the Chief Executive Officer and President of Bancorp nor as the Chief Executive Officer of Cathay Bank,net income and determined that it was appropriate to award Mr. Cheng ahe should receive an additional bonus of $1,450,000,$248,900 payable in the form ofwhich $1,300,000 was paid in cash on March 15, 2017, and $150,000 was paid in restricted stock units RSUs granted on March 27, 20171, 2018 that will vest in three equal installments on the first, second, and third anniversaries of the grant date.date, or earlier in the event of death, disability, retirement, or change in control.Wong.WongOf the cash bonus criteria for 45% was based on company-wide financial performance and the remaining 55% was based on both quantifiable and nonquantifiable individual and department goals. The sole company-wide financial goal was achieving diluted earnings per share of $2.158. The other’s individual/departmental goals related largelyincluded goals with respect to his individual performance and his responsibilities as Chief Operating Officer of Cathay Bank. These included meeting or exceeding deposit goals,growth, mortgage loan goals, andgrowth, loan and wealth management referrals, as well asgrowth in products/services, improving the customer experience, increasing products/services per household, increasing product adoption, increasing noninterestnon-interest income, and improving customer experience. Finally, he was to satisfactorily manage hismanaging functional areas of responsibility.In determiningcashpayout percentages for the EPS and ROA components of the bonus awardplan were 112.96% and 109.23%, respectively. The individual/departmental goal payout percentage was computed for Mr. Wong, as previously noted, reported diluted earnings per shareresulting in a payout percentage for 2016 were 1.48% over target. Allthat portion of the quantifiable criteria were met or exceededbonus of 110%. The Compensation Committee further determined that 10% of the bonus that was otherwise payable to him should be satisfied through the distribution of an RSU grant that will be payable one year from the March 9, 2018 grant date, except for earlier payment in the event of death.functionalthree-year strategic and business plan, managing areas of responsibility, were managed satisfactorily.Donald S. Chow.Ofexpanded stress testing, remediation of identified weaknesses arising from regulatory examinations, and development of models to calculate the cash bonus criteriaallowance for Mr. Chow, 50% was based on company-wide financial performanceloan and lease losses (ALLL) sufficient to address the remaining 50% was based on both quantifiable and nonquantifiable individual and department goals. The sole financial goal was achieving diluted earnings per share of $2.158. The individual and department goals related largely to his individual performance and his responsibilities as Chief Credit Officer of Cathay Bank. The qualitative goals included those relating to the quarterly average of delinquencies, the ratio of nonperforming assets and other real estate owned to total loans, and operating expenses being within budget. His individual goals also included managing his functional areas of responsibility and creating a positive credit environment, as well as heading initiatives relating to loan policies and procedures, product development, productivityrequirements of the appraisal operating system, and development and implementation of a credit training program.Current Expected Credit Loss approach to ALLL determinations.In determiningAs described above, the cashpayout percentages for the EPS and ROA components of the bonus awardplan were 112.96% and 109.23%, respectively. The individual/departmental goal payout percentage was computed for Mr. Chow, as previously noted, reported diluted earnings per shareBingham, resulting in a payout percentage for 2016 were 1.48% over target. Allthat portion of the quantifiable criteria were met or exceeded,bonus of 110%. The Compensation Committee further determined that 10% of the new initiatives were undertaken, andbonus that was otherwise payable to him should be satisfied through the functional areasdistribution of responsibility were managed satisfactorily.an RSU grant that will be payable one year from the March 9, 2018 grant date, except for earlier payment in the event of death. In The general practice of the Compensation Committee has been to award in December of each year beginning in 2013, the Compensation Committee has awarded performance-based restricted stock unitsLTI compensation to the Named Executive Officers in the form of performance-based RSUs under our 2005 Incentive Plan. As will be described, the enactment of the TCJA in December 2017 affected the 2017 grant cycle by (1) causing the Compensation Committee to increase the corporation’s tax deductions by awarding a portion of what would have otherwise been LTI in the form of bonuses to the CEO and the Executive Chair and (2) delay a portion of the 2017 LTI award to 2018.restricted stock units,RSUs, which included consideration of the types and amounts of long-term incentives at companiesLTI in our Peer Group. The Compensation Committee also considered the methodologies for calculating the amounts of 23restricted stock unitsRSUs for each award type that would be based on an approved dollar value, which would then be converted to an amount of restricted stock units,RSUs, based on accounting values, which in the case of the total stockholder return-based restricted stock units,TSR-based RSUs, used the Monte-Carlo valuation model. The tax and accounting treatment of performance share units compared to other forms of equity awards, the vesting provisions in the event of death, disability or retirement or a change in control, and the range and scope of clawbacks were also considered by the Compensation Committee in approving the program.restricted stock unitRSU generally represents the right to receive one share of our common stock at the end of the performance period, subject to adjustment. Performance above the target generally results in payment of additional shares and performance below the target generally results in payment of fewer or no shares. The performance period for the restricted stock unitRSU awards is three years. For 2013 to 2015, the metrics for the awards consisted of diluted earnings per share (“EPS”)an absolute EPS metric and total stockholder return (“TSR”)a TSR metric based on stock price growth plus dividends, relative to the companies in the KBW Regional Bank Index over the performance period. The Compensation Committee chose these two metrics because it concluded that successful performance against these metrics would align well with increases in long-term stockholder value. The value of the awards was split approximately 50/50 between these two metrics. With respect to the 2016 grant, the Compensation Committee determined to introduce a third metric – return on assets (“ROA”)ROA relative to the companies in the KBW Regional Bank Index over the performance period. The Compensation Committee considered ROA an important measure of long-term financial success for Bancorp and determined that adding this additional metric would improve the operation of the long-term incentiveLTI program. It was determined that for 2016 long-term incentives would be split approximately 50/25/25 among the EPS metric, the TSR metric, and the ROA metric.restricted stock unitsRSUs will be increased to the extent that dividends are paid on our common stock, as if reinvested on the ex-dividend date in additional shares.control”control,” as defined in the award agreement, occurs before the end of the performance period, a number of the target restricted stock unitsRSUs based on EPS or TSR or ROA may be earned depending on the timing of change in control and whether the restricted stock unitsRSUs are assumed by a public company. All the restricted stock unitsRSUs earned will be fully vested, and distribution of shares will commence generally within 90 days following the end of the performance period, provided the Named Executive Officer remains continuously employed through the performance period. Special provisions will apply if a Named Executive Officer dies, incurs a “total and permanent disability” or terminates employment on account of “retirement.”restricted stock unitRSU awards or repayment under certain circumstances. In the event a restatement of our financial results occurs, up to 50% of the aggregate awards for that individual can be forfeited or cancelled, whether or not such units are vested. If a distribution of shares has already occurred, provision is made for the surrender of up to 50% of the total shares received or, if shares have been sold, repayment of the proceeds, but in no event more than 50% of the aggregate fair market value of all shares received by the employee pursuant to the award agreements.units awarded byfor some component of the program), and that, even after taking the discretionary bonuses into account, 84% of Mr. Tai’s LTI and 78% of Mr. Cheng’s LTI was in the form of performance-based RSUs.on December 15, 2016determined to delay the grant of the EPS RSUs to the Named Executive Officers are as follows:until early 2018, which grant was made on March 15, 2018. As a result of these considerations, the Compensation Committee determined that the portion of the executive compensation program intended to represent LTI for the Named Executive Officers should be made up of the following components:Name Number of
Restricted
Stock Units
Based on EPS
(#) Number of
Restricted
Stock Units
Based on TSR
(#) Number of
Restricted
Stock Units
Based on ROA
(#)Pin Tai 19,946 10,384 9,973 Heng W. Chen 6,648 3,461 3,324 Dunson K. Cheng 11,635 6,057 5,817 Irwin Wong 7,779 4,050 3,889 Donald S. Chow 4,521 2,353 2,260 restricted stock units,RSUs, the Compensation Committee reviewed materials prepared by FWC, including an analysis of the base salaries, target bonus opportunities, long-term incentives, and total compensation of our Named Executive Officers, compared with proxy statement data for our Peer Group and survey data covering the banking industry. It then set long-term incentive dollar values for each Named Executive Officer, which were divided 50/25/25 between the awards based on EPS, TSR, and ROA. The total dollar values were approximately $1,500,000 for Mr. Tai, $500,000 for Mr. Chen, $875,000 for Mr. Cheng, $585,000 for Mr. Wong, and $340,000 for Mr. Chow.restricted stock unitsRSUs will be earned and will be scaled up to 150% of the units if the actual cumulative EPS is up to 15% or more than the target. If the actual cumulative EPS is less than 100%, but not more than 15% below the target, the number of units earned will be scaled down to 50%. If the actual cumulative EPS is more than 15% below the target, none of the restricted stock unitsRSUs will be earned.restricted stock unitsRSUs will be determined by comparing our TSR from the award date to the end of the three-year performance period, with the TSR of each of the companies in the KBW Regional Bank Index over the performance period. If our TSR over the 24restricted stock unitsRSUs will be earned. If the ranking is equal to the 30th percentile, 50% of the target restricted stock unitsRSUs will be earned. To the extent that our TSR is ranked above the 30th percentile, the number of earned target restricted stock unitsRSUs will be scaled up to 150% of the target restricted stock units for performance at or above the 70th percentile, so that 100% of the target restricted stock unitsRSUs will be earned for performance at the 50th percentile.restricted stock unitsRSUs will be determined by comparing our ROA for 20172018 to 20192020 with the ROA of each of the companies in the KBW Regional Bank Index over the same period. For this purpose, ROA will consist of the average ROA over the three years. If our ROA over the performance period is below the 30th percentile when ranked against each of the peer companies, no restricted stock unitsRSUs will be earned. If the ranking is equal to the 30th percentile, 50% of the target restricted stock unitsRSUs will be earned. To the extent that our ROA is ranked above the 30th percentile, the number of earned target restricted stock unitsRSUs will be scaled up to 150% of the target restricted stock unitsRSUs for performance at or above the 70th percentile, so that 100% of the target restricted stock unitsRSUs will be earned for performance at the 50th percentile.percentile20132014 Long-Term Equity Incentives. The performance period for the long-term equity incentives awarded in December 20132014 ended December 31, 2016.2017. With respect to the awards based on EPS, the payout percentage was 150% and with110.641%.With respect to the awards based on TSR, the Company’s ranking among the 38th companies was 6th, resulting in a percentile ranking at the 86th percentile, and a payout percentage was 106%150%.●incentive compensation arrangements should balance risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risks;●a banking organization’s risk-management processes and internal controls should reinforce and support the development and maintenance of balanced incentive compensation arrangements; and●banking organizations should have strong and effective corporate governance to help ensure sound compensation practices. any employee.long-term incentiveLTI awards, both performance-based and time-based, for our executive officers appropriately balance risk and reward and do not encourage taking unnecessary and excessive risks or encourage the manipulation of reported earnings. 25
The performance-based restricted stock unitsRSUs that were awarded to executive officers in 20162017 and 2018 are subject to a clawback provision, and our Bonus Program provides for a clawback of cash bonuses as well. The 2005 Incentive Plan Tai’sTai’s employment is terminated on account of death or disability, terminated by Bancorp for reasons other than cause, or he terminates employment for good reason, he will receive as severance an amount equal to 18 months base salary in addition to accrued obligations. For more discussion, see “Employment Agreement” below.Officer’sOfficer’s cash and equity compensation. For a more detailed discussion of the severance benefits, the events that would trigger payment of severance benefits and the Control Agreements in general, see “Potential Payments Upon Termination or Change in Control” below.20162017 Vote on Executive Compensation20162017 annual meeting of stockholders, 98.57%97.6% of the votes cast were in favor of approving this proposal. The Compensation Committee was aware of and considered the results of the advisory vote on executive compensation, and has construed this favorable vote of stockholders as supporting its executive compensation decisions and policies.policies.granted.granted.As part of its responsibilities, theThe Compensation Committee reviewshas designed our bonus and considers the deductibility of executive compensation under SectionLTI programs to conform to section 162(m) of the Internal Revenue Code which providesand related regulations so that we maypayments under these programs would generally not deduct compensation of more than $1,000,000count against the $1 million deduction limit that is paidgenerally applied to certain employees. This limitation does not apply, however, to “performance-based compensation”Named Executive Officers. Accordingly, the bonus and LTI programs were designed so that is payable due to the attainment of one or more pre-established performance goals, the material terms of which have been approved by the stockholders in advance of payment, and that meet certain other technical requirementspayments would qualify under the Internal Revenue Code.exception for “performance-based” compensation. However, as described above, recent changes to Section 162(m) eliminated the “performance-based” exception, except for a limited exception with respect to written, binding contracts in effect on November 2, 2017 that are not modified in any material respect after that date, and, as a result, starting in 2018 executive compensation is not likely to be fully deductible.26restricted stock units.RSUs. A desirable feature of restricted stock and restricted stock unitsRSUs is that they permit us to issue fewer shares, thereby reducing potential stockholder dilution. We believe that restricted stock and restricted stock unitsRSUs provide an equally motivating form of incentive compensation as stock options, and we will weigh the costs of restricted stock, restricted stock units,RSUs, and nonstatutory stock option grants with their potential benefits as compensation tools. Stock options only have value to the extent that our share price on the date of exercise exceeds the exercise price on the grant date and are an effective motivational tool when the stock price rises over the term of the award. Restricted stock and restricted stock unitsRSUs serve to reward and retain executive officers through shares valued at the current price on the date the restriction lapses, which awards may be subject to both service- and performance-based conditions.restricted stock units,RSUs, separately or in combination, should serve our objectives of incentivizing our executive officers to focus on delivering long-term value to our stockholders.stockholders.20162017 had any relationships requiring disclosure.Bancorp’sBancorp’s Annual Report on Form 10-K for the year ended December 31, 2016.2017.Compensation CommitteeTing Y. Liu (Chairman)Kelly L. ChanPatrick S.D. LeeJoseph C.H. Poon
The following tables set forth information regarding the compensation for services in all capacities paid or accrued for the periods indicated to our principal executive officer, principal financial officer,and three most highly compensated executive officers other than our principal executive officer and principal financial officer (the “Named Executive Officers”).
Summary Compensation Table
The table below sets forth information for the Named Executive Officers regarding compensation for the last three completed fiscal years:
Summary Compensation Table |
Name and Principal Position | Year |
Salary 1/ |
Bonus |
Stock |
Option |
Non-equity | Change in |
All other |
Total | |||||||||||||||||||||
Pin Tai | 2017 | 737,500 | 250,000 | 824,940 | 4/ | — | 712,600 | — | 21,945 | 5/ | 2,546,985 | |||||||||||||||||||
Chief Executive Officer | 2016 | 640,192 | — | 1,499,921 | — | 550,000 | — | 10,600 | 2,700,713 | |||||||||||||||||||||
and President of Bancorp and Cathay Bank | 2015 | 424,900 | — | 499,968 | — | 310,000 | — | 10,600 | 1,245,468 | |||||||||||||||||||||
Heng W. Chen | 2017 | 456,000 | — | 274,966 | — | 422,277 | 6/ | — | 10,800 | 1,164,043 | ||||||||||||||||||||
Executive Vice President and | 2016 | 440,958 | — | 499,924 | — | 340,000 | — | 10,600 | 1,291,482 | |||||||||||||||||||||
Chief Financial Officer of Bancorp and Cathay Bank | 2015 | 416,542 | — | 466,967 | — | 322,000 | — | 10,600 | 1,216,109 | |||||||||||||||||||||
Dunson K. Cheng | 2017 | 800,000 | 200,000 | 499,961 | 4/ | — | 1,026,400 | 24,890 | 7/ | 25,197 | 8/ | 2,576,448 | ||||||||||||||||||
Executive Chairman of | 2016 | 953,846 | — | 874,914 | — | 1,300,000 | 23,670 | 24,461 | 3,176,891 | |||||||||||||||||||||
| Bancorp and Cathay Bank | 2015 | 1,003,846 | 100,000 | 1,190,960 | — | 1,493,000 | 22,510 | 21,909 | 3,832,225 | |||||||||||||||||||||
Irwin Wong | 2017 | 418,750 | — | 304,990 | — | 378,397 | 6/ | — | 10,800 | 1,112,937 | ||||||||||||||||||||
Senior Executive Vice | 2016 | 389,039 | — | 584,962 | — | 320,000 | — | 10,600 | 1,304,601 | |||||||||||||||||||||
| President and Chief Operating Officer of Cathay Bank | 2015 | 339,777 | — | 582,967 | — | 280,000 | — | 10,600 | 1,213,344 | |||||||||||||||||||||
Kim R. Bingham | 2017 | 339,747 | — | 169,943 | — | 266,280 | 6/ | — | 10,800 | 786,770 | ||||||||||||||||||||
Executive Vice President and Chief Risk Officer of Cathay Bank | ||||||||||||||||||||||||||||||
1/ | Includes amounts deferred by Named Executive Officers under the 401(k) Profit Sharing Plan. |
2/ | The |
3/
| The amounts in this column consist of employer contributions under the 401(k) Profit Sharing Plan. Perquisites and other personal benefits, or property, are excluded if the aggregate amount was less than $10,000. Group life insurance, health insurance, and long-term disability insurance premiums are also excluded because such premiums are pursuant to a plan that does not favor executive officers or directors and is generally available to all salaried employees. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/ Includes approximately $150,000 bonus awarded for 2016 performance paid in RSUs on March 27, 2017. |
5/
This amount consists of $10,800 in employer contributions under the 401(k) Profit Sharing Plan, $3,194 for automobile expense, $6,986 in club memberships, and $965 in spousal travel.
6/
Of this amount, $42,207, $37,837, $26,610 to Mr. Chen, Mr. Wong, and Mr. Bingham, respectively, was paid in RSUs.
7/ | This amount consists of interest paid on deferred compensation that is considered above-market under the regulations of the SEC. For a discussion of the deferral arrangements, see “Nonqualified Deferred Compensation” below. |
8/ | This amount consists of $10,800 in employer contributions under the 401(k) Profit Sharing Plan, $4,130 for automobile expense, and $10,267 in club memberships. |
Grants of Plan-Based Awards
The table below sets forth information regarding grants of plan-based awards to our Named Executive Officers in 2017.
Grants of Plan-Based Awards |
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| Estimated possible payouts | Estimated future payouts | All other of stock | Grant of stock | ||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | or units (#) | awards 3/ ($) | ||||||||||||||||||||||||||
Pin Tai | 12/26/2017 | — | — | — | 4,156 | 8,312 | 12,468 | — | 337,467 | ||||||||||||||||||||||||||
12/26/2017 | — | — | — | 3,948 | 7,896 | 11,844 | — | 337,475 | |||||||||||||||||||||||||||
| 03/27/2017 | — | — | — | — | 3,893 | 4/ | — | — | 149,997 | ||||||||||||||||||||||||||
03/16/2017 | 450,100 | 862,400 | 1,312,500 | — | — | — | — | — | |||||||||||||||||||||||||||
Heng W. Chen | 03/09/2018 | — | — | — | — | 985 | 5/ | — | — | 42,207 | |||||||||||||||||||||||||
12/26/2017 | — | — | — | 1,693 | 3,386 | 5,079 | — | 137,472 | |||||||||||||||||||||||||||
12/26/2017 | — | — | — | 1,609 | 3,217 | 4,826 | — | 137,495 | |||||||||||||||||||||||||||
04/13/2017 | 18,113 | 345,000 | 517,500 | — | — | — | — | — | |||||||||||||||||||||||||||
Dunson K. Cheng | 12/26/2017 | — | — | — | 2,155 | 4,310 | 6,465 | — | 174,986 | ||||||||||||||||||||||||||
12/26/2017 | — | — | — | 2,047 | 4,094 | 6,141 | — | 174,978 | |||||||||||||||||||||||||||
03/27/2017 | — | — | — | — | 3,893 | 4/ | — | — | 149,997 | ||||||||||||||||||||||||||
03/16/2017 | 746,400 | 1,186,400 | 1,666,400 | — | — | — | — | — | |||||||||||||||||||||||||||
Irwin Wong | 03/09/2018 | — | — | — | — | 883 | 5/ | — | — | 37,837 | |||||||||||||||||||||||||
12/26/2017 | — | — | — | 1,878 | 3,756 | 5,634 | — | 152,494 | |||||||||||||||||||||||||||
12/26/2017 | — | — | — | 1,784 | 3,568 | 5,352 | — | 152,496 | |||||||||||||||||||||||||||
04/13/2017 | 17,850 | 340,000 | 510,000 | — | — | — | — | — | |||||||||||||||||||||||||||
Kim R. Bingham | 03/09/2018 | — | — | — | — | 621 | 5/ | — | — | 26,610 | |||||||||||||||||||||||||
12/26/2017 | — | — | — | 1,047 | 2,093 | 3,140 | — | 84,976 | |||||||||||||||||||||||||||
12/26/2017 | — | — | — | 994 | 1,988 | 2,982 | — | 84,967 | |||||||||||||||||||||||||||
04/13/2017 | 9,004 | 240,100 | 360,150 | — | — | — | — | — | |||||||||||||||||||||||||||
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3/ | Grant date fair value is based on the closing price of our common stock on the date of the grant. The estimated value of the performance-based RSUs at the grant date is based on the projected performance at the grant date showing a payout of 100% of the target number of performance-based restricted stock units. |
4/ | Consists of time-based RSUs awarded for 2016 performance paid in 2017. Each stock unit represents the contingent right to receive one share of common stock upon vesting. Such RSUs are scheduled to vest in three annual equal installments beginning March 27, 2018, or earlier in the event of death, disability, retirement, or change in control. For further discussion, refer to 2017 Proxy Statement under “Compensation Decisions for Named Executive Officers–Bonuses”. |
5/ | Consists of 10% bonus distributed in RSUs. Such RSUs vested in full on the date of the grant. Each RSU represents the right to receive one share of common stock of the Company, subject to adjustment in accordance with the Plan, which shares of common stock will be distributed to the officer on the first anniversary of the date of grant (or the first trading day thereafter). For further discussion, see “Compensation Decisions for Named Executive Officers–Bonuses” above. |
Outstanding Equity Awards at Fiscal Year-End
The table below sets forth information regarding outstanding equity awards as of December 31, 2017, made to our Named Executive Officers. Stock awards consist of RSUs, each of which represents a contingent right to receive one share of our common stock.
