Director Compensation
The following table sets forth for 2013 a summary of the compensation paid to all directors who were not also a Named Executive Officer:
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Name
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Fees earned or
paid in cash
($)
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Stock
awards
($)
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Option
awards
1/
($)
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Non-equity
incentive plan
compensation
($)
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Change in pension
value and
nonqualified deferred
compensation
earnings
($)
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All other
compensation
($)
2/
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Total
($)
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Kelly L. Chan
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116,000
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116,000
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Michael M.Y. Chang
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98,750
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98,750
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Thomas C.T. Chiu
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94,250
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94,250
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Nelson Chung
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67,000
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67,000
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Felix S. Fernandez
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93,500
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93,500
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Jane Jelenko
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91,250
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91,250
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Patrick S.D. Lee
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125,000
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125,000
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Ting Y. Liu
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115,250
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115,250
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Joseph C.H. Poon
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95,000
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95,000
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Anthony M. Tang
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73,198
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3/
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6,375
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79,573
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1/
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No stock options were granted in 2013. The aggregate number of options outstanding as of the close of December 31, 2013, for each named director
is as follows: Mr. Chan10,500, Mr. Chang10,500, Dr. Chiu10,500, Mr. Chung7,000, Mr. Lee10,500, Mr. Liu10,500, Mr. Poon10,500, and Mr. Tang126,510.
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2/
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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.
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3/
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This amount includes $45,692 for Mr. Tangs services as Executive Vice Chairman of the Board of Bancorp and Cathay Bank, a $12,506 retainer
fee as a director of Bancorp and Cathay Bank, a $3,750 retainer fee as chair of the Bank Board Credit Committee, and $11,250 as committee meeting attendance fees from October 1, 2013 to December 31, 2013. This amount does not include
$254,207 cash salary and $173,571 salary stock that was paid partly through the delivery of 5,022 fully-vested, non-forfeitable shares of our common stock and partly through the withholding of $67,896 to satisfy tax withholding, for his services as
Executive Vice President of Bancorp and Senior Executive Vice President and Chief Lending Officer of Cathay Bank from January 1, 2013 to September 30, 2013.
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19
EXECUTIVE COMPENSATION
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
address the factors most relevant to an understanding of our 2013 compensation policies and decisions regarding the compensation for each of the executive officers identified in the Summary Compensation Table under Remuneration of Executive
Officers below (the Named Executive Officers). It may contain some statements regarding thresholds, targets, and goals for future individual and company performance. These are disclosed in the limited context of our executive
compensation program and should not be understood to be statements of managements expectations or estimates of our financial results or other guidance. We specifically caution investors not to apply these statements to other contexts.
This CD&A reflects that 2013 was a transitional year for us. The compensation decisions that our Compensation Committee made
during the first nine months of 2013 were impacted by our participation in the Capital Purchase Program portion of the United States Department of the Treasurys Troubled Assets Relief Program (the TARP Capital Purchase Program),
during which we were subject to certain standards for executive compensation and corporate governance. Our participation ended on September 30, 2013, so that compensation decisions by the Compensation Committee for the remainder of the year
could be made without the limitations that were part of these standards. This was reflected by decisions to reinstitute the payment of cash bonuses for the last quarter of 2013 based on an evaluation of individual and corporate performance, and to
make equity incentive awards with performance criteria based on our earnings per share and relative total stockholder return over a three-year performance period. These decisions are described in more detail under Components of Our 2013
Executive Compensation Program and Establishing Our Executive Compensation below.
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:
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to attract, motivate, and retain capable executive management and other key personnel;
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to optimize the individual performance of our executive officers and our financial and operating performance;
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to 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;
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to ensure that we are not unnecessarily exposed to risks or to the manipulation of our reported earnings; and
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to provide incentives that appropriately balance risk and reward, are commensurate with prudent risk-taking, and are compatible with effective controls
and risk-management.
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We seek to combine these components, which are described below, in such a way as to best achieve these
objectives.
2013 Financial Performance
The following are highlights of our financial performance for 2013:
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Net income available to common stockholders increased 12.4% to $113.5 million from $101.0 million in 2012.
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Diluted earnings per share increased 11.7% to $1.43 from $1.28 in 2012.
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Total loans increased 8.8% to $8.08 billion at December 31, 2013, compared to $7.43 billion at December 31, 2012.
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Total deposits increased 8.1% to $7.98 billion at December 31, 2013, compared to $7.38 billion at December 31, 2012.
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We redeemed all $258 million of our preferred stock that had been issued under the U.S. Treasurys TARP Capital Purchase Program.
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The Impact of the TARP Capital Purchase Program
Our participation in the TARP Capital Purchase Program began on December 5, 2008, at which time we became subject to certain standards for executive
compensation and corporate governance in accordance with the Emergency Economic Stabilization Act of 2008, as amended by the American Recovery Reinvestment Act of 2009, and the rules and regulations thereunder (the EESA). These standards
generally applied to the principal executive officer, principal financial officer, and the three next most highly compensated executive officers (the senior executive officers) and up to 20 of the next most highly compensated employees
during the period in which any obligation arising from financial assistance under the TARP Capital Purchase Program remained outstanding (the TARP Period), disregarding any warrants to purchase
common stock held by the United States Department of the Treasury (the U.S. Treasury).
As a result of these standards and the restrictions they imposed on executive compensation, some of the Compensation Committees decisions during the TARP Period varied from historical practice and
from previous compensation programs. The following describes some of these restrictions and what was permissible under the EESA standards during the TARP Period:
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We could not pay or accrue any bonus, retention award, or incentive compensation, including stock options and equity awards, other than certain
long-term restricted stock or restricted stock units described below;
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We could award long-term restricted stock or restricted stock units, provided that the value of any such award could not exceed one-third of the
employees annual compensation as determined for the fiscal year of the award, the award could vest and be transferable only in accordance with the terms of the EESA, and the employee had to provide services for at least two years after the
date of the award for the long-term restricted stock or restricted stock units to vest;
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We could increase base salaries and also pay salary in stock, including stock subject to a holding period or transfer restrictions;
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We could provide perquisites, subject to complying with various reporting requirements for perquisites in excess of $25,000 to any individual;
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We could not pay any tax gross-ups (defined as any reimbursement of taxes owed with respect to any compensation);
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We could not deduct for tax purposes executive compensation in excess of $500,000 for any of the senior executive officers, regardless of whether it
was performance related; and
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We were required to adopt clawback policies, whereby executive officers would forfeit compensation awarded based on materially inaccurate
financial information or any other materially inaccurate performance-metric criteria.
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These restrictions were incorporated
into our executive compensation program and our Named Executive Officers each agreed to voluntarily waive
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any claim against the U.S. Treasury, Bancorp, or Cathay Bank for any changes to their compensation or benefits that were required in order to comply with the EESA during the TARP Period.
When we redeemed on September 30, 2013, the remaining shares of preferred stock that had been issued to the U.S. Treasury under the TARP
Capital Purchase Program, the TARP Period ended and we were no longer subject to these standards and restrictions.
Risk
Assessment
As a result of our participation in the TARP Capital Purchase Program, our Compensation Committee met with our senior risk
officers to evaluate the risks, both long-term and short-term, that we faced. As part of this evaluation, the Compensation Committee identified risks inherent in our business, including credit risk, interest rate risk, liquidity risk, price risk,
transaction risk, compliance risk, strategic risk, and reputation risk. The Compensation Committee then reviewed our incentive compensation arrangements to ensure that they do not encourage our Named 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. The Compensation Committee intends to continue meeting with our senior risk officers for this purpose on at least a semi-annual basis.
The review by the Compensation Committee also included consideration of the Guidance on Sound Incentive Compensation Policies that was
jointly issued in June 2010 by federal regulatory agencies, including the Federal Reserve Board, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The Guidance is based on the following three principles
that are to be incorporated in incentive compensation practices:
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Incentive compensation arrangements should balance risk and financial results in a manner that does not encourage employees to expose their
organizations to imprudent risks;
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A banking organizations risk-management processes and internal controls should reinforce and
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support the development and maintenance of balanced incentive compensation arrangements; and
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Banking organizations should have strong and effective corporate governance to help ensure sound compensation practices.
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To comply with the Guidance, our Board adopted in February 2014 an Incentive Compensation Policy to guide the Compensation Committee, as well as approved
adoption of procedures by management to implement such policy.
Components of Our 2013
Executive Compensation Program
The specific amounts paid or awarded to our Named Executive Officers for 2013 are described below under Establishing Our Executive Compensation. In this section, we will discuss the components
that comprised our executive compensation program for 2013, which were:
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restricted stock units;
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retirement benefits provided under a 401(k) plan and an employee stock ownership plan for employees who met their eligibility requirements prior to
January 2003;
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life insurance and the same medical, dental, and disability benefits as provided generally to other Cathay Bank employees; and
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perquisites and other personal benefits.
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Each of these components served 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 practices and trends, and regulatory requirements. After the restrictions under EESA lapsed at the end of the TARP Period, the Compensation Committee adjusted these components to more closely reflect
programs that can be utilized on an ongoing basis.
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Base Salary
We provide executive officers and other employees 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 Named Executive Officers. Instead, it considers a wide range of factors. In particular, the Compensation Committee will consider our overall financial and operating performance and
profitability, and its evaluation of each Named Executive Officers individual performance and contribution toward this overall performance and profitability. Our overall performance and profitability is determined, without any quantified
targets or particular weighting, with reference to financial factors such as net income, earnings per share, return on average assets, return on average stockholders equity, efficiency ratio, and percentage increase or decrease in total
assets, loans, and deposits.
The evaluation of each Named Executive Officers individual performance involves consideration of such
factors as the significance of the Named Executive Officers services, level of responsibility, any changes to 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 Named Executive Officers individual
skills, experience, length of service, and compensation levels in past years, not only in relation to the individuals 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.
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. However, the Compensation Committee takes into consideration the compensation history of the Named Executive Officers and will observe past ranges for reference and guidance without being
bound or limited by them.
Salary Stock
The compensation standards under the EESA permitted an arrangement under which an employee could receive salary in the form of stock (so-called salary stock), so long as the stock is not
subject to a substantial risk of forfeiture (as defined) or other future period of required service, the amount is determinable as a dollar amount through the date such compensation is earned (for example, an agreement that salary payments will be
made in stock equal to the value of the cash payment that would otherwise be due), and the amount of stock accrues at the same time or times as the salary or other permissible payments would otherwise be paid in cash. The compensation standards
further provide that the salary stock may be made subject to holding periods or transferability restrictions.
Beginning in June 2012 and
continuing through the TARP Period, the Compensation Committee used salary stock as a form of compensation that helps to
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align the interests of our Named Executive Officers with those of our stockholders through stock ownership, helped us to retain our executive officers through payment of competitive total
compensation, and recognized our executive officers for our financial and operational performance. In June 2012, the Compensation Committee increased the annual base salaries of the Named Executive Officers for the remainder of 2012, and in December
2012 it increased the annual base salaries of certain executive officers for 2013, with the amount of the increases being payable as salary stock. The Compensation Committee had not intended that these base salary increases would be permanent
adjustments to the executive officers compensation, and the increases were eliminated effective October 1, 2013 (after the end of the TARP Period) for all affected executive officers, including the Named Executive Officers.
Cash Bonus
Due to the
compensation standards under EESA, no cash bonuses had been paid to our Named Executive Officers during the TARP Period. Prior to participation in the TARP Capital Purchase Program, the Compensation Committee had paid annual cash bonuses under our
2005 Incentive Plan. It believes that a cash bonus component of our executive compensation program can serve as an important incentive and reward for the achievement of our business goals and as a means to attract, motivate, and retain our executive
officers. Accordingly, the Compensation Committee awarded cash bonuses to our executive officers for the portion of 2013 (October 1 through December 31) after the end of the TARP Period when the EESA restrictions no longer applied.
In awarding these cash bonuses, the Compensation Committee considered our overall financial and operating performance and profitability for 2013,
pro-rated for the fourth quarter, and evaluated each Named Executive Officers individual performance and contribution toward this overall performance and profitability taking into account the factors described above under Base
Salary.
In this process, the Compensation Committee considered the Chief Executive Officers annual employee performance
evaluation rating for the other Named Executive Officers. This evaluation is based
on subjective and qualitative evaluations of job knowledge, job skills, performance of duties, professional attributes, management skills, any customized annual goals or special projects, and
adherence to our policies. Compensation is not directly tied to the achievement of any customized goals or special projects that may be included in such evaluations. With respect to the 2013 cash bonuses, the Compensation Committee did not apply
specific quantified measurement amounts or targets for the Named Executive Officers.
The Compensation Committee adopted, effective
January 1, 2014, an Executive Officer Annual Cash Bonus Program, pursuant to which our executive officers may in the future be entitled to cash bonus awards that constitute cash awards under the 2005 Incentive Plan. To determine a
participants bonus award, the Compensation Committee may establish for a program year Company-wide financial criteria, including the achievement of quantifiable financial metrics, and metric and/or non-metric individual or
department-wide performance goals. Following completion of a program year, the Compensation Committee is to determine 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 Executive Officer Annual Cash 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. 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.
Equity Incentive Compensation
We have two plans under which we have issued equity awards to our directors and employees (including Named Executive Officers) and to directors and employees of Cathay Bank. Our 1998 Incentive Plan
authorized awards that could result in the issuance of Bancorps common stock. All awards granted under this plan have been in the form of nonstatutory stock options. Upon stockholder approval of our 2005 Incentive Plan in May 2005, we ceased
granting awards under the 1998 Incentive Plan, but options previously granted under this plan remain exercisable.
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Our 2005 Incentive Plan permits us to grant stock options (both incentive stock options designed to comply
with Internal Revenue Code Section 422 and nonstatutory stock options which will not so comply), stock awards (including shares, restricted stock units, stock appreciation rights, 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 all
other employees of Bancorp and Cathay Bank. Awards are generally based on a qualitative analysis of the individuals performance and our overall performance and profitability, taking into account the factors discussed above under Base
Salary and Cash Bonus. Without benchmarking, and 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.
Awards generally have been made on an annual basis at fixed 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 of stock options are made at or above the fair
market value of our common stock as quoted on the Nasdaq Global Select Market on the date the option is granted. The fair market value of our common stock is determined generally as the closing price of the common stock on the date the option is
granted. Outstanding options may not be repriced to reduce the exercise price without stockholder approval.
During the TARP Period, we were unable to grant options or other forms of incentive compensation to our
Named Executive Officers other than certain long-term restricted stock or restricted stock units permitted under the EESA. The value of any such award could not exceed one-third of that employees annual compensation as determined for the
fiscal year of the award, the award must vest and be transferable only in accordance with the terms of the EESA, and the employee must provide services for at least two years after the date of the grant for the restricted stock or units to vest. The
Compensation Committee awarded such units to certain of our Named Executive Officers for the period of 2013 during which we were subject to EESA.
After the end of the TARP Period, the Compensation Committee was able to award restricted stock units that were not subject to these additional restrictions. As described in more detail below, on
December 18, 2013, the Compensation Committee approved the award of performance-based restricted stock units under the 2005 Incentive Plan for the Named Executive Officers.
Retirement and Other Benefits
Salaried employees of Cathay Bank who have completed three months of service and have attained the age of 21 are eligible to participate in the 401(k) Profit Sharing Plan, which provides them with an
opportunity to save for retirement in a tax efficient manner. During 2013, Cathay Bank matched 100% of a participants contribution up to 2.5% of the participants eligible compensation per pay period. The vesting 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.
Under our Cathay Bank Employee Stock Ownership Plan (the ESOP), we can make annual contributions to a trust in the form of either cash or common stock. Each participants benefits under
the ESOP consist of cash (or cash equivalents) and shares of our common stock allocated to the participant. As of April 1, 2014, the ESOP held approximately 1,143,042 shares of our common stock. We have not made contributions since 2003, and we
do not plan to make a contribution in 2014.
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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 or directors and that are available generally to all salaried employees.
Our Named Executive officers are eligible to participate in all of these plans on the same terms as our other employees.
Perquisites and Other Personal Benefits
We provide our Named 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 Named Executive Officers. Currently, these perquisites consist of automobile expenses and club memberships. For 2013, the aggregate amount of
perquisites and other personal benefits provided to our Named Executive Officers was less than $10,000 each, except for Chief Executive Officer Dunson K. Cheng and Chief Lending Officer Pin Tai.
The Board has adopted an Excessive and Luxury Expenditure Policy that prohibits certain excessive or luxury expenditures to the extent they are not
reasonable expenditures for staff development, reasonable performance incentives, or other similar reasonable measures conducted in the normal course of our business operations.
This Policy contains standards that identify the types or categories of expenditures that are prohibited; identifies the types or categories of expenditures for which prior approval is required; provides
approval procedures for certain types of expenditures; requires prompt internal reporting of violations to the Compensation Committee; and mandates accountability for adherence to the Policy. A copy of this Policy is available at
www.cathaygeneralbancorp.com.
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 Board of Directors and Corporate Governance above.
The Chief
Executive Officer and the Compensation Committee review the performance of each Named Executive Officer (other than the Chief Executive Officer) and all other executive officers. The conclusions reached and recommendations made based on these
reviews, which include salary adjustments and equity award amounts, are then taken into account by the Compensation Committee as it makes decisions about compensation of the Named Executive Officers and other executive officers. With respect to the
Chief Executive Officer, the Compensation Committee reviews and approves the corporate goals and objectives relevant to the Chief Executive Officers compensation, evaluates the Chief Executive Officers performance against those
objectives, and approves the Chief Executive Officers compensation based on that evaluation. The Chief Executive Officer does not participate in any deliberations or voting regarding his own compensation.
The Compensation Committee has the authority to retain or obtain the advice of a compensation consultant, legal counsel, or such other advisors 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
advisors. 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, our senior risk officers, and representatives of other departments of Cathay Bank.
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Compensation Consultant
In June 2012, the Compensation Committee retained Frederic W. Cook & Co., Inc. (FWC) as a 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. Specifically, FWC was engaged to assist the Compensation
Committee in (a) designing a post-TARP Period compensation plan for certain of our executive officers that can meet the requirements of Section 162(m) of the Internal Revenue Code, (b) structuring our post-TARP Period 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) preparing the CD&A in this proxy statement.
FWC was consulted by the Compensation Committee as to how annual and long-term
incentives might be structured after the TARP Period and as to levels of compensation at companies considered in our peer group. FWC consulted with the Compensation Committee with respect to the design for the performance restricted stock units that
were awarded by the Compensation Committee in December 2013, as well as with respect to the design of the Executive Officer Annual Cash Bonus Program described above. In awarding performance restricted stock units, the Compensation Committee
considered 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 restricted stock unit awards and cash bonus awards were ultimately determined by the Compensation Committee.
Peer Group
As part of its engagement, FWC advised the Compensation Committee on selecting a group of peer companies (Peer Group) for purposes of assessing the competitiveness of executive compensation
and performance for the post-TARP Period. The recommended Peer Group includes publicly-traded commercial banks or holding companies in the western United States (or major metropolitan areas) with which Cathay Bank may compete for business, capital,
or executive talent, or that are within the range similar in total assets, number of employees, and market capitalization (between approximately one-third and three times Bancorps total assets and market capitalization). As of
December 31, 2013, total assets for the Peer Group ranged from $6.5 billion to $29.7 billion, and market capitalization ranged from $1.3 billion to $4.8 billion. By comparison, our total assets were $11.0 billion and our market
capitalization was $2.1 billion, which placed us near the median of the Peer Group. The Peer Group consists of the following 15 companies:
|
|
Bank of Hawaii Corporation
|
|
|
City National Corporation
|
|
|
East West Bancorp, Inc.
|
|
|
National Penn Bancshares, Inc.
|
|
|
Prosperity Bancshares, Inc.
|
|
|
Sterling Financial Corporation
|
|
|
Umpqua Holdings Corporation
|
|
|
Valley National Bancorp
|
|
|
Western Alliance Bancorporation
|
Compensation Decisions for Named Executive Officers
During 2013, the Compensation
Committee held 15 meetings to discuss, review, and/or deliberate about our compensation program and the appropriate levels of compensation for the Named Executive Officers,
27
and took action on one occasion by written consent. 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 Chief Executive Officer, the greater relative size and range of his total compensation reflect his length of
service, his critical role as the key person responsible for our earlier expansion and growth, and his leadership in guiding us through the recession and financial crisis of recent years back to profitability.
Base Salary and Salary Stock.
In December 2012, the Compensation Committee increased the annual base salaries for each of our Named Executive
Officers, except for Mr. Tai, for the period January 1, 2013, through December 31, 2013, with the net after-tax amount of the increase to be payable in salary stock. In May 2013, the Compensation Committee increased the annual base
salary for Mr. Tai for the period May 20, 2013, through December 31, 2013, with the net after-tax amount of the increase to be payable in salary stock. The Board designated Mr. Tai as an executive officer for the
purposes of Section 16 of the Exchange Act on May 16, 2013. The annual base salaries for the Named Executive Officers before adjustment and the increases are as follows:
|
|
|
|
|
|
|
|
|
Name
|
|
Annual Base Salary
Before Adjustment
($)
|
|
|
Additional Base
Salary Amount
for 2013 ($)
|
|
Dunson K. Cheng
|
|
|
1,000,000
|
|
|
|
1,060,000
|
|
Peter Wu
|
|
|
463,000
|
|
|
|
420,000
|
|
Heng W. Chen
|
|
|
335,400
|
|
|
|
231,429
|
|
Irwin Wong
|
|
|
264,800
|
|
|
|
162,857
|
|
Pin Tai
|
|
|
310,000
|
|
|
|
240,000
|
|
Until it was eliminated at the end of the TARP Period on September 30, 2013, the net after-tax amount of the
increase in the base salaries was to be paid in fully-vested, non-forfeitable shares of our common stock pursuant to our 2005 Incentive Plan. The number of shares granted each pay period equaled the
additional base salary amount payable for that pay period (less applicable tax withholdings and deductions), divided by the closing price of a share of our common stock as reported on Nasdaq on
the grant date (or, if the Nasdaq was closed on the grant date, by the Nasdaq closing price on the immediately preceding date on which the Nasdaq was open). The salary stock could not be sold or transferred (except in the case of death or permanent
disability) during the TARP Period.
In awarding salary stock, the Compensation Committee discussed, among other things, the tax treatment and
cost, the equity compensation and total annual compensation of the executive officers for 2013, the equity compensation and total annual compensation paid to executive officers of other financial institutions, our financial condition and projected
financial performance for 2013, and our objectives and compensation practices. In determining the appropriate level of salary stock for each Named Executive Officer, the Compensation Committee reviewed and assessed the individuals skills,
responsibilities, performance, and contributions.
At the end of the TARP Period, the Compensation Committee eliminated the salary stock
arrangements. In the meantime, the Compensation Committee had increased the cash portion of the annual base salaries of certain of the Named Executive Officers beginning approximately April 1, 2013. Mr. Wus annual base salary was
increased to $475,000, Mr. Chens annual base salary was increased to $349,000, and Mr. Wongs annual base salary was increased to $275,000. The annual base salaries for Mr. Cheng and Mr. Tai remained the same.
Cash Bonuses.
On March 13, 2014, the Compensation Committee awarded cash bonuses to the Named Executive Officers for the three
months ended December 31, 2013, being the portion of 2013 during which we were not subject to the EESA standards. The amounts awarded to the Named Executive Officers are as follows:
|
|
|
|
|
Name
|
|
Amount of
Cash Bonus
($)
|
|
Dunson K. Cheng
|
|
|
300,000
|
|
Peter Wu
|
|
|
89,000
|
|
Heng W. Chen
|
|
|
66,000
|
|
Irwin Wong
|
|
|
54,000
|
|
Pin Tai
|
|
|
56,000
|
|
28
The Compensation Committee determined that the bonus payment to our Chief Executive Officer,
Mr. Cheng, will be deferred. For details regarding the deferral, see Nonqualified Deferred Compensation below.
In making
these awards, the Compensation Committee discussed, among other things, our financial condition and actual financial results for 2013 pro-rated for the fourth quarter of 2013, safety and soundness and risk management considerations, paying for
performance, and the compensation of executive officers at peer banks and bank holding companies. During its discussions, the Compensation Committee considered, among other things, our growth in earnings, loans, and deposits, improvement to our
efficiency ratio, that our earnings were near record levels, that we had fully redeemed the preferred shares issued under the U.S. Treasurys TARP Capital Purchase Program, and that our memorandum of understanding with the Federal Reserve had
been terminated. Consideration of the amount of each award included an evaluation of each Named Executive Officers individual contributions towards these results.
Long-term Restricted Stock Units.
The Compensation Committee awarded on March 13, 2014, long-term restricted stock units under our 2005 Incentive Plan to certain Named Executive Officers for
the portion of 2013 during which we were subject to the EESA standards. The long-term restricted stock units represent a contingent right to receive one share of our common stock for each unit, were valued on the basis of the closing price of our
common stock on the date of grant, and vest on the second anniversary of the date of grant, or earlier in the event of death or disability.
In awarding long-term restricted stock units, the Compensation Committee discussed the same matters as were discussed in awarding the cash bonuses,
including an evaluation of each Named Executive Officers individual contributions during the TARP Period, and the extent to which an additional payment was appropriate in addition to the base salary and salary stock paid during the TARP Period
to such Named Executive Officers.
The number of restricted stock units awarded to the Named Executive Officers are as follows:
|
|
|
|
|
Name
|
|
Number of
Restricted Stock
Units (#)
|
|
Dunson K. Cheng
|
|
|
0
|
|
Peter Wu
|
|
|
0
|
|
Heng W. Chen
|
|
|
861
|
|
Irwin Wong
|
|
|
821
|
|
Pin Tai
|
|
|
1,095
|
|
Performance-Based Restricted Stock Units.
In December 2013, the Compensation Committee awarded performance-based
restricted stock units under the 2005 Incentive Plan to the Named Executive Officers. If target performance is achieved, each restricted stock unit 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 unit
awards is the three years ending December 31, 2016. The performance criteria for the awards are diluted earnings per share (EPS) and total stockholder return (TSR) consisting of 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.
FWC was consulted by the Compensation Committee with respect to the structure of the program for
performance-based restricted stock units, which included consideration of types and amounts of long-term incentives at companies in our peer group. The Compensation Committee also considered the methodologies for calculating the amounts of the
awards. Executives would be granted a target number of restricted stock units 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, based on accounting values,
which in the case of the TSR-based restricted stock units, used the Monte-Carlo valuation model. The Compensation Committee also considered the tax and accounting treatment of performance share units compared to
29
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. The amounts of the
performance-based restricted stock unit awards were ultimately determined by the Compensation Committee.
The restricted stock units payable
to the Named Executive Officers for target performance are as follows:
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Restricted
Stock
Units
Based on EPS
(#)
|
|
|
Number of
Restricted
Stock
Units
Based on TSR
(#)
|
|
Dunson K. Cheng
|
|
|
38,095
|
|
|
|
39,292
|
|
Peter Wu
|
|
|
17,142
|
|
|
|
17,681
|
|
Heng W. Chen
|
|
|
14,285
|
|
|
|
14,734
|
|
Irwin Wong
|
|
|
9,523
|
|
|
|
9,823
|
|
Pin Tai
|
|
|
10,476
|
|
|
|
10,805
|
|
The number of target restricted stock units 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.
For the awards based on EPS, the Compensation Committee used a projected
cumulative EPS for the three-year performance period to establish a target EPS. The target EPS was based on our strategic plan and, 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 restricted stock units earned 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 units will be earned.
For the awards based on TSR, the number of earned restricted stock units will be determined by comparing our TSR
from the award date to December 31, 2016, with the TSR of each of the companies in the KBW Regional Bank Index over the performance period. If our TSR over the performance period is below the 30th percentile
when ranked against each of the peer companies, no restricted stock units will be earned. If the ranking is equal to the 30th percentile, 50% of the target restricted stock units will be earned.
To the extent that our TSR is ranked above the 30th percentile, the number of earned target restricted stock units 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 units will be earned for performance at the 50th percentile.
If a change in control occurs before
December 31, 2016, a number of the target restricted stock units based on EPS or TSR may be earned depending on the timing of change in control and whether they are assumed by a public company.
All the restricted stock units 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 December 31, 2016. Special provision will apply if a Named Executive Officer dies, incurs a total and permanent disability or terminates
employment on account of retirement.
Provision is made for cancellation of restricted stock unit awards or repayment under
certain circumstances. In the event a restatement of our financial results as described in the award agreements 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.
In considering the award of performance-based restricted stock units,
the Compensation Committee discussed, among other things, whether the awards would provide incentives that appropriately balance reward and risk, whether they could encourage executive officers to take imprudent risks that could pose a threat to our
safety and soundness, the retention and incentive purpose of the awards and how they could serve to align the interests of the executive officers with those of our stockholders, and the methodology for calculating the number of units
30
to be awarded. In particular, the Compensation Committee took into account the fact that, now that we had emerged from TARP restrictions that had severely limited the use of long-term incentive
compensation, it was important to provide the Named Executive Officers with significant long-term incentives to both retain and motivate continued strong performance during the transition out of a TARP-constrained environment.
Additional Information Relating to Executive Compensation
Ownership Guidelines
We
do not require that each Named Executive Officer maintain a minimum ownership interest in our stock.
Compensation Recovery
Policy
As a result of our participation in the TARP Capital Purchase Program, we agreed that during the TARP Period any bonus or other
incentive compensation we pay to our Named Executive Officers during the TARP Period would be subject to recovery (or clawback) if such payments were made based on materially inaccurate financial statements or any other materially
inaccurate performance metric criteria. Each of our Named Executive Officers had specifically agreed to the provisions of the clawback.
While
this clawback policy is no longer applicable to us, the performance-based restricted stock units that were awarded to executive officers in 2013 are subject to a clawback. In addition, our Executive Officer Annual Cash Bonus Program provides for a
clawback as well. We believe the principles of a clawback in the event of materially inaccurate financial or performance data 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.
Change in 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 each of our Named Executive Officers and certain other senior officers of Cathay Bank in November 2006. These Control Agreements were amended and restated in December 2008 to comply with Section 409A of the
Internal Revenue Code. 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 Officers 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.
We were restricted during the TARP Period from making any golden parachute or severance payments to any of our Named Executive Officers and
each of the five next most highly-compensated employees. This restriction is no longer applicable and has not been a factor in the Compensation Committees compensation decisions or policies.
Say on Pay/Response to 2013 Vote
Our Board has been annually submitting to our stockholders a proposal to approve, on an advisory (non-binding) basis, our executive compensation. At the 2013 annual meeting of stockholders, 98.3% 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.
31
Pledging and Hedging Policy
Our 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 approvals have been granted.
Deductibility of Executive Compensation
As part of its responsibilities, the Compensation Committee reviews and considers the deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code, which provides that we may not deduct compensation of more than $1,000,000 that is paid to certain employees. This limitation does not apply, however, to performance-based compensation
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. During the TARP Period, we were unable to deduct compensation paid to
any of our Named Executive Officers in excess of $500,000, and the exemption for performance-based compensation was not available. This limitation is no longer applicable.
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, our President and Chief Executive Officer. 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, CompensationStock 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.
Under the 2005 Incentive Plan, we are permitted to issue both incentive stock options and nonstatutory
stock options. However, in earlier years the Compensation Committee elected to award only nonstatutory stock options because it believed that the tax benefits to the company outweighed the potential tax benefits of incentive stock options to our
employees. Generally, nonstatutory stock options entitled us to a deduction at the time the options are exercised and in the same amount as the optionees taxable income, calculated as the excess of the fair market value of the shares over the
exercise price. In the case of incentive stock options, we would be entitled to a deduction equaling the amount of the optionees taxable income as calculated above, but only if shares were sold within one year of exercise or two years of
grant.
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. As a result of this review and the restrictions on forms of incentive compensation imposed by EESA, we have recently awarded restricted stock units to those eligible under our 2005 Incentive
Plan.
A desirable feature of restricted stock and restricted stock units is that they permit us to issue fewer shares, thereby reducing
potential stockholder dilution. We believe that restricted stock and restricted stock units provide an equally motivating form of incentive compensation as stock options, and we will weigh the costs of restricted stock, restricted stock units, 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 units 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.
We believe that being able to award restricted stock, restricted
stock units, and nonstatutory stock options, separately or in combination, should serve our objectives of incentivizing our executive officers to focus on delivering long-term value to our stockholders.
32
Compensation Committee Interlocks and Insider Participation
No person who was a member of the Compensation
Committee during 2013 had any relationships requiring disclosure.
Compensation Committee Report
The Compensation Committee has reviewed and
discussed the CD&A with management. Based on such review and discussions, the Compensation Committee recommended to the Board that the CD&A be included in this proxy statement and incorporated by reference into Bancorps Annual Report
on Form 10-K for the year ended December 31, 2013.
The following portion of this Compensation Committee Report applies to the period in
2013 during which we were subject to the EESA standards (January 1, 2013 to September 30, 2013).
As described in the CD&A, the
compensation program for the Named Executive Officers and other Cathay Bank employees during the TARP Period consisted primarily of base salary and equity compensation. The base salaries of the Named Executive Officers are determined each year on a
case-by-case basis and, during the portion of 2013 in which we were subject to the EESA standards, included salary stock as described above. No cash bonuses were paid for the portion of 2013 during which we were subject to the EESA standards, but
long-term restricted stock units within the meaning of the EESA were awarded to our Named Executive Officers as described above. These long-term restricted stock units were awarded in accordance with the regulations applicable to participants in the
TARP Capital Purchase Program, as described in the CD&A, which required that the only form of bonus, incentive compensation, and retention awards we were permitted to award to our Named Executive Officers and the 10 next most highly-compensated
employees during the TARP Period were long-term restricted stock or restricted stock units, provided that the value of such award could not exceed one-third of that employees annual compensation as determined for the fiscal year of the award
and that the award could vest and be transferable only in accordance with the terms of the EESA.
Generally, we believe that by using a combination of base salary and equity compensation during the TARP
Period, our compensation program avoids encouraging the Named Executive Officers to take unnecessary and excessive risks that threaten the value of Bancorp. We also believe that such risk is mitigated by the variable factors we take into account in
making our compensation decisions. We believe that an appropriate mix of total compensation comprised of fixed base salaries and equity compensation can strike an appropriate balance between short- and long-term risk and reward, and ultimately drive
appropriate and desired results that are consistent with Bancorps overall growth strategy and risk profile. Accordingly, we seek to balance base salary and equity compensation for Named Executive Officers and to not cause base salary to be
disproportionately low compared with equity compensation.
We also seek to discourage the Named Executive Officers from taking unnecessary and
excessive risks by having base salary and equity compensation determinations made on the basis of variable factors in our discretion as described in the CD&A. We endeavor to set realistic performance goals because we believe that setting goals
that are unattainable could encourage excessive risk taking to achieve those goals. We also want to be comfortable that the maximum payout opportunity under the best performance scenario is both reasonable and not likely to motivate excessive risk
taking. We believe the use of variable metrics and subjecting compensation decisions to qualitative evaluation serve to minimize the potential for excessive risk taking. Formula-based metrics focused solely on quantitative returns may encourage
increased risk taking in singular pursuit of specific objectives for individual enrichment without due regard for the long-term welfare of Bancorp and the interests of our stockholders.
By avoiding formula-based quantitative measures during the TARP Period, our compensation program seeks to reduce the potential for manipulation of specific quantitative results and affords us the
flexibility to look beyond specific quantitative metrics and assess the quality of the financial results and their effect on the long-term objectives and welfare of Bancorp and the interests of our stockholders. Under this flexible approach, we can
further measure relative performance against industry
33
averages or other performance objectives rather than on absolute returns.
In accordance
with the EESA, further measures had been taken during the TARP Period to limit features in the compensation arrangements that could lead the Named Executive Officers to take unnecessary and excessive risks, unnecessarily expose Bancorp to risks, or
encourage the manipulation of our reported earnings to enhance the compensation of an employee. Specifically, we amended our compensation program to provide that: (a) the Named Executive Officers were not eligible to receive compensation
thereunder to the extent we determine that such compensation may provide incentives for them to take unnecessary and excessive risks that threaten the value of Bancorp; (b) each Named Executive Officer and the 20 next most highly-compensated
employees were required to return any bonus, retention award, or incentive compensation paid to them based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria (the clawback); and
(c) we would not pay or accrue any bonus, retention award, or incentive compensation to any Named Executive Officer or the 10 next most highly-compensated employees, other than certain long-term restricted stock or restricted stock units
permitted under the EESA.
In addition, we have reviewed and will continue to review and evaluate with our senior risk officers at least every
six months our compensation plans and the risks posed by these plans in order to identify and limit the features that could lead to the taking of unnecessary and excessive risks that could threaten our value, to identify any features in these plans
that could pose risks to us and limit those features to ensure we are not unnecessarily exposed to risks, and to eliminate any features in employee compensation plans that would encourage the manipulation of our reported earnings to enhance the
compensation of any employee. The clawback features supported the accuracy of our financial statements and encouraged the maintenance of accurate books and records and compliance with applicable accounting policies.
The Compensation Committee certifies that, during the portion of 2013 when we were subject to the EESA
standards:
|
|
It has reviewed with senior risk officers the senior executive officer (SEO) compensation plans and has made all reasonable efforts to ensure that
these plans do not encourage SEOs to take unnecessary and excessive risks that threaten the value of Bancorp;
|
|
|
It has reviewed with senior risk officers the employee compensation plans and has made all reasonable efforts to limit any unnecessary risks these
plans pose to Bancorp; and
|
|
|
It has reviewed the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of
Bancorp to enhance the compensation of any employee.
|
Compensation Committee
Ting Y. Liu (Chairman)
Kelly L. Chan
Patrick S.D. Lee
Joseph C.H. Poon
34
Remuneration of Executive Officers
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
($)
|
|
|
Stock
awards
2/
($)
|
|
|
Option
awards
3/
($)
|
|
|
Non-equity
incentive
plan
compensation
4/
($)
|
|
|
Change in
pension
value
and
non-
qualified
deferred
compensation
earnings ($)
|
|
|
All other
compensation
5/
($)
|
|
|
Total
($)
|
|
Dunson K. Cheng
|
|
|
2013
|
|
|
|
1,848,846
|
6/
|
|
|
300,000
|
|
|
|
1,999,975
|
|
|
|
|
|
|
|
|
|
|
|
15,980
|
7/
|
|
|
17,235
|
8/
|
|
|
4,182,036
|
|
Chairman of the
Board, President,
and Chief
Executive Officer
of Bancorp and
Cathay Bank
|
|
|
2012
|
|
|
|
1,565,000
|
|
|
|
|
|
|
|
782,485
|
|
|
|
|
|
|
|
|
|
|
|
14,909
|
|
|
|
6,250
|
|
|
|
2,368,644
|
|
|
|
2011
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
499,991
|
|
|
|
|
|
|
|
|
|
|
|
13,909
|
|
|
|
6,125
|
|
|
|
1,520,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Wu
|
|
|
2013
|
|
|
|
789,104
|
9/
|
|
|
89,000
|
|
|
|
899,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,375
|
|
|
|
1,784,438
|
|
Executive Vice Chairman of the Board and Chief Operating Officer of Bancorp and Cathay
Bank
|
|
|
2012
|
|
|
|
705,625
|
|
|
|
|
|
|
|
352,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
|
|
|
1,064,678
|
|
|
|
2011
|
|
|
|
449,625
|
|
|
|
|
|
|
|
224,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,125
|
|
|
|
680,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heng W. Chen
|
|
|
2013
|
|
|
|
520,828
|
10/
|
|
|
66,000
|
|
|
|
771,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,375
|
|
|
|
1,365,163
|
|
Executive Vice
President and
Chief Financial
Officer of
Bancorp and
Cathay Bank
|
|
|
2012
|
|
|
|
467,800
|
|
|
|
|
|
|
|
233,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
|
|
|
707,949
|
|
|
|
2011
|
|
|
|
321,750
|
|
|
|
|
|
|
|
160,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,125
|
|
|
|
488,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irwin Wong
|
|
|
2013
|
|
|
|
395,886
|
11/
|
|
|
54,000
|
|
|
|
520,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,375
|
|
|
|
977,212
|
|
Senior Executive
Vice President
and Chief Retail
Administration
and Regulatory
Affairs Officer of
Cathay Bank
|
|
|
2012
|
|
|
|
357,850
|
|
|
|
|
|
|
|
178,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
|
|
|
543,016
|
|
|
|
2011
|
|
|
|
254,750
|
|
|
|
|
|
|
|
127,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,125
|
|
|
|
388,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pin
Tai
12/
|
|
|
2013
|
|
|
|
456,039
|
13/
|
|
|
56,000
|
|
|
|
681,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,835
|
14/
|
|
|
1,221,933
|
|
Executive Vice
President and
Chief Lending
Officer of Cathay
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
|
1/
|
Includes salary stock received by the Named Executive Officers and amounts deferred by Named Executive Officers under the 401(k) Profit Sharing Plan.
For a discussion of salary stock, see Compensation Discussion and Analysis Components of Our 2013 Executive Compensation Program above.
|
|
2/
|
The amounts shown, if any, are not cash compensation received by the Named Executive Officer and may not correspond to the actual value that could be
realized by the Named Executive Officer. Instead, the amount represents the fair value of restricted stock units computed for the corresponding fiscal year, in accordance with FASB ASC Topic 718, valued based on the closing price of the
Bancorps common stock on the date of the grant.
|
|
3/
|
No stock options were granted to the Named Executive Officers for the last three completed fiscal years.
|
|
4/
|
No non-equity incentive plan compensation was paid to the Named Executive Officers for the last three completed fiscal years.
|
|
5/
|
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.
|
|
6/
|
Includes $1,003,846 cash salary, $795,000 salary stock, and $50,000 for accrued vacation paid to Mr. Cheng in 2013. The salary stock was paid to
Mr. Cheng partly through the delivery of 23,392 fully-vested, non-forfeitable shares of our common stock and partly through the withholding of $303,164 to satisfy tax withholding.
|
|
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 $6,375 in employer contributions under the 401(k) Profit Sharing Plan, $3,567 for automobile expense, and $7,293 in club
memberships.
|
|
9/
|
Includes $474,104 cash salary and $315,000 salary stock paid to Mr. Wu in 2013. The salary stock was paid to Mr. Wu partly through the
delivery of 9,177 fully-vested, non-forfeitable shares of our common stock and partly through the withholding of $121,921 to satisfy tax withholding.
|
|
10/
|
Includes $347,257 cash salary and $173,571 salary stock paid to Mr. Chen in 2013. The salary stock was paid to Mr. Chen partly through the
delivery of 5,022 fully-vested, non-forfeitable shares of our common stock and partly through the withholding of $67,896 to satisfy tax withholding.
|
|
11/
|
Includes approximately $273,743 cash salary and $122,143 salary stock paid to Mr. Wong in 2013. The salary stock was paid to Mr. Wong partly
through the delivery of 3,517 fully-vested, non-forfeitable shares of our common stock and partly through the withholding of $48,117 to satisfy tax withholding.
|
|
12/
|
Mr. Tai was
not a Named Executive Officer during 2011 or 2012. Therefore, no compensation information for those years appears in the Summary Compensation Table for Mr. Tai.
|
|
13/
|
Includes approximately $311,193 cash salary, $132,923 salary stock, and $11,923 for accrued vacation paid to Mr. Tai in 2013. The salary stock was
paid to Mr. Tai partly through the delivery of 3,690 fully-vested, non-forfeitable shares of our common stock and partly through the withholding of $50,376 to satisfy tax withholding.
|
|
14/
|
This amount consists of $6,375 in employer contributions under the 401(k) Profit Sharing Plan, $693 for automobile expense, $1,767 in spousal travel,
and $20,000 in relocation expense.
|
36
Grants of Plan-Based Awards
The table below sets forth information regarding grants of plan-based awards to our Named Executive Officers in 2013.
The salary stock represents shares of our common stock issued to the Named Executive Officers as an adjustment to their base salary. The amount of the adjustment was paid partly in fully-vested,
non-forfeitable shares of our common stock and partly in cash to satisfy tax withholding. Payment was made on each payroll date for the pay periods beginning January 1, 2013 and ending September 30, 2013, with the exception of Pin Tai,
whose payment started from the pay period beginning May 20, 2013, with the number of shares being equal to the additional base salary amount payable for each pay period, divided by the closing price of our common stock as reported on Nasdaq.
The shares, upon issuance, were subject to certain transfer restrictions under the EESA. This table does not include the long-term restricted stock units awarded to the Named Executive Officers on March 13, 2014, as discussed in the CD&A
above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grants of Plan-Based Awards
|
|
Name
|
|
Type of Grant
|
|
|
Grant date
|
|
|
Estimated future payouts
under equity
and non-equity
incentive
plan awards
|
|
|
All
other
stock
awards:
number
of shares
of stock
or units
(#)
1/
|
|
|
All
other
option
awards;
number of
securities
underlying
options
(#)
|
|
|
Exercise
or
base
price of
option
awards
($/Sh)
|
|
|
Grant
date
fair
value
of stock
and
option
awards
($)
4/
|
|
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
|
|
|
Dunson K. Cheng
|
|
|
Restricted Stock Units
|
|
|
|
12/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,292
|
2/
|
|
|
|
|
|
|
|
|
|
|
999,981
|
|
|
|
|
Restricted Stock Units
|
|
|
|
12/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,095
|
2/
|
|
|
|
|
|
|
|
|
|
|
999,994
|
|
|
|
|
Salary Stock
|
|
|
|
Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,392
|
|
|
|
|
|
|
|
|
|
|
|
491,833
|
|
Peter Wu
|
|
|
Restricted Stock Units
|
|
|
|
12/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,681
|
2/
|
|
|
|
|
|
|
|
|
|
|
449,981
|
|
|
|
|
Restricted Stock Units
|
|
|
|
12/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,142
|
2/
|
|
|
|
|
|
|
|
|
|
|
449,978
|
|
|
|
|
Salary Stock
|
|
|
|
Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,177
|
|
|
|
|
|
|
|
|
|
|
|
193,077
|
|
Heng W. Chen
|
|
|
Restricted Stock Units
|
|
|
|
12/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,734
|
2/
|
|
|
|
|
|
|
|
|
|
|
374,980
|
|
|
|
|
Restricted Stock Units
|
|
|
|
12/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,285
|
2/
|
|
|
|
|
|
|
|
|
|
|
374,981
|
|
|
|
|
Salary Stock
|
|
|
|
Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,022
|
|
|
|
|
|
|
|
|
|
|
|
105,678
|
|
Irwin Wong
|
|
|
Restricted Stock Units
|
|
|
|
12/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,823
|
2/
|
|
|
|
|
|
|
|
|
|
|
249,995
|
|
|
|
|
Restricted Stock Units
|
|
|
|
12/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,523
|
2/
|
|
|
|
|
|
|
|
|
|
|
249,979
|
|
|
|
|
Salary Stock
|
|
|
|
Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,517
|
|
|
|
|
|
|
|
|
|
|
|
74,019
|
|
Pin Tai
|
|
|
Restricted Stock Units
|
|
|
|
3/14/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,981
|
5/
|
|
|
|
|
|
|
|
|
|
|
81,889
|
|
|
|
|
Restricted Stock Units
|
|
|
|
4/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,973
|
3/
|
|
|
|
|
|
|
|
|
|
|
73,103
|
|
|
|
|
Restricted Stock Units
|
|
|
|
5/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,454
|
3/
|
|
|
|
|
|
|
|
|
|
|
29,996
|
|
|
|
|
Restricted Stock Units
|
|
|
|
12/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,805
|
2/
|
|
|
|
|
|
|
|
|
|
|
274,987
|
|
|
|
|
Restricted Stock Units
|
|
|
|
12/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,476
|
2/
|
|
|
|
|
|
|
|
|
|
|
274,995
|
|
|
|
|
Salary Stock
|
|
|
|
Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,690
|
|
|
|
|
|
|
|
|
|
|
|
82,535
|
|
|
1/
|
The number of shares of salary stock for each Named Executive Officer was payable on each payroll date for the pay periods beginning January 1,
2013, and ending December 31, 2013, with the exception of Pin Tai, whose payment started from the pay period beginning May 20, 2013, but have been aggregated for purposes of this table.
|
|
2/
|
Each restricted stock unit represents the contingent right to receive one share of common stock upon vesting. The number of restricted stock units that
are earned can be from 0% of the target award up to 150% of the target award, depending upon the achievement of certain performance criteria. These restricted stock units are scheduled to vest in a single installment on December 31, 2016,
subject to continued employment, but may vest to some extent earlier in the event of death, disability, retirement after December 31, 2015, or a change in control, with the number of units earned being based on the achievement of certain
performance criteria.
|
37
|
3/
|
Consists of long-term restricted stock units within the meaning of the Emergency Economic Stabilization Act of 2008, as amended from time to time, and
the rules and regulations promulgated thereunder (EESA). Each unit represents a contingent right to receive one share of common stock. These restricted stock units are scheduled to vest on the second anniversary of the grant date, or
earlier in the event of death or disability.
|
|
4/
|
The grant date fair value of the restricted stock units is as determined for financial reporting purposes and included in the Stock awards
column for each Named Executive Officer in the Summary Compensation Table above. The value of the salary stock is included in the Salary column in the Summary Compensation Table above, but the portion paid in cash
to satisfy tax withholding is not included in this table.
|
|
5/
|
Consists of restricted stock units awarded for 2012 compensation and therefore not included on the Stock awards column in the Summary
Compensation Table above.
|
38
Outstanding Equity Awards at Fiscal Year-End
The table below sets forth information regarding outstanding equity awards as of December 31, 2013, made to our Named Executive Officers. Except as
stated in the footnotes below, all options vest in 20% increments over a five-year period. All options terminate 10 years from the date of the grant, subject to early termination in the event of termination of employment, disability, or death. Stock
awards consist of restricted stock units, each of which represents a contingent right to receive one share of our common stock. This table does not include the long-term restricted stock units awarded to the Named Executive Officers on
March 13, 2014, discussed in the CD&A above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards
|
|
|
Stock awards
|
|
Name
|
|
Number of
securities
underlying
unexercised
options
exercisable
(#)
|
|
|
Number of
securities
underlying
unexercised
options
unexercisable
(#)
|
|
|
Equity
incentive
plan
awards:
number
of
securities
underlying
unexercised
unearned
options
(#)
|
|
|
Option
exercise
price
($)
|
|
|
Option
expiration
date
|
|
|
Number of
shares or
units of
stock
that have
not
vested
(#)
|
|
|
Market
value of
shares or
units of
stock that
have not
vested
($)
|
|
|
Equity incentive
plan
awards:
number of
unearned
shares, units
or
other rights that
have
not
vested (#)
|
|
|
Equity incentive
plan
awards:
market or
payout value
or
unearned
shares, units or
other
rights
that have
not
vested ($)
*/
|
|
Dunson K. Cheng
|
|
|
154,940
|
|
|
|
|
|
|
|
|
|
|
|
37.00
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245,060
|
1/
|
|
|
|
|
|
|
|
|
|
|
32.47
|
|
|
|
3/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
264,694
|
2/
|
|
|
|
|
|
|
|
|
|
|
33.54
|
|
|
|
5/12/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
154,940
|
|
|
|
|
|
|
|
|
|
|
|
36.24
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
154,970
|
|
|
|
|
|
|
|
|
|
|
|
23.37
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
3/
|
|
|
|
|
|
|
|
|
|
|
23.37
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,862
|
4/
|
|
|
317,071
|
4/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,481
|
5/
|
|
|
814,757
|
5/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,292
|
6/
|
|
|
1,050,275
|
6/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,095
|
6/
|
|
|
1,018,279
|
6/
|
Peter Wu
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
28.695
|
|
|
|
2/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,170
|
|
|
|
|
|
|
|
|
|
|
|
37.00
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,170
|
|
|
|
|
|
|
|
|
|
|
|
36.24
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,230
|
|
|
|
|
|
|
|
|
|
|
|
23.37
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,379
|
4/
|
|
|
143,781
|
4/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,716
|
5/
|
|
|
366,629
|
5/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,681
|
6/
|
|
|
472,613
|
6/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,142
|
6/
|
|
|
458,206
|
6/
|
Heng W. Chen
|
|
|
40,100
|
|
|
|
|
|
|
|
|
|
|
|
37.00
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
36.24
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,000
|
|
|
|
|
|
|
|
|
|
|
|
23.37
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,819
|
4/
|
|
|
128,812
|
4/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,988
|
5/
|
|
|
213,519
|
5/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,734
|
6/
|
|
|
393,840
|
6/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,285
|
6/
|
|
|
381,838
|
6/
|
Irwin Wong
|
|
|
32,580
|
|
|
|
|
|
|
|
|
|
|
|
37.00
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,000
|
|
|
|
|
|
|
|
|
|
|
|
36.24
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
23.37
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,810
|
4/
|
|
|
101,841
|
4/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,001
|
5/
|
|
|
160,407
|
5/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,823
|
6/
|
|
|
262,569
|
6/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,523
|
6/
|
|
|
254,550
|
6/
|
Pin Tai
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
|
|
28.695
|
|
|
|
2/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,710
|
|
|
|
|
|
|
|
|
|
|
|
37.00
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,750
|
|
|
|
|
|
|
|
|
|
|
|
36.90
|
|
|
|
1/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
23.37
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,084
|
4/
|
|
|
82,435
|
4/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,981
|
7/
|
|
|
106,412
|
7/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,973
|
8/
|
|
|
106,198
|
8/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,454
|
9/
|
|
|
38,865
|
9/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,805
|
6/
|
|
|
288,818
|
6/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,476
|
6/
|
|
|
280,023
|
6/
|
|
*/
|
The value equals the closing price of Bancorp common stock on the last business day of Bancorps most recently completed fiscal year, multiplied
by the number of shares underlying the award.
|
|
1/
|
These options vested at a rate of 30% on the date of grant, March 22, 2005; 10% vested on November 20, 2005; and the remainder vested at a
rate of 20% in three equal annual increments beginning November 20, 2006.
|
39
|
2/
|
These options vested at a rate of approximately 40% on November 20, 2005, and the remainder vested at a rate of approximately 20% in three equal
annual increments beginning November 20, 2006.
|
|
3/
|
These options vested at a rate of 50% in two annual increments beginning February 21, 2009.
|
|
4/
|
These restricted stock units are scheduled to vest in a single installment on May 8, 2014, or earlier in the event of death or disability.
|
|
5/
|
These restricted stock units are scheduled to vest in a single installment on December 20, 2014, or earlier in the event of death or disability.
|
|
6/
|
Each restricted stock unit represents the contingent right to receive one share of common stock upon vesting. The number of restricted stock units that
are earned can be from 0% of the target award up to 150% of the target award, depending upon the achievement of certain performance criteria. These restricted stock units are scheduled to vest in a single installment on December 31, 2016,
subject to continued employment, but may vest to some extent earlier in the event of death, disability, retirement after December 31, 2015, or a change in control, with the number of units earned being based on the achievement of certain
performance criteria.
|
|
7/
|
These restricted stock units are scheduled to vest in a single installment on March 14, 2015, or earlier in the event of death or disability.
|
|
8/
|
These restricted stock units are scheduled to vest in a single installment on April 15, 2015, or earlier in the event of death or disability.
|
|
9/
|
These restricted stock units are scheduled to vest in a single installment on May 17, 2015, or earlier in the event of death or disability.
|
Option Exercises and Stock Vested
The table below sets forth information regarding stock options exercised and vesting of stock awards for the Named Executive Officers during 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards
|
|
|
Stock awards
|
|
Name
|
|
Number of shares
acquired on
exercise (#)
|
|
|
Value realized on
exercise ($)
1/
|
|
|
Number of shares
acquired on
vesting (#)
|
|
|
Value realized on
vesting ($)
2/
|
|
Dunson K. Cheng
|
|
|
153,660
|
|
|
$
|
78,893
|
|
|
|
34,297
|
|
|
$
|
802,031
|
|
Peter Wu
|
|
|
|
|
|
|
|
|
|
|
15,308
|
|
|
$
|
354,580
|
|
Heng W. Chen
|
|
|
19,896
|
|
|
$
|
8,953
|
|
|
|
10,887
|
|
|
$
|
249,998
|
|
Irwin Wong
|
|
|
143,040
|
|
|
$
|
68,761
|
|
|
|
8,614
|
|
|
$
|
197,709
|
|
Pin Tai
|
|
|
16,180
|
|
|
$
|
14,574
|
|
|
|
8,839
|
|
|
$
|
203,074
|
|
|
1/
|
The value realized equals the difference between the option exercise price and the closing price of Bancorp common stock on the date of exercise,
multiplied by the number of shares for which the option was exercised.
|
|
2/
|
The value realized equals the closing price of Bancorp common stock on the vesting date, multiplied by the number of shares that vested.
|
Pension Benefits
Our Named Executive Officers did not receive any
benefits during 2013 under any defined contribution plan other than the 401(k) Profit Sharing Plan. We do not have any defined benefit plans.
Nonqualified Deferred Compensation
We have two deferred compensation arrangements
with Dunson K. Cheng, our President and Chief Executive Officer.
In an agreement, effective November 23, 2004, Mr. Cheng agreed to defer any cash bonus amounts in
excess of $225,000 for the year ended December 31, 2004, until January 1 of the first year following such time as Mr. Cheng separates from us (the Cheng Deferred Compensation Agreement). This Cheng Deferred Compensation
Agreement was amended and restated on November 8, 2007, to comply with Section 409A of the Internal Revenue Code (the Code) and provides that, if Mr. Cheng is subject to Section 409A of the Code, payment of the
deferred amount will be delayed to the later of:
40
(i) January 1 of the first year following his separation from service; or (ii) the first day of the seventh month following his separation from service. Pursuant to this agreement,
an amount equal to $610,000 was deferred in 2004. The deferred amount accrues interest at the rate of 7% per annum computed based on the actual number of days during each period divided by the actual number of days for the full year. The
deferred amount will be increased each quarter by the amount of interest computed for the preceding quarter. Beginning on the tenth anniversary of the agreement, the interest rate will equal 275 basis points above the then prevailing interest rate
on a 10-year Treasury note.
On March 13, 2014, the Compensation Committee awarded Dunson K. Cheng a cash bonus in the amount of $300,000
for the quarter ended
December 31, 2013, and provided as part of the award that payment of the bonus would be deferred until the later of: (i) January 1 of the first year following Mr. Chengs
separation from service; or (ii) the first day of the seventh month following Mr. Chengs separation from service. The Committees award further provided that the deferred amount accrues interest at the rate of 5.02% per
annum compounded quarterly, will be increased each quarter by the amount of interest computed for that quarter, and, beginning on the fifth anniversary of the award, the interest rate will equal 350 basis points above the then prevailing interest
rate on a five-year Treasury note.
The table below sets forth information regarding non-qualified deferred compensation arrangements for our
Named Executive Officers during 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Last FY ($)
|
|
|
Registrant
Contributions in
Last FY ($)
|
|
|
Aggregate
Earnings in
Last FY ($)
|
|
|
Aggregate
Withdrawals /
Distributions ($)
|
|
|
Aggregate Balance
at Last
FYE ($)
|
|
Dunson K. Cheng
|
|
|
|
|
|
|
|
|
|
|
76,616
|
1/
|
|
|
|
|
|
|
1,142,822
|
2/
|
Peter Wu
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heng W. Chen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irwin Wong
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pin Tai
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/
|
Includes $15,980 reported in the Summary Compensation Table above as interest that is considered above-market under the regulations of the
SEC.
|
|
2/
|
Includes $705,152 reported in the Summary Compensation Table for previous years, but does not include deferral of the $300,000 bonus
awarded in March 2014.
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Bancorp has not entered into any written employment agreements with any of the Named Executive Officers,
with the exception of the Control Agreements with each of the Named Executive Officers which in effect become employment agreements upon the occurrence of a change in control as defined therein.
The tables below under Cash Compensation and Benefits in the Event of a Change in Control reflect the amount of compensation payable to each
of the Named Executive Officers in the event of termination of the Named Executive Officers employment after a change in control. The amount of compensation payable to each Named Executive Officer upon voluntary and involuntary termination and
in the event of death or disability of the Named Executive
Officer is shown. The amounts shown assume that such termination was effective as of December 31, 2013, and thus include amounts earned through such time, and are estimates of the amounts
which would be paid out to the Named Executive Officers upon their termination. The actual amounts to be paid out, if any, can only be determined at the time of the Named Executive Officers separation from Bancorp and Cathay Bank.
In addition, a separate table below under Equity Compensation in the Event of a Change in Control reflects the value of any equity awards
granted to each Named Executive Officer under the 2005 Incentive Plan and the 1998 Incentive Plan that may be accelerated upon a change in control of Bancorp even if there was no termination of the Named
41
Executive Officers employment. The administrator of the 2005 Incentive Plan has the discretion to have Bancorp assume, substitute, or adjust each outstanding award under such plan,
accelerate the vesting of any options, or terminate any restrictions on stock awards or cash awards upon a change in control, as defined therein. Similarly, under the 1998 Incentive Plan, upon a change in control of Bancorp, as defined therein, the
Board has the discretion to accelerate the vesting of options under the 1998 Incentive Plan and to determine if outstanding options under the 1998 Incentive Plan will be cashed out at the change in control price, as defined therein.
Payments Made Upon Termination Other Than After a Change in Control
A Named Executive Officer who ceases to be an employee of Bancorp other than after a change in control, whether voluntary or involuntary and with or without cause, including in the event of retirement,
disability, or death, will be entitled to receive the following, which are generally available to all salaried employees:
|
|
base salary through the date of termination;
|
|
|
accrued vacation pay as of the date of termination;
|
|
|
vested benefits as of the date of termination;
|
|
|
if termination resulted from disability: long-term disability benefits of two-thirds annual base salary up to $15,000 per month and vesting of
long-term restricted stock units; and
|
|
|
if termination resulted from death: three times annual base salary, up to $600,000, subject to reduction beginning at age 65, and vesting of long-term
restricted stock units.
|
In addition to such amounts, Mr. Cheng would also be entitled to receive payment of the cash
bonuses, and interest thereon, deferred under the deferred compensation arrangements described under Executive CompensationNonqualified Deferred Compensation above.
Change of Control Employment Agreements
Bancorp entered into the Control Agreements with each of the Named Executive Officers which in effect become employment agreements upon the occurrence of a change in control as defined therein. The
Control Agreements for each of the Named Executive
Officers are substantially similar and have been filed as exhibits to Bancorps Annual Report on
Form 10-K
for the year ended December 31,
2008.
The following is only a summary of the significant terms of the Control Agreements. This summary is qualified in its entirety by
reference to the Control Agreements. For a discussion of the purposes of the Control Agreements and their relationship to our compensation policy, see
Change in Control Agreements
under Executive
CompensationCompensation Discussion and Analysis above.
Pursuant to the Control Agreements, Bancorp or Cathay Bank (as
applicable) has agreed to continue the employment of each Named Executive Officer for a period of three years from the occurrence of a change of control (the effective date). During this employment period, each Named Executive Officer
will be entitled to the following compensation and benefits:
|
|
An annual base salary at least equal to 12 times the highest monthly base salary paid or payable (including deferred salary) during the 12-months
preceding the effective date;
|
|
|
An annual cash bonus at least equal to the highest annual bonus earned for the last three full fiscal years prior to the effective date (with partial
years being annualized for the purpose of determining the amount of the bonus);
|
|
|
Participation in all incentive, saving, and retirement plans and programs applicable generally to other peer executives on terms no less favorable than
those in effect during the 120-day period immediately prior to the effective date;
|
|
|
Participation in welfare benefit plans and programs on terms no less favorable than those in effect during the 120-day period immediately prior to the
effective date;
|
|
|
Reimbursement for all reasonable expenses in accordance with procedures in effect during the 120-day period immediately prior to the effective date;
|
|
|
Fringe benefits (including, without limitation, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and
payment of related expenses) in accordance with the most favorable plans in effect during the 120-day period immediately prior to the effective date;
|
42
|
|
Office, secretarial and support staff; and
|
|
|
Paid vacation in accordance with the most favorable plans in effect during the 120-day period immediately prior to the effective date.
|
Payments Made Upon Death or Disability After a Change in Control
The Control Agreements provide that, in the event of the death or disability of a Named Executive Officer after a change in control, Bancorp or Cathay
Bank (as applicable) has agreed to pay the Named Executive Officer (or the Named Executive Officers estate or beneficiaries in the event of death): (i) base salary through the date of termination; (ii) a pro-rata bonus until the date
of termination of the higher of (A) the highest annual bonus earned for the last three full fiscal years prior to the change in control and (B) the annual bonus paid or payable for the most recently completed fiscal year following the
change in control, including any bonus or portion thereof that has been earned but deferred (the greater of clauses (A) and (B), the Highest Annual Bonus); (iii) any accrued vacation pay (items (i), (ii), and (iii),
collectively, the Accrued Obligations); and (iv) amounts that are vested benefits or that the Named Executive Officer is otherwise entitled to receive under any plan, policy, practice or program of, or any other contract or
agreement with, Bancorp or Cathay Bank at or subsequent to the date of termination (Other Benefits).
Payments
Made Upon Involuntary Termination Other Than For Cause or Voluntary Termination For Good Reason After a Change in Control
The Control
Agreements provide that, if a Named Executive Officers employment is terminated following a change in control (other than termination by Bancorp or Cathay Bank for cause or by reason of death or disability or by the Named Executive Officer for
other than good reason) or if the Named Executive Officer terminates employment in certain circumstances defined in the Control Agreements which constitute good reason, in addition to the Accrued Obligations and Other
Benefits as defined in the preceding section, the Named Executive Officer will be paid the aggregate of the following in a lump sum in cash within 30 days after the date of termination:
|
|
an amount equal to a multiple (two, two and one-half, or three, depending on the applicable Control
|
|
|
Agreement) of the Named Executive Officers annual base salary and of the Highest Annual Bonus; and
|
|
|
an amount equal to the sum of Bancorps or Cathay Banks (as applicable) matching or other employer contributions under Bancorps or
Cathay Banks qualified defined contribution plans and any excess or supplemental defined contribution plans in which the Named Executive Officer participates that the Named Executive Officer would receive if the Named Executive Officers
employment continued (for two, two and one-half, or three years after the date of termination, depending on the applicable Control Agreement).
|
Also (for a period of two, two and one-half, or three years, depending on the applicable Control Agreement), the Named Executive Officer would be entitled to receive welfare benefits (including medical,
prescription, dental, disability, employee life, group life, accidental death, and travel accident insurance) at least equal to, and at the same after-tax cost to the Named Executive Officer, as those that would have been provided in accordance with
the plans, programs, practices, and policies then in effect. In addition, the Named Executive Officer would be entitled to receive outplacement services, provided that the cost of such outplacement services will not exceed $50,000.
Payments Made Upon Involuntary Termination For Cause or Voluntary Termination For Other Than Good Reason After a Change in Control
The Control Agreements provide that, if a Named Executive Officers employment is terminated for cause following a change in control
or if the Named Executive Officer terminates his employment for other than good reason, Bancorp or Cathay Bank has agreed to pay the Named Executive Officer: (i) base salary through the date of termination; (ii) any accrued
vacation pay; and (iii) Other Benefits.
Certain Additional Payments
The Control Agreements provide that each Named Executive Officer is eligible for tax gross-up payments in reimbursement for change in control excise taxes
imposed on the severance payments and benefits, unless the value of the payments and benefits does not exceed 110% of the maximum amount payable without triggering the excise taxes, in which case the payments and benefits will be reduced to the
maximum amount.
43
Cash Compensation and Benefits in the Event of a Change in Control
The tables below show the potential cash payments and benefits for the Named Executive Officers if, hypothetically solely for the purposes of this proxy
statement, there had been a change in control effective December 31, 2013, and the Named
Executive Officer had been terminated as of the same day. These tables include the dollar amount of salary stock awarded as part of the base salary of each Named Executive Officer, but exclude
accrued and unpaid salary and vacation as well as Other Benefits because all employees are generally entitled to these payments and benefits upon termination of employment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary Termination
|
|
|
Involuntary Termination
|
|
|
|
|
Dunson K. Cheng
|
|
For Other
Than Good
Reason
|
|
|
For Good
Reason
|
|
|
For Cause
|
|
|
Other Than
For Cause
|
|
|
Death or
Disability
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary and Bonus
1/
|
|
$
|
0
|
|
|
$
|
9,780,000
|
|
|
$
|
0
|
|
|
$
|
9,780,000
|
|
|
$
|
0
|
|
Accrued Obligations
2/
|
|
|
0
|
|
|
|
1,200,000
|
|
|
|
0
|
|
|
|
1,200,000
|
|
|
|
1,200,000
|
|
401(k) Matching
|
|
|
0
|
|
|
|
19,125
|
|
|
|
0
|
|
|
|
19,125
|
|
|
|
0
|
|
Benefits
3/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Life Insurance
|
|
|
0
|
|
|
|
2,106
|
|
|
|
0
|
|
|
|
2,106
|
|
|
|
0
|
|
Health Insurance
|
|
|
0
|
|
|
|
15,902
|
|
|
|
0
|
|
|
|
15,902
|
|
|
|
0
|
|
Long-Term Disability Insurance
|
|
|
0
|
|
|
|
1,458
|
|
|
|
0
|
|
|
|
1,458
|
|
|
|
0
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services (max.)
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
Excise Tax plus Gross Up
|
|
|
0
|
|
|
|
4,182,301
|
|
|
|
0
|
|
|
|
4,182,301
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
15,250,892
|
|
|
$
|
0
|
|
|
$
|
15,250,892
|
|
|
$
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary Termination
|
|
|
Involuntary Termination
|
|
|
|
|
Peter Wu
|
|
For Other
Than Good
Reason
|
|
|
For Good
Reason
|
|
|
For Cause
|
|
|
Other Than
For Cause
|
|
|
Death or
Disability
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary and Bonus
4/
|
|
$
|
0
|
|
|
$
|
3,127,500
|
|
|
$
|
0
|
|
|
$
|
3,127,500
|
|
|
$
|
0
|
|
Accrued Obligations
2/
|
|
|
0
|
|
|
|
356,000
|
|
|
|
0
|
|
|
|
356,000
|
|
|
|
356,000
|
|
401(k) Matching
|
|
|
0
|
|
|
|
15,938
|
|
|
|
0
|
|
|
|
15,938
|
|
|
|
0
|
|
Benefits
3/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Life Insurance
|
|
|
0
|
|
|
|
2,464
|
|
|
|
0
|
|
|
|
2,464
|
|
|
|
0
|
|
Health Insurance
|
|
|
0
|
|
|
|
22,553
|
|
|
|
0
|
|
|
|
22,553
|
|
|
|
0
|
|
Long-Term Disability Insurance
|
|
|
0
|
|
|
|
1,215
|
|
|
|
0
|
|
|
|
1,215
|
|
|
|
0
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services (max.)
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
Excise Tax plus Gross Up
|
|
|
0
|
|
|
|
1,349,481
|
|
|
|
0
|
|
|
|
1,349,481
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
4,925,151
|
|
|
$
|
0
|
|
|
$
|
4,925,151
|
|
|
$
|
356,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary Termination
|
|
|
Involuntary Termination
|
|
|
|
|
Heng W. Chen
|
|
For Other
Than Good
Reason
|
|
|
For Good
Reason
|
|
|
For Cause
|
|
|
Other Than
For Cause
|
|
|
Death or
Disability
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary and Bonus
5/
|
|
$
|
0
|
|
|
$
|
1,688,857
|
|
|
$
|
0
|
|
|
$
|
1,688,857
|
|
|
$
|
0
|
|
Accrued Obligations
2/
|
|
|
0
|
|
|
|
264,000
|
|
|
|
0
|
|
|
|
264,000
|
|
|
|
264,000
|
|
401(k) Matching
|
|
|
0
|
|
|
|
12,750
|
|
|
|
0
|
|
|
|
12,750
|
|
|
|
0
|
|
Benefits
3/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Life Insurance
|
|
|
0
|
|
|
|
2,160
|
|
|
|
0
|
|
|
|
2,160
|
|
|
|
0
|
|
Health Insurance
|
|
|
0
|
|
|
|
20,274
|
|
|
|
0
|
|
|
|
20,274
|
|
|
|
0
|
|
Long-Term Disability Insurance
|
|
|
0
|
|
|
|
972
|
|
|
|
0
|
|
|
|
972
|
|
|
|
0
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services (max.)
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
Excise Tax plus Gross Up
|
|
|
0
|
|
|
|
778,259
|
|
|
|
0
|
|
|
|
778,259
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
2,817,272
|
|
|
$
|
0
|
|
|
$
|
2,817,272
|
|
|
$
|
264,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary Termination
|
|
|
Involuntary Termination
|
|
|
|
|
Irwin Wong
|
|
For Other
Than Good
Reason
|
|
|
For Good
Reason
|
|
|
For Cause
|
|
|
Other Than
For Cause
|
|
|
Death or
Disability
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary and Bonus
6/
|
|
$
|
0
|
|
|
$
|
1,307,714
|
|
|
$
|
0
|
|
|
$
|
1,307,714
|
|
|
$
|
0
|
|
Accrued Obligations
2/
|
|
|
0
|
|
|
|
216,000
|
|
|
|
0
|
|
|
|
216,000
|
|
|
|
216,000
|
|
401(k) Matching
|
|
|
0
|
|
|
|
12,750
|
|
|
|
0
|
|
|
|
12,750
|
|
|
|
0
|
|
Benefits
3/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Life Insurance
|
|
|
0
|
|
|
|
2,034
|
|
|
|
0
|
|
|
|
2,034
|
|
|
|
0
|
|
Health Insurance
|
|
|
0
|
|
|
|
18,043
|
|
|
|
0
|
|
|
|
18,043
|
|
|
|
0
|
|
Long-Term Disability Insurance
|
|
|
0
|
|
|
|
967
|
|
|
|
0
|
|
|
|
967
|
|
|
|
0
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services (max.)
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
Excise Tax plus Gross Up
|
|
|
0
|
|
|
|
600,812
|
|
|
|
0
|
|
|
|
600,812
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
:
|
|
$
|
0
|
|
|
$
|
2,208,320
|
|
|
$
|
0
|
|
|
$
|
2,208,320
|
|
|
$
|
216,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary Termination
|
|
|
Involuntary Termination
|
|
|
|
|
Pin Tai
|
|
For Other
Than Good
Reason
|
|
|
For Good
Reason
|
|
|
For Cause
|
|
|
Other Than
For Cause
|
|
|
Death or
Disability
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary and Bonus
7/
|
|
$
|
0
|
|
|
$
|
1,548,000
|
|
|
$
|
0
|
|
|
$
|
1,548,000
|
|
|
$
|
0
|
|
Accrued Obligations
2/
|
|
|
0
|
|
|
|
224,000
|
|
|
|
0
|
|
|
|
224,000
|
|
|
|
224,000
|
|
401(k) Matching
|
|
|
0
|
|
|
|
12,750
|
|
|
|
0
|
|
|
|
12,750
|
|
|
|
0
|
|
Benefits
3/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Life Insurance
|
|
|
0
|
|
|
|
2,160
|
|
|
|
0
|
|
|
|
2,160
|
|
|
|
0
|
|
Health Insurance
|
|
|
0
|
|
|
|
20,745
|
|
|
|
0
|
|
|
|
20,745
|
|
|
|
0
|
|
Long-Term Disability Insurance
|
|
|
0
|
|
|
|
972
|
|
|
|
0
|
|
|
|
972
|
|
|
|
0
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services (max.)
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
50,000
|
|
|
|
0
|
|
Excise Tax plus Gross Up
|
|
|
0
|
|
|
|
715,861
|
|
|
|
0
|
|
|
|
715,861
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
2,574,488
|
|
|
$
|
0
|
|
|
$
|
2,574,488
|
|
|
$
|
224,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/
|
This amount is equal to the product of (i) three and (ii) the sum of (x) the Named Executive Officers annual base salary
($2,060,000), and (y) the Highest Annual Bonus ($1,200,000).
|
45
|
2/
|
Accrued Obligations include (i) base salary through the date of termination, (ii) a pro-rata portion of the Highest Annual Bonus based on the
number of days elapsed in the year of termination, and (iii) any accrued vacation pay. These Accrued Obligations are earned through the date of termination under the terms of the employment agreement that takes effect upon a change in control.
They serve as compensation to the Named Executive Officers for services rendered during employment and not as severance or post-employment compensation. For the purposes of this table, only the pro-rata bonus as defined in the Control Agreements is
included because all employees are generally entitled to accrued and unpaid salary and vacation upon termination. Further, it is probable that, had the hypothetical change in control and termination taken place on December 31, 2013, the
pro-rata bonus would have been paid in lieu of, and not in addition to, the actual bonus, if any, paid to the Named Executive Officer for 2013 as would be reported in the Summary Compensation Table above.
|
|
3/
|
Amounts shown are based on the annual cost to Bancorp as of December 31, 2013, multiplied by three in the case of Mr. Cheng, by two and
one-half in the case of Mr. Wu, and by two in the case of Mr. Chen, Mr. Wong, and Mr. Tai.
|
|
4/
|
This amount is equal to the product of (i) two and one-half and (ii) the sum of (x) the Named Executive Officers annual base
salary ($895,000), and (y) the Highest Annual Bonus ($356,000).
|
|
5/
|
This amount is equal to the product of (i) two and (ii) the sum of (x) the Named Executive Officers annual base salary ($580,429),
and (y) the Highest Annual Bonus ($264,000).
|
|
6/
|
This amount is equal to the product of (i) two and (ii) the sum of (x) the Named Executive Officers annual base salary ($437,857),
and (y) the Highest Annual Bonus ($216,000).
|
|
7/
|
This amount is equal to the product of (i) two and (ii) the sum of (x) the Named Executive Officers annual base salary ($550,000),
and (y) the Highest Annual Bonus ($224,000).
|
Equity Compensation in the
Event of a Change in Control
Assuming solely for the purposes of this proxy statement that a change in control occurred on the last
business day of 2013 and the vesting of all options was accelerated and all restrictions on stock awards were terminated, the following table sets forth
the estimated value for equity awards to the Named Executive Officers that would not otherwise have vested or been terminated but for the change in control:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Stock Options
Accelerated Vesting
|
|
|
Restricted Stock
Accelerated Vesting
1/
|
|
|
Total
|
|
Dunson K. Cheng
|
|
$
|
0
|
|
|
$
|
3,200,383
|
|
|
$
|
3,200,383
|
|
Peter Wu
|
|
|
0
|
|
|
|
1,441,228
|
|
|
|
1,441,228
|
|
Heng W. Chen
|
|
|
0
|
|
|
|
1,118,009
|
|
|
|
1,118,009
|
|
Irwin Wong
|
|
|
0
|
|
|
|
779,367
|
|
|
|
779,367
|
|
Pin Tai
|
|
|
0
|
|
|
|
902,751
|
|
|
|
902,751
|
|
|
1/
|
Consists of long-term restricted stock units, the value of which is based on the closing price of Bancorps common stock on December 31,
2013, which was $26.73 per share.
|
46
PROPOSAL TWO
ADVISORY (NON-BINDING) VOTE TO APPROVE OUR EXECUTIVE COMPENSATION
Section 14A of 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 SECs rules. Accordingly, we are presenting the following advisory proposal 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.
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the
policies and practices described in this proxy statement. Your vote is advisory and shall not be binding upon the Board, and may not be construed as overruling a decision by the Board or the Compensation Committee, creating
or implying any additional fiduciary duty by the Board or the Compensation Committee, or restricting or limiting the ability of stockholders to make proposals for inclusion in proxy materials
related to executive compensation. However, the Board and Compensation Committee will consider the voting results of this non-binding proposal when reviewing compensation policies and practices.
The CD&A and the tables and other disclosures under Executive Compensation describe our compensation philosophy and compensation actions
taken with respect to 2013 compensation of our Named Executive Officers. We believe that our current executive compensation program directly links executive compensation to performance and aligns the interests of our executive officers with those of
our stockholders.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR
THE ADVISORY (NON-BINDING) PROPOSAL TO APPROVE
OUR EXECUTIVE COMPENSATION.
47
PROPOSAL THREE
VOTE ON THE FREQUENCY OF FUTURE ADVISORY (NON-BINDING) VOTES ON EXECUTIVE COMPENSATION
As described above in Proposal Two, our stockholders have the opportunity to cast an advisory vote on the
compensation of our Named Executive Officers as disclosed in this proxy statement. Section 14A of the Exchange Act also enables our stockholders to indicate how frequently we should seek an advisory vote on the compensation of our Named
Executive Officers. By voting on this Proposal Three, our stockholders may indicate whether they would prefer an advisory vote on executive compensation every year, every other year, or every three years, or they may abstain.
Upon consideration, our Board of Directors has determined that an advisory vote on executive compensation that occurs every year is most appropriate, and
recommends that you vote for a frequency of every year for future advisory votes on executive compensation. We believe that an annual advisory vote provides accountability and direct communication by enabling the vote to correspond to the
information presented in the accompanying proxy statement for the annual stockholders meeting. Voting every other year or every three years, potentially covering all actions occurring between the votes, would make it difficult to create
meaningful and coherent communication that the votes are intended to provide. We would not know whether the stockholder vote references the compensation for the
year being reported or one of the previous years, making it more difficult to understand the implications of the vote.
Your vote is advisory and shall not be binding upon the Board, and may not be construed as overruling a decision by the Board or the Compensation Committee, creating or implying any additional fiduciary
duty by the Board or the Compensation Committee, or restricting or limiting the ability of stockholders to make proposals for inclusion in proxy materials related to executive compensation. However, our Board and Compensation Committee will consider
the outcome of the vote when considering the frequency of future advisory votes on executive compensation.
Stockholders may cast a vote on
the preferred voting frequency by selecting the option of every year, every other year, or every three years, or they may abstain.
YOUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE FREQUENCY OF FUTURE ADVISORY (NON-BINDING) VOTES ON EXECUTIVE COMPENSATION TO BE
EVERY YEAR
.
48
PROPOSAL FOUR
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
We are asking stockholders to ratify the appointment of KPMG LLP (KPMG) as our independent
registered public accounting firm for our 2014 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 will reconsider the appointment.
The Audit Committee appoints the
independent registered public accounting firm annually. Before appointing KPMG as our independent registered public accounting firm for fiscal year 2014, the Audit Committee considered the firms qualifications and performance during fiscal
years 2012 and 2013. In addition, the Audit Committee reviewed and approved audit and permissible non-audit services performed by KPMG in fiscal 2012 and 2013, as well as the fees paid to KPMG for such services. In its
review of non-audit service fees and its appointment of KPMG as Bancorps independent registered public accounting firm, the Audit Committee considered whether the provision of such services
was compatible with maintaining KPMGs independence.
Representatives of KPMG LLP are expected to attend the meeting and will have an
opportunity to make a statement if they wish to do so. They may also respond to appropriate questions from stockholders or their representatives.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR
RATIFICATION OF THE APPOINTMENT OF KPMG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2014 FISCAL YEAR.
PRINCIPAL ACCOUNTING FEES AND SERVICES
KPMG audited our financial statements for the
fiscal year ended December 31, 2013. The following table presents fees billed or to be billed for professional audit services rendered by KPMG for the audits of our annual financial statements for 2013 and 2012 and for other services rendered
by KPMG.
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
Audit Fees
|
|
$
|
1,092,000
1/
|
|
|
$
|
1,046,700
1/
|
|
Audit-Related Fees
|
|
|
62,897
2/
|
|
|
|
93,069
2/
|
|
Tax Fees
|
|
|
16,343
3/
|
|
|
|
5,776
3/
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
1,171,240
|
|
|
$
|
1,145,545
|
|
|
|
|
|
|
|
|
|
|
|
1/
|
Audit fees consist of the aggregate fees of KPMG in connection with: (i) the audit of the annual consolidated financial statements, and
(ii) the required review of the financial information included in our Quarterly Reports on Form 10-Q.
|
|
2/
|
Audit-related fees consist of professional services provided by KPMG Hong Kong in connection with the review of banking returns, review of internal
controls, and other agreed upon procedures for the Hong Kong branch.
|
|
3/
|
Tax fees include tax compliance services provided by KPMG Hong Kong for the Hong Kong branch.
|
49
AUDIT COMMITTEE REPORT
As part of its ongoing activities, the Audit
Committee has:
|
|
Reviewed and discussed with management Bancorps audited consolidated financial statements for the year ended December 31, 2013;
|
|
|
Discussed with Bancorps independent auditors the matters required to be discussed by Auditing Standard No. 16,
Communications with
Audit Committees,
issued by the Public Company Accounting Oversight Board; and
|
|
|
Received the written disclosures and the letter from Bancorps independent accountant required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountants communications with the Audit Committee concerning independence, and has discussed with such independent accountant the independent accountants independence.
|
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited
consolidated financial statements be included in Bancorps Annual Report on Form 10-K for the year ended December 31, 2013, for filing with the Securities and Exchange Commission.
Audit Committee
Kelly L. Chan (Chairman)
Jane Jelenko
Ting Y. Liu
INCORPORATION OF CERTAIN INFORMATION
The information contained in this proxy statement under the captions Audit Committee Report,
Compensation Committee Interlocks and Insider Participation, and Compensation Committee Report shall not be deemed to be incorporated by reference by any general statement that purports to incorporate this proxy statement by
reference, or any part thereof, into any filing under the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act of 1934, as amended (the Exchange Act), except to the extent that Bancorp expressly
incorporates such information in such filing by reference. The information contained in this proxy
statement under the captions Compensation Committee Report and Audit Committee Report shall not be deemed to be soliciting material or otherwise be deemed to be filed
under the Securities Act or the Exchange Act, except to the extent that Bancorp requests that such information be treated as soliciting material or expressly incorporates such information in any such filing by reference. Neither the website of
Bancorp at www.cathaygeneralbancorp.com nor the website of Cathay Bank at www.cathaybank.com is a part of or is incorporated into this proxy statement.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that our executive officers and directors and persons who
own more than 10% of our common stock timely file initial reports of ownership of common stock and other equity securities, and reports of changes in such ownership, with the SEC. We have instituted procedures to receive and review these insider
reports. After a review of the insider reports, we
believe that all required reports were timely filed during 2013, except as follows: Pin Tai, an executive officer, was late in filing a report on Form 3 relating to a restricted stock unit award
made on May 17, 2013; and Perry Oei, an executive officer, was late in filing a Form 4 relating to the vesting and sale of restricted stock.
50
TRANSACTIONS WITH RELATED PERSONS,
PROMOTERS AND CERTAIN CONTROL PERSONS
Policies and Procedures Regarding Related Party Transactions
It is the policy of the Board that all related
party transactions are subject to review and approval or ratification by Bancorps Audit Committee, except for those matters that the Board has delegated to other committees, that require approval of a majority of the independent directors or
that are reserved for the full Board or for the Board of Directors of Cathay Bank by statute, charter, regulations, Nasdaq listing standards, bylaws, or otherwise. Extensions of credit by Cathay Bank to executive officers, directors, and principal
stockholders of Bancorp and their related interests are subject to review and approval by the Board of Directors of Cathay Bank pursuant to section 22(h) of the Federal Reserve Act (12 U.S.C. 375b), as implemented by the Federal Reserve Boards
Regulation O (12 CFR part 215).
A related party transaction includes any transaction in which Bancorp or any of its subsidiaries is a
participant and in which any of the following persons has or will have a direct or indirect interest: (a) a person who is or was (since the beginning of the last fiscal year for which Bancorp has filed a Form 10-K and proxy statement, even if
they do not presently serve in that role) an executive officer, director, or nominee for election as a director; (b) a greater than 5% beneficial owner of Bancorps common stock; or (c) an immediate family member of any of the
foregoing. Immediate family member includes a persons spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone residing in such
persons home (other than a tenant or employee).
In addition, the Audit Committee is responsible for reviewing and investigating any
matters pertaining to the integrity of management, including conflicts of interest and adherence to Bancorps Code of Ethics. Under Bancorps Code of Ethics, directors, officers,
and all personnel are expected to avoid and to promptly disclose any relationship, influence, or activity that would cause or even appear to cause a conflict of interest. All directors must
abstain from any discussion or decision affecting their personal, business, or professional interests.
In determining whether to approve or
ratify a related party transaction, the Audit Committee generally considers applicable laws and regulations and all relevant facts and circumstances and will take into account, among other factors it deems appropriate, whether the related party
transaction is on terms not more favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related partys interest in the transaction.
These policies and procedures regarding related party transactions are reflected in the Audit Committee charter, our Code of Ethics, the Cathay Bank
Regulation O Policy, and the Cathay Bank Code of Personal and Business Conduct, and have been approved by the Board.
Banking Transactions
Certain directors and officers of
Bancorp or Cathay Bank, members of their families, and companies with which they are associated, have been customers of, and have had banking transactions with, Cathay Bank in the ordinary course of Cathay Banks business. Cathay Bank expects
to continue such banking transactions in the future. All loans and commitments to lend in such transactions were made in compliance with applicable laws and on substantially the same terms, including interest rates and collateral, as those
prevailing at Cathay Bank at the time for comparable loans with persons not related to Cathay Bank and, in the opinion of the management of Cathay Bank, did not involve more than a normal risk of collectability or present any other unfavorable
features.
51
Indemnity Agreements
Bancorps bylaws provide for the
indemnification by Bancorp of its agents, including its directors and officers, to the maximum extent permitted under Delaware law. Bancorp also has indemnity agreements with its directors and certain of its officers. These indemnity agreements
permit Bancorp to indemnify an officer or director to the maximum extent permitted under Delaware law and prohibit Bancorp from terminating its indemnification
obligations as to acts of any officer or director that occur before the termination. Bancorp believes the indemnity agreements assist it in attracting and retaining qualified individuals to serve
as directors and officers of Bancorp. Bancorps certificate of incorporation also provides for certain limitations on the liability of directors, as permitted by Delaware law. The indemnification and limitations on liability permitted by the
certificate of incorporation, bylaws, and the indemnity agreements are subject to the limitations set forth by Delaware law.
CODE OF ETHICS
Bancorp has adopted a Code of Ethics for Senior Financial Officers that applies to its principal
executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and which is available at www.cathaygeneralbancorp.com. Stockholders may obtain a free copy by written
request directed to Cathay General Bancorp, 9650 Flair Drive, El Monte, CA 91731, Attention: Investor Relations.
If Bancorp makes any substantive amendments to its Code of Ethics for Senior Financial Officers or grants
any waiver, including any implicit waiver, from a provision of the Code to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, it will disclose the nature
of such amendment or waiver in a report on Form 8-K.
COMMUNICATIONS WITH BOARD OF DIRECTORS
The Board has an established a process for stockholder communications. Stockholders may send communications
to the Board or any individual director by mail addressed to: Board of Directors, Cathay General Bancorp, 9650 Flair Drive, El Monte, California 91731. Communications addressed to the Board will be reviewed by the Assistant Secretary of
Bancorp and directed to the Secretary, the Chairman of the Board, or the Lead Independent Director, as appropriate, for further review and distribution to certain or all members of the Board.
Communications addressed to individual directors will be forwarded directly to them.
AVAILABILITY OF
ANNNUAL REPORT ON FORM 10-K AND PROXY STATEMENT
On the written request of any stockholder of record as of April 1, 2014, Bancorp will furnish, without
charge, a copy of its Annual Report on Form 10-K for the year ended December 31, 2013, including financial statements, schedules, and lists of exhibits,
and any particular exhibit specifically requested. Requests should be addressed to Monica Chen, Assistant Secretary, Cathay General Bancorp, 9650 Flair Drive, El Monte, California 91731,
telephone number, (626) 279-3286.
52
STOCKHOLDER PROPOSALS FOR 2015 ANNUAL MEETING OF STOCKHOLDERS
Under Bancorps bylaws, nominations for election to the Board and proposals for other business to be
transacted by Bancorp stockholders at an annual meeting of stockholders may be made by a stockholder (as distinct from Bancorp) only if the stockholder is entitled to vote at the meeting and has given Bancorps Secretary timely written notice
that complies with the notice requirements of the bylaws. In addition, business other than a nomination for election to the Board must be a proper matter for action under Delaware law and Bancorps certificate of incorporation and bylaws. Among
other requirements, the written notice must be delivered to Bancorps Secretary at Bancorps principal executive office located at 777 North Broadway, Los Angeles, California 90012, by no earlier than February 17, 2015, or later than
March 19, 2015, based on the expected date of the scheduled annual meeting being May 18, 2015. However, if less than 70 days notice or prior public disclosure of the date of the scheduled annual meeting is given or made, the notice,
to be timely, must be so delivered or received by the close of business on the 10th day following the earlier of the day on which notice of the date of the scheduled annual meeting was mailed or the day on which such public disclosure was made.
Separate and apart from the required notice described in the preceding paragraph, rules promulgated by the SEC under the Exchange Act entitle
a stockholder in certain instances to require Bancorp to include that
stockholders proposal (but not that stockholders nominees for director) in the proxy materials distributed by Bancorp for its next annual meeting of stockholders. Any stockholder of
Bancorp who wishes to present a proposal for inclusion in Bancorps 2015 proxy solicitation materials must: (i) set forth the proposal in writing; (ii) file it with Bancorps Secretary on or before December 11, 2014, or if
the date for the 2015 annual meeting is before April 12, 2015, or after June 11, 2015, then such stockholder must file it with Bancorps Secretary at a reasonable time before the printing and mailing of the proxy statement for the
2015 annual meeting of stockholders; and (iii) meet the other requirements for inclusion contained in the SECs stockholder proposal rules.
By Order of the Board of Directors,
Perry Oei
Secretary
Los Angeles, California
April 10, 2014
53
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|
|
|
|
|
777 NORTH BROADWAY
LOS ANGELES, CALIFORNIA 90012
|
GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other
eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. 0 CATHAY GENERAL BANCORP Proxy for the Annual Meeting of Stockholders, May 12, 2014 THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF CATHAY GENERAL BANCORP Dunson K. Cheng, Peter Wu, and Anthony M. Tang, or any of them, with full power of substitution, are hereby appointed as proxy holders and authorized to represent and to vote as designated on the
reverse the undersigneds shares of Cathay General Bancorp common stock at the Annual Meeting of Stockholders to be held at 9650 Flair Drive, El Monte, California 91731, at 5:00 p.m., local time, on May 12, 2014, and at any adjournments or
postponements thereof. This proxy card when properly executed will be voted in the manner directed by you. If you return this proxy card without voting instructions, then the proxy holders will vote your shares according to the recommendations of
the Board of Directors. (Continued and to be signed on other side.) 14475
ANNUAL MEETING OF STOCKHOLDERS OF CATHAY GENERAL BANCORP May 12, 2014 PROXY VOTING INSTRUCTIONS TELEPHONE - Call toll-free 1-800-PROXIES
(1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call and use the Company Number and Account Number shown on your proxy
card. Vote by phone until 11:59 PM EST the day before the meeting. MAIL - Sign, date, and mail your proxy card in the envelope provided as soon as possible. IN PERSON - You may vote your shares in person by attending the Annual Meeting. COMPANY
NUMBER ACCOUNT NUMBER IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 12, 2014. Cathay General Bancorps Proxy Statement and Annual Report for the year ended December 31, 2013, are
also available electronically at www.cathaybank.com/cathay-general/annual-meeting-materials Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone. 00000333303004030000 5 051214 PLEASE SIGN, DATE,
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy Statement dated April 10, 2014. Please sign, date, and return this
proxy card even if you intend to be present at the Annual Meeting. This proxy may be revoked as set forth in the accompanying Proxy Statement, and the shares may be voted by the holder at the Annual Meeting. PLEASE MARK, THEN SIGN AND DATE THIS
PROXY CARD BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on
the account may not be submitted via this method. The Board recommends a vote FOR each of the Director nominees listed below in Proposal 1, a vote FOR Proposals 2 and 4, and a vote for EVERY YEAR in Proposal 3. 1. Election of Class III directors to
serve until the 2017 Annual Meeting of Stockholders and their successors have been elected and qualified FOR AGAINST ABSTAIN Nelson Chung Felix S. Fernandez Patrick S.D. Lee Ting Y. Liu FOR AGAINST ABSTAIN 2. Advisory vote to approve executive
compensation EVERY EVERY EVERY OTHER THREE YEAR YEAR YEARS ABSTAIN 3. Advisory vote on the frequency of future advisory votes on executive compensation FOR AGAINST ABSTAIN 4. Ratification of the appointment of KPMG LLP as independent registered
public accounting firm for 2014 Other Business. 5. The proxy holders are authorized to consider and vote in their discretion upon such other business as may properly come before the Annual Meeting and any adjournments Signature of Stockholder Date:
Signature of Stockholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
ANNUAL MEETING OF STOCKHOLDERS OF CATHAY GENERAL BANCORP MAY 12, 2014 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDER MEETING TO BE HELD ON MAY 12, 2014 Cathay General Bancorps Proxy Statement and Annual Report for the year ended December 31, 2013 are also available electronically at www.cathaybank.com/cathay-general/annual-meeting-materials
Please sign, date, and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 00000333303004030000 5 051214 PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy Statement dated April 10, 2014. Please sign, date, and return this proxy card even if you intend to be
present at the Annual Meeting. This proxy may be revoked as set forth in the accompanying Proxy Statement, and the shares may be voted by the holder at the Annual Meeting. PLEASE MARK, THEN SIGN AND DATE THIS PROXY CARD BELOW AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE. The Board recommends a vote FOR each of the Director nominees listed below in Proposal 1, a vote FOR Proposals 2 and 4, and a vote for EVERY YEAR in Proposal 3. 1. Election of Class III directors to serve until the 2017
Annual Meeting of Stockholders and their successors have been elected and qualified FOR AGAINST ABSTAIN Nelson Chung Felix S. Fernandez Patrick S.D. Lee Ting Y. Liu FOR AGAINST ABSTAIN 2. Advisory vote to approve executive compensation EVERY EVERY
EVERY OTHER THREE YEAR YEAR YEARS ABSTAIN 3. Advisory vote on the frequency of future advisory votes on executive compensation FOR AGAINST ABSTAIN 4. Ratification of the appointment of KPMG LLP as independent registered public accounting firm for
2014 Other Business. 5. The proxy holders are authorized to consider and vote in their discretion upon such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof. To change the address on your
account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. Signature of Stockholder Date: Signature of
Stockholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee, or guardian, please give full title as such.
If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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