DEF 14A of East West Bancorp Inc
Filed Apr 11, 2024 · FY20230001174947-24-000546
Summary Information about Director Nominees
Summary Information about Director Nominees The following table provides summary information about each director nominee and continuing director.
Summary Information about Director Nominees
| Name | Age | Director Since | Independent | Committee Memberships | Primary Occupation | | Manuel P. Alvarez | 43 | 2022 | X | A, R (RE) | Founding Principal, BridgeCounsel Strategies, LLC | | Molly Campbell | 63 | 2014 | X | A (FE), C, N | Infrastructure Advisor, Department of the Treasury, Office of Technical Assistance | | Archana Deskus | 58 | 2019 | X | C, R | Executive Vice President and CTO, PayPal Holdings, Inc. | | Serge Dumont | 64 | 2022 | X | C, N | Vice Chairman, ImpactWayv, Inc. | | Rudolph I. Estrada | 76 | 2005 | Lead Independent Director | A, E, N, R (RE and Chair) | CEO, Estradagy Business Advisors, LLC | | Mark Hutchins | 61 | 2023 | X | A (FE) | Retired Partner, KPMG LLP | | Paul H. Irving | 71 | 2010 | X | A, N (Chair), R | Senior Advisor, Milken Institute | | Sabrina Kay | 61 | 2022 | X | C, N | CEO, Fremont Private Investments | | Jack C. Liu | 65 | 1998 | X | C (Chair), N, R | Senior Attorney, Alliance International Law Offices | | Dominic Ng | 65 | 1991 | CEO | E (Chair) | Chairman of the Board and CEO of East West Bancorp, Inc. and East West Bank | | Lester M. Sussman | 69 | 2015 | X | A (FE and Chair), C, R (RE) | Retired Partner, Deloitte & Touche |
Summary Information about Director Nominees
A = Audit Committee; C = Compensation Committee; E = Executive Committee; N = Nominating/Corporate Governance Committee; R = Risk Oversight Committee; FE = Audit Committee Financial Expert; RE = Risk Oversight Committee Risk Expert
Summary Information about Director Nominees
| COMPANY HIGHLIGHTS | |
Proposal 1: Election of Directors
Proposal 1: Election of Directors
Director Nominee Qualifications and Experience
Director Nominee Qualifications and Experience Our director nominees bring a balance of relevant skills to our Board including:
Director Nominee Qualifications and Experience
| | Skills and Expertise | Alvarez | Campbell | Deskus | Dumont | Estrada | Hutchins | Irving | Kay | Liu | Ng | Sussman | | | High Level of Financial Expertise | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | | | Relevant Senior Leadership/Executive Officer | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | | | Broad International Exposure/Emerging Market | | ● | ● | ● | ● | ● | ● | ● | ● | ● | | | | Bank Regulatory Oversight | ● | | | | ● | ● | ● | ● | ● | ● | | | | Social and Corporate Governance | | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | | | Extensive Knowledge of the Company's Business/ Industry | ● | | | | ● | ● | ● | ● | ● | ● | ● | | | Information Technology, Cybersecurity and Privacy | | | ● | | | ● | | | | | ● | | | Innovation/Technology | ● | | ● | ● | | ● | ● | ● | | ● | | | | Governmental or Geopolitical | ● | ● | | ● | ● | ● | ● | ● | | ● | | | | Risk Oversight/ Management Expertise | ● | ● | ● | ● | ● | ● | ● | | ● | ● | ● |
Director Nominee Qualifications and Experience
Each of the director nominees currently serves on the Board. With the exceptions of Mr. Hutchins, who was appointed as a director of the Company on August 3, 2023, all of the director nominees were elected by stockholders at the May 23, 2023 annual meeting of stockholders. If elected, each nominee will hold office until the 2025 annual meeting of stockholders and until his or her successor is elected and qualified. The principal occupation during the past five years of each director nominee is set forth below. Included in each director nominee’s biography is an assessment of the specific qualifications, attributes, skills and experience of the nominee based on the qualifications described above.
Director Nominee Qualifications and Experience
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
Director Qualifications and Experience
Director Qualifications and Experience
Director Qualifications and Experience
| | Manuel P. Alvarez INDEPENDENT Founding Principal, BridgeCounsel Strategies, LLC DIRECTOR SINCE: 2022 COMMITTEES: Audit, Risk Oversight |
Director Qualifications and Experience
Manuel P. Alvarez is the Founding Principal of BridgeCounsel Strategies LLC, a minority-owned financial technology consultancy. Before founding BridgeCounsel in 2021, Mr. Alvarez served as California’s chief banking and financial regulator from 2019 to 2021, first as Commissioner of the Department of Business Oversight (“DBO”) and then as Commissioner of the California Department of Financial Protection & Innovation (“DFPI”), which broadly regulates the state’s banking and financial services industry. From 2014 to 2019, Mr. Alvarez served as General Counsel, Chief Compliance Officer, and Corporate Secretary at Affirm, Inc. (Nasdaq: AFRM), a financial-technology platform providing online point-of-sale consumer financing solutions. Mr. Alvarez is admitted to practice law in California and is an active real estate and angel investor. He serves on the advisory boards of several venture-backed, private fintech companies and enjoys mentoring first-generation law students and professionals. Mr. Alvarez’s extensive bank regulatory, governmental, and risk management experience well qualifies him to continue to serve on our Board.
Director Qualifications and Experience
| | Molly Campbell INDEPENDENT Infrastructure Advisor, Department of the Treasury, Office of Technical Assistance DIRECTOR SINCE: 2014 COMMITTEES: Audit, Compensation, Nominating/Corporate Governance |
Director Qualifications and Experience
Molly Campbell has almost 30 years of executive leadership experience, most recently as an Advisor to the U.S. Treasury Office of Technical Assistance, an advanced leadership fellow at Harvard University, and a distinguished career institute fellow at Stanford University. From 2015 through 2018, Ms. Campbell was the Director of the Port Department of the Port Authority of New York and New Jersey. In that role, she was responsible for the operations and oversight of the largest seaport on the East Coast. From 2007 through 2015, Ms. Campbell was Deputy Executive Director of the Port of Los Angeles. She has also served as the Director of Financial Management Systems at the Los Angeles World Airports and the Director of Public Finance for the City of Los Angeles. Ms. Campbell is active in national and international logistics associations. She currently serves on the Board of Directors of Granite Construction Inc. (NYSE: GVA). Ms. Campbell’s expertise and knowledge of global logistics, international trade, and financial management and reporting well qualifies her to continue to serve on our Board.
Director Qualifications and Experience
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
Director Qualifications and Experience
| | Archana Deskus INDEPENDENT Executive Vice President and Chief Technology Officer, PayPal Holdings, Inc. DIRECTOR SINCE: 2019 COMMITTEES: Compensation, Risk Oversight |
Director Qualifications and Experience
Archana Deskus is currently the Chief Technology Officer (“CTO”) of PayPal Holdings, Inc. (Nasdaq: PYPL). Prior to PayPal, Ms. Deskus held CIO roles at Intel Corporation (Nasdaq: INTC) from 2020 to 2022, Hewlett Packard Enterprise (NYSE: HPE) from 2017 to 2019, and Baker Hughes (Nasdaq: BKR) from 2013 to 2017. Ms. Deskus has also held CIO roles at Ingersoll-Rand (NYSE: IR), Timex Corporation, and United Technologies Corporation (NYSE: UTX), giving her wide perspectives across various industries. Ms. Deskus currently serves on the Board of Directors of Cognizant Technology Solutions Corporation (Nasdaq: CTSH) and DataStax, Inc. In addition to her business experiences, Deskus has served on the boards of private and non-profit organizations including Junior Achievement of Southeast Texas, Tavant Technologies and American Eagle Federal Credit Union. Ms. Deskus’ extensive information technology experience, as well as her insight and thought leadership in risk management, cyber security, and innovation well qualifies her to continue to serve on our Board.
Director Qualifications and Experience
| | Serge Dumont INDEPENDENT Vice Chairman, ImpactWayv, Inc. DIRECTOR SINCE: 2022 COMMITTEES: Compensation, Nominating/Corporate Governance |
Director Qualifications and Experience
Serge Dumont is co-founder and vice chairman of ImpactWayv, Inc. He previously held leadership roles at Omnicom Group, Inc. (NYSE: OMC), including vice chairman and chairman, Asia Pacific, from 2011 to 2018. Mr. Dumont’s professional career in global marketing and communications began when he founded Interasia Group in 1985, the first independent communications group in China. A recipient of the Legion d’Honneur, Mr. Dumont has received recognition from governments and international organizations for his contributions to business, philanthropy, health, culture, and education. He previously served as a Goodwill Ambassador for the United Nations’ UNAIDS program and as a senior advisor to the World Health Organization and the Beijing Municipal Government. Mr. Dumont is currently chairman of the board of trustees of Asia Society France and serves on the boards of Synergos and Asia Society in New York. Mr. Dumont’s broad international and geopolitical experience well qualifies him to continue to serve on our Board.
Director Qualifications and Experience
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
Director Qualifications and Experience
| | Rudolph I. Estrada LEAD INDEPENDENT DIRECTOR CEO of Estradagy Business Advisors, LLC DIRECTOR SINCE: 2005 COMMITTEES: Audit, Executive, Nominating/Corporate Governance, Risk Oversight (Chair) |
Director Qualifications and Experience
Rudolph I. Estrada serves as the Lead Independent Director of the Board of East West Bancorp, Inc. and East West Bank. Mr. Estrada has been the CEO of Estradagy Business Advisors, LLC since 1987, a business and banking advisory company. He also served as professor of business and management for the California State University system for over 35 years. He formerly served as the Los Angeles District Director of the U.S. Small Business Administration (“SBA”), the largest SBA district in the U.S., and was the former Presidential appointee serving as Commissioner on the White House Commission on Small Business. He offers over 40 years of board experience having served on various bank boards and corporate and non-profit organizations. He is a Board Leadership Fellow with the National Association of Corporate Directors and a decorated veteran of the U.S. Army. Mr. Estrada brings to the Board valuable business lending and public service perspectives, a focus on the prudent management and operations of businesses in a heavily regulated environment, and a comprehensive knowledge of corporate governance, which together well qualify him to continue to serve on our Board.
Director Qualifications and Experience
| | Mark Hutchins INDEPENDENT Retired Partner, KPMG LLP DIRECTOR SINCE: 2023 COMMITTEE: Audit |
Director Qualifications and Experience
Mark Hutchins is a retired audit and advisory partner of KPMG LLP, where he held many leadership positions, including serving on the board, acting as managing partner for the Pacific Southwest Region and Los Angeles Office, and leading the Foreign Bank Practice and Western Area Banking Group. Mr. Hutchins is a certified public accountant. Mr. Hutchins has served as a member of the board of directors of Nicholas Financial, Inc. since 2021 and has served on over 20 other corporate, nonprofit, and civic boards. He provides valuable insight on governance, enterprise risk management, financial reporting, and brings nearly 40 years of financial services experience to the Company, which well qualifies him to continue to serve on our Board.
Director Qualifications and Experience
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
Director Qualifications and Experience
| | Paul H. Irving INDEPENDENT Senior Advisor, Milken Institute DIRECTOR SINCE: 2010 COMMITTEES: Audit, Nominating/Corporate Governance (Chair), Risk Oversight |
Director Qualifications and Experience
Paul H. Irving has been a senior advisor at the Milken Institute since 2022, previously serving as the Institute’s president and founding chair of its Center for the Future of Aging from 2011 to 2021. Mr. Irving is also a national advisor at Manatt, Phelps & Phillips, LLP, a law and consulting firm, and a distinguished scholar-in-residence at the University of Southern California Leonard Davis School of Gerontology. He earlier served as an advanced leadership fellow at Harvard University, and chair, CEO, and head of the financial services group of the Manatt firm. Mr. Irving is a senior advisor at CWI Labs and a member of the board of CoGenerate, the National Academy of Medicine Commission for Healthy Longevity, the Global Advisory Council of Stanford University’s Distinguished Careers Institute, the Board of Councilors of the USC Davis School, and the Advisory Board of Working Nation. He is also a member of the International Strategic Committee of the Quadrivio Group Silver Economy Fund. Mr. Irving brings to the Board valuable perspective and insight on corporate governance, regulatory, policy and legal matters with his long experience as an advisor to the financial services industry and leadership roles in the professional services and non-profit sector, where he focuses on system-level economic, social and health challenges. These experiences and the insight they provide well qualify Mr. Irving to continue to serve on our Board.
Director Qualifications and Experience
| | Sabrina Kay INDEPENDENT CEO, Fremont Private Investments DIRECTOR SINCE: 2022 COMMITTEES: Compensation, Nominating/Corporate Governance |
Director Qualifications and Experience
Dr. Sabrina Kay has been the CEO of Fremont Private Investments since 2002 and the strategic partner of VSS Capital since 2021. An entrepreneur and philanthropist, Dr. Kay was the founding vice-chair of Premier Business Bank in 2006, which subsequently merged with First Foundation Bank in 2018. She was also the founder and CEO of Fremont University, CEO of Dale Carnegie Los Angeles, and founder and CEO of the California Design College/Art Institute of Hollywood. Dr. Kay was named the California Senate Women of the Year and was the founding commissioner of the ScholarShare 529 California College Savings Plan. Dr. Kay currently serves as a director of Hagerty, Inc. (NYSE: HGTY), MannKind Corporation (Nasdaq: MNKND), and the Petersen Automotive Museum. She has served on over 30 corporate, non-profit, and civic boards. Dr. Kay’s extensive knowledge of technology-enabled businesses, banking experience, and financial expertise well qualifies her to continue to serve on our Board.
Director Qualifications and Experience
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
Director Qualifications and Experience
| | Jack C. Liu INDEPENDENT Senior Attorney, Alliance International Law Offices DIRECTOR SINCE: 1998 COMMITTEES: Compensation (Chair), Nominating/Corporate Governance, Risk Oversight |
Director Qualifications and Experience
Jack C. Liu has been a senior attorney with Alliance International Law Offices since 2010. Prior to this, Mr. Liu was a Senior Advisor for the Morgan Stanley International Real Estate Fund (“MSREF”) and was President of MSREF’s affiliate, New Recovery Asset Management Corp. In addition to his renowned expertise in the U.S. banking regulatory practice area, Mr. Liu advises on business and legal aspects of international corporate, investment, and real estate matters. He currently serves on the board of TransGlobe Life Insurance, Inc., ranked #7 in the Taiwan life insurance industry by assets. He is also the director of Taiwan FamilyMart Co., Ltd., a major convenience store operator. Mr. Liu is admitted to practice law in California and Washington, D.C., as well as in Taiwan as a foreign attorney. Mr. Liu brings to the Board his experience and insight on doing business in Asia, as well as his board-level perspective and leadership on risk management and oversight of regulated financial institutions. Mr. Liu is well recognized as an expert in various corporate governance and ESG matters and is a certified professional insurance executive by the Republic of China Financial Supervisory Commission. Mr. Liu is a Board Leadership Fellow with the National Association of Corporate Directors. He is also the Vice Chairman of the Taipei Independent Directors Association in Taiwan. Mr. Liu’s executive management experience internationally and domestically well qualifies him to continue to serve on our Board.
Director Qualifications and Experience
| | Dominic Ng Chairman of the Board and CEO of East West Bancorp, Inc. and East West Bank DIRECTOR SINCE: 1991 COMMITTEE: Executive (Chair) |
Director Qualifications and Experience
Dominic Ng is Chairman of the Board and Chief Executive Officer of East West Bancorp, Inc. (Nasdaq: EWBC) and East West Bank. Mr. Ng transformed East West Bank from a small savings and loan association with $600 million in assets in 1991 into the full-service international and commercial bank it is today, with $69.6 billion in assets as of December 31, 2023. Prior to taking the helm of East West Bank as CEO in 1992, Mr. Ng was President of Seyen Investment and practiced as a CPA with Deloitte & Touche, LLP in Houston and Los Angeles. Mr. Ng is Chair of the 2023 Asia-Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC), the private sector arm of APEC advising heads of state and government on economic growth. In addition, Mr. Ng serves on the governing boards of Mattel Inc. (Nasdaq: MAT), the Academy Museum of Motion Pictures, and the University of Southern California. He was named one of Los Angeles Times’ 100 most influential people in Los Angeles and Los Angeles Business Journal’s Business Person of the Year. American Banker recognized Mr. Ng as Banker of the Year for successfully executing his vision and building East West Bank into one of the nation’s most profitable regional banks. Besides his industry achievements, Mr. Ng is also known for his civic and philanthropic leadership. He received the Alexis de Tocqueville Global Award presented by United Way Worldwide, which recognized his exceptional and sustained stewardship of United Way’s giving campaigns. Mr. Ng’s extensive management experience, financial expertise, and leadership of our Company well qualify him to continue to serve on our Board. Mr. Ng brings to the Board comprehensive knowledge of East West Bank’s business and operations, the financial services industry in the U.S. and in the Asia Pacific region, and U.S.-Asia cross-border trade and investments.
Director Qualifications and Experience
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
Director Qualifications and Experience
| | Lester M. Sussman INDEPENDENT Retired, Deloitte Audit Partner DIRECTOR SINCE: 2015 COMMITTEES: Audit (Chair), Compensation, Risk Oversight |
Director Qualifications and Experience
Lester M. Sussman formerly served as Vice President, Advisory Services for Resources Global Professionals (“RGP”). He was with RGP from 2005 through 2020, providing corporate governance, risk management and compliance services to clients globally. Mr. Sussman is also a retired audit partner of Deloitte, where he held leadership positions, including Partner in Charge of the Financial Services Group for the Pacific Southwest, and Partner in Charge of Capital Markets for the West Region. Mr. Sussman is a certified public accountant. Mr. Sussman is a current member of the board of directors of the Braille Institute, as well as the board of directors of the Pacific Southwest chapter of the National Association of Corporate Directors. Mr. Sussman is NACD Directorship Certified. Mr. Sussman brings over 40 years of financial services experience and significant accounting, financial reporting, and corporate governance expertise to the Company, which well qualifies him to continue to serve on our Board.
Director Qualifications and Experience
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
Identifying and Evaluating Nominees for Directors
Identifying and Evaluating Nominees for Directors Our Corporate Governance Guidelines contain Board membership criteria that apply to the Nominating/Corporate Governance Committee’s nominees for a position on the Board. Under these criteria, members of the Board should possess the following:
Identifying and Evaluating Nominees for Directors
| › The highest professional and personal ethics and values › Broad experience at the policy-making level in business, government, education, finance, accounting, law or public interest › A high level of financial experience › Extensive knowledge of the Company’s business and/or industry, risk oversight/management expertise and broad international exposure/Asia experience › A variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills, and expertise to oversee the Company’s businesses | › A diverse background and experience, including with respect to race, ethnicity, gender and national origin › A commitment to enhancing stockholder value › Sufficient time to carry out their duties and to provide insight and practical wisdom based on experience, including limited service on other boards of public companies in order to perform responsibly all director duties |
Identifying and Evaluating Nominees for Directors
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
Identifying and Evaluating Nominees for Directors
The Nominating/Corporate Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director and regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Committee considers various potential candidates for director. Candidates may come to the attention of the Committee through current Board members, professional search firms, stockholders or other persons.These candidates are evaluated at regular or special meetings of the Committee and may be considered at any point during the year. As described above, the Committee considers properly submitted stockholder nominations for candidates for the Board. Following verification of the stockholder status of persons proposing candidates, recommendations are aggregated and considered by the Committee. If any materials are provided by a stockholder in connection with the nomination of a director candidate, those materials are forwarded to the Committee. In evaluating the nominations, the Nominating/Corporate Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board.
Director Compensation
Director Compensation The Compensation Committee is responsible for reviewing and making recommendations to the Board of Directors with respect to the compensation of directors. Employees of the Company and its subsidiaries are not compensated for service as a director of the Company or its subsidiaries and are excluded from the table below. The compensation received by Mr. Ng as an employee of the Company is provided below in the “Summary Compensation Table.” Director compensation is reviewed by the Compensation Committee of the Board and adjustments are generally considered every two years. The Committee will engage an outside independent consultant to review director compensation amounts and structure at the same group of peer banks used by the Compensation Committee to review the compensation of senior management. In 2023, the Compensation Committee engaged Meridian Compensation Partners, LLC as its independent compensation consultant for this purpose. In 2023, non-employee directors received an annual cash retainer of $130,000 and an annual award of $130,000 of common stock. The Lead Independent Director received an additional annual cash retainer of $35,000. The Board believes that the role of a Lead Independent Director is essential to maintaining an independent leadership with respect to matters such as Board oversight, corporate strategy, management succession, internal controls, Board composition and functions, and accountability to stockholders, and therefore the annual cash retainer paid for the Lead Independent Director’s additional service is justified. The essential duties of the Lead Independent Director are explained in further detail in the section titled “Board Leadership Structure” above and in our Corporate Governance Guidelines. The Lead Independent Director also acts as the Board representative to the Company’s strategic advisory council of outside community leaders and is charged with developing strategic networks of new business, for which he received a cash retainer of $25,000 for such additional Board service. The committee chairs received an additional annual cash retainer as follows: Audit $25,000; Compensation $25,000; Risk Oversight $25,000; and Nominating/Corporate Governance $20,000.
Director Compensation
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
Director Compensation
The following table summarizes the compensation paid by the Company to non-employee directors for the calendar year that ended December 31, 2023:
Director Compensation
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | | Manuel P. Alvarez | 130,032 | 129,968 | 1,433(3) | 261,433 | | Molly Campbell | 130,032 | 129,968 | | 260,000 | | Archana Deskus | 130,032 | 129,968 | | 260,000 | | Serge Dumont | 130,032 | 129,968 | | 260,000 | | Rudolph I. Estrada | 215,032 | 129,968 | | 345,000 | | Mark Hutchins | 130,005 | 129,994 | | 260,000 | | Paul H. Irving | 150,032 | 129,968 | | 280,000 | | Sabrina Kay | 130,032 | 129,968 | | 260,000 | | Jack C. Liu | 155,032 | 129,968 | | 285,000 | | Lester M. Sussman | 155,032 | 129,968 | | 285,000 |
Director Compensation
| 1. | Annual cash retainers were paid to directors in June 2023 for service from May 2023 to May 2024. |
Director Compensation
| 2. | The Company granted 2,603 shares of the Company’s common stock to each non-employee director on May 24, 2023 except for Mr. Hutchins, who was granted 2,281 shares of the Company’s common stock when he was appointed on August 14, 2023. The grant date fair value is based on the number of shares granted and the closing price of the Company’s stock on the grant date. The closing price of the Company’s common stock was $49.93 on May 24, 2023 and $56.99 on August 14, 2023. The grant date fair values are computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 718, Compensation—Stock Compensation. See the Company’s Annual Report on Form 10-K, Note 1 - Summary of Significant Accounting Policies, on the Company’s accounting for share-based compensation plans. |
Director Compensation
| 3. | Represents stock dividends declared from February 7, 2022 through February 6, 2023 on 689 shares of stock granted on January 1, 2022. |
2023 Business and Financial Performance Highlights
2023 Business and Financial Performance Highlights In 2023, we continued to deliver strong and consistent financial performance. The Company achieved record loans of $52.2 billion, record deposits of $56.1 billion, and record assets of $69.6 billion. We also outperformed peer banks in terms of ROA, ROE, and total shareholder return (“TSR”). The Compensation Committee believes the Company’s 2023 pay decisions reflected the continued alignment between the Company’s financial and organizational objectives and its executive compensation program. We have outperformed peer banks over time. We consistently achieved a higher ROA and ROE for each of the last three years relative to the median ROA and ROE achieved by (i) our compensation peer group described on page 43 of this Proxy (the “Peer Group”), and (ii) the banks comprising the KBW Nasdaq BANK INDEX (“BKX”).
ROLE OF THE COMPENSATION CONSULTANT
ROLE OF THE COMPENSATION CONSULTANT The independent compensation consultant, Meridian Compensation Partners, LLC, reports directly to the Compensation Committee and advises the Compensation Committee on trends and issues in executive compensation and provides comparative compensation information for companies with which the Company competes for talent. The Compensation Committee has the sole authority to retain and oversee the work of the consultants, who do not provide services to Company management. The Compensation Committee evaluates the independence of the consultant annually.
USE OF PEER GROUP
USE OF PEER GROUP The Compensation Committee, with input from its independent compensation consultant, reviews at least annually the composition of peer companies against which the Company evaluates itself for compensation purposes. In determining the composition, financial institutions were primarily chosen based on comparable asset size, with additional consideration of other metrics such as market capitalization, revenue, geographic presence, business model, and complexity of operations. In November 2022, the Compensation Committee approved our 2023 compensation peer group which consisted of 22 bank holding companies with similar market capitalization and asset size as the Company (the “Peer Group”). The composition of the Peer Group was updated to better reflect the Company’s business focus, asset size, and continued growth by removing First Horizon Corporation and adding SouthState Corporation. The number of peer banking holding companies in the Peer Group was further adjusted after March 2023, and decreased from 22 to 18 due to a number of merger and acquisition transactions involving SVB Financial Group, First Republic Bank, Signature Bank, and PacWest Bancorp. As of December 31, 2023, our Peer Group’s total assets ranged from $35.8 billion to $213.8 billion, with a median total asset size of $65.8 billion. As of December 31, 2023, the median market capitalization of our Peer Group was $6.6 billion, with a range between $2.4 billion and $20.5 billion. With respect to total assets and market capitalization, the Company ranked in the 50th percentile and 72nd percentile, respectively, relative to the Peer Group as of December 31, 2023. THE COMPANIES IN THE PEER GROUP WERE AS FOLLOWS:
USE OF PEER GROUP
| FY 2023 Peer Group | | | | BankUnited, Inc. (NYSE: BKU) | Huntington Bancshares Incorporated (Nasdaq: HBAN) | SouthState Corporation (NYSE: SSB) | | BOK Financial Corporation (Nasdaq: BOKF) | KeyCorp (NYSE: KEY) | Synovus Financial (NYSE: SNV) | | Columbia Banking System, Inc. (NYSE: COLB) | Northern Trust Corporation (Nasdaq: NTRS) | Valley National Bankcorp (Nasdaq: VLY) | | Comerica Incorporated (NYSE: CMA) | Pinnacle Financial Partners, Inc. (Nasdaq: PNFP) | Western Alliance Bancorporation (NYSE: WAL) | | Cullen/Frost Bankers, Inc. (NYSE: CFR) | Popular, Inc. (Nasdaq: BPOP) | Wintrust Financial Corporation (Nasdaq: WTFC) | | First Citizens Bancshares Inc. (Nasdaq: FCNCA) | Regions Financial Corporation (NYSE: RF) | Zions Bancorp (Nasdaq: ZION) |
USE OF PEER GROUP
| COMPENSATION DISCUSSION AND ANALYSIS | |
USE OF PEER GROUP
It is important to note that in determining executive compensation, the Compensation Committee does not solely rely on comparative data from the Peer Group. While comparisons can be useful in identifying general compensation trends and overall pay levels, the Compensation Committee recognizes there may be meaningful differences between us and our peer companies. The listing of NEOs, for example, may vary amongst our peer companies, with titles, compensation, and tenure that do not readily track with ours. The Compensation Committee uses the comparison data as a general indicator of market trends in executive compensation but does not use it exclusively to set compensation levels for the CEO or other NEOs. In addition to peer data, the Compensation Committee also uses salary data from published industry sources. Any compensation decisions also consider individual and company performance, the position and tenure, responsibilities within the Company, and other factors to determine total compensation for the NEOs. See “Compensation-Setting Process” below for a more detailed discussion. For purposes of determining long-term incentive awards, the Compensation Committee and its independent compensation consultant determined it would be appropriate to continue benchmarking to banks in the BKX (the “Long-Term Performance Peer Group”). The use of this benchmark compares our performance to a broader index of financial institutions determined by a third party, aligns with our investors’ perspectives and increases the transparency of the Company’s goal-setting process.
COMPENSATION-SETTING PROCESS
| › Competitive pay data for similar jobs and responsibilities in the market; › The Company’s performance against financial measures; › The Company’s performance relative to strategic initiatives approved by the Compensation Committee; | › Individual performance and overall contributions; › The business climate, economic conditions, and other factors; and › The results of the most recent “Say-on-Pay” stockholder vote. |
PERFORMANCE-BASED BONUS PLAN
PERFORMANCE-BASED BONUS PLAN The Compensation Committee has developed a Performance-Based Bonus Plan to reward executives for achieving critical Company-wide financial metrics and strategic goals (collectively, the “Corporate Goals”) and departmental or individual goals (collectively, “Individual Goals”). For 2023, performance on Corporate Goals was measured 70% based on financial performance and 30% based on strategic goals. Performance of Individual Goals was measured by goals determined for executives (other than the CEO, whose bonus is paid 100% based on corporate performance). Each NEO is assigned a bonus target, stated as a percentage of the individual’s annual base salary. An NEO’s actual payout under the Performance-Based Bonus Plan depends on (i) the achievement of the Corporate Goals and, if applicable, Individual Goals, and (ii) the relative weightings of Corporate Goals and Individual Goals assigned to such NEO.
PERFORMANCE-BASED BONUS PLAN
| COMPENSATION DISCUSSION AND ANALYSIS | |
PERFORMANCE-BASED BONUS PLAN
In determining each NEO’s target bonus percentage and weighting for Corporate Goals and Individual Goals, the Board and the Committee generally considered competitive market information as well as individual performance and contributions to the Company. Following its annual review, the Committee determined that adjustments to the weights and potential payout of performance objectives were appropriate to align with market practice and balance incentives tied to corporate and individual performance. As such, the Committee approved the following features to the 2023 Performance-Based Bonus Plan.
PERFORMANCE-BASED BONUS PLAN
| › Target incentive opportunities, defined as a percentage of base salary, remained unchanged at 145% for Mr. Ng and 100% for Ms. Oh, Mr. Krause, and Mr. Shi. Target incentive for Mr. Del Moral- Niles was at 100%. Target incentive for Mr. Teo was increased from 60% to 80%. › To balance the more short-term focus inherent in financial goals against the long-term vision and performance objectives described in the strategic goals, maximum achievement for financial goals and strategic goals was set up to 200% of achievement of stated goals. | › To fully align and motivate our executives by emphasizing sustained value for the Company while reinforcing personal accountability, maximum achievement for Individual Goals for non-CEO NEOs was set at 200% of achievement of stated goals(1). › The achievement of Corporate Goals and Individual Goals under the Performance-Based Bonus Plan results in an annual award that can be earned between zero and 200% of the bonus target. |
PERFORMANCE-BASED BONUS PLAN
| 1. | For Mr. Teo, there was no change to the maximum achievement percentage of Individual Goals. |
PERFORMANCE-BASED BONUS PLAN
The financial, strategic, and individual goal weights for each NEO were approved as follows:
PERFORMANCE-BASED BONUS PLAN
| | | | Corporate Performance | | | | Executive | Title | Target Bonus % of Salary | Financial | Strategy | Individual | | Dominic Ng | Chairman and CEO | 145% | 70% | 30% | - | | Christopher J. Del Moral-Niles | Executive Vice President, Chief Financial Officer | 100% | n/a | n/a | n/a | | Irene H. Oh | Executive Vice President, Chief Risk Officer | 100% | 45% | 20% | 35% | | Douglas P. Krause | Vice Chairman, Chief Corporate Officer | 100% | 45% | 20% | 35% | | Parker L. Shi | Executive Vice President, Chief Operating Officer | 100% | 45% | 20% | 35% | | Gary Teo | Executive Vice President, Chief Human Resources Officer | 80% | 21% | 9% | 70% |
PERFORMANCE-BASED BONUS PLAN
Mr. Del Moral-Niles joined the Company in October 2023 and did not have individual goals in 2023. The corporate goals were also not applicable to Mr. Del Moral-Niles in 2023.
PERFORMANCE-BASED BONUS PLAN
| COMPENSATION DISCUSSION AND ANALYSIS | |
2023 Financial Metrics
2023 Financial Metrics Financial metrics comprised 70% of the Performance-Based Bonus Plan Corporate Goals in 2023. On an annual basis, the Company evaluates the performance metrics used, and modifies the metrics and the weightings as deemed appropriate. In 2023, the Company updated the metrics to more closely align with key priorities for the year, including growing operating earnings (“EPS”), total loans, total deposits, and pre-tax, pre-provision (“PTPP”) income, while managing credit quality. The weighting for the financial metrics consisted of 80% on growth, including operating EPS, PTPP income, and average total loans and deposits growth, and 20% on credit quality. Specific to the growth metrics, the weightings were 30% for operating EPS, 20% for PTPP income, 15% for average total loans growth, and 15% for average total deposits growth. The balance of the weightings consisted of 20% for the year-end criticized loans ratio. For 2023, target operating EPS was set at 10% higher than the actual 2022 adjusted EPS. Target PTPP income, average total loans growth, and average total deposits growth for 2023 were set to be 17%, 9%, and 2% higher, respectively, than 2022 results, which positioned the Company at the top quartile (ranked in the 84th percentile, the 73rd percentile, and 82nd percentile, respectively) against the same metrics as measured by analyst consensus estimates for the Proxy Peer Group. For credit quality, target metric for year-end criticized loans ratio was set to be 2.50% based on recent historical ratios and the mean criticized loan ratio for the Peer Group. The 2023 financial metrics, measured against actual results, are summarized as follows:
2023 Performance-Based Bonus for NEOs
2023 Performance-Based Bonus for NEOs After taking into account the Company’s financial and strategic performance, the Compensation Committee determined that the NEOs had a payout of 120% for the corporate component, which consisted of a 111% payout for the financial metrics (70% weighting) and a 141% payout for the strategic metrics (30% weighting). Payouts for the individual component (excluding the CEO) ranged from 126% to 142%. Overall payouts (excluding the CEO) ranged from 122% to 128%. For 2023, Mr. Del Moral-Niles’ bonus amount was determined based on his target bonus and his duration of employment with the Company. All other NEOs were awarded the performance-based bonus amounts set forth in the table below.
2023 Performance-Based Bonus for NEOs
| | | Target Weightings | | | 2023 Payout (as a % of Target) | | | | | | | Corporate Performance | | | Corporate Performance | | | | | Executive | Target Bonus as % Salary | Financial | Strategic | Individual | Financial | Strategic | Individual | Total Payout | | Dominic Ng | 145% | 70% | 30% | - | 111% | 141% | - | 120% | | Christopher J. Del Moral-Niles | 100% | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | Irene H. Oh | 100% | 45% | 20% | 35% | 111% | 141% | 142% | 128% | | Douglas P. Krause | 100% | 45% | 20% | 35% | 111% | 141% | 142% | 128% | | Parker L. Shi | 100% | 45% | 20% | 35% | 111% | 141% | 126% | 122% | | Gary Teo | 80% | 21% | 9% | 70% | 111% | 141% | 127% | 125% |
Long-Term Incentive Awards
Long-Term Incentive Awards Long-term incentive (“LTI”) awards are compensation awards designed to align the compensation of our executive officers to stockholder returns. These awards are generally granted as stock in the first quarter of each year, allowing the Compensation Committee adequate time to evaluate prior year performance. When determining the annual LTI awards for our executive officers, the Compensation Committee believes it is important to take into account not only the grant date values included in the “Summary Compensation Table,” but also to consider the effect of the year-end value of our stock on those awards over time. The timing of the grants generally follows the filing of the Company’s annual report on Form 10-K and occurs before the start of the Company’s “blackout period,” during which insiders may not engage in Company stock transactions. LTI awards issued in 2023 were granted under the Company’s 2021 Stock Incentive Plan, as amended (the “2021 Stock Incentive Plan”), which is the Company’s current omnibus stockholder-approved plan for equity awards to employees. One hundred percent of the value of LTI awards granted to our NEOs is made through performance-based restricted stock units (“PSUs”). Awards are subject to three one-year performance periods (for example, for awards granted in 2023: January 1, 2023, through December 31, 2023; January 1, 2024, through December 31, 2024; and January 1, 2025, through December 31, 2025), and are payable at the end of the three-year period. Each year, an NEO is eligible to earn a “target” number of PSUs equal to one third of the total PSUs granted based on actual performance. As described below, the actual number of PSUs earned may be higher or lower than the target amount depending
Long-Term Incentive Awards
| COMPENSATION DISCUSSION AND ANALYSIS | |
Long-Term Incentive Awards
on the Company’s financial performance that year relative to the Long-Term Performance Peer Group, which was defined as the banks in the KBW Nasdaq Bank Index (“BKX”). The actual number of PSUs earned in a year can range from 0% to 200% of the target PSUs. The Compensation Committee believes this practice further aligns our compensation program with industry best practices for LTI awards and reflects an appropriate balance between financial reward and long-term performance.
Long-Term Incentive Awards
| Metric | Weighting | Threshold (50% payout) | Target (100% payout) | Maximum (200% payout) | | ROA | 37.5% | 30th percentile | 50th percentile | >= 80th percentile | | ROE | 37.5% | 30th percentile | 50th percentile | >= 80th percentile | | TSR | 25% | 30th percentile | 50th percentile | >= 80th percentile |
Long-Term Incentive Awards
In determining the amount of equity awards granted to each NEO, the Compensation Committee considers its overall long-term incentive guidelines for all NEOs, while taking into account the competitive market for executive talent, and the benefits of incentive compensation tied to performance of the Company’s common stock. As described above, the Compensation Committee also considers the Company’s financial performance relative to the Long-Term Performance Peer Group in determining the actual number of PSUs awarded in a particular year. In 2022, the Company’s ROA and ROE of 1.80% and 19.51% respectively, were above the 2022 median ROA and ROE of 1.19% and 10.77% respectively, for the Long-term Performance Peer Group, and ranked in the 98th percentile for both metrics relative to the Long-term Performance Peer Group. The Company’s TSR in 2022 ranked 22nd percentile relative to the Long-term Performance Peer Group. Taking into account the various factors above, the Compensation Committee approved the 2023 LTI awards for each NEO, which are summarized in the table below. The Company calculates the aggregate grant date fair value of awards as of the date of grant in accordance with the same standard it applies for financial accounting purposes. In addition to their annual PSUs, Messrs. Ng, Krause, Shi, and Teo, and Ms. Oh were each granted an award of 29 RSUs on January 23, 2023, as part of the Spirit of Ownership Program(1). Mr. Del Moral-Niles joined the Company in late 2023 and did not receive the Spirit of Ownership grant. Upon joining the Company, Mr. Del Moral-Niles received a sign-on grant of 9,781 RSUs on October 2, 2023.
Long-Term Incentive Awards
| NEO | 2023 Target PSUs | 2023 RSUs | | Dominic Ng | 59,344 | 29 | | Christopher J. Del Moral-Niles | - | 9,781 | | Irene H. Oh | 11,210 | 29 | | Douglas P. Krause | 11,210 | 29 | | Parker L. Shi | 9,232 | 29 | | Gary Teo | 5,275 | 29 |
Long-Term Incentive Awards
| 1. | The Spirit of Ownership Program applies to all employees of the Company and was launched in 1998 with the premise that each employee is a shareholder, with a vested stake in the Company’s long-term success, growth, and profitability. |
PSU Payouts
PSU Payouts The PSUs awarded in 2021 had three one-year performance periods, with the last performance period ending on December 31, 2023. Based on the Company’s performance for ROA (37.5% weighting), ROE (37.5% weighting), and TSR (25% weighting) relative to the Long-Term Performance Peer Group, the Compensation Committee determined that the PSUs paid out at 196.9% of target for 2021, resulting from a 96th percentile rank for TSR, 77.5th percentile
PSU Payouts
| COMPENSATION DISCUSSION AND ANALYSIS | |
PSU Payouts
rank for ROA, and 92nd percentile rank for ROE; 150.0% of target for 2022 resulting from a 22nd percentile rank for TSR, 98th percentile rank for ROA, and 98th percentile rank for ROE; and 187.7% of target for 2023 resulting from a 65th percentile rank for TSR, 100th percentile rank for ROA, and 100th percentile rank for ROE. Please refer to the Option Exercises and Stock Vested table on page 58 for the number of shares each NEO earned. Mr. Shi and Mr. Del Moral-Niles did not participate in the 2021 – 2023 PSU program, because Mr. Shi joined the Company in 2021 after the PSU grant and Mr. Del Moral-Niles joined the Company in late 2023. The PSUs awarded in 2022 have three one-year performance periods. The first two performance periods ended on December 31, 2022, and December 31, 2023, respectively. Based on the Company’s performance for ROA (37.5% weighting), ROE (37.5% weighting), and TSR (25% weighting) relative to the Long-Term Performance Peer Group, the Compensation Committee determined that the PSUs were earned at 150.0% of target in 2022 resulting from a 22nd percentile rank for TSR, 98th percentile rank for ROA, and 98th percentile rank for ROE; and 187.7% of target in 2023 resulting from a 65th percentile rank for TSR, 100th percentile rank for ROA, and 100th percentile rank for ROE. The last performance period ends on December 31, 2024. Earned shares will not be payable until the end of the third year. The PSUs awarded in 2023 have three one-year performance periods. The first performance period ended on December 31, 2023. Based on the Company’s performance for ROA (37.5% weighting), ROE (37.5% weighting), and TSR (25% weighting) relative to the Long-Term Performance Peer Group, the Compensation Committee determined that the PSUs were earned at 187.7% of target in 2023 resulting from a 65th percentile rank for TSR, 100th percentile rank for ROA, and 100th percentile rank for ROE. The second and last performance periods end on December 31, 2024, and December 31, 2025, respectively.
NO TAX GROSS UPS
NO TAX GROSS UPS We do not provide for any tax gross ups of excise or other taxes on severance payments or in connection with a change in control.
COMPENSATION PROGRAM RISK ANALYSIS
COMPENSATION PROGRAM RISK ANALYSIS The Compensation Committee reviews the Company’s compensation policies and practices for our NEOs and other employees. The Compensation Committee has determined that our incentive compensation programs are not reasonably likely to have a material adverse effect on the Company. To conduct this review, the Company annually completes an inventory of its incentive compensation plans and policies. This evaluation covers a wide range of practices and policies including: the balanced mix between pay elements; short-term and long- term programs; caps on incentive payouts; governance controls in place to establish, review and approve goals; use of multiple performance measures; Compensation Committee discretion on individual awards; use of Stock Ownership Guidelines; use and provisions in severance/change of control policies; use of the Executive Compensation Recovery Policy, and Compensation Committee oversight of compensation programs. The Compensation Committee, along with the independent compensation consultant, determined that the Company’s compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company.
Summary Compensation Table
Summary Compensation Table The NEOs only receive compensation for services as executive officers and employees of the Bank, and no separate compensation is paid for their services to the Company. The table below and the accompanying footnotes summarize the 2023, 2022, and 2021 compensation for the NEOs.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(4) | Stock Awards ($)(1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | | Dominic Ng Chairman and Chief Executive Officer | 2023 | $1,275,000 | - | $4,745,307 | - | $2,218,500 | $119,743 | $8,358,550 | | | 2022 | 1,275,000 | - | 4,538,539 | - | 3,142,875 | 119,994 | 9,076,408 | | | 2021 | 1,275,000 | - | 5,065,596 | - | 2,181,270 | 127,306 | 8,649,172 | | Christopher J. Del Moral- Niles Executive Vice President and Chief Financial Officer | 2023 | $150,000(5) | $350,000 | $500,000 | - | - | $150 | $1,000,150 | | | 2022 | - | - | - | - | - | - | - | | | 2021 | - | - | - | - | - | - | - | | Irene H. Oh Executive Vice President and Chief Risk Officer | 2023 | $697,489 | - | $897,958 | - | $895,843 | $14,850 | $2,506,140 | | | 2022 | 673,319 | - | 858,902 | - | 1,024,744 | 40,778 | 2,597,743 | | | 2021 | 649,358 | - | 801,528 | - | 677,818 | 15,555 | 2,144,259 | | Douglas P. Krause Vice Chairman and Chief Corporate Officer | 2023 | $629,597 | - | $897,958 | - | $812,690 | $37,530 | $2,377,775 | | | 2022 | 582,792 | 100,000 | 758,090 | - | 934,584 | 50,118 | 2,425,584 | | | 2021 | 541,900 | - | 694,926 | - | 578,542 | 25,150 | 1,840,518 | | Parker L. Shi Executive Vice President and Chief Operating Officer | 2023 | $813,539 | - | $739,848 | - | $995,765 | $15,450 | $2,564,602 | | | 2022 | 800,000 | - | 707,684 | - | 1,197,120 | 43,615 | 2,748,419 | | | 2021 | 400,769(5) | 150,000 | 1,300,071 | - | 519,520 | 392,367 | 2,762,727 | | Gary Teo Executive Vice President and Chief Human Resources Officer | 2023 | $425,080 | - | $423,627 | - | $429,058 | $14,850 | $1,292,615 | | | 2022 | 398,296 | 120,000 | 352,001 | - | 273,573 | 29,969 | 1,173,839 | | | 2021 | 379,330 | - | 321,860 | - | 272,126 | 28,520 | 1,001,836 |
Summary Compensation Table
| 1. | Represents the aggregate grant date fair values of the RSUs and performance-based RSUs granted in 2023, 2022, and 2021 in accordance with FASB ASC Topic No. 718, Compensation—Stock Compensation. See the Company’s Annual Report on Form 10-K, Note 13 — Stock Compensation Plans to the Company’s Consolidated Financial Statements for the year ended December 31, 2023 on the Company’s accounting for share-based compensation plans. With the exception of Mr. Shi’s 2021 RSU awards and Mr. Del Moral-Niles’ 2023 RSU awards, and the broad employee RSU grant, all other NEO equity awards are performance-based with payouts that depend on the probable outcome of the performance criteria and the price of the Company’s common stock on the award certification date. For the 2023 performance-based RSUs, assuming that the highest level of performance conditions will be achieved, the grant date fair value of the maximum awards for the NEOs would be as follows: for Mr. Ng, $8,118,307; for Ms. Oh, $1,533,458; for Mr. Krause, $1,533,458; for Mr. Shi, $1,262,848; for Mr. Teo, $721,627. |
Summary Compensation Table
| 2. | Represents incentive compensation earned under our Performance-Based Bonus Plan in 2024, 2023, and 2022 related to years 2023, 2022, and 2021, respectively. Mr. Shi joined the Company in June 2021, and his 2021 payout amount was pro-rated based on months of employment. Mr. Del Moral-Niles joined the Company in October 2023 and did not participate in the annual Performance-Based Bonus Plan for 2023. |
Summary Compensation Table
| 3. | Includes: for Mr. Ng, (i) financial planning and administrative services of $52,125, (ii) vacation cash-out of $49,038, (iii) Company contributions under its 401(k) Plan of $14,850 and (iv) auto usage of $3,730; for Mr. Del Moral-Niles, (i) cell phone allowance of $150; for Ms. Oh, (i) Company contributions under its 401(k) Plan of $14,850; for Mr. Krause, (i) Company contributions under its 401(k) Plan of $14,850 and (ii) vacation cash-out of $22,680; for Mr. Shi, (i) Company contributions under its 401(k) Plan of $14,850, and (ii) cell phone allowance of $600; for Mr. Teo, (i) Company contributions under its 401(k) Plan of $14,850. These amounts reflect the Company’s actual costs to provide the perquisites or other personal benefits to the NEOs. |
Summary Compensation Table
| 4. | Includes: Mr. Del Moral-Niles’ sign-on bonus of $200,000 and discretionary bonus of $150,000, which was determined based on his target bonus and his duration of employment with the Company in 2023, Mr. Shi’s sign-on bonus of $150,000 in 2021, Mr. Krause’s one-time bonus of $100,000 in 2022 for assuming additional responsibilities and strengthening the corporate risk management function and Mr. Teo’s one-time bonus of $120,000 in 2022 for continuous recruitment of senior executives and top talent and managing and supporting leadership transitions. |
Summary Compensation Table
| 5. | Mr. Del Moral-Niles’ 2023 salary and Mr. Shi’s 2021 salary reflect the actual days employed by the Company. |
Summary Compensation Table
| COMPENSATION DISCUSSION AND ANALYSIS | |
Summary Compensation Table
The table below summarizes all plan-based awards granted by the Compensation Committee to the NEOs in 2023.
Grants of Plan-Based Awards
Grants of Plan-Based Awards
Grants of Plan-Based Awards
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | | | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock Award ($)(4) | | Dominic Ng | 01/23/2023 | - | - | - | - | - | - | 29 | 2,000 | | | 03/01/2023 | 924,375 | 1,848,750 | 3,697,500 | 29,672 | 59,344 | 118,688 | - | 4,743,307 | | Christopher J. Del Moral-Niles | 10/02/2023 | - | - | - | - | - | - | 9,781 | 500,000 | | Irene H. Oh | 01/23/2023 | - | - | - | - | - | - | 29 | 2,000 | | | 03/01/2023 | 350,568 | 701,137 | 1,402,274 | 5,605 | 11,210 | 22,420 | - | 895,958 | | Douglas P. Krause | 01/23/2023 | - | - | - | - | - | - | 29 | 2,000 | | | 03/01/2023 | 318,427 | 636,854 | 1,273,709 | 5,605 | 11,210 | 22,420 | - | 895,958 | | Parker L. Shi | 01/23/2023 | - | - | - | - | - | - | 29 | 2,000 | | | 03/01/2023 | 408,000 | 816,000 | 1,632,000 | 4,616 | 9,232 | 18,464 | - | 737,848 | | Gary Teo | 01/23/2023 | - | - | - | - | - | - | 29 | 2,000 | | | 03/01/2023 | 171,761 | 343,521 | 687,043 | 2,638 | 5,275 | 10,550 | - | 421,627 |
Grants of Plan-Based Awards
| 1. | These grants show the potential payment for our NEOs under our formula-based Performance-Based Bonus Plan. Additional information regarding the Performance- Based Bonus Plan is discussed in the section Compensation Discussion and Analysis – Elements of our Executive Compensation Program in this Proxy Statement. The actual payments the NEOs received are based upon the performance attained and are included in the Non-Equity Incentive Plan Compensation column in the “Summary Compensation Table” above. |
Grants of Plan-Based Awards
| 2. | Represents performance-based RSUs that cliff vest on March 1, 2026, assuming that the employee remains employed through such date. Vesting is subject to meeting pre-established performance goals over multiple performance periods with the last performance period ending on December 31, 2025. Dividends are accrued and paid at the time of vesting. Actual payout may range from zero to the maximum number of performance-based RSUs. Awards will be paid out 100% in stock in a number of shares equal to the number of performance-based RSUs vested. The target units represent the target number of performance-based RSUs granted on the grant date, and the Company’s TSR, ROA and ROE performance at the 50th percentile compared to the performance of the banks comprising the BKX for each year, representing a payout of 100%. Threshold units represent the Company’s TSR, ROA and ROE performance at the 30th percentile compared to the BKX for each year, resulting in a payout of 50% of the target number of performance-based RSUs. Maximum units represent the Company’s TSR, ROA and ROE performance at the 80th percentile and above compared to the banks comprising the BKX for each year, resulting in a payout of 200% of the target number of performance-based RSUs. The actual percentage payout would be linearly interpolated between the 30th percentile of the TSR, ROA and ROE performance (50% payout), the 50th percentile of the TSR, ROA and ROE performance (100% payout) and the 80th percentile of the TSR, ROA and ROE performance (200% payout). TSR is weighted at 25%, ROA and ROE are weighted equally at 37.5% each. |
Grants of Plan-Based Awards
| 3. | Represents (i) RSUs granted on January 23, 2023, as part of the all-employee Spirit of Ownership Program for Mr. Ng, Krause, Shi, Teo, and Ms. Oh, and (ii) Mr. Del Moral- Niles’ sign-on RSUs granted on October 2, 2023. All RSUs cliff vest three years from the date of grant. |
Grants of Plan-Based Awards
| 4. | The assumptions applied in determining the grant date fair value are the same as those set forth in footnote 1 to the “Summary Compensation Table” above. |
Grants of Plan-Based Awards
The table below sets forth the outstanding equity awards held by the NEOs as of December 31, 2023. There were no outstanding option awards held by NEOs as of December 31, 2023. With the exception of (i) the RSUs granted on February 12, 2021, February 1, 2022, and January 23, 2023, as part of the all-employee Spirit of Ownership Program, (ii) Mr. Del Moral-Niles’ sign-on RSUs granted in 2023, (iii) Mr. Shi’s sign-on and additional RSUs granted in 2021, and (iv) Mr. Teo’s RSUs granted on March 4, 2022, all of the outstanding equity awards are performance-based awards with payouts that depend on the outcome of the performance criteria and the price of the Company’s common stock on the award certification date. The performance-based awards have a term of three years and will vest based on the achievement of the applicable performance criteria.
Grants of Plan-Based Awards
| COMPENSATION DISCUSSION AND ANALYSIS | |
Outstanding Equity Awards at Year-End
Outstanding Equity Awards at Year-End
Outstanding Equity Awards at Year-End
| Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stocks That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | Dominic Ng | 02/12/2021 | 30(3) | 2,159 | - | - | | | 03/04/2021 | 116,164(4) | 8,358,000 | - | - | | | 02/01/2022 | 23(3) | 1,655 | - | - | | | 03/04/2022 | 65,541(5) | 4,716,682 | 38,8205 7 | 2,793,099 | | | 01/23/2023 | 29(3) | 2,087 | - | - | | | 03/01/2023 | 37,123(6) | 2,671,000 | 37,1236 7 | 2,671,000 | | Christopher J. Del Moral- Niles | 10/02/2023 | 9,781(3) | 703,743 | - | - | | Irene H. Oh | 02/12/2021 | 30(3) | 2,159 | - | - | | | 03/04/2021 | 18,342(4) | 1,319,707 | - | - | | | 02/01/2022 | 23(3) | 1,655 | - | - | | | 03/04/2022 | 12,380(5) | 890,740 | 7,3335 7 | 527,609 | | | 01/23/2023 | 29(3) | 2,087 | - | - | | | 03/01/2023 | 7,013(6) | 504,585 | 14,9476 7 | 1,075,413 | | Douglas P. Krause | 02/12/2021 | 30(3) | 2,159 | - | - | | | 03/04/2021 | 15,898(4) | 1,143,861 | - | - | | | 02/01/2022 | 23(3) | 1,655 | - | - | | | 03/04/2022 | 10,974(5) | 789,591 | 6,5005 7 | 467,675 | | | 01/23/2023 | 29(3) | 2,087 | - | - | | | 03/01/2023 | 7,013(6) | 504,585 | 14,9476 7 | 1,075,413 | | Parker L. Shi | 06/14/2021 | 4,305(3) | 309,745 | - | - | | | 12/01/2021 | 13,237(3) | 952,402 | - | - | | | 02/01/2022 | 23(3) | 1,655 | - | - | | | 03/04/2022 | 10,195(5) | 733,551 | 6,0395 7 | 434,506 | | | 01/23/2023 | 29(3) | 2,087 | - | - | | | 03/01/2023 | 5,776(6) | 415,583 | 12,3096 7 | 885,657 | | Gary Teo | 02/12/2021 | 30(3) | 2,159 | - | - | | | 03/04/2021 | 4,761(4) | 342,554 | - | - | | | 02/01/2022 | 23(3) | 1,655 | - | - | | | 03/04/2022 | 4,529(3) | 325,862 | - | - | | | 01/23/2023 | 29(3) | 2,087 | - | - | | | 03/01/2023 | 3,300(6) | 237,435 | 7,0336 7 | 506,048 |
Outstanding Equity Awards at Year-End
| 1. | Represents grants of performance-based RSUs. The vesting of the performance-based RSUs is subject to meeting the three-year service condition from the grant date and pre-established performance goals in each of the three years ending December 31 of the respective year. Dividends are accrued on the performance RSUs and paid at the time of vesting. |
Outstanding Equity Awards at Year-End
| 2. | The amounts shown represent the number of shares or units shown in the column immediately to the left multiplied by the closing price on December 31, 2023, of the Company’s common stock as reported on Nasdaq, which was $71.95. |
Outstanding Equity Awards at Year-End
| 3. | Reflects RSUs that will cliff vest three years from the date of grant, assuming that the employee remains employed through such date. |
Outstanding Equity Awards at Year-End
| 4. | This equity RSU granted on March 4, 2021, cliff vested on March 4, 2024. |
Outstanding Equity Awards at Year-End
| 5. | This equity RSU granted on March 4, 2022, cliff vests on March 4, 2025, assuming that the employee remains employed through such date. |
Outstanding Equity Awards at Year-End
| 6. | This equity RSU granted on March 1, 2023, cliff vests on March 1, 2026, assuming that the employee remains employed through such date. |
Outstanding Equity Awards at Year-End
| 7. | Reflects the maximum potential payout, but the actual number of shares ultimately paid out may vary from the amount shown on the table, with the possibility of payout, ranging from no payout to maximum payout depending on the outcome of the performance criteria. |
Outstanding Equity Awards at Year-End
| COMPENSATION DISCUSSION AND ANALYSIS | |
Outstanding Equity Awards at Year-End
The following table summarizes, for the NEOs, the option exercises and stock awards vested during 2023. The amounts reflected below show the number of shares acquired at the time of exercise or vesting, as applicable. The amounts reported as value realized are shown on a before-tax basis.
Option Exercises and Stock Vested
Option Exercises and Stock Vested
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Dominic Ng | - | - | 205,297 | 15,304,638 | | Christopher J. Del Moral-Niles | - | - | - | - | | Irene H. Oh | - | - | 34,251 | 2,553,158 | | Douglas P. Krause | - | - | 25,586 | 1,907,183 | | Parker L. Shi | - | - | - | - | | Gary Teo | - | - | 7,056 | 525,771 |
Option Exercises and Stock Vested
| 1. | The amount represents the number of shares vested multiplied by the closing price of the Company’s common stock on the Nasdaq on the vesting date. It excludes any reduction in value associated with the cancellation of shares for tax withholding purposes. |
Option Exercises and Stock Vested
The following table summarizes information about NEO participation in our nonqualified Deferred Compensation Plan, which is described on page 52 above, in the “Retirement Programs and Perquisites” section. In 2023, Mr. Ng and Mr. Shi participated and made contributions to the Deferred Compensation Plan.
Nonqualified Deferred Compensation Table
Nonqualified Deferred Compensation Table
Nonqualified Deferred Compensation Table
| Nonqualified Deferred Compensation in 2023 | | | | | | | Name | Executive Contributions in 2023 ($)(1) | Registrant Contributions in 2023 ($) | Aggregate Earnings in 2023 ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance on December 31, 2023 ($) | | Dominic Ng | 2,837,513 | - | 377,888 | - | 3,831,305 | | Christopher J. Del Moral-Niles | - | - | - | - | - | | Irene H. Oh | - | - | - | - | - | | Douglas P. Krause | - | - | - | - | - | | Parker L. Shi | 1,608,035 | - | 476,229 | - | 2,778,401 | | Gary Teo | - | - | 4,607 | - | 64,719 |
Nonqualified Deferred Compensation Table
| 1. | The amounts included in this column are included in the Summary Compensation Table for 2023 as “Salary.” |
Nonqualified Deferred Compensation Table
| 2. | Reflects hypothetical or “notional” gains on account balances based on the NEO’s selected investments. |
Nonqualified Deferred Compensation Table
| COMPENSATION DISCUSSION AND ANALYSIS | |
Employment Agreements and Potential Payments upon Termination or Change in Control
Employment Agreements and Potential Payments upon Termination or Change in Control The Bank, the Company’s principal subsidiary, has entered into employment agreements with the NEOs with the exception of Messrs. Del Moral-Niles and Teo. This is intended to ensure that the Bank will be able to maintain a stable and competent management base.
CEO to Median Employee Pay Ratio
CEO to Median Employee Pay Ratio We are providing the following information about the relationship of the total annual compensation of our median employee and the total annual compensation of Mr. Ng, our Chairman and CEO. For the year ended December 31, 2023, the annual total compensation of our CEO was $8,358,550 as shown in the “Summary Compensation Table.” The annual total compensation of our median employee for 2023, excluding the CEO, was $105,341, resulting in a ratio of 79 to 1, which is a reasonable estimate calculated in a manner consistent with the applicable rules. In determining the median employee, we identified and included all U.S.-based employees of East West Bank, other than the CEO, who were employed with us as of December 31, 2023. Further, we also included all employees of East West Bank outside of the U.S., who are based in Hong Kong and were employed with us as of December 31, 2023. The U.S. and Hong Kong-based employees represented 95% of our 3,175 total employees, excluding employees on leave of absence as of December 31, 2023. We excluded employees of East West Bank (China) Limited, our wholly owned subsidiary in China, and other employees based in China and Singapore, totaling 147 individuals or 5% of our total employees. As of December 31, 2023, the Company had 2,948 U.S.-based employees and 227 non-U.S. employees. Our definition of “total compensation,” for purposes of determining our median employee, includes total cash compensation paid during 2023 (excluding 401(k) deferrals and overtime wages) and the grant date fair value of RSUs (or RSU equivalents) awarded in 2023. We did not annualize the compensation for any employees that were not employed by us for all of 2023 or make any full-time equivalent adjustments for part-time employees. For our non-U.S. employees who were included in this calculation, we used the foreign exchange rates applicable as of December 31, 2023 in order to convert their total compensation into U.S. dollars. After determining our median employee, we then calculated such employee’s annual total compensation, in a manner consistent with the requirements of Item 402(u), for purposes of calculating the ratio presented above.
CEO to Median Employee Pay Ratio
| COMPENSATION DISCUSSION AND ANALYSIS | |
Pay Versus Performance
Pay Versus Performance The following table sets forth information concerning the compensation of our CEO and other NEOs for each of the fiscal years ending December 31, 2023, 2022, 2021, and 2020, and our financial performance for each such fiscal year.
Pay Versus Performance
| | | | | | Value of Initial $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for CEO(1) | Compensation Actually Paid Total to CEO | Average Summary Compensation Table Total for Non-CEO NEOs(2) | Average Compensation Actually Paid to non-CEO NEOs | Total Shareholder Return | Peer Group Total Shareholder Return(7) | Net Income ($ in millions) | Return on Equity | | 2023(3) | $8,358,550 | $15,412,681 | $1,948,256 | $2,572,881 | $161 | $104 | $1,161 | 17.91% | | 2022(4) | $9,076,408 | $6,591,588 | $2,236,396 | $2,110,635 | $135 | $105 | $1,128 | 19.51% | | 2021(5) | $8,649,172 | $27,525,426 | $1,938,007 | $3,294,597 | $162 | $126 | $873 | 15.70% | | 2020(6) | $6,933,775 | $13,751,400 | $1,284,762 | $1,961,710 | $104 | $90 | $568 | 11.17% |
Pay Versus Performance
| 1. | The CEO in 2023, 2022, 2021, and 2020 was Dominic Ng. |
Pay Versus Performance
| 2. | The non-CEO NEOs were Christopher J. Del Moral-Niles, Irene H. Oh, Douglas P. Krause, Parker L. Shi, and Gary Teo in 2023, Irene H. Oh, Douglas P. Krause, Parker L. Shi, and Gary Teo in 2022, Irene H. Oh, Douglas P. Krause, Parker L. Shi, and Nick Huang in 2021, and Irene H. Oh, Douglas P. Krause, Andy Yen, Gary Teo, and Catherine Zhou in 2020. |
Pay Versus Performance
| 3. | The LTI Plan for the 2023-2025 performance period has an estimated payout of 175%. The LTI Plan for the 2022-2024 performance period has an estimated payout of 175%. The LTI Plan for the 2021-2023 performance period paid out at 178%. |
Pay Versus Performance
| 4. | The LTI Plan for the 2022-2024 performance period has an estimated payout of 175%. The LTI Plan for the 2021-2023 performance period has an estimated payout of 174%. The LTI Plan for the 2020-2022 performance period paid out at 182%. |
Pay Versus Performance
| 5. | The LTI Plan for the 2021-2023 performance period has an estimated payout of 175%. The LTI Plan for the 2020-2022 performance period has an estimated payout of 174%. The LTI Plan for the 2019-2021 performance period paid out at 182%. |
Pay Versus Performance
| 6. | The LTI Plan for the 2020-2022 performance period has an estimated payout of 175%. The LTI Plan for the 2019-2021 performance period has an estimated payout of 175%. The LTI Plan for the 2018-2020 performance period paid out at 167%. |
Pay Versus Performance
| 7. | The peer group used is the KBW Nasdaq BANK INDEX (“BKX”). |
Pay Versus Performance
The following table reconciles the total compensation shown in the Summary Compensation Table to the compensation actually paid to NEOs shown in the Pay Versus Performance Table above.
Pay Versus Performance
| COMPENSATION DISCUSSION AND ANALYSIS | |
Pay Versus Performance
| | CEO | | | | Average of Non-CEO NEOs | | | | | Year | 2023 | 2022 | 2021 | 2020 | 2023 | 2022 | 2021 | 2020 | | Summary Compensation Table Total | $8,358,550 | $9,076,408 | $8,649,172 | $6,933,775 | $1,948,256 | $2,236,396 | $1,938,007 | $1,284,762 | | Less: Fair Value of Stock Awards Granted in Fiscal Year | (4,745,307) | (4,538,539) | (5,065,596) | (4,487,082) | (691,878) | (669,169) | (774,147) | (474,638) | | Add: Fair Value of Stock Awards Granted in Fiscal Year - Value at Yearend | 7,767,249 | 6,470,141 | 9,535,338 | 10,627,632 | 970,333 | 953,841 | 1,118,976 | 1,060,278 | | Change in Fair Value for Stock Awards Granted in Prior Years that were Unvested at the End of Fiscal Year | 1,451,398 | (4,846,683) | 10,881,577 | 1,180,999 | 153,827 | (463,118) | 781,123 | 100,365 | | Change in Fair Value of Stock Awards Granted in Prior Years that Vesting during the Fiscal Year | 1,919,170 | (237,471) | 2,894,477 | (1,009,781) | 124,875 | (18,447) | 193,214 | (56,099) | | Add: Dividends Paid on Unvested Shares Units for the Fiscal Year | 661,621 | 667,731 | 630,458 | 505,857 | 67,467 | 71,132 | 37,423 | 47,041 | | Compensation Actually Paid | $15,412,681 | $6,591,588 | $27,525,426 | $13,751,400 | $2,572,881 | $2,110,635 | $3,294,597 | $1,961,710 |
Pay Versus Performance
For the fiscal year ending December 31, 2023, the most important financial performance measures used to link compensation actually paid to our NEOs to Company are listed as follows.
Pay Versus Performance
| Important Financial Performance Measurement | | | | Return on Assets | Return on Equity | Total Shareholder Return |
Pay Versus Performance
| COMPENSATION DISCUSSION AND ANALYSIS | |
Pay Versus Performance
The following graphs compare the compensation actually paid to our CEO and the average of compensation actually paid to our non-CEO NEOs with Total Shareholder Return, Net Income, and Return on Average Equity.
Compensation Actually Paid vs. TSR
Compensation Actually Paid vs. TSR
Compensation Actually Paid vs. Net Income
Compensation Actually Paid vs. Net Income
Compensation Actually Paid vs. ROE
Compensation Actually Paid vs. ROE
Compensation Actually Paid vs. ROE
| RATIFICATION OF AUDITORS | |
What happens if a director nominee does not receive a majority vote?
What happens if a director nominee does not receive a majority vote? In an uncontested election, any director nominee who receives a greater number of “AGAINST” votes than votes “FOR” the nominee’s election shall immediately tender to the Board his or her offer to resign from the Board. The Board, after taking into consideration the recommendation of the Nominating/Corporate Governance Committee, will determine whether or not to accept the resignation of any nominee for director who receives a greater number of “AGAINST” votes than votes “FOR” the nominee’s election. In the event of a contested election, the director nominees who receive the largest number of votes cast “FOR” their election will be elected as directors.