UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment
No. )
Filed
by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check
the appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under §240.14a-12
EAST
WEST BANCORP, INC.
(Name
of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
☒
No fee required.
☐
Fee paid previously with preliminary materials.
☐
Fee computed on table in exhibit required by Item 25(b) per Exchange Act rules 14a6(i)(1) and 0-11
2023 PROXY STATEMENT | | |
| |
Notice
of Annual Meeting of Stockholders
|
DATE
AND TIME
Tuesday, May 23, 2023, at 2:00 p.m., Pacific Time |
|
RECORD
DATE
March 31, 2023 |
|
PLACE
Virtual Annual Meeting Link:
www.meetnow.global/MKAYVNG |
We
are holding the 2023 Annual Meeting of Stockholders of East West Bancorp, Inc. (the “Annual Meeting”) in a virtual-only meeting
format. To participate in the Annual Meeting, please review the information included on your Notice of Internet Availability of Proxy
Materials, on your proxy card or the instructions that accompanied your proxy materials.
ITEMS
OF BUSINESS
1. | Elect
ten directors to serve until the next annual meeting of stockholders and to serve until their
successors are elected and qualified. |
2. | Approve,
on an advisory basis, our executive compensation for 2022. |
3. | Approve,
on an advisory basis, the frequency of future advisory votes on executive compensation. |
4. | Ratify
the appointment of KPMG LLP as the Company’s independent registered public accounting
firm for the year ending December 31, 2023. |
5. | Transact
such other business as may properly come before the Annual Meeting or any postponement or
adjournment of the Annual Meeting. |
RECORD
DATE
Stockholders of record of East West Bancorp,
Inc. common shares at the close of business on March 31, 2023 are entitled to receive notice of and to vote at the Annual Meeting and
any postponement or adjournment thereof.
DELIVERY
OF PROXY MATERIALS
On
or about April 10, 2023, we began mailing to our stockholders of record a Notice of Internet Availability of Proxy Materials containing
instructions on how to access and review this Proxy Statement, our Annual Report on Form 10-K for the year ended December 31, 2022 (“Annual
Report on Form 10-K”), how to vote, participate in the Annual Meeting, and request a printed copy of our proxy materials. Our
Proxy Statement and Annual Report on Form 10-K are also available at: www.envisionreports.com/EWBC.
VOTING
We urge you to submit your proxy promptly
whether or not you plan to attend the Annual Meeting. You may vote by telephone, online, or by mailing your signed proxy card in the enclosed
return envelope if the Proxy Statement was mailed to you. Voting early will not prevent you from virtually attending and voting your shares
at the meeting, but it will help ensure the presence of a quorum. For more information on the virtual Annual Meeting, please refer to
the “Questions and Answers About the Annual Meeting and Voting”
section of the Proxy Statement beginning on page 68.
By order of the Board of
Directors,
Lisa
L. Kim
Corporate Secretary
Pasadena, California | April 10, 2023
2 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
Table of Contents
PROXY
STATEMENT |
| 5 |
Annual
Meeting of Stockholders |
| 5 |
Summary
of Proposals for 2023 |
| 5 |
Voting your
Shares |
| 6 |
COMPANY
HIGHLIGHTS |
| 7 |
Our
Company at a Glance |
| 7 |
2022
Financial Performance |
| 8 |
Environmental,
Social and Governance (“ESG”) Highlights |
| 9 |
Community
Highlights |
| 10 |
Diversity
and Inclusion |
| 11 |
Board
Diversity Matrix |
| 12 |
Summary
Information about Director Nominees |
| 13 |
Corporate
Governance Highlights |
| 14 |
Executive
Compensation Highlights |
| 14 |
BOARD
OF DIRECTORS AND CORPORATE GOVERNANCE |
| 15 |
Proposal
1: Election of Directors |
| 15 |
Board
of Directors and Nominees |
| 15 |
Director
Nominee Qualifications and Experience |
| 17 |
Governance
Documents |
| 23 |
Director
Independence, Financial Experts and Risk Management Experience |
| 23 |
Board
Leadership Structure |
| 25 |
Director
Education and Self-Assessment |
| 25 |
Board
Meetings |
| 26 |
Board
Committees |
| 26 |
Audit
Committee |
| 27 |
Compensation
and Management Development Committee (“Compensation Committee”) |
| 28 |
Nominating/Corporate
Governance Committee |
| 29 |
Risk
Oversight Committee |
| 29 |
Executive
Committee |
| 30 |
Stockholder
Nominees |
| 30 |
Identifying
and Evaluating Nominees for Directors |
| 31 |
Communications
with the Board |
| 32 |
Stock
Ownership Guidelines |
| 32 |
No
Pledging/Hedging of Company Securities |
| 33 |
Certain
Relationships and Related Transactions |
| 33 |
Director
Compensation |
| 34 |
2022
Non-Employee Director Compensation Table |
| 35 |
3 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
Table of Contents
Proposal 2:
Advisory Vote to Approve Executive Compensation |
| 35 |
COMPENSATION
DISCUSSION AND ANALYSIS |
| 37 |
2022 Business and Financial Performance Highlights |
| 37 |
Our Compensation Philosophy |
| 39 |
Overview of Our Executive Compensation Program |
| 40 |
2022 Pay Mix for NEOs |
| 40 |
Compensation-Setting Process and Roles |
| 41 |
Role of the Compensation Committee |
| 41 |
Role of the Compensation Consultant |
| 41 |
Role of Management |
| 41 |
2022 Stockholder Advisory vote on Executive Compensation |
| 42 |
Use of Peer Group |
| 42 |
Compensation-Setting Process |
| 43 |
Elements of Our Executive Compensation Program |
| 44 |
Other Compensation Policies and Information |
| 51 |
Compensation Committee Report |
| 52 |
Summary Compensation Table |
| 53 |
Grants of Plan-Based Awards |
| 54 |
Outstanding Equity Awards at Year-End |
| 55 |
Option Exercises and Stock Vested |
| 56 |
Nonqualified Deferred Compensation Table |
| 56 |
Retirement Plans |
| 57 |
Employment Agreements and Potential Payments upon Termination or Change in Control |
| 57 |
CEO to Median Employee Pay Ratio |
| 60 |
Proposal 3: Advisory
Vote on Frequency of Stockholder Say-on-Pay |
| 63 |
RATIFICATION OF AUDITORS |
| 63 |
Proposal 4: Ratification
of Auditors |
| 63 |
Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees |
| 64 |
Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent |
| |
Registered Public Accounting Firm |
| 64 |
Audit Committee Report |
| 65 |
STOCK OWNERSHIP
OF PRINCIPAL STOCKHOLDERS, DIRECTORS AND MANAGEMENT |
| 67 |
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
| 68 |
OTHER INFORMATION |
| 73 |
Proposals of Stockholders |
| 73 |
Annual Report on Form 10-K |
| 73 |
4 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
2023 PROXY STATEMENT | | |
| |
This summary does not contain all of
the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information
regarding our 2022 financial performance, please review our Annual Report on Form 10-K for the year ended December 31, 2022 (“Annual
Report on Form 10-K”).
Annual
Meeting of Stockholders
|
DATE
AND TIME
Tuesday, May 23, 2023, at 2:00 p.m., Pacific Time |
|
RECORD
DATE
March 31, 2023 |
|
PLACE
Virtual Annual Meeting Link:
www.meetnow.global/MKAYVNG |
This
Proxy Statement and the accompanying proxy card are furnished in connection with the solicitation of proxies by the Board of
Directors (the “Board”) of East West Bancorp, Inc., a Delaware corporation (the “Company,” “we,”
“us,” or “our”) for use at the 2023 annual meeting of stockholders to be held on May 23, 2023, and any
postponements, adjournments, or continuations thereof (the “Annual Meeting”). The mailing address of our principal
executive office is 135 N. Los Robles Avenue, 7th Floor, Pasadena, California 91101.
On or around April 10, 2023, we began sending
to our common stockholders of record as of March 31, 2023 (the “Record Date”) a Notice of Internet Availability of Proxy Materials
(the “Notice of Internet Availability”). The Notice of Internet Availability includes instructions on how to access this Proxy
Statement and Annual Report on Form 10-K and how to vote.
|
Summary
of Proposals for 2023
Proposals
for Stockholder Consideration |
Board
Recommendation |
PROPOSAL 1: ELECTION OF DIRECTORS
(PAGE 15) — To elect ten directors to serve until the next annual meeting of stockholders and to serve until their
successors are elected and qualified. |
FOR
EACH DIRECTOR NOMINEE — The Board believes that the ten director nominees
possess the necessary qualifications to provide effective oversight of our business and quality advice and counsel to our management. |
PROPOSAL
2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION (PAGE 35) — We seek a non-binding
advisory vote from stockholders to approve the compensation paid to our Named Executive Officers in 2022, as described in the
“Compensation Discussion and Analysis” section and
the tables that follow, beginning on page 37 of this Proxy Statement. |
FOR
— The Board values stockholders’ opinions and the Compensation Committee will consider
the outcome of the advisory vote when evaluating future executive compensation decisions. |
PROPOSAL
3: ADVISORY VOTE ON THE FREQUENCY OF STOCKHOLDER “SAY-ON-PAY” (PAGE 63) — We
are required no less frequently than every six years to submit for stockholder determination whether advisory votes on executive
compensation should be held every one, two or three years. |
FOR
“ONE” YEAR — The Board recommends that stockholders approve
holding the advisory vote on executive compensation every year. An annual advisory vote will enable stockholders to provide timely,
direct input on our executive compensation program. |
PROPOSAL 4: RATIFICATION OF AUDITORS
(PAGE 63) — As a matter of good corporate governance, stockholders are being asked to ratify
the Audit Committee’s selection of KPMG LLP to serve as the Company’s independent registered public accounting
firm for the year ending December 31, 2023. |
FOR
— The Audit Committee and the Board believe that the continued retention
of KPMG LLP to serve as the independent registered public accounting firm of the Company for the year ending December 31, 2023 is
in the best interests of the Company and its stockholders. |
5 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
2023 PROXY STATEMENT | | |
| |
Voting
your Shares
|
|
WHO MAY VOTE
|
|
Common
stockholders of record as of the close of business on March 31, 2023. |
|
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VOTING BY TELEPHONE
|
|
Follow
the instructions on the Notice of Internet Availability or on your proxy card. |
|
|
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VOTING ONLINE PRIOR TO MEETING
|
|
Registered holders
can go to www.envisionreports.com/ewbc
and follow the instructions.
If you hold your shares in street name, please follow the instructions found on your voting instruction form. |
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VOTING
BY MAIL
|
|
Complete,
sign, and date the proxy card and return it in the envelope that was provided in the proxy statement mailing package. |
|
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VOTING
DURING THE MEETING
|
|
If
you choose to vote during the virtual Annual Meeting, you will need the 15-digit control number appearing
on the Notice of Internet Availability or proxy card distributed to you.
|
|
If you want
to vote shares that you hold in street name during the virtual Annual Meeting, a control number must be obtained in advance to vote
during the meeting or to submit questions during the meeting. To obtain a control number, beneficial stockholders must submit proof
of their legal proxy issued by their broker, bank, or other nominee that holds their shares by sending a copy of the legal proxy,
along with their name and email address, to Computershare via email at legalproxy@computershare.com.
Requests for a control number must be labeled as “Legal Proxy” and be received by Computershare no later than 5:00 p.m.,
ET, on Thursday, May 18, 2023. |
6 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPANY HIGHLIGHTS | | |
| |
Our
Company at a Glance
East West Bancorp, Inc., with total assets of $64.1 billion as of December 31, 2022, is the publicly-listed parent company of East West Bank (the “Bank”). The Bank, celebrating its 50th anniversary, opened its doors in 1973 in Los Angeles’ Chinatown, as the first federally chartered savings institution focused primarily on serving the financial needs of Asian Americans. Today, the Company is the largest publicly-traded, independent bank (based on total assets) headquartered in Southern California. Through its network of over 120 banking locations in the U.S. and Asia, the Bank provides a wide range of personal and commercial banking services to businesses and individuals. In addition to offering traditional deposit products that include personal and business checking and savings accounts, money market, and time deposits, the Bank also offers foreign exchange, treasury management, and wealth management services. The Bank’s lending activities include commercial and residential real estate lending, construction finance, commercial business lending, working capital lines of credit, trade finance, letters of credit, affordable housing lending, asset-based lending, asset-backed finance, project finance, equipment financing and loan syndication. Additionally, the Bank offers hedging advisory and various derivative contracts such as interest rate, energy commodity and foreign exchange contracts. East West Bank was recognized with the “Best Board of Directors” distinction in Bank Director’s 2022 RankingBanking study, named the best performing U.S. public bank with more than $10 billion in assets in 2022 by S&P Global Market Intelligence, and received the 2022 Lender of the Year award from Export-Import Bank of the United States (EXIM).
Unique among U.S.-based regional banks, East West Bank, through its subsidiary, East West Bank (China) Limited, has a commercial business operating license in China, allowing the Bank to open branches, make loans and collect deposits in the country, facilitating our customers’ business transactions between the U.S. and Asia. The Bank continues to develop its international banking presence with its network of overseas branches and representative offices, most recently opening a Singapore representative office in January 2023. Through its branches and offices, the Bank focuses on growing its cross-border client base between the U.S. and Asia, helping U.S.-based businesses expand in Asia, and helping companies based in Asia pursue business opportunities in the U.S. |
|
|
7 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPANY HIGHLIGHTS | | |
| |
2022
Financial Performance
For
the full year 2022, the Company achieved record earnings and record revenue. Both total revenue and net income grew by 29%
year-over-year, and our profitability expanded to a return on assets of 1.80% and return on equity of 19.5% in 2022. Our strong
financial performance reflected strong net interest income growth, driven by loan growth and net interest margin expansion, improved
efficiency, and low credit costs. For more complete information regarding our 2022 financial performance, please review our Annual
Report on Form 10-K. Highlights of the Company’s strong 2022 financial performance are provided below.
8 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPANY HIGHLIGHTS | | |
| |
Environmental,
Social and Governance (“ESG”) Highlights
Highlights
of our ESG strategic initiatives and commitments:
| |
LARGEST
MINORITY-OPERATED DEPOSITORY INSTITUTION. We are
the largest FDIC- insured, minority-operated depository institution headquartered in the U.S., serving communities with diverse
ethnicities and socio-economic backgrounds in eight states across the nation.
SUPPORTING
UNDERSERVED COMMUNITIES. We offer home loans and other
products and services that support low-to-moderate income, minority and immigrant communities. We provide community development loans
to non-profit and community-based organizations. We are focused on basic, fair-priced products and alternative credit criteria to support
the underbanked, which is part of our founding mission. The Bank has an overall Community Reinvestment Act rating of “Outstanding.”
DIVERSITY
AND INCLUSION. Diversity of our workforce and leadership
are exemplary.
ENVIRONMENTAL
CONSERVATION. We practice resource conservation through
energy efficiency initiatives. We are committed to global energy and greenhouse gas reductions by promoting employee ridesharing, encouraging
the use of public transportation, providing charging stations for electric vehicles, and investing in videoconferencing capabilities.
SASB-COMPLIANT
POLICIES. Our lending and investment policies comply
with today’s Environmental, Social and Governance and Sustainability Accounting Standards Board (SASB) criteria.
SUPPORTING
THE ARTS. The arts play a vital role in building bridges
between cultures and enhancing the well-being of our communities, bringing us joy, expressing our voices and building mutual understanding.
The Bank fosters the arts in our communities by providing support to artists, museums, exhibits, art education programs, cultural celebrations
and other artistic experiences.
FINANCIAL
LITERACY. The Bank supports financial literacy initiatives
that help customers and community members learn more about managing their money. These programs provide access to financial education
in English, Chinese and Spanish.
SUPPORT
FOR SMALL BUSINESS. We offer products and services
tailored to support small business owners, including business checking, small business loans, and merchant services.
|
9 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPANY HIGHLIGHTS | | |
| |
Community
Highlights
We
maintain a culture of giving back to the communities in which we operate. As active volunteers, our associates work alongside numerous
local organizations to promote a variety of causes including financial literacy, small business development and first-time home ownership
in low-to-moderate income areas. The Bank, through its sponsorship and giving, also actively fosters and supports the arts as a bridge
to promote diversity and multi- cultural understanding. The following are some examples of the Company’s 2022 community investments
and social programs:
10 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPANY HIGHLIGHTS | | |
| |
Diversity and Inclusion
Promoting
diversity and inclusion in our workforce and executive leadership is critical to our continued growth and success. Our commitment to
diversity is reflected in the composition of our employees.
As
of December 31, 2022:
Workforce
Management
11 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPANY HIGHLIGHTS | | |
| |
Board
Diversity Matrix (as of March 31, 2023)
Board
Size |
2021 |
2022 |
Total
Number of Directors |
8 |
10 |
Gender |
Male |
Female |
Male |
Female |
Number
of directors based
on gender identity |
5 |
3 |
7 |
3 |
Demographic
Background |
|
|
|
|
African
American or Black |
0 |
1 |
0 |
1 |
Asian |
2 |
2 |
2 |
2 |
Hispanic
or Latinx |
1 |
0 |
2 |
0 |
White |
2 |
0 |
3 |
0 |
|
|
|
|
|
LGBTQ+ |
0 |
0 |
1 |
0 |
12 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPANY HIGHLIGHTS | | |
| |
Summary
Information about Director Nominees
The
following table provides summary information about each director nominee and continuing director.
Name |
Age |
Director
Since |
Independent |
Committee
Memberships |
Primary
Occupation |
Manuel
P. Alvarez |
42 |
2022 |
X |
R
(RE) |
Founding
Principal, BridgeCounsel
Strategies LLC
|
Molly
Campbell |
62 |
2014 |
X |
A
(FE), C, N |
Infrastructure Advisor, Department
of the Treasury, Office of Technical
Assistance
|
Archana
Deskus |
57 |
2019 |
X |
C,
R |
Executive
Vice President and CIO,
PayPal Holdings, Inc.
|
Serge
Dumont
|
63 |
2022 |
X |
N |
Vice
Chairman, ImpactWayv, Inc. |
Rudolph
I. Estrada |
75 |
2005 |
Lead Independent Director
|
A,
E, N, R (RE
and
Chair) |
CEO,
Estradagy Business Advisors |
Paul
H. Irving
|
70 |
2010 |
X |
A,
N (Chair), R |
Senior
Advisor, Milken Institute |
Sabrina
Kay
|
60 |
2022 |
X |
C |
CEO,
Fremont Private Investments |
Jack
C. Liu |
64 |
1998 |
X |
C
(Chair), N, R |
Senior
Attorney, Alliance International
Law Offices
|
Dominic
Ng |
64 |
1991 |
CEO |
E
(Chair) |
Chairman
of the Board and CEO of East
West Bancorp, Inc. and East West Bank
|
Lester
M. Sussman |
68 |
2015 |
X |
A
(FE and
Chair), C, R
(RE) |
Retired
Partner, Deloitte & Touche |
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
13 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPANY HIGHLIGHTS | | |
| |
Corporate
Governance Highlights
Highlights
of our corporate governance practices include:
›
Annual Director Elections |
›
Majority Voting |
›
Independent Board |
›
Key Board Committees are Independent |
›
Strong Lead Independent Director Position |
›
Board Diversity |
›
Annual Say-on-Pay |
›
No Poison Pill |
›
Right to Call Special Meetings |
›
Stockholder Proxy Access |
DIRECTOR/STOCKHOLDER
ALIGNMENT |
›
Stock Ownership Guidelines |
› No
Hedging or Pledging |
›
100% Board Attendance |
› |
Continuing Education for Board Directors |
›
Corporate Governance Guidelines |
› |
Regular
Board Self-Assessment and Management Evaluation |
›
Code of Conduct |
|
|
›
Environmental and Social Policy Framework |
|
|
Executive
Compensation Highlights
We
measure executive officer performance by evaluating both the achievement of specific financial goals and the long-term performance of
the Company. We align the pay and performance of our executive officers to the success of our business and the interests of our stockholders.
Our executive compensation practices include:
›
Independent Compensation Consultants |
› Compensation
Strategy and Plan |
›
At-Risk Compensation |
›
Long-Term Incentive Compensation |
›
Stockholder Alignment and Engagement |
›
No “Single Trigger” Change of Control Payments |
›
Stock Ownership Contains Holding Period |
›
“Claw Back” Right |
14 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
Proposal
1: Election of Directors
PROPOSAL
SNAPSHOT
What
am I voting on?
Stockholders
are being asked to elect ten director nominees for a one-year term. This section includes information about the Board and each director
nominee.
Voting
recommendation:
FOR
the election of each director nominee. We believe the combination of the various qualifications,
skills and experiences of the director nominees will contribute to an effective and well-functioning Board. The director nominees possess
the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management.
Board
of Directors and Nominees
Our
business is managed under the direction of our ten-member Board. The Board is nominating the ten director nominees to serve a one-year
term, each of whom is recommended for election by the Nominating/Corporate Governance Committee.
We
seek directors with strong reputation and experience in areas relevant to the strategy and operations of our businesses, particularly
industries and growth segments that we serve, as well as key geographic markets where we operate. Each of the nominees for director holds
or has held senior leadership and/or executive positions in financial services and/or large, complex organizations, and has operating
experience that meets this objective. In these positions, they have also gained experience in core management skills, such as strategic
and financial planning, corporate governance, risk management, regulatory oversight, and leadership development.
We also believe that each of the nominees has other key attributes that are important to an effective Board, including: |
|
› |
integrity and high ethical standards; |
› |
sound judgment and analytical skills; |
› |
the
ability to engage management and each other in a
constructive and collaborative fashion; |
› |
diversity
of origin, background, experience, and thought; and |
› |
the
commitment to devote significant time and energy to serve
on the Board and its committees. |
In
2022, all directors attended 100% of meetings of the Board.
The
nominees collectively bring a wide range of experience to the Board with a focus on our core business of being a financial bridge between
the U.S. and Asia. The nominees reflect our heritage as one of the most diverse financial institutions in the country and our leading
role as the largest FDIC-insured minority depository institution headquartered in the U.S. Of the ten persons nominated as directors,
seven are members of minority groups, including four Asian Americans, one African American, and two Hispanic Americans. We are committed
to gender diversity on the Board, and three of our ten director nominees are women. One of our director nominees identifies as LGBTQ+.
We believe the director nominees represent one of the most diverse boards among publicly-traded financial institutions in the U.S.
15 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
The
following table presents certain information with respect to the Board’s nominees for director. All director nominees of the Company
are also directors of the Bank. All of the nominees have indicated their willingness to serve.
A
= Audit Committee; C = Compensation Committee; E = Executive Committee; N = Nominating/Corporate Governance Committee; R = Risk Oversight
Committee
* = Independent Director; LD = Lead Independent Director; FE = Audit Committee Financial Expert; RE = Risk Oversight Committee
Risk Expert
None
of the director nominees were selected pursuant to any arrangement or understanding, other than with the directors and executive
officers of the Company acting within their capacity as such. There are no family relationships among directors or executive
officers of the Company. As of the date of this Proxy Statement, there were no directorships held by any director with a company
that has a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (“Exchange
Act”) or subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company
under the Investment Company Act of 1940, as amended, other than Mr. Ng, who is a director of Mattel, Inc. (Nasdaq: MAT); Ms.
Campbell, who is a director of Granite Construction Inc. (NYSE: GVA); Ms. Deskus, who is a director of Cognizant Technology
Solutions Corporation (Nasdaq: CTSH); and Dr. Kay, who is a director of MannKind Corporation (Nasdaq: MNKD) and Hagerty Inc. (NYSE:
HGTY).
We
have no reason to believe that any of the director nominees will be unable or unwilling to serve if elected. However, if any nominee
should become unable for any reason, or unwilling for good cause to serve, proxies may be voted for another person nominated as a substitute
by the Board, or the Board may reduce the number of directors.
16 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
Director
Nominee Qualifications and Experience
Our
director nominees bring a balance of relevant skills to our Board including:
Each of the director nominees currently
serves on the Board. With the exceptions of Mr. Dumont and Dr. Kay, who were appointed as a director of the Company on May 26, 2022,
all were elected by stockholders at the May 26, 2022 annual meeting of stockholders. If elected, each nominee will hold office until
the 2024 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.
17 | EAST
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
Director
Qualifications and Experience
|
Manuel
P. Alvarez
INDEPENDENT
Founding
Principal, BridgeCounsel Strategies, LLC
DIRECTOR
SINCE: 2022
COMMITTEE:
Risk Oversight
|
|
|
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. |
|
Molly
Campbell
INDEPENDENT
Infrastructure
Advisor, Department of the Treasury,
Office of Technical Assistance
DIRECTOR
SINCE: 2014
COMMITTEES:
Audit, Compensation, Nominating/Corporate Governance
|
|
|
Molly
Campbell has almost 30 years of executive leadership experience, most recently as an Advisor to the U.S. Treasury Office of
Technical Assistance and as an advanced leadership fellow at Harvard 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).
|
18 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
|
Archana
Deskus
INDEPENDENT
Executive
Vice President and Chief Information Officer, PayPal Holdings, Inc.
DIRECTOR
SINCE: 2019
COMMITTEES:
Compensation, Risk Oversight
|
|
|
Archana
Deskus is currently the Chief Information Officer (“CIO”) 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.
|
|
Serge
Dumont
INDEPENDENT
Vice
Chairman, ImpactWayv, Inc.
DIRECTOR
SINCE: 2022
COMMITTEE:
Nominating/Corporate Governance
|
|
|
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.
|
19 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
|
Rudolph
I. Estrada
LEAD
INDEPENDENT DIRECTOR
CEO
of Estradagy Business Advisors, LLC
DIRECTOR
SINCE: 2005
COMMITTEES:
Audit, Executive, Nominating/Corporate Governance,
Risk Oversight (Chair)
|
|
|
Rudolph
I. Estrada serves as the Lead Independent Director of the Board of East West Bancorp, Inc. and East West Bank. Mr. Estrada is 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 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.
|
|
Paul
H Irving
INDEPENDENT
Senior
Advisor, Milken Institute
DIRECTOR
SINCE: 2010
COMMITTEES:
Audit, Nominating/Corporate Governance (Chair), Risk Oversight
|
|
|
Paul
H. Irving is 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 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 Manatt, Phelps & Phillips, LLP, a national law and
consulting firm. Mr. Irving is chair emeritus and a member of the board of CoGenerate (formerly, Encore.org) and serves on 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 WorkingNation. 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 professional services and in the non-profit sector,
where he focuses on system-level economic, social and health challenges.
|
20 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
|
Sabrina
Kay
INDEPENDENT
CEO,
Fremont Private Investments
DIRECTOR
SINCE: 2022
COMMITTEE:
Compensation
|
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 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.
|
|
Jack
C. Liu
INDEPENDENT
Senior Attorney, Alliance International
Law Offices
DIRECTOR
SINCE: 1998
COMMITTEES:
Compensation (Chair), Nominating/Corporate Governance,
Risk Oversight
|
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. Mr. Liu advises on
business and legal aspects of international corporate, real estate, and banking matters. He currently serves on the boards of TransGlobe
Life Insurance, Inc., a privately-held insurance company based in Taiwan, and Tatung Company, a major industrial conglomerate in Taiwan.
|
Mr.
Liu is admitted to practice law in California and Washington, D.C., as well as in Taiwan as a foreign attorney. Mr. Liu is a
Leadership Fellow with National Association of Corporate Directors. He is also the Vice Chairman of Taipei Independent Directors
Association. Mr. Liu brings to the Board his experience and insight on doing business in Asia, as well as his board-level
perspective and leadership on risk management and oversight of regulated financial institutions. The Company believes that Mr.
Liu’s extensive executive management experience internationally and domestically well qualifies him to serve on our Board.
|
21 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
|
Dominic
Ng
Chairman
of the Board and CEO of East West Bancorp, Inc. and East West Bank
DIRECTOR
SINCE: 1991
COMMITTEE: Executive
(Chair)
|
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 $64.1 billion in assets as of December 31, 2022. 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.
President
Joe Biden appointed Mr. Ng as Chair of the Asia-Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC), the primary voice
of business advising APEC heads of state and government on the region’s 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.
The Company believes that Mr. Ng’s extensive management experience and financial expertise well qualify him to serve on its Board
of Directors. He 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.
|
|
Lester M. Sussman
INDEPENDENT
Retired, Deloitte Audit Partner
DIRECTOR SINCE:
2015
COMMITTEES: Audit
(Chair), Compensation, Risk Oversight |
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 to the Company.
|
22 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
Governance
Documents
We
have adopted formal Corporate Governance Guidelines reflecting our commitment to sound corporate governance. These principles are essential
to running the Company’s business efficiently and to maintaining our integrity in the marketplace. In addition, we have also adopted
a Code of Conduct. The Corporate Governance Guidelines, our Code of Conduct, our Environmental and Social Policy Framework and information
about other governance matters of interest to investors are available through our website at www.eastwestbank.com/investors by clicking
on Corporate Information — Governance Documents.
Director
Independence, Financial Experts and Risk Management Experience
INDEPENDENCE
Our
common stock is listed on the Nasdaq Stock Market LLC (“Nasdaq”). Under Nasdaq listing standards, independent directors must
comprise a majority of a listed company’s board of directors. In addition, Nasdaq listing standards require that, subject to specified
exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent.
Under these listing standards, a director is independent only if the board of directors of a company makes an affirmative determination
that the director has no material relationship with the company that would impair his or her independence.
The
Board has undertaken a review of the independence of each director in accordance with the Exchange Act and Nasdaq listing standards.
Based on this review, the Board has determined that all of our directors, except for Mr. Ng, are independent as that term is defined
under the Nasdaq listing standards. Accordingly, all members of the Audit, Compensation, and Nominating/Corporate Governance Committees
satisfy the independence requirements of Nasdaq. The Board has also determined that all members of the Risk Oversight Committee are independent,
though this committee is not subject to Nasdaq independence requirements. In making these determinations, the Board considered the relationships
that each non-employee director has with us and all other facts and circumstances that the Board deemed relevant in determining their
independence, including the beneficial ownership of our capital stock of each non-employee director, as well as relationships that our
directors may have with customers and vendors.
FINANCIAL
EXPERTS
Based
on its review, the Board determined that two directors, Ms. Campbell and Mr. Sussman, qualify as “audit committee financial experts,”
as defined under the applicable rules of the U.S. Securities and Exchange Commission (“SEC”), by reason of their prior job
experience, and satisfy the Nasdaq requirements for financial sophistication.
23 | EAST
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
Risk Management Experience |
All members of
the Risk Oversight
Committee: |
›
› |
Meet the independence requirement of
the Enhanced Prudential Standards of the Board of Governors of the Federal Reserve System (the “Federal Reserve”); and
Have a general understanding
of risk management principles and practices relevant to our business |
Risk Experts Under the Federal Reserve’s Enhanced Prudential Standards |
|
|
› |
Mr.
Alvarez was the founding General Counsel and Corporate Secretary of Affirm, Inc., where he helped build and scale the
company’s enterprise risk management function focusing on legal, compliance, and corporate governance. |
› |
During his tenure as Commissioner of the DFPI, Mr. Alvarez oversaw a large swath of the state’s financial services sector and had primary responsibility for the DFPI’s regulatory and risk oversight of state banks, credit unions, and other licensed entities. |
|
|
|
|
› |
Mr.
Estrada is the chair of the Risk Oversight Committee and formerly served as the Los Angeles District Director for the SBA. |
|
|
› |
He is experienced at providing management oversight in public and private sectors. |
|
|
› |
Mr. Sussman was an audit partner with Deloitte, where he held leadership positions including Partner in Charge of the Financial Services Group for the Pacific Southwest and Partner in Charge of Capital Markets for the West Region. |
› |
His work at RGP involved providing corporate governance, risk management and compliance services to clients globally. |
THE
RISK OVERSIGHT PROCESS INCLUDES
The
Board receiving regular reports from its committees and members of senior management to enable the Board to understand the Company’s
risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk. |
|
While
each committee is responsible for evaluating certain risks, as further described in “Board
Committees” below, and overseeing the management of such risks, the entire Board
is regularly informed through reports about such risks. Matters of significant strategic
risk are considered by the Board as a whole.
|
|
The
Board has responsibility for the oversight and evaluation of the Company’s risk management processes and, either as a whole or
through its committees, regularly discusses with committees and management our major risk exposures, their potential impact on our
business and the steps we take to manage them. |
24 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
Board
Leadership Structure
The
Board leadership is structured with a Chairman/CEO position and a Lead Independent Director position that is elected by and from the
independent members of the Board. The Board has determined that, at this time, having the CEO also serve as Chairman is in our best
interest. The designation of the CEO with the additional title as Chairman is important when dealing with overseas customers and
dignitaries in Asia, where these positions are typically combined. We have extensive experience and dealings with persons from this
region who may have the perception that they are not dealing with the senior decision maker unless they are dealing with the
Chairman. This structure also makes the best use of the CEO’s extensive knowledge of the Company and its industry, while
fostering greater communication between management and the Board.
Our governance structure provides for
a strong Lead Independent Director role. The powers and duties of a Chairman and a Lead Independent Director differ only in that the Chairman
presides over the normal business portion of the meetings of the Board. Since the Lead Independent Director may call for an executive
session of independent directors at any time and has joint control over the agenda and the information provided to directors for Board
meetings, the Board believes that it is able to have an open exchange of views or address any issues independent of the Chairman. In addition,
much of the work of the Board is conducted through its committees, and the Chairman is not a member of any committee, other than the Executive
Committee.
Among
other things, the Lead Independent Director is required to:
› |
Lead
executive sessions of the Board’s independent or non-management directors and preside at any session of the Board where the
Chairman is not present; |
› |
Act
as a regular communication channel between the independent directors and the Chairman; |
› |
Approve
Board meeting schedules to ensure sufficient time to discuss all agenda items; |
› |
Represent
the independent directors in discussions with major stockholders regarding their concerns and expectations; |
› | Call
special Board meetings or special meetings of the independent directors, as needed; |
› | Approve
the retention of consultants who report directly to the Board; and |
› | Advise
the independent Board committee chairs in fulfilling their designated roles and responsibilities to the Board. |
| |
| |
| |
The Company does not have a policy requiring mandatory separation of the roles of CEO and the Chairman of the Board. Instead, the Board
believes it is in the best interest of the Company to make a determination regarding the separate roles of CEO and Board Chairman on a
regular basis, based on the position and direction of the Company and the membership composition of the Board at the time. The determination
not to separate the roles of Chairman and CEO at this time also recognizes the strong independence of the Board with nine of the ten directors
being independent.
Director Education and Self-Assessment
We have a continuing education program
to assist directors in further developing their skills and knowledge to better perform their duties. This includes presentations made
as part of regular Board and committee meetings by qualified persons on various topics. For example, in 2022, our Board received in-Company
training on topics including BSA/AML and OFAC requirements, privacy and identity theft red flag training, fair lending and redlining,
the Foreign Corrupt Practices Act, and risk management. In addition, our directors have external continuing education requirements. In
2022, members of our Board participated in external director continuing education
25 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
programs including those offered by the
National Association of Corporate Directors (“NACD”), Ernst & Young, KPMG, PricewaterhouseCoopers, Deloitte, Crowe, Protiviti,
USC Corporate Directors, and New York University Law School Directors Academy on topics such as audit committee issues, information security,
geopolitical risk, climate change risk, global finance trends, oversight of artificial intelligence, compliance with the Sarbanes-Oxley
Act, ESG, board oversight of corporate political activity, diversity, compensation, compliance and ethics, and risk oversight and management.
In addition, Messrs. Estrada, Liu, and Sussman are active members of the NACD, Messrs. Estrada and Liu are NACD Leadership Fellows and
Mr. Sussman is NACD Directorship Certified.
The Board regularly evaluates its overall
effectiveness, committee assignments, Board refreshment, and governance and risk management practices. The Nominating/Corporate
Governance Committee determines the process for such evaluation and review, which typically includes a review of how certain
attributes affect Board and/or individual director effectiveness, such as Board and Board Committee size, meeting frequency, quality
and timing of information provided to the Board and Board Committee members, director communication, director education, director
skills and qualifications, director independence and overall performance.
Board
Meetings
During 2022, the Board held four regularly
scheduled meetings and a multi-day retreat. There were also 19 meetings of Board committees during 2022. All directors attended all Board
meetings, Board committee meetings, and the retreat. The policy of the Company is to encourage all director nominees to attend the annual
meeting of stockholders. All directors attended the 2022 annual meeting of stockholders.
The independent directors generally meet
in executive sessions without management or any employee directors present at every regularly scheduled meeting of the Board. The sessions
are chaired by the Lead Independent Director. Any director can request an additional executive session to be scheduled.
Board
Committees
The Board has the following five standing committees:
The standing committees report on their
deliberations and actions at each full Board meeting. Each of the committees has the authority to engage outside experts, advisors and
counsel to the extent it considers appropriate to assist the committee in its work.
Each of the standing committees operates
under a written charter. These charters can be found on the Company’s website at www.eastwestbank.com/investors by clicking on Corporate
Information — Governance Documents. Set forth below is a description of the standing committees of the Board.
The Bank’s board of directors also has the same
five standing committees, which each consists of the same directors as, and generally meets jointly with, the Company’s respective
committee.
26 | EAST
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
Audit
Committee
The Audit Committee oversees our accounting and financial
reporting process, the audit of our financial statements and assists our Board in monitoring our financial systems and our legal and regulatory
compliance.
|
| | |
|
CHAIR:
Lester M. Sussman
(Audit Committee
Financial Expert)
OTHER MEMBERS:
Molly Campbell,
(Audit Committee
Financial
Expert)
Rudolph I. Estrada,
Paul H. Irving
NUMBER OF
MEETINGS HELD
IN 2022: 6
| |
PRIMARY RESPONSIBILITIES
› Appointing,
compensating and overseeing the work of our independent registered public accounting firm;
› Approving
engagements of the independent registered public accounting firm to render any audit or permissible non-audit services;
› Reviewing
the qualifications and independence of the independent registered public accounting firm;
› Reviewing
the scope and results of the internal audits;
› Reviewing
the Company’s financial statements and related disclosures;
› Reviewing
and discussing with management and the independent registered public accounting firm the results of our annual audit;
› Resolving
any disagreements between management and the independent registered public accounting firm regarding financial reporting; |
|
| |
› Reviewing
our critical accounting policies and practices;
› Reviewing
the adequacy and effectiveness of our internal control over financial reporting;
› Establishing
procedures for the receipt, retention and treatment of accounting and auditing related complaints and concerns;
› Preparing
the audit committee report required by SEC rules to be included in our annual proxy statement; and
› Reviewing and approving quarterly earnings releases. |
|
| | |
27 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
Compensation and Management Development Committee
The
Compensation and Management Development Committee (the “Compensation Committee”) establishes and administers the executive
compensation policies and plans of the Company.
|
|
|
|
|
CHAIR:
Jack C. Liu
OTHER MEMBERS:
Molly Campbell,
Archana Deskus,
Sabrina Kay,
Lester M. Sussman
NUMBER OF
MEETINGS HELD
IN 2022: 7 |
|
PRIMARY RESPONSIBILITIES
› Annually
reviewing and approving the primary components of compensation for our CEO and other Named Executive Officers (after receiving input from
our CEO with respect to the other Named Executive Officers);
› Establishing,
with the input from the full Board, performance goals for the CEO, and evaluating his performance in light of those goals;
› Evaluating
the performance of our CEO and other Named Executive Officers in light of established goals and objectives;
› Periodically
evaluating the competitiveness of the compensation of our CEO, other Named Executive Officers, directors, and our overall compensation
plans;
› Providing input
with respect to the Company’s human capital strategy, including talent management and succession planning; |
|
|
|
› Reviewing and
discussing with management the risks arising from our compensation policies and practices for all employees that are reasonably likely
to have a material adverse effect;
› Evaluating
and making recommendations regarding director compensation with the use of a compensation consultant;
› Administering
our equity compensation plans for our employees and directors; and
› Producing the compensation
committee report required by SEC rules to be included in our annual proxy statement. |
|
|
|
|
Compensation
Consultant |
|
The Compensation Committee appointed Meridian Compensation Partners, LLC as its independent compensation consultant in 2022. The Compensation Committee uses its compensation consultant to: |
|
› Assist and advise the Compensation Committee during its meetings; |
› Provide information based on third-party data and analysis of compensation programs at comparable financial institutions for the design and implementation of our executive and non-employee director compensation programs; |
› Compile and analyze compensation data for financial services companies; |
› Assist the Compensation Committee in forming a peer group; and |
› Provide independent information as to the reasonableness and appropriateness of the compensation levels and compensation programs of the Company relative to comparable financial services companies. |
28 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
Nominating/Corporate
Governance Committee
The
Nominating/Corporate Governance Committee nominates persons for election as directors and reviews corporate governance matters.
|
| | |
|
CHAIR:
Paul H. Irving
OTHER MEMBERS:
Molly Campbell,
Serge Dumont,
Rudolph I. Estrada,
Jack C.
Liu
NUMBER OF
MEETINGS HELD
IN 2022: 2
| |
PRIMARY RESPONSIBILITIES
› Recommending
to the Board a slate of nominees for election to the Board in accordance with the Company’s Corporate Governance Guidelines;
› Recommending
to the Board individuals to fill any vacancies on the Board occurring between annual meetings of stockholders;
› Recommending
to the Board the directors who will serve on each committee of the Board;
› Developing
and recommending to the Board a set of corporate governance principles;
›
Periodically reassessing the Company’s corporate governance principles;
› Conducting
an annual assessment of the Board’s structure and performance to determine whether it, its committees and its members are
functioning effectively; and
|
|
| |
›
Overseeing and monitoring the Company’s ESG framework. |
|
| |
|
Risk
Oversight Committee
The Risk Oversight Committee provides focused oversight
of the Company’s identified enterprise risk categories, which include credit, capital, liquidity, operational, information technology,
information security, market, compliance, legal, strategic, and reputation. The Board believes an effective enterprise risk management
system is necessary to ensure the successful, safe and sound management of the Bank.
|
| | |
|
CHAIR:
Rudolph I. Estrada
OTHER MEMBERS:
Manuel P. Alvarez,
Archana Deskus,
Paul H. Irving,
Jack C. Liu,
Lester M. Sussman
NUMBER OF
MEETINGS HELD
IN 2022: 4
| |
PRIMARY RESPONSIBILITIES
› Be
responsible for the Company’s risk management standards;
› Monitor
the Company’s risk exposure in the identified enterprise risk categories;
› Timely
identify the material risks that the Company faces;
› Communicate
necessary information on material risks to senior management and, as appropriate, to the Board or relevant Board committee;
› Approve
and/or develop the risk appetite and tolerance levels for the Company;
› Oversee
the Company’s Independent Asset Review function;
›
Oversee the Company’s risk management framework and implement responsive
risk management strategies appropriate to the Company’s risk profile;
|
|
| |
›
Integrate risk management into the Company’s decision-making;
› Review
and revise BSA/AML & OFAC policies and procedures;
›
Monitor BSA/AML & OFAC compliance risks across the Bank; and
›
Review assessments of BSA program enhancements from internal audits, regulators
and independent third parties, including consultants.
|
|
| | |
29 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
Executive Committee
|
| |
|
|
CHAIR:
Dominic Ng
OTHER MEMBERS:
Rudolph I. Estrada
NUMBER OF MEETINGS HELD
IN 2022: 0
| |
PRIMARY RESPONSIBILITIES
›
The Executive Committee is appointed by the Board to provide an efficient means
of considering such matters and taking such actions, if any, as may require the attention of the Board in the interim between Board meetings.
›
The Executive Committee is authorized to exercise certain powers of the Board
during intervals between Board meetings.
|
|
| |
|
Stockholder Nominees
The policy of the Nominating/Corporate Governance Committee
is to consider properly submitted stockholder nominations for Board candidacy as described below in “Identifying and Evaluating
Nominees for Directors.” In evaluating these nominations, the Nominating/Corporate Governance Committee seeks to achieve a balance
of knowledge, experience and capability on the Board and to meet the membership criteria set forth under “Director Nominee Qualifications
and Experience” discussed above. Any stockholder nominations proposed for consideration by the Nominating/Corporate Governance Committee
should include the nominee’s name and qualifications for Board membership and should be addressed to:
Nominations for directors may be made by any stockholder
entitled to vote for the election of directors if proper notice is given in accordance with our Amended and Restated Bylaws (the “Bylaws”).
Notice of a stockholder’s intention to make any nominations must be made in writing, contain the information required by our Bylaws
regarding the stockholder and the director nominee and be delivered to the Secretary of the Company at the Company’s principal
executive offices. Notice must be provided not less than 90 calendar days or more than 120 calendar days prior to the anniversary of
the previous year’s annual meeting. If the meeting will be held more than 30 calendar days before or 60 calendar days after the
anniversary date of the prior year’s annual meeting, notice must be delivered no more than 120 calendar days prior to the annual
meeting and not later than the later of the 90th calendar day prior to the annual meeting and the 10th calendar day following the date
of the initial public announcement of the date of such meeting.
In addition to satisfying the foregoing requirements,
our Bylaws require that stockholders who intend to solicit proxies in support of director nominees other than the Board’s nominees
must provide notice to the Company and solicit proxies from at least 67% of the voting power of shares entitled to vote. The notification
shall contain the following information:
30 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
›
A representation that the stockholder, or
beneficial owner, if any, will, or is part of a group
that will file a definitive proxy statement and form
of proxy with the SEC and solicit proxies in support
of such director nominee(s) or nomination(s)
in accordance with Rule 14a-19 under the
Exchange Act;
› The name and record address of the stockholder,
as they appear on the Company’s books;
|
› A description of all arrangements or
understandings
between the stockholder and
each proposed nominee and any other person
or persons (including their names) pursuant to
which the nominations
are to be made by the
stockholder; and
› A representation that the stockholder
or a
qualified representative intends to appear in
person via the internet or by proxy at the meeting
to nominate the person named
in the notice. |
In addition to the procedures set forth
above, following discussions with stockholders, in March 2023 the Board amended our Bylaws to implement “stockholder proxy access,”
which will first apply for the election of directors at our 2024 annual meeting of stockholders. This bylaw will allow a stockholder,
or group of up to 20 stockholders, that meet certain ownership and procedural requirements, to nominate up to two director candidates
or, if greater, up to 20% of the number of directors then serving on the Board using our proxy statement. The stockholder or group members
will be required to have owned continuously at least three percent of our outstanding common stock for three years or more as of the date
we receive the nomination and will be required to continue to hold that number of shares through the annual meeting of stockholders. Notice
of a stockholder’s intention to make any nominations must be made in writing and must be delivered to the Secretary of the Company
at the principal executive offices of the Company not less than 120 calendar days or more than 150 calendar days prior to the anniversary
of the mailing date of the prior year’s proxy statement regarding the nomination and must contain information regarding the director
nominee and the person making the nomination, including proof of the required number of shares held by the stockholder or group, as well
as the additional information that is specified in our Bylaws. Except as otherwise required by law, we will disregard nominations not
made in accordance with the requirements in the Bylaws.
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:
› |
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 |
| |
| |
| |
| |
31 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
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.
Communications with the Board
Our Board welcomes suggestions and comments
from stockholders. All stockholders are encouraged to attend the Annual Meeting where senior management and representatives from our independent
registered public accounting firm, as well as members of the Board, will be available to answer questions. Stockholders may also send
written communications to the Board by writing to the Secretary of the Board at:
All communications (other than commercial
communications soliciting the sale of goods or services to, or employment with, the Company or directors of the Company) will be directed
to the appropriate committee, the Chairman of the Board, the Lead Independent Director, or to any individual director specified in the
communication, as applicable.
Stock Ownership Guidelines
All directors and Named Executive Officers
are required to own the Company’s common stock to further align the financial interests of our directors and management with those
of our stockholders. The stock ownership guideline for directors is three times their annual cash retainer, and the guideline should be
met within five years of the date of election. The stock ownership guideline for the CEO is six times his annual base salary, and the
stock ownership guideline for Named Executive Officers is one time their annual base salary. These guidelines should be met within five
years of the date of hire. The Company’s Stock Ownership Guidelines for directors and senior management are posted on the Company’s
website, which can be found at www.eastwestbank.com/investors by clicking on Corporate
Information — Governance Documents.
Named Executive Officers have additional
holding requirements for stock acquired as part of their compensation. Named Executive Officers are required to hold until retirement
at least 51% of any stock acquired upon the exercise of stock options (net of taxes and net of the grant price paid) and at least 51%
of any stock received upon vesting (net of taxes) of restricted stock or restricted stock units (“RSUs”).
32 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
No Pledging/Hedging of Company Securities
Pursuant to our Insider Trading Policy,
directors, officers and employees may not pledge the Company’s securities or engage in hedging strategies, including those designed
to hedge or offset any decrease in the market value of the Company’s securities granted as compensation or held directly or indirectly
by such person. Additionally, directors, officers and employees may not sell short or trade derivatives involving the Company’s
securities.
Certain Relationships and Related Transactions
Our Code of Conduct and Corporate Governance
Guidelines provide guidance for addressing actual or potential conflicts of interests, including those that may arise from transactions
and relationships between the Company and its executive officers or directors. In order to provide further clarity and guidance on these
matters, the Company has adopted a written policy regarding the review, approval or ratification of related party transactions.
The policy generally provides that the Audit
Committee will review and approve in advance, or will ratify, all related party transactions between the Company and our directors,
director nominees, executive officers, and persons known by the Company to own more than 5% of our common stock, and any of their
immediate family members. Related party transactions include transactions or relationships involving the Company and amounts in
excess of $120,000 and in which the above related parties had or will have a direct or indirect material interest. Under the policy,
the failure to approve a related party transaction in advance would not invalidate the transaction or violate the policy as long as
it is submitted to the Audit Committee for review and ratification as promptly as practicable after entering into the
transaction.
The Audit Committee works with our General
Counsel in reviewing and considering whether any identified transactions or relationships are covered by the policy. In determining whether
to approve or ratify a transaction or relationship that is covered by the policy, the Audit Committee considers, among other things:
› |
The identity of the parties involved in the
transaction or relationship; |
› |
The
terms of the transaction, including whether
those terms are fair to the Company and are in the
ordinary course of business and on substantially
the same terms with transactions or relationships
with unrelated third parties. |
› |
The facts and circumstances of the transaction
or relationship; |
|
› |
The material facts of the transaction
or relationship; |
|
› |
The benefits to the Company of the transaction or
relationship; and |
|
During 2022, we did not enter into any related party
transactions that required review, approval or ratification under our related party transaction policy. From time to time, we may
lend money through our subsidiary, the Bank, to various directors and corporations or other entities in which a director may own a
controlling interest. These loans (i) are made in the ordinary course of business, (ii) are made on substantially the same terms,
including interest rate and collateral, as those prevailing at the time for comparable transactions with other persons, and (iii) do
not involve more than a normal risk of collectability and do not present other unfavorable features. As of December 31, 2022, none
of these loans were categorized as nonaccrual, past due, restructured, or potential problem loans. We do not provide any loans to
Named Executive Officers. None of our directors or executive officers, any associate or affiliate of those persons, or persons who
beneficially owned more than 5% of our outstanding shares had any transactions or proposed transactions with us greater than
$120,000 during the past year, other than the aforementioned loans made in the ordinary course of business.
33 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
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 2022, the Compensation Committee engaged Meridian Compensation Partners,
LLC as its independent compensation consultant for this purpose.
In 2022, 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 $70,000 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.
Non-employee directors also received a meeting fee of $1,500 for each committee meeting attended through June 30, 2022.
34 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
The following table summarizes the compensation
paid by the Company to non-employee directors for the calendar year that ended December 31, 2022:
Name |
Fees
Earned or Paid in Cash ($) 1 |
Stock
Awards ($)2 |
Total
($) |
Manuel
P. Alvarez3 |
178,022.11 |
184,977.89 |
363,000.00 |
Molly
Campbell |
145,011.20 |
129,988.80 |
275,000.00 |
Archana
Deskus |
137,511.20 |
129,988.80 |
267,500.00 |
Serge
Dumont |
130,011.20 |
129,988.80 |
260,000.00 |
Rudolph
I. Estrada |
269,011.20 |
129,988.80 |
399,000.00 |
Paul
H. Irving |
159,011.20 |
129,988.80 |
289,000.00 |
Sabrina
Kay |
133,011.20 |
129,988.80 |
263,000.00 |
Jack
C. Liu |
165,511.20 |
129,988.80 |
295,500.00 |
Lester
M. Sussman |
170,011.20 |
129,988.80 |
300,000.00 |
1. | Annual cash retainers were paid
to directors in June 2022 for service from May 2022 to May 2023. |
2. | The Company granted 2,006 shares
of the Company’s common stock to each non-employee director on June 30, 2022. 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 $64.80 on June 30, 2022. 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 13 - Stock Compensation Plans to the Company’s Consolidated Financial Statements for the year ended December
31, 2022, on the Company’s accounting for share-based compensation plans. |
3. | Included
pro-rated cash and stock awards for board service from January 2022 to May 2022. |
Proposal 2: Advisory Vote to Approve Executive Compensation
PROPOSAL SNAPSHOT
What am I voting on?
Stockholders are
being asked, as required by Section 14A of the Exchange Act, to approve, on an advisory basis, the compensation of the Named Executive
Officers for 2022 as described in the “Compensation Discussion and Analysis”
section beginning on page 37 and the Compensation Tables section beginning on page 53.
Voting recommendation:
FOR
the advisory vote to approve executive compensation. The Compensation Committee takes very seriously its stewardship
responsibility to oversee the Company’s compensation programs and values thoughtful input from stockholders. The Compensation Committee
will take into account the outcome of the advisory vote when considering future executive compensation decisions.
This proposal, commonly known as a “Say-on-Pay”
proposal, gives our stockholders the opportunity to express their views on our NEO compensation as a whole. This vote is not intended
to address any specific item of compensation or any specific NEO, but rather the overall compensation of all our NEOs and the philosophy,
policies and practices described in this Proxy Statement. Our Board of Directors and management value the opinions of our stockholders,
including their advisory votes regarding the compensation paid to our NEOs, and as such, we hold our Say-on-Pay vote every year. We revisit
the frequency of our Say-on-Pay votes every 6 years.
35 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | |
| |
We believe that the information provided
in “Compensation Discussion and Analysis” beginning
on page 37 demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s
interests are aligned with our stockholders’ interests to support long-term value creation. The sustained success of the Company’s
customer focus and bridge banking model between East and West is reflected in the following key metrics:
› Total
loans grew 16% in 2022, to a record $48.2 billion;
› Total
deposits grew 5% in 2022, to a record $56.0 billion;
› ROA
of 1.80% in 2022 was substantially above the KRX median of 1.18% and average of 1.22%; and
› ROE
of 19.51% in 2022 was substantially above the KRX median of 10.77% and average of 11.44%.
Accordingly, we ask our stockholders to
vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders hereby approve,
on an advisory basis, the compensation of our Named Executive Officers as reflected in this Proxy Statement and as disclosed pursuant
to Item 402 of Regulation S-K, which disclosure includes the compensation discussion and analysis, the compensation tables, narratives
and all related material.”
Because your vote is advisory, it will not be binding upon
the Board. However, the Board and the Compensation Committee will consider the vote results when evaluating our compensation policies
and practices in the future. Currently, we expect to hold an advisory vote on the compensation paid to our NEOs each year and expect
that the next such vote, following this vote, will occur at our annual stockholder meeting in 2024.
36 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
Compensation
Discussion and Analysis
The following Compensation Discussion and Analysis (“CD&A”)
describes the structure and guiding principles of our 2022 executive compensation program for the Company’s Named Executive Officers,
as set forth below.
2022
Named Executive
Officers (“NEOs”) |
Dominic
Ng |
Chairman and Chief Executive Officer |
Irene
H. Oh |
Executive Vice President, Chief Financial Officer |
Douglas
P. Krause |
Vice Chairman, Chief Corporate Officer |
Parker
L. Shi |
Executive Vice President, Chief Operating Officer |
Gary
Teo |
Executive Vice President, Chief Human Resources Officer |
2022
Business and Financial Performance Highlights
In 2022, we continued to deliver strong and consistent
financial performance. The Company achieved record loans of $48.2 billion, record deposits of $56.0 billion, and record assets of $64.1
billion.
We also outperformed peer banks in terms of
ROA, ROE, and total shareholder return (“TSR”). The Compensation Committee believes the Company’s 2022 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 42 of this Proxy (the “Peer Group”),
and (ii) the banks comprising the Keefe, Bruyette and Woods Nasdaq Regional Banking Index (“KRX”).
37 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
Company Results Compared to Peers
38 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
Our Compensation Philosophy
We designed our executive compensation program to attract
and retain talented managers, while rewarding them for delivering on our key financial and strategic goals. Guiding principles of our
executive compensation program include:
Our
Executive Compensation Program |
What
We Do |
|
Place
a substantial majority of executive compensation at risk and subject to performance metrics |
|
Engage
with and consider stockholder input in designing our executive pay programs |
|
Grant
all of our NEOs’ total long-term incentives in performance-based restricted stock units |
|
Link
annual NEO incentive pay to objective, pre-established financial performance goals |
|
With
oversight from the Compensation Committee, perform annual risk assessments to ensure that our compensation policies and programs
are not likely to materially increase the Company’s risk exposure |
|
Engage
an independent compensation consultant that reports solely to the Compensation Committee` |
|
Maintain
stock ownership requirements for all NEOs, including a requirement that a majority of stock grants (net of taxes) must be help until
retirement |
|
Maintain
a relevant peer group |
|
Maintain
a clawback policy |
|
Listen
to and engage with our stockholders regarding executive compensation decisions and philosophy |
|
Conduct
an annual review and approval of our compensation strategy |
What
We Don’t Do |
|
Do
not allow re-pricing of stock options without stockholder approval |
|
Do
not provide “single trigger” change in control payments to executive officers |
|
Do
not permit hedging or pledging of Company stock |
|
Do
not permit gross-ups for excise or other taxes on severance or in connection with a change in control |
39 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
Overview of Our Executive Compensation Program
With input from our stockholders, we have designed an executive
compensation program that aligns pay with measurable achievement of our corporate goals. Our 2022 executive compensation program remained
the same as our 2021 structure. The components of each element of our executive compensation program are described in the table below.
2022 Pay Mix for NEOs
The 2022 pay mix for our NEOs highlights the Company’s
commitment to align compensation outcomes to results and underscores our compensation philosophy of placing significant emphasis on at-risk,
performance-based pay. In 2022, 83% of the CEO’s target pay was at risk and linked to performance-based outcomes. For the other
NEOs, 70% of target pay, on average, was at risk and tied to direct performance results.
40 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
Compensation-Setting
Process and Roles
ROLE
OF THE COMPENSATION COMMITTEE
As
outlined in our Corporate Governance Guidelines, the Compensation Committee is responsible for developing and overseeing the Company’s
executive compensation policies and programs. The goal of the Compensation Committee is to maintain compensation that is competitive
within the markets in which we compete for talent, and which reflects the long-term interests of our stockholders.
The
Compensation Committee is responsible for:
| |
› | Developing
the overall compensation strategy and policies for the Company; |
| |
› | Developing,
evaluating and approving the goals and objectives of the compensation of the CEO; |
| |
› | Evaluating
and approving the individual compensation, including bonus and equity incentive compensation and perquisites of each of the NEOs; |
| |
› | Establishing
the guidelines for stock ownership for executive management; |
| |
› | With
input from the Chief Human Resources Officer and Chief Risk Officer, reviewing our incentive compensation programs to evaluate and ensure
that none of them encourage excessive risk; |
| |
| |
› | Developing
and maintaining a balanced compensation strategy of long-term and short- term incentives; |
| |
› | Retaining
outside advisors, including compensation consultants, to provide professional counsel; |
| |
› | Approving
annually the Compensation Committee Report and our Compensation Discussion and Analysis for inclusion in our Proxy Statement; and |
| |
› | Providing
reports to the Board on compensation matters. |
| |
| |
| |
| |
| |
| |
| |
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.
ROLE
OF MANAGEMENT
The
Company’s Human Resources Department provides additional analysis, administrative support and counsel as requested by the Compensation
Committee. Members of management do not recommend, determine, or participate in Committee discussions related to their individual compensation
arrangements. The CEO provides executive compensation recommendations for his direct reports, including the other NEOs, but does not
participate in discussions related to his own compensation.
41 | EAST
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COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
2022 STOCKHOLDER ADVISORY VOTE ON
EXECUTIVE COMPENSATION
Our compensation
policies and practices continue to evolve based on input and correspondence submitted from our stockholders, our review of market practices,
our consideration of the independent compensation consultant’s advice, our review of reports issued by proxy advisory firms, and
the results of the most recent annual “Say-on-Pay” vote by stockholders.
Approximately
97.5% of the votes cast at our 2022 annual meeting of stockholders approved the Company’s 2021 executive compensation. The Compensation
Committee views the high approval percentage as an indication that stockholders were generally satisfied with the executive compensation
structure and how it was designed.
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
2021, the Compensation Committee approved our 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 2022 Peer Group was updated to better
reflect the Company’s business focus, asset size, and continued growth by removing New York Community Bancorp, Prosperity Bancshares,
Commerce Bancshares, and Webster Financial Corporation, and adding First Citizens BancShares, Pinnacle Financial Partners Inc., Valley
National Bancorp, and Wintrust Financial Corporation. As of December 31, 2022, our Peer Group’s total assets ranged from $31.8
billion to $212.6 billion, with a median total asset size of $73.3 billion. As of December 31, 2022, the median market capitalization
of our Peer Group was $7.4 billion, with a range between $2.6 billion and $22.3 billion. With respect to total assets and market capitalization,
the Company ranked in the 41st percentile and 61st percentile, respectively, relative to the Peer Group as of December 31, 2022.
THE COMPANIES IN THE PEER GROUP
WERE AS FOLLOWS:
FY
2022 Peer Group |
BankUnited,
Inc. (NYSE: BKU) |
KeyCorp
(NYSE: KEY) |
Synovus
Financial (NYSE: SNV) |
BOK
Financial Corporation
(Nasdaq: BOKF) |
Northern
Trust Corporation
(Nasdaq: NTRS) |
Umpqua
Holdings Corporation (Nasdaq: UMPQ) |
Comerica
Inc. (NYSE: CMA) |
PacWest
Bancorp (Nasdaq: PACW) |
Valley
National Bankcorp
(Nasdaq: VLY) |
Cullen/Frost
Bankers, Inc.
(NYSE: CFR) |
Pinnacle
Financial Partners
(Nasdaq: PNFP) |
Western
Alliance (NYSE: WAL) |
First
Horizon (NYSE: FHN) |
Popular
(Nasdaq: BPOP) |
Wintrust
Financial Corporation
(Nasdaq: WTFC) |
First
Citizens Bancshares
(Nasdaq: FCNCA) |
Regions
Financial Corporation
(NYSE: RF) |
Zions
Bancorp (Nasdaq: ZION) |
First
Republic Bank (NYSE: FRC) |
Signature
Bank (Nasdaq: SBNY) |
|
Huntington
Bancshares
(Nasdaq: HBAN) |
SVB
Financial Group (Nasdaq: SIVB) |
42 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
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 KRX (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
Compensation
for the NEOs and certain other executive officers is typically evaluated and set by the Compensation Committee in the first quarter of
each year, using the competitive compensation data provided by the independent compensation consultant, peer data, as well as Company
business departments and individual performance data. An executive’s compensation is generally established after considering the
following factors:
› | Competitive
pay data for similar jobs and responsibilities in the 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. |
| |
As a rapidly
growing organization, we encounter significant competition for top management talent – those individuals with the strategic vision,
understanding of specialized industries and the international banking experience necessary to sustain our growth. This challenge to attract
and retain qualified personnel has been an important consideration in our compensation decisions, and we expect it will continue to be
a significant consideration going forward.
For the
CEO, the Compensation Committee annually reviews and approves the corporate goals and objectives relevant to the CEO’s performance,
evaluates the CEO’s performance against those objectives and approves the CEO’s compensation level based on that evaluation.
With assistance from the independent compensation
consultant,
the Compensation Committee also considers the Company’s Peer Group and other peer data on base pay, performance-based bonus targets
and long-term incentive awards when setting compensation types and amounts for the CEO.
The Compensation
Committee separately reviews and discusses with the CEO his annual compensation recommendations for the other NEOs. A variety of factors
help determine the final approved compensation amounts for the NEOs. For base salary adjustments, compensation data from our Peer Group
and survey data for similar jobs and job levels are considered. For annual performance-based bonus payout and long-term incentive
43 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
awards,
the Compensation Committee considers the executive’s achievement against performance goals, along with individual contributions
toward Company objectives.
The Compensation
Committee does not benchmark to a particular percentile in determining target total direct compensation. Rather, it uses market peer
proxy and survey data as a reference point, giving consideration to factors such as tenure, individual performance, any unique circumstances
of the NEO’s position based on that individual’s responsibilities, market factors, succession considerations, and retention
considerations. We believe this approach drives higher realized compensation when our financial and stock performance is strong and less
realized compensation when our financial and/or stock performance is lower.
Elements of Our Executive Compensation
Program
BASE SALARY
Base salary
is a fixed portion of compensation delivered in cash to reflect each executive’s role and ongoing performance. NEO base salary
levels are typically reviewed annually by the Compensation Committee and adjusted as appropriate, typically to reflect merit, promotions
or changes in responsibilities, or market adjustments. When determining any base salary increases, the Compensation Committee considers
an individual’s total compensation package, his or her performance, Company performance, comparative peer and market compensation
data, internal parity, and other relevant factors, including the scope of the executive’s responsibilities relative to peers and
other executives, and retention concerns.
Executive |
Title |
FY2021
Base Salary ($000s) |
FY2022
Base Salary ($000s) |
%
Change |
Dominic Ng |
Chairman and CEO |
$1,275.0 |
$1,275.0 |
0.0% |
Irene H. Oh |
Executive Vice President, Chief Financial Officer |
$651.4 |
$677.4 |
+4.0% |
Douglas P. Krause |
Vice Chairman, Chief Corporate Officer |
$546.0 |
$589.7 |
+8.0% |
Parker L. Shi |
Executive Vice President, Chief Operating Officer |
$800.0 |
$800.0 |
0.0% |
Gary Teo |
Executive Vice President, Chief Human Resources Officer |
$382.2 |
$401.3 |
+5.0% |
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 2022, 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.
44 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
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 2022 Performance-Based Bonus Plan.
› | Target
incentive opportunities, defined as a percentage of base salary, were increased from 100% to 145% of salary for Mr. Ng and from 80% to
100% for Ms. Oh and Mr. Krause. Targets for Mr. Shi and Mr. Teo remained unchanged at 100% and 60%, respectively. |
| |
› | Weightings
for Corporate Goals and Individual Goals of the Performance-Based Bonus Plan were set at 100% Corporate Goals for Mr. Ng, at 65% Corporate
Goals and 35% Individual Goals for Ms. Oh, Mr. Krause and Mr. Shi, and at 30% Corporate Goals and 70% Individual Goals for Mr. Teo. |
| |
› | 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 strategic
goals was increased to match the maximum achievement for financial goals: i.e., 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
NEO was increased up to 200% of achievement of stated goals1. |
| |
› | 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.
|
| |
| |
| |
| |
| |
| |
| |
| |
| 1. | For
Mr. Teo, there was no change to the maximum achievement percentage of Individual Goals. |
The
financial, strategic and individual goal weights for each NEO were determined as follows:
|
|
|
Corporate Performance |
|
Executive |
Title |
Target Bonus %
of Salary |
Financial |
Strategy |
Individual |
Dominic Ng |
Chairman and CEO |
145% |
70% |
30% |
- |
Irene H. Oh |
Executive Vice President, Chief Financial 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 |
60% |
21% |
9% |
70% |
45 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
2022 Financial Metrics
Financial
metrics comprised 70% of the Performance-Based Bonus Plan Corporate Goals in 2022. On an annual basis, the Company evaluates the performance
metrics used, and modifies the metrics and the weightings as deemed appropriate. In 2022, the Company updated the metrics to more closely
align with key priorities for the year, including growing operating earnings, total loans, 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 loan growth (excluding PPP), and 20% on credit quality. Specific to the growth metrics, the weightings were
30% for operating EPS, 20% for PTPP income, and 30% for average total loan growth (excluding PPP). The balance of the weightings consisted
of 20% for the average quarter-end criticized loans ratio.
For
2022, target operating EPS was set at 10% higher than the actual 2021 adjusted EPS. Target PTPP income and average total loan growth
for 2022 were set to be 17% and 12% higher, respectively, than 2021 results, which positioned the Company at the top quartile (ranked
in the 83rd percentile and 81st percentile, respectively) against the same metrics as measured by analyst Consensus estimates and models
for the Proxy peer group. For credit quality, target metric for average quarter-end criticized loans ratio was set to be equivalent to
the average quarter- end ratio for 2021.
The
2022 financial metrics, measured against actual results, are summarized as follows:
46 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
2022
Strategic Metrics and Results
In
determining the 2022 Performance-Based Bonus payouts for the strategic component, the Compensation Committee evaluated management’s
performance in three key strategic areas: Strategic Growth, Operational Excellence, and Leadership Development and Succession Planning.
We
continued to deliver strong multi-year financial performance based on our strategic focus on commercial banking, bridge banking, omni-channel
banking, and wealth management. To invest in our future, improve efficiency, and strengthen our risk management, we focused on product
innovation, improved service levels, and continued to reinforce our credit culture. In 2022, we continued to deliver development programs
and enabled leaders and top talent to build their knowledge, skills, and experience to become better leaders and effective team members
in managing and driving growth of our business.
Strategic
Growth
|
|
›
Continued to optimize core industries across commercial loans. Maintained continuous growth of anchor industries and accelerated growth
across emerging industries;
›
Continued to generate cross border referrals across geographies to enable more clients to get access to our global capabilities and services;
and
›
Continued to incubate innovation and promote new growth opportunities.
|
|
|
|
Operational
Excellence |
|
›
Continued to practice process improvement to enhance our operational processes’ service
levels to meet customers’ increasing service expectations; and
›
Rationalized our technology vendor spending to reallocate funding to more strategic technology
investments. |
|
|
|
Leadership
Development and Succession Planning |
|
›
Continued to develop leaders at the most senior level and created talent programs to accelerate
the development of top talent; and
›
Recruited new leaders in key positions. |
At
its March 2023 meeting, the Compensation Committee approved the achievement of the executive team’s efforts at 114% for the strategic
component based on the weighting of 40% for strategic growth with 112% results, 30% for operational excellence with 126% results, and
30% for leadership development and succession planning with 103% results.
2022
Individual Metrics
2022
marked Mr. Ng’s 30th anniversary as CEO of the Company. Since the Company became publicly traded on the Nasdaq in 1999, its total
assets grew 30 times, total loans grew 32 times, total deposits grew 37 times, and total earnings grew 40 times. The Board recognized
that under Mr. Ng’s leadership, the Company successfully built upon its strong financial momentum from prior years and achieved
record 2022 financial results. In 2022, the Company achieved record earnings of $7.92 per diluted share, up by 30% from the previous
year, record net income of $1.1 billion, record revenue of $2.3 billion, record assets of $64.1 billion, record loans of $48.2 billion,
and record deposits of $56.0 billion. In addition, the Company reported a return on average assets of 1.80%, return on average equity
of 19.51%, and return on average tangible equity of 21.29% for 2022, as well as delivered three-year TSR of 44% compared to the Peer
Group’s 10% and KRX’s 6%. Under Mr. Ng’s leadership, the Company continues to deploy its growth strategy in commercial
and bridge banking, omni-channel banking, and wealth management, while improving operational excellence, and actively promoting leadership
development and hiring talent.
47 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
For
the other NEOs, the Compensation Committee concluded as follows: (i) Ms. Oh maintained strong capital positions and implemented
effective asset/liability management through a rising interest environment, which generated material net interest margin expansion,
while protecting downside risk through the appropriate use of balance sheet hedging. Ms. Oh effectively demonstrated strong expense
discipline while continuing to make strategic investments in infrastructure to streamline processes and improve efficiencies. Ms. Oh
had been, and continues to be, engaged with women leadership initiatives, and was named one of American Banker’s list of 2022
Most Powerful Women to Watch; (ii) Mr. Krause continued to highlight and maintain our disciplined credit culture, and significantly
improved asset quality in 2022 while supporting strong loan growth and promoting collaboration between the credit team and frontline
business units; he also continued to develop the management information system for earlier identification of weaknesses in loans and
portfolios, while maintaining strong compliance programs across the Company; (iii) Mr. Shi led corporate development strategy, and
oversaw day-to- day operations across the Company; he continued to enhance the Company’s cybersecurity programs and controls
monitoring systems through business innovation and new technologies; and (iv) Mr. Teo implemented leadership development and
succession planning programs across the Company, while continuing to deliver development and training programs to our
employees.
2022
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 170% for the corporate component, which consisted of a 194% payout for the financial metrics (70% weighting) and a 114% payout
for the strategic metrics (30% weighting). Payouts for the individual component (excluding the CEO) ranged from 89% to 137%. Overall
payouts (excluding the CEO) ranged from 114% to 158%.
For
2022, each NEO was awarded the performance-based bonus amounts set forth in the table below. In addition, Mr. Krause received a
one-time bonus of $100,000 for assuming additional responsibilities and strengthening the corporate risk management function, and
Mr. Teo received a one-time bonus of $120,000 for continuous recruitment of senior executives and top talent and managing and
supporting leadership and Board transitions.
|
Target
Weightings |
2022
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% |
- |
194% |
114% |
- |
170% |
Irene
H. Oh |
100% |
45% |
20% |
35% |
194% |
114% |
116% |
151% |
Douglas
P.
Krause |
100% |
45% |
20% |
35% |
194% |
114% |
137% |
158% |
Parker
L. Shi |
100% |
45% |
20% |
35% |
194% |
114% |
112% |
150% |
Gary
Teo |
60% |
21% |
9% |
70% |
194% |
114% |
89% |
114% |
48 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
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 2022 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, January 1, 2022, through December 31, 2022; January 1, 2023, through
December 31, 2023; and January 1, 2024, through December 31, 2024, for awards granted in 2022), 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 on
the Company’s financial performance that year relative to the Long-Term Performance Peer Group, which was defined as the banks
in the KRX for 2022 and the KBW Nasdaq Bank Index (“BKX”) for 2023 and 2024. The Company was added to the BKX and removed
from the KRX on September 19, 2022. 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.
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 |
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 2021, the Company’s ROA and ROE of 1.47% and 15.70% respectively, were above the 2021 median ROA and ROE of 1.28% and
10.58% respectively, for the Long-term Performance Peer Group, and ranked 77.5th percentile and 92nd percentile relative to the Long-term
Performance Peer Group. The Company’s TSR in 2021 ranked 96th percentile relative to the Long-term Performance Peer Group. Taking
into account the various factors above, the Compensation Committee approved the 2022 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 2022, Mr. Teo received a grant of 4,529 RSUs as an annual grant. In addition
to their annual PSUs or RSUs, NEOs were each granted an award of 23 RSUs on February 1, 2022, as part of the Spirit of Ownership Program1.
| 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. |
49 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
NEO |
2022
Target PSUs |
2022
RSUs |
Dominic
Ng |
58,230 |
23 |
Irene
H. Oh |
10,999 |
23 |
Douglas
P. Krause |
9,750 |
23 |
Parker
L. Shi |
9,058 |
23 |
Gary
Teo |
0 |
4,552 |
PSU
Payouts
The
PSUs awarded in 2020 had three one-year performance periods, with the last performance period ending on December 31, 2022. 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 199.4% of target for 2020, resulting from
the 94th percentile rank for TSR, 79.5th percentile rank for ROA, and 92nd percentile rank for ROE; 196.9% of target for 2021
resulting from the 96th percentile rank for TSR, 77.5th percentile rank for ROA, and 92nd percentile rank for ROE; and 150.0% of
target for 2022 resulting from the 22nd percentile rank for TSR, 98th percentile rank for ROA, and 98th percentile rank for ROE.
Please refer to the Option Exercises and Stock Vested table on page 56 for the number of shares each NEO earned. Mr. Shi joined the
Company in 2021 and did not participate in the 2020-2022 PSU program.
The
PSUs awarded in 2021 have three one-year performance periods. The first two performance periods ended on December 31, 2021, and December
31, 2022, 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 196.9% of target
in 2021 resulting from the 96th percentile rank for TSR, 77.5th percentile rank for ROA, and 92nd percentile rank for ROE; and 150.0%
of target in 2022 resulting from the 22nd percentile rank for TSR, 98th percentile rank for ROA, and 98th percentile rank for ROE. The
last performance period ends on December 31, 2023. Earned shares will not be payable until the end of the third year.
The
PSUs awarded in 2022 have three one-year performance periods. The first performance period ended on December 31, 2022. 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 the 22nd percentile rank for
TSR, 98th percentile rank for ROA, and 98th percentile rank for ROE. The second and last performance periods end on December 31, 2023,
and December 31, 2024, respectively.
Retirement
Programs and Perquisites
Our
NEOs receive the same customary benefits as all other employees, including medical, dental, life, disability, vacation cash-out, and
a 401(k) Plan, which includes company matching contributions. The NEOs are eligible to participate in the same plans and to the same
extent as most other salaried employees. Employees are allowed to cash out their earned vacation once a year if they meet both vacation
usage and time away from work requirements set by the Company. The Company maintains a non-qualified deferred compensation plan (“Deferred
Compensation Plan”) to help attract and retain executives and key employees. Our Deferred Compensation Plan provides NEOs and other
key employees the opportunity to defer a specified percentage of their annual base salary and/or their bonus under the annual cash bonus
plan (in each case, up to 80%). In 2022, Messrs. Ng and Shi, participated in the Deferred Compensation Plan. The deferred amounts are
credited to a participant’s account and are immediately vested. Amounts in a participant’s account are then hypothetically
or “notionally” invested
50 | EAST
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COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
in
one or more investment funds selected by such participant, with gains or losses adjusted based on the rate of return on the assets in
each notional investment fund. The available investment funds used to track such notional investment returns are substantially the same
as those offered under our 401(k) Plan. Returns on participant contributions are not guaranteed. The Company has the discretion to make
contributions to the Deferred Compensation Plan on behalf of its participants. In 2022, the Company did not make any such contributions
to the Deferred Compensation Plan.
In
general, the NEOs do not have different or greater benefits than other employees, except for financial planning services and the use
of a Company-owned car for the CEO. The financial planning services are intended to help ensure compliance by the CEO with all applicable
tax and regulatory requirements. For certain executives, the use of a company car is permitted in recognition of their extensive business-related
travel.
The
Compensation Committee reviews the perquisites provided to the NEOs annually as part of their overall review of executive compensation.
Based on a review of competitive pay data provided by its external independent compensation consultant, the Compensation Committee determined
that the perquisites provided in 2022 are within an appropriate range of competitive compensation practices relative to our Peer Group.
Details about the NEOs perquisites, including the cost to the Company, are shown in the “Summary Compensation Table”
under the “All Other Compensation” column on page 53 together with the accompanying footnotes.
Other Compensation Policies and
Information
In
addition to adhering to the processes described in the preceding sections, the Compensation Committee maintains a strong corporate governance
culture with respect to executive compensation. Over the years, it has adopted policies, including those described below, to further
align executive compensation with performance and what the Company believes is in the best interest of the stockholders.
STOCK OWNERSHIP GUIDELINES
The
Company maintains the following stock ownership and holding guidelines for our NEOs, and they are reviewed periodically by the Nominating/Corporate
Governance Committee.
|
CEO
|
|
›
6x annual base salary
|
|
|
|
|
|
|
|
NEOs
(other than CEO)
|
|
›
1x annual base salary
|
|
NEOs
have additional holding requirements for stock acquired as part of their compensation. NEOs shall hold until retirement at least 51%
of any stock acquired upon the exercise of stock options (net of taxes and net of the grant price paid) and at least 51% of any stock
received upon vesting (net of taxes) of restricted stock or RSUs.
The
Nominating/Corporate Governance Committee reviews compliance with the guidelines annually, and all NEOs met the stock ownership and holding
guidelines for 2022.
CLAWBACKS FOR
ANY RESTATEMENT; EXECUTIVE COMPENSATION RECOVERY POLICY
The
Company has adopted an Executive Compensation Recovery Policy for our NEOs, which was approved by the Compensation Committee in 2012.
Under this policy, all annual performance-based bonus payments and annual LTI awards that are based upon the Company’s financial
performance may be subject to clawback in the event of a restatement of the Company’s financial statements. The clawback will be
required without regard for the reason of the restatement, and the affected officers will be required to repay the Company the amount
of any incentive payment or incentive award received in excess of what would have been paid based on the restated numbers.
51 | EAST
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COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
TRADING RESTRICTIONS; NO HEDGING
OR PLEDGING OF COMMON STOCK
As
provided in the Company’s Insider Trading Policy, it is against Company policy for any employee, including any executive officer,
to engage in speculative transactions in Company securities, which include but are not limited to trades in puts or calls in Company
securities or selling Company securities short. In addition, under our Insider Trading Policy, it is against Company policy for NEOs
to pledge shares of common stock in the Company for any purpose.
NO TAX GROSS UPS
We
do not provide for any tax gross ups of excise or other taxes on severance payments or in connection with a change in control.
COMPENSATION PROGRAM RISK ANALYSIS
The
Compensation Committee reviews the Company’s compensation policies and practices for our NEOs and other employees. The Compensation
Committee has determined that our incentive compensation programs are not reasonably likely to have a material adverse effect on the
Company. To conduct this review, the Company annually completes an inventory of its incentive compensation plans and policies. This evaluation
covers a wide range of practices and policies including: the balanced mix between pay elements; short-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.
Compensation Committee Report
The
Compensation Committee has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis.
Based upon this review and our discussions, the East West Bancorp, Inc. Compensation Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this Proxy Statement and be incorporated by reference in its Annual Report on Form 10-K for the
year ended December 31, 2022.
52 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
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 2022, 2021, and 2020 compensation for the
NEOs.
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 |
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 |
2020 |
1,275,000 |
- |
4,487,082 |
- |
1,034,025 |
137,668 |
6,933,775 |
Irene
H. Oh
Executive Vice
President and
Chief Financial
Officer |
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 |
2020 |
635,524 |
- |
749,529 |
- |
414,324 |
22,012 |
1,821,389 |
Douglas
P. Krause
Vice Chairman
and Chief
Corporate
Officer |
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 |
2020 |
516,692 |
- |
560,159 |
- |
439,088 |
41,932 |
1,557,871 |
Parker
L. Shi
Executive
Vice President and Chief
Operating
Officer |
2022 |
$800,000 |
- |
$707,684 |
- |
$1,197,120 |
$43,615 |
$2,748,419 |
2021 |
$400,7695 |
$150,000 |
1,300,071 |
- |
519,520 |
392,367 |
2,762,727 |
2020 |
|
|
- |
- |
- |
- |
|
Gary
Teo
Executive Vice
President and
Chief Human
Resources
Officer |
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 |
2020 |
361,685 |
- |
282,057 |
- |
197,179 |
36,727 |
877,648 |
1. | Represents the aggregate grant
date fair values of the RSUs and performance-based RSUs granted in 2022, 2021, and 2020 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, 2022 on the Company’s accounting for share-based compensation plans. With
the exception of Mr. Shi’s 2021 RSU awards, Mr. Teo’s 2020 and 2022 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 2022 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, $7,911,539; for Ms. Oh, $1,494,402; for Mr. Krause, $1,318,590; for Mr. Shi, $1,230,684. |
| |
2. | Represents incentive compensation
earned under our Performance-Based Bonus Plan in 2023, 2022, and 2021 related to years 2022, 2021, and 2020, respectively. Mr. Shi joined
the Company in June 2021, and his 2021 payout amount was pro-rated based on the month of employment. |
| |
3. | Includes: for Mr. Ng, (i) financial
planning and administrative services of $48,500, (ii) vacation cash-out of $53,942, (iii) Company contributions under its 401(k) Plan
of $13,725 and (iv) auto usage of $3,827; for Ms. Oh, (i) vacation cash-out of $27,658 and (ii) Company contributions under its 401(k)
Plan of $13,120; for Mr. Krause, (i) Company contributions under its 401(k)
Plan of $13,725 and (ii) vacation cash-out of $36,393; for Mr. Shi, (i) Company contributions under its 401(k) Plan of $14,913, (ii) housing
and moving allowance of $25,000,(iii) vacation cash-out of $3,077, and (iv) cell phone allowance of $625; for Mr. Teo, (i) Company contributions
under its 401(k) Plan of $13,725 and (ii) vacation cash-out of $16,244. These amounts reflect the Company’s actual costs to provide
the perquisites or other personal benefits to the NEOs. |
| |
4. | Includes: 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 $120,000 in 2022 for continuous recruitment of senior executives
and top talent and managing and supporting leadership transitions. |
| |
5. | Mr. Shi’s 2021 salary reflects
the actual days employed by the Company. |
53 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
The
table below summarizes all plan-based awards granted by the Compensation Committee to the NEOs in 2022.
Grants of Plan-Based Awards
Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 |
Estimated Future Payouts Under Equity Incentive Plan Awards2 |
Name |
Grant
Date |
Threshold
($) |
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 |
02/01/2022 |
- |
- |
- |
- |
- |
- |
23 |
2,000 |
03/04/2022 |
924,375 |
1,848,750 |
3,697,500 |
29,115 |
58,230 |
116,460 |
- |
4,536,539 |
Irene
H. Oh |
02/01/2022 |
- |
- |
- |
- |
- |
- |
23 |
2,000 |
03/04/2022 |
338,713 |
677,427 |
1,354,854 |
5,500 |
10,999 |
21,998 |
- |
856,902 |
Douglas
P. Krause |
02/01/2022 |
- |
- |
- |
- |
- |
- |
23 |
2,000 |
03/04/2022 |
294,840 |
589,680 |
1,179,360 |
4,853 |
9,705 |
19,410 |
- |
756,090 |
Parker
L. Shi |
02/01/2022 |
|
|
|
|
|
|
23 |
2,000 |
03/04/2022 |
400,000 |
800,000 |
1,600,000 |
4,529 |
9,058 |
18,116 |
- |
705,684 |
Gary
Teo |
02/01/2022 |
- |
- |
- |
- |
- |
- |
23 |
2,000 |
03/04/2022 |
120,393 |
240,786 |
481,572 |
- |
- |
- |
4,529 |
350,001 |
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. |
| |
2. | Represents performance-based RSUs
that cliff vest on March 4, 2025, 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, 2024. 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 KRX for 2022 and the KBW Nasdaq Bank Index (“BKX”) for
2023 and 2024, representing a payout of 100%. The Company was added to the BKX and removed from the KRX on September 19, 2022.
Threshold units represent the Company’s TSR, ROA and ROE performance at the 30th percentile compared to the KRX for 2022 and
the BKX for 2023 and 2024, 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 KRX for 2022 and
the BKX for 2023 and 2024, 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. |
| |
3. | Represents RSUs granted on February
1, 2022, as part of the all employee Spirit of Ownership Program for all NEOs and Mr. Teo’s RSUs granted on March 4, 2022. All
RSUs cliff vest three years from the date of grant. |
| |
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. |
The
table below sets forth the outstanding equity awards held by the NEOs as of December 31, 2022. There were no outstanding option
awards held by NEOs as of December 31, 2022. With the exception of (i) the RSUs granted on January 24, 2020, February 12, 2021, and
February 1, 2022, as part of the all-employee Spirit of Ownership Program, (ii) Mr. Shi’s sign-on and additional RSUs
granted in 2021 and (iii) Mr. Teo’s RSUs granted on March 4, 2020 and 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.
54 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
Outstanding Equity Awards at Year-End
Stock
Awards |
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 |
1/24/2020 |
413 |
2,702 |
- |
- |
3/4/2020 |
205,2564 |
13,526,370 |
- |
- |
2/12/2021 |
303 |
1,977 |
- |
- |
3/4/2021 |
75,3815 |
4,967,608 |
43,4635 7 |
2,864,212 |
2/1/2022 |
233 |
1,516 |
- |
- |
3/4/2022 |
29,1156 |
1,918,679 |
77,6406 7 |
5,116,476 |
Irene
H. Oh |
1/24/2020 |
413 |
2,702 |
- |
- |
3/4/2020 |
34,2104 |
2,254,439 |
- |
- |
2/12/2021 |
303 |
1,977 |
- |
- |
3/4/2021 |
11,9025 |
784,342 |
6,8635 7 |
452,272 |
2/1/2022 |
233 |
1,516 |
- |
- |
3/4/2022 |
5,5006 |
362,450 |
14,6666 7 |
966,489 |
Douglas
P. Krause |
1/24/2020 |
413 |
2,702 |
- |
- |
3/4/2020 |
25,5454 |
1,683,416 |
- |
- |
2/12/2021 |
303 |
1,977 |
- |
- |
3/4/2021 |
10,3165 |
679,824 |
5,9485 7 |
391,973 |
2/1/2022 |
233 |
1,516 |
- |
- |
3/4/2022 |
4,8756 |
321,263 |
13,0006
7 |
856,700 |
Parker
L. Shi |
6/14/2021 |
4,3053 |
283,700 |
- |
- |
12/1/2021 |
13,2373 |
872,318 |
- |
- |
2/1/2022 |
233 |
1,516 |
- |
- |
3/4/2022 |
4,5296 |
298,461 |
12,0786 7 |
795,940 |
Gary
Teo |
1/24/2020 |
413 |
2,702 |
- |
- |
3/4/2020 |
7,0153 |
462,289 |
- |
- |
2/12/2021 |
303 |
1,977 |
- |
- |
3/4/2021 |
4,7615 |
313,750 |
2,7465 7 |
180,961 |
2/1/2022 |
233 |
1,516 |
- |
- |
3/4/2022 |
4,5293 |
298,461 |
- |
- |
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. |
| |
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, 2022, of the Company’s
common stock as reported on Nasdaq, which was $65.90. |
| |
3. | Reflects RSUs that will cliff vest
three years from the date of grant, assuming that the employee remains employed through such date. |
| |
4. | This equity granted on March 4,
2020, cliff vested on March 4, 2023. |
| |
5. | This equity RSU granted on March
4, 2021, cliff vests on March 4, 2024, assuming that the employee remains employed through such date. |
| |
6. | This equity granted on March 4,
2022, cliff vests on March 4, 2025, assuming that the employee remains employed through such date. |
| |
7. | Reflects the maximum potential
payout, but the actual number of shares ultimately paid out may vary from the amount shown on the table, with the possibility of payout,
ranging from no payout to maximum payout depending on the outcome of the performance criteria. |
55 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
The following table summarizes, for the NEOs, the option
exercises and stock awards vested during 2022. The amounts reflected below show the number of shares acquired at the time of exercise
or vesting, as applicable. The amounts reported as value realized are shown on a before-tax basis.
Option Exercises and Stock Vested
|
Option Awards |
Stock
Awards |
Name |
Number
of Shares
Acquired on
Exercise (#) |
Value Realized on
Exercise ($) |
Number
of Shares Acquired on
Vesting (#) |
Value
Realized on
Vesting ($)1 |
Dominic Ng |
- |
- |
169,921 |
13,131,914 |
Irene H. Oh |
- |
- |
27,385 |
2,116,732 |
Douglas P. Krause |
- |
- |
20,549 |
1,588,446 |
Parker L. Shi |
- |
- |
- |
- |
Gary Teo |
- |
- |
5,671 |
438,674 |
1. | The amount represents the number
of shares vested multiplied by the closing price of the Company’s common stock on the Nasdaq on the vesting date. It excludes any
reduction in value associated with the cancellation of shares for tax withholding purposes. |
The following table summarizes information
about NEO participation in our nonqualified Deferred Compensation Plan, which is described on page 50 above, in the “Retirement
Programs and Perquisites” section. In 2022, Mr. Ng and Mr. Shi participated and made contributions to the Deferred Compensation
Plan.
Nonqualified Deferred Compensation Table
Nonqualified
Deferred Compensation in 2022 |
Name |
Executive
Contributions in 2022 ($)1 |
Registrant
Contributions in 2022 ($) |
Aggregate
Earnings in
2022($)2 |
Aggregate
Withdrawals/ Distributions
($) |
Aggregate Balance
on December 31,
2022 ($) |
Dominic Ng |
637,500 |
- |
(21,596) |
- |
615,904 |
Irene H. Oh |
- |
- |
- |
- |
- |
Douglas P. Krause |
- |
- |
- |
- |
- |
Parker L. Shi |
642,769 |
- |
(81,467) |
- |
659,712 |
Gary Teo |
- |
- |
- |
- |
- |
1. | The amounts included in this
column are included in the Summary Compensation Table for 2022 as “Salary.” |
2. | Reflects hypothetical or “notional”
gains on account balances based on the NEO’s selected investments. |
56 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
Retirement Plans
We have two retirement plans. Our 401(k)
Plan is a qualified retirement plan under the Internal Revenue Code of 1986, as amended (the “Code”), and is open to all employees
of the Company and its subsidiaries with at least three months of service.
We also have a Supplemental Executive Retirement
Plan (“SERP”)which was established in 2001 in order to provide supplemental retirement benefits to certain employees whose
contributions to the 401(k) Plan are limited under applicable Internal Revenue Service regulations. The SERP was also intended as a retention
incentive to ensure the continued employment of the officers participating in the plan. As of December 31, 2022, none of our NEOs were
participants in the SERP.
As part of the life insurance contracts
purchased when the SERP was established, beneficiaries of the SERP participants would be entitled to a death benefit. Although Mr. Ng
and Mr. Krause are not currently participants in the SERP, each was at the time it was established in 2001 and death benefits for their
beneficiaries remain in effect. As of December 31, 2022, Mr. Ng’s beneficiaries would be entitled to death benefits of $21,580,000
and Mr. Krause’s beneficiaries would be entitled to death benefits of $7,740,000 under the SERP.
Employment Agreements and Potential
Payments upon
Termination or Change in Control
The Bank, the Company’s principal subsidiary,
has entered into employment agreements with the NEOs with the exception of Mr. Teo. This is intended to ensure that the Bank will be able
to maintain a stable and competent management base.
Chief Executive Officer
The Bank entered into an employment agreement
with its CEO, Mr. Ng, in June 1998 in connection with the sale of the Bank by its prior stockholders (the “Ng Employment Agreement”).
The Ng Employment Agreement was reapproved by the Board and amended on March 1, 2023, to provide for a termination date of March 1, 2026.
In addition to base salary and bonus to be determined annually, the employment agreement provides for, among other things, use of a Company
car, participation in stock benefit plans and other fringe benefits applicable to executive personnel and four weeks paid vacation per
year.
In the event the Bank chooses to terminate
Mr. Ng’s employment for any reason other than for Cause (as defined in the Ng Employment Agreement), or in the event of Mr. Ng’s
resignation from the Bank upon (i) failure to re- elect him to his current offices; (ii) a material change in functions, duties or responsibilities;
(iii) a relocation of his principal place of employment by more than 25 miles; (iv) liquidation or dissolution of the Bank; (v) a breach
of the employment agreement by the Bank; or (vi) his death or permanent disability, Mr. Ng, or, in the event of death, his beneficiary,
would be entitled to receive an amount equal to the greater of (i) the remaining payments due to him and the contributions that would
have been made on his behalf to any employee benefit plans of the Bank during the remaining term of the employment agreement or (ii) three
times the base salary currently in effect plus three times the preceding year’s bonus payable in a lump sum.
Under the assumption that Mr.
Ng’s employment with the Company was terminated on December 31, 2022, for any reason other than Cause, he would be entitled to
receive severance payments totaling $13,350,052. Also, if Mr. Ng’s employment with the Company was terminated for any reason
other than Cause, his outstanding and unvested stock options (if any), time-based and performance-based RSUs would become fully
vested. If Mr. Ng’s employment with the Company was terminated on December 31, 2022, for any reason other than Cause, the
market value of his RSUs, which would accelerate in vesting, was $24,409,195 based on the closing price of the Company’s
common stock as of that date.
57 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
Chief Financial Officer
On December 21, 2016, the Bank entered
into an Executive Employment Agreement with its Chief Financial Officer, Ms. Oh (the “Oh Employment Agreement”). The Oh Employment
Agreement, effective as of December 21, 2016, had an initial term of two years and was subject to annual renewal thereafter as may be
agreed by the Bank’s Board of Directors and Ms. Oh. The Oh Employment Agreement was reapproved by the Board and amended December
21, 2022, to provide for a termination date of December 21, 2023.
The Oh Employment Agreement provides
that Ms. Oh will receive an annual base salary, subject to periodic review and increase, and will be eligible to participate in an annual
performance-based bonus plan. However, any actual bonus for any given year will be determined and paid in accordance with the Bank’s
annual bonus plan arrangements applicable to senior executives generally. Ms. Oh will also be eligible to receive annual stock grants
as approved by the Board. In addition, Ms. Oh will be entitled to participate in all employee benefit plans and perquisite arrangements
available to senior executives of the Bank and shall receive reimbursement of reasonable business expenses. Ms. Oh’s employment
with the Bank may be terminated by the Bank with or without Cause (as defined in the Oh Employment Agreement), in the event of disability
(as defined in the Oh Employment Agreement) or death.
The Bank may terminate Ms. Oh’s
employment with the Bank at any time without Cause, for any reason or no reason at all, upon one month advance written notice. In addition,
it shall be considered termination without Cause by the Bank if Ms. Oh terminates her employment due to: (i) relocation of her office
more than 50 miles from its current location in Pasadena, California without her consent; (ii) any material breach by the Bank of her
employment agreement or any other material agreement between her and the Bank which causes her material harm; or (iii) if, following a
Change of Control, the successor does not assume all material obligations of the Bank to her. It shall also be considered termination
without Cause if without Ms. Oh’s consent, (a) the Oh Employment Agreement is not, whether initially or with respect to any subsequent
renewal period, renewed or approved by the Bank’s Board (other than in connection with a for Cause event), and (b) within one month
following the end of the then-current employment term, Ms. Oh resigns from the Bank.
In the event of termination of Ms. Oh’s
employment by the Bank without Cause, and contingent upon Ms. Oh’s execution and non-revocation of a general release of claims,
the Bank shall pay to Ms. Oh the following: (i) a single lump sum amount consisting of an amount equal to two times of Ms. Oh’s
then annual base salary and an amount equal to the annual cash bonus payout last received by Ms. Oh; and (ii) any annual bonus earned
but unpaid with respect to a performance year ending on or preceding the date of termination. Under the assumption that Ms. Oh’s
employment with the Company was terminated on December 31, 2022, for any reason other than Cause, she would be entitled to receive severance
payments totaling $2,379,598.
In addition, any equity awards would
continue to vest according to the grant date schedules, provided that performance RSUs will be settled based on performance unit goal
achievement, except that if such termination of employment occurs within two years after a Change of Control (as defined in the Oh Employment
Agreement), any performance RSUs will be settled as follows: (i) any RSUs for which the performance period has lapsed will continue to
vest based on performance unit goal achievement, and (ii) any RSUs for which the performance period has not lapsed will be converted into
time-based units based on the target performance level. The outstanding equity awards held by Ms. Oh as of December 31, 2022, are disclosed
in the table on page 55 under “Outstanding Equity Awards at Year-End.”
In the event of
a termination of Ms. Oh’s employment as the result of her death or due to disability, Ms. Oh or her beneficiary will be
entitled to receive (i) the Accrued Obligations (as defined in the Oh Employment Agreement) and (ii) any annual bonus earned but
unpaid with respect to a performance year ending on or preceding the date of termination. The Oh Employment Agreement also provides
that if Ms. Oh’s employment terminates as a result of death or disability, all unvested RSUs that have been granted prior to
the date of death or disability shall immediately vest. The market value on December 31, 2022, of her RSUs which would have
accelerated in vesting as a result of her death or disability would have been $4,116,806.
58 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
Vice Chairman and Chief Corporate Officer
The Bank entered into an employment agreement with
its Vice Chairman and Chief Corporate Officer, Mr. Krause, in 1999 (the “Krause Employment Agreement”). The Krause Employment
Agreement was reapproved by the Board and amended on March 1, 2023, to provide for a termination date of March 1, 2026. In addition to
base salary and bonus to be determined annually, the Krause Employment Agreement provides for, among other things, participation in stock
benefit plans and other fringe benefits applicable to executive personnel and four weeks paid vacation per year.
In the event the Bank
chooses to terminate Mr. Krause’s employment for any reason other than for Cause (as defined in the Krause Employment Agreement),
or in the event of Mr. Krause’s resignation from the Bank upon (i) a material change in functions, duties or responsibilities;
(ii) a relocation of the principal place of his employment by more than 25 miles; (iii) liquidation or dissolution of the Bank; (iv)
a breach of the employment agreement by the Bank; or (v) his death or permanent disability, Mr. Krause, or, in the event of death, his
beneficiary, would be entitled to receive an amount equal to the greater of (i) the remaining payments due to him and the contributions
that would have been made on his behalf to any employee benefit plans of the Bank during the remaining term of the employment agreement;
or (ii) three times the base salary currently in effect plus three times the preceding year’s bonus payable in a lump sum.
Under the assumption that Mr. Krause’s
employment with the Company was terminated on December 31, 2022, for any reason other than Cause (as defined in the Krause
Employment Agreement), he would be entitled to receive severance payments totaling $4,961,054 payable in a lump sum. Also, if Mr.
Krause’s employment with the Company was terminated for any reason other than Cause, all unvested RSUs would become fully
vested. If Mr. Krause’s employment with the Company was terminated on December 31, 2022, for any reason other than Cause, the
market value of his RSUs, which would have accelerated in vesting, was $3,315,034.
There is no employment contract with
Mr. Krause that provides for any payments, early vesting of any stock options or any RSUs upon a change of control.
Chief Operating Officer
The Bank entered into an employment agreement
with its Chief Operating Officer, Mr. Shi, on December 1, 2021 (the “Shi Employment Agreement”) with an initial term of two
years and is subject to annual renewal thereafter as may be agreed by the Bank’s Board of Directors and Mr. Shi.
The Shi Employment Agreement provides
that Mr. Shi will receive an annual base salary, subject to periodic review and increase, and will be eligible to participate in an annual
performance-based bonus plan. However, any actual bonus for any given year will be determined and paid in accordance with the Bank’s
annual bonus plan arrangements applicable to senior executives generally. Mr. Shi will also be eligible to receive annual stock grants
as approved by the Board. In addition, Mr. Shi will be entitled to participate in all employee benefit plans and perquisite arrangements
available to senior executives of the Bank and shall receive reimbursement of reasonable business expenses. Mr. Shi’s employment
with the Bank may be terminated by the Bank with or without Cause (as defined in the Shi Employment Agreement), in the event of disability
(as defined in the Shi Employment Agreement) or death.
The Bank may terminate Mr. Shi’s employment
with the Bank at any time without Cause, for any reason or no reason at all, upon thirty days’ advance written notice.
In the
event of termination of Mr. Shi’s employment by the Bank without Cause, and contingent upon Mr. Shi’s execution and
non-revocation of a general release of claims, the Bank shall pay to Mr. Shi the following: (i) a single lump sum amount consisting
of an amount equal to two times of Mr. Shi’s then annual base salary and a lump sum bonus equal to 100% of Mr. Shi’s
then annual base salary; if Mr. Shi is terminated without Cause during the term of his current contract, he would receive severance
payments totaling $2,400,000.
59 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
In addition, as part of his severance,
any equity awards would continue to vest according to the grant date schedules, provided that performance RSUs would be settled based
on performance unit goal achievement, except that if such termination of employment occurs within two years after a Change of Control
(as defined in the Shi Employment Agreement), any performance RSUs would be settled as follows: (i) any RSUs for which the performance
period has lapsed would continue to vest based on performance unit goal achievement, and (ii) any RSUs for which the performance period
has not lapsed will be converted into time-based units based on the target performance level. The outstanding equity awards held by Mr.
Shi as of December 31, 2022, are disclosed in the table on page 55 under “Outstanding
Equity Awards at Year-End.”
In the event of a termination of Mr.
Shi’s employment as the result of his death or due to disability, Mr. Shi or his beneficiary will be entitled to receive the Accrued
Obligations (as defined in the Shi Employment Agreement). The Shi Employment Agreement also provides that if Mr. Shi’s employment
terminates as a result of death or disability, all unvested RSUs that have been granted prior to the date of death or disability shall
immediately vest. The market value on December 31, 2022, of his RSUs which would have accelerated in vesting as a result of his death
or disability is $1,853,965.
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, 2022, the
annual total compensation of our CEO was $9,076,408 as shown in the “Summary
Compensation Table.” The annual total compensation of our median employee for 2022, excluding the CEO, was $109,718,
resulting in a ratio of 83 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, 2022. 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, 2022. The U.S. and Hong Kong-based employees represented 96% of our
3,100 total employees, excluding employees on leave of absence as of December 31, 2022. We excluded employees of East West Bank
(China) Limited, our wholly owned subsidiary in China, and other employees based in China, totaling 138 or 4% of our total
employees. As of December 31, 2022, the Company had 2,872 U.S.-based employees and 228 non-U.S. employees.
Our
definition of “total compensation,” for purposes of determining our median employee, includes total cash compensation
paid during 2022 (excluding 401(k) deferrals and overtime wages) and the grant date fair value of RSUs (or RSU equivalents) awarded
in 2022. We did not annualize the compensation for any employees that were not employed by us for all of 2022, 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, 2022, 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.
60 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
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, 2022, 2021, and 2020, and our financial
performance for each such fiscal year.
| | | | | Value of Initial $100 Investment Based on: | | |
Year | Summary Compensation Table Total for CEO1 | Compensation Actually Paid
Total to CEO | Average
Summary
Compensation Table Total
for Non-CEO
NEOs2 | Average Compensation Actually Paid to
non-CEO NEOs | Total
Shareholder
Return | Peer Group
Total
Shareholder Return6 | Net
Income
($ in
millions) | Return
on
Equity |
20223 | $9,076,408 | $6,591,588 | $2,236,396 | $2,110,635 | $135 | $106 | $1,128 | 19.51% |
20214 | $8,649,172 | $27,525,426 | $1,938,007 | $3,294,597 | $162 | $117 | $873 | 15.70% |
20205 | $6,933,775 | $13,751,400 | $1,284,762 | $1,961,790 | $104 | $88 | $568 | 11.17% |
1. | The CEO in 2022, 2021, and 2020 was Dominic Ng. |
2. | The non-CEO NEOs were 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. |
3. | 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%. |
4. | 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%. |
5. | 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%. |
6. | The peer group used is the KBW Nasdaq Regional Banking Index (“KRX”). |
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.
| CEO | Average of Non-CEO NEOs |
Year | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 |
Summary Compensation Table Total | $9,076,408 | $8,649,172 | $6,933,775 | $2,236,396 | $1,938,007 | $ 1,284,762 |
Less: Fair Value of Stock Awards Granted in Fiscal Year | (4,538,539) | (5,065,596) | (4,487,082) | (669,169) | (774,147) | (474,638) |
Add: Fair Value of Stock Awards Granted in Fiscal Year - Value at Yearend | 6,470,141 | 9,535,338 | 10,627,632 | 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 | (4,846,683) | 10,881,577 | 1,180,999 | (463,118) | 781,123 | 100,365 |
Change in Fair Value of Stock Awards Granted in Prior Years that Vesting during the Fiscal Year | (237,471) | 2,894,477 | (1,009,781) | (18,447) | 193,214 | (56,099) |
Add: Dividends Paid on Unvested Shares Units for the Fiscal Year | 667,731 | 630,458 | 505,857 | 71,132 | 37,423 | 47,041 |
Compensation Actually Paid | $6,591,588 | $ 27,525,426 | $13,751,400 | $2,110,635 | $3,294,597 | $1,961,710 |
For the fiscal year ending December 31, 2022,
the most important financial performance measures used to link compensation actually paid to our NEOs to Company are listed as follows.
Important
Financial Performance Measurement |
Return on Assets | | Return on Equity | | Total Shareholder Return |
61 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
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. Net Income
Compensation
Actually Paid vs. ROE
62 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | | |
| |
Proposal
3: Advisory Vote on Frequency of Stockholder
“Say-on-Pay”
PROPOSAL SNAPSHOT
What am I voting on?
Every six
years, stockholders must decide whether advisory votes on executive compensation should be held every one, two or three years.
Voting recommendation:
FOR holding an advisory vote
on executive compensation every “ONE” year.
Section 14A of the Securities Exchange
Act requires us to submit a non-binding, advisory proposal to stockholders at least once every six years to determine whether advisory
votes on executive compensation should be held every one, two or three years.
When voting on this proposal, you should
indicate your preference as whether our executive compensation should be reviewed by stockholders every “one,” “two,”
or “three” years. If you have no preference, you should “Abstain.” The option of one year, two years or three
years, which receives the greatest number of votes present in person or by proxy and entitled to vote at the Annual Meeting, will be deemed
to be the recommendation of the stockholders.
In 2017, our stockholders
voted in accordance with the Board’s recommendation to review and approve executive compensation every year. Accordingly, for
the past six years, we have held an advisory “say-on-pay” vote every year. The Board believes holding an advisory
“say-on-pay” vote every year has worked well for us, as it has allowed the Board and the Compensation Committee the
opportunity to evaluate individual compensation decisions each year in light of timely, ongoing feedback from stockholders. It is
also consistent with our efforts to engage in an ongoing dialogue with stockholders about corporate governance and executive
compensation. Upon careful consideration, the Board of Directors recommends that stockholders continue to hold an advisory vote on
executive compensation every year.
As this is a non-binding,
advisory vote, the result will not be binding on us. However, we value your opinion on this matter and will take the result of this non-binding,
advisory vote into account when making a determination as to the frequency of future say-on-pay votes.
Proposal
4: Ratification of Auditors
PROPOSAL
SNAPSHOT
What am I voting on?
Stockholders are being asked to ratify
the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for the year ending December
31, 2023. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, as a matter
of good corporate governance, the Board submits its selection of the independent registered public accounting firm to our stockholders
for ratification. If the stockholders should not ratify the appointment of KPMG LLP, the Audit Committee will reconsider the appointment.
63 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
RATIFICATION OF AUDITORS | | |
| |
Voting recommendation:
FOR the ratification of the
appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023.
KPMG LLP has been approved
by the Audit Committee of the Company to be the independent registered public accounting firm of the Company for the 2023 year. The
stockholders are being asked to ratify the selection of KPMG LLP. KPMG LLP has served as our independent registered public
accounting firm since 2009. If the stockholders do not ratify such selection by the affirmative vote of a majority of the votes
present and entitled to vote, the Audit Committee will reconsider its selection. Under applicable SEC regulations, the selection of
the independent registered public accounting firm is solely the responsibility of the Audit Committee.
Representatives from the firm of KPMG LLP
will be present at the Annual Meeting to respond to stockholders’ questions and will be given the opportunity to make a statement
if they desire to do so.
Audit Fees, Audit Related
Fees, Tax Fees and All Other Fees
The following is a description of the fees
earned by KPMG LLP for services rendered to the Company for the years ended December 31, 2022 and December 31, 2021.
|
2022 |
2021 |
Audit
Fees1 |
$3,061,241 |
$2,692,124 |
Audit-Related
Fees2 |
48,258 |
61,224 |
Tax
Fees3 |
32,031 |
8,336 |
All
Other Fees |
- |
- |
|
$3,141,530 |
$2,761,684 |
1. | Audit fees relate to the integrated audit of the Company’s consolidated financial statements,
internal control over financial reporting, the review of the Company’s interim consolidated financial statements, and other audits
provided in connection with regulatory filings provided by KPMG LLP. Audit fees also include the statutory audit for East West Bank (China)
Limited provided by KPMG China. |
2. | Audit-related fees consist of fees for certain professional services provided by KPMG Hong Kong in
connection with the review of regulatory filings for East West Bank’s Hong Kong branch. |
3. | Tax fees include tax compliance fees for East West Bank (China) Limited provided by KPMG China and tax consulting services by KPMG
LLP. |
Audit Committee Policy on
Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Consistent with SEC rules
regarding auditor independence, the Audit Committee is responsible for appointing, setting fees for and overseeing the work of our
independent registered public accounting firm. In recognition of this responsibility and in accordance with the Exchange Act, it is
the policy of the Audit Committee to pre-approve all permissible services provided by our independent registered public accounting
firm, except for minor audit-related engagements which in the aggregate do not exceed 5% of the total fees we pay to our independent
registered public accounting firm during the year in which the services were provided. All of the services listed above for 2022
were approved by the Audit Committee prior to the service being rendered as described in the operating procedures below.
Each year, prior to engaging our independent
registered public accounting firm, management submits to the Audit Committee for approval a list of services expected to be provided during
that year within each of the three
64 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
RATIFICATION OF AUDITORS | | |
| |
categories of services described below,
as well as related estimated fees, which are generally based on time and materials. Audit services include audit work performed on the
financial statements, as well as work that generally only the independent registered public accounting firm can reasonably be expected
to provide, including comfort letters and discussions surrounding the proper application of financial accounting and/or reporting standards.
Audit-related services include assurance and
related services that are traditionally performed by the independent registered public accounting firm, including due diligence related
to mergers and acquisitions, statutory audits, employee benefit plan audits and special procedures required to meet certain regulatory
requirements.
Tax services include compliance and other
non-advisory services performed by the independent registered public accounting firm when it is most efficient and effective to use such
firm as the tax service provider.
As appropriate, the Audit Committee then
pre-approves the services and the related estimated fees. The Audit Committee requires our independent registered public accounting firm
and management to report actual fees versus the estimate periodically throughout the year by category of service. During the year, circumstances
may arise when it becomes necessary to engage our independent registered public accounting firm for additional services not contemplated
in the initial annual proposal. In those instances, the Audit Committee pre-approves the additional services and related fees before engaging
our independent registered public accounting firm to provide the additional services.
Audit Committee Report
The Audit Committee operates pursuant to a
written charter most recently adopted by the Company’s Board on March 28, 2023. The Company’s Audit Committee Charter is available
through the Company’s website at www.eastwestbank.com/investors by clicking on Corporate
Information — Committee Charting. The Audit Committee held six meetings during the year ended December 31, 2022. These
meetings were attended by all members of the Audit Committee. The meetings of the Audit Committee are designed to facilitate and encourage
communication among the Audit Committee, the Company, the Company’s internal audit function and the Company’s independent
registered public accounting firm.
The Audit Committee recognizes the importance
of maintaining the independence of the Company’s independent registered public accounting firm, both in fact and appearance. Each
year, the Audit Committee evaluates the qualifications, performance and independence of the Company’s independent registered public
accounting firm and determines whether to re-engage the current independent registered public accounting firm. In doing so, the Audit
Committee considers the quality and efficiency of the services provided by the independent registered public accounting firm, and the
independent registered public accounting firm’s capabilities, technical expertise and knowledge of the Company’s operations
and industry.
Based on this evaluation, the
Audit Committee has retained KPMG LLP as the Company’s independent registered public accounting firm for the year 2023. The
members of the Audit Committee and the Board believe that, due to KPMG LLP’s knowledge of the Company and of the industries in
which the Company operates, including significant matters in audit, it is in the best interests of the Company and its stockholders
to continue retention of KPMG LLP to serve as the Company’s independent registered public accounting firm. Although the Audit
Committee has the sole authority to appoint the independent registered public accounting firm, the Audit Committee will continue to
recommend that the Board ask the stockholders, at the Annual Meeting, to ratify the appointment of the independent registered public
accounting firm.
65 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
RATIFICATION OF AUDITORS | | |
| |
Management is responsible for the
financial reporting process, the system of internal controls, including internal control over financial reporting, risk management
and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. KPMG LLP, the
Company’s independent registered public accounting firm, is responsible for the integrated audit of the consolidated financial
statements and internal control over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these
processes and procedures. The members of the Audit Committee currently are not professionally engaged in the practice of accounting
or auditing. The Audit Committee relies, without independent verification, on the information provided to it and on the
representations made by management regarding the effectiveness of internal control over financial reporting, that the financial
statements have been prepared with integrity and objectivity and that such financial statements have been prepared in conformity
with accounting principles generally accepted in the U.S. The Audit Committee also relies on the opinions of the Company’s
independent registered public accounting firm of the consolidated financial statements and the effectiveness of internal control
over financial reporting.
In performing its function, the Audit Committee
has among other tasks:
› |
Reviewed
and discussed the audited financial statements and the quarterly financial reports of the Company as of end of each quarter and for
the year ended December 31, 2022 with management and with KPMG; |
› |
Discussed
with KPMG the matters required to be discussed by the applicable requirements of the Public
Company Accounting Oversight Board (“PCAOB”) and the SEC, as well as other matters
including the scope of the audit, the Company’s significant accounting policies, new
accounting pronouncements and the critical audit matter addressed during the audit; and |
› |
Met
with KPMG with and without management to discuss the results of their examinations and their observations and recommendations regarding
the quality and adequacy of the Company’s internal controls; |
› |
Received from
KPMG written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent accountant’s
communications with the Audit Committee concerning independence, and discussed, with KPMG, their independence; and
|
› | Reviewed
and approved the amount of fees paid to KPMG for audit, audit-related and tax compliance
and other services and concluded that the provision of services by them did not impair their
independence. |
| |
| |
| |
| |
| |
| |
Based on the foregoing review and discussions,
and subject to the limitations on the Audit Committee’s role and responsibilities described above and in the Audit Committee
charter, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in its
Annual Report on Form 10-K for the year ended December 31, 2022 for filing with the SEC.
66 | EAST WEST BANCORP 2023 PROXY STATEMENT |
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS AND MANAGEMENT | | |
| |
Stock Ownership of Principal Stockholders,
Directors,
and Management
The following table presents the beneficial ownership
of the Company’s common stock as of March 31, 2023, by (i) each person or entity known to the Company to beneficially own more
than 5% of the outstanding common stock (or have the right to acquire within 60 days), (ii) the directors and director nominees, (iii)
Named Executive Officers, and (iv) all directors and executive officers, as a group:
Name
and Address of Beneficial Owner |
Common
Stock Number of Shares Beneficially Owned |
Percent
of Class |
The
Vanguard Group1
100 Vanguard Boulevard
Malvern, PA 19355 |
14,665,380 |
10.40% |
BlackRock,
Inc.2
55 East 52nd Street
New York, NY 10055 |
13,021,208 |
9.2% |
Capital
International Investors3
333
South Hope Street, 55th Fl.
Los Angeles, CA 90071 |
12,372,131 |
8.8% |
Directors
and Named Executive Officers4 |
Manuel P. Alvarez |
2,695 |
* |
Molly Campbell |
13,193 |
* |
Archana Deskus |
8,193 |
* |
Serge Dumont |
2,006 |
* |
Rudolph
I. Estrada5 |
18,957 |
* |
Paul H. Irving |
36,568 |
* |
Sabrina Kay |
2,006 |
* |
Douglas P. Krause |
93,109 |
* |
Jack C. Liu |
17,136 |
* |
Dominic
Ng6 |
937,852 |
* |
Irene H. Oh |
127,215 |
* |
Parker L. Shi |
0 |
* |
Lester M. Sussman |
19,577 |
* |
Gary Teo |
11,405 |
* |
All
Directors and Executive Officers, as a group (14 persons) |
1,289,912 |
* |
1. | Represents
shares of the Company’s common stock beneficially owned as of December 31, 2022, based
on the Schedule 13G/A filed by The Vanguard Group on February 9, 2023. According to the Schedule
13G/A, Vanguard Group has shared voting power with respect to 53,673 shares, sole dispositive
power with respect to 14,471,823 shares and shared dispositive power with respect to 193,557
shares of the Company’s common stock. |
| |
2. | Represents
shares of the Company’s common stock beneficially owned as of December 31, 2022, based
on the Schedule 13G/A filed by BlackRock, Inc. on January 24, 2021. According to the Schedule
13G/A, BlackRock, Inc. has sole voting power with respect to 12,587,808 shares and sole dispositive
power with respect to 13,021,208 shares of the Company’s common stock. |
| |
3. | Represents
shares of the Company’s common stock beneficially owned as of December 31, 2022, based
on the Schedule 13G/A filed by Capital International Investors on February 13, 2023. According
to the Schedule 13G/A, Capital International Investors has sole voting power with respect
to 12,372,131 shares and sole dispositive power with respect to 12,372,131 shares of the
Company’s common stock. |
| |
4. | Excludes
time-based and performance-based restricted stock units (“RSUs”) that were not
vested as of March 31, 2023. There were no time-based or performance-based RSUs that are
expected to vest within 60 days from March 31, 2023. |
| |
5. | 601
of these shares are held in three trusts, for the benefit of family members, for which Mr.
Estrada has voting and investment power. |
| |
6. | 53,000
of these shares are held in two trusts, for the benefit of family members, for which Mr.
Ng has voting and investment power. |
67 | EAST WEST BANCORP 2023 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | | |
| |
Questions and Answers about the Annual Meeting and
Voting
The information provided in the “question
and answer” format below is for your convenience only and does not contain all of the information you should consider before voting.
You should read this entire Proxy Statement carefully before voting.
Important
notice regarding availability of proxy materials for the
Annual
Meeting to be held on May 23, 2023
Pursuant
to the SEC rules related to the availability of proxy materials, the Company has made its
Proxy Statement and Annual Report on Form 10-K
available at www.envisionreports.com/EWBC.
|
When is the virtual Annual
Meeting and what are the procedures for attending and participating virtually at the Annual Meeting?
|
DATE
AND TIME
Tuesday, May 23, 2023, at 2:00 p.m., Pacific Time |
|
RECORD
DATE
March 31, 2023 |
|
PLACE
Virtual Annual Meeting Link:
www.meetnow.global/MKAYVNG |
We are holding the Annal Meeting in
a virtual-only meeting format.
If you are a registered stockholder
(i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the Annual Meeting virtually.
Please follow the instructions on the notice or proxy card that you received. If you hold your shares through an intermediary, such as
a bank or broker, you must register in advance to attend the Annual Meeting. To register to attend the Annual Meeting, you must submit
proof of your proxy power (legal proxy) reflecting your East West Bancorp, Inc. holdings along with your name and email address to Computershare
at legalproxy@computershare.com or by mail to P.O. Box 43001, Providence, RI 02940-3001. Requests for registration must be labeled as
“Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 18, 2023.
If you choose to vote during the virtual
Annual Meeting, you will need the 15-digit control number appearing on the Notice of Internet Availability or proxy card distributed to
you.
If you want to vote shares that you hold
in street name during the virtual Annual Meeting, a control number must be obtained in advance to vote during the meeting or to submit
questions during the meeting. To obtain a control number, beneficial stockholders must submit proof of their legal proxy issued by their
broker, bank, or other nominee that holds their shares by sending a copy of the legal proxy, along with their name and email address,
to Computershare via email at legalproxy@computershare.com or by mail to P.O. Box 43001, Providence, RI 02940-3001.
Requests for a control number must be
labeled as “Legal Proxy” and be received by Computershare no later than 5:00 p.m., Eastern Time, on May 18, 2023.
The Annual Meeting will include a question
and answer session. Questions may be submitted during the Annual Meeting through the virtual meeting website, www.meetnow.global/MKAYVNG.
If we receive substantially similar questions, we may group such questions together and provide a single response to avoid repetition
and allow time for additional topics.
We encourage stockholders to log in to the
virtual meeting website and access the webcast early, beginning approximately 15 minutes before the Annual Meeting’s 2:00 p.m.
(Pacific Time) start time. If you experience technical difficulties, please contact the technical support telephone number posted on
www.meetnow.global/MKAYVNG.
68 | EAST WEST BANCORP 2023 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | | |
| |
Whether or not you choose to participate
in the Annual Meeting, it is important that your shares be part of the voting process. In addition, even if you plan to attend the
Annual Meeting, we encourage you to return your proxy card or provide your bank, broker or other institution with voting instructions,
before the Annual Meeting in order to ensure that your shares are represented. |
What matters am I voting on?
YOU WILL BE VOTING ON:
› | The
election of ten directors to hold office until the 2024 annual meeting of stockholders or until their successors are duly elected and
qualified; |
› | A
non-binding advisory vote to approve the compensation paid to our Named Executive Officers for 2022, as described in this Proxy Statement; |
› | A
non-binding advisory vote to approve the frequency of future advisory votes on executive compensation; |
› | A
proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31,
2023; and |
› | Any
other business that may properly come before the Annual Meeting. |
How does the Board recommend I vote on these proposals?
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE:
› | FOR
the election of the ten nominees as directors; |
› | FOR
the approval, on a non-binding, advisory basis, of the compensation paid to our Named Executive Officers for 2022; |
› | FOR
the approval, on a non-binding, advisory basis, of holding an advisory vote on executive compensation every “ONE” year;
and |
› | FOR
the ratification of the appointment of KPMG LLP to serve as our independent registered public accounting firm for the year ending
December 31, 2023. |
Who is entitled to vote?
Holders of our common stock as of the
close of business on the Record Date may vote at the Annual Meeting. As of the Record Date, we had 141,395,435 shares of common stock
outstanding. In deciding all matters at the Annual Meeting, each stockholder will be entitled to one vote for each share of common stock
held on the Record Date. We do not have cumulative voting rights for the election of directors.
› | Stockholders
of Record. If your shares are registered directly in your name with our transfer agent,
you are considered the stockholder of record with respect to those shares, and this Proxy
Statement was provided to you directly by us. As the stockholder of record, you have the
right to delegate your voting directly to the individuals listed on the proxy card or to
vote in person at the virtual Annual Meeting. |
› | Beneficial
Owner: Street Name Stockholders. If your shares are held in a stock brokerage account
or by a bank or other nominee, you are considered the beneficial owner of shares held in
street name, or a street name stockholder, and this Proxy Statement was forwarded to you
by your broker, bank or other nominee, who is considered the stockholder of record with respect
to those shares. As the beneficial owner, you have the right to direct your broker, bank
or other nominee on how to vote your shares. Beneficial owners are also invited to attend
the Annual Meeting. However, because beneficial owners are not the stockholder of record,
you may not vote your shares in person at the Annual Meeting unless you follow your broker’s,
bank’s or other nominee’s procedures for obtaining a legal proxy giving you the
right to vote your shares at the Annual Meeting. |
69 | EAST WEST BANCORP 2023 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | | |
| |
How do I vote?
If you are a stockholder
of record, you may:
› | Instruct
the proxy holder or holders on how to vote your shares by using the internet voting site at www. envisionreports.com/EWBC or the toll-free
telephone number 1-800-652-VOTE (8683), 24-hours a day, seven days a week, until 2:00 p.m. Pacific Time on May 23, 2023 (have your proxy
card in hand when you visit the website or call); |
› | Instruct
the proxy holder or holders on how to vote your shares by completing and mailing your proxy card to the address indicated on your proxy
card (if you received printed proxy materials), which must be received by the time of the Annual Meeting; or |
› | Vote
by ballot at the virtual Annual Meeting. |
If you are a street
name stockholder, you will receive instructions from your broker, bank or other nominee. The instructions from your broker, bank or other
nominee will indicate the various methods by which you may vote, including whether internet or telephone voting is available.
› | Brokerage
firms and other intermediaries holding shares in street name for their customers are generally required to vote those shares in the manner
directed by their customers. A “Broker Non-Vote” occurs when the entity holding shares in street name has not received voting
instructions from the beneficial owner and either chooses not to vote those shares on a routine matter at the stockholders meeting or
is not permitted to vote those shares on a non-routine matter. |
› | The
only “routine” matter to be decided at the Annual Meeting is the proposal to ratify the appointment of KPMG LLP as our independent
registered public accounting firm for the year ending December 31, 2023 (Proposal 4). |
› | Absent
timely direction from you, your broker will not have discretion to vote on the other matters submitted for a vote at the Annual Meeting,
which are the election of directors and the non-binding advisory votes to approve our executive compensation for 2022 and on the frequency
of future advisory votes on executive compensation, as they are “non-routine” matters. |
› | A
“Broker Non-Vote” does not have an effect on the outcome of any proposal. It is important, therefore, that you provide instructions
to your broker, bank, trust company or other nominee so that your vote with respect to the proposals is counted. |
Can I change or revoke my vote?
Yes. Subject to
any rules that your broker, bank or other nominee may have, you can change your vote or revoke your proxy before the Annual Meeting.
If you are stockholder
of record, you may change your vote by:
› | Entering
a new vote via internet or telephone by 2:00 p.m. Pacific Time on May 23, 2023; or |
› | Returning
a later-dated proxy card which must be received by the time of the Annual Meeting; or |
› | Completing
a ballot in person via webcast at the virtual Annual Meeting. |
If you are a stockholder
of record, you may revoke your proxy by providing our Corporate Secretary with a written notice of revocation prior to your shares being
voted at the Annual Meeting. The written notice of revocation may be hand delivered to the Company’s Corporate Secretary or mailed
to and received by East West Bancorp at 135 N. Los Robles Ave., 7th Floor, Pasadena, California 91101, Attention: Corporate Secretary.
70 | EAST WEST BANCORP 2023 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | | |
| |
If you
are a street name stockholder, you may change your vote by:
› | Submitting
new voting instructions to your broker, bank or other nominee pursuant to instructions provided by your broker, bank or other nominee;
or |
› | Completing
a ballot at the virtual Annual Meeting, provided you have obtained a legal proxy from your broker, bank or other nominee giving you the
right to vote the shares. |
If you
are a street name stockholder, you must contact your broker, bank or other nominee that holds your shares to find out how to revoke your
proxy.
What is the effect of giving a proxy?
The persons
named in the proxy cards have been designated as proxy holders. When proxy cards are properly dated, executed and returned, the shares
represented by those proxy cards will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific
instructions are given, however, the shares will be voted in accordance with the recommendations of the Board as described above. If
any matter not described in this Proxy Statement is properly presented at the Annual Meeting, the proxy holders will use their own judgment
to determine how to vote your shares. If the Annual Meeting is adjourned, the proxy holders can vote your shares on the new meeting date
as well, unless you have properly revoked your proxy.
What is a quorum?
A
quorum is the minimum number of shares required to be present at the Annual Meeting for the meeting to be properly held under our Bylaws
and Delaware law. The presence, in person or by proxy, of a majority of all issued and outstanding shares of common stock entitled to
vote at the Annual Meeting will constitute a quorum at the Annual Meeting.
Abstentions
and Broker Non-Votes will be treated as shares present and entitled to vote for purposes of determining the presence of a quorum.
Assuming the presence of a quorum,
how many votes are needed for approval of each proposal?
Proposal |
Vote
Required |
Effect of “Abstain”
Vote |
Proposal
1 —
Election of Directors |
Each
director nominee must be elected by a vote of the majority of the votes cast, which means that the number of votes cast “FOR”
a nominee’s election exceeds the number of votes cast “AGAINST” that nominee |
No
effect |
Proposal 2 — Advisory Vote to Approve Executive Compensation
Proposal 4 — Ratification of Auditors |
Each
of Proposal 2 and Proposal 4 is approved if “FOR” votes are cast by the majority of the shares present, in person or by proxy,
and entitled to vote on such proposal |
Same
effect as “AGAINST” |
Proposal
3 – Advisory Vote
on Frequency of Future
Advisory Votes on Executive
Compensation |
The
option of one year, two years or three years, which receives the greatest number of votes present in person or by proxy and entitled
to vote at the Annual Meeting, will be deemed to be the recommendation of the stockholders |
No
effect |
71 | EAST WEST BANCORP 2023 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | | |
| |
What happens if a director nominee
does not receive a majority vote?
In an
uncontested election, any director nominee who receives a greater number of “AGAINST” votes than votes “FOR”
the nominee’s election shall immediately tender to the Board his or her offer to resign from the Board. The Board, after taking
into consideration the recommendation of the Nominating/Corporate Governance Committee, will determine whether or not to accept the resignation
of any nominee for director who receives a greater number of “AGAINST” votes than votes “FOR” the nominee’s
election. In the event of a contested election, the director nominees who receive the largest number of votes cast “FOR”
their election will be elected as directors.
How are proxies solicited for the
Annual Meeting?
Who pays for the solicitation?
Proxies
are solicited by and on behalf of the Board. All expenses associated with this solicitation will be borne by us. Although there is no
formal agreement to do so, we may reimburse brokers, banks and other nominees for their reasonable expense in forwarding these proxy
materials to their principals. Proxies will be solicited principally through the mail, however, our directors, officers and employees
may also solicit proxies personally, by telephone or via the internet. Directors, officers and employees will not be paid any additional
compensation for soliciting proxies. We have retained Georgeson LLC to assist in the distribution and solicitation of proxies. Georgeson
LLC may solicit proxies by personal interview, telephone, fax, mail and email. We expect that the fee for these services will not exceed
$12,000, plus reimbursement of customary out-of-pocket expenses.
Is my vote confidential?
Your vote
will not be disclosed either within the Company or to third parties, except as necessary to meet applicable legal requirements, to allow
for the tabulation of votes and certification of the vote, or to facilitate a successful proxy solicitation.
I share an address with another
stockholder, and we received multiple copies of the proxy materials. How can we obtain a single copy of the proxy materials?
Stockholders
who share an address and receive multiple copies of our proxy materials can request to receive a single copy in the future. To receive
a single copy of the proxy materials, stockholders may contact us at:
Stockholders
who hold shares in street name may contact their broker, bank, or other nominee to request information about “householding”
(providing one copy of this Proxy Statement for all stockholders residing at one address).
In some
cases, stockholders who hold their shares in street name and who share the same surname and address may receive only one copy of the
proxy materials. If you would like to have a separate copy of the proxy materials mailed to you or receive separate copies of future
mailings, please submit your request to your broker, bank or other nominee. We will deliver such additional copies promptly upon receipt
of such request.
72 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
OTHER INFORMATION | | |
| |
Where can I find the voting results
of the Annual Meeting?
We will disclose voting results on a Current
Report on Form 8-K to be filed with the SEC within four business days after the Annual Meeting. If final voting results are not available
to us in time to include them in the Form 8-K, we will file a Form 8-K to publish preliminary results and will provide the final results
in an amendment to the Form 8-K after final results become available.
Other Information
PROPOSALS OF STOCKHOLDERS
Proposals
of stockholders intended to be included in the proxy materials for the 2024 annual meeting of stockholders must be received by the Secretary
of East West Bancorp, Inc. at 135 N. Los Robles Avenue, 7th Floor, Pasadena, California 91101 by December 12, 2023 (120 calendar days
prior to the anniversary of this year’s April 10, 2023 mailing date).
Under
Rule 14a-8 adopted by the SEC under the Exchange Act, proposals of stockholders must conform to certain requirements as to form and may
be omitted from this Proxy Statement and proxy under certain circumstances. In order to avoid unnecessary expenditures of time and money
by stockholders and by the Company, stockholders are urged to review this rule and, if questions arise, to consult legal counsel prior
to submitting a proposal.
In
addition, the Company’s Bylaws provide that for stockholder proposals and director nominations (other than under our proxy
access bylaw) to be brought properly before an annual meeting by a stockholder, the notice must be made in writing, contain the
information required by our Bylaws regarding the stockholder and the director nominee and be delivered to the Secretary of the
Company at the Company’s principal executive offices. Notice must be provided not less than 90 calendar days or more than 120
calendar days prior to the anniversary of the previous year’s annual meeting. If the meeting will be held more than 30
calendar days before or 60 calendar days after the anniversary date of the prior year’s annual meeting, notice must be
delivered no more than 120 calendar days prior to the annual meeting and not later than the later of the 90th calendar day prior to
the annual meeting and the 10th calendar day following the date of the initial public announcement of the date of such meeting.
Accordingly, a stockholder proposal or director nomination (other than under our proxy access bylaw) for our 2024 annual meeting of
stockholders must be submitted no earlier than February 23, 2024 and no later than January 24, 2024. For director nominations using
our proxy access bylaw, the notice must be made in writing and must be delivered to the Secretary of the Company at the principal
executive offices of the Company not less than 120 calendar days or more than 150 calendar days prior to the anniversary of the
mailing date of the prior year’s proxy statement regarding the nomination, the nominee and the person making the nomination,
including proof of the required number of shares held by the stockholder or group. Accordingly, a proxy access nomination for our
2024 annual meeting of stockholders must be submitted no earlier than November 12, 2023 and no later than December 12, 2023. The
Company’s Bylaws require the stockholder notice to set forth certain information as to the matter the stockholder proposes to
bring before the annual meeting.
ANNUAL REPORT ON FORM 10-K
Our Annual
Report and this Proxy Statement are posted on our website at www.eastwestbank.com and are available from the SEC at its website at www.sec.gov.
You may also obtain a copy of our Annual Report and any exhibits thereto without
charge by sending a written request to Investor Relations, East West Bancorp, Inc., 135 N. Los Robles Avenue, 7th Floor, Pasadena,
California 91101. The Annual Report on Form 10-K will be mailed to all stockholders. The Annual Report on Form 10-K includes
financial statements required to be filed with the SEC pursuant to the Exchange Act for the year ended December 31, 2022, and the report
thereon of KPMG LLP, our independent registered public accounting firm.
73 | EAST
WEST BANCORP 2023 PROXY STATEMENT |
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