-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WYXYMaDC6Ku4tIxbMdfjTu5r3+Ty/rUKjY/6qhL9jraaqcdsFwRoCPpnT87nITKv 5Cxffx8IhBK2RrYn1i3/RA== 0001047469-99-010269.txt : 19990319 0001047469-99-010269.hdr.sgml : 19990319 ACCESSION NUMBER: 0001047469-99-010269 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990419 FILED AS OF DATE: 19990318 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CATHAY BANCORP INC CENTRAL INDEX KEY: 0000861842 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 954274680 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-18630 FILM NUMBER: 99567721 BUSINESS ADDRESS: STREET 1: 777 N BROADWAY CITY: LOS ANGELES STATE: CA ZIP: 90012 BUSINESS PHONE: 2136254700 MAIL ADDRESS: STREET 1: 777 NORTH BROADWAY CITY: LOS ANGELES STATE: CA ZIP: 90012 DEF 14A 1 DEF 14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] 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)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 CATHAY 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): [X] No Fee Required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------- CATHAY BANCORP, INC. 777 NORTH BROADWAY LOS ANGELES, CALIFORNIA 90012 To the stockholders of Cathay Bancorp, Inc.: We are pleased to invite you to attend the Annual Meeting of Stockholders of Cathay Bancorp, Inc. to be held at 777 North Broadway, Los Angeles, California 90012, on Monday, April 19, 1999, at 5:00 p.m., local time. The stockholders will be asked to elect three Class III directors of Cathay Bancorp, Inc. to serve until 2002. We look forward to seeing you at the Annual Meeting. Sincerely yours, /s/ Wilbur K. Woo ----------------------- Wilbur K. Woo Secretary CATHAY BANCORP, INC. 777 NORTH BROADWAY LOS ANGELES, CALIFORNIA 90012 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held on April 19, 1999 ------------------------ NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Cathay Bancorp, Inc. ("Bancorp") will be held at 777 North Broadway, Los Angeles, California 90012, on Monday, April 19, 1999, at 5:00 p.m., local time, to elect three Class III directors of Bancorp to serve until the 2002 annual meeting of stockholders and their successors have been elected and qualified, and to consider such other matters as may properly come before the Annual Meeting or any adjournments of the Annual Meeting. The Board of Directors is not aware of any other business to come before the Annual Meeting. The Board of Directors has selected March 5, 1999 as the record date (the "Record Date") for the Annual Meeting. Holders of record of Bancorp's Common Stock at the close of business on that date will be entitled to receive notice of, and to vote at, the Annual Meeting. Please vote, sign and date the enclosed Proxy card and return it in the accompanying envelope, which does not require postage if mailed in the United States. IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING. You are invited to attend the Annual Meeting in person. If you attend the Annual Meeting, you may choose to revoke your Proxy and vote in person at the meeting. If you do so, your Proxy card will be disregarded. By Order of the Board of Directors /s/ Wilbur K. Woo ---------------------- Wilbur K. Woo Secretary Los Angeles, California March 18, 1999 CATHAY BANCORP, INC. 777 NORTH BROADWAY LOS ANGELES, CALIFORNIA 90012 - ------------------------------------------------------------------------------- PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS April 19, 1999 - ------------------------------------------------------------------------------- GENERAL This Proxy Statement is being furnished to the holders of record of Common Stock of Cathay Bancorp, Inc., a Delaware corporation ("Bancorp"), in connection with the solicitation of proxies, including the proxy granted by the enclosed Proxy card, by the Bancorp Board of Directors for use at the 1999 Annual Meeting of Stockholders of Bancorp to be held on Monday, April 19, 1999 and at any adjournments of the Annual Meeting (the "Annual Meeting"). At the Annual Meeting, Bancorp stockholders will be asked to elect three Class III directors to serve until the 2002 annual meeting of stockholders and their successors have been elected and qualified, and to consider any other business that may properly be brought before the Annual Meeting. Stockholders are urged to vote by completing the enclosed Proxy card and returning it signed and dated in the enclosed postage-prepaid envelope. If the enclosed Proxy card is properly completed and is received by Bancorp before the voting, the shares of Common Stock represented by the Proxy card will be voted as directed on the Proxy card. If no direction is made, the shares will be voted FOR the election of each of the nominees named below as directors. Under Delaware law, the inspector of elections for the Annual Meeting may consider evidence that he deems to be reliable to reconcile proxies and ballots submitted by banks, brokers, their nominees or similar persons that represent more votes than the holder of a proxy is authorized by the recordholder to cast or more votes than the stockholder holds of record. The Bancorp Board of Directors knows of no additional proposal that will be presented for consideration at the Annual Meeting. The persons designated as proxy holders reserve the right to vote the shares in accordance with their best judgment on any proposal that does properly come before the Annual Meeting or to vote the shares for other persons if any nominee for director becomes unavailable to serve. A proxy may be revoked at any time before its exercise by filing a written notice of revocation with the Secretary of Bancorp or by delivering to the Secretary of Bancorp a later signed and dated Proxy card. A proxy may also be revoked if the person executing the Proxy card is present at the Annual Meeting and decides to vote in person. This Proxy Statement and the enclosed Proxy card were first mailed to stockholders on or about March 18, 1999. 1 QUORUM AND VOTING The Board of Directors has fixed the close of business on March 5, 1999 (the "Record Date") as the date for determining stockholders of record entitled to notice of, and to vote at, the Annual Meeting. On the Record Date, there were 8,998,396 shares of Common Stock outstanding. Each stockholder of record is entitled to one vote for each share of Common Stock registered in the stockholder's name. Cumulative voting is NOT available for the election of directors. It is important that stockholders be represented in person or by proxy at the Annual Meeting. The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the outstanding shares of Common Stock is necessary to constitute a quorum for the transaction of business. If insufficient shares are represented at the Annual Meeting to constitute a quorum or to elect the nominees for director, the Annual Meeting may be adjourned to permit further solicitation of proxies. Abstentions and broker non-votes (i.e., votes withheld by brokers on non-routine proposals in the absence of instructions from beneficial owners) are counted for purposes of establishing a quorum but will not be counted, and will have no effect, in determining whether a nominee or the nominees have been elected. Persons receiving a plurality of the votes cast at the Annual Meeting will be elected directors. Plurality means that persons who receive the largest number of votes cast are elected as directors up to the maximum number of directors to be chosen at the Annual Meeting. PRINCIPAL HOLDERS OF SECURITIES Based on Schedules 13G filed with Bancorp and with the Securities and Exchange Commission (the "SEC"), the persons and groups listed in the following table are the beneficial owners of more than five percent of Common Stock. Bancorp is not aware of any other person or group who beneficially owned more than five percent of Common Stock on the Record Date.
Amount and Nature of Beneficial of Percentage of Name and Address of Ownership of Common Stock Beneficial Owner Common Stock Beneficially Owned ------------------- ------------------ ------------------ Cathay Bank Employee Stock 570,204(1) 6.34% Ownership Plan and Trust ("ESOPT") 777 North Broadway Los Angeles, California 90012
- ------------------------------- (1) Shares of Common Stock beneficially owned by the ESOPT are allocated on an annual basis among ESOPT participants. Once shares of Common Stock are so allocated, each participant has the power to direct the vote of his or her allocated shares; the ESOPT Committee has sole power to vote and dispose of all unallocated shares of Common Stock beneficially owned by the ESOPT. As of the Record Date, the ESOPT held 8,418 unallocated shares of Common Stock. As of the Record Date, Messrs. Cheng, Chan, Ching, Poon and Tang were members of the ESOPT Committee. 2 As of the Record Date, directors and officers of Bancorp and their affiliates (including the ESOPT) were entitled to vote approximately 1,739,794 shares of Common Stock, representing approximately 19.33% of the outstanding shares of Common Stock. If shares held by the ESOPT that have been allocated to persons other than directors and officers of Bancorp are excluded from such total, as of the Record Date the directors and officers of Bancorp were entitled to vote 1,263,141 shares of Common Stock, representing approximately 14.04% of the outstanding shares of Bancorp. Bancorp has been informed that the directors and officers of Bancorp intend to vote FOR each of the nominees for director. ELECTION OF DIRECTORS Pursuant to Bancorp's Certificate of Incorporation, Bancorp's Board of Directors may consist of between three and 25 directors. The Board currently consists of eleven directors, each of whom is also a director of Cathay Bank, a California-chartered bank and wholly owned subsidiary of Bancorp. The Board has three classes of directors. The term of office of each class of directors is three years. The current term of the Class III directors will expire at the 1999 Annual Meeting of Bancorp stockholders, the current term of the Class I directors will expire at the 2000 Annual Meeting of Bancorp stockholders and the current term of the Class II directors will expire at the 2001 Annual Meeting of Bancorp stockholders. The stockholders of Bancorp are being asked to elect three Class III directors of Bancorp, who will hold office until the 2002 Annual Meeting of Stockholders and until their successors have been elected and qualified. It is intended that votes will be cast pursuant to the Proxy card FOR the three nominees named below, all of whom are currently directors of Bancorp and of Cathay Bank and have served continuously in these capacities since the dates indicated opposite their respective names. If any nominee named in this Proxy Statement becomes unavailable for any reason, or if any vacancy on the Bancorp Board of Directors should occur before the election, the shares represented by any proxy voting for that nominee will be voted for the person, if any, that may be designated by the Board of Directors to replace that nominee or to fill that vacancy on the Board. The Board of Directors, however, has no reason to believe that any nominee will be unavailable or that any vacancy on the Board of Directors will occur. The Board of Directors recommends a vote FOR the three nominees for director named below. The following table sets forth the periods each current director has served as a director of Bancorp and of Cathay Bank, and the principal occupations of each director for at least the past five years. It also sets forth information, as of the Record Date, with respect to the beneficial ownership, as that term is defined under rules and regulations of the SEC, of the outstanding Common Stock by each director, each officer named in the Summary Compensation Table below and by all the directors and officers of Bancorp as a group. 3 The information set forth in the following table as to shares of Common Stock owned has been furnished by each director and named officer.
Common Stock Percentage Beneficially Ownership Principal Director Owned on on Occupations and of Bancorp March 5, March 5, Name Age Directorships Since 1999 1999 ---- --- ------------- ------- --------- -------- Nominees for Election at Annual Meeting for the Term Ending in 2002 (Class III) - ------------------------ George T.M. Ching 84 Vice-Chairman of the Board of 1990 105,279(1) 1.17%(1) Directors of Bancorp since 1990; Vice-Chairman of the Board of Directors of Cathay Bank since 1985, President of Cathay Bank from 1962 until 1985 and director of Cathay Bank since 1962; President of Cathay Investment Company (CIC) since 1985 and director of CIC since 1984. Wing K. Fat(2) 72 Director of Cathay Bank since 1972; 1990 126,572(3) 1.41%(3) owner of interest in a Chinese-American restaurant in Sacramento, California, for over 40 years. Wilbur K. Woo 83 Secretary of Bancorp since 1990; 1990 169,928(4) 1.89%(4) Secretary of the Board of Directors of Cathay Bank since 1980 and director of Cathay Bank since 1978; Director of CIC since 1987. Directors Currently Serving Term Ending in 2000 (Class I) - ------------------- Michael M.Y. Chang 62 Director of Cathay Bank since 1983; 1990 150,193(5) 1.67%(5) self-employed attorney at law since 1971. Patrick S.D. Lee 64 Director of Cathay Bank since 1983; 1990 64,786(6) 0.72%(6) Director of CIC since 1984; President of T.C. Construction Corporation from 1972 through 1997 (construction and development of commercial and residential real estate); Vice President of T.C. Realty, Inc. (property management). 4 Common Stock Percentage Beneficially Ownership Principal Director Owned on on Occupations and of Bancorp March 5, March 5, Name Age Directorships Since 1999 1999 ---- --- ------------- ------- --------- -------- Anthony M. Tang 45 Executive Vice President of Bancorp 1990 216,283(7) 2.40%(7) since 1994; Senior Executive Vice President of Cathay Bank since December 1998; Executive Vice President of Cathay Bank from 1994 to December 1998; Senior Vice President of Bancorp and Cathay Bank from 1990 until 1994; Chief Financial Officer and Treasurer of Bancorp since 1990; Chief Lending Officer of Cathay Bank since 1985; and director of Cathay Bank since 1986. Thomas G. Tartaglia 75 Director of Cathay Bank since 1986; 1990 16,561(8) 0.18%(8) formerly Executive Vice President of Cathay Bank from 1984 until 1990. Directors Currently Serving Term Ending in 2001 (Class II) - ------------------- Ralph Roy Buon-Cristiani 73 Director of Cathay Bank since 1981; 1990 123,937(9) 1.38%(9) retired doctor of veterinary medicine. Kelly L. Chan(2) 52 Director of Cathay Bank since 1981; 1990 88,232(10) 0.98%(10) owner of interest in Phoenix Bakery, Inc., a retail bakery in Los Angeles, California, since 1984. Dunson K. Cheng 54 Chairman of the Board of Directors of 1990 161,913(11) 1.80%(11) each of Bancorp, Cathay Bank and CIC since 1994; President of Bancorp since 1990; President of Cathay Bank since 1985 and director of Cathay Bank since 1982; Secretary of CIC from 1985 until 1994; Chief Executive Officer of CIC since 1995 and director of CIC since 1984. 5 Common Stock Percentage Beneficially Ownership Principal Director Owned on on Occupations and of Bancorp March 5, March 5, Name Age Directorships Since 1999 1999 ---- --- ------------- ------- --------- -------- Chi-Hung Joseph Poon 52 Director of Cathay Bank since 1981; 1990 20,028(12) 0.22%(12) Director of CIC since 1984; Secretary and Chief Financial Officer of CIC since 1994; President of Edward Properties, Inc. since 1981 (real estate development). All directors and officers 1,263,141(13) 14.04%(13) as a group (18 persons)
- --------------------------- (1) Includes 88,057 shares held by the Ching Family Trust, approximately 3,205 shares held by Mr. Ching's wife and 8,418 shares held as unallocated shares by the ESOPT. Mr. Ching is a member of the ESOPT Committee and, as such, may be deemed to be a beneficial owner of unallocated ESOPT shares. (2) Kelly L. Chan is the nephew, by marriage, of Wing K. Fat. (3) Includes approximately 58,389 shares held by Fat Family Trust, approximately 63,337 shares held by Frank Fat, Inc., and approximately 4,806 shares held by Frank Fat Properties. (4) Consists entirely of shares held by Mr. Woo as trustee of a living trust established by Mr. Woo and his wife. (5) Includes approximately 34,554 shares held by Mr. Chang and his wife, approximately 31,236 shares held by Mr. Chang as custodian for his children, approximately 32,200 shares held by Mr. Chang's wife, as custodian for their children, and 52,203 shares held by the Michael and Judy Chang Family Trust. (6) Consists entirely of shares held by Mr. Lee as trustee of the Lee Trust. (7) Includes 23,349 shares held by Mr. Tang as custodian for his children, approximately 52,271 shares held by Mr. Tang's wife and approximately 17,564 shares held by the ESOPT which have been allocated to Mr. Tang's account through the Record Date and 8,418 shares held as unallocated shares by the ESOPT. Mr. Tang is a member of the ESOPT Committee and, as such, may be deemed to be a beneficial owner of unallocated ESOPT shares. (8) Consists of 11,508 shares held by the Thomas G. Tartaglia Trust and 5,053 shares held by the ESOPT which have been allocated to Mr. Tartaglia's account through the Record Date. (9) Includes 15,582 shares which Dr. Buon-Cristiani holds as custodian for his grandchildren. (10) Includes approximately 14,572 shares held by the Kelly and Barbara Chan Living Trust, 1,000 shares held by Mr. Chan's wife, approximately 2,851 shares held by Mr. Chan as custodian for his children, approximately 6,671 shares held by Chansons Properties, 50,000 shares held as Trustee of the WHFC Chan Grandchildren Sprinkling Trust and 8,418 shares held as unallocated shares by the ESOPT. Mr. Chan is a member of the ESOPT Committee and, as such, may be deemed to be a beneficial owner of unallocated ESOPT shares. (11) Includes approximately 57,586 shares held by the Dunson Cheng and Cynthia Cheng Trust, approximately 20,351 shares held by the ESOPT which have been allocated to Mr. Cheng's account through the Record Date and 8,418 shares held as unallocated shares by the ESOPT. Mr. Cheng is a member of the ESOPT Committee and, as such, may be deemed to be a beneficial owner of unallocated ESOPT shares. 6 (12) Includes 8,418 shares held as unallocated shares by the ESOPT. Mr. Poon is a member of the ESOPT Committee and, as such, may be deemed to be a beneficial owner of unallocated ESOPT shares. (13) Includes a total of 85,133 held by the ESOPT that have been allocated to the directors and officers through the Record Date and 8,418 shares held as unallocated shares by the ESOPT. THE BOARD OF DIRECTORS Regular meetings of the Bancorp Board of Directors are generally held on a monthly basis, while special meetings are called when necessary. The Bancorp Board of Directors held 12 meetings during 1998. During the fiscal year ended December 31, 1998, each director attended 75% or more of the meetings of the Bancorp Board. During the fiscal year ended December 31, 1998, the Bancorp Board of Directors had four standing committees, the Audit Committee, the Executive Committee, the ESOPT Committee and the Equity Incentive Plan Committee. The Bancorp Board of Directors does not have a nominating committee or a committee performing similar functions. AUDIT COMMITTEE During the fiscal year ended December 31, 1998, the Audit Committee consisted of Ralph Roy Buon-Cristiani (Chairman), Kelly L. Chan, Michael M.Y. Chang and Thomas Tartaglia. Mr. Cheng also served on the Audit Committee ex-officio in his capacity as President and chief executive officer. This committee oversees Bancorp's financial reporting on behalf of the Bancorp Board of Directors; recommends to the Bancorp Board of Directors and stockholders the independent auditors who will perform the annual audit; reviews with the independent auditors the proposed scope of, fees for, and results of the annual audit; reviews the system of internal accounting controls and the scope and results of internal audits with the independent auditors, the internal auditors and Bancorp management; considers the audit and non-audit services provided by the independent auditors, the proposed fees to be charged for each type of service, and the effect of non-audit services on the independence of the independent auditors; and performs any other tasks that may be assigned to it by the Board of Directors. The Audit Committee met 16 times during 1998 and each committee member attended 75% or more of the meetings of this committee. EXECUTIVE COMMITTEE During the fiscal year ended December 31, 1998, the Executive Committee consisted of Dunson K. Cheng (Chairman and serving in an ex-officio capacity, as President and chief executive officer of Bancorp), George T.M. Ching, Anthony M. Tang and Thomas G. Tartaglia. This committee has been delegated authority to exercise all powers of the Bancorp Board of Directors in the intervals between Board meetings, except those powers delegated to other committees and those that by statute, charter or bylaws are reserved to the full Board of Directors. The Executive Committee met 12 times during 1998 and each committee member attended 75% or more of the meetings of this committee. ESOPT COMMITTEE During the fiscal year ended December 31, 1998, the ESOPT Committee consisted of Dunson K. Cheng (Chairman), Kelly L. Chan, George T.M. Ching, Chi-Hung Joseph Poon and Anthony M. Tang. This committee has been delegated authority to administer the ESOPT in accordance with plan provisions and applicable governmental regulations. It is responsible for, among other things, the investment and 7 management of the ESOPT's assets. The ESOPT Committee met once during 1998 and each committee member attended the meeting. EQUITY INCENTIVE PLAN COMMITTEE During the fiscal year ended December 31, 1998, the Equity Incentive Plan Committee consisted of Chi-Hung Joseph Poon (Chairman), Ralph Roy Buon-Cristiani, Michael M.Y. Chang and Wing K. Fat. This committee has the authority to select participants, including executive officers and directors, of Bancorp and its subsidiaries to receive awards under the Cathay Bancorp Inc. Equity Incentive Plan (the "Equity Incentive Plan") and has broad discretion to determine the amount and types of awards, and the terms and conditions of individual awards. Established in September 1998, the Equity Incentive Plan Committee met three times during 1998 and each committee member attended 75% or more of the meetings of this committee. COMPENSATION OF DIRECTORS The persons currently serving as directors of Bancorp are the same persons who currently serve as directors of Cathay Bank. As a result, the current policy for compensation of directors is that Cathay Bank pays each Cathay Bank director who is not also a full-time officer of Bancorp, Cathay Bank or CIC an annual fee of $13,200 plus $200 for each Cathay Bank Board committee meeting (other than loan committee meetings) and $250 for each Cathay Bank Board loan committee meeting attended by the director. In 1998, Cathay Bank also paid each Cathay Bank non-employee director a $4,050 bonus. CIC currently pays each of its directors who is not a full-time officer of CIC, Bancorp or Cathay Bank an fee of $200 for each of its Board of Directors meetings attended. Bancorp, Cathay Bank and CIC reimburse directors for out-of-pocket expenses incurred in attending meetings of the Boards of Directors and Board committees and in traveling on company business. In addition to director fees paid to such persons, in 1998, Cathay Bank paid $15,391 to Mr. Woo as salary for his service as an officer, and CIC paid $23,169 to Mr. Ching as an officer. Directors are also eligible to receive stock option grants and restricted stock awards under the Equity Incentive Plan. In 1998, each non-employee director was granted nonqualified stock options to purchase 500 shares of Bancorp Common Stock at an exercise price of $33.00 per share (which was the per share fair market value of the Bancorp Common Stock on the date of grant). Such options become exercisable in 20% increments over a five-year period and terminate ten years from the date of grant (subject to early termination in the event of termination of directorship, disability or death). 8 INFORMATION CONCERNING MANAGEMENT COMPENSATION REMUNERATION OF EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES The following tables sets forth information regarding the compensation for services in all capacities paid or accrued for the calendar year ended December 31, 1998, by Bancorp or Cathay Bank (a) to the chief executive officer of Bancorp and (b) to the four most highly compensated executive officers and significant employees of either Bancorp or Cathay Bank. SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Long Term Compensation Annual Compensation Awards -------------------------------- ------------ Other Annual Securities All Other Compen- Underlying Compen- Name and Principal Year Salary Bonus sation(2) Options sation Position ($)(1) ($) ($) (#) ($) - ----------------------------------------------------------------------------------------------------------- Dunson K. Cheng, 1998 $366,354 $380,000 $3,657 17,500 $15,933(3) Chairman of the 1997 339,217 300,000 4,613 -0- 14,818(4) Board of Directors, 1996 314,190 195,000 3,860 -0- 15,007(5) President and chief executive officer of Bancorp and Cathay Bank - ----------------------------------------------------------------------------------------------------------- Anthony M. Tang, Executive 1998 160,930 133,608 -- 5,410 15,301(6) Vice-President and Chief 1997 150,500 110,000 -- -0- 15,190(7) Financial Officer/Treasurer 1996 138,000 78,917 -- -0- 14,340(8) of Bancorp and Senior Executive Vice-President and Chief Lending Officer of Cathay Bank - ----------------------------------------------------------------------------------------------------------- Irwin Wong, Executive 1998 105,773 77,992 637 3,900 14,406(9) Vice-President for Branch 1997 98,636 62,465 710 -0- 14,327(10) Administration of Cathay Bank 1996 91,945 41,621 454 -0- 13,663(11) - ----------------------------------------------------------------------------------------------------------- Milly W. Joe, Senior 1998 102,734 58,000 -- -0- 12,070(12) Vice-President and Cashier 1997 98,184 50,517 -- -0- 12,952(13) of Cathay Bank (Retired in 1996 93,555 39,016 -- -0- 13,391(14) February, 1999) - ----------------------------------------------------------------------------------------------------------- Elena Chan, Senior 1998 96,608 71,075 -- 2,830 11,827(15) Vice-President and Chief 1997 90,736 61,800 -- -0- 11,652(16) Financial Officer of 1996 84,200 41,232 -- -0- 11,195(17) Cathay Bank - ----------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------
(1) Includes amounts deferred by the named officers under the Cathay Bancorp's 401(k) Profit Sharing Plan (the "401(k) Plan"). 9 (2) The amounts reported in this column reflect the incremental cost to Bancorp of automobiles provided to the named officers. Excludes other perquisites and personal benefits paid to each named officer as such other perquisites and personal benefits, in each instance, were less than the lesser of $50,000 or 10% of the total annual salary and bonus set forth above. (3) This amount consists of $1,064 in group life insurance premiums, $2,690 in health insurance premiums, $7,313 in employer contribution to the ESOPT and $4,866 in employer contribution under the 401(k) Plan. (4) This amount consists of $1,758 in group life insurance premiums, $2,873 in health insurance premiums and $7,328 in employer contribution to the ESOPT and $2,859 in employer contribution under the 401(k) Plan. (5) This amount consists of $2,424 in group life insurance premiums, $2,877 in health insurance premiums and $9,706 in employer contribution to the ESOPT. (6) This amount consists of $875 in group life insurance premiums, $3,872 in health insurance premiums, $7,335 in employer contribution to the ESOPT and $3,219 in employer contribution under the 401(k) Plan. (7) This amount consists of $1,570 in group life insurance premiums, $3,727 in health insurance premiums, $7,350 in employer contribution to the ESOPT and $2,543 in employer contribution under the 401(k) Plan. (8) This amount consists of $1,268 in group life insurance premiums, $3,334 in health insurance premiums and $9,738 in employer contribution to the ESOPT. (9) This amount consists of $1,120 in group life insurance premiums, $3,872 in health insurance premiums, $7,299 employer contribution to the ESOPT and $2,115 in employer contribution under the 401(k) Plan. (10) This amount consists of $1,607 in group life insurance premiums, $3,743 in health insurance premiums, $7,314 in employer contribution to the ESOPT and $1,663 in employer contribution under the 401(k) Plan. (11) This amount consists of $1,549 in group life insurance premiums, $3,358 in health insurance premiums and $8,756 in employer contribution to the ESOPT. (12) This amount consists of $956 in group life insurance premiums, $1,677 in health insurance premiums, $7,385 in employer contribution to the ESOPT and $2,052 in employer contribution under the 401(k) Plan. (13) This amount consists of $1,443 in group term life insurance premiums, $2,867 in health insurance premiums, $6,996 in employer contribution to the ESOPT and $1,646 in employer contribution under the 401(k) Plan. (14) This amount consists of $2,281 in group life insurance premiums, $2,877 in health insurance premiums and $8,833 in employer contribution to the ESOPT. (15) This amount consists of $873 in group life insurance premiums, $1,678 in health insurance premiums, $7,344 in employer contribution to the ESOPT and $1,932 in employer contribution under the 401(k) Plan. (16) This amount consists of $1,307 in group life insurance premiums, $1,738 in health insurance premiums, $7,078 in employer contribution to the ESOPT and $1,529 in employer contribution under the 401(k) Plan. (17) This amount consists of $1,228 in group life insurance premiums, $1,718 in health insurance premiums and $8,249 in employer contribution to the ESOPT. 10 OPTIONS AND STOCK APPRECIATION RIGHTS The following table summarizes individual option grants made during 1998 to the individuals named in the above Summary Compensation Table. In 1998, the Company had no outstanding stock appreciation rights. OPTION GRANTS IN LAST FISCAL YEAR
Grant Date Individual Grants Value - ------------------------------------------------------------------------------- ----------- Number of Securities % of Total Grant Underlying Options Date Options Granted to Exercise Present Granted Employees Price Expiration Value Name (#)(1) in 1998 ($/Sh) Date ($)(2) ---- ---------- ---------- -------- ---------- ----------- Dunson K. Cheng 17,500 43.2% $33.00 9/17/08 $161,175 Anthony M. Tang 5,410 13.3% $33.00 9/17/08 $ 49,826 Irwin Wong 3,900 9.6% $33.00 9/17/08 $ 35,919 Milly W. Joe -0- -- -- -- -- Elena Chan 2,830 7.0% $33.00 9/17/08 $ 26,064
- ------------------------ (1) Such options become exercisable in 20% increments over a five-year period (subject to early termination in the event of termination of employment, disability or death). (2) The grant date present values are estimated using the Black-Scholes option-pricing model assuming (i) a four-year expected life of the option; (ii) a stock price volatility of 33.5%, based on daily market prices for the preceding four-year period; (iii) an expected dividend yield of 1.9% per share per annum; and (iv) a risk-free interest rate of 4.5%. The grant date present values are provided in accordance with the rules of the SEC and do not represent Bancorp's estimate or projection of the future value or market price of Bancorp's Common Stock. Actual gains, if any, on stock option exercises are dependent, among other things, on Bancorp's future financial performance, overall market conditions and the option holder's continued employment through the vesting period. The following table summarizes options exercises during 1998, and the number of all options and the value of all in-the-money options held at the end of 1998, by the individuals named in the above Summary Compensation Table. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of Securities Underlying Unexercised Value of Unexercised In- Options at End of the-Money Options at End Fiscal 1998 (#) of Fiscal 1998 ($)(1) Shares Acquired Value ------------------------- ------------------------- Name on Exercise (#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable ---- --------------- ----------- ------------------------- ------------------------- Dunson K. Cheng -0- -0- -0-/17,500 $0/$140,000 Anthony M. Tang -0- -0- -0-/ 5,410 $0/$ 43,280 Irwin Wong -0- -0- -0-/ 3,900 $0/$ 31,200 Milly W. Joe -0- -0- --/-- --/-- Elena Chan -0- -0- -0-/2,830 $0/$ 22,640
- ------------------------- (1) Based on the market value of the underlying securities of year end, less the exercise price. 11 CATHAY BANCORP, INC. 401(k) PLAN In 1997, the Board approved the Cathay Bancorp, Inc. 401(k) Profit Sharing Plan (the "401(k) Plan"), which began on March 1, 1997. Salaried employees who have completed one year of service and have attained the age of 21 are eligible to participate. Enrollment dates are on January 1st and July 1st of each year. Participants may contribute up to 15% of their compensation for the year, not to exceed the dollar limit set by the Internal Revenue Service (the "IRS"). Participants may change their contribution election on the enrollment dates. Bancorp matches 50% of the participants' contribution up to 4% of their compensation. The vesting schedule for matching contribution is 0% for less than two years of service, 25% after two years of service and from then on, at an increment of 25% each year until 100% vested after five years of service. In 1998, Bancorp's contribution amounted to $178,510. The 401(k) Plan allows participants to withdraw all or part of their vested amount in the 401(k) Plan due to certain financial hardships as designed by the IRS. Participants may also borrow up to 50% of the vested amount, up to a maximum of $50,000. The minimum loan amount is $1,000. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Board of Directors of Bancorp has a committee administering the Equity Incentive Plan, but does not have a compensation committee. No executive officer is separately compensated for services rendered to Bancorp. With the exception of Mr. Wong, Ms. Chan and Ms. Joe, the executive officers hold positions with both Bancorp and Cathay Bank. Mr. Wong and Ms. Chan are executive officers of Cathay Bank only and are not considered to be executive officers of Bancorp. Ms. Joe retired in February 1999. Prior to her retirement, Ms. Joe was an executive officer of Cathay Bank only and was not considered to be an executive officer of Bancorp. Accordingly, decisions regarding the compensation of executive officers, including the President and chief executive officer, other than the grant of awards under the Equity Incentive Plan, are made by the Compensation Committee of the Board of Directors of Cathay Bank, subject to review and approval by the Board of Directors of Cathay Bank. Decisions regarding the grant of awards under the Equity Incentive Plan to executive officers, including the President and chief executive officer, are made by the Equity Incentive Plan Committee. In the fiscal year ended December 31, 1998, the members of the Compensation Committee of Cathay Bank were Dunson K. Cheng, Chairman, George T.M. Ching, Chi-Hung Joseph Poon, Thomas G. Tartaglia and Kelly L. Chan, each of whom also was a director of Bancorp during 1998. Mr. Cheng, the chairman of the Compensation Committee of Cathay Bank, is also the Chairman, President and chief executive officer of Cathay Bank and of Bancorp. Mr. Cheng also is a member of the Boards of Directors of Cathay Bank and of Bancorp. Mr. Cheng does not participate in, and excuses himself from, those portions of any meeting of the Board of Directors or the Compensation Committee of Cathay Bank in which his compensation is discussed or established. In the fiscal year ended December 31, 1998, the members of the Equity Incentive Plan Committee were Chi-Hung Joseph Poon, Chairman, Ralph Roy Buon-Cristiani, Michael M.Y. Chang and Wing K. Fat. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION GENERAL The Compensation Committee of the Board of Directors of Cathay Bank establishes general policies on executive compensation as well as the actual salary, bonus and discretionary benefits of the President and chief executive officer of Bancorp and Cathay Bank, of each Executive Vice-President of 12 Bancorp and Cathay Bank, of the Senior Executive Vice-President of Cathay Bank, of each Senior Vice-President of Cathay Bank, and of each Regional Vice-President of Cathay Bank. Decisions by the Cathay Bank Compensation Committee are subject to review and approval by the full Board of Directors of Cathay Bank. The Equity Incentive Plan Committee selects participants, including the executive officers, of Bancorp and its subsidiaries, including Cathay Bank, to receive awards under the Equity Incentive Plan and has broad discretion to determine the amount and types of awards and the terms and conditions of individual awards. The compensation program for executive officers, including the President and chief executive officer, currently consists of base salary, annual cash bonus, participation in Bancorp's ESOPT (Employee Stock Ownership Plan and Trust)(1), certain matching contributions under the 401(k) Plan, life insurance in an amount equal to three times base salary and the same medical, dental and disability benefits as provided to other Cathay Bank employees. In 1998, such officers also became eligible to participate in the Equity Incentive Plan. The Cathay Bank Compensation Committee and the Bancorp Equity Incentive Plan Committee believe that to reward, provide incentives to and retain capable management, each of the executive officers should receive compensation that is both competitive and reflective of Cathay Bank's and Bancorp's performance. In addition, the Compensation Committee and the Bancorp Equity Incentive Plan Committee believe individual compensation should reflect the experience, performance and responsibility level of that individual. As a result of changes to the Internal Revenue Code adopted in 1993, publicly held corporations generally are not permitted a federal income tax deduction for compensation paid to certain officers to the extent that such an officer's compensation exceeds $1 million in a taxable year. An exception may apply to certain performance-based payments that are approved in advance by a majority vote of the stockholders. Bancorp has not previously paid compensation at levels that would cause this limitation to apply to Bancorp, and has no current plans to do so in the future. The Compensation Committee has not adopted any formal policy concerning the possible application of this limitation, should an officer in the future appear to merit compensation in excess of the limitation. The Compensation Committee will continue to review the issue and monitor whether any such payments would be structured so as to qualify as performance-based compensation that would be deductible. - ---------------------------- (1) Participation in the ESOPT is available to all salaried employees who have completed at least two full years of service. Each participant's share of Bancorp's annual contribution to the ESOPT, including the share of each participating executive officer, is calculated by dividing the participant's total "units" by the total "units" of all ESOPT participants for that year. Each ESOPT participant is granted one "unit" for each year of service and one "unit" for each one hundred dollars of eligible compensation. The Board of Directors determines the amount of Bancorp's annual contribution to the ESOPT in light of Bancorp's earnings in the prior plan year. Bancorp's annual contribution is made in cash. The cash contributed by Bancorp to the ESOPT is invested by the ESOPT's trustees in shares of Bancorp's Common Stock. Each participant's benefits under the ESOPT consists of the cash (or cash equivalents) and shares of Bancorp's Common Stock allocated to the participant's ESOPT account in accordance with the above-described formula. Under the ESOPT, each participant's benefits are 100% vested and without risk of forfeiture. Benefits under the ESOPT are distributed to the participant in accordance with the rules of the ESOPT and generally begin when the participant attains the age of 65 (or upon death or disability) or after the lapse of five years following termination of employment. 13 BASE COMPENSATION As part of the process of establishing base salaries, the Compensation Committee reviews the performance of each executive officer in relation to the overall performance of Cathay Bank and considers factors such as the experience and responsibility of each individual, including performance of special projects and assignments. Because the Committee believes that the evaluation of performance should not be reduced to a formula, the Committee considers a wide range of performance criteria, including objective factors such as earnings and profits and subjective factors such as individual performance. In establishing each executive officer's base salary, the Compensation Committee generally gives the most weight to the subjective evaluation of the performance of the individual in relation to the performance of Cathay Bank followed by a consideration of the officer's level of responsibility, experience and then an evaluation of objective performance factors, without any particular magnitude being assigned to this order of factors. The size of the base salary for each executive officer is determined by the above-mentioned subjective evaluation of the individual's performance, a comparison of the compensation levels paid to the individual in past years in relation to the individual's performance in those years and Bancorp's and Cathay Bank's general financial condition, profitability and results from operations. Bancorp's 1997 total assets increased by approximately 8% over 1996 levels, its 1997 stockholders' equity grew by approximately 15% over the 1996 figure, its return on average assets increased by 23% from 1.05% in 1996 to 1.29% in 1997, and its earnings per share increased from $1.66 in 1996 to $2.26 in 1997. The Compensation Committee considered these financial performance data and the level of responsibilities in giving executive officers an increase in base salaries in April 1998 (approximately 4.5% to 8%). The Compensation Committee further notes that Bancorp's financial outlook has continued to improve. Bancorp's 1998 total assets increased by approximately 10% over 1997 levels, its 1998 stockholders' equity grew by approximately 15% over the 1997 figure, its return on average assets increased from 1.29% in 1997 to 1.44% in 1998 and its earnings per share increased from $2.26 in 1997 to $2.74 in 1998. It should be noted that the Compensation Committee does not review objective data on the financial condition, profitability and results from operations of Bancorp and Cathay Bank in a vacuum. In deciding compensation levels of executives (whether it is base salary or bonuses), the Compensation Committee reviews objective data in light of the financial performance of other similar banks, Bancorp's and Cathay Bank's relative advantages and disadvantages in the banking industry and the obstacles and challenges presented to the particular executive in attempting to achieve the goals of Bancorp and Cathay Bank. The Compensation Committee also reviews the base compensation of executive officers in equivalent positions paid by banks considered competitive with Cathay Bank and, in particular, executive officer compensation reported in the survey issued by the California Banker's Association (the "CBA"). The CBA survey consists of a review of executive compensation at banks with total assets over $1 billion, all of which are located in California. Substantially all of Bancorp's operations are located in California and its assets were approximately $1.6 billion at December 31, 1997 and $1.8 billion at December 31, 1998. Actual base salaries (and bonuses) paid to the executive officers in fiscal 1998 compared to the median salaries in the CBA survey as follows: Chairman, chief executive officer and President -- actual base salary of $366,354 compared to the median base salary of chief executive officers in the CBA survey of $373,266 (actual bonus of $380,000 compared to the median bonus of chief executive officers in the CBA survey of $235,898); Senior Executive Vice-President and Chief Lending Officer -- actual base salary of $160,930 compared to the median base salary of chief credit officers in the CBA survey of $152,504 (actual bonus of $133,608 compared to the median bonus of chief credit officers in the CBA survey of $43,600); Executive Vice-President for Branch Administration -- actual base salary of $105,773 compared to the median base salary of branch administrators in the CBA survey of $103,000 (actual bonus of $77,992 compared to the median bonus of branch administrators in the CBA survey of $25,681); Senior Vice-President and Cashier -- actual base salary of $102,734 compared to the median base salary of opera- 14 tions administrators in the CBA survey of $78,000 (actual bonus of $58,000 compared to the median bonus of operations administrators in the CBA survey of $31,244); and Senior Vice-President and Chief Financial Officer -- actual base salary of $96,608 compared to the median base salary of chief financial officers in the CBA survey of $160,000 (actual bonus of $71,075 compared to the median bonus of chief financial officers in the CBA survey of $58,000). In addition to these surveys, the Compensation Committee considers data comparing the percentage change in cumulative total stockholder return on Bancorp's Common Stock with the percentage change in cumulative total stockholder return on the Standard & Poors 500 and the SNL Western Bank Index. See "Comparative Stock Performance" below for a graph comparing cumulative stockholder return data for Bancorp, the Standard & Poors 500 Index and the SNL Western Bank Index. The SNL Western Bank Index is a market weighted index including every publicly traded bank located in the States of Alaska, California, Hawaii, Nevada, Oregon and Washington. ANNUAL CASH BONUS The annual cash bonus paid to each executive officer, including the Chairman, President and chief executive officer, is determined, in the discretion of the Compensation Committee, on the basis of the overall performance and profitability of Cathay Bank and Bancorp in the fiscal year then ending and the Committee's subjective evaluation of the individual officer's performance and responsibility in relation to company performance. Overall performance and profitability is determined with reference to the following factors listed in order of importance: net income, return on average assets, return on stockholders' equity and percentage increase or decrease in total assets, loans and deposits. The size of the annual bonus for each officer is determined by the above-mentioned evaluation of the performance of Bancorp and Cathay Bank in relation to the contributions perceived by the Compensation Committee made by the officer to achieve the overall level of financial performance of Bancorp and Cathay Bank, and by a comparison of the size of annual bonuses paid to the officer in past years with respect to the individual's performance in those years, the base salaries of the executives and the length of employment with Bancorp and Cathay Bank and the overall performance and profitability of Bancorp and Cathay Bank in those years. See also "CEO Compensation" below. THE EQUITY INCENTIVE PLAN In 1998, the Board adopted, and the stockholders approved, the Equity Incentive Plan, which currently authorizes the issuance of up to 1,075,000 shares of Bancorp's Common Stock pursuant to awards granted thereunder. Awards may be granted in the form of stock options or restricted stock. The Equity Incentive Plan is intended to strengthen Bancorp by providing selected employees and directors of Bancorp and its subsidiaries, including Cathay Bank, an opportunity to participate in Bancorp's future by offering them an opportunity to acquire stock in Bancorp so as to retain, attract and motivate them. Currently, there are 19 participants in the Equity Incentive Plan. The Equity Incentive Plan Committee has the discretion to determine the number and type of awards granted, and awards generally increase as a function of higher positions of responsibility in Bancorp or its subsidiaries. Awards are made at a level calculated to be at mid-range when compared with other companies of comparable size and complexity in the California banking industry. Consideration is also given to the estimated dilutive effect of such awards on Bancorp's existing stockholders. For 1998, the Equity Incentive Plan Committee granted nonqualified stock options to purchase 17,500 shares of Common Stock to Bancorp's chief executive officer. Options granted to the other executive officers for the same period ranged from 0 shares to 5,410 shares. Such options have an exercise price of $33.00 per share (which was the fair market value of a share of Bancorp Common Stock on the date of grant), become exercisable in 20% increments over a five-year period and terminate ten years 15 from the date of the grant (subject to early termination in the event of termination of employment, disability or death). CEO COMPENSATION In April 1998, the Compensation Committee increased Mr. Cheng's annual base salary by approximately 8% to $366,354 and in December 1998 the Committee awarded Mr. Cheng a $380,000 cash bonus. Mr. Cheng's total base salary and bonus in 1998 was $746,354, up from $639,217 in 1997. In September 1998, the Equity Incentive Plan Committee also awarded Mr. Cheng nonqualified stock options to purchase 17,500 shares of Bancorp Common Stock. See "The Equity Incentive Plan" above for a description of the options. The increase in Mr. Cheng's compensation in 1998 reflects Bancorp's and Cathay Bank's growth and improved profits. In setting Mr. Cheng's compensation, the Compensation Committee and the Equity Incentive Plan Committee considered Mr. Cheng's management ability, his growing responsibilities and the fact that Cathay Bank sustained steady growth in 1998. As an indication of such growth, Bancorp's total assets and deposits as of December 31, 1998 were up 10% and 8% respectively, from December 31, 1997 levels, and net income increased 22% from $20,107,738 in 1997 to $24,578,883 in 1998. Although Mr. Cheng is a member of Cathay Bank's Compensation Committee, he does not participate in, and excuses himself from, those portions of any meeting in which his compensation is discussed or established. Mr. Cheng is not a member of the Equity Incentive Plan Committee. Generally, Mr. Cheng's base salary is determined primarily with reference to a subjective evaluation made by the Compensation Committee of his performance in the immediately preceding year, the growth of Bancorp and Cathay Bank (a percentage increase or decrease in total assets, loans and deposits) in the immediately preceding year, the percentage increase or decrease in net income in the immediately preceding year, and a comparison of his level of compensation with chief executive officers at other banks of a similar size operating in California. The base salary and total cash compensation paid to Mr. Cheng in fiscal 1998 was $366,354 and $746,354, respectively, compared with the median base salary and total cash compensation of chief executive officers listed in the CBA survey of $373,266 and $609,164, respectively. See "Base Compensation" above for a description of the CBA survey. The bonus paid to Mr. Cheng is based generally on the performance and management of Bancorp and Cathay Bank. Specifically, in determining Mr. Cheng's bonus, the Compensation Committee considers the percentage increase or decrease in net income occurring during the year in which the bonus is paid and any growth in total assets, loans and deposits experienced during that year. The bonus paid to Mr. Cheng in fiscal 1998 was $380,000, compared with the median bonus/incentive compensation paid to chief executive officers listed in the CBA survey of $235,898. See "Base Compensation" above for a description of the CBA survey. The number of options granted to Mr. Cheng in 1998 was generally at mid-range when compared with other companies of comparable size and complexity in the California banking industry, with consideration also given to the estimated dilutive effect of such options on Bancorp's existing stockholders. COMPENSATION COMMITTEE EQUITY INCENTIVE PLAN COMMITTEE George T.M. Ching Ralph Roy Buon-Cristiani Thomas G. Tartaglia Michael M.Y. Chang Dunson K. Cheng Wing K. Fat Chi-Hung Joseph Poon Chi-Hung Joseph Poon Kelly L. Chan 16 COMPARATIVE STOCK PERFORMANCE The graph below compares the percentage change in the cumulative total stockholder return on Bancorp's Common Stock from December 31, 1993 through December 31, 1998 with the percentage change in the cumulative total return on the Standard & Poors 500 Index (the "S&P 500 Index") and the SNL Western Bank index (the "SNL Western Bank Index") for the same period. Bancorp will furnish, without charge, upon the written request of any person who is a stockholder of record as of March 5, 1999, a list of the companies included in the SNL Western Bank Index. Requests for this information should be addressed to Wilbur K. Woo, Secretary, Cathay Bancorp, Inc., 777 North Broadway, Los Angeles, California 90012. This graph assumes the investment of $100 in Bancorp's Common Stock on December 31, 1993 and an investment of $100 in each of the S&P 500 Index and the SNL Western Bank Index on that date.
Period Ending December 31, ---------------------------------------------------------- Index 1993 1994 1995 1996 1997 1998 - ------------------------------------------------------------------------------------ Cathay Bancorp Inc. $100.00 $ 97.98 $117.83 $154.61 $295.10 $338.03 S&P 500 100.00 101.32 139.39 171.26 228.42 293.69 SNL Western Bank Index 100.00 99.01 166.03 236.05 347.97 356.54
INCORPORATION OF COMPENSATION AND PERFORMANCE INFORMATION THE INFORMATION CONTAINED IN THE ABOVE SECTIONS OF THIS PROXY STATEMENT CAPTIONED "INFORMATION CONCERNING MANAGEMENT COMPENSATION," "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION," "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION" AND "COMPARATIVE STOCK PERFORMANCE" SHALL NOT BE DEEM- 17 ED TO BE INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT, OR ANY PART HEREOF, INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "1934 ACT"), EXCEPT TO THE EXTENT THAT BANCORP EXPRESSLY INCORPORATES SUCH INFORMATION IN SUCH FILING BY REFERENCE. THE INFORMATION CONTAINED IN THE ABOVE SECTIONS OF THIS PROXY STATEMENT CAPTIONED "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION" AND "COMPARATIVE STOCK PERFORMANCE" SHALL NOT BE DEEMED TO BE SOLICITING MATERIAL OR OTHERWISE BE DEEMED TO BE FILED UNDER THE 1933 ACT OR THE 1934 ACT, EXCEPT TO THE EXTENT THAT BANCORP REQUESTS THAT SUCH INFORMATION BE TREATED AS SOLICITING MATERIAL OR EXPRESSLY INCORPORATES SUCH INFORMATION IN ANY SUCH FILING BY REFERENCE. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that Bancorp's executive officers and directors and persons who own more than ten percent of Bancorp's Common Stock timely file initial reports of ownership of Bancorp's Common Stock and other equity securities, and reports of changes in such ownership, with the SEC and the Nasdaq Stock Market. Bancorp has instituted procedures to receive and review such insider reports. After a review of such insider reports, Bancorp believes that all required reports have been timely filed. CERTAIN TRANSACTIONS BANKING TRANSACTIONS Some of the directors and officers of Bancorp or of Cathay Bank, members of their families, and the companies with which they are associated have been customers of, and have had banking transactions with, Cathay Bank in the ordinary course of Cathay Bank's business since Cathay Bank began operations, and Cathay Bank expects to have such banking transactions in the future. All loans and commitments to lend included in these transactions were made in compliance with applicable laws and on substantially the same terms, including interest rates and collateral, as those prevailing in Cathay Bank at the time for comparable transactions with other persons of similar creditworthiness and, in the opinion of the management of Cathay Bank, did not involve more than a normal risk of collectibility or present any other unfavorable features. The aggregate balance of secured and unsecured loans made or authorized to be made directly to the directors and executive officers of Bancorp or of Cathay Bank, members of their families, and entities with which they were associated was $15,903,791 at December 31, 1998, which represented 10% of Bancorp's stockholders' equity at that date. OFFICE LEASE T.C. Realty, Inc., a California corporation owned by Patrick S.D. Lee's spouse, leases to Cathay Bank approximately 8,912 square feet of office space in downtown Los Angeles. During 1998, Cathay Bank paid T.C. Realty approximately $110,509 to lease this space. Under the terms of a new three-year lease entered into in February, 1998, annual payments under the lease in 1999 are expected to be approximately $106,944. 18 INDEMNITY AGREEMENTS Bancorp's Bylaws provide for the indemnification by Bancorp of its agents, including its directors and officers, to the maximum extent permitted under Delaware law. In May 1991, Bancorp entered into indemnity agreements with its directors and certain of its officers. These indemnity agreements permit Bancorp to indemnify an officer or director to the maximum extent permitted under Delaware law and prohibit Bancorp from terminating its indemnification obligations as to acts of any officer or director that occur before the termination. Bancorp believes the indemnity agreements will assist it in attracting and retaining qualified individuals to serve as directors and officers of Bancorp. Bancorp's Certificate of Incorporation also provides for certain limitations on the liability of directors, as permitted by Delaware law. The indemnifications and limitations on liability permitted by the certificate of incorporation, bylaws and the indemnity agreements are subject to the limitations set forth by Delaware law. INDEPENDENT AUDITORS KPMG LLP, independent auditors, audited Bancorp's accounts for the fiscal year ended December 31, 1998 and have been selected as Bancorp's independent auditor for 1999. Representatives of KPMG LLP are expected to attend the Annual Meeting and will have an opportunity to make a statement if they wish to do so. They may also respond to questions from stockholders or their representatives. ANNUAL REPORT ON FORM 10-K On or before March 31, 1999, Bancorp will file with the SEC an Annual Report on Form 10-K for the fiscal year ended December 31, 1998, together with applicable financial statements and schedules. BANCORP WILL FURNISH, WITHOUT CHARGE, UPON THE WRITTEN REQUEST OF ANY PERSON WHO IS A STOCKHOLDER OF RECORD AS OF MARCH 5, 1999, A COPY OF THE ANNUAL REPORT ON FORM 10-K TOGETHER WITH THE FINANCIAL STATEMENTS AND SCHEDULES. Upon written request, Bancorp will provide to any stockholder a copy of the exhibits to the Annual Report on Form 10-K. REQUESTS SHOULD BE ADDRESSED TO MONICA CHEN, ASSISTANT SECRETARY, CATHAY BANK, 777 NORTH BROADWAY, LOS ANGELES, CALIFORNIA 90012, TELEPHONE NUMBER (213) 625-4700. SOLICITATION OF PROXIES The cost of soliciting proxies will be paid by Bancorp. In addition to use of the mails, proxies may be solicited personally or by telephone, facsimile or telegraph by officers, directors and employees of Bancorp and its subsidiaries who will not be specially compensated for these solicitation activities. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries for forwarding solicitation materials to the beneficial owners of shares held of record by these persons, and Bancorp will reimburse these persons for their reasonable expenses incurred in forwarding the materials. STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING OF STOCKHOLDERS Under Bancorp's Restated Bylaws, nominations for election to the Bancorp Board of Directors and proposals for other business to be transacted by the Bancorp stockholders at an annual meeting of stockholders may be made by a stockholder (as distinct from Bancorp) only if the stockholder is entitled to vote 19 at the meeting and has given Bancorp's Secretary timely written notice that complies with the notice requirements of the Restated Bylaws. In addition, business other than a nomination for election to the Board must be a proper matter for action under Delaware law and Bancorp's Restated Certificate of Incorporation and Restated Bylaws. Among other requirements, the written notice must be delivered to Bancorp's Secretary at Bancorp's principal executive offices by no later than February 19, 2000, or earlier than January 20, 2000; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the scheduled annual meeting is given or made, the notice, to be timely, must be so delivered by the close of business on the 10th day following the earlier of the day on which notice of the date of the scheduled annual meeting was mailed or the day on which such public disclosure was made. Separate and apart from the required notice described in the preceding paragraph, rules promulgated by the SEC under the Exchange Act (the "SEC Stockholder Proposal Rules") entitle a stockholder in certain instances to require Bancorp to include that stockholder's proposal (but not that stockholder's nominees for director) in the proxy materials distributed by Bancorp for its next annual meeting of stockholders. Any stockholder of Bancorp who wishes to present a proposal for inclusion in Bancorp's 2000 proxy solicitation materials must set forth the proposal in writing, file it with Bancorp's Secretary on or before November 19, 1999, and meet the other requirements for inclusion contained in the SEC Stockholder Proposal Rules. OTHER MATTERS As of the date of this Proxy Statement, the Bancorp Board of Directors knows of no other matters to be brought before the Annual Meeting other than the proposals specifically listed in the Notice of Annual Meeting of Stockholders. Nevertheless, if further business is properly presented, the persons named as proxies on the accompanying Proxy card will vote the shares in their discretion in accordance with their best judgment. Whether or not you currently plan to attend the Annual Meeting in person, please mark your vote on the accompanying Proxy card, then sign, date and return the Proxy card in the enclosed postage-paid envelope as soon as possible. By Order of the Board of Directors /s/ Wilbur K. Woo ----------------------- Wilbur K. Woo Secretary Los Angeles, California March 18, 1999 20 CATHAY BANCORP, INC. PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS, APRIL 19, 1999 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CATHAY BANCORP, INC. Dunson K. Cheng, George T.M. Ching and Wilbur K. Woo, or any of them, with full power of substitution, are hereby appointed as Proxies and authorized to represent and to vote as designated on the reverse the undersigned's shares of Cathay Bancorp, Inc. common stock at the Annual Meeting of Stockholders to be held at 777 North Broadway, Los Angeles, California, at 5:00 p.m., local time, on April 19, 1999, and at any and all adjournments thereof. (CONTINUED AND TO BE SIGNED ON OTHER SIDE.) /X/ Please mark your votes as in this example. FOR ALL THE NOMINEES WITHHOLD LISTED AT RIGHT AUTHORITY (EXCEPT TO VOTE FOR ALL AS INDICATED TO THE NOMINEES CONTRARY BELOW) LISTED AT RIGHT (1) ELECTION OF / / / / CLASS III DIRECTORS OF CATHAY BANCORP, INC. INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THE NAME OF THAT NOMINEE ON THE LINE PROVIDED BELOW. - ---------------------------------------------- Nominees: George T.M. Ching Wing K. Fat Wilbur K. Woo (2) OTHER BUSINESS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF. This Proxy when properly executed will be voted in the manner directed by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1 AS CLASS III DIRECTORS OF CATHAY BANCORP, INC. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE NOMINEES FOR DIRECTOR. The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy Statement dated March 18, 1999. Please sign and return this Proxy even if you intend to be present at the Annual Meeting. This Proxy may be revoked as set forth in the accompanying Proxy Statement, and the shares may be voted by the holder at the Annual Meeting. PLEASE MARK ABOVE, THEN DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. Signature of Stockholder __________________________ Signature of Stockholder __________________________ Dated ____________, 1999 Note: Joint owners should each sign. Trustees and others acting in a representative capacity should indicate the capacity in which they sign. Please sign exactly as name appears on the Proxy. -----END PRIVACY-ENHANCED MESSAGE-----