Note 19 - Equity Incentive Plans

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

19.      Equity Incentive Plans

In 1998, the Board adopted the Cathay Bancorp, Inc. Equity Incentive Plan. Under the Equity Incentive Plan, as amended in September, 2003, directors and eligible employees may be granted incentive or non-statutory stock options and/or restricted stock units, or awarded non-vested stock, for up to 7,000,000 shares of the Company’s common stock on a split adjusted basis. In May 2005, the stockholders of the Company approved the 2005 Incentive Plan which provides that 3,131,854 shares of the Company’s common stock may be granted as incentive or non-statutory stock options, or as restricted stock, or as restricted stock units. In conjunction with the approval of the 2005 Incentive Plan, the Bancorp agreed to cease granting awards under the Equity Incentive Plan. As of December 31, 2013, the only options granted by the Company under the 2005 Incentive Plan were non-statutory stock options to selected bank officers and non-employee directors at exercise prices equal to the fair market value of a share of the Company’s common stock on the date of grant. Such options have a maximum ten-year term and vest in 20% annual increments (subject to early termination in certain events) except certain options granted to the Chief Executive Officer of the Company in 2005 and 2008. If such options expire or terminate without having been exercised, any shares not purchased will again be available for future grants or awards. There were no options granted in 2013, in 2012, or in 2011. The Company expects to issue new shares to satisfy stock option exercises and the vesting of restricted stock units.

Cash received from exercises of stock options totaled $14.8 million for 594,946 shares in 2013, $764,000 for 50,024 shares in 2012, and $1.3 million for 86,860 shares in 2011. The fair value of stock options vested in 2013 was $2.1 million compared to $745,000 in 2012. Aggregate intrinsic value for options exercised was $307,000 in 2013 compared to $103,000 in 2012.

A summary of stock option activity for 2013, 2012, and 2011 follows:

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Balance, December 31, 2010		4,947,348			27.93		3.7	$	334
Exercised		(86,860	)	$	15.05
Forfeited		(503,503	)		22.72
Balance, December 31, 2011		4,356,985			28.86		3.0	$	37
Exercised		(50,024	)	$	15.27
Forfeited		(310,331	)		23.75
Balance, December 31, 2012		3,996,630			29.45		2.2	$	-
Exercised		(594,946	)	$	24.80
Forfeited		(588,810	)		22.86
Balance, December 31, 2013		2,812,874			31.81		1.9	$	2,119
Exercisable, December 31, 2013		2,812,874		$	31.81		1.9	$	2,119

At December 31, 2013, 2,640,264 shares were available under the 2005 Incentive Plan for future grants. The following table shows stock options outstanding and exercisable as of December 31, 2013, the corresponding exercise prices, and the weighted-average contractual life remaining:

		Outstanding
Exercise Price		Shares		Weighted-Average Remaining Contractual Life (in Years)		Shares
$	28.70		438,000		0.1		438,000
	32.26		10,000		0.5		10,000
	38.38		15,000		0.9		15,000
	37.00		568,270		1.1		568,270
	32.47		245,060		1.2		245,060
	33.54		264,694		1.4		264,694
	36.90		218,540		2.1		218,540
	36.24		410,730		2.1		410,730
	38.26		12,000		2.3		12,000
	23.37		630,580		4.2		630,580
			2,812,874		1.9		2,812,874

In addition to stock options, the Company also grants restricted stock units to eligible employees which vest subject to continued employment at the vesting dates. On February 21, 2008, restricted stock units, which vest ratably over five years, for 82,291 shares were granted. Upon vesting of restricted stock units, the Company issued 138,220 shares of common stock at the average closing price of $22.71 in 2013, 11,814 shares at the average closing price of $16.90 in 2012, and 12,633 shares of common stock at the average closing price of $18.79 per share in 2011.

The Company granted restricted stock units for 25,037 shares at an average closing price of $20.68 per share in 2013, for 125,133 shares at an average closing price of $18.24 per share in 2012, and for 147,661 shares at an average closing price of $14.78 in 2011. The restricted stock units granted in 2013, 2012, and 2011 are scheduled to vest two years from grant date.

The following table presents restricted stock unit activity for 2013, 2012, and 2011:

	Units
Balance at December 31, 2010		38,960
Granted		147,661
Vested		(12,633	)
Cancelled or forfeited		(2,578	)
Balance at December 31, 2011		171,410
Granted		125,133
Vested		(11,814	)
Cancelled or forfeited		(28,113	)
Balance at December 31, 2012		256,616
Granted		25,037
Vested		(138,220	)
Cancelled or forfeited		-
Balance at December 31, 2013		143,433

In December 2013, the Company granted performance share unit awards in which the number of units earned is calculated based on the relative total shareholder return (“TSR”) of the Company’s common stock as compared to the TSR of the KBW Regional Banking Index. In addition, the Company granted performance share unit awards in which the number of units earned is determined by comparison to the targeted EPS as defined in the award for the 2014 to 2016 period. Performance TSR restricted stock units for 119,840 shares and performance EPS restricted stock units for 116,186 shares were granted to eight executive officers in 2013. Both the performance TSR and performance EPS share awards are scheduled to vest at December 31, 2016.

The compensation expense recorded for restricted stock units was $2.0 million in 2013, $1.3 million in 2012, and $758,000 in 2011. Unrecognized stock-based compensation expense related to restricted stock units was $7.2 million at December 31, 2013, and is expected to be recognized over the next 2.6 years.

In 2013, 52,431 shares of the Company’s common stock at the average price of $21.13 per share were issued to seven executive officers and recorded as compensation expense compared to 45,937 shares at the average price of $17.16 in 2012. Salary stock compensation expenses were $1.1 million in 2013 compared to $788,000 in 2012.

The following table summarizes the tax benefit from options exercised:

	2013			2012			2011
	(In thousands)
(Short-fall)/benefit of tax deductions in excess of grant-date fair value	$	(2,509	)	$	(620	)	$	(290	)
Benefit of tax deductions on grant-date fair value		4,172			747			362
Total benefit of tax deductions	$	1,663		$	127		$	72