<PAGE>
===============================================================================
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 [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 (S) 240.14a-11(c) or (S) 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):
[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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO OF EAST WEST BANCORP, INC.]
East West Bancorp, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1999
Notice is hereby given that the annual meeting (the "Meeting") of the
stockholders of East West Bancorp, Inc. (the "Company") will be held at The
Ritz-Carlton Huntington Hotel, 1401 South Oak Knoll Avenue, Pasadena,
California, on Wednesday, May 12, 1999, beginning at 3:00 p.m. for the
following purposes:
1. Election of Directors. To elect two persons to the Board of Directors
for a term of three years and to serve until his or her successors are
elected and qualified, as more fully described in the accompanying Proxy
Statement.
2. Other Business. To transact such other business as may properly come
before the Meeting and at any and all adjournments thereof.
Only those stockholders of record at the close of business on March 22, 1999
shall be entitled to notice of and to vote at the Meeting.
STOCKHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY IN THE POSTAGE
PREPAID ENVELOPE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT THEY PLAN TO ATTEND
THE MEETING IN PERSON. STOCKHOLDERS WHO ATTEND THE MEETING MAY WITHDRAW THEIR
PROXY AND VOTE IN PERSON IF THEY WISH TO DO SO.
By order of the Board of Directors
/s/ Douglas P. Krause
DOUGLAS P. KRAUSE
Senior Vice President, General
Counsel and Corporate Secretary
San Marino, California
March 22, 1999
<PAGE>
[LOGO OF EAST WEST BANCORP, INC.]
East West Bancorp, Inc.
415 Huntington Drive
San Marino, California 91108
(626) 799-5700
----------------
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
To be held May 12, 1999
----------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors ("Board of Directors") of East West Bancorp,
Inc. (the "Company") for use at the annual meeting ("Meeting") of the
stockholders ("Stockholders") of the Company to be held on May 12, 1999 at The
Ritz-Carlton Huntington Hotel, 1401 South Oak Knoll Avenue, Pasadena,
California, at 3:00 p.m. and at any adjournment thereof. This Proxy Statement
and the enclosed proxy card ("Proxy") and other enclosures will be first
mailed to Stockholders on or about April 2, 1999. Only Stockholders of record
on March 22, 1999 ("Record Date") are entitled to vote in person or by proxy
at the Meeting or any adjournment thereof.
Matters to be Considered
The matters to be considered and voted upon at the Meeting will be:
1. Election of Directors. To elect two persons to the Board of Directors
for a term of three years and to serve until his or her successors are
elected and qualified. The Board of Directors' nominees are:
Dominic Ng
Herman Li
2. Other Business. To transact such other business as may properly come
before the Meeting and at any and all adjournments thereof.
Costs of Solicitations of Proxies
This solicitation of Proxies is made on behalf of the Board of Directors of
the Company and the Company will bear the costs of solicitation. The expense
of preparing, assembling, printing and mailing this Proxy Statement and the
materials used in this solicitation of Proxies also will be borne by the
Company. It is contemplated that Proxies will be solicited principally through
the mail, but directors, officers and regular employees of the Company or its
subsidiary, East West Bank ("East West Bank"), may solicit Proxies personally
or by telephone. Although there is no formal agreement to do so, the Company
may reimburse banks, brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses in forwarding these proxy materials
to their principals. The Company does not intend to utilize the services of
other individuals or entities not employed by or affiliated with the Company
in connection with the solicitation of Proxies.
1
<PAGE>
Outstanding Securities and Voting Rights; Revocability of Proxies
The authorized capital of the Company consists of 50,000,000 shares of
common stock, par value $.001 per share ("Common Stock"), of which 23,050,000
shares were issued and outstanding on the Record Date, and 5,000,000 shares of
serial preferred stock, $.001 per share, of which no shares were issued and
outstanding on the Record Date. A majority of the outstanding shares of Common
Stock constitutes a quorum for the conduct of business at the Meeting.
Abstentions will be treated as shares present and entitled to vote for
purposes of determining the presence of a quorum. Each Stockholder is entitled
to one vote, in person or by proxy, for each share of Common Stock standing in
his or her name on the books of the Company as of the Record Date on any
matter submitted to the Stockholders. The Company's Certificate of
Incorporation does not authorize cumulative voting. In the election of
directors, the person receiving the highest number of votes "FOR" will be
elected. Accordingly, abstentions from voting and votes "WITHHELD" in the
election of directors have no legal effect.
A Proxy for use at the Meeting is enclosed. The Proxy must be signed and
dated by you or your authorized representative or agent. You may revoke a
Proxy at any time before it is exercised at the Meeting by submitting a
written revocation to the Secretary of the Company or a duly executed proxy
bearing a later date or by voting in person at the Meeting.
If you hold your Common Stock in "street name" and you fail to instruct your
broker or nominee as to how to vote your Common Stock, your broker or nominee
may, in its discretion, vote your Common Stock "FOR" the election of the Board
of Director's nominee.
Unless revoked, the shares of Common Stock represented by Proxies will be
voted in accordance with the instructions given thereon. In the absence of any
instruction in the Proxy, your shares of Common Stock will be voted "FOR" the
election of the nominee for director set forth herein.
The enclosed Proxy confers discretionary authority with respect to any other
proposals which properly may be brought before the Meeting. As of the date
hereof, management is not aware of any other matters to be presented for
action at the Meeting. However, if any other matters properly come before the
Meeting, the Proxies solicited hereby will be voted by the Proxyholders in
accordance with the recommendations of the Board of Directors.
2
<PAGE>
Beneficial Ownership of Principal Stockholders and Management
The following table sets forth the beneficial ownership of Common Stock as
of the Record Date by (i) each person known to the Company to own more than 5%
of the outstanding Common Stock and Series A Stock, (ii) the directors and
nominee for director of the Company, (iii) the Chief Executive Officer and the
four other executive officers of the Company whose total annual compensation
in 1998 exceeded $100,000 (the "Named Executives"), and (iv) all executive
officers and directors of the Company, as a group:
<TABLE>
<CAPTION>
Common Stock
----------------------
Number of Percent
Name and Address Shares of
of Beneficially Class
Beneficial Owner Owned (1) (2)
---------------- ------------ -------
<S> <C> <C>
CNA Casualty Corporation ........................... 2,000,000(3) 8.68%
CNA Plaza 23 South
Chicago, IL 60685
Dominic Ng.......................................... 112,000 *
Julia Gouw.......................................... 121,000(4) *
Herman Li........................................... 20,000 *
Edward Zapanta...................................... 10,000 *
Jack Liu............................................ -- *
Kenneth P. Slosser.................................. 100 *
William Chu......................................... 10,000 *
Douglas Krause...................................... 36,200 *
John Stephan........................................ 2,000 *
All Directors and Executive Officers, as a group (14
persons)........................................... 380,300
</TABLE>
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* Less than 1%.
(1) Except as otherwise noted and except as required by applicable community
property laws, each person has sole voting and disposition powers with
respect to the shares.
(2) Shares which the person (or group) has the right to acquire within 60 days
after the Record Date are deemed to be outstanding in calculating the
percentage ownership of the person (or group), but are not deemed to be
outstanding as to any other person (or group).
(3) CNA Financial Corporation and Loews Corporation have filed Schedule 13(G)
indicating shared dispositive power under SEC interpretations regarding
subsidiary control. CNA Financial Corporation and Loews Corporation have
each disclaimed beneficial ownership of these securities.
(4) 1,300 of such shares are indirectly owned; 1,000 shares are owned by the
Gouw Family Foundation of which Ms. Gouw is trustee; 300 shares are owned
by family members for whom Ms. Gouw has voting power.
3
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ELECTION OF DIRECTORS
Board of Directors and Nominees
The Company's Certificate of Incorporation and Bylaws provide that, except
as provided by the terms of any series of Preferred Stock or any other class
of securities having a preference over the Common Stock, the number of
directors shall be determined from time to time by the Board of Directors but
may not be less than five. The Board of Directors is currently composed of six
members. The Bylaws further provide for the division of the initial directors
of the Company into three classes of approximately equal size. Two members of
Class I shall be elected to a three year term at the annual meeting of
Stockholders in 1999, two members of Class II shall be elected to a three year
term at the annual meeting of Stockholders in 2000, and two members of Class
III shall be elected to a three year term at the annual meeting of
Stockholders in 2001.
The directors proposed for reelection, Dominic Ng and Herman Li, were
appointed to the Board of Directors in 1998 and 1999, respectively. Mr. Ng and
Mr. Li have indicated their willingness to serve and unless otherwise
instructed, Proxies will be voted in such a way as to effect, if possible, the
election of Mr. Ng and Mr. Li. In the event that Mr. Ng or Mr. Li should be
unable to serve as a director, it is intended that the Proxies will be voted
for the election of such substitute nominee, if any, as shall be designated by
the Board of Directors. Management has no reason to believe that Mr. Ng or Mr.
Li will be unavailable.
None of the directors, nominee for director or executive officers 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 hereof, no directorships are held by
any director with a company which has a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
"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 except that Mr. Ng is a director of ESS
Technology, Inc. and Dr. Zapanta is a director of Times Mirror Company and
Edison International.
The following table sets forth certain information with respect to the
Board's nominees for director and the current directors of the Company. All
directors of the Company are also directors of East-West Bank. Officers will
serve at the pleasure of the Board of Directors, subject to restrictions set
forth in their employment agreements. See "ELECTION OF DIRECTORS -- Executive
Compensation -- Employment Agreements and Change of Control Agreements".
<TABLE>
<CAPTION>
Year First
Elected or Current Term
Name of Director Age(1) Appointed(2) to Expire
---------------- ------ ------------ ------------
<S> <C> <C> <C>
Dominic Ng, Nominee......................... 40 1992 1999
Herman Li, Nominee.......................... 46 1998 1999
Jack Liu.................................... 41 1998 2000
Kenneth P. Slosser.......................... 35 1998 2000
Edward Zapanta.............................. 60 1998 2001
Julia Gouw.................................. 39 1997 2001
</TABLE>
- --------
(1) As of February 28, 1999.
(2) Refers to the earlier of the year the individual first became a director
of the Company or the Bank.
The principal occupation during the past five years of each director and
nominee is set forth below. All directors have held their present positions
for at least five years, unless otherwise stated.
Dominic Ng has served as a director and the President and Chief Executive
Officer of the Bank since October 1992, and was elected Chairman of the Board
in 1998. Mr. Ng has held the same positions with the
4
<PAGE>
Company since its formation. Mr. Ng also served as the director in charge of
Chinese Business Services for the international accounting firm of Deloitte &
Touche, LLP. Mr. Ng currently serves as a member of the Board of Visitors of
The Anderson School at UCLA, Board of Regents of Loyola Marymount University,
and serves, among others, as a director of the Los Angeles Chamber of Commerce
and United Way of Greater Los Angeles. Mr. Ng also serves on the Board of ESS
Technology, Inc.
Julia Gouw has served as Executive Vice President and Chief Financial
Officer of the Bank since 1994 and as a director of the Bank since 1997, and
has held these same positions with the Company since its formation. Ms. Gouw
joined the Bank in July 1989 as Vice President and Controller. Prior to
joining the Bank, Ms. Gouw was a Senior Audit Manager with the international
accounting firm of KPMG Peat Marwick, LLP. Ms. Gouw is on the Board of
Visitors of UCLA School of Medicine, a member of the Financial Executives'
Institute and the California Society of CPA's and is a past president of the
Financial Managers Society--Los Angeles Chapter.
Herman Li is Chairman of the C&L Restaurant Group, a franchisee of Burger
King Corporation that owns and operates over 75 outlets throughout the nation.
Mr. Li is an executive committee member of Burger King Corporation's Diversity
Action Council and was honored in 1997 as "Asian Business Owner of the Year"
by the Asian Business Association of Los Angeles.
Jack C. Liu, Esq., is managing partner of SilkRoad Capital Corp., an
investment firm that focuses on Asia-related investment projects. Mr. Liu was
formerly of counsel to the international law firm of Morgan Lewis & Bockius
LLP. Mr. Liu specialized in corporate, banking regulation and real estate
investment related legal matters.
Kenneth P. Slosser is a senior vice president in the corporate finance group
of Friedman, Billings, Ramsey & Co., Inc., which he joined in December 1996.
Prior to that time, Mr. Slosser served as an Assistant Director with the
Office of Thrift Supervision, where he supervised savings associations located
in California, Arizona, and Nevada.
Edward Zapanta has served as Vice-Chairman of the Board of the Bank since
June 1998 and has held the same position with the Company since its formation.
Dr. Zapanta is the Senior Medical Director of Health Care Partners Medical
Group. Dr. Zapanta currently serves as a director of Times Mirror Corporation
and Edison International and is a member of the Board of Trustees of the
University of Southern California.
Committees of the Board of Directors
The business of East West Bancorp's Board of Directors is conducted through
its meetings, as well as through meetings of its committees. Set forth below
is a description of the committees of the Board.
The Audit Committee of East West Bancorp reviews and reports to the Board on
various auditing and accounting matters, including the annual audit report
from East West Bancorp's independent public accountants. The Audit Committee
currently consists of Herman Li, Kenneth Slosser and Edward Zapanta, and Jack
Liu as its Chairman. Since East West Bancorp was newly formed, the Audit
Committee did not meet during 1998. The Audit Committee of East West Bank
consists of the same directors who comprise the Audit Committee of East West
Bancorp. The Audit Committee of East West Bank meets on the same schedule as
the full Board of Directors of East West Bank.
The full Board of Directors of East West Bancorp acts as the Nominating
Committee that nominates officers and directors of East West Bancorp for
election.
East West Bancorp does not have a Compensation Committee. The Compensation
Committee of East West Bank establishes executive compensation policies as
well as the actual compensation of the Chief Executive Officer. The
Compensation Committee currently consists to Herman Li, Jack Liu, and Edward
Zapanta.
5
<PAGE>
The Board of Directors met one time during 1998. All of the persons who were
directors of East West Bancorp during 1998 attended 100% of (1) the total
number of Board meetings and (2) the total number of meetings held by all
committees on which they served during 1998.
Compliance with Reporting Requirements of Section 16
Under Section 16(a) of the Exchange Act, the Company's directors, executive
officers and any persons holding five percent or more of the Common Stock are
required to report their ownership of Common Stock and any changes in that
ownership to the Securities and Exchange Commission (the "SEC") and to furnish
the Company with copies of such reports. Specific due dates for these reports
have been established and the Company is required to report in this Proxy
Statement any failure to file on a timely basis by such persons. Based solely
upon a review of copies of reports filed with the SEC during the fiscal year
ended December 31, 1998, all persons subject to the reporting requirements of
Section 16(a) filed all required reports on a timely basis.
Compensation of Board of Directors
Employees of the Company are not compensated for service as directors of the
Company. Nonemployee directors receive an annual retainer of $7,000, plus
$1,000 for each Board meeting attended and $300 for each committee meeting
attended. The committee chair receives an additional $200 for each committee
meeting attended. Pursuant to the Company's Incentive Plan, nonemployee
directors have received 10,000 options to purchase Company Common Stock at an
exercise price of $10 per share, which options vest at the rate of 25% per
year on each anniversary of the grant.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES.
6
<PAGE>
Executive Officer Compensation
Summary Compensation Table. It is expected that until the officers of the
Company begin to devote significant time to the separate management of the
Company's business, which is not expected to occur until such time as the
Company becomes actively involved in additional businesses, the officers will
only receive compensation for services as officers and employees of the Bank,
and no separate compensation will be paid for their services to the Company.
The following table sets forth the name and compensation of the Named
Executive Officers for the fiscal years ended December 31, 1998, 1997 and
1996:
<TABLE>
<CAPTION>
Long-term
Compensation -
Annual Annual Number of Stock All other
Name and principal position Year Salary(1) Bonus Options Granted Compensation(2)
- --------------------------- ---- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Dominic Ng............... 1998 $429,801 $225,000 1,069,875 $7,500
Chairman, President, and 1997 296,321 217,000 4,750
Chief Executive Officer 1996 275,150 138,000 4,750
Julia Gouw............... 1998 186,870 80,000 356,625 7,361
Executive Vice
President, 1997 120,786 51,000 3,610
Chief Financial Officer,
and Director 1996 108,695 32,000 3,402
John Stephan............. 1998 203,471 50,900(3) 10,000 1,584
Executive Vice
President, 1997 41,556 12,300(3) --
Director of Retail
Banking
William Chu.............. 1998 148,681 30,000 10,000 6,300
Senior Vice President
and 1997 142,578 32,000 4,285
Director of Planning and 1996 139,225 24,000 4,361
Business Development
Douglas Krause........... 1998 130,447 40,800 25,000 --
Senior Vice President, 1997 114,506 36,500 --
General Counsel, and 1996 13,231 3,000 --
Corporate Secretary
</TABLE>
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(1) Includes compensation deferred at election of executive and the year upon
which such compensation was earned.
(2) Represents employer contributions to the Company's 401(k) Plan. The
Company provides the named executive officers with certain group life,
health, medical and other non-cash benefits generally available to all
salaried employees and not included in this column pursuant to S.E.C.
rules.
(3) Amounts pursuant to employment agreement signed at hiring of executive.
7
<PAGE>
Option Grants
The following stock options were granted during 1998 to the Named Executives
pursuant to the Company's Incentive Plan:
<TABLE>
<CAPTION>
Percent of
Total
Number of Options Hypothetical
Options Granted to Exercise Value at
Granted Employees in Price Expiration Grant
Name (1) FY 1998 ($/Share) Date Date (2)
- ---- --------- ------------ -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Dominic Ng............ 1,069,875 62.32% $10.00 6/25/08 $4,365,090
Julia Gouw............ 356,625 20.77% $10.00 6/25/08 $1,455,030
John Stephan.......... 10,000 0.59% $10.00 6/25/08 $ 40,800
William Chu........... 10,000 0.59% $10.00 6/25/08 $ 40,800
Douglas Krause........ 25,000 1.46% $10.00 6/25/08 $ 102,000
</TABLE>
- --------
(1) The options were granted as of June 25, 1998 pursuant to the Incentive
Plan. The options become exercisable in annual installments of 25% on
each of the first, second, third and fourth anniversary dates of the
grant. The options may be exercised at any time prior to their expiration
by tendering the exercise price in cash, check or in shares of stock
valued at fair market value on the date of exercise. In the event of a
change in control (as defined) involving the Company, the options will
become exercisable in full. The options may be amended by mutual
agreement of the optionee and the Company.
(2) The estimated present value at grant date of options granted during
fiscal year 1998 has been calculated using the Black-Scholes option
pricing model, based upon the following assumptions: estimated time until
exercise of 6.5 years; a risk-free interest rate of 4.82%, representing
the interest rate on a U.S. government zero-coupon bond with a maturity
corresponding to the estimated time until exercise; a volatility rate of
30.38%; and a dividend yield of 0.12%, representing the current $0.03 per
share annualized dividends divided by the fair market value of the common
stock on the date of grant. The approach used in developing the
assumptions upon which the Black-Scholes valuation was done is consistent
with the requirements of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation."
Option Exercises and Holdings
Following the Reorganization, options to purchase shares of Common Stock, no
par value, of the Bank were converted into options to purchase shares of
Common Stock of the Company. The following table sets forth certain
information concerning options held by the Named Executives under the Bank's
Incentive Plan:
Aggregated Option Exercises During Fiscal Year 1998
Option Values on December 31, 1998
<TABLE>
<CAPTION>
Shares Value of Unexercised
Acquired Value Number of Unexercised In-the-Money Options
Name on Exercise Realized Options at 12/31/98 Options at 12/31/98(1)
- ---- ----------- -------- ------------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dominic Ng.............. -- $-- -- 1,069,875 $-- $--
Julia Gouw.............. -- $-- -- 356,625 $-- $--
John Stephan............ -- $-- -- 10,000 $-- $--
William Chu............. -- $-- -- 10,000 $-- $--
Douglas Krause.......... -- $-- -- 25,000 $-- $--
</TABLE>
- --------
(1) Based upon the market price of the Common Stock on December 31, 1998
($9.875 per share), there were no "in-the-money" options at December 31,
1998.
8
<PAGE>
Employment and Change of Control Agreements
The Bank has entered into employment agreements with each of its executive
officers intended to ensure that the Bank will be able to maintain a stable
and competent management base. The agreements provide that should any of the
executives be terminated without cause or, for certain executives, should they
resign for good reason, including a detrimental change in responsibilities or
a reduction in salary or benefits, the Bank shall pay such executive a
designated lump sum. The payments range from six months to three years of base
salary plus certain benefits. For certain executives, the normal six months
severance increases to twenty-four months if the executive is terminated
following a change of control. If all agreements are terminated without cause
following a change in control, such executive officers would be entitled to
receive payments which are estimated to have an aggregate value of
approximately $4.3 million at December 31, 1998.
Although the above-described employment agreements could increase the cost
of any acquisition of control of the Company or the Bank, management of the
Company and the Bank do not believe that the terms thereof would have a
significant anti-takeover effect.
Report of Compensation Committee on Executive Compensation
The Bank's Compensation Committee (the "Compensation Committee") establishes
the general policies regarding compensation for the Bank's employees, adopts
and amends employee compensation plans and approves specific compensation
levels for executive officers, including the Named Executives. Currently, the
members of the Compensation Committee are Jack Liu, Edward Zapanta and Herman
Li is its chair. Each member of the Compensation Committee is a non-employee
director of the Company and the Bank. The Company has also retained the
services of a compensation consultant to provide input and data to the
Compensation Committee.
Set forth below is a report of the Compensation Committee of the Bank
addressing the compensation policies for 1998 applicable to the Bank's
executives, including the Named Executives.
The Report of the Compensation Committee on Executive Compensation shall not
be deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of
1933 (the "Securities Act") or under the Exchange Act, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The goals of the executive compensation and benefits programs are to enable
the Bank to attract and retain high caliber executives, provide a total
compensation package in a cost effective manner, encourage management
ownership of East West Bancorp, Inc. common stock and to maximize return to
its shareholders.
The philosophy of the Bank is to provide a compensation program that is
designed to reward achievement of the Bank's goals and objectives and to
provide total compensation opportunities that are competitive when compared
with those of comparable financial institutions.
To achieve the compensation and benefits program objectives:
. The principal objective of the salary program is to maintain salaries
that are targeted at the median for comparable positions in similarly
sized financial institutions,
. Annual incentives are designed to reward for overall Bank success and
individual performance and provide total cash compensation opportunities
above competitive levels when warranted by performance,
. The principal objective of the long-term stock-based incentive plan is
to align management's financial interests with those of East West
Bancorp's shareholders, provide incentive for management ownership of
East West Bancorp common stock, support the achievement of long-term
financial objectives, and provide for long term incentive reward
opportunities,
9
<PAGE>
Employee benefits are offered to provide a competitive total compensation
program and to encourage retention of key employees.
ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of East West Bank
establishes executive compensation policies as well as the actual salary,
bonus and discretionary benefits of the Chief Executive Officer. Decisions of
the Compensation Committee of East West Bank are subject to review and
approval by the Board of Directors of the Company. The Compensation Committee
is comprised of three non-employee directors of East West Bank.
ELEMENTS OF THE COMPENSATION PROGRAM
There are three principal elements of the executive compensation program--
base salary, bonus compensation (annual incentive) and long-term stock-based
incentive compensation (stock options). In determining each component of
compensation, the total compensation package of each executive is considered.
Base Salaries
The salary of each executive officer is determined initially according to
competitive pay practices, level of responsibility, prior experience, and
breadth of knowledge, as well as internal equity issues. The Company uses its
discretion rather than a formal weighting system to evaluate these factors and
to determine individual base salary levels. Thereafter, base salaries are
reviewed on an annual basis, and increases are made based on a subjective
assessment of each executive's performance, as well as the factors described
above.
Annual Incentives
The Bank provides annual incentives to all employees, including executives.
Annual incentives are intended to reward for overall Bank success and
individual performance and provide total cash compensation opportunities above
competitive levels when warranted by performance. The Bank considers
individual contributions, business unit performance, and overall corporate
performance. Actual awards, if any, are also based on a subjective assessment
of each executive's individual performance. No formal weightings are assigned
to these levels of performance.
Each executive is assigned a bonus range as a percentage of salary, with a
maximum bonus achievable at above average performance from the executive.
Long-Term Stock-Based Incentives
The Bank believes that long-term incentive compensation opportunities should
be dependent on stock-based measures to strengthen the alignment between
management's interests and those of the Company's shareholders. Under its 1998
Stock Incentive Plan, the Company generally grants stock options to all
executives of the Company and the Bank. All options have been granted at an
option price not less than the fair market value of the common stock on the
date of grant. Thus, stock options have value only if the stock price
appreciates from the date the options are granted. The result is a focus by
all executive's on the creation of shareholder value over the long term.
In determining the number of options granted to individual executives, the
Company considers individual contributions, business unit performance,
competitive practices, the number of options previously granted, and value of
the stock on the date of the grant. Formal weightings have not been assigned
to these factors.
10
<PAGE>
CEO COMPENSATION
The determination of the Chief Executive Officer's salary, bonus and grants
of stock options followed the policies described above for the determination
of all executives' compensation subject to the additional considerations
described below.
Compensation for the Chief Executive Officer, Mr. Ng, was made in accordance
with a three year employment agreement entered into in June 1998 in connection
with the sale of the Bank by its prior shareholders. The terms of the
employment agreement are described in "Employment and Change of Control
Agreements." As this employment agreement is less than a year old, the
Compensation Committee decided to forego until the second quarter of 1999 the
consideration of a base salary increase for Mr. Ng, which would otherwise have
taken effect as of February 1, 1999, the date upon which annual salary
adjustments for all other executives became effective.
The bonus of the Chief Executive Officer is described in the Summary
Compensation Table. This indicated bonus was determined pursuant to the terms
of Mr. Ng's employment contract and is based primarily on the satisfaction of
performance criteria determined by the Board. The performance criteria include
the satisfaction by the Bank of goals relating to improvements in Return on
Equity, Return on Asset and Increase in Assets.
The Chief Executive Officer received stock options in 1998 as set forth in
the Summary Compensation Table. All of the options granted have an exercise
price equal to the fair market value of the stock on the date of grant. The
number of options granted was specified in Mr. Ng's employment agreement
entered into in connection with the sale of the Bank by the prior
shareholders. The number of options granted to Mr. Ng are also consistent with
the factors described in the prior paragraph for all executives, with an
additional emphasis on placing a significant portion of the Chief Executive
Officer's compensation at risk based on the long term stock price performance
of the Company.
POLICY WITH RESPECT TO SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 1987, as amended (the
"Code"), generally limits the corporate deduction for compensation paid to
executive officers named in the Proxy Statement to $1,000,000, unless the
compensation qualifies as "performance based" and has been approved in advance
by a vote of its shareholders. Section 162(m) excludes from its deduction
limits any compensation received pursuant to the exercise of a stock option
granted prior to the first shareholder meeting at which directors are to be
elected that occurs after the close of the first calendar year following the
calendar year in which the Company became publicly held; all stock options
currently granted to executive officers named in the Proxy Statement comply
with this grandfather clause.
Neither the Company nor the Bank is currently compensating any named
executive officers at levels that would cause this limitation on corporate tax
deductions to apply and has no current plans to do so, except that the
compensation of Mr. Ng would, in the event of a termination without cause or a
resignation for good cause, as specified in his employment agreement, would
result in compensation in excess of $1,000,000 being paid in that year. The
Compensation Committee has accordingly not adopted a formal policy concerning
the application of the Section 162(m) limitation on tax deductions. The
Compensation Committee will continue to monitor the applicability of Section
162(m). The Compensation Committee will, if it appears that any named
executive officer will likely be approaching the $1,000,000 compensation
limitation in the near future, review whether such payments should be
structured so as to qualify as deductible performance-based compensation.
Dated: March 22, 1999 THE COMPENSATION COMMITTEE
Herman Li Jack Liu Edward Zapanta
11
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Compensation Committee Interlocks and Insider Participation
No person who served as a member of the Compensation Committee during the
1998 fiscal year is, or ever has been, an officer or employee of the Company
or any of its subsidiaries.
Except as provided herein, there are no existing or proposed material
transactions between the Bank or the Company and any of its executive
officers, directors, or the immediate family or associates of any of the
foregoing persons. Mr. Slosser, a director of the Company and the Bank, is a
senior vice president of Friedman, Billings, Ramsey & Co., Inc. ("Placement
Agent."). The Bank has entered into an agreement whereby the Placement Agent
will provide the Bank financial advisory services through December 12, 1999.
In addition, in connection with the private placement of the Bank's securities
held by the Bank's two former shareholders to certain investors, the Placement
Agent acquired warrants to purchase up to 475,000 shares of Company Common
Stock at a per share purchase price of $10 which expires June 12, 2003.
CERTAIN TRANSACTIONS
One of the directors of the Company and the Bank is a guarantor of an
extension credit to two corporations in each of which the director is a
director, executive officer and a beneficial owner of over 10% of a class of
equity securities. The extensions of credit were made in the ordinary course
of business and on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and did not involve more than the normal risk of collectibility
or present other unfavorable features. As of December 31, 1998, the loans were
performing in accordance with their terms. Except for the stock plans
described above and the Agreement between East West Bank and the Placement
Agent described under the caption "ELECTION OF DIRECTORS -- Executive
Compensation -- Compensation Committee Interlocks and Insider Participation,"
none of the directors or executive officers of the Company, or any associate
or affiliate of such person, had any other material interest, direct or
indirect, in any transaction during the past year or any proposed transaction
with the Company.
INDEPENDENT AUDITORS
The auditors of the Company are Deloitte & Touche, LLP, Certified Public
Accountants. Deloitte & Touche LLP performed audit services for the Company's
subsidiary, East West Bank, during 1998, which consisted of the examination of
the financial statements of East West Bank and its affiliates and predecessors
and limited assistance and consultation in connection with filings with the
Securities and Exchange Commission. All professional services rendered by
Deloitte & Touche LLP during 1998 were furnished at customary rates and terms.
Representatives of Deloitte & Touche LLP will be present at the Meeting to
respond to appropriate questions.
PROPOSALS OF STOCKHOLDERS
Proposals of Stockholders intended to be included in the proxy materials for
the 2000 Annual Meeting of Stockholders must be received by the Secretary of
the Company, 415 Huntington Drive, San Marino, California 91108, by November
10, 1999.
Under Rule 14a-8 adopted by the Securities and Exchange Commission under the
Exchange Act, proposals of stockholders must conform to certain requirements
as to form and may be omitted from the proxy statement and proxy under certain
circumstances. In order to avoid unnecessary expenditures of time and money by
stockholders and the Company, stockholders are urged to review this rule and,
if questions arise, to consult legal counsel prior to submitting a proposal to
the Company.
12
<PAGE>
SEC rules also establish a different deadline for submission of shareholder
proposals that are not intended to be included in the Company's proxy
statement with respect to discretionary voting (the "Discretionary Vote
Deadline"). The Discretionary Vote Deadline for the year 2000 annual meeting
is February 12, 2000 (45 calendar days prior to the anniversary of the mailing
date of this proxy statement). If a shareholder gives notice of such a
proposal after the Discretionary Vote Deadline, the Company's proxy holders
will be allowed to use their discretionary voting authority to vote against
the shareholder proposal without discussion when and if the proposal is raised
at the Company's year 2000 annual meeting.
The Company has not been notified by any shareholder of his or her intent to
present a shareholder proposal from the floor at this year's Annual Meeting.
The enclosed proxy card grants the proxy holders discretionary authority to
vote on any matter properly brought before the Annual Meeting.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31, 1998
accompanies this Proxy Statement. The Annual Report contains consolidated
financial statements of the Company and its subsidiaries and the report
thereon of Deloitte & Touche LLP, the Company's independent auditors.
STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K INCLUDING FINANCIAL STATEMENTS REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 BY WRITING TO THE COMPANY AT
415 HUNTINGTON DRIVE, SAN MARINO, CALIFORNIA 91108.
OTHER BUSINESS
Management knows of no business which will be presented for consideration at
the Meeting other than as stated in the Notice of Meeting. If, however, other
matters are properly brought before the Meeting, it is the intention of the
Proxyholders to vote the shares represented thereby on such matters in
accordance with the recommendation of the Board of Directors and authority to
do so is included in the Proxy.
EAST WEST BANCORP, INC.
/s/ Dominic Ng
Dominic Ng
Chairman of the Board of Directors,
President and Chief Executive
Officer
San Marino, California
March 22, 1999
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REVOCABLE PROXY
East West Bancorp, Inc.
Annual Meeting of Stockholders -- May 12, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder(s) of East West Bancorp, Inc. (the "Company")
hereby nominates, constitutes and appoints Julia Gouw and Douglas P. Krause,
and each of them, the attorney, agent and proxy of the undersigned, with full
power of substitution, to vote all stock of the Company which the undersigned
is entitled to vote at the Annual Meeting of Stockholders of the Company (the
"Meeting") to be held at the Ritz-Carlton Huntington Hotel, 1401 South Oak
Knoll Avenue, Pasadena, California at 3:00 p.m., on Wednesday, May 12, 1999,
and any adjournments thereof, as fully and with the same force and effect as
the undersigned might or could do if personally present thereat, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "FOR" THE ELECTION OF THE BOARD
OF DIRECTORS' NOMINEES LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY SHALL BE VOTED BY THE PROXYHOLDERS IN ACCORDANCE WITH THE
RECOMMENDATIONS OF A MAJORITY OF THE BOARD OF DIRECTORS.
East West Bancorp, Inc.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
This Proxy will be voted "FOR" the election of the Board of Directors'
nominees unless authority to do so is withheld.
1. ELECTION OF DIRECTORS --
<TABLE>
<S> <C> <C>
Nominee: Dominic Ng For [_] Withhold Authority [_]
Term Expires 2002
Nominee: Herman Li For [_] Withhold Authority [_]
Term Expires 2002
</TABLE>
PLEASE SIGN AND DATE ON REVERSE SIDE
2. OTHER BUSINESS. In their discretion, the proxyholders are authorized to
transact such other business as may properly come before
the Meeting and any adjournment or adjournments thereof.
The undersigned hereby ratifies and confirms all that said attorneys and
proxyholders, or either of them, or their substitutes, shall lawfully do or
cause to be done by virtue hereof, and hereby revokes any and all proxies
heretofore given by the undersigned to vote at the Meeting. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting and the Proxy
Statement accompanying said notice.
(Please date this Proxy and
sign your name as it appears
on your stock certificates.
Executors, administrators,
trustees, etc., should give
their full titles. All joint
owners should sign.)
I (We) [ ] do [ ] do not
expect to attend the Meeting.
Dated: _______________ , 1999.
------------------------------
Signature
----------------------
Signature
PLEASE SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE
PREPAID ENVELOPE PROVIDED.
