<PAGE>
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:
-------------------------------------------------------------------
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial of Percentage of
Name and Address of Ownership of Common Stock
Beneficial Owner Common Stock Beneficially Owned
------------------- ------------------ ------------------
<S> <C> <C>
Cathay Bank Employee Stock 570,204(1) 6.34%
Ownership Plan and Trust ("ESOPT")
777 North Broadway
Los Angeles, California 90012
</TABLE>
- -------------------------------
(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
<PAGE>
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
<PAGE>
The information set forth in the following table as to shares of Common
Stock owned has been furnished by each director and named officer.
<TABLE>
<CAPTION>
Common
Stock Percentage
Beneficially Ownership
Principal Director Owned on on
Occupations and of Bancorp March 5, March 5,
Name Age Directorships Since 1999 1999
---- --- ------------- ------- --------- --------
<S> <C> <C> <C> <C> <C>
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
<PAGE>
<CAPTION>
Common
Stock Percentage
Beneficially Ownership
Principal Director Owned on on
Occupations and of Bancorp March 5, March 5,
Name Age Directorships Since 1999 1999
---- --- ------------- ------- --------- --------
<S> <C> <C> <C> <C> <C>
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
<PAGE>
<CAPTION>
Common
Stock Percentage
Beneficially Ownership
Principal Director Owned on on
Occupations and of Bancorp March 5, March 5,
Name Age Directorships Since 1999 1999
---- --- ------------- ------- --------- --------
<S> <C> <C> <C> <C> <C>
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)
</TABLE>
- ---------------------------
(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
<PAGE>
(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
<PAGE>
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 $33.00 per share
(which was the per share fair market value of the Bancorp Common Stock on the
date of grant). Such options become exercisable in 20% increments over a
five-year period and terminate ten years from the date of grant (subject to
early termination in the event of termination of directorship, disability or
death).
8
<PAGE>
INFORMATION CONCERNING MANAGEMENT COMPENSATION
REMUNERATION OF EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The following tables sets forth information regarding the compensation
for services in all capacities paid or accrued for the calendar year ended
December 31, 1998, by Bancorp or Cathay Bank (a) to the chief executive
officer of Bancorp and (b) to the four most highly compensated executive
officers and significant employees of either Bancorp or Cathay Bank.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Long Term
Compensation
Annual Compensation Awards
-------------------------------- ------------
Other
Annual Securities All Other
Compen- Underlying Compen-
Name and Principal Year Salary Bonus sation(2) Options sation
Position ($)(1) ($) ($) (#) ($)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes amounts deferred by the named officers under the Cathay Bancorp's
401(k) Profit Sharing Plan (the "401(k) Plan").
9
<PAGE>
(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 $8,249 in employer contribution to the ESOPT.
10
<PAGE>
OPTIONS AND STOCK APPRECIATION RIGHTS
The following table summarizes individual option grants made during 1998
to the individuals named in the above Summary Compensation Table. In 1998,
the Company had no outstanding stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Grant Date
Individual Grants Value
- ------------------------------------------------------------------------------- -----------
Number of
Securities % of Total Grant
Underlying Options Date
Options Granted to Exercise Present
Granted Employees Price Expiration Value
Name (#)(1) in 1998 ($/Sh) Date ($)(2)
---- ---------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
- ------------------------
(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
<TABLE>
<CAPTION>
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
---- --------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
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
</TABLE>
- -------------------------
(1) Based on the market value of the underlying securities of year end, less
the exercise price.
11
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<TABLE>
<CAPTION>
Period Ending December 31,
----------------------------------------------------------
Index 1993 1994 1995 1996 1997 1998
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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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.)
<PAGE>
/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.
