Richard Hernandez
About Richard Hernandez
Richard Hernandez (age 50) is President of California BanCorp (BCAL) and California Bank of Commerce, bringing 25+ years of commercial banking experience; he previously served as President of Southern California Bancorp and Bank of Southern California since 2022, held EVP roles at Pacific Western Bank/California United Bank (2005–2020), and was VP at U.S. Bank (1999–2003). He holds a bachelor’s degree in international finance from California Lutheran University and serves on the board of Casa Pacifica (2011–2017; 2021–present) . Performance metrics used in BCAL’s executive incentive plans emphasize return on average assets (ROAA), asset quality, pre-tax pre-provision revenue, strategic objectives, and risk management; a recoupment (clawback) policy applies to incentive compensation tied to restated results .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Southern California Bancorp / Bank of Southern California | President | 2022–2024 (pre-merger role) | Led franchise pre-merger; transitioned into President role at BCAL post-merger |
| Pacific Western Bank (formerly California United Bank) | EVP overseeing commercial banking (Los Angeles & Ventura Counties) | 2005–2020 | Growth and leadership across key SoCal markets |
| U.S. Bank | Vice President, Commercial Banking | 1999–2003 | Relationship management and commercial banking execution |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Casa Pacifica | Board member | 2011–2017; 2021–present | Non-profit governance supporting adolescents and families affected by abuse |
Fixed Compensation
Multi-year compensation (grant-date fair value for equity).
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | 375,000 | 398,438 |
| Cash Bonus Paid ($) | 366,375 | 153,319 |
| Stock Awards ($) | 250,005 | 327,316 |
| Other Annual Compensation ($) | 49,208 | 95,258 |
| Total ($) | 1,040,588 | 974,331 |
2024 other annual compensation detail:
| Component | 2024 ($) |
|---|---|
| 401(k) Match | 13,800 |
| Life Insurance Premium | 320 |
| Health Insurance Premium | 18,572 |
| Car Allowance | 18,000 |
| Other (includes one-time vacation payout under new Flex Time Off policy) | 44,566 |
| Total | 95,258 |
Notes:
- Bonus and equity awards are determined under the Management Incentive Plan (MIP) reviewed by the CNG Committee, with pay outcomes tied to company and individual performance and external benchmarks; clawback policy applies to incentive compensation .
Performance Compensation
Annual incentive plan and long-term incentives framework.
- Annual bonus metrics: ROAA, asset quality, pre-tax pre-provision revenue; also strategic objectives and risk management are assessed. Weightings, targets, and payout curves were not disclosed .
- Equity is primarily time-based RSUs under the equity plans and award agreements; the company emphasizes alignment with shareholders and can accelerate vesting upon certain events (see vesting schedules and CIC terms below) .
Annual incentive mechanics (disclosures):
| Metric | Weighting | Target | Actual | Payout | Vesting/Timing |
|---|---|---|---|---|---|
| ROAA | Not disclosed | Not disclosed | Not disclosed | Not disclosed | Annual cash bonus |
| Asset quality | Not disclosed | Not disclosed | Not disclosed | Not disclosed | Annual cash bonus |
| Pre-tax, pre-provision revenue | Not disclosed | Not disclosed | Not disclosed | Not disclosed | Annual cash bonus |
| Strategic objectives | Not disclosed | Not disclosed | Not disclosed | Not disclosed | Annual cash bonus |
| Risk management | Not disclosed | Not disclosed | Not disclosed | Not disclosed | Annual cash bonus |
Equity Ownership & Alignment
Beneficial ownership and alignment policies.
| Item | Amount/Status |
|---|---|
| Common shares owned | 61,184 shares |
| RSUs vesting within 60 days | 3,365 units |
| Total beneficial ownership | 64,549 shares (0.20% of outstanding) |
| Unvested RSUs outstanding (12/31/24) | 44,726 units (sum of 11,236 + 3,788 + 10,094 + 19,608) |
| Estimated value of total beneficial shares (12/31/24 price $16.54) | ~$1.07 million (=64,549×$16.54) |
| Estimated value of unvested RSUs (12/31/24 price $16.54) | ~$0.74 million (=44,726×$16.54) |
| Ownership guidelines | Non-CEO executives target ≥1× base salary in BCAL stock; 3-year compliance window |
| Apparent compliance status | Beneficial holdings (~$1.07M) exceed 2024 base salary ($398,438), indicating he exceeds the 1× guideline threshold |
| Hedging policy | Hedging/short sales prohibited |
| Pledging | Pledging only with pre-approval; as of proxy, no outstanding pledges by directors or executive officers |
| Clawback policy | Restatement-based recoupment for incentive compensation (SEC Rule 10D/Nasdaq 5608 compliant) |
Outstanding equity awards and vesting:
| Grant Date | Type | Unvested Units (12/31/24) | Vesting Schedule | Market Value (12/31/24) |
|---|---|---|---|---|
| 11/02/2020 | RSU | 11,236 | Equal installments over 5 years beginning 12/01/2021 | $185,843 |
| 03/04/2022 | RSU | 3,788 | Equal installments over 3 years beginning 03/04/2023 | $62,654 |
| 05/05/2022 | RSU | 10,094 | Equal installments over 5 years beginning 05/05/2023 | $166,955 |
| 08/02/2024 | RSU | 19,608 | Equal installments over 5 years beginning 08/02/2025 | $324,316 |
Notes:
- The company’s anti-hedging policy and lack of outstanding pledges reduce misalignment risk; ownership guidelines reinforce “skin-in-the-game” .
- Upcoming scheduled vesting across 2025 (including 05/05/2025, 08/02/2025, and year-end tranches) may incrementally increase tradable float for the executive once restrictions lapse, subject to trading windows and company policies .
Employment Terms
Change-in-control (CIC), severance, SERP, and policies.
| Provision | Terms for Richard Hernandez |
|---|---|
| CIC Agreement | Executed March 26, 2025; if terminated without cause or for good reason within 24 months post-CIC, lump-sum severance equals 2×(base salary + average annual bonus (3 yrs) + average equity grant value (3 yrs)); pro-rated current-year bonus at maximum; all equity awards vest (performance-based at target); 280G “best-net” cutback (no gross-up); expires 12/31/2028 (obligations survive any CIC during term) |
| SERP | Annual benefit of $75,000 for 10 years post “normal retirement” at 67; vesting 10% annually over 10 years; early termination/disability/death or termination without cause yields lump-sum of accrued liability balance; CIC-related qualifying termination yields lump sum equal to accrued liability balance discounted to present value; vested accrued benefit present value $65k as of 12/31/2024 |
| Clawback | Incentive compensation subject to recoupment upon financial restatement; compliant with SEC/Nasdaq; may recover gains on equity vesting/exercise/sale |
| Hedging/Pledging | Hedging prohibited; pledging only with pre-approval; no pledges outstanding |
| Ownership Guidelines | 1× base salary (3-year window); appears exceeded based on 12/31/24 holdings and salary |
Compensation Structure Analysis
- Year-over-year mix shifted toward fixed pay: base salary rose to $398,438 in 2024 (from $375,000), while the cash bonus declined to $153,319 (from $366,375), indicating greater reliance on fixed pay in 2024; equity grant value increased to $327,316 (from $250,005) .
- Equity is delivered as time-based RSUs (no options outstanding for Hernandez), reducing risk vs. options but providing retention via multi-year vesting; outstanding RSUs total 44,726 units with defined multi-year schedules .
- Incentives are tied to ROAA, asset quality, and pre-tax pre-provision revenue, alongside strategic and risk objectives, aligning payouts with profitability and risk discipline; clawback provisions add downside accountability .
Risk Indicators & Red Flags
- Clawback policy in place; anti-hedging enforced; no outstanding pledges — mitigates alignment risks .
- Company prohibits officer loans; related-party approvals overseen by CNG Committee per policy; no officer loans outstanding under policy .
- Section 16(a) review disclosed late filings for certain executives in 2024 (not naming Hernandez), indicating no reported delinquency naming Hernandez in that disclosure .
Investment Implications
- Alignment: Hernandez exceeds BCAL’s executive ownership guideline (beneficial holdings ~$1.07M vs. 2024 base salary $398k), has no outstanding pledges, and is subject to a robust clawback — positive for long-term alignment .
- Retention: Significant unvested RSUs (44,726 units) with multi-year vesting plus a 24-month, 2× CIC protection (salary+bonus+equity average), pro-rated current-year bonus at max, and full vesting at target upon qualifying CIC termination create strong retention and change-in-control protections .
- Near-term selling dynamics: Multiple RSU tranches vest through 2025 (e.g., May 5, Aug 2, and year-end schedules), which can modestly increase tradable supply subject to trading windows and pre-clearance; anti-hedging rules limit risk-mitigating transactions .
- Pay-for-performance: Annual bonus design emphasizes ROAA, asset quality, and pre-tax pre-provision revenue with strategic/risk overlays; 2024 bonus declined versus 2023 consistent with variable outcomes under this framework, while equity awards increased, maintaining multi-year alignment .
Disclosures sourced from California BanCorp’s 2025 DEF 14A proxy statement. All amounts and terms are as disclosed in that filing.