Chang Liu
CATHAY GENERAL BANCORPAbout Chang Liu
Chang M. Liu, age 58, is President and CEO of Cathay General Bancorp and Cathay Bank (CEO since 2020; President since 2019) and serves on the Bancorp Board (director since 2020) and Cathay Bank Board (since 2019) . Under Liu, 2024 net income was $286 million and EPS $3.95 (down from 2023’s $354.1 million and $4.86), with 2024 TSR 6.82% versus 9.59% for the S&P U.S. BMI Banks – Western Region peers; in 2023 TSR was 13.5% versus peers at -4.0% . Pay design emphasizes performance: 74% of CEO compensation is performance-based, with 3-year RSUs tied to EPS (50%), relative TSR (25%), and relative ROA (25%) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cathay Bank | Senior VP & Assistant Chief Lending Officer | 2014 | Lending leadership, foundation for later COO/CEO roles |
| Cathay Bank | Deputy Chief Lending Officer | 2014–2015 | Expanded lending oversight |
| Cathay Bank | Chief Lending Officer; EVP | 2016–2019 | Led lending strategy and executive operations |
| Cathay Bank | Chief Operating Officer | Feb–Sep 2020 | Operational efficiency ahead of CEO role |
| Banc of California (Pacific Trust Bank) | EVP & Chief Lending Officer | 2011–2014 | External credit leadership experience |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Federal Reserve Bank of San Francisco – Los Angeles Regional Board | Director | n/a | Regional monetary policy insight |
| Federal Home Loan Bank of San Francisco | Director | n/a | Liquidity/housing finance expertise |
| California Bankers Association | Director | n/a | Industry advocacy |
| UCLA Anderson Forecast | Board of Advisors | n/a | Economic outlook advisory |
| American Cancer Society – CEOs Against Cancer (LA Chapter) | Chair | n/a | Community leadership |
| UC Irvine Joe C. Wen School | Public Health Community Advisory Council | n/a | Public health/community engagement |
| Foothill Family | Board member | n/a | Non-profit governance |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $900,750 | $943,250 |
| Target Bonus (%) | 100% | 100% |
| Actual Bonus Paid ($) | $784,600 | $825,400 |
| Current Base (after Apr 1 adjustment) ($) | $920,000 | $951,000 |
Performance Compensation
Annual cash incentive (2024) structure and outcome:
| Metric | Weighting | Target | Actual | Payout % |
|---|---|---|---|---|
| EPS | 56% | $4.45 | $3.95 | 77.53% |
| ROA | 24% | 1.35% | 1.22% | 80.74% |
| Individual/Dept. | 20% | Rating scale | CEO payout 120% | 120% |
2024 long-term incentive (RSUs granted June 28, 2024):
| RSU Type | Target RSUs | Performance Period End | Vesting Framework |
|---|---|---|---|
| EPS (50%) | 25,212 | Dec 31, 2026 | 0–150% earned; scaled vs 3-year cumulative EPS target; dividends accrue as equivalents; change-in-control provisions define treatment |
| Relative TSR (25%) | 12,506 | Dec 31, 2026 | 0% below 30th percentile; 100% at 50th; 150% at ≥70th percentile; 20-day avg prices used |
| Relative ROA (25%) | 12,606 | Dec 31, 2026 | Similar percentile scaling as TSR (30th–70th) on 3-year average ROA |
Payout of prior LTI (granted 2022; performance ended Dec 31, 2024):
| RSU Type | Payout % |
|---|---|
| EPS | 72.938% |
| Relative TSR | 125% |
| Relative ROA | 150% |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (3/20/2025) | 136,558 shares; includes 48,736 gross shares issuable within 60 days upon settlement of vested RSUs before tax withholding |
| Ownership % of Outstanding | Below 1% (percentage not shown; indicated as not exceeding 1%) |
| Shares Vested (2023) | 145,042 shares; value $5,132,883 |
| Shares Vested (2024) | 48,736 shares; value $2,086,876 |
| 2024 RSU Grants Outstanding | EPS 25,212; TSR 12,506; ROA 12,606 target units |
| Stock Ownership Guidelines | CEO must hold shares equal to 3x base salary; may not sell/assign/pledge until compliance; unearned performance shares don’t count |
| Hedging/Pledging | Prohibited absent Board approval; no approvals granted |
| Clawback Policy | Adopted Sept 2023; recovers incentive comp for restatements (3-year lookback) |
Employment Terms
| Provision | Key Terms |
|---|---|
| Employment Agreement | Dated Jul 16, 2020; initial term Oct 1, 2020–Sep 30, 2023; auto-renews annually; current renewal runs through Sep 30, 2025 |
| Severance (no cause / Good Reason) | 18 months base salary + 18 months COBRA; as of Dec 31, 2024 valued $1,426,986 (requires release) |
| Non-solicitation/Confidentiality | Customary clauses in agreement |
| Change-in-Control Agreement | 1.5x (base + Applicable Annual Bonus) lump-sum; plus benefits and 401(k) matching continuation and outplacement; total illustrative “Good Reason/Involuntary (not for cause)” value $3,882,125 as of Dec 31, 2024 |
| Equity on Change-in-Control | No automatic acceleration if awards are continued/assumed by a public company; illustrative accelerated vesting value $4,679,016 at target (12/31/2024) |
| Tax Gross-ups | None in Liu’s 2020 Control Agreement (Company policy moving away from gross-ups) |
Board Governance
| Attribute | Detail |
|---|---|
| Director Service | Bancorp director since 2020; Cathay Bank director since 2019 |
| Independence | Dependent (not independent) director |
| Committees | Investment Committee and Risk Committee (joined Risk in July 2024) |
| Board Leadership | Chairman and CEO roles separated; Executive Chairman leads Board; CEO focuses on operations |
| Attendance | In 2024 each director attended >75% of Board and committee meetings |
| Independent Sessions | Independent directors meet at least quarterly; met six times in 2024 |
| Lead Independent Director | Nelson Chung |
Say-on-Pay & Shareholder Feedback
| Year | Approval % |
|---|---|
| 2023 | 94.44% |
| 2024 | 94.22% |
Investment Implications
- Pay-for-performance alignment is robust: 74% of CEO pay is performance-based, with STI tied to EPS/ROA (below-target outcomes in 2024) and LTI tied to multi-year EPS/relative TSR/ROA; this reduces risk of pay inflation and supports long-term value creation .
- Upcoming RSU maturities (Dec 31, 2026) and annual vesting events can create settlement-related trading flows; 2023–2024 vestings were sizable (145k shares in 2023; 48.7k in 2024) and typically involve share withholding for taxes, moderating selling pressure signals .
- Governance mitigants: pledging/hedging bans, a 2023 clawback policy, separated Chairman/CEO roles, and an engaged Risk/Compensation oversight framework lessen alignment and execution risks .
- Change-of-control economics are meaningful (cash and potential equity acceleration); while standard for peers, investors should note the 1.5x base+bonus cash multiple and potential accelerated equity value, which could influence behavior in strategic scenarios .
- Shareholder support for compensation remains high (94%+ approval in 2023–2024), indicating stable external confidence in pay design despite 2024 financial pressure (EPS down; TSR below peer index) .