Heng Chen
CATHAY GENERAL BANCORPAbout Heng Chen
Heng W. Chen, age 72, is Executive Vice President, Chief Financial Officer, and Treasurer of Cathay General Bancorp since 2003 and CFO of Cathay Bank since 2004; he holds an MBA, was formerly a CPA, and previously worked at City National Bank, City National Corporation, and Price Waterhouse . In 2024, CATY’s net income was $286 million, EPS was $3.95, efficiency ratio 51.35%, and net interest margin 3.04%; total shareholder return was 6.82% vs 9.59% for the S&P U.S. BMI Banks – Western Region Index, framing the context for pay-for-performance outcomes .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Cathay General Bancorp | EVP, CFO & Treasurer | 2003–present | Oversees liquidity, capital (buybacks/dividends), IR, treasury, and compliance; aligns incentives and risk oversight |
| Cathay Bank | EVP; CFO | 2004–present | Supervises treasury, CECL model, regulatory and financial reporting |
| Cathay Real Estate Investment Trust | VP & CFO | 2003–2013 | Entity finance leadership within the Cathay group |
| GBC Venture Capital, Inc. | Director, VP & CFO | 2003–2023 | Long-term finance leadership for affiliate venture entity |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| None disclosed | — | — | No external public company boards disclosed in 2025 proxy |
Fixed Compensation
Multi-year compensation (Summary Compensation Table):
| Year | Salary ($) | Stock awards ($) | Non‑equity incentive (bonus) ($) | All other comp ($) | Total ($) |
|---|---|---|---|---|---|
| 2022 | 529,599 | 568,905 | 501,100 | 15,250 | 1,614,854 |
| 2023 | 548,250 | 589,937 | 366,500 | 16,500 | 1,521,187 |
| 2024 | 566,500 | 609,929 | 363,800 | 17,250 | 1,557,479 |
2024 salary adjustment and target bonus:
| Item | Value |
|---|---|
| Base salary before adjustment | $553,000 |
| Base salary after 3% adjustment (effective 4/1/2024) | $571,000 |
| Target bonus % of base | 75% |
Performance Compensation
Short‑term incentive (2024 bonus structure and outcomes for CFO):
| Metric | CFO weighting | Target | Actual 2024 | Payout % |
|---|---|---|---|---|
| EPS | 49% | $4.45 | $3.95 | 77.53% |
| ROA | 21% | 1.35% | 1.22% | 80.74% |
| Individual/Departmental | 30% | Rating scale (2.0–4.75) | NEO ratings 3.14–3.88 | 75%–120% (range, individual not disclosed) |
| Total bonus paid (CFO) | — | — | — | $363,800 |
Long‑term performance RSUs (granted June 28, 2024; 3‑year performance):
| Component | Target RSUs | Performance period | Vest date | Payout scale |
|---|---|---|---|---|
| EPS (absolute cumulative EPS) | 8,085 | 1/1/2024–12/31/2026 | 12/31/2026 | 0% if >15% below target; 50% at −15%; 100% at target; up to 150% at +15% |
| TSR (relative to KBW Regional Bank Index) | 4,011 | 1/1/2024–12/31/2026 | 12/31/2026 | 0% below 30th pct; 50% at 30th; 100% at 50th; 150% at ≥70th pct |
| ROA (relative to KBW Regional Bank Index) | 4,042 | 1/1/2024–12/31/2026 | 12/31/2026 | 0% below 30th pct; 50% at 30th; 100% at 50th; 150% at ≥70th pct |
Historical LTI payouts (awarded May 2022; performance period ended 12/31/2024):
| Metric | Payout % |
|---|---|
| EPS (absolute) | 72.938% |
| TSR (relative) | 125.0% |
| ROA (relative) | 150.0% |
Equity Ownership & Alignment
Beneficial ownership (as of March 20, 2025):
| Holder | Shares | % of outstanding | Notes |
|---|---|---|---|
| Heng W. Chen | 197,022 | <1% | Includes 100 shares held by the Chen Trust and 16,434 gross shares to be issued within 60 days upon RSU settlement (before tax withholding) |
Stock/RSU activity and vesting:
| Item | Shares | Date/Status | Value / Notes |
|---|---|---|---|
| Shares acquired on vesting (2024) | 16,434 | Settled in 2024 | $703,704 value at settlement |
| Outstanding RSUs (target, vesting 12/31/2025) | 3,903; 4,086; 8,173 | 2025 vest (single installment, subject to performance/continued employment) | Market values shown in proxy at 12/31/2024 |
| Outstanding RSUs (target, vesting 12/31/2026) | 4,146; 4,178; 8,357 | 2026 vest (single installment, subject to performance/continued employment) | Market values shown in proxy at 12/31/2024 |
Alignment policies and practices:
- Hedging/pledging policy prohibits pledging, margin accounts, and hedging unless advance Board approval; no such approvals have been granted .
- Stock ownership guidelines require the CEO to hold 3x base salary; no officer other than the CEO has a minimum ownership requirement .
- Company does not currently grant stock options to employees; equity is delivered via RSUs .
Employment Terms
Change‑of‑control economics (CFO):
| Scenario (hypothetical CIC at 12/31/2024) | Base salary + bonus multiple | Lump‑sum base + bonus ($) | Accrued obligations ($) | 401(k) matching ($) | Welfare benefits | Outplacement ($) | Excise tax gross‑up eligibility |
|---|---|---|---|---|---|---|---|
| Voluntary for Good Reason or involuntary other than for Cause | 2x of salary ($571,000) + Applicable Annual Bonus ($501,100) | $2,144,200 | $501,100 | $34,500 | 2 years medical/life/disability (illustrative costs shown) | $50,000 | CFO’s 2008 CIC agreement includes excise tax gross‑up eligibility; future agreements do not (Chen covered) |
| For Cause / voluntary other than Good Reason | — | $0 | Accrued salary/vacation only | — | — | — | — |
Other separation terms:
- No individual employment agreement for CFO; standard benefits include base through termination, accrued vacation, vested benefits; RSUs may prorate for death, disability, or retirement based on performance and service time .
- Clawback policy adopted September 2023 requiring repayment of incentive compensation for restatements (3‑year lookback) .
Investment Implications
- Pay-for-performance alignment: 2024 STIP paid below target driven by EPS and ROA misses versus targets (EPS $3.95 vs $4.45; ROA 1.22% vs 1.35%), with CFO bonus at $363,800, indicating variable pay responsive to financial outcomes .
- LTI mix and metrics: 2024 grants split across absolute EPS (50%), relative TSR (25%), and relative ROA (25%) over three years; prior 2022 cycle paid 125% TSR and 150% ROA, but only ~73% EPS, highlighting reliance on relative metrics that can still produce payouts in weaker absolute environments .
- Insider selling pressure: Scheduled single‑installment RSU vesting on 12/31/2025 and 12/31/2026 (multiple tranches) and the company’s practice of share withholding for taxes (e.g., 16,434 gross shares issued within 60 days of record date before tax withholding) can create periodic supply; monitor Form 4s around year‑end vest dates .
- Retention/change‑of‑control: CFO has a robust CIC agreement with 2x salary+bonus, extended welfare benefits, and excise tax gross‑up eligibility under his 2008 agreement—supportive of retention in an M&A scenario, but gross‑up is a governance negative to some investors .
- Risk controls and governance: Prohibitions on hedging/pledging, presence of clawback policy, and no late Section 16 filings noted for CFO (late filings were other officers/directors due to administrative error) reduce governance risk .
- Shareholder sentiment: Strong say‑on‑pay support in 2024 (94.22%), lowering near‑term compensation controversy risk .