Michael Du
About Michael Du
Michael Du (age 52) is Executive Vice President and Chief Risk Officer (CRO) of Hanmi Financial Corporation, promoted in April 2024 after serving as SVP & CRO since joining in November 2019; he is a CPA with multiple risk/audit certifications and completed an executive management program at UCLA . Education: B.S. in accounting; M.S. in business administration; 25+ years of service in the U.S. Air Force/Reserves, retiring as Command Chief Master Sergeant; current external engagement includes California Bankers Association Federal and State Government Relations Committees . Company performance context: 2024 GAAP net income was $62.2M with ROAA 0.83%, NPA/Assets 0.19%, and efficiency ratio 60.31%; 5-year cumulative TSR value of initial $100 rose to $147 vs $124 for the peer index .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Hanmi Bank | SVP & Chief Risk Officer | Nov 2019–Apr 2024 | Built and led enterprise risk and compliance programs; prepared for CRO promotion . |
| Pacific Western Bank | Director of Internal Audit | Jun 2017–Nov 2019 | Led internal audit function at a regional bank; strengthened control environment . |
| Unify Federal Credit Union | VP of Risk Management | May 2015–Jun 2017 | Advanced risk frameworks and exam readiness . |
| U.S. Air Force/Reserves | Command Chief Master Sergeant | 25+ years | Senior enlisted leadership, discipline and risk culture . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| California Bankers Association | Member, Federal & State Government Relations Committees | Current | Policy/regulatory engagement for banking industry . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 249,597 | 264,573 | 268,667 |
| Stock Awards – Grant Date Fair Value ($) | 59,799 | 76,062 | 96,747 |
| Non-Equity Incentive (AIP) ($) | 87,444 | 65,250 | 75,655 |
| All Other Compensation ($) | 25,236 | 29,557 | 30,064 |
| Total Compensation ($) | 422,075 | 435,441 | 471,133 |
- 2024 base salary was unchanged vs 2023; the CHR Committee froze all NEO base salaries for 2024 (Du’s target AIP remained 30% of salary) .
- 2024 perquisites and benefits for Du totaled $30,064, including 401(k) employer contributions of $20,035 and $10,029 of perquisites (auto allowance, technology allowance, etc.) .
Performance Compensation
Annual Incentive Plan (AIP) – 2024 CRO Scorecard
| Metric | Weight | Threshold | Target | Maximum | Actual | Achievement |
|---|---|---|---|---|---|---|
| ROAA | 10% | 0.66% | 0.83% | 0.91% | 0.83% | 10.0% |
| NPA/Assets | 10% | 0.42% | 0.35% | 0.28% | 0.19% | 15% |
| Efficiency Ratio | 10% | 63.62% | 57.84% | 54.95% | 60.31% | 7.9% |
| BSA Program Enhancements | 5% | Qualitative | Qualitative | Qualitative | See (1) | 5% |
| Information Security Enhancements | 5% | Qualitative | Qualitative | Qualitative | See (2) | 3% |
| Compliance Mgmt System Enhancements | 20% | Qualitative | Qualitative | Qualitative | See (3) | 20% |
| Risk Mgmt Program Enhancements | 5% | Qualitative | Qualitative | Qualitative | See (4) | 5% |
| Data Governance Enhancements | 10% | Qualitative | Qualitative | Qualitative | See (5) | 10% |
| Risk Results (audit/exam ratings) | 15% | Qualitative | Qualitative | Qualitative | See (6) | 13% |
| Discretionary (retain risk staff) | 10% | Qualitative | Qualitative | Qualitative | See (7) | 5% |
| Eligible Salary | $268,667 | |||||
| Target % of Salary | 30% | |||||
| Total Achieved as % of Target | 94% | |||||
| Payout % of Base Salary | 28.16% | |||||
| Actual Payout ($) | $75,655 |
Footnotes: (1) BSA program enhancements completed . (2) InfoSec assessment and enhancements initiated; policy alignment started . (3) Regulatory compliance risk assessment completed; enhancements implemented; new risk assessment platform adopted . (4) ERM upgrades, new risk assessments/policies, regulatory alignment achieved . (5) New data governance platform implemented . (6) Satisfactory exam and audit results . (7) Maintained staffing continuity in risk organization .
Long-Term Incentives – Award Design and 2024 Grants
- Structure: ~55% PSUs tied to 3-year relative TSR vs KBW Regional Banking Index; ~45% time-based RS vesting in equal annual installments over 3 years (first vest on 1st anniversary) .
- Negative TSR cap: If absolute TSR is negative over the period, PSU payout capped at Target even if relative TSR is high .
- 2024 grants (April 1, 2024; stock price $15.49; PSU Monte Carlo fair value $14.30/share):
- Time-Based RS: 3,383 shares; grant date fair value $52,403 .
- PSUs: Threshold 1,551; Target 3,101; Max 4,652; grant date fair value $44,344 .
- 2021 PSU cycle: Company TSR -10.77% ranked at 48th percentile; payout 92.06% of target; Du earned 1,645 PSUs (settled in shares) in March 2024 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (Apr 2, 2025) | 12,614 shares; <1% of outstanding . |
| Unvested RS (12/31/2024) | 361 (granted 3/23/2022); 1,069 (granted 3/10/2023); 3,383 (granted 4/1/2024) . |
| PSUs Outstanding (Target units, 12/31/2024) | 1,310 (2022 grant); 1,973 (2023 grant); 4,652 shown as max for 2024; target was 3,101 . |
| Market Value of Unvested Awards (12/31/2024 close $23.62) | RS: $79,906 + $25,250 + $8,527; PSUs (target counts shown in table carry separate market values) . |
| Options | None outstanding for Du . |
| Pledging/Hedging | Prohibited for executives and directors; no pledging or hedging allowed; directors/SVP+ cannot hold shares in margin accounts or pledge shares . |
| Ownership Guidelines | Formal stock ownership guidelines apply to CEO (5x salary) and CFO (1.5x salary); Du not subject to these specific guidelines . |
| Insider Trading Policy | Comprehensive policy governing trading and blackout compliance . |
| Section 16 Filing | Company noted certain late filings in 2024 (annual awards) for some insiders; no specific late filing noted for Du . |
Vesting cadence:
- Time-based RS grants vest in three equal annual installments beginning on the first anniversary of grant (e.g., 4/1/2025, 4/1/2026, 4/1/2027 for the 2024 grant) .
- PSUs vest after the 3-year performance period based on relative TSR vs KBW Index with threshold/target/maximum levels and negative TSR cap .
Employment Terms
| Provision | Michael Du |
|---|---|
| Employment status | At-will; no separate employment agreement (severance rights limited) . |
| Change-in-Control (CoC) equity treatment | Double trigger: RS/PSUs vest only upon a CoC coincident with or followed by termination without cause or for good reason; PSUs vest based on actual performance through termination; time-based RS require CoC + qualifying termination (unlike CEO/CFO contracts) . |
| Termination without cause/for good reason (no CoC) | PSUs vest pro rata based on actual performance through termination; RS do not accelerate for Du . |
| Potential payments (as of 12/31/2024 scenario) | Termination without cause/for good reason: $77,641 (equity vest value; no cash severance); Qualifying termination in connection with CoC: $291,008 (equity vest value; no cash severance) . |
| Clawback | SEC/Nasdaq-compliant recoupment of incentive comp for material restatements; Sarbanes-Oxley 304 clawback for CEO/CFO misconduct-related restatements; no indemnification or reimbursement for lost comp under clawback . |
| Tax gross-ups | Company policy: no excise tax gross-ups in employment agreements; CEO/CFO have 280G cut-back provisions (not applicable to Du) . |
Compensation Structure Analysis
- Mix shift and alignment: 2024 long-term incentives increased the time-based RS proportion slightly across NEOs to support retention, while maintaining majority PSU weighting tied to relative TSR (55% PSU / 45% RS), reinforcing pay-for-performance alignment .
- Cash vs equity and at-risk pay: Du’s 2024 total comp was $471,133 with a modest cash AIP payout (28.16% of salary) driven by risk/compliance achievements and corporate metrics; significant equity remains unvested, creating long-term alignment .
- Performance targets and rigor: Corporate ROAA met target, NPA/Assets exceeded maximum, efficiency ratio below target; CRO’s scorecard emphasized BSA, compliance, ERM, data governance, and audit/exam outcomes, balancing risk mitigation with financial performance .
- Say-on-Pay support: 2024 say-on-pay approved with 94.6% support, signaling shareholder endorsement of program design and pay outcomes .
Related Party Transactions and Red Flags
- Related-party transactions: None requiring review/approval were entered into in 2024 .
- Risk indicators: No options repricing; hedging/pledging prohibited; insider trading policy and clawback in place; strong say-on-pay approval; no disclosures of SEC investigations or legal proceedings tied to Du in the proxy .
Compensation Peer Group (benchmarking)
Peer group of ~20 regional banks (assets ~$4–16B) used by the CHR Committee and Aon in 2024 (e.g., Brookline Bancorp, TriCo Bancshares, CVB Financial, Westamerica Bancorporation, etc.) for program design and competitiveness; decisions apply judgment rather than targeting a specific percentile .
Equity Incentives – Detailed 2024 Grant Summary
| Grant Type | Grant Date | Shares (Threshold/Target/Max) | Fair Value ($) | Vesting |
|---|---|---|---|---|
| Time-Based RS | 4/1/2024 | 3,383 | 52,403 | 3 equal annual installments starting 1st anniversary . |
| PSUs (TSR vs KBW) | 4/1/2024 | 1,551 / 3,101 / 4,652 | 44,344 | End of 3-year period; 35th/50th/75th percentile payout schedule; negative TSR cap at Target . |
| 2021 PSUs (payout) | Vested Mar 2024 | 1,645 earned at 92.06% of target | — | Certified at 48th percentile relative TSR . |
Equity Ownership & Vesting Pressure – Snapshot
- Unvested RS of 4,813 shares as of 12/31/2024 will vest ratably in 2025–2027, creating periodic taxable events; company prohibits pledging/hedging, limiting forced-selling risk; no options outstanding, minimizing option-related selling pressure .
- PSUs from 2022–2024 cycles remain unvested and are performance-contingent; outcomes tied to relative TSR vs KBW Index, aligning payouts with shareholder returns .
Investment Implications
- High alignment: Du’s incentives emphasize core risk/compliance outcomes and corporate profitability, with majority of long-term equity in PSUs tied to relative TSR, promoting shareholder-aligned decision-making and disciplined risk posture .
- Retention and selling pressure: The frozen 2024 base, increased RS proportion, and stepped RS vesting support retention; upcoming RS vesting may cause routine tax-withholding disposals but overall insider selling pressure appears limited given no options and anti-pledging/hedging policies .
- Change-of-control economics: Double-trigger equity vesting for Du (no guaranteed cash severance) lowers parachute risk; potential equity vest values were $291k under CoC termination and $78k under non-CoC qualifying termination (as of 12/31/2024 illustrative), indicating modest termination economics vs CEO/CFO contracts .
- Governance and shareholder support: Robust say-on-pay approval (94.6%) and clawback framework reduce governance risk; Du’s role in ERM, compliance and data governance execution should mitigate operational and regulatory risks while supporting valuation stability .