Form 4: Hope Bancorp EVP, General Counsel Angelee Harris Receives Stock and Performance-Based Restricted Stock Units

Angelee Harris, EVP and General Counsel of Hope Bancorp, received stock and performance-based restricted stock units (PRSUs) on July 19, 2024, under the company's equity incentive plans.

Summary

• On July 19, 2024, Angelee Harris, EVP and General Counsel of Hope Bancorp, received 6,304 restricted stock units (RSUs) and several performance-based restricted stock units (PRSUs).
• The RSUs were granted under the 2024 Equity Incentive Plan, with installments vesting on July 21, 2025, March 20, 2026, and March 22, 2027.
• The PRSUs were granted under the 2024 IEP and are subject to cliff vesting after a 3-year performance period.
• Vesting of the PRSUs depends on Hope Bancorp's achievement of specified targets, including absolute return on average tangible common equity and relative total stockholder return in relation to the KRX Index.
• The number of shares received from PRSUs can range from 0% to 150% of the target amount, depending on performance against threshold, target, and stretch goals.
• Harris also holds PRSUs granted in previous years (2022 and 2023) under the 2017 LTIP and 2019 ICP, with vesting contingent on various performance metrics.

Sentiment

Score: 7

Explanation: The document reflects a standard executive compensation practice. The use of performance-based metrics is a positive sign, aligning executive interests with shareholder value. However, the actual value realized depends on future performance.

Positives

• The grant of RSUs and PRSUs aligns the executive's interests with those of the shareholders.
• The performance-based vesting criteria for the PRSUs incentivize the executive to achieve specific financial goals for the company.
• The staggered vesting schedule of the RSUs encourages long-term commitment from the executive.

Risks

• The value of the RSUs and PRSUs is subject to the market price of Hope Bancorp's common stock.
• The vesting of the PRSUs is contingent on the company's ability to meet specific performance targets, which may not be achieved.
• The potential dilution of existing shareholders' equity due to the issuance of new shares upon vesting of the RSUs and PRSUs.

Future Outlook

The vesting of the PRSUs is dependent on the future financial performance of Hope Bancorp, specifically related to return on average tangible common equity, earnings per share, and total stockholder return relative to peers and the KRX Index.

Industry Context

Equity grants are a common practice in the banking industry to attract, retain, and incentivize key executives. The use of performance-based vesting criteria is also a standard approach to align executive compensation with shareholder value creation.

Comparison to Industry Standards

• Many regional banks use a mix of time-based and performance-based equity awards.
• Performance metrics often include return on assets (ROA), return on equity (ROE), and earnings per share (EPS).
• Comparing Hope Bancorp's performance metrics and vesting schedules to those of its peer group would provide a more comprehensive assessment of the competitiveness of its executive compensation program.
• Companies like East West Bancorp and Bank of Hawaii, which also cater to similar demographics, could be used as benchmarks.

Stakeholder Impact

• Shareholders: Potential dilution upon vesting of RSUs and PRSUs, but also potential for increased shareholder value if performance targets are met.
• Employees: The equity grants may serve as a positive signal regarding the company's commitment to its employees.
• Executive: Incentivized to achieve performance targets that benefit the company and its shareholders.

Key Dates