CATHAY GENERAL BANCORP Stock Compensation Disclosure

19.         Equity Incentive Plans

 

Pursuant to the Company’s 2005 Incentive Plan, as amended and restated in May 2025 (the "2005 Incentive Plan"), the Company may grant incentive stock options (employees only), non-statutory stock options, common stock awards, restricted stock, RSUs, stock appreciation rights and cash awards to non-employee directors and eligible employees.

 

As of December 31, 2025, 2,770,049 shares were available under the 2005 Incentive Plan for future grants.

 

In addition to stock options, the Company also grants restricted stock units (“RSUs”) that are generally granted at no cost to the recipient. RSUs generally vest ratably over three years or cliff vest after one or three years of continued employment from the date of the grant. While a portion of RSUs may be time-vesting awards, others may vest subject to the attainment of specified performance goals and are referred to as “performance-based RSUs.” All RSUs are subject to forfeiture until vested.

 

Performance-based RSUs are granted at the target amount of awards. Based on the Company’s attainment of specified performance goals and consideration of market conditions, the number of shares that vest can be adjusted to a minimum of zero and to a maximum of 150% of the target. The amount of performance-based RSUs that are eligible to vest is determined at the end of each performance period and is then added together to determine the total number of performance shares that are eligible to vest. Performance-based RSUs generally cliff vest three years from the date of grant.

 

Compensation costs for the time-based awards are based on the quoted market price of the Company’s stock at the grant date. Compensation costs associated with performance-based RSUs are based on grant date fair value, which considers both market and performance conditions. Compensation costs of both time-based and performance-based awards are recognized on a straight-line basis from the grant date until the vesting date of each grant.   

 

The following table presents RSU activity for 2025, 2024, and 2023:

 

		Time-Based RSUs								Performance-Based RSUs
						Weighted-Average								Weighted-Average
						Grant Date								Grant Date
		Shares				Fair Value				Shares				Fair Value
Balance at December 31, 2022			202,059			$	33.29				362,965			$	31.56
Granted			86,809				37.92				123,504				38.41
Vested			(92,075	)			34.29				(136,808	)			34.21
Forfeited			(2,404	)			37.77				—				—
Balance at December 31, 2023			194,389			$	34.83				349,661			$	32.94
Granted			77,361				37.75				121,412				37.79
Vested			(42,241	)			36.38				(113,764	)			36.91
Forfeited			(27,043	)			41.71				(17,395	)			39.26
Balance at December 31, 2024			202,466			$	34.70				339,914			$	33.02
Granted			72,684				46.07				89,777				46.00
Vested			(52,179	)			44.05				(104,318	)			42.82
Forfeited			(12,270	)			39.95				(12,342	)			37.91
Balance at December 31, 2025			210,701			$	36.00				313,031			$	33.28

 

The compensation expense recorded for RSUs was $6.6 million in 2025, $6.0 million in 2024, and $7.0 million in 2023. Unrecognized stock-based compensation expense related to RSUs was $9.6 million and $9.6 million as of December 31, 2025, and 2024, respectively.  As of December 31, 2025, these costs are expected to be recognized over the next 1.8 years.