HOPE BANCORP INCHOPE
HOPE BANCORP INC Stock Compensation Disclosure
STOCK-BASED COMPENSATION
In May 2024, the Company’s stockholders approved the 2024 Equity Incentive Plan (the “2024 Plan”), which provides for grants of stock options, stock appreciation rights (“SAR”), restricted stock, performance shares, and performance units to non-employee directors and employees of the Company. Stock options may be either incentive stock options (“ISOs”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or nonqualified stock options (“NQSOs”).
The 2024 Plan provides the Company flexibility to (i) attract and retain qualified non-employee directors, executives, and other key employees with appropriate equity-based awards; (ii) motivate high levels of performance; (iii) recognize employees’ contributions to the Company’s success; and (iv) align the interests of the participants with those of the Company’s stockholders. The 2024 Plan reserved for 4,500,000 shares available for grant to participants. At December 31, 2025, there were 2,522,950 remaining shares available for future grants under the 2024 plan. The pool of available shares can be partially replenished for future grants to the extent there are forfeitures, expirations or otherwise terminations of existing equity awards without issuance of the shares underlying such awards. The exercise price for shares under an ISO may not be less than 100% of fair market value on the date the award is granted under the Code. Similarly, under the terms of the 2024 Plan, the exercise price for SARs and NQSOs may not be less than 100% of fair market value on the date of grant. Performance units are awarded to participants at the market price of the Company’s common stock on the date of award, after the lapse of the restriction period and the attainment of the performance criteria. All options not exercised generally expire 10 years after the date of grant.
ISOs, SARs, and NQSOs have vesting periods of to five years and have 10-year contractual terms. Restricted stock, performance shares, and performance units are granted with a restriction period of not less than one year from the grant date for performance-based awards and not more than three years from the grant date for time-based vesting of grants. Compensation expense for awards is recognized over the vesting period.
With the exception of the shares that are underlying stock options and restricted stock awards, the Board of Directors may choose to settle the awards by paying the equivalent cash value or by delivering the appropriate number of shares.
The following is a summary of the Company’s stock option activity for the year ended December 31, 2025:
| Number of Shares | Weighted-Average Exercise Price Per Share | Weighted-Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value (Dollars in thousands) | ||||||||||||||||||||
| Outstanding - January 1, 2025 | 421,231 | $ | 17.04 | ||||||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Exercised | — | — | |||||||||||||||||||||
| Expired | (20,571) | 15.88 | |||||||||||||||||||||
| Forfeited | — | — | |||||||||||||||||||||
Outstanding - December 31, 2025 | 400,660 | $ | 17.10 | 0.65 | $ | — | |||||||||||||||||
Options exercisable - December 31, 2025 | 400,660 | $ | 17.10 | 0.65 | $ | — | |||||||||||||||||
The following is a summary of the Company’s restricted stock and performance unit activity for the year ended December 31, 2025:
| Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
| Outstanding (unvested) - January 1, 2025 | 1,705,716 | $ | 11.84 | ||||||||
| Granted | 1,396,713 | 10.21 | |||||||||
| Vested | (722,383) | 12.04 | |||||||||
| Forfeited | (271,123) | 12.82 | |||||||||
Outstanding (unvested) - December 31, 2025 | 2,108,923 | $ | 10.57 | ||||||||
The total fair value of restricted stock and performance units vested for the years ended December 31, 2025, 2024, and 2023, was $7.7 million, $10.4 million, and $9.5 million, respectively.
The amount charged against income related to stock-based payment arrangements was $7.7 million, $8.9 million, and $12.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. The income tax benefit recognized was approximately $2.2 million, $2.6 million, and $3.1 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Since all stock option grants were vested at December 31, 2025, there was no unrecognized compensation expense related to non-vested stock option grants. Unrecognized compensation expense related to non-vested restricted stock and performance units at December 31, 2025 was $13.0 million, and is expected to be recognized over a remaining weighted average vesting period of 2.0 years.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.