UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.              )

 

 

East West Bancorp, Inc.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MAY 31, 2007

Notice is hereby given that the annual meeting (the “Meeting”) of the stockholders of East West Bancorp, Inc. (the “Company”) will be held at The Westin Pasadena Hotel, 191 N. Los Robles Avenue, Pasadena, California on May 31, 2007, beginning at 2:00 p.m. for the following purposes:

1.                Election of Directors.   The election of three persons as directors for terms expiring in 2010 and to serve until his or her successors are elected and qualified;

2.                Approval of Performance-Based Bonus Plan.   Approve East West Bancorp Inc.’s Performance-Based Bonus Plan, as amended;

3.                Approval of Performance Stock.   Approve Section 6, as amended, of the East West Bancorp Inc. 1998 Stock Incentive Plan;

4.                Ratification of Auditors.   Ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for its fiscal year ending December 31, 2007; and

5.                Other Business.   The transaction of such other business as may properly come before the Meeting or any postponement or adjournment of the Meeting.

Properly signed proxy cards permit the proxy holder named therein to vote on such other business as may properly come before the Meeting and at any and all adjournments thereof, in their discretion. As of the date of mailing, the Board of Directors of the Company is not aware of any other matters that may come before the Meeting.

Only those stockholders of record at the close of business on April 2, 2007 shall be entitled to notice of and to vote at the Meeting.

YOUR VOTE IS VERY IMPORTANT. STOCKHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY IN THE POSTAGE PREPAID ENVELOPE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING IN PERSON. STOCKHOLDERS WHO ATTEND THE MEETING MAY WITHDRAW THEIR PROXY AND VOTE IN PERSON IF THEY WISH TO DO SO.

 

East West Bancorp, Inc.
135 N. Los Robles Avenue, 7th Floor
Pasadena, California 91101
(626) 768-6000

PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS

To be held May 31, 2007

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (“Board of Directors” or “Board”) of East West Bancorp, Inc. (the “Company”) for use at its annual meeting (“Meeting”) of stockholders to be held on May 31, 2007 at The Westin Pasadena Hotel, 191 N. Los Robles Avenue, Pasadena, California, at 2:00 p.m. and at any adjournment thereof. This Proxy Statement and the enclosed proxy card (“Proxy”) and other enclosures are first being mailed to stockholders on or about April 16, 2007. Only stockholders of record on April 2, 2007 (“Record Date”) are entitled to vote in person or by proxy at the Meeting or any adjournment thereof. The mailing address of the Company’s principal executive office is 135 N. Los Robles Avenue, 7th Floor, Pasadena, California 91101.

Matters to be Considered

The matters to be considered and voted upon at the Meeting will be:

1.                Election of Directors.   The election of three persons as directors for terms expiring in 2010 and to serve until his or her successors are elected and qualified. The Board of Directors’ nominees are:

Peggy Cherng
Julia S. Gouw
John Lee

2.                Approval of Performance-Based Bonus Plan.   Approve East West Bancorp Inc.’s Performance-Based Bonus Plan, as amended;

3.                Approval of Performance Stock.   Approve Section 6, as amended, of the East West Bancorp Inc. 1998 Stock Incentive Plan;

4.                Ratification of Auditors.   Ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for its fiscal year ending December 31, 2007; and

5.                Other Business.   The transaction of such other business as may properly come before the Meeting or any postponement or adjournment of the Meeting.

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Costs of Solicitation of Proxies

This solicitation of Proxies is made on behalf of the Board of Directors of the Company and the Company will bear the costs of solicitation. The expense of preparing, assembling, printing and mailing this Proxy Statement and the materials used in this solicitation of Proxies also will be borne by the Company. It is contemplated that Proxies will be solicited principally through the mail, but directors, officers and employees of the Company may solicit Proxies personally or by telephone. Although there is no formal agreement to do so, the Company may reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding these proxy materials to their principals. The Company does not intend to utilize the services of other individuals or entities not employed by or affiliated with it in connection with the solicitation of Proxies.

Outstanding Securities and Voting Rights; Revocability of Proxies

The authorized capital stock of the Company consists of 200,000,000 shares of common stock, par value $0.001 per share (“Common Stock”), of which 60,956,037 shares were issued and outstanding on the Record Date, and 5,000,000 shares of serial preferred stock, par value $0.001 per share, of which no shares were issued and outstanding on the Record Date. A majority of the outstanding shares of Common Stock constitutes a quorum for the conduct of business at the Meeting. Abstentions and broker non-votes will be treated as shares present and entitled to vote for purposes of determining the presence of a quorum. Each stockholder is entitled to one vote, in person or by proxy, for each share of Common Stock standing in his or her name on the books of the Company as of the Record Date on any matter submitted to the stockholders.

The Company’s Certificate of Incorporation does not authorize cumulative voting. For the election of directors, the persons receiving the highest number of votes “FOR” will be elected. Accordingly, abstentions, broker non-votes and votes “WITHHELD” in the election of directors have no legal effect.

Unless otherwise required by law, the Certificate of Incorporation, or Bylaws, approval of the proposals that may properly come before the Meeting, other than the election of directors, require the affirmative vote of the majority of shares present in person or by proxy at the Meeting and entitled to vote.

A Proxy for use at the Meeting is enclosed. The Proxy must be signed and dated by you or your authorized representative or agent. You may revoke a Proxy at any time before it is exercised at the Meeting by submitting a written revocation to the Secretary of the Company or a duly executed Proxy bearing a later date or by voting in person at the Meeting. Attendance at the Meeting will not in and of itself constitute revocation of a proxy.

Brokers who hold shares of Common Stock for the accounts of their clients (who hold their shares in “street name”) may vote such shares either as directed by their clients or in their own discretion if permitted by the stock exchange or other organization of which they are members. Members of the New York Stock Exchange (“NYSE”) are permitted to vote their clients’ proxies in their own discretion as to the election of directors if the clients have not furnished voting instructions within ten days of the meeting. Certain proposals other than the election of directors are “non-discretionary” and brokers who have received no instructions from their clients do not have discretion to vote on those items. When a broker votes a client’s shares on some but not all of the proposals at a meeting, the missing votes are referred to as “broker non-votes”. There are no broker non-votes on the election of directors (Proposal No. 1) and the ratification of auditors (Proposal No. 4).

Unless revoked, the shares of Common Stock represented by properly executed Proxies will be voted in accordance with the instructions given thereon. In the absence of any instruction in a properly executed Proxy, your shares of Common Stock will be voted “FOR” the election of the nominee for director set forth herein.

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The enclosed Proxy confers discretionary authority with respect to matters incident to the Meeting and any other proposals which management did not have notice of at least 45 days prior to the date on which the Company mailed its proxy material for last year’s annual meeting of stockholders. As of the date hereof, management is not aware of any other matters to be presented for action at the Meeting. However, if any other matters properly come before the Meeting, the Proxies solicited hereby will be voted by the Proxyholders in accordance with the recommendations of the Board of Directors.

BENEFICIAL STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT

The following table sets forth the beneficial ownership of Common Stock as of the Record Date by (i) each person known to the Company to own more than 5% of the outstanding Common Stock, (ii) the directors and nominees for director of the Company, (iii) the Chief Executive Officer, Chief Financial Officer and other executive officers of the Company and its subsidiaries whose total annual compensation in 2006 exceeded $100,000 (the “Named Executives”), and (iv) all executive officers and directors of the Company and its subsidiaries, as a group:

*                    Less than 1%.

(1)          Except as otherwise noted and except as required by applicable community property laws, each person has sole voting and disposition powers with respect to the shares.

(2)          Shares which the person (or group) has the right to acquire within 60 days after the Record Date are deemed to be outstanding in calculating the ownership and percentage ownership of the person (or group). Specifically, the following individuals have the right to acquire the shares indicated after their names upon the exercise of such stock options: Mr. Ng, 1,083,910; Mr. Chen 3,614; Ms. Cherng, 20,000; Mr. Estrada, 2,500; Ms. Gouw, 90,214; Mr. Lewis, 58,757; Mr. Li, 20,000; Mr. Liu, 17,000;

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Mr. Kooken, 20,000; Mr. Renken, 40,000; and Mr. Spigner, 14,168. The aggregate number of shares issuable upon the exercise of options currently exercisable held by the directors and officers as a group, is 1,370,163.

(3)          Based on Schedule 13(G) filed with the Securities and Exchange Commission on February 14, 2007.

(4)          Based on Schedule 13(G) filed with the Securities and Exchange Commission on February 13, 2007.

(5)          Based on Schedule 13(G) filed with the Securities and Exchange Commission on September 15, 2005.

(6)          2,414 of these shares are held in the Summit Group Profit Sharing Plan for which Mr. Estrada has voting and investment power.

(7)          1,800 of these shares are owned by family members for whom Ms. Gouw has voting and investment power; Ms. Gouw disclaims any beneficial interest in such shares.

(8)          296,830 of these shares are held in the John M. Lee Trust for which Mr. Lee has voting and investment power.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), requires that the Company’s directors, executive officers and persons who own more than ten percent of a registered class of the Company’s equity securities file with the Securities and Exchange Commission (the “SEC”), and with each exchange on which the Common Stock trades, initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Directors, officers and greater than ten percent holders are required by the SEC’s regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely upon a review of copies of reports provided during the fiscal year ended December 31, 2006, the Company believes that all persons subject to the reporting requirements of Section 16(a) filed all required reports on a timely basis.

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Board of Directors Recommends a Vote “For” All Nominees

Board of Directors and Nominees

The Company’s Certificate of Incorporation and Bylaws provide that the number of directors shall be determined from time to time by the Board of Directors but may not be less than five. The Board of Directors is currently composed of nine members. The Bylaws further provide for the division of the directors into three classes of approximately equal size. Three members shall be elected to a three-year term at the Meeting of Stockholders in 2007, three members shall be elected to a three-year term at the annual meeting of stockholders in 2008, and three members shall be elected to a three-year term at the annual meeting of stockholders in 2009.

The directors proposed for election at the Meeting, Peggy Cherng, Julia S. Gouw and John Lee, were appointed to the Board of Directors in 2002, 1997, and 2006, respectively. Mses. Cherng and Gouw and Mr. Lee have indicated their willingness to serve and unless otherwise instructed, Proxies will be voted in such a way as to effect, if possible, the election of Mses. Cherng and Gouw and Mr. Lee. In the event that Ms. Cherng, Ms. Gouw or Mr. Lee should be unable to serve as a director, it is intended that the Proxies will be voted for the election of such substitute nominee, if any, as shall be designated by the Board of Directors. Management has no reason to believe that Ms. Cherng, Ms. Gouw or Mr. Lee will be unavailable to serve on the Board of Directors.

None of the directors, nominees for director or executive officers were selected pursuant to any arrangement or understanding, other than with the directors and executive officers of the Company acting within their capacity as such. There are no family relationships among directors or executive officers of the Company. As of the date hereof, no directorships are held by any director with a company which has a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company under the Investment Company Act of 1940 except that Mr. Ng is a director of Mattel, Inc. and Mr. Renken is a director of 21st Century Insurance Group and Willdan Group, Inc.

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The following table sets forth certain information with respect to the Board’s nominees for director and the current continuing directors of the Company. All directors of the Company are also directors of East West Bank (the “Bank”), the Company’s principal subsidiary. Executive officers serve at the pleasure of the Board of Directors, subject to restrictions set forth in their employment agreements. See “ELECTION OF DIRECTORS” and “Employment Agreements and Potential Payments Upon Termination or Change-in-Control”.

(1)          As of April 2, 2007.

(2)          Refers to the earlier of the year the individual first became a director of the Company and the Bank.

The principal occupation during the past five years of each director and nominee is set forth below. All directors have held their present positions for at least five years, unless otherwise stated.

Peggy Cherng is Co-Chair of Panda Restaurant Group, which includes more than 950 restaurants in the United States, Puerto Rico and Japan. Dr. Cherng holds a PhD in Electrical Engineering and serves on the boards of the National Restaurant Association, Methodist Hospital of Southern California, Children’s Hospital Los Angeles and UCLA Anderson School of Management.

Rudolph I. Estrada is a former Presidential appointee serving as Commissioner on the White House Commission on Small Business. He also served as the Los Angeles District Director for the U.S. Small Business Administration. Mr. Estrada is President and CEO of Estradagy Business Advisors, a business and banking advisory group and serves as a professor of business and economics with the California State University system. He serves on the boards of several corporate and non-profit organizations.

Julia S. Gouw is Executive Vice President and Chief Financial Officer of East West Bancorp, Inc. and East West Bank. Prior to joining East West, Ms. Gouw spent over five years as a CPA with KPMG LLP. Ms. Gouw was ranked among the top 10 bank CFOs in the nation by U.S. Banker in January 2006. She serves on the Board of Visitors of the UCLA School of Medicine and on the boards of the Iris Cantor-UCLA Women’s Health Center and Huntington Memorial Hospital.

John Kooken has garnered a broad banking experience, having retired as Chief Financial Officer and Vice Chairman of Security Pacific Corp., the parent of former Security Pacific National Bank. He served as a director of Golden State Bancorp until its acquisition in 2002. Among his community activities, he is a member of the boards of Huntington Memorial Hospital and of the Children’s Bureau of Southern California.

John Lee is Vice Chairman of the Board of East West Bancorp, Inc. and East West Bank. Mr. Lee co-founded Standard Bank in 1980 - a $923 million asset federal savings bank acquired by East West. Mr. Lee was one of the founders of East West Bank and the first general manager of the Bank in the Chinatown

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District of Los Angeles. Mr. Lee is active in a variety of philanthropic activities and is an avid supporter of education in Chinese art and culture.

Herman Y. Li is Chairman of the C&L Restaurant Group Inc., a franchisee of Burger King and Denny’s in multiple states. Mr. Li is President of the Southern California Burger King Franchisee Association and a member of the Burger King Corporation’s Diversity Action Council. He also serves on the Board of Directors of the National Franchisee Association representing over 8,000 Burger King restaurants worldwide. Mr. Li is Treasurer of the Committee of 100.

Jack C. Liu, Esq. is Senior Advisor for Morgan Stanley International Real Estate Fund (“MSREF”) and is President of MSREF’s affiliates New Recovery Asset Management Corp. in Taiwan. He also serves as Chairman of Topvision Display Technologies, Inc. Mr. Liu is admitted to practice law in the jurisdictions of California, Washington, D.C. and the Republic of China. His legal expertise is in international corporate, real estate and banking.

Dominic Ng is Chairman, President and Chief Executive Officer of East West Bancorp, Inc. and East West Bank. Prior to taking the helm of East West in 1992, Mr. Ng was President of Seyen Investment, Inc. and spent over a decade as a CPA with Deloitte & Touche LLP. Mr. Ng serves on the boards of the Federal Reserve Bank of San Francisco, Los Angeles Branch and Mattel, Inc.

Keith W. Renken is Managing Partner of the consulting company Renken Enterprises and a professor in the University of Southern California Executive in Residence Program. Mr. Renken is a former senior partner of Deloitte & Touche LLP, from which he retired in 1992 after 33 years with the firm. He serves on the board of directors of 21st Century Insurance Group and Willdan Group, Inc.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE ELECTION OF THE BOARD OF DIRECTORS’ NOMINEES.

CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

The Company is committed to having sound corporate governance principles. These principles are essential to running the Company’s business efficiently and to maintaining the Company’s integrity in the marketplace. The Company has adopted formal Corporate Governance Guidelines to explain our corporate governance principles to investors. In addition, the Company has also adopted a Code of Ethical Conduct. These guidelines, as well as our Code of Ethics and other governance matters of interest to investors, are available through our website at www.eastwestbank.com by clicking on Investor Relations and then Corporate Governance.

DIRECTOR INDEPENDENCE /FINANCIAL EXPERTS

The Company’s Board of Directors has conducted a review regarding the “independence” of each of its members under the standards of Rule 4200(a) (15) of the NASD, Inc. (“NASD”) listing standards. The Board has determined that 7 of its 9 members, all of whom are non-employee directors, satisfy NASD’s “independence” requirements. These independent directors are: Peggy Cherng, Rudolph I. Estrada, John Kooken, John Lee, Herman Y. Li, Jack C. Liu and Keith W. Renken. Accordingly, a majority of the Board of Directors, and each member of its Audit, Compensation, Risk Oversight and Nominating/Corporate Governance Committees, satisfy the independence requirements of the NASD.

In addition, the Board of Directors has conducted a review regarding the qualifications of each member of the Audit Committee under the standards of Rule 4350(d) (2) of the NASD listing standards and Section 10A(m) of the Exchange Act and determined that all members meet these standards.

The Company’s Board of Directors has also conducted a review regarding whether any members of the Audit Committee meet the criteria to be considered a “financial expert” as that term is defined by the

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SEC. Based on its review, the Board determined that all members of the Audit Committee, John Lee, Herman Y. Li, Keith W. Renken, and John Kooken, its chairman, qualify as “financial experts” by reason of their prior job experience.

COMMITTEES OF THE BOARD OF DIRECTORS

The business of the Company’s Board of Directors is conducted through its meetings, as well as through meetings of its committees. Set forth below is a description of the committees of the Board.

Audit Committee

The Audit Committee reviews and reports to the Board on various auditing and accounting matters. The Audit Committee also engages the independent public accountants, reviews the scope and results of the procedures for internal auditing, reviews the Company’s financial statements, reviews the independence of the Company’s independent auditors, and approves all auditing and non-auditing services performed by its independent auditors. The Audit Committee currently consists of John Lee, Herman Y. Li, Keith W. Renken, and John Kooken as chairman. All members of the Audit Committee have been determined by the Board to be independent under the standards of Rule 4200(a)(15) of the NASD listing standards. The Bank also has an Audit Committee, which consists of the same directors who comprise the Company’s Audit Committee and which generally meet jointly with the Company’s Audit Committee. The Audit Committees met ten times in 2006. The charter of the Audit Committee is available through the Company’s website at www.eastwestbank.com by clicking on Investor Relations and then Corporate Governance.

Compensation Committee

The Compensation Committee establishes executive compensation policies as well as the actual compensation of the Chief Executive Officer. The Compensation Committee currently consists of Peggy Cherng, Keith W. Renken, and Jack C. Liu as chairman. All members of the Compensation Committee have been determined by the Board to be independent under the standards of Rule 4200(a)(15) of the NASD listing standards. The Bank also has a Compensation Committee, which consists of the same directors who comprise the Company’s Compensation Committee and which generally meet jointly with the Company’s Compensation Committee. The Compensation Committees met four times in 2006. The charter of the Compensation Committee is available through the Company’s website at www.eastwestbank.com by clicking on Investor Relations and then Corporate Governance.

The Compensation Committee’s responsibilities include:

·       Approving the annual and long-term incentive compensation programs for the CEO and other executive management

·       Annually, creating performance goals and criteria for the Company and evaluating the Company’s performance against those goals

·       Annually, establishing and evaluating the CEO’s performance and compensation

·       Annually, approving annual compensation and grants of incentive shares to all other executive officers

·       Conducting the executive evaluation process in a manner that promotes trust and open communication between the Board and CEO, ensuring the CEO understands the Board’s expectations, and providing feedback to the CEO on his or her performance

·       As appropriate, reviewing CEO compensation and benefits compared to peer companies

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·       Annually determining the officers of the Company who will be eligible for participating in the Company’s Performance-Based Bonus Plan, establishing by no later than 90 days after the beginning of each fiscal year the specific goals of participants under the Bonus Plan, and certifying the meeting of such goals and awarding bonuses under such plan

·       Reviewing and making recommendations to the Board of Directors with respect to the compensation of directors

·       Reporting to the Board of Directors on the selection of goals and on the results of the evaluation and compensation review

The CEO provides reviews and recommendations for senior management personnel for the consideration of the Compensation Committee. The performance of the CEO and other executive officers is reviewed by the Compensation Committee. Additionally, the Compensation Committee employs Semler Brossy Consulting Group, an outside executive compensation consulting firm, as its compensation consultant. The role of Semler Brossy Consulting Group is to assist and advise the Compensation Committee in its deliberations.

Risk Oversight Committee

The Risk Oversight Committee reviews enterprise risk management, including credit matters, the loan portfolio, asset-liability policy, capital requirements and ratios, and interest rate risk. The Risk Oversight Committee was formed in 2006 when the Credit and Finance Committee expanded its scope and added members. The Risk Oversight Committee currently consists of Peggy Cherng, Rudolph I. Estrada, John Kooken, John Lee, and Keith W. Renken as chairman. All members of the Risk Oversight Committee have been determined by the Board to be independent under the standards of Rule 4200(a)(15) of the NASD listing standards. The Bank also has a Risk Oversight Committee, which consists of the same directors who comprise the Company’s Risk Oversight Committee and which generally meet jointly with the Company’s Risk Oversight Committee. The Risk Oversight Committees met four times in 2006. The charter of the Risk Oversight Committee is available through the Company’s website at www.eastwestbank.com by clicking on Investor Relations and then Corporate Governance.

Nominating/Corporate Governance Committee

The Nominating/Corporate Governance Committee nominates persons for election as directors and reviews corporate governance matters. The Nominating/Corporate Governance Committee currently consists of Rudolph I. Estrada, Jack C. Liu, John Kooken, and Herman Y. Li as chairman. All members of the Nominating/Corporate Governance Committee have been determined by the Board to be independent under the standards of Rule 4200(a)(15) of the NASD listing standards. The Bank also has a Nominating/Corporate Governance Committee, which consists of the same directors who comprise the Company’s Nominating/Corporate Governance Committee and which generally meet jointly with the Company’s Nominating/Corporate Governance Committee. The Nominating/Corporate Governance Committees met four times in 2006. The charter of the Nominating/Corporate Governance Committee is available through the Company’s website at www.eastwestbank.com by clicking on Investor Relations and then Corporate Governance.

Executive Committee

The Executive Committee is authorized to exercise certain powers of the Board of Directors during intervals between the meetings of the Board of Directors. The Executive Committee currently consists of Dominic Ng and Julia S. Gouw. The Bank also has an Executive Committee, which consists of the same directors who comprise the Company’s Executive Committee. The Company’s Executive Committee met one time in 2006 and the Bank’s Executive Committee met 30 times in 2006. The charter of the Executive

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Committee is available through the Company’s website at www.eastwestbank.com by clicking on Investor Relations and then Corporate Governance.

Board Attendance of Meetings

The Company’s Board of Directors met seven times during 2006. All of the directors attended 100% of the meetings of the Board of Directors and at least 75% of the meetings of the Committees on which he or she served in 2006. The policy of the Company is to encourage all directors who are being elected and all directors who are also employees of the Company to attend the annual meeting of stockholders. All of the directors attended the 2006 annual meeting of stockholders.

CONSIDERATION OF DIRECTOR NOMINEES

Stockholder Nominees

The policy of the Nominating/Corporate Governance Committee is to consider properly submitted stockholder nominations for candidates for membership on the Board as described below under “Identifying and Evaluating Nominees for Directors.”  In evaluating such nominations, the Nominating/Corporate Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth under “Director Qualifications.” Any stockholder nominations proposed for consideration by the Nominating/Corporate Governance Committee should include the nominee’s name and qualifications for Board membership and should be addressed to:

Corporate Secretary
East West Bancorp, Inc.
135 N. Los Robles Avenue, 7th Floor
Pasadena, CA 91101

In addition, nominations for director may be made by any stockholder entitled to vote for the election of directors if proper notice is given in accordance with the Bylaws. Notice of a stockholder’s intention to make any nominations must be made in writing and must be delivered to the Secretary of the Company at the principal executive offices of the Company no later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the meeting at which directors are to be elected. However, in the event that less than sixty-five (65) days notice of the meeting is given to stockholders, notice by the stockholder to be timely must be delivered not later than the close of business on the seventh (7th) day following the date of mailing notice of the meeting to stockholders. Such notification shall contain the following information: (a) all information about each proposed nominee that would be required in a proxy solicitation under the federal proxy rules; (b) the name and address of the notifying stockholder; and (c) the number of shares of the Company’s Common Stock beneficially owned by the notifying stockholder. Nominations not made in accordance with the requirements in the Bylaws may be disregarded.

Director Qualifications

The Company’s Corporate Governance Guidelines contain Board membership criteria that apply to Nominating/Corporate Governance Committee recommended nominees for a position on the Board. Under these criteria, members of the Board should have the highest professional and personal ethics and values. They should have broad experience at the policy-making level in business, government, education, finance, accounting, law or public interest. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties.

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Identifying and Evaluating Nominees for Directors

The Nominating/Corporate Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director. The Nominating/Corporate Governance Committee regularly assesses the appropriate size of the Board, and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Nominating/Corporate Governance Committee considers various potential candidates for director. Candidates may come to the attention of the Nominating/Corporate Governance Committee through current Board members, professional search firms, stockholders or other persons. These candidates are evaluated at regular or special meetings of the Nominating/Corporate Governance Committee, and may be considered at any point during the year. As described above, the Nominating/Corporate Governance Committee considers properly submitted stockholder nominations for candidates for the Board. Following verification of the stockholder status of persons proposing candidates, recommendations are aggregated and considered by the Nominating/Corporate Governance Committee at a regularly scheduled meeting, which is generally the first or second meeting prior to the issuance of the proxy statement for the Company’s annual meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials are forwarded to the Nominating/Corporate Governance Committee. In evaluating such nominations, the Nominating/Corporate Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board.

COMMUNICATIONS WITH THE BOARD

The Company’s Board of Directors welcomes suggestions and comments from stockholders. All stockholders are encouraged to attend the annual meeting of stockholders where senior management and outside auditors, as well as members of the Board, will be available to answer questions.  Stockholders may also send written communications to the Board by writing to the Secretary of the Board of Directors at East West Bancorp, Inc., 135 N. Los Robles Avenue, 7th Floor, Pasadena, California 91101. All communications (other than commercial communications soliciting the sale of goods or services to, or employment with, the Company or directors of the Company) will be directed to the appropriate committee or to the Chairman of the Board or to any individual director specified in the communication, as applicable.

EXECUTIVE SESSIONS

Executive sessions of non-management directors are generally held after every regularly scheduled Board meeting, at least six times a year. The sessions are scheduled and chaired by a presiding director on a rotating basis by the Chair of the Audit Committee, the Compensation Committee, the Risk Oversight Committee, and the Nominating/Corporate Governance Committee. In addition, the non-management directors generally also meet separately with only the Chief Executive Officer in an executive session after each regularly scheduled board meeting. Any non-management director can request that an additional executive session be scheduled.

STOCK OWNERSHIP GUIDELINES

Directors and executive officers are encouraged to own the Company’s Common Stock to further align management’s financial interests with stockholders’ interests. Under the Company’s stock ownership guidelines for directors, all directors who have served at least one three-year term should accumulate at least $50,000 of Common Stock. Guidelines for senior officers are also in place and constitute share ownership in an amount having a market value equivalent to a multiple of the individual’s annual base salary, depending upon that individual’s management level, to be achieved within three years of becoming subject to the guideline. Stock ownership guidelines for directors and senior officers can be found through the Company’s website at www.eastwestbank.com by clicking on Investor Relations and then Corporate Governance.

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DIRECTOR COMPENSATION

The Compensation Committee is responsible for reviewing the compensation of the directors and making recommendations for changes to the Board of Directors. In 2006, nonemployee directors received a $5,000 increase in the annual cash retainer and a $5,000 increase in the annual restricted stock award.

Employees of the Company and its subsidiaries are not compensated for service as directors of the Company or its subsidiaries and are not included in the table below. The compensation received by Mr. Ng and Ms. Gouw as employees of the Company are shown in the “Summary Compensation Table”.

Nonemployee directors receive an annual retainer of $25,000 of cash and $25,000 of restricted stock; the restricted stock vests 100% after the 3rd anniversary of the grant date. The committee chairs each receive an additional annual cash retainer as follows:  Audit—$10,000; Compensation—$7,000; Risk Oversight—$5,000; Nominating/Corporate Governance—$5,000. Nonemployee directors also receive a meeting fee of $1,000 for each Board and committee meeting attended. Nonemployee directors may elect to receive their annual $25,000 cash retainer in the form of Common Stock, at a 25% risk premium (i.e., $31,250 of common stock) if they agree to hold the stock for at least one year.

The following table summarizes the compensation paid by the Company to non-employee directors for the fiscal year ended December 31, 2006:

2006 Director Compensation Table

(1)          This director elected to receive his/her annual $25,000 cash retainer in the form of Common Stock, at a 25% risk premium (i.e., $31,250 of common stock). Each director is required to hold the stock for at least one year.

(2)          The amount shown under Column (g) as All Other Compensation for Mr. Estrada represents consulting fees paid during the year.

(3)          This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with Statement of Financial Accounting Standards No. 123R Share-based Payment (FAS 123R). This amount may consist of restricted stock awards granted in and prior to 2006 and also stock received in lieu of the annual cash retainer. As of December 31, 2006, each director had the following restricted stock awards outstanding: Peggy Cherng, 1,868 shares; Rudolph I. Estrada, 1,210 shares; John Kooken, 1,868 shares; John Lee, 623 shares; Herman Y. Li, 1,868 shares; Jack C. Liu, 1,868 shares; and Keith W. Renken, 1,868 shares.

(4)          This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with FAS 123R. This amount consists of stock option awards granted prior to 2006. As of December 31, 2006, each director had the following stock option awards outstanding: Peggy Cherng, 20,000 options; Rudolph I. Estrada, 10,000 options; John Kooken, 20,000 options; John Lee, 0 options; Herman Y. Li, 20,000 options; Jack C. Liu, 23,500 options; and Keith W. Renken, 40,000 options. No stock options were awarded to directors in 2006.

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COMPENSATION DISCUSSION AND ANALYSIS

Objectives of the Company’s Compensation Committee

The Company’s Compensation Committee is responsible on an annual basis for establishing goals, evaluating the performance and establishing the compensation of the Chief Executive Officer, administering the East West Bancorp, Inc. Performance-Based Bonus Plan, overseeing the development of other annual and long-term compensation programs for senior management personnel, and making awards under the East West Bancorp, Inc. 1998 Stock Incentive Plan. The Compensation Committee is also responsible for approving the compensation of the other executive officers of the Company.

The members of the Compensation Committee are Peggy Cherng, Keith W. Renken, and Jack C. Liu as chairman. Each member of the Compensation Committee is independent under the standards of Rule 4200(a)(15) of the NASD listing standards.

Specifically, the Compensation Committee has the responsibilities described below:

·       Oversee the development of, and approve, annual and long-term incentive compensation programs for the CEO and other executive management;

·       On an annual basis, establish goals for the CEO, evaluate the performance of the CEO, and establish the compensation of the CEO. The Committee shall obtain input from the full Board and report to the Board on the selection of goals and on the results of the evaluation and compensation review;

·       Receive an annual report from the CEO of his or her performance assessment;

·       Approve annual compensation and grants of incentive shares of all executive officers;

·       Conduct the executive evaluation process in a manner that promotes trust and communications between the Board and CEO, ensure the CEO understands the Board’s expectations; and provide feedback to the CEO on his or her performance;

·       As appropriate from time to time, review CEO compensation and benefits compared to peer companies;

·       Annually determine the officers of the Company who will be eligible for participating in the Performance-Based Bonus Plan of the Company, determining by no later than 90 days after the beginning of each fiscal year the specific goals of participants under the Bonus Plan, and for certifying the meeting of such goals and awarding bonuses under such plan;

·       Review and make recommendations to the Board of Directors with respect to the compensation of directors;

Overall Philosophy

The goals of the executive compensation and benefits programs are to enable the Company to attract and retain high caliber executives, provide a total compensation package in a cost effective manner, encourage management ownership of the Company’s Common Stock and to maximize return to its stockholders.

The Company’s philosophy is to provide a compensation program that is designed to reward executives for the achievement of the Company’s goals and objectives and to provide total compensation opportunities that are competitive when compared with those of comparable financial institutions.

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To achieve these objectives:

·       The principal objective of the salary program is to maintain salaries that are targeted at the median for comparable positions in similarly sized financial institutions;

·       The annual total cash compensation incentives are designed to reward for overall Company success and individual performance when performance targets are met; above-average compensation may be warranted when performance goals are exceeded;

·       The long-term stock-based incentive plan is designed to align management’s financial interests with those of the Company’s stockholders, provide incentive for management ownership of the Company’s Common Stock, support the achievement of the Company’s long-term financial objectives, and provide management with long-term financial opportunities.

Role of Executive Officers and Compensation Consultants in Compensation Decisions

The CEO provides reviews and recommendations for senior management personnel for the consideration of the Compensation Committee. The performance of the CEO and other executive officers is reviewed by the Compensation Committee. Additionally, the Compensation Committee employs Semler Brossy Consulting Group, an outside executive compensation consulting firm, as its compensation consultant. The role of Semler Brossy Consulting Group is to assist and advise the Compensation Committee in its deliberations.

Executive Compensation Benchmarking

The Compensation Committee has employed Semler Brossy to conduct an analysis of CEO compensation at peer banks of similar size and scope. The Compensation Committee used this analysis to help establish a competitive pay level for CEO compensation. The peer group includes U.S commercial banks with total assets of between $6 billion and $25 billion with similar financial performance. The Compensation Committee does not perform a formal benchmarking analysis for the compensation of the other named executives. However, the Compensation Committee regularly competes with peer banks in California for banking executives and accordingly, the Compensation Committee is aware of the compensation being offered in the marketplace. Employee benefits are offered to provide a competitive total compensation program, with an emphasis on incentive compensation, and to encourage retention of key employees.

Elements of the Compensation Program

The principal elements of compensation for named executive officers include:

·       Base salary

·       Bonus compensation (including performance-based incentives)

·       Long-term stock-based incentive compensation (stock options and/or restricted stock)

·       Retirement benefits

·       Deferred compensation

Each executive’s compensation is based on the above components as well as consideration of the executive’s total compensation package.

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Base Salaries

The salary of each named executive officer is determined initially according to competitive pay practices, level of responsibility, prior experience, and breadth of knowledge, as well as internal equity issues. The Company uses its discretion rather than a formal formula to evaluate these factors and to determine individual base salary levels. Thereafter, base salaries are reviewed on an annual basis, and increases are made based on a subjective assessment of each executive’s performance, as well as the factors described above. Additionally, all of the named officers have minimum base salaries stipulated in individual employment agreements. All named executives received salary increases effective March 1, 2006: Mr. Ng’s salary was increased to $750,000, Ms. Gouw’s salary was increased to $273,000, Mr. Chen’s salary was increased to $225,000, Mr. Lewis’ salary was increased to $206,000 and Mr. Spigner’s salary was increased to $216,300.

Annual Incentives

The Company provides annual incentives to all employees, including the named executive officers. Annual incentives are intended to reward for overall Company success and individual performance and provide generally competitive total cash compensation opportunities when performance targets are met; above-average compensation may be warranted when performance goals are exceeded.

In 2002, the stockholders of the Company approved the Company’s Performance-Based Bonus Plan (the “Bonus Plan”). The Bonus Plan was adopted in light of Internal Revenue Service (“IRS”) Code Section 162(m), which does not permit a publicly traded company to deduct compensation in excess of $1,000,000 unless the compensation in excess of $1,000,000 is “performance based.” The Bonus Plan is structured so that bonuses paid under the Plan will qualify as “performance-based” compensation. To qualify as performance-based, the bonus must be determined by measurable and objective financial criteria, such that the amount of the bonus, once the formula is established, is non-discretionary, except that the Compensation Committee may discretionarily adjust the actual bonus downward from the formula bonus. Because bonuses are paid under the Bonus Plan only if the Company’s financial or other results meet or exceed certain quantifiable performance goals established by the Compensation Committee, the Compensation Committee believes that the Company may deduct such bonuses for Federal income tax purposes even if the bonus payments, together with salary, paid to an executive officer in any one year may exceed $1,000,000. Currently, Mr. Ng, the CEO of the Company, is the only officer participating in the Bonus Plan.

On March 20, 2006, the Compensation Committee set the performance measures for Mr. Ng and the other named executive officers for 2006. For 2006, the performance criteria for Mr. Ng was based on an overall weighting of earnings per share of 75% and return on equity of 25%. Payments of awards under the Bonus Plan are based upon the achievement of these objectives for 2006. The Compensation Committee also set threshold, target and maximum bonus amounts for Mr. Ng. The target bonus amount was 200% of his $750,000 base salary, or $1,500,000. The Compensation Committee set the target level for the Company’s earnings per share and return on equity at levels the Compensation Committee believes are challenging but achievable. A formula was established based on the earnings per share and return on equity goals that sets a payout range around the target bonus amount. The formula determines the percentage of the target bonus to be paid, based on the achievement of the performance goals. The Compensation Committee has the discretion to reduce the bonus in a non-formulaic manner, based upon circumstances including the overall criteria applicable in determining the bonuses of other executive officers, the results of regulatory examinations, regulatory compliance, and initiatives to build a strong platform to support continued growth.

On February 26, 2007, the Compensation Committee met and measured the 2006 performance for the Company. The Compensation Committee determined the dollar amount of Mr. Ng’s 2006 bonus based on

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the achievement of the earnings per share and return on equity performance metrics. Because of the Company’s outstanding performance in 2006, the formulaic bonus could have been paid out at above the target bonus amount. Mr. Ng’s actual bonus award was 171% of his $750,000 base salary, or $1,280,000, which was a decrease from his 2005 bonus of $1,500,000. No cash bonus was paid to Mr. Ng outside of the Bonus Plan. Also on February 26, 2007, the Compensation Committee approved the bonuses for the other named executives. For fiscal year 2006, 50% of the other named executive officers’ annual incentive award was based upon achievement of corporate goals and 50% was based on the fulfillment of personal goals. The personal goals for each named executive officer were determined early in 2006 and varied based on the nature and responsibility of the position. The corporate goals in 2006 related to earnings per share, return on equity, growth in commercial business, trade finance, and demand deposits, expenditure control and strategic objectives. Additionally, the Compensation Committee also considers in a non-formulaic way each named executive officer’s individual contributions and performance.

For the fiscal year ended December 31, 2006, each of the named executive officers received the following payments in March 2007 as an annual incentive for 2006 performance:

 

For the 2007 fiscal year, the Compensation Committee has determined that the criteria for bonus compensation for the CEO under the Bonus Plan will be based on earnings per share. Common objectives for other executive officers are earnings per share, return on equity, growth in commercial business, trade finance, and demand deposits, expenditure control and strategic/operational objectives.

Long-Term Stock-Based Incentives

The Company believes that long-term incentive compensation opportunities should be stock-based to strengthen the alignment between management’s interests and those of Company’s stockholders. Under its 1998 Stock Incentive Plan, the Company generally grants incentive shares in restricted stock and/or stock options to all executive officers of the Company and the Bank.

On an annual basis, after the financial statements for the prior year have been finalized, the Compensation Committee meets to evaluate the performance for the prior year and to recommend compensation for the CEO and the other executive officers for the current year. At this time, the annual cash incentive bonus for the CEO and other executive officers is determined for the prior year. Additionally, stock options and shares of restricted stock are also approved and granted to the CEO and the other executive officers at this time.

In determining the number of incentive shares granted to individual executives, individual contributions, business unit performance, competitive practices, the number of incentive shares previously granted, and value of the stock on the date of the grant are considered. Formal weightings have not been assigned to these factors and the Compensation Committee has the discretion to adjust the percentage between restricted stock and stock options that a named executive officer receives. All stock options have been granted at an option price not less than the fair market value of the common stock on the date of grant. Thus, stock options have value only if the stock price appreciates from the date the options are granted. Restricted stock provides a tangible ownership stake whose ultimate value is linked to the stock price, and which helps in retaining talented executives. The object is to support an executive team focused on the long-term success of the company and on the creation of stockholder value over the long term.

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The stock options granted to all named executive officers generally vest at a rate of 1/3 after the second anniversary of the grant date, 1/3 after the third anniversary of the grant date and 1/3 after the fourth anniversary of the grant date.

The Chief Executive Officer was granted performance-based restricted stock with a two-year cliff vesting on March 9, 2006 under the Bonus Plan. The actual number of shares the Chief Executive Officer will receive under this grant will depend on the Company’s achievement of specified performance targets. The performance period is from January 1, 2006 through December 31, 2007 and the performance criteria for this period is based on the Company’s earnings per share. At the end of the performance period, the number of stock awards issued will be determined based on established performance metrics. The Compensation Committee will determine the final amount. If the Company performs below its performance target, the Compensation Committee may, at its discretion, choose not to award any shares. Currently, Mr. Ng is the only officer participating in the Bonus Plan. For Mr. Ng, vesting of all restricted stock is subject to a performance goal established to qualify as performance-based under Code Section 162(m). The number of shares that Mr. Ng receives will depend on the achievement of multi-year earnings per share performance criteria.

The restricted stock granted to other named executive officers generally vests at a rate of 1¤2 after the fourth anniversary of the grant date and 1¤2 after the fifth anniversary of the grant date.

For 2006, the long-term stock-based incentives awarded by the Compensation Committee are reflected in the “Summary Compensation Table” and the “Grants of Plan-Based Awards Table”.

Stock Ownership Guidelines for Named Executives

The Company has stock ownership guidelines for all senior officers (included the named executives). The stock ownership guideline constitutes share ownership in a market value equivalent to a multiple of the executive’s annual base salary, depending upon that executive’s management level, to be achieved within three years of becoming subject to the guideline. The stock ownership guidelines applicable are three times annual base salary for the Chief Executive Officer and one time annual base salary for all other named executives, if tenure is three years or more. Ownership can be by direct or beneficial ownership of common shares of by ownership of restricted stock.

Retirement Benefits

The Company has two retirement plans. The Company’s 401(k) Plan (the “401(k) Plan”) is a qualified retirement plan under the Internal Revenue Code of 1986 as amended (the “Code”) and is open to all employees of the Company and its subsidiaries with at least three months of service. In 2006, the Company matched 100% of the first 6% of employee salary contributions to the 401(k) Plan, up to a maximum contribution of $13,200 per employee.

The Company also has a Supplemental Executive Retirement Plan (the “SERP”) which provides supplemental retirement benefits to certain named executives, including Mr. Ng and Ms. Gouw. The SERP is discussed in further detail under the heading “Retirement Plans”.

Deferred Compensation

The named executive officers, along with other officers of the Company, are entitled to participate in the nonqualifed deferred compensation plan (the “Deferred Compensation Plan”) which was established by the Company in 1997. The Company does not contribute to the Deferred Compensation Plan. All executive contributions in the last fiscal year are included in the amounts reported as compensation in the Summary Compensation Table. The Deferred Compensation Plan is discussed in further detail under the heading “Nonqualified Deferred Compensation”.

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Accounting and Tax Considerations of Executive Compensation

SFAS No. 123(R) requires companies to account for stock options using the fair value method, which generally results in compensation expense recognition. The Company adopted SFAS No. 123(R), Share-Based Payment, on January 1, 2006 using the modified prospective method. The modified prospective method requires application of the new Statement to new awards and to awards modified, repurchased or cancelled after the required effective date. Additionally, compensation cost for the portion of awards for which the requisite service has not been rendered that are outstanding as of January 1, 2006 will be recognized as the requisite services are rendered on or after January 1, 2006. The compensation cost of that portion of awards is based on the grant-date fair value of those awards as calculated for pro forma disclosures under the original SFAS No. 123. For more information, please see our Annual Report on Form 10-K for the year ended December 31, 2006.

IRS Code Section 162(m) places a limit of $1 million on the amount of compensation that may be deducted by the Company in any taxable year with respect to each “covered employee” within the meaning of Section 162(m). However, “performance-based compensation” within the meaning of Section 162(m) is not subject to the deduction limit. To qualify as performance-based, the bonus must be determined by measurable and objective financial criteria, such that the amount of the bonus, once the formula is established, is non-discretionary, except that the Compensation Committee may discretionarily adjust the actual bonus downward from the formula bonus. Because bonuses are paid under the Bonus Plan only if the Company’s financial or other results meet or exceed certain quantifiable performance goals established by the Compensation Committee, the Compensation Committee believes that the Company may deduct such bonuses for Federal income tax purposes even if the bonus payments, together with salary, paid to an executive officer in any one year may exceed $1 million. The Compensation Committee considers the impact of this IRS rule when developing and approving all elements of executive compensation. Currently, all elements of executive compensation have been designed so that the Company may deduct the total expense.

REPORT BY THE COMPENSATION COMMITTEE

East West Bancorp’s Compensation Committee has certain duties and powers as described in its charter. The Compensation Committee is currently composed of three non-employee Directors named at the end of this report each of whom is independent as defined by the NASD listing standards.

The Compensation Committee has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis. Based upon this review and our discussions, the East West Bancorp Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis section be included in this 2007 Proxy Statement and be included by reference in its Annual Report on Form 10-K for the year ended December 31, 2006.

 

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COMPENSATION OF EXECUTIVE OFFICERS

It is expected that until the executive officers of the Company begin to devote significant time to the separate management of the Company and the Bank, which is not expected to occur until such time as the Company becomes actively involved in additional businesses, the executive officers will only receive compensation for services as executive officers and employees of the Bank, and no separate compensation will be paid for their services to the Company.

The following table sets forth the name and compensation of the named executive officers for the fiscal year ended December 31, 2006.

Summary Compensation Table

(1)                Includes compensation deferred at election of the executive and the year upon which such compensation was earned. See also “Nonqualified Deferred Compensation for the 2006 Fiscal Year Table”.

(2)                The amounts shown for 2006 represent the incentive compensation awards for fiscal year 2006 which were paid in March 2007.

(3)                This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with FAS 123R and consists of restricted stock awards granted in and prior to 2006. Stock awards for the Chief Executive Officer include the compensation cost recognized for stock awards containing a performance-based vesting condition granted on March 9, 2006. The achievement of the performance condition was deemed to be probable at the grant date. Dividends accrue on all stock awards at the normal dividend rate.

(4)                This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with FAS 123R and consists of stock option awards granted during and prior to 2006.

(5)                Includes the year-to-date change in the actuarial present value of the accumulated benefit under the SERP for each named executive officer only. The SERP provides supplemental retirement benefits to certain employees whose contributions to the 401(k) Plan are, under applicable Internal Revenue Service regulations, limited. See “Retirement Plans.” In 2006, there were no above-market or preferential earnings on non-qualified deferred compensation. Deferred compensation earnings are only to be included in this Summary Compensation Table if they are above-market earnings. See “Nonqualified Deferred Compensation”.

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(6)                Represents all other compensation including employer contributions to the 401(k) Plan, unused vacation pay, and perquisites including automobile allowances and financial planning services. Employer contributions to the 401(k) Plan and cash payout of unused vacation pay are benefits generally available to all salaried employees. The named executive officers are also provided with certain group life, health, long-term disability and medical and other non-cash benefits generally available to all salaried employees and not included in this column pursuant to SEC rules. The costs of all perquisites have been calculated based on the actual expense paid by the Company. All other compensation that exceeds $10,000, other than perquisites are described below. All perquisites or other personal benefits greater than $25,000 or 10% of the total value of all perquisites received by the named executive are also described below:

Mr. Ng received $13,200 in 401(k) contributions and financial planning services valued at $33,250 in 2006. Ms. Gouw received $5,650 in 401(k) contributions, $7,200 as an automobile allowance and financial planning services valued at $8,000 in 2006. Mr. Chen received $13,200 in 401(k) contributions and $7,016 as reimbursement for automobile usage in 2006. Mr. Spigner received $15,600 as an automobile allowance in 2006. Mr. Lewis received $13,200 in 401(k) contributions and $8,400 as an automobile allowance in 2006.

The following stock options were granted during 2006 to the named executive officers pursuant to the Company’s Stock Incentive Plan and the Performance-Based Bonus Plan:

Grants of Plan-Based Awards Table

(1)                 Under the Performance-Based Bonus Plan (the “Bonus Plan”), Mr. Ng receives a performance-based annual cash incentive. The actual cash incentive award Mr. Ng received was based on the Company’s achievement of specified performance targets. The performance period for the cash incentive was from January 1, 2006 through December 31, 2006 and the performance criteria, established by the Compensation Committee in early 2006, were based on EPS and ROE metrics. The Compensation Committee determined the final amount of Mr. Ng’s cash incentive on February 26, 2007, based on the Company’s actual performance in 2006. The actual bonus paid to Mr. Ng based upon meeting the performance criteria could have been paid out above the target, but below the maximum. The actual bonus paid for 2006 was below the target amount and is set forth in column (g) of “Summary Compensation Table”. See also “Compensation Discussion and Analysis”.

(2)                 Mr. Ng was granted performance-based restricted stock with a two-year cliff vesting on March 9, 2006 under the Bonus Plan. The actual number of shares Mr. Ng will receive under this grant will depend on the Company’s achievement of specified performance targets. The performance period is from January 1, 2006 through December 31, 2007. At the end of the performance period, the number of stock awards issued will be determined based on the established performance metrics. The Board of Directors or the Compensation Committee will determine the final amount. If the Company performs below its performance target, the Board of Directors or the Compensation Committee may, at its discretion, choose not to award any shares. Shares of stock, if any, will be issued following the end of the performance period two years from the date of grant. The number of shares shown in the above table under column (f) Threshold refers to the minimum amount payable for a certain level of performance under the plan. Column (g) Target refers to the amount paid if the specified performance target is reached. Column (h) Maximum refers to the maximum payout possible under the plan. See also “Compensation Discussion and Analysis”.

(3)                 Shares of restricted stock were granted pursuant to the 1998 Stock Incentive Plan of the Company. The restricted stock granted on March 9, 2006 to the named executives, vests 50% after four years and 50% after five years. All restricted stock granted on December 1, 2006 vests 100% after three years. Dividends are paid on shares of restricted stock at the same time dividends are paid on our other outstanding shares of common stock.

(4)                 The stock options were granted pursuant to the 1998 Stock Incentive Plan of the Company. The stock options vest and become exercisable over four years as follows: 1/3 after two years, 1/3 after three years and 1/3 after four years. The options may be exercised at any time prior to their expiration by tendering the exercise price in cash, check or in shares of stock valued at fair market value on the date of exercise. The options may be amended by mutual agreement of the optionee and East West Bancorp.

(5)                 The estimated present value at grant date of options granted during fiscal year 2006 has been calculated using the Black-Scholes option pricing model, based upon the following assumptions: estimated time until exercise of 4 years; risk-free interest rate of 4.75%, representing the interest rate on U.S. Treasury Strips in effect at the time of grant equal to the stock option’s expected term; a volatility rate of 27.79%; and a dividend yield of 0.57%, representing the $0.20 per share annualized dividend rate in 2006 divided by the fair market value of the common stock on the date of grant. The approach used in developing the assumptions upon which the Black-Scholes valuation was done is consistent with the requirements of FAS 123R.

The grant date fair value for the restricted stock reflects the FAS 123R value over the vesting period for the shares. Dividends are paid on shares of restricted stock at the same time dividends are paid on our other outstanding shares of common stock.

The actual number of shares Mr. Ng will receive under the performance-based restricted stock granted during fiscal year 2006 is based on the Company’s achievement of specified performance targets. The performance period is from January 1, 2006 through December 31, 2007. As the actual number of shares Mr. Ng will receive is unknown, the maximum number of future shares to be issued under the grant on March 9, 2006 has been used to calculate the grant date fair value of this award.

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The following table sets forth certain information concerning options and restricted stock held by the Named Executives under the Company’s Stock Incentive Plan:

Outstanding Equity Awards at December 31, 2006

(1)                 All stock options listed above vest at a rate of 1/3 after the second anniversary of the grant date, 1/3 after the third anniversary of the grant date and 1/3 after the fourth anniversary of the grant date.

(2)                 The restricted stock awards aggregate the historic grants that have not vested. The shares of restricted stock for all named executive officers excluding the Chief Executive Officer either vests 100% after three years or 50% after four years and 50% after five years. On March 10, 2005 Mr. Ng was granted 25,000 shares of restricted stock which vests 20% each year, over a five year vesting schedule. As of December 31, 2006, 20,000 of these shares were still outstanding. Additionally, all named executives were granted 75 shares of restricted stock that vests 100% after 3 years, as part of annual grants of restricted stock to all employees. Each named executive has 225 shares of such restricted stock outstanding. Dividends are paid on shares of restricted stock at the same time dividends are paid on our other outstanding shares of common stock.

(3)                 Mr. Ng was granted performance-based restricted stock with a two-year cliff vesting on March 9, 2006 under the Bonus Plan. The actual number of shares Mr. Ng will receive under this grant will depend on the Company’s achievement of specified performance targets. The performance period is from January 1, 2006 through December 31, 2007. At the end of the performance period, the number of stock awards issued will be determined based on established performance metrics. The Board of Directors or the Compensation Committee will determine the final amount. If the Company performs below its performance target, the Board of Directors or the Compensation Committee may, at its discretion, choose not to award any shares. Shares of stock, if any, will be issued following the end of the performance period two years from the date of grant. The number of shares shown in the above table under column (i) reflects the maximum payout possible under the plan. As the actual number of shares Mr. Ng will receive is unknown, the maximum number of future shares to be issued under this grant has been used to calculate the grant date fair value of this award.

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The following table sets forth certain information concerning options and stock awards held by the Named Executives under the Company’s Stock Incentive Plan:

Option Exercises and Stock Vested in 2006 Fiscal Year

(1)          Stock option exercises for Mr. Ng were effected pursuant to a Rule 10b5-1 trading plan entered into on January 27, 2006.

RETIREMENT PLANS

The Company has two retirement plans. The Company’s 401(k) Plan (the “401(k) Plan”) is a qualified retirement plan under the Internal Revenue Code of 1986 as amended (the “Code”) and is open to all employees of the Company and its subsidiaries with at least three months of service. In 2006, the Company matched 100% of the first 6% of employee salary contributions to the 401(k) Plan, up to a maximum contribution of $13,200 per employee.

The Company also has a Supplemental Executive Retirement Plan (the “SERP”) which provides supplemental retirement benefits to certain employees whose contributions to the 401(k) Plan are, under applicable Internal Revenue Service regulations, limited.

The following table sets forth certain information concerning pension benefits for the Named Executives under the Company’s SERP:

Pension Benefits for the 2006 Fiscal Year

 

The Board of Directors designates those employees who are eligible to participate in the SERP. The Board has designated named executive officers Mr. Ng and Ms. Gouw as participants in the SERP. Benefits under the SERP include income generally payable commencing upon a designated retirement date until age 80. Participants will be entitled to a projected benefit equal to 50% of his or her 2001 total compensation, adjusted 3% per year for cost of living. The designated retirement date is the 20th anniversary of employment by the Company and early retirement after 15 years is permitted with lower benefits. SERP benefits begin to vest after 15 years of service; however vesting accelerates to 100% upon a

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change in control of the Company. Upon a termination of employment for “cause,” the participant forfeits all benefits. The participant is entitled to all vested benefits in the case of a termination without “cause”. The Company has purchased life insurance contracts on the participants in order to finance the cost of these benefits and it is anticipated that, because of the tax-advantaged effect of this life insurance investment, the return on the life insurance contracts will be approximately equal to the accrued benefits to the participants under the SERP, other than in the event of accelerated vesting because of a change of control.

As of December 31, 2006, Mr. Ng and Ms. Gouw had 15 and 17 years, respectively, of service under the SERP. As of December 31, 2006, Mr. Ng and Ms. Gouw are both eligible for early retirement under the SERP. As of December 31, 2006, the early retirement annual payment under the SERP is $380,607 for Mr. Ng and $172,592 for Ms. Gouw. The annual payment under the SERP after the 20th anniversary of employment or in the case of disability is $750,245 for Mr. Ng and $270,261 for Ms. Gouw (increased by an annual 3% CPI adjustment). As of December 31, 2006, the present value of the future benefit under the SERP after the 20th anniversary of employment was $7,802,268 for Mr. Ng and $3,376,396 for Ms. Gouw. The present value of the future benefit is calculated using an 8% discount rate, as is the present value of the accumulated benefit in the table above.

The SERP is an unfunded non-qualified plan, which means that the participants have no rights under the SERP beyond those of a general creditor of the Company, and there are no specific assets set aside by the Company in connection with the plan. There are accordingly no assurances to the participants that upon retirement the Company will be able to pay the accrued benefits. The SERP is not an employment contract. There are no other Company plans that provide for specified retirement payment and benefits, excluding those executives covered under the SERP.

NONQUALIFIED DEFERRED COMPENSATION

The Company also has a nonqualified deferred compensation plan (the “Deferred Compensation Plan”) which was established by the Company in 1997. The Deferred Compensation Plan is available to all officers above a certain level. The Company does not contribute to the Deferred Compensation Plan. 

Under the Deferred Compensation Plan, a participant is returned his or her deferrals, along with interest, in a future year or years in a single lump sum or in monthly installments, as selected by the participants, subject to the terms of the plan. The Deferred Compensation Plan allows the participants to tax defer part of their income to a later date. Participants in the plan can defer up to 80% of their base salary, bonus and performance-based compensation. Once made, deferral elections are generally irrevocable. However, deferral elections can be reduced in the event of an unforeseeable financial emergency arising from severe financial hardship. The Deferred Compensation Plan does not earn above market interest. The annual rate of return earned is 120% of the Long Term Applicable Federal Rate published from time to time by the Internal Revenue Service. At December 31, 2006, the rate of return on the Deferred Compensation Plan was 5.74%.

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