10. STOCK BASED INCENTIVE PLANS

The Company has a stock based incentive plan, the 2007 BBCN Bancorp Equity Incentive Plan ("2007 Plan"). The 2007 Plan, which was approved by our stockholders on May 31, 2007 as amended and restated on July 25, 2007 and again on December 1, 2011, provides for grants of stock options, stock appreciation rights ("SARs"), restricted stock, performance shares and performance units (sometimes referred to individually or collectively as "awards") to non-employee directors, officers, employees and consultants 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 2007 Plan gives the Company flexibility to (i) attract and retain qualified non-employee directors, executives and other key employees and consultants with appropriate equity-based awards, (ii) motivate high levels of performance, (iii) recognize employee contributions to the Company's success, and (iv) align the interests of Plan participants with those of the Company's stockholders. The exercise price for shares under an ISO may not be less than 100% of fair market value ("FMV") on the date the award is granted under Code Section 422. Similarly, under the terms of the 2007 Plan the exercise price for SARs and NQSOs may not be less than 100% of FMV on the date of grant. Performance units are awarded to a participant 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). No minimum exercise price is prescribed for performance shares and restricted stock awarded under the 2007 Plan.

ISOs, SARs and NQSOs have vesting periods of three to five years and have 10-year contractual terms. Restricted stock, performance shares, and performance units will be granted with a restriction period of not less than one year from the grant date for performance-based awards and not less than three years from the grant date for time-based vesting of grants. Compensation expense for awards is recorded over the vesting period.

Upon the merger with Center Financial Corporation effective November 30, 2011, the former Center's stock based incentive plan the Center Financial Corporation 2006 Stock Incentive Plan, adopted April 12, 2006, as amended and restated June 13, 2007 ("2006 Plan") converted the outstanding share awards of 585,860 shares and 2,443,513 shares available for future grants at November 30, 2011 at an exchange ratio of 0.7805.

The 2006 Plan provides for the granting of incentive stock options to officers and employees, and non-qualified stock options and restricted stock awards to employees (including officers) and non-employee directors. The options prices of all options granted under the 2006 Plan must be not less than 100% of the fair market value at the date of grant. All options granted generally vest at the rate of 20% per year except that the options granted to the non-employee directors vest at the rate of 33 1/3% per year. All options not exercised generally expire ten years after the date of grant.

The 2007 Plan initially reserved 1,300,000 shares for issuance. Including the 1,907,161 shares available for future grants under the 2006 Plan, 3,128,161 shares were available for future grants as of December 31, 2011.

The total shares reserved for issuance will serve as the underlying value for all equity awards under the 2007 Plan and the 2006 Plan. With the exception of the shares 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.

For the year ended December 31, 2011, 15,000 shares of performance unit awards were granted under the 2007 Plan. The fair value of performance unit awards granted is the fair market value of the Company's common stock on the date of grant. In 2011, 2010 and 2009, 0, 0 and 40,000 options were granted, respectively. The fair value of each option granted for the year ended December 31, 2009 was estimated on the date of grant using a Black-Scholes valuation model that uses the assumptions noted in the following table. Expected stock price volatility was based on the historical volatility of our stock. We use historical data to estimate the option exercise and employee terminations within the valuation model. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.


	2011		2010		2009
Risk-free interest rate		0		0		2.3	%
Expected option life (years)		0		0		6.2
Expected stock price volatility		0		0		51.2	%
Dividend yield		0		0		3.4	%
Weighted average fair value of options granted during the period		0		0	$	0.44

A summary of stock option activity under the Plan for the year ended December 31, 2011 is as follows:


	Number of Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding—January 1, 2011		493,250		$	9.82
Granted		0			0
Converted upon the merger		445,761			20.81
Exercised		(109,000	)		5.02
Forfeited/canceled		0			0

Outstanding—December 31, 2011		830,011		$	16.35		6.37	$	309,000

Options exercisable—December 31, 2011		782,297		$	14.80		5.16	$	243,000
Unvested options expected to vest after December 31, 2011		47,714		$	19.78		9.92	$	66,000

A summary of restricted unit activity under the Plan for the year ended December 31, 2011 was as follows:


	Number of Shares			Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Life (Years)
Outstanding—January 1, 2011		36,200		$	8.25
Granted		15,000			8.97
Converted upon the merger		11,480			9.27
Vested		(10,200	)		11.18
Forfeited/canceled		0			0

Outstanding—December 31, 2011		52,480		$	7.42		8.98

The total fair value of performance units vested for the years ended December 31, 2011, 2010 and 2009 was $96 thousand, $100 thousand and $586 thousand, respectively.

The amount charged against income, before income tax benefit of $16 thousand, $124 thousand and $562 thousand, in relation to the stock-based payment arrangements was $103 thousand, $376 thousand and $1.5 million for 2011, 2010 and 2009, respectively. At December 31, 2011, unrecognized compensation expense related to non-vested stock option grants and restricted units aggregated $263 thousand, and is expected to be recognized over a weighted average period of 2.54 years.

The estimated annual stock-based compensation as of December 31, 2011 for each of the succeeding years is indicated in the table below:


	Stock Based Compensation Expense
	(in thousands)
For the year ended December 31:
2012	$	69
2013		68
2014		63
2015		42
2016		21

Total	$	263