This excerpt taken from the WABC DEF 14A filed Mar 12, 2009.
Federal Income Tax Consequences
The U.S. federal income tax consequences to the Corporation and its employees of awards under the Stock Plan are complex and subject to change. The following discussion is only a brief summary of the applicable federal income tax rules. Recipients of awards should consult their own tax advisors since a taxpayers particular situation may be such that some variation of the rules described below will apply.
Participants will recognize ordinary compensation income when shares are delivered to them upon vesting of stock awards issued under the Stock Plan or when cash amounts if any are paid to them in settlement of awards under the Stock Plan. The amount of income recognized in this situation will be based on the fair market value of the shares received. Subject to any limitations under section 162(m) of the Code and limitations under EESA and ARRA, the Corporation generally will be entitled to a deduction equal to the amount of ordinary income that a participant is required to recognize.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE PERFORMANCE CRITERIA FOR PERFORMANCE-BASED AWARDS UNDER THE AMENDED AND RESTATED WESTAMERICA BANCORPORATION STOCK OPTION PLAN OF 1995, AS AMENDED. THE PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY.