SCHEDULE 14A (RULE 14A-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OFProxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]Registrant /X/
Filed by a partyParty other than the registrant [_]Registrant / /
Check the appropriate box:
[X]/ / Preliminary proxy statement
[_]Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive proxy statement
[_]Proxy Statement
/ / Definitive additional materials
[_]Additional Materials
/ / Soliciting material pursuantMaterial Pursuant to Rule 14a-11(c)Section 240.14a-11(c) or Rule 14a-12Section
240.14a-12
BANCORP HAWAII, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
BANCORP HAWAII, INC.(Name of Registrant as Specified In Its Charter)
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(NAME OF PERSON(S) FILING PROXY STATEMENT)(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing feeFiling Fee (Check the Appropriateappropriate box):
[_]/X/ $125 per Exchange Act RuleRules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
14a-6(j)Item 22(a)(2) [_]of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[_].
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
(1)0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price ofor other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4)0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the formForm or scheduleSchedule and the date of its filing.
(1)1) Amount previously paid:
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(4)Party:
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[LOGO OF BANCORP HAWAII, INC.][logo]
130 MERCHANT STREET
HONOLULU, HAWAII 96813
March 10, 19941995
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Bancorp Hawaii, Inc. to be held at 8:30 a.m. on Wednesday, April 27, 1994,26, 1995, on
the Sixth Floor of the Bank of Hawaii Building, 111 South King Street, Honolulu,
Hawaii.
The accompanying Notice of Meeting and Proxy Statement describe the matters
to be considered and voted upon at the meeting. In addition to consideration of
these matters, a report to stockholders on the affairs of the Company will be
given and stockholders will have the opportunity to discuss matters of interest
concerning the Company.
Regardless of the number of shares you own and whether or not you plan to
attend, it is important that your shares be represented and voted at the
meeting. In the event you are unable to attend the meeting, your shares may
still be voted if you complete, sign, and return the enclosed Proxy Card. Please
complete the Proxy Card and mail it promptly in the enclosed postage-
paidpostage-paid return
envelope to insure that your shares are voted in the manner you desire. If you
wish to do so, your proxy may be revoked at any time prior to its use.
On behalf of the Board of Directors, thank you for your cooperation and
support.
Sincerely,
H. Howard Stephenson Chairman of the
Board and Chief Executive Officer[sig]
LAWRENCE M. JOHNSON
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
BANCORP HAWAII, INC.
130 Merchant Street
Honolulu, Hawaii 96813NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 26, 1995
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Bancorp
Hawaii, Inc. ("Bancorp") will be held on Wednesday, April 27, 1994,26, 1995, at 8:30 a.m.
on the sixth floor of the Bank of Hawaii Building, 111 South King Street,
Honolulu, Hawaii, for the following purposes:
1. To elect four Class IIIII Directors for terms expiring in 1997,1998, and successorsa
successor to fill the unexpired termsterm of twoa retiring Class III Directors.I Director.
2. To approve an amendment to the Restated Articles of Incorporation to
increase the authorized number of shares of common stock, $2 par value,
from 50,000,000 shares to 100,000,000 shares.
3. To approve the Bancorp Hawaii, Inc. Stock Option Plan of 1994 under
which an aggregate of up to 1,250,000 shares of common stock (to be
adjusted to 1,875,000 shares as a result of the 50% stock dividend declared
on January 26, 1994 and payable on March 15, 1994) may be issued pursuant
to the exercise of options to purchase common stock that may be granted to
officers and key employees.
4. To approve the Bancorp Hawaii, Inc. Executive Officer One-Year
Incentive Plan.
5. To approve the Bancorp Hawaii, Inc. Sustained Profit Growth Plan.
6. To elect an Auditor.
7.3. To transact any other business that may be properly brought before
the meeting.
Only owners of record of Bancorp Hawaii, Inc. common stock at the close of
business February 17, 199421, 1995 are entitled to attend the meeting and vote on the
business brought before it.
You are urged to attend the meeting in person. However, in the event you are
unable to attend the meeting, your shares may still be voted if you fill in,
sign, and return the enclosed Proxy Card in the attached postage prepaid
envelope. The Proxy Statement, to which your attention is now invited, is
intended to provide certain background information that will be helpful in
deciding how to cast your vote on business transacted at the meeting.
Please complete the Proxy Card and mail it promptly in the enclosed
postage-
paidpostage-paid envelope to insure that your shares are voted in the manner you
desire. If you wish to do so, your proxy may be revoked at any time prior to its
use.
By Order of the Board of Directors
RuthBY ORDER OF THE BOARD OF DIRECTORS
RUTH E. MiyashiroMIYASHIRO
Vice President and Secretary
Bancorp Hawaii, Inc.
Honolulu, Hawaii
Dated: March 10, 19941995
IMPORTANT
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY
AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THIS WILL SAVE
BANCORP THE EXPENSE OF A SUPPLEMENTARY SOLICITATION.
THANK YOU FOR ACTING PROMPTLY.
BANCORP HAWAII, INC.
130 Merchant Street
Honolulu, HawaiiMERCHANT STREET
HONOLULU, HAWAII 96813
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 27, 199426, 1995
(Approximate Mailing Date: March 10, 1994)1995)
The accompanying proxy is solicited by order of the Board of Directors of
Bancorp Hawaii, Inc. ("Bancorp"). Any proxy submitted as a result of this
solicitation may be revoked by the stockholder by giving notice of revocation to
Bancorp in writing or in person at any time prior to its use. Attendance at the
Annual Meeting will not in itself constitute revocation of a proxy.
The expense of this mail solicitation will be paid by Bancorp. In addition
to using the mails, proxies may be solicited by officers, directors, and regular
employees of Bancorp or its subsidiaries, in person, or by telephone, telefax or
telegram without additional compensation for such services. Bancorp will also
request brokers or nominees who hold Bancorp's common stock in their names to
forward proxy material at Bancorp's expense to the beneficial owners of such
stock. Bancorp has retained D. F. King & Co., Inc., a firm of professional proxy
solicitors, to aid in the solicitation of such proxies at an estimated fee of
$7,500$8,000 plus reimbursement of out-of-pocket expenses.
VOTING SECURITIES, VOTES REQUIRED, AND PRINCIPAL HOLDERS THEREOF
As of February 17, 199421, 1995 (the "record date"), Bancorp had outstanding
28,292,15641,829,335 shares of common stock. If holders of more than 50% of those shares
are represented at the meeting, either in person or by proxy, a quorum will
exist for conducting business. Each share of common stock is entitled to one
vote; cumulative voting is not permitted under the By-Laws of Bancorp. All
matters that will be submitted to the stockholders at the meeting will require
an affirmative vote of a majority of shares present in order to be valid and
binding. Under Hawaii law and Bancorp's Restated Articles of Incorporation and
By-Laws, abstentions and broker nonvotes are not voted in favor of or against
any matter that may come before the Annual Meeting. Such abstentions and broker
nonvotes will, however, have the effect of a negative vote if an item requires
the approval of a specified percentage of all issued and outstanding shares of
Bancorp's common stock.
At the close of business on December 31, 1993,1994, Bancorp had 28,425,03941,851,466 shares
of common stock outstanding. Two corporations were known to Bancorp to own
beneficially 5% or more of Bancorp's common stock. Information about such
ownership is set forth in the following table:
TITLE OF NAMENAMES AND ADDRESSADDRESSES OF AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS
-------- -------------------- ----------------- ---------------------------------------------- -------------------- --------------------
Common Stock State Farm Mutual Automobile 1,737,038(1) 6.11%
Insurance 2,811,556(1) 6.72%
Company and its related entities
One State Farm Plaza
Bloomington, Illinois 61701
Common Stock Wellington Management Company/ 1,428,392(2) 5.03%
Wellington Trust Company,
National
Association, a wholly-owned
subsidiary
of Wellington Management
Company
75 State Street
Boston, Massachusetts 02109Ruane, Cunniff & Co., Inc. 2,317,762(2) 5.54%
767 Fifth Avenue, Suite 4701
New York, NY 10153-4798
- ----------------
(1) State Farm Mutual Automobile Insurance Company and its related entities have
sole voting and dispositive power over the 1,737,0382,811,556 shares.
(2) Wellington Management Company/Wellington Trust Company, National
Association,Ruane, Cunniff & Co., Inc., in theirits capacity as an investment advisor,adviser
registered under section 203 of the Investment Advisers Act of 1940, may be
deemed beneficial owner of 1,428,3922,317,762 shares of Bancorp, which are owned by
numerous investment counseling clients, andBancorp. Ruane, Cunniff &
Co., Inc. has sharedsole voting andpower over 1,971,600 shares, sole dispositive
power over 788,187751,462 shares, and shared dispositive and no voting
power over 640,2051,566,300
shares.
No such client is known to have ownership of
more than five percent of the class of common stock of Bancorp.1
ELECTION OF DIRECTORS
The Restated Articles of Incorporation of Bancorp provide that the Board of
Directors shall consist of not less than 3 nor more than 15 persons who shall be
elected for such terms as may be prescribed in the By-Laws of Bancorp. The
By-Laws of Bancorp provide for a Board of Directors consisting of 11 persons
divided into 3 classes, with the terms of office of one class expiring each
year. Directors to succeed the class of directors whose terms expire will be
elected for terms of 3 years at Bancorp's annual meetings.
Listed below are the four persons who have been nominated as Class IIIII
directors to serve 3-year terms to expire in 1997,1998, and the personsperson who havehas been
nominated as a Class III directorsI director to fill the unexpired termsterm of twoa Class III directorsI director
who havehas reached mandatory retirement age. All of the nominees, except Mary G. F. Bitterman and Herbert M. Richards, Jr.,Richard J.
Dahl, are currently serving as directors of Bancorp. Mrs. Bitterman and Mr. Richards haveDahl has been nominated
as a Class III directorsI director to succeed Messrs. Sidney Hashimoto and Frank Manaut,Thomas B. Hayward, who havehas reached mandatory
retirement age. Should any of these nominees become unable to serve, an event
which is not anticipated by Bancorp, the proxies, except those from stockholders
who have given instruction to withhold voting for the following nominees, will
be voted for such other persons as management may nominate. Certain information
concerning each of the nominees, and each of the continuing directors, is set
forth after his/her name.
NOMINEES FOR ELECTION AS CLASS II DIRECTORS--TERMSIII DIRECTORS -- TERMS EXPIRE IN 1997
SHARES OF BANCORP
NAME, AGE, AND OTHER COMMON STOCK
YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) OWNED AS OF
AS DIRECTOR DURING PAST 5 YEARS HELD DECEMBER 31, 1993
------------------ ----------------------- --------------- -----------------
David A. Heenan; Chairman, President and Aloha Airgroup, Inc., 215
54; 1993 Chief Executive Officer Aloha Airlines, Inc.,
of Theo H. Davies & C. Brewer Homes, Inc.,
Co., Ltd. (the North Kennedy-Wilson, Inc.,
American subsidiary of Bank of Hawaii
Hong Kong-based Jardine International, Inc. a
Matheson Holdings Ltd., subsidiary of
a diversified multi- Bank of Hawaii
national corporation)
since July 1982.
Stuart T. K. Ho; Chairman of the Board Aloha Airgroup, Inc., 10,752(1)
58; 1987 and President, Capital Bishop Insurance of Hawaii, Inc.,
Investment of Hawaii, Capital Investment of
Inc. (diversified real Hawaii, Inc.,
estate development and Gannett Co., Inc.,
management company) College Retirement
since January 1982; Equities Fund,
Chairman, Gannett Various subsidiaries
Pacific Corp. and affiliates of Bancorp
(newspaper publishing
company) since 1987.
Lawrence M. Johnson; President of Bancorp and Various subsidiaries 152,674(2)
53; 1989 Bank of Hawaii since and affiliates of Bancorp
March 1989; Executive
Vice President of
Bancorp August 1980 to
February 1989; Vice
Chairman of Bank of
Hawaii December 1984 to
February 1989.
Fred E. Trotter; President of F. E. Longs Drug Stores, 5,179(3)
63; 1978 Trotter, Inc. since Maui Land &
January 1970. Pineapple Co., Inc.,
Bancorp Leasing of
Hawaii Inc., a
subsidiary of Bank
of Hawaii
2
NOMINEES FOR ELECTION AS CLASS III DIRECTORS--TERMS EXPIRE IN 19951998
SHARES OF BANCORP
NAME, AGE, AND OTHER COMMON STOCK
YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) DIRECTORSHIPS OWNED AS OF
AS DIRECTOR DURING PAST 5 YEARS HELD DECEMBER 31, 19931994
- ------------------ ----------------------- ----------------------------------------- ---------------------------------------- ---------------------- -----------------
Mary G.F.G. F. Bitterman; President and Chief Various 2,872(4)
Bitterman; Executive Officer, KQED,Various subsidiaries 495,962(1)
50, 1994 KQED, Inc. (public broadcasting and affiliates broadcastingof
center) of Bancorp since November 1993; Bancorp
Consultant (telecommunications,
investments, and Asian-
PacificAsian-Pacific
affairs) November 1988 to October
1993.
Herbert M. Richards, Jr.; President and Manager, Various 2,441(5)
Richards, Jr. Kahua Ranch, Ltd. (cattleVarious subsidiaries 643,661(2)
65, 1994 (cattle and sheep ranching and and affiliates of
diversified agricultural business) Bancorp
since December 1953.
H. Howard Stephenson; Retired. Chairman and Chief Executive Various subsidiaries 281,457(3)
65; 1980 Officer of Bancorp businessand Bank March 1989 and affiliates of
to July 1994; President of Bancorp and Bancorp
Bank August 1980 to February 1989.
*Charles R. Wichman; Attorney at Law, Partner of Carlsmith Various subsidiaries 32,205(4)
69; 1989 Ball Wichman Murray Case & Ichiki (now and affiliates of
retired) since 1957. Bancorp
*Charles R. Wichman's term of office will expire on the day of the annual
meeting of stockholders to be held in 1996, as he will have reached mandatory
retirement age. His successor will be elected by the stockholders at the annual
meeting in 1996 to serve for the remainder of the Class III director's term
expiring in 1998.
2
NOMINEE FOR ELECTION AS CLASS I DIRECTOR -- TERM EXPIRES IN 1996
SHARES OF BANCORP
NAME, AGE, AND COMMON STOCK
YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS OWNED AS OF
AS DIRECTOR DURING PAST 5 YEARS HELD DECEMBER 31, 1994
- ---------------------------- ---------------------------------------- ---------------------- -----------------
Richard J Dahl; President of Bancorp and Bank since Various subsidiaries 143,607(5)
43 August 1994; Executive Vice President and affiliates of
and Chief Financial Officer of Bancorp Bancorp.
April 1987 to January 1994; Vice
Chairman of Bank December 1954.1989 to July
1994.
Each nominee or director continuing in office is also currently a director
of Bank of Hawaii (hereinafter the "Bank"), Bancorp's major subsidiary.
These persons will be placed in nomination for election as Class IIIII and
Class IIII directors, as above indicated. The shares represented by the proxy cards
returned will be voted FOR the election of these nominees unless you specify
otherwise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE ABOVE
NOMINEES AS DIRECTORS.
A stockholder may nominate a particular individual to serve as a director,
provided notice of such nomination together with the written consent of such
individual to serve as a director is given at least 14 days prior to the annual
meeting. The notice of nomination must be made in writing, delivered or mailed
by first class mail to the Secretary of Bancorp, and must set forth (i) the
name, age, business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of the
nominee, and (iii) the number of shares of Bancorp stock beneficially owned by
the nominee.
DIRECTORS CONTINUING IN OFFICE
CLASS III DIRECTORS--TERMS EXPIRE IN 1995
SHARES OF BANCORP
NAME, AGE, AND OTHER COMMON STOCK
YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) DIRECTORSHIPS OWNED AS OF
AS DIRECTOR DURING PAST 5 YEARS HELD DECEMBER 31, 1993
- ------------------ ----------------------- ------------- -----------------
H. Howard Chairman and Chief Various 187,639(6)(10)
Stephenson; Executive Officer of subsidiaries
64; 1980 Bancorp and Bank of and affiliates
Hawaii since March 1989; of Bancorp
President of Bancorp and
Bank of Hawaii August
1980 to February 1989.
Charles R. Wichman; Attorney at Law, Partner Various 20,906(7)
68; 1989 of Carlsmith Ball subsidiaries
Wichman Murray Case & and affiliates
Ichiki (now retired) of Bancorp
since 1957.
3
DIRECTORS CONTINUING IN OFFICE
CLASS I DIRECTORS--TERMSDIRECTORS -- TERMS EXPIRE IN 1996
SHARES OF BANCORP
NAME, AGE, AND OTHER COMMON STOCK
YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) DIRECTORSHIPS OWNED AS OF
AS DIRECTOR DURING PAST 5 YEARS HELD DECEMBER 31, 1993
------------------ ----------------------- -------------1994
- ------------------------- ------------------------------------ ----------------------------- -----------------
Peter D. Baldwin; President of Baldwin Pacific Maui Land & 2,475(8)
56; 1991 Pacific Corporation Pineapple Co., Inc.1,337(6)
57; 1991 Corporation (diversified foods Inc.
distribution, milk and juice
processing/packaging company, and
orchard farming in California)
since 1965; President of Baldwin
Pacific Properties, Inc. (real
estate development company)Company) since
1988; presidentDirector and Chief Executive
Officer of Orchards Hawaii, Inc.
(fruit juice processing
plant)marketing) since
1986; President of Haleakala Ranch
Company (cattle ranching) since
1979.
*Thomas B. Hayward; President, Thomas B. Litton Industries, 489
69; 1992 Hayward Associates, Maxwell Laboratories,
(consulting firm Bank of Hawaii
engaged in technology International, Inc., a
related business subsidiary of Bank
development in the of Hawaii
Asia-Pacific Basin)
since 1982.
K. Tim Yee; President, Queen's International Hawaiian Trust Company, 2,638(9)
67;4,476(7)
68; 1984 InternationalCorporation since April 1993; Limited, a subsidary
Corporation sincesubsidiary of Bank of Hawaii
April 1993;
President, The Queen Emma Bank of Hawaii
Foundation (engaged in healthcare
alliances and partnershipspartner-ships with
other healthcare companies) May
1988 to March 1993.
4
DIRECTORS CONTINUING IN OFFICE
CLASS II DIRECTORS -- TERMS EXPIRE IN 1997
SHARES OF BANCORP
NAME, AGE, AND OTHER COMMON STOCK
YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) DIRECTORSHIPS OWNED AS OF
AS DIRECTOR DURING PAST 5 YEARS HELD DECEMBER 31, 1994
- ------------------------- ------------------------------------ ----------------------------- -----------------
David A. Heenan; Trustee, The Estate of James Aloha Airgroup, Inc., 332
55; 1993 Campbell since January 1, 1995; Aloha Airlines, Inc.,
Chairman, President and Chief C. Brewer Homes, Inc.,
Executive Officer of Theo H. Kennedy-Wilson, Inc.,
Davies & Co., Ltd. (the North Bank of Hawaii
American subsidiary of Hong Kong- International, Inc.,
based Jardine Matheson Holdings a subsidiary of
Ltd., a diversified multi-national Bank of Hawaii
corporation) July 1982 to March 1993.
All DirectorsDecember
31, 1994.
Stuart T. K. Ho; Chairman of the Board and Executive OfficersPresident, Aloha Airgroup, Inc., 16,338(8)
59; 1987 Capital Investment of Hawaii, Inc. Aloha Airlines, Inc.,
(diversified real estate Bishop Insurance of
development and management Hawaii, Inc.,
company) since January 1982; Capital Investment of
Chairman, Gannett Pacific Corp. Hawaii, Inc.,
(newspaper publishing company) Gannett Co., Inc.,
since 1987. College Retirement
Equities Fund,
Various subsidiaries
and affiliates
of Bancorp
asLawrence M. Johnson; Chairman and Chief Executive Officer Various subsidiaries and 250,051(9)(11)
54; 1989 of Bancorp and Bank since August affiliates of Bancorp
1994; President of Bancorp and
Bank March 1989 to July 1994;
Executive Vice President of
Bancorp August 1980 to February
1989.
Fred E. Trotter; President of F. E. Trotter, Inc. Longs Drug Stores, 7,895(10)
64; 1978 since January 1970. Maui Land &
Pineapple Co., Inc.,
Bancorp Leasing of
Hawaii Inc., a
Group 652,955(10)(11)subsidiary of
Bank of Hawaii
- --------
* Thomas B. Hayward's term of office will expire on the day of the annual
meeting of stockholders to be held---------
(1)Includes 1,648 shares owned jointly with spouse, 500 shares owned by self in
1995, as he will have reached
mandatoryan individual retirement age. His successor will be electedaccount, 901 shares owned by the stockholders
at the annual meeting in 1995 to serve for the remainder of the Class I
director's term expiring in 1996.
(1) Includes 247spouse, 1,000 shares
owned by spouse in an individual retirement account;account, and indirectly, 10,258 shares as co-trustee for the Chinn Ho Trust under
Trust Agreement dated February 6, 1987.
(2) Includes 11,352 shares held in trust for Mr. Johnson under the Bank of
Hawaii Profit Sharing Plan, and 105,117 shares that Mr. Johnson has the
right to acquire within 60 days through the exercise of stock options.
(3) Includes 3,385 shares owned by spouse; 645 shares owned by the F. E.
Trotter, Inc. Pension Plan, of which Mr. Trotter is the sole participant,
and 13 shares owned by daughter, Brooke Trotter.
(4) Includes 1,061 shares owned jointly with spouse, 580 shares owned by
spouse, and 6511,012 shares owned
by spouse as custodian for daughter, Sarah.
(5) 5
(2)Includes 1,4022,103 shares owned by Kahua Ranch, Ltd., of which Mr. Richards is
President and Manager and beneficiary of trust.
(6) (3)Includes 112,509168,763 shares owned jointly with spouse, and 65,31781,079 shares that
Mr. Stephenson has the right to acquire within 60 days through the exercise
of stock options.
(7) (4)Includes 1,2221,833 shares owned by spouse, and 3,7425,613 shares owned by self in an
individual retirement account.
(8) (5)Includes 40,467 shares owned jointly with spouse, 1,243 shares owned by son
Steven, 1,243 shares owned by daughter Sarah, 1,192 shares owned by daughter
Jane, 1,417 shares held in trust for Mr. Dahl under the Bank of Hawaii
Profit Sharing Plan, and 98,045 shares that Mr. Dahl has the right to
acquire within 60 days through the exercise of stock options.
(6)Shares owned by Baldwin Pacific Corporation, of which Mr. Baldwin is
President, Director, and owner of all of the outstanding shares of stock.
(9) (7)Includes 150225 shares owned by self in Individual Retirement Account, 225an individual retirement account, 337
shares owned by spouse in Individual Retirement Account,an individual retirement account, 200 shares owned
by son Kevin in an individual retirement account, 200 shares owned by
daughter Lauren in an individual retirement account, and 2,2633,514 shares held
in trust for family. Mr. Yee disclaims beneficial ownership, investment, and
voting power over the shares held in trust for family.
(8)Includes 370 shares owned by self in an individual retirement account, 562
shares owned by spouse in an individual retirement account; and, indirectly,
15,406 shares as co-trustee for the Chinn Ho Trust under Trust Agreement
dated February 6, 1987.
(9)Includes 18,286 shares held in trust for Mr. Johnson under the Bank of
Hawaii Profit Sharing Plan, and 122,682 shares that Mr. Johnson has the
right to acquire within 60 days through the exercise of stock options.
(10)Includes 5,204 shares owned by spouse; 967 shares owned by the F. E.
Trotter, Inc. Pension Plan, of which Mr. Trotter is the sole participant,
and 20 shares owned by daughter, Brooke Trotter.
(11)Excludes 32,17548,262 shares owned by the Bancorp Hawaii Charitable Foundation
(the "Foundation"). The Board of Directors of the Foundation has appointed
Mr. StephensonJohnson President of the Foundation. Mr. Stephenson,Johnson, as President, has the
authority to direct the disposition and to vote and execute proxies 4
of such
shares on behalf of the Foundation. Because Mr. StephensonJohnson possesses shared
voting and investment power with respect to such shares, he may be deemed to
have incidents of beneficial ownership thereof for certain purposes within
the meaning of the applicable regulations of the Securities and Exchange
Commission. If the total number of shares beneficially owned by (i) Mr. StephensonJohnson
included such shares held in trust for the Foundation, the percentage of
shares of common stock owned by Mr. Johnson would be 0.71%. Mr. Johnson has
advised Bancorp that he disclaims beneficial ownership of such shares of
Bancorp's common stock.
6
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows as of December 31, 1994, the number of shares of
common stock of Bancorp beneficially owned by all current named executive
officers of Bancorp, individually, and (ii)together will all current directors,
executive officers, nominees as a group. Chairman and Chief Executive Officer
Johnson and President Dahl are omitted from this table since such information is
provided for Mr. Johnson as a director continuing in office on page 5 and Mr.
Dahl as a nominee for director on page 3.
NUMBER OF SHARES
NAME, AND AGE OF CURRENT POSITION AND BUSINESS EXPERIENCE BENEFICIALLY OWNED
INDIVIDUAL DURING THE PAST FIVE YEARS (A)
- ----------------------------------------------- ------------------------------------------ ---------------------
Thomas J. Kappock, 50, Executive Vice President of Bancorp since 150,089(b)
April 1987 and Vice Chairman of the Bank
since December 1989.
Alton T. Kuioka, 47 Executive Vice President of Bancorp since 77,172(c)
October 1994 and Vice Chairman of the
Bank since June 1994; Executive Vice
President of the Bank from November 1991
to May 1994; Senior Vice President from
October 1988 to October 1991.
David A. Houle, 47 Senior Vice President, Treasurer and Chief 14,981(d)
Financial Officer of Bancorp since
December 1992 and Executive Vice
President and Chief Financial Officer of
the Bank since February 1994; Senior
Vice President and Investment Manager at
Comerica Incorporated from January 1985
to September 1992.
Directors, nominees and executive officers as a 1,000,848(e)(f)
group (15 persons)
- ---------
(a) Each of the above named executive officers beneficially owns less than 1% of
the outstanding shares of common stock of Bancorp.
(b) Includes 3,453 shares held in trust for Mr. Kappock under the Bank of Hawaii
Profit Sharing Plan, and 129,167 shares that Mr. Kappock has the right to
acquire within 60 days through the exercise of stock options.
(c) Includes 7,667 shares held in trust for Mr. Kuioka under the Bank of Hawaii
Profit Sharing Plan, and 55,387 shares that Mr. Kuioka has the right to
acquire within 60 days through the exercise of stock options.
(d) Includes 35 shares held in trust for Mr. Houle under the Bank of Hawaii
Profit Sharing Plan, and 11,250 shares that Mr. Houle has the right to
acquire within 60 days through the exercise of stock options.
(e) Excludes 48,262 shares owned by the Bancorp Hawaii Charitable Foundation
(the "Foundation"), of which Mr. Johnson is President, as mentioned in
footnote (11) on page 6. If the total number of shares beneficially owned by
the directors and executive officers as a group included such shares held in
trust for the Foundation, the percentagespercentage of shares of common stock owned by
Mr. Stephenson and the group would be 0.77%
and 2.41%, respectively. Mr. Stephenson has advised Bancorp that he
disclaims beneficial ownership of such shares of Bancorp's common stock.
(11)2.51%.
(f) Includes 369,777509,535 shares that may be acquired within 60 days through the
exercise of stock options, and 18,91532,306 shares held in trust under the Bank of
Hawaii Profit Sharing Plan pursuant to elections by
7
executive officers. If such shares are included, all directors and executive
officers of Bancorp as a group owned 2.30%2.39% of Bancorp's common stock on
December 31, 19931994 and no one director or executive officer owned more than
1% of such stock.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Bancorp's directors and executive officers and persons who own more than ten
percent of Bancorp's common stock to report their ownership and changes in their
ownership of Bancorp's common stock to the Securities and Exchange Commission
and the New York Stock Exchange. Specific due dates for these reports have been
established by the Securities and Exchange Commission and Bancorp is required to
report in this proxy statement any failure of its directors and executive (and
certain other) officers to file by these dates.
To Bancorp's knowledge, based solely on review of the copies of such reports
received by Bancorp and the written representations of its directors and
officers, Bancorp believes that all such filing requirements were satisfied by
its directors and officers except that the initial Form 3 report filed by
David A. Heenan for month-end April, upon being elected a director, failed to
include an aggregate total of 70 shares which were acquired in December 1992
and January 1993. The Form 4 to report the beneficial ownership of the
additional 70 shares was filed in June 1993.1994.
DUTIES AND COMPENSATION OF DIRECTORS
Bancorp's Board of Directors met a total of 8 times during 1993.1994. Each of the
directors attended 75% or more of the aggregate total number of meetings of the
Board of Directors and the total number of meetings held by the committees on
which he or she served in 1993.1994.
With the exception of Messrs. Stephenson andMr. Johnson, who areis not compensated for serving on the
Board of Directors, each director was paid an annual retainer of $8,000, plus
$750 for each regular Board meeting attended.
The Board of Directors has 3 committees--Nominating Committee,4 committees -- Audit Committee, Compensation and
CompensationManagement Development Committee, Executive Committee, and Nominating Committee.
Directors who are not employees of Bancorp or any of its subsidiaries serving as
members of the Audit Committee, Compensation Committee, and CompensationExecutive Committee
receive $600 for each meeting attended. The chairman of the Audit Committee also
receives an annual retainer of $2,500.
Bancorp maintains a Directors' Deferred Compensation Plan under which each
director may elect to defer all of his annual retainer and meeting fees or all
of his annual retainer. Under the Plan the rate of interest paid on the deferred
amounts is the average cost of time deposits of the prior year, compounded and
credited quarterly. The rate of interest paid on the deferred amounts for the
year 19931994 was 4.13%3.30%. Distribution of the deferred amounts will commence as of
the first day of the first calendar month after the participating director
ceases being a director of Bancorp. Distribution will be made in a lump sum or
in approximately equal annual installments over such period of years (not
exceeding 10 years) as the director elects.
5AUDIT COMMITTEE
The Audit Committee, composed of Stuart T. K. Ho (Chairman), Mary G. F.
Bitterman, and K. Tim Yee, met 3 times during 1994. The functions of this
Committee are to review Bancorp's filings with the Securities and Exchange
Commission, review tax matters of consequence to Bancorp and its subsidiaries,
review the internal financial controls of Bancorp and its subsidiaries, review
the scope of auditing activity performed by Bancorp's independent and internal
auditors, and report the results to the Board of Directors. The Committee also
annually reviews the audit services provided by the independent accountants and
makes recommendations to the Board of Directors with respect to the nomination
of independent accountants for Bancorp.
COMPENSATION COMMITTEE
The Compensation Committee, composed of Fred E. Trotter (Chairman), Stuart
T. K. Ho, and Charles R. Wichman, met 7 times during 1994. The functions of this
Committee are to review, approve and report to the Board of Directors, the
compensation arrangements and plans for senior management of Bancorp and its
subsidiaries. No member of the Compensation Committee may be an executive
officer of
8
Bancorp and no executive officer of Bancorp may be a member of the parallel
committee of a corporation of which any of Bancorp's outside directors is an
officer or director. No executive officer of Bancorp is a director of another
entity having an executive officer who is a member of the Compensation
Committee.
EXECUTIVE COMMITTEE
The Executive Committee, composed of H. Howard Stephenson (Chairman),
Lawrence M. Johnson, Stuart T. K. Ho, and Charles R. Wichman, and two other
non-employee Directors Thomas B. Hayward and Fred E. Trotter, who served for
six-month rotating terms, met one time during 1994. This Committee is authorized
to exercise certain powers of the Board of Directors, which are delegated by
resolution, during intervals between the meetings of the Board of Directors when
time is of the essence.
NOMINATING COMMITTEE
The Nominating Committee, composed of Messrs.Fred E. Trotter (Chairman), Peter D.
Baldwin, Hashimoto,Mary G. F. Bitterman, Thomas B. Hayward, David A. Heenan, Stuart T. K.
Ho, Manaut,Herbert M. Richards, Jr., Charles R. Wichman, and K. Tim Yee, met once
during 1993.
This1994. The functions of this Committee hasinclude the responsibilityauthority to consider
and recommend to the Board of recommendingDirectors nominees to fill Board vacancies. In
addition to the nomination procedure discussed on page 3, this Committee will
consider stockholders' recommendations by stockholders for nominees for election to the Board,
if such recommendations are received in writing, prior to the first day in
January preceding the next Annual Meeting, addressed to Bancorp's Nominating
Committee in care of Ruth E. Miyashiro, Vice President andthe Corporate Secretary, Bancorp Hawaii, Inc., 130 Merchant
Street, Honolulu, Hawaii 96813.
AUDIT COMMITTEE
The Audit Committee, composed of Messrs. Ho (Chairman), Hashimoto, and Yee,
met 4 times during 1993. This Committee has the responsibility of reviewing
Bancorp's filings with the Securities and Exchange Commission, reviewing tax
matters of consequence to Bancorp and its subsidiaries, reviewing the internal
financial controls of Bancorp and its subsidiaries, reviewing the scope of
auditing activity performed by Bancorp's independent and internal auditors, and
recommending the nomination of independent auditors for Bancorp.
COMPENSATION COMMITTEE
The Compensation Committee, composed of Messrs. Trotter (Chairman), Ho, and
Wichman, met 4 times during 1993. This Committee has the responsibility of
approving and reporting to the full Board of Directors the compensation
arrangements and plans for senior management of Bancorp and its subsidiaries.
The Report of the Compensation Committee, which begins on page 11, describes
the responsibilities of that committee, and discloses the bases for the
compensation of the Chief Executive Officer, including the factors and criteria
upon which that compensation was based; compensation policies applicable to
Bancorp's executive officers; and the specific relationship of corporate
performance to executive compensation for the last fiscal year.
69
EXECUTIVE COMPENSATION
The following tables summarizetable sets forth for the fiscal years ending December 31,
1994, 1993, and 1992, information with respect to compensation ofpaid by Bancorp
to the Chief Executive Officer, and the four other most highly compensated executive
officers, and two individuals who retired as executive officers (the "named
executive officers") of Bancorp for the fiscal year 1993:during 1994:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------- ----------------------------PAYOUTS
ANNUAL COMPENSATION AWARDS PAYOUTS
-----------------------------
- ----------------------------------------------------------------------------------- ----------- LONG TERM
OTHER ANNUAL LONG TERMOPTIONS/ INCENTIVE ALL OTHER
BONUS COMPENSATION SARS PAYOUTS COMPENSATION
NAME AND COMPEN- OPTIONS/ INCENTIVE COMPEN-
PRINCIPAL BONUS SATION SARS PAYOUTS SATION
POSITION (1) YEAR SALARY($SALARY ($) ($)[1](2) ($)[2](3) (#)[3] ($)[4](4) ($)[5] ($)(6)
- ------------------------------- --------- --------------- --------- -------- ------- -------- --------- ------------------------ ----------- ----------- -------------
H. Howard Stephenson 1993 $591,865 $344,324 -- 0 $454,127 $ 55,830
Chmn. of Bd. & CEO of
Bancorp & Bank 1992 569,100 421,703 -- 17,500 368,223 140,721
1991 542,000 348,777 -- 15,000 323,606 23,162
Lawrence M. Johnson Chairman of 1994 $ 485,233 $ 145,000 -- 12,500 $ 0 $ 32,533
the Board and Chief 1993 411,685 191,603 -- 20,000 276,394 38,834
Pres. & Dir. of Bancorp
& BankExecutive Officer 1992 395,850 234,660 -- 10,000 219,970 77,954
1991 377,000 194,080H. Howard Stephenson .......... 1994 402,948 75,000 -- 31,500(7) 0 27,030
Retired Chairman of the Board 1993 591,865 344,324 -- 17,500 454,127 55,830
and Chief Executive Officer 1992 569,100 421,703 -- 15,000 368,223 140,721
Richard J. Dahl ............... 1994 306,112 100,000 -- 10,000 194,800 23,162
Richard J. Dahl0 20,555
President 1993 251,160 116,890 -- 12,500 168,621 23,691
Exec. Vice Pres. of
Bancorp & Vice 1992 241,500 143,161 -- 7,500 134,300 26,612
Chmn. of Bank 1991 230,000 118,404Thomas J. Kappock ............. 1994 264,447 80,000 -- 7,500 120,000 23,162
Thomas J. Kappock0 17,769
Executive Vice President 1993 251,160 116,890 -- 12,500 168,621 23,691
Exec. Vice Pres. of
Bancorp & Vice 1992 241,500 143,161 -- 7,500 134,300 26,612
Chmn. of Bank 1991 230,000 118,404Alton T. Kuioka ............... 1994 172,287 60,000 -- 7,500 120,000 23,1620 11,606
Executive Vice President
John K. Tsui .................. 1994 162,349 0 -- 0 0 10,941
Retired Executive Vice 1993 262,080 121,972 -- 12,500 175,952 24,721
Exec. Vice Pres. of
Bancorp & VicePresident 1992 252,000 149,386 -- 7,500 140,400 28,805
Chmn. of Bank 1991 240,000 123,552David A. Houle ................ 1994 149,420 40,000 -- 7,500 126,000 23,1627,500(7) 0 10,075
Senior Vice President, 1993 125,004 43,633 -- 2,500 0 986
Treasurer and Chief Financial 1992 10,417 0 -- 2,500 0 0
Officer
- --------
[1]---------
(1) Mr. Stephenson, Chairman of the Board and Chief Executive Officer of Bancorp
since March 1989, retired effective August 1, 1994. Mr. Johnson, President
of Bancorp since March 1989, became Chairman of the Board and Chief
Executive Officer of Bancorp effective August 1, 1994. Mr. Dahl, Executive
Vice President of Bancorp since April 1987, became President of Bancorp
effective August 1, 1994. Mr. Kuioka, Vice Chairman of the Bank since June
1994, became an executive officer of Bancorp on October 26, 1994.
Accordingly, information for years prior to 1994 is not presented. Mr. Tsui,
an executive officer of Bancorp, retired effective June 29, 1994. Mr. Houle
has been an executive officer of Bancorp since he joined Bancorp in December
1992.
(2) "Bonus" consists of cash awards under Bancorp's Executive Officer One-Year
Incentive Plan.Plan for the years 1992 and 1993. No cash awards were made to any
executive officer under the Executive Officer One-Year Incentive Plan for
1994 as performance goals were not met. The material terms of this plan are
described in the Compensation Committee's Report in the section entitled
"One-Year"Executive Officer One-Year Incentive Plan for 1993"1994" on page 13.
[2] Thepages 16 and 17. For
the year 1994, a special cash bonus, as described on pages 17 and 18, that
was awarded to all but one of the named executive officers, of Bancorp receive certain perquisites, such
as participationis included in
group medical, dental, disability, and life insurance
programs that are available to all employees on a nondiscriminatory basis.this column.
(3) Perquisites did not exceed $50,000 or 10% of the total of annual salariessalary and
bonusesbonus reported for any suchnamed executive officer for 1993.
[3]1994.
10
(4) Each stock option was in tandem with a stock appreciation right ("SAR"). A
SAR entitles the optionee, in lieu of exercising the stock option, to
receive cash equal to the excess of the value of one share over the option
price times the number of shares as to which the option is exercised. There
were no restricted stock awards to the named executive officers of Bancorp
for the years 1991, 1992, 1993, or 1993.1994. All stock option awards were granted with
an exercise price that is equal to the fair market value of Bancorp's common
stock on the date of grant. The number and exercise price of the stock
options awarded to the named executive officers were not adjusted or amended
for the years 1991, 1992, 1993 and 1993.
[4]1994, except for the adjustment for the 50%
stock dividend paid on March 15, 1994, as required by the Stock Option
Plans.
(5) Represents amounts paid under Bancorp's Sustained Profit Growth PlanPlan. There
were no amounts paid under this plan for the three-year incentive period
from January 1, 19911992 through December 31, 1993. The material terms of this plan are described in the Compensation
Committee's Report in the1994. See section entitled "Sustained
Profit Growth Plan" on page 14.
[5]17.
(6) This column includes allocations for 19931994 under the Bank of Hawaii Profit
Sharing Plan (the "Profit Sharing Plan") and the Bank of Hawaii Profit
Sharing Excess Plan (the "Excess Profit Sharing Plan"). The Profit Sharing
Plan is a tax-qualified, defined contribution plan with features meeting the
requirements of Section 401(k) of the Internal Revenue Code. The Internal
Revenue Code limits the annual amounts that any participant may be allocated
under the Profit Sharing Plan. The Excess Profit Sharing Plan, which was
adopted effective as of January 1, 1992, establishes an account on the books
of 7
Bancorp or a subsidiary to which is credited the amount of any reduction
in a participant's allocation under the Profit Sharing Plan. The amounts so
allocated under the Excess Profit Sharing Plan will be paid from the general
assets of Bancorp or a subsidiary at the same time the participant receives
a distribution of his accounts in the Profit Sharing Plan.
(7) Stock options granted prior to March 16, 1994 have been adjusted for the 50%
stock dividend paid by Bancorp.
For 1993 Mr. Stephenson1994 the named executive officers received an allocation of $22,372the following allocations
under the Profit Sharing Plan and $33,458 under the Excess Profit Sharing Plan. Mr. Johnson
received an allocation of $22,372 under the Profit Sharing Plan for 1993 and
$16,462 under the Excess Profit Sharing Plan. Mr. Dahl received an
allocation of $22,372 under the Profit Sharing Plan for 1993 and $1,319
under the Excess Profit Sharing Plan. Mr. Kappock received an allocation of
$22,372 under the Profit Sharing Plan for 1993 and $1,319 under the Excess
Profit Sharing Plan. Mr. Tsui received an allocation of $22,372 under the
Profit Sharing Plan for 1993 and $2,349 under the Excess Profit Sharing
Plan.Plan:
PROFIT SHARING EXCESS PROFIT
PLAN SHARING
NAME ALLOCATION PLAN ALLOCATION
- -------------------------------------------------------- -------------- --------------------
Lawrence M. Johnson..................................... $ 10,116 $ 22,417
H. Howard Stephenson.................................... 10,116 16,914
Richard J. Dahl......................................... 10,116 10,439
Thomas J. Kappock....................................... 10,116 7,653
Alton T. Kuioka......................................... 10,116 1,490
John K. Tsui............................................ 10,116 825
David A. Houle.......................................... 10,075 0
11
STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------------ POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITES OPTIONS/SARS STOCK PRICE APPRECIATION
FOR
INDIVIDUAL GRANTS OPTION TERM[1]
- ---------------------------------------------------------------------- -----------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO EXERCISE OR BASEFOR OPTION TERM (1)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED (#) FISCAL YEAR $/SHARE DATE 5%($) 10%($)
----- ----------------------------- ------------- --------------- ----------- ------------ ------------ -------- ---------- ---------- ------------
Lawrence M. Johnson.......... 12,500(2) 8.0%/16.1% $ 25.75 12-13-2004 $ 1,032,000 $ 2,424,000
H. Howard Stephenson....Stephenson......... 31,500(3) 20.3%/40.5% 30.00 07-31-1999 758,000 1,621,000
Richard J. Dahl.............. 10,000(2) 6.4%/12.9% 25.75 12-13-2004 826,000 1,939,000
Thomas J. Kappock............ 7,500(2) 4.8%/ 9.6% 25.75 12-13-2004 619,000 1,454,000
Alton T. Kuioka.............. 7,500(2) 4.8%/ 9.6% 25.75 12-13-2004 619,000 1,454,000
John K. Tsui................. 0 -- -- -- 0 0
$ 0 -- $ 0 $ 0
Lawrence M. Johnson..... 20,000[2] 7.4%David A. Houle............... 3,750 (4) 4.8%/32.0% 42.25 11-21-2003 531,000 1,347,000
Richard J. Dahl......... 12,500[2] 4.65%/20.0% 42.25 11-21-2003 332,000 842,000
Thomas J. Kappock....... 12,500[2] 4.65%/20.0% 42.25 11-21-2003 332,000 842,000
John K. Tsui............ 12,500[2] 4.65%/20.0% 42.25 11-21-2003 332,000 842,000 9.6% 30.25 2-17-2004 673,000 1,581,000
3,750 (2) 25.75 12-13-2004
- --------
[1]---------
(1) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises or stock holdings are dependent on
the future performance of the stock and overall market conditions. There can
be no assurance that the amounts reflected in this table will be achieved.
[2](2) Stock options in tandem with SARs granted on November 22, 1993December 14, 1994 become
exercisable on November 22, 1994December 13, 1995 for a nine yearnine-year period ending November 21,
2003.December 13,
2004. The exercise or base price of the stock options and tandem SARs was
the fair market value of Bancorp's common stock on date of grant. 8
All such
options and tandem SARs would become immediately exercisable upon a change
in control of Bancorp.
(3) Mr. Stephenson was granted 21,000 stock options in tandem with SARs on
January 27, 1994, which became exercisable on July 27, 1994. The number of
stock options in tandem with SARs granted and exercise price (or base price)
per share have been adjusted for the 50% stock dividend paid by Bancorp on
March 15, 1994.
(4) Mr. Houle was granted 2,500 stock options in tandem with SARs on February
18, 1994, which became exercisable on February 17, 1995. The number of stock
options in tandem with SARs and exercise price (or base price) per share
have been adjusted for the 50% stock dividend paid by Bancorp on March 15,
1994.
The stock options and stock appreciation rights exercised by the Executivenamed
executive officers during fiscal 1993,1994, as well as the number and total value of
unexercised in-the-money options as of December 31, 1993,1994, are shown in the
following table:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF NUMBER OF UNEXERCISED, UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONSIN-
OPTIONS/SARS AT FISCAL YEAR-THE-MONEY OPTIONS/SARS AT
SHARES ACQUIRED VALUE YEAR-END (#) FISCAL YEAR-
END(#) ENDYEAR-END ($)[2]
------------------------- -------------------------
SHARES VALUE
ACQUIRED(3)
ON EXERCISE REALIZED NAMED EXERCISE(#)-------------------------- --------------------------
NAME (#)(1) ($)[1](2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----- ----------- --------- ----------------------------- --------------- ---------- ----------- ------------- ----------- -------------
Lawrence M. Johnson.......... 54,776 $ 981,844 122,682 12,500 $ 581,325 $ 0
H. Howard Stephenson.... 6,357 $162,473 65,317 -0- $ 371,267 $ -0-
Lawrence M. Johnson..... 12,386 481,148 101,783 23,334 1,653,113 -0-Stephenson......... 16,896 232,086 112,579 0 146,172 0
Richard J. Dahl......... 2,000 197,886 87,827 15,000 1,041,432 -0-Dahl.............. 16,475 548,084 98,045 10,000 433,874 0
Thomas J. Kappock....... 4,250 128,072 91,658 15,000 1,154,45 -0-Kappock............ 8,319 161,258 129,167 7,500 833,154 0
Alton T. Kuioka.............. 7,425 130,840 55,387 7,500 292,419 0
John K. Tsui............ -0- 132,987 48,908 15,000 262,639 -0-Tsui................. 13,205 405,935 12,072 0 0 0
David A. Houle............... 0 0 7,500 7,500 0 0
- --------
[1]---------
(1) Shares adjusted for 50% stock dividend paid by Bancorp on March 15, 1994.
(2) Includes exercise of stock appreciation rights.
[2](3) The fair market value of Bancorp's stock at fiscal year-end was $41.00.$25.375.
12
LONG-TERM INCENTIVE PLANS--AWARDSPLANS -- AWARDS IN LAST FISCAL YEAR[1]YEAR(1)
ESTIMATED FUTURE PAYOUT UNDER
TARGET PAYOUT LONG-TERM INCENTIVE PLAN
--------------------------------
TARGET
PAYOUT
AS A % OF PERFORMANCE
FY 94-96PERFORMANCE OR OTHER -----------------------------------
95-97 AVERAGE PERIOD UNTIL ANNUAL MATURATION OR THRESHOLD TARGET MAXIMUM
NAME ANNUAL SALARY OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- --------- -------------- --------- -------- --------- -------------------------------- --------------- -------------------------- ----------- ---------- ----------
H. Howard Stephenson.... 8%Lawrence M. Johnson............. 40% 3 years ending 12-31-9612-31-97 $ 6,000[2]209 $ 46,000[2]209,000 $ 92,000[2]
Lawrence M. Johnson.....417,000
Richard J. Dahl................. 35% 3 years ending 12-31-96 19,000 151,000 303,000
Richard12-31-97 15 115,000 230,000
Thomas J. Dahl.........Kappock............... 35% 3 years ending 12-31-96 12,000 92,000 185,000
Thomas J. Kappock.......12-31-97 100 100,000 199,000
Alton T. Kuioka................. 35% 3 years ending 12-31-96 12,000 92,000 185,000
John K. Tsui............ 35%12-31-97 65 65,000 130,000
David A. Houle.................. 30% 3 years ending 12-31-96 12,000 92,000 185,00012-31-97 50 48,000 98,000
- --------
[1]---------
(1) Represents contingent awards under Bancorp's Sustained Profit Growth Plan
for the three-year incentive period from January 1, 19941995 through December
31, 1996.1997. Under this Plan each executive receivedreceives a contingent award of a
specified percentage of his average annual base salary for the three-year
period. The maximum cash award payable under the plan is two times the
contingent award. The amount of the cash awards will depend upon Bancorp's
performance as measured by the growth in net income per employee and
earnings per share growth. Maximum payout, which is two times the contingent
award, can occur only if total growth in net income per employee during the
three-year period is 26% or more and total growth in earnings per share is
28% or more. No payments will be made if total growth in net income per
employee during such period is 8% or less and total growth in earnings is
12% or less. If growth in net income per employee during such period is 20%
and growth in earnings is 20%, then one 9
times the contingent awards would be
payable ("Target", above). After the earnings growth rate and net income per
employee growth have been ascertained, the Chairman and the President of
Bancorp will prepare recommendations for all participants (excluding
themselves) for the Compensation Committee. The Compensation Committee will
then make the final determination of cash awards.
[2] Amounts reflect the prorated estimated future payout to Mr. Stephenson who
will retire as Chairman and Chief Executive Officer of Bancorp effective
August 1, 1994.
PENSION PLAN TABLE
AVERAGE ANNUAL ESTIMATED MAXIMUM ANNUAL RETIREMENT
AVERAGE ANNUALSALARY IN BENEFIT BASED UPON YEARS OF SERVICE
SALARY IN CONSECUTIVE ------------------------------------------------------------------------------------------------------
HIGHEST PAID YEARS 15 20 25 30 35*
--------------------- -------- -------- -------- -------- --------- -------------------- ---------- ---------- ---------- ---------- ----------
$ 75,000......................75,000 $ 20,43520,342 $ 27,24727,122 $ 34,05933,903 $ 40,87140,684 $ 47,683
100,000...................... 27,935 37,247 46,559 55,871 65,183
125,000...................... 35,435 47,247 59,059 70,871 82,683
150,000...................... 42,935 57,247 71,559 85,871 100,183
200,000...................... 57,935 77,247 96,559 115,871 135,183
250,000...................... 72,935 97,247 121,559 145,871 170,183
300,000...................... 87,935 117,247 146,559 175,871 205,183
350,000...................... 102,935 137,247 171,559 205,871 240,183
400,000...................... 117,935 157,247 196,559 235,871 275,183
450,000...................... 132,935 177,247 221,559 265,871 310,183
500,000...................... 147,935 197,247 246,559 295,871 345,183
550,000...................... 162,935 217,247 271,559 325,871 380,183
600,000...................... 177,935 237,247 296,559 355,871 415,183
650,000...................... 192,935 257,247 321,559 385,871 450,183
700,000...................... 207,935 277,247 346,559 415,871 485,18347,464
100,000 27,842 37,122 46,403 55,684 64,964
125,000 35,342 47,122 58,903 70,684 82,464
150,000 42,842 57,122 71,403 85,684 99,964
200,000 57,842 77,122 96,403 115,684 134,964
250,000 72,842 97,122 121,403 145,684 169,964
300,000 87,842 117,122 146,403 175,684 204,964
350,000 102,842 137,122 171,403 205,684 239,964
400,000 117,842 157,122 196,403 235,684 274,964
450,000 132,842 177,122 221,403 265,684 309,964
500,000 147,842 197,122 246,403 295,684 344,964
550,000 162,842 217,122 271,403 325,684 379,964
600,000 177,842 237,122 296,403 355,684 414,964
650,000 192,842 257,122 321,403 385,684 449,964
700,000 207,842 277,122 346,403 415,684 484,964
- -----------------
*Applies only to individuals hired before November 1, 1969.
The Employees' Retirement Plan of Bank of Hawaii (the "Retirement Plan")
provides retirement benefits for employees of participating employers who have
completed certain age and service requirements. "Participating employers" means
the Bank, Hawaiian Trust Company, Limited, Building Services, Inc., First
Federal Savings and Loan Association of America, First Savings and Loan
Association of America, First
13
National Bank of Arizona, and any associated company that havehas adopted the
Retirement Plan. Although retirement generally occurs at age 65, employees may
retire at or after age 62 with unreduced benefits. The amount of benefits
payable to employees who retire prior to age 62 is subject to specified
adjustments. Benefits paid under the Retirement Plan are primarily determined by
(1) the number of months a participant has worked, and (2) a participant's
average annual salary during the 60 consecutive months in his or her last 120
months of service affording the highest average, excluding overtime, premium
pay, incentive plan payouts, or discretionary bonuses.
The normal retirement benefit shown above assumes payment in the form of a
single life annuity commencing at age 65, and is not subject to any deduction
for Social Security or other offset amounts. The Internal Revenue Code generally
limits the maximum annual benefit which can be paid under the Retirement Plan to
the lesser of $118,800$120,000 or 100% of the participant's average compensation for the
highest three consecutive calendar years during which he or she was a
participant. Accordingly, if at retirement the annual benefit of any participant
should exceed this limit, the individual's benefit from the Retirement Plan will
be reduced to the permissible maximum. The amount of this reduction will be paid
to the participant from an unfunded excess benefit plan designed for this
purpose.
10
The credited years of service and the 19931994 compensation covered by the
Retirement Plan of the individuals named in the Summary Compensation Table on
page 7 of this Proxy Statementexecutive officers, except Messrs. Stephenson and
Tsui who retired, are as follows: Mr. Stephenson, 34Johnson, 31 years and $591,865;$485,233; Mr. Dahl,
12 years and $306,112; Mr. Kappock 22 years and $264,447; Mr. Kuioka, 25 years
and $172,287; and Mr. Houle, 1 year and $149,420.
On January 25, 1995, Bancorp's Board of Directors adopted a voluntary early
retirement program effective January 3, 1995. Under the program, five years are
added to both an employee's age and years of service for purposes of calculating
benefits under the Retirement Plan. An electing employee will also receive an
additional retirement payment of $250 per month until age 65. Messrs. Johnson,
Kappock and Kuioka are eligible to participate in the program and, if they elect
to do so, their credited years of service would increase to 36 years, 27 years
and 30 years, respectively.
On January 25, 1995, Bancorp's Board of Directors also approved
comprehensive revisions to Bancorp's retirement and $411,685; Mr. Dahl, 11 yearsprofit sharing benefits
which will take effect on January 1, 1996. The revisions include the freezing
and $251,160;
Mr. Kappock, 21 yearsvesting of the Retirement Plan as of December 31, 1995; the implementation
of a defined contribution retirement plan under which 4% of an employee's total
eligible compensation will be contributed to an individual retirement account
annually; expanding the compensation basis upon which contributions to the
profit sharing plan are calculated, and $251,160; and Mr. Tsui, 8 years and $262,080.the contribution of $1.25 for each $1
(up to 2% of total eligible compensation) an employee contributes to the profit
sharing member savings plan. The effect of these changes on the compensation of
the named executive officers will be reflected in the proxy statements for
future Bancorp annual meetings of stockholders.
CHANGE-IN-CONTROL ARRANGEMENTS
Bancorp's Key Executive Severance Plan provides for severance benefits to a
participant under certain circumstances if the participant's employmentthere is terminated within 2 years of a change of control.control at
Bancorp. A "change of control" will be deemed to have occurred if (i) any person
or group becomes the beneficial owner of 25% or more of the total number of
voting securities of Bancorp, (ii) the persons who were directors of Bancorp
before a cash tender or exchange offer, merger or other business combination,
sale of assets, or contested election cease to constitute a majority of the
Board of Directors of Bancorp or any successor to Bancorp, or (iii) a majority
of the Board of Directors determines in good faith that a change of control is
imminent. TheMessrs. Johnson, Dahl, Kappock, Kuioka and Houle are covered by the
Key Executive Severance Plan. For Messrs. Johnson, Dahl, Kappock and Kuioka,
severance benefits are payable if their employment is terminated within 2 years
of a change of control. Such severance benefits include (i) payment of a lump
sum amount equal to 3 years of compensation (consisting of salary, bonuses, and
incentive compensation); (ii) special supplemental retirement payments equal to
the retirement benefits the participant would have received had he or she
continued in the employ of Bancorp and the Bank for 3 years following his or her
termination of employment (or until his or her normal retirement date, if
earlier); and (iii) continuation of all other benefits he or she would have
received had he or she continued in the employ of Bancorp and the Bank for 3
years following his or her
14
termination of employment (or until his or her normal retirement date, if
earlier), such as hospital, medical-surgical, major medical, and group life
insurance. Messrs. Stephenson, Johnson, Dahl, Kappock,For Mr. Houle, severance benefits are payable if Bancorp terminates
his employment within 2 years of a change of control and Tsuiinclude the same
benefits listed above except that, in each case, the benefits are covered by
the Key Executive Severance Plan.for a 2 year
period.
REPORT OF THE COMPENSATION COMMITTEE
The Committee, composed entirely of independent nonemployee directors, sets
and administers the policies which govern Bancorp's executive compensation
program,programs, and various incentive and stock option programs. The Committee reviews
compensation levels of members of management, evaluates the performance of
management, considers management succession and related matters. All decisions
relating to the compensation of Bancorp's officers are reviewed by the full
Board, except for decisions about awards under Bancorp's stock option plans,
which must be made solely by the Committee in order for the grants under such
plans to satisfy Securities Exchange Act Rule 16b-3.
Pursuant to recently
adopted rules designed to enhance disclosure of companies' policies toward
executive compensation, set forth below is a report addressing Bancorp's
compensation policies as they affect all executive officers in general, and
specifically as they affect Mr. Stephenson, the Chairman and Chief Executive
Officer; and Messrs. Johnson, Dahl, Kappock, and Tsui, the four executive
officers other than Mr. Stephenson who, for 1993, were Bancorp's most highly
paid executives (collectively with Mr. Stephenson, the "Executive Officers").
The policies and underlying philosophy governing Bancorp's executive
compensation program, which are endorsed by the Committee and the Board of
Directors, are designed to (i) maintain a compensation program that is equitable
in a competitive marketplace, (ii) provide opportunities that integrate pay with
Bancorp's annual and long-term performance goals, (iii) encourage achievement of
strategic objectives and creation of stockholder value, (iv) recognize and
reward individual initiative and achievements, (v) maintain an appropriate
balance between base salary and (iv)short and long-term incentive opportunity, and
(vi) allow Bancorp to compete for, retain, and motivate talented executives who
are critical to Bancorp's success.
Executive compensation is targeted at levels that the Committee believes to
be consistent with others in Bancorp's industry, with the Executive Officers'executive officers'
compensation weighted toward programs contingent upon Bancorp's level of annual
and long-term performance. As a result, the Executive Officers'executive officers' actual
compensation levels in any particular year may be above or below those of
Bancorp's competitors, depending upon Bancorp's performance. The following are
Bancorp's competitive targets:
In general, Bancorp will provide total compensation that is at the
50th percentile (median) among bankbanks of comparable size and performance.
11
Bancorp will provide 75th percentile awards if Bancorp's performance
significantly exceeds expectations.
Goals for specific components are as follows:
Base salaries for executives generally are targeted at the 50th
percentile of their comparator group.
The short-term (one-year) incentive plan will provide 50th
percentile awards if annual goals are achieved. The plan will pay higher
awards if annual performance goals are exceeded.
Under long-term incentive plans, Bancorp will provide to
participants a consistent 50th percentile opportunity from year-to-year,
with possiblitiespossibilities of earning substantially higher levels if long-term
performance goals are exceeded.
For competitive compensation purposes, Bancorp uses a group of 13 Bank
Corporations chosen because they generally are more comparable to Bancorp in terms of
overall size, business mix and geographic scope. This group of 13 banks
differs from the group of banks used in the line of business index for the
performance graph. The organizations used in the performance graph arescope than the 27 bank corporations of
the Montgomery Securities Regional Bank Group. Overall,Group used in the 13 Bank Corporations used for compensation comparisons better reflect
Bancorp's size, business mix and geographic scope than the full Montgomery
Securities Regional Bank Group.performance graph.
Eight of the thirteen Bank Corporations are in the Montgomery Securities
Regional Bank Group.
Bancorp has retainedretains the services of a nationally recognized consulting firm to
assist the Committee in connection with the performance of its various duties since 1982.duties.
The consulting firm provides advice to the Committee with respect to executive
compensation programs for officers of Bancorp. In doing so, Bancorp is able to
take into account how the compensation paid to its executives compares to
compensation paid by the 13 Bank Corporations, as well as how Bancorp's
performance compares to such companies. Bancorp conducts an extensive executive
compensation survey on a biannual basis. The consultingconsultant firm has reviewed Bancorp's
15
compensation program for the five highest paidnamed executive officers forin 1993 and has reported to Bancorp that,
in its opinion, the compensation of all such officers fallsfell within the range of
competitive practices in view of Bancorp's consolidated performance and the
contribution of those officers to that performance.
In 1993, for the named Executive Officers, base salary
relative to the 13 bank comparator group was approximately at the 60th
percentile. Competitive data from the 13 comparator banks is not yet available
to allow precise comparison of either short or long-term incentive awards for
1993.
RELATIONSHIP OF PERFORMANCE UNDERTO COMPENSATION PLANS
Compensation paid the Executive Officersnamed executive officers in 1993,1994, as reflected in the
Summary Compensation Table on page 7,10, consisted of the following elements: base
salary, profit sharing, One-Year Incentive Plan cash award for 1993, and cash awards
earned under Bancorp's Sustained Profit Growth Plan for the 1991 through 1993
performance cycle.a special bonus. In addition, as indicated in the
Summary Compensation Table and the table entitled "Stock Option/SAR Grants in
Last Fiscal Year" on page 8,12, in 19931994 the Committee awarded stock options under
the Bancorp Hawaii, Inc. Stock Option PlanPlans of 1988.
The Committee's emphasis on tying pay to annual1988 and long-term performance
criteria is reflected in the compensation paid to Executive Officers for 1993.
Approximately fifty percent of the amount paid to Executive Officers for 1993
arose from performance based compensation arrangements; and approximately
thirty-two percent arose from arrangements tied to Bancorp's performance over a
three-year period.1994.
BASE SALARIES
Base salaries for Executive Officersexecutive officers are determined by evaluating the
responsibilities of the position held, the experience of the individual, the
competitive marketplace, and the individual's performance of his
responsibilities, with greatest emphasis on individual performance and the
competitive marketplace. Adjustments to salary also reflect new responsibilities
assigned or assumed by the individual. In setting salaries, the focus is
generally on median competitive data. However, also taken into account are key
differences in responsibilities between the executives of Bancorp and those
found at other banks when using competitive market data in the salary process.
12
The largest salary adjustment among the top five named executive officers during the
year 1994 was 4%., except for the increases given Messrs. Johnson and Dahl due to
their promotions effective August 1, 1994. Salary adjustments reflect the
criteria that are described above, namely competitive information on salary
increases, and the overall economic environment. The other factors considered
were position responsibilities and individual performance. There is no specific
weighting given to the factors outlined above.
EXECUTIVE OFFICER ONE-YEAR INCENTIVE PLAN FOR 1993
The awards under Bancorp's1994
In 1994, the stockholders of Bancorp approved the Bancorp Executive Officer
One-Year Incentive Plan (the "Incentive Plan"). The plan's stated purpose is to
(i) motivate special achievement by eligible employees upon whose judgment,
initiative and efforts Bancorp is largely dependent for the successful conduct
of its Executive Officers reportedbusiness through a compensation program emphasizing performance
objectives; (ii) supplement other compensation plans; and (iii) assist Bancorp
in retaining and attracting such employees. Under the Incentive Plan, the
Committee establishes, before the beginning of the year, performance objectives
applicable to annual award payments and the amounts of such awards. Each
executive officer receives a contingent incentive opportunity of a specified
percentage of his or her annual base salary. These contingent award
opportunities ranged from 30% to 50% of base salary. For 1994, all of the
current named executive officers of Bancorp participated in the "Bonus" columnIncentive Plan.
Late in 1993, performance goals were established for each participating
executive. The goals took into account, depending on the responsibilities of the
Summary
Compensation Table on page 7 were determined by a two-step process that
considered bothindividual, one or more of the following financial performance measures of
Bancorp as a whole during the year and the individualexecutive's business unit (specifically, achievement of
pre-established performance goals); contribution of each Executive Officer. The first step established athe relevant business unit
to the implementation of Bancorp's strategic plan; and the achievement by the
executive's business unit of non-financial goals, such as customer satisfaction.
A financial performance factor that was determined by Bancorp's (i) return on
average equity ("ROAE") and (ii) earnings growth.growth, weighted equally, was
established. The maximum financial performance factor of 1.42.0 would be attained
if the earnings growth was 12.0%8.0% or more and ROAE was 18%16% or more. For purposes
of the Incentive Plan, "ROAE" is defined as Bancorp's net income for 19931994
divided by Bancorp's average total equity (as reported in its annual report to
stockholders) for 1993,1994, and "earnings growth" is defined as the percentage
growth in Bancorp's fully-
dilutedfully-diluted earnings per share (subject to certain
adjustments such as unusual gains or loss transactions), comparing 19931994 with
1992. After this performance
factor was determined, a second step evaluated the individual participant's job
performance against his responsibilities and the economic and other
circumstances with which he had to cope during the year. An individual
performance factor ranging from 0 to 1.4 was assigned. These two factors were
multiplied by each other by the contingent award and by base salary to
determine the award payable, if any.1993. Bancorp's performance for purposes of compensation decisions was measured
under the Incentive Plan against ROAE and earnings growth goals which were
established prior to the start of the fiscal year and reviewed and approved by
the Committee.
The Committee regards total shareholder return as the key measure of
financial success. "Total shareholder return" consists of dividends paid and
share price appreciation. The Committee believes that some of the most
important factors driving share price appreciation are the general state of the
stock market, the worldwide and national economic environment and investor
sentiment regarding the financial services industry in general and regional
banks in particular. None of these factors are within the control of Bancorp
management. However, of those factors within management's control, earnings per
share is regarded by the Committee as an effective factor because of the
emphasis within the stock markets on price/earnings multiples. Over the long-
term, the expectation is that growth in earnings per share will be roughly
matched by growth in share prices, given a stable price-earnings multiple.
Also, given the expectation that Bancorp's dividend tends to remain at a level
of 25%-35% of earnings, growth in dividends per share should, over the long
term, mirror earnings per share growth.
Of course, movements in the other factors cited above (overall stock market
direction, economic environment, etc.) could overwhelm the effects of earnings
per share growth. However, over the long term, the Committee believes that
earnings per share growth is the single factor (within management's control)
most likely to influence total shareholder return.16
The Committee regards ROAE as a very good measure of how Bancorp's profit
compares to returns available to shareholders in the overall investment
marketplace. This measure is not unique to banks, but is a common measure of
investment return. Also, the measure of ROAE ties in to total shareholder value
in that it is the percentage growth rate which should roughly be reflected in
dividends growth and share price growth, as discussed above.
UnderBancorp did not meet its performance goals under the Incentive Plan, each Executive Officer received a contingentPlan.
Accordingly no incentive award of a specified percentage of his annual base salary (Mr.
Stephenson--50%, Messrs. Johnson, Dahl, Kappock, and Tsui--40%). The total
awardspayments were based on a financial performance factor for the year of 0.895. This
performance factor was then adjusted for individual performance in each case,
resulting in awards that, on average, were 97.5% of contingent cash awards. The
maximum bonus payablemade to any participantexecutive officer with
respect to these goals under this plan is 200% of the contingent award.
13
Incentive Plan.
SUSTAINED PROFIT GROWTH PLAN
In 1994, the stockholders of Bancorp approved the Bancorp Sustained Profit
Growth Plan (the "Growth Plan"). The Growth Plan's stated purpose is to advance
the interests of Bancorp by (i) motivating special achievement by eligible
employees upon whose judgment, initiative and efforts Bancorp is largely
dependent for the successful conduct of its business through a compensation
program emphasizing long-term performance incentives; (ii) supplementing other
compensation plans; and (iii) assisting Bancorp in retaining and attracting such
employees. The Committee determineshas the discretion to determine which, and to what
extent, selected senior officers will participate in the Sustained Profit Growth Plan (the "Growth Plan") on the
basis of their ability to make substantial contributions to the long-term
success, growth, and profitability of Bancorp. Under this planthe Growth Plan, each
executive
receivedselected senior officer receives a contingent award opportunity of a specified
percentage of his or her average annual base salary for the three-year period
(Mr. Stephenson--40%, Messrs. Johnson,
Dahl, Kappock, and Tsui--35%)ranging from 30% to 40%.
The maximum cash award payable under the plan
was two times the contingent award. Bancorp's performance was measured by the
growth inGrowth Plan measures net income per employee and growth in earnings per
share, weighted equallyequally.
Bancorp did not meet its performance goals for the 1992 to 1994 cycle.
Accordingly, no long-term incentive payments were made to any executive officer
with respect to such cycle.
SPECIAL BONUS
Bancorp's executive compensation program has certain objectives which the
Committee determined were not met in determining awards1994. These are: (i) maintaining a fair
compensation system in a competitive market place; (ii) recognizing and
rewarding individual initiatives and achievements; and (iii) retaining and
motivating talented executives who are critical to Bancorp's success. The
failure to meet these objectives was the result of the fact that neither the
Incentive Plan nor the Growth Plan compensate for these factors in a year in
which the objective results are not attained in large part because of reasons
beyond the control of Bancorp management; in this case a slow Hawaii economy
coupled with a fast rise in nationwide interest rates.
The Committee's consultants have recommended that the Committee restructure
both the Incentive Plan and the Growth Plan to meet the desired objectives in
more diverse economic environments and the Committee intends to undertake that
restructuring in 1995. In the interim the Committee's consultants have
recommended and the Committee has determined that a bonus should be paid to key
management personnel of Bancorp for performance in 1994 even though no payments
were earned under either the Incentive Plan or the Growth Plan. The payout underCommittee
reviewed the 1991--1993 Growth Plan was basedperformance of the named executive officers and noted significant
performance objectives that were accomplished in 1994 by the named executive
officers. These included the following:
- In 1994, Bancorp experienced several changes in its executive ranks, with
the retirement of two named executive officers of Bancorp and the
departure of two executive vice presidents of the Bank. The named
executive officers identified key individuals and reallocated
responsibilities without adverse impact to the operations of Bancorp and
the Bank.
- Attaining the reported results for 1994, despite challenges the named
executive officers faced to minimize the effects of the (i) sluggish
growth in the Hawaii economy, and (ii) on a financial performance factornational level, the seven
increases in excessshort-term interest rates during the year.
17
- Continuing Bancorp's strategy of expanding its operations to maintain and
grow its markets, including the following 1994 achievements:
In the Pacific, the Bank opened a second branch in Fiji and
installed four automated teller machines (ATM), the first in the
country. Plans are underway to open a third branch and install two
more ATMs. A second branch was also opened on Saipan in the
Commonwealth of the Growth Plan maximumNorthern Marianas.
In the South Pacific, Bank of 2.0 timesHawaii International, Inc., a
subsidiary of the contingent awardBank, finalized its 51% acquisition of National
Bank of Solomon Islands Limited (NBSI). NBSI operates ten branches
and 50 agencies throughout the Solomon Islands.
In Hong Kong, the assets and liabilities of Hawaii Financial
Corporation (Hong Kong) Limited (HFC) were transferred to a new
branch of the Bank. HFC will be liquidated when regulatory
approval is received to repatriate its capital. The new branch in
Hong Kong provides our customers access to more products of the
Bank.
In 1994 the Bank opened four in-store bank branches in a large
supermarket chain in the State of Hawaii. These in-store bank
branches have accumulated almost $3 million in deposits as of
December 31,
1993.
The Committee regards consistent growthyear-end 1994.
- Expansion of Bancorp's products and services:
After many years of effort through the legislative and regulatory
process, the named executive officers obtained approval for the
Bank to establish a general insurance agency. In late 1994, the
Bank established Pan-Ocean Insurance Agency, Inc. as a general
insurance agency to engage in earnings per share as onecertain types of insurance sales.
A subsidiary of the most important single factors within management's controlBank was established to act as an investment
advisor registered with the Securities and Exchange Commission.
This company, Pacific Capital Asset Management, Inc., will manage
portfolios for influencing long-
term stockholder valueretirement plans and net income per employee as the best measure of
efficient management of personnel and resources. The reasons the Committee
emphasizes growth in earnings per share as important to enhance shareholder
value are described above ("One-Year Incentive Plan for 1993"). Indeed, the
importance placed on this factor is indicated by the fact that it is included
in both the One-Year Incentive and Sustained Profit Growth Plans.
The Committee also feelsother large institutional
investors.
- Recognizing the need to measure efficiencyfocus its staff members toward the year 2000, the
named executive officers completed and implemented Bancorp's long-term
strategic plan, "Bancorp 2000." This plan focuses on the remainder of operations, which
is difficultthe
decade with a goal of maintaining Bancorp as a strong independent
financial institution.
Considering these factors, its consultants' recommendations, the desired
objectives of the compensation program and recommendations by the Chief
Executive Officer and President as to dobonus for the top 134 of Bancorp's
executives, the Committee determined on a subjective basis and review of
individual performances to authorize special bonuses to 77 of the top 134
officers, including $75,000 to Mr. Stephenson, $80,000 to Mr. Kappock, $60,000
to Mr. Kuioka, and $40,000 to Mr. Houle. The Committee then reviewed the
performance of the Chief Executive Officer and President and, on a subjective
basis, awarded special bonuses of $145,000 to Mr. Johnson and $100,000 to Mr.
Dahl. The Committee decided that no objective system was appropriate to
determine the Chief Executive Officer's bonus, that he had done a commendable
job in a multi-product service industry becausedifficult transition year, and that he should receive, as Chief
Executive Officer, a bonus higher than anyone else. The total bonus amount for
the 77 top executive officers in 1994 equates to 25.7% of the inabilityamount earned
under the Incentive and Growth Plans in 1993. The total bonus amount for the
named executive officers in 1994 equates to precisely allocate overhead costs. Therefore, some indirect measure of
efficiency is required.
The Committee has chosen to focus on staff expense, Bancorp's largest expense
category, other than interest. Rather than simply restrict the growth of this
expense, which might inhibit otherwise profitable expansion, the Growth Plan
measures net income per employee (NIPE) as a means of quantifying the profit
realized on the staff expense incurred. While other factors, such as interest
rate levels and the growth18.0% of the economy, will influence Bancorp's net income,amount earned by the
Committee believes that NIPE growth, over a three-year period, is a
reasonable proxy for measuring whether staff expense is being appropriately
managed.1993 named executive officers under the Incentive and Growth Plans in 1993.
STOCK OPTION PLANS
The Committee considers stock option grants under the Bancorp Hawaii, Inc.
Stock Option Plan, the Bancorp Hawaii, Inc. Stock Option Plan of 1983, and the
Bancorp Hawaii, Inc. Stock Option PlanPlans of 1988, and 1994 (collectively, the
"Plans") for key employees, including key executive officers of Bancorp and its
subsidiaries. Stock options are granted by the Compensation Committee
("Committee") to those key
18
employees whose management responsibilities place them in a position to make
substantial contributions to the financial success of Bancorp. The size of stock
option awards is based primarily on the individual's responsibilities and
position with Bancorp and, for executive officers other than Mr. Johnson, is
intended to be at approximately the 50th percentile for comparable positions at
the 13 Bank Corporations. Directors who are not also employees may not
participate in the Plans. Stock options are granted at a price equal to the fair market value of
the stock on the date the options are granted. The Committee, which administers the Plans, determines
whether the options are incentive stock options or nonqualified stock options.
The Committee reviewed employee stock option programs of the 13 Bank
Corporations that comprise Bancorp's competitive group for compensation
purposes, prior to determining the grant of optionsStock Options are granted with an exercise price equal to the Executive Officers
in 1993.market price
of Bancorp's common stock on the date of grant. While the value realizable from
exercisable options is dependent upon the extent to which Bancorp's performance
is reflected in the market price of Bancorp's common stock at any particular
point in time, the decision as to whether such value will be realized in any
particular year is primarily determined by each individual executive and not by
the Committee.
The Committee considered several factors in the granting of stock options in
November 1993. AnticipatingDecember 1994. The Committee continues to believe that stock options provide a
change instrong incentive to increase shareholder value, since stock options have value
only if the stock price increases over time. Bancorp's executive leadership in 1994,10-year stock options,
priced at the Committee desired to retain each memberfair market value of the Managing Committee.stock on the date of grant, ensure that
management is oriented to growth over the long term and not to short-term
profits. The Committee increased long-termdetermined that the 1994 stock option grants in an effort to 14
improve retention of each member of senior management. The Committee determined
the
performance of the five namedcurrent executive officers throughout 1993were appropriate for several reasons: (1) to be
outstandingalign
the interests of management with stockholders; (ii) to focus the attention of
management on the long-term success of Bancorp; and (iii) to keep total pay
competitive despite a slowdown in producing well above average financial results in a demanding
and challenging Hawaii economy. During May of 1993,cash compensation increases attributable to
slower earnings growth. Individual option grant sizes were determined based on
the same factors as a result of the efforts
of the executive officers and staff of Bancorp, the Bank of Hawaii, the largest
subsidiary of Bancorp, completed its acquisition of American Financial Services
of Hawaii, Inc. ("AFS") and the integration of AFS is progressing well and
ahead of schedule. Other significant accomplishments include the: (i)
acquisition by Bank of Hawaii International, Inc., a subsidiary of the Bank, of
an equity interest in Banque Indosuez Vanuatu, Ltd. (renamed Banque d'Hawaii
Vanuatu, Ltd.), (ii) establishment of branches of the Bank in Suva and Nadi,
Fiji, which expands Bancorp's market presence in the growing economy of the
South Pacific.performance awards. The Committee believes that the
performance level of each
individualthe current named executive officers warranted an increasethe stock
options granted in stock option grants over previous years. As
such, theDecember 1994. The Committee targeted grants aboveat the 50th
percentile. The Committee used present value and other methods in determining
the targeted size of the awards. In the case of Mr. Stephenson,Johnson, who will be retiring aswas appointed
Chairman of the Board and Chief Executive Officer effective August 1, 1994, the
Committee on December 14, 1994 elected to examine the possibility ofgrant him a stock option grant to him during January 1994
afterfor 12,500
shares at an option price of $25.75 per share, based upon consultation with
external consultants and taking into consideration incentive opportunities of
CEOs of companies in the final financial results were made public. The performancecomparator companies group.
CEO COMPENSATION
Mr. H. Howard Stephenson retired as Chairman and Chief Executive Officer
("CEO") of Bancorp was such that theeffective August 1, 1994. The Board of Directors elected Mr.
Lawrence M. Johnson as CEO effective August 1, 1994.
The Committee on January 27,in early 1994 increased then CEO Stephenson's compensation
package, based upon consultation with external consultants, which consisted of a
4.0% increase in Mr. Stephenson's base salary effective April 1, 1994, in
recognition of Bancorp's continued strong performance in 1993 under his
leadership. The Committee granted Mr. Stephenson a stock option for 21,000
shares at an option price of $45.00 per share out of the Bancorp Stock Option
Plan of 1994, which would bewere exercisable after July 27, 1994. ThisThe number of shares
and option price have been adjusted to 31,500 shares and $30.00, respectively,
for the 50% stock option grant is subject to approval of the 1994 Plan by the
stockholders at the annual meeting of stockholders to be helddividend paid on April 27,March 15, 1994.
The Committee believes thatin February 1994 approved a 4% increase in the base salary of
Mr. Johnson effective April 1, 1994, as a result of Bancorp's achieving its 1993
financial goals. Mr. Johnson's annual base salary was increased to $575,000
effective August 1, 1994 by the Committee when he succeeded Mr. Stephenson as
CEO of Bancorp, based upon consultation with external consultants and taking
into consideration median salaries of CEOs of companies in the comparator
companies group. In addition, incentive opportunities for 1994 were increased to
reflect the promotion. Mr. Johnson was granted a stock options areoption for 12,500 shares
by the Committee on December 14, 1994, at an integral partoption price of its
executive compensation package since options align the interests$25.75 per share.
Mr. Johnson received a special bonus of management
with stockholders$145,000 for 1994 and focus the attentionMr. Stephenson
received a special bonus of management$75,000, as discussed on the long-term
success of Bancorp.
CEO COMPENSATIONpages 17 and 18.
19
The Committee's general approach in setting Mr. Stephenson'sJohnson's target annual compensation
is to provide levels that are competitive among the 13 Bank Corporations that
comprise Bancorp Hawaii's competitive group for compensation purposes. The
specific targeted levels for each element of compensation are the same as those
shown on pages 11 and 12page 15 for all Bancorp executive officers. In
setting actual compensation levels, the Committee reviewed a competitive study
of the 13 bank comparator group completed in July 1993. This study reflected
1993 base salary levels and incentive payments for 1992 performance. In
addition, theThe Committee intends to
have a significant percentage (over 20%) of each executive officer's target
compensation based upon objective long-term performance criteria. On average,
Mr. Stephenson'sJohnson's long-term incentive compensation opportunity is approximately 30 percentcomparable to the
chief executive officers of his total compensation.
This compares with the aforementioned 13 Bank Corporations' average of
approximately 2633 percent.
Mr. Stephenson has held the position of Chairman and Chief Executive Officer
since March 1989. Bancorp's performance throughout the last five fiscal years
enabled stockholders to realize a total return of 102.6% (or an annual
compounded return of 15.2%). "Total return" is defined as cumulative stock
price appreciation including the reinvestment of dividends. This total return
compares to a 5-year return of 95.3% (or an annual compounded return of 14.3%)
for the Standard & Poors' 500 Index.
This performance resulted in increased compensation paid to Mr. Stephenson
over the past three years. The Committee in late 1992 approved a four percent
increase in Mr. Stephenson's base salary for the year 1993. This increase
resulted in a base salary level that was approximately at the 55th percentile.
Mr. Stephenson's 1994 base salary will be reviewed by the Committee in February
1994 and any salary adjustment will be effective April 1, 1994. Mr.
Stephenson's 1993 salary and incentive plan compensation increased 4.0% over
his 1992 compensation in recognition of Bancorp's 13.2% earnings improvement in
1992 under his leadership. Of the 1993 compensation, 57.4% was represented by
incentive plan compensation, compared to 58.1% in 1992, and 55.4% in 1991. Base
salary represented only 42.6% of 1993 salary and incentive plan compensation. A
significant portion of the increased compensation was represented by incentive
payments under Bancorp's plans.
15
Mr. Stephenson's award under the One-Year Incentive Plan for 1993 was based
on both corporate financial and individual performance. Two financial
performance factors were used, weighted equally: growth in earnings per share
and return on average equity. These measures are explained in more detail under
the section entitled "One-Year Incentive Plan for 1993". Other factors were
individual performance in assigned responsibilities, leadership and management
skills, strategic decision making, and the economic and other challenges that
were present during the course of the year. The greatest emphasis was placed on
individual performance. The performance factors, as described in the section
entitled "One Year Incentive Plan for 1993" on page 13, were achieved. The cash
award for the one-year incentive period ended December 31, 1993 for Mr.
Stephenson was equal to about 58% of his annual base salary.
Mr. Stephenson's award under the Sustained Profit Growth Plan for the years
1991 to 1993 is based on two measures of corporate performance weighted
equally: earnings per share growth and net income per employee. These measures
and the actual performance goals are described in detail in footnote [1] to the
table entitled "Long-Term Incentive Plans-Awards in Last Fiscal Year" on pages
9 and 10. The performance factors, as described in the section entitled
"Sustained Profit Growth Plan" on page 14, were achieved. Competitive data
allowing comparisons of 1993 payments to the 13 comparator banks is not yet
available.
REVENUE RECONCILIATION ACT OF 1993
In 1993, Congress adopted the Revenue Reconciliation Act of 1993 (the "1993
Act"), certain provisions of which limit the ability of publicly-held companies
to deduct for taxation purposes the compensation paid to individual employees in
excess of $1 million in any fiscal year. The 1993 Act affords certain exemptions
to the deductibility limitation, generally requiring that compensation be
closely tied to objective performance criteria.
In general, Bancorp intends to maintain deductibility for all compensation
paid to covered employees, and will comply with the required terms of the
specified exemptions under the 1993 Act, except in circumstances under which
such compliance would unduly interfere with the incentive goals of Bancorp's
executive compensation program and when the loss of deductibility would not be
materially adverse to Bancorp's overall financial position.
Compensation Committee
Fred E. Trotter, Chairman
Stuart T. K. Ho
Charles R. Wichman
March 10, 1994
NO COMPENSATION COMMITTEE INTERLOCKS
ORAND INSIDER PARTICIPATION
During 1993 no Executive OfficerNo executive officer of Bancorp served as a member of a compensation
committee (or Boardboard of Directorsdirectors serving as such) of any entity of which any
member ofif the Compensation Committee was an Executive Officer.
Noexecutive officer.
As discussed under "Transactions with Management and Others" Bancorp offers
preferential rate loans for primary residences to directors and executive
officers of Bancorp and its subsidiaries. Such preferential rate loans include
primary residence adjustable rate mortgage loans made to two members of the
Compensation Committee, Messrs. Ho and Trotter. The largest such loan amounts
outstanding during 1994, the loan amounts outstanding at December 31, 1994, and
the average interest rates charged during 1994 in connection with these two
loans were, respectively, $384,127, $377,099 and 6.5% for Mr. Ho, and $319,579,
$314,530 and 4.66% for Mr. Trotter. The third member of the Compensation
Committee, was an employee or former employeeMr. Wichman, is a retired partner of Carlsmith Ball Wichman Murray
Case & Ichiki. That firm provided legal services to Bancorp orand its subsidiaries
or had any relationships with Bancorp requiredin 1994 and is expected to be discloseddo so in this Proxy Statement pursuant to Item 404 of Regulation S-K
under the 1934 Act, other than as noted under the headings "Certain Business
Relationships" and "Sale of Commercial Paper" on page 19.
161995.
20
PERFORMANCE GRAPH
The following performance graph, which shows a five-year comparison of
cumulative total returns for Bancorp, the S&P 500 Composite Index, and the
Montgomery Securities Regional Bank Median, shall not be deemed to be
incorporated by reference into any filing under the 1933 Act or the 1934 Act,
except to the extent Bancorp specifically incorporates it by reference into a
filing under the 1933 Act or the 1934 Act; nor shall it be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission or subject to Regulation 14A or 14C under the 1934 Act or to the
liabilities of Section 18 of the 1934 Act, except to the extent that Bancorp
specifically requests that such information be treated as soliciting material or
specifically incorporates it by reference into a filing under the 1933 Act or
the 1934 Act. As of the date of this Proxy Statement, Bancorp has made no such
incorporation by reference or request.
COMPARISON OF FIVE-YEARFIVE YEAR CUMULATIVE TOTAL RETURN
AMONG BANCORP HAWAII, INC, S&P 500 INDEX AND
MONTGOMERY SECURITIES REGIONAL BANK MEDIAN*RETURN*
(INCLUDES DIVIDEND REINVESTMENT)
MONTGOMERY
SECURITIES
Measurement PeriodREGIONAL
BANCORP BANK
HAWAII S&P REGIONAL
(Fiscal Year Covered) HAWAII, INC. 500 INDEX BANK MEDIAN
- -------------------------- ------- ---------- --------- -----------
Measurement Pt- 12/31/1988 $100 $100 $100
FYE89 $ 100 $ 100 $ 100
12/31/1989 $144 $131 $120
FYE90 91 97 78
12/31/1990 $131 $127 $94
FYE91 147 127 137
12/31/1991 $209 $165 $164
FYE92 148 136 185
12/31/1992 $210 $178 $220
FYE93 142 150 193
12/31/1993 $203 $195 $23194 137 152 185
*Assumes- ---------
* Assumes $100 invested on December 31, 19881989 in Bancorp Hawaii stock, S&P 500
Index and the Montgomery Securities Regional Bank Median.
The above graph compares the performance of Bancorp Hawaii, Inc. with that
of the S&P 500 Index and a peer group defined in the Montgomery Securities
Regional Bank Median. The chart assumes that $100 was invested on December 31,
1988, in Bancorp Hawaii stock, S&P 500 Index and the Montgomery Securities
Regional Bank Median.median. The total return on each investment is as of December 31
of each of the subsequent 5 years and assumes reinvested dividends.
1721
TRANSACTIONS WITH MANAGEMENT AND OTHERS
With the exception of preferential interest rates on the personal,
non-
businessnon-business loans described below, the terms and conditions of the following
transactions were no less favorable to Bancorp and its subsidiaries than those
on comparable transactions with unaffiliated parties.
LOANS
In the ordinary course of business Bancorp and its subsidiaries make loans
to employees, directors, and officers of Bancorp and the Bank as well as to
associates of such directors and officers. For personal, non-business loans made
by the Bank, employees and officers of Bancorp and the Bank (other than
executive officers of Bancorp and the Bank) pay preferential interest rates and
to the extent permitted by law, the Bank expects to continue making preferential
rates available to these individuals on personal, non-business loans.
Directors and executive officers of Bancorp and the Bank, including Messrs.
Stephenson, Johnson, Dahl, Kappock, and Tsui,Kuioka, and Houle were made ineligible for
preferential rates on loans made by the Bank after March 10, 1979. Since that
date all outstanding loans and commitments by the Bank to directors, executive
officers, and their associates were made in the ordinary course of business,
were made on substantially the same terms (including interest rates and
collateral) as those prevailing at the time for comparable transactions with
other persons, and did not involve more than normal risk of collectibility or
present other unfavorable features. The total amount of loans and leases
outstanding from Bancorp and its subsidiaries to directors, executive officers
(and their associates) of Bancorp and the Bank aggregated $83,710,486$82,559,396 as of
December 31, 1993.1994.
Bancorp offers preferential rate loans to directors and executive officers
of Bancorp and its subsidiaries for primary residences under policies, terms,
and conditions applicable to all other employees at rates no lower than 1% below
the prevailing market rates.
The following schedule shows detailed(together with certain information onset forth under
"Compensation Committee Interlocks and Insider Participation") provides
information concerning preferential rate loans made by Bancorp to those
directors and executive officers of Bancorp whose aggregate indebtedness
exceeded $60,000 at any time during 1993:1994:
LARGEST LOAN
AMOUNT(S) LOAN
AMOUNT(S) AMOUNT(S) AVERAGE
OUTSTANDING OUTSTANDING ON TYPE OF TYPE RATEINTEREST
DIRECTORS DURING 1993 ON1994 12/31/93 TRANSACTIONS(S)94 TRANSACTION(S) RATE CHARGED
---------- ------------------------- ------------ ----------- --------------- ---------------------- ------------
Peter D. Baldwin............. $ 366,394Baldwin $ 360,120 $ 353,440 Real Estate 5.650%5.156%(1)
Stuart T. K. Ho.............. 392,520Ho 384,127 377,099 Real Estate 6.000%6.500%(1)
Lawrence M. Johnson.......... 327,896 0 Real Estate 7.750%(2)Johnson 570,000 570,00561,590 Real Estate 5.000%(1)
Frank J. Manaut.............. 97,231 93,039Fred E. Trotter 319,579 314,530 Real Estate 4.666%(1)
K. Tim Yee 78,935 72,273 Real Estate 7.000%(2)
Fred E. Trotter.............. 320,000 319,579 Real Estate 4.500%(1)
K. Tim Yee................... 84,646 78,935 Real Estate 7.000%(2)
EXECUTIVE OFFICERS
(EXCLUDING THOSE WHO ARE
ALSO DIRECTORS)
--------------------
- -------------------------
Richard J. Dahl.............. 1,176,137Dahl 1,093,374 1,067,722 Real Estate 5.375%5.885%(1)
Thomas J. Kappock............ 325,245Kappock 306,606 288,440 Real Estate 5.031%4.625%(1)
John K. Tsui................. 470,759 463,914Alton T. Kuioka 489,000 488,599 Real Estate 5.375%7.500%(3)
David A. Houle 308,366 304,281 Real Estate 5.750%(1)
- -----------------
(1) Primary residence adjustable rate mortgage loans.loan.
(2) Includes a primary residence mortgage loan made during the period June 1976
to March 5, 1978 when the preferential interest rate was 7%.
18(3) Primary residence fixed rate mortgage loan.
22
CERTAIN BUSINESS RELATIONSHIPS
Bancorp and its subsidiaries, in the ordinary course of business, have
occasion to utilize the products or services of a number of organizations with
which directors of Bancorp are or were affiliated as officers, directors,
partners or directors.
Carlsmith Ball Wichman Murray Case and Ichiki (ofshareholders, including a law firm of which Mr. Wichman a
director of Bancorp, is a retired
partner), provided legal services amounting
to $2,740,018 to Bancorppartner. See "Compensation Committee Interlocks and its subsidiaries in 1993, which represented more
than 5% of its gross revenues for the calendar year 1993.Insider Participation,"
Management believes that such transactions were on terms that were at least as
favorable to Bancorp or the subsidiaries of Bancorp involved as would have been
available from unaffiliated parties.
In addition, the Bank has made loans to Carlsmith Ball
Wichman Murray Case and Ichiki. Such loans were made in the ordinary course of
business, were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with other persons, and did not involve more than the normal risk of
collectibility or present other unfavorable features.
SALE OF COMMERCIAL PAPER
As a means to borrow funds on a short-term basis, Bancorp issues commercial
paper that matures in 1 to 269 days. The interest rates paid are determined by
prevailing money market conditions. Among those who purchased Bancorp's
commercial paper during 1993 were:
AMOUNT OR AVERAGE AMOUNT
RANGE OF INTEREST OUTSTANDING
PURCHASER PURCHASES RATE 12/31/93
--------- ------------- -------- -----------
Capital Investment of Hawaii, Inc. (of which
Mr. Ho, a director of Bancorp, is 2.625% $ 0
Chairman and President).................... $1,250,000 to
1,250,247
Carlsmith Ball Wichman Murray Case and
Ichiki (of which Mr. Wichman, a director of 3.125% 0
Bancorp, is a retired partner)............ 400,000 to
3,009,920
Kahua Ranch, Ltd. (of which Mr. Richards, a
nominee for director of Bancorp, is
president)................................. 2,200,000 2.750% 2,200,000
PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
The Board of Directors recommends that the stockholders approve a proposed
amendment to Article III of the Restated Articles of Incorporation to increase
the authorized number of shares of common stock, $2 par value, from 50,000,000
shares to 100,000,000 shares.
Article III of Bancorp's present Restated Articles of Incorporation
authorizes Bancorp to issue an aggregate of 50,000,000 shares of common stock,
$2 par value, of which 28,425,039 were issued and outstanding as of December
31, 1993; and 20,000,000 shares of preferred stock, $1 par value, none of which
is issued and outstanding. The Board of Directors believes that the proposed
amendment is in the best interests of Bancorp and its stockholders and will
provide Bancorp with flexibility of action in the future by assuring there will
be sufficient authorized but unissued shares of common stock for possible
acquisitions, stock dividends or stock splits, financing requirements, and
other corporate purposes.
On January 26, 1994, the Board of Directors declared a 50% stock dividend to
be payable on March 15, 1994 to stockholders as of record date February 17,
1994. In connection with this distribution, Bancorp will be issuing
approximately 14,200,000 new shares of common stock, which would reduce the
approximate number of authorized shares of common stock available for future
issuance from 21,575,000 to 7,375,000.
19
There are no commitments or understandings at the present time for the
issuance of any shares of the common stock other than for issuance of shares
under various employee benefit plans, and Bancorp's Dividend Reinvestment and
Stock Purchase Plan. It is believed that the authority to issue such shares
will enable the Board of Directors at any time to act without delay in a manner
that is in the best interests of Bancorp and its stockholders.
Shares to be issued by Bancorp in the future may be issued for such
consideration, cash or otherwise, at such times and in such amounts as the
Board of Directors, in its discretion, may determine, without further action by
the stockholders unless required by applicable law.
VOTE REQUIRED
The affirmative vote of two-thirds of the outstanding shares entitled to vote
is necessary for the adoption of this proposal. Shares represented by the
proxies received will be voted "For" the proposed amendment unless stockholders
otherwise specify in their proxies.
STOCKHOLDER RESOLUTION
For the purpose of so amending Bancorp's Restated Articles of Incorporation,
the following resolution will be presented:
"RESOLVED, that the authorized capital stock of Bancorp Hawaii, Inc.
(hereinafter the "Corporation") be increased to $220,000,000 consisting of
120,000,000 shares, of which 100,000,000 shares shall be common stock of the
par value of $2 per share and 20,000,000 shares shall be preferred stock of the
par value of $1 per share.
FURTHER RESOLVED, that the first paragraph of Article III of the Restated
Articles of Incorporation of the Corporation., which states the authorized
capital stock, be amended to read as follows:
The capital stock of the Corporation shall be $220,000,000. The number of
shares of stock that the Corporation is authorized to issue shall be
120,000,000 shares, of which 100,000,000 shares shall be common stock of
the par value of $2 per share and 20,000,000 shares shall be preferred
stock of the par value of $1 per share."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE FOREGOING
RESOLUTION.
PROPOSAL TO ADOPT THE BANCORP HAWAII, INC. STOCK OPTION PLAN OF 1994
Bancorp's Board of Directors has approved and recommended for submission to
the stockholders for approval the Bancorp Hawaii, Inc. Stock Option Plan of
1994 (the "1994 Plan"), a copy of which is attached as Exhibit A, pursuant to
which a maximum of 1,250,000 shares of common stock (to be adjusted to
1,875,000 shares as a result of a 50 percent stock dividend declared on January
26, 1994 and payable on March 15, 1994) of Bancorp may be issued.
The purpose of the 1994 Plan is to attract, retain and motivate high quality
personnel and to provide incentives for the promotion of business and the
financial success of the Company by providing them with an equity participation
in Bancorp. The Board of Directors believes that the adoption of the 1994 Plan
is desirable since it will promote and closely align the interest of employees
of Bancorp and its shareholders by providing stock-based compensation.
SUMMARY OF THE 1994 PLAN
The 1994 Plan is designed to advance the interests of Bancorp and its
subsidiaries by assuring the continued service of key employees and by
attracting other able personnel. "Key employees" are those
20
employees who may from time to time be deemed by the Compensation Committee of
Bancorp's Board of Directors (the "Committee") as being capable because of
their management responsibility of making substantial contributions to the
financial success of Bancorp. It is not anticipated that more than
approximately 300 employees will participate in the Plans at any one time.
The 1994 Plan provides for the granting of options, stock appreciation
rights, restricted stock, restricted stock units, and common stock for payment
of obligations under the One-Year Incentive Plan or the Sustained Growth Plan
(an "award") covering an aggregate of 1,250,000 shares of common stock (to be
adjusted to 1,875,000 shares as a result of the 50% stock dividend) (the
"authorized pool"). The number of shares of common stock subject to grant is
subject to equitable adjustments for any merger, reorganization, consolidation,
stock dividend, or any other similar change which may be required in order to
prevent dilution. Any award granted that is not exercised prior to
cancellation, termination, or expiration is thereafter available for further
grant under the 1994 Plan. The 1994 Plan expires on January 1, 2004, and no
award may be granted on or after such date.
The 1994 Plan provides for the granting of options to purchase shares of the
common stock of Bancorp at an exercise price that will be at least 100% of the
fair market value of the stock on the date an option is granted. An option may
be either an incentive stock option as defined in the Internal Revenue Code or
a nonqualified stock option. In the case of an incentive stock option, the
aggregate fair market value (determined at the time the option is granted) of
the stock with respect to which incentive stock options are exercisable for the
first time by such individual during any calendar year (under this and all
other plans of Bancorp and its subsidiary corporations) cannot exceed $100,000.
Subject to any specific plan rules that may apply to particular option types,
the Committee may also grant premium options, performance-based options,
options issued in tandem with SARs, reload options, and various combinations of
the above.
Options granted under the 1994 Plan will be exercisable during a term of not
more than ten years from the date the option was granted. An option is
exercisable by notice of an election to exercise the option, given in writing
to the Committee, designating the number of shares that the optionee has
elected to purchase. Unless the option involves a stock appreciation right
(hereinafter described) the optionee must, at the time he or she exercises his
or her option, tender the full purchase price for the shares he or she has
elected to purchase. The purchase price may be paid in full or in part by
tendering cash, or by delivery of common stock of Bancorp that has been owned
by the participant for at least one year (or in the case of nonqualified stock
options, at least six months), and valued at its fair market value on the
exercise date ("stock swap"). By use of stock swaps, an optionee may exercise
an option using common stock of Bancorp to pay the option price and then to use
the common stock received to pay the option price for additional option shares
in successive transactions.
Options are nontransferable (except by will or by the laws of descent and
distribution) and may be exercised by the holder no earlier than six months
following the date of grant. A nonvested option will terminate and may no
longer be exercised if the optionee ceases to be an employee of Bancorp or any
of its subsidiaries. However, in the event of termination of employment for
reasons other than death, disability, or retirement, a vested option may be
exercised within the 90-day period following such termination of employment. In
the event of termination of employment on or after retirement age 62 (along
with eligibility for an unreduced pension benefit under the Employees'
Retirement Plan of Bank of Hawaii) due to death, disability, or retirement, a
vested option may be exercised within five years following such termination of
employment, or until the option expiration date, whichever is shorter. In
addition to the above rules, in order to qualify as an incentive stock option,
a vested incentive stock option must be exercised within 90 days following
termination of employment for reasons other than death or disability and one
year following termination of employment due to disability. Finally, in the
event of termination of employment for cause (as defined), all options, whether
vested or not, shall terminate immediately.
Stock appreciation rights are granted either by themselves ("freestanding")
or in connection with stock options whereby an option holder is granted the
right to elect to receive the appreciation on his or her stock
21
option in lieu of exercising the option in the usual manner. Stock appreciation
rights may not be exercised earlier than six months following the date of
grant. The 1994 Plan provides for a grant price equal to the fair market value
of the stock on the date of grant in the case of freestanding stock
appreciation rights and a grant price equal to the related option price in the
case of tandem stock appreciation rights. The Committee may grant stock
appreciation rights with respect to options to be issued and also with respect
to options theretofore issued, whereby the optionee may surrender all or part
of such option and exercise the stock appreciation right (the "call") and
thereby obtain payment of an amount equal to the difference between the
aggregate option price of such shares surrendered and the market value of those
shares on the day surrendered. The call of such stock appreciation rights will
be subject to such limitations (including, but not limited to, limitations as
to time and amount) as the Committee may deem appropriate, and payment may be
made in shares of common stock (at its fair market value on the date of the
call) or in cash, or partly in such shares and partly in cash, at the
discretion of the Committee as provided in the stock appreciation rights so
granted. Stock appreciation rights are nontransferable and, in the event of
termination of employment, will terminate or be exercisable under rules similar
to those applying to options.
The maximum number of shares subject to options which may be granted to any
single participant during the term of the 1994 Plan may not exceed 20% of the
authorized pool. Similarly, the maximum number of shares subject to stock
appreciation rights which may be granted to any single participant during the
term of the 1994 Plan may not exceed 20% of the authorized pool. Because the
exercise price for options and the grant price for stock appreciation rights
are no less than fair market value of the underlying stock at the date of
grant, the amount a participant receives upon exercise is based exclusively on
the increase in value of stock after the date of grant.
Subject to the terms and conditions of the 1994 Plan, the Committee may also
grant shares of restricted stock or restricted stock units to eligible
employees in such amounts, and with such restrictions upon transfer as the
Committee may determine. Restricted stock may not be sold or encumbered until
all restrictions terminate or expire, or until earlier satisfaction of any
other conditions that are specified by the Committee.
Restricted stock which is then subject to restrictions shall be forfeited to
Bancorp by a holder of restricted stock upon termination of his/her employment;
provided, however, that no such forfeiture shall occur because of death, or
total disability, in which case all outstanding shares of restricted stock will
vest 100 percent as of the date of employment termination. In all other cases,
nonvested restricted stock shall be forfeited upon termination of employment.
However, the Committee shall have discretion to vest any or all shares 100
percent upon termination of employment due to retirement.
Under the 1994 Plan, the Committee may also allow participants to receive
settlement in shares of Bancorp stock in lieu of any or all cash payments they
might receive under the One-Year Incentive Plan or the Sustained Profit Growth
Plan.
The shares under the 1994 Plan may be modified to prevent dilution of their
value due to changes in the financial structure of Bancorp. The 1994 Plan also
provide that if at any time there is a successor to Bancorp due to corporate
merger, consolidation, acquisitions of property or stock, reorganization, or
liquidation, the successor must assume the outstanding obligations.
Additionally, if there is a change of control, all options and stock
appreciation rights are immediately exercisable and all restricted shares would
immediately vest.
ADMINISTRATION OF THE PLAN
The 1994 Plan shall be administered by the Committee, members of whom must be
nonemployee directors. The Committee has full power to administer the 1994
Plan, including the authority to designate recipients, determine whether and
when awards are to be granted to the recipient, and specify the terms and
conditions of each option subject to the minimum exercise prices provided for
under the 1994 Plan.
22
The Board of Directors may amend the 1994 Plan, except that no amendment may
have a material adverse effect on any awards previously granted and the Board
may not without the approval of the stockholders change the maximum number of
shares as to which awards may be granted under the 1994 Plan except to prevent
dilution.
CERTAIN TAX ASPECTS OF THE PLAN
The tax consequences of the 1994 Plan are complex and the following
discussion deals only with general tax principles applicable to the Plans
under federal law.
Stock Options
An incentive stock option issued will not result in any taxable income to
the optionee or deduction to Bancorp or subsidiaries at the time it is granted
or exercised, provided that the option is exercised no later than three months
after termination of employment for reasons other than death or disability
(one year after
termination of employment because of death or disability) and the stock is
held for a period of at least two years after the date of grant and one year
after date of exercise. However, any appreciation in share value from the date
of grant to the date of exercise will be an item of tax preference at the time
of exercise in determining liability for the alternative minimum tax. The
subsequent sale of the stock will result in long-term capital gain to the
optionee on the excess of the sale price over the exercise price. If, however,
the optionee disposes of his or her shares within two years from the date of
grant or one year from the date of exercise, the difference between the fair
market value of the stock at the date of exercise and the cost of such stock
will be taxed as ordinary income (and Bancorp will receive a corresponding
deduction) in the year the shares are sold. Any additional gain will be taxed
as a capital gain. The amount of ordinary income is limited to the excess of
the selling price over the amount paid for the stock if the selling price is
less than the fair market value of the stock at the date of exercise. If the
shares are disposed of at a loss (sale price is less than amount paid for the
stock), the loss will be a capital loss.
Recipients of nonqualified options will not be deemed to have received any
taxable income as a result of the granting of options. Taxable income will be
realized at ordinary rates by the optionee upon the exercise of such an option
in the amount that the fair market value of the shares acquired at the time of
exercise exceeds the option price, and Bancorp will be entitled to a deduction
for income tax purposes in an equivalent amount at that time. The subsequent
sale of shares received on exercise will be taxed as a capital gain or loss.
Stock Appreciation Rights (SARs)
An optionee will not realize income at the time of the grant of stock
appreciation rights, but upon the exercise of such rights and the receipt of
cash in lieu of stock he or she will realize ordinary income equal to the
amount of cash received and Bancorp will be entitled to a deduction in an
equivalent amount at that time.
All optionees may elect to satisfy applicable tax withholding requirements
resulting from the exercise of a nonqualified stock option by the following
methods: (1) have Bancorp withhold the applicable taxes from the person's
salary or other cash compensation; (2) have Bancorp withhold from common stock
that is subject to exercise of the option shares having a fair market value
equal to the amount required to satisfy tax withholding requirements, but only
if the election is made pursuant to rules governing such elections under
section 16(b) of the Securities and Exchange Act of 1934; (3) have Bancorp
accept from the optionee cash in an amount required to satisfy the withholding
requirements; or (4) any combination of items (1) through (3) that will
provide Bancorp with cash or common stock in value equal to the amount
required to satisfy the withholding requirements.
23
Restricted Stock
Upon receipt of restricted stock, the participant will generally recognize
taxable ordinary income when the shares cease to be subject to restrictions
under the 1994 Plan equal to the excess of the fair market value of the shares
at that time over the amount, if any, paid for such shares.
However, within 30 days after the date the shares are received, the
participant may elect under section 83(b) of the Code to recognize taxable
ordinary income at the time of transfer in an amount equal to the excess of the
fair market value (determined without regard to applicable restrictions) of the
shares at such time over the amount, if any, paid for such shares. If an
election is made, no additional income will be recognized upon lapse of
restrictions on the shares, but, if the shares are subsequently forfeited, the
participant may not deduct the income that was recognized at the time of
receipt of the shares and the participant will have a capital loss equal to the
amount, if any, paid for the shares. The participant's holding period for the
shares will begin at the time taxable income is recognized under these rules,
and the tax basis of the shares will be that amount of income so recognized
plus the amount, if any, paid for the shares.
Any dividends received on the restricted shares prior to the date the
participant recognizes income as described above, will be taxable compensation
income when received. Bancorp will be entitled to a deduction at the same time
and in the same amount as the participant recognizes ordinary income, provided
Bancorp has satisfied any applicable withholding obligations under the Code.
POTENTIAL REALIZABLE DOLLAR VALUE OF AWARDS UNDER THE 1994 PLAN
The Committee granted stock options for 21,000 shares (on a pre-stock
dividend basis) to Mr. Stephenson from the 1994 Plan on January 27, 1994, at an
option price of $45.00, subject to approval of the 1994 Plan by the
stockholders. An estimation of benefits or amounts that may be received or
allocated to each of the following groups under the 1994 Plan, based on the
number of options granted in 1993, are as follows:
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR OPTION TERM[1]
------------------------------
NUMBER OF EXERCISE
SECURITIES OR BASE
UNDERLYING PRICE
NAME OPTIONS/SARS $/SHARE 5%($) 10%($)
---- ------------ -------- -------------- ---------------
H. Howard Stephenson.... 21,000 $45.00 $ 520,200 $ 1,283,000
Lawrence M. Johnson..... 20,000 42.25 531,000 1,347,000
Richard J. Dahl......... 12,500 42.25 332,000 842,000
Thomas J. Kappock....... 12,500 42.25 332,000 842,000
John K. Tsui............ 12,500 42.25 332,000 842,000
Executive Group......... 67,500 42.25 1,793,000 4,545,000
Nonexecutive Director
Group.................. 0 0 0 0
Nonexecutive Officer Em-
ployee Group........... 139,000 42.25 3,693,000 9,360,260
- --------
[1] These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises or stock holdings are dependent on
the future performance of the stock and overall market conditions. There
can be no assurance that the amounts reflected in this table will be
achieved. The 1994 Plan benefits related to restricted stock grants cannot
be determined at this time.
VOTE REQUIRED
Approval of the 1994 Plan requires the affirmative vote of the holders of a
majority of the stock present or represented at the meeting. In the absence of
such approval, the 1994 Plan shall automatically be canceled and terminated.
24
STOCKHOLDER RESOLUTION
For purposes of approving the 1994 Plan and providing 1,250,000 shares (or
1,875,000 shares resulting from the 50 percent stock dividend to be paid on
March 15, 1994) of common stock for stock options, the following resolution
will be presented:
RESOLVED, that the Bancorp Hawaii, Inc. Stock Option Plan of 1994 described
in the Proxy Statement and presented to this meeting and the provision of
1,250,000 authorized but unissued shares of common stock (to be adjusted to
1,875,000 shares as a result of the 50 percent stock dividend payable on March
15, 1994) of Bancorp Hawaii, Inc., are hereby approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE FOREGOING
RESOLUTION.
SHAREHOLDER APPROVAL OF INCENTIVE PLANS
In 1993, Congress adopted the Revenue Reconciliation Act of 1993 (the "1993
Act"), certain provisions of which limit the ability of publicly-held companies
to deduct for taxation purposes the compensation paid to individual employees
in excess of $1 million in any fiscal year. The 1993 Act affords certain
exemptions to the deductibility limitation for plans that are qualified as
performance based and conform to specific rules governing disclosure, approval,
and design.
Pursuant to the rules governing performance based compensation under the 1993
Act, Bancorp provides the following information regarding the Executive Officer
One-Year Incentive Plan and the Sustained Profit Growth Plan, and seeks
shareholder approval for the material terms of these plans, as well as approval
for the eligible class of employees and maximum allowable awards.
PROPOSAL TO APPROVE THE BANCORP HAWAII, INC.
EXECUTIVE OFFICER ONE-YEAR INCENTIVE PLAN
On January 26, 1994, the Board of Directors adopted and approved the
submission of the Bancorp Hawaii, Inc. Executive Officer One-Year Incentive
Plan (the "Executive Incentive Plan") to the stockholders for approval. A
summary of the principal provisions of the Executive Incentive Plan is set
forth below. The full text of the Executive Incentive Plan is attached to this
Proxy Statement as Exhibit B.
SUMMARY OF THE EXECUTIVE INCENTIVE PLAN
Bancorp's Executive Incentive Plan provides contingent cash awards to
eligible employees, based upon Bancorp performance and other factors.
Generally, selected key employees are eligible for participation. "Key
employees" are those employees who may, from time to time, be deemed by the
Compensation Committee (the "Committee") of Bancorp's Board of Directors as
being capable because of their management responsibility of making substantial
contributions to the financial success of Bancorp. It is not anticipated that
more than approximately 8 employees will participate in the Executive Incentive
Plan at any one time.
Under the Executive Incentive Plan, each participant receives a contingent
cash award of a specified percentage of his or her annual base salary. For the
named executive officers, these percentages are 50% (for the Chief Executive
Officer) and 40% (for the President and Vice Chairmen). Maximum awards under
the Incentive Plan are 200% of the contingent awards.
Actual awards are determined by a two-step process that considers both the
performance of Bancorp as a whole during the year and the individual
performance of each participant. To measure Bancorp performance, the Committee
may, before the beginning of the Plan year, select from among a number of
25
business criteria or measures, and establish specific objective numeric goals
relating to those measures. The measures may include return on average equity
or year-end equity, return on average or year-end assets, earnings per share,
growth in earnings per share, increase in Bancorp's Common Stock price, total
return to shareholders, growth in net income per employee, growth in
noninterest income, control of net overhead expense, control of nonperforming
loans, capital adequacy, or adequacy of loan loss reserves.
Bancorp performance currently is assessed using two measures that are
weighted equally: return on average equity ("ROAE") and growth in earnings per
share. For the purposes of the Executive Incentive Plan, ROAE is defined as
Bancorp's net income for the fiscal year-end covered under the Executive
Incentive Plan, divided by Bancorp's total average equity (as reported in its
annual report to shareholders) for that same fiscal year-end. "Earnings per
share" is defined as fully diluted earnings per share as reported in Bancorp's
annual report (or as otherwise reported to shareholders) subject to any
adjustment made by the Committee. The Committee establishes specific
performance goals relating to each of these measures before the beginning of
each fiscal year.
After Bancorp performance has been assessed against these measures,
individual participant's performance is evaluated relative to his or her job
responsibilities, and the economic and other factors encountered during the
year. For the named executive officers, assessment of individual performance
may result in a downward adjustment of the maximum award, or the entire
elimination of this award. No upward adjustments based on discretion are
permitted beyond the maximum award for the named executive officers.
The Board or Committee may amend or modify certain features of the Executive
Incentive Plan at any time, without approval of stockholders. These features
include the specific performance criteria used to measure Bancorp performance,
the specific mechanism for calculating awards, and the level of contingent
awards under the Executive Incentive Plan.
An estimation of benefits that may be received by the named Executive
Officers under the Executive Incentive Plan for 1994 is shown below. Because
specific benefits for 1994 are not determinable at this time, the amounts shown
below reflect actual awards paid for 1993 performance.
ESTIMATED
PARTICIPANTS CONTINGENT AWARD
------------ ----------------
H. Howard Stephenson..................................... $344,324
Lawrence M. Johnson...................................... 191,603
Richard J. Dahl.......................................... 116,890
Thomas J. Kappock........................................ 116,890
John K. Tsui............................................. 121,972
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy is required to approve the Executive
Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE FOREGOING
PROPOSAL.
26
PROPOSAL TO APPROVE THE BANCORP HAWAII, INC.
SUSTAINED PROFIT GROWTH PLAN
On January 26, 1994, the Board of Directors approved the submission to a vote
of the stockholders, the Bancorp Hawaii, Inc. Sustained Profit Growth Plan (the
"Growth Plan"). A summary of the principal provisions of the Growth Plan is set
forth below. The entire text of the Growth Plan is attached to this Proxy
Statement as Exhibit C.
SUMMARY OF THE GROWTH PLAN
Bancorp's Growth Plan provides contingent cash awards to eligible employees,
based upon Bancorp performance over a three-year period. New performance cycles
start annually.
Officer employees of the level of Senior Vice President and above are
eligible for participation in the Growth Plan. It is anticipated that the
number of eligible employees will not exceed approximately 56 employees at any
one time.
Under the Growth Plan, each participant receives a contingent cash award of a
specified percentage of his or her annual base salary. For the five named
executive officers, these percentages are 40% (for the Chief Executive Officer)
and 35% (for the President and Vice Chairmen). Maximum awards under the Growth
Plan are 200% of the contingent awards.
Actual awards are determined by measuring Bancorp performance over the three
year performance period. To measure Bancorp performance, the Committee may,
before the beginning of the Growth Plan year, select from among a number of
business criteria or measures, and establish specific objective numeric goals
relating to those measures. The measures may include return on average or year-
end equity, return on average or year-end assets, earnings per share, growth in
earnings per share, increase in Bancorp's common stock price, total return to
shareholders, growth in net income per employee, growth in noninterest income,
control of net overhead expense, control of nonperforming loans, capital
adequacy, adequacy of loan loss reserves.
Two performance measures currently are used, weighted equally: Growth in
earnings per share ("EPS") and growth in net income per employee ("NIPE"). For
purposes of the Growth Plan, EPS growth is defined as the growth in EPS during
the incentive period, measured by dividing EPS during the third calendar year
of the performance cycle by the EPS in the base year (i.e., the year before the
beginning of the performance cycle). Growth in NIPE is defined as the increase
in NIPE for the third year of the incentive program as compared to the NIPE for
the base year. The Compensation Committee of the Board establishes specific
performance goals relating to each of these measures before the beginning of
each performance cycle.
Individual awards are determined based solely on these measures of Bancorp
performance. No upward adjustments based on discretion are permitted for any
participant.
The Board or Committee may amend or modify certain features of the Growth
Plan at any time, without approval of stockholders. These features include the
specific performance criteria used to measure Bancorp performance, the specific
mechanism for calculating awards, and the level of contingent awards under the
Growth Plan.
An estimation of benefits or amounts that may be received or allocated to the
named five executives appears on page 9 in the table entitled "Long-Term
Incentive Plans--Awards in Last Fiscal Year." An estimation of benefits or
amounts that may be received or allocated to each of the following groups under
the Growth Plan, based on awards paid in 1993, are as follows:
PARTICIPANT GROUP ESTIMATED TARGET
----------------- ----------------
Executive Group.......................................... $545,000
Nonexecutive Group....................................... 0
Nonexecutive Officer Employee Group...................... 515,000
27
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy is required to approve the Growth Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE FOREGOING
PROPOSAL.
ELECTION OF AN AUDITOR
The Board of Directors, on recommendation of the Audit Committee, recommends
the reelection of Ernst & Young LLP as Bancorp's Auditor for 19941995 and
thereafter, until its successor is elected. Ernst & Young LLP has been Bancorp's
Auditor since its incorporation in 1971 and also serves as Auditor for the Bank.
Representatives of Ernst & Young LLP are expected to attend the Annual Meeting
and have indicated that they will have no statement to make but will be
available to respond to questions.
OTHER MATTERS
Bancorp knows of no other matter to come before the meeting. However, if any
other matter properly comes before the meeting, the persons named in the
enclosed proxy will vote in accordance with their judgment upon any such
matters.
Section 2.06 of Bancorp's By-Laws provides that for business to be properly
brought before the meeting by a stockholder, the stockholder must give written
notice thereof to the Secretary of Bancorp no later than ten days following the
day notice of the stockholders meeting was mailed to stockholders. Such written
notice must set forth as to each matter that the stockholder proposes to bring
before the meeting (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at such meeting,
(ii) the name and address, as they appear on Bancorp's books, of the stockholder
proposing such business, (iii) the class and number of shares of securities of
Bancorp beneficially owned by such stockholder, and (iv) any material interest
of such stockholder in such business.
Any such notice must be delivered or mailed to Ruth E. Miyashiro, Vice
President andthe Corporate Secretary,
Bancorp Hawaii, Inc., 130 Merchant Street, Honolulu, Hawaii 96813.
28
STOCKHOLDER PROPOSALS FOR 19951996 MEETING
Proposals of stockholders to be presented at and included in Bancorp's Proxy
Statement and proxy for the 19951996 Annual Meeting of Stockholders must be received
by Bancorp (at 130 Merchant Street, Honolulu, Hawaii 96813) on or before
November 17, 1994.
By Order of the Board of Directors
Ruth20, 1995.
BY ORDER OF THE BOARD OF DIRECTORS
RUTH E. Miyashiro
Vice President and Secretary
Honolulu, Hawaii MarchMIYASHIRO
VICE PRESIDENT AND SECRETARY
HONOLULU, HAWAII
MARCH 10, 19941995
A COPY OF BANCORP'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE RELATED
FINANCIAL STATEMENTS AND SCHEDULES FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, IS AVAILABLE WITHOUT CHARGE TO ANY STOCKHOLDER WHO REQUESTS A COPY
IN WRITING. THE FORM 10-K CONSISTS ENTIRELYPRIMARILY OF INCORPORATION BY REFERENCE OF
INFORMATION CONTAINED IN THE ANNUAL REPORT TO STOCKHOLDERS.STOCKHOLDERS OR IN THIS PROXY
STATEMENT. REQUESTS FOR COPIES SHOULD BE MAILED TO RUTH E. MIYASHIRO, VICE
PRESIDENT AND SECRETARY, BANCORP HAWAII, INC., 130 MERCHANT STREET, HONOLULU,
HAWAII 96813.
29
EXHIBIT A
BANCORP HAWAII, INC. STOCK OPTION PLAN OF 1994
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 Establishment of the Plan. Bancorp Hawaii, Inc., a Hawaii corporation
(hereinafter referred to as the "Company"), hereby establishes an incentive
compensation plan to be known as the "Bancorp Hawaii, Inc. Stock Option Plan of
1994" (hereinafter referred to as the "Plan"), as set forth in this document.
The Plan permits the grant of Nonqualified Stock Options, Incentive Stock
Options, SARs, Restricted Stock, Restricted Stock Units, and other similar
Awards; and it offers flexibility in determining the time of payment and
whether Awards will be conditioned on the attainment of performance goals and
whether they will be settled in cash.
Subject to ratification by an affirmative vote of a majority of Shares, the
Plan shall become effective as of January 1, 1994 (the "Effective Date"), and
shall remain in effect as provided in Section 1.3 herein.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success
and enhance the value of the Company by linking the personal interests of
Participants to those of Company shareholders, and by providing Participants
with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants upon
whose judgment, interest, and special effort the successful conduct of its
operation largely is dependent.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1 herein, and shall remain in effect, subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Article 13 herein, until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions. However, in no event may an Award
be granted under the Plan on or after January 1, 2004.
ARTICLE 2. DEFINITIONS
2.1 Definitions. Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Restricted Stock Unit, or other vehicles described in the Plan.
(b) "Award Agreement" means an agreement entered into by each Participant and
the Company, setting forth the terms and provisions applicable to Awards
granted to Participants under this Plan.
(c) "Beneficial Owner" shall have the meaning ascribed to such term in rule
13d-3 of the General Rules and Regulations under the Exchange Act.
(d) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(e) "Cause" means (i) willful misconduct on the part of a Participant that is
detrimental to the Company; or (ii) the conviction of a Participant for the
commission of a felony or crime involving turpitude. "Cause" under either (i)
or (ii) shall be determined in good faith by the Committee.
(f) "Change in Control" shall be deemed to have occurred if:
(1) Any person [other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation
owned directly or indirectly by the shareowners of the Company
30
in substantially the same proportions as their ownership of stock of the
Company], including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, is or becomes the beneficial owner of
shares of stock of the Company having 25% or more of the total number of
votes that may be cast for the election of directors of the Company; or
(2) As a result of, or in connection with, any cash tender or exchange
offer, merger or other business combination, sale of assets, contested
election, or any combination of the foregoing transactions, the persons who
were directors of the Company before the transaction shall cease to
constitute a majority of the Board of Directors of the Company or any
successor of the Company; or
(3) A majority of the Board of Directors determines in good faith that a
"Change in Control" is imminent.
(g) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(h) "Committee" means the committee, as specified in Article 3, appointed by
the Board to administer the Plan with respect to grants of Awards.
(i) "Company" means Bancorp Hawaii, Inc., a Hawaii corporation, or any
successor thereto as provided in Article 15 herein.
(j) "Director" means any individual who is a member of the Board of Directors
of the Company.
(k) "Disability" means a disability as defined in the then existing insured
disability income benefit program maintained by the Bank of Hawaii (regardless
of whether the Participant is covered under that program.)
(l) "Employee" means any full-time, nonunion employee of the Company or of
the Company's Subsidiaries. Directors who are not otherwise employed by the
Company shall not be considered Employees under this Plan. Individuals
described in the first sentence of this definition who are foreign nationals or
are employed outside of the United States, or both, are considered to be
"Employees" and may be granted Awards on the terms and conditions set forth in
the Plan or on such terms and conditions different from those specified in the
Plan as may, in the judgment of the Committee, be necessary or desirable to
further the purpose of the Plan, provided that any maximum amount for an
individual Award that is provided in the Plan shall continue to apply to such
Employees in the same manner as with respect to other Employees.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor Act thereto.
(n) "Fair Market Value" means
(1) When Shares are not listed on an established stock exchange, the mean
between the closing dealer "bid" and "ask" prices for the Shares as quoted
by NASDAQ on the date of the determination, and if no "bid" and "ask"
prices are quoted for such date, "Fair Market Value" shall be determined by
reference to such prices on the next preceding date on which such prices
were quoted; or
(2) When Shares are listed on an established stock exchange (or
exchanges), "Fair Market Value" shall be deemed to be the highest closing
price of a Share on such stock exchange, and if no sale of Shares shall
have been made on any stock exchange on that day, "Fair Market Value" shall
be determined by reference to such price for the next preceding day on
which a sale shall have occurred; or
(3) If Shares are not traded on an established stock exchange and no
closing dealer "bid" and "ask" prices are available, "Fair Market Value"
shall be determined by the Committee based on objective criteria.
(o) "Freestanding SAR" means a SAR that is granted independently of any
Options.
31
(p) "Incentive Stock Option" or "ISO" means an option to purchase Shares,
granted under Article 6 herein, which is designated as an Incentive Stock
Option and is intended to meet the requirements of Section 422 of the Code.
(q) "Insider" shall mean an Employee who is, on the relevant date, a
specifically identified officer, director, or ten percent (10%) beneficial
owner of the Company, as defined under Section 16 of the Exchange Act.
(r) "Nonqualified Stock Option:" or "NQSO" means an option to purchase
Shares, granted under Article 6 herein, which is not intended to be an
Incentive Stock Option.
(s) "Option" means an Incentive Stock Option or a Nonqualified Stock Option.
(t) "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option as determined by the Committee.
(u) "Participant" means an Employee of the Company who has outstanding an
Award granted under the Plan.
(v) "Performance-Based Compensation" means compensation under an Award that
is granted in order to provide remuneration solely on account of the attainment
of one or more preestablished, objective performance goals under circumstances
that satisfy the requirements of Code Section 162(m)(4)(C).
(w) "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, at its discretion), and the Shares are
subject to a substantial risk of forfeiture, as provided in Article 8 herein.
(x) "Person" shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act and used in sections 13(d) and 14(d) thereof, including a
"group" as defined in Section 13(d).
(y) "Reload Option" means a NQSO that allows the holder to receive a new
Option for the same or some other specified number of Shares if he or she
exercises the NQSO by tender previously owned Shares.
(z) "Restricted Stock" means an Award of Shares subject to restrictions that
include a requirement to complete a specified period of employment in order to
avoid forfeiture of such Shares.
(aa) "Restricted Stock Unit" means a unit representing a Share that is
subject to restrictions like those applicable to Restricted Stock and that,
depending on its terms, may be settled either in cash or by the issuance of an
unrestricted Share upon the lapse of the restrictions.
(ab) "Retirement" means termination of employment after attainment of both
age 62 and entitlement to an unreduced retirement allowance under the
Employees' Retirement Plan of Bank of Hawaii.
(ac) "Shares" means the shares of common stock of the Company.
(ad) "Stock Appreciation Right" or "SAR" means an Award pursuant to the terms
of Article 7 herein.
(ae) "Subsidiary" means any corporation in which the Company has at least a
50-percent direct or indirect ownership interest.
(af) "Tandem SAR" means a SAR that is granted in connection with a related
Option, the exercise of which shall require forfeiture of the right to purchase
a Share under the related Option (and when a Share is purchased under the
Option, the Tandem SAR shall similarly be canceled).
32
(ag) "Window Period" means the period beginning on the third business day
following the date of public release of the Company's quarterly sales and
earnings information, and ending on the twelfth business day following such
date.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by a compensation committee
of the Board consisting of two or more outside Directors who meet the
requirements of this section. The members of the Committee shall be appointed
from time to time by, and shall serve at the discretion of the Board of
Directors.
The Committee shall be comprised solely of Directors who are eligible to
administer the Plan pursuant to Rule 16b-3(c)(2) under the Exchange Act and
whose status allows the Plan to meet the requirement of Code Section
162(m)(4)(C)(i) that performance goals under the Plan must be determined by a
compensation committee of the Board comprised solely of two or more outside
Directors. If for any reason the existing Committee does not qualify to
administer the Plan under these criteria, the Board of Directors may appoint a
new Committee so as to comply with Rule 16b-3(c)(2) and Code Section
162(m)(4)(C)(i).
3.2 Authority of the Committee. The Committee shall have full power except as
limited by law or by the Articles of Incorporation or Bylaws of the Company,
and subject to the provisions herein, to determine the participants, the size
and types of Awards; to determine the terms and conditions of such Awards in a
manner consistent with the Plan; to construe and interpret the Plan and any
agreement or instrument entered into under the Plan; to establish, amend, or
waive rules and regulations for the Plan's administration; and (subject to the
provisions of Article 13 herein) to amend the terms and conditions of any
outstanding Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan. Further, the Committee
shall make all other determinations which may be necessary or advisable for the
administration of the Plan. As permitted by law, the Committee may delegate its
authorities as identified hereunder.
All Participants under the Plan are eligible to receive Awards that may
provide Performance-Based Compensation. The Committee shall determine when
granting each Award whether or not it is intended to provide Performance-Based
Compensation, and shall cause the agreement covering any Award that is so
intended to indicate this fact and to include such other information as may be
necessary to satisfy the requirements for treatment as compensation described
in Code Section 162(m)(4)(C). Until the maximum dollar Award is changed and
approved by the Company's stockholders, the maximum dollar amount that will be
paid in settlement of any Award that provides Performance-Based Compensation is
the Fair Market Value (determined on the date the Award is exercised or
otherwise settled) of 20 percent of the total authorized pool of Shares
specified in Section 4.1. Notwithstanding the foregoing, if an initial dollar
maximum is specifically provided for a particular type of Award elsewhere in
this Plan, that specific maximum shall be substituted in place of the maximum
in the preceding sentence. A change in the foregoing maximum may be made by
Plan amendment or other means, provided that it is made and approved by the
Company's stockholders in a manner that satisfies regulatory guidance under
Code Section 162(m)(4)(C). Once made, the changed maximum dollar amount(s)
shall apply to Awards providing Performance-Based Compensation, and the maximum
specified in this section shall cease to apply.
The terms and conditions of any Award (other than an Award of an Option and
the related Tandem SAR, if any) that is intended to provide Performance-Based
Compensation shall include the requirement that such Award shall be payable
only on account of the attainment of one or more preestablished performance
goals. The agreement covering the Award shall specify the performance goals to
which payment under the Award is subject and shall state, in terms of an
objective formula or standard, the method for computing the amount of
compensation payable to the Participant if the goal is obtained. In addition,
before the payment of any such Award, the Committee shall certify that the
performance goals and any other material terms of the Award have in fact been
satisfied.
33
For purposes of the foregoing, the Committee shall specify the performance
goals and certify the attainment of such goals with respect to performance-
related Awards in accordance with Code section 162(m) and related rules and
regulations followed by the Internal Revenue Service. Except as otherwise
permitted or required by such authorities, the performance goals applicable to
each Award subject to this paragraph shall be determined by the Committee in a
manner such that any compensation of a Participant under the Award is paid
pursuant to a preestablished objective performance formula or standard that
precludes discretion and generally allows a third party with knowledge of the
relevant performance results to calculate the amount to be paid to the
Participant.
In general, the reservation of a right to reduce or eliminate the
compensation or other economic benefit that was due upon attainment of the
performance goal shall not be considered to constitute impermissible
discretion, but the choice to pay upon the attainment of either of two
performance goals shall not be allowed under the rules precluding Committee
discretion. The performance goals applicable to each Award intended to provide
Performance-Based Compensation award may be based on but not limited to the
following business criteria: control of net overhead expenses, control of
nonperforming loans, adequacy of loan loss reserves, control of noninterest
expenses, control of interest margins, increase in the Company's common stock
price, increase in earnings per share, growth in net income per employee,
return on equity, increase in bank deposit levels, return on average equity,
return on assets, increase in capitalization levels, increase in noninterest
income and growth in earnings.
3.3 Decisions Binding. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders or resolutions of
the Board shall be final, conclusive, and binding on all persons, including the
Company, its stockholders, Employees, Participants, and their estates and
beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3
herein, the total number of Shares available for grant under the Plan shall be
1,250,000. These Shares may be either authorized but unissued or reacquired
Shares.
The following rules will apply for purposes of the determination of the
number of Shares available for grant under the Plan:
(a) While an Award is outstanding, it shall be counted against the
authorized pool of Shares, regardless of its vested status.
(b) The grant of an Option or Freestanding SAR shall reduce the Shares
available for grant under the Plan by the number of Shares subject to such
Award.
(c) The grant of a Tandem SAR shall reduce the number of Shares available
for grant by the number of Shares subject to the related Option (i.e.,
there is no double counting of Options and their related Tandem SARs).
(d) To the extent that an Award is settled in cash rather than in Shares,
the authorized Share pool shall be credited with the appropriate number of
Shares represented by the cash settlement of the Award, as determined at
the sole discretion of the Committee (subject to the limitation set forth
in Section 4.2 herein).
4.2 Lapsed Awards. If any Award granted under the Plan is canceled,
terminates, expires, or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan. However, in the event that prior to the Award's
cancellation, termination, expiration, or lapse, the holder of the Award at any
time received one or more "benefits of ownership" pursuant to such Award (as
defined by the Securities and
34
Exchange Commission, pursuant to any rule or interpretation promulgated under
Section 16 of the Exchange Act), the Shares subject to such Award shall not be
made available for regrant under the Plan. Further, any Award of an Option or
Freestanding Option that is canceled, terminated, expires, or lapses, shall
continue to be counted against the maximum number of Shares for which an Option
may be granted to an Employee under Article 6 or Article 7.
4.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the shares, such adjustment shall be made in
the number and class of Shares which may be delivered under the Plan, and in
the number and class of and/or price of Shares subject to outstanding Awards
granted under the Plan, as may be determined to be appropriate and equitable by
the Committee, in its sole discretion, to prevent dilution or enlargement of
rights; and provided that the number of Shares subject to any Award shall
always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in this Plan include all
full-time, active, salaried Employees of the Company and its subsidiaries, as
determined by the Committee, including Employees who are members of the Board,
but excluding Directors who are not Employees.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may from time to time, select from all eligible employees, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Employees at any time and from time to time as shall
be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each
Participant; provided, however, that the maximum number of Shares subject to
Options which may be granted to any single Participant during the term of the
Plan is 20 percent of the total authorized pool of Shares specified in
Section 4.1. The Committee may grant ISOs, NQSOs, or a combination thereof.
Subject to any specific Plan rules that may apply to particular Option types,
the NQSOs that may be granted include premium Options as well as performance-
based Options, Options issued in tandem with SARs, Reload Options, and various
combinations of the foregoing.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions
(including performance-based goals, if applicable) as the Committee shall
determine. The Option Agreement also shall specify whether the Option is
intended to be an ISO within the meaning of Section 422 of the Code, or a NQSO
whose grant is intended not to fall under the Code provisions of Section 422.
6.3 Option Price. The Option Price for each Option (except a premium Option
described in the next following sentence) shall be equal to 100 percent of the
Fair Market Value of a Share on the date the Option is granted. The Option
Price for each grant of a premium Option shall be a price determined by the
Committee that, expressed as a percentage of the Fair Market Value of a Share
on the date the Option is granted, shall not be less than 101 percent. The
Option Price shall in all cases be determined as of the date on which the
Option is granted, and shall in no event reflect a discount from the Fair
Market Value of a Share on such date. Accordingly, the Option Price of an ISO
shall never be less than 100 percent of the Fair Market Value of a Share on the
date the ISO is granted. Except in the case of an equitable adjustment pursuant
to Section 4.3, the Option Price of an outstanding Option shall not be changed
by means of repricing or other means after the date of the Option grant.
35
6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth anniversary date of its grant.
6.5 Exercise of Options. Options granted under the Plan shall be exercisable
at such times and be subject to such restrictions and conditions as the
Committee shall in each instance approve, which need not be the same for each
grant or for each Participant. However, in no event may any Option granted
under this Plan become exercisable prior to six months following the date of
its grant.
6.6 Payment. Options shall be exercised by the delivery of a written notice
of exercise to the Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment for the
Shares.
The Option Price upon exercise of any Option shall be payable to the Company
n full either: (a) in cash or its equivalent, or (b) by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the Option Price (provided that the Shares which are tendered must
have been held by the Participant for at least six months prior to their tender
to satisfy the Option Price if NQSOs, and one year prior to tender if ISOs), or
(c) by a combination of (a) and (b).
The Committee also may allow cashless exercise for NQSOs as permitted under
Federal Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant one or more
Share certificates or other appropriate evidence of ownership indicating the
number of Shares purchased under the Option(s).
6.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under applicable federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares.
6.8 Termination of Employment Due to Death, Disability, or Retirement.
(a) Termination by Death. In the event the employment of a Participant is
terminated by reason of death after becoming eligible for Retirement, all
outstanding Options granted to that Participant shall remain exercisable at any
time prior to their original expiration date, or for five years after the date
of death, whichever period is shorter, by such person or persons as shall have
been named as the Participant's Beneficiary, or by such persons that have
acquired the Participant's rights under the Option by will or by the laws of
descent and distribution.
(b) Termination by Disability. In the event the employment of a Participant
is terminated by reason of Disability after becoming eligible for Retirement,
all outstanding Options granted to that Participant shall remain exercisable at
any time prior to their original expiration date, or for five years after the
date that the Committee determines the definition of Disability to have been
satisfied, whichever period is shorter.
(c) Termination by Retirement. In the event the employment of a Participant
is terminated by reason of Retirement, all outstanding Options granted to that
Participant shall remain exercisable at any time prior to their original
expiration date, or for five years after the effective date of Retirement,
whichever period is shorter.
(d) Employment Termination Followed by Death. In the event that a
Participant's employment terminates by reason of Disability or Retirement, and
within the exercise period following such termination
36
the Participant dies, then the remaining exercise period under outstanding
Options shall equal the longer of: (i) one year following death; or (ii) the
remaining portion of the exercise period which was triggered by the employment
termination; but in no event shall such remaining exercise period extend beyond
the original expiration date. Such Options shall be exercisable by such person
or persons who shall have been named as the Participant's Beneficiary, or by
such persons who have acquired the Participant's rights under the Option by
will or by the laws of descent and distribution.
(e) Exercise Limitations on ISOs. The time limit for exercising an ISO is
subject to the limits in Code Section 422(a)(2) (as modified by Section
421(c)(1)(A) and 422(c)(6)). In general, these sections provide that an Option,
in order to be treated as an ISO, must be exercised within three months after a
Participant ceases to be an Employee, except that this three-month period does
not apply if the Option is exercised after the Employee's death and it is
changed to one year in the case of an Employee who is permanently and totally
disabled (within the meaning of Code Section 22(e)(3)). Accordingly, if an
Option intended to qualify as an ISO is not exercised within the applicable ISO
time limit, it will be treated as an NQSO instead of an ISO.
6.9 Termination of Employment for Cause. If the employment of a Participant
shall be terminated by the Company for Cause, all outstanding Options held by
the Participant shall be forfeited to the Company immediately and no additional
exercise period shall be allowed, regardless of the vested status of the
Options.
6.10 Termination of Employment for Other Reasons. If the employment of a
Participant shall be terminated by the Company for any reason other than the
reasons set forth in Section 6.8 or 6.9, all Options held by the Participant
which are not vested as of the effective date of employment termination shall
be forfeited to the Company immediately.
Options which are vested as of the effective date of employment termination
may be exercised by the Participant within the period beginning on the
effective date of employment termination, and ending three months after such
date.
6.11 Nontransferability of Options. No Option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
or her lifetime only by such Participant.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may
be granted to an Employee at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs or any combination of these forms of SARs. Other SARs such as limited SARs
may not be granted under this Plan.
The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs; provided, however, that the maximum number of SARs
which may be granted to any single Participant during the term of the Plan is
20 percent of the total authorized pool of Shares specified in section 4.1.
The grant price of a Freestanding SAR shall equal the Fair Market Value of a
Share on the date of grant of the SAR. The grant price shall in all cases be
determined when the SAR is granted. Except in the case of an equitable
adjustment pursuant to Section 4.3, the grant price of an outstanding SAR shall
not be changed by means of repricing or other means after the date of the SAR
grant. In no event shall any SAR granted hereunder become exercisable within
the first six months of its grant.
37
7.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of
the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO, (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than 100
percent of the difference between the Option Price of the underlying ISO and
the Fair Market Value of the Shares subject to the underlying ISO at the time
the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes on
them.
7.4 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
7.5 Terms of SARS. The term of a SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
the term of a Tandem SAR shall not exceed the term of the related Option, and
the term of a Freestanding SAR shall not exceed ten years.
7.6 Payment of SAR Amount. Upon exercise of a SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the date
of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.
7.7 Rule 16B-3 Requirements. Notwithstanding any other provision of the Plan,
the Committee may impose such conditions on exercise of a SAR (including,
without limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Section 16
(or any successor rule) of the Exchange Act.
For example, if the Participant is an Insider, the ability of the Participant
to exercise SARs for cash will be limited to Window Periods. However, if the
Committee determines that the Participant is not an Insider, or if the
securities laws change to permit greater freedom of exercise of SARs, then the
committee may permit exercise at any point in time, to the extent the SARs are
otherwise exercisable under the Plan.
7.8 Termination of Employment Due to Death, Disability, or Retirement. In the
event the employment of a Participant is terminated by reason of death,
Disability, or Retirement; (i) the forfeiture or vesting and continued
exercisability of all outstanding Tandem SARs granted to that Participant shall
be the same as the forfeiture, vesting and continued exercisability, if any, of
the related Options, as determined under Section 6.8 of this Plan, and (ii) the
forfeiture or vesting and continued exercisability of all outstanding
Freestanding SARs shall be the same as if each Freestanding SAR were an Option
subject to the rules of Section 6.8.
7.9 Termination of Employment For Cause. If the employment of a Participant
shall be terminated by the Company for Cause, all outstanding SARs held by the
Participant shall be forfeited to the Company immediately and no additional
exercise period shall be allowed, regardless of the vested status of the SARs.
7.10 Termination of Employment for Other Reasons. If the employment of a
Participant shall terminate for any reason other than the reasons set forth in
Section 7.8 or 7.9: (i) the forfeiture or vesting and continued
38
exercisability of all outstanding Tandem SARs granted to that Participant shall
be the same as the forfeiture vesting and continued exercisability, if any, of
the related Options, as determined under Section 6.10 of this Plan, and (ii)
the forfeiture or vesting and continued exercisability of all outstanding
Freestanding SARs shall be the same as if each Freestanding SAR were an Option
subject to the rules of Section 6.10.
7.11 Nontransferability of SARS. No SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, all SARs
granted to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant.
ARTICLE 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
8.1 Grant of Restricted Stock/Restricted Stock Units. Subject to the terms
and provisions of the Plan, the Committee, at any time and from time to time,
may grant Shares of Restricted Stock and/or Restricted Stock Units to eligible
Employees in such amounts as the Committee shall determine.
8.2 Restricted Stock/Restricted Stock Unit Agreement. Each Restricted Stock
or Restricted Stock Unit grant shall be evidenced by an Agreement that shall
specify the Period of Restriction, or Periods, the number of Restricted Stock
Shares (or Restricted Stock Units) granted, and such other provisions as the
Committee shall determine.
8.3 Transferability. Except as provided in this Article 8, the Shares of
Restricted Stock and Restricted Stock Units granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until
the end of the applicable Period of Restriction established by the Committee
and specified in the governing Agreement. However, in no event may any
Restricted Stock or Restricted Stock Unit granted under the Plan become vested
in a Participant prior to six months following the date of its grant. All
rights with respect to any Restricted Stock or Restricted Stock Unit granted to
a Participant under the Plan shall be available during his or her lifetime only
to such Participant.
8.4 Other Restrictions. The Committee shall impose such other conditions
and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units
granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock or each Share provided in settlement of a
Restricted Stock Unit, restrictions based upon the achievement of specific
performance goals (Company-wide, divisional, and/or individual), and/or
restrictions under applicable federal or state securities laws; and may legend
the certificates representing Restricted Stock or Restricted Stock Units to
give appropriate notice of such restrictions.
8.5 Certificate Legend. In addition to any legends placed on certificates
pursuant to Section 8.4 herein, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan may bear a legend such as the
following:
"The sale or other transfer of the Shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer as set forth in the Company's
Stock Plan of 1994, and in a Restricted Stock Agreement. A copy of the Plan
and such Restricted Stock Agreement may be obtained from Bancorp Hawaii,
Inc."
The Company shall have the right to retain the certificates representing
Shares of Restricted Stock in the Company's possession until such time as all
conditions and/or restrictions applicable to such Shares have been satisfied.
8.6 Removal Of Restrictions. Except as otherwise provided in this Article 8,
Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall become freely transferable by the Participant after the last day
of the Period of Restriction. Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Section 8.5 removed from his or her Share certificate.
39
8.7 Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.8 Dividends And Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all regular cash dividends paid with respect to all Shares
while they are so held. Except as provided in the succeeding sentence, in the
sole discretion of the Committee, other cash dividends and other distributions
paid with respect to Shares of Restricted Stock may be paid to Participants or
may be subjected to the same restrictions on transferability and forfeitability
as the Shares of Restricted Stock with respect to which they were paid. If any
such dividends or distributions are paid in Shares, the Shares shall be subject
to the same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.
In the event that any dividend constitutes a "derivative security" or an
"equity security" pursuant to Rule 16(a) under the Exchange Act, such dividend
shall be subject to a vesting period equal to the longer of: (i) the remaining
vesting period of the Shares of Restricted Stock with respect to which the
dividend is paid; or (ii) six months. The Committee shall establish procedures
for the application of this provision.
8.9 Termination Of Employment Due to Death or Disability. In the event the
employment of a Participant is terminated by reason of death or Disability, all
outstanding Shares of restricted Stock shall immediately vest 100 percent as of
the date of employment termination (in the case of Disability, the date
employment terminates shall be deemed to be the date that the Committee
determines the definition of Disability to have been satisfied). The holder of
the certificates of Restricted Stock shall be entitled to have any
nontransferability legends required under Sections 8.4 and 8.5 of this Plan
removed from the Share certificates.
8.10 Termination of Employment for Other Reasons. If the employment of a
Participant shall terminate for any reason other than those specifically set
forth in section 8.9 herein, all Shares of Restricted Stock held by the
Participant which are not vested as of the effective date of employment
termination shall be forfeited immediately and returned to the Company;
provided, however, that in the case of termination of employment by reason of
retirement, the Committee may provide for accelerated vesting of some or all
such Shares upon such terms as the Committee, in its sole discretion, deems
appropriate.
ARTICLE 9. BENEFICIARY DESIGNATION. A Participant's "Beneficiary" is the person
or persons entitled to receive payments or other benefits or exercise rights
that are available under the Plan in the event of the Participant's death. A
Participant may designate a Beneficiary or change a previous Beneficiary
designation at any time by using forms and following procedures approved by the
Committee for that purpose. If no Beneficiary designated by the Participant is
eligible to receive payments or other benefits or exercise rights that are
available under the Plan at the Participant's death, the Beneficiary shall be
the Participant's estate. Notwithstanding the provisions above, the Committee
may in its discretion, after notifying the affected Participants, modify the
foregoing requirements, institute additional requirements for Beneficiary
designations, or suspend the existing Beneficiary designations of living
Participants or the process of determining Beneficiaries under this section, or
both. If the Committee suspends the process of designating Beneficiaries on
forms and in accordance with procedures it has approved pursuant to this
section, the determination of who is a Participant's Beneficiary shall be made
under the Participant's will and applicable state law.
ARTICLE 10. DEFERRALS AND SHARE SETTLEMENTS. The Committee may permit a
Participant to defer such Participant's receipt of the payment of cash or the
delivery of Shares that would otherwise be due to such Participant by virtue of
the exercise of an Option or SAR, or with respect to the lapse or waiver of
restrictions with respect to Restricted Stock or Restricted Stock Units. If any
such deferral election is required or permitted, the Committee shall, in its
sole discretion, establish rules and procedures for such payment deferrals. In
addition, the Committee may require or permit a Participant to receive
settlement in the form of Shares of equal or greater Fair Market Value that are
provided under this Plan in lieu of any cash payment
40
that the Participant would otherwise receive under the Company's One-Year
Incentive Plan and/or Sustained Profit Growth Plan, or under any successor to
either or both of these cash incentive plans.
ARTICLE 11. RIGHTS OF EMPLOYEES
11.1 Employment. Nothing in the Plan shall interfere with or limit in any way
the right of the Company to terminate any Participant's employment at any time,
nor confer upon any Participant any right to continue in the employ of the
Company.
For purposes of the Plan, transfer of employment of a Participant between the
Company and any one of its Subsidiaries (or between Subsidiaries) shall not be
deemed a termination of employment.
11.2 Participation. No Employee shall have the right to be selected to
receive an Award under this Plan, or having been so selected, to be selected to
receive a future Award.
ARTICLE 12. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, unless otherwise specifically
prohibited by the terms of Article 16 herein:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable;
(b) Any period of restriction for Restricted Stock and Restricted Stock
Units granted hereunder that have not previously vested shall end, and such
Restricted Stock and Restricted Stock Units shall become fully vested;
(c) Subject to Article 13 herein, the Committee shall have the authority
to make any modifications to the Awards as determined by the Committee to
be appropriate before the effective date of the Change in Control.
ARTICLE 13. AMENDMENT, MODIFICATION, AND TERMINATION. The Board may at any time
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part; provided, that no amendment which requires shareholder approval in
order for the Plan to continue to comply with Rule 16b-3 under the Exchange
Act, including any successor to such Rule, shall be effective unless such
amendment shall be approved by the requisite vote of shareholders of the
Company entitled to vote thereon. Further, no amendment, modification,
suspension, or termination of the Plan shall in any material manner affect any
Award theretofore granted under the Plan without the written consent of the
affected Participant or any person validly claiming under or through such
Participant.
ARTICLE 14. WITHHOLDING
14.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising or as a result of this Plan.
14.2 Share Withholding. With respect to withholding required upon the
exercise of Options or SARs upon the lapse of restrictions on Restricted Stock
or Restricted Stock Units, or upon any other taxable event hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy
the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All elections shall be irrevocable, made in writing, signed by
the Participant, and elections by Insiders shall additionally comply with the
applicable requirement set forth in (a) or (b) of this section 14.2.
(a) Awards having exercise timing within Participants' discretion. The
Insider must either:
(1) Deliver written notice of the stock withholding election to the
Committee at least six months prior to the date specified by the Insider on
which the exercise of the Award is to occur; or
41
(2) Make the stock withholding election in connection with an exercise of
an Award which occurs during a Window Period.
(b) Awards having a fixed exercise/payout schedule which is outside insider's
control. The Insider must either:
(1) Deliver written notice of the stock withholding election to the
Committee at least six months prior to the date on which the taxable event
(e.g., exercise or payout) relating to the Award is scheduled to occur; or
(2) Make the stock withholding election during a Window Period which
occurs prior to the scheduled taxable event relating to the Award (for this
purpose, an election may be made prior to such a Window Period, provided
that it becomes effective during a Window Period occurring prior to the
applicable taxable event).
ARTICLE 15. SUCCESSORS. All obligations of the Company under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
ARTICLE 16. LEGAL CONSTRUCTION
16.1 Gender and Number. Except where otherwise indicated by the context any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
16.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
16.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
Notwithstanding any other provision set forth in the Plan, if required by the
then-current Section 16 of the Exchange Act, any "derivative security" or
"equity security" offered pursuant to the Plan to any Insider may not be sold
or transferred for at least six months after the date of grant of such Award.
The terms "equity security" and "derivative security" shall have the meanings
ascribed to them in the then-current Rule 16(a) under the Exchange Act.
16.4 Securities Law Compliance. With respect to Insiders, transactions under
this Plan are intended to comply with all applicable conditions or Rule 16b-3
or its successors under the 1934 Act. To the extent any provision of the Plan
or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.
16.5 Governing Law. To the extent not preempted by federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and governed by
the laws of the State of Hawaii.
42
EXHIBIT B
BANCORP HAWAII, INC. EXECUTIVE OFFICER ONE-YEAR INCENTIVE PLAN
EFFECTIVE JANUARY 1, 1994
SECTION 1. ESTABLISHMENT AND PURPOSES.
1.01 Bancorp Hawaii, Inc. hereby establishes the Executive Officer One-Year
Incentive Plan.
1.02 The purpose of this Plan is to advance the interests of Bancorp Hawaii,
Inc. by (i) motivating special achievement by Eligible Employees upon whose
judgment, initiative and efforts Bancorp Hawaii, Inc. is largely dependent for
the successful conduct of its business through a compensation program
emphasizing performance objectives; (ii) supplementing other compensation
plans; and (iii) assisting Bancorp Hawaii, Inc. in retaining and attracting
such employees.
SECTION 2. DEFINITIONS.
As used herein, the following terms shall have the following meanings unless
a different meaning is plainly required in the context:
2.01 "Board" shall mean the Board of Directors of the Holding Company.
2.02 "Committee" shall mean the Compensation Committee of the Holding
Company.
2.03 "Contingent Award" shall mean an award to an Eligible Employee expressed
as a percentage of Salary for the Incentive Period.
2.04 "Earnings Growth" shall mean the percentage change in Earnings Per Share
for the Incentive Period as compared to the year immediately prior to the
Incentive Period.
2.05 "Earnings Per Share" (EPS) shall mean fully diluted Earnings Per Share
as reported by the Holding Company in its annual report (or as otherwise
reported to shareholders) adjusted as described in this Section 2.05. The
Holding Company's reported net income shall be adjusted for the following in
computing EPS:
(a) Any extraordinary or unusual gain or loss transactions,
(b) Securities gains or losses,
(c) Incentive Salary Expense, and
(d) Dividends on preferred shares, if any, of the Holding Company.
The Committee will, in its sole discretion, determine any adjustments to be
made pursuant to this Section 2.05. In the event of a stock dividend or stock
split during the Incentive Period, Earnings Growth shall be recomputed to take
into account the effects of such stock dividend or stock split.
2.06 "Eligible Employees" shall mean Key Employees of the Holding Company or
of a Subsidiary who, in the opinion of the Committee, are or give promise of
becoming of exceptional importance to the Holding Company or any Subsidiary,
and of making substantial contributions to the success, growth and profit of
the Holding Company and its Subsidiaries.
2.07 "Ending Value Multiplier", with respect to any Contingent Award, shall
mean an amount determined by the Financial Performance Factor.
2.08 "Financial Performance Factor" shall mean an amount ranging from zero to
2.0 as determined by applying the Performance Matrix as described in Section 6
(or, in certain events, of Section 8.02) of the Plan.
43
2.09 "Holding Company" shall mean Bancorp Hawaii, Inc.
2.10 "Incentive Period", with respect to any Contingent Award, shall mean the
Holding Company's fiscal year.
2.11 "Incentive Salary Expense" shall mean the pre-tax amount accrued for
this Plan during the Incentive Period.
2.12 "Key Employees" shall mean officers or other employees of the Holding
Company or any Subsidiary, including directors who are also officers or other
employees of the Holding Company or of a Subsidiary.
2.13 "Net Income" shall mean the Holding Company's consolidated net income
for the Incentive Period, as reported in the annual report to shareholders (or
as otherwise reported to shareholders) adjusted in the same manner as EPS.
2.14 "Participant" shall mean a person that the Committee, in its sole
discretion, selects from among the Eligible Employees to be awarded a
Contingent Award.
2.15 "Performance Matrix" shall mean the matrix shown in Section 6 by which
the Financial Performance Factor under this Plan is calculated.
2.16 "Plan" shall mean this Executive Officer One-Year Incentive Plan, as it
may be amended from time to time.
2.17 "Return on Average Equity" (ROAE) shall mean Net Income of the Holding
Company for the Incentive Period divided by Average Total Equity for the
Incentive Period. Average Total Equity shall be as reported in the Holding
Company's annual report to shareholders (or as otherwise reported to
shareholders) less the average amount of any preferred stock.
2.18 "Salary" shall mean actual base salary for the Incentive Period.
2.19 "Subsidiary" or "Subsidiaries" shall mean any corporation(s) in which
the Holding Company or any Subsidiary (as defined hereby) owns, at the time of
making a Contingent Award hereunder, stock possessing 50% or more of the total
combined voting power of all classes of stock in such corporation.
SECTION 3. ELIGIBILITY
3.01 Contingent Awards may be made only to Eligible Employees.
3.02 Neither members of the Committee nor any member of the Board who is not
an employee of the Holding Company or of a Subsidiary shall be an Eligible
Employee.
SECTION 4. ADMINISTRATION
4.01 The Plan shall be administered by the Committee.
4.02 The Committee shall be vested with full authority to make such rules and
regulations as it deems necessary to administer the Plan and to interpret the
provisions of the Plan. Any determination, decision or action of the Committee
in connection with the construction, interpretation, administration or
application of the Plan shall be final, conclusive and binding upon all
Eligible Employees, Participants and any and all persons claiming under or
through any Eligible Employee or Participant, unless otherwise determined by
the Board.
44
4.03 Any determination, decision or action of the Committee provided for in
this Plan may be made or taken by action of the Board if the Board so
determines with the same force and effect as if such determination, decision or
action had been made or taken by the Committee. No member of the Committee or
Board shall be liable for any determination, decision or action made in good
faith with respect to the Plan or any Contingent Award. The fact that a member
of the Board shall at the time be, or shall theretofore have been or thereafter
may be, an Eligible Employee or a Participant shall not disqualify him or her
from taking part in and voting at any time as a member of the Board in favor of
or against any amendment of the Plan.
SECTION 5. CONTINGENT AWARDS
5.01 The Committee may, from time to time, in its sole discretion, award to
each Participant a Contingent Award. The Committee shall cause notice to be
given to each Participant of his or her selection as soon as practicable
following the making of a Contingent Award.
5.02 The Contingent Award that may be awarded to any Participant shall be a
percentage of his or her Salary, which percentage shall be no greater than the
amounts set out in the table below.
CONTINGENT
AWARD
AS A % OF
BANK OF HAWAII OFFICERS SALARY
----------------------- ----------
Chairman of the Board/CEO.................................... 50%
President or Vice Chairman................................... 40%
5.03 The Contingent Award shall be determined by multiplying the
Participant's Salary times the percentage specified for him or her by the
Committee. In any event, the maximum payout under this Plan shall be two times
the Contingent Award. For example, if the Participant has a Salary of $80,000
and the Contingent Award awarded to such Participant is 30%, the Contingent
Award is $24,000. In this example, the maximum payout under this Plan is two
times the Contingent Award, or $48,000.
5.04 For the named executive officers, assessment of individual performance
may result in a downward adjustment of the maximum award, or the entire
elimination of this award. No upward adjustments based on discretion are
permitted beyond the maximum award for the named executive officers.
SECTION 6. ENDING VALUE OF CONTINGENT AWARD
6.01 The Ending Value of a Contingent Award shall be determined by
multiplying the Contingent Award by the Ending Value Multiplier.
6.02 The Ending Value Multiplier is the Financial Performance Factor
(determined from the Performance Matrix in this Section 6).
6.03 The maximum Ending Value Multiplier under all circumstances is 2.000.
45
6.04 Performance Matrix:
FINANCIAL PERFORMANCE FACTOR
- --------------------------------------------------------------------------------
R 16% 0.98 1.1 1.3 1.7 2.0
- -------------------------------------------------------------------------------------------------------
O 15% 0.72 1.06 1.2 1.6 2.0
- -------------------------------------------------------------------------------------------------------
A 14% 0.55 0.77 1.0 1.4 1.9
- -------------------------------------------------------------------------------------------------------
E 12% 0.4 0.5 0.88 1.2 1.9
- -------------------------------------------------------------------------------------------------------
2% 4% 6% 7% 8%
EARNINGS GROWTH
6.05 Interpolation shall be made on a straight line basis, rounded to three
decimal places. For example, if ROAE is 13% and Earnings Growth is 5%, the
Financial Performance Factor is 0.725. (In certain unusual cases, either ROAE
or Earnings Growth may be below 12% and 2% respectively. Proration will still
be performed if at least one of these factors is within the range indicated on
the Performance Matrix.)
SECTION 7. DETERMINATION AND PAYMENT OF AWARDS
7.01 If the Ending Value as computed and adjusted in accordance with Section
6 is zero, no payment shall be made, any Contingent Awards shall terminate and
all rights thereunder shall cease.
7.02 Subject to the provisions of Section 8 hereof, the Ending Value, if any,
of the Contingent Award for each Participant shall be determined as per Section
6. The amount determined for each Participant shall be paid in cash in a lump
sum (subject to withholding requirements, if applicable) as soon as practicable
after determination thereof.
However, a Participant may make a request, on a form approved by the
Committee, for the deferral of all or part of any payment he or she may
receive, provided that such request is delivered to the Human Resources
Division no later than November 1 of the Incentive Period.
The Committee may accept or reject any such request for a deferral and may
determine the conditions of such deferral at the Committee's sole discretion.
SECTION 8. TERMINATION OF EMPLOYMENT
8.01 Except as otherwise provided in Section 8.02 below, if a Participant
does not remain continuously in the employ of the Holding Company or a
Subsidiary until the expiration of the Incentive Period with respect to any
Contingent Award, such Contingent Award shall terminate and all rights
thereunder shall cease.
8.02 If the employment of a Participant with the Holding Company or a
Subsidiary terminates during the Incentive Period due to his or her death,
disability or retirement, the Committee shall determine the cash payment to be
made with respect to such Participant under the following method:
Salary shall be annualized based on the number of whole months of the
Incentive Period prior to the Participant's death, disability or retirement.
The Ending Value of the Contingent Award calculated under Sections 6 and 7
shall be multiplied by a fraction, the numerator of which shall be the number
of full months of the Incentive Period during which Participant was an employee
of the Holding Company or Subsidiary, and the denominator of which shall be 12.
This calculation and the payment of any award necessarily must be paid in
accordance with Section 7.02.
46
SECTION 9. NON-TRANSFERABILITY OF CONTINGENT AWARDS
No Contingent Award shall be sold, assigned, transferred, encumbered,
hypothecated or otherwise anticipated by a Participant, and during the lifetime
of a Participant, any payment shall be payable only to the Participant. The
Committee shall, if it so determines, adopt rules for the designation by a
Participant of a beneficiary to receive cash payments, if any, that may become
due pursuant to this Plan after the death of the Participant.
SECTION 10. AMENDMENT OR TERMINATION OF THE PLAN
The Board or the Committee may, at any time, terminate or at any time and
from time to time amend, modify or suspend this Plan provided that no such
amendment, modification, suspension or termination of the Plan shall in any
manner adversely affect any Contingent Award theretofore made under the Plan
without the consent of the Participant.
SECTION 11. CHANGES IN CAPITALIZATION
In the event of a dissolution or liquidation of the Holding Company, or a
merger or consolidation in which the Holding Company is not the surviving
corporation, the amount of cash payable with respect to any Contingent Award
for an Incentive Period that will end after such event shall be determined and
payable as if the Incentive Period ended on the date of such event and an
Ending Value Multiplier of 2.00 shall be used in calculating payments under
this Plan, notwithstanding any other provisions of this Plan. All Contingent
Awards shall be calculated based on annualized salary for such shortened
Incentive Period and shall be paid to such participants within ten days of the
end of the shortened Incentive Period.
47
EXHIBIT C
BANCORP HAWAII, INC. SUSTAINED PROFIT GROWTH PLAN
EFFECTIVE JANUARY 1, 1994
SECTION 1. ESTABLISHMENT AND PURPOSES
1.01 Bancorp Hawaii, Inc. hereby establishes the Sustained Profit Growth
Plan.
1.02 The purpose of this Plan is to advance the interests of Bancorp Hawaii,
Inc. by (i) motivating special achievement by Eligible Employees upon whose
judgment, initiative and efforts Bancorp Hawaii, Inc. is largely dependent for
the successful conduct of its business through a compensation program
emphasizing long-term performance incentives; (ii) supplementing other
compensation plans; and (iii) assisting Bancorp Hawaii, Inc. in retaining and
attracting such employees.
SECTION 2. DEFINITIONS
As used herein, the following terms shall have the following meanings unless
a different meaning is plainly required in the context:
2.01 "Base Year" shall mean the fiscal year prior to the Incentive Period.
2.02 "Board" shall mean the Board of Directors of the Holding Company.
2.03 "Committee" shall mean the Compensation Committee of the Holding
Company.
2.04 "Contingent Award" shall mean an award to an Eligible Employee expressed
as a percentage of average annual Salary for the Incentive Period.
2.05 "Eligible Employees" shall mean Key Employees of the Holding Company or
of a Subsidiary who, in the opinion of the Committee, are or give promise of
becoming of exceptional importance to the Holding Company or any Subsidiary,
and of making substantial contributions to the success, growth and profit of
the Holding Company and its Subsidiaries.
2.06 "Earnings Per Share" (EPS) shall mean fully diluted Earnings Per Share
as reported by the Holding Company in its annual report (or as otherwise
reported to shareholders) adjusted as described in this Section 2.06. The
Holding Company's reported net income shall be adjusted for the following in
computing EPS:
(a) Any extraordinary or unusual gain or loss transactions,
(b) Securities gains or losses,
(c) Incentive Salary Expense, and
(d) Dividends on preferred shares, if any, of the Holding Company.
The Committee will, in its sole discretion, determine any adjustments to be
made to EPS pursuant to this Section 2.06.
2.07 "Earnings Growth Rate" shall mean the growth of EPS during the Incentive
Period. For example, if EPS in the Base Year is $6.00 and EPS for the third
calendar year of the Incentive Period is $7.80, then the Earnings Growth Rate
is 30%. For purposes of this Plan, the Earnings Growth Rate shall be rounded to
the nearest one-tenth of one percent. In the event of a stock dividend or stock
split during the Incentive Period, Earnings Growth Rate shall be restated to
take into account the effect of such stock dividend or stock split.
48
2.08 "Ending Value Multiplier", with respect to any Contingent Award, shall
mean an amount ranging from zero to 2.00 as determined by applying the
Performance Matrix as described in Section 6 (or in certain events, Section
9.02) of the Plan.
2.09 "FTE Staff" shall be sum of (i) the total number of hours worked by
part-time employees of the Holding Company and its Subsidiaries during the
applicable fiscal year of the Incentive Period divided by 2,080 and (ii) the
average number of full-time staff members employed by the Holding Company and
the Subsidiaries during the same fiscal year.
2.10 "Growth in NIPE" or "NIPE Growth" shall mean the increase (if any) in
NIPE for the third year of the Incentive Period as compared to NIPE for the
Base Year. Growth in NIPE shall be expressed as a percentage to two decimal
places. For example, if NIPE in the Base Year is $25,000 and NIPE in the third
year of the Incentive Period is $35,000, then Growth in NIPE is 40%.
2.11 "Holding Company" shall mean Bancorp Hawaii, Inc.
2.12 "Incentive Period", with respect to any Contingent Award, shall mean the
Holding Company's fiscal years 1994 through 1996 inclusive.
2.13 "Incentive Salary Expense" shall mean the pre-tax amount accrued for
this Plan and any other sustained profit growth plans of the Holding Company
during the Incentive Period.
2.14 "Key Employees" shall mean officers or other employees of the Holding
Company or any Subsidiary, including directors who are also officers or other
employees of the Holding Company or of a Subsidiary.
2.15 "Net Income per Employee" (NIPE) shall mean the Holding Company's net
income as reported in its annual report, or as otherwise reported to
shareholders (adjusted in the same manner as provided in Section 2.06), divided
by FTE Staff.
2.16 "Participant" shall mean a person that the Committee, in its sole
discretion, selects from among the Eligible Employees to be awarded a
Contingent Award.
2.17 "Performance Matrix" shall mean the matrix shown in Section 6 which is
used in calculating Ending Value Multipliers under this Plan.
2.18 "Plan" shall mean this Sustained Profit Growth Plan, as it may be
amended from time to time.
2.19 "Salary" shall mean base salary only.
2.20 "Subsidiary" or "Subsidiaries" shall mean any corporation(s) in which
the Holding Company or any Subsidiary (as defined hereby) owns, at the time of
making a Contingent Award hereunder, stock possessing 50% or more of the total
combined voting power of all classes of stock in such corporation.
SECTION 3. ELIGIBILITY
3.01 Contingent Awards may be made only to Eligible Employees.
3.02 Neither members of the Committee nor any member of the Board who is not
an employee of the Holding Company or of a Subsidiary shall be an Eligible
Employee.
SECTION 4. ADMINISTRATION
4.01 The Plan shall be administered by the Committee.
49
4.02 The Committee shall be vested with full authority to make such rules and
regulations as it deems necessary to administer the Plan and to interpret the
provisions of the Plan. Any determination, decision or action of the Committee
in connection with the construction, interpretation, administration or
application of the Plan shall be final, conclusive and binding upon all
Eligible Employees, Participants and any and all persons claiming under or
through any Eligible Employee or Participant, unless otherwise determined by
the Board.
4.03 Any determination, decision or action of the Committee provided for in
this Plan may be made or taken by action of the Board if the Board so
determines with the same force and effect as if such determination, decision or
action had been made or taken by the Committee. No member of the Committee or
Board shall be liable for any determination, decision or action made in good
faith with respect to the Plan or any Contingent Award. The fact that a member
of the Board shall at the time be, or shall theretofore have been or thereafter
may be, an Eligible Employee or a Participant, shall not disqualify him or her
from taking part in and voting at any time as a member of the Board in favor of
or against any amendment of the Plan.
SECTION 5. CONTINGENT AWARDS
5.01 The Committee may, from time to time, in its sole discretion, award to
each Participant a Contingent Award. The Committee shall cause notice to be
given to each Participant of his or her selection as soon as practicable
following the making of a Contingent Award.
5.02 The Contingent Award that may be awarded to any Participant shall be a
percentage of his or her average annual Salary for the Incentive Period, which
percentage shall be no greater than the amounts set out in the table below.
CONTINGENT AWARD
BANK OF HAWAII OFFICERS AS A % OF SALARY
----------------------- ----------------
Chairman of the Board/CEO.............................. 40%
President or Vice Chairman............................. 35%
Executive Vice President............................... 30%
Senior Vice President.................................. 25%
Other Subsidiary Officers.............................. 25%
5.03 The Contingent Award shall be multiplied by the Participant's average
annual Salary for the Incentive Period. In any event, the maximum payout under
this Plan shall be two times the Contingent Award. For example, a Participant
with an average annual Salary of $80,000 might receive a Contingent Award of
25% or $20,000. In this example, the maximum payout under this Plan would be
two times the Contingent Award, or $40,000.
50
SECTION 6. ENDING VALUE OF CONTINGENT AWARD
6.01 The Ending Value of a Contingent Award shall be determined by
multiplying the Contingent Award by the Ending Value Multiplier determined from
the Performance Matrix in Section 6.02.
6.02 Ending Value Multiplier
EARNINGS GROWTH RATE
NIPE --------------------
GROWTH 12% 14% 16% 18% 20% 22% 24% 26% 28%
- ------ ----- ----- ----- ----- ----- ----- ----- ----- -----
26% 1.000 1.125 1.250 1.375 1.500 1.625 1.750 1.875 2.000
25% 0.875 1.000 1.125 1.250 1.375 1.500 1.625 1.750 1.875
24% 0.750 0.875 1.000 1.125 1.250 1.375 1.500 1.625 1.750
22% 0.625 0.750 0.875 1.000 1.125 1.250 1.375 1.500 1.625
20% 0.500 0.625 0.750 0.875 1.000 1.125 1.250 1.375 1.500
17% 0.375 0.500 0.625 0.750 0.875 1.000 1.125 1.250 1.375
14% 0.250 0.375 0.500 0.625 0.750 0.875 1.000 1.125 1.250
11% 0.125 0.250 0.375 0.500 0.625 0.750 0.875 1.000 1.125
8% 0.000 0.125 0.250 0.375 0.500 0.625 0.750 0.875 1.000
6.03 Interpolation between the points shown above shall be made on a straight
line basis rounded to three decimal places. For example, if NIPE Growth is 23%
and the Earnings Growth Rate is 27%, the Ending Value Multiplier would be
1.500. The maximum Ending Value Multiplier under all circumstances will be
2.00.
SECTION 7. CONDITIONS
The Chairman and the President shall prepare recommendations for the
Committee. The Committee shall make the final determination of the Ending
Multiplier and any awards, and reserves the right to add to or withhold all or
any portion of any or all award(s) at its sole discretion.
SECTION 8. DETERMINATION AND PAYMENT OF AWARDS
8.01 If the Ending Value as computed and adjusted in accordance with Section
6 and 7 is zero, no payment shall be made, any Contingent Awards shall
terminate and all rights thereunder shall cease.
8.02 Subject to the provisions of Section 9 hereof, the Ending Value, if any,
of the Contingent Award for each Participant shall be determined as per
Sections 6 and 7. The amount determined for each Participant shall be paid in
cash in a lump sum (subject to withholding requirements, if applicable) as soon
as practicable after determination thereof.
However, a Participant may make a request, on a form approved by the
Committee, for the deferral of all or part of any payment he or she may
receive, provided that such request is delivered to the Human Resources
Division no later than November 1 of the last year of the Incentive Period.
The Committee may accept or reject any such request for a deferral and may
determine the conditions of such deferral at the Committee's sole discretion.
SECTION 9. TERMINATION OF EMPLOYMENT
9.01 Except as otherwise provided in Section 9.02 below, if a Participant
does not remain continuously in the employ of the Holding Company or a
Subsidiary until the expiration of the Incentive Period with respect to any
Contingent Award, such Contingent Award shall terminate and all rights
thereunder shall cease.
9.02 If the employment of a Participant with the Holding Company or a
Subsidiary terminates during the Incentive Period due to his or her death,
disability or retirement, the Committee shall determine the cash payment to be
made with respect to such Participant under the following method.
51
The Contingent Award payable, if any, shall be based on the annualized salary
of the Participant as of the last January 1 prior to the Participant's death,
disability or retirement. The Ending Value of the Contingent Award calculated
under Sections 6, 7 and 8 shall be multiplied by a fraction, the numerator of
which shall be the number of full months of the Incentive Period during which
Participant was an employee of the Holding Company or Subsidiary, and the
denominator of which shall be 36. This calculation and the payment of any award
must be paid in accordance with Section 8.02.
SECTION 10. NON-TRANSFERABILITY OF CONTINGENT AWARDS
No Contingent Award shall be sold, assigned, transferred, encumbered,
hypothecated or otherwise anticipated by a Participant, and during the lifetime
of a Participant, any payment shall be payable only to the Participant. The
Committee shall, if it so determines, adopt rules for the designation by a
Participant of a beneficiary to receive cash payments, if any, that may become
due pursuant to this Plan after the death of the Participant.
SECTION 11. AMENDMENT OR TERMINATION OF THE PLAN
The Board or the Committee may, at any time, terminate or at any time and
from time to time amend, modify or suspend this Plan provided that no such
amendment, modification, suspension or termination of the Plan shall in any
manner adversely affect any Contingent Award theretofore made under the Plan
without the consent of the Participant.
SECTION 12. CHANGES IN CAPITALIZATION
In the event of a dissolution or liquidation of the Holding Company or a
merger or consolidation in which the Holding Company is not the surviving
corporation, the amount of cash payable with respect to any Contingent Award
for an Incentive Period that will end after such event shall be determined and
payable as if the Incentive Period ended on the date of such event and an
Ending Value Multiplier of 2.000 shall be used in calculating the award for
this Plan, notwithstanding any other provisions of this Plan. All Contingent
Awards shall be calculated based on the average annual Salary of the
Participant for the shortened Incentive Period, and shall be paid to such
Participants within ten days of the end of the shortened Incentive Period.
5223
BANCORP HAWAII, INC.
130 Merchant Street, Honolulu, Hawaii 96813
P R 0 X Y
FOR THE ANNUAL MEETING OF STOCKHOLDERS-APRIL 27, 1994For the Annual Meeting of Stockholders-April 26, 1995
THIS PROXY IS SOLICITED BY MANAGEMENT BY ORDER OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Peter D. Baldwin, Thomas B.
Hayward,Mary G.
F. Bitterman, Stuart T. K. Ho, , H. Howard Stephenson, Fred E. Trotter, and
Charles R. Wichman and each of them, the proxy of the undersigned, with full
powers of substitution, to vote all of the common stock of Bancorp Hawaii, Inc.,
which the undersigned may be entitled to vote at the annual meeting of
stockholders of the corporation to be held on April 27, 1994,26, 1995, or at any
adjournment thereof. Said proxies are instructed to vote as follows:
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR: (1)FOR THE ELECTION OF ITS NOMINEES
AS DIRECTORS (2) AMENDMENT OF THE RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK, (3) APPROVAL OF THE
BANCORP HAWAII, INC. STOCK OPTION PLAN OF 1994, (4) APPROVAL OF THE BANCORP
HAWAII, INC. EXECUTIVE OFFICER ONE-YEAR INCENTIVE PLAN, (5) APPROVAL OF THE
BANCORP HAWAII, INC. SUSTAINED PROFIT GROWTH PLAN, AND (6) ELECTION OF ERNST & YOUNG LLP AS AUDITOR. THIS PROXY WILL BE
VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, IT WILL BE VOTED AS
RECOMMENDED BY THE BOARD OF DIRECTORS. SAID PROXIES ARE AUTHORIZED TO VOTE IN
THEIR DISCRETION WITH RESPECT TO OTHER MATTERS WHICH MAY COME BEFORE THE
MEETING.
(Continued, and to be signed and dated(PLEASE DATE AND SIGN ON REVERSE SIDE)
- --------------------------------------------------------------------------------
Please mark boxes / / or /x/ in blue or black ink.
1. Elect the following Directors:
Class III Directors for terms expiring in 1998
Nominees: Mary G. F. Bitterman, Herbert M. Richards, Jr.,
H. Howard Stephenson, Charles R. Wichman
Class I Director for term expiring in 1996
Nominee: Richard J. Dahl
(CHECK ONE BOX ONLY)
For all nominees listed above. /X/
Withhold Authority Generally. /X/
For all nominees except as listed below. /X/
(To withhold authority for any particular nominee write his or her name on reverse side)
- ------------------------------------------------------------------------------------------------------------------------------------
PLEASE MARK BOXES [_] OR [X] IN BLUE OR BLACK INK.
1. Elect the following Directors: (CHECK ONE BOX ONLY)
Class II Directors for terms expiring in 1997 NOMINEES: DAVID A. HEENAN, STUART T. K. HO, LAWRENCE M. JOHNSON, FRED E TROTTER
Class III Directors for term expiring in 1995 NOMINEES: MARY G. F. BITTERMAN, HERBERT M. RICHARDS, JR.
(CHECK ONE BOX ONLY)
For all nominees listed on the reverse side. [X] Withhold Authority Generally. [X] Exceptions*
(TO WITHHOLD AUTHORITYthe
line below.)
- --------------------------------------------------------------------------------
2. Elect Ernst & Young LLP as Auditor.
FOR ANY PARTICULAR NOMINEE MARK THE "EXCEPTION"
BOX AND WRITE HIS NAME ON THE LINE BELOW.)
*Exceptions
-------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
2. Approve an amendment to the Restated Articles of Incorporation
to increase the authorized number of shares of common stock. FOR [X] AGAINST [X] ABSTAIN [X]
3. Approve the Bancorp Hawaii, Inc. Stock Option Plan of 1994. FOR [X] AGAINST [X] ABSTAIN [X]
4. Approve the Bancorp Hawaii Inc. Executive Officer
One-Year Incentive Plan. FOR [X] AGAINST [X] ABSTAIN [X]
5. Approve the Bancorp Hawaii, Inc. Sustained Profit Growth Plan. FOR [X] AGAINST [X] ABSTAIN [X]
6. Elect Ernst & Young as Auditor. FOR [X] AGAINST [X] ABSTAIN [X]
/X/ AGAINST /X/ ABSTAIN /X/
Please sign your name exactly as
it appears hereon. Joint owners
should sign personally. Attorney,
Executor, Administrator. Trustee,
or Guardian should indicate full
title. If Address is incorrect,
please give us correct one.
Dated:
--------------------------------------------
-----------------------------------------------------___________________________
_________________________________
Signature (no witness required)
-----------------------------------------------------_________________________________
Signature if stock held jointly
Votes must be indicated (X) in Black or
Blue ink. [X]
Sign, Date and Return Proxy Card Promptly Votes must be indicated (X) in
Using the Enclosed Envelope. Black or Blue ink as in this
example /X/