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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A(Rule 14a-101)SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrantý | |||||
Filed by a Party other than the Registranto | |||||
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o | Preliminary Proxy Statement | ||||
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||||
ý | Definitive Proxy Statement | ||||
o | Definitive Additional Materials | ||||
o | Soliciting Material Pursuant to §240.14a-12 |
Bank of Hawaii Corporation | ||||||||
(Name of Registrant as Specified In Its Charter) | ||||||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||||||
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o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||||||
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(2) | Aggregate number of securities to which transaction applies: | |||||||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||||||
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o | Fee paid previously with preliminary materials. | |||||||
o | 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 Form or Schedule and the date of its filing. | |||||||
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Your VOTE is important!
Notice of 20092010
Annual Meeting of Shareholders
and Proxy Statement
Meeting Date: April 24, 200923, 2010
Bank of Hawaii Corporation
130 Merchant Street
Honolulu, Hawaii 96813
BANK OF HAWAII CORPORATION
130 Merchant Street
Honolulu, Hawaii 96813
March 13, 200912, 2010
Dear Shareholder:
The 20092010 Annual Meeting of shareholders of Bank of Hawaii Corporation will be held on Friday, April 24, 200923, 2010 at 8:30 a.m. on the Sixth Floor of the Bank of Hawaii Building, 111 South King Street, Honolulu, Hawaii. Each shareholder may be asked to present valid picture identification. Shareholders holding stock in brokerage accounts will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date.
The Notice of Meeting and Proxy Statement accompanying this letter describe the business we will consider and vote upon at the meeting. A report to shareholders on the affairs of Bank of Hawaii Corporation also will be given, and shareholders will have the opportunity to discuss matters of interest concerning the Company.
For reasons explained in the accompanying Proxy Statement, the Board of Directors recommends that you vote FOR all proposals.
Your vote is very important. Please complete, sign, date and return the enclosed proxy card and mail it promptly in the enclosed postage-paid return envelope, even if you plan to attend the Annual Meeting. You may also vote by telephone or electronically via the Internet. If you wish to do so, your proxy may be revoked at any time before voting occurs.
On behalf of the Board of Directors, thank you for your cooperation and support.
Sincerely, | ||
ALLAN R. LANDON |
| Page | ||||||
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Notice of | |||||||
Proxy Statement | |||||||
Questions and Answers About the Proxy Materials and the Annual Meeting | |||||||
Proposal 1: Election of Directors | |||||||
Board of Directors | |||||||
Beneficial Ownership | |||||||
Corporate Governance | |||||||
Board Committees and Meetings | |||||||
Director Compensation | |||||||
Director Compensation Table | |||||||
Audit Committee Report | |||||||
Compensation Committee Report | |||||||
Executive Compensation | |||||||
Compensation Discussion and Analysis | |||||||
Summary Compensation Table | |||||||
Nonqualified Deferred Compensation | |||||||
Grants of Plan-Based Awards | |||||||
Outstanding Equity Awards at Fiscal Year-End | |||||||
Option Exercises and Stock Vested | |||||||
Equity Compensation Plan Information | |||||||
Pension Benefits | |||||||
Change in Control, Termination and Other Arrangements | |||||||
Certain Relationships and Related Transactions | |||||||
Section 16(a) Beneficial Ownership Reporting Compliance | |||||||
Proposal 2: Ratification of Selection of an Independent Registered Public Accounting Firm | |||||||
46
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Other Business | |||||||
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held April 24, 2009
23, 2010
To Our Shareholders:
The Annual Meeting of shareholders of Bank of Hawaii Corporation will be held on Friday, April 24, 2009,23, 2010, 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:
The Board of Directors recommends that shareholders vote FOR all proposals.
Shareholders of record of Bank of Hawaii Corporation common stock (NYSE: BOH) at the close of business on February 27, 200926, 2010 are entitled to attend the meeting and vote on the business brought before it.
We look forward to seeing you at the meeting. However, if you cannot attend the meeting, your shares may still be voted if you complete, sign, date, and return the enclosed proxy card in the enclosed postage-paid return envelope. You also may vote by telephone or electronically via the Internet.
By Order of the Board of Directors
MARK A. ROSSI
Vice Chairman and Corporate Secretary
Bank of Hawaii Corporation
Honolulu, Hawaii
Dated: March 13, 200912, 2010
IMPORTANT |
Please sign and return the enclosed proxy card or vote by telephone or on the Internet as promptly as possible. This will save the expense of a supplementary solicitation. |
Thank you for acting promptly. |
Please sign and return the enclosed proxy card or vote by telephone or on the Internet as promptly as possible. This will save the expense of a supplementary solicitation.
Thank you for acting promptly.
Important Notice Regarding the Availability of Proxy Materials
for the Annual Shareholder Meeting to be Held April 24, 200923, 2010
The Proxy Statement and the Bank of Hawaii Corporation 20082009 Annual Report on Form 10-K to Shareholders for the year ended December 31, 20082009 are available atwww.edocumentview.com/boh.boh.
The Board of Directors (the "Board") of Bank of Hawaii Corporation (Bank of Hawaii Corporation and its subsidiaries, as appropriate, are referred to as "Bank of Hawaii" or the "Company") is soliciting the enclosed proxy for the Company's 20092010 annual meeting. The proxy statement, proxy card, and the Company's Annual Report to Shareholders and Annual Report on Form 10-K are being distributed to the Company's shareholders on or about March 13, 2009.12, 2010.
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING
Q:
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Q: What is New York Stock Exchange Rule 452 about and how does it impact shareholder voting?
Q: What shares can I vote?
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enclosed proxy card or notice, admission ticket, and proof of identification. If you hold your shares as a beneficial owner, you must vote your shares through your broker or other nominee.
Even if you plan to attend the annual meeting, we recommend you also submit your proxy so your vote will be counted if you later decide not to attend the annual meeting.
Q:
Mail. You may mail your proxy by signing your proxy card or, for shares held in street name, the voting instruction card included by your broker or nominee, and mailing it in the enclosed, postage prepaid and addressed envelope. If you provide specific voting instructions, your shares will be voted as you instruct. If you sign and return a proxy card without giving specific voting instructions, your shares will be voted as recommended by the Board.
Internet. If you have Internet access, you may submit your proxy from anywhere, following the "Vote by Internet" instructions on your proxy card.
Telephone. If you live in the United States, you may submit your proxy by following the "Vote by Telephone" instructions on the proxy card.
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All other proposals require the affirmative vote of a majority of shares present in person or by proxy and entitled to vote at the meeting. Broker non-votes will be treated as not entitled to vote and will not affect the outcome. Abstentions will have the same effect as votes cast against the proposal.
Q:
votes and certification of the vote, and (iii) to facilitate a successful proxy solicitation by our Board. Occasionally, shareholders write comments on their proxy cards, which are forwarded to Bank of Hawaii management.
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Q: May I propose actions for consideration at next year's annual meeting of shareholders?
Proposals To Be Included In The Proxy Statement and Voted On At The Meeting. Proposals that shareholders wish to have included in the proxy statement for the 20102011 annual meeting of shareholders must be made in accordance with U. S. Securities and Exchange Commission ("SEC") Rule 14a-8. Proposals must be received by the Company's Corporate Secretary on or before November 14, 200913, 2010 at the above address.
Proposals To Be Voted On At The Meeting Only. Under our By-Laws, for a shareholder to bring a proposal before the 20102011 annual meeting, Bank of Hawaii must receive the written proposal no later than 80 days nor earlier than 90 days before the first anniversary of the 20092010 annual meeting;
in other words, no later than February 4, 20103, 2011 and no earlier than January 25, 2010.24, 2011. (Please refer to Section 1.12 of Bank of Hawaii's By-Laws.) The proposal also must contain the information required in the By-Laws. If you wish to make one or more nominations for election to the Board, the required information includes, among other things, the written consent of such individual to serve as director and (i) the name, age, business address and, if known, residence address of each nominee, (ii) the principal occupation or employment of each nominee, and (iii) the number of shares of Bank of Hawaii stock each nominee beneficially owns. These advance notice provisions are separate from the requirements a shareholder must meet to have a proposal included in the proxy statement under SEC rules. By complying with these provisions, a shareholder may present a proposal in person at the meeting, but will not be entitled to have the proposal included in the Company's proxy statement unless they comply with the requirements described in the preceding paragraph. Persons holding proxies solicited by the Board may exercise discretionary authority to vote against such proposals.
Q:
PROPOSAL 1: ELECTION OF DIRECTORS
In April 2008, Company's shareholders approved management's proposal to amend the Certificate of Incorporation and declassify the Board of Directors and provide for the annual election of all directors. The Company's Certificate of Incorporation also provides that the Board shall consist of not less than 3 orrequires at least three directors and no more than 15 persons as established from time to time by resolution of the Board.persons. The Board has fixed the number of directors at fourteen. Each of the fourteen directors listed below shall be nominated for a one-year term to serve until the 20102011 Annual Meeting of shareholders and until their successors are elected and qualified.
Certain information with respect to each of the nominees is set forth below. Each nominee has consented to serve and all nominees except for Messrs. Burak and Ho are currently serving on the Company's Board. The nominees were each recommended to the Board by the Company's Nominating and Corporate Governance Committee. In the event that any or all of the director nominees are unable to stand for election as director, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, may select different nominees for election as directors.
Certain information with respect to each of the nominees is set forth below, including his or her principal occupation, qualifications, and directorships during the past five years. Each nominee has consented to serve and all nominees are currently serving on the Company's Board. The nominees were each recommended to the Board by the Company's Nominating and Corporate Governance Committee whose goal is to assemble a board that operates cohesively and encourages candid communication and discussion, and focuses on activities that help the Company maximize shareholder value. The Nominating and Corporate Governance Committee also looks at the individual strength of directors, their ability to contribute to the board, and whether their skills and experience complement those of the other directors. A more detailed discussion on the nomination process and the criteria the Nominating and Corporate Governance Committee considers in their evaluation of director candidates is found in the Corporate Governance section on page 13.
THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
Name, Age, and Year First Elected as Director | Principal Occupation(s) and Qualifications | Other Public Directorships Held in the Last 5 Years | ||
---|---|---|---|---|
S. Haunani Apoliona; 60; 2004 | — | |||
Mary G. F. Bitterman; | President and | Barclays Global Investors Funds |
Name, Age, and Year First Elected as Director | Principal Occupation(s) and Qualifications | Other Public Directorships Held in the Last 5 Years | ||
---|---|---|---|---|
Mark A. Burak; |
| — | ||
Michael J. Chun; | President and Headmaster of Kamehameha Schools—Kapalama (a college preparatory school serving children of Hawaiian ancestry) since | Alexander & Baldwin, Inc. |
Name, Age, and Year First Elected as Director | Principal Occupation(s) and Qualifications | Other Public Directorships Held in the Last 5 Years | ||
---|---|---|---|---|
Clinton R. Churchill; | Trustee, | — | ||
David A. Heenan; | Trustee, The Estate of James Campbell (an organization administering the assets held in trust under the will of James Campbell) since 1995 (Chairman 1999, 2001). Dr. Heenan formerly served as Chairman and CEO of Theo H. Davies Co., Ltd., the North American holding company for the Hong Kong-based Jardine Matheson. He also worked internationally for Chevron, Citicorp and McKinsey. He has served on the faculties of the Wharton and Columbia Business Schools. Dr. Heenan is a visiting professor at Georgetown University. Dr. Heenan has been a director of Bank of Hawaii, the Company's major subsidiary, since 1983. He is the author or co-author of seven books and has written various articles for diverse publications as the Harvard Business Review, the Sloan Management Review, the Wall Street Journal, and the New York Times. He holds an MBA from Columbia University and Ph.D. from the Wharton School of Business, University of Pennsylvania. As is the case with Mr. Churchill, Dr. Heenan's association with the Campbell Estate, qualifies him for service on the Company's Board. His international experience with major multinationals gives him an added perspective that is valuable to the Board in light of the broad geographic reach of the Company's business. Dr. Heenan's management and business knowledge led the Board to elect him to its Compensation Committee, which he chairs, and to its Executive Committee. Along with all of the other independent directors, Dr. Heenan also serves on the Board's Nominating and Corporate Governance Committee. | Maui Land & Pineapple Co., Inc. | ||
Peter S. Ho; | President of the Company since April 2008; Vice Chairman and Chief Banking Officer since January 2006; Vice Chairman, Investment Services from April 2004 to December 2005; and Executive Vice President, Hawaii Commercial Banking Group from February 2003 to April 2004. As President of the Company, he is responsible for retail banking, commercial banking and investment services. Mr. Ho has been a director of Bank of Hawaii, the Company's major subsidiary, since 2005. Mr. Ho is active in the Hawaii community and serves on several boards, including the Hawaii Chapter of the American Red Cross, The Nature Conservancy of Hawaii, the Hawaii Community Foundation, and Teach for America-Hawaii. He also serves on the board of trustees of Hawaii Pacific University, Hanahauoli School, and Pacific Capital Funds. Mr. Ho holds a bachelor of science degree in business administration and an MBA from the University of Southern California. In 2008 he successfully completed Harvard Business School's Advanced Management Program. Mr. Ho's long career at Bank of Hawaii, his management responsibilities for all aspects of the Company's banking operations and his deep knowledge of our markets, community and culture all qualify him for service on our Board. | — |
Name, Age, and Year First Elected as Director | Principal Occupation(s) and Qualifications | Other Public Directorships Held in the Last 5 Years | ||
---|---|---|---|---|
Robert Huret; | Managing Member of FTV Management Company, L.P., (a | — | ||
Allan R. Landon; | Chairman and Chief Executive Officer of the Company since September | — |
Name, Age, and Year First Elected as Director | Principal Occupation(s) and Qualifications | Other Public Directorships Held in the Last 5 Years | ||
---|---|---|---|---|
Kent T. Lucien; | Vice Chairman and Chief Financial Officer of the Company since April 2008; Trustee, C. Brewer & Co. Ltd., (a Hawaii corporation engaged in agriculture, real estate and power production) from April 2006 to December 2007; and Chief Executive Officer Operations, C. Brewer & Co., Ltd. from May 2001 to April 2006. He also held the positions of Controller and CFO and various other executive positions at C. Brewer & Co., Ltd. Prior to C. Brewer & Co., Ltd., Mr. Lucien worked for Price Waterhouse Coopers. He is a Certified Public Accountant. Mr. Lucien serves on the board of Wailuku Water Company LLC and Maui Land & Pineapple Co., Inc. where he serves as Audit Committee Chair. He has been a director of Bank of Hawaii, the Company's major subsidiary, since 2006. Mr. Lucien received his bachelors degree from Occidental College and his MBA from Stanford University. Mr. Lucien's senior executive experience in significant Hawaiian businesses and his background in finance and accounting led the Board to nominate him as a director in 2006 and, prior to becoming the Company's Chief Financial Officer, to serve on the Audit Committee as its chair and to be designated as a financial expert. These qualifications, coupled with the deep knowledge of the Company's finances gained in his current role continue to qualify him for Board service. | Maui Land & Pineapple Co., Inc. | ||
Martin A. Stein; | Partner, RSA Ventures (a consulting and venture capital company) since 1999; Chief Executive Officer and President, Sonoma Mountain Ventures, LLC (strategic and technology consulting and venture capital) 1998 to 2004. RSA Ventures specializes in telecommunications and internet financial companies across the United States and international companies including Canada and Israel. For eight years, Mr. Stein served as Vice Chairman of BankAmerica Corporation responsible for all technology and operations worldwide. He chaired various marketing, product strategy and budget committees for Bank of America and its parent company. He also served as EVP and Chief Information Officer responsible for all technology and operations at PaineWebber Corporation. As EVP of Fleet Financial Group, he was responsible for strategic planning, product development, marketing, MIS, operations and payments. Mr. Stein has been a director of Bank of Hawaii, the Company's major subsidiary, since 1999. Mr. Stein brings extensive experience in merger and consolidation activities, organizational efficiencies and staff management and development. He received a bachelor of arts degree (cum laude) and an honorary doctorate degree in business science from St. Johns University. Mr. Stein's knowledge of the global commercial banking business and his focus on the technology that continues to be of great significance to the industry, as well as his experience in strategic transactions and operational challenges, allow him to provide the Board with valuable insight across a range of matters. These qualifications led the Board to elect him to its Audit Committee. Along with all of the other independent directors, Mr. Stein also serves on the Board's Nominating and Corporate Governance Committee. | — | ||
Donald M. Takaki; | Chairman and CEO, HawkTree International, Inc. (a diversified holding company engaged in transportation, leasing, business records management, and real estate) since 1999. As Chairman and CEO of Island Movers, Inc., Mr. Takaki has grown his family-owned and operated transportation services company into Hawaii's largest transportation service company ranked among the top 250 companies in the State of Hawaii. He is the former Chairman of the Hawaii Convention Authority and former board member of Hawaiian Airlines. Mr. Takaki has been a director of Bank of Hawaii, the Company's major subsidiary, since 1990. He is committed to his community having served on the boards of many business and civic organizations, including the Hawaii Visitors and Convention Bureau (Chairman 2004-2006), Hawaii Hotel & Lodging Association, Hawaii Korean Chamber of Commerce, Japanese Cultural Center of Hawaii, and Iolani School. He serves as President and General Manager, Pacific Region Baseball, Inc., a non-profit organization that brings student athletes to and from Hawaii and Asia to promote cross cultural learning. In 2007, Mr. Takaki was recognized as the Distinguished Public School Graduate by the Public Schools of Hawaii Foundation. Mr. Takaki's deep involvement in the community and knowledge of business affairs throughout the Hawaiian Islands, as well as the experience gained through 13 years of service on our Board, make him well-qualified for service as a director. | — |
Name, Age, and Year First Elected as Director | Principal Occupation(s) and Qualifications | Other Public Directorships Held in the Last 5 Years | ||
---|---|---|---|---|
Barbara J. Tanabe; 60; 2004 | Owner and Partner, Ho'akea Communications, LLC (a public affairs company) since 2003. Ms. Tanabe has expertise in communications and issues management with 25 years of experience in public affairs, crisis management, and broadcast journalism in the United States and Asia. She served as President and CEO of Hill & Knowlton/Communications Pacific and her own consulting firm, Pacific Century, where she counseled executives and government officials in the areas of cross-cultural communications, crisis and issues management, and news media management. Ms. Tanabe was one of the first Asian-American women journalists in the nation, and pioneered news coverage of issues dealing with ethnic minorities, diversity, and civil rights. She co-founded a public policy research firm, Hawaii Institute of Public Affairs, which produced studies resulting in legislation to promote economic development in Hawaii. Ms. Tanabe has been a director of Bank of Hawaii, the Company's major subsidiary, since 1994. She serves on the boards of the Japan-America Society of Hawaii (Chair), Pacific Forum (The Asia arm of the Center for Strategic and International Studies), and numerous task forces including special assignments with the chief justice of the Hawaii State Supreme Court. She received her bachelor of arts degree in communications from the University of Washington and an MBA from the University of Hawaii. Ms. Tanabe's expertise in and sensitivity to public policy matters, the media and cultural and ethnic diversity in our core market bring insights that inform a wide range of Board deliberations and qualify her for service on the Board and her management and business ownership background align her views on the Compensation Committee with those of shareholders. Along with all of the other independent directors, Ms. Tanabe also serves on the Board's Nominating and Corporate Governance Committee. | — | ||
Robert W. Wo, Jr.; | President and Director, C.S. Wo & Sons, Ltd. (a furniture retailer) since 1984. Under Mr. Wo's leadership, his third generation family-owned and operated business has grown to become Hawaii's largest furniture retailer, ranking it among the Top 250 companies in the State of Hawaii and among the Top 100 furniture retailers in the nation. He is a member of the Hawaii Business Roundtable whose mission is to promote the overall economic vitality and social health of Hawaii. Mr. Wo has been a director of Bank of Hawaii, the Company's major subsidiary, since 1991. He has always been active in the community, having served on the boards of Aloha United Way, Junior Achievement of Hawaii, and the Retail Merchants of Hawaii. Currently, Mr. Wo serves on several business and non-profit boards, including Grace Pacific Corporation, Hawaii Medical Service Association, Kapiolani Health Foundation, Assets School, and Bobby Benson Center. He received his bachelors in Economics from Stanford University and earned his MBA from Harvard Business School. Mr. Wo's deep involvement in the community and knowledge of business affairs throughout the Hawaiian Islands bring a customer perspective to his participation in Board affairs and, as a major employer in the state, qualify him for service on the Compensation and Executive Committees as well as his role as a director. Along with all of the other independent directors, Mr. Wo also serves on the Board's Nominating and Corporate Governance Committee. | — | ||
At the close of business on February 20, 2009,16, 2010, Bank of Hawaii had 47,748,58648,010,982 shares of its common stock outstanding. As of February 20, 2009,16, 2010, this table shows how much Bank of Hawaii common stock was owned by (i) its directors and nominees, (ii) the executive officers named in the Summary Compensation Table (the "named executive officers"), (iii) all executive officers and directors as a group, and (iv) entities that are known by us to own beneficially more than five percent of Bank of Hawaii's common stock. Unless otherwise indicated and subject to applicable community property and similar statutes, all persons listed below have sole voting and investment power over all shares of common stock beneficially owned. Share ownership has been computed in accordance with SEC rules and does not necessarily indicate beneficial ownership for any other purpose.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
Name | Number of Shares Beneficially Owned | Right to Acquire Within 60 Days | Total | Percent of Outstanding Shares as of 02-20-09 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Barclays Global Investors, NA.(1) | 4,036,868 | 0 | 4,036,868 | 8.46 | % | ||||||||
The Vanguard Group, Inc.(1) | 2,520,805 | 0 | 2,520,805 | 5.28 | % | ||||||||
S. Haunani Apoliona | 5,863 | (2) | 17,318 | 23,181 | * | ||||||||
Mark A. Burak | 0 | 0 | 0 | * | |||||||||
Mary G. F. Bitterman | 21,890 | (2)(3) | 19,518 | 41,408 | * | ||||||||
Michael J. Chun | 10,282 | (2)(3) | 17,518 | 27,800 | * | ||||||||
Clinton R. Churchill | 12,731 | (2)(3)(5) | 17,518 | 30,249 | * | ||||||||
David A. Heenan | 29,032 | (2)(4) | 19,518 | 48,550 | * | ||||||||
Robert Huret | 15,446 | (2) | 15,518 | 30,964 | * | ||||||||
Kent T. Lucien | 11,520 | (2) | 2,191 | 13,711 | * | ||||||||
Martin A. Stein | 4,187 | (2) | 18,518 | 22,705 | * | ||||||||
Donald M. Takaki | 20,352 | (2) | 19,518 | 39,870 | * | ||||||||
Barbara J. Tanabe | 15,981 | (2) | 17,518 | 33,499 | * | ||||||||
Robert W. Wo, Jr. | 20,240 | (2)(3) | 17,518 | 37,758 | * | ||||||||
Allan R. Landon | 155,899 | 242,238 | 398,137 | * | |||||||||
Peter S. Ho | 61,503 | 57,835 | 119,338 | * | |||||||||
Mary E. Sellers | 25,872 | 39,490 | 65,362 | * | |||||||||
Daniel C. Stevens | 659 | 0 | 659 | * | |||||||||
Shelley B. Thompson | 20,295 | 7,163 | 27,458 | * | |||||||||
Directors, nominees and executive officers as a group (21 persons) | 487,534 | 644,290 | 1,131,824 | 2.4 | % |
Name | Number of Shares Beneficially Owned | Right to Acquire Within 60 Days | Total | Percent of Outstanding Shares as of February 16. 2010 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
BlackRock, Inc.(1) | 4,944,488 | 0 | 4,944,488 | 10.31 | % | |||||||||
40 East 52nd Street | ||||||||||||||
New York, NY 10022 | ||||||||||||||
The Vanguard Group, Inc.(2) | 2,859,710 | 0 | 2,859,710 | 5.96 | % | |||||||||
100 Vanguard Blvd. | ||||||||||||||
Malvern, PA 19355 | ||||||||||||||
S. Haunani Apoliona | 7,310 | (3) | 17,048 | 24,358 | * | |||||||||
Mary G. F. Bitterman | 23,874 | (3)(4) | 18,248 | 42,122 | * | |||||||||
Mark A. Burak | 1,000 | 0 | 1,000 | * | ||||||||||
Michael J. Chun | 11,542 | (3)(4) | 17,248 | 28,790 | * | |||||||||
Clinton R. Churchill | 14,640 | (3)(4)(6) | 17,248 | 31,888 | * | |||||||||
David A. Heenan | 33,299 | (3)(5) | 18,248 | 51,547 | * | |||||||||
Robert Huret | 18,604 | (3) | 16,248 | 34,852 | * | |||||||||
Martin A. Stein | 6,634 | (3) | 18,248 | 24,882 | * | |||||||||
Donald M. Takaki | 24,283 | (3) | 18,248 | 42,531 | * | |||||||||
Barbara J. Tanabe | 17,639 | (3) | 17,248 | 34,887 | * | |||||||||
Robert W. Wo, Jr. | 23,211 | (3)(4) | 17,248 | 40,459 | * | |||||||||
Allan R. Landon | 145,261 | 242,238 | 387,499 | * | ||||||||||
Peter S. Ho | 63,481 | 57,835 | 121,316 | * | ||||||||||
Kent T. Lucien | 14,020 | (3) | 2,191 | 16,211 | * | |||||||||
Mark A. Rossi | 13,919 | 0 | 13,919 | |||||||||||
Mary E. Sellers | 28,119 | 35,890 | 64,009 | * | ||||||||||
Directors, nominees and executive officers as a group (20 persons) | 517,774 | 627,910 | 1,145,684 | 2.4 | % |
Notes to Table on Amount and Nature of Beneficial Ownership
All stock is subject to sole voting and investment power unless otherwise specified.
Advisors (UK) Limited, BlackRock Asset Management Australia Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Japan Limited, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock Investment Management, LLC, BlackRock (Luxembourg) S.A., and BlackRock International Ltd,, (collectively referred to as a group,"BlackRock") may be deemed to have beneficial ownership as of December 31, 20082009 of 4,036,8684,944,488 shares of Bank of Hawaii common stock owned by numerous investment advisory or bank clients, none known to have more than five percent. According to the same filing, BarclaysBlackRock has sole power to vote or to direct the vote over 3,422,6294,944,488 of those shares, and sole power to dispose or to direct the disposition of 4,036,8684,944,488 shares.
Corporate Governance Guidelines
The Company and the Board have adopted Corporate Governance Guidelines ("Governance Guidelines"). The Board amended the Governance Guidelines in 2008 to change the directors' mandatory retirement age from 72 to 75, change the directors' term limit to one year, and conform to the New York Stock Exchange ("NYSE") amendments modifying the director independence tests. The Governance Guidelines are posted on the Company's Investor Relations website atwww.boh.com. Shareholders and other interested parties may receive a copy of the Governance Guidelines by writing the Corporate Secretary at 130 Merchant Street, Honolulu, Hawaii 96813. www.boh.com. The Governance Guidelines address director qualification and independence standards, responsibilities of the Board, access to management and independent advisors, compensation, orientation and continuing education, Board committees, Chief Executive Officer ("CEO") evaluation, management succession, Code of Business Conduct and Ethics, shareholder communications to the Board and the Board's annual performance evaluation.
Ms.The Company's leadership structure consists of a combined Chairman and CEO and a Lead Independent Director. At this time, the Board believes that it is in the best interests of the Company to have a single individual to control and implement the short- and long-term strategies of the Company,
particularly in the current environment facing financial institutions. At the same time this governance structure provides a form of leadership that allows the Board to function distinct from management, capable of objective judgment regarding management's performance, and enables the Board to fulfill its duties effectively and efficiently. The Company's leadership structure ensures the objectivity of the Board's decisions and its role in reviewing the performance of management. Through its leadership and governance processes the Company has successfully established a governance structure that provides both oversight and guidance by the Board to management regarding strategic planning, risk assessment and management, and corporate performance.
The Company's Lead Independent Director is appointed by the Board and the current Lead Independent Director, Dr. Mary G. F. Bitterman, has served asin this position since 1999. The Company's Governance Guidelines clearly define the Lead Independent Director since 1999,Director's role and is Viceduties which include, but are not limited to: serving as Chairman of the Executive Committee and Chair of theCompany's Nominating & Corporate Governance Committee. The Lead Independent Director's duties are set forth in the Governance Guidelines and includeCommittee, presiding over regularly scheduled executive sessions of the non-management directors, serving as a liaison between the non-management directors and executive management, and assisting the Board and executive management to ensure compliance with the Governance Guidelines.
In addition to a Lead Independent Director, ten of the eleven non-management directors are "independent" as defined by the NYSE rules. The non-management directors meet in executive session without management in attendance for regularly scheduled meetings which are usually held five times a year.meetings. The non-management directors may also meet in executive session each time the full Board convenes for a meeting. In 2008,2009, the non-management directors met in executive session five times. The Lead Independent Director also meets regularly on an individual basis with members of the Company's executive management team.
Director Qualifications and Nomination Process
The Nominating & Corporate Governance Committee is responsible for identifying and assessing all director candidates and recommending nominees to the Board. Potential nominees will beare evaluated based on their independence, within the meaning of the Governance Guidelines and the rules of the NYSE. Candidates to be nominated as a director, including those submitted by shareholders, are selected based on, among other criteria, their integrity, informed judgment, financial literacy, high performance standards, accomplishments and reputation in the community, experience, skill sets, and ability to commit adequate time to Board and committee matters and to act on behalf of shareholders.
The criteria also include a determination of the needs of the Board and of the individuals' personal qualities and characteristics with those of the other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of the Company and its shareholders. In addition, Board members are expected to participate in continuing education and training opportunities to stay current on corporate governance, industry trends and issues and to understand the Company's business.
The objective of the Nominating & Corporate Governance Committee is to present a combination of candidates that will result in a Board should encompasswith a broadwide range of skills, expertise, industry knowledge, diversity of viewpoints, background, and backgrounds, with business and community contacts relevant to the Company's business. To accomplish this, the Nominating & Corporate Governance Committee seeks candidates from different age groups, ethnicities, genders, industries, and experiences, in addition to the criteria described above. The result is a diverse and experienced Board, ranging in age from 44 to 69, with a variety of ethnicities and genders. The Board includes directors with experience in public corporations, non-profits, and entrepreneurial individuals who have successfully run their own private enterprise. The Board also has the broad set of skills necessary for providing oversight to a financial institution, which includes proven leadership, and expertise in finance, accounting, information technology, lending, investment management, and communications. With the exception of Mr. Burak, who was first elected in 2009, all of the non-management directors have been on the Company's Board for at least five years.
A shareholder may submit a candidate for consideration by the Board to be included in the Board's slate of director nominees. Candidates proposed by shareholders will be evaluated by the Nominating & Corporate Governance Committee under the same criteria that are applied to other candidates. The criteria are set forth above and in the Company's By-Laws and Governance Guidelines. Candidates to be considered for nomination by the Nominating & Corporate Governance Committee at the 20102011 Annual Meeting of Shareholders must be presented in writing to the Corporate Secretary on or before November 14, 200913, 2010 at 130 Merchant Street, Honolulu, Hawaii 96813.
Communication with Directors
Shareholders and any interested parties may communicate with the Board, Non-Management Directors or Lead Independent Director by sending correspondence c/o the Company's Corporate Secretary, 130 Merchant Street, Honolulu, Hawaii 96813. All appropriate communications received will be forwarded to the Board, Non-Management Directors or Lead Independent Director as addressed.
Code of Business Conduct and Ethics
The Company has earned its reputation as a respected leader in the communities it serves and in the financial services industry by conducting business in an ethical, responsible and professional manner. The Company is proud of the high standards of quality and service that have been its hallmark through the years. These qualities represent fundamental business practices and apply to all directors, officers and employees.
The Company and Board have adopted a Code of Business Conduct and Ethics for Directors, Officers and Employees (the "Code"), which was revised in 2008 and that is posted on the Investor Relations page of the Company's websitewww.boh.com. www.boh.com. The Code addresses the professional, honest and candid conduct of each director, officer and employee; conflicts of interest, disclosure process, compliance with laws, rules and regulations (including securities trading); corporate opportunities, confidentiality, fair dealing, protection and proper use of Company assets; and encourages the reporting of any illegal or unethical behavior. A waiver for an executive officer or director of the Company may be made only by the Audit Committee of the Board of Directors and must be promptly disclosed as required by SEC or NYSE rules. The Company will disclose any such waivers, as well as any amendments to the Code, on the Company's website. Shareholders may obtain a printed copy of the Code by contacting the Corporate Secretary at the address previously provided.
Director Independence
The Board is comprised of a majority of independent directors as defined by the NYSE listing standards. In affirmatively determining that a director is independent of the Company's management and has no material relationship with the Company, either directly or indirectly as a partner, shareholder, or officer of an organization that has a relationship with the Company, the Board applies the following categorical standards, in addition to such other factors as the Board deems appropriate:
company's consolidated gross revenues for such year, until three years after falling below such threshold.
For purposes of these independence standards, an "immediate family member" includes the director's spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than a domestic employee) who shares the director's home.
The following ten directors and nominees have been determined by the Board to be independent: Messrs. Burak, Chun, Churchill, Heenan, Huret, Stein and Wo, and Mmes. Apoliona, Bitterman and Tanabe, and accordingly, the Board has a majority of independent directors as defined by the listing standards of the NYSE and the Governance Guidelines. There were no relationships that were considered in determining the independence of the independent directors. All of the committees, with the exception of the Executive Committee, are composed entirely of independent directors who also meet applicable committee independence standards. Mr. Landon is the CEO of the Company and therefore not independent, Mr. Ho is the President of the Company and therefore not independent,
Mr. Lucien is the CFO of the Company and therefore not independent, and Mr. Takaki has been determined not to be an independent director due to his and his family's ownership interest in HawkTree International, Inc. ("HawkTree"), a diversified holding company engaged in transportation, leasing, business records management, and real estate. HawkTree and its subsidiaries provide courier, armored car, ATM servicing, moving, and relocation services for the Company, and the Company provides insurance services to HawkTree. More specific information is available on page 4044 in the section regarding Certain Relationships and Related Transactions.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee during fiscal year 20082009 served as an officer, former officer, or employee of the Company or had a relationship that was required to be disclosed under "Certain Relationships and Related Transactions." Further, during 2008,2009, no executive officer of the Company served as:
Oversight of Risk
Bank of Hawaii governance, including policies, standards and procedures, has been developed with the goal of ensuring that business decisions and the execution of business process are in compliance with legal and regulatory requirements and support the Company's governing objective of maximizing shareholder value over time and cultural imperatives. Authority for accepting risk exposures on behalf of the Company originates from the Board of Directors and in turn is delegated through the Managing Committee and its subcommittees, including the Risk Council. The Risk Council, chaired by the Chief Risk Officer, provides the Managing Committee with a forum for the review and communication of both specific and company wide risk issues, and serves to enhance collaboration among all areas of the Company that create and manage risk, while reinforcing executive management's responsibility for ensuring risk is managed within established tolerances.
Risk management at the Company is the process for identifying, measuring, controlling and monitoring risk across the enterprise given its business as a financial institution and financial intermediary. Risk management crosses all functions and employees and is embedded in all aspects of planning and performance measurement. Systems, information and timely reporting enable the organization to quickly adapt to early warning signs.
The Board of Directors is responsible for oversight of the Company's enterprise risk framework. The Board has delegated to the Audit Committee primary responsibility for overseeing financial, credit, investment and operational risk exposures including regulatory and legal risk; the Fiduciary and Investment Management Committee primary responsibility for oversight of fiduciary and investment risk of client accounts; and the Compensation Committee primary responsibility for oversight of risk related to management and staff. These committees report to the full Board to ensure the Company's overall risk exposures are understood, including risk interrelationships. The Board also oversees reputational risk.
Risk reports are provided and discussed at every Committee and Board meeting. In addition to detailed reports, the Board reviews an Enterprise Risk Position report that reflects key risk measures and trends across the Company. Key managers responsible for risk management (the Chief Risk Officer, the Treasurer, the Chief Compliance Officer, the Chief Legal Officer and the Chief Fiduciary
Officer) regularly provide updates at the respective Committee and Board meetings. In support of the Board's risk oversight role and to ensure that potential problems are surfaced, the Audit Committee directly oversees the Company's Internal Audit and Credit Review functions.
Compensation Policies and Risk
The Board's risk oversight responsibility includes the implementation of compensation programs that do not encourage or incentivize risk taking. In 2009, with the assistance of an independent outside consultant, the Company completed a review of its compensation policies and incentive plans to confirm its policies and plans are encouraging behavior that is within the Company's risk tolerance, are compatible with effective controls and risk management, and are supported by strong corporate governance. The Company's incentive compensation plan documents were reviewed, as well as the past two years of the Company's proxy filings, Human Resources and Compensation Committee charter and meeting minutes, and quarterly line of business profitability reports. The results of the review revealed no individual employees or groups of employees whose activities expose the firm to material amounts of risk. The review also revealed that the controls and risk management at the Company are communicated in a top down manner and are ingrained in the culture of the organization, creating a comprehensive risk management process. The Company's compensation policies and incentive plans are further supported by an effective Board and strong corporate governance structure. The results of the review were shared with the Human Resources and Compensation Committee and the full Board. Upon review and discussion of the results, management and the Committee are of the opinion that the Company's compensation policies are sound and do not create incentives affecting financial risk that are likely to have a material adverse affect on the Company. This disclosure is required only if it has been determined that the Company's compensation policies create risks that are likely to have a material adverse affect on the Company. Although the disclosure was not required, the Board and Management of the Company felt it was important to make an affirmative statement about the relationship of its compensation plans and policies and material adverse risk.
The Board met 910 times during 2008.2009. The Board's policy is that directors should make every effort to regularly attend meetings of the Board and committees on which they serve and the Company's annual shareholder meeting. Each director attended 75% or more of the aggregate of the total number of Board meetings and the total number of meetings held by the committees on which he or she served in 2008.2009. All of the Company's directors attended the 20082009 shareholders' meeting.
Board Committees
The Board has four standing committees: the Audit Committee, the Human Resources & Compensation Committee (the "Compensation Committee"), the Executive & Strategic Planning Committee (the "Executive Committee"), and the Nominating & Corporate Governance Committee.Committee (the "Nominating Committee"). The committee charters are posted in the Investor Relations section of the Company's website atwww.boh.com. Shareholders and any interested parties may request a printed copy of the charters and Governance Guidelines by contacting the Corporate Secretary at 130 Merchant Street, Honolulu, Hawaii 96813. www.boh.com.
The Board has affirmatively determined that all of the members of the Audit, Compensation and Nominating & Corporate Governance Committees ("Board Committees") meet the independence standards of the NYSE and the Company's Governance Guidelines. The Board Committees' charters require that each committee perform an annual evaluation of its performance and assess the adequacy of its charter. Each committee has the authority to retain consultants and advisors to assist it in its duties, including the sole authority for the retention, termination and negotiation of the terms and conditions of the engagement.
Below are the members of each current standing committee.
Audit | Compensation | Executive | Nominating and Governance | |||
---|---|---|---|---|---|---|
Mary G. F. Bitterman | Mary G. F. Bitterman | Mary G. F. Bitterman | S. Haunani Apoliona | |||
David A. Heenan* | Clinton R. Churchill | Mary G. F. Bitterman* | ||||
Barbara J. Tanabe | David A. Heenan | |||||
Robert W. Wo, Jr. | Allan R. Landon* | Michael J. Chun | ||||
Martin A. Stein | Robert W. Wo, Jr. | Clinton R. Churchill | ||||
David A. Heenan | ||||||
Robert Huret | ||||||
Martin A. Stein | ||||||
Barbara J. Tanabe | ||||||
Robert W. Wo, Jr. |
Audit Committee: 67 Meetings in 20082009
The Audit Committee operates under and annually reviews a written charter that has been adopted by the Board and is included as Appendix A to this Proxy Statement.Board. The Audit Committee's duties include assisting the Board in its oversight of the following areas of the Company: regulatory and financial accounting, and reporting and credit risk management; compliance with legal and regulatory requirements; the independent registered public accounting firm's qualifications and independence; and overseeing the performance of the Company's internal audit function and independent registered public accounting firm. The Board has determined that Mark A. Burak and Robert Huret meetsmeet the definition of "financial expert" within the meaning of the SEC regulations adopted under the Sarbanes-Oxley Act of 2002. The Board has determined that all Committee members meet the NYSE standard of financial literacy and have accounting or related financial management expertise. The Committee has adopted policies and
procedures governing the following: pre-approval of audit and non-audit services; the receipt and treatment of complaints regarding accounting, internal controls, or auditing matters and the confidential, anonymous submission by employees of the Company regarding questionable accounting or audit matters; and restrictions on the Company's hiring of employees of the independent registered public accounting firm. The Committee is also responsible for reviewing conflict of interest transactions involving a director or executive officer. The report of the Audit Committee is on page 17.22.
Compensation Committee: 86 Meetings in 20082009
The duties of the Compensation Committee are set forth in its charter, and include responsibility for compensation levels of directors and members of executive management and reviewing the performance of executive management. The Committee reviews and approves goals for incentive compensation plans, and stock plans, and evaluates performance against those goals. The Compensation Committee also reviews management development and training programs and reviewsas well as succession planning for senior and executive management. The Compensation Committee charter allows for the delegation of its duties to its own subcommittee as long as in compliance with all applicable laws, rules and listing standards. The CEO, in consultation with the director of human resources, makes recommendations with respect to non-CEO executive officer compensation. Watson Wyatt Worldwide, Inc. ("Watson Wyatt"), an employee benefits and human capital consulting firm with worldwide operations in the Americas, Europe and Asia Pacific, has been retained by the Compensation Committee to provide compensation consulting and market data information. The report of the Compensation Committee is on page 18.
Executive Committee: No Meetings Held in 20082009
The Committee has power to act for the Board in between its meetings except on those matters reserved to the Board by the By-Laws or otherwise. The Committee has the authority to advise the
CEO and Board on long-range strategy and monitor the Company's progress. The Committee did not meet in 2008.2009.
Nominating & Corporate Governance Committee: 5 Meetings in 20082009
The duties of the Nominating & Corporate Governance Committee are set forth in its charter and include reviewing the qualifications of all Board candidates and recommending qualified candidates for membership on the Board. The Committee reviews the Board's organization, procedures and committees and makes recommendations concerning the size and composition of the Board and its committees. The Committee makes recommendations to the Board regarding standards for determining non-management director independence and reviews the qualifications and independence of the members of the Board and its committees. The Committee reviews and evaluates the Company's compliance with corporate governance requirements and leads and oversees the Board and its committees' annual performance evaluations. Further information regarding the responsibilities performed by the Committee and the Company's corporate governance is provided in the Committee charter and the Governance Guidelines.
Retainer and Meeting Fees
In 2008,2009, each director was paid an annual retainer of $20,000, plus $750 for each Board meeting attended. The Lead Independent Director is paid an additional annual retainer fee of $10,000. The chairmen of the Compensation and Audit Committees, and the vice chairman of the Executive Committee also receive an annual retainer of $5,000. The Directors are reimbursed for board-related travel expenses, and directors who are non-Hawaii residents receive an additional $5,000 to compensate them for travel time. Members of the Compensation Committee and the Executive Committee receive $750 for each meeting attended. The fee is $1,500 per meeting for members of the Audit Committee and $2,000 per meeting for the Chairman of the Audit Committee. No fees are paid for attendance at the Nominating & Corporate Governance Committee meetings. In addition to the four standing committees mentioned above, the Board has other committees for which directors receive fees. Ms. Apoliona and Mr. Takaki are members of the Benefit Plans Committee and receive $750 per meeting attended, and Mmes. Apoliona and Tanabe and Messrs. Chun, Takaki, and Wo are members of the Fiduciary Investment Management Committee and receive $750 per meeting attended. Mr. Wo also receives an annual retainer of $5,000 as chairman of the Fiduciary Investment Management Committee.
Director Stock Plan
The Company maintains the Bank of Hawaii Corporation Amended and Restated Director Stock Compensation Plan ("Director Stock Plan"). The purpose of the Director Stock Plan is to advance the interests of the Company by encouraging and enabling eligible non-employee members of the Board to acquire and retain throughout each member's tenure as director a proprietary interest in the Company by ownership of shares of Bank of Hawaii common stock. The Director Stock Plan allows for the granting of stock options, restricted stock, and restricted stock units. Under the Director Stock Plan, the Board has the flexibility to set the form and terms of awards. In 2008,2009, Board members were given the option of receiving a grant of restricted shares, or the equivalent value in cash. Seven Board members accepted the stock award and the Company issued 9671,447 shares of restricted common stock ("Restricted Shares") to each of the seven non-employee directordirectors with a vesting date of one year from the date of grant. The other four non-employee directors accepted a cash award of $52,500 which was subsequently used to purchase Company shares. No options were granted under the Director Stock Plan in 2008. In 2008, the Board members were offered an opportunity to amend the terms2009.
Directors' Deferred Compensation Plan
The Company maintains the Directors' Deferred Compensation Plan, under which a non-employee director may elect to defer the payment of either all of the director's annual retainer and meeting fees, or all of the director's annual retainer. In 2008 the Board amended the Directors' Deferred Compensation Plan with respect to the timing and form of distributions of deferred amounts. At the director's choice, deferred amounts under the Directors' Deferred Compensation Plan may be payable: 1) beginning on the first day of the first month after the participating director ceases to be a director of the Company; or 2) on an anniversary date of the director's choosing after the director ceases to be a director; or 3) a date specified by the director (which may include a date prior to the date a director ceases to be a director). Deferred amounts are paid to the participant in a lump sum or in equal annual installments over such period of years (not exceeding 10 years) as the participant elects at the time of deferral. If a participant dies, all deferred and previously unpaid amounts will be paid in a lump sum to the participant's beneficiary on the second day of the calendar year following the year of death. A participant's deferred amounts are adjusted for appreciation or depreciation in value based on hypothetical investments in one or more Pacific Capital Funds or in shares of Bank of Hawaii common stock, as may be directed by the participant. In
addition to the amendment regarding the timing and form of distributions, in 2008 the Board amended the Directors' Deferred Compensation Plan to allow directors a one-time change to preexisting distribution elections. Under the terms of this amendment, no director was allowed to defer distributions that would otherwise be payable in 2008 or provide for distributions to be paid in 2008 that would otherwise be payable in a later year.
The Bank of Hawaii's obligations under the Directors' Deferred Compensation Plan are payable from its general assets, although the Company has established a rabbi trust to assist it in meeting its liabilities under the plan. The assets of the trust are at all times subject to the claims of the Company's general creditors.
Director Stock Ownership Guidelines
The Board of Directors believes it is important to support an ownership culture for the Company's employees and shareholders. To ensure that linkage to shareholders occurs among the fiduciaries of the Company, in December 2006, the Nominating & Corporate Governance Committee implemented stock ownership guidelines that require each non-management director to own a minimum amount of five times his or her annual cash retainer in the Company's stock. Directors were given five years to achieve guideline levels of ownership. All tenTen of the current non-management directors have satisfied the ownership guidelines.guidelines and one made significant progress in meeting the ownership guidelines in 2009.
Director Compensation
The following table shows, for the year ended December 31, 2008,2009, information on compensation earned by or awarded to each non-employee director who served on the Board of Directors during 2008.2009.
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
S. Haunani Apoliona | $ | 34,250 | $ | 61,497 | $ | 10,919 | 0 | 0 | 0 | $ | 106,666 | |||||||||||
Mary G. F. Bitterman | $ | 56,000 | $ | 61,497 | $ | 10,919 | 0 | 0 | 0 | $ | 128,416 | |||||||||||
Michael J. Chun | $ | 29,750 | $ | 61,497 | $ | 10,919 | 0 | 0 | 0 | $ | 102,166 | |||||||||||
Clinton R. Churchill | $ | 38,500 | $ | 61,497 | $ | 10,919 | 0 | 0 | 0 | $ | 110,916 | |||||||||||
David A. Heenan | $ | 37,000 | $ | 61,497 | $ | 10,919 | 0 | 0 | 0 | $ | 109,416 | |||||||||||
Robert Huret | $ | 40,000 | $ | 61,497 | $ | 10,919 | 0 | 0 | 0 | $ | 112,416 | |||||||||||
Martin A. Stein | $ | 40,000 | $ | 61,497 | $ | 10,919 | 0 | 0 | 0 | $ | 112,416 | |||||||||||
Donald M. Takaki | $ | 34,250 | $ | 61,497 | $ | 10,919 | 0 | 0 | 0 | $ | 106,666 | |||||||||||
Barbara J. Tanabe | $ | 36,500 | $ | 61,497 | $ | 10,919 | 0 | 0 | 0 | $ | 108,916 | |||||||||||
Robert W. Wo, Jr. | $ | 41,500 | $ | 61,497 | $ | 10,919 | 0 | 0 | 0 | $ | 113,916 |
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
S. Haunani Apoliona | $ | 35,750 | $ | 52,468 | 0 | 0 | 0 | 0 | $ | 88,218 | ||||||||||||
Mary G. F. Bitterman | $ | 57,500 | 0 | 0 | 0 | 0 | $ | 52,500 | $ | 110,000 | ||||||||||||
Mark A. Burak | $ | 19,750 | 0 | 0 | 0 | 0 | $ | 52,500 | $ | 72,250 | ||||||||||||
Michael J. Chun | $ | 31,250 | $ | 52,468 | 0 | 0 | 0 | 0 | $ | 83,718 | ||||||||||||
Clinton R. Churchill | $ | 45,750 | 0 | 0 | 0 | 0 | $ | 52,500 | $ | 98,250 | ||||||||||||
David A. Heenan | $ | 35,500 | $ | 52,468 | 0 | 0 | 0 | 0 | $ | 87,968 | ||||||||||||
Robert Huret | $ | 43,000 | $ | 52,468 | 0 | 0 | 0 | 0 | $ | 95,468 | ||||||||||||
Martin A. Stein | $ | 39,250 | $ | 52,468 | 0 | 0 | 0 | 0 | $ | 91,718 | ||||||||||||
Donald M. Takaki | $ | 34,250 | $ | 52,468 | 0 | 0 | 0 | 0 | $ | 86,718 | ||||||||||||
Barbara J. Tanabe | $ | 37,250 | $ | 52,468 | 0 | 0 | 0 | 0 | $ | 89,718 | ||||||||||||
Robert W. Wo, Jr. | $ | 42,250 | 0 | 0 | 0 | 0 | $ | 52,500 | $ | 94,750 |
common stock in their accounts): S. Haunani Apoliona, 4,2324,229 shares; Mary G. F. Bitterman, 2,432982 shares; Mark A. Burak 0 shares; Michael J. Chun, 4,2324,229 shares; Clinton R. Churchill, 4,2322,782 shares; David A. Heenan, 4,2324,229 shares; Robert Huret, 2,4322,429 shares; Martin A. Stein, 2,4322,429 shares; Donald M. Takaki, 4,2324,229 shares; Barbara J. Tanabe, 2,4322,429 shares; and Robert W. Wo, Jr., 4,2322,782 shares.
As members of the Audit Committee, we review the Company's financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls and disclosure controls. In this context, we have met and held discussions with management and the independent registered public accounting firm. Management represented to us that the Company's consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles, and we have reviewed and discussed the audited financial statements and related disclosures with management and the independent registered public accounting firm, including a review of the significant management judgments underlying the financial statements and disclosures.
The independent registered public accounting firm reports to us. We have sole authority to appoint (subject to shareholder ratification) and to terminate the engagement of the independent registered public accounting firm.
We have discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61 ("Communication with Audit Committees"), as amended and as adopted by the Public Company Accounting Oversight Board ("PCAOB") in Rule 3200T, including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements. In addition, we have received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding communications with the audit committee concerning independence, and have discussed with the independent registered public accounting firm its independence from the Company and its management. In concluding that the independent registered public accounting firm is independent, we determined, among other things, that the audit and non-audit services provided by Ernst & Young LLP (as described below) were compatible with its independence. Consistent with the requirements of the Sarbanes-Oxley Act of 2002, the Audit Committee has adopted policies to avoid compromising the independence of the independent registered public accounting firm, such as prior committee approval of audit, non-audit, tax and other services, and required audit partner rotation.
We discussed with the company's internal auditors and independent registered public accounting firm the overall scope and plans for their respective audits, including internal control testing under Section 404 of the Sarbanes-Oxley Act. We meet with the internal auditors and independent registered public accounting firm, with and without management present, and in private sessions with members of senior management to discuss the results of their examinations, their evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting. We also periodically meet in executive session.
In reliance on the reviews and discussions referred to above, as members of the Audit Committee, we recommended to the board (and the board subsequently approved the recommendation) that the audited financial statements be included in the Company's annual report on Form 10-K for the year ended December 31, 2008,2009, for filing with the Securities and Exchange Commission. We have also appointed the Company's independent registered public accounting firm, subject to shareholder ratification, for 2009.2010.
As submitted by the members of the Audit Committee,
Clinton R. Churchill, Chairman
Mary G. F. Bitterman
Mark A. Burak
Robert Huret
Martin A. Stein
The Compensation Committee, composed entirely of independent directors in accordance with the applicable laws, regulations, NYSE listing requirements and the Governance Guidelines, sets and administers policies that govern the Company's executive compensation programs, and various incentive and stock programs. As members of the Compensation Committee, we have reviewed and discussed the Compensation Disclosure and Analysis to be included in the Company's 2009 Proxy Statement with management and, based on these discussions, recommended to the Company's Board (and the Board subsequently approved the recommendation) that the Compensation Disclosure and Analysis be included in such Proxy Statement.
As submitted by the members of the Compensation Committee
David A. Heenan, Chairman
Mary G. F. Bitterman
Barbara J. Tanabe
Robert W. Wo, Jr.
COMPENSATION DISCUSSION AND ANALYSIS
Compensation of our named executive officers, including the Chief Executive Officer (the "CEO"), is the responsibility of the Compensation Committee of the Board (the "Committee").
Compensation Philosophy
The Committee believes that executive compensation should align with shareholders' interests, link to achievement of the Company's business plan, maintain a balance between risk and reward, reinforce support for the Company's vision and be consistent with market compensation trends after taking into account the unique circumstances facing the Company in light of geographic, demographic and economic conditions in the markets served by the Company. The Committee also believes that compensation should recognize short and long-term performance and may include both cash and equity components. The composition of components may vary from year to year based on individual, market and other factors. There are no specific formulas to determine the mix of pay elements, or the allocation between cash and non-cash compensation or among non-cash forms of pay. As described below, neither total compensation nor any element of cash and non-cash compensation is formally benchmarked against a peer group of companies. In making compensation decisions, the Committee considers individual performance, experience in the position, breadth of duties, and pay parity among positions of comparable responsibility, andresponsibility. While the Committee may requestalso review market data.data, it does not target pay at any specific competitive market percentile.
Compensation Process
The Committee, consistent with its Charter, determines compensation for the named executive officers. The Committee evaluates the CEO's performance against the overall corporate business plan. With respect to compensation decisions for the other named executive officers, the Committee gives significant weight to the recommendations of the CEO.
The Committee monitors the Company's performance throughout the year as to both financial and non-financial performance. The Committee also monitors the Company's risk profile and risk management processes to ensure that the Company's compensation policies do not promote unnecessary and excessive risks that may threaten the value of the Company. Several areas are reviewed by the Committee including, but not limited to, how risk management is built into incentive
compensation for the Company's executive management, the specific risk profile for a community bank as it relates to loans and investment securities, the controlled and disciplined approach in the compensation structure of the Company, the implementation of new policies with regard to qualitative versus quantitative measures of management performance, and the refinement of best practices.
In January, the Committee reviews the Company's annual results and the longer-term performance trend compared to the business plan. The Committee uses this review, together with factors as described on page 23,29, as the basis for the annual evaluation of the CEO. The Committee's evaluation is communicated to the CEO by the Lead Independent Director and discussed with the full Board.
Based on similar factors and individual objectives, the CEO annually reviews the performance of each of the other named executive officers. The conclusions reached and recommendations based on those reviews, including any recommendations for salary adjustments, annual bonus awards and equity components, are presented to the Committee. For the 2009 recommendations, an assessment of effective risk management was added to each named executive's performance evaluation. The Committee considers the CEO's recommendations. The CEO does not attend executive sessions of the Committee where his own compensation is being reviewed and determined by the Committee or the Board. The CEO is assisted by the director of human resources (herself not a named executive officer) in formulating recommendations for the named executive officers, other than for himself. The Committee has the discretion to accept, reject or modify the CEO's recommendations. The Committee has discretion to determine the amount of equity and other compensation payable to executives based on its assessment of their performance. Rather than relying on
formulaic models, the Committee believes that retaining discretion to assess performance of the CEO and other named executive officers gives the Committee members the ability to more accurately reflect individual contributions that cannot be quantified.
The Role of the Compensation Consultant
Watson Wyatt Worldwide, Inc. ("Watson Wyatt"), an employee benefitsThe Committee is responsible for retaining its compensation consultant and human capital consulting firm,for determining terms and conditions, including fees. The Committee determines whether the consultant's services are performed objectively and free from the influence of management. The executive compensation consultant reports directly to the Committee and takes instructions solely from the Committee. Towers Watson continued their engagement with the Committee to provide advice on executive compensation matters during 2008.2009. The Committee Chairman pre-approves all Towers Watson engagements, including the nature, scope and fees of assignments.
The Committee examines the steps and safeguards Towers Watson takes to ensure that its executive compensation consulting services are objective, including:
For 2008,2009, Towers Watson Wyatt provided the Committee with market data and an analysis of competitive compensation for the named executive officers. The Committee used this data as a "market check" to help assess the competitiveness of the Company's pay practices, but neither total compensation nor any element of compensation paid to the named executive officers is benchmarked against this data. The Committee did not target the elements of its compensation program at any specific level or percentiles within a peer group. Towers Watson Wyatt provided a report to the Committee in January 20082009 which was used to assess 20082009 compensation. Towers Watson Wyatt identified a peer group of ten publicly-held, high-performing, regional full-service community banks similar in size to the Company ranging between $7.7$6.8 billion and $15.2$17.0 billion in assets asbased on the most recently available quarterly data available at the time of December 31, 2006the study, and a market capitalization of $1.1 billion to $3.3$3.4 billion as of November 30, 2007.2008. These financial services organizations were also selected on the basis of their relatively low risk orientation and high levels of performance as measured by return-on-assets, return-on-equity,return on assets, return on equity, total shareholder return, loan loss reserves, and nonperforming asset percentages.assets. The ten organizations include:included:
Towers Watson Wyatt analyzed the proxy statements of the ten financial services organizations identified above and data from three national and highly regarded surveys (2007(2008 Watson Wyatt Report on Financial InstitutionsTop Management Compensation Survey, 20072008 Mercer Executive Compensation Survey and 20072008 Hewitt Financial Services Total Compensation Measurement—Financial Services) representingSurvey) specifically for financial services companies to determine the competitiveness of the Company's pay practices. They reported that the Committee's historic compensation practices generally resulted in competitive pay and:
The Committee instructed Watson Wyatt to conduct a similar analysis on competitive market data for 2009. Watson Wyatt provided its completed report to the Committee in January 2009. In 2008, Alabama National Bancorporation was acquired by RBC Centura Banks and Prosperity Bancshares Inc. was identified to be substituted in its place, The proxy analysis of the 10 banks were supplemented with three published financial services surveys (2008 Watson Wyatt Report on Top Management Compensation Survey—financial services cut, 2008 Mercer Executive Compensation Survey—financial services cut and 2008 Hewitt Financial Services Total Compensation Survey). In its study, Watson Wyatt reported:
The Committee instructed Towers Watson to conduct a similar analysis on competitive market data for 2010. Towers Watson provided its completed report to the Committee in January 2010. It was believed that some of the banks in the 2008/2009 peer group were no longer considered high performing, or appropriate because many of the peer organizations were participating in the Troubled Asset Relief Program ("TARP"). TARP companies also must follow compensation guidelines that are structured non-conventionally. Therefore, Towers Watson identified a new 2009/2010 peer group of ten
publicly-held, high-performing, regional full-service community banks similar in size to the Company ranging between $5.5 billion and $24.0 billion in assets based on the most recently available quarterly data available at the time of the study, and a market capitalization of $609 million to $3 billion as of November 19, 2009. These financial services organizations were also selected on the basis of their relatively low risk orientation and high levels of performance as measured by return on assets, return on equity, total shareholder return, loan loss reserves, and nonperforming assets. Five of the ten banks in the 2008/2009 peer group were substituted with other banks. The new peer group was reviewed with the Chairman of the Committee and consisted of:
The proxy analysis of these 10 banks was supplemented with four published financial services surveys (2009 Watson Wyatt Report on Top Management Compensation Survey, 2009 Mercer Executive Compensation Survey, 2009 Towers Perrin Financial Services Executive Database, and 2009/2010 Watson Wyatt Report on Long-Term Incentives, Policies & Practices), again specifically for financial services organizations where available. Because of differences in the methodologies, timing of the release of survey results, and the type of data covered, each of the four nationally published surveys may not be used for benchmarking all pay components. Base salary and target total cash compensation was analyzed using the first three mentioned surveys above. Long-term incentive award opportunity levels were analyzed using only the last two surveys mentioned above because they provided the most current information at the time the analysis was conducted. The surveys were selected because they are conducted by large survey companies with robust participation representing between 300 and 2,400 organizations. The consultant used survey data subsets appropriate to the size of the company unit and responsibility scope of the position. In its study, Towers Watson reported:
Performance-based compensation plays a significant role in aligning executives' interests with those of the Company's shareholders; therefore incentives constitute a substantial portion of each of the named executive officers' compensation. The following table shows the percentage of targeted total direct compensation provided in the form of incentive compensation for each named executive officer ("NEO"). The Company's pay mix for the NEOs is generally consistent with competitive practices.
Percentage of Target Total Direct Compensation Provided by Each Pay Element
| BOHC NEOs | Competitive | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
NEO | Salary | Annual Incentives | Long-Term Incentives* | Salary | Annual Incentives | Long-Term Incentives | |||||||||||||
Mr. Landon | 32 | % | 32 | % | 36 | % | 31 | % | 29 | % | 40 | % | |||||||
Mr. Ho | 31 | % | 24 | % | 45 | % | 32 | % | 28 | % | 40 | % | |||||||
Mr. Lucien | 40 | % | 27 | % | 33 | % | 44 | % | 27 | % | 29 | % | |||||||
Mr. Rossi | 43 | % | 29 | % | 28 | % | 45 | % | 26 | % | 29 | % | |||||||
Ms. Sellers | 36 | % | 25 | % | 39 | % | 48 | % | 20 | % | 32 | % |
The focus of this engagement was on 20082009 performance-based compensation and 20092010 compensation decisions. The Committee reviewed the analysis and used it to assess compensation changes for 2009.2010. Having considered the analysis by Towers Watson, Wyatt, the current economic environment, and the recommendation of the CEO, it was determined that base salaries in 20092010 for the CEO, President, and named executive officersChief Administrative Officer would remain flat with 2008.the same as in 2009, and the base salaries for the Chief Financial Officer and Chief Risk Officer would be increased effective April 1, 2010 by $35,000 and $30,000, respectively, based on their performance in 2009 and their compensation relative to industry peers.
ManagementFees paid to Towers Watson related to the directors and executive compensation engagement for the Committee totaled $38,066 in 2009.
The Company separately retained Towers Watson Wyatt in 20082009 to provide actuarial, plan valuation, and benefit consulting services in connection with the Company's Employees' Retirement Plan of Bank of Hawaii. The decision to engage Towers Watson for these services was recommended and approved by the Company without Board discussion or approval. Fees paid to Towers Watson for the services in connection with the Company's retirement plan totaled $139,146 in 2009.
Compensation Elements and Determination of Compensation
Compensation elements for 20082009 included:
The measurements of corporate performance and individual performance and contribution that are used to evaluate named executive officers (other than the CEO) for each element of compensation paid to such executive officers, and the specific items of corporate performance that are taken into account in setting compensation policies and making compensation decisions, are set forth below. The CEO makes an initial recommendation to the Committee as to each element of compensation for each of the other named executive officers for their consideration. The Committee has the discretion to accept, reject, or modify the CEO's recommendations. RestrictedIn 2008, the Committee approved the "Cash for Equity Program." The program is intended to be an efficient way to provide equity based
compensation. The goals of the program are to facilitate stock awards align withaccumulation, simplify compensation and foster long-term employment by encouraging participants to use the cash to purchase the Company's focus on long term performance, contribution to overall company value, retention of key talent, and alignment with shareholder interests. Long term equity awards granted in 2008 were comprised exclusively of restrictedcommon stock. The amount of the Company's equityCash for Equity awards is determined independently of the value of a named executive officer's existing equity holdings and independently of the amount of his or her annual incentive award. The program allows for flexibility in the timing of awards and avoids the estimation of the value of grants.
Base Salary
Base salary is based on each individual's responsibilities. The CEO may consider the compensation of named executive officers disclosed by other banking companies. The Company generally establishes base
salaries in connection with recruiting or retaining qualified executive officers. The Committee reviews salary levels as part of the Company's annual performance review process, as well as upon promotion or other changes in job responsibility. Merit-based increases to salaries for executive officers other than the CEO are determined by the Committee based on the CEO's assessment of individual performance.
In recommending base salaries the CEO considers the needs of the Company and of the executive officer, comparability within the Company, pay parity among positions of comparable responsibility and individual performance. The Committee also looks at market survey data to verify that salaries are competitive and within market ranges.
Consistent with the Company's practices, the Committee increased theIn 2009 no increases in base salary of Mr. Ho from $500,000 to $625,000 in April 2008 to reflect increasing operational responsibilities as President. Mr. Lucien joinedwere approved by the Company in April 2008 as Vice Chairman and Chief Financial Officer. Mr. Lucien had previously served as a member of the Company's Board of Directors since April 2006. The CEO negotiated and the Committee approved a base salary of $340,000.Committee. At the request of Mr. Landon, the Committee has not increased Mr. Landon's salary since 2004, and he has not received any other type of award in lieu of a salary increase.
Performance Based Variable Compensation
The named executive officers participate in the Bank of Hawaii Corporation Executive Incentive Plan (the "Executive Incentive Plan"), pursuant to which the Company awards annual cash bonusesawards to executives. The purpose of the Executive Incentive Plan is to optimize the profitability and growth of the Bank of Hawaii through incentives for each annual period. These incentives are consistent with the Company's goals and link the personal interests of participants with those of the Company's shareholders. The Executive Incentive Plan provides participants with an incentive for individual performance and teamwork among participants.
For awards that are intended to qualify as performance-based compensation under Internal Revenue Code Section 162(m) (see "Tax Considerations" below), the Committee establishes, at the beginning of an annual performance period, an incentive pool from which bonusincentive awards are paid to participants. The incentive pool is expressed as a percentage of the Company's net income before taxes for the fiscal year. For performance year 2008,2009, the incentive pool was established as an amount equal to 2% of the Company's net income before taxes for the fiscal year. At the beginning of the performance period, each participating executive is allocated a maximum percentage of the incentive pool. For 2008,2009, the Compensation Committee allocated a maximum of 19% to Mr. Landon, 14% to Mr. Ho and 9% to each of the other named executive officers (pro-rated for Mr. Lucien).officers. The Committee exercises its discretion, however, to reduce an executive's actual bonusincentive payment to a dollar amount based on a target award opportunity. A target award opportunity, expressed as a percentage of base salary, is established for each named executive officer at the beginning of the year. Each named executive officer's target opportunity takes into account the executive's position, scope of responsibilities, and individual contribution to the Company. For 2008,2009, the target bonusincentive opportunity for the Chief Executive Officer was 100% of his base salary, the target opportunity for Mr. Ho was 80% of his base salary, and the
target bonusincentive opportunity for the each of the other named executive officers was 67.5% of base salary. The potential range of annual bonusincentive opportunities is as follows:
Mr. Landon | 0 - | % | ||
Mr. Ho | 0 - | % | ||
Other Named Executive Officers | 0 - | % |
In evaluating the CEO's performance and determining the amount by which the CEO's incentive pool percentage would be adjusted to arrive at his bonus,incentive payment, the Committee employs a scoring system that assigns to the CEO a weighted score based on satisfaction of specified criteria established at the beginning of the year. The CEO receives a score, possibly ranging from 1 (lowest possible score) to 5 (highest possible
score) for each of the specified criteria, and the scores are then weighted according to the specified percentages. For example, the Committee assigns a score of 5 if the Company's stock performance is in the top quartile or if Total Shareholder Return (dividends and share appreciation for the calendar year) is above 11%8%; a score of 4 if the Company's stock performance is in the second quartile or if Total Shareholder Return is above 8.5%5%; and a score of 3 if the Company's stock performance is in the third quartile or if Total Shareholder Return is above 6%2%. The Company's stock performance is measured through comparison with the banking companies identified in the Mid-Cap Bank Performance Index described below.
For 2008,2009, the Committee considered the criteria below and assigned the listed weights to such criteria:criteria. These measures were selected by the Committee because they represent a balance between financial and qualitative measurements of performance. They are consistent with the strategic direction of the Company and highly correlated to increases in shareholder returns as well as organizational long-term health and efficiency.
| Score | Weight | Product | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Measurement Based | ||||||||||||
Stock performance as defined by the 2008 Mid-Cap Bank Performance1 or Total Shareholder Return | 4.00 | 25 | % | 1.000 | ||||||||
Company financial performance2 | 5.00 | 25 | % | 1.250 | ||||||||
Customer satisfaction as measured by the Company's Customer Satisfaction Survey | 2.50 | 10 | % | 0.250 | ||||||||
Employee satisfaction as measured by the Company's Employee Satisfaction Survey | 2.50 | 10 | % | 0.250 | ||||||||
Judgment Based | ||||||||||||
Community and customer relations | 5.00 | 10 | % | 0.500 | ||||||||
Development of the management team | 5.00 | 10 | % | 0.500 | ||||||||
Other significant achievements or activities accomplished | 5.00 | 10 | % | 0.500 | ||||||||
Score | 4.250 |
| Score | Weight | Product | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Measurement Based | ||||||||||||
Stock performance as defined by the 2009 Mid-Cap Bank Performance(1) or Total Shareholder Return | 5.00 | 20 | % | 1.000 | ||||||||
Company financial performance(2) | 3.67 | 30 | % | 1.100 | ||||||||
Customer satisfaction as measured by the Company's Customer Satisfaction Survey | 5.00 | 10 | % | 0.500 | ||||||||
Employee satisfaction as measured by the Company's Employee Satisfaction Survey | 4.75 | 10 | % | 0.475 | ||||||||
Judgment Based | ||||||||||||
Community and customer relations | 5.00 | 10 | % | 0.500 | ||||||||
Development of the management team | 5.00 | 10 | % | 0.500 | ||||||||
Other significant achievements or activities accomplished | 4.75 | 10 | % | 0.475 | ||||||||
Score | 4.550 |
Corp., National City Corp., Old National Bancorp, PNC Financial Services Group Inc., Popular Inc., Prosperity Bancshares Inc., Provident Bankshares, The South Financial Group Inc., Sterling Financial Corp./WA, Susquehanna Bancshares Inc., SVB Financial Group, Synovus Financial Corp., TCF Financial Corp., Trustmark Corp., UCBH Holdings Inc., Umpqua Holdings Corp., United Bankshares Inc., Valley National Bancorp, Westamerica Bancorporation, Whitney Holding Corp., Wilmington Trust Corp., Wintrust Financial Corp. and Zions Bancorporation. The Mid-Cap Bank Performance Index was modified by the Committee in March 2007 due to mergers and acquisitions as follows: First Republic was replaced by Prosperity Bancshares Inc. Compass Bancshares Inc. was replaced by Comerica, and Mercantile Bankshares was replaced by Provident Bankshares.
As indicated in the table above, the Committee assigned a score of "4""5" for the stock performance criteria because the Company's stock performance was in the secondtop quartile as measured by the Mid-Cap Bank Performance Index, and a score of "5""3.67" for the financial performance criteria.criteria because Tier 1 capital was more than 12%, loan loss reserves as a percent of outstanding loans was above 2%, and earnings per share was more than 4% below budget. With respect to the judgment based criteria, the Committee's evaluation is based on its subjective assessment of the CEO's performance in these areas. As noted above, the Compensation Committee assigned a score of "5" in two of these categories and a score of "4.75" in the "Other" category, resulting in a final weighted score of 4.254.55 to the CEO.
In 2009, because risk management was particularly important to the Company, the Committee made two of the three financial performance criteria risk related. The specified criteria are generally not adjusted during the year, except, in the Committee's discretion, in the event of certain unanticipated transactions affecting the Company. The Committee did not make any such adjustments in 2008.2009. Certain adjustments also may be made by the Committee with respect to awards granted to individuals who are promoted or change job responsibilities during the performance period. The Committee did not make any such adjustments for the CEO or named executive officers in 2008.2009.
The Committee believes that stock performance and financial performance correlate most closely with the objectives of the Company and that the more subjective elements can be assessed through survey data. The Committee determined the final bonusincentive payment based on a subjective determination that takes into consideration the results of the scoring system, but which is not determined by reference to a specific formula driven off the numerical score. Based on this evaluation, the Committee awarded the CEO a bonusan incentive payment of $600,000 (approximately 80%$540,000 (72% of base salary), equal to10% lower than the CEO bonusincentive payment of $600,000 in 2007.2008.
The bonusincentive amounts payable to each of the other named executive officers is determined by a similar process that does not include formal scoring but takes into account individual business unit objectives, as well as the individual's performance, scope of responsibilities and market data. The CEO makes an initial recommendation to the Committee as to the final bonuses ofincentive awards for each of the other named executive officers for the Committee's consideration. The Committee has the discretion to accept, reject, or modify the CEO's recommendations. For 20082009 compensation determinations, the Committee recognized the strong performance and leadership provided by the President and Chief Risk Officer, in particular. The Committee accepted and approved the CEO's bonusincentive recommendations (as reflected in the Summary Compensation Table) for the other named executive officers.
In addition to the awards under the Executive Incentive Plan, the Committee may pay discretionary cash bonusesawards to executives. In paying discretionary bonuses,awards, the Committee considers recommendations from the CEO, changes in position, and an assessment of individual performance. These cash bonusesawards will not qualify as performance-based compensation under Section 162(m).
In 2008, the Committee approved the "Cash for Equity Program." The program is intended to be an alternative to equity based compensation. The goals of the program are to accelerate stock accumulation, simplify compensation and foster long-term employment by encouraging participants to use the cash to purchase the Company's common stock. The program also assists executives in meeting the Company's Stock Ownership Guidelines. During 2008, Senior Executive Vice Presidents, Executive Vice Presidents and Senior Vice Presidents were collectively paid $4,560,000 to increase their stock holdings in the Company.
On December 19, 2008, the Committee granted Mr. Ho a cash award of $1,250,000 under the Cash for Equity Program in recognition of his 2008 leadership and performance, and his commitment to help lead Bank of Hawaii in the future. The Committee approved the payment with the expectation that Mr. Ho will use a substantial portion of the grant to increase his holdings of the Company's common stock. In addition, under the terms of the grant, Mr. Ho agreed to repay a pro-rata portion of the grant, based on the remaining days in the four-year term, if his employment terminates prior to January 1, 2013.
In April 2008, the Committee awarded a $75,000 cash bonus to Mr. Ho in recognition of the increased responsibilities associated with his promotion to President.
In April 2008, the Committee awarded Ms. Sellers $50,000, and in January 2009, Mr. Ho was awarded $20,000 for their leadership and performance.
Long-Term and Equity-based Compensation and Cash for Equity
Long-term incentives are intended to encourage decision-making with the long-term interests of the Company in mind, to retain and reward management and to align the interests of shareholders and executives through the achievement of the Company's strategic business plan.
Equity awards can be an important component of total compensation and reflect the Committee's strategy of balancing short and long-term incentives in structuring executive officer compensation and aligning the interest of the executives with those of shareholders.
In accordance with the Company's equity compensation plans, the Committee may grant stock options, restricted stock awards or restricted stock units. However, it currently expects to award shares of restricted stock or restricted stock units to the extent, if any, it utilizes equity compensation as part of the overall compensation program.
As mentioned above, in 2008, the Committee approved the Cash for Equity Program. The program is intended to be an alternative to equity based compensation. The goals of the program are to facilitate stock accumulation, simplify compensation and foster long-term employment by encouraging participants to use the cash to purchase the Company's common stock. The program also assists executives in meeting the Company's Stock Ownership Guidelines. The amounts paid to the named executive officers under this program are listed in the "Bonus" column in the Summary Compensation Table. Grants currently being issued under this program for named executive officers include long-term retention terms which call for repayment of a pro-rata portion of the grant if the executive leaves prior to the end of the term.
The amount of the long-term incentive grant awards is subjectively determined, taking into account position and job responsibilities, individual performance, Company performance, future potential contributions to the Company, internal pay parity, and market survey data. In addition, the Committee may review additional factors to determine the size, frequency and type of long-term incentive grants. These factors may include the tax consequences of the grants to the individual and the Company, accounting impact, potential dilutive effects, potential future stock values and the number of shares remaining available for issuance under the Company's equity incentive plans.
As determined at the discretion of the Committee, the terms and conditions of awards under the 2004 Stock and Incentive Compensation Plan, including the amount, measurement, vesting and payment of such awards, may be conditioned upon certain performance measures. In the case of awards that are intended to comprise qualified performance-based compensation to covered employees under Section 162(m) of the Internal Revenue Code, the performance measures are limited to one or more, separately or in combination, of the following performance measures: (a) earnings per share (actual or targeted growth); (b) net income after capital charge (NIACC); (c) net income (before or after taxes); (d) return measures (including, but not limited to, return on average assets, risk-adjusted return on capital, or return on average equity); (e) efficiency ratio; (f) full-time equivalency control; (g) stock price (including, but not limited to, growth measures and total shareholder return); (h) noninterest income compared to net interest income ratio; (i) expense targets; (j) margins; (k) operating efficiency; (l) EVA® (economic value added); and (m) customer satisfaction. The performance measures may apply to the Company as a whole or any subsidiary, affiliate, or business unit of the Company.
Restricted stock or restricted stock unit awards generally vest based on achievement of one or more performance goals, length of service or both. The discussion under "Grants of Plan-Based Awards" and the footnotes to the "Outstanding Equity Awards at Fiscal Year-End" table disclose the performance criteria that have been used for recent equity awards made to the named executive officers. These criteria include achievement of top quartile total shareholder return based on the Mid-Cap Bank Performance Index, Total Shareholder Return, Earnings Per Share growth, efficiency ratio, NIACC (as more fully defined in the Company's Annual Report on Form 10-K filed with the SEC on February 25, 2009)22, 2010), risk adjusted return on capital (RAROC), return on equity (ROE), direct expense, operating income growth, operating leverage, and credit loss management.
Additional information regarding stock option and equity awards issued, and the criteria for performance based vesting, is provided in "Grants of Plan-Based Awards" and in the tables "Outstanding Equity Awards at Fiscal Year-End" and "Option Exercises and Stock Vested."
In 2001, the Committee adopted stock ownership guidelines applicable to the executive officers. The objective of stock ownership guidelines is to align shareholder and management interests. Under the guidelines, the CEO should own Company stock having a market value equal to at least five times base salary, and the other named executive officers should own at least 2.5 times base salary. Stock ownership includes the value of vested stock options, stock units from qualified plans, and other stock held by the executive. The guidelines provide that executives comply with the stock ownership levels within three years of the date that they are hired or promoted to such position within the Company. At December 31, 2008, each named executive officer2009, Messrs. Landon and Ho and Ms. Sellers satisfied the stock ownership guidelines that pertain to them.and Messrs. Lucien and Rossi made substantial progress in meeting the guidelines.
Health, Welfare, Retirement, Perquisites and Other Compensation
Executive officers are eligible to participate in health and insurance plans, retirement plans, and other benefits generally available to full-time employees. This is consistent with our belief in offering employees basic health welfare and retirement benefits that are competitive in our markets. The retirement programs assist our employees in planning for their retirement income needs. Benefits under our qualified health welfare and retirement plans are not directly tied to specific Company performance. The Committee regularly reviews the value of benefits from the retirement plans.
Our employees who meet service requirements are eligible to participate in the Company-sponsored Retirement Savings Plan, a tax-qualified defined contribution pension plan.
We believe that ongoing perquisites should be limited in scope and value. The most significant perquisites as defined by the SEC, relate to moving and relocation expenses.
Nonqualified Deferred Compensation Plans
The Committee has adopted the Bank of Hawaii Corporation Executive Deferred Compensation Program (the "Deferred Compensation Program"), a program that offers senior management the ability to defer up to 80% of base salary and/or 100% of bonusincentive amounts under the Executive Incentive Plan in order to allow executives to defer, along with the receipt of such bonusincentive amounts, the income tax liability on such amounts (including any appreciation in value as a result of the deemed investment of such amounts) until payment. This program allows participants to manage their cash flow and estate planning needs. The Company also maintains the Bank of Hawaii Retirement Savings Excess Benefit Plan (the "Excess Benefit Plan"), a non-qualified supplemental retirement benefits plan that compensates participants for benefits that would otherwise be payable under the Company's Retirement Savings Plan but for certain Internal Revenue Code limitations. The Committee believes that this plan is important to ensure equitability in retirement funding amounts between those that fall below and above the IRC limitations. See the discussion under "Nonqualified Deferred Compensation" for additional information regarding the Deferred Compensation Program and the Excess Benefit Plan.
Benefits under the Executive Deferred Compensation Program and the Retirement Savings Excess Benefit Plan are not directly tied to specific Company performance. The value of these programs is viewed independently by the Committee from the other pay elements. Gains from longer-term incentives are not included in the determination of nonqualified deferred compensation benefits. In 2008, Ms. Thompson2009, Mr. Lucien deferred a portion of her 2007his 2008 award under the non-equity incentive plan.
Employment Agreements
The Company does not provide employment agreements for any of the named executive officers. The Company believes in a policy of "at will" employment arrangements.
Change In Control
The Committee believes that it is an important part of an executive's total compensation package to provide for protections in the event of a change in control of the Company. Change in control benefits play
an important role in attracting and retaining valuable executives. The payment of such benefits ensures a smooth transition in management following a change in control by giving an executive the incentive to remain with the Company through the transition period, and, in the event the executive's employment is terminated as part of the transition, by compensating the executive with a degree of financial and personal security during a period in which he is likely to be unemployed.
The Change in Control Retention Plan (the "Retention Plan"), provides benefits only in the event that a participant's employment is terminated by the Company without cause or by the participant for "good reason" within 24 months following a change in control. The Committee believes that this encourages executives to remain with the Company upon a change in control. The key provisions of the Retention Plan are:
Each of the named executive officers other than Mr. Landon participates in the Retention Plan. Mr. Landon has not entered into any other type of agreement in lieu of the Retention Plan.
In 2009, the Company amended the Retention Plan to limit any payment or benefit under the plan to an amount that would not be subject to Excise Tax even if the benefits would be completely eliminated as a result of this limit, and to eliminate any tax gross up payments to executives in connection with any payment or benefit under the Plan. The terms of the Company's 2004 Stock and Incentive Plan provide for full acceleration of vesting of restricted stock and restricted stock units upon the occurrence of a change in control of the Company. We believe that it is generally appropriate to fully vest equity and incentive-based awards to employees in a change in control transaction because such a transaction may often cut short or reduce the employee's ability to realize value with respect to such awards. Similarly, the Executive Incentive Plan provides that bonusincentive awards will, upon a change in control of the Company, be prorated as though the applicable performance period ended on the change in control date and will be calculated as an amount equal to two times a participant's bonusincentive allocation for the prorated performance period.
Tax Considerations
Section 162(m) of the Internal Revenue Code limits the deductibility of compensation paid to certain executive officers in excess of $1.0 million, but excludes "performance based compensation" from this limit. To maintain flexibility in compensating executive officers, the Compensation Committee does not require all compensation to be awarded in a tax deductible manner, but it is its intent to do so to the fullest extent possible and consistent with overall corporate goals. Some compensation payable to our executive officers may exceed the Section 162(m) deduction limit. Approximately $2 million ofIn 2009 there was no compensation paid during 2008 will not be deductible bythat exceeded the Company under Section 162(m). A portion of this amount relates to the vesting of restricted stock awarded in prior years that did not qualify as performance-based compensation. The amount does not correlate to the FAS 123R expense recognized in 2008 for financial statement reporting purposes.deductibility limit.
Section 409A of the Internal Revenue Code is a relatively new federal tax provision. If an executive is entitled to nonqualified deferred compensation benefits that are subject to Section 409A, and such benefits do not comply with Section 409A, the executive would be subject to adverse tax treatment, including accelerated income recognition (in the first year that benefits are no longer subject to a substantial risk of forfeiture) and a 20% penalty tax pursuant to Section 409A. The Internal Revenue Service extended the transition relief period for amending plans to comply with Section 409A through December 31, 2008. The Company has evaluated the impact of Section 409A on its compensation and benefits plans, programs and arrangements and modified them as necessary to comply with the newthese regulations.
Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allan R. Landon | 2008 | 750,001 | — | 1,025,844 | — | 600,000 | — | 89,235 | 2,465,080 | ||||||||||||||||||||
Chairman of the | 2007 | 750,001 | — | 1,198,019 | — | 600,000 | — | 84,554 | 2,632,574 | ||||||||||||||||||||
Board, Chief Executive Officer | 2006 | 750,001 | — | 779,075 | — | 650,000 | — | 95,683 | 2,274,759 | ||||||||||||||||||||
Peter S. Ho | 2008 | 581,732 | 1,345,000 | 591,496 | — | 480,000 | 808 | 84,702 | 3,083,738 | ||||||||||||||||||||
President, Chief | 2007 | 451,539 | — | 682,457 | — | 365,000 | (861 | ) | 65,641 | 1,563,776 | |||||||||||||||||||
Banking Officer | 2006 | 398,038 | — | 278,744 | — | 325,000 | 160 | 50,232 | 1,052,174 | ||||||||||||||||||||
Kent T. Lucien | 2008 | 245,057 | — | 146,203 | 8,764 | 160,000 | — | 873 | 560,897 | ||||||||||||||||||||
Vice Chairman, Chief Financial Officer | |||||||||||||||||||||||||||||
Mary E. Sellers | 2008 | 307,231 | 50,000 | 169,135 | — | 250,000 | 5,511 | 42,790 | 824,667 | ||||||||||||||||||||
Vice Chairman, Chief Risk Officer | |||||||||||||||||||||||||||||
Shelley B. Thompson | 2008 | 362,231 | — | 270,772 | — | 200,000 | — | 42,018 | 875,021 | ||||||||||||||||||||
Vice Chairman, Chief Fiduciary Officer | |||||||||||||||||||||||||||||
Daniel C. Stevens | 2008 | 157,846 | — | 11,825 | 586,049 | 755,720 | |||||||||||||||||||||||
Former Vice Chairman | 2007 | 212,692 | 75,000 | 42,865 | — | 100,000 | — | 191,743 | 622,300 | ||||||||||||||||||||
and Former Chief Financial Officer |
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allan R. Landon | 2009 | 750,000 | — | — | — | 540,000 | — | 78,723 | 1,368,723 | ||||||||||||||||||||
Chairman of the Board, Chief | 2008 | 750,001 | — | — | — | 600,000 | — | 89,235 | 1,439,236 | ||||||||||||||||||||
Executive Officer | 2007 | 750,001 | — | 2,488,687 | — | 600,000 | — | 84,554 | 3,923,242 | ||||||||||||||||||||
Peter S. Ho | 2009 | 625,000 | — | — | — | 450,000 | 535 | 79,685 | 1,155,220 | ||||||||||||||||||||
President, Chief Banking Officer | 2008 | 581,732 | 1,345,000 | — | — | 480,000 | 808 | 84,702 | 2,492,242 | ||||||||||||||||||||
2007 | 451,539 | — | 1,513,800 | — | 365,000 | (861 | ) | 65,641 | 2,395,119 | ||||||||||||||||||||
Kent T. Lucien | 2009 | 340,000 | 200,000 | — | — | 216,000 | — | 18,279 | 774,279 | ||||||||||||||||||||
Vice Chairman, Chief Financial | 2008 | 245,057 | — | 488,012 | — | 160,000 | — | 873 | 893,942 | ||||||||||||||||||||
Officer | |||||||||||||||||||||||||||||
Mark A. Rossi | 2009 | 360,000 | 200,000 | — | — | 216,000 | — | 54,099 | 830,099 | ||||||||||||||||||||
Vice Chairman, Chief Administrative | 2008 | 357,231 | — | 268,700 | — | 240,000 | — | 54,754 | 920,685 | ||||||||||||||||||||
Officer, General Counsel & | 2007 | 310,961 | 100,000 | 213,680 | — | 220,000 | — | 279,442 | 1,124,083 | ||||||||||||||||||||
Corporate Secretary | |||||||||||||||||||||||||||||
Mary E. Sellers | 2009 | 310,000 | 200,000 | — | — | 222,000 | 3,733 | 39,666 | 775,399 | ||||||||||||||||||||
Vice Chairman, Chief Risk Officer | 2008 | 307,231 | 50,000 | 403,050 | — | 250,000 | 5,511 | 42,790 | 1,058,582 |
The following table provides additional information about the amounts that appear in the "All Other Compensation" amounts in the Summary Compensation Table for 2009, 2008 2007 and 2006,2007, respectively.
| | Bank of Hawaii Retirement Savings Plan 401(k) Matching Contribution ($)(1) | Bank of Hawaii Value Sharing Contribution ($)(2) | Bank of Hawaii Excess Plan Value Sharing Contribution ($)(3) | Bank of Hawaii Retirement Savings Plan Company Fixed Contribution ($)(4) | Bank of Hawaii Excess Plan Company Fixed Contribution ($)(5) | Term Life Insurance ($)(6) | Relocation Expenses ($)(7) | Other Compensation ($)(8) | Total All Other Compensation ($) | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allan R. Landon | 2008 | — | 6,920 | 33,699 | 6,900 | 33,600 | 8,116 | — | — | 89,235 | |||||||||||||||||||||
2007 | — | 6,139 | 32,062 | 6,750 | 35,250 | 4,353 | — | — | 84,554 | ||||||||||||||||||||||
2006 | — | 6,802 | 39,578 | 6,600 | 38,400 | 4,303 | — | — | 95,683 | ||||||||||||||||||||||
Peter S. Ho | 2008 | 9,200 | 6,920 | 23,822 | 6,900 | 23,752 | 646 | — | 13,462 | 84,702 | |||||||||||||||||||||
2007 | 9,000 | 6,139 | 15,050 | 6,750 | 16,546 | 501 | — | 11,655 | 65,641 | ||||||||||||||||||||||
2006 | 8,800 | 6,802 | 14,008 | 6,600 | 13,591 | 431 | — | — | 50,232 | ||||||||||||||||||||||
Kent T. Lucien | 2008 | — | — | — | — | — | 873 | — | — | 873 | |||||||||||||||||||||
Mary E. Sellers | 2008 | 9,200 | 6,920 | 9,545 | 6,900 | 9,517 | 708 | — | — | 42,790 | |||||||||||||||||||||
Shelley B. Thompson | 2008 | 9,200 | 6,920 | 8,311 | 6,900 | 8,287 | 2,400 | — | — | 42,018 | |||||||||||||||||||||
Daniel C. Stevens | 2008 | 886 | — | — | — | 379 | 84,784 | 500,000 | 586,049 | ||||||||||||||||||||||
2007 | — | — | — | — | — | 607 | 157,718 | 33,418 | 191,743 | ||||||||||||||||||||||
2006 | — | — | — | — | — | — | — | — | — |
| | Bank of Hawaii Retirement Savings Plan 401(k) Matching Contribution ($)(1) | Bank of Hawaii Value Sharing Funding ($)(2) | Bank of Hawaii Excess Plan Value Sharing Funding ($)(3) | Bank of Hawaii Retirement Savings Plan Company Fixed Contribution ($)(4) | Bank of Hawaii Excess Plan Company Fixed Contribution ($)(5) | Term Life Insurance ($)(6) | Other Compensation ($)(7) | Total All Other Compensation ($) | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allan R. Landon | 2009 | 5,402 | 24,366 | 7,350 | 33,150 | 8,455 | — | 78,723 | ||||||||||||||||||||
2008 | — | 6,920 | 33,699 | 6,900 | 33,600 | 8,116 | — | 89,235 | ||||||||||||||||||||
2007 | — | 6,139 | 32,062 | 6,750 | 35,250 | 4,353 | — | 84,554 | ||||||||||||||||||||
Peter S. Ho | 2009 | 9,800 | 5,402 | 19,405 | 7,350 | 26,400 | 696 | 10,632 | 79,685 | |||||||||||||||||||
2008 | 9,200 | 6,920 | 23,822 | 6,900 | 23,752 | 646 | 13,462 | 84,702 | ||||||||||||||||||||
2007 | 9,000 | 6,139 | 15,050 | 6,750 | 16,546 | 501 | 11,655 | 65,641 | ||||||||||||||||||||
Kent T. Lucien | 2009 | 5,212 | 3,602 | 1,300 | 4,900 | 1,769 | 1,496 | — | 18,279 | |||||||||||||||||||
2008 | — | — | — | — | — | 873 | — | 873 | ||||||||||||||||||||
Mark A. Rossi | 2009 | 9,800 | 5,402 | 7,828 | 7,350 | 10,650 | 2,384 | 10,685 | 54,099 | |||||||||||||||||||
2008 | 9,200 | 6,344 | 10,214 | 6,325 | 10,184 | 1,582 | 10,905 | 54,754 | ||||||||||||||||||||
2007 | — | — | — | — | — | 1,290 | 278,152 | 279,442 | ||||||||||||||||||||
Mary E. Sellers | 2009 | 9,800 | 5,402 | 6,946 | 7,350 | 9,450 | 718 | — | 39,666 | |||||||||||||||||||
2008 | 9,200 | 6,920 | 9,545 | 6,900 | 9,517 | 708 | — | 42,790 |
NONQUALIFIED DEFERRED COMPENSATION
Executive Deferred Compensation Program
The Company's Deferred Compensation Program is a nonqualified deferred compensation plan that allows senior management (including the named executive officers) to defer up to 80% of their base salary earned for a specified year through the Executive Base Salary Deferral Plan (the "Salary Deferral Plan"), and to defer up to 100% of bonusincentive payments under the Executive Incentive Plan. In 2008, Ms. Thompson2009, Mr. Lucien deferred amounts under the Executive Deferred Compensation Program.
A participant is always 100% vested in his or her deferred amounts. Deferred amounts under the Deferred Compensation Program are subject to adjustment for appreciation or depreciation in value based on hypothetical investments in one or more investment funds or vehicles permitted by the Compensation Committee and chosen by the participant. A participant's deferred amounts are generally payable beginning on the earliest to occur of (a) a specified time chosen by the participant, or if none, the date that is six months following a separation from service, (b) the participant's death, (c) the participant's disability or (d) an "unforeseeable emergency" (generally, a severe financial hardship resulting from the illness of the participant or his or her spouse or dependent, or other extraordinary and unforeseeable circumstances arising from events beyond the control of the participant). Distributions in the event of an unforeseeable emergency are subject to restrictions and are limited to an amount that is reasonably necessary to satisfy the emergency need. For distributions upon a separation from service or at a specified time chosen by a participant, the participant may choose to receive deferred amounts as a lump sum cash payment or in annual installments over a period not to exceed five years. The amount of each installment will be calculated using the "declining balance method", under which each installment payment is determined by dividing a participant's aggregate unpaid balance by the remaining years in the payment period. For distributions on all other events, payment will be made as a cash lump sum.
Bank of Hawaii's obligations with respect to deferred amounts under the Salary Deferral Plan and the Executive Incentive Plan are payable from its general assets, although the Company has established a rabbi trust to assist it in meeting its liabilities under the plans. The assets of the trust are at all times subject to the claims of the Company's general creditors.
Retirement Savings Excess Benefit Plan
The Excess Benefit Plan is a non-qualified supplemental retirement benefits plan that compensates participants for the amount of benefits that would otherwise be payable under the Company's Retirement Savings Plan but for limitations under Internal Revenue Code Sections 415 and 401(a)(17) as to the amount of annual contributions to, and annual benefits payable under, the Retirement Savings Plan. A participant's accrued benefits under the Excess Benefit Plan are hypothetically invested in one or more Pacific Capital Fundsfunds permitted by the Committee and chosen by the participant, and are adjusted for appreciation or depreciation in value attributable to such hypothetical investments.
For an individual who first becomes a participant in the Excess Benefit Plan after May 19, 2006, the plan provides that benefits are payable upon a separation from service according to a distribution schedule that is determined by reference to the total amount accrued for the individual under the plan. A participant with:
In each case, the first installment will be paid on the first day of the seventh month following separation from service and subsequent installments will be paid in each subsequent January. An individual who first became a participant in the Excess Benefit Plan on or prior to May 19, 2006 will receive benefits upon the participant's separation from service and may have elected to be paid (a) according to the distribution schedule applicable to individuals who become participants after May 19, 2006, (b) in a lump sum on the first day of the seventh month following separation from service, or (c) in annual installments (not to exceed five) commencing on the first day of the seventh month following separation from service or commencing on an anniversary of the participant's separation from service (not later than the fifth anniversary). The amount of each installment will be calculated using the declining balance method. If a participant dies prior to the full distribution of his or her deferred amounts, however, any unpaid amounts remaining will be distributed in a lump sum.
The Company's obligations under the Excess Benefit Plan are payable from its general assets, although the Company has established a rabbi trust to assist it in meeting its liabilities under the Plan. The assets of the trust are at all times subject to the claims of the Company's general creditors.
The Company has reviewed the impact of Internal Revenue Code Section 409A on the terms of its nonqualified deferred compensation plans and has amended them as necessary to ensure compliance with Section 409A. See the discussion under "Tax Considerations."
Set forth below is information regarding the amounts deferred by or for the benefit of the named executive officers in 2008.2009.
Name | Executive Contributions In Last Fiscal Year ($)(1) | Registrant Contributions In Last Fiscal Year ($)(2) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals or Distributions in Last Fiscal Year ($) | Aggregate Balance at Last Fiscal Year-End ($)(3) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allan R. Landon | — | 67,299 | 7,026 | — | 330,658 | |||||||||||
Peter S. Ho | — | 47,574 | (12,392 | ) | — | 104,286 | ||||||||||
Kent T. Lucien | — | — | — | — | — | |||||||||||
Mary E. Sellers | — | 19,062 | 626 | — | 32,414 | |||||||||||
Shelley B. Thompson | 16,000 | 16,598 | (6,704 | ) | — | 40,941 | ||||||||||
Daniel C. Stevens | — | — | — | — | — |
Name | Executive Contributions In Last Fiscal Year ($)(1) | Registrant Contributions In Last Fiscal Year ($)(2) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals or Distributions in Last Fiscal Year ($) | Aggregate Balance at Last Fiscal Year-End ($)(3) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allan R. Landon | — | 57,516 | 1,028 | — | 398,984 | |||||||||||
Peter S. Ho | — | 45,805 | 1,854 | — | 165,728 | |||||||||||
Kent T. Lucien | 80,000 | 3,069 | 18,933 | — | 98,933 | |||||||||||
Mark A. Rossi | — | 18,478 | 37 | — | 20,436 | |||||||||||
Mary E. Sellers | — | 16,396 | 117 | — | 51,593 |
rate of return for the calendar year ended December 31, 2008,2009, as reported by the administrator of the Executive Deferred Compensation Program.
Name of Fund | Rate of Return | Name of Fund | Rate of Return | ||||||
---|---|---|---|---|---|---|---|---|---|
Vanguard Prime Money Market Fund | 2.77% | Vanguard 500 Index Fund | -37.02% | ||||||
Vanguard Short-Term Federal Fund | 7.04% | Vanguard Growth Equity Fund | -47.86% | ||||||
Vanguard Target Retirement Income Fund | -10.93% | Vanguard Mid-Cap Index Fund | -41.82% | ||||||
Vanguard Target Retirement 2005 Fund | -15.82% | Vanguard Windsor Fund | -41.10% | ||||||
Vanguard Target Retirement 2010 Fund | -20.67% | Vanguard International Growth | -44.94% | ||||||
Vanguard Target Retirement 2015 Fund | -24.06% | Pacific Capital Growth & Income Fund | -36.39% | ||||||
Vanguard Target Retirement 2020 Fund | -27.04% | Pacific Capital Growth Stock Fund | -34.85% | ||||||
Vanguard Target Retirement 2025 Fund | -30.05% | Pacific Capital HG Core Fixed Income Fund | 4.81% | ||||||
Vanguard Target Retirement 2030 Fund | -32.91% | Pacific Capital HG Short Inter. Fixed Income Fund | 5.82% | ||||||
Vanguard Target Retirement 2035 Fund | -34.66% | Pacific Capital International Stock Fund | -47.46% | ||||||
Vanguard Target Retirement 2040 Fund | -34.53% | Pacific Capital Mid-Cap Stock Fund | -42.45% | ||||||
Vanguard Target Retirement 2045 Fund | -34.56% | Pacific Capital New Asia Growth Fund | -42.17% | ||||||
Vanguard Target Retirement 2050 Fund | -34.62% | Pacific Capital Small Cap Fund | -38.70% | ||||||
Vanguard Wellington Fund | -22.30% | Pacific Capital Value Fund | -34.97% |
Name of Fund | Rate of Return | Name of Fund | Rate of Return | ||||||
---|---|---|---|---|---|---|---|---|---|
Vanguard Prime Money Market Fund | 0.53 | % | Vanguard 500 Index Fund | 26.49 | % | ||||
Vanguard Short-Term Federal Fund | 2.79 | % | Vanguard Growth Equity Fund | 33.71 | % | ||||
Vanguard Target Retirement Income Fund | 14.28 | % | Vanguard Mid-Cap Index Fund | 40.22 | % | ||||
Vanguard Target Retirement 2005 Fund | 16.16 | % | Vanguard Windsor Fund | 34.69 | % | ||||
Vanguard Target Retirement 2010 Fund | 19.32 | % | Vanguard International Growth | 41.63 | % | ||||
Vanguard Target Retirement 2015 Fund | 21.30 | % | Pacific Capital Growth & Income Fund | 20.86 | % | ||||
Vanguard Target Retirement 2020 Fund | 23.10 | % | Pacific Capital Growth Stock Fund | 26.60 | % | ||||
Vanguard Target Retirement 2025 Fund | 24.81 | % | Pacific Capital HG Core Fixed Income Fund | 5.44 | % | ||||
Vanguard Target Retirement 2030 Fund | 26.72 | % | Pacific Capital HG Short Inter. Fixed Income Fund | 6.19 | % | ||||
Vanguard Target Retirement 2035 Fund | 28.17 | % | Pacific Capital International Stock Fund | 44.43 | % | ||||
Vanguard Target Retirement 2040 Fund | 28.32 | % | Pacific Capital Mid-Cap Stock Fund | 36.36 | % | ||||
Vanguard Target Retirement 2045 Fund | 28.15 | % | Pacific Capital New Asia Growth Fund | 47.82 | % | ||||
Vanguard Target Retirement 2050 Fund | 28.31 | % | Pacific Capital Small Cap Fund | 23.67 | % | ||||
Vanguard Wellington Fund | 22.20 | % | Pacific Capital Value Fund | 20.59 | % |
| | | | | | | | All Other Stock Awards; Number of Shares of Stock or Units (#) | All Other Option Awards; Number of Securities Underlying Options (#) | | | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Payouts Under Equity Incentive Plan Awards | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | |||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($)(1) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||
Allan R. Landon | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Peter S. Ho | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Kent T. Lucien | 4/25/08 | 2,555 | 138,737 | |||||||||||||||||||||||||||||||
7/25/08 | — | — | — | — | — | — | 7,500 | — | 349,275 | |||||||||||||||||||||||||
Mary E. Sellers | 4/24/08 | — | — | — | — | — | — | 7,500 | — | — | 403,050 | |||||||||||||||||||||||
Shelley B. Thompson | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Daniel C. Stevens | — | — | — | — | — | — | — | — | — | — | — |
All Other Stock Awards; Number of Shares of Stock or Units (#) | All Other Option Awards; Number of Securities Underlying Options (#) | |||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Payouts Under Equity Incentive Plan Awards | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | |||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($)(1) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||
Allan R. Landon | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Peter S. Ho | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Kent T. Lucien | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Mark A. Rossi | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Mary E. Sellers | — | — | — | — | — | — | — | — | — | — | — |
See the "Outstanding Equity Awards at Fiscal Year-End" and "Option Exercises and Stock Vested" tables for grants reported in prior years, some of which may have restricted stock awards subject to performance vesting in which the performance criteria for vesting was or will be established subsequent to the grant date.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| Option Awards | Stock Awards | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options Exercisable (#)(1) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | |||||||||||||||||||
Allan R. Landon(3) | 110,638 | — | — | 18.80 | 3/22/11 | — | — | — | — | |||||||||||||||||||
61,600 | — | — | 27.01 | 3/22/12 | — | — | — | — | ||||||||||||||||||||
70,000 | — | — | 29.92 | 2/20/13 | — | — | — | — | ||||||||||||||||||||
— | — | — | — | — | — | — | 24,547 | 1,155,182 | ||||||||||||||||||||
Peter S. Ho(4) | 2,916 | — | — | 27.01 | 3/22/12 | — | — | — | — | |||||||||||||||||||
54,919 | — | — | 50.72 | 12/16/15 | — | — | 7,670 | 360,950 | ||||||||||||||||||||
— | — | — | — | — | — | — | 15,000 | 705,900 | ||||||||||||||||||||
Kent T. Lucien(5) | 2,191 | — | — | 54.31 | 4/28/16 | — | — | — | — | |||||||||||||||||||
— | — | — | — | — | 982 | 46,213 | — | — | ||||||||||||||||||||
— | — | — | — | — | — | — | 7,500 | 352,950 | ||||||||||||||||||||
Mark A. Rossi(6) | — | — | — | — | — | — | — | 2,400 | 112,944 | |||||||||||||||||||
— | — | — | — | — | — | — | 4,170 | 196,240 | ||||||||||||||||||||
Mary E. Sellers(7) | 900 | — | — | 18.80 | 3/22/11 | — | — | — | — | |||||||||||||||||||
4,000 | — | — | 27.01 | 3/22/12 | — | — | — | — | ||||||||||||||||||||
9,500 | — | — | 32.89 | 4/28/13 | — | — | — | — | ||||||||||||||||||||
21,490 | — | — | 50.72 | 12/16/15 | — | — | 818 | 38,495 | ||||||||||||||||||||
— | — | — | — | — | 4,529 | 213,135 | — | — | ||||||||||||||||||||
— | — | — | — | — | 6,255 | 294,360 |
In 2008,on the Company granted restricted sharesclosing stock price of the Company'sBank of Hawaii's common stock toon December 31, 2009 of $47.06.
In April 2008, Mr. LucienLandon received a grant of 2,55549,320 restricted shares, which vest each January through 2010 (with final vesting on January 30, 2009 and on April 30, 2009October 29, 2010) with respect to 745 shares per day providing Mr. LucienLandon remains employed by the Company and subject to the achievement by the Company of positive net income.income for the relevant period. The terms of Mr. Lucien'sLandon's grant also provides that, on any date that a tranche of restricted shares is scheduled to vest, if the Company has achieved positive net income and at least one of the following two performance objectives for the fiscal period: (1) the Company's TSR either exceeds 10% or falls within the top quartile of the Mid-Cap Bank Performance Index, or (2) the Company's EPS for any fiscal period increases by 8% or more over the Company's EPS for the same period in the prior fiscal year, the number of shares that will vest will be 67.5 shares per day. On January 30, 2009, Mr. Landon became vested in 16,470 shares. On January 29, 2010, Mr. Landon became vested in 24,547 shares as the Company met the TSR objective.
share ("EPS")EPS for any fiscal period increases by 8% or more over the Company's
EPS for the same period in the prior fiscal year, the number of shares that will vest will be 10.59,000 shares per day.year. On January 30, 2009,March 3, 2008, Mr. LucienHo became vested in 1,7509,000 shares as the Company met the TSR objective for 2007. On March 1, 2010, another 9,000 shares will vest as the Company met the TSR objective for 2009.
the Director Stock Plan. One-third of these options vest each year on the anniversary of the grant date. Also as a non-management director Mr. Lucien received a grant of 483 serviced-based restricted shares on April 28, 2006 and 982 service-based restricted shares on April 27, 2007 under the Director Stock Plan. These shares become fully vested on the third anniversary after grant date provided he remains on the Board of the Company. In July 2008, after his appointment as Vice Chairman and CFO of the Company, Mr. Lucien received a grant of 7,500 restricted shares which vest according to the following schedule providing Mr. Lucien remains an employee and the Company achieves positive net income for the immediately preceding fiscal period: a) on January 30, 2010 with respect to 1,875 of the shares (providing the Company achieves positive net income for the period from April 1, 2009 through December 31, 2009), b) on the last business day of January in each of 2011 and 2012 with respect to 2,500 of the restricted shares, and c) on April 30, 2012 with respect to 625 of the restricted shares. In each period, an additional 50% of the shares will vest provided that the Company has met at least one of the following two performance objectives for the fiscal period: (1) the Company's TSR either exceeds 10% or falls within the top quartile of the Mid-Cap Bank Performance Index, or (2) the Company's EPS for any fiscal period increases by 8% or more over the Company's EPS for the same period in the prior fiscal year.
On February 1, 2010, 2,813 of these shares vested as the Company met the TSR objective.
Notwithstanding the general vesting schedules applicable to Mr. Lucien'sgrant and Ms. Sellers' restricted share grants, all restrictions with respect to suchon January 29, 2010 another 1,875 shares will lapse upon the earliest to occur of a change in control of the Company, the recipient's death or the termination of the recipient's employment due to disability.
See the "Outstanding Equity Awards at Fiscal Year-End" and "Option Exercises and Stock Vested" tables for grants reported in prior years, some of which may have restricted stock awards subject to performance vesting in which the performance criteria for vesting was or will be established subsequent to the grant date.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| Option Awards | Stock Awards | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options Exercisable (#)(1) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | |||||||||||||||||||
Allan R. Landon(3) | 110,638 | — | — | 18.80 | 3/22/11 | — | — | — | — | |||||||||||||||||||
61,600 | — | — | 27.01 | 3/22/12 | — | — | — | — | ||||||||||||||||||||
70,000 | — | — | 29.92 | 2/20/13 | — | — | — | — | ||||||||||||||||||||
— | — | — | — | — | — | — | 41,017 | 1,852,738 | ||||||||||||||||||||
Peter S. Ho(4) | 2,916 | — | — | 27.01 | 3/22/12 | — | — | — | — | |||||||||||||||||||
54,919 | — | — | 50.72 | 12/16/15 | 3,750 | 169,388 | 7,670 | 346,454 | ||||||||||||||||||||
— | — | — | — | — | — | — | 21,000 | 948,570 | ||||||||||||||||||||
Kent T. Lucien(5) | 1,461 | 730 | — | 54.31 | 4/28/16 | 483 | 21,817 | — | — | |||||||||||||||||||
— | — | — | — | — | 982 | 44,357 | — | — | ||||||||||||||||||||
— | — | — | — | — | — | — | 2,555 | 115,409 | ||||||||||||||||||||
— | — | — | — | — | — | — | 7,500 | 338,775 | ||||||||||||||||||||
Mary E. Sellers(6) | 1,500 | — | — | 13.5625 | 11/3/10 | — | — | — | — | |||||||||||||||||||
3,000 | — | — | 18.80 | 3/22/11 | — | — | — | — | ||||||||||||||||||||
4,000 | — | — | 27.01 | 3/22/12 | — | — | — | — | ||||||||||||||||||||
9,500 | — | — | 32.89 | 4/28/13 | — | — | — | — | ||||||||||||||||||||
21,490 | — | — | 50.72 | 12/16/15 | — | — | 818 | 36,949 | ||||||||||||||||||||
— | — | — | — | — | 5,662 | 255,753 | — | — | ||||||||||||||||||||
— | — | — | — | — | 7,500 | 338,775 | ||||||||||||||||||||||
Shelley B. Thompson(7) | 7,163 | — | — | 50.72 | 12/16/15 | — | — | 409 | 18,475 | |||||||||||||||||||
— | — | — | — | — | 2,831 | 127,876 | — | — | ||||||||||||||||||||
— | — | — | — | — | — | — | 12,000 | 542,040 |
Performance Index, or (2) the Company's EPS for any fiscal period increases by 8% or more over the Company's EPS for the same period in the prior fiscal year, the number of shares that will vest will be 9,000 shares per year. On March 3, 2008, Mr. Ho became vested in 9,000 shares as the Company met the TSR objective.
The following table includes values realized for stock options exercised, the vesting of restricted stock, and the payouts on performance-based restricted stock units. For further information on the vesting criteria for these restricted stock awards see the table "Outstanding Equity Awards At Fiscal Year-End."
OPTION EXERCISES AND STOCK VESTED
| OPTION AWARDS | STOCK AWARDS | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||||||
Allan R. Landon(1) | 0 | 0 | 27,053 | $ | 1,346,642 | ||||||||
Peter S. Ho(2) | 0 | 0 | 17,522 | $ | 808,871 | ||||||||
Kent T. Lucien | 0 | 0 | 0 | 0 | |||||||||
Mary E. Sellers(3) | 0 | 0 | 5,047 | $ | 239,567 | ||||||||
Shelley B. Thompson(4) | 0 | 0 | 4,023 | $ | 176,229 | ||||||||
Daniel C. Stevens(5) | 0 | 0 | 1,000 | $ | 48,020 |
| OPTION AWARDS | STOCK AWARDS | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||||||
Allan R. Landon(1) | 0 | 0 | 16,470 | $ | 590,779 | ||||||||
Peter S. Ho(2) | 0 | 0 | 9,750 | $ | 356,303 | ||||||||
Kent T. Lucien(3) | 0 | 0 | 3,038 | $ | 107,439 | ||||||||
Mark A. Rossi(4) | 0 | 0 | 1,430 | $ | 48,216 | ||||||||
Mary E. Sellers(5) | 3,600 | $ | 92,477 | 2,378 | $ | 79,487 |
Equity Compensation Plan Information
The following table contains information with respect to all of the Company's compensation plans (including individual compensation arrangements) under which securities are authorized for issuance as of December 31, 2008.2009.
EQUITY COMPENSATION PLAN INFORMATION
Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights A | Weighted-average exercise price of outstanding options, warrants and rights B | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(A)) C | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders | 1,412,760 | $ | 32.42 | 1,149,249 |
Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights A | Weighted-average exercise price of outstanding options, warrants and rights B | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(A)) C | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders | 1,296,835 | $ | 32.93 | 1,140,120 |
The Employees' Retirement Plan of Bank of Hawaii (the "Retirement Plan") provides retirement benefits for eligible employees based on the employee's years of service and average annual salary during the 60 consecutive months resulting in the highest average (excluding overtime, incentive plan payouts, and discretionary bonuses)cash awards). The Retirement Plan was frozen as of December 31, 1995, except that for the five-year period commencing January 1, 1996, benefits for certain eligible participants were increased in proportion to the increase in the participant's average annual salary. As of December 31, 2000, the benefits under the Retirement Plan were completely frozen and not subject to increase for any additional years of service or increase in average annual salary. Peter S. Ho and Mary E. Sellers are the only named executive officers who are participants in the Retirement Plan. A summary of their benefits are listed below:
Name | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefits ($) | Payments During Last Fiscal Year ($) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter S. Ho | Employees' Retirement Plan of Bank of Hawaii | 2 | $ | 3,923 | 0 | |||||||
Mary E. Sellers | Employees' Retirement Plan of Bank of Hawaii | 7 | $ | 32,504 | 0 |
Name | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefits ($) | Payments During Last Fiscal Year ($) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter S. Ho | Employees' Retirement Plan of Bank of Hawaii | 2 | 4,458 | 0 | ||||||||
Mary E. Sellers | Employees' Retirement Plan of Bank of Hawaii | 7 | 36,237 | 0 |
CHANGE IN CONTROL, TERMINATION AND OTHER ARRANGEMENTS
Bank of Hawaii's Change in Control Retention Plan (the "Retention Plan") provides a participant with benefits in the event that the participant's employment is terminated by the Company without cause or by the participant for "good reason" within 24 months following a change in control of the Company. All of the named executive officers except Mr. Landon are participants in the Retention Plan. Two levels of benefits are payable to participants in the Retention Plan, with executives holding the position of Vice Chairman or above being eligible for the higher tier of benefits. Each of the named executive officers other than Mr. Landon is eligible for the higher tier of benefits (described in the table below). In consideration of the benefits payable under the Retention Plan, participants are, for 12 months following termination of employment, subject to non-disclosure, non-competition (generally with respect to any other financial institution doing business in Hawaii), non-solicitation of business and employees, and non-disparagement restrictions.
In 2009, the Company amended the Retention Plan to limit any payment or benefit under the plan to an amount that would not be subject to Excise Tax even if the benefits would be completely
eliminated as a result of this limit, and to eliminate any tax gross up payments to executives in connection with any payment or benefit under the Plan.
Under the Retention Plan, a "change in control" will be deemed to have occurred if:
A participant is deemed to have "good reason" if one or more of the following occur after a change in control without the participant's written consent:
The terms of the Company's 2004 Stock and Incentive Plan provide for full acceleration of vesting of restricted stock and restricted stock units upon the occurrence of a change in control of the Company. Similarly, the Executive Incentive Plan provides that bonusincentive awards will, upon a change in control of the Company, be prorated as though the applicable performance period ended on the change in control date, and will be calculated as an amount equal to two times a participant's bonusincentive allocation for the prorated performance period.
The table below sets forth the benefits that would have been payable to each of the named executive officers had a qualifying termination occurred under the terms of the Retention Plan or plans with change in control provisions on December 31, 2008.2009.
| Base Salary and Bonus Payment (1) | Executive Incentive Plan Payment (2) | Health Benefits (3) | Outplacement (4) | Relocation Payment (5) | Acceleration of Restricted Stock (6) | Non- competition Payment (7) | Tax Gross Up (8) | Total | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allan R. Landon(9) | $ | 0 | $ | 1,500,000 | $ | 0 | $ | 0 | $ | 0 | $ | 1,108,788 | $ | 0 | $ | 0 | $ | 2,608,788 | ||||||||||
Peter S. Ho | 2,250,000 | 1,000,000 | 38,787 | 20,480 | 150,000 | 1,464,411 | 1,125,000 | 1,522,489 | 7,571,167 | |||||||||||||||||||
Kent T. Lucien | 1,139,000 | 306,000 | 13,408 | 20,480 | 150,000 | 441,311 | 569,500 | 950,564 | 3,590,263 | |||||||||||||||||||
Mary E. Sellers | 1,038,500 | 418,500 | 14,846 | 20,480 | 150,000 | 575,240 | 519,250 | 755,569 | 3,492,385 | |||||||||||||||||||
Shelley B. Thompson | 1,222,750 | 492,750 | 12,935 | 20,480 | 150,000 | 507,711 | 611,375 | 816,648 | 3,834,649 |
| Base Salary and Bonus Payment(1)(9) | Executive Incentive Plan Payment(2)(9) | Health Benefits(3) | Outplacement(4) | Relocation Payment(5) | Acceleration of Restricted Stock(6)(9) | Non- competition Payment(7) | Total | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allan R. Landon(8) | — | $ | 1,500,000 | — | — | — | — | — | $ | 1,500,000 | |||||||||||||||
Peter S. Ho | $ | 2,250,000 | $ | 1,000,000 | $ | 43,088 | $ | 20,881 | $ | 150,000 | $ | 414,693 | $ | 1,125,000 | $ | 5,003,662 | |||||||||
Kent T. Lucien | $ | 495,596 | $ | 459,000 | $ | 27,352 | $ | 20,881 | $ | 150,000 | — | $ | 569,500 | $ | 1,722,329 | ||||||||||
Mark A. Rossi | $ | 1,206,000 | $ | 486,000 | $ | 29,637 | $ | 20,881 | $ | 150,000 | $ | 133,265 | $ | 603,000 | $ | 2,628,783 | |||||||||
Mary E. Sellers | $ | 1,038,500 | $ | 418,500 | $ | 16,419 | $ | 20,881 | $ | 150,000 | $ | 157,278 | $ | 519,250 | $ | 2,320,828 |
"Highest Base Salary"), and (b) two times the product of the participant's annual bonus target percentage under the Executive Incentive Plan in the year of termination and the participant's Highest Base Salary. Amounts would be payable in a lump sum in the month following termination.
Tabletermination unless the participant is a "key employee" as defined in Treasury Regulation Section 416(i)(1)(A)(i), (ii) or (iii) in which case amounts would be payable in a lump sum on the first day of Contentsthe seventh month following termination.
The Company does not have employment agreements with its executives. However, the Committee has from time to time entered into retention agreements with certain of its executives as an incentive to the executives to stay with the Company for a specified period of time.
In April 2008, the Company announced Daniel Stevens' intention to resign from the Company and on April 25, 2008, the Company and Mr. Stevens entered into an agreement under which Mr. Stevens would receive a cash payment of $500,000 and relocation support back to Kansas. Mr. Stevens completed his employment on May 30, 2008.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has ethics and business conduct policies and procedures to monitor and approve related person transactions, including procedures related to any loans the Company makes to executive officers and directors. The Company also conducts ethics training for its officers and directors. In accordance with applicable NYSE listing standards, each related party transaction is reviewed and evaluated by an appropriate group, generally the Audit Committee, to determine whether a particular relationship serves the best interest of the Company and its shareholders and whether the relationship should be continued. The Company also has adopted a Code of Business Conduct and Ethics ("Code") for all directors, officers and employees to address, among other topics, possible conflicts of interest, corporate opportunities, compliance responsibilities, and reporting and accountability. The Code stresses personal accountability. Directors, officers, or employees who become aware of conflicts of interest or are concerned that a conflict might develop are required to disclose the matter promptly.
In accordance with the applicable NYSE listing standards and the Code, any material transactions or relationships involving a director or executive officer that could reasonably be expected to give rise to a conflict of interest must be approved or ratified by the Audit Committee and a list of those approvals and ratifications must be submitted semi-annually to the Board of Directors. The Audit Committee acts on approvals or ratifications based on the facts and circumstances of each case. In addition to self-reporting, information about potential conflicts of interest is obtained as part of the annual questionnaire process. In response to the annual Directors' and Officers' Questionnaire, each director and executive officer submits to the Corporate Secretary a description of any current or proposed related person transactions. These descriptions are presented to the Audit Committee for review and approval or ratification.
The Company and its subsidiaries are also subject to extensive federal regulations regarding certain transactions, including banking regulations relating to the extension of credit by subsidiary banks to insiders, such as executive officers, directors and entities in which these individuals have specified control positions.
During 2008,2009, the Company and its banking, insurance, and investment subsidiaries engaged in transactions in the ordinary course of business with one or more of the Company's directors and executive officers, members of their immediate families, corporations and organizations of which one or more of them was a beneficial owner of 10% or more of a class of equity securities, certain of their associates and affiliates, and certain trusts and estates of which one or more of them was a trustee or beneficiary. All loans to such persons 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 loans with persons not related to the lender, and did not involve more than the normal risk of collectability or present other unfavorable features.
Mr. Takaki's affiliated company,Donald Takaki is Chairman and Chief Executive Officer of HawkTree International, Inc. ("HawkTree") and its subsidiaries, Pacific Courier, Inc. ("PCI"), provides courier and armored car services among the branches for the Company. In 2008, the Company paid approximately $1.7 million in courier fees, and reimbursed airfreight costs of approximately $270,000, to PCI. PCI was selected to continue to provide courier and armored car services after a request for quote process conducted by the Company in February 2005. The Company has the right to terminate the services provided by PCI upon 30 days notice. In 2008, Island Movers, Inc. ("Island Movers"), another of Mr. Takaki's businesses, was. PCI and Island Movers provide courier and moving/relocation services, respectively, to the Company. In 2009, Island Movers provided moving/relocation services for approximately $44,000. The PCI courier contract cost approximately $1.9 million in 2009. HawkTree has contracted with the Company to provide interstate moving services for Bank officers, including household furnishingspurchase property and automobiles. The Company anticipates paying approximately $250,000 to $350,000 per year to Island Movers for moving and relocation services. Additionally in 2008, Mr. Takaki's parent company, HawkTree, purchasedcasualty insurance services from the Company's affiliate, Bank of Hawaii Insurance Services, Inc. ("BOHIS"). BOHIS will provide property and casualty insurance services, in conjunction with Hawk Tree'sHawkTree's existing licensed insurance producer of record. For the services rendered, HawkTree will pay a total fee of $200,000 per year, from which BOHIS will receive $120,000. During 2009, Elyte Pacific ATM Services, L.L.C. ("Elyte") was providing ATM servicing and currency transportation services to the Company. On November 15, 2009, PCI purchased the operating assets of Elyte. The existing contract between the Company and Elyte was assigned to PCI at the time of the sale. The ATM servicing and currency transportation services contract will cost approximately $3.5 million per year. PCI will continue to provide courier services to the Company, and will also carry on the ATM servicing and currency transportation services previously performed by Elyte.
The above-mentioned transactions were made in the ordinary course of business and made on terms and conditions comparable to contracts with other customers not related to the Company. The Audit Committee ratified and approved the contracts with PCI, Island Movers and HawkTree.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the SEC require Bank of Hawaii to disclose late filings of reports of ownership (and changes in stock ownership) of Bank of Hawaii common stock by its directors and certain officers. To our knowledge, based on review of the copies of such reports received by Bank of Hawaii and the written representations of its directors and officers, the Company believes that all of its directors and officers complied timely with those filing requirements for 2008.2009 with the exception of Mark A. Burak
and Michael J. Chun, each of whom filed one late report for one transaction, and Robert W. Wo, Jr., who inadvertently became aware only recently that his wife held an additional 1,000 shares in trust.
PROPOSAL 2: RATIFICATION OF SELECTION OF AN
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Ernst & Young LLP as the Company's independent registered public accounting firm for 2009.2010. The Board recommends that the shareholders ratify this selection. Ernst & Young LLP has been the Company's independent registered public accounting firm since its incorporation in 1971. We expect representatives of Ernst & Young LLP to attend the annual meeting. Ernst & Young LLP has indicated that they will have no statement to make but will be available to respond to questions. If this Proposal does not pass, the selection of the independent registered public accounting firm will be reconsidered by the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOREGOING PROPOSAL
The following table summarizes Ernst & Young LLP audit fees for 20082009 and 2007.2008.
Service | 2008 | 2007 | |||||
---|---|---|---|---|---|---|---|
Audit Fees | $ | 1,368,500 | $ | 1,225,500 | |||
Audit Related Fees | $ | 155,000 | $ | 149,000 | |||
Tax Fees | $ | 22,000 | $ | 37,800 | |||
All Other Fees | $ | 13,000 | $ | 28,085 | |||
Total | $ | 1,558,500 | $ | 1,440,385 |
Service | 2009 | 2008 | |||||
---|---|---|---|---|---|---|---|
Audit Fees | $ | 1,333,735 | $ | 1,368,500 | |||
Audit Related Fees | $ | 184,000 | $ | 155,000 | |||
Tax Fees | $ | 29,708 | $ | 22,000 | |||
All Other Fees | — | $ | 13,000 | ||||
Total | $ | 1,547,443 | $ | 1,558,500 |
Audit Fees
The Audit Fees for 20082009 and 20072008 represent fees for professional services rendered for the audit of the Company's annual consolidated financial statements, statutory and subsidiary audits of subsidiaries, reports on internal controls and the reviews of the Company's financial statements included in the quarterly reports on Form 10-Q and out-of-pocket expenses.
Audit Related Fees
The Audit Related Fees for 20082009 and 20072008 include fees for benefit plan audits and other attestation reports.
Tax Fees
The Tax Fees for 20082009 and 20072008 relate primarily to expatriate tax services and other tax advisory services.
All Other Fees
The All Other Fees category for 2008 includes fees related to the review of certain corporate policies. The All Other Fees category for 2007 includes fees related to the review of certain corporate policies and for copyrighted and other professional on-line publication services provided by an affiliate of Ernst & Young LLP.
PROPOSAL 3: COMPANY PROPOSAL REGARDING APPROVAL OF THE MATERIAL TERMS OF THE AMENDED PERFORMANCE MEASURES UNDER THE BANK OF HAWAII CORPORATION 2004 STOCK AND INCENTIVE COMPENSATION PLAN
The Company is seeking approval of the performance measures that may be used in connection with the grant of certain awards under the Bank of Hawaii Corporation 2004 Stock and Incentive Compensation Plan ("Stock Plan"). Specifically, the Company is asking shareholders to approve the material terms of the amended and restated performance measures under the Stock Plan. If approved, the Company will continue to be able to grant awards under the Stock Plan that are intended to qualify as "performance-based compensation" under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Board of Directors unanimously recommends that the shareholders vote "FOR" this proposal.
Subject to certain exceptions, Section 162(m) of the Code disallows federal income tax deductions for compensation paid by a publicly held corporation to certain executives (referred to as "covered employees") to the extent the amount paid to the covered employee exceeds $1 million for the taxable year. The Stock Plan has been designed to allow the grant of awards that are intended to qualify under an exception to the deduction limit of Section 162(m) for "performance-based compensation." Under the Stock Plan, the Compensation Committee is authorized to make the following types of awards: incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and stock-based awards. These awards may qualify as performance-based compensation if the granting, vesting and/or payment of the award are subject to the achievement of one or more of the performance measures.
At the 2004 Annual Meeting, shareholders approved the Stock Plan, including the performance measures that could be used by the Compensation Committee with respect to granting awards intended to qualify as performance-based compensation. At its meeting on February 17, 2009, the Compensation Committee added performance measures available to it under the Stock Plan to include measures related to safety and soundness. Under Section 162(m), shareholders are required to approve the material terms of the performance measures so that the Compensation Committee can continue to grant awards that are intended to qualify as performance-based compensation.
Under Section 162(m) of the Code, the material terms of the performance measures include provisions regarding eligibility, the types of awards that may be made, a description of the business criteria on which the performance measure is based, and the limits on the compensation that may be paid to an individual participant. Stock options and stock appreciation rights granted under the Stock Plan may also qualify as performance-based compensation under an exception to Section 162(m) of the Code that does not require shareholder approval. If the shareholders do not approve the material terms of the performance measures, all types of awards will continue to be available for grant under the Stock Plan; however, other than stock options and stock appreciation rights, none of the awards granted under the Stock Plan would be able to qualify as performance-based compensation under Section 162(m) and will result in the payment of additional taxes by the Company.
Proposed Performance Measures:
As approved by the Compensation Committee, the granting, payment or vesting of an award to a covered employee that is intended to qualify as performance-based compensation to covered employees under Section 162(m) of the Code may be based upon any of the following performance measures:
The performance measures may apply to the Company as a whole or any subsidiary, affiliate, or business unit of the Company, or any combination thereof. Awards that are intended to qualify as performance-based compensation may not be adjusted upward. The Compensation Committee retains the discretion to adjust such awards downward.
The Company isnot seeking shareholder approval to increase the number of shares of Common Stock available for awards under the Stock Plan nor to make any other changes to the Stock Plan.
The following description summarizes the material terms of the Stock Plan. The summary is qualified in its entirety by reference to the full text of the Stock Plan. Shareholders may request a free copy of the Stock Plan by writing to Bank of Hawaii Corporation, Corporate Secretary, 130 Merchant Street, Honolulu, Hawaii 96813.
Administration and Eligibility
The Compensation Committee administers the Stock Plan. The Compensation Committee, in its discretion, determines the terms and conditions of all awards and grants, including the number, duration, grant date, grant or exercise price (which may not be less than 100% of the fair market value of Common Stock on the date of grant), vesting, form of payment, and other terms and conditions that are not inconsistent with the Stock Plan.
The Compensation Committee may grant awards under the Stock Plan to any employee, including officers and other key employees, or independent contractors of the Company or any of its subsidiaries or affiliates. A director of the Company or any of its subsidiaries or affiliates, who is not otherwise employed by such an organization, is not eligible to participate in awards under the Stock Plan.
The covered employees whose awards under the Stock Plan may be subject to the performance measures (with respect to amount, measurement, vesting, and/or payment of such awards) are the members of senior management and include the named executive officers listed in the Summary Compensation Table. Although Section 162(m) of the Code only limits deductibility for compensation paid to covered employees, the Compensation Committee may include the performance measures in the terms of awards granted to other members of senior management.
Limits on Awards
Under the terms of the Stock Plan, the following annual grant limitations ("Annual Award Limits") apply to awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code:
In each case, the maximum aggregate number of shares or awards will be increased by the amount of the participant's unused applicable Annual Award Limit as of the close of the previous calendar year.
The amount of shares or awards to be made in the future under the Stock Plan is not currently determinable.
Other Terms of the Stock Plan
Stock Options. Upon exercise of an option, the participant is entitled to purchase option shares at a specified exercise price. Options granted under the Stock Plan may be either an option intended to be an incentive stock option (an "ISO") within the meaning of Section 422 of the Code or a nonqualified stock option (a "NQSO"). ISOs may be granted only to employees.
Stock Appreciation Rights ("SARs"). Upon exercise of a SAR, the participant is entitled to receive an amount based upon the appreciation in the Common Stock over the grant price. SARs may be granted either by themselves ("freestanding SARs") or in connection with options ("tandem SARs").
Restricted Stock and Restricted Stock Units. Restricted stock is a stock grant to a participant that generally remains nontransferable and subject to forfeiture until the satisfaction of specified conditions. Restricted stock units are similar to restricted stock except that no shares of Common Stock are actually awarded on the date of grant.
Performance Shares and Performance Units. A performance share is a hypothetical share unit with an initial value equal to the fair market value of a share of Common Stock as of the date of grant, and a performance unit is a unit of value with an initial value as of the date of grant as may be established by the Compensation Committee and provided under the award agreement. The performance shares and performance units are payable in cash, shares, or a combination of cash and shares as may be determined by the Compensation Committee and provided under the award agreement.
Cash-Based Awards and Stock-Based Awards. The Compensation Committee may grant cash-based awards and stock-based awards in an amount and manner that it may determine, at its discretion. Such
awards may be valued and conditioned upon performance periods and goals, and may be payable in cash, shares, or a combination of cash and shares as may be determined by the Compensation Committee. Cash-based awards and stock-based awards may serve as the basis for formulating short-term or long-term, performance-based bonus arrangements.
Change In Control. In the event of a "change in control" of the Company, awards and grants generally vest and become exercisable in accordance with the terms and conditions of the Stock Plan.
Nontransferability. Except as may be provided under an award agreement, any award granted is not transferable other than by will or by the laws of descent and distribution and, further, the rights to the award apply to and may be exercised, during the participant's lifetime, only by the participant.
Amendment and Termination. The Compensation Committee or the Board may amend or terminate the Stock Plan in whole or in part at any time. However, no amendment can be made without shareholder approval as may be required by law, regulation, or stock exchange rule. Further, options may not be repriced, replaced, or regranted through cancellation without prior shareholder approval. An amendment may not adversely affect in a material way any outstanding award without the written consent of the participant.
Certain Federal Income Tax Considerations.
The following discussion briefly summarizes certain United States federal income tax aspects of awards granted pursuant to the Stock Plan. State and local tax consequences may differ.
Incentive Stock Options. Generally, a participant who is granted an ISO will not recognize income on the grant or exercise of the option. The general rule is that gain or loss from the sale or exchange of shares of Common Stock acquired on the exercise of an ISO will be treated as capital gain or loss. If certain holding period requirements are not satisfied at the time of a sale or exchange of shares (a "disqualifying disposition"), however, the participant generally will recognize ordinary income at the time of the disposition. In addition, if a participant does not exercise an ISO within specified periods after termination of employment, the participant will recognize ordinary income on the exercise of the ISO.
NQSOs, SARs, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards, and Stock-Based Awards. A participant generally is not required to recognize income on the grant of a NQSO, a SAR, restricted stock units, performance shares, performance units, cash-based awards or stock-based awards. Instead, ordinary income generally is required to be recognized on the date the NQSO or SAR is exercised, or in the case of restricted stock units, performance shares, performance units, cash-based awards or stock-based awards, on the date of payment of such award.
Restricted Stock. Unless a participant makes an election under Section 83(b) of the Code as described below, the participant generally is not required to recognize ordinary income on the award of restricted stock. Instead, on the date the shares vest (i.e. become transferable or no longer subject to a substantial risk of forfeiture), the participant will be required to recognize ordinary income. If a participant makes a Section 83(b) election, the participant will be required to recognize ordinary income on the date the restricted stock is awarded. In such case, the participant will not be required to recognize additional ordinary income when the shares vest.
Deductibility by Company. The Company generally is not allowed a deduction in connection with the grant or exercise of an ISO. However, if a participant is required to recognize ordinary income as a result of a disqualifying disposition, the Company generally will be entitled to a deduction equal to the amount of ordinary income so recognized. In general, in the case of a NQSO, restricted stock, restricted stock units, performance shares, performance units, cash-based awards or stock-based awards, the Company will be allowed a deduction in an amount equal to the amount of ordinary income recognized by the participant.
Parachute Payments. Where payments to certain persons that are contingent on a change in control exceed limits specified in the Code, the person generally is liable for a 20 percent excise tax on, and the corporation or other entity making the payment generally is not entitled to any deduction for, a specified portion of such payments. Any award under which vesting is accelerated by a change in control of the Company, would be relevant in determining whether the excise tax and deduction disallowance rules would be triggered.
Tax Rules Affecting Nonqualified Deferred Compensation Plans. Section 409A of the Code imposes tax rules that apply to "nonqualified deferred compensation plans." Failure to comply with, or to qualify for an exemption from, the rules with respect to an award could result in significant adverse tax results to the award recipient including immediate taxation upon vesting, an additional income tax of 20 percent of the amount of income so recognized, plus a special interest payment. The Stock Plan is intended to comply with, or qualify for an exemption from, Section 409A of the Code to the extent applicable.
THE BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
The Board knows of no other business for consideration at the annual meeting. Your signed proxy or proper telephone or Internet vote gives authority to the proxies to vote at their discretion on other matters properly presented at the annual meeting, or adjournment or postponement of the meeting.
A copy of the Company's Annual Report on Form 10-K, including the related financial statements and schedules filed with the SEC, is available without charge to any shareholder who requests a copy in writing. Any exhibit to Form 10-K is also available upon written request at a reasonable charge for copying and mailing. Written requests should be made to the Corporate Secretary at 130 Merchant Street, Honolulu, Hawaii 96813.
BANK OF HAWAII CORPORATIONAUDIT COMMITTEE CHARTER
April 25, 2008
Statement of Policy
The Audit Committee (the "Committee") will provide assistance to the Board of Directors (the "Board") in fulfilling their oversight responsibility to the shareholders of Bank of Hawaii Corporation (the "Company"). The purpose of the Committee will be to:
In fulfilling its purpose, it is the responsibility of the Committee to maintain free and open communications between the Committee, independent registered public accounting firm, internal auditors and management of the Company. In discharging its oversight role, the Committee shall be empowered to conduct or authorize investigations into any matter within the scope of its responsibilities. The Committee may employ one or more independent registered public accounting firms, outside counsel or other experts as it deems appropriate, at the Company's expense. The Committee shall have full access to the independent registered public accounting firm and all records, facilities or personnel of the Company. The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation to the independent registered public accounting firm, experts hired by the Committee, conduct of the internal audit and credit review functions, and necessary or appropriate Committee expenses.
Organization
The Committee shall be appointed by the Board and shall be comprised of at least three members, consisting entirely of independent directors of the Board and meet any and all other requirements for audit committee members set forth in the listing requirement of the New York Stock Exchange and Rule 10A-3 of the Securities Exchange Act of 1934. Each Committee member shall be or must become financially literate at or within a reasonable period of time following his or her appointment. At least one member of the Committee must have accounting or related financial management expertise so as to meet the SEC's requirement of "Financial Expert". Members shall not serve on more than two other public audit committees simultaneously. The Committee will meet at least quarterly. The Board shall appoint one of the members of the Audit Committee to serve as Chairman. The Chairman shall prepare or approve an agenda and distribute it to the members of the Committee in advance of each meeting.
The Committee may perform the duties required to be performed by the financial audit committee of its subsidiary, Bank of Hawaii (the "Bank"), and any other bank or non-bank subsidiary exercising fiduciary powers that does not have its own audit committee, to the extent permitted and in the manner required by applicable laws and regulations. The Committee may act simultaneously on behalf of the Company and of the Bank.
Responsibilities
Limitation of the Audit Committee's Role
While the Audit Committee has the responsibilities and powers set forth in this charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company's financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles of the United States of America and applicable rules and regulations. These are the responsibilities of management and the independent registered public accounting firm.
[BANK OF HAWAII LOGO]
IMPORTANT ANNUAL SHAREHOLDERS' MEETINGINFORMATION—YOUR VOTE COUNTS!
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Shareholder Meeting Notice & Admission Ticket | 123456 | C0123456789 | 12345 | |||
Important Notice Regarding the Availability of Proxy Materialsfor the Bank of Hawaii Corporation Shareholders' Meeting to be Held on April 24, 2009
Under new Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the annual shareholders' meeting are available on the Internet. Follow the instructions below to view the materials and vote online or request a copy. The items to be voted on and location of the annual meeting are on the reverse side. Your vote is important!
This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The Proxy Statement, 2008 Annual Report on Form 10-K and Summary Annual Report to shareholders are available at:
www.envisionreports.com/boh
1234 5678 9012 345 & Admission Ticket www.envisionreports.com/boh Step 1: Go to www.envisionreports.com/boh to view the materials. Step 2: Click on Cast Your Vote or Request Materials. Step 3: Follow the instructions on the screen to log in. Shareholder Meeting Notice 0157IA IMPORTANT ANNUAL SHAREHOLDERS’ MEETING INFORMATION — YOUR VOTE COUNTS! + + Important Notice Regarding the Availability of Proxy Materials for the Bank of Hawaii Corporation Shareholders’ Meeting to be Held on April 23, 2010 Under Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the annual shareholders’ meeting are available on the Internet. Follow the instructions below to view the materials and vote online or request a copy. The items to be voted on and location of the annual meeting are on the reverse side. Your vote is important! This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The Proxy Statement, 2009 Annual Report on Form 10-K and Summary Annual Report to shareholders are available at: Easy Online Step 4:Make your selection as instructed on each screen to select delivery preferences and vote. | ||
When you go online, you can also help the environment by consenting to receive electronic delivery of future materials. | ||
Obtaining a Copy of the Proxy |
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Shareholder Meeting Notice & Admission Ticket
Bank of Hawaii Corporation's Annual Meeting of Shareholders will be held on April 24, 2009 at 111 S. King Street, 6th Floor, Honolulu, HI, at 8:30 a.m. Hawaii Time.
Proposals to be voted on at the meeting are listed below along with the Board of Directors' recommendations.
The Board of Directors recommends that you vote FOR the following proposals:
PLEASE NOTE—YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you must vote online or request a paper copy of the proxy materials to receive a proxy card. If you wish to attend and vote at the meeting, please bring this notice with you.
Here’s how to order a copy of the proxy materials and select a future delivery preference: | ||||
Paper copies:Current and future paper delivery requests can be submitted via the telephone, Internet or email options below. | ||||
Email copies:Current and future email delivery requests must be submitted via the Internet following the instructions below. If you request an email copy of current materials you will receive an email with a link to the materials. | ||||
PLEASE NOTE:You must use the | ||||
To facilitate timely delivery, all requests for a paper copy of the proxy materials must be received by April 13, 2010. . Shareholder Meeting Notice & Admission Ticket Bank of Hawaii Corporation’s Annual Meeting of Shareholders will be held on April 23, 2010 at 111 S. King Street, 6th Floor, Honolulu, HI, at 8:30 a.m. Hawaii Time. Proposals to be voted on at the meeting are listed below along with the Board of Directors’ recommendations. The Board of Directors recommends that you vote FOR the following proposals: 1. Election of Directors. 01 - S. Haunani Apoliona 02 - Mary G. F. Bitterman 03 - Mark A. Burak 04 - Michael J. Chun 05 - Clinton R. Churchill 06 - David A. Heenan 07 - Peter S. Ho 08 - Robert Huret 09 - Allan R. Landon 10 - Kent T. Lucien 11 - Martin A. Stein 12 - Donald M. Takaki 13 - Barbara J. Tanabe 14 |
345 01 - S. Haunani Apoliona 05 - Clinton R. Churchill 02 - Mary G. F. Bitterman 06 - David A. Heenan 03 - Mark A. Burak 07 - Peter S. Ho For Withhold For Withhold For Withhold Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X 0157GA 1 U PX + Annual Meeting Proxy Card . + A Election of Directors — The Board of Directors recommends a vote FOR the nominees listed. 3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment(s) or postponement(s) thereof. 04 - Michael J. Chun 08 - Robert Huret For Withhold 09 - Allan R. Landon 10 - Kent T. Lucien 11 - Martin A. Stein 12 - Donald M. Takaki PLEASE COMPLETE SECTIONS A – D ON BOTH SIDES OF | THIS CARD. 13 - Barbara J. Tanabe 14 - Robert W. Wo, Jr. For Against Abstain 2. Ratification of Selection of An Independent Registered Public Accounting Firm (Ernst & Young). B Proposal — The Board of Directors recommends a vote FOR Proposal 2. | |||
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.[1]Electronic Voting Instructions | ||||
You can vote by Internet or telephone! Available 24 hours a day, 7 days a week! | ||||
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. | ||||
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. | ||||
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on April | ||||
23, 2010. Vote by Internet • Log on to the Internet and go towww.envisionreports.com/boh •Follow the steps outlined on the | ||||
Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the • Follow the instructions provided by the recorded message. |
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Annual Meeting Proxy Card | 123456 | C0123456789 | 12345 | |||
IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A Election of Directors—The Board of Directors recommends a vote FOR the nominees listed. Admission Ticket
B Proposal—The Board of Directors recommends a vote FOR Proposal 2.
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C Proposal—The Board of Directors recommends a vote FOR Proposal 3.
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3. | Approval of the Material Terms of Amended Performance Measures under the Company's 2004 Stock and Incentive Compensation Plan | o | o | o | 4. | In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment(s) or postponement(s) thereof. |
PLEASE COMPLETE SECTIONS A—E ON BOTH SIDES OF THIS CARD.
2009 Annual Meeting Admission Ticket2009 Annual Meeting ofBank of Hawaii Corporation ShareholdersApril 24, 2009, 8:30 a.m.111 S. King Street, 6th floorHonolulu, HawaiiUpon arrival, please present this admission ticketand photo identification at the registration desk.
IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Notice of 2009 Annual Meeting of Shareholders
111 S. King Street, 6th floor, Honolulu, HawaiiProxy Solicited by Board of Directors for Annual Meeting—April 24, 2009
Mark A. Rossi and Cynthia G. Wyrick, or either of them, with full power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of Bank of Hawaii Corporation to be held on April 24, 2009 at 8:30 a.m. or at any postponement or adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR ALL NOMINEES AND PROPOSALS, AND ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Important Notice Regarding the Availability of Proxy Materials for the Annual Shareholders' Meeting to be Held April 24, 2009:
The Proxy Statement and the Bank of Hawaii Corporation 2008 Annual Report on Form 10-K for the year ended December 31, 2008 are available at www.envisionreports.com/boh.
(Items to be voted appear on reverse side.)
D Non-Voting Items
Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below D Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. Date (mm/dd/yyyy) — Please print date below. C Non-Voting Items Change of Address — Please print new address below. PLEASE COMPLETE SECTIONS A – D ON BOTH SIDES OF THIS CARD. Consent to Electronic Delivery:By marking this box, I consent to access future Annual Reports and Proxy Statements of Bank of Hawaii Corporation electronically over the Internet. I understand that unless I request otherwise or revoke my consent, Bank of Hawaii Corporation will notify me when any such communications are available and how to access them. I understand that costs associated with the use of the Internet will be my responsibility. To revoke my consent, I can contact Bank of Hawaii Corporation's transfer agent, Computershare Investor Services, at 1-888-660-5443. + + IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.[1] | 2010 Annual Meeting Admission Ticket 2010 Annual Meeting of Bank of Hawaii Corporation Shareholders April 23, 2010, 8:30 a.m. 111 S. King Street, 6th floor Honolulu, Hawaii Upon arrival, please present this admission ticket and photo identification at the registration desk. |
Change of Address—Please print new address below.
E Authorized Signatures—This section must be completed for your vote to be counted.—Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
PLEASE COMPLETE SECTIONS A—E ON BOTH SIDES OF THIS CARD.