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

SCHEDULE 14A

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

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HAWAIIAN ELECTRIC INDUSTRIES, INC.    •    PO BOX 730    •    HONOLULU, HI 96808-0730

Constance H. Lau
President and
Chief Executive Officer

March 22, 201021, 2011

Dear Fellow Shareholder:

         On behalf of the Board of Directors, it is my pleasure to invite you to attend the Annual Meeting of Shareholders of Hawaiian Electric Industries, Inc. (HEI). The meeting will be held on HEI's premises in Room 805 on the eighth floor of the American Savings Bank Tower, located at 1001 Bishop Street, Honolulu, Hawaii, on May 11, 2010,10, 2011, at 9:30 a.m., local time. A map showing the location of the meeting site appears on page 7985 of the Proxy Statement.

         The accompanying Notice of Annual Meeting of Shareholders and Proxy Statement describe the items of business to be conducted during the meeting. In addition, we will review significant events of 20092010 and their impact on you as a shareholder of HEI. HEI officers and Board members will be available before and after the meeting to talk with you and answer questions.

         Of particular importance for your attention, this is the first year in which we will be asking our shareholders to submit an advisory vote on the Company's executive compensation. A description of the Company's executive compensation programs, as well as details of the compensation for the Company's named executive officers, is provided in the Proxy Statement.

         As a shareholder of HEI, it is important that your views be represented.Please help us obtain the quorum needed to conduct business at the meeting by promptly voting your shares.

         The Board and management team of HEI would like to express their appreciation to you for your confidence and support. I look forward to seeing you at the Annual Meeting in Honolulu.

Sincerely,

		Recycled

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Hawaiian Electric Industries, Inc. 900 Richards Street Honolulu, Hawaii 96813

NOTICE OF ANNUAL MEETING

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Proxy Statement

        HEI is soliciting proxies for the Annual Meeting of Shareholders scheduled for May 11, 2010,10, 2011, at 9:30 a.m., local time, at the American Savings Bank Tower, 1001 Bishop Street, 8th floor, Room 805, Honolulu, Hawaii. The mailing address of the principal executive offices of HEI is P.O. Box 730, Honolulu, Hawaii 96808-0730.

        The approximate mailing date for this Proxy Statement, form of proxy and Annual Report to Shareholders is March 22, 2010.21, 2011. The 20092010 Annual Report to Shareholders accompanying this Proxy Statement is not considered proxy soliciting material.

Who can attend the meeting?

        Attendance will be limited to:

•

shareholders of record (i.e., shareholders who own shares registered in their own name on the books of HEI);



•

beneficial owners of HEI Common Stock having evidence of ownership and entitled to vote at the meeting;



•

authorized representatives of absent shareholders; and



•

invited guests of management.

        If you own shares of HEI Common Stock in the name of a bank, brokerage firm or other holder of record, you must show proof of ownership. This may be in the form of a letter from the holder of record or a recent statement from the bank or broker showing ownership of HEI Common Stock.

        Any person claiming to be an authorized representative of a shareholder must produce written evidence of the authorization.

What are shareholders being asked to vote on?

•

Proposal No 1:Election of three Class IIIII directors for a three-year term expiring at the 20132014 Annual Meeting of Shareholders.



•

Proposal No 2:  Approval of the 2011 Nonemployee Director Stock Plan (attached as Appendix A).



•

Proposal No 3:  Advisory vote on the frequency of future advisory votes on HEI's executive compensation.



•

Proposal No 4:  Advisory vote on a resolution approving HEI's executive compensation.



•

Proposal No 5:Ratification of the appointment of PricewaterhouseCoopers LLP (PwC) as HEI's independent registered public accounting firm for 2010.2011.



•

Approval of the 2010 Equity and Incentive Plan.

Electronic accessAccess to proxy materialsProxy Materials

        HEI provides shareholders the option to access its proxy materials via the Internet. In keeping with our efforts to conserve natural resources, this method of delivery reduces the amount of paper necessary to produce these materials and reduces the costs associated with the printing and mailing of these materials to shareholders. On March 22, 2010,21, 2011, a Notice of Internet Availability of Proxy Materials

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(Notice) will be mailed to certain shareholders and our proxy materials will be posted on the website referenced in the Notice (www.ViewMaterial.com/HEI). As more fully described in the Notice, these shareholders may choose to access our proxy materials on the website referred to in the Notice or may request to receive a printed set of our proxy materials. The Notice and website will provide information

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regarding how to request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis.

        If you currently receive our proxy materials in printed form and would like to receive them electronically in the future, please so indicate on the enclosed proxy, if voting by mail, or by following the instructions provided when using the telephone or Internet voting options described under "How do shareholders vote?" below.

Who is eligible to vote?

        Only persons who own shares of HEI Common Stock as of the close of business on March 3, 20102, 2011 (the proxy record date) are entitled to vote.

How many shares are outstanding and entitled to vote?

        On March 3, 2010, 92,658,1232, 2011, 94,915,883 shares of HEI Common Stock were outstanding. Each shareholder is entitled to one vote for each share held. Under the Bylaws of HEI, shareholders do not have cumulative voting rights in the election of directors.

What constitutes a quorum?

        A quorum is needed to conduct business at the Annual Meeting. A majority of the shares of HEI Common Stock outstanding on March 3, 20102, 2011 and entitled to vote, and present in person or by proxy at the Annual Meeting, constitutes a quorum. Abstentions and broker votes of uninstructed shares on routine matters (such as ratification of the appointment of the independent registered public accounting firm) will be counted in the number of shares present in person or by proxy for purposes of determining a quorum. A quorum established for one purpose will apply for all purposes at the Annual Meeting.

How do shareholders vote?

        Whether or not you plan to attend the Annual Meeting, please take the time to vote. You may vote via the Internet, by touchtone telephone or by mail before the Annual Meeting, or in person at the Annual Meeting. The Internet and telephone procedures are designed to authenticate your vote and confirm that your voting instructions are followed. If you vote via the Internet or by telephone, follow the instructions on the Notice or card you received by mail. If you vote by telephone, you will receive additional recorded instructions, and if you vote via the Internet, you will receive additional instructions at the Internet website. You will need to have the control number on your Notice or proxy/voting instruction card, as applicable, available.

        Shareholders who vote via the Internet or by telephone shouldnot mail the proxy/voting instruction card.

1.

BY INTERNET: You may vote on-line by following the instructions in the Notice or by accessing the Internet at www.cesvote.com. Specific instructions regarding how to record and confirm your vote will be available on the website.



2.

BY TELEPHONE: You may vote by touchtone telephone by following the instructions in the Notice or by calling 1-888-693-8683. Once connected, you will be prompted to record and confirm your vote.

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3.

BY MAIL: Please mark your vote and sign, date and promptly return the proxy in the postage-paid envelope provided. If you return the signed proxy but do not mark the boxes showing how you wish to vote, your votes will be cast following the recommendations of management on all proposals. If you wish to have someone other than the individuals listed

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on the enclosed proxy vote your shares at the meeting, cross out all three names and insert the name of another person to vote your shares at the meeting.





4.

IN PERSON: You may vote your shares by attending the Annual Meeting and voting in person.

How do shareholders vote if their shares are held in street name?

        If your shares are held in "street name" (that is, through a broker, trustee or other holder of record), you will receive a voting instruction card or other information from your broker or other holder of record seeking instruction as to how your shares should be voted.If you do not provide such instruction, your broker or nominee may vote your shares at its discretion on your behalf on routine matters, but not on nonroutine matters. The ratification of the appointment of HEI's independent registered public accounting firm is considered a routine matter. The election of directors, and the approval of the 2010 Equity2011 Nonemployee Director Stock Plan, the advisory vote on the frequency of advisory votes on executive compensation and Incentive Planthe advisory vote on executive compensation are considered nonroutine matters.Please provide instructions to your broker on how to vote your shares on all five proposals to ensure that your shares will be voted on all proposals at the Annual Meeting.

        You may not vote shares held in "street name" at the Annual Meeting unless you obtain a legal proxy from your broker or holder of record.

How do shareholders vote if their shares are held in the Dividend Reinvestment and Stock Purchase Plan, the HEI Retirement Savings Plan or the American Savings Bank 401(k) Plan?

        If you own shares held in the Dividend Reinvestment and Stock Purchase Plan, the HEI Retirement Savings Plan (including shares previously received under the Tax Reduction Act Stock Ownership Plan) or the American Savings Bank 401(k) Plan, the respective plan trustees will vote those shares of stock according to your directions. For all of these plans, the respective trustees will vote all the shares of HEI Common Stock for which they receive no voting instructions in the same proportion as they vote shares for which they receive instruction.

Can shareholders change their vote?

        If you vote by any of the methods described above, you may revoke your proxy or vote at any time before the Annual Meeting in one of three ways:

•

submit a properly signed proxy with a later date or vote again at a later time by telephone or Internet;



•

notify the Corporate Secretary of HEI in writing; or



•

vote in person at the Annual Meeting (if your shares are registered in your name on HEI's books or, if your shares are held in "street name" and you have a legal proxy from your broker or other holder of record).

How many votes are required?

        If a quorum is present at the Annual Meeting, then:

•

Directors will be elected by a plurality of the votes cast. Plurality means that the persons receiving the highest number of votes are elected. There will be no abstentions for this matter

since your options are to vote either "FOR" or to "WITHHOLD" your vote for a nominee. SinceAlthough the election of directors is considered a nonroutine matter, broker nonvotes (i.e., a vote of your shares bywhen your broker or other holder of record whendoes not vote your shares on a nonroutine matter because you have not provided instructions onregarding how to vote on a nonroutinethat matter) will not affect the outcome of this matter.



•
Appointment of HEI's independent registered public accounting firm will be ratified if more votes are cast in favor than against such ratification. Abstentions and broker nonvotes will not affect the outcome of this matter.




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•

The 2010 Equity and Incentive2011 Nonemployee Director Stock Plan will be approved if the majority of votes cast are in favor of such approval, so long as the total votes cast represent more than 50% of all shares entitled to vote. Abstentions will be considered votes cast and will have the same effect as voting against approval of the 2010 Equity and Incentive2011 Nonemployee Director Stock Plan. Broker nonvotes will have no effect on the outcome of the vote on the 2010 Equity2011 Nonemployee Director Stock Plan, except that they will not count as votes cast for purposes of determining whether the total votes cast represent more than 50% of the shares entitled to vote.



•

Since the votes on executive compensation and Incentive Plan.frequency of votes on executive compensation are advisory only, no minimum number of votes cast is required. Brokers may not vote on these proposals without your instructions because these proposals are considered nonroutine matters. For the proposal concerning how frequently shareholders wish to have advisory votes on HEI's executive compensation, your options are to vote for a frequency of every "1 YEAR," "2 YEARS," "3 YEARS" or "ABSTAIN." For the proposal to adopt a resolution approving HEI's executive compensation, your options are to vote "FOR," "AGAINST" or "ABSTAIN."



•

The appointment of HEI's independent registered public accounting firm will be ratified if more votes are cast in favor than against such ratification. Abstentions and broker nonvotes will not affect the outcome of this matter.


Who will count the votes and are the votes confidential?


        Corporate Election Services will act as tabulator for broker and bank proxies as well as for proxies of the other shareholders of record. Your identity and vote will not be disclosed to persons other than those acting as tabulators except:

•

as required by law;



•

to verify the validity of proxies and the voting results of the voting in the case of a contested proxy solicitation; or



•

when you write a comment on the proxy form.


Could other matters be decided at the Annual Meeting?


        HEI knows of no business to be presented at the 20102011 Annual Meeting other than the items set forth in this Proxy Statement. If other business is properly brought before the Annual Meeting, or any adjournment or postponement thereof, the persons named on the enclosed proxy will vote your stock in accordance with their best judgment, unless authority to do so is withheld by you in your proxy.


What happens if the Annual Meeting is postponed or adjourned?


        If the Annual Meeting is postponed or adjourned, your proxy will still be goodremain valid and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke your proxy until it is voted at the Annual Meeting.


Proposals You May Vote On

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1.     Election of Class II Directors

        The Board of Directors currently consists of 12 directors divided into three classes with staggered terms. Ms. Plotts, a Class II director, will retire from the Board when her current term as a Class II director ends at the Annual Meeting. Concurrently with the retirement of Ms. Plotts from the Board at the Annual Meeting, the authorized size of the Board will decrease from 12 to 11 directors.

        The Board proposes three Class II nominees for election at the Annual Meeting:

•

Thomas B. Fargo



•

Kelvin H. Taketa



•

Jeffrey N. Watanabe

        Each nominee is currently a member of the Board and has consented to serve for the new term expiring at the 2013 Annual Meeting if elected. If a nominee is unable to stand for election, the proxy holders listed in the proxy may vote in their discretion for a suitable substitute.

        YOUR BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES FOR CLASS II DIRECTOR LISTED ABOVE.

        Information regarding the business experience and certain other directorships for each Class II nominee and Class I and III director is provided on pages 16-21 together with a description of the




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experience, qualifications, attributes and skills that led to the Board's conclusion that each of the nominees and directors should serve on the Board at the time of this Proxy Statement, in light of HEI's current business and structure.

2.     Ratification of appointment of Independent Registered Public Accounting Firm

        On February 26, 2010, the Audit Committee engaged PricewaterhouseCoopers LLP as HEI's new independent registered public accounting firm for 2010, subject to shareholder ratification. The Board, upon the recommendation of its Audit Committee, recommends the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of HEI for fiscal year 2010 and thereafter until its successor is appointed. KPMG LLP was HEI's independent registered public accounting firm for 2009 and has been the auditor of HEI since 1981. Representatives of KPMG LLP and PricewaterhouseCoopers LLP will be present at the Annual Meeting and each will be given the opportunity to make a statement and to respond to appropriate questions.

        On February 23, 2010, the Audit Committee voted to dismiss KPMG LLP as HEI's independent registered public accounting firm, effective as of February 24, 2010. The company informed KPMG LLP of the decision and dismissed KPMG LLP on February 24, 2010. KPMG LLP's reports on HEI's consolidated financial statements as of and for the fiscal years ended December 31, 2009 and 2008 contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. The audit reports of KPMG LLP on the effectiveness of internal control over financial reporting as of December 31, 2009 and 2008 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified as to uncertainty, audit scope or accounting principles. During the fiscal years ended December 31, 2009 and 2008 and through February 24, 2010, there were no disagreements with KPMG LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG LLP, would have caused it to make reference to the subject matter of the disagreements in connection with its reports for such years. During the fiscal years ended December 31, 2009 and 2008 and through February 24, 2010, there were no reportable events as defined in Item 304(a)(1)(v) of the Securities and Exchange Commission's Regulation S-K.

        During the fiscal years ended December 31, 2009 and 2008 and through February 26, 2010, the date of engagement of PricewaterhouseCoopers LLP, neither HEI nor any person on its behalf has consulted with PricewaterhouseCoopers LLP with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on HEI's consolidated financial statements, and no written report or oral advice was provided by PricewaterhouseCoopers LLP to HEI that PricewaterhouseCoopers LLP concluded was an important factor considered by HEI in reaching a decision as to the accounting, auditing, or financial reporting issue; or (ii) any matter that was the subject of either a disagreement as defined in Item 304(a)(1)(iv) of the Securities and Exchange Commission's Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of the Securities and Exchange Commission's Regulation S-K.

        YOUR BOARD AND THE AUDIT COMMITTEE RECOMMEND THAT YOU VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR HEI FOR 2010.

3.     Approval of 2010 Equity and Incentive Plan

        HEI's Compensation Committee believes that the use of long-term incentives that reward selected employees of HEI or its affiliates whose contributions are essential to the growth and success of HEI's business best strengthens the commitment of such persons to HEI and its affiliates, motivates such persons to faithfully and diligently perform their responsibilities and attracts and retains competent and




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dedicated persons whose efforts will result in the long-term growth and profitability of HEI. To that end, on February 11, 2010, the Board adopted the Hawaiian Electric Industries, Inc. 2010 Equity and Incentive Plan (2010 Plan), subject to the approval of HEI's shareholders. The purpose of the 2010 Plan is to afford an incentive to regular full-time employees of HEI or any affiliate of HEI to continue as employees, to increase their efforts on behalf of HEI and to promote HEI's business, all in accordance with the Compensation Committee's philosophy set forth below. Subject to shareholder approval of the 2010 Plan, no new awards will be made under HEI's 1987 Stock Option and Incentive Plan, as amended from time to time (1987 Plan). The 1987 Plan will remain in effect with respect to awards previously made under such Plan. If shareholders do not approve the 2010 Plan, the 2010 Plan will have no effect and awards may continue to be granted under the 1987 Plan.

        The 2010 Plan is being submitted to HEI's shareholders in order to ensure its compliance with Section 162(m) of the Internal Revenue Code (Section 162(m)) and the New York Stock Exchange (NYSE) listing standards concerning shareholder approval of equity compensation plans and the grant of incentive stock options. The NYSE listing standards provide that shareholders must be given the opportunity to vote on all equity compensation plans and material revisions thereto. The 2010 Plan is an equity compensation plan (i.e., a plan that provides for the delivery of HEI Common Stock to our employees as compensation for their services) and we are asking in this proposal for your approval of the 2010 Plan in compliance with the NYSE listing standards.

        Section 162(m) denies a deduction by an employer for certain compensation in excess of $1,000,000 per year paid by a publicly held corporation to the following covered employees who are employed at the end of the corporation's taxable year: the Chief Executive Officer, the Chief Financial Officer and the three other most highly compensated executive officers (other than the Chief Executive Officer and the Chief Financial Officer) for whom compensation disclosure is required under the proxy rules. Certain compensation, including compensation based on the attainment of performance goals, is excluded from this deduction limit if certain requirements are met. Among the requirements for compensation to qualify for this exclusion is that the material terms pursuant to which the compensation is to be paid be disclosed to and approved by the shareholders in a separate vote prior to the payment of any such compensation, and that the plan be administered by "outside directors", as defined in Section 162(m). Accordingly, if the 2010 Plan is approved by shareholders and other conditions of Section 162(m) relating to the exclusion for performance-based compensation are satisfied, compensation paid to covered employees pursuant to the 2010 Plan will not be subject to the deduction limit of Section 162(m). We are asking in this proposal for your approval of the 2010 Plan and the performance goals that are applicable under the 2010 Plan where an award is intended to qualify as performance-based compensation under Section 162(m).

        We are also seeking your approval so that we may use the 2010 Plan to grant incentive stock options (options that enjoy certain favorable tax treatment under Sections 421 and 422 of the Internal Revenue Code), if applicable.


Plan Description


        The following is a summary of the material terms of the 2010 Plan and is qualified in its entirety by the full text of the 2010 Plan, which is attached as Appendix A to this Proxy Statement.

Purposes

        The purposes of the 2010 Plan are to:

•

provide an additional incentive to selected employees of HEI or its affiliates, in order to strengthen the commitment of such persons to HEI and its affiliates;



•

motivate such persons to faithfully and diligently perform their responsibilities; and




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•

attract and retain competent and dedicated persons whose efforts will result in the long-term growth and profitability of HEI.

Administration of the 2010 Plan

        The 2010 Plan will be administered by the Board or, if and to the extent the Board does not administer the 2010 Plan, the Compensation Committee of the Board or a subcommittee of the Compensation Committee. Pursuant to the terms of the 2010 Plan and subject to any restrictions on the authority delegated to it by the Board, the administrator will have the power and authority, without limitation, to:

•

determine the types of awards to be granted and the terms and provisions of award agreements;



•

designate plan participants;



•

determine the number of shares of HEI Common Stock to be covered by awards, and the terms, provisions, conditions, restrictions and performance goals (if any) relating to any award;



•

determine and adjust performance goals for awards intended to comply with the requirements of Section 162(m);



•

determine whether, to what extent and under what circumstances an award may be settled in cash, shares of HEI Common Stock or other securities and the methods by which awards may be settled, exercised, cancelled, forfeited, accelerated, exchanged or surrendered;



•

permit the deferral of all or any portion of the cash or shares of HEI Common Stock that are payable under an award;



•

construe and interpret the 2010 Plan and any award and to prescribe, amend and rescind rules and regulations relating to the 2010 Plan;



•

determine the fair market value of an award; and



•

make all other determinations deemed necessary or desirable for the administration of the 2010 Plan.

        All decisions made by the administrator pursuant to the provisions of the 2010 Plan will be final, conclusive and binding on all persons, including HEI and the participants.

Eligibility

        Awards may be granted to any regular full-time employee of HEI or any of its affiliates who has been selected as an eligible participant by the administrator. Incentive stock options will be granted only to employees (including officers and directors who are also employees) of HEI or any of its 50% or more owned subsidiaries.

Shares Reserved for Issuance

        The maximum number of shares of HEI Common Stock reserved for issuance under the 2010 Plan will be 4,000,000 shares, subject to adjustment for certain transactions, provided that shares that are issued in connection with all awards other than options and share appreciation rights or awards whose vesting, exercisability or payment is subject to the attainment of performance goals will be counted against the 4,000,000 limit described above as four shares of HEI Common Stock for every share of HEI Common Stock that is issued in connection with such award. The shares may be authorized but unissued HEI Common Stock or shares that have been or may be reacquired by HEI in the open market, in private transactions or otherwise. If any shares subject to an award are forfeited, cancelled, exchanged or surrendered or if an award otherwise terminates or expires without a distribution of




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shares to a participant, the shares with respect to such award will, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for awards under the 2010 Plan. If any award (other than a share appreciation right) is settled in part or in full in cash, the shares settled in cash will again be available for issuance in connection with future awards granted under the 2010 Plan. Notwithstanding the foregoing, shares surrendered or withheld as payment of either the exercise price of an award granted under the 2010 Plan (including shares otherwise underlying an award of a share appreciation right that are retained by HEI to account for the grant price of such share appreciation right) and/or withholding taxes in respect of such an award will no longer be available for grant under the 2010 Plan. All shares may be made subject to awards of incentive stock options.

        To the extent required to comply with the requirements of Section 162(m), the aggregate number of shares subject to awards (other than other cash-based awards) awarded to any one participant during any calendar year may not, subject to certain equitable adjustments as provided in the 2010 Plan, exceed 100,000 shares, and the maximum value of the aggregate payment that any participant may receive with respect to other cash-based awards in any calendar year is $2,000,000.

        The closing price per share of HEI Common Stock on the New York Stock Exchange on March 3, 2010 was $20.66.

Types of Awards

        The 2010 Plan provides for the grant of stock options (including incentive stock options), share appreciation rights, restricted shares, deferred shares, performance shares, other share-based awards and other cash-based awards.

        Options.    The grant of each option will be memorialized in an award agreement, containing such terms and conditions as the administrator will determine. The administrator will have sole and complete authority to determine the participants to whom options will be granted under the 2010 Plan, the number of shares to be subject to options and the terms and conditions of options (including whether the option is an incentive stock option), provided that the exercise price of each option may not be less than 100% of the fair market value (as defined in the 2010 Plan) of the underlying HEI Common Stock on the date of grant. If a participant owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Internal Revenue Code) more than 10% of the combined voting power of all classes of stock of HEI or of any of its subsidiaries and an incentive stock option is granted to such participant, the exercise price of such an incentive stock option (to the extent required at the time of grant by the Internal Revenue Code) will be no less than 110% of the fair market value of the HEI Common Stock on the date such incentive stock option is granted. The term of any option granted under the 2010 Plan may not exceed 10 years, provided, however, that if an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Internal Revenue Code) more than 10% of the combined voting power of all classes of stock of HEI or of any of its subsidiaries and an incentive stock option is granted to such employee, the term of such incentive stock option (to the extent required by the Internal Revenue Code at the time of grant) will be no more than 5 years from the date of grant. Notwithstanding the foregoing, the administrator will have the authority to accelerate the exercisability of any outstanding option at such time and under such circumstances as the administrator, in its sole discretion, deems appropriate.

        Options may be exercised in whole or in part by giving written notice of exercise to HEI specifying the number of shares to be purchased, accompanied by payment in full of the aggregate exercise price of the shares so purchased in cash or its equivalent. As determined by the administrator, in its sole discretion, payment for any options in whole or in part may also be made (i) by means of consideration received under any cashless exercise procedure approved by the administrator (including the withholding of shares otherwise issuable upon exercise), (ii) in the form of unrestricted shares already




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owned by the participant subject to certain conditions, (iii) any other form of consideration approved by the administrator and permitted by applicable law or (iv) any combination of the foregoing. A participant will have no rights to dividends or any other rights of a shareholder with respect to the shares subject to an option until the participant has given written notice of exercise, paid in full for such shares and satisfied the requirements of the 2010 Plan, and the shares are delivered to the participant.

        To the extent that the aggregate fair market value (as defined in the 2010 Plan) of shares of HEI Common Stock with respect to which incentive stock options granted to a participant under the 2010 Plan and all other option plans of HEI or of any subsidiary of HEI become exercisable for the first time by the participant during any calendar year exceeds $100,000 (as determined in accordance with Section 422(d) of the Internal Revenue Code), the portion of such incentive stock options in excess of $100,000 will be treated as a nonqualified stock option.

        Share Appreciation Rights.    Share appreciation rights may be granted either alone (Free Standing Rights) or in conjunction with all or part of any option granted under the 2010 Plan (Related Rights). Subject to Section 409A of the Internal Revenue Code, in the case of nonqualified stock options, Related Rights may be granted either at or after the time of the grant of such option. In the case of an incentive stock option, Related Rights may be granted only at the time of the grant of the incentive stock option. The administrator will determine the participants to whom, and the time or times at which, grants of share appreciation rights will be made, the number of shares to be awarded, the price per share and all other conditions of share appreciation rights. Share appreciation rights will contain such additional terms and conditions, not inconsistent with the terms of the 2010 Plan, as the administrator will deem desirable, as set forth in an award agreement. Notwithstanding the foregoing, no Related Right may be granted for more shares than are subject to the option to which it relates and any share appreciation right must be granted with an exercise price not less than the fair market value of the underlying HEI Common Stock on the date of grant.

        A participant will have no rights to dividends or any other rights of a shareholder with respect to the shares subject to a share appreciation right until the participant has given written notice of its exercise, paid in full for such shares and satisfied the requirements of the 2010 Plan, and the shares are delivered to the participant.

        Upon the exercise of a Free Standing Right, the participant will be entitled to receive up to, but not more than, that number of shares equal in value to the excess of the fair market value as of the date of exercise over the price per share specified in the Free Standing Right multiplied by the number of shares in respect of which the Free Standing Right is being exercised.

        Share appreciation rights that are Related Rights will be exercisable only at such time or times and to the extent that the options to which they relate are exercisable. A Related Right granted in connection with an incentive stock option will be exercisable only if and when the fair market value (as defined in the 2010 Plan) of shares of the HEI Common Stock subject to the incentive stock option exceeds the exercise price of such option. A Related Right may be exercised by a participant by surrendering the applicable portion of the related option, upon which the participant will be entitled to receive up to, but not more than, that number of shares equal in value to the excess of the fair market value as of the date of exercise over the exercise price specified in the related option multiplied by the number of shares in respect of which the Related Right is being exercised. Options which have been so surrendered, in whole or in part, will no longer be exercisable to the extent the Related Rights have been so exercised.

        The administrator may determine to settle the exercise of a share appreciation right in cash in lieu of shares (or in any combination of shares and cash). The term of each Related Right will be the term of the option to which it relates, and no share appreciation right will be exercisable more than 10 years after the date such right is granted.




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        Restricted Shares, Deferred Shares and Performance Shares.    The grant of each award of restricted shares, deferred shares and performance shares will be memorialized in an award agreement, containing such terms and conditions as the administrator will determine. The administrator will have sole and complete authority to determine the participants to whom awards of restricted shares, deferred shares and performance shares will be granted under the 2010 Plan, the number of shares to be subject to the awards and the terms and conditions of the awards, including whether the vesting of such an award will be restricted by time or subject to the attainment of one or more performance goals (as described below). The restricted shares, deferred shares and performance shares will be subject to restrictions and conditions pursuant to the 2010 Plan and as determined by the administrator at the time of grant or, subject to Section 409A of the Internal Revenue Code, at a later time. The administrator may, in its sole discretion, provide for the lapse of restrictions in installments and may accelerate or waive such restrictions in whole or in part based on such factors and such circumstances as the administrator may determine, in its sole discretion, including, but not limited to, the attainment of certain performance related goals; provided, however, that this sentence will not apply to any award which is intended to qualify as "performance-based compensation" under Section 162(m). Except as provided in the applicable award agreement, the participant will generally have the rights of a shareholder of HEI with respect to restricted shares or performance shares during the restricted period. The participant will generally not have the rights of a shareholder with respect to shares subject to deferred shares during the restricted period; provided, however, that, subject to Section 409A of the Internal Revenue Code, an amount equal to dividends declared during the restricted period with respect to the number of shares covered by deferred shares will, unless otherwise set forth in the applicable award agreement, be paid to the participant at the same time as dividends are paid to HEI's shareholders generally, provided that the participant is then providing services to HEI or any affiliate of HEI.

        Other Share-Based or Cash-Based Awards.    The administrator is authorized to grant awards to participants in the form of other share-based awards or other cash-based awards, as deemed by the administrator to be consistent with the purposes of the 2010 Plan and as evidenced by an award agreement. The administrator will determine the terms and conditions of such awards, consistent with the terms of the 2010 Plan, at the date of grant or thereafter, including any performance goals and performance periods.

Performance Goals

        Under the 2010 Plan, the administrator has the authority to determine that vesting or payment of an award will be subject to the attainment of one or more performance goals. The performance goals may include any combination of, or a specified increase or decrease of, one or more of the following over a specified period:

•

earnings before all or any interest, taxes, depreciation and/or amortization;



•

net income (before or after taxes);



•

earnings per share of HEI Common Stock;



•

market share, gross revenue, and return on assets;



•

cost reduction goals and operating expenses;



•

earnings from continuing operations, levels of expense, cost or liability;



•

performance against operational budgets;



•

a participant's individual operational project goals;



•

return on average common equity;




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•

individual performance goals;



•

total return to shareholders and shareholder value added;



•

free cash flow;



•

modified free cash flow (net income plus depreciation and amortization less net capital expenditures);



•

pre-tax, pre-provision income;



•

net interest margin;



•

efficiency ratio; and



•

net charge offs.

        Where applicable, the performance goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of HEI or its affiliates, or a division or strategic business unit of HEI, or may be applied to the performance of HEI relative to a market index, a group of other companies or a combination thereof, all as determined by the administrator. The performance goals may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur). Each of the foregoing performance goals will be determined in accordance with generally accepted accounting principles and will be subject to certification by the administrator, provided that the administrator will have the authority to make equitable adjustments to the performance goals in recognition of unusual or nonrecurring events affecting HEI or any of its affiliates or the financial statements of HEI or any of its affiliates, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles, in any case to the extent such adjustment does not cause a loss of deduction under Section 162(m).

Termination of Employment

        Unless the applicable award agreement provides otherwise, in the event that the employment of a participant with HEI or any of its affiliates terminates for any reason other than cause, retirement, disability (each such term as defined in the 2010 Plan) or death, the participant's options and share appreciation rights:

•

to the extent exercisable at the time of such termination, will remain exercisable until the date that is one year after such termination, on which date they will expire; and



•

to the extent that they were not exercisable at the time of such termination, will expire at the close of business on the date of such termination.

        The one-year period described above will be extended to three years after the date of such termination in the event of the participant's death during such one-year period.

        Unless the applicable award agreement provides otherwise, in the event that the employment of a participant with HEI and all of its affiliates terminates on account of retirement, disability or death, the participant's options and share appreciation rights, to the extent that they were exercisable at the time of such termination, will become fully vested and will remain exercisable until the date that is three years after such termination, on which date they will expire. In the event of the termination of a




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participant's employment for cause, all outstanding options and share appreciation rights granted to such participant will expire at the commencement of business on the date of such termination.

        In the event of the termination of employment with HEI and all of its affiliates of a participant who has been granted one or more Related Rights, such rights will be exercisable at such time or times and subject to such terms and conditions as set forth in the related options.

        The rights of participants granted restricted shares, deferred shares or performance shares upon termination of employment with HEI or any affiliate thereof during the restricted period will be set forth in the applicable award agreement.

        Notwithstanding the foregoing, no option or share appreciation right will be exercisable after the expiration of its term.

Effect of a Change in Control

        Except as otherwise provided in an award agreement or in an individual agreement between a participant and HEI, in the event of a change in control of HEI (as defined in the 2010 Plan), the surviving entity or acquiring entity (or the surviving or acquiring entity's parent company) will assume all awards outstanding under the 2010 Plan or will substitute for them with similar awards. Any such assumed or substituted award will provide that, if the participant's employment with HEI or an affiliate of HEI (or any successor) is terminated within 24 months following the change in control by HEI or an affiliate without cause or by the participant with good reason (as defined in the 2010 Plan), the award will become fully vested and exercisable and all restrictions on such awards will immediately lapse (with all performance goals or other vesting criteria deemed achieved at 100% of target levels), and each such award that is an option or share appreciation right will remain exercisable for not less than one year following such termination of employment.

        To the extent the surviving entity (or acquiring entity or parent company, as the case may be) refuses to assume or substitute for outstanding awards:

•

all outstanding awards will become fully vested and exercisable and all restrictions on such awards will immediately lapse (with all performance goals or other vesting criteria deemed achieved at 100% of target levels);



•

with respect to options and share appreciation rights, the participant will have the right to exercise such awards for a period of time determined by the administrator, or will be entitled to receive an amount in cash equal to the excess (if any) of the number of shares subject to such awards multiplied by the per share consideration paid as of the date of the occurrence of the change in control for the shares, minus the aggregate exercise price of such awards; and



•

all awards not assumed, continued or substituted will terminate upon the change in control.

Transferability of Awards

        Unless otherwise determined by the administrator or provided in an award agreement, awards will not be transferable by a participant except by will or the laws of descent and distribution and will be exercisable during the lifetime of a participant only by such participant or his guardian or legal representative.

Amendment or Termination of the 2010 Plan

        The Board may amend, alter or terminate the 2010 Plan, or amend an award, at any time, but no amendment, alteration or termination may be made that would impair the rights of a participant under any award without such participant's consent. Shareholder approval is required for any amendment that would increase the total number of shares (unless pursuant to an equitable adjustment as set forth in




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the 2010 Plan), materially increase plan benefits, materially alter eligibility provisions or extend the maximum option term under the plan, or as otherwise required by law or applicable rule.

        In addition, the administrator may not reduce the exercise price of an outstanding option or share appreciation right by amending its terms or by canceling such award in exchange for cash or the grant of a new award without first obtaining approval from the shareholders of HEI.

Term of the 2010 Plan

        No awards may be made after the ten-year anniversary of the date on which shareholders approve the 2010 Plan but awards made before such tenth anniversary may extend beyond the tenth anniversary date.


New 2010 Plan Benefits


        The benefits to be derived under the 2010 Plan by participants cannot be determined, since the ultimate value of awards under the 2010 Plan depends on several factors, including the market value of HEI Common Stock, and future grants under the 2010 Plan will be made at the sole discretion of the administrator, based on a variety of considerations.


Certain Federal Income Tax Consequences


The following discussion of certain relevant federal income tax effects applicable to stock options and share appreciation rights granted under the 2010 Plan is a summary only, and reference is made to the Internal Revenue Code and the applicable regulations and rulings thereunder for a complete statement of all relevant federal tax provisions.

Options

        With respect to nonqualified stock options, the grantee will recognize no income upon grant of the option, and, upon exercise, will recognize ordinary income to the extent of the excess of the fair market value of the shares on the date of option exercise over the amount paid by the grantee for the shares. Upon a subsequent disposition of the shares received under the option, the grantee generally will recognize capital gain or loss to the extent of the difference between the fair market value of the shares at the time of exercise and the amount realized on the disposition.

        In general, no taxable income is realized by a grantee upon the grant of an incentive stock option. If shares are issued to a grantee (option shares) pursuant to the exercise of an incentive stock option granted under the 2010 Plan and the grantee does not dispose of the option shares within the two-year period after the date of grant or within one year after the receipt of such option shares by the grantee (disqualifying disposition), then, generally (i) the grantee will not realize ordinary income upon exercise and (ii) upon sale of such option shares, any amount realized in excess of the exercise price paid for the option shares will be taxed to such grantee as capital gain (or loss). The amount by which the fair market value of the HEI Common Stock on the exercise date of an incentive stock option exceeds the purchase price generally will constitute an item which increases the grantee's "alternative minimum taxable income" (as defined in the Internal Revenue Code).

        If option shares acquired upon the exercise of an incentive stock option are disposed of in a disqualifying disposition, the grantee generally would include in ordinary income in the year of disposition an amount equal to the excess of the fair market value of the option shares at the time of exercise (or, if less, the amount realized on the disposition of the option shares) over the exercise price paid for the option shares.

        Subject to certain exceptions, an option generally will not be treated as an incentive stock option if it is exercised more than three months following termination of employment. If an incentive stock




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option is exercised at a time when it no longer qualifies as an incentive stock option, such option will be treated as a nonqualified stock option as discussed above.

        In general, HEI will receive an income tax deduction at the same time and in the same amount as the employee recognizes ordinary income.

Share Appreciation Rights

        The recipient of a grant of share appreciation rights will not realize taxable income and HEI will not be entitled to a deduction with respect to such grant on the date of such grant. Upon the exercise of a share appreciation right, the recipient will realize ordinary income equal to the fair market value of any shares received at the time of exercise. In general, HEI will be entitled to a corresponding deduction, equal to the amount of income realized.

Section 409A of the Internal Revenue Code

        The American Jobs Creation Act of 2004 added Section 409A to the Internal Revenue Code (Section 409A), which imposes restrictions on "nonqualified deferred compensation" (as defined in Section 409A). Section 409A generally applies to amounts deferred after December 31, 2004. Generally, options and share appreciation rights with an exercise price at least equal to the fair market value of the underlying stock on the date of grant and restricted stock will not be considered deferred compensation if such awards do not include any other feature providing for the deferral of compensation. Failure to follow the provisions of Section 409A can result in taxation to the grantee of a 20% additional income tax and interest on the taxable amount and, depending on the state, additional state taxes. It is intended that payments and benefits under the 2010 Plan comply with or be exempt from Section 409A. If taxes or penalties under Section 409A are imposed on a grantee in connection with the 2010 Plan, such grantee will be solely responsible and liable for the satisfaction of all such taxes and penalties, and neither HEI nor any affiliate will have any obligation to indemnify or otherwise hold the grantee (or any beneficiary) harmless from any or all of such taxes or penalties.


Vote Required


        Under the NYSE listing standards, the 2010 Plan will be approved if a majority of the votes cast are in favor of such approval, so long as the total votes cast represent more than 50% of all shares entitled to vote. Abstentions will be considered votes cast and will have the same effect as voting against the proposal. Broker nonvotes will have no effect on the outcome of the vote on the 2010 Plan.

        YOUR BOARD RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE 2010 EQUITY AND INCENTIVE PLAN.




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Equity compensation plan information


        Information as of December 31, 2009 about HEI Common Stock that may be issued upon the exercise of awards granted under all of the company's equity compensation plans was as follows:

Plan category		(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)			(b) Weighted-average exercise price of outstanding options, warrants and rights			(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (2)
Equity compensation plans approved by shareholders			432,677		$	19.73			4,099,071
Equity compensation plans not approved by shareholders			—			—			—
Total			432,677		$	19.73			4,099,071

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(1)

Includes 374,500 shares subject to outstanding nonqualified stock options and 58,177 of dividend equivalent shares accrued as of December 31, 2009 for such options.



(2)

This represents the number of shares remaining available as of December 31, 2009, including 4,022,393, net of any shares underlying outstanding grants, under the 1987 Stock Option and Incentive Plan and 76,678 under the HEI Nonemployee Director Plan. All of the shares remaining available for issuance under the HEI Nonemployee Director Plan may be issued in the form of unrestricted HEI Common Stock. Of the shares remaining available for issuance under the 1987 Stock Option and Incentive Plan, 28,731 shares may be issued in the form of restricted stock, stock payments or stock-settled restricted stock units (i.e., other than in the form of options, warrants or rights).




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Director Nominees for Election and Continuing Directors

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Nominees for Class II directors whose terms expireIII Directors Whose Terms Expire at the 20132014 Annual Meeting


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		Thomas B. FargoPeggy Y. Fowler, age 61,59, director since 2005nominee for 2011 Annual Meeting Audit Committee Member Ms. Fowler brings a wealth of knowledge and Compensation Committee Chairexperience to HEI. Her prior positions in managing utility operations and leading a large public company as its chief executive officer impart significant expertise to the Board. Her recent experience serving on the board of a mainland bank holding company will strengthen the Board's capabilities in overseeing the subsidiary bank operations. Business experience and other public company and HEI affiliate directorships since 20052006 •       Operating Executive Board Member, J.F. Lehman & Company (private equity firm), since 2008 •       Owner, Fargo Associates,  LLC (defense and homeland/national security consultancy), since 2005 •       Chief Executive Officer, Hawaii Superferry, Inc. (interisland ferry), 2008-2009 •       President, Trex Enterprises Corporation (defense research and development firm), 2005-2008 •       Commander, U.S. Pacific Command, 2002-2005 •       Director since 2008 and Audit Committee Member, Northrop Grumman Corporation •       Director, Hawaiian Holdings, Inc., 2005-2008 •       Director since 2005 and Audit Committee Member, Hawaiian Electric Company,  Inc. (HEI subsidiary), since 2009 •       Co-Chief Executive Officer, Portland General Electric Company (PGE), 2009 •       President and Chief Executive Officer, PGE, 2000-2008 •       Director, PGE, since 1998 •       Director, Umpqua Holdings Corporation, since 2009, and Chair of Budget and Compensation Committees, since April 2010
		Skills and qualifications for HEI Board service     •       Extensive knowledge35 years of executive leadership, financial oversight and utility operations experience from serving at PGE in senior officer positions, including Chief Operating Officer, President and Chief Executive Officer. •       Breadth of proven management, leadership, analytical and technical skills, including crisis management, risk assessment, strategic planning and public relations skills, demonstrated especially by her leadership of PGE after the 2001 bankruptcy of its parent company, Enron Corp., through its independence from Enron in 2006 and by her recognition as Oregon's Most Admired CEO in a 2005Portland Business Journal survey and as Portland's First Citizen in 2007 by the Portland Metropolitan Association of Realtors, an annual award honoring civic achievement and business leadership. •       Expertise in financial oversight, regulatory compliance and corporate governance matters gained from her experience as President (1997-2000), CEO (2000-2008) and Chair (2001-2004) of PGE, her service as a director for PGE and the Portland Branch of the U.S. military,Federal Reserve Bank of San Francisco, a major customerdirector and member of HEI's electric utility subsidiary.the Nominating and Corporate Governance Committee for The Regence Group (BlueCross BlueShield health insurance provider in Idaho, Oregon, Utah and Washington), and a director and chair of the Budget and Compensation Committees and member of the Loan and Investment Committee for Umpqua Holdings Corporation (publicly traded bank holding company based in Portland, Oregon).
		Involvement in certain legal proceedings •       Leadership, strategic planning and financial and nonfinancial risk assessment skills developed over 39 yearsPGE was owned by Enron Corp. from 1997 to 2006. Enron also owned Portland General Holdings, Inc., previously a holding company for the nonregulated business of leading 9 organizations rangingPGE that became a subsidiary of Enron, holding Enron's nonregulated businesses in sizePortland. Enron Corp. filed for bankruptcy in 2001. Ms. Fowler was President of Portland General Holdings from 1301999 to 300,000 people and managing budgets up2003, when it also filed for bankruptcy protection. The case was procedurally consolidated with the Enron bankruptcy, but Enron's bankruptcy reorganization plan did not expressly pertain to $8 billion.
		•       Experience with corporate governance, including audit, compensation and governance committees, from service on several public and private company boards.Portland General Holdings. The Portland General Holdings bankruptcy case was dismissed in October 2005, after substantially all of its assets were distributed or placed in segregated accounts.




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		Kelvin H. TaketaKeith P. Russell, age 55,65, director since 1993nominee for 2011 Annual Meeting Nominating Mr. Russell has extensive senior management experience in the banking industry. His prior service as chief risk officer of a large financial institution significantly strengthens the Board's capabilities in overseeing risk within the organization. In addition, Mr. Russell's many years of experience in managing and Corporate Governance Committee Chairoverseeing bank operations will contribute important expertise to the Board. Mr. Russell also has extensive knowledge and experience from his prior service as an officer of a lender to the electric utility industry. Business experience and other public company and HEI affiliate directorships since 2005 •       President and Chief Executive Officer, Hawaii Community Foundation, since 1998 •       Director, Hawaiian Electric Company, Inc. (HEI subsidiary), since 2004 Skills and qualifications for HEI Board service2006 •       Executive management experience with responsibility for overseeing more than $405 million in charitable assets as President and Chief Executive Officer of the Hawaii Community Foundation.
		•       Proficiency in risk assessment, strategic planning and organizational leadership as well as marketing and public relations obtained from his current position at the Hawaii Community Foundation and his prior experience as Vice President and Executive Director of the Asia/Pacific Region for The Nature Conservancy and as Founder, Managing Partner and Director of Sunrise Capital Inc.
		•       Knowledge of corporate and nonprofit governance issues gained from his prior service as a director for Grove Farm Company, Inc., his current service as Vice Chair of the Independent Sector and through publishing articles and lecturing on governance of tax-exempt organizations.




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		Jeffrey N. Watanabe, age 67, director since 1987 Chairman of the Board since 2006 and Executive Committee Chair Business experience and other public company and HEI affiliate directorships since 2005 •       Managing Partner, Watanabe Ing & Komeiji LLP, 1972-2007 (now retired) •       Director since 2003 and Compensation and Corporate Governance Committee Member, Alexander & Baldwin, Inc. •       Director since 1988 and Audit and Executive Committee Member, American Savings Bank, F.S.B. (HEI subsidiary), since 2010 •       President, Russell Financial,  Inc. (strategic and financial consulting firm servicing business and high net worth families and individuals), since 2001 •       Vice Chair/Chief Risk Officer, Mellon Financial Corp., then Chairman, Mellon West, 1991-2001 •       Senior Executive Vice President, then Director, Hawaiian Electric Company, Inc. (HEI subsidiary), from 1999-2006President and Chief Operating Officer, GLENFED/Glendale Federal Bank, 1983-1991 •       Director, Nationwide Health Properties, since 2008 2002 •       Director, Sunstone Hotel Investors, since 2003 •       Director, Countrywide Financial, 2003-2008
		Skills and qualifications for HEI Board service •       Broad business, legal, corporate governance and leadership experience from serving as Managing Partner of the law firm he founded, advising clients on a variety of business and legal matters for 35 years and from serving on a dozen public and private company and nonprofit boards and committees, including his current service on the Compensation and Corporate Governance Committees for Alexander & Baldwin, Inc.
		•       Specific experience with strategic planning from providing strategic counsel to local business clients and prospective investors from the continental United States and the Asia Pacific region for 25 years of his law practice.
		•       Experience in public utility regulation from practicing law before the Hawaii Public Utilities Commission, which regulates HEI's utility subsidiaries.


Class II director whose term will expire at the 2010 Annual Meeting

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		Diane J. Plotts, age 74, director since 1987 Audit Committee Chair and Compensation and Executive Committee Member Business experience and other public company and HEI affiliate directorships since 2005 •       Independent business advisor since 2000 •       Director since 1996 and Audit Committee Chair, American Savings Bank, F.S.B. (HEI subsidiary) Skills and qualifications for HEI Board service •       3510 years of executive leadership, financial oversight, risk management and strategic planning experience from serving as General PartnerVice Chairman/Chief Risk Officer for Mellon Financial Corporation and DirectorChairman of Hemmeter Investment Company.Mellon's West Coast operations. Mellon was also a major lender and capital provider to the electric utility industry.
		•       Bank8 years of executive and corporate governance experience from serving as a founding directorDirector, President and Chief Operating Officer of the former Bank of Honolulu for 8 years.GLENFED/Glendale Federal Bank.
		•       Fluency in organizational governance matters9 years of banking industry experience serving as Senior Vice President and boardroom dynamics from serving onDeputy Administrator for Security Pacific National Bank, with direct responsibility for a varietywide breadth of nonprofit boards,operations including the University of Hawaii Board of Regents, Aloha United Way, Hawaii Community Foundationleasing, consumer and University of Hawaii Foundation.commercial finance, mortgage banking, venture capital, cash management and trust business.




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Continuing Class III directors whose terms expire at the 2011 Annual Meeting

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		Don E. Carroll, age 68, director since 1996 Compensation Committee Member Business experience and other public company and HEI affiliate directorships since 2005 •       Retired Chairman, Oceanic Time Warner Cable Advisory Board, since 2004 •       Director since 2004 and Audit Committee Member, American Savings Bank, F.S.B. (HEI subsidiary) Skills and qualifications for HEI Board service •       38 years of executive and finance management experience as President and Vice President, Finance of Oceanic Cable.
		•       Experience with financial institutions and executive compensation and compensation program oversight from serving as Chair of the Compensation Committee for Island Insurance Company, Ltd. and as a member of the Compensation Committee for Pacific Guardian Life.
		•       In-depth knowledge and familiarity with issues facing HEI and its banking subsidiary gained from 14 years of service as a director for HEI and 6 years of service as a director for American Savings Bank, F.S.B.




		Richard W. Gushman, II, age 64, director since 2007 Nominating and Corporate Governance Committee Member Business experience and other public company and HEI affiliate directorships since 2005 •       President and Owner, DGM Group (real estate development firm), since 1973 •       Managing Partner, Summit Financial Resources (financial services company), since 1994 •       Director since 2002 and Audit Committee Member, American Savings Bank, F.S.B. (HEI subsidiary) Skills and qualifications for HEI Board service •       Demonstrated business leadership and financial management skills gained from executive management, financial stewardship and corporate governance leadership roles as chief executive officer of DGM Group for 37 years and Managing Partner of Summit Financial Resources for 16 years.
		•       Extensive experience in governance, board leadership and financial oversight from serving on a variety of corporate, advisory and community organization boards and in financial stewardship roles, including his current service as a director of James Campbell Company LLC and as a member of the state of Hawaii Department of Hawaiian Home Lands and the Office of Hawaiian Affairs Advisory Boards.
		•       Valuable entrepreneurial and hands-on perspective and experience from having grown the real estate development practice he started in 1973 into the DGM Group.




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		Victor H. Li, S.J.D., age 68, director since 1988 Compensation Committee Member Business experience and other public company and HEI affiliate directorships since 2005 •       Co-Chairman, Asia Pacific Consulting Group (Pacific region trade consultancy), since 1992 •       Director, American Savings Bank, F.S.B. (HEI subsidiary), since 2004 Skills and qualifications for HEI Board service •       Thoughtful leadership and consensus-building skills and marketing and strategic planning experience acquired through his current position for the last 18 years as Co-Chairman of the Asia Pacific Consulting Group, and his former position for 10 years as chief executive for the East-West Center.
		•       Long-term knowledge and understanding of HEI's operations and strategic goals after 20 years on the Board.
		•       Prior energy and public company board experience from serving as a director at Grumman Corporation and AES China Generating Co. Ltd.




		Barry K. Taniguchi, age 63, director since 2004 and nominee for 2011 Annual Meeting Audit Committee Chair Executive Committee Member Mr. Taniguchi brings to the Board considerable experience as a business leader in Hawaii, with extensive knowledge of the business climate and significant contacts and relationships within the business community and local governmental agencies. With the successes of his own businesses, and because of his commitment to a wide array of charitable causes, Mr. Taniguchi is one of the most well-respected businesspersons in the state of Hawaii. Business experience and other public company and HEI affiliate directorships since 20052006 •       President and Chief Executive Officer, KTA Super Stores (grocery store chain), since 1989 •       President, K. Taniguchi Ltd. (real estate lessor), since 1989 •       Director, American Savings Bank, F.S.B. (HEI subsidiary), since 2002 •       Director since 2001 and Audit Committee Chair, Hawaiian Electric Company, Inc. (HEI subsidiary) •       Director, Hawaii Electric Light Company, Inc. (HEI subsidiary), 1997-2009 •       Director, Maui Electric Company, Limited (HEI subsidiary), 2006-2009
		Skills and qualifications for HEI Board service •       Current knowledge of and experience with the business community on the island of Hawaii, which is served by one of HEI's utility subsidiaries, Hawaii Electric Light Company, Inc., from serving in his current chief executive officer positions for the last 2322 years.
		•       Accounting and auditing knowledge and experience gained from obtaining a public accounting certification and working as an auditor and as a controller.
		•       Extensive corporate and nonprofit board experience and leadership roles in community and civic organizations,experience, including from his current service on the boards of Hawaii Employers Mutual Insurance Company and Hawaii Community Foundation and from his role as a director and former Chair of the Hawaii Island Economic Development Board.




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Continuing Class I directors whose terms expireDirectors Whose Terms Expire at the 2012 Annual Meeting

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		Shirley J. Daniel, Ph.D., C.P.A., age 56, director since 2002 Audit Committee Member Business experience and other public company and HEI affiliate directorships since 2005 •       Professor of Accountancy, Shidler College of Business, University of Hawaii at Manoa, since 1995 •       Director, American Savings Bank, F.S.B. (HEI subsidiary), since 2004 Skills and qualifications for HEI Board service •       Current expertise in accounting, auditing and corporate governance from teaching courses on these subjects at the Shidler College of Business.
		•       Business and leadership experience from her current service as Director for the Pacific Asian Management Institute and Center for International Business Education and Research and from her prior service as Managing Director for the Pacific Asian Center for Entrepreneurship and E-Business.
		•       Prior experience in accounting and auditing from being a licensed certified public accountant and from working as an auditor and audit manager with the international accounting firm Arthur Young & Company (currently Ernst & Young LLP).




		Constance H. Lau, age 58,59, director 2001-2004 and since 2006 Executive Committee Member Current and prior positions with the companyCompany •       President and Chief Executive Officer and Director, HEI, since 2006 •       Chairman of the Board, Hawaiian Electric Company, Inc. (HEI subsidiary), since 2006 •       Chairman of the Board, American Savings Bank, F.S.B. (HEI subsidiary), since 2006 •       Chairman of the Board and Chief Executive Officer, American Savings Bank, F.S.B. (HEI subsidiary), since 20082008-2010 •       Chairman of the Board, President and Chief Executive Officer, American Savings Bank, F.S.B., 2006-2008 •       President and Chief Executive Officer and Director, American Savings Bank, F.S.B., 2001-2006 •       Senior Executive Vice President and Chief Operating Officer and Director, American Savings Bank, F.S.B., 1999-2001
		•       Treasurer, HEI, 1989-1999
		•       Financial Vice President and Treasurer, HEI Power Corp. (former HEI subsidiary), 1997-1999
		•       Treasurer, Hawaiian Electric Company,  Inc., and Assistant Treasurer, HEI, 1987-1989
		•       Assistant Corporate Counsel, Hawaiian Electric Company, Inc., 1984-1987
		Other public company directorships since 20052006 •       Director since 2004 and Audit Committee Member, Alexander & Baldwin, Inc.
		Skills and qualifications for HEI Board service •       Intimate understanding of the companyCompany from serving in various chief executive, chief operating and other executive, finance and legal positions at HEI and its subsidiaries over the last 2526 years.
		•       Familiarity with current management and corporate governance practices from her current service as a director and Audit Committee member for Alexander & Baldwin,  Inc. and as a director of AEGIS Insurance Services, Inc.
		•       Experience with financial oversight and expansive knowledge of the Hawaii business community and the local communities that compose the company'sCompany's customer bases from serving as a director or investment committee chairperson for various local industry, business development, educational and educationalnonprofit organizations. •       Utility and banking industry knowledge from serving as a director or task force member of the Hawaii Bankers Association, the American Bankers Association and the Edison Electric Institute.




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		A. Maurice Myers, age 69,70, director since 1991 Compensation Committee Member Business experience and other public company and HEI affiliate directorships since 20052006 •       Chief Executive Officer and Owner, Myers Equipment Leasing LLC (equipment leasing company), since 2010 •       Chief Executive Officer and Director, POS Hawaii LLC (provider of point-of-sale business systems for restaurants and retailers), since 2009 •       Chief Executive Officer and Director, Wine Country Kitchens LLC (manufacturer of gourmet food products), since 2007 •       Chairman, Chief Executive Officer and President, Waste Management, Inc. (waste and environmental services provider), 1999-2004 •       Director, Hawaiian Electric Company,  Inc. (HEI subsidiary), 2004-2006 and since 2009
		Skills and qualifications for HEI Board service •       20 years of public company executive and board leadership experience as Chairman, Chief Executive Officer and President of Waste Management, Inc., Chairman, Chief Executive Officer and President of Yellow Corporation, President of America West Airlines and Chief Executive Officer and President of Aloha Airgroup, Inc.
		•       Practiced skills in risk assessment, strategic planning, financial oversight, customer and public relations and marketing exercised in leading successful restructuring efforts at Waste Management, Yellow Corporation and America West Airlines.
		•       Diverse business experience and public and private company board experience, including from his prior service as a director and Compensation Committee Chairchair for Tesoro Corporation and as a director for BIS Industries Limited and Cheap Tickets.

 


		James K. Scott, Ed.D., age 58,59, director since 1995 Audit and Committee Member Nominating and Corporate Governance Committee Member Business experience and other public company and HEI affiliate directorships since 20052006 •       President, Punahou School (K-12 independent school), since 1994 •       Director, American Savings Bank, F.S.B. (HEI subsidiary), since 2008 Skills and qualifications for HEI Board service •       Recognized leadership and executive management skills as President of Punahou School for 1617 years. •       2526 years of experience developing and executing strategic plans as the chief executive at two independent schools, including overseeing fundraising programs and admissions/marketing functions.
		•       Governance and board leadership experience from his current positions as Chair of the Secondary School Admission Test Board, director and former Chair of the Hawaii Association of Independent Schools, member of the Board of Governors of the Pacific and Asian Affairs Council and member of the Advisory Board of the Klingenstein Center of Teachers College at Columbia University.




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Continuing Class II Directors Whose Terms Expire at the 2013 Annual Meeting


		Thomas B. Fargo, age 62, director since 2005 Compensation Committee Chair Nominating and Corporate Governance Committee Member Business experience and other public company and HEI affiliate directorships since 2006 •       Operating Executive Board Member, J.F. Lehman & Company (private equity firm), since 2008 •       Owner, Fargo Associates,  LLC (defense and homeland/national security consultancy), since 2005 •       Chief Executive Officer, Hawaii Superferry, Inc. (interisland ferry), 2008-2009 •       President, Trex Enterprises Corporation (defense research and development firm), 2005-2008 •       Commander, U.S. Pacific Command, 2002-2005 •       Director since 2008 and Audit Committee Member, Northrop Grumman Corporation •       Director, Hawaiian Holdings, Inc., 2005-2008 •       Director since 2005, Hawaiian Electric Company, Inc. (HEI subsidiary)
		Skills and qualifications for HEI Board service •       Extensive knowledge of the U.S. military, a major customer of HEI's electric utility subsidiary. •       Leadership, strategic planning and financial and nonfinancial risk assessment skills developed over 39 years of leading 9 organizations ranging in size from 130 to 300,000 people and managing budgets up to $8 billion. •       Experience with corporate governance, including audit, compensation and governance committees, from service on several public and private company boards.




		Kelvin H. Taketa, age 56, director since 1993 Nominating and Corporate Governance Committee Chair Business experience and other public company and HEI affiliate directorships since 2006 •       President and Chief Executive Officer, Hawaii Community Foundation (statewide charitable foundation), since 1998 •       Director, Hawaiian Electric Company, Inc. (HEI subsidiary), since 2004 Skills and qualifications for HEI Board service •       Executive management experience with responsibility for overseeing more than $405 million in charitable assets as President and Chief Executive Officer of the Hawaii Community Foundation. •       Proficiency in risk assessment, strategic planning and organizational leadership as well as marketing and public relations obtained from his current position at the Hawaii Community Foundation and his prior experience as Vice President and Executive Director of the Asia/Pacific Region for The Nature Conservancy and as Founder, Managing Partner and Director of Sunrise Capital Inc. •       Knowledge of corporate and nonprofit governance issues gained from his prior service as a director for Grove Farm Company, Inc., his current service as Vice Chair of the Independent Sector and Director of the Stupski Foundation and through publishing articles and lecturing on governance of tax-exempt organizations.




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		Jeffrey N. Watanabe, age 68, director since 1987 Chairman of the Board since 2006 Executive Committee Chair Business experience and other public company and HEI affiliate directorships since 2006 •       Managing Partner, Watanabe Ing & Komeiji LLP, 1972-2007 (now retired) •       Director since 2003 and Compensation and Corporate Governance Committee Member, Alexander & Baldwin, Inc. •       Director since 1988 and Executive Committee Member, American Savings Bank, F.S.B. (HEI subsidiary) •       Director, Hawaiian Electric Company, Inc. (HEI subsidiary), from 1999-2006 and since 2008 Skills and qualifications for HEI Board service •       Broad business, legal, corporate governance and leadership experience from serving as Managing Partner of the law firm he founded, advising clients on a variety of business and legal matters for 35 years and from serving on more than a dozen public and private company and nonprofit boards and committees, including his current service on the Compensation and Corporate Governance Committees for Alexander & Baldwin, Inc. •       Specific experience with strategic planning from providing strategic counsel to local business clients and prospective investors from the continental United States and the Asia Pacific region for 25 years of his law practice.


Class I Director Who Intends to Resign at the 2011 Annual Meeting


		Shirley J. Daniel, Ph.D., C.P.A., age 57, director since 2002 Audit Committee Member Business experience and other public company and HEI affiliate directorships since 2006 •       Professor of Accountancy, Shidler College of Business, University of Hawaii at Manoa, since 1995 •       Director, American Savings Bank, F.S.B. (HEI subsidiary), since 2004 Skills and qualifications for HEI Board service •       Current expertise in accounting, auditing and corporate governance from teaching courses on these subjects at the Shidler College of Business. •       Business and leadership experience from her current service as Director for the Pacific Asian Management Institute and Center for International Business Education and Research and from her prior service as Managing Director for the Pacific Asian Center for Entrepreneurship and E-Business. •       Prior experience in accounting and auditing from being a licensed certified public accountant and from working as an auditor and audit manager with the international accounting firm Arthur Young & Company (currently Ernst & Young LLP).




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Class III Directors Who Are Not Continuing After the Expiration of Their Terms at the 2011
Annual Meeting


		Don E. Carroll, age 69, director since 1996 Compensation Committee Member Business experience and other public company and HEI affiliate directorships since 2006 •       Retired Chairman, Oceanic Time Warner Cable Advisory Board, since 2004 •       Director since 2004 and Audit Committee Member, American Savings Bank, F.S.B. (HEI subsidiary) Skills and qualifications for HEI Board service •       38 years of executive and finance management experience as President and Vice President, Finance of Oceanic Cable. •       Experience with financial institutions and executive compensation and compensation program oversight from serving as Chair of the Compensation Committee for Island Insurance Company, Ltd. and as a member of the Compensation Committee for Pacific Guardian Life. •       In-depth knowledge and familiarity with issues facing HEI and its banking subsidiary gained from 15 years of service as a director for HEI and 7 years of service as a director for American Savings Bank, F.S.B.




		Victor H. Li, S.J.D., age 69, director since 1988 Compensation Committee Member Business experience and other public company and HEI affiliate directorships since 2006 •       Co-Chairman, Asia Pacific Consulting Group (Pacific region trade consultancy), since 1992 •       Director, American Savings Bank, F.S.B. (HEI subsidiary), since 2004 Skills and qualifications for HEI Board service •       Thoughtful leadership and consensus-building skills and marketing and strategic planning experience acquired through his current position for the last 19 years as Co-Chairman of the Asia Pacific Consulting Group, and his former position for 10 years as chief executive for the East-West Center. •       Long-term knowledge and understanding of HEI's operations and strategic goals after 21 years on the Board. •       Prior energy and public company board experience from serving as a director at Grumman Corporation and AES China Generating Co. Ltd.




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Proposal No. 1: Election of Class III Directors

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        In accordance with the Bylaws of the Company, the Board has fixed the size of the Board to serve from and after the 2011 Annual Meeting at nine directors, divided into three classes with staggered terms. The Board proposes that the following three nominees be elected at the 2011 Annual Meeting as Class III directors to serve until the 2014 Annual Meeting, or until their successors shall be duly elected and qualified:

        The Board proposes three Class III nominees for election at the Annual Meeting:

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Peggy Y. Fowler



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Keith P. Russell



•

Barry K. Taniguchi

        Mr. Taniguchi is currently an incumbent Class III director of HEI. Ms. Fowler and Mr. Russell are new nominees, but they are not new to the HEI family of companies, as they are directors of HEI's principal subsidiaries. Ms. Fowler is a director of Hawaiian Electric Company and Mr. Russell is a director of American Savings Bank, and each has substantial experience in the electric power and banking industries, respectively. Ms. Fowler and Mr. Russell are nominated to fill the positions held by current Class III directors Don E. Carroll and Victor H. Li, who have served several terms on the HEI Board but are not seeking reelection. Mr. Carroll will continue serving the Company as a member of the board of directors for HEI subsidiary Hawaiian Electric Company. The Board has determined that all three nominees are independent under the applicable standards for director independence, as discussed below under "Board of Directors—Who are the independent directors of the Board?". Each nominee has consented to serve for the new term expiring at the 2014 Annual Meeting if elected. If a nominee is unable to stand for election at the time of the 2011 Annual Meeting, the proxy holders listed in the proxy may vote in their discretion for a suitable substitute.

        At the 2010 Annual Meeting, the Board was fixed at 11. However, Mr. Richard W. Gushman, II resigned from his position as a Class III director effective September 30, 2010. In addition, Dr. Shirley J. Daniel, a Class I director with a term expiring in 2012, intends to resign from the Board effective at the Annual Meeting (but she will continue to serve the Company as a member of the board of directors of HEI subsidiary American Savings Bank). Following the Annual Meeting, there will thus be a total of nine directors on the HEI Board with three directors in each of the three Board classes of directors.

        Information regarding the business experience and certain other directorships for each Class III director nominee and for each continuing Class I and II director is provided on pages 5-12 above together with a description of the experience, qualifications, attributes and skills that led to the Board's conclusion at the time of this Proxy Statement that each of the nominees and directors should serve on the Board in light of HEI's current business and structure.

        YOUR BOARD RECOMMENDS THAT YOU VOTE"FOR" EACH OF THE NOMINEES FOR CLASS III DIRECTOR LISTED ABOVE.




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Corporate Governance

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What are HEI's governance policies and guidelines?


        In 2009,2010, the Board and management continued to review and monitor corporate governance trends and best practices to comply with the corporate governance requirements of the New York Stock Exchange, regulations of the Securities and Exchange Commission and rules and regulations of the Board of Governors of the Federal Reserve, Federal Deposit Insurance Corporation and Office of Thrift Supervision applicable to HEI as a bank holding company. As part of an annual review, the HEI Categorical Standards of Director Independence (see Appendix B), Corporate Governance Guidelines, Corporate Code of Conduct and charters for the Audit, Compensation, Executive and Nominating and Corporate Governance Committees were reviewed and revised as deemed appropriate by the Board. These documents and HEI's Corporate Code of Conduct, are available on HEI's website at www.hei.com.


What is the Board's leadership structure?


        Since 2006, Mr. Watanabe has served as the nonexecutive Chairman of the Board since 2006, upon the retirement of former HEI Chairman, President and Chief Executive Officer, Robert F. Clarke. Also since that time, Ms. Lau has served as HEI's President and Chief Executive Officer andOfficer. Since that time, Ms. Lau has also been the only employee director on the Board. Prior to Mr. Watanabe becoming2006, the Company's Chief Executive Officer had also served as Chairman of the Board. During that time, the Board had an independent lead director.Lead Director.

        Mr. Watanabe has served on the Board since 1987, but has never been employed by HEI or any HEI subsidiary. The Board has determined that he is independent. Among the many skills and qualifications that Mr. Watanabe brings to the Board, the Board consideredconsidered: (i) his extensive experience in corporate and nonprofit governance from serving on other public company, private company and nonprofit boards; (ii) his reputation for effective consensus and relationship building and business and community leadership, including leadership of his former law firm, andfirm; (iii) his willingness to spend time advising and mentoring members of HEI's senior management; and (iv) his dedication to committing the hard work and time necessary to successfully lead the Board.

        As HEI's Chairman, Mr. Watanabe's key responsibilities are to:

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lead Board and shareholder meetings and executive sessions of the independent directors, including executive sessions at which the performance of the Chief Executive Officer is evaluated by the Board;



•

attend all meetings of the Audit, Compensation and Nominating and Corporate Governance Committees of the Board as an observer and chair the Executive Committee of the Board;



•

serve on and/or advise the boards of HEI's primary operating subsidiaries, Hawaiian Electric Company and American Savings Bank, and chair joint executive sessions of the independent directors of HEI and these subsidiary boards;



•

work closely with management to develop meeting agendas and materials for the Board and subsidiary boards;



•

be available to other Board and subsidiary board members and management for questions and consultation; and



•

ensure and assist communications among Board members and Board committees and between the Board and management.

        The Board's Corporate Governance Guidelines provide that if the Chairman and Chief Executive Officer positions are held by the same individual, or if the Board determines that the Chairman is not independent, the independent directors should designate an independent director to serve as Lead Director. If a Lead Director is designated, the Lead Director's responsibilities would be to: (i) preside




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at Board and shareholder meetings when the Chairman is not present, (ii) preside at executive sessions




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of the independent directors, (iii) facilitate communication between the independent directors and the Chairman or the Board as a whole, (iv) call meetings of the nonmanagement or independent directors in executive session, (v) participate in approving meeting agendas, schedules and materials for the Board and (vi) perform other functions described in the Corporate Governance Guidelines or as determined by the Board from time to time.

        The Board believes that its current leadership structure, which provides for an independent nonemployee Chairman, or an independent Lead Director if the Chairman is not independent, is appropriate and effective in light of HEI's current operations, strategic plans and overall corporate governance structure for several reasons.structure. Several reasons support this conclusion. First, the Board believes that having an independent Chairman or Lead Director has been important in establishing a tone at the top for both the Board and the companyCompany that encourages constructive expression of views that may differ from those of senior management. Second, the Board believes that the presence of an independent Chairman or Lead Director, particularly at this time of growing government and investor scrutiny of public and financial company boards, demonstrates to the Board's desire to inspire confidence in the company'sCompany's regulators and shareholders that the Board is committed to serving the best interests of the companyCompany and its shareholders and not the best interests of management. Third, the Board recognizes that the companyCompany has an uncommon corporate governance structure in that the boards of its two primary operating subsidiaries are also composed mostly of nonemployee directors and that the HEI Chairman plays an important leadership role at these subsidiary boards. For instance, in addition to chairing executive sessions of the nonemployee directors and attending meetings of the audit committees of these subsidiary boards, the Chairman leads each subsidiary board in conducting its annual performance evaluation and assists communications between each of these boards and management of the respective subsidiary company and among members of each subsidiary board.


What is the Board's role in risk oversight?


        HEI is a holding company that operates principally through its electric public utility and bank subsidiaries. At the holding company and subsidiary levels, the companyCompany faces a variety of risks, including operational risks, regulatory and legal compliance risks, credit and interest rate risks, competitive risks and liquidity risks. Developing and implementing strategies to manage these risks is the responsibility of management, and that responsibility is carried out by assignments of responsibility to various officers and other employees of the companyCompany under the direction of HEI's Chief Financial Officer, who also serves as HEI's chief risk officer. The role of the Board is to oversee the management of these risks.

        The Board's specific risk oversight functions are as follows:

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The Board has considered and approved a consolidated enterprise risk management (ERM) system recommended by management. The system is designed to identify and assess risks at the holding company and subsidiary levels so that information regarding the informationCompany's risks can be reported to the Board, along with proposed strategies for mitigating significantthese risks. The structure of the ERM system is decentralized, with separate chief risk officers at each of HEI's primary operating subsidiaries, Hawaiian Electric Company and American Savings Bank. The chief risk officer of Hawaiian Electric Company is also responsible for identifying, assessing and reporting risks at the company'sCompany's utility subsidiaries that operate on the islands of Hawaii, Maui, Molokai and Maui.Lanai. Each subsidiary chief risk officer reports directly to the subsidiary President and functionally to HEI's chief risk officer. The Board believes that this decentralized risk management structure is appropriate and effective for the company'sCompany's diverse operations and holding company structure, because it allows for industry-specific risk identification and management at the subsidiary levels while also ensuring an integrated and consolidated view of risk at the holding company level by HEI's chief risk officer. In connection with approving this ERM system, the Board reviewed a catalog of




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risks and management's assessment of those risks reported by HEI's chief risk officer. As part of




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the Board's ongoing risk oversight, HEI's chief risk officer is responsible for providing regular reports to the Board and Audit Committee on the conditionstatus of those risks, any changes to the risk catalog or management's assessment of those risks, and any other risk management matters that the Board may request from time to time. The Board and Audit Committee also receive reports from the company'sHEI's internal auditor evaluating the effectiveness of management's implementation of the approved ERM system.

•

The Board has assigned to the Compensation Committee the specific risk oversight responsibility of reviewing whether the company'sCompany's compensation policies or practices are reasonably likely to have a material adverse effect on the companyCompany and of recommending new or revised policies and practices to address any such risks identified. Included in this oversight responsibility is the Compensation Committee's review and evaluation of American Savings Bank's compensation practices for compliance under new regulatory guidance on sound incentive compensation plans. The Compensation Committee reports the results of its review and any recommendations to the Board. The results of the Compensation Committee's review are also communicated to the Audit Committee through HEI's chief risk officer. Both the Audit and Compensation Committees are composed entirely of independent directors. Currently, two members of the Compensation Committee (Ms. Plotts and Mr. Fargo) also serve on the Audit Committee.



•

The Board has assigned to the Audit Committee the specific risk oversight responsibilities of (i) reviewing the company'sCompany's major financial risk exposures and the steps management has taken to monitor and control such exposures, and(ii) overseeing HEI's Code of Conduct compliance program including the establishment ofand (iii) establishing procedures for direct reporting of potential accounting and auditing issues to the Audit Committee. The Audit Committee reports the results of this review to the Board each quarter.quarter regarding these matters.



•

The Board has also assigned to the Audit Committee the responsibility of assisting the Board in overseeing the overall risk management strategy of the company.Company. In order to assist the Board with overall risk oversight, the Audit Committee is specifically required to discuss policies with respect to risk assessment and risk management, including the guidelines and policies governing the process by which risk assessment and risk management are undertaken at the company,Company, and to report to the Board the committee's discussion and findings so that the entire Board can respond to changes in the company'sCompany's risk profile.



•

In addition to overall risk oversight by the HEI Board, the boards of HEI's primary operating subsidiaries, Hawaiian Electric Company and American Savings Bank, are specifically responsible for overseeing risks at their respective companies and may assign certain risk-related responsibilities to their respective audit or other committees. In particular, the subsidiary bank board has retained overall risk management responsibility for bank risks and the board functions as a risk committee of the whole. Under the decentralized ERM structure discussed above, risk management activities at the subsidiary levels are reported to these subsidiary boards through the subsidiary chief risk officers. The HEI Board and/or Audit Committee may be invited to participate in risk oversight discussions by these subsidiary boards and/or audit committees. The information from these subsidiary board or audit committee sessions are also reported, on at least a quarterly basis, to the Board by the subsidiary chief risk officers (or their representatives), who functionally report to HEI's chief risk officer on risk management matters. These subsidiary boards are composed mostly of nonemployee directors. The subsidiary audit committees are composed entirely of nonemployee directors who meet the independence requirements for audit committee members of companies listed on the New York Stock Exchange.



•

At least annually, the Board conducts a strategic planning and risk review. As part of this review, the Board reviews fundamental financial and business strategies and assesses the major




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risks facing the companyCompany and options to mitigate those risks. To facilitate strategic planning through constructive dialogue among management and Board members, members of management who are not directors may be invited to participate in the review. Based on the review, the Board and senior management, including the HEI chief risk officer, identify key issues to be addressed during the course of the next calendar year.




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        The Board believes that risk oversight is one of the areas in which having an independent Chairman or Lead Director is especially important in order to ensure that views that may differ from those of management are expressed. Since the HEI Chairman attends the meetings of the Board, the subsidiary boards and their respective committees, the HEI Chairman is also in a unique position to assist with communications regarding risk oversight and risk management among the Board and its committees, between the subsidiary boards and their respective committees and between directors and management.


How does the Board select nominees for the Board?


        The Board believes that there are skill sets and qualities and attributes that should be represented on the Board as a whole but not necessarily by each director. The Nominating and Corporate Governance Committee and the Board thus consider the qualifications and attributes of directors and director candidates not only individually but also in the aggregate and in light of the current and future needs of HEI and its subsidiaries.

        The Nominating and Corporate Governance Committee of the Board assists the Board in identifying and evaluating persons for nomination or re-nominationrenomination for Board service. To identify qualified candidates for HEI Board membership, the committee may consider persons who are serving on its subsidiary boards as well as persons suggested by Board members, management and shareholders or may retain a third-party search firm to help identify potentially qualified candidates. The committee's evaluation process does not vary based on whether or not a candidate is recommended by a shareholder.

        Once a person is identified as a potential director candidate, the committee may review publicly available information to assess whether the candidate should be further considered. If so, a committee member or designated representative for the committee will contact the person. If the person is willing to be considered for nomination, the person is asked to provide additional information regarding his or her background, his or her specific skills, experience and qualifications for Board service, and any direct or indirect relationships with the company.Company. In addition, one or more interviews may be conducted with committee and Board members and committee members may contact one or more references provided by the candidate or others who would have first-hand knowledge of the candidate's qualifications.

        In evaluating the qualifications and attributes of all candidateseach potential candidate (including incumbent directors) for nomination or re-nomination,renomination, the committee considers:

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the candidate's independence,qualifications, consisting of his/her knowledge (including relevant industry knowledge), understanding of the Company's businesses, experience, skills, substantive areas of expertise, financial literacy, diversity,innovative thinking, business judgment, achievements and other factors required to be considered under applicable laws, rules or regulations;



•

the candidate's attributes, comprising independence, personal and professional integrity, character, business judgment, achievements, reputation, ability to represent the interests of all shareholders, time availability in light of other commitments, dedication, absence of conflicts of interest, diversity, appreciation of multiple cultures, commitment to deal responsibly with social issues and other stakeholder concerns and other factors required to be considered under applicable laws, rules or regulations or that the committee considers appropriate in the context of the needs of the Board;




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familiarity with and respect for corporate governance requirements and practices;



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with respect to incumbent directors, the annual self-evaluation of the individual director, his or her current qualifications and his or her contributions to the Board;



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the current composition of the Board and its committees; and



•

intangible qualities including the compatibility of the candidateability to ask difficult questions and, simultaneously, to work collegially with members of the Board.Board, as well as to work effectively with management.

        The Board considers the recommendations of the Nominating and Corporate Governance Committee and then makes the final decision whether to approve and extend an invitation to a candidate to join the Board upon appointment or election, subject to any approvals required by law, rule or regulation.

        Ms. Fowler and Mr. Russell, both of whom are new nominees for election as HEI directors but are currently directors of Hawaiian Electric Company and American Savings Bank, respectively, were highly recommended by the Nominating and Corporate Governance Committee based on its observations of the performance of these individuals as directors of these HEI subsidiaries and taking into account their strong experience in the electric power and financial services industries, respectively. Ms. Fowler was recruited to the board of directors of Hawaiian Electric Company in 2009 and Mr. Russell to the American Savings Bank board in 2010, in each instance with the assistance of an international executive search firm.


Does the Board consider diversity in identifying nominees for the Board?


        In assisting the Board to identify qualified director candidates, to serve on the Board, the Nominating and Corporate Governance Committee considers the diversity of race, ethnicity, gender, age, cultural background and racial minority diversityprofessional experience of the candidate. The Board believes it functions most effectively with members who collectively possess a range of substantive expertise, skills and experience in areas that are relevant to leading the companyCompany in




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accordance with the Board's fiduciary responsibilities. The Board also believes that having a board composed of members who can collectively contribute a range of perspectives, including perspectives that may arise from being female or a racial minority, improves the quality of the Board's deliberations and decisions because it enables the Board to view issues from a variety of angles and thus more richlythoroughly and completely. As the company'sCompany's operations and strategic plans and the Board's composition may evolve over time, the Nominating and Corporate Governance Committee is charged with identifying and assessing the appropriate mix of knowledge areas, qualifications and personal attributes contributed by Board members that will bring the most strategic and decision-making advantage to the company.Company.

        With operations almost exclusively in the state of Hawaii, it is natural and advantageous that our Board be composed primarilylargely of members who live and work in the state and have firsthand knowledge of and experience with our customer base and political and regulatory environment. Since a large pool of potential candidates for Board membership come from this state, the Board benefits from the unique racial diversity that exists in Hawaii. Of twelveIf the shareholders vote to elect the three director nominees proposed by the Board members, six membersfor election at the Annual Meeting, the resulting composition of the Board would be as follows: four directors (or 50%44.4%) who are Caucasian, five membersfour directors (or 42%44.4%) who are Asian American and one memberdirector (or 8%11.1%) who is Caucasian, Asian American and native Hawaiian. Three Board membersTwo (or 25%22.2%) of such nine directors, including current nominees, are female.

        The Board also recognizes that, due to Hawaii's geographic isolation from the continental United States and the comparatively small number of public companies, banks and regulated utilities based in Hawaii, the Board also benefits from having directors who have gained business experience at companies located in the continental United Statesother states because those Board members can and have contributed valuable information about experiences they have had working at or serving on the boards of other public




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companies and companies in similar industries, which also contributes to the breadth of perspectives on the Board.


How can shareholders communicate with the directors?


        Interested parties, including shareholders, desiring to communicate with the Board, any director or the nonmanagement or independent directors as a group regarding matters pertaining to the business or operations of HEI may address their correspondence in care of the Corporate Secretary, Hawaiian Electric Industries, Inc., P.O. Box 730, Honolulu, HI 96808-0730. The HEI Corporate Secretary may review, sort and summarize all such correspondence in order to facilitate communications to the Board. In addition, the HEI Corporate Secretary has the authority and discretion to handle any director communication that is an ordinary course of business matter, matter—including routine questions, complaints, comments and related communications that can appropriately be handled by management. Directors may at any time request copies of all correspondence addressed to them. The charter of the HEI Audit Committee, which is available for review at www.hei.com, sets forth procedures for submitting complaints or concerns regarding financial statement disclosures, accounting, internal accounting controls or auditing matters on a confidential, anonymous basis.





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Does the Board evaluate itself?


        The Board conducts an annual evaluation to determine whether it and its committees are functioning effectively. In addition, each director annually evaluates his or her performance as a director and members of the Audit, Compensation and Nominating and Corporate Governance Committees annually evaluate the performance of each committee on which he or she serves. The evaluation process is overseen by the Nominating and Corporate Governance Committee, in consultation with the Chairman. The chairperson of the Nominating and Corporate Governance Committee or the Chairman may meet with individual directors to discuss their performance, as he or she deems appropriate.

Directors
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Who are the independent directors of the Board?


        Under HEI's Corporate Governance Guidelines, a majority of Board members must qualify as independent under the listing standards of the New York Stock Exchange (NYSE) and any additional requirements as determined by the Board from time to time.

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For a director to be considered independent under NYSE listing standards, the Board must determine that the director does not have any direct or indirect material relationship with HEI or its subsidiaries.subsidiaries apart from his or her service as a director. The NYSE listing standards also specify circumstances under which a director may not be considered independent, such as when the director has been an employee of the companyCompany within the last three fiscal years, if the director has had certain relationships with the company'sCompany's external or internal auditor within the last three fiscal years or when the companyCompany has made or received payments for goods or services to entities with which the director or an immediate family member (as defined by NYSE) of the director has specified affiliations and the aggregate amount of such payments in any year within the last three fiscal years exceeds the greater of $1 million or 2% of such entity's consolidated gross revenues for the last fiscal year.



•

The Board has also adopted Categorical Standards for Director Independence (HEI Categorical Standards), which are attached as Appendix B and available for review on HEI's website at www.hei.com. The HEI Categorical Standards specify circumstances under which a director may not be considered independent. In addition to the specific circumstances that would preclude an independence finding under the NYSE listing standards, the HEI Categorical Standards provide that a director is not independent where HEI and its subsidiaries have made charitable contributions to a nonprofit organizations withorganization for which the director orserves as an immediate family member (as defined in the HEI Categorical Standards) of the director has specified affiliationsexecutive officer and the aggregate amount of such contributions in any single completed fiscal year of the nonprofit organization within the last three fiscal years exceeds the greater of $1 million or 2% of such organization's total annual charitable receiptsconsolidated gross revenues for the last fiscal year.

        The Nominating and Corporate Governance Committee and the Board considered the information below, which was provided by the directors and director nominees and/or by HEI or its subsidiaries, concerning relationships between (i) HEI or its subsidiaries and (ii) the director, director nominee, the director's or director nominee's immediate family members (as defined by NYSE) or entities with




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which any of the directors, director nominees or immediate family members have certain affiliations. Based on its consideration of the relationships described below and the recommendations of the Nominating and Corporate Governance Committee, the Board determined at its meeting on February 8, 2011 that all of the nonemployee directors and director nominees of HEI (Messrs. Carroll, Fargo, Gushman, Li, Myers, Russell, Scott, Taketa, Taniguchi and Watanabe and Mses. Daniel and Plotts)Fowler) are independent. The remaining director, Ms. Lau, is the only employee director of HEI. In addition, the Board determined that Richard W. Gushman, II, who resigned from the Board effective September 30, 2010, and Diane J. Plotts, who retired from the Board at the 2010 Annual Meeting of Shareholders, were independent during their service on the Board in 2010.

•

With respect to Messrs. Gushman, Li, Scott and Taniguchi and Ms.Dr. Daniel, the Board considered the amounts paid during the last three fiscal years to purchase electricity from HEI subsidiaries, Hawaiian Electric Company or Hawaii Electric Light Company (the sole public utilities providing electricity to the islands of Oahu and Hawaii, respectively), by entities employing these directors or in which these directors have ownership interests or other affiliations. None of the amounts paid by any of these entities for electricity (excluding pass-through surcharges for fuel and for Hawaii state revenue taxes) within the last three fiscal years exceeded the thresholds in the NYSE listing standards or HEI Categorical Standards that would automatically result in a director not being independent (i.e., the greater of $1 million or 2% of such entity's consolidated gross revenues for the last fiscal year). The Board also considered that Hawaiian Electric Company and Hawaii Electric Light Company are the sole source of electric power on the islands of Oahu and Hawaii, respectively, and that the rates charged by these public utilities for electricity are fixed by state regulatory authority. Since purchasers of electricity from Hawaiian Electric Company and Hawaii Electric Light Company have no choice as to supplier and no




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ability to negotiate rates or other terms, the Board determined that these relationships do not impair the independence of these directors.





•

With respect to Messrs. Carroll, Fargo, Gushman, Li, Myers,Scott and Taketa Taniguchi, Watanabe and Mses.Dr. Daniel, and Plotts, the Board considered the amount of charitable contributions during the last three fiscal years from HEI and its subsidiaries to nonprofit organizations where these directors or their immediate family members serve as employees directors, officers or trustees.executive officers. None of the contributions made to such nonprofit organizations within the last three fiscal years exceeded the threshold in the HEI Categorical Standards that would automatically result in a director not being independent (i.e., the greater of $1 million or 2% of such organization's total annual charitable receiptsconsolidated gross revenues for the last fiscal year). In addition, no donation made by the companyCompany exceeded $200,000 per entity in any single fiscal year during the last three fiscal years. In determining that none of these relationships affected director independence, the Board considered that companyCompany policy requires that charitable contributions from HEI or its subsidiaries that directly benefitto entities from whichwhere an HEI director receives compensation areserves as an executive officer, and where the director has a direct or indirect material interest, and the aggregate amount donated by HEI and its subsidiaries to such organization would exceed $120,000 in any single fiscal year, be pre-approvedpreapproved by the Nominating and Corporate Governance Committee and ratified by the Board.



•

With respect to Messrs. Carroll Gushman, Li,and Watanabe and Mses.Dr. Daniel, and Plotts, the Board considered preferential rate mortgage loans made to these nonemployee directorsthem by HEI's subsidiary, American Savings Bank, including the preferential rate mortgage loans described under "Other Relationships and Related Person Transactions—Are there any related person transactions with HEI or its subsidiaries?" below and determined that none of these relationships affected the independence of these directors.did not affect their independence. As of June 30, 2006, American Savings Bank no longer extends preferential rate loans to directors. Preferentialdirectors and, effective as of January 2011, no HEI nonemployee director continues to have a preferential rate mortgage loans existing on June 30, 2006, including those to the directors named above, were grandfathered.loan from American Savings Bank.



•

With respect to Messrs. Gushman, Scott, Taketa, Taniguchi and Watanabe, the Board considered other director or officer positions held by those directors at entities for which another HEI director or




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officer serves as a director or trustee and determined that none of these relationships affected the independence of these directors. None of these relationships resulted in a compensation committee interlock or would automatically preclude an independence finding under the NYSE listing standards or HEI Categorical Standards.



•

With respect to Mr. Carroll, the Board considered that his son iswas employed in a nonofficer position by HEI'sHEI subsidiary American Savings Bank until early 2010 and determined that this relationship doesdid not impairaffect Mr. Carroll's independence as a director.


How often did the Board meet in 2010?


        In 2010, there were nine regular meetings and no special meetings of the Board. All directors attended at least 75% of the combined total number of meetings of the Board and Board committees on which they served.


Does the Board meet in executive session without management present?


        The nonemployee directors meet regularly in executive sessions without management present. In 2009,2010, these sessions were chaired by Mr. Watanabe, who is the Chairman of the Board and an independent nonemployee director. Mr. Watanabe may request from time to time that other nonemployee directors chair the executive sessions.


Board of Directors

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How often did the Board of Directors meet in 2009?


        In 2009, there were nine regular meetings and one special meeting of the Board of Directors. All directors attended at least 75% of the combined total number of meetings of the Board and Board committees on which they served.


Did all directors attend last year's Annual Meeting?


        AllTen of HEI's twelve directors attended the 2009 annual meeting2010 Annual Meeting of shareholders.Shareholders. HEI encourages all directors to attend each year's Annual Meeting of Shareholders.


Does the Board evaluate itself?


        The Board conducts annual meetingevaluations to determine whether it and its committees are functioning effectively. In addition, each director annually evaluates his or her performance as a director and each member of shareholders.the Audit, Compensation and Nominating and Corporate Governance Committees annually evaluates the performance of each committee on which he or she serves. The evaluation process is overseen by the Nominating and Corporate Governance Committee, in consultation with the Chairman. The chairperson of the Nominating and Corporate Governance Committee or the Chairman may meet with individual directors to discuss their performance, as he or she deems appropriate.




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Committees of the Board

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What committees has the Board established and how often did they meet?


        The Board of Directors has four standing committees: Audit, Compensation, Executive and Nominating and Corporate Governance. Members of these committees are appointed annually by the Board, taking into consideration the recommendationrecommendations of the Nominating and Corporate Governance Committee. The table below shows current committee members during 2010 and the number of meetings of each committee held in 2009.2010.

Name		Audit		Compensation		Executive		Nominating and Corporate Governance			Audit		Compensation		Executive		Nominating and Corporate Governance
Don E. Carroll				X									X
Shirley J. Daniel		X									X
Thomas B. Fargo(1)		X		X	(2)						X		X	(2)			X
Richard W. Gushman, II(3)								X									X
Constance H. Lau (1)(4)						X									X
Victor H. Li				X									X
A. Maurice Myers				X									X
Diane J. Plotts(5)		X	(2)	X		X					X	(2)	X		X
James K. Scott		X						X			X						X
Kelvin H. Taketa								X	(2)								X	(2)
Barry K. Taniguchi(6)		X									X	(2)			X
Jeffrey N. Watanabe						X	(2)								X	(2)
Number of Meetings in 2009		4		4		0		4
Number of Meetings in 2010											5		8		0		3

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(1)

Mr. Fargo became a member of the Nominating and Corporate Governance Committee on October 1, 2010 and resigned from the Audit Committee on October 15, 2010.



(2)

Committee Chairperson.



(3)

Mr. Gushman resigned from the Board and the Nominating and Corporate Governance Committee, effective September 30, 2010.



(4)

Ms. Lau is an employee director. All other directors have been determined to be independent. See "Corporate Governance—"Board of Directors—Who are the independent directors of the Board?" above.



(2)(5)

Ms. Plotts retired from the Board and the committees on which she served, effective at the 2010 Annual Meeting of Shareholders.



(6)

Mr. Taniguchi replaced Ms. Plotts as a member of the Executive Committee Chairperson.and became chairperson of the Audit Committee upon her retirement from the Board at the 2010 Annual Meeting of Shareholders.




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What are the primary functions of each of the four committees?


        The primary functions of HEI's standing committees are described below. Each committee operates and acts under written charters that are approved by the Board and available for review on HEI's website at www.hei.com. Each of the Audit, Compensation and Nominating and Corporate Governance Committees may form subcommittees of its members and delegate authority to its subcommittees.

Audit Committee

        The Audit Committee is responsible for overseeing (1)(i) HEI's financial reporting processes and internal controls, (2)(ii) the performance of HEI's internal auditor, (3)(iii) risk assessment and risk management policies set by management and (4)(iv) the Corporate Code of Conduct compliance program for HEI and its subsidiaries. In addition, thethis committee is directly responsible for the appointment, compensation and oversight of the independent registered public accounting firm that audits HEI's consolidated financial statements and maintains procedures for receiving and reviewing confidential




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reports to the committee of potential accounting and auditing concerns. See "Audit Committee Report" below for additional information about the Audit Committee.

        All Audit Committee members are independent and qualified to serve on thethis committee pursuant to NYSE and SEC requirements and the Audit Committee meets the other applicable requirements of the Securities Exchange Act of 1934. None of the Audit Committee members serve on the audit committees of more than two other public companies.

Compensation Committee

        The responsibilities of the Compensation Committee include (1)(i) overseeing the compensation plans and programs for employees, executives and nonemployee directors of HEI and its subsidiaries, including equity and incentive plans, (2)plans; (ii) reviewing the extent to which risks that may arise from the company'sCompany's compensation policies and practices, if any, may have a material adverse effect on the companyCompany and recommending changes to address any such risksrisks; (iii) evaluating the compliance of American Savings Bank's incentive compensation practices under the principles for sound incentive compensation plans and (3)(iv) assessing the independence of any compensation consultant involved in determining or recommending director or executive compensation. See "Compensation Discussion and Analysis—Compensation Process" and "Other Relationships and Related Person Transactions—Compensation Committee Interlocks and Insider Participation" below for additional information about the Compensation Committee.

        All Compensation Committee members are independent and qualified to serve on thethis committee pursuant to NYSE requirements and also qualify as "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code. At least a majority of the members of the Compensation Committee qualifies as "nonemployee directors" as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934. The Compensation Committee has formed and delegated authority toDuring 2010, a Nonemployee Director Subcommittee to makemade equity grants on behalf of the committee.Compensation Committee; however, the Compensation Committee as a whole has been, and will be, performing this function in 2011. A member of the board of directors of each of Hawaiian Electric Company and American Savings Bank attends meetings of the Compensation Committee as a nonvoting representative of such director's subsidiary board.

Executive Committee

        The Executive Committee may exercise the power and authority of the Board when it appears to its members that action is necessary and a meeting of the full Board is impractical. It may also consider other matters concerning HEI that may arise from time to time between Board meetings. The




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committee is currently composed of the Chairman of the Board, who chairs the committee, the Audit Committee Chairperson and the HEI President and Chief Executive Officer.

Nominating and Corporate Governance Committee

        The functions of the Nominating and Corporate Governance Committee include (1)(i) evaluating the background and qualifications of potential nominees for the Board and for the boards of HEI's subsidiaries, (2)(ii) recommending to the Board the director nominees to be submitted to shareholders for election at the next annual meeting, (3)Annual Meeting, (iii) assessing the independence of directors and nominees, (4)(iv) recommending the slate of executive officers to be appointed by the Board and subsidiary boards, (5)(v) advising the Board with respect to matters of Board and committee composition and procedures, (6)(vi) overseeing the annual evaluation of the Board and (7)(vii) making recommendations to the Board and the boards of HEI's subsidiaries regarding corporate governance and board succession planning matters. See "Corporate Governance" above for additional information regarding the activities of the Nominating and Corporate Governance Committee.





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Director Compensation

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How is director compensation determined?


        The Board believes that a competitive package is necessary to attract and retain individuals with the experience, skills and qualifications needed for the challenging role of serving as a director of a publicly traded company with a unique blend of highly regulated industries. The Board chooses to compensate nonemployee directors using a mix of cash and HEI Common Stock to allow for an appropriate level of compensation for services, including stock awards that will align the interests of directors with those of HEI shareholders. Only nonemployee directors are compensated for their service as directors. Ms. Lau, who is the only employee director of HEI, does not receive separate or additional compensation for serving as a director.

        The Compensation Committee recommends nonemployee director compensation to the Board. In 2010, the committee asked its independent compensation consultant, Frederic W. Cook & Co. Inc. (Fred Cook & Co.), to conduct an evaluation of HEI's nonemployee director compensation practices. Fred Cook & Co. assessed the structure of HEI's nonemployee director compensation program and its value compared to competitive market practices of financial services and utility peer companies, similar to the assessments used in its executive compensation review, which is described under "Compensation Discussion and Analysis—Compensation Program—How does HEI determine the amount for each element?" below. The 2010 analysis took into consideration the duties and scope of responsibilities of directors, especially in light of HEI's unique business and regulatory structure. The Compensation Committee reviewed the analysis in determining its recommendations to the Board concerning the appropriate nonemployee director compensation, including cash retainers, stock awards and meeting fees. In its meeting on August 9, 2010, the Board approved the Compensation Committee's recommendations on changes to nonemployee director compensation to be effective on January 1, 2011. Although Ms. Lau is a member of the HEI Board, neither she nor any other executive officer of the Company participated in the determination of nonemployee director compensation. There were no increases to the standard director retainer or meeting fees paid to directors in 2010.




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        Retainer.    The following is the annual cash retainer schedule for nonemployee directors of HEI, including those who also serve as directors of certain HEI subsidiaries, paid in quarterly installments in 2010, as well as the new schedule for 2011. Nonemployee directors of HEI who also serve on Board committees, or as directors on subsidiary company boards and committees, received fees for service on such boards or committees in 2010 as indicated below. However, starting in 2011, no additional fees are paid to HEI directors for service on subsidiary company boards. HEI directors who serve on committees of subsidiary boards will continue to receive fees in 2011 for such committee service, as shown below.

		2010			2011
HEI Nonexecutive Chairman of the Board		$	250,000		$	250,000
HEI Director			40,000			65,000
HEI Audit Committee Chair			15,000			15,000
HEI Compensation Committee Chair			10,000			15,000
HEI Nominating and Corporate Governance Committee Chair			5,000			10,000
HEI Audit Committee Member			6,000			6,000
HEI Compensation Committee Member			4,000			6,000
HEI Nominating and Corporate Governance Committee Member			4,000			4,000
American Savings Bank Director (who is also an HEI Director)			25,000			—
Hawaiian Electric Company Director (who is also an HEI Director)			25,000			—
American Savings Bank Audit Committee Chair			12,500			12,500
Hawaiian Electric Company Audit Committee Chair			10,000			10,000
American Savings Bank Audit Committee Member			5,000			5,000
Hawaiian Electric Company Audit Committee Member			4,000			4,000

        Meeting Fees.    Nonemployee directors of HEI and its subsidiary boards are also entitled to meeting fees for each meeting attended after the minimum number of meetings specified below.

		2010			2011
HEI Audit Committee Member		$	1,250 per meeting after 8 meetings		$	1,500 per meeting after 6 meetings
American Savings Bank Audit Committee Member		$	1,000 per meeting after 8 meetings		$	1,000 per meeting after 8 meetings
Hawaiian Electric Company Audit Committee Member		$	750 per meeting after 8 meetings		$	750 per meeting after 8 meetings
HEI Nominating and Corporate Governance Committee Member		$	500 per meeting after 6 meetings		$	1,500 per meeting after 6 meetings
HEI Compensation Committee Member		$	500 per meeting after 6 meetings		$	1,500 per meeting after 6 meetings

        Stock Awards.    On June 30, 2010, each HEI nonemployee director received 1,800 shares of HEI Common Stock as an annual grant under HEI's 1990 Nonemployee Director Stock Plan, as last amended and restated on May 6, 2008 (1990 Director Plan) for the purpose of further aligning directors' and shareholders' interests. Stock grants to nonemployee directors under the 1990 Director Plan are made annually on the last business day in June.

        As part of the Compensation Committee's 2010 reevaluation of nonemployee director compensation, the committee recommended and the Board approved an increase in the annual stock grants and initially fixed the amount of the grants to a specified dollar value rather than a specified number of shares. If shareholders approve the HEI 2011 Nonemployee Director Stock Plan at the




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Annual Meeting (see description below under "Proposal No. 2: Approval of 2011 Nonemployee Director Stock Plan"), HEI nonemployee directors on June 30, 2011 will receive shares of HEI Common Stock equal in value to $75,000, with the number of shares to be issued to each HEI nonemployee director to be determined based on the closing sales price of HEI Common Stock on the New York Stock Exchange on such date.

        Retirement Benefit.    Pursuant to the termination of the HEI Nonemployee Director Plan on December 17, 1996, previously retired directors continue to receive benefits in accordance with the terms of the plan. Upon their retirement from service as a director, Mr. Myers and Ms. Plotts (who retired from the Board in May 2010) are eligible to receive benefits from the plan in an annual amount of $15,000, paid quarterly, for a period equal to the number of years of their active service through December 31, 1996 (7 years for Mr. Myers and 10 years for Ms. Plotts). All benefits payable under the plan, whether commenced or not, cease upon the death of the nonemployee director.

        Deferred Compensation.    Nonemployee directors may elect to participate in the HEI Nonemployee Directors' Deferred Compensation Plan, which allows any nonemployee director to defer compensation from HEI for service as a director. The plan allows for either lump sum or installment distributions upon the retirement of the director. Upon the death of the director, the balance of the deferred account will be distributed in a lump sum to a designated beneficiary. Directors are also eligible to participate in the new 2011 Deferred Compensation Plan for HEI and Hawaiian Electric Company described under "Compensation Discussion and Analysis—Compensation Elements—Can named executive officers participate in nonqualified deferred compensation plans?" below.

        Preferential Rate Loans.    Under a program for American Savings Bank directors that has been discontinued since June 30, 2006, certain HEI directors were eligible to receive preferential rate mortgage loans because they were American Savings Bank directors at the time. When this program was discontinued, existing loans were grandfathered. Information regarding the grandfathered loans that nonemployee directors Messrs. Gushman and Watanabe and Mses. Daniel and Plotts had in 2010 is included under "Other Relationships and Related Person Transactions—Are there any related person transactions with HEI or its subsidiaries?" below. All preferential rate mortgage loans to nonemployee directors were either paid off or refinanced at market rates by January 2011.

        Health Benefits.    Directors, at their election and at their cost, may participate in the group employee medical, vision and dental plans generally made available to HEI, Hawaiian Electric Company or American Savings Bank employees.




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Director Compensation Table


        The table below shows compensation to the HEI nonemployee directors in 2010.


2010 DIRECTOR COMPENSATION TABLE


Name		Fees Earned or Paid in Cash ($) (3)			Stock Awards ($) (4)			Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (5)			All Other Compensation ($) (6)			Total ($)
Don E. Carroll			75,000			41,301			—			—			116,301
Shirley J. Daniel			71,000			41,301			—			25,560			137,861
Thomas B. Fargo			84,880			41,301			—			—			126,181
Richard W. Gushman, II (1)			55,500			41,301			—			44,513			141,314
Victor H. Li			69,000			41,301			—			—			110,301
A. Maurice Myers			70,000			41,301			6,024			—			117,325
Diane J. Plotts (2)			34,965			—			—			9,200			44,165
James K. Scott			75,000			41,301			—			—			116,301
Kelvin H. Taketa			70,000			41,301			—			—			111,301
Barry K. Taniguchi			114,221			41,301			—			—			155,522
Jeffrey N. Watanabe			341,812			41,301			—			16,630			399,743

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(1)

Mr. Gushman resigned from the Board effective September 30, 2010.



(2)

Ms. Plotts retired from the Board effective at the 2010 Annual Meeting of Shareholders.



(3)

See detail of cash retainers for board and committee service below.



(4)

Represents the value of unrestricted HEI Common Stock determined by reference to the average of the high and low sales prices of $22.945 per share on the New York Stock Exchange on June 30, 2010 of 1,800 shares of HEI Common Stock as the annual grant under the 1990 Director Plan. Nonemployee directors of HEI do not receive any restricted stock, restricted stock units or stock option awards.



(5)

Pension benefits for Mr. Myers and Ms. Plotts were frozen in 1996, when the HEI Nonemployee Director Plan was terminated. Accordingly, they no longer receive credit for their active service after 1996. For both Mr. Myers and Ms. Plotts, the change in pension value reflects only their respective ages and changes in actuarial factors, such as discount rate and mortality assumptions. Ms. Plotts had a negative change in pension value from December 31, 2009 to the date of her retirement in May 2010.



(6)

Represents the difference between the market interest rate at the time of the original loan and the preferential interest rate on loans by American Savings Bank to Messrs. Gushman and Watanabe and Mses. Daniel and Plotts. Each of these loans was made prior to 2006, when American Savings Bank established a policy to not extend preferential rate loans to directors. Preferential rate loans to directors that existed at the time this policy was established in 2006 were grandfathered. All such preferential rate loans made to nonemployee directors were either paid off or refinanced at market rates by January 2011.




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        The table below shows cash retainers paid to HEI nonemployee directors in 2010 for each board and committee (including subsidiary boards and committees) on which each director served in 2010 and for service as nonexecutive HEI Chairman in 2010.

Name		HEI Board Retainer ($)			HEI Comm. Retainer ($)			HEI Chairman of the Board Retainer ($)			HECO Board Retainer ($)			HECO Audit Comm. Retainer ($)			ASB Board Retainer ($)			ASB Audit Comm. Retainer ($)			Total (1) ($)
Don E. Carroll			40,000			5,000			—			—			—			25,000			5,000			75,000
Shirley J. Daniel			40,000			6,000			—			—			—			25,000			—			71,000
Thomas B. Fargo			40,000			16,728			—			25,000			3,152			—			—			84,880
Richard W. Gushman (2)			30,000			3,000			—			—			—			18,750			3,750			55,500
Victor H. Li			40,000			4,000			—			—			—			25,000			—			69,000
A. Maurice Myers			40,000			5,000			—			25,000			—			—			—			70,000
Diane J. Plotts (3)			14,493			6,885			—			—			—			9,058			4,529			34,965
James K. Scott			40,000			10,000			—			—			—			25,000			—			75,000
Kelvin H. Taketa			40,000			5,000			—			25,000			—			—			—			70,000
Barry K. Taniguchi			40,000			11,753			—			25,000			4,471			25,000			7,997			114,221
Jeffrey N. Watanabe			40,000			—			250,000			25,000			—			25,000			1,812			341,812

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(1)

Additional committee meeting fees paid in 2010 were $1,000 to each of Messrs. Carroll, Fargo and Myers for attending two Compensation Committee meetings in excess of six meetings at $500 per meeting.



(2)

Mr. Gushman resigned from the Board effective September 30, 2010.



(3)

Ms. Plotts retired from the Board effective at the 2010 Annual Meeting of Shareholders.





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Proposal No. 2: Approval of 2011 Nonemployee Director Stock Plan

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        HEI's Compensation Committee and Board believe that the use of stock grants as a major part of the compensation to the nonemployee directors of HEI and its operating subsidiaries, whose oversight contributions are essential to the growth and success of HEI's business, best strengthens the commitment of these individuals to HEI and its subsidiaries, motivates such persons to faithfully and diligently perform their oversight responsibilities and attracts and retains competent and experienced persons whose efforts will contribute to the growth and success of HEI. To that end, on February 8, 2011, the Board approved the Hawaiian Electric Industries, Inc. 2011 Nonemployee Director Stock Plan (2011 Director Plan), subject to the approval of HEI's shareholders. The purpose of the 2011 Director Plan is to motivate nonemployee directors of HEI and its operating subsidiaries to continue as directors, to align their interests with those of HEI's shareholders, and to increase their efforts to promote HEI's business. Subject to shareholder approval of the 2011 Director Plan, no new awards will be made under HEI's 1990 Nonemployee Director Stock Plan, as last amended and restated on May 6, 2008 (1990 Director Plan). If shareholders do not approve the 2011 Director Plan, it will have no effect and awards may continue to be granted under the 1990 Director Plan. There currently are 46,678 shares of HEI Common Stock reserved for issuance and unissued under the 1990 Director Plan.

        The 2011 Director Plan is being submitted to HEI's shareholders in order to ensure compliance with the New York Stock Exchange (NYSE) listing standards concerning shareholder approval of equity compensation plans. The NYSE listing standards provide that shareholders must be given the opportunity to vote on all equity compensation plans and material revisions to such plans. The 2011 Director Plan is an equity compensation plan (i.e., a plan that provides for the delivery of HEI Common Stock to our nonemployee directors as compensation for their services) and we are asking for your approval of the 2011 Director Plan in compliance with the NYSE listing standards. The purposes,




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terms and benefits under the 2011 Director Plan are summarized below and the full text of the plan is attached to this Proxy Statement as Appendix A.

        Under the NYSE listing standards, the 2011 Director Plan will be approved if a majority of the votes cast are in favor of such approval, so long as the total votes cast represent more than 50% of all shares entitled to vote. Abstentions will be considered votes cast and will have the same effect as voting against the proposal. Broker nonvotes will have no effect on the outcome of the vote on the 2011 Director Plan.

        YOUR BOARD RECOMMENDS THAT YOU VOTE"FOR" APPROVAL OF THE 2011 NONEMPLOYEE DIRECTOR STOCK PLAN.


What are the purposes and terms of the 2011 Director Plan?


        The following is a summary of the material terms of the 2011 Director Plan and is qualified in its entirety by the full text of the 2011 Director Plan, which is attached as Appendix A to this Proxy Statement.

        Purposes.    The 2011 Director Plan, if approved by shareholders, will replace the 1990 Director Plan. The purposes of the 2011 Director Plan are to:

•

align the personal interests of nonemployee directors of HEI and its operating subsidiaries with the interests of HEI and its shareholders in enhancing shareholder value;



•

provide nonemployee directors of HEI and its operating subsidiaries with incentives to maintain their status as directors and to improve HEI's performance by increasing the level of stock owned by nonemployee directors;



•

encourage and assist nonemployee directors to meet HEI's share ownership guidelines; and



•

provide an additional means of attracting and retaining nonemployee directors.

        Administration of the 2011 Director Plan.    The 2011 Director Plan will be administered in the discretion of a committee which may be the Compensation Committee, a subcommittee of the Compensation Committee or such other committee as may be appointed as administrator from time to time by the Board. The initial administrator of the 2011 Director Plan will be the Compensation Committee.

        Eligibility to Participate.    The 2011 Director Plan provides benefits to individuals who, on the grant date, are nonemployee directors of HEI and nonemployee directors of HEI operating subsidiaries approved as participating companies by the Board (initially Hawaiian Electric Company and American Savings Bank). If the 2011 Director Plan is approved at the Annual Meeting, we expect that eight HEI nonemployee directors, two American Savings Bank nonemployee directors (who are not also HEI directors) and four Hawaiian Electric Company nonemployee directors (who are not also HEI directors) will be eligible to participate in the Plan in 2011.

        Shares Reserved for Issuance under the Plan.    The number of shares of HEI Common Stock reserved for issuance under the 2011 Director Plan is 300,000, subject to adjustment for certain changes in capitalization. The shares to be issued under the Plan may, in whole or in part, be authorized but unissued shares of HEI Common Stock or shares that may be reacquired by HEI in the open markets in private transactions or otherwise. The closing price per share of HEI Common Stock on March 2, 2011 was $24.63.

        Benefits Under the Plan.    The 2011 Director Plan provides for the grant of shares of HEI Common Stock (Stock Payments) to eligible nonemployee directors annually on the Grant Date, which will be each June 30 (or on the next preceding business day if June 30 is not a business day) or, in the case of




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a person who is elected or appointed to serve as a new director after June 30, on the date that such person first becomes a director. The amount of HEI Common Stock to be issued to nonemployee directors under the Plan may be expressed either as a specified number of shares or as a specified dollar value. If the Stock Payment is expressed as a dollar value, then the number of shares to be issued on the Grant Date is determined by dividing the specified dollar value by the Fair Market Value (as defined in the Plan) of a share of HEI Common Stock on the Grant Date, with any resulting fractional share to be paid in cash.

        Under the 2011 Director Plan, individuals who are serving as nonemployee directors of HEI, Hawaiian Electric Company or American Savings Bank on June 30, 2011 (the 2011 Grant Date) will be entitled to the following Stock Payments:

•

The nonemployee directors of HEI on the 2011 Grant Date will be entitled to a Stock Payment valued at $75,000. No additional Stock Payment will be payable to an HEI nonemployee director who also serves as a director of a subsidiary.



•

Each nonemployee director of Hawaiian Electric Company and each nonemployee director of American Savings Bank who is not also a director of HEI on the 2011 Grant Date will be entitled to a Stock Payment valued at $40,000. Only one Stock Payment will be payable to any such director even if he or she serves as a director of both Hawaiian Electric Company and American Savings Bank.

        The amount of the Stock Payment to which participating nonemployee directors may be entitled, and whether the Stock Payment is expressed as a dollar value or in number of shares, may be changed in the discretion of the committee, subject to Board approval and without shareholder approval, but may not be changed more than once between annual meetings of shareholders.

        Shareholder Rights.    No participant in the 2011 Director Plan shall have any rights as an HEI shareholder with respect to any shares of HEI Common Stock except if and when such shares are issued. Recipients of Stock Payments shall have all the rights of a shareholder from and after the Grant Date with respect to the issued shares of HEI Common Stock granted. Once issued as a Stock Payment, the shares of HEI Common Stock thus granted are not subject to forfeiture.

        Transferability of Rights.    No participant in the 2011 Director Plan may assign the right to receive any Stock Payment or any other right or interest under the Plan, contingent or otherwise, or cause or permit any encumbrance, pledge or charge of any nature to be imposed on any such right to receive a Stock Payment. Each participant is responsible for complying with all applicable federal and state securities and other applicable laws relating to participation in the Plan or the shares received as a Stock Payment.

        Amendment or Termination of the Plan.    The Board in its discretion may amend, suspend or terminate the 2011 Director Plan at any time. However, no such amendment will, without approval of the shareholders of HEI, change the class of persons eligible to receive Stock Payments under the Plan (except for changing the subsidiaries whose nonemployee directors are eligible to participate in the Plan) or otherwise modify the requirements as to eligibility for participation in the Plan, or increase the total number of shares of HEI Common Stock which may be issued under the Plan (except for adjustment in the event of certain changes in capitalization). Moreover, no amendment, suspension or termination of the 2011 Director Plan will impair or adversely affect any right or obligation under any Stock Payment previously granted under the Plan. Notwithstanding the foregoing, the Board may, without further action by the shareholders of HEI, amend the 2011 Director Plan or modify the grants of stock under the Plan as described above under "Benefits Under the Plan" or in response to changes in securities or other laws, or rules, regulations or regulatory interpretations thereof, applicable to the Plan, or to comply with stock exchange rules or requirements.




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        Term of the Plan.    The 2011 Director Plan will become effective if it is approved by shareholders at the Annual Meeting and, unless terminated earlier by the Board, will terminate on April 30, 2021.


New 2011 Director Plan Benefits


        The number of shares to be received by nonemployee directors under the 2011 Director Plan cannot be determined since the ultimate value of grants under the Plan depends on several factors, including the market value of HEI Common Stock, whether awards are denominated in dollar value or number of shares, the number of directors and the boards on which they serve and the level of future grants under the Plan. The following table shows the number of shares of HEI Common Stock which current nonemployee directors would have been entitled to receive if the 2011 Director Plan had been in effect in 2010, based on the Fair Market Value of HEI Common Stock on June 30, 2010. The table also shows the estimated number of shares that current nonemployee directors and director nominees who are expected to be serving as such on June 30, 2011 will receive assuming that the Fair Market Value of HEI Common Stock on that date is the Fair Market Value of HEI Common Stock on the record date (March 2, 2011).


NEW PLAN BENEFITS


Nonemployee Director		Number of Shares of HEI Common Stock if 2011 Director Plan had been in effect on 6/30/10 (2)			Number of Shares of HEI Common Stock Estimated to be granted on 6/30/11 (3)
Don E. Carroll (1)			3,342			1,624
Shirley J. Daniel (1)			3,342			1,624
Thomas B. Fargo			3,342			3,045
Victor H. Li			3,342			3,045
A. Maurice Myers			3,342			3,045
James K. Scott			3,342			3,045
Kelvin H. Taketa			3,342			3,045
Barry K. Taniguchi			3,342			3,045
Jeffrey N. Watanabe			3,342			3,045
Nonemployee Director Nominee
Peggy Y. Fowler			—			3,045
Keith P. Russell			—			3,045

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(1)

Mr. Carroll and Ms. Daniel will not be directors of HEI on June 30, 2011, but are expected to be nonemployee directors of Hawaiian Electric Company and American Savings Bank, respectively, and hence eligible to receive Stock Payments in those capacities.



(2)

Based on the closing price on June 30, 2010 of HEI Common Stock on the New York Stock Exchange of $22.44 per share. Each director would also have received a cash payment of $4.49 in lieu of a fractional share had the 2011 Director Plan been in place in 2010.



(3)

Based on the closing price on March 2, 2011 (the record date) of HEI Common Stock on the New York Stock Exchange of $24.63 per share. HEI directors and directors of subsidiary boards who are not also directors of HEI would also receive a cash payment of $1.65 and $0.88, respectively, in lieu of a fractional share based on this assumed stock price.




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Equity Compensation Plan Information


        Information as of December 31, 2010 about HEI Common Stock that may be issued under all of the Company's equity compensation plans was as follows:

Plan category		(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)			(b) Weighted-average exercise price of outstanding options, warrants and rights (2)			(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (3)
Equity compensation plans approved by shareholders			1,131,174		$	20.76			3,953,169
Equity compensation plans not approved by shareholders			—			—			—
Total			1,131,174		$	20.76			3,953,169

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(1)

This column includes the number of shares of HEI Common Stock which may be issued under the HEI 2010 Equity Incentive Plan (EIP) and the 1987 Stock Option and Incentive Plan (SOIP) on account of awards outstanding as of December 31, 2010, including: (a) 77,500 shares that may be issued with respect to restricted stock units granted in 2010 under the EIP assuming that all service conditions are met; (b) 215,500 shares that may be issued under the SOIP upon exercise of outstanding nonqualified stock options and 26,240 of dividend equivalent shares accrued as of December 31, 2010 for such options; (c) 573,244 shares that may be issued under the SOIP with respect to awards made under the 2009-2011 Long-Term Incentive Plan (LTIP) and the 2010-2012 LTIP, assuming that the performance goals for these awards are met at the maximum levels; (d) 69,000 shares issuable with respect to restricted stock units which were granted in 2009 assuming that all service conditions are met and (e) 169,690 shares that could have been issued under performance awards granted in 2008 under the 2008-2010 LTIP and the 2008-2010 supplemental LTIP assuming achievement of all goals at the maximum level and calculated using the closing price of HEI Common Stock on December 31, 2010. The number of shares that may be issued under the LTIP awards is included at the maximum level to show the maximum dilution that may result from these awards; however, shares will only be issued under these awards based upon achievement of the performance goals, and it is expected that a lesser number of shares will ultimately be awarded because it is unlikely that all performance goals will be achieved at maximum levels. For example, the actual number of shares issued under the 2008-2010 LTIP and supplemental LTIP awards was 119,045 shares. The number of shares that may be issued upon the exercise of 450,000 stock appreciation rights (SARs) is not included in this column because the number of shares issued upon the exercise of the SARs is based upon the appreciation in stock price from the date of grant to the date of exercise, converted into shares. As of December 31, 2010, the closing price of HEI Common Stock was $22.79, which was less than the weighted-average exercise price of the shares of $26.13, and accordingly such rights had no intrinsic value and no shares may be issued upon their exercise.



(2)

The weighted average exercise price in this column relates only to the 215,000 shares of HEI Common Stock that may be issued upon exercise of outstanding options. Excluded from the weighted average exercise price calculation are shares that may be issued without the payment of additional consideration (including the LTIP and restricted stock unit awards) and the SARS (which had no intrinsic value at December 31, 2010).



(3)

This represents the number of shares available as of December 31, 2010 for future awards, including 3,904,491 shares available for future awards under the EIP and 46,678 shares available for future awards under the 1990 Director Plan. As of May 11, 2010, no new awards may be granted under the SOIP. The shares remaining available for issuance under the 1990 Director Plan may be issued in the form of unrestricted HEI Common Stock, but such shares will no longer be available for issuance if the 2011 Director Plan is approved by shareholders at the Annual Meeting.




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Proposal No. 3: Advisory Vote on the Frequency of Future Advisory Votes on HEI'S Executive Compensation

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        HEI's shareholders are being asked to cast an advisory vote on a resolution approving HEI's executive compensation. The advisory vote on executive compensation, described in Proposal No. 4 below, is referred to as a "say-on-pay" vote. This Proposal No. 3 affords shareholders the opportunity to cast an advisory vote onhow often HEI should include a say-on-pay vote in its proxy materials for future annual shareholder meetings. Under this Proposal No. 3, shareholders may vote to have the say-on-pay vote every year, every two years or every three years, or they may abstain from voting on this proposal.

        HEI believes that, at least over the next several years, say-on-pay advisory votes should be conducted every year so that shareholders may annually express their views on the Company's executive compensation. Accordingly, unless shareholders express a strong preference that say-on-pay advisory votes be conducted less frequently, the Board anticipates that it will conduct a say-on-pay vote again next year. The Compensation Committee, which administers the Company's executive compensation programs, and the Board will value the opinions expressed by shareholders in these votes and will consider the outcome of these votes in making decisions on executive compensation.

        YOUR BOARD RECOMMENDS THAT YOU VOTE FOR A FREQUENCY OF EVERY1 YEAR FOR THE ADVISORY VOTE ON EXECUTIVE COMPENSATION (AS OPPOSED TO EVERY 2 YEARS OR EVERY 3 YEARS OR ABSTAINING).





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Proposal No. 4: Advisory Vote on Resolution Approving HEI'S Executive Compensation

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        In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, HEI is submitting for shareholder advisory vote a proposal on executive compensation, commonly known as a "say-on-pay" proposal. The Board is aware of the significant interest in executive compensation matters on the part of investors and the general public, and recognizes that shareholders should have the ability to voice their views on the Company's compensation policies and practices for executives.

        The "say-on-pay" proposal gives HEI's shareholders the opportunity to endorse or not endorse the Company's executive compensation program through their vote on the following resolution:

Resolved: that shareholders approve HEI's executive compensation, including its executive compensation policies and practices and the compensation for the named executive officers, as set forth under "Compensation Discussion and Analysis" and "Executive Compensation" in the Proxy Statement for the 2011 Annual Meeting of Shareholders.

        HEI's primary goals for its executive compensation program are to incent a high level of business performance that creates value for its shareholders and to attract, motivate and retain talented executives who will provide leadership for the Company's success. The Compensation Committee, which is composed entirely of independent directors, seeks to accomplish these goals in a manner that aligns the interests of its executives with the long-term interests of its shareholders and rewards achievement of the Company's financial, operational and strategic goals.

The Compensation Committee and Board believe that these are the appropriate goals for HEI's executive compensation program and that HEI's compensation is properly designed to achieve these goals. Accordingly, the Compensation Committee and Board recommend that you vote in favor of the shareholder resolution approving HEI's executive compensation.




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Compensation Program Design Summary


        In making its compensation decisions, the Compensation Committee considered the following primary components of HEI's 2010 executive compensation program, which are described in greater detail below under "Compensation Discussion and Analysis" and "Executive Compensation," and how these components support HEI's compensation goals. Given the complicated nature of the Company's heavily-regulated subsidiaries, the Compensation Committee believes it is imperative to provide, and believes it has provided, an appropriate mix of compensation components at competitive levels relative to the Company's peers in order to attract and retain the highly qualified executives necessary to manage the Company's operations and motivate executives to achieve a high level of performance that generates shareholder value.

Compensation Element/Eligibility		Description		Linkage to Compensation Objectives
CURRENT YEAR PERFORMANCE
Base Salary All HEI and subsidiary executives, including named executive officers		Salary is a market-competitive, fixed level of compensation.		Attract and retain qualified leaders capable of a high level of performance that builds shareholder value.
Annual Incentive All HEI and subsidiary executives, including named executive officers		Cash award based on achievement of Company goals during the year. Combined with salary, target level of annual incentive provides a market-competitive total cash opportunity. Actual annual incentive payout depends on Company performance. Poor performance yields no incentive payment.		Motivate high business performance in furtherance of creating value for shareholders. Attract and retain qualified leaders capable of a high level of performance that builds shareholder value. Vary compensation based on individual and business unit performance.
LONG-TERM INCENTIVE PLAN
Long-term Performance-based Awards Approximately 25 HEI and subsidiary executives based on job responsibilities, including named executive officers		Long-term incentive award opportunities based on performance and retention objectives for each executive. 2010-2012 long-term incentive plan awards are payable 100% in shares of HEI Common Stock. Award value at different performance levels (minimum, target and maximum) is converted to the number of shares by dividing the planned value by the closing sale price on date of establishing the award opportunity. Level of award is determined at the end of the three-year performance period based on achieving set goals. Payment in HEI shares upon completion of three-year performance period links the compensation value to the long-term performance of HEI. Poor performance yields no incentive payment.		Align executive and shareholder interests and create long-term value. Attract and retain qualified leaders capable of a high level of performance that builds shareholder value. Motivate high business performance in furtherance of creating value for shareholders. Encourage sustained, long-term growth by linking portion of compensation to Company performance over three years.




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Compensation Element/Eligibility		Description		Linkage to Compensation Objectives
Annual Stock-Based Grant Approximately 15 HEI and subsidiary executives, including named executive officers		Annual equity grants made in the form of restricted stock units (RSUs). The amount of an annual equity grant is a percentage of long-term compensation at market-competitive levels. Awards vest over 4 years.		Align executive and shareholder interests and create long-term value. Attract and retain qualified leaders capable of a high level of performance that builds shareholder value. Motivate high business performance in furtherance of creating value for shareholders.
RETIREMENT, PENSION & SAVINGS
HEI Retirement Plans All HEI and subsidiary executives, including named executive officers, except for American Savings Bank executives		Executives participate in the defined benefit pension plans and savings plans under the same terms and conditions as all HEI employees.		Attract and retain qualified leaders capable of a high level of performance that creates shareholder value. Enhance long-term employee well-being.
American Savings Bank 401(k) Plan Select American Savings Bank executives, including its president and CEO (who is a named executive officer)		Separate 401(k) plan established to encourage full-career retention of key American Savings Bank executives.		Attract and retain qualified leaders capable of a high level of performance that creates shareholder value. Enhance long-term employee well-being.
HEI Excess Pay Plan HEI and subsidiary executives (other than American Savings Bank) with compensation expected to exceed applicable IRS limits, including named executive officers		Established in accordance with U.S. Department of Labor and Internal Revenue Service guidelines to provide employees with the ability to earn retirement benefits correlated to salary compensation in excess of limits applicable to defined benefit pension plans.		Attract and retain qualified leaders capable of a high level of performance that creates shareholder value. Enhance long-term employee well-being.
HEI Deferred Compensation Plan All HEI and subsidiary executives, including named executive officers, except for American Savings Bank executives		Nonqualified plan for executives and directors of HEI and Hawaiian Electric Company to defer portions of cash compensation, with certain limitations.		Attract and retain qualified leaders capable of a high level of performance that creates shareholder value. Enhance long-term employee well-being.
OTHER BENEFITS
Change-in-Control Agreements Named executive officers and select HEI and subsidiary executives (7 participants total)		Double-trigger agreements, with 1 times to 3 times payment multiples. (Double-trigger = change in control followed by qualifying loss of employment.)		Attract and retain qualified leaders capable of a high level of performance that creates shareholder value. Encourage focused attention of executives on performance in furtherance of the best interests of shareholders.
HEI Executive Death Benefit Plan Named executive officers employed prior to September 9, 2009		Form of insurance that provides death benefits to executive's beneficiaries in event of executive's death; plan frozen to those participants who were employees as of September 9, 2009.		Enhance long-term employee well-being.


Pay-for-Performance


        The Compensation Committee's allocation of the executive compensation components demonstrates its commitment to pay the Company's executives based on the Company's business performance.




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•

On average, 39% of the targeted cash compensation (base salary plus annual incentive) for 2010 for the named executive officers was based on business results and performance, with the remainder coming from base salary.



•

In addition, 52% of the Chief Executive Officer's total direct compensation (base salary, annual incentives, long-term incentive plan awards for the three-year performance period ended and restricted stock units granted during the year) and 45% (on average) of the total direct compensation of the other named executive officers was in long-term compensation elements (restricted stock units and long-term incentive awards). This emphasis on long-term compensation ensures that the interests of the named executive officers are aligned with the long-term interests of shareholders.

        The following chart demonstrates the relative mix of compensation elements that made up total direct compensation for the named executive officers in 2010:



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*

Percentages for annual and long-term incentives are based on target levels; actual award amounts will be determined at the end of the applicable performance period. Information is not provided in the above table for Mr. Wacker because he did not commence his employment with American Savings Bank until November 15, 2010.

        The financial and strategic objectives HEI executives must achieve to receive awards under HEI's annual and long-term incentive plans are set at challenging levels to motivate a high degree of performance, with an emphasis on longer-term financial success and prudent risk management. Certain performance metrics under the annual incentive plan (net income and return on average common equity) and the long-term incentive plan (net income, total return to shareholders and performance relative to the Edison Electric Institute Index) focus executives on building the value of the HEI enterprise and sustaining that value over time. By tying incentives to sustained value creation, HEI's incentive plans align each executive's interests with the interest of shareholders in long-term growth in the value of their ownership stake in HEI.

        As a result of the Compensation Committee's approach to executive compensation, the annual total direct compensation received by HEI's Chief Executive Officer over the past five years shows a consistent correlation to the performance of the Company. The graph below compares the Chief Executive Officer's annual total direct compensation to HEI's consolidated net income. The dotted line shows adjusted (or non-GAAP) net income, which adjusts GAAP net income to exclude the effects of certain actions taken by American Savings Bank in furtherance of its balance sheet restructure and its multi-year performance improvement initiative (as detailed in the notes to the table).




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Correlation of CEO Annual Total Direct Compensation and HEI Consolidated Net Income




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(1)

Adjustments were made to arrive at the non-GAAP measurement of HEI Consolidated Net Income for long-term incentive plan award purposes for 2008 (excluded from expenses a $35.6 million charge related to American Savings Bank's balance sheet restructuring) and 2009 (excluded from expenses $9.3 million in other than temporary impairment charges, $1.1 million in severance payments, $2.2 million in lease buyout charges and $19.3 million for losses in the sale of American Saving Bank's private-issue mortgage-related securities portfolio).



(2)

HEI's CEO voluntarily waived a $753,999 bonus that she earned for 2009. As a result, her 2009 total direct compensation was lower, and the difference between her 2009 total direct compensation and 2010 total direct compensation was correspondingly greater, than it otherwise would have been. For further detail on 2010 compensation elements, see "Executive Compensation—Summary Compensation Table".


Alignment with Shareholder Interests


        A significant portion of the named executive officers' 2010 total direct compensation took the form of equity awards (restricted stock units and awards under the long-term incentive plan) and HEI's share ownership guidelines require the named executive officers to hold a significant amount of HEI Common Stock to further align their interests with those of shareholders over the long term. In 2010 the Compensation Committee increased the portion of total direct compensation for the named executive officers that will be in the form of equity in the future by designing the 2010-2012 long-term incentive plan awards to be 100% in the form of equity, rather than a portion in cash and a portion in equity as in previous long-term incentive plans.


Effect of Advisory Vote


        While the advisory vote on executive compensation is nonbinding, the Board understands that it is useful and appropriate to seek the views of shareholders when considering the design and initiation of executive compensation programs. Accordingly, the Board and the Compensation Committee will review the voting results and seek to determine the cause or causes of any significant negative vote. Voting results provide little detail by themselves, and the Company may consult directly with shareholders to better understand issues and concerns not previously presented. HEI expects to continue to engage regularly with shareholders concerned with executive compensation or any other matter. Shareholders who want to communicate with HEI's Board or management should visit the Company's website at www.hei.com and view "Contact Information."

        YOUR BOARD RECOMMENDS THAT YOU VOTE"FOR" APPROVAL OF THE SHAREHOLDER RESOLUTION APPROVING HEI'S EXECUTIVE COMPENSATION.




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Compensation Committee Report

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        The Compensation Committee, which is composed solely of independent directors of the Board, assists the Board in fulfilling its responsibilities with regard to compensation matters, and is responsible under its charter for determining the compensation of HEI's executive officers. The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis that follows. Based on that review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.Statement and that it be incorporated by reference into HEI's 2010 Annual Report on Form 10-K.

SUBMITTED BY THE COMPENSATION COMMITTEE OF THE
HEI BOARD OF DIRECTORS
Thomas B. Fargo, Chairperson
Don E. Carroll
Victor H. Li
A. Maurice Myers
Diane J. Plotts





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Compensation Discussion and Analysis

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Who were the named executive officers for HEI in 2009?2010?


        For 2009,2010, the named executive officers of HEI were:

1.

Constance H. Lau, President and Chief Executive Officer of HEI; Chairman of the Board of Hawaiian Electric Company (HEI subsidiary); and Chairman of the Board and Chief Executive Officer of American Savings Bank (HEI subsidiary).



2.

James A. Ajello, HEI Senior Financial Vice President, Treasurer and Chief Financial Officer since January 26, 2009.Officer.



3.

Curtis Y. Harada, HEI Vice President, Internal Audit since November 9, 2009. Mr. Harada served as HEI Controller and as HEI Acting Financial Vice President, Treasurer and Chief Financial Officer from February 1, 2008 to January 25, 2009 and as HEI Vice President, Controller and Chief Accounting Officer from January 26, 2009 to November 8, 2009. He is included as a named executive officer solely because he served as acting Chief Financial Officer for part of 2009, and he is not presently expected to be a named executive officer in future periods. Accordingly, some of the discussion and analysis below, to the extent forward-looking, is made without reference to Mr. Harada.



4.

Chester A. Richardson, HEI Senior Vice President, General Counsel, Secretary and Chief Administrative Officer. Mr. Richardson's role was expanded to include the duties of the HEI Corporate Secretary, effective September 28, 2009.



5.4.

Richard M. Rosenblum, Hawaiian Electric Company President and Chief Executive Officer.



5.

Richard F. Wacker, American Savings Bank President and Chief Executive Officer since January 1, 2009. Mr. Rosenblum succeeded T. Michael May, who retired as of December 31, 2008.November 15, 2010.



6.

Timothy K. Schools, former American Savings Bank President.President, who resigned on September 10, 2010.


Summary of Results


        Beginning in 2008, HEI initiated strategies to set both of the operating companies on a new course. Hawaiian Electric Company entered into an agreement with the state of Hawaii to help create a clean energy future for Hawaii, and American Savings Bank set new performance standards while continuing its commitment to help Hawaii's communities grow and prosper. The year 2010 saw major progress on these initiatives and HEI's unique business model continues to provide the Company with a strong balance sheet and the financial resources to invest in the strategic growth of HEI and its operating subsidiaries while providing an attractive dividend to HEI's shareholders.

In 2009,2010, HEI and its subsidiaries continued to aggressively pursue initiatives to improve fundamental operating and financial performance in order to be in a better position to weather the economic downturnimprove profitability and tocapital efficiency, grow earnings, reduce risk and improve capital efficiencybe positioned to benefit as economic conditions improve.

•

The utility subsidiaries made investments in critical reliability projects and sought timely cost recovery and return on those investments. In the face of lower kilowatthour sales and lower and slower rate relief, management took responsible action to contain and defer spending. As a




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result,

•

The utility subsidiaries focused on their critical role in achieving the utilities were able to substantially offset the negative impact of lower than expected revenues. Simultaneously, the utilities executed the first steps in carrying out their roles in the Hawaii Clean Energy Initiative, a landmark multi-year agreement with the state of Hawaii aimed at achievingstate's clean energy goals, among the most aggressive in the nation. The utilities invested in reliability and clean energy goalsinitiatives and sought to recover their costs and earn a return on their investments in the nation and a sustainable,more timely manner. The utilities made progress on their clean energy future forefforts on numerous fronts in 2010, including the state. Asimplementation of feed-in tariffs and electric vehicle pilot charging rates, the completion of purchase power agreements with renewable developers and implementation of their biofuels strategies. The utilities received a resultnumber of these effortsrate case decisions in 2009,2010. In February, Hawaiian Electric Company received furtherinterim rate relief for its biofueled peaking unit and in August, Maui Electric Company received interim rate relief in its 2010 test year rate case. In November, Hawaii Electric Light Company received an interim decision in its 2010 test year rate case. The utilities also received a number of final rate case decisions in 2010, including a final rate decision in December 2010 for Hawaiian Electric Company's 2009 test year rate casecase. A new regulatory model, generally referred to as "decoupling," was approved by the Hawaii Public Utilities Commission in August 2010 with implementation approved for recoveryHawaiian Electric Company in December 2010 in connection with its 2009 test year rate case. This "decoupling" business model of costs for a new biodiesel generating stationdelinking revenues from kilowatthour sales in setting electric rates is designed to support Hawaii's efforts to reduce its dependence on February 19, 2010, and onoil by aligning the same date, received approval of the joint proposalutility with the Consumer Advocate for astate's public policy to promote energy efficiency and conservation. This new method of setting electric rates called "decoupling", whichratemaking will helpallow the utility to be financially viable whilerecover its investments and costs in a much more timely manner, and will strengthen the utility's financial viability so that it assists in implementing state policymay attract the capital needed to reduce Hawaii's dependence on oil.

support reliability and clean energy investments.



•

In 2010, American Savings Bank successfully completed the performance improvement project that it started in 2008, achieving significant improvements in profitability and cost structure while enhancing its product and service offerings for customers. The bank experiencedreported higher impairment chargesearnings, a strong 1.2% return on assets and losses on investment securities anda 56% efficiency ratio for the year. With a lagging economic recovery in Hawaii, the bank continued to experience elevated provisions for loan losses, although such losses were more than 30% lower than in prior years, driven by the economic recession; however, its2009, and net loan charge-offs remained low compared to the industry. DespiteIn the economic conditions,second half of 2010, the banking industry was negatively impacted by Regulation E, a federal regulation that prohibits banks from charging customers overdraft fees for ATM and debit card transactions unless the customer opts in to the overdraft service. As a result, the bank increased itsexperienced lower fee income in 2010. Despite these challenges, the bank maintained strong capital ratios while continuing to enhance financial soundness and continuedprovide a comprehensive campaignhealthy dividend to improve net income and profitability that it began in 2008. In 2009, the bank refined its target for performance improvement as it began to exceed its original goals set in 2008.HEI.

        HEI's financial results are beginning to reflect the Company's strategic progress. In 2009,2010, HEI's consolidated net income was $83$113.5 million, or $1.21 diluted earnings per share, compared to $0.91 per share. However, excluding the $19.3 million, or $0.21share in 2009 and $1.07 per share loss fromin 2008. With the nonrecurring liquidationachievement of private-issue mortgage-related securities at the bank, HEI's adjusted consolidated net income was $102.3 million, or $1.12 per share. Despite the economic headwinds faced by HEI and all businesses generallymajor strategic milestones in 2009,2010, HEI was able to preserveimprove earnings, maintain its dividend and achieve a positive15% total return to shareholders in 2009for the year, significantly outperforming the Edison Electric Institute Index. Because of the hard work invested over the last few years, both Hawaiian Electric Company and at the same time,American Savings Bank have strong business models and strategies that align, more than ever, with shareholder and stakeholder interests. We continue to move forward on key strategic initiatives, positioning it for improvedbuilding upon our achievements, to continue to improve performance and shareholder value creation in the near future.


Executive Summary


        The Compensation Committee recommends total compensation programs for executives of HEI and its subsidiaries, subject to the approval of the Board. In 2009,2010, the Compensation Committee held foureight meetings to consider and approve the overall executive compensation program design. The committee held lengthy discussions, with and without management present, regarding best pay practices and trends. In 2009, theThe Compensation Committee revisedCommittee's focus has been to refine HEI's executive compensation programs to incorporateby incorporating best practices and alignaligning executive compensation more directly with shareholder interests. The primary purpose




Table of the changes was to makeContents

        In establishing HEI's executive compensation more performance-based.program for 2010, the Compensation Committee was guided by three principles:

•

Total direct compensation (comprised of base salary, annual incentives, long-term incentive plan awards for the three-year performance period ended and restricted stock units granted during the year) should be competitive with the median total direct compensation for comparable officers in the peer group companies for HEI and the applicable subsidiary.



•

A significant component of every executive's compensation should be tied directly to HEI's financial performance ("pay for performance strategy").



•

Long-term compensation should be tied to HEI's long-term performance for shareholders.

        The following are the major revisionschanges to the executive compensation program impacting the above-named executive officers in 2009:2010:

•

Base salariesTotal direct compensation for the named executive officers excluding salary adjustments for executives who assumed additional responsibilities, were frozen in 2009, reflectingwas reevaluated and correlated to the economic recession and similar actions by othercompetitive market median of the respective peer group of companies.



•

Annual and long-term incentives for performance periods beginning in 2009 were based on a percentage of an executive's base salary, rather than the salary midpoint of the executive's grade, to better reflect appropriate levels of compensation for individual contributors. Each incentive metric has its own threshold for minimum level of performance.



•

The 2009-20112010-2012 long-term incentive plan awards were denominated 60%100% in HEI stock (rather than a portion in stock and a portion in cash and 40%as done in stock units, with a stock value determined at the beginning of the performance period, so that the awards will have a stronger linkage to improvements in shareholder value. The 2010-2012prior long-term incentive plan will be paid 100% in stock,plans), less an amount withheld for taxes, with the number of share units determined at the beginning of the performance period to reward




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participants for increases in share value and to better align executive incentives with shareholder interests.

•

The HEI Excess Pay Plan, HEI Executives' Deferred Compensation Plan and American Savings Bank Select Deferred Compensation Plan, each a nonqualified deferred compensation plan, were amended so that a participant will forfeit all benefits if terminated for cause (defined as a violation of HEI's Corporate Code of Conduct, which applies to HEI and its subsidiaries).



•

The Executive Death Benefit PlanHEI's stock ownership guidelines were revised in December 2010 to increase the ownership requirements of the named executive officers other than the HEI President and CEO (whose ownership requirements were doubled in 2009) from one and one-half times to two times their respective base salaries in shares of HEI and Participating Subsidiaries was amended effective September 9, 2009 to close participation to otherwise newly eligible employees and to freeze benefits for existing participants as of such date.



•

In keeping with HEI's philosophy to reduce nonperformance-based perquisites, (i) company-paid executive physicals were eliminated as ofCommon Stock by January 1, 2009 and (ii) as of July 1, 2009, American Savings Bank no longer extends preferential rate loans to employees, including executives (although preferential rate loans existing as of that date are grandfathered).



•

Effective May 1, 2009, automobile and gas allowances for subsidiary utility executives were eliminated and replaced with a one-time $10,000 increase to2016. Under the eligible utility executive's base salary. Mr. Rosenblum did not receive this benefit when he was hired as Hawaiian Electric Company President and Chief Executive Officer effective January 1, 2009.



•

Effective August 2009, the electric rate discount benefit was eliminated for Hawaiian Electric Company directors, employees and retirees, including Ms. Lau and Mr. Rosenblum.



•

In 2009, the tax gross-up on club membership initiation fees was eliminated.



•

In 2009, restricted stock units were granted to certain named executive officers. The restricted stock units generally vest four years after issuance, but provide for pro-rata vesting upon an executive's retirement, death or disability.



•

Under HEI's stock ownership guidelines, the HEI President and Chief Executive OfficerCEO must own five times (formerly two and a half times) her annual base salary in shares of HEI Common Stock by theher compliance date, which is January 1, of each year, following the fifth anniversary of the date the policy was changed on January 26, 2009. The policy was changed to be more consistent with what the Compensation Committee believes to be best practices. The other named executive officers, with the exception of Mr. Harada, are required to own one and a half times their respective base salaries in shares of HEI Common Stock by the compliance date following the fifth anniversary of their first becoming subject to the guidelines.2015. See "Stock Ownership Information—Does HEI have stock ownership and retention guidelines for directors and officers?officers and does it have a policy regarding hedging the risk of ownership?" below.



•

A new nonqualified deferred compensation plan for HEI and HECO executives was adopted to allow executives to defer certain portions of base salary and incentive compensation and to select a range of investment vehicles (similar to that offered under the Company's 401(k) plan). This new plan will be implemented in 2011.

        HEI has either eliminated or restricted the use ofnearly all tax gross-ups tofor named executive officers. There are no gross-ups in the change-in-control agreements given to the named executive officers and aggregate payments under the agreements are limited to the maximum amount deductible under Section 280G of the Internal Revenue Code. There are no tax gross-ups allowed on club membership initiation or membership fees. Tax gross-ups of death benefits have been restricted to the executives who participatedhave contractual entitlements to such gross-ups pursuant to their participation in the applicable plan prior to September 9, 2009. Relocation and temporary housing expenses of Messrs. Ajello and Rosenblum were grossed up for taxes up2009 (the date the death benefit plan was frozen).

        The primary refinement has been to a certain limitmake HEI's executive compensation more performance based. The compensation program applicable to the extentnamed executive officers consists of short-term and long-term components. The short-term components comprise base salary and an annual incentive bonus plan, the gross-ups were withinlatter being performance based. Long-term incentive compensation is made up of a long-term incentive plan (which is performance based) and a restricted stock unit grant (which is time vested over four years). The Compensation Committee and the allowanceBoard believe that the current executive compensation program reflects "best practices" and is structured to encourage participants to build long-term value in the Company for such expenses under their offersthe benefit of employment. This is a common practice for executive relocation policies and was a condition of their recruitment.its shareholders.




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Compensation Process


Who is responsible for determining appropriate executive compensation?


        The Compensation Committee recommends total compensation programs for HEI and its subsidiaries, subject to the approval of the Board. The committee has authority to retain (or terminate) the services of consultants and advisors to provide advice to the committee. The committee approves, modifies and/or rejects its consultants', advisors' or management's recommendations regarding executive compensation programs, including incentive compensation and equity-based plans. The committee may delegate authority to a subcommittee of no fewer than two members of the committee to determine matters such as equity compensation. The Board approves the actions of the committee and, where the executive works atis employed by a subsidiary of HEI, the actions of the committee are also approved by the subsidiary board.

        The Board conducts an evaluation of the performance of the HEI President and Chief Executive Officer in light of corporate goals and objectives relevant to her compensation. The Compensation Committee, with the assistance of its independent compensation consultant, recommends to the Board an executive compensation package for the HEI President and Chief Executive Officer based on the Board's evaluation. The independent directors of the Board approve the compensation of the HEI President and Chief Executive Officer.


Can the Compensation Committee modify or terminate executive compensation programs?


        The Compensation Committee reserves the right to amend, suspend or terminate any incentive program or other executive compensation program, or any individual executive's participation in such programs. The committee can exercise its discretion to reduce or increase (except to the extent an award or payout is intended to satisfy the requirements for deductibility under Section 162(m) of the Internal Revenue Code) the size of any award or payout. In 2009,2010, no portion of any bonus or long-term incentive compensation paid by HEI or any of its subsidiaries to executives was nondeductible under Section 162(m).

        In making its compensation determinations, the Compensation Committee will consider financial accounting and tax consequences, if appropriate. For instance, the committee may determine that there should not be any incentive payout that would otherwise result solely from a new way of accounting for a financial measure. As another example, the committee will take into account tax deductibility in establishing executive compensation, but it reserves the right to award compensation even when not deductible if it is reasonable and appropriate.


Who is the compensation consultant and what is the consultant's role?


        The Compensation Committee'sCommittee has retained Frederic W. Cook & Co. Inc. (Fred Cook & Co.) as its independent compensation consultant untilsince December 20092009. The consultant was Towers Watson (formerly Towers Perrin). Theengaged directly by the committee engaged Towers Watson to provide advice and data with respect to executive compensation analyses, benchmarking and market practices. Towers Watson worked with the Compensation Committeepractices, including to develop recommendations to the Board regarding executive compensation initiatives and proposed changes.

        During the fourth quarter of 2009, the Compensation Committee conducted a request for proposal process to evaluate compensation consultants for future work, including(i) conduct a review of HEI's executive compensation policies and practices; (ii) evaluate and determine the appropriate selection of competitive peer groups (for benchmarking purposes); (iii) examine the compensation ofcomponents and pay ranges for the named executive officersofficers; and other senior executives at HEI, American Savings Bank(iv) recommend the appropriate mix of compensation elements and Hawaiian Electric Company. As a result oflevels for the selection evaluation process, Frederic W. Cook & Co., Inc. (Fred Cook & Co.) was retained in December 2009 as the Compensation Committee's independent compensation consultant, to provide information, analyses and advice regardingnamed executive compensation.




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        In 2009, Towers Watson also performed some nonexecutive compensation consulting services for Hawaiian Electric Company, which value did not exceed $120,000. As part of the terms of its engagement, Fred Cook & Co. is not permitted to perform any services at the direction of the management of HEI or its subsidiaries. All services by Fred Cook & Co. are provided at the direction of the Compensation Committee.officers.

        In February 2010, Fred Cook & Co. concluded anits executive compensation review on behalf of the Compensation Committee.Committee, which included the selection of peer companies for HEI and its subsidiaries and a comparison of HEI, Hawaiian Electric Company and American Savings Bank executive compensation against executive compensation for such companies. After extensive deliberations in committee meetings held over the course of three months, and after receipt of the report from Fred Cook & Co., the Compensation Committee reached its determinations with respect to the 2010 compensation for the named executive officers. The results of thisFred Cook & Co.'s review and the determinations made by the Compensation Committee are discussed below.




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What is the role of executive officers in determining named executive officer and director compensation?


        WithIn 2010 and with the permission of the Compensation Committee, in 2009, HEI executivesexecutive officers discussed with Towers Watson and Fred Cook & Co. HEI'sthe compensation philosophy of the Company and theits methodology and metrics for computing executive incentives. Human resources and finance personnel provided data in response to the requests of the Compensation Committee Towers Watson and Fred Cook & Co.

        Although the HEI President and Chief Executive Officer is a director on the HEI Board, she did not participate in any Board decisions impacting her own compensation. In February 2009, Ms. Lau recommendedHowever, in her role as HEI President and Chief Executive Officer, she did review the performance of the other named executive officers and made recommendations with respect to their compensation to the Compensation Committee. In addition, she participates in the deliberations of the Board in acting on the recommendations of the Compensation Committee with respect to the compensation of these other named executive officers.

        Executive officers do not have a base salary increase effective March 2, 2009 for Mr. Richardsonrole in recognition of his expanded job responsibilities as HEI's Chief Administrative Officer that were effective December 8, 2008.determining director compensation other than providing administrative support and responses to data requests from the Compensation Committee and its independent consultant.


How do HEI's compensation policies and practices relate to HEI's risk management?


        HEI has an Enterprise Risk Management function that is principally responsible for identifying and managingmonitoring risk across the holding company and its two operating companies, and for reporting high risk areas to the boards of directors and designated board committees. As a result, all of the HEI directors, including those who serve on the Compensation Committee, are awareapprised of the risks which could have a material adverse effect on HEI. The Board (through its Compensation Committee) hasCommittee assessed and considered these risks and, with advice of its independent compensation consultant, has establishedwhen establishing HEI's compensation policies and practices and the specific executive compensation program described in this Compensation Discussion and Analysis. The Board and the Compensation Committee have concluded that the executive compensation program does not encourage unnecessary or excessive risk-taking.

        HEI's compensation policies and practices are designed to encourage executive management to maximize value for shareholders, while considering its key stakeholders including(including customers, employees and regulators,regulators), and to discourage decisions that introduce risks that may have a material adverse effect on HEI. The executive compensation program is structured to pay for performance and align the executive officers' interests with shareholder interests, as well as encourage executives to focus on profitability, efficient use of capital, earnings growth and stock price appreciation in both the short and long terms. Because the executive officers are in a position to directly influence HEI's performance, compensation for executive officers involves a significant portion of pay that is "at risk" and tied directly to HEI performance—namely, the annual incentive bonus plan and the value of long-term equity-based incentives.

        In structuring the incentive compensation plans and setting the particular goals, targets and metrics for awards under those plans, the Compensation Committee incorporates the following elements and practices to encourageensure consistent leadership and appropriate and prudent decision-making among the named executive officers in a manner that requires cooperation and execution without taking unnecessary or excessive risks:

•

Financial performance objectives of the annual cash incentive program linked to approved budget guidelines and nonfinancial measures aligned with the interests of all of HEI's stakeholders.






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•

Alignment of financial and nonfinancial performance in the annual cash incentive programs for named executive officers, other officers and nonexecutive employees.




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•

"Clawback" capability through an executive compensation recovery policy to recoup incentive awards paid to executives who are found to be personally responsible for fraud, gross negligence or intentional misconduct that causes a restatement of HEI's financial statements. (This policy is expected to be modified in 2011 upon the completion of SEC rule-making proceedings relating to when and under what circumstances clawbacks are required.)



•

Greater financial opportunity inopportunities under long-term incentive programs bestthat are realized through increases in long-term total shareholder return, earnings growth, greater profitability and efficient use of capital, which mitigates excessive short-term risk-taking.



•

Share ownership guidelines provide forrequire named executive officers to hold certain amounts of HEI stock,Common Stock, ensuring that each executive has a significant amount of personal wealthstake tied to the long-term performance of HEI.



•

Pro-rata payouts under the performance-based plans (above(only when performance is above minimum thresholds), rather than an "all-or-nothing" approach.



•

Use of annual grants of long-term equity-based incentives vesting over a period of years to encourage executives to focus on sustaining HEI's long-term performance.



•

Use of a variety of performance metrics, both financial and nonfinancial (e.g., net income, return on average common equity, and total shareholder return and achievement of clean energy initiatives, among others) that correlate to long-term creation of shareholder value and are affectedimpacted by management decisions.



•

A variable and nonformulaic goal-setting process, process—where prior performance, and market conditions and peer group measures are considered relative to future expected performance to assess the reasonableness of the goals.



•

Exercise of Board discretion in establishing performance goals and metrics, in determining whether these goals have been achieved and in administering all performance-based and equity awards including(including the form of the award such as cash or stock.stock).



•

Continuous monitoring by the Board and the Compensation Committee through assessment of HEI's progress toward its goals in juxtaposition to risks faced by the enterprise, through management presentations at quarterly meetings and through periodic written reports.


Compensation Program


What is HEI's philosophy with respect to its executive compensation programs?


        HEI's compensation philosophy is reflected in the following key design priorities that govern its executive compensation decisions:

•

Design and structure the compensation elements to incent individual and group performance toward achieving the strategic goals of the Company.



•

Balance the cash and equity components to align executive compensation with shareholders' interests.



•

Levelize total compensation at the competitive market median of the relevant peer group of companies in order to promote executive recruitment, retention and motivation.



•

Pay for performance.



•

Establish metrics using a balanced scorecard that focuses executives on long-term value creation and includes consideration of risk management issues and Company performance against its peers.




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•

Promote key Company values, including integrity, teamwork, egalitarianism and avoidance of pressure to take undue risks.



•

Manage costs.

        The compensation programs are designed to support HEI's business goals and promote both short- and long-term profitable growth of the Company. HEI's equity plans are used in its executive compensation programs to align executive compensation with the long-term interests of HEI's shareholders. Total compensation for each executive varies with the performance of HEI and its subsidiaries in achieving financial and nonfinancial objectives.


What are the objectives of HEI's executive compensation programs?programs and what are they designed to reward?


        The following are the primary objectives of HEI's compensation programs:

•

Encourage and reward performance relative to business plans and strategies that maximize the value HEI delivers to its shareholders and other key stakeholders such(such as customers, employees policymakers and regulators.regulators).



•

Provide compensation and benefits that are designed to incent a high level of business performance and be competitive with peer companies and relevant functional positions to attract, retain and motivate talented executives.



•

Emphasize performance-based rewards driven by results within the scope of the executive's responsibility or the responsibilities of the executive team as a group.



•

Provide differentiated reward strategies among HEI and its operating bank and utility subsidiaries to align with specific business needs and talent markets.



•

Maintain a culture of integrity, where there is no undue pressure to meet or exceed targets for personal gain nor encouragement ofor to encourage employees to take undue or inappropriate risks.




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What is each element of executive compensation?


        To meet theHEI's executive compensation objectives described above, the compensation for named executive officers includes the following elements:elements comprise—

•

Base salary.Salary—provides base level of cash compensation for the year.



•

Annual performance-based cash incentive compensation.Incentive—supports a single-year focus with variable pay for performance; vehicle is stable over time, but the metrics may vary; only program for rewarding in-year performance.



•

Long-termLong-Term Incentives—two components comprising long-term performance-based equityawards (payable at end of three-year performance period) and nonequity incentive compensationlong-term time-vested awards (which vest over four years); these long-term incentives encourage a multi-year focus, rewarding sustained business and service-based restricted stock units.performance; metrics are stable over time, but vehicles may vary; award size is limited to rewarding demonstrated performance and addressing retention risk.



•

HealthRetirement, Pension and welfareSavings—retirement benefits andprovided to all eligible employees through tax-qualified HEI Retirement Plan provide financial security in recognition of years of service; additional benefits that cannot be paid from HEI Retirement Plan due to Internal Revenue Code limits provided through HEI Excess Pay Plan; eligible employees may save for retirement benefits.on a tax-deferred basis through HEI's 401(k) Plan or, for select American Savings Bank executives, through ASB's 401(k) Plan.


Why does HEI choose to pay each element?


•

HEI chooses to pay its executives a base salary because it shouldin order to pay value for value received,received. Base salary is targeted to the peer group median with individual differences (above and salary for services rendered during the year recognizesbelow




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median) to recognize the individual's position, responsibilities, experience, performance and contributions.



•

HEI provides its executives the opportunity to earn annual cash incentives based on the achievement of goals (i) to build fundamental earnings in a controlled risk manner to support the continued payment of the HEI dividend, (ii) to focus on nonfinancial measures important to HEI's stakeholders and (iii) to motivate executives and encourage their commitment to HEI's success. Shareholders and other stakeholders benefit from the achievement of these goals.



•

HEI provides longer-termlong-term incentives to support initiatives to provideaimed at building long-term growth in shareholder value, to increase HEI's financial and strategic flexibility and to builddevelop the fundamental value of HEI's operating companies in their respective industries. HEI's long-term incentive plan rewards executives based on HEI's successful financial performance over rolling three-year performance periods. The three-year performance period provides balance with the shorter-term focus of the annual incentive compensation plan. In 2009,2010, in accordance with the 2008-2010 long-term incentive plan, HEI paid its executives in a mix of earned long-term incentives paid partially in cash, HEI stock and service-based restricted stock units in order to encourage stock ownership and alignment of the interests of executives and shareholders. The 2010-2012 long-term incentive plan awards to all HEI executives will be paid entirely in stock, less an amount withheld for taxes, determined in share units set at the beginning of the performance period, to encourage even greater alignment of executivesexecutive incentives with shareholder interests. The long-term incentive plan, as constructed, also has a favorable retention impact on the executives.



•

HEI provides its executives health and welfare benefits and retirement benefits to encourage executivegood health and retention of its executives, as well as enablingto enable HEI to be competitive with its peers.


How does HEI determine the amount for each element?


        HEI uses competitive market peer company comparisons to determine the amount of each element of executive compensation. Peer companies are companies which, in the aggregate, are similar in business focus, financial scope and valuation, provide similar products and services and are sources for talented employees. Peer companies are selected by the Compensation Committee's independent compensation consultant and are reviewed and approved by the Compensation Committee. The resulting peer companies are used as a reference in determining appropriate pay levels and mix of pay components.components by benchmarking toward a competitive median and allowing differences to recognize high performers.

        Peer companies for HEI and its subsidiaries should reflect HEI's diverse businesses. HEI is a Hawaii-based holding company with a unique blend of two regulated operating subsidiaries, a bank and electric utilities. HEI supplies power to 95% of Hawaii's population through its electric utilities, Hawaiian Electric Company and its subsidiaries, Hawaii Electric Light Company and Maui Electric




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Company, and provides a wide range of financial services to individuals and businesses through American Savings Bank, one of the state's largest financial institutions based on asset size. Among the objectives of the HEI compensation program are (i) to provide differentiated reward strategies among HEI and its operating bank and utility subsidiaries in order to align with specific business needs and talent markets and (ii) to reward performance relative to strategic plans that support shareholder value.

Peer companies in 20092010

        In early 2009, Towers Watson conducted a peer group selection by considering companies within a range of one-half to two times the size, based on assets, of HEI, Hawaiian Electric Company or American Savings Bank, eliminating companies that had three-year total shareholder returns that were significantly negative.

•

To screen peer companies for HEI executives, Towers Watson reviewed electric utilities, multi-utilities, commercial banks, thrifts and mortgage finance companies with $1.25 to $5 billion in revenues, 1,700 to 7,040 employees and a market capitalization of $1.0 to $4.2 billion. Not all peers met all of the criteria.



•

To screen peer companies for Hawaiian Electric Company executives, Towers Watson reviewed electric utilities and multi-utilities with $1.0 to $4.2 billion in revenues, 1,070 to 4,300 employees and a return on average common equity greater than 5%.



•

To screen peer companies for American Savings Bank executives, Towers Watson reviewed commercial banks, thrifts and mortgage finance companies with $2.7 to $10.8 billion in assets, 665 to 2,600 employees and a return on assets greater than 1.0%.

        The following were the HEI peer group companies in 2009:

Banking/Financial Services Peers		Utility Peers*
Bank of Hawaii		Allegheny Energy
Central Pacific Financial		Alliant Energy
Citizens Republic Bancorp		Ameren
City National Bank		Entergy
CVB Financial		Great Plains Energy
F.N.B.		Mirant
Old National Bancorp		Northeast Utilities
Pacific Capital Bancorp		NSTAR
Park National		OGE Energy
Prosperity Bancshares		Pinnacle West Capital
SVB Financial Group		PNM Resources
Trustmark		Portland General Electric
Umpqua Holdings		PPL
Washington Federal		Puget Energy
		Questar
		Sempra Energy
		Sierra Pacific Resources
		TECO Energy
		Vectren
		Wisconsin Energy




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        The following were the Hawaiian Electric Company peer group companies in 2009:

Utility Peers*
Allegheny Energy		Portland General Electric
Alliant Energy		PPL
Ameren		Puget Energy
Aquila		Questar
Avista		San Diego Gas & Electric
Entergy		Sierra Pacific Resources
Great Plains Energy		TECO Energy
Mirant		UIL Holdings
Northeast Utilities		UniSource Energy
NSTAR		Vectren
OGE Energy		Westar Energy
Pinnacle West Capital		Wisconsin Energy
PNM Resources

        The following were the American Savings Bank peer group companies in 2009:

Banking/Financial Services Peers
Bank of Hawaii		Old National Bancorp
Central Pacific Financial		Pacific Capital Bancorp
Citizens Republic Bancorp		Park National
City National Bank		Prosperity Bancshares
CVB Financial		Sterling Bancshares
First Financial Bankshares		SVB Financial Group
F.N.B.		Trustmark
Frontier Financial		Umpqua Holdings
Glacier Bancorp		Washington Federal
NBT Bancorp		Westamerica Bancorporation

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*

Some company names have changed and some companies no longer exist due to restructurings that occurred after the Towers Watson peer group selection was completed.

Peer companies in 2010

        As part of an enterprise-wide review of executive compensation in February 2010, Fred Cook & Co. conducted a peer group selection and compensation comparison in which the same utility peer group would apply to HEI and Hawaiian Electric Company and a banking peer group would apply to American Savings Bank.Bank for purposes of setting 2010 compensation.




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•

To screen peer companies for HEI and Hawaiian Electric Company executives, compensation data from a peer group of 15 similarly-sized public utility companies and survey data from Towers Watson that covered both energy services and general industry companies were reviewed. The resulting primary comparator group includes 15 publicly-traded utilities with annual revenue between $1.5 and $6 billion, approximately halfone-half to three-times that of HEI. The results of the review revealed that the total direct compensation levels (i.e., annual cash compensation plus long-term incentive awards) of Ms. Lau and Messrs. Ajello and Richardson)Richardson are atbetween the 25^th percentile and the median level, and Mr. Rosenblum's total direct compensation is at the median level.level for 2010.



•

To screen peer companies for American Savings Bank executives, the compensation consultant reviewed compensation data from a 20-company peer group of high-performing regional banks and thrifts and survey data from Towers Watson that covered a broader set of financial services companies. The resulting comparator group includes 23 regional banks with total assets between approximately halfone-half and two-times that of ASB,American Savings Bank, or $2.6 to $10.5 billion, respectively. The results of the review reflected that Mr. Schools' total direct compensation is in the median to 75^th percentile range.range for 2010.




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        The following are the HEI and Hawaiian Electric Company peer group companiescompanies* in 2010:

Utility Peers
Allegheny Energy		Pinnacle West Capital
Alliant Energy		PNM Resources
Great Plains Energy		Portland General Electric
Mirant		Questar
Northeast Utilities		TECO Energy
NSTAR		Vectren
NV Energy		Wisconsin Energy
OGE Energy

        The following are the American Savings Bank peer group companiescompanies* in 2010:

Banking Peers
1st Source		Great Southern Bancorp
BancFirst		Hancock
Bank of Hawaii		IBERIABANK
Bank of the Ozarks		Independent Bank
City Holding Company		NBT Bancorp
Community Bank System		Oriental Financial Group
CVB Financial		Park National
Dime Community Bancshares		Prosperity Bancshares
First Financial Bankshares		Republic Bancorp
FirstMerit		United Bankshares
Flushing Financial		Westamerica Bancorporation
Glacier Bancorp

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*

Some company names have changed and some companies no longer exist due to restructurings that occurred after the Fred Cook & Co. analyses and peer group selections were completed.




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How does each element fit into HEI's overall compensation objectives?


        With the assistance of its compensation consultant, the Compensation Committee reviews each compensation element to determine whether it fits into HEI's overall compensation objectives. The committee also requests that, at least annually, management prepare and the consultant review tally sheets on each executive officer to determine how each executive's elements of pay, pay—such as base salary, annual incentives, benefits and long-term incentives, incentives—compared to executives in functionally comparable positions at peer companies. The Compensation Committee uses this information to consider whether any element should be reduced or increased or whether the mix of elements should be changed.

        The Compensation Committee also reviewedreviews internal equity among the named executive officers when developing pay recommendations. The Compensation Committee believes that the comparative compensation among the named executive officers is fair, considering job scope, experience, value to the organization and duties relative to the other named executive officers.


Compensation Elements


What are the base salaries of the named executive officers?


        The base salariesIn May 2010, the Board evaluated Ms. Lau's performance for the named executive officers are set forthprior year and the Compensation Committee recommended to the Board a salary increase taking into consideration the Board's evaluation. Also, in May 2010, Ms. Lau recommended to the 2009 Summary Compensation Table below.

        In February 2009, the named executive officers agreed to waive the meritCommittee base salary increases whichfor Messrs. Ajello, Richardson and Rosenblum. These adjustments were in the budget approvedconsidered by the Compensation Committee and Boards, due to be relatively modest in light of the economic downturn and the projected slow or minor growth for executive officer salaries based on general industry surveys obtained from human resource consulting firms, excluding salary adjustmentsfreeze in effect for named executive officers during 2009 (excluding one salary adjustment in 2009 for Mr. Richardson, who assumed additional responsibilities or to make up forin 2009). After considering these recommendations, the elimination offollowing salary adjustments, effective May 1, 2010, were approved by the HEI-paid carBoard:

Name		% Base Salary Increase			$ Base Salary Increase			Base Salary Effective May 1, 2010
Constance H. Lau			3.0	%	$	23,200		$	795,000
James A. Ajello			4.0	%	$	17,000		$	442,000
Chester A. Richardson			3.4	%	$	12,000		$	361,000
Richard M. Rosenblum			1.2	%	$	7,000		$	587,000
Timothy K. Schools (1)			n/a			n/a		$	550,000
Richard F. Wacker (2)			n/a			n/a			n/a

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(1)

Mr. Schools voluntarily resigned in September 2010.



(2)

Mr. Wacker was hired by American Savings Bank as President and gas allowances. Mr. Richardson was an exception to the salary freeze because he assumed additional responsibilities as HEI's Chief AdministrativeExecutive Officer in 2008on November 15, 2010 and received aan annualized base salary adjustment of 8.6%, or $27,600, effective March 2, 2009.




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        Mr. Harada did not receive any salary adjustment in 2009, but did receive a bonus for the partial month that he served as HEI Acting Financial Vice President, Treasurer and Chief Financial Officer at a monthly rate of $15,000 while retaining his role and compensation as HEI Controller and Chief Accounting Officer. The bonus for Mr. Harada was based on his increased responsibilities in his role as acting chief financial officer for HEI until January 25, 2009.

$550,000.


What was HEI's 20092010 annual incentive plan and were there any payouts under this plan?


        HEI's annual incentive plan is known as the Executive Incentive Compensation Plan. The following werePlan (EICP). For the award ranges, shown as a percentage of annual base salary, that2010 EICP, the Compensation Committee approved in February 2009 for the 2009 annual incentive plan:

Name		Minimum			Target			Maximum
Constance H. Lau			42.5	%		85	%		170	%
James A. Ajello			25.0	%		50	%		100	%
Curtis Y. Harada			20.0	%		40	%		80	%
Chester A. Richardson			25.0	%		50	%		100	%
Richard M. Rosenblum			30.0	%		60	%		120	%
Timothy K. Schools			40.0	%		80	%		160	%

        The Compensation Committee established minimum thresholds for each of the financial and other operational goals of the annual executive incentive plan designed to align management decisions with shareholder value. The table below lists the named executive officer performance metrics, weightings, minimum thresholds and target and maximum goals for the 20092010 annual incentive compensation plan. Unless otherwise specified throughout this Proxy Statement, a reference to utility goals means consolidated goals of the utilities, which include Hawaiian Electric Company and its subsidiaries, Maui Electric Company and Hawaii Electric Light Company.




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        In setting Mr. Schools' goals, the Compensation Committee determined to exclude one-time charges such as severance and lease buyouts in light of American Savings Bank's aggressive performance improvement project to reduce its cost structure and improve its efficiency, profitability and go-forward earnings. In addition, in light of the recent unprecedented volatility, illiquidity, uncertainty and unusually low asset valuations in the capital markets and in the banking industry, the committee excluded the impact of other-than-temporary impairment charges and goodwill impairment charges and related impacts. The committee, however, retained the discretion to reduce any such award if the resulting payout was not in the best interest of HEI and its shareholders. In setting goals for the other named executive officers, the committee also determined that any adjustments made at American




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Savings Bank and Hawaiian Electric Company would also be applied for purposes of calculating HEI metrics.

Name		Weight			Performance Metric		Minimum Threshold		Target Goal		Maximum Goal
Constance H. Lau James A. Ajello Curtis Y. Harada			60	%	HEI Return on Average Common Equity		7.1%		7.9%		8.7%
Chester A. Richardson			40	%	HEI Net Income		$101.5 million		$112.8 million		$124.1 million
			100	%
Richard M. Rosenblum			30	%	HEI Net Income		$101.5 million		$112.8 million		$124.1 million
			20	%	HEI Return on Average Common Equity		7.1%		7.9%		8.7%
			20	%	Utility Net Income		$76.1 million		$84.5 million		$93.0 million
			10	%	Utility Safety (Total Cases Incident Rate)		4.65		4.25		3.88
			10	%	Hawaii Clean Energy Initiatives (HCEI) (including Big Wind)		Meet minimum project milestones		Meet target project milestones		Meet maximum project milestones
			10	%	HECO Customer Satisfaction		76.6%		78.2%		82.0%
			100	%
Timothy K. Schools			100	%	Bank Return on Assets		0.850%		0.950%		1.050%

Name		Weight			Performance Metric		Minimum Threshold		Target Goal		Maximum Goal
Constance H. Lau James A. Ajello Chester A. Richardson			50	%	HEI Return on Average Common Equity		7.2%		7.9%		8.5%
			50	%	HEI Net Income		$105 million		$115 million		$125 million
			100	%
Richard M. Rosenblum			15	%	HEI Net Income		$105 million		$115 million		$125 million
			15	%	HEI Return on Average Common Equity		7.2%		7.9%		8.5%
			40	%	Utility Net Income		$75 million		$80 million		$85 million
			10	%	Utility Safety (Total Cases Incident Rate)		3.20		2.41		1.41
			10	%	Hawaii Clean Energy Initiative (HCEI)		Meet minimum project milestones		Meet target project milestones		Meet maximum project milestones
			10	%	Utility Customer Satisfaction		76.6%		78.2%		82.0%
			100	%
Timothy K. Schools Richard F. Wacker			50	%	Bank Return on Assets		1.00%		1.10%		1.20%
			50	%	Bank Net Income		$50 million		$55 million		$60 million
			100	%

        The above goals were set by the Compensation Committee and approved by the Board in 20092010 because they were believed to provide the necessary incentives to properly align executive compensation with achievement of performance goals that enhance shareholder value. HEI's goals of net income and return on average common equity are determined on a consolidated basis, and are thus impacted by the results from the bank and utility operating subsidiaries.

        Given the deterioration in the mainland housing market in 2009, and with further declines in the value of its private-issue mortgage-related securities expected,both American Savings Bank sold $225 million of those securities in the fourth quarter of 2009 for a realized loss of $19.3 million net of tax. In determining the 2009 annual incentive (and 2007-2009 long-term incentive) plan awards, the Compensation Committee viewed the loss resulting from the sale as the equivalent of the acceleration of future other-than-temporary impairment losses, which were an allowed authorized exclusion set by the Compensation Committee in establishing the goals and metrics for the 2009 annual incentive plan in February 2009. The Compensation Committee, taking into account HEI's financial strategy (including the focus on improving the fundamental earnings power of its subsidiaries), thus concluded that the realized loss from the sale of those securities should be excluded for purposes of determining whether the 2009 compensation measures had been achieved.Hawaiian Electric Company.




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        The following were the award ranges, shown as a percentage of annual base salary, that the Compensation Committee approved in February 2010 for the 2010 EICP:

Name		Minimum			Target			Maximum
Constance H. Lau			42.5	%		85	%		170	%
James A. Ajello			25	%		50	%		100	%
Chester A. Richardson			25	%		50	%		100	%
Richard M. Rosenblum			30	%		60	%		120	%
Timothy K. Schools (1)			40	%		80	%		160	%
Richard F. Wacker (2)			40	%		80	%		160	%

---

(1)

For purposes of incentive plan awards only, Mr. Schools was credited for a full twelve months in 2010 as part of his separation arrangement.



(2)

Mr. Wacker was eligible to participate in the annual incentive plan prorated for American Savings Bank's actual performance and actual days worked from his date of hire in November 2010.

        HEI's adjusted net income, after excluding from HEI consolidated net income the bank's realized loss from the sale$272,000 of the private-issue mortgage-related securities ($19.3 million net of tax)committee-approved exclusions for severance expenses and other approved exclusions ($12.6 million net of tax) for other-than-temporary impairment losses, lease buyouts and severance costs,related to the performance improvement project, was $114.9$113.8 million, which exceeds the 2009 target income2010 minimum threshold of $112.8$105 million, and its adjusted return on common equity was 8.0%7.8%, which exceeds the 2009 targetminimum 2010 threshold of 7.1%7.2%. As a result, of the $31.9 million in exclusions, named executive officers Ms. Lau and Messrs. Ajello Harada and Richardson received awards for performance between the minimum threshold and target and maximum level. Without the exclusion for the losses from the sale of private-issue mortgage-related securities, the HEI return on common equity and HEI net income goals would have been below minimum level. Ms. Lau voluntarily waived payment of the annual 2009 bonus to align with shareholders and help the company transition under the dividend earn-out strategy toward improved long-term fundamental performance and generation of shareholder value.goal levels. Mr. Rosenblum's bonus was impacted in part by the exclusions because half30 percent of his goals were based on achievement of HEI goals, with the other half70 percent being based on utility goals.

        After excluding the bank's realized loss from the sale of the private-issue mortgage-related securities and other approved exclusions from earnings, the bank's return on assets was 1.05%, which was at the maximum level for that performance metric. While the Compensation Committee concluded that it was appropriate to recognize the hard work performed in 2009 by American Savings Bank executives in pursuing the bank's aggressive performance improvement project, it also weighed the fact that, without excluding the realized securities losses, the bank's return on assets would be at a level below the minimum threshold for an annual incentive award. Accordingly, rather than allowing executives of American Savings Bank to achieve the maximum bonus level under the 2009 annual incentive plan based on all the exclusions, the Compensation Committee exercised its discretion under the Plan to reduce the awards to the level of awards payable for performance at 120% of target, which was approximately the level of achievement that would have been reflected in HEI's results if the exclusions were taken into account. As a result of this analysis, Mr. Schools received an award based on performance at a level between the target and maximum levels, instead of at the maximum level.

In 2009,2010, the utility met the following annual incentive goals:

•

Utility Net Income at $79.4$76.6 million, which was between the minimum goalthreshold of $76.1$75 million and the target goal of $84.5$80 million. Utility Net Income is the basic financial measurement of earnings for the year and contributes directly to HEI's net income, its earnings per share and support of its dividend to shareholders. Net income is a generally accepted accounting principle (GAAP) measure.



•

Utility Safety focuses on employee safety as measured by the Total Cases Incident Rate. This is a standard measure of safety performance, which is determined by the total number of Occupational Safety and Health Administration recordable cases × 200,000 productive hours divided by the total number of productive hours for the year, with the lower the Total Cases Incident Rate, the better. The goal was selected because of the importance of safety to every employee. The consolidated Total Cases Incident Rate was 3.95,2.22, which was between the target goal of 4.252.41 and the maximum goal of 3.88.1.41.



•

Utility Customer Satisfaction is part of Hawaiian Electric Company's balanced scorecard focused externally on customers, and is based on customer surveys conducted by a third party vendor in the performance period. It is an indicator of how satisfied customers are with the utility's service, reliability and pricing. Utility consolidated customer satisfaction was 77.8%, which was between the minimum level of 76.6% and the target level of 78.2%.



•

The utility met three of five project objectives set as annual goals for the Hawaii Clean Energy Initiatives Big Wind/Renewables Integration. The Big Wind goal focusesInitiative. Specified project milestones were achieved or exceeded for the utility on meeting key milestones for developmentinterisland wind studies, a fuel infrastructure strategic plan and integrationimplementation of a major renewable energy resource. The potential renewable energy contributions from this project, combined with the contributions from ongoingfeed-in-tariff projects. These projects are intended to obtain renewable energy from sources including wind energy, photovoltaics, biomass, geothermal, ocean energy and others, which will help the utilities meet their commitments under the Hawaii Renewable Portfolio Standards law and the Hawaii Clean Energy Initiative, an agreement executed between the state of Hawaii and the utilities in October 2008 to proactively reduce the state's dependency on fossil fuel by moving towards a




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October 2008 to proactively reduce the state's dependency on fossil fuels by moving toward a future of increasing renewable energy. In 2009,2010, Hawaiian Electric Company met its Big Wind/Renewables Integrationminimum project milestonemilestones for the Hawaii Clean Energy Initiative.

        With respect to the goals for Messrs. Schools and Wacker, American Savings Bank's return on assets, after approved exclusions for severance expenses and lease buyouts related to the performance improvement project, was 1.21%, which was at the maximum level for that performance metric, and its net income was $58.7 million, which was between the target level.goal and maximum level for that performance metric. The Compensation Committee concluded that it was appropriate to recognize the outstanding performance of American Savings Bank executives in completing the bank's aggressive multi-year performance improvement project. As a result of American Savings Bank's performance, Messrs. Schools and Wacker received an award based on performance at a level between the target and maximum levels. Mr. Schools had earlier agreed to remain with the bank until the performance improvement project was substantially completed. After the project's completion in August 2010, the Company agreed to a September departure by Mr. Schools but with credit for a full year's service in 2010 for purposes of the incentive compensation programs in recognition of his leadership in completing the bank's performance improvement initiative. Mr. Wacker, who was hired on November 15, 2010, received an award prorated for the days worked in 2010.