UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of Filed by a Party other than the Registrant ◻ | ||||||||||||||||
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| Preliminary Proxy Statement |
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| Definitive Proxy Statement |
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1411 Sand Island Parkway, Honolulu, Hawaii 96819
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| March 14, 2022 |
March 11, 2019
To the Shareholders of Matson, Inc.:
You are invited to attend the 20192022 Annual Meeting of Shareholders of Matson, Inc. (“Matson” or the “Company”), to be held in the Bankers Club on the 30th Floor of the First Hawaiian Center, 999 Bishop Street, Honolulu, Hawaii,online via live webcast on Thursday, April 25, 201928, 2022 at 8:3000 a.m., Hawaii Standard Time. At the meeting, we will have the opportunity to discuss the Company’s financial performance during 2018, and our future plans and expectations.
We have elected to provide access to our proxy materials over the internet under the Securities and Exchange Commission’s “notice and access” rules. On or around March 11, 2019,14, 2022, we expect to distribute to our shareholders either (i) a copy of our Proxy Statement, the accompanying proxy card and our annual report or (ii) the Notice of Internet Availability of Proxy Materials (the “Notice”) only. The Notice contains instructions for how to access our Proxy Statement and annual report over the Internet and how to request a paper copy of the Proxy Statement and annual report.
Your vote is important – no matter how many or how few shares you may own. Whether or not you plan to attend the virtual Annual Meeting, please read the Proxy Statement and vote as soon as possible. You may vote via the Internet by telephone or, if you receive printed proxy materials, by telephone or by mailing a proxy card. Instructions for Internet and telephone voting are included in your proxy card and the Proxy Statement (if you receive your materials by mail). Any shareholder attending the virtual Annual Meeting may vote in personat the meeting even if a proxy has been returned.
Thank you for your continued support of Matson.
| Sincerely, |
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MATTHEW J. COX Chairman and Chief Executive Officer |
1411 Sand Island Parkway, Honolulu, Hawaii 96819
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Matson, Inc. will be held in the Bankers Club on the 30th Floor of the First Hawaiian Center, 999 Bishop Street, Honolulu, Hawaii,online via live webcast on Thursday, April 25, 201928, 2022 at 8:3000 a.m., Hawaii Standard Time, to:
1. | Elect the seven directors named in the proxy statement to serve until the next Annual Meeting of Shareholders and until their successors are duly elected and qualified; |
2. | Approve, on an advisory basis, executive compensation; |
3. | Ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for the year ending December 31, |
4. | Transact such other business as properly may be brought before the meeting or any adjournment or postponement thereof. |
To participate in the virtual meeting, you must go to www.virtualshareholdermeeting.com/MATX2022and enter the control number provided on the proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. During the meeting, shareholders may vote, ask questions and view the list of registered shareholders as of the record date by following the instructions available on the meeting website.
The Board of Directors has set the close of business on February 22, 201925, 2022 as the record date for the meeting. Owners of Matson, Inc. stock at the close of business on that date are entitled to receive notice of and to vote at the meeting. Shareholders will be asked at the meeting to present valid photo identification. Shareholders holding stock in brokerage accounts must present a copy of a brokerage statement reflecting stock ownership as of the record date.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE VIRTUAL MEETING, PLEASE PROMPTLY VOTE VIA THE INTERNET OR BY TELEPHONE, OR IF YOU RECEIVE PRINTED PROXY MATERIALS, BY TELEPHONE OR BY MAILING THE PROXY CARD.
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| By Order of the Board of Directors, |
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| RACHEL C. LEE Vice President and Corporate Secretary |
March | |
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS |
FOR THE SHAREHOLDER MEETING TO BE HELD ON APRIL |
The Notice of Annual Meeting of Shareholders, Proxy Statement and the |
Annual Report to Shareholders are available at www.proxyvote.com. |
SUMMARY INFORMATION
This summary highlights information contained elsewhere in this Proxy Statement. For more complete information, we encourage you to review the entire Proxy Statement and Matson’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
TABLE OF CONTENTSAnnual Meeting of Shareholders
● Date and Time: | April 28, 2022 at 8:00 a.m. (HST) |
● Place: | On-line only, at www.virtualshareholdermeeting.com/MATX2022 |
● Record Date: | February 25, 2022 |
● Attendance: | All shareholders may attend the virtual meeting online and listen to the webcast. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. |
● Voting: | Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and each of the other proposals. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. |
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Vote at | Vote by Calling 1-800-690-6903 | Vote by Mail | Vote Online at Virtual Meeting |
Meeting Agenda and Voting Recommendations
Agenda Item | Board | Page |
Election of seven directors | FOR | 7 |
Advisory approval of our executive compensation | FOR | 53 |
Ratification of selection of Deloitte & Touche LLP (“Deloitte”) as our independent auditors | FOR | 56 |
Director Nominees
We are asking you to vote “FOR” all of the director nominees listed below. Set forth below is summary information about each director nominee.
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Nominee and Principal Occupation | Age | Director | Independent | Leadership/Committees |
Matthew J. Cox, Chairman and Chief Executive Officer of Matson, Inc. | 60 | 2012 | − | ● Chairman of the Board |
Stanley M. Kuriyama, former Chairman of Alexander & Baldwin, Inc. | 68 | 2016 | ✓ | ● Lead Independent Director ● Compensation ● Nominating (Chair) |
Meredith J. Ching, Executive Vice President, External Affairs of Alexander & Baldwin, Inc. | 65 | 2020 | ✓ | ● Compensation |
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Nominee and Principal Occupation | Age | Director | Independent | Leadership/Committees |
Admiral Thomas B. Fargo, U.S. Navy (Ret.), former Commander of the U.S. Pacific Command | 73 | 2011 | ✓ | ● Audit |
Mark H. Fukunaga, Chairman and Chief Executive Officer of Servco Pacific Inc. | 66 | 2018 | ✓ | ● Compensation (Chair) ● Nominating |
Constance H. Lau, former President and Chief Executive Officer of Hawaiian Electric Industries, Inc. | 69 | 2004 | ✓ | ● Audit (Chair) ● Nominating |
Jenai S. Wall, Chairman and Chief Executive Officer of Foodland Super Market, Ltd. | 63 | 2019 | ✓ | ● Audit ● Nominating |
Corporate Governance Highlights
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✓ 86% of Board is independent (6 of 7 directors) ✓ Commitment to Board diversity ✓ 43% of director nominees are women (50% of independent directors) and 71% self-identify as racially or ethnically diverse ✓ Balanced mix of director tenures, with average of 8 years ✓ Average director age of 66 years ✓ Annual election of all directors ✓ Plurality plus vote for directors ✓ Board oversight of risk management ✓ Annual shareholder engagement program | ✓ Lead Independent Director ✓ Board oversight of succession planning for directors, CEO and senior management ✓ Annual Board and committee self-evaluations ✓ Executive sessions of independent directors ✓ Continuing director education ✓ Strong executive and director stock ownership guidelines ✓ No supermajority voting requirements ✓ Board oversight of sustainability initiatives, human capital and political spending ✓ Mandatory retirement age for directors |
For more information, please see “Corporate Governance” and “Proposal 1 – Election of Directors” in this Proxy Statement.
Executive Compensation
We are asking you to vote “FOR”, on an advisory basis, our executive compensation. Matson’s compensation philosophy is to align the Company’s objectives with shareholder interests through a compensation program that attracts, motivates and retains talented executives, and rewards outstanding performance. In 2021, 81% of Mr. Cox’s and approximately 70% of the other NEO’s target total direct compensation were variable and at-risk based on annual and long-term performance.
CEO Target Total Direct Compensation | Other NEO Target Total Direct Compensation |
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At the 2021 Annual Meeting of Shareholders, our executive compensation program received strong support from shareholders with over 97% voting FOR our say on pay proposal.
Other Compensation Practices
Promote Good Pay Practices | | Discourage Bad Pay Practices |
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✓ Change in control agreements that include double triggers requiring both a change in control event and termination of employment before any severance payments can be made ✓ Pay packages for the CEO and NEOs that are in line with the Company’s peer group ✓ Different financial, operating and stock price performance metrics to determine incentive payments in annual and long-term incentive awards ✓ Vesting of 50% of annual equity award is tied to achievement of specified performance goals, including relative TSR ✓ Minimum vesting periods of three years on all equity awards to senior executives ✓ No-fault clawback policy that applies to all senior management ✓ Policy prohibiting hedging and other speculative transactions involving Company stock by employees, officers and directors | | ✘ No employment contracts with any executive officer ✘ No guaranteed bonus payments to executive officers ✘ No bonus payouts that are not tied to performance ✘ No single trigger vesting of equity in change of control ✘ No pension payouts that are not proportional to pension payouts to employees generally ✘ No excessive perquisites ✘ No excessive severance or change in control provisions ✘ No tax reimbursements or gross-ups ✘ No dividends or dividend equivalents paid on unvested Performance Shares ✘ No unreasonable internal pay disparity ✘ No re-pricing or replacing of underwater stock options, without prior shareholder approval ✘ No above-market interest on deferred compensation plans |
For more information, please see “Executive Compensation” and “Proposal 2 – Advisory Vote to Approve Executive Compensation” in this Proxy Statement.
As a matter of good corporate governance, we are asking you to vote “FOR” the ratification of the appointment of Deloitte as our independent auditors for the fiscal year ending December 31, 2022. Following a robust evaluation process that considered the qualifications, independence and performance of Deloitte, the Audit Committee believes that Deloitte is independent and that it is in the best interests of Matson and our shareholders for Deloitte to serve as our independent auditors. The following table summarizes the fees Deloitte billed to us for professional services for 2021 and 2020. The Audit Committee pre-approved all such services.
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Fiscal Year | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
2021 | 2,608,000 | 0 | 225,000 | 0 |
2020 | 2,345,000 | 20,000 | 129,000 | 0 |
For more information, please see “Proposal 3 – Ratification of Appointment of Independent Registered Public Accounting Firm” in this Proxy Statement.
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CERTAIN INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS | | 20 |
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PROPOSAL 2 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | | 53 |
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PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | 56 |
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1411 Sand Island Parkway, Honolulu, Hawaii 96819
PROXY STATEMENT
Annual Meeting of Shareholders
Thursday, April 25, 201928, 2022
The Board of Directors (the “Board of Directors” or the “Board”) of Matson, Inc. (“Matson” or the “Company”) is soliciting your proxy to vote at the 20192022 Annual Meeting of Shareholders to be held on Thursday, April 25, 201928, 2022 at 8:3000 a.m., Hawaii Standard Time, and any adjournment or postponement of that meeting (the “Annual Meeting”). The Annual Meeting will be held online via live webcast at the Bankers Club on the 30th Floor of the First Hawaiian Center, 999 Bishop Street, Honolulu, Hawaii.www.virtualshareholdermeeting.com/MATX2022. This Proxy Statement and the accompanying proxy card and Notice of Annual Meeting of Shareholders were first mailed or otherwise made available, on or about March 11, 2019,14, 2022, to shareholders of record as of February 22, 2019,25, 2022, the record date for the Annual Meeting.
In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission (“SEC”), instead of mailing a printed copy of our proxy materials to each shareholder of record, we are furnishing proxy materials primarily on the Internet. On or around March 11, 2019,14, 2022, we mailed to our shareholders (other than to certain registered holders, certain street name shareholders, or those who previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials, which contains instructions as to how you may access and review on the Internet all of our proxy materials, including this Proxy Statement and our annual report. The Notice of Internet Availability of Proxy Materials also instructs you as to how you may vote your proxy on the Internet. If you would prefer to receive printed proxy materials, please follow the instructions for requesting printed materials contained in the Notice of Internet Availability of Proxy Materials. This process is designed to expedite shareholders’ receipt of proxy materials, lower the cost of the Annual Meeting and help conserve natural resources.
A Note Regarding Websites and Hyperlinks
Websites provided throughout this document are provided for convenience only, and the content on the referenced websites does not constitute a part of this Proxy Statement and is not incorporated herein by reference.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Who may attend the Annual Meeting?
All shareholders as of the record date, February 25, 2022, are invited to attend the Annual Meeting.
Why is the Annual Meeting being held online via live webcast?
The Board of Directors has decided that the Annual Meeting should be held online this year via live webcast in light of the continued impacts of and risks related to COVID-19 and potential limitations on large gatherings in Honolulu, Hawaii in order to permit shareholders from any location with access to the Internet to participate. The Company has endeavored to provide shareholders with the same rights and opportunities for participation in the Annual Meeting online as an in-person meeting.
How can I attend the Annual Meeting online?
To attend online and participate in the Annual Meeting, you will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials to log into www.virtualshareholdermeeting.com/MATX2022. If you are a beneficial shareholder, you may contact the beneficial owner of shares held in the name of yourbank, broker, banktrust or other nominee or custodian where you must bring proof of ownership (e.g., a current broker’s statement) in orderhold your shares if you have questions about obtaining your control number.
We encourage you to be admittedaccess the meeting prior to the start time. Please allow ample time for online check-in, which will begin at 7:30 a.m. Hawaii Standard Time. We will have technicians ready to assist you with any difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or course of the annual meeting, please call the technical support number that will be posted on the virtual meeting log-in page.
How may I submit questions at the Annual Meeting.Meeting?
Shareholders may submit questions live during the Annual Meeting at the virtual meeting website. We plan to answer as many questions as possible during the time permitted. More information regarding the question and answer process, including the number and types of questions permitted, the time allotted for questions, and how questions will be recognized and answered will be available in the meeting Rules of Conduct, which will be posted on the virtual meeting website before and during the meeting.
Who is entitled to vote at the Annual Meeting?
You are entitled to receive notice of, and to vote at, the Annual Meeting if you own shares of Matson common stock at the close of business on February 22, 2019,25, 2022, the record date for the Annual Meeting. At the close of business on the record date, there were 42,826,267 40,851,326shares of Matson common stock issued and outstanding. Each share of common stock is entitled to one vote onfor each matterdirector nominee and each of the other proposals to be voted on at the Annual Meeting.
What matters will be voted on at the Annual Meeting?Meeting and what are the Board’s voting recommendations?
There are three proposals scheduled to be considered and voted on at the Annual Meeting:
| Election of seven directors; |
| Advisory vote to approve executive compensation; and |
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| Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, |
What are the Board’s voting recommendations?2
The Board recommends that you vote as follows:“FOR” each of the director nominees and “FOR” each of the other proposals.
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How do I vote by proxy before the Annual Meeting?
If you are a shareholder of record, you may submit a proxy via the Internet, by telephone or by mail.
| Submitting a Proxy via the Internet: You can submit a proxy via the Internet until 11:59 p.m. Eastern Daylight Time (5:59 p.m. Hawaii Standard Time) |
| Submitting a Proxy by Telephone: You can submit a proxy for your shares by telephone until 11:59 p.m. Eastern Daylight Time (5:59 p.m. Hawaii Standard Time) |
| Submitting a Proxy by Mail: If you choose to submit a proxy by mail, simply mark your proxy card, date and sign it, and return it in the postage paid envelope provided with the proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. |
By casting your vote in any of the ways listed above, you are authorizing the individuals listed on the proxy to vote your shares in accordance with your instructions. You may also attend the Annual Meeting online and vote in person.your shares.
If you are a “street name” holder, you must provide instructions on voting to your broker, bank, trust or other nominee or custodian holder.
What is the difference between a “shareholder of record” and a “street name” holder?
These terms describe how your shares are held. If your shares are registered directly in your name with our independent transfer agent and registrar, Computershare Shareowner Services LLC, you are a “shareholder of record”. If your shares are held in the name of a brokerage, bank, trust or other nominee as a custodian, you are a “street name” holder and you are considered the “beneficial owner” of the shares. As the beneficial owner of shares, you have the right to direct your broker, bank, trustee or nominee or custodian how to vote your shares, and you will receive separate instructions from your broker, bank or other holder of recordthem describing how to vote your shares.
How many proxy cards might I receive?
You could receive multiple proxy cards if you hold your shares in different ways (e.g., joint tenancy, trusts and custodial accounts) or in multiple accounts. If your shares are held in “street name”, you will receive your proxy card or other voting information from your broker, bank, trusttrustee or other nominee or custodian, and you will return your proxy card or cards to such broker, bank, trust or other nominee.them. You should complete and sign, or provide Internet or telephone voting instructions with respect to, each proxy card you receive, unless you are a “shareholder of record” and you elect to vote via the Internet or by telephone.
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Can I vote my shares in person atduring the Annual Meeting?
Yes. If you decide to join us in personon-line at the virtual Annual Meeting, and you are a “shareholder of record”, you may vote your shares in person at the Annual Meeting. If you hold your shares as a “street name” holder and wish to vote in person atduring the Annual Meeting you must obtain a legal proxy from your broker, bank, trust or other nominee, giving youby following the right to vote the sharesinstructions at the Annual Meeting. You will be unable to vote your shares at the Annual Meeting without a legal proxy.www.virtualshareholdermeeting.com/MATX2022.
Can I revoke my proxy or change my vote after I have submitted a proxy?
You may revoke your proxy or change your vote at any time before it is exercised by:
| delivering to the Corporate Secretary a written notice of revocation, dated later than the proxy, before the vote is taken at the Annual Meeting; |
| delivering to the Corporate Secretary an executed proxy bearing a later date, before the vote is taken at the Annual Meeting; |
| submitting a proxy on a later date via the Internet or by telephone (only your last Internet or telephone proxy will be counted) |
| attending the Annual Meeting online and voting |
Any written notice of revocation, or later dated proxy, should be delivered to:
Rachel C. Lee
Corporate Secretary
Matson, Inc.
555 12th Street
Oakland, California 94607
(510) 628‑4000
Alternatively, you may hand deliver a written revocation notice, or a later dated proxy, to the Corporate Secretary at the Annual Meeting before we begin voting.628-4000
If your shares are held by a broker, bank, brokertrustee or other nominee or custodian, you must follow the instructions provided by the bank, broker or other nomineethem if you wish to revoke your proxy or change your vote.
What constitutes a quorum for the Annual Meeting?
In order to take action on the proposals at the Annual Meeting, a quorum, consisting of a majority of the outstanding shares entitled to vote as of the record date, must be present in person or by proxy.represented at the meeting. Abstentions and broker non-votes will be counted as shares that are present for purposes of determining quorum.
What are the voting requirements for each of the proposals?
Provided a quorum is present:
Proposal 1 – Election of directors: Directors will be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors. A “plurality” voting standard means that the seven nominees who receive the most “for” votes cast will be elected as directors. As discussed below in the section “Corporate Governance—Corporate Governance Guidelines”, the Company has a “plurality plus” policy in uncontested director elections.
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Proposal 2 – Advisory vote to approve executive compensation: The affirmative vote of a majority of the votes cast in person or by proxy at the Annual Meeting is required to approve the advisory vote to approve executive compensation.this proposal.
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Proposal 3 – Ratification of the appointment of Deloitte and Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 20192022: The affirmative vote of a majority of the votes cast in person or by proxy at the Annual Meeting is required to ratify the appointment of the Company’s independent registered public accounting firm.approve this proposal.
A broker “non-vote” occurs when a broker or other nominee who holds shares for a beneficial owner is unable to vote those shares for the beneficial owner because the broker or other nominee does not have discretionary voting power for the proposal and has not received voting instructions from the beneficial owner of the shares. Brokers will have discretionary voting power to vote shares for which no voting instructions have been provided by the beneficial owner only with respect to the proposal to ratify the appointment of the Company’s independent registered public accounting firm. Brokers will not have such discretionary voting power to vote shares with respect to the election of directors or the advisory vote to approve executive compensation.
How will abstentions and broker non-votes affect the votes?
Abstentions and broker non-votes will generally have no effect on the voting results for any matter,proposal, as they are not considered to be votes cast.cast under Hawaii corporate law.
How will my shares be voted if I give my proxy but do not specify how my shares should be voted?
If you provide specific voting instructions, your shares will be voted at the Annual Meeting in accordance with your instructions. If you hold shares in your name (i.e., you are a shareholder of record and not a street name holder) and sign and return a proxy card without giving specific voting instructions, your shares will be voted “FOR” each of the director nominees named in this Proxy Statement and “FOR” Proposals 2 and 3 in accordance with the Board’s recommendations.
At the Annual Meeting, votes will be counted by an election inspector from the Company. Such inspector will be present atparticipate in the Annual Meeting to process and count the votes cast by our shareholders, make a report of inspection count the votes cast by our shareholders and certify as to the number of votes cast on each proposal.
Who will conduct the proxy solicitation and how much will it cost?
We are soliciting proxies from shareholders on behalf of our Board and will pay for all costs incurred by it in connection with the solicitation. In addition to solicitation by mail, the directors, officers and employees of Matson and its subsidiaries may solicit proxies from shareholders in person or by telephone, videoconference, facsimile or email without additional compensation other than reimbursement for their actual expenses.
We have retained Alliance Advisors, a proxy solicitation firm, to assist us in the solicitation of proxies for the Annual Meeting. We will pay Alliance Advisors a fee of approximately $5,500$6,500 and reimburse the firm for its reasonable out‑of‑pocketout-of-pocket expenses.
Arrangements also will be made with brokerage firms and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by
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such persons, and we will reimburse such custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in connection with thethese forwarding of solicitation materials to the beneficial owners of our stock.services.
Where can I find the voting results of the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting and expect to publish final results on a Form 8‑8-K filed with the SEC within four business days after the Annual Meeting.
If you have any questions about voting your shares or attending the Annual Meeting, please call our Corporate Secretary at (510) 628‑4000628-4000 or Alliance Advisors toll free at (855) 723‑7816.723-7816.
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PROPOSAL 1 — ELECTION OF DIRECTORS
The number of directors is currently fixed at seven. Michael J. Chun, having reached the mandatory retirement age under the Company’s Bylaws, is not standing for reelectionEach Director nominee was previously elected by shareholders at the 2019last year’s Annual Meeting. Our Board extends its gratitude to Dr. Chun for his dedication and service to the Company. If elected, each Director nominee will serve until the next Annual Meeting of Shareholders and until his or her successor is duly elected and qualified.
Director Nominees and Qualification of Directors
The nominees of the Board of Directors are the seven persons named below. The Board of Directors believes that all nominees will be able and willing to serve. However, if any nominee should decline or become unable to serve for any reason, the proxy holder will vote your shares to approve the election of any replacement nominee proposed by the Board of Directors or just for the remaining nominees, leaving a vacancy. Alternatively, the Board of Directors may reduce the size of the Board.
The following table provides the name, age (as of March 11, 2019) and principal occupation of each person nominated by the Board of Directors, their business experience during at least the last five years, the year each was first elected or appointed a director (including to predecessor companies) and qualifications of each director. Our Board members have a diverse range of perspectives and are knowledgeable about our businesses.businesses and operating markets. Each director contributes into establishing a Board climate of trust and respect, where deliberations are open and constructive. All of our Board members are U.S. citizens which helps ensure the Company remainsremain in compliance with the requirements of the Merchant Marine Act of 1920, commonly referred to as the Jones Act. In selecting nominees, the Board has considered these factors and has reviewed the qualifications of each nominee, which includes the factors reflected below:
* This skills matrix represents the diverse skillsets of our seven directors being proposed for re-election. The fact that a particular skill or qualification is not designated does not mean the director does not possess that particular attribute.
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Gender Diversity | Racial and Ethnic Diversity |
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Age | Tenure |
●Average age of directors: 66 years (67 years for independent directors) | ●Average Board tenure: 8 years (7 years for independent directors) |
The following table provides the name, age (as of March 14, 2022) and principal occupation of each person nominated by the Board of Directors, their business experience during at least the last five years, the year each was first elected or appointed a director (including to predecessor companies), other public company board directorships, and the skills, qualifications and attributes of each director that led to the conclusion he or she should serve as a director, in light of Matson’s current business and structure.
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Matthew J. Cox Director Since: 2012 | ||
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| Chairman of the Board of Matson since April 2017 and Chief Executive Officer since June 2012; |
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| President of Matson from June 2012 to April 2017; |
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| Chairman and CEO of Matson’s subsidiary, Matson Navigation Company, Inc. (“MatNav”) since June 2012; |
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| President of MatNav from October 2008 to April 2017; |
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| Variety of positions, including Vice President, Refrigerated Containers, at American President Lines (“APL”) (global container transportation company) from 1987 to 1999; and |
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| Director of First Hawaiian, Inc. |
Director Qualifications |
As a member of Matson’s senior management team for over |
1 Mr. Cox will not be standing for re-election at the First Hawaiian, Inc. 2022 annual meeting of stockholders.
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Stanley M. Kuriyama Director Since: 2016 |
● | Chairman of Alexander & Baldwin, Inc., Honolulu, Hawaii (NYSE:ALEX) (real estate investment trust) (“A&B”) from June 2012 to September 2020; and |
● | Chief Executive Officer of A&B from January 2010 to December 2015; Director of A&B from January 2010 through June 2012; and executive Chairman of A&B from January 2016 to December 2016. |
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As the former Chairman and Chief Executive Officer of A&B, Mr. Kuriyama brings to the Board an in- |
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Meredith J. Ching |
● | Executive Vice President, External Affairs of A&B since March 2018; |
● | Senior Vice President, Government & Community Relations of A&B from June 2007 to March 2018; and |
● | Director of Cincinnati Bell Inc. (NYSE:CBB) (telecommunications provider) (“Cincinnati Bell”) from July 2018 to September 2021 and Director of Hawaiian Telcom Holdco, Inc. from May 2015 to June 2018. |
Director Qualifications |
As Executive Vice President of External Affairs at A&B and through her extensive involvement in the Hawaii business community and local community organizations, Ms. Ching brings to the Board deep understanding about Hawaii and Matson’s operating markets. She also has public company board experience via her prior service on the boards of Hawaiian Telcom and Cincinnati Bell Inc. |
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| |
Thomas B. Fargo |
● | Chairman of the Board of Hawaiian Electric Industries, Inc., |
● |
| Commander, U.S. Pacific Command, from May 2002 to March 2005; |
● |
| John M. Shalikasvili Chair in National Security Studies at the National Bureau of Asian Research from 2010 to March 2016; |
● |
| Owner of Fargo Associates, LLC (defense and homeland/national security consultancy) since 2005; |
● |
|
|
| Lead Director of The Greenbrier Companies, Inc. (NYSE:GBX) (transportation equipment and services) since January 2021 and a director since July |
● | Non-Executive Chairman of the Board, Huntington Ingalls Industries, Inc., Newport News, Virginia (NYSE:HII) (military shipbuilder) from March 2011 to April 2020; and Director of Hawaiian Electric Company, Inc. (“HECO”), a subsidiary of HEI, from March 2005 to January 2017. |
Director Qualifications | |
Through his various executive and leadership roles, Admiral Fargo brings to the Board experience in maritime and military operations and in managing complex business organizations. He is knowledgeable about Hawaii and Matson’s operating markets through his involvement in the Hawaii business community and local community organizations. Admiral Fargo also has extensive diplomatic, business and policy experience in Asia. As the senior military commander in East Asia and the Pacific, he was responsible for U.S. security arrangements and engagement with the respective governments of the region. |
6
| |
Mark H. Fukunaga Chair of the Compensation Committee | |
● |
| Chairman and Chief Executive Officer of Servco Pacific Inc. |
Director Qualifications |
As the Chairman and Chief Executive Officer of Servco, a company with operations in automotive distribution and retailing, |
| |
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7
10
| |
| |
Constance H. Lau Director Since: 2004 | |
● |
| President, Chief Executive Officer and Director of HEI |
● |
| Chairman of the |
● | Director of HECO from May 2006 to May 2019. |
| |
Director Qualifications | |
As the former President, Chief Executive Officer and |
| |
| |
Jenai S. Wall |
● |
| Chairman and Chief Executive Officer of Foodland Super Market, Ltd. (grocery retailer) (“Foodland”) |
● |
| Director of |
● | Director of A&B from April 2015 to April 2019. |
|
|
|
Director Qualifications |
As Chairman and Chief Executive Officer of Foodland, the largest locally-owned grocery retailer in Hawaii, and other entities in the Sullivan Family of Companies, Ms. Wall brings to the Board experience in managing complex business organizations and real-time logistics expertise. She is knowledgeable about Hawaii and Matson’s operating markets through her involvement in the Hawaii business community and local community organizations. She also has public company board experience via her service on the |
The Board of Directors recommends that shareholders vote “FOR”
each of the seven nominees for director.
2 Ms. Wall will not be standing for re-election at the First Hawaiian, Inc. 2022 annual meeting of stockholders.
11
The NYSE listing standards and our Corporate Governance Guidelines require that a majority of our Board of Directors, andincluding every member of the Audit, Compensation and Nominating and Corporate Governance Committees be “independent.”“independent” and that committee members satisfy heighted independence standards, as applicable. The Board has reviewed each of its current directors and the additional nominee for director, and has determined that all of such individuals, with the exception of Mr. Cox, who is an executive officer of Matson, are independent under NYSE rules. The Board has also determined that Jeffrey N. Watanabe, who retired from the Board in April 2018 upon reaching the mandatory retirement age under the Company’s Bylaws, was independent under NYSE rules. In making its independence determinations, the Board considered the transactions, relationships or arrangements described below in “Certain Information Regarding Directors and Executive Officers—Certain Relationships and Transactions”, as well as the following, none of which the Board deemed to be material to Matson: Dr. Chun—Matson’s banking relationships with Bank of Hawaii, an entity of which Dr. Chun was a director; Admiral Fargo—Matson’s banking relationships with American Savings Bank, the corporate parent of which Admiral Fargo is a director; Mr. Fukunaga—Matson’s commercial relationships with Servco, an entity of which Mr. Fukunaga is chairman and chief executive officer; Ms. Lau—Matson’s banking relationships with American Savings Bank, the corporate parent of which Ms. Lau iswas president, chief executive officer, and a director;director during 2021; and Ms. Wall—Matson’s commercial relationships with Foodland, an entity of which Ms. Wall is chairman and chief executive officer, and Matson’s banking relationships with First Hawaiian Bank, an entity of which Ms. Wall is a director;director and Mr. Watanabe—Matson’s banking relationships with American Savings Bank, an entitythe corporate parent of which Mr. WatanabeMs. Wall is a director.
The Board recognizes that one of its key responsibilities is to evaluate and determine the optimal leadership structure to best serve the interests of shareholders. The Board understands that there is no single, generally accepted approach to providing Board leadership. Given the dynamic and competitive environment in which we operate, the right Board leadership structure may vary as circumstances warrant.
The Company’s Bylaws and Corporate Governance Guidelines provide the Board flexibility to determine whether it is in the best interests of the Company and its shareholders to have a combined or separate Chairman of the Board and Chief Executive Officer (“CEO”). The Board has combined the Chairman and CEO roles and the independent directors have designated a Lead Independent Director because it provides unified leadership and accountability in quickly and seamlessly identifying and carrying out the strategic priorities of the Company. With its Lead Independent Director, this governance structure also provides a form of leadership that allows the Board to function independently from management capable ofand exercise objective judgment regarding management’s performance, and enables the Board to fulfill its duties effectively and efficiently. The Lead Independent Director has significant responsibilities, which are set forth in the Company’s Corporate Governance Guidelines, including:
| Consults with the Chairman on agendas and meeting schedules to assure that there is sufficient time for discussion of all agenda items; |
| Consults with the Chairman on information sent to the Board; |
| Facilitates the process for the Board’s self-evaluation; |
| Presides at Board meetings in the absence of the Chairman; |
| Presides at executive sessions of non-management directors; |
| Has authority to call meetings of the independent directors; |
| Serves as liaison between the independent directors and the Chairman and CEO; and |
| If appropriate, and in coordination with executive management, be available for consultation and direct communication with major shareholders. |
12
The Board believes that the Company and its shareholders continue to be best served at this time by having Matthew J. Cox serve as the Chairman and CEO, and Stanley M. Kuriyama serve as the Lead Independent Director.
Each year, the Nominating and Corporate Governance Committee, together with the Lead Independent Director, oversees an annual Board and committee evaluation process to assess its performance and effectiveness. As part of this process, Board members complete a questionnaire that requests subjective comment in key areas and solicits specific topics on which Directors would like to focus during the upcoming year. The results are discussed by the Board in an executive session at a regularly scheduled Board meeting. Each committee conducts its own self-evaluation and reports the findings of the self-evaluations to the full Board.
The Board’s Role in Risk Oversight
The Board has oversight of the risk management process, which includes overseeing our process for identifying, assessing and mitigating significant financial, operational, legal, strategic, cyber securitycybersecurity and other risks that may affect the Company.Company, including those related to climate change and human capital management. Risk oversight plays a role in all major Board decisions and the evaluation of riskkey risks is a keycore part of the decision-making process. For example, the identification of risks and the development of sensitivity analyses are key requirements for
9
capital requests that are presented to the Board. The Board administers its oversight role in part through the Audit Committee. One of theits committees. The Audit Committee’s risk responsibilities involvesinclude discussing policies regarding risk assessment and risk management.management as well as assessing and discussing risks arising from financial reporting. The Audit Committee also provides oversight of the Company’s enterprise risk management program, which includes management of climate-related risks. The Compensation Committee’s risk responsibilities include assessing risks arising from the Company’s compensation policies and practices. The Nominating and Corporate Governance Committee’s risk responsibilities include discussing governance-related risks.
This risk management process occurs throughout all levels of the organization, but is also facilitated through a risk management steering committee comprised of senior management, whose members meet regularly to identify and address specific significant risks. Risk management is reflected in the Company’s compliance, auditing and risk management functions, and its risk-based approach to strategic and operating decision-making. Management reviews its risk management activities with the Audit Committee and the full Board of Directors on a regular basis. The Board periodically receives various reports on risk-related matters, including presentations by senior management that coverwith an overview of the risk management program and that include risk management perspectives from each of Matson’s business segments in the company-wide strategic plan.
In 2018,2021, management worked with the Compensation Committee and Exequity LLP, an independent executive compensation consulting firm retained by the Compensation Committee, to review all Company incentive plans and related policies and practices, and the overall structure of total pay and pay mix, the risk management process and related internal controls.controls, and mitigating factors in plan design and governance.
The Company concluded that the risks arising from our incentive compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
13
Board of Directors and Committees of the Board
The Board of Directors held eightseven meetings during 2018.2021. In conjunction with six threeof these meetings, the non‑non-management directors of Matson met in formally-scheduled executive sessions led by the Lead Independent Director. In 2018,2021, all directors attended more than 75%all of the aggregate meetings of the Board of Directors and the Committees of the Board on which they served. In addition, Matson’s directors are strongly encouraged to attend the Annual Meeting of Shareholders. All but one of the directors then serving on the Board attended the 20182021 Annual Meeting.
The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, each of which is governed by a charter, which is available on the corporate governance page of Matson’s website at www.matson.com. Each committee meets regularly throughout the year, reports its actions to the Board, receives reports from senior management, annually evaluates its performance and can retain outside advisors. The composition of each committee is set forth below:
Director | Audit | Compensation | Nominating and |
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| |
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| |
Matthew J. Cox | | | |
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| ||
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| |
Constance H. Lau | Chair | |
|
Mark H. Fukunaga | | Chair | ✓ |
Stanley M. Kuriyama | | ✓ | Chair |
Meredith J. Ching | | ✓ | |
Thomas B. Fargo | ✓ | | |
Jenai S. Wall | ✓ | | ✓ |
Audit Committee: Each member is an independent director under the applicable NYSE listing standards and SEC rules. In addition, the Board has determined that Ms. Lau and Mr. Baird areis an “Audit Committee Financial Experts”Expert” under SEC rules. The duties and responsibilities of the Audit Committee are set forth in a written charter adopted by the Board of Directors, and are summarized in the Audit Committee Report, which appears in this Proxy Statement. The Audit Committee met fivenine times during 2018.2021.
Compensation Committee: Each member is an independent director under the applicable NYSE listing standards and SEC rules. The Compensation Committee has general responsibility for managementthe compensation and benefits of the Company’s executive officers and other salaried employee compensation and benefits,employees, including incentive compensation and stock incentive plans, and for making recommendations on director compensation to the Board. The Compensation Committee may form subcommittees and delegate such authority as the Compensation Committee deems appropriate, subject to any restrictions by law or listing standard. For further information on the processes and procedures for consideration of executive compensation, see the “Executive Compensation
10
– Compensation Discussion and Analysis” section of this Proxy Statement. The Compensation Committee met five times during 2018.2021.
Nominating and Corporate Governance Committee: Each member is an independent director under the applicable NYSE listing standards. The functions of the Nominating and Corporate Governance Committee include recommending to the Board individuals qualified to serve as directors; recommending to the Board the size and composition of committees of the Board and monitoring the functioning of the committees; advising on Board composition and procedures; reviewing corporate governance issues; overseeing the annual evaluation of the Board; and ensuring that an evaluation of
14
management occurs. The Nominating and Corporate Governance Committee met three times during 2018.2021.
Nominating and Corporate Governance CommitteeDirector Nomination Processes
The Nominating and Corporate Governance Committee identifies potential nominees by asking current directors to notify the Nominating and Corporate Governance Committee of qualified persons who might be available to serve on the Board. From time to time, the Nominating and Corporate Governance Committee also engages firms that specialize in identifying director candidates.
The Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders. In considering such candidates, the Nominating and Corporate Governance Committee will take into consideration the needs of the Board and the qualifications of the candidate. To have a candidate considered by the Nominating and Corporate Governance Committee, a shareholder must submit a written recommendation that meets the requirements of the Company’s Bylaws, including the name of the shareholder, evidence of the shareholder’s ownership of Matson stock (including the number of shares owned and the length of time of ownership), the name of the candidate, the candidate’s qualifications to be a director and the candidate’s consent for such consideration.
The shareholder recommendation and information described above must be sent to the Corporate Secretary at 555 12th Street, Oakland, California 94607.
The Nominating and Corporate Governance Committee believes that the minimum qualifications for serving as a director are high ethical standards, a commitment to shareholders, a genuine interest in Matson and a willingness and ability to devote adequate time to a director’s duties. The Company’s Corporate Governance Guidelines authorize the Nominating and Corporate Governance Committee to consider other factors it deems to be in the best interests of Matson and its shareholders, including whether nominees possess such knowledge, experience, skills, expertise and diversity to enhance the Board’s ability to manage and direct the business and affairs of the Company, including, when applicable, to enhance the ability of committees of the Board to fulfill their duties and/or to satisfy any independence requirements imposed by law, regulation or NYSE rules. While the Nominating and Corporate Governance Committee does not have a separate written diversity policy, it does consider diversity, including diversity of knowledge, skills, professional experience, gender, ethnicity, education, expertise, and representation in industries relevant to the Company, as an important factor in its evaluation of candidates. The Nominating and Corporate Governance Committee reviews annually with the Board the composition of the Board as a whole and recommends any measures to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills and expertise to oversee the Company’s execution of its strategy.
Once a potential candidate has been identified by the Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee reviews information regarding the person to determine whether the person should be considered further. If appropriate, the Nominating and Corporate Governance Committee may request information from the candidate, review the person’s accomplishments, qualifications and references, and conduct interviews with the candidate. The Nominating and Corporate Governance Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder.
15
Corporate Governance Guidelines
The Board of Directors has adopted Corporate Governance Guidelines to assist the Board in the exercise of its responsibilities and to promote the more effective functioning of the Board and its committees. The guidelines provide details on matters such as:
| Goals and responsibilities of the Board; |
| Selection of directors, including the Chairman of the Board and the Lead Independent Director; |
11
| Board membership criteria and director retirement age; |
| Stock ownership guidelines; |
| Director independence and executive sessions of non-management directors; |
| Oversight of sustainability matters; |
● | Board self-evaluation; |
| Board compensation; |
| Board access to management and outside advisors; |
| Board orientation and continuing education; and |
| Leadership development, including annual evaluations of the CEO and management succession plans. |
“Plurality Plus” Policy. Our Corporate Governance Guidelines provide that any director nominee who receives a greater number of “withhold” votes than “for” votes in an uncontested election is required to tender his or her resignation for consideration by the Nominating and Corporate Governance Committee of the Board. The Nominating and Corporate Governance Committee will consider the resignation offer and recommend to the Board whether to accept or reject the resignation offer, or whether other action should be taken. The Board will consider the recommendation of the Nominating and Corporate Governance Committee and will determine whether or not to accept the resignation offer. Full details of this policy are set forth in our Corporate Governance Guidelines, which are available on the corporate governance page of Matson’s corporate website at www.matson.com.
Matson’s core values include being an industry leader in environmental stewardship, contributing positively to the communities in which we live and work, and conducting our business with integrity and accountability.
Our Corporate Governance Guidelines provide that as part of our commitment to sustainability, the Board, with the assistance of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, is responsible for overseeing sustainability matters relevant to the Company’s business, including environmental, social and governance (“ESG”) matters. In 2021, ESG topics were presented or discussed at every regular Board meeting and included reviews of Matson’s ESG disclosures, sustainability reports (which generally are aligned with the Global Reporting Initiative and the Sustainability Accounting Standards Board reporting frameworks), reporting aligned with the Task Force on Climate-Related Financial Disclosures (“TCFD”), long-term fleet plans, greenhouse gas (“GHG”) emission reduction goals, regulatory updates and compliance matters.
16
In 2021, Matson took several steps to advance our sustainability journey, including among other things, the following:
● | Published an inaugural Sustainability Report which describes the Company’s process to identify significant ESG issues, measures we are taking to promote responsible, sustainable and ethical operations, and the progress we have made to advance our sustainability strategy and goals; |
● | Published a Sustainability Report Supplement with additional data regarding our 2020 performance; |
● | Announced GHG emission reduction goals that reflect Matson’s commitment to help the world decarbonize and limit climate change, including: |
o | Reduce Scope 1 GHG emissions from our owned fleet by 40% by 2030; and |
o | Achieve net zero Scope 1 GHG emissions from our fleet by 2050; and |
● | Expanded disclosures regarding our human capital management strategy in the Company’s Annual Report on Form 10-K and sustainability reports, and published EEO-1 data on our website. |
In addition, in March 2022, Matson published a report aligned with the recommendations of the TCFD. In the TCFD report, we discuss our governance and risk management approach for climate-related matters, several climate-related risks and opportunities for our business from our scenario analysis, and key climate-related metrics and targets.
For more information about our sustainability reports, initiatives and strategy, please see our website at www.matson.com/sustainability. Website references included throughout are provided for convenience only, and the contents of our websites do not constitute a part of and are not incorporated by reference into this proxy statement. Our ESG goals are aspirational and may change. Statements regarding our goals are not guarantees or promises that they will be met.
The following table summarizes the compensation paid by Matson to non-employee directors for services rendered during 2018:2021:
2021 DIRECTOR COMPENSATION
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| ||||||||
| | | | | | | | | ||||||||
Name |
| Fees Earned |
| Stock Awards |
| All Other |
| Total | | Fees Earned | | Stock Awards | | All Other | | Total |
(a) |
| (b) |
| (c) |
| (g) |
| (h) | | (b) | | (c) | | (g) | | (h) |
W. Blake Baird |
| 86,500 |
| 100,008 |
| 2,436 |
| 188,944 | ||||||||
Michael J. Chun |
| 90,000 |
| 100,008 |
| 7,013 |
| 197,021 | ||||||||
Meredith J. Ching | | 82,500 | | 115,001 | | 3,334 | | 200,835 | ||||||||
Thomas B. Fargo |
| 80,500 |
| 100,008 |
| 16,562 |
| 197,070 | | 86,250 | | 115,001 | | − | | 201,251 |
Mark H. Fukunaga |
| 62,625 |
| 100,008 |
| — |
| 162,633 | | 98,500 | | 115,001 | | 3,334 | | 216,835 |
Stanley M. Kuriyama |
| 107,875 |
| 100,008 |
| — |
| 207,883 | | 128,500 | | 115,001 | | 6,457 | | 249,958 |
Constance H. Lau |
| 96,500 |
| 100,008 |
| 2,436 |
| 198,944 | | 107,250 | | 115,001 | | 3,334 | | 225,585 |
Jeffrey N. Watanabe |
| 39,500 |
| — |
| 29,654 |
| 69,154 | ||||||||
Jenai S. Wall | | 92,250 | | 115,001 | | 3,334 | | 210,585 |
(1) | Represents the |
17
(2) | Options have not been granted to directors since 2007. No non-employee directors had any stock |
(3) | Represents dividend equivalent amounts payable upon vesting of restricted stock |
12
For 2018,Generally, non-employee directors receivedreceive cash retainers as follows, all of which wereare pro-rated and paid quarterly. All non-employee directors other than Mr. Watanabe received an annual cash retainer of $70,000 for their service on the Board. Messrs. Watanabe and Kuriyama received pro-rated cash retainers of $10,000 and $22,500, respectively, for serving as Lead Independent Director for a portion of the year. Ms. Lau received an annual cash retainer of $19,000 for serving as Chair of the Audit Committee. All other Audit Committee members received an annual cash retainer of $9,000. Dr. Chun received an annual cash retainer of $12,500 for serving as Chair of the Compensation Committee. All other Compensation Committee members received an annual cash retainer of $7,500. Mr. Kuriyama received an annual cash retainer of $11,000 for serving as Chair of the Nominating and Corporate Governance Committee. All other Nominating and Corporate Governance Committee members received an annual cash retainer of $6,000. quarterly:
| | | | | | |
Annual cash retainer: | | | |
| $ | 75,000 |
Additional annual cash retainer for Lead Independent Director: | | | | | $ | 30,000 |
Additional annual cash retainers for committee service: |
| | Chair | | | Member |
Audit Committee | | $ | 24,000 | | $ | 9,000 |
Compensation Committee | | $ | 17,500 | | $ | 7,500 |
Nominating and Corporate Governance Committee | | $ | 16,000 | | $ | 6,000 |
For any telephonic or in-person boardin-person Board or committee meetings in excess of seventhe minimum number of meetings adescribed below, an additional per meeting fee of $1,500 was paid to each director who attended such meetings. meetings:
| | | |
Excess meeting fees (per meeting): |
| | |
More than seven Board meetings | | $ | 1,500 |
More than six Audit Committee meetings | | $ | 750 |
More than five Compensation Committee meetings | | $ | 750 |
More than four Nominating and Corporate Governance Committee meetings | | $ | 750 |
Directors who are employees of Matson or its subsidiaries did not receive compensation for serving as directors. Non-employee directors may defer half or all of their annual cash retainer and meeting fees until retirement or until a later date they may select; Mr. Fukunaga and Ms. Lau deferred all of hertheir respective annual cash retainerretainers and meeting fees in 2018.2021.
Under the terms of the Amended and Restated Matson, Inc. 2016 Incentive Compensation Plan (the “2016 Plan”), an automatic grant of approximately $100,000$115,000 in restricted stock units was awarded to each director who is elected or reelected as a non-employeenon-employee director at each Annual Meeting of Shareholders. These awards have 100% cliff vesting on the earlier of the grant date anniversary or the next annual shareholders meeting following the date of the grant. Non-employee directors may defer all or a portion of their vested shares until cessation of board service or the fifth anniversary of the award date, whichever is earlier. Mr. KuriyamaThe deferred shares earn dividend equivalents that are paid when the shares are issued. Admiral Fargo elected to make such a deferral in 2018.2021.
Directors have business travel accident coverage of $200,000 for themselves and $50,000 for their spouses while accompanying directors on Matson business. They also may participate in the Company’s matching gifts program for employees, in which the Company matches contributions to qualified cultural and educational organizations up to a maximum of $3,000 annually.
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Director ShareStock Ownership Guidelines
The Board has a ShareStock Ownership Guideline PolicyGuidelines that encouragesencourage each non-employee director to own Matson common stock (including restricted stock units) with a value of five times the amount of the current cash retainer within five years of becoming a director. All non-employee directors have met or are on track to meet the established guidelines.
Matson values the views of its shareholders, which is why we regularly and proactively engage with our largest shareholders throughout the year and share their perspectives with the Board. During 2021, management met or offered to meet with shareholders who collectively own approximately two-thirds of our stock to discuss our business strategy and operations, sustainability strategy, and diversity, equity and inclusion strategy, and to solicit feedback on these and a variety of other topics. Management, including our Chairman and Chief Executive Officer, also engaged with a large institutional investor who had withheld votes for Mr. Kuriyama at the 2021 Annual Meeting of Shareholders to determine the reason for such vote. This investor indicated that their vote was intended to encourage the Company to set GHG emission reduction targets and publish a TCFD-aligned report. We believe the Company has provided responsive disclosure (see “—ESG and Sustainability” above).
Shareholders and other interested parties may contact any of the directors, including the Lead Independent Director, or the independent directors as a group, by mailing correspondence “c/o Matson Law Department” to Matson’s corporate offices at 555 12th Street, Oakland, California 94607. The Law Department will forward such correspondence to the appropriate director(s). However, the Law Department reserves the right not to forward any offensive or otherwise inappropriate materials.
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS
The following table lists the names and addresses of the only shareholders known by Matson to have owned beneficially more than five percent of Matson’s common stock outstanding as of December 31, 2018,2021, the number of shares they beneficially own, and the percentage of outstanding shares such ownership represents, based upon the most recent reports filed with the SEC. Except as indicated in the footnotes, such shareholders have sole voting and dispositive power over shares they beneficially own.
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Name and Address of Beneficial Owner |
| Amount of |
| Percent of |
|
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 |
| 6,431,213 | (a) | 15.06 | % |
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The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 |
| 4,309,115 | (b) | 10.09 | % |
| | | | |
---|---|---|---|---|
Name and Address of Beneficial Owner | Amount of | | Percent of | |
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | 6,451,459 (a) | | 15.7% |
| | | | |
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | | 4,502,169 (b) | | 11.0% |
| | | | |
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|
Name and Address of Beneficial Owner |
| Amount of |
| Percent of |
|
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 |
| 3,378,404 | (c) | 7.91 | % |
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|
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, TX 78746 |
| 2,640,783 | (d) | 6.18 | % |
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Fuller & Thaler Asset Management, Inc. 411 Borel Avenue, Suite 300 San Mateo, CA 94402 |
| 2,209,654 | (e) | 5.17 | % |
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Hotchkis and Wiley Capital Management, LLC 725 S. Figueroa Street, 39th Floor Los Angeles, CA 90017 |
| 2,184,354 | (f) | 5.11 | % |
| | | | |
---|---|---|---|---|
Name and Address of Beneficial Owner | Amount of | | Percent of | |
ArrowMark Colorado Holdings, LLC 100 Fillmore Street, Suite 325 Denver, Colorado 80206 | | 3,420,041 (c) | | 8.3% |
| | | | |
Fuller & Thaler Asset Management, Inc. 411 Borel Avenue, Suite 300 San Mateo, CA 94402 | | 2,165,940 (d) | | 5.3% |
| | | | |
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 | | 2,078,714 (e) | | 5.1% |
(a) | As reported in |
(b) | As reported in |
(c) | As reported in |
(d) | As reported in a Schedule 13G/A filed with the SEC on February 7, 2022, as of December 31, 2021, Fuller & Thaler Asset Management, Inc. has sole voting power over 2,119,372shares and sole dispositive power over all 2,165,940 shares, and does not have shared voting or shared dispositive power over any shares. |
(e) | As reported in a Schedule 13G/A filed with the SEC on February 14, 2022, as of December 31, 2021, T. Rowe Price Associates, Inc. has sole voting power over |
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CERTAIN INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
Security Ownership of Directors and Executive Officers
The following table shows the number of shares of Matson common stock beneficially owned as of February 22, 201925, 2022 by each director and nominee, by each Named Executive Officer (as defined below), and by directors, nominees and executive officers as a group. Except as indicated in the footnotes, directors, nominees and executive officers have sole voting and dispositive power over shares they beneficially own.
| | | | | | | | |
---|---|---|---|---|---|---|---|---|
Name or Number in Group |
| Number of |
| Restricted |
| Total |
| Percent of |
Meredith J. Ching | | 26,919 | | 1,706 | | 28,625 | | * |
Matthew J. Cox | | 242,930 | | — | | 242,930 | | * |
Thomas B. Fargo | | 27,057 | | — | | 27,057 | | * |
Mark H. Fukunaga | | 17,096 | | 1,706 | | 18,802 | | * |
Stanley M. Kuriyama | | 36,139 | | 1,706 | | 37,845 | | * |
Constance H. Lau | | 63,936 | | 1,706 | | 65,642 | | * |
Jenai S. Wall | | 8,091 | | 1,706 | | 9,797 | | * |
| | | | | | | | |
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20
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Name or Number in Group |
| Number of Shares Owned(a) |
| Stock Options(b) |
| Total |
| Percent of |
|
W. Blake Baird |
| 13,583 |
| 0 |
| 13,583 |
| * |
|
Michael J. Chun |
| 50,411 |
| 0 |
| 50,411 |
| * |
|
Matthew J. Cox |
| 214,796 |
| 31,861 |
| 246,657 |
| * |
|
Thomas B. Fargo |
| 18,406 |
| 0 |
| 18,406 |
| * |
|
Mark H. Fukunaga |
| 7,000 |
| 0 |
| 7,000 |
| * |
|
Stanley M. Kuriyama |
| 29,848 |
| 0 |
| 29,848 |
| * |
|
Constance H. Lau |
| 50,670 |
| 0 |
| 50,670 |
| * |
|
Jenai S. Wall |
| 0 |
| 0 |
| 0 |
|
|
|
Joel M. Wine |
| 101,861 |
| 90,335 |
| 192,196 |
| * |
|
Ronald J. Forest |
| 43,975 |
| 34,920 |
| 78,895 |
| * |
|
Peter T. Heilmann |
| 29,555 |
| 0 |
| 29,555 |
| * |
|
John P. Lauer |
| 15,866 |
| 0 |
| 15,866 |
| * |
|
15 Directors, Nominees, and Executive Officers as a Group |
| 684,646 |
| 172,294 |
| 856,940 |
| 2.00 | % |
| | | | | | | | |
---|---|---|---|---|---|---|---|---|
Name or Number in Group |
| Number of |
| Restricted |
| Total |
| Percent of |
Joel M. Wine | | 135,748 | | — | | 135,748 | | * |
Ronald J. Forest | | 36,704 | | — | | 36,704 | | * |
Peter T. Heilmann | | 43,393 | | — | | 43,393 | | * |
John P. Lauer | | 23,379 | | — | | 23,379 | | * |
22 Current Directors and Executive Officers as a Group | | 777,748 | | 12,194 | | 789,942 | | 1.9% |
(a) | Amounts include shares as to which directors, nominees and executive officers have shared voting and dispositive power, as follows: |
(b) | Amounts include shares deemed to be beneficially owned by directors, nominees and executive officers because they may be acquired within 60 days from February |
* | Represents less than 1% of the issued and outstanding shares of the Company’s common stock as of February 25, 2022. |
*Represents less than 1% of the issued and outstanding shares of the Company’s common stock as of February 22, 2019.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires Matson’s directors and executive officers, and persons who own more than 10% of Matson’s common stock, to file reports of ownership and changes in ownership with the SEC. Based solely on a review of those reports provided to usfiled with the SEC and any written representations that no other reports were required, Matson believes that, during fiscal 2018,2021, its directors and executive officers and persons who ownowned more than 10% of Matson’s common stock filed all reports required to be filed under Section 16(a) on a timely basis.
Certain Relationships and Transactions
Matson has adopted a written policy under which the Audit Committee must pre-approveapprove all related person transactions that are disclosable under SEC Regulation S-K, Item 404(a). Prior to entering into a transaction with Matson, directors and executive officers (and their family members) and shareholders who beneficially own more than five percent of Matson’s common stock must make full disclosure of all facts and circumstances to the Law Department. The Law Department then determines whether such transaction requires the approval of the Audit Committee. The Audit Committee considers all of the relevant facts available, including (if applicable) but not limited to: the benefits to the Company; the impact on a director’s independence in the event the person in question is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms available to unrelated third parties or to employees generally. The Audit Committee will approve only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its shareholders.
The Audit Committee has established written procedures to address situations when approvals need to be sought between meetings. Whenever possible, proposed related person transactions will be included as an agenda item at the next scheduled Audit Committee meeting for review and approval. However, if it appears that a proposed related person transaction will occur prior to the next scheduled Audit Committee meeting, approval will be sought from Audit Committee members between meetings. Approval by a majority of the Audit Committee members will be sufficient to approve the related person transaction. If a related person transaction is approved in this manner, the action will be reported at the next Audit Committee meeting.
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If the Company becomes aware of a related person transaction that has not been previously approved, the Audit Committee will evaluate the transaction, taking into account the same factors described above. Based on the conclusions reached, the Audit Committee will evaluate all options, including but not limited to ratification, amendment or termination of the related person transaction. The transactions described below were approved by the Audit Committee in accordance with its written procedures.
Mr. Fukunaga, a director of Matson, is Chairman and Chief Executive Officer, and owns more than 10% of the common stock, of Servco. Servco’s annual revenue is over $1 billion. In 2018,2021, Matson provided shipping services to or for the benefit of Servco for approximately $261,000, less than 0.02% of Servco’s annual revenue.$1,216,000. The transactions between Servco and Matson were conducted in the ordinary course of business on standard commercial terms.
Ms. Lau, a director of Matson, is the former President, Chief Executive Officer and Director of HEI, as well as the former Chairman of the Board of American Savings Bank, a subsidiary of HEI. American Savings Bank currently has a 5.38% participation in the Company’s $650,000,000, five-year unsecured revolving credit facility. The credit facility, including American Savings Bank’s participation, was entered into in the ordinary course of business; was made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender; and did not involve more than the normal risk of collectability or present other unfavorable features.
Ms. Lau abstained from voting when the Board approved the amendmentWall, a director of Matson, is Chairman and restatementChief Executive Officer, and owns more than 10% of the revolving credit facilitycommon stock, of Foodland. In 2021, Matson provided shipping services to or for the benefit of Foodland for approximately $427,000. The transactions between Foodland and Matson were conducted in 2017.the ordinary course of business on standard commercial terms.
The parents of Vicente S. Angoco, the Senior Vice President, Pacific of Matson, own and operate a company which provides drayage of some Matson containers in Guam. The approximate dollar value of the payment from Matson in connection with this service in 20182021 was $374,600.$300,000. The brother of Mr. Angoco owns and operates a company with which the Company contracts for chassis repair and maintenance services in Guam. The approximate dollar value of the payment from Matson in connection with this service in 20182021 was $614,700.$340,000. The brother-in-law of Mr. Angoco owns and operates a company with which the Company contracts for the provision of temporary and contract workers in Guam. The approximate dollar value of the payment from Matson in connection with this service in 20182021 was $765,000.$702,000. Mr. Angoco has no monetary or other interest in any of the businesses described above. These transactions were conducted in the ordinary course of business on standard commercial terms.
Matson has adopted a Code of Ethics that applies to the CEO, the Chief Financial Officer (“CFO”) and the Controller. A copy of the Code of Ethics is posted on the corporate governance page of Matson’s corporate website, www.matson.com. Matson intends to disclose any changes in or waivers from its Code of Ethics by posting such information on its website.website within four business days following the amendment or waiver.
Matson has adopted a Code of Conduct, which is applicable to all directors, officers and employees, and is posted on the corporate governance page of Matson’s corporate website. Matson intends to disclose any changes in its Code of Conduct or waivers from its Code of Conduct granted to directors or executive officers by posting such information on its website.
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The name of each executive officer of Matson, (in alphabetical order),his or her age (in parentheses) as of March 11, 2019,14, 2022, and present and prior positions with Matson and business experience for the past five years, and the diversity of the executive officers in the aggregate, are given below. Generally, the term of office of executive officers is at the pleasure of the Board of Directors.
Gender Diversity | Racial and Ethnic Diversity |
●12% of executive officers self-identify as female | ●19% of executive officers self-identify as racially/ethnically diverse |
Vicente S. Angoco, Jr. (52)(55): Senior Vice President Pacific since June 2012; Senior Vice President, Pacific of MatNav since January 2011; Vice President, Pacific of MatNav, March 2008 – January 2011; General Manager, Guam and Micronesia of MatNav, December 2006 – March 2008; first joined Matson or a subsidiary in 1996.
Grace M. Cerocke (43): Senior Vice President since February 2021; Senior Vice President, Finance of Matson Logistics, since February 2021; Vice President, Finance of Matson Logistics, October 2012 – January 2021; first joined Matson or a subsidiary in 1997.
Matthew J. Cox (57)(60): Chairman of the Board since April 2017 and Chief Executive Officer since June 2012; President, June 2012 – April 2017; Chairman and CEO of MatNav since June 2012; President of MatNav, October 2008 – April 2017; Executive Vice President and Chief Operating Officer of MatNav, July 2005 – September 2008; first joined Matson or a subsidiary in 2001.
Branton B. Dreyfus (65)(68): Senior Vice President since January 2020; Vice President, February 2019 – January 2020; Senior Vice President, Alaska of MatNav since January 2020; Vice President, Alaska of MatNav, February 2019;2019 – January 2020; Vice President, Key Commodities of MatNav, January 2019 – February 2019; Vice President, Equipment and Purchasing of MatNav, May 2017 – February 2019; Vice President, West Coast Terminals and Vehicle Operations of MatNav, July 2005 – May 2017; first joined Matson or a subsidiary in 1993.
Ronald J. Forest (63)(66): Senior Advisor since February 2022; President, since April 2017;2017–January 2022; Senior Vice President, Operations, June 2012 – April 2017; President of MatNav, since April 2017;2017–January 2022; Senior Vice President, Operations of MatNav, April 2003 – April 2017; first joined Matson or a subsidiary in 1995.
Qiang Gao (58): Senior Vice President since February 2021; Senior Vice President, Asia of MatNav since February 2021; Vice President, Asia of MatNav, September 2012 – January 2021; first joined Matson or a subsidiary in 2003.
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Peter T. Heilmann (53): Executive Vice President, Chief Administrative Officer and General Counsel since February 2021; Senior Vice President, Chief Administrative Officer and General Counsel,
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Peter T. Heilmann (50):April 2018 – February 2021; Senior Vice President and Chief Administrative Officer, since April 2017 and General Counsel since– April 2018; Secretary, May 2012 – January 2018; Senior Vice President and Chief Legal Officer, March 2014 – April 2017; SeniorExecutive Vice President, Chief Administrative Officer and General Counsel of MatNav since March 2014;February 2021; Senior Vice President, Chief Administrative Officer and General Counsel of MatNav, April 2017 – February 2021; Senior Vice President and Chief Administrative Officer of MatNav, sinceMarch 2014 – April 2017; Vice President and Deputy General Counsel of MatNav, May 2012 – February 2014; first joined Matson or a subsidiary in 2012.
Richard S. Kinney (58): Senior Vice President since April 2020; Senior Vice President, Network Operations of MatNav since January 2020; Vice President, West Coast Terminals and Purchasing of MatNav, May 2017 – January 2020; Vice President, Equipment & Inland Operations, January 2016 – April 2017; first joined Matson or a subsidiary in 1998.
John P. Lauer (58)(61): Executive Vice President and Chief Commercial Officer since February 2021; Senior Vice President and Chief Commercial Officer, since April 2017;2017 – January 2021; Senior Vice President, Ocean Services, March 2015 – April 2017; Executive Vice President and Chief Commercial Officer of MatNav since February 2021; Senior Vice President and Chief Commercial Officer of MatNav, since April 2017;2017 – January 2021; Senior Vice President, Ocean Services of MatNav, March 2015 – April 2017; Vice President, Transpacific Services of MatNav, 2012 – March 2015; Director, Transpacific Services of MatNav, 2010 – 2012; first joined Matson or a subsidiary in 2007.
Rusty K. Rolfe (61)Ku’uhaku T. Park (55): Senior Vice President since February 2022; Senior Vice President, Government and Community Relations of MatNav since February 2022; Vice President, Government and Community Relations of MatNav, October 2012 – January 2022; first joined Matson or a subsidiary in 2012.
Laura L. Rascon (59): Senior Vice President since February 2021; Senior Vice President, Customer Experience of MatNav since February 2021; Vice President, Customer Support of MatNav, July 2008 – January 2021; first joined Matson or a subsidiary in 1983.
Rusty K. Rolfe (64): Executive Vice President since February 2021; Senior Vice President, June 2012;2012 – January 2021; President of Matson Logistics since July 2012; Executive Vice President, Matson Logistics, August 2011 – July 2012; Executive Vice President, Matson Integrated Logistics, April 2006 – August 2011; first joined Matson or a subsidiary in 2001.
Christopher A. Scott (48): Senior Vice President since February 2021; Senior Vice President, Transpacific Services of MatNav since February 2021; Vice President, Transpacific Services of MatNav, January 2015 – January 2021; first joined Matson or a subsidiary in 1995.
John W. Sullivan (68): Senior Vice President since April 2020; Senior Vice President, Vessel Operations and Engineering of MatNav since January 2020; Vice President, Vessel Operations and Engineering of MatNav, August 2003 – January 2020; first joined Matson or a subsidiary in 1993.
Jason L. Taylor (48): Senior Vice President since February 2022; Senior Vice President, Human Resources of MatNav since February 2022; Vice President, Human Resources of MatNav from January 2018 – January 2022; Director, HR operations from December 2015 – December 2017; first joined Matson or a subsidiary in 2012.
Joel M. Wine (47)(50): Executive Vice President and Chief Financial Officer since February 2021; Senior Vice President and Chief Financial Officer, September 2011 – January 2021; Executive Vice President and Chief Financial Officer of MatNav since September 2011;February 2021; Senior Vice President and Chief Financial Officer of MatNav, since June 2012;2012 – January 2021; first joined Matson or a subsidiary in 2011.
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Compensation Discussion and Analysis
In this Compensation Discussion and Analysis (“CD&A”), Matson explains the material elements of its 20182021 compensation practices for the executive officers named in the Summary Compensation Table on page 3040 (collectively, the “Named Executive Officers” or “NEOs”). The NEOs for 20182021 are:
| Matthew J. Cox, Chairman of the Board and Chief Executive Officer, |
| Joel M. Wine, |
| Ronald J. Forest, President, |
| Peter T. Heilmann, |
| John P. Lauer, |
On January 27, 2022, the Board of Directors approved the transition of Mr. Forest from President to Senior Advisor, effective as of February 1, 2022. Mr. Forest will continue in his new role through the conclusion of the contract renewal negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union on the U.S. West Coast. Mr. Forest expects to retire from Matson on or around August 1, 2022.
Executive Summary
For 2018,2021, Matson generated net income of $109.0$927.4 million, or $2.53$21.47 per diluted share, as compared to net income of $231.0$193.1 million, or $5.35$4.44 per diluted share, generated in 2017. The net income and earnings per share in 2017 benefitted from a one-time, non-cash adjustment of $154.0 million and $3.56 per diluted share, respectively, as a result of the Tax Cuts and Jobs Act of 2017.2020. Earnings before interest, income taxes, depreciation and amortization (“EBITDA”) of $297.3for 2021 increased $926.6 million in 2018 was modestly higher than the $296.0 million recorded in 2017.year-over-year to $1,350.3 million. A reconciliation of our GAAP to non-GAAP results can be found in Exhibit A to this Proxy Statement. Matson performed wellMatson’s consolidated financial performance in 2018 with strong2021 was solid, reflecting yearlong improvement in economic and business trends in our markets. Our China tradelane service saw significant demand for its CLX, CLX+ and CCX expedited ocean services and was the primary driver of the increase in consolidated operating income year-over-year. In our domestic tradelanes, volume was higher than the pandemic-reduced levels achieved in the China serviceyear ago primarily due to the economic recovery and, in the case of Hawaii, a significant rebound in tourism. Logistics operating income was higher compared to the level achieved in the full year 2020 primarily due to higher contributions from supply chain management, transportation brokerage, and freight forwarding as a result of elevated goods consumption, inventory restocking and favorable supply and demand fundamentals in our Logistics segment and the Company’s joint venture interest in SSA Terminals, LLC. Operationally in 2018, Matson took delivery of its first new vessel in the Hawaii service, MV Daniel K. Inouye, and continued to make construction progress on the remaining three Hawaii vessels and the upgrade of the terminal at Sand Island. The new vessels and the upgrade at the Sand Island terminal are expected to strengthen the Company’s market leading position in the Hawaii tradelane and drive increased efficiency in the years ahead.core markets.
The Company’s 20182021 results generally exceeded the targetedextraordinary annual performance measures that were incorporated into the Board of Directors approved 2018‑20202021-2023 Operating Plan. However,Plan, and Matson’s three-year performance for the period ended December 31, 20182021 under the equity compensation program was below target performance, while meeting threshold performance as set in the 2016‑2018 Operating Plan.above extraordinary performance. Each operating plan is Matson’s tactical and strategic view of future performance, and contains a three-year projection of financial and operating results, the key elements of which are incorporated as performance targets in the Company’s incentive compensation plans, as discussed in this CD&A.
In accordance with the Performance Share award provisions under the 2016 Incentive Compensation Plan and its predecessors (the “2016 Plan”), the 2016‑2018 equity award settlement did not take into consideration the impact of the Span Alaska acquisition, the Kanaloa class vessel construction, a non-trust post-retirement adjustment, and tax reform, including any benefit related to tax rate changes, on the Company’s financial results.
Pay for PerformancePay-for-performance. In line with Matson’s continued emphasis on managing a compensation program that links pay to performance, compensationperformance-based awards are determined using the following performance metrics: EBITDA for the Company’s annual cash incentive plan and the average annual return on invested capital (“ROIC”) and three-year cumulative total shareholder return (“TSR”) relative to
25
peer indices for the Company’s Performance Share awards (“Performance Shares”). These performance metrics align with Matson’s strategic objectives for profitable growth, efficient use of capital and increasing the value of Matson’s common stock for shareholders. Compensation awarded to the NEOs for 20182021 performance reflected Matson’s financial results:
| Annual Cash |
|
|
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Matson’s Compensation Philosophy
The objective of Matson’s executive compensation program is to help attract, retain and motivate talented executives who provide strong leadership for Matson and develop and execute effective strategies that maximize long-term shareholder value. The program is designed to be market competitive and emphasize pay-for-performance by making the majority of NEO compensation “at risk”. This is accomplished by aligning incentive pay with the achievement of key annual and long-term operating goals, growth in shareholder value and individual performance. In 2018, 80%2021, 81% of Mr. Cox’s and approximately 65%70% of the other NEOs’ target total direct compensation waswere variable and at-risk based on annual and long-term incentive pay opportunities.performance. The material elements of total direct compensation for Matson’s NEOs are base salaries, annual cash incentives and equity incentives. Annual equity awards are split evenly between time-based restricted stock units (“time‑basedtime-based RSUs”) and Performance Shares that are measured over a 3‑year3-year performance period. NEOs are also eligible for retirement, severance and change in control termination benefits and participate in other employee health and welfare programs.
All elements of total direct compensation to the NEOs are generally benchmarked against the 50th percentile of competitive market practices. However, market data is only one of many factors considered in determining individual executive pay, including demonstrated performance, experience in the position, scope of impact and internal equity with other executives.
In order to promote the compensation philosophy described above, Matson continues to monitor its existing pay practices, as highlighted below, to ensure that it adopts the best practices to the extent they are aligned to the business goals and strategy of the Company, as well as shareholder interests.
| | | ||
---|---|---|---|---|
Promote Good Pay Practices | | Discourage Bad Pay Practices | ||
Change in control agreements that include double triggers requiring both a change in control event and termination of employment before any severance payments can be made
Pay
Different financial, operating and stock price performance metrics to determine incentive payments in annual and long-term incentive awards
| | ✘ No employment contracts with any executive officer ✘ No guaranteed bonus payments to executive officers ✘ No bonus payouts that are not tied to performance ✘ No single trigger vesting of equity in change of control ✘ No pension payouts that are not proportional to pension payouts to employees generally ✘ No excessive perquisites |
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| | | |
---|---|---|---|
Promote Good Pay Practices | | Discourage Bad Pay Practices | |
✓ Vesting of 50% of annual equity award is tied to achievement of specified performance goals, including relative TSR
Strong executive and director stock ownership
Minimum vesting periods of three years on all equity awards to senior executives
No-fault clawback policy that applies to all senior management
Policy prohibiting hedging and other speculative transactions involving Company stock by employees, officers and directors | | ✘ |
No tax reimbursements or gross-ups
No
No unreasonable internal pay disparity
No re-pricing or replacing of underwater stock options, without prior shareholder approval ✘ No above-market interest on deferred compensation plans |
Matson’s Continued Focus on Pay-for-Performance
Say-on-Pay Vote in 2018. 2021. At the 20182021 Annual Meeting of Shareholders, an advisory vote approved the compensation of the NEOs with over 96%97% of votes cast voting in favor of the executive compensation program. The Compensation Committee took these results into consideration and concluded it should continue to apply the same basic compensation philosophy. It also determined that it should continue to look for opportunities to make improvements in the executive pay programs, as it has in previous years.
Pay-for-Performance Emphasis. The following features of the NEOs’ compensation structures, which were first implemented in 2013, continued to be applied in the 2018 executive2021 NEO compensation program emphasizingemphasize Matson’s focus on pay-for-performance:
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| Performance Metrics are Aligned with Shareholder Value. Matson’s performance-based awards are determined using the following performance metrics: EBITDA for the Company’s annual incentive plan and ROIC and TSR relative to peer indices for the Company’s Performance Shares. These performance metrics align with Matson’s strategic objectives for profitable growth, efficient use of capital and increasing the value of Matson’s common stock for shareholders. The financial performance metrics used for annual cash and long-term incentive compensation are also different in order to avoid focusing the NEOs’ attention on a single performance goal at the expense of achieving other important goals for maximizing the long-term value of the Company for shareholders. To continue to promote pay-for-performance, the relative TSR modifier was replaced with a discrete relative TSR metric for Performance Share awards. Further details on the TSR metric are provided on page 34. |
| Multi-Year Performance Periods to Emphasize Long-Term |
| No Stock Option |
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Compensation Decision Process
Role of the Compensation Committee. The Compensation Committee of Matson’s Board makes all decisions about the compensation of Matsonthe NEOs. The process that it follows for Mr. Cox is different from the process for all other NEOs.
Determining CEO Compensation. For decisions affecting the CEO’s compensation, the Board has a formal performance review process whichthat starts at the beginning of the year with an analysis and establishment of the CEO’s future performance goals. In February 2018, Mr. Watanabe, in his role asThe Lead Independent Director directed this processworked with the CEO in developing the CEO’s objectives. Mr. WatanabeThe Lead Independent Director and the Compensation Committee reviewed a variety of factors, including the CEO’s prior performance objectives, the CEO’s achievement of those objectives, the performance of the Company, the Company’s current Operating Plan, as well as the Compensation Committee’s independent consultant’s market analysis and recommendations of CEO pay, including target annual incentive levels and equity grants.
Following the analysis and review process, Mr. Watanabethe Compensation Committee received input from the Board of Directors, after which the Board finalized the CEO’s annual performance objectives. The objectives for any given year include, but are not limited to, achieving the annual operating planOperating Plan results, any growth initiatives, other strategic initiatives, and the CEO’s core responsibilities. The objectives are documented as part of setting the CEO’s annual compensation package.
After completion of the fiscal year, the Lead Independent Director and the Compensation Committee conducted an assessment of the CEO’s performance against the objectives set at the beginning of the year is conducted. In February 2019, Mr. Kuriyama performed this step in his role as Lead Independent Director. Mr. Kuriyama and determined the payout of the CEO’s annual cash incentive. The Compensation Committee evaluatedalso reviewed competitive market data and determined the merit adjustment to the CEO’s performancebase salary and provided their assessmentsize of equity incentive award to be granted. The Compensation Committee subsequently presented the results of this process to the full Board of Directors. The Board of Directors discussed the results of the assessment, including the areas of greatest strength and areas where improvements could be made. The result of this process is subsequently considered by the Compensation Committee in determining the CEO’s actual salary for the next fiscal year, payout of the CEO’s annual incentive award and sizing of future equity grants.
Determining Compensation of other NEOs. For decisions affecting the compensation of the other NEOs, the Compensation Committee follows a similar process, but takes into consideration recommendations made by Mr. Cox.
In evaluating pay actions and the mix of pay elements for all NEOs (including Mr. Cox), the Compensation Committee reviews:
| A summary of the value of all compensation elements provided to the executive during the year; |
| Competitive market peer group and broader industry survey data; |
| Health and welfare benefits and retirement plan balances; |
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| Prior compensation decisions and realized values for the past five years through tally sheets; |
| Business strategic goals and performance expectations; |
| Expected and actual Company and individual performance; and |
| Insight from the shareholder |
The Compensation Committee uses the above information to evaluate the following:
| Alignment of the pay program with the Compensation Committee’s commitment to |
| Consistency with competitive market practices; |
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| Reasonableness and balance of pay elements as they relate to pay risk; |
| Year-to-year pay movement for each NEO to ensure it reflects any variations in annual performance and market conditions; |
| Internal pay equity with other executives based on individual performance, job scope and impact; and |
| The effect of potential future payments, awards and plan design changes on the executive’s total pay package. |
Role of the CEO. Mr. Cox recommends annual compensation actions for other NEOs to the Compensation Committee. In consultation with each NEO, Mr. Cox develops individual performance plans that serve as the basis for the determination of annual incentive awards. After the completion of the fiscal year, Mr. Cox reviews executive officer performance relative to individual goals and Company performance and makes recommendations to the Compensation Committee about each officer’s incentive award. In addition to performance results, Mr. Cox considers any changes in job scope, internal pay relationships to other executives, merit increase guidelines and market pay studies to recommend changes in base salary, annual cash incentive awards and equity awards for Compensation Committee approval.
Role of Independent Consultant. The Compensation Committee believes that using an independent compensation consultant is important in developing executive compensation programs that are reasonable, consistent with Matson’s pay philosophy and market competitive.competitive. Since the end of 2012, the Compensation Committee has retained Exequity LLP (“Exequity”), an independent executive compensation consulting firm, to provide executive compensation services. Exequity reports directly to the Compensation Committee and the Compensation Committee Chair pre-approves all executive compensation engagements, including the nature, scope and fees of assignments. Exequity advised the Compensation Committee on all aspects of executive compensation including the following during 2018:2021:
| Recommended peer group assessment criteria and identified and recommended potential peer companies; |
| Provided information on trends and regulatory developments for executive compensation; |
| Evaluated the size and structure of the components of Matson’s executive compensation program relative to the Company’s peer group and broader market practices; |
| Reviewed and commented on recommendations regarding executive pay, including target annual incentive levels, equity grants, and |
| Reviewed the compensation risk assessment; |
|
|
| Reviewed and assisted in the preparation of the executive compensation disclosure in the annual proxy statement. |
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Board compensation, and recommended adjustments to Board pay. In the course of fulfilling these responsibilities, a representative of Exequity attended four of the fiveall Compensation Committee meetings held during the year, participated in executive sessions of the Compensation Committee without management present, and met with management from time to time to gather relevant information and provide input in assessing management proposals. The Compensation Committee’s executive compensation decisions, including the specific amounts paid to Matson’s executive officers, are made through the exercise of its own judgment and may reflect factors and considerations other than the information and recommendations provided by Exequity,its compensation consultant, including the executive’s role and organizational impact, experience, tenure, sustained performance over time, and internal pay relationships. Exequity has not provided any other services to the Compensation
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Committee and has received no compensation from the Company other than with respect to the services described above.
Pursuant to SEC rules, the Compensation Committee has assessed the independence of Exequity and concluded that no conflict of interest exists that would prevent Exequity from independently representing the Compensation Committee.
Role of Management. Management assists the Compensation Committee in its role of determining executive compensation in a number of ways, including:
| Providing management’s perspective on compensation plan structure and implementation; |
| Identifying appropriate performance measures and establishing individual performance goals that are consistent with the Board-approved Operating Plan; |
| Providing the data used to measure performance against established goals, with Mr. Cox providing perspective on individual executive performance and compensation amounts; and |
| Providing recommendations, based on information provided by |
Role of Market Data. As there are few companies directly comparable to Matson in business mix, size and location of operation, based on the recommendation of Exequity,its compensation consultant, the Compensation Committee used a combination of peer group proxy statement data and published general industry survey data as a benchmark reference in the 20182021 compensation decision-making process. This competitive market data providesserves as only one of many factors the Compensation Committee considers in assessing and determining appropriate pay levels as it exercises its business judgment. Other factors the Committee considers include Matson’s pay philosophy, incumbent job scope of responsibility, tenure, organization impact, internal equity, Company and individual performance, and historical pay actions.
ExequityThe Compensation Committee’s consultant conducted an independent review of the peer group and established the following selection criteria to develop a recommended peer group for the Compensation Committee’s approval:
| Transportation-related companies (including air freight, airline, marine, railroad, trucking and logistics management operations); |
| Companies with similar size characteristics, including annual revenues generally within one-half to two times Matson’s annual revenue and having a market capitalization that is generally less than five times Matson’s market capitalization; and |
| Additional companies that may be outside these size parameters but have other relevant business and operating characteristics to Matson and are influenced by similar economic and regulatory factors. |
Based on these factors, Exequitythe consultant recommended and the Compensation Committee approved a peer group of the following nineteenfifteen public transportation-related companies (“peer group”) for pay comparisons starting in 20172020 for 20182021 pay assessments:
|
| |
|
| ● Kirby Corporation ● Knight-Swift Transportation Holdings Inc. ● Landstar System, Inc. |
| | |
|
| |
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