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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A
Proxy Statement
(Pursuant to Section 14(a) of the Securities Exchange Act of 1934)
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F I R S T H A W A I I A N , I N C.
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section
[Section] 249.14a-11(a) or [Section] 140.14a o 12
F I R S T H A W A I I A N , I N C.
(Name of Registrant as Specified in its Charter)
Herbert E. Wolff
Senior Vice President & Secretary
P.O. Box 3200
Honolulu, HI 96847
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(I)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed per Exchange Act Rules 14g - 6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
Common stock of Unistar Radio Networks, Inc.
2. Aggregate number of securities to which transaction applies:
1,000 shares of common stock of Unistar Radio Networks, Inc.
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11; proposed cash payment of
$16,589,235 for acquisition of the common stock of Unistar Radio
Networks, Inc.
4. Proposed maximum aggregate value of transaction: $16,589,235
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(g)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration No.:
3. Filing Party:
4. Date Filed:
CALCULATION OF FEE
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Title of each class of Fee required by Amount of
securities in which Exchange Act registration
transaction applies Cash payment Rule D-11 fee
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Common Stock
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FIRST HAWAIIAN, INC.
P.O. Box 3200
Honolulu, Hawaii 96847
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF FIRST HAWAIIAN, INC.
The Annual Meeting of the Stockholders of First Hawaiian, Inc. (the
"Corporation") will be held on April 21, 1994 at 9:30 o'clock A.M. in the 20th
floor Dining Room of the Plaza Club, 900 Fort Street, Honolulu, Hawaii, for the
following purposes:
1. To elect five directors for a term of three years
until the Annual Meeting of stockholders in 1997,
or until their successors are elected and qualified.
2. To elect the Auditor of the Corporation.
3. To approve an amendment to the Certificate of
Incorporation to increase the number of authorized
shares of common stock, par value $5 per share, from
66,500,000 to 100,000,000.
4. To transact such other business as may properly be
brought before the meeting and any adjournments
thereof.
Only stockholders of record at the close of business on February 22,
1994, will be entitled to notice of and to vote at the Annual Meeting and
any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS:
Herbert E. Wolff
Senior Vice President and Secretary
Dated: March 1, 1994
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. PLEASE
MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING
POSTAGE-PAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY
AND VOTE IN PERSON IF YOU WISH TO DO SO.
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FIRST HAWAIIAN, INC.
P.O. Box 3200
Honolulu, Hawaii 96847
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of First Hawaiian, Inc. (the "Corporation") of proxies
to be used in the voting at the Annual Meeting of Stockholders of the
Corporation to be held on April 21, 1994, and any adjournments thereof.
The annual report of the Corporation, containing consolidated financial
statements as at and for the year ended December 31, 1993, is being mailed to
all stockholders simultaneously with the mailing of this proxy statement. This
proxy statement and the form of proxy are first being distributed to
stockholders on or about March 1, 1994.
First Hawaiian, Inc. is a holding company for First Hawaiian Bank (the
"Bank"), First Hawaiian Creditcorp, Inc., First Hawaiian Leasing, Inc.,
FHI International, Inc., and Pioneer Federal Savings Bank.
OUTSTANDING SHARES; VOTING RIGHTS
At the close of business on February 22, 1994 (the "record date") there
were 00,000,000 shares of common stock of the Corporation outstanding. Each
share is entitled to one vote; there is no cumulative voting.
The following table sets forth information as of the record date for each
person known by the Corporation to be the beneficial owner of more than five
percent of the common stock of the Corporation:
Name and Amount and
Address of Nature of Percent
Beneficial Beneficial of
Owner Ownership Class
---------- ---------- -------
David M. Haig, Fred C. Weyand, Paul Mullin Ganley 7,900,000 shares, as to which there is 00.00
and Walter A. Dods, Jr., as Trustees under the shared voting and investment power
Will and of the Estate of Samuel M. Damon,
1132 Bishop Street, Honolulu, Hawaii 96813 (1)
Asset Management Division, First Hawaiian Bank, 3,636,925 shares (2) 00.00
P.O. Box 3200, Honolulu, Hawaii 96847
Alexander & Baldwin, Inc., 822 Bishop Street, 1,692,894 shares, as to which there is 0.00
Honolulu, Hawaii 96813 (3) sole voting and investment power
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(1) Messrs. Haig, Weyand, Ganley and Dods are Directors of the Corporation.
Mr. Dods became a Trustee of the Estate on January 1, 1994.
(2) The shares held by the Asset Management Division in fiduciary accounts
include: 1,502,034 shares as to which it has sole voting power and
1,497,914 shares as to which it has sole investment power; 1,748,180
shares as to which it has shared voting power and 1,756,878 shares as to
which it has shared investment power; 386,711 shares as to which sole
voting power is retained by the settlors of the trusts; and 387,133 shares
as to which sole investment power is held by outside investment advisers.
(3) Mr. Robert J. Pfeiffer, a Director of the Corporation, is Chairman of the
Board of Alexander & Baldwin, Inc. Mr. John C. Couch, a Director of the
Corporation, is President and Chief Executive Officer of Alexander
& Baldwin, Inc.
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PROXY VOTING
Proxies in the accompanying form duly executed and received by the
Corporation at any time prior to the Annual Meeting, and not revoked or
superseded prior to being voted, will be voted at the Annual Meeting. Where a
specification is indicated in such proxy, it will be voted in accordance with
such specification. Where no specification is so indicated, such proxy will be
voted in accordance with the recommendations set forth herein.
Proxies in the accompanying form may be revoked or superseded at any time
before they are voted by a proxy of a later date, or by written notification
received by the Secretary of the Corporation prior to the Annual Meeting.
Attendance in person at the Annual Meeting does not of itself revoke a proxy
theretofore given, but any stockholder who attends the Annual Meeting in person
is free to revoke any proxy theretofore given and vote his or her shares in
person.
The Corporation will pay the cost of solicitation of proxies for the
Annual Meeting. In addition to solicitation by use of the mails, proxies may be
solicited personally or by telephone, facsimile or telegraph by certain
officers and regular employees of the Corporation, who will not receive any
added compensation for so doing. The Corporation may reimburse brokers and
others holding shares in their names as nominees for their expenses in sending
proxy material to beneficial owners.
ELECTION OF DIRECTORS
The Bylaws of the Corporation provide that the Board of Directors will be
divided into three equal classes of Directors. Each class of Directors is
elected to serve a 3 year staggered term, with the term of one class expiring
at each Annual Meeting. The Board of Directors has set the total number of
Directors at 15.
Directors are elected by a plurality of the votes cast by the holders of
the Corporation's common stock at the Annual Meeting at which a quorum is
present. Under the Corporation's Certificate of Incorporation and Bylaws and
under Delaware law, abstentions and broker non-votes will not have the effect
of votes in opposition to a Director.
Proxies in the accompanying form will (unless a contrary direction is
indicated therein) be voted to elect the nominees named below (who have been
nominated by the present Board of Directors) as Directors to serve subject to
the Certificate of Incorporation and Bylaws of the Corporation. If elected,
each will serve for a term of three years and until a successor is duly elected
and qualified.
If any of the nominees listed are not available for election at the
Annual Meeting (a contingency which the Board of Directors of the Corporation
does not now foresee), it is the intention of the Board of Directors to
recommend the election of such other persons as the Board may select in order
to fill such vacancies. Proxies in the accompanying form will be voted for the
election of such other persons unless authority to vote such proxies in the
election of Directors has been withheld.
The nominees designated by the Board of Directors are named below, with
brief statements setting forth their present principal occupations and other
information, including directorships in public companies:
Shares of Common
Stock of the Corporation Percent
Nominees for a Term of Three Years Beneficially Owned of
Until the Annual Meeting of Stockholders in 1997 at February 22, 1994 Class
------------------------------------------------ ------------------------ -------
JOHN W. A. BUYERS, 66, has been a Director of the Bank since 1976. 000,000 *
He has been Chairman of the Board and Chief Executive Officer
of C. Brewer and Company, Limited since 1992. From 1982 to
1992 he was Chairman and President of C. Brewer and Company,
Limited. From 1975 to 1982, he was President and Chief Executive
Officer of C. Brewer and Company, Limited. Since 1989, he has
been Chairman of Mauna Loa Partners, a master limited
partnership trading on the New York Stock Exchange. In 1993 he
was elected Chairman of C. Brewer Homes, Inc., a new publicly-
traded company. He is also a Director of John B. Sanfilippo & Co.,
Inc. located in Elk Grove Village, Illinois.
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Shares of Common
Stock of the Corporation Percent
Nominees for a Term of Three Years Beneficially Owned of
Until the Annual Meeting of Stockholders in 1997 at February 22, 1994 Class
------------------------------------------------ ------------------------ -------
JOHN C. COUCH, 54, has been a Director of the Corporation since 000,000 *
1991 and a Director of the Bank since 1985. He has been President
and Chief Executive Officer of Alexander & Baldwin, Inc. since
April, 1992. He was President and Chief Operating Officer of
Alexander & Baldwin, Inc. from October, 1985 until April, 1989
and from April, 1991 to March, 1992. Since April, 1989, he has
been President and Chief Executive Officer of A&B-Hawaii, Inc.,
a wholly-owned subsidiary of Alexander & Baldwin, Inc. He has
been a Director of Alexander & Baldwin, Inc. since 1985. He
was President and Chief Operating Officer of Matson Navigation
Company, Inc. from January, 1985 to September, 1985 and
Executive Vice President and Chief Operating Officer from
January, 1984 to December, 1984. Since April, 1992 he has been
Vice Chairman of Matson Navigation Company, Inc. Alexander
& Baldwin, Inc., which is engaged in ocean transportation, sugar
production and refining, property development and property
management, holds 1,692,894 shares of stock of the Corporation,
as to which Mr. Couch disclaims beneficial ownership.
DAVID M. HAIG, 42, has been a Director of the Corporation 000,000 *
since 1989 and a Director of the Bank since 1983. Mr. Haig is a
beneficiary and, since 1982, a Trustee under the Will and of the
Estate of S. M. Damon. His reported beneficial ownership of the
Corporation's stock includes 7,900,000 shares owned by the Estate
of S. M. Damon as to which Mr. Haig shares voting and investment
powers, and 2,400 shares owned by a trust as to which Mr. Haig
shares voting and investment powers. He is beneficiary of an HR-10
plan which holds 8,000 shares of the Corporation's stock for which
he has sole voting and investment powers.
DR. RODERICK F. MCPHEE, 65, has been a Director of the Corporation 000,000 *
or the Bank since 1972. Since 1968, he has been President of
Punahou School, a kindergarten through 12th grade college
preparatory school. Dr. McPhee is President and ex-officio non-
voting member of the Board of Trustees of Punahou School,
which owns 209,316 shares of the Corporation's stock. He has
no voting or investment powers with respect to such shares and
disclaims beneficial ownership thereof.
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Shares of Common
Stock of the Corporation Percent
Nominees for a Term of Three Years Beneficially Owned of
Until the Annual Meeting of Stockholders in 1997 at February 22, 1994 Class
------------------------------------------------ ------------------------ -------
ROBERT J. PFEIFFER, 74, has been a Director of the Corporation 000,000 *
since 1982 and a Director of the Bank since 1980. He has been
Chairman of the Board of Alexander & Baldwin, Inc. since
October, 1980. He was President of Alexander & Baldwin, Inc.
from October, 1979 until January, 1985 and President again from
April, 1989 until April, 1991. He was Chief Executive Officer from
January, 1980 until April, 1992. He was Chief Executive Officer of
Matson Navigation Company, Inc. from April, 1973 to April, 1992.
He has been Chairman of the Board since October, 1979.
Alexander & Baldwin, Inc., which is engaged in ocean
transportation, sugar production and refining, property
development, and property management, holds 1,692,894 shares
of stock of the Corporation, as to which Mr. Pfeiffer disclaims
beneficial ownership.
*The percentage of shares beneficially owned does not exceed one
percent of the shares currently outstanding, including shares that can
be acquired within 60 days through the exercise of stock options.
Each of the foregoing nominees who presently serves on the Board
attended 75% or more of the combined total number of meetings held during 1993
of the Board and Committees on which he sits. The Board of Directors met 12
times in 1993.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THESE NOMINEES.
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DIRECTORS CONTINUING IN OFFICE AND EXECUTIVE OFFICERS
The Directors continuing to serve on the Board of Directors, pursuant
to their prior elections, and the named executive officers listed in the
Summary Compensation Table below are listed here. The Directors will serve
subject to the Certificate of Incorporation and the Bylaws of the Corporation
until the annual meeting of stockholders in the year shown parenthetically
after each name and until their respective successors have been duly elected
and qualified.
Shares of Common
Stock of the Corporation Percent
Beneficially Owned of
Directors Continuing to Serve at February 22, 1994 Class
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WALTER A. DODS, JR., 52, (1996) has been Chairman of the Board and 000,000 *
Chief Executive Officer of the Corporation and the Bank
since September, 1989. He was President of the Corporation from
March, 1989 to March, 1991. He was President of the Bank from
November, 1984 to October, 1989 and has been a Director of
the Bank since 1979. He was an Executive Vice President of the
Corporation from 1982 to 1989 and has been a Director of the
Corporation since 1983. He has been with the Bank since 1968.
His reported beneficial ownership of the Corporation's stock
includes 924 shares held in his wife's individual retirement
account as to which Mr. Dods disclaims beneficial ownership,
and 13,900 shares that Mr. Dods has the right to acquire within
60 days through the exercise of stock options. He is a Trustee
under the Will and of the Estate of S. M. Damon and his reported
beneficial ownership of the Corporation's stock includes
7,900,000 shares owned by the Estate of S. M. Damon as to which
Mr. Dods shares voting and investment powers. He is a Director
of Alexander & Baldwin, Inc., which holds 1,692,894 shares of the
stock of the Corporation, as to which Mr. Dods disclaims beneficial
ownership. He is a trustee of Punahou School, which owns 209,316
shares of the Corporation's stock; he has shared voting and
investment powers with respect to such shares and disclaims
beneficial ownership thereof.
DR. JULIA ANN FROHLICH, 53, (1995) has been a Director of the 000,000 *
Corporation since 1992 and a Director of the Bank since August,
1991. She has been a Director of First Hawaiian Creditcorp, Inc.
and First Hawaiian Leasing, Inc. since 1990. She has been
President of the Blood Bank of Hawaii since 1985.
PAUL MULLIN GANLEY, 54, (1996) has been a Director of the 000,000 *
Corporation since 1991 and a Director of the Bank since 1986.
He is a Trustee under the Will and of the Estate of S. M. Damon
and a partner in the Carlsmith Ball Wichman Murray Case &
Ichiki law firm. His reported beneficial ownership of the
Corporation's stock includes 7,900,000 shares owned by the
Estate of S. M. Damon as to which Mr. Ganley shares voting and
investment powers; 19,108 shares in his revocable living trust
as to which he has sole voting and investment powers; 19,150
shares in his wife's revocable living trust as to which Mr. Ganley
disclaims beneficial ownership; 12,336 shares in a profit sharing
plan as to which he has sole voting and investment powers; and
17,094 shares in two individual retirement accounts as to which
he has sole voting and investment powers.
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Shares of Common
Stock of the Corporation Percent
Beneficially Owned of
Directors Continuing to Serve at February 22, 1994 Class
----------------------------- ------------------------ -------
JOHN A. HOAG, 61, (1995) was an Executive Vice President of the 000,000 *
Corporation from 1982 to 1991 and President and Director
since 1991. He has been President and Director of the Bank since
October, 1989. He has been with the Bank since 1960. His reported
beneficial ownership of the Corporation's stock includes 928
shares owned jointly with his wife as to which Mr. Hoag shares
voting and investment powers, 19,781 shares in his wife's revocable
living trust as to which Mr. Hoag disclaims beneficial ownership
and 7,890 shares that Mr. Hoag has the right to acquire within
60 days through the exercise of stock options.
BERT T. KOBAYASHI, JR., 53, (1995) has been a Director of the
Corporation since 1991 and a Director of the Bank since 1974. 000,000 *
He is a principal of the law firm of Kobayashi, Sugita and Goda. He is a
Director of Schuler Homes, Inc.
DR. RICHARD T. MAMIYA, 69, (1996) has been a Director of the Corporation 000,000 *
since January, 1994 and a Director of the Bank since 1980. He is on the
active staff of Queen's Medical Center for thoracic, cardiovascular, and
general surgery; he is on the courtesy staff of Straub, Kuakini, and
Kapiolani Children's hospitals. In accordance with the Corporation's Bylaws
and Delaware law, the Corporation's Board of Directors elected Dr. Mamiya
in January, 1994 to fill the unexpired term of the late Mr. Sheridan
C. F. Ing.
DR. FUJIO MATSUDA, 69, (1996) has been a Director of the 000,000 *
Corporation since 1987 and a Director of the Bank since 1985. He
has been Executive Director of the Research Corporation of the
University of Hawaii since 1984; he was the President of the
University of Hawaii from 1974 to 1984. He is a Director of
UALCorporation.
GEORGE P. SHEA, JR., 55, (1996) has been a Director of the 000,000 *
Corporation since March, 1993 and the Bank since March, 1989.
He has been Chairman, President and Chief Executive Officer of
First Insurance Company of Hawaii, Ltd. since 1988. He was a
Certified Public Accountant with Peat Marwick Mitchell &
Company from 1965 to 1971 when he joined First Insurance and
was promoted to Treasurer. He was Vice President, Secretary and
Treasurer of First Insurance from 1978 to 1982 and President and
Chief Executive Officer from 1982 to 1988.
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Shares of Common
Stock of the Corporation Percent
Beneficially Owned of
Directors Continuing to Serve at February 22, 1994 Class
----------------------------- ------------------------ -------
FRED C. WEYAND, 77, (1995) has been a Director of the Corporation 000,000 *
since 1986 and a Director of the Bank since 1981. He was Vice Pres-
ident of the Corporation from 1976 to 1982; Senior Vice President
of the Bank from 1980 to 1982 and Corporate Secretary from 1978
to 1981. He served as a commissioned officer in the United States
Army from 1940 to 1976 and held the office of Chief of Staff from
1974 to 1976. He is a Trustee under the Will and of the Estate of
S. M. Damon. His reported beneficial ownership of the Corporation's
stock includes 7,900,000 shares owned by the Estate of S. M. Damon
as to which he shares voting and investment powers and 7,869
shares in his wife's revocable living trust as to which he shares
voting and investment powers. He is beneficiary of a defined
benefit pension plan which holds 17,200 shares of the Corpora-
tion's stock for which he has sole voting and investment powers.
ROBERT C. WO, 68, (1995) was a Director of the Corporation 000,000 *
from 1974 to 1989 and again since 1992 and has been a Director
of the Bank since 1963. He has been President and Secretary of BJ
Management Corp since 1979. He has been Chairman of C. S. Wo
& Sons, Ltd., a manufacturer and retailer of home furnishings
since 1973. His reported beneficial ownership of the Corporation's
stock includes 8,000 shares in the Betty and Bob Wo Foundation as
to which he shares voting and investment powers.
Executive Officers
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PHILIP H. CHING--His reported beneficial ownership of the 25,466 *
Corporation's stock includes 10,808 shares held in his wife's
revocable living trust as to which Mr. Ching disclaims beneficial
ownership and 2,752 shares that Mr. Ching has the right to acquire
within 60 days through the exercise of stock options.
DONALD G. HORNER--His reported beneficial ownership of the 24,361 *
Corporation's stock includes 2,757 shares that Mr. Horner has
the right to acquire within 60 days through the exercise of stock
options.
HOWARD H. KARR--His reported beneficial ownership of the 62,404 *
Corporation's stock includes 2,118 shares held in his wife's revocable
living trust, 602 shares held in his wife's individual retirement
account, 2,500 shares owned by a resident son, as to which shares
Mr. Karr disclaims beneficial ownership, 2,500 shares held in a
custodial account for a minor child for which he has sole voting
and investment powers, and 3,450 shares that Mr. Karr has the
right to acquire within 60 days through the exercise of stock options.
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Shares of Common
Stock of the Corporation Percent
Beneficially Owned of
Nominees, Directors Continuing to Serve and Executive Officers at February 22, 1994 Class
-------------------------------------------------------------- ------------------------ -------
Beneficial Ownership of all Nominees, Directors, 000,000 *
and Executive Officers as a Group (18 persons)
* The percentage of shares beneficially owned does not exceed one percent of
the shares currently outstanding, including shares that can be acquired
within 60 days through the exercise of stock options.
Each of the foregoing Directors attended 75% or more of the combined
total number of meetings held during 1993 of the Board and Committees on which
he or she sits, except for Dr. Mamiya, who is filling an unexpired term. The
Board of Directors met 12 times in 1993. To the Corporation's knowledge, which
is based solely on a review of reports of changes in ownership of the
Corporation's common stock as received by the Corporation from directors,
executive officers and other persons owning more than 10% of the Corporation's
Common Stock, the Corporation believes that all such reports were timely filed,
except for one report that was filed late by Dr. McPhee.
COMMITTEES OF THE BOARD
Among the standing committees of the Board are the Joint Audit Committee,
the Executive Compensation Committee, the Executive Committee and the
Nominating Committee.
The Joint Audit Committee, which met 5 times during 1993, determines on
behalf of the Board whether the performance and examination of the independent
public accounting firm and the Corporation's internal auditor are satisfactory
and adequate to meet the Board's supervisory responsibility. The Committee
reviews internal auditing reports, the adequacy of internal financial and
accounting controls, the work of the external and internal auditors and
management's responses to their audit reports and recommendations. It
recommends the independent public accounting firm proposed for election as
Auditor of the Corporation. It also reviews the Corporation's reports to
stockholders and other financial statements. The Committee reviewed and
approved the 1993 audit plan. The members of the Joint Audit Committee are
George P. Shea, Jr. (Chairman), Warren H. Haruki, Howard K. Hiroki, Roderick
F. McPhee, and Fujio Matsuda. Messrs. Haruki and Hiroki are Directors of the
Bank and hold certified public accountants certificates.
The Executive Compensation Committee acts upon the executive compensation
program of the Corporation and its subsidiaries. The Committee administers the
Incentive Plan for Key Executives, the Long-Term Incentive Plan, the Stock
Incentive Plan, and the Deferred Compensation Plan, reviews the performance and
salaries of the Corporation's Chief Executive Officer and other senior
management officers of the Corporation and its subsidiaries and makes
recommendations to the Board of Directors with respect to the appropriate
senior management compensation structure. The Committee met 3 times in 1993.
Its members are Robert J. Pfeiffer (Chairman), Glenn A. Kaya and Wallace S.
Fujiyama (both Directors of the Bank), and Bert T. Kobayashi, Jr., and Fred C.
Weyand. General Weyand was appointed to the Committee on October 21, 1993 to
replace the late Mr. D. Hebden Porteus.
The Executive Committee serving also as the Nominating Committee advises
the Board of Directors with respect to the number of Directors to be elected to
the Board and recommends the persons to be nominated for election as Directors.
The Committee will consider nominees recommended by the stockholders for
election as Director. Any such recommendation, together with the nominee's
qualifications and consent to be considered as a nominee, should be sent to the
Secretary of the Corporation in a sufficient time prior to the Annual Meeting
of the Corporation's stockholders for the Committee to consider and act upon
such recommendation. The Committee met 2 times in 1993. Its members are Robert
J. Pfeiffer (Chairman), Walter A. Dods, Jr., Bert T. Kobayashi, Jr., and Fred
C. Weyand. General Weyand and Mr. Kobayashi were appointed to the Committee on
October 21, 1993 to replace Mr. Porteus and Mr. Ing, respectively.
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REMUNERATION OF DIRECTORS
In 1993, the Corporation paid a quarterly retainer of $3,000 to each
member of the Board of Directors who was not an employee of the Corporation or
its subsidiaries. All members of the Board received a fee of $800 and
reimbursement for transportation expenses for each Board meeting attended and
$700 for each committee meeting attended.
The Corporation has a Directors' Retirement Plan for outside Directors
of the Corporation and Bank who are not covered by the Corporation's Employees'
Retirement Plan. Following retirement from the Board after at least 10 years of
service, the retired Director or his or her beneficiary will be entitled to
receive monthly payments for a 10 year period at an annual rate equal to
one-half of the annual retainer fee in effect at the time of his or her
retirement.
EXECUTIVE COMPENSATION
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee of the Board of Directors (the
"Committee") is composed entirely of independent, outside Directors. The
Committee has been designated by the Board of Directors with the responsibility
for administering the executive compensation program of the Corporation and its
subsidiaries.
The philosophy underlying the administration of the Corporation's
executive compensation program is an appropriate linkage between executive
compensation, financial and operating performance, and the creation of
stockholder value. Key objectives of this philosophy include:
o providing a competitive pay system to attract, retain and motivate
executives;
o establishing compensation plans which emphasize performance-based pay
opportunities, as measured by operating, financial and strategic
objectives and goals;
o providing longer-term, equity-based incentives for executives to
ensure they are motivated and rewarded for growth in equity value and
generating higher returns to the stockholders relative to comparable
financial institutions.
The Corporation's present compensation program was established in 1991
and 1992 with the assistance of an independent consultant. In establishing the
program, the Committee took into consideration the total compensation paid to
executives of a peer group of companies (the "Initial Peer Group") recommended
by the consultants. The companies chosen for the Initial Peer Group were
comparably-sized or larger regional bank holding companies, including the one
comparable bank holding company in Hawaii. Compensation levels were adjusted
for relative size of the companies in the Peer Group. The companies included
some, but not all, of the companies which comprise the S&P Major Regional Bank
Index shown in the Comparison of Five-Year Cumulative Stockholder Return
performance graph included in this Proxy Statement.
The objective of the new executive compensation program was to set the
total compensation package to be competitive with companies in the Initial Peer
Group, maintaining the existing base salary program while emphasizing
performance-based pay opportunities which would allow compensation to increase
as the Corporation's financial performance increases.
The compensation program adopted by the Committee includes three
components designed to implement the foregoing objectives: (1) base salaries;
(2) annual incentives; and (3) long-term incentives. Each of these components
of compensation is discussed separately below.
BASE SALARIES
Base salaries of executive officers are set by the Committee in
December of each year for the following year. The Committee takes into
consideration factors such as varying levels of responsibility, individual
performance, consistency and fairness, cost of living increases and cost
control. The Committee members also take into consideration general levels of
compensation at other large corporations which in their judgment provide
guidance as to competitive base salary level. The Committee places no relative
weighting on any single factor in adjusting base salaries.
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ANNUAL INCENTIVES
Annual incentives for executive officers are provided pursuant to the
Incentive Plan for Key Executives (the "IPKE"), which provides cash and
deferred bonuses based upon the Corporation's profitability and the executive's
performance over the course of the year. The IPKE promotes the Corporation's
pay-for-performance philosophy by providing executives with direct financial
incentives, in the form of annual cash bonuses or restricted stock awards, to
achieve corporate and individual performance goals. Moreover, annual bonus
opportunities allow the Corporation to communicate specific goals that are of
primary importance during the coming year and to motivate executives to achieve
these goals. The IPKE was originally approved by the stockholders in 1969 and
has subsequently been amended several times by the stockholders.
The total amount of bonuses available under the IPKE is a bonus pool equal
to 2-1/2 percent of consolidated income before income taxes and
securities gains for the performance year. Guideline percentages of base salary
were set, increasing as the executives' pay grades increase. In allocating the
bonus pool, the Committee grants bonuses above or below guideline percentages
based upon the Committee members' judgment as to individual performance and
relative levels of responsibility.
In 1993, the Corporation's performance (as measured by profitability)
was 5.8% lower than the level of performance attained in 1992. Thus, total
bonuses under the IPKE for 1993 were lower by 8-1/2% as compared to 1992.
LONG-TERM INCENTIVES
Long-term incentives are provided in the form of cash awards under the
Corporation's Long-Term Incentive Plan (the "LTIP") and grants of stock options
under the Stock Incentive Plan (the "SIP"). In keeping with the Corporation's
commitment to provide a total compensation package which places a significant
amount of pay "at-risk", long-term incentives (plus awards under the IPKE)
comprise approximately 40 percent of the value of an executive's total
compensation package if the Corporation meets its target performance levels.
The Corporation's LTIP applies to a group of key executives approved by
the Committee, much smaller than the group qualified for IPKE and SIP awards.
It is intended to provide incentive compensation to participants based on the
Corporation's ability to sustain a target level of performance over a
three-year performance cycle. Below a threshold return on average equity
("ROE") level, no award is earned. When corporate performance exceeds the
threshold level, awards are determined based on the degree to which the
Corporation's growth of assets goals and relative return on assets ("ROA") as
compared to a peer group of companies approved by the Committee are attained
over a three-year performance cycle. The peer group for LTIP purposes is
comprised of regional bank holding companies similar to the Corporation in
size, performance and nature of operations. The group, which is not the same as
the Initial Peer Group, includes some but not all of the companies in the S&P
Major Regional Bank Index. ROA and growth of assets goals are equally weighted
in the award determination. These performance goals are closely linked to
stockholder value creation and reinforce desired long-term strategies and
performance.
The LTIP award is determined as a target percentage of individual base
salary, and may be adjusted by the Committee based on the individual's
performance. The Corporation has completed the first financial performance
cycle under the LTIP covering the period 1991-1993. Financial information for
peer companies is presently not available. However, awards will be paid for
this cycle sometime in 1994 when this determination can be made and the
Committee approves such awards.
Under the SIP approved by the stockholders, stock options are granted
at an option exercise price not less than the fair market value of the
Corporation's stock on the date of grant. Accordingly, stock options have value
only if the stock price appreciates from the date the options are granted. This
design focuses executives on the creation of stockholder value over the long
term and encourages equity ownership in the Corporation.
11
13
Guidelines for setting the size of stock option grants were set by the
Committee at the time the SIP was established, based on the recommendation of
the independent consultant. The size of individual annual awards is increased
or decreased from the guideline levels based on individual performance at the
sole discretion of the Committee.
CORPORATE PERFORMANCE IN 1993
The Corporation's net income for 1993 represented the second best year
in the Corporation's 135-year history. Net income totalled $81,857,000 in 1993
compared to $86,900,000 in 1992, the Corporation's best year ever.
Despite the challenges created by a continued economic slowdown in the
United States and Japan during 1993, which resulted in Hawaii's worst recession
wince statehood, the Committee believes the actual performance results are
commendable. The Corporation's ROA of 1.21% for 1993 continued to
exceed the regional bank average. Although the Corporation's ROE was lower than
the regional bank average for the first time since before 1988, this was
attributable in part to the Corporation's strong capital levels. However, the
Corporation did not meet its budgeted financial goals in 1993 and given the
Corporation's policy of closely linking performance and compensation, these
results affected the level of executive incentive compensation in 1993 and 1994
as discussed in this Report.
STOCKHOLDER RETURN PERFORMANCE GRAPH
The attached Comparison of Five-Year Cumulative Total Stockholder
Return performance graph compares the cumulative total stockholder return
(stock price appreciation and reinvestment of dividends) on the Corporation's
common stock during the last five years as compared to the S & P Major
Regional Bank Index and the broader S & P 500 Index.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Dods has been Chief Executive Officer of the Corporation since
October, 1989. In addition to his corporate responsibilities, Mr. Dods is
regarded as one of Hawaii's premier business leaders and is also respected for
his numerous community, charitable, and educational activities. His involvement
in these activities has contributed considerably to the favorable image of the
Corporation in the community.
BASE SALARY
In December, 1992, the Committee met to consider Mr. Dods' performance
for 1992. Based on the fact that the Corporation exceeded its financial goals
for 1992 and in light of the Corporation's record results for that year, the
Committee set Mr. Dods' base salary for 1993 at $625,000. Any change in base
salary will affect awards under the IPKE, the LTIP and the SIP to the extent
awards are based in part on a target percentage of base salary.
In December, 1993, the Committee reviewed Mr. Dods' performance and
concluded that his management performance was outstanding and that well
conceived plans were executed, including corporate acquisitions and the
development of a new corporate headquarters building. Based on those factors
and the Corporation's sustained financial performance during a difficult
economic period, the Committee concluded that a merit increase in base pay
was warranted. However, in view of the economic conditions facing the
Corporation and the emphasis on cost controls, Mr. Dods requested that his base
salary and the base salaries of the other four executive officers listed in the
Summary Compensation Table, Messrs. Hoag, Karr, Ching, and Horner, not be
increased for 1994. Accordingly, the Committee set Mr. Dods' base salary at
$625,000 for 1994, which is the same as it was in 1993. The base salaries for
the other key officers noted above also will remain at 1993 levels.
ANNUAL INCENTIVES
In 1993, the Committee awarded Mr. Dods $312,500 under the IPKE based
on its discretionary assessment of the same factors noted above. The Committee
concluded that the amount was appropriate in light of the consistent success of
the Corporation and Mr. Dods' individual contributions. The amount was less
than the $375,000 annual incentive award earned by Mr. Dods in 1992, because
the bonus pool was lower as a result of lower earnings in 1993 and because
there were more participants in the IPKE in 1993 than in 1992.
12
14
LONG TERM INCENTIVES
In April, 1993, Mr. Dods received options to purchase 18,000 shares
pursuant to the SIP, as set forth in the table under "Option Grants in Last
Fiscal Year." The Committee has determined that in their judgment the number of
options granted was appropriate in light of other elements of compensation
awarded, and would serve the objective of directly linking a significant
portion of Mr. Dods' compensation to future creation of stockholder value.
Mr. Dods will also be eligible to receive the first payout under the LTIP
in 1994 based on the Corporation's financial performance for the 1991-1993
performance cycle.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Recently enacted Section 162(m) of the Internal Revenue Code generally
limits the deductibility by corporations of compensation in excess of
$1,000,000 paid to certain executive officers beginning in 1994, unless certain
requirements are met. The Committee continues to consider the impact of this
new tax code provision on the Corporation, and, in due course, will review its
compensation programs for the executive officers subject to the deduction limit
while preserving its focus on performance-driven compensation.
CONCLUSION
The Committee believes these compensation policies and programs
effectively serve the interests of stockholders and the Corporation. The
various pay programs offered are appropriately balanced to provide increased
motivation for executives to contribute to the Corporation's overall future
successes, thereby enhancing stockholder value.
Executive Compensation Committee
Robert J. Pfeiffer, Chairman
Wallace S. Fujiyama
Glenn A. Kaya
Bert T. Kobayashi, Jr.
Fred C. Weyand
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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL STOCKHOLDER RETURN*
-----------------------------------------------------------
Among First Hawaiian, Inc.,
S&P 500 Index and S&P Major Regional Bank Index
(Companies appear in published industry index)
First S&P S&P Major
Measurement Period Hawaiian, Inc. 500 Index Regional Bank Index
- ------------------------ -------------- --------- -------------------
(Fiscal Year Covered)
Measurement P+ 12/31/88 $100 $100 $100
FYE 12/31/89 172 132 122
FYE 12/31/90 140 127 87
FYE 12/31/91 204 166 156
FYE 12/31/92 220 179 199
FYE 12/31/93 197 197 210
- --------
* Total return assumes reinvestment of dividends and $100 invested on
December 31, 1988 in the First Hawaiian, Inc. common stock, S&P 500 Index and
S&P Major Regional Bank Index.
RETURN ON ASSETS (%)
- -----------------------------------------------------------------------------
Regional Bank Average
Fiscal Year First Hawaiian, Inc. (54 regional banks)*
- ----------- -------------------- ---------------------
1988 1.08 .86
1989 1.29 .82
1990 1.35 .62
1991 1.36 .62
1992 1.33 .88
1993 1.21 1.17
- --------
* Source: Merrill Lynch & Co. Statistical Fact Book
RETURN ON EQUITY (%)
- -----------------------------------------------------------------------------
Regional Bank Average
Fiscal Year First Hawaiian, Inc. (54 regional banks)*
- ----------- -------------------- ---------------------
1988 19.4 13.2
1989 22.2 12.5
1990 20.3 9.0
1991 17.4 8.3
1992 16.5 12.0
1993 14.0 15.4
- --------
* Source: Merrill Lynch & Co. Statistical Fact Book
14
16
Summary Compensation Table
The following table summarizes the compensation for the chief executive
officer and the other four most highly compensated executive officers for the
years ended December 31, 1993, 1992 and 1991.
Long-Term Compensation
Annual Compensation ------------------------------------
--------------------------------- Awards Payouts
Name Other ------------------------ -------
and Annual Restricted Securities All Other
Principal Compen- Stock Underlying LTIP Compen-
Position Year Salary Bonus(1) sation(2) Awards(3) Options Payouts sation(4)
- --------------------- ---- -------- -------- --------- ---------- ---------- ------- ---------
Walter A. Dods, Jr. 1993 $625,000 $328,125 $120,835 $-- 18,000 $ N/A $57,057
Chairman of the 1992 $575,000 $366,879 $114,673 $-- 18,800 $ N/A $58,612
Board of Directors, 1991 $500,000 $372,605 $113,110 $-- N/A $ N/A $65,179
Chief Executive
Officer, and
Director of the
Corporation
and Bank
John A. Hoag 1993 $400,000 $190,000 $113,142 $-- 9,920 $ N/A $34,018
President and 1992 $375,000 $201,769 $ 97,508 $-- 10,820 $ N/A $27,015
Director of the 1991 $325,000 $205,443 $102,138 $-- N/A $ N/A $25,674
Corporation
and Bank
Howard H. Karr 1993 $250,000 $118,750 $ 41,439 $-- 4,960 $ N/A $15,730
Executive Vice 1992 $230,000 $123,752 $ 34,930 $-- 4,420 $ N/A $10,518
President and 1991 $200,000 $126,042 $ 38,764 $-- N/A $ N/A $13,027
Treasurer of the
Corporation and
Vice Chairman
and Chief Financial
Officer of the Bank
Philip H. Ching 1993 $212,500 $100,937 $ 53,279 $-- 3,510 $ N/A $17,594
Executive Vice 1992 $195,000 $104,920 $ 43,806 $-- 3,750 $ N/A $13,059
President of the 1991 $170,000 $106,886 $ 44,252 $-- N/A $ N/A $14,228
Corporation and
Vice Chairman
of the Bank
Donald G. Horner 1993 $205,000 $ 97,375 $ 36,549 $-- 3,730 $ N/A $11,476
Executive Vice 1992 $190,000 $102,230 $ 32,886 $-- 3,650 $ N/A $ 8,115
President of the 1991 $165,000 $104,110 $ 76,804 $-- N/A $ N/A $10,322
Corporation and
Bank
NOTES:
(1) Includes cash awards under the IPKE and the cash portion under the Bonus
Plan for Employees and Profit Sharing Plan.
(2) Includes primarily directors' and committees' fees from the Corporation
and its subsidiaries, and imputed income, including "gross-up" for income
taxes related to social club memberships and dues and personal use of
automobiles. For 1993, the amounts of Other Annual Compensation disclosed
for each of the above named executive officers consisted of the following:
15
17
Director and Club
Committee Memberships
Fees and Dues Automobiles Other Total
----------- ----------- ----------- ------- ---------
Dods . . . . . . . . . . $82,200 $13,102 $21,543 $3,990 $120,835
Hoag . . . . . . . . . . $84,300 $ 4,393 $15,101 $9,348 $113,142
Karr . . . . . . . . . . $20,300 $ 4,763 $14,684 $1,692 $ 41,439
Ching . . . . . . . . . . $25,900 $ 8,322 $13,793 $5,264 $ 53,279
Horner . . . . . . . . . . $16,800 $ 6,366 $12,633 $ 750 $ 36,549
(3) There were no restricted stock awards to the above named executive
officers under the IPKE for the years shown. As of December 31, 1993, the
aggregate number of non-vested shares by the year of vesting of such
shares for each of the above named executive officers and aggregate market
value (based on the market price of the stock at December 31, 1993)
follow:
Number of
Shares Vesting In Market
---------------------- Total Value
1995 1998 Shares 12/31/93
------- ------ ------ --------
Dods . . . . . . . . . . 8,163 -- 8,163 $202,034
Hoag . . . . . . . . . . 5,612 -- 5,612 138,897
Karr . . . . . . . . . . -- -- -- --
Ching . . . . . . . . . . 2,755 -- 2,755 68,186
Horner . . . . . . . . . . -- 17,666 17,666 437,234
------- ------ ------ --------
Total . . . . . . . . 16,530 17,666 34,196 $846,351
======= ====== ====== ========
Dividends are paid to the above named executive officers on their
restricted stock holdings. The IPKE awards are intended to reward key
employees based upon the Corporation's overall performance, the
individual's business unit's performance and the key employee's own
performance. The IPKE is administered by the Committee. The IPKE provides
for a maximum bonus pool equivalent to 2 1/2% of consolidated income
before income taxes and securities gains for the performance year. The
Chief Executive Officer will, at his discretion, allocate a portion of the
bonus pool to each business unit. The manager of each business unit will
recommend how this allocated amount should be distributed to individual
participants in the business unit. Individual awards are generally based
upon the participant's management level and performance during the
performance period. The business unit manager's recommendations are
reviewed and approved or adjusted by the Chief Executive Officer. These
recommendations are then presented to the Committee for final review and
approval.
The awards under the IPKE can be paid, at the Committee's sole
discretion, in cash and/or common stock with a fair market value equal to
the award amount. A participant can elect to have all or a portion of the
cash award deferred for future payment under the Corporation's Deferred
Compensation Plan.
Participants are entitled to vote the restricted shares. IPKE shares
become vested upon the participant attaining 60 years of age, completion
of 20 full years of employment, retirement, death, or termination of
employment prior to retirement with the approval of the Corporation,
whichever occurs earliest. Beginning in 1989, for those participants who
had previously met the minimum restrictions for completion of 20 full
years of employment or attaining 60 years of age, the Committee imposed a
five-year restriction from the date of any subsequent stock awards. IPKE
also provides for forfeiture by the participant and reversion to the
Corporation of all non-vested shares previously awarded in certain cases
of termination of employment.
(4) Includes accruals or payments under the Supplemental Executive Retirement
Plan ("SERP"), term life insurance premiums including "gross-up" for
income taxes, split dollar insurance agreements as discussed below, and
deferred portion under the Bonus Plan for Employees and Profit Sharing
Plan. Details of All Other Compensation for each of the above named
executive officers for 1993 are as follows:
Term Split Dollar Profit
SERP Insurance Insurance Sharing Total
------ --------- ------------ ------- -------
Dods . . . . . $9,729 $32,735 $ 8,697 $5,896 $57,057
Hoag . . . . . $4,104 $ 7,206 $16,812 $5,896 $34,018
Karr . . . . . $ 354 $ 1,770 $ 7,710 $5,896 $15,730
Ching . . . . -- $ 3,751 $ 8,531 $5,312 $17,594
Horner . . . . -- $ 824 $ 5,527 $5,125 $11,476
16
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The Corporation has split dollar insurance agreements with the named
executive officers, as well as other senior officers. The Corporation pays
the insurance premium and imputes the economic benefit to the executive
utilizing the PS58 table published by the Internal Revenue Service. Under
the agreement, the executive owns a policy with a death benefit equal to
three times final salary and the Corporation owns an interest in the policy
on the life of the executive sufficient to recover all previously paid
premiums plus any foregone interest, net of the income tax benefit, on
such premium payments upon the death of the executive. The amount for
each named executive officer under this split dollar agreement included
in the above table represents the foregone interest, net of applicable
income tax benefit. The Corporation also has a $1,000,000 whole life
insurance policy on the life of Mr. Dods. The premium and related
"gross-up" income taxes on this policy are included under the Term
Insurance column. The death benefit under this policy is deducted from
the death benefit under Mr. Dods' split dollar policy.
There are no employment contracts, change-in-control arrangements (other than
in the LTIP, SIP and Deferred Compensation Plan) or termination of employment
arrangements with the named executive officers.
Option Grants in Last Fiscal Year
The following table sets forth the stock options granted on April 14,
1993 to each of the above named executive officers under the SIP. The table
also lists the potential realizable values of such options on the basis of
assumed annual compounded stock appreciation rates of 5% and 10%
over the life of the options, which is set at 10 years. The Corporation does
not have a stock appreciation rights program.
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants}(1) for Option Term(2)
- ------------------------------------------------------------------------------------ ----------------------
Percent
Number of of Total Exercise
Securities Options or Base
Underlying Granted to Price
Options Employees in Per Expiration
Name Granted(3) Fiscal Year Share Date 5% 10%
- ------------------- ------------ ------- ---------- -------- --------
Walter A. Dods, Jr. . . 18,000 17.0% $30.25 4/14/03 $342,433 $867,793
John A. Hoag . . . . . 9,920 9.4% $30.25 4/14/03 $188,719 $478,250
Howard H. Karr . . . . 4,960 4.7% $30.25 4/14/03 $ 94,359 $239,125
Philip H. Ching . . . . 3,510 3.3% $30.25 4/14/03 $ 66,774 $169,220
Donald G. Horner. . . . 3,730 3.5% $30.25 4/14/03 $ 70,960 $179,826
NOTES:
(1) Options under the SIP are granted at 100% of the market value of the
stock on the date of the grant. Options vest 25% per year after the first
anniversary after the date of grant. No option may be exercised prior to
vesting (and in no event earlier than 6 months after the date of grant)
or later than 10 years after the date of grant. The exercise price of an
option is payable either in cash, by tendering previously acquired shares
by the optionee, or by a combination of cash and previously acquired
shares. In the event of a change-in-control, as defined in the SIP, all
options granted and held at least six months become immediately
exercisable and vested. In the event of death, disability or retirement,
the Committee has the discretion to accelerate the vesting of options
previously granted. The SIP provides for the shortening of the exercise
period for vested options if termination is due to death, disability or
retirement. The SIP also provides for the Corporation to withhold
statutory income taxes upon the exercise of the options by the option
holder paying cash or tendering previously acquired Corporation shares or
by the Corporation withholding the appropriate number of option shares
which would have been issued following the option exercise. Without the
approval of the stockholders of the Corporation, the SIP cannot be
terminated, amended, or modified to (a) increase the total amount of
shares which may be issued except as provided in the SIP; (b) change the
class of eligible employees; (c) materially increase the cost of the
SIP or benefits to the participants; (d) extend the maximum period after
the date of grant during which the options may be exercised; or (e)
change the provisions of the exercise price.
17
19
(2) The potential realizable value is reported net of the option exercise
price, but before income taxes associated with exercise. These amounts
represent assumed annual compounded rates of appreciation of 5% and 10%
from the date of grant to the end of the option. Actual gains, if any, on
stock option exercises are dependent on the future performance of the
Corporation's common stock, overall stock market conditions, and the
optionees' continued employment through the vesting period. The amounts
reflected in these columns may not necessarily be achieved.
(3) None of the options granted represent reload options.
Option Values at December 31, 1993
The following table reflects the securities underlying unexercised
options and the value of these options as of December 31, 1993:
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
December 31, 1993 December 31, 1993
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
------------------- ----------------- -----------------
Walter A. Dods, Jr. . . . 4,700/32,100 None/None
John A. Hoag . . . . . 2,705/18,035 None/None
Howard H. Karr . . . . 1,105/8,275 None/None
Philip H. Ching . . . . 938/6,322 None/None
Donald G. Horner . . . . 913/6,467 None/None
There were no options exercised by the named executive officers in 1993.
Long-Term Incentive Plans--Awards in Last Fiscal Year
The Corporation adopted the LTIP in 1991. The LTIP is designed to reward
key employees for the Corporation's and individual's performances measured over
three-year cycles. The first cycle covers 1991-1993; the second cycle
1992-1994; and so on. The LTIP is administered by the Committee and has no
expiration date.
For each of the current performance cycles, the Corporation's average
ROA relative to a group of peer financial institutions and the Corporation's
growth in assets are used to measure the Corporation's performance and to
determine the payout factor, which ranges from 0% to 140%. In addition, a
threshold minimum performance level of average ROE must be achieved for each
three-year performance cycle. To determine individual awards the Chief
Executive Officer will evaluate each participant's performance (other than his
own) during these cycles. The Committee will then evaluate the Chief Executive
Officer's performance and review the other key employees' evaluations made by
the Chief Executive Officer in making the awards.
Cash payouts are made after each three-year performance cycle. A
participant can elect to have the cash award deferred for future payment under
the Corporation's Deferred Compensation Plan.
The first three-year performance cycle (1991-1993) ended December 31,
1993 and awards will be paid in 1994.
In 1992, the Committee approved the individual participants, including
the named executive officers, and their target awards for the 1991-1993
performance cycle. The following table reflects the estimated future payouts
based upon the named executive officer's target award and the threshold and
maximum amounts for the 1991-1993 performance cycle. These payouts are
contingent upon the Corporation and the named executive officer meeting certain
performance factors.
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20
Performance
Number of or Other Estimated Future Payouts
Shares, Units Period Until under Non-Stock Price-Based Plans
or Other Maturation or ------------------------------------------------
Name Rights Payout Threshold(1) Target Maximum(2)
- ------------------- ------------- ------------- ------------ -------- ----------
Walter A. Dods, Jr. . . None 12/31/93 $None $218,750 $437,500
John A. Hoag . . . . None 12/31/93 $None $120,000 $240,000
Howard H. Karr . . . . None 12/31/93 $None $ 50,000 $100,000
Philip H. Ching . . . None 12/31/93 $None $ 42,500 $ 85,000
Donald G. Horner . . . None 12/31/93 $None $ 41,000 $ 82,000
NOTES:
(1) If the Corporation does not meet its minimum performance factors and/or
the participant receives a 0% performance rating, there is no award and
payout.
(2) Maximum individual payout is limited to 200% of the target amount.
Pension Plans
The Corporation has an Employees' Retirement Plan (the "ERP") for
employees of the Corporation and participating subsidiaries who have completed
certain age and service requirements. Under the ERP, covered compensation
includes salary, including overtime, but excluding bonuses. Pension
compensation is also limited to a maximum allowable under the Internal Revenue
Code. Retirement benefits become payable effective upon an employee's
retirement at the normal retirement age of 65 years. Normal retirement benefits
payable under the ERP are based on total or final compensation and years of
credited service. Under specified circumstances, an employee who has attained a
certain age and length of service may retire early with reduced benefits.
The Corporation has a non-qualified, unfunded Supplemental Executive
Retirement Plan (the "SERP") for executives of the Corporation and
participating subsidiaries. To be eligible, an executive must have had benefits
under the Corporation's tax-qualified plans that are limited by certain laws or
regulations governing such plans and their benefits. The SERP provides the
difference between an unrestricted benefit and the restricted benefit allowed
under the qualified plan. In determining the pension benefits under the SERP, a
participant's covered compensation includes salary, including overtime, as well
as the annual bonus earned under the IPKE.
The following table illustrates the estimated annual pension benefits
payable to an executive officer at age 65. Whether these amounts become payable
depends on the contingencies and conditions governing the Corporation's ERP and
SERP.
Final Years of Service(2)
Average ---------------------------------------------------------------------------------
Compensation(1) 15 20 25 30 35
--------------- -------- -------- -------- -------- --------
$ 200,000 $ 50,626 $ 67,501 $ 84,377 $101,252 $118,127
250,000 63,751 85,001 106,252 127,502 148,752
300,000 76,876 102,501 128,127 153,752 179,377
350,000 90,001 120,001 150,002 180,002 210,002
400,000 103,126 137,501 171,877 206,252 240,627
450,000 116,251 155,001 193,752 232,502 271,252
500,000 129,376 172,501 215,627 258,752 301,877
550,000 142,501 190,001 237,502 285,002 332,502
600,000 155,626 207,501 259,377 311,252 363,127
650,000 168,751 225,001 281,252 337,502 393,752
700,000 181,876 242,501 303,127 363,752 424,377
750,000 195,001 260,001 325,002 390,002 455,002
800,000 208,126 277,501 346,877 416,252 485,627
850,000 221,251 295,001 368,752 442,502 516,252
900,000 234,376 312,501 390,627 468,752 546,877
950,000 247,501 330,001 412,502 495,002 577,502
1,000,000 260,626 347,501 434,377 521,252 608,127
1,050,000 273,751 365,001 456,252 547,502 638,752
1,100,000 286,876 382,501 478,127 573,752 669,377
1,150,000 300,001 400,001 500,002 600,002 700,002
1,200,000 313,126 417,501 521,877 626,252 730,627
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21
Notes:
(1) Final average compensation represents the average annual
compensation during the highest 60 consecutive calendar months in the last
120 calendar months of creditable service. Compensation for the purpose of
this table includes total salary plus the value of awards under the IPKE as
shown on the Summary Compensation Table (but not bonuses under the Bonus
Plan for Employees and Profit Sharing Plan). The estimated annual benefits
are computed on the basis of a straight-life annuity form of payment with
no social security offset.
(2) As of December 31, 1993, the number of years of creditable service
under the Corporation's defined benefit plans for each of the named
executive officers in the Summary Compensation Table was as follows: Mr.
Dods, 25 years; Mr. Hoag, 34 years; Mr. Karr, 21 years; Mr. Ching, 36
years; and Mr. Horner, 15 years.
Ten-Year Option Repricings
For the year ended December 31, 1993, there was no adjustment or
amendment to the exercise price of the stock options previously awarded.
Compensation Committee Interlocks and Insider Participation
No member of the Executive Compensation Committee was, at any time during
the last completed fiscal year, an officer or employee of the Corporation or
any of its subsidiaries. General Weyand was Vice President of the Corporation
from 1976 to 1982; Senior Vice President of the Bank from 1980 to 1982 and
Corporate Secretary from 1978 to 1981.
The Corporation has in the ordinary course of business extended credit to
Messrs. Kaya and Kobayashi (consisting of real estate mortgages and consumer
credit lines) as follows:
Aggregate
Largest Indebtedness Interest
Aggregate Outstanding Rate
Indebtedness December 31, Per
Name in 1993 1993 Annum
--------------------------- ------------ ------------ -------------
Glenn A. Kaya . . . . . . $421,229 $416,415 6.125%-6.625%
Bert T. Kobayashi, Jr. . . $891,700 $867,098 5.00 %-6.125%
In 1993, the subsidiaries of the Corporation paid fees to the law firm of
Kobayashi, Sugita & Goda in the amount of $1,000,301. Mr. Kobayashi is a
partner of Kobayashi, Sugita & Goda.
Mr. Pfeiffer is Chairman of the Board and a director of Alexander &
Baldwin, Inc., which owns 5.22% of the Corporation's outstanding common stock.
Mr. Dods is a director of Alexander & Baldwin, Inc. and the Asset Management
Division of First Hawaiian Bank holds 2,992,715 shares of Alexander & Baldwin,
Inc.'s common stock in a fiduciary capacity. Mr. Dods does not serve on the
executive compensation committee (or other board committee performing the
equivalent function) of Alexander & Baldwin, Inc.
The Bank has (a) made loans to Mr. Wallace C. Fujiyama and Alexander &
Baldwin, Inc. and (b) made loans to, and issued a letter of credit on behalf
of, Matson Navigation Company, Inc., a subsidiary of Alexander & Baldwin, Inc.
These loans and the letter of credit were made in the ordinary course of
business, were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with other persons, and did not involve more than normal risks of
collectibility or present other unfavorable features.
CERTAIN TRANSACTIONS
The total amount of loans outstanding to directors and executive officers
of the Corporation from the Bank aggregated $957,270 at December 31, 1993.
These loans were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and did
not involve more than normal risks of collectibility or present other
unfavorable features.
The following schedule shows detailed information on loans made by the
Corporation to those Directors (including nominees) and named executive officers
of the Corporation whose aggregate indebtedness exceeded $60,000 at any time
during 1993:
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Aggregate
Largest Indebtedness Interest
Aggregate Outstanding Rate
Indebtedness December 31, Per
Name and Title in 1993 1993(1) Annum
-------------- ------------- ------------- -------------
John W. A. Buyers $ 996,998 $ 984,523 5.00%-6.375%
Director
Philip H. Ching $ 264,354 $ 260,995 5.00%-7.62%
Executive Vice President
John C. Couch $2,739,968 $2,112,387 5.00%-9.00%
Director
Walter A. Dods, Jr. $1,950,084 $1,257,461 5.00%-7.62%
Chairman,Chief
Executive Officer
and Director
Dr. Julia Ann Frohlich $ 66,792 $ 14,371 7.62%
Director
David M. Haig $1,325,482 $1,221,214 6.00%
Director
John A. Hoag $ 353,633 $ 214,127 4.00%-7.62%
President and Director
Donald G. Horner $ 425,658 $ 366,766 5.00%-7.62%
Executive Vice President
Howard H. Karr $ 523,623 $ 516,504 5.00%-7.62%
Executive Vice President
and Treasurer
Bert T. Kobayashi, Jr. $ 891,700 $ 867,098 5.00%-6.125%
Director
Dr. Richard T. Mamiya $2,734,686 $2,696,597 5.00%-9.125%
Director
Dr. Fujio Matsuda $ 361,547 $ 338,308 5.00%-6.125%
Director
Dr. Roderick F. McPhee $ 379,282 $ 371,968 5.75%-6.00%
Director
NOTE: (1) All loans are secured by real estate mortgages or are consumer credit
lines.
The Bank leases a parcel of land, on which a branch of the Bank is
located, from the Estate of Samuel M. Damon pursuant to a lease commencing July
1, 1967. This lease is for a term of 50 years, requiring the payment of a fixed
annual rent of $95,713 annually from July 1, 1993 to June 30, 1997. Rents
thereafter are to be fixed for each of two succeeding 10-year periods by
agreement or failing agreement by appraisal. Messrs. Haig, Weyand, Ganley and
Dods are Directors of the Corporation and the Bank and Trustees of the Estate.
Management of the Corporation believes that this transaction is as favorable to
the Corporation and the Bank as that which would have been obtainable in
transactions with persons or companies not affiliated with the Corporation or
the Bank.
The Bank leases 5,100 square feet of office space to the Trustees of
the Damon Estate in a downtown Honolulu office building in which the Bank's
headquarters are temporarily located pending the construction of a new
headquarters building. The Trustees of the Damon Estate leased 4,031 square
feet in the old headquarters building at $2.00 per square foot per month for
the period ending April 30, 1997. In consideration of the Trustees and other
tenants of the old headquarters building agreeing to temporarily relocate their
offices to allow for construction of the new building, the Bank offered the
Trustees and 3 other non-related tenants comparable space in the temporary
location at the same aggregate rent as previously applied in the old building.
Management of the Corporation believes that, while the rent charged to the
Trustees and the other tenants may not be market rate rents for the temporary
location, the temporary arrangements made for the Trustees
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23
described above are as favorable to the Corporation and the Bank as
those that would have been obtainable in a similar transaction with persons or
companies not affiliated with the Corporation or the Bank.
ELECTION OF AUDITOR
The Board of Directors, on recommendation of the Joint Audit Committee,
recommends the re-election of Coopers & Lybrand as Auditor of the Corporation to
serve for the ensuing year. Coopers & Lybrand has served the Corporation in the
capacity of independent Auditors since 1973. Proxies in the accompanying form
will be voted for the election of Coopers & Lybrand unless a contrary
specification is indicated therein, in which event they will be voted as
specified. Election of the Auditor requires the affirmative vote of a majority
of the shares present or represented at the meeting. Under the Corporation's
Certificate of Incorporation and Bylaws, abstentions and broker non-votes will
not have the effect of votes in opposition to the election of Coopers & Lybrand.
It is expected that representatives of Coopers & Lybrand will be at the
Annual Meeting and will be available to respond to questions and make a
statement if they choose.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR.
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
The Board of Directors believes that it is advisable, for the reasons
set forth below, to amend Article Fourth of the Certificate of Incorporation
of the Corporation to increase the number of authorized shares of common
stock, par value $5.00 per share ("Common Stock"), from 66,500,000 to
100,000,000 shares. Accordingly, at its meeting on January 20, 1994, the Board
of Directors adopted a resolution proposing that an amendment to Article Fourth
of the Corporation's Certificate of Incorporation be presented to the
stockholders at the Annual Meeting for their approval. The proposed resolution
being submitted for stockholder approval is as follows:
RESOLVED, that Article Fourth of the Certificate of Incorporation be
amended to increase the number of authorized shares of Common Stock of the
Corporation by 34,500,000 shares and to read in its entirety as follows:
FOURTH: The total number of shares of stock which this
corporation shall have authority to issue is One Hundred Million
(100,000,000) shares of common stock having a par value of
Five Dollars ($5.00) per share.
As of the close of business on February 22, 1994, 00,000,000 of the
66,500,000 shares of Common Stock now authorized by the Certificate of
Incorporation were issued and outstanding, and an additional 00,000 shares of
Common Stock were held by the Corporation for issuance in connection with the
IPKE and SIP.
The Corporation has no agreements, commitments or plans at this time
for the sale or other use of the additional authorized shares of Common Stock.
However, the Board of Directors believes that it is in the best interest of the
Corporation and its stockholders to increase the shares of authorized Common
Stock so that a sufficient number of additional shares of Common Stock will be
available for issuance from time to time in connection with possible future
actions such as stock splits or stock dividends or for the purpose of
accomplishing a merger with, or of acquiring, another corporation, bank or
trust company. Having such additional authorized shares of Common Stock
available for issuance in the future will give the Corporation greater
flexibility to take advantage of opportunities that may arise and allow
additional shares of Common Stock in excess of the number of shares presently
authorized to be issued without the expense and delay of a special meeting of
stockholders. The Corporation does not have any plan at present to effect a
merger with, or otherwise acquire, another Company.
If the resolution is adopted and the Certificate of Incorporation is
amended in accordance therewith, the newly authorized Common Stock could
generally be issued at the discretion of the Board of Directors, subject,
however, to the rights of the Corporation's stockholders under Article Ninth of
the Certificate of Incorporation, as described below. In addition,
in certain circumstances, the rules and regulations of NASDAQ (on which the
Common Stock is now traded) may require specific stockholder authorization of
a proposed issuance of shares of Common Stock.
Article Ninth of the Certificate of Incorporation provides that upon any
increase in the authorized capital stock of the Corporation, unless the
resolution of the stockholders of the Corporation authorizing said increase
shall otherwise provide, the Board of Directors shall first offer the
additional authorized stock pro rata to all stockholders of record at such
price and on such terms as the Board of Directors may in each instance fix. An
exception to the requirement that authorized capital stock first be offered to
all stockholders is provid-
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24
ed in Article Ninth with respect to the issue of additional stock of the
Corporation for the purposes of accomplishing the merger with, or of acquiring,
any other corporation, bank or trust company. Therefore, except for the
issuance of the new shares in connection with a merger or acquisition by the
Corporation, the proposed increase in authorized Common Stock should not have
any effect upon a change in control of the Corporation.
The additional shares for which authorization is sought would be
identical in terms with the shares of Common Stock now authorized and
outstanding, and the amendment would not affect the terms or the rights of the
holders of those shares. The Corporation's Common Stock has no conversion
rights and is not redeemable under the terms of the Certificate of
Incorporation.
The affirmative vote of the holders of a majority of the outstanding
Common Stock is required for adoption of the proposed amendment to Article
Fourth of the Certificate of Incorporation. Accordingly, under the
Corporation's Certificate of Incorporation and Bylaws, and under Delaware
laws, abstentions and broker non-votes will have the effect of votes cast
against adoption of the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR.
OTHER BUSINESS
At the date of this proxy statement, management does not know of any
business to be presented at the Annual Meeting other than the matters set forth
above. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the accompanying form of proxy to vote in
accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS FOR 1995
Proposals of stockholders intended to be presented at the 1995 Annual
Meeting of the Corporation must be received by the Corporate Secretary of the
Corporation on or prior to November 4, 1994.
BY ORDER OF THE BOARD OF DIRECTORS
FIRST HAWAIIAN, INC.
Herbert E. Wolff
Senior Vice President and Secretary
Dated: March 1, 1994
A COPY OF THE ANNUAL REPORT OF THE CORPORATION ON FORM 10-K TO BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION PRIOR TO APRIL 1, 1994, IS
AVAILABLE AFTER THAT DATE TO EACH STOCKHOLDER UPON WRITTEN REQUEST THEREFOR.
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APPENDIX
This Appendix is attached hereto in compliance with Item 304(a) of
Regulation S-T promulgated by the Securities and Exchange Commission with
regard to graphic and image material.
1. The performance graph required by Item 402(l) of Regulation S-K is
presented in narrative form on page 14.
2. A bar graph depicting Return on Assets is presented in narrative form
on page 14.
3. A bar graph depicting Return on Equity is presented in narrative form
on page 14.
26
[First Hawaiian LOGO]
First Hawaiian, Inc. THIS IS YOUR PROXY FORM
- --------------------------------------------------------------------------------
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF FIRST HAWAIIAN, INC.
ANNUAL MEETING - APRIL 21, 1994 PROXY
The undersigned hereby appoints R.F. McPHEE, R.J. PFEIFFER, and F. C.
Weyand, and each of them, each with full power of substitution, the proxies of
the undersigned to attend the Annual Meeting of the Stockholders of FIRST
HAWAIIAN, INC. (the "Corporation") to be held at 9:30 o'clock A.M., Hawaiian
Standard Time, on April 21, 1994 in the 20th Floor Dining Room of the Plaza
Club, 900 Fort Street, Honolulu, Hawaii, and any adjournments thereof, and to
vote at said meeting and any adjournments thereof all shares of stock of the
Corporation standing in the name of the undersigned, as instructed below, and
in their judgment on any other business which may properly come before said
meeting.
1. ELECTION OF DIRECTORS
/ / FOR ALL NOMINEES LISTED BELOW / / WITHHOLD AUTHORITY
(except as marked to the contrary below)* to vote for all nominees listed below
JOHN W. A. BUYERS, JOHN C. COUCH, DAVID M. HAIG, DR. RODERICK F. McPHEE,
ROBERT J. PFEIFFER
*(INSTRUCTIONS: To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.)
------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE ELECTION OF COOPERS & LYBRAND AS AUDITOR:
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF STOCK
FROM 66,500 TO 100,000,000.
/ / FOR / / AGAINST / / ABSTAIN
This proxy will be voted as directed, but if no direction is specified, it will
be voted FOR Proposals 1, 2 and 3.
Dated: ________________________, 1994
_____________________________________
_____________________________________
Stockholder(s) should sign above
exactly as name(s) appear to the
left, but minor discrepancies in
such signatures shall not invalidate
this proxy. If more than one
Stockholder, all should sign.
