SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BANCWEST CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:
[BANCWEST CORPORATION LETTERHEAD APPEARS HERE]
March 1, 1999
Dear Fellow Stockholder:
On behalf of the Board of Directors of BancWest Corporation (formerly First
Hawaiian, Inc.), I cordially invite you to attend the 1999 annual meeting of
stockholders of the Corporation. The annual meeting will be held at 10:30 a.m.,
Pacific Time, on Thursday, April 15, 1999, in the Terrace Room, 21st Floor, Pan
Pacific Hotel, 500 Post Street, San Francisco, California. Following the merger
of First Hawaiian, Inc. and BancWest Corporation, the Corporation intends to
alternate the site of its annual meetings between San Francisco and Honolulu.
Therefore, the annual meeting in the year 2000 will be in Honolulu.
As a convenience to our stockholders residing in Hawaii, we also invite
stockholders to view the annual meeting via live video conference in the 30th
Floor Board Room of First Hawaiian Center, 999 Bishop Street, Honolulu, Hawaii,
beginning at 7:30 a.m., Hawaii Time. Stockholders present at First Hawaiian
Center will be able to view and listen to the annual meeting proceedings as they
occur and also ask questions. HOWEVER, THOSE IN ATTENDANCE AT THE FIRST HAWAIIAN
CENTER VIDEO CONFERENCE SITE WILL NOT BE ABLE TO CAST VOTES AT THAT SITE, NOR
WITHDRAW ANY PROXIES THAT THEY MAY HAVE SUBMITTED PREVIOUSLY.
We urge all stockholders to read the enclosed Notice of Annual Meeting of
Stockholders and Proxy Statement and to sign and return their proxies as
described in the Notice and Proxy Statement. It is important that your views be
represented, whether or not you are able to be present at the annual meeting in
San Francisco.
We appreciate your continued interest in BancWest Corporation, which is
reflected by the fact that so many of you cast your votes each year. We are
confident that you will continue to do so.
Sincerely,
/s/ Walter A. Dods, Jr.
------------------------------
Walter A. Dods, Jr.
[BANCWEST CORPORATION LETTERHEAD APPEARS HERE]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF BANCWEST CORPORATION
The annual meeting of the Stockholders of BancWest Corporation (the
"Corporation") will be held on April 15, 1999 at 10:30 A.M., Pacific Time (the
"Annual Meeting") in the Terrace Room, 21st Floor, Pan Pacific Hotel, 500 Post
Street, San Francisco, California, for the following purposes:
1. For the holders of Common Stock of the Corporation to elect
3 Non-Class A Directors, each to serve for a term of 3 years.
2. To elect the Auditor of the Corporation.
3. For the holders of Class A Common Stock of the Corporation
to elect 3 Class A Directors, each to serve for a term of 3 years.
4. To transact such other business as may properly be brought before the
meeting and any adjournments thereof. The Corporation knows of no
other business to be brought before the meeting.
Only stockholders of record at the close of business on February 19,
1999, will be entitled to notice of, and to vote, at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS:
Herbert E. Wolff
Senior Vice President and Secretary
Dated: March 1, 1999
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 IN SAN FRANCISCO, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON IF YOU WISH TO DO SO.
2
[BANCWEST CORPORATION LETTERHEAD APPEARS HERE]
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of BancWest Corporation (the "Corporation") of proxies
for the holders of the Common Stock of the Corporation to be used in the voting
at the annual meeting of stockholders of the Corporation to be held on April 15,
1999, and any adjournments thereof (the "Annual Meeting").
BancWest Corporation ("Old BancWest") merged with and into First
Hawaiian, Inc. ("First Hawaiian") on November 1, 1998 (the "Merger"). Upon
consummation of the Merger, First Hawaiian changed its name to BancWest
Corporation. This will be the first Annual Meeting of the stockholders of the
Corporation following the Merger.
The annual report of the Corporation, containing consolidated financial
statements as at and for the year ended December 31, 1998, 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, 1999.
BancWest Corporation is a holding company for First Hawaiian Bank, Bank
of the West, and FHL Lease Holding Company, Inc. The principal offices of the
Corporation are located at 999 Bishop Street, Honolulu, Hawaii 96813.
RECORD DATE AND VOTING RIGHTS
The Board of Directors of the Corporation has fixed the close of
business on February 19, 1999 as the record date (the "Record Date") for the
determination of stockholders entitled to receive notice of, and to vote at, the
Annual Meeting. Only stockholders of record as of the Record Date will be
entitled to vote at the Annual Meeting or any adjournment thereof. On the Record
Date, the Corporation had two classes of capital stock ("Voting Stock")
outstanding: Common Stock, par value $1.00 per share ("Common Stock"), and Class
A Common Stock, par value $1.00 per share ("Class A Common Stock"). As of the
close of business on February 19, 1999, the Corporation had outstanding
31,572,627 shares of Common Stock and 25,814,768 shares of Class A Common Stock.
Each share of Voting Stock outstanding on the Record Date is entitled to
one vote on each matter submitted to a vote of stockholders at the Annual
Meeting, other than the election of directors. Only the holders of Common Stock
will be entitled to vote for the election of the Non-Class A Directors, and only
the holders of Class A Common Stock will be entitled to vote for the election of
the Class A Directors (the terms "Non-Class A Directors" and "Class A Directors"
are defined below under "Election of Directors"). Each outstanding share of
Common Stock will be entitled to one vote in the election of Non-Class A
Directors, and each outstanding share of Class A Common Stock will be entitled
to one vote in the election of Class A Directors. Unless otherwise noted, the
term "director" shall include the Non-Class A Directors and the Class A
Directors.
VOTING AND REVOCABILITY OF PROXIES
Your vote is important and the Board of Directors urges you to exercise
your right to vote.
Proxies in the accompanying form duly executed and received by the
Corporation at any time before the Annual Meeting, and not revoked or superseded
before being voted, will be voted at the Annual Meeting. Where a specification
is indicated in the proxy, it will be voted in accordance with the
specification. Where no specification is indicated, the proxy will be voted in
accordance with the recommendations of the Board of Directors set forth in this
Proxy Statement. If any other proposals are brought before the meeting and
submitted to vote, all proxies will be voted in accordance with the judgment of
the persons voting the respective proxies.
3
Proxies in the accompanying form may be revoked or superseded at any
time before they are voted by a proxy of a later date, by written notification
received by the Secretary of the Corporation prior to the Annual Meeting or by
attending the Annual Meeting in San Francisco and voting in person. Attendance
in person at the Annual Meeting does not of itself revoke a proxy previously
given, but any stockholder who attends the Annual Meeting in person is free to
revoke any proxy previously given and to vote his or her shares in person.
PROXY SOLICITATION
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 such solicitation. The Corporation may reimburse brokers and
others holding shares in their names as nominees for their expenses in sending
proxy material to beneficial owners.
QUORUM, ABSTENTIONS AND BROKER NON-VOTES
Holders of outstanding shares of capital stock of the Corporation
representing at least a majority of the votes entitled to vote at the Annual
Meeting, present in person in San Francisco or represented by proxy, will
constitute a quorum (a "Quorum") with respect to all matters other than the
election of directors. At least a majority of the shares of Common Stock
entitled to vote at the Annual Meeting, present in person or represented by
proxy, shall constitute a quorum of the Common Stock for the election of Non-
Class A Directors (a "Non-Class A Quorum"). At least a majority of the shares of
Class A Common Stock entitled to vote at the Annual Meeting, present in person
or represented by proxy, shall constitute a quorum of the Class A Common Stock
for the election of Class A Directors (a "Class A Quorum"). The absence of a
Non-Class A Quorum will not prevent the election of Class A Directors, and the
absence of a Class A Quorum will not prevent the election of Non-Class A
Directors.
Abstentions and broker "non-votes" are counted as present and entitled
to vote for purposes of determining a quorum. A broker "non-vote" occurs when a
nominee holding shares for a beneficial owner does not have discretionary voting
power with respect to that item and has not received instructions from the
beneficial owner. Abstentions and broker non-votes will not be counted as either
"for" or "against" in the tabulation of votes on Non-Class A Directors.
ELECTION OF DIRECTORS
The members of the Board of Directors of the Corporation (the "Board of
Directors") are divided into 3 classes, one of which is elected at each annual
meeting of stockholders to hold office for a three-year term and until their
respective successors are elected and duly qualified.
The Board of Directors has fixed the number of directors to serve on the
Board of Directors at 20. Based upon the ratio of the number of shares of Class
A Common Stock issued and outstanding to the total number of shares of common
stock issued and outstanding, the holders of shares of the Class A Common Stock
are entitled to elect 9 of the 20 directors of the Corporation (the "Class A
Directors"). The holders of the Common Stock outstanding on the Record Date are
entitled to elect the remaining 11 directors of the Corporation (the "Non-Class
A Directors").
The terms of 3 Non-Class A Directors will expire at the Annual Meeting,
and the current Non-Class A Directors acting as a committee of the Board of
Directors have nominated the 3 persons set forth below for election for a term
of 3 years expiring at the annual meeting of the stockholders in 2002. The terms
of 3 Class A Directors will expire at the Annual Meeting, and the holders of the
Class A Common Stock have designated the 3 persons set forth below for election
to a term of 3 years expiring at the annual meeting of the stockholders in 2002.
The Non-Class A Directors will be elected by a plurality of the votes
cast by the holders of the Corporation's Common Stock entitled to vote thereon.
Class A Directors will be elected by a plurality of the votes cast by
the holders of the Class A Common Stock entitled to vote thereon.
Proxies will be voted for election of each nominee listed
below, all of whom are now members of the Board of Directors, unless (with
respect to any nominee) the authority to vote for such nominee has been
with-
4
held in the applicable proxy. In the event, which is not now anticipated, that
any of such nominees should become unavailable to serve for any reason, shares
for which proxies have been received will be voted for a substitute nominee
selected by a committee comprised of current Non-Class A Directors unless the
number of directors constituting the full Board of Directors is reduced.
Nominees for Non-Class A Directors for Terms Expiring at the 2002 Annual
Meeting
A committee comprised of the current Non-Class A Directors has nominated
Walter A. Dods, Jr., Paul Mullin Ganley and Fujio Matsuda for election as Non-
Class A Directors at the Annual Meeting, each for a 3-year term expiring at the
2002 annual meeting. The principal occupation of, and certain other information
regarding, these nominees are set forth below.
WALTER A. DODS, JR., 57, has been a director of the Corporation since
1983, a director of First Hawaiian Bank since 1979, and a director of Bank of
the West since November 17, 1998. He has been Chairman of the Board and Chief
Executive Officer of the Corporation and First Hawaiian Bank since September,
1989 and Vice Chairman of Bank of the West since November 1998. He was President
of the Corporation from March, 1989 to March, 1991. He was President of First
Hawaiian Bank from November, 1984 to October, 1989. He was an Executive Vice
President of the Corporation from 1982 to 1989. He has been with First Hawaiian
Bank since 1968. He is a trustee under the Will and of the Estate of S.M. Damon
and a director of Alexander & Baldwin, Inc.
PAUL MULLIN GANLEY, 59, has been a director of the Corporation since
1991 and a director of First Hawaiian 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 law
firm.
FUJIO MATSUDA, 74, has been a director of the Corporation since 1987 and
a director of First Hawaiian Bank since 1985. Since July 1996, he has been
Chairman, Pacific International Center for High Technology Research. He was
President of the Japan-America Institute of Management Science from September
1994 to June 1996. He was Executive Director of the Research Corporation of the
University of Hawaii from 1984 until 1994, and he was the President of the
University of Hawaii from 1974 to 1984.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE NOMINEES.
Designees for Class A Directors for Terms Expiring at the 2002 Annual Meeting
The holders of the Class A Common Stock have designated the persons set
forth below for election as Class A Directors at the Annual Meeting for a three-
year term expiring at the 2002 annual meeting. The principal occupation of, and
certain other information regarding, these designees are set forth below.
JACQUES ARDANT, 46, has been a director of the Corporation since
November 1, 1998 and a director of Bank of the West since September 1998. He has
been Director for International Banking and Finance, North America Area, Banque
Nationale de Paris ("BNP") since April 1997. He was Deputy General Manager of
BNP Greece from 1994 to April 1997. He was Secretary Generale of BNP Italy from
1989 to 1994. He has been with BNP since 1978.
YVES MARTRENCHAR, 41, has been a director of the Corporation since
November 1, 1998 and a director of Bank of the West since March 1994. He has
been the Executive Vice President for Products and Markets at BNP since October
1996. He was head of private banking for the branch system of BNP in France from
1993 to October 1996. He has been with BNP since 1980.
DON J. MCGRATH, 50, has been a director of the Corporation since
November 1 1998, a director of Bank of the West since July 1989, and a director
of First Hawaiian Bank since November 18, 1998. He has been President and Chief
Operating Officer of the Corporation since November 1 1998, President and Chief
Executive Officer of Bank of the West since January 1996 and Vice Chairman of
First Hawaiian Bank since November 1998. He was President and Chief Operating
Officer of Bank of the West from 1991 to 1996. He has been with Bank of the West
since 1975.
Directors Continuing in Office
Set forth below is the principal occupation of, and certain other
information regarding, the directors whose terms of office will continue after
the Annual Meeting. The terms of such directors will expire at the annual
meeting of stockholders held in the year indicated parenthetically after such
director's name.
5
Non-Class A Directors
JOHN W. A. BUYERS, 71, (2000) has been a director of the Corporation
since 1994 and a director of First Hawaiian Bank since 1976. He has been
Chairman of the Board and Chief Executive Officer of C. Brewer and Company,
Limited, a diversified agribusiness and specialty food company, since 1992. From
1982 to 1992, he was Chairman and President of C. Brewer and Company, Limited,
Hawaii's oldest company. Since 1986, he has been Chairman of ML Resources, Inc.,
the managing general partner of ML Macadamia Orchards, L.P., a master limited
partnership trading on the New York Stock Exchange. The partnership is engaged
in agribusiness. In 1993, he was elected Chairman of Hawaii Land and Farming
Co., Inc., a publicly-traded real estate development company. He is also a
director of John B. Sanfilippo & Sons, Inc., a nut marketing company located in
Elk Grove Village, Illinois.
DR. JULIA ANN FROHLICH, 58, (2001) has been a director of the
Corporation since 1992 and a director of First Hawaiian Bank since August 1991.
She was a director of First Hawaiian Creditcorp, Inc. from 1990 to June 1998 and
was a director of FHL Lease Holding Company, Inc. from 1990 to June 1997. She
has been President of the Blood Bank of Hawaii since 1985.
DAVID M. HAIG, 47, (2000) has been a director of the Corporation since
1989 and a director of First Hawaiian Bank since 1983. Mr. Haig is a beneficiary
and, since 1982, has been a trustee, under the Will and of the Estate of S. M.
Damon.
JOHN A. HOAG, 66, (2000) has been a director of the Corporation since
1991 and a director of First Hawaiian Bank since October 1989. He was President
of the Corporation from 1991 until April 1995 and was an Executive Vice
President of the Corporation from 1982 to 1991. From 1989 until June 30, 1994,
Mr. Hoag was President of First Hawaiian Bank; from that date until his date of
retirement, June 1, 1995, he was Vice Chairman of First Hawaiian Bank. Mr. Hoag
is chairman of the board of Hawaii Reserves, Inc., a land management
corporation.
BERT T. KOBAYASHI, JR., 58, (2001) has been a director of the
Corporation since 1991 and a director of First Hawaiian Bank since 1974. He is a
principal of the law firm of Kobayashi, Sugita & Goda. He is a director of
Schuler Homes, Inc., a land development company.
JOHN K. TSUI, 60, (2000) He has been a director of the Corporation since
July 1995 and a director of First Hawaiian Bank since July 1994. He has been
Vice Chairman and Chief Credit Officer of the Corporation since November 1,
1998. He was President of the Corporation from April 1995 to October 31, 1998.
He became President and Chief Operating Officer of First Hawaiian Bank in July
1994 and Vice Chairman of Bank of the West in November 1998. He was Executive
Vice President of Bancorp Hawaii, Inc. (now known as Pacific Century Financial
Corporation) from 1986 to June 1994 and Vice Chairman of Bank of Hawaii from
1984 to June 1994.
FRED C. WEYAND, 82, (2001) has been a director of the Corporation since
1986 and a director of First Hawaiian Bank since 1981. He was Vice President of
the Corporation from 1976 to 1982; Senior Vice President of First Hawaiian 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 as a member of the Joint Chiefs of Staff from 1974 to
1976. He is a trustee under the Will and of the Estate of S.M. Damon.
ROBERT C. WO, 73, (2001) was a director of the Corporation from 1974 to
1989 and again since 1992 and has been a director of First Hawaiian Bank since
1963. He has been President and Secretary of BJ Management Corp., a management
consulting company, since 1979. He has been Chairman of C.S. Wo & Sons, Ltd., a
manufacturer and retailer of home furnishings, since 1973.
Class A Directors
ROBERT A. FUHRMAN, 74, (2001) has been a director of the Corporation
since November 1, 1998 and a director of Bank of the West since August 1981. He
has been Chairman of the Board of Directors of Bank of the West since April
1991. He is the retired Vice Chairman, President and Chief Operating Officer of
Lockheed Corporation.
6
MICHEL LARROUILH, 63, (2000) has been a director of the Corporation
since November 1, 1998 and a director of Bank of the West since February 1984.
He was Chief Executive Officer of Bank of the West from February, 1984 to
December, 1995. He was Chairman and Chief Executive Officer of Old BancWest from
January 1996 to December 1997. He was Chairman and Advisor to the Chief
Executive Officer of Old BancWest from January 1998 to October 1998.
VIVIEN LEVY-GARBOUA, 51, (2001) has been director of the Corporation
since November 1, 1998 and a director of Bank of the West since March 1994.
Since 1996, he has been the Chief Executive, International and Finance at BNP.
He was Senior Executive Vice President, Head of International Division, from
January 1994 to August 1996. He has been with BNP since 1980.
RODNEY R. PECK, 53, (2001) has been a director of the Corporation since
November 1, 1998 and a director of Bank of the West since July 1990. He is a
Senior Partner with the law firm, Pillsbury, Madison & Sutro LLP, San Francisco,
California.
JOEL SIBRAC, 51, (2000) has been a director of the Corporation since
November 1, 1998 and a director of Bank of the West since January 1995. He has
been Vice Chairman of the Corporation since November 1, 1998. He has been Senior
Executive Vice President, Commercial Banking Group, of Bank of the West since
1996. He was General Manager, North American Desk, of BNP from 1994 to 1996 and
General Manager of BNP Italy from 1990 to 1994. He has been with BNP since 1974.
JACQUES HENRI WAHL, 66, (2000) has been a director of the Corporation
since November 1, 1998 and a director of Bank of the West since July 1982. He
has been a member of the Managing Committee of the BNP Group, Director and
Senior Advisor to the Chief Executive Officer of BNP since January 1997. He was
Vice Chairman of BNP and Chairman of Banque Nationale de Paris Intercontinentale
from 1993 to 1996. He was President and Chief Operating Officer of BNP from 1982
to 1993. He has been with BNP since 1982.
COMMITTEES, ATTENDANCE AND COMPENSATION OF THE BOARD
COMMITTEES OF THE BOARD
The Board of Directors of the Corporation has an Audit Committee and an
Executive Compensation Committee. The Board of Directors does not have a
standing nominating committee. However, Non-Class A Directors may be nominated
by a majority vote of a committee comprised of all the Non-Class A Directors
then in office.
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 Plans effective in 1991 and 1998, and the Deferred
Compensation Plan. It reviews the performance and approves the salary of the
Corporation's Chief Executive Officer and reviews the performance and salaries
of other senior management officers of the Corporation and its subsidiaries.
The Committee also makes recommendations to the Board of Directors with respect
to the appropriate senior management compensation structure. The Committee met 7
times in 1998. Its current members are Fujio Matsuda (Chairman), Julia Ann
Frohlich, Robert A. Fuhrman, David M. Haig, and Michel Larrouilh.
The Audit Committee, which met 5 times during 1998, 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 to be selected as Auditor of the
Corporation. It also reviews the Corporation's reports to stockholders and other
financial statements of the Corporation. The Committee reviewed and approved the
1998 audit plan. The current members of the Audit Committee are John A. Hoag
(Chairman), John W.A. Buyers and Robert A. Fuhrman.
ATTENDANCE AT MEETINGS
All Non-Class A Directors and nominees listed above attended 75% or more
of the combined total number of meetings held during 1998 of the Board of
Directors and the committees on which he or she sits. The Board of Directors met
13 times in 1998. The Class A Directors and designees listed above became
members of the Board of Directors of the Corporation on November 1, 1998. All
Class A Directors attended the 2 meetings of the Board of Directors held in 1998
after that date, except Messrs. Martrenchar and Wahl, each of whom attended one
of those 2 meetings.
7
COMPENSATION OF DIRECTORS
In 1998, 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 such non-employee members of the Board received a fee of
$800 and reimbursement for transportation and lodging expenses for each Board
meeting attended and $700 for each committee meeting attended. As chairman of
the Joint Audit Committee (which preceded the Audit Committee from January to
October 1998), George P. Shea, Jr. was paid an additional $2,000 per month
through October 1998. Directors who are also employees of the Corporation or one
of its subsidiaries do not receive board or committee fees or retainers.
The Corporation has a Directors' Retirement Plan for non-employee
directors of the Corporation and First Hawaiian Bank who are not covered by any
of the Corporation's employee retirement programs. Following retirement from one
of these boards after reaching age 55 and at least ten years of service as
director, the retired director or his or her beneficiary will be entitled to
receive monthly payments for a ten-year period at an annual rate equal to one-
half of the annual retainer fee in effect at the time of the director's
retirement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more than
ten percent of any class of the Corporation's capital stock, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Based on the Corporation's records and
certain written representations received by the Corporation, the Corporation
believes that during 1998 all such filing require ments applicable to its
directors, executive officers and ten-percent stockholders were complied with,
except for the following: Howard H. Karr, an executive officer of the
Corporation, was inadvertently late in reporting that he had acquired indirect
beneficial ownership in stock options to acquire 2,030 shares of Common Stock
held by his wife under the Corporation's Stock Incentive Plan by virtue of his
marriage on June 19, 1997. Mr. Karr's indirect beneficial interest in his wife's
stock options was reported in his Form 5 report filed for the year ended
December 31, 1998. Director John W. A. Buyers inadvertently filed a Form 4
report regarding purchase of 988 shares of the Common Stock approximately two
months after the report was due. Director Julia Ann Frohlich was inadvertently
late in reporting the acquisition of a total of 164 shares under a stock
brokerage's dividend reinvestment plan in the years 1994 to 1997. The
acquisition of the shares was reflected in the Form 5 report filed by Dr.
Frohlich for 1998.
SECURITY OWNERSHIP OF DIRECTORS,
NAMED EXECUTIVE OFFICERS AND OTHERS
The beneficial ownership of all classes of Voting Stock of the
Corporation for each nominee for director, each current director and the named
executive officers of the Corporation, all of the current directors and
executive officers as a group, as well as all persons known by the Corporation
to be the beneficial owner of more than 5% of the Common Stock or the Class A
Common Stock (each a "5% Owner"), is shown in the following table. Each of the
individuals or groups listed below owns less than one percent of the
outstanding shares and voting power of any class of Voting Stock, unless
otherwise indicated. Each individual has sole voting and investment power with
respect to the shares he or she beneficially owns, unless otherwise reflected in
a footnote. The table is based upon information furnished by each such person
or, in the case of each 5% Owner, based upon a Schedule 13D or 13G filed with
the SEC. All listings are with respect to the Common Stock except the listing
for Banque Nationale de Paris, which beneficially owns the Class A Common Stock.
All information is as of February 19, 1999. Percentages are based upon the
number of shares of Common Stock outstanding on such date, plus, where
applicable, the number of shares the indicated person or group had a right to
acquire within 60 days of such date.
8
Shares Beneficially Percent
Owned/1/ of Class
Nominees for Non-Class A Directors ------------------- ---------
- ----------------------------------
Walter A. Dods, Jr. 8,510,260(2) 26.95%
Paul Mullin Ganley 7,936,127(3) 25.14%
Fujio Matsuda 3,113 *
DESIGNATED CLASS A DIRECTORS
- ----------------------------
Jacques Ardant -0- *
Yves Martrenchar -0-(15) *
Don J. McGrath 89,737 (15) *
DIRECTORS CONTINUING IN OFFICE
- ------------------------------
John W.A. Buyers 2,691 *
Julia Ann Frohlich 1,712 *
Robert A. Fuhrman 1,000 *
David M. Haig 7,918,591(4) 25.08%
John A. Hoag 38,953(5) *
Bert T. Kobayashi, Jr. 5,309(6) *
Michel Larrouilh 3,735(15) *
Vivien Levy-Garboua -0-(15) *
Rodney R. Peck 200 *
Joel Sibrac 300(15) *
John K. Tsui 220,462(7) *
Jacques Henri Wahl -0-(8)(15) *
Fred C. Weyand 7,927,907(9) 25.11%
Robert C. Wo 102,592(10) *
OTHER EXECUTIVE OFFICERS
- ------------------------
Donald G. Horner 169,018(11) *
Howard H. Karr 180,166(12) *
All nominees, designees, directors and
executive officers as a group (24 persons) 9,221,213 29.21%
5% OWNERS OF COMMON STOCK
- -------------------------
David M. Haig, Fred C. Weyand,
Paul Mullin Ganley and Walter A. Dods, Jr.,
as trustees under the Will and of the
Estate of S.M. Damon, 999 Bishop Street,
Honolulu, Hawaii 96813 7,900,000(13) 25.02%
Trust and Investments Division,
First Hawaiian Bank,
P.O. Box 3200,
Honolulu, Hawaii 96847 2,434,649(14) 7.71%
Alexander & Baldwin, Inc.
822 Bishop Street
Honolulu, HI 96813 1,692,894 5.36%
5% OWNERS OF CLASS A COMMON STOCK
- ---------------------------------
Banque Nationale de Paris
16, boulevard des Italiens 75009 Paris, France 25,814,768(15) 100%
*The percentage of shares beneficially owned, including shares that can be
acquired within 60 days from February 19, 1999 through the exercise of stock
options, does not exceed 1% of the shares currently outstanding.
9
NOTES TO SECURITY OWNERSHIP TABLE:
Note (1) This column includes the number of shares that may be acquired through
exercise of stock options within 60 days from February 19, 1999 for
the following: Mr. Dods, 247,950; Mr. Tsui, 120,170; Mr. Horner,
62,750; Mr. Karr, 69,300.
Note (2) Mr. Dods' reported beneficial ownership of the Common Stock includes
924 shares held in his wife's individual retirement account as to
which Mr. Dods disclaims beneficial ownership; 7,900,000 shares owned
by the Estate of S. M. Damon as to which Mr. Dods shares voting and
investment powers; and 83,476 shares owned by First Hawaiian
Foundation, as to which Mr. Dods holds shared voting and investment
powers. Mr. Dods is a director of Alexander & Baldwin, Inc., which
owns 1,692,894 shares of the Common Stock of the Corporation. Mr. Dods
disclaims beneficial ownership of the shares owned by Alexander &
Baldwin, Inc. and First Hawaiian Foundation.
Note (3) Mr. Ganley's reported beneficial ownership of the Common Stock
includes 7,900,000 shares owned by the Estate of S.M. Damon as to
which Mr. Ganley shares voting and investment powers; 35,929 shares in
his revocable living trust, a money purchase pension plan and an
individual retirement account as to which he has sole voting and
investment powers; and 170 shares for which he has sole voting and
investment powers, as successor trustee.
Note (4) Mr. Haig's reported beneficial ownership of the Common Stock includes
7,900,000 shares owned by the Estate of S. M. Damon as to which Mr.
Haig shares voting and investment powers. He is beneficiary of an
HR-10 plan which holds 5,814 shares of the Common Stock as to which he
has sole voting and investment powers.
Note (5) Mr. Hoag's reported beneficial ownership of the Common Stock includes
19,020 shares in his wife's revocable living trust as to which Mr.
Hoag disclaims beneficial ownership and 1,795 shares held jointly with
his wife.
Note (6) Mr. Kobayashi's reported beneficial ownership of the Common Stock
includes 1,935 shares held in his wife's IRA account and revocable
living trust as to which he disclaims beneficial ownership.
Note (7) Mr. Tsui's reported beneficial ownership of the Common Stock includes
2,000 shares held as trustee of his daughter's trust, as to which he
holds sole voting and investment powers; 1,000 shares held in his
wife's trust; and 83,476 shares owned by First Hawaiian Foundation, as
to which Mr. Tsui holds shared voting and investment powers. Mr. Tsui
disclaims beneficial ownership of the shares owned by his wife's trust
and First Hawaiian Foundation. Mr. Tsui's reported stock options
include an option to acquire 20,170 shares of Common Stock held by the
aforesaid trust for his daughter.
Note (8) Mr. Wahl is a director of Banque Nationale de Paris, which is the
owner of 25,814,768 shares of the Class A Common Stock of the
Corporation, as to which Mr. Wahl disclaims beneficial ownership.
Note (9) Mr. Weyand's reported beneficial ownership of the Common Stock
includes 7,900,000 shares owned by the Estate of S.M. Damon as to
which he shares voting and investment powers and 14,907 shares in his
wife's revocable living trust as to which he shares voting and
investment powers.
Note (10) Mr. Wo's reported beneficial ownership of the Common Stock includes
8,000 shares in the Betty and Bob Wo Foundation as to which he shares
voting and investment powers, 300 shares held jointly with his wife,
and 87,000 shares held by C.S. Wo & Sons, Ltd., as to which he shares
voting and investment powers.
Note (11) Mr. Horner's reported beneficial ownership of the Common Stock
includes 83,476 shares owned by First Hawaiian Foundation, as to which
Mr. Horner holds shared voting and investment powers. Mr. Horner
disclaims beneficial ownership of the shares owned by First Hawaiian
Foundation.
Note (12) Mr. Karr's reported beneficial ownership of the Common Stock includes
78 shares owned by his wife directly or as custodian and 83,476 shares
owned by First Hawaiian Foundation, as to which Mr. Karr holds shared
voting and investment powers. Mr. Karr disclaims beneficial ownership
of the shares owned by his wife and First Hawaiian Foundation.
Note (13) Messrs. Haig, Weyand, Ganley and Dods are directors of the
Corporation. Mr. Dods is also the Chairman and Chief Executive Officer
of the Corporation. The trustees have shared voting and investment
powers as to shares owned by the Damon Estate.
10
Note (14) The shares held by the Trust and Investments Division in fiduciary
accounts include: 996,927 shares as to which it has sole voting power
and 960,812 shares as to which it has sole investment power; 1,190,014
shares as to which it has shared voting power and 1,222,669 shares as
to which it has shared investment power; 233,519 shares as to which
sole voting power is retained by the settlors of the trusts; and
251,168 shares as to which sole investment power is held by outside
investment advisers.
Note (15) The designated Class A Directors and Class A Directors continuing in
office hold a beneficial interest in an aggregate of 97,302 shares of
the common stock of Banque Nationale de Paris, including the number of
shares that may be acquired through exercise of stock options within
60 days from February 19, 1999.
EXECUTIVE OFFICERS
Listed below are the executive officers of the Corporation,
with their age and position and office held with the Corporation.
Name, Age* Positions and Offices With the Corporation
- ---------- ------------------------------------------
Walter A. Dods, Jr., 57 Please see "Election of Directors" - "Nominees
for Non-Class A Directors for Terms Expiring at
the 2002 Annual Meeting" (page 5)
Don J. McGrath, 50 Please see "Election of Directors" -"Designees
for Class A Directors for Terms Expiring at the
2002 Annual Meeting" (page 5)
John K. Tsui, 60 Please see "Election of Directors" -"Directors
Continuing in Office" (page 6)
Joel Sibrac, 51 Please see "Election of Directors" -
"Directors Continuing in Office" (page 7)
Howard H. Karr, 56 Executive Vice President and Chief Financial
Officer of the Corporation since November 1,
1998; Executive Vice President and Treasurer of
the Corporation from 1990 to October 31, 1998;
Vice Chairman of First Hawaiian Bank since
1997; Vice Chairman, Chief Financial Officer
and Treasurer of First Hawaiian Bank from
September 1993 to 1997. Mr. Karr has been with
First Hawaiian Bank since 1973.
Douglas C. Grigsby, 46 Executive Vice President and Treasurer of the
Corporation since November 1, 1998 and Chief
Financial Officer of Bank of the West since
1989. Mr. Grigsby has been with Bank of the
West since 1977.
Bernard Brasseur, 60 Executive Vice President and Risk Manager of
the Corporation since November 1, 1998 and Risk
Manager of Bank of the West since 1983. Vice
Chairman of First Hawaiian Bank since November,
1998. Mr. Brasseur has been with BNP since
1966, and Bank of the West since 1983.
Donald G. Horner, 48 Executive Vice President of the Corporation
since 1989; Vice Chairman of First Hawaiian
Bank since July 1994; Executive Vice President
of First Hawaiian Bank from 1993 to 1994. Mr.
Horner has been with First Hawaiian Bank since
1978.
*As of March 1, 1999
Pursuant to a Standstill and Governance Agreement between the
Corporation and BNP, Walter A. Dods, Jr., Chairman and Chief Executive Officer
of the Corporation and First Hawaiian Bank, and Don J. McGrath, President and
Chief Operating Officer of the Corporation and President and Chief Executive
Officer of Bank of the West, will continue to serve in their respective
capacities unless removed by a vote of two-thirds of the board of directors or
until their death, voluntary retirement or resignation.
11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation for the Chief Executive
Officer and the other four most highly compensated executive officers of the
Corporation for the years ended December 31, 1998, 1997 and 1996.
Long-Term Compensation
------------------------------------------
Annual Compensation(1) Awards Payouts
------------------------------------- -------------------------- ------------
Name Other
and Annual Restricted Securities All Other
Principal Compen- Stock Underlying LTIP Compen-
Position Year Salary/(2)/ Bonus/(3)/ sation/(4)/ Awards/(5)/ Options Payouts/(6)/ sation/(7)/
- --------- ---- ----------- ---------- ----------- ----------- ---------- ------------ -----------
Walter A. Dods, Jr. 1998 $860,000 $501,189 -- -- 66,150 -- $69,349
Chairman, Chief 1997 $851,167 $498,483 -- -- 80,000 -- $76,268
Executive Officer 1996 $825,267 $462,691 -- -- 22,000 -- $78,500
and Director
Don J. McGrath 1998 $108,336 $268,818/(8)/ -- --/(9)/ --/(9)/ -- --
President, Chief
Operating Officer
and Director*
John K. Tsui 1998 $573,000 $274,310 $ 3,256 -- 36,730 -- $21,413
Vice Chairman, 1997 $566,334 $273,512 $ 351 -- 50,000 -- $25,462
Chief Credit 1996 $547,133 $131,437 -- $110,006 11,680 -- $26,562
Officer and
Director
Howard H. Karr 1998 $342,000 $135,644 -- -- 17,540 -- $13,935
Executive Vice 1997 $337,834 $130,648 -- -- 25,000 -- $16,349
President and 1996 $321,033 $124,914 -- -- 5,840 -- $17,034
Chief Financial
Officer
Donald G. Horner 1998 $310,000 $122,100 $ 7,527 -- 15,900 -- $11,817
Executive Vice 1997 $305,833 $115,355 $ 1,581 -- 25,000 -- $11,080
President 1996 $287,633 $111,791 -- -- 5,310 -- $12,966
NOTES TO SUMMARY COMPENSATION TABLE:
*Mr. McGrath became an executive officer and director of the Corporation on
November 1, 1998, the effective date of the Merger.
Note (1) Includes amounts earned but deferred under the Corporation's Deferred
Compensation Plan (the "DCP")
Note (2) Includes the following for the above-named executive officers:
12
BASE DIRECTOR AND TOTAL
YEAR SALARY COMMITTEE FEES* SALARY
---- ------ --------------- ------
Dods...... 1998 $860,000 $ -- $860,000
1997 $851,167 $ -- $851,167
1996 $741,667 $83,600 $825,267
McGrath... 1998 $108,336 $ -- $108,336
Tsui...... 1998 $573,000 $ -- $573,000
1997 $566,334 $ -- $566,334
1996 $473,333 $73,800 $547,133
Karr...... 1998 $342,000 $ -- $342,000
1997 $337,834 $ -- $337,834
1996 $295,833 $25,200 $321,033
Horner.... 1998 $310,000 $ -- $310,000
1997 $305,833 $ -- $305,833
1996 $270,833 $16,800 $287,633
*For periods after 1996, employees of the Corporation or its subsidiaries who
are also directors do not receive director or committee fees.
Note (3) Includes cash payments under the Corporation's Cash Bonus Plan ("Cash
Bonus Plan") for all three years and cash payments under the
Corporation's Incentive Plan for Key Executives ("IPKE") for 1997 and
1996. IPKE payments for the calendar year 1996 were paid in 1997 and
for calendar year 1997 in 1998. IPKE payments for calendar year 1998
are in the process of being calculated and will be reported in the
Proxy Statement for the 2000 annual meeting.
Note (4) Reported amount represents above-market interest earned on amounts
deferred under the DCP in 1997 and 1998. The aggregate amount of
perquisites and other personal benefits received as compensation by
each of the above-named executive officers in each of the three most
recent years was less than $50,000 and 10% of Salary and Bonus.
Note (5) The Executive Compensation Committee may, at its sole discretion, make
awards under the IPKE and 1998 SIP (as defined below) in restricted
Common Stock. No unvested awards of restricted Common Stock are
outstanding to Messrs. Dods, Tsui, Karr or Horner. See "Certain
Transactions" (page 24) for a discussion of a grant to Mr. McGrath of
shares of restricted Common Stock of the Corporation which was required
under the terms of the Merger agreement. Mr. McGrath holds 86,737
shares of restricted Common Stock with a market value as of December
31, 1998 of $4,163,376. All of the shares will vest on November 1,
2000.
Note (6) Because the Corporation did not achieve its minimum performance
standards for the three-year cycles that ended December 31, 1996 and
1997, respectively, no amounts were paid under the Corporation's Long-
Term Incentive Plan ("LTIP") for such cycles. For the reasons described
under "Long-Term Incentive Plans--Awards in Last Fiscal Year" (page
16), a payment equal to one-third of the maximum value attainable for
the three-year 1998-2000 performance cycle was made to all participants
in the LTIP (based upon 1998 compensation levels) in January 1999.
Messrs. Dods, Tsui, Karr and Horner received such payouts aggregating
$518,452 in January 1999. These payments will be reported as 1999 LTIP
Payouts in the Summary Compensation Table in the Proxy Statement for
the 2000 annual meeting. The four executive officers waived all other
payments under the change in control provisions of the LTIP arising out
of the Merger.
Note (7) Includes (i) premiums for life insurance, including "gross-up" for
income taxes; (ii) amounts related to split dollar insurance agreements
as discussed below; and (iii) Corporation contributions for the account
of the above-named executive officers to the Corporation's Profit
Sharing Plan ("Profit Sharing Plan") and amounts credited to the
accounts of such executive officers under the profit-sharing portion of
the Corporation's nonqualified, unfunded Supplemental Executive
Retirement Plan (the "SERP") that provides benefits that would have
been provided under the Profit Sharing Plan but for Internal Revenue
Code (the "Code") restrictions on such benefits. (In determining
profit-sharing benefits under the SERP, the participant's covered
compensation includes base pay, commissions, overtime, short-term
incentive pay, and the annual cash bonus earned under IPKE; a
participant's covered compensation does not include the cash portion of
the Corporation's Cash Bonus Plan.) Details of All Other Compensation
received by the above-named executive officers for 1998 are as follows:
13
Profit
Sharing Plan
Life Split Dollar (including SERP)
Insurance Insurance Contributions Total
--------- ------------ ---------------- -----
Dods.................................... $32,483 $5,677 $31,189 $69,349
Tsui.................................... -- $4,953 $16,460 $21,413
Karr.................................... -- $2,991 $10,944 $13,935
Horner.................................. -- $3,217 $ 8,600 $11,817
The Corporation has split dollar insurance agreements with the named
executive officers (except Mr. McGrath), as well as certain 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 insurance premiums
previously paid 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
insurance 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" for income taxes on this policy are
included under the Life Insurance column. The death benefit under this
policy is deducted from the death benefit under Mr. Dods' split dollar
policy.
Note (8) The amount shown for Mr. McGrath is the annual bonus he earned for the
entire calendar year 1998 under the Bank of the West Senior Management
Incentive Plan. However, he was an executive officer of the Corporation
only from November 1, 1998.
Note (9) See "Certain Transactions" (page 24) for a discussion of grants to Mr.
McGrath of shares of restricted Common Stock of the Corporation and
options granted under the 1998 SIP (as defined below), which were
required under the terms of the Merger agreement and were not part of a
recurring compensation arrangement that will continue in the future.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted during 1998 to each
of the above-named executive officers under the Corporation's 1998 Stock
Incentive Plan ("1998 SIP") and the potential realizable values of such options.
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants(1) for Option Term/(2)/
------------------------------------------------------------- -----------------------------
Number of Percent of
Securities Total Options Exercise
Underlying Granted to or
Options Employees in Base Price Expiration
Name Granted/(3)/ Fiscal Year Per Share Date 5% 10%
------------ ------------- ---------- ---------- ---------- ----------
Dods.............................. 66,150 16.8% $39.00 3/04/08 $1,622,454 $4,111,616
McGrath........................... 27,721/(4)/ 7.1% $40.00 11/1/08 $ 697,344 $1,767,205
Tsui.............................. 36,730 9.3% $39.00 3/04/08 $ 900,873 $2,282,988
Karr.............................. 17,540 4.5% $39.00 3/04/08 $ 430,202 $1,090,215
Horner............................ 15,900 4.0% $39.00 3/04/08 $ 389,978 $ 988,280
14
NOTES TO OPTION GRANTS IN LAST FISCAL YEAR:
Note (1) Options under the 1998 SIP are granted at 100% of the market value of
the stock on the date of the grant. When granted, options issued to
Messrs. Dods, Tsui, Karr and Horner were to vest 25% per year after the
first anniversary of the date of grant. Mr. McGrath's options will vest
on the second anniversary of 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 death, disability or
retirement, the Committee has the discretion to accelerate the vesting
of options previously granted. The 1998 SIP provides for the shortening
of the exercise period for vested options if termination is due to
death, disability or retirement. The 1998 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 Common Stock 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 1998 SIP cannot be terminated, amended, or modified to
(a) increase the total amount of shares which may be issued except as
provided in the 1998 SIP; (b) change the class of eligible employees;
(c) materially increase the cost of the 1998 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. The 1998 SIP and the Corporation's 1991 Stock
Incentive Plan ("1991 SIP") provide that in the event of a change in
control, as defined in each plan, all options granted and held at least
6 months become immediately exercisable and vested. Because the Merger
constituted a change in control under the 1998 SIP and the 1991 SIP,
all options listed in the table above for Messrs. Dods, Tsui, Karr and
Horner and all outstanding options under the 1991 SIP became
immediately exercisable and vested as of November 1, 1998.
Note (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 the
underlying stock 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.
Note (3) None of the options granted represents reload options.
Note (4) See "Certain Transactions" (page 24) for a discussion of Mr. McGrath's
stock options, which were granted pursuant to the terms of the Merger
agreement and were not part of a recurring compensation arrangement
that will continue in the future.
OPTION VALUES AT DECEMBER 31, 1998
The following table reflects the securities underlying unexercised options to
the named executive officers and the value of these options as of December 31,
1998:
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
December 31, 1998 December 31, 1998
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
------------------ -----------------
Dods............................................................. 247,950/0 $3,888,450/$0
McGrath.......................................................... 0/27,721 $ 0 /$221,768
Tsui............................................................. 120,170/0 $1,765,850/$0
Karr............................................................. 69,300/0 $1,081,220/$0
Horner........................................................... 62,750/0 $ 965,460/$0
There were no options exercised by the named executive officers in 1998.
15
The 1998 SIP and 1991 SIP provide that in the event of a change
in control, as defined in each plan, all options granted and held at least 6
months become immediately exercisable and vested. Because the Merger
constituted a change in control under the 1998 SIP and the 1991 SIP, all
outstanding options under the 1998 SIP and the 1991 SIP for Messrs. Dods,
Tsui, Karr and Horner became immediately exercisable and vested as of
November 1, 1998.
See "Certain Transactions" (page 24) for a discussion of Mr.
McGrath's stock options, which were granted pursuant to the terms of the
Merger agreement and were not part of a recurring compensation arrangement
that will continue in the future.
TEN-YEAR OPTION REPRICINGS
For the year ended December 31, 1998, there was no adjustment
or amendment to the exercise price of the stock options previously awarded.
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
The LTIP applies to a group of key executives approved by the
Executive Compensation Committee, which is much smaller than the group
eligible for IPKE and 1998 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. The LTIP is
administered by the Executive Compensation Committee and has no expiration
date.
Under the LTIP, no "awards" of shares, units or other rights,
as such, are granted. Instead, at the beginning of each performance cycle,
the Executive Compensation Committee designates which key executives will be
eligible to participate in the LTIP for the cycle. Additional key executives
could be declared eligible during the cycle. The Committee also establishes
target amounts of individual payouts and corporate performance standards to
be met over the performance cycle.
The Merger constituted a "Change in Control" within the
definition of the LTIP (an "LTIP Change in Control"). Upon the occurrence of
an LTIP Change in Control, the LTIP provides that the maximum value
attainable by participants will be deemed to have been fully earned for the
entire performance period as of the effective date of the LTIP Change in
Control, regardless of the Corporation's actual financial performance. Based
on actual performance to November 1, 1998, it did not appear that any
payments would be made for either of the three-year performance periods that
began in 1996 and 1997. Implementation of the LTIP Change in Control
provisions, on the other hand, would have resulted in payments under the LTIP
for the three-year performance periods that began on January 1, 1996, 1997,
and 1998 even though the Corporation was the surviving corporation in the
Merger. The Corporation also recognized that because of the Merger, the
performance goals that were established for the LTIP for the three-year perfor-
mance period that began January 1, 1998 would no longer be appropriate. As a
result, the Executive Compensation Committee amended the LTIP to (i) specify
that the Merger would not be considered an LTIP Change in Control for
purposes of the LTIP, and (ii) pay the maximum value attainable to each
participant for one year of the three-year performance period that began
January 1, 1998. A payment equal to one-third of the maximum value attainable
for the three-year 1998-2000 performance cycle was made to all participants
in the LTIP (based upon 1998 compensation levels) in January, 1999. The
Corporation's Executive Compensation Committee intends to establish new
target amounts and corporate performance standards, and to designate eligible
participants for the periods commencing January 1, 1999 and ending on
December 31, 2000 and 2001 to reflect the consummation of the Merger.
DEFINED BENEFIT PENSION PLANS
The Corporation has an Employees' Retirement Plan (the "ERP")
for employees of the Corporation and participating subsidiaries. Under the
ERP, covered compensation includes salary, including overtime, but excluding
bonuses. Pension compensation is also limited to the maximum allowable under
the 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 average 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 ERP was "frozen" as of December 31, 1995 and none of the executive
officers named in the Summary Compensation Table accrues such benefits under
the ERP for service after December 31, 1995.
16
Effective as of January 1, 1999, assets attributable to certain
Bank of the West employees in the BNP US Retirement Plan (the "BNP Plan")
were merged into the ERP and the ERP was amended to provide eligible Bank of
the West employees with accrual of benefits comparable to those provided
under the BNP Plan. Benefits accrue based upon an employee's years of service
and compensation over his/her years of employment. Except for Mr. McGrath,
none of the executive officers named in the Summary Compensation Table is
eligible to accrue such benefits.
The Corporation also maintains a grandfathered pension portion
of the SERP under which executive officers named in the Summary Compensation
Table continue to earn benefits based on the ERP formula. In determining
grandfathered pension benefits under the SERP, the participant's covered
compensation includes base pay, commissions, overtime, short-term incentive
pay, and the annual cash bonus earned under IPKE; a participant's covered
compensation does not include the cash portion of the Corporation's Cash
Bonus Plan or any LTIP bonus. The grandfathered pension benefit payable under
the SERP is reduced by the participant's "frozen" accrued benefit under the
ERP.
Effective as of January 1, 1998, the SERP was amended to
provide that eligible executive officers, including the executive officers
named in the Summary Compensation Table, would receive benefits under the
SERP in an amount equal to the greater of (i) the benefits payable under the
profit sharing portion of the SERP and the grandfathered SERP pension
benefits or (ii) a target percentage (60% for executives with 20 or more
years of service) of his/her final average compensation (see Note (1) below).
As required by the Merger agreement, the SERP was amended to
provide that certain Bank of the West employees, including Mr. McGrath, would
be entitled to a minimum benefit equal to the minimum benefit under the
terminated Bank of the West Excess Benefit Plan. To be eligible for such
minimum benefit, Mr. McGrath must have completed at least 20 years of service
and attained at least age 55 at retirement. The minimum benefit will be 50%
of his base salary at the annual rate in effect on the date he retires from
service ("final pay") if he is at least age 60 at retirement and 30% of his
final pay if he is at least age 55 but less than 60 at retirement. Mr.
McGrath is currently age 50 with 23 years of service and his base salary is
$650,000.
The following table illustrates the estimated annual pension
benefits payable under the ERP and the SERP to an executive officer at age
65. Whether these amounts become payable depends on the contingencies and
conditions set forth in the ERP and the SERP.
Years of Service(2)
Final Average -----------------------------------------------------------------------------------
Compensation(1) 15 20 25 30 35 40
----------------- ------- ------- ------- ------- ------- ---------
$200,000 50,082 66,777 83,471 100,165 116,859 133,553
300,000 76,332 101,777 127,221 152,665 178,109 203,553
400,000 102,582 136,777 170,971 205,165 239,359 273,553
500,000 128,832 171,777 214,721 257,665 300,609 343,553
600,000 155,082 206,777 258,471 310,165 361,859 413,553
700,000 181,332 241,777 302,221 362,665 423,109 483,553
800,000 207,582 276,777 345,971 415,165 484,359 553,553
900,000 233,832 311,777 389,721 467,665 545,609 623,553
1,000,000 260,082 346,777 433,471 520,165 606,859 693,553
1,100,000 286,332 381,777 477,221 572,665 668,109 763,553
1,200,000 312,582 416,777 520,971 625,165 729,359 833,553
1,300,000 338,832 451,777 564,721 677,665 790,609 903,553
1,400,000 365,082 486,777 608,471 730,165 851,859 973,553
1,500,000 391,332 521,777 652,221 782,665 913,109 1,043,553
1,600,000 417,582 556,777 695,971 835,165 974,359 1,113,553
17
NOTES TO DEFINED BENEFIT PENSION PLANS TABLE:
Note (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 base salary plus the value of awards under the IPKE
as shown on the Summary Compensation Table (but not bonuses under the
LTIP or the Cash Bonus Plan). The amount of the IPKE bonus included in
compensation for any year for purposes of the ERP and the SERP is the
amount earned for the performance year, though not paid until March of
the following year. The estimated annual benefits are computed on the
basis of a straight-life annuity form of payment with no social
security offset.
Note (2) As of December 31, 1998, the number of years of creditable service
under the Corporation's defined benefit plans for each of the executive
officers named in the Summary Compensation Table was as follows: Mr.
Dods, 30 years; Mr. McGrath, 23 years; Mr. Tsui, 15 years (5 years
actual service plus 10 years added by the Executive Compensation
Committee when Mr. Tsui was hired); Mr. Karr, 26 years; and Mr. Horner,
20 years.
The Merger also constituted a change in control for purposes of
the SERP. As a result, if a SERP participant is "involuntarily terminated"
within 36 months of the Merger, he/she will be granted three extra years of
credited service, the SERP benefit will be based on the greater of covered
compensation over the 12 months prior to termination or the final average
compensation otherwise provided in the SERP, and benefit payments will
commence on the later of his/her attaining age 55 or his/her date of
termination. The SERP defines "involuntary termination" to include a discharge
or resignation in response to a (i) change in day-to-day duties; (ii) reduction
in compensation or benefits; (iii) downward change of title; or (iv) relocation
requested by the employer.
CHANGE IN CONTROL AND EMPLOYMENT ARRANGEMENTS
Except as provided in the next two paragraphs, there are no
employment contracts, change in control arrangements (other than in the LTIP,
1998 SIP, 1991 SIP, SERP and DCP) or termination of employment arrangements
with the above-named executive officers.
Prior to the Merger, Mr. McGrath was a party to an employment
agreement with Bank of the West. To replace that agreement, the Corporation
entered into an employment agreement with Mr. McGrath (the "Agreement"),
effective upon the consummation of the Merger. Pursuant to the Agreement, Mr.
McGrath will serve as President and Chief Operating Officer of the
Corporation and President and Chief Executive Officer of Bank of the West,
with his principal business office in the San Francisco Bay Area. Either party
may terminate Mr. McGrath's employment upon 30 days' advance notice under
the Agreement. Mr. McGrath is entitled to: receive a base salary at the
annual rate of at least $650,000, receive at least four weeks of paid
vacation per year, and participate in all of the Corporation's employee
benefit plans and executive compensation programs. In addition, if (1) he
voluntarily resigns his employment for "Good Reason" (as defined in the
Agreement) or (2) the Corporation terminates his employment at any time for
any reason other than "Cause" (as defined in the Agreement) or "Disability"
(as defined in the Agreement), then he will be entitled to a severance
payment equal to 300% of the sum of his then-current annual rate of "Base
Compensation" (as defined in the Agreement), plus the mean of the annual
bonuses awarded to him for the three years ending immediately prior to the
date of his termination. He would also be entitled to continue participation
in the Corporation's group insurance plans for one year and he would be
credited with an additional year of service for purposes of determining the
vested portion of his stock options. If a "Change in Control" (as defined in
the Agreement) occurs, all of the stock options he holds at termination will
become 100% vested upon such Change in Control and remain exercisable for 18
months following termination of employment. The Corporation would also be
obligated to provide Mr. McGrath with a tax restoration payment if any
payments or benefits caused an excise tax to be imposed upon him. If he
receives such severance benefits, then he will be subject to a
non-competition covenant for three years following the termination of his
employment (provided a Change in Control has not occurred). He is also
subject, under all circumstances and at all times, to a confidentiality
covenant. As of the effective time of the Merger, he was also appointed to
the board of directors of the Corporation and of First Hawaiian Bank.
Pursuant to a Standstill and Governance Agreement between the
Corporation and Banque Nationale de Paris, Mr. Dods, Chairman and Chief
Executive Officer of the Corporation and First Hawaiian Bank, and Mr.
McGrath, President and Chief Operating Officer of the Corporation and
President and Chief Executive Officer of Bank of the West, will continue to
serve in their respective capacities unless removed by a vote of two-thirds
of the board of directors or until their death, voluntary retirement or
resignation.
18
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Executive Compensation Committee are Fujio
Matsuda (Chairman), Julia Ann Frohlich, David M. Haig and, since November 1,
1998, Robert A. Fuhrman and Michel Larrouilh. Until November 1, 1998, John C.
Couch, Richard T. Mamiya and Roderick F. McPhee were members of the
Committee.
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.
First Hawaiian and Bank of the West made loans to certain
persons who were members of the Executive Compensation Committee in 1998.
These loans were made in the ordinary course of business, 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 Corporation has in the ordinary course of business extended
credit to certain persons who were members of the Executive Compensation
Committee as follows:
LARGEST AGGREGATE INTEREST
AGGREGATE INDEBTEDNESS RATE
INDEBTEDNESS OUTSTANDING PER
NAME IN 1998 DECEMBER 31, 1998 ANNUM
------------------------ ------------ ----------------- -------------
John C. Couch........... $1,579,061 $896,445 5.000%-8.500%
David M. Haig........... $ 965,639 -- 8.125%
Richard T. Mamiya....... $ 435,710 $426,290 8.625%
Fujio Matsuda........... $ 292,974 $286,650 5.000%-8.250%
Roderick F. McPhee...... $ 272,068 $267,335 7.250%-8.125%
Until July 27, 1998, Mr. Couch was Chairman of the Board and is a
director of Alexander & Baldwin, Inc. ("A&B"), which owned 5.36% of the
Corporation's outstanding Common Stock as of February 19, 1999. Mr. Dods is a
director of A&B and the Trust and Investments Division of First Hawaiian Bank
held 5.46% of A&B's common stock in a fiduciary capacity as of February 19,
1999. Mr. Dods does not serve on the executive compensation committee (or other
board committee performing the equivalent function) of A&B.
First Hawaiian Bank has (a) made loans to, and issued letters
of credit on behalf of, A&B and its wholly-owned subsidiary, A&B-Hawaii,
Inc., (b) made loans to, and issued a letter of credit on behalf of, Matson
Navigation Company, Inc., a subsidiary of A&B, and (c) made loans to, and
issued letters of credit on behalf of, California and Hawaiian Sugar Company,
Inc., a subsidiary of A&B-Hawaii, Inc.
Mr. Haig is a trustee under the Will and of the Estate of S.M.
Damon. First Hawaiian Bank has made a loan to the Estate of S.M. Damon.
These loans and the letters 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.
REPORT OF EXECUTIVE COMPENSATION COMMITTEE.
The Executive Compensation Committee of the Board of Directors (the
"Committee") is comprised of independent, outside directors of the Corporation.
The Board of Directors has delegated responsibility for administering the
executive compensation program of the Corporation and its subsidiaries to the
Committee.
The executive compensation philosophy of the Corporation is to provide
remuneration to top performers that is consistent with the quality of their
contributions and the sacrifices they make on behalf of the organization. We
believe that the overall compensation package for executives who contribute to
the long-term advancement of the company should reflect their influence on that
growth. The Corporation intends to make it rewarding for these key executives to
remain until retirement. Key objectives of this philosophy include:
* providing a pay system designed to attract, retain, reward
and motivate executives;
* establishing compensation plans which emphasize performance-based pay
opportunities, as measured by strategic, financial and operating
objectives and goals; and
* providing longer-term, equity-based incentives for executives to
ensure they are motivated and rewarded for growth in equity value and
enhanced value to the stockholders.
19
The compensation program administered 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 annually. Factors
such as varying levels of responsibility, individual performance, consistency
and fairness, cost of living factors, the Corporation's operating results and
financial performance and cost control are considered. No particular weight
is placed on, or relative importance given to, any single factor in adjusting
base salaries.
Annual Incentives
Annual incentives for executive officers are provided pursuant
to 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 available for bonuses under the IPKE is a
bonus pool equal to 2 1/2% of consolidated income before income taxes and
securities gains for the performance year. Guideline percentages of base
salary are set, increasing as an executive's pay grade increases. The Chief
Executive Officer, at his discretion, allocates a portion of the annual bonus
pool to each business unit. The manager of each business unit recommends how
this allocated amount should be distributed to individual participants in the
business unit. Individual awards above or below guideline percentages are
generally based upon the participant's grade 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 Committee grants individual bonuses above or below guideline
percentages based upon the Committee's judgment, after reviewing the
recommendation of the Chief Executive Officer, as to individual performance
and relative levels of responsibility.
The IPKE performance year is the fiscal year of the
Corporation, which is the calendar year. Calculation and award of IPKE
bonuses for each year's performance is deferred until the following March.
This allows management and the Committee to base the awards upon final
performance results for the year. Therefore, no IPKE awards for the 1998
performance year have been calculated and they are not reported in this Proxy
Statement. IPKE awards granted in 1997 and 1998 for 1996 and 1997
performances, respectively, for the named executive officers are reported in
"Executive Compensation - Summary Compensation Table."
Executive officers are also eligible to receive annual contributions and
bonuses under the Corporation's Profit Sharing Plan and Cash Bonus Plan, which
are plans with fixed profit sharing formulas in which all eligible employees of
the Corporation participate and which are not administered by the Committee.
Contributions to these plans have been terminated for periods commencing after
December 31, 1998.
Long-Term Incentives
Long-term incentives are provided in the form of cash awards under the
Corporation's LTIP and grants of stock options under the 1991 SIP and the 1998
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, together with awards under the IPKE, generally comprise
approximately 40% 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 which is much smaller than the group eligible for IPKE and 1991
SIP and 1998 SIP awards. It is intended to provide incentive compensation to
participants based on the Corporation's ability to sustain target levels of
performance over three-year performance cycles. Under the formula in effect for
the three-year cycle ending in 1998, LTIP awards were based on target
percentages (ranging from 10% to 50%) of each participant's average base salary
over the three-year performance cycle. If the Corporation did not achieve a
threshold average ROA of 1.00% over the three-year performance cycle, no payouts
were to be made under the LTIP. When the Corporation's average ROA exceeded the
threshold level, the target payouts to participants were to be adjusted by a
factor
20
(ranging from 0% to 140%) based on the Corporation's financial performance
compared to peer groups, as measured by ROE, and based upon the Corporation's
total stockholder return ("TSR") over the period. Relative ROE and TSR were
equally weighted in the payout determination. In addition, LTIP awards to
participants were to be adjusted by the Committee based on each individual's
performance (from 0% to 140% of the individual's targeted amount as adjusted for
the Corporation's performance). In the Committee's judgment, these performance
measures were closely linked to stockholder value creation and reinforced
desired long-term strategies and performance.
The peer group used in the LTIP for comparative ROE was comprised of
regional bank holding companies similar to the Corporation in size, performance
and nature of operations. The peer group for TSR comparison was the S&P Major
Regional Bank Index. The former group includes some, but not all, of the
companies in the S&P Major Regional Bank Index.
See the discussion under "Long-Term Incentive Plans--Awards in the Last
Fiscal Year" (page 16) for a description of the impact of the Merger upon LTIP
payouts.
Under the 1998 SIP, stock options are granted at an option exercise
price not less than the fair market value of the Common 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
enhancement of stockholder value over the long term and encourages equity
ownership in the Corporation.
Guidelines for setting the size of stock option grants were set by the
Committee at the time the 1998 SIP was established, based on the recommendation
of an independent consultant. The guideline for stock option grants is a
percentage of base salary (ranging from 10% to 300%), based upon officer grades
(increasing as grade increases), resulting in a dollar target which is then
converted into the target number of shares by dividing the dollar target by the
Corporation's stock price on the date of grant. The size of individual annual
awards is increased or decreased from the guideline level based on individual
performance at the sole discretion of the Committee.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Base Salary
In March, 1998, the Committee reviewed Mr. Dods' performance for 1997.
Despite a stagnant year for Hawaii's economy, net income increased for 1997 over
1996 by 4.9%. Rather than wait for the economy to turn, Mr. Dods took
significant cost reduction steps in 1997 to maintain the Corporation's
competitive edge. Initiatives included internal mergers --Pioneer Federal
Savings Bank into First Hawaiian Bank and Pacific One Bank, N.A. into Pacific
One Bank; branch closures to reduce geographic overlap; outsourcing of selected
operations and staff reductions due to the consolidations and increased use of
part-timers. As part of these cost control initiatives, Mr. Dods proposed
freezing the base salaries of 53 senior officers at 1997 levels and requested
that the Committee not grant salary increases for himself and the other
officers. Accordingly, Mr. Dods' base salary for 1998 was not changed from 1997
levels.
Annual Incentives
As stated above, IPKE payments for 1998 have not yet been determined.
The IPKE payment for Mr. Dods to be granted in 1999 for 1998 performance will be
reflected in the proxy statement for the 2000 annual meeting. As a result of the
Corporation's and his performance for 1997, the Committee awarded him $470,000
under the IPKE, which was paid in 1998.
Long-Term Incentives
In March 1998, Mr. Dods received options to purchase 66,150 shares
pursuant to the 1998 SIP, as set forth in the Summary Compensation Table under
the section "Option Grants in Last Fiscal Year." This award was based upon the
1998 SIP's guideline percentage of base salary. See the discussion in Note (1)
under "Option Grants in Last Fiscal Year" for a description of the impact of the
Merger upon vesting of option grants.
Based on the Corporation's financial performance for the 1994-1996 and
1995-1997 performance cycles, no LTIP payouts were made to Mr. Dods in 1997 and
1998. See the discussion under "Long-Term Incentive Plans--Awards in the Last
Fiscal Year" (page 16)and in Note (6) of the "Notes to Summary Compensation
Table" for a description of the impact of the Merger upon the LTIP payout to Mr.
Dods.
21
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Section 162(m) of the Internal Revenue Code limits the deductibility of
certain compensation for the Chief Executive Officer and the additional four
executive officers who are highest paid and employed at year-end to $1,000,000
per year per executive. The $1,000,000 limit on deductibility does not apply to
compensation that meets the requirements for qualified performance-based
compensation as further described in the Code. The Corporation's pay philosophy
is performance focused and the Committee believes in retaining discretion to
increase as well as decrease incentive awards based on the Committee's
assessment of individual performance and other relevant factors. The 1998 SIP
permits the Committee to structure future stock option grants so that
compensation resulting therefrom would be deductible performance-based
compensation. The Committee will continue to review its compensation programs
for the executive officers subject to the deductibility limit while preserving
its focus on performance-driven compensation.
Executive Compensation Committee
Fujio Matsuda, Chairman
Julia Ann Frohlich
David M. Haig
Robert A. Fuhrman
Michel Larrouilh
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following 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 Common Stock during the
last 5 years as compared to the Standard & Poor's Major Regional Bank Index and
the broader Standard & Poor's 500 Stock Index.
22
COMPARISON OF FIVE-YEAR
CUMULATIVE TOTAL STOCKHOLDER RETURN*
- --------------------------------------------------------------------
[Chart Appears Here]
For the years ended December 31
BancWest Corporation Common Stock
100 100 132 160 188 235
- --------------------------------------------------------------------
S&P 500 Index
100 101 139 171 229 294
- --------------------------------------------------------------------
S&P Major Regional Bank Index
100 95 149 204 306 338
- --------------------------------------------------------------------
* Total return assumes reinvestment of dividends and $100 invested on
December 31, 1993 in the BancWest Corporation Common Stock, S&P 500
Index and S&P Major Regional Bank Index.
23
CERTAIN TRANSACTIONS
The total amount of loans outstanding at December 31, 1998 to directors
and executive officers of the Corporation from First Hawaiian Bank and Bank of
the West aggregated $6,733,330 and $1,737,592, respectively. First Hawaiian Bank
has also made loans to organizations in which a director is an executive
officer, partner or trustee or is, directly or indirectly, the beneficial owner
of 10% or more of any class of equity securities of such organization. These
loans were made in the ordinary course of business, 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 executive officers of
the Corporation whose aggregate indebtedness exceeded $60,000 at any time during
1998. All loans are secured by real estate mortgages or are consumer credit
lines:
AGGREGATE
LARGEST INDEBTEDNESS INTEREST
AGGREGATE OUTSTANDING RATE
INDEBTEDNESS DECEMBER 31, PER
NAME AND TITLE IN 1998 1998 ANNUM
- ---------------------------- ------------ ------------- -------------
John W. A. Buyers $ 929,829 $ 271,734 5.000%-8.500%
Director
John C. Couch $1,579,061 $ 896,445 5.000%-8.500%
Director*
David M. Haig $ 965,639 $ - 0 - 8.125%
Director
Donald G. Horner $ 321,969 $ - 0 - 5.000%-8.250%
Executive Vice President
Howard H. Karr $ 809,897 $ 192,178 5.625%-8.000%
Executive Vice President
and Chief Financial Officer
Bert T. Kobayashi, Jr. $ 770,347 $ 747,086 5.000%-8.000%
Director
Richard T. Mamiya $ 435,710 $ 426,290 8.625%
Director*
Fujio Matsuda $ 292,974 $ 286,650 5.000%-8.250%
Director
Roderick F. McPhee $ 272,068 $ 267,335 7.250%-8.125%
Director*
John K. Tsui $ 440,512 $ 435,296 7.375%-7.750%
Vice Chairman, Chief Credit
Officer and Director
*Mr. Couch and Drs. Mamiya and McPhee resigned from the Board of Directors of
the Corporation on November 1, 1998, the effective date of the Merger.
As disclosed in the Corporation's proxy statement dated July 17, 1998
relating to the Merger, certain employees of Bank of the West, including Mr.
McGrath, had been awarded stock appreciation rights ("SARs") under the Bank of
the West Senior Management Long Term Incentive Plan ("BOTW LTIP"). In connection
with the Merger, each such employee, including Mr. McGrath, was asked to enter
into a waiver agreement pursuant to which the employee would waive all rights he
or she had with respect to such SARs and consent to the cancellation of such
SARs in consideration for the issuance by the Corporation immediately after the
effective
24
time of the Merger of shares of restricted Common Stock with an aggregate value
(based on the per share value initially assigned by the parties to the Class A
Common Stock) equal to the gross value of the cash payout such employee would
have been entitled to pursuant to the BOTW LTIP upon the Merger's closing in the
absence of such waiver agreement, rounded down to the nearest whole share. Such
shares will become 100% vested on the second anniversary of the date of the
Merger's closing (November 1, 2000), provided the employee does not voluntarily
terminate his employment with Bank of the West or the Corporation prior to such
time (or have his employment terminated by Bank of the West or the Corporation
for cause).
Immediately after the effective time of the Merger, the Corporation was
also required by the terms of the Merger agreement to issue to such employees,
in the aggregate, options to purchase up to 150,000 shares of Common Stock with
an exercise price equal to the fair market value of such shares at the Merger's
closing. Such options will vest at the same time and under the same conditions
as the optionee's shares of restricted Common Stock.
Mr. McGrath executed such a waiver. As a result, he was granted 86,737
restricted shares of the Common Stock with a dollar value of $3,469,480
immediately after the Merger and was granted an option to acquire 27,721 shares
of Common Stock under the 1998 SIP. These grants were required by the terms of
the Merger agreement, and were not part of a recurring compensation arrangement
that will continue in the future.
First Hawaiian Bank leases a parcel of land, on which a branch of the
bank is located, from the Estate of S.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 $156,800 annually from July 1, 1997 to June 30, 2002 and
$179,200 annually from July 1, 2002 to June 30, 2007. Rents thereafter are to be
fixed for the next ten-year period by agreement or, failing agreement, by
appraisal. Messrs. Haig, Weyand, Ganley and Dods are directors of the
Corporation and trustees of the Estate. Management of the Corporation believes
that this transaction is as favorable to the Corporation and First Hawaiian Bank
as that which would have been obtainable in transactions with persons or
companies not affiliated with the Corporation or First Hawaiian Bank.
First Hawaiian Bank leases 6,074 square feet of office space to the
Estate of S.M. Damon in the downtown Honolulu headquarters building of the bank.
The Estate now pays rent for the space at the same rate as would be paid by
unrelated parties for the same space. The rent is a minimum of $3.12 per square
foot per month ($227,410 per annum), plus common area maintenance expenses,
until December 7, 2002. Rents thereafter are to be fixed by agreement or,
failing agreement, by appraisal. The lease will expire in December 2007.
Bank of the West leases approximately 48,382 square feet of office space
in San Francisco, California under a Commercial Office Lease (the "Master
Lease") commencing November 1, 1993 and expiring October 31,2003. Bank of the
West has subleased approximately 22,485 square feet of this space to BNP, or
approximately 46.5% of the leased premises (the "Subtenant's Percentage Share").
The sublease term is the same as the Master Lease, and BNP pays pro-rata rent
and certain expenses directly to the landlord under the Master Lease. BNP's
share of rent and expenses is based primarily on the Subtenant's Percentage
Share. The subleased premises were leased to BNP "as is", and BNP must look
solely to the landlord under the Master Lease for all services and benefits
provided by the Master Lease landlord applicable to the subleased space. Bank of
the West indemnifies BNP against losses incurred by BNP as a result of any
breach by Bank of the West of its obligations as tenant under the Master Lease,
except those assumed by BNP.
Bank of the West has participated and continues to participate in
various transactions with BNP and its affiliates. These transactions are subject
to review by the Federal Deposit Insurance Corporation (the "FDIC") and other
regulatory authorities and are required to be on terms at least as favorable to
Bank of the West as those prevailing at the time for similar non-affiliate
transactions.
Bank of the West issued Subordinated Capital Notes in the principal
amount of $50,000,000, 7.50% interest only, due August 2002. The Subordinated
Capital Notes were sold directly to BNP and are subordinated to claims of
depositors and creditors of Bank of the West. The maximum principal amount
outstanding in 1998 and balance outstanding on December 31, 1998 were
$50,000,000.
Bank of the West engaged in short-term federal funds purchases with BNP.
Federal funds purchased generally mature within 1 to 4 days from the transaction
date. The maximum amount owed by Bank of the West to BNPin 1998 and the balance
outstanding on December 31, 1998 were $150,000,000.
Mr. Kobayashi is a director of the Corporation and First Hawaiian Bank
and his law corporation is a partner of the law firm of Kobayashi, Sugita &
Goda. In 1998, the Corporation and its subsidiaries paid legal fees
25
to Kobayashi, Sugita & Goda in the amount of $2,289,717. Of this amount,
$613,577 is reimbursable by customers. Kobayashi, Sugita & Goda leases from the
bank 26,788 square feet of office space in the headquarters building. The rent
is set at annual amounts ranging from $994,419 per annum in 1999 to $1,412,621
per annum in the lease's final year, 2006, plus common area maintenance
expenses.
Mr. Peck is a director of the Corporation and Bank of the West and a
Senior Partner of the law firm, Pillsbury Madison & Sutro LLP, which provides
professional services to the Corporation and its subsidiaries.
ELECTION OF AUDITOR
The Board of Directors, on recommendation of the Audit Committee,
recommends the election of PricewaterhouseCoopers ("PWC") as Auditor of the
Corporation to serve for the ensuing year. PWC has served the Corporation in the
capacity of independent Auditors since 1973. Proxies in the accompanying form
will be voted for the election of PWC 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 by proxy at the meeting. Abstentions and broker non-votes will not
have the effect of votes in opposition to the election of PWC.
It is expected that representatives of PWC will be present at the Annual
Meeting and will be available to respond to appropriate questions. Such
representatives may make a statement if they choose.
If the proposal to elect PWC is not approved by the stockholders, or if
prior to the 2000 annual meeting, PWC declines to act or otherwise becomes
incapable of acting, or if its employment is discontinued by the Board of
Directors, then the Board of Directors will appoint other independent
accountants whose employment for any period subsequent to the 2000 annual
meeting will be subject to ratification by the stockholders at that meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF PWC AS
AUDITOR.
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 PROPOSAL FOR 2000 ANNUAL MEETING
Stockholder proposals intended to be presented at the 2000 annual
meeting of the Corporation's stockholders must be received by the Corporation no
later than November 1, 1999. If the annual meeting for the year 2000 is changed
by more than 30 days before or after April 15, 2000, however, the new deadline
will be described in one of the Corporation's quarterly reports on Form 10-Q.
Under the Corporation's By-Laws, a stockholder proposal not intended to be
included in the proxy material for the 2000 annual meeting must be received by
the Corporation by not earlier than January 16, 2000 and not later than February
5, 2000. Any such proposal must also comply with the other provisions contained
in the Corporation's By-Laws relating to stockholder proposals.
BY ORDER OF THE BOARD OF DIRECTORS
BANCWEST CORPORATION
Herbert E. Wolff
Senior Vice President and Secretary
Dated: March 1, 1999
A COPY OF THE ANNUAL REPORT OF THE CORPORATION ON FORM 10-K TO BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION PRIOR TO MARCH 31, 1999, WILL BE
AVAILABLE AFTER THAT DATE TO EACH STOCKHOLDER UPON WRITTEN REQUEST THEREFOR.
26
PROXY SOLICITED BY THE BOARD OF DIRECTORS
BANCWEST CORPORATION
ANNUAL MEETING-APRIL 15, 1999
The undersigned hereby appoints Dr. J.A. Frohlich, R.A. Fuhrman, and
J.A. Hoag, and each of them, each with full power of substitution, the proxies
of the undersigned to attend the Annual Meeting of Stockholders of BANCWEST
CORPORATION (the "Corporation") to be held at 10:30 o'clock A.M., Pacific
Daylight Time, on April 15, 1999 in the Terrace Room, 21st Floor, Pan Pacific
Hotel, 500 Post Street, San Francisco, California, 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 on the
reverse side, and in their judgment on any other business which may properly
come before said meeting.
(TO BE CONTINUED AND SIGNED ON THE OTHER SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
BANCWEST CORPORATION
APRIL 15, 1999
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
votes as in this
example.
FOR all
nominees listed WITHHOLD
at right AUTHORITY FOR AGAINST ABSTAIN
1. Election of [ ] [ ] Nominees: Walter A. Dods, Jr. 2. Proposal to approve the election [ ] [ ] [ ]
Non-Class A Paul Mullin Ganley of PricewaterhouseCoopers LLP
Directors Dr. Fujio Mateuda
*(INSTRUCTIONS: To withhold authority to vote This proxy will be voted as directed, but if no
for any individual nominee write that nominee's direction is specified, it will be voted FOR
name in the space provided below.) Proposals 1 and 2.
Please mark, sign, date and return this Proxy card
- --------------------------------------------- promptly, using the enclosed envelope.
Signature ____________________________________ Date _____________ Signature ____________________________________ Date _____________
Note: Stockholder(s) should sign above exactly as name(s) appears hereon. But minor discrepancies in such signatures shall not
invalidate their proxy; if more than one Stockholder, all should sign.
