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[FIRST HAWAIIAN, INC. LOGO]
P.O. Box 3200
Honolulu, Hawaii 96847
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF FIRST HAWAIIAN, INC.
The Annual Meeting of the Stockholders of First Hawaiian, Inc. (the
"Corporation") will be held on April 20, 1995 at 9:30 o'clock A.M. in the 20th
floor Dining Room of The Plaza Club, 900 Fort Street, Honolulu, Hawaii, for the
following purposes:
1. To elect 5 directors for a term of 3 years until the Annual Meeting
of Stockholders in 1998, and until their successors are elected and
qualified.
2. To fix the number of Directors at 15.
3. To elect the Auditor of the Corporation.
4. To transact such other business as may properly be brought before
the meeting and any adjournments thereof.
Only stockholders of record at the close of business on February 24, 1995,
will be entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS:
Herbert E. Wolff
Senior Vice President and Secretary
Dated: March 1, 1995
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. PLEASE MARK,
DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING
POSTAGE-PAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY
AND VOTE IN PERSON IF YOU WISH TO DO SO.
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[FIRST HAWAIIAN, INC. LOGO]
P.O. Box 3200
Honolulu, Hawaii 96847
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of First Hawaiian, Inc. (the "Corporation") of proxies
to be used in the voting at the Annual Meeting of Stockholders of the
Corporation to be held on April 20, 1995, and any adjournments thereof.
The annual report of the Corporation, containing consolidated financial
statements as at and for the year ended December 31, 1994, 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, 1995.
First Hawaiian, Inc. is a holding company for First Hawaiian Bank
(the "Bank"), First Hawaiian Creditcorp, Inc., First Hawaiian Leasing,
Inc., FHI International, Inc., and Pioneer Federal Savings Bank.
OUTSTANDING SHARES; VOTING RIGHTS
At the close of business on February 24, 1995 (the "record date") there
were 31,978,563 shares of common stock (the "Common Stock") of the Corporation
outstanding. Each share is entitled to one vote on each matter submitted to a
vote of stockholders; there is no cumulative voting.
The following table sets forth information as of the record date for each
person known by the Corporation to be the beneficial owner of more than 5% of
the Common Stock:
Name and Amount and
Address of Nature of Percent
Beneficial Beneficial of
Owner Ownership Class
---------- ---------- -------
David M. Haig, Fred C. Weyand, Paul Mullin Ganley and 8,000,000 shares 25.02
Walter A. Dods, Jr., as Trustees under the Will and
of the Estate of S.M. Damon, 1132 Bishop Street,
Honolulu, Hawaii 96813(1)
Asset Management Division, First Hawaiian Bank, 3,539,838 shares(2) 11.07
P.O. Box 3200, Honolulu, Hawaii 96847
Alexander & Baldwin, Inc., 822 Bishop Street 1,692,894 shares 5.29
Honolulu, Hawaii 96813(3)
- ------------------
(1)Messrs. Haig, Weyand, Ganley and Dods are Directors of the Corporation.
Mr. Dods is the Chairman and Chief Executive Officer of the Corporation.
The Trustees have shared voting and investment power as to shares owned
by the Damon Estate.
(2)The shares held by the Asset Management Division in fiduciary accounts
include: 1,469,369 shares as to which it has sole voting power and 1,451,703
shares as to which it has sole investment power; 1,571,655 shares as to
which it has shared voting power and 1,595,173 shares as to which it has
shared investment power; 498,814 shares as to which sole voting power is
retained by the settlors of the trusts; and 492,962 shares as to which sole
investment power is held by outside investment advisers.
(3)Mr. Robert J. Pfeiffer, a Director of the Corporation, is Chairman of the
Board of Alexander & Baldwin, Inc. Mr. John C. Couch, a Director of the
Corporation, is President and Chief Executive Officer of Alexander &
Baldwin, Inc. Alexander & Baldwin, Inc. has sole voting and investment power
as to shares shown in the above table.
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PROXY VOTING
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 set forth in this Proxy Statement and in
the discretion of the proxies named therein on all other matters properly to
come before the meeting or any adjournment thereof.
Proxies in the accompanying form may be revoked or superseded at any time
before they are voted by a proxy of a later date, or by written notification
received by the Secretary of the Corporation prior to the Annual Meeting.
Attendance in person at the Annual Meeting does not of itself revoke a proxy
previously given, but any stockholder who attends the Annual Meeting in person
is free to revoke any proxy previously given and vote his or her shares in
person.
The Corporation will pay the cost of solicitation of proxies for the
Annual Meeting. In addition to solicitation by use of the mails, proxies may be
solicited personally or by telephone, facsimile or telegraph by certain
officers and regular employees of the Corporation, who will not receive any
added compensation for so doing. The Corporation may reimburse brokers and
others holding shares in their names as nominees for their expenses in sending
proxy material to beneficial owners.
ELECTION OF DIRECTORS
The Bylaws of the Corporation provide that the Board of Directors is
divided into 3 equal classes of Directors. Each class of Directors is elected
to serve a 3 year staggered term, with the term of one class expiring at each
Annual Meeting. The number of Directors on the current Board is fixed at 15.
The Board of Directors recommends that the stockholders again set the total
number of Directors at 15.
Directors are elected by a plurality of the votes cast by the holders of
the Corporation's Common Stock at the Annual Meeting at which a quorum is
present. Under the Corporation's Certificate of Incorporation and Bylaws and
under Delaware law, abstentions and broker non-votes will not have the effect
of votes in opposition to election of a Director.
Proxies in the accompanying form will (unless a contrary direction is
indicated on the proxy) be voted to elect the nominees named below (who have
been nominated by the present Board of Directors) as Directors to serve subject
to the Certificate of Incorporation and Bylaws of the Corporation. If elected,
each will serve for a term of 3 years or until a successor is duly elected and
qualified.
If any of the nominees listed are not available for election at the Annual
Meeting (a contingency which the Board of Directors of the Corporation does not
now foresee), the Board of Directors intends to recommend the election of such
other persons as the Board may select in order to fill the vacancies. Proxies
in the accompanying form will be voted for the election of such other persons
unless authority to vote the proxies in the election of Directors has been
withheld.
The nominees designated by the Board of Directors are named below, with
brief statements setting forth their present principal occupations and other
information, including directorships in public companies:
Shares of Common
Stock of the Corporation Percent
Nominees for a Term of Three Years Beneficially Owned of
Until the Annual Meeting of Stockholders in 1998 at February 24, 1995 Class
------------------------------------------------ ------------------------ -------
DR. JULIA ANN FROHLICH, 54, has been a Director of the Corporation 1,200 *
since 1992 and a Director of the Bank since August, 1991. She has
been a Director of First Hawaiian Creditcorp, Inc. and First
Hawaiian Leasing, Inc. since 1990. She has been President of the
Blood Bank of Hawaii since 1985.
JOHN A. HOAG, 62, was an Executive Vice President of the 60,973 *
Corporation from 1982 to 1991 and has been President and a
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Shares of Common
Stock of the Corporation Percent
Nominees for a Term of Three Years Beneficially Owned of
Until the Annual Meeting of Stockholders in 1998 at February 24, 1995 Class
------------------------------------------------ ------------------------ -------
Director of the Corporation since 1991. He has been a Director
of the Bank since October, 1989. From 1989 until June 30, 1994,
Mr. Hoag was President of the Bank; since that date, he has been
Vice Chairman of the Bank. He has been with the Bank since 1960.
His reported beneficial ownership of the Corporation's stock includes
928 shares owned jointly with his wife as to which Mr. Hoag shares voting
and investment powers, 21,801 shares in his wife's revocable living trust
as to which Mr. Hoag disclaims beneficial ownership and 15,905 shares
that Mr. Hoag has the right to acquire within 60 days through the exercise
of stock options.
BERT T. KOBAYASHI, JR., 54, has been a Director of the Corporation since 5,895 *
1991 and a Director of the Bank since 1974. He is a principal of the
law firm of Kobayashi, Sugita and Goda. He is a Director of
Schuler Homes, Inc.
FRED C. WEYAND, 78, has been a Director of the Corporation since 1986 8,021,086 25.08
and a Director of the Bank since 1981. He was Vice President of the
Corporation from 1976 to 1982; Senior Vice President of the Bank
from 1980 to 1982 and Corporate Secretary from 1978 to 1981. He served
as a commissioned officer in the United States Army from 1940 to 1976
and held the office of Chief of Staff from 1974 to 1976. He is a Trustee
under the Will and of the Estate of S.M. Damon. His reported beneficial
ownership of the Corporation's stock includes 8,000,000 shares owned by
the Estate of S.M. Damon as to which he shares voting and investment
powers and 11,086 shares in his wife's revocable living trust as to which
he shares voting and investment powers.
ROBERT C. WO, 69, was a Director of the Corporation from 1974 to 1989 14,092 *
and again since 1992 and has been a Director of the 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. His reported beneficial ownership of the Corporation's stock
includes 8,000 shares in the Betty and Bob Wo Foundation as to which
he shares voting and investment powers.
*The percentage of shares beneficially owned does not exceed 1% of the shares
currently outstanding, including shares that can be acquired within 60 days
through the exercise of stock options.
Each of the foregoing nominees attended 75% or more of the combined total
number of meetings held during 1994 of the Board and Committees on which he or
she sits. The Board of Directors met 12 times in 1994.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO SET THE TOTAL NUMBER OF
DIRECTORS AT 15 AND A VOTE FOR THE ABOVE NOMINEES.
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DIRECTORS CONTINUING IN OFFICE AND EXECUTIVE OFFICERS
The Directors continuing to serve on the Board of Directors, pursuant to
their prior elections, and the named executive officers listed in the Summary
Compensation Table below, are listed here. The Directors will serve subject to
the Certificate of Incorporation and the Bylaws of the Corporation until the
annual meeting of stockholders in the year shown parenthetically after each
name and until their respective successors have been duly elected and
qualified.
Shares of Common
Stock of the Corporation Percent
Beneficially Owned of
Directors Continuing to Serve at February 24, 1995 Class
----------------------------- ------------------------ -------
JOHN W. A. BUYERS, 67, (1997) has been a Director of the 2,012 *
Corporation since 1994 and a Director of the Bank since 1976.
He has been Chairman of the Board and Chief Executive Officer
of C. Brewer and Company, Limited, a diversified land and
agriculture business, since 1992. From 1982 to 1992 he was
Chairman and President of C. Brewer and Company, Limited.
From 1975 to 1982, he was President and Chief Executive Officer
of C. Brewer and Company, Limited. Since 1989, he has been
Chairman of Mauna Loa Resources, the managing general partner
of Mauna Loa Partners, a master limited partnership trading on the
New York Stock Exchange. The partnership is engaged in agribusiness.
In 1993, he was elected Chairman of C. Brewer Homes, Inc., a new
publicly-traded real estate developer. He is also a Director of
John B. Sanfilippo & Sons, Inc. located in Elk Grove Village, Illinois.
JOHN C. COUCH, 55, (1997) has been a Director of the Corporation 8,437 *
since 1991 and a Director of the Bank since 1985. He has been
President and Chief Executive Officer of Alexander & Baldwin, Inc.
since April, 1992. He was President and Chief Operating Officer of
Alexander & Baldwin, Inc. from October, 1985 until April, 1989
and from April, 1991 to March, 1992. Since April, 1989, he has been
President and Chief Executive Officer of A&B-Hawaii, Inc., a
wholly-owned subsidiary of Alexander & Baldwin, Inc. He has been
a Director of Alexander & Baldwin, Inc. since 1985. He was President
and Chief Operating Officer of Matson Navigation Company, Inc.
from January, 1985 to September, 1985 and Executive Vice President
and Chief Operating Officer from January, 1984 to December, 1984.
Since April, 1992 he has been Vice Chairman of Matson Navigation
Company, Inc. Alexander & Baldwin, Inc., which is engaged in ocean
transportation, container leasing, agribusiness, property development
and property management, holds 1,692,894 shares of stock of the
Corporation, as to which Mr. Couch disclaims beneficial ownership.
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Shares of Common
Stock of the Corporation Percent
Beneficially Owned of
Directors Continuing to Serve at February 24, 1995 Class
----------------------------- ------------------------ -------
WALTER A. DODS, JR., 53, (1996) has been Chairman of the Board and 8,300,317 26.13
Chief Executive Officer of the Corporation and the Bank since
September, 1989. He was President of the Corporation from March,
1989 to March, 1991. He was President of the Bank from November,
1984 to October, 1989 and has been a Director of the Bank since 1979.
He was an Executive Vice President of the Corporation from 1982 to
1989 and has been a Director of the Corporation since 1983. He has
been with the Bank since 1968. His reported beneficial ownership of
the Corporation's stock includes 924 shares held in his wife's individual
retirement account as to which Mr. Dods disclaims beneficial ownership,
and 28,600 shares that Mr. Dods has the right to acquire within 60 days
through the exercise of stock options. He is a Trustee under the Will
and of the Estate of S.M. Damon and his reported beneficial ownership
of the Corporation's stock includes 8,000,000 shares owned by the Estate
of S. M. Damon as to which Mr. Dods shares voting and investment powers.
He is a Director of Alexander & Baldwin, Inc., which holds 1,692,894
shares of the stock of the Corporation, as to which Mr. Dods disclaims
beneficial ownership. He is a trustee of Punahou School, which owns
209,316 shares of the Corporation's stock; he has shared voting and
investment powers with respect to such shares and disclaims beneficial
ownership thereof.
PAUL MULLIN GANLEY, 55, (1996) has been a Director of the Corporation 8,050,888 25.18
since 1991 and a Director of the Bank since 1986. He is a Trustee under
the Will and of the Estate of S.M. Damon and a partner in the Carlsmith
Ball Wichman Murray Case & Ichiki law firm. His reported beneficial
ownership of the Corporation's stock includes 8,000,000 shares owned
by the Estate of S.M. Damon as to which Mr. Ganley shares voting and
investment powers; 19,108 shares in his revocable living trust as to
which he has sole voting and investment powers; 12,336 shares in a
profit sharing plan as to which he has sole voting and investment
powers; and 17,094 shares in two individual retirement accounts as to
which he has sole voting and investment powers.
DAVID M. HAIG, 43, (1997) has been a Director of the Corporation 8,018,109 25.07
since 1989 and a Director of the Bank since 1983. Mr. Haig is a
beneficiary and, since 1982, a Trustee under the Will and of the Estate
of S.M. Damon. His reported beneficial ownership of the Corporation's
stock includes 8,000,000 shares owned by the Estate of S.M. Damon as to
which Mr. Haig shares voting and investment powers, and 2,500 shares
owned by a trust as to which Mr. Haig shares voting and investment
powers. He is beneficiary of an HR-10 plan which holds 8,000 shares of
the Corporation's stock as to which he has sole voting and investment
powers.
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Shares of Common
Stock of the Corporation Percent
Beneficially Owned of
Directors Continuing to Serve at February 24, 1995 Class
----------------------------- ------------------------ -------
DR. RICHARD T. MAMIYA, 70, (1996) has been a Director of the Corporation 4,000 *
since 1994 and a Director of the Bank since 1980. He is on the active
staff of Queen's Medical Center for thoracic, cardiovascular, and general
surgery; he is on the courtesy staff of Straub, Kuakini, and Kapiolani
Children's hospitals. In accordance with the Corporation's Bylaws and
Delaware law, the Corporation's Board of Directors elected Dr. Mamiya in
January, 1994 to fill the unexpired term of the late Mr. Sheridan C.F. Ing.
DR. FUJIO MATSUDA, 70, (1996) has been a Director of the Corporation 2,559 *
since 1987 and a Director of the Bank since 1985. He was Executive
Director of the Research Corporation of the University of Hawaii from 1984
until 1994; he was the President of the University of Hawaii from 1974 to
1984. He is President of the Japan-America Institute of Management Science.
DR. RODERICK F. MCPHEE, 66, (1997) has been a Director of the 11,405 *
Corporation or the Bank since 1972. From 1968 through 1994, he was
President of Punahou School, a kindergarten through 12th grade college
preparatory school. Dr. McPhee was President and ex-officio non-voting
member of the Board of Trustees of Punahou School, which owns 209,316
shares of the Corporation's stock. He has no voting or investment powers
with respect to such shares and disclaims beneficial ownership thereof.
ROBERT J. PFEIFFER, 75, (1997) has been a Director of the Corporation 1,045 *
since 1982 and a Director of the Bank since 1980. He has been Chairman
of the Board of Alexander & Baldwin, Inc. since October, 1980. He was
President of Alexander & Baldwin, Inc. from October, 1979 until January,
1985 and from April, 1989 until April, 1991. He was Chief Executive Officer
from January, 1980 until April, 1992. He was Chief Executive Officer of
Matson Navigation Company, Inc. from April, 1973 to April, 1992. He has
been Chairman of the Board since October, 1979. Alexander & Baldwin, Inc.,
which is engaged in ocean transportation, container leasing, agribusiness,
property development and property management, holds 1,692,894 shares of
stock of the Corporation, as to which Mr. Pfeiffer disclaims beneficial
ownership.
GEORGE P. SHEA, JR., 56, (1996) has been a Director of the Corporation 2,669 *
since March, 1993 and the Bank since March, 1989. He has been Chairman,
President and Chief Executive Officer of First Insurance Company of Hawaii,
Ltd. since 1988. He was a Certified Public Accountant with Peat Marwick
Mitchell & Company from 1965 to 1971 when he joined First Insurance and was
promoted to Treasurer. He was Vice President, Secretary and Treasurer of
First Insurance from 1978 to 1982 and President and Chief Executive Officer
from 1982 to 1988.
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Shares of Common
Stock of the Corporation Percent
Beneficially Owned of
Executive Officers at February 24, 1995 Class
------------------ ------------------------ -------
PHILIP H. CHING--His reported beneficial ownership of the Corporation's 28,283 *
stock includes 10,808 shares held in his wife's revocable living trust
as to which Mr. Ching disclaims beneficial ownership and 5,569 shares
that Mr. Ching has the right to acquire within 60 days through the
exercise of stock options.
DONALD G. HORNER--His reported beneficial ownership of the 27,373 *
Corporation's stock includes 5,569 shares that Mr. Horner has the right
to acquire within 60 days through the exercise of stock options.
HOWARD H. KARR--His reported beneficial ownership of the Corporation's 63,664 *
stock includes 2,118 shares held in his wife's revocable living trust,
602 shares held in his wife's individual retirement account, 2,500 shares
held in a custodial account for a child for which he has sole voting and
investment powers, and 7,210 shares that Mr. Karr has the right to
acquire within 60 days through the exercise of stock options.
Nominees, Directors Continuing to Serve and Executive Officers
- --------------------------------------------------------------
Beneficial Ownership of all Nominees, Directors, and Executive 8,323,690 26.03
Officers as a Group (19 persons).
- ------------------
*The percentage of shares beneficially owned does not exceed 1% of the shares
currently outstanding, including shares that can be acquired within 60 days
through the exercise of stock options.
Each of the foregoing Directors attended 75% or more of the combined total
number of meetings held during 1994 of the Board and Committees on which he or
she sits. The Board of Directors met 12 times in 1994. To the Corporation's
knowledge, which is based solely on a review of reports of changes in ownership
of the Corporation's Common Stock as received by the Corporation from
directors, executive officers and other persons owning more than 10% of the
Corporation's Common Stock, the Corporation believes that all such reports were
timely filed.
COMMITTEES OF THE BOARD
Among the standing committees of the Board are the Executive Committee,
Executive Compensation Committee, and the Joint Audit Committee. The Executive
Committee also acts as the Nominating Committee.
The Executive Committee, acting as the Nominating Committee, advises the
Board of Directors with respect to the number of Directors to be elected to the
Board and recommends the persons to be nominated for election as Directors. The
Committee will consider nominees recommended by the stockholders for election
as Director. Any such recommendation, together with the nominee's
qualifications and consent to be considered as a nominee, should be sent to
the Secretary of the Corporation in a sufficient time prior to the Annual
Meeting of the Corporation's stockholders for the Committee to consider and
act upon such recommendation. The Committee, acting as the Nominating
Committee, met once in 1994. Its members are Robert J. Pfeiffer (Chairman),
Walter A. Dods, Jr., Bert T. Kobayashi, Jr., and Fred C. Weyand.
The Executive Compensation Committee acts upon the executive compensation
program of the Corporation and its subsidiaries. The Committee administers the
Incentive Plan for Key Executives, the Long-Term Incentive Plan, the Stock
Incentive Plan, and the Deferred Compensation Plan, reviews the per-
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formance and salaries of the Corporation's Chief Executive Officer and other
senior management officers of the Corporation and its subsidiaries and
makes recommendations to the Board of Directors with respect to the
appropriate senior management compensation structure. The Committee met 7
times in 1994. Its members are Robert J. Pfeiffer (Chairman), Julia Ann
Frohlich, Bert T. Kobayashi, Jr., Fred C. Weyand and Glenn A. Kaya, a Director
of the Bank.
The Joint Audit Committee, which met 5 times during 1994, determines on
behalf of the Board whether the performance and examination of the independent
public accounting firm and the Corporation's internal auditor are satisfactory
and adequate to meet the Board's supervisory responsibility. The Committee
reviews internal auditing reports, the adequacy of internal financial and
accounting controls, the work of the external and internal auditors and
management's responses to their audit reports and recommendations. It
recommends the independent public accounting firm proposed for election as
Auditor of the Corporation. It also reviews the Corporation's reports to
stockholders and other financial statements. The Committee reviewed and
approved the 1994 audit plan. The members of the Joint Audit Committee are
George P. Shea, Jr. (Chairman), Warren H. Haruki, Howard K. Hiroki, Roderick F.
McPhee, and Fujio Matsuda. Messrs. Haruki and Hiroki are Directors of the Bank
and hold certified public accountants certificates, as does Mr. Shea.
COMPENSATION OF DIRECTORS
In 1994, the Corporation paid a quarterly retainer of $3,000 to each
member of the Board of Directors who was not an employee of the Corporation or
its subsidiaries. All members of the Board received a fee of $800 and
reimbursement for transportation expenses for each Board meeting attended and
$700 for each committee meeting attended.
The Corporation has a Directors' Retirement Plan for non-employee
Directors of the Corporation and the Bank who are not covered by the
Corporation's Employees' Retirement Plan. Following retirement from the Board
after at least 10 years of service, the retired Director or his or her
beneficiary will be entitled to receive monthly payments for a 10 year period
at an annual rate equal to one-half of the annual retainer fee in effect at the
time of the Director's retirement.
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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 for the
years ended December 31, 1994, 1993 and 1992.
Long-Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
---------------------------------- -------------------------- ----------
Name Other
and Annual Restricted Securities All Other
Principal Compen- Stock Underlying LTIP Compen-
Position Year Salary(1) Bonus(2) sation(3) Awards(4) Options Payouts(5) sation(6)
- ---------------------- ---- --------- -------- --------- ----------- ---------- ---------- ---------
Walter A. Dods, Jr. 1994 $714,580 $ 31,250 $42,887 -- 22,000 None $34,158
Chairman of the 1993 $711,190 $334,021 $34,645 -- 18,000 $306,822 $41,432
Board of Directors, 1992 $652,400 $375,587 $37,273 -- 18,800 -- $35,939
Chief Executive
Officer, and
Director of the
Corporation
and Bank
John A. Hoag 1994 $502,356 $ 16,000 $19,555 -- 11,320 None $ 4,945
President and 1993 $493,648 $195,896 $19,494 -- 9,920 $ 75,268 $24,018
Director of the 1992 $453,700 $210,477 $18,808 -- 10,820 -- $12,410
Corporation and
Vice Chairman and
Director of the
Bank
Howard H. Karr 1994 $278,144 $ 12,500 $19,464 -- 5,600 None $ 1,317
Executive Vice 1993 $271,992 $124,646 $19,447 -- 4,960 $ 62,039 $ 9,480
President and 1992 $247,500 $132,460 $17,430 -- 4,420 -- $ 1,764
Treasurer of the
Corporation and
Vice Chairman
and Chief Financial
Officer of the Bank
Philip H. Ching 1994 $243,486 $ 10,624 $25,612 -- 4,010 None $ 2,941
Executive Vice 1993 $243,664 $106,249 $22,115 -- 3,510 $ 45,815 $12,282
President of the 1992 $218,800 $112,340 $20,006 -- 3,750 -- $ 5,639
Corporation and
Vice Chairman
of the Bank
Donald G. Horner 1994 $232,615 $ 10,750 $19,101 -- 3,870 None $ 695
Executive Vice 1993 $222,550 $102,500 $18,999 -- 3,730 $ 51,091 $ 6,351
President of the 1992 $206,800 $109,460 $16,086 -- 3,650 -- $ 885
Corporation and
Vice Chairman of
the Bank
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NOTES TO SUMMARY COMPENSATION TABLE:
Note (1) Includes the following for the above named executive officers:
Base Director and Total
Year Salary Committee Fees Other Salary
----------------------------------------------------------
Dods.........1994 $625,000 $85,800 $3,780 $714,580
1993 $625,000 $82,200 $3,990 $711,190
1992 $575,000 $77,400 $ -- $652,400
Hoag.........1994 $400,000 $93,500 $8,856 $502,356
1993 $400,000 $84,300 $9,348 $493,648
1992 $375,000 $78,700 $ -- $453,700
Karr.........1994 $250,000 $25,200 $2,944 $278,144
1993 $250,000 $20,300 $1,692 $271,992
1992 $230,000 $17,500 $ -- $247,500
Ching........1994 $212,500 $25,200 $5,786 $243,486
1993 $212,500 $25,900 $5,264 $243,664
1992 $195,000 $23,800 $ -- $218,800
Horner.......1994 $215,000 $16,800 $ 815 $232,615
1993 $205,000 $16,800 $ 750 $222,550
1992 $190,000 $16,800 $ -- $206,800
Note (2) Includes cash payments under the qualified Profit Sharing Plan and
Cash Bonus Plan for all 3 years and 1992 and 1993 cash payments under
the Incentive Plan for Key Employees ("IPKE"). IPKE payments for 1994
are in the process of being determined and will be paid in 1995 and
reported in the Proxy Statement for the 1996 annual meeting.
Note (3) Includes primarily imputed income, including "gross-up" for income
taxes, related to social club memberships and dues and personal use of
automobiles. The amounts of Other Annual Compensation for the above
named officers other than Mr. Ching in each of the 3 most recent years
were less than $50,000 and 10% of Salaries and Bonuses. Mr. Ching
received imputed income, including "gross-up," related to club
memberships and dues in the amounts of $8,542, $8,322 and $7,932,
respectively, for 1994, 1993 and 1992 and imputed amounts, including
"gross-up," related to automobiles, of $17,070, $13,793, and $12,074,
respectively, for 1994, 1993 and 1992.
Note (4) The Executive Compensation Committee may, at its sole discretion, pay
IPKE awards in restricted Common Stock of the Corporation with a fair
market value equal to the payment amount, in lieu of cash. There were
no restricted stock awards to the above named executive officers
under the IPKE for the years shown. As of December 31, 1994, the
aggregate number of non-vested restricted shares by the year of
vesting of such shares for each of the above named executive officers
and aggregate market value (based on the market price of the stock at
December 31, 1994) follow:
Number of
Shares Vesting In Market
----------------- Total Value
1995 1998 Shares 12/31/94
------ ------ ------ --------
Dods................ 8,163 -- 8,163 $193,871
Hoag................ 5,612 -- 5,612 133,285
Karr................ -- -- -- --
Ching............... 2,755 -- 2,755 65,431
Horner.............. -- 17,666 17,666 419,568
------ ------ ------ --------
Total............ 16,530 17,666 34,196 $812,155
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NOTES TO SUMMARY COMPENSATION TABLE (continued):
Dividends are paid to the above named executive officers on their
restricted stock holdings. Participants are entitled to vote the
restricted shares. Restricted IPKE shares become vested upon the
participant attaining 60 years of age, completion of 20 full years of
employment, retirement, death, or termination of employment prior to
retirement with the approval of the Corporation, whichever occurs
earliest. Beginning in 1989, for those participants who had previously
met the minimum restrictions for vesting by completion of 20 full years
of employment or attaining 60 years of age, the Committee imposed a
five-year minimum waiting period from the date of any subsequent stock
awards. The IPKE also provides for forfeiture by the participant and
reversion to the Corporation of all non-vested shares previously
awarded in certain cases of termination of employment.
Note (5) The amounts of LTIP payouts for the first LTIP cycle (1991-1993) were
determined and paid in 1994. Because the Corporation did not exceed its
threshold average return on equity ("ROE") of 15% over the 1992-1994
performance cycle, no awards will be payable under the LTIP in 1995 for
the cycle, which ended December 31, 1994.
Note (6) Includes premiums for term life insurance, including "gross-up" for
income taxes, and split dollar insurance agreements as discussed below.
Details of All Other Compensation for each of the above named executive
officers for 1994 are as follows:
Term Split Dollar
Insurance Insurance Total
--------- ------------ --------
Dods.............. $32,483 $ 1,675 $34,158
Hoag.............. $ -- $ 4,945 $ 4,945
Karr.............. $ -- $ 1,317 $ 1,317
Ching............. $ -- $ 2,941 $ 2,941
Horner............ $ -- $ 695 $ 695
The Corporation has split dollar insurance agreements with the named
executive officers, 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 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 Term Insurance
column. The death benefit under this policy is deducted from the
death benefit under Mr. Dods' split dollar insurance policy.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted on March 9, 1994
to each of the above named executive officers under the Corporation's Stock
Incentive Plan ("SIP"). The table also lists the potential realizable values of
such options on the basis of assumed annual compounded stock appreciation rates
of 5 % and 10 % over the life of the options, which is set at 10 years. The
Corporation does not have a stock appreciation rights ("SAR") program.
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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 Expira-
Options Employees in Base Price tion
Name Granted(3) Fiscal Year Per Share Date 5% 10%
------ ---------- ------------- ---------- ------- -------- --------
Walter A. Dods, Jr..... 22,000 17.1% $26.50 3/09/04 $366,646 $929,152
John A. Hoag........... 11,320 8.8% $26.50 3/09/04 $183,141 $478,091
Howard H. Karr......... 5,660 4.4% $26.50 3/09/04 $ 91,570 $239,045
Philip H. Ching........ 4,010 3.1% $26.50 3/09/04 $ 64,876 $169,359
Donald G. Horner....... 3,870 3.0% $26.50 3/09/04 $ 58,901 $159,736
NOTES TO OPTION GRANTS IN LAST FISCAL YEAR:
Note (1) Options under the SIP are granted at 100% of the market value of the
stock on the date of the grant. Options vest 25% per year after the
first anniversary 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 a change in control, as
defined in the SIP, all options granted and held at least 6 months
become immediately exercisable and vested. In the event of death,
disability or retirement, the Committee has the discretion to
accelerate the vesting of options previously granted. The SIP provides
for the shortening of the exercise period for vested options if
termination is due to death, disability or retirement. The SIP also
provides for the Corporation to withhold statutory income taxes upon
the exercise of the options by the option holder paying cash or
tendering previously acquired Corporation shares or by the Corporation
withholding the appropriate number of option shares which would have
been issued following the option exercise. Without the approval of the
stockholders of the Corporation, the SIP cannot be terminated,
amended, or modified to (a) increase the total amount of shares which
may be issued except as provided in the SIP; (b) change the class of
eligible employees; (c) materially increase the cost of the SIP or
benefits to the participants; (d) extend the maximum period after the
date of grant during which the options may be exercised; or
(e) change the provisions of the exercise price.
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 represent reload options.
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OPTION VALUES AT DECEMBER 31, 1994
The following table reflects the securities underlying unexercised options
and the value of these options as of December 31, 1994:
Numbers of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
December 31, 1994 December 31, 1994
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
-------------------------- ----------------- -----------------
Walter A. Dods, Jr........ 13,900/44,900 None/None
John A. Hoag.............. 7,890/24,170 None/None
Howard H. Karr............ 3,450/11,590 None/None
Philip H. Ching........... 2,753/8,517 None/None
Donald G. Horner.......... 2,758/8,492 None/None
There were no options exercised by the named executive officers in 1994.
TEN-YEAR OPTION REPRICINGS
For the year ended December 31, 1994, 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 Corporation's LTIP applies to a group of key executives approved by
the Executive Compensation Committee, much smaller than the group eligible for
IPKE and SIP awards. It is intended to provide incentive compensation to
participants based on the Corporation's ability to sustain a target level of
performance over a 3-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 3-year cycle, the Executive
Compensation Committee designates which key executives will be eligible to
participate in the LTIP for the cycle. Additional key executives may be
declared eligible during the cycle. The Committee also establishes target
amounts of individual payouts and corporate performance standards to be met
over the 3-year performance cycle.
In 1994, the Executive Compensation Committee established the formula for
LTIP awards for the 3-year cycle 1994 to 1996. Under the formula for this
cycle, LTIP payouts are based on target percentages (ranging from 10% to 35%)
of each participant's average base salary over the 3-year performance cycle. If
the Corporation does not achieve a threshold average ROE of 14% over the 3-year
performance cycle, no payouts will be due under the LTIP. When the
Corporation's ROE exceeds the threshold level, the target awards to
participants are adjusted by a factor (ranging from 0% to 140%) based on the
Corporation's financial performance compared to a peer group, as measured by
return on average assets ("ROAA"), and based upon the Corporation's average
efficiency ratio. Relative ROAA and average efficiency ratio are equally
weighted in the payout calculation. In addition, LTIP payouts to participants
may be adjusted by the Committee based on that individual's performance (from
0% to 140% of the individual's targeted amount as adjusted for the
Corporation's performance).
The peer group used for comparative ROAA purposes is comprised of regional
bank holding companies similar to the Corporation in size, performance and
nature of operations. The group includes some but not all of the companies in
the S&P Major Regional Bank Index.
Cash payouts are made after each 3-year performance cycle. The payouts in
1994 for the 3-year cycle 1991-1993 are reported in the "Summary Compensation
Table." A participant can elect to have the cash award deferred for future
payment under the Corporation's Deferred Compensation Plan.
The following table reflects the estimated future payouts, with respect to
the named executive officers, at threshold, target and maximum award levels for
the 3-year performance cycle beginning in 1994 and end-
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ing in 1996. Actual payouts are contingent upon the Corporation meeting
its threshold ROE and are subject to adjustment by the Committee as described
above, based upon corporate and individual performances, which will be
determined in 1997 for the 1994-1996 performance cycle.
Performance
Number of or Other Estimated Future Payouts
Shares, Units Period Until under Non-Stock Price-Based Plans(2)
or Other Maturation or ----------------------------------------
Name Rights Payout(1) Threshold(3) Target Maximum(4)
- ------------------- ------------- ------------- ------------ -------- ----------
Walter A. Dods, Jr. None 12/31/96 None $218,750 $428,750
John A. Hoag....... None 12/31/96 None $120,000(5) $235,200(5)
Howard H. Karr..... None 12/31/96 None $ 50,000 $ 98,000
Philip H. Ching.... None 12/31/96 None $ 42,500 $ 83,300
Donald G. Horner... None 12/31/96 None $ 43,000 $ 84,280
NOTES TO LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR:
Note (1) Performance period beginning January 1, 1994 and ending December 31,
1996.
Note (2) Estimated future payouts under the Target and Maximum columns are
based upon the named executive officer's base salary as of December 31,
1994.
Note (3) If the Corporation does not meet its threshold ROE or the participant
receives a 0% individual performance rating, there is no payout.
Note (4) Under the current formula, the maximum individual payout is limited
to 196% of the target amount.
Note (5) Mr. Hoag has announced his retirement in 1995. He will be entitled to
participate in the LTIP for the 1993-1995, 1994-1996 and 1995-1997
cycles, but any payout would be prorated to reflect the portion of the
cycle during which he remains an employee.
PROFIT SHARING PLAN AND CASH BONUS PLAN
The Corporation has a defined contribution Profit Sharing Plan and a
defined contribution Cash Bonus Plan (together, the "Plans"). All regular
employees of the Corporation and participating subsidiaries (including those
who are officers and directors) become members of the Plans on the first of the
month coincident with or next following their completion of one year of service
in which they work at least 1,000 hours. The Profit Sharing Plans provide that
for every taxable year, the Corporation and its participating subsidiaries
shall each contribute to the Profit Sharing Plan an amount of cash equal to
one-half of the applicable percentage of the total compensation of Plan
participants employed by each company, respectively, for such year. Such
percentage of the total compensation is a function of the percentage increase
in the Corporation's consolidated net earnings for such year as determined from
the following table:
Percent Increase In Percent of Total
Consolidated Net Earnings Compensation
------------------------- ----------------
0 or less 5.0
5 8.0
10 11.5
15 15.5
20 20.0
25 25.0
The other half of the amount of the Corporation's contribution to the
Plans is distributed in the form of a cash bonus under the Cash Bonus Plan that
is currently taxable to the employee.
A Profit Sharing Plan participant's share of the total profit sharing
contribution bears the same proportion to the total as is represented by the
participant's compensation for the plan year divided by the total compensation
of participants entitled to an allocable share of the profit sharing
contribution.
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DEFINED BENEFIT PENSION PLANS
The Corporation has an Employees' Retirement Plan (the "ERP") for
employees of the Corporation and participating subsidiaries who have completed
certain age and service requirements. Under the ERP, covered compensation
includes salary, including overtime, but excluding bonuses. Pension
compensation is also limited to a maximum allowable under the Internal Revenue
Code. Retirement benefits become payable effective upon an employee's
retirement at the normal retirement age of 65 years. Normal retirement benefits
payable under the ERP are based on total or final compensation and years of
credited service. Under specified circumstances, an employee who has attained a
certain age and length of service may retire early with reduced benefits.
The Corporation has a non-qualified, unfunded Supplemental Executive
Retirement Plan (the "SERP") for executives of the Corporation and
participating subsidiaries. To be eligible, an executive must have had benefits
under the Corporation's tax-qualified plans that are limited by certain laws or
regulations governing such plans and their benefits. The SERP provides the
difference between an unrestricted benefit and the restricted benefit allowed
under the qualified plan. In determining the pension benefits under the SERP, a
participant's covered compensation includes salary and the annual bonus earned
under the IPKE.
The following table illustrates the estimated annual pension benefits
payable to an executive officer at age 65. Whether these amounts become payable
depends on the contingencies and conditions governing the Corporation's ERP and
SERP.
Final Years of Service(2)
Average ---------------------------------------------------------------------
Compensation(1) 15 20 25 30 35 40
- --------------- -------- -------- -------- -------- -------- --------
$ 200,000 $ 50,494 $ 67,326 $ 84,157 $100,989 $117,820 $134,651
250,000 63,619 84,826 106,032 127,239 148,445 169,651
300,000 76,744 102,326 127,907 153,489 179,070 204,651
350,000 89,869 119,826 149,782 179,739 209,695 239,651
400,000 102,994 137,326 171,657 205,989 240,320 274,651
450,000 116,119 154,826 193,532 232,239 270,945 309,651
500,000 129,244 172,326 215,407 258,489 301,570 344,651
600,000 155,494 207,326 259,157 310,989 362,820 414,651
700,000 181,744 242,326 302,907 363,489 424,070 484,651
800,000 207,994 277,326 346,657 414,989 485,320 544,651
900,000 234,244 312,326 390,407 468,489 546,570 624,651
1,000,000 260,494 347,326 434,157 520,989 607,820 694,651
1,100,000 286,744 382,326 477,907 573,489 669,070 764,651
1,200,000 312,994 417,326 521,657 625,989 730,320 834,651
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
Profit Sharing Plan and Cash Bonus Plan). 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, 1994, the number of years of creditable service
under the Corporation's defined benefit plans for each of the named
executive officers in the Summary Compensation Table was as follows:
Mr. Dods, 26 years; Mr. Hoag, 35 years; Mr. Karr, 22 years; Mr. Ching,
37 years; and Mr. Horner, 16 years.
CHANGE IN CONTROL ARRANGEMENTS
There are no employment contracts, change-in-control arrangements (other
than in the LTIP, SIP and Deferred Compensation Plan) or termination of
employment arrangements with the named executive officers.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Executive Compensation Committee are Robert J.
Pfeiffer, Chairman, Julia Ann Frohlich, Glenn A. Kaya, Bert T. Kobayashi,
Jr., and Fred C. Weyand.
No member of the Executive Compensation Committee was, at any time during
the last completed fiscal year, an officer or employee of the Corporation or
any of its subsidiaries. General Weyand was Vice President of the Corporation
from 1976 to 1982, Senior Vice President of the Bank from 1980 to 1982 and
Corporate Secretary from 1978 to 1981.
The Corporation has in the ordinary course of business extended credit to
Messrs. Kaya and Kobayashi and Dr. Frohlich (consisting of real estate
mortgages and consumer credit lines) as follows:
Aggregate
Largest Indebtedness Interest
Aggregate Outstanding Rate
Indebtedness December 31, Per
Name in 1994 1994 Annum
------------------------- ------------ ------------- -------------
Glenn A. Kaya............ $416,415 $411,512 7.625%-8.125%
Bert T. Kobayashi, Jr. .. $867,098 $838,365 5.000%-6.000%
Julia Ann Frohlich....... $ 14,371 $ 0 9.600%
In 1994, the subsidiaries of the Corporation paid fees to the law firm of
Kobayashi, Sugita & Goda in the amount of $602,292. Mr. Kobayashi is a partner
of Kobayashi, Sugita & Goda.
Mr. Pfeiffer is Chairman of the Board and a director of Alexander &
Baldwin, Inc., which owns 5.29% of the Corporation's outstanding common stock.
Mr. Dods is a director of Alexander & Baldwin, Inc. and the Asset Management
Division of First Hawaiian Bank holds 2,709,064 shares of Alexander & Baldwin,
Inc.'s common stock in a fiduciary capacity. Mr. Dods does not serve on the
executive compensation committee (or other board committee performing the
equivalent function) of Alexander & Baldwin, Inc.
The Bank has (a) made loans to Alexander & Baldwin, Inc. and (b) made
loans to, and issued a letter of credit on behalf of, Matson Navigation
Company, Inc., a subsidiary of Alexander & Baldwin, Inc. These loans and the
letter of credit were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and did
not involve more than normal risks of collectibility or present other
unfavorable features.
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee of the Board of Directors (the
"Committee") is composed of independent, outside Directors of the Corporation
and one independent, outside director of the Bank. The Board of Directors has
delegated responsibility for administering the executive compensation program
of the Corporation and its subsidiaries to the Committee.
The philosophy underlying the administration of the Corporation's executive
compensation program is an appropriate linkage between executive compensation,
financial and operating performance, and the creation of stockholder value. Key
objectives of this philosophy include:
o providing a pay system designed to attract, retain and motivate
executives;
o establishing compensation plans which emphasize performance-based pay
opportunities, as measured by operating, financial and strategic
objectives and goals;
o providing longer-term, equity-based incentives for executives to ensure
they are motivated and rewarded for growth in equity value and enhanced
value to the stockholders.
The compensation program adopted by the Committee includes three
components designed to implement the foregoing objectives: (1) base salaries;
(2) annual incentives; and (3) long-term incentives. Each of these components
of compensation is discussed separately below.
BASE SALARIES
Base salaries of executive officers are set annually by the Committee. The
Committee takes into consideration factors such as varying levels of
responsibility, individual performance, consistency and fairness, cost of
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living factors, the Corporation's operating results and financial
performance and cost control. The Committee places no particular weight on, or
relative importance 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 of bonuses available under the IPKE is a bonus pool equal
to 21/2% of consolidated income, before income taxes and securities gains, for
the performance year. Guideline percentages of base salary are set, increasing
as the executives' pay grades increase. 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 management level and performance during the performance period.
The business unit manager's recommendations are reviewed and approved or
adjusted by the Chief Executive Officer. These recommendations are then
presented to the Committee for final review and approval. The 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.
Before 1994, IPKE bonuses were calculated and awarded in December of the
performance year based upon year-end projections. For 1994, however, the Chief
Executive Officer recommended, and the Committee approved, deferral of
calculation and award of IPKE bonuses for 1994 performance until March, 1995.
This will allow management and the Committee to base the awards upon final,
rather than projected, performance results for the year. Therefore, no IPKE
awards for the 1994 performance year have been calculated and they are not
reported in this Proxy Statement. IPKE awards granted in 1995 for 1994
performance for the named executive officers will be reported in the proxy
statement for the 1996 annual meeting.
Executive officers are also eligible to receive annual 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.
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 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, 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 that is much smaller than the group eligible for IPKE and SIP
awards. It is intended to provide incentive compensation to participants based
on the Corporation's ability to sustain target levels of performance over a
3-year performance cycle. Under the formulas in effect for 3-year cycles ending
in 1994 and 1995, LTIP awards are based on target percentages (ranging from 10%
to 35%) of each participant's average base salary over the 3-year performance
cycle. If the Corporation does not achieve a threshold average ROE set by the
Committee over the 3-year performance cycle, no payouts are made under the
LTIP. When the Corporation's average ROE exceeds the threshold level, the
target payouts to participants are adjusted by a factor (ranging from 0% to
140%) based on the Corporation's financial performance compared to a peer
group, as measured by ROAA, and based upon the Corporation's asset growth over
the period. Relative ROAA and growth of assets are equally weighted in the
payout determination. In addition, LTIP awards to participants may 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 are closely linked to
stockholder value creation and reinforce desired long-term strategies and
performance.
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The peer group used for LTIP purposes is comprised of regional bank
holding companies similar to the Corporation in size, performance and nature of
operations. The group, which is updated and approved annually by the Committee,
includes some, but not all, of the companies in the S&P Major Regional Bank
Index.
The Corporation has completed the 1992-1994 performance cycle. The
Corporation's average ROE for the period was 13.96%, which did not exceed the
current threshold level for awards to be earned. Accordingly, no awards will be
payable for the 1992-1994 cycle.
The amounts of the LTIP payouts determined by the Committee in 1994 with
respect to the named executive officers for the 1991-1993 cycle are reported in
the "Summary Compensation Table" in this proxy statement. The formula for
calculating LTIP payouts for the 1994-1996 performance cycle is described under
"Long-Term Incentive Plans - Awards in Last Fiscal Year" in this proxy
statement.
Under the SIP approved by the stockholders, stock options are granted at
an option exercise price not less than the fair market value of the
Corporation's stock on the date of grant. Accordingly, stock options have value
only if the stock price appreciates from the date the options are granted. This
design focuses executives on the 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 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 85%), 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
Mr. Dods has been Chief Executive Officer of the Corporation since
October, 1989. In addition to his corporate responsibilities, Mr. Dods is
regarded as one of Hawaii's premier business leaders and is also respected for
his numerous community, charitable and educational activities. His involvement
in these activities has contributed considerably to the favorable image of the
Corporation in the community.
BASE SALARY In December, 1993, the Committee reviewed Mr. Dods' performance and
concluded that his management performance was outstanding and that
well-conceived plans were executed, including corporate acquisitions and the
development of a new corporate headquarters building. Based on those factors
and the Corporation's sustained financial performance during a difficult
economic period, the Committee concluded that a merit increase in base salary
was warranted. However, in view of the economic conditions facing the
Corporation and the emphasis on cost controls, Mr. Dods requested that his base
salary and the base salaries of the other 4 executive officers listed in the
Summary Compensation Table, Messrs. Hoag, Karr, Ching and Horner, not be
increased for 1994. Accordingly, the Committee set Mr. Dods' base salary at
$625,000 for 1994, which is the same as it was in 1993. The base salaries for
the other key officers noted above also were set at 1993 levels. In mid-1994,
however, Mr. Horner's salary was increased, due to a promotion and increased
responsibilities.
ANNUAL INCENTIVES As stated above, IPKE payments for 1994 have not yet been
determined. The IPKE payment for Mr. Dods to be granted in 1995 for 1994
performance will be reflected in the proxy statement for the 1996 annual
meeting. Mr. Dods received a cash bonus of $14,254 for 1994 from the
Corporation's Cash Bonus Plan in which all eligible employees participate and
receive payments based on the formulas set forth in the Plan.
LONG-TERM INCENTIVES In March, 1994, Mr. Dods received options to purchase
22,000 shares pursuant to the SIP, as set forth in the table under the section
"Option Grants in Last Fiscal Year." This award was based upon the SIP's
guideline percentage of base salary, and the number of shares was rounded up to
the closest 1,000 shares. The Committee has determined that in its judgment the
number of options granted was appropriate in light of other elements of
compensation awarded and would serve the objective of directly linking a
significant portion of Mr. Dods' compensation to future creation of stockholder
value.
Mr. Dods also received a payout of $306,822 under the LTIP in 1994 based
on the Corporation's financial performance for the 1991-1993 performance cycle.
As discussed above, based on the Corporation's performance for the 1992-1994
cycle, Mr. Dods will not receive an LTIP payout for this cycle.
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POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Section 162(m) of the Internal Revenue Code generally limits the
deductibility by corporations of compensation in excess of $1,000,000 paid to
certain executive officers beginning in 1994, unless certain requirements are
met. The Committee continues to consider the impact of this new tax code
provision on the Corporation, and, in due course, will review its compensation
programs for the executive officers subject to the deduction limit while
preserving its focus on performance-driven compensation.
Executive Compensation Committee
Robert J. Pfeiffer, Chairman
Julia Ann Frohlich
Glenn A. Kaya
Bert T. Kobayashi, Jr.
Fred C. Weyand
STOCKHOLDER RETURN PERFORMANCE GRAPH
The attached Comparison of Five-Year Cumulative Total Stockholder Return
performance graph compares the cumulative total stockholder return (stock price
appreciation and reinvestment of dividends) on the Corporation's common stock
during the last five years as compared to the S&P Major Regional Bank Index and
the broader S&P 500 Index.
COMPARISON OF FIVE-YEAR
CUMULATIVE TOTAL STOCKHOLDER RETURN*
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Among First Hawaiian, Inc., S&P 500 Index and S&P Major Regional Bank Index
(companies appear in published industry index).
[GRAPH]
1989 1990 1991 1992 1993 1994
For the years ended December 31
First Hawaiian, Inc.
100 81 118 128 115 115
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S&P500 Index
100 97 126 136 150 152
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S&P Major Regional Bank Index
100 71 127 163 172 163
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*Total return assumes reinvestment of dividends and $100 invested on December
31, 1989 in the First Hawaiian, Inc. common stock, S&P 500 Index and S&P Major
Regional Bank Index.
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CERTAIN TRANSACTIONS
The total amount of loans outstanding to directors and executive officers
of the Corporation from the Bank aggregated $1,557,878 at December 31, 1994.
These loans were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and did
not involve more than normal risks of collectibility or present other
unfavorable features.
The following schedule shows detailed information on loans made by the
Corporation to those Directors (including nominees) and executive officers of
the Corporation whose aggregate indebtedness exceeded $60,000 at any time
during 1994. 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 1994 1994 Annum
- ------------------------ ------------ ------------ -------------
John W. A. Buyers $ 984,523 $ 971,121 5.000%-6.375%
Director
Philip H. Ching $ 440,995 $ 430,161 5.000%-9.600%
Executive Vice President
John C. Couch $2,112,387 $1,993,915 5.000%-9.500%
Director
Walter A. Dods, Jr. $1,257,461 $1,242,226 5.000%-9.600%
Chairman, Chief
Executive Officer
and Director
David M. Haig $1,221,214 $1,115,477 8.000%
Director
John A. Hoag $ 354,127 $ 342,900 6.000%-9.600%
President and Director
Donald G. Horner $ 464,766 $ 443,441 5.000%-9.600%
Executive Vice President
Howard H. Karr $ 526,504 $ 519,124 5.000%-9.600%
Executive Vice President
and Treasurer
Bert T. Kobayashi, Jr. $ 867,098 $ 838,365 5.000%-6.000%
Director
Dr. Richard T. Mamiya $2,696,597 $2,654,613 5.000%-9.125%
Director
Dr. Fujio Matsuda $ 413,308 $ 387,577 5.000%-7.625%
Director
Dr. Roderick F. McPhee $ 371,968 $ 283,957 5.625%-8.000%
Director
John K. Tsui $ 458,000 $ 456,996 4.500%-8.000%
Vice Chairman
The 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 $95,713 annually from July 1, 1993 to June 30, 1997. Rents
thereafter are to be fixed for each of two succeeding 10-year periods by
agreement or failing agreement by appraisal. Messrs. Haig, Weyand, Ganley and
Dods are Directors of the Corporation and the Bank and Trustees of the Estate.
Management of the Corporation believes that this transaction is as favorable to
the Corporation and the Bank
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as that which would have been obtainable in transactions with persons or
companies not affiliated with the Corporation or the Bank.
The Bank leases 4,178 square feet of office space to the Estate of S.M.
Damon in a downtown Honolulu office building in which the Bank's headquarters
are temporarily located pending the construction of a new headquarters
building. The Estate leased 4,031 square feet in the old headquarters building
at $2.00 per square foot per month for the period ending April 30, 1997. In
consideration of the Estate and other tenants of the old headquarters building
agreeing to temporarily relocate their offices to allow for construction of the
new building, the Bank offered the Estate and 3 other unrelated tenants
comparable space in the temporary location at the same aggregate rent as
previously applied in the old building. Management of the Corporation believes
that, while the rent charged to the Estate and the other tenants may not be
market rate rents for the temporary location, the temporary arrangements made
for the Estate described above are as favorable to the Corporation and the Bank
as those that would have been obtainable in a similar transaction with persons
or companies not affiliated with the Corporation or the Bank.
ELECTION OF AUDITOR
The Board of Directors, on recommendation of the Joint Audit Committee,
recommends the re-election of Coopers & Lybrand L.L.P. ("Coopers & Lybrand") as
Auditor of the Corporation to serve for the ensuing year. Coopers & Lybrand has
served the Corporation in the capacity of independent Auditors since 1973.
Proxies in the accompanying form will be voted for the election of Coopers &
Lybrand unless a contrary specification is indicated therein, in which event
they will be voted as specified. Election of the Auditor requires the
affirmative vote of a majority of the shares present or represented at the
meeting. Under the Corporation's Certificate of Incorporation and Bylaws,
abstentions and broker non-votes will not have the effect of votes in
opposition to the election of Coopers & Lybrand.
It is expected that representatives of Coopers & Lybrand will be at the
Annual Meeting and will be available to respond to questions and make a
statement if they choose.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RE-ELECTION OF COOPERS &
LYBRAND 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 PROPOSALS FOR 1996
Proposals of stockholders intended to be presented at the 1996 Annual
Meeting of the Corporation must be received by the Corporate Secretary of the
Corporation on or prior to November 3, 1995.
BY ORDER OF THE BOARD OF DIRECTORS
FIRST HAWAIIAN, INC.
Herbert E. Wolff
Senior Vice President and
Secretary
Dated: March 1, 1995
A COPY OF THE ANNUAL REPORT OF THE CORPORATION ON FORM 10-K TO BE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION PRIOR TO APRIL 1, 1995, WILL BE
AVAILABLE AFTER THAT DATE TO EACH STOCKHOLDER UPON WRITTEN REQUEST THEREFOR.
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FIRST HAWAIIAN, INC. THIS IS YOUR PROXY FORM
- --------------------------------------------------------------------------------
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF FIRST HAWAIIAN, INC.
ANNUAL MEETING -- APRIL 20, 1995
The undersigned hereby appoints R.F. McPHEE, R.J. PFEIFFER, and F. MATSUDA
and each of them, each with full power of substitution, the proxies of the
undersigned to attend the Annual Meeting of Stockholders of FIRST HAWAIIAN, INC.
(the "Corporation") to be held at 9:30 o'clock A.M., Hawaiian Standard Time, on
April 20, 1995 in the 20th floor Dining Room of THE PLAZA CLUB, 900 Fort Street,
Honolulu, Hawaii, and any adjournments thereof, and to vote at said meting 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)
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[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR all
nominees listed WITHHOLD
at right AUTHORITY
1. ELECTION [ ] [ ] NOMINEES: Julia Ann Frohlich
OF John A. Hoag
DIRECTORS Bert T. Kobayashi, Jr.
*(INSTRUCTIONS: To withhold authority to Fred C. Weyand
vote for any individual nominee write that nom- Robert C. Wo
inee's name in the space provided below.)
FOR AGAINST ABSTAIN
2. Fix the total number of Directors at fifteen. [ ] [ ] [ ]
3. Proposal to approve the election of Coopers [ ] [ ] [ ]
& Lybrand L.L.P. as Auditor.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS SPECIFIED, IT
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
SIGNATURE _________________________________ DATE _____________
SIGNATURE _________________________________ DATE _____________
(IF HELD JOINTLY)
NOTE: Stockholder(s) shown 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.
