Pay packages for most CEOs at Hawaii’s top publicly traded companies fell in 2011 from a record high in 2010.
The average compensation for Hawaii CEOs, based on nine of Hawaii’s largest listed companies, declined to $1.9 million last year from $3.8 million in 2010, according to a Star-Advertiser analysis of Securities and Exchange Commission filings.
Leading the list of executive compensation in Hawaii last year was Hawaiian Electric Industries Inc. CEO Constance Lau, whose compensation package was valued at $5.3 million, down 19 percent from $6.6 million the year before.
Second to Lau was Alexander & Baldwin CEO Stanley Kuriyama, whose compensation dropped to $2.34 million last year from $3.68 million in 2010. Allan Kitagawa, Territorial Bancorp’s chief executive, fell to third place from first after his compensation dropped to $2.33 million in 2011 from $6.79 million in 2010. Six of the nine CEOs reported declines in their total compensation packages.
The SEC requires public companies to report compensation for their top five executives, including salaries and other sources such as pension benefits and stock awards that executives might not receive until later years.
The 2011 compensation packages for top executives at eight of Hawaii’s listed companies are being voted on during annual shareholder meetings this spring. On Friday, for example, 96 percent of voting shareholders at Bank of Hawaii approved of the executive compensation for 2011. Central Pacific Financial Corp. shareholders approved 2011 compensation with a 99 percent vote Wednesday.
Most companies were required to begin holding a nonbinding "say-on-pay" vote among shareholders as a result of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The one local corporation that is not holding a vote, Maui Land & Pineapple, is in a group of smaller companies that will not be required to do so until 2013.
Approval margins for shareholder votes done last year ranged from 89.2 percent at Territorial Bancorp to 99.9 percent at Central Pacific.
While shareholders across the country generally have been supportive of executive pay packages, that was not the case in a vote this month by Citigroup stockholders, who rejected the company’s $15 million compensation plan for CEO Vikram Pandit. Only 41 firms in the Russell 3000 index of major U.S. companies failed last year to win a majority for executive pay plans, according to ISS Proxy Advisory Services.
Looking at salaries alone and taking out other compensation, Territorial Bank’s Kitagawa was No. 1 at $834,353 in 2011. That was up from $817,993 in 2010. Trailing Kitagawa were Lau at $815,000 and Barnwell Industries’ CEO Morton Kinzler at $726,562.
Stock awards, which averaged $1.65 million per CEO in 2010, fell to an average of $374,000 in 2011. Stock awards are usually tied to certain financial benchmarks such as profitability and share price. Although the shares normally vest over multiyear period, the SEC requires companies to report their full value in the year the grants were made. The size of an executive’s stock grant can vary widely from year to year. Several local executives who received large stock awards in 2010 received none in 2011.
The second-largest category of compensation after salaries last year were non-equity incentives, or cash bonuses, that are based on achieving performance goals. The average performance bonus in 2011 was $490,233, down from $726,111 in 2010. Only two CEOs, Barnwell Industries’ Kinzler and MLP’s Warren Haruki, received discretionary cash bonuses.
For HEI’s Lau, most of her compensation is tied to performance.
Roughly 60 percent of Lau’s compensation is "at-risk and not guaranteed and is based on meeting objectives common in the banking and utility industries," said Shelee Kimura, HEI’s manager of investor relations.
"It is also important to note that 90 percent of Connie’s total compensation is not included in electric rates," Kimura said. The portion of the typical residential electric bill that goes to Lau’s compensation is not more than 3 cents per month, Kimura said.
Central Pacific CEO John Dean, who opted to draw a salary of just $1 in 2010 during a tumultuous period at the bank, saw his paycheck increase to $566,664 in 2011. Dean’s total compensation for 2010 was $407,032.
Dean, who joined the company in March 2010, "turned the company around" while earning the $1-a-year salary, said Wayne Kirihara, the bank’s chief marketing officer.
"Our board believed it to be in our best interest to have him sustain the significant progress being made toward full recovery of our company with an appropriate salary adjustment," Kirihara said.
