It pays to be a chief executive officer in Hawaii.
Total compensation for the leaders of Hawaii’s 12 largest publicly traded companies jumped an average 32.4 percent last year to $2.5 million.
Most employees in the state weren’t as fortunate. The average wage for a worker in Hawaii rose just 1.2 percent to $40,900.
For the first time in four years, there was a new leader in the state’s CEO rankings. Bank of Hawaii’s Peter Ho, 49, received total compensation of $7.9 million, which was more than double the $3.6 million he collected in 2013.
Ho’s spike in compensation, which included $5.7 million in stock awards, enabled him to dethrone Hawaiian Electric Industries’ Connie Lau even though her compensation jumped 49.2 percent to $5.6 million, from $3.8 million. Lau, 62, had topped the list of highest-paid Hawaii CEOs for the past three years.
Altogether, nine of the 12 CEOs received higher compensation than the previous year, according to a Honolulu Star-Advertiser analysis of Securities and Exchange Commission filings.
Their total compensation was 61 times greater than the average worker’s salary in Hawaii. Four CEOs made at least $3 million, and two of them, including Ho, saw their compensation double.
Among the perks some of the 12 CEOs received were club membership dues, car and parking allowances, free cellphone use, spousal travel, home security and in-office meals.
The average CEO salary at Hawaii’s 12 largest publicly traded companies in 2013 was $1.9 million.
Besides Ho and Lau, the other Hawaii members of the $3 million-plus club were Matson President and CEO Matt Cox, whose compensation increased 13.9 percent to $4.1 million, from $3.6 million in 2013; and Hawaiian Airlines President and CEO Mark Dunkerley, whose compensation rose 27 percent to $3.1 million, from $2.4 million.
Maui Land & Pineapple Chairman and CEO Warren Haruki, whose pay package jumped to $784,576, from $385,112, largely due to annual incentive compensation that was paid in company stock, joined Ho among CEOs whose compensation doubled.
Still, the amount paid to Hawaii’s CEOs paled in comparison with what the nation’s leading CEOs received. The average pay for the top 100 CEOs in 2014 who had been in their position for two full years was $15.7 million, an increase of 0.3 percent over the previous year, according to a report prepared for The New York Times by Equilar.
Microsoft CEO Satya Nadella had the highest compensation at $84.3 million. Oracle co-founder Larry Ellison, who owns Island Air and 98 percent of Lanai, was second at $67.3 million.
Mary Bitterman, the lead independent director of Bank of Hawaii’s 14-member board, said the huge bump in Ho’s compensation was justified because it rewarded him for his accomplishments and put his pay package in line with his peers.
"Bank of Hawaii’s board has been very focused on coming up with a compensation plan that is competitive and that’s fair and that aligns with compensation programs at similarly sized and complex institutions across the country," she said. "What we’re reflecting in that $7.9 million is looking back at the successful completion of a very ambitious three-year strategic plan and some kind of upgrading to align the compensation better with peers across the country in the financial services industry."
Bub Wo, an independent director and chairman of the bank’s human resources and compensation committee, said most of Ho’s pay package is tied to performance. Ho received a one-time special grant of 56,700 shares of stock worth approximately $3.3 million in recognition of the successful completion of the bank’s three-year strategic plan. Ho will only get the full stock grant — which is vested over a four-year period — if the company achieves future performance-based thresholds.
"Part of the vesting is that we want Peter Ho to stay with the company and to continue on and retain him because of his great leadership," Wo said.
Bitterman said the $7.9 million merges the past three years’ accomplishments with ambitious targets for the next four years.
"We’re kind of doing a one-time bump-up because Peter was really undercompensated," Bitterman added. "For six years this bank has been (recognized by Forbes magazine for being) in the top five banks of the United States of America in terms of safety and soundness. There is no other bank in the United States of America that has been so recognized."
Ho’s base salary rose 5.2 percent to $794,424, from $754,847, which ranked third among Hawaii CEOs behind Territorial Savings Bank’s Allan Kitagawa ($851,124) and Lau ($815,000).
Bank of Hawaii, the state’s second-largest bank, shared the wealth, with its top executives being paid better than any of the other publicly traded companies. Each of the bank’s top five executives received total compensation of at least $1.9 million.
The SEC requires public companies to report total compensation for their top five executives.
Bob Harrison, chairman, president and CEO of First Hawaiian Bank, declined to reveal his compensation. The state’s largest bank is owned by French giant BNP Paribas and isn’t required to disclose executive wages.
Lau likely will regain her spot as the highest-paid CEO in 2015 if Florida-based NextEra Energy’s $4.3 billion takeover of HEI receives approval from HEI shareholders and the Hawaii Public Utilities Commission before the end of the year. Lau, in addition to her $5.6 million HEI compensation, would receive $11.6 million in merger-related compensation, according to a regulatory filing by NextEra. Lau also received $171,534 last year as a director at Matson, the state’s largest ocean shipping company.
As has been the case in recent years, more than half of the Hawaii CEOs had stock awards and stock options with values that exceeded their salaries. Ho, Lau, Cox and Dunkerley all had stock awards in excess of $1 million.
Stock awards, which are tied to performance benchmarks such as a company’s return on equity and paid over a multiyear period, were the single largest category of compensation in 2014. Stock awards averaged $1.1 million for the 12 CEOs, with Ho’s $5.7 million leading the way.
Salaries were the second-highest source of compensation, averaging $581,175 in 2014. Kitagawa’s salary of $851,124 led the field even though it was unchanged from 2014.
The third-largest component of executive pay last year was "nonequity incentives," an annual cash payment tied to meeting certain corporate goals. The average nonequity payment was $507,657, topped by the $1.25 million received by Ho.
There were three CEOs whose total compensation declined from the previous year.
John Dean, chairman and CEO of Central Pacific Bank, took the biggest loss as his total compensation dropped 29.2 percent to $893,594, from $1.3 million, primarily due to fewer stock awards.
Kitagawa, who is also Territorial’s chairman and president, saw his pay package drop 3.7 percent to $1.96 million, from $2.04 million.
Eric Yeaman, president and CEO of Hawaiian Telcom, had his total compensation fall 4 percent to $1.98 million, from $2.07 million, largely due to a decline in nonequity incentive plan compensation. Yeaman, 47, is the youngest CEO of the 12 companies and the only one besides Ho under 50.
Barnwell Industries Chairman and CEO Morton Kinzler, the oldest company head at age 89, received $890,546, up 5.4 percent from $844,739.
Among other top executives, Stanley Kuriyama, chairman and CEO of Alexander & Baldwin, received a pay package worth $2.2 million, up 3.8 percent from $2.1 million in 2013. Cyanotech President and CEO Brent Bailey’s compensation increased 7.4 percent to $640,795, from $596,486. And Royal Hawaiian Orchards President and CEO Scott Wallace received a 7.7 percent increase in compensation to $300,709, from $279,271.
