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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 240.14a-11(c) or 240.14a-12
CB Bancshares, Inc.
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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)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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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 number,
or the Form or Schedule and the date of its filing.
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[CB BANCSHARES LETTERHEAD]
NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS
TO STOCKHOLDERS OF CB BANCSHARES, INC.:
Notice is hereby given that the 2001 annual meeting (the "Meeting") of
stockholders of CB Bancshares, Inc. ("Bancshares"), will be held on the second
floor, City Financial Tower, 201 Merchant Street, Honolulu, Hawaii, on Thursday,
April 26, 2001, at 9:00 a.m., Hawaii Standard Time, for the purposes of
considering and voting upon the following matters:
1. To elect three (3) Class III Directors to serve until the 2004
annual meeting of stockholders and until their successors are
elected.
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors is not aware of any other business to come before
the Meeting. Only stockholders of record at the close of business on March 6,
2001, will be entitled to notice of and to vote at the Meeting or any
adjournments or postponements thereof.
All stockholders are cordially invited to attend the Meeting in person.
However, to assure the presence of a quorum, you are requested to promptly sign,
date and return the enclosed form of proxy, which is solicited by the Board of
Directors, in the enclosed, self-addressed stamped envelope whether or not you
plan to attend the meeting. The proxy will not be used if you attend and vote at
the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ LIONEL Y. TOKIOKA
------------------------------------------
Lionel Y. Tokioka
Chairman
Honolulu, Hawaii
March 15, 2001
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND PROMPTLY
MAIL YOUR ENCLOSED PROXY CARD.
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CB BANCSHARES, INC.
201 Merchant Street
Honolulu, Hawaii 96813
PROXY STATEMENT
2001 ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 2001
This Proxy Statement and the enclosed Proxy Card are furnished in
connection with the solicitation of proxies by the Board of Directors of CB
Bancshares, Inc. ("Bancshares") to be used for voting at the 2001 annual meeting
of stockholders of Bancshares and at any adjournments or postponements thereof
(the "Meeting"), which will be held on Thursday, April 26, 2001, at 9:00 a.m.,
Hawaii Standard Time, on the second floor, City Financial Tower, 201 Merchant
Street, Honolulu, Hawaii. The accompanying Notice of Annual Meeting, this Proxy
Statement and the Proxy Card are first being mailed to stockholders of
Bancshares on or about March 15, 2001.
The annual report of Bancshares, which is being mailed with this Proxy
Statement, is not deemed to be proxy solicitation material.
VOTING RIGHTS
Only holders of Bancshares common stock ("Common Stock") of record at
the close of business (4:00 p.m., Hawaii Standard Time) on March 6, 2001 (the
"Record Date"), are entitled to notice of and to vote at the Meeting. On the
Record Date, there were 3,189,534 shares of Bancshares Common Stock issued and
outstanding. Each share of Common Stock is entitled to one vote on any matter
which may properly come before the Meeting. There is no cumulative voting with
respect to Bancshares Common Stock.
VOTING BY PROXY
Proxies solicited by the Board of Directors which are properly executed
and returned to Bancshares will be voted in accordance with directions given
thereon. Executed proxies on which no directions are indicated will be voted FOR
election of the Board's nominees for Class III directors. If for any reason a
nominee should decline or be unable to stand for election at the 2001 annual
meeting of stockholders, an event which Bancshares does not presently
anticipate, proxies, if authorized to vote for the Board's nominees, may in
their discretion vote for another candidate. The Board of Directors has
appointed directors Colbert M. Matsumoto, Calvin K.Y. Say and Dwight L.
Yoshimura, to act as proxies on behalf of the Board of Directors.
Before the annual meeting the Bancshares' Board of Directors will
appoint inspectors of election and tellers of vote. The inspectors and tellers
will tally all votes cast in person or by proxy for the election of directors.
With respect to the election of directors, abstentions and broker non-votes will
not be counted as either a vote for or against the election of a director.
Because elections for director will be determined according to votes actually
cast, abstentions and broker non-votes will have no effect on the outcome of
voting. Directors will be elected upon receiving a majority of the votes cast in
person or by proxy at the annual meeting, provided a quorum is present. The
presence in person or by proxy of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Meeting is necessary to
constitute a quorum. If a quorum is not present in person or represented by
proxy, the stockholders entitled to vote, present or represented by proxy, have
the power to adjourn the Meeting from time to time, without notice other than an
announcement at the Meeting, until a quorum is present or represented.
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All other action to be taken at the Meeting requires the affirmative vote of a
majority of the shares entitled to vote at the Meeting (accordingly, abstentions
and broker non-votes will have the same effect as votes cast against any such
action).
A stockholder may revoke his or her proxy at any time before its
exercise by filing with the Secretary of Bancshares or the presiding officer of
the meeting a written notice of revocation. A stockholder attending the 2001
annual meeting may revoke his or her proxy in person at the meeting at any time
before its exercise, and a stockholder's proxy may be revoked or superseded by a
duly executed proxy of later date.
THE ENCLOSED PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
BANCSHARES and delegates discretionary authority with respect to any additional
matters which may properly come before the meeting. Although the Board is not
currently aware of any additional matter, if other matters do properly come
before the meeting, proxies will vote thereon in accordance with their best
judgment.
ELECTION OF DIRECTORS
Bancshares currently has a total of eleven (11) directors constituting
the entire Board of Directors, divided into three (3) classes, CLASS I
consisting of four (4) directors, CLASS II consisting of four (4) directors, and
CLASS III consisting of three (3) directors. The articles of incorporation
provide for each class of directors to be elected for three-year terms on a
staggered basis. At the 2001 annual meeting three (3) Class III directors are to
be elected to serve until the 2004 annual meeting of stockholders and until
their respective successors have been elected.
The Board of Directors' three nominees for Class III directors are Tomio
Fuchu, Duane K. Kurisu, and Mike K. Sayama. Mr. Fuchu is an incumbent director
of Bancshares. Mr. Kurisu is currently a director of City Bank (the "Bank") and
Citibank Properties, Inc ("CB Properties"). Mr. Sayama is currently a director
of the Bank. The selection of nominees for the election of directors of the Bank
and CB Properties is within the discretion of the Board of Directors of
Bancshares. The Board of Directors of the Bank, a subsidiary of Bancshares, are
elected by the directors of Bancshares, as the sole stockholder of the Bank. The
Board of Directors of CB Properties, a subsidiary of the Bank, are elected by
the directors of Bancshares, the directors of the Bank, and other stockholders.
THE BANCSHARES BOARD OF DIRECTORS RECOMMENDS TO THE STOCKHOLDERS
ITS THREE NOMINEES FOR CLASS III DIRECTORS
Unless authority to vote for the election of directors or for a
specified nominee is withheld, all proxies will be voted to elect the Board of
Directors' three (3) nominees. While Bancshares does not anticipate that any
nominee will decline or be unable to stand for election at the 2001 annual
meeting, if for any reason any nominee should decline or be unable to serve,
proxies may vote for the election of such other person as the Board of Directors
shall nominate or proxies shall otherwise select.
To be eligible for election as a director, written request that a
person's name be placed in nomination together with the written consent of such
nominee to serve as director must be received by the Secretary from a
stockholder of record who is entitled to notice of and to vote at any annual or
special meeting of stockholders not less than thirty (30) days before the date
fixed for such meeting.
The following table sets forth as to each nominee for Class III
Director, and each Class I and Class II director now in office, each person's
age, principal occupation during the past five years and the
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year in which he or she was first elected a director of Bancshares and, for each
such nominee and director, and for all executive officers and directors of
Bancshares, as a group, the number of shares of Bancshares Common Stock
beneficially owned as of February 28, 2001, and the percentage of the class
which such ownership represents. Unless otherwise noted, each person listed
below is the direct beneficial and record owner of the number of shares
indicated, as to which he or she exercises sole voting and investment power.
Shared ownership has been computed in accordance with Securities and Exchange
Commission rules, and it does not necessarily indicate beneficial ownership for
any other purpose.
COMMON
YEAR FIRST STOCK
NAME, AGE, PRINCIPAL OCCUPATION DURING ELECTED A BENEFICIALLY PERCENT
PAST FIVE YEARS, AND OTHER DIRECTORSHIPS DIRECTOR OWNED OF CLASS
----------------------------------------------------------- ---------- ------------ --------
NOMINEES FOR ELECTION AS CLASS III DIRECTORS --
TERMS TO EXPIRE IN 2004
FUCHU, TOMIO (62) 1995 2,000(1) 0.063%
Counselor of Kyokuto Securities Co., Ltd. since July
2000; Chairman of Kyokuto Securities Co., Ltd. from
July 1995 to June 2000
KURISU, DUANE K. (47) ---- 3,000(1) 0.094%
Partner of Kurisu and Fergus since 1985
SAYAMA, MIKE K. (47) ---- 2,000(1) 0.063%
Vice President of Health Benefits Management of
Hawaii Medical Service Association since 1997; Area
Director of Hawaii Biodyne from 1991 to August 1997
CLASS I DIRECTORS -- TERMS TO EXPIRE IN 2002
MATSUMOTO, COLBERT M. (48) 1999 7,668(1,2,3) 0.240%
Chairman and Chief Executive Officer of Island
Insurance Co., Ltd.; Director of Bancshares since April
1999; Director of the Bank since April 1998
MORITA, CARYN S. (40) 1995 30,164(4) 0.944%
Senior Vice President and General Counsel of the Bank
since November 1996; Senior Vice President and General
Counsel of Bancshares from April 1994 to November 1996;
Vice President and General Counsel of Bancshares from
September 1993 to April 1994
TAKADA, YOSHIKI (42) 1997 2,000(1) 0.063%
Senior Vice President of SMC Pneumatics Inc. since June
1991; Director of SMC Corporation since June 1994;
Director of the Bank since June 1993
TOKIOKA, LIONEL Y. (66)(5) 1994 32,279(2,6) 1.011%
Chairman of the Board of Bancshares since April 1999;
Chairman of the Board of International Savings and
Loan, Ltd. ("ISL") from April 1997 to June 2000; Vice
Chairman of the Board of ISL from April 1994 to April
1997; Chairman of the Board and Chief Executive Officer
of International Holding Capital Corp. from 1984 to
April 1994; Chairman of the Board, Chief Executive
Officer and President of ISL from 1978 to April 1994
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COMMON
YEAR FIRST STOCK
NAME, AGE, PRINCIPAL OCCUPATION DURING ELECTED A BENEFICIALLY PERCENT
PAST FIVE YEARS, AND OTHER DIRECTORSHIPS DIRECTOR OWNED OF CLASS
----------------------------------------------------------- ---------- ------------ --------
CLASS II DIRECTORS -- TERMS TO EXPIRE IN 2003
ANDRES, DONALD J. (59) 1997 6,675(7) 0.209%
Director and Executive Vice President, M. A. Schapiro &
Co., Inc. from May 1994 to December 1997; Partner,
Ernst & Young LLP from June 1962 to May 1994
MIGITA, RONALD K. (59)(8) 1997 65,528(9) 2.018%
President and Chief Executive Officer of Bancshares
since April 1997; Vice Chairman and Chief Executive
Officer of the Bank since April 1997; President of the
Bank from August 1998 to June 2000; Vice Chairman and
Chief Executive Officer of ISL from April 1997 to June
2000; President and Chief Operating Officer of
Bancshares from June 1995 to November 1996; President
of ISL from April 1996 to November 1996; Executive Vice
President of Bank of Hawaii from 1989 to May 1995
SAY, CALVIN K. Y. (49) 2000 2,000(1) 0.063%
Speaker, House of Representatives since 1998; Chairman,
House Committee on Finance and Vice Chairman
Legislative Management Committee from 1993 to 1998
YOSHIMURA, DWIGHT L. (46) 1999(10) 2,000(1) 0.063%
Senior Vice President and General Manager, General
Growth Management of Hawaii since October 1993;
Director of ISL from May 1998 to June 2000
Directors and Executive Officers as a group (15 persons) 243,444 7.277%
(1) These shares include 2,000 shares covered by exercisable options as of
February 28, 2001.
(2) Includes 4,281 shares of Bancshares common stock owned by Island
Insurance Co., Ltd. Colbert M. Matsumoto and Lionel Y. Tokioka,
directors of Bancshares, are also directors of Island Insurance Co.,
Ltd; as such, they may be deemed to share voting and dispositive power
with respect to those 4,281 shares. Messrs. Matsumoto and Tokioka
disclaim beneficial ownership of those 4,281 shares.
(3) Includes 387 shares owned by Island Holdings, Inc. Profit Sharing 401(k)
Plan. Colbert M. Matsumoto is a member of the Administrative Committee
of Island Holdings, Inc. Profit Sharing 401(k) Plan; as such, he may be
deemed to share voting and dispositive power with respect to those 387
shares. Mr. Matsumoto disclaims beneficial ownership of those 387
shares.
(4) Of 30,164 shares beneficially owned by Caryn S. Morita, 22,373 shares
are held in a Trust established by James M. and Aiko N. Morita, with
Caryn S. Morita and Patrick A. Tanigawa as Joint-Trustees (voting power
is shared between the Joint-Trustees under the terms of the Trust), 448
shares are allocated to her account in the CB Bancshares, Inc. Employee
Stock Option Plan ("ESOP"), the voting of which shares she is entitled
to direct, and 7,000 shares are covered by exercisable options as of
February 28, 2001.
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(5) See "Consulting Agreement with Lionel Y. Tokioka" on page 8 concerning
Mr. Tokioka's agreement with Bancshares.
(6) Of the 32,279 shares beneficially owned by Lionel Y. Tokioka, 452 shares
are allocated to his account in the ESOP, the voting of which shares he
is entitled to direct, and 2,000 shares are covered by exercisable
options as of February 28, 2001. Not included in the 32,279 shares owned
by Mr. Tokioka are 877 shares owned by Thym, Inc., an affiliated
corporation, and 1,234 shares owned by his spouse, as to which he
disclaims any beneficial ownership.
(7) Of the 6,675 shares beneficially owned by Donald J. Andres, 1,000 shares
are owned jointly with his spouse as to which he shares voting and
investment power, 1,675 shares are owned by Mr. Andres, 2,000 shares are
owned by a family limited partnership, as to which he exercises sole
voting and investment power, and 2,000 shares are covered by exercisable
options as of February 28, 2001.
(8) See "Employment Agreement with Ronald K. Migita" on page 8 concerning
Mr. Migita's employment with Bancshares.
(9) Of 65,528 shares beneficially owned by Ronald K. Migita, 7,000 shares
are held by a trust with Mr. Migita and his spouse as co-trustees, as to
which he shares voting and investment power, 528 shares are owned by Mr.
Migita and 58,000 shares are covered by exercisable options as of
February 28, 2001. Of the 528 shares owned by Mr. Migita, 428 shares are
allocated to his account in the ESOP, the voting of which shares he is
entitled to direct.
(10) Dwight L. Yoshimura was elected by the Board of Directors on January 19,
1999 to fill the unexpired term of director James M. Morita, who died on
June 4, 1998.
Dean K. Hirata, Senior Vice President and Chief Financial Officer of
Bancshares and the Bank, Warren Y. Kunimoto, Senior Vice President of the Bank,
Richard C. Lim, President and Chief Operating Officer of the Bank and Jasen H.
Takei, Senior Vice President of the Bank, are Named Executive Officers named in
the Summary Compensation Table on page 8 whose Bancshares stock ownership is not
described above. As of February 28, 2001, Mr. Hirata owned beneficially 8,632
shares of Common Stock, which included 132 shares allocated to his account in
the ESOP, the voting of which shares he is entitled to direct. These shares
include 7,500 shares covered by exercisable options as of February 28, 2001. Mr.
Kunimoto owns beneficially 8,613 shares of Common Stock, which included 501
shares allocated to his account in the ESOP, the voting of which shares he is
entitled to direct. These shares include 13,500 shares covered by exercisable
options as of February 28, 2001. Mr. Lim owned beneficially 42,205 shares of
Common Stock, which included 781 shares allocated to his account in the ESOP,
the voting of which shares he is entitled to direct. These shares include 35,500
shares covered by exercisable options as of February 28, 2001. Mr. Takei owned
beneficially 22,961 shares of Common Stock, which included 528 shares allocated
to his account in the ESOP, the voting of which shares he is entitled to direct.
These shares include 16,500 shares covered by exercisable options as of February
28, 2001.
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MANAGEMENT
Executive officers of Bancshares, and other significant officers and
employees of Bancshares and its subsidiaries are listed below. The information
is current as of the Record Date.
NAME AND AGE CURRENT POSITION AND BUSINESS HISTORY
------------ -------------------------------------
Lionel Y. Tokioka (66)........................ Chairman of the Board of Bancshares since April
1999; Chairman of the Board of ISL from 1997 to
June 2000; Vice Chairman of the Board of ISL from
April 1994 to April 1997
Ronald K. Migita (59)......................... President and Chief Executive Officer of Bancshares
since April 1997; Vice Chairman and Chief Executive
Officer of the Bank since April
1997; President of the Bank from
August 1998 to June 2000; Vice
Chairman and Chief Executive Officer
of ISL from April 1997 to June 2000;
President and Chief Operating
Officer of Bancshares from June 1995
to November 1996; President of ISL
from April 1996 to November 1996;
Executive Vice President of Bank of
Hawaii from 1989 to May 1995
Richard C. Lim (49)........................... President and Chief Operating Officer of the Bank
since July 2000; Executive Vice President and Chief
Operating Officer of the Bank from
July 1998 to June 2000; President
and Chief Operating Officer of ISL
from February 1997 to June 2000;
President and Chief Operating
Officer of ISL from April 1994 to
April 1996, and from November 1996
to February 1997; Executive Vice
President of the Bank since June
1998; Executive Vice President of
ISL from May 1991 to April 1994, and
from April 1996 to November 1996
Dean K. Hirata (43)........................... Senior Vice President and Chief Financial Officer
of Bancshares, Bank and ISL since March 1999;
Senior Vice President and Controller of First
Hawaiian Bank from 1995 to March 1999; Vice
President and Controller of First Hawaiian Bank
prior to 1995
Jasen H. Takei (38)............................ Senior Vice President of the Bank since July 2000;
Senior Vice President of ISL for more than five
years prior to July 2000
Warren Y. Kunimoto (49)........................ Senior Vice President of the Bank since June 1997;
Executive Vice President of ISL from 1990 to June 1997
Officers of Bancshares are elected annually for a term of one year at
the Board of Directors annual meeting immediately following the annual meeting
of stockholders.
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EMPLOYMENT AGREEMENT WITH RONALD K. MIGITA
Bancshares and Ronald K. Migita entered into an employment agreement on
May 31, 1995 ("Employment Agreement") employing Mr. Migita as President and
Chief Operating Officer of Bancshares for a term commencing June 5, 1995 and
ending on May 31, 2000. Mr. Migita's base salary under the Employment Agreement
was $225,000 for each year of the term. After execution of the Employment
Agreement, Mr. Migita's base salary was increased to $250,000. The Employment
Agreement was not renewed.
CONSULTING AGREEMENT WITH LIONEL Y. TOKIOKA
Bancshares and Lionel Y. Tokioka entered into a consulting agreement
("Consulting Agreement") engaging Mr. Tokioka as a consultant to Bancshares and
its subsidiaries at an annual fee of $150,000 for a one-year period commencing
June 1, 1999 and ending on May 31, 2000. Bancshares is also required to
reimburse Mr. Tokioka for certain expenses and to provide office and parking
space and other facilities necessary for the provision of services under the
Consulting Agreement. The Consulting Agreement may be terminated for just cause
as defined therein. The Consulting Agreement may also be terminated in the event
of the death or permanent disability of Mr. Tokioka. The Consulting Agreement
was not renewed.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table sets forth all compensation paid or payable for the
years 1998 to 2000 by Bancshares or its subsidiaries to Bancshares' Chief
Executive Officer in 2000, and the four other most highly compensated executive
officers of Bancshares and its subsidiaries.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------- ----------------
AWARDS
----------------
SECURITIES ALL OTHER
NAME AND PRINCIPAL UNDERLYING COMPENSATION
POSITIONS HELD IN 2000 YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#) ($)
---------------------- ---- ---------- ---------- ---------------- ------------
Ronald K. Migita............... 2000 $250,008 $200,000 15,000 $ 4,534(1)
President and Chief Executive 1999 $250,008 $100,000 15,000 $ 6,328(1)
Officer of Bancshares; Vice 1998 $250,008 $100,000 12,500 $ 8,073
Chairman and Chief Executive
Officer of the Bank
Richard C. Lim................. 2000 $200,040 $175,000 12,500 $ 7,612(2)
President and Chief Operating 1999 $200,032 $100,000 10,000 $12,482(3)
Officer of the Bank 1998 $150,000 $107,703(2) 0 $ 8,073
Dean K. Hirata................. 2000 $128,450 $ 45,000 7,500 $ 3,426(4)
Senior Vice President and 1999 $ 99,471 $ 33,000 0 0
Chief Financial Officer of
Bancshares and the Bank
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Jasen H. Takei................. 2000 $120,000 $ 48,000 5,000 $ 3,200(5)
Senior Vice President of the 1999 $112,431 $ 85,000 5,000 $ 9,477(6)
Bank 1998 $104,837 $ 50,000 0 $ 5,232
Warren Y. Kunimoto............. 2000 $ 96,885 $ 44,000 5,000 $ 8,209(7)
Senior Vice President of the 1999 $ 93,408 $ 60,000 3,000 $ 1,895
Bank 1998 $ 93,423 $ 20,000 0 $ 1,881
(1) This amount is the annual contribution made by Bancshares to Mr.
Migita's 401(k) account.
(2) This amount includes $3,078 in accrued vacation pay, and an annual
contribution made by Bancshares to Mr. Lim's 401(k) account of $4,534.
(3) This amount includes $6,154 in accrued vacation pay, and an annual
contribution made by Bancshares to Mr. Lim's 401(k) account of $6,328.
(4) This amount is the annual contribution made by Bancshares to Mr.
Hirata's 401(k) account.
(5) This amount is the annual contribution made by Bancshares to Mr. Takei's
401(k) account.
(6) This amount includes $4,839 in accrued vacation pay, and an annual
contribution made by Bancshares to Mr. Takei's 401(k) account of $4,638.
(7) This amount includes $5,479 in accrued vacation pay, and an annual
contribution made by Bancshares to Mr. Kunimoto's 401(k) account of
$2,730.
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options during the last fiscal year to the above named executive officers under
Bancshares' Stock Compensation Plan of 1995 ("Stock Compensation Plan").
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
---------------------------------------------------------------
Number of
Securities Potential realizable value at
Underlying Percent of total assumed annual rates of stock
Options/ options/SARs price appreciation for option
SARs granted to Exercise or term (10 years)
Granted(1) employees base price Expiration -----------------------------
Name (#) in fiscal year ($/Sh)(3) date 5% ($) 10% ($)
---- ---------- -------------- ----------- ---------- ------------ ------------
Ronald K. Migita........ 15,000(2) 20.1% $28.50 1/26/2010 $268,852 $681,325
Richard C. Lim.......... 12,500(4) 16.7% $28.50 1/26/2010 $224,044 $567,771
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Dean K. Hirata.......... 7,500(5) 10.1% $28.50 1/26/2010 $134,426 $340,662
Jasen H. Takei.......... 5,000(6) 6.7% $28.50 1/26/2010 $ 89,617 $227,108
Warren Y. Kunimoto...... 5,000(7) 6.7% $28.50 1/26/2010 $ 89,617 $227,108
(1) All options were granted on January 26, 2000.
(2) Of Mr. Migita's stock option award of 15,000 shares, 3,508 shares are
incentive stock options which became exercisable one year after the date
of grant, providing the optionee remains employed by Bancshares or one
of its subsidiaries throughout the one-year period beginning on the date
of the grant.
(3) The exercise price for the incentive stock options is the closing sales
price for Bancshares Common Stock on the NASDAQ on January 26, 2000.
(4) Of Mr. Lim's stock option award of 10,000 shares, 3,508 shares are
incentive stock options which become exercisable one year after the date
of grant, providing the optionee remains employed by Bancshares or one
of its subsidiaries throughout the one-year period beginning on the date
of the grant.
(5) Of Mr. Hirata's stock option award of 7,500 shares, 3508 shares are
incentive stock options which become exercisable one year after the date
of grant, providing the optionee remains employed by Bancshares or one
of its subsidiaries throughout the one-year period beginning on the date
of grant.
(6) Of Mr. Takei's stock option award of 5,000 shares, 3508 shares are
incentive stock options which become exercisable one year after the date
of grant, providing the optionee remains employed by Bancshares or one
of its subsidiaries throughout the one-year period beginning on the date
of grant.
(7) Of Mr. Kunimoto's stock option award of 5,000 shares, 3508 shares are
incentive stock options which become exercisable one year after the date
of grant, providing the optionee remains employed by Bancshares or one
of its subsidiaries throughout the one-year period beginning on the date
of grant.
The following table sets forth information concerning unexercised stock
options to purchase Bancshares Common Stock under the Stock Compensation Plan.
Mr. Migita exercised 1,000 of his nonqualified stock options in 1998.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired FY-End(#) FY-End($)
or Value ------------------------- -------------------------
Exercised (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
------------- ------------ ------------------------- -------------------------
Ronald K. Migita......... 0 $0 1,500/0(1) $0/$0
0 $0 2,500/0(2) $0/$0
0 $0 12,500/0(3) $0/$0
0 $0 12,500/0(4) $0/$0
0 $0 15,000/0(5) $0/$0
0 $0 0/15,000(6) $0/$0
Richard C. Lim........... 0 $0 1,500/0(1) $0/$0
0 $0 1,500/0(2) $0/$0
0 $0 10,000/0(3) $0/$0
0 $0 10,000/0(5) $0/$0
0 $0 0/12,500(6) $0/$0
Dean K. Hirata........... 0 $0 0/7,500(6) $0/$0
Jasen H. Takei........... 0 $0 750/0(1) $0/$0
0 $0 750/0(2) $0/$0
0 $0 5,000/0(3) $0/$0
0 $0 5,000/0(5) $0/$0
0 $0 0/5,000(6) $0/$0
Warren Y. Kunimoto....... 0 $0 750/0(1) $0/$0
0 $0 750/0(2) $0/$0
0 $0 4,000/0(3) $0/$0
0 $0 3,000/0(5) $0/$0
0 $0 0/5,000(6) $0/$0
(1) These options were originally granted as performance options to become
exercisable five years after the date of grant. The performance options
may have become exercisable sooner, depending upon Bancshares financial
results. If Bancshares' "return on equity" increased by 100 basis
points, then the performance options would become exercisable with
respect to one-third of the stated number of shares of Common Stock; an
increase of 200 basis points would have caused the performance options
to become exercisable with respect to two-thirds of the stated number of
shares of Common Stock; and a 300 basis point increase meant the
performance options would have become fully exercisable. An employee
must have been employed by Bancshares or one of its subsidiaries for a
full year after the date of grant before a Performance Option could have
been exercised. On November 18, 1997, the Compensation Committee removed
the return on equity and the five-year conditions to the exercise of
these previously granted options.
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(2) These options are index options which become exercisable one year after
the date of grant, providing the optionee remains employed by Bancshares
or one of its subsidiaries throughout the one-year period beginning on
the date of grant. The exercise price of an index option increases from
year to year according to increases, but not decreases, in the cost of
living. The initial exercise price of the index options is the fair
market value on the date of grant. Each January 1, the exercise price
for index options will increase according to the increase in the Bureau
of Labor Statistics' Consumer Price Index -- All Urban Consumers. On
November 18, 1997, the Compensation Committee fixed the exercise price
of index options at the initial exercise price of the grants increased
by the Index factors as of September 30, 1997.
(3) 2,325 of these options are incentive stock options which become
exercisable one year after the date of the grant. The exercise price is
fixed at $43.00 per share, which was the fair market value of each share
on December 15, 1997, the date of the grants. The term of the option is
ten years from December 15, 1997.
(4) 2,352 of these options are incentive stock options and 10,148 are
non-qualified stock options which become exercisable one year after the
date of the grant. The exercise price is fixed at $42.50 per share,
which was the fair market value of each share on January 2, 1998, the
date of the grant. The term of the option is ten years from January 2,
1998.
(5) 3,278 of these options are incentive stock options which become
exercisable one year after the date of the grant. The exercise price is
fixed at $30.50 per share, which was the fair market value of each share
on January 19, 1999, the date of the grants. The term of the option is
ten years from January 19, 1999.
(6) 3,508 of these options are incentive stock options which become
exercisable one year after the date of the grant. The exercise price is
fixed at $28.50 per share, which was the fair market value of each share
on January 26, 2000, the date of the grants. The term of the option is
ten years from January 26, 2000.
In-the-money options are those where the fair market value on December
31, 2000 of the underlying securities exceeded the exercise or base price of the
option.
CHANGE OF CONTROL AGREEMENTS
On March 28, 1996, the Board of Directors of Bancshares approved and
adopted Change of Control Agreements with five senior executives of Bancshares,
including Ronald K. Migita (the "CBBI Executives' Agreement"). On March 28,
1996, the Board of Directors of the Bank approved and adopted Change of Control
Agreements between the Bank and eight senior executives (the "Bank Executives'
Agreement"). On March 28, 1996, the Board of Directors of ISL approved and
adopted Change of Control Agreements between ISL and five of its executives (the
"ISL Executives' Agreement"), including Warren Y. Kunimoto, Richard C. Lim and
Jasen H. Takei. On July 1, 2000, ISL was merged with and into the Bank. The ISL
Executives' Agreement remains effective as assumed by the Bank as part of the
merger. On May 13, 1999, the Board of Directors of the Bank approved and adopted
a Change of Control Agreement with Dean K. Hirata. The CBBI Executives'
Agreements, the Bank Executives' Agreements and the ISL Executives' Agreements
are collectively referred to below as a "Change of Control Agreement," and
collectively "Change of Control Agreements." An executive who is a party to the
Change of Control Agreements are referred to below as an "Executive," and
collectively the
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"Executives." Bancshares, the Bank and ISL are sometimes referred to below as
the "Employer." As of the date of this Proxy Statement, Change of Control
Agreements remain in effect for a total of nine (9) executives of Bancshares and
the Bank.
The Change of Control Agreements were adopted by the Boards of Directors
of the Bank, ISL and Bancshares to encourage continuity of management in the
event of a change of control of Bancshares by granting certain benefits to
certain senior executives. The Change of Control Agreements become operational
upon the occurrence of a "Change of Control," (the "Effective Date"). For the
Change of Control Agreements, a Change of Control occurs when (i) a person
acquires 20% or more of Bancshares' voting stock; (ii) Bancshares shareholders
approve a merger, consolidation, or other business combination, or a sale of
substantially all of its assets or enters into a similar business transaction (a
"Transaction"), unless after such Transaction, the shareholders immediately
prior to the Transaction continue to control a majority of Bancshares' voting
power in the resulting entity; or (iii) within any 24- month period beginning on
or after December 1995, the persons who were directors immediately prior to such
period shall cease (for any reason other than death) to constitute at least a
majority of the Board of Directors.
In the event of a Change of Control, the benefits that will be provided
to the Executives include: (i) employment with the Employer for a three-year
period commencing on the Effective Date (the "Employment Period"), in a
commensurate position, with commensurate duties, as held 90 days before the
Effective Date; (ii) during the Employment Period, a base salary equal to the
highest monthly salary paid during the year prior to the Effective Date; (iii)
for each of the years during the Employment Period, a bonus equal to the highest
bonus paid with regard to the three fiscal years prior to the Effective Date;
(iv) during the Employment Period, participation in all health and welfare,
incentive, savings plans and programs, including stock option, retirement and
life insurance plans, all on a basis equal to the highest level of participation
received during the 90-day period prior to the Effective Date.
Upon an Executive's death, as to him the Change of Control Agreements
automatically terminate. The Employer may terminate the Change of Control
Agreements for an Executive, after having established that Executive's
disability and giving that Executive required notice. Following a Change of
Control, an Executive may terminate the Change of Control Agreements for any
reason on 30-day's written notice. The Employer may terminate the Change of
Control Agreements for cause.
The Employer is required to make certain payments to the Executives upon
termination of the Change of Control Agreements. If a Change of Control
Agreement is terminated for death or disability, the Executive will receive
those payments that have accrued under the Change of Control Agreements to the
date of death, including full base salary, annual prorated bonus and deferred
compensation, and any other amounts owed under the Employer's employee benefit
plans then in effect. If a Change of Control Agreement is terminated for cause
or is voluntarily terminated by the Executive, the Executive will also receive
those payments that have accrued under the Change of Control Agreement to the
date of termination other than the prorated bonus.
If the Change of Control Agreement is terminated by the Employer, other
than for cause, the Employer must pay to the Executive in a lump sum in cash the
aggregate of the following amounts: (1) the Executive's base salary through the
date of termination; (2) a cash amount equal to 2.99 times the sum of: (a) the
Executive's average annual base salary, as defined (based on the average of the
five most recent taxable years); (b) the higher of the (x) annual bonus earned
by the Executive for the last fiscal year, or (y) the higher of the annual bonus
earned by the Executive for the fiscal year of the Employer including the
Effective Date or the last fiscal year of the Employer ended before the
Effective Date; and (c) the present value, calculated using an 8% discount rate,
of the annual cost to the Employer of obtaining life
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insurance coverage and benefit plans for the Executive and certain other fringe
benefits, all of such amounts being subject to proration based on the number of
months remaining in the Employment Period; (3) a cash amount equal to the
difference between (x) the maximum payments the Executive would have received
under any long-term incentive compensation or performance plan of the Employer
for the remainder of the Employment Period if he had continued in the employ of
the Employer for the remainder of the Employment Period, and (y) any amounts
actually paid under any such plan with respect to such awards: (4) a cash amount
equal to the present value of the incremental retirement benefits that would
have been payable or available to the Executive had the Executive continued in
the Employer's employ for the remainder of the Employment Period; and (5) a cash
amount equal to any deferred compensation and any other amounts owing to the
Executive under the then applicable employee benefit plans. Any amount paid or
payable under (2)(a), (2)(b) or (4) above is reduced by any amount paid to the
Executive under Bancshares' severance procedures and guidelines or any agreement
related thereto.
With respect to any stock options or restricted stock held by the
Executive, upon the earlier of the merger of the Employer with and into another
corporation following a Change of Control or six months after termination of the
Change of Control Agreement, the Executive will be paid an amount equal to the
sum of (1) the product of (a) the excess of (x) the greater of (I) the highest
price offered for a share of common stock of Bancshares in conjunction with any
tender offer or during the 60-day period immediately preceding the date of the
Change of Control, if the Change of Control occurs other than pursuant to a
tender offer or (II) the then fair market value of such a share of common stock
over (y) the exercise price of any stock option held by the Executive on the
date of the Change of Control times (b) the number of shares of common stock
subject to such options and (2) the product of (a) the excess of (x) the amount
determined under sub-clause (1)(a) above over (y) the amount, if any, paid to
acquire any shares of restricted common stock held by the Executive at the date
of the Change of Control times (b) the number of such shares of restricted
stock. If the Executive otherwise receives the value of any such stock option or
restricted stock under the general provisions of any such award or any generally
applicable provisions of any plan under which such options or restricted stock
are issued, the number of shares of common stock take into account above is
appropriately reduced.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee"), considers compensation for
executive officers of Bancshares and certain officers of the Bank and makes
recommendation for approval by Bancshares' Board of Directors.
The Committee designs executive compensation packages to attract and
retain key executive officers and to maintain a competitive compensation package
in comparison with banks and other financial institutions and business
organizations of comparable size and complexity to Bancshares. Bancshares'
executive compensation program is comprised of three elements:
- annual base salary;
- annual bonus awards; and
- stock compensation awards
Base Salaries. In determining the level of base salary for executive
officers, the Committee evaluates a number of factors, including the span of
control of each executive as well as the managerial and leadership skills and
qualities possessed by the officer, the financial performance of Bancshares and
its subsidiaries, including enhancement of value to stockholders, and related
business matters such as community involvement and business relationships of the
executive officer. In addition, the Committee
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avails itself of salary surveys prepared by external organizations for
comparison purposes. There is no specific weighting of factors or objective
formula by which the Committee applies these factors.
Qualitative Factors. In examining the personal skills and qualities of
an executive officer, the Committee evaluates the executive officer's
administrative, managerial, planning and leadership skills, including vision and
motivation, implementation and other leadership qualities.
Financial Factors. In examining the financial performance of Bancshares
and its subsidiaries, the Committee specifically examines, among other things,
the amount of revenue and net income generated by Bancshares and its
subsidiaries, earnings per share, the increase or decrease in total assets of
Bancshares, appreciation in Bancshares' stock price, if any, and other increases
in shareholder value, the growth rate of Bancshares and its subsidiaries, and
how such indicators compare to those of other comparable financial institutions.
Related Business Factors. The Committee also analyzes related business
indicators such as an executive officer's relationship with other businesses on
a local, national and international level, an executive officer's community
involvement, the public image and reputation projected by the executive officer,
the executive officer's communication skills, and the executive officer's
relationship with stockholders, employees and government regulators.
Bonus Awards. In determining bonus payments, the Committee generally
follows a bonus compensation program which focuses on specific performance
measurements and achievement of strategic and tactical goals. Selected officers
in addition to Mr. Migita and Mr. Lim received bonuses commensurate with their
level of goal attainment.
Stock Compensation Awards. The CB Bancshares, Inc. Stock Compensation
Plan was initially approved in 1995, to provide awards of stock option grants to
executive officers and other key employees. The Stock Compensation Plan is
designed to align the interests of executive officers with those of Bancshares'
stockholders and reward the executive for creating shareholder value. Stock
awards may be granted to key executives and other key employees who are in a
position to make a substantial contribution to the long-term success of
Bancshares. The Committee administers the Stock Compensation Plan and reviews
recommendations of the executive officers which in turn are recommended to the
Bancshares Board of Directors based on the experience, achievements and
anticipated future contributions to Bancshares of employees reviewed by the
Committee. Stock compensation awards are not automatically granted every year.
Chief Executive Officer Compensation. The Compensation Committee
followed the same general compensation policy described above for all executives
to determine Mr. Migita's 2000 compensation. As of June 5, 2000, by mutual
agreement of the Board, Mr. Migita's Employment Agreement was terminated and
continued employment, as with all other employees, would be on an "at will"
basis. No adjustments in Mr. Migita's base salary was made in 2000. However,
based on the attainment of financial and operational objectives, the Committee
awarded him a discretionary bonus of $200,000 and a stock option of 15,000
shares.
Deductibility of Executive Compensation. In 1993, the United States
Congress enacted Section 162(m) of the United States Internal Revenue Code of
1986, as amended, effective for taxable year commencing on January 1, 1994. This
legislation generally limits Bancshares' executive compensation deduction to
$1,000,000 per year per executive for certain compensation paid to its Chief
Executive Officer and the four highest compensated executives (other than the
CEO) named in the proxy statement. The Committee has determined Bancshares and
its subsidiaries will not pay any amounts in the fiscal year
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ended December 31, 2000 to any executive officer that would result in a loss of
federal income tax deduction under Section 162(m). Accordingly, the Committee
has not recommended that any special actions be taken or that any plans or
programs be revised at this time. The Committee intends to study Section 162(m)
and its effects on Bancshares' executive compensation program with respect to
future compensation.
Compensation Committee
Larry K. Matsuo, Chairman
Colbert M. Matsumoto, Vice-Chairman
Calvin K.Y. Say
Lionel Y. Tokioka
Dwight L. Yoshimura
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year, the following persons served as a member of
the Compensation Committee of Bancshares' Board of Directors:
Larry K. Matsuo, Chairman
Colbert M. Matsumoto, Vice-Chairman
Calvin K.Y. Say
Lionel Y. Tokioka
Dwight L. Yoshimura
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FINANCIAL PERFORMANCE
The following graph summarizes the cumulative return experienced by
Bancshares' stockholders over the years 1996 through 2000, compared to the CRSP
Index for the NASDAQ Stock Market and two Peer Groups. Peer Group 1 is the same
used in the prior years and consists of two Hawaii and two West Coast bank
holding companies. Bancshares compiled a new Peer Group for fiscal year 2000,
Peer Group 2, which removed the two West Coast bank holding companies and added
one additional Hawaii bank holding company in its place. Bancshares believes
Peer Group 2 is more representative of the business in which it is engaged since
they are all headquartered, with substantial operations, in Hawaii.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CB BANCSHARES, INC., NASDAQ STOCK MARKET (U.S.) INDEX
& TWO PEER GROUP INDICES
(Performance results through 12/31/00)
1995 1996 1997 1998 1999 2000
---------- ---------- ---------- ---------- ---------- ----------
CB Bancshares 100 104 158 113 108 96
Peer Group 1 100 123 173 192 176 249
Peer Group 2 100 119 144 157 134 157
NASDAQ 100 123 151 213 395 238
Peer Group 1 consists of: Bancwest Corporation, Cathay Bancorp Inc., CPB Inc.
and GBC Bancorp
Peer Group 2 consists of: Bancwest Corporation, CPB Inc. and Pacific Century
Financial Corporation
- Assumes $100 invested on December 31, 1995 in Bancshares
Common Stock, NASDAQ Stock Market (U.S.) Index and Two
Peer Group Indices.
- Total return assumes reinvestment of dividends.
- Fiscal year ending December 31.
[Source: Research Data Group]
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
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COMPENSATION OF DIRECTORS
From July 2000, each person (other than Ronald K. Migita and Caryn S.
Morita, who were not paid any retainer) who served as a director of Bancshares
or the Bank Boards of Directors received an annual retainer of $10,000 for
serving on each of the Boards. Each member of the Board of Directors of
Bancshares and the Bank received a fee of $500 per Board meeting attended and
$500 per standing committee meeting attended. Each standing committee chairman
of the Boards of Directors of Bancshares and the Bank received an annual
retainer of (i) $2,500 for the Audit Committee; (ii) $1,500 for the Compensation
Committee; (iii) $2,500 for the Executive Committee; (iv) $1,000 for the
Nominating Committee; and (v) $3,500 for the Senior Loan Committee. The Chairman
of the Board of Bancshares received an annual retainer of $175,000. As full-time
employees of Bancshares and the Bank, respectively, Bancshares directors Ronald
K. Migita and Caryn S. Morita received no meeting fees for any Board of Director
or committee meetings attended.
From January to June of 2000, each person (other than Ronald K. Migita
and Caryn S. Morita, who were not paid any retainer) who served as a director of
one or more of Bancshares, the Bank or ISL Boards of Directors received an
annual retainer of (i) $10,000 for serving on each of the Boards; (ii) $5,000
for serving on a second Board; and (iii) $2,500 for serving on a third Board.
Each member of the Board of Directors of Bancshares, the Bank and ISL received a
fee of $500 per Board meeting attended and $500 per standing committee meeting
attended. Each standing committee chairman of the Boards of Directors of
Bancshares, the Bank and ISL receive $550 for each committee meeting presided.
As full-time employees of Bancshares and the Bank, respectively, Bancshares
directors Ronald K. Migita and Caryn S. Morita received no meeting fees for any
Board of Director or committee meetings attended.
In 1996, the Bancshares Board of Directors adopted a director's
compensation policy which included continued payment of retainer and meeting
fees equivalent to those described above, but capped the number of meeting fees
for which a Board member would be paid annually to 18 (subject to the occurrence
of extraordinary events such as acquisition proposals or a shareholder election
contest.) A similar cap on meeting fees was instituted for committee meetings.
In addition, persons who attend more than one meeting of a Board or committee on
the same day will be paid only one meeting fee.
Two of the Bank's subsidiaries, CB Properties and Datatronix Financial
Services, Inc., pay an annual retainer of $1,000 and $500 per meeting to their
directors. The Bank's other subsidiaries, ISL Capital Corporation, ISL Financial
Corporation, Pacific Access Mortgage, LLC, pay no retainer or Board fees to
their directors.
O.R.E., Inc., pays no retainer or Board fees to their directors.
Directors Deferred Plan
Bancshares maintains a Directors Deferred Compensation Plan (the "DCP")
which each director may elect to defer all or a portion no less than a ratable
50% of the annual retainer fees and meeting fees. Distribution will be made in a
single lump sum within ten years following termination, or in equal annual
installments over a period of years, not to exceed ten. Under the DCP, deferred
amounts may be credited to either a regular account or a company stock account.
The amount allocated to the regular account is treated as if such amount were
ratable credited each plan year with interest in an amount equal to the interest
rate payable on a City Bank one year certificate of deposit issued as of the
first day of the plan year. The amount allocated to the company stock account is
treated as if such amount were invested in shares of Bancshares Common Stock.
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Director Stock Program
Bancshares maintains a Director Stock Program under which each director
of Bancshares and the Bank, who is not an employee receives an annual grant of
options to acquire restricted stock at a price equal to the fair market value of
Bancshares' stock at the date of grant. A director who is not an employee of
Bancshares or the Bank receives an annual option for 1,000 restricted shares
(not to exceed annual option for 1,000 restricted shares to any one director).
COMMITTEES OF THE BOARD; MEETINGS
The Audit, Compensation and Nominating Committees of Bancshares' Board
of Directors committees are currently comprised of the following members:
Audit Committee: Compensation Committee: Nominating Committee:
---------------- ----------------------- ---------------------
Kenneth N. Sumimoto, Chairman Larry K. Matsuo, Chairman Larry K. Matsuo, Chairman
Calvin K.Y. Say, Vice-Chairman Colbert M. Matsumoto, Vice-Chairman Dwight L. Yoshimura, Vice-
Donald J. Andres Calvin K. Y. Say Chairman
George Matsuda Lionel Y. Tokioka Ronald K. Migita
Hiroshi Sakai Dwight L. Yoshimura Yoshiki Takada
Lionel Y. Tokioka
The Audit Committee of the Board of Directors has the responsibility and
authority described in its charter attached hereto as Appendix A, which has been
adopted by Bancshares' Board of Directors. The Audit Committee is charged with
recommending to the entire Board the engagement and discharge of independent
auditors of the financial statements of Bancshares, reviewing the professional
service provided by independent auditors, reviewing the independence of
independent auditors, reviewing with the auditors the plan and results of the
auditing engagement, considering the range of audit and non-audit fees,
reviewing the adequacy of Bancshares' system of internal accounting controls,
reviewing the results of procedures for internal auditing and consulting with
the internal auditor of Bancshares with respect to all aspects of Bancshares'
internal auditing program. The Board of Directors has determined that the Audit
Committee Members are able to read and understand the fundamental financial
statements, and that at least one member of the Audit Committee has past
employment experience in finance or accounting. The Audit Committee met five
times during the fiscal year ended December 31, 2000. The Audit Committee's
Report appears below.
The Nominating Committee solicits recommendations for prospective
directors, reviews such nominees and presents to the Board proposed candidates
for the office of director of Bancshares and its subsidiaries. The Board then
proposes the slate of directors for submittal to the stockholders at the annual
meetings of Bancshares and its subsidiaries. The Nominating Committee accepts
recommendations from security holders that are timely submitted. The Nominating
Committee met one time in 2000.
The Compensation Committee is charged with recommending to the entire
Board the compensation to be paid to officers and key employees of Bancshares
and the Bank and the compensation of members of the Board of Directors. The
Compensation Committee also makes recommendations to the entire board regarding
the grant of stock options and restricted stock awards. The Compensation
Committee met three times during the fiscal year ended December 31, 2000. The
Compensation Committee's Report on Executive Compensation for the fiscal year
ended December 31, 2000 appears on page 14 of this Proxy Statement.
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The Board of Directors met four times during the fiscal year ended
December 31, 2000. Each Director attended, in person or by telephone, at least
75% of the meetings held by the Board of Directors and by the committees on
which the Director served.
AUDIT COMMITTEE REPORT
The Audit Committee members, except for Lionel Y. Tokioka, are
independent, as defined in Rule 4200(a)(14) of the National Association of
Securities Dealer's listing standards. Mr. Tokioka is not independent as defined
in that rule solely because he received consulting compensation from Bancshares
in excess of $60,000 during the previous fiscal year. The Board of Directors
nonetheless has determined, in compliance with NASD/AMEX Rule 4310(c)(26)(B)(ii)
to continue Mr. Tokioka's membership on the Audit Committee, because of the
extent of his knowledge and experience in financial and business matters. The
Board of Directors determined that Mr. Tokioka's membership on the Audit
Committee is required by the best interests of Bancshares and its stockholders,
and that his relationship with Bancshares does not in any way impair his
independence from Bancshares' management.
The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is attached to this Proxy Statement as Appendix A.
The Audit Committee is responsible for providing independent, objective
oversight of Bancshares' accounting and system of internal controls, the quality
and integrity of Bancshares' financial reports, and the independence and
performance of Bancshares' independent auditors. Management is responsible for
Bancshares' internal controls and the financial reporting process. KPMG LLP,
certified public accountant, as Bancshares' independent auditor and accountant,
is responsible for performing an independent audit of Bancshares' financial
statements in accordance with generally accepted auditing standards and issuing
a report on those financial statements. The Audit Committee monitors and
oversees those processes.
In that context, the Audit Committee has reviewed and discussed
Bancshares' audited financial statements for the year ended December 31, 2000
with management and KPMG LLP, and the matters required to be discussed by
Statement on Accounting Standards No. 61 (Codification of Statements on Auditing
Standards, AU Section 380) with respect to those statements. Those standards
include, among other things: (i) methods used to account for significant unusual
transactions; (ii) the effect of significant accounting policies in
controversial or emerging areas for which there is a lack of authoritative
guidance or consensus; (iii) the process used by management in formulating
particularly sensitive accounting estimates and the basis for the independent
auditors' conclusions regarding the reasonableness of those estimates; and (iv)
disagreements with management over the application of accounting principles, the
basis for management's accounting estimates, and the disclosures in the
financial statements.
The Audit Committee believes strongly in the principles underlying the
requirement that independent auditors maintain their independence in strict
compliance with applicable independence rules. The Audit Committee has received
the written disclosures and the letter from KPMG LLP required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
The Audit Committee has discussed with KPMG LLP its independence from Bancshares
in connection with its audit of Bancshares' most recent financial statements.
The Audit Committee also has discussed with management of Bancshares and KPMG
LLP such other matters and received such assurances from management, as the
Audit Committee deemed appropriate.
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Based on that review and the various discussions noted above, the Audit
Committee recommended to the Board of Directors that those audited financial
statements be included in Bancshares' Annual Report on Form 10-K for the fiscal
year ended December 31, 2000, for filing with the SEC. Furthermore, the Audit
Committee recommended that the Board of Directors engage KPMG LLP as Bancshares'
independent auditor for the fiscal year ending December 31, 2001.
AUDIT FEES
The aggregate fees billed by Bancshares' independent accountants for
professional services rendered in connection with the audit of Bancshares'
financial statements included in Bancshares' Annual Report on Form 10-K for
Fiscal Year 2000, as well as for the review of Bancshares' financial statements
included in Bancshares' Quarterly Reports on Form 10-Q during Fiscal Year 2000
totaled $198,500 (excluding expenses reimbursed by Bancshares).
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
KPMG LLP did not perform any financial information technology services
for Bancshares during the fiscal year ended December 31, 2000. No fees other
than those described above under the caption "Audit Fees" and those described
below under the caption "All Other Fees" were billed to Bancshares by
Bancshares' independent accountants for professional services in the fiscal year
ended December 31, 2000.
ALL OTHER FEES
Bancshares was billed a total of $495,800 for all other non-audit
services provided by KPMG LLP during the fiscal year ended December 31, 2000. In
accordance with the SEC's newly promulgated auditor independence requirements,
the Audit Committee has considered whether the KPMG LLP's provision of non-audit
services to Bancshares is compatible with maintaining the independence of the
auditors. The Audit Committee believes the foregoing expenditures are compatible
with maintaining the independence of KPMG LLP as Bancshares' principal
independent auditor and accountant.
This Audit Committee Report shall not be deemed to be incorporated by
reference in any document previously or subsequently filed with the SEC that
incorporated by reference all or any portion of this Proxy Statement, except to
the extent that Bancshares specifically requests that this Audit Committee
Report be specifically incorporated by reference. The information in this Audit
Committee Report shall not be deemed to be soliciting material, or be filed with
the SEC or subject to Regulation 14A or 14C or to liabilities of Section 18 of
the Securities Act.
Donald J. Andres Hiroshi Sakai Calvin K. Y. Say
George Matsuda Kenneth N. Sumimoto Lionel Y. Tokioka
INDEBTEDNESS OF MANAGEMENT
Certain directors and executive officers of Bancshares and its
subsidiaries, and companies with which such directors and executive offers are
associated, were customers of, and had banking transactions with the Bank in the
ordinary course of the Bank's business during 2000. Such loans totaled $10,003
million at December 31, 2000. All loans and commitments to lend included in such
transactions were made in the ordinary course of business, on substantially the
same terms, including interest rates and
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collateral, as those prevailing at the time for comparable transactions with
other persons (except as described below) and, in the opinion of the management
of the Bank, did not involve more than a normal risk of collectibility or
present other unfavorable features.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
Bancshares' officers and directors, and persons who own more than ten percent of
a registered class of Bancshares equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"SEC"). Officers, directors and beneficial owners of more than ten percent of
Bancshares Common Stock are required by the SEC regulation to furnish Bancshares
with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of Forms 3, 4 and 5 and
amendments thereto furnished to Bancshares during the last fiscal year,
Bancshares is not aware of any late reports of such forms, transactions not
timely reported or known failure to file a required form.
OWNERSHIP OF SECURITIES BY CERTAIN BENEFICIAL OWNERS
The following table shows certain information with respect to all
persons who are known to Bancshares to be the beneficial owners of more than
five percent of Bancshares' outstanding Common Stock as of February 28, 2001:
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership of Class
------------------------------------ -------------------- --------
CB Bancshares, Inc. Employee Stock Ownership Plan(1) 202,149 shares 6.34%
Pacific Century Trust, Trustee
Financial Plaza of the Pacific
111 South King Street
Honolulu, Hawaii 96813
Northaven Management, Inc. 200,900 shares 6.30%
200 Park Avenue, 9th Floor
New York, New York 10166
TON Finance, B.V. 341,401 shares 10.70%
Rokin 5S 1000 A.E.
Amsterdam, Netherlands
(1) Participants in the ESOP are entitled to direct the ESOP Trustee how to
vote shares which have been allocated to their respective accounts. In
the absence of such direction, such shares will be voted by the ESOP
Committee. The Trustee has sole investment power.
Bancshares knows of no other beneficial owner of five percent or more of
Bancshares Common Stock nor does it know of any arrangement which may at a
subsequent date result in a change in control of Bancshares.
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INDEPENDENT AUDITOR
During 2001, KPMG LLP completed its examination of the consolidated
financial statements of Bancshares for 2000. A representative of KPMG LLP is
expected to be present at the 2001 annual meeting and will have the opportunity
to make a statement and to respond to appropriate questions.
OTHER MATTERS
The cost of soliciting proxies will be borne by Bancshares. Bancshares
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of Bancshares or its subsidiaries may
solicit proxies personally or by telegraph, telephone or other electronic means
without additional compensation.
FINANCIAL STATEMENTS
Bancshares' 2000 Annual Report to stockholders, including financial
statements, has accompanied or preceded the mailing of this proxy statement.
Bancshares will provide without charge to each stockholder solicited,
upon the written request of any such stockholder, a copy of its annual report to
the Securities and Exchange Commission on Form 10-K, including the financial
statements and schedules thereto, for the fiscal year ended December 31, 2000.
Such written request should be directed to Mr. Dean K. Hirata, Senior Vice
President and Chief Financial Officer, CB Bancshares, Inc., 201 Merchant Street,
Honolulu, Hawaii 96813.
STOCKHOLDER PROPOSAL
In order for any stockholder proposal to be included in Bancshares'
proxy statement and proxy as an item of business for the 2002 annual meeting of
stockholders of Bancshares, it must be received at the principal executive
officers of Bancshares not later than November 14, 2001.
OTHER BUSINESS
The Board of Directors does not know of any other matter to be presented
at the 2001 annual meeting, but should any other matter properly come before the
meeting, or any adjournment thereof, proxies will vote on such matter in
accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ LIONEL Y. TOKIOKA
Lionel Y. Tokioka
Chairman
March 15, 2001
TO BE CERTAIN THAT YOUR SHARES WILL BE REPRESENTED AT THE 2001 ANNUAL MEETING OF
STOCKHOLDERS, WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
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APPENDIX A
CB BANCSHARES, INC.
AUDIT COMMITTEE CHARTER
MAY 31, 2000
I. PURPOSE
The Audit Committee is appointed by the Board of Directors (Board) to
assist the Board in fulfilling its oversight responsibilities by
reviewing the financial information which will be provided to the
shareholders and others, the systems of internal controls which
management and the Board have established, and the audit process.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access
to the outside auditors as well as anyone in the organization. The audit
committee is able to retain counsel at its discretion without prior
permission of the institution's Board or its management.
II. COMPOSITION AND MEETINGS
1. The Audit Committee shall consist of a minimum of three
directors. All Audit Committee members must be independent, free
from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment.
All Audit Committee members shall have a basic understanding of
finance and accounting, and be or become financially literate
(able to read and understand fundamental financial statements),
and at least one member of the Audit Committee shall have
accounting or related financial management expertise.
2. The Committee shall meet at least four times annually, or more
frequently as circumstances require.
3. At least annually, the Audit Committee shall determine whether
all existing and potential Audit Committee members are
"independent of management."
4. The Audit Committee Chair shall prepare and/or approve an agenda
in advance of each meeting. The Committee should meet privately
in executive session at least annually with management, the
Chief Auditor, the outside auditors, and as a committee to
discuss any matters that the Committee or each of these groups
believe should be discussed.
5. If an audit committee Chair is not designated or present, the
members of the Committee may designate a Chair by majority vote
of the Committee membership.
6. The audit committee will maintain minutes and other relevant
records of their meetings and decisions.
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III. RESPONSIBILITIES AND DUTIES
DOCUMENTS/REPORTS REVIEW
The Audit Committee shall:
1. Review and reassess the Audit Committee Charter on an annual
basis. Submit the charter to the Board for approval and have the
document published at least once every three years in accordance
with Securities and Exchange Commission (SEC) regulations.
2. Provide an open avenue of communication between the outside
auditors, management, the internal auditors, and the Board.
3. Review Bancshares' annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and outside auditors of significant issues regarding
accounting principles, practices, and judgments.
4. Review and discuss with management and the outside auditors
Bancshares' quarterly financial results prior to the release of
earnings and/or Bancshares' quarterly financial statements prior
to filing if possible or soon thereafter. Discuss any
significant changes to Bancshares' accounting principles and any
items required to be communicated by the outside auditors in
accordance with Statement of Auditing Standards (SAS) No. 61
(see item 11). The Chair of the Committee may represent the
entire Audit Committee for purposes of this review.
5. Review with management and the outside auditors: a) The scope of
services required by the audit, significant accounting policies,
and audit conclusions regarding significant accounting
estimates. b) Their assessments of the adequacy of internal
controls, and the resolution of identified material weaknesses
and reportable conditions in internal controls, including the
prevention or detection of management override or compromise of
the internal control system. c) The institution's compliance
with laws and regulations.
6. Review the regular internal audit reports to management prepared
by the Internal Audit Division and Management's response.
OUTSIDE AUDITORS
7. The outside auditors are ultimately accountable to the Audit
Committee and the Board. The Audit Committee shall review the
independence of the outside auditors.
8. On an annual basis, the Committee should review and discuss with
the outside auditors all significant relationships they have
with Bancshares that could impair the auditor's independence and
objectivity.
9. Discuss with management the selection and termination of the
outside auditors and any significant disagreements between the
outside auditors and management.
10. Approve the fees and other significant compensation to be paid
to the outside auditors.
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11. Prior to releasing the year-end earnings, discuss the results of
the audit with the outside auditors. Discuss certain matters
required to be communicated to audit committees in accordance
with Association of Certified Public Accountant Statement of
Auditing Standards (AICPA SAS 61).
12. Consider the outside auditors' judgments about the quality not
just the acceptability of Bancshares' accounting principles as
applied in its financial reporting.
INTERNAL AUDIT DEPARTMENT
13. Overseeing of the internal audit function.
14. Review the appointment, performance, and replacement of the
Chief Auditor.
OTHER AUDIT COMMITTEE RESPONSIBILITIES
15. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be
included in Bancshares' annual proxy statement.
16. Perform any other activities consistent with this Charter,
Bancshares' by-laws, and governing law, as the Committee or the
Board deems necessary or appropriate.
17. Periodically report to the Board on significant results of the
foregoing activities.
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PROXY
CB BANCSHARES, INC.
IMPORTANT -- PLEASE SIGN AND RETURN IMMEDIATELY
CB BANCSHARES, INC., 201 MERCHANT STREET, HONOLULU, HAWAII 96813
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2001 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of CB Bancshares, Inc. ("Bancshares") hereby
constitutes and appoints Colbert M. Matsumoto, Calvin K.Y. Say and Dwight L.
Yoshimura and each or any of them, with full power of substitution, as Proxies
of the undersigned to vote and otherwise act in respect of all of the shares of
the common stock of Bancshares, which the undersigned may be entitled to vote at
the 2001 annual meeting of stockholders of Bancshares to be held on Thursday,
April 26, 2001, at 9:00 a.m., on the second floor, City Financial Tower,
Honolulu, Hawaii, on any adjournment thereof, with all the rights and powers the
undersigned would possess if personally present. Proxies are instructed to vote
as specified on the reverse side.
(CONTINUED ON THE REVERSE SIDE)
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PLEASE SIGN, DATE AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
CB BANCSHARES, INC.
APRIL 26, 2001
Please Detach and Mail in the Envelope Provided
A [X] Please Mark your
votes as in this
example.
FOR ALL NOMINEES WITHHOLD NOMINEES:
LISTED AT RIGHT AUTHORITY TO VOTE Tomio Fuchu
(except as indicated FOR ALL NOMINEES Duane K. Kurisu
to the contrary) LISTED AT RIGHT Mike K. Sayama
[ ] [ ]
1. To elect three (3) Class III Directors to serve until the 2. To transact such other business as may be properly come before
2004 annual meeting of stockholders and until their the meeting or any adjournments or postponements thereof.
successors are elected.
(INSTRUCTION: To withhold authority to vote for any individual THE BOARD OF DIRECTORS IS NOT AWARE OF ANY OTHER BUSINESS TO COME
nominee, or nominees write the name of the nominee or nominees BEFORE THE MEETING. ONLY STOCKHOLDERS OF RECORD AT THE CLOSE OF
in the space provided below.) BUSINESS ON MARCH 6, 2001, WILL BE ENTITLED TO NOTICE OF AND TO
VOTE AT THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
-------------------------------------------------------------- IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
SIGN, DATE AND PROMPTLY MAIL YOUR ENCLOSED PROXY CARD.
Signature __________________________________ Signature __________________________________ Dated: ____________________, 2001
NOTE: Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate
name by the President or other authorized officer. If a partnership, please sign in partnership name by an authorized person.