<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
CB BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
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):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / 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.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
TO STOCKHOLDERS OF CB BANCSHARES, INC.:
Notice is hereby given that the 1996 annual meeting (the "Meeting") of
stockholders of CB Bancshares, Inc. ("Bancshares"), will be held at the Hawaii
Prince Hotel (Haleakala/Kilauea Rooms), 100 Holomoana Street, Honolulu, Hawaii,
on Thursday, May 23, 1996, at 2:00 p.m., Hawaiian Standard Time, for the
purposes of considering and voting upon the following matters:
1. To elect four (4) Class I Directors to serve until the 1999 annual
meeting of stockholders and until their successors are elected.
2. To elect the firm of Grant Thornton LLP as independent auditor for the
ensuing year.
3. 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 April 16, 1996,
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, please 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 vote at the Meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
[/S/ JAMES M MORITO]
James M. Morita
CHAIRMAN OF THE BOARD
Honolulu, Hawaii
April 19, 1996
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 BLUE PROXY CARD. STOCKHOLDERS WITH QUESTIONS OR REQUIRING
ASSISTANCE MAY CALL CHEMICAL MELLON SHAREHOLDER SERVICES, WHICH IS ASSISTING
YOUR COMPANY, TOLL-FREE AT (888) 532-8140 (HAWAII) OR (800) 244-7265 (MAINLAND).
<PAGE>
[LOGO]
201 Merchant Street
Honolulu, Hawaii 96813
------------------------
PROXY STATEMENT
1996 ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1996
------------------------
This Proxy Statement and the enclosed Blue 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 1996 annual meeting
of stockholders of Bancshares and at any adjournments or postponements thereof
(the "Meeting"), which will be held on May 23, 1996, at 2:00 p.m., Hawaiian
Standard Time, at the Hawaii Prince Hotel (Haleakala/Kilauea Rooms), 100
Holomoana Street, Honolulu, Hawaii. The accompanying Notice of Annual Meeting,
this Proxy Statement and the Blue Proxy Card are first being mailed to
stockholders of Bancshares on or about April 19, 1996.
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. Hawaiian Standard Time) on April 16, 1996, (the
"Record Date") are entitled to notice of and to vote at the Meeting. On the
Record Date, there were 3,551,228 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 I directors, and FOR election of the
firm of Grant Thornton LLP as independent auditor. If for any reason a nominee
should decline or be unable to stand for election at the 1996 annual meeting of
stockholders, an event which Bancshares does not presently anticipate, proxies,
if authorized to vote for the Board's nominees, may at their discretion vote for
another candidate. The Board of Directors has appointed directors James M.
Morita, Frederic K. T. Chun, Tomio Fuchu and Marcelino J. Avecilla to act as
proxies on behalf of the Board of Directors.
Prior to 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 and
election of the independent auditor. 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. All actions to be taken at the Meeting, including
election of directors and election of the independent auditor, require the
1
<PAGE>
affirmative vote of a majority of the shares represented and entitled to vote at
the Meeting (accordingly, abstentions will have the same effect as votes cast
against any such action and broker non-votes will not affect the outcome of any
such action).
A stockholder may revoke his or her proxy at any time prior to 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 1996 annual
meeting may revoke his or her proxy in person at the meeting at any time prior
to 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 1996 annual meeting four (4) Class I directors are to be elected to serve
until the 1999 annual meeting of stockholders and until their respective
successors have been elected.
The Board of Directors' four nominees for Class I directors are James H.
Kamo, Caryn S. Morita, Robert R. Taira and Lionel Y. Tokioka, who are all
currently directors of Bancshares and City Bank (the "Bank"). Mr. Kamo, Mr.
Taira and Mr. Tokioka are also directors of International Savings and Loan
Association, Limited ("ISL"). The Board of Directors of the Bank and ISL are
elected by Bancshares as the sole stockholder of the Bank and ISL. The selection
of nominees for the election of directors of the Bank and ISL is within the
discretion of the Board of Directors of Bancshares.
THE BANCSHARES BOARD OF DIRECTORS RECOMMENDS TO THE STOCKHOLDERS ITS FOUR
NOMINEES FOR CLASS I 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'
four (4) nominees. While Bancshares does not anticipate that any nominee will
decline or be unable to stand for re-election at the 1996 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 prior to the date fixed for such
meeting.
The following table sets forth as to each nominee for director, and each
director now in office, each person's age, principal occupation during the past
five years and the 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 the
2
<PAGE>
Record Date, and the percentage of the class which such ownership represents.
Unless otherwise noted, each of the persons 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.
<TABLE>
<CAPTION>
YEAR FIRST COMMON STOCK
NAME, AGE, PRINCIPAL OCCUPATION DURING PAST FIVE YEARS, AND OTHER ELECTED A BENEFICIALLY PERCENT OF
DIRECTORSHIPS DIRECTOR OWNED CLASS
- ----------------------------------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
NOMINEES FOR ELECTION AS CLASS I DIRECTORS -- TERMS TO EXPIRE IN 1999
KAMO, JAMES H. (75) 1993 (1) 7,298(2) 0.21%
Attorney; Corporate Secretary of Bancshares and its subsidiaries.
MORITA, CARYN S. (35) 1995 (3) 22,852(4) 0.64%
Senior Vice President and General Counsel of Bancshares since April 1994;
Vice President and General Counsel of Bancshares from September 1993 to
April 1994; Deputy Attorney General for the State of Hawaii from August 1988
to September 1993.
TAIRA, ROBERT R. (72) 1980 23,411 0.66%
Chairman of the Board, King's Hawaiian Bakery West, Inc.; Vice Chairman of
the Board of Bancshares; Vice Chairman of the Board of the Bank; President
and Treasurer of City Finance and Mortgage, Inc.
TOKIOKA, LIONEL Y. (61) 1994 (5) 21,934(6) 0.62%
Vice Chairman of the Board of ISL since April 1994; Chairman of the Board
and Chief Executive Officer of International Holding Capital Corp. (from
1984 to April 1994); Chairman of the Board and President of ISL (from 1986
to April 1994).
CLASS III DIRECTORS -- TERMS TO EXPIRE IN 1998
ARAKAWA, RAYMOND Y. (80) 1980 3,646(7) 0.10%
Manager, Pacific Area, J. A. Sexauer, Inc. (plumbing supplies).
CHUN, FREDERIC K. T. (76) 1980 11,210 0.32%
Vice President of Bancshares; Chairman of the Board and President of
Citibank Properties, Inc.; Vice Chairman of the Board of City Finance and
Mortgage, Inc.; Chairman of the Board, Chun Kim Chow, Ltd. (retail chain).
FUCHU, TOMIO (57) 1995 (8) 0 0 %
Chairman of Kyokuto Securities Co. Ltd. since June 1995; Managing Director
and General Manager, International Planning Division of The Sakura Bank,
Ltd. from June 1994 to June 1995; Director and General Manager,
International Planning Division of The Sakura Bank, Ltd. from June 1992 to
June 1994; Director and General Manager, Tokyo Main Branch of The Mitsui
Taiyo Kobe Bank, Ltd. until June 1992.
CLASS II DIRECTORS -- TERMS TO EXPIRE IN 1997
AVECILLA, MARCELINO J., M.D. (83) 1980 5,727 0.16%
Physician and surgeon (self-employed).
MIZUGUCHI, NORMAN K. (56) 1995 (9) 0 0 %
President of the Senate, Hawaii State Legislature; Director and President of
Hawaiian Emporium, Inc.
MORITA, JAMES M. (82) 1980 53,955(10) 1.52%
Chairman of the Board, Chief Executive Officer of Bancshares; Chairman of
the Board and Chief Executive Officer of the Bank; Chairman of the Board and
Chief Executive Officer of ISL; Chairman of the Board and Chief Executive
Officer of City Finance and Mortgage, Inc.
YAMANE, KAZUO E. (79) 1980 6,976(11) 0.20%
Chairman of the Board, U. Yamane, Ltd. (owns and manages real estate).
Directors and Executive Officers as a group (16 persons) 178,903(12) 5.04%
</TABLE>
3
<PAGE>
- --------------------------
(1) James H. Kamo was elected by the Board of Directors on July 15, 1993, to
fill the unexpired term of director Robert M. Kaya, who died July 8, 1993.
(2) Of the 7,298 shares beneficially owned by James H. Kamo, 2,913 shares are
held by a trustee of a retirement trust for the benefit of Mr. Kamo, as to
which shares he exercises sole voting and investment power, and 4,385 shares
are owned jointly with his spouse as to which he shares voting and
investment power.
(3) Caryn S. Morita was elected by the Board of Directors on August 15, 1995, to
fill the unexpired term of director Hilarion T. Benedicto, who died on July
30, 1995.
(4) Of 22,852 shares beneficially owned by Caryn S. Morita, 22,377 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. Of 22,852 shares
owned by Caryn S. Morita, 132 shares are allocated to her account in the CB
Bancshares, Inc. Employees Stock Ownership Plan ("ESOP"), the voting of
which shares she is entitled to direct. This amount does not include 1,500
shares covered by exercisable options.
(5) Lionel Y. Tokioka was appointed to fill a new position by the Board of
Directors in 1994.
(6) Of the 21,934 shares owned by Lionel Y. Tokioka, 438 shares are allocated to
his account in the Bancshares ESOP, the voting of which shares he is
entitled to direct. Not included in the 21,934 shares owned by Lionel Y.
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 3,646 shares beneficially owned by Raymond Y. Arakawa, 3,262 shares
are owned by him directly as to which he exercises sole voting and
investment power, and 384 shares are owned by members of his immediate
family as to which he shares voting and investment power.
(8) Tomio Fuchu was elected by the Board of Directors on August 15, 1995, to
fill the unexpired term of director Kunihiko Adachi, who died on May 2,
1995.
(9) Norman K. Mizuguchi was appointed on August 15, 1995 to fill a new position
approved by the Board of Directors in 1995.
(10) Of 53,955 shares owned by James M. Morita, 20,252 shares are allocated to
his account in the Bancshares ESOP, the voting of which shares he is
entitled to direct. Not included in the 53,955 shares owned by James M.
Morita, are 22,377 shares held in a Trust established by James M. and Aiko
N. Morita, with Caryn S. Morita and Patrick A. Tanigawa, as Joint-Trustees,
referred to in footnote 4 above. This amount does not include 5,000 shares
covered by exercisable options.
(11) Of the 6,976 shares beneficially owned by Kazuo E. Yamane, 6,115 shares are
owned by him directly as to which he exercises sole voting and investment
power, and 861 shares are owned by his spouse as to which he shares voting
and investment power.
(12) This amount does not include an aggregate of 11,250 shares covered by
exercisable options granted to members of this group.
Randall O. Chang, President of the Bank, and Richard C. Lim, President of
ISL, are the only Named Executive Officers named in the Summary Compensation
Table below whose Bancshares stock ownership is not described above. As of the
Record Date, Mr. Chang owned beneficially 603 shares of Common Stock, all of
which are allocated to his account in the Bancshares ESOP, the voting of which
shares he is entitled to direct, and Mr. Lim owned beneficially 11,271 shares of
Common Stock, which included 334 shares allocated to his account in the
Bancshares ESOP, the voting of which shares he is entitled to direct. These
amounts do not include 1,000 shares and 750 shares for Mr. Chang and Mr. Lim,
respectively, covered by exercisable options as of the Record Date.
4
<PAGE>
MANAGEMENT
Executive officers of Bancshares, and other significant employees of
Bancshares and its subsidiaries are listed below. All positions described below
and elsewhere in the Proxy Statement are as of the Record Date.
<TABLE>
<CAPTION>
NAME AND AGE CURRENT POSITION AND BUSINESS HISTORY
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
James M. Morita (82)................. Chairman of the Board of Bancshares and Chairman of the Board and Chief
Executive Officer of the Bank for more than the past five years; Chief
Executive Officer of Bancshares since January 1991; President of
Bancshares until June 5, 1995; Chairman of the Board and Chief Executive
Officer of City Finance and Mortgage, Inc., since May 1990; Chairman of
the Board and Chief Executive Officer of ISL since April 1994.
Robert R. Taira (72)................. Vice Chairman of the Board of Bancshares and the Bank for more than the
past five years; President and Treasurer of City Finance and Mortgage,
Inc., since March 1990; Chairman of the Board of King's Hawaiian Bakery
West, Inc. for more than the past five years.
Ronald K. Migita (54)................ President and Chief Operating Officer of Bancshares since June 5, 1995;
Executive Vice President of Bank of Hawaii from 1989 to May 1995.
Frederic K. T. Chun (76)............. Vice President of Bancshares since September 1993; Treasurer of Bancshares
from 1982 to 1993; Chairman of the Board and President of Citibank
Properties, Inc., since September 1990; Vice Chairman of the Board of
City Finance and Mortgage, Inc. since March 1990.
James H. Kamo (75)................... Corporate Secretary of Bancshares, the Bank and City Finance and Mortgage,
Inc., for more than the past five years; Corporate Secretary of O.R.E.,
Inc., since April 1992; Corporate Secretary of Citibank Properties, Inc.,
since April 1992; Corporate Secretary of ISL since March, 1996.
Lionel Y. Tokioka (61)............... Vice Chairman of the Board of ISL since April 1994; Chairman of the Board
and President of ISL from December 1986 to April 1994.
Caryn S. Morita (35)................. Senior Vice President and General Counsel of Bancshares since April 1994;
Vice President and General Counsel of Bancshares from September 1993 to
April 1994; Deputy Attorney General for the State of Hawaii from August
1988 to September 1993. Caryn Morita is the daughter of James M. Morita.
Randall O. Chang (50)................ President and Chief Operating Officer of the Bank since August 1993;
Senior Vice President, Daiwa Bank, from March 1989 to August 1993.
Richard C. Lim (44).................. President and Chief Operating Officer of ISL since April 1994; Executive
Vice President and Director of ISL from May 1991 to April 1994.
Henry L. Wong (55)................... Chief Economist and Senior Vice President of Bancshares since June 1994;
Executive Vice President and Chief Administrator of Bancshares from
February 1992 to June 1994; Senior Vice President of Bancshares from
December 1991 to February 1992; Senior Vice President of the Bank from
March 1989 to December 1991.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE CURRENT POSITION AND BUSINESS HISTORY
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
Daniel Motohiro (52)................. Senior Vice President and Chief Financial Officer of Bancshares since May
1992; Treasurer of Bancshares since October 1993; Assistant Treasurer of
Bancshares from June 1987 to October 1993; Senior Vice President and
Controller of the Bank from August 1987 to April 1992.
</TABLE>
Officers of Bancshares are elected annually for a term of one year at the
Board of Directors meeting immediately following the annual meeting of
stockholders.
Bancshares and Ronald K. Migita entered into an Employment Agreement on May
31, 1995 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 is $225,000 for each year of the term. Bancshares may in
its discretion increase the base salary and grant bonus or other compensation or
benefits, and Mr. Migita is entitled to participate in employee benefits plans
and programs of Bancshares, to the extent that he is eligible. Bancshares may
terminate the employment of Mr. Migita for cause as defined in the Agreement
without prior notice. Mr. Migita may terminate his employment upon 120 days
prior written notice. The Agreement terminates in the event of the death or
disability, as defined in the Agreement, of Mr. Migita.
The Bank and Randall O. Chang have entered into an Employment Agreement
employing Mr. Chang as President and Chief Operating Officer of the Bank at a
minimum base salary of $165,000 per year for a five-year period commencing
August 16, 1993. The Bank may in its discretion increase such base salary and
grant bonus or other compensation and benefits to Mr. Chang, and he is entitled
to participate in employee benefit programs generally available to executive
officers of the Bank. Under the Employment Agreement the Bank may terminate Mr.
Chang for cause as defined in the agreement. Mr. Chang has the right to
terminate his employment at any time under the agreement for good reason, as
defined in the agreement, or with not less than 120 days written notice without
good reason. In the event of an illness or incapacity of Mr. Chang, the Bank
must continue payment of his salary for a minimum of 12 months after
commencement of such illness or incapacity.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table sets forth all compensation paid or payable for the
years 1993 - 1995 by Bancshares or its subsidiaries to Bancshares' Chief
Executive Officer, James M. Morita, and the four other most highly compensated
executive officers of Bancshares and its subsidiaries.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------------
AWARDS
ANNUAL COMPENSATION -------------------
------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS/SARS (#) COMPENSATION ($)
- ----------------------------- --------- ----------- ----------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
James M. Morita, Chairman of 1995 $ 440,000 $ 122,317 $ 2,092 10,000 $ 122,988(1)
the Board, 1994 $ 437,504 $ 199,570 $ 4,068 10,000 $ 160,833
Chief Executive Officer of 1993 $ 383,000 $ 180,000 $ 1,980 -- $ 25,587
Bancshares; Chairman of the
Board and Chief Executive
Officer of the Bank;
Chairman of the Board and
Chief Executive Officer of
ISL
Randall O. Chang, President 1995 $ 173,250 -- $ 8,505 2,000 $ 4,848(3)
and Chief Operating Officer 1994 $ 165,000 $ 26,466 $ 28,588(4) 2,000 $ 13,549
of the Bank (2) 1993 $ 61,875 -- $ 7,500 -- --
Lionel Y. Tokioka, Director 1995 $ 200,000 $ 174,182 $ 1,000 2,500 $ 51,055(6)
and
Vice Chairman of ISL(5) 1994 $ 152,758 $ 118,492 $ 3,444 -- $ 13,350
Robert R. Taira, Vice 1995 $ 150,000 $ -- -- -- $ 43,314(7)
Chairman
of Bancshares; Vice Chairman 1994 $ 127,500 -- -- -- $ 69,800
of the Bank; President and 1993 $ 60,000 -- -- -- $ 58,846
Treasurer of City Finance
and Mortgage, Inc.
Richard C. Lim, President and 1995 $ 150,000 $ 142,112 $ 9,230 1,500 $ 4,848(9)
Chief Operating Officer 1994 $ 114,280 $ 92,795 $ 2,735 1,500 $ 14,016
of ISL(8)
</TABLE>
- ------------------------------
(1) This amount includes an annual contribution of $4,848 made by Bancshares to
Mr. Morita's 401(k) account. This amount also includes $118,140, which
represents the premium attributed to insurance coverage for Mr. Morita paid
by Bancshares pursuant to split-dollar life insurance policies.
(2) Mr. Chang became President and Chief Operating Officer of the Bank in August
1993.
(3) This amount includes an annual contribution of $4,848 made by Bancshares to
Mr. Chang's 401(k) account.
(4) This amount includes $21,618 paid by the Bank for Mr. Chang's residential
rental expenses.
(5) Mr. Tokioka became Vice Chairman of ISL in April 1994.
(6) This amount includes $46,207 in fees paid to Mr. Tokioka for serving as
director of Bancshares and certain of its subsidiaries. This amount includes
an annual contribution of $4,848 made by Bancshares to Mr. Tokioka's 401(k)
account.
(7) This amount includes fees paid to Mr. Taira for serving as director of
Bancshares and certain of its subsidiaries during 1995. Mr. Taira does not
participate in Bancshares' 401(k) program.
(8) Mr. Lim became President and Chief Operating Officer of ISL in April 1994.
(9) This amount includes an annual contribution of $4,848 made by Bancshares to
Mr. Lim's 401(k) account.
7
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options during the last fiscal year to the above named executive officers under
Bancshares' Stock Compensation Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------ POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF STOCK
OPTIONS/ SARS PRICE APPRECIATION
GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE EXPIRATION ---------------------
NAME GRANTED(1)(#) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
- --------------------------------- ---------------- ------------- ------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
James M. Morita.................. 5,000 (2) 9.2% $ 29.00(4) 12/29/2005 $ 91,200 $ 231,100
5,000 (3) 9.2% $ 29.00(5) 12/29/2005 $ 50,600 $ 190,500
Randall O. Chang................. 1,000 (2) 1.8% $ 29.00(4) 12/29/2005 $ 18,240 $ 46,220
1,000 (3) 1.8% $ 29.00(5) 12/29/2005 $ 10,120 $ 38,100
Lionel Y. Tokioka................ 1,250 (2) 2.3% $ 29.00(4) 12/29/2005 $ 22,800 $ 57,775
1,250 (3) 2.3% $ 29.00(5) 12/29/2005 $ 12,650 $ 47,625
Robert R. Taira.................. 0 0% -- -- -- --
Richard C. Lim................... 750 (2) 1.4% $ 29.00(4) 12/29/2005 $ 13,680 $ 34,665
750 (3) 1.4% $ 29.00(5) 12/29/2005 $ 7,590 $ 28,575
</TABLE>
- ------------------------
(1) All options were granted on December 29, 1995 and approved by Bancshares
Board of Directors.
(2) These options are Performance Options which become exercisable on December
29, 2000. The Performance Options may become exercisable, in installments,
sooner than December 29, 2000, depending upon Bancshares' financial results.
If Bancshares' "return on equity" increases by 100 basis points, then the
Performance Options will become exercisable with respect to one-third of the
stated number of shares of Common Stock; an increase of 200 basis points
will cause 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 means the Performance Options become fully-exercisable.
However, an employee must be employed by Bancshares or one of its
subsidiaries for a full year after the date of grant before a Performance
Option can be exercised.
(3) These options are Index Options which become exercisable on December 29,
1996, providing the optionee remains employed by Bancshares or one of its
subsidiaries throughout the one-year period beginning on the date of grant.
(4) The exercise price of $29.00 for the Performance Options is the closing
sales price for Bancshares Common Stock on NASDAQ on December 29, 1995.
(5) The exercise price of an Index Option increases from year to year according
to increases (but not decreases) in the cost of living. The initial exercise
price of the Index Options is set forth above. Each January 1, the exercise
price for Index Options will increase according to the increase in the
Bureau of Labor Statistics' Consumer Price Index--All Urban Consumers. For
purposes of the 5% and 10% Potential Realizable Value columns, the Consumer
Price Index-All Urban is assumed to increase at an annual rate of 2.5% over
the ten year term of the options.
The following table sets forth information concerning unexercised stock
options to purchase Bancshares Common Stock under the Stock Compensation Plan.
None of the above named executive officers exercised any stock options in 1995.
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FY-END(#) OPTIONS/SARS AT FY-END($)
------------------------- ---------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------- ---------------------------
<S> <C> <C>
James M. Morita............................................ 0/10,000(1) $ 0/$0
5,000/5,000(2) $ 0/$0
Randall O. Chang........................................... 0/2,000(1) $ 0/$0
1,000/1,000(2) $ 0/$0
Lionel Y. Tokioka.......................................... 0/1,250(1) $ 0/$0
0/1,250(2) $ 0/$0
Robert R. Taira............................................ 0 --
Richard C. Lim............................................. 0/1,500(1) $ 0/$0
750/750(2) $ 0/$0
</TABLE>
- ------------------------
(1) Performance Options.
(2) Index Options.
In-the-Money Options are those where the fair market value of the underlying
securities exceeds the exercise or base price of the option.
DEFINED BENEFIT PLAN COMPENSATION
During 1991, the Bank entered into deferred compensation agreements with key
management officers. Under the agreements, the Bank is obligated to provide
certain of such officers or beneficiaries of such officers, during a period of
ten years after the officer's death, disability, or retirement, annual benefits
ranging from $25,000 to $50,000. Presently, the group covered by this plan
consists of 32 present officers and five retired officers. Additionally, under a
similar unfunded defined benefit plan, Mr. Morita would receive an annual amount
equal to $150,000 or one-half of his final annual compensation prior to death,
disability, or retirement, whichever is higher, (subject to a maximum amount of
$250,000) for such ten-year term. The amount payable annually under the plan for
Mr. Morita is $250,000. Mr. Morita will also be extended certain medical
benefits, club memberships and Bank related travel expense during the ten-year
term of the agreement.
The estimated present value of future benefits to be paid under all plans is
being accrued over the period from the effective date of the agreements until
the full eligibility dates of the participants. The expense incurred for the
plans covering the 37 officers for the year ended December 31, 1995, amounted to
$1,421,000, of which 48.7% was for Mr. Morita's plan. The Bank is the
beneficiary of life insurance policies with a face value of $18,493,000 that
have been purchased as a method of partially financing benefits for certain
officers.
CHANGE OF CONTROL AGREEMENTS
On March 28, 1996, the Board of Directors of Bancshares approved and adopted
(i) a Change of Control Agreement between Bancshares and James M. Morita,
Chairman of the Board and Chief Executive Officer of Bancshares (the "Chairman's
Agreement"); and (ii) Change of Control Agreements with five senior executives
of Bancshares (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 of its senior executives (the "Bank Executives'
Agreement"), including Randall Chang. 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 Lionel Tokioka and
Richard Lim. Mr. Robert Taira is not a party to a Change of Control Agreement.
The Chairman's Agreement, the CBBI Executives' Agreements, the Bank Executives'
Agreements and the ISL Executives' Agreements are collectively referred to below
as the "Change of Control Agreements". The executives who are parties to the
Change of Control Agreements are referred to below as the "Executives."
Bancshares, Bank and ISL are sometimes referred to below as the "Employer."
9
<PAGE>
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, including Mr. Morita. The Change of Control Agreements become
operational upon the occurrence of a "Change of Control." For purposes of the
Change of Control Agreements, a "change of control" is deemed to occur when (i)
a person becomes the beneficial owner of 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.
The Chairman's Agreement also provides that certain provisions become
operative upon the occurrence of a "Potential Change of Control." A Potential
Change of Control is deemed to occur under the Chairman's Agreement if: (i) a
person commences a tender offer for 20% or more of Bancshares' voting stock;
(ii) approval of a Transaction is requested of Bancshares' shareholders; (iii)
Bancshares enters into an agreement that will result in a "change of control",
(iv) any person becomes the beneficial owner of 9.9% or more of Bancshares'
outstanding voting securities, (v) proxies for the election of Bancshares'
directors are solicited by anyone other than Bancshares, or (vi) the Board of
Directors of Bancshares deems any other event to be a Potential Change of
Control. Notwithstanding the occurrence of a Potential Change of Control under
the Chairman's Agreement, if the Bancshares Board of Directors determines in
good faith that the events giving rise to a Potential Change of Control will not
result in the occurrence of a Change of Control, or if no Change of Control
occurs within 12 months after occurrence of a Potential Change of Control,
neither Bancshares nor the Chairman have any obligation to the other under the
Change of Control Agreement, unless and until the agreement again becomes
effective by reason of the occurrence of another Potential Change of Control or
Change of Control.
In the event of a Change of Control or, in the case of the Chairman's
Agreement, a Potential 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 the commensurate duties, as held 90-days prior to the Effective
Date (or in the case of the Chairman's Agreement immediately prior to a
Potential Change of Control); (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
(one year in the Chairman's Agreement). The Chairman's Agreement also provides
for payment by Bancshares of certain excise taxes (and any income or excise
taxes thereon) that may be imposed on payments to him pursuant to Section 4999
of the Internal Revenue Code, as amended.
The Change of Control Agreements will automatically terminate upon the
Executive's death. The Employer may terminate the Change of Control Agreements
after having established the Executive's disability and giving the Executive
required notice. Following a Change of Control, the Executive may terminate the
Change of Control Agreements for any reason on 30-days written notice. The
Employer may terminate the Change of Control Agreements for cause and the
Chairman may terminate the Chairman's Agreement for "good reason," as such term
is defined in the Chairman's Agreement.
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 Agreement to the
date of death, or termination for disability, including base salary through the
date of termination, a prorated annual bonus based on the previous fiscal year,
any deferred compensation not yet paid, and any other
10
<PAGE>
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, or terminated by the Chairman for good reason, 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 insurance coverage and benefit plans for the Executive and
certain other fringe benefits, all of such amount 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 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 Bancshares 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 taken into account above is
appropriately reduced.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Executive Compensation Committee (the "Committee"), which meets no less
than twice per year, considers compensation for executive officers of Bancshares
and certain officers of the Bank and ISL and makes recommendations 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 to 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
11
<PAGE>
BASE SALARIES. In determining the level of base salary for executive
officers, the Committee evaluates a number of factors, including 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. 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 and increase 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 corporate communication, and the executive officer's
relationship with stockholders, employees and government regulators.
BONUS AWARDS. In determining bonus payments for management, the Committee
generally follows a management incentive compensation program which focuses on
specified performance measures. The Committee employs four performance measures:
profit objective performance, return on equity, return on assets relative to
peers and individual performance. The three corporate performance measures are
weighted as follows: profit objective performance (35%), return on equity (25%)
and relative return on assets (40%). Performance standards are set for each
measure, consisting of a minimum (at which no incentive is earned), target and
maximum. Incentive amounts are capped at the maximum level. After the three
corporate performance measures are determined, individual performance, which is
based on more qualitative criteria, is considered in the final determination of
an appropriate incentive bonus payment. There were no bonus awards earned under
the Bancshares management incentive plan for 1995.
ISL maintains an Auxiliary Compensation Plan which provides a variable
compensation package which is allocated 33% to a Required Contribution Package
and 67% to a Discretionary Contribution Package. The Required Contribution
Package is allocated to the ISL 401(K) and ESOP plans. The Discretionary
Contribution Package is allocated among all exempt employees based on their
salaries and on an allocation formula. The ISL Board may then provide its
discretion in determining the final amount of any incentive award.
The total amount allocated to the Auxiliary Compensation Plan is determined
by the ISL Board of Directors and cannot exceed 20% of ISL's pre-tax net income
(excluding extraordinary items). The amount allocated to the Discretionary
Contribution Package can only be distributed if certain standards are met
relating to capital levels, profitability and risk. For 1995, all of the
capital, profitability and risk requirements were satisfied and an amount equal
to 10.4% of pre-tax net income was allocated to the Plan. Mr. Morita, Mr.
Tokioka and Mr. Lim earned bonuses of $122,317, $174,182 and $142,112,
respectively, under the Plan.
STOCK COMPENSATION AWARDS. Bancshares maintains the CB Bancshares, Inc.
Stock Compensation Plan under which awards may be granted 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 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 makes recommendations of stock awards to
12
<PAGE>
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.
On December 29, 1995, stock option awards were granted for selected
employees including the named executive officers, except Mr. Taira. One-half of
the option grants are Performance Options; the other one-half of the option
grants are Index Options, the terms of which are described in the Option/SAR
Grants in Last Fiscal Year table.
CHIEF EXECUTIVE OFFICER COMPENSATION. In determining Mr. Morita's base
salary, the Committee considers quantitative and financial performance factors
as well as qualitative factors which require subjective evaluation. Among the
quantitative factors considered are profitability, growth and total shareholder
return, such as return on equity, return on assets and share price performance.
The Committee also considers Mr. Morita's leadership ability to direct
Bancshares in an increasingly competitive environment and his strong
relationships and reputation in the industry. For 1995, the Committee determined
to make no change in Mr. Morita's base salary.
With respect to Mr. Morita's incentive compensation, the Committee
determined that Bancshares did not meet its financial objectives for 1995 and
that there would be no incentive award for the 1995 Bancshares plan year. With
respect to ISL, the financial performance objectives were met and Mr. Morita
earned an incentive award of $122,317 under the plan formula.
With respect to stock compensation, the Compensation Committee considered it
important to link Mr. Morita's compensation closely to stockholder interests.
Therefore, on December 29, 1995, Bancshares granted Mr. Morita 10,000 stock
options, 5,000 of which are Performance Options and 5,000 of which are Index
Options.
As in prior years, the Committee retained an executive compensation
consultant to assist in determining the overall competitiveness of its
compensation program and whether the results are appropriate and aligned with
shareholders' interests. Based on the consultant's study, the Committee has
determined that Mr. Morita's total direct compensation package falls between the
median and the 75th percentile of comparable banking institutions of similar
size.
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 years 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 ended December 31,
1995 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
<TABLE>
<S> <C>
Kazuo E. Yamane Marcelino J. Avecilla, M.D.
Raymond Y. Arakawa George C. C. Oh
Hilarion T. Benedicto (deceased July 30,
Larry K. Matsuo 1995)
</TABLE>
13
<PAGE>
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:
<TABLE>
<S> <C>
- - Kazuo E. Yamane - Raymond Y. Arakawa
- - Larry K. Matsuo - George C.C. Oh
- - Marcelino J. Avecilla, M.D. - Hilarion T. Benedicto
(deceased July 30, 1995)
</TABLE>
During the last fiscal year, Mr. Yamane served as Vice Chairman and Vice
President of Citibank Properties, Inc., a subsidiary of Bancshares. Mr. Yamane
received no compensation for these positions.
The following executive officers of Bancshares also serve on the Board of
Directors of ISL which makes compensation decisions with respect to executive
officers of ISL: James M. Morita, Robert R. Taira, Frederic K.T. Chun, Ronald K.
Migita and James H. Kamo. Mr. Morita excused himself from deliberations of the
ISL Board of Directors relating to his own individual compensation from ISL.
FINANCIAL PERFORMANCE
The following graph summarizes the cumulative return experienced by
Bancshares' stockholders over the years 1990 through 1995, compared to the CRSP
Index for the NASDAQ Stock Market and a Peer Group consisting of two Hawaiian
and four west coast bank holding companies:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CB BANCSHARES, INC., NASDAQ MARKET
& PEER GROUP INDICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CB BANCSHARES PEER GROUP NASDAQ
<S> <C> <C> <C>
1990 100 100 100
1991 124 139 161
1992 168 154 187
1993 256 146 215
1994 242 149 210
1995 249 201 296
</TABLE>
(Performance results through 12/31/95)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
CB Bancshares 100 124 168 256 242 249
Peer Group 100 139 154 146 149 201
NASDAQ 100 161 187 215 210 296
</TABLE>
The Peer Group consists of: California Bancshares Inc., CPB Inc., GBC
Bancorp, Cathay Bancorp Inc., First Hawaiian Inc. and Western Bank of Coos Bay,
Oregon.
14
<PAGE>
-Assumes $100 invested on December 31, 1990 in Bancshares Common Stock,
NASDAQ Market Index and Peer Group Index.
-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.
COMPENSATION OF DIRECTORS
During 1995, each person (other than James M. Morita 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 one 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 received $550 for each committee meeting presided. As full-time
employees of Bancshares, Bancshares directors James M. Morita 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.
City Finance and Mortgage, Inc., O.R.E., Inc. and Citibank Properties, Inc.,
pay no retainer or Board fees to their directors. ISL's direct and indirect
subsidiaries (DRI Assurance, Inc., ISL Capital Corporation, ISL Services, Inc.,
ISL Financial Corporation and Pacific Assurance Agency, Inc.) also pay no
retainer or Board fees to their directors.
COMMITTEES OF THE BOARD; MEETINGS
The Audit Committee and Compensation Committee of Bancshares' Board of
Directors committees are currently comprised of the following members:
<TABLE>
<S> <C>
AUDIT COMMITTEE: COMPENSATION COMMITTEE:
- -------------------------------------- --------------------------------------
Marcelino J. Avecilla, Chairman Kazuo E. Yamane, Chairman
Raymond Y. Arakawa Raymond Y. Arakawa
Kazuo E. Yamane Marcelino J. Avecilla
Larry K. Matsuo
George C.C. Oh
</TABLE>
The Audit Committee is responsible for the operations and continued
independence of Bancshares' Internal Audit Division ("IAD"). IAD independently
reviews all operations of Bancshares and its subsidiaries (other than ISL which
has its own audit department for ISL and its subsidiaries). Reviews are
conducted by IAD's two operating departments: Audit and Loan Review. The Audit
Department's primary responsibilities are to review the adequacy and
effectiveness of internal controls, to evaluate compliance with regulatory
guidelines, internal policy, and generally accepted accounting practices, and to
identify areas of risk and loss exposure. The Loan Review Department's primary
responsibility is to evaluate the credit quality of the loan portfolios of
Bancshares and its subsidiaries (other than ISL and its subsidiaries).
The functions performed by the Bancshares Audit Committee include
recommending annually to the Board of Directors of Bancshares an independent
certified public accountant to perform the external audit function, reviewing
financial statements and records, consulting with management concerning internal
audit
15
<PAGE>
procedures, and meeting with Bancshares' independent certified public
accountants to discuss the process and scope of their external audit and the
engagement letter. The Audit Committee held 13 meetings during 1995.
The Compensation Committee has the responsibility of reviewing and
recommending compensation of all executive officers of Bancshares and its
subsidiaries, subject to the approval of the Board of Directors of Bancshares
and its subsidiaries, as the case may be. The Compensation Committee held four
meetings during 1995. Bancshares has no nominating committee.
Bancshares' Board of Directors held 23 meetings during 1995. All present
directors attended at least 75% of the aggregate of meetings of the Board of
Directors and meetings of committees of which they are members, except Mr. Fuchu
and Mr. Mizuguchi.
CERTAIN TRANSACTIONS
The Bank leases the premises in which its Kalihi Branch is situated from U.
Yamane, Ltd., a corporation of which Kazuo E. Yamane, a director of Bancshares,
is president, a director and the controlling stockholder. The lease, which
commenced on February 1, 1978, provided for two consecutive five-year terms,
followed by a ten-year term. Base rent for the current ten-year term is
$4,145.63 per month. The lease also requires the payment by the Bank of certain
additional charges, including certain maintenance costs and a pro rata share of
real estate taxes and other assessments, which totalled $14,408 in 1995. The
lease was negotiated in an arm's length transaction, and, in the opinion of
management, its provisions, including the provision for rent, are comparable
with those of leases between unassociated parties for like property similarly
situated.
James H. Kamo, a director and executive officer of Bancshares, also acts as
legal counsel for Bancshares and the Bank. Mr. Kamo received payment of $21,374
in 1995 for legal services rendered on behalf of Bancshares and subsidiaries. In
addition to directors' retainer and meeting fees described above, Mr. Kamo was
also paid $10,000 per month for his services as Secretary of Bancshares, the
Bank and subsidiaries.
INDEBTEDNESS OF MANAGEMENT
Certain directors and executive officers of Bancshares and its subsidiaries,
and companies with which such directors and executive officers are associated,
were customers of, and had banking transactions with the Bank and ISL in the
ordinary course of the Bank's and ISL's business during 1995. Such loans
totalled $11.4 million at December 31, 1995. 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 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 and ISL, did
not involve more than a normal risk of collectibility or present other
unfavorable features.
In 1982 ISL, while it was a subsidiary of International Holding Capital
Corp. ("IHCC"), made a preferred interest rate home mortgage loan to Lionel
Tokioka, a director and executive officer of Bancshares, and his wife, Carole
Tokioka. The interest rate for such loan is 8.5%. As of April 1, 1994, which was
the loan payment date immediately preceding the merger of IHCC into Bancshares,
the amount of outstanding indebtedness on such loan was $330,130.32. As of the
latest practicable date (March 1, 1996), the amount outstanding on such loan was
$280,398.
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. 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.
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<PAGE>
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, and written
representations that no Form 5's were required, Bancshares is not aware of any
late reports of such forms, transactions not timely reported or known failure to
file a required form, except Mr. Fuchu and Mr. Mizuguchi did not timely file
their initial Form 3s upon becoming directors of Bancshares, and Form 5 filings
were not timely made with respect to allocation of ESOP shares and/or grants of
stock options for the following executive officers: James M. Morita, Lionel
Tokioka, Caryn Morita, Randall Chang, Richard Lim, Henry Wong, and Daniel
Motohiro.
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 the Record Date:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ----------------------------------------------------------------------------- -------------------- ------------
<S> <C> <C>
CB Bancshares, Inc. Employees Stock Ownership Plan 420,894 Shares 11.85% (1)
Hawaiian Trust Company Ltd., Trustee
841 Bishop Street, 12th Floor
Honolulu, Hawaii 96813
The following persons have filed a joint filing on Schedule 13D: (2) 220,360 Shares(3) 6.21%
M.A. Schapiro & Co., Inc.;
M.A. Schapiro & Co., Inc. Profit Sharing/Retirement Plan;
S.D. Securities, Inc.; Second District Securities Co., Inc. Profit
Sharing/Retirement Plan;
Donald J. Andres; and Thomas J. Mirante all located at:
One Chase Manhattan Bank
New York, New York 10005
First Union Corporation (4) 216,700 Shares(5) 6.10%
One First Union Center
Charlotte, North Carolina 28288
TON Finance, B.V. (6) 341,401 Shares 9.61%
Rokin 5S 1000 A.E.
Amsterdam, Netherlands
</TABLE>
- ------------------------
(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.
(2) The information relating to this beneficial ownership was derived from a
Schedule 13D, dated March 12, 1996, filed with the Securities and Exchange
Commission.
(3) Of the 220,360 shares, the above-referenced Schedule 13D indicates the
following beneficial ownership of shares: M.A. Schapiro & Co., Inc. --
161,482; S.D. Securities, Inc. -- 52,878; M.A. Schapiro & Co., Inc. Profit
Sharing/Retirement Plan -- 2,000; Second District Securities Co., Inc.
Profit Sharing/ Retirement Plan -- 2,000; Donald J. Andres -- 1,000; and
Thomas J. Mirante -- 1,000. In the Schedule 13D filing, the filing persons
state each may be deemed to beneficially own, but expressly disclaims any
such beneficial ownership, the aggregate number of shares of Common Stock
owned by each other filing person.
(4) The information relating to this beneficial ownership was derived from a
Schedule 13G, dated February 12, 1996, which was filed by First Union
Corporation with the Securities and Exchange Commission, as parent holding
company for its subsidiary Evergreen Asset Management Group, an investment
adviser for mutual funds or other clients, with respect to ownership as of
December 31, 1995.
17
<PAGE>
(5) Of the 216,700 shares, the above-referenced Schedule 13G indicates First
Union Corporation has sole power to vote 212,100 shares, and shared power to
vote 4,600 shares.
(6) The information relating to this beneficial ownership was derived from a
Schedule 13D, dated May 24, 1995, filed with the Securites and Exchange
Commission.
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.
NOMINATIONS TO BOARD OF DIRECTORS
On March 13, 1996, Bancshares received the nominations of two individuals to
the Bancshares Board of Directors from George Reycraft, as Chairman of S.D.
Securities, Inc. The nominees, who have consented to serve as director if
elected, are H. Clifton Whiteman and William M. Griffin. Mr. Whiteman, who lives
in New York City, is a retired bank executive, who has served as a director and
consultant, York Research Corporation, New York, since 1991; director and
consultant, Keene Corporation, New York, since 1991; and director, Teltec
Communications Corp., Westernville, New York since 1995. Mr. Griffin is Chairman
of The WMG Company, located in Hartford, Connecticut, organized in 1986 for the
purpose of managing the funds of certain limited partnerships which specialize
in the ownership of shares of regional banks and thrift institutions. Mr.
Griffin is a director of Texas Utilities Company and Gradient Lens Corporation.
INDEPENDENT AUDITOR
Bancshares' Board of Directors recommends to stockholders the election of
the firm of Grant Thornton LLP, Accountants and Management Consultants, to serve
as independent auditor for Bancshares for 1996 and thereafter until its
successor is elected. During 1995, Grant Thornton LLP completed its examination
of the financial statements of Bancshares for 1994 and the preparation of the
corporate income tax returns and interim examination for 1995. A representative
of Grant Thornton LLP is expected to be present at the 1996 annual meeting and
will have the opportunity to make a statement and to respond to appropriate
questions.
EXPENSES OF SOLICITATION
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. Bancshares has retained Chemical Mellon
Shareholder Services, a professional proxy solicitation firm, to assist in the
solicitation of proxies by mail, personally or by telephone or other means of
communication, for a fee estimated at up to $35,000 plus expenses.
FINANCIAL STATEMENTS
Bancshares' 1995 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, 1995.
SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO MR. DANIEL MOTOHIRO, CHIEF FINANCIAL
OFFICER, CB BANCSHARES, INC., 201 MERCHANT STREET, HONOLULU, HAWAII 96813.
18
<PAGE>
STOCKHOLDER PROPOSAL
In order for any stockholder proposal to be included in Bancshares' proxy
statement and proxy as an item of business for the 1997 annual meeting of
stockholders of Bancshares, it must be received at the principal executive
offices of Bancshares not later than December 30, 1996.
OTHER BUSINESS
The Board of Directors does not know of any other matter to be presented at
the 1996 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/ JAMES M. MORITA
James M. Morita
CHAIRMAN OF THE BOARD
April 19, 1996
TO BE CERTAIN THAT YOUR SHARES WILL BE REPRESENTED AT THE 1996 ANNUAL MEETING OF
STOCKHOLDERS, WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED BLUE PROXY CARD
PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
19
<PAGE>
PROXY
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 1996 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of CB Bancshares, Inc. ("Bancshares") hereby
constitutes and appoints James M. Morita, Frederic K. T. Chun, Tomio Fuchu and
Marcelino J. Avecilla 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 1996 annual meeting of stockholders of CB Bancshares to be held
on Thursday, May 23, 1996, at 2:00 p.m., at Hawaii Prince Hotel, 100 Holomoana
Street, Honolulu, Hawaii, or 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 REVERSE SIDE
- --------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING: PLEASE MARK
YOUR VOTE AS
INDICATED IN
THIS EXAMPLE /X/
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES WITHHOLD
LISTED AT RIGHT AUTHORITY
(except as indicated TO VOTE FOR
to the contrary) ALL NOMINEES
LISTED AT RIGHT
/ / / /
James H. Kamo, Caryn S. Morita, Robert R. Taira, Lionel Y. Tokioka
(INSTRUCTION: To withhold authority to vote for any individual nominee, or
nominee's write the name of the nominee or nominees in the space provided
below.)
2. ELECTION OF THE FIRM OF GRANT THORNTON AS INDEPENDENT AUDITOR FOR THE
ENSUING YEAR.
FOR AGAINST ABSTAIN
/ / / / / /
- --------------------------------------------------------------------------------
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, INCLUDING, BUT NOT
LIMITED TO, MATTERS PRESENTED AT THE MEETING, WHICH WERE NOT KNOWN
TO THE BOARD OF DIRECTORS, A REASONABLE TIME BEFORE THE SOLICITATION OF
PROXIES.
IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS
ABOVE.
Please sign exactly as name appears hereon.
When signing as attorney, personal representative,
trustee, or guardian, please give full title. All
joint owners and trustees should sign. If the
signer is a corporation, please sign in full
corporate name, by duly authorized officer.
-----------------------------------------------
Signature (no witness required)
-----------------------------------------------
Signature
Dated:
-----------------------------------------
PLEASE SIGN AND DATE HERE RETURN PROMPTLY
*FOLD AND DETACH HERE*
