<PAGE> 1
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.
- --------------------------------------------------------------------------------
(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] 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:
---------------------------------------------------------------------
(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
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> 2
[CB BANCSHARES LETTERHEAD]
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
TO STOCKHOLDERS OF CB BANCSHARES, INC.:
Notice is hereby given that the 2000 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 27, 2000, at 3:30 p.m., Hawaii Standard Time, for the purposes of
considering and voting upon the following matters:
1. To elect four (4) Class II Directors to serve until the 2003
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, 2000, 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, 2000
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.
<PAGE> 3
CB BANCSHARES, INC.
201 Merchant Street
Honolulu, Hawaii 96813
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 2000
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 2000 annual meeting
of stockholders of Bancshares and at any adjournments or postponements thereof
(the "Meeting"), which will be held on April 27, 2000, at 3:30 p.m., Hawaii
Standard Time, on the second floor, City Financial Tower, 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, 2000.
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, 2000 (the
"Record Date"), are entitled to notice of and to vote at the Meeting. On the
Record Date, there were 3,255,282 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 II directors. If for any reason a
nominee should decline or be unable to stand for election at the 2000 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, H. Clifton Whiteman and Hiroshi Sakai,
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.
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. Since
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.
2
<PAGE> 4
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 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 2000
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 2000 annual meeting four (4) Class II directors are to
be elected to serve until the 2003 annual meeting of stockholders and until
their respective successors have been elected.
The Board of Directors' four nominees for Class II directors are Donald
J. Andres, Ronald K. Migita, Calvin K. Y. Say, and Dwight L. Yoshimura. All of
the nominees, except Mr. Say, are incumbent directors of Bancshares and Mr.
Migita and Mr. Yoshimura are currently directors of City Bank (the "Bank"). Mr.
Say is currently a director of International Savings and Loan Association,
Limited ("ISL"). The Board of Directors of the Bank and ISL, the two major
subsidiaries of Bancshares, 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 II 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 election at the 2000 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 Class II
Director, and each Class I and Class III 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
3
<PAGE> 5
for all executive officers and directors of Bancshares, as a group, the number
of shares of Bancshares Common Stock beneficially owned as of the 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 COMMON
FIRST STOCK
NAME, AGE, PRINCIPAL OCCUPATION DURING PAST FIVE YEARS, AND OTHER ELECTED A BENEFICIALLY PERCENT
DIRECTORSHIPS DIRECTOR OWNED OF CLASS
- ------------------------------------------------------------------------ ---------- ------------ ----------
<S> <C> <C> <C>
NOMINEES FOR ELECTION AS CLASS II DIRECTORS -
TERMS TO EXPIRE IN 2003
ANDRES, DONALD J. (58) 1997 3,675(1) 0.082%
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. (58)(2) 1997 3,354(3) 0.103%
Chief Executive Officer of Bancshares, Bank and ISL since April 1997,
President of Bancshares since April 1997; President and Chief
Operating Officer of Bancshares from June 1995 to November 1996; Vice
Chairman of Bank and ISL since April 1997; President of the Bank
since August 1998; 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. (48) ---- 0 0%
Speaker, House of Representatives since 1998; Chairman, House
Committee on Finance and Vice Chairman Legislative Management
Committee from 1993 to 1998
YOSHIMURA, DWIGHT L. (45) 1999(4) 0 0%
Senior Vice President and General Manager, General Growth Management
of Hawaii since October 1993; Director of ISL since May 1998
CLASS I DIRECTORS - TERMS TO EXPIRE IN 2002
MATSUMOTO, COLBERT M. (47) 1999 1,000 0.031%
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. (39) 1995 23,063(5) 0.709%
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 (41) 1997 0 0%
Senior Vice President of SMC Pneumatics Inc. since June 1991;
Director of SMC Corporation since June 1994; Director of the Bank
since June 1993
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
YEAR COMMON
FIRST STOCK
NAME, AGE, PRINCIPAL OCCUPATION DURING PAST FIVE YEARS, AND OTHER ELECTED A BENEFICIALLY PERCENT
DIRECTORSHIPS DIRECTOR OWNED OF CLASS
- ------------------------------------------------------------------------ ---------- ------------ ----------
<S> <C> <C> <C>
TOKIOKA, LIONEL Y. (65)(6) 1994 22,998(7) 0.676%
Chairman of the Board of Bancshares since April 1999, Chairman of the
Board of ISL since April 1997; 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
CLASS III DIRECTORS - TERMS TO EXPIRE IN 2001
FUCHU, TOMIO (61) 1995 0 0%
Chairman of Kyokuto Securities Co., Ltd. since July 1995; Managing
Director and General Manager, International Planning Division of The
Sakura Bank, Ltd. from February 1993 to June 1995
MATSUO, LARRY K. (73) 1998 4,162(8) 0.128%
Chief Executive Officer of Paren, Inc., dba Park Engineering for more
than the past five years; Director of the Bank for more than the past
five years
SAKAI, HIROSHI (74) 1998 4,258(9) 0.131%
Attorney; Director of the Bank for more than the past five years;
President, Citibank Properties, Inc. since April 1997
Directors and Executive Officers as a group (15 persons) 78,580 2.414%
</TABLE>
(1) Of the 3,675 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, 675 shares are owned by Mr. Andres, and 2,000
shares are owned by a family limited partnership, as to which he
exercises sole voting and investment power.
(2) See "Employment Agreement with Ronald K. Migita" on pages 7 to 8
concerning Mr. Migita's employment with Bancshares and the Bank.
(3) Of 3,354 shares beneficially owned by Ronald K. Migita, 3,100 shares
are held by a trust with Mr. Migita and his spouse as co-trustees, as
to which he shares voting and investment power. Of 3,354 shares owned
by Mr. Migita, 254 shares are allocated to his account in the CB
Bancshares, Inc. Employees Stock Ownership Plan ("ESOP"), the voting of
which shares he is entitled to direct. These shares do not include
44,000 shares covered by exercisable options as of the Record Date.
(4) 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.
(5) Of 23,063 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. Of
23,063 shares beneficially owned by Ms. Morita, 347 shares are
allocated to her account in
5
<PAGE> 7
the ESOP, the voting of which shares she is entitled to direct. These
shares do not include 6,000 shares covered by exercisable options as of
the Record Date.
(6) See "Consulting Agreement with Lionel Y. Tokioka" on page 8 concerning
Mr. Tokioka's agreement with Bancshares.
(7) Of the 22,998 shares 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. Not included in the 22,998 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.
(8) Of 4,162 shares beneficially owned by Larry K. Matsuo, 2,399 shares are
held by a trust with Mr. Matsuo as trustee, as to which he exercises
sole voting and investment power, and 1,763 shares are held by a trust
with Mr. Matsuo's spouse as trustee, as to which he shares voting and
investment power.
(9) Of 4,258 shares beneficially owned by Hiroshi Sakai, 3,682 are owned
jointly with his spouse, as to which he shares voting and investment
power. Not included in the 4,258 shares owned by Mr. Sakai are 458
shares owned by his spouse, as to which he disclaims any beneficial
ownership.
Richard C. Lim, Executive Vice President and Chief Operating Officer of
the Bank and President and Chief Operating Officer of ISL, Michael K. Kawamoto,
Executive Vice President of the Bank, and Jasen H. Takei, Senior Vice President
of ISL, are Named Executive Officers named in the Summary Compensation Table on
page 9 whose Bancshares stock ownership is not described above. As of the Record
Date, Mr. Lim owned beneficially 4,323 shares of Common Stock, which included
626 shares allocated to his account in the ESOP, the voting of which shares he
is entitled to direct. These amounts do not include 23,000 shares for Mr. Lim,
covered by exercisable options as of the Record Date. Mr. Kawamoto owned
beneficially 5,409 shares of Common Stock, which included 5,315 shares allocated
to his account in the ESOP, the voting of which shares he is entitled to direct,
and Mr. Takei owned beneficially 6,338 shares of Common Stock, which included
405 shares allocated to his account in the ESOP, the voting of which shares he
is entitled to direct. These amounts do not include 9,000 shares and 11,500
shares for Mr. Kawamoto and Mr. Takei, respectively, covered by exercisable
options as of the Record Date.
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.
<TABLE>
<CAPTION>
Name and Age Current Position and Business History
- ------------ -------------------------------------
<S> <C>
Lionel Y. Tokioka (65)............. Chairman of the Board of Bancshares since April 1999; Chairman
of the Board of ISL since 1997; Vice Chairman of the Board of
ISL from April 1994 to April 1997
Ronald K. Migita (58).............. Chief Executive Officer of Bancshares, Bank and ISL since April
1997; President of Bancshares since April 1997; President and
Chief Operating Officer of Bancshares from June 1995 to November
1996; Vice Chairman of Bank and ISL since April 1997; President
of the Bank since August 1998; President of ISL from April 1996
to
</TABLE>
6
<PAGE> 8
<TABLE>
<S> <C>
November 1996; Executive Vice President of Bank of
Hawaii from 1989 to May 1995; See "Employment Agreement
with Ronald K. Migita" on pages 7 to 8 concerning Mr.
Migita's employment with Bancshares and the Bank
Richard C. Lim (48)................ Executive Vice President and Chief Operating Officer of the
Bank since July 1998; President and Chief Operating Officer of
ISL since February 1997; 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 (42)................ 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
Michael K. Kawamoto (52)........... Executive Vice President of the Bank for more than the past
five years
Jasen H. Takei (37)................ Senior Vice President of ISL for more than the past five years
</TABLE>
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.
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
is $225,000 for each year of the term. After execution of the Employment
Agreement, Mr. Migita's base salary was increased to $250,000. 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 benefit 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 Employment
Agreement without prior notice. Mr. Migita may terminate his employment upon 120
days prior written notice. The Employment Agreement terminates in the event of
the death or disability, as defined in the Employment Agreement, of Mr. Migita.
Pursuant to his Employment Agreement, Mr. Migita was employed as
President and Chief Operating Officer of Bancshares from June 1995 through
November 15, 1996, when his position as President and Chief Operating Officer
was terminated, although Bancshares continued Mr. Migita's payments under his
Employment Agreement. On March 5, 1997, the Bancshares Board of Directors
elected Mr. Migita President and Chief Executive Officer, subject to regulatory
approval, settlement of threatened litigation by Mr. Migita, and regulatory
approval of Mr. Morita's retirement agreement. On March 27, 1997, Bancshares and
Mr. Migita entered into a settlement agreement, which, subject to regulatory
approval, (a) designated him to management's Class II slate of director nominees
for the 1997 annual meeting, (b) appointed him as President and Chief Executive
Officer of Bancshares, (c) reaffirmed
7
<PAGE> 9
Mr. Migita's May 31, 1995 Employment Agreement, (d) allowed him to retain all
compensation since November 15, 1996, (e) restored all employment benefits
provided for in the Employment Agreement, (f) provided for continued employment
of his secretary, (g) provided for reimbursement of Mr. Migita's legal expenses
and costs, up to $8,000, and (h) recommended his appointment as Chief Executive
Officer of the Bank. That settlement agreement was submitted to the Federal
Reserve Bank of San Francisco ("FRB") pursuant to the Memorandum of
Understanding agreement dated October 16, 1996 ("MOU") entered into between
Bancshares and FRB. The FRB indicated that it did not disapprove the settlement
agreement under the MOU. This MOU was terminated in April 1999.
CONSULTING AGREEMENT WITH LIONEL Y. TOKIOKA
Bancshares and Lionel Y. Tokioka have entered into a consulting
agreement ("Consulting Agreement") engaging Mr. Tokioka as a consultant to
Bancshares and its subsidiaries at an annual fee of $150,000 for a one-year
period commencing June 1, 1999, payable in equal monthly installments.
Bancshares is also required to reimburse Mr. Tokioka for certain expenses and to
provide office and parking space and other facilities necessary for the
provision of services under the Consulting Agreement. The Consulting Agreement
may be terminated for just cause as defined therein. The Consulting Agreement
may also be terminated in the event of the death or permanent disability of Mr.
Tokioka.
8
<PAGE> 10
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table sets forth all compensation paid or payable for the
years 1997 to 1999 by Bancshares or its subsidiaries to Bancshares' Chief
Executive Officer in 1999, and the four other most highly compensated executive
officers of Bancshares and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------
AWARDS
----------------
SECURITIES ALL OTHER
ANNUAL COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITIONS HELD IN ---------------------------- (#) COMPENSATION
1999 YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#) ($)
- --------------------------------------- ---- ----------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Ronald K. Migita....................... 1999 $250,008 $100,000 15,000 $6,328(1)
President and Chief Executive Officer 1998 $250,008 $100,000 12,500 $8,073
of Bancshares; Vice Chairman, 1997 $241,664 $15,000 12,500 $4,533
President and Chief Executive Officer
of the Bank; Vice Chairman and Chief
Executive Officer of ISL
Richard C. Lim......................... 1999 $200,032 $100,000 10,000 $12,482(3)
President and Chief Operating Officer 1998 $150,000 $107,703(2) 0 $8,073
of ISL; Executive Vice President and 1997 $150,000 $143,594 10,000 $23,563
Chief Operating Officer of the Bank
Dean K. Hirata......................... 1999 $99,471 $33,000 0 0
Senior Vice President and Chief
Financial Officer of Bancshares, the
Bank and ISL
Michael K. Kawamoto.................... 1999 $115,564 $12,000 0 $4,570(4)
Executive Vice President of the Bank 1998 $115,529 $5,000 0 $6,387
1997 $114,153 $5,000 4,000 $4,283
Jasen H. Takei......................... 1999 $112,431 $85,000 0 $9,477(5)
Senior Vice President of ISL 1998 $104,837 $50,000 0 $5,232
1997 $104,073 $12,000 5,000 $6,454
</TABLE>
(1) This amount is the annual contribution made by Bancshares to
Mr. Migita's 401(k) account.
(2) Mr. Lim's bonus was calculated according to a bonus plan adopted in
1996 by the ISL Board of Directors (see "Board Compensation Committee
Report on Executive Compensation" on pages 13 to 15). The amount paid
to Mr. Lim is his bonus calculated for the fourth quarter of 1997
($32,703), and for 1998 ($75,000).
(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.
9
<PAGE> 11
(4) This amount is the annual contribution made by Bancshares to Mr.
Kawamoto's 401(k) account.
(5) This amount includes $4,839 in accrued vacation pay, and an annual
contribution made by Bancshares to Mr. Takei's 401(k) account of
$4,638.
STOCK OPTIONS
The following table sets forth information concerning the grant of
stock options during the last fiscal year to the above named executive officers
under Bancshares' Stock Compensation Plan of 1995 ("Stock Compensation Plan".)
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------
NUMBER OF PERCENT OF POTENTIAL REALIZABLE
SECURITIES TOTAL VALUE AT ASSUMED ANNUAL
UNDERLYING OPTIONS/SARS RATES OF STOCK PRICE
OPTIONS/ GRANTED TO EXERCISE APPRECIATION FOR OPTION
SARS EMPLOYEES OR BASE TERM (10 YEARS)
GRANTED(1) IN FISCAL PRICE EXPIRATION --------------------------
NAME (#) YEAR ($/SH)(3) DATE 5% ($) 10% ($)
- ---- ----------- -------------- --------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ronald K. Migita....... 15,000(2) 30.6% $30.50 1/19/2009 $287,719 $729,137
Richard C. Lim......... 10,000(4) 20.4% $30.50 1/19/2009 $191,813 $486,091
Michael K. Kawamoto 2,000 4.1% $30.50 1/19/2009 $38,363 $97,218
Jasen H. Takei......... 5,000(5) 10.2% $30.50 1/19/2009 $95,906 $243,046
</TABLE>
(1) All options were granted on January 19, 1999.
(2) Of Mr. Migita's stock option award of 15,000 shares, 3,278 shares are
incentive stock options which became exercisable one year after the
date of grant, providing the optionee remains employed by Bancshares or
one of its subsidiaries throughout the one year period beginning on the
date of the grant.
(3) The exercise price for the incentive stock options is the closing
sales price for Bancshares Common Stock on the NASDAQ on January 19,
1999.
(4) Of Mr. Lim's stock option award of 10,000 shares, 3,278 shares are
incentive stock options which become exercisable one year after the
date of grant, providing the optionee remains employed by Bancshares or
one of its subsidiaries throughout the one year period beginning on the
date of the grant.
(5) Of Mr. Takei's stock option award of 5,000 shares, 3,278 shares are
incentive stock options which become exercisable one year after the
date of grant, providing the optionee remains employed by Bancshares or
one of its subsidiaries throughout the one year period beginning on the
date of grant.
The following table sets forth information concerning unexercised stock
options to purchase
10
<PAGE> 12
Bancshares Common Stock under the Stock Compensation Plan. Mr. Migita exercised
1,000 of his nonqualified stock options in 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS AT
OR VALUE FY-END(#) FY-END($)
EXERCISED REALIZED ------------------------- -------------------------
(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------ ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Ronald K. Migita.................... 0 $0 1,500/0(1) $660/$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 0/15,000(5) $0/$0
Richard C. Lim...................... 0 $0 1,500/0(1) $330/$0
0 $0 1,500/0(2) $0/$0
0 $0 10,000/0(3) $0/$0
0 $0 0/10,000(5) $0/$0
Michael K. Kawamoto............. 0 $0 1,500/0(1) $330/$0
0 $0 1,500/0(2) $0/$0
0 $0 4,000/0(3) $0/$0
0 $0 0/2,000(5) $0/$0
Jasen H. Takei........................ 0 $0 750/0(1) $165/$0
0 $0 750/0(2) $0/$0
0 $0 5,000/0(3) $0/$0
0 $0 0/5,000(5) $0/$0
</TABLE>
(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.
(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
11
<PAGE> 13
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.
In-the-money options are those where the fair market value on December
31, 1999 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"), including Michael K. Kawamoto. 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 Richard
C. Lim and Jasen H. Takei. 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 "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 11
executives of Bancshares, the Bank and ISL.
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
12
<PAGE> 14
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 prior to 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 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
13
<PAGE> 15
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 ISL
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
organization of comparable size and complexity to Bancshares. Bancshares'
executive compensation program is comprised of three elements:
o annual base salary;
o annual bonus awards; and
o 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 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
14
<PAGE> 16
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 for management, the
Committee generally follows a management incentive 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.
The ISL Board of Directors in 1996 adopted a bonus plan for Mr. Lim
which provided for a bonus based on loan funding completed during 1997 by ISL.
The bonus was based on a percentage of the "net contribution amount," defined as
fee revenue less certain expenses incurred to produce such revenue, including
commission, sales cost, underwriting and other costs. Mr. Lim's bonus for the
fourth quarter of 1997 amounted to $32,702, and was paid in 1998. Mr. Lim did
not have a bonus plan in 1998 and 1999, and received discretionary bonuses of
$75,000 and $100,000 respectively. Mr. Lim was awarded a stock incentive option
of 10,000 shares in 1999.
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 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. In determining the compensation
of Bancshares' President and Chief Executive Officer, the Committee first
considers the Employment Agreement dated May 31, 1995 covering Mr. Migita's
initial employment with Bancshares. The Committee then reviews quantitative and
financial performance factors as well as qualitative factors in order to
determine whether any adjustments are necessary to the compensation set by the
Agreement, which require subjective evaluation. Among the quantitative factors
considered are profitability, growth in resources and over-all shareholder
returns, such as return on equity, return on assets and share performance. The
qualitative factors that are weighed include, in addition to those described
above, his personal achievements related to regulatory matters as well as goals
set by the Committee. No adjustment in Mr. Migita's salary was made in 1999.
However, the Committee awarded him a bonus of $100,000, and a stock incentive
option of 15,000 shares as part of his compensation for 1999.
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
15
<PAGE> 17
ended December 31, 1999 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
H. Clifton Whiteman, Chairman
Larry K. Matsuo, Vice Chairman
Colbert M. Matsumoto
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:
H. Clifton Whiteman, Chairman
Larry K. Matsuo, Vice Chairman
Colbert M. Matsumoto
Lionel Y. Tokioka
Dwight L. Yoshimura
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: Ronald K. Migita and Lionel Y. Tokioka.
16
<PAGE> 18
FINANCIAL PERFORMANCE
The following graph summarizes the cumulative return experienced by
Bancshares' stockholders over the years 1994 through 1999, compared to the CRSP
Index for the NASDAQ Stock Market and a Peer Group consisting of two Hawaii and
two West Coast bank holding companies:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CB BANCSHARES, INC., NASDAQ MARKET
& PEER GROUP INDICES
[insert graph here]
(Performance results through 12/31/99)
<TABLE>
<CAPTION>
- ---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
1994 1995 1996 1997 1998 1999
- ---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CB Bancshares 100 103 107 162 116 111
- ---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Peer Group 100 130 159 224 249 135
- ---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
NASDAQ 100 141 174 213 300 542
- ---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
The Peer Group consists of: CPB Inc., GBC Bancorp, Cathay Bancorp Inc. and First
Hawaiian Inc.
o Assumes $100 invested on December 31, 1994 in Bancshares
Common Stock, NASDAQ Market Index and Peer Group Index
o Total return assumes reinvestment of dividends.
o 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 1999, 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 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
17
<PAGE> 19
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.
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,
USA Investment Corporation, ISL Realty Investment Corporation, ISL Funding
Corporation and Pacific Assurance Agency, Inc.) also pay 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 Company Common Stock.
Director Stock Program
Bancshares maintains a Director Stock Program under which each director
of Bancshares, the Bank and ISL, 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, the Bank or ISL 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:
<TABLE>
<CAPTION>
Audit Committee: Compensation Committee: Nominating Committee:
- ---------------- ----------------------- ---------------------
<S> <C> <C>
Kenneth N. Sumimoto, Chairman H. Clifton Whiteman, Chairman Larry K. Matsuo, Chairman
Hiroshi Sakai, Vice-Chairman Larry K. Matsuo, Vice-Chairman Dwight L. Yoshimura,
Donald J. Andres Colbert M. Matsumoto Vice-Chairman
George Matsuda Lionel Y. Tokioka Ronald K. Migita
Lionel Y. Tokioka Dwight L. Yoshimura Yoshiki Takada
Dwight L. Yoshimura
</TABLE>
18
<PAGE> 20
The Audit Committee is responsible for the operations and continued
independence of Bancshares' Internal Audit Division ("IAD"). IAD independently
reviews significant operations of Bancshares 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.
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 findings, 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 seven meetings during 1999.
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 seven
meetings during 1999.
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 1999.
Bancshares' Board of Directors held four meetings during 1999. 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.
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 and
ISL in the ordinary course of the Bank's and ISL's business during 1999. Such
loans totaled $8.745 million at December 31, 1999. 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 nor 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
19
<PAGE> 21
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, 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.
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. Employee Stock Ownership Plan(1) 222,468 shares 6.83%
Pacific Century Trust, Trustee
Financial Plaza of the Pacific
111 South King Street
Honolulu, Hawaii 96813
TON Finance, B.V. 341,401 shares 10.49%
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.
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.
INDEPENDENT AUDITOR
During 2000, KPMG LLP completed its examination of the financial
statements of Bancshares for 1999. A representative of KPMG LLP is expected to
be present at the 2000 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.
20
<PAGE> 22
FINANCIAL STATEMENTS
Bancshares' 1999 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, 1999.
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 2001 annual meeting of
stockholders of Bancshares, it must be received at the principal executive
office of Bancshares not later than November 14, 2000.
OTHER BUSINESS
The Board of Directors does not know of any other matter to be
presented at the 2000 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, 2000
TO BE CERTAIN THAT YOUR SHARES WILL BE REPRESENTED AT THE 2000 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.
21
<PAGE> 23
Please Detach and Mail in the Envelope Provided
Please mark your
[X] votes as in this
example.
FOR ALL NOMINEES WITHHOLD
LISTED AT RIGHT AUTHORITY TO VOTE
(EXCEPT AS INDICATED FOR ALL NOMINEES
TO THE CONTRARY) LISTED AT RIGHT
1. To elect four (4) [ ] [ ]
Class II Directors
to serve until the 2003 annual meeting of
stockholders and until their successors are elected.
NOMINEES:
Donald J. Andres
Ronald K. Migita
Calvin K. Y. Say
Dwight L. Yoshimura
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, OR
NOMINEES WRITE THE NAME OF THE NOMINEE OR NOMINEES IN THE SPACE PROVIDED BELOW.)
- -------------------------------------------------
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, 2000,
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 ________, 2000
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.
<PAGE> 24
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 2000 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of CB Bancshares, Inc. ("Bancshares") hereby
constitutes and appoints Colbert M. Matsumoto, H. Clifton Whiteman and Hiroshi
Sakai 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 2000 annual meeting of stockholders of Bancshares to be held on
Thursday, April 27, 2000, at 3:30 p.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)
