A&B
ALEXANDER & BALDWIN, INC.
P. O. BOX 3440 - HONOLULU, HAWAII 96801-3440
March 10, 1997
To the Shareholders of Alexander & Baldwin, Inc.:
The 1997 Annual Meeting of Shareholders of Alexander & Baldwin, Inc. will
be held in the Plaza Meeting Room on the ground floor of Amfac Center, 745 Fort
Street, Honolulu, Hawaii, on THURSDAY, APRIL 24, 1997 AT 10:00 A.M. You are
invited to attend, and we hope you will be able to do so. At the meeting, we
will have the opportunity to discuss the Company's financial performance during
1996, and our future plans and expectations.
WHETHER OR NOT YOU NOW PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED
TO SIGN, DATE AND MAIL THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE AT YOUR EARLIEST CONVENIENCE. Regardless of the size of your holding,
it is important that your shares be represented. If you attend the Annual
Meeting, you may withdraw your proxy and vote in person.
Sincerely,
JOHN C. COUCH
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
A&B
ALEXANDER & BALDWIN, INC.
P. O. BOX 3440 - HONOLULU, HAWAII 96801-3440
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of
Alexander & Baldwin, Inc. ("A&B") will be held in the Plaza Meeting Room on the
ground floor of Amfac Center, 745 Fort Street, Honolulu, Hawaii, on Thursday,
April 24, 1997, at 10:00 a.m., Honolulu time, for the following purposes:
1. To elect nine directors to serve until the next Annual Meeting of
Shareholders and until their successors are duly elected and
qualified;
2. To elect auditors for the ensuing year; and
3. To transact such other business as properly may be brought before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on February 14,
1997 as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting.
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE
PROVIDED.
By Order of the Board of Directors
MICHAEL J. MARKS
Vice President, General
Counsel and Secretary
March 10, 1997
<PAGE>
A&B
ALEXANDER & BALDWIN, INC.
P. O. BOX 3440 - HONOLULU, HAWAII 96801-3440
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Alexander & Baldwin, Inc. ("A&B") for use
at the Annual Meeting of Shareholders to be held on April 24, 1997 and at any
adjournment or postponement thereof (the "Annual Meeting"). A proxy may be
revoked at any time prior to its exercise by a written revocation bearing a
later date than the proxy and filed with the Secretary of A&B, by submission of
a later-dated proxy, or by voting in person at the Annual Meeting.
Only shareholders of record at the close of business on February 14, 1997
are entitled to notice of and to vote at the Annual Meeting. On that date, A&B
had outstanding 45,337,945 shares of common stock without par value, each of
which is entitled to one vote. Provided a quorum is present, the affirmative
vote of a majority of the shares of A&B common stock represented at the Annual
Meeting, in person or by proxy, and entitled to vote will be necessary for the
election of directors and election of auditors. Abstentions and broker non-
votes will be included for purposes of determining a quorum at the Annual
Meeting. Broker non-votes will have the same effect as a vote to withhold
authority in the election of directors, and abstentions and broker non-votes
will have the same effect as a vote against the election of auditors.
Following the original mailing of proxy soliciting material, officers,
employees and directors of A&B and its subsidiaries may, without additional
compensation, solicit proxies by appropriate means, including by mail,
telephone, telecopy and personal interview. Arrangements also will be made
with brokerage houses and other custodians, nominees and fiduciaries which are
record holders of A&B's common stock to forward proxy soliciting material to
the beneficial owners of such stock, and A&B will reimburse such record holders
for their reasonable expenses. A&B has retained the firms of Morrow & Co.,
Inc., New York, New York, and Skinner & Co., San Francisco, California, to
assist in the solicitation of proxies at a combined cost of $11,000, plus
reasonable out-of-pocket expenses.
This proxy statement and the enclosed proxy are being mailed to
shareholders on or about March 10, 1997.
ELECTION OF DIRECTORS
Directors will be elected at the Annual Meeting to serve until the next
Annual Meeting of Shareholders and until their successors are duly elected and
qualified. There is no cumulative voting in the election of directors.
NOMINEES. The nominees of the Board of Directors are the nine persons
named below, all of whom are currently members of the Board of Directors. The
Board of Directors has no reason to believe that any nominee will be unable to
serve. However, if any nominee or nominees should decline or become unable to
serve for any reason, shares represented by the accompanying proxy will be
voted for such other person or persons as the Board of Directors may nominate.
Robert G. Reed III, who has served on A&B's Board of Directors since 1986, is
retiring as a director, and will not stand for reelection at the Annual
Meeting.
The following table sets forth the name, age and principal occupation of
each person nominated by the A&B Board, their positions with A&B and business
experience during the last five years, and the year each first was elected or
appointed a director.
Nominee, year nominee Principal occupation, information as to other
first became a positions with A&B, and other directorships
director, and age
- -------------------------------------------------------------------------------
Michael J. Chun President, The Kamehameha Schools, Honolulu, Hawaii
1990 (educational institution) since June 1988; Vice
53 President and Secretary, ParEn, Inc., Honolulu,
Hawaii (environmental engineering services) from
January 1985 until June 1988; Director of Bank of
Hawaii.
John C. Couch Chairman of the Board (since 1995), Chief Executive
1985 Officer (since 1992) and President (since 1991) of
57 A&B; Chairman of the Boards (since 1995) of A&B's
subsidiaries, A&B-Hawaii, Inc. ("ABHI") and Matson
Navigation Company, Inc. ("Matson"); Chief Executive
Officer (from 1989 until 1996) and President (from
1989 until 1995) of ABHI; previously held various
executive officer positions with A&B and Matson;
Director of First Hawaiian, Inc. and First Hawaiian
Bank.
Leo E. Denlea, Jr. Chairman of the Board and Chief Executive Officer,
1987 Farmers Group, Inc., Los Angeles, California
65 (insurance) since September 1986 and President of
Farmers Group, Inc. from September 1986 until
December 1995; Director of B.A.T. Industries, p.l.c.
Walter A. Dods, Jr. Chairman of the Board and Chief Executive Officer of
1989 First Hawaiian, Inc. and its subsidiary, First
55 Hawaiian Bank, Honolulu, Hawaii (banking) since
September 1989.
Charles G. King President, King Auto Center, Lihue, Kauai, Hawaii
1989 (automobile dealership) since October 1995; Vice
51 President, Kuhio Motors, Inc., Lihue, Kauai, Hawaii
(automobile dealership) from December 1983 to
October 1995.
Carson R. McKissick Managing Director, The Corporate Development
1971 Company, Los Angeles, California (financial advisory
64 services) since July 1991; Director of Triangle
Pacific Corp.
C. Bradley Mulholland Chief Executive Officer of Matson since April 1992;
1991 President of Matson since May 1990; Chief Operating
55 Officer of Matson from July 1989 until April 1992;
prior to July 1989 held various executive officer
positions with Matson.
Maryanna G. Shaw Private investor.
1980
58
Charles M. Stockholm Managing Director, Trust Company of the West, San
1972 Francisco, California (investment management
64 services) since June 1986.
The Bylaws of A&B provide that no person (other than a person nominated
by or on behalf of the Board) will be eligible to be elected a director at an
annual meeting of shareholders unless a written notice that the person's name
be placed in nomination is received by the Chairman of the Board, the
President, or the Secretary of A&B not less than 60 days nor more than 90 days
prior to the anniversary date of the immediately preceding annual shareholders'
meeting. If the annual meeting is not called for a date which is within 30
days of the anniversary date of the preceding annual meeting, a shareholder's
notice must be given not later than 10 days after the date on which notice of
the annual meeting was mailed or public disclosure of the date of the annual
meeting was made, whichever occurs first. To be in proper written form, a
shareholder's notice must set forth specified information about each nominee
and the shareholder making the nomination. Such notice must be accompanied by
a written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
COMMITTEES. The Board of Directors, which held seven meetings during
1996, has an Audit Committee and a Compensation and Stock Option Committee.
A&B has no nominating or similar committee; the full Board of Directors
performs that function.
The current members of the Audit Committee, which held three meetings
during 1996, are Mr. McKissick, Chairman, Ms. Shaw, and Messrs. Chun, Denlea
and Dods. The Audit Committee meets from time to time with A&B's independent
auditors and has general responsibility for reviewing the accounting and
auditing affairs of A&B.
The current members of the Compensation and Stock Option Committee, which
held six meetings during 1996, are Mr. Stockholm, Chairman, and Messrs. King
and Reed. The Compensation and Stock Option Committee has general responsi-
bility for management and other salaried employee compensation, including
incentive compensation and stock option plans.
COMPENSATION OF DIRECTORS. Directors who are not employees of A&B
receive an annual retainer of $16,000 and an additional $3,000 if also serving
as Chairman of a Board committee. In 1996, all directors received an
attendance fee of $700 per meeting. In addition, attendance fees of $700 and
$600 per meeting were paid to A&B directors serving as chairmen and members,
respectively, of Board committees. All A&B directors served as directors of
A&B's ABHI and Matson subsidiaries and, in such capacities, received attendance
fees of $700 per ABHI or Matson Board meeting. Beginning in 1997, directors
who are employees of A&B no longer will receive the attendance fees. Outside
directors may defer up to 100 percent of their annual retainer and meeting fees
until retirement or until such earlier date as they may select. No directors
have deferred such fees.
Under A&B's Non-Employee Director Stock Option Plan ("Director Plan"),
approved by the shareholders at the 1989 Annual Meeting, a non-qualified stock
option to purchase 3,000 shares of A&B common stock automatically will be
granted at each Annual Meeting of Shareholders to each individual who is, at
such meeting, elected or re-elected as a non-employee director of A&B. The
option price per share is the average of the means between the highest and
lowest sales prices per share of common stock for the five consecutive trading
days prior to the grant date, and the option expires 10 years from the date of
grant, or earlier if the optionee ceases to be a director. Options become
exercisable 6 months after the grant date. At the 1996 Annual Meeting held on
April 25, 1996, options to purchase 3,000 shares of A&B common stock at an
exercise price of $24.75 per share were granted to each of the eight non-
employee directors. As of February 14, 1997, no options granted under the
Director Plan have been exercised.
A&B maintains life insurance, retirement and deferred compensation plans,
and provides medical and dental benefits, for its directors who are not A&B
employees. The life insurance program affords coverage of $50,000 for
directors, as well as business travel accident coverage of $200,000 for
directors and $50,000 for their spouses while accompanying directors on A&B
business. Under the retirement plan, a director who has 5 or more years of
service will receive, in addition to certain post-retirement health care
insurance benefits, a lump sum payment upon retirement or attainment of age 65,
whichever is later, that is actuarially equivalent to a payment stream for the
life of the director consisting of 50 percent of the amount of the annual
retainer fee in effect at the time of his or her retirement or other
termination, plus 10 percent of that amount, up to an additional 50 percent,
for each year of service as a director over 5 years.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS
The following table lists the names and addresses of the only share-
holders known by A&B to have owned beneficially more than 5 percent of A&B's
common stock outstanding on February 14, 1997, the number of shares they
beneficially own, and the percentage of outstanding shares such ownership
represents. Except as indicated in the footnotes, such shareholders have
sole voting and dispositive power over shares they beneficially own.
Name and Address Amount of Percent of
of Beneficial Owner Beneficial Ownership Class
- ------------------- -------------------- -----------
Southeastern Asset 4,538,607 (b) 10.0
Management, Inc.
6075 Poplar Avenue
Suite 900
Memphis, Tennessee 38119
The Capital Group 2,631,500 (c) 5.8
Companies, Inc./Capital
Research and Management
Company
333 South Hope Street
Los Angeles, California 90071
First Hawaiian Bank (a) 2,574,606 (d) 5.7
P. O. Box 3200
Honolulu, Hawaii 96847
The Harry and Jeanette 2,271,079 (e) 5.0
Weinberg
Foundation/Estate
of Harry Weinberg
7 Park Center Court
Owings Mills,
Maryland 21117
(a) For additional information concerning relationships and transactions
between A&B and First Hawaiian Bank, please see "Security Ownership of
Directors and Executive Officers" and "Compensation Committee Interlocks
and Insider Participation" below.
(b) As reported in Amendment No. 5 to Schedule 13G dated January 31, 1997 (the
"Southeastern 13G") filed with the Securities and Exchange Commission.
According to the Southeastern 13G, such shares are owned legally by
investment advisory clients of Southeastern Asset Management, Inc.
("Southeastern"), and are held in discretionary accounts, with
Southeastern having sole dispositive power over all such shares and sole
voting power over 4,341,207 of such shares. In addition, according to the
Southeastern 13G, (i) investment advisory clients of Southeastern own an
aggregate of 1,089,700 shares (2.4% of A&B's outstanding common stock) in
non-discretionary accounts over which Southeastern has no dispositive or
voting power, and (ii) Longleaf Partners Fund and Longleaf Partners Realty
Fund (collectively, "Longleaf"), which are investment companies, own
1,584,200 shares (3.5% of A&B's outstanding common stock) over which
Longleaf has sole dispositive and voting power. Southeastern is
Longleaf's investment counsel.
(c) The Capital Group Companies, Inc. is the parent holding company of various
investment management companies which hold discretionary investment power
over the shares reported in Schedule 13G dated February 12, 1997 (the
`Capital 13G'') filed with the Securities and Exchange Commission.
According to the Capital 13G, Capital Research and Management Company has
sole dispositive power over all 2,631,500 shares and no voting power over
any of such shares.
(d) Shares are beneficially owned in a fiduciary capacity by the trust
department of First Hawaiian Bank, as follows: shared voting and disposi-
tive power - 1,923,298 shares, sole voting and dispositive power - 551,511
shares, sole voting and shared dispositive power - 500 shares, and shared
dispositive power only - 4,000 shares. First Hawaiian Bank's trust
department holds 95,297 shares, over which it has neither voting nor
dispositive power.
(e) Such shares consist of 1,668,496 shares owned by The Harry and Jeanette
Weinberg Foundation ("Foundation"), and 602,583 shares owned by the Estate
of Harry Weinberg ("Estate"). A&B has been informed by representatives of
the Foundation and the Estate that each entity disclaims beneficial
ownership of the shares owned by the other entity.
<PAGE>
CERTAIN INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS. The following
table shows the number of shares of A&B common stock beneficially owned as of
February 14, 1997 by each director and nominee, by each executive officer named
in the "Summary Compensation Table" below, and by directors, nominees and
executive officers as a group (including one advisory director) and, if at
least one-tenth of one percent, the percentage of outstanding shares such
ownership represents. Except as indicated in the footnotes, directors,
nominees and executive officers have sole voting and dispositive power over
shares they beneficially own.
Name or Number Amount of Beneficial Percent of
in Group Ownership Class
- -------------------- ----------- ------------
(a)(b)(c)
-----------
Michael J. Chun 21,435 --
John C. Couch 568,784 1.2
Leo E. Denlea, Jr. 25,600 --
Walter A. Dods, Jr. 22,084 --
Charles G. King 26,885 --
Carson R. McKissick 29,000 --
C. Bradley Mulholland 379,133 0.8
Robert G. Reed III 25,000 --
Maryanna G. Shaw 892,543 2.0
Charles M. Stockholm 27,000 --
W. Allen Doane 146,342 0.3
David G. Koncelik 64,312 0.1
Glenn R. Rogers 193,016 0.4
22 Directors, Nominees
and Executive Officers 5,242,270 11.1
as a Group (d)
(a) Amounts do not include shares owned by spouses of those directors and
executive officers who disclaim beneficial ownership thereof, as follows:
Mr. McKissick - 600, and directors, nominees and executive officers as a
group - 8,840. In addition, Mr. Stockholm and Ms. Shaw, who are husband
and wife, each disclaim beneficial ownership of all shares beneficially
owned by the other. Except as noted in footnote (d) below, amounts do not
include shares beneficially owned in a fiduciary capacity by trust com-
panies or the trust departments of banks of which A&B directors are
directors or officers, or both, and shares held by foundations or trusts
of which A&B directors are trustees or directors, as follows: First
Hawaiian Bank - 2,574,606 shares, The Wallace Alexander Gerbode
Foundation, of which Ms. Shaw and Mr. Stockholm are trustees - 40,000
shares, and the William Garfield King Educational Trust, of which Mr. King
is a trustee - 400 shares.
(b) Amounts include shares as to which directors, nominees and executive
officers have (i) shared voting and dispositive power, as follows:
Mr. Chun - 435 shares, Mr. Denlea - 1,600 shares, Mr. King - 685 shares
(held by a living trust of which Mr. King is a co-trustee),
Mr. Mulholland - 37,678 shares, Ms. Shaw - 72,613 shares, Mr. Rogers -
1,074 shares, and directors, nominees and executive officers as a group -
1,569,014 shares, and (ii) sole voting power only, as follows:
Mr. Couch - 1,778 shares, Mr. Mulholland - 2,141 shares,
Mr. Rogers - 1,700 shares, and directors, nominees and executive officers
as a group - 11,713 shares.
(c) Amounts include shares deemed to be owned beneficially by directors,
nominees and executive officers because they may be acquired prior to
May 9, 1997 through the exercise of stock options, as follows:
Mr. Couch - 392,483, Mr. Mulholland - 308,000, Mr. Rogers - 168,300,
Mr. Doane - 124,500, Mr. Koncelik - 59,200, Ms. Shaw and Messrs. Denlea,
King, McKissick, Reed and Stockholm - 24,000 each, Messrs. Chun and
Dods - 21,000 each, and directors, nominees and executive officers as a
group - 1,689,081.
(d) Includes 2,256,196 shares beneficially owned by Alexander C. Waterhouse,
an advisory director of A&B, of which 1,542,102 shares also are bene-
ficially owned by First Hawaiian Bank in a fiduciary capacity.
Mr. Waterhouse served as a director of A&B from 1974 to 1984. As an
advisory director, Mr. Waterhouse is entitled to attend and participate
in meetings of the Board and to receive director's compensation, but he
has no vote.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a)
of the Securities Exchange Act of 1934 requires A&B's directors and executive
officers, and persons who own more than 10 percent of its common stock, to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission. Michael J. Chun, a director, was required
to report the acquisition, under the Company's Dividend Reinvestment Program,
of 5.2, 10.1 and 11.3 shares on or before February 14 of 1994, 1995 and
1996, respectively, but such acquisitions were reported in 1997. The Company
believes that during fiscal 1996 all other reports required to be filed under
Section 16(a) by its directors and executive officers were filed on a timely
basis.
CERTAIN RELATIONSHIPS AND TRANSACTIONS. Pursuant to A&B's employee
relocation policy applicable to all full-time salaried, non-bargaining unit
personnel, in 1996 A&B agreed to purchase the former Honolulu, Hawaii residence
of an executive officer of A&B for $1,435,000, which was the fair market value
as determined by averaging the amounts of two real estate appraisals obtained
by A&B. The purchase was closed in January 1997. The Company intends to
resell the residence for fair market value at the time of its sale, and to
retain the net proceeds thereof.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION. The following table summarizes
the cash and noncash compensation paid by A&B for services rendered, during
each of the last three completed fiscal years, by A&B's Chief Executive Officer
and the four other most highly compensated executive officers (collectively,
the "named executive officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted Securities All Other
Compen- Stock Underlying LTIP Compen-
Name and sation Awards Options/SARs Payouts sation
Principal Position Year Salary($) Bonus($)(1) ($)(3) ($)(4) (#) ($)(5) ($)(8)
- ------------------ ---- --------- ----------- ------- ---------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chairman of the Board, 1995 590,000 60,021(2) 7,551 152,903 75,000 41,952(6) 73,117
President and Chief Executive 1994 540,000 267,000(2) 4,145 356,100 70,000 89,100(6) 82,067
Officer of A&B
C. Bradley Mulholland 1996 416,000 195,000 0 0 37,000 57,500 50,804
President and Chief 1995 416,000 42,541(2) 4,565 125,176 45,000 41,034(6) 47,930
Executive Officer of Matson 1994 392,500 128,000(2) 3,496 266,250 40,000 49,500(6) 55,982
David G. Koncelik 1996 235,600 207,024(2) 0 34,476 23,200 56,250(7) 12,519
President and Chief Executive 1995 235,000 27,518(2) 0 41,232 24,000 0 0
Officer of California and 1994 235,000 82,160(2) 0 30,810 12,000 0 16,685
Hawaiian Sugar Company, Inc.
W. Allen Doane 1996 285,000 83,012(2) 804 148,460 24,500 16,028(6) 15,113
President and Chief 1995 282,333 40,037(2) 2,808 86,187 30,000 17,526 14,399
Operating Officer of ABHI 1994 259,000 68,750(2) 2,859 144,975 25,000 27,900(6) 18,389
Glenn R. Rogers 1996 218,000 77,034(2) 0 149,936 24,300 19,030(6) 34,800
Vice President, 1995 218,000 42,541(2) 4,153 93,679 30,000 20,030(6) 34,323
Chief Financial Officer 1994 205,000 64,950(2) 3,346 129,225 25,000 21,200(6) 37,760
and Treasurer of A&B
</TABLE>
(1) "Bonus" consists of cash amounts earned for the fiscal year identified in
column (b) under A&B's One-Year Performance Improvement Incentive Plan
("One-Year Plan").
(2) Represents a portion of the named executive officers' award under the One-
Year Plan. The named executive officers elected to receive the balance of
their One-Year Plan award in restricted stock, the value of which is
included in column (f).
(3) "Other Annual Compensation" consists of amounts reimbursed to the named
executive officers for their estimated income tax liability by reason of
A&B's payments for the cost of personal excess liability insurance. It
does not include the aggregate amount of perquisites received by each
named executive officer, which for each fiscal year in question was less
than the lesser of $50,000 or 10% of reported salary and bonus.
(4) Represents (i) amount of One-Year Plan award elected to be received in
stock in respect of awards earned for the fiscal year identified in column
(b), (ii) amount of award under A&B's Three-Year Performance Improvement
Incentive Plan ("Three-Year Plan") elected to be received in stock in
respect of awards earned for the three-year plan cycle ending with and
including the fiscal year identified in column (b), and (iii) additional
stock awarded in the discretion of the Compensation and Stock Option
Committee ("Committee") in respect of the foregoing stock elections,
valued at 50% of the amount of the One-Year Plan and/or Three-Year Plan
award that the named executive officer has elected to take in stock. All
shares are subject to the A&B Restricted Stock Bonus Plan, which provides
that if the named executive officer leaves A&B's employ (for any reason
other than retirement, death or disability) within three years after the
award, the shares are subject to repurchase by A&B at the lesser of their
fair market value at the time of repurchase or the amount of the award
originally applied to their purchase. Shares subject to such repurchase
right may not be sold or transferred until such right lapses. As of
December 31, 1996, the number and value (based upon a $25.00 per share
closing price of A&B's common stock on such date) of shares of restricted
stock held by the named executive officers are as follows:
Mr. Couch - 23,173 shares ($579,325); Mr. Mulholland - 17,795 shares
($444,875); Mr. Koncelik - 3,215 shares ($80,375); Mr. Doane - 10,467
shares ($261,675); and Mr. Rogers - 10,060 shares ($251,500). Dividends
are payable on the restricted shares if and to the extent payable on A&B's
common stock generally.
(5) "LTIP Payouts" consist of cash amounts earned under the Three-Year Plan
for the three-year plan cycle ending with and including the fiscal year
identified in column (b).
(6) Represents a portion of the named executive officers' award under the
Three-Year Plan. The named executive officers elected to receive the
balance of their Three-Year Plan award in restricted stock, the value of
which is included in column (f).
(7) Represents (i) the entire amount of the named executive officer's award
under the Three-Year Plan, which the named executive officer elected to
defer under the A&B Deferred Compensation Plan and to convert into common
stock-equivalent units ("conversion election"), and (ii) additional common
stock-equivalent units awarded in the discretion of the Committee in
respect of the named executive officer's conversion election, valued at
50% of the amount of the deferred Three-Year Plan award that the named
executive officer has elected to convert into common stock-equivalent
units. All common stock-equivalent units are subject to the A&B Deferred
Compensation Plan, which provides that, if the named executive officer
leaves A&B's employ (for any reason other than retirement, death or
disability), the named executive officer will no longer have any right,
title or interest in any bonus common stock-equivalent units awarded
within three years prior to the date of termination, and the non-bonus
common stock-equivalent units credited to the named executive officer's
account will be subject to conversion to cash at an amount equal to the
lesser of the fair market value of A&B stock on the date of termination or
the amount of the award that was converted to these non-bonus common
stock-equivalent units.
(8) "All Other Compensation" for 1996 includes: (i) amounts contributed by
A&B to the A&B Profit Sharing Retirement Plan (Mr. Couch - $8,025,
Mr. Mulholland - $8,025, Mr. Koncelik - $8,025, Mr. Doane - $8,025 and
Mr. Rogers - $8,025); (ii) amounts accrued for profit sharing under the
A&B Excess Benefits Plan, pursuant to which executives chosen by the
Committee receive additional credits and payments equal to the difference
between the maximum benefit permitted under federal tax laws and the
benefit the executives otherwise would receive under A&B's qualified plans
(Mr. Couch - $23,100, Mr. Mulholland - $13,965, Mr. Koncelik - $4,494,
Mr. Doane - $7,088 and Mr. Rogers - $3,570); (iii) amounts contributed
by A&B for the accounts of the named executive officers under the A&B
Executive Survivor/Retirement Benefit Plan, pursuant to which executives
selected by the Chief Executive Officer of A&B receive benefits in lieu of
coverage over $50,000 which otherwise would be provided under A&B's group
life insurance program (Mr. Couch - $26,227, Mr. Mulholland - $10,614 and
Mr. Rogers - $23,205); and (iv) director fees (Mr. Couch - $18,200 and
Mr. Mulholland - $18,200).
OPTION GRANTS. The following table contains information concerning the grant
of stock options under A&B's 1989 Stock Option/Stock Incentive Plan during 1996
to the named executive officers.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs Exercise
Underlying Granted to or Base Grant Date
Options/SARs Employees Price Present Value
Name Granted (#) in Fiscal Year ($/share) Expiration Date ($)(c)
---- ------------ ---------------- --------- --------------- -------------
<S> <C> <C> <C> <C> <C>
John C. Couch 60,000(a) 12.7% 23.250 January 23, 2006 402,000
37,663(b) 8.0% 32.625 January 24, 2005 189,445
C. Bradley Mulholland 37,000(a) 7.9% 23.250 January 23, 2006 247,900
David G. Koncelik 23,200(a) 4.9% 23.250 January 23, 2006 155,440
W. Allen Doane 24,500(a) 5.2% 23.250 January 23, 2006 164,150
Glenn R. Rogers 24,300(a) 5.2% 23.250 January 23, 2006 162,810
</TABLE>
(a) Options granted on January 24, 1996 under the 1989 Stock Option/Stock
Incentive Plan ("1989 Plan") with an exercise price per share equal to the
fair market value of the underlying shares of A&B common stock on the
grant date. These options became exercisable one year after the date of
grant. No stock appreciation rights were granted with these options.
Each of these granted options ("original option") contains a reload
feature, pursuant to which the optionee automatically will be granted a
new option to the extent the original option is exercised within five
years after the grant date through the optionee's delivery of previously-
acquired shares of A&B common stock in payment of the exercise price, and
certain other conditions are satisfied at the time of such exercise. The
reload option will be granted at the time the original option is so
exercised, and will allow the optionee to purchase the same number of
shares of A&B common stock as is delivered in exercise of the original
option. The reload option will have an exercise price per share equal to
the greater of (i) the fair market value per share of A&B common stock on
the date the reload option is granted or (ii) 150% of the exercise price
per share in effect under the original option. The reload option will not
become exercisable unless the shares purchased under the original option
have been held for at least two years. In certain merger, reorganization
or change in control situations involving A&B, the exercisability of
options under the 1989 Plan, whether original or reload options, will be
accelerated in accordance with the terms of the grant, and options may be
surrendered for a cash distribution per share equal to the difference
between the fair market value of the option share (or, if greater, the
change in control consideration paid per share) and the exercise price.
(b) Reload option granted on June 18, 1996 under the 1989 Plan with an
exercise price per share equal to 150% of the exercise price per share in
effect under the original option. See footnote (a) above for additional
information.
(c) Based on an option pricing model proposed by A&B's independent compensa-
tion consultant that projects future gains from stock options. This
option pricing model modifies the Black-Scholes model by using the average
stock price volatility for a broad range of stocks and converting the
results into explicit price growth assumptions consistent with the Capital
Asset Pricing Model ("CAP-M"). The assumptions used in this pricing
model are as follows: (i) the market value of A&B stock increases at a
uniform rate of 10% compounded annually, (ii) stock options will be
exercised five years from the date of grant, (iii) projected future gains
are discounted back to the date of grant using a 15% discount rate, and
(iv) the resulting current dollar values are further discounted by 5% to
take into account the probability the stock options will be forfeited as
a result of executives' termination of employment within one year of the
grant date. This option pricing model makes no explicit assumptions about
A&B's future dividend yields, but the CAP-M price growth and discount
factors implicitly assume an average dividend yield of between 2% and 3%
for the broad market. There is no assurance the value realized by an
executive officer will be at or near the value estimated by this option
pricing model. The actual value, if any, an executive officer may realize
will depend upon how much the stock price has increased over the exercise
price on the date the option is exercised.
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END HOLDINGS. The following table
provides information, with respect to the named executive officers, concerning
the number and value of unexercised options held as of December 31, 1996.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs At Options/SARs
FY-End(#) At FY-End($)(c)
Shares ---------------------- --------------------
Acquired Value
Name on Exercise(#) Realized($)(a) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John C. Couch 50,000 356,250 388,800(b) 97,663 348,263 150,000
C. Bradley 0 0 271,000 37,000 307,500 92,500
Mulholland
David G. 0 0 36,000 23,200 96,000 58,000
Koncelik
W. Allen Doane 0 0 100,000 24,500 165,000 61,250
Glenn R. Rogers 0 0 144,000 24,300 172,500 60,750
</TABLE>
(a) Based on the highest sales price of A&B common stock on date of exercise
minus the exercise price.
(b) Of this number, an option representing 56,317 shares was granted with
tandem stock appreciation rights ("SARs") entitling the option holder,
subject to the approval of the Compensation and Stock Option Committee,
to surrender the portion of the option having tandem SARs for a
distribution, in cash or in shares of A&B common stock, equal to the
difference between (i) the fair market value of the shares at the time
the option is exercised and (ii) the aggregate option price payable for
such shares.
(c) Based on the highest sales price of A&B common stock on December 31, 1996
($25.75 per share), minus the exercise price.
LONG-TERM INCENTIVE PLANS. The following table provides information,
with respect to the named executive officers, concerning threshold,
target and maximum award levels determined in 1996 under A&B's Three-Year
Performance Improvement Incentive Plan ("Three-Year Plan") for the
three-year performance cycle beginning 1997 and ending 1999. Under the
Three-Year Plan, neither shares, units nor other quantifiable rights are
awarded to participants at the outset of the three-year cycle. Instead,
at the beginning of the plan cycle, the Compensation and Stock Option
Committee ("Committee"), with the advice and recommendations of
management, identifies the participants for the Three-Year Plan and
formulates the performance goals to be achieved for the plan cycle.
Goals are established for A&B as a whole, for each operating unit, and
for each individual participant. At the end of each plan cycle, results
are compared with goals, and awards are made accordingly. Aggregate
awards for all participants under the Three-Year Plan generally are
limited by minimum pre-tax income levels for A&B set by the Committee in
advance of each plan cycle, and if such minimum levels are not reached,
the award of each participant is reduced proportionately. Participants
may elect to receive awards earned under the Three-Year Plan entirely in
cash or up to 50 percent in shares of A&B stock and the remainder in
cash. A participant who elects to take stock may be awarded, in the
Committee's discretion, as a premium, additional shares of common stock,
valued at up to 50 percent of the amount of the award the participant has
elected to take in stock. Both the premium and non-premium shares of A&B
stock are subject to the A&B Restricted Stock Bonus Plan, which provides
that if the participant leaves A&B's employ (for any reason other than
retirement, death or disability) within three years after the award, the
participant may lose all right, title and interest in the premium shares,
and the non-premium shares will be subject to repurchase by A&B at the
lesser of their fair market value at the time of repurchase or the amount
of the award originally applied to their purchase. Cash payments made
under the Three-Year Plan are reported in the "Summary Compensation
Table" above for the year of payout, under column (h).
Under the A&B Deferred Compensation Plan, participants may elect to defer
up to 100% of cash amounts earned under the Three-Year Plan until retirement or
other termination of employment, or an earlier date specified by the
participant, and may elect to convert all or a portion (subject to specified
limitations) of such deferred amounts into common stock-equivalent units that
are valued on the basis of the fair market value of A&B stock. The balance of
such deferred award will be credited with interest, compounded annually, at an
annual rate equal to 1% above the New York Reserve Bank discount rate.
Participants who convert all or part of a deferred award into common stock-
equivalent units may, at the discretion of the Committee, be awarded as a
premium up to 50% "bonus" common stock-equivalent units. If a participant
leaves A&B's employ (for any reason other than retirement, death or
disability), then such participant will no longer have any right, title or
interest in any bonus common stock-equivalent units awarded within three years
prior to the date of termination, and the non-bonus common stock-equivalent
units credited to the participant's account will be subject to conversion to
cash at an amount equal to the lesser of the fair market value of A&B stock on
the date of termination or the amount of the award that was converted to these
non-bonus common stock-equivalent units.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
Estimated Future Payouts Under
Performance or Non-Stock Price-Based Plans(2)
Other Period ------------------------------------
Until Maturation
Name or Payout(1) Threshold($) Target($) Maximum($)
---- ---------------- ------------ --------- ----------
John C. Couch December 31, 1999 158,000 316,000 632,000
C. Bradley December 31, 1999 93,500 187,000 374,000
Mulholland
David G. Koncelik December 31, 1999 61,000 122,000 244,000
W. Allen Doane December 31, 1999 56,000 112,000 224,000
Glenn R. Rogers December 31, 1999 46,000 92,000 184,000
(1) Performance period beginning January 1, 1997 and ending December 31,
1999.
(2) In addition to the amounts shown, if the executive officers elect to
receive any portion of their awards, up to a maximum of 50 percent, in
restricted shares of A&B common stock, the Compensation and Stock Option
Committee ("Committee") may, in its sole discretion, award additional
restricted shares of A&B common stock valued at up to 50 percent of the
amount of the awards elected to be taken in stock. See footnote (4) of
the "Summary Compensation Table" above for additional information. Also,
if the executive officers elect to defer all or a portion of their awards
under the A&B Deferred Compensation Plan and to convert all or a portion
of such deferred award into common stock-equivalent units, the Committee
may, in its sole discretion, award additional common stock-equivalent
units valued at up to 50 percent of the amount of the deferred award that
is converted into common stock-equivalent units. See footnote (7) of the
"Summary Compensation Table" above for additional information.
RETIREMENT PLAN. The A&B Retirement Plan for Salaried Employees, a
non-contributory defined benefit pension plan, provides retirement benefits to
A&B's salaried employees who are not subject to collective bargaining
agreements. The table below shows estimated annual retirement benefits to
covered participants at normal retirement age (age 65) under this plan,
including amounts payable under A&B's Excess Benefits Plan, pursuant to which
executives chosen by the Committee will receive additional credits and payments
equal to the difference between the maximum benefit permitted under federal tax
laws and the benefit the executives otherwise would receive under A&B plans.
PENSION PLAN TABLE
Remuneration Years of Service
- ------------ ----------------
15 20 25 30 35
-- -- -- -- --
$ 125,000
$ 32,928 $ 43,908 $ 54,888 $ 60,372 $ 65,868
150,000 39,864 53,160 66,444 73,092 79,728
175,000 46,800 62,400 78,012 85,812 93,612
200,000 53,736 71,652 89,568 98,520 107,484
250,000 67,620 90,156 112,692 123,960 135,228
300,000 81,492 108,660 135,816 149,400 162,984
400,000 109,236 145,656 182,064 200,268 218,472
500,000 136,992 182,652 228,324 251,160 273,984
600,000 164,736 219,660 274,572 302,028 329,484
700,000 192,492 256,656 320,820 352,896 384,984
800,000 220,236 293,652 367,068 403,776 440,484
900,000 247,992 330,660 413,316 454,644 495,984
1,000,000 275,736 367,656 459,564 505,524 551,472
1,100,000 303,492 404,652 505,824 556,404 606,984
Retirement benefits are based on participants' average monthly compensa-
tion in the 5 highest consecutive years of their final 10 years of service.
Compensation includes base salary, overtime pay, certain commissions and fees,
shift differentials and one-year bonuses. Credited years of service as of
March 1, 1997 for the persons named in the above Summary Compensation Table
are: Mr. Couch - 20.5, Mr. Mulholland - 31.6, Mr. Koncelik - 8.3, Mr. Doane -
5.9, and Mr. Rogers - 21.6. The amounts are based on an ordinary straight life
annuity payable at normal retirement age, and do not give effect to social
security offsets.
SEVERANCE AGREEMENTS. A&B has entered into severance agreements (the
"Severance Agreements") with Messrs. Couch, Mulholland, Koncelik, Doane and
Rogers in order to encourage their continued employment with A&B by providing
them with greater security in the event of termination of their employment
following a change in control of A&B. A&B also has entered into Severance
Agreements with seven other employees, including three other executive
officers. Each Severance Agreement has an initial two-year term and is
automatically extended at the end of each term for a successive one-year period
unless terminated by A&B. The Severance Agreements provide for certain
severance benefits if the executive's employment is terminated by A&B without
"cause" or by the executive for "good reason" following a "change in control"
of A&B (as those terms are defined in the Severance Agreements). Upon such
termination of employment, the executive will be entitled to receive a lump sum
severance payment equal to two times the sum of the executive's base salary
plus certain awards and amounts under various A&B incentive and deferred
compensation plans, and an amount equal to the spread between the exercise
price of outstanding options held by the executive and the higher of the then
current market price of A&B common stock or the highest price paid in connec-
tion with a change in control of A&B. In addition, A&B will maintain all (or
provide similar) employee benefit plans for the executive's continued benefit
for a period of two years after termination. Each Severance Agreement provides
for a tax gross-up payment to offset any excise taxes that may become payable
by an executive by reason of Sections 280G and 4999 of the Internal Revenue
Code if the executive's employment is terminated without cause or for good
reason following a change in control of A&B.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee ("Committee") of the Board of
Directors directs the management of A&B's executive compensation program. The
Committee is composed entirely of independent, non-employee Board members, and
is assisted by an international management consulting firm that advises the
Committee on compensation matters.
COMPENSATION PHILOSOPHY
The Committee has implemented an executive compensation philosophy,
approved by the Board, that seeks to relate executive compensation to corporate
performance, individual performance and creation of shareholder value. This
philosophy is achieved through a performance-based compensation system,
pursuant to which a substantial portion of executive officers' compensation is
based on the short-term and long-term results achieved for A&B and A&B share-
holders and on the executive officers' individual performances. For 1996,
approximately 61% of the compensation of named executive officers in the above
Summary Compensation Table was in the form of non-salary, performance-based
compensation.
Consistent with this compensation philosophy, and to enhance the linkage
between the financial interests of executive officers and those of A&B
shareholders, the Board of Directors in 1994 approved stock ownership guide-
lines that recommend specified minimum levels of ownership of A&B stock to be
met by executive officers within a period of five years. These recommended
minimum levels range from ownership of A&B stock with a value of one times base
salary to, in the case of the Chief Executive Officer, ownership of A&B stock
with a value of five times base salary.
An objective of the executive compensation philosophy is to enable
executive officers to receive above-average compensation, compared with
compensation of executive officers with comparable job responsibilities at
other companies, in order that A&B will be able to attract, retain and motivate
executive officers. Achievement of above-average compensation is tied to
corporate and individual results and the performance of A&B stock, so there is
no assurance that this level of compensation will be achieved.
Comparative data is provided by the Committee's independent compensation
consultant and is based on national compensation survey data from nearly 350
industrial companies, controlled for size and complexity. This survey data
includes none of the four companies (other than A&B) included in the Dow Jones
Marine Transportation Index used in the Shareholder Return Performance Graph
which appears in this Proxy Statement. A&B competes for executive talent
across a broad group of industries, so survey data based on a broad group of
industrial companies is more appropriate than survey data based on just the
companies in the Dow Jones Marine Transportation Index.
Consistent with the foregoing compensation objectives, the Committee will
not necessarily limit executive compensation to that amount deductible by A&B
under Section 162(m) of the Internal Revenue Code of 1986, as amended. The
Committee nevertheless will consider the deductibility of executive compensa-
tion as one factor in its consideration of compensation matters, and will
consider reasonable steps and alternatives to preserve the deductibility of
compensation payments.
In accordance with the Committee's executive compensation philosophy, the
major components of compensation under A&B's executive compensation program
consist of: (i) base salary, (ii) annual incentive compensation pursuant to
the One-Year Performance Improvement Incentive Plan ("One-Year Plan"), and
(iii) long-term incentive compensation pursuant to the Three-Year Performance
Improvement Incentive Plan ("Three-Year Plan") and the 1989 Stock Option/Stock
Incentive Plan.
BASE SALARY
Adjustments to base salary, if any, are considered annually by the
Committee. The Committee reviews the salary adjustments for the executive
officers (other than the Chief Executive Officer) with the Chief Executive
Officer and the senior human resources executive. In making a salary
adjustment, the Committee normally will consider the executive officer's
performance in the past year, the previously-described survey data provided by
its independent compensation consultant pertaining to the salary level
necessary for A&B to pay competitively, and projected salary increases in the
coming year for executive officers in the diversified group of companies
selected by its independent compensation consultant, but does not consider any
specific corporate performance factor. For 1996, however, pursuant to the
decision of management, there were no base salary increases for the Chief
Executive Officer and other executive officers who were participants in the
One-Year Plan.
ANNUAL INCENTIVES
The One-Year Plan provides performance-based incentives to eligible
executive officers and other key employees who contribute materially to the
financial success of A&B. In determining the size of an incentive award to an
executive officer, the Committee considers both corporate performance and
individual performance (the latter includes the performance of the business
unit for which the executive officer is responsible) in the past year.
Corporate performance counts toward 10%-60% of the incentive awards, depending
upon the executive officer's corporate responsibilities. For incentive awards
granted for the 1996 plan cycle, the corporate performance factors, and their
relative weights, were as follows: corporate profit before income tax (60%),
corporate cash flow from operations (20%) and return on average total capital
(20%). The relevant corporate performance factors and their relative weights
are determined annually by the Committee, and therefore are subject to change
for future plan cycles. At the beginning of each one-year plan cycle, the
goals for these corporate performance factors, as well as the goals for the
specific business units for which the executive officers are responsible and
the goals for the individuals themselves, are identified, and threshold, target
and maximum award levels are assigned. At the end of each plan cycle, the
amounts of the incentive awards, if any, are determined by comparing results
with the performance goals. Aggregate awards under the One-Year Plan are
limited by whether A&B meets certain levels of corporate performance set by
the Committee in advance of each plan cycle. The Committee, however, retains
the discretion to adjust awards if, in its judgment, the awards do not
accurately reflect the performance of A&B, the unit or the individual.
LONG-TERM INCENTIVES
The Three-Year Plan is structured like the One-Year Plan, but provides
performance-based incentives to eligible executive officers and other key
employees who contribute materially to the financial success of A&B on the
basis of corporate performance and individual performance over a three-year
performance cycle. Corporate performance counts toward 10%-100% of the
incentive awards, depending upon the executive officer's corporate
responsibilities. For incentive awards granted for the 1994-1996 plan cycle,
the specific corporate performance factors, and their relative weights, were as
follows: corporate profit before income tax (50%), corporate cash flow from
operations (25%) and return on average total capital (25%). As with the One-
Year Plan, the relevant corporate performance factors and their relative
weights are determined annually by the Committee, and therefore are subject to
change for future plan cycles. In addition, as with the One-Year Plan, the
specific business unit performance factors used in assessing individual
performance, and their relative weights, vary by business unit and job
position. These business unit performance factors include, but are not limited
to, profit before income tax, cash flow from operations, revenue, cost
reduction, cost of crops, and schedule integrity.
Stock option grants under the 1989 Stock Option/Stock Incentive Plan are
considered annually by the Committee. Stock option grants are viewed as a
desirable long-term compensation method because they link directly the
financial interests of executive officers with those of shareholders. Stock
options are granted in the discretion of the Committee. In determining the
size of a stock option award to an executive officer, the Committee considers
the role of the executive officer and corporate performance and individual
performance in the past year, without assigning specific weight to any
particular factor. In determining the size of stock option awards, the
Committee does not consider amounts of stock options outstanding, but does
consider the size of previously-granted stock options and the aggregate size
of current awards.
CHIEF EXECUTIVE OFFICER COMPENSATION
As stated previously, Mr. Couch did not receive a base salary increase
for 1996. Normally, however, the Committee considers a base salary increase
for the Chief Executive Officer based on the Chief Executive Officer's
performance in the previous year and the salaries of other executive officers
with comparable job responsibilities in the diversified group of companies
selected by its independent compensation consultant. In this regard, the
Committee's objective is to maintain a competitive base salary. Mr. Couch's
award under the Three-Year Plan for the 1994-1996 performance cycle was below
target, reflecting below-target corporate profit before income tax, return on
total capital and corporate cash flow from operations. Mr. Couch's award under
the One-Year Plan for 1996 was above target, reflecting above-target corporate
profit before income tax and return on total capital and below-target corporate
cash flow from operations. Mr. Couch also received a stock option grant
totaling 60,000 shares in 1996. That grant was based on an overall review of
corporate performance in 1995, without focus on any specific corporate
performance measure, and an assessment of Mr. Couch's past and expected
contributions.
The foregoing report is submitted by Mr. Stockholm (Chairman), and
Messrs. King and Reed.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation and Stock Option Committee are
Mr. Stockholm, Chairman, and Messrs. King and Reed. Since April 20, 1995,
Mr. Couch, Chairman of the Board, President and Chief Executive Officer of A&B,
has served as a member of the Executive Compensation Committee of First
Hawaiian, Inc. Mr. Dods, a director of A&B, is Chairman of the Board and Chief
Executive Officer of First Hawaiian, Inc., and Chairman of the Board and Chief
Executive Officer of its banking subsidiary, First Hawaiian Bank.
First Hawaiian Bank (i) has a 29 percent participation in and is agent
for a $155,000,000 revolving credit and term loan agreement with A&B and ABHI,
under which $20,000,000 was outstanding at February 14, 1997, (ii) has a
revolving credit agreement with A&B under which the amount outstanding
($8,000,000 at February 14, 1997), when combined with First Hawaiian Bank's
share of amounts drawn under the previously-described $155,000,000 revolving
credit and term loan agreement, may not exceed $45,000,000, (iii) has 16.34
percent and 16.08 percent beneficial interests in trusts that hold 20 percent
equity investments in the original hull and midbody improvements, respectively,
of the S.S. Lurline, a vessel chartered to Matson for 25 years subject to an
option to renew the charter for up to five years, which interests were received
in consideration of an aggregate equity investment participation commitment of
$2,040,500, (iv) has a 22.9 percent beneficial interest in a leveraged lease to
lease containers to Matson, which interest was received in consideration of an
aggregate equity investment participation commitment of $7,200,000, (v) has
issued a $12,800,000 letter of credit on behalf of Matson for insurance
security purposes, (vi) has a 40 percent participation in a $100,000,000
revolving credit facility with California and Hawaiian Sugar Company, Inc.
("C&H"), under which no amount was outstanding at February 14, 1997, and
(vii) has a $10,000,000 line of credit with C&H to support the issuance of
letters of credit, under which $9,604,414 was outstanding at February 14, 1997.
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on A&B's common stock against the
cumulative total return of the S&P Composite - 500 Stock Index and the Dow
Jones Marine Transportation Index. The Dow Jones Marine Transportation Index
is a published index consisting of five companies, including A&B. For illus-
trative purposes, the Company again has chosen to display the Dow Jones Real
Estate Investment Index in the comparison.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
*$100 INVESTED ON DECEMBER 31, 1991 IN ALEXANDER & BALDWIN, INC. COMMON STOCK,
THE S&P 500 STOCK INDEX, THE DJ MARINE TRANSPORTATION INDEX AND THE DJ REAL
ESTATE INVESTMENT INDEX. TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS.
FISCAL YEARS ENDING DECEMBER 31.
1991 1992 1993 1994 1995 1996
Alexander & Baldwin, Inc. 100 91 102 88 94 106
S&P Composite - 500 100 108 118 120 165 203
DJ Marine Transportation 100 88 113 103 118 144
DJ Real Estate Investment 100 90 106 100 124 166
ELECTION OF INDEPENDENT AUDITORS
The Board of Directors has nominated Deloitte & Touche LLP for election
as auditors of A&B for the ensuing year. Deloitte & Touche LLP and its
predecessors have served A&B as such since 1957. Representatives of Deloitte &
Touche LLP are expected to be present at the Annual Meeting, where they will
have the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders.
OTHER BUSINESS
The Board of Directors of A&B knows of no other business to be presented
for shareholder action at the Annual Meeting. However, should matters other
than those set forth in this proxy statement properly come before the Annual
Meeting, the proxyholders named in the accompanying proxy will vote upon them
in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 1998
Proposals of shareholders intended to be presented at the 1998 Annual
Meeting of A&B must be received at the headquarters of A&B on or before
November 10, 1997 in order to be considered for inclusion in the 1998 proxy
statement and proxy.
By Order of the Board of Directors
MICHAEL J. MARKS
Vice President, General
Counsel and Secretary
March 10,1997
<PAGE>
[FORM OF PROXY - Electronic form of proxy format differs slightly from paper
copy]
APPENDIX - PROXY CARD
A&B
ALEXANDER & BALDWIN, INC.
822 Bishop Street, Honolulu, Hawaii 96813
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 24, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. C. Couch, W. A. Dods, Jr., and M. G. Shaw,
and each of them, proxies with full power of substitution, to vote the shares
of stock of Alexander & Baldwin, Inc., which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of the Corporation to be held on
Thursday, April 24, l997, and any adjournments thereof, on the matters set
forth in the Notice of Meeting and Proxy Statement, as follows:
(continued and to be signed on reverse side)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 BELOW.
---
Please mark your votes as indicated in this example / X /
1. ELECTION OF DIRECTORS (Check one box only):
M. J. Chun, J. C. Couch, L. E. Denlea, Jr., W. A. Dods, Jr., C. G. King,
C. R. McKissick, C. B. Mulholland, M. G. Shaw, C. M. Stockholm.
FOR all nominees WITHOUT AUTHORITY
listed to the right: to vote for all nominees listed to the right:
__ __
|__| |__|
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CHECK THE "FOR ALL
NOMINEES" BOX TO THE LEFT AND WRITE THE NAME OF THE NOMINEE FOR WHOM YOU WISH
TO WITHHOLD AUTHORITY IN THE SPACE PROVIDED BELOW.)
2. PROPOSAL TO ELECT DELOITTE & TOUCHE LLP as the auditors of the Corporation:
FOR AGAINST ABSTAIN
__ __ __
|__| |__| |__|
3. In their discretion on such other matters as may properly come before the
meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS
1 AND 2 AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
DATED: , 1997
--------------------------------------
PLEASE SIGN EXACTLY AS NAME(S) APPEARS AT LEFT:
____________________________________________
Signature
____________________________________________
Signature
IMPORTANT: WHEN STOCK IS IN TWO OR MORE NAMES, ALL MUST SIGN. WHEN SIGNING AS
EXECUTOR, TRUSTEE, GUARDIAN OR OFFICER OF A CORPORATION, GIVE TITLE AS SUCH.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
