A&B
ALEXANDER & BALDWIN, INC.
P. O. BOX 3440 - HONOLULU, HAWAII 96801-3440
March 8, 1999
To the Shareholders of Alexander & Baldwin, Inc.:
The 1999 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 22, 1999 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
1998, 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,
/s/ W. Allen Doane
W. ALLEN DOANE
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 22, 1999, at 10:00 a.m., Honolulu time, for the following purposes:
1. To elect twelve 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 12,
1999 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
/s/ Alyson J. Nakamura
ALYSON J. NAKAMURA
Secretary
March 8, 1999
<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 22, 1999 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 12, 1999
are entitled to notice of and to vote at the Annual Meeting. On that date, A&B
had outstanding 43,521,456 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, 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 8, 1999.
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 twelve persons
named below, all of whom are currently members of the Board of Directors. 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.
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 at least the last five years, and the year each first was
elected or appointed a director.
Principal occupation, information as to
other positions with A&B, and other Director
Name directorships Age since
---- --------------------------------------- --- --------
Michael J. Chun President, The Kamehameha Schools, Honolulu, 55 1990
Hawaii (educational institution) since June
1988; Vice President and Secretary, ParEn,
Inc., Honolulu, Hawaii (environmental
engineering services) from January 1985
until June 1988; Director of Bank of Hawaii.
John C. Couch On medical leave of absence from A&B. 59 1985
Chairman of the Board (from 1995 until July
1998), Chief Executive Officer (from 1992
until July 1998) and President (from 1991
until July 1998) of A&B; Chairman of the
Boards (from 1995 until July 1998) 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 Bank.
Leo E. Denlea, Jr. Retired Chairman of the Board and Chief 67 1987
Executive Officer, Farmers Group, Inc., Los
Angeles, California (insurance)
(September 1986 - March 1997); President of
Farmers Group, Inc. from September 1986
until December 1995.
W. Allen Doane President and Chief Executive Officer of A&B 51 1998
since October 1998; Vice Chairman of the
Board of Matson since December 1998;
Executive Vice President of A&B from August
1998 to October 1998; Chief Executive
Officer of ABHI since January 1997;
President of ABHI since April 1995; Chief
Operating Officer of ABHI from April 1991 to
December 1996; Executive Vice President of
ABHI from April 1991 to April 1995.
Walter A. Dods, Jr. Chairman of the Board and Chief Executive 57 1989
Officer of BancWest Corporation (formerly
known as First Hawaiian, Inc.) and its
subsidiary, First Hawaiian Bank, Honolulu,
Hawaii (banking) since September 1989;
Director of BancWest Corporation, First
Hawaiian Bank, and Bank of the West.
Charles G. King President, King Auto Center, Lihue, Kauai, 53 1989
Hawaii (automobile dealership) since October
1995; Vice President, Kuhio Motors, Inc.,
Lihue, Kauai, Hawaii (automobile dealership)
from December 1983 to October 1995.
Carson R. McKissick Managing Director, The Corporate Development 66 1971
Company, Los Angeles, California (financial
advisory services) since July 1991; Trustee
of Winship Properties.
C. Bradley Executive Vice President of A&B since August 57 1991
Mulholland 1998; Chief Executive Officer of Matson
since April 1992; President of Matson since
May 1990; Chief Operating Officer of Matson
from July 1989 until April 1992; prior to
July 1989 held various executive officer
positions with Matson.
Robert J. Pfeiffer Chairman of the Boards of A&B, ABHI and 79 1978*
Matson since July 1998; President and Chief
Executive Officer of A&B from July 1998 to
October 1998; Chairman Emeritus of the
Boards of A&B, ABHI and Matson from April
1995 to July 1998; Chairman of the Boards of
A&B (from 1980 until 1995), ABHI (from 1989
until 1995) and Matson (from 1979 until
1995); previously held various executive
officer positions with A&B, ABHI and Matson,
including Chief Executive Officer of A&B
from January 1980 to April 1992.
*Served on the Board from 1978 to 1995.
Rejoined the Board in 1998.
Lynn M. Sedway President and Chief Executive Officer, 57 1998
Sedway Group, San Francisco, California
(real estate consulting services) since
April 1978; Director of AMB Property
Corporation.
Maryanna G. Shaw Private investor. 60 1980
Charles M. Managing Director, Trust Company of the 66 1972
Stockholm West, San Francisco, California (investment
management 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 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 share-
holder 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
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD. The Board of Directors
held eleven meetings during 1998. All directors were present for 75 percent or
more of the total number of meetings of the Board of Directors and Committees
of the Board on which they serve, with the exception of Mr. Couch, who has been
on medical leave of absence from A&B since July 27, 1998. The Board of
Directors 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 1998, are Mr. McKissick, Chairman, Ms. Sedway, Ms. Shaw, and Mr. 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 nine meetings during 1998, are Mr. Stockholm, Chairman, and Messrs. Chun,
Denlea, and Charles G. King. The Compensation and Stock Option Committee has
general responsibility for management and other salaried employee compensation,
including incentive compensation and stock option plans.
COMPENSATION OF DIRECTORS. Until June 30, 1998, directors who were not
employees of A&B (outside directors) received an annual cash retainer of
$16,000 and an additional $3,000 if also serving as Chairman of a Board
committee. Effective July 1, 1998, those amounts were increased to $18,000 and
$3,500, respectively. Outside directors also received, until June 30, 1998, an
attendance fee of $700 per Board meeting and, in addition, attendance fees of
$700 and $600 per committee meeting if also serving as chairmen and members,
respectively, of Board committees. Effective July 1, 1998, the attendance fee
per Board meeting was increased to $800, and the attendance fees per committee
meeting for chairmen and members were increased to $800 and $700, respectively.
All directors of A&B served as directors of A&B's ABHI and Matson subsidiaries
and, in such capacities, outside directors received attendance fees of $700 per
ABHI or Matson Board meeting (increased to $800 effective July 1, 1998).
Outside directors may defer up to 100 percent of their annual cash retainer and
meeting fees until retirement or until such earlier date as they may select.
No directors have deferred such fees. In addition to the annual cash retainer
and meeting fees, beginning 1999, each individual who served as an outside
director during the previous year automatically will be granted, on or about
January 15, an annual stock retainer of 150 shares of A&B common stock
(prorated in the event the outside director did not serve on the Board for the
entire year). Directors who are employees of A&B do not receive compensation
for serving as directors.
Under A&B's 1989 Non-Employee Director Stock Option Plan, which was
approved by the shareholders at the 1989 Annual Meeting, and A&B's 1998 Non-
Employee Director Stock Option Plan, which was approved by the shareholders at
the 1998 Annual Meeting and which replaced the 1989 Non-Employee Director Stock
Option Plan, a non-qualified stock option to purchase 3,000 shares of A&B
common stock automatically is granted at each Annual Meeting of Shareholders to
each individual who is, at such meeting, elected or re-elected as an outside
director of A&B. The option price per share is the fair market value of A&B
common stock on 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 six months after the grant date. At the 1998 Annual Meeting held
on April 23, 1998, options to purchase 3,000 shares of A&B common stock, at an
exercise price of $29.76875 per share, were granted to each of the outside
directors under the 1989 Non-Employee Director Stock Option Plan.
A&B maintains life insurance, personal excess liability insurance,
retirement and deferred compensation plans, and provides medical and dental
benefits, for its outside directors. In addition, the outside directors are
reimbursed for their estimated income tax liability by reason of A&B's payments
for the cost of life insurance, personal excess liability insurance, and
medical and dental benefits. 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. The personal excess liability insurance program affords coverage of
$10 million for the outside directors. Under the retirement plan, a director
who has five 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 five
years.
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 five percent of A&B's
common stock outstanding on February 12, 1999, the number of shares they bene-
ficially 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 4,196,900 (b) 9.6
Management, Inc.
6410 Poplar Avenue
Suite 900
Memphis, Tennessee 38119
Capital Research and 2,575,000 (c) 5.9
Management Company
333 South Hope Street
Los Angeles, California 90071
First Hawaiian Bank (a) 2,391,068 (d) 5.5
P. O. Box 3200
Honolulu, Hawaii 96847
The Harry and Jeanette 2,271,079 (e) 5.2
Weinberg Foundation,
Incorporated
7 Park Center Court
Owings Mills, Maryland 21117
Alexander C. Waterhouse 2,243,196 (f) 5.2
670 Queen Street #200
Honolulu, Hawaii 96813
____________________
(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. 7 to Schedule 13G dated February 10, 1999
(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 3,999,500 of such shares. In addition, according to the
Southeastern 13G, (i) investment advisory clients of Southeastern own an
aggregate of 2,594,500 shares (6.0% 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 ("Longleaf"), which is an
investment company, owns 1,565,000 shares (3.6% of A&B's outstanding
common stock) over which Longleaf has sole dispositive and voting power.
Southeastern is Longleaf's investment counsel.
(c) As reported in Amendment No. 1 to Schedule 13G dated February 8, 1999 (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 2,575,000 shares and does not have voting
power over any 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 - 1,926,452 shares, sole voting and dispositive power - 407,970
shares, sole voting and shared dispositive power - 36,300 shares, shared
dispositive power only - 3,000 shares, and shared voting power only -
1,000 shares. First Hawaiian Bank's trust department holds 16,346 shares
over which it has neither voting nor dispositive power.
(e) As reported in Schedule 13G dated February 17, 1998 (the "Foundation 13G")
filed by The Harry and Jeanette Weinberg Foundation, Incorporated (the
"Foundation") with the Securities and Exchange Commission. According to
the Foundation 13G, the Foundation has sole dispositive and voting power
over 2,164,530 shares and shared dispositive and voting power over 106,549
shares. A representative of the Foundation confirmed that the Foundation
13G is current as of February 12, 1999.
(f) Amount includes (i) 663,646 shares owned by Waterhouse Properties, Inc.,
of which Mr. Waterhouse is Vice Chairman of the Board and 56 percent
shareholder, having sole voting and dispositive power, (ii) an aggregate
of 1,523,802 shares owned by the Martha A. Waterhouse Trust Estate, and
three trusts established under the Will of John T. Waterhouse, deceased,
of which Mr. Waterhouse is a co-trustee, having shared voting and
dispositive power with First Hawaiian Bank and other trustees, (iii) 5,300
shares owned by the John Carl Waterhouse Trust, of which Mr. Waterhouse is
a co-trustee, having shared voting and dispositive power with First
Hawaiian Bank, (iv) 7,758 shares owned by Mr. Waterhouse as a life tenant,
having sole voting and no dispositive power, and (v) 42,690 shares owned
by Mr. Waterhouse, having sole voting and dispositive power. The above
figure does not include 8,240 shares owned by Mr. Waterhouse's wife.
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 12, 1999 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 (a)(b)(c) Class
- -------------- -------------------- ----------
Michael J. Chun 27,591 --
John C. Couch 697,147 1.6
Leo E. Denlea, Jr. 31,750 --
W. Allen Doane 208,854 0.5
Walter A. Dods, Jr. 28,310 --
Charles G. King 33,035 --
Carson R. McKissick 34,150 --
C. Bradley Mulholland 439,144 1.0
Robert J. Pfeiffer 100,000 0.2
Lynn M. Sedway 75 --
Maryanna G. Shaw 889,380 2.0
Charles M. Stockholm 33,150 --
Miles B. King 100,708 0.2
David G. Koncelik 133,839 0.3
Michael J. Marks 120,423 0.2
Glenn R. Rogers 246,059 0.5
23 Directors, Nominees
and Executive Officers
as a Group (d) 5,661,492 12.4
____________________
(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
companies 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 - 2,391,068 shares, Bank of Hawaii - 741,951 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. Charles G. 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 - 441 shares, Mr. Denlea - 1,600 shares, Mr. Charles G. King -
685 shares (held by a living trust of which Mr. King is a co-trustee),
Mr. Mulholland - 37,678 shares, Ms. Shaw - 63,300 shares, Mr. Rogers -
1,109 shares, and directors, nominees and executive officers as a group -
1,637,377 shares, and (ii) sole voting power only, as follows: Mr.
Couch - 1,904 shares, Mr. Mulholland - 2,293 shares, Mr. Marks - 2,544
shares, Mr. Rogers - 1,820 shares, and directors, nominees and executive
officers as a group - 9,567 shares.
(c) Amounts include shares deemed to be owned beneficially by directors,
nominees and executive officers because they may be acquired prior to
May 7, 1999 through the exercise of stock options, as follows: Mr.
Couch - 491,076, Mr. Doane - 178,300, Mr. Mulholland - 354,500, Mr.
Pfeiffer - 100,000, Mr. Miles B. King - 98,600, Mr. Koncelik - 127,200,
Mr. Marks - 91,000, Mr. Rogers - 206,900, Ms. Shaw and Messrs. Denlea,
Charles G. King, McKissick and Stockholm - 30,000 each, Messrs. Chun and
Dods - 27,000 each, and directors, nominees and executive officers as a
group - 2,122,002.
(d) Includes 2,243,196 shares beneficially owned by Alexander C. Waterhouse,
an advisory director of A&B, of which 1,529,102 shares also are bene-
ficially owned by First Hawaiian Bank in a fiduciary capacity. Mr. Water-
house 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 (the "Exchange Act") 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. The Company
believes that during fiscal 1998, all reports required to be filed under
Section 16(a) by its directors and executive officers were filed on a timely
basis.
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 each person who served as
A&B's Chief Executive Officer in 1998, and the four other most highly
compensated executive officers. The table also sets forth the compensation
paid by A&B to David G. Koncelik, who served as President and Chief Executive
Officer of California and Hawaiian Sugar Company, Inc. ("C&H"), a wholly-owned
subsidiary of ABHI, until December 24, 1998. As used in this proxy statement,
"named executive officers" means all persons identified in the Summary
Compensation Table.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
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($)(7) ($)(10) ($)(11) (#) ($)(12) ($)(15)
- ------------------ ---- --------- ----------- ------- ---------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert J. Pfeiffer(1) 1998 261,538 (1) 38,695 (1) 100,000 (1) (1)
Chairman of the Board 1997 - - - - - - -
of A&B 1996 - - - - - - -
W. Allen Doane (2) 1998 351,618 278,750(9) 92 122,996 25,700 82,004(13) 17,581
President and Chief 1997 310,000 150,000(9) 1,241 74,994 28,100 50,006(13) 47,530
Executive Officer of A&B 1996 285,000 83,012(8) 804 148,460 24,500 16,028(13) 15,113
John C. Couch (3) 1998 684,000 84,040(8) 2,803 263,422 70,000 91,663(13) 34,200
1997 651,000 273,038(8) 0 220,462 73,500 265,000 59,428
1996 590,000 225,506(8) 6,234 328,016 60,000 41,828(13) 75,552
C. Bradley Mulholland (4) 1998 464,723 50,017(8) 565 131,220 36,100 37,513(13) 23,236
Executive Vice President of 1997 440,807 75,008(8) 475 175,466 30,400 98,026(13) 33,095
A&B, President and Chief 1996 416,000 195,000 0 0 37,000 57,500 50,804
Executive Officer of Matson
David G. Koncelik (5) 1998 293,853 (5) 0 0 32,400 160,000 (5)
1997 270,006 184,534(8) 0 30,716 35,600 212,500(14) 13,770
1996 235,600 207,024(8) 0 34,476 23,200 56,250(14) 12,519
Glenn R. Rogers (6) 1998 270,000 60,008(8) 91 153,703 27,700 42,539(13) 13,500
Executive Vice President, 1997 241,000 60,007(8) 601 164,988 27,900 50,006(13) 35,496
Chief Financial Officer 1996 218,000 77,034(8) 0 143,936 24,300 19,030(13) 34,800
and Treasurer of A&B
Miles B. King 1998 234,000 118,750(9) 550 0 17,500 55,000 11,700
Vice President and Chief 1997 222,000 118,750(9) 528 0 19,300 65,000 66,342
Administrative Officer of A&B 1996 212,000 151,250(9) 643 0 16,800 29,000 66,332
Michael J. Marks 1998 218,000 35,020(8) 430 52,480 10,200 35,000 10,900
Vice President and 1997 208,000 35,004(8) 513 52,496 10,300 30,000 23,169
General Counsel of A&B 1996 200,000 41,036(8) 513 61,464 7,000 12,000 23,261
_______________________________
</TABLE>
(1) Mr. Pfeiffer served as Chairman of the Board, President and Chief
Executive Officer of A&B from July 27, 1998 (when Mr. Couch started an
extended medical leave of absence) to October 22, 1998. In accordance
with applicable requirements, this table includes information with respect
to Mr. Pfeiffer's compensation during 1998 after he voluntarily
relinquished the positions of President and Chief Executive Officer.
Mr. Pfeiffer does not participate in A&B's One-Year Performance Improve-
ment Incentive Plan ("One-Year Plan"), Three-Year Performance Improvement
Incentive Plan ("Three-Year Plan"), Profit Sharing Retirement Plan, or
Excess Benefits Plan and, accordingly, did not receive any amounts under
those plans.
(2) Mr. Doane was appointed President and Chief Executive Officer of A&B
effective October 22, 1998. He had been Executive Vice President of A&B
since August 27, 1998, and continues to be President (since April
1995) and Chief Executive Officer (since January 1997) of ABHI.
(3) Mr. Couch served as Chairman of the Board, President and Chief Executive
Officer of A&B until July 27, 1998, when he started an extended medical
leave of absence. In accordance with applicable requirements, the table
includes information with respect to Mr. Couch's compensation for all of
1998.
(4) Mr. Mulholland, President and Chief Executive Officer of Matson, was
appointed to the additional position of Executive Vice President of A&B
effective August 27, 1998.
(5) In connection with the recapitalization and partial sale of C&H,
Mr. Koncelik ceased to be President and Chief Executive Officer of C&H
effective December 24, 1998, and became President and Chief Executive
Officer of C&H Sugar Company, Inc., of which A&B owns approximately 40% of
the equity interests. Although Mr. Koncelik was not an executive officer
at the end of 1998, in accordance with applicable requirements, this table
includes information with respect to his compensation. Under the terms of
the recapitalization and partial sale of C&H, Mr. Koncelik did not receive
any amounts under the One-Year Plan or the A&B Profit Sharing Retirement
Plan.
(6) Mr. Rogers was appointed Executive Vice President effective July 1997. He
had been Vice President, and continues to be Chief Financial Officer and
Treasurer, since April 1993.
(7) "Bonus" consists of cash amounts earned for the fiscal year identified in
column (b) under the One-Year Plan.
(8) Represents the portion of the named executive officer's award under the
One-Year Plan payable in cash. The named executive officer elected to
receive the balance of the One-Year Plan award in restricted stock, the
value of which is included in column (f).
(9) Includes (i) the portion of the named executive officer's award under the
One-Year Plan which such officer elected to defer under the A&B Deferred
Compensation Plan and to convert into common stock-equivalent units, and
(ii) additional common stock-equivalent units awarded, in the discretion
of the Committee, in an amount equal to 50% of the common stock-equivalent
units into which the deferred One-Year Plan award was converted.
(10) "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
also includes, in the case of Mr. Pfeiffer, certain benefits pursuant to
the Second Amended and Restated Employment Agreement between A&B and
Mr. Pfeiffer dated as of October 25, 1990, and an employment agreement
between A&B and Mr. Pfeiffer dated as of July 27, 1998, including certain
personal tax financial planning benefits in the amount of $24,168.
(11) Represents (i) the dollar amount of One-Year Plan awards, for the fiscal
year identified in column (b), elected to be received in stock, (ii) the
dollar amount of Three-Year Plan awards, for the three-year plan cycle
ending with and including the fiscal year identified in column (b),
elected to be received in stock, and (iii) additional stock awarded, in
the discretion of the Committee, in an amount equal to 50% of the dollar
amount of the One-Year Plan and/or Three-Year Plan award that the named
executive officer has elected to take in stock. As of December 31, 1998,
the number and value (based upon a $23.25 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. Doane - 12,257 shares ($284,975);
Mr. Couch - 27,518 shares ($639,794); Mr. Mulholland - 12,011 shares
($279,256); Mr. Rogers - 15,791 shares ($367,141); and Mr. Marks - 5,278
($122,714). Dividends are payable on the restricted shares if and to the
extent payable on A&B's common stock generally.
(12) "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).
(13) Represents the portion of the named executive officer's award under the
Three-Year Plan payable in cash. The named executive officer elected to
receive the balance of the Three-Year Plan award in restricted stock,
the value of which is included in column (f).
(14) Represents (i) the entire amount of the named executive officer's award
under the Three-Year Plan, including the portion of such amount which such
officer elected to defer under the A&B Deferred Compensation Plan and to
convert into common stock-equivalent units, and (ii) additional common
stock-equivalent units awarded, in the discretion of the Committee, in an
amount equal to 50% of the common stock-equivalent units into which the
deferred Three-Year Plan award was converted.
(15) "All Other Compensation" for 1998 includes: (i) amounts contributed by
A&B to the A&B Profit Sharing Retirement Plan (Mr. Doane - $8,000,
Mr. Couch - $8,000, Mr. Mulholland - $8,000, Mr. Rogers - $8,000,
Mr. Miles B. King - $8,000, and Mr. Marks - $8,000); and (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. Doane - $9,581, Mr. Couch -
$26,200, Mr. Mulholland - $15,236, Mr. Rogers - $5,500, Mr. Miles B.
King - $3,700, and Mr. Marks - $2,900). Amounts with respect to the A&B
Executive Survivor/Retirement Benefit Plan, reported in this column in
respect of 1996 and 1997, are now described under "Retirement Plans"
below.
OPTION GRANTS. The following table contains information concerning the
grant of stock options under A&B's 1998 Stock Option/Stock Incentive Plan and
1989 Stock Option/Stock Incentive Plan during 1998 to the named executive
officers.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs Exercise
Underlying Granted to or Base Grant Date
Options/SARs Employees Price Present Value
Name Granted (#) in Fiscal Year ($/share) Expiration Date ($)(c)
---- ------------ ---------------- --------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Robert J. Pfeiffer 100,000(a) 17.1% 22.750 August 25, 2008 446,830
W. Allen Doane 25,700(b) 4.4% 27.875 January 20, 2008 140,705
John C. Couch 70,000(b) 12.0% 27.875 January 20, 2008 383,243
C. Bradley Mulholland 36,100(b) 6.2% 27.875 January 20, 2008 197,644
David G. Koncelik 32,400(b) 5.5% 27.875 January 20, 2008 177,387
Glenn R. Rogers 27,700(b) 4.7% 27.875 January 20, 2008 151,655
Miles B. King 17,500(b) 3.0% 27.875 January 20, 2008 95,811
Michael J. Marks 10,200(b) 1.7% 27.875 January 20, 2008 55,844
</TABLE>
_________________________
(a) Options granted on August 26, 1998 under the 1998 Stock Option/Stock
Incentive Plan ("1998 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 January 27, 1999. 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 condi-
tions 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 1998
Plan, whether original or reload options, will be accelerated in
accordance with the terms of the grant.
(b) Options granted on January 21, 1998 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 exer-
cisability 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.
(c) Based on the Black-Scholes option pricing model, the assumptions used
included: (i) stock volatility of 25.05%, (ii) the expected exercise of
options in 5.75 years, (iii) a risk-free rate of return of 4.5%,
(iv) a discount of 0.3% for the forfeiture resulting from an executive
officer's termination of employment prior to exercise, and (v) a long-term
dividend yield of 4%. 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.
OPTION EXERCISES AND FISCAL YEAR-END HOLDINGS. The following table
provides information, with respect to the named executive officers, concerning
(i) the exercise of stock options and stock appreciation rights during the 1998
fiscal year and the value realized in connection with such exercise, and
(ii) the number and value of unexercised options held as of December 31, 1998.
<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 ($)(b)
Shares ---------------------- --------------------
Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Pfeiffer 0 0 0 100,000 0 50,000
W. Allen Doane 0 0 152,600 25,700 45,000 0
John C. Couch 1,483 31,580(a) 394,500 70,000 0 0
C. Bradley 0 0 338,400 36,100 67,500 0
Mulholland
David G. 0 0 94,800 32,400 36,000 0
Koncelik
Glenn R. Rogers 0 0 196,200 27,700 45,000 0
Miles B. King 0 0 81,100 17,500 30,000 0
Michael J. Marks 0 0 88,800 10,200 12,750 0
_______________________
(a) Based on the highest sales price of A&B common stock on date of exercise minus the exercise price.
(b) Based on the highest sales price of A&B common stock on December 31, 1998 ($23.25 per share), minus the exercise price.
</TABLE>
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 1998 under A&B's Three-Year Performance
Improvement Incentive Plan ("Three-Year Plan") for the three-year performance
cycle beginning 1999 and ending 2001. 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 major operating unit, and
for some individual participants. 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 and return on adjusted net assets for A&B set by the Committee in
advance of each plan cycle, and if such minimum levels are not reached, the
aggregate awards to participants are reduced proportionately. The Committee
retains the discretion to adjust awards if, in its judgment, the awards do not
accurately reflect the performance of A&B, the major operating unit, or the
individual. 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. Alternatively, participants may defer all or a portion of
such awards. Cash amounts earned under the Three-Year Plan are reported in the
"Summary Compensation Table" above for the year for which those amounts are
earned, under column (h). Messrs. Pfeiffer, Couch and Koncelik are not
eligible for, and will not receive, awards under the Three-Year Plan for the
performance period beginning 1999 and ending 2001.
<TABLE>
<CAPTION>
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($) Maximum ($)
---- ---------------- ------------ --------- -----------
<S> <C> <C> <C> <C>
W. Allen Doane December 31, 2001 175,000 350,000 700,000
C. Bradley December 31, 2001 116,500 233,000 466,000
Mulholland
Glenn R. Rogers December 31, 2001 66,000 132,000 264,000
Miles B. King December 31, 2001 43,000 86,000 172,000
Michael J. Marks December 31, 2001 24,000 48,000 96,000
</TABLE>
___________________
(1) Performance period beginning January 1, 1999 and ending December 31, 2001.
(2) In addition to the amounts shown, if the executive officers elect to
receive any portion of their awards in restricted shares of A&B common
stock, the Committee may, in its sole discretion, award additional shares
of A&B common stock under the A&B Restricted Stock Bonus Plan valued at up
to 50 percent of the amount of the awards elected to be taken in stock.
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 the
deferred amount into common stock-equivalent units, the Committee may, in
its sole discretion, award additional common stock-equivalent units of up
to 50 percent of the number of such units into which the deferred award is
initially converted.
RETIREMENT PLANS. The A&B Retirement Plan for Salaried Employees
("Retirement Plan"), 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
-- -- -- -- --
$ 200,000 $ 53,516 $71,355 $89,194 $98,113 $107,033
300,000 81,266 108,355 135,444 148,988 162,533
400,000 109,016 145,355 181,694 199,863 218,033
500,000 136,766 182,355 227,944 250,738 273,533
600,000 164,516 219,355 274,194 301,613 329,033
700,000 192,266 256,355 320,444 352,488 384,533
800,000 220,016 293,355 366,694 403,363 440,033
900,000 247,766 330,355 412,944 454,238 495,533
1,000,000 275,516 367,355 459,194 505,113 551,033
1,100,000 303,266 404,355 505,444 555,988 606,533
1,200,000 331,016 441,355 551,694 606,863 662,033
1,300,000 358,766 478,355 597,944 657,738 717,533
Retirement benefits are based on participants' average monthly compensa-
tion in the five 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. The amounts are based on an ordinary
straight life annuity payable at normal retirement age, and do not give effect
to social security offsets. Credited years of service as of March 1, 1999 for
the persons named in the "Summary Compensation Table" above are: Mr. Doane -
7.9, Mr. Couch - 22.5, Mr. Mulholland - 33.6, Mr. Rogers - 23.6, Mr. Miles B.
King - 6.4, and Mr. Marks - 23.8. Mr. Pfeiffer currently does not participate
in the Retirement Plan, although he receives benefits under the plan based upon
his prior service. The obligation to pay retirement benefits to Mr. Koncelik
was transferred to C&H Sugar Company, Inc. effective December 24, 1998.
In addition, the persons named in the "Summary Compensation Table" above,
with the exception of Messrs. Pfeiffer and Koncelik, participate in the A&B
Executive Survivor/Retirement Benefit Plan ("Executive Survivor Plan"). The
Executive Survivor Plan provides for a pre-retirement death benefit equal to 50
percent of final base compensation for 10 years and, at such person's election
upon retirement, either (i) a continuation of such death benefit or (ii) an
additional retirement income benefit equal to 26 percent of final base
compensation for 10 years.
SEVERANCE AGREEMENTS. A&B has entered into severance agreements (the
"Severance Agreements") with Messrs. Doane, Couch, Mulholland, Koncelik,
Rogers, Miles B. King, and Marks 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 five other employees, including one
other executive officer. 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
connection 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.
Effective July 27, 1998, A&B entered into an employment agreement with
Mr. Pfeiffer, which provided that Mr. Pfeiffer would serve as Chairman of the
Board, President and Chief Executive Officer of A&B until the thirtieth day
after either party gave notice of termination. The agreement also provided
that during such period, Mr. Pfeiffer would serve as Chairman of the Boards
of Matson and ABHI, as well as Chairman of the Boards of California and
Hawaiian Sugar Company, Inc., which was then a wholly-owned subsidiary of
ABHI, and of A&B Properties, Inc. Effective October 22, 1998, the agreement
was amended to reflect that, in connection with the Board's appointment of
Mr. Doane as successor Chief Executive Officer of A&B, Mr. Pfeiffer voluntarily
relinquished the positions of President and Chief Executive Officer of A&B and
Chairman of the Board of A&B Properties, Inc. Under the agreement, Mr.
Pfeiffer's annual base salary is $600,000. If the agreement is terminated by
A&B without "cause" (as defined in the agreement), or by reason of Mr.
Pfeiffer's death, Mr. Pfeiffer will receive his full salary through the date of
termination at the rate then in effect, plus (i) a lump-sum payment equal to
six months' base salary and (ii) all compensation and benefits payable to him
under the terms of any compensation or benefit plan, program or arrangement
maintained by A&B, to the extent then unpaid.
Under the terms of the employment agreement, Mr. Pfeiffer received a stock
option on August 26, 1998 to acquire 100,000 shares of A&B common stock and he
is eligible to receive discretionary bonuses as determined by the Compensation
and Stock Option Committee, in its sole discretion. Mr. Pfeiffer's employment
agreement also provides that the Second Amended and Restated Employment
Agreement between A&B and Mr. Pfeiffer, dated as of October 25, 1990, pursuant
to which Mr. Pfeiffer is entitled to receive certain benefits, will remain in
full force and effect.
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 1998,
approximately 56% 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 June 1994, approved stock ownership
guidelines 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 approximately
405 industrial companies, controlled for size and complexity. This survey data
includes none of the three 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 1998 Stock Option/Stock
Incentive Plan ("1998 Plan"). Stock options first were granted under the 1998
Plan, which replaced the 1989 Stock Option/Stock Incentive Plan, on August 26,
1998.
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 considers 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 1998, the base salaries of the Chief Executive Officer
and executive officers as a group were set to approximate a range between the
25th and 75th percentile of salaries in such diversified group.
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 1998 plan cycle, the corporate performance factors, and their
relative weights, were as follows: corporate profit before income tax (65%)
and return on adjusted net assets (35%). 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 20%-100% of the
incentive awards, depending upon the executive officer's corporate
responsibilities. For incentive awards granted for the 1996-1998 plan cycle,
the specific corporate performance factors, and their relative weights, were as
follows: corporate profit before income tax (65%) and return on adjusted net
assets (35%). 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, revenue, cost reduction, gross
margin, and cost of crops.
Stock option grants under the 1998 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
In 1998, the Committee approved a base salary increase for Mr. Couch, who
was Chief Executive Officer until July 27, 1998, based on his performance in
the previous year and the salaries of other executive officers with comparable
job responsibilities in the diversified group of companies selected by the
Committee's independent compensation consultant. In this regard, the
Committee's objective was to maintain a competitive base salary, which was set
to correspond to a level between the average and the 75th percentile of base
salaries in the selected diversified group of companies. Mr. Couch's award
under the Three-Year Plan for the 1996-1998 performance cycle was below target,
reflecting below-target corporate profit before income tax and below-target
return on adjusted net assets. Mr. Couch's award under the One-Year Plan for
1998 was below target, reflecting below-target corporate profit before income
tax and below-target return on adjusted net assets. Mr. Couch also received a
stock option grant totaling 70,000 shares in 1998. That grant was based on an
overall review of corporate performance in 1997, without focus on any specific
corporate performance measure, and an assessment of Mr. Couch's past and
expected contributions.
When Mr. Couch started his extended medical leave of absence, Mr.
Pfeiffer, at the request of the Board of Directors, agreed to resume his role
as CEO, a position he ably fulfilled for 12 years prior to his retirement in
1992. Mr. Pfeiffer agreed, among other things, to advise the Board of
Directors in selecting a new CEO, and to assist that individual on an interim
basis. Compensation for Mr. Pfeiffer, who served as CEO from July 27, 1998
until October 22, 1998, and who continues to serve as Chairman of the Board,
was determined by the Committee after taking into account recommendations by
its independent compensation consultant. The Committee decided on a
performance-oriented compensation package, consisting of a below-market salary,
a discretionary incentive, and a stock option grant of 100,000 shares in 1998.
Further, under the terms of A&B's employment agreement with Mr. Pfeiffer, he
does not participate in the One-Year Plan or Three-Year Plan.
Mr. Doane's base salary as CEO was determined by the Committee after
taking into account recommendations by its independent compensation consultant.
In determining Mr. Doane's salary, the Committee recognized the key leadership
role Mr. Doane assumed as CEO and, in connection with his promotion, provided a
substantial salary increase over his prior salary as CEO of A&B-Hawaii, Inc.
("ABHI"). Nonetheless, Mr. Doane's salary as CEO of A&B is below market.
Mr. Doane's awards under the Three-Year Plan for the 1996-1998 performance
cycle, and under the One-Year Plan for 1998, were above-target, reflecting
primarily above-target ABHI profit before income tax and above-target ABHI
return on adjusted net assets. In 1998, Mr. Doane received a stock option
grant totaling 25,700 shares. This grant was made to him in connection with
his role in 1997 as CEO of ABHI. It was based on the A&B stock option grant
target award guidelines adjusted by corporate performance and individual
performance, as determined by the Committee.
The foregoing report is submitted by Mr. Charles M. Stockholm (Chairman),
and Messrs. Michael J. Chun, Leo E. Denlea, Jr., and Charles G. King.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation and Stock Option Committee are
Mr. Stockholm, Chairman, and Messrs. Chun, Denlea, and Charles G. King. From
April 20, 1995 to November 1, 1998, Mr. Couch, who, until July 27, 1998, was
Chairman of the Board, President and Chief Executive Officer of A&B, served as
a member of the Executive Compensation Committee of First Hawaiian, Inc. (now
known as BancWest Corporation) During this time, Mr. Dods, a director of A&B,
was 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 32 percent participation in and is agent
for a $140,000,000 revolving credit and term loan agreement with A&B and ABHI,
under which $35,000,000 was outstanding at February 12, 1999, (ii) has a
revolving credit agreement with A&B under which the amount outstanding
($7,500,000 at February 12, 1999), when combined with First Hawaiian Bank's
share of amounts drawn under the previously-described $140,000,000 revolving
credit and term loan agreement, may not exceed $45,000,000, (iii) had, until
Matson's purchase of the S.S. Lurline on August 23, 1998, 16.34 percent and
16.08 percent beneficial interests in trusts that held 20 percent equity
investments in the original hull and midbody improvements, respectively, of the
S.S. Lurline, a vessel chartered to Matson, which interests were received in
consideration of an aggregate equity investment participation commitment of
$2,040,500, (iv) has a $25,000,000 revolving credit facility with Matson to
support the issuance of commercial paper, under which no amount was outstanding
at February 12, 1999, (v) has issued letters of credit totaling $12,951,000 on
behalf of Matson for insurance security purposes, (vi) has issued letters of
credit totaling $2,019,845 on behalf of A&B Properties, Inc. to secure
obligations to governmental agencies in connection with real estate develop-
ments, (vii) had a 47 percent participation in an $85,000,000 revolving credit
facility with California and Hawaiian Sugar Company, Inc. ("C&H"), which
participation terminated in January 1999, and (viii) has issued a $10,432,000
letter of credit on behalf of C&H for insurance security purposes.
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 four 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.
*$100 INVESTED ON DECEMBER 31, 1993 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.
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Alexander & Baldwin, Inc. 100 86 93 104 118 104
S&P Composite - 500 100 101 139 171 229 294
DJ Marine Transportation 100 92 105 128 154 95
DJ Real Estate Investment 100 95 118 158 187 145
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 1999
Proposals of shareholders intended to be presented pursuant to Rule 14a-8
under the Exchange Act at the Annual Meeting of A&B in the year 2000 must be
received at the headquarters of A&B on or before November 9, 1999 in order to
be considered for inclusion in the year 2000 proxy statement and proxy. In
order for proposals of shareholders made outside of Rule 14a-8 under the
Exchange Act to be considered "timely" within the meaning of Rule 14a-4(c)
under the Exchange Act, such proposals must be received at the headquarters of
A&B not later than January 23, 2000. A&B's Bylaws require that proposals of
shareholders made outside of Rule 14a-8 under the Exchange Act must be
submitted, in accordance with the requirements of the Bylaws, not later than
January 23, 2000 and not earlier than December 24, 1999.
By Order of the Board of Directors
/s/ Alyson J. Nakamura
ALYSON J. NAKAMURA
Secretary
March 8, 1999
<PAGE>
PROXY CARD
A&B
ALEXANDER & BALDWIN, INC.
822 Bishop Street, Honolulu, Hawaii 96813
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 22, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W. A. Doane, 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 22, l999, and at 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.
FOR WITHOUT AUTHORITY Doane, W. A. Dods, Jr.,
all nominees to vote for all nominees C. G. King, C. R.
listed to the right listed to the right McKissick, C. B. Mulholland,
__ __ R. J. Pfeiffer, L. M.
|__| |__| Sedway, M. G. Shaw, C. M.
Stockholm.
(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 properly may 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 PROPERLY
MAY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
DATED: , 1999
--------------------------------------
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.
<PAGE>
