SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
CPB INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11c(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated
and state how it was determined):
---------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
<PAGE>
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------
3) Filing Party:
--------------------------------------------------------
4) Date Filed:
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<PAGE>
CPB INC.
220 South King Street
Honolulu, Hawaii 96813
(808) 544-0500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1996
TO THE SHAREHOLDERS OF CPB INC.:
NOTICE IS HEREBY GIVEN that, pursuant to its Bylaws and the
call of its Board of Directors, the Annual Meeting of
Shareholders (the "Meeting") of CPB Inc. (the "Company") will be
held on the third floor of the Central Pacific Plaza Building,
220 South King Street, Honolulu, Hawaii 96813, on Tuesday, April
23, 1996, at 10:00 a.m., Hawaii time, for the purpose of
considering and voting upon the following matters:
1. ELECTION OF DIRECTORS. To elect three persons to the
Board of Directors for a term of three years and to serve until
their successors are elected and qualified, as more fully
described in the accompanying Proxy Statement.
2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
ACCOUNTANTS. To ratify the appointment of KPMG Peat Marwick LLP
as the Company's independent accountants for the fiscal year
ending December 31, 1996.
3. OTHER BUSINESS. To transact such other business as may
properly come before the Meeting and at any and all adjournments
thereof.
Only those shareholders of record at the close of business
on February 29, 1996 shall be entitled to notice of and to vote
at the Meeting.
SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY
IN THE POSTAGE PREPAID ENVELOPE AS PROMPTLY AS POSSIBLE, WHETHER
OR NOT THEY PLAN TO ATTEND THE MEETING IN PERSON. SHAREHOLDERS
WHO ATTEND THE MEETING MAY WITHDRAW THEIR PROXY AND VOTE IN
PERSON IF THEY WISH TO DO SO.
By order of the Board of
Directors
(signed)
AUSTIN Y. IMAMURA
Vice President and Secretary
Dated: March 25, 1996
<PAGE>
CPB INC.
220 South King Street
Honolulu, Hawaii 96813
(808) 544-0500
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 23, 1996
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitation of proxies ("Proxies") by the Board of Directors of
CPB Inc. (the "Company") for use at the Annual Meeting of
Shareholders (the "Meeting") of the Company to be held on the
third floor of the Central Pacific Plaza Building, 220 South King
Street, Honolulu, Hawaii 96813, on Tuesday, April 23, 1996, at
10:00 a.m., Hawaii time, and at any and all adjournments thereof.
This Proxy Statement and accompanying Notice will be mailed to
shareholders on or about March 25, 1996.
Matters to be Considered
The matters to be considered and voted upon at the Meeting
will be:
1. ELECTION OF DIRECTORS. To elect three persons to the
Board of Directors for a term of three years and to serve until
their successors are elected and qualified.
2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
ACCOUNTANTS. To ratify the appointment of KPMG Peat Marwick LLP
as the Company's independent accountants for the fiscal year
ending December 31, 1996.
3. OTHER BUSINESS. To transact such other business as may
properly come before the Meeting and at any and all adjournments
thereof.
Voting and Revocability of Proxies
A Proxy for use at the Meeting is enclosed. Any shareholder
who executes and delivers such Proxy has the right to revoke it
at any time before it is exercised by filing with the Secretary
of the Company an instrument revoking it or a duly executed Proxy
bearing a later date. It may also be revoked by attendance at
the Meeting and election to vote in person thereat. Subject to
such revocation, all shares represented by a properly executed
Proxy received in time for the Meeting will be voted by the Proxy
Holders in accordance with the instructions on the Proxy. If no
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<PAGE>
instructions are specified with respect to matters to be acted
upon, the shares represented by the Proxy will be voted "FOR" the
election of all nominees as directors and "FOR" ratification of
the appointment of KPMG Peat Marwick LLP as the Company's
independent accountants for the fiscal year ending December 31,
1996. It is not anticipated that any matters will be presented
at the Meeting other than as set forth in the accompanying Notice
of the Meeting. If any other matters are presented properly at
the Meeting, however, the Proxy will be voted by the Proxy
Holders in accordance with the recommendations of the Board of
Directors.
If you hold your shares of common stock, no par value
("Common Stock") in "street name" and you fail to instruct your
broker or nominee as to how to vote your Common Stock, your
broker or nominee may, in its discretion, vote your Common Stock
"FOR" the election of the Board of Directors' nominees and "FOR"
the proposal to ratify the appointment of KPMG Peat Marwick LLP
as the Company's independent accountants for the fiscal year
ending December 31, 1996.
Cost of Solicitations of Proxies
This solicitation of Proxies is made on behalf of the Board
of Directors of the Company and the Company will bear the costs
of solicitation. The expense of preparing, assembling, printing
and mailing this Proxy Statement and the materials used in this
solicitation of Proxies also will be borne by the Company. It is
contemplated that Proxies will be solicited principally through
the mail, but directors, officers and regular employees of the
Company or its subsidiary, Central Pacific Bank (the "Bank"), may
solicit Proxies personally or by telephone. Although there is no
formal agreement to do so, the Company may reimburse banks,
brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expenses in forwarding these proxy materials
to their principals. The Company does not intend to utilize the
services of other individuals or entities not employed by or
affiliated with the Company in connection with the solicitation
of Proxies.
Outstanding Securities and Voting Rights
The close of business on February 29, 1996 has been fixed as
the record date ("Record Date") for the determination of the
shareholders of the Company entitled to notice of and to vote at
the Meeting. There were 5,263,222 shares of Common Stock issued
and outstanding on the Record Date.
Each holder of Common Stock will be entitled to one vote, in
person or by proxy, for each share of Common Stock standing in
his or her name on the books of the Company as of the Record Date
on any matter submitted to the vote of the shareholders, except
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that in connection with the election of directors, the shares are
entitled to be voted cumulatively, provided that not less than
forty-eight hours prior to the time fixed for the Meeting, a
written request for such cumulative vote has been delivered to
the Secretary of the Company. If a shareholder has given such
request, all shareholders may cumulate their votes for candidates
in nomination. Cumulative voting entitles a shareholder to give
one nominee as many votes as is equal to the number of directors
to be elected multiplied by the number of shares of stock owned
by such shareholder, or to distribute his or her votes on the
same principle between two or more nominees as he or she sees
fit. Nominees receiving the highest number of votes on the
foregoing basis up to the total number of directors to be elected
will be elected directors. Accordingly, abstentions from voting
or votes withheld from the election of directors will have no
effect in an uncontested election. Discretionary authority to
cumulate is hereby solicited by the Board of Directors and return
of the Proxy shall grant such authority.
The proposal to ratify the appointment of KPMG Peat Marwick
LLP as the Company's independent accountants requires the
affirmative vote of shareholders holding not less than a majority
of the shares of the Company's Common Stock represented and
entitled to vote at the Meeting. Accordingly, an abstention from
voting on the proposal to ratify the appointment of KPMG Peat
Marwick LLP will have the effect of a vote "AGAINST" the
proposal.
Principal Shareholders
As of February 29, 1996, the following entities were the
only entities known to Management of the Company to beneficially
own more than five percent of the Company's outstanding Common
Stock.
3
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Title of Name and Address Beneficial Percent
Class of Beneficial Owner Ownership of Class
- -------- ------------------- ---------- --------
<S> <C> <C>
Common The Sumitomo Bank, Limited 722,801<F1> 13.73%<F2>
6-5 Kitahama 4-Chome,
Chuo-ku
Osaka, Japan
Common The Committee of the Central 540,562<F3> 10.27%
Pacific Bank Employee Stock
Ownership Plan
220 South King Street
Honolulu, Hawaii 96813
Common State of Wisconsin 275,000<F4> 5.22%
Investment Board
P.O. Box 7842
Madison, Wisconsin 53707
<FN>
<F1> Includes 11,051 additional shares issued pursuant to the
Share Purchase Agreement between the Company and The
Sumitomo Bank, Limited ("Sumitomo") and based upon the
exercise of Stock Options by participants of the Stock
Option Plan. See "ELECTION OF DIRECTORS -- Transactions."
<F2> This percentage is computed as if the 11,051 shares
described in footnote 1 were outstanding. However, the
11,051 shares are not deemed to be outstanding for the
purpose of computing the percentage of Common Stock owned by
any other person.
<F3> Under the terms of the Employee Stock Ownership Plan of
Central Pacific Bank ("ESOP"), shares of the Common Stock of
the Company are held in trust by Central Pacific Bank, the
trustee under the ESOP Trust ("Trustee"), for the exclusive
benefit of the participants. The Trustee is the
recordholder of the Common Stock held by the ESOP; however,
the Committee of the ESOP (the "ESOP Committee"), which
consists of five members, gives the Trustee investment
instructions with respect to all of the ESOP assets and
voting instructions with respect to those shares held by the
ESOP for which the voting rights have not passed through to
participants. At February 29, 1996, all of the shares of
Common Stock held by the ESOP had been allocated to the
accounts of participants. Although the members of the ESOP
Committee share among themselves as committee members
dispositive power, subject to the terms of the ESOP, over
all of the shares held by the ESOP and, therefore, pursuant
to the applicable regulations promulgated pursuant to the
Securities Exchange Act of 1934, as amended, are technically
the beneficial owners of such shares, the actual beneficial
owners are the employees who participate in the ESOP. The
members of the ESOP Committee, therefore, disclaim
4
<PAGE>
beneficial ownership of such shares held in trust which are
otherwise attributable to them by virtue of serving on such
ESOP Committee.
<F4> Based upon information provided by this shareholder.
</TABLE>
5
<PAGE>
ELECTION OF DIRECTORS
Under the Company's Restated Articles of Incorporation and
Bylaws, which provide for a "classified" Board, three directors
(out of a present total of nine) are to be elected at the Meeting
to serve three-year terms expiring at the 1999 Annual Meeting of
Shareholders and until their respective successors are elected
and qualified. The Company's Bylaws currently provide for nine
directors, three each serving as Class I, Class II and Class III
directors. Nominees for the election at the Meeting will serve
as Class II directors.
There are no family relationships among directors or
executive officers of the Company, and, except as set forth
below, as of the date hereof, no directorships are held by any
director with a company which has a class of securities
registered pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or subject to the
requirements of Section 15(d) of the Exchange Act or any company
registered as an investment company under the Investment Company
Act of 1940. Mr. Stanley Hong, a director of the Company, serves
as director of the following companies: Capital Investment of
Hawaii, Inc., First Insurance Company of Hawaii, Ltd., Theo H.
Davies & Co., Ltd. and Hawaiian Tax Free Trust: Pacific Capital
Funds.
All nominees have indicated their willingness to serve and
unless otherwise instructed, Proxies will be voted for all of the
nominees. However, in the event that any of them should be
unable to serve, the Proxy Holders named on the enclosed Proxy
Card will vote in their discretion for such persons as the Board
of Directors may recommend.
The following table sets forth certain information, as of
February 29, 1996, with respect to each of the directors,
nominees and the Named Executives (as defined below) as well as
all continuing directors and executive officers of the Company,
as a group:
<TABLE>
<CAPTION>
Common Stock
Beneficially
First Year Owned on February
Elected or 29, 1996<F2>
Principal Appointed as -----------------------------------
Occupation Officer or Percent
for the Past Director of of Term
Name Five Years Age the Company<F1> Number Class<F3> Expires
- ----------- ---------------- ---- --------------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
DEVENS, Vice Chairman of 64 1980 2,221<F4> * 1997
Paul the Board of
(Class III Company; Attorney
Director) at Law; Of Counsel
(1994 - present),
Partner (1975 - 1994),
6
<PAGE>
Devens, Lo, Nakano
Saito, Lee & Wong
GUILD, Retired, former 61 1980 1,056 * 1996
Alice F. Managing Director, Iolani
(Class II Palace (1986-1991)
Director,
Nominee)
HIROTA, President, Sam O. 55 1980 2,900<F6> * 1998
Dennis I., Hirota, Inc. - Engineering
Ph.D. and Surveying (1986-present);
(Class I Registered Professional
Director) Engineer<F5>
HONG, Attorney-at-Law (1995- 59 1993 200<F7> * 1997
Stanley present); Senior Vice
(Class III President -- Properties,
Director) McCormack Corp.
(1993-1994); President
and Chief Executive
Officer, Hawaii Visitors
Bureau (1984-1993)
HOTTA, Senior Managing Director 57 1993 -- <F8> * 1998
Kensuke and Executive Committee
(Class I Member in Charge of Inter-
Director) national Banking at Head
Office, The Sumitomo Bank,
Limited (1993-present);
Senior Managing Director
and Member of the Executive
Committee of The Sumitomo
Bank, Limited (1992-1993);
Managing Director of The
Sumitomo Bank, Limited
(1990-1992)
NAGAMINE, President, Flamingo 54 1983 5,280<F9> * 1996
Daniel M. Enterprises, Inc.
(Class II (1985-present); General
Director, Partner, Flamingo
Nominee) Downtown, a limited
partnership (1981-
present); Certified
Public Accountant
7
<PAGE>
SAITO, Chairman and Chief 60 1989 16,697<F11> * 1998
Joichi Executive Officer of Company
(Class I) (1996-present); President
Director) of Company (1992-
1995); Executive Vice
President of Company
(1988-1992); Chairman
of the Board and Chief
Executive Officer of Bank
(1996-present); President
and Chief Operating
Officer of Bank (1989-1995);
<F5><F10>
SATOH, Retired; Chairman of the 67 1975 29,991<F13> * 1997
Yoshiharu Board and Chief Executive
(Class III Officer of Company
Director) (1992-1995); Chairman
of the Board, President
and Chief Executive
Officer of Company
(1990-1992); President
and Chief Executive
Officer of Company
(1982-1990); Chairman
of the Board and Chief
Executive Officer
of Bank (1988-1995)
<F5><F12>
SHIBUYA, President of Company 54 1995 388<F14> * 1996
Naoaki (1996-present);
(Class II Executive Vice President
Director, of Company (1993-1995);
Nominee) Vice President of Company
(1993-1995); President and
Chief Operating Officer of
Bank (1996-present);
Executive Vice President
of Bank (1993-1995); Executive
Vice President of The
Sumitomo Bank of California
(1989-1993)<F5>
8
<PAGE>
IMAMURA, Vice President and 49 1991 5,902<F15> * N/A
Austin Y. Secretary of Company
(1991-present); Executive
Vice President and
Secretary of Bank (1991-
present); Senior Vice
President and Secretary
of Bank (1991); Senior
Vice President of Bank
(1987-1991);
KANDA, Vice President and Treasurer 47 1991 5,450<F16> * N/A
Neal K. of the Company (1991-present);
Executive Vice President
and Controller of
Bank (1993-present);
Senior Vice President
and Controller of
Bank (1990-1993)
All Directors 90,689<F17> 1.72%
and Executive
Officers,
as a Group
(11 persons)
* Less than 1%.
9
<PAGE>
<FN>
<F1> All directors of the Company are also directors of the
Bank. Dates prior to the formation of the Company in
1982 indicate the year first appointed director of the
Bank. Dr. Hirota, Mrs. Guild and Messrs. Devens,
Nagamine, and Satoh commenced service as directors of the
Company on February 1, 1982, the date of formation of the
Company. Dr. Hirota, Mrs. Guild and Mr. Nagamine served
as directors of the Company until April 23, 1985 when the
Company's shareholders adopted a classified Board and
reduced the number of directors to nine. However, Dr.
Hirota, Mrs. Guild and Mr. Nagamine continued to serve on
the Bank's Board until they were reelected to the
Company's Board in 1986, 1990, and 1990, respectively.
Mr. Hong has been a director of the Bank since 1985. Mr.
Shibuya has been a director of the Bank since 1994.
<F2> Except as otherwise noted below, each person has sole
voting and investment powers with respect to the shares
listed.
<F3> In computing the percentage of shares beneficially owned,
the number of shares which the person (or group) has a
right to acquire within 60 days after February 29, 1996
are deemed outstanding for the purpose of computing the
percentage of Common Stock beneficially owned by that
person (or group) but are not deemed outstanding for the
purpose of computing the percentage of shares
beneficially owned by any other person.
<F4> Includes 1 share held of record by Devens, Lo, Nakano,
Saito, Lee and Wong, a partnership for which Mr. Devens
is of counsel.
<F5> Messrs. Hirota, Saito, Satoh and Shibuya are also
directors of CPB Properties, Inc., a wholly-owned
subsidiary of the Bank.
<F6> Includes 1,180 shares for which Dr. Hirota has shared
voting and investment powers with his wife, Kathryn
Hirota.
<F7> Includes 200 shares for which Mr. Hong has shared voting
and investment powers with his wife, Karen Ho Hong.
<F8> Does not include 711,750 shares held of record by
Sumitomo, of which Mr. Hotta is a Senior Managing
Director, and 11,051 shares which Sumitomo has the right
to acquire by the exercise of warrants. With respect to
shares described in the preceding sentence, Mr. Hotta
disclaims any beneficial ownership.
10
<PAGE>
<F9> Includes 5,280 shares for which Mr. Nagamine has shared
voting and investment powers with his wife, Maxine
Nagamine.
<F10> Mr. Saito was formerly an officer of Sumitomo and is now
retired from Sumitomo.
<F11> Includes 1,500 shares for which Mr. Saito has shared
voting and investment powers with his wife, Yoko Saito,
9,680 shares which Mr. Saito has the right to acquire by
the exercise of stock options vested pursuant to the
Company's 1986 Stock Option Plan and 5,517 shares
allocated to Mr. Saito's account under the Bank's ESOP.
<F12> Mr. Satoh was formerly an officer of Sumitomo and is now
retired from Sumitomo.
<F13> Includes 10,144 shares held in the name of Yoshiharu
Satoh Revocable Living Trust, Yoshiharu Satoh Trustee,
and 6,904 shares held in the name of Ikuko Satoh
Revocable Living Trust, Ikuko Satoh Trustee, for which
Mr. Satoh has shared voting and investment powers with
his wife, Ikuko Satoh. Also includes 12,943 shares
allocated to Mr. Satoh's account under the Bank's ESOP.
<F14> Includes 200 shares for which Mr. Shibuya has shared
voting and investment powers with his wife, Tsuneko
Shibuya and 188 shares allocated to Mr. Shibuya's account
under the Bank's ESOP.
<F15> Includes 1,000 shares for which Mr. Imamura has shared
voting and investment powers with his wife, Patricia
Imamura, and 4,902 shares allocated to Mr. Imamura's
account under the Bank's ESOP.
<F16> Includes 1,470 shares allocated to Mr. Kanda's account
under the Bank's ESOP. Also includes 3,780 share which
Mr. Kanda has the right to acquire by the exercise of
stock options vested pursuant to the Company's 1986 Stock
Option Plan.
<F17> Includes 16,065 shares for which certain directors and
officers have shared voting and investment powers, 13,640
shares which members of the group have the right to
acquire by the exercise of stock options vested pursuant
to the Company's 1986 Stock Option Plan and 25,020 shares
allocated to the accounts of executive officers under the
Bank's ESOP. Also includes 20,604 shares attributable to
members of the group who serve on the ESOP Committee
which have been released from the suspense account but
have not yet been allocated to the accounts of
participants, but does not include 519,958 shares held of
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<PAGE>
record by the ESOP Trustee as to which voting rights have
passed through to participants and as to which such ESOP
Committee members disclaim beneficial ownership.
</TABLE>
12
<PAGE>
The Board of Directors and Committees
The Board of Directors of the Company has various standing
committees, including an Executive Committee, a Nominating
Committee, an Audit Committee and a Stock Option Plan Committee.
The Board has no standing Compensation Committee.
The Executive Committee, which did not hold any meetings
during 1995, is chaired by Mr. Devens, and Messrs. Hirota and
Satoh are members. The purpose of the Executive Committee is,
among other things, to manage the business affairs of the Company
while not in conflict with specific directives that may be given
by the Board of Directors.
The Nominating Committee held one meeting during 1995. The
committee is chaired by Mr. Devens, and Messrs. Hirota, Hong,
Nagamine and Satoh are members. It is responsible for
recommending nominees for directors of the Company. It will
consider nominees for election at the 1997 Annual Meeting of
Shareholders recommended by shareholders if such recommendations
are received in writing prior to December 15, 1996. Shareholder
recommendations should be addressed to the Company's Secretary,
P.O. Box 3590, Honolulu, Hawaii 96811.
The Audit Committee held one meeting during 1995. The
committee is chaired by Mr. Nagamine, and Messrs. Devens, Hirota
and Mrs. Guild are members. The primary functions of the Audit
Committee are to review various financial and audit reports and
to make recommendations concerning the appointment of independent
accountants.
The Stock Option Plan Committee held one meeting during
1995. This committee is chaired by Dr. Hirota, and Mr. Devens
and Mrs. Guild are members. The committee's primary functions
include determining individuals to whom options will be granted
and their terms and making periodic reports to the Board of
Directors as to the status of the Company's Stock Option Plan.
During the fiscal year ended December 31, 1995, the Board of
Directors of the Company held a total of six meetings. All of
the persons who were directors of the Company during 1995
attended at least 75% of the aggregate of (1) the total number of
such Board meetings and (2) the total number of meetings held by
all committees of the Board on which they served during the year,
except for Mr. Hotta.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
BOARD OF DIRECTORS' NOMINEES.
13
<PAGE>
Compensation of Directors and Executive Officers
Executive Compensation
Summary of Cash and Certain Other Compensation
The following table sets forth certain summary information
concerning compensation paid or accrued by the Company to or on
behalf of the Company's Chief Executive Officer and each of the
four other executive officers of the Company (determined as of
the end of the last fiscal year) whose annual salary and bonus
exceeded $100,000 in 1995 (the "Named Executives") for each of
the fiscal years ended December 31, 1995, 1994 and 1993:
14
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
------------
Awards
------------ All Other
Name and Principal Position Year Salary Bonus Options (#) Compensation
- --------------------------- ----- ------- ------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Yoshiharu Satoh 1995 $392,902 <F2> $446,510 -- $19,639<F3>
Chairman of the Board
and Chief 1994 363,328 -- -- 19,965<F4>
Officer<F1>
1993 320,000 200 -- 36,444<F5>
Joichi Saito 1995 244,992 -- -- 19,273<F6>
President<F7>
1994 236,661 -- -- 19,637<F8>
1993 213,333 200 -- 32,793<F9>
Naoaki Shibuya 1995 160,000 -- 9,500 18,648<F10>
Executive Vice President<F11>
1994 156,667 -- -- 35<F12>
1993 6,250 200 -- --
Austin Y. Imamura 1995 150,000 -- -- 18,447<F13>
Vice President and
Secretary 1994 145,667 -- -- 18,353<F14>
1993 133,000 200 -- 20,106<F15>
Neal K. Kanda 1995 112,000 -- -- 13,761<F16>
Vice President
and Treasurer 1994 109,333 -- -- 13,763<F17>
1993 97,167 200 -- 14,681<F18>
<FN>
<F1> Mr. Satoh retired from the Company as of December 31,
1995.
<F2> Includes $12,902 of accumulated vacation pay.
<F3> Includes contributions to the Bank's Cash or Deferred
Arrangement ("CODA")/Profit Sharing Plan, the Bank's ESOP,
the Bank's Split Dollar Life Insurance Plan and the SERP
for the account of Mr. Satoh of $7,294, $10,879, and
$1,466, respectively.
<F4> Includes contributions to the Bank's CODA/Profit Sharing
Plan, the Bank's ESOP and the Bank's Split Dollar Life
Insurance Plan for the account of Mr. Satoh of $7,500,
$11,155, and $1,310 respectively.
<F5> Includes contributions to the Bank's Profit Sharing Plan,
the Bank's ESOP and the Bank's Split Dollar Life Insurance
Plan for the account of Mr. Satoh of $14,073, $21,211, and
$1,160 respectively.
15
<PAGE>
<F6> Includes contributions to the Bank's CODA/Profit Sharing
Plan, the Bank's ESOP and the Bank's Split Dollar Life
Insurance Plan for the account of Mr. Saito of $7,294,
$10,879, and $1,100, respectively.
<F7> Mr. Saito was named Chairman of the Board and Chief
Executive Officer of the Company effective January 1, 1996
by the Board of Directors.
<F8> Includes contributions to the Bank's CODA/Profit Sharing
Plan, the Bank's ESOP and the Bank's Split Dollar Life
Insurance Plan for the account of Mr. Saito of $7,500,
$11,155, and $982, respectively.
<F9> Includes contributions to the Bank's Profit Sharing Plan,
the Bank's ESOP and the Bank's Split Dollar Life Insurance
Plan for the account of Mr. Saito of $12,730, $19,187, and
$876, respectively.
<F10> Includes contributions to the Bank's CODA/Profit Sharing
Plan, the Bank's ESOP and the Bank's Split Dollar Life
Insurance Plan for the account of Mr. Shibuya of $7,294,
$10,879, and $475, respectively.
<F11> Mr. Shibuya was named President of the Company on January
1, 1996 by the Board of Directors.
<F12> Represents a contribution to the Bank's Split Dollar Life
Insurance Plan for the account of Mr. Shibuya.
<F13> Includes contributions to the Bank's CODA/Profit Sharing
Plan, the Bank's ESOP and the Bank's Split Dollar Life
Insurance Plan for the account of Mr. Imamura of $7,294,
$10,879 and $274, respectively.
<F14> Includes contributions to the Bank's CODA/Profit Sharing
Plan, the Bank's ESOP and the Bank's Split Dollar Life
Insurance Plan for the account of Mr. Imamura of $7,284,
$10,833 and $236, respectively.
<F15> Includes contributions to the Bank's Profit Sharing Plan,
the Bank's ESOP and the Bank's Split Dollar Life Insurance
Plan for the account of Mr. Imamura of $7,937, $11,962,
and $207, respectively.
<F16> Includes contributions to the Bank's CODA/Profit Sharing
Plan, the Bank's ESOP and the Bank's Split Dollar Life
Insurance Plan for the account of Mr. Kanda of $5,446,
$8,123, and $192, respectively.
<F17> Includes contributions to the Bank's CODA/Profit Sharing
Plan, the Bank's ESOP and the Bank's Split Dollar Life
16
<PAGE>
Insurance Plan for the account of Mr. Kanda of $5,467,
$8,131 and $165, respectively.
<F18> Includes contributions to the Bank's Profit Sharing Plan,
the Bank's ESOP and the Bank's Split Dollar Life Insurance
Plan for the account of Mr. Kanda of $5,798, $8,739 and
$144, respectively.
</TABLE>
Option Grants
The following options were granted during 1995 to the
Named Executives:
<TABLE>
<CAPTION>
Option<F1> Grants in 1995
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term <F3>
------------------------------------------------------------ -------------------------
% of Total Options Exercise or
Options Granted to Base Price Expiration 5% 10%
Name Granted (#) Employees in 1995 ($/#) Date ($) ($)
- ---------------- ------------ ----------------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
SATOH, Yoshiharu -- -- -- -- -- --
SAITO, Joichi -- -- -- -- -- --
SHIBUYA, Naoaki 9,500<F2> 13.6% $26.08 6/14/2005 $155,800 $394,820
IMAMURA, Austin -- -- -- -- -- --
KANDA, Neal K. -- -- -- -- -- --
<FN>
<F1> The Company has no compensation plans pursuant to which
stock appreciation rights may be granted.
<F2> The options were granted pursuant to the Stock Option Plan.
The options become exercisable in annual installments of 25%
on each of the first, second, third, fourth and fifth
anniversary dates of the grant. The options may be
exercised at any time prior to their expiration by tendering
the exercise price in cash, check or in shares of stock
valued at fair market value on the date of exercise. In the
event of a change in control (as defined) involving the
Company, the options will become exercisable in full. The
options may be amended by mutual agreement of the optionee
and the Company.
<F3> The Potential Realizable Value is the product of (a) the
difference between (i) the closing average market price per
share at the grant date and the sum of (A) 1 plus (B) the
assumed rate of appreciation of the Common Stock compounded
annually over the term of the option and (ii) the per share
exercise price of the option and (b) the number of shares of
Common Stock underlying the option on the date of the grant.
These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option
17
<PAGE>
exercises are dependent on a variety of factors, including
market conditions and the price performance of the Stock.
There can be no assurance that the rate of appreciation
presented in this table can be achieved.
</TABLE>
Option Exercises and Holdings
The following table provides information with respect to the
Named Executives concerning the exercise of options during the
fiscal year ended December 31, 1995 and unexercised options held
by the Named Executives as of December 31, 1995:
18
<TABLE>
<CAPTION>
Aggregated Option<F1> Exercises in 1995
and Year-End Option Values
Value of Unexercised
Number of Unexercised In-the-Money Options<F2>
Shares Options at 12/31/95 at 12/31/95
Acquired Value
on Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
SATOH, Yoshiharu -- N/A 9,240 -- $245,868 --
SAITO, Joichi -- N/A 9,680 -- 171,160 --
SHIBUYA, Naoaki -- N/A -- 9,500 -- 56,240
IMAMURA, Austin Y. -- N/A -- -- -- $--
KANDA, Neal K. -- N/A 3,780 2,520 24,759 16,506
<FN>
<F1> The Company has no compensation plans pursuant to which
stock appreciation rights may be granted.
<F2> The value of unexercised "in-the-money" options is the
difference between the market price of the Common Stock
on December 29, 1995 ($32.00 per share) and the exercise
price of the option, multiplied by the number of shares
subject to the option.
</TABLE>
Defined Benefit Pension Plan
The table below shows estimated annual retirement
benefits at age 65 for various levels of executive compensation
and service under the Bank's Defined Benefit Pension Plan.
<TABLE>
<CAPTION>
Pension Plan Table
Annualized Final Years of Service
Average ----------------------------------------------------------------------------------
Compensation 15 Years 20 Years 25 Years 30 Years 35 Years
- --------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$50,000 $ 11,250 $ 15,000 $ 18,750 $ 22,500 $ 26,250
100,000 22,500 30,000 37,500 45,000 52,500
150,000 33,750 45,000 56,250 67,500 78,750
200,000 45,000 60,000 75,000 90,000 105,000
250,000 56,250 75,000 93,750 112,500 131,250
300,000 67,500 90,000 112,500 135,000 157,500
350,000 78,750 105,000 131,250 157,500 183,750
400,000 90,000 120,000 150,000 180,000 210,000
450,000 101,250 135,000 168,750 202,500 236,250
500,000 112,500 150,000 187,500 225,000 262,500
</TABLE>
19
<PAGE>
Under the Defined Benefit Pension Plan, benefits are based
upon the employee's years of service and highest average annual
salary in the final 60-consecutive month period of service,
excluding the period between June 30, 1986 and January 1, 1991,
when the Defined Benefit Pension Plan was curtailed. The
credited years of service as of December 31, 1995 for Messrs.
Satoh, Saito, Shibuya, Imamura and Kanda are 23, 8, 2, 9, and 5,
respectively.
Compensation of Directors
The Company and the Bank each has a policy of paying fees to
directors for their attendance at board meetings and committee
meetings. The Company and the Bank pay $800 per board meeting to
all directors and $600 per board committee meeting to non-officer
directors. In addition, the Company pays $4,000 annually to each
director (excluding officers) and the Bank pays $10,000 annually
to each director (excluding officers). CPB Properties, Inc.
pays $600 per board meeting to its directors.
Non-officer directors of the Company are eligible to
participate in the Company's Stock Option Plan.
Report of Board of Directors to Shareholders
The Board of Directors of the Company establishes the
general policies regarding compensation for the Bank's employees,
adopts and amends employee compensation plans and approves
specific compensation levels for executive officers, including
the Named Executives. The Bank's Compensation Committee (the
"Compensation Committee") implements and monitors the Board's
policies regarding compensation, recommends changes to
compensation policies or compensation plans and makes
recommendations regarding specific compensation levels for
executives. Currently, the members of the Compensation Committee
are Paul Devens, Alice F. Guild, Dennis I. Hirota, Ph.D. (chair),
Clayton K. Honbo, M.D., Paul Kosasa and Gilbert J. Matsumoto.
Each member of the Compensation Committee is a non-employee
director of the Company and/or the Bank. The Company has also
retained the services of a compensation consultant to provide
input and data to the Compensation Committee.
Set forth below is a report of the Board of Directors
addressing the Company's compensation policies for 1995
applicable to the Company's executives, including the Named
Executives.
The Report of the Board of Directors on Executive
Compensation shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement
into any filing under the Securities Act of 1933 (the "Securities
Act") or under the Exchange Act, except to the extent that the
20
<PAGE>
Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company's compensation programs reflect the philosophy
that executive compensation levels should be linked to Company
performance, yet be competitive and consistent with that provided
to others holding positions of similar responsibility in the
banking and financial services industry. The Company's
compensation plans are designed to assist the Company in
attracting and retaining qualified employees critical to the
Company's long-term success, while enhancing employees'
incentives to perform to their fullest abilities to increase
profitability and maximize shareholder value. With the exception
of the 1995 Annual Executive Incentive Plan (the "Annual
Incentive Plan") and the Supplemental Executive Retirement Plan
(the "SERP"), the Company's compensation plans are generally
available to all employees, subject to certain hours and years
of service requirements. In addition, the Board of Directors has
reserved the authority to grant discretionary awards to
individual employees where deemed appropriate.
Salary Compensation
The Company pays cash salaries to its executive officers
which are competitive with salaries paid to executives of other
companies in the banking and financial services industry based
upon the individual's experience, performance and
responsibilities and past and potential contribution to the
Company. In determining the market rate, the Company obtains
information regarding executive salary levels for other companies
in the banking and financial services industry, especially among
the larger Hawaii banks. The relative asset size and
profitability levels of these institutions are also considered.
Based upon current asset size, the Company is the third largest
Hawaii bank. On April 25, 1995, the Company's Board of Directors
set the compensation for all executive officers for the ensuing
year, effective May 1, 1995.
In determining the compensation of the Company's Chief
Executive Officer, the Board considered the factors described
above, along with other performance criteria, such as the
Company's 1994 earnings performance, management of credit risk
and growth. The Company weighted each of these factors
relatively equally. The Company's 1994 net income decreased by
15.4% from 1993, compared with an increase of 9.2% over 1992.
Return on average assets was 1.03% in 1994, compared with 1.29%
in 1993. The level of nonperforming assets, past due loans and
charge-offs also increased. Total assets increased by 6.1% in
1994, compared with 4.0% in 1993. In assessing the Company's
performance, the Board also took into account economic conditions
21
<PAGE>
in Hawaii.
Based upon the foregoing, although the Bank's officers
received salary increases averaging 1-1/2% over the prior year,
the Named Executives, including the Chief Executive Officer, did
not receive increases in their base salary for 1995.
Incentive Compensation
During 1995, the Bank had four programs whereby individual
compensation was directly linked to the Company's performance:
the Incentive Cash Bonus Program (the "Bonus Plan"), the Profit
Sharing Plan, the ESOP and the Annual Incentive Plan.
Bonus Plan. The Bonus Plan was adopted in 1990 to provide
an opportunity pursuant to which employees could receive cash
bonuses annually. All employees of the Bank who are employed at
the end of the fiscal year and persons who retired during the
year after attaining age 62 are eligible to participate in the
Bonus Plan, except those executives who are participants in the
Annual Incentive Plan. Subject to Board approval, each
qualifying employee may be paid a cash bonus equal to a specified
percentage of the employee's regular annual salary. The
percentage, which ranges from 2% to 10%, is determined according
to a formula based upon increases of 15% or more in the Bank's
net income (excluding the after tax effect of the bonus) over the
prior fiscal year. During 1995, the Bank's net income (as
defined) increased 2.4% over the 1994 fiscal year. Therefore,
the Bank's employees did not receive any cash bonuses pursuant to
the Bonus Plan.
Profit Sharing Plan and ESOP. The Bank makes annual
contributions (the "Plan Contribution") to the Profit Sharing
Plan and ESOP (collectively, the "Plans") as determined by the
Bank's Board of Directors depending on the profitability of the
Bank during the year, subject to certain limitations on
contributions under the Internal Revenue Code and the Plans, and
further subject to the terms of an Annual Contributions Agreement
between the Bank and the ESOP Trustee with respect to the ESOP
Loan. See "ELECTION OF DIRECTORS -- Certain Transactions."
The assets of the Plans are held in trust for the exclusive
benefit of the participants. Employees with not less than one
year of service with the Bank are eligible to participate in the
Plans. The portion of the Plan Contribution contributed to each
Plan is allocated among the participating employees, including
the Named Executives, in the proportion which each participant's
compensation for the fiscal year bears to the total compensation
for all participating employees for such year. Benefits vest at
a rate of 20% per year and participants receive a distribution of
vested amounts allocated to their accounts only upon retirement
or termination of employment with the Bank.
22
<PAGE>
The Bank's Board makes its determination of the amount of
the Plan Contribution based upon management's recommendation at
the end of the fiscal year. For 1995, the Plan Contribution
equaled 10% of the pre-tax income of the Bank and CPB Properties,
Inc. (excluding the effect of the Plan Contribution expense),
less the amount of cash dividends paid by the Bank during the
fiscal year. The Plan Contribution is allocated between the
Profit Sharing Plan and the ESOP by the Bank's Board in its
discretion based upon management's recommendation. In
determining the allocation of the Plan Contribution, the Bank's
Board considers the countervailing concerns of investment
diversification through the Profit Sharing Plan and employee
Common Stock ownership through the ESOP. In addition, the Bank's
Board takes into account the funding requirements of the ESOP
Loan. On May 11, 1994, the Bank's Board of Directors approved
the Cash or Deferred Arrangement ("CODA") program which allows
each employee who is a participant in the Profit Sharing Plan to
elect to receive one-half of the current year's profit sharing
contribution in cash with the other half being allocated to such
employee's account under the Profit Sharing Plan. Elections not
made would be deferred into that employee's 401(k) Plan account.
For 1995, approximately 40% of the Plan Contribution was
allocated to the Profit Sharing Plan and 60% to the ESOP. In
1995, the Bank contributed $796,000 to the CODA and Profit
Sharing Plan and $1,196,000 to the ESOP, which equaled 2.4% and
7.3%, respectively, of total compensation paid to all
participating employees for the year.
Annual Incentive Plan. The Annual Incentive Plan was
adopted by the Board of Directors for the 1995 fiscal year.
Full- time employees of the Company or its subsidiaries who have
been granted the title of Senior Vice President or above prior to
October 1, 1995, were eligible to participate in the Annual
Incentive Plan. In addition, a participant must receive a
performance appraisal rating of "accomplished" or above during
the calendar year to be considered eligible for an award.
Participants in the Annual Incentive Plan were not eligible to
participate in the Bonus Plan. During 1995, 14 executives,
including each of the Named Executives, were eligible to
participate in the Annual Incentive Plan.
Subject to review by the Board of Directors, participants
were eligible to receive a cash bonus under the Annual Incentive
Plan, provided certain corporate objectives for financial
performance, as measured by return on equity ("ROE") and growth
in average assets, were met. During 1995, based upon the
Company's historical earnings and asset trends, the Board of
Directors established a target ROE of 13.5% and target asset
growth of 10.0%.
During 1995, the Company's return on equity was 10.79% and
its average assets in December increased 0.4% over average assets
23
<PAGE>
in December 1994. Because the target objectives for corporate
performance set forth in the Annual Incentive Plan were not met,
Messrs. Satoh, Saito, Shibuya, Imamura and Kanda received no cash
awards under the Annual Incentive Plan in 1995.
Stock Based Compensation
The Company also believes that stock ownership by employees,
including the Named Executives, provides valuable long-term
incentives for such persons who will benefit as the Common Stock
price increases and that stock-based performance compensation
arrangements are beneficial in aligning employees' and
stockholders' interests. To facilitate these objectives, the
Company adopted the Stock Option Plan.
Stock Option Plan. The Stock Option Plan was adopted in
1986 and amended in 1992 to increase the number of shares
available for issuance upon the exercise of stock options granted
under the plan. Through the Stock Option Plan, stock options
have been granted to key employees, including the Company's
executive officers. Non-employee directors and consultants are
eligible to participate in the Stock Option Plan, but to date the
Company has not granted stock options to such persons, in keeping
with the Company's philosophy that stock incentive programs
should be used to motivate employees and to tie their interests
to those of the shareholders. The Stock Option Plan is
administered by the Stock Option Plan Committee consisting of
three non-employee directors. In 1995, the Stock Option Plan
Committee, acting on management's recommendation, determined to
grant stock options covering 69,600 shares to employees,
including 9,500 shares to Mr. Naoaki Shibuya. None of the other
Names Executives received a grant of stock options during 1995.
Other Compensation
Discretionary Bonus. The Board approved a recommendation of
the Compensation Committee to grant Mr. Satoh a lump sum bonus of
$446,510 upon his retirement at December 31, 1995, in recognition
of his 23 years of service to the Bank and Company, his
unprecedented tenure as Chairman and Chief Executive Officer, and
in anticipation of the value of his continuing service as a
director of the Bank and the Company. In reaching such
determination, the Board took into account the unique knowledge
and expertise that Mr. Satoh would bring to the Board of
Directors in future years. The amount of the bonus was based
upon a review of Mr. Satoh's final salary level, the level of
pension benefits to which he would be entitled and a present
valuation of a reasonable consulting arrangement.
Other. The Company's executives are also eligible to
participate in the Bank's Defined Benefit Pension Plan (the
"Pension Plan"), Split Dollar Life Insurance Plan (the
24
<PAGE>
"Insurance Plan") and the SERP. The Pension Plan is a qualified
defined benefit plan which provides for monthly annuity payments
upon retirement. Benefits are based upon the employee's years of
service and highest average annualized compensation in the
employee's final 60-month period of employment. In 1995, the
maximum annual compensation allowable for determining benefits
payable under the Pension Plan was reduced to $150,000, which had
the effect of reducing the benefits payable under the Pension
Plan to the Company's executive officers whose annualized
compensation was likely to exceed $150,000. See "ELECTION OF
DIRECTORS -- Compensation of Directors and Executive Officers --
Executive Compensation -- Defined Benefit Plan." The SERP was
adopted by the Board of Directors effective January 1, 1995 as a
means of supplementing the benefits provided under the Pension
Plan in light of the recently imposed salary limitations. Under
the Insurance Plan, the Bank provides life insurance coverage for
certain senior officers, including the Named Executives. The
Split Dollar Agreements provide death benefits of approximately
two times the officers' normal annual salary during employment
and an amount approximating the officers' final normal annual
salary upon retirement.
The Named Executives also participate in the Company's
broad-based employee benefit plans, such as medical, supplemental
disability and term life insurance.
Dated: March 18, 1996. THE BOARD OF DIRECTORS
PAUL DEVENS
ALICE F. GUILD
DENNIS I. HIROTA, Ph.D.
STANLEY HONG
KENSUKE HOTTA
DANIEL M. NAGAMINE
JOICHI SAITO
YOSHIHARU SATOH
NAOAKI SHIBUYA
Compensation Committee Interlocks and Insider Participation
The Board of Directors of the Company does not have a
standing compensation committee. Decisions regarding executive
compensation are made by the entire Board of Directors based upon
recommendations of the Bank's Compensation Committee. See
"ELECTION OF DIRECTORS -- Report of Board of Directors to
Shareholders." During 1995, three of the Company's executive
officers, Yoshiharu Satoh, Joichi Saito and Neal Kanda,
participated in deliberations of the Board of Directors
concerning executive officer compensation.
Some of the directors and executive officers of the Company
25
<PAGE>
and the Bank and the companies with which they are associated
were customers of and had banking transactions with the Bank in
the ordinary course of the Bank's business during 1994, and the
Bank expects to conduct similar banking transactions in the
future. All such loans and commitments were made on
substantially the same terms, including interest rates,
collateral and repayment terms, as those prevailing at the time
for comparable transactions with other persons of similar
creditworthiness, and in the opinion of Management of the Bank,
did not involve more than a normal risk of collectibility or
present other unfavorable features.
Paul Devens, a director of the Company and a member of the
Bank's Compensation Committee, is of counsel to the law firm of
Devens, Lo, Nakano, Saito, Lee and Wong. The Company and the
Bank retained the legal services of Mr. Devens' law firm during
1995. Management is of the opinion that the fees paid to Mr.
Devens' law firm are comparable to those fees that would have
been paid for comparable legal services from a law firm not
affiliated with the Company or the Bank. It is anticipated that
Mr. Devens' law firm will perform certain legal services for the
Company and the Bank during 1996.
Performance Graph
The following graph compares the yearly percentage change in
the Company's cumulative total shareholder return on Stock with
(i) the cumulative total return of the Nasdaq market index and
(ii) the cumulative total return of banks and bank holding
companies listed on Nasdaq over the period from January 1, 1991
through December 31, 1995. The graph assumes an initial
investment of $100 and reinvestment of dividends. The graph is
not necessarily indicative of future price performance.
The graph shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or under the
Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
26
<PAGE>
Comparison of Five Year Cumulative Total Return
Among Nasdaq U.S. Companies,
Nasdaq Banks/Bank Holding Companies,
and CPB Inc.
(Performance Graph -- Data Points)
NASDAQ-U.S. 1990 $100.00
1991 $161.00
1992 $187.00
1993 $215.00
1994 $210.00
1995 $296.00
NASDAQ-Banks/Bank 1990 $100.00
Holding Companies 1991 $164.00
1992 $239.00
1993 $272.00
1994 $271.00
1995 $404.00
CPB Inc. 1990 $100.00
1991 $151.00
1992 $159.00
1993 $155.00
1994 $162.00
1995 $206.00
(end of graph)
Certain Transactions
On June 21, 1991, the ESOP Committee filed a Notice of
Change in Bank Control ("Notice") with the Board of Governors of
the Federal Reserve System (the "FRB") pursuant to 12 U.S.C.
Section 1817(j) to permit the acquisition (the "Acquisition") on
behalf of the ESOP of 125,000 shares of Common Stock, which at
that time would have resulted in the ESOP Committee beneficially
owning more than 10% of the outstanding voting securities of the
Company. The FRB notified the ESOP Committee on August 30, 1991
that it would not disapprove the Acquisition, and on May 18,
1992, the Trustee on behalf of the ESOP consummated the
Acquisition. As a result of the Acquisition, the ESOP Committee
owned beneficially 540,562 shares of Common Stock or 10.27% of
the total outstanding Common Stock, as of February 29, 1996.
Pursuant to applicable regulations of the FRB, the Committee may
acquire up to 25% of the outstanding voting stock of the Company
on behalf of the ESOP without additional notification to the FRB.
In connection with the Acquisition, on November 8, 1991, the
Trustee under the ESOP entered into a loan agreement with
Sumitomo's Los Angeles Branch, pursuant to which the Trustee
27
<PAGE>
borrowed for the benefit of the ESOP Trust and the participants
the principal amount of $2,000,000. The loan was to be repaid in
four annual installments of $500,000 each plus interest
commencing November 8, 1992. Interest accrues at a rate of 1%
above The London Interbank Offered Rate ("LIBOR") for periods of
three, six or twelve months at the option of the borrower. The
Trustee held the shares acquired with the proceeds in a suspense
account as collateral for the loan. The Company guaranteed
repayment of the loan, and the Bank was obligated to make cash
contributions to the ESOP Trust in amounts equal to principal and
interest payments on the loan. The loan was repaid in full on
November 8, 1995.
On December 16, 1986, the shareholders of the Company
ratified an agreement ("Share Purchase Agreement") dated November
20, 1986 between the Company and Sumitomo (see "PRINCIPAL
SHAREHOLDERS"), which provides that the Company will not issue or
reissue shares of any class of the Company's authorized capital
stock, or issue any obligations or securities convertible into
shares of capital stock of the Company without first giving
written notice to Sumitomo describing the securities to be sold
and offering Sumitomo the opportunity to purchase an amount of
securities which will allow it to maintain its 13.734% level of
ownership of the Company's capital stock. Pursuant to the Share
Purchase Agreement, on December 24, 1986, the Company issued a
warrant (the "ISOP Warrant") to Sumitomo which gave it the right
to purchase from the Company 35,025 shares of Common Stock upon
the exercise of stock options at a price equal to the fair market
value of the Common Stock on the date Sumitomo exercises the ISOP
Warrant or any portion thereof. The Company notifies Sumitomo
when it grants stock options to its officers and employees and
when such options are exercised. The ISOP Warrant expires
December 23, 1996. Sumitomo currently has the right to acquire
11,051 shares by exercise of the ISOP Warrant.
CKSS Associates (the "Partnership"), a limited partnership
in which CPB Properties, Inc., a wholly-owned subsidiary of
Central Pacific Bank, is a general partner and 50% owner, has
entered into loan agreements with Sumitomo, and Central Pacific
Bank, whereby Sumitomo agreed to lend $20,000,000 and the Bank
agreed to lend $4,000,000 to the Partnership. Both loans are
secured by the real estate housing the Company's headquarters.
The loans are due on November 18, 1996, except for a portion
advanced by the Bank which is due on August 10, 2001. As of
December 31, 1995, the Bank had advanced pursuant to its loan
agreement the sum of $500,000. As of the same date, Sumitomo had
advanced pursuant to its loan agreement the sum of $10,700,000.
On April 30, 1993, the Partnership entered into a building
loan agreement with the Bank to develop a four-story building in
Kaimuki on the island of Oahu, Hawaii ("Kaimuki Plaza"), on land
owned by CPB Properties, Inc. During 1992, the Partnership and
28
<PAGE>
CPB Properties, Inc. entered into a lease agreement effective
from January 1, 1993 to December 31, 2047. The loan agreement
called for the Partnership to borrow up to $12.2 million for the
Kaimuki Plaza. The outstanding balance at December 31, 1995 was
$11,300,000. All loans related to the Company's headquarters and
Kaimuki Plaza are priced at 0.75% above LIBOR. The weighted
average interest rate on these loans was 6.636% at December 31,
1995.
Management of the Company believes that the terms of such
loans are as favorable as could be negotiated with unaffiliated
third parties.
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP has audited the Company's consolidated
financial statements since the Company's inception in 1982 and
has been the independent accountants for the Bank since 1975.
Accordingly, the Board of Directors has appointed KPMG Peat
Marwick LLP as the Company's independent accountants for the
fiscal year ending December 31, 1996 and the shareholders are
being asked to ratify such appointment. Representatives of KPMG
Peat Marwick LLP will be present at the Meeting to respond to
appropriate questions and will have an opportunity to make a
statement if they desire to do so.
Audit services of KPMG Peat Marwick LLP for fiscal year 1995
included the audit of the consolidated financial statements and
audits of certain employee benefit plans of the Bank.
All services provided to the Company and the Bank by KPMG
Peat Marwick LLP were approved in advance or ratified by the
Company's and Bank's Boards of Directors, and the possible effect
on the independence of KPMG Peat Marwick LLP by rendering such
services was considered. All professional services rendered by
KPMG Peat Marwick LLP during 1995 were furnished at customary
rates and terms.
The affirmative vote of the holders of at least a majority
of the outstanding shares of the Company's Common Stock
represented and entitled to vote at the Meeting will be required
for passage of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
OTHER BUSINESS
Management knows of no other business that will be presented
for consideration at the Meeting other than as stated in the
Notice of Meeting. If, however, other matters are properly
brought before the Meeting, it is the intention of the persons
29
<PAGE>
named in the accompanying form of Proxy to vote the shares
represented thereby on such matters in accordance with the
recommendation of the Board of Directors.
PROPOSALS OF SHAREHOLDERS
The 1997 Annual Meeting of Shareholders will be held on or
about April 22, 1997. Proposals of shareholders intended to be
presented at the 1997 Annual Meeting must be received by the
Secretary of the Company, Post Office Box 3590, Honolulu, Hawaii
96811, no later than November 18, 1996.
SHAREHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K INCLUDING FINANCIAL
STATEMENTS REQUIRED TO BE FILED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 BY WRITING TO
AUSTIN Y. IMAMURA, VICE PRESIDENT AND SECRETARY, CPB INC., POST
OFFICE BOX 3590, HONOLULU, HAWAII 96811.
Dated: March 25, 1996.
CPB INC.
(signed)
Joichi Saito
Chairman of the Board and
Chief Executive Officer
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CPB INC.
Annual Meeting of Shareholders
To Be Held April 23, 1996
This Proxy is solicited on behalf of the Board of Directors
The undersigned shareholders of CPB Inc. (the "Company")
hereby nominate, constitute and appoint Messrs. Paul Devens,
Joichi Saito and Austin Y. Imamura, or any one of them, each with
full power of substitution, as the lawful attorneys, agents and
proxies of the undersigned, for the Annual Meeting of
Shareholders of CPB Inc. ("Annual Meeting") to be held on the
third floor of the Central Pacific Plaza Building, 220 South King
Street, Honolulu, Hawaii 96813, on Tuesday, April 23, 1996 at
10:00 a.m., Hawaii time, and at any and all adjournments thereof,
to represent the undersigned and to cast all votes to which the
undersigned would be entitled to cast if personally present, as
follows:
IMPORTANT: Continued and to be signed on reverse side.
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_________ [X] Please mark
COMMON your votes
as indicated in this example
1. ELECTION OF DIRECTORS, Class II, Term Will Expire in 1999.
[ ] FOR ALL NOMINEES (EXCEPT AS INDICATED TO THE CONTRARY
BELOW)
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED
BELOW.
Nominees: Alice F. Guild, Daniel M. Nagamine and Naoaki
Shibuya
(Instructions: To withhold authority to vote for any
individual nominee, write that nominee's name on the space
below.)
________________________________________________________
2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS.
To ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent accountants for the fiscal year ending
December 31, 1996.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. OTHER BUSINESS. In their discretion, the Proxy Holders are
authorized to transact such other business as may properly
come before the meeting and any and all adjournments
thereof. The Board of Directors at present knows of no
other business to be presented by or on behalf of the
Company or its Board of Directors.
The Board of Directors recommends a vote "FOR" the election of
all nominees for director and "FOR" ratification of the
appointment of KPMG Peat Marwick LLP as the Company's independent
accountants. If any other business is properly presented at such
meeting, this Proxy shall be voted in accordance with the
recommendations of the Board of Directors.
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The undersigned hereby ratifies and confirms all that said
attorneys and Proxy Holders, or any of them, or their
substitutes, shall lawfully do or cause to be done by virtue
hereof, and hereby revokes any and all proxies heretofore given
by the undersigned to vote at the Annual Meeting. The
undersigned acknowledges receipt of the Notice of Annual Meeting
and the Proxy Statement accompanying said notice.
Date: ___________________________________________, 1996
_____________________________________
Signature
_____________________________________
Signature if held jointly
Please date this Proxy and sign above as your name(s) appear(s)
on this Proxy. Joint owners should each sign personally.
Corporate proxies should be signed by an authorized officer.
Partnership proxies should be signed by an authorized partner.
Personal representatives, executors, administrators, trustees or
guardians should give their full titles. This Proxy will be
voted "FOR" the election of all nominees unless authority to do
so is withheld for all nominees or for any individual nominee.
Unless "AGAINST" or "ABSTAIN" is indicated, this Proxy will be
voted "FOR" ratification of the appointment of KPMG Peat Marwick
LLP as the Company's independent accountants. PLEASE SIGN, DATE
AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE
PREPAID ENVELOPE PROVIDED.
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