<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CPB INC.
220 South King Street
Honolulu, Hawaii 96813
(808) 544-0500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1999
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 27, 1999, 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 LLP as the Company's independent
accountants for the fiscal year ending December 31, 1999.
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
26, 1999 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,
/s/ Austin Y. Imamura
AUSTIN Y. IMAMURA
Vice President and Secretary
Dated March 26, 1999
<PAGE>
CPB INC.
220 South King Street
Honolulu, Hawaii 96813
(808) 544-0500
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1999
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
27, 1999, 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 26, 1999.
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 LLP as the Company's independent
accountants for the fiscal year ending December 31, 1999.
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 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 LLP as the
Company's independent accountants for the fiscal year ending December 31,
1999. 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
LLP as the Company's independent accountants for the fiscal year ending
December 31, 1999.
-1-
<PAGE>
COSTS OF SOLICITATION OF PROXIES
This solicitation of Proxies is made on behalf of the Board of
Directors of the Company (the "Board") 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 26, 1999 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
9,777,036 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 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 Common 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 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 LLP will have
the effect of a vote "AGAINST" the proposal.
-2-
<PAGE>
PRINCIPAL SHAREHOLDERS
As of February 26, 1999, 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.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
TITLE OF NAME AND ADDRESS BENEFICIAL PERCENT
CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
----- ------------------- --------- ---------
<S> <C> <C> <C>
Common The Sumitomo Bank, Limited 1,316,881(1) 13.41%(2)
6-5 Kitahama 4-chome,
Chuo-ku
Osaka, Japan
Common The Committee of the Central Pacific Bank 1,070,386(3) 10.95%
Employee Stock Ownership Plan
220 South King Street
Honolulu, Hawaii 96813
</TABLE>
(1) Includes 42,968 additional shares which may be issued pursuant to the
exercise of warrants granted pursuant to a Share Purchase Agreement between
the Company and The Sumitomo Bank, Limited ("Sumitomo") and based upon the
exercise of stock options by participants of the 1986 and 1997 Stock Option
Plans. See "ELECTION OF DIRECTORS -- Certain Transactions."
(2) This percentage is computed as if the 42,968 shares described in footnote 1
were outstanding. However, the 42,968 shares are not deemed to be
outstanding for the purpose of computing the percentage of Common Stock
owned by any other person.
(3) 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 26, 1999,
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 beneficial ownership of such shares held in trust which are
otherwise attributable to them by virtue of serving on such ESOP Committee.
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 Year 2002 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 W. Hong, a director of the Company, serves as director of the
following companies: Capital Investment of Hawaii, Inc., First Insurance
Company of Hawaii, Ltd., Hawaiian Tax Free Trust, Pacific Capital Funds, Kerr
Pacific Corporation and Lanihau Management Corporation.
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. Mrs. Alice F. Guild and
Messrs. Daniel M. Nagamine and Naoaki Shibuya, who are currently serving as
Class II directors, are nominees.
-3-
<PAGE>
The following table sets forth certain information, as of February 26,
1999, with respect to each of the directors, nominees and Named Executives (as
defined below), as well as all continuing directors and executive officers, as a
group:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
FIRST YEAR OWNED ON
ELECTED OR FEBRUARY 26, 1999(2)
PRINCIPAL APPOINTED AS --------------------
OCCUPATION OFFICER OR PERCENT
FOR THE PAST DIRECTOR OF OF TERM
NAME FIVE YEARS AGE THE COMPANY(1) NUMBER CLASS(3) EXPIRES
- ---- ---------- --- -------------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
DEVENS, Vice Chairman of the Board of 67 1980 5,942(4) * 2000
Paul Company; Attorney at Law;
(Class III Of Counsel (1994 - present),
Director) Devens, Nakano, Saito, Lee, Wong
& Ching; Partner (1975 - 1994),
Devens, Lo, Nakano, Saito, Lee
& Wong
GUILD, Managing Director, Iolani Palace 64 1980 3,612(5) * 1999
Alice F. (1998-present)
(Class II
Director,
Nominee)
HIROTA, President, Sam O. Hirota, Inc.- 58 1980 6,700(7) * 2001
Dennis I., Engineering and Surveying (1986-
Ph.D. present); Registered Professional
(Class I Engineer and Licensed Professional
Director) Land Surveyor(6)
HONG, President and Chief Executive Officer; 62 1993 1,900(8) * 2000
Stanley W. The Chamber of Commerce of
(Class III Hawaii (1996-present); Consultant to
Director) HRT, Ltd. (1994 - 1996);
Senior Vice President - McCormack
Properties, Ltd. (1993 - 1994);
President and Chief Executive Officer,
Hawaii Visitors Bureau (1984 - 1993);
Attorney at Law
NAGAMINE, President, Flamingo Enterprises, 57 1983 9,760(9) * 1999
Daniel M. Inc. (1985-present); General
(Class II Partner, Flamingo Downtown,
Director, a limited partnership
Nominee) (1981 - 1994) Certified Public
Accountant - Inactive
OKUYAMA, Senior Managing Director, International 55 1997 1,500(10) * 2001
Shunichi Banking Group, The Sumitomo Bank,
(Class I Limited (1998 - present); Managing
Director) Director, International Banking Group,
The Sumitomo Bank, Limited (1997 -
1998); Managing Director, Europe,
Middle East and Africa Region,
The Sumitomo Bank, Limited
(1996-1997); Director and
General Manager, London
Branch, The Sumitomo Bank,
Limited (1993-1996)
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
FIRST YEAR OWNED ON
ELECTED OR FEBRUARY 26, 1999(2)
PRINCIPAL APPOINTED AS --------------------
OCCUPATION OFFICER OR PERCENT
FOR THE PAST DIRECTOR OF OF TERM
NAME FIVE YEARS AGE THE COMPANY(1) NUMBER CLASS(3) EXPIRES
- ---- ---------- --- -------------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
SAITO, Chairman of the Board 63 1989 37,602(12) * 2001
Joichi and Chief Executive
(Class I Officer of Company (1996-
Director) present); President of
Company (1992 - 1995);
Chairman of the Board and Chief
Executive Officer of Bank
(1996-present); President and
Chief Operating Officer of Bank
(1989 - 1995)(6)(11)
SATOH, Retired; Chairman of the Board 70 1975 61,950(14) * 2000
Yoshiharu and Chief Executive Officer of
(Class III Company (1992-1995); Chairman
Director) of the Board, President and Chief
Executive Officer of Bank (1988 -
1995)(6)(13)
SHIBUYA, President of Company 57 1995 14,161(16) * 1999
Naoaki (1996-present); Executive Vice
(Class II President of Company (1993-
Director) 1995); President and Chief
Nominee) Operating Officer of Bank (1996-
present); Executive Vice President
of Bank (1993 -1995)(6)(15)
IMAMURA, Vice President and Secretary of 52 1991 13,430(17) * N/A
Austin Y. Company (1991-present);
Executive Vice President and
Secretary of Bank (1991-present)
KANDA Vice President and Treasurer 50 1991 18,897(18) * N/A
Neal K. of Company (1991-present);
Executive Vice President of Bank
(1996 - present); Executive Vice
President and Controller of Bank
(1993 - 1996)
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
FIRST YEAR OWNED ON
ELECTED OR FEBRUARY 26, 1999(2)
PRINCIPAL APPOINTED AS --------------------
OCCUPATION OFFICER OR PERCENT
FOR THE PAST DIRECTOR OF OF TERM
NAME FIVE YEARS AGE THE COMPANY(1) NUMBER CLASS(3) EXPIRES
- ---- ---------- --- -------------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
All Directors 175,454(19) 1.79%
and Executive
Officers,
as a Group
(11 persons)
</TABLE>
- ------------------
* Less than 1%.
(1) 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. Saito has been a director of the Bank
since 1988. Mr. Shibuya has been a director of the Bank since 1994.
(2) Except as otherwise noted below, each person has sole voting and investment
powers with respect to the shares listed.
(3) 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 26, 1999 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.
(4) Includes 2 shares held by Devens, Nakano, Saito, Lee, Wong & Ching, a
partnership for which Mr. Devens is of counsel, and 1,500 shares which Mr.
Devens has the right to acquire by the exercise of stock options vested
pursuant to the Company's 1997 Stock Option Plan.
(5) Includes 1,500 shares which Mrs. Guild has the right to acquire by the
exercise of stock options vested pursuant to the Company's 1997 Stock
Option Plan.
(6) Messrs. Saito, Satoh, and Shibuya, and Dr. Hirota are also directors of CPB
Properties, Inc., a wholly-owned subsidiary of the Bank.
(7) Includes 1,760 shares for which Dr. Hirota has shared voting and investment
powers with his wife, Kathryn Hirota and 1,500 shares which Dr. Hirota has
the right to acquire by the exercise of stock options vested pursuant to
the Company's 1997 Stock Option Plan.
(8) Includes 400 shares for which Mr. Hong has shared voting and investment
powers with his wife, Karen Ho Hong and 1,500 shares which Mr. Hong has
the right to acquire by the exercise of stock options vested pursuant to
the Company's 1997 Stock Option Plan.
(9) Includes 8,260 shares for which Mr. Nagamine has shared voting and
investment powers with his wife, Maxine Nagamine and 1,500 shares which Mr.
Nagamine has the right to acquire by the exercise of stock options vested
pursuant to the Company's 1997 Stock Option Plan.
(10) Includes 1,500 shares which Mr. Okuyama has the right to acquire by the
exercise of stock options vested pursuant to the Company's 1997 Stock
Option Plan. Does not include 1,273,913 shares held by Sumitomo, of which
Mr. Okuyama is a Senior Managing Director, or 42,968 shares which Sumitomo
has the right to acquire by the exercise of warrants. With respect to
shares described in the preceding sentence, Mr. Okuyama disclaims any
beneficial ownership.
(11) Mr. Saito was formerly an officer of Sumitomo, from which he is now
retired.
(12) Includes 7,000 shares for which Mr. Saito has shared voting and investment
powers with his wife, Yoko Saito, and 15,242 shares allocated to Mr.
Saito's account under the Bank's ESOP.
(13) Mr. Satoh was formerly an officer of Sumitomo, from which he is now
retired.
(14) Includes 46,642 shares held in the name of Yoshiharu Satoh Revocable Living
Trust, Yoshiharu Satoh Trustee, 13,808 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 and 1,500
shares which Mr. Satoh has the right to acquire by the exercise of stock
options vested pursuant to the Company's 1997 Stock Option Plan.
-6-
<PAGE>
(15) Mr. Shibuya is on indefinite leave of absence from Sumitomo.
(16) Includes 400 shares for which Mr. Shibuya has shared voting and investment
powers with his wife, Tsuneko Shibuya, 11,400 shares which Mr. Shibuya has
the right to acquire by the exercise of stock options vested pursuant to
the Company's 1986 Stock Option Plan and 2,361 shares allocated to Mr.
Shibuya's account under the Bank's ESOP.
(17) Includes 13,430 shares allocated to Mr. Imamura's account under the Bank's
ESOP.
(18) Includes 12,600 shares which Mr. Kanda has the right to acquire by the
exercise of stock options vested pursuant to the Company's 1986 Stock
Option Plan and 5,897 shares allocated to Mr. Kanda's account under the
Bank's ESOP.
(19) Includes 31,630 shares for which certain directors and officers have shared
voting and investment powers, 34,500 shares which members of the group have
the right to acquire by the exercise of stock options vested pursuant to
the Company's 1986 and 1997 Stock Option Plans and 36,930 shares allocated
to the accounts of executive officers under the Bank's ESOP.
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 Compensation & 1997 Stock Option Plan Committee (the "Compensation
Committee").
The Executive Committee, which held no meetings during 1998, is chaired
by Mr. Devens, and Messrs. Nagamine, Saito and Satoh and Dr. Hirota 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 1998. The committee
is chaired by Mr. Satoh, and Mrs. Guild, Dr. Hirota, and Messrs. Saito and
Shibuya are members. It is responsible for recommending nominees for
directors of the Company. It will consider nominees for election at the 2000
Annual Meeting of Shareholders recommended by shareholders if such
recommendations are received in writing prior to December 15, 1999.
Shareholder recommendations should be addressed to the Company's Secretary,
P.O. Box 3590, Honolulu, Hawaii 96811.
The Audit Committee held one meeting during 1998. The committee is
chaired by Mrs. Guild, and Messrs. Hong and Satoh 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 Compensation Committee held two meetings during 1998. The
committee is chaired by Mr. Hong, and Messrs. Devens and Nagamine are
members. The Compensation Committee's primary functions include determining
individuals to whom options will be granted and their terms, approving
recommendations related to employee compensation and benefit programs, and
determining the Chief Executive Officer's compensation.
During the fiscal year ended December 31, 1998, the Board of
Directors of the Company held a total of seven meetings. All of the persons
who were directors of the Company during 1998 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. Okuyama.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE BOARD OF
DIRECTORS' NOMINEES.
-7-
<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 three 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 1998 (the "Named
Executives") for each of the fiscal years ended December 31, 1998, 1997 and
1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- --------------------------- ---- ------ ----- -------------
<S> <C> <C> <C> <C>
Joichi Saito 1998 $338,344 $25,988 $22,827(1)
Chairman of the Board 1997 310,000 -- 20,020(2)
and Chief Executive Officer 1996 292,336 -- 19,213(3)
Naoaki Shibuya 1998 235,011 17,738 $22,678(4)
President 1997 210,000 -- $23,317(5)
1996 196,667 -- $19,535(6)
Austin Y. Imamura 1998 186,667 14,850 $21,635(7)
Vice President and 1997 176,667 -- $22,069(8)
Secretary 1996 163,333 -- $18,267(9)
Neal K. Kanda 1998 156,667 12,375 $20,849(10)
Vice President and 1997 144,000 -- $19,976(11)
Treasurer 1996 125,333 -- $16,100(12)
</TABLE>
- ------------------------
(1) 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 Bank's 401(k) Plan for the account of Mr. Saito of
$6,541, $10,597, $1,606 and $4,084, respectively.
(2) 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 $7,507, $11,146 and $1,367, respectively.
(3) 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 $7,262, $10,691 and $1,260, respectively.
(4) Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's
ESOP, the Bank's Split Dollar Life Insurance Plan and the Bank's 401(k)
Plan for the account of Mr. Shibuya of $6,541, $10,597, $540 and $5,000,
respectively.
(5) Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's
ESOP, the Bank's Split Dollar Life Insurance Plan and the Bank's 401(k)
Plan for the account of Mr. Shibuya of $7,507, $11,146, $464 and $4,200,
respectively.
(6) Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's
ESOP, the Bank's Split Dollar Life Insurance Plan and the Bank's 401(k)
Plan for the account of Mr. Shibuya of $7,262, $10,691, $540 and $1,042,
respectively.
(7) Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's
ESOP, the Bank's Split Dollar Life Insurance Plan and the Bank's 401(k)
Plan for the account of Mr. Imamura of $6,541, $10,597, $467 and $4,030
respectively.
(8) Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's
ESOP, the Bank's Split Dollar Life Insurance Plan and the Bank's 401(k)
Plan for the account of Mr. Imamura of $7,507, $11,146, $437 and $2,979,
respectively.
(9) 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 $7,262, $10,691 and $314, respectively.
(10) Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's
ESOP, the Bank's Split Dollar Life Insurance Plan and the Bank's 401(k)
Plan for the account of Mr. Kanda of $6,541, $10,597, $330 and $3,381,
respectively.
(11) Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's
ESOP, the Bank's Split Dollar Life Insurance Plan and the Bank's 401(k)
Plan for the account of Mr. Kanda of $6,756, $10,032, $308 and $2,880,
respectively.
(12) Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's
ESOP, the Bank's Split Dollar Life Insurance Plan and the Bank's 401(k)
Plan for the account of Mr. Kanda of $6,068, $8,933, $219 and $880,
respectively.
-8-
<PAGE>
OPTION GRANTS
No options or stock appreciation rights were granted during 1998 to the
Named Executives.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the Named
Executives concerning the exercise of options during the fiscal year ended
December 31, 1998 and unexercised options held by the Named Executives as of
December 31, 1998:
AGGREGATED OPTION(1) EXERCISES IN 1998
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
SHARES NUMBER OF UNEXERCISED OPTIONS(2)
ACQUIRED VALUE OPTIONS AT 12/31/98 AT 12/31/98
ON EXERCISE REALIZED ------------------------------ -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
SAITO, Joichi 15,360 $181,876 -- -- -- --
SHIBUYA, Naoaki -- N/A 11,400 7,600 $50,844 $33,896
IMAMURA, Austin Y. -- N/A -- -- -- --
KANDA, Neal K. -- N/A 12,600 -- 60,102 --
</TABLE>
- ------------------------
(1) The Company has no compensation plans pursuant to which stock appreciation
rights may be granted.
(2) The value of unexercised "in-the-money" options is the difference between
the market price of the Common Stock on December 31, 1998 ($17.50 per share)
and the exercise price of the option, multiplied by the number of shares
subject to the option.
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.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ANNUALIZED FINAL
AVERAGE COMPENSATION YEARS OF SERVICE
-------------------- ----------------------------------------------------------------------------
15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 5,625 $ 7,500 $ 9,375 $ 11,250 $ 13,125
100,000 11,250 15,000 18,750 22,500 26,250
150,000 16,875 22,500 28,125 33,750 39,370
200,000 22,500 30,000 37,500 45,000 52,500
250,000 28,125 37,500 46,875 56,250 65,625
300,000 33,750 45,000 56,250 67,500 78,750
350,000 39,375 52,500 65,625 78,750 91,875
400,000 45,000 60,000 75,000 90,000 105,000
450,000 50,625 67,500 84,375 101,250 118,125
500,000 56,250 75,000 93,750 112,500 131,250
</TABLE>
Under the Defined Benefit Pension Plan, benefits are based upon the
employee's years of service and highest average annual salary in a
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.
Benefits based on the highest average annual salary in a 60-consecutive-month
period of service in excess of the qualified plans maximum compensation limit of
$160,000 for 1998 would be payable to eligible employees pursuant to the
Supplemental Executive Retirement Plan. The credited years of service as of
December 31, 1998 for Messrs. Saito, Shibuya, Imamura and Kanda are 11, 5, 13,
and 9, respectively.
-9-
<PAGE>
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 each of their non-employee directors $800 per board
meeting attended and $600 per board committee meeting attended. In addition,
the Company pays $4,000 annually to each non-employee director, and the Bank
pays $10,000 annually to each non-employee director. CPB Properties, Inc.
pays each of its non-employee directors $600 per board meeting attended.
Non-employee directors of the Company and the Bank are also eligible
to participate in the Company's 1997 Stock Option Plan (the "1997 Plan").
During 1997, non-employee directors received grants of stock options to
purchase, in the aggregate, 147,000 shares of Common Stock at an exercise
price of $17.875 per share. Options vest at a rate of 1,500 shares per year
until the earlier of the director's retirement at age 70 or 10 years from the
date of grant.
REPORT OF THE COMPENSATION COMMITTEE TO SHAREHOLDERS
The Compensation Committee reviews and recommends to the Board of
Directors the terms of employment agreements and compensation plans for
executives, reviews and adopts (subject to ratification by the entire Board
of Directors) the terms of the Company's stock option plans and other
performance-based compensation plans for employees of the Company, determines
eligibility to participate in and grants of awards to employees under the
Company's stock option plans and performance-based compensation plans and
otherwise performs functions related to the administration of the Company's
stock option plans and performance-based compensation plans. The Compensation
Committee is chaired by Mr. Hong, and Messrs. Devens and Nagamine are
members. Each member of the Compensation Committee is a non-employee
director of the Company and the Bank.
Set forth below is a report of the Compensation Committee addressing
the Company's compensation policies for 1998 applicable to the Company's
executives, including the Named Executives.
THE REPORT OF THE COMPENSATION COMMITTEE 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
COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL
NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
REPORT OF THE COMPENSATION COMMITTEE 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
1997 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 the
authority to grant discretionary awards to individual employees where it deems
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. On April 21, 1998, the Company's Board of Directors approved the
compensation for all executive officers for the ensuing year, effective May 1,
1998.
-10-
<PAGE>
In recommending the increase in compensation for the Company's Chief
Executive Officer, the Compensation Committee considered salary level
relative to competitors, the Company's financial performance relative to the
previous year, and the relative increases in salaries received by other
officers of the Company. Each of these factors was weighted relatively
equally. Although the overall level of nonperforming assets, past due loans
and charge-offs increased during 1997, the Company's 1997 net income
increased by 6.2% over 1996. Return on average assets of 1.04% in 1997,
stayed constant compared to 1996. Furthermore, total assets increased by 6.7%
in 1997, compared with a 2.3% increase in 1996. In assessing the Company's
performance, the Compensation Committee also took into account economic
conditions in Hawaii. In addition, the other Named Executives also received
salary increases.
INCENTIVE COMPENSATION
During 1998, the Bank had three programs whereby compensation for
the Named Executives was directly linked to the Company's performance: the
Profit Sharing Plan, the ESOP and the Annual Incentive 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.
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.
The Bank's Board of Directors makes its determination of the amount
of the Plan Contribution based upon management's recommendation at the end of
the fiscal year. For 1998, 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 of Directors in its discretion
based upon management's recommendation. In determining the allocation of the
Plan Contribution, the Bank's Board of Directors considers the countervailing
concerns of investment diversification through the Profit Sharing Plan and
employee Common Stock ownership through the ESOP. In 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 1998, approximately 40% of the Plan
Contribution was allocated to the Profit Sharing Plan and 60% to the ESOP. In
1998, the Bank contributed $826,000 to the CODA and Profit Sharing Plan and
$1,241,000 to the ESOP, which equaled 4% and 6%, respectively, of total
compensation paid to all participating employees for the year.
ANNUAL INCENTIVE PLAN. The Annual Incentive Plan was adopted by the
Bank's Board of Directors for the 1998 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, 1998, 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. During 1998, eight
executives, including each of the Named Executives, were eligible to
participate in the Annual Incentive Plan.
-11-
<PAGE>
Subject to review by the Bank's 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, growth in average assets and the ratio of the Company's
return on average assets to that of Hawaii bank holding companies, were met.
Based on the corporate objectives set for 1998, participants were eligible to
receive cash bonuses. After assessing the Company's 1998 financial
performance, the Bank's Board of Directors, upon management's recommendation,
did not award cash bonuses to the Named Executives. The amounts awarded to
each of the Named Executives reflected in the "Bonus" column of the Summary
Compensation Table were related to the 1997 Annual Incentive Plan.
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 shareholders' interests. To facilitate these objectives, the
Company adopted the 1997 Plan.
1997 PLAN. The 1997 Plan was adopted in 1997 to replace the 1986
Stock Option Plan which expired on November 7, 1996. The 1997 Plan is
administered by the Compensation Committee. The 1997 Plan provides for stock
options to be granted to key employees, generally at a level of vice
president and above, including the Named Executives, and to non-employee
directors of the Company and the Bank. However, no stock options were granted
to the Named Executives during 1998.
OTHER COMPENSATION
The Company's executives are eligible to participate in the Bank's
Defined Benefit Pension Plan (the "Pension Plan"), the SERP and the Split
Dollar Life Insurance Plan (the "Insurance Plan"). 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 a 60-consecutive-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 Pension
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 the 401(k) Plan, medical, disability and term
life insurance.
Dated: March 26, 1999 THE COMPENSATION COMMITTEE
STANLEY W. HONG, CHAIR
PAUL DEVENS
DANIEL M. NAGAMINE
-12-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Some of the directors and executive officers of the Company 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 1998, 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, Nakano,
Saito, Lee, Wong & Ching. The Company and the Bank retained the legal
services of Mr. Devens' law firm during 1998. 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 1999.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
Company's cumulative total shareholder return on Common Stock with (i) the
cumulative total return of U.S. Companies listed on Nasdaq and (ii) the
cumulative total return of banks and bank holding companies listed on Nasdaq
over the period from December 31, 1993 through December 31, 1998. The graph
assumes an initial investment of $100 at the end of 1993 and reinvestment of
dividends during the ensuing five-year period. 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.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG NASDAQ U.S. COMPANIES, NASDAQ BANKS/BANK HOLDING COMPANIES, AND CPB INC.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ-U.S. 100 116 134 131 185 227
- --------------------------------------------------
NASDAQ-BANKS 100 146 166 165 246 325
- --------------------------------------------------
CPB INC. 100 105 134 128 182 159
- --------------------------------------------------
</TABLE>
-13-
<PAGE>
CERTAIN TRANSACTIONS
On August 29, 1998, the Company's Board of Directors adopted a
Shareholder Rights Plan (the "Rights Plan") which entitiles holders of common
stock to receive one right for each share of common stock outstanding as of
September 16, 1998. Each right entitles the registered holder to purchase
from the Company one one-hundredth (1/100th) of a share of the Company's
Junior Participating Preferred Stock, Series A, no par value per share
("Preferred Shares"), at a price of $75.00 per one one-hundredth (1/100th) of
a Preferred Share, subject to adjustment. The rights are exercisable only
upon the occurrence of specific events and will expire on August 26, 2008.
The Rights Plan was designed to ensure that shareholders receive fair and
equal treatment in the event of unsolicited or coercive attempts to acquire
the Company. The Rights Plan was also intended to guard against unfair tender
offers and other abusive takeover tactics. The Rights Plan is not intended
to prevent an acquisition bid for the Company on terms that are fair to all
shareholders.
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 "Federal Reserve Board") pursuant to 12 U.S.C. Section 1817(j) to
permit the acquisition (the "Acquisition") on behalf of the ESOP of 250,000
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 Federal Reserve Board 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. The ESOP Committee owned beneficially 1,070,386 shares of Common
Stock or 10.95% of the total outstanding Common Stock, as of February 26,
1999. Pursuant to applicable regulations of the Federal Reserve Board, 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 Federal
Reserve Board.
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, warrants are issued giving Sumitomo
the right to purchase from the Company shares of Common Stock upon the
exercise of stock options at a price equal to the fair market value of the
Common Stock at the time Sumitomo exercises the warrant, contingent upon the
exercise of stock options held by optionees and subject to the approval of
the Federal Reserve Board. At December 31, 1998, Sumitomo held exercisable
warrants for 42,968 shares and warrants for 69,158 shares which will become
exercisable, all of which will expire on or before July 30, 2007.
CKSS Associates (the "Partnership"), a limited partnership in which
CPB Properties, Inc., a wholly-owned subsidiary of the Bank, is a general
partner and 50% owner, entered into loan agreements with Sumitomo and the
Bank for the development of office building complexes in Honolulu known as
Central Pacific Plaza, part of which serves as the Company's headquarters,
and Kaimuki Plaza, in which one of the Bank's branches is located. At
December 31, 1998, notes payable by the Partnership totaling $8,501,000 to
Sumitomo, due on June 18, 2001, were secured by a mortgage on Central Pacific
Plaza. A note payable of $9,900,000 to the Bank, due on August 10, 2001, is
secured by a mortgage on the leasehold interest in the Kaimuki Plaza. As part
of the development of the Kaimuki Plaza, the Partnership entered into a lease
agreement with CPB Properties, Inc., which owns the land, effective from
January 1, 1993 to December 31, 2047. The Partnership also has a $200,000
note payable to the Bank, due on April 10, 2001, which is secured by second
mortgages on the Central Pacific Plaza and Kaimuki Plaza properties. All
loans are priced at 0.75% above the London Interbank Offered Rate. The
weighted average rate on these notes was 6.638% at December 31, 1998.
Management of the Company believes that the terms of such loans are as
favorable as could be negotiated with unaffiliated third parties.
-14-
<PAGE>
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
KPMG 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 LLP as the Company's independent accountants for the fiscal
year ending December 31, 1999 and the shareholders are being asked to ratify
such appointment. Representatives of KPMG 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.
All services provided to the Company and the Bank by KPMG 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 LLP by
rendering such services was considered. All professional services rendered by
KPMG LLP during 1998 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 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 2000 Annual Meeting of Shareholders will be held on or about
April 25, 2000. Proposals of shareholders intended to be presented at the
2000 Annual Meeting must be received by the Secretary of the Company, Post
Office Box 3590, Honolulu, Hawaii 96811, no later than November 26, 1999 to
be included in the proxy statement and the related proxy materials.
In addition, in the event a shareholder proposal is not submitted to
the Company prior to February 10, 2000, the proxy to be solicited by the
Board of Directors for the 2000 Annual Meeting of Shareholders will confer
authority on the holders of the proxy to vote the shares in accordance with
their best judgement and discretion, if the proposal is presented at the 2000
Annual Meeting of Shareholders, without any discussion of the proposal in
the proxy statement for such meeting.
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,
1998 BY WRITING TO AUSTIN Y. IMAMURA, VICE PRESIDENT AND SECRETARY, CPB INC.,
POST OFFICE BOX 3590, HONOLULU, HAWAII 96811.
Dated: March 26, 1999.
CPB INC.
/s/ Joichi Saito
Joichi Saito
Chairman of the Board and
Chief Executive Officer
-15-
<PAGE>
CPB INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1999
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, Jolchi 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. (the "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 27, 1999 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.
THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES UNLESS
AUTHORITY TO DO SO IS WITHHELD FOR ALL NOMINEES OR FOR ANY OTHER NOMINEE.
UNLESS "AGAINST" OR "ABSTAIN" IS INDICATED, THIS PROXY WILL BE VOTED "FOR"
APPROVAL OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS. PLEASE SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE
IN THE POSTAGE PREPAID ENVELOPE PROVIDED.
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S><C>
PLEASE MARK
YOUR VOTES AS /X/
INDICATED IN
THIS EXAMPLE
FOR ALL NOMINEES WITHHOLD AUTHORITY
(EXCEPT AS INDICATED TO VOTE FOR ALL
TO THE CONTRARY) NOMINEES LISTED
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS. 2. RATIFICATION OF THE / / / / / /
Class II. Term will expire / / / / APPOINTMENT OF INDEPENDENT
in 2002. ACCOUNTANTS.
To ratify the appointment
of KPMG LLP as the Company's
independent accountants for
fiscal year ending December 31, 1999.
Nominees: Alice F. Guild, Daniel M. Nagamine and Naoaki Shibuya 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 at the Annual Meeting.
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below)
------------------------------------------
The Board of Directors recommends a vote
"FOR" the election of all nominees for
director and "FOR" ratification of the
appointment of KPMG 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.
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 Proxy Statement accompanying said
notice.
Date: , 1999
----------------------------
--------------------------------------------
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.
</TABLE>
FOLD AND DETACH HERE
