<PAGE>
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-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:
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<PAGE>
[LOGO]
CPB INC.
220 SOUTH KING STREET
HONOLULU, HAWAII 96813
(808) 544-0500
March 22, 2000
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend the
2000 Annual Meeting of Shareholders of CPB Inc. The Annual Meeting will be held
on Tuesday, April 25, 2000, at 10:00 a.m., Hawaii time, on the third floor of
the Central Pacific Plaza Building, 220 South King Street, Honolulu, Hawaii.
The accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement describe matters to be acted upon at the Annual Meeting. We ask that
all shareholders read these documents and sign and return the enclosed Proxy
Card in the enclosed postage-paid envelope to ensure that your shares are voted
accordingly. Shareholders who attend the meeting may withdraw their proxy and
vote in person if they wish to do so.
We appreciate your continued interest in CPB Inc. and are confident that, as
in the past, you will continue to vote your shares.
Sincerely,
/s/ Joichi Saito
Joichi Saito
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
<PAGE>
PRELIMINARY COPY. INTENDED DATE OF DEFINITIVE PROXY: MARCH 22, 2000
[LOGO]
CPB INC.
220 SOUTH KING STREET
HONOLULU, HAWAII 96813
(808) 544-0500
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2000
------------------------
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 25, 2000, 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. AMENDMENT TO RESTATED ARTICLES OF INCORPORATION. To approve an
amendment to the Restated Articles of Incorporation of the Company to
clarify the authority of the Board of Directors to provide for the
issuance of shares of preferred stock previously authorized by the
shareholders of the Company in one or more series and fix the rights,
preferences and privileges of each series of preferred stock of the
Company.
3. 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, 2000.
4. 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,
2000 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 22, 2000
<PAGE>
PRELIMINARY COPY. INTENDED DATE OF DEFINITIVE PROXY: MARCH 22, 2000
CPB INC.
220 SOUTH KING STREET
HONOLULU, HAWAII 96813
(808) 544-0500
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 25, 2000
------------------------
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 25, 2000, 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 22, 2000.
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. AMENDMENT TO RESTATED ARTICLES OF INCORPORATION. To approve an
amendment to the Restated Articles of Incorporation of the Company to
clarify the authority of the Board of Directors to provide for the
issuance of shares of preferred stock previously authorized by the
shareholders of the Company in one or more series and fix the rights,
preferences and privileges of each series of preferred stock of the
Company.
3. 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, 2000.
4. 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, "FOR" approval of the amendment
to Restated Articles of Incorporation and "FOR" ratification of the appointment
of KPMG LLP as the Company's independent accountants for the fiscal year ending
December 31, 2000. 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
<PAGE>
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, "FOR"
approval of the amendment to Restated Articles of Incorporation and "FOR" the
proposal to ratify the appointment of KPMG LLP as the Company's independent
accountants for the fiscal year ending December 31, 2000.
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 29, 2000 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 9,236,657 shares of
Common Stock issued and outstanding on the Record Date. Abstentions and broker
non-votes will be counted for purposes of determining whether a quorum is
present for the purposes of conducting business.
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 amend the Restated Articles of Incorporation requires the
affirmative vote of at least two-thirds ( 2/3) of the Company's outstanding
Common Stock having voting power. Accordingly, an abstention from voting on the
proposal to amend the Restated Articles of Incorporation will have the effect of
a vote "AGAINST" the proposal.
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
2
<PAGE>
from voting on the proposal to ratify the appointment of KPMG LLP will have the
effect of a vote "AGAINST" the proposal.
PRINCIPAL SHAREHOLDERS
As of February 29, 2000, the following were the only persons 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 PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------- --------------------------------------------- -------------------- ----------
<S> <C> <C> <C>
Common The Committee of the Central 1,040,411(1) 11.26%
Pacific Bank Employee Stock
Ownership Plan
220 South King Street
Honolulu, Hawaii 96813
Common The Sumitomo Bank, Limited 1,020,132(2) 10.99%(3)
6-5 Kitahama 4-Chome
Chuo-Ku
Osaka, Japan
Common Private Capital Management 611,262 6.62%
3003 9th Street North
Naples, Florida 34103
Common State of Wisconsin Investment Board 470,000 5.09%
P.O. Box 7842
Madison, Wisconsin 53707
</TABLE>
- ------------------------
(1) 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, 2000,
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.
(2) Includes 46,219 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."
(3) This percentage is computed as if the 46,219 shares described in footnote 2
were outstanding. However, the 46,219 shares are not deemed to be
outstanding for the purpose of computing the percentage of Common Stock
owned by any other person.
3
<PAGE>
ELECTION OF DIRECTORS
Under the Company's Restated Articles of Incorporation ("Articles") 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 2003 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 III directors. Messrs. Paul Devens and Stanley W. Hong and Dr. Clayton K.
Honbo, who are currently serving as Class III directors, are the nominees.
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.
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: First
Insurance Company of Hawaii, Ltd., Hawaiian Tax Free Trust, Pacific Capital
Funds, Kerr Pacific Corporation and Lanihau Management Corporation.
The following table sets forth certain information, as of February 29, 2000,
with respect to each of the directors, nominees and Named Executives (as defined
below), as well as all directors and executive officers, as a group:
<TABLE>
<CAPTION>
COMMON STOCK
FIRST YEAR BENEFICIALLY
ELECTED OR OWNED ON
APPOINTED AS FEBRUARY 29, 2000(2)
OFFICER OR ----------------------
PRINCIPAL OCCUPATION DIRECTOR OF PERCENT OF TERM
NAME FOR THE PAST FIVE YEARS AGE THE COMPANY(1) NUMBER CLASS(3) EXPIRES
- ---- --------------------------- -------- --------------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES (CLASS III DIRECTORS)
DEVENS, Paul Vice Chairman of the Board 68 1980 7,442(4) * 2000
(Class III Director, Nominee) of Company; Attorney at
Law; Of Counsel
(1994-present), Devens,
Nakano, Saito, Lee, Wong &
Ching
HONBO, Clayton K., M.D. Retired; Doctor of 61 1999 180,498(5) 1.94% 2000
(Class III Director, Nominee) Obstetrics and Gynecology
(1977-1999)
HONG, Stanley W. President and Chief 63 1993 3,400(6) * 2000
(Class III Director, Nominee) Executive Officer, The
Chamber of Commerce of
Hawaii (1996-present);
Consultant to HRT, Ltd.
(1994-1996)
CLASS I DIRECTORS
HIROTA, Dennis I., Ph.D. President, Sam O. Hirota, 59 1980 8,200(8) * 2001
(Class I Director) Inc.--Engineering and
Surveying (1986-present);
Registered Professional
Engineer and Licensed
Professional Land
Surveyor(7)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
FIRST YEAR BENEFICIALLY
ELECTED OR OWNED ON
APPOINTED AS FEBRUARY 29, 2000(2)
OFFICER OR ----------------------
PRINCIPAL OCCUPATION DIRECTOR OF PERCENT OF TERM
NAME FOR THE PAST FIVE YEARS AGE THE COMPANY(1) NUMBER CLASS(3) EXPIRES
- ---- --------------------------- -------- --------------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
HOTTA, Kensuke Deputy President, The 61 1999 0(9) * 2001
(Class I Director) Sumitomo Bank, Limited
(1997-present); Senior
Managing Director,
International Banking
Group, The Sumitomo Bank,
Limited (1993-1997)
SAITO, Joichi Chairman of the Board and 64 1989 38,282(11) * 2001
(Class I Director) Chief Executive Officer of
Company (1996-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)(7)(10)
CLASS II DIRECTORS
GUILD, Alice F. Executive Director, Iolani 65 1980 5,112(12) * 2002
(Class II Director) Palace (1998-present)
NAGAMINE, Daniel M. President, Flamingo 58 1983 11,260(13) * 2002
(Class II Director) Enterprises, Inc.
(1985-present); General
Partner, Flamingo Pearl
City, a limited partnership
(1998-present); General
Partner, Flamingo Downtown,
a limited partnership
(1981-1994); Certified
Public Accountant
SHIBUYA, Naoaki President of Company 58 1995 18,588(15) * 2002
(Class II Director) (1996-present); Executive
Vice President of Company
(1993-1995); President and
Chief Operating Officer of
Bank (1996-present);
Executive Vice President of
Bank (1993-1995)(7)(14)
EXECUTIVE OFFICERS
IMAMURA, Austin Y. Vice President and 53 1991 14,097(16) * N/A
Secretary of Company
(1991-present); Executive
Vice President and
Secretary of Bank
(1991-present)
KANDA, Neal K. Vice President and 51 1991 19,455(17) * N/A
Treasurer 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
FIRST YEAR BENEFICIALLY
ELECTED OR OWNED ON
APPOINTED AS FEBRUARY 29, 2000(2)
OFFICER OR ----------------------
PRINCIPAL OCCUPATION DIRECTOR OF PERCENT OF TERM
NAME FOR THE PAST FIVE YEARS AGE THE COMPANY(1) NUMBER CLASS(3) EXPIRES
- ---- --------------------------- -------- --------------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
All Directors and Executive 306,334(18) 3.29%
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 and
Nagamine 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. Hotta was a director of the Company and the Bank from 1993 to 1996 and
has been a director of the Company and the Bank continuously since 1999.
Mr. Hong has been a director of the Bank since 1985. Dr. Honbo has been a
director of the Bank since 1986. 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 29, 2000 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 3,000 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 175,366 shares for which Dr. Honbo has shared voting and
investment powers with his wife, Lynette Honbo and 3,000 shares which
Dr. Honbo has the right to acquire by the exercise of stock options vested
pursuant to the Company's 1997 Stock Option Plan.
(6) Includes 400 shares for which Mr. Hong has shared voting and investment
powers with his wife, Karen Ho Hong and 3,000 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.
(7) Messrs. Saito and Shibuya, and Dr. Hirota are also directors of CPB
Properties, Inc., a wholly-owned subsidiary of the Bank.
(8) Includes 1,760 shares for which Dr. Hirota has shared voting and investment
powers with his wife, Kathryn Hirota and 3,000 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.
(9) Does not include 973,913 shares held by Sumitomo, of which Mr. Hotta is a
Deputy President, or 46,219 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) Mr. Saito was formerly an officer of Sumitomo, from which he is now
retired.
(11) Includes 7,000 shares for which Mr. Saito has shared voting and investment
powers with his wife, Yoko Saito, and 15,922 shares allocated to
Mr. Saito's account under the Bank's ESOP.
(12) Includes 3,000 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.
(13) Includes 8,260 shares for which Mr. Nagamine has shared voting and
investment powers with his wife, Maxine Nagamine and 3,000 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.
(14) Mr. Shibuya is on indefinite leave of absence from Sumitomo.
(15) Includes 400 shares for which Mr. Shibuya has shared voting and investment
powers with his wife, Tsuneko Shibuya, 15,200 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 2,988 shares allocated to
Mr. Shibuya's account under the Bank's ESOP.
(16) Includes 14,097 shares allocated to Mr. Imamura's account under the Bank's
ESOP.
(17) 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 6,455 shares allocated to Mr. Kanda's account under the
Bank's ESOP.
(18) Includes 193,188 shares for which certain directors and officers have
shared voting and investment powers, 45,800 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 39,462
shares allocated to the accounts of executive officers under the Bank's
ESOP.
6
<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 Compensation & 1997 Stock Option Plan Committee (the "Compensation
Committee").
The Executive Committee, which held no meetings during 1999, is chaired by
Mr. Devens, and Messrs. Nagamine, Saito and Shibuya 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 1999. The committee is
chaired by Mr. Nagamine, and Mrs. Guild, Dr. Honbo, 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 2001 Annual
Meeting of Shareholders recommended by shareholders if such recommendations are
received in writing prior to December 15, 2000. Shareholder recommendations
should be addressed to the Company's Secretary, P.O. Box 3590, Honolulu, Hawaii
96811.
The Audit Committee held one meeting during 1999. The committee is chaired
by Mrs. Guild, and Mr. Hong and Dr. Honbo 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 1999. 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, 1999, the Board of Directors of
the Company held a total of five meetings. All of the persons who were directors
of the Company during 1999 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.
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
7
<PAGE>
and bonus exceeded $100,000 in 1999 (the "Named Executives") for each of the
fiscal years ended December 31, 1999, 1998 and 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- --------------------------- -------- -------- -------- ------------
<S> <C> <C> <C> <C>
Joichi Saito ......................................... 1999 $370,016 $33,908 $23,154(1)
Chairman of the Board and Chief Executive Officer 1998 338,344 -- 22,827(2)
1997 310,000 25,988 20,020(3)
Naoaki Shibuya ....................................... 1999 258,344 23,646 21,904(4)
President 1998 235,011 -- 22,678(5)
1997 210,000 17,738 23,317(6)
Austin Y. Imamura .................................... 1999 198,000 21,025 21,822(7)
Vice President and Secretary 1998 186,667 -- 21,635(8)
1997 176,667 14,850 22,069(9)
Neal K. Kanda ........................................ 1999 168,000 20,348 21,657(10)
Vice President and Treasurer 1998 156,667 -- 20,849(11)
1997 144,000 12,375 19,976(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
$7,270, $10,811, $1,873 and $3,200, respectively.
(2) 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. Saito of $6,541, $10,597, $1,606 and $4,084,
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 $7,507, $11,146 and $1,367, respectively.
(4) Includes contributions to the Bank's CODA/Profit Sharing Plan, the Banks
ESOP, the Bank's Split Dollar Life Insurance Plan and the Bank's 401(k)
Plan for the account of Mr. Shibuya of $7,270, $10,811, $623 and $3,200,
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 $6,541, $10,597, $540 and $5,000,
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 $7,507, $11,146, $464 and $4,200,
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 $7,270, $10,811, $540 and $3,200,
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 $6,541, $10,597, $467 and $4,030
respectively.
8
<PAGE>
(9) 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.
(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 $7,270, $10,811, $375 and $3,200,
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 $6,541, $10,597, $330 and $3,381,
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 $6,756, $10,032, $308 and $2,880,
respectively.
OPTION GRANTS
No options or stock appreciation rights were granted during 1999 to the
Named Executives.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the Named
Executives concerning the exercise of options during the fiscal year ended
December 31, 1999 and unexercised options held by the Named Executives as of
December 31, 1999:
AGGREGATED OPTION(1) EXERCISES IN 1999
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS(2)
SHARES OPTIONS AT 12/31/99 AT 12/31/99
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
SAITO, Joichi................... -- N/A -- -- -- --
SHIBUYA, Naoaki................. -- N/A 15,200 3,800 $234,992 $58,748
IMAMURA, Austin Y............... -- N/A -- -- -- --
KANDA, Neal K................... -- N/A 12,600 -- 198,765 --
</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, 1999 ($28.50 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.
9
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
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 $ 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 39,375
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 1999 would be payable to eligible employees pursuant to the
Supplemental Executive Retirement Plan. The credited years of service as of
December 31, 1999 for Messrs. Saito, Shibuya, Imamura and Kanda are 12, 6, 14
and 10, 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 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/or the
Bank.
Set forth below is a report of the Compensation Committee addressing the
Company's compensation policies for 1999 applicable to the Company's executives,
including the Named Executives.
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<PAGE>
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
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 27, 1999, the Company's Board of Directors approved the
compensation for all executive officers for the ensuing year, effective May 1,
1999.
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 net
charge-offs in 1998 increased to 0.53% of average loans compared to 0.36% in
1997, the level of nonperforming assets, loans delinquent for 90 days or more
and restructured loans still accruing interest as a percentage of year-end loans
decreased to 1.76% at year-end 1998 from 3.36% at year-end 1997. Net income in
1998 increased by 0.7% over 1997, while return on assets decreased to 1.00% from
1.04% in the previous year. Total assets increased by 4.8% in 1998, compared
with a 6.7% increase in 1997. 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 1999, 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
11
<PAGE>
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 1999, 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 1999, approximately 40% of the Plan Contribution was allocated
to the Profit Sharing Plan and 60% to the ESOP. In 1999, the Bank contributed
$853,000 to the CODA and Profit Sharing Plan and $1,280,000 to the ESOP, which
equaled 4.5% and 6.7%, 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 1999 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, 1999, 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 1999, ten executives, including each of the Named
Executives, were eligible to participate in the Annual Incentive Plan.
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 the
Company's return on equity, return on assets and the efficiency ratio are met.
Based on the corporate objectives set for 1999, participants were eligible to
receive cash bonuses. After assessing the Company's 1999 financial performance,
the Bank's Board of Directors, upon management's recommendation, awarded cash
bonuses to the Named Executives in the amounts noted for 1999 in the "Summary
Compensation Table."
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
1999.
12
<PAGE>
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, subject to future adjustments based on
increases in the cost of living. The reduction had the effect of decreasing 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, supplemental disability and
term life insurance.
Dated: March 22, 2000 THE COMPENSATION COMMITTEE
STANLEY W. HONG, CHAIR
PAUL DEVENS
DANIEL M. NAGAMINE
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
1999, 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 1999. 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 2000.
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 the Nasdaq market index and (ii) the cumulative total return of
banks and bank holding companies listed on Nasdaq over the period from
December 31, 1994 through December 31, 1999. The graph assumes an initial
investment of $100 at the end of 1994 and reinvestment of dividends during the
ensuing five-year period. The graph is not necessarily indicative of future
price performance.
13
<PAGE>
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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CPB INC. NASDAQ US NASDAQ BANKS
<S> <C> <C> <C>
1994 100 100 100
1995 127 141 149
1996 122 174 197
1997 173 213 329
1998 152 300 327
1999 253 542 314
</TABLE>
CERTAIN TRANSACTIONS
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 then 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.
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, 1999, notes payable
by the Partnership totaling $8,501,000 to Sumitomo and 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. The notes
14
<PAGE>
payable bear interest at either a fixed rate or a variable rate based upon the
London Interbank Offered Rate or the Federal Funds rate. The weighted average
rate on these notes was 6.620% at December 31, 1999. Management of the Company
believes that the terms of such loans are as favorable as could be negotiated
with unaffiliated third parties.
AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
The Articles currently authorize 1,000,000 shares of preferred stock, no par
value per share of which 500,000 have been designated as Junior Participating
Preferred Stock, Series A (the "Series A Preferred Stock").
In 1999, pursuant to the current Paragraph 4, Article IV of the Articles,
the Board of Directors established the Series A Preferred Stock in connection
with the distribution of rights pursuant to the shareholders rights plan the
Board of Directors had approved. The Department of Commerce and Consumer Affairs
of the state of Hawaii (the "Department of Commerce and Consumer Affairs")
initially raised a question concerning the Board of Directors' authority to
establish the Series A Preferred Stock. However, the Department of Commerce and
Consumer Affairs ultimately agreed with the Company that the Board of Directors
did have the authority to establish the Series A Preferred Stock pursuant to the
current Articles and accepted for filing the Statement of Designation of Junior
Participating Preferred Stock, Series A of CPB Inc.
In order to avoid the possibility of any questions or delays relating to the
establishment of additional series of preferred stock in the future, the Board
of Directors has unanimously adopted and recommends the Company's shareholders
consider and approve an amendment to Paragraph 4, Article IV of the Articles
(the "Amendment") as set forth below. The Amendment does not change or expand
the current authority or power of the Board of Directors. The Amendment merely
clarifies the authority of the Board of Directors to provide for the issuance of
shares of preferred stock previously authorized by the shareholders of the
Company in one or more series and fix the rights, preferences and privileges of
each series of preferred stock of the Company.
If the following Amendment is adopted, the Articles will be amended to
delete Paragraph 4, Article IV in its entirety and replace the same with the
following:
ARTICLE IV
4. The Board of Directors is expressly authorized by resolution or
resolutions from time to time adopted, to provide for the issuance of
shares of preferred stock in one or more series, and to fix and state
the powers, designations, preferences and relative, participating,
optional or other special rights of the shares of such series, and
the qualifications, or restrictions thereof, including (but without
limiting the generality of the foregoing) the following:
(a) The designation of such series and the number of shares which
shall constitute such series;
(b) Any provisions for dividends on shares of such series, including,
without limitation, the dividend rate, the conditions upon which and the
dates when such dividends shall be payable, whether dividends shall be
payable on any other class or classes or of any other series of stock,
and whether dividends shall be cumulative and, if so, the date or dates
from which dividends shall be cumulative;
(c) Whether shares of such series may be redeemed and, if redeemable,
whether they are redeemable for cash, property or rights (including
securities of the Corporation or another corporation), the time or times
when shares of such series may be redeemed, the price or prices, rate or
rates, and adjustments with which shares of such series may be redeemed,
and the other terms and conditions upon which shares of such series may
be redeemed;
15
<PAGE>
(d) The rights to which holders of shares of such series shall be
entitled upon any voluntary or involuntary dissolution, liquidation,
distribution of assets or winding up the Corporation;
(e) The terms and amount of any sinking or purchase fund to be
provided for the purchase, redemption or retirement of the shares of such
series;
(f) The rights, if any, of the holders of shares of such series or of
the Corporation to convert such shares into or exchange such shares for
shares of Common Stock or of any other series of Preferred Stock of the
Corporation or any other securities of the Corporation or another
corporation, and the terms and conditions of such conversion or exchange;
(g) Whether the holders of shares of such series shall have any
voting rights or no voting rights and, if such holders shall have any
voting rights, the voting rights of holders of shares of such series;
(h) The extent to which the Company may increase or decrease the
number of shares of any such series (but not above the total number of
authorized shares of the class or below the number of shares of such
series then outstanding);
(i) The subscription or purchase price and form of consideration for
which the shares of such series shall be issued;
(j) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of Preferred
Stock and whether such shares may be reissued as shares of the same or
any other series of Preferred Stock; and
(k) Any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations
and restrictions thereof, insofar as they are not inconsistent with these
Restated Articles of Incorporation, to the full extent in accordance with
the laws of the State of Hawaii.
The affirmative vote of the holders of at least two-thirds ( 2/3) of the
Company's outstanding Common Stock having voting power will be required for
passage of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
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,
2000 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 1999 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.
16
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OTHER BUSINESS
The Board of Directors 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 2001 Annual Meeting of Shareholders will be held on or about April 24,
2001. Proposals of shareholders intended to be presented at the 2001 Annual
Meeting must be received by the Secretary of the Company, Post Office Box 3590,
Honolulu, Hawaii 96811, no later than November 22, 2000.
In addition, in the event a shareholder proposal is not submitted to the
Company prior to February 6, 2001, the proxy to be solicited by the Board of
Directors for the 2001 Annual Meeting of Shareholders will confer authority on
the holders of the proxy to vote the shares in accordance with their best
judgment and discretion, if the proposal is presented at the 2001 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, 1999 BY WRITING TO AUSTIN Y.
IMAMURA, VICE PRESIDENT AND SECRETARY, CPB INC., POST OFFICE BOX 3590, HONOLULU,
HAWAII 96811.
Dated: March 22, 2000
CPB INC.
/s/ Joichi Saito
Joichi Saito
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
17
<PAGE>
CPB INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD April 25, 2000
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. Joichi Saito, Naoski Shibuya, 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 25, 2000 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:
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"
AMENDMENT TO RESTATED ARTICLES OF INCORPORATION AND "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.
IMPORTANT: CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
CPB INC.
APRIL 25, 2000
Please Detach and Mail in the Envelope Provided
/X/ Please mark your votes as in this example.
1. ELECTION OF DIRECTORS.
Class III. Terms will expire in 2003.
FOR ALL NOMINEES
(EXCEPT AS INDICATED TO THE CONTRARY) / /
WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED / /
Nominees: Paul Devens
Clayton K. Honbo
Stanley W. Hong
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- ------------------------------------------------------------------------------
2. AMENDMENT TO RESTATED ARTICLES OF INCORPORATION. To approve an amendment
to the Restated Articles of Incorporation of the Company to clarify the
authority of the Board of Directors to provide for the issuance of shares of
preferred stock previously authorized by the shareholders of the Company in
one or more series and fix the rights, preferences and privileges of each
series of preferred stock of the Company.
FOR / / AGAINST / / ABSTAIN / /
3. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS. To ratify
the appointment of KPMG LLP as the Company's independent accountants for
fiscal year ending December 31, 2000.
FOR / / AGAINST / / ABSTAIN / /
4. 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 present knows of no
other business to be presented at the Annual Meeting.
The Board of Directors recommends a vote "FOR" the election of all nominees for
director, "FOR" amendment to Restated Articles of Incorporation and "FOR"
ratification of the appointment of KMPG 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 herby 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.
Signature _____________ Signature if held jointly__________ Date:________, 2000
NOTE: 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.
