No poison pill has been adopted
Corporate Governance Guidelines
The Company and the Board have adopted Corporate Governance Guidelines (“Governance Guidelines”). The Governance Guidelines are posted on the Investor Relations page of the Company'sCompany’s website at www.boh.com. The Governance Guidelines address director qualification and independence standards, responsibilities of the Board, access to management and access to independent advisors, compensation, orientation and continuing education, Board committees, Chief Executive Officer (“CEO”) evaluation, management succession, Code of Business Conduct and Ethics, shareholder communications to the Board and the Board’s annual performance evaluation.
The Company’s leadership structure includes both a combined Chairman and CEO and a separate Lead Independent Director. At this time, the Board believes that it is in the best interests of the Company to have a single individual serve as Chairman and CEO to control and implement the short- and long-term strategies of the Company. The Board believes that this joint position provides it with the ability to perform its oversight role over management with the benefit of a management perspective as to the Company’s business strategy and all other aspects of the business. With its Lead Independent Director, this governance structure also provides a form of leadership that allows the Board to function distinct from management, capable of objective judgment regarding management’s performance, and enables
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the Board to fulfill its duties effectively and efficiently. The Company’s leadership structure promotes the objectivity of the Board’s decisions and its role in reviewing the performance of management. Through its leadership and governance processes the Company seeks to establish a governance structure that provides both oversight and guidance by the Board to management regarding strategic planning, risk assessment and management, and corporate performance.
The Company’s Lead Independent Director is appointed by the Board and the current Lead Independent Director, Dr. Mary G. F. Bitterman, has servedMr. Raymond P. Vara, Jr., was appointed in this position since 1999.April 2020. The Company’s Governance Guidelines clearly define the Lead Independent Director’s role and duties which include, but are not limited to, serving as Chairman of the Company’s Nominating & Corporate Governance Committee, presiding over regularly scheduled executive sessions of the non-management directors, serving as a liaison between the non-management directors and executive management, and assisting the Board and executive management to ensure compliance with the Governance Guidelines. Since Dr. Bitterman will not be standing for re-election in 2020 due to retirement, a new Lead Independent Director will be determined.
The Company'sCompany’s Nominating & Corporate Governance Committee has determined that each12 of the 13 current non-management directors, including the Lead Independent Director, are “independent” as defined by the NYSE rules. The non-management directors meet in executive session without management in attendance for regularly scheduled meetings. The non-management directors may also meet in executive session each time the full Board convenes for a meeting. In 2019,2021, the non-management directors met sixthree times in executive session. The Lead Independent Director also meets regularly on an individual basis with members of the Company’s executive management team.
Director Qualifications and Nomination Process
The Nominating & Corporate Governance Committee is responsible for identifying and assessing all director candidates and recommending nominees to the Board. Potential nominees are evaluated based on their independence, within the meaning of the Governance Guidelines and the rules of the NYSE. Candidates to be nominated as a director, including those submitted by shareholders, are selected based on, among other criteria, their integrity, informed judgment, financial literacy, high performance standards, accomplishments and reputation in the community, experience, skill sets, and ability to commit adequate time to Board and committee matters and to act on behalf of shareholders. The criteria also include a determination of the needs of the Board and of the interplay between each individual’s personal qualities and characteristics and those of the other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of the Company and its shareholders. In addition, Board members are expected to participate in continuing education and training opportunities to stay current on corporate governance, industry trends and issues and to enhance their understanding of the Company’s business.
The objective of the Nominating & Corporate Governance Committee is to present a combination of candidates that will result in a Board with a wide range of skills, expertise, industry knowledge, viewpoints, and backgrounds, with business and community contacts relevant to the Company’s business. To accomplish this, the Nominating & Corporate Governance Committee seeks candidates from different age groups, ethnicities, genders, industries, and experiences, in addition to the criteria described above. The Board includes directors with experience in public corporations, not-for-profitnonprofit organizations, and entrepreneurial individuals who have successfully run their own private enterprises. The Board also has the broad set of skills necessary for providing oversight to a financial institution, which includes proven leadership and expertise in finance, accounting, information technology, risk management, lending, investment management, digital marketing, data analytics and communications. A shareholder may submit a candidate for consideration by the Board to be included in the Board’s slate of director nominees. Candidates proposed by shareholders will be evaluated by the Nominating & Corporate Governance Committee under the same criteria that are applied to other candidates. The criteria are set forth above and in the Company’s Bylaws and Governance Guidelines. Candidates to be considered for nomination by the Nominating & Corporate Governance Committee at the 20212023 Annual Meeting of Shareholders must be presented in writing to the Corporate Secretary on or before November 15, 2020,18, 2022, at 130 Merchant Street, Honolulu, Hawaii 96813.
Director Experience, Tenure, Diversity and Refreshment
The Board maintains a unique balance of experience, tenure, diversity, cultural and local market knowledge and broad subject matter expertise. While our longer-tenured directors carry a wealth of experience and deep understanding of the Company and our industry, the Board embraces the need for fresh perspectives and is committed to continued director refreshment.
The Board's refreshment activities are ongoing. Since 2013,2017, the Board has added six new directors. In anticipation of the retirement of one directorthree directors in 2019 and two more retirements in 2020,2024, on October 22, 2021 the Board in January 2019 increased the authorized number of directors on the Board to 14 and elected new directors Messrs. Erickson and Feldmandirector Elliot K. Mills to serve tountil the 2019 annual meeting. They2022 Annual Meeting. On February 18, 2022, Mr. Mills and the other current directors were also nominated to stand for re-election at the 2019 annual meeting. On July 19, 2019, the Board elected new director Michelle Hulst to serve to the 2020 annual meeting. Ms. Hulst was also nominated to stand for re-election at the 2020 annual meeting. On February 21, 2020, the Board elected new director, Dana M. Tokioka, to serve until the 2020 annual meeting. Ms. Tokioka was also nominated to stand for re-election at the 2020 annual meeting.
2022 Annual Meeting.The Board employs a balanced approach to populating Board Committees. This refreshment strategy results in a membership that maintains new and contemporary perspectives, ideas and approaches, with the appointment of Messrs. EricksonMmes. Moy and Tanabe to the Audit & Risk Committee and Nominating & Corporate Governance Committee, and Feldman and Ms. Hulst to the Human Resources & Compensation Committee and Nominating & Corporate Governance Committee in January 2019 and July 2019, respectively.
Board and Committee Evaluations
The Nominating & Corporate Governance Committee leads and oversees the annual evaluation of the Board and Board committees. The annual evaluation includes an individual director self-assessment and an independent third party hosted survey to determine whether the Board and its committees are functioning effectively. The Nominating & Corporate Governance Committee establishes the evaluation criteria, oversees the evaluation process, discusses the results with the Board, and implements any changes that emerge from the evaluations that the Board deems appropriate to enhance Board effectiveness.
An independent consultant provides assistance with the design of the online survey instrument and administers the survey on behalf of the Nominating & Corporate Governance Committee, thereby assuring anonymity of participant responses through a secure, encrypted website. A written report of total sample data, as well as data for the Board committees, is prepared by the consultant, analyzing the closed-end questions and including the verbatim comments offered by directors at the close of each section of the survey that may provide recommendations for improvement. The report also tracks current data against results from previous surveys, where comparable. The Nominating & Corporate Governance Committee, through the same third party, distributes a survey to executive management for feedback concerning how the Board and its committees can enhance their effectiveness.
The Company'sCompany’s Bylaws and Governance Guidelines provide for majority voting in uncontested elections and a resignation process in the event a director nominee does not obtain a majority of votes cast. The resignation process provides the Board with discretion to accept or reject a tendered resignation if a majority vote is not obtained. If the tendered resignation is not accepted by the Board, the Board shall not nominate such director to stand for re-election at the next annual meeting of shareholders.
Communication with Directors
Shareholders and any interested parties may communicate with the Board, non-management directors, or the Lead Independent Director by sending correspondence c/o the Company’s Corporate Secretary, 130 Merchant Street, Honolulu, Hawaii 96813. All appropriate communications received will be forwarded to the Board, non-management directors or the Lead Independent Director as addressed.
Code of Business Conduct and Ethics
The Company has earned its reputation as a respected leader in the communities it serves and in the financial services industry by conducting business in an ethical, responsible and professional manner. The Company is proud of the high standards of quality and service that have been its hallmark through the years. These qualities represent fundamental business practices and apply to all directors, officers and employees.
The Company and the Board have adopted a Code of Business Conduct and Ethics (the "Code"“Code”) for directors, executive officers (including the Company's chief executive officer, chief financial officer, principal accounting officerCompany’s Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and controller)Controller) and employees that isare posted on the Investor Relations page of the Company’s website at www.boh.com. The Code addresses the professional, honest and ethical conduct required of each director, officer and employee, conflicts of interest, disclosure process, compliance with laws, rules and regulations (including securities trading), corporate opportunities, confidentiality, fair dealing, protection and proper use of Company assets, and encourages the reporting of any illegal or unethical behavior through robust reporting protocols and whistleblower protections. The Company also maintains a strong whistleblower and anti-retaliation policy and encourages conduct reporting through several designated channels, including the Chair of the Audit and& Risk Committee, Chief Ethics Officer, General Counsel and a third-partythird party hosted anonymous alert line. A waiver of any provision of the Code may be made only by the Audit & Risk Committee of the Board and must be promptly disclosed as required by SEC and NYSE rules. The Company will disclose any such waivers, as well as any amendments to the Code, on the Company’s website at www.boh.com.
Policy Prohibiting Hedging and Pledging of Company Stock
The Company'sCompany’s Securities Trading Policy (the "Policy"“Policy”) specifically prohibits directors and employees from hedging the risk associated with the ownership of Bank of Hawaii Corporation'sCorporation’s common stock. The Policy also prohibits directors and employees from pledging transactions involving Bank of Hawaii Corporation common stock as collateral, including the use of a traditional margin account with a broker-dealer.
The Board is comprised of a majority of independent directors as defined by the NYSE listing standards. In affirmatively determining that a director is independent of the Company’s management and has no material relationship with the Company, either directly or indirectly as a partner, shareholder, or officer of an organization that has a relationship with the Company, the Board applies the following categorical standards, in addition to such other factors as the Board deems appropriate:
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a) | In no event shall a director be considered independent if the director is an employee, or a member of the director’s immediate family is an executive officer of the Company until three years after the end of such employment relationship. Employment as an interim Chairman of the Board, CEO,Chief Executive Officer, Chief Financial Officer ("CFO") or other executive officer shall not disqualify a director from being considered independent following that employment. |
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b) | In no event shall a director be considered independent if the director receives, or a member of the director’s immediate family who serves as an executive officer of the Company receives more than $120,000 per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service). A director may not be considered independent until three years after ceasing to receive such compensation. |
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c) | In no event shall a director be considered independent if the director is a current partner or employee of the Company’s internal or external auditor, or whose immediate family member is a current partner or employee of such a firm and personally works on the Company’s audit; or was a partner or employee of such a firm and personally worked on the Company’s audit within the last three years. |
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d) | In no event shall a director be considered independent if the director is employed, or a member of the director’s immediate family is employed, as an executive officer of another company where any of the Company’s present executives serves on that company’s compensation committee until three years after the end of such service or employment relationship. |
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e) | In no event shall a director be considered independent if the director is an executive officer or employee, or an immediate family member of the director is an executive officer, of a company that makes payments to, or receives payments from, the Company for property or services rendered in an amount which, in any single fiscal year, exceeds the greater of $1.0 million, or 2% of such other company’s consolidated gross revenues for such year, until three years after falling below such threshold. |
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f) | A director will not fail to be deemed independent solely as a result of the director’s and the director’s immediate family members’, or a director’s affiliated entities, banking relationship with the Company if such relationship does not violate paragraphs (a) through (e) above and is made in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with persons not affiliated with the Company and, with respect to extensions of credit, is made in compliance with applicable laws, including Regulation O of the Board of Governors of the Federal Reserve System, and do not involve more than the normal risk of collectability or present other unfavorable features. |
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g) | Audit & Risk Committee members may not receive directly or indirectly any consulting, advisory or other compensatory fee from the Company and shall otherwise meet the independence criteria of SectionRule 10A-3 ofunder the Securities Exchange Act of 1934, as amended. Audit & Risk Committee members may receive directors’ fees and other in-kind consideration ordinarily available to directors, as well as regular benefits that other directors receive (including any additional such fees or consideration paid to directors with respect to service on committees of the Board). |
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h) | Human Resources & Compensation Committee members may not receive directly or indirectly any consulting, advisory or other compensatory fee from the Company, and shall otherwise meet the independence criteria of Section 10C ofRule 10C-1 under the Securities Exchange Act of 1934, as amended. Human Resources & Compensation Committee members may receive directors'directors’ fees or other in-kind consideration ordinarily available to directors, as well as regular benefits that other directors receive (including any additional such fees or consideration paid to directors with respect to service on committees of the Board). |
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i) | If a particular commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship or transaction that is not addressed by the above standards exists between a director and the Company, the Board will determine, after taking into account all relevant facts and circumstances, whether such relationship or transaction is in the Board’s judgment material, and therefore whether the affected director is independent. |
For purposes of these independence standards, an “immediate family member” includes the director’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than a domestic employee) who shares the director’s home.
The following 1112 director nominees standing for election have been determined by the Board to be independent: Messrs. Burak, Erickson, Feldman, Mills, Nichols, Vara, and Wo, and Mmes. Apoliona, Hulst, Moy, Tanabe, and Tokioka, and accordingly, the Board has a majority of independent directors as defined by the listing standards of the NYSE and the Governance Guidelines. All of the committeesThe Audit & Risk, Human Resources & Compensation, and Nominating & Corporate Governance Committees are each composed entirely of independent directors who also meet applicable committee independence standards. Mr. Ho is the Chairman, CEO and President of the Company and is therefore not independent. Mr. Lucien, iswho retired as an employee of the Company in April 2020, was formerly the Vice Chair and Chief Strategy Officer of the Company and is therefore not independent.
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Human Resources & Compensation Committee Interlocks and Insider Participation
No member of the Human Resources & Compensation Committee during fiscal year 20192021 served as an officer, former officer, or employee of the Company or had a relationship that was required to be disclosed under “Certain Relationships and Related Transactions.” Further, during 2019,2021, no executive officer of the Company served as:
A member of the Human Resources & Compensation Committee (or equivalent) of any other entity, one of whose executive officers served as one of our directors or was an immediate family member of a director, or served on our Human Resources & Compensation Committee; or
A director of any other entity, one of whose executive officers or their immediate family member served on our Human Resources & Compensation Committee.
Sound Environmental, Social, GovernanceOversight of Risk
The Company’s governance, including policies, standards and Leadership - A Commitmentprocedures, has been developed with the goal of ensuring that business decisions and the execution of business processes are in compliance with legal and regulatory requirements.
Authority for accepting risk exposures on behalf of the Company originates from the Board. In turn, that authority is delegated through the Board-appointed Executive Committee, chaired by the CEO and comprised of executive management, and its subcommittees, including the Risk Council. The Risk Council, chaired by the Chief Risk Officer, provides the Executive Committee with a forum for the review and communication of both specific and company-wide risk issues, and serves to Integrityenhance collaboration among all areas of the Company that create and Ethical Excellence
Themanage risk, while reinforcing executive management’s responsibility for ensuring risk is managed within established tolerances.Risk management at the Company is committedthe process for identifying, measuring, controlling and monitoring risk across the enterprise given its business as a financial institution and financial intermediary. Risk Management crosses all functions and employees and is embedded in all aspects of planning and performance measurement. The Company’s systems, information and timely reporting are designed to promoting sound Environmental, Social and Governance ("ESG") through strongenable the Company to quickly adapt to early warning signs.
The Board leadership and managementis responsible for oversight and processes. Broadly speaking, our senior management team developsof the Company’s ESG strategic directionenterprise risk framework. The Board implements its risk oversight function both as a whole and through delegation to various committees. The Board has delegated to the Audit & Risk Committee primary responsibility for overseeing financial, credit, investment and operational risk exposures including regulatory and legal risk; to the Fiduciary & Investment Management Committee primary responsibility for oversight of fiduciary and investment risk of client accounts; and to the Human Resources & Compensation Committee primary responsibility for oversight of risk related to management and staff. These committees report to the full Board to ensure the Company’s overall risk exposures are understood, including risk interrelationships. The Board also oversees its execution, whilereputational risk.
Risk reports are provided and discussed at every committee and Board meeting. In addition to detailed reports, the Board reviews an Enterprise Risk Position report that reflects key risk measures and trends across the Company. Key managers responsible for risk management (Chief Risk Officer, Treasurer, Chief Compliance Officer, General Counsel, and Chief Fiduciary Officer) regularly provide updates at the respective committee and Board meetings. In support of the Board’s risk oversight role and to ensure that potential problems are surfaced, the Audit & Risk Committee directly oversees the Company’s Internal Audit and Credit Review functions.
Cybersecurity and Information Security Risk Oversight
Management of cybersecurity risks is charged with providing guidance, insight and oversight as to the strategy, initiatives and management’s performance. As discussed in other sections,responsibility of the full Board. In 2021, the Company, the Board, and seniorthe Audit & Risk Committee continued to strengthen the management and oversight of cybersecurity risks through new security system enhancements, policies, testing, identification and reporting. The Company continued its program of third party penetration testing and ongoing analysis to identify potential vulnerabilities and need for additional enhancements. The company also remain committedcontinued to fostering an effectivesupport remote work in response to the COVID-19 pandemic which included ensuring the necessary provisions for managing the cybersecurity and efficientinformation security risks associated with remote work.
The Board devotes significant time and attention to the oversight of cybersecurity and information security risk, and control environmentbenefits from the technical expertise of certain of its members. In particular, the Board and Audit & Risk Committee each receive regular reporting on cybersecurity and information security risk. At least quarterly, the Audit & Risk Committee receives an operational risk update that includes a review of cybersecurity and information security risk. Our Board reviews and approves our Information Security Policy annually and frequently receives presentations on and discusses cybersecurity and information security risks, industry trends and best practices.
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Compensation Policies and Risk
The Board’s risk oversight responsibility includes the implementation of compensation programs that do not encourage or incentivize excessive risk taking or inappropriate conduct and promote, among other things, gender pay equality. The Human Resources & Compensation Committee is responsible for establishing and reviewing the Company’s executive compensation programs, as well as the compensation programs for employees generally, and ensuring that the programs do not encourage unnecessary or excessive risk taking or create risks that are reasonably likely to have a material adverse effect on the Company and its customers.
The Company, in addition to its annual comprehensive review, receives ongoing reporting relating to the Company’s incentive plans’ design, performance, payouts and customer impact, with oversight by and reporting to the Board, Audit & Risk Committee and Human Resources & Compensation Committee. This reporting includes an emphasis on an ethically driven cultureanalysis of potential “red flag” indicators including the existence, nature and anextent of any customer complaints, regulatory complaints, legal actions, employee feedback and payout results to determine if the incentive plan design or implementation resulted in employee wrongdoing or customer abuse.
COMMITMENT TO MEANINGFUL SOCIAL INITIATIVES
Detailed and Carefully Designed COVID-19 Response
At Bank of Hawaii, the health and safety of our employees, our customers and our community are our top priority. We put strict safety protocols in place at the beginning of the COVID-19 pandemic and have continued to follow government regulations throughout our branch network and facilities.
In addition, through our ongoing investment in digital enhancements, we enable our office employees to work remotely while continuing to provide our customers with safe and secure ways to bank. Through remote access, approximately 70% of our employees were working remotely at the height of the pandemic, with nearly half of our employees continuing to work from home at the end of 2021, greatly minimizing the impact of the COVID-19 pandemic on our operations. This was made possible by the implementation of a digital workspace platform that was designed from the ground up to be mobile and community.
The Company’s Codesecure.We continued to support our customers through our communications by keeping them informed about our numerous digital banking options, allowing them to bank safely from home. From online banking to Direct Deposit to the many capabilities offered through our mobile banking app, we helped our customers as they embraced the various innovative alternatives available to banking in-person.
Throughout the COVID-19 pandemic, we implemented programs to support individuals, families and businesses, and made donations to organizations supporting those in our communities who need it most.
Addressing the Impacts of Business ConductCOVID-19 in Hawaii
In early April 2020, Bank of Hawaii Foundation (the “Foundation”) made an unprecedented $3 million donation to Hawai‘i Community Foundation’s (“HCF”) Hawaiʻi Resilience Fund, which was established by HCF and Ethics drives a workplacethe Omidyar ‘Ohana Fund to address the growing social and workforce that embraceseconomic impacts of COVID-19 pandemic in Hawaii. Our community continues to benefit from the highest ethical and moral standards. We maintain strong and confidential reporting processes and procedures that support an open and honest environment in an effortgrant. From businesses to ensure that the highest principles of integrity and inclusion are maintained.
The Company strivesnonprofits to ensure a respectful, diverse and inclusive employee environment and experience. Our policies encourage individual values, strengths and protections to provide gender diversity and equality in the workplace and in its compensation practices.
ESG Highlights and Initiatives
consumers, Bank of Hawaii is notaddressing a wide spectrum of needs to assist those hit hardest during the pandemic. Our CEO serves as vice chairman of the State of Hawaii’s House Select Committee on COVID-19 Economic and Financial Preparedness.SBA’s Paycheck Protection Program (“PPP”)
In order to expedite PPP loans and help local business owners, we created a dedicated PPP team of more than 400 employees from every major area of the Company. At the peak of the program, these employees went above and beyond, working countless hours to process applications. Their efforts continued as they worked through loan forgiveness.
In 2021, the Bank participated in the second round of the PPP. The expertise and diligence of our PPP team enabled us to process more than 3,400 PPP loans totaling over $287 million in 2021. In 2020 and 2021 combined Bank of Hawaii processed almost 8,000 PPP loans totaling over $830 million. In addition, the Bank processed more than 7,500 PPP loan forgiveness applications totaling more than $700 million in federal funding to assist Hawaii businesses through this special program.
Support for Small Businesses
During the COVID-19 pandemic, Bank of Hawaii continued to support small businesses with the SBA 504 Program, a commercial real estate financing program for owner-occupied properties that allows small business borrowers to preserve working capital by requiring only a leader in Hawaii’s10% down payment on purchase transactions.
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Emergency Relief and Financial Assistance
To help lessen the financial industry, but also a leader among Hawaii’s corporate citizens.impact of the COVID-19 pandemic on the communities we serve, Bank of Hawaii’s ESG approachHawaii offered a number of programs to help affected individual and business customers. The Company deferred loan payments far beyond the requirements of the CARES Act and also waived ATM surcharge fees and early withdrawal penalty fees on tax-deferred annuities. Rather than the 90 days typically offered, Bank of Hawaii offered six months of forbearance and loan extensions. We reached out proactively to inform people that help was available to clients with loans of all sizes, from large commercial clients to consumers with small installment loans. In lieu of in-person visits, the Company made it possible for customers to complete their necessary documentation online. In addition, we offered loan deferrals to our commercial clients, which helped these customers for up to 18 months, compared to the usual six months in our market. These programs supported a variety of local business owners, including landlords who were able to support their tenants.
In Saipan, 2021 marked the 10th year of the I Kinometi Para I Kumunidåt I Islå-ta Grants, Bank of Hawaii small business and revitalization and development grants. Five grants of up to $5,000 each are awarded annually to support new and existing small businesses to thrive and give back to the community. Since its inception in 2012, $250,000 has been awarded to 50 small businesses. This year with help from the grant monies, one of the five grant recipients, Benjamin Babauta, owner of Tyler’s Gelatte Stone, added an additional employee; organized Small Business Sunday, an event held at Sugar King Park, which gave 13 other small businesses a venue to display products and gain market share; and donated the $1,500 Small Business Sunday proceeds and donations to the Autism Society of the Commonwealth of the Northern Mariana Islands.
Philanthropy and Volunteering to Sustain Our Community
The Company, and its exceptional people, demonstrate their generosity and respect throughout the year by supporting many different causes. Bank of Hawaii, its employees, and the Foundation contributed nearly $2.2 million to community and philanthropic causes in 2021. In addition, Bank of Hawaii employees volunteered safely while adhering to COVID-19 pandemic protocols at numerous events throughout the year to help distribute food and necessary supplies to our community in need, support small businesses and help care for our ‘āina.
Kōkua for Community through the COVID-19 Pandemic
To help address expanding food insecurity, the Foundation donated $50,000 to The Pantry by Feeding Hawaii Together, the only “e-commerce” food pantry in America. The donation helped with food and staffing costs. The Pantry serves an average of 13,000 individuals each month.
The Foundation donated $50,000 over a two-year period to Maui Health Foundation’s Patient Resource Assistance Fund, which provides financial support to lower-income patients in need of non-acute medical care so that they may be discharged in a safe and healthy way.
Bank of Hawaii provided the use of its former Kalihi Branch, in-kind support valued at over $30,000, to Kōkua Kalihi Valley (“KKV”) Comprehensive Family Services to administer 1,359 vaccinations to vulnerable members of the community in March through June of 2021. A Foundation grant of $4,000 provided lunches for volunteers, KKV staff, and Hawaii Army National Guard and Honolulu Fire Department employees who worked or volunteered at the vaccination site at the former Kalihi Branch.
A Foundation donation of $30,000 to Project Vision Hawaii helped the nonprofit operate its mobile clinics, which provide hot showers and health resources (including eye exams for children) to those who have a low income or are experiencing homelessness. In 2021, Project Vision Hawaii pivoted to also administer COVID-19 testing and vaccines to various communities.
YWCA’s Dress for Success received a $25,000 Foundation donation to help empower women, including those transitioning out of prison or shelters, or who are new or returning to the workforce, to achieve economic independence. The program provides networking support, training and professional attire to help women gain skills, confidence and jobs.
Palama Settlement received a $25,000 Foundation donation to support its newly established Digital Arts Academy, a formal digital arts program in the Kalihi-Palama neighborhood. The program is integratedpart of the Center of Innovation, created to train youth in digital graphic skills that can translate into job readiness. During the Company’s core values -
Excellence, Integrity, Respect, Innovation, Commitment,pandemic, the program also assisted students with online education challenges by making computers more accessible to those without adequate technology at home.A $20,000 donation was made to Mental Health America of Hawaii to support its mission to promote mental wellness. The grant helped the organization become more accessible online, including through social media.
Hawaii Community Lending received a Foundation grant of $10,000 to support their outreach efforts to low- and
Teamwork.
moderate-income Hawaii Island residents to inform them about federal grants available to provide more than $21 million in rent relief and assistance with utilities. Many of the applicants live at 80% below the average median income for the area.24
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Employees Celebrating Diversity and Cultural Awareness and Giving Back to Community
Bank of Hawaii is committed to making corporate social responsibilitysupporting, educating and bringing awareness to the community on issues of diversity, equity and inclusion. Bank of Hawaii partnered with the Japanese American Citizens League – Honolulu, the National Asian Pacific American Bar Association – Hawaii, and the American Civil Liberties Union to host “A Conversation on Race in Hawai‘i”, a part everything we dotwo-part panel featuring leaders from all sectors of the community.
The Company is a long-time sponsor of the Honolulu Rainbow Film Festival, and in 2021 renewed a four-year sponsorship of the Hawaii LGBT Legacy Foundation to support the Honolulu Pride Festival & Parade. The donation supports not only the festival and parade, but helps to fund other program initiatives of the Hawaii LGBT Legacy Foundation. In previous years our employees have turned out in big numbers to show their support by walking in the communities we serve-including how we manageparade.
In an effort to contribute to the progress and developadvancement of ensuring an inclusive, collaborative and respectful workplace, Bank of Hawaii’s Diversity, Equity and Inclusion Program supports employee-led Employee Resource Groups (“ERG”s). Our Women Inspired ERG works to empower, support and educate on issues important to women at work, home and in the greater community. Our RainBOH ERG celebrates coming to work with pride, encourages allies to become visible, and educates on issues related to the LGBTQA+ community. And our people,Military ERG engages in service and networking opportunities that serve the productsneeds of services member, veterans, and services we offer, andmilitary families.
During the investments we make2021 annual Live Kōkua Giving Campaign, employees raised more than $550,000 in creatingpartnership with Aloha United Way, which serves more than 300 nonprofits. Themed #BankohStrongForOurCommunity, over 90% of the Bank’s employees donated to 257 organizations, making a sustainable and resilient economydifference for some of the most vulnerable in our geographic area. communities.
With intentionality and a safety first mindset, our Bankoh Blue Crew returned more actively to help mālama the keiki to kūpuna in our island home. Bank employees volunteered at vaccination centers and sites, including Kōkua Kalihi Valley Comprehensive Family Services on Oahu and Southern Regional Clinic, the Talofofo Gym and Ypao Beach on Guam. Volunteers from the Bank of Hawaii Military ERG worked with Honolulu Habitat for Humanity to build a home for a military veteran and his family. At Hawaii Foodbank, Bank employee volunteers packed over 5,000 bags of food as part of their Food 4 Keiki School Pantry Program. Bank employee volunteers also helped remove 500 pounds of invasive limu with Mālama Maunalua at Maunalua Bay.
Our own human capitalsummer 2021 interns got out from behind the screens of their virtual internships and fostering sustainable growthworked together to improve landscaping at Hawai‘i Nature Center in Makiki on July 24, 2021. The nonprofit organization seeks to foster awareness, appreciation, understanding and stewardship of our environment by educating children with an interactive and immersive approach. For our interns, it was an opportunity to meet one another, roll up their sleeves and work with their hands to improve this beautiful outdoor environment that connects families and children with nature through a variety of programs. Our volunteers were split into three small groups to clear invasive and overgrown tall grass to ensure the safety of the children who visit, clear banana trees that were not growing well on the property, and clear greenery that was blocking the passage of the ‘auwai (canal/ditch).
Susannah Wesley Community Center, a social service agency in Kalihi, asked Bank of Hawaii to provide volunteers to assist families with applications to enter a Section 8 Housing waitlist. For the first time, the application process was entirely online. Thirty-two Bank volunteers helped 300 families complete the application.
Bank of Hawaii employee volunteers have been advising young entrepreneurs and improving financial literacy through decades of partnership with Junior Achievement (“JA”). In 2021, 18 Bank employees in Guam volunteered as advisors, from product development to sales. Guam Economic Development Authority was so supportive, it funded a space for JA students to sell their products in Chamoru Village. Nearly 150 Bank of Hawaii employee volunteers made financial education possible.
Bank of Hawaii continues to build long-term relationships throughout the communities we serve havethrough education. For the greatest impact onpast 11 years, the Company has been offering our continued successSmartMoney financial education seminars, which cover a variety of financial topics, such as how to save and invest and purchase a leader among Hawaii’s corporate citizens.
As a result of the Company's efforts,first home. In 2021, Bank of Hawaii ranked 4th among U.S. publicly traded financial institutionsvolunteers in Guam and 40th overallSaipan led 26 Smart Money Seminars with 158 participants on Barron’s 100 Most Sustainable Companies.subjects ranging from Business of Banking, ABCs of Credit, Pathways to Homeownership and Budgeting.In 2021, four Bank of Hawaii wasemployees completed the only company in HawaiiInternal Revenue Service Volunteer Income Tax Assistance certification program and volunteered at Goodwill Hawaii; providing free tax preparation to be recognized. The rankings are compiled by Calvert Research and Management and are based on hundreds of metrics that address environmental, social and corporate governance. In addition, D. A. Davidson, a national financial services firm rankedeligible taxpayers. Aside from time spent to prepare for the Company No. 1 for ESG among financial institutions in the Country in its inaugural ESG Research report released on December 19, 2019. D. A. Davidson's analysts bestowed this top accolade tocertification, Bank of Hawaii as a Company that "exemplifies a businessemployee volunteers donated 58 hours at Goodwill Hawaii and completed 43 tax returns with proper prioritiesrefunds totaling $46,624.
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Attract, Develop and embodies a dedication to long-term sustainable progress." D. A. Davidson also selected Bank of Hawaii as its top pick for good governance because its "proactive, yet conservative, nature has lauded Bank of Hawaii an abundance of awards", including the referenced Barron's award.
Excellence
Retain Exceptional PeopleBank of Hawaii strives to attract, develop and retain exceptional people. Exceptional people are what allows Bank of Hawaii to be the best corporate citizen possible.
Diversity and Inclusion
In furtherance of this core value, Bank of Hawaii implemented a comprehensive internal training program and supported initiatives to foster diversity and inclusion in the workplace. Bank of Hawaii recognizes that a diverse and inclusive workforce fosters an environment where everyone can thrive and be successful.
The composition of Bank of Hawaii's workforce is a testament to its ongoing commitment to diversity. In 2019, the workforce was comprised of 64.7% women and 86.2% minorities (non-Caucasian). In 2019, we increased our support of the Honolulu Pride Parade & Festival to visionary sponsorship, and in October, walked with 3002021, Bank of Hawaii provided more opportunities for employees familyto engage with our Leading Women employee resource group. Bank of Hawaii hosted popular discussions on “Leadership: Career Success Tips” and friends“How an Entrepreneurial Spirit Can Help Advance Your Career,” with women executives and business leaders in the parade. We also continued to sponsor the annual Honolulu Rainbow Film Festival.
community.Employee Learning
Bank of Hawaii’s substantial training and career advancement programs target professional development and personal growth, such aswhich include our Fostering Workplace Excellence and other employee development programs. In 2019,2021, even during the bankCOVID-19 pandemic when a significant number of our employees were working remotely, the Company held over 32,00024,000 training hours or career advancement program hours with over 17,000 participants.hours. Our commitment to our employees’ growth is integral to developing exceptional people.
In 2016, Bank of Hawaii launched its College Assistance Program (CAP)(“CAP”) to give employees striving to obtain their first four-year bachelor’s degree access to a college education and tuition reimbursement. This unique program started out with an opportunity for employees to earn their bachelor’s degree online through Chaminade University of Honolulu. The programCAP gives employees the convenience and flexibility to study where, when, and what they desire by allowing them to choose from a variety of select majors.majors at Chaminade University of Honolulu. Their choice of majors need not relate to their current position. The program launched with three participants. Because ofCAP also gives employees the program’s success and popularity, as of the fall 2019 term, there were a record-high of 55 participants. In 2019, additional enhancements were madeoption to CAP, giving employees even greater flexibility and choice. Employees can now pursue an accelerated online associateAssociate of artsArts degree through the University of Hawaii’sHawai‘i’s Community Colleges (UHCC). This acceleratedColleges. When the program allows participants to earn anbegan in 2016, there were three participants. The program has been very successful and popular, now boasting five employees who have earned their associate’s degree, in approximately 2.5 years.four employees who have earned their bachelor’s degree, and 67 unique participants with more than $355,000 reimbursed to employees for the cost of their education. The Bank’s other educational assistance programs include itsCompany’s Tuition Assistance Program (TAP), Professional Education Program (PEP)(“TAP”) is aimed at assisting employees in completing job-related courses at any accredited school. The TAP program had 23 participants and more than $66,000 reimbursed to student employees in 2021. Another educational assistance program offered is the Professional Certification Program.
Bank of Hawaii also offers a Student Loan Assistance Program (PCERT).
Attracting, retaining and engaging the best talent in our marketsfor employees. Student loan debt is criticala significant impediment to our current and future success. We were the first local financial institution to increase our minimum wage level to $15 per hour in 2018. In 2019 we continued to concept and develop ways to enhance our employees' well-being. During the year, we announced three employee financial programs designed to support the full financial needsa key demographic sector of our employees.
We’ve creatednational community. This program provides $100 per month, up to a newlifetime maximum of $10,000, for an individual employee’s student debt. At year-end 2021, we had more than 150 employees enrolled in this program.Our employee savings product, known as the
GROW Account. This program encourages the habit of buildingour employees to build an emergency savings nest egg by our employees.egg. Through these special accounts, we offer a $50 bonus to our employees when they reach $500 in savings in their GROW Account.Account. We offer an additional $100 bonus to those employees who save an additional $500. An alarming number of Americans do not have money saved and available to meet typical unforeseen sundry expenses. We hope this new program helps our team build healthy and important savings habits for the long term.
We also created a new Student Loan Assistance Program. Student loan debt is a significant impediment to a key demographic sector of our national community. This new program provides $100 per month, up to a lifetime maximum of $10,000 for an individual employee’s student debt. As of the end of 2019 we had over 100 employees signed up for this program.
Finally, we created a newOur Employee Mortgage Program for our employees. This program provides our employees with a discount of up to 1% off of prevailing market rates for their primary residences. This is an attractive retention tool for Bank of Hawaii given the high cost of housing on our islands.
The Bankoh Meals-To-Go program, which launched in May 2020, took the idea of sharing meals to a new level by offering employees free family-style meals once a week. With our Café Blue cafeterias temporarily closed, we utilized those facilities to provide meals for 98 weeks, officially ending in June 2021. Employees not in need were encouraged to donate their meals to family members, kūpuna or those experiencing food insecurity. Any food not utilized was donated to Aloha Harvest. Our Café Blue cafeterias at the downtown Tower and Hale O Kapolei later reopened, serving contactless food-to-go, which employees can order online through their laptop or mobile device. The Bankoh Meals-To-Go program distributed 418,364 meals on Oahu and 116,424 meals on neighbor islands and the West Pacific region with the help of 51 Bank volunteers. In addition, 12,843 pounds of food were donated to Aloha Harvest and 113 neighbor island and West Pacific region restaurants received support through participation in the program.
Investing in Our Future
For the 2019-20202021 through 2022 academic year, Bank of Hawaiithe Foundation supported 2226 college scholarships totaling $77,000$91,000 for children and grandchildren of Bank of Hawaii employees. BOH Foundation provides funding to Hawaii Community Foundation, which administers the scholarships. Since 2014, Bank of Hawaiithe Foundation has provided $602,500$791,000 to fund 173226 college scholarships. These scholarships reflect our commitment to help our employees and their families reduce the financial burdens of post-high school education. We believe this investment will benefitenable a better future and the next generation of our world’s and Hawaii’s leaders.
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Supporting the Military
Bank of Hawaii is proud of its longstanding commitment to supporting our military service members and their families. In April, the Company introduced its military resource group to recognize, honor and support our active duty military, our veterans and their families.
In honor of Veterans Day, our Military ERG, planned a special lunch for veterans at the Barber’s Point location of U.S. VETS, an organization dedicated to ending veteran homelessness. Our Military ERG provided more than 70 bentos and had the opportunity to talk story and thank veterans in a safe, socially distanced way. The Barber’s Point location of U.S. VETS offers on-site long-term and permanent housing to help veterans gain housing stability, increase their skill levels and income, and reach greater self-determination through employment.
Bank of Hawaii is also a founding and leading sponsor of Sounds of Freedom, a division of the Great Aloha Run for active-duty men and women in all branches of service who run in formation. In addition to our Bankoh Blue Crew volunteering each year at the community event, the Company also presents the Sound of Freedom awards at the conclusion of the race to the top male and female military race finishers.
Outreach to the Unbanked and Underbanked
Bank of Hawaii was the first local bank to offer an alternative to traditional checking accounts in the State of Hawaii, beginning in April 2015. EASE by Bank of Hawaii combines convenience and access, is FDIC-insured and is among the lowest-fee bank accounts in the U.S.
With no checks to return, customers do not incur overdraft fees. Customers are also given a free Visa debit card and free access to 307 Bank of Hawaii ATMs, do not have direct deposit requirements or monthly service fees if they elect to receive online statements, and are allowed to open an account with a deposit of just $25. They also receive free 24/7 Bankoh by Phone, mobile banking and e-Bankoh online banking services. We continue to see strong demand for our EASE product, and are pleased to meet the needs of the unbanked and underbanked in the communities we serve for yearsserve.
Empowering Youth
The Foundation continued its ongoing sponsorship of PBS Hawai‘i’s HIKI NŌ, the groundbreaking student news program and statewide digital media learning initiative to come and demonstratesupport its programming, which transformed its practices to meet social distancing guidelines. The Foundation’s investment dates back to the depthlaunch of HIKI NŌ in 2011. Since then, Hawaii’s HIKI NŌ schools have gained the Bank’s commitment to its people and their families.
Integrity
reputation of being formidable competitors at rigorous national journalism contests, including the prestigious Student Television Network Convention in Seattle, Washington.As a partner with ClimbHI Hawaii, Bank of Hawaii consistently demonstrates its core valueis a member of doing the right thingClimbHI Bridge that seeks to provide Hawaii’s students with career exploration opportunities and connect them with companies and organizations to serve as resources and points of insight into those explorations, including financial education and career advice. In 2019, as part of the founding group of supporters, the Foundation helped fund the effort, which aided the organization’s launch in 2020 amidst the COVID-19 pandemic. Whether contributing financially, participating in virtual career fairs with local middle schools, mentoring high school students or assisting with business class projects, the Foundation is proud to support our students in their academic pursuits.
For the past 11 years, Bank of Hawaii has been partnering with nonprofit EPIC ‘Ohana’s Hawaii Youth Opportunities Initiative to offer financial education and services to foster teens. Foster youth have a high propensity for pregnancy, incarceration, homelessness and low college graduation rates due primarily to a lack of social network. Through the right reasons. WhetherOpportunity Passport Program, teens from foster families are able to open matched Individual Development Account (“IDA”) savings accounts, where every dollar saved is matched by donors up to $1,000 annually (up to a maximum of $3,000). The funds may be withdrawn between the ages of 14 to 26 and have enabled young people to help pay for college education, housing and transportation. Since 2010, under the Hi Hopes Program (f/k/a Opportunity Passport), Bank of Hawaii has opened 917 IDAs as well as EASE accounts. A donation of $1.4 million has enabled former foster youth to pay for necessary expenses such as housing or education on Oahu or transportation on the neighbor islands.
Housing for Our Community
Honolulu continues to be one of the most expensive cities in the U.S., and with a shortage of affordable rental homes across Hawaii, the adverse impacts of the COVID-19 pandemic make the availability of affordable and workforce housing more important than ever.
In 2021, almost 800 affordable housing units (490 on Oahu, 201 on Maui and 101 on Hawaii Island) started construction or rehabilitation thanks in part to Bank of Hawaii, and almost 800 more units are in the pipeline.
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Additionally, Bank of Hawaii is leading the funding of the construction loan for Hale Kalele, as well as providing the permanent loan to support the project’s operations. As a new development in urban Honolulu, Hale Kalele is leased from the state and sponsored by the Kobayashi Group. The first two floors will serve as juvenile facility operated by the State Judiciary, and the other floors will include 200 low-income rental housing units for families with incomes between 30% and 60% of the area’s median income. Construction began in October 2020 and is scheduled for completion in 2022.
Furthermore, the Company is committed to equity investment as an investor in Low-Income Housing Tax Credits projects across the state as well as in the Commonwealth of the Northern Mariana Islands/Saipan.
BRINGING ENVIRONMENTAL CONSCIOUSNESS TO THE WAY WE DO BUSINESS
Bank of Hawaii seeks out projects that be supportingadvance our overall environmental initiatives by seeking out lending opportunitiesstrategy, such as those that support renewable energy projects, or reducing itsprojects. Building sound environmentally minded investments into our portfolio reduces risk, increases our value to investors and allows us to pursue our own initiatives to reduce our impact on the environment through internal or employee initiatives.
Volunteering for the Environment
Bank of Hawaii is committedconstantly improving its operations to supporting our environment through numerous efforts throughoutproactively find more efficient and effective ways to ensure both the year in every community it serves across Hawaiilong-term success of the Company and the West Pacific. In total, more than 500continued vitality of our Bankoh Blue Crew (employee volunteers,the communities it serves. Through its modernization efforts, the Company is helping to do its part in offsetting the negative impacts of climate change. The impacts of climate change, such as extreme weather conditions, natural disasters and their friendsrising sea levels, are of significant concern to the Bank, its operations as well as those of its customers and family) have volunteered more than 1,400 hours at work projects and events specifically focused on addressing environmental impact issues.
third party vendors upon which it relies.Financing the Future
The Company actively participates in the financing of photovoltaic projects. The Company currently is a lender in over 110a variety of renewable energy projects with over $100 million committed to these initiatives. Bank of Hawaii continues to seek out other opportunities in this sector and is a leader in these financing initiatives.
Comprehensive Solutions
As we continue renovations to our facilities and branches, Bank of Hawaii focuses its efforts on Building Management Systems (“BMS”) as part of scheduled infrastructure upgrades. Through these upgrades, we are able to implement customized solutions that maximize energy conservation. In 2021, we focused on BMS optimization at our corporate headquarters and new installations at our Kahala and Mililani Branches. Our energy initiatives to date have resulted in 71% of our building area, approximately 733,000 square feet, with management systems in place.
Bank of Hawaii also participates in Hawaiian Electric Company’s Demand Response Program at our two largest facilities. Through this participation, the Company receives incentives to reduce its usage during periods of island-wide peak demand, helping to preserve the reliability of the electrical grid and reduce the need for more electrical generation equipment.
Reducing energy consumption remains one of our top priorities. Through conservation and energy efficiency efforts, such as BMS and infrastructure modernization, we have already cut our energy use in half since 2012. In recent years, we have completed many impactful conservation initiatives throughout the Bank of Hawaii network. As we strive to align with the Hawaii’s 2045 Energy Goals and create continued savings, we are enhancing our building design, modernizing our properties with data acquisition controls and planning future projects. We are committed to pursuing additional opportunities to achieve our ambitious sustainability goals.
In 2021, the Company completed renovations of the corporate headquarters, including high performance window tinting, LED lighting with occupancy and daylight sensing controls, and high efficiency air conditioning systems with direct digital controls.
Our “Branch of Tomorrow” design makes more efficient use of space, with increased customer support through innovative cash recycling machines at the tellers, portable computing platforms to allow the tellers to reach out directly with customers and reduce long waiting lines, and upgraded ATMs that allow direct deposit of cash and checks along with simplified transaction handling. Staff lunchrooms have been outfitted with point-of-use hot water dispensers to replace water heaters, microwave ovens to replace stoves and cook-tops, as well as large-screen LED monitors that allow for remote, online meetings and training sessions, which reduce energy usage, staff travel and downtime. These innovations allow us to work more efficiently and effectively every single day.
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Progressing Towards Environmental Sustainability
Along with its conservation efforts, Bank of Hawaii is committed to renewable energy resources, and has made this an integral part of the modernization project at its branches and other facilities. An additional 58 Kilowatts of photovoltaic systems were installed in 2021. The Company now has photovoltaic installation on over 60% of owned branches and buildings. This includes three large photovoltaic systems (561kW, 350kW and 100kW) at its main facilities. Combined, our PV networks have the capacity to create 3.4 Megawatt hours of energy annually.
Bank of Hawaii greatly improved its ability to respond to in-area natural disasters by relocating our disaster recovery data center to the continental U.S., enabling greater data protection while reducing our carbon footprint. Our partner on the continent has been running on 100% renewable energy since January 2016, and is the only major data center provider to receive an ‘A’ grade by Greenpeace in all five of their data center grading categories.
Reducing Waste
Reducing the amount of paper used in the workplace is a high-priority atpart of Bank of Hawaii, as we strive to optimally operateHawaii’s office transformation initiative. The Company strives for optimum performance in our digital environment and function in the 21st century electronic and digital based environment. As part of an overall “office transformation” initiative, we anticipate this sustainability effort will have environmental, efficiency and cost-reduction benefits. PastWe are currently imaging old paper records, are being imaged, reducingwhich reduces costly storage expenses, and we are moving toward contemporaneously imaging today’scurrent records, reducing the amount of paper required.
Bank of Hawaii has also implemented several enterprise-wide digital and cloud-based solutions to help facilitate this initiative. In addition, remote work has enabled less paper consumption, and in 2021, paper acquisition and destruction activity decreased by 10%.Encouraging Public Transportation
and Bicycle UseBank of Hawaii offers a Bus Pass Benefit Program for its employees on Oahu, reducing the cost of a monthly bus pass from $70 to $30 (on a pre-tax basis) for participating employees 64 years and younger. Employees 65 and older receive $30 towards the purchase of a $35 senior annual Bus Pass. All active full-time and part-time employees who ride the bus as a primary source of transportation to and from work are eligible for the benefit. Over 450During 2021, more than 240 employees taketook advantage of this benefit, resulting in an annual commitment by the Company of close to $200,000$100,000 towards reducing greenhouse gas emissions.
Encouraging the Use of Bicycles
Bank of Hawaii also offers employees up to $20 per month as reimbursement for reasonable expenses if an employee uses a bicycle regularly for commuting to work. Reasonable expenses include the purchase of a bicycle as well as continuing maintenance, repair and storage.
Helping to Preserve the Environment
For its 14th annual Community Service Day, Bank of Hawaii partnered with local nonprofit organizations Papahana Kuaola and Hui Kû Maoli Ola for a variety of ‘âina-based service work in September. From trail building and invasive plant removal to native planting and lo‘i maintenance, volunteers of all ages worked together to help care for the environment and promote greater sustainability. Volunteers planted more than 800 native trees; rehabilitated one mile of trail; cleaned two lo‘i; and propagated more than 3,000 native plants, including ti leaf, ‘olena, nanea, kalo and loulu palms, which are endemic to Hawai‘i.
Farm-Based Community
In November, 70 Bankoh Blue Crew volunteers helped at Kahumana Organic Farm and Café Community, a nonprofit committed to co-creating healthy, inclusive and productive farm-based programs with homeless families, people with disabilities and youth. Activities included orchard clearing and planting, greenhouse seeding, landscaping, painting houses and working at the food hub.
Supporting the Military
BOH supports the Armed Services YMCA Hawai‘i, which provides quality social, educational and recreational programs to help meet the needs of military service members and their families in the state of Hawaii. In October, our 23 employees in a six-month leadership course, Pathways to Professional Excellence, helped restore the Armed Services YMCA located at the Kaneohe Marine Corps Base on Oahu. Work included repainting and restoring the childcare facility, landscaping the planting, and cleaning the surrounding walkways.
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Respect
Bank of Hawaii and its employees live and work with respect, treating others as they wish to be treated themselves. Bank of Hawaii bears this out by giving back to its communities through philanthropy, outreach and volunteering.
Philanthropy and Volunteering
The Company, and its exceptional people, demonstrate their generosity and respect throughout the year by supporting many different causes. Bank of Hawaii, its employees, and the Bank of Hawaii Foundation contributed more than $2.9 million to community and philanthropic causes in 2019. In addition, hundreds of Bank of Hawaii employees recorded more than 15,000 volunteer hours and participated in 154 community events during the course of the year.
Outreach to the Un- and Under-banked
Commencing April of 2015, Bank of Hawaii became the first local bank to offer an alternative to traditional checking accounts in the State of Hawaii. EASE by Bank of Hawaii combines convenience and access, is FDIC insured and is among the lowest-fee bank accounts in the U.S.
With no checks to return, customers do not incur overdraft fees. Customers are also given a free Visa debit card and free access to 387 Bank of Hawaii ATMs; do not have direct deposit requirements or monthly service fees if they elect to receive online statements; and are allowed to open an account with a deposit of just $25. They also receive free 24/7 Bankoh by Phone, mobile banking and eBankoh online banking services. We continue to see strong demand for our EASE product, and are pleased to meet the needs of the un- and under-banked in the communities we serve.
Innovation
Bank of Hawaii is constantly improving its operations to proactively find more efficient and effective ways to ensure both the long-term success of the organization and the continued vitality of the communities it serves. Through its modernization efforts, the Company is helping to do its part in offsetting the negative impacts of climate change.
Comprehensive Solutions
Innovation is at the heart of what we do. We continue to design all renovated branches, as well as renovated floors within the corporate headquarters to incorporate Building Management Systems (BMS) and evolving Energy Management Systems (EMS). The BMSs allow for centralized control of certain functions within the building to conserve energy and optimize efficiency. The EMS would allow for real time monitoring of a facility’s energy usage to help identify and prevent waste.
Bank of Hawaii also participates in the Demand Response Program from Hawaiian Electric Company at our two largest facilities. Through this participation, the Company receives incentives to reduce its usage during periods of island- wide peak demand, helping to preserve the reliability of the electrical grid and reduce the need for more electrical generation equipment. The Company is seeking to expand its participation in this program as it rolls out BMS and EMS to additional facilities and evaluates the potential use of Energy Storage Systems (“ESS”).
Conserving for the Future
Along with BMS, the Company’s renovated branches and renovated floors within the corporate headquarters are being outfitted with high performance window tinting, LED lighting with occupancy and daylight sensing controls, and high efficiency air conditioning systems with direct digital controls.
Our new “Branch of Tomorrow” design makes more efficient use of space, with increased customer support through innovative cash recycling machines at the tellers, portable computing platforms to allow the tellers to reach out directly with customers and reduce long waiting lines, and upgraded ATMs that allow direct deposit of cash and checks along with simplified transaction handling. Staff lunchrooms are being outfitted with point-of-use hot water dispensers to replace water heaters, microwave ovens to replace stoves and cook-tops, as well as large-screen LED monitors that allow for remote, online meetings and training sessions, which reduce energy usage, staff travel and downtime. These innovations allow us to work more efficiently and effectively every single day.
Progressing Towards Environmental Sustainability
Along with its conservation efforts, Bank of Hawaii is committed to renewable energy resources, and has made this an integral part of the modernization project at its branches and other facilities. Currently, 14 facilities have solar installations, and the Company is looking at ways to increase its use of solar, including the addition of energy storage systems.
In the past few years, branches on Oahu, Maui and the Big Island, as well as our corporate headquarters and other facilities have been upgraded with roof-mounted photovoltaic solar panels, reducing utility-provided energy consumption. Our newly renovated Pearlridge and Manoa Branches were designed for the installation of solar systems that will reduce each building’s electrical load by roughly one-third. We are looking to maximize our photovoltaic energy production and incorporate ESS in an effort to achieve net zero buildings in the future. Producing and conserving energy are just part of the innovations that truly make these the branches of tomorrow.
Reducing energy consumption remains one of our top priorities. We have set ambitious short-term goals to meet the challenge of operating in a more sustainable fashion. Within the next few years, our goal is to meet 100% of our electrical needs from renewable resources, including investment matches. Through conservation and energy efficient efforts, such as building management systems and infrastructure modernization, we have already cut our energy use by half since 2012. Our sustainability goals help to support Hawaii's Clean Energy Initiative to produce 100% of the state's electricity through renewable resources by 2045. We are committed to pursuing additional opportunities to achieve our ambitious sustainability goals.
Commitment
Bank of Hawaii became a leader in the financial industry in Hawaii by actively building long-term relationships and committing to the growth and well-being of the communities it serves.
Financial Education
Through education, Bank of Hawaii is building long-term relationships throughout its communities. Presented for free to both customers and noncustomers, SmartMoney financial education seminars cover a variety of financial topics, such as the purchase of a first home and how to save and invest. This year, 34 seminars were held at community organizations in Hawaii, Guam, Saipan and Palau. Bank volunteers led these seminars for more than 267 participants. Bank of Hawaii has offered SmartMoney Seminars for the past 10 years.
Our volunteers also provide financial guidance on Honolulu television stations KGMB and KHNL in weekly “SmartMoney Monday” segments during morning and evening news programming.
Financial Education for Our Future
Each year, Bank of Hawaii employee volunteers visit elementary, middle and high schools to teach students financial literacyBOARD COMMITTEE. The Company supports social programs requiring financial education, especially in Guam and Saipan. We also continue to provide Junior Achievement with volunteers in Hawaii and in Guam. Additionally, our bankers engaged in financial education initiatives under the American Bankers Association’s Teach Children to Save Day as well as SmartMoney Lesson Day. In 2019, 836 volunteers provided 5,266 hours of service.
Closing the Gap
The Bank of Hawaii Foundation continued its ongoing support of PBS Hawaii’s HIKI NÔ, the groundbreaking student news program and statewide digital media learning initiative with a $100,000 grant. BOH Foundation’s investment dates back to the launch of HIKI NO in 2011. Since then, Hawaii’s HIKI NO schools have gained the reputation of being formidable competitors at rigorous national journalism contests, including bringing home nearly 20% of the awards at the prestigious Student Television Network Convention held in March 2019 in Seattle, Washington, and which involved over 3,000 students and teachers.
Providing for Our Families
Bank of Hawaii Foundation builds long-term relationships in the communities it serves by providing cultural and creative opportunities for everyone. Since 2004, Bank of Hawaii has sponsored a free, once-a-month program of art activities, entertainment and films for the whole family at the Honolulu Museum of Art. Together, Bank of Hawaii Foundation and Honolulu Museum of Art (HOMA) has enabled free public access to quality art and programming and have built one of Honolulu’s most popular family programs. This year, the monthly event, called Bankoh Family Sundays, drew more than 22,000 attendees supported by over 120 employee volunteers. Each event provides opportunities to showcase topical themes and celebrations. Examples include “Out of the Blue,” which created opportunities for attendees in July to learn more about sustainability and protecting our oceans and surf. Aqua Aston Hospitality and Kokua Hawaii Foundation both led fun and educational activities along with museum teaching artists. In December, “Warm Fuzzies” helped launch a partnership with the Institute for Human Services to hold a donation drive for IHS’ Holiday Store, which allows clients to pick gifts for their families and loved ones. This is the first time HOMA has partnered with IHS, and is the first step in engaging with organizations in the community that serve public interest though social services and support of the underprivileged.
Festival for All
Bank of Hawaii has been supporting the Hawaii Book and Music Festival for the past 14 years. This family-friendly, and free, festival honors cultural arts and promotes literacy through a weekend of presentations and hands-on activities with award-winning authors, live entertainment and performances for all ages. More than 30,000 people attended the festival in 2019. The Bank of Hawaii Book Swap, staffed by Blue Crew volunteers, is a mainstay, where approximately 4,500 books are available on a bring-one-take-one basis.
Teamwork
Bank of Hawaii employees consistently display their teamwork, one of the Company’s most fundamental core values, not only as they collaborate amongst themselves but also as they partner with the Company’s clients and others in the community.
Assisting Foster Teens
Bank of Hawaii has been partnering with nonprofit EPIC ‘Ohana’s Hawaii Youth Opportunities Initiative since 2010 to offer financial education and services to foster teens. Foster youth, due primarily to a lack of social network, have a high propensity for pregnancy, incarceration, homelessness and low college graduation rates.
Through the Opportunity Passport Program, teens from foster families are able to open matched Individual Development Account savings accounts, where each dollar saved is matched by donors up to $1,000 annually (to a maximum of $3,000), and may be withdrawn between the ages of 14 to 26. This has enabled these young people to help pay for college education, housing and transportation. Since 2010, the Opportunity Passport Program has opened 817 IDA savings accounts. Qualified withdrawals surpassed $1.16 million during 2019. Eleven Bankoh Blue Crew volunteers participated in this initiative.
Volunteer Income Tax Assistance
During tax season, 22 BOH volunteers on Oahu and Hawaii Island partnered with Goodwill Hawaii and Honolulu Community Action Program to provide free tax preparation services for eligible taxpayers as part of the Volunteer Income Tax Assistance (VITA) program. Volunteers donated approximately 311 hours to prepare 219 tax returns that returned $362,000 back to the community. This includes $110,865 in federal earned income tax credits that working families and individuals would not have received if they hadn’t filed. VITA offers free tax help to people in our communities who can benefit the most from tax refunds, including people with disabilities, the elderly, those with limited understanding of English, and those who make approximately $54,000 or less.
Laumaka and Maui CCC Work Furlough Program (LWFP)
Bank of Hawaii’s Commercial Banking Division, our Waiakamilo Branch on Oahu, and our in-store Maui Lani Branch on Maui have all been important participants in the LWFP. The Company’s role is to maintain savings accounts for those in the correctional system who are nearing their release date and have received permission to live outside of the correctional facility. The bank opens up savings accounts and assists with automatic deposits and payments, in addition to working with the Department of Public Safety staff in monitoring what payments can be made from these accounts. In 2019, Bank of Hawaii provided over 344 hours to support a program that has an important role in reducing recidivism from 50% for those inmates who are released directly from the correctional system (paroled) to 5% (under the LWFP).
Housing for the Community
In 2019, the Honolulu City Council passed Bill 7, a five-year pilot program to attract developers by allowing small lot developments to be built on lots of 20,000 sq. ft. or less, with higher density and smaller setbacks than were previously permitted. We partnered with a developer to fund the first project under Bill 7, Puuhue Apartments, in Honolulu, which is a planned four-story building that will bring 25 affordable rentals to market.
We continue to partner with developers to finance affordable and workforce housing options in Hawaii and the Western Pacific, including housing options for senior citizens. Some recent examples are Queen Emma Tower and Kulia at Ho’opili, both on Oahu, and Waimea Huakai Phase I on Kauai, which combined will bring nearly 225 new units into the market. Almost 322 affordable housing units financed by Bank of Hawaii commenced or completed construction in 2019, and nearly 450 more units are in the pipeline.
Financial Assistance Programs
In January, Bank of Hawaii began offering financial assistance programs to help Federal employees or contract employees to the Federal Government due to the partial government shutdown that began on December 22, 2018. BOH offered a personal loan program (up to $5,000 loan amount at a fixed 3% interest rate for affected workers); a loan forbearance program (to help affected workers defer loan payments for up to three months for residential mortgages, home equity loans and home equity lines in amortization); and a loan extension program (for affected workers to extend other direct installment or indirect loans, such as personal loans or auto loans, for up to three months).
Oversight of Risk
The Company's governance, including policies, standards and procedures, has been developed with the goal of ensuring that business decisions and the execution of business processes are in compliance with legal and regulatory requirements.
Authority for accepting risk exposures on behalf of the Company originates from the Board. In turn, that authority is delegated through the Board-appointed Managing Committee, chaired by the CEO and comprised of executive management, and its subcommittees, including the Risk Council. The Risk Council, chaired by the Chief Risk Officer, provides the Managing Committee with a forum for the review and communication of both specific and company-wide risk issues, and serves to enhance collaboration among all areas of the Company that create and manage risk, while reinforcing executive management's responsibility for ensuring risk is managed within established tolerances.
Risk management at the Company is the process for identifying, measuring, controlling and monitoring risk across the enterprise given its business as a financial institution and financial intermediary. Risk Management crosses all functions and employees and is embedded in all aspects of planning and performance measurement. The Company's systems, information and timely reporting are designed to enable the organization to quickly adapt to early warning signs.
The Board is responsible for oversight of the Company's enterprise risk framework. The Board implements its risk oversight function both as a whole and through delegation to various committees. The Board has delegated to the Audit & Risk Committee primary responsibility for overseeing financial, credit, investment and operational risk exposures including regulatory and legal risk; to the Fiduciary and Investment Management Committee, comprised of five board members, primary responsibility for oversight of fiduciary and investment risk of client accounts; and to the Human Resources & Compensation Committee primary responsibility for oversight of risk related to management and staff. These committees report to the full Board to ensure the Company's overall risk exposures are understood, including risk interrelationships. The Board also oversees reputational risk.
Risk reports are provided and discussed at every committee and Board meeting. In addition to detailed reports, the Board reviews an Enterprise Risk Position report that reflects key risk measures and trends across the Company. Key managers responsible for risk management (the Chief Risk Officer, the Treasurer, the Chief Compliance Officer, the General Counsel, and the Chief Fiduciary Officer) regularly provide updates at the respective committee and Board meetings. In support of the Board's risk oversight role and to ensure that potential problems are surfaced, the Audit & Risk Committee directly oversees the Company's Internal Audit and Credit Review functions.
Cybersecurity and Information Security Risk Oversight
Management of cybersecurity risks is the responsibility of the full Board. In 2019, the Company, the Board, and the Audit & Risk Committee continued to strengthen the management and oversight of cybersecurity risk through new security system enhancements, policies, testing, identification and reporting. The Company continued its program of third party penetration testing and ongoing analysis to identify potential vulnerabilities and need for system enhancements.
The Board devotes significant time and attention to oversight of cybersecurity and information security risk, and benefits from the technical expertise of certain of its members. In particular, the Board and Audit & Risk Committee each receive regular reporting on cybersecurity and information security risk. At least quarterly, the Audit & Risk Committee receives an operational risk update that includes a review of cybersecurity and information security risks. Our Audit & Risk Committee also annually reviews and approves our Information Security Policy. The Board frequently receives presentations on and discusses cybersecurity and information security risks, industry trends and best practices.
Compensation Policies and Risk
The Board's risk oversight responsibility includes the implementation of compensation programs that do not encourage or incentivize excessive risk taking or inappropriate conduct and promote, among other things, gender pay equality. The Human Resources & Compensation Committee is responsible for establishing and reviewing the Company's executive compensation programs, as well as the compensation programs for employees generally, and ensuring that the programs do not encourage unnecessary or excessive risk taking or create risks that are reasonably likely to have a material adverse effect on the Company and its customers.
The Company, in addition to its annual comprehensive review, receives ongoing reporting relating to the Company's incentive plans' design, performance, payouts and customer impact, with oversight by and reporting to the Board, Audit and Risk Committee and Human Resources & Compensation Committee. This reporting includes an analysis of potential "red flag" indicators including the existence, nature and extent of any customer complaints, regulatory complaints, legal actions, employee feedback and payout results to determine if the incentive plan design or implementation resulted in employee wrongdoing or customer abuse.
BOARD COMMITTEESS AND MEETINGS
The Board met 1011 times during 2019.2021. The Board’s policy is that directors should make every effort to regularly attend meetings of the Board and committees on which they serve and the Company’s annual meetingAnnual Meeting of shareholders.Shareholders. Each director attended at least 75% of the meetings of the Board and 75% of the committee meetings on which he or she served in 2019.2021. All of the Company’s then sitting directors attended the 20192021 Annual Meeting of Shareholders.
The Board has three standing committees: the Audit & Risk Committee, the Human Resources & Compensation Committee, and the Nominating & Corporate Governance Committee. The charters for the respective Board committees are posted in the Investor Relations sectionpage of the Company’s website at www.boh.com.
The Board has affirmatively determined that all of the members of the Audit & Risk, Human Resources & Compensation, and Nominating & Corporate Governance Committees (collectively the “Board Committees”) meet the independence standards of the NYSE and the Company’s Governance Guidelines. The Board Committees’ charters require that each committee perform an annual evaluation of its performance and assess the adequacy of its charter. Each committee has the authority to retain consultants and advisors to assist it in its duties, including the sole authority for the retention, termination and negotiation of the terms and conditions of the engagement.
Below are the members of each current standing committee.
|
| | | |
| Audit & Risk | Human Resources & Compensation | Nominating & Corporate Governance |
S. Haunani Apoliona | | | ü✓ |
Mary G. F. Bitterman * | ü | ü | Chair |
Mark A. Burak | Chair | | ü✓ |
John C. Erickson | üVice Chair | | ü✓ |
Joshua D. Feldman | | ü✓ | ü✓ |
Michelle E. Hulst ** | | ü✓ | ü✓ |
Robert Huret *Elliot K. Mills | Vice Chair | ✓ | ü✓ |
Alicia E. Moy | ✓ | ü | ü✓ |
Victor K. Nichols | ü✓ | | ü✓ |
Barbara J. Tanabe | ✓ | ü✓ | ü✓ |
Raymond P. Vara, Jr. | ü✓ | ü✓ | üChair |
Robert W. Wo | | Chair | ü |
| | | |
* Not standing for re-election in April 2020 | | |
** Committee Member as of July 2019 | | ✓ |
30
Audit & Risk Committee: 614 Meetings in 2019
��
2021The Audit & Risk Committee operates under and annually reviews a charter that has been adopted by the Board. The Audit & Risk Committee’s duties include assisting the Board in its oversight of the following areas of the Company: regulatory and financial accounting, reporting and credit risk management; compliance with legal and regulatory requirements; the independent registered public accounting firm’s qualifications and independence; and the performance of the Company’s internal audit functionand credit review functions and independent registered public accounting firm. The Audit & Risk Committee also provides oversight of management’s activities with respect to capital management and liquidity planning, including dividends and share repurchases, and overall interest rate risk management. In addition, the Audit & Risk Committee meets in private session at the conclusion of every regularly scheduled meeting to provide a confidential forum for identification and discussion of issues of importance to the Company. The Audit & Risk Committee also meets with non-member directors on a regularly scheduled basis to brief them on the content and issues discussed at the previous meeting.
The Board has determined that Messrs. Burak, Erickson, Huret, Nichols, Vara, and VaraMs. Moy meet the definition of “financial expert” within the meaning of the SEC regulations adopted under the Sarbanes-Oxley Act of 2002. The Board has determined that all Audit & Risk Committee members meet the NYSE standard of financial literacy and have accounting or related financial management expertise. In addition, the Board has determined that Messrs. Burak, Erickson, Huret and Nichols meet the definition of "risk expert"“risk expert” under the Federal Reserve Bank rules implementing Section 16 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"“Dodd-Frank Act”) and 12 CFR 252.22(d)(1).
The Audit & Risk Committee has adopted policies and procedures governing the following: pre-approval of audit and non-audit services; the receipt and treatment of complaints regarding accounting, internal controls, or auditing matters and the confidential, anonymous submission of information by employees of the Company regarding questionable accounting or audit matters; and restrictions on the Company’s hiring of certain employees of the independent registered public accounting firm. The Audit & Risk Committee is also responsible for reviewing Company transactions involving a director or executive officer. The Audit & Risk Committee Report is located on page 75.
68.Human Resources & Compensation Committee: 1011 Meetings in 2019
2021The Human Resources & Compensation Committee'sCommittee’s duties are set forth in its charter, and include responsibility for compensation levels of directors and members of executive management and reviewing the performance of executive management. The Human Resources & Compensation Committee reviews and approves goals and objectives relevant to CEO compensation, and evaluates performance against those goals. It is also their responsibility to review the Company'sCompany’s long-term and short-term incentive compensation plans, equity-based plans, and deferred compensation programs. The Human Resources & Compensation Committee also reviews management development and training programs as well as succession planning for senior and executive management. The Human Resources & Compensation Committee charter allows for the delegation of its duties to its own subcommittee as long as such delegation is in compliance with all applicable laws, rules, and listing standards. The CEO makes recommendations with respect to non-CEO executive officer compensation. The Human Resources & Compensation Committee Report is located on page 37.
35.Nominating & Corporate Governance Committee: 97 Meetings in 2019
2021The Nominating & Corporate Governance Committee'sCommittee’s duties are set forth in its charter and include reviewing the qualifications of all Board candidates and recommending qualified candidates for membership on the Board and the oversight of director continuing education opportunities. The Nominating & Corporate Governance Committee reviews the Board’s organization, procedures and committees and makes recommendations concerning the size and composition of the Board and its committees. The Nominating & Corporate Governance Committee makes recommendations to the Board regarding standards for determining non-management director independence and reviews the qualifications and independence of the members of the Board and its committees. The Nominating & Corporate Governance Committee also reviews and evaluates the Company’s compliance with corporate governance requirements and leads and oversees the Board and its committees’ annual performance evaluations. Further information regarding the responsibilities performed by the Nominating & Corporate Governance Committee and the Company’s corporate governance is provided in the committee charter and the Governance Guidelines.
COMPENSATIONRetainer Fees
In 2019,2021, based on a comparative peer analysis completed by Veritas Executive Compensation Consultants, LLC ("Veritas"(“Veritas”), the Board'sBoard’s independent executive compensation consultant, it was determined that the NominatingAudit & Corporate GovernanceRisk Committee (“ARC”) retainers be paid a separate $10,000increased. The annual retainer feefor ARC members increased from $17,000 to $22,100, the annual retainer for the Chairman of the ARC increased from $30,000 to $39,000, and the chairannual retainer for the Vice Chairman of the Nominating & Corporate Governance Committee be paid a $20,000 retainer. PriorARC increased from $25,000 to 2019, the Nominating & Corporate Governance Committee and its chair received no retainer fee.$32,500. Veritas recommended the above changes to the Board to be consistent withaccount for the Bankincreased workload of the ARC due to the fact that the ARC has a dual role, handling typical responsibilities of the Bank’s peer group in order to retainseparate audit and attract well-qualified directors.risk committees. All other fees remain unchanged from last year. The Board concurred with Veritas'Veritas’ recommendation and approvedapproval of the following retainer fees effective April 26, 2019:
An annual retainer for service on the Board of $55,000 (decreased from $65,000);$55,000;
An annual retainer for the Lead Independent Director in the amount of $35,000;
A newAn annual retainer for the Nominating & Corporate Governance Committee members in the amount of $10,000 and new annual retainer for the Chairman of the Nominating & Corporate Governance Committee in the amount of $20,000;
An annual retainer for Audit & Risk Committee members in the amount of $17,000,$22,100, an annual retainer for the Chairman of the Audit & Risk Committee in the amount of $30,000,$39,000, and an annual retainer for the Vice Chairman of the Audit & Risk Committee in the amount of $25,000;$32,500; and
An annual retainer for Human Resources & Compensation Committee members in the amount of $12,000 and an annual retainer for the Chairman of the Human Resources & Compensation Committee in the amount of $21,000.
In addition to these standing committees, the Board has other committees for which directors received fees in 2019.2021. Messrs. Feldman, Lucien, and Nichols and Mmes. Hulst and Tokioka are members of the Digital Advisory Committee (“DAC”). Ms. Apoliona and Mr.Messrs. Feldman and Lucien are members of the Board-appointed Benefit Plans Committee (“BPC”), and Mmes. Apoliona, Moy and Tanabe, and Mr.Tokioka and Messrs. Lucien and Wo are members of the Fiduciary Investment Management Committee (“FIMC”). Effective April 26, 2019,24, 2020, the DAC annual retainer is $7,500 and the retainer for its chairman (Mr. Nichols) is $12,500. The FIMC chairman'schairman’s (Ms. Tanabe) annual retainer remains unchanged from last year2019 at $15,500 and annual retainer fees for the FIMC and BPC members remainsremain unchanged at $9,500 and $6,500, respectively.
The Directors are reimbursed for Board-related travel expenses, and directors who reside principally on the U.S. mainland receive an additional $5,000 annually to compensate them for travel time, which remains unchanged from last year.
The shareholders approved the 2015 Director Stock Compensation Plan (the “Director Stock Plan”) at the 2015 annual meeting. The purpose of the Director Stock Plan is to advance the interests of the Company by encouraging and enabling eligible non-employee members of the Board to acquire and retain throughout each member'smember’s tenure as director a proprietary interest in the Company by owning shares of Bank of Hawaii Corporation common stock. The Director Stock Plan allows for the granting of stock options, restricted common stock, and restricted stock units. Under the Director Stock Plan, the Board has the flexibility to set the form and terms of awards. In 2018, theThe Board approvedreceives an increase inannual equity compensation value toof $65,000. Based on the fair market value on the date of grant in April 2021, each of the non-employee Board members with the exception of Michelle Hulst, was given a stock award of 786715 shares of restricted common stock (“Restricted Shares”) with a vesting date of April 17, 2020. Ms. Hulst22, 2022. Mr. Mills was elected to the boardBoard in July 2019October 2021 and received equity compensation in alignment with the remainder of the 2019 unexpired term. Ms. Hulst received 597376 shares of Company restricted common stock with a vesting date of April 17, 2020.22, 2022, in alignment with the remainder of the unexpired term. In 2019,2021, no stock options or restricted stock units were granted under the Director Stock Plan.
32
Directors'Directors’ Deferred Compensation Plan
The Company maintains the Directors'Directors’ Deferred Compensation Plan (the “Directors’ Deferred Plan”), under which each non-employee director may participate and elect to defer the payment of all of his/his or her annual Board and committee retainer fees, or all of his/his or her annual Board retainer fees, or all of his/his or her annual committee retainer fees. At the director'sdirector’s choice, deferred amounts under the Directors'Directors’ Deferred Plan may be payable: 1) beginning on the first day of the first month after the participating director ceases to be a director of the Company; or 2) on an anniversary date of the director'sdirector’s choosing after the director ceases to be a director; or 3) a date specified by the director (which may include a date prior to the date a director ceases to be a director). Deferred amounts are paid to the participant in a lump sum or in equal annual installments over such period of years (not exceeding 10 years) as the participant elects at the time of deferral. If a participant dies, all deferred and previously unpaid amounts will be paid in a lump sum to the participant'sparticipant’s beneficiary on the second day of the calendar year following the year of death. A participant'sparticipant’s deferred amounts are adjusted for appreciation or depreciation in value based on hypothetical investments in one or more mutual funds or in shares of Bank of Hawaii Corporation common stock, as may be directed by the participant. The Company'sCompany’s obligations under the Directors'Directors’ Deferred Plan are payable from its general assets, although the Company has established a rabbi trust to assist it in meeting its liabilities under the plan. The assets of the trust are at all times subject to the claims of the Company'sCompany’s general creditors.
Director Stock Ownership Guidelines
The Board believes it is important to support an ownership culture for the Company'sCompany’s directors, employees and shareholders. To ensure that linkage to shareholders occurs among the fiduciaries of the Company each non-management director is required to own a minimum amount of five times his or her annual cash retainer in Bank of Hawaii Corporation common stock. Directors are given five years from first joining the Board to achieve guideline levels of ownership. SixAs of January 31, 2022, nine of the eleven13 non-management directors standing for re-election have satisfied the ownership guidelines. The fivefour remaining directors are expected to satisfy the ownership guidelines within the required five-year period.
33
The following table presents, for the year ended December 31, 2019,2021, information on compensation earned by or awarded to each non-employee director who served on the Board of Directors during 2019. Messrs.2021. Mr. Ho and Lucien did not receive any additional compensation for services provided as directors.
DIRECTOR COMPENSATION TABLE
Name | | Fees Earned or Paid in Cash ($)(1) | | | Stock Awards ($)(2) | | | Option Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($) | | | Change in Pension Value and Non- qualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | Total ($) | |
S. Haunani Apoliona | | | 81,000 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 145,986 | |
Mark A. Burak | | | 101,750 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 166,736 | |
John C. Erickson | | | 100,625 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 165,611 | |
Joshua D. Feldman | | | 91,000 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 155,986 | |
Michelle E. Hulst | | | 89,500 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 154,486 | |
Kent T. Lucien | | | 78,500 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 143,486 | |
Elliot K. Mills | | | 21,125 | | | | 32,509 | | | | — | | | | — | | | | — | | | | — | | | | 53,634 | |
Alicia E. Moy | | | 95,325 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 160,311 | |
Victor K. Nichols | | | 103,325 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 168,311 | |
Barbara J. Tanabe | | | 55,000 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 119,986 | |
Dana M. Tokioka | | | 72,000 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 136,986 | |
Raymond P. Vara, Jr. | | | 142,825 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 207,811 | |
Robert W. Wo | | | 95,500 | | | | 64,986 | | | | — | | | | — | | | | — | | | | — | | | | 160,486 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees
Earned
or Paid in
Cash
($)(1) | | Stock
Awards
($)(2) | | Option
Awards
($)(3) | | Non-Equity
Incentive Plan
Compensation
($) | | Change in
Pension Value
and Non-qualified
Deferred
Compensation
Earnings
($) | | All Other Compensation ($) | | Total
($) |
| S. Haunani Apoliona | | 81,000 |
| | 65,065 |
| | — |
| | — |
| | — |
| | — |
| | 146,065 |
|
| Mary G. F. Bitterman | | 141,500 |
| | 65,065 |
| | — |
| | — |
| | — |
| | — |
| | 206,565 |
|
| Mark A. Burak | | 95,000 |
| | 65,065 |
| | — |
| | — |
| | — |
| | — |
| | 160,065 |
|
| Clinton R. Churchill | | 26,375 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 26,375 |
|
| John C. Erickson | | 87,000 |
| | 81,344 |
| | — |
| | — |
| | — |
| | — |
| | 168,344 |
|
| Joshua D. Feldman | | 81,875 |
| | 81,344 |
| | — |
| | — |
| | — |
| | — |
| | 163,219 |
|
| Michelle E. Hulst | | 41,000 |
| | 48,757 |
| | — |
| | — |
| | — |
| | — |
| | 89,757 |
|
| Robert Huret | | 95,000 |
| | 65,065 |
| | — |
| | — |
| | — |
| | — |
| | 160,065 |
|
| Alicia E. Moy | | 86,500 |
| | 65,065 |
| | — |
| | — |
| | — |
| | — |
| | 151,565 |
|
| Victor K. Nichols | | 87,000 |
| | 65,065 |
| | — |
| | — |
| | — |
| | — |
| | 152,065 |
|
| Barbara J. Tanabe | | 92,500 |
| | 65,065 |
| | — |
| | — |
| | — |
| | — |
| | 157,565 |
|
| Raymond P. Vara, Jr. | | 94,000 |
| | 65,065 |
| | — |
| | — |
| | — |
| | — |
| | 159,065 |
|
| Robert W. Wo | | 95,500 |
| | 65,065 |
| | — |
| | — |
| | — |
| | — |
| | 160,565 |
|
(1) | |
(1) | Ms. Apoliona and Messrs. Burak, Nichols, and Wo elected to defer all of their respective fees earned in 2019.2021. Ms. Tanabe elected to defer all of her Board retainer fee only. Ms. Tokioka elected to defer all of her committee retainer fees only. |
(2) | |
(2) | The amounts in this column reflect the fair value of the restricted stock on the dates of grant. On April 26, 2019,30, 2021, the Company issued grants of 786715 shares of restricted common stock to each of the non-management directors, each grant having an aggregate fair value of $65,065$64,986 based on the closing price of the Company'sCompany’s common stock of $82.78$90.89 on the date of the grant; 100% of the grant will vest on April 17, 2020.22, 2022. As of December 31, 2019,2021, each director had the following number of restricted stock awards accumulated in their accounts (which excludes options exercised and held as common stock in their accounts): Ms. Apoliona, 2,586 shares; Dr. Bitterman, 7862,515 shares; Mr. Burak, 786715 shares; Mr. Erickson, 786715 shares; Mr. Feldman, 786715 shares; Ms. Hulst, 715 shares; Mr. Huret, 786Lucien, 715 shares; Mr. Mills, 376 shares; Ms. Moy, 786715 shares; Mr. Nichols, 786715 shares; Ms. Tanabe, 786715 shares; Ms. Tokioka, 715 shares; Mr. Vara, 786715 shares; and Mr. Wo, 2,5862,515 shares. On January 25, 2019, the Company elected Messrs. Erickson and Feldman toOctober 22, 2021, the Board elected Mr. Mills to serve the remainder of the unexpired term until the 2019 annual meeting2022 Annual Meeting and issued a grant of 212376 shares each for their respectivehis service on the Board, which had an aggregate fair value of $16,279$32,509 based on the closing price of $76.79 on the date of the grant. On July 19, 2019, the Company elected Ms. Hulst to the Board to serve the remainder of the unexpired term until the 2020 annual meeting and issued a grant of 597 shares of restricted stock to Ms. Hulst for her service on the Board, which had an aggregate fair value of $48,757 based on the closing price of $81.67$86.46 on the date of the grant. These shares will vestvested on April 17, 2020.22, 2022. |
(3) | |
(3) | No option awards were granted in 2019.2021. As of December 31, 2019,2021, no director had outstanding options to purchase shares of the Company'sCompany’s common stock. |
34
PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Act provides shareholders the opportunity to vote, on an advisory (non-binding) basis, to approve the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’sSEC���s compensation disclosure rules.
As an advisory vote, this proposal is not binding upon the Company. However, the Human Resources & Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by shareholders and considers the outcome of the vote when making future compensation decisions for its executive officers. The Company currently conducts annual advisory votes on executive compensation. The Company’s shareholders approved its executive compensation at the 20192021 Annual Meeting of Shareholders.
As described in the Compensation Discussion and Analysis, the primary focus of the Company's executive compensation programs is to encourage and reward behavior that the Board believes will promote sustainable growth in shareholder value, and to promote gender pay equity. Our executive compensation programs are intended to balance risk and reward in relation to the Company’s overall business strategy and further align management’s interests with shareholders’ interests. The Company’s commitment to a performance culture is reflected in its strong financial performance in recent years. Accordingly, the Board of Directors recommends that shareholders approve the executive compensation programs by approving the following advisory resolution:
RESOLVED, that the shareholders of Bank of Hawaii Corporation approve, on an advisory basis, the compensation of the individuals identified in the Summary Compensation Table, as disclosed in the Company’s 20202022 proxy statement pursuant to the compensation disclosure rules of the SEC, which disclosure includes the Compensation Discussion and Analysis section, the compensation tables, and the accompanying footnotes in this proxy statement.
The Board of Directors recommends a vote “FOR” the foregoing proposal.
HUMAN RESOURCES & COMPENSATION COMMITTEE REPORT
The Human Resources & Compensation Committee, composed entirely of independent directors in accordance with the applicable laws, regulations, NYSE listing requirements and the Governance Guidelines, sets and administers policies that govern the Company’s executive compensation programs, and various incentive and stock programs. As members of the Human Resources & Compensation Committee, we have reviewed and discussed the Compensation Discussion and Analysis to be included in the Company’s 20202022 Proxy Statement with management and, based on these discussions, recommended to the Company’s Board (and the Board subsequently approved the recommendation) that the Compensation Discussion and Analysis be included in such Proxy Statement.
As submitted by the members of the Human Resources & Compensation Committee,
Mary G. F. Bitterman
Alicia E. Moy
Elliot K. Mills
Barbara J. Tanabe
COMPENSATION DISCUSSIONDISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) describes the compensation structure, process and implementation in 20192021 for our Named Executive Officers (“NEOs”). The NEOs in 20192021 were:
|
| |
Peter S. Ho | Chairman of the Board of Directors, Chief Executive Officer, and President |
Dean Y. Shigemura | Vice Chair, Chief Financial Officer |
Sharon M. Crofts | Vice Chair, Client Solutions Group |
James C. Polk | Vice Chair, Consumer Lending and Deposit Product Group |
Mark A. Rossi | Vice Chair, Chief AdministrativeCommercial Officer General Counsel and Corporate Secretary |
Mary E. Sellers | Vice Chair, Chief Risk Officer |
The CD&A is organized as follows:
36
Compensation-Related Highlights
2021 Compensation Program
Compensation-Related Highlights
2019 Compensation Program
| |
◦ | Short- and long-term incentive plans are 100% performance-based. |
| |
◦ | The short-term incentive plan provides for 80% quantitative and 20% qualitative performance measures. |
| |
◦ | The long-term incentive plan provides for a three-year performance period, with a 3-year cliff vesting period, for the 2019-20212021-2023 performance period. |
| |
◦ | The short- and long-term incentive plan quantitative performance metrics are measured relative to the identified peer group performance and are not absolute. |
Strong Operational Performance
| |
◦ | Return-on-EquityReturn-on-Common-Equity and Stock Price-to-Book Ratio are key measures of the Company’s financial health and are key performance metrics in the executive compensation program. Return-on-EquityReturn-on-Common-Equity was 17.65%17.92% and Stock Price-to-Book Ratio was 2.962.35 as of December 31, 2019,2021, both in the top quartile of peers. Tier 1 Capital Ratio, also a key performance metric in the executive compensation program, was 12.18% as of December 31, 2019 and far exceeded the minimum ratio necessary to be characterized as “well-capitalized.” |
