Corporate Governance Guidelines.Guidelines. The Board of Directors has adopted Corporate Governance Guidelines to assist the Board in the exercise of its responsibilities and to promote the more effective functioning of the Board and its committees. The guidelines provide details on matters such as:
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Select Corporate Governance Guideline Topics •
Goals and responsibilities of the Board
•
Selection of directors, including the Chairman of the Board
•
Board membership criteria, and director retirement age and limits on board seats
•
Stock ownership guidelines
•
Director independence, and executive sessions of non-management directors
•
Board self-evaluation
•
Board compensation
•
Board access to management and outside advisors
•
Board orientation and continuing education
•
Leadership development, including annual evaluations of the CEO and management succession plans
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The full text of the A&B Corporate Governance Guidelines is available on the corporate governance page of A&B’s corporate website, www.alexanderbaldwin.com.
Code of Ethics. A&B has adopted a Code of Ethics (the “Code”) that applies to the CEO, Chief Financial Officer and Controller. A copy of the Code is posted on the corporate governance page of A&B’s corporate website, www.alexanderbaldwin.com. A&B intends to disclose any changes in or waivers from its Code by posting such information on its website.
Code of Conduct. A&B has adopted a Code of Conduct, which is applicable to all directors, officers and employees, and is posted on the corporate governance page of A&B’s corporate website, www.alexanderbaldwin.com.
A&B’s Culture. We are proud of the culture at A&B, where we are committed to being Partners for Hawaii. In 2020 we celebrated our 150th anniversary, and we honor the reputation that we have built over a century and a half of doing the right thing for our stakeholders. Several years ago, A&B built upon its longstanding principles and developed vision, mission and values statements that guide our daily actions. These statements have been updated in 2021 to reflect the continuing evolution of the Company:actions:
Our Vision: As Hawaii’s premier commercial real estate company, we will own and operate a superior portfolio of properties that enhances the lives of Hawaii’s people, enables our tenants to thrive and creates value for our shareholders.
Our Mission: Utilize A&B’s extensive assets, expertise, long history and deep relationships to benefit Hawaii and all our stakeholders. Develop, acquire and manage commercial real estate in a way that fulfills the everyday needs of Hawaii’s residents and promotes the sustainability of our communities. Support our employees in their quest to further their careers, provide for their families, enjoy their work and give back to the community.
Our Values:
| Integrity | | | | |
Integrity | Be guided in all actions by strong moral principles, in keeping with A&B’s legacy of honesty and fairness. | |
Respect | Respect | | | Value and respect the unique qualities, perspectives and contributions of each employee and seek to understand the priorities of community members. | |
Adaptability | Adaptability | | | Embrace innovation and seek better approaches. | |
Collaboration | Collaboration | | | Share information and ideas and work together to find the best solutions. | |
Decisiveness | Decisiveness | | | Make clear and timely decisions and communicate them widely. | |
Accountability | Accountability | | | Hold ourselves accountable for delivering results and recognizing achievement. | |
| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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BOARD OF DIRECTORS INFORMATION | |
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Corporate Responsibility, Sustainability and Sustainability.ESG. Prioritizing environmental, social and governance (“ESG”) issues aligns with A&B’s mission to improve Hawaii’s communitiesbenefit Hawaii and create value for all our stakeholders. We understand our responsibility to the environment and the communities in which we operate and are dedicated to making continued improvements in our efforts. A numbercontinuous improvement.
Our leadership team and the Board of Directors are committed to ESG issues. Consideration of ESG is a meaningful component of our 2020strategic plans, is integrated into our operations and informs how we pursue opportunities and manage risks. The Board of Directors provides oversight and receives regular reports on ESG highlights are listed below.topics, including diversity and climate risk, at both its Nominating and Corporate Governance Committee meetings and Board meetings. We regularly seek input from our investors on ESG and other topics. In 2022, we conducted ESG-specific outreach: we met with or offered to meet with governance teams from investors representing approximately 63% of our stock, including some of our largest investors. This outreach is part of our commitment to communicate with our shareholders.
•
PublishedClimate Change: The Board of Directors also provides oversight on climate risk. We continue to align our inaugural corporate sustainability report.
•
Continued an energy efficiency program for variousdisclosures with the Task Force on Climate-Related Financial Disclosures (“TCFD”) and the Sustainability Accounting Standards Board (“SASB”). We undertook a climate risk analysis of properties in our portfolio with savingsto better understand both current and future risks.
We issued our third annual corporate responsibility report in 20202022, which expanded on our TCFD disclosures, discussion of over 850,000 KWH. The programclimate change governance, strategy and risk management, and metrics and targets. We disclosed data on greenhouse gas emissions (scopes 1, 2 and 3), energy usage, renewable energy production and water usage for our commercial real estate portfolio. Our corporate responsibility report is located at www.alexanderbaldwin.com/commitment/sustainability/.
In addition to tracking important environmental metrics, we also understand the importance of robust environmental targets to help reduce the harmful effects of climate change. Accordingly, we have established the following reduction targets:
•GHG emissions: 35% reduction of GHG Scope 2 emissions by 2025 from 2017 baseline.
•Energy usage: 15% reduction of whole building energy consumption by 2025 from 2017 baseline.
•Water usage: 15% reduction of whole building water consumption by 2025 from 2017 baseline.
Clean energy is a key component in its current statecombating climate change. We have been renewable energy producers since 1906 when our first hydroelectric facility began operations. In 2022, we completed construction of a 1.3 megawatt rooftop photovoltaic system at Pearl Highlands Center that is expected to resultoffset 100% of common area energy usage and provide additional power to select tenants. Kaka'ako Commerce Center has been identified as the next property in a reduction of more than 9,000 tons of carbon over the next ten years and is being expanded to additional propertiesbroader rooftop solar initiative. We also produced approximately 12,500 megawatt hours ("MWH") in our portfolio.
•
Engaged in responsible development like our Lau Hala Shops project, where2022 from hydroelectric sources on agricultural lands. Although those lands were subsequently sold for strategic organizational streamlining reasons, we created an innovative community gathering place with the adaptive reuse of an existing structure, energy efficient lighting and air conditioning, efficient water usage systems and solar-powered trash compactors. The project received both national and local awards for its adaptive renovation.
•
Produced 41,000+ MWH fromare highly focused on implementing clean energy (hydroelectricsolutions on our CRE portfolio going forward.
Environmental and solar) sourcesSocial Councils: To continue advancing our ESG efforts, two key employee councils – enough to offset over 40% of the energy used by our entire 3.9 million square-foot commercial real estate portfolio and our corporate headquarters.
•
Increased our focus on diversity, equity and inclusion, supporting A&B Pride (a LGBTQ affinity group), a women’s leadership development group,an Environmental Council and a “Green Team.” Our efforts have been recognizedSocial Council – made up of a diverse group of employees from all levels of our organization help shape our agenda for environmental and social stewardship, both nationallywithin and locally, as we received Nareit’s Silver Award for its Diversity, Equity and Inclusion Recognition Awards and Pacific Business News’s Businessoutside of Pride corporate award.A&B.
•
Supported our employees, tenants and community throughout the COVID pandemic, as described further in the “Performance in 2020” section later in this proxy statement.
•
Strengthened our engagement with our employees, increasing communications and connectivity with our employees as they worked remotely and conducting our fourth annual employee survey.
•
Gave $950,000 in cash and in-kind donations to 230 organizations in 2020; over the last five years, we have donated over $5.5 million to 640+ organizations.
•
Increased our Board’s independence and maintained diversity through changes in Board composition.
Diversity: A&B values diversity and strives to create an inclusive workplace where everyone isindividuals are able to bring their whole selves to work. We believe that a diverse workforce creates value by fostering greater creativity, innovation and inclusive connection among our employees and our community. Diversity is an important part of A&B’s human capital management practices and long-term strategy. Additional information, including workforce diversity statistics using EEO-1 data, was included for a third year in our inaugural corporate responsibility report publishedreport.
Other ESG highlights are listed below.
•Implemented a CRE benchmarking program that compiles energy and water data in August 2020.ENERGY STAR Portfolio Manager. This enables us to better track and understand our energy and water consumption throughout our portfolio. We also collaborated with the City & County of Honolulu and other stakeholders to establish a county-wide energy and water building benchmarking program.
Our leadership team
•Continued an energy efficiency program for various properties in our portfolio, with energy reductions in 2022 of over 1,000,000 KWH. The program in its current state is expected to result in a reduction of more than 10,000 tons of carbon during the ten-year program.
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•Continued our focus on environmentally responsible development with the renovation of Aikahi Park Shopping Center, focusing on sustainable elements including the adaptive re-use of an existing structure, LED lighting retrofits, EV charging stations, sustainable materials, water conservation measures and the Boardan open, walkable concept.
•Conducted energy audits on eight properties in our CRE portfolio, which provided valuable information on areas for potential energy savings. We also invited tenants to participate in free energy audits of Directors are committedtheir spaces in connection with these audits.
•Strengthened our tenant sustainability management program, which shares sustainability stories, tips and resources, and provides tenants with a portal to ESG issues. Consideration of ESG is integrated into our operations and informs how we pursue opportunities and manage risks. It isdiscuss sustainability matters. As a meaningful componentresult of our operatingtenant sustainability outreach, several tenants implemented significant equipment upgrades to utilize energy or water efficient models.
•Continued our focus on diversity, equity and strategic plans. The Board of Directors receives regular reportsinclusion (“DEI”) and provides oversight on ESG matters, including diversity. We regularly seek input fromsustainability, supporting A&B Pride (a LGBTQ+ affinity group), a women’s leadership development group, and a “Green Team.”
•Strengthened our investors on ESG and other topics. In 2020, we conducted an ESG-specific virtual roadshow, meeting or offering to meet with governance teams from investors representing approximately 68% of our stock, including some of our largest passive investors. This outreach is part of our commitment to communicateengagement with our shareholders.employees, increasing communications and connectivity as they worked remotely and conducting our sixth annual employee survey.
•Continued to promote employee learning and development, with live and online training programs, professional development stipends and tuition reimbursement for the pursuit of higher education degrees. We also provided a health and wellness program in which approximately 70% of employees participated.
•Gave $975,000 in cash and in-kind donations to 181 Hawaii nonprofit organizations in 2022.
Compensation of Directors. The Compensation Committee periodically reviews the compensation of A&B’s non-employee Directorsdirectors with the assistance of its independent compensation consultant, WTW (formerly Willis Towers Watson (“WTW”)Watson). The compensation levels and components were last reviewed in October 2018 andJuly 2021 along with the annual review of the Company’s share-ownership guidelines. The share-ownership guidelines are reviewed annually. In each case, they were deemed to be well aligned with market competitive practices and remain unchanged in 2020. 2022. With regard to director compensation, certain compensation levels were considered to be below market competitive practices and were revised in 2022. This was the first time A&B has made adjustments to non-Chairman pay elements in the last 11 years.
The following table summarizes the compensation earned by or paid to our directors (other than Mr. Benjamin, A&B CEO, whose compensation is included in the Summary Compensation Table and who receives no compensation for serving on the Board) for services as a member of our Board of Directors for the period from January 1, 20202022 through December 31, 2020.
2022.2020 DIRECTOR COMPENSATION
| Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Option Awards ($)(2) | | | Non-Equity Incentive Plan Compen- sation ($) | | | Change in Pension Value and Nonqualified Deferred Compen- sation Earnings ($) | | | All Other Compen- sation ($) | | | Total ($) | |
| (a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | |
| W. Allen Doane(3) | | | | | 21,250 | | | | | | 0 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | 0 | | | | | | 21,250 | | |
| Robert S. Harrison(3) | | | | | 25,173 | | | | | | 0 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | 0 | | | | | | 25,173 | | |
| Stanley M. Kuriyama(4) | | | | | 198,750 | | | | | | 135,009 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | 0 | | | | | | 333,759 | | |
| Diana M. Laing | | | | | 64,178 | | | | | | 90,010 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | 0 | | | | | | 154,188 | | |
| John T. Leong | | | | | 15,614 | | | | | | 52,503 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | 0 | | | | | | 68,117 | | |
| Thomas A. Lewis, Jr. | | | | | 64,250 | | | | | | 90,010 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | 0 | | | | | | 154,260 | | |
| Douglas M. Pasquale | | | | | 110,750 | | | | | | 90,010 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | 2,000(5) | | | | | | 202,760 | | |
| Michele K. Saito | | | | | 80,250 | | | | | | 90,010 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | 0 | | | | | | 170,260 | | |
| Eric K. Yeaman(6) | | | | | 81,345 | | | | | | 116,261 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | 0 | | | | | | 197,606 | | |
|
(1)
Represents the aggregate grant-date fair value of the annual automatic grant of restricted stock unitRestricted Stock Unit (“RSU”) awards made in 2020.2022. See discussion of the assumptions underlying the valuation of equity awards included in Note 16 of the Company’s consolidated financial statements, included in the Company’s 20202022 Annual Report on Form 10-K. At the end of 2020,2022, Ms. Laing, Mr. Leong, Mr. Pasquale and Mses. Laing andMs. Saito each held 7,093 restricted stock units,4,669 RSUs, Mr. Lewis held 11,093 restricted stock units, Mr. Kuriyama held 4,618 restricted stock units, Mr. Leong held 4,530 restricted stock units8,669 RSUs and Mr. Yeaman held 9,358 restricted stock units. Messrs. Doane and Harrison had no restricted stock units.7,470 RSUs.
(2)
No non-management director holds any outstanding stock options and no stock options have been granted to directors by A&B or by A&B Predecessor since 2007.
(3)
Messrs. Doane and Harrison ceased their service as directors when their terms ended at the 2020 Annual Meeting of Shareholders on April 28, 2020.
(4)
Represents compensation paid to Mr. Kuriyama, who served as non-executive Chairman of the Board through September 30, 2020. It includes a cash payment of $135,000 that represents the grant date value of the shares underlying the unvested restricted stock units granted at the 2020 Annual Meeting of Shareholders (included in column (c)) that were forfeited by Mr. Kuriyama in connection with his retirement as the Chairman of the Board of Directors.
(5)
Represents charitable contributions under the matching gifts program described on page 15in the Matching Gift Program section below.
(4)Includes compensation paid to Mr. Pasquale for his service as Lead Independent Director.
(6)
(5)Includes compensation paid to Mr. Yeaman for his service as non-executive Chairman of the Board from October 1, 2020.
Board.
Our Board of Directors approved the following non-employee director compensation schedule of annual fees, which was developed with the assistance of WTW.
| Pay Element | | | | | | Amount | |
| Annual Board Cash Retainer | | | | | | | $ | 56,000 | | |
| Chairman of the Board Annual Cash Retainer | | | | | | | $ | 85,000 | | |
| Lead Director Annual Cash Retainer | | | | | | | $ | 81,000 | | |
| Committee Member Cash Retainers (in addition to Board Cash Retainer) | | | •
Audit •
Compensation •
Nominating and Corporate Governance | | | | $ $ $ | 9,000 7,500 6,000 | | |
| Committee Chair Cash Retainers (in addition to Committee Member Cash Retainer) | | | •
Audit •
Compensation •
Nominating and Corporate Governance | | | | $ $ $ | 14,000 10,000 7,500 | | |
| Annual Equity Award | | | | | | | $ | 90,000 | | |
| Chairman of the Board Equity Award | | | | | | | $ | 135,000 | | |
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| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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Pay Element |
BOARD OF DIRECTORS INFORMATION | Amount |
Annual Board Cash Retainer | | $56,000 |
Chairman of the Board Annual Cash Retainer | | $100,000 |
Lead Director Annual Cash Retainer | | $81,000 |
Committee Member Cash Retainers (in addition to Board Cash Retainer) | •Audit •Compensation •Nominating and Corporate Governance | $10,000 |
$7,500 |
$7,500 |
Committee Chair Cash Retainers (in addition to Committee Member Cash Retainer) | •Audit | $14,000 |
•Compensation | $10,000 |
•Nominating and Corporate Governance | $7,500 |
Annual Equity Award | | $100,000 |
Chairman of the Board Equity Award | | $160,000 |
Directors are provided an additional per meeting fee of $750 if the number of board or committee meetings they attend exceeds an annual predefined number, which is currently set at:
•
•Board – 7 meetings
•
Audit – 6 meetings
•
Compensation – 5 meetings
•
Nominating and Corporate Governance – 4 meetings
Under the terms of the Alexander & Baldwin, Inc. 2012 Incentive Compensation2022 Plan, (“2012 Plan”), an automatic annual grant of restricted stock units (“RSUs”)RSUs is made to each director at each Annual Meeting of Shareholders. A prorated grant is made upon appointment as a director at any time between Annual Meetings. Awards vest in their entirety on the earlier of their one-year grant date anniversary.anniversary or immediately prior to the first regular annual meeting of stockholders that occurs in the year following the year of the award date. Accelerated vesting occurs upon cessation of service by reason of death, disability or retirement during the vesting period. Directors who are management employees of A&B or its subsidiaries do not receive compensation for serving as directors.
Director Business Travel Accident Coverage.Coverage. Non-management directors have coverage of $200,000$250,000 for themselves and $50,000 for their accompanying spouses while traveling on A&B business.
Matching Gift Program. Directors may participate in A&B’s matching gifts program for employees, in which A&B matches contributions to eligible cultural,any non-profit organization serving Hawaii communities or any educational and other non-profit organizationsinstitution in the United States up to an aggregate maximum of $3,000$2,000 annually.
Director Share Ownership Guidelines. The Board has adopted guidelines that encourage each non-employee director to own A&B common stock (including RSUs) with a value of $280,000 and $500,000 for the Chairman of the
ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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Board, which is five times the current annual board retainer of $56,000 and $100,000 for the Chairman, within five years of becoming a director. All current directors have met or are on track to meet the established guidelines within the required timeframe.
Communications with Directors.Directors. Shareholders and other interested parties may contact any of the directors by mailing correspondence “c/o A&B Law Department” to A&B’s headquarters at 822 Bishop Street, Honolulu, Hawaii 96813. The Law Department will forward such correspondence to the appropriate director(s). However, the Law Department reserves the right not to forward any offensive or otherwise inappropriate materials.
In addition, A&B’s directors are encouraged to attend the Annual Meeting of Shareholders. All the current A&B directors who were directors as of the 2020 Annual Meeting attended the 2022 Annual Meeting.
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ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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SHAREHOLDERS SECURITY OWNERSHIP
The following table lists the names and addresses of the only shareholders known by A&B on February 18, 202116, 2023 to have owned beneficially more than five percent of A&B’s common stock outstanding, the number of shares they beneficially own, and the percentage of outstanding shares such ownership represents, based upon the most recent reports filed with the SEC. Except as indicated in the footnotes, such shareholders have sole voting and dispositive power over shares they beneficially own.
| Name and Address of
Beneficial Owner | | | Amount of
Beneficial Ownership | | | Percent of
Class | |
| BlackRock, Inc.
40 East 52nd Street
New York, NY 10022 | | | | | 11,477,731(a) | | | | | | 15.8% | | |
| The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 | | | | | 10,397,266(b) | | | | | | 14.4% | | |
| Wellington Management Group LLP
280 Congress Street
Boston, MA 02210 | | | | | 5,672,181(c) | | | | | | 7.8% | | |
(a) | | | | | | | | | | | |
Name and Address of Beneficial Owner | Amount of Beneficial Ownership | | Percent of Class |
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 13,983,358 | (a) | 19.3% |
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 11,896,545 | (b) | 16.4% |
State Street Corporation One Lincoln Street Boston, MA 02111 | 4,207,231 | (c) | 5.8% |
(a)As reported in Amendment No. 1 to Schedule 13G dated January 25, 202126, 2023 (the “BlackRock 13G”) filed with the SEC. According to the BlackRock 13G, as of December 31, 2020,2022, BlackRock, Inc. has sole voting power over 11,342,322 shares and sole dispositive power over 11,477,731 shares and does not haveno shared voting or shared dispositive power over any shares, and has sole voting power over 13,739,450 shares and sole dispositive power over 13,983,358 shares.
(b)
As reported in Amendment No. 912 to Schedule 13G dated February 8, 20219, 2023 (the “Vanguard 13G”) filed with the SEC. According to the Vanguard 13G, as of December 31, 2020,2022, The Vanguard Group has no sole voting power over any shares and sole dispositive power over 10,265,70611,710,147 shares, has shared voting power over 74,874114,498 shares, and has shared dispositive power over 131,560186,398 shares.
(c)
As reported in Amendment No. 2 to Schedule 13G dated February 15, 2021December 31, 2022 (the “Wellington“State Street 13G”) filed with the SEC. According to the WellingtonState Street 13G, as of December 31, 2020, Wellington Management Group LLP2022, State Street Corporation has shared voting power over 4,835,617 shares and shared dispositive power over 5,672,181 shares and does not haveno sole voting or sole dispositive power over any shares, and has shared voting power over 3,279,801 shares and shared dispositive power over 4,207,231 shares.
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| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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DIRECTORS AND EXECUTIVE OFFICERS INFORMATION
Security Ownership of Directors and Executive Officers. The following table shows the number of shares of A&B common stock beneficially owned as of February 18, 202116, 2023 by each director and nominee, by each executive officer named in the “Summary Compensation Table” below, and by directors and executive officers as a group and, if at least one-tenth of one percent, the percentage of outstanding shares such ownership represents. Except as indicated in the footnotes, directors, nominees and executive officers have sole voting and dispositive power over shares they beneficially own.
| Name or Number in Group | | | Number of Shares Owned (a)(b)(c) | | | Stock Options (d) | | | Total | | | Percent of Class | |
| Diana M. Laing | | | | | 3,750 | | | | | | 0 | | | | | | 3,750 | | | | | | — | | |
| John T. Leong | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | — | | |
| Thomas A. Lewis, Jr. | | | | | 6,655 | | | | | | 0 | | | | | | 6,655 | | | | | | — | | |
| Douglas M. Pasquale | | | | | 78,975 | | | | | | 0 | | | | | | 78,975 | | | | | | 0.1 | | |
| Michele K. Saito | | | | | 29,374 | | | | | | 0 | | | | | | 29,374 | | | | | | — | | |
| Eric K. Yeaman | | | | | 29,374 | | | | | | 0 | | | | | | 29,374 | | | | | | — | | |
| Christopher J. Benjamin | | | | | 226,385 | | | | | | 50,677 | | | | | | 277,062 | | | | | | 0.4 | | |
| Brett A. Brown | | | | | 8,152 | | | | | | 0 | | | | | | 8,152 | | | | | | — | | |
| Lance K. Parker | | | | | 23,606 | | | | | | 0 | | | | | | 23,606 | | | | | | — | | |
| Nelson N. S. Chun | | | | | 133,210 | | | | | | 23,389 | | | | | | 156,599 | | | | | | 0.2 | | |
| Meredith J. Ching | | | | | 113,386 | | | | | | 17,539 | | | | | | 130,925 | | | | | | 0.2 | | |
| 12 Directors and Executive Officers as a Group | | | | | 659,986 | | | | | | 91,605 | | | | | | 751,591 | | | | | | 1.0 | | |
(a)
| | | | | | | | |
Name or Number in Group | Number of Shares Beneficially Owned (a)(b)(c)(d) | Percent of Class |
Diana M. Laing | 15,863 | — |
John T. Leong | 9,550 | — |
Thomas A. Lewis, Jr. | 18,768 | — |
Douglas M. Pasquale | 91,088 | 0.1 |
Michele K. Saito | 41,487 | 0.1 |
Eric K. Yeaman | 46,262 | 0.1 |
Christopher J. Benjamin | 330,429 | 0.5 |
Clayton K. Y. Chun | 19,060 | — |
Lance K. Parker | 60,475 | 0.1 |
Meredith J. Ching | 131,931 | 0.2 |
Jerrod M. Schreck | 12,879 | — |
Brett A. Brown | 45,690 | — |
14 Directors and Executive Officers as a Group | 830,215 | 1.2 |
(a)Amounts include 28,404 shares held in a trust by the spouse of Mr. Benjamin and 213 shares held by the spouse of Ms. Ching.
(b)
Amounts include shares as to which certain persons have (i) shared voting and dispositive power, as follows: Mr. Pasquale – 78,97591,088 shares, Ms. Ching – 3,976 shares, and directors, nominees and executive officers as a group – 82,95195,064 shares and (ii) sole voting power only: Ms. Ching – 658709 shares, Mr. Parker – 541 shares, and directors and executive officers as a group – 6581,250 shares.
(c)
Shares owned by Mr. Brown are held in a brokerage margin account.
(d)
Amounts reflect shares deemed to be beneficially owned because they may be acquired prior to April 19, 2021 through the exercise of stock options. Amounts do not include 528,407 restricted stock units465,670 RSUs or performance share unitsPerformance Share Units (“PSUs”) that have been granted to the directors and executive officers as a group that may not be acquired prior to April 19, 2021.16, 2023. No director or executive officer holds any outstanding stock options and no stock options have been granted by A&B or by A&B Predecessor since 2012.
Certain Relationships and Transactions. A&B has adopted a written policy under which the Audit Committee must pre-approve all related person transactions that are disclosable under Item 404(a) of SEC Regulation S-K. Prior to entering into a transaction with A&B, directors and executive officers (and their family members) must make full disclosure of all facts and circumstances to the Law Department. The Law Department then determines whether such transaction requires the approval of the Audit Committee. The Audit Committee considers all of the relevant facts available, including (if applicable) but not limited to: the benefits to the Company; the impact on a director’s or executive’s independence, including with respect to an immediate family member of a director or executive or an entity in which a director or executive is a partner, shareholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms available to unrelated third parties or to employees generally. The Audit Committee will approve only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its shareholders. If a related person transaction involves a member of the Audit Committee, that member recuses himself or herself from the process of review and approval.
The Audit Committee has established written procedures to address situations when approvals need to be sought between meetings. Whenever possible, proposed related person transactions will be included as an agenda item at the next scheduled Audit Committee meeting for review and approval. However, if it appears that a proposed related person transaction will occur prior to the next scheduled Audit Committee meeting, approval will be sought from Audit
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Committee members between meetings.
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Approval by a majority of the Committee members will be sufficient to approve the related person transaction. If a related person transaction is approved in this manner, the action will be reported at the next Audit Committee meeting.
A&B’s business strategy is Hawaii-focused and, accordingly, a number
There have been no related person transactions since the beginning of our directors are Hawaii-based executives who provide extensive local knowledge and insight. Hawaii’s business community is relatively small and isolated. Given A&B’s position as a major landowner in the state, the largest owner of grocery-anchored retail assets, the largest materials and construction company in the state, and as one of the state’s premier real estate developers, it isfiscal year 2022 that were required to be expected that relationships will exist between the Company and key business leaders and their companies, as disclosed below. The transactions described were made in the ordinary course of business and on substantially the same terms as those made with persons not related to A&B.reported under SEC rules.
Related Person Relationships with First Hawaiian Bank: Robert S. Harrison, former director of A&B through April 26, 2020, is Chairman and Chief Executive Officer of FHB.
•
FHB is the largest bank in Hawaii and is the top-ranked Hawaii bank in commercial and industrial lending and in construction and land development loans.
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ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
FHB has been a lending partner to the Company and its predecessor for many years prior to Mr. Harrison joining the Board.
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The Audit Committee reviewed all FHB related person transactions.
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All transactions were made in the ordinary course of business, on commercially reasonable, prevailing terms and rates.
FHB has the following arrangements with A&B for general corporate purposes:
(i)
A 15.6 percent participation in A&B’s $450 million revolving credit and term loan agreement (the “Revolver”), of which, in 2020, the largest aggregate amount of principal outstanding was $231.0 million. For 2020, the Company had net borrowings of $12.3 million and paid interest of $3.6 million to Revolver lenders that include FHB. As of February 18, 2021, outstanding borrowings were $111.0 million, bearing interest at a rate of LIBOR, plus an applicable rate between 1.25 and 2.05 percent based upon a pricing grid using the ratio of debt to total adjusted asset value, as defined in the agreement.
(ii)
A loan of $5.0 million made to a limited liability company in which a subsidiary of A&B is a member, of which, in 2020, the largest aggregate amount of principal outstanding was $3.7 million. During 2020, interest payments of $29,400 were made, and the principal loan amount of $3.7 million was paid off.
(iii)
A $60.0 million loan made to a limited liability company in which a subsidiary of A&B is a member, of which, in 2020, the largest aggregate amount of principal outstanding was $59.5 million; $1.6 million was paid in principal with an interest rate hedge fixed to 3.135 percent of which net interest paid was $1.9 million; and $57.6 million was outstanding on February 18,2021.
(iv)
A $8.5 million share of A&B’s $50.0 million syndicated term loan facility, of which, in 2020, the largest aggregate amount of principal outstanding was $50.0 million. Interest on outstanding amounts is based on LIBOR plus a margin ranging from 1.20 and 2.00 percent, determined using a pricing grid (based on A&B’s Total Debt to Total Adjusted Asset Value Ratio, as defined in the loan agreement). In 2020, total interest of $1.2 million was paid and there were no principal payments. As of February 18, 2021, $50.0 million was outstanding. On February 13, 2020, the Company entered into a swap agreement with an unrelated financial institution to fix the base rate at 1.349 percent in lieu of LIBOR, pursuant to which payments on this swap agreement totaled $0.4 million during 2020.
(v)
Lease agreements whereby FHB is a commercial tenant in two properties owned by A&B subsidiaries, under leases with terms that expire between 2021 and 2063, with aggregate gross rents in 2020 of $0.5 million and aggregate net rent from and after January 1, 2021 to the expiration date of the leases of $8.6 million.
In addition, after the acquisition of Grace Pacific Corporation (“Grace Pacific”) on October 1, 2013, FHB has a line of credit totaling $2.0 million with an unconsolidated joint venture in which a subsidiary of A&B is a 50 percent member. Borrowings under the line of credit bear interest at rates between 1.82 percent to 2.25 percent plus LIBOR. There were no principal balance amounts outstanding during 2020, and there was no amount outstanding as of February 18, 2021.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis (“CD&A”)
The CD&A addresses A&B’s compensation practices for 20202022 for the fivesix executive officers named in the Summary Compensation Table on page 3034 (collectively, the “Named Executive Officers” or “NEOs”). Clayton K. Y. Chun was appointed Chief Financial Officer, effective December 1, 2022. Lance K. Parker was appointed President, effective January 1, 2023, in addition to his role as Chief Operating Officer. He also has been appointed Chief Executive Officer, effective July 1, 2023. The compensation for the following NEOs is addressed in the CD&A: •
Christopher J. Benjamin, President and Chief Executive Officer
•
Brett A. Brown, Executive Vice President and Chief Financial Officer
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LanceClayton K. Parker, Executive Vice President and Chief Real Estate Officer
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Nelson N. S.Y. Chun, Executive Vice President, Chief Financial Officer and Treasurer
•Lance K. Parker, President and Chief LegalOperating Officer
•
Meredith J. Ching, Executive Vice President, External Affairs
•Jerrod M. Schreck, Executive Vice President of A&B; President of Grace Pacific, A&B’s materials and construction subsidiary
•Brett A. Brown, former Executive Vice President and Chief Financial Officer
Executive Summary
2022 results reflected the strong performance of A&B's high-quality portfolio of grocery-anchored retail, industrial and ground lease assets. The COVID-19 pandemic brought onCommercial Real Estate ("CRE") portfolio grew its Net Operating Income ("NOI") by over 6% year over year. Same-store NOI increased 6.0% and Core FFO per diluted share increased 17.7% over the prior year. Leasing activity remained robust, finishing the year with total leased occupancy of 95%, matching the high-water mark for occupancy over the past decade. We completed the Aikahi Park Shopping Center and Hawaiian Island Creations renovation projects in Kailua and commenced the Manoa Marketplace revitalization. We also completed a 1.3 megawatt PV system at Pearl Highlands Center, one of the greatest challengeslargest solar rooftop installations in the state.
In addition, we significantly advanced simplification efforts, selling approximately 20,200 acres of non-core landholdings and actively marketing Grace Pacific, our materials and construction subsidiary. In addition to positioning itself for sale, Grace Pacific saw steady improvement in its construction backlog and overall performance.
We strengthened our balance sheet, positioning the Company to invest in more CRE assets and weather a potential recession, and at the same time repurchased over 275,000 shares of stock. We successfully implemented a new enterprise resource program.
In addition to strong performance in 2022, the Company continued to focus on corporate responsibility, key ESG matters and good governance in executive pay programs. We continued improvements in our Company’s historyhuman resources practices and adversely impactedbenefits and completed the economy, financial markets and Hawaii’s business environment in 2020.pension termination project.
A&B responded to the pandemic with swift and strategic actions that focused on our employees, our tenants, our communities and our shareholders. Some of these actions included:
Safety and health. A COVID-19 taskforce was formed with the purpose of creating safety protocols and educational resources for our employees and visitors. The key objective of all policies and procedures was the importance of safety and health as it relates to our employees and visitors.
Support for our employees. Very early into the pandemic, we implemented a work from home plan that allowed us to remain operational by employing technologies that had been implemented in recent years including cloud-based services and storage and remote-working tools. We also offered flexible work arrangements, stayed connected with employees through frequent town hall meetings, and held a significant number of employee activities and learning events throughout the year.
Support for our tenants. We worked proactively with our tenants on a case-by-case basis, assisting them as appropriate. We provided financial relief, supported the operational and facilities changes required for them to remain safely operating, assisted impacted tenants with marketing support, and provided guidance in accessing government relief resources.
Support for our communities. Early into the pandemic, we pivoted our strategic areas of community giving to include emerging COVID-related needs, prioritizing food and housing insecurity. By year’s end, we directed $277,000, or 29%, of total 2020 charitable giving to pandemic relief efforts. These donations supported a spectrum of community needs, including meals for impacted families, emergency rental assistance and homelessness prevention programs, and donations to support remote learning for students in disenfranchised communities across Hawaii. We also provided the use of our properties to distribute food to financially-impacted residents and teamed with the Hawaii Farm Bureau to distribute local produce and protein food boxes to our affected tenants and employees.
Our shareholders. We took decisive actions in the best interests of our shareholders, including drawing strategically on our credit facility to ensure adequate capital in light of the uncertainty created by the pandemic, protecting our core commercial real estate business, advancing our simplification strategy and reinstating a fourth quarter dividend at the end of 2020.
Despite the challenges created by COVID-19, the Company did not adjust its financial performance targets or exercise discretion based on COVID-19 impacts and did not provide base salary increases to NEOs. In 2020,2022, our executive compensation program received strong support from shareholders, with approximately 97% of the Say-on-Pay votes cast in favor of the program. We believe this is because our pay program links pay with performance, aligns pay with shareholder interests and follows good governance practices. The vote on executive compensation is just one source of insight regarding shareholder views on our compensation practices. A&B also has an extensive shareholder outreach program that incorporates discussion of various governance topics, including compensation. In 2020,2022, we met or offered to meet (virtually, due to the pandemic) on environmental, social and governance-focused matters, executive compensation and company operations with shareholders owning approximately 76%74% of our stock. The
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EXECUTIVE COMPENSATION | |
feedback we received regarding our compensation practices was very positive. The Compensation Committee welcomes shareholder perspectives on our executive pay program and is informed regardingutilizes our annual outreach process to collect feedback gathered in discussions withdirectly from our shareholders.
Approach to Compensation Governance. The Compensation Committee consistently evaluates the Company’s executive compensation practices and modifies or adopts programs or practices to provide an appropriate balance of risk and reward. A&B firmly believes in pay for performance and alignment with shareholder interests. Thus, a majority of NEO compensation is tied to performance to ensure alignment with shareholders. 78%77% of CEO and 66%64% of other NEO target total direct compensation (“TDC”) (excluding the one-time simplification incentive) is performance-based pay aligned with shareholder interests. A&B adheres to good governance practices, as listed below, to ensure that it adopts best practices to the extent that they are best aligned to the business goals and strategy of the Company as well as shareholder interests.
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Promote Good Pay Practices •
Direct components of pay are generally targeted at the 50th percentile of market pay data
•
TDC consisting heavily of performance-based compensation
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Multiple relevant performance metrics to determine incentive payments
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Multi-year performance periods on performance-based equity awards
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Multi-year vesting periods on equity awards
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Robust stock ownership guidelines for senior executives
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Review of realizable pay of NEOs
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Reasonable internal pay ratios
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Reasonable severance or change-in control provisions
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Double trigger change-in-control severance that requires both a change-in-control and termination of employment without cause before any payments are made
•
“Clawback”Compensation recoupment (“clawback”) policies established for executives
•
NEO participationNEOs generally participate in the same health and welfare benefit plans as other salaried employees
•
Conduct shareholderShareholder outreach to solicit input and gain investor perspectives on our compensation programs
•
Anti-hedging policies established
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No repricing or replacing of underwater stock options without prior shareholder approval
•
Pay risk assessments
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Performance in 2020
Financial results in 2020 were negatively impacted by the COVID-19 pandemic, with net operating income down 9.5% compared to 2019. However, our second half results demonstrated positive momentum on several strategic fronts, including continued non-core asset monetization, improved Grace Pacific performance and the moderate recovery of our CRE collections. Our portfolio showed resilience, reflecting our balance of needs-based retail, industrial and ground leases. We also made further progress in executing on our broader strategic agenda and simplification efforts, including continuing the monetization of our development-for-sale pipeline and our other landholdings. Efforts to improve Materials and Construction operating performance also continued, with some indications of progress in 2020. Organizational streamlining, professional and corporate culture development, process improvements, strategic planning efforts, ESG initiatives and meaningful cost reductions also were implemented throughout the Company in 2020.
While not reflected in financial metrics, it is important to state that the management team was instrumental in effectively leading the workforce, preserving financial liquidity, advancing strategic priorities and enhancing organizational culture during an unprecedented period.
Compensation Overview
The Company’s executive compensation programs are administered by its Compensation Committee. The Compensation Committee has retained WTW, an independent compensation consultant, to provide advice and analysis on the design, structure and level of executive compensation for A&B.
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EXECUTIVE COMPENSATION | |
Compensation Philosophy and Objectives.Objectives. The Company seeks to align its objectives with shareholder interests through a compensation program that attracts, motivates and retains qualified and effective executives, and rewards performance and results. To achieve this, the Company uses the following pay elements, which are described more fully under the “Pay Elements”Pay Elements section of the CD&A:
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Element of Pay | Composition | Metrics | | Composition | | | | Metrics | | | | Rationale | |
| Base Salary | Cash | | | Cash | | | | — | | | | •
Provides a fixed rate of pay based upon an executive’s responsibilities
| |
| Annual Cash
Incentives | | | | Cash | | | | 75%PIIP metrics for all NEOs* (except Mr. Schreck):
Financial•60% A&B Performance Grid Metrics
•10% Grace Pacific Performance Grid Metrics •30% Individual Goals 25%
Non-Financial
PIIP metrics for Mr. Schreck: •10% A&B Performance Grid Metrics •60% Grace Pacific Performance Grid Metrics •30% Individual Goals
(Value Creation Goals)
AIP metrics for Mr. Chun**: •70% A&B Performance Grid Metrics •30% Individual Goals
| | | | •
Rewards the achievement of annual Company, business unit and individual performance
•
Reinforces pay-for-performance principles
•
Rewards both immediately measurable accomplishments and actions that create longer-term value
| |
One-time Simplification Incentive | Cash | For all NEOs (except Mr. Schreck and Mr. Chun): 75%-100% of Participant’s Annual Cash Incentives Target
For Messrs. Schreck and Chun: Awards based on a percentage of transaction value and expected level of involvement in each transaction
| •Rewards the execution of the Company’s simplification strategy with respect to monetization of specific asset groups over a one-to-two-year period |
Long-Term Incentives | | | Equity | For all NEOs* (except Mr. Chun): •50% Performance
Share UnitsPSUs 50% Restricted Stock
Units
| | | | ◦Relative 3-year TSR
(FTSE (FTSE Nareit All-
EquityAll-Equity Index & Selected Peer Group) •50% RSUs ◦3-year vesting period
For Mr. Chun: •30% PSUs ◦Relative 3-year TSR (FTSE Nareit All-Equity Index & Selected Peer Group) •70% RSUs ◦3-year vesting period
| | | | •
Aligns the executives’ long-term interests with those of A&B’s shareholders, motivates long-term performance
•
Aids in attracting and retaining employees
•
Reinforces pay-for-performance principles
| |
| Health and Welfare Benefits | | | | | | | | — | | | | •
Aids in attracting and retaining employees while supporting their wellbeing
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| Retirement Benefits | | | | | | | | — | | | | •
Assists employees with retirement income savings and attracts and retains employees
| |
| Severance Benefits | | | | | | | | — | | | | •
Retains talent during transitions due to a Change in Control or other covered events
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* PIIP metrics applicable to Mr. Chun for one month after his promotion to Chief Financial Officer effective December 1, 2022.
** AIP metrics applicable to Mr. Chun for eleven months while serving as Senior Vice President and Chief Accounting Officer through November 30, 2022.
Pay for Performance. The Company’s overall performance in 20202022 was reflected in elements of compensation earned by NEOs for 2020.2022. For the pay elements listed above, A&B targets pay at around the 50th percentile.
Pay Mix. The Company’s combination of pay elements is designed to place greater emphasis on performance-based compensation, while at the same time focusing on long-term talent retention and ensuring an appropriate balance between pay and risk. The Committee believes this is consistent with one of its key compensation objectives, which is to align management and shareholder interests. For 2020,2022, the Target Total Direct Compensation (“TDC”)TDC mix was generally within the same range as competitive practices based on survey data for each element of pay, as shown by the following table.
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EXECUTIVE COMPENSATION | |
Percentage of Target Total Direct Compensation
Compensation*
Provided by Each Core Pay Element for 20202022
* Does not include one-time simplification incentive. Brett Brown served as Chief Financial Officer ("CFO") through November 30, 2022; Clayton Chun was appointed CFO effective December 1, 2022. Mr. Brown’s percentage was calculated using his annualized cash compensation and 2022 equity award. Mr. Chun's percentage was calculated using his annualized cash compensation in his new role as CFO and 2022 equity award he received earlier in the year as Chief Accounting Officer.
Assessment of Total Compensation. In evaluating and making pay decisions, the Compensation Committee utilizes the following tools, resources and information:
| | | | | |
•
Company and individual performance
•
Say-on-Pay vote results
•
Competitive market data
•
Economic environment
•
Job responsibilities and experience
•
Positioning within the executive’s salary range
•
Positioning in relation to the pay philosophy •Investor feedback
| | | •
Investor feedback
•
Projected market salary increases
•
Value of the total pay package
•
Alignment to pay-for-performance principles
•
Reasonableness and balance of pay risk
•
Internal pay equity
•
NEO’s current and expected future contributions to Company performance and shareholder value
•
Size of recent awards
| | |
Internal Pay Equity. The Compensation CommitteeA&B considers internal pay equity as a factor in establishing compensation for executives. To this end, after reviewing the competitivenessOne of the CEO’s and other NEO’s annual compensation, the Committee also considers the ratio ofmetrics considered is the CEO’s annual compensation relative to the average annual compensation for the other NEOs, as compared with such a ratio based on 50th percentile benchmark data. For 2020,2022, the Company’s CEO-to-NEOsCEO-to-
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other-NEOs pay ratio was lower than the 50th percentile ratio of companies in our executive talent market. This finding indicates that our CEO’s annual compensation is reasonable in relation to these benchmarks.
Pay Elements
The Company provides the following pay elements to its executive officers in varying combinations to accomplish its compensation objectives.
Salary:Salary: Salary is intended to provide a competitive fixed rate of pay based upon an executive’s responsibilities. The Company believes that salary is less impactful than performance-based compensation in achieving the overall objectives of the Company’s executive compensation program. Accordingly, at target, less than half (between 22%salary comprises between 23% to 45%)49% of a NEO’s target total direct compensation is paid as salary.(not including one-time simplification incentive).
Generally, the Board of Directors determines the CEO’s annual salary change on the basis of the factors listed previously in the Assessment of Total Compensation section. The Board has a formal performance review process for the CEO that includes categories such as, but not limited to: company goals, financial results, strategic leadership corporate culture,and business management, and talent management. Each Board member has an opportunity to provide specific input on the CEO’s performance across key categories. The results of this process are carefully considered by the Board and the Compensation Committee in determining the CEO’s annual salary and incentive award.
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EXECUTIVE COMPENSATION | |
The CEO recommends annual salary changes for the other NEOs. Salary adjustments for NEOs are generally considered by the Compensation Committee in February of each year for implementation on April 1. While the Committee approved certain NEO
| | | | | | | | | | | |
NEO | Base Salary as of 12/31/21 | % Change | Base Salary as of 12/31/22 |
Mr. Benjamin | $710,700 | 4.0 | % | $739,000 |
Mr. Chun* | $275,600 | 45.1 | % | $400,000 |
Mr. Parker | $440,000 | 2.3 | % | $450,000 |
Ms. Ching | $320,000 | 3.0 | % | $329,600 |
Mr. Schreck | $319,300 | 3.4 | % | $330,000 |
Mr. Brown** | $420,000 | N/A | N/A |
* Mr. Chun was appointed Chief Financial Officer, effective December 1, 2022.
** Mr. Brown served as Chief Financial Officer through November 30, 2022; his base salary adjustments in February 2020, the management team later recommended no salary increases in lightas of the impacts of the COVID-19 pandemic. The Committee accepted this recommendation.that date was $432,600.
Salary Information for 2019 – 2020
| NEO | | | Base Salary as of 12/31/19 | | | % Change | | | Base Salary as of 12/31/20 | |
| Mr. Benjamin | | | | $ | 690,000 | | | | 0% | | | | $ | 690,000 | | |
| Mr. Brown | | | | $ | 400,000 | | | | 0% | | | | $ | 400,000 | | |
| Mr. Parker | | | | $ | 397,838 | | | | 0% | | | | $ | 397,838 | | |
| Mr. Chun | | | | $ | 362,805 | | | | 0% | | | | $ | 362,805 | | |
| Ms. Ching | | | | $ | 305,933 | | | | 0% | | | | $ | 305,933 | | |
Annual Cash Incentives: For 2020,2022, annual incentives for NEOs were provided through the Alexander & Baldwin, Inc. Performance Improvement Incentive Plan (“PIIP”) and Alexander & Baldwin, Inc. Annual Incentive Plan (“AIP”) to motivate and reward executives for achievement of pre-established financialcorporate performance metrics and value creationindividual goals, as applicable. The Company believes that the annual incentive structure drives the following objectives:
•
•Aligning with key goals/objectives and shareholder interests
•Rewarding for achievement of company performance
•
Emphasizing pay-for-performance
•Fostering a team environment while allowing for flexibility in individual recognition
•
MotivatingPIIP and rewarding value creation over both the short and long term
AIP Performance Goal Categories.Categories. Each plan year, a pool is fundedawards for all plan participants (except for the CEO),are determined based on the attainment level of goals for that year, as determined by the Compensation Committee. FinancialPerformance grid metrics and individual goals were established in February 2020.2022. Awards can range from 0% to 200% of target for PIIP and from 0% to 150% for AIP.
•
Financial Goals•A&B Performance Grid Metrics (weighted 75%)60% for the CEO and the other NEOs, with the exception of 70% for Mr. Chun, while serving as Senior Vice President and Chief Accounting Officer through November 30, 2022, and 10% for Mr. Schreck) – RewardsDesigned to reward the accomplishmentsachievement of financial prioritiesmetrics related to A&B and to ensure that executives are held accountable for the financial health and discipline of the Company. The targets are based on the Company’s Board-approved operating plan and adjusted in certain instances to exclude the effect of certain items. When establishing the operating plan, management and the Board of Directors consider the historical performance of the Company, external elements such as economic
ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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conditions and competitive factors, Company capabilities, performance objectives, and the Company’s strategic plan. Although created pre-COVID, financial goals remained unchanged despite the financial challenges brought on by the pandemic. The maximum and threshold performance ranges were determined on the basis of the level of difficulty in achieving the objective and are intended to ensure an enduring standard of performance. Pool funding can range from
•Grace Pacific Performance Grid Metrics (weighted 10% for the CEO and the other NEOs, with the exception of 60% for Mr. Schreck and 0% for Mr. Chun, while serving as Senior Vice President and Chief Accounting Officer through November 30, 2022) – Designed to 200%reward the achievement of target.financial and safety metrics related to Grace Pacific. The targets are based on the Company’s Board-approved operating plan and adjusted in certain instances to exclude the effect of certain items.
•
Value CreationIndividual Goals (weighted 25%)30% for the CEO and the other NEOs) – Rewards the contributions and accomplishments of strategicindividual goals and priorities and milestones that are not immediately reflected in financial results but create value for shareholders. Examples include identifying and positioning non-core projects for sale, strengthening our Company balance sheet, advancing technology projects and systems initiatives, and making forward progress on organizational simplification. The value creation goals were modified slightly at mid-year to properly reflect the changing priorities brought on by the pandemic. With input from the CEO, the Compensation Committee reviews and approves the Value Creation ratings. Pool funding can range between 0% to 200% of target.
•
Individual Modifier — Recognizes individual contributions to Company performance and the executive’s success in fulfilling their duties and responsibilities. Each NEO’s award can be modified by multiplying the award that would otherwise be paid by between 0% to 150% based on individual performance, so long as the aggregate incentive pool established for
PIIP executives is not exceeded.
and AIPCompany Performance and Payout Determination (Except for CEO). Determination of award pool fundinglevels in 20202022 was based on the Company’s operating performance as compared to Financial GoalsPerformance Grid Metrics set at the beginning of the year and Value CreationIndividual Goal ratings, recommended by the CEO, based on input from senior management and on business actions and outcomes in support of the Company’s strategic direction. Recommendations were reviewed and approved by the Compensation Committee. The level of achievement for each goalPerformance Grid Metric and Individual Goal is rated on a scale from 0 to 3, as follows: 0 for below threshold performance, 1.0 for threshold performance, 2.0 for target performance and to 3.0 for maximum performance.
The incentive pool is funded by aggregating the target incentives for each PIIP participant, excluding the CEO, and multiplying that sum by the performance ratings for the applicable measures at below threshold, threshold, target or maximum levels, with
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EXECUTIVE COMPENSATION | |
proration between these levels, as determined by the Compensation Committee. The CEO’s award is determined separately by the Compensation Committee and does not positively or negatively affect the aggregate incentive pool.
| Performance Metrics ($ in millions) | | | Threshold | | | Target | | | Maximum | | | Actual | | | 0-3 Rating | |
| Same-Store Cash NOI Growth(1) | | | | | 1.3% | | | | | | 2.7% | | | | | | 4.3% | | | | | | -12.7% | | | | | | 0.0 | | |
| Non-Same-Store Cash NOI(1) | | | | $ | 17.6 | | | | | $ | 18.2 | | | | | $ | 18.9 | | | | | $ | 13.5 | | | | | | 0.0 | | |
| Adjusted Free Cash Flow(1) | | | | $ | 77.0 | | | | | $ | 85.6 | | | | | $ | 102.7 | | | | | $ | 76.2 | | | | | | 0.0 | | |
| Adjusted Non-Grace G&A Expenses(1) | | | | $ | 36.2 | | | | | $ | 34.5 | | | | | $ | 31.7 | | | | | $ | 30.0 | | | | | | 3.0 | | |
| Consolidated Adjusted Pre-tax Income(1) | | | | $ | 41.0 | | | | | $ | 45.6 | | | | | $ | 54.7 | | | | | $ | 19.2 | | | | | | 0.0 | | |
| Value Creation | | | | | 1.0 | | | | | | 2.0 | | | | | | 3.0 | | | | | | 3.0 | | | | | | 3.0 | | |
The incentive compensation for Mr. Brown, Mr. Parker, Mr. Chun and Ms. Ching was based on a weighted mix of (a) the level of achievement of the financial and operating goals set forthfactors included in the table above and (b) the scores awarded for Value Creation accomplishments and the Company on a consolidated basis.
•
For 2020, funding of the PIIP awards for Mr. Brown, Mr. Parker, Ms. Ching and Mr. Chun was derived based on the Value Creation rating (collectively weighted 25%) and from the ratings of all other performance metrics listed in the table above (collectively weighted 75%). These factorsPerformance Grid Metrics were selected because the Company believes they best reflect the results of business execution and profitability levelsachievement of financial metrics of the respective operations and Value Creation reflectsalign with performance measures used more traditionally by our REIT peers. In addition, individual goals reward the individual contributions and accomplishments of the Company that create long-term value for shareholders that are not necessarily reflected in annual financial results.
•
Despite the financial challenges posted Individual award levels are determined by multiplying each NEO’s incentive target by the COVID-19 pandemic, no favorable discretion was applied in connection with the determinationweighting of PIIP awards.
•
Based on 2020each element (A&B grid, Grace grid and individual goals) and by performance shown above, the actual pool fundingratings for the financial goals was 20% ofapplicable measures at below threshold (0%), threshold (50%), target (100%) or maximum (150% for Mr. Parker, Mr. Brown, Mr. ChunAIP and Ms. Ching, while pool funding200% for the Value Creation goals was 50% of target, for total PIIP pool funding of 70% of target. The CEO recommended, and the Committee approved the use of individual modifiers for PIIP participants that is based on an assessment of goal achievement within their respective areas of responsibility. No modifier was applied to Mr. Parker, Mr. Chun and Ms. Ching, and a 90% individual modifier was applied to Mr. Brown.
Payout Determination for the CEO. Each plan year, the CEO’s annual incentive isPIIP) levels, with proration between these levels, as determined by the Compensation Committee separately from other plan participants.Committee. The award is calculated using a 75% weightingCEO recommends individual goal ratings for the samenon-CEO NEOs while the CEO’s individual goal rating is determined separately by the Compensation Committee.
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A&B Performance Metrics ($ in millions) | Threshold | Target | Maximum | Actual | 0-3 Rating | Weighting |
CRE Same-Store NOI Growth(1) | -0.5% | 1.0% | 4.0% | 6.0 | % | 3 | 40% |
Core FFO per Diluted Share(1) | $ | 0.94 | | $ | 0.98 | | $ | 1.04 | | $ | 1.13 | | 3 | 30% |
Average Net Debt to Core EBITDA(1) | 6.7x | 6.3x | 5.7x | 5.3x | 3 | 30% |
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Grace Pacific Performance Metrics ($ in millions) | Threshold | Target | Maximum | Actual | 0-3 Rating | Weighting |
Grace Pacific Adjusted EBITDA(1) | $ | 6.9 | | $ | 13.8 | | $ | 19.0 | | $ | 7.1 | | 1 | 60% |
Consolidated Backlog (EOY)(2) | $ | 150.0 | | $ | 180.0 | | $ | 200.0 | | $ | 209.0 | | 3 | 20% |
Net Cash Flow to/(from) A&B(3) | $ | 3.4 | | $ | 6.8 | | $ | 10.3 | | $ | -20.4 | | 0 | 10% |
Safety (RIR) (4) | 3.5 | 3.1 | 2.7 | 3.2 | 2 | 10% |
(1)Refer to the Use of Non-GAAP Financial Goals applicableMeasures section in this Proxy Statement for a discussion of the use of non-GAAP financial measures and the required reconciliations of GAAP to all other NEOs plusnon-GAAP measures.
(2)Backlog represents the additional Financial Goal below,total amount of revenue that Grace Pacific, G P Roadway Solutions, Inc. and any construction joint venture expect to realize on contracts awarded. Backlog primarily consists of asphalt paving and, to a 25% weightinglesser extent, Grace Pacific’s consolidated revenue from its construction-and traffic control-related products and services. Backlog includes estimated revenue from the remaining portion of contracts not yet completed, as well as revenue from approved change orders. The length of time that projects remain in backlog can span from a few days for a small volume of work to 36 months, or longer, for large paving contracts and contracts performed in phases. This amount includes opportunity backlog consisting of contracts in which Grace Pacific has been confirmed to be the lowest bidder at the time of this disclosure. Circumstances outside the Company’s control such as procurement or technical protests, and/or changes in the availability of project funding, among others, may arise that prevent the finalization of such contracts.
(3)Net Cash Flow to/from A&B represents the net amount of cash advances and/or repayments between Grace Pacific and A&B for the Committee’s subjective assessmentperiod January 1, 2022 through December 31, 2022.
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(4)Recordable Incident Rate, or RIR, represents the number of progressemployees per 100 full-time employees that have been involved in achieving other Non-Financial Goals. The Value Creation Goals do not apply toan OSHA-recordable injury or illness.
Individual Performance. Individual goals are developed by the NEOs and approved by the CEO as(with the CEO is involved in the determinationexception of the results. Instead,CEO’s individual goals, which are reviewed by the Compensation Committee and the Board of Directors evaluate the CEO’s non-financial performance based on a number of criteria, including leadership and execution of strategy. Based on that evaluation, the Compensation Committee rates the CEO’s non-financial performanceCommittee). Performance against individual goals is rated on a scale from 0 to 3, as follows: 0 for below threshold performance, 1.0 for threshold performance, 2.0 for target performance and to 3.0 for maximum performance.
| | | | | |
NEO | Individual Goals |
Mr. Benjamin | •Support commercial real estate growth efforts including deal sourcing and evaluating and improving external market positioning. •Lead corporate streamlining efforts while ensuring that simplification and monetization goals are achieved. •Lead liability mitigation efforts by documenting and resolving known legacy obligations. |
Mr. Chun | •Provide direct oversight of the implementation of the Enterprise Resource Planning (ERP) system in a timely and cost-effective manner. •Actively oversee the successful completion of additional ERP modules in a timely and cost-effective manner. •Effectively manage department expenses and optimize cost efficiencies. •Develop succession and future state plans for the Finance and Accounting departments. |
Mr. Parker | •Refine asset management model and process. •Deploy growth capital for commercial real estate acquisitions and development. •Oversee overall land management and monetization efforts on Neighbor Islands. •Implement a professional development plan. |
Ms. Ching | •Direct the overall management of water matters relating to the Company's land stewardship. •Provide government relations leadership and support for the achievement of the Company's simplification and REIT-related goals. •Support Grace Pacific’s Makakilo quarry extension permitting effort. •Continue implementation of organizational design changes for External Affairs department to align with A&B's simplified business model. |
Mr. Schreck | •Position Grace Pacific for sale. •Reduce non-core liabilities and advance ongoing environmental remediation efforts. • Manage KT&S and support CEO in resolution/transfer of A&B non-core obligations. |
Mr. Brown | •Support growth with creative structuring while maintaining target credit metrics. •Manage non-Grace G&A expenses. •Increase new investor targeting and sell-side research coverage. |
Mr. Benjamin’s and Mr. Parker’s individual performance ratings for 2022 were determined to be at target while ratings for 2022 for Mr. Chun, Ms. Ching and Mr. Schreck were determined to be between target and maximum. Mr. Brown’s PIIP award was calculated at target and prorated through his last day of service, consistent with the Company’s Executive Severance Plan described on page 39. PIIP Payout Determination for the CEO. Each plan year, the CEO’s annual incentive is determined by the Compensation Committee separately from other plan participants. The award is calculated using a 60% weighting for the same A&B Performance Grid Metrics and 10% weighting for the same Grace Pacific Performance Grid Metrics applicable to all other NEOs plus a 30% weighting for Individual Goals. The Compensation Committee and the Board of Directors evaluate the CEO’s individual goal performance based on criteria established at the beginning of 2022, including leadership and execution of organizational initiatives and strategies. Based on that evaluation, the Compensation Committee rates the CEO’s individual performance on a scale from 0 to 3, as follows: 0 for below
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threshold performance, 1.0 for threshold performance, 2.0 for target performance and to 3.0 for maximum performance. The Committee rated the CEO’s non-financialindividual performance at 3.0.2.0. The Committee considered the leadership provided by the CEO during an unprecedented period,including advancement of strategic corporate priorities, continued progress in monetization of non-core assets, protecting the safety and health of employees and favorable advancement of simplification and organizational developmenteffectiveness efforts.
| Additional CEO Performance Metric ($ in mil.) | | | Threshold | | | Target | | | Maximum | | | Actual | | | 0-3 Rating | |
| Grace Adjusted EBITDA (1) | | | | $ | 7.9 | | | | | $ | 13.3 | | | | | $ | 19.8 | | | | | $ | 2.3 | | | | | | 0.0 | | |
For the CEO’s 20202022 PIIP award, after calculation of the Financial GoalsA&B and the Non-FinancialGrace Pacific Performance Grid Metrics and Individual Goals, the Compensation Committee awarded the CEO a total incentive award of $455,400,$1,284,155, which was 60%158% of target.
(1)
Refer to pages 39 to 41 for a discussion of the use of non-GAAP financial measures and the required reconciliations of GAAP to non-GAAP measures including, but not limited to, Net Operating Income (“NOI”) and same-store (“Same-Store”) metrics.
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Actual awards earned in total by the NEOs were based on performance against the goals as described above and were as follows:
PIIP and AIP Annual Incentive Award Information
| | | | Target PIIP Award | | | Actual as a % of | | | Actual PIIP Award | |
| NEO | | | % of Base Salary | | | $ | | | Target | | | % of Base Salary | | | $ | |
| Mr. Benjamin | | | | | 110% | | | | | $ | 759,000 | | | | | | 60% | | | | | | 66% | | | | | $ | 455,400 | | |
| Mr. Brown | | | | | 80% | | | | | $ | 320,000 | | | | | | 63% | | | | | | 50% | | | | | $ | 201,600 | | |
| Mr. Parker | | | | | 80% | | | | | $ | 318,270 | | | | | | 70% | | | | | | 56% | | | | | $ | 222,789 | | |
| Mr. Chun | | | | | 55% | | | | | $ | 199,543 | | | | | | 70% | | | | | | 39% | | | | | $ | 139,680 | | |
| Ms. Ching | | | | | 55% | | | | | $ | 168,253 | | | | | | 70% | | | | | | 38% | | | | | $ | 117,784 | | |
Equity Compensation: | | | | | | | | | | | | | | | | | |
| Target PIIP and AIP Award | Actual as a % of | Actual PIIP and AIP Award |
NEO | % of Base Salary | $ | Target | % of Base Salary | $ |
Mr. Benjamin | 110 | % | $812,900 | 158% | 174% | $1,284,155 |
Mr. Chun* - AIP (11 months) | 55 | % | $144,506 | 139% | 76% | $200,502 |
- PIIP (one month) | 70 | % | $23,333 | 165% | 116% | $38,610 |
Mr. Parker | 100 | % | $450,000 | 158% | 158% | $710,872 |
Ms. Ching | 55 | % | $181,280 | 180% | 99% | $325,799 |
Mr. Schreck | 55 | % | $181,500 | 109% | 60% | $197,980 |
Mr. Brown** (11 months) | 80 | % | $317,240 | 100% | 80% | $317,240 |
* Mr. Chun’s target award is based on his salary and AIP target percentage as of November 30, 2022 for eleven months and his salary and PIIP target percentage as of December 31, 2022 for one month that includes an increase for his promotion to Chief Financial Officer effective December 1, 2022.
** Mr. Brown served as Chief Financial Officer until he was terminated without cause, effective November 30, 2022. He received a pro-rata PIIP award under the terms of the A&B Executive Severance Plan described on page 39. His target award reflects a prorated target and his award as a percentage of base salary was based on his prorated salary. One-Time Simplification Incentive
In its effort to further simplify A&B’s ongoing operations, the Company implemented, in 2021, a one-time simplification incentive to motivate and reward individuals for the execution of its simplification strategy including monetization of certain agricultural landholdings and renewable energy assets, the materials and construction business and the Company’s interest in the Kukui’ula joint venture. Simplification of the Company’s business model is critical strategically as the Company transitions from a more diversified organization and focuses on becoming a pure commercial real estate company.
The one-time simplification incentive included the Executive Simplification Incentive Program (ESIP) and Management Simplification Incentive Program (MSIP), both of which expired at the end of 2022. Both programs were designed to highlight the crucial nature of simplification given the expected strategic benefits of monetization and existing market conditions.
•ESIP participation was limited to PIIP participants, including NEOs as of the ESIP plan effective date of February 22, 2021, who were involved closely in the process of achieving simplification goals within a two-year period. The two-year timeframe reflected the importance of the simplification process to the Company’s strategy and was a key performance factor. Each participant had an aggregate bonus opportunity under the ESIP that ranged from 75% to 100% of their then-current annual PIIP target. The potential payout amounts were set at the below percentages of PIIP target to reflect the workload associated with completing the transactions successfully, the scale of the transactions and the anticipated benefit to the Company’s strategy resulting from the transactions.
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The table below describes the award level, as a percentage of the NEO’s 2021 PIIP target, the maximum 2022 award payout and the actual 2022 award amount:
•MSIP participation was limited to non-PIIP participants, including non-NEOs as of the MSIP plan effective date of February 22, 2021, who were involved in progress made in executing the Company’s simplification strategy within a two-year period. The two-year timeframe reflected the importance of the simplification process to the Company’s strategy and was a key performance factor. Awards were calculated as a percentage of a transaction value in connection with the monetization of a designated asset group. Award levels for each participant were also based on the participant’s expected level of involvement in transactions related to each respective asset group, as determined by the CEO. The 2022 award payout was $20,550 (out of a potential award of $46,050) for Mr. Chun and $25,688 (out of a potential award of $169,125) for Mr. Schreck.
The Compensation Committee had discretion to determine ESIP payouts and the CEO had discretion to determine MSIP payouts.
| | | | | | | | | | | | | | | | | | | | |
| Award Potential as % of PIIP Target | 2022 Award Potential in Dollars | 2022 Award |
Individual | Kukui’ula Sale* | M&C Sale | Ag/Energy Assets | Total |
Chris Benjamin | 30 | % | 40 | % | 30 | % | 100 | % | $ | 426,773 | | $ | 182,903 | |
Lance Parker | 50 | % | 20 | % | 30 | % | 100 | % | $ | 168,750 | | $ | 101,250 | |
Meredith Ching | 25 | % | 25 | % | 25 | % | 75 | % | $ | 67,980 | | $ | 33,990 | |
Brett Brown | 30 | % | 40 | % | 30 | % | 100 | % | $ | 181,692 | | $ | 77,868 | |
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*The Kukui’ula sale was completed in November 2021.
Based on the sale of substantially all of the assets of A&B’s Kauai agricultural landholdings and renewable energy assets on June 30, 2022, the Compensation Committee approved the payouts for the NEOs above. The aggregated total award payments of $442,249 represent approximately 0.6% of the $73.9 million of total proceeds received by the Company from the agricultural lands and renewable energy assets.
Other Incentives
In its effort to further simplify A&B’s ongoing operations, as discussed elsewhere in this Proxy Statement, A&B has sought the monetization of the materials and construction business represented by Grace Pacific. Given Mr. Schreck’s critical role in this process for the disposition of Grace Pacific, the Compensation Committee has approved an arrangement to reward Mr. Schreck for positioning Grace for sale by stabilizing and improving Grace operations and for continuing to manage Grace through a sales process and completion of a potential transaction despite the attendant professional uncertainties posed by any such transaction. The special incentive includes (i) a success fee of $250,000 that would be paid based upon the closing of a transaction, (ii) an additional success fee to reward Mr. Schreck for achieving the highest possible value for the business measured based on the total transaction value, a portion of which may be paid on the 12-month anniversary of closing or Mr. Schreck’s earlier termination without cause by the ultimate buyer or retention by the Company as of the closing, and a portion of which may be paid based on the value of any earnout amounts received by A&B measured through the first 12 months following the closing and (iii) special retention in the amount of $330,000 and an amount equal to a pro-rated share of the award opportunity at target under PIIP if Mr. Schreck is not eligible for severance benefits under the Executive Severance Plan.
Long-Term Incentives ("LTI")
Equity grants are generally approved by the Compensation Committee at its January meeting. Based on current market data provided by WTW, the CEO makes recommendations for each executive officer other than himself to the Compensation Committee, which retains full authority to set the actual grant amount. In determining the type and size of a grant to an executive officer, the Compensation Committee generally considers, among other things, the items mentioned above in the Assessment of Total Compensation section.
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Equity Grant Information
| | | | Target LTI | | | LTI Vehicle Mix | |
| NEO | | | Value | | | PSUs | | | RSUs | |
| Mr. Benjamin | | | | $ | 1,700,000 | | | | | | 50% | | | | | | 50% | | |
| Mr. Brown | | | | $ | 700,000 | | | | | | 50% | | | | | | 50% | | |
| Mr. Parker | | | | $ | 600,000 | | | | | | 50% | | | | | | 50% | | |
| Mr. Chun | | | | $ | 250,000 | | | | | | 50% | | | | | | 50% | | |
| Ms. Ching | | | | $ | 250,000 | | | | | | 50% | | | | | | 50% | | |
| | | | | | | | | | | |
| Target 2022 | LTI Vehicle Mix |
NEO | LTI Value | PSUs | RSUs |
Mr. Benjamin | $ | 1,700,000 | | 50 | % | 50 | % |
Mr. Chun | $ | 200,000 | | 30 | % | 70 | % |
Mr. Parker | $ | 750,000 | | 50 | % | 50 | % |
Ms. Ching | $ | 250,000 | | 50 | % | 50 | % |
Mr. Schreck | $ | 165,000 | | 50 | % | 50 | % |
Mr. Brown | $ | 700,000 | | 50 | % | 50 | % |
•
RSUs are awards that are settled in shares butand vest in thirds over a three-year period based on service. RSUs are intended to focus behaviors on improving long-term stock price performance on an absolute basis (as a complement to the relative-performance nature of PSUs), increase share ownership and strengthen retention of participants through a three-year vesting period. Under the service-vesting requirement, recipients must remain employed until the end of each vesting period to earn any shares that become issuable. Pro-rata vesting will apply to the extent employment ceases with the Company during the restricted period by reason of death, disability or retirement during the vesting period. Grantees receive dividendsdividend equivalents quarterly on the full amount of RSUs granted, regardless of vesting, at the same rate as is payable on the Company’s common stock.
•
PSUs will beare awards that are settled in shares and have both a performance- and service-vesting requirement. The performance requirement is based on A&B’s TSR results relative to the TSR of companies that comprise the FTSE Nareit All-Equity REITs Index and a select group of peer REITs that are a subset of the FTSE Nareit All-Equity REITs Index focused on shopping center and diversified companies,portfolios, with market capitalization between $500 million and $6 billion. PSUs have concurrent three-year performance and vesting horizons. Under the service-vesting requirement, recipients must remain employed until the end of the performance and vesting period to earn any shares that become issuable. Pro-rata vesting will apply to the extent employment ceases with the Company during the performance period by reason of death, disability or retirement, with proration to be applied to the number of shares resulting from the Company’s relative TSR over the performance period (i.e., actual performance). PSUs are intended to motivate recipients to focus on A&B shareholder returns relative to the share performance of other U.S.-based companiesREITs with commercial real estate focus and/or market capitalization similar market capitalization.to the Company's. The service requirement provides that PSUs cliff vest after a three-year period (concurrent with the performance period), as defined by the award. Payment of accrued dividend equivalents on PSUs will be made upon attainment of the applicable performance goals and will be paid solely according to the number of actual shares earned.
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Performance Ranges for 20202022 PSUs
| | | | Performance | | | Earnout* | |
| ThresholdPerformance | Earnout* |
Threshold | 35th Percentile | | | 35% of Target | |
| Target | | | 55th Percentile | | | 100% of Target | |
| Maximum | | | 75th Percentile | | | 200% of Target | |
*
With proration between these levels
20182020 PSUs: With TSR at the 17.960.3 percentile for the FTSE Nareit All-Equity index and at the 15.372.7 percentile for the Selected Peer Group index, 0%158% of the PSUs granted in 20182020 were earned. Amounts forfeited were as follows: Mr. Benjamin – 32,514 PSUs, Mr. Parker – 10,838 PSUs, and Mr. Chun and Ms. Ching – 4,967 PSUs. Mr. Brown was not an
A&B employee in 2018 and did not receive a PSU grant.LEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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Target total direct compensation is presented in the following table:
Target Total Direct Compensation for 20202022*
| NEO | | | Base Salary as of 12/31/20 | | | Target PIIP Award | | | 2020 LTI Grant | | | Target Total Direct Compensation | |
| Mr. Benjamin | | | | $ | 690,000 | | | | | $ | 759,000 | | | | | $ | 1,700,000 | | | | | $ | 3,149,000 | | |
| Mr. Brown | | | | $ | 400,000 | | | | | $ | 320,000 | | | | | $ | 700,000 | | | | | $ | 1,420,000 | | |
| Mr. Parker | | | | $ | 397,838 | | | | | $ | 318,270 | | | | | $ | 600,000 | | | | | $ | 1,316,108 | | |
| Mr. Chun | | | | $ | 362,805 | | | | | $ | 199,543 | | | | | $ | 250,000 | | | | | $ | 812,348 | | |
| Ms. Ching | | | | $ | 305,933 | | | | | $ | 168,253 | | | | | $ | 250,000 | | | | | $ | 724,186 | | |
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NEO | Base Salary as of 12/31/22 | Target PIIP Award | 2022 LTI Grant | Target Total Direct Compensation |
Mr. Benjamin | $ | 739,000 | | $ | 812,900 | | $ | 1,700,000 | | $ | 3,251,900 | |
Mr. Chun** | $ | 400,000 | | $ | 280,000 | | $ | 200,000 | | $ | 880,000 | |
Mr. Parker | $ | 450,000 | | $ | 450,000 | | $ | 750,000 | | $ | 1,650,000 | |
Ms. Ching | $ | 329,600 | | $ | 181,280 | | $ | 250,000 | | $ | 760,880 | |
Mr. Schreck | $ | 330,000 | | $ | 181,500 | | $ | 165,000 | | $ | 676,500 | |
Mr. Brown*** | $ | 432,600 | | $ | 346,080 | | $ | 700,000 | | $ | 1,478,680 | |
* Excluding one-time simplification incentive opportunity.
** Mr. Chun’s target total direct compensation is based on his annualized cash compensation in his new role as CFO and 2022 equity award he received as Chief Accounting Officer.
*** Mr. Brown's total direct compensation is based on his annualized cash compensation and 2022 equity award.
Retirement Plans: The Company provides various retirement plans to assist its employees with retirement income savings and to attract and retain its employees. The Committee periodically reviews the value of benefits from the retirement plans in conjunction with all other forms of pay in making compensation decisions.
A&B Retirement Plan for Salaried Employees (Frozen since 2012):The A&B Retirement Plan for Salaried Employees (the “Qualified Retirement Plan”), which is a tax-qualified defined benefit pension plan, provides pension benefits to the Company’s salaried non-bargaining unit employees. The Pension Benefits table of this Proxy Statement provides further information regarding the Qualified Retirement Plan. In 2007, A&B Predecessor closed participation in its traditional defined pension plan for new non-bargaining unit employees hired after January 1, 2008. Effective January 1, 2012, the Company froze benefit accruals under its traditional defined benefit plans for all non-bargaining unit employees hired before January 1, 2008 and replaced the benefit with a cash balance formula in which participants accrued 5% of their eligible annual compensation. Effective January 1, 2020, the Company froze benefit accruals under the cash balance formula and replaced the benefit with a non-elective company contribution to the A&B Individual Deferred Compensation and Profit SharingProfit-Sharing Plan and the A&B Non-Qualified Defined Contribution Plan, as described below.
In February 2021, a plan to terminate the Qualified Retirement Plan was approved. In 2022, participants had the choice of receiving a single lump sum payment or an annuity from a highly-rated insurance company that will pay and administer future benefit payments. The effective date of the termination was May 31, 2021.
A&B Individual Deferred Compensation and Profit-Sharing Plan: The Company has a tax-qualified defined contribution retirement plan (the “IDC Plan”) available to all salaried non-bargaining unit employees. Beginning in 2020, the IDC Plan provided for a match of up to three percent3% of the eligible compensation deferred by a participant during the fiscal year, subject to IRS maximum compensation limitations and a non-elective Company contribution equal to 3% of eligible compensation.
The Company has a profit-sharing plan which provides for performance-based discretionary contributions to participants based on the degree of achievement of goals similar to 20202022 AIP goals as determined by the Compensation Committee. Employees are immediately eligible for up to five percent5% of annual base compensation, based on achievement of goals. There was a 0.9%5% profit-sharing contribution for 2020.2022.
A&B Excess Benefits Plan:This non-qualified benefit plan (the “Excess Benefits Plan”) for executives is designed to meet the retirement plan objectives described above. Certain executives, including all NEOs,Messrs. Benjamin, Parker and Brown and Ms. Ching, are eligible to participate in the Excess Benefits Plan. It complements the Qualified Retirement Plan and the IDC Plan by providing benefits and contributions in amounts that could not be provided by those plan’s formulas due to the limits imposed by tax law. Effective January 1, 2020, the Company
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froze benefit accruals under this plan and replaced the benefit with a Non-Qualified Defined Contribution Plan. The Pension Benefits table of this Proxy Statement provides further information regarding the A&B Excess Benefits Plan.
A&B Non-Qualified Defined Contribution Plan: Under the A&B Non-Qualified Defined Contribution Plan, eligible participants receive 3% of their annual eligible compensation in excess of the applicable IRS compensation limit, a discretionary gain sharing contribution up to 5% of base salary in excess of the applicable IRS compensation limit,
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based on achievement of goals, and the lesser of 3% of eligible compensation or the applicable IRS deferral limit minus the maximum allowable match, including the match on catch-up contributions, under the 401(k) plan.
Employment and Other Agreements: Except as set forth below, the The Company does not provide employment or similar agreements for any of the NEOs. The Company believes in a policy of “at will” employment.
Effective May 8, 2019, we entered into a letter agreement with Brett A. Brown, Executive Vice President and CFO, under which Mr. Brown received relocation expenses up to $50,000 (plus tax gross up) and a $25,000 signing bonus, subject to reimbursement if he voluntarily resigns from the Company within two years of his start date.
Severance Plan and Change in Control Agreements: The Company provides severance benefits pursuant to the Severance Plan and Change in Control agreements to certain executives,reinforce and encourage the continued attention and dedication of members of the Company’s top management, including the NEOs, to retain talent during transitions due totheir assigned duties without possible distraction and disruption arising from a Changechange in Controlcontrol or other covered event andevent. Severance arrangements also are provided to providemaintain a competitive pay package. The Compensation Committee designed the change in control agreement to provide a competitively structured program, and yet be conservative overall in the amounts of potential award payouts. The Compensation Committee’s decisions regarding other compensation elements are affected by the potential payouts under these arrangements, as the Committee considers how the terms of these arrangements and the other pay components interrelate. These agreementsarrangements are described in further detail in the “Other Potential Post-Employment Payments” section of this Proxy Statement.
Retiree Health and Medical Plan:Plan, Life and Disability Insurance: The Company provides NEOs with the same retiree medical and life insurance benefits as are provided in general to all salaried non-bargaining unit employees who joined A&B Predecessor prior to January 1, 2008. The Company’s contribution towards the monthly medical premium is based on the employee’s age and years of service and is capped at $136 per month. The benefits from these plans are reflected in the “Other Potential Post-Employment Payments” section of this Proxy Statement. Effective January 1, 2022, NEOs receive the same life insurance coverage maximum of two times base salary as is provided in general to all salaried non-bargaining unit employees, with maximum amounts of $1,000,000 for NEOs and $400,000 for other employees. Effective January 1, 2022, NEOs also receive disability insurance through a group disability program available to all salaried non-bargaining unit employees, plus up to an additional $17,500 a month under an individual disability insurance program based on total base salary and annual incentive target.
The Role of Compensation Survey Data
The Company uses published compensation survey data as a reference but does not benchmark against specific companies within such surveys. The Company operates in a number ofseveral different industries and there are no companies that are considered directly comparable in business mix, size and geographic relevance. Accordingly, the Company does not use data that are specific to any individual segment of the Company’s business but instead, based on the recommendation of WTW, uses data from three national and highly recognized published surveys representing a broad group of general industry and real estate companies similar in size to the Company to assess the Company’s pay practices. WTW uses data subsets in each survey that represent companies of similar size with revenues between $250 million and $1 billion. The survey sources provide only one of the tools that the Committee uses to assess appropriate pay levels. Internal equity, Company performance, business unit performance, compensation philosophy, performance consistency, historical pay movement, pay mix, pay risk, economic environment and individual performance are also reviewed.
The surveys used by WTW in its assessment of total direct compensation and CEO pay ratio as compared to other NEOs include:
•
WTW 20202021 CDB General Industry Executive Database
•
WTW 20202021 Long-term Incentives, Policies and Practices Survey
•
National Association of Real Estate Investment Trusts (Nareit) 20202021 Compensation Survey
The Role of the Compensation Consultant
After conducting a search, theThe Compensation Committee selected and retained WTW, an independent executive compensation consulting firm, to assist the Committee in:
•
Evaluating salary and incentive compensation levels
•
Reviewing and suggesting executive pay plan design modifications
•
Understanding current trends and legislative reform initiatives in the area of executive compensation
•
Assessing appropriate outside Board of Director pay levels and structuring
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WTW reports directly to and takes instructions from the Compensation Committee. The Committee approves all WTW engagements, including the nature, scope and fees of assignments. The Compensation Committee has reviewed WTW’s work, policies and procedures and determined that no conflicts of interest exist. In accordance with the New
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York Stock Exchange (“NYSE”) requirements, the Compensation Committee annually assesses the independence of its compensation consultant, outside legal counsel, and other advisers who will provide services with respect to executive compensation matters.
The Role of Management
Management assists the Compensation Committee in its role of determining executive compensation in a number of ways, including:ways:
•
ProvidingProvides management’s perspective on compensation plan structure and implementationimplementation.
•
IdentifyingIdentifies appropriate performance measures and suggestingsuggests company, unit and individual performance goals that are consistent with the Board-approved operating plansplans.
•The CEO conducts an annual performance evaluation of NEOs, excluding himself, against pre-approved Company and individual goals.
•
Providing the data used to measureThe CEO combines performance against established goals,evaluations with the CEO providing perspective on individual executive performance and compensation amounts
•
Providing recommendations, based on informationmarket data provided by WTW regarding pay levels for officers on the basis of plan formulas, salary structures and the CEO’s assessment of individual officer performance
Tax and Accounting Considerations
In evaluating the Company’s executivemakes compensation structure,recommendations to the Compensation Committee considers tax and accounting treatment, balancing the effects on the individual and the Company. The Compensation Committee believes that the potential deductibility of the compensation payable under those programs should be only one of a number of relevant factors taken into consideration, and not the sole or primary factor, in establishing the cash and equity compensation programs for the executive officers. Section 162(m) of the Code generally limits to $1.0 million the amount of remuneration that the Company may deduct in any calendar year for certain executive officers. Prior to 2018, the Company structured annual incentive awards and long-term incentive awards with the intention of meeting the exception to this limitation for “performance-based” compensation, as defined in Section 162(m) of the Code, so that these amounts could be fully deductible for income tax purposes. The performance-based exception was eliminated effective as of January 1, 2018, and compensation paid to the NEOs in excess of $1.0 million will generally not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. The Compensation Committee believes that cash and equity incentive compensation must be maintained at the requisite level to attract and retain the executive officers essential to the Company’s financial success, even if all or part of that compensation may not be deductible by reason of the Section 162(m) limitation. Accordingly, the Compensation Committee will continue to maintain flexibility and the ability to pay competitive compensation by not requiring all compensation to be deductible.Committee.
Stock Ownership Guidelines
To enhance shareholder alignment and ensure commitment to value-enhancing, longer-term decision-making, the Company has established stock ownership guidelines. Executives are required to own a value of stock equal to the salary multiple below within a five year-periodfive-year period from commencement of employment or within a five-year period after a change in salary based on promotion:
| Position | | | Salary Multiple | |
Position | CEO | | | | | 5X | | Salary Multiple |
CEO | Other NEOs | | | | | 3X | | 5X |
Other NEOs | 3X |
All NEOs with the exception of Mr. Parker, who became an NEO in 2015, have met or are on track to meet the ownership guidelines. Mr. Parker has been advised against selling A&B stock until such time that he meets or exceeds his stock ownership guideline; he has not sold any A&B stock since becoming an NEO (other thanguidelines within the use of shares to pay taxes on the vesting of restricted stock units).required timeframe.
Equity Granting Policy
Equity awards are expected to be granted for current employees at the January Compensation Committee meeting each year. Equity grants for new hires or promoted employees are approved at regularly scheduled Compensation Committee meetings. The timing of these grants is made without regard to anticipated earnings or other major announcements by the Company.
| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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EXECUTIVE COMPENSATION | |
Policy Regarding Speculative Transactions and Hedging
The Company has adopted a formal policy prohibiting directors, officers and employees from (i) entering into speculative transactions, such as trading in options, warrants, puts and calls or similar instruments, involving A&B stock, or (ii) hedging or monetization transactions, such as zero-cost collars and forward sale contracts, involving A&B stock. The Company does not prohibit investments in exchange funds.
Policy Regarding Recoupment of Certain Compensation
The Company has adopted a formal “clawback” policy for senior management, including all NEOs. Pursuant to the policy, the Company will seek to recover from each Participant, as defined in the policy, the full or partial portion of any incentive compensation paid or granted to, or received by, such Participant during the three-year period preceding the date on which the Company is required to prepare an accounting restatement that is greater than the amount that would have been paid, granted or received had the financial results been originally reported as set forth in the accounting restatement. The Company will update the policy as appropriate to comply with new SEC and NYSE requirements when they are issued and in effect.
Tax and Accounting Considerations
In evaluating the Company’s executive compensation structure, the Compensation Committee considers tax and accounting treatment, balancing the effects on the individual and the Company. The Compensation Committee believes that the potential deductibility of the compensation payable under those programs should be only one of a number of relevant factors taken into consideration, and not the sole or primary factor, in establishing the cash and
ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
33
equity compensation programs for the executive officers. Section 162(m) of the Code generally limits to $1.0 million the amount of remuneration that the Company may deduct in any calendar year for certain executive officers. The Compensation Committee believes that cash and equity incentive compensation must be maintained at the requisite level to attract and retain the executive officers essential to the Company’s financial success, even if all or part of that compensation may not be deductible by reason of the Section 162(m) limitation. Accordingly, the Compensation Committee will continue to maintain flexibility and the ability to pay competitive compensation by not requiring all compensation to be deductible.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the CD&A section of this Proxy Statement with management and based on these discussions and review, it has recommended to the Board of Directors that the CD&A disclosure be included in this Proxy Statement.
The foregoing report is submitted by Ms. Saito (Chair), Ms. Laing and Mr. Lewis.
Compensation Committee Interlocks and Insider Participation
There were no Compensation Committee Interlocks or Insider Participation in 2020.
2022. | ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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EXECUTIVE COMPENSATION | |
Summary Compensation Table.Table.The following table summarizes the compensation paid by A&B to its NEOs in 2020, 20192022, 2021 and 2018.2020.
20202022 Summary Compensation Table
| | Name and Principal Position (a) | | | Year (b) | | | | Salary ($) (c) | | | | Bonus ($)(1) (d) | | | | Stock Awards ($)(2) (e) | | | | Option Awards ($) (f) | | | | Non-Equity Incentive Plan Compensation ($)(3) (g) | | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) (h) | | | | All Other Compensation ($)(5) (i) | | | | Total ($) (j) | |
| | Christopher J. Benjamin President and Chief Executive Officer | | | | | 2020 | | | | | | | 690,000 | | | | | | | 386,400 | | | | | | | 1,946,094 | | | | | | | N/A | | | | | | | 69,000 | | | | | | | 300,551 | | | | | | | 78,710 | | | | | | | 3,470,755 | | |
| | | 2019 | | | | | | | 685,000 | | | | | | | 170,116 | | | | | | | 1,969,270 | | | | | | | N/A | | | | | | | 664,884 | | | | | | | 390,393 | | | | | | | 33,403 | | | | | | | 3,913,066 | | |
| | | 2018 | | | | | | | 665,000 | | | | | | | 268,504 | | | | | | | 2,003,838 | | | | | | | N/A | | | | | | | 509,768 | | | | | | | 0(6) | | | | | | | 32,323 | | | | | | | 3,479,433 | | |
| | Brett A. Brown(7) Executive Vice President & Chief Financial Officer | | | | | 2020 | | | | | | | 400,000 | | | | | | | 137,600 | | | | | | | 801,301 | | | | | | | N/A | | | | | | | 64,000 | | | | | | | 0 | | | | | | | 40,728 | | | | | | | 1,443,629 | | |
| | | 2019 | | | | | | | 259,231 | | | | | | | 71,728 | | | | | | | 604,043 | | | | | | | N/A | | | | | | | 163,500 | | | | | | | N/A | | | | | | | 96,668(8) | | | | | | | 1,195,170 | | |
| | Lance K. Parker Executive Vice President and Chief Real Estate Officer | | | | | 2020 | | | | | | | 397,838 | | | | | | | 159,135 | | | | | | | 686,836 | | | | | | | N/A | | | | | | | 63,654 | | | | | | | 74,887 | | | | | | | 49,185 | | | | | | | 1,431,535 | | |
| | | 2019 | | | | | | | 394,941 | | | | | | | 59,048 | | | | | | | 729,337 | | | | | | | N/A | | | | | | | 404,363 | | | | | | | 87,508 | | | | | | | 22,815 | | | | | | | 1,698,012 | | |
| | | 2018 | | | | | | | 383,438 | | | | | | | 58,734 | | | | | | | 667,946 | | | | | | | N/A | | | | | | | 234,938 | | | | | | | 5,608 | | | | | | | 22,130 | | | | | | | 1,372,794 | | |
| | Nelson N. S. Chun Executive Vice President and Chief Legal Officer | | | | | 2020 | | | | | | | 362,805 | | | | | | | 99,771 | | | | | | | 286,186 | | | | | | | N/A | | | | | | | 39,909 | | | | | | | 32,480 | | | | | | | 38,737 | | | | | | | 859,888 | | |
| | | 2019 | | | | | | | 360,163 | | | | | | | 49,839 | | | | | | | 303,877 | | | | | | | N/A | | | | | | | 174,800 | | | | | | | 77,702 | | | | | | | 21,546 | | | | | | | 987,927 | | |
| | | 2018 | | | | | | | 349,674 | | | | | | | 70,566 | | | | | | | 306,116 | | | | | | | N/A | | | | | | | 133,972 | | | | | | | 0(9) | | | | | | | 20,908 | | | | | | | 881,236 | | |
| | Meredith J. Ching Executive Vice President, External Affairs | | | | | 2020 | | | | | | | 305,933 | | | | | | | 84,131 | | | | | | | 286,186 | | | | | | | N/A | | | | | | | 33,653 | | | | | | | 145,361 | | | | | | | 32,700 | | | | | | | 887,964 | | |
| | | 2019 | | | | | | | 275,244 | | | | | | | 42,027 | | | | | | | 303,877 | | | | | | | N/A | | | | | | | 147,398 | | | | | | | 193,129 | | | | | | | 18,304 | | | | | | | 979,979 | | |
| | | 2018 | | | | | | | 277,923 | | | | | | | 59,504 | | | | | | | 306,116 | | | | | | | N/A | | | | | | | 112,971 | | | | | | | 0(10) | | | | | | | 15,146 | | | | | | | 771,660 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position (a) | Year (b) | Salary ($) (c) | Bonus ($)(1) (d) | Stock Awards ($)(2) (e) | Option Awards ($) (f) | Non-Equity Incentive Plan Compensation ($)(3) (g) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) (h) | All Other Compensation ($)(5) (i) | Total ($) (j) | | | | | | | | | | | |
Christopher J. Benjamin Chief Executive Officer (6) | 2022 | 731,922 | | 433,784 | | 1,912,851 | | N/A | 1,033,274 | | 0 | (7) | 133,059 | | 4,244,890 | | | | | | | | | | | | |
2021 | 711,523 | | 351,797 | | 1,834,728 | | N/A | 1,137,439 | | 0 | (7) | 101,066 | | 4,136,553 | | | | | | | | | | | | |
2020 | 690,000 | | 386,400 | | 1,946,094 | | N/A | 69,000 | | 300,551 | | | 78,710 | | 3,470,755 | | | | | | | | | | | | |
Clayton K. Y. Chun Executive Vice President, Chief Financial Officer and Treasurer (8) | 2022 | 293,315 | | 78,272 | | 214,984 | | N/A | 181,390 | | 0 | | (9) | 45,679 | | 813,640 | | | | | | | | | | | | |
Lance K. Parker President and Chief Operating Officer (10) | 2022 | 447,498 | | 240,131 | | 843,873 | | N/A | 571,991 | | 0 | (11) | 76,634 | | 2,180,127 | | | | | | | | | | | | |
2021 | 423,748 | | 241,920 | | 755,459 | | N/A | 448,688 | | 10,558 | | | 63,166 | | 1,943,539 | | | | | | | | | | | | |
2020 | 397,838 | | 159,135 | | 686,836 | | N/A | 63,654 | | 74,887 | | | 49,185 | | 1,431,535 | | | | | | | | | | | | |
Meredith J. Ching Executive Vice President, External Affairs | 2022 | 327,199 | | 129,366 | | 281,291 | | N/A | 230,423 | | 0 | (12) | 56,762 | | 1,025,041 | | | | | | | | | | | | |
2021 | 318,944 | | 100,320 | | 269,809 | | N/A | 235,027 | | 0 | (12) | 42,958 | | 967,058 | | | | | | | | | | | | |
2020 | 305,933 | | 84,131 | | 286,186 | | N/A | 33,653 | | 145,361 | | | 32,700 | | 887,964 | | | | | | | | | | | | |
Jerrod M. Schreck Executive Vice President of A&B and President of Grace Pacific | 2022 | 327,324 | | 109,949 | | 185,631 | | N/A | 113,719 | | 0 | | (13) | 47,306 | | 783,929 | | | | | | | | | | | | |
Brett A. Brown Former Executive Vice President and Chief Financial Officer | 2022 | 393,399 | | 174,537 | | 787,635 | | N/A | 220,571 | | N/A | | 195,745 | | 1,771,887 | | | | | | | | | | | | |
2021 | 420,955 | | 186,480 | | 755,459 | | N/A | 448,688 | | N/A | | 62,860 | | 1,874,442 | | | | | | | | | | | | |
2020 | 400,000 | | 137,600 | | 801,301 | | N/A | 64,000 | | 0 | | 40,728 | | 1,443,629 | | | | | | | | | | | | |
(1)
Represents the NEO’s awardawards attributable to Value Creation goalsESIP or MSIP 2022 awards, and individual modifiersgoals under the PIIP or AIP program for the fiscal year identified in column (b) payable in cash in February of the following year.year, except for Mr. Brown’s 2019Brown, whose award includes a $25,000 signing bonus.was paid on November 30, 2022 when he ceased employment with the Company.
(2)
Represents the grant-date fair value of time-based restricted stock unitsRSUs and the grant-date fair value of performance stock unitsPSUs for the fiscal year identified in column (b) granted in 2020. Performance stock units2022. PSUs awarded in 20202022 vest in February 20232025 if performance goals are attained at target. IfAssuming that maximum performance goals applicable to the performance stock unitsPSUs were to be achieved, the values in this column with respect to 20202022 would be as follows: Mr. Benjamin, $3,042,206;$2,975,712; Mr. Chun, $289,985; Mr. Parker, $1,312,765; Ms. Ching, $437,588, Mr. Schreck, $288,775 and Mr. Brown, $1,252,622; Mr. Parker, $1,073,688; Mr. Chun, $447,376 and Ms. Ching, $447,376.$1,225,279. If performance goals are not attained at threshold, all performance stock unitsPSUs will be forfeited.
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See Note 16 of the consolidated financial statements of the Company’s 20202022 Annual Report on Form 10-K regarding the assumptions underlying the valuation of equity awards.
(3)
Represents the NEO’s award attributable to financial goals under the PIIP program for the fiscal year identified in column (b) payable in cash in February of the following year.year, except for Mr. Brown, whose award was paid on November 30, 2022 when he ceased employment with the Company.
(4)
All amounts are attributable to the aggregate change in the actuarial present value of the NEO’s accumulated benefit under all defined benefit and actuarial pension plans.
(5)
Represents amounts contributed by A&B to the NEO’s account under the A&B Individual Deferred Compensation and Profit Sharing Plan and Alexander & Baldwin Non-Qualified Defined Contribution Plan. The 2022 amount for Mr. Brown includes $36,050 in severance, $10,000 for outplacement counseling services and $15,624 in health and welfare benefits, all under the A&B Executive Severance Plan described on page 39; $49,915 in accrued unused vacation pay; and $13,503 for a one-time 5% prorated cash payment in lieu of receiving a 5% pay credit in the Cash Balance Plan (“Plan”), which was frozen effective December 31, 2019. The cash payment was paid after three years of service with the Company, consistent with the vesting requirements of the Plan. (6)In addition to his title of Chief Executive Officer, Mr. Benjamin served as President through December 31, 2022.
(6)
(7)The change in pension value was a decrease of $255.$274,023 for 2022 and $4,391 for 2021. Under SEC rules, such a decrease is shown in the table as $0.
(8)Mr. Chun was appointed Executive Vice President and Chief Financial Officer effective December 1, 2022.
(7)
Mr. Brown joined A&B on May 8, 2019.
(8)
Includes $50,000 for relocation expenses and $46,668 for taxes owed on such expenses.
(9)
The change in pension value was a decrease of $49,477.$663. Under SEC rules, such a decrease is shown in the table as $0.
(10)Mr. Parker was Executive Vice President and Chief Real Estate Officer of A&B until November 1, 2021, when he was appointed Chief Operating Officer in addition to his title of Executive Vice President. He was appointed President, in addition to his title of Chief Operating Officer, effective January 1, 2023. He also was appointed Chief Executive Officer, effective, July 1, 2023.
(10)
(11)The change in pension value was a decrease of $117,273.$79,461. Under SEC rules, such a decrease is shown in the table as $0.
(12)The change in pension value was a decrease of $149,929 for 2022 and $88,022 for 2021 . Under SEC rules, such a decrease is shown in the table as $0. | ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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(13)The change in pension value was a decrease of $1,731. Under SEC rules, such a decrease is shown in the table as $0. | | | | PAGE31
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EXECUTIVE COMPENSATION | |
Grants of Plan-Based Awards.The following table contains information concerning the non-equity and equity grants under A&B’s incentive plans during 20202022 to the NEOs.
20202022 Grants of Plan-Based Awards
| | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) (i) | | | All Other Option Awards: Number of Securities Underlying Options (#)(4) (j) | | | Exercise or Base Price of Option Awards ($/Sh) (k) | | | Grant Date Fair Value of Stock and Option Awards ($)(5) (l) | |
| Name (a) | | | Grant Date (b) | | | Threshold ($) (c) | | | Target ($) (d) | | | Maximum ($) (e) | | | Threshold (#) (f) | | | Target (#) (g) | | | Maximum (#) (h) | |
| Christopher J. Benjamin | | | | | 2/1/20 | | | | | | 284,625 | | | | | | 569,250 | | | | | | 1,138,500 | | | | | | 13,609 | | | | | | 38.883 | | | | | | 77,766 | | | | | | 38,883 | | | | | | N/A | | | | | | N/A | | | | | | 1,946,094 | | |
| Brett A. Brown | | | | | 2/1/20 | | | | | | 120,000 | | | | | | 240,000 | | | | | | 480,000 | | | | | | 5,604 | | | | | | 16,010 | | | | | | 32,020 | | | | | | 16,010 | | | | | | N/A | | | | | | N/A | | | | | | 801,301 | | |
| Lance K. Parker | | | | | 2/1/20 | | | | | | 119,351 | | | | | | 238,703 | | | | | | 477,406 | | | | | | 4,803 | | | | | | 13,723 | | | | | | 27,446 | | | | | | 13,723 | | | | | | N/A | | | | | | N/A | | | | | | 686,836 | | |
| Nelson N. S. Chun | | | | | 2/1/20 | | | | | | 74,829 | | | | | | 149,657 | | | | | | 299,314 | | | | | | 2,001 | | | | | | 5,718 | | | | | | 11,436 | | | | | | 5,718 | | | | | | N/A | | | | | | N/A | | | | | | 286,186 | | |
| Meredith J. Ching | | | | | 2/1/20 | | | | | | 63,099 | | | | | | 126,197 | | | | | | 252,395 | | | | | | 2,001 | | | | | | 5,718 | | | | | | 11,436 | | | | | | 5,718 | | | | | | N/A | | | | | | N/A | | | | | | 286,186 | | |
(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) (i) | All Other Option Awards: Number of Securities Underlying Options (#)(4) (j) | Exercise or Base Price of Option Awards ($/Sh) (k) | Grant Date Fair Value of Stock and Option Awards ($)(5) (l) |
Name (a) | Grant Date (b) | Threshold ($) (c) | Target ($) (d) | Maximum ($) (e) | Threshold (#) (f) | Target (#) (g) | Maximum (#) (h) |
Christopher J. Benjamin | | 284,515 | | 569,030 | | 1,138,060 | | | | | | | | |
2/1/22 | | | | 13,060 | | 37,313 | | 74,626 | | 37,313 | | N/A | N/A | 1,912,851 | |
Clayton K. Y. Chun | | 58,744 | | 117,488 | | 234,975 | | | | | | | | |
2/1/22 | | | | 922 | | 2,633 | | 5,266 | | 6,145 | | N/A | N/A | 214,984 | |
Lance K. Parker | | 157,500 | | 315,000 | | 630,000 | | | | | | | | |
2/1/22 | | | | 5,761 | | 16,461 | | 32,922 | | 16,461 | | N/A | N/A | 843,873 | |
Meredith J. Ching | | 63,448 | | 126,896 | | 253,792 | | | | | | | | |
2/1/22 | | | | 1,920 | | 5,487 | | 10,974 | | 5,487 | | N/A | N/A | 281,291 | |
Jerrod M. Schreck | | 63,525 | | 127,050 | | 254,100 | | | | | | | | |
2/1/22 | | | | 1,267 | | 3,621 | | 7,242 | | 3,621 | | N/A | N/A | 185,631 | |
Brett A. Brown (6) | | 121,128 | | 242,256 | | 484,512 | | | | | | | | |
2/1/22 | | | | 5,377 | | 15,364 | | 30,728 | | 15,364 | | N/A | N/A | 787,635 | |
(1)Amounts reflected in this section relate to estimated payouts under the non-equity incentive portion of the PIIP. The value of the actual payouts is included in column (g) of the Summary Compensation Table.
(2)
ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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(2)Amounts in this section reflect performance share unitPSU grants. Performance share unitsPSUs awarded in 20202022 vest in February 20232025 if performance goals are attained during the performance period.
(3)
Amounts in this section reflect time-based restricted stock unit awards.RSUs.
(4)
No options were granted in 2020.2022.
(5)
Represents the grant-date fair value of the equity awards granted in 2020.2022. See Note 16 of the consolidated financial statements of the Company’s 20202022 Annual Report on Form 10-K regarding the assumptions underlying the valuation of equity awards.
(6)Mr. Brown ceased to serve as CFO on November 30, 2022; he received a prorated non-equity incentive award at target pursuant to the terms of the A&B Executive Severance Plan. All of his equity awards granted in 2022 were forfeited.
The PIIP is based on financial, operating, and value creationindividual goals for the Company, as well as individual modifiers reflecting the executive’s job responsibilities and individual performance.Company. Performance measures, weighting of goals and target opportunities are discussed in the CD&A section of this Proxy Statement. Information on equity grants is provided in the CD&A section of this Proxy Statement.
| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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EXECUTIVE COMPENSATION | |
Outstanding Equity Awards at Fiscal Year-End. The following table contains information concerning the outstanding equity awards held by the NEOs.
20202022 Outstanding Equity Awards at Fiscal Year-End
| | | | Option Awards | | | Stock Awards | |
| Name (a) | | | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | | | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | | | Option Exercise Price ($) (e) | | | Option Expiration Date (f) | | | Number of Shares or Units of Stock that Have Not Vested (#) (g) | | | Market Value of Shares or Units of Stock that Have Not Vested ($)(5) (h) | | | Equity In- centive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) (i) | | | Equity In- centive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(5) (j) | |
| Christopher J. Benjamin | | | | | 50,677 | | | | | | — | | | | | | — | | | | | | 14.92 | | | | | | 1/24/2022 | | | | | | 73,531(1) | | | | | | 1,263,263 | | | | | | 107,111(6) | | | | | | 1,840,167 | | |
| Brett A. Brown | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | 23,163(2) | | | | | | 397,940 | | | | | | 26,739(7) | | | | | | 459,376 | | |
| Lance K. Parker | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 26,154(3) | | | | | | 449,326 | | | | | | 37,788(8) | | | | | | 649,198 | | |
| Nelson N.S. Chun | | | | | 23,389 | | | | | | — | | | | | | — | | | | | | 14.92 | | | | | | 1/24/2022 | | | | | | 11,048(4) | | | | | | 189,805 | | | | | | 16,196(9) | | | | | | 278,247 | | |
| Meredith J. Ching | | | | | 17,539 | | | | | | — | | | | | | — | | | | | | 14.92 | | | | | | 1/24/2022 | | | | | | 11,048(4) | | | | | | 189,805 | | | | | | 16,196(9) | | | | | | 278,247 | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Option Awards | | Stock Awards |
Name (a) | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | Option Exercise Price ($) (e) | Option Expiration Date (f) | | Number of Shares or Units of Stock that Have Not Vested (#) (g) | | Market Value of Shares or Units of Stock that Have Not Vested ($)(6) (h) | Equity In- centive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)(6) (i) | | Equity In- centive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(7) (j) |
Christopher J. Benjamin | — | — | — | — | — | | 86,786 | (1) | 1,625,502 | 130,964 | (8) | 2,452,956 |
Clayton K. Y. Chun | — | — | — | — | — | | 11,947 | (2) | 223,767 | 8,698 | (9) | 162,914 |
Lance K. Parker | — | — | — | — | — | | 36,070 | (3) | 675,591 | 52,735 | (10) | 987,727 |
Meredith J. Ching | — | — | — | — | — | | 12,763 | (4) | 239,051 | 19,259 | (11) | 360,721 |
Jerrod M. Schreck | — | — | — | — | — | | 7,606 | (5) | 142,460 | 10,740 | (12) | 201,160 |
Brett A. Brown (13) | — | — | — | — | — | | — | | — | — | | — |
(1)
Vesting date of unvested RSUs – 10,83812,961 shares on 2/1/29/21;11,90523; 18,256 shares each on 2/1/28/21,23 and 2/1/28/22; 12,96124; 12,437 shares on 2/1/2023 and 12,438 shares each on 2/1/21,2024 and 2/1/22, and 2/2/23.2025.
(2)
Vesting date of unvested RSUs – 3,576 shares on 7/29/21 and 3,577 shares on 7/29/22; 5336991 shares on 2/1/2123; 2,405 on 2/1/2023 and 5,3372,406 shares on 2/1/24; and 2,048 shares each on 2/1/222023 and 2/1/23.2024 and 2,049 shares on 2/1/2025.
(3)
Vesting date of unvested RSUs – 3,6134,575 shares on 1/29/21; 4,409 shares each on 1/28/21 and 1/28/22; 4,5742/2123; 7,517 shares each on 2/1/2123 and 2/1/2224; 5,487 shares each on 2/1/23, 2/1/24 and 4,575 shares on 2/2/23.1/25.
(4)
Vesting date of unvested RSUs – 1,6561,906 shares on 2/1/29/21; 1,837 shares each on 1/28/21 and 1/28/22; 1,90623; 2,685 shares each on 2/1/21, 2/1/22,23 and 2/1/23.24; 1,829 shares each on 2/1/23, 2/1/24, and 2/1/25.
(5)Vesting date of unvested RSUs – 763 shares on 2/1/23; 1,611 shares each on 2/1/23 and 2/1/24; 1,207 shares each on 2/1/23, 2/1/24 and 2/1/25.
(5)
(6)These PSUs are shown at the target amount (100% of the target number of shares awarded).
(7)Market value of stock not vested, shown at target performance, based on the closing stock price at year-endas of $17.18.December 30, 2022 of $18.73.
(6)
(8)Vesting date of PSUs – 32,514 shares on 1/29/21; 35,714 shares on 1/28/22; 38,883 shares on 2/1/23.23; 54,768 shares on 2/1/24; 37,313 shares on 2/1/25.
(7)
(9)Vesting date of PSUs – 10,729 shares on 7/29/22; 16,0102,973 shares on 2/1/23.23; 3,092 shares on 2/1/24; 2,633 shares on 2/1/25.
(8)
(10)Vesting date of PSUs – 10,838 shares on 1/29/21; 13,227 shares on 1/28/22; 13,723 shares on 2/1/23.23; 22,551 shares on 2/1/24; 16,461 shares on 2/1/25.
(9)
(11)Vesting date of PSUs – 4,967 shares on 1/29/21; 5,511 shares on 1/28/22; 5,718 shares on 2/1/23.23; 8,054 shares on 2/1/24; 5,487 shares 2/1/25.
(12)Vesting date of PSUs – 2,287 shares on 2/1/23; 4,832 shares on 2/1/24; 3,621 shares on 2/1/25. | ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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(13)Mr. Brown ceased employment with the Company effective 11/30/22 and forfeited his unvested shares.
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Option Exercises and Stock Vested.Vested. The following table contains information concerning option exercises and the vesting of stock awards for the NEOs during 2020.2022.
2022 Option Exercises and Stock Vested for 2020
| | | | OPTION AWARDS | | | STOCK AWARDS | |
| Name (a) | | | Number of Shares Acquired on Exercise (#) (b) | | | Value Realized on Exercise ($) (c) | | | Number of Shares Acquired on Vesting (#) (d)(4) | | | Value Realized on Vesting ($) (e) | |
| Christopher J. Benjamin | | | | | 0 | | | | | | 0 | | | | | | 30,886 | | | | | | 676,494 | | |
| Brett A. Brown | | | | | N/A | | | | | | N/A | | | | | | 3,576 | | | | | | 43,127 | | |
| Lance K. Parker | | | | | 1,740 | | | | | | 3,236 | | | | | | 9,942 | | | | | | 217,794 | | |
| Nelson N. S. Chun | | | | | 31,291 | | | | | | 86,989 | | | | | | 5,238 | | | | | | 114,722 | | |
| Meredith J. Ching | | | | | 23,466 | | | | | | 43,647 | | | | | | 5,238 | | | | | | 114,722 | | |
| | | | | | | | | | | | | | | | | |
| OPTION AWARDS | | STOCK AWARDS |
Name (a) | Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($) (c) | | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($) (e) |
Christopher J. Benjamin | — | — | | 95,621 | 2,185,266 |
Clayton K. Y. Chun | — | — | | 8,364 | 191,073 |
Lance K. Parker | — | — | | 35,943 | 821,381 |
Meredith J. Ching | — | — | | 14,528 | 332,031 |
Jerrod M. Schreck | — | — | | 5,750 | 131,353 |
Brett A. Brown | — | — | | 32,202 | 678,033 |
There were no outstanding options in 2022.
The value realized in column (e) was calculated based on the market value of A&B common stock on the vesting date. No amounts realized upon exercise of options orthe vesting of stock have been deferred.
Pension Benefits.Benefits. The following table contains information concerning pension benefits for the NEOs at the end of 2020.2021.
2022 Pension Benefits for 2020
| Name (a) | | | Plan Name (b) | | | Number of Years Credited Service(1) (#) (c) | | | Present Value of Accumulated Benefit ($) (d) | | | Payments During Last Fiscal Year ($) (e) | |
| Christopher J. Benjamin | | | A&B Retirement Plan for Salaried Employees | | | | | 18.4 | | | | | | 755,533 | | | | | | — | | |
| | | | A&B Excess Benefits Plan | | | | | 18.4 | | | | | | 1,767,467 | | | | | | — | | |
| Brett A. Brown | | | A&B Retirement Plan for Salaried Employees | | | | | 0 | | | | | | — | | | | | | — | | |
| | | | A&B Excess Benefits Plan | | | | | 0 | | | | | | — | | | | | | — | | |
| Lance K. Parker | | | A&B Retirement Plan for Salaried Employees | | | | | 15.3 | | | | | | 367,995 | | | | | | — | | |
| | | | A&B Excess Benefits Plan | | | | | 15.3 | | | | | | 73,475 | | | | | | — | | |
| Nelson N. S. Chun | | | A&B Retirement Plan for Salaried Employees | | | | | 16.2 | | | | | | 578,852 | | | | | | — | | |
| | | | A&B Excess Benefits Plan | | | | | 16.2 | | | | | | 633,921 | | | | | | — | | |
| Meredith J. Ching | | | A&B Retirement Plan for Salaried Employees | | | | | 37.6 | | | | | | 1,983,134 | | | | | | — | | |
| | | | A&B Excess Benefits Plan | | | | | 37.6 | | | | | | 643,160 | | | | | | — | | |
(1)
| | | | | | | | | | | | | | |
Name (a) | Plan Name (b) | Number of Years Credited Service(1) (#) (c) | Present Value of Accumulated Benefit ($) (d) | Payments During Last Fiscal Year ($) (e)(2) |
Christopher J. Benjamin | A&B Retirement Plan for Salaried Employees | 18.4 | — | 794,067 |
A&B Excess Benefits Plan | 18.4 | 1,450,519 | — |
Clayton K. Y. Chun | A&B Retirement Plan for Salaried Employees | 4.4 | — | 58,355 |
A&B Excess Benefits Plan | — | — | — |
Lance K. Parker | A&B Retirement Plan for Salaried Employees | 15.3 | — | 317,746 |
A&B Excess Benefits Plan | 15.3 | 54,821 | — |
Meredith J. Ching | A&B Retirement Plan for Salaried Employees | 37.6 | — | 1,854,356 |
A&B Excess Benefits Plan | 37.6 | 533,987 | — |
Jerrod M. Schreck | A&B Retirement Plan for Salaried Employees | 4.4 | — | 56,652 |
A&B Excess Benefits Plan | — | — | — |
Brett A. Brown | A&B Retirement Plan for Salaried Employees | — | — | — |
A&B Excess Benefits Plan | — | — | — |
(1)Credited service used to calculate the traditional defined benefit was frozen as of December 31, 2011. Effective January 1, 2020, the Company froze benefit accruals under the cash balance plan. Years shown as based on all credited service years under the plan through December 31,the plan freeze date as of January 1, 2020.
(2)Payments were made as a lump sum in accordance with the terms of the plan.
Actuarial assumptions used to determine the present values of the pension benefits include: Discount ratesrate for qualified andthe non-qualified retirement plans are 2.43% and 1.07%, respectivelyplan is 5.24% as of December 31, 2020.2022. Age 62 with 5 years of service (or current age, if greater) is the assumed retirement age. Qualified plan benefits (traditional defined benefit and cash balance) are assumed to be paid on a life annuity basis (however, cash balance portion could be paid in a lump sum). The cash balance accounts are projected to the assumed retirement age using 0.71% interest per year (the rate in effect for 2021) with no future pay
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credits. The projectedretirement age. As a result of plan termination, qualified plan cash balance accountsbenefits were convertedpaid to life annuities atparticipants or transferred to an insurance company in 2022 and no further benefits are due from the assumed retirement age using the annuity conversion interest assumptions and mortality used in our financial disclosures, i.e., 0.51% (for the first 5 years), 2.31% (next 15 years) and 3.15% (years in excess of 20) applied on a rolling basis, and the Applicable Mortality Table, as defined for lump sum calculations under Section 417(e) of the Internal Revenue Code.plan.
The Excess Benefits Plan benefits are paid as a lump sum equal to the present value of the traditional defined benefit assumed to be paid on a life annuity basis plus the cash balance account. The present value was determined based on interest rates (with 39% marginal tax rate adjustment) and mortality used in our financial disclosures, i.e., 0.31%2.73% (for the first 5 years), 1.41%3.21% (next 15 years) and 1.92%3.09% (years in excess of 20) applied on a rolling basis, and the Applicable Mortality Table, as defined for lump sum calculations under Section 417(e) of the Internal Revenue Code. The cash balance accounts are projected to the assumed retirement age using 0.71%2.15% interest per year (the rate in effect for 2021)May 31, 2021 onward) with no future pay credits.
A&B Retirement Plan for Salaried Employees:Employees:
The A&B Retirement Plan for Salaried Employees (the “Qualified Retirement Plan”) provides pension benefits to the Company’s salaried employees who are not subject to collective bargaining agreements. In 2007, A&B Predecessor closed participation in its traditional defined pension plan and established a cash balance plan for new non-bargaining unit employees hired after January 1, 2008. A&B Predecessor subsequently froze the traditional plan on January 1, 2012, transitioning all employees to the cash balance plan and lowering the vesting period from five years to three years. Effective January 1, 2020, the Company froze benefit accruals under the cash balance plan.
The traditional defined benefit formula was based on participants’ service and average monthly compensation in the five highest consecutive years of their final 10 years of service. For participants in the plan who remained employed after its freezing, this measurement period goes only through December 31, 2011. Compensation included base salary, overtime pay and one-year bonuses. The amounts were expressed as a single life annuity payable at the normal retirement age of 65. An employee became vested after five years of service with A&B Predecessor or the Company. An employee may take early retirement at age 55 or older, if the employee has already completed at least five years of service with A&B Predecessor or the Company. If an employee retires early, the same formula for normal retirement is used, although the benefit will be reduced for commencement before age 62 because the employee will receive payment early and over a longer period of time.
The replacement cash balance formula provided annual retirement account contributions equal to 5 percent of an employee’s eligible cash compensation, for each year worked through December 31, 2019, while covered by the cash balance formula, plus interest. At retirement or other separation from service, the employee may elect to receive the vested cash balance portion of the Qualified Retirement Plan benefits as a lump sum or an actuarially equivalent annuity. Effective January 1, 2020, the Company froze benefit accruals under the cash balance formula and replaced the benefit with a non-elective company contribution through the A&B Individual Deferred Compensation and Profit Sharing Plan for Salaried Non-Bargaining Employees, in which participants receive 3% of their annual eligible compensation. Participants continue to receivereceived interest credit for the cash balance benefits after the plan freeze.
In February 2021 a plan to terminate the Qualified Retirement Plan was approved. Participants had the choice of receiving a single lump sum payment or an annuity from a highly-rated insurance company that will pay and administer future benefit payments. The effective date of the termination was May 31, 2021. The lump sum payments and transfer of liabilities and assets to the insurance company were fully executed in 2022. No further benefits are due from the plan.
A&B Excess Benefits Plan:The A&B Excess Benefits Plan is discussed in the CD&A section of this Proxy Statement. Under the pension portion of the Excess Benefits Plan associated with the Qualified Retirement Plan, benefits under the traditional defined benefit formula are payable after the executive’s separation from service in a lump sum that is actuarially equivalent to thesingle life annuity form of payment, and the cash balance account is paid as a lump sum. Under the profit sharing portion of the Excess Benefits Plan associated with the A&B Retirement Plan, amounts are credited to executives’ accounts based on achievement of goals, to be payable after the executive’s separation from service. All NEOs are eligible to participate in the Excess Benefits Plan. Effective January 1, 2020, the Company froze benefit accruals under the plan and replaced the benefit with a Non-Qualified Defined Contribution Plan as described below.
A&B Non-Qualified Defined Contribution Plan:Under the A&B Non-Qualified Defined Contribution Plan, eligible participants receive 3% of their annual eligible compensation in excess of the applicable IRS compensation limit, a discretionary gain sharing contribution up to 5% of base salary in excess of the applicable IRS compensation limit based on achievement of goals, and the lesser of 3% of eligible compensation or the applicable IRS deferral limit plan minus the maximum allowable match, including the match on catch-up contributions, under the 401(k) plan.
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Non-Qualified Deferred Compensation. The following table contains information concerning non-qualified deferred compensation for the NEOs.
2020 Non-Qualified2022 Nonqualified Deferred Compensation
| Name (a) | | | Executive Contributions in Last FY ($) (b) | | | Registrant Contributions in Last FY ($)(1) (c) | | | Aggregate Earnings in Last FY ($)(2) (d) | | | Aggregate Withdrawals/ Distributions ($) (e) | | | Aggregate Balance at Last FYE ($)(1) (f) | |
| Christopher J. Benjamin | | | | | — | | | | | | 59,045 | | | | | | 22,785 | | | | | | — | | | | | | 137,372 | | |
| Brett A. Brown | | | | | — | | | | | | 21,063 | | | | | | — | | | | | | — | | | | | | 21,063 | | |
| Lance K. Parker | | | | | — | | | | | | 29,520 | | | | | | 4,442 | | | | | | — | | | | | | 42,189 | | |
| Nelson N. S. Chun | | | | | — | | | | | | 19,072 | | | | | | 4,700 | | | | | | — | | | | | | 40,706 | | |
| Meredith J. Ching | | | | | — | | | | | | 13,035 | | | | | | 35 | | | | | | — | | | | | | 13,179 | | |
(1) | | | | | | | | | | | | | | | | | |
Name (a) | Executive Contributions in Last FY ($) (b) | Registrant Contributions in Last FY ($)(1) (c) | Aggregate Earnings/Loss in Last FY ($)(2) (d) | Aggregate Withdrawals/ Distributions ($) (e) | Aggregate Balance at Last FYE ($)(1) (f) |
Christopher J. Benjamin | — | 99,309 | | -26,344 | | — | 293,294 | |
Clayton K. Y. Chun | — | 12,973 | | -2,915 | | — | 28,454 | |
Lance K. Parker | — | 43,084 | | -11,973 | | — | 110,226 | |
Meredith J. Ching | — | 23,212 | | -3,473 | | — | 45,512 | |
Jerrod M. Schreck | — | 13,756 | | -293 | | — | 16,164 | |
Brett A. Brown | — | 52,352 | | -7,193 | | — | 99,394 | |
(1)Represents contributions under the Alexander & Baldwin Nonqualified Defined Contribution Plan earned in the last fiscal year and accrued in the aggregate balance at last FYE and also included in the column (i) All Other Compensation in the 20202022 Summary Compensation Table.Table and in prior years to the extent of registrant contributions.
(2)
Represents interest and earningsloss earned on the prior year’s cash account balance.
Other Potential Post-Employment Payments.Payments
Change in Control Agreements:A&B has entered into Change in Control Agreements with each of the NEOs that are intended to encourage their continued employment with A&B by providing them with greater security in the event of termination of their employment following a change in control of A&B.&B and certain terminations prior to a change in control. The Company has adopted a participation policy that extends these agreements to those senior level executives whose employment would be most likely at risk upon a change in control. Each Change in Control Agreement has an initial one-year term and is automatically extended at the end of each term for a successive one-year period, unless terminated by A&B. The Change in Control Agreements provide for certain severance benefits if the executive’s employment is terminated by A&B without “cause” or by the executive for “good reason,”reason” within a specified period following (or prior to) a “Change in Control Event” of A&B, in each case as defined in the agreement, following a “Change in Control Event” of A&B, as defined by Internal Revenue Code Section 409A, as follows: Upon a termination of employment under the above circumstances, the executive will be entitled to receive (i) a lump-sum severance payment equal to two times the sum of the executive’s base salary and target bonus, (ii) pro rata payment at target with respect to outstanding contingent awards for uncompleted performance periods, (iii) a lump sum payment of amounts due the executive under deferred compensation plans, and (iv) an amount equal to the positive spread between the exercise price of outstanding options held by the executive and the fair market value of the underlying shares at the time of termination. In addition, A&B will maintain all (or provide similar) health and welfare benefit plans for the executive’s continued benefit for a period of two years after termination.termination or pay a taxable cash payment equal to the employer cost of providing such benefits. A&B will also reimburse executives for individual outplacement counseling services up to $10,000. These are “double trigger” agreements under which no payments are made and long-term incentives do not accelerate unless both a change in control and a qualifying termination of employment occurs.
In the event that any amount payable to the executive is deemed under the Internal Revenue Code to be made in connection with a change in control of the Company, and such payments would result in the excise tax imposed on “excess parachute payments” under the Internal Revenue Code, the Change in Control Agreements provide that the executive’s payments will be reduced to an amount that would not result in the imposition of the excise tax, to the extent that such reduction would result in a greater after-tax benefit to the executive. No tax gross-up payments are provided by the Change in Control Agreements.
If there is a potential change in control of the Company, the executive agrees to remain in the employ of the Company until the earliest of (1) a date six months after the occurrence of the potential change in control, (2) the termination of the executive’s employment by reason of disability or retirement, or (3) the occurrence of a change in control of the Company.
Executive Severance Plan:Plan: The Company also maintains the Executive Severance Plan (“Severance Plan”) that covers the NEOs. The Severance Plan continues from year to year, subject to a periodic review by the Board of Directors. The Severance
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Plan provides certain severance benefits if a designated executive is involuntarily terminated without “cause,” as defined in the Severance Plan, or laid off from employment as part of a job elimination/
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restructuring or reduction in force. Upon such termination of employment and execution of a release agreement acceptable to the Company, the executive will be entitled to receive an amount equal to twelve months’ base salary, payable in equal installments over a period of one year, continued payment by the Company of life and disability insurance premiums and COBRA premiums for continued group health plan coverage for a maximum of twelve months, reimbursement for outplacement counseling services and a prorated share of incentive plan awards at target levels under the PIIP that would have been payable to the executive had he or she remained employed until the end of the applicable performance period.
Voluntary Resignation: If the executive voluntarily resigns from the Company, no amounts are payable under the Severance Plan or the PIIP. The executive may be entitled to receive retirement and retiree health and welfare benefits to the extent those benefits have been earned or vested under the provisions of the plans. The executive may have up to three to six months after termination to exercise vested stock options at the time of termination. In addition, the executive would be entitled to any amounts voluntarily deferred (and the earnings accrued) under the tax-qualified A&B IDC Plan.
Other benefits, as described in the CD&A section of this Proxy Statement, may include accrued, vested benefits under the Qualified Retirement Plan and the Excess Benefits Plan. See also the Pension Benefits for 20202022 table and accompanying narrative.
The following tables show the potential value to each executive other than Mr. Brown under various termination-related scenarios, assuming that the termination of employment or other circumstances resulting in payment occurred on December 31, 2020.2022. Mr. Brown's employment was terminated effective November 30, 2022 under circumstances constituting an involuntary termination without cause for purposes of the Executive Severance Plan. Under the terms of the Executive Severance Plan described above, he received a payment of $317,240, representing a prorated PIIP award at target and became entitled to (i) a cash severance payment equal to $432,600, payable in twelve equal monthly installments; (ii) approximately $15,624 in respect of health and welfare benefits in exchange for his execution of a release acceptable to A&B (iii) $10,000 in reimbursement for outplacement counseling services. These payments are reflected in the Summary Compensation Table of this Proxy Statement.
Executive Termination Scenarios
| Christopher J. Benjamin | |
| Components | | | Change in Control w/Termination | | | Termination w/o Cause(1) | | | Termination w/Cause | | | Voluntary Resignation | | | Death | | | Disability(2) | | | Retirement(3) | |
| Cash Severance | | | | $ | 2,898,000 | | | | | $ | 690,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Retirement Benefits(4) | | | | $ | (141,011)(6) | | | | | $ | (69,188)(6) | | | | | $ | (69,188)(6) | | | | | $ | (69,188)(6) | | | | | $ | (69,188)(6) | | | | | $ | (69,188)(6) | | | |
| | | | | $ | (9,215)(5)(6) | | | | | $ | (9,215)(5)(6) | | | | | $ | (9,215)(5)(6) | | | | | $ | (9,215)(5)(6) | | | | | $ | (235,740)(5)(6) | | | | | $ | (9,215)(5)(6) | | | |
| Health & Welfare Benefits | | | | $ | 45,860 | | | | | $ | 20,592 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Outplacement Counseling | | | | $ | 10,000 | | | | | $ | 10,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Long-Term Incentives(7) | | | | $ | 2,574,660 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 1,478,798 | | | | | $ | 1,478,798 | | | | | $ | 1,478,798 | | |
| Total (Lump-sum) | | | | $ | 5,387,509 | | | | | $ | 651,404 | | | | | $ | (69,188)(6) | | | | | $ | (69,188)(6) | | | | | $ | 1,409,610 | | | | | $ | 1,478,798 | | | | | $ | 1,409,610 | | |
| Total (Annuity) | | | | $ | (9,215)(6) | | | | | $ | (9,215)(6) | | | | | $ | (9,215)(6) | | | | | $ | (9,215)(6) | | | | | $ | (235,740)(6) | | | | | $ | (9,215)(6) | | | |
| Brett A. Brown | |
| Components | | | Change in Control w/Termination | | | Termination w/o Cause(1) | | | Termination w/Cause | | | Voluntary Resignation | | | Death | | | Disability(2) | | | Retirement(3) | |
| Cash Severance | | | | $ | 955,619 | | | | | $ | 400,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Retirement Benefits(4) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Health & Welfare Benefits | | | | $ | 57,117 | | | | | $ | 26,707 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Outplacement Counseling | | | | $ | 10,000 | | | | | $ | 10,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Long-Term Incentives(7) | | | | $ | 867,382 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 462,499 | | | | | $ | 462,499 | | | | | $ | 462,499 | | |
| Total (Lump-sum) | | | | $ | 1,890,118 | | | | | $ | 436,707 | | | | | | — | | | | | | — | | | | | $ | 462,499 | | | | | $ | 462,499 | | | | | $ | 462,499 | | |
| Total (Annuity) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Christopher J. Benjamin |
Components | Change in Control w/Qualifying Termination | | Termination w/o Cause(1) | | Termination w/Cause | | Voluntary Resignation | | Death | | Disability(2) | Retirement(3) | |
Cash Severance | $ | 3,103,800 | | | $739,000 | | --- | | --- | | --- | | --- | --- | |
Retirement Benefits(4) | $ | 386,601 | | | $138,275 | | $138,275 | | $138,275 | | $138,275 | | --- | $138,275 | |
Health & Welfare Benefits | $ | 74,861 | | | $26,112 | | --- | | --- | | --- | | --- | --- | |
Outplacement Counseling | $ | 10,000 | | | $10,000 | | --- | | --- | | --- | | --- | --- | |
Long-Term Incentives(5) | $ | 3,492,813 | | | --- | | --- | | --- | | $2,542,329 | | $2,542,329 | $2,542,329 | |
Total | $ | 7,068,075 | | | $913,387 | | $138,275 | | $138,275 | | $2,680,604 | | $2,542,329 | $2,680,604 | |
| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Clayton K. Y. Chun |
Components | Change in Control w/Qualifying Termination | | Termination w/o Cause(1) | | Termination w/Cause | | Voluntary Resignation | | Death | | Disability(2) | Retirement(3) | |
Cash Severance | $ | 400,000 | | | $ | 400,000 | | | --- | | --- | | --- | | --- | --- | |
Retirement Benefits(4) | --- | | --- | | --- | | --- | | --- | | --- | --- | |
Health & Welfare Benefits | $ | 31,992 | | | $ | 31,992 | | | --- | | --- | | --- | | --- | --- | |
Outplacement Counseling | $ | 10,000 | | | $ | 10,000 | | | --- | | --- | | --- | | --- | --- | |
Long-Term Incentives(5) | --- | | --- | | --- | | --- | | $278,815 | | $278,815 | --- | |
Total | $ | 441,992 | | | $ | 441,992 | | | --- | | --- | | $278,815 | | $278,815 | --- | |
ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
40
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EXECUTIVE COMPENSATION | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Lance K. Parker |
Components | Change in Control w/Qualifying Termination | | Termination w/o Cause(1) | | Termination w/Cause | | Voluntary Resignation | | Death | | Disability(2) | Retirement(3) | |
Cash Severance | $ | 1,566,336 | | | $450,000 | | --- | | --- | | --- | | --- | --- | |
Retirement Benefits(4) | $ | 25,539 | | | $25,539 | | $25,539 | | $25,539 | | $25,539 | | --- | Not Yet Eligible | |
Health & Welfare Benefits | $ | 86,856 | | | $32,066 | | --- | | --- | | --- | | --- | --- | |
Outplacement Counseling | $ | 10,000 | | | $10,000 | | --- | | --- | | --- | | --- | --- | |
Long-Term Incentives(5) | $ | 1,462,745 | | | --- | | --- | | --- | | $1,059,937 | | $1,059,937 | --- | |
Total | $ | 3,151,476 | | | $517,605 | | $25,539 | | $25,539 | | $1,085,476 | | $1,059,937 | --- | |
| Lance K. Parker | |
| Components | | | Change in Control w/Termination | | | Termination w/o Cause(1) | | | Termination w/Cause | | | Voluntary Resignation | | | Death | | | Disability(2) | | | Retirement(3) | |
| Cash Severance | | | | $ | 1,295,655 | | | | | $ | 397,838 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Retirement Benefits(4) | | | | $ | 60,801 | | | | | $ | 3,994 | | | | | $ | 3,994 | | | | | $ | 3,994 | | | | | $ | 3,994 | | | | | | — | | | | | | not yet eligible | | |
| | | | | $ | (42,781)(6) | | | | | $ | (42,781)(6) | | | | | $ | (42,781)(6) | | | | | $ | ($42,781)(6) | | | | | $ | (155,902)(5)(6) | | | | | | — | | | | | | not yet eligible | | |
| Health & Welfare Benefits | | | | $ | 52,574 | | | | | $ | 25,528 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Outplacement Counseling | | | | $ | 10,000 | | | | | $ | 10,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Long-Term Incentives(7) | | | | $ | 923,012 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 528,995 | | | | | $ | 528,995 | | | | | $ | 528,995 | | |
| Total (Lump-sum) | | | | $ | 2,342,041 | | | | | $ | 437,360 | | | | | $ | 3,994 | | | | | $ | 3,994 | | | | | $ | 532,995 | | | | | $ | 528,995 | | | | | $ | 528,995 | | |
| Total (Annuity) | | | | $ | (42,781)(6) | | | | | $ | (42,781)(6) | | | | | $ | (42,781)(6) | | | | | $ | ($42,781)(6) | | | | | $ | (155,902)(6) | | | | | | — | | | | | | not yet eligible | | |
| Nelson N. S. Chun(8) | |
| Components | | | Change in Control w/Termination | | | Termination w/o Cause(1) | | | Termination w/Cause | | | Voluntary Resignation | | | Death | | | Disability(2) | | | Retirement(3) | |
| Cash Severance | | | | $ | 1,124,696 | | | | | $ | 362,805 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Retirement Benefits(4) | | | | $ | (23,331)(6) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | $ | (200,348)(5)(6) | | | | | | — | | | | | | — | | |
| Health & Welfare Benefits | | | | $ | 42,311 | | | | | $ | 19,498 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Outplacement Counseling | | | | $ | 10,000 | | | | | $ | 10,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Long-Term Incentives(7) | | | | $ | 387,194 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 223,021 | | | | | $ | 223,021 | | | | | $ | 233,021 | | |
| Total (Lump-sum) | | | | $ | 1,540,869 | | | | | $ | 392,303 | | | | | | — | | | | | | — | | | | | $ | 223,021 | | | | | $ | 223,021 | | | | | $ | 233,021 | | |
| Total (Annuity) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | $ | (200,348)(6) | | | | | | — | | | | | | — | | |
| Meredith J. Ching(8) | |
| Components | | | Change in Control w/Termination | | | Termination w/o Cause(1) | | | Termination w/Cause | | | Voluntary Resignation | | | Death | | | Disability(2) | | | Retirement(3) | |
| Cash Severance | | | | $ | 948,392 | | | | | $ | 305,933 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Retirement Benefits(4) | | | | $ | (27,317)(6) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | $ | (1,223,543)(5)(6) | | | | | | — | | | | | | — | | |
| Health & Welfare Benefits | | | | $ | 24,328 | | | | | $ | 10,807 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Outplacement Counseling | | | | $ | 10,000 | | | | | $ | 10,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Long-Term Incentives(7) | | | | $ | 387,194 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 223,021 | | | | | $ | 223,021 | | | | | $ | 223,021 | | |
| Total (Lump-sum) | | | | $ | 1,342,597 | | | | | $ | 326,740 | | | | | | — | | | | | | — | | | | | $ | 223,021 | | | | | $ | 223,021 | | | | | $ | 223,021 | | |
| Total (Annuity) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | $ | (1,223,543)(6) | | | | | | — | | | | | | — | | |
(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Meredith J. Ching(6) |
Components | Change in Control w/Qualifying Termination | | Termination w/o Cause(1) | | Termination w/Cause | | Voluntary Resignation | | Death | | Disability(2) | Retirement(3) | |
Cash Severance | $ | 1,021,760 | | | $329,600 | | --- | | --- | | --- | | --- | --- | |
Retirement Benefits(4) | $ | 80,655 | | | --- | | --- | | --- | | --- | | --- | --- | |
Health & Welfare Benefits | $ | 62,941 | | | $20,163 | | --- | | --- | | --- | | --- | --- | |
Outplacement Counseling | $ | 10,000 | | | $10,000 | | --- | | --- | | --- | | --- | --- | |
Long-Term Incentives(5) | $ | 513,649 | | | --- | | --- | | --- | | $373,876 | | $373,876 | $373,876 | |
Total | $ | 1,689,005 | | | $359,763 | | --- | | --- | | $373,876 | | $373,876 | $373,876 | |
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Jerrod M. Schreck |
Components | Change in Control w/Qualifying Termination | | Termination w/o Cause(1) | | Termination w/Cause | | Voluntary Resignation | | Death | | Disability(2) | Retirement(3) | |
Cash Severance | $ | 833,050 | | | $330,000 | | --- | | --- | | --- | | --- | --- | |
Retirement Benefits(4) | --- | | --- | | --- | | --- | | --- | | --- | --- | |
Health & Welfare Benefits | $ | 86,856 | | | $32,042 | | --- | | --- | | --- | | --- | --- | |
Outplacement Counseling | $ | 10,000 | | | $10,000 | | --- | | --- | | --- | | --- | --- | |
Long-Term Incentives(5) | $ | 300,785 | | | --- | | --- | | --- | | $225,403 | | $225,403 | --- | |
Total | $ | 1,230,691 | | | $372,042 | | --- | | --- | | $225,403 | | $225,403 | --- | |
(1)Assumes execution of an acceptable release agreement as provided by the Executive Severance Plan.
(2)
If an NEO is disabled, the executive will continue to accrue credited vesting service as long as he/she is continuously receiving disability benefits under A&B’s sickness benefits plan or long-term disability benefit plan. Should the NEO stop receiving disability benefits, the accrual of credited vesting service will cease. Upon the later of attainment of age 65 or the date at which the executive is no longer eligible for disability benefits, the NEO will be entitled to receive a pension benefit based on years of credited benefit service and compensation prior to becoming disabled. Credited benefit service shall not include any periods of disability after December 31, 2011.
(3)
Normal retirement is at age 65. An executive with 5 years of service may retire at age 62 with unreduced traditional defined benefit pension benefits under the Qualified Retirement Plans.benefits. Employees may elect early retirement after attaining age 55 and completing 5 years of service.
(4)
Retirement Benefits figures are incremental to the values shown in the Pension Benefits Table, which uses a different set of assumptions for timing of termination as described in the related narrative.
(5)
Represents the present value of amount paid as an annuity.
| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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EXECUTIVE COMPENSATION | |
(6)
The Retirement Benefits figures are incremental to the values shown in the Pension Benefits Table. Under certain termination scenarios, benefits reflected in the Pension Benefits Table under the various retirement plans are forfeited or reduced resulting in a negative value.
(7)
Includes the gain on accelerated stock options and the value of accelerated restricted stock and performance share units.PSUs. The value of stock awards was determined based on the closing price of A&B common stock on December 31, 202030, 2022 of $17.18.$18.73.
(8)
Mr. Chun and (6)Ms. Ching areis 62 or older and areis eligible for unreduced retirement benefits per the Company’s retirement plan. Therefore, their benefits upon termination are the same as those shown in the pension benefits table (figures shown in the executive termination table are incremental to those in the pension benefits table). Mr. Chun’s and Ms. Ching’s qualified pension death benefits are different upon death since the death benefits are payable to their spouses assuming Joint & Survivor 50% form of payment is elected (non-qualified death benefits are the same as retirement since they are payable as lump sums, as if they retire as of 1/1/2021). The non-qualified Change in Control (“CIC”) benefits are different as they are calculated based on lump sum assumptions as of the assumed CIC date (as of 12/31/2020)2022).
All amounts shown are lump-sum payments, unless otherwise noted. Assumptions used in the tables above are set forth in the Pension Benefits section, with the exception of non-qualified Change in Control benefits, which were calculated based on lump sum assumptions as of 12/31/2020 (1.30%2022 (2.73% (first 5 years), 1.87%3.21% (next 15 years), and 2.23%3.09% (years in excess of 20).
ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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The Excess Benefits Plan benefits are paid, upon termination, as a lump sum equal to the present value of the traditional defined benefit assumed to be paid on a life annuity basis plus the cash balance account. The lump sum conversion was based on interest rates (with 39% marginal tax rate adjustment) and mortality used in our financial disclosures and included in the Pension Benefits section.
CEO to Median Employee Pay Ratio Information
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
In determining the summary compensation table amount of pay for our CEO and the median employee, management employed the same methodology used for NEOs as set forth in the 20202022 Summary Compensation Table. TheTable, except that the Company’s contribution to employee health plans was also included. As illustrated below, using the Total Pay amounts, A&B’s 20202022 CEO to median employee pay ratio is 35:37:1.
CEO to Median Pay Ratio
| | | | Summary Compensation Table Amount | | | + | | | Company Contribution to Health Plans | | | = | | | Total Pay | |
| CEO | | | | $ | 3,470,755 | | | | | | | | $ | 15,566 | | | | | | | | $ | 3,486,321 | | |
| Median Employee | | | | $ | 81,338 | | | | | | | | $ | 19,249 | | | | | | | | $ | 100,587 | | |
The
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| Summary Compensation Table Amount | + | Company Contribution to Health Plans | = | Total Pay |
CEO | $4,244,890 | | $13,096 | | $4,257,985 |
Median Employee | $97,315 | | $19,154 | | $116,469 |
As permitted under applicable rules, we used the same median employee that was identified in the 2021 proxy statement using the following steps:
1.
We selected November 22, 2020, which is within the last three months of our fiscal year end (December 31, 2020), as the date upon which we would identify the “median employee” because it enabled us to make such identification in a reasonably efficient manner. We determined that, as of November 22, 2020, our employee population consisted of approximately 634 individuals, with all of these individuals located in the United States. This population consisted of our full-time part-time, and temporary employees, if any. Our workforce has remained stable since November 2020 and there are no changes to the employee population or compensation arrangements that would result in a significant change in the pay ratio disclosure.
2.
To identify the “median employee”, we utilized the amount of base salary and overtime our employees received, as reflected in our payroll records through November 22, 2020. When determining the “median employee,” we then approximated full-year values of base salary for all employees who were employed for a partial year.
3.
We identified our median employee using this compensation measure, which was consistently applied to all our employees included in the calculation. Since our employees are located in the United States, as is our CEO, we did not make any cost-of-living adjustments in identifying the “median employee.”
| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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EXECUTIVE COMPENSATION | |
4.
Once we identified our median employee, we combined all of the elements of such employee’s compensation for 20202022 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $81,338.$97,315.
5.
With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column (column (j)) of our 20202022 Summary Compensation Table included in this Proxy Statement.
The pay ratio is a reasonable estimate calculated based on rules and guidance provided by the SEC. The SEC rules allow for varying methodologies for companies to identify their median employee; and other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Consequently, the pay ratios reported by other companies are unlikely to be relevant or meaningful for purposes of comparison to our pay ratio as reported here.
ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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Chief Executive Officer Transition
Christopher Benjamin will retire as Chief Executive Officer, effective June 30, 2023. As disclosed previously on Form 8-K, in connection with Mr. Benjamin’s retirement, his regular 2023 stock grant award was made in the form of time-based restricted stock units with a grant date value of $1,700,000; shares subject to this award will be issued to him on February 1, 2024. A one-year, post-retirement vesting was determined to be appropriate in light of the planned transition of the CEO role consistent with A&B's succession plan and the standard retirement treatment for equity grants. Mr. Benjamin also entered into a Consulting Agreement to provide transitional assistance with Company projects from July 1, 2023 to December 31, 2023, and he will be paid a retainer at the rate of $85,000 per month. In addition, Mr. Benjamin entered into a letter agreement, which contains non-disclosure, non-compete (for a period of twelve months), and release provisions after his retirement in exchange for a payment of $1,500,000.
Lance K. Parker was appointed Chief Executive Officer of the Company, in addition to his role as President, to be effective as of July 1, 2023. In connection with his appointment as Chief Executive Officer, he will receive an increase in his annual base salary from $563,000 to $675,000. Mr. Parker also will receive an incremental equity award (50% as performance share units and 50% as time-based restricted stock units) with a grant date value of $750,000 to be granted on July 31, 2023.
Executive Compensation – Pay v. Performance
As described in the CD&A beginning on page 21, our executive compensation programs aim to be competitive with our peers and aligned with our business strategy and corporate objectives. Our compensation philosophy emphasizes a pay for performance culture focused on the long-term interests of our shareholders. We believe that this alignment between executive compensation and shareholder interests will drive corporate performance over time. Additionally, the Company maintains strong governance and pay practices, including meaningful share ownership guidelines for directors and executive officers, clawback policies that apply to short-term cash awards and long-term equity awards, “double trigger” change in control benefits and performance of an annual compensation risk assessment by our Compensation Committee. For purposes of the following executive compensation disclosures, the individuals listed below are referred to collectively as our "Named Executive Officers" for 2022.
•Christopher J. Benjamin, Chief Executive Officer
•Clayton K. Y. Chun, Executive Vice President, Chief Financial Officer and Treasurer
•Lance K. Parker, President and Chief Operating Officer
•Meredith J. Ching, Executive Vice President, External Affairs
•Jerrod M. Schreck, Executive Vice President of A&B and President of Grace Pacific
•Brett A. Brown, former Executive Vice President and Chief Financial Officer
Pay Versus Performance
(dollars in thousands, except as indicated)
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| | | | | | | | Value of Initial Fixed $100 Investment based on: | | | | |
Year | Summary Comp. Table Total for PEO | Comp. Actually Paid to PEO | | Average Summary Comp. Table Total for non-PEO Named Executive Officers | | Average Comp. Actually Paid to non-PEO Named Executive Officers | | Total Share holder Return | Peer Group Total Share holder Return (3) | Net Income (millions) | CRE Same-Store NOI Growth | | |
2022 | 4,244.9 | | 3,329.4 | | (1) | 1,314.9 | | (2) | 658.4 | | (1) | 98.33 | | 104.46 | | -49.5 | | 6.0 | % | | |
2021 | 4,136.6 | | 6,610.6 | | (1) | 1,462.3 | | (2) | 2,117.7 | | (1) | 126.12 | | 119.43 | | 35.8 | | 17.3 | % | | |
2020 | 3,470.8 | | 2,722.2 | | (1) | 1,155.8 | | (2) | 971.9 | | (1) | 83.62 | | 72.36 | | 5.2 | | (12.7) | % | | |
ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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(1)The following tables set forth the adjustments made to the Summary Compensation Table ("SCT") total compensation during each year represented in the PVP Table to arrive at compensation “actually paid” to our NEOs during each of the years specified in the PVP Table:
| | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | |
Adjustments to Determining Compensation "Actually Paid" for PEO | 2022 | | 2021 | | 2020 |
Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” Column of the SCT | $ | - | | | $ | - | | | $ | (300.6) | |
| | | | | |
| | | | | |
Deduction for Amounts Reported under the “Stock Awards” Column in the SCT | (1,912.9) | | | (1,834.7) | | | (1,946.1) | |
| | | | | |
Increase for Fair Value of Awards Granted during year that Remain Unvested as of Year end | 1,602.4 | | | 3,044.6 | | | 1,584.9 | |
| | | | | |
Increase/deduction for Change in Fair Value from prior Year-end to current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end | (307.2) | | | 466.9 | | | 52.9 | |
Increase/deduction for Change in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to year that Vested during year | (369.7) | | | 735.3 | | | (164.6) | |
| | | | | |
| | | | | |
Increase based on Dividends or Other Earnings Paid during year prior to Vesting Date of Award | 71.9 | | | 61.9 | | | 24.9 | |
Total Adjustments | $ | (915.5) | | | $ | 2,474.0 | | | $ | (748.6) | |
| | | | | |
(dollars in thousands) | | | | | |
Adjustments to Determining Compensation "Actually Paid" for Non-PEO NEOs | 2022 | | 2021 | | 2020 |
Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” Column of the SCT | $ | - | | | $ | (2.6) | | | $ | (63.2) | |
| | | | | |
| | | | | |
Deduction for Amounts Reported under the “Stock Awards” Column in the SCT | (462.7) | | | (512.6) | | | (515.1) | |
| | | | | |
Increase for Fair Value of Awards Granted during year that Remain Unvested as of Year end | 255.4 | | | 850.7 | | | 419.5 | |
| | | | | |
Increase/deduction for Change in Fair Value from prior Year-end to current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end | (52.8) | | | 129.5 | | | 2.7 | |
Increase/deduction for Change in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to year that Vested during year | (53.6) | | | 173.4 | | | (34.0) | |
Deduction of Fair Value of Awards Granted Prior to year that were Forfeited during year | (358.7) | | | - | | | - | |
| | | | | |
Increase based on Dividends or Other Earnings Paid during year prior to Vesting Date of Award | 15.9 | | | 17.0 | | | 6.2 | |
Total Adjustments | $ | (656.5) | | | $ | 655.4 | | | $ | (183.9) | |
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(2)For fiscal years 2020 through 2022, Christopher J. Benjamin is included as the PEO. For fiscal years 2020 and 2021, Lance K. Parker, Meredith J. Ching, Brett A. Brown and Nelson N. S. Chun are included as other NEOs. For fiscal year 2022, Clayton K. Y. Chun, Lance K. Parker, Meredith J. Ching, Jerrod M. Schreck and Brett A. Brown are included as other NEOs.
(3)The peer group is the FTSE Nareit Equity Shopping Centers index.
The PVP table demonstrates alignment of Compensation Actually Paid with our performance as measured by TSR (both on an absolute basis and in relation to the FTSE Nareit Equity Shopping Centers index), Net Income and CRE Same-Store NOI Growth.
•In 2020, as the global economy and capital markets were severely affected by the COVID-19 pandemic, our TSR and Net Income declined moderately and CRE Same-Store NOI Growth was negative. Likewise, Compensation Actually Paid of our PEO and the average of our non-PEO NEOs was -22% and -16%, respectively, in relation to Summary Compensation Table pay.
•In 2021, our TSR, Net Income and CRE Same-Store NOI Growth each rebounded strongly, and our TSR outperformed the FTSE Nareit Equity Shopping Centers index. In turn, for that year our PEO’s Compensation Actually Paid was 60% higher than his Summary Compensation Table pay, while the average of our non-PEO NEOs’ Compensation Actually Paid was 45% higher than their Summary Compensation Table pay.
•For the most recently completed year of 2022, our TSR and CRE Same-Store NOI Growth declined, and we reported Net Income of $-49.5 million. Net loss for 2022 includes after-tax losses from discontinued operations of Grace Pacific and the Company-owned quarry land on Maui of $86.6 million, partially offset by 6.3% growth in the CRE NOI in 2022. Compensation Actually Paid of our PEO and the average of our non-PEO NEOs was -22% and -50%, respectively, in relation to Summary Compensation Table pay.
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| | |
|
Most Important Company Performance Measures for Determining NEO Compensation |
CRE Same-Store NOI Growth |
Core FFO per Diluted Share |
Average Net Debt to Core EBITDA |
Total Shareholder Return |
Grace Pacific Adjusted EBITDA |
Consolidated Backlog |
Safety Recordable Incident Rate |
Use of Non-GAAP Financial Measures
NOI is a non-GAAP measure used internally in evaluating the unlevered performance of the Company’s Commercial Real Estate portfolio. The Company believes NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only the contractual income and cash-based expense items that are incurred at the property level. When compared across periods, NOI can be used to determine trends in earnings of the Company’s properties as this measure is not affected by non-contractual revenue (e.g., straight-line lease adjustments required under GAAP); by non-cash expense recognition items (e.g., the impact of depreciation and amortization expense or impairments); or by other expenses or gains or losses that do not directly relate to the Company’s ownership and operations of the properties (e.g., indirect selling, general, administrative and other expenses, as well as lease termination income). The Company believes the exclusion of these items from operating profit (loss) is useful because the resulting measure captures the contractually-based revenue that is realizable (i.e., assuming collectability is deemed probable) and the direct property-related expenses paid or payable in cash that are incurred in operating the Company’s Commercial Real Estate portfolio, as well as trends in occupancy rates, rental rates and operating costs. NOI should not be viewed as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
NOI represents total Commercial Real Estate contractually-based operating revenue that is realizable (i.e., assuming collectability is deemed probable) less the direct property-related operating expenses paid or payable in cash. The calculation of NOI excludes the impact of depreciation and amortization (e.g., depreciation related to capitalized costs for improved properties, other capital expenditures for building/area improvements and tenant space improvements, as well as amortization of leasing commissions); straight-line lease adjustments (including amortization of lease incentives); amortization of favorable/unfavorable lease assets/liabilities; lease termination income; interest and other income (expense), net; selling, general, administrative and other expenses (not directly associated with the property); and impairment of commercial real estate assets.
The Company reports NOI on a Same-Store basis, which includes the results of properties that were owned and operated for the entirety of the current and prior calendar year. The Same-Store pool excludes properties under development or redevelopment and also excludes properties acquired or sold during either of the comparable reporting periods. While there is management judgment involved in classifications, new developments and redevelopments are moved into the Same-Store pool after one full calendar year of stabilized operation. New developments and redevelopments are generally considered stabilized upon the initial attainment of 90% occupancy. Properties included in held for sale are excluded from Same-Store.
The Company believes that reporting on a Same-Store basis provides investors with additional information regarding the operating performance of comparable assets versus from other factors (such as the effect of developments, redevelopments, acquisitions or dispositions).
The Company’s methods of calculating non-GAAP measures may differ from methods employed by other companies and thus may not be comparable to such other companies.
A reconciliation of Commercial Real Estate operating profit to NOI, Same-Store Cash NOI and Non-Same Store Cash NOI follows:
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ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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EXECUTIVE COMPENSATION | |
| | | | | | | | | | | |
| Year Ended | |
(In millions) | 2022 | 2021 | Change |
Commercial Real Estate operating profit | $ | 81.5 | | $ | 72.6 | | |
Adjustments: | | | |
Depreciation and amortization | 36.5 | | 37.7 | | |
Straight-line lease adjustments | (6.3) | | (4.4) | | |
Favorable/(unfavorable) lease amortization | (1.1) | | (0.9) | | |
Termination income | (0.1) | | (0.2) | | |
Other (income)/expense, net | 0.5 | | (0.6) | | |
Selling, general, administrative and other expenses | 6.8 | | 6.5 | | |
NOI | $ | 117.8 | | $ | 110.7 | | |
Acquisitions / dispositions and other adjustments | (0.7) | | (0.2) | | |
Same-Store NOI | $ | 117.1 | | $ | 110.5 | | 6.0 | % |
Non-Same Store NOI | $ | 0.7 | | $ | 0.2 | | |
| | | | Year Ended | |
| (In millions) | | | 2020 | | | 2019 | | | Change | |
| Commercial Real Estate operating profit | | | | $ | 49.8 | | | | | $ | 66.2 | | | | | | | | |
| Adjustments: | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | | | 40.1 | | | | | | 36.7 | | | | | | | | |
| Straight-line lease adjustments | | | | | 1.3 | | | | | | (5.1) | | | | | | | | |
| Favorable/(unfavorable) lease amortization | | | | | (1.2) | | | | | | (1.6) | | | | | | | | |
| Termination income | | | | | (2.3) | | | | | | (0.1) | | | | | | | | |
| Other (income)/expense, net | | | | | (0.9) | | | | | | (2.0) | | | | | | | | |
| Selling, general, administrative and other expenses | | | | | 7.5 | | | | | | 10.1 | | | | | | | | |
| NOI | | | | $ | 94.3 | | | | | $ | 104.2 | | | | | | | | |
| Acquisitions / dispositions and other adjustments | | | | | (13.5) | | | | | | (11.6) | | | | | | | | |
| Same-Store Cash NOI | | | | $ | 80.8 | | | | | $ | 92.6 | | | | | | (12.7)% | | |
| Non-Same Store Cash NOI | | | | $ | 13.5 | | | | | $ | 11.6 | | | | | | | | |
|
Adjusted Free Cash Flow wasEarnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) is calculated on a liquidity measure for the Company for the year ended December 31, 2020, as management believes that the measure provided useful information about the Company’s ability to generate cash for ongoing business operations and strengthening the balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company believes that Net Cash Providedconsolidated basis (“Consolidated EBITDA”) by Operations is the most directly comparable GAAP measurement to Adjusted Free Cash Flow. A reconciliation of Net Cash Provided by Operations to Adjusted Free Cash Flow is as follows:
| (In Millions) | | | 2020 | |
| Net Cash Provided by Operations | | | | $ | 63.1 | | |
| Adjustments: | | | | | | | |
| Add: Net cash provided by (used in) investing activities | | | | | 12.0 | | |
| Add: Enterprise resource planning system costs | | | | | 1.1 | | |
| Less: Capital expenditures for acquisitions | | | | | — | | |
| Adjusted Free Cash Flow | | | | $ | 76.2 | | |
Adjusted Non-Grace G&A Expenses was an operating performance measure for the Company for the year ended December 31, 2020. The Adjusted Non-Grace G&A Expenses measure consists ofadjusting the Company’s consolidated selling, general and administrative expenses (i.e., Corporate overhead costs as well as selling, general and administrative expenses related to the Company’s segments), adjustednet income (loss) to exclude selling, generalthe impact of interest expense, income taxes, depreciation and administrative expenses at the Company’s Materials & Construction (“M&C”) segmentamortization and for other adjustments. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company believes that Selling, General and Administrative Expense is the most directly comparable GAAP measurement to Adjusted Non-Grace G&A Expenses. A reconciliation of Selling, General and Administrative Expense to Adjusted Non-Grace G&A Expenses follows:
| (In Millions) | | | 2020 | |
| Selling, General and Administrative Expense | | | | $ | 46.1 | | |
| Adjustments: | | | | | | | |
| M&C Segment Selling, General and Administrative Expense | | | | | (15.0) | | |
| Enterprise Resource Planning System Costs | | | | | (1.1) | | |
| Adjusted Non-Grace G&A Expenses | | | | $ | 30.0 | | |
noncontrolling interest. Consolidated Adjusted Pre-tax Income (Loss) was an operating performance measure for the Company for the year ended December 31, 2020, as management believes that the measure provided insight into the operating results of the Company’s
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EXECUTIVE COMPENSATION | |
businesses, excluding the M&C segment and other adjustments, and the underlying business trends affecting performance on a consistent and comparable basis from period to period. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company believes that Income (Loss) From Continuing Operations Before Income Taxes is the most directly comparable GAAP measurement to Consolidated Adjusted Pre-tax Income (Loss). A reconciliation of Income (Loss) From Continuing Operations Before Income Taxes to Consolidated Adjusted Pre-tax Income (Loss) follows:
| (In Millions) | | | 2020 | |
| Income (Loss) From Continuing Operations Before Income Taxes | | | | $ | 5.6 | | |
| Adjustments: | | | | | | | |
| M&C Segment Operating Loss | | | | | 12.4 | | |
| M&C Interest Expense | | | | | 0.1 | | |
| Enterprise Resource Planning System Costs | | | | | 1.1 | | |
| Consolidated Adjusted Pre-tax Income (Loss) | | | | $ | 19.2 | | |
Materials & Construction EBITDA is calculated by adjusting segment operating loss (which excludes interest expense and income taxes) to add back depreciation and amortization recorded for the segment. The Company adjusts Materials & ConstructionConsolidated EBITDA to arrive at Grace Adjusted EBITDA by excluding the income attributable to the Company’s joint venture interest in a materials company, as well as adjusting for items identified as non-recurring, infrequent or unusual that are not expected to recur in the segment’s normalCompany’s operations. Core EBITDA is calculated by adjusting Consolidated Adjusted EBITDA for the Adjusted EBITDA of the non-core operations of the Company, including Land Operations and Discontinued Operations. A reconciliation of Consolidated Net Income to Consolidated EBITDA, Consolidated Adjusted EBITDA, and Core EBITDA follows:
| | | | | |
(In Millions) | 2022 |
Net Income | $ | (49.5) | |
Adjustments: | |
Depreciation and amortization | 38.0 | |
Depreciation and amortization related to discontinued operations | 5.8 | |
Interest expense | 22.0 | |
Interest expense related to discontinued operations | 0.2 | |
Income tax expense (benefit) | (18.3) | |
Consolidated EBITDA | $ | (1.8) | |
Adjustments: | |
Asset impairments related to the Land Operations Segment | 5.0 | |
(Income) loss from discontinued operations, net of income taxes and excluding depreciation, amortization and interest expense | 80.6 | |
Pension termination | 76.9 | |
Consolidated Adjusted EBITDA | $ | 160.7 | |
Adjustments: | |
| |
Land Operations Adjusted EBITDA | (67.0) | |
Core EBITDA | $ | 93.7 | |
Net Debt is calculated by adjusting the Company’s total debt to its notional amount (by excluding unamortized premium, discount and capitalized loan fees) and by subtracting cash and cash equivalents recorded in the Company’s consolidated balance sheets. Average Net Debt is calculated by adjusting Net Debt for cash received on assets sold as part of the Company’s simplification efforts (as described in the “Executive Simplification Incentive Program (ESIP)” section above) that were not expected to be sold this year. A reconciliation of Notes Payable and Other Debt to Net Debt and Average Net Debt follows:
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Monthly |
(In Millions) | 2022 | 2022 | 2022 | 2022 | 2022 | 2022 | 2022 | 2022 | 2022 | 2022 | 2022 | 2022 | Average |
Notes Payable and Other Debt | $ | 521.3 | | $ | 520.9 | | $ | 520.4 | | $ | 520.0 | | $ | 519.6 | | $ | 469.2 | | $ | 459.7 | | $ | 459.3 | | $ | 461.5 | | $ | 461.1 | | $ | 476.6 | | $ | 472.2 | | $ | 488.5 | |
Adjustments: | | | | | | | | | | | | | |
Net unamortized deferred financing cost / discount (premium) | (0.4) | | (0.4) | | (0.4) | | (0.4) | | (0.4) | | (0.4) | | (0.4) | | (0.3) | | (0.3) | | (0.3) | | (0.3) | | (0.3) | | (0.4) | |
Cash and cash equivalents | 51.6 | | 38.1 | | 32.6 | | 44.0 | | 18.9 | | 32.9 | | 25.3 | | 18.2 | | 6.6 | | 5.0 | | 24.0 | | 33.3 | | 27.5 | |
Favorable/Unfavorable Market Value of Loan | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | |
Net Debt | $ | 572.5 | | $ | 558.6 | | $ | 552.7 | | $ | 563.7 | | $ | 538.2 | | $ | 501.8 | | $ | 484.6 | | $ | 477.3 | | $ | 467.9 | | $ | 465.9 | | $ | 500.4 | | $ | 505.2 | | $ | 515.7 | |
Adjustments: | | | | | | | | | | | | | |
Cash receipts from assets sold as part of simplification efforts that were not expected in 2022 | — | | — | | — | | — | | — | | 55.8 | | 55.8 | | 55.8 | | 55.8 | | 55.8 | | 55.8 | | 55.8 | | 32.6 | |
Average Net Debt | $ | 470.0 | | $ | 483.1 | | $ | 488.1 | | $ | 476.3 | | $ | 501.0 | | $ | 492.5 | | $ | 490.5 | | $ | 497.1 | | $ | 510.9 | | $ | 512.1 | | $ | 508.7 | | $ | 495.0 | | $ | 493.8 | |
Average Net Debt to Core EBITDA is calculated as Average Net Debt divided by Core EBITDA, as follows:
| | | | | |
($ In Millions) | 2022 |
Average Net Debt | $ | 493.8 | |
Core EBITDA | $ | 93.7 | |
Average Net Debt to Core EBITDA | 5.3x |
Core Funds From Operations (“Core FFO”) represents a non-GAAP measure relevant to the operating performance of the Company’s commercial real estate business (i.e., its core business). Core FFO is calculated by adjusting CRE operating profit to exclude items noted above (i.e., depreciation and amortization related to real estate included in CRE operating profit) and to make further adjustments to include expenses not included in CRE operating profit but that are necessary to accurately reflect the operating performance of its core business (i.e., corporate expenses and interest expense attributable to this core business) or to exclude items that are non-recurring, infrequent, unusual and unrelated to the core business operating performance (i.e., not likely to recur within two years or has not occurred within the prior two years).
| | | | | |
(In millions, except per share amounts) | 2022 |
CRE Operating Profit | $ | 81.5 | |
Adjustments: | |
Depreciation and amortization of commercial real estate properties | 36.5 | |
Corporate and other expense | (39.3) | |
Core business interest expense | (11.0) | |
Distributions to participating securities | (0.2) | |
Pension termination - CRE and Corporate | 14.7 | |
Core FFO | $ | 82.2 | |
| |
Weighted average diluted shares outstanding (FFO/Core FFO) | 72.8 | |
Core FFO per diluted share | $ | 1.13 | |
Grace Pacific Adjusted EBITDA is calculated by adjusting income (loss) from discontinued operations, net of taxes and noncontrolling interest to add back items recorded into discontinued operations, including depreciation and amortization, interest expense, the Company’s income from its Maui quarries as well as impairment as a result of being classified as held-for-sale, loss from discontinued operations related to the Company's Land Operations segment and to exclude income attributable to noncontrolling interests as presented in its consolidated statements of operations.
As illustrative examples, the Company identified non-cash long-lived asset impairments recorded in different businesses within the M&C segment as non-recurring, infrequent or unusual items that are not expected to recur in the segment’s normal operations. By excluding these items from Materials
ALEXANDER & Construction EBITDA to arrive at Grace Adjusted EBITDA, the Company believes it provides meaningful supplemental information about its core operating performance and facilitates comparisons to historical operating results. Such non-GAAP measures should not be viewed as a substitute for, or superior to, financial measures calculated in accordance with GAAP.BALDWIN, INC. ▪ 2023 PROXY STATEMENT
| (In Millions) | | | 2020 | |
| Materials & Construction Operating Profit (Loss) | | | | $ | (12.4) | | |
| Adjustments: | | | | | | | |
| Materials & Construction depreciation and amortization | | | | | 10.8 | | |
| Materials & Construction EBITDA | | | | $ | (1.6) | | |
| Impairment of assets related to Materials & Construction | | | | | 5.6 | | |
| Loss (income) attributable to noncontrolling interests | | | | | 0.4 | | |
| Income attributable to the Company’s joint venture interest in a materials company | | | | | (2.1) | | |
| Grace Adjusted EBITDA | | | | $ | 2.3 | | |
47
| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
| | | | |
(In millions) | 2022 |
Income (loss) from discontinued operations, net of income taxes | $ | (86.6) | |
Adjustments: | |
Depreciation and amortization related to discontinued operations | 5.8 | |
Interest expense related to discontinued operations | 0.2 | |
Asset impairments related to discontinued operations | 89.8 | |
(Expenses) incurred by A&B directly attributable to discontinued operations | (0.6) | |
(Income) loss attributable to Company’s Maui quarries | (1.8) | |
(Income) loss attributed to Land Operations discontinued operations | 0.3 | |
Grace Pacific Adjusted EBITDA | $ | 7.1 | |
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PROPOSAL NO. 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
Shareholders are being asked to vote to approve, on a non-binding, advisory basis, the compensation of our NEOs.
A&B’s compensation philosophy is to drive the Company’s performance and further shareholder interests through a compensation program that attracts, motivates and retains outstanding executives, and rewards outstanding performance. The CD&A section of this Proxy Statement discusses our policies and procedures that implement our compensation philosophy. Highlights of our compensation program include the following:
•
Executive compensation is closely aligned with performance. In 2020, 782022, 77 percent of the CEO’s target total direct compensation iswas variable and performance-based, and 6664 percent of the other NEOs’ target total direct compensation was variable and performance-based.performance-based (compensation based on a one-time simplification incentive program was not included in target percentages). The ratio of variable compensation is consistent with market practices.
•
The Company remains committed to responsible pay practices and has adopted policies that are representative of best practices, including a clawback policy that applies to all senior management and a policy prohibiting hedging and other speculative transactions involving Company stock. The Compensation Committee is focused on continuous improvement in executive compensation practices and policies to ensure alignment between pay and performance, as well as implementation of best practices. This includes, but is not limited to, such practices as adopting a 50th percentile target compensation philosophy, using multiple performance metrics and multi-year equity vesting, double triggers on equity grants in the event of a change in control, reasonable change-in-control agreements, protocols for an annual pay risk assessment, meaningful stock ownership guidelines, and no guaranteed bonuses, change-in-control gross-ups or stock option repricing. In 2020,2022, the average total direct compensation for NEOs was at approximately the 50th percentile of market.
•
As described previously in this Proxy Statement, Company results reflected the Company’s profitability was challenged by COVID-19.strong performance of the CRE portfolio and strategic progress made to simplify the Company. The executive compensation program generally reflected below-targetabove-target performance by the Company in 2020, with2022. PIIP and AIP awards rangingranged between 109% and 180% and ESIP and MSIP awards ranged between 15% and 60% and 70% of target for the NEOs. A profit sharing contribution of 0.9% was earned. Despite the challenges presented by COVID-19, the Company did not adjust its financial performance targets or exercise discretion based on COVID-19 impacts and did not provide base salary increases to NEOs.target.
•
The actual performance level attained for the 20182020 PSU grants covering the performance period of 2018—20202020—2022 was at approximately the 16.6th66.5 percentile on a blended basis relative to the FTSE Nareit All-Equity REITs Index and the Selected Peer Group indices, which resulted in noan earnout of 158% of the performance shares awarded with a three-year performance horizon.
The following resolution is being submitted for a shareholder advisory vote at the Annual Meeting:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 20212023 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 20202022 Summary Compensation Table and the other related tables and disclosure.”
Although the advisory vote is non-binding, the Compensation Committee and the Board will review the results of the vote and consider them in future determinations concerning our executive compensation program.
The Board of Directors recommends that shareholders vote FOR the approval of the resolution relating to executive compensation.
| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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AUDIT COMMITTEE REPORT
The Audit Committee provides assistance to the Board of Directors in fulfilling its obligations with respect to matters involving the accounting, auditing, financial reporting, internal control and legal compliance functions of A&B, including the review and approval of all related person transactions required to be disclosed in this Proxy Statement. Among other things, the Audit Committee reviews and discusses with management and Deloitte & Touche LLP, A&B’s independent registered public accounting firm, the results of the year-end audit of A&B, including the auditors’ report and audited financial statements. In this context, the Audit Committee has reviewed and discussed A&B’s audited financial statements with management, has discussed with Deloitte & Touche LLP the matters required to be discussed by applicable Public Company Accounting Oversight Board and SEC rules and, with and without management present, has discussed and reviewed the results of the independent registered public accounting firm’s audit of the financial statements.
The Audit Committee has received the written communication regarding independence from Deloitte & Touche LLP required under the rules of the Public Company Accounting Oversight Board and the SEC, and has discussed with Deloitte & Touche LLP its independence from A&B. The Audit Committee has determined that the provision of non-audit services rendered by Deloitte & Touche LLP to A&B is compatible with maintaining the independence of Deloitte & Touche LLP from A&B in the conduct of its auditing function.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that A&B’s audited consolidated financial statements be included in A&B’s Annual Report on Form 10-K for the fiscal year ended December 31, 20202022 for filing with the SEC. The Audit Committee also has appointed, subject to shareholder ratification, Deloitte & Touche LLP as A&B’s independent registered public accounting firm for 2021.2023.
The foregoing report is submitted by Mr. Pasquale (Chairman), Ms. Laing, Mr. Leong and Mr. Yeaman.
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ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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PROPOSAL NO. 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors is responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The Audit Committee also conducts an annual evaluation of the independent registered public accounting firm. After evaluating, among other things, qualifications, performance and independence of Deloitte & Touche LLP, the Audit Committee has appointed Deloitte & Touche LLP as the independent registered public accounting firm of A&B for the ensuing year, and recommends that shareholders vote in favor of ratifying such appointment. Although ratification of this appointment is not required by law, the Board believes that it is desirable as a matter of corporate governance. Even if the appointment is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time if it determines that such a change would be in our best interests and those of our shareholders. If shareholders do not ratify the appointment of Deloitte & Touche LLP, it will be considered as a recommendation to the Board and the Audit Committee to consider the retention of a different firm. Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting, where they will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from shareholders.
In compliance with the Sarbanes Oxley Act of 2002 and applicable SEC rules, the Audit Committee has adopted policies and procedures for Audit Committee approval of audit and non-audit services. Under such policies and procedures, the Audit Committee pre-approves or has delegated to the Chairman of the Audit Committee authority to pre-approve all audit and non-prohibited, non-audit services performed by the independent registered public accounting firm in order to assure that such services do not impair the auditor’s independence. Any additional proposed services or costs exceeding pre-approved cost levels require additional pre-approval as described above. The Audit Committee may delegate pre-approval authority to one or more of its members for services not to exceed a specific dollar amount per engagement. Requests for pre-approval include a description of the services to be performed, the fees to be charged and the expected dates that the services will be performed. All services provided by Deloitte & Touche LLP during 20202022 were pre-approved in accordance with these policies.
For the years ended December 31, 20202022 and 2019,2021, professional services were performed by Deloitte & Touche LLP (including affiliates) for A&B as follows:
Audit Fees.Fees. The aggregate fees billed for the audit of the Company’s annual consolidated financial statements, including Sarbanes-Oxley Section 404 attestation-related work, for the fiscal years ended December 31, 20202022 and 2019,2021, the reviews of the interim financial statements included in the Company’s Quarterly Reports on Form 10-Q and consents for SEC registration statements were approximately $1,600,000$1,906,000 and $1,966,000,$1,783,000, respectively.
Audit-Related Fees.The aggregate fees billed for Audit-Related services for the fiscal years ended December 31, 20202022 and 20192021 were approximately $0.$56,000 and $124,000, respectively.
Tax Fees.Fees. The aggregate fees billed for professional tax services for fiscal years ended December 31, 20202022 and 20192021 were approximately $17,000 and $34,000, respectively, and were related primarily to tax compliance services in 2020 and 2019.$0.
All Other Fees.Fees. The aggregate fees billed for other services for fiscal years ended December 31, 20202022 and 20192021 were approximately $0.
SHAREHOLDERS WITH THE SAME ADDRESS
Individual shareholders sharing an address with one or more other shareholders may elect to “household” the mailing of the Notice of Internet Availability of Proxy Materials or our annual report and proxy statement. This means that only one Notice of Internet Availability of Proxy Materials or our annual report and proxy statement will be sent to that address unless one or more shareholders at that address specifically elect to receive separate mailings. Shareholders who participate in householding will continue to receive separate proxy cards. We will promptly send a separate Notice of Internet Availability of Proxy Materials or our annual report and proxy statement to a shareholder at a shared address on request. Shareholders with a shared address may also request us to send separate Notices of Internet Availability of Proxy Materials or our annual reports and proxy statements in the future, or to send a single copy in the future if we are currently sending multiple copies to the same address.
Requests related to householding should be mailed to Alexander & Baldwin, Inc., P.O. Box 3440, Honolulu, HI 96801-3440, Attn: Alyson J. Nakamura, Corporate Secretary or by calling (808) 525-8450. If you are a shareholder
ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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whose shares are held by a bank, broker or other nominee, you can request information about householding from your bank, broker or other nominee.
| ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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OTHER BUSINESS
The Board of Directors of A&B knows of no other business to be presented for shareholder action at the Annual Meeting. However, should matters other than those included in this Proxy Statement properly come before the Annual Meeting, the proxy holders named in the accompanying proxy will use their best judgment in voting upon them.
SHAREHOLDER PROPOSALS FOR 20222024
Proposals of shareholders intended to be presented pursuant to Rule 14a-8 under the Exchange Act at the 20222024 Annual Meeting of A&B must be received at the headquarters of A&B on or before November 16, 202114, 2023 in order to be considered for inclusion in the year 20222024 Proxy Statement and proxy.
In order for proposals of shareholders made outside of Rule 14a-8 under the Exchange Act to be considered “timely” within the meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be received at the headquarters of A&B not later than December 28, 2021.26, 2023. A&B’s Bylaws require that shareholder proposals made outside of Rule 14a- 8 under the Exchange Actor a notice of nomination of candidates for election as a director must be submitted to our Corporate Secretary at 822 Bishop Street, Honolulu, HI 96822, in accordance with the requirements of the Bylaws, not later than December 28, 202126, 2023 and not earlier than November 28, 2021.26, 2023.
The Company’s Bylaws provide that no person (other than a person nominated by the Board) will be eligible to be elected a director at an annual meeting of shareholders unless the Corporate Secretary has received, not less than 120 days nor more than 150 days before the anniversary date of the prior annual meeting, a written shareholder’s notice in proper form that the person’s name be placed in nomination. If the annual meeting is not called for a date which is within 25 days of the anniversary date of the prior annual meeting, a shareholder’s notice must be given not later than 10 days after the date on which notice of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever occurs first. To be in proper written form, a shareholder’s notice must include information about each nominee and the shareholder making the nomination. The notice also must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
In addition to satisfying the foregoing requirements under our Bylaws relating to nominations of director candidates, including the deadline for written notice, to comply with the SEC's “universal proxy rules,” stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees at the 2024 Annual Meeting in compliance with Rule 14a-19 promulgated under the Exchange Act must provide written notice containing the information required by Rule 14a-19(b) to our Corporate Secretary at 822 Bishop Street, Honolulu, HI 96822 no later than February 25, 2024.
By Order of the Board of Directors
ALYSON J. NAKAMURA
Vice President and Corporate Secretary
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ALEXANDER & BALDWIN, INC. ▪ 2023 PROXY STATEMENT
52 ALEXANDER & BALDWIN, INC. ▪ 2021 PROXY STATEMENT
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01 - Christopher J. Benjamin04 - Thomas A. Lewis, Jr.07 - Eric K. Yeaman02 - Diana M. Laing05 - Douglas M. Pasquale03 - John T. Leong06 - Michele K. SaitoFor Against Abstain For Against Abstain For Against Abstain1PCFUsing a black ink pen, mark your votes with an X as shown in this example.Please do not write outside the designated areas.03DSUB++
A Proposals — The Board of Directors recommends a vote FOR the nominees listed and FOR Proposals 2 AND 3.2. PROPOSAL TO APPROVE THE ADVISORY RESOLUTION RELATINGTO EXECUTIVE COMPENSATION3. PROPOSAL TO RATIFY THE APPOINTMENT OFDELOITTELEXANDER & TOUCHE LLP AS THE INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM OF THE CORPORATION1. Election of Directors:For Against AbstainNOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below.NOTE: Such other business as may properly come before the meeting or any adjournments thereof.THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTEDFOR PROPOSALS 1, 2 AND 3, AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS PROPERLY MAY COME BEFORE THE MEETING OR ANYADJOURNMENTS OR POSTPONEMENTS THEREOF.q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. qAnnual Meeting Proxy CardFor Against AbstainYou may vote online or by phone instead of mailing this card.OnlineGo to www.envisionreports.com/ALEXor scan the QR code — login details arelocated in the shaded bar below.PhoneCall toll free 1-800-652-VOTE (8683) withinthe USA, US territories and CanadaYour vote matters – here’s how to vote!822 Bishop Street, Honolulu, Hawaii 96813PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 27, 2021SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSThe undersigned hereby appoints Christopher J. Benjamin, Douglas M. Pasquale and Eric K. Yeaman, and each of them, proxies with full power of substitution,to vote the shares of stock of Alexander & Baldwin, Inc., which the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Corporationto be held on Tuesday, April 27, 2021, and at any adjournments or postponements thereof, on the matters set forth in the Notice of Meeting and ProxyStatement, as stated on the reverse side.THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTEDFOR PROPOSALS 1, 2 AND 3, AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS PROPERLY MAY COME BEFORE THE MEETING OR ANYADJOURNMENTS OR POSTPONEMENTS THEREOF.PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.(continued and to be marked, dated and signed, on other side)Proxy — ALEXANDER & BALDWIN, INC.q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. qC Non-Voting Items++Change of Address — Please print new address below.Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders.The Proxy Statement and the 2020 Annual Report to Shareholders are available at: www.envisionreports.com/ALEXBALDWIN, INC. ▪ 2023 PROXY STATEMENT
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The 2021 Annual Meeting of Shareholders of Alexander
ALEXANDER & Baldwin, Inc. will be held onTuesday, April 27, 2021 at 8:00 A.M. local time, virtually via the internet at www.meetingcenter.io/245597085.To access the virtual meeting, you must have the information that is printed in the shaded barlocated on the reverse side of this form.The password for this meeting is — ALEX2021.BALDWIN, INC. ▪ 2023 PROXY STATEMENT
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