Challenger Charles Djou has been trying to make Mayor Kirk Caldwell’s position as a director of Territorial Bancorp has become an issue in the mayoral campaign.
Media accounts of Caldwell’s compensation from Territorial have relied on the range of values appearing in the mayor’s annual financial disclosure statements.
For example, Gordon Pang’s story in today’s Star-Advertiser on the Caldwell-Djou debate puts the value of Territorial shares owned by Caldwell “between $900,000 and $999,999 in 2015.” Civil Beat similarly cited a range for cash compensation based on financial disclosures.
These values are imprecise because the city’s ethics law, like the state law, require reporting of financial interests in broad categories rather than dollar amounts.
In this case, though, it’s unnecessary to rely on the financial disclosures, which are inherently imprecise.
Territorial Bancorp, the parent company of Territorial Savings, is a publicly traded corporation and must report compensation paid to its officer and directors.
The company’s latest proxy statement shows Caldwell and other directors have received cash payments, as well as both stock options and grants of restricted stock. These types of stock have different tax consequences and other technical differences.
I have to leave the untangling what those mean to a more financially savvy reader or another time.
In any case, the following discussion is copied directly from Territorial Bancorp’s 2016 Proxy Statement (SEC Form 14A).
Each of Territorial Savings Bank’s outside directors receives an annual retainer for board meetings of $32,650 per year and an annual retainer for committee meetings of $2,450 per year. Each of Territorial Bancorp Inc.’s outside directors receives an annual retainer for board meetings of $5,100 per year and an annual retainer for committee meetings of $615 per year. The retainer fees are increased to the following amounts for the following committees: the Chairman of Territorial Savings Bank’s Audit Committee receives a committee retainer of $2,650 and the Chairman of Territorial Bancorp Inc.’s Audit Committee receives a committee retainer of $8,570; the Chairman of Territorial Savings Bank’s Compensation Committee receives a committee retainer of $4,900; and the Chairman of Territorial Bancorp Inc.’s Compensation Committee receives a committee retainer of $1,225. Receipt of full retainer payments is based upon a director attending at least 75% of board or committee meetings, as applicable, with reductions for the failure to attend such number of board or committee meetings.
The following table sets forth for the year ended December 31, 2015, certain information as to the total remuneration we paid to our directors. Mr. Kitagawa does not receive separate fees for service as a director.
Amounts represent cash dividends paid on shares of unvested restricted stock.
At December 31, 2015, Directors David Murakami, Richard Murakami, Ikeda, and Caldwell each had 6,141 shares of unvested restricted stock, and Director Tanaka had 547 shares of unvested restricted stock. In addition, at December 31, 2015, Directors David Murakami, Richard Murakami, Ikeda, and Caldwell each had 34,395 vested stock options and 6,880 unvested stock options. Director Tanaka had 2,468 vested stock options and 617 unvested stock options.
On August 19, 2010, Directors David Murakami, Richard Murakami, Ikeda and Caldwell were each granted 36,821 shares of restricted stock and 41,275 stock options with an exercise price of $17.36 per option. Shares of restricted stock and options vest at a rate of one-sixth per year beginning August 19, 2011.
On August 19, 2012, Director Tanaka was granted 2,735 shares of restricted stock and 3,085 stock options with an exercise price of $23.62 per option. Shares of restricted stock and options vest at a rate of one-fifth per year beginning August 19, 2012.
The Company has no stock ownership guidelines for directors. However, for previous grants under our 2010 Equity incentive Plan each director must retain 50% of each restricted stock or stock option award (net of taxes) until their service on the Board ends. We have not determined whether we will maintain the stock retention requirement for future grants made under the 2010 Equity Incentive Plan.