Is there a story lurking here?

Perhaps. Perhaps not. But I thought I would share a simple example of where news stories originate when you’re not relying on press releases and insider tips. One of the skills you learn is pattern recognition, which is in part learning to spot deviations from the norm.

So yesterday I was browsing for ideas. I’m not sure how I ended up on the SEC web site looking at recent filings by Hawaii companies. There was an April 27, 2012 Form 8K from Bank of Hawaii reporting on actions taken at the company’s annual meeting of the same date. It’s short and to the point, consisting of votes on three matters taken up at the annual meeting.

The ratification of the company’s selection of an independent public accounting firm was apparently noncontroversial. There were 40,163,608 votes in favor, 286,745 opposed, and 60,293 abstentions. The numbers aren’t people, but the number of shares represented.

Then there was an “advisory vote” on the executive compensation plan. Here’s how the issue was described in the BOH proxy statement in advance of the annual meeting.

PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) enacted in 2010 provides shareholders the opportunity to vote, on an advisory (nonbinding) basis, to approve the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s compensation disclosure rules.

As an advisory vote, this proposal is not binding upon the Company. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by shareholders and will continue to consider the outcome of the vote when making future compensation decision for its executive officers. The Company currently conducts annual advisory votes on executive compensation. The Company’s shareholders approved its executive compensation at the 2011 Annual Meeting of Shareholders.

As described in the Compensation Discussion and Analysis, the primary focus of the Bank of Hawaii executive compensation programs is to encourage and reward behavior that promotes sustainable growth in shareholder value. Our executive compensation programs reflect best practices and are designed to balance risk and reward in relation to the Company’s overall business strategy and further align management’s interests with shareholders’ interests. The Company’s commitment to a performance culture is reflected in its strong financial performance in recent years despite challenging economic conditions. Accordingly, the Board of Directors recommends that shareholders approve the executive compensation programs by approving the following advisory resolution:

RESOLVED, that the shareholders of Bank of Hawaii Corporation approve, on an advisory basis, the compensation of the individuals identified in the Summary Compensation Table, as disclosed in the Company’s 2012 proxy statement pursuant to the compensation disclosure rules of the SEC, which disclosure includes the Compensation Discussion and Analysis section, the compensation tables and the accompanying footnotes in this proxy statement.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE FOREGOING PROPOSAL

And here there was a little blip on the radar.

There were 32,122.803 in favor, or 20% less than the vote on the CPA appointment. THere were 519,361 opposed, 868,193 abstentions, and a block of 7,000,290 “non-votes”.

So there was apparently a little more dissension on that vote.

Then there was the election of directors.

All but two directors were approved with about 33 million shares voting in favor, give or take a few hundred thousand.

The remaining two directors received nearly 20% less. Donald Takaki, a board member for 15 years, received 28,257,996 votes, 5,252,360 were withheld (a polite way of describing votes against). Kent Lucien lagged behind with 27,346.973 votes in favor and 6,163,383 withheld. A block of 7,000,290 shares were listed as “non-votes.”

There aren’t any clues here for why those two directors faced more apparent opposition, but it certainly looks like there must have been opposition from one or more institutional investors.

This would typically be a starting point for reporting–was there a technical explanation for the discrepancies in votes? Is there a disaffected block of shareholders? What’s going on?

Here are the descriptions provided by the company of Takaki and Lucien.

Donald M. Takaki;
70; 1997

Chairman and CEO, HawkTree International, Inc. (a diversified holding company engaged in transportation, leasing, business records management, and real estate) since 1999. As Chairman and CEO of Island Movers, Inc., Mr. Takaki has grown his family-owned and operated transportation services company into Hawaii’s largest transportation service company ranked among the top 250 companies in the State of Hawaii. He is the former Chairman of the Hawaii Convention Authority and former board member of Hawaiian Airlines. Mr. Takaki has been a director of Bank of Hawaii, the Company’s major subsidiary, since 1990. He is committed to his community, having served on the boards of many business and civic organizations, including the Hawaii Visitors and Convention Bureau (Chairman 2004-2006), Hawaii Hotel & Lodging Association, Hawaii Korean Chamber of Commerce, Japanese Cultural Center of Hawaii, and Iolani School. He serves as President and General Manager, Pacific Region Baseball, Inc., a non-profit organization that brings student athletes to and from Hawaii and Asia to promote cross cultural learning. In 2007, Mr. Takaki was recognized as the Distinguished Public School Graduate by the Public Schools of Hawaii Foundation. Mr. Takaki’s deep involvement in the community and knowledge of business affairs throughout the Hawaiian Islands, as well as the experience gained through 15 years of service on our Board, make him well-qualified for service as a director.

Kent T. Lucien;
58; 2006

Vice Chairman and Chief Financial Officer of the Company since April 2008; Trustee, C. Brewer & Co. Ltd., (a Hawaii corporation engaged in agriculture, real estate and power production) from April 2006 to December 2007; and Chief Executive Officer Operations, C. Brewer & Co., Ltd. from May 2001 to April 2006. He also held the positions of Controller and CFO and various other executive positions at C. Brewer & Co., Ltd. Prior to C. Brewer & Co., Ltd., Mr. Lucien worked for Price Waterhouse Coopers. He is a Certified Public Accountant. Mr. Lucien serves on the board of Wailuku Water Company LLC and Maui Land & Pineapple Co., Inc. He has been a director of Bank of Hawaii, the Company’s major subsidiary, since 2006. Mr. Lucien received his bachelors from Occidental College and his MBA from Stanford University. Mr. Lucien’s senior executive experience in significant Hawaiian businesses and his background in finance and accounting led the Board to nominate him as a director in 2006 and, prior to becoming the Company’s Chief Financial Officer, to serve on the Audit & Risk Committee as its chair and to be designated as a financial expert. These qualifications, coupled with the deep knowledge of the Company’s finances gained in his current role continue to qualify him for Board service.

Why would they get less support than the other directors? And who voted the shares that were withheld? Interesting questions, for sure.