Bankoh workers share profits

By Frank Cho
Advertiser Staff Writer

Melanie Silva, left, and Hien Nguyen, tellers with the Bank of Hawaii downtown branch, keep track of the company stock they got recently. The stock program is "unusual, to say the least," a bank official said. Eugene Tanner • The Honolulu Advertiser

For years, Melanie Silva could have cared less about the stock market's gyrations.

She didn't own any stocks and had no intention of buying them.

But nearly every day now the 25-year-old teller at Bank of Hawaii's downtown branch looks in on how the bank's stock is performing. And she is not alone.

More than 3,200 of Bank of Hawaii's employees have received free shares of Bankoh stock worth millions of dollars in recent weeks as part of the bank's effort to enhance customer service and create some excitement about the company's planned turnaround.

"I think it's very exciting. I mean we're actually a part of the company," said Hien Nguyen, a 23-year-old bank teller who received 100 shares of restricted Bankoh stock.

An employees' restricted stock grant program this broad is relatively rare in the corporate world. But it is only the latest tool Chairman and Chief Executive Officer Mike O'Neill is using to help turn around the bank's financial performance, which has suffered in recent years.

O'Neill, who has made increasing the bank's stock price the cornerstone of his turnaround strategy, is hoping that giving employees a bigger financial stake in the bank will improve customer service, and the company's bottom line.

Pacific Century Financial Corp., Bank of Hawaii's parent company, ran into asset quality problems in the late 1990s that wiped out much of its profits and drew close scrutiny from banking regulators. The bank has since announced plans to sell nearly all of its operations outside of the state to shave $5 billion in assets by yearend to focus its business on Hawai'i.

Only employees from teller to vice president of the surviving bank operations are receiving the one-time stock deal, the company said.

The smallest employee stock grant was for 100 shares, rising from there depending on an employee's position in the bank and other factors, said Neal Hocklander, a vice chairman at Bank of Hawaii.

"It's very unusual to say the least," Hocklander said. "In all my years of human resources, I am not aware of another situation where a company has offered restricted stock to everyone."

Based on yesterday's close, the bank's stock was up 10.5 percent from $22.40 a share when it was authorized to employees April 27. Because there was no cost to employees, the entire price would be a profit.

Workers who were hired after April will not receive the unrestricted stock grants. But the bank is looking at other options to give them an ownership stake in the company.

"We are exploring and considering what programs that we might be able to offer our employees on a ongoing basis, but we have not decided or determined what that program might be," Hocklander said.

But nothing in life is ever completely free. Under the grant, employees must remain with the bank for three years before they can sell the stock.

Hocklander said that if an employee leaves early, the shares are forfeited.

But some workers don't seem to mind the restrictions.

"I think that one of the good things about it," Silva said, "is it keeps people with the bank."

Frank Cho can be reached at 525-8088, or by e-mail at fcho@honoluluadvertiser.com.