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The Honolulu Advertiser

Posted at 12:07 p.m., Tuesday, January 13, 2004

Panel recommends raises for Kamehameha trustees

By Vicki Viotti
Advertiser Staff Writer

A court-appointed panel has recommended nearly doubling the salary of the Kamehameha Schools trustees and raising the pay of its chairperson by almost three-quarters.

The report of the three-member Trustee Compensation Committee for the schools was filed Dec. 22 with the state Probate Court. The court will take up the recommendation on trustee pay, one of the most controversial issues dogging the charitable trust in recent years, on Jan. 23.

If the court approves the panel's recommendation, the annual salary for each trustee would increase from $97,500 to $180,000. The chairman would be paid $207,000, up from $120,00 a year.

The board of trustees now is chaired by Constance Lau. Other members are J. Douglas Ing, Robert Kihune, Diane Plotts and Nainoa Thompson.

Kekoa Paulsen, a spokesman for the multi-billion-dollar trust, said the trustees have decided not to comment on the recommendation until the court makes the final decision.

Hugh Jones, the deputy state attorney general that has monitored the overhaul of the trust in the past seven years, said a response to the report is under review and added that objections are "possible."

In May 1999, Probate Judge Kevin Chang appointed the compensation committee, chairman Michael Rawlins and members Colbert Matsumoto and Allen Hoe. The panel's recommendation is based in part on the advice of Martin L. Katz, an executive compensation consultant with the firm Mercer Human Resources Consulting.

According to the panel's report, Mercer surveyed national data, interviewed the trustees, staff with the state attorney general's office before submitting his report in November. The panel decided that the compensation should be a "service-based" retainer fee, without regard to the number of meetings the trustees attend.

The committee "is convinced that presently and for the foreseeable next few years, being a Kamehameha Schools trustee is virtually a full-time job."

"Your committee firmly believes that its determination and recommendation accurately reflects the true nature and value of the individual trustees’ contributions during this difficult and critical transition period," the report states.

However, Jones said the state had received preliminary reports from the panel and decided to commission its own salary study based on the Guidestar.org database of charitable organizations.

Jones said the Guidestar report indicated the national average for compensation to boards on public charities is $6,190. The Kamehameha board already is paid more than 98 percent of public charities, he added.

"We're considering what we want to put in our response," Jones said. "It's possible we will be making objections."

The trust assets totaled $4.3 billion for the year ending June 30, 2002. The trust is scheduled to issue its 2003 annual report tomorrow.

Before the reorganization of the trust in 1999, trustee compensation had been based on a percentage of the estate's gross receipts. For the fiscal year ending June 1998, the five trustees each received more than $1 million.

Under a 1999 state law, compensation of trustees of charitable trusts must be "reasonable." A three-member committee was established to come up with a compensation plan through an agreement between five former trustees — removed from their positions by court order — and Matsumoto, whom the court earlier appointed to review estate finances.