Posted on: Sunday, May 2, 2004
Executive pay detailed
| Nonprofit leaders among top-paid Hawai'i CEOs | ||||||||||||
| Executive pay, executive perks: Some of the most highly paid business leaders in Hawai'i | ||||||||||||
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CEO COMPENSATIONS (Charts)
By Deborah Adamson
Advertiser Staff Writer
Afree MBA education and use of a San Francisco apartment were some of the perks Hawai'i executives enjoyed in their latest fiscal year, on top of hefty paychecks. And they didn't have to be leaders of companies that sold shares to the public: Some top earners came from nonprofit organizations.
Walter A. Dods Jr., chairman of First Hawaiian Bank, commanded the state's highest salary, bonus and other compensation at $2.5 million last year. His perks included $72,000 in expenses for a San Francisco apartment he used. Following Dods is Robert Clarke, chairman, president and chief executive of Hawaiian Electric Industries, who got $1.31 million. Allen Doane, president and chief executive of Alexander & Baldwin, came in third at $1.1 million.
The surprising fourth works for a nonprofit: Roger Drue, president and chief executive of Hawaii Pacific Health, which operates Kapiolani Health and Straub Clinic, collected $725,076 in salary and other compensation in fiscal 2002, the latest year for which financial data was available. Drue is set to retire in July and will be replaced by Chuck Sted. Fifth was Ron Migita, president and CEO of merger-bound CB Bancshares, who took in $644,984 in 2003.
Public companies, unions and nonprofit organizations must file reports with the federal government listing compensation for top executives. A review of those records shows 78 percent of the top executives at 40 Hawai'i organizations earned a salary of more than $100,000 in their latest fiscal year.
Among labor unions, the highest-paid executive was Gary Rodrigues, former state director of United Public Workers Local 646, who pulled down $273,746, according to a 2002 filing with the U.S. Department of Labor. Last year, he was convicted of mail fraud, embezzling union money and related charges. He is free pending appeal. Lynn Kinney, secretary treasurer of the Painters AFL-CIO Local 1791, took in $228,690. Ron Taketa, financial secretary of the United Brotherhood of Carpenters Local 745, got $193,255 to come in third.
Michael O'Neill, chairman and CEO of Bank of Hawaii, didn't get a salary or bonus last year. But he owned $101.7 million worth of Bank of Hawaii stock and unexercised options as of year-end, the highest among public company CEOs.
"Clearly, I'm in bed with you, the shareholders," O'Neill said at the bank's annual shareholders meeting last week. "So far, it's been a comfortable bed."
O'Neill is followed by Doane of Alexander & Baldwin, who had $23.9 million in stock and option holdings, including nearly $600,000 worth of shares awarded to him last year. Maui Land's Cole was third at $5.5 million.
Dods, who cashed out his First Hawaiian Bank holdings for about $30 million when BNP Paribas acquired the bank three years ago, had $547,278 worth of the parent company's shares at the end of 2003.
Stock holdings separate many CEOs of public companies from the union and nonprofit executives.
"Only people in public companies have that avenue open to them," said Lawrence Boyd, labor economist for the University of Hawai'i's Center for Labor Education and Research. "If they are worth that kind of money, it should show."
Compensation should be tied to performance, and it should be clear why there's a big pay gap between the CEO and the rank and file, Boyd said.
In 2003, the average Hawai'i CEO compensation — salary, pay and other benefits — rose by half a percent for publicly held companies. The year-over-year increase ranges from a high of 63 percent for Dennis Simonis, president of ML Macadamia Orchards, to a decline of 64 percent for Arnoldus, who didn't get a bonus last year. David Cole of Maui Land & Pineapple was not included, because he became CEO only in 2003.
The share prices of Hawai'i's public companies averaged a total return — stock price appreciation plus reinvested dividends — of 28 percent last year, versus the S&P 500's 29 percent.
The highest was a 118 percent gain for Maui Land, while the lowest return was a dip of 54 percent for Cyanotech.
Nationally, CEOs in office at least two years had a 7.2 percent increase in their 2003 salary and bonus, to a median of $2.12 million, according to a survey of 350 major U.S. corporations by Mercer Human Resource Consulting in New York.
Meanwhile, the paychecks of nonunion salaried workers rose by 3.6 percent, the smallest gain since Mercer launched its survey in 1989.
Among nonprofit healthcare providers, Gary Okamoto of The Queen's Health System had the highest total compensation after Hawaii Pacific Health's Drue. He got $480,629, which included $65,640 in MBA expenses paid for by The Queen Emma Foundation. Third was Robert Walker, president and CEO of Castle Medical Center. He walked away with $421,518 in fiscal 2002.
William O'Connor, president and CEO of Rehabilitation Hospital of the Pacific, who has since resigned, received $697,965 in overall compensation for 2002. That includes an unspecified amount of severance pay. Public filings show a base salary of $209,961 for him in the prior year.
"Not-for-profits exist because we recognize that certain things, like healthcare, should be widely distributed," said Boyd, the labor economist. But when executive pay for these organizations reach the $400,000 level, "there should be criteria for performance."
In 2002, Hawaii Pacific Health lost $2.5 million on revenue of $574.6 million, yet it paid CEO Drue total compensation of $725,076. But that fiscal year included merger-related costs, which hurt the bottom line, said spokeswoman Pat Oda. Moreover, Drue's take had fallen by 18 percent from the previous year.
Among other nonprofits, the highest salary and other compensation went to Aloha United Way President Irving Lauber, who took in $173,234. Hale Makua's President Anthony Krieg was second at $168,798, and third was Donald Anderson of the YMCA of Honolulu, with $156,691.
Marty Katz, with Mercer's executive compensation group, said nonprofit organizations have to pay competitive salaries to attract and retain top management.
"They need very highly qualified people to compete in a world where endowments and donations are shrinking," he said.
Among labor unions, leaders of the largest groups didn't necessarily receive the highest pay. The Hawaii Government Employees Association Local 152 has about 42,000 members, and paid Executive Director Russell Okata $128,688. But Kinney of the 1,458-member painters union got 78 percent more.
If each top executive's compensation were divided by its membership, Business Representative Thaddeus Tomei of the 193-strong Elevator Constructors Local 126 had the highest pay, at $603 per head, for a total take of $116,416.
Second was Jerry Ahue, president of the Communications Workers Local 293, at $577 per member. He pulled in a total of $109,133, with 189 members. On a per-member basis, HGEA's Okata commanded the cheapest compensation, at $3.
Leaders of unions in the construction industry tend to be better-paid because they have more complex responsibilities, said Bill Puette, director of the Center for Labor Education and Research at the University of Hawai'i.
Unlike other union leaders, they often handle healthcare benefits and apprentice programs along with other duties.
Reach Deborah Adamson at 525-8088 or dadamson@honoluluadvertiser.com.
