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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.       )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

Bank of Hawaii Corporation

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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Your VOTE is important!

Notice of 2023

Annual Meeting of Shareholders

and Proxy Statement

Meeting Date: April 28, 2023

Bank of Hawai‘i Corporation

130 Merchant Street

Honolulu, Hawai‘i 96813

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LETTER FROM OUR CHAIRMAN, CEO, AND PRESIDENT

March 17, 2023

Dear Shareholder:

The 2023 Annual Meeting of Shareholders of Bank of Hawai‘i Corporation will be held via live webcast on Friday, April 28, 2023, at 8:30 a.m. Hawaii Standard Time.  Each shareholder will be asked to provide their control number when logging in to attend the virtual Annual Meeting.  Shareholders who hold shares through an intermediary, such as a bank or broker, will also be able to use the control number provided by their bank or broker to attend and participate at the virtual Annual Meeting.  More detailed instructions on how to attend and vote at the virtual Annual Meeting are found on pages 3 and 4.

The Notice of Meeting and Proxy Statement accompanying this letter describe the business we will consider and vote upon at the meeting.  A report to shareholders on the affairs of Bank of Hawai‘i Corporation also will be given and shareholders will have the opportunity to ask about matters of interest concerning the Company through the virtual meeting platform during the virtual Annual Meeting.

For reasons explained in the accompanying Proxy Statement, the Board of Directors recommends that you vote FOR Proposal 1: Election of Directors, FOR Proposal 2: Advisory Vote on Executive Compensation, FOR "Every Year" on Proposal 3: Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation, and FOR Proposal 4: Ratification of the Re-appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the 2023 fiscal year.

Your vote is very important.  Please complete, sign, date and return the enclosed proxy card and mail it promptly in the enclosed postage-paid return envelope, even if you plan to virtually attend the Annual Meeting.  If you wish to do so, your proxy may be revoked at any time before voting occurs at the virtual Annual Meeting.  You may also vote and change your vote at the virtual Annual Meeting.

On behalf of the Board of Directors, thank you for your cooperation and support.

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NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS

To be held April 28, 2023

To Our Shareholders:

The 2023 Annual Meeting of Shareholders of Bank of Hawai‘i Corporation will be held via live webcast at www.meetnow.global/M7CT9HZ on Friday, April 28, 2023, at 8:30 a.m. Hawaii Standard Time for the following purposes:

These items of business are more fully described in the proxy statement accompanying this Notice, which is being mailed to shareholders on or about March 17, 2023.  Shareholders of record of Bank of Hawai‘i Corporation common stock (NYSE: BOH) at the close of business on March 2, 2023 are entitled to attend the meeting and vote on the business brought before it.  A list of such shareholders shall be open to the examination of any shareholders upon request following the 2023 Annual Meeting of Shareholders.

We look forward to connecting with you at the meeting.  However, if you cannot attend the meeting, your shares may still be voted by telephone or via the Internet, or you may complete, sign, date, and return the enclosed proxy card in the enclosed postage-paid return envelope.

Honolulu, Hawai‘i

March 17, 2023

Important Notice Regarding the Availability of Proxy Materials

for the 2023 Annual Meeting of Shareholders to be Held on April 28, 2023.

The Proxy Statement and the Bank of Hawai‘i Corporation 2022 Annual Report

on Form 10-K to Shareholders for the year ended December 31, 2022, are available at www.edocumentview.com/boh.  

We encourage you to access and review all of the information in the proxy materials before voting.

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BANK OF HAWAI‘I CORPORATION

PROXY STATEMENT

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PROXY STATEMENT SUMMARY

This summary contains highlights of information contained elsewhere in our proxy statement and does not contain all information to be considered.  We encourage you to read the entire proxy statement before voting.

PROPOSALS FOR THE ANNUAL MEETING

VOTING YOUR SHARES

You may vote if you are a shareholder of record as of the close of business on March 2, 2023.  Each share of common stock is entitled to one vote.  Series A Preferred Stock generally is not entitled to vote.  On March 2, 2023 (the “Record Date”), there were 39,836,941 shares of common stock issued and outstanding.  All votes are confidential.

Even if you plan to attend the Annual Meeting, we encourage all shareholders to vote in advance of the meeting.

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HIGHLIGHTS

Bank of Hawaii Corporation (“Bank of Hawai‘i Corporation” or the “Company”) is an independent regional financial services company. The Company’s principal subsidiary, Bank of Hawaii (“Bank of Hawai‘i” or the “Bank”), was founded in 1897 and provides a broad range of financial products and services to businesses, consumers and governments in Hawai‘i and the West Pacific.

Bank of Hawai‘i Corporation is committed to meeting high standards of ethical behavior, corporate governance, and business conduct.  The first two columns in the table below summarize the Company's governance and compensation practices, demonstrating what we do to drive performance and manage risk and is current through March 1, 2023.  The third column highlights the Company's business performance during 2022.

See “Sound Environmental, Social, and Governance Leadership” starting on page 19, “Compensation Discussion and Analysis” starting on page 36, and “Business and Performance Overview” starting on page 42.  

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PROXY STATEMENT

GENERAL INFORMATION

The Board of Directors (the “Board”) of Bank of Hawai‘i Corporation is soliciting the enclosed proxy for the Company's 2023 Annual Meeting of Shareholders (the “Annual Meeting”).  The proxy statement, proxy card, and the Company's Annual Report to Shareholders and Annual Report on Form 10-K are being distributed to the Company's shareholders on or about March 17, 2023.

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

The advisory vote on executive compensation (Proposal 2), the advisory vote on the frequency of future advisory votes on executive compensation (Proposal 3) and the advisory vote on the ratification of the reappointment of our independent registered public accounting firm (Proposal 4) are also decided by a majority of votes cast.  For Proposals 1, 2 and 3, broker non-votes will be treated as not entitled to vote and will not affect the outcome.  For Proposal 4, your broker, bank, trustee, or other nominee may exercise its discretion and vote.  Abstentions will have the same effect as votes cast against the proposal.

Holders of our common stock are entitled to one vote per share of common stock held on the Record Date. The outstanding shares of Series A Preferred Stock are not entitled to any voting rights for any current proposal.

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The online meeting will begin promptly at 8:30 a.m. Hawaii Standard Time. We encourage you to access the virtual meeting website prior to the start time to leave ample time for check-in. Please follow the instructions as outlined in this proxy statement.  

If you hold your shares through a bank or broker as a beneficial shareholder, and want to attend the Annual Meeting online by webcast (with the ability to ask a question and/or vote, if you choose to do so) you have two options:

Submit proof of your proxy power (“Legal Proxy”) from your broker or bank reflecting your Bank of Hawai‘i Corporation holdings along with your name and email address to Computershare. Requests for registration must be labeled “Legal Proxy” and be received no later than 5:00 p.m. Eastern Time, on April 27, 2023. You will receive a confirmation of your registration by email after Computershare receives your registration materials. Requests for registration should be directed to Computershare at the following:

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For the 2023 proxy season, an industry solution has been agreed upon to allow beneficial shareholders to register online at the Annual Meeting to attend, ask questions and vote.  We expect that the vast majority of beneficial shareholders will be able to fully participate using the control number received with their voting instruction form. Please note, however, that this option is intended to be provided as a convenience to beneficial shareholders only, and there is no guarantee this option will be available for every type of beneficial shareholder voting control number. The inability to provide this option to any or all beneficial shareholders shall in no way impact the validity of the Annual Meeting. Beneficial shareholders may choose the Register in Advance of the Annual Meeting option above, if they prefer to use this traditional, paper-based option. You may vote your shares as usual via ProxyVote.com.

In any event, please go to www.meetnow.global/M7CT9HZ for more information on the available options and registration instructions.

Computershare

1-888-724-2416

1-781-575-2748

Hours: 8:30 a.m. - 6:00 p.m. Eastern Time

Proposals To Be Included In The Proxy Statement and Voted On At The Meeting.  Proposals that shareholders wish to have included in the proxy statement for the 2024 Annual Meeting of Shareholders must be made in accordance with SEC Rule 14a-8.  Proposals must be received by the Company's Corporate Secretary on or before November 18, 2023, at the above address.

Proposals To Be Voted On At The Meeting Only.  Under Section 1.12 of the Company's Bylaws, for a shareholder to bring a proposal before the 2024 Annual Meeting, the Company must receive the written proposal not later than 80 days nor earlier than 90 days before the first anniversary of the 2023 annual meeting; in other words, not earlier than January 28, 2023, and no later than February 7, 2024.  The proposal also must contain the information required in the Bylaws.  If you wish to make one or more nominations for election to the Board, the required information includes, among other things, the written consent of such individual to serve as director and (i) the name, age, business address and, if known, residence address of each nominee, (ii) the principal occupation or employment of each nominee, and (iii) the number of shares of Bank of Hawai‘i Corporation common stock each nominee beneficially owns.  These advance notice provisions are separate from the requirements a shareholder must meet to have a proposal included in the proxy statement under SEC rules.  By complying with these provisions, a shareholder may present a proposal in person at the meeting, but will not be entitled to have the proposal included in the Company's proxy statement unless they comply with the requirements described in the preceding paragraph.  Persons holding proxies solicited by the Board may exercise discretionary authority to vote against such proposals.  In addition to satisfying the foregoing requirements under the Company’s Bylaws, to comply with the “universal proxy rules”, shareholders who intend to solicit proxies in support of director nominees at the 2024 Annual Meeting must include the additional information required by SEC Rule 14a-19(b) including a statement that they intend to solicit 67% of outstanding voting shares.

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PROPOSAL 1: ELECTION OF DIRECTORS

BOARD OF DIRECTORS

The Company’s Certificate of Incorporation requires that the Company’s Board consist of not fewer than three directors and not more than 15 directors, with the exact number to be determined by the Board.  On October 22, 2021, the Board fixed the number of directors for election at the annual meeting at 14.  Each of the 14 directors listed below has been nominated for a one-year term to serve until the 2024 Annual Meeting of Shareholders and until his or her successor is elected and qualified or until the director’s earlier resignation, removal, death or disqualification. In the event that any or all of the director nominees are unable to stand for election as director, the Board, upon the recommendation of the Nominating & Corporate Governance Committee, may select different nominees for election as directors.

Certain information with respect to each of the nominees is set forth below, including his or her principal occupation, qualifications, and directorships during the past five years.  Each nominee has consented to serve and all nominees are currently serving on the Company’s Board.  The nominees were each recommended to the Board by the Company’s Nominating & Corporate Governance Committee whose goal is to assemble a board that operates cohesively, encourages candid communication and discussion, and focuses on activities that help the Company create sustainable long-term growth and maximize shareholder value.  The Nominating & Corporate Governance Committee also looks at the individual strengths of directors, their ability to contribute to the Board, and whether their skills and experience complement those of the other directors.  A more detailed discussion on the nomination process and the criteria the Nominating & Corporate Governance Committee considers in their evaluation of director candidates is found in the Commitment to Effective Corporate Governance section which begins on page 19.

The Board of Directors recommends a vote “FOR” each of the nominees.

ARC - Audit & Risk Committee

BPC - Benefit Plans Committee

DAC - Digital Advisory Committee

FIMC - Fiduciary & Investment Management Committee

HRC - Human Resources & Compensation Committee

NCGC - Nominating & Corporate Governance Committee

As one of the largest financial institutions in Hawai‘i, finding director candidates with a deep knowledge of the focused market in which we operate is critical.  The nominees' breadth and diversity of experience, mix of qualifications, attributes, and skills strengthen our Board of Director's effective oversight of the Company's business.  While our longer tenured directors bring a wealth of experience and deep understanding of the business, we recognize the need for fresh perspectives, have consistently added new directors, and are committed to continued board and committee diversity and refreshment.

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ATTRIBUTES AND SKILLS OF THE NOMINEES

Nominees for directors are selected based on, among other criteria, their integrity, informed judgment, financial literacy, high performance standards, accomplishments and reputation in the community, experience, skill sets, ability to commit adequate time to Board and committee matters, and to act on behalf of shareholders.  The criteria also includes a determination of the needs of the Board and of the individual’s personal qualities and characteristics with those of the other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of the Company and its shareholders.  The composition of the Board should encompass a broad range of skills, expertise, industry knowledge, diversity of background and viewpoint, and professional and community contacts relevant to the Company’s business.

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QUALIFICATIONS AND EXPERIENCE

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BENEFICIAL OWNERSHIP

At the close of business on January 31, 2023, Bank of Hawai‘i Corporation had 39,894,680 shares of its common stock outstanding.  As of January 31, 2023, the following table shows the amount of Bank of Hawai‘i Corporation common stock owned by (i) each person or entity who is known by us to beneficially own more than five percent of Bank of Hawai‘i Corporation’s common stock; (ii) each current director and director nominee, (iii) each of the executive officers named in the Summary Compensation Table (the “named executive officers”), and (iv) all of our directors and executive officers as a group.  Unless otherwise indicated and subject to applicable community property and similar statutes, all persons listed below have sole voting and investment power over all shares of common stock beneficially owned.  Share ownership has been computed in accordance with SEC rules and does not necessarily indicate beneficial ownership for any other purpose.

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SOUND ENVIRONMENTAL, SOCIAL, AND GOVERNANCE LEADERSHIP

The Company is dedicated to making corporate social responsibility a part of everything we do in the communities we serve, including how we manage and develop our people, the products and services we offer, and the investments we make in creating a sustainable and resilient economy in our communities. In 2022, the Company constituted its Environmental, Social and Governance (“ESG”) Committee, which is a cross-functional team of senior executives representing Communications, Community & Employee Engagement, Facilities, Human Resources, Investor Relations, Legal, Risk, and all aspects of our revenue generating businesses. The ESG Committee reports to the Nominating and Corporate Governance Committee of the Board. Senior management and the Board remain committed to being a leader among Hawai‘i’s corporate citizens by fostering an effective and efficient risk and control environment that includes an emphasis on an ethically driven culture, sustainable growth, and an ongoing investment in our employees and our community.

In 2022, the Company published its 2021 ESG Report, which, for the first time, reported according to the Sustainability Accounting Standards Board (“SASB”) framework. In compiling the report, the Company completed an SASB materiality assessment, and examined a range of key stakeholders including investors, customers, colleagues and ESG rating organizations.  In addition, during 2022 we conducted significant shareholder outreach on the topic of ESG and gained many valuable insights.  We welcome the additional transparency and the streamlining of information that comes from aligning our ESG strategies according to SASB guidelines, and will look to mature our ESG strategies and goals going forward.

The Company’s Code of Business Conduct and Ethics drives a workplace and workforce that embraces the highest ethical and moral standards. We maintain strong and confidential reporting processes and procedures that support an open and honest environment in an effort to ensure that the highest principles of integrity and inclusion are maintained.

The Company believes that a diverse and inclusive workforce fosters an environment where everyone can thrive and be successful.  As of December 31, 2022, approximately 87% of the Company’s workforce are ethnically diverse (non-Caucasian) and approximately 63% are female, including 43% and 60% of our senior leaders and managers, respectively.  In addition, we conduct an external pay equity study periodically to ensure that a gender pay gap does not exist.

COMMITMENT TO EFFECTIVE CORPORATE GOVERNANCE

The Company is committed to effective corporate governance practices that enhance and protect shareholder rights including:

Corporate Governance Guidelines

The Company and the Board have adopted Corporate Governance Guidelines (“Governance Guidelines”).  The Governance Guidelines are posted on the Investor Relations page of the Company’s website at www.boh.com.  The Governance Guidelines address director qualification and independence standards, responsibilities of the Board, access to management and access to independent advisors, compensation, orientation and continuing education, Board committees, Chief Executive Officer (“CEO”) evaluation, management succession, Code of Business Conduct and Ethics, shareholder communications to the Board and the Board’s annual performance evaluation.

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The Company’s leadership structure includes both a combined Chairman and CEO and a separate Lead Independent Director.  At this time, the Board believes that it is in the best interests of the Company to have a single individual serve as Chairman and CEO to control and implement the short- and long-term strategies of the Company.  The Board believes that this joint position provides it with the ability to perform its oversight role over management with the benefit of a management perspective as to the Company’s business strategy and all other aspects of the business.  With its Lead Independent Director, this governance structure also provides a form of leadership that allows the Board to function distinct from management, capable of objective judgment regarding management’s performance, and enables the Board to fulfill its duties effectively and efficiently.  The Company’s leadership structure promotes the objectivity of the Board’s decisions and its role in reviewing the performance of management.  Through its leadership and governance processes the Company seeks to establish a governance structure that provides both oversight and guidance by the Board to management regarding strategic planning, risk assessment and management, and corporate performance.

The Company’s Lead Independent Director is appointed by the Board and the current Lead Independent Director, Mr. Raymond P. Vara, Jr., was appointed in April 2020.  The Company’s Governance Guidelines clearly define the Lead Independent Director’s role and duties which include, but are not limited to, serving as Chairman of the Company’s Nominating & Corporate Governance Committee, presiding over regularly scheduled executive sessions of the non-management directors, serving as a liaison between the non-management directors and executive management, and assisting the Board and executive management to ensure compliance with the Governance Guidelines.  

The Board has determined that 12 of the 13 current non-management directors, including the Lead Independent Director, are “independent” as defined by the NYSE rules.  The non-management directors meet in executive session without management in attendance for regularly scheduled meetings.  The non-management directors may also meet in executive session each time the full Board convenes for a meeting.  In 2022, the non-management directors met four times in executive session.  The Lead Independent Director also meets regularly on an individual basis with members of the Company’s executive management team.

Director Qualifications and Nomination Process

The Nominating & Corporate Governance Committee is responsible for identifying and assessing all director candidates and recommending nominees to the Board.  Potential nominees are evaluated based on their independence, within the meaning of the Governance Guidelines and the rules of the NYSE.  Candidates to be nominated as a director, including those submitted by shareholders, are selected based on, among other criteria, their integrity, informed judgment, financial literacy, high performance standards, accomplishments and reputation in the community, experience, skill sets, and ability to commit adequate time to Board and committee matters and to act on behalf of shareholders.  The criteria also include a determination of the needs of the Board and of the interplay between each individual’s personal qualities and characteristics and those of the other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of the Company and its shareholders.  In addition, Board members are expected to participate in continuing education and training opportunities to stay current on corporate governance, industry trends and issues and to enhance their understanding of the Company’s business.

The objective of the Nominating & Corporate Governance Committee is to present a combination of candidates that will result in a Board with a wide range of skills, expertise, industry knowledge, viewpoints, and backgrounds, with business and community contacts relevant to the Company’s business.  To accomplish this, the Nominating & Corporate Governance Committee seeks candidates from different age groups, ethnicities, genders, industries, and experiences, in addition to the criteria described above.  The Board includes directors with experience in public corporations, nonprofit organizations, and entrepreneurial individuals who have successfully run their own private enterprises.  The Board also has the broad set of skills necessary for providing oversight to a financial institution, which includes proven leadership and expertise in finance, accounting, information technology, risk management, lending, investment management, digital marketing, data analytics and communications.  A shareholder may submit a candidate for consideration by the Board to be included in the Board’s slate of director nominees.  Candidates proposed by shareholders will be evaluated by the Nominating & Corporate Governance Committee under the same criteria that are applied to other candidates.  The criteria are set forth above and in the Company’s Bylaws and Governance Guidelines.  Candidates to be considered for nomination by the Nominating & Corporate Governance Committee at the 2023 Annual Meeting of Shareholders must be presented in writing to the Corporate Secretary on or before November 18, 2022, at 130 Merchant Street, Honolulu, Hawai‘i 96813.

Director Experience, Tenure, Diversity and Refreshment

The Board maintains a unique balance of experience, tenure, diversity, cultural and local market knowledge and broad subject matter expertise.  While our longer-tenured directors carry a wealth of experience and deep understanding of the Company and our industry, the Board embraces the need for fresh perspectives and is committed to continued director refreshment. Since 2017, the Board has added six new directors.  On February 24, 2023, the current directors were nominated to stand for re-election at the 2023 Annual Meeting. The Board employs a balanced approach to populating Board Committees.  This refreshment strategy results in a membership that maintains new and contemporary perspectives, ideas and approaches.

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Board and Committee Evaluations

The Nominating & Corporate Governance Committee leads and oversees the annual evaluation of the Board and Board committees.  The annual evaluation includes an individual director self-assessment and an independent third party hosted survey to determine whether the Board and its committees are functioning effectively.  The Nominating & Corporate Governance Committee establishes the evaluation criteria, oversees the evaluation process, discusses the results with the Board, and implements any changes that emerge from the evaluations that the Board deems appropriate to enhance Board effectiveness. 

An independent consultant provides assistance with the design of the online survey instrument and administers the survey on behalf of the Nominating & Corporate Governance Committee, thereby assuring anonymity of participant responses through a secure, encrypted website.  A written report of total sample data, as well as data for the Board committees, is prepared by the consultant, analyzing the closed-end questions and including the verbatim comments offered by directors at the close of each section of the survey that may provide recommendations for improvement.  The report also tracks current data against results from previous surveys, where comparable.  The Nominating & Corporate Governance Committee, through the same third party, distributes a survey to executive management for feedback concerning how the Board and its committees can enhance their effectiveness.

Majority Voting

The Company’s Bylaws and Governance Guidelines provide for majority voting in uncontested elections and a resignation process in the event a director nominee does not obtain a majority of votes cast.  The resignation process provides the Board with discretion to accept or reject a tendered resignation if a majority vote is not obtained.  If the tendered resignation is not accepted by the Board, the Board shall not nominate such director to stand for re-election at the next annual meeting of shareholders.

Communication with Directors

Shareholders and any interested parties may communicate with the Board, non-management directors, or the Lead Independent Director by sending correspondence c/o the Company’s Corporate Secretary, 130 Merchant Street, Honolulu, Hawai‘i 96813.  All appropriate communications received will be forwarded to the Board, non-management directors or the Lead Independent Director as addressed.

Code of Business Conduct and Ethics

The Company has earned its reputation as a respected leader in the communities it serves and in the financial services industry by conducting business in an ethical, responsible and professional manner.  The Company is proud of the high standards of quality and service that have been its hallmark through the years.  These qualities represent fundamental business practices and apply to all directors, officers and employees.

The Company and the Board have adopted a Code of Business Conduct and Ethics (the “Code”) for directors, executive officers (including the Company’s Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Controller) and employees that are posted on the Investor Relations page of the Company’s website at www.boh.com.  The Code addresses the professional, honest and ethical conduct required of each director, officer and employee, conflicts of interest, disclosure process, compliance with laws, rules and regulations (including securities trading), corporate opportunities, confidentiality, fair dealing, protection and proper use of Company assets, and encourages the reporting of any illegal or unethical behavior through robust reporting protocols and whistleblower protections.  The Company also maintains a whistleblower and anti-retaliation policy and encourages conduct reporting through several designated channels, including the Chair of the Audit & Risk Committee, Chief Ethics Officer, General Counsel and a third party hosted anonymous alert line.  A waiver of any provision of the Code may be made only by the Audit & Risk Committee of the Board and must be promptly disclosed as required by SEC and NYSE rules.  The Company will disclose any such waivers, as well as any amendments to the Code, on the Company’s website at www.boh.com.

Policy Prohibiting Hedging and Pledging of Company Stock

The Company’s Securities Trading Policy (the “Policy”) specifically prohibits directors and employees from hedging the risk associated with the ownership of Bank of Hawai‘i Corporation’s common stock.  The Policy also prohibits directors and employees from pledging transactions involving Bank of Hawai‘i Corporation common stock as collateral, including the use of a traditional margin account with a broker-dealer.

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Director Independence

The Board is comprised of a majority of independent directors as defined by the NYSE listing standards.  In affirmatively determining that a director is independent of the Company’s management and has no material relationship with the Company, either directly or indirectly as a partner, shareholder, or officer of an organization that has a relationship with the Company, the Board applies the following categorical standards, in addition to such other factors as the Board deems appropriate:

For purposes of these independence standards, an “immediate family member” includes the director’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than a domestic employee) who shares the director’s home.

The following 12 director nominees standing for election have been determined by the Board to be independent: Messrs. Burak, Erickson, Feldman, Mills, Nichols, Vara, and Wo, and Mmes. Apoliona, Hulst, Moy, Tanabe, and Tokioka, and accordingly, the Board has a majority of independent directors as defined by the listing standards of the NYSE and the Governance Guidelines.  The Audit & Risk, Human Resources & Compensation, and Nominating & Corporate Governance Committees are each composed entirely of independent directors who also meet applicable committee independence standards.  Mr. Ho is the Chairman, CEO and President of the Company and is therefore not independent.  Mr. Lucien, who retired as an employee of the Company in April 2020, was formerly the Vice Chair and Chief Strategy Officer of the Company and is therefore not independent under the NYSE listing standards.

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Human Resources & Compensation Committee Interlocks and Insider Participation

No member of the Human Resources & Compensation Committee during fiscal year 2022 served as an officer, former officer, or employee of the Company or had a relationship that was required to be disclosed under “Certain Relationships and Related Transactions.”  Further, during 2022, no executive officer of the Company served as:

Oversight of Risk

The Company’s governance, including policies, standards and procedures, has been developed with the goal of ensuring that business decisions and the execution of business processes are in compliance with legal and regulatory requirements.

Authority for accepting risk exposures on behalf of the Company originates from the Board.  In turn, that authority is delegated through the Board-appointed Executive Committee, chaired by the CEO and comprised of executive management, and its subcommittees, including the Risk Council.  The Risk Council, chaired by the Chief Risk Officer, provides the Executive Committee with a forum for the review and communication of both specific and company-wide risk issues, and serves to enhance collaboration among all areas of the Company that create and manage risk, while reinforcing executive management’s responsibility for ensuring risk is managed within established tolerances.

Risk management at the Company is the process for identifying, measuring, controlling and monitoring risk across the enterprise given its business as a financial institution and financial intermediary.  Risk Management crosses all functions and employees and is embedded in all aspects of planning and performance measurement.  The Company’s systems, information and timely reporting are designed to enable the Company to quickly adapt to early warning signs.

The Board is responsible for oversight of the Company’s enterprise risk framework.  The Board implements its risk oversight function both as a whole and through delegation to various committees.  The Board has delegated to the Audit & Risk Committee primary responsibility for overseeing financial, credit, investment and operational risk exposures including regulatory and legal risk; to the Fiduciary & Investment Management Committee primary responsibility for oversight of fiduciary and investment risk of client accounts; and to the Human Resources & Compensation Committee primary responsibility for oversight of risk related to management and staff.  These committees report to the full Board to ensure the Company’s overall risk exposures are understood, including risk interrelationships.  The Board also oversees reputational risk.

Risk reports are provided and discussed at every committee and Board meeting.  In addition to detailed reports, the Board reviews an Enterprise Risk Position report that reflects key risk measures and trends across the Company.  Key managers responsible for risk management (Chief Risk Officer, Treasurer, Chief Compliance Officer, General Counsel, and Chief Fiduciary Officer) regularly provide updates at the respective committee and Board meetings.  In support of the Board’s risk oversight role and to ensure that potential problems are surfaced, the Audit & Risk Committee directly oversees the Company’s Internal Audit and Credit Review functions.

Cybersecurity and Information Security Risk Oversight

Management of cybersecurity risks is the responsibility of the full Board.  In 2022, the Company, the Board, and the Audit & Risk Committee continued to strengthen the management and oversight of cybersecurity risks through new security system enhancements, policies, testing, identification and reporting.  The Company continued its program of third party penetration testing and ongoing analysis to identify potential vulnerabilities and need for additional enhancements.  The company also continued to support remote work in response to the COVID-19 pandemic which included ensuring the necessary provisions for managing the cybersecurity and information security risks associated with remote work.

The Board devotes significant time and attention to the oversight of cybersecurity and information security risk, and benefits from the technical expertise of certain of its members.  In particular, the Board and Audit & Risk Committee each receive regular reporting on cybersecurity and information security risk.  At least quarterly, the Audit & Risk Committee receives an operational risk update that includes a review of cybersecurity and information security risk.  Our Board reviews and approves our Information Security Policy annually and frequently receives presentations on and discusses cybersecurity and information security risks, industry trends and best practices.

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Compensation Policies and Risk

The Board’s risk oversight responsibility includes the implementation of compensation programs that do not encourage or incentivize excessive risk taking or inappropriate conduct and promote, among other things, gender pay equality.  The Human Resources & Compensation Committee is responsible for establishing and reviewing the Company’s executive compensation programs, as well as the compensation programs for employees generally, and ensuring that the programs do not encourage unnecessary or excessive risk taking or create risks that are reasonably likely to have a material adverse effect on the Company and its customers.

The Company, in addition to its annual comprehensive review, receives ongoing reporting relating to the Company’s incentive plans’ design, performance, payouts and customer impact, with oversight by and reporting to the Board, Audit & Risk Committee and Human Resources & Compensation Committee.  This reporting includes an analysis of potential “red flag” indicators including the existence, nature and extent of any customer complaints, regulatory complaints, legal actions, employee feedback and payout results to determine if the incentive plan design or implementation resulted in employee wrongdoing or customer abuse.

COMMITMENT TO MEANINGFUL SOCIAL INITIATIVES

Throughout our 125^th anniversary year, we celebrated our history and milestones made possible by the continued dedication and teamwork of our employees.  Supporting our teammates along with our communities will help ensure a better tomorrow for the islands we call home.

Support for Small Businesses

Bank of Hawai‘i continued to support small businesses with the SBA 504 Program, a commercial real estate financing program for owner-occupied properties that allows small business borrowers to preserve working capital by requiring only a 10% down payment on purchase transactions.

In Saipan, 2022 marked the 11th year of the I Kinometi Para I Kumunidåt I Islå-ta Grants, Bank of Hawai‘i’s small business and revitalization and development grants.  Five grants of up to $5,000 each are awarded annually to support new and existing small businesses to thrive and give back to the community. Since its inception in 2012, $275,000 has been awarded to 55 small businesses. One of the five grant recipients in 2022 was St. Jude Renal Care Facility, a locally owned and operated Centers for Medicare and Medicaid Services certified outpatient hemodialysis center, which serves patients from Tinian, Rota and Saipan, as well as transient patients from Guam, Federated States of Micronesia, Japan, Korea and the continental U.S. With help from the grant monies, they purchased equipment that ensures power supply for dialysis treatment care and related services in the event of an emergency, natural disaster or power outages.

Philanthropy and Volunteering to Sustain Our Community

The Company, and its exceptional people, demonstrate their generosity and respect throughout the year by supporting many different causes. Bank of Hawai‘i, its employees, and the Foundation contributed nearly $3.4 million to community and philanthropic causes in 2022.

Kōkua for Community

Bank of Hawai‘i’s Live Kōkua Giving Campaign is the Company’s biggest annual employee-giving event. During the 2022 campaign, employees raised more than $569,000 in partnership with Aloha United Way, which serves more than 300 nonprofits. Themed #BankohCares, over 90% of the bank’s employees participated during the campaign, which ran from October 11 to December 12, in an effort to make a difference for some of the most vulnerable in our communities.

Bank of Hawai‘i Foundation also supports hundreds of nonprofits in its local community. In addition, employee-volunteers (known as our Bankoh Blue Crew) participate in our Live Kōkua Volunteer Program for hands-on community service activities.

Highlights from Bankoh Blue Crew in the Community:

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Bank of Hawai‘i Foundation

Continued Support for ALICE in Hawai‘i: 2022 Facts and Figures

Bank of Hawai‘i Foundation has been sponsoring the ALICE Report on behalf of the Aloha United Way since 2018. In 2022, Bank of Hawai‘i Foundation provided a grant of $97,500 to sponsor ALICE in Hawai‘i: 2022 Facts & Figures. The report focuses on the ALICE population, with data results based on a statewide survey of nearly 2,400 Hawai‘i residents from July to September. Its findings reveal information about who is struggling in Hawai‘i, and is used to inform and impact decision-making at the state and county levels.

In response to the first 2018 ALICE Report, the ALICE Initiative was designed to find solutions toward a more equitable Hawai‘i. Bank of Hawai‘i Foundation, among other partners, has pledged support for the next three years. Since 2018, more than 14,000 households have received access to services, and it’s our honor to continue this important work.

The 2022-2024 ALICE Fund invests in the ALICE Cohort Initiative, which includes 17 nonprofits collectively working to develop and implement impactful and scalable programs to help O‘ahu's ALICE households. It is overseen by Aloha United Way and Hawai‘i Community Foundation. Bank of Hawai‘i Foundation is one of many supporting the 2022-2024 ALICE Fund over three years. This Initiative raises awareness about a huge, but sometimes hidden, segment of our community who are struggling to afford basic necessities.

Celebrating 125 Years in Business by Supporting the Community

Leading up to Bank of Hawai‘i’s 125^th anniversary in December 2022, the Company celebrated with a yearlong campaign. With a focus on supporting the community through sustainability, Bank of Hawai‘i partnered with 12 nonprofits to plant more than 6,500 trees, over 125 trees per week, throughout 2022. Bank of Hawai‘i’s 125^th anniversary tree planting pledge totaled $126,202, with $111,000 donated to eight Hawai‘i nonprofits and $15,202 to Guam, Saipan and Palau nonprofits. These organizations planted trees statewide across Hawai‘i, as well as Guam, Saipan and Palau, and reflect all the island communities the bank serves. This initiative culminated on Arbor Day on November 5, when hundreds of bank volunteers planted 2,000 native trees and plants at the Wai‘anae Kai Forest Reserve for Bank of Hawai‘i’s annual Community Service Day.

In addition, Bank of Hawai‘i Foundation gave each employee the opportunity to select a nonprofit to receive $125. The initiative, called “Aloha for Community,” resulted in a contribution totaling $218,750 to nonprofits across Hawai‘i and the West Pacific region. Employees selected 237 nonprofits, whose missions span a wide range of causes, from food security to animal welfare to medical access.

In total, Bank of Hawai‘i donated nearly $345,000 to the community in celebration of its 125th anniversary campaign.

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Celebrating Diversity and Cultural Awareness

The Company is a long-time sponsor of the Honolulu Rainbow Film Festival, and in 2021 renewed a four-year sponsorship of the Hawai‘i LGBT Legacy Foundation to support the Honolulu Pride Festival & Parade.  The donation supports not only the festival and parade, but helps to fund other program initiatives of the Hawai‘i LGBT Legacy Foundation. In previous years, our employees have turned out in big numbers to show their support by walking in the parade. 2022 saw the return of the festival and parade in-person after a hiatus during the pandemic. Over 300 employees with family and friends came out in support and celebration of Pride.  In an effort to contribute to the progress and advancement of ensuring an inclusive, collaborative and respectful workplace, Bank of Hawai‘i’s Diversity, Equity, Inclusion and Belonging Program supports employee-led Employee Resource Groups (“ERGs”).  Our Women Inspired ERG works to empower, support and educate on issues important to women at work, home and in the greater community. Our RainBOH ERG celebrates coming to work with pride, encourages allies to become visible, and educates on issues related to the LGBTQA+ community. Our Blue Brigade Military ERG engages in service and networking opportunities that serve the needs of service members, veterans and military families. Our Native Hawaiian ERG was launched in 2022 to create opportunities for Native Hawaiians and allies to connect in dialogue and culture. These four ERGs sponsored over 17 community and employee engagement programs, and brought together nearly 800 employees, family and friends to join in fellowship, advancement and support of each other and the community. All of the ERG-sponsored programs aim to foster a sense of belonging among Bank of Hawai‘i’s employees and further the Company’s diversity, equity, inclusion and belonging goals.

Women Inspired ERG:

Blue Brigade Military ERG:

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RainBOH LGBTQ+ ERG:

Native Hawaiian ERG:

Employee Learning

Bank of Hawai‘i’s substantial training and career advancement programs target professional development and personal growth, which include our Fostering Workplace Excellence and other employee development programs.  Bank of Hawai‘i continued to invest in people development in 2022. Employees attended a total of 8,715 hours in formal learning events on core employee or leadership skills development.  In addition, select employees completed 6,700 development hours under the various leadership development programs the company provides.

Investing in Our Employees

In 2016, Bank of Hawai‘i launched its College Assistance Program (“CAP”) to give employees striving to obtain their first four-year bachelor’s degree access to a college education and tuition reimbursement. CAP gives employees the convenience and flexibility to study where, when, and what they desire by allowing them to choose from a variety of select majors at Chaminade University of Honolulu. Their choice of majors need not relate to their current position. CAP also gives employees the option to pursue an accelerated online Associate of Arts degree through the University of Hawai‘i’s Community Colleges. When the program began in 2016, there were three participants. The program has been very successful and popular, with five employees who have earned their associate’s degree, 11 employees who have earned their bachelor’s degree, and 79 unique participants with $324,406 reimbursed to employees for the cost of their education. The Company’s Tuition Assistance Program (“TAP”) is aimed at assisting employees in completing job-related courses at any accredited school. The TAP program had 23 participants and $61,369 reimbursed to student employees in 2022. Another educational assistance program offered is the Professional Certification Program managed by each department for their employee certification needs.

Bank of Hawai‘i also offers a Student Loan Assistance Program for employees. Student loan debt is a significant impediment to a key demographic sector of our national community. This program provides $100 per month, up to a lifetime maximum of $10,000, for an individual employee’s student debt. At year-end 2022, we had more than 140 employees enrolled in this program.  Our employee savings product, known as the GROW Account encourages our employees to build an emergency savings nest egg. Through these special accounts, we offer a $50 bonus to our employees when they reach $500 in savings in their GROW Account. We offer an additional $100 bonus to those employees who save an additional $500.

Our Employee Mortgage Program provides our employees with a discount of up to 1% off of prevailing market rates for their primary residences. This is an attractive retention tool for Bank of Hawai‘i given the high cost of housing on our islands.

Investing in Our Future

For the 2022 through 2023 academic year, the Foundation supported 25 college scholarships totaling $85,750 for children and grandchildren of Bank of Hawai'i employees.  Since 2014, the Foundation has provided $876,750 to fund 251 college scholarships. These scholarships reflect our commitment to help our employees and their families reduce the financial burdens of post-high school education. We believe this investment will enable a better future and the next generation of our world’s and Hawai‘i’s leaders.

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Supporting Our Native Hawaiian Community

Bank of Hawai‘i is proud of our longstanding commitment to our Native Hawaiian community as well as our greater community in Hawai‘i.  Bank of Hawai'i continued its support of the Council of Native Hawaiian Advancement’s annual conference, Hulihia, in 2022 and introduced a new Native Hawaiian Employee Resource Group in September with a community service project at Paepae O He‘eia Fishpond.  Bank of Hawai‘i is also proud to partner with the Hawai‘i Executive Collaborative in its movement entitled Restoring Hawai‘i’s Soul. In alignment with other organizations in Hawai‘i, Bank of Hawai‘i sponsored a facilitator to be certified in the program and launched a Rediscovering Hawai‘i’s Soul event in December for executive leadership, with further expansion plans in 2023.

Outreach to the Unbanked and Underbanked

Bank of Hawai‘i was the first local bank to offer an alternative to traditional checking accounts in Hawai‘i, beginning in April 2015. EASE by Bank of Hawai‘i combines convenience and access, is FDIC-insured and is among the lowest-fee bank accounts in the U.S.

EASE by Bank of Hawai‘i recently received national certification from the Cities for Financial Empowerment Fund (“CFE Fund”) the Bank On National Account Standards (2021-2022). CFE Fund is dedicated to providing consumers with safe and affordable accounts, and the Bank On standards were created by consumer advocates, national nonprofits, civic leaders and others to designate account features that ensure low cost, high functionality and consumer safety. Bank On’s goal is to ensure that everyone has access to a safe and affordable bank or credit union account, and EASE by Bank of Hawai‘i is one of only two deposit account products in Hawai‘i to receive this national certification.

With no checks to return, customers do not incur overdraft fees.  Customers are also given a free Visa debit card and free access to over 300 Bank of Hawai‘i and partner ATMs, do not have direct deposit requirements or monthly service fees if they elect to receive online statements, and are allowed to open an account with a deposit of just $25. They also receive free 24/7 Bankoh by Phone, mobile banking and e-Bankoh online banking services. We continue to see strong demand for our EASE product, and are pleased to meet the needs of the unbanked and underbanked in the communities we serve.

Assisting Communities with Their Financial Needs

Bank of Hawai‘i continues to build long-term relationships throughout the communities we serve through education. For the past 12 years, the Company has been offering our SmartMoney financial education seminars, which cover a variety of financial topics, such as how to save and invest and purchase a first home. In 2022, 517 bankers volunteered to teach financial education classes on critical topics including identity protection, budgeting, financing college, and credit.  Our volunteers taught at 30 schools, where greater than 50% of its students were from families qualifying for a free or reduced price lunch. Every year since 2010, Bank of Hawai‘i employees have partnered with Goodwill Hawaii’s Volunteer Income Tax Assistance Program. In 2022, 29 employees became IRS-certified for the 2022 season and accepted in the Consumer Financial Protection Bureau Tax Time Initiative Cohort. Bank volunteers prepared 95 tax filings that resulted in over $126,000 in refunds back to the community. Eleven volunteered at Goodwill Hawaii; providing free tax preparation to eligible taxpayers.  This was the first time in the 12 years we had representation on four of the major Hawaiian Islands.

Empowering Youth

The Foundation continued its ongoing sponsorship of PBS Hawai‘i’s HIKI NŌ, the groundbreaking student news program and statewide digital media learning initiative to support its programming, which transformed its practices to meet social distancing guidelines. The Foundation’s investment dates back to the launch of HIKI NŌ in 2011. Since then, Hawai‘i’s HIKI NŌ schools have gained the reputation of being formidable competitors at rigorous national journalism contests, including the prestigious Student Television Network Convention in Seattle, Washington.  

As a partner with ClimbHI Hawaii, Bank of Hawai‘i is a member of the ClimbHI Bridge that seeks to provide Hawai‘i’s students with career exploration opportunities and connect them with companies and organizations to serve as resources and points of insight into those explorations, including financial education and career advice. In 2019, as part of the founding group of supporters, the Foundation helped fund the effort, which aided the organization’s launch in 2020 amidst the COVID-19 pandemic. Whether contributing financially, participating in virtual career fairs with local middle schools, mentoring high school students or assisting with business class projects, the Foundation is proud to support our students in their academic pursuits.  

For the past 12 years, Bank of Hawai‘i has been partnering with nonprofit EPIC ‘Ohana’s Hawai‘i Youth Opportunities Initiative to offer financial education and services to foster teens. Foster youth have a high propensity for pregnancy, incarceration, homelessness and low college graduation rates due primarily to a lack of social network.  Through the Opportunity Passport Program, teens from foster families are able to open matched Individual Development Account (“IDA”) savings accounts, where every dollar saved is matched by donors up to $1,000 annually (up to a maximum of $3,000). The funds may be withdrawn between the ages of 14 to 26 and have enabled young people to help pay for college education, housing and transportation. Since 2010, under the Hi Hopes Program (f/k/a Opportunity Passport), Bank of Hawai‘i has opened 1,009 IDAs as well as EASE accounts. A donation of $1.48 million has enabled former foster youth to pay for necessary expenses such as housing or education on O‘ahu or transportation on the neighbor islands.

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Bank of Hawai‘i volunteers have been advising young entrepreneurs and improving financial literacy through decades of partnership with Junior Achievement.  In 2022, 90 Bank employees, from Guam to Hilo, volunteered to facilitate lessons or serve as advisors for the company program.

Housing for Our Community

Honolulu continues to be one of the most expensive cities in the U.S., and with a shortage of affordable rental homes across Hawai‘i, the adverse impacts of the COVID-19 pandemic make the availability of affordable and workforce housing more important than ever.

In 2022, over 550 affordable housing units (206 on O‘ahu, 214 on Maui, 92 on Hawai‘i Island, and 48 on Kaua‘i) started construction or rehabilitation thanks in part to Bank of Hawai‘i, and over 1,000 more units are in the pipeline.  We are committed to investing in new opportunities to create more homes across the state, including these recent developments on three different islands.

Bank of Hawai‘i worked with nonprofit developer Ikaika Ohana and Urban Housing Communities to support the Kaiāulu o Kūku‘ia project in Lahaina, Maui. The 200-apartment homes made up of 25 two-story eight-plex buildings will include 100 two-bedroom, 75 three-bedroom and 25 four-bedroom units of affordable workforce housing for families in west Maui County earning 60% or less of the median income. Located on state land leased purposefully for the creation of affordable housing, this community is designed to be sustainable and energy efficient, with cost savings for residents. Groundbreaking was held in July 2022.

Bank of Hawai‘i assisted nonprofit developer EAH Housing with a 92-unit affordable senior community residence in Hilo for veterans, surviving spouses and other income-qualified seniors. Construction started in November 2022 for the Hale Nā Koa ‘O Hanakahi development on Hawai‘i Island, designed for people 62 years or older, serving households earning 30% to 80% of the area median income.  The project is the residential component of a master planned, full service complex that will also later include a veterans’ center and a community-based outpatient clinic. Bank of Hawai‘i Foundation separately gave EAH a $25,000 grant.

We are also a committed equity investor in Low-Income Housing Tax Credits (“LIHTC”) projects across the state as well as in the Commonwealth of the Northern Mariana Islands/Saipan. For example, in 2022, Bank of Hawai‘i invested more than $20 million in LIHTC to support the development of Ikaika Ohana’s Kaiāulu o Kūku‘ia affordable housing development in Lahaina, Maui.

COMMITMENT TO ENVIRONMENTAL SUSTAINABILITY IN THE WAY WE DO BUSINESS

Bank of Hawai‘i seeks out projects that advance our overall environmental strategy, such as those that support renewable energy projects.  Building sound environmentally minded investments into our portfolio reduces risk, increases our value to investors and allows us to pursue our own initiatives to reduce our impact on the environment through internal or employee initiatives.

Bank of Hawai‘i is constantly improving its operations to proactively find more efficient and effective ways to ensure both the long-term success of the Company and the continued vitality of the communities it serves. Through its modernization efforts, the Company is helping to do its part in offsetting the negative impacts of climate change.  The impacts of climate change, such as extreme weather conditions, natural disasters and rising sea levels, are of significant concern to the Bank, its operations, as well as those of its customers and third party vendors upon which it relies.

Financing the Future

The Company actively participates in the financing of photovoltaic/energy savings projects. The Company currently is a lender in a variety of renewable energy projects with over $150 million committed to these initiatives as of December 31, 2022. Bank of Hawai‘i continues to seek out other opportunities in this sector and is a leader in these financing initiatives.

Progressing Towards Environmental Sustainability

In 2022, Bank of Hawai‘i continued to focus its efforts on Building Management Systems (“BMS”) as part of renovations or scheduled infrastructure upgrades. Through these upgrades, we are able to implement customized solutions that maximize energy conservation. This year we continued BMS optimization at our corporate headquarters and new installations at our Hilo, Kahului and Waimea Branches. Our energy initiatives to date have resulted in 74% of our building area with management systems in place.  

Bank of Hawai‘i also participates in Hawaiian Electric Company’s Demand Response Program at our two largest facilities. Through this participation, the Company receives incentives to reduce its usage during periods of island-wide peak demand, helping to preserve the reliability of the electrical grid and reduce the need for more electrical generation equipment.

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Reducing energy consumption remains one of our top priorities, and we have achieved year-over-year demand reduction. In recent years, we have completed many impactful initiatives throughout the Bank of Hawai‘i network, including photovoltaic installation with battery storage, BMS installations and upgrades and infrastructure modernization.

Our “Branch of Tomorrow” design principles continue to be used in our renovations.  These focus on more efficient use of space, portable computing platforms to allow the tellers to reach out directly with customers and reduce queue times, and upgraded ATMs that allow direct deposit of cash and checks along with simplified transaction handling. Staff lunchrooms have been outfitted with point-of-use hot water dispensers to replace water heaters, microwave ovens to replace stoves and cook-tops, as well as large-screen LED monitors that allow for remote, online meetings and training sessions, which reduce energy usage and staff travel requirements. Along with its conservation efforts, Bank of Hawai‘i is committed to renewable energy resources, and has made this an integral part of the modernization project at its branches and other facilities. The Company now has photovoltaic installation on over 60% of owned branches and buildings. This includes three large photovoltaic systems (561kW, 350kW and 100kW) at its main facilities. Combined, our PV networks have the capacity to create 3.4 Megawatt hours of energy annually.

Bank of Hawai‘i greatly improved its ability to respond to in-area natural disasters by relocating our disaster recovery data center to the continental U.S., enabling greater data protection while reducing our carbon footprint. Our partner on the continent has been running on 100% renewable energy since January 2016, and is the only major data center provider to receive an ‘A’ grade by Greenpeace in all five of their data center grading categories.

Reducing Waste

Reducing the amount of paper used in the workplace is part of Bank of Hawai‘i’s office transformation initiative.  The Company strives for optimum performance in our digital environment and we anticipate this sustainability effort will have environmental, efficiency and cost-reduction benefits. We are currently imaging old paper records, which reduces costly storage expenses, and we are moving toward contemporaneously imaging current records, reducing the amount of paper required. Bank of Hawai‘i has also implemented several enterprise-wide digital and cloud-based solutions to help facilitate this initiative.

Encouraging Public Transportation and Bicycle Use

Bank of Hawai‘i offers a Bus Pass Benefit Program for its employees on O‘ahu, reducing the cost of a monthly bus pass from $70 to $30 (on a pre-tax basis) for participating employees 64 years and younger.  Employees 65 and older receive $30 towards the purchase of a $35 senior annual Bus Pass.  All active full-time and part-time employees who ride the bus as a primary source of transportation to and from work are eligible for the benefit.  During 2022, more than 240 employees took advantage of this benefit, resulting in an annual commitment by the Company of close to $100,000 towards reducing greenhouse gas emissions.

Bank of Hawai‘i also offers employees up to $20 per month as reimbursement for reasonable expenses if an employee uses a bicycle regularly for commuting to work.  Reasonable expenses include the purchase of a bicycle as well as continuing maintenance, repair and storage.

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BOARD COMMITTEES AND MEETINGS

The Board met 10 times during 2022.  The Board’s policy is that directors should make every effort to regularly attend meetings of the Board and committees on which they serve and the Company’s Annual Meeting of Shareholders.  Each director attended at least 75% of the meetings of the Board and 75% of the committee meetings on which he or she served in 2022.  All of the Company’s then sitting directors attended the 2022 Annual Meeting of Shareholders.

Board Committees

The Board has three standing committees: the Audit & Risk Committee, the Human Resources & Compensation Committee, and the Nominating & Corporate Governance Committee.  The charters for the respective Board committees are posted in the Investor Relations page of the Company’s website at www.boh.com.

The Board has affirmatively determined that all of the members of the Audit & Risk, Human Resources & Compensation, and Nominating & Corporate Governance Committees (collectively the “Board Committees”) meet the independence standards of the NYSE and the Company’s Governance Guidelines.  The Board Committees’ charters require that each committee perform an annual evaluation of its performance and assess the adequacy of its charter.  Each committee has the authority to retain consultants and advisors to assist in its duties, including the sole authority for the retention, termination and negotiation of the terms and conditions of the engagement.

Below are the members of each current standing committee.

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Audit & Risk Committee: 8 Meetings in 2022

The Audit & Risk Committee operates under and annually reviews a charter that has been adopted by the Board. The Audit & Risk Committee’s duties include assisting the Board in its oversight of the following areas of the Company: regulatory and financial accounting, reporting and credit risk management; compliance with legal and regulatory requirements; the independent registered public accounting firm’s qualifications and independence; and the performance of the Company’s internal audit and credit review functions and independent registered public accounting firm. The Audit & Risk Committee also provides oversight of management’s activities with respect to capital management and liquidity planning, including dividends and share repurchases, and overall interest rate risk management. In addition, the Audit & Risk Committee meets in private session at the conclusion of every regularly scheduled meeting to provide a confidential forum for identification and discussion of issues of importance to the Company. The Audit & Risk Committee also meets with non-member directors on a regularly scheduled basis to brief them on the content and issues discussed at the previous meeting.

The Board has determined that Messrs. Burak, Erickson, Nichols, Vara, and Ms. Moy meet the definition of “financial expert” within the meaning of the SEC regulations adopted under the Sarbanes-Oxley Act of 2002. The Board has determined that all Audit & Risk Committee members meet the NYSE standard of financial literacy and have accounting or related financial management expertise. In addition, the Board has determined that Messrs. Burak, Erickson, and Nichols meet the definition of “risk expert” under the Federal Reserve Bank rules implementing Section 16 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and 12 CFR 252.22(d)(1).

The Audit & Risk Committee has adopted policies and procedures governing the following: pre-approval of audit and non-audit services; the receipt and treatment of complaints regarding accounting, internal controls, or auditing matters and the confidential, anonymous submission of information by employees of the Company regarding questionable accounting or audit matters; and restrictions on the Company’s hiring of certain employees of the independent registered public accounting firm. The Audit & Risk Committee is also responsible for reviewing Company transactions involving a director or executive officer. The Audit & Risk Committee Report is located on page 72.

Human Resources & Compensation Committee: 9 Meetings in 2022

The Human Resources & Compensation Committee’s duties are set forth in its charter, and include responsibility for compensation levels of directors and members of executive management and reviewing the performance of executive management. The Human Resources & Compensation Committee reviews and approves goals and objectives relevant to CEO compensation, and evaluates performance against those goals. It is also their responsibility to review the Company’s long-term and short-term incentive compensation plans, equity-based plans, and deferred compensation programs. The Human Resources & Compensation Committee also reviews management development and training programs as well as succession planning for senior and executive management. The Human Resources & Compensation Committee charter allows for the delegation of its duties to its own subcommittee as long as such delegation is in compliance with all applicable laws, rules, and listing standards. The CEO makes recommendations with respect to non-CEO executive officer compensation. The Human Resources & Compensation Committee Report is located on page 35.

Nominating & Corporate Governance Committee: 7 Meetings in 2022

The Nominating & Corporate Governance Committee’s duties are set forth in its charter and include reviewing the qualifications of all Board candidates and recommending qualified candidates for membership on the Board and the oversight of director continuing education opportunities. The Nominating & Corporate Governance Committee reviews the Board’s organization, procedures and committees and makes recommendations concerning the size and composition of the Board and its committees. The Nominating & Corporate Governance Committee makes recommendations to the Board regarding standards for determining non-management director independence and reviews the qualifications and independence of the members of the Board and its committees. The Nominating & Corporate Governance Committee also reviews and evaluates the Company’s compliance with corporate governance requirements and leads and oversees the Board and its committees’ annual performance evaluations. Further information regarding the responsibilities performed by the Nominating & Corporate Governance Committee and the Company’s corporate governance is provided in the committee charter and the Governance Guidelines.

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DIRECTOR COMPENSATION

Retainer Fees

In the second quarter of 2022, the Audit & Risk Committee (“ARC”) retainer fees were decreased due to the discontinuation of special COVID-19 ARC meetings.  The annual retainer for ARC members decreased from $22,100 to $17,000, the annual retainer for the Chair of the ARC decreased from $39,000 to $30,000, and the annual retainer for the Vice Chair of the ARC decreased from $32,500 to $25,000.  Also in the second quarter of 2022, the Human Resources & Compensation Committee (“HR Comp”) annual retainer for the Chair of HR Comp increased from $21,000 to $24,000.  The Board and Nominating & Corporate Governance Committee fees were unchanged from 2021.  The Board approved the following retainer fees effective April 29, 2022:

In addition to these standing committees, the Board has other committees for which directors received fees in 2022.  Messrs. Feldman, Lucien, Mills and Nichols and Mmes. Hulst and Tokioka are members of the Digital Advisory Committee (“DAC”).  Ms. Apoliona and Messrs. Feldman and Lucien are members of the Board-appointed Benefit Plans Committee (“BPC”), and Mmes. Apoliona, Moy, Tanabe, and Tokioka and Messrs. Lucien and Wo are members of the Fiduciary Investment Management Committee (“FIMC”).  Effective April 29, 2022, it was determined that the DAC and the FIMC retainers be increased.  The annual retainer for DAC members increased from $7,500 to $10,000 and the annual retainer for the Chair of the DAC increased from $12,500 to $20,000.  The annual retainer for FIMC members increased from $9,500 to $10,000 and the annual retainer for the Chair of the FIMC increased from $15,500 to $20,000.  The annual retainer fees for HR Comp members and the retainer fees for BPC members remain unchanged at $12,000 and $6,500, respectively.  

The Directors are reimbursed for Board-related travel expenses, and directors who reside principally on the continental U.S. receive an additional $5,000 annually to compensate them for travel time, which remains unchanged from last year.

Director Stock Plan

The shareholders approved the 2015 Director Stock Compensation Plan (the “Director Stock Plan”) at the 2015 annual meeting.  The purpose of the Director Stock Plan is to advance the interests of the Company by encouraging and enabling eligible non-employee members of the Board to acquire and retain throughout each member’s tenure as director a proprietary interest in the Company by owning shares of Bank of Hawai‘i Corporation common stock.  The Director Stock Plan allows for the granting of stock options, restricted common stock, and restricted stock units.  Under the Director Stock Plan, the Board has the flexibility to set the form and terms of awards.  The Board receives an annual equity compensation value of $65,000.  Based on the fair market value on the date of grant in April 2022, each of the non-employee Board members was given a stock award of 875 shares of restricted common stock (“Restricted Shares”) with a vesting date of April 21, 2023.  In 2022, no stock options or restricted stock units were granted under the Director Stock Plan.

Directors’ Deferred Compensation Plan

The Company maintains the Directors’ Deferred Compensation Plan (the “Directors’ Deferred Plan”), under which each non-employee director may participate and elect to defer the payment of all of his or her annual Board and committee retainer fees, or all of his or her annual Board retainer fees, or all of his or her annual committee retainer fees.  At the director’s choice, deferred amounts under the Directors’ Deferred Plan may be payable: 1) beginning on the first day of the first month after the participating director ceases to be a director of the Company; or 2) on an anniversary date of the director’s choosing after the director ceases to be a director; or 3) a date specified by the director (which may include a date prior to the date a director ceases to be a director).  Deferred amounts are paid to the participant in a lump sum or in equal annual installments over such period of years (not exceeding 10 years) as the participant elects at the time of deferral.  If a participant dies, all deferred and previously unpaid amounts will be paid in a lump sum to the participant’s beneficiary on the second day of the calendar year following the year of death.  A participant’s deferred amounts are adjusted for appreciation or depreciation in value based on hypothetical investments in one or more mutual funds or in shares of Bank of Hawai‘i Corporation common stock, as may be directed by the participant.  The Company’s obligations under the Directors’ Deferred Plan are payable from its general assets, although the Company has established a rabbi trust to assist it in meeting its liabilities under the plan.  The assets of the trust are at all times subject to the claims of the Company’s general creditors.

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Director Stock Ownership Guidelines

The Board believes it is important to support an ownership culture for the Company’s directors, employees and shareholders.  To ensure that linkage to shareholders occurs among the fiduciaries of the Company each non-management director is required to own a minimum amount of five times his or her annual cash retainer in Bank of Hawai‘i Corporation common stock.  Directors are given five years from first joining the Board to achieve guideline levels of ownership.  As of January 31, 2023, 10 of the 13 non-management directors standing for re-election have satisfied the ownership guidelines.  The three remaining directors are expected to satisfy the ownership guidelines within the required five-year period.

Director Compensation

The following table presents, for the year ended December 31, 2022, information on compensation earned by or awarded to each non-employee director who served on the Board of Directors during 2022.  Mr. Ho did not receive any additional compensation for services provided as a director.

DIRECTOR COMPENSATION TABLE

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PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Dodd-Frank Act provides shareholders the opportunity to vote, on an advisory (non-binding) 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 Human Resources & Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by shareholders and considers the outcome of the vote when making future compensation decisions for its executive officers.  The Company currently conducts annual advisory votes on executive compensation.  The Company’s shareholders approved its executive compensation at the 2022 Annual Meeting of Shareholders.

As described in the Compensation Discussion and Analysis, the primary focus of the Company's executive compensation programs is to encourage and reward behavior that the Board believes will promote sustainable growth in shareholder value, and to promote gender pay equity.  Our executive compensation programs are intended 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.  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 Hawai‘i Corporation approve, on an advisory basis, the compensation of the individuals identified in the Summary Compensation Table, as disclosed in the Company’s 2023 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.

HUMAN RESOURCES & COMPENSATION COMMITTEE REPORT

The Human Resources & Compensation Committee, composed entirely of independent directors in accordance with applicable laws, regulations, NYSE listing requirements and the Governance Guidelines, sets and administers policies that govern the Company’s executive compensation programs, and various incentive and stock programs.  As members of the Human Resources & Compensation Committee, we have reviewed and discussed the Compensation Discussion and Analysis to be included in the Company’s 2022 Proxy Statement with management and, based on these discussions, recommended to the Company’s Board (and the Board subsequently approved the recommendation) that the Compensation Discussion and Analysis be included in such Proxy Statement.

As submitted by the members of the Human Resources & Compensation Committee,

Robert W. Wo, Chairman

Joshua D. Feldman

Michelle E. Hulst

Elliot K. Mills

Barbara J. Tanabe

Raymond P. Vara, Jr.

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) describes the compensation structure, process and implementation in 2022 for our Named Executive Officers (“NEOs”).  The NEOs in 2022 were:

CD&A TABLE OF CONTENTS

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Compensation-Related Highlights

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2022 Shareholder Outreach

The Company has always had a robust shareholder outreach process that annually solicits feedback from investors.  Because we appreciate the value of shareholder sentiment, and noticed a modest decline in support for our annual Say on Pay proposal in 2022, we enhanced our outreach efforts to make sure we fully understood shareholders’ views of our pay program.

Over the past year we reached out to our thirty largest shareholders, representing voting authority for approximately 61% of shares outstanding.  Our goal for this outreach was to discuss Company performance, environmental, social and governance (ESG) strategy, and executive compensation.  While a large majority of the shareholders we contacted indicated they had no concerns with our executive pay program, we did conduct virtual meetings with 6 shareholders representing voting authority for approximately 29% of shares outstanding.  We were able to meet with and address the concerns of both top shareholders who voted no on our say-on-pay proposal.  Our Chair of the Human Resources and Compensation Committee led many of these discussions, which also included senior members of management, such as our Treasurer and Director of Investor Relations, Chief Financial Officer, and Chief General Counsel. 

Through the engagement process and robust discussions, the Company learned the following:

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Retention Grants Supporting Succession Strategy

Given that there was some confusion about retention awards granted in 2021, we wanted to take this opportunity to provide additional context to our decision and how we designed the program with all constituents in mind.  It is essential that the Company’s top talent is in place long enough to allow for an orderly leadership succession.  Our seasoned group of 2021 executive officers – Sharon M. Crofts, Vice Chair, Client Solutions Group; James C. Polk, Vice Chair and now Chief Banking Officer; Mary E. Sellers, Vice Chair and Chief Risk Officer; and Dean Y. Shigemura, Vice Chair and Chief Financial Officer – have been with the Company a combined 100 years, and have amassed a vast repository of institutional knowledge, and deep ties to and relationships with our customers and the community.  In order to ensure effective knowledge and skill transfer to the next generation, over time, this core team needs to be protected from recruitment by competitors in our small local market and to delay retirement until successful execution of our succession strategy.  These threats were especially relevant two years ago during the height of the pandemic, when seasoned executives across the country were deciding to retire early rather than face the continued uncertainty caused by COVID-19, and competition among local banks for executive talent had increased.  A sudden loss of talent at this level would have created significant risk to the Company’s leading position in the market, and therefore the Company implemented a succession strategy that involves:

Key to the success of this strategy, and as detailed in contemporaneous disclosures and in our 2022 proxy, in 2021 the Company made a modification of its long-term incentive (LTI) plan and granted long-term restricted stock awards with vesting following a three-year (for Mmes. Crofts and Sellers) or five-year (for Messrs. Polk and Shigemura) performance period.  During that period, Mmes. Crofts and Sellers and Mr. Polk are not eligible to receive additional long-term restricted stock grants.

* To be settled half in cash and half in stock; ineligible for annual grants during the performance period

** Ineligible for annual grants during the performance period.  

We believe these retention grants are fully-aligned with the concept of pay-for-performance and benefit the Company, the executive, and shareholders alike. The awards are 100% performance-based, and only begin to vest when the Company attains a rigorous three-year average percentile rank relative to peers of at least the 50th percentile with respect to Return on Common Equity (ROCE) and Stock Price to Book Ratio (P/B). Full vesting requires performance at the 75th percentile or above.  Moreover, Mr. Polk, and Mmes. Crofts and Sellers are no longer eligible to receive additional LTI awards during the performance period.  

Mr. Polk’s 2022 award, which appears in this year’s proxy below, was primarily in recognition of his increased scope of responsibility upon being promoted to Chief Banking Officer. The following chart illustrates how that award, annualized over the retention period, would compare to what Mr. Polk could have otherwise expected to receive in annual equity grants absent the award.  

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The Company believes its retention efforts are now complete and it will not be necessary to grant any additional similar retention awards in the future. To the extent that executives receiving grants remain employed past their respective retention periods, they will not receive additional retention awards.

Finally, throughout 2022 and into 2023, the execution of the succession plan outlined above has been demonstrably successful.  The core nucleus of leadership has remained intact while several internal moves have taken place in order to develop talent and restructure areas of responsibility among senior executives.  In addition, the Company has hired a Deputy Chief Risk Officer who will begin serving alongside Ms. Sellers in May and then be promoted upon her expected retirement in 2024.

Pay for Performance

Certain shareholders expressed interest in the Company’s 2021 assessment of pay-for-performance, in particular relative to peers.  In response, our independent compensation consultant Willis Towers Watson prepared the following view of realizable pay-for- performance, using a composite of Total Shareholder Returns (“TSR”) (a metric favored by many peers), P/B, and ROCE (the Company’s preferred performance metrics), weighted equally.  Viewed through this unique lens, it is clear that the Company continues to demonstrate strong pay-for-performance alignment for the CEO and other NEOs.

Notes: (1) Our CEO and other Named Executive Officers’ relative 3-year realizable pay are positioned at the 74th percentile, and 91st percentile, respectively, compared to peers while our composite three-year relative performance (measured by TSR, P/B, and ROCE weighted equally) is positioned at the 83rd percentile. (2) Comparisons are made to the companies in our 2022 compensation peer group. (3) Realizable pay is defined as cash compensation, reflecting base salary plus actual bonus paid, and equity compensation, reflecting the value of grants made during the period valued using each company’s stock price as of December 31, 2021, using the most currently available data from peer filings at the time of analysis. Performance awards are based on actual payouts (if disclosed) and target for those not disclosed or where the cycle is incomplete; time-based stock awards are based on the number of shares granted; option awards reflect the intrinsic value. (4) The first performance measure is Total Shareholder Return, which is calculated using stock prices adjusted for stock splits, cash dividends, rights offerings, and spin-offs. The second performance measure is price-to-book ratio. The third measure is return on common equity. The percentile ranks of these three measures are averaged, and the percentile rank of that average is then plotted in the above charts.

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Incentive Plan Metrics

Some shareholders also provided feedback regarding the operation of the Company’s LTI and short-term incentive (STI) programs.  In particular, there were questions about why both programs use ROCE and P/B as performance metrics.  The Board believes that these metrics are strong measures of management’s ability to drive profitability (ROCE) and enhance shareholder equity (P/B), resulting in both short- and long-term shareholder value.  Moreover, while the metrics overlap, the LTI and STI programs are not identical.  The LTI program measures ROCE and P/B over a three-year sustained performance period and both measures are equally weighted (50% P/B, 50% ROCE).  For the CEO STI program, annual measurement of ROCE and P/B each receive a 40% weighting.  In addition, 20% of STI depends on a qualitative assessment of disciplined other metrics relating to Strategic Initiatives, Community Presence/Reputation, and Leadership Development/Succession.  Finally, the Company determines the amount of the overall STI bonus pool by assessing annual growth in earnings per common share (EPS) – if earnings go down, the amount available for incentives also goes down – which has the practical effect of making EPS a fourth metric upon which to determine STI payouts.  

*S&P Supercomposite Regional Bank Index (excluding banks with assets > $50.0 billion) as of January 3, 2022.

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Executive Summary

2022 Executive Compensation Program Design

Compensation Policies and Practices

Our executive compensation and corporate governance programs are designed to closely link pay with operational performance and increases in long-term shareholder value while minimizing excessive risk taking.  To help us accomplish these important objectives, we have adopted the following policies and practices over time:

Compensation Program Governance Summary

Business and Performance Overview

We are organized into three business segments for management reporting purposes: Consumer Banking, Commercial Banking, and Treasury and Other.

Consumer Banking offers a broad range of financial products and services, including loan, deposit and insurance products; private banking and international client banking services; trust services; investment management; and institutional investment advisory services. Consumer Banking also provides a full service brokerage offering equities, mutual funds, life insurance, and annuity products. Loan and lease products include residential mortgage loans, home equity lines of credit, automobile loans and leases, personal lines of credit, installment loans, and small business loans and leases. Deposit products include checking, savings, and time deposit accounts. Private banking and personal trust groups assist individuals and families in building and preserving their wealth by providing investment, credit, and trust services to high-net-worth individuals. The investment management group manages portfolios utilizing a variety of investment products. Also within Consumer Banking, institutional client services offers investment advice to corporations, government entities, and foundations. Products and services from Consumer Banking are delivered to customers through 51 branch locations and 320 ATMs throughout Hawai‘i and the Pacific Islands, e-Bankoh (online banking service), a customer service center, and a mobile banking service.

Commercial Banking offers products including corporate banking, commercial real estate loans, commercial lease financing, auto dealer financing, and deposit products.  Commercial lending and deposit products are offered to middle-market and large companies in Hawai‘i and the Pacific Islands.  In addition, Commercial Banking offers deposit products to government entities in Hawai‘i.  Commercial real estate mortgages focus on customers that include investors, developers, and builders predominantly domiciled in Hawai‘i.  Commercial Banking also includes international banking and provides merchant services to its customers.

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Treasury consists of corporate asset and liability management activities, including interest rate risk management and a foreign currency exchange business.  This segment’s assets and liabilities (and related interest income and expense) consist of interest-bearing deposits, investment securities, federal funds sold and purchased, and short and long-term borrowings. The primary sources of noninterest income are from bank-owned life insurance, net gains from the sale of investment securities, and foreign exchange income related to customer-driven currency requests from merchants and island visitors. The net residual effect of the transfer pricing of assets and liabilities is included in Treasury, along with the elimination of intercompany transactions.

We concluded 2022 with solid financial performance.  Over the year our loan balances grew to $13.6 billion, an increase of 11.3% from 2021.  Our deposit balances also increased to $20.6 billion, up 1.3% from 2021.  Our asset quality and capital and liquidity ratios remain strong.  The Return-on-Common-Equity for the year was 17.83%, our Return-on-Assets was 0.98%, and our efficiency ratio was 59.49%.

Company Performance Highlights

Key Performance Metrics

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Deposit and Loan Growth

Strong Credit Risk Profile

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A Balanced Approach to Capital Return

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Detailed Discussion and Analysis

Executive Compensation Philosophy

At Bank of Hawai‘i, we believe that executive compensation should reflect strong alignment between pay, performance and shareholders' interests while maintaining a balanced approach to risk and reward.  Compensation programs should reinforce support for our vision and be consistent with market compensation trends after taking into account the unique circumstances facing Bank of Hawai‘i in light of geographic, demographic, and economic conditions in the markets served by the Company.  The Human Resources & Compensation Committee (“the Committee”) believes that compensation should recognize short- and long-term performance by including both cash and equity components, and reflect inclusiveness and gender equality and recognize individual performance.

The primary focus of the Company's executive compensation program is to encourage and reward performance that supports the Company's long-term business strategies and promotes sustainable growth in shareholder value.  The Company believes that its goals are best supported by rewarding its NEOs for outstanding contributions to the Company's success, compensating those officers competitively with similarly situated executive officers, and providing its NEOs with equity to encourage and motivate them to focus on the Company's long-term growth and success.

The Committee is responsible for developing and implementing the executive compensation program.  With the support of its independent compensation consultant, the Committee has designed and implemented an executive compensation program that is structured to:

Executive Compensation Philosophy Drives Performance

We believe that the Company’s performance on key measures is evidence that the Company’s pay for performance approach to compensation facilitates consistent strong performance and growth. The Company achieved solid financial results in 2022.  Diluted earnings per common share was $5.48 for the full year of 2022, compared with $6.25 in 2021.  Net income for the year was $225.8 million, compared with $253.4 million in the previous year.  The return on average assets for the full year of 2022 was 0.98%, and the Return-on-Common-Equity for the full year of 2022 was 17.83%. The efficiency ratio for the full year of 2022 was 59.49%.

During 2022, loan balances continued to grow and reached $13.6 billion at December 31, 2022, up 11.3% from $12.3 billion at December 31, 2021.  Total assets finished 2022 at $23.6 billion, up 3.6% from $22.8 billion at December 31, 2021.  Total deposits finished 2022 at $20.6 billion, up 1.3% from $20.4 billion at December 31, 2021.  The Company’s overall asset quality continued to remain strong during 2022. Total non-performing assets were $12.6 million at December 31, 2022 compared with $19.0 million at December 31, 2021.

The Company continued to return value to its shareholders through dividends and resumed share repurchases.  The Company maintained the quarterly dividend of $0.70 per share in 2022. The Company purchased 627,629 shares in 2022 through its share repurchase program.  From the beginning of the share repurchase program initiated during July 2001 through December 31, 2022, the Company has repurchased 58.0 million shares of common stock and returned a total of nearly $2.4 billion to our common shareholders at an average cost of $41.17 per share.  Total shareholders’ equity was $1.3 billion at December 31, 2022.

Executive Compensation Process

The Committee’s annual process for setting NEOs’ compensation begins in the fourth quarter of each year when the Company’s senior management team sets operating and financial goals for the coming year.  Using data and analysis provided by an independent compensation consultant and considering senior management’s operating and financial goals, as well as the market environment, the Committee establishes compensation levels and challenging performance goals for the year.

The compensation program is designed and implemented as follows:

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Commencing in February of each year, the Committee reviews the annual results of the Company compared to the business plan, and uses this review as the basis for the annual evaluation of the CEO.  The Committee reviews the relative performance for the quantitative performance metrics. The CEO does not attend executive sessions of the Committee when his own compensation is being reviewed or determined.  The Committee's evaluation is discussed with the full Board, excluding the CEO, and communicated to the CEO by the Lead Independent Director.

Based on similar factors and individual objectives, including an assessment of effective risk management, the CEO annually reviews the performance of each of the other NEOs.  The conclusions and recommendations based on those reviews, including any recommendations for salary adjustments, annual awards and equity components, are presented to the Committee for consideration.

The Committee believes that retaining discretion to assess the qualitative performance of the CEO and other NEOs gives the Committee members the ability to more accurately reflect individual contributions that cannot be quantified.

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Peer Group and the Market Check