Amid flat profits and a stagnant local economy, Hawaii's largest banking company slashed the bonuses awarded last year to its top executives.
According to proxy documents filed with the Securities and Exchange Commission, Lawrence M. Johnson, the chairman and chief executive officer of Pacific Century Financial Corp., received an $80,151 bonus in 1997, down 84% from the $491,973 award he got in 1996.
Richard J. Dahl, president and chief operating officer, was awarded $48,950, 84% less than in 1996, while David A. Houle, treasurer and chief financial officer, saw his bonus shrink 42%, to $58,420.
"From a shareholder perspective it is somewhat reassuring they are sharing in the bank's success or, in this case, lack thereof," said David H. Winton, an analyst with Keefe, Bruyette & Woods. "Unfortunately, their problems are not necessarily tied to something they are doing or not doing."
Pacific Century executives were unavailable to comment.
The company, formerly Bancorp Hawaii, also has a long-term incentive plan under which bonuses are awarded to executives who help meet performance goals set over three-year cycles. In the cycle ending Dec. 31, as in the two previous cycles, none of the 41 senior officers received a bonus under the program, the proxy said.
Annual bonuses are tied to return on average assets, which declined 1 basis-point to 0.98% last year, and net income, which inched up less than 5%, to nearly $140 million in 1997.
The slow economy in Hawaii was the main culprit. Two-thirds of the Honolulu company's assets are based in the state, which has experienced eight years of little or no growth. Additionally, Pacific Century's loan portfolio has suffered from exposure to problems in Asia.
In an attempt to improve performance, the company last month announced a major cost-cutting initiative, saying it would pare annual expenses by $25 million and improve its ratio of expenses to revenue to 55% by yearend 2000 from its current 66%.
Under the plan, Pacific Century will close 25 of its 100 branches, many of which are owned by its main subsidiary, $15 billion-asset Bank of Hawaii. In addition, the bank announced it would cut its work force by 11%.