Is Bishop trustees
pay not reasonable?
Their commissions --By Rick Daysog
$862,000 each so far this
fiscal year -- are on hold
After each taking more than $1.8 million in commissions during the past two years, Bishop Estate's five trustees are barred from receiving further compensation, under a ruling by a state judge.
Probate Judge Kevin Chang yesterday ordered the trustees not to take compensation from the estate or from its for-profit subsidiaries until a future date set by the court.
Chang also ordered the estate to show why it hasn't adopted an October recommendation by court-appointed master Colbert Matsumoto to set up a single-voice management system headed by a chief executive officer.
Yesterday, Matsumoto disclosed that trustees Richard "Dickie" Wong, Oswald Stender, Lokelani Lindsey, Henry Peters and Gerard Jervis each earned more than $1 million in the year ending June 1998 and another $862,000 for the first 10 months of the trust's 1999 fiscal year.
Matsumoto argued that the pay level could threaten the tax-exempt status of the multibillion-dollar charitable trust. The Internal Revenue Service has been conducting an exhaustive, four-year audit of the estate and has focused on the issue of trustee compensation.
"My concern is that they're required to draw an amount not in excess of what is reasonable," Matsumoto said. "The matter is a very serious matter that requires closer examination by the court."
Trustees have argued that their compensation is performance-based. They also have said that they waive hundreds of thousands of dollars a year that they are legally entitled to.
But Matsumoto noted that the trustees' pay exceed the guidelines set by the trust's own outside consultants. One recent study by the Towers Perrin consulting firm suggested trustees be paid from $680,000 to about $750,000, he said.
Matsumoto also raised concerns that the compensation levels could violate federal legislation aiming to limit the pay of trustees of charitable organizations. "This situation is tantamount to rolling the dice," Matsumoto said.
Chang, meanwhile, denied a petition by the estate to delay implementing chief executive officer-based management, and ordered the trust to show why such a plan has not been put in place.
The estate earlier agreed to establish a system by April 1 but asked Chang for an extension. Trust lawyer Bruce Graham said the estate has hired the executive search firm Korn/Ferry International Inc. which is still looking at candidates.
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