The five ousted trustees eachBy Rick Daysog
made $1,037,012 in the
year ending June '98
Bishop Estate's five trustees, who were temporarily removed from office less than two weeks ago, took a $192,412 pay raise last year, according to the estate's tax filings released today.
Trustees Richard "Dickie" Wong, Oswald Stender, Henry Peters, Lokelani Lindsey and Gerard Jervis each earned $1,037,012 in the year ending June 30, 1998, up from $844,600 in the year-earlier period.
The board members' 1998 compensation is the highest ever for the 114-year-old trust, topping the previous record of $938,000 in the trust's 1994 fiscal year and comes amid a tumultuous year in which the trustees were subject to investigations by the IRS and the attorney general's office.
Critics have cited the high commissions as a key issue in the 2-year-old controversy surrounding the estate and the trust-run Kamehameha Schools.
Less than two weeks ago, Probate Judge Kevin Chang ordered the temporary removal of four of the five trustees and accepted the voluntary resignation of the fifth, Oswald Stender.
Prior to the historic removal order, Chang indefinitely suspended payouts to the trustees after the estate's court-appointed master, Colbert Matsumoto, raised objections that trustees were paid more than a million dollars in the last fiscal year and had been paid an additional $800,000 during the first 10 months of the current fiscal year.
Matsumoto said he was concerned that the high pay levels violated past court orders and could threaten the estate's tax-exempt status.
The IRS has been investigating whether trustees took excessive compensation during the past several years, and the state attorney general's office is also examining the issue.
The IRS, which is in the process of negotiating a closing agreement of its three-year audit with the estate's current interim trustees, has demanded that the estate establish a policy for reasonable compensation not only for its trustees but also for its top executives.
The federal agency also has threatened to revoke the estate's tax-exempt status if the former trustees aren't permanently removed.
Trustees in the past have defended their pay as performance-based and have cited recent estate-commissioned studies by mainland consulting firms that show that their pay is comparable to that of mainland executives with similar duties.
They also have cited state law that, until this year, allowed trustees to earn up to 2 percent of all estate income above $205,000. Under that formula, the trustees would have been eligible to receive as much as $1.66 million each.
The new state law, which took effect in January, now limits the pay of trustees of charitable institutions to "reasonable levels" set by the probate court.
The trustees' increased pay comes as the estate's finances enjoyed a near-record year. The estate reported net revenues of $334.7 million for the year ending June 30, 1998, second only to the year-earlier's $377.5 million.
The estate said its spending on the trust-run Kamehameha Schools hit $124 million, up from the year earlier's $118 million.
Bishop Estate archive