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Monday, May 17, 2004



Executives to cash in
on bank merger

Some Central Pacific and
CB Bancshares execs will receive
packages exceeding $10 million


An unsolicited merger that collectively cost Central Pacific Bank and City Bank more than $25 million during the past year will allow senior executives to cash in on millions of dollars apiece.

Senior executives of City Bank parent CB Bancshares Inc. will receive separation packages ranging from $100,000 to more than $10 million while Central Pacific Financial Corp.'s top official will be rewarded with a wage-and-bonus package that could be worth as much as $2.05 million in his first year, according to financial information obtained by the Star-Bulletin. More details will become public later this week in a filing with the Securities and Exchange Commission.

Five other members of Central Pacific's management team will receive $200,000 merger bonuses in addition to pay raises.

Clint Arnoldus, chairman, president and chief executive of Central Pacific, will get a $1 million retention bonus for accomplishing the merger -- half of that amount to be paid on the merger closing date and the other half on the first anniversary of the merger's closing.

Arnoldus, who will be CEO of the new company, will receive an annual base salary of $600,000, nearly $70,000 more than he earned in total compensation last year. In addition, his compensation includes a target bonus of 50 percent, or $300,000, of his base salary that could be increased to a maximum of 75 percent, or $450,000. The bonus is based on performance incentives. He also will receive 180,000 stock options that will vest over three years, as well as a retirement benefit that would begin at age 65.

Ronald Migita, president and CEO of CB Bancshares, will receive an annual base salary of $200,000, along with director fees, for his two-year term as nonexecutive chairman of the new bank. At CB Bancshares, he received total compensation of $644,984 in 2003.

Migita also will receive a change-in-control severance benefit, a lump-sum payment of a retirement benefit, and payment to cover tax liabilities. The additional payments are expected to be worth more than $10 million.

Neal Kanda, chief financial officer of Central Pacific, will receive an annual base salary of $285,000 as president of the merged bank with a target bonus of 40 percent of salary. He also will receive a $200,000 merger bonus.

Central Pacific will pay $200,000 bonuses to four executive vice presidents as an incentive to remain with the bank.

Richard Lim, president and chief operating officer of City Bank, will receive an annual base salary of $150,000 with a target bonus of 30 percent of salary as senior vice president-mortgage banking. Lim also will receive a severance of more than $10 million, according to a person familiar with the situation.

Dean Hirata, chief financial officer of CB Bancshares, will receive an annual base salary of $200,000 with a target bonus of 30 percent of salary as CFO at the new bank.

Douglas Weld, executive vice president of City Bank, will receive an annual base salary of $195,000 a year with a target bonus of 30 percent of salary as executive vice president and chief credit officer.

Warren Kunimoto, executive vice president of City Bank, will be paid an annual base salary of $120,000 with a target bonus of 30 percent of salary as senior vice president-information technology.

Lionel Tokioka, chairman of the board of CB Bancshares, will receive an annual consulting retainer of $100,000 as senior adviser to the board of directors.

CB Bancshares also has agreed to pay Central Pacific a termination fee of $12.52 million if the merger is not completed by Sept. 30 or if several other conditions occur, such as CB Bancshares' shareholders failing to approve the merger or CB Bancshares receiving a competing acquisition proposal and the merger agreement is terminated.

The banks announced the $420 million merger on April 23, more than a year after it was initially proposed.

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