Wednesday, August 18, 1999

Trustee pay to be overhauled

A compensation panel member
says there will be 'a considerable
change' in the Bishop
trustees' salary

By Rick Daysog


The salaries of Bishop Estate's trustees, a longtime source of resentment among trust critics, may soon be changed to a "reasonable" level under a study by a court-appointed panel.

Mike Rawlins, chairman of the trustee compensation committee, said his group plans to submit to the probate court a report by its mainland compensation expert, Towers Perrin, by Sept. 14.

Rawlins declined to disclose specific findings of the soon-to-be-completed report, which will be a subject of a hearing before Probate Judge Kevin Chang.

"It would be a safe assumption that there will be a considerable change in trustee compensation," Rawlins said.

Complaints about trustees' $1 million-a-year commissions has played a major role in the two-year Bishop Estate controversy. In the past, board members' annual pay, which topped the $1 million mark in 1998, had been based on a percentage of the estate's gross revenues but under a new state law that took effect this year, trustees pay must be set at "reasonable" levels.

Last night, the compensation committee -- appointed in May by Judge Chang to determine a formula to pay future Bishop Estate trustees -- held a hearing at the Kamehameha Schools campus to gather public feedback on how trustees should be paid.

One speaker, Leroy Akamine, argued that trustees should not be paid for their duties. Akamine, a 1952 Kamehameha Schools graduate and a director of the student-parent group Na Pua a Ke Ali'i Pauahi, said recent changes ordered by the probate court vastly reduce the duties of board members.

The probate court, in ordering the estate to implement a new management system headed by a chief executive officer last year, essentially limited the role of the board of trustees to that of a policy setter, he said.

Ousted Bishop Estate trustee Henry Peters argued that changing the way trustees are paid essentially amounts to changing the will of the estate's founder, Bernice Pauahi Bishop.

While Bishop's will does not specify how trustees should be paid, Peters said that lowering the trustees' pay means the board would be reduced to a part-time or voluntary status. Pauahi's will called for board members to actively manage the trust's assets, said Peters.

Peters -- who was temporarily removed by Judge Chang back in May after the Internal Revenue Service threatened to revoke the estate's tax-exempt status -- defended his past commissions as performance-based.

Peters noted that the estate has prospered financially and pointed to the recent public offering of Goldman Sachs Inc., which boosted the estate's assets by about $2 billion. Under the current system, "if the trustees earned zero income (for the trust), they would receive zero commissions," he said.

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