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Section 1: 8-K (FORM 8-K)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report: November 12, 2019

 

Exact Name of Registrant Commission I.R.S. Employer
as Specified in Its Charter File Number Identification No.
Hawaiian Electric Industries, Inc. 1-8503 99-0208097

 

State of Hawaii

(State or other jurisdiction of incorporation)

 

1001 Bishop Street, Suite 2900, Honolulu, Hawaii  96813

(Address of principal executive offices and zip code)

 

Registrant’s telephone number, including area code:

(808) 543-5662

 

None

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to 12(b) of the Act:

 

Registrant Title of each class Trading
Symbol(s)
Name of each exchange on
which registered
Hawaiian Electric Industries, Inc. Common Stock, Without Par Value HE New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule12b-2 of the Securities Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the

Exchange Act. ¨

 

 

 

 

 

 

Item 7.01 Regulation FD Disclosure.

 

The attached Letter to HEI Shareholders and HEI Fact Sheet entitled “Delivering Value to Customers, Communities and Shareholders” were sent to certain investors and stakeholders and posted on the Investor Relations page of HEI’s website.

 

The Letter to HEI Shareholders is furnished as Exhibit 99.1 and the HEI Fact Sheet is furnished as Exhibit 99.2.

 

Item 9.01 Financial Statements and Exhibits.

 

(d)  Exhibits  
   
Exhibit 99.1 Letter to HEI Shareholders dated November 12, 2019
   
Exhibit 99.2 HEI Fact Sheet, “Delivering Value to Customers, Communities and Shareholders.”

 

The information furnished in connection with this current report on Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

HAWAIIAN ELECTRIC INDUSTRIES, INC.  
(Registrant)  
/s/  Gregory C. Hazelton  
Gregory C. Hazelton  
Executive Vice President,  
   Chief Financial Officer and Treasurer  
(Principal Financial Officer)  
   
Date: November 13, 2019  

 

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EXHIBIT INDEX

 

Exhibit No.   Description
Exhibit 99.1   Letter to HEI Shareholders dated November 12, 2019
Exhibit 99.2   HEI Fact Sheet, “Delivering Value to Customers, Communities and Shareholders.”
104   Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

 

November 12, 2019

 

Dear HEI Shareholder,

 

The HEI Board of Directors and management team are focused on serving our customers and communities sustainably and reliably, while also driving superior long-term value to our shareholders. HEI has outperformed the S&P 500 and broader utility index in total shareholder return over one-, three- and five-year periods, with our stock price currently at a near-record high. At the same time, we have aggressively pursued some of the nation’s most ambitious renewable energy goals.

 

This week, Jeff Ubben, founder of the ValueAct Spring Fund, published a letter to the community of Hawaii. Frankly, the letter is disappointing. While Jeff Ubben is entitled to his own opinion, he is not entitled to his own facts. The letter is a misguided, factually inaccurate and misleading attack on HEI, Hawaiian Electric and our commitment to renewable energy, the state of Hawaii and our valued customers and investors.

 

The ValueAct Spring Fund has been a shareholder of HEI for just over a year and is new to getting to know Hawaii and the community our company has served for 128 years. ValueAct has raised the issues in their letter in the past, and we’ve addressed those directly with Mr. Ubben and his ValueAct colleagues. They don’t seem interested in the facts but rather seem intent on pursuing their own agenda – specifically, handpicking a CEO for HEI.

 

The attached document details the real facts on the strength of the business, our commitment to delivering value to our customers and all shareholders, and our path toward a more sustainable and prosperous future for Hawaii and our communities. We encourage you to read it.

 

We have a strong, capable, independent Board of Directors that takes succession planning seriously and has robust, timely and appropriate succession planning processes in place. The Board has recently added new directors (including one suggested by ValueAct) as part of our ongoing board refreshment process and to maintain the diversity of experience and expertise necessary to oversee the company’s strategic direction, including our move to a renewable and sustainable future.

 

ValueAct’s activities should be viewed in the context of its substantial conflicts of interests in Hawaii. ValueAct has a significant interest in AES – much larger than its investment in HEI – and Mr. Ubben sits on AES' Board. While AES has been an important and valued participant in the Hawaii energy ecosystem, it does have competitive and contractual interests in Hawaii, including winning bids to build solar plus storage projects under Stage 1 of our renewable RFP, owning a wind farm under construction on Oahu which will sell power to our utility, and operating a coal plant under a contract with our utility that expires in 2022.

 

At HEI, we see a vibrant future for Hawaii – one that puts our state at the forefront of clean energy, creates a sustainable and growing local economy, and allows our families and communities to flourish. The HEI Board of Directors and management team are fully focused on and committed to delivering on this promise.

 

Thank you for your investment and continued support of our company.

 

Sincerely,

 

HEI Board of Directors

 

By  
Jeff Watanabe, Chair

 

 

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Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit 99.2

 

 

 

 

Investing in Hawaii's Sustainable Future has Delivered Value for Shareholders and Proven Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HEI’s strategy has provided superior long-term value to our shareholders

Outperformed S&P 500 and broader utility index in total shareholder return over 1-, 3- and 5-year periods1
16% 5-year total return (CAGR%) for period ending 9/30/19
   

 

Delivered strong consolidated earnings growth on both a GAAP (+22%) and core (+12%) basis for FY182; on track to meet our earnings guidance for 20193

 

 

Uninterrupted dividends since 1901, with ~$600 million returned to shareholders in dividends over last 5 years

Increased quarterly dividend by 3.2% in 2019 given strong earnings growth and future prospects, with potential to grow dividend in line with earnings
2.9% dividend yield as of market close on 11/8/19
   

 

Investing additional ~$1.2 billion from 2019-21 to integrate more renewable energy, modernize our grid, increase customer options and strengthen reliability and resilience

 

 

Consolidated enterprise and efficient capital structure provide the capital to grow our businesses and invest in Hawaii while limiting need for dilutive equity

Dividends from subsidiaries have increased ~30% since 2017, with dividend from bank growing nearly 50%, supportive of our investment grade rating and enabling recent dividend increase
Able to fund utility 2019-21 capex program without external equity
   

 

 

 

   

 

 

 

 

 

 

Committed to Achieving Hawaii's Renewable Energy Goals while Ensuring Affordability, Reliability and Resilience

 

 

 

 

 

 

 

 

Leading role in advancing state policy goals of 100% renewable portfolio standard (RPS) and carbon neutral economy by 2045

On track to exceed 2020 RPS milestone of 30%4
Key role of utility is to facilitate community-wide transition to renewable energy and carbon neutrality

 

 

Rapidly working to reduce greenhouse gas emissions

Reduced fossil fuel use – and greenhouse gas emissions – by 19% over past 10 years and ahead of state milestone
Cut oil imports by ~88 million gallons per year for electricity generation
Coal plant contract expires in 2022, additional fossil plant retiring by 2024, if not sooner

 

 

Launched ambitious renewable procurements to significantly increase renewable energy

Secured lowest cost solar plus storage prices ever in HI, with Hawaii Public Utilities Commission approving contracts for 260 MW of solar and ~1 GWh of storage in 2019
Subsequently launched one of the largest renewable energy procurements undertaken by a U.S. utility for up to 900 MW renewable energy, 500 GWh storage, and 210 MW grid services
  » Received more than 75 bids to build renewable energy or storage projects, or provide grid services

 

 

Aligned with state policy and transforming utility to achieve state policy goals

Conducted long-term planning with stakeholder engagement for state to reach 100% RPS goal by 2045
Next phase of long-term planning underway with focus on resilience
Collaborating with stakeholders to evolve Hawaii regulatory framework to further advance policy goals

 

 

We have the nation’s highest percentage of rooftop solar and we plan to grow that dramatically

18% of our customers have rooftop solar, 9 times the national average of 2%
On Oahu, 1 in 3 single-family homes have rooftop solar
By 2045 we envision meeting the needs of all single-family homes with customer-sited resources
Rooftop solar helps ensure that limited land is available for other community needs, such as affordable housing and local agriculture
National leader and innovator integrating high levels of intermittent, customer-sited solar:
  » Using innovative inverter technologies to manage distributed resources
  » Managing grid to ensure reliability with high levels of variable, intermittent distributed sources
  » Expertise routinely sought by other utilities

 

 

Unique geographic operating environment underpins our focus on resilience

Five isolated island grids, which are not connected to other power sources (like grids on the mainland U.S.)
Each island must be self-sufficient and preserve its own reliability as we expand renewables

 

 

   

 

 

 

 

 

 

 

ESG is in Our DNA and We Are Integrating it Further into Decision-Making and Strategy

 

 

 

 

 

 

 

 

 

 

 

 

Our mission is to be a catalyst for a better Hawaii through our three lines of business – utilities, banking and sustainable infrastructure

As an enterprise with operations entirely in Hawaii, we have long recognized that the strength of our companies is inextricably linked to the health of our environment, economy and communities

   

 

ESG is in our DNA, and embedded in our core strategies across our three lines of business

Utility: Focused on achieving Hawaii’s 100% renewable energy and carbon neutral economy goals in a way that’s affordable, reliable and resilient for our customers
Bank: Investing in economic growth of our state; fostering innovation and entrepreneurship to diversify and expand our economy
 Pacific Current: Developed with mission to advance Hawaii's sustainability goals through investment in clean energy, water, wastewater and agriculture
   

 

Integrating ESG even further into governance structures, decision-making processes and reporting

Conducted ESG materiality assessment for all companies within enterprise
 Board strategic retreat to oversee development of ESG assessment and strategy
Formalizing ESG integration into risk management and strategic planning
   

 

 

   

 

 

 

 

 

 

Strong, Capable, Independent Board of Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

Strong Board reflects key expertise, including significant C-Suite, utility and banking experience

   

 

Focused on Board and management succession planning following 2016 termination of NextEra Energy merger process

   

 

Since 2017, added five new directors as part of ongoing Board refreshment and to maintain diversity of experience and the expertise necessary to oversee the strategic direction of our companies:

Celeste Connors: Expertise in sustainability, energy and economic policy, and Hawaii business, government and non-profit communities; CEO, Hawaii Green Growth

 Richard Dahl: Expertise and senior leadership experience in banking and utilities; former President & COO, Bank of Hawaii (Member, HEI Audit and Compensation Committees)
 Micah Kane: Extensive government and policy experience as leader of Hawaii governmental and non-profit agencies; deep understanding of Hawaii's business and political environment; CEO, Hawaii Community Foundation (Member, HEI Nominating & Corp. Gov. Committee)
 Mary Powell: Significant experience in utilities and renewable energy; President and CEO, Green Mountain Power since 2008 (serves on HEI and ASB boards)
 Jim Scilacci: Track record of value creation and financial leadership in utilities industry; former CFO, Edison International (HEI Audit Committee Chair)
   

 

Average independent director tenure of 7.7 years

   

 

Recently made Board leadership changes as part of planned transition:

Peggy Fowler appointed Chair, Nominating & Corporate Governance Committee
Jim Scilacci appointed Chair, Audit Committee
 Admiral Thomas Fargo named Vice Chair of the Board
 Jeff Watanabe, Board Chair, nominated and elected to a single one-year term
   

  

Substantial diversity on Board provides range of perspectives

64% of our directors are women or from diverse ethnic backgrounds

 

 

 

 

 

 

 

 

1.As of Nov. 12, 2019.
2.2018 core earnings growth excludes one-time tax reform impacts that reduced net income in 2017. HEI 2018 net income was $201.8 million. HEI 2017 net income was $165.3 million on a GAAP basis and, excluding one-time tax reform impacts of $14.2 million, was $179.5 million on a non-GAAP (core) basis.
3.Reaffirmed on earnings webcast Nov. 1, 2019. This document is not a reaffirmation of such guidance.
4.This is despite challenges such as lava flows that have taken a third party-owned geothermal plant on Hawaii Island out of service since May 2018 and a Hawaii Supreme Court action delaying a third party- owned biomass plant.

 

 

   

 

 

 

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