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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.            )

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Filed by a Party other than the Registrant o

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

Hawaiian Electric Industries, Inc.

(Name of Registrant as Specified In Its Charter)

 

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GRAPHIC


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LOGO   PHOTO

March 25, 2019

Dear Fellow Shareholder:

On behalf of the Board of Directors of Hawaiian Electric Industries, Inc. (HEI), it is my pleasure to invite you to attend the 2019 Annual Meeting of Shareholders (2019 Annual Meeting) of HEI. The meeting will be held on Tuesday, May 7, 2019 at 10:00 a.m., Hawaii time at HEI's premises in Room 805 on the eighth floor of the American Savings Bank Tower, located at 1001 Bishop Street, Honolulu, Hawaii 96813. A map showing the location of the meeting site appears on the last page of the enclosed Proxy Statement.

The Notice of Annual Meeting of Shareholders and Proxy Statement that accompany this letter describe the business to be conducted during the 2019 Annual Meeting.

Your vote is very important. Whether or not you attend the meeting in person, and no matter how many shares you own, it is important that your views be represented. Please vote by signing and returning your proxy card or by using telephone or internet voting. Instructions on how to vote are on pages 72-73 of the Proxy Statement.

For further details on HEI's accomplishments in 2018, please see my letter in the accompanying Annual Report, as well as our Independent Chairman's letter to follow.

The Board of Directors and management team of HEI would like to express our appreciation to you for your confidence and support. I look forward to seeing you at the 2019 Annual Meeting in Honolulu.

    Sincerely,
 
SIGNATURE
Constance H. Lau
President and Chief Executive Officer

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    PHOTO

A Message from Our Independent Chairman

Dear Fellow Shareholder,

At Hawaiian Electric Industries (HEI), your board is committed to the highest standards of ethics and good corporate governance, promoting integrity, accountability, transparency and sound decision-making. As Chairman, I value this chance to share our board's priorities for achieving our objectives of creating long-term shareholder value and ensuring the vitality of HEI for all who rely on our company, from our shareholders and customers to our employees and the communities we serve.

Board Refreshment and Governance

To support and advance our company's priorities, including our work to achieve Hawaii's leading renewable energy goals, we are focused on ensuring we have the right mix of directors with the collective expertise to guide our strategy. We are deeply committed to maintaining diverse perspectives, and 64% of our directors are women or from diverse ethnic backgrounds. We are excited to nominate three new directors for election to the board this year, two of whom are women and all of whom bring excellent skills and experience to add to the strength of our talented board.

Celeste Connors has extensive experience developing policy on sustainability and climate change and bringing stakeholders together to address policy challenges. Mary Powell is the CEO of a utility known for its customer focus and innovative green energy initiatives. And Jim Scilacci has in-depth utility and financial expertise. As a board, we took great care in evaluating the needs of our company and assessing potential board candidates. We highly recommend Celeste, Mary and Jim to you, our shareholders, for election to the board. To learn more about them, please see pages 2-5 of this proxy statement.

After 25 years of dedicated service to HEI's board, much of which as a valued chair of our Nominating & Corporate Governance Committee, Kelvin Taketa will not stand for re-election. We have appointed Peggy Fowler as the new Chair of our Nominating & Corporate Governance Committee. In addition, as part of our planned board leadership transition, Admiral Tom Fargo, who serves as Chair of our Compensation Committee and has been nominated for re-election to the board, will be appointed Vice Chair of the Board if elected at this annual meeting.

While this year reflects a number of changes in our board composition, board refreshment is a continuous process. We conduct annual board and committee self-evaluations and periodic self and peer reviews to ensure the board's skills align with our strategy. In addition to expertise in utilities and banking, our board has significant leadership experience and deep expertise in regulation, renewable energy, infrastructure resilience, risk management, financial oversight, strategic and operational management of complex organizations and corporate transformation. With our operations and strategy focused on Hawaii, our success is inextricably linked to the health of Hawaii's economy and communities. Thus, it is critically important to have directors who are connected to and understand our communities and the unique regulatory and community considerations of operating in our islands. Finally, our board continues to prioritize diversity and independence, which encourage the constructive expression of views that may differ from those of senior management, particularly in setting our strategic direction.

Board Oversight of Strategy and Capital Allocation

The board meets regularly to assess HEI's strategy, including the development and investment in opportunities that serve as catalysts for a better Hawaii. Our place-based strategy and sustained financial performance provide the resources to invest in the company's strategic growth and a sustainable future for our state, while delivering shareholder value. Our strong investment grade balance sheet provides efficient access to growth capital and our consolidated enterprise and efficient capital structure limit our need for external equity. Over the last five years, we have invested $2 billion in Hawaii infrastructure, loaned $7.8 billion to Hawaii customers and returned approximately


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$600 million in dividends to shareholders. In addition, our total return to shareholders has outperformed both the S&P 500 and broader utility index over one-, three- and five-year periods.

Culture and Our Teammates

We are dedicated to creating a better Hawaii. We reflect this commitment through our efforts to provide products and services that enhance our customers' lives, and in our work to protect Hawaii's unique environment, strengthen our economy, support our communities and act with integrity and accountability.

Our board oversees and works with management to find and cultivate the talent our organization needs to continue delivering value for our shareholders, customers and communities. Our employees are committed to the company's foundational values: integrity, excellence, aloha and safety. In turn, we as a board have prioritized investment in our employees, providing opportunities for challenge, growth and advancement. We offer numerous training courses and extensive wellness programs focusing on improving overall employee health across the enterprise. I'm pleased to announce that American Savings Bank continues to receive recognition for its excellent workplace culture, and has been named one of Hawaii Business Magazine's "Best Places to Work" for ten consecutive years.

Our Focus on Risk Oversight

The board spends significant time on risk oversight. We have a board-approved consolidated enterprise risk management system designed to identify and assess risks across the HEI enterprise and report risks to the board, along with proposed strategies for mitigating such risks.

At least annually, the board conducts a strategic planning and risk review, during which we evaluate the company's fundamental financial and business strategies and assess major risks facing the company and options to mitigate those risks. Based on the review, the board and senior management, including the HEI Chief Risk Officer, identify key issues to be addressed during the next calendar year.

Meaningful Shareholder Engagement

We believe strong corporate governance includes engaging with our shareholders and considering their views. Over the past year, our company reached out to or engaged in meetings and discussions with shareholders representing more than 65% of our institutional shareholder base. These meetings covered our financial and operational performance, our progress toward renewable energy goals, executive compensation and board and governance policies, and involved our independent directors as appropriate. This engagement provides valuable insight that informs the work of both management and the board.

We look forward to the year ahead as we continue our work to create long-term shareholder, customer and community value. On behalf of the Board of Directors, thank you for your continued support.

Aloha,

SIGNATURE

Jeffrey N. Watanabe
Chairman of the Board


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NOTICE OF 2019 ANNUAL
MEETING OF SHAREHOLDERS
Hawaiian Electric Industries, Inc.
1001 Bishop Street, Suite 2900
Honolulu, Hawaii 96813

 

LOGO
When:   Tuesday, May 7, at 10:00 a.m., Hawaii Time
Where:   American Savings Bank Tower, 1001 Bishop Street, 8th Floor, Room 805, Honolulu, Hawaii 96813
Items of Business:   Proposal 1 — Election of four Class II directors to serve for a three-year term expiring at the 2022 Annual Meeting of Shareholders and election of one Class III director to serve until the 2020 Annual Meeting of Shareholders
    Proposal 2 — Advisory vote to approve the compensation for HEI's named executive officers
    Proposal 3 — Approval of extension of the term of the Hawaiian Electric Industries, Inc. 2011 Nonemployee Director Stock Plan and increase in the number of shares available for issuance thereunder
    Proposal 4 — Ratification of the appointment of Deloitte & Touche LLP as HEI's independent registered public accountant for 2019
    To transact such other business as may properly come before the 2019 Annual Meeting
Record Date:   March 1, 2019
Annual Report:   The 2018 Annual Report to Shareholders, which is not part of the proxy solicitation materials, has been mailed or made available electronically to shareholders, along with this Notice of 2019 Annual Meeting of Shareholders and accompanying Proxy Statement.
Who Can Attend:   Only shareholders of record as of the record date are entitled to receive notice of, attend and vote at the 2019 Annual Meeting. To attend, you must bring government-issued photo identification. If your shares are held in street name, you must also bring evidence of ownership on the record date (such as a brokerage account statement). If you represent an entity that is a shareholder, you will also need proof of authority for representation.
Date of Mailing:   On or about March 25, 2019, these proxy materials and annual report are being mailed or made available to shareholders.

How To Vote Your Shares

Your vote is important. Please vote as soon as possible by one of the methods shown below. Make sure to have your proxy card, voting instruction form, or notice of Internet availability in hand and follow the instructions. Shareholders of record may appoint proxies and vote their shares in one of four ways:

GRAPHIC   By Telephone: You can vote your shares by calling 1-888-693-8683.

GRAPHIC

 

By Internet: You can vote your shares online at www.cesvote.com.

GRAPHIC

 

By Mail: You can vote by mail by marking, dating, and signing your proxy card or voting instruction form and returning it in the postage-paid envelope.

GRAPHIC

 

In Person: Attend our annual meeting and vote by ballot.

Shareholders whose shares are held by a bank, broker or other financial intermediary (i.e., in "street name") should follow the voting instruction card provided by such intermediary.

Any proxy may be revoked in the manner described on page 74 in the accompanying Proxy Statement.

It is important that you vote your shares. To ensure that your shares are voted, please follow the instructions on the proxy card to either complete and return the proxy card or vote by telephone or over the internet. Mailing your proxy card or voting by telephone or over the internet does not preclude you from changing your vote in person at the 2019 Annual Meeting of Shareholders (the 2019 Annual Meeting).

Important Notice Regarding the Internet Availability of Proxy Materials for the 2019 Annual Meeting of Shareholders to be held on May 7, 2019

The accompanying Proxy Statement, 2018 Annual Report to Shareholders and 2018 Annual Report on Form 10-K are available at http://www.hei.com


By Order of the HEI Board of Directors,

Kurt K. Murao
Vice President — Legal & Administration and
Corporate Secretary

March 25, 2019

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TABLE OF CONTENTS

    Page        
  i   PROXY SUMMARY    
  1   PROPOSAL NO. 1: ELECTION OF FOUR CLASS II DIRECTORS AND ONE CLASS III DIRECTOR    
    2   DIRECTOR NOMINEES FOR ELECTION    
     
  7   CONTINUING DIRECTORS    
     
  13   CORPORATE GOVERNANCE    
     
  19   BOARD OF DIRECTORS    
     
  21   COMMITTEES OF THE BOARD    
     
  23   DIRECTOR COMPENSATION    
  27   PROPOSAL NO. 2: ADVISORY VOTE TO APPROVE THE COMPENSATION OF HEI'S NAMED EXECUTIVE OFFICERS    
  28   COMPENSATION DISCUSSION AND ANALYSIS    
     
    28   Executive Summary    
  30   How We Make Compensation Decisions    
  31   We Use Comparative Market Data as a Reference Point for Compensation    
  33   What We Pay and Why: Compensation Elements and 2018 Pay Decisions    
  46   Additional Policies and Information    
     
  49   COMPENSATION COMMITTEE REPORT    
     
  49   COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION    
     
  50   EXECUTIVE COMPENSATION TABLES    
     
  50   Summary Compensation Table    
  53   Grants of Plan-Based Awards    
  54   Outstanding Equity Awards at 2018 Fiscal Year-End    
  55   2018 Option Exercises and Stock Vested    

 

    Page        
  56   Pension Benefits    
  58   2018 Nonqualified Deferred Compensation    
  59   Potential Payments Upon Termination or Change in Control    
  61   CEO Pay Ratio    
     
  62   STOCK OWNERSHIP INFORMATION    
     
  64   OTHER RELATIONSHIPS AND RELATED PERSON TRANSACTIONS    
  65   PROPOSAL NO. 3: APPROVAL OF EXTENSION OF THE HAWAIIAN ELECTRIC INDUSTRIES, INC. 2011 NONEMPLOYEE DIRECTOR STOCK PLAN AND INCREASE IN THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE THEREUNDER    
  69   AUDIT COMMITTEE REPORT    
  70   PROPOSAL NO. 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019    
  71   ABOUT THE MEETING    
     
  72   VOTING PROCEDURES    
     
  76   OTHER INFORMATION    
     
  A-1   EXHIBIT A: Reconciliation of GAAP to Non-GAAP Measures: Reported Core Earnings and Other Financial Measures    
     
  B-1   EXHIBIT B: Reconciliation of GAAP to Non-GAAP Measures: Incentive Compensation Adjustments    
     
  C-1   APPENDIX A: Hawaiian Electric Industries, Inc. 2011 Nonemployee Director Stock Plan    
    MAP    

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   PROXY SUMMARY   


PROXY SUMMARY

This summary contains highlights about our Company and the upcoming 2019 Annual Meeting. This summary does not contain all of the information that you should consider. Please read the entire Proxy Statement carefully prior to voting.

VOTING MATTERS

    Management Proposals
  Board Vote Recommendation
  Page
    1. Election of Four Class II Directors and One Class III Director       GRAPHIC FOR Each Nominee       1    
    2. Advisory Vote to Approve the Compensation of HEI's Named Executive Officers     GRAPHIC FOR     27  
    3. Approval of Extension of the Term of the Hawaiian Electric Industries, Inc. 2011 Nonemployee Director Stock Plan and Increase in the Number of Shares Available for Issuance Thereunder       GRAPHIC FOR       65    
    4. Ratification of Appointment of Independent Auditor for 2019     GRAPHIC FOR     70  

ELECTION OF DIRECTORS

The following table provides summary information about the nominees for election to the Board of Directors (Board) — four Class II directors and one Class III director of Hawaiian Electric Industries, Inc. (HEI or the Company). Additional information about all directors, including the nominees, may be found beginning on page 2.

 

 

Name


  Age     Director
Since

 
  Primary Occupation     Independent     Leadership and
Committee
Membership


 
  Other
Public
Boards


 

 

 

Class II Directors

                                                   

​  

 

Celeste A. Connors

    43     New     Executive Director, Hawaii Green Growth Local2030 hub     GRAPHIC          

 

 

Thomas B. Fargo

      70       2005       Chairman, Huntington Ingalls Industries, Inc.
Former Commander, U.S. Pacific Command
      GRAPHIC       CC (chair) NCGC       3    

​  

 

Mary G. Powell

    58     New     CEO, Green Mountain Power Corporation     GRAPHIC         1  

 

 

William J. Scilacci, Jr.

      63       New       Retired EVP and CFO, Edison International       GRAPHIC                

​  

 

Class III Director

                                                 

 

 

Jeffrey N. Watanabe

      76       1987       Retired Founder, Watanabe Ing LLP       GRAPHIC       EC (chair)
CC
BD
         

CC - Compensation Committee
EC - Executive Committee
NCGC - Nominating and Corporate Governance Committee

BD - Chairman of the Board

GOVERNANCE HIGHLIGHTS

HEI's governance is guided by the principle that shareholder value for our Company is linked to the value we bring to the customers and communities we serve. Highlights of our governance include:

 
   
   
   
   

​  

 

BOARD OF DIRECTORS


   

 

 

Independent Chairman of the Board

     

YES

   

 

 

Number of Independent Directors

      10 of 11    

 

 

Percentage of Directors who are women or from diverse ethnic backgrounds

      64%*    

 

 

All Audit, Compensation and Nominating & Corporate Governance Committee members are independent

      YES    

 

 

Executive session of independent directors held at each Board meeting

      YES    

 

 

All directors attended at least 89% of meetings of the Board and Board committees on which they served in 2018

      YES    

 

 

Policy limitation on membership on other public company boards

      YES    

 

 

Annual Board and committee self-evaluations and periodic director self and peer review

      YES    

 

 

Directors required to submit resignation for Board consideration upon the end of their term after reaching age 75 or in event of a significant change in their employment

      YES    

 

 

Share ownership and retention requirements for directors and executives

      YES    

* see page 17

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   PROXY SUMMARY   

CURRENT DIRECTORS

 

 

    Public
C-Suite
Experience



  Utilities
Experience


  Financial
Experience


  Banking
Experience


  Hawaii
Experience


  Government /
Regulation Experience


  Renewable
Energy
Experience



  Diversity

 

 

Jeffrey N. Watanabe (Chairman)

                      GRAPHIC       GRAPHIC       GRAPHIC       GRAPHIC               GRAPHIC    

​  

 

Constance H. Lau (CEO)

    GRAPHIC     GRAPHIC     GRAPHIC     GRAPHIC     GRAPHIC     GRAPHIC     GRAPHIC     GRAPHIC  

 

 

Richard J. Dahl

      GRAPHIC       GRAPHIC       GRAPHIC       GRAPHIC       GRAPHIC                            

​  

 

Thomas B. Fargo

            GRAPHIC     GRAPHIC     GRAPHIC     GRAPHIC          

 

 

Peggy Y. Fowler

      GRAPHIC       GRAPHIC       GRAPHIC       GRAPHIC               GRAPHIC       GRAPHIC       GRAPHIC    

​  

 

Keith P. Russell

    GRAPHIC     GRAPHIC     GRAPHIC     GRAPHIC                  

 

 

James K. Scott

                                      GRAPHIC       GRAPHIC               GRAPHIC    

​  

 

Barry K. Taniguchi

            GRAPHIC         GRAPHIC     GRAPHIC         GRAPHIC  

NEW DIRECTOR NOMINEES

 

 

    Public
C-Suite
Experience



  Utilities
Experience


  Financial
Experience


  Banking
Experience


  Hawaii
Experience


  Government /
Regulation
Experience



  Renewable
Energy
Experience



  Diversity

 

 

Celeste A. Connors

                                      GRAPHIC       GRAPHIC       GRAPHIC       GRAPHIC    

​  

 

Mary G. Powell

        GRAPHIC     GRAPHIC     GRAPHIC         GRAPHIC     GRAPHIC     GRAPHIC  

 

 

William James Scilacci, Jr.

      GRAPHIC       GRAPHIC       GRAPHIC                       GRAPHIC       GRAPHIC            

The lack of a check for a particular item does not mean that the director does not possess that experience or is unable to contribute to the decision-making process in that area. We look to each director to be knowledgeable in these areas; however, the check indicates that the item is a particularly prominent area of expertise that the director brings to the Board.

SHAREHOLDER INTERESTS

In an uncontested director election, a director who is elected but does not receive the support of a majority of votes cast must submit his or her resignation for Board consideration

No shareholder rights plan

Input from shareholder outreach incorporated in decision processes

Prohibition on hedging and pledging of HEI stock

Proxy access

SHAREHOLDER ENGAGEMENT

We believe that strong corporate governance includes engagement with our shareholders and considering their views. This past year, we reached out to or held meetings and discussions with shareholders representing more than 65% of our institutional shareholder base. We greatly value the feedback received from our shareholders, which is collected and shared with the Board. This engagement provides valuable insight that informs the work of both management and the Board.

    HEI Participants
Types of Engagement
Topics Covered

 

Independent directors, including Board leadership

Executive management

Investor relations team

 

Discussions with existing shareholders (portfolio managers and corporate governance/investment stewardship departments)

Discussions with prospective shareholders

Investor conferences

Earnings conference calls

Outreach to proxy advisory firms

Outreach to financial advisors and stock brokers for our shareholders

 

Key value drivers

Capital structure and capital allocation priorities

Strategic initiatives

Financial and operational performance and goals

Board composition and governance

ESG risks and opportunities

Risk management

Executive compensation policies and design

ii


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   PROXY SUMMARY  

2018 BUSINESS HIGHLIGHTS

FINANCIAL RESULTS

          Net Income1
  Diluted Earnings per Share (EPS)1
  Return on Average Common Equity1
    2018       $202M       $1.85       9.5%    
​     2017     $165M ($179M)     $1.52 ($1.65)     7.9% (8.6%)  
    2016       $248M ($190M)       $2.29 ($1.75)       12.4% (9.5%)    

1 Numbers in parentheses are non-GAAP measures, which exclude tax reform and related adjustments for 2017, and after-tax merger and spin-off related expenses and income for 2016. See Exhibit A for a reconciliation of GAAP to non-GAAP measures.


               
          Total Shareholder Return (%)
               
          HEI
  S&P 500 Index
  Edison Electric
Institute Index


  KBW Regional Banking Index
    2018       5.0       (4.4)       3.7       (17.5)    
    3-year     41.7     30.4       36.0     16.7    
    5-year       72.1         50.3         68.5       26.6      
    10-year     166.0     242.8       176.4     87.2    

Source: Bloomberg.

2018 COMPANY HIGHLIGHTS

Creating long-term value for shareholders, customers, employees and communities

In 2018, our HEI family of companies achieved important accomplishments that advance our goal of delivering long-term value for our shareholders, customers, employees and communities. We continued to work in collaboration with the communities we serve to reach our ambitious but necessary renewable energy goals, strengthen our economy and make our communities and neighborhoods more resilient.

We delivered on key priorities of our five-year utility transformation plan, including (1) achieving 27 percent of energy sales from renewable sources — up from just 9 percent a decade ago and despite the lava-related outage of a third party geothermal plant in 2018; (2) contracting for the addition of eight new solar-plus-storage projects comprising 275 megawatts of solar and more than one gigawatt of battery storage, all at prices below the cost of fossil fuel generation; (3) a 19% reduction in imported fossil fuel use over the last 10 years, helping keep more dollars in our state's economy; (4) 19% lower greenhouse gas emissions (GHG) from our facilities since 2010, with an expectation that over the next four years GHG emissions from our power plants will be cut in half, moving our state closer to a carbon neutral future; (5) the filing of our electrification of transportation roadmap to advance adoption of electric vehicles in our state; (6) continued work to modernize our grid, strengthen resilience and enable more renewable energy and more customer options; (7) a 17% improvement in customer satisfaction since 2014; and (8) implementation of a new enterprise management system, which is key to completing our One Company initiative to standardize processes across our system and bring more efficiency and value for customers.

Our bank continues to carry out its vision of enabling Hawaii's families, businesses and communities to achieve their goals. ASB invested approximately $1.8 billion in our community in 2018. Its lending activities in Hawaii help build a sustainable local economy and provide the capital to help our customers grow their businesses, plan for retirement and their children's education, or buy their first home. ASB also achieved record financial performance in 2018, with net income of $82.5 million, a 23% increase over the prior year. Additionally, the new Honolulu campus that ASB's non-branch employees are moving into this spring provides opportunities to further the bank's efforts to make banking easier for customers, deepen customer relationships, increase efficiency and enhance the bank's award-winning culture.

In 2018, our newest subsidiary, Pacific Current, continued to strengthen our strategy to be a catalyst for a better Hawai'i by building local partnerships to invest in projects that advance our state's sustainability goals. Pacific Current progressed development of solar-plus-storage projects at five University of Hawai'i campuses to help the university achieve its goal of net zero energy by 2035. In 2018, Pacific Current also established a small and highly talented management team, which includes its new President, Scott Valentino.

Together our companies generated $201.8 million in net income in 2018, representing solid growth of 22% in both net income and diluted earnings per share (EPS) over 2017, or 12% growth over the prior year's core net income and EPS, which excluded one-time tax reform impacts that reduced our 2017 earnings. In 2018 we continued our record of paying uninterrupted dividends to our shareholders and in early 2019 our board approved a 3% dividend increase, raising the quarterly dividend from 31 cents to 32 cents per share and reflecting the strength of our 2018 results and our Board's confidence in our future prospects.

iii


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   PROXY SUMMARY   

SUSTAINABILITY

As a company with a strategy focused on Hawaii and with all of our operations in the state, our ability to deliver long-term value for our stakeholders is tied to the strength and long-term sustainability of Hawaii's communities, economy and environment. This is why our overall strategy is to be a catalyst for a better Hawaii and why our Board and management team are focused on collaborating with our communities to further a sustainable future for our state.

Advancing a sustainable environment

Hawaii has the nation's most ambitious climate goals: 100% renewable energy and a carbon neutral economy, including transportation, by 2045, and our companies are critical to accomplishing these goals. Our utility is on track to achieve our state's aggressive renewable energy standard, and is playing a leading role alongside other community partners to increase electrification of transportation to help make our state's economy carbon neutral. Significantly reducing the use of imported fossil fuel in our state will benefit our customers, economy and environment, and we believe will also drive long-term shareholder value as we invest in these efforts. Such benefits include more stable customer bills, more dollars retained in our local economy, increased resiliency for our state, and lower greenhouse gas emissions. These actions will help preserve Hawaii's unique environment, which is key to our economy given the importance of the tourism industry in Hawaii. As we continue our clean energy transition, we are seeking ways to increase efficiency and deliver even more benefits to our customers and shareholders.

The actions we take today will help us achieve our long-term goals. Those actions include:

Pursuing aggressive targets

    If projects we are contracting for are approved and built in the projected timeline, by 2022 we have would expect to achieve:

    45-50% of electricity sales from renewable resources

    ~50% lower fossil fuel use than 2008

    ~50% lower greenhouse gas emissions than 2010

Adding more renewables and storage

    We have filed with the Hawaii Public Utilities Commission (PUC) for approval of power purchase agreement (PPAs) representing 275 MWs solar and more than 1 GWh of storage

Investing in electrification of transportation (EoT)

    We filed our EoT Strategic Roadmap with the (PUC) in 2018, laying the foundation for more electric vehicles for our state

Promoting smart, sustainable, resilient communities

    In 2018 the PUC accepted our Grid Modernization Strategy and we filed for Phase I of implementation of that plan

    We are convening important community conversations about resilience planning

Engaging with stakeholders on regulatory framework

    The performance-based ratemaking docket focuses on aligning the utility regulatory framework with our state's climate goals

Building a sustainable economy

Our companies are key contributors to Hawaii's economy, and the health of our economy in turn impacts our companies. As a bank entirely focused on Hawaii, ASB is committed to building a sustainable local economy through its business lending activities and through its efforts to foster innovation and entrepreneurship. ASB loaned more than $7.8 billion to Hawaii customers over the past five years, including lending for small businesses, clean energy projects, community development and low income housing. This important financing helps diversify our economy and create new jobs, advance our state's move to a renewable energy, carbon neutral future, and helps provide a more stable foundation for Hawaii families. In addition, ASB works to promote innovation and entrepreneurship in our economy by sponsoring and participating in innovation and entrepreneurship programs, including its own "KeikiCo" business plan competition for K-12 students, university programs such as the University of Hawaii Pacific and Asian Center for Entrepreneurship and Chaminade University's Hogan Entrepreneurs Program, and nationally recognized start-up accelerators like XLR8UH and Elemental Excelerator.

iv


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   PROXY SUMMARY  

EXECUTIVE COMPENSATION HIGHLIGHTS — PAYING FOR PERFORMANCE

The compensation program for our named executive officers is composed of four primary elements — base salary, performance-based annual and long-term incentives, and restricted stock units vesting in equal annual installments over four years. We emphasize variable pay over fixed pay, with the majority of the total compensation opportunity at target for each named executive officer linked to the Company's financial, market and operational results. The compensation program also balances the importance of achieving long-term strategic priorities and critical short-term goals linked to long-term objectives.

2018 Named Executive Officer (NEO) Pay Opportunity
Variable Over Fixed Pay
Opportunity at Target
  Balance of Short- and Long-Term Pay
Opportunity at Target

GRAPHIC

 

CHART

VARIABLE PAY REFLECTS PERFORMANCE

Under our pay-for-performance design, incentive payouts to named executive officers are aligned with results. The following graphs show the performance-based payouts to the HEI Chief Executive Officer (CEO). HEI CEO annual incentive pay is linked to HEI's adjusted annual net income, as well as subsidiary performance. Long-term performance-vesting equity payouts over the respective three-year periods tracked our Relative TSR results.

Annual Net Income and CEO Performance-
Based Annual Incentive Payouts
  3-year Relative TSR Results and Performance
Based Long-Term Incentive Payouts

CHART

 

CHART

SUMMARY COMPENSATION TABLE

Due to the NextEra Energy merger that was pending at the time the 2015-17 and 2016-18 long term incentive plans (LTIPs) were established, these two LTIPs were denominated in cash rather than in stock. This is because the Compensation Committee had determined that while the merger was pending, HEI's stock price might be affected at least in part by merger considerations that were unrelated to HEI's true operating performance and that, as a result, the compensatory goals of the LTIP would be better served without such merger impact. Following the termination of the HEI/NextEra Energy merger agreement in July 2016, HEI returned to exclusively equity-based LTIPs in 2017, which impacts the comparative compensation amounts disclosed in the 2018 Summary Compensation Table (SCT). Although our LTIP programs and practices have not changed (i.e., one 3-year LTIP is granted each year), due to the disclosure timing differences between cash-based and equity-based LTIPs, the reported compensation amounts in the SCT for 2018 and 2017 are notably higher than, and not comparable to, the reported amounts for 2016 as they contain two LTIPs because of the disclosure differences, and are not reflective of the target compensation provided to our NEOs for 2018 and 2017. Due to SEC disclosure rules, the 2018 and 2017 compensation amounts in the SCT include both the 2015-2017 LTIP and 2016-18 LTIP respective cash payouts and the 2017-2019 and 2018-2020 respectiveequity-based LTIP. By contrast, the 2016 compensation amounts in the SCT do not include any LTIP amounts. Please see page 50 under "Summary Compensation Table".

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   PROXY SUMMARY   

COMPENSATION COMMITTEE DECISION-MAKING

The Compensation Committee, all of whose members are independent directors, establishes pay programs and reviews performance results to ensure that executive officer compensation aligns with shareholder interests. In addition, the Compensation Committee is advised by an independent compensation consultant with respect to the design of the plans, performance results, reasonableness of pay decisions and appropriateness or reasonableness of compensation adjustments.

The Compensation Committee believes that executive officer compensation reflects favorably on the Company's pay-for-performance objective, is aligned with shareholder interests and compares well relative to the Company's peers.

OUR EXECUTIVE COMPENSATION PROGRAM INCORPORATES BEST PRACTICES:

GRAPHIC   Majority of target compensation opportunity tied to performance

GRAPHIC

 

Rigorous performance goals are aligned with business strategy

GRAPHIC

 

Stock ownership and retention requirements apply to named executive officers

GRAPHIC

 

Clawback policy for performance-based pay

GRAPHIC

 

"Double trigger" change-in-control agreements

GRAPHIC

 

No tax gross ups (except for executive death benefit frozen in 2009)

GRAPHIC

 

No employment contracts

GRAPHIC

 

Minimal perquisites

GRAPHIC

 

Prohibition against hedging and pledging of HEI stock

GRAPHIC

 

No dividends or dividend equivalents paid on unearned performance shares

vi


Table of Contents

   PROPOSAL NO. 1: ELECTION OF FOUR CLASS II DIRECTORS AND ONE CLASS III DIRECTOR   


PROPOSAL NO. 1: ELECTION OF FOUR CLASS II DIRECTORS AND ONE CLASS III DIRECTOR

In accordance with HEI's Bylaws, the Board has fixed the size of the Board at eleven directors, divided into three classes with staggered terms. The Board proposes that the following nominees be elected at the 2019 Annual Meeting:

Class II directors to serve until the 2022 Annual Meeting of Shareholders, or until his or her respective successor shall be duly elected and qualified:

Celeste A. Connors
Thomas B. Fargo
Mary G. Powell
William J. Scilacci, Jr.

Class III director to serve until the 2020 Annual Meeting of Shareholders, or until his respective successor shall be duly elected and qualified:

Jeffrey N. Watanabe

Messrs. Fargo and Watanabe are incumbent directors of HEI. Mr. Scilacci and Mss. Connors and Powell are new director nominees of HEI. The Board has determined that Messrs. Fargo, Scilacci and Watanabe and Mss. Connors and Powell are independent under the applicable standards for director independence, as discussed below under "Board of Directors — Independent Directors." Messrs. Fargo and Scilacci and Mss. Connors and Powell have each consented to serve for the new three-year term expiring at the 2022 Annual Meeting, if elected. Mr. Watanabe has consented to serve for the remainder of the Class III term expiring at the 2020 Annual Meeting, if elected. If a nominee is unable to stand for election at the time of the 2019 Annual Meeting, the proxy holders listed in the proxy card may vote in their discretion for a suitable substitute.

Information regarding the business experience and certain other directorships for each director nominee and continuing directors is provided on pages 2-12 below, together with a description of the experience, qualifications, attributes and skills that led to the Board's conclusion at the time of this Proxy Statement that each of the nominees and directors should serve on the Board in light of HEI's current business and structure.

ü FOR

The Board recommends that you vote FOR each nominee listed above to serve as a Class II or Class III Director.

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Table of Contents

   DIRECTOR NOMINEES FOR ELECTION   

Nominees for Class II Directors whose terms expire at the 2022 Annual Meeting of Shareholders


GRAPHIC



Celeste A. Connors
Director nominee for the 2019
Annual Meeting




 


Ms. Connors brings to HEI considerable expertise in the areas of environmental, energy and economic policy spanning a 20-year career. She has substantial experience engaging with the public and private sectors to design and implement significant domestic and international policies. Ms. Connors' track record of leadership and innovation is complemented by her deep understanding of the business, government and non-profit communities in Hawaii.

RELEVANT PROFESSIONAL EXPERIENCE

Practitioner in Residence (Energy, Resources and Environment Program), Johns Hopkins University School of Advanced International Studies (SAIS) (since 2012)

Chief Executive Officer and Co-Founder, c.dots development (builds partnerships to deliver sustainable and resilient infrastructure in local communities) (since 2012)

Director (Environment and Climate Change), National Security Council and National Economic Council in the White House (2008-2012)

Foreign Service Officer, U.S. Department of State (2000-2012)

Foreign Affairs Advisor (Office of the Mayor), City of New York (1999-2000)

RELEVANT SKILLS & QUALIFICATIONS

Ms. Connors has considerable experience in environmental sustainability from serving as Executive Director of Hawaii Green Growth Local2030 hub, which was recognized by the United Nations in 2018 as one of the world's first hubs for sustainability solutions. Her proven track record of working to achieve Hawaii's energy and sustainability goals will add significant value to HEI's efforts to accelerate a sustainable future for Hawaii.

Ms. Connors has significant government, regulatory and policy development experience from serving as Director for Environment and Climate Change at the National Security Council and National Economic Council in the White House, as well as a Foreign Service Officer with the U.S. Department of State. Ms. Connors has advised the President, Vice President, Cabinet members and other governmental leaders on environment and sustainable development policy.

She has a deep understanding of the business, government and non-profit communities in the Hawaiian Islands from serving as Executive Director of Hawaii Green Growth Local2030 hub and CEO and Co-Founder of c.dots development.


Age: 43

Principal Occupation: Executive Director, Hawaii Green Growth Local2030 hub (public-private partnership focused on identifying sustainable growth priorities within an island context) (since 2015)


 

 

EXPERTISE

 

 


GRAPHIC




ENERGY

 

 

GRAPHIC



COMMUNITY RELATIONS

 

 

GRAPHIC



GOVERNMENT AND REGULATION

 

 

GRAPHIC



LEADERSHIP

 

 

GRAPHIC



ENTREPRENEURSHIP

 

 

EDUCATION

Master of Science (MSc), Development Studies, University of London, School of Oriental and African Studies (SOAS)

Bachelor of Arts, International Relations, Tufts University

2


    


 


    


    


 


    


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   DIRECTOR NOMINEES FOR ELECTION  



GRAPHIC



Admiral Thomas B.
Fargo, USN (Retired)
Independent Director
Compensation Committee Chair
Nominating and Corporate Governance
Committee Member









In addition to extensive leadership expertise, Admiral Fargo brings to the Board deep knowledge of the U.S. military, a major customer of HEI's electric utility subsidiary and a key driver of Hawaii's economy. He has top level management, strategic planning and financial and non-financial risk assessment skills developed over 40 years of leading nine organizations ranging in size from 130 to 300,000 people and managing budgets up to $8 billion.

PROFESSIONAL EXPERIENCE

Owner, Fargo Associates LLC (since 2005) (defense and homeland/national security consultancy)

Commander of the U.S. Pacific Command (retired)

PUBLIC COMPANY BOARDS

The Greenbrier Companies (since 2015) (rail manufacturing & licensing services)

Huntington Ingalls Industries, Inc. (since 2011) (military shipbuilder)

Matson Inc. (since 2012) (transportation & logistics) and predecessor company, Alexander & Baldwin, Inc. (2010-2011)

PAST PUBLIC COMPANY BOARDS

Northrop Grumman Corporation (2008-2011)

Hawaiian Holdings, Inc. (2005-2008) (Hawaiian Airlines holding company)

OTHER POSITIONS

Vice Chairman, United Services Automotive Association

Advisory Board Member, National Bureau of Asian Research

Director, AtHoc (until 2016)

Director, GTA Teleguam (until 2017)

Senior Advisor, SKAI Ventures

Director, Hawaiian Electric Company, Inc. (HEI subsidiary) (2005-2016)


Age: 70

Independent Director
Since:
2005

Principal Occupation: Chairman,
Huntington Ingalls Industries, Inc. (military
shipbuilder) (NYSE: HII)





 

 

EXPERTISE

 

 

GRAPHIC



CRITICAL CUSTOMERS

 

 

GRAPHIC



RISK MANAGEMENT

 

 


GRAPHIC




CORPORATE GOVERNANCE

 

 

GRAPHIC



LEADERSHIP

 

 

GRAPHIC



STRATEGIC PLANNING

 

 

GRAPHIC



FINANCE AND ACCOUNTING

 

 

EDUCATION

Bachelor of Science, United States Naval Academy

Executive and business training —
Harvard University; Stanford University

3


    


 


    


    


 


    


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   DIRECTOR NOMINEES FOR ELECTION   



GRAPHIC



Mary G. Powell
Director nominee for the 2019
Annual Meeting



 


Ms. Powell brings to HEI considerable strategic and operational management expertise having served as President and Chief Executive Officer of Green Mountain Power, a Vermont-based utility and subsidiary of Northern New England Energy, since 2008. She is a nationally recognized leader and innovator in the utilities space, and currently serves on a number of boards, including the board of Sunrun Inc., a solar financing company.

RELEVANT PROFESSIONAL EXPERIENCE

Independent Director, Sunrun Inc. (since Feb. 2018)

Vice Chair, Vermont Chamber of Commerce (2010-2012)

Chair, Vermont Business Roundtable (2012-2014)

Vice President (Human Resources and Organizational Development), then Vice President (Administration), then Senior Vice President (Customer and Organizational Development), then Senior Vice President and Chief Operating Officer, Green Mountain Power (1998-2008)

President, HR Works (total solutions provider of human resource management and benefits administration services) (1997-1998)

VP Human Resources, VP Retail Banking and SVP of Retail Banking, Key Bank of Vermont (1992-1997)

RELEVANT SKILLS & QUALIFICATIONS

Ms. Powell has significant experience in utilities and renewable energy, having served as President and CEO of Green Mountain Power since 2008. Under her leadership, the company became the world's first utility to become a Certified B Corporation (a business that balances purpose and profit). Ms. Powell led an ambitious energy vision to dramatically ramp up local renewable resources in Vermont.

Ms. Powell has relevant public board experience, serving as a director at Sunrun Inc., where she is a member of the compensation committee.

She also brings to HEI considerable non-profit experience, including serving as Chair of the Board of Directors of The Solar Foundation, a non-profit working to advance solar power as an energy source, and serving as a Board Member of Blue Cross Blue Shield of Vermont.

Ms. Powell's track record of leadership and innovation has received national acclaim; she was named as one of Fast Company's "100 Most Creative People in Business" in 2016 and as one of CEO Connection's "2017 Most Influential Women of the Mid-Market," among other recognitions.


Age: 58

Principal Occupation: President and Chief Executive Officer, Green Mountain Power, since 2008


 

 

EXPERTISE

 

 

GRAPHIC



LEADERSHIP

 

 

GRAPHIC



STRATEGIC AND OPERATIONAL MANAGEMENT

 

 

GRAPHIC



CORPORATE TRANSFORMATION

 

 

GRAPHIC



FINANCE AND ACCOUNTING

 

 

GRAPHIC



BANKING

 

 

GRAPHIC



ENERGY, UTILITIES

 

 

EDUCATION

Associate of Science, Keene State College

4


    


 


    


    


 


    

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   DIRECTOR NOMINEES FOR ELECTION  



GRAPHIC



William James
Scilacci, Jr
Director nominee for the 2019
Annual Meeting





 


Mr. Scilacci brings to HEI extensive financial, leadership and operational management expertise from serving as a finance executive at a major California company, and its utility and competitive generation subsidiaries. His experience spans an impressive career of more than 30 years, and he demonstrated a strong track record of considerable shareholder value creation.

RELEVANT PROFESSIONAL EXPERIENCE

Senior Vice President and Chief Financial Officer, Edison Mission Energy (competitive generation subsidiary of Edison International) (2005-2008)

Vice President and Chief Financial Officer, then Senior Vice President, Chief Financial Officer Southern California Edison Company (subsidiary of Edison International and one of the largest electric utilities in the U.S.) (2000-2005)

Director, QF Resources, Southern California Edison (1996-2000)

Assistant Treasurer, Southern California Edison (1993-1996)

Finance Manager, Supervisor, and Analyst, Southern California Edison (1984-1993)

RELEVANT SKILLS & QUALIFICATIONS

Significant leadership and operational management experience through serving as CFO of Edison International, a publicly-traded company whose market cap increased substantially during Mr. Scilacci's tenure.

Extensive experience communicating with Wall Street analysts, investors, and rating agencies.

Mr. Scilacci's track record of success is highlighted by his recognition as one of the top CFOs in the electric utility sector by a 2017 Institutional Investor survey of investors and sell-side analysts.


Age: 63

Principal Occupation: Former Executive Vice President and Chief Financial Officer, Edison International (2008-2016)


 

 

EXPERTISE

 

 

GRAPHIC



FINANCE AND ACCOUNTING

 

 

GRAPHIC



STRATEGIC AND OPERATIONAL MANAGEMENT

 

 

GRAPHIC



LEADERSHIP

 

 

GRAPHIC



ENERGY, UTILITIES

 

 

GRAPHIC



RISK MANAGEMENT

 

 

EDUCATION

Master of Business Administration, Santa Clara University

Bachelor of Arts, University of California, Los Angeles

5


    


 


    


    


 


    

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   DIRECTOR NOMINEES FOR ELECTION   

Nominee for Class III Director whose term expires at the 2020 Annual Meeting of Shareholders


GRAPHIC



Jeffrey N.
Watanabe
Independent Director
HEI Chairman of the Board
HEI Executive Committee Chair
Compensation Committee Member






 


Mr. Watanabe has been one of the most influential figures in Hawaii's business community over the past four decades. His strategic counsel is widely sought by Hawaii's business, political and nonprofit leaders, as well as by global businesses seeking to do business in Hawaii.

Mr. Watanabe has a long personal history in environmental protection and public service. He was instrumental in assisting the National Park Service dramatically expand Volcanoes National Park through the acquisition of over 100,000 acres on the Big Island of Hawaii. He assisted with and facilitated the acquisition of the Palmyra Atoll, currently used as an international research center. Both were accomplished through The Nature Conservancy.

PROFESSIONAL EXPERIENCE

35 years at Watanabe Ing, LLP

PAST PUBLIC COMPANY BOARDS

Matson Inc., Lead Independent Director (2017-2018), Director (2012-2018)

Alexander & Baldwin, Lead Independent Director (2012-2015), Director (2003-2015)

American Classic Voyages (1998-2003)
Cheap Tickets (2001)

OTHER POSITIONS

Director, American Savings Bank (HEI subsidiary)

Board member and Chair, Nature Conservancy of Hawaii (1988-2006)

Board of Governors, Nature Conservancy (1997-2003)

Chair, Child and Family Service (1984-1988); Consuelo Foundation (1991-2016); Blood Bank of Hawaii (1993-1994); Sesame Workshop (2000-2004); University of Hawaii Foundation (1996-1998)

Board member, Rehabilitation Hospital of the Pacific (1982-2000); Queen's Health System and Medical Center (1989-2000); Punahou School (1998-2018); First Insurance of Hawaii Foundation; Child & Family Service-Philippines (1988-2016); Hawaiian Electric Industries Charitable Foundation


Age: 76

HEI Independent Director Since: 1987

Chairman of the Board Since: 2006

Principal Occupation: Former Managing Partner, Watanabe Ing & Komeiji LLP (1972-2007)


 

 

EXPERTISE

 

 


GRAPHIC


 

LEGAL

 

 

GRAPHIC



GOVERNMENT AND REGULATION

 

 


GRAPHIC


 

INVESTING

 

 


GRAPHIC




CORPORATE GOVERNANCE

 

 


GRAPHIC


 

COMMUNITY RELATIONS

 

 


GRAPHIC


 

ENTREPRENEURSHIP

 

 

EDUCATION

Juris Doctor, George Washington University

Bachelor of Arts, University of California Berkeley

6


    


 


    


    


 


    


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   CONTINUING DIRECTORS   

Continuing Class III Directors whose terms expire at the 2020 Annual Meeting of Shareholders



  
GRAPHIC





Peggy Y. Fowler
Independent Director
Nominating and Corporate Governance
Committee Chair
Compensation Committee Member





 


Ms. Fowler's position as Chief Executive Officer of Portland General Electric, a NYSE-listed public utility company imparts significant industry, operations, leadership and management expertise to the Board.

Ms. Fowler has deep environmental and renewable energy expertise. During Ms. Fowler's tenure as CEO, PGE made the strategic decision to reduce use of oil and coal, and has been ranked #1 on multiple occasions for selling more renewable power to residential customers than any other U.S. utility. Under Ms. Fowler's leadership, wind and solar projects were constructed and integrated into the PGE grid.

PROFESSIONAL EXPERIENCE

35 years of executive leadership, senior officer and operating positions, PGE

PUBLIC COMPANY BOARDS

Umpqua Holdings Corp (since 2009, Chairman 2012-present) (bank holding company)

PAST PUBLIC COMPANY BOARDS

Portland General Electric (2006-2012)

OTHER POSITIONS

Director and committee member, Cambia Health Solutions (not-for-profit health insurer)

Director, PGE Foundation

Director, Portland Branch of Federal Reserve Bank of San Francisco (2007-2011)


Age: 67

Independent Director Since: 2011

Principal Occupation: Former Chief
Executive Officer (2000-2008),
Portland General Electric Company (PGE)




 

 

EXPERTISE

 

 

GRAPHIC



LEADERSHIP

 

 

GRAPHIC



ENERGY, UTILITIES

 

 

GRAPHIC



RENEWABLES

 

 

GRAPHIC



ENVIRONMENTAL MANAGEMENT

 

 

GRAPHIC



CORPORATE GOVERNANCE

 

 

GRAPHIC



FINANCIAL OVERSIGHT

 

 

GRAPHIC



REGULATORY COMPLIANCE

 

 

EDUCATION

Public Utility Executive Program, University of Idaho and University of Michigan

Bachelor of Science, Chemistry and Bachelor of Science, Math, George Fox University

7


    


 


    


    


 


    


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   CONTINUING DIRECTORS   



GRAPHIC



Keith P. Russell
Independent Director
Audit Committee Member



 


Mr. Russell served as an executive and/or Director within three major financial institutions and held domestic and international positions in all areas of banking, finance, capital markets and risk management. He has served on numerous panels on corporate governance and strategic direction.

Mr. Russell's years of executive leadership experience in financial service operations, including as an executive officer of a major lender to the electric utility industry, contribute invaluable expertise to the Board. His prior service as Chief Risk Officer of a large financial institution strengthens the Board's risk management capabilities.

PROFESSIONAL EXPERIENCE

Vice Chair/Chief Risk Officer, Mellon Financial Corp. (1991-2001)

President and Chief Operating Officer, Glendale Federal Bank (1983-1991)

Senior Vice President, Security Pacific Corporation (1974-1983)

PUBLIC COMPANY BOARDS

Sunstone Hotel Investors (since 2003)

PAST PUBLIC COMPANY BOARDS

Nationwide Health Properties (2002-2011)

OTHER POSITIONS

Director, KBS Growth and Income REIT

Director, American Savings Bank (HEI subsidiary)


Age: 73

Independent Director Since: 2011

Principal Occupation: President,
Russell Financial (since 2001)



 

 

EXPERTISE

 

 

GRAPHIC



RISK MANAGEMENT

 

 

GRAPHIC



FINANCE AND ACCOUNTING

 

 

GRAPHIC



BANKING

 

 

GRAPHIC



LEADERSHIP

 

 

GRAPHIC



STRATEGIC PLANNING

 

 

GRAPHIC



CORPORATE GOVERNANCE

 

 

EDUCATION

Master of Arts, Northwestern University

Bachelor of Arts, University of Washington

8


    


 


    


    


 


    

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   CONTINUING DIRECTORS  



GRAPHIC



Barry K. Taniguchi
Independent Director
Audit Committee Chair
Executive Committee Member




 


Mr. Taniguchi brings to the Board considerable experience as a proven business leader in Hawaii, with extensive knowledge of the business climate and significant contacts and relationships within the business community and local governmental agencies. His extensive business and community service have earned him numerous awards for leadership.

Under Mr. Taniguchi's leadership, KTA Super Stores is investing in environmental and social innovations including electric vehicle infrastructure investments, PV system installation, sourcing from locally owned and produced businesses and supporting their marketing and expanded distribution, and philanthropic programs with direct community impact.

PROFESSIONAL EXPERIENCE

President and Director, K. Taniguchi Ltd. (since 1989) (real estate lessor)

OTHER POSITIONS

Trustee, Public Schools of Hawaii Foundation

Director, Hawaii Food Industry Association

Director, American Savings Bank (HEI subsidiary)


Age: 71

Independent Director Since: 2004

Principal Occupation: Chairman (since 2014) and Chief Executive Officer (since 1989), former President (1989-2014), KTA Super Stores (largest grocery store chain on island of Hawaii)


 

 

EXPERTISE

 

 

GRAPHIC



FINANCE AND ACCOUNTING

 

 

GRAPHIC



GOVERNMENT AND REGULATION

 

 

GRAPHIC



COMMUNITY RELATIONS

 

 

GRAPHIC



LEADERSHIP

 

 

GRAPHIC



AUDIT

 

 

EDUCATION

Bachelor in Business Administration, University of Hawaii

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   CONTINUING DIRECTORS   

Continuing Class I Directors whose terms expire at the 2021 Annual Meeting of Shareholders


GRAPHIC



Richard J. Dahl
Independent Director
Audit Committee Member




 


Mr. Dahl has significant leadership, strategy, audit and risk-management expertise. He has in-depth experience in corporate transformation and restructuring, and in driving improved corporate governance and shareholder engagement. His experiences working in Hawaii and on the U.S. mainland, and in banking and the electric utility industry, bring valuable perspective to the Board.

Under Mr. Dahl's leadership, Dole Food Company invested in a number of sustainability initiatives that secured external recognition. Dole was named one of the World's Most Ethical Companies by Ethisphere Magazine, and undertook a carbon offset program to secure a carbon neutral operating footprint.

PROFESSIONAL EXPERIENCE

Interim Chief Executive Officer, Dine Brands Global, Inc. (formerly known as DineEquity) (3/1/17 - 9/15/17) (franchisor of over 3000 Applebee's and IHOP restaurants)

President and Chief Operating Officer (2004-2007) and Chief Operating Officer (2002-2004), Dole Food Company

President and Chief Operating Officer, Bank of Hawaii Corporation (1981-2002)

Ernst & Young (1973-1981)

PUBLIC COMPANY BOARDS

Dine Brands Global, Inc. (formerly known as DineEquity) (since 2004); Non-Executive Chairman (since 2017)

IDACORP (since 2008) (currently decommissioning/divesting ownership of its coal plants)

PAST PUBLIC COMPANY BOARDS

Non-Executive Chairman, International Rectifier Corporation (2008-2015) (leading manufacturer and distributor of power management semi-conductors and researcher in battery storage)

OTHER POSITIONS

Non-Executive Chairman, James Campbell Company, LLC (privately held real estate investment and development company), Executive Chair, President and CEO (2010-2016)

Director, Hawaiian Electric Company, Inc. (HEI subsidiary)


Age: 67

Independent Director Since: 2017

Principal Occupation: Former President and Chief Executive Officer, James Campbell Company LLC (2010-2016)


 

 

EXPERTISE

 

 

GRAPHIC



STRATEGIC & OPERATIONAL MANAGEMENT

 

 

GRAPHIC



CORPORATE TRANSFORMATION

 

 

GRAPHIC



FINANCE AND ACCOUNTING

 

 

GRAPHIC



CORPORATE GOVERNANCE

 

 

GRAPHIC



BANKING

 

 

GRAPHIC



ENERGY, UTILITIES

 

 

GRAPHIC



LEADERSHIP

 

 

GRAPHIC



RISK MANAGEMENT

 

 

GRAPHIC



AUDIT

 

 

EDUCATION

Bachelor of Science, University of Idaho

10


    


 


    


    


 


    

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   CONTINUING DIRECTORS  



GRAPHIC



Constance H. Lau
President and CEO, HEI
Executive Committee Member
Chairman, Hawaiian Electric
Company (HEI subsidiary)
Chairman, American Savings
Bank (HEI subsidiary)










Ms. Lau has deep industry and operational expertise having served in leadership capacities spanning several functions across HEI and its subsidiaries. Ms. Lau's expertise and leadership have been recognized nationally, leading her to be named Chair of the National Infrastructure Advisory Council, and to be named as a clean energy ambassador for the U.S. Department of Energy Clean Energy Ministerial C3E Initiative. Ms. Lau is also recognized as a transformational leader, having been identified by the US Banker List of Most Powerful Women in Banking in 2004, 2005, 2006 for transforming ASB into a full-service community bank.

Signing the groundbreaking Hawaii Clean Energy Initiative with the Governor of State of Hawaii also secured Ms. Lau the Women in Clean Energy & the Environment, Woman of the Year award, 2011.

PROFESSIONAL EXPERIENCE

Chair, National Infrastructure Advisory Council (since 2012)

President and Chief Executive Officer, American Savings Bank (2001-2006) Chief Operating Officer, ASB (1999-2001)

Treasurer, HEI (1989-1999)

Treasurer, Hawaiian Electric Company and Assistant Treasurer, HEI (1987-1989)

Assistant Corporate Counsel, Hawaiian Electric Company (1984-1987)

PUBLIC COMPANY BOARD

Matson Inc. (since 2012) and predecessor company, Alexander & Baldwin Inc. (2004-2012)

OTHER POSITIONS

Board Member, Edison Electric Institute

Former Board Member, Electric Power Research Institute

Board Member, Associated Electric & Gas Insurance Services

Board Member, Hawaii Business Roundtable

Board Member, Foundation for Asia-Pacific Center for Security Studies

Board Member, Elemental Excelerator

Member, Federal Electricity Subsector Coordinating Council

Former Member of the Federal Reserve Bank of San Francisco's Twelfth District Community Depository Advisory Council (2011-2014)

Chair, Consuelo Foundation

Trustee, Punahou School

Chair, Military Affairs Council, Chamber of Commerce of Hawaii


Age: 67

HEI Director Since: 2001 (except from 2004-2006)

Principal Occupation: President and Chief Executive Officer, HEI (since 2006)


 

 

EXPERTISE

 

 

GRAPHIC



CLEAN ENERGY, UTILITIES

 

 

GRAPHIC



INFRASTRUCTURE

 

 

GRAPHIC



CYBER SECURITY

 

 

GRAPHIC



FINANCE AND ACCOUNTING

 

 

GRAPHIC



BANKING

 

 

GRAPHIC



LEADERSHIP

 

 

GRAPHIC



CORPORATE TRANSFORMATION

 

 

GRAPHIC



STRATEGIC & OPERATIONAL MANAGEMENT

 

 

GRAPHIC



CORPORATE GOVERNANCE

 

 

GRAPHIC



MERGERS AND ACQUISITIONS

 

 

EDUCATION

Master of Business Administration,
Stanford Graduate School of Business

Juris Doctor, Hastings College of the Law, University of California

Bachelor of Science in Administrative
Sciences, Yale College

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   CONTINUING DIRECTORS   



GRAPHIC



James K.
Scott, Ed.D.
Independent Director
Nominating and Corporate Governance
Committee Member








Dr. Scott is a well-respected leader in the State of Hawaii. His extensive knowledge, contacts and relationships within Hawaii's business community, nonprofit community and local governmental agencies contribute significantly to the Board's understanding of Hawaii's unique cultural and business environment.

Dr. Scott has overseen various transformational environmental and social programs at Punahou School. These include implementing a need-blind student admission policy and securing a $300 million endowment to support a need-based financial aid program; making a commitment to become a Net Zero Energy campus by 2025; developing an environmental sustainability curriculum; and becoming a laptop technology campus and securing Apple Distinguished School status.

Under Dr. Scott's leadership, Punahou School has been named the Greenest School in America by the Green Guide.

OTHER POSITIONS

Director, Hawaii Association of Independent Schools

Trustee, Barstow Foundation

Member, Advisory Board of the Klingenstein Center of Teachers College, Columbia University

Trustee, National Association of Independent Schools

Director, American Savings Bank (HEI subsidiary)


Age: 67

Independent Director
Since:
1995

Principal Occupation: President,
Punahou School (since 1994)




 

 

EXPERTISE

 

 

GRAPHIC



LEADERSHIP

 

 

GRAPHIC



COMMUNITY RELATIONS

 

 

GRAPHIC



GOVERNMENT AND REGULATION

 

 

GRAPHIC



EXECUTIVE MANAGEMENT

 

 

EDUCATION

Master's Degree and Doctorate in Education, Harvard University

Master of Arts, University of San Francisco

Bachelor of Arts, Stanford University

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   CORPORATE GOVERNANCE   


CORPORATE GOVERNANCE

HEI's governance policies and guidelines

HEI's Board and management review and monitor corporate governance trends and best practices on an ongoing basis, including for purposes of reviewing HEI's corporate governance documents and complying with the corporate governance requirements of the New York Stock Exchange (NYSE), rules and regulations of the Securities and Exchange Commission (SEC) and rules and regulations of the Board of Governors of the Federal Reserve (Federal Reserve) applicable to HEI as a savings and loan holding company. HEI's corporate governance documents (such as the charters for the Audit, Compensation, Nominating and Corporate Governance and Executive Committees, Corporate Governance Guidelines and Corporate Code of Conduct, as well as other governance documents) are available on HEI's website at www.hei.com/govdocs.

The Board's leadership structure

Since 2006, Mr. Watanabe has served as the nonexecutive Chairman of the Board and Ms. Lau has served as HEI's President and CEO. Since that time, Ms. Lau has also been the only employee director on the Board.

Mr. Watanabe has never been employed by HEI or any HEI subsidiary. The Board has determined that he is independent. Among the many skills and qualifications that Mr. Watanabe brings to the Board, the Board considered: (i) his extensive experience in corporate and nonprofit governance from serving on other public company, private company and nonprofit boards; (ii) his reputation for effective consensus and relationship building and business and community leadership, including leadership of his former law firm; (iii) his willingness to spend time advising and mentoring members of HEI's senior management; and (iv) his dedication to committing the hard work and time necessary to successfully lead the Board.

As HEI's Chairman, Mr. Watanabe's key responsibilities are to:

lead Board and shareholder meetings and executive sessions of the independent directors, including executive sessions at which the performance of the CEO is evaluated by the Board;

attend all meetings of the Audit and Nominating and Corporate Governance Committees of the Board as an observer and the Executive Committee of the Board as its chair. Mr. Watanabe also currently attends meetings of the Compensation Committee as a member;

work closely with the Nominating and Corporate Governance Committee in periodically evaluating board and committee structures, as well as advise with respect to succession planning for the Board;

serve on and/or advise the boards of HEI's primary operating subsidiaries, Hawaiian Electric and ASB, chair joint executive sessions of the independent directors of HEI and these subsidiary boards and attend meetings of subsidiary board committees;

work closely with management to develop meeting agendas and materials for the Board and subsidiary boards;

be available to other Board and subsidiary board members and management for questions and consultation; and

ensure and facilitate communications among Board members and Board committees and between the Board and management.

The Board's Corporate Governance Guidelines provide that if the Chairman and CEO positions are held by the same person, or if the Board determines that the Chairman is not independent, the independent directors should designate an independent director to serve as "Lead Director." If a Lead Director is designated, the Lead Director's responsibilities are to: (i) preside at Board and shareholder meetings when the Chairman is not present, (ii) preside at executive sessions of the independent directors, (iii) facilitate communication between the independent directors and the Chairman or the Board as a whole, (iv) call meetings of the non-management or independent directors in executive session, (v) participate in approving meeting agendas, schedules and materials for the Board and (vi) perform other functions described in the Corporate Governance

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Guidelines or as determined by the Board from time to time.

The Board believes that its current leadership structure, which provides for an independent nonemployee Chairman, or an independent Lead Director if the Chairman is not independent, is appropriate and effective in light of HEI's current operations, strategic plans and overall corporate governance structure. Several reasons support this conclusion. First, the Board believes that having an independent Chairman or Lead Director has been important in establishing a tone at the top for both the Board and the Company that encourages constructive expression of views that differ from those of senior management. Second, the Board believes that the presence of an independent Chairman or Lead Director demonstrates to the Company's regulators and shareholders that the Board is committed to serving the best interests of the Company and its shareholders and not the best interests of management. Third, the Board recognizes that HEI has an uncommon corporate governance structure in that the boards of its two primary operating subsidiaries are also composed mostly of nonemployee directors and that the HEI Chairman plays an important leadership role at these subsidiary boards. For instance, in addition to chairing executive sessions of the nonemployee directors and attending meetings of the committees of these subsidiary boards, the Chairman leads each subsidiary board in conducting its annual performance self-evaluation and facilitates communications between the Board and each of these boards and management of the respective subsidiary company. We recently created the position of vice-chairman. In the absence of the chairman of the board, the vice-chairman presides at meetings of our shareholders and of our board of directors, and has the additional powers and duties assigned to the vice-chairman from time to time by the board of directors.

The Board's role in risk oversight

HEI is a holding company that operates principally through its Hawaii-based electric public utility and bank subsidiaries. At the holding company and subsidiary levels, the Company faces a variety of risks, including operational risks, regulatory and legal compliance risks, credit and interest rate risks, competitive risks, liquidity risks, cybersecurity risks, strategic, reputational and sustainability related risks. Developing and implementing strategies to manage these risks is the responsibility of management, and that responsibility is carried out by assignments of responsibility to various officers and other employees of the Company under the direction of HEI's Chief Financial Officer, who also serves as HEI's Chief Risk Officer. The role of the Board is to oversee the management of these risks.

The Board's specific risk oversight functions are as follows:

The Board has approved a consolidated enterprise risk management (ERM) system recommended by management. The system is designed to identify and assess risks across the HEI enterprise so that information regarding the Company's risks can be reported to the Board, along with proposed strategies for mitigating these risks. The structure of the ERM system is decentralized, with separate Chief Risk Officers at each of Hawaiian Electric and ASB in addition to HEI's Chief Risk Officer. The Chief Risk Officer of Hawaiian Electric is also responsible for identifying, assessing and reporting risks at HEI's other electric utility subsidiaries that operate on the neighbor islands of Hawaii, Maui, Molokai and Lanai. Each subsidiary Chief Risk Officer reports directly to the respective subsidiary President and functionally to HEI's Chief Risk Officer, who reviews such risks on a consolidated basis. The Board believes that this decentralized risk management structure is appropriate and effective for the Company's diverse operations and holding company structure, because it allows for industry-specific risk identification and management at the subsidiary levels while also ensuring an integrated and consolidated view of risk at the holding company level by HEI's Chief Risk Officer. In connection with approving this ERM system, the Board reviewed (and continually assesses) a catalog of risks and management's assessment of those risks. As part of the Board's ongoing risk oversight, HEI's Chief Risk Officer is responsible for providing regular reports to the Board and Audit Committee on the status of those risks, any changes to the risk catalog or management's assessment of those risks, and any other risk management matters that the Board may request from time to time. The Board and Audit Committee also receive reports from HEI's internal auditor evaluating the effectiveness of management's implementation of the approved ERM system.

The Board has assigned to the Audit Committee the responsibility of assisting in the oversight of the overall risk management strategy of the Company. In providing such assistance, the Audit Committee is specifically required to discuss policies with respect to risk assessment and risk management, including the

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The Board has also assigned to the Audit Committee the specific risk oversight responsibilities of (i) reviewing the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures, (ii) overseeing HEI's Code of Conduct compliance program and (iii) establishing procedures for direct reporting of potential accounting and auditing issues to the Audit Committee. The Audit Committee reports to the Board each quarter regarding these matters.

The Board has assigned to the Compensation Committee the specific risk oversight responsibility of reviewing whether the compensation policies or practices of HEI or its subsidiaries encourage employees to take risks that are reasonably likely to have a material adverse effect on such entities and of recommending new or revised policies and practices to address any such identified risks. Included in this oversight responsibility is the Compensation Committee's review and evaluation of ASB's compensation practices for compliance with regulatory guidance on sound incentive compensation plans. The Compensation Committee reports the results of its review and any recommendations to the Board. The results of the review are also communicated to the Audit Committee through HEI's Chief Risk Officer. Both the Audit and Compensation Committees are composed entirely of independent directors.

In addition to overall risk oversight by the HEI Board, the boards of HEI's primary operating subsidiaries, Hawaiian Electric and ASB, are responsible for overseeing risks at their respective companies. The Hawaiian Electric Board has assigned responsibility for ongoing oversight of risk management to its Audit Committee. The ASB Board has assigned responsibility for financial and reporting risk management to its Audit Committee and for all other risks to its Risk Committee. ASB's Risk Committee was formed in order to monitor financial risks such as credit risk, interest rate risk, liquidity risk and other key risk areas such as information security, business continuity, and strategic and reputational risks because of the potential for risks to escalate quickly in the banking sector. Under the decentralized ERM structure discussed above, risk management activities at the subsidiary level are reported to these committees and to the subsidiary boards through the subsidiary Chief Risk Officers. The HEI Board and/or Audit Committee may also be invited to participate in risk oversight discussions by these subsidiary boards and/or committees. The information from these subsidiary board and committee sessions are reported, on at least a quarterly basis, to the HEI Board by the subsidiary Chief Risk Officers (or their representatives), who functionally report to HEI's Chief Risk Officer on risk management matters. These subsidiary boards are composed primarily of nonemployee directors. The subsidiary audit committees are composed primarily of nonemployee directors who meet the independence requirements for audit committee members of companies listed on the NYSE, and with regard to the ASB Audit Committee, comply with FDIC regulations.

At least annually, the Board conducts a strategic planning and risk review. As part of this review, the Board reviews fundamental financial and business strategies and assesses the major risks facing the Company and options to mitigate those risks. As a company with a Hawaii-focused strategy and with all of its operations in the state, the strength and sustainability of Hawaii's economy, communities and environment is essential to our ability to deliver long-term value for our shareholders. For this reason, key sustainability-related risks (e.g., potential implications for our companies and our strategies due to climate change, economic developments, etc.) are included in our strategic planning process and are considered at the full Board level, in addition to being included in our ERM process overseen by the Audit Committee. To facilitate strategic planning through constructive dialogue among management and Board members, members of management who are not directors are invited to participate in the review. The Board also invites external experts and advisors to present on topics relevant to its oversight of company strategy and risks, providing a broader perspective and expertise from outside the company. Based on the review, the Board and senior management, including the HEI Chief Risk Officer, identify key issues to be addressed during the course of the next calendar year.

The Board believes that, for risk oversight, it is especially important to have an independent Chairman or Lead Director in order to ensure that differing views from those of management are expressed. Since the HEI Chairman attends the meetings of the Board, the subsidiary boards and their respective committees, the HEI Chairman is also in a unique position to assist with communications regarding risk oversight and risk management among the Board and its committees, between the subsidiary boards and their respective committees and between directors and management.

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Selection of nominees for the Board

A key role of the Board is to ensure that it has the skills, expertise and attributes needed in light of the company's strategy, challenges and opportunities. The Board believes that there are skill sets, qualities and attributes that should be represented on the Board as a whole but do not necessarily need to be possessed by each director. The Nominating and Corporate Governance Committee and the Board thus consider the qualifications and attributes of incumbent directors and director candidates both individually and in the aggregate in light of the current and future needs of HEI and its subsidiaries.

The Nominating and Corporate Governance Committee assists the Board in identifying and evaluating persons for nomination or re-nomination for Board service or to fill a vacancy on the Board. To identify qualified candidates for HEI Board membership, the Committee may consider persons who are serving on its subsidiary boards as well as persons suggested by Board members, management and shareholders or may retain a third-party search firm to help identify qualified candidates. The Committee's evaluation process does not vary based on whether a candidate is recommended by a shareholder, a Board member, a member of management or self-nomination.

Once a person is identified as a potential director candidate, the committee may review publicly available information to assess whether the candidate should be further considered. If so, a committee member or designated representative for the committee will contact the person. If the person is willing to be considered for nomination, the person is asked to provide additional information regarding his or her background, his or her specific skills, experience and qualifications for Board service, and any direct or indirect relationships with the Company. In addition, one or more interviews may be conducted with committee and Board members, and committee members may contact one or more references provided by the candidate or others who would have first-hand knowledge of the candidate's qualifications and attributes.

In evaluating the qualifications and attributes of each potential candidate (including incumbent directors) for nomination or re-nomination or appointment to fill a vacancy, the committee considers:

the candidate's qualifications, consisting of his/her knowledge (including relevant industry knowledge), understanding of the Company's businesses and the environment within which the Company operates, experience, skills, substantive areas of expertise, financial literacy, innovative thinking, business judgment, achievements and other factors required to be considered under applicable laws, rules or regulations;

the candidate's attributes, comprising independence, personal and professional integrity, character, reputation, ability to represent the interests of all shareholders, time availability in light of other commitments, dedication, absence of conflicts of interest, diversity, appreciation of multiple cultures, commitment to deal responsibly with environmental and social issues and stakeholder concerns, and other factors that the committee considers appropriate in the context of the needs of the Board;

familiarity with and respect for corporate governance requirements and practices;

with respect to incumbent directors, the self-evaluation of the individual director, his or her current qualifications and his or her contributions to the Board;

the current composition of the Board and its committees; and

intangible qualities of the candidate including the ability to ask difficult questions and, simultaneously, to work constructively with members of the Board, as well as to work effectively with management.

The Board considers the recommendations of the Nominating and Corporate Governance Committee and then makes the final decision whether to renominate incumbent directors and whether to approve and extend an invitation to a candidate to join the Board upon appointment or election, subject to any approvals required by law, rule or regulation. Ms. Connors was recommended for consideration to the Nominating and Corporate Governance Committee by an executive officer, Ms. Powell was recommended by a shareholder and Mr. Scilacci was a referral from a former executive officer and the Company's financial advisor.

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Diversity in identifying nominees for the Board

In assisting the Board in identifying qualified director candidates, the Nominating and Corporate Governance Committee considers whether the candidate would contribute to the expertise, skills and professional experience, as well as to the diversity of the Board in terms of race, ethnicity, gender, age, geography and cultural background. The Board believes it functions most effectively with members who collectively possess a range of substantive expertise, skills and experience in areas that are relevant to leading HEI in accordance with the Board's fiduciary responsibilities. The Board also believes that having a board composed of members who can collectively contribute a range of perspectives, including perspectives that may arise from a person's gender or ethnicity, improves the quality of the Board's deliberations and decisions because it enables the Board to view issues from a variety of perspectives and, thus, more thoroughly and completely. As the Company's operations and strategic plans and the Board's composition may evolve over time, the Nominating and Corporate Governance Committee is charged with identifying and assessing the appropriate mix of knowledge areas, qualifications and personal attributes contributed by Board members that will bring the most strategic and decision-making advantage to HEI.

With operations almost exclusively in the State of Hawaii, it is advantageous that our Board include members who live and work in the state and have firsthand knowledge of and experience with our customer base and the political and regulatory environment. The Board benefits from the unique racial diversity that exists in Hawaii. If the shareholders vote to elect the five director nominees proposed by the Board for election at the 2019 Annual Meeting, the resulting composition of the Board would be as follows: seven directors (or 63.6%) who are Caucasian, three directors (or 27.3%) who are Asian American and one director (or 9.1%) who is Caucasian, Asian American and native Hawaiian. Four (or 36.4%) of the eleven directors would be female.

The Board also recognizes that, due to Hawaii's geographic isolation from the continental United States and the comparatively small number of publicly-traded companies, banks and regulated utilities based in Hawaii, the Board also benefits from having among its members directors who have gained business experience at companies located in other states; those Board members contribute valuable information about experiences they have had working at or serving on the boards of other public companies and companies in similar industries, which also contributes to the breadth of perspectives on the Board.

Director resignation policies

Through its Corporate Governance Guidelines, the Board requires its members to submit a letter of resignation for consideration by the Board in certain circumstances. A director must tender his or her resignation in the event of a significant change in the director's principal employment and at the end of the term during which the director reaches age 75. In addition to the evaluation process discussed on page 16, requiring a director to submit a letter of resignation in these two circumstances ensures that the Board examines whether a director's skills, expertise and attributes continue to provide value over time. The Board has waived the resignation requirement for Mr. Watanabe upon reaching the age of 75 as part of its ongoing governance planning and to assure a smooth transition as the Board makes significant changes in its composition and leadership.

A director must also submit his or her resignation for consideration by the Board if the director is elected under the plurality vote standard (described on page 74) but does not receive the support of the majority of votes cast. In such an event, the Board will evaluate the reasons for the voting result and determine how best to address the shareholder concerns underlying that result. In some cases, the Board may decide that the best approach is to accept the director's resignation. In other cases, the Board may discover that a shareholder concern that was the cause of the vote outcome may more appropriately be addressed by taking other action.

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The Board's role in management succession planning

The Board, led by its Nominating and Corporate Governance Committee, is actively engaged in succession planning and talent development, with a focus on the CEO and senior management of HEI and its operating subsidiaries. The Board and the Nominating and Corporate Governance Committee consider talent development programs and succession candidates through the lens of Company strategy and anticipated future opportunities and challenges. At its meetings throughout the year, the Nominating and Corporate Governance Committee reviews progress of talent development and succession programs and discusses internal and external succession candidates, including their capabilities, accomplishments, goals and development plans. The full Board also reviews and discusses talent strategy and evaluations of potential succession candidates at an annual Board retreat. In addition, potential leaders are given frequent exposure to the Board through formal presentations and informal events. These reviews, presentations and other interactions familiarize the Board with the Company's talent pool to enable the Board to select successors for the senior executive positions when appropriate.

Shareholder communication with the directors

Interested parties, including shareholders, desiring to communicate with the Board, any individual director or the independent directors as a group regarding matters pertaining to the business or operations of HEI may address their correspondence in care of the Corporate Secretary, Hawaiian Electric Industries, Inc., P.O. Box 730, Honolulu, HI 96808-0730. The HEI Corporate Secretary may review, sort and summarize all such correspondence in order to facilitate communications to the Board. In addition, the HEI Corporate Secretary has the authority and discretion to handle any director communication that is an ordinary course of business matter, including routine questions, complaints, comments and related communications that can appropriately be handled by management. Directors may at any time request copies of all correspondence addressed to them. The charter of the HEI Audit Committee, which is available for review at www.hei.com/govdocs, sets forth procedures for submitting complaints or concerns regarding financial statement disclosures, accounting, internal accounting controls or auditing matters on a confidential, anonymous basis.

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   BOARD OF DIRECTORS   


BOARD OF DIRECTORS

Independent directors

Under HEI's Corporate Governance Guidelines, a majority of Board members must qualify as independent under the listing standards of the NYSE and any additional requirements as determined by the Board from time to time.

For a director to be considered independent under NYSE listing standards, the Board must determine that the director does not have any direct or indirect material relationship with HEI or its subsidiaries apart from his or her service as a director. The NYSE listing standards also specify circumstances under which a director may not be considered independent, such as when the director has been an employee of the Company within the last three fiscal years, if the director has had certain relationships with the Company's external or internal auditor within the last three fiscal years or when the Company has made or received payments for goods or services to entities with which the director or an immediate family member of the director has specified affiliations and the aggregate amount of such payments in any year within the last three fiscal years exceeds the greater of $1 million or 2% of such entity's consolidated gross revenues for the fiscal year.

The Board has also adopted Categorical Standards for Director Independence (HEI Categorical Standards), which are available for review on HEI's website at www.hei.com/govdocs. The HEI Categorical Standards specify circumstances under which a director may not be considered independent. In addition to the circumstances that would preclude independence under the NYSE listing standards, the HEI Categorical Standards provide that a director is not independent if HEI and its subsidiaries have made charitable contributions to a nonprofit organization for which the director serves as an executive officer and the aggregate amount of such contributions in any single fiscal year of the nonprofit organization within the last three fiscal years exceeds the greater of $1 million or 2% of such organization's consolidated gross revenues for the fiscal year.

The Nominating and Corporate Governance Committee and the Board considered the relationships described below in assessing the independence of Board members. Based on its consideration of such relationships and the recommendations of the Nominating and Corporate Governance Committee, the Board determined that all of the nonemployee directors and director nominees of HEI (Messrs. Dahl, Fargo, Russell, Scilacci, Scott, Taniguchi and Watanabe and Mss. Connors, Fowler and Powell) are independent. The remaining director, Ms. Lau, is an employee director of HEI and therefore is not independent.

Relationships considered in determining director independence:

With respect to Messrs. Scott, Taniguchi and Watanabe, the Board considered amounts paid in the last three fiscal years to purchase electricity from HEI subsidiaries Hawaiian Electric or Hawaii Electric Light (the sole public utilities providing electricity to the islands of Oahu and Hawaii, respectively) by entities employing these directors or where a family member of the director was an executive officer. None of the amounts paid by these entities for electricity (excluding pass-through charges for fuel, purchased power and Hawaii state revenue taxes) exceeded the thresholds in the NYSE listing standards or HEI Categorical Standards that would automatically result in a director not being independent. Since Hawaiian Electric and Hawaii Electric Light are the sole sources of electric power on the islands of Oahu and Hawaii, respectively, the rates they charge for electricity are fixed by state regulatory authority and purchasers of electricity from these public utilities have no choice as to supplier and no ability to negotiate rates or other terms, the Board determined that these relationships do not impair the independence of these directors.

With respect to Dr. Scott, the Board considered charitable contributions in the last three fiscal years from HEI and its subsidiaries to the nonprofit organization where he serves as an executive officer. None of the contributions exceeded the threshold in the HEI Categorical Standards that would automatically result in Dr. Scott not being independent. In determining that these donations did not impair the independence of Dr. Scott, the Board also considered the fact that Company policy requires that charitable contributions from HEI or its subsidiaries to entities where an HEI director serves as an executive officer, and where the director has a direct or indirect material interest, and the aggregate amount donated by HEI and its subsidiaries to such organization would exceed $120,000 in any

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   BOARD OF DIRECTORS   

single fiscal year, be preapproved by the Nominating and Corporate Governance Committee.

With respect to Messrs. Fargo, Scott, Taniguchi and Watanabe, the Board considered other director or officer positions held by those directors at entities for which an HEI executive officer serves as a director or trustee and determined that none of these relationships affected the independence of these directors. None of these relationships resulted in a compensation committee interlock or would automatically preclude independence under the NYSE listing standards or HEI Categorical Standards.

Board meetings in 2018

In 2018, there were seven regular meetings and three special meetings of the Board. All directors who served on the Board in 2018 attended at least 89% of the combined total number of meetings of the Board and Board committees on which they served during the year.

Executive sessions of the Board

The nonemployee directors meet regularly in executive sessions without management present. In 2018, these sessions were chaired by Mr. Watanabe, who is the Chairman of the Board and an independent nonemployee director. Mr. Watanabe may request from time to time that another independent director chair the executive sessions.

Board attendance at annual meetings

All of HEI's incumbent directors who served on the Board in 2018 attended the 2018 Annual Meeting of Shareholders. HEI encourages all directors to attend each year's Annual Meeting.

Board evaluations

The Board conducts annual evaluations to determine whether it and its committees are functioning effectively. As part of the evaluation process, each member of the Audit, Compensation and Nominating and Corporate Governance Committees annually evaluates the performance of each committee on which he or she serves.

Each director up for reelection also evaluates his or her own performance. The nonemployee directors also periodically complete peer evaluations of the other nonemployee directors. The evaluation process is overseen by the Nominating and Corporate Governance Committee, in consultation with the Chairman.

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   COMMITTEES OF THE BOARD   


COMMITTEES OF THE BOARD

Board committee composition and meetings

The Board has four standing committees: Audit, Compensation, Executive and Nominating and Corporate Governance. Members of these committees are appointed annually by the Board, taking into consideration the recommendations of the Nominating and Corporate Governance Committee. The table below shows the current members of each such committee and the number of meetings each committee held in 2018.

Name
  Audit
  Compensation
  Executive
  Nominating
and
Corporate
Governance

Richard J. Dahl

  GRAPHIC
   

Thomas B. Fargo

      GRAPHIC       GRAPHIC

Peggy Y. Fowler

    GRAPHIC
  GRAPHIC

Constance H. Lau1

          GRAPHIC    

Keith P. Russell

  GRAPHIC
   

James K. Scott

              GRAPHIC

Kelvin H. Taketa

        GRAPHIC

Barry K. Taniguchi

  GRAPHIC       GRAPHIC    

Jeffrey N. Watanabe

    GRAPHIC
GRAPHIC

Number of meetings in 2018

  5   4   0   9

GRAPHIC

1
Ms. Lau is an employee director. All other directors have been determined to be independent. See "Board of Directors — Independent Directors" above.

Functions of the Board's standing committees

The primary functions of HEI's standing committees are described below. Each committee operates and acts under written charters that are approved by the Board and available for review on HEI's website at www.hei.com/govdocs. Each of the Audit, Compensation and Nominating and Corporate Governance Committees may form subcommittees of its members and delegate authority to its subcommittees.

Audit Committee

The Audit Committee is responsible for overseeing (i) HEI's financial reporting processes and internal controls, (ii) the performance of HEI's internal auditor, (iii) risk assessment and risk management policies set by management and (iv) the Corporate Code of Conduct compliance program for HEI and its subsidiaries. In addition, this committee is directly responsible for the appointment, compensation and oversight of the independent registered public accounting firm that audits HEI's consolidated financial statements. The Audit Committee operates and acts under a written charter, which was adopted and approved by the Board and is available for review at www.hei.com/govdocs. The Audit Committee also maintains procedures for receiving and reviewing confidential reports of potential accounting and auditing concerns. See "Audit Committee Report" below for additional information about the Audit Committee.

All Audit Committee members are independent and qualified to serve on the committee pursuant to NYSE and SEC requirements and the Audit Committee meets the other applicable requirements of the Securities Exchange Act of 1934.

Mr. Dahl currently serves on the audit committees of Dine Brands Global, Inc. fka DineEquity, Inc. (NYSE: DIN), IDACORP, Inc. (NYSE: IDA), IDACORP's wholly-owned subsidiary, Idaho Power Company, and HEI's wholly-owned subsidiary Hawaiian Electric. The HEI Board has determined that Mr. Dahl's simultaneous service on the other audit committees would not impair his ability to effectively serve on its Audit Committee. None of the other Audit Committee members serve on the audit committees of more than two other public companies.

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HEI's primary operating subsidiaries, Hawaiian Electric and ASB, are responsible for overseeing risks at their respective companies. The Hawaiian Electric Board has assigned responsibility for ongoing oversight of risk management to its Audit Committee. The ASB Board has assigned responsibility for financial and reporting risk management to its Audit Committee and for all other risks to its Risk Committee. The HEI Board and/or Audit Committee may also be invited to participate in risk oversight discussions by these subsidiary boards and/or committees. The information from these subsidiary board and committee sessions are reported, on at least a quarterly basis, to the HEI Board by the subsidiary Chief Risk Officers (or their representatives), who functionally report to HEI's Chief Risk Officer on risk management matters.

Compensation Committee

The responsibilities of the Compensation Committee include (i) overseeing the compensation plans and programs for employees, executives and nonemployee directors of HEI and its subsidiaries, including equity and incentive plans; (ii) reviewing the extent to which risks that may arise from the Company's compensation policies and practices, if any, may have a material adverse effect on the Company and recommending changes to address any such risks; (iii) evaluating the compliance of ASB's incentive compensation practices under the principles for sound incentive compensation plans for banking organizations and (iv) assessing the independence of any compensation consultant involved in determining or recommending director or executive compensation. See "Compensation Discussion and Analysis — How We Make Compensation Decisions" and "Compensation Committee Interlocks and Insider Participation" below for additional information about the Compensation Committee.

The Compensation Committee operates and acts under a written charter, which was adopted and approved by the Board and is available for review at www.hei.com/govdocs. All Compensation Committee members are independent and qualified to serve on this committee pursuant to NYSE requirements and also qualify as "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code and as "nonemployee directors" as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934. An independent member of the board of directors of each of Hawaiian Electric and ASB attends meetings of the Compensation Committee as a nonvoting representative of such director's subsidiary board.

Executive Committee

The Executive Committee may exercise the power and authority of the Board when it appears to its members that action is necessary and a meeting of the full Board is impractical. It may also consider other matters concerning HEI that may arise from time to time between Board meetings. The Executive Committee is currently composed of the Chairman of the Board, who chairs the Executive Committee, the Audit Committee Chair and the HEI President and CEO. The Executive Committee operates and acts under a written charter, which was adopted and approved by the Board and is available for review at www.hei.com/govdocs.

Nominating and Corporate Governance Committee

The functions of the Nominating and Corporate Governance Committee include (i) evaluating the background and qualifications of potential nominees for the Board and for the boards of HEI's subsidiaries, (ii) recommending to the Board the director nominees to be submitted to shareholders for election at the next Annual Meeting, (iii) assessing the independence of directors and nominees, (iv) recommending the slate of executive officers to be appointed by the Board and subsidiary boards, (v) advising the Board with respect to matters of Board and committee composition and procedures, (vi) overseeing the annual evaluation of the Board, its committees and director nominees, (vii) overseeing talent development and succession planning for senior executive positions and (viii) making recommendations to the Board and the boards of HEI's subsidiaries regarding corporate governance and board succession planning matters. The Nominating and Corporate Governance Committee operates and acts under a written charter, which was adopted and approved by the Board and is available for review at www.hei.com/govdocs. See "Corporate Governance" above for additional information regarding the activities of the Nominating and Corporate Governance Committee.

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   DIRECTOR COMPENSATION   


DIRECTOR COMPENSATION

How director compensation is determined

The Board believes that a competitive compensation package is necessary to attract and retain individuals with the experience, skills and qualifications needed to serve as a director of a publicly traded company with a unique blend of highly regulated industries. Nonemployee director compensation is composed of a mix of cash and HEI Common Stock to align the interests of directors with those of HEI shareholders. Only nonemployee directors are compensated for their service as directors. Ms. Lau, the only employee director of HEI, does not receive separate or additional compensation for serving as a director. Although Ms. Lau is a member of the HEI Board, neither she nor any other executive officer participates in the determination of nonemployee director compensation.

The Compensation Committee reviews nonemployee director compensation at least once every three years and recommends changes to the Board. In 2018, the HEI Compensation Committee asked its independent compensation consultant, Frederic W. Cook & Co., Inc. (FW Cook), to conduct an evaluation of HEI's nonemployee director compensation practices. FW Cook assessed the structure of HEI's nonemployee director compensation program and its value compared to competitive market practices of utility peer companies, similar to the assessments used in its executive compensation review. The 2018 analysis took into consideration the duties and scope of responsibilities of directors. The HEI Compensation Committee reviewed the analysis in determining its recommendations concerning the appropriate nonemployee director compensation, including cash retainers, stock awards and meeting fees for HEI directors.

The Compensation Committee recommended that the Board approve the compensation program reflected in the FW Cook analysis and, at its October 31, 2018 meeting, the Board approved an increase in the annual cash retainer for the chairpersons of HEI's Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee to $20,000 and an increase in the annual cash retainer for the members of those committees to $10,000 in recognition of the increased workload of such committees. These increases were effective January 1, 2019.

Components of director compensation

Cash retainer. HEI nonemployee directors received the cash amounts shown below as retainer for their 2018 HEI Board service and for their 2018 service on HEI and subsidiary board committees. No separate fees are paid to HEI directors for service on subsidiary company boards, except to the extent that they serve on any committee of a subsidiary board. Cash retainers were paid in quarterly installments.

Position*
  2018 Annual Retainer

HEI Nonexecutive Chairman of the Board

  $250,000

HEI Director

  75,000

HEI Audit Committee Chair

  15,000

HEI Compensation Committee Chair

  15,000

HEI Nominating and Corporate Governance Committee Chair

  10,000

HEI Audit Committee Member

  6,000

HEI Compensation Committee Member

  6,000

HEI Nominating and Corporate Governance Committee Member

  4,000

Hawaiian Electric Audit Committee Chair

  10,000

Hawaiian Electric Audit Committee Member

  4,000

ASB Audit Committee Chair

  10,000

ASB Audit Committee Member

  4,000

ASB Risk Committee Chair

  10,000

ASB Risk Committee Member

  4,000
*
No additional retainer is paid for service on the HEI Executive Committee.

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Extra meeting fees. Nonemployee directors are also entitled to meeting fees for each board or committee meeting attended (as member or chair) after the number of meetings specified below.

HEI Board

 

$1,500 per meeting after 8 meetings

HEI Audit Committee

 

$1,500 per meeting after 10 meetings

HEI Compensation Committee

 

$1,500 per meeting after 6 meetings

HEI Nominating and Corporate Governance Committee

 

$1,500 per meeting after 6 meetings

Hawaiian Electric Audit Committee

 

$1,000 per meeting after 6 meetings

ASB Audit Committee

 

$1,000 per meeting after 10 meetings

ASB Risk Committee

 

$1,000 per meeting after 6 meetings

Stock awards. On June 29, 2018, each HEI nonemployee director received shares of HEI Common Stock with a value equal to $100,000 as an annual grant under HEI's 2011 Nonemployee Director Stock Plan (2011 Director Plan), which was approved by HEI shareholders on May 10, 2011, for the purpose of further aligning directors' and shareholders' interests. The number of shares issued to each HEI nonemployee director was determined based on the closing sales price of HEI Common Stock on the NYSE on June 29, 2018. Stock grants to nonemployee directors under the 2011 Director Plan are made annually on the last business day in June and vest immediately. HEI considers the 2011 Director Plan an important vehicle for the appropriate compensation of its nonemployee directors. Proposal No. 3 in this Proxy Statement requests shareholder approval of an extension of the term of the 2011 Director Plan and an increase in the number of shares available for issuance thereunder.

Maximum Compensation. At its October 29, 2018 meeting, the Compensation Committee recommended, and the Board approved, a maximum annual compensation limit of $600,000 for any nonemployee director, to include the aggregate grant date fair value of all awards granted to any nonemployee director during any single calendar year plus the aggregate amount of all cash earned and paid or payable to such director for services rendered for the same year.

Deferred compensation. Nonemployee directors may participate in the HEI Deferred Compensation Plan implemented in 2011 (2011 Deferred Compensation Plan) and described under "Compensation Discussion and Analysis — Benefits — Deferred Compensation Plans" below. Under the plan, deferred amounts are credited with gains/losses of deemed investments chosen by the participant from a list of publicly traded mutual funds and other investment offerings. Earnings are not above-market or preferential. Participants may elect the timing upon which distributions are to begin following separation from service (including retirement) and may choose to receive such distributions in a lump sum or in installments over a period of up to fifteen years. Lump sum benefits are payable in the event of disability or death. Mr. Taketa participated in this plan in 2018, but no other nonemployee director did so. Nonemployee directors are also eligible to participate in the prior HEI Nonemployee Directors' Deferred Compensation Plan, as amended January 1, 2009, although no nonemployee director deferred compensation under such plan in 2018.

Health benefits. Nonemployee directors may participate, at their election and at their cost, in the group employee medical, vision and dental plans generally made available to HEI, Hawaiian Electric or ASB employees. No nonemployee director participated in such plans in 2018.

2018 DIRECTOR COMPENSATION TABLE

The table below shows the compensation paid to HEI nonemployee directors for 2018.

Name*
  Fees Earned
or Paid in Cash
($)3

  Stock Awards
($)4

  Total
($)

Richard J. Dahl   88,000   100,000   188,000
Thomas B. Fargo   101,500   100,000   201,500
Peggy Y. Fowler   84,130   100,000   184,130
Keith P. Russell   98,000   100,000   198,000
James K. Scott   83,500   100,000   183,500
Kelvin H. Taketa1   92,500   100,000   192,500
Barry K. Taniguchi   103,000   100,000   203,000
Jeffrey N. Watanabe, Chairman2   338,000   100,000   438,000
1
In 2018, Mr. Taketa elected to defer $74,000 of his fees under the 2011 Deferred Compensation Plan. Mr. Taketa did not have above-market or preferential earnings on nonqualified deferred compensation in 2018.

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2
Mr. Watanabe's fees were for service as director and Chairman of the HEI Board and as a member of the Compensation Committee. He also served on the HEI Executive Committee and the ASB Board and Executive Committee, as well as the Hawaiian Electric Board and ASB Risk Committee. Mr. Watanabe's HEI Chairman responsibilities are described above under "Corporate Governance — The Board's leadership structure."

3
Represents cash retainers for board and committee service (as detailed below).

4
For all HEI nonemployee directors, this amount represents an HEI stock award in the value of $100,000, as described above under "Stock awards."

The table below shows the detail of cash retainers paid to HEI nonemployee directors for Board and committee service (including subsidiary committee service) in 2018.

Name*
  HEI
Board
Retainer
($)

  HEI
Committee
Retainer
($)

  HEI
Chairman
Retainer
($)

  HEI
Extra
Meeting
Fees1 ($)

  HECO
Audit
Committee
Retainer
($)

  ASB
Audit
Committee
Retainer
($)

  ASB
Risk
Committee
Retainer
($)

  Total
($)

Richard J. Dahl   75,000   6,000     3,000   4,000       88,000
Thomas B. Fargo   75,000   19,000     7,500         101,500
Peggy Y. Fowler   75,000   6,130     3,000         84,130
Keith P. Russell   75,000   6,000     3,000     4,000   10,000   98,000
James K. Scott   75,000   4,000     4,500         83,500
Kelvin H. Taketa   75,000   10,000     7,500         92,500
Barry K. Taniguchi   75,000   15,000     3,000     10,000     103,000
Jeffrey N. Watanabe, HEI Chairman   75,000   6,000   250,000   3,000       4,000   338,000
1
Represents extra meeting fees earned for attending Board and committee meetings in excess of the number of meetings specified on page 24.

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   DIRECTOR COMPENSATION   

Director stock ownership and retention

HEI directors are required to own and retain HEI Common Stock throughout their service with the Company. Each director has until his or her compliance date (January 1 of the year following the fifth anniversary of the later of (i) amendment to his or her required level of stock ownership or (ii) first becoming subject to the requirements) to reach the following ownership levels: Chairman of the Board — 2x annual cash retainer; other HEI directors — 5x annual cash retainer. As of January 1, 2018, each director who had reached his or her compliance date had achieved his or her stock ownership target.

Until reaching the applicable stock ownership target, directors must retain all shares received under their annual stock retainer. The Compensation Committee has the authority to approve hardship exceptions to these retention requirements.

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   PROPOSAL NO. 2: ADVISORY VOTE TO APPROVE HEI'S EXECUTIVE COMPENSATION   


PROPOSAL NO. 2: ADVISORY VOTE TO APPROVE THE COMPENSATION OF HEI'S NAMED EXECUTIVE OFFICERS

We are asking for your advisory vote on the compensation of our named executive officers as described in this Proxy Statement. This proposal, which we present to our shareholders on an annual basis and which is commonly known as a "say-on-pay" proposal, gives shareholders the opportunity to express their views on the overall compensation of our named executive officers and the policies and practices described in this Proxy Statement.

The Compensation Committee and Board believe that HEI's executive compensation is effective in achieving our goals of promoting long-term value for our shareholders, customers and communities and attracting, motivating and retaining the talent necessary to create such value. Accordingly, the Board recommends that you vote FOR the following resolution:

Please read the Compensation Discussion and Analysis and Executive Compensation Tables portions of this Proxy Statement. These sections describe the Company's executive compensation policies and practices and the compensation of our named executive officers.

While the say-on-pay vote is advisory and is therefore nonbinding, the Compensation Committee and Board consider the vote results when making future decisions regarding HEI's executive compensation.

ü FOR

Your Board recommends that you vote FOR the advisory resolution approving the compensation of HEI's named executive officers as disclosed in this Proxy Statement.

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   COMPENSATION DISCUSSION AND ANALYSIS   


COMPENSATION DISCUSSION AND ANALYSIS

This section describes our executive compensation program and the compensation decisions made for our 2018 named executive officers. For 2018, we have four named executive officers, our Chief Executive Officer, our Chief Financial Officer, and our two other executive officers during 2018, the chief executives at Hawaiian Electric (our electric utility subsidiary) and ASB (our bank subsidiary), respectively:

Name
  Title
  Entity
Constance H. Lau   HEI President & CEO   Holding company
Gregory C. Hazelton   HEI Executive Vice President, Chief Financial Officer & Treasurer   Holding company
Alan M. Oshima   Hawaiian Electric President & CEO   Electric utility subsidiary
Richard F. Wacker   ASB President & CEO   Bank subsidiary

Executive summary

Our guiding principles shape our program design and pay decisions

In designing HEI's executive compensation program and making pay decisions, the Compensation Committee follows these guiding principles:

pay should reflect Company performance, particularly over the long-term,

compensation programs should align executives' interests with those of our shareholders and other stakeholders,

programs should be designed to attract, motivate and retain talented executives who can drive the Company's success, and

the cost of programs should be reasonable while maintaining their purpose and benefit.

Key design features

Straightforward design. The compensation program for our named executive officers comprises four primary elements — base salary, performance-based annual incentives, performance-based long-term incentives earned over three years and time-based restricted stock units (RSUs) that vest in equal annual installments over four years.

Emphasis on variable (performance-based) pay. Through the target compensation mix, we emphasize variable pay over fixed pay, with the majority of the target compensation opportunity for each named executive officer linked to the Company's financial, market and operating results.

Balance between short- and long-term components. The compensation program also balances the importance of achieving long-term strategic priorities and critical short-term goals that support long-term objectives.

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   COMPENSATION DISCUSSION AND ANALYSIS  

Our compensation practices demonstrate our commitment to sound governance

The tables below summarize our current executive compensation practices — both what we do (to drive performance and manage risk) and what we don't do:

    What We Do    
    ü   Link pay to performance    

 

 

ü

 

Utilize rigorous performance conditions that encourage long-term value creation

 

 

 

 

ü

 

Balance short- and long-term compensation to promote sustained performance over time

 

 

 

 

ü

 

Grant majority of long-term incentives in the form of performance-based awards

 

 

 

 

ü

 

Use the competitive median as a reference point in setting compensation levels

 

 

 

 

ü

 

Review tally sheets when making compensation decisions

 

 

 

 

ü

 

Mitigate undue risk in compensation programs

 

 

 

 

ü

 

Utilize "double-trigger" change-in-control agreements

 

 

 

 

ü

 

Maintain clawback policy for performance-based compensation

 

 

 

 

ü

 

Require stock ownership and retention by named executive officers; CEO must own five times her base salary

 

 

 

 

ü

 

Prohibit pledging of Company stock and transactions designed to hedge the risk of stock ownership

 

 

 

 

ü

 

Utilize an independent compensation consultant to advise the Compensation Committee

 

 

 

 

 

 

 

 

 

 

    What We Don't Do    
    GRAPHIC   No employment contracts    

 

 

GRAPHIC

 

No tax gross ups, except under the Executive Death Benefit Plan frozen in 2009

 

 

 

 

GRAPHIC

 

No compensation programs that are reasonably likely to create material risk to the Company

 

 

 

 

GRAPHIC

 

No significant perquisites

 

 

 

 

GRAPHIC

 

No dividends or dividend equivalents on unearned performance shares

 

 

 

 

 

 

 

 

 

2018 say-on-pay results, shareholder outreach and 2019 program

At our 2018 Annual Meeting of Shareholders, approximately 92% of votes cast approved our executive compensation program through the advisory say-on-pay vote. After evaluating the outcome of the 2018 advisory vote, the Compensation Committee decided not to make any material changes to our executive compensation program. In addition, in 2019, we invited shareholders who collectively held more than 25% of HEI's outstanding shares and key proxy advisory organizations to discuss our executive compensation program. From such outreach, we learned that there was general approval of our program.

The executive compensation program in place in 2015 and 2016 reflected the fact that HEI's proposed merger with NextEra Energy was pending at that time. In early 2015 and 2016, respectively, the Compensation Committee had provided for the 2015-17 and 2016-18 LTIP to be settled in cash rather than in equity as in prior years, and for relative total shareholder return (TSR) to be replaced by earnings per share (EPS) growth as one of the LTIP metrics. These changes were implemented because the Compensation Committee had determined that while the merger was pending the Company's stock price might be affected at least in part by merger considerations that were unrelated to the Company's true operating performance and that, as a result, the compensatory goals of the LTIP would be better served without taking into account such merger impact. Since the merger agreement between HEI and NextEra Energy was terminated in July 2016, and consistent with the feedback we received from stakeholders during our outreach at that time, the Compensation Committee determined that the 2017-19 and 2018-20 LTIPs would return to being settled in equity and include relative TSR as one of the performance metrics.

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   COMPENSATION DISCUSSION AND ANALYSIS   

How we make compensation decisions

Our roles in determining compensation are well-defined

Role of the Compensation Committee

The Compensation Committee oversees the design and implementation of our executive compensation program. On an annual basis, the Compensation Committee engages in a rigorous process to arrive at compensation decisions regarding the named executive officers. In the course of this process, the Compensation Committee:

Engages in extensive deliberations in meetings held over several months

Consults with its independent compensation consultant during and outside of meetings

Focuses on the Company's long-term strategy and nearer-term goals to achieve such strategy in setting performance metrics and goals

Reviews tally sheets for each named executive officer to understand how the elements of compensation relate to each other and to the compensation package as a whole (the tally sheets include fixed and variable compensation, minimal perquisites and change in pension value for current and past periods)

Examines data and analysis prepared by its independent compensation consultant concerning peer group selection, comparative compensation data and evolving best practices

Reviews Company performance and discusses assessments of the individual performance of senior members of management

Analyzes the reasonableness of incentive payouts in light of the long-term benefits to shareholders

Considers trends in payouts to determine whether incentive programs are working effectively

Reviews risk assessments to determine whether compensation programs and practices carry undue risk

Early each year, the Compensation Committee determines payouts under incentive plans ending in the prior year, establishes performance metrics and goals for incentive plans beginning that year and recommends to the Board and subsidiary boards the level of compensation and mix of pay elements for each named executive officer.

Role of the independent directors as a whole

The independent directors evaluate the CEO's performance, consider Compensation Committee recommendations concerning her pay and determine her compensation. The Board and subsidiary boards also review the performance of and Compensation Committee recommendations concerning the other named executive officers and approve their compensation.

Role of executive officers

The CEO, who is also an HEI director, assesses and reports on the performance of the other named executive officers and makes recommendations to the Compensation Committee with respect to their levels of compensation and mix of pay elements. She also participates in Board deliberations regarding the Compensation Committee's recommendations on the other named executive officers. She does not participate in the deliberations of the Compensation Committee to recommend, or of the Board to determine, her own compensation.

Management supports the Compensation Committee in executing its responsibilities by providing materials for Compensation Committee meetings (including tally sheets and recommendations regarding performance metrics, goals and pay mix); by attending portions of Compensation Committee meetings as appropriate to provide perspective and expertise relevant to agenda items; and by supplying data and information as requested by the Compensation Committee and/or its independent compensation consultant.

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   COMPENSATION DISCUSSION AND ANALYSIS  

Compensation consultant & consultant independence

The Compensation Committee's independent compensation consultant, Frederic W. Cook & Co., Inc. (FW Cook), is retained by, and reports directly to, the Compensation Committee. FW Cook provides the Compensation Committee with independent expertise on market practices and developments in executive compensation, compensation program design, peer group composition and competitive pay levels, and provides related research, data and analyses. FW Cook also advises the Compensation Committee regarding analyses and proposals presented by management related to executive compensation. A representative of FW Cook generally attends Compensation Committee meetings, participates in Compensation Committee executive sessions and communicates directly with the Compensation Committee.

In early 2019, as in prior years, the Compensation Committee evaluated FW Cook's independence, taking into account all factors it believed to be relevant, including the factors specified in the NYSE listing standards and the absence of other relationships between FW Cook and the Company, its directors or executive officers. Based on such factors and FW Cook's independence policy, which was shared with the Compensation Committee, the Compensation Committee concluded that FW Cook is independent and that the work of FW Cook has not raised any conflict of interest.

We use comparative market data as a reference point for compensation

Compensation benchmarking

The Compensation Committee considers comparative market compensation as a reference in determining pay levels and mix of pay components. While the Compensation Committee seeks to position named executive officer target compensation opportunity (composed of base salary, target performance-based annual incentive, target performance-based long-term incentive and time-vested RSUs) at approximately the comparative market median, the Compensation Committee may decide that an executive's pay opportunity should be higher or lower based on internal equity or the executive's level of responsibility, experience, expertise, performance, retention and succession considerations.

Information from public company proxy statements for peer group companies was used to provide comparative market data in setting 2018 compensation for all named executive officers. Data from the Willis Towers Watson Energy Services Survey was also used in establishing 2018 compensation. The data was regressed based on HEI's and Hawaiian Electric's revenues for appropriate size comparisons.

Peer Groups

Compensation peers

The Compensation Committee annually reviews the peer groups used in benchmarking for HEI and subsidiary executive compensation, with analysis and recommendations provided by FW Cook. For 2018 compensation, the Compensation Committee determined, with input from FW Cook, that the companies in our 2017 compensation peer group remained appropriate and that no changes were necessary for 2018. The selection criteria and resulting 2018 peer groups are set forth below.

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   COMPENSATION DISCUSSION AND ANALYSIS   

        HEI 2018 Peer Group (applies to
Ms. Lau and Mr. Hazelton)
      Utility Subsidiary 2018 Peer
Group (applies to Mr. Oshima)
      Bank Subsidiary 2018 Peer Group
(applies to Mr. Wacker)
Selection Criteria      

Electric and multi-utility companies

Revenue balanced in a range of approximately 0.5x to 2x HEI's revenue

Market cap and location as secondary considerations

     

Subset of electric and multi-utility companies from HEI's peer group

Revenue balanced in a range of approximately 0.5x to 2x Hawaiian Electric's revenue

Market cap and location as secondary considerations

     

Regional banks and thrifts

Revenue balanced in a range of approximately 0.75x to 2x ASB's revenue

Total assets balanced in a range of approximately 0.5x to 2x ASB's total assets

Secondary consideration of 2 of 3 of the following:

proportion of loan portfolio composed of over 30% residential and less than 85% commercial

located on the west coast or Hawaii

noninterest income to operating revenue from 10%-40%

Peer Group for 2018 Compensation       ALLETTE, Inc.
Alliant Energy Corp.
Ameren Corp.
Avista Corp.
Black Hills Corp.
CenterPoint Energy Inc.
CMS Energy Corp.
Eversource Energy
Great Plains Energy1
IDACORP Inc.
MDU Resources Group Inc.
NiSource Inc.
Northwestern Corp
OGE Energy Corp.
Pinnacle West Capital Corp.
PNM Resources Inc.
Portland General Electric
SCANA Corp.
Vectren Corp.
WEC Energy Group Inc.
Westar Energy1
      ALLETTE, Inc.
Alliant Energy Corp.
Avista Corp.
Black Hills Corp.
Great Plains Energy Inc.1
IDACORP Inc.
MDU Resources Group Inc.
NiSource Inc.
Northwestern Corp
OGE Energy Corp.
Pinnacle West Capital Corp.
PNM Resources Inc.
Portland General Electric
SCANA Corp.
Vectren Corp.
Westar Energy Group Inc.1
      Ameris Bancorp
Beneficial Bankcorp
Berkshire Hills Bancorp
Central Pacific Financial
Community Bank System
CVB Financial
First Busey
First Financial Bank
HomeStreet
Independent Bank
Opus Bank
Park National
Republic Bancorp
Renasant Corp
Sandy Spring Bancorp
Seacoast Banking
South State
Tomkins Financial
TriCo Bancshares
United Financial
Westamerica Bancorp

1. After the peer data was established for 2018 compensation, Great Plains Energy and Westar Energy announced they were merging.

Performance peers

In addition to the peer companies used for benchmarking executive compensation, certain of the performance metrics used in the long-term incentive plans (described below under "Long-term incentives") are based on performance relative to performance peers. HEI's Relative TSR performance is based on HEI's performance compared to the utilities in the Edison Electric Institute (EEI) Index.

2018 Edison Electric Institute (EEI) Index Peers for HEI Long-Term Incentive Plan Relative TSR Metric

The EEI is an association of U.S. shareholder-owned electric companies that are representative of comparable investment alternatives to HEI. The EEI's members serve virtually all of the ultimate customers in the shareholder-owned segment of the industry. The following companies comprise the 2018 EEI Index used for HEI's Relative TSR metric:

ALLETTE, Inc.
Alliant Energy Corp.
Ameren Corp.
American Electric Power Co.
Avangrid
Avista Corp.
Black Hills Corp.
Centerpoint Energy Inc.
CMS Energy Corp.
Consolidated Edison Inc.
Dominion Energy Inc.
      DTE Energy Co.
Duke Energy Corp.
Edison International
El Paso Electric Co.
Entergy Corp.
Eversource Energy
Exelon Corp.
FirstEnergy Corp.
Great Plains Energy1
IDACORP Inc.
      MDU Resources Group Inc. MGE Energy Inc.
NextEra Energy Inc.
NiSource Inc.
Northwestern Corp.
OGE Energy Corp.
Otter Tail Corp.
PG&E Corp.
Pinnacle West Capital Corp.
PNM Resources Inc.
Portland General Electric
      PPL Corp.
Public Service Enterprise    Group Inc.
SCANA Corp.
Sempra Energy
Southern Co.
Unitil Corp.
Vectren Corp.
WEC Energy Group Inc.
Westar Energy1
Xcel Energy Inc.

1. After peer data was established for 2018 compensation, Great Plains Energy and Westar Energy announced they were merging. The combined entity remains in the EEI Index as Evergy, Inc.

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   COMPENSATION DISCUSSION AND ANALYSIS   

What we pay and why: Compensation elements and 2018 pay decisions

Each element of compensation supports important objectives

The total compensation program for named executive officers is made up of the five standard components summarized below. Each component fulfills important objectives that reflect our focus on pay for performance, competitive programs to attract and retain talented executives and aligning executive decisions with the interests of the Company and our shareholders. These elements are described in further detail in the pages that follow.

Compensation Element
  Summary
  Objectives
Base Salary   Fixed level of cash compensation set in reference to peer group median (may vary based on performance, experience, responsibilities, expertise and other factors).   Attract and retain talented executives by providing competitive fixed cash compensation.
Annual Performance-Based Incentives   Variable cash award based on achievement of pre-set performance goals for the year. Award opportunity is a percentage of base salary. Performance below threshold levels yields no incentive payment.   Drive achievement of key business results linked to short-term and long-term strategy and reward executives for their contributions to such results. Balance compensation cost and return by paying awards based on performance.
Long-Term Performance- Based Incentives   Variable equity award* based on meeting pre-set performance objectives over a 3-year period. Award opportunity is a percentage of base salary. Performance below threshold levels yields no incentive payment.   Motivate executives and align their interests with those of shareholders by promoting long-term value growth and by paying awards in the form of equity. Balance compensation cost and return by paying awards based on performance.
Annual RSU Grant   Annual equity grants in the form of RSUs that vest in equal installments over 4 years. Amount of grant is a percentage of base salary.   Promote alignment of executive and shareholder interests by ensuring executives have significant ownership of HEI stock. Retain talented leaders through multi-year vesting.
Benefits   Includes defined benefit pension plans and retirement savings plan (for HEI/utility employees) and defined contribution plan (for bank employees); deferred compensation plans; double-trigger change-in-control agreements; minimal perquisites; and an executive death benefit plan (frozen since 2009).   Enhance total compensation with meaningful and competitive benefits that promote retention, peace of mind and contribute to financial security. Double-trigger change-in-control agreements encourage focused attention of executives during major corporate transitions.
*
While the proposed merger with NextEra Energy was pending, the Compensation Committee decided to provide for the LTIP (2015-17 and 2016-18 performance periods) to be settled in cash in lieu of HEI Common Stock. The Committee had determined that during the pendency of the merger process HEI's stock price might be affected at least in part by merger considerations that were unrelated to HEI's true operating performance and that, as a result, the compensatory goals of the LTIP would be better served by a cash settlement. Since the merger did not occur and the merger agreement between NextEra Energy and HEI was terminated in July 2016, the Committee decided that it would return to equity settlement for the 2017-19 LTIP.

Changes to elements in 2018

On an annual basis, the Compensation Committee reviews and recommends each named executive officer's target compensation opportunity, which is composed of: base salary, target annual incentive opportunity and target

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long-term equity value. Target bonus and equity values are established as a percentage of base salary. The Compensation Committee made changes to base salaries for 2018, as shown in the chart below.

Base Salary
($)
Performance-based
Annual Incentive
(Target Opportunity1
as % of
Base Salary)
Performance-based
Long-term Incentive
(Target Opportunity1
as % of
Base Salary)
RSUs
(Value as % of
Base Salary)
Name
2017
2018
2017
2018
2017-19
2018-20
2017
2018

Constance H. Lau

893,533 921,800 100 same 160 same 75 same

Gregory C. Hazelton

487,500 512,500 60 same 80 same 50 same

Alan M. Oshima

655,583 686,750 75 same 95 same 65 same

Richard F. Wacker

660,000 679,800 80 same 80 same 20 same
1.
The threshold and maximum opportunities are 0.5 times target and 2 times target, respectively.

Base salary

Base salaries for our named executive officers are reviewed and determined annually. In establishing base salaries for the year, the Compensation Committee considers competitive market data, internal equity and each executive's level of responsibility, experience, expertise, performance and retention and succession considerations. The Compensation Committee considers the competitive median in setting base salaries, but may determine that the foregoing factors compel a higher or lower salary.

For 2018, in order to recognize their performance and maintain the market competitiveness of their pay, each of our named executive officers received a base salary increase of 3.0%. The resulting 2018 base salaries are shown in the table above. For all named executive officers other than Mr. Wacker, base salary increases for 2017 became effective as of March 1, 2017 and base salary increases for 2018 became effective as of March 1, 2018. Accordingly, unless otherwise indicated, amounts referenced as 2017 and 2018 base salary are prorated amounts to include two months of 2016 and 2017 base salary, respectively, and ten months of 2017 and 2018 base salary, respectively.

Annual incentives

HEI named executive officers and other executives are eligible to earn an annual cash incentive award under HEI's Executive Incentive Compensation Plan (EICP) based on the achievement of performance goals for the year. Each year, the Compensation Committee determines the target annual incentive opportunity for each executive, performance metrics and the applicable goals.

2018 target annual incentive opportunity

The target annual incentive opportunity is a percentage of base salary, with the threshold and maximum opportunities equal to 0.5 times and 2 times target, respectively. In establishing the target percentage for each executive, the Compensation Committee takes into account the mix of pay elements, competitive market data, internal equity, prior performance and other factors described above under "Base salary."

The 2018 target annual incentive opportunities for the named executive officers are shown in the table above. For 2018, the Compensation Committee recommended, and the Board approved, keeping the 2018 target opportunity (as a percentage of base salary) the same as the 2017 target opportunity for each of our named executive officers.

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2018 performance metrics, goals, results & payouts

The performance metrics for annual incentives are chosen because they connect directly to the Company's strategic priorities and correlate with creating shareholder value. The 2018 performance metrics for Ms. Lau and Mr. Hazelton related to the holding company and its subsidiaries, while the metrics for Mr. Oshima related to the utility and the metrics for Mr. Wacker related to the bank. The rationale for each metric is shown in the chart below.

In addition to selecting performance metrics, the Compensation Committee determines the level of achievement required to attain the threshold, target and maximum goal for each metric. The level of difficulty of the goals reflects the Compensation Committee's belief that incentive pay should be motivational — that is, the goals should be challenging but achievable — and that such pay should be balanced with reinvestment in the Company and return to shareholders. Consistent with this approach, the Compensation Committee believes the threshold should represent solid performance with positive financial/operating results, target should denote achievable goals that include a stretch factor and maximum should signify truly exceptional performance.

The target level for financial goals, such as net income and ROA, is generally set at the level of the Board-approved budget, which represents the level of accomplishment the Company seeks to achieve for the year. In setting the threshold and maximum levels, the Compensation Committee considers expected industry-specific metrics and whether the risks to accomplishing the budget weigh more heavily toward the downside and how challenging it would be to achieve incremental improvements over the target level.

The chart below identifies the 2018 annual incentive metrics, the objective each measure serves, the level of achievement required to attain the threshold, target and maximum levels for each metric, the results for 2018 and the percentage of target achieved.

 
   
  Goals    
  % of
Target
Achieved

2018 Annual Incentive Performance
Metrics & Why We Use Them

   
   
  Weighting
  Threshold
  Target
  Maximum
  Result
Lau and Hazelton                        

HEI Consolidated Adjusted Net Income1 focuses on fundamental earnings, which correlates to shareholder value

 

60%

 

$194.7M

 

$216.3M

 

$231.4M

 

$210.4M

 

 

Utility Operations2 supports effective utility operations for all stakeholders

 

25%

 

See note 2 below

 

See note 2 below

 

See note 2 below

 

See note 2 below

 

98%

ASB Return on Assets (ROA)8 measures how efficiently the bank deploys its assets by comparing return to total assets

 

15%

 

1.07%

 

1.15%

 

1.23%

 

1.20%

 

 

Oshima

 

 

 

 

 

 

 

 

 

 

 

 

Utility Consolidated Adjusted Net Income1 focuses on fundamental earnings, which correlates to shareholder value

 

30%

 

$151.0M

 

$158.9M

 

$174.8M

 

$151.3M

 

 

Utility Consolidated Operation and Maintenance Expense3 measures operational efficiency

 

15%

 

$460M

 

$447M

 

N/A

 

$461M

 

 

Utility Consolidated Customer Satisfaction4 focuses on improving the customer experience through all points of contact with the utility

 

15%

 

Consolidated score of 69 in 2 of 4 quarters

 

Consolidated score of 69 in 3 of 4 quarters

 

Consolidated score of 69 in 4 of 4 quarters

 

Consolidated score of 69 in 4 of 4 quarters

 

 

Utility Consolidated Reliability/System Average Interruption Duration Index (SAIDI)5 promotes system reliability for customers

 

5%

 

102 minutes

 

99 minutes

 

97 minutes

 

149 minutes

 

76%

Utility Consolidated Safety/Total Cases Incident Rate (TCIR)6 rewards improvements in workplace safety, promoting employee well-being and reducing expense

 

2%

 

1.37 TCIR

 

1.03 TCIR

 

0.92 TCIR

 

Below Threshold

 

 

Utility Consolidated Safety/Severity Rate7 rewards improvements in workplace safety, promoting employee well-being and reducing expense

 

3%

 

18.53

 

16.00

 

13.46

 

Below Threshold

 

 

Transformation Metrics promote achievement of utility transformation initiatives

 

30%

 

Threshold

 

Target

 

Maximum

 

Target

 

 

Wacker

 

 

 

 

 

 

 

 

 

 

 

 

ASB ROA8

 

40%

 

1.07%

 

1.15%

 

1.23%

 

1.20%

 

 

ASB Adjusted Net Income1 focuses on fundamental earnings, which correlates to shareholder value

 

60%

 

$73.0M

 

$79.0M

 

$85.0M

 

$82.5M

 

160%

N/A — Not Applicable

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1
HEI Consolidated, Utility Consolidated and ASB Adjusted Net Income represent HEI consolidated, Utility consolidated and ASB GAAP net income for 2018, adjusted for the items described further below, respectively. These Adjusted Net Income metrics are non-GAAP measures. For a reconciliation of the GAAP and non-GAAP results, see "Reconciliation of GAAP to Non-GAAP Measures: Incentive Compensation Adjustments" attached as Exhibit B.

2
Utility Operations is a composite of six utility operational goals weighted in the same proportion for which they are weighted for utility executives. Utility Operations includes the six operational goals that applied to Mr. Oshima in 2018 (Utility Consolidated Operation and Maintenance Expense, Utility Consolidated Customer Satisfaction, Utility Consolidated SAIDI, Utility Consolidated Safety/TCIR, Utility Consolidated Safety/Severity Rate and Utility Transformation Metrics). Utility Transformation Metrics focuses on achievement of the utility's transformation goals. Mr. Oshima approves the Transformation milestones under this metric and determines the aggregate performance at the end of the performance period. For 2018, the Utility Transformation milestones focused on the areas of PSIP execution, electrification of transportation, new products and services, customer/community engagement, ERP/EAM Project, grid modernization implementation, integrated grid planning proposal, one company initiative, and regulatory/policy. The Utility Transformation goal was achieved at target for 2018, meaning that all milestones were achieved. For HEI executives the weightings of the components of Utility Operations were as follows: Utility Consolidated Operation and Maintenance Expense — 5.36%, Utility Consolidated Customer Satisfaction — 5.36%,Utility Consolidated SAIDI — 1.79%, Utility Consolidated Safety/TCIR — 0.71%, Utility Consolidated Safety/Severity Rate — 1.07% and Utility Transformation Metrics — 10.71%.

3
Utility Consolidated Operation and Maintenance Expense represents non-fuel expenses of the consolidated utilities, including retirement defined benefits expense — other than service costs, and excludes expenses covered by surcharges or otherwise neutral to net income and adjustments relating to LNG project costs.

4
Utility Consolidated Customer Satisfaction is based on quarterly results of customer surveys conducted by an outside vendor.

5
Utility Consolidated Reliability/SAIDI is measured by the average outage duration for each customer served, exclusive of catastrophic events and outages caused by independent power producers, over whose plant maintenance and reliability the utility has limited real-time control.

6
Utility Consolidated Safety/TCIR is a standard measure of employee safety. TCIR equals the number of Occupational Safety and Health Administration recordable cases as of 12/31/18 × 200,000 productive hours divided by productive hours for the year. Lower TCIR scores reflect better safety performance.

7
Utility Consolidated Safety/Severity Rate is a measure of the significance of the safety incidents a company experienced based on the number of lost work days incurred. Lost work days occur when an occupational injury or illness prevents an employee from working a full, assigned work shift. Severity rate is calculated by taking the number days away from work due to a work place injury (maximum of 180 days) multiplied by 200,000 and divided by number of hours worked by all employees.

8
ASB ROA is ASB's adjusted net income divided by its average total assets for the period. Average total assets is calculated by averaging the total assets for each day in the perio