HEI Exhibit 10.16

EXECUTIVE DEATH BENEFIT PLAN

OF

HAWAIIAN ELECTRIC INDUSTRIES, INC.

AND PARTICIPATING SUBSIDIARIES

 

I. ESTABLISHMENT OF PLAN

Hawaiian Electric Industries, Inc. (“HEI”) hereby establishes this Executive
Death Benefit Plan of Hawaiian Electric Industries, Inc. and Participating
Subsidiaries effective September 1, 2001. The only benefits provided under this
Plan are death benefits. The Plan is an unfunded welfare plan maintained for the
purpose of providing benefits for a select group of management employees of HEI
and certain of its subsidiaries, as described in section 2520.104-24 of the
regulations promulgated by the Secretary of Labor pursuant to the Employee
Retirement Income Security Act of 1974, as amended.

 

II. DEFINITIONS

2.1. “Administrative Committee” means the Administrative Committee for the HEI
Executive Death Benefit Plan, which shall be a three-person committee composed
of the Vice President-Administration of HEI, the Vice President-Corporate
Excellence of HECO, and the Manager-Compensation and Benefits of HECO (or the
holders of any successor positions, however designated), and shall have the
powers and duties set forth herein.

2.2. “Beneficiary” means the beneficiary designated in writing by a Participant.
The Beneficiary designation must be made on a form provided by the
Administrative Committee. A Participant must designate his or her Beneficiary at
the time he or she becomes a Participant, and may change the designated
Beneficiary at any time thereafter by executing a new Beneficiary designation.
If the designated Beneficiary does not survive the Participant, or if there is
no valid Beneficiary designation at the time of the Participant’s death, any
benefits payable hereunder shall be paid to the Participant’s estate.

2.3. “Disabled” or “Disability” refers to the existence of a disability within
the meaning of the long-term disability program maintained by the Participating
Employer by whom a Participant is employed.

2.4. “Eligible Position” means a management position that is designated in the
personnel records of the Participating Employer as:

 

  a. Manager or above at HEI, HECO, MECO, or HELCO, Grade 50 and above at HEI;
or

 

  b. President and CEO at ASB.

2.5. “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.

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2.6. “Participant” means a management employee or former employee of a
Participating Employer who has satisfied the eligibility requirements of the
Plan, as set forth in Article III below, and has not terminated employment or
changed his or her position in a manner that results in a loss of eligibility to
participate.

2.7. “Participating Employer” means HEI or one of the following HEI
subsidiaries: Hawaiian Electric Company, Inc. (“HECO”); Maui Electric Company,
Limited (“MECO”); Hawaii Electric Light Company, Inc. (“HELCO”); and American
Savings Bank, F.S.B. (“ASB”).

2.8. “Plan” means the Executive Death Benefit Plan of Hawaiian Electric
Industries, Inc. and Participating Subsidiaries, as set forth in this document
and as amended from time to time.

2.9. “Retire” or “Retirement” means termination of employment with a
Participating Employer after the Participant has qualified for immediate
commencement of normal or early retirement benefits under the Retirement Plan
for Employees of Hawaiian Electric Industries, Inc. and Participating
Subsidiaries or the American Savings Bank Retirement Plan (whether or not such
Participant actually elects to have such retirement benefits commence
immediately).

2.10. “Salary” means base annual rate of salary, including any elective
contributions to the Hawaiian Electric Industries Retirement Savings Plan, the
Hawaiian Electric Industries, Inc. FlexPlan, the ASB Cafeteria Plan, or any
successor plan thereof, but excluding any incentive compensation, bonuses,
deferred compensation, fringe benefits, or other amount not included in base
annual salary. Amounts paid under the Merit Performance Bonus Plan of ASB are
not included in Salary, regardless of whether the Participant elects to
contribute such amounts to the Hawaiian Electric Industries Retirement Savings
Plan.

 

III. ELIGIBILITY

3.1. Becoming a Participant. To become a Participant in the Plan, a person must:

 

  a. Be employed by a Participating Employer in an Eligible Position on or after
the effective date of this Plan, or have been employed in an Eligible Position
at ASB on or after January 1, 2001; and

 

  b. Be designated as a Participant in writing by the Administrative Committee,
or by a member of the Administrative Committee to whom the Committee has
delegated the authority to designate Participants.

3.2. Forfeiture Upon Termination of Employment. A Participant who terminates
employment with the Participating Employers for any reason other than
Retirement, death, or Disability shall cease to be a Participant and shall
forfeit any and all rights to benefits under this Plan.

3.3 Forfeiture Upon Transfer to Ineligible Position. A Participant who transfers
to a position that is not an Eligible Position shall cease to be a Participant
and shall forfeit any and all rights to benefits under this Plan.

 

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IV. BENEFITS

4.1. Benefits for HEI, HECO, MECO, and HELCO Participants. A Participant who is
employed in, who Retired from, or who terminated employment due to Disability
from, an Eligible Position with HEI, HECO, MECO, or HELCO, shall receive the
following benefits:

 

  a. If the Participant dies while actively employed, the Participant’s
Beneficiary shall receive a lump sum death benefit equal to (i) two times the
Participant’s Salary at the date of his or her death, (ii) divided by one minus
the highest marginal rate of federal income tax imposed on benefits of this type
as of the date of the Participant’s death.

 

  b. If the Participant dies after he or she Retires, the Participant’s
Beneficiary shall receive a lump sum death benefit equal to (i) one times the
Participant’s Salary at the date of his or her Retirement, (ii) divided by one
minus the highest marginal rate of federal income tax imposed on benefits of
this type as of the date of the Participant’s death.

 

  c. If the Participant incurs a Disability, then:

 

  i. If the Participant dies while still Disabled and before attaining age 65,
the Participant’s Beneficiary shall receive a lump sum death benefit equal to
(i) two times the Participant’s Salary at the date he or she became Disabled,
(ii) divided by one minus the highest marginal rate of federal income tax
imposed on benefits of this type as of the date of the Participant’s death.

 

  ii. If the Participant continues to be Disabled until the time he or she
attains age 65, then upon the Participant’s death after such time the
Participant’s Beneficiary shall receive a lump sum death benefit equal to
(i) one times the Participant’s Salary at the date he or she became Disabled,
(ii) divided by one minus the highest marginal rate of federal income tax
imposed on benefits of this type as of the date of the Participant’s death.

4.2. Benefits for ASB Participants. If a Participant dies after he or she
Retires from an Eligible Position with ASB, the Participant’s Beneficiary shall
receive a lump sum death benefit equal to (i) one times the Participant’s Salary
at the date of his or her Retirement, (ii) divided by one minus the highest
marginal rate of federal income tax imposed on benefits of this type as of the
date of the Participant’s death. A Participant who is employed in an Eligible
Position with ASB shall not be entitled to any benefits hereunder if he or she
dies, becomes Disabled, or otherwise terminates employment before he or she
Retires.

4.3. Transfers Between ASB and Other Participating Employers. If a Participant
transfers from an Eligible Position with ASB to an Eligible Position with
another Participating Employer, or vice versa, the Participant’s entitlement to
benefits shall be determined based on the Eligible Position in which he or she
is last employed.

 

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4.4. Payment. All benefits payable under this Plan shall be paid by the
Participating Employer by which the Participant was last employed.

4.5. Vesting. A Participant shall have a vested right to benefits under this
Plan upon Retirement. Prior to Retirement, any benefit hereunder shall be
subject to forfeiture in accordance with Section 3.2 or Section 3.3; provided,
however, that no Participant’s right to benefits may be reduced or eliminated
except in accordance with Section 3.2 or Section 3.3 or with the written consent
of such Participant.

4.6. Claims Procedure. If any Participant or Beneficiary believes he or she is
entitled to a benefit from the Plan which is different from the benefit
initially determined, such Participant or Beneficiary may file a written claim
for benefits with the Manager-Compensation and Benefits of HECO (or the holder
of any successor position, however designated) (the “Manager”). The Manager
shall consider such written claim and render a decision within ninety (90) days
following receipt thereof. If the Manager denies any part of the claim, he or
she shall provide the claimant with written notice of the denial and of the
claimant’s right to a further review. The notice shall set forth, in a manner
calculated to be understood by the claimant, the reason for the denial and shall
refer to specific Plan provisions on which the denial is based and provide a
description and explanation of additional information which the claimant might
provide to perfect the claim.

Within ninety (90) days after receiving notice that a claim has been denied, the
claimant may file a written appeal with the full Administrative Committee. The
claimant may submit written comments, documents, records, and other information
relating to the claim. Upon request, the claimant may obtain, free of charge,
reasonable access to, and copies of, documents, records, and other information
relevant to the claim. The Administrative Committee may require the claimant to
provide such additional information or testimony as the Administrative
Committee, in its sole discretion, deems useful or appropriate to its
consideration of the claim. In reviewing the claim, the Administrative Committee
shall take into account all comments, documents, records, and other information
submitted by the claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.
The Administrative Committee shall render its final decision within sixty
(60) days of receipt of the request for reconsideration unless special
circumstances require an extension of time. If such an extension is required,
the Administrative Committee shall provide the claimant with written notice of
the extension within the initial sixty (60) day period, and the Administrative
Committee shall render its decision as soon as possible but in no event later
than one hundred twenty (120) days following receipt of the appeal. If the
Administrative Committee’s final decision is a denial of the claim, the
Administrative Committee shall provide written notice of the denial, which
notice shall set forth, in a manner calculated to be understood by the claimant,
the reason for the denial and shall refer to specific Plan provisions on which
the denial is based.

Claim determinations by the Manager and the Administrative Committee shall be
made in their discretion, as provided in Section 5.1. The final decision of the
Administrative Committee shall be binding and conclusive on all persons.

If the Manager or Administrative Committee fails to respond to a claimant within
the time limits set forth in this Section, the claimant may consider the claim
denied and may pursue whatever

 

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additional remedies are available to it. A claimant must comply with these
procedures and exhaust all possibilities contained herein before seeking relief
in any other forum.

 

V. ADMINISTRATION

5.1. Administrative Committee’s Powers and Discretion. The Administrative
Committee shall have the power to interpret and construe the provisions of the
Plan, to resolve any ambiguities and reconcile any inconsistencies in its
provisions, and to decide all questions of fact that arise in the operation of
the Plan. All such powers shall be exercised in the Administrative Committee’s
discretion. Specifically, but without limiting the generality of the foregoing,
the Administrative Committee shall determine, in its discretion, all questions
with respect to any individual’s rights under the Plan, including, but not
limited to, eligibility for participation, eligibility for and the amount of
benefits payable from the Plan, the validity and effect of any Beneficiary
designation hereunder, and the proper Beneficiary to whom any benefits hereunder
will be paid. The Administrative Committee, acting unanimously, shall also have
the power to waive the application of Section 3.3 to a Participant if
extenuating circumstances exist. The decision of the Administrative Committee
with regard to the interpretation or construction of the Plan, or on any other
matter within its authority, shall be binding and conclusive upon the
Participating Employers and upon each Participant, Beneficiary, and any other
interested party.

5.2. Delegation. The Administrative Committee may delegate authority to one or
more of its members, or to any other employee of a Participating Employer, in
its discretion. In particular, the Administrative Committee may delegate
authority for the day-to-day administration of the Plan to the
Manager-Compensation and Benefits of HECO or such persons in the HECO Benefits
Department as such Manager may designate.

 

VI. MISCELLANEOUS

6.1. Effect on Prior Deferred Compensation Agreements. This Plan supersedes
certain Deferred Compensation Agreements between Participants herein and HEI
regarding the payment of death benefits similar to those provided hereunder.
Such Deferred Compensation Agreements shall be of no further force or effect. As
a condition of participation in this Plan, each Participant who was previously a
party to such an agreement shall execute a written revocation of such agreement
in a form provided by the Administrative Committee. This Plan does not affect
Deferred Compensation Agreements that are currently in force between HEI and
individuals who do not become Participants in this Plan, including retirees,
disabled persons, and certain active employees of the Participating Employers
who are not currently employed in Eligible Positions but who were previously
employed in such positions and have been permitted to retain the benefit of
Deferred Compensation Agreements.

6.2. Amendment and Termination. The Administrative Committee may amend or
terminate the Plan at any time in its discretion; provided, however, that no
amendment or termination of the Plan shall reduce the rights and benefits of any
person who is a Participant at the time of the amendment or termination without
such Participant’s written consent. No amendment or termination of the Plan
shall affect benefits that have vested in accordance with Section 4.5.

 

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6.3. No Funding. Benefits shall be paid as needed solely from the general assets
of the Participating Employers, insurance contracts whose premiums are paid
directly by the Participating Employers from their general assets, or a
combination thereof. This Plan shall constitute solely an unsecured promise by
the Participating Employers to pay the benefits described herein. Participants
and Beneficiaries shall rely solely upon such unsecured promise, and shall have
no right, title, interest, or claim to any specific asset, fund, reserve,
account, insurance policy, or other property of any nature.

6.4. Life Insurance Policies. The Administrative Committee, in its absolute
discretion, may purchase or maintain life insurance contracts to assist in
meeting the Participating Employers’ benefit obligations hereunder. Any such
policies shall be the property of HEI or the Participating Employer purchasing
and maintaining such policies. The Administrative Committee shall have the
exclusive and unrestricted right to make any elections, exercise any rights, and
receive and use any benefits payable thereunder. No Participant or Beneficiary
shall have any interest in any such policy or any rights thereunder.

6.5. Nonalienation. No benefit payable under this Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to do so shall be void; nor shall any
such benefit be in any manner liable for or subject to the debts, contracts,
liabilities, engagements, or torts of, or claims against, any Participant or
Beneficiary.

6.6. No Right to Employment. Nothing in this Plan shall give any Participant any
right to continued employment with any Participating Employer or limit in any
way the Participating Employers’ right to discharge any Participant.

6.7. Indemnification. The Participating Employers shall indemnify and hold
harmless their respective directors, officers, employees, and agents, including,
without limitation, the members of the Administrative Committee, against any and
all claims, losses, damages, expenses, and liabilities arising, directly or
indirectly, from their responsibilities in connection with the Plan, and from
the defense costs thereof (including reasonable attorneys’ fees), to the extent
permitted by law and except where any such liability is judicially determined to
be the result of gross negligence or willful misconduct. The right of indemnity
shall be conditioned upon (1) timely notice to HEI of any claim asserted against
a person within the scope of this Section, and (2) the indemnified person’s
reasonable cooperation and assistance in the defense of such claim.

6.8. Costs of Enforcement. If the Administrative Committee denies a claim for
benefits under this Plan, and the claimant is later determined to be entitled to
such benefits, then in addition to such benefits the claimant shall be entitled
to recover all costs of enforcing his or her claim, including, without
limitation, attorneys’ fees and other legal costs.

6.9. Governing Law. This Plan shall be governed by, and construed and enforced
in accordance with, the laws of the State of Hawaii, to the extent such laws are
not preempted by ERISA.

 

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TO RECORD the adoption of this Plan, the undersigned have executed this document
this 24th day of August, 2001.

 

HAWAIIAN ELECTRIC INDUSTRIES, INC. By  

\s\ Robert F. Clarke

  Its Chairman, President & Chief Executive Officer By  

\s\ Peter C. Lewis

  Its Vice President – Administration & Corporate Secretary

 

ADOPTED AND APPROVED BY THE PARTICIPATING
EMPLOYERS:         HAWAIIAN ELECTRIC COMPANY, INC.     AMERICAN SAVINGS BANK,
F.S.B. By  

\s\ T. Michael May

    By  

\s\ Constance H. Lau

  Its President & Chief Executive Officer       Its President & Chief Executive
Officer MAUI ELECTRIC COMPANY, LIMITED     HAWAII ELECTRIC LIGHT COMPANY, INC.
By  

\s\ Edward L. Reinhardt

    By  

\s\ Warren H.W. Lee

  Its President       Its President

 

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