Exhibit 10.1


 


BANK OF HAWAII CORPORATION

EXECUTIVE BASE SALARY DEFERRAL PLAN


 


(Effective January 1,
2006)


 





















 


BANK OF HAWAII CORPORATION

EXECUTIVE BASE SALARY DEFERRAL PLAN


 


Article 1.                                                Purpose.  This Bank of Hawaii Corporation Executive Base
Salary Deferral Plan (the “Plan”) is intended to advance the interests of Bank
of Hawaii Corporation (the “Company”) by providing deferred compensation
benefits to selected executive officers of the Company and its subsidiaries and
thereby strengthening the ability of the Company and its subsidiaries to
attract and retain executive officers upon whose judgment, initiative, and
efforts the successful conduct and development of the Company depend.


 


Article 2.                                                Effective
Date and Plan Year.  This Plan is
effective January 1, 2006, (the “Effective Date”).  The “Plan Year” shall be the calendar
year.  However, any deferral elections in
effect for a Plan Year shall apply commencing with the first payroll period
commencing in the calendar year through the last payroll period commencing in
the calendar year.  Example: Bank of Hawaii uses bi-weekly payroll periods.  The first payroll period in 2006 commences January 6,
2006.  The last payroll period will
commence December 22, 2006, and end January 4, 2007.  Deferral elections with respect to the 2006
Plan Year apply to the payroll periods commencing January 6, 2006, and
ending January 4, 2007.


 


Article 3.                                                Eligibility.  The Human Resources and Compensation
Committee of the Board of Directors of the Company (the “Committee”) shall determine
the executive officers of the Company and its subsidiaries who shall be
eligible to participate in the Plan (the “Participants”), and such Participants
shall be eligible to participate in the Plan as of the date designated by the Committee.  Participation shall be limited to a select
group of management or highly compensated employees of the Company and its
subsidiaries as determined by the Committee pursuant to the requirements of the
Employee Retirement Income Security Act of 1974, as amended, (“ERISA”).  To participate and receive benefits under the
Plan, each Participant shall agree to observe all rules and regulations
established by the Committee and shall abide by all decisions of the Committee
in the construction and administration of the Plan.


 


Article 4.                                                Administration.  The Committee shall administer the Plan in
accordance with the Committee’s charter and the governance rules and
procedures applicable to the Committee. 
The Committee may delegate its administrative authority and
responsibilities under the Plan to any officer or staff member of the Company
or Bank of Hawaii (the “Bank”) or to a third-party administrator.


 


The Committee shall have
plenary authority, in its discretion, to: (a) construe and interpret the
Plan and its terms and resolve any ambiguities herein; (b) determine the
amount and recipient of any payment hereunder; (c) prescribe, amend, and
rescind rules and regulations; and (d) make all other determinations
and do all other things necessary or appropriate for the administration of the
Plan.  All decisions, determinations, and
interpretations made by the Committee shall be binding and conclusive on Participants,
beneficiaries, and all other interested parties.


 


Article 5.                                                Base
Salary Deferral Election.  By making
a “Deferral Election,” a Participant may elect to defer the receipt of up to
80% of his or her base salary (less FICA taxes and other applicable payroll
deductions) earned for the Plan Year.  A
Participant’s Deferral Election shall be on a form (paper or electronic) approved
by the Director of Human Resources of the Bank.


 





















 


(a)                                  General
Deferral Election Timing Rule.  To be
effective for a Plan Year, the Participant’s Deferral Election must be executed
and delivered to the Director of Human Resources of the Bank or a third-party
administrator no later than December 31 of the year immediately preceding
the Plan Year.  The Deferral Election in
effect as of December 31 of the immediately preceding year shall be
irrevocable as to base salary earned for the Plan Year.


 


(b)                                 First
Year of Eligibility.  In the case of the
first Plan Year in which a Participant becomes eligible to participate, the
Participant may make a Deferral Election within 30 days after becoming eligible
to participate, but such Deferral Election shall be effective only with respect
to base salary for services performed after the date the Deferral Election form
is executed and delivered to the Bank or third-party administrator.  For purposes of determining whether a
Participant is newly eligible to participate, the plan aggregation rules under
Section 409A of the Code apply. 
This means that, if a Participant is already eligible to participate in
another account balance deferred compensation plan, such as the Bank of Hawaii
Retirement Savings Excess Benefit Plan, the Participant will not be treated as
newly eligible with respect to this Plan. 
Accordingly, the special election rule for first year of
eligibility would not apply to such Participant.  Example: On December 31,
2005, Employee A is a participant in the Bank of Hawaii Retirement Savings
Excess Benefit Plan.  On March 31,
2006, Employee A receives a promotion, and, in connection with the promotion,
the Committee designates Employee A as being eligible to participate in this
Plan.  Employee A may not make a deferral
election with respect to any base salary earned in 2006, but may make an
election before the end of 2006 to defer base salary in 2007.


 


(c)                                  Subsequent
Plan Years.  There will be no
evergreen elections.  A Participant must
make an affirmative deferral election with respect to a Plan Year under Article 5(a).  If a Participant has not made an affirmative
election by December 31 of the immediately preceding year, the Participant
will be deemed to have irrevocably elected not to make a deferral for the Plan
Year.


 


(d)                                 Cancellation
of Deferral Election in the Event of Unforeseeable Emergency or Hardship
Distribution from a 401(k) Plan.  In
the event of an “unforeseeable emergency,” as defined in Article 8(d),
prior to the Participant having a separation from service and before a
distribution is made from this Plan on account of such “unforeseeable
emergency,” the Participant’s Deferral Election, if any, with respect to the
Plan Year shall be cancelled.  Likewise,
if the Participant receives a hardship distribution pursuant to Section 1.401(k)-1(d)(3) of
the Treasury Regulations, the Participant’s Deferral Election with respect to
the Plan Year shall be cancelled.  Any
future Deferral Elections shall be subject to the timing rule in Article 5(a).


 


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Article 6.                                                Deferred
Compensation Account.  One or more
separate accounts shall be established and maintained on behalf of each
Participant under the Plan (collectively, the “Account”), which shall reflect
the balance of the deferred amounts credited to the Participant and the deemed
investment earnings on such amounts.  The
deferred amounts for each Participant shall be credited to the Participant’s
Account as soon as practicable following the date such compensation would
otherwise have been paid to the Participant. 
The Bank or a third-party administrator shall maintain books and records
that appropriately reflect the balance of the Participant’s Account.  If a Participant elects different times or forms
of distribution for the amounts deferred in different Plan Years, the Bank or third-party
administrator shall separately account for the different Plan Year’s deferrals.


 


For purposes of
determining the value of the Participant’s Account, the amount allocated to the
Participant’s Account shall be treated as if it were invested and reinvested in
one or more investment funds or vehicles as may be designated by the Committee
and thereafter directed by the Participant. 
Each Account shall be appropriately increased or decreased to reflect
the appreciation or depreciation in the value of the deemed investment, the net
income or loss attributable to the deemed investment, and the distributions and
expenses that may be charged to the Account. 
The Participant agrees on behalf of the Participant and any designated
beneficiary to assume all risks and responsibilities for the direction of
investments in the Participant’s Account, and neither the Company, the
Committee, nor any third-party service provider shall be liable for any deemed
investment losses that may be incurred under the Account because of the
Participant’s investment elections.  The
Participant shall have no direct ownership interest in any assets representing
such deemed investments.  Pursuant to
Articles 12 and 13, the Participant’s Account represents a general unfunded
promise to pay deferred compensation.  The
Participant’s Account balance is the measure of the amount of the Participant’s
deferred compensation.


 


Article 7.                                                Vesting.  A Participant shall have a 100% vested and
nonforfeitable interest in the balance of the Participant’s Account at all
times.


 


Article 8.                                                Time
of Distribution.  Except as provided
in a Participant’s election under Section 8(e) or Article 9, any
deferred amount shall be distributed by December 31 of the year in which
the first of the following events occurs or, if later, by the 15th day of the
third month following the first to occur of the following events:


 


(a)                                  Six
Months following Separation from Service. 
The date that is six months following the Participant’s “separation from
service”.  For this purpose, “separation
from service” is defined by reference to Proposed Treasury Regulations Section 1.409A-1(h) and
future guidance from the Internal Revenue Service (the “IRS”) and generally
means termination of employment from the Company and its subsidiaries.


 


(b)                                 Disability.  The Participant’s “Disability”.  A Participant shall be considered “disabled”
if the Participant (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or (ii) is, by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for


 


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a period of not
less than 3 months under an accident and health plan covering employees of the Company.  In addition to the foregoing, a Participant
shall be deemed “disabled” as of the date the Social Security Administration
determines the Participant to be totally disabled.


 


(c)                                  Death.
 The Participant’s death.  In the event of the death of a Participant
before his of her Account has been distributed in full, the balance of the
Participant’s Account shall be paid to the Participant’s designated
beneficiary.  The Participant’s
beneficiary may be designated or changed by the Participant (without the
consent of any prior beneficiary) through written notice acceptable to the Bank’s
Director of Human Resources.  Whenever a
new beneficiary form is filed with the Bank, all former beneficiary designations
by such Participant shall be revoked automatically.  If, upon the death of a Participant, there is
no valid beneficiary designation on file with the Bank, the beneficiary of the
Participant’s Account shall be the Participant’s surviving spouse or, if none, the
Participant’s estate.


 


(d)                                 An
Unforeseeable Emergency.  The
occurrence of an “unforeseeable emergency,” which may occur prior to a
separation from service or after a separation from service.  A Participant will be deemed to have had an “unforeseeable
emergency” if the Participant suffers a severe financial hardship resulting
from (1) an illness or accident of the Participant, the Participant’s
spouse, or a “dependent” of the Participant, as defined in Section 152(a) of
the Code; (2) loss of the Participant’s property due to casualty, or (3) other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, as more particularly described in
Proposed Treasury Regulations Section 1.409A-3(g)(3) or future Internal
Revenue Service guidance under Section 409A of the Code.  Generally, the purchase of a home or the
payment of college tuition are not “unforeseeable emergencies”.  A distribution on account of “unforeseeable
emergency” may not be made to the extent that such emergency is or may be relieved
through reimbursement or compensation from insurance or otherwise, by
liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not cause severe financial hardship), or by cessation of deferrals
under this Plan.  In accordance with Article 5(d),
before a distribution is made based on unforeseeable emergency, the Participant’s
current year deferrals in this Plan, if any, shall be cancelled.  Any distribution because of an unforeseeable
emergency must be limited to the amount reasonably necessary to satisfy the
emergency need (which may include amounts necessary to pay any federal, state,
or local  income taxes or penalties reasonably
anticipated to result from the distribution). 
The determination of the amount reasonably necessary to satisfy the
emergency need must take into account any additional compensation that is
available to the Participant because of the cancellation of the Participant’s
deferral election under Article 5(d).


 


(e)                                  Specified
Time.  At the time of making a
Deferral Election for a Plan Year, a Participant may specify a time at which
the amount deferred for the Plan Year will be distributed or commence to be
distributed.  The specified time must be
a date (e.g., “January 1, 2010”). 
The specified time may not be an event, (e.g.,
“when my child begins college”).  If a
Participant chooses a specified time, the deferred amount will be distributed
at the earliest to occur of the Participant’s Disability, death, unforeseeable


 


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emergency, or
specified time.  Separation from service
shall have no applicability if the Participant designates a specified time.


 


Article 9.                                                Form of
Distribution.


 


(a)                                  All
Events other than Separation from Service or Specified Time.  For all distribution events listed in Article 8
other than separation from service or specified time, the Participant’s Account
shall be paid in cash in a single lump sum.


 


(b)                                 Separation
from Service and Specified Time.  At
the time a Participant makes a Deferral Election, the Participant must elect
the form of distribution for that portion of the Participant’s Account
attributable to that Plan Year’s deferred compensation in the event such amount
is paid on account of separation from service or because a specified time has
been reached.  The Participant may choose
from among the following forms of distribution:


 


•                                          a
single lump sum payment in cash, or


 


•                                          annual
installments over a period not to exceed 5 years (using the “declining balance
method,” under which each annual installment payment is determined by multiplying
the remaining Account balance by a fraction, where the numerator is one and the
denominator is the remaining years in the payment period).


 


As part of the election
with respect to separation from service, the Participant may choose to defer
the commencement of payments to an anniversary of the Participant’s separation
from service, so long as the benefits commence by the 5th anniversary of the
Participant’s separation from service.


 


If a Participant elects
different forms of distributions for the amounts deferred in different Plan
Years, the third-party administrator shall separately account for the different
Plan Year’s deferred amounts in accordance with Article 6.


 


Article 10.                                          Subsequent
Changes to Elections as to the Time and Form of Payment.  A Participant’s election with respect to the
time and form of payment following a separation from service or a specified
time may be not be changed except as permitted by the Committee and provided in
this Article 10.


 


(a)                                  Any
new election must be made at least 12 months prior to the date the payment is
scheduled to be paid;


 


(b)                                 Under
the new election, payment must be deferred for a period of not less than 5
years from the date such payment would otherwise have been paid; and


 


(c)                                  The
new election may not take effect until 12 months after the new election is
made.


 


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Installment payments are
treated as a single payment for purposes of this rule with respect to
subsequent changes to elections.


 


Example:  At the time of
making a deferral election, Participant A chooses to have the deferred amount
paid in five annual installments commencing August 1, 2015, (the year in
which Participant A expects his first child to begin college).  In 2013, Participant A is pleased to learn
that his first child has qualified for a college scholarship.  Before August 1, 2014, Participant A may
elect to defer the commencement of the installments to a date no earlier than August 1,
2020.  As part of the further deferral,
Participant A may change the form of distribution from installments to a lump
sum.


 


Article 11.                                          Incapacity.  If the Committee finds that any person to
whom an Account is payable under this Plan is legally, physically, or mentally
incapable of personally receiving and receipting for payment, the Committee may
direct that such Account be paid to any person, persons, or institutions who
have custody of such person, or are providing necessities of life (including,
without limitation, food, shelter, clothing, and medical, or custodial care) to
such person, to the extent deemed appropriate by the Committee.  Any such payment shall constitute a full
discharge of the liability of the Company to the extent thereof.


 


Article 12.                                          No
Funding.  The amounts payable under
this Plan shall be paid from the general assets of the Company, as the Company
may determine, and a Participant shall have no right, title, or interest in or
to investments, if any, which the Company may make to assist it in meeting its
obligations under this Plan, including any deemed investments under Article 6.  Beneficial ownership of any such investments
shall at all times remain in the Company.  Nothing contained in this Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a
fiduciary relationship between the Company and the Participant or any other
person.  To the extent that any person
acquires a right to receive a payment from the Company under this Plan, such
right shall be no greater than the right of an unsecured creditor.


 


The Company may establish
a “rabbi trust” in order to assist the Company in satisfying its obligations
under the Plan.  If a rabbi trust is
established, the arrangement shall be consistent with the preceding paragraph,
and the arrangement shall be subject to the following conditions: (a) the
establishment and maintenance of the trust shall not cause the Plan to be other
than an “unfunded” plan for purposes of the Code and Title I of ERISA; (b) the
Company shall be treated as the “grantor” of the trust for purposes of Section 677
of the Code; (c) the trust shall provide that its assets will be used to
satisfy claims of the Company’s general creditors in the event of the Company’s
insolvency; and (d) neither the rabbi trust nor the assets of the rabbi
trust shall be located or transferred outside of the United States.


 


Article 13.                                          Legal
Status.  This Plan is intended to
constitute a nonqualified deferred compensation plan that is not subject
to the qualification requirements of Section 401(a) of the Code.  The Plan is also intended to be a “top-hat
plan,” as described in Section 201(2) of ERISA.  Prior to the actual payment of the amounts
credited to an Account, there shall be no transfer of any assets to a
Participant or for the benefit of a Participant under this Plan, and the Plan
is intended to confer no current benefit that would be immediately taxable to
the Participant under constructive receipt or other tax principles.  The Plan has been designed to meet the
requirements of Section 409A of the Code and shall be interpreted consistent
with any guidance


 


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issued by U.S. Department of Treasury, including the
Internal Revenue Service, under Section 409A.


 


Article 14.                                          Continued
Employment.  Nothing contained in
this Plan shall be construed as conferring upon a Participant the right to
continue in the service of the Company as an employee or in any other capacity.


 


Article 15.                                          Nonassignment.  Except as provided in this Article 15, the
interests of a Participant hereunder may not be sold, transferred, assigned,
pledged, or hypothecated, and no Participant may borrow against his or her
Account.  Notwithstanding
the foregoing, if the Committee receives a “domestic relations order,” as
defined in Section 414(p)(1)B) of the Code, with respect to a Participant’s
Account, the Committee may direct payment of all or a portion of the Participant’s
Account to an individual other than the Participant in accordance with and at
the time specified by the domestic relations order.


 


Article 16.                                          Amendment
and Termination.  The Committee may
amend, modify, or terminate the Plan at any time, in its discretion.  However, no amendment, modification, or
termination of the Plan shall adversely affect a Participant’s rights with
respect to amounts then accrued in the Participant’s Account.


 


Article 17.                                          Tax
Withholding.  The payment of any
amount under this Plan shall be conditioned upon the satisfaction of tax
withholding or other withholding liabilities under state or federal law.  The Participant shall be liable for any and
all taxes applicable to payments under this Plan, and the Company shall not “gross-up”
such payments for taxes.


 


Article 18.                                          Indemnification.  In addition to such other rights of
indemnification as they may have as members of the Board of Directors of the
Company, the Company shall indemnify the members of the Committee against all
reasonable expenses, including attorneys’ fees, actually and reasonably
incurred in connection with the defense of any action, suit, or proceeding, or
in connection with any appeal therein, to which they or any of them may be a
party by reason of any action or failure to act under or in connection with the
Plan, and against all amounts reasonably paid by them in settlement thereof or
paid by them in satisfaction of a judgment in any such action, suit, or
proceeding, if such members acted in good faith and in a manner that they believed
to be in, and not opposed to, the best interests of the Company.


 


Article 19.                                          Claims
Procedure.  Any individual (“Claimant”)
who has not received benefits under the Plan that he or she believes should be
paid may make a claim for such benefits as follows:


 


(a)                                  Written
Claim.  The Claimant initiates a
claim by submitting to the Committee a written claim for the benefits.


 


(b)                                 Timing
of Committee Response.  The Committee
shall respond to the Claimant within 90 days after receiving the claim.  If the Committee determines that special
circumstances require additional time for processing the claim, the Committee may
extend the response period by an additional 90 days by notifying the Claimant
in writing, prior to the end of the initial 90-day period, that an additional
period is required.


 


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The notice of
extension must set forth the special circumstances and the date by which the Committee
expects to render its decision.


 


(c)                                  Notice
of Decision.  If the Committee denies
part or all of the claim, the Committee shall notify the Claimant in writing of
such denial.  The Committee shall write
the notification in a manner calculated to be understood by the Claimant.  The notification shall set forth: (i) the
specific reasons for the denial; (ii) a reference to the specific
provisions of the Plan on which the denial is based; (iii) a description
of any additional information or material necessary for the Claimant to perfect
the claim and an explanation of why it is needed; (iv) an explanation of
the Plan’s review procedures and the time limits applicable to such procedures;
and (v) a statement of the Claimant’s right to bring a civil action under Section 502(a) of
ERISA following an adverse benefit determination on review.


 


(d)                                 Review
Procedure.  If the Committee denies
part or all of the claim, the Claimant shall have the opportunity for a full
and fair review by the Committee of the denial. To initiate the review, the
Claimant, within 60 days after receiving the Committee’s notice of denial, must
file with the Committee a written request for review.  The Claimant shall then have the opportunity
to submit written comments, documents, records and other information relating
to the claim.  The Committee shall also
provide the Claimant, upon request and free of charge, reasonable access to,
and copies of, all documents, records and other information relevant (as
defined in applicable ERISA regulations) to the Claimant’s claim for benefits.
In considering the review, the Committee shall take into account all materials
and information the Claimant submits relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit
determination.


 


(e)                                  Committee
Response.  The Committee shall
respond in writing to the Claimant within 60 days after receiving the request
for review.  If the Committee determines
that special circumstances require additional time for processing the claim,
the Committee may extend the response period by an additional 60 days by
notifying the Claimant in writing, prior to the end of the initial 60-day
period, that an additional period is required. 
The notice of extension must set forth the special circumstances and the
date by which the Committee expects to render its decision.  The Committee shall notify the Claimant in
writing of its decision on review.  The Committee
shall write the notification in a manner calculated to be understood by the
Claimant.  The notification shall set
forth:  (i) the specific reasons for
the denial; (ii) a reference to the specific provisions of the Plan on
which the denial is based; (iii) a statement that the Claimant is entitled
to receive, upon request and free of charge, reasonable access to and copies of
all documents, records, and other information relevant (as defined in
applicable ERISA regulations) to the Claimant’s claim for benefits, and (iv) a
statement of the Claimant’s right to bring a civil action under Section 502(a) of
ERISA after exhausting all administrative claims and review procedures in this Article 19.


 


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Article 20.                                          Successors.  All obligations of the Company under the Plan
with respect to any Account hereunder shall be binding on any successor to the Company.  If the Company enters into a contract to sell
all or substantially all the assets of the Company, the Company shall require
the buyer to assume the obligations under this Plan.


 


Article 21.                                          Enforceability
and Controlling Law.  If any
provision of this Plan is held by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions shall continue in full force
and effect.  Except to the extent
preempted by ERISA, the provisions of this Plan shall be construed,
administered, and enforced according to the laws of the State of Hawaii without
giving effect to the conflict of laws principles.


 


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