The Kamehameha Schools
Retirement Plan
A Sighting from The Catbird Seat
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May 16, 2007
Deferred money to ex-trustees
'pretty big'
By Rick Daysog, Advertiser Staff Writer
Newly released filings with the Internal Revenue Service show former Kamehameha Schools trustee Henry Peters received $428,835 in deferred pay last year.
The filings, which cover the year ending June 30, 2006, also show that former trustees Matsuo Takabuki earned $270,135 in deferred compensation last year, while former state Supreme Court Chief Justice William Richardson received $47,696.
The filings for the first time give details about the compensation for former board members of the $7 billion charitable trust.
A deferred compensation plan is a tax-savings strategy that allows an executive to postpone the payment of part of his or her annual compensation until a later date, when the executive is in a lower tax bracket.
Kamehameha Schools offered a deferred compensation plan for key employees and trustees from the mid-1970s until the early 1990s.
Contacted at home yesterday, Peters said his deferred compensation is part of a retirement plan that he set up to provide for his family.
Peters said his past trustee pay was performance-based and was determined under a state law that at the time allowed trustees of charitable organizations to receive up to 2 percent of the organization's annual income.
He added that many of the estate's court-appointed masters have found the compensation was appropriate in their annual reviews of the estate's finances.
"We didn't have any retirement, a health plan or any other kind of those amenities. We just have those commissions and from those commissions, it was our responsibility to provide for our own future," Peters said. "Our compensation was performance-based. It was based on results."
Takabuki, who retired in 1993, and Richardson, who retired as trustee in 1992, could not be reached for immediate comment. When these three served as trustees, the charity was known as Bishop Estate.
APPROACHES CEO'S PAY
Peters' deferred compensation is about four times the amount paid to each of the current Kamehameha Schools trustees last year. It's also about three-quarters of the $574,230 that the charitable trust's Chief Executive Officer Dee Jay Mailer earned in 2006.
"That is a pretty big number," said Linda Lampkin, research director at ERI Economic Research Institute in Washington, D.C., and an executive pay expert specializing in the nonprofit sector.
Peters received the money from an individual deferred compensation plan he set up with trustee pay that he received in the 1980s and 1990s.
Before his resignation in 1999, Peters earned as much as $1 million a year as a trustee.
Peters, 66, is a former state House speaker. He served as a Kamehameha Schools trustee from 1984 until 1999 when he resigned along with fellow trustees Richard "Dickie" Wong, Lokelani Lindsey, Gerard Jervis and Oswald Stender.
The resignations came after the Internal Revenue Service threatened to revoke the charitable trust's tax-exempt status.
Kamehameha Schools spokeswoman Ann Botticelli had no comment on Peters' deferred pay.
COMPENSATION SLAMMED
When he resigned from the trust, Peters' deferred pay was criticized by the state attorney general's office. The AG's office — which had been seeking multi-million dollar fines against Peters and his fellow trustees — argued that Peters' deferred compensation was based on excessive pay that he received while he was trustee.
Deputy Attorney General Hugh Jones would not comment yesterday.
The estate's tax filings also show that Mailer's 2006 pay of $574,230 was up nearly $100,000, or about 21 percent, from her 2005 compensation of $474,240.
But even with the pay hike, Mailer was the estate's second-highest paid executive behind the trust's vice president of endowment, Kirk Belsby, who received $663,724 in total compensation last year.
Both Mailer and Belsby earned less than the $2.6 million average pay that the CEOs of Hawai'i's largest publicly traded companies received last year. But the salaries of the trust executives were in the general range of what top executives of the nation's largest nonprofits receive.
Lampkin, the Washington, D.C., executive pay expert, said the average annual compensation for top executives of charitable foundations with assets of $100 million or more was about $637,000 last year.
For large nonprofits including hospitals and universities with assets of $1 billion to $10 billion, the pay ranges between $513,000 a year and $1 million a year, Lampkin said.
HOW MUCH OTHERS MADE
Kamehameha Schools' tax filing for its 2006 fiscal year also listed the pay for several of its top executives, including:
Christopher Pating, vice president of strategic planning, who earned $461,415 last year;
Elizabeth Hokada, director of financial assets, who received $316,953;
Michael Loo, vice president of finance and administration, who was paid $299,630;
Vice President of Legal Services Colleen Wong, who earned $248,285;
Michael Chun, headmaster of Kamehameha Schools' Kapalama campus, who received $230,035;
Former state Budget Director Yukio Takemoto, who recently retired as the estate's director of facilities development, received $208,471 last year.
Founded by the 1884 will of Princess Bernice Pauahi Bishop, the Kamehameha Schools is a tax-exempt organization that educates children of Hawaiian ancestry. The estate is one of the nation's largest charities and is Hawai'i's largest private landowner with 365,000 acres.
EDUCATION SPENDING UP
The estate's 2006 tax filings also showed that the estate increased spending for its educational programs to 220 million, which included $197 million on campus and outreach programs.
Those expenditures included $11 million in financial aid for preschool to 12th-grade students, and another $12.7 million in post-high school financial aid.
The trust also spent $4.4 million in legal fees last year, with much of that going to defend its Hawaiians-first admission policy.
The trust announced Monday that it had settled a lawsuit that challenged its century-old Hawaiians-first admissions policy just as the U.S. Supreme Court was about to decide whether to take the case.
Reach Rick Daysog at rdaysog@honoluluadvertiser.com.
http://the.honoluluadvertiser.com/article/2007/May/16/ln/FP705160410.html/~ ~ ~
According to Kamehameha Schools’ Annual Return/Report of Employee Benefit Plan (Form 5500) for the year 2000:
– The Employer’s ID Number (EIN) is 99-0073480
– The Plan Number (PN) is 002
– The Plan was adopted effective January 1, 1972
– Approximate number of participants at end of year: 1,656
– Participants include employees of Kamehameha Schools, Pauahi Management Corporation and Kamehameha Investment Corporation (wholly owned subsidiaries of Bishop Holdings Corporation, which is a subsidiary of Kamehameha Activities Association, a controlled support organization of the Schools) and Kukui, Inc. (a wholly owned subsidiary of Pauahi Management Corporation) (together with the Schools, “Participating Employers”).
- The current value of the assets at the beginning of the year were $130,379,025; the total assets at the end of the year were $118,339,357.
– The net investment loss from common/collective trusts was $809,235.
– The net investment loss from pooled separate accounts was $7,358,998.
– The Plan is administered by the Retirement Plan Committee which is appointed by the Schools’ Board of Trustees (Board) and is responsible for management and administration of the Plan. In accordance with the Plan document, effective March 12, 1996, the plan administrator shall be the Schools and the chairperson of the Committee shall be appointed by the Board.
– The Custodians of the plan are the Prudential Insurance Company and First Hawaiian Bank (which is now owned by a French company).
– The Independent Auditor was KPMG LLP
The insurance broker for Kamehameha Schools’ Retirement Plan was Aon.
On November 20, 1996, Bobby Harmon, the Risk, Insurance & Safety Manager for Kamehameha Schools/Bishop Estate, and the non-salaried President of P&C Insurance Company, Inc., a subsidiary of Pauahi Holdings, Inc., was terminated from both positions. In the year 2000, Harmon began to question (in what attorneys for Kamehameha Schools have dubbed “his letter-writing campaign”) the propriety of the management of the investments in the Plan.
Copies of some of his letters and related materialsare posted here solely for the information of Kamehameha Plan Participants and curious catbirds:
www.kycbs.net/Claim-IRS-W2-Katz-7-25-8.htm
http://starbulletin.com/2000/02/11/news/story1.html
www.kycbs.net/AAA-KS_USDOL-8-5-0.htm
www.kycbs.net/AAA-KSBE-IRS-2-24-1.htm
www.kycbs.net/Guttman-4-18-1.htm
www.kycbs.net/GuttmanComplaint-7-30-1.htm
www.kycbs.net/AAA-Guttman-IRS-W2-3-28-2.htm
www.kycbs.net/Claim-Tamm-3-30-2.htm
www.kycbs.net/AAA-KSpens-4-9-2.htm
www.kycbs.net/KSpens4-10-2.htm
www.kycbs.net/KSpens6-20-2.htm
www.kycbs.net/KSpens7-11-2.htm
www.kycbs.net/KSpens11-25-2.htm
www.kycbs.net/Claim-Katz-1-8-3.htm
www.kycbs.net/Claim-Guttman-IRS-1-21-3.htm
www.kycbs.net/Harmon-Trustees.htm
www.kycbs.net/KSpens12-17-3.htm
www.kycbs.net/AAA-HarmonMotionDismiss.htm
www.kycbs.net/AAA-HarmonAnswer-6-14-4.htm
www.kycbs.net/Claim-MarrHipp-8-9-4.htm
www.kycbs.net/Claim-Guttman-8-10-4.htm
www.kycbs.net/Claim-Guttman-8-13-4.htm
www.kycbs.net/KSpens11-10-4.htm
www.kycbs.net/Claim-Guttman-1-27-5.htm
www.kycbs.net/Claim-Guttman-1-31-5.htm
www.kycbs.net/Claim-KS-2-7-5.htm
www.kycbs.net/Claim-Tius-2-11-5.htm
www.kycbs.net/Claim-KS-3-1-5.htm
www.kycbs.net/Claims-Branch-AAA.htm
www.kycbs.net/Claims-Branch-AttorneyGeneral.htm
www.kycbs.net/Claims-Branch-Ayabe-Chong.htm
www.kycbs.net/Claims-Branch-DOL.htm
www.kycbs.net/Claims-Branch-DOJ.htm
www.kycbs.net/Claims-Branch-Dunn-Tamm.htm
www.kycbs.net/Claims-Branch-IRS.htm
www.kycbs.net/Claims-Branch-Kessner-Duca.htm
www.kycbs.net/Claims-Branch-Marr-Hipp.htm
www.kycbs.net/Claims-Branch-Mary-Lou-Woo.htm
www.kycbs.net/Claims-Branch-P-C.htm
www.kycbs.net/Claims-Branch-Prudential.htm
www.kycbs.net/Claims-Branch-Torkildson-Katz.htm
www.kycbs.net/CV05-00030-Complaints.htm
www.kycbs.net/CV05-00030-Witness-Chang-Kevin.htm
www.kycbs.net/CV05-00030-Witness-Clarke-Edwina.htm
www.kycbs.net/CV05-00030-Witness-Graulty-Rey.htm
www.kycbs.net/CV05-00030-Witness-Hipp-Kenneth.htm
www.kycbs.net/CV05-00030-Witness-Inouye-Maryanne.htm
www.kycbs.net/CV05-00030-Witness-Kam-Louanne.htm
www.kycbs.net/CV05-00030-Witness-Kurren-Barry.htm
www.kycbs.net/CV05-00030-Witness-Kurren-Faye.htm
www.kycbs.net/CV05-00030-Witness-McCubbin.htm
www.kycbs.net/CV05-00030-Witness-Park-Rodney.htm
www.kycbs.net/CV05-00030-Witness-Savio-Peter.htm
www.kycbs.net/CV05-00030-Witness-Takemoto-Yukio.htm
www.kycbs.net/CV05-00030-Witness-Wong-Colleen.htm
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Please take time to visit the Kamehameha Schools website at...
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Last updated July 25, 2008, by The Catbird