Maui Land & Pineapple Co. CEO David Cole's compensation package for 2007 included more than $1.5 million in cash and $1.4 million in stocks.
Including stock options, Cole's total package was worth about $4.1 million, according to a proxy statement filed with the U.S. Securities and Exchange Commission. That made him the second-highest-paid executive among the eight largest companies in Hawaii after Allen Doane of Alexander & Baldwin Inc., with $8.6 million.
It was also the largest compensation package Cole has received during his five years at ML&P, compared to a package worth $1.6 million in 2006.
Cole's pay in 2007 was boosted by a one-time $1 million payment to compensate him for a loss of value in stock options when the exercise price was raised to comply with a new IRS rule.
Cole's pay was based on performance measures, including meeting a "net income threshold" and achieving specific "value accelerator transactions."
The company made an $8 million profit in 2007, which did not meet the "net income threshold." But Cole did achieve two out of seven "value accelerator transactions," according to the proxy statement.
Walter Dods, chairman of the board of directors' compensation committee, cited two actions.
One was the company's success in raising $15 million through a private placement of stock with companies owned by eBay founder Pierre Omidyar and former AOL executive Miles Gilburne. Since the investment was made without intermediaries, the company saved on investment banking fees, Dods noted.
Cole's second achievement was a "joint venture with a global luxury brand." The deal, which the company has not announced, "has the potential to vastly increase shareholder value," Dods said.
Cole received a bonus of 16,000 shares worth $500,000 for accomplishing the two deals, Dods said.
He noted that other factors affected Cole's compensation, including receiving a bonus early in 2007 for the company's financial performance in 2006.
Cole called his compensation "relatively small," and noted that much of it is in stock options that he has not exercised. The company's current stock price is well below the exercise price on his options.
Cole also noted that he had to forfeit 30 percent of his stock awards because he had not met certain performance goals.
"At the end of the day, the cash involved is not that large," he said.
Other ML&P executive pay packages for 2007 included:
* CFO Robert Webber: $381,538 cash, $278,642 in stocks and $133,546 in stock options.
* Vice President/Treasurer Fred Rickert: $195,000 cash, $294,687 in stocks and $60,953 in stock options.
* Senior Vice President Ryan Churchill: $240,000 cash, $158,650 in stocks and $45,115 in stock options.
* Maui Pine General Manager Gerard Watts: $209,423 cash, $95,660 in stocks and $56,154 in stock options. Watts left the company earlier this year.
* Executive Vice President for Community Development Bob McNatt: $319,208 cash, $261,029 in stock options. McNatt left the company at the end of 2007.
Kahului stock analyst Irwin Yamamoto said Cole's stock-heavy compensation plan was "very typical" for a CEO of a public company.
The plan is meant as an incentive for the CEO to increase the value of the company, because he would benefit as the stock price goes up. But it can also have negative consequences, he said.
"It shouldn't be, but it's based on short-term moves," he said. "Get the earnings up fast, no matter if it's good for long term."
Former ML&P Board Member Claire Sanford said the company had previously rewarded executives with stock, but nothing close to the amount Cole received.
She said when Cole arrived, the former AOL executive said he thought his base salary of $450,000 was "low," and asked for what she considered a "ridiculous" number of shares.
"I felt what was being asked was just obscene," Sanford said. "I felt it was not in the best interest of the company."
Sanford thought it was wrong that Cole would get such a large stake in the company so quickly, when people who'd been with ML&P for decades didn't have the same opportunity. She questioned why he needed such generous incentives.
"I had watched a group of people work really hard for Maui Pine who didn't have those same incentives, and I think they'd worked as hard as they could," she said.
* Ilima Loomis can be reached at iloomis@mauinews.com.
