Hawaiian Electric Execs Pocketed Huge Raises Despite $1.4B In Losses

Steering the utility from the brink of bankruptcy justified a $1.7 million raise for its CEO, the company said.

Hawaiian Electric Industries Inc. and its subsidiaries faced torrents of bad news in 2024.

Federal investigators found the company’s equipment had started the Lahaina wildfire that killed 102 people and destroyed most of the historic town. The company agreed to pay $1.9 billion to settle hundreds of lawsuits blaming it for the fire. Legislative measures to help bail out the company stalled.

[Caption] Hawaiian Electric Industries, whose equipment sparked the 2023 Lahaina fire, has given big raises to top executives.(Nathan Eagle/Civil Beat/2023)

But none of that prevented Hawaiian Electric Industries executives from getting raises, some in the seven figures. The compensation data, and the company’s reasoning for fattening executives’ paychecks after a historically bad year, are laid out in detail in a report to shareholders HEI filed with securities regulators on Friday.

Hawaiian Electric Industries’ president and chief executive, Scott Seu, got a one-year bump of $1.7 million, boosting his take-home pay to $3.2 million in 2024. Shelee Kimura, president and chief executive of HEI’s utility subsidiary, Hawaiian Electric Co. Inc., had a pay jump from $859,000 in 2023 to $1.5 million last year. And Ann Teranishi, president and chief executive of American Savings Bank, another HEI subsidiary, took home $2.6 million, up from $1.2 million the previous year.

Those amounts don’t include additional, more speculative compensation that potentially vests with the executives later if the companies perform well. Counting total compensation, including stock awards, Seu earned $6.5 million in 2024 compared with $5.4 million in 2023, and Kimura earned $2.6 million versus $2.1 million. Those incentives do not apply to Teranishi because HEI sold its controlling interest in the bank in December.

Julie Smolinski, HEI’s vice president for strategy and corporate sustainability, said the raises were justified because the executives brought the companies back from the brink of bankruptcy in 2024 without imposing additional costs on customers.

“If you start the year facing the possibility of bankruptcy, then ending the year in a much stronger position — where you’ve put that behind you — that is a major accomplishment,” she said.

Table listing HEI executive Scott Seu, Shelee Kimura and Ann Teranishi salaries from 2022 - 2024 and showing consistent pay increases for every year.

Name Scott W. H. Seu HEI President & CEO ASB Chair Year 2024 Compensation* $3.2M ---------------------------- Name Year 2023 Compensation* $1.5Name Year 2022 Compensation* $2.3M ---------------------------- Name Shelee M. T. Kimura Hawaiian Electric President & CEO Year 2024 Compensation* $1.5M ---------------------------- Name Year 2023 Compensation* $859.2K ---------------------------- Name Year 2022 Compensation* $925.3K ---------------------------- Name Ann C. Teranishi ASB President & CEO Year 2024 Compensation* $2.6M ---------------------------- Name Year 2023 Compensation* $1.2M ---------------------------- Name Year 2022 Compensation* $1.6M

*Compensation is take-home pay defined as “Realized Compensation” on HEI’s proxy statement. It does not include additional, more speculative compensation that vests with the executives in later years if the companies perform well. Counting the additional compensation including stock awards, Seu earned $6.5 million in 2024 compared with $5.4 million in 2023, and Kimura earned $2.6 million versus $2.1 million. Those incentives do not apply to Teranishi because HEI sold its controlling interest in the bank in December.

Major accomplishments included raising $558 million from the sale of new stock, and selling a 90% stake in American Savings Bank to a local investor group, which raised another $384 million in cash, Smolinski said.

That allowed HEI to fund its share of a $4.04 billion Maui wildfire settlement without costing customers, said Jim Kelly, Hawaiian Electric Co. Inc.’s vice president for government and community relations and corporate communications. And lawmakers seem willing to further shore up HECO’s finances by advancing two bills this legislative session, he said.

“I feel like we’re sitting here on March 19 with some momentum behind them,” Kelly said.

Nonetheless, the scope of the executive pay may sit poorly with HECO customers, who pay the highest power rates in the country. Seu’s total compensation last year -- $6,536,011 -- is 58 times more than the average total compensation of the median HEI employee, which was $112,593, the company reported to shareholders.

Seu’s compensation is paid by HEI shareholders, not utility ratepayers, Kelly stressed.

Jack Roose, principal of the consulting firm Organizational Alignment, which has advised Hawaiʻi nonprofits and trusts on executives compensation, said pay incentives generally reward leaders for meeting strategic goals.

The challenge is when there’s an incident like the Lahaina fire, which can undermine executives’ ability to meet performance goals unless metrics are adjusted for such black swan events.

“The incentive plans are geared for normal life,” Roose said. “Things like the Maui situation are once-in-100-years events.”

In HEI’s case, a board of directors Compensation and Human Capital Management Committee establishes metrics with the help of an independent compensation consultant, Frederic W. Cook & Co. Inc.

Some elements of compensation such as base salaries are established by looking at salaries of similar-sized utilities, the company’s proxy statement indicates. That’s meant to attract and retain quality executives, Smolinski said.

HEI’s stock performance in 2023 and 2024 -- a key metric for incentive pay -- met none of the goals laid out in the company’s long-term incentive metrics. As a result, executives qualified for none of those compensation incentives.

But for 2024, the metrics were adjusted by the compensation committee, Smolinski said, so executives wouldn’t be penalized for helping craft a settlement that freed the company from litigation risks at great cost to its bottom line. Shareholders will be able to vote for or against the raises during HEI’s annual meeting in May.

I switched my legal state of residence to WA state( no taxes).
I still spend most of my time at my home with my wife in Hawaii.
Aside from Guam, Hawaii has to be the most “crooked”
states in the USA.
I know Guam is not a state, but they may as well be.
My point is once you have a state run by one single party,
you have rampant corruption.
The only thing that glues the USA together is the Electoral college.
States generally don’t have that safety cushion.
So they become “city states”.
Look at history, city states died because
they were depending on on people that got tired of their
city BS.

Guam isn’t run by single party. It’s just that the politicians in both parties are genuinely idiot,

“What else is new?”

Surf’s up.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.