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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.           )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material Pursuant to §240.14a-12

CENTRAL PACIFIC FINANCIAL CORP.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
         
Payment of Filing Fee (Check the appropriate box):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        

    (2)   Aggregate number of securities to which transaction applies:
        

    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        

    (4)   Proposed maximum aggregate value of transaction:
        

    (5)   Total fee paid:
        


o

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        

    (2)   Form, Schedule or Registration Statement No.:
        

    (3)   Filing Party:
        

    (4)   Date Filed:
        


LOGO

CENTRAL PACIFIC FINANCIAL CORP.
220 South King Street
Honolulu, Hawaii 96813
(808) 544-0500

APRIL 26, 2005 ANNUAL MEETING
YOUR VOTE IS IMPORTANT

March 23, 2005

Dear Fellow Shareholder:

        On behalf of your Board of Directors, we cordially invite you to attend the 2005 Annual Meeting of Shareholders of Central Pacific Financial Corp. The Annual Meeting will be held on April 26, 2005, at 6:00 p.m., Hawaii time, in the Plumeria Room of the Ala Moana Hotel, 410 Atkinson Drive, Honolulu, Hawaii.

        The accompanying Notice of Annual Meeting of Shareholders and Proxy Statement describe matters to be acted upon at the Annual Meeting. Please give these materials your prompt attention. Then, we ask that you sign, date and mail promptly the enclosed Proxy Card in the enclosed postage-paid envelope to ensure that your shares are voted accordingly. Shareholders who attend the meeting may withdraw their proxy and vote in person if they wish to do so.

        We appreciate your continued interest in Central Pacific Financial Corp. and are confident that, as in the past, you will continue to vote your shares.

Sincerely,  

 

 
Ronald K. Migita SIGNATURE
RONALD K. MIGITA
Chairman
CLINT ARNOLDUS
Vice Chairman and Chief Executive Officer

LOGO

CENTRAL PACIFIC FINANCIAL CORP.
220 South King Street
Honolulu, Hawaii 96813
(808) 544-0500


NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

        TO BE HELD APRIL 26, 2005


TO THE SHAREHOLDERS OF CENTRAL PACIFIC FINANCIAL CORP.:

        NOTICE IS HEREBY GIVEN that, pursuant to its Restated Bylaws and the call of its Board of Directors, the Annual Meeting of Shareholders (the "Meeting") of Central Pacific Financial Corp. (the "Company") will be held in the Plumeria Room of the Ala Moana Hotel, 410 Atkinson Drive, Honolulu, Hawaii, on April 26, 2005, at 6:00 p.m., Hawaii time, for the purpose of considering and voting upon the following matters:

        Only those shareholders of record at the close of business on February 28, 2005 shall be entitled to notice of and to vote at the Meeting.

        SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY IN THE POSTAGE PREPAID ENVELOPE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING IN PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY WITHDRAW THEIR PROXY AND VOTE IN PERSON IF THEY WISH TO DO SO.

    By order of the Board of Directors,

 

 

 

 

 

SIGNATURE

GLENN K. C. CHING
Senior Vice President and Corporate Secretary

Dated: March 23, 2005


CENTRAL PACIFIC FINANCIAL CORP.
220 South King Street
Honolulu, Hawaii 96813
(808) 544-0500


PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS

APRIL 26, 2005


INTRODUCTION

        This Proxy Statement is furnished in connection with the solicitation of proxies ("Proxies") by the Board of Directors (the "Board") of Central Pacific Financial Corp. (the "Company") for use at the Annual Meeting of Shareholders (the "Meeting") of the Company to be held in the Plumeria Room of the Ala Moana Hotel, 410 Atkinson Drive, Honolulu, Hawaii, on April 26, 2005, 6:00 p.m., Hawaii time, and at any and all adjournments thereof. The approximate date on which this Proxy Statement and accompanying Notice and form of proxy are first being mailed to shareholders is March 23, 2005.

Matters to be Considered

        The matters to be considered and voted upon at the Meeting will be:

Record Date, Outstanding Securities and Voting Rights

        The Board fixed the close of business on February 28, 2005 as the record date (the "Record Date") for the determination of the shareholders of the Company entitled to notice of and to vote at the Meeting. Only holders of record of shares of Common Stock at the close of business on the Record Date will be entitled to vote at the Meeting and at any adjournment or postponement of the Meeting. There were 28,270,840 shares of the Company's common stock, no par value ("Common Stock"), issued and outstanding on the Record Date, held by approximately 4,500 holders of record.

        Each holder of Common Stock will be entitled to one vote, in person or by proxy, for each share of Common Stock standing in the holder's name on the books of the Company as of the Record Date on any matter submitted to the vote of the shareholders.

1


Quorum

        The required quorum for the transaction of business at the Meeting is a majority of the total outstanding shares of Common Stock entitled to vote at the Meeting, either present in person or represented by proxy. Abstentions will be included in determining the number of shares present at the Meeting for the purpose of determining the presence of a quorum.

Broker Authority to Vote

        Under the rules of the National Association of Securities Dealers, Inc., member brokers generally may not vote shares held by them in street name for customers unless they are permitted to do so under the rules of any national securities exchange of which they are a member. Under the rules of the New York Stock Exchange, Inc. ("NYSE"), a member broker who holds shares in street name for customers has the authority to vote on certain terms if it has transmitted proxy soliciting materials to the beneficial owner but has not received instructions from that owner. NYSE rules permit member brokers that do not receive instructions from their customers to vote on all three of the proposals discussed above in their discretion.

Vote Required to Approve the Proposals

        Proposal 1: Election of Directors.    You may vote "FOR" or "WITHHOLD" with respect to any or all director nominees. The election of directors requires a plurality of the votes cast "FOR" the election of directors by the shares entitled to vote in the election at a meeting at which a quorum is present. Accordingly, the five directorships to be filled at the meeting will be filled by the five nominees receiving the highest number of "FOR" votes; votes that are "WITHHELD" will be excluded entirely from the vote and will have no effect on the outcome of the vote.

        Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm.    The proposal to ratify the appointment of KPMG LLP as the Company's independent registered public accounting firm requires the affirmative vote of shareholders holding not less than a majority of the shares of Common Stock represented in person or by proxy and entitled to vote at the Meeting. An abstention from voting on the proposal to ratify the appointment of KPMG LLP will have the effect of a vote "AGAINST" the proposal.

        Proposal 3: Approval of Amendment to Restated Articles of Incorporation of Central Pacific Financial Corp.    The proposal to approve an amendment to the Restated Articles of Incorporation of Central Pacific Financial Corp. to add a new Article IX regarding limitation of liability for directors as provided for under Hawaii law requires the affirmative vote of the holders of two-thirds of the shares entitled to vote thereon. An abstention from voting on the proposal to amend the Restated Articles of Incorporation will have the same effect as a vote "AGAINST" the proposal.

        The Board of Directors recommends a vote "FOR" the election of all nominees as directors, "FOR" ratification of the appointment of KPMG LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2005, and "FOR" the amendment to the Restated Articles of Central Pacific Financial Corp. It is not anticipated that any matters will be presented at the Meeting other than as set forth in the accompanying Notice of the Meeting. If any other matters are presented properly at the Meeting, however, the Proxy will be voted by the Proxy Holders in accordance with the recommendations of the Board of Directors.

Revocability of Proxies

        Any shareholder who executes and delivers such Proxy has the right to revoke it at any time before it is exercised by filing with the Corporate Secretary of the Company an instrument revoking it or a duly executed Proxy bearing a later date. A Proxy may also be revoked by attending the Meeting and voting in person at the Meeting. Subject to such revocation, all shares represented by a properly executed Proxy

2



received in time for the Meeting will be voted by the Proxy Holders in accordance with the instructions on the Proxy.

Solicitation of Proxies

        This solicitation of Proxies is made on behalf of the Board and the Company will bear the costs of the preparation of proxy materials and the solicitation of Proxies for the Meeting. It is contemplated that Proxies will be solicited principally through the mail, but directors, officers and regular employees of the Company or its subsidiary, Central Pacific Bank (the "Bank"), may solicit Proxies personally, by telephone, electronically or by other means of communication. Although there is no formal agreement to do so, the Company may reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding these proxy materials to beneficial owners. The Company has retained D.F. King & Co., Inc. to assist it in connection with the solicitation of Proxies for a fee of approximately $12,500, plus reimbursement of expenses.

Principal Shareholders

        Based on filings made under Section 13(d) and Section 13(g) of the Securities and Exchange Act of 1934, as amended, as of the Record Date, the following were the only persons known to management of the Company to beneficially own more than five percent of the Company's outstanding Common Stock:

Name and Address of Beneficial Owner

  Amount and Nature of
Beneficial Ownership

  Percent of Class
 
Private Capital Management, Inc.
8889 Pelican Bay Boulevard Suite 500
Naples, Florida 34108-7512
  2,708,123 (1) 9.62 %

Barclays Global Investors, N.A.
Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105-2228

 

2,117,361

(2)

7.52

%

Neuberger Berman, Inc.
630 Third Ave.
New York, NY, 10158-3698

 

1,012,100

(3)

6.28

%

(1)
According to a Schedule 13G filed on February 14, 2005, Private Capital Management, Inc. has shared dispositive and voting power over all such shares.

(2)
According to a Schedule 13G filed on February 14, 2005, Barclays Global Investors, N.A. has sole dispositive power over 1,785,701 shares, 1,603,014 of which it has sole voting power over, and Barclays Global Fund Advisors has sole dispositive power over 331,660 shares, 326,531 of which it has sole voting power over.

(3)
According to a Schedule 13G filed on February 16, 2005, Neuberger Berman, Inc. has shared dispositive power over all such shares, 664,000 of which it has shared voting power over.

Security Ownership of Directors, Nominees and Executive Officers

        The following table sets forth certain information regarding beneficial ownership of Common Stock by each of the current directors, one nominee who is not currently a director, Earl E. Fry, and the Named Executive Officers (as defined below under the heading "Compensation of Directors and Executive Officers—Executive Compensation"), as well as all directors and executive officers as a group, as of the close

3



of business on March 16, 2005. Unless otherwise noted, the address of each person is c/o Central Pacific Financial Corp., 220 South King Street, Honolulu, Hawaii 96813.

Name of Beneficial Owner

  Amount and Nature of Beneficial Ownership(1)
  Percent of Class(2)
Directors and Nominees        

Clint Arnoldus

 

66,267

(3)

*

Richard J. Blangiardi

 

935

(4)

*

Christine H. H. Camp Friedman

 

1,304

(5)

*

Earl E. Fry

 


 

 

B. Jeannie Hedberg

 

2,534

(6)

*

Dennis I. Hirota

 

32,966

(7)

*

Clayton K. Honbo

 

493,753

(8)

1.75%

Paul J. Kosasa

 

50,836

(9)

*

Duane K. Kurisu

 

20,105

(10)

*

Colbert M. Matsumoto

 

28,003

(11)

*

Gilbert J. Matsumoto

 

166,787

(12)

*

Ronald K. Migita

 

248,949

(13)

*

Crystal K. Rose

 

2,635

(14)

*

Mike K. Sayama

 

22,885

(15)

*

Maurice H. Yamasato

 

13,752

(16)

*

Dwight L. Yoshimura

 

20,861

(17)

*

Named Executive Officers(18)

 

 

 

 

Neal K. Kanda

 

58,818

(19)

*

Alwyn S. Chikamoto

 

47,235

(20)

*

Blenn A. Fujimoto

 

30,578

(21)

*

Dean K. Hirata

 

54,584

(22)

*

Denis K. Isono

 

5,481

(23)

*

Douglas R. Weld

 


 

 

All Directors and Executive Officers as a Group (21 persons)

 

1,369,288

(24)

4.84%

(*)
Less than one percent.

(1)
Except as otherwise noted below, each person has sole voting and investment powers with respect to the shares listed. The numbers shown include the shares actually owned as of March 16, 2005 and, in accordance with Rule 13d-3 under the Securities Exchange Act, as amended, any shares of Common Stock that the person has the right or will have the right to acquire within 60 days of March 16, 2005.

(2)
In computing the percentage of shares beneficially owned by each person or group of persons named above, any shares which the person (or group) has a right to acquire within 60 days after March 16, 2005 are deemed outstanding for the purpose of computing the percentage of Common Stock beneficially owned by that person (or group) but are not deemed outstanding for the purpose of computing the percentage of shares beneficially owned by any other person.

4


(3)
6,425 shares of Common Stock are held by a family trust for which he and his wife (Lesley Arnoldus) are co-trustees. 59,842 shares of Common Stock are those that he has the right to acquire by the exercise of stock options vested pursuant to the Company's 1997 Stock Option Plan.

(4)
600 shares of Common Stock were granted under the Director Restricted Shares Program (1997 Stock Option Plan) and 335 shares of Common Stock granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares.

(5)
300 shares of Common Stock were granted under the Director Restricted Shares Program (1997 Stock Option Plan) and 335 shares of Common Stock granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 669 shares of Common Stock are held in her Simplified Employee Pension Plan Individual Retirement Account.

(6)
600 shares of Common Stock were granted under the Director Restricted Shares Program (1997 Stock Option Plan) and 335 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 125 shares of Common Stock are held as a custodian for her grandson. 1,000 shares of Common Stock are held in a 401-K Retirement Savings Plan. 174 shares of Common Stock are held for her account and benefit under the Central Pacific Financial Corp. Directors Deferred Compensation Plan. 300 shares of Common Stock are directly held.

(7)
1,200 shares of Common Stock were granted under the Director Restricted Shares Program (1997 Stock Option Plan) and 335 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 3,520 shares of Common Stock are held jointly with his wife (Kathryn Hirota) and for which he has shared voting and investment powers with his wife. 31 shares of Common Stock are held by Dr. Hirota, as President of Sam O. Hirota, Inc. 6,880 shares of Common Stock are directly held. 21,000 shares of Common Stock that he has the right to acquire by the exercise of stock options vested pursuant to the Company's 1997 Stock Option Plan.

(8)
1,200 shares of Common Stock were granted under the Director Restricted Shares Program (1997 Stock Option Plan) and 335 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 347,532 shares of Common Stock are held in trust for the benefit of his wife (Lynette Honbo). 100,234 shares of Common Stock are held in trusts for the benefit of his sons and daughter for which he and the beneficiary of the specific trust are each co-trustees. 23,052 shares of Common Stock are held in trusts for the benefit of his sons and daughter for which he and his wife are each co-trustees. 400 shares of Common Stock are held in his Individual Retirement Account. 21,000 shares that he has the right to acquire by the exercise of stock options vested pursuant to the Company's 1997 Stock Option Plan.

(9)
1,200 shares of Common Stock were granted under the Director Restricted Shares Program (1997 Stock Option Plan) and 335 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 21,000 shares that he has the right to acquire by the exercise of stock options vested pursuant to the Company's 1997 Stock Option Plan. 28,301 shares of Common Stock are held by The Kosasa Foundation, a nonprofit corporation for which Mr. Kosasa serves as President and Director. Mr. Kosasa disclaims beneficial ownership of such shares.

(10)
635 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 8,260 shares of Common Stock are directly held. 11,210 shares of Common Stock are those that he has the right to acquire by the exercise of stock options vested pursuant to the CB Bancshares, Inc. Directors Stock Option Plan, the Agreement and Plan of Merger dated April 22, 2004 between Central Pacific Financial Corp. and CB Bancshares, Inc., and the Company's 1997 Stock Option Plan.

(11)
635 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 10,339 shares of Common Stock are held jointly with wife (Gail Matsumoto). 9,917 shares of Common Stock are held for his account and benefit under the Central Pacific Financial Corp. Directors Deferred Compensation Plan. 7,112 shares of Common Stock are those he has the right to acquire by the exercise of stock options vested pursuant to the CB Bancshares, Inc. Directors Stock Option Plan, the Agreement and Plan of Merger dated April 22, 2004 between Central Pacific Financial Corp. and CB Bancshares, Inc., and the Company's 1997 Stock Option Plan.

(12)
1,200 shares of Common Stock were granted under the Director Restricted Shares Program (1997 Stock Compensation Plan) and 335 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan).

5


(13)
110,870 shares of Common Stock are held in his trust. 362 shares of Common Stock are directly held. 137,717 shares of Common Stock are those that he has the right to acquire by the exercise of stock options vested pursuant to the CB Bancshares, Inc. Stock Compensation Plan, the Agreement and Plan of Merger dated April 22, 2004 between Central Pacific Financial Corp. and CB Bancshares, Inc., and the Company's 1997 Stock Option Plan.

(14)
300 shares of Common Stock were granted under the Director Restricted Shares Program (1997 Stock Compensation Plan) and 335 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 2,000 shares of Common Stock are held by her as trustee of her pension plan.

(15)
635 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 19,750 shares of Common Stock are those that he has the right to acquire by the exercise of stock options vested pursuant to the CB Bancshares, Inc. Directors Stock Option Plan, the Agreement and Plan of Merger dated April 22, 2004 between Central Pacific Financial Corp. and CB Bancshares, Inc., and the Company's 1997 Stock Option Plan. 2,500 shares of Common Stock are directly held.

(16)
635 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 13,117 shares of Common Stock are directly held.

(17)
635 shares of Common Stock were granted under the Director Restricted Shares Program (2004 Stock Compensation Plan). A holder of shares of Common Stock granted under the Director Restricted Shares Program has voting power, but not investment power, with respect to such shares. 20,226 shares of Common Stock are those that he has the right to acquire by the exercise of stock options vested pursuant to the CB Bancshares, Inc. Directors Stock Option Plan, the Agreement and Plan of Merger dated April 22, 2004 between Central Pacific Financial Corp. and CB Bancshares, Inc., and the Company's 1997 Stock Option Plan.

(18)
The following includes information regarding all the "Named Executive Officers" (as defined below under the heading "Compensation of Directors and Executive Officers—Executive Compensation") except for Mr. Arnoldus, whose information is included in this table under the section heading "Directors and Nominees".

(19)
17,628 shares of Common Stock are held under his account under the Company's Retirement Savings Plan. 25,200 shares of Common Stock are directly owned. 15,990 shares of Common Stock are those that he has the right to acquire by the exercise of stock options vested pursuant to the Company's 1997 Stock Option Plan.

(20)
22,142 shares of Common Stock are under his account under the Company's Retirement Savings Plan. 13,200 shares of Common Stock are directly held. 11,893 shares of Common Stock are those that he has the right to acquire by the exercise of stock options vested pursuant to the Company's 1997 Stock Option Plan.

(21)
685 shares of Common Stock are under his account under the Company's Retirement Savings Plan. 2,000 shares of Common Stock are directly held. 27,893 shares of Common Stock are those that he has the right to acquire by the exercise of stock options vested pursuant to the Company's 1997 Stock Option Plan.

(22)
4,507 shares of Common Stock are held in his Individual Retirement Account. 8,970 shares of Common Stock are held jointly with his spouse. 703 shares of Common Stock are directly owned. 40,404 shares of Common Stock are those that he has the right to acquire by the exercise of stock options vested pursuant to the CB Bancshares, Inc. Stock Compensation Plan, the Agreement and Plan of Merger dated April 22, 2004 between Central Pacific Financial Corp. and CB Bancshares, Inc., and the Company's 1997 Stock Option Plan.

(23)
2,124 shares of Common Stock are directly owned. 3,357 shares of Common Stock are those that he has the right to acquire by the exercise of stock options vested pursuant to the Company's 1997 Stock Option Plan.

(24)
Represents 418,394 shares of Common Stock the individuals have a right to acquire within 60 days after March 16, 2005.

6



ELECTION OF DIRECTORS

        The Company's Restated Bylaws currently provide for fifteen directors, five each serving as Class I, Class II and Class III directors, each class of directors serving for three-year terms. Five directors (out of a present total of fifteen) are to be elected at the Meeting to serve three-year terms expiring at the 2008 Annual Meeting of Shareholders and until their respective successors are elected and qualified. The nominees to serve as Class II directors for election at the Meeting are B. Jeannie Hedberg, Duane K. Kurisu, Colbert M. Matsumoto, and Crystal K. Rose, all of whom are currently directors of the Company, and Earl E. Fry. Earl E. Fry was recommended to the Corporate Governance and Nominating Committee by a non-management director of the Company. Current director Gilbert J. Matsumoto will not be standing for reelection.

        All nominees have indicated their willingness to serve and unless otherwise instructed, Proxies will be voted for all of the nominees. However, in the event that any of them should be unable to serve, the Proxy Holders named on the enclosed Proxy Card will vote in their discretion for such persons as the Board of Directors may recommend.

        There are no family relationships among directors or executive officers of the Company, and, as of the date hereof, no directorships are held by any director or director nominee with a company with a class of securities registered pursuant to Section 12 of the Exchange Act, or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.

        THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE BOARD OF DIRECTORS' NOMINEES.

DIRECTORS' AND EXECUTIVE OFFICERS' INFORMATION

        The following table sets forth certain information with respect to each of the continuing directors, nominees and Named Executive Officers:

Name

  Principal Occupation
for the Past Five Years

  Age
  First Year Elected or Appointed as Officer or Director of the Company(1)
  Term
Expires

Nominees                

FRY, Earl E.

 

Executive Vice President, Chief Financial Officer and Secretary, Informatica Corporation (2003-present); Senior Vice President, Chief Financial Officer and Secretary, Informatica Corporation (2002-2003); Senior Vice President and Chief Financial Officer, Informatica Corporation (1999-2002); Vice President and Chief Financial Officer, Omnicell Technologies (1995-1999)

 

46

 

N/A

 

N/A

HEDBERG, B. Jeannie, C.P.A.

 

Partner, Hedberg, Freitas, King & Tom (1969-present); Certified Public Accountant

 

61

 

2003

 

2005

KURISU, Duane K.

 

Chairman and Chief Executive Officer, aio group (2001-present); Partner, Kurisu & Fergus (1985-2001)

 

50

 

2004

 

2005

MATSUMOTO, Colbert M., J.D.

 

Chairman and Chief Executive Officer, Island Insurance Company, Ltd. (1999-present); Partner, Matsumoto LaFountaine & Chow, AAL, ALC (1994-1998)

 

51

 

2004

 

2005

ROSE, Crystal K., J.D.

 

Partner, Bays Deaver Lung Rose & Baba (1989-present)

 

47

 

2005

 

2005
                 

7



Continuing Directors

 

 

 

 

 

 

 

 

ARNOLDUS, Clint

 

Vice Chairman and Chief Executive Officer, Central Pacific Financial Corp. (9/2004-present); Vice Chairman and Chief Executive Officer, Central Pacific Bank (9/2004-present); Vice Chairman and Chief Executive Officer, City Bank (9/2004-2/2005); Chairman, President and Chief Executive Officer, Central Pacific Financial Corp. (2002-9/2004); Chairman, President and Chief Executive Officer, Central Pacific Bank (2002-9/2004); Chairman, President and Chief Executive Officer, Community Bank, Pasadena, California (1998-2001)

 

58

 

2002

 

2007

BLANGIARDI, Richard J.

 

Senior Vice President and General Manager, Emmis Operating Company (2002-present); President, Telemundo Holding Inc. (1999-2002); Managing Director, Brad Marks International (1999); Chief Executive Officer, Premier Horse Network (1997-1999)

 

57

 

2003

 

2006

CAMP FRIEDMAN, Christine H. H.

 

Managing Director, Avalon Development LLC (1999-present); Vice President of Development, A&B Properties, Inc. (1997-1999)

 

38

 

2004

 

2007

HIROTA, Dennis I., Ph.D.

 

President, Sam O. Hirota, Inc. Engineering and Surveying (1986-present); Registered Professional Engineer and Licensed Professional Land Surveyor

 

63

 

1980

 

2007

HONBO, Clayton K., M.D.

 

Retired; Doctor of Obstetrics and Gynecology, Clayton K. Honbo, M.D., Inc. (1977-1999)

 

67

 

1999

 

2006

KOSASA, Paul J.

 

President and Chief Executive Officer, MNS, Ltd., dba ABC Stores (1999-present); Executive Vice President and District Manager, MNS Ltd., dba ABC Stores (1997-1998)

 

47

 

2002

 

2006

MIGITA, Ronald K.

 

Chairman, Central Pacific Financial Corp. and Central Pacific Bank (9/2004-present); Chairman, City Bank (9/2004-2/2005); Director, Chief Executive Officer and President, CB Bancshares, Inc. (1997-2004); Vice Chairman and Chief Executive Officer, City Bank (1997-2004); President, City Bank (1998-2000); Vice Chairman and Chief Executive Officer, International Savings and Loan Association, Limited (1997-2000)

 

63

 

2004

 

2007

SAYAMA, Mike K.

 

Vice President, Hawaii Medical Service Association (1997-present)

 

50

 

2004

 

2006

YAMASATO, Maurice H.

 

President, Yamasato Fujiwara Higa & Associates, Inc. (1987-present)

 

62

 

2004

 

2007

YOSHIMURA, Dwight L.

 

Senior Vice President and Senior General Manager, GGP Limited Partnership (1991-present)

 

50

 

2004

 

2006
                 

8



Named Executive Officers(2)

 

 

 

 

 

 

 

 

KANDA, Neal K.

 

President and Chief Operating Officer, Central Pacific Financial Corp. and Central Pacific Bank (9/2004-present); Director, Central Pacific Bank (2004-present); Director, City Bank (2004-2/2005); Director, Central Pacific Financial Corp. (2004-2/2005); President and Chief Operating Officer, City Bank (2004-2/2005); Vice President and Treasurer, Central Pacific Financial Corp. (2003-2004); Executive Vice President and Chief Financial Officer, Central Pacific Bank (2002-9/2004); Vice President, Treasurer and Secretary, Central Pacific Financial Corp. (2002-2003); Executive Vice President, Central Pacific Bank (1993-2001); Vice President and Treasurer, Central Pacific Financial Corp. (1999-2001)

 

56

 

1991

 

N/A

CHIKAMOTO, Alwyn S.

 

Executive Vice President, Commercial Real Estate, Central Pacific Bank (9/2004-present) Executive Vice President, Commercial Real Estate, City Bank (9/2004-2/2005); Executive Vice President and Chief Credit Officer, Central Pacific Bank (2002-9/2004); Senior Vice President and Commercial Finance Group Manager, Central Pacific Bank (1997-2002)

 

51

 

1988

 

N/A

FUJIMOTO, Blenn A.

 

Executive Vice President, Hawaii Market, Central Pacific Bank (9/2004-present); Executive Vice President, Hawaii Market, City Bank (9/2004-2/2005); Executive Vice President and Chief Financial Services Officer, Central Pacific Bank (2002-9/2004); Senior Vice President and Retail Division Manager, Central Pacific Bank (2000-2002); Vice President and District Manager, Bank of Hawaii (1998-2000)

 

46

 

2000

 

N/A

HIRATA, Dean K.

 

Executive Vice President and Chief Financial Officer, Central Pacific Financial Corp. and Central Pacific Bank (9/2004-present); Executive Vice President and Chief Financial Officer, City Bank (2002-2/2005); Senior Vice President and Chief Financial Officer, CB Bancshares, Inc. (1999-9/2004); Senior Vice President and Chief Financial Officer, City Bank (1999-2002); Senior Vice President and Chief Financial Officer, International Savings and Loan Association, Limited (1999-2000); Senior Vice President and Controller, First Hawaiian Bank (1990-1999)

 

47

 

2004

 

N/A

ISONO, Denis K.

 

Executive Vice President, Operations and Services, Central Pacific Financial Corp. and Central Pacific Bank (9/2004-present) Executive Vice President, Operations and Services, City Bank (9/2004-2/2005); Executive Vice President and Chief Operations Officer, Central Pacific Bank (2002-9/2004); Executive Vice President, Operations, Bank of Hawaii (2000-2002); Senior Vice President and Controller, Bank of Hawaii and Pacific Century Financial Corp. (1988-2000)

 

53

 

2002

 

N/A
                 

9



WELD, Douglas R.

 

Executive Vice President and Chief Credit Officer, Central Pacific Bank (9/2004-present); Executive Vice President and Chief Credit Officer, City Bank (2003-2/2005); Senior Vice President and Chief Credit Officer, City Bank (2002-2003); Chief Credit Officer, Tokai Bank of California/United California Bank (1986-2002)

 

56

 

2004

 

N/A

(1)
All directors of the Company are also directors of the Bank. Dates prior to the formation of the Company in 1982 indicate the year first appointed director of the Bank. Dr. Hirota commenced service as a director of the Company on February 1, 1982, the date of formation of the Company. Dr. Hirota served as a director of the Company until April 23, 1985 when the Company's shareholders adopted a classified Board and reduced the number of directors to nine. However, Dr. Hirota continued to serve on the Bank's Board until he was reelected to the Company's Board in 1986. Dr. Honbo has been a director of the Bank since 1986. Mr. Kosasa has been a director of the Bank since 1994. Mr. Arnoldus has been a director of the Bank since 2002. Mr. Blangiardi and Ms. Hedberg have been directors of the Bank since 2003. Ms. Camp Friedman, Ms. Rose, Mr. Kurisu, Mr. Matsumoto, Mr. Migita, Mr. Sayama, Mr. Yamasato and Mr. Yoshimura have been directors of the Bank since 2004.


Messrs. Chikamoto, Fujimoto and Weld are officers of the Bank and not officers of the Company; therefore, the year included in the column labeled "First Year Elected or Appointed as Officer or Director of the Company" indicates the year that each was first appointed as an officer of the Bank.

(2)
The following includes information regarding all the Named Executive Officers except for Mr. Arnoldus, whose information is included in this table under the section heading "Directors and Nominees."

Section 16(a) Beneficial Ownership Reporting Compliance

        The Company's directors, executive officers and the beneficial holders of more than 10% of the Common Stock are required to file certain reports with the United States Securities and Exchange Commission regarding the amount of and changes in their beneficial ownership of the Company's stock. Based on its review of copies of those reports, the Company is required to disclose known failures to file required forms, or failures to timely file required reports during the previous year. To the best knowledge of the Company, there were no failures to file or timely file such required reports during 2004 by any person who was at any time during 2004 a director, officer, beneficial owner of more than 10% of the Common Stock, or any other person subject to Section 16 of the Exchange Act with respect to the Company, except for those as set forth below:

        (i) Clint Arnoldus—180,000 Company stock options granted on September 15, 2004 and reported on Form 4 on November 3, 2004 and 6,025 shares of Common Stock purchased on November 24, 2004 and reported on Form 5 on January 19, 2005; (ii) Joseph F. Blanco—300 shares of Common Stock granted on April 12, 2004 and reported on Form 4 on April 16, 2004; (iii) Dennis I. Hirota—300 shares of Common Stock granted on April 12, 2004 and reported on Form 4 on April 16, 2004 and 31 shares of Common Stock acquired via exchange of CB Bancshares, Inc. stock on September 15, 2004 and reported on Form 5 on January 6, 2005; (iv) Clayton K. Honbo—300 shares of Common Stock granted on April 12, 2004 and reported on Form 4 on April 16, 2004; (v) Denis K. Isono—1,124 shares of Common Stock acquired via exchange of CB Bancshares, Inc. stock on September 15, 2004 and reported on Form 5 on January 6, 2005; (vi) Neal K. Kanda—200 shares of Common Stock acquired as beneficiary of spouse upon marriage on February 12, 1999, 200 shares sold by spouse on December 6, 2004 and both reported on Form 5 on January 19, 2005, and 314 shares of Common Stock acquired via exchange of CB Bancshares, Inc. stock on September 15, 2004 and reported on Form 5 on January 27, 2005; (vii) Paul J. Kosasa—300 shares of Common Stock granted on April 12, 2004 and reported on Form 4 on April 16, 2004; (viii) Duane K. Kurisu—8,260 shares of Common Stock acquired via exchange of CB Bancshares, Inc. stock on September 15, 2004 and reported on Form 4 on January 28, 2005; (ix) Colbert M. Matsumoto—10,339 shares of Common Stock acquired via exchange of CB Bancshares, Inc. stock on September 15, 2004 and

10



reported on Form 4 on November 3, 2004, and 7,500 shares of Common Stock purchased on November 16, 2004, 50 shares of Common Stock purchased on November 18, 2004, 235 shares of Common Stock purchased on December 3, 2004, 1,522 shares of Common Stock purchased on December 21, 2004, 143 shares of Common Stock purchased on December 31, 2004, 69 shares of Common Stock purchased on January 4, 2005, all of which were reported on Form 4 on January 28, 2005; (x) Gilbert J. Matsumoto—300 shares of Common Stock granted on April 12, 2004 and reported on Form 4 on April 16, 2004; (xi) Mike K. Sayama—2,475 shares of Company stock acquired via exchange of CB Bancshares, Inc. stock on September 15, 2004 and reported on Form 4 on November 3, 2004, 1,975 shares of Company stock sold on October 29, 2004 and reported on Form 4 on November 4, 2004; (xii) Maurice H. Yamasato—182 shares of Company stock sold on October 6, 2004 and reported on Form 4 on February 25, 2005. The Company has taken measures to ensure more timely filing.


CORPORATE GOVERNANCE AND BOARD MATTERS

        The Board has three (3) standing committees: an Audit Committee, a Compensation Committee, and a Corporate Governance and Nominating Committee. During 2004, the Board dissolved its Executive Committee and its Mergers & Acquisitions Committee.

        During the fiscal year ended December 31, 2004, the Board held a total of twenty-five (25) meetings, including monthly, annual and special meetings. Each person who was a director of the Company during 2004 attended at least 75% of the total number of such Board meetings and 75% of the total number of meetings held by all committees of the Board on which he or she served during the year, except Mr. Kosasa who attended 70% of Board meetings and 70% of meetings held by committees of the Board on which he served. The Company expects directors to attend the annual meetings of shareholders. All directors attended last year's annual meeting of shareholders.

        The following table sets forth the members of the Board as of the date of this Proxy Statement and the committees of the Board on which they serve as of March 1, 2005.

Name of Director

  Audit Committee
  Compensation
Committee

  Corporate Governance and
Nominating Committee

Non-Employee Directors:            
Richard J. Blangiardi       *   VC
Christine H. H. Camp Friedman   *        
B. Jeannie Hedberg   C        
Dennis I. Hirota           *
Clayton K. Honbo       *    
Paul J. Kosasa       *    
Duane K. Kurisu           *
Colbert M. Matsumoto       C   *
Gilbert J. Matsumoto            
Crystal K. Rose           C
Mike K. Sayama   *        
Maurice H. Yamasato   *        
Dwight L. Yoshimura       VC    
Employee Directors:            
Ronald K. Migita            
Clint Arnoldus            

* = Member

C = Chair

VC = Vice Chair

11


        Ms. Rose, Chair of the Corporate Governance & Nominating Committee, has been chosen by the Board to serve as the presiding director for all meetings of the non-management directors in executive sessions. In Ms. Rose's absence, Mr. Blangiardi, Vice Chair of the Corporate Governance & Nominating Committee, has been chosen by the Board to preside over these sessions of the Board.

        Interested parties may communicate directly with the presiding director or with the non-management directors as a group, by writing to: Crystal K. Rose, Bays, Deaver, Lung, Rose & Baba, 1099 Alakea Street, 16th Floor, Honolulu, Hawaii 96813. Alternatively, concerns may be made known and communicated directly to the presiding director or to the non-management directors as a group, through procedures set forth in the Company's Complaint Policy which is available on the Company's website (www.centralpacificbank.com).

Audit Committee

        The Audit Committee held twelve (12) meetings during 2004. The responsibilities of the Audit Committee are described below in the "Report of the Audit Committee" under the subheading "Report of the Audit Committee." The Audit Committee operates under a Charter adopted by the Board. A copy of the Charter of the Audit Committee is attached to the Company's proxy statement as Appendix A. The Charter of the Audit Committee is available on the Company's website (www.centralpacificbank.com), and is also available in print upon request (submit request for copies of the Charter to Central Pacific Financial Corp., Attn: Investor Relations, P.O. Box 3590, Honolulu, Hawaii 96811). As of March 1, 2005, the members of the Company's Audit Committee are B. Jeannie Hedberg (Chair), Christine H. H. Camp Friedman, Mike K. Sayama and Maurice H. Yamasato, each of whom is "independent" within the meaning of the listing standards of the NYSE and the rules of the SEC. The Board of Directors has also determined that each member is financially literate, as such qualification is defined under the rules of the NYSE, and that Ms. Hedberg has accounting or related financial management expertise, as such qualification is defined under the rules of the NYSE, and is an "audit committee financial expert" within the meaning of the rules of the SEC. No member of the Audit Committee serves on the audit committee of any other publicly registered company.

Compensation Committee

        The Compensation Committee held seven (7) meetings during 2004. The Compensation Committee's primary purpose is to assist the Board in discharging the Board's responsibilities relating to compensation of the Company's executive officers by evaluating and recommending to the Board approval of executive officer benefit, bonus, incentive compensation, severance, equity-based or other compensation plans, policies and programs of the Company and providing an annual report on executive compensation for inclusion in the Company's proxy statement. The functions of the Compensation Committee are further described in "COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS" below, under the subheading "Report of the Compensation Committee." The Charter of the Compensation Committee is available on the Company's website (www.centralpacificbank.com), and is also available in print upon request (submit request for copies of the Charter to Central Pacific Financial Corp., Attn: Investor Relations, P.O. Box 3590, Honolulu, Hawaii 96811). As of March 1, 2005, the members of the Company's Compensation Committee are Colbert M. Matsumoto (Chair), Dwight L. Yoshimura (Vice Chair), Richard J. Blangiardi, Clayton K. Honbo and Paul J. Kosasa, each of whom is "independent" within the meaning of the listing standards of the NYSE, is a "nonemployee director" within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934 and is an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code of 1986.

Corporate Governance and Nominating Committee

        The Corporate Governance and Nominating Committee held sixteen (16) meetings during 2004. The Corporate Governance and Nominating Committee is responsible for promoting the best interests of the

12



Company and its shareholders through the implementation of sound corporate governance principles and practices, including identifying individuals qualified to become Board members, recommending nominees for directors of the Company, reviewing the qualifications and independence of the members of the Board and its committees, reviewing and monitoring the Company's Corporate Governance Guidelines, monitoring the Board's and the Company's compliance regarding changes in corporate governance practices and laws and leading the Board in its annual review of the performance of the Board and Chief Executive Officer. The Charter of the Corporate Governance and Nominating Committee and the Company's Corporate Governance Guidelines are available on the Company's website (www.centralpacificbank.com), and are also available in print upon request (submit request for copies of the Charter or Guidelines to Central Pacific Financial Corp., Attn: Investor Relations, P.O. Box 3590, Honolulu, Hawaii 96811). As of March 1, 2005, the members of the Company's Corporate Governance and Nominating Committee are Crystal K. Rose (Chair), Richard J. Blangiardi (Vice Chair), Duane K. Kurisu and Colbert M. Matsumoto, each of whom is "independent" within the meaning of the listing standards of the NYSE.

Director Independence

        The Board has determined, in accordance with our Standards Regarding Director Independence, that all of the members of the Board who are not also officers or employees of the Company or any of its affiliates, or the non-employee directors, are "independent" within the meaning of the rules of the NYSE. All of the directors other than Ronald K. Migita and Clint Arnoldus are non-employee directors. All committees of the Board are comprised solely of independent directors. A copy of our Standards Regarding Director Independence is attached as Appendix B to this Proxy Statement.

Code of Conduct & Ethics

        The Company is committed to promoting and fostering ethical conduct and sound corporate governance principles. The Company has a Code of Conduct & Ethics applicable to all employees, officers and directors of the Company. In addition, the Company also has a supplemental Code of Conduct & Ethics For Senior Financial Officers, which is applicable to the Chief Executive Officer, President, Chief Financial Officer, Controller, any other principal financial officer or principal accounting officer and any other person fulfilling and/or performing any similar role, function or capacity. Both of the aforementioned Codes of Conduct & Ethics are available on the Company's website (www.centralpacificbank.com), and are also available in print upon request (submit request for copies of the Codes of Conduct & Ethics to Central Pacific Financial Corp., Attn: Investor Relations, P.O. Box 3590, Honolulu, Hawaii 96811).

Director Nomination Process

        Director Qualifications.    The Corporate Governance and Nominating Committee is responsible for reviewing the qualifications and independence of director nominees in accordance with the criteria set forth in the Company's Corporate Governance Guidelines. The general criteria considered include qualification as independent, diversity, age, skills, experience and other relevant considerations in the context of the needs of the Board.

        Identifying and Evaluating Nominees.    The Board seeks to identify candidates for director positions that are best qualified and suited to meet the needs of the Company and to present these candidates for shareholder approval, as and when director positions become open and available. The Corporate Governance and Nominating Committee will first identify, review, evaluate and recommend to the Board, nominees for director positions. The Board will then vote whether or not to recommend such nominees to the Company's shareholders for election.

13



        In identifying potential director nominees, the Corporate Governance and Nominating Committee will search within the State of Hawaii and may search outside the State of Hawaii for any potential director candidates, and in this regard, may utilize the services of a professional search firm. While the same general criteria set forth above shall be applied in evaluating a candidate's qualifications, it is difficult to enumerate all of the attributes, skills and qualities that the Corporate Governance and Nominating Committee and/or Board may, at any given point in time, determine, consider and value in evaluating, selecting and recommending director nominees. Accordingly, the Corporate Governance and Nominating Committee and the Board exercise their discretion and consider any circumstances, experiences, attributes, skills, qualities, and factors applicable to any director nominee with the intent and purpose of having the best qualified and best suited directors serving on the Board at all times, as well as ensuring that the Board as a whole is diverse and well rounded. The Board may enlist the services of a third party to conduct a background check or other investigation in order to determine whether a candidate meets any criteria.

        Shareholder Nominees.    In accordance with the policies set forth in the Company's Corporate Governance Guidelines, the Corporate Governance and Nominating Committee will consider properly submitted director nominees for election at the 2006 Annual Meeting of Shareholders recommended by shareholders if such recommendations are received in writing prior to January 26, 2006. Shareholder recommendations should be addressed to the Company's Corporate Secretary, P.O. Box 3590, Honolulu, Hawaii 96811.

Communications with the Board

        Shareholders of the Company may send written communications directly to the Board, addressed to: Board of Directors of Central Pacific Financial Corp., 220 South King Street, Third Floor, Honolulu, Hawaii 96813. Any such communication may be directed to the attention of the Chairman of the Board or the Chair of any Board Committee (such as, for example, the Chair of the Audit Committee or the Chair of the Corporate Governance and Nominating Committee). Shareholders sending such communications must include the following in their written communication: (a) such shareholder(s) must identify himself/herself/itself/themselves and provide reasonably satisfactory proof of their ownership of the Company's stock; (b) such shareholder(s) must state in reasonable detail and communicate with reasonable clarity and specificity their issue or concern; and (c) such shareholder(s) must include their contact information (at a minimum, phone number and address).

Report of the Audit Committee

        The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filings under the Securities Act of 1933, as amended (the "Securities Act") or under the Exchange Act, except to the extent we specifically incorporate this Report by reference.

Report of the Audit Committee

        The role of the Audit Committee is to assist the Board of Directors in its oversight of the Company's financial reporting process. The Board of Directors, in its business judgment, has determined that all members of the Committee are "independent", as required by applicable listing standards of the New York Stock Exchange. The Board of Directors has also determined that each member is financially literate, as such qualification is defined under the rules of the NYSE, and that one member of the Committee has accounting or related financial management expertise, as such qualification is defined under the rules of the NYSE and is an "audit committee financial expert" within the meaning of the rules of the SEC. The Committee operates pursuant to a Charter that was last amended and restated by the Board on February 1, 2005, a copy of which is attached to this Proxy Statement as Appendix A. In addition, the Charter of the Audit Committee is available on the Company's website (www.centralpacificbank.com).

14



        Pursuant to the Audit Committee Charter, the Audit Committee's primary purpose is to assist the Board in overseeing various accounting, auditing, internal control, legal and regulatory matters of the Company, and in fulfillment of this purpose, the Audit Committee's primary responsibilities are to:


        In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial statements with management and the Company's independent registered public accounting firm. The Audit Committee reviewed with the independent registered public accounting firm, who is responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States of America, their judgments as to the quality, and not just the acceptability, of the Company's accounting principles and such other matters as are required to be discussed with the Audit Committee by Statement of Auditing Standards No. 61, as amended by Statement on Auditing Standards No. 90 (Communication with Audit Committees).

        The Audit Committee also obtained from the independent registered public accounting firm a formal written statement describing all relationships between the Company and the independent registered public accounting firm that bear on the independent registered public accounting firm's independence consistent with Independence Standards Board Standard No. 1, (Independence Discussions with Audit Committee). The Audit Committee has received and discussed with the independent registered public accounting firm the matters in the written disclosures required by the Independence Standards Board and as required under the Sarbanes-Oxley Act of 2002. The Audit Committee discussed with the independent registered public accounting firm any relationships that may impact on the firm's objectivity and independence and satisfied itself as to the registered public accounting firm's independence.

        The Audit Committee discussed with the Company's internal auditor and independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee met with the internal auditor and independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the internal controls, and the overall quality of the financial reporting.

        In reliance on these discussions and reviews referred to above, the Audit Committee recommended that the Board of Directors approve the inclusion of the Company's audited consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2004, for filing with the Securities and Exchange Commission.

        Management is responsible for the Company's financial reporting process including its system of internal controls, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The Company's independent registered public accounting firm is responsible for auditing those financial statements. Our responsibility is to monitor and review these processes. It is not our duty or our responsibility to conduct auditing or accounting reviews or procedures. We are not employees of the Company and we may not all be, and we may not all represent ourselves to be or to serve as, accountants or auditors by profession or experts in the fields of accounting or auditing. Therefore, we have relied, without independent verification, on management's representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and on the representations of the independent registered public

15



accounting firm included in its report on the Company's financial statements. Our oversight does not provide us with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, our considerations and discussions with management and the independent registered public accounting firm do not assure that the Company's financial statements are presented in accordance with accounting principles generally accepted in the United States of America, that the audit of our Company's financial statement has been carried out in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) or that our Company's independent registered public accounting firm is in fact "independent."

        Respectfully submitted by the members of the Audit Committee of the Board of Directors:

16



COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Director Compensation

        The Company and the Bank each has a policy of paying fees to non-management directors for their attendance at board and board committee meetings. The Company and the Bank pay each of their non-management directors $800 per board meeting attended and $600 per board committee meeting attended. In addition, the Company pays $10,000 annually to each non-management director, and the Bank pays $15,000 annually to each non-management director. The Company pays the Chair of the Audit Committee $10,000 annually, the Chair of the Compensation Committee $5,000 annually, and the Chair of the Corporate Governance & Nominating Committee $5,000 annually.

        Non-employee directors of the Company and the Bank have been eligible to participate in the Company's 1997 Stock Option Plan and continue to be eligible to participate in the Company's 2004 Stock Compensation Plan. The Company annually grants restricted Common Stock of the Company to non-employee directors of both the Company and the Bank. In 2004, the Company granted 300 restricted shares of the Company's Common Stock to each of the Company's and the Bank's non-employee directors (where an individual was both a director of the Company and the Bank, he or she only received a total of 300 restricted shares of Common Stock). For 2005, the Company granted the equivalent of $6,000 of the Company's Common Stock (with restrictions) to each of the Company's non-employee directors, and in addition, the equivalent of $6,000 of the Company's Common Stock (with restrictions) to each of the Bank's non-employee directors (where an individual is both a director of the Company and the Bank, they received a total of $12,000 worth of the Company's Common Stock (with restrictions)).

        During 1997, non-employee directors received a one-time grant of stock options to purchase, in the aggregate, 294,000 shares of Common Stock at an exercise price of $8.9375 per share. Options vest at a rate of 3,000 shares per year until the earlier of the director's retirement at age 70 or 10 years from the date of grant.

        The Company also maintains a Directors Deferred Compensation Plan, which became effective as of January 1, 2001, and under which each non-employee director of the Company and the Bank may elect to defer all or a portion of his or her annual retainer and meeting fees. Distribution of the deferred compensation account will be made in the form of a lump sum payment within ten years following termination from service or annual installment payments over a period no greater than ten years following termination from service, in accordance generally with the director's election made at the time of the deferral. A withdrawal from the deferred compensation account is also available in the case of an unforeseeable emergency. Under the Directors Deferred Compensation Plan, deferred amounts are valued based on corresponding investments in certain investment funds offered by the Bank's Trust Division which may be selected by the director. The Directors Deferred Compensation Plan is a nonqualified deferred compensation plan under which distributions are made from the general assets of the Company under the direction and oversight of the Compensation Committee.

Executive Compensation

        Summary of Cash and Certain Other Compensation.    The following table sets forth certain summary information concerning compensation paid or accrued by the Company to or on behalf of any person who served as the Company's Chief Executive Officer during the last fiscal year and each of the four (4) other most highly compensated executive officers of the Company or the Bank (given such executive officer of the Bank performed a policy making function for the Company), determined as of the end of the last fiscal year. We have also included certain summary information concerning compensation paid or accrued by the Company to or on behalf of Messrs. Hirata and Weld, who began serving as executive officers upon the

17


completion of our merger with CB Bancshares, Inc. on September 15, 2004. The individuals listed in the following table comprise our "Named Executive Officers."

SUMMARY COMPENSATION TABLE

 
   
   
   
  Long Term Compensation
   
 
 
   
  Annual Compensation
  Awards
   
   
 
 
   
  Payouts
   
 
 
   
  Restricted
Stock
Award
($)

  Securities
Underlying
Options/SARs
(#)*

   
 
Name and Principal Position

  Year
  Salary
($)

  Bonus
($)

  LTIP**
Payout
($)

  All Other
Compensation
($)

 
Clint Arnoldus   2004   516,692       180,000     1,080,791 (1)
  Chief Executive Officer, Central Pacific Financial   2003   469,203       49,605     61,448 (2)
  Corp. and Central Pacific Bank   2002   452,972   505,218     40,000     503,239 (3)

Neal K. Kanda

 

2004

 

244,341

 

71,250

 


 


 


 

139,334

(4)
  President and Chief Operating Officer, Central   2003   219,300       15,457     42,890 (5)
  Pacific Financial Corp. and Central Pacific Bank   2002   210,002   126,073     16,338     45,943 (6)

Alwyn S. Chikamoto,

 

2004

 

191,580

 

48,668

 


 


 


 

138,904

(7)
  Executive Vice President, Commercial Real   2003   183,600       12,941     42,501 (8)
  Estate, Central Pacific Bank   2002   165,673   72,000     11,192     45,773 (9)

Blenn A. Fujimoto,

 

2004

 

191,580

 

48,668

 


 


 


 

136,093

(10)
  Executive Vice President, Hawaii Market,   2003   183,600       12,941     39,940 (11)
  Central Pacific Bank   2002   157,670   110,000     6,924     41,160 (12)

Dean K. Hirata,

 

2004

 

54,178

 

33,750

 


 


 

 

 

6,771

(13)
  Executive Vice President, Chief Financial   2003   N/A   N/A   N/A   N/A   N/A   N/A  
  Officer, Central Pacific Financial Corp. and   2002   N/A   N/A   N/A   N/A   N/A   N/A  
  Central Pacific Bank                              

Denis K. Isono,

 

2004

 

185,845

 

47,316

 


 


 


 

134,411

(14)
  Executive Vice President, Operations and   2003   178,500       8,388     29,917 (15)
  Services, Central Pacific Financial Corp. and   2002   116,002   100,000         31,899 (16)
  Central Pacific Bank                              

Douglas R. Weld,

 

2004

 

56,875

 

37,500

 


 


 


 

5,996

(17)
  Executive Vice President and Chief Credit   2003   N/A   N/A   N/A   N/A   N/A   N/A  
  Officer, Central Pacific Bank   2002   N/A   N/A   N/A   N/A   N/A   N/A  

*
SAR stands for "Stock Appreciation Rights" and refers to SARs payable in cash or stock, including SARs payable in cash or stock at the election of the Company or Named Executive Officer.

**
LTIP stands for "Long-Term Incentive Plan" and refers to any plan providing compensation intended to serve as an incentive for performance to occur over a period longer than one fiscal year, whether such performance is measured by reference to financial performance of the Company or an affiliate, the Company's stock price, or any other measure, but excluding restricted stock, stock option and SAR Plans.

(1)
Includes contributions to the Bank's Cash or Deferred Arrangement ("CODA")/Profit Sharing Plan and the Bank's 401(k) Plan for the account of Mr. Arnoldus of $18,791 and $8,200, respectively, a $12,000 automobile allowance, and a $1,080,000 one-time merger bonus.

(2)
Includes contributions to the Bank's Cash or Deferred Arrangement ("CODA")/Profit Sharing Plan and the Bank's 401(k) Plan for the account of Mr. Arnoldus of $23,198 and $8,000, respectively, a $12,000 automobile allowance, and $15,556 related to residential security system expenses.

(3)
Includes $260,000 representing a sign-on bonus, $210,905 representing payments for relocation expenses, including $88,448 related to the sale of Mr. Arnoldus' former residence and purchase of new residence, $18,304 related to temporary housing expenses, $17,968 related to residential security system expenses, $95,076 related to "gross-up" payments for additional personal income tax obligations resulting from the relocation expense reimbursement, and a $11,877 automobile allowance.

(4)
Includes contributions to the Bank's CODA/Profit Sharing Plan and the Bank's 401(k) Plan for the account of Mr. Kanda of $18,791 and $8,200, respectively, a $8,400 automobile allowance, and a $100,000 merger-related executive retention bonus.

(5)
Includes contributions to the Bank's CODA/Profit Sharing Plan and the Bank's 401(k) Plan for the account of Mr. Kanda of $23,198 and $8,000, respectively, and a $8,400 automobile allowance.

(6)
Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's ESOP and the Bank's 401(k) Plan for the account of Mr. Kanda of $13,234, $13,406 and $8,000, respectively, and a $8,400 automobile allowance.

18


(7)
Includes contributions to the Bank's CODA/Profit Sharing Plan and the Bank's 401(k) Plan for the account of Mr. Chikamoto of $18,791 and $8,200, respectively, a $8,400 automobile allowance, and a $100,000 merger-related executive retention bonus.

(8)
Includes contributions to the Bank's CODA/Profit Sharing Plan and the Bank's 401(k) Plan for the account of Mr. Chikamoto of $23,198 and $8,000, respectively, and a $8,400 automobile allowance.

(9)
Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's ESOP and the Bank's 401(k) Plan for the account of Mr. Chikamoto of $13,234, $13,406 and $8,000, respectively, and a $8,400 automobile allowance.

(10)
Includes contributions to the Bank's CODA/Profit Sharing Plan and the Bank's 401(k) Plan for the account of Mr. Fujimoto of $18,791 and $8,200, respectively, an automobile allowance of $8,400, and a $100,000 merger-related executive retention bonus.

(11)
Includes contributions to the Bank's CODA/Profit Sharing Plan and the Bank's 401(k) Plan for the account of Mr. Fujimoto of $23,198 and $8,000, respectively, and an automobile allowance of $8,400.

(12)
Includes contributions to the Bank's CODA/Profit Sharing Plan, the Bank's ESOP and the Bank's 401(k) Plan for the account of Mr. Fujimoto of $12,741, $13,100 and $7,577, respectively, and an automobile allowance of $7,000.

(13)
Includes contributions to the Bank's CODA/Profit Sharing Plan for the account of Mr. Hirata of $1,625, and an automobile allowance of $2,700. Mr. Hirata became an executive officer of the Company on September 15, 2004 with the CB Bancshares, Inc. merger.

(14)
Includes contributions to the Bank's CODA/Profit Sharing Plan and the Bank's 401(k) Plan for the account of Mr. Isono of $14,301 and $8,200, respectively, an automobile allowance of $8,400, and a $100,000 merger-related executive retention bonus.

(15)
Includes contributions to the Bank's CODA/Profit Sharing Plan and the Bank's 401(k) Plan for the account of Mr. Isono of $12,549 and $6,268, respectively, and an automobile allowance of $8,400.

(16)
Includes a sign-on bonus of $25,000, and an automobile allowance of $5,600.

(17)
Includes contributions to the Bank's CODA/Profit Sharing Plan for the account of Mr. Weld of $1,706, and an automobile allowance of $2,800. Mr. Weld became an executive officer of the Company on September 15, 2004 with the CB Bancshares, Inc. merger.

        Option Grants.    Mr. Arnoldus was granted 180,000 Company stock options during 2004 at an exercise price of $27.50 per share. There were no other option grants to our Named Executive Officers during 2004.

        The following table provides information with respect to the Named Executive Officers concerning the granting of options during the fiscal year ended December 31, 2004. As of December 31, 2004, the Company has not granted any stock appreciation rights.

OPTION GRANTS DURING FISCAL YEAR 2004

 
  Individual Grants
   
   
 
  Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term(2)

 
  Number of Shares Underlying Options Granted
   
   
   
Name

  Percentage of Total
Options Granted
to Employees in 2004

  Exercise Price Per Share
  Option
Expiration
Date

  5%
  10%
ARNOLDUS, Clint   180,000 (1) 100.0 % $ 27.50   9/15/14   $ 3,113,028   $ 7,889,025
KANDA, Neal K.   N/A   N/A     N/A   N/A     N/A     N/A
CHIKAMOTO, Alwyn S.   N/A   N/A     N/A   N/A     N/A     N/A
FUJIMOTO, Blenn A.   N/A   N/A     N/A   N/A     N/A     N/A
HIRATA, Dean K.   N/A   N/A     N/A   N/A     N/A     N/A
ISONO, Denis K.   N/A   N/A     N/A   N/A     N/A     N/A
WELD, Douglas R.   N/A   N/A     N/A   N/A     N/A     N/A

(1)
The options granted to Mr. Arnoldus are subject to a vesting schedule pursuant to which one-third shall vest annually on the anniversary of the grant date. The grant date was September 15, 2004.

(2)
The potential realizable value of each grant of options included in the table represents the potential value assuming that the market price of the underlying shares appreciates in value from the date of grant to the end of the option term at an annualized rate of 5% or 10%. Actual gains, if any, on stock option exercises will depend upon the actual future market price of the Company's stock.

19


        Option Exercises and Holdings.    The following table provides information with respect to the Named Executive Officers concerning the exercise of options during the fiscal year ended December 31, 2004 and unexercised options held by the Named Executive Officers as of December 31, 2004

AGGREGATED OPTION EXERCISES DURING FISCAL YEAR 2004
AND 2004 FISCAL YEAR-END OPTION VALUES

 
   
   
  Number of Unexercised
Options at
12/31/04

  Value of Unexercised In-
the-Money Options* at
12/31/04

Name

  Shares
Acquired on
Exercise (#)

  Value
Realized ($)

  Exercisable
  Unexercisable
  Exercisable
  Unexercisable
ARNOLDUS, Clint       59,842   209,763   $ 1,008,681   $ 1,809,121
KANDA, Neal K.       12,724   19,071     178,055     266,825
CHIKAMOTO, Alywn S.       9,655   14,478     129,788     194,611
FUJIMOTO, Blenn A.       26,509   16,556     525,454     252,248
HIRATA, Dean K.       40,404       1,043,059    
ISONO, Denis K.       3,357   5,031     28,031     42,009
WELD, Douglas R.                

*
The value of unexercised "in-the-money" options is the difference between the market price of the Common Stock on December 31, 2004 ($36.17 per share) and the exercise price of the option, multiplied by the number of shares subject to the option.

        Defined Benefit Pension Plan.    The Bank has a Defined Benefit Pension Plan that was closed to new participants effective December 31, 2002. To be eligible, an executive must have been hired prior to December 2, 2001. Accordingly, Messrs. Arnoldus, Hirata, Isono and Weld are not eligible to receive benefits pursuant to the Defined Benefit Pension Plan.

        The table below shows estimated annual retirement benefits at age 65 for various levels of executive compensation and service under the Bank's Defined Benefit Pension Plan.

PENSION PLAN TABLE

 
  Years of Service
Annualized Final
Average Compensation

  15 Years
  20 Years
  25 Years
  30 Years
  35 Years
$ 50,000   $ 5,625   $ 7,500   $ 9,375   $ 11,250   $ 13,125
  100,000     11,250     15,000     18,750     22,500     26,250
  150,000     16,875     22,500     28,125     33,750     39,375
  200,000     22,500     30,000     37,500     45,000     52,500
  250,000     28,125     37,500     46,875     56,250     65,625
  300,000     33,750     45,000     56,250     67,500     78,750
  350,000     39,375     52,500     65,625     78,750     91,875
  400,000     45,000     60,000     75,000     90,000     105,000
  450,000     50,625     67,500     84,375     101,250     118,125
  500,000     56,250     75,000     93,750     112,500     131,250

        Under the Defined Benefit Pension Plan, benefits are based upon the employee's years of service and highest average annual salary in the final 60-consecutive month period of service as of December 31, 2002. The credited years of service as of December 31, 2004 for Messrs. Kanda, Chikamoto and Fujimoto are 13, 25 and 2, respectively.

        Supplemental Executive Retirement Arrangements. The Company also has non-qualified, unfunded supplemental executive retirement arrangements ("SERA") for certain executive officers. For Mr. Arnoldus, the SERA provides a lump sum payment equal to the actuarial equivalent of a joint and 100% survivor annuity payable for life and upon his death to his current spouse for life starting at age 65. The

20



annuity amount on which the SERA benefit will be based is equal to (A) the product of his years of service with the Company, up to a maximum of 15 years, multiplied by 31/3% of the average of his salary and bonus for the three fiscal years preceding his termination, reduced by (B) the actuarial equivalent of his benefit under the Social Security Act and any other retirement benefits provided by the Company. For Mr. Kanda, the SERA provides a benefit equal to the difference between (A) the benefit which would have accrued under the Company's Defined Benefit Pension Plan, without regard to limitations imposed by laws and regulations governing such plans, reduced by (B) the benefit that actually accrued under the Defined Benefit Pension Plan. The Defined Benefit Pension Plan was curtailed effective December 31, 2002, and accordingly, no new benefits are accruing to Mr. Kanda. Each of Mr. Hirata and Mr. Weld is entitled to receive, upon termination, a SERA benefit calculated as if the Supplemental Executive Retirement Agreement between each of Messrs. Hirata and Weld and CB Bancshares, Inc. (the "CB SERP") had continued in effect until the date of termination of his employment and a SERA benefit calculated under the "change of control" provisions of the CB SERP as of the date of the merger of the Company and CB Bancshares, Inc. The nominal SERA benefit under the CB SERP would be a life annuity equal to the greater of (A) 65% of final average compensation, less 50% of his social security benefit and less any pension benefits accrued under any CB Bancshares defined contribution plan or (B) the full SERA benefit that he would have received had he remained in the employ of CB Bancshares and retired at age 65 and calculated as of the date of the merger of the Company and CB Bancshares, Inc. The 65% formula is reduced by 2.5% for each year of service less than 25 years of service and increased by 2.5% for each year of service exceeding 25 years of service (subject to a maximum adjusted percentage of 70%). The final average compensation means the average base salary plus bonus for the five year period preceding the executive's termination of employment.

Employment Arrangements

        Effective September 14, 2004, the Company entered into a separate Employment Agreement with each of (a) Clint Arnoldus, Chief Executive Officer and Vice Chairman of the Company and the Bank, (b) Ronald K. Migita, Chairman of the Company and the Bank, (c) Neal K. Kanda, President and Chief Operating Officer of the Company and the Bank, (d) Dean K. Hirata, Executive Vice President and Chief Financial Officer of the Company and the Bank, (e) Douglas R. Weld, Executive Vice President and Chief Credit Officer of the Bank, (f) Alwyn S. Chikamoto, Executive Vice President, Commercial Real Estate, of the Bank, (g) Blenn A. Fujimoto, Executive Vice President, Hawaii Market, of the Bank and (h) Denis K. Isono, Executive Vice President, Operations and Services of the Company and the Bank.

Terms of Mr. Arnoldus' Agreement

        Under his agreement, Mr. Arnoldus receives an annual base salary of $600,000 with a minimum bonus target of 50% of his base salary.

        The Company may terminate Mr. Arnoldus' employment at any time and Mr. Arnoldus may resign at any time. If the Company chooses to terminate Mr. Arnoldus' employment for reasons other than "cause" (as defined in his agreement) or if Mr. Arnoldus resigns for "good reason" (as defined in his agreement), the Company will be required to pay Mr. Arnoldus a lump sum payment equal to twice his base salary and target bonus, and Mr. Arnoldus will become entitled to his supplemental retirement benefit. In addition, the Company will be required to pay Mr. Arnoldus his accrued and unpaid compensation, a pro rata target bonus, continued health and welfare benefits for Mr. Arnoldus and his wife for life, accelerated vesting of all equity awards, relocation reimbursement and outplacement assistance. Mr. Arnoldus will be subject to a non-solicitation and non-competition requirement for the remainder or the term of his employment agreement.

        In the event of a change of control of the Company, Mr. Arnoldus may voluntarily resign during the sixty-day period following the sixth month after the change of control date. In the event Mr. Arnoldus' employment is terminated in anticipation of or following a change of control, he will be entitled to the

21



same benefits he would have received had he been terminated without cause or resigned for good reason except that his severance amount will be three times base salary and target bonus. He will also be entitled to payments to cover any excise tax liability (on an after-tax basis) under Section 4999 of the Internal Revenue Code with respect to his payments under the employment agreement.

Terms of Mr. Migita's Agreement

        Under his agreement, Mr. Migita receives an annual base salary of $200,000 and ordinary course directors fees.

        The Company may terminate Mr. Migita's employment at any time, and Mr. Migita may resign at any time. If the Company chooses to terminate Mr. Migita's employment for reasons other than "cause" (as defined in his agreement) or if Mr. Migita resigns for "good reason" (as defined in his agreement), the Company will be required to pay to Mr. Migita his accrued but unpaid compensation, a lump-sum payment of salary for the remainder of the term, continued health and welfare benefits for the remainder of the term and accelerated vesting of all equity awards. Mr. Migita will be subject to a non-solicitation and non-competition requirement for the remainder of the term of the employment agreement.

Terms of Mr. Kanda's Agreement

        Under his agreement, Mr. Kanda receives an annual base salary of $285,000 with a minimum bonus target of 40% of his base salary.

        The Company may terminate Mr. Kanda's employment at any time, and Mr. Kanda may resign at any time. If the Company chooses to terminate Mr. Kanda's employment for reasons other than "cause" (as defined in his agreement) or if Mr. Kanda resigns for "good reason" (as defined in his agreement), the Company will be required to pay to Mr. Kanda a lump-sum payment equal to salary and target bonus for the "severance period", which is two years. In addition, the Company will be required to pay Mr. Kanda his accrued but unpaid compensation, a pro rata target bonus, continued health and welfare benefits for the remainder of the severance period, accelerated vesting of equity awards and outplacement assistance. In this circumstance, Mr. Kanda will be subject to a non-solicitation and non-competition requirement for the duration of his severance period. If Mr. Kanda terminates his employment without good reason or the Company terminates his employment for cause, Mr. Kanda will be subject to a non-solicitation and non-competition requirement for the remainder of the term of his employment agreement. Mr. Kanda would also be entitled to these severance benefits if the Company does not agree to renew his employment on substantially similar terms after the end of his two-year term. If there is a change of control of the Company, the term of the employment agreement and the severance period will both automatically extend to three years and Mr. Kanda will be entitled to payments to cover any excise tax liabilities (on an after-tax basis) under Section 4999 of the Internal Revenue Code with respect to his payments under the agreement.

Terms of Mr. Hirata's Agreement

        Under his agreement, Mr. Hirata receives an annual base salary of $200,000 with a minimum bonus target of 30% of his base salary.

        The Company may terminate Mr. Hirata's employment at any time, and Mr. Hirata may resign at any time. If the Company chooses to terminate Mr. Hirata's employment for reasons other than "cause" (as defined in his agreement) or if Mr. Hirata resigns for "good cause" (as defined in his agreement), the Company will be required to pay Mr. Hirata a lump-sum payment equal to the higher of (1) about $824,000 and (2) salary and target bonus for the "severance period", which is the shorter of two years or the remainder of the term of the employment agreement. In addition, Mr. Hirata will also be entitled to his accrued but unpaid compensation, a pro rata target bonus, continued health and welfare benefits for the remainder of the severance period, outplacement assistance and accelerated vesting of all equity awards. In this circumstance, Mr. Hirata will be subject to a non-solicitation and non-competition requirement for the

22



duration of his severance period. If Mr. Hirata terminates his employment without good reason or the Company terminates his employment for cause, Mr. Hirata will be subject to a non-solicitation and non-competition requirement for the remainder of the terms of the employment agreement. If there is a change in control of the Company, the term of the employment agreement and the severance period will both automatically extend to three years, and Mr. Hirata will be entitled to payments to cover any excise liabilities (on an after- tax basis) under Section 4999 of the Internal Revenue Code.

        Under certain circumstances provided in his agreement, Mr. Hirata will be provided with benefits and/or payments as if the change of control agreement and supplemental executive retirement agreement that he previously had with CB Bancshares continued in effect.

Terms of Mr. Weld's Agreement

        Under his agreement, Mr. Weld receives an annual base salary of $195,000 with a minimum bonus target of 30% of his base salary.

        The Company may terminate Mr. Weld's employment at any time, and Mr. Weld may resign at any time. If the Company chooses to terminate Mr. Weld's employment for reasons other than "cause" (as defined in his agreement) or if Mr. Weld resigns for "good reason" (as defined in his agreement), Central Pacific will be required to pay Mr. Weld a lump-sum payment equal to the higher of (1) about $819,000 and (2) salary and target bonus for the "severance period", which is the shorter of two years or the remainder of the term of the employment agreement. In addition, Mr. Weld will also be entitled to his accrued but unpaid compensation, a pro rata target bonus, continued health and welfare benefits for the remainder of the severance period and accelerated vesting of all equity awards. In this circumstance, Mr. Weld will be subject to a non-solicitation and non-competition requirement for the duration of his severance period. If Mr. Weld terminates his employment without good reason or the Company terminates his employment for cause, Mr. Weld will be subject to a non-solicitation and non-competition requirement for the remainder of the term of the employment agreement. If there is a change of control of the Company, the term of the employment agreement and the severance period will both automatically extend to three years, and Mr. Weld will be entitled under the proposed terms to payments to cover any excise tax liabilities (on an after-tax basis) under Section 4999 of the Internal Revenue Code.

        Under certain circumstances provided in his agreement, Mr. Weld will be provided with benefits and/or payments as if the change of control agreement and supplemental executive retirement agreement that he previously had with CB Bancshares continued in effect.

Terms of the Agreements for Messrs. Chikamoto, Fujimoto and Isono

        Under his respective employment agreement, each of Messrs. Chikamoto, Fujimoto and Isono will receive an annual base salary with a minimum bonus target of 30% of his base salary. The annual base salary for each of Messrs. Chikamoto and Fujimoto is $194,670 and for Mr. Isono is $189,263.

        The Company may terminate the employment of each of the officers listed above at any time, and each officer may resign at any time. If the Company chooses to terminate the officers' employment for reasons other than "cause" (as defined in their respective agreements) or if the officer resigns for "good reason" (as defined in their respective agreements), the Company will be required to pay the officer a lump sum payment equal to salary and target bonus for the "severance period", which is the shorter of two years or the remainder of the term of the employment agreement. In addition, the Company will be required to pay the officer his accrued but unpaid compensation, a pro rata target bonus, continued health and welfare benefits for the severance period, accelerated vesting of all equity awards and outplacement assistance. In this circumstance, the officer will be subject to a non-solicitation and non-competition requirement for the duration of his severance period. If the officer terminates his employment without good reason or the Company terminates his employment for cause, the officer will be subject to a non-solicitation and non-competition agreement for the remainder of the term of the employment

23



agreement. If there is a change of control of the Company, the term of the employment agreement and the severance period will both automatically extend to three years, and the officer will be entitled to payments to cover any excise tax liabilities (on an after-tax basis) under Section 4999 of the Internal Revenue Code with respect to his payments under the agreement.

Report of the Compensation Committee

        Set forth below is a report of the Compensation Committee addressing the Company's compensation policies for 2004 applicable to the Company's executives, including the Named Executive Officers.

        The following Report of the Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filings under the Securities Act or under the Exchange Act, except to the extent we specifically incorporate this Report of the Compensation Committee by reference.

Report of the Compensation Committee on Executive Compensation

        The Company's compensation programs reflect the philosophy that executive compensation should be linked to Company performance, yet be competitive and consistent with the compensation paid to others holding positions of similar responsibility in the banking and financial services industries. The Company's compensation plans are designed to assist the Company in attracting and retaining qualified employees critical to the Company's long-term success, while motivating employees to perform to their fullest abilities to increase profitability and maximize shareholder value.

Salary Compensation

        The Company pays cash salaries to its executive officers which are competitive with salaries paid to executives of other companies in the banking and financial services industries based upon the individual's experience, performance and responsibilities and past and potential contribution to the Company. In determining the market rate, the Company obtains information regarding executive salary levels for other companies in the banking and financial services industries, including national banking organizations. The relative asset size and profitability levels of these institutions are also considered. On April 28, 2004, the Company's Board approved the compensation for all executive officers for the ensuing year, effective May 1, 2004.

        The Company's Chief Executive Officer, Clint Arnoldus, was hired in January 2002 as President and Chief Operating Officer and became Chairman, President and Chief Executive Officer in April 2002. In September 2004, in connection with the Company's merger with CB Bancshares, Mr. Arnoldus relinquished the titles of Chairman and President and since that time has served in the positions of Chief Executive Officer and Vice Chairman. In determining Mr. Arnoldus' compensation, the Compensation Committee considered the Company's performance, his experience and background, and peer-level compensation. Other considerations included his leadership, management philosophy, vision and other factors that were determined to be key to the Company's future success.

Incentive Compensation

        During 2004, the Company had two programs whereby compensation for the Named Executive Officers was directly linked to the Company's performance: the Profit Sharing Plan and the Annual Executive Incentive Plan.

        Profit Sharing Plan.    The Bank has a Profit Sharing Plan (the "Profit Sharing Plan") pursuant to which the Bank makes annual profit-sharing contributions (the "Profit Sharing Contribution") to the Retirement Savings Plan as determined by the Bank's Board of Directors depending on the profitability of

24



the Bank during the year, subject to certain limitations on contributions under the Internal Revenue Code and the Profit Sharing Plan.

        Employees with not less than one year of service with the Bank are eligible to participate in the Profit Sharing Plan. The Profit Sharing Contribution is allocated among participating employees, including the Named Executive Officers, in the proportion which each participant's compensation for the fiscal year bears to the total compensation for all participating employees for such year. Benefits vest at a rate of twenty percent (20%) per year and participants receive a distribution of vested amounts allocated to their accounts only upon retirement or termination of employment with the Bank.

        In 1994, the Bank's Board of Directors approved the Cash or Deferred Arrangement ("CODA") program which allows each employee who is a participant in the Profit Sharing Plan to elect to receive up to one-half of the current year's profit sharing contribution in cash with the other half being allocated to such employee's account under the Retirement Savings Plan. Elections not made would be deferred into that employee's Retirement Savings Plan account.

        The Bank's Board of Directors makes its determination of the amount of the Profit Sharing Contribution based upon management's recommendation at the end of the fiscal year. For 2004, the Profit Sharing Contribution equaled five percent (5%) of the pre-tax income of the Bank (excluding the effect of the Profit Sharing Contribution expense), less the amount of cash dividends paid by the Bank during the fiscal year. In 2004, the Bank's Profit Sharing Contribution was $1,920,000, which equaled 9.0% of total compensation paid to all participating employees for the year.

        Annual Executive Incentive Plan.    The 2004 Annual Executive Incentive Plan was adopted by the Company's Board of Directors and approved by the Company's shareholders for the 2004 fiscal year. Executives with the corporate title of Executive Vice President or above as of January 1, 2004, including Messrs. Arnoldus, Kanda, Chikamoto, Fujimoto and Isono, were eligible to participate in the Annual Executive Incentive Plan.

        Subject to approval by the Compensation Committee, participants were eligible to receive a cash bonus under the Annual Executive Incentive Plan based upon a combination of Company and individual performance criteria. The Company performance criteria was based on a number of financial measures including the Company's return on equity, efficiency ratio and earnings per share, adjusted to exclude the impact of the merger. The Company achieved its return on equity and minimum earnings per share thresholds, and accordingly, cash bonuses were paid to Messrs. Kanda, Chikamoto, Fujimoto and Isono. Discretionary cash bonuses were also paid to Messrs. Hirata and Weld reflecting their contributions to the Company since the merger.

Stock-Based Compensation

        The Company also believes that stock ownership by employees, including the Named Executive Officers, provides valuable long-term incentives for such persons who will benefit as the Common Stock price increases and that stock-based performance compensation arrangements are beneficial in aligning employees' and shareholders' interests. To facilitate these objectives, the Company adopted the 2004 Stock Compensation Plan.

        2004 Stock Compensation Plan.    The 2004 Stock Compensation Plan was adopted in 2004 to replace the 1997 Stock Option Plan. The 2004 Stock Compensation Plan provides for the award of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and stock-based awards to be given to any employee, director, or independent contractor of the Company or any of its affiliates. The 2004 Stock Compensation Plan is administered by the Compensation Committee of the Board.

        The granting of stock options for fiscal year 2004 was conditioned upon the attainment of all financial performance objectives consistent with the Annual Executive Incentive Plan. Since those performance

25



thresholds were not met in their entirety, there were no grants of stock options for 2004, other than those granted to Mr. Arnoldus in connection with the merger.

Other Compensation

        In connection with the Company's merger with CB Bancshares, Inc. on September 15, 2004, certain officers received merger-related bonus payments from the Company. Mr. Arnoldus received a one-time merger-related bonus. Each of Messrs. Kanda, Chikamoto, Fujimoto and Isono received a retention bonus: $100,000 was paid to such executive on the merger closing date and $100,000 will be paid on the first anniversary of the merger closing date provided the executive is still in the employ of the Company on such date.

        The Named Executive Officers also participate in the Company's broad-based employee benefit plans, such as the 401(k) Savings Plan and medical, dental, supplemental disability and term life insurance programs.

        Certain Company executives are eligible to participate in the Company's Defined Benefit Pension Plan (the "Pension Plan"), SERA and the Split Dollar Life Insurance Plan (the "Insurance Plan"). See "ELECTION OF DIRECTORS—Compensation of Directors and Executive Officers—Executive Compensation—Defined Benefit Pension Plan and—Supplemental Executive Retirement Plan." Under the Insurance Plan, the Company provides life insurance coverage for certain senior officers. The Insurance Plan agreements provide death benefits of approximately two times the officer's normal annual salary during employment and an amount approximating the officer's final normal annual salary upon retirement. Of the Named Executive Officers, Messrs. Chikamoto, Fujimoto and Kanda participate in the Pension Plan, Messrs. Arnoldus, Kanda, Hirata and Weld are eligible to receive benefits pursuant to the SERA, and Messrs. Chikamoto and Kanda participate in the Insurance Plan.

        Respectfully submitted by the members of the Compensation Committee of the Board of Directors:

    COLBERT M. MATSUMOTO, CHAIR
DWIGHT L. YOSHIMURA, VICE CHAIR
RICHARD J. BLANGIARDI
CLAYTON K. HONBO
PAUL J. KOSASA

Compensation Committee Interlocks and Insider Participation

        The Compensation Committee of the Company is composed entirely of the following five independent directors: Colbert M. Matsumoto (Chair), Dwight L. Yoshimura (Vice Chair), Richard J. Blangiardi, Clayton K. Honbo and Paul J. Kosasa.

26



PERFORMANCE GRAPH

        The following graph compares the yearly percentage change in the Company's cumulative total shareholder return on Common Stock with (i) the cumulative total return of the Russell 2000 index and (ii) the cumulative total return of all publicly-traded U.S. banks with assets of $1-$5 billion as quoted by SNL Financial over the period from December 31, 1999 through December 31, 2004. The graph assumes an initial investment of $100 at the end of 1999 and reinvestment of dividends during the ensuing five-year period. The graph is not necessarily indicative of future price performance.

        The following performance graph does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filings under the Securities Act or under the Exchange Act, except to the extent we specifically incorporate this performance graph by reference.

Comparison of Five Year Cumulative Total Return
Among Russell 2000 Index Companies, Publicly-Traded U.S. Banks with Total Assets of $1-$5 Billion
and Central Pacific Financial Corp.

GRAPH

27



DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD OF DIRECTORS


PROPOSAL 1:

ELECTION OF DIRECTORS

        The Board of Directors recommends the election of the five (5) nominees listed below as directors, to serve a three-year term expiring at the 2008 Annual Meeting of Shareholders and until their respective successors are elected and qualified or until their earlier death, resignation or removal.

Earl E. Fry

B. Jeannie Hedberg

Duane K. Kurisu

Colbert M. Matsumoto

Crystal K. Rose

        For more information regarding the background of each of the nominees for director, see the section titled "ELECTION OF DIRECTORS—Director's and Executive Officers' Information". The person named as "Proxy" in the enclosed form of proxy statement will vote the shares represented by all valid returned proxies in accordance with the specifications of the shareholders returning such proxies. If at the time of the Annual Meeting of Shareholders any of the nominees named above should be unable to serve, which event is not expected to occur, the discretionary authority provided in the proxy statement will be exercised to vote for such substitute nominee or nominees, if any, as shall be designated by the Board of Directors.

        The election of directors requires a plurality of the votes cast "FOR" the election of the directors by the shares entitled to vote in the election at a meeting at which a quorum is present. Accordingly, the five directorships to be filled at the meeting will be filled by the five (5) nominees receiving the highest number of "FOR" votes.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL 5 NOMINEES. UNLESS A CONTRARY CHOICE IS SPECIFIED, PROXIES SOLICITED BY THE BOARD WILL BE VOTED "FOR" ALL 5 NOMINEES.

28



PROPOSAL 2:

RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUTING FIRM

        The Board has appointed KPMG LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2005. KPMG LLP audited the Company's financial statements for the fiscal year ended December 31, 2004, and has audited the Company's financial statements since the Company's inception in 1982. Representatives of KPMG LLP are expected to attend the Meeting. The representatives are expected to be available to respond to appropriate questions and will have an opportunity to make a statement, if they desire to do so.

        The Company is asking its shareholders to ratify the selection of KPMG LLP as its independent registered public accounting firm (as it has done in prior years) because it believes it is a matter of good corporate practice. If the Company's shareholders do not ratify the selection, the Audit Committee will reconsider whether to retain KPMG LLP, but may still retain them. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.

Fees Paid to Independent Registered Accounting Firm

        The following table sets forth the aggregate fees the Company has incurred for audit and non-audit services provided by KPMG LLP who acted as independent registered public accounting firm for the fiscal year ending 2004 and performed the Company's audit services in fiscal year 2004. The table lists audit fees, audit-related fees, tax fees, and all other fees.

        Audit Fees.    The audit fees include only fees that are customary under generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) and are the aggregate fees the Company incurred for professional services rendered for the audit of the Company's annual financial statements for fiscal year 2004, the audit of internal controls over financial reporting for fiscal year 2004, reviews of the financial statements included in the Company's Quarterly Reports on Form 10-Q for fiscal year 2004, review of financial statements included in the Company's Registration Statement on Form S-4 and amendments thereto filed in fiscal year 2004, and regulatory and statutory engagements related to the aforementioned statements.

        Audit-Related Fees.    Audit-related fees include fees for assurance and related services that are related to the performance of the audit of the financial statements, but are not reported under audit fees. These services include audits of the Company's retirement plans and common area maintenance audits for office buildings owned by the Company.

        Tax Fees.    Tax fees include only fees the Company incurred for professional services rendered for preparation of the Company's tax return, tax filings, and tax consulting.

29



        All Other Fees.    All other fees include the aggregate fees billed for services rendered by KPMG LLP other than those services covered above. All other fees consist principally of fees for services relating to the compilation of the Company's existing loan policies into a loan manual.

 
  Year Ended December 31, 2004
  Year Ended December 31, 2003
 
 
  Amount
  Percent Approved by
Audit Committee

  Amount
  Percent Approved by
Audit Committee

 
Audit Fees(1)   $ 1,623,500   100 % $ 405,600   100 %
Audit-Related Fees     68,500   100 %   63,600   100 %
Tax Fees     53,000   100 %   67,200   55 %
All Other Fees     8,120   100 %   21,450   100 %

(1)
The increase in audit fees for fiscal year 2004 is attributable primarily to costs related to the audit of internal control over financial reporting and the CB Bancshares merger.

        The Audit Committee of the Board established a policy in 2003 to pre-approve all services provided by KPMG LLP. Each service to be provided by KPMG LLP is presented for pre-approval at the Audit Committee's regular meeting or presented to the Chair of the Audit Committee for pre-approval under delegated authority and presented to the Audit Committee at their next regular meeting. All engagements with KPMG LLP that commenced during 2003 and since then have been pre-approved in accordance with the pre-approval policy. Tax fees for the year ended December 31, 2003 that were not pre-approved by the Audit Committee related to an engagement that commenced prior to the Audit Committee's establishment of the pre-approval process.

        The Audit Committee considered whether the provision of audit-related services, tax services, and all other services is compatible with maintaining the independence of KPMG LLP.

        The Board has submitted its appointment of KPMG LLP for ratification by the Company's shareholders. The affirmative vote of the holders of at least a majority of the outstanding shares of Common Stock represented and entitled to vote at the Meeting will be required for passage of this proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. UNLESS A CONTRARY CHOICE IS SPECIFIED, PROXIES SOLICITED BY THE BOARD WILL BE VOTED "FOR" THIS PROPOSAL.

30



PROPOSAL 3:

AMENDMENT OF RESTATED ARTICLES OF INCORPORATION OF CENTRAL PACIFIC FINANCIAL CORP.

        The Board of Directors recommends the approval of an amendment to the Restated Articles of Incorporation of Central Pacific Financial Corp. to add a new Article IX regarding director limitation of liability as provided for under Hawaii law. The amendment will limit the liability of directors of the Company to the fullest extent permitted by Hawaii law. The Company believes that the new provisions relating to limitation on liability, which are similar to those commonly found in the charters of companies in Hawaii and nationwide, will enhance the Company's ability to continue to attract qualified individuals to serve as directors.

        The specific language of the proposed amendment is as follows:

ARTICLE IX

        This provision is permitted under Hawaii law, specifically Section 414-222 of the Hawaii Revised Statutes (Hawaii Business Corporation Act). Section 414-222(a) provides that a corporation may eliminate or limit the personal liability of its directors in any action brought by the shareholders or the corporation for monetary damages against any director of the corporation for any action taken, or any failure to take any action, as a director. Section 414-222(b) prohibits a corporation from eliminating or limiting the personal liability of a director for: (1) the amount of a financial benefit received by a director to which the director is not entitled; (2) an intentional infliction of harm on the corporation or the shareholders; (3) a violation of section 414-223, relating to liability for unlawful distributions; or (4) an intentional violation of criminal law.

        If the proposed amendment is adopted, a director would still remain personally liable for certain acts described under subsection (b) of §414-222.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION OF CENTRAL PACIFIC FINANCIAL CORP. UNLESS A CONTRARY CHOICE IS SPECIFIED, PROXIES SOLICITED BY THE BOARD WILL BE VOTED "FOR" THIS PROPOSAL.

31



PROPOSALS OF SHAREHOLDERS

        Shareholder proposals intended to be included in the Company proxy statement and voted on at the Company's regularly scheduled 2006 annual meeting of shareholders must be received at the Company's offices at 220 South King Street, Honolulu, Hawaii 96813, Attention: Corporate Secretary, by November 23, 2005. Applicable SEC rules and regulations govern the submission of shareholder proposals and the Company's consideration of them for inclusion in next year's proxy statement and form of proxy.

        The Company's Restated Bylaws contain procedures that shareholders must follow to present business at a meeting of shareholders if such business is not specified in the proxy statement. A shareholder may obtain a copy of these procedures from the Company's Secretary. In addition to other applicable requirements, for business to be properly brought before the 2006 annual meeting of shareholders, a shareholder must give notice to the matter to be presented at the meeting in a proper written form to the Company's Secretary. The Secretary must receive this written notice at the principal offices of the Company not less than 90 calendar days nor more than 120 calendar days prior to the anniversary date of the preceding year's annual meeting. As a result, any notice given by or on behalf of a shareholder pursuant to these provisions of our Restated Bylaws (and not pursuant to SEC Rule 14a-8) must be received no earlier than December 27, 2005 and no later than January 26, 2006. Shareholder proposals not made in accordance with these requirements may be disregarded by the chairperson of the meeting.


OTHER BUSINESS

        The Board knows of no other business that will be presented for consideration at the Meeting other than as stated in the Notice of Meeting. If, however, other matters are properly brought before the Meeting, it is the intention of the persons named in the accompanying form of Proxy to vote the shares represented thereby on such matters in accordance with the recommendation of the Board.

Incorporation by Reference

        To the extent that this Proxy Statement is incorporated by reference into any other filing by the company under the U.S. Securities Act of 1933 or the U.S. Securities Exchange Act of 1934, the sections of this Proxy Statement entitled "Report of the Compensation Committee on Executive Compensation," "Report of the Audit Committee" (to the extent permitted by the rules of the SEC) and "Stock Price Performance," will not be deemed incorporated, unless specifically provided otherwise in such filing.

Dated: March 23, 2005   CENTRAL PACIFIC FINANCIAL CORP.

 

 

 
   
Ronald K. Migita

RONALD K. MIGITA
Chairman

 

 

 
   
SIGNATURE

CLINT ARNOLDUS
Vice Chairman and Chief Executive Officer

32


APPENDIX A


CENTRAL PACIFIC FINANCIAL CORP.

BOARD OF DIRECTORS

AUDIT COMMITTEE CHARTER

(Revised & Adopted by the Board of Directors, Effective February 1, 2005)

I.    DEFINITIONS OF TERMS USED HEREIN

        The following terms used in this Charter have the following meanings:

II.    PURPOSE

        The Committee's primary purpose is to assist the Board in overseeing various accounting, auditing, internal control, legal and regulatory matters of the Company. Accordingly, in fulfillment of this purpose, the Committee's primary objectives are to:

A-1


III.    AUTHORITY

        The Committee is established pursuant to Article V of the Bylaws (as amended and restated) of the Company.

        In order to carry out its purpose, objectives and responsibilities under this Charter, the Committee shall have the following authority:

A-2


IV.    MEMBERSHIP

V.    MEETINGS

A-3


VI.    RESPONSIBILITIES

        In fulfilling its primary purpose and objectives, the Committee shall have the following responsibilities:

A-4


A-5


A-6



A-7


A-8


VII.    HIRING OF EMPLOYEES OR FORMER EMPLOYEES OF INDEPENDENT AUDITOR.

        The Company shall not employ in any position involved in financial reporting matters (to include, but not be limited to, the Company's chief executive officer, chief financial officer, and controller), any person who, within the one-year period preceding the commencement of the audit of the Company's current year's financial statements, was employed by the Company's independent auditor and performed more than ten hours of work on the independent audit or any other audit, review or attestation engagement for the Company. The Company may employ such person at any time in a position that does not involve financial reporting matters.

VIII.    AMENDMENT.

        This Charter may only be amended by a majority of the Board. The Committee, may, however, in its best judgment and discretion, deviate from or alter, modify or change any of its responsibilities in this Charter if doing so would better serve the primary purpose and objectives of this Charter, provided such deviation is of a temporary nature, and provided further that the Chair informs the Board of such deviation and obtains Board approval of same.

A-9



IX.    LIMITATIONS.

A-10


APPENDIX B


CENTRAL PACIFIC FINANCIAL CORP.
STANDARDS REGARDING DIRECTOR INDEPENDENCE

A.
In order to qualify as independent, a Director ("Director") of Central Pacific Financial Corp. ("CPF") or Central Pacific Bank ("CPB") must meet all of the following criteria:

1.
The Board of Directors of CPF and CPB must affirmatively determine that the Director has no material relationship with CPF, either directly or as a partner, shareholder or officer of an organization that has a relationship with CPF.

B-1


2.
The Director is not employed by CPF nor was employed by CPF within the last 3 years.

3.
None of the Director's immediate family members is an executive officer of CPF nor was an executive officer of CPF within the last 3 years.

4.
Within the last 3 years, the Director has not received more than $100,000 during any twelve-month period in direct compensation from CPF, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).

5.
Within the last 3 years, none of the Director's immediate family members has received more than $100,000 during any twelve-month period in direct compensation from CPF, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).
6.
The Director is not a current partner of a firm that is CPF's internal or external auditor.

7.
None of the Director's immediate family members are a current partner of a firm that is CPF's internal or external auditor.

8.
The Director is not a current employee of a firm that is CPF's internal or external auditor.

9.
The Director does not have an immediate family member who is an employee of a firm that is CPF's internal or external auditor, and who participates in the firm's audit, assurance or tax compliance (but not tax planning) practice.

10.
Within the last 3 years, the Director was not a partner or employee of a firm that is or was CPF's internal or external auditor, who personally worked on CPF's audit within that time.

11.
Within the last 3 years, no immediate family member of the Director was a partner or employee of a firm that is CPF's internal or external auditor, who personally worked on CPF's audit within that time.

12.
The Director does not serve, and within the last 3 years has not served, as an executive officer of another company (excluding CPF companies) in which any present CPF executive officer serves on that other company's compensation committee.

13.
None of the Director's immediate family members is, nor within the last 3 years has been, employed as an executive officer of another company (excluding CPF companies) in which any present CPF executive officer serves on that other company's compensation committee.

14.
The Director is not a current employee of a company that has made payments to, or received payments from, CPF for property or services in an amount which, in any of the last 3 fiscal years, exceeds the greater of $1 million or 2% of such other company's consolidated gross revenues.

B-2


15.
None of the Director's immediate family members is a current executive officer of a company that has made payments to, or received payments from, CPF for property or services in an amount which, in any of the last 3 fiscal years, exceeds the greater of $1 million or 2% of such other company's consolidated gross revenues.
B.
In order to qualify as independent for purposes of the audit committee, a Director must meet all of the following additional independence criteria:

1.
Other than in his or her capacity as a member of the Board or any Board committee, a Director must not accept or have accepted, directly or indirectly, any consulting, advisory, or other compensatory fee from CPF.
2.
A Director must not be affiliated with CPF or any subsidiary of CPF.

When used above the following terms shall have the following meanings:

"affiliate of" or "affiliated with", a specified person, means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified. A person is not deemed to be in control of a specified person if the person is not the beneficial owner, directly or indirectly, of more than 10% of any class of voting equity securities of the specified person, and is not an executive officer of the specified person. The following are deemed affiliates: an executive officer of an affiliate; a director who is also an employee of an affiliate; a general partner of an affiliate, and a managing member of an affiliate. [See Securities Exchange Act of 1934, Rule 10-A-3] The term "affiliate" also includes a subsidiary, sibling company, predecessor, parent company, or former parent company. [See NYSE Corporate Governance Standards]

"Company" and "CPF" means and includes Central Pacific Financial Corp. and its affiliates and subsidiaries.

"executive officer" means and includes as to Central Pacific Financial Corp., its chief executive officer, president, any vice president in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy making function or any other person

B-3



who performs similar policy making functions for Central Pacific Financial Corp. Executive officers of affiliates and subsidiaries of Central Pacific Financial Corp. may be deemed executive officers of Central Pacific Financial Corp. if they perform such policy making functions for Central Pacific Financial Corp. [See Securities Exchange Act of 1934, Rule 3b-7]

"immediate family member(s)" means and includes a person's spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who share such person's home (when applying the look-back provisions, one need not consider individuals who are no longer immediate family members as a result of legal separation or divorce, or those who have died or become incapacitated).

B-4


CENTRAL PACIFIC FINANCIAL CORP.
ANNUAL MEETING OF SHAREHOLDERS
April 26, 2005
This Proxy is solicited on behalf of the Board of Directors

        The undersigned hereby appoints Clint Arnoldus, Neal K. Kanda and Glenn K.C. Ching as proxies, each with full power of substitution, to represent and vote as designated on the reverse side, all the shares of Common Stock of Central Pacific Financial Corp. held of record by the undersigned on February 28, 2005, at the Annual Meeting of Shareholders to be held in the Plumeria Room of the Ala Moana Hotel, 410 Atkinson Drive, Honolulu, Hawaii, on April 26, 2005, at 6:00 p.m., Hawaii time, or any adjournment or postponement thereof.

(Continued and to be signed on the reverse side)


Annual Meeting of Shareholders
CENTRAL PACIFIC FINANCIAL CORP.

April 26, 2005

Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.

\/ Please detach along perforated line and mail in the envelope provided. \/



THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSALS 2 AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ý


 
   
  FOR ALL
NOMINEES

  WITHHOLD
AUTHORITY
TO VOTE
FOR ALL
NOMINEES
LISTED

  FOR ALL
EXCEPT (See
Instructions Below)

   
   
   
  FOR
  AGAINST
  ABSTAIN
1.   ELECTION OF DIRECTORS. Class II Terms will expire in 2008               Nominees:
    Earl E. Fry
    B. Jeannie
        Hedberg
    Duane K.
        Kurisu
    Colbert M.
        Matsumoto
    Crystal K.
        Rose
  2.   RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. To ratify the appointment of KPMG LLP as the Company's independent registered public accounting firm for fiscal year ending December 31, 2005.            
                                FOR
  AGAINST
  ABSTAIN
                        3.   APPROVAL OF AMENDMENT OF RESTATED ARTICLES OF INCORPORATION OF CENTRAL PACIFIC FINANCIAL CORP. To approve an amendment to the Restated Articles of Incorporation of Central Pacific Financial Corp. to add a new Article IX regarding limitation of liability for directors as provided for under Hawaii law.            
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark "FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to withhold, as shown here: •                        
 
          4.   OTHER BUSINESS. To transact such other business as may properly come before the Meeting and at any and all adjournments thereof. The Board of Directors at present knows of no other business to be presented by or on behalf of the Company or the Board of Directors at the Annual Meeting.            

The Board of Directors recommends a vote "FOR" the election of all nominees for director, "FOR" ratification of the appointment of KPMG LLP as the Company's independent registered public accounting firm, and "FOR" approval of the proposed amendment to the Restated Articles of Incorporation of Central Pacific Financial Corp. If any other business is properly presented at such meeting, this proxy shall be voted in accordance with the recommendations of the Board of Directors.

The undersigned hereby ratifies and confirms all that said attorneys and Proxy Holders, or any of them, or their substitutes, shall lawfully do or cause to be done by virtue hereof, and hereby revokes any and all proxies heretofore given by the undersigned to vote at the Annual Meeting. The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy Statement accompanying said notice.



To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. o


       

Signature of Shareholder       Date:       Signature of Shareholder       Date:    
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.

Please date, sign and mail
your proxy card in
the envelope provided as soon
as possible.

\/ Please fold and detach card at perforation before mailing \/

CENTRAL PACIFIC FINANCIAL CORP.
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 26, 2005

This Proxy is solicited on behalf of the Board of Directors

        The undersigned shareholders of Central Pacific Financial Corp. (the "Company") hereby nominate, constitute and appoint Messrs. Clint Arnoldus, Neal K. Kanda and Glenn K.C. Ching, or any one of them, each with full power of substitution, as the lawful attorneys, agents and proxies of the undersigned, for the Annual Meeting of Shareholders of Central Pacific Financial Corp. (the "Annual Meeting") to be held in the Plumeria Room of the Ala Moana Hotel, 410 Atkinson Drive, Honolulu, Hawaii, on Tuesday, April 26, 2005 at 6:00 p.m., Hawaii time, and at any and all adjournments thereof, to represent the undersigned and to cast all votes to which the undersigned would be entitled to cast if personally present, as follows:

        This proxy will be voted "FOR" the election of all nominees unless authority to do so is withheld for all nominees or for any other nominee. Unless "AGAINST" or "ABSTAIN" is indicated, this proxy will be voted "FOR" approval of the independent registered public accounting firm and "FOR" approval of the amendment to Restated Articles of Incorporation of the Company. PLEASE SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE PREPAID ENVELOPE PROVIDED.

        However, if you are a 401(k) participant, this proxy covers all shares for which the undersigned has the right to give voting instructions to Vanguard Fiduciary Trust Company, Trustee of the Central Pacific Bank 401(k) Retirement Savings Plan (the "Plan"). This proxy, when properly executed, will be voted as directed. If no direction is given to the Plan's Trustee by 5:00 PM EST on April 20, 2005, the Plan's Trustee will vote you shares held in the Plan in the same proportion as votes received from other participants in the Plan.

    Date:     
   

 

 


    Signature of Shareholder   (Sign in the Box)

 

 

Please sign exactly as your name or names appear on this Proxy.

Annual Meeting of Shareholders
CENTRAL PACIFIC FINANCIAL CORP.

April 26, 2005

\/ Please fold and detach card at perforation before mailing \/

Please fill in boxe(s) as shown using black or blue ink or number 2 pencil. ý
PLEASE DO NOT USE FINE POINT PENS.

 
   
  FOR ALL
NOMINEES
(EXCEPT AS
INDICATED
TO THE
CONTRARY)

  WITHHOLD
AUTHORITY
TO VOTE
FOR ALL
NOMINEES
LISTED

   
   
   
  FOR
  AGAINST
  ABSTAIN
1.   ELECTION OF DIRECTORS. Class II Terms will expire in 2008           Nominees:
    Earl E. Fry
    B. Jeannie Hedberg
    Duane K. Kurisu
    Colbert M.
        Matsumoto
    Crystal K. Rose
  2.   RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. To ratify the appointment of KPMG LLP as the Company's independent registered public accounting firm for fiscal year ending December 31, 2005.            
                            FOR
  AGAINST
  ABSTAIN
                    3.   APPROVAL OF AMENDMENT OF RESTATED ARTICLES OF INCORPORATION OF CENTRAL PACIFIC FINANCIAL CORP. To approve an amendment to the Restated Articles of Incorporation of Central Pacific Financial Corp. to add a new Article IX regarding limitation of liability for directors as provided for under Hawaii law.            
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.)                        
 
      4.   OTHER BUSINESS. To transact such other business as may properly come before the Meeting and at any and all adjournments thereof. The Board of Directors at present knows of no other business to be presented by or on behalf of the Company or the Board of Directors at the Annual Meeting.            

The Board of Directors recommends a vote "FOR" the election of all nominees for director, "FOR" ratification of the appointment of KPMG LLP as the Company's independent registered public accounting firm, and "FOR" approval of the proposed amendment to the Restated Articles of Incorporation of Central Pacific Financial Corp. If any other business is properly presented at such meeting, this proxy shall be voted in accordance with the recommendations of the Board of Directors.

The undersigned hereby ratifies and confirms all that said attorneys and Proxy Holders, or any of them, or their substitutes, shall lawfully do or cause to be done by virtue hereof, and hereby revokes any and all proxies heretofore given by the undersigned to vote at the Annual Meeting. The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy Statement accompanying said notice.

IMPORTANT: Continued and to be signed on the reverse side.




QuickLinks

INTRODUCTION
ELECTION OF DIRECTORS
CORPORATE GOVERNANCE AND BOARD MATTERS
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
PERFORMANCE GRAPH
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUTING FIRM
PROPOSAL 3: AMENDMENT OF RESTATED ARTICLES OF INCORPORATION OF CENTRAL PACIFIC FINANCIAL CORP.
PROPOSALS OF SHAREHOLDERS
OTHER BUSINESS
CENTRAL PACIFIC FINANCIAL CORP. BOARD OF DIRECTORS AUDIT COMMITTEE CHARTER (Revised & Adopted by the Board of Directors, Effective February 1, 2005)
CENTRAL PACIFIC FINANCIAL CORP. STANDARDS REGARDING DIRECTOR INDEPENDENCE