Arnold D. Martines
About Arnold D. Martines
Arnold D. Martines is Chairman, President and CEO of Central Pacific Financial Corp. and Central Pacific Bank, serving as CEO since January 1, 2023 and elevated to Chairman on June 10, 2024; he has 29+ years of banking experience and is a director since 2023 with Risk Committee membership . He holds a BBA from the University of Hawaii at Mānoa and completed Pacific Coast Banking School at the University of Washington . Under his tenure, CPF reported 2024 net income of $53.4M (adjusted $63.4M), ROA of 0.72% (adjusted 0.86%), and ROE of 10.25% (adjusted 12.10%); company TSR in the SEC “Pay Versus Performance” framework showed an index value of $124.21 on a $100 initial investment in 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Central Pacific Financial/Bank | Chairman, President & CEO | 6/2024–present | Board-CEO alignment; consolidated leadership; capital and risk oversight at Board Risk Committee |
| Central Pacific Financial/Bank | President & CEO | 1/2023–6/2024 | Led net interest margin expansion, core deposit growth; investment portfolio repositioning for future NII |
| Central Pacific Financial/Bank | President & COO | 1/2022–12/2022 | Executive oversight of operations; succession preparation |
| Central Pacific Financial/Bank | EVP & Chief Banking Officer | 6/2020–12/2021 | Led client-facing businesses; credit and revenue initiatives |
| Central Pacific Financial/Bank | Group EVP, Revenue | 5/2019–5/2020 | Organization-wide revenue focus |
| Central Pacific Bank | Earlier leadership and credit roles | 2004–2018 | Commercial, middle market, corporate lending leadership; portfolio management approvals |
External Roles
| Organization | Role | Years |
|---|---|---|
| Saint Louis School | Trustee | Current |
| Child & Family Service | Director | Current |
| YMCA of Honolulu | Director | Current |
| Hawaii Community Foundation | Director | Current |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $471,731 | $628,846 | $663,462 (earned) |
| Board Retainer | None (employee-director) | None (employee-director) | None (employee-director) |
Performance Compensation
Annual Incentive Plan (AIP) design and targets (2024)
| Metric | Weighting | Threshold | Target | Maximum |
|---|---|---|---|---|
| Net Income | 50% | $51,123,200 | $63,904,000 | $76,684,800 |
| Efficiency Ratio | 20% | 65.20% | 62.69% | 60.18% |
| Business Plan/Personal Goals | 30% | Committee assessed | Committee assessed | Committee assessed |
2024 AIP actual results and CEO payout
| Metric | Weight | Target | Actual/Result | Payout % |
|---|---|---|---|---|
| Net Income | 50% | $63,904,000 | $63,424,000 (99%; 98% payout) | 98% |
| Efficiency Ratio | 20% | 62.69% | 65.10% (+3.84%; 52% payout) | 52% |
| Business/Personal | 30% | Meets Expectations | Exceeds Expectations (CEO 117% payout) | 117% |
| Final Pool Payout | — | — | 94% of target | 94% |
| CEO Award | Base $675,000; Target 100% | $675,000 | $634,500 (94% of target) | 94% |
Long-Term Incentives (2024 grants)
| Component | Design | Weighting | Vesting | Performance Grid |
|---|---|---|---|---|
| PSUs (ROE) | 3-yr avg ROE performance | 25% of total | Cliff vest 2/15/2027 | 80%→50%, 100%→100%, ≥120%→200% |
| PSUs (rTSR) | rTSR vs S&P SmallCap 600 Commercial Bank Index (with TSR governor if TSR negative) | 25% of total | Cliff vest 2/15/2027 | P25→50%, P50→100%, ≥P75→200% |
| RSUs | Time-based | 50% of total | Equal annual on 2/15/2025, 2/15/2026, 2/15/2027 | Time vest |
| CEO 2024 Target Equity | RSUs (#) | PSUs (ROE) (#) | PSUs (rTSR) (#) | Target Value ($) |
|---|---|---|---|---|
| $775,000 | 20,005 | 10,003 | 10,002 | $774,994 |
Outstanding equity and vesting schedule (CEO)
| Grant Cohort | Instrument | Shares Not Vested | Notional Value ($) | Key Vest Dates |
|---|---|---|---|---|
| 2022 | RSUs | 1,992 | $57,868 | 2/15/2025 |
| 2022 | PSUs (ROA) | 2,988 (at target trending) | $86,801 | 2/15/2025 (cliff) |
| 2022 | PSUs (TSR) | 5,974 (at max trending) | $173,545 | 2/15/2025 (cliff) |
| 2023 | RSUs | 8,923 | $259,213 | 2/15/2025; 2/15/2026 |
| 2023 | PSUs (ROE) | 3,347 (threshold trending) | $97,230 | 2/15/2026 (cliff) |
| 2023 | PSUs (TSR) | 13,384 (max trending) | $388,805 | 2/15/2026 (cliff) |
| 2024 | RSUs | 20,005 | $581,145 | 2/15/2025; 2/15/2026; 2/15/2027 |
| 2024 | PSUs (ROE) | 5,002 (threshold trending) | $145,308 | 2/15/2027 (cliff) |
| 2024 | PSUs (TSR) | 20,004 (max trending) | $581,116 | 2/15/2027 (cliff) |
Note: 2022–2024 PSU cohorts trend indications reflect current tracking and may differ from ultimate outcomes; 2022 PSU cycle payout was 96.03% based on 3-yr ROA and TSR vs KBW Regional Bank Index .
Equity Ownership & Alignment
- Beneficial ownership: 59,389 shares as of 2/19/2025, including 40,439 jointly with spouse; 13,609 in CEO’s 401(k); 5,341 in spouse’s 401(k); <1% of class . Prior year beneficial ownership was 56,197 shares as of 2/20/2024, including 31,946 jointly; 13,189 in CEO’s 401(k); 5,176 in spouse’s 401(k); 5,886 in CPB Foundation account where he is VP/Director .
- Stock ownership guidelines: CEO must hold 50% of after-tax vested shares until reaching ownership valued at 4x base salary; he is on track within 5-year window (appointed 1/2023) .
- Hedging/pledging: Hedging prohibited; pledging requires prior legal consent under Company Stock Trading Policy .
- Insider trading controls: Quarterly blackout windows, preclearance for Section 16 insiders, 10b5‑1 plan cooling-off periods; robust governance .
- Options: Company has not granted stock options since November 2012; none outstanding/vested in 2024 .
| Ownership Snapshot | 2/20/2024 | 2/19/2025 |
|---|---|---|
| Total Beneficial Shares | 56,197 | 59,389 |
| % of Class | <1% | <1% |
| Jointly Held | 31,946 | 40,439 |
| 401(k) (CEO) | 13,189 | 13,609 |
| 401(k) (Spouse) | 5,176 | 5,341 |
Employment Terms
- Agreements: No employment agreements; executives are at-will .
- Change-in-control: No individual CIC agreements; equity accelerates only with double-trigger (CIC plus qualifying termination) at target for PSUs; CEO acceleration value estimated $2,041,779 as of 12/31/2024 .
- Clawback: NYSE-compliant clawback policy adopted 9/21/2023; permits recovery on restatement and other risk-related triggers .
- Policies: Company Stock Trading Policy with blackout periods and MNPI restrictions; anti-hedging; limited pledging; short-swing profit rules for Section 16 insiders .
Board Governance
- Roles: Chairman, President & CEO; Director since 2023; Board Risk Committee member .
- Dual-role mitigation: Board combined Chair/CEO deemed appropriate in 2024; Lead Independent Director (Crystal K. Rose) presides over executive sessions; 9 of 12 directors independent; Audit, Compensation, Governance Committees fully independent .
- Attendance: In 2024, Board held 8 regular and 10 special meetings; all incumbent directors attended at least 75% of aggregate Board and committee meetings; 11/12 attended 2024 annual meeting .
Director Compensation
- As an employee, the CEO does not receive Board retainers; director fee schedule applies to non-employee directors only .
Compensation Structure Analysis
| Topic | Evidence | Implications |
|---|---|---|
| Cash vs equity mix | 2024 CEO pay: Salary $663,462; Stock awards $776,694; AIP $634,500; Other $31,377 | Balanced at-risk mix; material equity exposure aligns to long-term performance |
| AIP discretion | Committee applied formula; no negative discretion used in 2024 | Program rules-driven; credibility maintained |
| Performance metrics rigor | AIP tied to Net Income, Efficiency Ratio, Business/Personal; PSUs tied to ROE and rTSR vs sector benchmark | Clear linkage to financial outcomes and peer-relative returns |
| Option repricing/modification | None; company hasn’t granted options since 2012 | No repricing red flags |
| Clawbacks and ownership | NYSE-compliant clawback; 4x salary guideline; hedging prohibited; pledging restricted | Strong alignment and risk controls |
| Peer benchmarking | 16-bank peer group; company assets at 38th percentile; pay positioned below peers and local market historically | Competitive tension; retention risk mitigated via program updates |
Performance & Track Record
- Company financials under Martines’ leadership: 2023 net income $58.7M (ROA 0.78%, ROE 12.38%); 2024 net income $53.4M with adjusted net income $63.4M (ROA 0.72% adjusted 0.86%; ROE 10.25% adjusted 12.10%) .
- Strategic achievements: Net interest margin management; core deposits growth; asset quality maintained; enterprise risk enhancements; Maui branch recovery and community engagement; Forbes/Newsweek awards .
| TSR context (Value of $100) | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| CPF TSR | $67.51 | $103.81 | $78.12 | $80.37 | $124.21 |
Say-on-Pay & Shareholder Feedback
- 2025 Say-on-Pay: 21,564,312 For; 501,346 Against; 24,864 Abstain; strong approval (~97–98% of votes cast) . Committee notes 98% approval of NEO compensation program in 2024 CD&A .
Compensation Peer Group (2024)
Selected peers span asset sizes ~$2.2B–$23.8B; CPF at $7.472B assets and 38th percentile of group size .
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited/restricted under policy (no observed pledging disclosed) .
- Related party and independence: Board independence maintained; related party transactions reviewed by Audit Committee with immaterial amounts and market terms .
- Insider reporting: No delinquent Section 16 filings in 2024; robust controls .
Equity Ownership & Guidelines Compliance
- CEO guideline: 4x salary; on track within five years from 1/2023; 50% of after-tax vested shares must be held if short of guideline .
Employment & Contracts
- No employment or CIC agreements; double-trigger equity acceleration only; CEO CIC acceleration value $2,041,779 (as of 12/31/2024) .
Investment Implications
- Alignment: Strong pay-for-performance architecture—AIP and PSUs closely aligned to Net Income, Efficiency, ROE, and rTSR; ownership guidelines and clawbacks bolster governance quality .
- Governance: Combined Chair/CEO mitigated by a longstanding Lead Independent Director and independent key committees; majority independent board—reduces traditional dual-role concerns .
- Trading signals: Multiple vesting dates (Feb 15, 2025/2026/2027) could create episodic selling pressure as RSUs vest; insider trading policy and preclearance/blackouts moderate execution timing .
- Retention risk: CEO pay positioned below local peers historically; program enhancements and strong shareholder support (98%) reduce risk of turnover, but Hawaii’s high cost-of-living market remains competitive .
- Performance outlook: Adjusted earnings recovery in 2024 and risk management improvements (investment portfolio repositioning) suggest improving NII trajectory; PSU metrics calibrated to ROE and sector-relative TSR will be sensitive to rate and credit cycles .