Matson, Inc.

1411 Sand Island Parkway, Honolulu, Hawaii 96819

March 10, 2020

To the Shareholders of Matson, Inc.:

You are invited to attend the 2020 Annual Meeting of Shareholders of Matson, Inc.  (“Matson” or the “Company”), to be held in the Bankers Club on the 30th Floor of the First Hawaiian Center, 999 Bishop Street, Honolulu, Hawaii, on Thursday, April 23, 2020 at 8:30 a.m., Hawaii Standard Time.  At the meeting, we will have the opportunity to discuss the Company’s financial performance during 2019, and our future plans and expectations.

We have elected to provide access to our proxy materials over the internet under the Securities and Exchange Commission’s  “notice and access” rules.  On or around March 10,  2020, we expect to distribute to our shareholders either (i) a copy of our Proxy Statement, the accompanying proxy card and our annual report or (ii) the Notice of Internet Availability of Proxy Materials (the “Notice”) only.  The Notice contains instructions for how to access our Proxy Statement and annual report over the Internet and how to request a paper copy of the Proxy Statement and annual report.

Your vote is important – no matter how many or how few shares you may own.  Whether or not you plan to attend the Annual Meeting, please read the Proxy Statement and vote as soon as possible.  You may vote via the Internet or, if you receive printed proxy materials, by telephone or by mailing a proxy card.  Instructions for Internet and telephone voting are included in your proxy card and the Proxy Statement (if you receive your materials by mail).  Any shareholder attending the Annual Meeting may vote in person even if a proxy has been returned.

Thank you for your continued support of Matson.

 

Matson, Inc.

1411 Sand Island Parkway, Honolulu, Hawaii 96819

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders of Matson, Inc. will be held in the Bankers Club on the 30th Floor of the First Hawaiian Center, 999 Bishop Street, Honolulu, Hawaii, on Thursday, April 23, 2020 at 8:30 a.m., Hawaii Standard Time, to:

The Board of Directors has set the close of business on February 24, 2020 as the record date for the meeting.  Owners of Matson, Inc. stock at the close of business on that date are entitled to receive notice of and to vote at the meeting.  Shareholders will be asked at the meeting to present a  valid, government-issued photo identification.  Shareholders holding stock in brokerage accounts must present a copy of a brokerage statement reflecting stock ownership as of the record date.

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.  WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY VOTE VIA THE INTERNET OR IF YOU RECEIVE PRINTED PROXY MATERIALS, BY TELEPHONE OR BY MAILING THE PROXY CARD.

 

 

 

 

 

 

TABLE OF CONTENTS

 

 

 

Matson, Inc.

1411 Sand Island Parkway, Honolulu, Hawaii 96819

PROXY STATEMENT

Annual Meeting of Shareholders

Thursday, April 23, 2020

The Board of Directors (the “Board of Directors” or the “Board”) of Matson, Inc.  (“Matson” or the “Company”) is soliciting your proxy to vote at the 2020 Annual Meeting of Shareholders to be held on Thursday, April 23, 2020 at 8:30 a.m., Hawaii Standard Time, and any adjournment or postponement of that meeting (the “Annual Meeting”).  The Annual Meeting will be held at the Bankers Club on the 30th Floor of the First Hawaiian Center, 999 Bishop Street, Honolulu, Hawaii.  This Proxy Statement and the accompanying proxy card and Notice of Annual Meeting of Shareholders were first mailed or otherwise made available, on or about March 10, 2020, to shareholders of record as of February 24,  2020, the record date for the Annual Meeting.

In accordance with rules and regulations adopted by the U.S.  Securities and Exchange Commission (“SEC”), instead of mailing a printed copy of our proxy materials to each shareholder of record, we are furnishing proxy materials primarily on the Internet.  On or around March 10, 2020, we mailed to our shareholders (other than to certain registered holders, certain street name shareholders, or those who previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials, which contains instructions as to how you may access and review on the Internet all of our proxy materials, including this Proxy Statement and our annual report.  The Notice of Internet Availability of Proxy Materials also instructs you as to how you may vote your proxy on the Internet.  If you would prefer to receive printed proxy materials, please follow the instructions for requesting printed materials contained in the Notice of Internet Availability of Proxy Materials.  This process is designed to expedite shareholders’ receipt of proxy materials, lower the cost of the Annual Meeting and help conserve natural resources.

 

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

Who may attend the Annual Meeting?

All shareholders are invited to attend the Annual Meeting.  You will be asked to present a valid, government-issued photo identification.  If you are the beneficial owner of shares held in the name of your broker, bank or other nominee, you must also present a copy of a brokerage statement reflecting stock ownership as of the record date.

Who is entitled to vote at the Annual Meeting?

You are entitled to receive notice of, and to vote at, the Annual Meeting if you own shares of Matson common stock at the close of business on February 24,  2020, the record date for the Annual

Meeting.  At the close of business on the record date, there were 43,040,657 shares of Matson common stock issued and outstanding.  Each share of common stock is entitled to one vote on each matter to be voted on at the Annual Meeting.

What matters will be voted on at the Annual Meeting and what are the Board’s voting recommendations?

There are three proposals scheduled to be considered and voted on at the Annual Meeting:

The Board recommends that you vote “FOR” each of the director nominees and “FOR” each of the other proposals.

How do I vote by proxy before the Annual Meeting?

If you are a shareholder of record, you may submit a proxy via the Internet, by telephone or by mail.

By casting your vote in any of the ways listed above, you are authorizing the individuals listed on the proxy to vote your shares in accordance with your instructions.  You may also attend the Annual Meeting and vote in person.

If you are a “street name” holder, you must provide instructions on voting to your broker, bank, trust or other nominee holder.

What is the difference between a “shareholder of record” and a “street name” holder?

These terms describe how your shares are held.  If your shares are registered directly in your name with our independent transfer agent and registrar, Computershare Shareowner Services LLC, you are a “shareholder of record”.  If your shares are held in the name of a brokerage, bank, trust or other nominee as a custodian, you are a “street name” holder and you are considered the “beneficial owner” of the shares.  As the beneficial owner of shares, you have the right to direct your broker, trustee or nominee how to vote your shares, and you will receive separate instructions from your broker, bank or other holder of record describing how to vote your shares.

How many proxy cards might I receive?

You could receive multiple proxy cards if you hold your shares in different ways (e.g., joint tenancy, trusts and custodial accounts) or in multiple accounts.  If your shares are held in “street name”, you will receive your proxy card or other voting information from your broker, bank, trust or other nominee, and you will return your proxy card or cards to such broker, bank, trust or other nominee.  You should complete and sign, or provide Internet or telephone voting instructions with respect to, each proxy card you receive.

Can I vote my shares in person at the Annual Meeting?

Yes.  If you decide to join us in person at the Annual Meeting and you are a “shareholder of record”, you may vote your shares in person at the Annual Meeting.  If you hold your shares as a “street name” holder and wish to vote in person at the Annual Meeting, you must obtain a legal proxy from your broker, bank, trust or other nominee, giving you the right to vote the shares at the Annual Meeting.  You will not be able to vote your shares at the Annual Meeting without a legal proxy.

Can I revoke my proxy or change my vote after I have submitted a proxy?

You may revoke your proxy or change your vote at any time before it is exercised by:

Any written notice of revocation, or later dated proxy, should be delivered to:

Rachel C. Lee

Corporate Secretary

Matson, Inc.

555 12th Street

Oakland, California 94607

(510) 628‑4000

Alternatively, you may hand deliver a written revocation notice, or a later dated proxy, to the Corporate Secretary at the Annual Meeting before we begin voting.

If your shares are held by a bank, broker or other nominee, you must follow the instructions provided by the bank, broker or other nominee if you wish to revoke your proxy or change your vote.

What constitutes a quorum for the Annual Meeting?

In order to take action on the proposals at the Annual Meeting, a quorum, consisting of a majority of the outstanding shares entitled to vote as of the record date, must be present in person or by proxy.  Abstentions and broker non-votes will be counted as shares that are present for purposes of determining quorum.

What are the voting requirements for each of the proposals?

Provided a quorum is present:

Proposal 1 – Election of directors:  Directors will be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors.  A  “plurality” voting standard means that the seven nominees who receive the most “for” votes cast will be elected as directors.

Proposal 2 – Advisory vote to approve executive compensation:  The affirmative vote of a majority of the votes cast in person or by proxy at the Annual Meeting is required to approve this proposal.

Proposal 3 – Ratification of the appointment of Deloitte and Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020:  The affirmative vote of a majority of the votes cast in person or by proxy at the Annual Meeting is required to approve this proposal.

What is a broker “non-vote”?

A broker “non-vote” occurs when a broker or other nominee who holds shares for a beneficial owner is unable to vote those shares for the beneficial owner because the broker or other nominee does not have discretionary voting power for the proposal and has not received voting instructions from the beneficial owner of the shares.  Brokers will have discretionary voting power to vote shares for which no voting instructions have been provided by the beneficial owner only with respect to the proposal to ratify the appointment of the Company’s independent registered public accounting firm.  Brokers will not have such discretionary voting power to vote shares with respect to the election of directors or the advisory vote to approve executive compensation.

How will abstentions and broker non-votes affect the votes?

Abstentions and broker non-votes will have no effect on the voting results for any matter, as they are not considered to be votes cast.

How will my shares be voted if I give my proxy but do not specify how my shares should be voted?

If you provide specific voting instructions, your shares will be voted at the Annual Meeting in accordance with your instructions.  If you hold shares in your name (i.e., you are a shareholder of record and not a street-name holder) and sign and return a proxy card without giving specific voting instructions, your shares will be voted “FOR” each of the director nominees named in this Proxy Statement and “FOR”  Proposals 2 and 3,  in accordance with the Board’s recommendations.

Who will count the votes?

At the Annual Meeting, votes will be counted by an election inspector from the Company.  Such inspector will be present at the Annual Meeting to process and count the votes cast by our shareholders, make a report of inspection and certify as to the number of votes cast on each proposal.

Who will conduct the proxy solicitation and how much will it cost?

We are soliciting proxies from shareholders on behalf of our Board and will pay for all costs incurred by it in connection with the solicitation.  In addition to solicitation by mail, the directors, officers and employees of Matson and its subsidiaries may solicit proxies from shareholders in person or by telephone, facsimile or email without additional compensation other than reimbursement for their actual expenses.

We have retained Alliance Advisors, a proxy solicitation firm, to assist us in the solicitation of proxies for the Annual Meeting.  We will pay Alliance Advisors a fee of approximately $5,500 and reimburse the firm for reasonable out‑of‑pocket expenses.

Arrangements also will be made with brokerage firms and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and we will reimburse such custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in connection with the forwarding of solicitation materials to the beneficial owners of our stock.

Where can I find the voting results of the Annual Meeting?

We will announce preliminary voting results at the Annual Meeting and expect to publish final results on a Form 8‑K filed with the SEC within four business days after the Annual Meeting.

If you have any questions about voting your shares or attending the Annual Meeting, please call our Corporate Secretary at (510) 628‑4000 or Alliance Advisors toll free at (855) 723‑7816.

PROPOSAL 1 — ELECTION OF DIRECTORS

The number of directors is currently fixed at seven.  On January 22, 2020, Mr. Baird notified the Chairman of the Board of Directors of Matson of his decision not to stand for re-election to the Board of Directors after his current term expires at the 2020 Annual Meeting of Shareholders.1  Our Board extends its gratitude to Mr. Baird for his dedication and service to the Company.  If elected, each Director nominee will serve until the next Annual Meeting of Shareholders and until his or her successor is duly elected and qualified.

Director Nominees and Qualification of Directors

The nominees of the Board of Directors are the seven persons named below.  The Board of Directors believes that all nominees will be able to serve.  However, if any nominee should decline or become unable to serve for any reason, the proxy holder will vote your shares to approve the election of any replacement nominee proposed by the Board of Directors or just for the remaining nominees, leaving a vacancy.  Alternatively, the Board of Directors may reduce the size of the Board.

The following table provides the name, age (as of March 10, 2020) and principal occupation of each person nominated by the Board of Directors, their business experience during at least the last five years, the year each was first elected or appointed a director (including to predecessor companies) and qualifications of each director.  Our Board members have a diverse range of perspectives and are knowledgeable about our businesses.  Each director contributes in establishing a Board climate of trust and respect, where deliberations are open and constructive.  All of our Board members are U.S. citizens which helps ensure the Company remains in compliance with the requirements of the Merchant Marine Act of 1920, commonly referred to as the Jones Act.  In selecting nominees, the Board has considered these factors and has reviewed the qualifications of each nominee, which includes the factors reflected below:

 

 

 

 

 

 

 

 

 

1 At our 2019 Annual Meeting of Shareholders, Mr.  Baird received the support of approximately 57% of votes cast.  We believe this lower level of support was due to concerns of some institutional investors with his service on three public company boards.  The Board of Directors does not believe that Mr. Baird’s professional commitments ever limited his ability to devote sufficient time and attention to Matson Board duties.

 

 

 

 

 

 

 

 

 

 

 

 

2 Adm. Fargo will retire from the HII board after its next annual meeting of shareholders to be held on April 28, 2020.

 

 

The Board of Directors recommends that shareholders vote “FOR”
each of the seven nominees for director.

CORPORATE GOVERNANCE

Director Independence

The NYSE listing standards and our Corporate Governance Guidelines require that a majority of our Board of Directors and every member of the Audit, Compensation and Nominating and Corporate Governance Committees be “independent.”  The Board has reviewed each of its current directors and the additional nominee for director, and has determined that all of such individuals, with the exception of Mr. Cox, who is an executive officer of Matson, are independent under NYSE rules.  The Board had also previously determined that Michael J. Chun, who retired from the Board in April 2019 upon reaching the mandatory retirement age under the Company’s Bylaws, was independent under NYSE rules.  In making its independence determinations, the Board considered the transactions, relationships or arrangements described below in “Certain Information Regarding Directors and Executive Officers—Certain Relationships and Transactions”, as well as the following, none of which the Board deemed to be material to Matson:  Dr. Chun—Matson’s banking relationships with Bank of Hawaii, an entity of which Dr. Chun was a director; Admiral Fargo—Matson’s banking relationships with American Savings Bank, the corporate parent of which Admiral Fargo is a director; Mr. Fukunaga—Matson’s commercial relationships with Servco, an entity of which Mr. Fukunaga is chairman and chief executive officer; Ms. Lau—Matson’s banking relationships with American Savings Bank, the corporate parent of which Ms. Lau is president, chief executive officer, and a director; and Ms. Wall—Matson’s commercial relationships with Foodland, an entity of which Ms. Wall is chairman and chief executive officer, and Matson’s banking relationships with First Hawaiian Bank, an entity of which Ms. Wall is a director and the corporate parent of which Ms. Wall is a director.

Board Leadership Structure

The Board recognizes that one of its key responsibilities is to evaluate and determine the optimal leadership structure to best serve the interests of shareholders.  The Board understands that there is no single, generally accepted approach to providing Board leadership.  Given the dynamic and competitive environment in which we operate, the right Board leadership structure may vary as circumstances warrant.

The Company’s Bylaws and Corporate Governance Guidelines provide the Board flexibility to determine whether it is in the best interests of the Company and its shareholders to have a combined or separate Chairman of the Board and Chief Executive Officer (“CEO”).  The Board has combined the Chairman and CEO roles and designated a Lead Independent Director because it provides unified leadership and accountability in quickly and seamlessly identifying and carrying out the strategic priorities of the Company.  With its Lead Independent Director, this governance structure also provides a form of leadership that allows the Board to function independently from management and exercise objective judgment regarding management’s performance, and enables the Board to fulfill its duties effectively and efficiently.  The Lead Independent Director has significant responsibilities, which are set forth in the Company’s Corporate Governance Guidelines, including:

The Board believes that the Company and its shareholders continue to be best served at this time by having Matthew J. Cox serve as the Chairman and CEO, and Stanley M. Kuriyama serve as the Lead Independent Director.

Board Evaluations

Each year, the Nominating and Corporate Governance Committee, together with the Lead Independent Director, oversees an annual Board and committee evaluation process to assess its performance and effectiveness.  As part of this process, Board members complete a questionnaire that requests subjective comment in key areas and solicits specific topics on which Directors would like to focus during the upcoming year.  The results are discussed by the Board in executive session at a separate meeting.  Each committee conducts its own self‑evaluation and reports the findings of the self-evaluations to the full Board.

The Board’s Role in Risk Oversight

The Board has oversight of the risk management process, which includes overseeing our process for identifying, assessing and mitigating significant financial, operational, legal, strategic, cybersecurity and other risks that may affect the Company.  Risk oversight plays a role in all major Board decisions and the evaluation of risk is a key part of the decision-making process.  For example, the identification of risks and the development of sensitivity analyses are key requirements for capital requests that are presented to the Board.  The Board administers its oversight role in part through the Audit Committee.  One of the Audit Committee’s responsibilities involves discussing policies regarding risk assessment and risk management.

This risk management process occurs throughout all levels of the organization, but is also facilitated through a risk management steering committee comprised of senior management, whose members meet regularly to identify and address specific significant risks.  Risk management is reflected in the Company’s compliance, auditing and risk management functions, and its risk-based approach to strategic and operating decision-making.  Management reviews its risk management activities with the Audit Committee and the full Board of Directors on a regular basis.  The Board periodically receives various reports on risk-related matters, including presentations by senior management that cover an overview of the risk management program and include risk management perspectives from each of Matson’s business segments in the company-wide strategic plan.

Pay Risk Assessment

In 2019, management worked with the Compensation Committee and Exequity LLP, an independent executive compensation consulting firm retained by the Compensation Committee, to review all Company incentive plans and related policies and practices, and the overall structure of total pay, pay mix, the risk management process and related internal controls.

The Company concluded that the risks arising from our incentive compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

Board of Directors and Committees of the Board

The Board of Directors held seven meetings during 2019.  In conjunction with six of these meetings, the non‑management directors of Matson met in formally-scheduled executive sessions led by the Lead Independent Director.  In 2019, all directors attended more than 75% of the aggregate meetings of the Board of Directors and the Committees of the Board on which they served.  In addition, Matson’s directors are strongly encouraged to attend the Annual Meeting of Shareholders.  All of the directors then serving on the Board attended the 2019  Annual Meeting.

The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, each of which is governed by a charter, which is available on the corporate governance page of Matson’s website at www.matson.com.  Each committee meets regularly throughout the year, reports its actions to the Board, receives reports from senior management, annually evaluates its performance and can retain outside advisors.  The composition of each committee is set forth below:

 

Audit Committee:  Each member is an independent director under the applicable NYSE listing standards and SEC rules.  In addition, the Board has determined that Ms. Lau and Mr. Baird are “Audit Committee Financial Experts” under SEC rules.  The duties and responsibilities of the Audit Committee are set forth in a written charter adopted by the Board of Directors, and are summarized in the Audit Committee Report, which appears in this Proxy Statement.  The Audit Committee met five times during 2019.

Compensation Committee:  Each member is an independent director under the applicable NYSE listing standards and SEC rules.  The Compensation Committee has general responsibility for management and other salaried employee compensation and benefits, including incentive compensation and stock incentive plans, and for making recommendations on director compensation to the Board.  The Compensation Committee may form subcommittees and delegate such authority as the Compensation Committee deems appropriate, subject to any restrictions by law or listing standard.  For further information on the processes and procedures for consideration of executive compensation, see the “Executive Compensation – Compensation Discussion and Analysis”  section of this Proxy Statement.  The Compensation Committee met five times during 2019.

Nominating and Corporate Governance Committee:  Each member is an independent director under the applicable NYSE listing standards.  The functions of the Nominating and Corporate Governance Committee include recommending to the Board individuals qualified to serve as directors; recommending to the Board the size and composition of committees of the Board and monitoring the functioning of the committees; advising on Board composition and procedures; reviewing corporate

governance issues; overseeing the annual evaluation of the Board; and ensuring that an evaluation of management occurs.  The Nominating and Corporate Governance Committee met four times during 2019.

Director Nomination Processes

The Nominating and Corporate Governance Committee identifies potential nominees by asking current directors to notify the Nominating and Corporate Governance Committee of qualified persons who might be available to serve on the Board.  From time to time, the Nominating and Corporate Governance Committee also engages firms that specialize in identifying director candidates.

The Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders.  In considering such candidates, the Nominating and Corporate Governance Committee will take into consideration the needs of the Board and the qualifications of the candidate.  To have a candidate considered by the Nominating and Corporate Governance Committee, a shareholder must submit a written recommendation that meets the requirements of the Company’s Bylaws, including the name of the shareholder, evidence of the shareholder’s ownership of Matson stock (including the number of shares owned and the length of time of ownership), the name of the candidate, the candidate’s qualifications to be a director and the candidate’s consent for such consideration.

The shareholder recommendation and information described above must be sent to the Corporate Secretary at 555 12th Street, Oakland, California 94607.

The Nominating and Corporate Governance Committee believes that the minimum qualifications for serving as a director are high ethical standards, a commitment to shareholders, a genuine interest in Matson and a willingness and ability to devote adequate time to a director’s duties.  The Company’s Corporate Governance Guidelines authorize the Nominating and Corporate Governance Committee to consider other factors it deems to be in the best interests of Matson and its shareholders, including whether nominees possess such knowledge, experience, skills, expertise and diversity to enhance the Board’s ability to manage and direct the business and affairs of the Company, including, when applicable, to enhance the ability of committees of the Board to fulfill their duties and/or to satisfy any independence requirements imposed by law, regulation or NYSE rules.  While the Nominating and Corporate Governance Committee does not have a separate written diversity policy, it does consider diversity, including diversity of knowledge, skills, professional experience, gender, ethnicity, education, expertise, and representation in industries relevant to the Company, as an important factor in its evaluation of candidates.  The Nominating and Corporate Governance Committee reviews annually with the Board the composition of the Board as a whole and recommends any measures to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills and expertise to oversee the Company’s execution of its strategy.

Once a potential candidate has been identified by the Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee reviews information regarding the person to determine whether the person should be considered further.  If appropriate, the Nominating and Corporate Governance Committee may request information from the candidate, review the person’s accomplishments, qualifications and references, and conduct interviews with the candidate.  The Nominating and Corporate Governance Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder.

Corporate Governance Guidelines

The Board of Directors has adopted Corporate Governance Guidelines to assist the Board in the exercise of its responsibilities and to promote the effective functioning of the Board and its committees.  The guidelines provide details on matters such as:

“Plurality Plus” Policy.  Our Corporate Governance Guidelines provide that any director nominee who receives a greater number of “withhold” votes than “for” votes in an uncontested election is required to tender his or her resignation for consideration by the Nominating and Corporate Governance Committee of the Board.  The Nominating and Corporate Governance Committee will consider the resignation offer and recommend to the Board whether to accept or reject the resignation offer, or whether other action should be taken.  The Board will consider the recommendation of the Nominating and Corporate Governance Committee and will determine whether or not to accept the resignation offer.  Full details of this policy are set forth in our Corporate Governance Guidelines, which are available on the corporate governance page of Matson’s corporate website at www.matson.com.

Sustainability

Matson’s core values include being an industry leader in environmental stewardship and contributing positively to the communities in which we live and work.  We operate in some of the most pristine and environmentally sensitive areas in the Pacific, including the Hawaiian Islands, the coast of California, Puget Sound, the coast of Alaska and islands in the South Pacific.  In keeping with our core values, we are committed to protecting these areas.  The Board oversees our sustainability progress.  For more information about our sustainability initiatives, please see our website at www.matson.com/sustainability.  Websites provided throughout this document are provided for convenience only, and the content on the referenced websites does not constitute a part of this Proxy Statement and is not incorporated herein by reference.

Compensation of Directors

The following table summarizes the compensation paid by Matson to non-employee directors for services rendered during 2019:

2019  DIRECTOR COMPENSATION

For 2019, non-employee directors received cash retainers as follows, all of which were pro-rated and paid quarterly:

 

For any telephonic or in‑person board meetings in excess of seven meetings, a per meeting fee of $1,500 was paid to each director who attended such meetings.  Directors who are employees of Matson or its subsidiaries did not receive compensation for serving as directors.  Non-employee directors may defer half or all of their annual cash retainer and meeting fees until retirement or until a later date they may select; Mr. Fukunaga and Ms. Lau deferred all of their respective annual cash retainers and meeting fees in 2019.

Under the terms of the 2016 Incentive Compensation Plan, an automatic grant of approximately $100,000 in restricted stock units was awarded to each director who is elected or reelected as a non‑employee director at each Annual Meeting of Shareholders.  These awards have 100% cliff vesting on the earlier of the grant date anniversary or the next annual shareholders meeting following the date of the grant.  Non-employee directors may defer all or a portion of their vested shares until cessation of board service or the fifth anniversary of the award date, whichever is earlier.  Admiral Fargo and Mr. Fukunaga elected to make such a deferral in 2019.

Directors have business travel accident coverage of $200,000 for themselves and $50,000 for their spouses while accompanying directors on Matson business.  They also may participate in the Company’s matching gifts program for employees, in which the Company matches contributions to qualified cultural and educational organizations up to a maximum of $3,000 annually.

Director Share Ownership Guidelines

The Board has a Share Ownership Guideline Policy that encourages each non-employee director to own Matson common stock (including restricted stock units) with a value of five times the amount of the current cash retainer within five years of becoming a director.  All non-employee directors have met or are on track to meet the established guidelines.

Shareholder Engagement

Matson values the views of its shareholders, which is why we regularly and proactively engage with our largest shareholders throughout the year.  During 2019, members of our Board of Directors and management met or offered to meet with shareholders who collectively own approximately two-thirds of our stock to discuss our business strategy and operations, corporate governance practices and human capital management strategy, and to solicit feedback on these and a variety of other topics.  Shareholder perspectives are shared with the Board.

Communications with Directors

Shareholders and other interested parties may contact any of the directors, or the independent directors as a group, by mailing correspondence “c/o Matson Law Department” to Matson’s corporate offices at 555 12th Street, Oakland, California 94607.  The Law Department will forward such correspondence to the appropriate director(s).  However, the Law Department reserves the right not to forward any offensive or otherwise inappropriate materials.

SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS

The following table lists the names and addresses of the only shareholders known by Matson to have owned beneficially more than five percent of Matson’s common stock outstanding as of December 31, 2019, the number of shares they beneficially own, and the percentage of outstanding shares such ownership represents, based upon the most recent reports filed with the SEC.  Except as indicated in the footnotes, such shareholders have sole voting and dispositive power over shares they beneficially own.

 

 

CERTAIN INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS

Security Ownership of Directors and Executive Officers

The following table shows the number of shares of Matson common stock beneficially owned as of February 24, 2020 by each director and nominee, by each Named Executive Officer (as defined below), and by directors, nominees and executive officers as a group.  Except as indicated in the footnotes, directors, nominees and executive officers have sole voting and dispositive power over shares they beneficially own.

*     Represents less than 1%  of the issued and outstanding shares of the Company’s common stock as of February 24,  2020.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires Matson’s directors and executive officers, and persons who own more than 10% of Matson’s common stock, to file reports of ownership and changes in ownership with the SEC.   Based solely on a review of those reports filed with the SEC and any written representations that no other reports were required, Matson believes that, during fiscal 2019, its directors and executive officers and persons who owned more than 10% of Matson’s common stock filed all reports required to be filed under Section 16(a) on a timely basis, except that a  Form 4 to report an acquisition of shares for Mr. Fukunaga was inadvertently filed late due to an administrative error.

Certain Relationships and Transactions

Matson has adopted a written policy under which the Audit Committee must pre-approve all related person transactions that are disclosable under SEC Regulation S-K, Item 404(a).  Prior to entering into a transaction with Matson, directors and executive officers (and their family members) and shareholders who beneficially own more than five percent of Matson’s common stock must make full disclosure of all facts and circumstances to the Law Department.  The Law Department then determines whether such transaction requires the approval of the Audit Committee.  The Audit Committee considers all of the relevant facts available, including (if applicable) but not limited to:  the benefits to the Company; the impact on a director’s independence in the event the person in question is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; the availability of other sources for comparable products or services; the terms of the 

transaction; and the terms available to unrelated third parties or to employees generally.  The Audit Committee will approve only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its shareholders.

The Audit Committee has established written procedures to address situations when approvals need to be sought between meetings.  Whenever possible, proposed related person transactions will be included as an agenda item at the next scheduled Audit Committee meeting for review and approval.  However, if it appears that a proposed related person transaction will occur prior to the next scheduled Audit Committee meeting, approval will be sought from Audit Committee members between meetings.  Approval by a majority of the Audit Committee members will be sufficient to approve the related person transaction.  If a related person transaction is approved in this manner, the action will be reported at the next Audit Committee meeting.

Mr. Fukunaga, a director of Matson, is Chairman and Chief Executive Officer, and owns more than 10% of the common stock, of Servco.  Servco’s annual revenue is over $1 billion.  In 2019, Matson provided shipping services to or for the benefit of Servco for approximately $417,600, less than 0.02% of Servco’s annual revenue.  The transactions between Servco and Matson were conducted in the ordinary course of business on standard commercial terms.

Ms. Lau, a director of Matson, is President, Chief Executive Officer and Director of HEI, as well as Chairman of the Board of American Savings Bank, a subsidiary of HEI.  American Savings Bank currently has a 5.38%  participation in the Company’s $650,000,000, five-year unsecured revolving credit facility.  The credit facility, including American Savings Bank’s participation, was entered into in the ordinary course of business; was made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender; and did not involve more than the normal risk of collectability or present other unfavorable features.  Ms. Lau abstained from voting when the Board approved the amendment and restatement of the revolving credit facility in 2017.

Ms. Wall, a director of Matson, is Chairman and Chief Executive Officer, and owns more than 10% of the common stock, of Foodland.  In 2019, Matson provided shipping services to or for the benefit of Foodland for approximately $317,000.  The transactions between Foodland and Matson were conducted in the ordinary course of business on standard commercial terms.

The parents of Vicente S. Angoco, the Senior Vice President, Pacific of Matson, own and operate a company which provides drayage of some Matson containers in Guam.  The approximate dollar value of the payment from Matson in connection with this service in 2019  was $422,000.  The brother of Mr. Angoco owns and operates a company with which the Company contracts for chassis repair and maintenance services in Guam.  The approximate dollar value of the payment from Matson in connection with this service in 2019  was $518,000.  The brother-in-law of Mr. Angoco owns and operates a company with which the Company contracts for the provision of temporary and contract workers in Guam.  The approximate dollar value of the payment from Matson in connection with this service in 2019  was $661,000.  Mr. Angoco has no monetary or other interest in any of the businesses described above.  These transactions were conducted in the ordinary course of business on standard commercial terms.

Code of Ethics

Matson has adopted a Code of Ethics that applies to the CEO, the Chief Financial Officer (“CFO”) and the Controller.  A copy of the Code of Ethics is posted on the corporate governance page of Matson’s corporate website, www.matson.com.  Matson intends to disclose any changes in or waivers from its Code of Ethics by posting such information on its website.

Code of Conduct

Matson has adopted a Code of Conduct, which is applicable to all directors, officers and employees, and is posted on the corporate governance page of Matson’s corporate website.  Matson intends to disclose any changes in its Code of Conduct or waivers from its Code of Conduct granted to directors or executive officers by posting such information on its website.

Executive Officers

The name of each executive officer of Matson, age as of March 10, 2020, and present and prior positions with Matson and business experience for the past five years are given below.  Generally, the term of office of executive officers is at the pleasure of the Board of Directors.

Vicente S. Angoco, Jr. (53):   Senior Vice President, Pacific since June 2012; Senior Vice President, Pacific of MatNav since January 2011; Vice President, Pacific of MatNav, March 2008 – January 2011; General Manager, Guam and Micronesia of MatNav, December 2006 – March 2008; first joined Matson or a subsidiary in 1996.

Matthew J. Cox (58):   Chairman of the Board since April 2017 and Chief Executive Officer since June 2012; President, June 2012 – April 2017; Chairman and CEO of MatNav since June 2012;  President of MatNav,  October 2008 – April 2017; Executive Vice President and Chief Operating Officer of MatNav,  July 2005 – September 2008; first joined Matson or a subsidiary in 2001.

Branton B. Dreyfus (66):   Senior Vice President, Alaska since January 2020; Vice President, Alaska, February 2019 – January 2020;  Vice President, Key Commodities, January 2019 – February 2019; Vice President, Equipment and Purchasing, May 2017 – February 2019; Vice President, West Coast Terminals and Vehicle Operations, July 2005 – May 2017; first joined Matson or a subsidiary in 1993.

Ronald J. Forest (64):   President since April 2017; Senior Vice President, Operations, June 2012 – April 2017;  President of MatNav since April 2017; Senior Vice President, Operations of MatNav, April 2003 – April 2017; first joined Matson or a subsidiary in 1995.

Peter T. Heilmann (51):   Senior Vice President and Chief Administrative Officer since April 2017 and General Counsel since April 2018;  Secretary, May 2012 – January 2018; Senior Vice President and Chief Legal Officer, March 2014 – April 2017; Senior Vice President and General Counsel of MatNav since March 2014; Chief Administrative Officer of MatNav since April 2017; Vice President and Deputy General Counsel of MatNav, May 2012 – February 2014; first joined Matson or a subsidiary in 2012.

John P. Lauer (59):   Senior Vice President and Chief Commercial Officer since April 2017; Senior Vice President, Ocean Services, March 2015 – April 2017;  Senior Vice President and Chief Commercial Officer of MatNav since April 2017; Senior Vice President, Ocean Services of MatNav, March 2015 – April 2017;  Vice President, Transpacific Services of MatNav, 2012 – March 2015; Director, Transpacific Services of MatNav, 2010 – 2012; first joined Matson or a subsidiary in 2007.

Rusty K. Rolfe (62):   Senior Vice President since June 2012; President of Matson Logistics since July 2012; Executive Vice President, Matson Logistics, August 2011 – July 2012; Executive Vice President, Matson Integrated Logistics, April 2006 – August 2011; first joined Matson or a subsidiary in 2001.

Joel M. Wine (48):   Senior Vice President and Chief Financial Officer since September 2011; Senior Vice President and Chief Financial Officer of MatNav since June 2012; first joined Matson or a subsidiary in 2011.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

In this Compensation Discussion and Analysis (“CD&A”), Matson explains the material elements of its 2019 compensation practices for the executive officers named in the Summary Compensation Table on page 38 (collectively, the “Named Executive Officers” or “NEOs”).  The NEOs for 2019 are:

Executive Summary

For 2019, Matson generated net income of $82.7 million, or $1.91 per diluted share, as compared to net income of $109.0 million, or $2.53 per diluted share, generated in 2018.  Earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for 2019 decreased $33.0 million year-over-year to $264.3 million.  A reconciliation of our GAAP to non-GAAP results can be found in Exhibit A to this Proxy Statement.  Matson’s performance in 2019 was mixed with the China and Alaska tradelane services and Logistics making solid contributions, but the SSAT joint venture and Hawaii tradelane service coming in below expectations.  2019 was an important transition year for the Company with significant progress on investments in the Hawaii tradelane with the delivery of two new vessels, Kaimana Hila and Lurline, and the installation of three new gantry cranes at Sand Island.

The Company’s 2019 results generally fell below the targeted annual performance measures that were incorporated into the Board of Directors approved 2019‑2021 Operating Plan.  However, Matson’s three-year performance for the period ended December 31, 2019 under the equity compensation program was above target performance.  Each operating plan is Matson’s tactical and strategic view of future performance, and contains a three-year projection of financial and operating results, the key elements of which are incorporated as performance targets in the Company’s incentive compensation plans, as discussed in this CD&A.

In accordance with the Performance Share award provisions under the 2016 Incentive Compensation Plan (the “2016 Plan”), the 2017‑2019 equity award settlement did not take into consideration the financial impact of a non-trust post-retirement adjustment and 2017 tax reform, including any impact on tax rate changes.

Pay-for-performance.  In line with Matson’s continued emphasis on managing a compensation program that links pay to performance, performance-based awards are determined using the following performance metrics:  EBITDA for the Company’s annual cash incentive plan and the average annual return on invested capital (“ROIC”) and three-year cumulative total shareholder return (“TSR”) relative to peer indices for the Company’s Performance Share awards (“Performance Shares”).  These performance metrics align with Matson’s strategic objectives for profitable growth, efficient use of capital and increasing the value of Matson’s common stock for shareholders.  Compensation awarded to the NEOs for 2019 performance reflected Matson’s financial results:

Matson’s Compensation Philosophy

The objective of Matson’s executive compensation program is to help attract, retain and motivate talented executives who provide strong leadership for Matson and develop and execute effective strategies that maximize long-term shareholder value.  The program is designed to be market competitive and emphasize pay-for-performance by making the majority of NEO compensation “at risk”.  This is accomplished by aligning incentive pay with the achievement of key annual and long-term operating goals, growth in shareholder value and individual performance.  In 2019, 80% of Mr. Cox’s and approximately 65% of the other NEOs’ target total direct compensation were variable and at-risk based on annual and long-term performance.  The material elements of total direct compensation for Matson’s NEOs are base salaries, annual cash incentives and equity incentives.  Annual equity awards are split evenly between time-based restricted stock units (“time‑based RSUs”) and Performance Shares that are measured over a 3‑year performance period.  NEOs are also eligible for retirement, severance and change in control termination benefits and participate in other employee health and welfare programs.

All elements of total direct compensation to the NEOs are generally benchmarked against the 50th percentile of competitive market practices.  However, market data is only one of many factors considered in determining individual executive pay, including demonstrated performance, experience in the position, scope of impact and internal equity with other executives.

In order to promote the compensation philosophy described above, Matson continues to monitor its existing pay practices, as highlighted below, to ensure that it adopts the best practices to the extent they are aligned to the business goals and strategy of the Company, as well as shareholder interests.

 

 

Matson’s Continued Focus on Pay-for-Performance

Say-on-Pay Vote in 2019.  At the 2019 Annual Meeting of Shareholders, an advisory vote approved the compensation of the NEOs with over 97% of votes cast voting in favor of the executive compensation program.  The Compensation Committee took these results into consideration and concluded it should continue to apply the same basic compensation philosophy.

Pay-for-Performance Emphasis.  The following features of the 2019 NEO compensation program emphasize Matson’s focus on pay-for-performance:

Compensation Decision Process

Role of the Compensation Committee.  The Compensation Committee of Matson’s Board makes all decisions about the compensation of the NEOs.  The process that it follows for Mr. Cox is different from the process for all other NEOs.

Determining CEO Compensation.  For decisions affecting the CEO’s compensation, the Board has a formal performance review process that starts at the beginning of the year with an analysis and establishment of the CEO’s future performance goals.  Mr. Kuriyama, in his role as Lead Independent

Director, directed this process in developing the CEO’s objectives.  Mr. Kuriyama reviewed a variety of factors, including the CEO’s prior performance objectives, the CEO’s achievement of those objectives, the performance of the Company, the Company’s current Operating Plan, as well as the Compensation Committee’s independent consultant’s market analysis and recommendations of CEO pay, including target annual incentive levels and equity grants.  Following the analysis and review process, Mr. Kuriyama received input from the Board of Directors, after which the Board finalized the CEO’s annual performance objectives.  The objectives for any given year include, but are not limited to, achieving the annual operating plan results, any growth initiatives, other strategic initiatives, and the CEO’s core responsibilities.  The objectives are documented as part of setting the CEO’s annual compensation package.

After completion of the fiscal year,  Mr. Kuriyama and the Compensation Committee conducted an assessment of the CEO’s performance against the objectives set at the beginning of the year and determined the payout of the CEO’s annual cash incentive.  Mr. Kuriyama and the Compensation Committee also reviewed competitive market data and determined the merit adjustment to the CEO’s base salary and size of equity incentive award to be granted.  The Compensation Committee subsequently presented the results of this process to the full Board of Directors.  The Board of Directors discussed the results of the assessment, including the areas of greatest strength and areas where improvements could be made.

Determining Compensation of other NEOs.  For decisions affecting the compensation of the other NEOs, the Compensation Committee follows a similar process, but takes into consideration recommendations made by Mr. Cox.

In evaluating pay actions and the mix of pay elements for all NEOs (including Mr. Cox), the Compensation Committee reviews:

The Compensation Committee uses the above information to evaluate the following:

Role of the CEO.  Mr. Cox recommends annual compensation actions for other NEOs to the Compensation Committee.  In consultation with each NEO, Mr. Cox develops individual performance plans that serve as the basis for the determination of annual incentive awards.  After the completion of the fiscal year,  Mr. Cox reviews executive officer performance relative to individual goals and Company performance and makes recommendations to the Compensation Committee about each officer’s incentive award.  In addition to performance results, Mr. Cox considers any changes in job scope, internal pay relationships to other executives, merit increase guidelines and market pay studies to recommend changes in base salary, annual cash incentive awards and equity awards for Compensation Committee approval.

Role of Independent Consultant.  The Compensation Committee believes that using an independent compensation consultant is important in developing executive compensation programs that are reasonable, consistent with Matson’s pay philosophy and market competitive.  Since the end of 2012, the Compensation Committee has retained Exequity LLP (“Exequity”), an independent executive compensation consulting firm, to provide executive compensation services.  Exequity reports directly to the Compensation Committee and the Compensation Committee Chair pre-approves all executive compensation engagements, including the nature, scope and fees of assignments.  Exequity advised the Compensation Committee on all aspects of executive compensation including the following during 2019:

Exequity also assessed Board pay levels, reviewed the structure of Board compensation, and recommended adjustments to Board pay.  In the course of fulfilling these responsibilities, a representative of Exequity attended four of the five Compensation Committee meetings held during the year, participated in executive sessions of the Compensation Committee without management present, and met with management from time to time to gather relevant information and provide input in assessing management proposals.  The Compensation Committee’s executive compensation decisions, including the specific amounts paid to Matson’s executive officers, are made through the exercise of its own judgment and may reflect factors and considerations other than the information and recommendations provided by Exequity, including the executive’s role and organizational impact, experience, tenure, sustained performance over time, and internal pay relationships.  Exequity has not provided any other services to the Compensation Committee and has received no compensation other than with respect to the services described above.

Pursuant to SEC rules, the Compensation Committee has assessed the independence of Exequity and concluded that no conflict of interest exists that would prevent Exequity from independently representing the Compensation Committee.

Role of Management.  Management assists the Compensation Committee in its role of determining executive compensation in a number of ways, including:

Role of Market Data.  As there are few companies directly comparable to Matson in business mix, size and location of operation, based on the recommendation of Exequity, the Compensation Committee used a combination of peer group proxy statement data and published general industry survey data as a benchmark reference in the 2019 compensation decision-making process.  This competitive market data serves as only one of many factors the Compensation Committee considers in assessing and determining appropriate pay levels as it exercises its business judgment.  Other factors the Committee considers include Matson’s pay philosophy, incumbent job scope of responsibility, tenure, organization impact, internal equity, Company and individual performance, and historical pay actions.

Exequity conducted an independent review of the peer group and established the following selection criteria to develop a recommended peer group for the Compensation Committee’s approval:

Based on these factors, Exequity recommended and the Compensation Committee approved a peer group of the following sixteen public transportation-related companies (“peer group”) for pay comparisons starting in 2018 for 2019 pay assessments:

 

Hornbeck Offshore Services, Inc., Overseas Shipholding Group, Inc.  and Tidewater Inc. were dropped due to their revenue position and Forward Air Corporation was added.  Matson is between the 25th and 50th percentiles of this peer group in revenue and market capitalization.  Given the limited number of relevant publicly traded transportation companies similar enough to Matson’s profile to serve as meaningful comparisons, the Compensation Committee believes the peer group recommended by Exequity provides a reasonable basis for analyzing compensation for Matson’s NEOs.  The Compensation Committee will continue to collect general industry data for similar revenue size companies as additional

reference for competitive market analysis, particularly for NEOs other than Mr. Cox, given the limited number of similarly sized companies in the peer group and competition for talent with other industry segments.

Components of Executive Compensation

The material elements of compensation for Matson’s NEOs are base salaries, annual cash bonuses and equity incentives.  NEOs also are eligible for retirement, severance and change in control termination benefits and participate in other employee benefit programs.

Base Salary:  Salary is intended to provide a minimum fixed rate of pay which comprises less than 36% of an NEO’s target total direct compensation.  Salary increases can be awarded in recognition of extraordinary performance, organizational advancement and increasing levels of responsibility, as well as projections for market movement and merit guidelines established for the Company.  Generally, base salaries for Matson’s NEOs are based on the Compensation Committee’s determination of appropriate salary levels, taking into consideration peer group and survey information, Mr. Cox’s recommendations (for NEOs other than himself), the executive’s role in the organization, his performance during the prior fiscal year and relative pay position to other Matson executives.  In 2019, in connection with Matson’s overall merit program, the Compensation Committee increased the base salaries for all NEOs, including Mr. Cox, by 3% to keep up with inflation and general market practices.

Annual Cash Incentives:  Annual incentives for NEOs are provided through the Cash Incentive Plan (the “CIP”).  The CIP was designed to align performance incentives at all participating organization levels, to motivate executives to contribute to the Company’s success and to reward them if they achieve specific pre-established corporate and individual goals.  These goals are established in February of each year based on the use of the metrics described below.

Weighting of Goals.  The weighting of the corporate and individual goals depends on the executive’s position and responsibilities.  The intention is to weight a significant portion of the awards on the financial results of the Company, but balance that with important strategic and operating goals that have been established for the year through the individual portion.  The 2019 weighting is as follows:

Weighting of 2019 CIP Goals for NEOs

 

Determination of Annual Cash Incentive Award.  Each component – corporate and individual – is evaluated against the respective performance goals.  There are three levels of award opportunities for each component:  threshold, target and extraordinary.  In 2019, the target award opportunity levels for NEOs ranged from 70% to 100% of salary, which is consistent with competitive market targets.  If a threshold goal is not achieved, there is no payout for that component.  If threshold goals are achieved, a participant receives 50% of the target award opportunity set for that component.  If target or extraordinary goals are achieved, a participant receives 100% or 200%, respectively, of the target award opportunity for that component.  Awards are prorated for performance between the threshold, target and extraordinary levels, as applicable.  No additional award is provided for performance above the extraordinary goal level.  The maximum achievable award in the aggregate is 200% of the NEO’s target award opportunity.

Mr. Cox reviews the annual individual incentive award calculations for each individual other than himself and makes recommendations to the Compensation Committee regarding payouts.  For Mr. Cox’s individual incentive award calculation, the Lead Independent Director reviews Mr. Cox’s individual performance achievement and provides the results to the Compensation Committee.  The Compensation Committee reviews and approves all awards and has discretion to modify recommended awards to take into consideration factors it believes appropriately reflect the performance of the Company and the individual.  Such factors vary, but may include, for individuals, adjustments for an executive taking on temporary but significant responsibilities in addition to his normal job role, or for the Company or a business unit, adjustments for extraordinary or unusual events.

Company Performance.  The corporate component measure in 2019 was based on the 2019‑2021 Operating Plan approved by the Board of Directors and was weighted 100% on consolidated EBITDA performance, subject to any adjustments made to accurately reflect the Company’s 2019 performance.  Any adjustments are at the sole discretion of the Compensation Committee.  EBITDA was selected as the CIP corporate performance measure because the Company believes it best reflects the annual operating results of business execution and profitability levels.  The Company believes that EBITDA is a critical annual operating performance measure and, in combination with the multi-year performance measures of ROIC and TSR (described below in “Performance Shares”), provides focus and alignment with shareholder interests.

Annual incentive goals at threshold, target and extraordinary (maximum) are approved by the Compensation Committee in February of each year.  The 2019 annual corporate and business unit targets reflected the Company’s Board‑approved Operating Plan.  When establishing the Operating Plan, management and the Board of Directors consider the historical performance of the Company, external elements such as economic conditions and competitive factors and Company capabilities.  In 2019, the Compensation Committee set threshold performance at 90% of target and extraordinary performance at 120% of target for EBITDA results.  The threshold and extraordinary goals were determined on the basis of the level of difficulty in achieving the target objective as well as establishing a reasonable range of performance variability around the Operating Plan target.

For determination of CIP award levels for 2019, the Company’s operating performance was compared to the performance goals approved by the Compensation Committee in February 2019.  Corporate goals and the actual result were as follows:

Company Performance Results Related to the 2019 CIP

 

Individual Performance.  In addition to the corporate performance goal, 30% of each NEO’s 2019 award under the CIP was based on achieving individual goals, which reflect the NEO’s position in the Company and the activities of the NEO’s business function.  Individual goals contain performance metrics and are reviewed by the Compensation Committee each year.  Performance against individual goals is assessed at threshold, target and extraordinary levels; achievement of some but not all individual goals can result in a partial payout.  The primary individual NEO goals are listed below.

 

Total Performance for 2019.  Actual CIP awards earned versus target averaged approximately 94% of the overall targeted goal payouts and were as follows:

2019 CIP Payouts for NEOs

Equity-Based Compensation:  The equity portion of the total compensation program is designed to:

Performance Shares.  In 2019, Matson continued the use of Performance Share awards focused on multi-year performance over a three-year measurement period.  Settlement of the Performance Shares granted in 2019 is determined after the end of the three-year performance period (i.e., December 31, 2021).  The actual number of shares that vest is based on Matson’s three-year annual average ROIC performance against pre-established goals approved by the Compensation Committee in January 2019 (the primary performance measure) and Matson’s TSR as measured against the S&P Transportation Select Industry Index and S&P MidCap 400 Index over the three-year period (the performance modifier).  The total number of Performance Shares earned may range from zero to 200% of the target grant size based on the Company’s primary performance measure results and then that percentage is further adjusted +/- 25% based on the TSR performance modifier results.  No Performance Shares will vest sooner than three years from the date of grant except under certain circumstances in connection with the occurrence of a change in control of Matson.

On December 31, 2019, the performance period for the 2017‑2019 Performance Share grant ended.  For determination of the Performance Share award levels, the Company’s ROIC and TSR performance were compared to the performance goals approved by the Compensation Committee in January 2017.  ROIC is defined as (1) net income plus (2) after-tax interest expense divided by (3) average debt plus average total shareholders’ equity, subject to any adjustments made to accurately reflect the Company’s performance.  Any adjustments are at the sole discretion of the Compensation Committee.  2017‑2019 ROIC performance excludes any financial impact related to a non-trust post-retirement adjustment and 2017 tax reform, including any benefit related to tax rate changes, in accordance with the terms of the Performance Share award provisions.  Corporate goals and the actual results were as follows:

Company Performance Results Related to the 2017‑2019 Performance Share Awards

 

Settlement of 2017‑2019 Performance Share Grant.  Actual Performance Share awards earned versus target were 134.7%, as follows:

2017‑2019 Performance Share Award Settlement for NEOs(1)

Each NEO was awarded a 2017‑2019 Performance Share grant in January 2017.  Pursuant to the vesting provisions of these grants, vesting occurred on January 25, 2020, while approval of the performance results associated with the awards took place on January 22, 2020.  Additionally, Messrs. Forest, Heilmann and Lauer were awarded Performance Shares related to executive job promotions in April 2017.  The performance results for these grants were approved on January 22, 2020 and vesting will occur on April 28, 2020, contingent on satisfaction of the time-based vesting condition.  Therefore, the awards are included in the Outstanding Equity Awards at Fiscal Year-End table of this Proxy Statement.

Restricted Stock Units.  In 2019, the Company granted time-based RSUs to the NEOs.  Time‑based RSU grants align participant interests directly with shareholders and are intended to increase executive beneficial share ownership, focus the efforts of executives on improving long‑term stock price performance, and strengthen retention of participants through a three-year vesting period.

Equity-based grants are generally considered and granted annually in January by the Compensation Committee.  Mr. Cox makes recommendations for each NEO (other than himself) to the Compensation Committee which retains full discretion to set the grant amount.  In determining the type and size of a grant to an executive officer, the Compensation Committee generally considers, among other things: