Central Pacific Financial Corp. will pay its president and chief executive officer, Clint Arnoldus, $5 million after he retires at the end of the year.

The 61-year-old Arnoldus announced yesterday that he will step down from the bank on Dec. 31 with four years remaining on his 10-year contract.

Arnoldus served as the public face of the state's fourth-largest financial institution, appearing in TV ads with Alex the loyalty dog. Arnoldus will leave a bank that has grown dramatically as a result of its 2005 merger with City Bank but has stumbled in recent months because of problem loans to California home builders.

"The board is grateful for Clint's leadership and contributions over the last six years," said Ronald Migita, Central Pacific's chairman. "Clint has a strong track record of achievements as leader of our company and has helped Central Pacific Bank expand its role as an integral part of our community."

In a telephone interview yesterday, Arnoldus said he plans to move to Scottsdale, Ariz., and spend more time with his family, which includes six children and 14 grandchildren. He said he also will step down from Central Pacific's board of directors.

"These past several years have been a great experience for me," Arnoldus said.

Arnoldus' announcement comes after Central Pacific restated its fourth-quarter 2007 earnings because of problem loans to California home builders who have been hard-hit by the turmoil in the credit markets.

Last month, the company reported it lost $44.5 million during the three months ending Dec. 31, 2007, after it previously announced that it made $3.6 million during the quarter. In January, the company set aside $28.2 million as a provision for potential loan losses stemming from the Mainland subprime crisis.

Arnoldus' $5 million payout represents the amount Central Pacific owes its top executive under the terms of his employment contract. The retirement package, which includes cash payments, healthcare, relocation costs and other benefits, is more than three times Arnoldus' 2007 pay of $1.4 million.

It doesn't include 208,649 shares of Central Pacific stock that Arnoldus already owns. Based on yesterday's closing price of $16.99, those shares are worth nearly $3.6 million.

The size of the retirement package isn't unusual for a top executive of a large local company.

Michael Ruley, who resigned as Hawaiian Telcom's chief executive officer last month, will receive $1.3 million in back pay, bonuses and other payments along with a monthly consulting fee of $23,830.

Robert Clarke, who retired as Hawaiian Electric Industries Inc.'s CEO in 2006, accrued more than $6 million in retirement benefits during his 19 years with the company, according to company filings with the Securities and Exchange Commission. Those benefits will be paid in regular installments to Clarke for the rest of his life, the company said.

Migita said that Central Pacific plans to hire an executive search firm to help in its selection of Arnoldus' successor. Migita said the bank will look at internal and external candidates.

Arnoldus, who has served as the bank's No. 1 executive since 2002, took a high profile as he tried to broaden Central Pacific's appeal beyond its roots as a small bank founded by Japanese-American World War II veterans.

Taking a page from Bank of Hawaii's popular "Ask Mike" advertisements starring then-CEO Michael O'Neill, Arnoldus appeared in Central Pacific's television commercials touting the bank's products and services.

He also served as the driving force behind Central Pacific's merger with City Bank, in a $430 million deal that combined the state's fourth- and fifth-largest banks.

The deal increased the company's earnings and market capitalization, reduced overhead and allowed the combined banks to better compete with Hawai'i's three major banks.

The merger was initially rebuffed by City Bank's management, which considered it a hostile takeover attempt. City Bank officials later accepted the deal after Central Pacific sweetened its offer. As a result of the deal, Central Pacific currently has $5.7 billion in assets and operates 39 branches.

During the merger, Arnoldus made headlines for his heated exchanges with the heads of Hawai'i's two largest banks. He criticized First Hawaiian Bank for its ownership by BNP Paribas of France and said Bank of Hawaii alienated its customers "by loading the senior management with Mainland imports."

Bank of Hawaii's O'Neill said Arnoldus' statements were untrue and likened him to the leader of the small country in "The Mouse That Roared," a satire about a tiny country that declared war on the United States.

Walter Dods, who was chief executive of First Hawaiian at the time, called Arnoldus' remarks a "cheap shot" and said he was born and raised here and "didn't just get off the boat from California and learn the shaka sign." Dods also offered to debate Arnoldus in pidgin on what is "local."

Arnoldus eventually backtracked, saying he didn't mean to say that First Hawaiian's employees are French and not local.

Arnoldus said yesterday that the whole ordeal surrounding the City Bank merger was the most challenging in his 30-plus years in banking.

"That was the roughest thing I've been through," Arnoldus said.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.